Commons Sitting of 7 February 2002

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    CITY OF LONDON (WARD ELECTIONS) BILL (By Order)
    Order read for further consideration, as amended by the Chairman of Way and Means.
    To be further considered on Thursday 14 February.

    MERSEY TUNNELS BILL (By Order)
    Order for Second Reading read.
    To he read a Second time on Tuesday 12 February.

Oral Answers to Questions
  EDUCATION AND SKILLS
  The Secretary of State was asked—
  EDUCATION AND SKILLS

    Young People (Consultation)
    David Wright: What steps the Government have taken to consult young people about the policies of her Department. [31400]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): We are building on existing good practice to integrate young people's involvement in all our activities and, by doing so, implementing the Government's core principles on participation published last November in "Learning to Listen". The development of the Connexions service is an excellent example of how a new service can engage with young people.
    David Wright: I thank my hon. Friend for that reply. Last week I visited Madeley Court school in my constituency which has a school council and two student representatives on the governing body. Does he agree that that is a good mechanism for consultation on education policy nationally and on the policies of the governing body of that school?
    Mr. Lewis: I agree with my hon. Friend. That is an innovative approach to the involvement of young people and I congratulate the head teachers and governors on involving young people in that way. We are becoming increasingly conscious—certainly I am as the first Minister for Young People and Learning—of the importance of listening to young people and talking to
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    them about policies that have an impact on their everyday lives. It is important that they are involved in the design, development and evaluation of services.
    At a national level, we are keen to consult young people in a way that they have not been consulted before. For example, when we published our White Paper, we held a consultation day with children and young people. When we produce our proposals on 14 to 19 reforms in the near future, the document will be specifically aimed at young people and we will hold consultation events with them. As we develop new services and evaluate existing ones, it is important that we involve young people.
    Mr. Charles Hendry: What discussions has the Minister had with members of the Youth Parliament about his Department's policies? Will he confirm that all members of the Youth Parliament have been invited to the Department to meet Ministers and officials? What are his plans to ensure continuing dialogue with members of the Youth Parliament and how will he keep in touch with them to give them feedback on the discussions?
    Mr. Lewis: We have a high regard for the contribution that the UK Youth Parliament makes in linking politics, Government and young people together. The hon. Gentleman might be aware that the children and young people's unit has been in dialogue with representatives of the UK Youth Parliament. Deliberations are under way on the level of future Government support for the activities of the Youth Parliament.
    As for discussions with the Department for Education and Skills, many young people who have been involved in the UK Youth Parliament have told me about the benefits of that, both locally and when it meets at a national level. I am sure that the hon. Gentleman will agree that every Member of the House has a responsibility to re-engage young people with politics and the political process. One of the biggest dangers to democracy is that far too many young people do not think that deliberations in this House and politics in general are relevant to their everyday lives. The UK Youth Parliament plays an important part in dealing with that.
    Mr. Jonathan Shaw: It is right to engage young people in consultation because it is mutually beneficial for the school and the young people, and helps the school to run smoothly. However, does my hon. Friend agree that practice varies enormously? Although some young people enjoy that benefit and like being at school, some schools are not so committed to the practice. Will he comment on strengthening guidelines to encourage schools to engage young people so that they can benefit in the way that he described?
    Mr. Lewis: I agree that practice is patchy. Some schools are good at involving young people and are committed to the concept, but others are not. We do not think it appropriate to introduce statute on that policy at the moment, but we should spread good practice guidance and make it clear that in principle the Government support the idea of school councils and other ways to engage

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    young people at school level. We have a long way to go, and we need to build on existing good practice and commitment.
    Mr. Damian Green: I agree with a lot of what the Minister said: consultation with young people is important. He will know from consulting school councils and others that their greatest current concern is the disastrous failure of the exam system in the Edexcel fiasco. The Secretary of State has given Edexcel one month to prove that this summer's exams will not fall into chaos. Do the Government have a contingency plan if Edexcel does not satisfy the Department, and if so, what is it?
    Mr. Lewis: The Government's reaction to the difficulties at Edexcel was immediate, rapid and decisive. We insisted that the Qualifications and Curriculum Authority carry out an audit of the difficulties that emerged at the examinations board last summer—that report has recently been published—and the quality assurance person at the QCA has been put into Edexcel to improve practice. We believe that lessons have been learned from the difficulties of recent months, which undoubtedly affected too many young people, and that systems are now in place to ensure that the improvements that we expect at Edexcel are delivered in time for the summer exams.
    Mr. Green: That is an extraordinary reply. We are in the middle of the one-month period of investigation, but the Minister is apparently entirely confident. Either the one-month exercise is a sham, or the Government have no plan B and the exams will go ahead under Edexcel even if Edexcel fails the one-month test. Which is it?
    Mr. Lewis: It is irresponsible of the hon. Gentleman to undermine confidence in this country's examinations system. Although the situation at Edexcel is serious in terms of the small number of young people affected by it, the vast majority of young people have every reason to have confidence in the examinations system because they have not been affected by the problems at Edexcel in the past. We have every confidence that the robust quality assurance systems that we have put in place and the interventions of the QCA and my right hon. Friend the Secretary of State will ensure that this summer the examinations system will run as we expect it to.

    Private Finance Initiative
    Mr. Ben Chapman: If she will make a statement on the PFI in schools. [31401]
    The Parliamentary Under-Secretary of State for Education and Skills (John Healey): There are 38 signed PFI projects involving almost 500 schools with a value of more than £1 billion. A further £1 billion has been allocated to projects in various stages of development. The Government have increased the amount of PFI credits for schools from £35 million in 1997–98 to a planned £850 million in 2003–04.
    Mr. Chapman: Does my hon. Friend agree that in public services, it is critical that the quality of service that people need is put in place, rather than the means of its financing or provision? In three schools in my constituency, PFI work is about to commence that will provide them with new classrooms—in one case to replace 14 mobile classrooms—and new facilities that would otherwise not have been provided, or not have been provided on the same scale or in the same time frame.
    John Healey: I thank my hon. Friend for his question. I am glad to hear about the three schools in his constituency, which are among nine in the authority area that are to benefit from the scheme. The programme has already started and is running on time for completion in December this year. He is right that teachers and pupils will have good-quality buildings maintained to good-quality standards. He mentioned the added value that that can bring. Wirral local education authority officials told my officials that even at the current high levels of Government capital investment through public routes, it would have taken 15 years to reach by conventional means the same state that the PFI contract will deliver for the nine schools in the area.
    Dr. Vincent Cable: I welcome the fact that after many years of frozen capital spending, my local authority, which is Liberal-Democrat controlled, is working with the Department to build new primary schools in my constituency. However, does the Minister acknowledge that PFI funding is more expensive than conventional public borrowing? Will he explain whether the extra cost will be borne by the improved and expanded schools, or will it be spread across the whole LEA and so be borne by other schools as well?
    John Healey: If the hon. Gentleman's authority has put in a bid for a PH project, it is one of the more than 100 out of 150 LEAs to have done so. That demonstrates the interest in that form of additional financing of capital investment. As for cost, he will know that PFI projects can proceed only if they can demonstrate value for money over conventional means of funding. My hon. Friend the Member for Wirral, South (Mr. Chapman) spoke of a project in his LEA area that will deliver a 9 per cent. lower cost for the programme. Furthermore, payments begin only when services start. Teachers, pupils and schools get new buildings with guaranteed higher maintenance standards.
    Mr. Andrew Miller: Many of our constituents deserve new-build in the education system, some of which is 20 years overdue in my constituency. I welcome the PFI work and seek an assurance from my hon. Friend that despite carping from certain quarters, he will not back off from the programme, which provides a sensible way of putting capital into schools in our most deprived communities.
    John Healey: I can give my hon. Friend that assurance. PFI is a means to raise additional resources to improve school buildings and to deliver better and more cost-effective public services. Of course, it can also free head teachers and teachers from the business of maintaining and managing buildings, allowing them to concentrate more on standards, education and their

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    students. Despite the carping that my hon. Friend mentioned, it is increasingly popular with schools and local education authorities. Last year's bidding round was oversubscribed by 3:1, the current one by 4:1.
    Mr. Peter Lilley: The Minister will know that I strongly support the genuine transfer of risk to private bodies, but can he tell us the difference between shifting the Government's debt into public-private partnerships and Enron's accounting methods to shift its debt and hide it in offshore partnerships?
    John Healey: The right hon. Gentleman does the PFI programme in schools a serious disservice in trying to make such links. There is no connection or comparison whatever with the methods that that company employed. He is right about shifting the balance of risk, which is key to PFI contracts and the ability to deliver value for money and cost reductions. Shifted risks include risks that the private sector bears in upfront costs until buildings are completed, and risks associated with serious systems and buildings failure during the contract, which is why many local authorities and schools regard the arrangement as a valuable way of bringing new capital finance into the school system.

    School/Further Education Links
    Joan Ryan: What plans she has to encourage further links between schools and further education colleges. [31402]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): The Learning and Skills Council is working closely with local education authorities, schools and colleges to secure effective links. Area-based inspections promote collaboration to support a wide range of local provision. We are providing £38 million to promote increased flexibility in the curriculum for 14 to 16-year-olds.
    Joan Ryan: I thank my hon. Friend for his answer. Both further education colleges in my constituency, Capel Manor college and Enfield college, are conscious of the importance of such links. As he mentioned, funding will be a key issue. The ability to deliver pre-vocational and vocational education is connected to the need to harmonise funding between the FE sector and sixth-form colleges. The FE sector has welcomed the Government's commitment to pursue such harmonisation. Can my hon. Friend say more about the time scale?
    Mr. Lewis: My hon. Friend can inform the two colleges in her constituency that they will find out on 15 February whether their bids have been successful. I confirm that the Government are committed to the principle of convergence and believe that it has to happen. I give her a cast-iron guarantee that the issue of convergence will be considered in the spending review.
    Mr. Phil Willis: Does the Minister agree that transport is a key issue in getting good contact between FE and schools, especially in rural
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    areas? Does he agree that the Education Act 1996, which allows local authorities to opt out of providing free transport for over-16s, either to schools or FE colleges, must be changed? Does he condemn Labour-controlled Northumberland LEA, which has just introduced a charging policy for all students going to schools or colleges after the age of 16? Does that not fly in the face of his comments about better co-operation between schools and colleges?
    Mr. Lewis: I agree that transport is important, particularly in rural areas, as I have discovered from visiting some of those communities. That is the No. 1 issue, especially for young people, in terms of potential isolation and continuing study. As the hon. Gentleman knows, the Government have introduced education maintenance allowances, which at present are available in only 30 per cent. of the country. Early evidence on EMAs is that participation brings significant benefits. Many young people are using that additional money to pay for transport costs. The Connexions card that we are introducing in September will provide reductions for young people in the cost of transport.
    As for the responsibility of local authorities and passenger transport authorities, the hon. Gentleman served on the Committee that considered the Education Bill. That clarified and made more transparent the way in which local education authorities and passenger transport bodies must work together to ensure that it is clear who is responsible, and that the resources allocated are used specifically to support young people staying in learning post-16.
    Derek Twigg: After my hon. Friend has visited my constituency tomorrow, he may be so impressed that he will want to return to see the excellent collaboration between Halton college of further education and Widnes and Runcorn sixth form college, which has resulted in a new shared Runcorn campus being built. Although collaboration between schools is important, does he agree that to provide the best possible service to people in post-16 education, collaboration between sixth form colleges and further education colleges is just as essential?
    Mr. Lewis: I agree, and I look forward to meeting my hon. Friend in his constituency tomorrow. Co-operation is particularly important in the context of a new 14 to 19 phase of education. The challenge is to achieve seamless collaboration between schools, sixth form colleges, FE colleges, training providers and employers. We need an approach that integrates the various institutions that impact on young people's lives, so that we provide them with the best opportunities and incentives to stay in learning and training.

    Individual Learning Accounts
    Mr. Mark Simmonds: What measures she will take to ensure that the lack of quality assurance that led to fraudulent use of ILAs is not reproduced in successor schemes. [31403]
    The Parliamentary Under-Secretary of State for Education and Skills (John Healey): Quality assurance methods will be built into the successor scheme to individual learning accounts. A range of options will be explored as we develop the new programme.
    Mr. Simmonds: Does the Minister agree that the lack of quality assurance and monitoring structures in the ILA scheme led directly to a scandalous and probably fraudulent abuse of taxpayers' money? There has also been a shocking and detrimental impact on service providers and recipients, and a terrible impact on people who benefited from ILAs.
    John Healey: The hon. Gentleman is right to the extent that the picture is complex. It is increasingly clear that the lack of quality control measures contributed to the problems experienced by the ILA scheme. There is widespread agreement that pre-registration checks of learning providers need to be strengthened. We will draw the lessons of the ILA scheme. That will help us to set appropriate quality control measures for a future programme. However, I caution him about the need to balance greater protection for the public purse with simplicity for the learner and limited bureaucracy for the provider.
    Jeff Ennis: When does my hon. Friend anticipate announcing the successor to ILAs, and what role does he envisage for local learning and skills councils in the successor scheme?
    John Healey: My hon. Friend, who serves on the Select Committee on Education and Skills, will acknowledge that the ILA scheme was innovative and important in many respects, but there are important lessons for us to learn. We are undertaking a consultation with all learning providers under the scheme, with partners who have an interest in the future of the programme, and with learners who opened ILA accounts. I know that he will find this frustrating, but it is too soon to say with certainty when we will be able to relaunch the scheme. Above all, there is a need to get to the bottom of what went wrong before we can make sensible decisions about the shape of the programme for the future.
    Mr. Paul Goodman: Is it not clear that the Government were warned about the likelihood of fraud in the system as early as summer 2000? What does the Minister have to say to my constituent Stephen Good, a legitimate ILA provider who has had to place his property on the market because of the Government's incompetence and complacency? When will he be told when his situation will be rectified?
    John Healey: In the preparation of the ILA scheme and its introduction in autumn 2000, we had discussions with a wide range of partners. We had to strike a balance in the design between control and quality assurance methods and a non-bureaucratic system that was easy for the learner and the provider. With hindsight, as I acknowledged in response to the hon. Member for Boston and Skegness (Mr. Simmonds), it is clear that the quality assurance arrangements were simply not good enough. That part of the system will be stronger for the future scheme. A small number of unscrupulous learning
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    providers undermined and abused the scheme. I take the constituent of the hon. Member for Wycombe (Mr. Goodman) to be a legitimate provider who, like many others, made much of the scheme to benefit a range of learners across the board.
    Mr. Derek Foster: Does my hon. Friend agree that the glee shown by Opposition Members—[Interruption.] There is perhaps synthetic anger too, but is not their attitude symptomatic of the reasons why the public service cannot be innovative? We did the same when we were in opposition, so I am not making a cheap party political point. The individual learning account was a superb and innovative scheme that put purchasing power—Opposition Members should be pleased about this—in the hands of the individual learner, thereby giving them the power to shape the content of their learning. I share my hon. Friend's dismay about the administrative problems and urge him—
    Mr. Speaker: Order. The right hon. Gentleman's question is far too long.
    John Healey: I do not want to underestimate the scale or nature of the problems, including those that we are unearthing in our investigations. My right hon. Friend is right that the scheme was important and innovative and put power in the hands of learners for the first time. That is part of the reason why the scheme in its short life encouraged new learners and people who were returning to learning for the first time. It is also part of the reason why one in six of those who used ILAs had no previous qualifications and why one in four had not done any learning in the previous year. He may not be aware that the Learning and Skills Council agrees with his analysis and in yesterday's Select Committee hearing described the ILA as the single most successful attempt to attract new learners.
    Alistair Burt: Is it not the case that the simplicity and innovation of the scheme went so far as to ensure that the only criteria that the learning provider had to offer the contractor to gain access to Government money were a name, address and telephone number, and details of the bank account where the cash was to be sent? No other validation whatever was required. Is not the story very simple? The Government set up the ILA scheme and were warned about possible abuses, but ignored those warnings. They encouraged new providers into the market, but when the abuses became so obvious that they could not be ignored, they announced a date for the closure of the scheme. Then they brought forward even that date, prematurely ending the scheme and closing it overnight, leaving millions of pounds owed to providers and breaking faith with thousands of students who expected to go on courses. They also caused job losses, company failures and a disastrous loss of confidence in decent adult education initiatives. Can he hazard a guess as to whom the public hold responsible for this scandal, and will he meet some of the learning providers face to face, so that he can explain to them precisely what he intends to do about it?
    John Healey: I have met learning providers face to face. Officials in the Department are in constant contact with them and, as I explained to the hon. Member for

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    Boston and Skegness, we are undertaking extensive consultation to draw on their experience to help us to design the future scheme. The hon. Gentleman is right about the registration of learning providers: it was registration, and it was clear from the outset that it was not a quality assurance stamp of approval from the Government on either the provision or the provider. As I have explained, that is something that we will have to change in a successor scheme.
    On the decision that we very regrettably had to make to bring forward the closure of the scheme from 7 December to 23 November, it must be becoming increasingly clear to the hon. Gentleman that not to have taken that decision with immediate effect would have risked substantial loss of public funds. That was the reason that we took the decision, and that is why it was the right decision to take at that time.

    GCSEs
    Dr. Stephen Ladyman: What recent assessment she has made of the performance at GCSE of (a) pupils at grammar schools and (b) their equivalent intellectual cohort in comprehensive schools. [31404]
    The Minister for School Standards (Mr. Stephen Timms): The Department has not made a recent assessment. An assessment carried out two years ago showed a modest advantage to comprehensive schools.
    Dr. Ladyman: I have to confess that I am baffled. As my hon. Friend said, the assessment done by the Department a couple of years ago showed an advantage to comprehensive schools. A wide range of academic research now shows a consistent pattern of comprehensive education out-performing selective education. When a clear, consistent pattern illustrates that selective education is failing our children, why will the Government not face up to their responsibility to deal with those local education authorities that are entirely selective? Will the Minister again consider my suggestion, which is now supported by people campaigning for as well as against grammar schools, that an independent inquiry be held into the corrosive effects of selective education?
    Mr. Timms: The academic debate on this subject still rages. The Government's position is that we do not favour selection by ability at the age of 11; there will be no new grammar schools under this Government. I understand my hon. Friend's concern about these arrangements, particularly in Kent. In the White Paper, we set the target that by 2004 at least 20 per cent. of pupils in every school should achieve five good GCSEs, rising to 25 per cent. by 2006. A total of 372 schools did not achieve the 25 per cent. target last summer; 28 of those were in Kent. Clearly, extensive work will need to be done with those schools in Kent to achieve the targets, with support from my Department. That is where I urge my hon. Friend and the many others who are concerned about these issues to focus their attention.
    Mr. Roy Beggs: Are five good GCSE grades today the equivalent to five GCE O-levels
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    of grade C and above in the past? To what extent has improvement in overall examination results been assessed as due to grade inflation over the years?
    Mr. Timms: That is certainly not the explanation. We have careful, thorough quality control procedures in place to ensure that standards are maintained. There is indeed broad comparability between the levels to which the hon. Gentleman referred. Teachers, schools and pupils have worked very hard, and that is the reason that we have hit the target of at least 50 per cent. of our young people getting five good GCSEs a year ahead of our deadline. That is down to the hard work and success of schools.
    Mr. David Chaytor: I welcome my hon. Friend the Minister's reaffirmation of the Government's opposition to selection by ability at the age of 11. But, in view of the endemic divisiveness, administrative chaos and waste of potential that are inherent in all the selective systems—let us remember that they exist in almost a quarter of our local authorities—is there not now an overwhelming argument for a national inquiry into the impact of selection on those children who are not selected?
    Mr. Timms: Our priorities should be clearly focused on raising standards across the entire secondary system. It is clear from the exchange that we have just had that we are succeeding in that. In the case of existing grammar schools, we believe that parents should be able to determine locally whether the arrangements should continue.
    Mrs. Eleanor Laing: The Minister seems somewhat confused. On one side, he says that he wants standards raised, whereas, on the other, he ignores the way in which standards can be raised. It was a pleasure to see the Secretary of State, Ministers and most Labour Members, including the hon. Member for South Thanet (Dr. Ladyman), joining us in the Lobby last night and voting to defend grammar schools. Perhaps I can help the Minister with his research. Has he not seen the National Foundation for Educational Research survey on the impact of selection on pupil performance? It says that
    "within the middle ability range, young people in grammar schools perform significantly better than those in comprehensives".
    That is very clear. Will the Minister admit to the hon. Member for South Thanet, once and for all, that he is wrong that selective education is a "corrosive evil"? It is not; it is one way to raise standards for huge numbers of pupils across the country. Will the Minister accept that, and will he defend grammar schools?
    Mr. Timms: The hon. Lady is a little confused. The votes last night were about faith schools, not grammar schools. The assessment made a couple of years ago indicated an advantage to comprehensive schools, but I am aware that the debate rages. She should support comprehensive schools and encourage rising standards across the entire secondary system, as we are doing. The evidence is clear that we are succeeding.
    Mr. Bill Rammell: Is it not the case that numerous surveys have proved that children do not perform better in grammar schools? Is that not the fundamental question that we must face? Does not the

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    Conservative party's obsessive interest in pursuing selective education fail to take account of the number of children who would lose out through a selective system because they would go to second-class and lower-quality schools?
    Mr. Timms: Let me draw my hon. Friend's attention to the assessment made a couple of years ago. Research on all 15-year-olds in grammar schools in a particular area found that 96.4 per cent. of those youngsters achieved five good GCSEs. A second group included the top 25 per cent. of 15-year-olds in comprehensives, and 100 per cent. achieved five good GCSE grades.

    School Autonomy
    Richard Younger-Ross: If her Department will consult on regulations to give successful schools greater autonomy. [31405]
    The Minister for School Standards (Mr. Stephen Timms): Yes, we shall. I anticipate that the consultation will take place later this year. We set out our thinking in a policy statement that was provided to members of the Education Bill Standing Committee and placed in the Library of the House.
    Richard Younger-Ross: I thank the Minister for his response. If greater autonomy is seen to be good, will it not benefit all schools? Are not struggling schools often those that require greater flexibility? Will he assure the House that there will be greater flexibility and less Government interference?
    Mr. Timms: There certainly will be greater autonomy as a result of the measures agreed by the House when the Education Bill was considered on Report yesterday. We are developing our policy of intervening in inverse proportion to success. When a school is successful in terms of its achievement at assessment and in its leadership, we want to increase the autonomy available to it, because we can be confident that it will use that extra freedom to raise standards.
    What we want, and what the Bill will make possible, is for our best schools to lead the next wave of education reform. Of course, under the separate power to innovate, which is also in the Bill, it will be possible for other schools to make proposals to help them raise standards. However, they will not have the same automatic entitlement that is available to our best schools, for the reasons that I have explained.
    Caroline Flint: I served in Committee on the Education Bill and was pleased to support it. As my hon. Friend knows, specialist schools are also part of innovation in our children's education. Will he consider the regulations on funding, because unfortunately Rossington high school, which is seeking specialist school status, has been turned down, not because of its bid but because, in a coal-mining area, we do not have the companies on our doorstep to fund it? The parish council has agreed to put some money in, but the regulations prevent it. Will he look into that?
    Mr. Timms: My hon. Friend is absolutely right about the valuable contribution of specialist schools in raising
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    standards. I understand the concerns about sponsorship. That is why we support the Technology Colleges Trust in working with schools to help them raise the sponsorship that they need.
    Mr. Henry Bellingham: Is the Minister aware that there is great rejoicing in King's Lynn over news that Park high school is to receive specialist technology status? If he comes to that school, he will be very welcome indeed, and they may even unveil a picture of him in the assembly hall. However, is he aware that St. Clement's high school has had its bid turned down for the third time, even though in 2000 people from the school were invited to No. 10 because it was one of the most improving schools in the country? If he goes to that school, they will probably burn an effigy of him. Will he come up to west Norfolk and visit the two schools in the near future?
    Mr. Timms: I was aware of the rejoicing in King's Lynn, because the hon. Gentleman told me about it. There will be rejoicing in all the nearly 150 schools that gained specialist status in this round. Schools have to go through a very rigorous process to attain specialist status, and many have to apply two, three or more times before succeeding, but the process is a very valuable one in helping them to raise their standards and develop strong plans for future improvement. I think that, on reflection, the hon Gentleman would support that.

    Professional Qualifications (Access)
    Fiona Mactaggart: If she will make a statement on schemes to improve access to professional qualifications in (a) health and (b) education for people working in low-paid jobs in those fields. [31406]
    The Minister for Lifelong Learning (Margaret Hodge): Good progress is being made in both health and education to extend access and opportunity to individuals to gain professional qualifications. We have several initiatives in place and we are developing more. For instance, in the national health service, low-paid staff can receive £150 towards work-related training. In education, we are developing a new qualifications framework; we have foundation degrees in place; and we are funding a range of pilot projects to discover better work-based routes for gaining professional qualifications.
    Fiona Mactaggart: A few days ago, I gave 117 teaching assistants in the Slough education action zone certificates for training courses that they had been on. Many of them would be capable of gaining professional qualifications, including qualified teacher status. What action will my hon. Friend's Department take to help areas such as mine that have a teacher shortage and have some very talented people who lack education qualifications to work in their schools? We need to provide a ladder of qualifications to give us in the end the teachers we so seriously need.
    Margaret Hodge: First, I congratulate those people to whom my hon. Friend gave those certificates. That is the important first step in the progression, perhaps finally towards a career as a teacher. We have a whole range of ladders—I call them climbing frames, because people can

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    go across as well as up—to develop and progress within one's career. The fact that we now have nearly 100,000 teaching assistants working through local education authorities gives those people the opportunity to progress.
    There are many innovative examples that I could share with the House. Let me cite just one: Lancashire LEA has 130 teaching assistants this year who will get their qualifications to become teachers and will work in the primary sector, and it is now seeing how it can extend those opportunities to people in the secondary sector.
    Mr. David Tredinnick: Does the Minister accept that many low-paid workers can supplement their incomes by learning, for example, aromatherapy, which is taught in my constituency, or perhaps herbal medicine, or reiki—channelled energy—which is becoming increasingly popular? Will she ensure that there are joined-up discussions with the Department of Health to ensure that some of those courses get help? Will she remind the Secretary of State that there are 50,000 complementary practitioners in Britain wanting to work in the health service?
    Margaret Hodge: We have frequent discussions with the Department of Health about training opportunities, and we are working closely with that Department to create opportunities through the NHS university, which will develop over time. I share the hon. Gentleman's view that, also over time, we should bring complementary medicines into the health service.

    Overseas Students
    Kevin Brennan: What recent discussions she has had with the university sector about standards in the awarding of degrees by UK universities to students studying overseas; and if she will make a statement. [31407]
    The Secretary of State for Education and Skills (Estelle Morris): My Department has regular discussions with the sector about the standard of UK degrees. For courses delivered overseas, universities should abide by the Quality Assurance Agency's code of practice on the academic management of collaborative programmes.
    Kevin Brennan: Does my right hon. Friend share my concern that there may be a temptation for some universities, in an understandable desire to improve their financial position, to skimp a little on standards for overseas degrees? Does she share my particular concern that the monitoring of standards may not be good enough for some degrees being taught in foreign languages overseas? Will she agree to keep a close eye on the situation and ensure that degrees from British universities are of as high a standard when they are awarded to students overseas as they are in the UK?
    Estelle Morris: I would share my hon. Friend's concern if we did not have the Quality Assurance Agency, which is responsible for monitoring standards. I agree with him that it is essential that standards are monitored, and where there is a franchise arrangement, and the place of learning is some distance from the parent organisation, we will always ensure that standards are maintained. I must say to my hon. Friend that it is right for universities
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    in the UK to offer their courses abroad—that is the nature of the world in which we live—and I am immensely proud of how popular many UK university courses are abroad. I do take my hon. Friend's point, and the work of the QAA is vital for standards.

    Higher Education (Wales)
    Adam Price: What plans she has to implement the National Assembly for Wales's proposals for the restructuring of higher education in Wales. [31408]
    The Minister for Lifelong Learning (Margaret Hodge): Policy on higher education in Wales is a matter for the National Assembly for Wales. I understand that the Minister for Education and Lifelong Learning in the Assembly will shortly make a response to the recent policy review of higher education, in the form of a 10-year strategy for higher education in Wales.
    Adam Price: I thank the Minister for her reply, but I am puzzled by it—and also by the quotation in The Western Mail from the departmental spokesman, who said:
    "There is no possibility at all of any legislation"
    to implement the proposals of the National Assembly's higher education review. That is the most important review of higher education in Wales since the establishment of the university of Wales, and we are constantly told that the knowledge base is vital to the economic future of areas such as Wales, yet the Department also tells us that there is no legislative time for the National Assembly's proposals. Does the Minister not agree that decisions on the future of higher education should be made in Wales, and will she give the Assembly the directive powers over the Higher Education Funding Council for Wales that it has asked for?
    Margaret Hodge: The Minister for Education and Lifelong Learning in Wales has not asked us to extend any powers, because she has not yet responded to the consultation paper that has been under consideration in Wales. If and when she does, and if and when she asks us for additional powers, we will consider the request. I must also point out that almost half of Welsh undergraduates study in English higher education institutions.

    Performance and Innovation Unit
    Mr. Barry Sheerman: What steps she is taking to improve the co-ordination of her Department with the performance and innovation unit. [31409]
    The Secretary of State for Education and Skills (Estelle Morris): Officials and Ministers in our Department are in regular contact with the performance and innovation unit about its current and future work programme. When specific PIU projects relate to departmental policy, both Ministers and officials have close working relationships with the PIU. For example, the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Wentworth (John Healey),

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    who has responsibility for adult skills, was sponsor Minister for the recently published PIU report on adult skills.
    Mr. Sheerman: My right hon. Friend will know that the Select Committee's job is to track the Executive and hold them to account. Can she help us to gain access to more information about what is happening in the PIU and in No. 10 generally, because increasingly we see decisions being made, influence being exercised and policy being formed in places that we have not been able to reach through the traditional Select Committee methods? Can my right hon. Friend help us, even by telling us in detail what education policy groups are meeting and working on those subjects in the PIU and through other avenues in No. 10?
    Estelle Morris: With the greatest respect, if my hon. Friend is having difficulty securing information in his capacity as Chairman of the Education and Skills Committee, that is a matter for him, not for me. My Department has close working relationships with units, organisations and other Departments throughout Whitehall. At the end of the day, we are in the same Government and we follow the same policies, but I should make it absolutely clear that my Ministers and I take decisions on education and skills. Responsibility and accountability rest with us.

    The Solicitor-General was asked—

    Crown Prosecutions (North Yorkshire)
    Miss Anne McIntosh: How many successful Crown prosecutions there were in North Yorkshire between (a) 1 January and 31 December 2000 and (b) 1 January and 31 December 2001. [31435]
    The Solicitor-General(Ms Harriet Harman): In 2000, there were 12,000 cases in North Yorkshire, of which 98 per cent. resulted in convictions, and in 2001 there were 11,000 cases, of which 99 per cent. resulted in convictions. As the hon. Lady knows, some cases do not make it to trial, but North Yorkshire's discontinuance rate is lower than the national average.
    Miss McIntosh: I thank the Solicitor-General for her reply. Will she take this opportunity to join me in congratulating the North Yorkshire Crown Prosecution Service on its excellent recent report? Does she share my concern that the figures that she quoted do not reflect the fact that reported crimes in the year ending March 2001 totalled more than 51,000? There is a large discrepancy between reported crimes and successful prosecutions.
    The Solicitor-General: I am sure that the hon. Lady's congratulations to North Yorkshire's chief crown prosecutor, Rob Turnbull, and his team will be warmly received. They have done a good job, received a good inspectorate report and their figures are good. In particular, they have reduced to 51 the number of days that it takes to bring a young offender to justice.
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    The hon. Lady raises the wider point of what happens before a case reaches the CPS, whether such a case is investigated by the police once reported and whether evidence is sufficient to proceed to prosecution. In North Yorkshire, there is a good, co-operative relationship, which the inspectorate described as better than elsewhere in the country. Co-operation between the CPS and the police has ensured that, if there is proper evidence, cases can be brought. However, it is clear that the Home Office and the Lord Chancellor's Department—indeed, the Government as a whole—are concerned that there should not be crimes for which no offender is brought to justice.
    Mr. John Burnett: Can the Solicitor-General say approximately how frequently such prosecutions were contracted out to solicitors and barristers in private practice in North Yorkshire during that period? Will she tell us—not just in respect of North Yorkshire but, more importantly, generally—how her Department ensures that costs charged to it by solicitors and barristers in private practice are competitive, reasonable and provide good value for public money?
    The Solicitor-General: I do not have the exact figures, either for North Yorkshire or nationally, but I will provide the hon. Gentleman with them. He makes a very important point, but there are certain principles that we want to adhere to. In instructing agents, outside solicitors or barristers, the CPS must be fair to the public purse, but the relationship between the defence and the prosecution must also be fair. We do not want a well resourced prosecution facing down an under-resourced defence, or vice versa.
    Furthermore, I hope that, for positive rather than negative reasons, there will be fewer instructed independent counsel and private solicitors in future. I want CPS staff to act as designated caseworkers, bringing their own cases on the Crown's behalf to the magistrates court, and CPS lawyers to act as High Court advocates, bringing their own cases in the Crown court. The CPS is taking forward that initiative, but, as I said, I shall provide the hon. Gentleman with the detailed figures that he has requested.

    Manslaughter
    Vera Baird: If she will give guidance to the Crown Prosecution Service on charging manslaughter where people have killed partners who have inflicted grave domestic violence on them. [31436]
    The Solicitor-General: I am not planning to give guidance to the CPS on charging manslaughter where people have killed partners who have inflicted grave domestic violence on them. The CPS will always consider the full background circumstances of a case when deciding whether the charge should be murder or manslaughter, including whether the defendant has acted under provocation or with diminished responsibility. I am working closely with the CPS to ensure the vigorous prosecution of domestic violence.
    Vera Baird: Will my right hon. and learned Friend accept that a practical problem follows on from the failure to give that advice to prosecutors as yet? I am obliged for her answer, which reveals that things may

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    change. The problem is that women who kill as a consequence of domestic violence are often acting in self-defence. Although they may appear to use excessive force, it is because the ferocity of an earlier attack has put them in great fear. Of course, that issue must be tried by a jury. Does my right hon. and learned Friend accept that jurors rarely try domestic violence cases in which the charge is murder because judges permit a woman who has killed in the heat of the moment under pressure to plead guilty to provocation manslaughter—a plea that she must take or run the risk of the life sentence that follows murder—
    Mr. Speaker: Order. The question is far too long and, when I stand, the hon. Lady should be seated.
    The Solicitor-General: My hon. Friend raises some important and difficult issues. It is true to say that there is continuous consideration of those issues. We want to get it right and there are no easy answers. As she knows, each case has to be judged on the basis of the individual circumstances. Of course, we want to be sure that prosecutors study all the background to the case and have all the information. In the case that she raises, prevention is better than cure and we do not want domestically violent husbands to be murdered by their wives; we want them to be prosecuted, or we want the violence to be prevented in the first place.

    Civil Service Pension Scheme
    Lynne Jones: If she has made an assessment of the risk of the Government facing legal action under the Human Rights Act 1998 over the civil service pension scheme. [31437]
    The Solicitor-General: I am afraid that I cannot answer my hon. Friend's question without breaching the long-established Attorney-General's convention that neither whether the law officers have advised, nor if they have what the advice was, is revealed outside Government.
    Lynne Jones: I thank my right hon. and learned Friend for that answer. I live in hope, which will probably not be realised, that in the answer to my supplementary question she may shed more light on Government thinking. She will be aware that the majority of private pension schemes extend benefits to unmarried partners, that Members of Parliament have voted to extend benefits to their partners and that, later this year, the civil service
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    pension scheme will change to recognise unmarried partners. In view of those developments, does she agree that the Government are vulnerable to challenge from teachers, doctors, nurses, police officers and members of the armed forces in long-term unmarried partnerships who are denied benefits for their partners?
    The Solicitor-General: My hon. Friend has raised some important matters, but they are policy issues for the Cabinet Office. She then worked her way back to asking me the original question about legal advice, which I cannot answer except to say that, as regards the Human Rights Act, all Departments and Ministers are very concerned that all their actions should comply with the European convention. To the extent that we can, we assist them in doing that. It is not only secrecy that prevents me answering that question; there is a line of accountability which ends with the deciding Ministers and not the advising Ministers. In this respect, the Law Officers are advising Ministers, not decision makers. We are the deciding Ministers on the other issues about which I have been asked and we are fully accountable to the House.
    Mr. William Cash: Is the Solicitor-General prepared to accept some advice from a Conservative Front Bencher on the question of the Human Rights Act, bearing it in mind that I want to be helpful? If there is a problem with the civil service scheme, is she aware that in the recent case of R v. the Secretary of State for the Home Department, ex parte Simms, Lord Hoffmann made it crystal clear that if Parliament chose to do so, it could legislate contrary to the fundamental principles in the European convention on human rights, providing the actions taken by Parliament were clear and unambiguous? The option is there. Will she pass that advice on to Ministers?
    The Solicitor-General: I will draw Ministers' attention to the Hansard containing the hon. Gentleman's comments, but in an ingenious and, as we would expect, complicated way he has asked the same question as was asked earlier on what our legal advice is. He has given me his advice, for which I thank him, and hon. Members and Ministers will read it.[Interruption.] As the Under—Secretary of State for the Home Department, my hon. Friend the Member for Wallasey (Angela Eagle), points out, he has given it for free, which is welcome, but I cannot answer that point. I cannot engage in a discussion about the Human Rights Act's application to this particular point of policy. He will have to get one of his colleagues to ask the Minister with policy responsibility at the Cabinet Office.

Nationality, Immigration and Asylum
12.31 pm
The Secretary of State for the Home Department(Mr. David Blunkett): With permission, Mr. Speaker I wish to make a statement on nationality, immigration and asylum.
Last October I informed the House of the new strategic direction for that crucial area. Today I am publishing a White Paper to be followed by legislation in this Session.
Significant progress has already been made. The first induction centre was opened on 22 January in Dover. Registration cards were launched last week and are now being issued to new asylum seekers. We have launched the highly skilled migrant programme. New border security controls are in place, following my announcement on 19 September. As of last week, asylum seekers are no longer being held in prison. I confirm that vouchers will be replaced by cash by the autumn, together with action against fraud and the development of a more robust, faster and efficient system.
The White Paper takes forward our agenda by offering an holistic and comprehensive approach to nationality, managed immigration and asylum that recognises the inter-relationship of each element in the system. No longer will we treat asylum seekers in isolation or fail to recognise that there must be alterative routes to entry into this country.
Our policies must command trust, confidence and respect from the wider community. The British people demand coherence in policy and efficiency in administration.
Our starting point has been the development of a sense of belonging and community. Confidence in our identity and citizenship allows us to welcome those who come to the UK as refugees or legal migrants more readily.
I confirm that, to give new meaning and value to the acquisition of British nationality, we will introduce a number of key reforms: there will be new light-touch arrangements to ensure that those who take on nationality have the language skills and basic knowledge of our society that are needed to contribute fully; there will be ceremonies at which the confirmation of citizenship can be celebrated; and we will modernise the oath of allegiance to provide new wording to make clear the fundamental rights and duties of citizenship. That will be a citizenship pledge.
The White Paper sets out the routes by which men and women can work legitimately in this country. In today's global economy, that is crucial both to our competitiveness and prosperity.
My new proposals include the development of routes for seasonal or short-term casual working; consultation on reform to the working holidaymakers scheme to make it less restrictive; and enabling students graduating in the UK to switch into the work permit scheme.
This White Paper sets out an end-to-end revision of the asylum system. The new process will track and support asylum seekers from induction, through reporting and accommodation, to removal or integration.
Work has started on the new trial accommodation centres which will be mandatory for those designated asylum seekers who are claiming public support. The
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centres will offer education, health care and legal and interpreting services. Opportunities for volunteering and other purposeful activities will also be available, as will appropriate language support.
For those refused asylum, secure removal centres will enable us to protect the integrity of the system through early removal. [HON. MEMBERS: "Hear, hear."] It is nice to have the support of the Opposition in such large numbers. I hope that the consensus continues.
Without an agreed and legitimate route for asylum seekers to enter this country, it has been inevitable that men and women desperate to seek refuge would put their lives at risk. That is why I am announcing today that we will set up the new gateway for those seeking to settle in Britain. This will be operated under the auspices of the United Nations High Commissioner for Refugees. Legitimate refugees who come via this gateway will no longer have to attempt a hazardous journey across the channel. This will be a major step in regularising legitimate entry alongside our managed economic migration programme.
In addition, to secure a robust foundation on which we can build, I intend to undertake a full comprehensive audit of existing asylum claimants. Longstanding cases will receive urgent attention.
The White Paper also sets out substantial changes to the whole asylum appeals process. Far too many appeals and judicial reviews are designed to delay and frustrate. I am therefore announcing today that we will simplify the one-stop appeals process; set closure dates for appeal hearings to stop multiple adjournments; and make the Immigration Appeal Tribunal a superior court of record.
In addition, we will increase the capacity of the adjudication system by 50 per cent., to a total of 6,000 a month, during the course of this year; and we will expand the number of removal places to 4,000.
I can also confirm that I intend to close Campsfield House. This outdated centre is no longer appropriate in the 21st century. These places will be transferred to the new high-standard removal centres.
My reforms will protect fundamental rights, stop abuse of the system, and enable more effective administration and processing of claims. Those working in the Immigration and Nationality Directorate will be able to do their job more effectively, and I expect both greater productivity and efficiency.
Let us be in no doubt. We need to reduce the pull factor by clamping down on both clandestine entry and illegal working.
The Proceeds of Crime Bill will ensure that we can seize the assets of criminals involved in smuggling and trafficking people. In addition, the maximum penalty for those facilitating illegal entry will be raised to 14 years.
I can also announce that we will legislate to tackle trafficking for the purposes of sexual exploitation. That will be a stepping stone to more wide-ranging legislation dealing with sexual exploitation. In addition, together with our European and international partners, we will introduce tougher border controls and step up action.
A high-level steering group of business and trade union leaders will be established to take forward proposals to tackle illegal working; and, as I announced on Tuesday, we intend to launch a consultation on entitlement cards to be published in the spring or early summer. I want to

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avoid misunderstanding should such a card be agreed, failure to carry it would not be a criminal offence. That should allay fears as regards stop and search.
Alongside those measures, we will act against the worrying practice of fraudulent marriages. We will increase the probationary period from one to two years; consult on a new non-switching provision to prevent people from applying to remain in the United Kingdom on the basis of marriage, after entering through a different category; and encourage communities with a culture of arranged marriages to look to those already resident in the United Kingdom.
Finally, I know that the rules on family visitor visas have been a cause of great concern to hon. Members. I have an open mind on how best to improve the system—not least for those seeking urgent entry on occasions such as bereavement. The Government would thus welcome ideas on how best to provide guarantees or bonds. That might be undertaken not simply by individuals or families, but by the provision of a community bond. I realise that we have to get that right, so I encourage positive suggestions on the best way to proceed.
Our future social cohesion, economic prosperity and integrity depend on how well we rise to the global challenge of mass migration, communication and flight from persecution. We have a history of trade and migration that has brought us wealth and prosperity over the centuries.
Nevertheless, building trust and confidence to secure the support of the British people is essential. By doing that, we can create a country that is open to skills and enterprise, but not to exploitation. This is a Britain with a balanced approach to nationality and migration—a country of which all of us can be proud.
Mr. Oliver Letwin: I thank the Home Secretary for his usual courtesy in letting us see the statement and the White Paper in advance.
Some months ago, when the Home Secretary first made a statement about his proposals for changing the UK's asylum arrangements, I responded that the aim of the Conservative party—like that of the Government—is to see the establishment of an asylum system that is humane, effective and fair; that rapidly provides a safe home for the innocent victims of persecution; and that, at the same time, prevents the asylum system being misused as a means of evading our immigration rules. I have since reiterated that position, and I re-state it today. We welcome unreservedly the fact that the Home Secretary is genuinely trying to make those joint aims a reality.
May I gently urge that, in future, when the Home Secretary has such interesting and important proposals, he restrain himself—if that is humanly possible—from using partial leaks of his White Papers to the media as a way of announcing the proposals? I recognise the temptation, but the interests of rational debate in this country will be best served in the long run if we are all able to discuss the full statement that we have all heard on the basis of a White Paper that at least some of us have had the opportunity to read.
When the Home Secretary made his initial statement, many questions were necessarily left unanswered. Some of them have been answered in the White Paper. We welcome the increase in the capacity of the adjudication system, the new UNHCR gateway—a
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massive improvement—and the news in the White Paper that there will be health care and interpretation facilities in the accommodation centres.
At least at a first reading, however, some of the questions remain unanswered. It is not clear in the White Paper whether the accommodation centres will, in practice, normally provide legal assistance on site, still less whether decision makers and adjudicators will be available on the spot. We remain uncertain whether the residence requirement set out in paragraph 4.37 of the White Paper will really be enforceable on the basis of entitlement to benefits, given the fact that many asylum seekers do not take up benefits in any case. Will the Home Secretary undertake to let us have those critical details by the time that we come to debate the Bill?
In the months since the initial statement, we—like the Home Secretary and his ministerial team—have had time to reflect on the causes of the shambles that he has gallantly admitted to having inherited from his predecessor, the current Foreign Secretary.
As the Home Secretary will recognise from our recent debates, we are persuaded that a significant part of the problem faced by hard-working officials arises from the sheer weight of numbers, which is in part generated by the disproportion between the share of the burden borne by the UK and the share of the burden borne by France.
I hope that the Home Secretary will take this further opportunity to state a commitment to achieving the closure of Sangatte; a renegotiated bilateral agreement with France when that becomes possible—to take the right hon. Gentleman's point—after the French elections; and in due course, as he says in the White Paper, the replacement of the Dublin convention with some meaningful and effective arrangement for distributing the burden fairly around the EU and other European countries. Will the Home Secretary accept that, in the absence of such changes on the international front, it is highly unlikely that he will achieve the fulfilment of his, and of our, ambitions?
Mr. Dennis Skinner: He's the Home Secretary's puppy.
Mr. Letwin: The hon. Gentleman chunters happily that I am the Home Secretary's puppet. That is presumably because he cannot understand the possibility that, as a matter of fact, there could be agreement about sensible measures and constructive opposition.
Turning from asylum to the related issue of economic migration, we note with interest the more detailed proposals, contained in the White Paper, to increase the rate of permitted economic migration. We join the Home Secretary, I hesitate to tell the hon. Member for Bolsover (Mr. Skinner), in believing that, in a crowded island, there are environmental and social reasons for limiting the rate of immigration, but we join the Home Secretary also in the acknowledgment that the British economy and British society have much to gain from a controlled inflow of talented and energetic people who seek to better their circumstances by setting to work and engaging as entrepreneurs in our society. We strongly welcome the Home Secretary's moves towards ensuring that all those entering the country as migrants should be proficient in English and should acquire an early understanding of our constitutional arrangements.

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We will look carefully and constructively at the details of the proposals put forward in the White Paper for the amendment of the immigration rules, and we anticipate an interesting and fruitful debate when the Bill comes before the House.
Although no one can doubt the work that has gone into the White Paper, will the Home Secretary agree that the proposals, both on asylum and on immigration, will ultimately be judged not by the nobility of the aspirations that they undoubtedly represent, but by their effectiveness in practice?
Can the Home Secretary tell us what targets and criteria he will now establish to enable the House to hold him to account two or three years hence? What does he expect then to be the speed with which asylum claims are processed? What does he regard as the then tolerable backlog? With what speed does he expect removals, where those are necessary, then to occur?
If the Home Secretary is willing to address the remaining practical questions relating to his measures, and if he is willing to state clearly what results his measures are designed to achieve, I believe that he will have the backing of the whole House in seeking to bring order out of his predecessor's chaos.
Mr. Skinner: Come on David, stroke him!
Mr. Blunkett: I will do my own stroking in my own time.
I warmly welcome the approach of the hon. Member for West Dorset (Mr. Letwin) on behalf of the official Opposition. I do hope that, despite continuing disagreements about particular detail, this will herald a new beginning in this country of not using asylum as a political football and not enabling the National Front and the British National party to make mischief with it. We all seek, and I accept that the hon. Gentleman seeks, to find solutions that balance the needs of this country and those who seek asylum and those of the British people and the confidence and security that they demand.
I take the little rap across the knuckles about what may or may not have emerged. I heard the hon. Gentleman—albeit for 20 seconds—on the "Today" programme this morning, so he was quite willing to respond, and I read with interest his Daily Express article before he came to the House on Monday, so we are all a little guilty of wanting to ensure the widest possible debate.
Yes, legal advice will be available in the accommodation centres. Yes, we will seek to provide a coherent way in which the adjudication process can be organised around the centres, which will speed the operation, cut the enormous cost of travel and the dislocation that occurs when appeals are cancelled by the Immigration Appellate Authority, not simply by the lawyers who represent those appellants. We will link the reporting centres—often mobile reporting centres—across the country, so that we can track and know where people live and where they are. In fact, entitlement to the new cash benefit will be dependent on them adhering to those facilities.
The hon. Gentleman referred to the shambles. The shambles was inherited by my predecessor in May 1997—the shambles of the Siemens contract, which did not work
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badly; it did not work at all. There was the failure to introduce computerised fingerprinting, which we dealt with at the end of October, and the failure to have a system that balanced nationality and immigration with asylum. I pay tribute again to the work done by my predecessor and by the then Minister of State with responsibility for immigration, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), who worked very hard, including on developing the concept of economic migration.
Let us examine the international position and France. We talked about that on Monday, and the hon. Gentleman raises the issue again today. I explain, once again, that tolerated illegal presence in France is undoubtedly a problem. I cannot deal with that problem bilaterally in the months ahead, but the development of Dublin II in the European Union must address and overcome that problem. If we can do that alongside international moves in relation to border controls and while tackling head on, through economic development, the causes of economic migration and persecution in the source region—my right hon. Friend the Secretary of State for International Development is doing just that with the Chancellor—and by overcoming unacceptable regimes, as we have done in Afghanistan, we will reduce the flow of those who seek a better or safer life in other parts of the globe.
Finally, we welcome economic migration, but it will need to be controlled, and we will be able to achieve that more readily through the new routes that have been explained today. The hon. Gentleman asked me about a judgment of my performance and, by implication, that of those who work for and on behalf of the Home Office. I will, of course, hold them to account, and I will be held to account by Parliament. I shall set out in the Bill the way in which we will have legislative dates for implementation. Of course, I will have to negotiate further resources with my right hon. Friend the Chancellor, and therefore targets, such as those in the spending review this summer, will be determined at that date. But I am painfully aware that, if I am still in the job in three years' time, it will be me and no one else who will have to answer for the competence, effectiveness and activity of the service.
Several hon. Members rose—
Mr. Speaker: Order. The House will know that I have to protect the business of the House, so I appeal to hon. Members that, when they question the Home Secretary, they should ask one question, and one question alone.
Mr. Tam Dalyell: May I ask the Home Secretary about language restrictions on older people? Home Office records will show that Dr. Louis Pirouet of the Refugee Council, the late Dr. Max Perutz, who died yesterday, and I went to see Home Office officials on that very point. Will my right hon. Friend reflect on the restrictions that might be imposed on those who are genuine refugees but who are too old to start learning a language?
Mr. Blunkett: I hope that I can put my hon. Friend's mind at rest by stressing that we are talking about people who are seeking naturalisation—citizenship. Although, as I stressed on Radio 5, it is important not to exclude spouses or older women from language tuition, which has

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been the case because such tuition is currently not free for spouses, I accept my hon. Friend's point and will reflect on it as it relates to naturalisation. There is no problem with those seeking refugee status and wishing to remain here.
Simon Hughes: On behalf of the Liberal Democrats, I, too, welcome the White Paper and intend to make a constructive, and I hope positive, response. An holistic attitude to the interlinked issues will give us a better chance of getting things right this time compared with the hash made by Governments in the past nine years, once under a Labour Administration and twice under the Conservatives. I look forward to working on the details so that we get them right in the consultation period before legislation is introduced.
On citizenship, we welcome a preparation process, a pledge and a ceremony of citizenship. Will the Home Secretary confirm that he is open to proper and full consultation so that we get those right and obtain the agreement of the maximum the number of people to those steps in the process?
On asylum seekers, what are the implications in the White Paper for the number of people who will be in accommodation or induction centres, and how does that compare with those who will remain in dispersal programmes? What will the Home Secretary do to ensure that we get the decisions right in the first place so that they are not turned down on technical, as opposed to substantive, reasons, as is often the case? Are we going to reduce the huge number of people in detention to about the European Union average? Will those in detention have a right to apply for bail? Presumably judicial review will remain even though the system has changed. Will significant extra resources be available and will a target on the backlog be set?
Finally, in relation to migrants and asylum seekers, the Home Secretary will know that we greatly welcome the existence of legitimate routes from outside the country. Does he have a timetable according to which those are likely to be in place and any idea of the numbers? Will everyone in that position be given advice and support so that they can consider properly whether they will be accepted as asylum seekers rather than as economic migrants before they make an application for one or the other?
Mr. Blunkett: In view of your strictures, Mr. Speaker, and not because I cannot remember the questions, I shall write to the hon. Gentleman. On the hon. Gentleman's most salient questions, let me say this. Everyone who is interested in the development of citizenship and language must be fully consulted; bail will continue to be available; and no restrictions will exist other than those that I set out in the White Paper in relation to judicial review. At this stage, we are not setting a target figure for the gateway. We need to ensure that we build up from what will inevitably be a low base.
Dr. Phyllis Starkey: I welcome the reconsideration of financial bonds for visitors, as will my constituents.
On the health care of people who enter the country, especially from those regions with poor immunisation records, I note that the accommodation centres will
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provide health care. What steps is the Home Secretary taking to deal with those who do not require public support and who will not, therefore, go through accommodation centres? What interim measures does he plan to introduce to encourage people to contact primary care authorities now for immunisation?
Mr. Blunkett: I am grateful to my hon. Friend for her question. All people who come from outside the country and claim asylum will have to appear at, and work through, the new induction centres. As we build those up rapidly during the course of the year, we will undertake health checks and carry out immunisation if appropriate.
Mr. Andrew Lansley: The White Paper makes it clear that the Government continue to regard Oakington immigration reception centre in my constituency as a key element of the processing of asylum applications, yet the Home Secretary will have known since October that Oakington is to be the site of a new settlement of housing development and must therefore close by 2004. Why does the White Paper make no reference to what is intended to be a centre for fast-track applications for asylum? What is to happen to the Oakington centre? If the service is to be relocated elsewhere, why cannot that be done more quickly, to one of the accommodation centres that are to be established?
Mr. Blunkett: The programme of 3,000 places in accommodation centres—to answer a previous question—which must be trialled initially is separate from the matter to be judged in the Lords in the spring, which is the challenge to the operation of Oakington. I understand the hon. Gentleman's concerns, but I have two years in which to relocate Oakington, whereas I have three months in which to win the case on the operation of the principle.
Mr. Terry Rooney: I welcome much of what my right hon. Friend the Home Secretary has said this afternoon. I shall respond to his invitation regarding the family visitor process. Will he say anything today about the review of the fees for appeals in respect of family visitor applications?
Mr. Blunkett: Those fees have been a cause of concern to many hon. Members, including my hon. Friend. I am aware that the review indicates that they cause not only administrative inconvenience, but considerable distress to those involved. I am therefore minded to abolish them.
Mr. David Cameron: I welcome what the Home Secretary has said today, especially about asylum seekers no longer being kept in prison and his announcement about Campsfield House. Will he say a little more about the accommodation centres and how they will link with induction centres and removal centres? What is to be secure and what is not?
Mr. Blunkett: Those seeking asylum will spend a short spell in induction centres. That will gradually reduce dispersals to bed and breakfast and other accommodation of that sort, which will alleviate pressure on local communities at those sites. Accommodation centres are the next stage—they must first be trialled, of course—of the full provision that I described in my statement. They will be open centres: people will be free to come and go,

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provided they are present in the evening and are registered and people know what is happening. Removal centres will bite only when people have been refused leave to remain and have gone through the appeals process. They will enable us to operate the removals process much more effectively. Expanding the number of places to 4,000 will enable us to manage the process sensibly. In the removal centres, security will be paramount.
Mr. Chris Mullin: Much that is in the White Paper will be welcome, especially the news that asylum seekers will no longer be held in prison and that the hated voucher scheme is on the way out. No reasonable person will object to the notion that citizenship brings with it responsibilities as well as rights. As regards the deportation of failed asylum seekers, especially when children are involved, has my right hon. Friend considered introducing a modest resettlement grant, so that we do not dump destitute families with children at airports on the other side of the world?
Mr. Blunkett: I am very sympathetic to ensuring that we get that right. One of the reasons why removal has, throughout the ages and for Governments of all persuasions in other countries, been so difficult is that often the family has been in the country for a considerable period. Working with the International Organisation for Migration and others to get the process right makes sense in terms of both voluntary resettlement and returns, and those removed through removal centres. I promise my hon. Friend that we shall examine this closely, and that the Department for International Development will be involved.
Mr. Christopher Chope: Does the Home Secretary accept that a weakness of the White Paper is its failure to address the removal of failed asylum seekers? Even under his proposals, we are talking about fewer than one in three failed asylum seekers being returned. Why does he not go for 100 per cent. of failed asylum seekers being sent back to where they came from?
Mr. Blunkett: Why does the hon. Gentleman remind me of Alan B'stard's friend Piers? He did yesterday, and he does again today.
There is a really sensitive and important issue: how do we accelerate the removal of those who are already here and have gone through the system, as opposed to how we operate the new system, whereby people will be placed in removal centres and it will be possible to remove 100 per cent. of those who have gone through the new process? The sensitivities concern the fact that we do not wish to tear neighbourhoods, communities and different ethnic cultures apart in the process. Otherwise, we could send the police out en masse, collect people, stick them on planes and send them away; there has to be a balance. If I can get 100 per cent. of those who should not be here through the new system and out of the country, I will, but I would welcome a bit more sensitivity and help from people such as the hon. Gentleman.
Mr. Neil Gerrard: I welcome what my right hon. Friend said about providing a gateway for asylum seekers to make applications from other countries
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under the auspices of the United Nations High Commissioner for Refugees. Does he agree, however, that people will still make applications in this country, having arrived here by other means, or because the circumstances in their country of origin have changed? Does he accept that under the United Nations convention on refugees—the foundation of international law on asylum—we cannot simply regard those people as illegitimate applicants and those who come through the gateway as legitimate applicants?
Mr. Blunkett: First, we will accept asylum claims from those who present themselves and prove that they have a legitimate case, whether or not they have come through the gateway. Indeed, under the convention, we have an obligation to do so, which we will fulfil.
We must consider putting a time limit on older cases—those before 2 October 2000—in which, having tried to get asylum, people then make a claim based on human rights. If we can get that right, we can try to make sense of a system that is otherwise disabled by people taking one route but then switching to another.
Miss Julie Kirkbride: I particularly welcome many of the compassionate proposals that the Home Secretary outlined to the House. Will he give more details on the way in which he intends to stop the exploitation of children brought into the country for the sex trade, and tackle the disgrace of young British Asian women being forced into arranged marriages against their will?
Mr. Blunkett: So that there is no misunderstanding, let us be clear about the difference between forced marriages and arranged marriages, which are agreed. Forced marriages are utterly unacceptable; the communities that operate arranged marriages are clear about that, and I pay tribute to community leaders who have taken action to make the tradition more secure.
We must address the need to increase the penalties and take much more decisive action when children are checked as they come into the country—highlighted, of course, by the tragic Climbié case—not simply under immigration and asylum legislation, but under the sexual offences issues that I shall introduce in the next parliamentary Session as part of the reform of the legal and criminal justice system.
Fiona Mactaggart: I welcome above all the Home Secretary's determination to bring more efficiency to the administration of the system; without efficiency, there will not be fairness. He referred to marriages and the no-switching rule, where there is obvious conflict between efficiency and fairness. People who are in the country as students or visitors and get married here often do not return home to apply for permission to enter as a spouse because of long queues in their countries of origin; the delay in getting here may mean that they do not witness the birth of their child or that their family cannot be financed here. In his review of the process, will my right hon. Friend take all those factors into account to ensure that people in genuine marriages can look after their spouses in Britain?
Mr. Blunkett: Yes. I will examine in detail the issues raised. Perhaps I ought to have made it clear, although in

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a statement one must be concise, that we are referring to those who enter on visitor and other visas under six months, and who do so knowing that they intend to switch. It is unfair on those who are using the system legitimately; it slows down the system for them. That is why we need to examine the matter urgently.
Hywel Williams: May I say on behalf of Plaid Cymru and the Scottish national party that there is much in the White Paper for us to study? We in Plaid Cymru and the SNP will look with interest at the short statement of what it means to be British on page 34. That might be useful. I refer the Home Secretary to the answer that he gave me on Monday regarding language. What consideration has been given to the implications for the use of language as an occupational qualification in some circumstances?
Mr. Blunkett: I promise the hon. Gentleman that there is no question of being Welsh and not being British or, as I said on Monday, of the Welsh language not being included—or Gaelic, Mr. Speaker. I need to get this right. I shall simply duck the last part of the question, which is designed to embroil me with the Assembly as regards the necessity of the Welsh language in some jobs and some professions. I have enough on my plate today.
Mr. Iain Coleman: Given that previous ministerial statements indicated that the anticipated average time in an attendance centre could be up to six months, and given that a number of individuals and organisations, including the chief executive of the Children's Society, have expressed grave concern about children being taken out of or not being in mainstream education for such a long period, will my right hon. Friend reassure us that the complex and diverse needs of the children of asylum seekers will be met, and give us some details of the likely arrangements for that?
Mr. Blunkett: I will happily write to my hon. Friend, and I will place the letter in the Library so that hon. Members can see the substantive answer. Clearly, on the top of one question, I cannot answer all that. I should make it clear that there is a big difference between what happens in the accommodation centres and the time spent in removal centres. Accommodation centres are an alternative to the haphazard dispersal of youngsters, often into unsatisfactory accommodation, and often not getting them into school quickly. The provision of education—tailored, I hope, to particular regional languages—will be a gain, not a detriment to the well-being of those children. In any case, the entire operation that I spelled out today—the seamless approach from induction through to integration or removal—is designed to speed up the process. God forbid that anyone should be in an accommodation centre for six months. The process needs to be speeded up. If we can get that right, my hon. Friend's fears will be overcome.
Mr. Andrew MacKay: The Home Secretary will have noted that much of his statement was warmly received on the Conservative Benches. Is he completely satisfied with the security arrangements at the various French ports of exit, and does he feel that it would be useful to persuade our French friends to have more British personnel involved?
Mr. Blunkett: I am glad to say that the French welcomed the additional immigration officers and security
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at Coquelles. As I spelled out on Monday, I cannot guarantee that security is 100 per cent., but over the past six months there have been enormous improvements at the rail freight terminal and at ports. The reduction from 808 people in July to 32 in December coming through clandestinely is an indication of the progress that has been made.
Jeremy Corbyn: Will the Home Secretary say a bit more about the accommodation centres—where they will be situated, how much it will cost to run them and what element of compulsion there will be for the people inside them? Will his prediction that people will spend no more than six months in these centres be enshrined in regulation, or is there a danger that the centres will become long-term ghettos where asylum seekers are stuck while the system is incapable of dealing effectively and efficiently with their applications?
Mr. Blunkett: Asylum seekers will not be any more stuck—to use my hon. Friend's phraseology—than they are at the moment in terms of the accommodation that they have been assigned under the asylum support system. I cannot give a guarantee that a requirement will be built into law that nobody should be in the centres for more than six months. I can only endeavour to change completely the efficiency and administration of the system, so that no one, whether they are in an accommodation centre or in existing dispersal, finds themselves waiting for an inordinate and unacceptable time. I can assure him that the intention is to provide help and support. People will not be held or restricted in accommodation centres. They will not be imprisoned or confined, but they will be expected—as will the reporting centres—to ensure that we know where they are. If they are claiming support, they must be given an option in respect of whether to get support in an accommodation centre. We cannot compel people to take accommodation, food, board, lodging, education and health care, but we can offer them those things if support is what they seek.
Mr. Peter Luff: May I invite the Home Secretary to apply the same decent, democratic and compassionate values that he showed in his statement to the proposal to site one of the asylum and accommodation centres at a remote, rural location in my constituency—Throckmorton airfield? Does he think that it is right that the Government should assert Crown immunity and introduce urgent provisions to override the democratic planning process, which has already ruled out on environmental grounds any development on the land? Does he think that it is right to locate asylum seekers, as he intends to do, immediately between the county's only landfill site and the burial site of 130,000 foot and mouth-diseased carcases? What message does that decision risk sending about the Government's attitude to asylum seekers?
Mr. Blunkett: I welcome the hon. Gentleman's undoubted concern for the well-being of the asylum community. Of course, I shall bear it in mind, but let me make it clear that we have made no decision on the sites. We have initially identified eight, one of which is already deemed unsuitable. We have a competitive exercise that has to include the normal contracting, tendering and advertising process to see whether the voluntary and

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private sectors would like to propose other sites. From all those sites, we will initially select four for consultation. My noble Friend Lord Rooker contacted the hon. Members in whose constituencies these initial centres are proposed in order to ensure that no secrecy or underhand activity was involved. We will do the same when additional sites have been identified. We will then work through those that are unacceptable because of factors that make it unhealthy or undesirable for the centres to be placed there.
Mrs. Ann Cryer: I thank my right hon. Friend for his statement. I think that I agreed with just about every word in it—an unusual situation for me.
Does my right hon. Friend agree that, in respect of Islam, it is clear that when parents are arranging a marriage for their children, the main prerequisite is compatibility? Will not that compatibility be much more easily achieved if parents arrange marriages within the UK community of Muslims who are originally from the Asian subcontinent, rather than by going to the subcontinent to bring back young husbands and wives? That would help with many of the aims that he is trying to achieve in his White Paper, as many of them are better achieved from within the Asian community. It would certainly help the many young women who, I am afraid, visit my office in need of help because of the breakdown of traditional arranged marriages that have gone very wrong.
Mr. Blunkett: I am grateful to my hon. Friend for her sensitivity and forthrightness in representing her constituents and in raising the issue of equality. I want to make it clear that we are not seeking to impose anything on the communities with regard to these issues. We are simply raising an issue that many people in communities in which arranged marriages are part of the culture wish to have addressed, and wish to have articulated in this, their and our Parliament.
Dr. Evan Harris: The Home Secretary will be aware that, between 1997 and 2001, in the light of two critical reports by successive chief inspectors of prisons, his Department was urged to close Campsfield House. Every year, however, the Department said no, and that Campsfield House was fit
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for the 20th and 21st centuries. Today, the Home Secretary has suddenly decided that it is not fit for the 21st century, which is welcome. Does he not think it unfit because it is too small to accommodate the large numbers of people he wishes to detain, including those who are not due for removal and, for the first time, families, who—according to the White Paper—are now liable for detention, even when they are not due for removal? Is it not time for a radical review of the Government's detention regime, to stop people who have been persecuted, and who are later granted asylum, being detained for months in unsuitable detention centres?
Mr. Blunkett: First, I am setting up accommodation centres. Only when someone has failed to establish their right to remain through the appeals process am I using secure removal centres. Secondly, I am sorry that the hon. Gentleman was so churlish. If I was closing Campsfield House only because it was not big enough, I would have waited to close it—and to announce the closure—until the accommodation and removal numbers were up to an acceptable level. I have not done that, because I believe—and the hon. Gentleman appears to agree—that Campsfield is unsuitable. I would have welcomed a little more warmth from him.
Shona McIsaac: As a site in my constituency is being considered for an accommodation centre, I have tried to reassure local residents that they will be consulted fully about the proposals, should South Killingholme be selected. Will my right hon. Friend reassure those residents that they will be involved in the consultation process? Will he similarly reassure the three parish councils and the unitary authority affected?
Mr. Blunkett: Yes, I can give my hon. Friend that assurance. It is important that people understand what is on offer, so that they do not badly misunderstand what is to take place. It is also important, when establishing such centres, that people genuinely feel that they have a contribution to make, not least because the centres will provide substantial opportunities for jobs for local people.
Several hon. Members rose—
Mr. Speaker: Order. We now come to the business statement and I must advise Back Benchers once again that one question to the Leader of the House is sufficient.

Business of the House
1.22 pm
The President of the Council and Leader of the House of Commons (Mr. Robin Cook): The business for next week will be as follows:
MONDAY 11 FEBRUARY—Remaining stages of the Land Registration Bill [Lords].
TUESDAY 12 FEBRUARY—Remaining stages of the Employment Bill.
WEDNESDAY 13 FEBRUARY—Debate on the appointment of the Parliamentary Commissioner for Standards.
Remaining stages of the British Overseas Territories Bill [Lords].
THURSDAY 14 FEBRUARY—Debate on defence policy on a motion for the Adjournment of the House.
FRIDAY 15 FEBRUARY—The House will not be sitting.
The provisional business for the week following the constituency week will be:
MONDAY 25 FEBRUARY—Progress on remaining stages of the Proceeds of Crime Bill.
TUESDAY 26 FEBRUARY—Conclusion of remaining stages of the Proceeds of Crime Bill.
WEDNESDAY 27 FEBRUARY—Opposition Day [11th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
THURSDAY 28 FEBRUARY—Debate on Welsh Affairs on a motion for the Adjournment of the House.
FRIDAY 1 MARCH—Debate on the achievements of the national lottery on a motion for the Adjournment of the House.
I should also like to inform the House that the business in Westminster Hall before Easter will be:
THURSDAY 28 FEBRUARY—Debate on the report from the International Development Committee on the humanitarian crisis in Afghanistan and the surrounding region.
THURSDAY 7 MARCH—Debate on increasing access to heritage attractions.
THURSDAY 14 MARCH—Debate on Government policy on health and safety at work.
THURSDAY 21 MARCH—Debate on the report from the Public Administration Committee on ministerial accountability and parliamentary questions.
The House will be aware that London Underground will make an announcement this afternoon on the value-for-money review of the public-private partnership plans for the tube. I am pleased to inform the House that, with the permission of Mr. Speaker, the Secretary of State for Transport, Local Government and the Regions will make a statement at the close of Third Reading of the Tax Credits Bill at 7 pm today.
Mr. Eric Forth: I thank the Leader of the House for his statement. You have told the House more than once recently, Mr. Speaker. that you deprecate Ministers' habit of making announcements outside the House before making them here, especially, if I may say so, on something as important as a White Paper.
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However, this morning's edition of The Sun includes the headline:
"Sun Exclusive. Immigrants Must Pass English Test. Lessons in how to be British."
Indeed, the Home Secretary seemed to take pride in the fact that he appeared on Radio 4 this morning, telling us most of the contents of his White Paper. When will Ministers end their persistent practice of appearing on the media to make announcements before coming to the House to do so?
In connection with what the Leader of the House has just told us about the odd device of a statement at 7 o'clock this evening on the important matter of the London tube, word has reached me, though I can scarce believe it is true, that there will be a press briefing this afternoon, probably arranged by Jo Moore on behalf of the Secretary of State for Transport, Local Government and the Regions.
I hope that the Leader of the House will assure us that there will be no such press briefing this afternoon on a matter that will be announced to the House by the Secretary of State this evening. If, for any reason, the Leader of the House cannot give us that assurance, I hope that he will be able to make his peace with you, Mr. Speaker. It appears that Ministers are persistently Clouting what you have made absolutely clear—statements must be made here before they are made anywhere else.
I draw the Leader of the House's attention to early-day motion 821, on the conduct of the right hon. Member for Blackburn (Mr. Straw).
[That this House is concerned by the exchange between the hon. Member for Liverpool, Riverside and the Foreign Secretary (5th February, Official Report, columns 745–6) about Gibraltar, in which the Foreign Secretary told his honourable Friend that she had asked him a "disobliging question" and that "she should not judge the Government by her own standards"; believes that Back Bench honourable Members have the right to ask searching questions of Ministers without being subjected to insult or innuendo; and calls upon the Foreign Secretary to clarify his remarks forthwith or to withdraw them]
You will recall, Mr. Speaker, that on 5 February, just a couple of days ago, the hon. Member for Liverpool, Riverside (Mrs. Ellman) asked the Foreign Secretary to
"tell us what unpleasant circumstances and trick question he is preparing for the referendum?"
The Foreign Secretary, a very senior member of the Government, replied:
"My hon. Friend asks me a disobliging question. She should not judge the Government by her own standards."—[Official Report, 5 February 2002; Vol. 379, c. 745–46.]
What protection do you believe you can give Labour Back Benchers against their Secretaries of State? It seems that relations in the Labour party have reached such a state that the Opposition must table early-day motions to try to protect Labour Members from Ministers. I hope that the Leader of the House will give us some idea of when he will give hon. Members his assurances on what he proposes to do to protect his own colleagues.
You know, Mr. Speaker, that the House has been joining in this week's celebrations of Her Majesty's jubilee. She is a septuagenarian who has been in office for 50 years, but the House may not know that, next

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Monday, we will have our own septuagenarian, who will have been in office for 30 years. I refer, of course, to the hon. Member for Bolsover (Mr. Skinner).
I hope that the Leader of the House will approach the appropriate authorities, perhaps through you, Mr. Speaker, to see whether we can arrange a street party for the hon. Gentleman to celebrate the fact that he has shown sufficient flexibility not to retire at 65. I hope that the House will join me in wishing him a happy joint jubilee with Her Majesty.
Mr. Cook: I am very happy to join the right hon. Gentleman in congratulating my hon. Friend. I am available to attend any street party that he thinks may be appropriate. Whether my hon. Friend will invite Her Majesty, I will leave to him—I am not entirely sure that she will be on the guest list.
The statement about English being required for British citizenship was made last October, not in The Sun this morning. I listened with care to my right hon. Friend the Home Secretary on the "Today" programme and again this afternoon. There is a breadth of policy statements in the White Paper that was totally untouched in the "Today" interview.
The shadow Home Secretary said at the Dispatch Box that he would only gently rebuke my right hon. Friend for appearing on the "Today" programme.
Mr. Forth: That is not what I said.
Mr. Cook: I fully understand that there is a gulf between the right hon. Gentleman and the shadow Home Secretary both in personality and in policy, but it may just be that the latter was only gentle in his criticism because he, too, appeared on the "Today" programme this morning, rather bizarrely responding to a statement that he had not even heard.
On what the right hon. Gentleman said about the device of having a statement at 7 o'clock, I should have thought that the House would welcome the opportunity to hear a statement from my right hon. Friend the Secretary of State for Transport, Local Government and the Regions on what is not his announcement but an announcement by London Underground. I would deprecate it if we were to break into a very important debate on the Tax Credits Bill, to which many amendments have been tabled, including by Opposition Members. As Leader of the House, I wanted to protect the time for scrutiny of that Bill. We have arranged for a full statement. The right hon. Gentleman keeps complaining that we do not sit long enough. He has today the opportunity to sit for an extra hour and hear that statement. I hope that he will be here for it.
On the early-day motion, I am sure that my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) is grateful to the right hon. Gentleman for his protection, but I know her well enough to know that she can stand up for herself. This Chamber is a place for robust exchanges—we are all grown-ups—and, if I may say so, the right hon. Gentleman has in his time been every bit as robust as my right hon. Friend the Foreign Secretary.
Several hon. Members rose—
Mr. Speaker: Order. Some hon. Members who came into the Chamber after the statement had started are
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seeking to catch my eye. They will not be called. In order to be called, hon. Members must come into the Chamber in time for the statement.
Mr. Dennis Skinner: Is my right hon. Friend aware that I am able to be here, almost on the verge of my 70th birthday, because of the dedication of the nurses and doctors in the hospital who gave me a second mortgage on life a few years ago? While I am here, let me also ask him about those other 70-year-old miners and widows in the mining communities. Can we have a statement to ensure that they, too, can celebrate the years ahead of them with their proper miners' compensation? Will he hurry and speed that along and call on Industry Ministers to deal with the matter? Then, most people in Bolsover will not be too happy about me, but will be happy about the Labour Government having paid out that £5 billion in miners' compensation.
Michael Fabricant: He is a national treasure.
Mr. Cook: The hon. Gentleman will have noticed that we have an opportunity to debate the national heritage in March, and he will no doubt wish to celebrate my hon. Friend's contribution to it.
I repeat my congratulations to my hon. Friend. It is entirely characteristic of him that he should share his own celebrations with the staff of the NHS. In his three decades in the House, he has been a redoubtable champion of an NHS that is free at the point of use and provided on the basis of need, not ability to pay. I hope that we will share many more decades together, defending that important principle.
I will certainly draw my hon. Friend's remarks about miners to the attention of my right hon. Friend the Secretary of State for Trade and Industry and suggest that, in the spirit of celebration of his contribution, she should give a speedy response.
Mr. Paul Tyler: I associate myself with the good wishes expressed to the hon. Member for Bolsover (Mr. Skinner). Many of us would agree with him that the current fad for denigrating NHS staff does no credit to politics, from whatever source it comes.
Several issues are raised by the statement on the public-private partnership for the tube. The excuse given by the Leader of the House for having it at 7 o'clock-when of course it will be more difficult for hon. Members and the media to take the issue seriously—is that the only opportunity for ministerial statements is at 12.30. Well, we are already at 1.30, and the likelihood is that this session will continue for some time longer, so it would be perfectly possible to have a statement at 2, if not 2.15 or 2.30.
Given that the Prime Minister effectively made a statement on this subject to the BBC yesterday by saying that the plan was ready to go, and that the Secretary of State for Transport, Local Government and the Regions also made a statement yesterday, can the Leader of the House tell us: when is a statement not a statement? If people are prepared to make statements to the media, why are they not prepared to make statements to the House? Will we have a firm assurance from the Secretary of State this evening that the plan has been approved by the Health

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and Safety Executive? If it has not, why is a statement being made at all? Surely safety questions must be paramount.
On another subject, it is reported today that there is a six-week wait for the single vaccine for measles, mumps and rubella. Can the Leader of the House give us an assurance that this is not an attempt to ration the single vaccines—and an absolute assurance that parents will be encouraged to have their children vaccinated on the basis of the credibility of the joint MMR vaccine, not by any restriction on the single vaccines? Does the right hon. Gentleman accept that since the Phillips report on BSE there has been a real credibility gap concerning the advice available to the Government on matters of scientific and medical importance?
Mr. Cook: I have not offered any excuse to the House for not breaking into the debate on the Tax Credits Bill; that is a real reason. The hon. Gentleman and I have repeatedly pressed the importance of ensuring that the House has adequate opportunity for scrutiny—
Mr. Forth: Oh!
Mr. Cook: It is true: a number of amendments have been tabled to the Bill that will be before the House this afternoon, and there are several different groups to discuss. I am keen to ensure that we have adequate time to consider them. As for the idea that a statement should be made now, I remind the hon. Gentleman that the statement will be about the announcement by London Underground—an announcement that has not yet been made. With the best will in the world, my right hon. Friend the Secretary of State cannot make a statement on an announcement that has yet to be made.
As for the vaccines, I say firmly to the hon. Gentleman—I hope that he will accept this—that our case for the MMR vaccine as the best way to protect both public health and the individual rests on the credibility of that vaccine. May I "gently"—as the shadow Home Secretary said—remind him that the assurances have come not only from Ministers and the Government machine; just about every independent scientist and medical body that has considered the question has echoed our faith in that credibility. I hope that we can now reach a responsible phase in which people recognise that the best way of protecting public health and the safety of individual children is to encourage people to use the MMR vaccine, which will ensure that we protect the individual and the population at large.
Mrs. Alice Mahon: I am pleased to follow the hon. Member for North Cornwall (Mr. Tyler), because I too want to raise the question of MMR with my right hon. Friend. I am sure that he has seen early-day motion 815, which was tabled by the hon. Member for The Wrekin (Peter Bradley).
[That this house notes with concern the recent outbreaks of measles in London and the north east; further notes the often devastating consequences of measles, mumps and rubella for young children and their parents; condemns the irresponsible conduct of some sections of the press and media which have undermined public confidence in mmr either by sensationalising the doubts about its safety of a small minority of doctors or by
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cynically manufacturing a political controversy without regard for the consequences for public health; and urges parents to consider the almost unanimous medical advice from this country and the 90 others where mmr is routinely in use that the risk associated with the triple vaccination is vastly outweighed by the danger to their children and those of others of not having it.]
My right hon. Friend will also have heard the Prime Minister's statement yesterday, which mirrors his own. May we have a debate in Government time on the subject, so that we can hold the Opposition to account for their irresponsibility and scaremongering, particularly the Conservative spokesman on health, who is himself a doctor? We could also point out to the Opposition how disastrous it will be if parents stop their children having that excellent, and proven, vaccination.
Mr. Cook: I fully echo what my hon. Friend says; she speaks from a lifetime's work in the NHS. It is very important for the nation as a whole that we encourage the maximum number of families to ensure that their children are vaccinated. I fear that we may be witnessing the first hint of the problem that will arise if the uptake declines, and I deeply regret the fact that the hon. Member for Woodspring (Dr. Fox), who speaks for the Conservative party on health and is himself medically qualified, has chosen to put politics before science in this matter.
Mr. Julian Brazier: May we have an early debate on the new White Paper on immigration? We have a crisis in Kent, with the largest concentration of vulnerable unaccompanied minors seeking asylum. That problem is compounded by the fact that the Government's monstrous standard spending assessment system values a child in London at three times the rate of a child in Kent. The combination of local deprivation and large numbers of unaccompanied minors seeking asylum—together with the many children in care who are sent to us by London authorities—is creating a crisis that is getting progressively worse.
Mr. Cook: I hear what the hon. Gentleman says about the House exploring the matter further, and we will have many opportunities to do so when we discuss the Bill that will follow in the White Paper's wake. I am sure that he and many other hon. Members will wish to make their constituency points then.
Several hon. Members rose—
Mr. Deputy Speaker(Sir Alan Haselhurst): Order. We have not set a good standard for brevity so far. I am not going to run this statement for an excessive time, so I ask that questions be as brief as possible.
Harry Cohen: May I draw my right hon. Friend's attention to my early-day motion 812?
[That this House notes that there have been numerous and highly credible allegations made of large commission payments made to individuals in Saudi Arabia as part of the Al-Yamamah arms sales to that country; is concerned that the 1992 National Audit Office report into the Al-Yamamah arms sales has been kept secret; further notes that other allegations have been made that Osama bin Laden and the Al-Qaeda network have received substantial funds from individuals in Saudi Arabia;

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desires reassurances that the commission payments have not ended up in the hands of international terrorists; calls for publication of the 1992 National Audit Office Report; and believes that transparency in arrangements for arms sales creates a safer and more stable world.]
I suggest to my right hon. Friend that next Thursday's defence debate will provide the Government with a good opportunity to arrange publication of the National Audit Office report on the Al-Yamamah contracts, which has been kept secret since 1992. The report almost certainly refers to the payment of kickbacks and commissions as part of that arms deal, some of which may have been used to fund Osama bin Laden and al-Qaeda. Does my right hon. Friend accept that there is a powerful case for publication of that report?
Mr. Cook: My hon. Friend makes some rather large claims for a report that neither he nor I have seen. I am in no way able to authenticate what might be in it, but I suggest that we do not speculate too widely. As he says, the report has not been published since it was drawn up in 1992, so there is a long tradition of its not being published that he must displace. However, I am sure that he will take part in the debate and he can press his case then.
Mr. Andrew MacKay: I follow the hon. Member for Halifax (Mrs. Mahon) by suggesting strongly to the Leader of the House that the Secretary of State for Health should make a statement on the current vaccination problems, which clearly constitute a crisis. That would allow many of us to express our belief that the national health service should offer parents an informed choice.
Mr. Cook: My right hon. Friend's policy is well known, has been stated often in the House and was restated by the Prime Minister only this week. It is that the Government stand firmly behind the MMR as the best way to provide protection for children and protection of the public health. Given that we are providing the MMR vaccine as a matter of policy, and that we believe it to be the best vaccine for the nation and the public, it would be very strange not to continue to say that that is the vaccine on which we should rely.
Mr. Harry Barnes: Is my right hon. Friend aware that there is a way to involve in discussions in the House the four elected Sinn Fein Members? A debate on paramilitary intimidation will take place in Westminster Hall on 14 February, which will include discussion of the forced exiling of many people from Northern Ireland by paramilitary groups. Although the Sinn Fein Members can attend and listen to that debate, they cannot participate, but they could book a Committee Room in which discussion could continue afterwards. That would enable some of us to ask those Members when they will call the dogs off and allow those placed in exile to return.
Mr. Cook: My hon. Friend has a long record of being robust with Sinn Fein and on the record of the IRA in Northern Ireland, and I congratulate him on the vigour with which he has pursued such matters. One reason why we decided to accept the four elected representatives of
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Sinn Fein on to the precincts was so that they could engage in dialogue, and my hon. Friend points out a useful way in which they could do so, if they so wish.
Dr. Julian Lewis: Is the Leader of the House aware of reports suggesting that payments of up to £150,000 a piece are being urged for Scottish Labour Members of Parliament whose seats might disappear through Boundary Commission adjustments? Does he think it right that Members who lose their seats in that way should be paid up to three times as much as those who lose their seats through retirement or the hazards of the electoral process? If so, why should such payments be made only to Labour Members in Scotland, and not to Members of Parliament throughout the United Kingdom?
Mr. Cook: I have never heard of such figures—
Mr. Forth: Answer.
Mr. Cook: I shall indeed do so. In the case of my local patch, the Boundary Commission has shown great wisdom, judgment and sense, and I welcome the result. However, in view of the figures that the hon. Gentleman quotes, I may rethink whether I wish to contest my seat.
David Hamilton: Can my right hon. Friend inform me of the truth of some of the reports in the news today about the last deep mine in Scotland, the Longannet complex, which is under threat? Will he ask the Minister for Industry and Energy to make a statement to the House?
Mr. Cook: I had not heard that report before I came to the Chamber. If it is true, I fully understand the enormous concern that it will cause to the many people who work in that pit and to the community surrounding one of the last remaining deep mines in operation. I shall certainly ensure that we convey my hon. Friend's question to my colleague and that an answer is forthcoming today.
Michael Fabricant: May we have an urgent debate on the future of the BBC, in particular on its political coverage? Is the Leader of the House aware that many people in the House and, indeed, in the BBC are concerned that political coverage will now be sidelined from mainstream radio and television channels? Does he agree that the licence payer deserves to see the way in which the democratic process works? That will not happen if coverage of this place is consigned to minority digital channels.
Mr. Cook: I fully endorse the principle behind the hon. Gentleman's question and the House will be aware that I have repeatedly expressed my concern about the decline in the coverage of Parliament in the written and the broadcast media. He touches on an unusual point of consensus between the Labour and Conservative parties, in that our joint chairs have both written to the BBC chair to point out that the BBC has a public service obligation. It receives funding for that obligation and I hope that it will bear in mind that that obligation requires the BBC to ensure that it adequately and properly covers Parliament.
Lynne Jones: My right hon. Friend mentioned the importance of adequate scrutiny of

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legislation. Does he think that any lessons can be learned for the future programming of Bills from the lack of scrutiny given to many amendments to the Education Bill? Will he consider allocating an adequate, but not excessive, amount of time for the consideration of every subject area to which substantive amendments have been tabled?
Mr. Cook: Of course we want to ensure that there is adequate time for parliamentary scrutiny of legislation. For that reason, several times during the proceedings of the Education Bill in Standing Committee we approached the Opposition to offer additional sittings. Indeed, we tabled an additional meeting on 22 January, which turned out not to be necessary as there were no amendments to be debated at that sitting. As for Report, the original programme resolution provided for one day, but we provided for two. When there was difficulty on the first day, we provided an additional two hours on the second day. At every stage, we have responded to requests for additional time. I regret the fact that some of the important provisions in the Bill were not adequately debated, but that was entirely because the Opposition chose to conduct themselves in a way that did not make it possible.
Mr. Roy Beggs: May I bring to the attention of the Leader of the House early-day motion 767 on the Omagh victims' legal action group?
[That this House remembers with deep sadness the Omagh bombing of 15th August 1998 in which 31 people—including seven children and two unborn babies—were murdered by the Real IRA; commends the courage of the families of the victims of this bombing in launching an unprecedented civil legal case against five named individuals, suspected of planting the bomb, and the Real IRA; congratulates the families on their persistence in attempting to seek justice; and urges the public to show their support for the families' legal action in whatever way they can.]
Almost 100 hon. Members have signed up to support that motion and to urge the public to support the families' legal action. I appeal to the right hon. Gentleman to raise at Cabinet level the justice of the Government providing matching funding to support the money raised privately for that legal action against those perceived to have been responsible for the murder of 29 people in Omagh three years ago. That would be a small sum compared to the £100 million perceived to have been spent on the Bloody Sunday inquiry into the loss of 14 lives 30 years ago.
Mr. Cook: I understand the gravity of the issue and the extent to which it troubles the hon. Gentleman's constituents and many others throughout Northern Ireland. I will certainly reflect on his request. I assure him that the proper place to deal with the pursuit of justice and legal action is through the prosecution service, which is adequately resourced to meet anything that may be available to the defence.
Geraldine Smith: Will my right hon. Friend confirm that the Post Office is still publicly owned? In view of the irresponsible attitude of the regulator, which is jeopardising the universal service obligation, will he ask the Minister with responsibility for the Post Office to make a full statement to the House?
Mr. Cook: I have drawn to the attention of the Secretary of State for Trade and Industry the many
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remarks that were made about that matter following the business statement last Thursday. I stress that Postcomm's first statutory obligation is to maintain the Post Office's universal service obligation. We would require any proposal that the regulator persisted with to be consistent with that obligation.
Mr. Eric Pickles: As far as I understand the right hon. Gentleman's response to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), the Secretary of State for Transport, Local Government and the Regions is unable to make a statement to the House at the normal time because London Underground will not have reached its decision by then. However, it will have done so at 3.30—that is why the Secretary of State is holding a press conference with two other Ministers. In the interests of brevity, may I suggest a compromise? If the Secretary of State came here to make a statement, the press could appear in the Press Gallery and listen. I think that this is the single most important piece of public finance anywhere in the world, so it is very frustrating for London Members to wait a further four hours before having an opportunity to ask the Secretary of State a number of pertinent questions. If he fears that we will run out of questions, there is no possibility of that.
Mr. Cook: I invite the hon. Gentleman to look at the Order Paper. He will see that a large number of amendments have been tabled to the Tax Credits Bill, all bar one of which are in the name of Opposition Members. Those Members want those amendments to be debated. I have therefore ensured that the Secretary of State will make a full statement to the House and will not interfere with the debate on the amendments. My hon. Friend the Paymaster General is on the Front Bench, ready to take part in that debate. I hope that we will be able to start it soon.
Mr. Tam Dalyell: Since it was my right hon. Friend, to his credit, who persuaded Madeleine Albright to allow a trial in a third country, he knows a great deal about Lockerbie. Can we have a statement next week about where the responsibilities of the House of Commons end and those of the Scottish Parliament begin? In particular, is it not high time that we had a statement on Strathclyde police's extraordinary actions, which have gone unchallenged, in providing a witness in a forthcoming murder trial, namely Tony Gauci, with salmon fishing on the River Spey? That aspect of the proceedings is not sub judice. Should there not be an explanation?
Mr. Cook: I am always nervous when my hon. Friend gives me credit, but in response to his last point may I say gently to him that that matter is sub judice because it touches directly on an appeal proceeding that is currently under way. It would be wholly inappropriate and improper of me to comment on it. In any case I am not in a position to enlighten him on that specific point.
Hywel Williams: Given that yesterday and the day before we were allowed a total of six minutes to debate clauses relating to Wales in the Education Bill, and that more clauses related to Wales than to England, will the Leader of the House tell us whether he would

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allow the Welsh Grand Committee to examine such measures on Second Reading, as the Scottish Grand Committee did?
Mr. Cook: I hear what the hon. Gentleman says but I remind him of the point that I have just made. We doubled the amount of time that was available for the Report stage and having found that there was a difficulty on the first day, we extended consideration on the second day. The House itself has some responsibility in this matter. If there is adequate time available for examination and scrutiny of a Bill, we must ensure that we reasonably pace it so that all clauses are debated and people such as the hon. Gentleman can make their voices heard.
Mr. Kevin Hughes: On Tuesday the Department of Trade and Industry published its clean coal technology review. Today the Select Committee on Trade and Industry has published its report on security of energy supply, and we are all waiting eagerly for the Government's performance and innovation unit energy review. Will my right hon. Friend assure the House that he will arrange for a full day's debate on those matters? The issue is the total energy supply, perhaps for the next three decades. I would like a debate so that our views can be heard, as well those of the policy wonks that put these reports together.
Mr. Cook: I am not sure that I recognise the description of my hon. Friend the Minister for Industry and Energy as a policy wonk. I suspect that he would also take issue with it but we all look forward with interest to the forthcoming PIU energy review. I am sure that the House will wish to ensure that it is fully explored. I have a difficult task which becomes more difficult every Thursday with the number of additional claims—
Mr. Forth: Good.
Mr. Cook: The right hon. Gentleman does not help me, but nor is it his job to help me in this. Every Thursday there is an increase in the list of subjects for which we would wish to have a day's debate. I cannot satisfy everybody, but I am very conscious of my hon. Friend's claim.
Mr. Peter Duncan: When the Leader of the House contemplates his political future can I appraise him of the full offer that is being made to Labour Members? He was slow to back the Conservative proposals for PFI, so may I seek his assurance that he will firmly reject Scottish Labour's PPP—peerages on offer, pensions on offer and pay-offs on offer? Is it not the case that every Member of Parliament here today either voted for the Scotland Act 1998 and accepted that there would be fewer Members here thereafter, or has arrived since?
Mr. Cook: Of course I voted for the Scotland Act and of course I fully recognised what we were voting for, namely a reduction in the representation of Scotland at Westminster. We have carried through that commitment and we intend to honour it. I say to the hon. Gentleman, who is the sole Conservative Member from Scotland, that
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I am delighted that we are able to maintain that token relic from Scotland, just in case we in Scotland forget the nature of the Tory party.
Mr. Michael Connarty: Will my right hon. Friend find time for a debate on the handling of the dispute with the Public and Commercial Services Union over the introduction of Jobcentre Plus and unscreened areas in offices? It would appear that this has ground to a halt with letters, particularly a very unhelpful letter from Leigh Lewis, being fired at the union, demanding that it replies. Letters are going backwards and forwards like bullets when we should, as a Government who believe in negotiating with trade unions, be negotiating a settlement and not getting into this stalemate. Surely we should debate the matter in the House to help the Secretary of State who appears to be supporting this gunfire diplomacy rather than negotiation.
Mr. Cook: I understand the strength of feeling on this and my hon. Friend no doubt speaks from having consulted in his local area. We have now had 60 hours of negotiation with the unions on this particular question. My hon. Friend should also reflect that only one in four of the membership of the union voted for strike action. I strongly support the principle of having unscreened offices for the public. I am pleased to report that in offices where unscreened facilities have been provided there has been a reduction, not an increase, in the abuse or intimidation of staff. Of course we look forward to ways in which we can increase the safety of those working in unscreened offices, but in the 21st century that is the type of service that the public are entitled to expect.
Mr. Menzies Campbell: The Leader of the House will be aware of the belief of many Members of all parties represented in the House that the finding of negligence made against the two pilots of the Chinook aircraft which crashed on the Mull of Kintyre is unjustified and should not stand. He will also be aware of the publication this week of the House of Lords Select Committee report under the chairmanship of Lord Jauncey, who legitimately has the reputation of being one of Scotland's most eminent judges and of robust intellectual rigour. It is clear from the publication of the report that the Committee charged with the responsibility of examining these matters concluded that the original verdict was unjustified. An error of judgment having occurred and an injustice having arisen as a result, when may we have a debate to discuss these matters in the House?
Mr. Cook: I am aware of the report produced by the House of Lords Select Committee. The right hon. and learned Gentleman will be the first to agree that these are complex matters touching on difficult questions of interpretation and issues. The Minister of State for Defence has received the report and given an undertaking that he will study and respond to it. Over the years respective Governments have said that before revisiting the conclusion they would want new evidence. At present it is not clear that the House of Lords Select Committee has come up with new evidence.
John Cryer: Could my right hon. Friend find time for a debate on car manufacturing? Later this

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month the last car will roll off the assembly line at Ford, Dagenham and for the first time in decades no cars will be made there. Many of the thousands of people who work there, 600 of whom are my constituents, feel that that is a bitter and deep betrayal, particularly after all Ford's past promises of a golden future.
Mr. Cook: I understand the enormous significance of the ending of car production as regards both employment and the culture and history of my hon. Friend's region, although I understand that Dagenham will continue to be a centre of excellence for diesel engine production. I shall take note of what my hon. Friend says about a debate. I am conscious of the fact that there have been several requests for debates on the manufacturing industry.
Mr. Christopher Chope: Why did not the Secretary of State for Transport, Local Government and the Regions ask London Underground to delay its announcement until 7 o'clock so that it would coincide with his statement to the House?
Why does the Leader of the House describe the week after next as a constituency week, when it has previously been described as a half-term?
Mr. Cook: I described it is a constituency week because that is where many of my colleagues intend to spend the week.
On the question of London Underground, I have many responsibilities for which I am happy to answer to the House, but the timetabling of board meetings of London Underground goes beyond my writ.

Points of Order
2 pm
Mr. Eric Forth: On a point of order, Mr. Deputy Speaker. If the Leader of the House were to ask you for the opportunity, would you allow him to correct an impression that he gave—I am sure, inadvertently—a short time ago? I thought that he suggested that the Opposition were responsible for delaying business yesterday, yet during about six hours of debate, the Secretary of State for Education and Skills alone spoke for 43 minutes and the right hon. Member for Holborn and St. Pancras (Mr. Dobson) spoke for 35 minutes. Government Members spoke for a total of three and a half hours, while Opposition Members spoke for only two and a half hours. I say that, Mr. Deputy Speaker, because I do not want either the House or you to be under any misapprehension—nor would I want anyone to accuse the Leader of the House of giving the wrong impression: during yesterday's business, in which, regrettably, we made so little progress on the Education Bill, Government speakers took up much more time in total than Opposition speakers.
Mr. Deputy Speaker(Sir Alan Haselhurst): I think that it suffices that that point is on the record. I had the pleasure of listening to most of those speeches, so I am well aware of the balance.
Clive Efford: On a point of order, Mr. Deputy Speaker. It should be pointed out that the majority of Labour Members who spoke from the Back Benches in support of the new clauses could hardly be described as Government members.
Hon. Members: Oh!
Mr. Deputy Speaker: I think that it would be safer for the Chair to let that rest.

Orders of the Day
  Tax Credits Bill
  As amended in the Standing Committee, considered.
  Tax Credits Bill
    New Clause 1

      RECIPIENTS OF CHILDREN'S TAX CREDIT PRIOR TO APRIL 2003
      'Persons in receipt of children's tax credit immediately prior to April 2003 shall continue to receive tax credit of the same amount after that date in any case where their award of child tax credit under this Act would be of a lesser amount, for as long as they are responsible for one or more children or qualifying young persons.'.—[Mr. Webb.]
      Brought up, and read the First time.
      2.2 pm
      Mr. Steve Webb: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker(Sir Alan Haselhurst): With this it will be convenient to consider the following: New clause 4—Effect of working tax credit on housing or council tax benefits—
      'No award of working tax credit under this Act shall be taken into account in the determination of any housing or council tax benefit to which a person may be entitled under any other enactment.'.
      New clause 7—Access to social fund—
      ?Before the coming into effect of this Act, the Secretary of State shall lay before Parliament regulations providing for the conditions and qualifications for access to the social fund of persons ceasing to qualify for income support or income based job seekers allowance upon the coming into effect of this Act.'.
      New Clause 8—Access to passported benefits—
      ?Before the coming into effect of this Act, the Secretary of State shall lay before Parliament regulations providing for the conditions and qualifications for access to passported benefits provided by the Secretary of State, devolved administrations and local authorities which prior to the coming into effect of this Act had been afforded by qualifying for working families tax credit, income support or income-based jobseeker's allowance.'.
      Amendment No. 1, in clause 1, page 1, line 12 at end insert—
      ?(subject to the exception provided in section (Recipients of children's tax credit prior to April 2003))'.
      Amendment No. 5, in clause 60, page 32, line 25, at end insert—
      ?(except for regulations made under section (Access to social fund) or section (Access to passported benefits).'.
      Mr. Webb: It is my pleasure to speak to new clause 1. We also support new clause 4. I shall not comment on new clauses 7 and 8-they will be discussed by the Conservative Members who tabled them—other than to note that they raise important issues and we are sympathetic to their intention. We look forward to hearing more about them in due course.
      During our deliberations in the Standing Committee, a certain amount of ping-pong took place between the two sides. We wanted to give the Paymaster General the opportunity to set out her thinking on the rates and structure of the tax credits, but she declined to do so. Lest the hon. Lady be under any misapprehension, new clause 1 is different altogether. It does not relate to new
      1056
      claimants of the tax credit who start to become entitled—for example, due to the birth of a child—after April 2003; it relates to the rules that will govern the existing recipients of that tax credit.
      The new clause would mean that people receiving tax credits before April 2003 were not cash losers due to the transition. They would be able to continue with the same cash receipt of tax credit for as long as they still had a dependent child, or a qualifying young person.
      Obviously, the Chancellor will have to make decisions about the rates and thresholds of the tax credit in his Budget statement. We are not trying to pre-empt that. The acceptance of the new clause would not prejudge any of those decisions. It is really a statement of the principle that people who currently receive the tax credit should not be cash losers—whatever the Chancellor's decision as to the rates and thresholds.
      I shall give the House an example, as otherwise we might assume that—in a rare lapse—the Liberal Democrats were defending the rich while the Conservatives were talking about the social fund. The families that I am talking about are not necessarily filthy rich.
      I take the example, which I believe to be a good one, of a couple, both of whom work full-time—one on the typical salary for a nurse, one on the typical salary for a teacher. At present they receive the full child tax credit of £520. It seems almost inconceivable that, assessed on their joint income, they would receive anything other than zero. If a family of that sort received child tax credit, so would Back-Bench Members of Parliament. If, having decided to introduce a taper that withdraws child tax credit from higher earners, we include Back-Bench Members of Parliament among those who receive it, there is not much point in having a taper. Therefore, without going into details on the exact rates and thresholds that the Chancellor will choose, there is bound to be a doubt in the minds of families such as the nurse married to the teacher that they may be about to lose some, or all, of the £520 a year that they currently receive.
      More than one or two families are in that position. If the thresholds remain the same, 900,000 families could lose all of their tax credit, and another 500,000 could lose some of it. The purpose of the new clause is to tell them, "You may be reassured. Although you might not get an increase, we offer you our assurance as a House today that, whatever rates and thresholds the Chancellor introduces, you will not be cash losers."
      One might ask, why should not those families be cash losers? If a new system is introduced that is less generous to people in those circumstances, why should they not lose? We must remember that the children's tax credit was the successor to the married couples tax allowance, so we had a year when that allowance was abolished and nothing took its place, and we shall have had at least two years of the children's tax credit, now payable at £520 a year. It is reasonable to suppose that families have got used to budgeting on the basis of that income, and £520 is quite a serious sum of money. All that we are asking the House to agree is that such families may continue to receive that amount at that cash level. It would not be inflation-proofed, but they would be protected from a windfall loss of up to £520.

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      Unless the Chancellor wants to create 1.4 million losers, he will have to spend some money on that issue anyway—perhaps by raising the threshold or changing the taper. We are not prejudging that decision, but we are proposing a relatively cheap solution, as is our wont, because the only group that we are protecting consists of existing recipients, who gradually fade out of the system. An existing recipient with a 16-year-old child and nothing else gets the money for one year, and that is it.
      If we were arguing that the Government should be raising the threshold so that new recipients in the same circumstances received the full tax credit, that increased cost would roll on indefinitely in the system. Our proposal is a transitional measure, not one for new claimants, because arguably a new family—the nurse married to the teacher who then has he first baby—has never budgeted on the basis of that sum of money and has never got used to having it, so that family's not having it through a new system is defensible. However, taking the money away from people who have got used to having it is far less defensible. Ours is a very modest proposal, to protect existing recipients and to make a statement of principle that there should be no cash losers, without prejudice to any decision that the Chancellor might take about raising thresholds.
      I shall briefly address new clause 4. Here there are interesting parallels between the Tax Credits Bill and the State Pension Credit Bill. In the case of the latter Bill, which is passing through another place, the Government have decided that any gains that are given to people through the credit should not be taken from them by means of tapers on housing benefit and council tax benefit, but the Government have not offered us those assurances in the case of tax credits—quite the contrary.
      There is some suggestion that a person who gets tax credits through the Tax Credits Bill will then potentially have some or most of them taken away as a result of the tapers on housing benefit and council tax benefit. Several London Members, who served on the Committee with us, expressed concern that because, in view of high rents, people can be on housing benefit while having relatively high incomes, those people could lose 65p—perhaps 85p—in the pound of the money that the Government want to give them.
      If the purpose of the Bill is to reward work, to encourage people to work and to teach that work pays, it is dishonest to give them money through the pay packet so that they get a high take-home pay figure and then allow the local authority to come along and take 85 per cent. of it from them. That seems counter-productive in terms of the Government's objectives. We therefore consider that new clause 4 is helpful to the Government—just as we have been in tabling many of our amendments—by enabling those whom they intend to benefit from the tax credits to keep the money, instead of having to give it to someone else.
      Hywel Williams: Does the hon. Gentleman realise that the point that he is discussing merely replicates the very worst aspects of the previous system and that that is a disincentive to returning to work, not only in London but in constituencies such as mine
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      where many people claim the working families tax credit, are paid low wages and are in part-time or short-time work?
      Mr. Webb: I am grateful to the hon. Gentleman for that intervention. Although high rents and council taxes in London are important, the issue is more about the interaction between high housing costs, high local taxes and low wages. Where all those factors combine, the problem will be particularly acute.
      The principle of what we want to achieve under new clause 4 is relatively straightforward. We are sure that the Government want to encourage people to take the low-paid jobs that are available, but if the money that the Government give them is taken away from them partly or wholly because of another benefit system, that goes against what the Government want to achieve. We seek to protect existing claimants and to help the Government achieve their goals of encouraging low-paid work, and we believe that new clauses 1 and 4 would help to achieve those objectives.
      Mr. Howard Flight: This group of new clauses and amendments essentially covers territory that there was insufficient time to cover in Committee. Yet again, that is evidence of the unsatisfactory nature of Bill programming.
      Amendment No. 1, tabled by the Liberal Democrats, raises an important point of principle and, as has been stated, it grandfathers claimants' benefits under the existing children's tax credit. It was the consistent policy of Conservative Governments in changing social welfare, in essence, to grandfather existing claimants and to ensure that people were not disadvantaged by legislative changes. Therefore, amendment No. 1 is, in part, a probing amendment—it is important for the House to know what the Government intend to do. As the hon. Member for Northavon (Mr. Webb) said, the intention is not to discover what the rates will be across the board, but to address a point of principle, so I look forward to hearing what the Paymaster General has to say.
      New clauses 7 and 8, with amendment No. 5, broadly address overlapping territory. Under new clause 4, the Liberal Democrats would apply a disregard principle, designed to address problems that arise in areas where housing is expensive, such as London. Under new clauses 7 and 8, we raise a much wider issue. The Bill does not explicitly state how passporting to the social fund and the various other crucial benefits—housing benefits, school meal benefits and council tax benefits—will be dealt with as a result of ending income support and income-based jobseeker's allowance, which provided crucial passports to qualify for those benefits.
      The Bill therefore leaves major uncertainties about the arrangements for people who are presently passported by the existing qualifications under the working families tax credit, disabled person's tax credit, income support and jobseeker's allowance. The Bill will float some families off income support and income-based jobseeker's allowance, and they will lose access to the social fund unless specific provisions are made.
      We want the Government to set out what their proposals are, as they should have done in the first place in the Bill. Perhaps those proposals will be satisfactory, but, unless that issue is properly addressed, the House

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      should divide on the new clause because the most needy in society will face a major flaw if the issue is not addressed.
      The Paymaster General(Dawn Primarolo): Notwithstanding the fact that the hon. Member for Arundel and South Downs (Mr. Flight) has already declared that he intends to vote for the new clause before he has even heard what I have to say—I shall endeavour to be my normal persuasive self—several important issues are raised in this group of new clauses and amendments, and I should like briefly to deal with each principle. The hon. Member for Northavon (Mr. Webb) has moved a new clause that deals with one set of changes, but the hon. Gentlemen have spoken about something unconnected to the new clauses and amendments that they have tabled. That causes some difficulty, but let me give an explanation.
      This group of new clauses and amendments deals with the relationship between the new tax credits and the existing forms of support. They cover three main issues—the children's tax credit, the interaction with housing and council tax benefits, and the passporting issue. I want to deal with each issue in turn because they are very important, as the hon. Gentlemen have said.
      2.15 pm
      In speaking to new clause 1 and amendment No. 1, the hon. Member for Northavon returns to a point that we considered in Committee, even though he tries to explain that he is not doing so. I disappointed him in Committee, and I am afraid I shall do so again now. In dealing with what he claimed was a principle, he suggested some solutions. He said that the Chancellor could let thresholds remain the same, or he could change the threshold to address the point that the hon. Gentleman was making. As I have repeatedly said, the rates and tapers will be announced in the Budget by my right hon. Friend the Chancellor of the Exchequer.
      New clause 1 refers to the children's tax credit and to people who are currently entitled to it. Under that new clause, the hon. Gentleman continues to try to extract a commitment from the Government about how a particular group of people may be affected. He then tries to extrapolate from that the type of decisions that my right hon. Friend the Chancellor will want to announce in his Budget statement.
      The children's tax credit was one of a series of measures that we introduced in the previous Parliament to improve support for families with children. The measures that we introduced in our first term in office were constrained, as was the working families tax credit, by the system that then existed. The children's tax credit works in the framework imposed by independent taxation. It is therefore based on individual claimants and their individual incomes. That territory is fairly well understood in the House. The children's tax credit had to work in that way because of the income tax system.
      One of the consequences of that has been that couples with the same aggregate income may receive different amounts of the children's tax credit, depending on how the income is distributed between them. Hon. Members and organisations have lobbied us extensively to tell us
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      that that simply was not fair and that we needed to address it. That issue has been addressed in the child tax credit, and the hon. Gentleman would like me to tell him exactly how the rates and tapers will affect people as they transfer, but I am not about to do so. I have not seen any serious suggestion that the Government are at fault in trying to resolve that difficulty.
      The formal announcements on the rates and tapers and on when the new tax credits will be introduced will be made in the Budget statement. I confirm yet again that that will happen in the Chancellor's Budget statement on 17 April and that we are planning a start in April 2003.
      When setting the rates and thresholds, due consideration will be given to the relevant factors. My right hon. Friend will take those into account. As I said to the hon. Gentleman, the outline is in the Bill, but asking for specific undertakings on different sections of the population that will receive the tax credits is another attempt to debate rates and tapers. I know that he is keen to have that debate; so am I, and I look forward to engaging in it when the Chancellor makes his announcement. I hope that the hon. Gentleman's cold is not so bad that it restricts him from participating then.
      Mr. Webb: New clause 1 is devised to allow us to request an assurance that there will be no cash losers among existing recipients. The Chancellor can set any rates or thresholds that he likes for people who come into the system or who continue in it, but do the Government believe that, no matter what those are, the principle of no cash losers is at stake? It seems that the Minister wants to keep cash losses on the table.
      Dawn Primarolo: I am not going to help the hon. Gentleman to make his points about whether there are losers in the transition to the new tax credits, which he made in the press. As I said to him and to other Committee members and Members of the House, it is clear that the Chancellor will take all considerations into his calculations. Thresholds and tapers, which will influence all those who transfer into the new tax credits, will be announced in the Budget statement. The hon. Gentleman is trying to crack open that debate now so that he can continue to advance the arguments that he made in the press. I understand why he wants to do that as an Opposition Member. However, he will understand, because I have said this to him so often, that the Chancellor will make the announcement in the Budget statement.
      Mr. Flight: Is the Paymaster General aware of the principle of Newton's law, named after Tony Newton? It clearly established that there should be no cash losers when welfare benefits change. For the record, the Minister is saying that this Government do not follow that principle.
      Dawn Primarolo: That is not the Newton's law that immediately came to my mind. If you will excuse the pun, Mr. Deputy Speaker, this is a fruitless debate. All hon. Members know that rates and tapers are the subject of the Budget announcement by my right hon. Friend the Chancellor. The Bill and our debates on it have been widely welcomed by everyone who is concerned about simplicity and transparency and about ensuring that families on the lowest incomes get the most support from our policies to tackle child poverty.

      1061
      New clause 4 deals with the interaction of the working tax credit with housing benefit and council tax benefit. It would prevent the working tax credit from being taken into account in assessing entitlement to either of those benefits and would mean that people in work had a higher entitlement to benefits. I am not sure that that would produce the bed of roses that the hon. Member for Northavon might suppose.
      Of primary importance to any family or individual is the overall package of support that they receive if they are in low-income work. A family with children could receive a combination of child benefit, child tax credit, working tax credit and housing and council tax benefits on top of their earnings. The Government are committed to ensuring that the overall package provides sufficient incentives for families to move into work and, once they are working, to increase their earnings.
      The hon. Gentleman is well versed in the interactions of tapers and their effects on incentives to move into work. A key factor is the effect of the interaction of the various elements of the package on overall withdrawal rates. I know that the hon. Gentleman and many of my hon. Friends are concerned about the impact of that on rental costs in some parts of the country. It might help if I outline the effect of the new clause on the current system because it does not deliver what the hon. Gentleman wants.
      If the working families tax credit were not taken into account in housing benefit and council tax benefit, the combined withdrawal rates of the two credits would increase significantly, producing a total withdrawal rate of around 125 per cent., so people would be worse off for working harder. The underlying principles, if not the precise numbers, are the same for the working tax credit as they are for the working families tax credit and the disabled person's tax credit.
      The Government are committed to improving work incentives. I understand the hon. Gentleman's concern about areas with high rents. We have discussed that in the context of housing benefit, and the Department for Work and Pensions is considering the problem. Far from improving things, new clause 4 would cut across the work that we are doing to ensure that people are better off in work. In addition, its effects would not be well targeted, so not only would it result in a withdrawal rate of 125 per cent. but the targeting would cause problems. Housing benefit and council tax benefit are withdrawn as incomes increase, ensuring that those on the lowest incomes get the most support. Apart from a small disregard, net earnings are taken fully into account in housing and council tax benefits. It would not make any sense to treat the working tax credit, which is designed to boost net earnings, more favourably than earnings themselves.
      New clause 4 would not work. Indeed, it would make things worse. The debate allows the hon. Gentleman to highlight the interaction between high-rent areas and housing benefit payments. None the less, the new clause would destroy all the work incentives and the possibilities offered by the working tax credit. That might be his intention; I know that he is not a fan of the working tax credit. However, the new clause does not impress its virtues on the Government.
      1062
      I am trying to explain the Government's intentions and how we view the interaction between benefits and the new tax credit. The interaction is especially important when we consider the passporting of benefits, which is dealt with in new clauses 7 and 8.
      2.30 pm
      New clauses 7 and 8 set out to probe the Government's intentions regarding entitlement to what are commonly known as the passported benefits—benefits provided by other Government Departments, for example, free school meals provided by the Department for Education and Skills, and free prescriptions and dental treatment provided by Department of Health. Those benefits, and many more besides, use entitlement to certain key social security benefits and tax credits as a peg in decisions on who should get access to them, as a way to reduce the administration and difficulties involved in making sure that benefits get through.
      Passported benefits remain the responsibility of the administering Departments, not of the Treasury; it is for those Departments to set the rules for entitlement and decide what level of income brings a family into entitlement. For those reasons, it is inappropriate to legislate for other Government Departments in the Bill, even though the Bill gives powers to provide information to the other Departments to undertake passporting.
      The key issues in passporting are, as the hon. Member for Arundel and South Downs mentioned, those who are floated off income support or income-based jobseeker's allowance when the child elements of those benefits are removed, and what we do to ensure that people who had passported benefits continue to receive them in the new tax credits. The latest estimates suggest that about 70,000 families, out of a total 1.3 million currently receiving income support or jobseeker's allowance, will no longer receive the benefits as a result of the changes. Naturally, we are anxious to ensure that their entitlements are protected.
      The Department for Work and Pensions will make proposals on how those families will be treated in due course, once the rates, tapers and income rules have been determined. Families that are floated off will be contacted well in advance by that Department and offered an interview; they will be provided with all the details and with help to secure their position.
      In previous discussions, hon. Members have asked about entitlement to free school meals and free milk for the young children—the so-called welfare foods scheme—of those floated off income support and income-based jobseeker's allowance. They are two specific issues on which I can offer more detail on the Government's thinking.
      On 24 January, my hon. Friend the Minister for School Standards made it clear to the Committee considering the Education Bill that the Government intend to put in place measures to guarantee that those who are floated off income support or income-based jobseeker's allowance because of the introduction of the new tax credits will not lose their access to free school meals—they will be protected. Today, I can confirm that similar arrangements will be put in place to maintain that group's entitlements to the welfare foods category of benefits.
      I am trying to reassure the House that those who are currently passported to certain benefits will continue to be passported on the same basis as now. It is necessary that

      1063
      the Government Departments involved develop new regulations using the new tax credits to ensure that there is no loss. I am confident that that will be achieved.
      I hope that in the light of my explanation of how the amendments are technically flawed and would make matters worse, and my reassurances about passported benefits, together with the fact that I am not persuaded to make today an announcement on rates and tapers that my right hon. Friend the Chancellor is due to make in his Budget statement, the amendments and new clauses will be withdrawn. If they are pressed to a vote, regrettably I shall have to recommend to my right hon. and hon. Friends that they oppose them in the Lobby.
      Mr. Flight rose—
      Mr. Deputy Speaker: Order. The hon. Gentleman cannot speak again. Only the mover of the lead new clause can do so.
      Mr. Webb: I am grateful to the Paymaster General for putting on the record some of the issues that we had no time to discuss in Committee, especially those relating to passporting. The hon. Member for Arundel and South Downs (Mr. Flight) can decide for himself whether or not he is satisfied with the hon. Lady's response.
      Taking our new clauses in reverse order, I accept the Paymaster General's explanation of new clause 4's effect on the marginal tax rate. I would go so far as to say that I made a mistake—that is not the effect intended. However, she did not satisfy us on the principle. Her colleagues in the Department for Work and Pensions were prepared to say in respect of pension credit that they will put up housing benefit thresholds to ensure that the benefit of the credit gets through. That credit is not due to start until October 2003. That Department is prepared to assure people that it will adjust rates and thresholds to ensure that they will get the benefit 18 months or so down the line, but the Paymaster General is not prepared to assure them that what they are given with one hand through the working tax credit will not be taken away with the other through housing benefit even 12 months down the line.
      Whatever the merits of the new clause, the Paymaster General might have offered us some reassurance. The issue of high housing costs can only be addressed with reference to the effects on the housing benefit system, because the only way to identify those who have the combination of low income and high housing costs is through housing benefit. The hon. Lady said that the new clause would not deal with the problem, but did not say what would. I think that she recognises there is a problem, but she gave no sense that the Government intend to deal with it, nor any indication of how they might do so. We are disappointed by the Government's response to new clause 4, which, although it would not achieve what we intended, at least raises the issue.
      It is interesting to compare the Paymaster General's response on passported benefits to her response on continued entitlement to the children's tax credit. On passported benefits, she gave an assurance that there would be no losers—people getting free school meals now will get them in future—but there was no such assurance on the children's tax credit: that will be dealt with in the
      1064
      Budget. What is the difference of principle between the two? [Interruption.] None—it is decent of the hon. Lady to say that. After all, I have admitted that I was wrong.
      People are getting credits now and they want an assurance that they will continue to do so in future. We are delighted by the assurance that free school meals will be carried over; why can we not have a similar assurance on the children's tax credit? As the hon. Member for Arundel and South Downs said, when structural changes are made there tends to be a principle whereby attempts are made to avoid cash losers. People then work their way through the system and inflation does its bit, but people are protected when changes are made.
      Whatever rates and thresholds the Chancellor chooses—we are not trying to pre-empt his decision—we seek an assurance today that those who currently receive money will be protected and that there is a principle of no cash losers at work. However, the Paymaster General has reserved the option, in effect saying that she wants to leave for the Chancellor in the Budget the discretion not merely to set the rates and thresholds that he wants to set, but to take some or all of the £520 a year that those hard-working families are getting.
      My hon. Friends and I are concerned that the Chancellor wants to reserve that option. We therefore want to test the opinion of the House.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 165, Noes 245.

      Division No. 163]

      [2.38 pm

      AYES

      Allan, Richard

      Cormack, Sir Patrick

      Amess, David

      Cotter, Brian

      Ancram, Rt Hon Michael

      Cran, James

      Arbuthnot, Rt Hon James

      Davey, Edward (Kingston)

      Atkinson, David (Bour'mth E)

      Davies, Quentin (Grantham)

      Atkinson, Peter (Hexham)

      Djanogly, Jonathan

      Bacon, Richard

      Doughty, Sue

      Baldry, Tony

      Duncan, Peter (Galloway)

      Barker, Gregory

      Ewing, Annabelle

      Baron, John

      Fabricant, Michael

      Barrett, John

      Field, Mark (Cities of London)

      Beggs, Roy

      Flight, Howard

      Beith, Rt Hon A J

      Flook, Adrian

      Bercow, John

      Forth, Rt Hon Eric

      Blunt, Crispin

      Fox, Dr Liam

      Boswell, Tim

      Francois, Mark

      Brady, Graham

      Gale, Roger

      Brake, Tom

      Garnier, Edward

      Brazier, Julian

      George, Andrew (St Ives)

      Brooke, Mrs Annette L

      Gibb, Nick

      Browning, Mrs Angela

      Gidley, Sandra

      Burnett, John

      Gillan, Mrs Cheryl

      Burt, Alistair

      Goodman, Paul

      Butterfill, John

      Gray, James

      Cable, Dr Vincent

      Grayling, Chris

      Calton, Mrs Patsy

      Green, Damian (Ashford)

      Cameron, David

      Green, Matthew (Ludlow)

      Campbell, Gregory (E Lond'y)

      Grieve, Dominic

      Campbell, Rt Hon Menzies

      Gummer, Rt Hon John

      (NE Fife)

      Hague, Rt Hon William

      Carmichael, Alistair

      Hammond, Philip

      Cash, William

      Hams, Dr Evan (Oxford W)

      Chapman, Sir Sydney

      Harvey, Nick

      (Chipping Barnet)

      Hawkins, Nick

      Chope, Christopher

      Hayes, John

      Clappison, James

      Heald, Oliver

      Collins, Tim

      Hoban, Mark

      Conway, Derek

      Holmes, Paul

      1065

      Horam, John

      Robertson, Laurence (Tewk'b'ry)

      Howard, Rt Hon Michael

      Robinson, Peter (Belfast E)

      Jenkin, Bernard

      Roe, Mrs Marion

      Key, Robert

      Ruffley, David

      Kirkbride, Miss Julie

      Russell, Bob (Colchester)

      Knight, Rt Hon Greg (E Yorkshire)

      Salmond, Alex

      Laing, Mrs Eleanor

      Sanders, Adrian

      Lansley, Andrew

      Shephard, Rt Hon Mrs Gillian

      Laws, David

      Simmonds, Mark

      Letwin, Oliver

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

      Lewis, Dr Julian (New Forest E)

      Smyth, Rev Martin (Belfast S)

      Liddell-Grainger, Ian

      Soames, Nicholas

      Lidington, David

      Spelman, Mrs Caroline

      Loughton, Tim

      Spicer, Sir Michael

      Luff, Peter

      Spink, Bob

      McIntosh, Miss Anne

      Spring, Richard

      MacKay, Rt Hon Andrew

      Streeter, Gary

      Maclean, Rt Hon David

      Swayne, Desmond

      McLoughlin, Patrick

      Swire, Hugo

      Malins, Humfrey

      Syms, Robert

      Maples, John

      Tapsell, Sir Peter

      Mates Michael

      Taylor, Matthew (Truro)

      Maude, Rd Hon Francis

      Taylor, Sir Teddy

      Mawhinney, Rt Hon Sir Brian

      Thomas, Simon (Ceredigion)

      May, Mrs Theresa

      Thurso, John

      Mercer, Patrick

      Trend, Michael

      Mitchell, Andrew (Sutton Coldfield)

      Turner, Andrew (Isle of Wight)

      Tyler Paul

      Moss, Malcolm

      Tyrie Andrew

      Murrison, Dr Andrew

      Walter, Robert

      Oaten, Mark

      Waterson, Nigel

      O'Brien, Stephen (Eddisbury)

      Watkinson, Angela

      Öpik, Lembit

      Webb, Steve

      Osborne, George (Tatton)

      Weir, Michael

      Ottaway, Richard

      Whittingdale, John

      Page, Richard

      Widdecombe, Rt Hon Miss Ann

      Paice, James

      Wiggin, Bill

      Pickles, Eric

      Wilkinson, John

      Price, Adam

      Willetts, David

      Prisk, Mark

      Williams, Hywel (Caernarfon)

      Pugh, Dr John

      Willis, Phil

      Randall, John

      Wishart, Pete

      Redwood, Rt Hon John

      Yeo, Tim

      Reid, Alan (Argyll & Bute)

      Young, Rt Hon Sir George

      Rendel, David

      Robathan, Andrew

      Tellers for the Ayes:

      Robertson, Angus (Moray)

      Mr. David Heath and

      Robertson, Hugh (Faversham)

      Richard Younger-Ross.

      NOES

      Abbott, Ms Diane

      Brennan, Kevin

      Alexander, Douglas

      Brown, Rt Hon Nicholas

      Anderson, Rt Hon Donald

      (Newcastle E & Wallsend)

      (Swansea E)

      Brown, Russell (Dumfries)

      Anderson, Janet (Rossendale)

      Browne, Desmond

      Armstrong, Rt Hon Ms Hilary

      Burgon, Colin

      Atherton, Ms Candy

      Cairns, David

      Atkins, Charlotte

      Campbell, Alan (Tynemouth)

      Austin, John

      Campbell, Ronnie (Blyth V)

      Bailey, Adrian

      Casale, Roger

      Banks, Tony

      Cawsey, Ian

      Barnes, Harry

      Challen, Colin

      Battle, John

      Chapman, Ben (Wirral S)

      Beard, Nigel

      Chaytor, David

      Beckett, Rt Hon Margaret

      Clapham, Michael

      Bell, Stuart

      Clark, Dr Lynda

      Benn, Hilary

      (Edinburgh Pentlands)

      Bennett, Andrew

      Clark, Paul (Gillingham)

      Benton, Joe

      Clarke, Rt Hon Charles

      Berry, Roger

      (Norwich S)

      Best, Harold

      Clarke, Rt Hon Tom (Coatbridge)

      Blackman, Liz

      Clarke, Tony (Northampton S)

      Blizzard, Bob

      Clelland, David

      Boateng, Rt Hon Paul

      Clwyd, Ann

      Borrow, David

      Coffey, Ms Ann

      Bradley, Peter (The Wrekin)

      Coleman, Iain

      1066

      Connarty, Michael

      Keen, Alan (Feltham & Heston)

      Cook, Rt Hon Robin (Livingston)

      Keen, Ann (Brentford & Isleworth)

      Cooper, Yvette

      Kemp, Fraser

      Corbyn, Jeremy

      Khabra, Piara S

      Cruddas, Jon

      Kilfoyle, Peter

      Cryer, John (Hornchurch)

      King, Ms Oona (Bethnal Green)

      Cummings, John

      Kumar, Dr Ashok

      Cunningham, Jim (Cov'try S)

      Ladyman, Dr Stephen

      Cunningham, Tony (Workington)

      Laxton, Bob

      Dalyell, Tam

      Lepper, David

      Darling, Rt Hon Alistair

      Leslie, Christopher

      Davey, Valerie (Bristol W)

      Levitt, Tom

      David, Wayne

      Lewis, Ivan (Bury S)

      Davies, Rt Hon Denzil (Llanelli)

      Linton, Martin

      Dawson, Hilton

      Lloyd, Tony

      Dean, Mrs Janet

      Love, Andrew

      Dhanda, Parmjit

      Luke, Iain

      Dobbin, Jim

      Lyons, John

      Dobson, Rt Hon Frank

      McAvoy, Thomas

      Donohoe, Brian H

      McCabe, Stephen

      Doran, Frank

      McCafferty, Chris

      Drew, David

      McCartney, Rt Hon Ian

      Drown, Ms Julia

      McDonagh, Siobhain

      Eagle, Maria (L'pool Garston)

      MacDonald, Calum

      Edwards, Huw

      McDonnell, John

      Efford, Clive

      MacDougall, John

      Ennis, Jeff

      McGuire, Mrs Anne

      Etherington, Bill

      McIsaac, Shona

      Farrelly, Paul

      McKechin, Ann

      Field, Rt Hon Frank (Birkenhead)

      Mackinlay, Andrew

      Fisher, Mark

      McNulty, Tony

      Fitzpatrick, Jim

      Mactaggart, Fiona

      Fitzsimons, Mrs Lorna

      McWilliam, John

      Flint, Caroline

      Mahon, Mrs Alice

      Flynn, Paul

      Marsden, Gordon (Blackpool S)

      Foster, Rt Hon Derek

      Martlew, Eric

      Foster, Michael (Worcester)

      Meacher, Rt Hon Michael

      Foster, Michael Jabez (Hastings)

      Meale, Alan

      Gapes, Mike

      Merron, Gillian

      Gardiner, Barry

      Miliband, David

      Gerrard, Neil

      Miller, Andrew

      Gibson, Dr Ian

      Mitchell, Austin (Gt Grimsby)

      Gilroy, Linda

      Moffatt, Laura

      Godsiff, Roger

      Mole, Chris

      Griffiths, Jane (Reading E)

      Moonie, Dr Lewis

      Grogan, John

      Moran, Margaret

      Hall, Mike (Weaver Vale)

      Mullin, Chris

      Hall, Patrick (Bedford)

      Murphy, Jim (Eastwood)

      Hamilton, David (Midlothian)

      Norris, Dan

      Hamilton, Fabian (Leeds NE)

      O'Brien, Bill (Normanton)

      Hanson, David

      O'Hara, Edward

      Harris, Tom (Glasgow Cathcart)

      O'Neill, Martin

      Henderson, Doug (Newcastle N)

      Osborne, Sandra (Ayr)

      Henderson, Ivan (Harwich)

      Pearson, Ian

      Hendrick, Mark

      Perham, Linda

      Hepburn, Stephen

      Pike, Peter

      Heppell, John

      Plaskitt, James

      Hermon, Lady

      Pollard, Kerry

      Heyes, David

      Pond, Chris

      Hill, Keith

      Pound, Stephen

      Hinchliffe, David

      Prentice, Ms Bridget (Lewisham E)

      Hopkins, Kelvin

      Prentice, Gordon (Pendle)

      Howarth, George (Knowsley N)

      Primarolo, Dawn

      Hoyle, Lindsay

      Quin, Rt Hon Joyce

      Hughes, Kevin (Doncaster N)

      Quinn, Lawrie

      Hurst, Alan

      Rammell, Bill

      Illsley, Eric

      Reed, Andy (Loughborough)

      Jackson, Glenda (Hampstead)

      Roche, Mrs Barbara

      Jackson, Helen (Hillsborough)

      Rooney, Terry

      Johnson, Alan (Hull W & Hessle)

      Ruddock, Joan

      Jones, Helen (Warrington N)

      Russell, Ms Christine (Chester)

      Jones, Jon Owen (Cardiff C)

      Ryan, Joan

      Jones, Martyn (Clwyd S)

      Salter, Martin

      Joyce, Eric

      Sarwar, Mohammad

      Kaufman, Rt Hon Gerald

      Savidge, Malcolm

      Keeble, Ms Sally

      Sawford, Phil

      1067

      Shaw, Jonathan

      Turner, Dennis (Wolverh'ton SE)

      Shipley, Ms Debra

      Turner, Dr Desmond (Kemptown)

      Simon, Siôn

      Turner, Neil (Wigan)

      Skinner, Dennis

      Twigg, Derek (Halton)

      Smith, Rt Hon Andrew (Oxford E)

      Tynan, Bill

      Smith, Geraldine (Morecambe)

      Vis, Dr Rudi

      Smith, Jacqui (Redditch)

      Walley, Ms Joan

      Soley, Clive

      Ward, Ms Claire

      Southworth, Helen

      Wareing, Robert N

      Starkey, Dr Phyllis

      White, Brian

      Steinberg, Gerry

      Williams, Rt Hon Alan

      Stewart, Ian (Eccles)

      (Swansea W)

      Stinchcombe, Paul

      Williams, Mrs Betty (Conwy)

      Stoate, Dr Howard

      Winnick, David

      Strang, Rt Hon Dr Gavin

      Wood, Mike

      Stringer, Graham

      Woolas, Phil

      Stuart, Ms Gisela

      Worthington, Tony

      Sutcliffe, Gerry

      Wright, Anthony D (Gt Yarmouth)

      Taylor, Rt Hon Ann (Dewsbury)

      Wright, David (Telford)

      Taylor, Ms Dari (Stockton S)

      Wright, Tony (Cannock)

      Thomas, Gareth (Clwyd W)

      Wyatt, Derek

      Thomas, Gareth R (Harrow W)

      Timms, Stephen

      Tellers for the Noes:

      Todd, Mark

      Mr. Nick Ainger and

      Truswell, Paul

      Angela Smith.

      Question accordingly negatived.

New Clause 2

  MEANS OF PAYMENT OF TAX CREDITS TO RECIPIENTS
  ?(1) Subject to subsection (2), a person to whom an award of tax credit has been made shall be entitled to receive it by means of a book of serial orders at a post office.

  (2)Regulations may provide that the entitlement in subsection (1) shall end when arrangements are in place for any recipient who so wishes to receive payment into a basic account accessible at a Post Office in which case that entitlement shall be replaced by an entitlement to payment into such an account.

  (3)This section applies to payments—

  (a)of child tax credit and any payments of working tax credit being made directly by the Board under section 23, and

  (b)of working tax credit being paid by employers by virtue of section 24.'. —[Mr. Heath.]

  Brought up, and read the First time.
  Mr. David Heath: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker: With this it will be convenient to take the following amendments: No. 15, in page 16, line 20, at beginning insert—
  ?Subject to section (Means of payment of tax credits to recipients)'.
  No. 13, in page 16, line 30, at end insert—
  ?subject to employers consulting with their employees as to whether they would prefer working tax credit payments to be made by the Board directly.'.
  No. 16, in page 16, line 30, at end insert—
  '(1A) Regulations under this section shall not apply to an employer with fewer than 15 employees'.
  No. 14, in page 17, line 42, at end insert—
  '(8) The Board will refund to employers their costs incurred in making payments of working tax credit to employees.
  (9) No employer with 20 or fewer employees will be bound by the regulations set out in this section.'.
  Mr. Heath: Amendments Nos. 15 and 16 were tabled by the Liberal Democrats. Should my hon. Friend the Member for Teignbridge (Richard Younger-Ross) catch your eye later in the debate, Mr. Deputy Speaker, he will speak to amendment No. 16. Amendment No. 15 is simply a paving amendment for new clause 2.
  The new clause deals with the payment of tax credits through the sub-post office system. It is a great delight to engage the attention of yet another Department on the matter of sub-post offices, as we are already talking simultaneously to two Departments. Nothing would please me more than if the new clause were to be unnecessary when events reach their conclusion next year.
  We greatly welcomed the performance and innovation unit report and its comments on the universal banking service. We hope that it will be put in place satisfactorily, but we do not share the Government's confidence that that will necessarily be the case. In that view, we have allies, not least the National Federation of Sub-Postmasters, which has serious concerns about the readiness of the Government systems to implement what the NFSP sees as an important part of the strategy for the future survival and development of the sub-post office system. As we know—I will not go into a long history of sub-post offices, as that would be unnecessary to the prosecution of the argument for the new clause—
  Mr. Deputy Speaker: Order. That would not only be unnecessary, but it might take us outside the scope of the discussion that we should be having.
  Mr. Heath: Absolutely right, Mr. Deputy Speaker. I obviously phrased my comment badly. I meant to say that to widen the scope to include the history of sub-post offices would be inappropriate to the debate. However, to deal specifically with the payment systems within sub-post offices, which is the substance of the new clause, is necessary.
  As we know, three forms of bank account are to be offered by sub-post offices. I need to deal with only two: the basic bank account, which will provide basic banking services through the clearing banks but situated in the sub-post offices, and the Post Office card account. That baseline provision is the most critical element. It is designed for those who have not had or do not want a bank account, but still need to receive their benefits through the sub-post office system, and for whom we would suggest that the tax credit is also a relevant factor.
  The Government were tardy in getting arrangements under way for that basic payment system. There seems to have been almost no progress under the aegis of the Department of Trade and Industry. Perhaps for that reason some rattling of the cages was necessary in autumn last year, when the Secretary of State for Work and Pensions was appointed as a sort of universal bank tsar. We know that, last October, the contracts had not been placed with the companies that were to put in the infrastructure.
  In a letter to Mr. Colin Baker, the general secretary of the NFSP, on 19 October, the director of postal services—network and markets—in the DTI commented:
  "There is a lot to do to put in place these sophisticated, if commonplace, banking arrangements".
  That is a masterpiece of understatement. The IT project in question is massive, if not revolutionary. It involves a great deal of development work, provision of

  1069
  infrastructure and training. None of those were in place in October. The contracts were not let until November, when a decision was taken to split the contracts between the basic bank account, which was to be provided by LINK Interchange Network Ltd., and the Post Office bank account, to be provided by EDS/Citibank.
  Since then, I have had a number of meetings with representatives of those companies and with representatives of IT companies on a wider front. The one word that keeps coming back to me about the project is "challenging". We can assume that that means well nigh impossible to deliver on the date on which Ministers still assure us it will happen. One of the leading IT manufacturers told me that the industry norm for such a project would be to have it developed and operational at least 12 months before it was to go live. That time would be needed to identify difficulties, to train the personnel who were to install the system and use it and to ensure that it was working to everyone's satisfaction.
  Twelve months before the new payment system is to go live is the beginning of April this year, yet we know that the contracts have only just been let and that progress on development is limited. We are at a loss to know how personnel are to be trained, as the Government tell us nothing about that. We are at a loss to know what the migration policy is—what its objectives are, let alone how it is to be implemented. Again, the Government will not tell us. They will not tell us anything at all about the project. They merely repeat that it will be all right on the night and that the system will be ready in April.
  Nothing would delight me more than if that were the case, but if not, there is an argument that for other benefits, there is a period of migration which allows for flexibility, but the child tax credit is not a mobile target. It is to come into effect in April 2003, so there is a fixed deadline for that element of tax credit. There are serious fears that the system will not be ready. The new clause would provide a plan B for the Government. They may well need such a plan to allow people to receive their payments through the Post Office on the specified date if they do not have a bank account.
  3 pm
  What is the argument against such an alternative? The only argument against the ability to make such arrangements if the Post Office card account is not ready is that the Government want to move people towards basic bank accounts instead of towards the Post Office card account. That is what the clearing banks think. They feel that they have been sold a pup and coerced into providing the services, while the Government do not intend the card account to be ready on the day. If it is not ready, people will be pushed into basic bank accounts, irrespective of their wishes. The post offices share that suspicion and see such a move as very retrograde, as people who have bank accounts may well opt for the bank rather than the Post Office. All the benefits that would accrue to the Post Office system would then be nugatory. Clearly, the Government have an argument in terms of reducing costs, but not in terms of providing the choice that they have always maintained to be the basis of their proposals. That is why the new clause would provide an appropriate safety belt for the Government and for the system.
  The new clause has another separate purpose. Subsection (3) would extend the payment system for working tax credit into the same payment framework as
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  the other payments. That is another very important aspect of the new clause. I understand that the Government's argument against the proposal is that they want to preserve the linkage of working tax credit with work, but they take the deeply patronising view that recipients can make the connection only if two lines to that effect are written on their pay cheque, rather than on their bank statement. That view is wrong.
  The arguments for providing the option proposed in the new clause—it is not a compulsory course of action—are threefold. First, it would reduce costs for employers. That is a valuable objective and I know that my hon. Friend the Member for Teignbridge will amplify that point in terms of small employers if he can catch your eye, Mr. Deputy Speaker. Secondly, it would extend control to the recipient, which is right in itself. Thirdly, it would help to safeguard our post office network—something that hon. Members in all parts of the House would see as a key objective.
  David Cairns: Surely the proposal would achieve a significant reduction in an employer's costs only if all the employees in a company opted to take their payment through their payment book at the Post Office. If one employee did not take the option—the hon. Gentleman said that it is an option and is not compulsory—the employer would still have to set up the system, fill in the forms and cross a certain cost threshold. A significant saving will be secured only if all the employees of a firm opt to go to the Post Office. How will he make that happen?
  Mr. Heath: I gently suggest to the hon. Gentleman that he is perhaps talking about big business and has never had experience of a small business with a small number of employees. It is perfectly possible that all the employees in such a business might opt for the proposal, not least because there might be only one employee who is receiving the relevant payment.
  Mr. Hugo Swire: Does the hon. Gentleman agree that the point of the proposal is to give people a choice? It is important that people should have such an option.
  Mr. Heath: The hon. Gentleman is absolutely right. Typically, the Government want to extend not choice, but compulsion, because there is only one way of delivering the objectives that they have in mind. We reject that position and I think that he probably rejects it as well.
  Mr. Mark Hoban: The hon. Member for Greenock and Inverclyde (David Cairns) mentioned set-up costs. The other costs that are borne by employers—the £90 million a year that the package will cost—are related to individual transactions. Although the set-up costs will be lost if all employees opt out, costs will still be reduced even if some of them remain in the system and are paid as before through their payroll, because there is a transaction cost as well as a set-up cost.
  Mr. Heath: The hon. Gentleman is, of course, absolutely and transparently correct. The matter involves not all employees, but those who are receiving working tax credit. Often, only relatively small numbers of

  1071
  employees would be involved, so it is not unrealistic to assume that the new clause would have tangible benefits for employers.
  I know that other hon. Members wish to speak to the new clause, so I shall conclude my remarks. I repeat that this is a win-win situation for the Government. No additional cost would accrue to them and the new clause would provide real benefits for individuals. It would safeguard our post offices at a time when many people are yet to be convinced that the Government's proposals, however creditable, will be in place when they are needed to safeguard the system. I commend it to the House.
  Mr. Flight: The first part of the new clause deals with an issue that was extensively discussed in Committee. I put it to the House that there is not only a likelihood but an extremely strong probability that the arrangements that the Government envisage for delivering the new tax credits in April 2003, essentially through the universal bank, will not be in place. When the subject was discussed in Committee, after we had asked a number of questions, the Paymaster General effectively said that the Government accepted that that could happen and that standby arrangements were in place to deliver payment—it certainly included the child tax credit—by coupons or order books at post offices. I looked through the Bill, but could not find where it provides for such arrangements, so in principle, the new clause seems to be necessary to ensure that they are covered.
  Rather than commenting on the proposed arrangements for the option on payment of working tax credit, however, I should like to focus on amendment No. 13. The Government are well aware that the Opposition believe in principle that the arguments stack up in favour of paying working tax credit not through employers but directly to recipients. One of the main arguments that they have put forward for paying it through employers is that of stigma. Amendment No. 13 is designed to test that argument. Rather like the second part of the new clause, it seeks to offer an appropriate option on a collective basis. Therefore, it requires a consultation process between employers and employees to take place before the obligation for employers to pay the credit through the pay packet takes effect. Implicit in the proposal is the idea that, if a majority of employees prefer to be paid directly by the board, that is the arrangement into which the company would enter.
  We are extremely surprised that the Government have paid no heed to the arguments against paying working tax credit directly to beneficiaries. The evidence—in so far as it exists—is indeed that more stigma is attached to payment through the pay packet, as people's personal backgrounds will implicitly be known by their employers and often, as a result, by their work colleagues. The National Association of Citizens Advice Bureaux has made the point that, notwithstanding the provisions of the Bill, employers in smaller businesses could be discouraged from employing people if that entailed the hassle of administering working tax credit. There is strong evidence that the stigma element would be greater as a result of payment through the pay packet than as a result of direct payment.
  David Cairns: This is one of the issues that I hope to raise later. The hon. Gentleman has twice referred to
  1072
  extensive evidence that greater stigma attaches to payment through the pay packet than to payment through the order book. Other than the anecdotal evidence that he has given, can he outline exactly what that extensive evidence is?
  Mr. Flight: I refer the hon. Gentleman to the studies, which I have already mentioned, undertaken by the National Association of Citizens Advice Bureaux and by the Institute for Fiscal Studies.
  Have the Government taken into consideration the fact that people in marriages and partnerships frequently hold joint bank accounts, and that those accounts might sometimes come under pressure from the more powerful character in the partnership? Going back to the child tax credit, one of the results of paying everything automatically through a bank account, as the Government wish to do, is that that might undermine their correct intention that the money should go to the carer.
  The Government suggested, somewhat unenthusiastically, in Committee that if the recipients of child tax credit really wanted to go on receiving their payment through vouchers that were cashable at post offices, they would be able to do so. It is still not clear whether that is a realistic option. If there is a genuine intent that child tax credit should go to the carer, I suggest that that is more likely to be achieved by permitting those at the poorer end of society, in particular, to receive it through vouchers, rather than by forcing them down the bank payment route.
  I return to the question whether working tax credit should be paid directly, which we believe remains the better option, or by employers. The Government have refused to accept that the result of what they are seeking to achieve will be to produce a social wage. People will take home a certain amount of money, but they will not understand the details in terms of whether they have paid tax, or of how much of the new negative tax rate income they have got back. They will simply have a sum of money. In many cases, their take-home pay will bear no relation to the economic market value of the job that they are doing.
  We remain concerned that that will act as a disincentive to people to up-skill themselves and to improve the amount that they earn, and as an overall disincentive to productivity improvements in the economy. I urge the Government to be a little suspicious of the CBI's support for payment via the payroll. It is clear that that is attractive, and I recollect the Paymaster General making certain references to that effect. There are attractions to employers in having pay subsidies, because they reduce the pressure to pay a proper rate for the job and exert downward pressures on rates of pay. If the Government ignore that important aspect of the question, they do so at their peril and in the face of what is already happening.
  3.15 pm
  Amendment No. 14 is a probing amendment, and we discussed some of the issues involved in Committee. The proposal is a response to the issues raised by the Government's better regulation task force and by the Carter report. The burdens of administration transferred on to businesses by the Government have fallen particularly on small companies with fewer than four employees. That represents something like £25 million out of their total costs. Worse than that, of

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  that £25 million, small companies spend some £15 million not on payments but merely on keeping on top of the regulations and the requirement to know what they are supposed to be doing.
  We have argued consistently that it is undesirable for small businesses to be burdened with such administrative costs and focuses, when their main task is simply to keep their business alive. The Liberal Democrat amendment has proposed a slightly smaller minimum floor at which businesses would be exempt than the one that we have proposed, but it deals with the same issue of principle. Will the Government consider the points made by Lord Haskins and his taskforce in relation to small businesses?
  Mr. Mark Field: Prior to entering this place, I ran a small business that would have come within the scope of the Liberal Democrat amendment and our own, in terms of the number of employees. My concern is that whatever level is set, when a company gets near to that level it will provide a big disincentive to taking on any more employees. I am sure that that point will be addressed by the Minister later. What thoughts does my hon. Friend have on the matter?
  Mr. Flight: I thank my hon. Friend for his comments. I was about to come to the other part of our amendment, which proposes that the Government should consider measures for the Board of the Inland Revenue to refund to companies the cost of administering working tax credit, if they remain charged with that burden. Again, this is a probing amendment, and we have touched on this subject before.
  After consulting widely with businesses, it is clear that they understood that the relevant territory covered by the Carter review and the comments of the Chancellor of the Exchequer were not just concerned with technical arrangements for payroll—which, I grant, is most of Carter's territory, as the Paymaster General has pointed out. Businesses also understood that the Chancellor had indicated in the pre-Budget report that the Government would consider some refunding of costs for administration carried out on behalf of the Government in relation to working tax credit. That is particularly relevant to small businesses, if they are not to be exempt.
  The total administrative costs for businesses is now of the order of £250 million a year, which covers tax credits, student loan repayments and the administration of stakeholder pensions. The Government will be turning a blind eye if they do not appreciate that business perceives them to have recognised those costs and to be thinking of doing something about them. In Committee, it was clear that the Government were not interested in so doing, and that they felt that businesses should be very pleased with the working tax credit because it would subsidise employment for them. However, I wish to give the Paymaster General a further opportunity to consider the matter, because that is certainly what business expects.
  The amendments grouped with new clause 2 interact and relate to each other, but there are separate issues to consider. First, will the Government even be able to deliver the child tax credit, given the running-down of post offices, the likely failure of the universal bank and the lack of provision in the Bill for an alternative? Secondly, will they reconsider giving employees at least
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  the option to receive working tax credit payments directly, whether on a corporate basis or as specified in new clause 2(2), when they express a wish to do so? Thirdly, it is necessary to tease out of the Government yet again whether they are willing to compensate business for the costs of administering their programmes.
  Richard Younger-Ross: I support the new clause and the amendments grouped with it and want particularly to discuss further the effects on employers. As the hon. Member for Arundel and South Downs (Mr. Flight) said, the Liberal Democrat and Conservative amendments differ only in detail rather than principle. The principles are one and the same.
  I have looked up some figures on small businesses. Although I do not have a figure for the number of businesses that employ 15 or 20 people, 83 per cent. of companies employ 10 people or fewer. It might be argued that if 83 per cent. of businesses were exempted from the proposal it would have a dramatic effect, but it would not, because only about 20 per cent. of employees would be affected. Therefore, it is possible, and with minimal effect, to encourage enterprise and remove a burden from a very large number of businesses.
  Let us consider the overall cost of the burden on small businesses, which is constantly growing and never seems to diminish. The British Chambers of Commerce has compiled figures from the regulatory impact assessment prepared by the Government. The total updated cost, until May 2002, now runs to £15.6 billion. The working tax credit will cost some £262 million and the student repayment loan—another burden on small businesses£255 million. Businesses, especially small businesses, are bearing heavy burdens that have an effect on the ability to grow and progress.
  Without wanting to put words in its mouth, I am sure that the British Chambers of Commerce would support the Conservative amendment as much as ours. I have a note from it:
  "The British Chambers of Commerce very much welcomes this amendment. In the week it published its own Regulatory Reform Action Plan. It shows Government how to seriously go about cutting the burdens on business. Government will no doubt spout out figures about only 1 in 8 businesses being affected by tax credits, but that 1 in 8 equates to 175,000 small businesses."
  That is a heavy burden.
  Let us consider what other employer organisations say about tax credits. The CBI has spoken in favour and its parliamentary brief says:
  "The CBI supported the introduction of the tax credits system … as a valuable way of incentivising work."
  However, it warns:
  "The CBI believes that, if there is no possibility of administering the tax credits system within the Inland Revenue, employers should be compensated for the administrative costs associated with running the scheme."
  That proposal is included in one of the amendments. Other amendments might also reduce the burden and cost by exempting a large number of businesses from having to administer the scheme.
  The Bath report considered tax credits and concluded that
  "the pattern of compliance costs discriminates against small employers in that the bottom thirty per cent of employers bear seventy five per cent of the compliance costs."

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  That cannot be right. New Labour wants "New Britain" to have an enterprise culture and, if we are to have an enterprise culture, encouraging small businesses to thrive is vital.
  Some 90 per cent. of Government revenue is collected by businesses. Employers are responsible for statutory sick pay and maternity pay administration. Family-friendly schemes introduced in the past two years such as the Employment Relations Act 1999, the working time directive, the Data Protection Act 1998 and the national minimum wage, which I support in principle, are all burdens on businesses, and on small businesses in particular.
  Mr. Webb: Lest my hon. Friend be misunderstood or misquoted, I presume that he is drawing a distinction between measures such as the minimum wage, which we supported and which are beneficial, and tax credits, which can be delivered other than through the pay packet. Whereas the minimum wage can be delivered only in that way, tax credits need not be a burden on business.
  Richard Younger-Ross: I am grateful to my hon. Friend for drawing that distinction. I am not saying that we do not support some of those measures, the burden of which must be borne by business, but we must consider the overall burden; if it is not necessary for business to bear a particular burden, it should not have to do so. Small businesses can therefore be exempted and encouraged. We must look at the total picture and not consider such matters in isolation.
  America has, in principle, exempted businesses by using the standard of turnover of less than $500,000. Alternatively, companies that employ fewer than 15 people or fewer than 20 people are exempt from certain legislation. That proves that such measures can be achieved in an enterprise culture.
  In France, small businesses hold a nominal percentage of the tax collected to help them with the tax collection burden. The cost of tax and national insurance collection for large UK companies with more than 5,000 employees is about £5 per employee. The cost for companies employing between 1,000 and 5,000 people is about £30 per employee. For companies with between 500 and 999 employees, the cost is about £29 per employee. However, the cost for very small companies with between one and four employees is an astronomical £288 per employee.
  I know that the Government are minded to help small businesses and are aware of the burdens of regulation. The Prime Minister commented on the working time directive in November 1999:
  "I can see myself how some of the regulation is over the top. The problem is being recognised but more needs to be done."
  If the burden has been recognised and more needs to be done, we have an opportunity to relieve the burden through the Bill.
  The Minister responsible for small businesses was quoted in The Sunday Times on 30 January 2000:
  "It is about balancing the right of individual employees to fair treatment against demands on the employer. Once you get to 20 people it is very different from running a tiny company."
  That is one reason why the figure I quoted is slightly lower—the differences are in that band.
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  Devon has many small businesses—about 37,000. More than three quarters of employers throughout Devon have fewer than 10 employees. I want those businesses to thrive, prosper and grow, but they will not do so if we increase the burden on very small businesses. Instead of being able to climb the mountain of success, they will come across a rock face that they find hard to scale. Progressing from being self-employed to employing others should be made as easy possible, so I ask the Government to consider their response to the amendments carefully.
  3.30 pm
  Mr. Hoban: I welcome the grouping of the new clause and the amendments, because together they point up one of the issues at the heart of the Bill: the obligation on businesses to pay working tax credit, leading to a high burden on employers. Employers have to bear the cost of administration of working tax credit only because they are required to pay that credit to their employees.
  Let me remind the House of the burdens that the Government have placed on businesses. The cost of the Bill, as set out in the regulatory impact assessment, is about £90 million. I welcome the reduction compared with the previous regime, but it is still a significant cost on business. Employers face a problem. In a survey conducted by the Association of Chartered Certified Accountants in July 2001, 97 per cent. of respondents felt that the burden of payroll compliance had increased since April 1997, and 78 per cent. referred specifically to the administration costs of the working families tax credit.
  The real cost falls on smaller businesses. The average payroll cost per head for a business with between one and five employees is £288. That is a terrific cost when compared with the cost for businesses employing more than 5,000 employees, which averages at about £5 a head.
  I am especially interested in amendment No. 16, which has the deficiencies that my hon. Friend the Member for Cities of London and Westminster (Mr. Field) highlighted earlier. By setting a limit of 15 employees, it would create an artificial barrier to taking on additional employees. That stands in contrast to amendment No. 14, under which the Board of Inland Revenue would refund employers' costs but which has an opt-out provision for companies with fewer than 20 employees, whose tax credits would be paid directly by the Inland Revenue.
  It is a shame that amendment No. 14 is needed at all, because I would much rather the Government did not impose this burden on businesses, but by requiring the Inland Revenue to reimburse the costs it would demonstrate to the Government once and for all the true cost of compliance. Far too often, the Government impose burdens on business without understanding the true cost. Estimates are published in regulatory impact assessments that are riddled with caveats and assumptions. The amendment would lift part of the £90 million burden from business, and the other part of the burden would disappear for businesses with fewer than 20 employees.
  My hon. Friend the Member for Arundel and South Downs (Mr. Flight) referred to the consultations between employers and employees concerning whether benefits should be paid directly to employees by the Inland Revenue, rather than by the employers. Some people have a problem with tax credits being paid through payroll services, because they want to separate clearly their

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  personal lives and domestic finances from their lives at work. They do not want their employers to know about changes in personal circumstances, such as divorce or-a term that was used in Committee-partnering up, which affect the payment of tax credits. I suspect that many employees, following consultations with employers, will opt for direct payment. Many will prefer that, and it will remove some of the perceived stigma attaching to the credits.
  The hon. Member for Somerton and Frome (Mr. Heath) referred to post offices. Too often in debates on post offices, people refer solely to the rural post office network and the sub-post offices there. Those of us who represent urban areas also have a network of sub-post offices that we wish to sustain. That is an important factor to be borne in mind. The option to enable payment through post offices, either through the order book system, which will act as a failsafe in case the universal bank does not come into effect—as seems increasingly likely—or through such a bank account, will generate the traffic that sub-post offices in urban and rural areas need to sustain their business.
  Quite often, the shops are not just a post office counter but provide a wide range of services and are a valuable local amenity. Any measure that will improve the traffic flowing through the sub-post offices is valuable.
  Mr. Heath: I am extremely grateful to the hon. Gentleman for drawing the important distinction between urban and rural post offices and explaining the fact that this applies to both. I was at pains to mention the sub-post office network rather than just rural post offices, because the impact of the loss of benefit traffic is often greater on the urban sub-post offices, which rely on it more heavily.
  Mr. Hoban: The hon. Gentleman makes a valid point. Often, urban sub-post offices rely on the trade from benefit, as it were, to keep them afloat. They also often exist in some of the most deprived areas of our constituencies, where people are least likely to be able to travel from their homes to a main post office in the town centre. In our consideration of the hon. Gentleman's proposals, the importance of sub-post offices to elderly people and young mothers should not be underestimated.
  The new clause and the amendments are designed to preserve some of the social fabric of our rural and urban communities and would help to reduce the costs imposed on businesses. We should not be too churlish about the actions that the Government have taken to reduce those costs through their reform of the tax credits system—in Committee, the Paymaster General referred to some of the representations that she had received from business organisations welcoming the changes—but I hope that the House will take advantage of the opportunity that we now have to reduce those burdens once and for all by enabling employers with fewer than 20 employees to have the tax credits paid directly to those employees, and by ensuring that other businesses have their costs reimbursed by those who impose them—in this case, Her Majesty's Government.
  Mr. Swire: I am particularly interested in this group of amendments, tabled by ourselves and the Liberal Democrats, because I represent a constituency that, like that of the hon. Member for Teignbridge (Richard Younger-Ross), has a lot of small businesses. My local
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  businesses employ an average of between three and five people. We are a diverse community, largely rural but with some urban areas—and, if I may do so without straying too far from the new clause, Madam Deputy Speaker, I want to talk about post offices and how they fit into that pattern.
  Having sat through the Standing Committee stage—that was a steep learning curve for me—I believe that when the Government introduce new legislation they have an opportunity that they do not always get: the opportunity to get things right. Our amendments will steer them in that direction.
  In Committee, my hon. Friend the Member for Arundel and South Downs (Mr. Fligh0t) spoke lucidly about post offices and the role that the universal bank will play. It is true—although I must not go over old ground—that many of the neediest people, to whom the Bill will be of most benefit, do not have bank accounts. As my hon. Friend the Member for Fareham (Mr. Hoban) said, those people—such as the elderly and single mothers—would usually find it easier to go to their local post office, whether they live in a rural or an urban area.
  New clause 2 says that anyone who so wishes should be able to
  "receive payment into a basic account accessible at a Post Office".
  That raises the question of what an accessible post office is, and what is accessible once people get there. One of the problems in rural areas is the number of post offices that are closing. There is some evidence that the rate at which—
  Madam Deputy Speaker (Sylvia Heal): Order. I must bring the hon. Gentleman to order. We are talking about tax credits, not the future of the post office network.
  Mr. Swire: Thank you, Madam Deputy Speaker. I was trying not to stray too far from the new clause, but obviously I failed.
  When we think about how we want people to receive their benefits, we must recognise the role of post offices. At this stage I shall make only a few comments about the burden on business, because we shall be debating that subject all afternoon. We have heard comments from the CBI, the Institute of Directors and others, but we should also listen to the Federation of Small Businesses and the British Chambers of Commerce.
  As I have said, most of my local businesses in East Devon employ very few people. Small businesses represent the engine room of the economy, and any Government who want that engine room to grow should aspire to enable those companies to employ more people. Yet the Bill as it stands acts as a disincentive to employing 15 or 20 people. What on earth is the incentive to expand a business if that merely invites extra costs and red tape?
  I fully agree with the comments that have been made about stigma; indeed, the stigma may apply more in small businesses, where people are more likely to know each other socially than people in larger businesses. The fact that people's pay packets may not be a true reflection of the job that they do could cause dissent, and will be bad for morale.

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  I urge the Government to take on board what the Opposition are saying, and especially to recognise that post offices will have a problem, particularly between now and when the universal bank is set up. Our suggestions would give the Government a real opportunity to do what they claim they wish to do, and help those hard-pressed sub-post offices. They have the opportunity at least to nod towards the concerns expressed by the various bodies that represent small businesses, such as the British Chambers of Commerce and the Federation of Small Businesses, which are worried about ever-increasing regulation and red tape, and the interference in the lives of people employed by small businesses. I hope that the Government will take our amendments in good part, and respond to them later.
  3.45 pm
  Mr. Peter Luff: I think that all those who served on the Standing Committee would admit that it was good natured throughout its proceedings. Whatever differences there might have been between the two sides of the Committee on some issues, there was a common desire to improve the lot of the poorer people who will benefit from this Bill. That spirit characterised our debates.
  The Committee was intimidating, too, because it included not only the Financial Secretary to the Treasury, who is a distinguished lawyer, but the Paymaster General, who is one of the most talented Ministers in Her Majesty's Government, a professor of social policy representing the Liberal Democrats, and one of the most distinguished understanders of the City of London, my hon. Friend the Member for Arundel and South Downs (Mr. Flight). Those of us with no such qualifications—apart from a dim memory of an economics degree—felt inhibited from speaking.
  On the issues relating to new clause 2 and the amendments that have been grouped with it, however, passions began to be aroused. Uniquely, we got the hon. Member for West Renfrewshire (Jim Sheridan) to intervene on that subject; it was his only contribution. The hon. Gentleman made the traditional old Labour case. I shall not quote his contribution in full, but he said:
  "I thank the hon. Gentleman"—
  I think that that was my hon. Friend the Member for Fareham (Mr. Hoban)—
  "for this nostalgic trip back to the dark days of his Government, whereby any legislation enhancing the life of people"—
  Madam Deputy Speaker: Order. I hope that the hon. Gentleman's remarks will now be germane to the amendments that we are discussing.
  Mr. Luff: They will be strictly germane, Madam Deputy Speaker. I am sorry for my rather lengthy introduction—hat was always a fault with my university essays, and I was regularly marked down for it.[Interruption.] I did not hear what the Paymaster General said then, but I hope that Hansard has recorded it, because it is always worth listening to what she has to say.
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  The hon. Member for West Renfrewshire continued by saying that in times like the dark days of the Conservative Government:
  "any legislation enhancing the life of people in the lower quartile of our society suddenly becomes a burden on businesses…It is ridiculous in this day and age to say that about legislation that allows workers to work for less than 48 hours a week or sets a minimum wage, which takes people off benefits so that they do not need tax credits. It is nostalgic rubbish."
  I understand the sentiments that the hon. Gentleman was expressing, but if he were here I would invite him to reflect on exactly what our amendments would do. In Committee I talked about the road to hell being paved with good intentions—and to use another cliché this is the straw that breaks the camel's back. We all share a desire to enhance the lives of our poorer constituents, but we must look at the consequences of the mechanisms that we choose.
  If we put unacceptable burdens on the businesses that support those people, we risk destroying the mechanism that creates the jobs, which lies at the heart of any Government's ability—and the private sector's ability—to remove them from poverty. That is the crucial point.
  Ultimately, this is not a matter of great principle, but a matter of balance. We all accept that from time to time Governments must intervene in the affairs of the private sector to enhance some greater social good. As I made clear in Committee, that is a principle to which Conservative Governments have adhered down the centuries. The question is: when has that process gone too far? At what stage do we start putting that process at risk? Our amendments present the Government with a real case to be answered. They should say to themselves, "This may be the moment when the process has begun to go too far."
  I have already said that I have a high regard for the Paymaster General—but she was a bit naughty when she quoted so selectively from the words of the brief that the CBI sent to members of the Standing Committee. She described the CBI's position as follows: She said that the CBI brief stated:
  "The CBI supported the introduction of the tax credit system, including paying via the pay packet, as a valuable way of incentivising work. In that context, it also supports the extension of the principle of tax credits to employees without children."—[Official Report, Standing Committee A, 22 January 2002; c. 143, 153.]
  All well and good. That is indeed what the CBI said in its briefing note, but sadly for the Paymaster General, who quoted only the first two sentences, that same paragraph continues:
  "Nevertheless, employers are concerned at the rising burden of payroll administration and their growing role as paymasters of the benefit system. When the government originally suggested payment via the pay packet it indicated that the system should be paid via tax codes, but this now appears impractical. The CBI believes that, if there is no possibility of administering the tax credits system within the Inland Revenue, employers should he compensated for the administrative costs associated with running the scheme."
  That is the full and complete CBI position, according to a paragraph from the briefing entitled "CBI position." With respect to the Paymaster General, that is what our new clauses seek to deliver: the CBI's position as fully expressed, and not as selectively quoted.

  1081
  I shall not trouble the House by quoting the briefing at length, because to do so would be tedious, but I shall read out its final paragraph, which is just one sentence long:
  "Over the longer term, the CBI remains convinced that a technical solution is required which will allow payment via the pay packet to be administered by the Inland Revenue and bypass need for employer intervention completely."
  The CBI is advocating an interim solution, and the Paymaster General must address this issue when she winds up this debate rather more convincingly than she did in Committee.
  Historically, the CBI has not been particularly good at speaking up for the interests of smaller businesses, but I am glad that, under Digby Jones, it at last seems to be doing so. That is the spirit and rationale that underlies the CBI's position. I am pleased to say that, typically, local chambers of commerce are rather better at standing up for smaller businesses, which would be affected by the amendments and new clauses tabled by the Liberal Democrats and by my hon. Friends.
  The Herefordshire and Worcestershire chamber of commerce pointed out to me that a huge proportion of businesses in Worcestershire are smaller businesses. It said that 84 per cent. of businesses in Worcestershire employ 10 people or fewer, and that payroll costs create a real problem for such businesses. I shall read a paragraph from a letter from the chamber of commerce that I quoted in Standing Committee, because it is of huge importance and the whole House has a right to hear it:
  "Each of the tax credit or collection items adds an amount of administration and therefore cost to the job of operating the payroll. It must be remembered that the person doing the payroll is often the owner manager, their expertise is probably in the field in which they started the business and they will have varying degrees of expertise. People running small businesses already need to be multi skilled and able to turn their hands to many tasks, however there is a danger in increasing the non-core workload, that is not income generating, too much."
  Mr. Swire: Following on from what my hon. Friend has just said, does he agree with the similar comments of Donald Martin, the UK policy chairman of the Federation of Small Businesses? Mr. Martin said:
  "Businesses should not be treated as a social welfare arm of government. It is an invasion of employee privacy and a major distraction from the business of wealth creating activity."
  Mr. Luff: My hon. Friend makes a very powerful point, but sadly, the scope of the new clauses and amendments under consideration does not allow us to debate—as I would like to do—invasion of privacy. We are focusing on the cost, and new clause 2, which I shall come to in a moment, focuses on the method of payment. I strongly agree with my hon. Friend, however, and those are issues that have to be taken seriously.
  I urge the Paymaster General to recognise in her response that I am not trying to belittle the Government's attempts to reduce poverty. We all want to reduce poverty, but we must consider how to strike a balance and what mechanisms to use. It is probably asking too much for the Government to consider these new clauses and amendments sympathetically, but they should consider something similar in another place, or undertake to find another mechanism to reduce cost at a later stage, so that the CBI's long-term hope can come to fruition.
  A year or so ago, something happened in my constituency. The complaints that we have always heard from the small business sector acquired a new urgency
  1082
  and fervour. There was a change of spirit—I do not know what caused it—and the sense that the burden had become too great was suddenly made very vocal.
  In Standing Committee, the Paymaster General helpfully said that, in her view, the overall effect of the Bill might be to reduce the burdens on business. However, her confidence is not necessarily shared by the business sector itself, and experience certainly proves that that sector is right to be sceptical and cynical. It would help if she could explain why she is confident that, even at the margin, the proposals, without emendation, might reduce the burdens on business. That would be an encouraging message, if she can deliver on it.
  I realise that new clause 2 represents an example of the law of unintended consequences. It deals with the payment mechanism and is primarily inspired, I expect, by a desire to help the claimant by offering choice. As the hon. Member for Somerton and Frome (Mr. Heath), who spoke so effectively at the beginning of this debate, made clear, the Government appear to be hostile to offering choice in almost anything. However, offering the option of the payment mechanism seems a prudent and sensible step, and I endorse all that the hon. Gentleman said about choice.
  As I said, new clause 2 also illustrates the law of unintended consequences, because it would affect the post office network at the margin. You have rightly said, Madam Deputy Speaker, that we should not debate that issue and I shall not do so, but in answering the debate it is important for the Government to bear that helpful benefit in mind. The post office network is in crisis. Thousands of post offices are closing and anything that we can do to increase footfall in sub-post offices would be helpful. Although new clause 2 may be inspired by the desire to help the claimant, it would have a very useful side-effect that hon. Members must concentrate on and bear in mind when they vote. I hope that we will have the chance to vote on new clause 2, because I certainly wish to support it in the Lobby.
  New clause 2 also goes a long way towards addressing the issue of stigma, which has been thrown around, and to which my hon. Friend the Member for East Devon (Mr. Swire) referred in his intervention. In 1998, Martin Taylor, author of the Government-commissioned report on work incentives, told the former Social Security Select Committee that there was no empirical evidence to suggest that the working families tax credit would have an effect on stigma. He said:
  "As far as stigma goes, the hard and fast evidence in all these non-financial and psychological matters is difficult to come by."
  The Government would be ill-advised to hang too much of their case on that point.
  The Government should also remember that a formidable alliance shares the view that we are right to be sceptical of the stigma claim. The National Council for One Parent Families, the CBI and the Institute for Fiscal Studies have all warned that the stigma attached to means-tested benefits could actually be increased by paying the credit through the payroll. In its document entitled "Credit Where it's Due", the Institute for Fiscal Studies says:
  "There is no evidence, though, that payment in this way improves work incentives or reduces stigma: the WFTC evaluation programme has not yet produced estimates of WFTC take-up or the impact on employment."

  1083
  It also suggests that
  "for some, payment through the wage packet has been perhaps more stigmatising and certainly more hassle than direct payment."
  I know that the words of the Institute for Fiscal Studies are always taken very seriously in the House.
  In his opening speech, my hon. Friend the Member for Arundel and South Downs referred to the National Association of Citizens Advice Bureaux. In February, it published a report affirming that claimants should be given a free choice between direct payment and payment through their employer. The Paymaster General should also be concerned by NACAB reports of staff being dismissed as a result of their employers being forced to administer their claim for tax credits. I do not condone that behaviour. It is often the case that when we consider legislation we have to consider the world as it is and not as we would like it to be. Behaviour of that kind by employers is wrong and against the spirit of legislation, let alone their broader social responsibilities, but it is the inevitable consequence of a system like this one. The NACAB report states:
  "For many people, getting paid tax credit by their employer is simply not worth the trouble it can cause. Some employers consider the administrative burden too great for them to manage. In a small number of cases people have been sacked just for claiming tax credits. Other staff have pressure put on them to reduce their hours so they don't qualify, or are threatened with the sack."
  New clause 2 and its grouped amendments deal with two separate issues, both of great importance. The next group of amendments concerns the other important issue of fraud, and the House will wish to explore that at some length.
  The Minister must ask herself in all conscience whether she has got the balance of burdens on business and the social obligations of businesses in the wider community right. The amendments, which would relieve employers of some costs and exempt some employers from the provisions altogether, are the right measures because they will enhance employment and wealth throughout society. That is an issue with which she must always wrestle.
  The hon. Lady must be careful about relying on some of her well-rehearsed arguments on stigma and so forth. She should also consider the wider benefits of new clause 2—not only the benefits of choice that have been mentioned, but the wider social benefits of protecting the network of post offices. The new clause and the amendments have a huge amount to recommend them to the Government. I urge her to consider them sympathetically. If she has to reject them now, please will she reconsider them in another place?
  4 pm
  Dawn Primarolo: This has been an interesting debate, although much of the ground was covered in Committee, and it has centred on two issues. First, the new clause and the amendments would impose restrictions on the Inland Revenue board's powers to make payments both direct to the claimant and through the employer—the new clause and the amendments cover a number of issues to which I will return. Secondly, the amendments try to deal with the burdens on the employer.
  I share the enthusiasm of the hon. Member for Teignbridge (Richard Younger-Ross) for seeing small businesses thrive and grow. I remind him, however, that
  1084
  the working tax credit makes it possible for employers to draw on a wider pool of labour, as it enables more people to make the move into work and stay there. Employers also derive benefits from having employees in low-income households supported while they make that transition into work.
  I also agree with the hon. Member for Mid-Worcestershire (Mr. Luff) that the road to hell is paved with good intentions. I will demonstrate that the amendments and new clauses tabled by the official Opposition today would restrict the choice of and increase the burdens on employers, which is the exact opposite of what they claimed they were trying to do.
  New clause 2 and amendment No. 15 attempt to impose an obligation on the Board of the Inland Revenue to make all direct payments of the new tax credits by order book through the post office. The amendment would restrict the manner in which payments could be made to that set out in the new clause. The new clause goes on to allow the board to make payments by automated credit transfer, but only through a "basic account", accessible at the post office and then only if the claimant has chosen that payment method.
  Let us be clear that the new clause would in effect offer the claimant no choice. Claimants would not have the choice of the payment going into their bank account, if they already had one. I am talking not about what the proposer of the amendment thinks he has done, but what he has done. The board cannot make emergency payments—
  Mr. Heath rose—
  Dawn Primarolo: The debate started at 2.50 pm and has been long. Many issues have been covered. I will be more than happy to give way to the hon. Gentleman when I have made some progress.
  The new clause would allow the board to make payments by automated credit transfer, but only through the basic account accessible at the post office and then only if the claimant had chosen that method of payment.
  There was much discussion of the Post Office. Here, we are concerned only with the payment made. I remind hon. Members that the powers in the Bill are permissive powers for the Inland Revenue to determine how claimants will be paid and what choices they will have. I will be happy to deal with that subject after I have given way to the hon. Member for Somerton and Frome (Mr. Heath), but first I must inform the hon. Member for Teignbridge that the classic problem for some Liberal Democrat Members seems to be accepting a principle, but not accepting the consequences of implementing it. I also remind him that the Liberal Democrats opposed the working families tax credit. While we are more than happy that they now think that the child tax credit is the way forward, they need to be careful as they venture into that territory.
  Mr. Heath: I do not understand the basis for the start of the Paymaster General's speech on this subject. She is claiming that the new clause and amendments would leave out the parts of the Bill that deal with alternative methods of payment, which they clearly would not. Furthermore, she interprets the word "entitlement" to mean a requirement on the Board of the Inland Revenue.

  1085
  I know of no construction that enables the word "entitlement" to be termed an instruction to the board, allowing no other means of payment. Perhaps the hon. Lady will elucidate.
  Dawn Primarolo: Indeed I will. The Bill gives authority to the board of the Inland Revenue to administer the new tax credits under its care and management functions. If the hon. Gentleman had been able to attend the Standing Committee—he was not a member—he would have heard some discussion of how those obligations interact with the Bill.
  With the exception of transfer into bank accounts, there is no statement in the Bill to list the precise ways in which the credit can be paid. As I said in Committee, the preferred option would be a direct transfer to a bank account—both individual's bank accounts and through the universal bank at the post office. I said that we needed to ensure that that payment was made. I understand why the hon. Gentleman is frustrated, but as he well knows, when one drafts an amendment one needs to know what is already in the Bill and where it cross-references.
  There is a second issue. The new clause would impose an obligation on employers to use the same payment methods as the board. I am sure that those who drafted it did not intend it to do that either. I understand the concern that the new clause is intended to deal with. Hon. Members are trying to ensure that claimants can collect their money from the post office, as they do now, and that they are not forced to use bank accounts if no suitable accounts are available. I explained in Committee that the amendments tabled there would not have delivered that end. I am now explaining that these amendments will not do so either.
  Hon. Members talked a lot about burdens on the employer. The new clause would impose an obligation on employers to make all working tax credit payments payable by them by order book or through suitable post office accounts. The working tax credit is paid by the employer. The payment goes from the board to the employer and then from the employer to the employee. The new clause would have that effect despite the fact that the employer would normally pay the employee's wages either in cash or into a bank account and that is what the employee expects. I find it hard to believe that the intention was to impose such a restriction, although the hon. Gentleman has confirmed that that is the case. I can assure him that the new clause would have such an effect.
  The main thrust of the new clause is to enable claimants to continue to receive payments by order book. That would limit the choice of payment methods already available to and used by benefits and tax credit claimants alike.
  My key objection to the new clause is that it would prevent claimants from receiving their payments by any method other than order book or through an account at the post office, even if they chose another payment method. It must be remembered that tax credits are paid to a broad range of families, many of whom already have bank accounts, are accustomed to using them and would expect to be able to continue to do so. Many other families will want to receive payments in that way. The new clause would prevent them from doing so.
  1086
  I made it clear in Committee that a move away from familiar payment methods must be accompanied by suitable alternative methods of payment for the most vulnerable members of society. As I said, the regulations to determine payment methods will deal with exactly that point. I was asked by the hon. Member for Northavon (Mr. Webb) whether the Prime Minister's commitment that people would still be able to collect cash from a post office via the universal bank would be an option. I confirmed that it would. Not only is the new clause unnecessary because the assurances have been given but should it be carried it would narrow choice and increase the burdens on employers, which hon. Members say they wish to reduce.
  Mr. Swire: Will the hon. Lady give way?
  Dawn Primarolo: I am happy to give way to the hon. Gentleman but hon. Members have already said that they want to discuss at length other new clauses. I will give way but out of respect to the House I need to try to put on the record the answers to the questions that so many hon. Members have asked.
  Mr. Swire: It is true that many of the recipients of credits and benefits already have a bank account, but according to the Institute for Fiscal Studies extending the principle of tax credits to couples and individuals without children will bring an extra 250,000 single mothers and 170,000 working couples into the regulations. The IFS believes that in total almost 6 million households will receive some form of support. The number of people entitled to the benefits will rise by a large amount. Does the hon. Lady not concede that many of those people will not have, and will never have had, a bank account?
  Dawn Primarolo: I am not sure whether the hon. Gentleman was listening. I said that we needed to provide choice and to ensure that other payment methods were available for those who had no access to bank accounts. Indeed when we discussed fraud in Committee, every Committee member accepted that the best way to minimise fraud and to ensure that the money went to the family or individual who was entitled to it was to have a secure payment method. We need to balance a secure payment method with ensuring access. That is what the regulations will provide for.
  As part of that—I said it in Committee—we are working closely with the Post Office and the Department for Work and Pensions to ensure that a suitable alternative will be available. The powers in the regulations are permissive ones designed to deliver that. The Bill provides the power to make the regulations on the manner of direct payment—that is all.
  If new clause 2 were part of the Bill, it would restrict entitlement. The new clause and amendment No. 15 would reduce freedom of choice at the same time as putting more burdens on businesses by requiring them to have two methods of payment: they will have to issue an order book, or pay into the post office account. That is clearly daft. I hope that the hon. Member for Somerton and Frome will agree to withdraw the new clause as it is fatally flawed.

  1087
  4.15 pm
  Amendment No. 13 attempts to impose a duty on employers to consult with employees to see whether they would prefer to receive their working tax credit directly from the board rather than through the payroll. It is supported by hon. Members who just a few minutes ago were complaining about burdens. Now they are saying that employers must consult their employees.
  What is interesting about the amendment is that it does not say what employers would have to do once they had consulted. Presumably, they would have to start printing order books, if it is linked to new clause 2.
  Amendments Nos. 14 and 16 are another attempt to raise the issue of burdens on employers, which we discussed at length in Committee and during debates on the Bill that preceded the Tax Credits Bill. Amendment No. 14 has the dual purpose of requiring the board to reimburse employers for the costs they incur in paying working tax credit to employees, and of exempting employers with 20 or fewer employees from paying the tax credit, whereas amendment No. 16 aims to exempt employers with fewer than 15 employees.
  As I pointed out in Committee, the Government are not attracted to that idea at all. The tax system does not provide for a direct subsidy or compensation to employers to fulfil their obligations in relation to tax. However, as I said at length in Committee—I will spare the House the long list—in a number of areas the Government have introduced reforms to reduce burdens, to simplify the operation of PAYE and to assist small businesses in particular. All that has been accepted and welcomed but ironically the amendments put more burdens on employers.
  Let us consider the proposal to reimburse employers. What do we reimburse them for? An employer may have 20 employees with only one receiving a tax credit. How do we calculate exactly how much compensation should be paid? What information would we have to ask the employer to give us, so that we could calculate the compensation?
  One amendment seeks to exempt employers with 20 or fewer employees and another those with 15 or fewer employees. I think that about 85 per cent. of employers are in businesses with 15 or fewer employees and 95 per cent. are in businesses with 20 or fewer employees. What would happen if a business had 16 employees and the exemption was for businesses with 15? Would it be asked to fill in loads of forms and send in loads of returns? Would it be sent loads more forms back? That would increase the burdens on that business. It has been demonstrated that paying the working tax credit through the wage packet will be simple. It supports the transition into work and assists employees and employers.
  The hon. Member for Mid—Worcestershire said that the road to hell is paved with good intentions. The Opposition may have been full of good intentions but their amendments are a disaster. They are a disaster for claimants because they would restrict their choice and remove our ability to respond in an emergency by, for example, paying a claimant by giro. They would be an utter disaster for employers, who would have to consult, decide what to do, print order books, make arrangements with the Post Office in case that is where the claimant wanted the money to go, and let us know whether they had 14, 15, 16, 20 or 21 employees, depending on which bit of the system they came under.
  1088
  These are totally disruptive amendments, and I am happy to send a much longer explanation to the hon. Member for Somerton and Frome of why his good intentions do not work. I urge my hon. Friends to oppose the new clause and amendments because they are simply daft.
  Mr. Heath: Until latterly, we had rather a good debate. [HON. MEMBERS: "Hear, hear."] Any debate which has the spokesman for the Conservative Opposition standing at the Dispatch Box and supporting collectivism and workplace ballots and expressing suspicion of the CBI shows that we live in a topsy-turvy world.
  I am grateful to all those who expressed opinions in the debate, particularly my hon. Friend the Member for Teignbridge (Richard Younger—Ross) who did a good job describing the difficulties that small businesses will experience. The hon. Member for Mid—Worcestershire (Mr. Luff) talked about the law of unintended consequences and my new clause assisting post offices, but that was certainly not an unintended consequence. It was absolutely the intention of my new clause not only to extend choice but to protect the sub-post office system.
  What are we to make of the Minister's response? She said as her parting shot that she would write to me at length and I look forward to the letter with great expectations. Other than that, her argument seems to be a simple assertion: she does not like our amendments, so they are daft. She says that with all the authority of the Treasury Bench, and we know how desperately clever the Treasury is at producing briefings on these amendments. She says ex cathedra that because she does not like the new clause, she does not believe it to be sensible or that it will work.
  The Minister adduces an argument that the new clause would restrict payments only to those that could be made through a sub-post office and that it would restrict choice. I have looked again at the Bill. I see no change to clause 23 other than the paving amendment which we propose to allow for new clause 2. I see no change to clause 24 which provides the powers that she says are now curtailed. The new clause provides only an entitlement to receive the cash over the counter in a post office. That seems a perfectly sensible and proper proposal.
  The Minister asserts, secondly, that the universal bank will be in operation in April 2003. I desperately hope she is right, but I am sick and tired of hearing Ministers assert with no evidence that the development of the universal bank is anything like at the stage it should be if it is go live in April 2003. If it is not, the mechanisms in the Bill will be inadequate and the Minister has no plan B. That may be of no great concern to the Government or the Inland Revenue, but it is of enormous concern to people who need that facility through their post office and to those who are trying to make their businesses in those post offices work, but who will not have the income they desperately need to maintain the network.
  For those reasons I reject the Government's simple assertions and seek the advice of the House on the merits of new clause 2.
  Question put, That the clause be read a Second time: —
  The House divided: Ayes 170, Noes 252.

  Division No. 164]

  [4.23 pm

  AYES

  Allan, Richard

  Hayes, John

  Amess, David

  Heald, Oliver

  Ancram, Rt Hon Michael

  Heath, David

  Arbuthnot, Rt Hon James

  Hendry, Charles

  Atkinson, David (Bour'mth E)

  Hermon, Lady

  Atkinson, Peter (Hexham)

  Hoban, Mark

  Bacon, Richard

  Holmes, Paul

  Baldry, Tony

  Horam, John

  Barker, Gregory

  Jenkin, Bernard

  Baron, John

  Key, Robert

  Barrett, John

  Kirkbride, Miss Julie

  Beggs, Roy

  Knight, Rt Hon Greg (E Yorkshire)

  Beith, Rt Hon A J

  Laing, Mrs Eleanor

  Bellingham, Henry

  Lansley, Andrew

  Bercow, John

  Laws, David

  Beresford, Sir Paul

  Letwin, Oliver

  Blunt, Crispin

  Lewis, Dr Julian (New Forest E)

  Boswell, Tim

  Liddell-Grainger, Ian

  Brady, Graham

  Lidington, David

  Brake, Tom

  Lilley, Rt Hon Peter

  Brazier, Julian

  Loughton, Tim

  Brooke, Mrs Annette L

  Luff, Peter

  Browning, Mrs Angela

  McIntosh, Miss Anne

  Burnside, David

  MacKay, Rt Hon Andrew

  Burt, Alistair

  Maclean, Rt Hon David

  Butterfill, John

  McLoughlin, Patrick

  Cable, Dr Vincent

  Malins, Humfrey

  Calton, Mrs Patsy

  Maples, John

  Cameron, David

  Mates, Michael

  Campbell, Gregory (E Lond'y)

  Mawhinney, Rt Hon Sir Brian

  Campbell, Rt Hon Menzies (NE Fife)

  May, Mrs Theresa

  Mercer, Patrick

  Carmichael, Alistair

  Moss, Malcolm

  Cash, William

  Murrison, Dr Andrew

  Chapman, Sir Sydney (Chipping Barnet)

  Oaten, Mark

  O'Brien, Stephen (Eddisbury)

  Chidgey, David

  Öpik, Lembit

  Chope, Christopher

  Osborne, George (Tatton)

  Clappison, James

  Ottaway, Richard

  Collins, Tim

  Page, Richard

  Conway, Derek

  Paice, James

  Cotter, Brian

  Paterson, Owen

  Cran, James

  Pickles, Eric

  Davey, Edward (Kingston)

  Price, Adam

  Davies, Quentin (Grantham)

  Prisk, Mark

  Djanogly, Jonathan

  Pugh, Dr John

  Doughty, Sue

  Randall, John

  Duncan, Peter (Galloway)

  Reid, Alan (Argyll & Bute)

  Duncan Smith, Rt Hon Iain

  Robathan, Andrew

  Ewing, Annabelle

  Robertson, Angus (Moray)

  Fabricant, Michael

  Robertson, Hugh (Faversham)

  Field, Mark (Cities of London)

  Robertson, Laurence (Tewk'b'ry)

  Flight, Howard

  Robinson, Peter (Belfast E)

  Flook, Adrian

  Roe, Mrs Marion

  Forth, Rt Hon Eric

  Rosindell, Andrew

  Francois, Mark

  Ruffley, David

  Gale, Roger

  Russell, Bob (Colchester)

  Garnier, Edward

  Salmond, Alex

  George, Andrew (St Ives)

  Sanders, Adrian

  Gibb, Nick

  Simmonds, Mark

  Gidley, Sandra

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

  Gillan, Mrs Cheryl

  Smyth, Rev Martin (Belfast S)

  Goodman, Paul

  Soames, Nicholas

  Gray, James

  Spelman, Mrs Caroline

  Grayling, Chris

  Spicer, Sir Michael

  Green, Damian (Ashford)

  Spink, Bob

  Green, Matthew (Ludlow)

  Spring, Richard

  Greenway, John

  Steen, Anthony

  Grieve, Dominic

  Streeter, Gary

  Hague, Rt Hon William

  Swayne, Desmond

  Hammond, Philip

  Swire, Hugo

  Harvey, Nick

  Syms, Robert

  Hawkins, Nick

  Tapsell, Sir Peter

  1090

  Taylor, Ian (Esher & Walton)

  Widdecombe, Rt Hon Miss Ann

  Taylor, Matthew (Truro)

  Wiggin, Bill

  Taylor, Dr Richard (Wyre F)

  Wilkinson, John

  Taylor, Sir Teddy

  Willetts, David

  Thomas, Simon (Ceredigion)

  Williams, Hywel (Caernarfon)

  Trend, Michael

  Williams, Roger (Brecon)

  Turner, Andrew (Isle of Wight)

  Willis, Phil

  Tyler, Paul

  Winterton, Nicholas (Macclesfield)

  Tyrie, Andrew

  Wishart, Pete

  Walter, Robert

  Yeo, Tim

  Waterson, Nigel

  Young, Rt Hon Sir George

  Watkinson, Angela

  Webb, Steve

  Tellers for the Ayes:

  Weir, Michael

  John Thurso and

  Whittingdale, John

  Richard Younger-Ross.

  NOES

  Ainger, Nick

  Cummings, John

  Anderson, Rt Hon Donald (Swansea E)

  Cunningham, Jim (Cov'try S)

  Dalyell, Tam

  Anderson, Janet (Rossendale)

  Darling, Rt Hon Alistair

  Armstrong, Rt Hon Ms Hilary

  Davey, Valerie (Bristol W)

  Atherton, Ms Candy

  David, Wayne

  Atkins, Charlotte

  Davies, Rt Hon Denzil (Llanelli)

  Austin, John

  Dawson, Hilton

  Bailey, Adrian

  Dean, Mrs Janet

  Baird, Vera

  Dhanda, Parmjit

  Barnes, Harry

  Dobbin, Jim

  Barron, Kevin

  Donohoe, Brian H

  Battle, John

  Doran, Frank

  Bell, Stuart

  Drown, Ms Julia

  Benn, Hilary

  Eagle, Angela (Wallasey)

  Bennett, Andrew

  Eagle, Maria (L 'pool Garston)

  Benton, Joe

  Edwards, Huw

  Berry, Roger

  Efford, Clive

  Best, Harold

  Ennis, Jeff

  Blackman, Liz

  Etherington, Bill

  Blizzard, Bob

  Farrelly, Paul

  Boateng, Rt Hon Paul

  Field, Rt Hon Frank (Birkenhead)

  Borrow, David

  Fitzpatrick, Jim

  Bradley, Peter (The Wrekin)

  Fitzsimons, Mrs Lorna

  Bradshaw, Ben

  Flint, Caroline

  Brennan, Kevin

  Foster, Rt Hon Derek

  Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

  Foster, Michael (Worcester)

  Foster, Michael Jabez (Hastings)

  Brown, Russell (Dumfries)

  Galloway, George

  Browne, Desmond

  Gapes, Mike

  Burgon, Colin

  Gardiner, Barry

  Cairns, David

  Gerrard, Neil

  Campbell, Alan (Tynemouth)

  Gibson, Dr Ian

  Campbell, Mrs Anne (C'bridge)

  Gilroy, Linda

  Campbell, Ronnie (Blyth V)

  Godsiff, Roger

  Caplin, Ivor

  Griffiths, Jane (Reading E)

  Casale, Roger

  Grogan, John

  Cawsey, Ian

  Hall, Mike (Weaver Vale)

  Challen, Colin

  Hall, Patrick (Bedford)

  Chapman, Ben (Wirral S)

  Hamilton, David (Midlothian)

  Chaytor, David

  Hamilton, Fabian (Leeds NE)

  Clapham, Michael

  Hanson, David

  Clark, Dr Lynda (Edinburgh Pentlands)

  Harris, Tom (Glasgow Cathcart)

  Healey, John

  Clark, Paul (Gillingham)

  Henderson, Doug (Newcastle N)

  Clarke, Rt Hon Charles (Norwich S)

  Henderson, Ivan (Harwich)

  Hendrick, Mark

  Clarke, Rt Hon Tom (Coatbridge)

  Hepburn, Stephen

  Clarke, Tony (Northampton S)

  Heppell, John

  Clelland, David

  Hesford, Stephen

  Clwyd, Ann

  Heyes, David

  Coffey, Ms Ann

  Hill, Keith

  Coleman, Iain

  Hinchliffe, David

  Connarty, Michael

  Hodge, Margaret

  Cook, Rt Hon Robin (Livingston)

  Hope, Phil

  Cooper, Yvette

  Hopkins, Kelvin

  Cruddas, Jon

  Howarth, Rt Hon Alan (Newport E)

  Cryer, Mrs Ann (Keighley)

  Howarth, George (Knowsley N)

  Cryer, John (Hornchurch)

  Hoyle, Lindsay

  1091

  Hughes, Kevin (Doncaster N)

  Plaskitt, James

  Hurst, Alan

  Pollard, Kerry

  Illsley, Eric

  Pond, Chris

  Jackson, Glenda (Hampstead)

  Pound, Stephen

  Jackson, Helen (Hillsborough)

  Prentice, Ms Bridget (Lewisham E)

  Johnson, Alan (Hull W & Hessle)

  Prentice, Gordon (Pendle)

  Johnson, Miss Melanie (Welwyn Hatfield)

  Primarolo, Dawn

  Quin, Rt Hon Joyce

  Jones, Helen (Warrington N)

  Quinn, Lawrie

  Jones, Jon Owen (Cardiff C)

  Rammell, Bill

  Jones, Lynne (Selly Oak)

  Reed, Andy (Loughborough)

  Jones, Martyn (Clwyd S)

  Roche, Mrs Barbara

  Joyce, Eric

  Rooney, Terry

  Kaufman, Rt Hon Gerald

  Ruddock, Joan

  Keeble, Ms Sally

  Russell, Ms Christine (Chester)

  Keen, Alan (Feltham & Heston)

  Ryan, Joan

  Keen, Ann (Brentford & Isleworth)

  Sarwar, Mohammad

  Kemp, Fraser

  Savidge, Malcolm

  Khabra, Piara S

  Sawford, Phil

  Kilfoyle, Peter

  Shaw, Jonathan

  King, Ms Oona (Bethnal Green)

  Sheerman, Barry

  Kumar, Dr Ashok

  Shipley, Ms Debra

  Ladyman, Dr Stephen

  Skinner, Dennis

  Lammy, David,

  Smith, Rt Hon Andrew (Oxford E)

  Laxton, Bob

  Smith, Angela (Basildon)

  Lazarowicz, Mark

  Smith, Rt Hon Chris (Islington S)

  Lepper, David

  Smith, Geraldine (Morecambe)

  Leslie, Christopher

  Smith, Jacqui (Redditch)

  Levitt, Tom

  Soley, Clive

  Lewis, Ivan (Bury S)

  Southworth, Helen

  Lloyd, Tony

  Starkey, Dr Phyllis

  Love, Andrew

  Steinberg, Gerry

  Luke, Iain

  Stewart, Ian (Eccles)

  Lyons, John

  Stinchcombe, Paul

  McAvoy, Thomas

  Strang, Rt Hon Dr Gavin

  McCabe, Stephen

  Stringer, Graham

  McCafferty, Chris

  Stuart, Ms Gisela

  McCartney, Rt Hon Ian

  Sutcliffe, Gerry

  McDonagh, Siobhain

  Taylor, Rt Hon Ann (Dewsbury)

  MacDonald, Calum

  Taylor, Ms Dari (Stockton S)

  McDonnell, John

  Thomas, Gareth (Clwyd W)

  MacDougall, John

  Thomas, Gareth R (Harrow W)

  McIsaac, Shona

  Timms, Stephen

  McKechin, Ann

  Todd, Mark

  Mackinlay, Andrew

  Turner, Dennis (Wolverh'ton SE)

  McNulty, Tony

  Turner, Dr Desmond (Kemptown)

  McWilliam, John

  Turner, Neil (Wigan)

  Mahon, Mrs Alice

  Twigg, Derek (Halton)

  Mallaber, Judy

  Tynan, Bill

  Marsden, Gordon (Blackpool S)

  Vis, Dr Rudi

  Martlew, Eric

  Walley, Ms Joan

  Meacher, Rt Hon Michael

  Ward, Ms Claire

  Meale, Alan

  Wareing, Robert N

  Merron, Gillian

  Watts, David

  Miliband, David

  White, Brian

  Miller, Andrew

  Wicks, Malcolm

  Mitchell, Austin (Gt Grimsby)

  Williams, Rt Hon Alan (Swansea W)

  Moffatt, Laura

  Mole, Chris

  Williams, Mrs Betty (Conwy)

  Moonie, Dr Lewis

  Wills, Michael

  Moran, Margaret

  Winnick, David

  Mullin, Chris

  Wood, Mike

  Murphy, Jim (Eastwood)

  Woolas, Phil

  Naysmith, Dr Doug

  Worthington, Tony

  Norris, Dan

  Wright, Anthony D (Gt Yarmouth)

  O'Brien, Bill (Normanton)

  Wright, David (Telford)

  O'Hara, Edward

  Wright, Tony (Cannock)

  O'Neill, Martin

  Wyatt, Derek

  Osborne, Sandra (Ayr)

  Perham, Linda

  Tellers for the Noes:

  Pickthall, Colin

  Mrs. Anne McGuire and

  Pike, Peter

  Mr. Ian Pearson.

  Question accordingly negatived.
  Tom Brake: On a point of order, Madam Deputy Speaker. I understand that at 3.30 pm today a press release was issued, announcing that the Government were to proceed with the public-private partnership for the London underground. Is that not a contempt of the House, given that the Secretary of State for Transport, Local Government and the Regions is due to make a statement at 7 o'clock this evening?
  Madam Deputy Speaker: I remind the hon. Gentleman that what he says is correct: Mr. Speaker has agreed to a statement by the Secretary of State for Transport, Local Government and the Regions at 7 pm this evening.

New Clause 6

  AGGRAVATED TAX CREDIT FRAUD
  '(1) A person is guilty of aggravated tax credit fraud if he is knowingly concerned in any fraudulent activity undertaken with a view to obtaining payments of a tax credit by him or any other person and—

  (a) tax credits have been fraudulently obtained by himself or another in excess of the prescribed sum; or

  (b) he has been convicted of an offence under the provisions of this Act or a benefit offence as defined by section 7 of the Social Security Fraud Act 2001 within the preceding five years.

  (2) A person who commits an offence under subsection (1) is liable—

  (a) on summary conviction, to imprisonment for a term not exceeding six months, or a fine not exceeding the statutory maximum, or both, or

  (b) on conviction on indictment, to imprisonment for a term not exceeding fourteen years, or a fine, or both.

  (3) Regulations may make provision as to the prescribed sum in subsection (1).'.—[Mr. Clappison.]

  Brought up, and read the First time.
  Mr. James Clappison: I beg to move, That the clause be read a Second time.
  Madam Deputy Speaker: With this it will be convenient to discuss the following: Government amendment No. 23.
  Amendment No. 3, in clause 33, page 21, line 40, at end insert—
  '(3) The Secretary of State shall within one year of this section coming into effect and every year thereafter lay a report before Parliament on—

  (a) the extent of fraud in claims for tax credits, and

  (b) the measures he has taken to deal with fraudulent claims for tax credits, including measures to facilitate the early detection and prevention of such fraud.'.

  Amendment (a) thereto, in line 3, after "credits", insert—
  ', including the estimated extent of fraud as a proportion of all error in such claims,'.
  Mr. Clappison: I shall briefly consider Government amendment No. 23 first, as it deals with a subject that is slightly different from the provisions on non-compliance. We welcome the amendment and we are grateful to the Paymaster General for writing to us about it. The change in the wording of clause 31 will be advantageous and fairer to employers, especially small employers. I ask the

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  indulgence of the Financial Secretary to the Treasury and the House in permitting us modestly to claim some small credit for bringing that about by raising the issue in previous debates.
  In Committee, we drew attention to what would have been a significant tightening-up of the provisions, which would have been a considerable imposition on employers. Following that scrutiny, it emerged that the situation that would have prevailed had the Bill been passed unamended would have been even worse than we originally thought. That point was disclosed in a letter from the Financial Secretary.
  When we originally raised the issue, we were worried that the clause would extend liability for innocent errors made by employers—acts and omissions on their part—that were neither fraudulent nor negligent but that would have resulted in the imposition of penalties on employers. In the letter, it is revealed that it would have been even worse than that, because the liability would have gone further.
  The Financial Secretary wrote that the clause
  "would allow a penalty to be imposed on an employer even if the incorrect payment of tax credit was attributable to an innocent error on the part of the employer or for some other reason outside the employer's control."
  That means, quite simply, that an employer could have faced a significant penalty—a particularly significant penalty for a small employer—for something that had nothing to do with him and that was the result of someone else's actions. That would have been a serious state of affairs. Government amendment No. 23 puts it right, and we welcome it.
  However, we add this sentiment, which is apt in the circumstances. It is a pity that we could not have extended to the rest of the Bill the detailed scrutiny that we were giving to the parts that were considered in Committee, to discover what other pitfalls there may have been. The Government amendment has emerged as a result of that scrutiny. We can only express the hope that there are no more pitfalls awaiting small employers or anyone else.
  I now come to the meat of this group of amendments and the new clause: fraud. We believe that fraud within the tax credit system is a serious issue, and that the starting point for that issue is a proper assessment of the extent of fraud in the existing tax credit system. Quite simply, we need to know how much fraud there is within tax credits.
  We have been asking that question for some time and, sadly, we are no closer to receiving a straightforward answer from the Government today than we were when we began asking the question. We would like to know, for example, whether the Government themselves know how much fraud there is. If they do, will they tell the House?
  I asked the Paymaster General that question in March 2001, during a debate on the uprating of tax credits. She kindly agreed to write to me and she was as good as her word. She wrote in April 2001 and told me:
  "The Inland Revenue are carrying out a benchmarking exercise to establish the level of fraud in tax credit claims. This began in September 2000 and will run for twelve months. The results will be used to ensure tax credits compliance work is carried out in the most effective way."
  Taking the Paymaster General at her word, on 15 October I tabled a parliamentary question, to ask what assessment Ministers had made of the extent of fraud.
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  I received a reply in a written answer on 18 December. You might think, Madam Deputy Speaker, that from 15 October to 18 December was a rather long time to wait for a written answer, but I was treated better than the right hon. Member for Birkenhead (Mr. Field), because the answer that I eventually received was grouped with a question that he had originally asked back on 28 June, on much the same subject. Anyway, this is what I and the right hon. Gentleman were told on 18 December:
  "The Inland Revenue is currently undertaking an exercise to benchmark the level of fraud within the working families tax credit. The full results of this will be known early next year."—[Official Report, 19 December 2001; Vol. 377, c. 323–24W.]
  Well, here we are, early next year as it was then, and in Committee we had the opportunity to ask—at an appropriate time, it would seem—about fraud. We asked the same question, but without any greater success in getting an answer. We have been mulling over what the Paymaster General said in Committee:
  "On the benchmarking report, I told the hon. Member for Hertsmere that the Inland Revenue are considering the details and a report will come to me. It is already using that information to inform people about the new provisions. I cannot give him a guarantee that I will be able to publish that information because it deals with specifics of possible frauds that it would be unwise to put in the public domain. However, I will consider how to ensure that he is properly informed so that he can discharge his parliamentary duties."—[Official Report, Standing Committee A, 24 January 2002; c. 239.]
  Since then I have asked a further parliamentary question. I know that the Government like to control everything these days, but I would like to be the judge of how I discharge my parliamentary duties and I am afraid that the answer I have received from the Government does not enable me or anyone else to discharge their parliamentary duties. I was told:
  "The Inland Revenue are currently analysing the data from their compliance benchmarking exercise. We shall be considering the results, and questions of publication, within the next few months."—[Official Report, 5 February 2002; Vol. 379, c. 851W.]
  I have been asking the same question for roughly a year. I have been taken through to the time when the Inland Revenue exercise concluded, at the end of September. We were no wiser at the end of that. We were no wiser as a result of asking the parliamentary question in December 2001. We were no wiser after the Committee, and we are no wiser after this most recent written answer. I do look to the Financial Secretary for an answer today.
  Given the speed with which the Government are changing the tax credits system and the way in which new tax credits are constantly emerging, I am very worried that this tax credit will be abolished before we have the chance to know how much fraud there was in it. We shall move on to the next tax credit and we shall be told about that, that the Government are conducting a benchmarking exercise and it is too early to say what its results are. We need to know today from the Financial Secretary.
  4.45 pm
  Mr. Hoban: My hon. Friend has set out a sorry tale of delays and prevarication by the Government. Might he perhaps be tempted to explain to us why he thinks that the Government may have prevaricated in providing that information to the House to enable hon. Members to make a judgment as to the extent of fraud in that system?
  Mr. Clappison: A variety of explanations were put forward in Committee, but my hon. Friend assumes in his question that the Government themselves know, so it would be good to have a straightforward answer from the Financial Secretary whether he knows the outcome of the benchmarking exercise carried out by the Inland Revenue. Does he know how much fraud there is in the working families tax credit?
  If the Financial Secretary does know, would he tell us whether he will kindly put that figure in the public domain? I am not asking him to clarify what was said in Committee by the Paymaster General. To summarise, she said that the Government were afraid of encouraging people to commit fraud by giving away too many details. Well, we are not asking how to commit fraud. We are not asking for details like that. We are simply asking how much fraud there is. If it is the Minister's argument that it would be dangerous to say how much fraud there is, that in itself would be a very strong temptation to people to commit fraud if they heard something like that coming from the Government. It is hardly a ringing endorsement of the invulnerability of tax credits to fraud.
  The same argument has not applied to fraud in the benefits system. At the most recent Work and Pensions questions we were told by the Secretary of State himself, I believe, how important it was to know how much fraud there was in the benefits system. The same considerations apply to the Tax Credits Bill, so today we are looking to the Financial Secretary to give us some straightforward answers to straightforward questions.
  Knowing how much fraud takes place is very important, but that is only a starting point; it is also important to find out what is being done about it. That brings me to amendment No. 3, in which we propose that we have a report every year on the extent of tax credit fraud, so that we know what is happening. We would have a starting point—we would know how much fraud there was to begin with. We would know what measures were being taken to deal with it and, as a result of that report, we would know each year what progress was being made in dealing with fraud.
  The Government said in the 1998 Green Paper on fraud that that scenario would be desirable. They said it is important to have better information about the extent of fraud and then to discover what is being done about it. In Committee, the Paymaster General told us that early detection is important to stop abuses that may arise in the system. We agree with her, so that would be specifically required under amendment No. 3, which, we hope, will find favour with the Financial Secretary for that reason.
  We believe that much more can be done. In Committee, we explained how we would like tax credit fraud to be tackled. We would like better co-ordination between Departments and between local and central Government, greater co-operation between the public and the private sectors and as much involvement from the public as possible in providing information. We welcome the fact that there has been a significant public response to the benefit fraud hotline.
  I was told in a parliamentary answer last week that the public had communicated to the Inland Revenue, through the benefit fraud hotline, 16,676 allegations of improper applications for the working families tax credit and disabled person's tax credit. We welcome that public-spirited co-operation from people who share our
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  concern that fraud should be dealt with effectively. I do not know how the public would respond to what the Government have done in relation to that public willingness and spirit of co-operation.
  Mr. Swire: Will my hon. Friend give way?
  Mr. Clappison: I shall give way, but my hon. Friend may want to ponder on the statistics showing what the Government have done. We have heard what the public have done—they have made more than 16.000 allegations. However, I was told, by way of a written parliamentary answer, that there were 530 recoveries—presumably, recoveries of incorrect payments—18 penalties, which are financial penalties, and 2 prosecutions, even though 16,676 allegations were made to the hotline.
  Mr. Swire: In developing that theme, I wonder whether part of the problem is that those who run the fraud hotline do not feel that they are given enough support. I suggest that because I have a letter from my constituent, Julie Embling of the Acorn kindergarten in Exmouth, Devon—I wrote to the Under-Secretary of State for Education and Skills, the hon. Member for Bury, South (Mr. Lewis), in November asking for a reply, but I have yet to receive one—who maintains that, in running her small private school, she is owed about £2,000 a year by people claiming the working families tax credit who do not pay it on to her. She spoke to someone at the fraud hotline about her recurring problems and was told that child minders, nurseries and pre-schools are suffering financially from that nationwide problem. Those at the hotline suggested that she write to me as her Member of Parliament to try to persuade the Government to change the laws on the working families tax credit.
  Mr. Clappison: I am grateful to my hon. Friend for making that point. I am sure that his constituent will be as interested as we are in the consequences of these proposals. She will also have in mind the recent experience of fraud involving individual learning accounts. Innocent providers lost out under that system, as did the people who were innocently trying to obtain education and training, because of the disruption caused when it was suddenly discovered that large-scale fraud was taking place and the Government had to bring the system to an ignominious halt. We are trying to prevent something similar happening again by having a thorough and proper debate on fraud.
  We are not impressed by the number of prosecutions for working families tax credit fraud. We do not suggest that that is the only way to tackle fraud, but we would like people who knowingly commit fraud, especially those who commit the most determined fraud—I shall deal with that in speaking to new clause 6—to be prosecuted for a serious criminal offence. We suspect that many people who could be prosecuted are not being prosecuted.
  Altogether, in the two years that the working families tax credit has operated, there have been only 28 prosecutions. There has been a recent spurt in the number of prosecutions—it may be entirely coincidental that questions have been asked about that—but the figure is still low in relation to the size of the system, the number of people claiming and the amount of fraud in other parts of the benefits system. I emphasise that we, like members of the public, are interested in prosecuting people who commit serious fraud and in dealing with them severely.

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  New clause 6 is designed to create an offence of aggravated tax credit fraud for those who repeatedly commit fraud or obtain large sums. Those determined fraudsters need to be dealt with more seriously. We need to decide how best to protect the interests of taxpayers and the majority of tax credit claimants who are honest and who also believe that the fraud is unacceptable. They want us to get to the people who commit serious frauds to obtain a large amount of money or who defraud the state again and again.
  Treating such offences more seriously would be in line with what the Government are trying to do in other parts of the benefits system. The Social Security Fraud Act 2001 tackles fraud in other benefits. It received Opposition support and removes benefits from people who are repeatedly convicted of offences. There is a widespread desire to ensure that those who commit the most serious frauds are dealt with more strictly.
  We have asked many questions about fraud and want straightforward answers. It is time that the Government came clean. They should tell us what the level of fraud is and set out more clearly what they intend to do about it. We will continue to press for answers.
  Mr. Webb: I congratulate the hon. Member for Hertsmere (Mr. Clappison) on his assiduous studying of the Bill in Committee which led to the correction set out in Government amendment No. 23. I wholeheartedly associate myself with his comment that large chunks of it were not scrutinised because of the tight timetable. It would be regrettable if other aspects of the Bill were not picked up on. I hope that the Government take a lesson from that the next time they programme our discussions. They should realise that it is in their interests to have proper scrutiny. Indeed, we would all benefit in such circumstances.
  Mr. Frank Field: The hon. Gentleman says that that would be in the Government's interests, but would it not be in the taxpayers' interests?
  Mr. Webb: This is a win-win situation. It is in all our interests that there is proper scrutiny. However, the Government's reputation for producing good legislation is damaged if Bills are not properly scrutinised and have to be corrected later on. So I welcome Government amendment No. 23 and the process by which it came about.
  I also welcome the suggestion in amendment No. 3 and amendment (a) that there should be annual reports on the extent of fraud, what is being done about it and how it contributes to the total error in claims. My slight hesitation is that a detailed exposition of what is being done to tackle fraud might show our hand too much, but the request for information on the scale of fraud and the overall progress in tackling it would be welcome.
  I will be interested to hear the Financial Secretary's response to new clause 6. We all agree that fraud is a bad thing and that repeated or large-scale fraud is even worse. There is only one question, therefore: what is the appropriate penalty? When my colleagues and I ask whether a proposed penalty, of whatever magnitude, is not serious enough or too serious, it is sometimes suggested that we either approve of the crime or are not tough enough. We want such crime punished properly,
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  but does new clause 6 set out the right punishment? The hon. Member for Hertsmere did not try to justify the specific tariff or degree of severity that it sets out, which is why I have an open mind about whether to support it.
  5 pm
  My instinct is to be slightly nervous of the severity of the proposal. I do not understand the legal system enough to understand the precise implications of new clause 6(2)(b) and its reference to conviction on indictment. However,
  "imprisonment for a term not exceeding fourteen years"
  strikes me as an extraordinarily long period.
  We have a scale of relative importance of different offences. To draw an analogy with recent news items, it was suggested that those who take mobile phones off people in the street should face four years, or something like that, in the slammer; at that point, someone came on the radio and said, "But something much more serious was done to me, and the person who did it only got 18 months." No one disagrees that the act is wrong; the question is where it fits into the scale of seriousness of offences and penalties.
  Mr. Clappison: I am listening with great interest to the important points that the hon. Gentleman is making. The purpose of setting a maximum sentence is to cater for the worst type of offences. The new clause is in effect saying that offences with such aggravating features are the more serious type of offences.
  It might interest the hon. Gentleman to know the current state of affairs regarding those who have already been prosecuted for working families tax credit fraud—an offence that currently attracts possible imprisonment. Only seven people have been sent to prison for such offences, and a written answer that I received suggests that some of those people may also have been involved in offences of another type.
  Mr. Webb: I am grateful for that intervention, and I understand that we see only the maximum in the new clause. However, I cannot help reflecting on a dreadful constituency case in which a teenager was murdered and the murderer was given 12 years. I find it hard to understand the relative figures when it is suggested that a fraudster—even a serious tax credit fraudster—should be given 14 years. That is not to say that the offences are not serious, or that the sentences are not serious enough. I just wonder about their relative position in the scale of penalties for offences.
  I look forward to hearing the Minister's comments. We all agree that tax credit fraud should be cracked down on, but, in passing, I observe that the proposals about not putting the money through the pay packet would have worked well in the context of the current group of amendments. The ability to pass money through the books of a firm is an open invitation to fraud if the firm wants to collude with its employees. Direct payments to the individual are far less prone to organised fraud of that sort.
  I welcome the fact that the Conservative amendments turn the focus to fraud. Regular reports to Parliament would be welcome, but I have some reservations about the extent of the penalties proposed in new clause 6.
  Mr. David Ruffley: I support new clause 6. It is necessary because the regime to be introduced by the Bill will make fraud easier than it is under the system to be replaced.
  In 1999, the Select Committee on Social Security said that there were
  "serious concerns … about the increased potential for fraud in Working Families Tax Credit as compared to Family Credit."
  That Committee suggested, and I agree, that a straightforward benefits system was less susceptible to fraud than a tax credit system. I venture to suggest that one of the reasons why the questions asked by my hon. Friend the Member for Hertsmere (Mr. Clappison) about the level of fraud under working families tax credit have not been answered is that those answers would reveal a higher incidence of fraud under the tax credit system than under the family credit system that it replaced.
  Why should that be embarrassing to the Government? The answer is not far to seek: the working families tax credit system and the tax credit system to follow from the Bill was an idea of the Chancellor of the Exchequer and Her Majesty's Treasury. The system is manifestly not only more complicated, but more susceptible to fraud.
  The questions that I have posed about increased susceptibility to fraud have been borne out by international experience across the Atlantic. The Canadian working income supplement, a tax credit system not unlike the one that the Bill seeks to introduce, has been a disaster. It has resulted in increased fraud and has led the Canadian authorities to the inescapable conclusion that they should scrap it and return to a benefit-based system. Equally, in the United States, the Internal Revenue Service is beside itself at the amount of fraud perpetrated under the earned income tax credit system, which is the key model for the Treasury's working tax credit and, before that, the working families tax credit. The figures speak for themselves. In early 1997, the taxpayers of America lost more than $4.4 billion as a result of fraud in the earned income tax credit system, mainly because of poor certification—in fact, it is virtually non-existent—of hours worked in employment. The Economist observed:
  "There is no longer a consensus that the earned income tax credit is a sensible addition to America's anti-poverty programmes."
  New clause 6 has a clear intention; it will introduce serious penalties for aggravated fraud. The system that the Bill will introduce provides more scope for the fraudster, chiefly because of the annual basis of assessment, which contrasts with the much shorter periods required for income support and the six-month assessment period for working families tax credit. If a claim is made before the beginning of a tax year for the following tax year, the claimant may have to calculate in his annual assessment what he thinks his income will be for the next 12 months. If there is a change in his circumstances, that will not be assessed automatically before the 12-month period is up.
  The Institute for Fiscal Studies said that that is self-evidently loopy, as there is no comparable system in any other benefit regime; it does not think that such a period of assessment has previously been introduced without serious reassessment of the claimant's benefit within 12 months. From the Bill, it is clear that the Government seek to get round that by arguing that if there is a change in someone's circumstances, their case could be reopened. If someone gets a lot more money during the year, there will be a reassessment of the amount of
  1100
  benefit that they receive. However, within certain thresholds, the Government will choose to ignore any change in circumstances. We are told that there will be a threshold above which certain amounts of increased income will be ignored by the authorities, thus leading demonstrably to overpayment. That is what the disregard in the threshold means; someone will get more benefit under the new system than they otherwise would.
  The Institute for Fiscal Studies thinks that that is a bit peculiar, but it becomes even more peculiar when we realise that we have not been told what the threshold is. Extraordinarily, all that we are told is that thresholds will be set by regulation; we do not know how much increased income will be disregarded or, in other words, constitute a benefit overpayment. In those circumstances, there is considerable potential for fraud. It may be argued that there will be powers to seek repayment of overpaid benefit at the end of the tax year, but that overpayment has to be detected. I know that my hon. Friends did sturdy work in Committee, questioning the ability of the authorities to get repayments made when overpayments have occurred in year.
  At the beginning of a tax year, when information is given to the Inland Revenue about future income for the next 12 months, there is an in-built incentive to underestimate the amount forecast by the taxpayer. An answer to that conundrum has not been forthcoming from the Government and still causes great concern to the Institute for Fiscal Studies.
  What about the ability of the Inland Revenue—not the Department for Work and Pensions any more—to police the new regime that the Bill seeks to introduce? I reiterate the powerful points made by my hon. Friend the Member for Hertsmere, because I fear that Ministers on the Treasury Bench may try to wriggle out of the question. In the letter that the Paymaster General placed in the Library, she stated:
  "The Inland Revenue are carrying out a benchmarking exercise to establish the level of fraud in tax credit claims. This began in September 2000 and will run for 12 months. The results will be used to ensure tax credits compliance work is carried out in the most effective way."
  What is the number of cases that have given rise to criminal proceedings as a result of that study?
  That is a perfectly simple question. I hope that we will get an answer. During the speech of my hon. Friend the Member for Hertsmere, the Parliamentary Private Secretary scuttled no less than twice to the Box to get bits of paper. Much agitation was evident. I sincerely hope that the Financial Secretary has done his homework and that he will provide an answer to a question that was raised in Standing Committee—an answer that has been asked for twice, including my questioning now, in the Chamber today. It should not be terribly difficult, and it should be something that we have a right to know.
  The Financial Secretary may smirk away. Someone once said of his general performance:
  "We have seen the future; and it smirks",
  which, I think, is a variation on a quote from the Webbs. The right hon. Gentleman should not smirk. He may congratulate me on what he considers to be an amusing joke. I find it not so much amusing as worrying that he can laugh about a taxpayer issue. The right hon. Member for Birkenhead (Mr. Field) said that it is the taxpayer who

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  is losing out as a result of fraud, and I suggest to the Financial Secretary that the taxpayer deserves some answers today.
  The Government have the technology to calculate the number of cases that have been caught and the number of criminal proceedings that have been brought. We know that the Government can have access to that information because in her letter on 11 April 2001, which is deposited in the House of Commons Library, the Paymaster General tells us that between April 2000 and February 2001 approximately 29,000 working families tax credit and disabled person's tax credit investigations were completed, and about 300 penalties were imposed. If she can find the information for that period, why on earth can she not find it for the 12-month period about which she promised to tell us? Those facts need to be put on the record by Ministers today.
  I try not to think too ill of my fellow man, in the inclusive Conservative party that my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo) has done so much to influence over the past few weeks. I do not want to resort to cheap rhetoric about benefit frauds, cheats and scroungers. We are seeking as a party to condemn a little less and understand a little more. So I want to be very gentle in making my point: I think that it is highly unlikely that the number of serious fraud cases that relate to working families tax credit and in which penalties are justified amounts to only 300 in one year. That is the number given in the Paymaster General's figures, but it seems remarkably low, so I repeat that we need the figures that she undertook to give to us.
  In conclusion, I should like to make a more general point about fraud, not least in relation to that which is endemic as a result of having a tax credit system, as opposed to a straightforward benefit system and family credit. Apart from housing benefit, the two most vulnerable benefits in terms of fraud are jobseeker's allowance and income support, which are both folded into the working tax credit and child tax credit that are at the core of the Bill. On 20 December 1999, Lord Rooker, the then Minister of State, Department of Social Security, told the House something very interesting. He said:
  "Previous estimates have shown that £2 billion a year has definitely been lost through fraud. A further £3 billion may have been lost in cases where fraud is strongly suspected".
  On top of that lot, he referred to
  "a further £2 billion where there is some suspicion of fraud."—[Official Report, 20 December 1999; Vol. 341, c. 323W.]
  Those figures have been estimated to be somewhat on the low side, not least by my right hon. Friend the Member for Haltemprice and Howden (David Davis) when he was Chairman of the Public Accounts Committee. That estimable Committee suggested that, in total, social security fraud cost the average family about £500 a year. That is the scale and magnitude of the problem with which the Government have to grapple. Of course, the predecessor Administration also had to grapple with it. However, this Bill seems to encourage a lax culture in terms of application for the two credits. There is the disregard of increases in income, about which the authorities are saying "Don't worry about that, we'll overpay you." A new regime is being introduced in which the arrangements are more complicated and it will be more difficult for people to get the right answers. It will, therefore, give fraudsters more scope to try things on and
  1102
  claim that they were confused—a point that has been rather sagely made by the Institute for Fiscal Studies. For those reasons, as well as that which has already been mentioned—the secrecy with which Ministers are treating the information about the level of fraud in working families tax credit and tax credits in general—I urge the House to support the new clause and the associated amendments tabled by my hon. Friends.
  Mr. Frank Field: I rise to speak to the amendments in the group to which I have appended my name. I do so for one very simple reason: when the Opposition were in government, they were, at least in my view, open to the charge of being soft on fraud and soft on the causes of fraud. I hope that those on the Front Bench will accept the amendments, as I would not want us to go into an election with that charge not only being pinned to us, but being widely believed by the electorate.
  I want to support my right hon. Friend the Financial Secretary and again emphasise to the House the difficulties that he has in trying to ensure that the civil service machine is as effective as we want it to be in countering fraud. It is not part of my normal behaviour to attack civil servants either generally or individually, but I can say that the main culprits are not in the Box tonight and that I am thinking about the generalities and not about individuals.
  Two examples might suggest that the machinery supporting the Government is not as anxious to counter fraud, or to take notice of the will of the House, as it should be. I have already cited the first example. I had responsibility for fraud for about 13 weeks, and decided that we should undertake an inquiry into the patterns of fraud in family credit. That information would be made known to the Treasury so that when it came to plan the working families tax credit, it could at least design out of the new benefit the easy means to fraud that were present in the family credit system. As is known, a successor Minister has told the House that the papers carrying my decision have gone missing. That hardly suggests that there is mega-support in some Departments for countering fraud.
  The second example has also been cited. Attempts to get information about the extent of fraud through a parliamentary question tabled in my name took six months to elicit a reply. Again, that hardly suggests a group of people actively engaged in trying to protect taxpayers' money. I emphasise that point because we are not talking about our money. We are talking about a large number of people, many of whom earn low wages, who pay their taxes because they believe that they should. We have an equal duty to ensure that the money raised from those people, whether rich or poor, is spent in the way in which the House requires.
  If we are casual with that responsibility, in the long run there will be even less support in the House for welfare measures than there is at the moment. So, if we cannot do this for the proper reason, we should do it for another reason—namely, because those of us who are interested in ensuring that those at the bottom of the pile get a slightly better deal than they would if there were no Government intervention want those programmes to be protected.
  Mr. Clappison: Just before the right hon. Gentleman moves on from that point, it is worth bearing in mind the answer that he received to his parliamentary question. It stated that
  "it is not possible to answer specific questions about the proportion of the Inland Revenue's compliance costs that relate to Tax Credits."—[Official Report, 19 December 2001; Vol. 377, c. 324W.]
  It took the machinery that he has described six months to tell him that it did not know the answer.
  Mr. Field: I hate to say this, but the Treasury looks good in this regard compared with the Department for Work and Pensions. I recently received a reply to a letter that I had sent to that Department nine months earlier. It had a "roller-towel" answer similar to the one to which the hon. Gentleman has just referred. All this suggests that, despite the Government's wish to counter fraud, that wish is not being backed up with resolute action by all civil servants. For the reasons that I have briefly outlined, therefore, I hope that when my right hon. Friend the Financial Secretary to the Treasury comes to reply, he will not surprise the House or taxpayers, and that he will express the Government's intention to adopt the amendments.
  Mr. Mark Field rose—
  Mr. Frank Field: I give way to my namesake.
  Mr. Mark Field: I thank the right hon. Gentleman—perhaps I should call him my right hon. kinsman. He has made a thoughtful contribution detailing some of the intrinsic problems that the Department faced when he was a Minister. Does he not feel, however, that an openness to fraud will inevitably be endemic in the system of tax credits? That system has been born out of a desire to push the burden of costs on to business, rather than keeping it with the Government.
  Mr. Frank Field: I believe that there would still be fraud if we were operating the tax credit system in the Garden of Eden, given how easy it is to commit fraud. Hence the amendments, which are trying to send a police force into the Garden of Eden to do a bit of handiwork on the taxpayer's behalf. That is yet another reason to accept them.
  I shall end on the note on which I began. In the run-up to the 1997 election, the party to which I belong was able to seize the initiative in countering fraud. Taxpayers thought that the Conservative party had totally failed to live up to its responsibilities to protect taxpayers' money. My worry is that if we are not seen to act ever diligently in protecting taxpayer's money, the charge made against the last Conservative Government—that they were soft on fraud and soft on the causes of fraud—will be made against us.
  I hope that the Financial Secretary will deliver a robust response. Despite his difficulties in bringing some civil servants to heel in implementing the wishes of the House, I hope that we take an important step forward in protecting taxpayer's money and in tilting the balance towards decent citizens and against those citizens who rip us off.
  Mr. Flight: The Government's approach contains a genuine flaw. They have understandably chosen a system
  1104
  that prioritises giving people credits as they need them. That system is extremely complex. Indeed, the Financial Secretary said in Committee that it would be like a television set—people would not understand how it worked, but they would turn the knob on and off. We should consider those two points together.
  The word "fraud" may be wrong, but human nature is human nature, and, inevitably, those who qualify for tax credits will develop and understand ways in which to play the system. People will work out what cannot be checked effectively or will not be checked at all. Currently, there is a marked lack of discipline in the system, and I can understand why the Government are not keen on the kind of disciplinary measures that might tighten it up. For instance, all claimants might be required to produce a detailed annual return for the Revenue, answering all the key questions about their circumstances. That would circumvent the easy argument, "I didn't really know that I had to give that bit of information, and I didn't understand." The reply to that is, "How could you? It is a very complex matter."
  Alternatively, the Revenue might have to check working hours with employers. That would not solve the problem in relation to the self-employed, but, again, checking with employers, whatever formula the Government apply in relation to average working hours, would be an enormous task and yet another burden on employers. The nature of the arrangement will encourage laxity, wheezes and playing the system—not major fraud, but a culture of fraud. We have seen such things in other areas of national life. When the Government are using the taxes and money of those who are not well-off and of others, they cannot afford to have their cake and eat it. If they are to introduce a negative income tax credits system, they must also apply the disciplines that go with it.
  As other hon. Members have argued, two outcomes resulted from a similar system in the United States, on which much of the Government's approach is modelled. First, costs spiralled from, I think, $1.6 billion to more than $18 billion in a decade. Secondly, some 25 per cent. of the claims turned out to be invalid. As the Bill stands, we shall go down that road. Are the Government prepared to introduce the disciplines needed to prevent the same thing from happening here?
  Mr. Hoban: I do not wish to add a great deal more, but I want to put on record part of the debate in Committee on the message that the Government are sending out on working families tax credit fraud. I also want to explain the importance of the new clause and the amendments grouped with it, which were tabled by my hon. Friend the Member for Hertsmere (Mr. Clappison).
  In a parliamentary answer covering the period from October 1999 to September 2001, it was identified that there were 52,000 investigations into working families tax credit claims, of which 8,800 resulted in recovery of an overpayment. There were 478 penalties for over-claiming, but only 22 prosecutions, of which 13 were successful. My concern is that, with so few prosecutions following so many recoveries and penalties, the message to the perpetrators was that, to echo the right hon. Member for Birkenhead (Mr. Field), the Government were soft on fraud and soft on the causes of fraud. That can only encourage fraudsters to commit further fraud, which is why I support the new offence of aggravated tax relief fraud. It is important to demonstrate that there is a stiff sanction.

  1105
  5.30 pm
  It is also important, as in amendment No. 3 and amendment (a), to stress that the Government should be held to account by Parliament for the extent of fraud in the system and made to say, without giving the game away to the fraudsters, what measures they are taking to ensure that fraud is reduced. We must send out a clear message to the fraudsters, and I am afraid that the Government's track record, with so few prosecutions following so many false claims, sends out quite the wrong message.
  The Financial Secretary to the Treasury (Mr. Paul Boateng): This worthwhile and thoughtful debate has demonstrated the seriousness with which the whole House takes the issue of fraud. I assure the hon. Member for Arundel and South Downs (Mr. Flight) that the Government are determined to tackle it wherever and in whatever aspect of the tax and/or benefit system it appears.
  I entirely reject the accusation—it was not only implicit but explicit in some contributions today—that we are not committed to tackling non-compliance in the tax credit system: we are, and I would argue that the measures in the Bill demonstrate that. The notion that the people who are responsible for administering the tax and tax credits system would glean from what some hon. Members have said today is that the House questions their seriousness of intent, which would be disappointing for a body of men and women engaged in a difficult and problematic field of enforcement.
  My right hon. Friend the Member for Birkenhead (Mr. Field) clearly appreciates the balance that must be struck, whereby we need to be committed not only to deterring, detecting and reversing non-compliance but to encouraging people to take up what is rightfully theirs.
  My right hon. Friend has championed that cause for many years, which distinguishes his criticisms and concerns from those of the hon. Member for Bury St. Edmunds (Mr. Ruffley), who, in an interesting reference to the right hon. Member for Kensington and Chelsea (Mr. Portillo), demonstrated that the distance between Kensington and Chelsea and Bury St. Edmunds is more than geographical.
  Mr. Ruffley: Will the right hon. Gentleman give way?
  Mr. Boateng: No, I have not finished.
  The attempts by the right hon. Member for Kensington and Chelsea and his hon. Friend the Member for Buckingham (Mr. Bercow) to change the face of the Conservative party are likely to take a long time. I heard the points that the hon. Member for Bury St. Edmunds made, and I will deal with them later.
  Mr. Ruffley: On a point of information, I must tell the Minister that my reference to my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo) was supportive; I agree with his injunction that our party should be more inclusive. The Minister entirely misunderstood the point I was trying to make.
  Mr. Boateng: If what the hon. Gentleman said earlier was supposed to be supportive, I hope that I never have to rely on his support.
  1106
  A delicate balance has to be struck. If the hon. Gentleman is being supportive, I hope that he will have the grace to recognise that we need to get the balance right. There is a balance between helping the compliant majority to claim and to understand both what they are entitled to and their obligations under the system—because with rights come responsibilities—and having effective remedies against those who try to abuse the system.
  There undoubtedly are people who abuse the system—we all come across them from time to time in our constituency surgeries. My right hon. Friend the Member for Birkenhead and I share a common approach to theology, and we both accept that man is fallen—so, as he suggested, we will not have the opportunity to observe what would happen if the measure were enforced in the Garden of Eden. We operate in an entirely different place, and our laws must reflect the nature of that place.
  Mr. Frank Field: Given the nature of the Bill, how it operates, and who is responsible for membership, will not the overwhelming majority of the fallen creatures be employers?
  Mr. Boateng: I am not sure that I accept that. There are a lot of fallen folk about, and I do not think that they are to be found in any one place or category. Even among ourselves I fear that there are some—on both sides of the House. We have to live with that fact, but our laws also have to reflect not only the reality of human nature but our need to get the balance right.
  We had the opportunity to examine this issue at length in Committee, and I am rather surprised by some of the suggestions that have been made about the Bill. For example, I should have thought that the hon. Member for Hertsmere (Mr. Clappison) would welcome the fact that we recognise the merits of his amendment and the points that he made so ably in Committee. However, he seemed a little churlish—
  Mr. Flight: Surely not.
  Mr. Boateng: I fear so, although it was uncharacteristic. It was churlish of the hon. Gentleman to chide us for tabling our amendment. We recognised the force of his case, and I find it rather surprising that he suggests that simply because we tabled our own amendment, there may be other hidden horrors lurking in the Bill, as yet unrecognised because there has not been enough time for consideration. I would say that we gave the Bill very thorough consideration in Committee, just as we have done tonight.
  Be that as it may, I would argue that aspects of the new tax credits make the system intrinsically more secure. The measure of income used is the income for a tax year, which is defined much more closely in line with tax, reducing the capacity for understating income and making it easier to cross-check income figures with tax and national insurance records. As right hon. and hon. Members know, understatement of income is a common feature of the system at the moment. It will be much harder to get away with that once the Bill completes its passage through this House and the other place.
  I assure all who have contributed to the debate that our intention is that the administration of the system and the ethos that we create will develop a culture not only of

  1107
  maximum take-up of the system and the credit—the importance of that was put forcefully in Committee by the Liberal Democrats and my hon. Friends—but, importantly, of compliance and of intolerance of abuse. There must be a determined effort to bring to book those responsible for abuse. The regulations, and the guidance given to those seeking the credit and to those administering it, will buttress that culture.
  Secondly, concern has been expressed about the child care tax credit. The ability of the new tax credits to respond to changes as they happen will mean that support for child care costs through the child care element of the working tax credit will be matched much more closely to the actual costs incurred. At the moment, support for child care depends on the situation when the claim is made; once awarded, child care tax credit stays in place for the full six months, but we are awarding that structural point. Entitlement to the child care element will stop if the use of qualifying child care stops. Of course, the corollary is that parents who are already claiming working tax credit, and who become eligible for help with child care costs, will be able to apply for it at that point.
  The important point, which addresses directly the comments of the hon. Member for East Devon (Mr. Swire), is that we intend that there should be a system of rigorous spot-checks. Officials will visit nurseries to ensure compliance, so the system will not be lax or in any way tolerant of abuse. There will be checks, and we will try to improve links between the different Inland Revenue systems, which will make it harder for claimants to hide sources of income and to receive tax credits to which they are not entitled.
  To combat fraud, up-front checks will be made, and the automated systems and data sources available to the Inland Revenue will be used to support systematic risk-screening techniques. My right hon. Friend the Member for Birkenhead made a very fair point—we have not always done as well as we should.
  I regret any failures to answer letters and queries promptly. Right hon. and hon. Members may not like the responses that they receive, but as Members of Parliament they are entitled to speedy responses and every effort is being made to improve performance in that area.
  5.45 pm
  Those checks will enable those cases that carry the greatest risk to be identified before payments are made. The Inland Revenue will then be able to carry out further checks and ask for additional information or supporting evidence from the claimant before deciding whether to put an award into payment.
  The Revenue will carry out up-front checks on all claims. The initial automated risk assessment will identify claims that present a high risk of non-compliance or fraud and need immediate investigation. Those will be directed for consideration to staff in one of the Revenue's research, intelligence and analysis teams. The risk weightings used in the up-front screening process will be capable of being varied, either centrally or locally, in response to different factors such as changing perceptions of risk. I think that my right hon. Friend will accept that that is a very different attitude and approach from the one that has sometimes existed elsewhere. The research, intelligence
  1108
  and analysis teams will also have access to third-party information and data from other sources, such as the self-assessment system, to assist them in identifying cases.
  During the year, the Revenue will carry out compliance work on cases where it suspects that an award is incorrect. Clause 16 enables the Revenue to require information and evidence to help it decide whether there are grounds for amending or revoking an award, allowing it to take effective action during the year to prevent tax credits being paid incorrectly.
  Clause 18 allows the board to conduct inquiries into awards after the end of the year, enabling it to implement an end-of-year compliance regime—investigating awards, ensuring that they were correct and either amending or revoking them if they were not. The clause gives the Revenue the power to require information and evidence from any person to whom an award has been made, provided an inquiry has been opened. The Revenue may also obtain information from third parties.
  In response to the hon. Member for Hertsmere, I should point out that there were more than 16,000 allegations to the hotline, but, as he will know, there were more than 50,000 investigations into working families tax credit applications. Up to November 2001, there were 50,382 investigations into WFTC applications and 1,668 into disabled person's tax credit applications. I suggest that that is not indicative of any slackness. The hon. Gentleman will want to know that we will be guided and informed by the outcome of the study to which he referred as we implement this tax credit system, and I can assure him that we will be.
  On the most serious cases of suspected tax credit fraud, the provisions giving the Revenue powers to investigate fraud cases effectively are in clause 34. Clause 33, which amendment No. 3 would amend, creates a new offence of tax credit fraud. Such cases will be those where the actions of claimants are particularly offensive—the use of false documents, repeat offences, collusive employers or organised fraud by criminal gangs. Those cases will be considered for prosecution, but where they do not proceed for one reason or another, they will go back to the compliance teams at local level to be investigated and penalised. There is no question of people just getting away with it. It is not a case of, if they are not prosecuted, there is no follow-up. There will be follow-up. A clear message will be sent that fraud is simply not acceptable. That approach mirrors that for tax fraud, where similar considerations apply in deciding which cases should be subject to prosecution.
  We on the Labour Benches cannot accept the notion that people who are being investigated for tax fraud, many of whom will be white collar workers or self-employed, should be treated differently from those who are being investigated for tax credit fraud, that tax credits are outside the overall tax system and that one particular group of people in society should be treated more harshly and more aggressively when it comes to prosecution than another. All people must be treated fairly. All people must understand that they have rights and responsibilities.
  New clause 6 seeks to introduce the offence of aggravated fraud where the sum of tax credit at stake is particularly high or where a person has been convicted of social security or tax credit fraud in the recent past, opening the way to a higher maximum sentence on indictment.

  1109
  Courts already have the power to take previous offences and the size of any fraud into account when setting sentence. We know that it is unusual for any court to pass a sentence for tax or tax credit fraud in excess of seven years, however aggravating the circumstances. Dealing with the mischief is not made more effective simply by ratcheting up the maximum sentence. That is an odd way in which to approach sentencing.
  There is, however, the common law offence of cheating the public revenue: that can and will be used in appropriate circumstances. It allows the court to pass whatever period of imprisonment it feels is appropriate—there is no maximum sentence. I hope that, having considered that, hon. Members will not feel the need to proceed down the road that new clause 6 suggests. There are sufficient avenues available, and they will be used where appropriate. New clause 6 simply is not necessary.
  Amendment No. 3 takes us into different territory. It seeks to impose a requirement on the Secretary of State for an annual report to Parliament on the extent of tax credit fraud and the counter-measures taken. I am not sure what it would add. The Inland Revenue already produces an annual report every year, which is presented to Parliament by Treasury Ministers. It covers, among other things, the Revenue's work on countering fraud and non-compliance across the range of its responsibilities. Since the Revenue took over responsibility for tax credits, the report has included its work on countering tax credits fraud and non-compliance. We are seeking to take a co-ordinated approach to tackling non-compliance in tax and tax credits.
  The Revenue is subject to scrutiny by the National Audit Office and its board appears before the Public Accounts Committee. Treasury Ministers are, and will remain, answerable to Parliament on tax credit matters in the normal way.
  I assure right hon. and hon. Members that their points about the importance of a vigorous and determined culture in relation to tax credit fraud will be taken on board. We will seek not only in debates in the House but in any other appropriate way to ensure that the House is kept informed of developments in that area.
  I shall say a few words about the benchmarking study that was conducted on WFTC cases, which I know is of concern to right hon. and hon. Members. That work was undertaken as a means of evaluating the effectiveness of Revenue systems and, in particular, to inform the development of the risk assessment process. My hon. Friend the Paymaster General has made it clear that we do not think that it would be helpful to provide details of the factors that the Revenue would consider when deciding whether to take up a case. My hon. Friend has said that she needs time to consider the results of the Revenue's analysis and will consider whether it is appropriate to make any of that information available. She has heard the points that right hon. and hon. Members have made forcefully and effectively, and no doubt in due course will communicate her intentions in that regard.
  This has been an important debate. We need to make sure that we send a clear message that fraud is unacceptable, that rights bring with them responsibilities and that we intend to ensure that we create a culture of compliance and determined enforcement of the tax credit system, while never forgetting that the system is designed to ensure that those who need help receive help when they
  1110
  need it. It is designed to ensure that we address the evils of poverty, particularly child poverty, and make work pay. In doing that, we need to be aware of the importance of combating fraud.
  I hope that I have demonstrated to the House our seriousness of purpose and intent and that hon. Members will not push the amendments to a vote.
  Mr. Clappison: This has been an interesting debate and it has ranged widely into theological questions. I always approach issues of theology and morality with a certain degree of humility and reluctance. I never like to say too much on the subject; I do not want to speculate about who is fallen and who is not fallen. In this context, I am interested only in finding out what the wages of sin are, but the Minister will not tell me. I have asked him over and over again and he simply will not say. We heard more elegant prevarication, if I may put it that way, in his speech.
  I should hate to be thought of as churlish in my response to Government amendment No. 23. I hope that I commended the Minister's response in Committee. I also commend his openness in revealing through his correspondence that the situation was even worse than we thought it was, and that the good that we have done through the amendment will be all the greater. Our sadness is that we have helped the Government in this, but we have not been given the chance to help them a little more by looking at nearly half the Bill, which did not receive any scrutiny.
  The hon. Member for Northavon (Mr. Webb) asked, interestingly, what the sentence should be and whether the maximum sentence was too harsh. I recommend that he look at the sentence of seven years' imprisonment, which is set for every fraud in the Bill. We are setting a maximum to deal with the worst cases of fraud—those that involve repeated offences of fraud and frauds of large sums. We would have to be realistic in considering what that large sum would be. It would be the amount that ordinary people thought indicated that somebody was profiting far too much. Some people are profiting far too much. On any view of it, the amount of fraud in the system is not reflected in the number of prosecutions. The Financial Secretary told us of the 50,000 investigations, but he did not go on to tell us that of those only 28 prosecutions were generated. The child care providers investigation did not result in a single prosecution, nor did the investigation of employers. So whatever applies to the rest of us as regards the wages of sin, as far as the Government are concerned employers are saintly and immune from sin, because employers are never involved in fraud. The Government are being complacent and we are disappointed by the Financial Secretary's response.
  It being Six o'clock, MR. DEPUTY SPEAKER put forthwith the Question already proposed from the Chair, pursuant to Order [10 December].
  The House divided: Ayes 120, Noes 294.

  Division No. 165]

  [6 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Baldry, Tony

  Amess, David

  Barker, Gregory

  Arbuthnot, Rt Hon James

  Baron, John

  Atkinson, David (Bour'mth E)

  Beggs, Roy

  Atkinson, Peter (Hexham)

  Bercow, John

  Bacon, Richard

  Beresford, Sir Paul

  1111

  Blunt, Crispin

  MacKay, Rt Hon Andrew

  Boswell, Tim

  Maclean, Rt Hon David

  Brady, Graham

  McLoughlin, Patrick

  Brazier, Julian

  Malins, Humfrey

  Browning, Mrs Angela

  Maples, John

  Burnside, David

  Mates, Michael

  Burt, Alistair

  Mawhinney, Rt Hon Sir Brian

  Butterfill, John

  May, Mrs Theresa

  Cameron, David

  Mercer, Patrick

  Cash, William

  Moss, Malcolm

  Chapman, Sir Sydney (Chipping Barnet)

  Murrison, Dr Andrew

  Osborne, George (Tatton)

  Chope, Christopher

  Ottaway, Richard

  Clappison, James

  Page, Richard

  Collins, Tim

  Paice, James

  Conway, Derek

  Prisk, Mark

  Cran, James

  Randall, John

  Davis, Rt Hon David (Haltemprice)

  Redwood, Rt Hon John

  Djanogly, Jonathan

  Robathan, Andrew

  Duncan, Peter (Galloway)

  Robertson, Hugh (Faversham)

  Fabricant, Michael

  Robinson, Peter (Belfast E)

  Field, Rt Hon Frank (Birkenhead)

  Roe, Mrs Marion

  Field, Mark (Cities of London)

  Rosindell, Andrew

  Flight, Howard

  Ruffley, David

  Forth, Rt Hon Eric

  Shephard, Rt Hon Mrs Gillian

  Francois, Mark

  Simmonds, Mark

  Gale, Roger

  Soames, Nicholas

  Garnier, Edward

  Spelman, Mrs Caroline

  Gibb, Nick

  Spicer, Sir Michael

  Gillan, Mrs Cheryl

  Spink, Bob

  Goodman, Paul

  Spring, Richard

  Gray, James

  Steen, Anthony

  Grayling, Chris

  Streeter, Gary

  Green, Damian (Ashford)

  Swayne, Desmond

  Greenway, John

  Swire, Hugo

  Gummer, Rt Hon John

  Syms, Robert

  Hague, Rt Hon William

  Tapsell, Sir Peter

  Hammond, Philip

  Taylor, Ian (Esher & Walton)

  Hawkins, Nick

  Taylor, Sir Teddy

  Hayes, John

  Trend, Michael

  Heald, Oliver

  Turner, Andrew (Isle of Wight)

  Hendry, Charles

  Tyrie, Andrew

  Hermon, Lady

  Walter, Robert

  Hoban, Mark

  Waterson, Nigel

  Jenkin, Bernard

  Watkinson, Angela

  Key, Robert

  Whittingdale, John

  Kirkbride, Miss Julie

  Widdecombe, Rt Hon Miss Ann

  Laing, Mrs Eleanor

  Wiggin, Bill

  Lansley, Andrew

  Wilkinson, John

  Leigh, Edward

  Willetts, David

  Letwin, Oliver

  Winterton, Nicholas (Macclesfield)

  Lewis, Dr Julian (New Forest E)

  Young, Rt Hon Sir George

  Liddell-Grainger, Ian

  Lidington, David

  Tellers for the Ayes:

  Loughton, Tim

  Mr. Laurence Robertson and Mr. Stephen O'Brien.

  Luff, Peter

  McIntosh, Miss Anne

  NOES

  Abbott, Ms Diane

  Barron, Kevin

  Ainger, Nick

  Battle, John

  Ainsworth, Bob (Cov'try NE)

  Beith, Rt Hon A J

  Alexander, Douglas

  Benn, Hilary

  Allan, Richard

  Bennett, Andrew

  Anderson, Rt Hon Donald (Swansea E)

  Benton, Joe

  Berry, Roger

  Anderson, Janet (Rossendale)

  Best, Harold

  Armstrong, Rt Hon Ms Hilary

  Blackman, Liz

  Atherton, Ms Candy

  Blizzard, Bob

  Atkins, Charlotte

  Boateng, Rt Hon Paul

  Austin, John

  Borrow, David

  Bailey, Adrian

  Bradley, Peter (The Wrekin)

  Baird, Vera

  Bradshaw, Ben

  Barnes, Harry

  Brake, Tom

  Barrett, John

  Brennan, Kevin

  1112

  Brooke, Mrs Annette L

  Gardiner, Barry

  Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

  Gerrard, Neil

  Gibson, Dr Ian

  Brown, Russell (Dumfries)

  Gidley, Sandra

  Browne, Desmond

  Gilroy, Linda

  Buck, Ms Karen

  Godsiff, Roger

  Burgon, Colin

  Green, Matthew (Ludlow)

  Burnham, Andy

  Hall, Mike (Weaver Vale)

  Cairns, David

  Hall, Patrick (Bedford)

  Campbell, Alan (Tynemouth)

  Hamilton, David (Midlothian)

  Campbell, Mrs Anne (C'bridge)

  Hamilton, Fabian (Leeds NE)

  Campbell, Rt Hon Menzies (NE Fife)

  Hanson, David

  Harris, Tom (Glasgow Cathcart)

  Campbell, Ronnie (Blyth V)

  Healey, John

  Caplin, Ivor

  Heath, David

  Carmichael, Alistair

  Henderson, Doug (Newcastle N)

  Casale, Roger

  Henderson, Ivan (Harwich)

  Cawsey, Ian

  Hendrick, Mark

  Challen, Colin

  Hepburn, Stephen

  Chapman, Ben (Wirral S)

  Heppell, John

  Chaytor, David

  Hesford, Stephen.

  Chidgey, David

  Heyes, David

  Clapham, Michael

  Hill, Keith

  Clark, Dr Lynda (Edinburgh Pentlands)

  Hinchliffe, David

  Hodge, Margaret

  Clark, Paul (Gillingham)

  Hoey, Kate

  Clarke, Rt Hon Charles (Norwich S)

  Holmes, Paul

  Hope, Phil

  Clarke, Rt Hon Tom (Coatbridge)

  Hopkins, Kelvin

  Clarke, Tony (Northampton S)

  Howarth, Rt Hon Alan (Newport E)

  Clelland, David

  Howarth, George (Knowsley N)

  Clwyd, Ann

  Hughes, Kevin (Doncaster N)

  Coffey, Ms Ann

  Hurst, Alan

  Cohen, Harry

  Illsley, Eric

  Coleman, Iain

  Ingram, Rt Hon Adam

  Connarty, Michael

  Jackson, Glenda (Hampstead)

  Cooper, Yvette

  Jackson, Helen (Hillsborough)

  Corbyn, Jeremy

  Johnson, Alan (Hull W & Hessle)

  Cotter, Brian

  Jones, Helen (Warrington N)

  Cruddas, Jon

  Jones, Jon Owen (Cardiff C)

  Cryer, Mrs Ann (Keighley)

  Jones, Lynne (Selly Oak)

  Cryer, John (Hornchurch)

  Jones, Martyn (Clwyd S)

  Cummings, John

  Joyce, Eric

  Cunningham, Jim (Cov'try S)

  Kaufman, Rt Hon Gerald

  Dalyell, Tam

  Keeble, Ms Sally

  Darling, Rt Hon Alistair

  Keen, Alan (Feltham & Heston)

  Davey, Edward (Kingston)

  Keen, Ann (Brentford & Isleworth)

  Davey, Valerie (Bristol W)

  Kemp, Fraser

  David, Wayne

  Khabra, Piara S

  Davies, Rt Hon Denzil (Llanelli)

  Kilfoyle, Peter

  Dawson, Hilton

  King, Ms Oona (Bethnal Green)

  Dean, Mrs Janet

  Kumar, Dr Ashok

  Denham, Rt Hon John

  Ladyman, Dr Stephen

  Dhanda, Parmjit

  Lammy, David

  Dismore, Andrew

  Laws, David

  Dobbin, Jim

  Laxton, Bob

  Dobson, Rt Hon Frank

  Lazarowicz, Mark

  Donohoe, Brian H

  Lepper, David

  Doran, Frank

  Leslie, Christopher

  Dowd, Jim

  Levitt, Tom

  Drown, Ms Julia

  Lewis, Ivan (Bury S)

  Eagle, Angela (Wallasey)

  Linton, Martin

  Eagle, Maria (L'pool Garston)

  Lloyd, Tony

  Edwards, Huw

  Love, Andrew

  Ennis, Jeff

  Luke, Iain

  Etherington, Bill

  Lyons, John

  Ewing, Annabelle

  McAvoy, Thomas

  Farrelly, Paul

  McCabe, Stephen

  Fisher, Mark

  McCafferty, Chris

  Fitzsimons, Mrs Lorna

  McCartney, Rt Hon Ian

  Flint, Caroline

  McDonagh, Siobhain

  Foster, Rt Hon Derek

  MacDonald, Calum

  Foster, Michael (Worcester)

  McDonnell, John

  Foster, Michael Jabez (Hastings)

  MacDougall, John

  Galloway, George

  McGuire, Mrs Anne

  Gapes, Mike

  McIsaac, Shona

  1113

  McKechin, Ann

  Shipley, Ms Debra

  Mackinlay, Andrew

  Simon, Siôn

  McNulty, Tony

  Skinner, Dennis

  McWalter, Tony

  Smith, Rt Hon Andrew (Oxford E)

  McWilliam, John

  Smith, Angela (Basildon)

  Mahon, Mrs Alice

  Smith, Rt Hon Chris (Islington S)

  Mallaber, Judy

  Smith, Jacqui (Redditch)

  Marsden, Gordon (Blackpool S)

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

  Martlew, Eric

  Soley, Clive

  Meacher, Rt Hon Michael

  Southworth, Helen

  Meale, Alan

  Spellar, Rt Hon John

  Merron, Gillian

  Starkey, Dr Phyllis

  Miliband, David

  Steinberg, Gerry

  Miller, Andrew

  Stewart, Ian (Eccles)

  Mitchell, Austin (Gt Grimsby)

  Stinchcombe, Paul

  Moffatt, Laura

  Strang, Rt Hon Dr Gavin

  Mole, Chris

  Stringer, Graham

  Moonie, Dr Lewis

  Stuart, Ms Gisela

  Moran, Margaret

  Sutcliffe, Gerry

  Morris, Rt Hon Estelle

  Taylor, Rt Hon Ann (Dewsbury)

  Mullin, Chris

  Taylor, Ms Dari (Stockton S)

  Murphy, Jim (Eastwood)

  Thomas, Gareth (Clwyd W)

  Naysmith, Dr Doug

  Thomas, Gareth R (Harrow W)

  Norris, Dan

  Thomas, Simon (Ceredigion)

  O'Brien, Bill (Normanton)

  Timms, Stephen

  O'Hara, Edward

  Todd, Mark

  O'Neill, Martin

  Turner, Dennis (Wolverh'ton SE)

  Öpik, Lembit

  Turner, Dr Desmond (Kemptown)

  Osborne, Sandra (Ayr)

  Turner, Neil (Wigan)

  Perham, Linda

  Twigg, Derek (Halton)

  Pickthall, Colin

  Tynan, Bill

  Pike, Peter

  Vis, Dr Rudi

  Plaskitt, James

  Walley, Ms Joan

  Pollard, Kerry

  Ward, Ms Claire

  Pond, Chris

  Wareing, Robert N

  Pound, Stephen

  Watts, David

  Prentice, Ms Bridget (Lewisham E)

  Webb, Steve

  Prentice, Gordon (Pendle)

  Weir, Michael

  Price, Adam

  White, Brian

  Primarolo, Dawn

  Williams, Rt Hon Alan (Swansea W)

  Quin, Rt Hon Joyce

  Quinn, Lawrie

  Williams, Mrs Betty (Conwy)

  Rammell, Bill

  Williams, Hywel (Caernarfon)

  Raynsford, Rt Hon Nick

  Williams, Roger (Brecon)

  Reed, Andy (Loughborough)

  Willis, Phil

  Reid, Alan (Argyll & Bute)

  Wills, Michael

  Rendel, David

  Winnick, David

  Robertson, Angus (Moray)

  Wishart, Pete

  Roche, Mrs Barbara

  Wood, Mike

  Rooney, Terry

  Woolas, Phil

  Ruddock, Joan

  Worthington, Tony

  Russell, Bob (Colchester)

  Wright, Anthony D (Gt Yarmouth)

  Russell, Ms Christine (Chester)

  Wright, David (Telford)

  Ryan, Joan

  Wright, Tony (Cannock)

  Salmond, Alex

  Wyatt, Derek

  Salter, Martin

  Younger-Ross, Richard

  Sarwar, Mohammad

  Savidge, Malcolm

  Tellers for the Noes:

  Sawford, Phil.

  Jim Fitzpatrick and Mr. Ian Pearson.

  Shaw, Jonathan

  Question accordingly negatived.
  MR. DEPUTY SPEAKERthen proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

Clause 31

  FAILURE BY EMPLOYERS TO MAKE CORRECT PAYMENTS
  Amendment made: No. 23, in page 21, line 22, after "has" insert—
  ', by reason of his fraud or neglect,'.—[Mr. Boateng.]
  Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
  6.12 pm
  Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
  I am pleased to open this debate on the Bill. I am grateful to hon. Members on both sides of the House for the detailed and constructive debates that have taken place on Second Reading, in Committee and on Report. We have been able to discuss a wide range of matters of concern to hon. Members. My right hon. Friend the Financial Secretary and I have been happy to explain the Bill's provisions, and I believe that they address some of those concerns. I am extremely grateful to hon. Members for their assistance in these proceedings and for the very thoughtful way in which they have approached the Bill, not only in challenging the Government, but in genuinely helping us to consider the issues that it raises. I shall return to a few of those points briefly.
  The Bill marks another important step towards achieving the Government's aims of providing employment opportunities for all and tackling poverty. The Bill will introduce two new tax credits—the child tax credit and the working tax credit—which will provide focused and flexible support to families. There will be a single credit to support families with children and a separate credit to provide a top-up for the low paid, providing inclusive support for those facing persistent in-work poverty.
  The Bill will provide the framework for the credits, as well as a further streamlining in the way that support for families is administered, through the transfer to the Inland Revenue of responsibility for child benefit under part 2. By establishing a common framework for the credits, the Bill provides an opportunity to create an inclusive system of support in which families comply with a common set of rules regardless of their income or circumstances. The detailed rules for the credits will be brought out in regulations. I was grateful for the opportunity in Committee to provide more detail on those rules. I was also grateful for the challenge set by the Opposition to respond in varied and creative ways to their insistent and creative questions on whether I was able to share details on the rates and tapers, which as the House well knows are the subject of the Budget statement.
  Hon. Members expressed a desire for more detail to be included in the Bill. It provides the framework for the credits and the regulations contain the technical detail. That is the right way to introduce the reforms and is the norm for such legislation. It allows us the flexibility to adjust the detailed rules over time as we have more experience of the pattern and changing lifestyles of the families that we want to support.
  However, as the hon. Member for Mid-Worcestershire (Mr. Luff) and other Committee members explained, the powers to make regulations are subject to negative resolution procedure. There is nothing wrong with that approach. Like all Governments, we try to strike a balance between the appropriate use of parliamentary time to construct a framework and the way in which we deal with the mechanical issues, which in this case relate to how the credits work.
  I have given the use of regulations careful consideration. Important regulations will need to be made and I accept that it will be helpful to reconsider whether we need to use negative resolutions for every set of regulations. When we introduced the child care tax credit

  1115
  as part of the working families tax credit, and the disabled person's tax credit, the first statutory instruments to contain the relevant legislation were subject to affirmative resolution procedure. I will consider how we can make some of the regulations subject to the affirmative resolution procedure in the first instance, although they would have to return to the negative procedure. That reflects further the co-operative and suitable way in which the Committee approached its work.
  The new tax credits will be awarded for up to a year and are based on an annual income of the claimants for a tax year. They will make the process of claiming easier and will further integrate tax credits with the income tax system. The annual framework will allow the credits to be more flexible during the year. In Committee, we discussed at length how to provide the claimant with the certainty of having a stream of income for the year while ensuring that the system was flexible enough to adjust to changes in income that were dramatic for a family. At the same time, we did not want claimants to think that every penny of change would require a notification to the Inland Revenue. We had a helpful discussion on that in Committee. I hope that the draft regulations, on which we are consulting, will be available to Members of this House. They should also be available to Members of the other place when they consider the Bill and before it returns here.
  Hon. Members were concerned about the potential for overpayments to be run up, and about the complexity of the system. The annual nature of the credits will simplify the income assessment process. We will aim to make sure that in any in-year reporting of changes our desire to avoid any overpayment at the end of the year is borne in mind. When hon. Members see the draft regulations, they will realise that progress has been made to deal with those details.
  The Bill also provides for the credit to contain several elements so that the level support is dependent on circumstances. I confirm that the working tax credit will contain elements focused on helping various groups who may face in-work poverty. In particular, elements in respect of disabled workers and severely disabled adults will be included, alongside extra recognition for couples, lone parents and those working full-time hours. The working tax credit will also build on the success of the child care tax credit in the working families tax credit by providing a child care element. The basic existing framework will be retained, but the payment will be made directly to the main carer.
  In considering legislation in isolation, we often forget or are not able to bring into our debates the often complex reality of people's lives. Although the nature of legislation such as the Bill is simple, the legislative drafting of simple concepts sometimes demands further explanation. When considering the main principles of the Bill, hon. Members were anxious to ensure that persons or families claiming the credit were given a simple, direct and clear explanation of their entitlement, and that requests for advice or for help in making sure that they receive their full entitlement were responded to.
  I am confident that the Bill provides that framework for entitlement and strikes the right balance in respect of the problems to which my right hon. Friend the Financial Secretary spoke in the important debate on how to deal
  1116
  with those who commit fraud against the system. The penalties, sanctions and effective deterrents we can use against those who seek to cheat the system enable us to strike the right balance between making sure that people receive their rightful entitlements and preventing those who seek to steal the money to which others are entitled from doing so. None the less, the regime is geared towards ensuring that everyone claims their rights. The Bill strikes the right balance in respect of compliance and the provision of support to genuine claimants.
  The Government are resolute in our commitment to tackle child poverty and to ensure that work pays. We have already taken more than 1 million children out of poverty. The new credits build on the successful reforms of the last Parliament: the working families tax credit, the children's tax credit, the disabled person's tax credit, and the unprecedented real-terms increases in child benefit and out-of-work benefits. Those reforms have achieved a lot in a short time, but we now have the opportunity to introduce a modern system of support that can deliver even more.
  I agree with the hon. Member for Northavon (Mr. Webb): we have the opportunity to change the system radically. That is precisely what the Bill is designed to do. We should not pass up this opportunity to make a huge difference to the lives of the poorest in our society, and to ensure that their children are not scarred by poverty, grow up in poverty, and inherit poverty in their working lives. I commend the Bill to the House.
  6.24 pm
  Mr. Flight: We have had a constructive debate on Report and in Committee. The only sadness is that we have not discussed or focused on many parts of the Bill. The Government should have delayed introducing it until they had resolved their policy and intentions, and decided how they wanted to implement them. There are no forecasts about costs, no indication of the size and nature of the benefits and no cost analysis. As the Institute for Fiscal Studies said, the consultation process was wholly inadequate. I understand that the original numbers in the consultation document were taken out before publication.
  Parliament is being asked for a blank cheque. This is a framework Bill too far, and Opposition Members do not accept that that is a justifiable approach to legislation that is likely to result in £2.8 billion of expenditure of taxpayers' money. The Bill is not in a form for it to be practicable to make a proper assessment of its proposals, either to oppose them in aggregate or support them.
  As I pointed out on Second Reading, the Bill's proposals are essentially similar to the negative income tax reforms proposed more than 25 years ago by the Heath Government. As the House will be aware, a Select Committee then reported on tax credits and there was an important minority report by Labour Committee members, some of whom still serve as MPs. The minority Committee was advised by Lord Kaldor and the Child Poverty Action Group, and led the incoming Labour Government in 1974 to decide against implementing tax credits. There were good reasons of principle for that. Those principles remain valid today and are the antithesis of the fine intentions that the Paymaster General has just expressed. The Committee felt that tax credits were insufficiently focused on those most in need, that the majority of the expenditure benefited people not in

  1117
  poverty, that the costs were too great in relation to the benefits paid to those who were in need and that the additional revenue would be better spent on more focused measures to help people in need.
  Roger Casale: I am interested to hear the hon. Gentleman repeat the argument that he made on Second Reading. Does he not accept that the world has changed enormously 25 years on? The argument for tax credits is valid today because we can no longer hope just to compensate people for being poor, on low wages or not having access to work. We have to achieve the dynamic effects that come from reconnecting people with the labour market, providing incentives to get back to work and, of course, providing proper child care and support for their children.
  Mr. Flight: First, I made those points in Committee, not on Second Reading. Secondly, they are points of principle, not just points of practice. Given the expenditure and the difficulties associated with the Bill's approach to addressing the problems of those most in need, the arrangements are not particularly effective. The hon. Gentleman will note that these criticisms have been made by a number of organisations that focus on poverty. There are many good things in the proposals, to which I referred on Second Reading. However, our objections of principles remain valid and have not been adequately debated—[Interruption.]
  Mr. Deputy Speaker (Sir Michael Lord): Order.
  Mr. Flight: In view of the many issues that have not been addressed, I suggest that the Government agree to give the relevant Select Committee responsibility to scrutinise the substantial volume of regulations that will need to be introduced; otherwise, as the Law Society has warned, many important issues and principles will not be considered properly by Parliament.
  I shall focus on difficult issues raised by the Bill, many of which are issues of principle that have not been resolved. There is the simple question of how generous and expensive the child tax credits will be. The lower the level of child tax credit, the less effect there will be on reducing child poverty, but the higher the level, the greater the risk of reducing work incentives, which the tax credits are intended to increase. More generous tax credits will reduce the financial disincentives to marriage or cohabitation for parents who are jobless, but the CTC and WTC proposals will continue some of the financial disincentives of the working families tax credit to marriage and cohabitation for parents. In Committee we touched on this issue, which is acknowledged by the study sponsored by the Rowntree Trust.
  Working families tax credit and child tax credit have already brought back elements of joint assessment for both married and cohabiting couples. As a result of the Bill, one partner will be liable to repay the CTC or WTC if it is wrongly paid to the other partner. That could cause a nightmare situation when couples split up. Although working tax credit will increase incentives for people to get a job, it will reduce the incentives as they earn more, and some will lose more than 90 per cent. through tax and the withdrawal of benefits. The problem of squaring incentives to work is by no means fully addressed by the
  1118
  Bill. Under working tax credit, as with working families tax credit, parents remain the only people who are not eligible for child care subsidies.
  As I said on Second Reading, I welcome the fact that the savings rules that applied to WFTC will not apply to child tax credit, but I do not recollect the Government ever setting forth the policy on savings for working tax credit.
  Both credits are complex and present people in real life with complex decisions about whether to work more hours and whether to live together or apart. There is an issue of principle as to whether Government should use financial incentives to influence people's personal behaviour in those areas.
  As in Australia and Canada, payments will be based on annual income figures, but unlike Australia and Canada, in the UK the Inland Revenue will not have the necessary data for many potential claimants unless the Government adopt the suggestion that all claimants should be required to produce annual returns for the Revenue.
  Major problems will remain in defining and determining cohabitation. The Revenue said that it would check whether anyone was lodging a tax return from the same address as the claimant, but care will be needed by the Inland Revenue to avoid the risk of making a wrong cohabitation decision, such that under the law a couple is deemed to be cohabiting, because there will be consequent penalties and difficulties in recovering overpayments.
  The arrangements depend on a great deal of information being transferred between Government Departments, especially from the Department for Work and Pensions to the Inland Revenue. We have not touched on the question whether this is potentially in breach of the data protection legislation, if not data protection principles.
  The Bill fails to ensure that a national system of credits and benefits is maintained, and it risks the possibility of disputes similar to the current threat that the Whitehall moneys financing attendance allowance could be withdrawn in Scotland. The threat exists as a result of Scottish Ministers having chosen to provide free nursing care. It is in the interests of the country that there should be one system in all of Britain to avoid the possibility of conflicts, which the drafting of the Bill has not ruled out.
  The Government have not resolved the difficulty of defining minimum hours to be worked to qualify for working tax credit, or how that will be checked, if at all. Will employers be required to provide information either regularly or on a spot-check basis? We have argued very strongly—this is the main point that has been made by the Institute for Fiscal Studies—that there is no work incentive argument for providing tax credits for singles and couples without children and thereby adding about 500,000 claimants a year.
  Another issue that has arisen is the fact that the Government continue to propose in the Bill what I can only call Enron-style, off-balance-sheet accounting. Some £4 billion of existing expenditure is automatically being transferred to a tax net-off, and another £2.8 billion will probably be transferred as a result of the Bill. A total of £15 billion of welfare-related expenditure will then be accounted for in terms of netting off tax receipts, rather than being shown as expenditure. The Office for National Statistics, which adopts the accounting conventions set out in the 1995 European standard of accounting, keeps

  1119
  the national accounts on one basis, but there are now difficulties in reconciling the Red Book with national accounts. There is no logic to justify taking the proposed approach other than that of seeking to conceal the extent of such expenditure.
  It has emerged from this debate that at the heart of the issue are our concerns about the complexities of the arrangements and our anxiety that the need for claimants to keep detailed records and monitor the number of hours worked, the amount of income earned and child care costs will lead to a much-increased risk of non-compliance. The right hon. Member for Birkenhead (Mr. Field) was more constrained today, but as he has warned previously, the arrangements in the Bill are likely to result in spiralling costs of the sort that were experienced in America as people learned to play the system and to offer excessive bonuses for dishonesty.
  Above all—I suggest that hon. Members think about this point—the Bill will ensure that about 40 per cent. of all families will be on means-tested benefits. Some 30 per cent. of those will be of working age; and, on the Government's figures, about 80 per cent. will have children. Other tax credits will go to 56 per cent. of those in retirement. Stepping back, one can see that that means that well over half of the recipients will be paying for their benefits through direct and indirect tax. Is there any logic in a system that includes the costs, difficulties and administrative issues that are involved in taking money from people and then giving it back to them? That cannot be an ideal way of running our affairs. Indeed, the Prime Minister himself has warned of the major problems in having too much means-testing.
  There are good objectives in the Bill and several aspects that we support, which I highlighted on Second Reading, but the House has not had the opportunity to consider many serious problems and a lot of the issues that I have sought to raise in this speech. I end where I started: it would surely be much more healthy for the Government who seek to introduce such legislation to bring to the House much more detailed proposals, rather than a framework in respect of which we do not know how many of the problems will be solved, when we do not know how much it will cost or whether 1.3 million people will be worse off as a result of its introduction. That is not the way to legislate, and I do not think that the Paymaster General made any convincing case for addressing this important territory with such a framework Bill, so we will abstain from voting. On the many areas that it does not address, there is scope to deal with hon. Members' queries through parliamentary questions, but it is to be hoped that many of the outstanding issues can be addressed in the other place.
  6.39 pm
  Jon Cruddas: Two elements dominated Government thinking on the social security/labour market interface in the last Parliament: first, helping families in poverty, especially those with children, by means of the children's tax credit; and secondly, pricing people into work through measures to alter the trade-off between work and non-work, through the working families tax credit.
  The Bill proposes two new targeted tax credits: the child tax credit to tackle child poverty and target support for parents, and the working tax credit to tackle in-work
  1120
  poverty and remove barriers to work. These two new initiatives develop the strategy of confronting poverty and restructuring the supply of labour that was started in 1997. The strategy on the labour market has been to alter the derived utility of work for those not in employment. It makes work pay by altering the trade-off between work and non-work by building a minimum floor for wages—through the minimum wage—and by constructing a take-home premium above market wage rates for poorer labour market participants through the working families tax credit.
  These measures work alongside the new deal and benefit-policing arrangements in terms of people's availability for work. If we add to that the record rises in child benefit and the 10p starting rate for income tax, the reform package begins to take shape. The Child Poverty Action Group has identified a substantial reduction in poverty—whatever measure we care to use. Separately, Piachet and Sutherland estimate that 1 million children have been lifted out of poverty since 1997.
  Any labour market initiative such as the working tax credit should be judged against the nature of the labour market that it seeks to affect. New analysis of the labour force survey data by Professor Peter Nolan, the director of the future of work programme at the London school of economics, is helpful here. Let us consider the three general classifications in the labour force survey: white collar; traditional services; and manual, manufacturing and construction. Between 1992 and 2000, white-collar professionals accounted for 1.5 million of the 2.3 million increase in employment numbers. Yet traditional services—covering clerical and secretarial, personal and protective, sales, postal and cleaning services—together with manual, manufacturing and construction workers still account for nearly two out of three jobs.
  Closer analysis suggests that the fastest-growing occupations have been: first, the four long-established services of sales assistants, data-input clerks, storekeepers and receptionists; secondly, state-dominated education and health service workers; and thirdly, the caring occupations such as those of care assistants, welfare and community workers, and nursery nurses. The fastest-growing occupation in the 1990s has been hairdressing. The fastest-growing manual occupation since 1992 was housekeeping, with a rise of 368 per cent. In short, the key areas of growth in the demand for labour through the 1990s have been in traditional, low-paid, unskilled and routine employment. Much of that is carried out by women and much is part-time.
  It is precisely because of these developments that the policy proposals before us are so important. The child tax credit will be the first single system of income-related support for families with children, irrespective of whether they are in or out of work. The working tax credit rationalises and extends the current provision of in-work support and, in so doing, increases the utility of work for more people.
  The Bill establishes the machinery, prior to the Budget, for an extension of our attack on poverty in terms of the realities of labour market structure. There appears to be a problem, however, in terms of the operation of the working tax credit. This exists in areas with exceptional market conditions and strong disincentives to work. They are areas characterised by relatively high-wage economies, but with significant proportions of deprived families and, often, single parents. There are shortages of

  1121
  child care and early-years provision, together with exceptionally strong disincentives in the housing market in terms of labour market participation.
  I am talking about London. Research by the Greater London Authority suggests that London has the lowest take-up rate of the working families tax credit in the UK—in London the rate is one in 10 families compared to one in six nationally, and one in five lone parents compared to one in three nationally. Part of this is accounted for by regional earnings differentials, yet even with a 70 per cent. write-off of child care costs, the higher-cost child care is a disincentive to participation, as are higher housing costs. Research suggests that people paying higher rents lose out. The gain through the tax credit is lost through housing benefit withdrawal.
  In short, because of a combination of forces, the labour market participation strategy underscoring the policy is less effective in London, as there are greater financial disincentives to participation. Let us take my constituency as an example. It is one of the capital's more deprived constituencies, with a high number of one-parent families and housing benefit recipients. According to House of Commons statistics supplied to my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), Dagenham remains 533rd out of 641 constituencies in the ranking relating to the proportion of families receiving the working families tax credit.
  That implies serious imbalances between poor families' unemployment entitlement and take-up incentives. The issue should be investigated and there may be a need to introduce regional premiums to the regime to ensure that the policy works with maximum effect, consistently across the country.
  Overall, I welcome the Bill, as it is specifically designed to confront the labour market that we have, but I am concerned that we are not yet maximising the strategy's potential in deprived parts of the capital such as my constituency.
  6.45 pm
  Mr. Webb: It is interesting to follow such a well-informed and thoughtful contribution from the hon. Member for Dagenham (Jon Cruddas). It is a shame, in many ways, that we did not have the benefit of those and other insights from him in Committee. That is perhaps a shortcoming of our proceedings.
  On Second Reading, we gave a broad welcome to the Bill's aim to streamline and focus extra resources on families with children. We have not changed our position. As the Minister said, the Committee debates were instructive, and hon. Members from both sides contributed thoughtfully and helpfully. The Committee process highlighted the difficulty of debating such Bills in the absence even of draft regulations. I hope that the import of what the Minister said a few moments ago is that their lordships will have sight of the regulations early in their deliberations. I am reassured by her nodding in response. That will make a big difference.
  It is important to put on record one or two reservations that survived the Committee's scrutiny. As the Minister is aware, my principal reservation is about what the working tax credit is supposed to achieve, as distinct from other support for low-income childless people. I tabled two written questions to pick up on the Government's two
  1122
  justifications for the strategy. Both were for answer today and they were submitted in good time, but neither has been answered.
  One question relates to the Government's statement that poverty also affects childless people—they cite 1 million childless people in poverty. I simply asked how many of those people would be entitled to the working tax credit. In other words, how many are over 25 and working 30 hours a week? Very few, I suspect, but answer came there none. The argument that we need the working tax credit to relieve poverty is open to question.
  I asked about the incentive argument—an unemployment trap exists because a childless person who takes low-paid work does not get much reward. Clearly, there is not much reward for a renter, but there is a much greater incentive for a person whose mortgage is not paid for by work and whose help is not taken away when he gets a job. The anti-poverty and unemployment trap arguments for the strategy are weak and it is regrettable that we did not discuss the meat of that in Committee.
  The practicalities for our constituents of claiming these tax credits still worry me considerably. If authorities are to decide whether they will be assessed on this year's income or last year's, that requires an estimate of this year's income. Therefore, if 1 million-plus people must estimate income and if some get that or their hours wrong, there could be serious over-payment problems. Without being patronising, some members of that client group are simply not used to such calculations, so we may be storing up troubles ahead.
  The strategy is a difficult mix of the tax and benefits systems. In some cases, the benefit route has been chosen, as in the example of joint assessment, while in others the tax route has been taken. In particular, the appeals process, which we raised briefly, still gives me real cause for concern. I am worried that, instead of appeals going through the effective tax credit appeal procedure, a whole new tax appeal process will be created.
  We welcome the additional support for families with children and the attempt at streamlining, so we support the Bill.
  6.48 pm
  David Cairns: I am pleased to speak in this debate. Unfortunately, I could not take part in the discussions on Second Reading or in Committee. However, I have followed the debate in the Official Report, and it has been fascinating, instructive and, of necessity, very technical. It is important to step back from the technicality and consider the broader picture of the range of Government strategies aimed at alleviating poverty and making work pay for those who are in work but, for whatever reason, inadequately remunerated for it.
  The Government's commitment to poverty alleviation is strengthened by the Bill, which builds on the success of the working families tax credit, which in turn currently benefits 1.3 million families, including 1,893 families in my constituency. That is a large number in what is, even before the boundary changes, a relatively small constituency. Across Scotland, 119,000 families are benefiting in a very direct way from the measures.
  Incidentally, it is a disappointment to me that no member of the Scottish National party, which is alleged to stand for Scotland, has sought to take part in or even

  1123
  be present at most of what is an extremely important debate for Scotland. Now I shall move on, before I am called to order.
  We have heard about the minimum wage, the children's tax credit and the increases in child benefit, but no one has mentioned another important element in the strategy—the Jobcentre Plus initiative. I thought that my hon. Friend the Member for Dagenham (Jon Cruddas) might mention it, but perhaps time constraints got in the way. In my district authority alone, £3 million has been spent on modernising jobcentres, giving them excellent computer connections and making them better and friendlier places that can help people to move from welfare into work. The programme has been tremendously important throughout the country.
  It was said on Second Reading and in Committee that the fact that we are introducing this measure to build on the working families tax credit is an admission that we got it wrong. That is baffling. The entire history of the welfare state—certainly the modern welfare state—is that measures are introduced and the world moves on, as my hon. Friend the Member for Wimbledon (Roger Casale) so tellingly said, so that we have continually to refine and improve on our systems. I hope that Ministers will not rest on their laurels and that they are already examining what further improvements can be made five or six years down the line. I am sure that they are.
  It was said of Beveridge, perhaps wrongly, that he believed that unemployment, or idleness, was the root cause of poverty. Perhaps there was too much emphasis in the past on simply getting people into work and off benefits, with the assumption that they would automatically stop being poor. We know from constituency experience that that is not the case, and we need tailored programmes for people who are in work but remain poor.
  I urge Ministers not to retreat one inch from the principle of delivering our programmes through the wage packet and the good offices of the Inland Revenue. We have had a good debate about the comparative stigma attached to the benefit book or the Inland Revenue approach, and I take on board the sincere points that have been made, but people in receipt of the working families tax credit who come to my surgery are very grateful for what they get and they want to explain all their circumstances to ensure that they can claim everything to which they are entitled. Stigma is not quite the issue that Opposition Members would have us believe.
  There are undoubted benefits in incentivising work and allowing people to look at their pay slip at the end of the month and say, "I earned that by my own endeavours, by being disciplined and getting out of bed in the morning." That is a positive gain, and I hope that the blandishments to revert to a benefit book approach will be rejected.
  We need only consider the difference in take-up between the working families tax credit and the systems that it replaced—family credit and so on—let alone the opportunities for fraud that the benefit book system introduced. If some of the amendments that we discussed earlier had been accepted, employers would have been printing their own order books and distributing them to their employees, and there would have been a great risk of fraud.
  1124
  We have heard some criticism about a lack of flexibility with regard to changing circumstances; the hon. Member for Northavon (Mr. Webb) made some good points on that subject. It is true that the situation must be monitored closely, and the system must react quickly to people's changing circumstances—but that applies to the current system, including the benefits system, too.
  A classic example, of which all hon. Members will be aware, is the position of school cleaners, who work fewer hours in the summer but get paid the same because their wages are aggregated and averaged over the year. I had a constituency case recently involving a school cleaner whose benefit entitlement was changed over the few months of the summer when she was working fewer hours. I am thankful to say that we got a result fairly quickly, so there is flexibility in the current system. It is not perfect, however; no system would be, and the hon. Gentleman was right to raise those issues. It is a flawed assumption that the current system is flexible enough. It must be improved.
  Some hon. Members have talked about stigma, but one positive change that has not been mentioned on Third Reading so far is the fact that the disabled person's tax credit will now be focused on the working tax credit. There will be a focus on the work that disabled people do, by their own endeavour and efforts, and they will get the rewards of being in work. That is a positive step, and has been welcomed by those who represent disabled people. They are not being patronised or getting a handout for being disabled; the focus is on the work that they do, not who they are.
  Much has been said about the effects on businesses. My hon. Friend the Paymaster General was too modest, in that she did not explain everything that the Government have done for business. That gives me the opportunity to mention that under the Labour Government we have the lowest inflation in Europe, the lowest interest rates in 30 years, favourable tax regimes for capital investment, the lowest corporation tax in many years for larger businesses—it is down from 33 to 30 per cent.—favourable regimes for research and development, and 1 million more people in work today than when we came to power in 1997. We must balance what some may call the burdens on business with the tremendous benefit to business of having a Labour Government who are friendly to business and understand and reflect its needs.
  The Bill will also affect the work of the Inland Revenue, where there is a quiet revolution under way. If hon. Members have not been to their regional office lately to talk to the people who work there, I recommend that they go. North of the border, we were fortunate to be invited by the Minister of State, Scotland Office to meet the Scottish chief executive of the Inland Revenue, and we were told that as a direct result of the Bill, the work of calculating, assessing and collecting taxes will be a minority part of the Inland Revenue's business by 2003. That is a big change from the position a few years ago.
  With its work on integrated tax credits, making sure that businesses comply with the minimum wage, administering student loans and so on, the Inland Revenue is undergoing a quiet revolution, and it is to be commended. When I have spoken to the people there I have been tremendously impressed by their vigour and their zeal for that approach to their work. They realise that there is a change in attitude towards them, because they are no longer seen as the bad guys of the piece but as

  1125
  people doing something positive. The Inland Revenue now has a much more business-oriented approach. It is proactive, going out to businesses to explain the integrated tax credits and helping them comply with the new arrangements.
  On Second Reading the Paymaster General said:
  "By the mid-1990s, the United Kingdom had the highest rate of relative poverty in the European Union and the highest proportion of children living in workless households."—[Official Report, 10 December 2001; Vol. 376, c. 598.]
  By the middle of this decade we will be able to say that 1 million children have been lifted out of poverty and 1 million more people are in work, and they will be receiving more help through the tax credits. I am extremely proud of that, and I commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed.

  London Underground
  7 pm
  The Secretary of State for Transport, Local Government and the Regions: With permission, Mr. Deputy Speaker, I should like to make a statement on the future of London Underground.
  Earlier today, the board of London Regional Transport announced that it was "minded to proceed" with the plans for modernisation of the tube. In coming to its conclusion, the board has undertaken a thorough evaluation of the bids to assess whether they are likely to provide value for money. It is confident that they will do so and that the proposed contracts will provide an appropriate basis for the future maintenance and renewal of London Underground's infrastructure.
  The board of London Regional Transport will now consult the Mayor of London and Transport for London under the terms of the Greater London Authority Act 1999. The final decision on whether to proceed will be taken in the light of that consultation.
  Last autumn, I announced that I intended to take independent advice from Ernst and Young on the evaluation process that London Underground and London Regional Transport had followed, and on the robustness of their conclusions. Ernst and Young began its work in October, and has kept in close contact with London Underground during the evaluation of the final bids.
  Ernst and Young reached the following conclusion. Overall, the methodology adopted for assessing the value for money by London Underground has been robust and appropriate, and London Underground's recommendation that the public-private partnership proposals deliver value for money is a subjective one, which is supported by its analysis. Copies of the report were placed in the Vote Office at 2.45 this afternoon, when I answered a written question on this issue.
  I have always made it clear that my approach to the modernisation of the underground would be based on three principles. First, there must be no privatisation; secondly, safety must not be compromised; and thirdly, the contracts must offer value for money.
  Under these proposals, there will be no privatisation. London Underground will remain in the public sector and will have control of all operations. It will run the trains, work the signals, control the track and operate the stations. So there will be no privatisation, or part-privatisation, of the London underground. The public sector will be in charge of the safe operation of a single unified network. London Underground will set the strategic priorities for investment, and monitor the performance of the private sector contractors that build and maintain the infrastructure.
  Where the contracts differ from current arrangements involving the private sector is mainly in their scope and duration, and in the allocation of responsibility for integrating the various packages of work necessary to upgrade the tube and modernise it properly.
  These are long-term arrangements that envisage a real partnership between London Underground and the private sector, which will work together to deliver sustained improvements. That partnership should enable substantial efficiencies to be realised and locked into the long-term process of tube modernisation. In particular, it should prevent the problems of the past, when infrastructure

  1127
  improvements—notably, of course, relating to the Jubilee line extension—have all too often come in over budget and later than originally planned.
  The private sector will be contractually bound to deliver specific improvements. London Underground will be empowered to monitor the contracts closely and enforce them rigorously. If the private sector companies fail to perform, they will be penalised for so doing. If that sanction fails, they could lose their contracts. If the private sector does not do the work properly or puts safety at risk, London Underground will have the power to step in, do the necessary work and bill the private sector accordingly.
  Secondly, safety will not be compromised. The Health and Safety Executive is currently considering the changes to London Underground's railway safety case to reflect the bidders' proposals for maintaining and upgrading the network. Only if those are accepted will the modernisation plans be allowed to proceed. If they do proceed, the infrastructure controller, London Underground—in the public sector—will retain clear statutory responsibility for safety across the whole of the network. The private sector infrastructure companies will have a contractual safety case with London Underground. They will have to perform to standards every bit as demanding as those required at present by London Underground's own statutory safety case. It will be for the Health and Safety Executive to accept the safety case. That is not a matter for politicians to decide. In my view, it is far better to leave it to the independent experts.
  The third test is value for money. I have always said that the tube modernisation plans should not proceed unless they are likely to provide appropriate value for money. In preparing its final assessment of the proposed tube modernisation contracts, London Underground has conducted a full evaluation of value for money. As the National Audit Office has said, value for money is not a simple pass-fail test. London Underground has carried out a thorough evaluation of bids, incorporating both a financial assessment against a public sector comparator and wider factors that cannot be quantified in purely financial terms.
  Essentially, the public sector comparator measures the cost of providing the same modernisation of tube infrastructure under current arrangements. It also takes account of two possible funding scenarios: annual grant and bond finance. Hon. Members will be aware that in December 2000 the National Audit Office reported on the public sector comparator that London Underground proposed to use and made various recommendations. Those have been taken into account in the construction of the comparator used for this final evaluation of the bids.
  London Underground's evaluation demonstrates that the tube modernisation contracts are likely to deliver good value for money over their 30-year term. Even when tested on a much more demanding seven-and-a-half year basis, the value for money of the PPP remains favourable. The bids look good not just against a public sector option funded in the conventional way through annual grant, but also one funded by bonds, which was, of course, the Mayor's preferred approach.
  On the basis of the advice that we have now received, the Government believe that the tube modernisation proposals represent the best way forward. In headline
  1128
  terms, London Underground will receive investment on an unprecedented scale. Now that the actual bids have been evaluated, I am able to report that we would expect investment of about £16 billion in the next 15 years. That figure includes nearly £8.5 billion to be spent on trains and signalling, nearly £4 billion on track, and more than £3.5 billion on stations. By any standards, it will represent a step change in the amount of money spent on the underground and will begin the process of making it a system fit for the 21st century.
  The benefits of proceeding with the tube modernisation contracts are considerable. Over the first 15 years of the contract, London Underground will save £2 billion compared to traditional public funding. On any measure, that represents a significant saving to the public sector. What is more, the contracts will mean faster and more reliable tube journeys than the alternatives. London Underground says that those could be worth as much as a further £2 billion to its passengers.
  Such savings can be achieved only through harnessing the private and the public sectors together, which is why this partnership is such an important feature of the Government's reform of the delivery of public services. Over the first 15 years of the contracts, £4 billion of the money going into improvements to the tube will come from private finance. Put simply, if that private finance was not forthcoming, it would need to be found within the public sector or not at all, which would mean less money to spend on other priorities such as health, education and other parts of the transport system.
  We believe that there is now a clear choice. On the one hand, we can move ahead with proposals that will see the tube transformed, with real year-on-year improvements beginning immediately the contracts are signed. We think that that is the right way forward, subject, of course, to the outcome of the consultation process and to the board of London Regional Transport taking a final decision to proceed with the contracts.
  Alternatively, we could look forward to yet more delay while different plans are prepared and a new procurement exercise is put in place. That would condemn Londoners to several more years of the status quo, with a creaking infrastructure that is unable to deliver the efficient and modern underground system that the travelling public rightly deserve.
  Our modernisation plans for the tube will unlock £16 billion of investment over the next 15 years, the equivalent of £5,000 for every household in London. There will be no privatisation. The publicly owned London Underground will remain in control and safety will be paramount, which is why the Health and Safety Executive will have the final say.
  These proposals form the basis of creating a tube fit for the 21st century, and I commend them to the House.
  Mr. Eric Pickles: I thank the Secretary of State for his usual courtesy in giving us sight of his statement before he made it. No doubt he expects us to rant and rave over the fact that the statement was made at 7 pm when the entire world knows exactly what he intends to do, but frankly there are more important things to deal with and I intend to move on, save to say that I congratulate the Secretary of State on making history. Usually statements at 7 pm have been on matters

  1129
  of war or catastrophe. This is the first time that a statement has been made at 7 pm on an impending catastrophe.
  In particular, I thank the Select Committee for its splendid work, which has made the Secretary of State's statement understandable, and the many Labour Back Benchers who have briefed me over the past few days warning me about the problems that are to come.
  The Secretary of State is enthusiastic about these proposals. Sometimes we are told that savings will total £3 billion, sometimes that they will total £4.5 billion. Now we are told that they will total £2 billion.
  The Secretary of State says that the proposals represent best value for money, real improvements and a saving for the public. I almost expected him to produce a piece of paper from the Government's favourite accountants saying that this is the best thing for transport policy since the De Lorean motor car.
  Does the Secretary of State understand that the proposals rely on a serendipity of circumstances? Everything has to be lined up to the most favourable of the various variable circumstances for the savings to occur. The PPP is more expensive than the Mayor's bonds. Does the Secretary of State accept that to achieve £1 billion of savings, efficiency savings of 35 to 40 per cent over the public service model would be needed? Given that the projects involve not only infrastructure but day-to-day maintenance does he seriously expect the House to believe that 40 per cent. savings can be achieved?
  The proposals also rely on the serendipity of nothing going wrong. The liability of risk for certain events and assets has been shifted from the private sector to the public sector. The liability of risk of contractors will be capped. That is why the Secretary of State was most careful to use the expression, "They will be billed accordingly." According to the contracts they will not pay accordingly because their liability will be capped. Does he agree with London's Transport Commissioner that
  "the amount of risk that has been transferred"
  to the private sector
  "is barely perceptible"?
  It is little wonder that the Ernst and Young report said that the assessment was "subjective". There has been no independent assessment, as Ernst and Young explains at great length. It said, more or less, "We were asked to do a job and we have done it. We have been asked whether the methodology is okay and we have said that it is. We were asked whether it would work. We have told them that the assessment was subjective." So all that money has been spent and we are exactly where we were to begin with.
  Let me briefly read from the Ernst and Young report:
  "The contract structure is unique, inevitably meaning that it has not been proven in a commercial environment … If the contract structure, in particular the risk transfer and review mechanisms, does not function effectively, either through poor design or operation, then there is a risk that value for money could be eroded."
  It seems appropriate in the period that the Secretary of State has given that we should ask the National Audit Office to be brought in to look at the assessment. This is probably the most major piece of infrastructure change in the world and we desperately need an independent assessment.
  1130
  I wish to ask the Secretary of State about the connection of Ernst and Young with the various contractors who are bidding. I expect such a company to have some connection with many of the main players, but I am surprised that it has entered into a partnership with W. S. Atkins, one of the principal bidders. Did the Department question the partnership? What assurances did the Secretary of State receive? These are matters of probity. I should be grateful to hear from the Secretary of State why it was felt appropriate for Ernst and Young to go into partnership with W.S. Atkins.
  The Secretary of State fails to address capacity. All the decisions are pushed to the second quarter of the 30-year period. There will be no new trains for years. There will be no upgrades for years. Ten years from now passengers will notice little or no difference. Will the Secretary of State confirm that the Jubilee line will have no new trains or no newly refurbished trains until 2018? Will he confirm that the Bakerloo line will have none until 2018? Will he confirm that he will be 67 years old before the Bakerloo line sees refurbished trains? I know that the Government are asking us to prepare for retirement, but I do not think that that is entirely what they had in mind.
  The PPP will be supported by a combination of fare box and public subsidy. Before the Select Committee the Secretary of State said he felt that the fare box could cover 30 per cent. of the PPP without raising fares above the rate of inflation. Can he now tell us what the level of public subsidy will be over the first seven-and-a-half year period? Given that he has extended the consultation period until 8 March, which coincidentally is the same date as the Health and Safety Executive is due to approve version 3.1 of the safety case, is he confident that by the end of the consultation period we will have the HSE safety case?
  This is an off-balance deal. It is so off balance sheet that it would make Enron blush. For five years the Labour Government have neglected the tube. Public investment has been down by 25 per cent. Delays and overcrowding have increased. The measure bears all the hallmarks of the Secretary of State: it is wildly optimistic, it completely disregards dangers and it is made with the certain knowledge that when it is time to give account, others will be carrying the can.
  Mr. Byers: The House will be aware that the information was provided by way of a written reply at 2.45 pm when copies of the Ernst and Young report were placed in the Vote Office. We are having the statement now because this was the soonest that I could come to the House to make a statement. Business managers will know that very well.
  On the specific points raised by the hon. Gentleman—of which there were many—he said that there would be a long delay before new trains were put on the Jubilee line. That revealed the fact that the hon. Gentleman is not a frequent user of the line. If he would like to go over the road and into Westminster station, he can travel on the Jubilee line. He will see that all the rolling stock is new. It would be rather foolish to try to replace it in five or 10 years' time.
  The hon. Gentleman referred to the fact that there would be no extra capacity on the Jubilee line to meet the increased demand. What he has not seen—because he has not yet looked at the papers—is that there will be a

  1131
  22 per cent. increase in capacity on the Jubilee line within the first 10 years. The reality is that there will be increases in capacity on lines where there is currently significant overcrowding.
  As regards the fare box, I shall make the position clear: the assumptions in the papers show that there is no need for an increase above the rate of inflation.
  The HSE has no timetable for its report on whether the safety case has been met. The HSE is independent of Secretaries of State. It will take as long as it needs to decide whether the safety case has been met. There is no deadline. No one has laid down a timetable. The HSE will take its time and will arrive at a conclusion when it is ready to do so.
  The hon. Gentleman referred to the role of the National Audit Office. That is an important point. We in the House respect the work undertaken by the NAO. However, the view of the NAO is clear: it did not want to publish a report at this stage of the process as to do so would involve it too closely in the decision-making process. In the view of the NAO, that would make it impossible for it to carry out an independent value-for-money assessment after the decisions had been taken. That was the NAO's position. It would have made my job in reaching a decision an awful lot easier if the NAO had been prepared to make a clear recommendation on value for money, but that was not the case.
  The hon. Gentleman asked about the capping of liability and where risk would be transferred. Because we are publishing the Ernst and Young report and because London Transport will publish details in due course, people will be able to see those details. The important point in the contract is that liability for the issues that worry the travelling public will be transferred to the private sector.
  I shall give the House three examples. If a train breaks down for 10 minutes during the rush hour at Victoria, the private company will be fined £21,000. If an escalator at Oxford Circus is out of action for a month, the private company will be fined £45,000. If a signal on the Jubilee line is out of action for a day, the private-sector company will be fined £300,000. Those are the penalties that will be imposed if the companies do not perform as they should.
  I was disappointed by the hon. Gentleman's response. However, it shows that the Conservatives are thoroughly divided on their approach to the public-private partnership. Steve Norris, the Tory candidate for Mayor of London last year—and probably the Conservative who knows most about transport—said that the public-private partnership was, in reality, the only game in town and that to imply that we can just go back and have another negotiation was naive.
  So that is the reality—[Interruption.] Opposition Members do not like it when I reveal that their candidate for mayor holds a completely different view. We did not hear a word from the hon. Member for Brentwood and Ongar (Mr. Pickles) about the Conservative approach to the underground, but we know what it is, because it is on the record. The Conservatives have said, "We should transfer the underground into the private sector"—[HON. MEMBERS: "Where?"] In "The Common Sense Revolution".
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  We have ensured that we shall put investment into the London underground. The system has been denied investment for generations. The time has now come. If one talks to people travelling on the underground, they do not want political arguments—they want money to go into the system. This Government will deliver the investment of which the underground has been starved for far too long.
  Mrs.Gwyneth Dunwoody: My right hon. Friend will know that London, as a capital city, is desperately in need of a modern and efficient transport system, and that its underground has been neglected for many years. Could he tell me, in fairly simple terms, why he is persisting with a scheme that is manifestly unworkable, when there is a volume of evidence that says that it is not value for money, that there is no control on the costs after seven and a half years, and that what he is doing is opening up the viper's nest of exactly the contractual problems that destroyed Railtrack? Frankly, it seems to many of us that, although his intentions are excellent, the result of today's decision will be more delay, more confusion and—very sadly for all of us—a system that will be indefensibly incompetent.
  Mr. Byers: I read with great interest the report of the Transport Sub-Committee of the Select Committee on Transport, Local Government and the Regions—which my hon. Friend chaired—that was published on Tuesday. That obviously will have informed our thinking and will inform the thinking during the consultation period that has just begun.
  It is worth noting that this is not just the largest public-private partnership that the Government have entered into; it will also be the most open and transparent, because the public will be able to see in detail the basis on which we have arrived at our decision and there will then be a real debate during the consultation period about the merits or otherwise.
  On the specifics that my hon. Friend raised, she is right to point out that there are 30-year contracts with a periodic review after seven and a half years. I believe that that strikes the right balance between introducing a degree of flexibility into the contractual arrangements and having some long-term certainty. London Underground and London Transport will have the opportunity, in that periodic review, to address issues such as capacity on individual lines, because that will be a real priority as far as they are concerned.
  However, I have to say—this is a crucial issue—that I, of all Ministers, am not going to repeat the mistakes of Railtrack and the railway system. The crucial difference is that London Underground will remain publicly owned and publicly accountable. There will be no shareholders in London Underground. The priority for London Underground will be ticket holders, not shareholders. That means that it must concentrate on ensuring that the private sector delivers as far as the ticket holders are concerned. There will not be a great fragmentation of the system, because there will be a unified structure, and that unified structure will be London Underground. There will be three private contractors working for London Underground, but the unified structure will be provided by London Underground itself.

  1133
  Therefore I do not believe that this is a repetition of the mistakes that the Conservative party imposed on the railway network. Instead it is a new way of securing private investment while ensuring that London Underground remains in the public sector.
  Tom Brake: I thank the Secretary of State for giving me an advance copy of the statement, although I doubt that, when I received it, it contained anything that I did not know already, given that he had announced its contents yesterday and earlier today.
  The right hon. Gentleman's statement does prompt some questions. First, does he stand by the Deputy Prime Minister's figure of £4.5 billion-worth of savings, and why is he so confident that this represents value for money? He has himself said that the criteria are subjective. Ernst and Young has said that they are subjective. His statement has said that the PPP is likely to represent value for money. Mr. Wilkes, who is a PFI expert, has said that what tends to happen in this sort of deal is that extra costs are loaded on to the public sector model simply to tip the balance in favour of PPP.
  What has happened to the reputational externalities that have been referred to in the past? There is only one reference to those in the Ernst and Young report, and that is in the glossary. There is no other reference to them throughout the document. Those were supposed to show that £700 million extra was going to be loaded on to the public sector model. Where have those gone to?
  Can the right hon. Gentleman guarantee that the consultation to which he refers will be genuine? Perhaps he will allow Labour Members the opportunity of a free vote to express what they feel about the proposals.
  Finally, on the Health and Safety Executive, the right hon. Gentleman says that there is no given date by which the report must be delivered, but will he guarantee that if there is any uncertainty about whether the safety case is valid he will throw out the PPP? There is clearly uncertainty about whether the PPP represents value for money, yet he is proceeding with it. Will he do so if there is any doubt about the safety case? I believe that this PPP represents the Labour party's poll tax on wheels, and that it will haunt them for 30 years.
  Mr. Byers: The safety position has been absolutely clear throughout—it will be decided by the Health and Safety Executive; it is not right for politicians to decide whether a safety case has been made. Independent safety experts—the Health and Safety Executive—will decide whether they agree with the safety case. I have said several times before that if they do not agree, we will not proceed with the PPP. I said that months ago; I continue to say it, and I say it again in the House this evening.
  The Deputy Prime Minister suggested that there might be indicative savings of about £4.5 billion—I read his precise words today. There are savings of about £4 billion, which is significant. [Interruption.] It is £2 billion, and £2 billion indirectly. Hon. Members should read the report that the National Audit Office produced in December 2000. I have looked at it in detail and, as those who follow such things closely will know, the NAO makes it very clear that the benefits of a value-for-money assessment are not just the direct financial benefits but the indirect financial benefits, and people should consider that if they want to look at the issue in the round.
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  The NAO also said in its December 2000 report that value for money will not be a pass-fail; there will always be a subjective test. That is why I felt it was important that, rather than having a report to me that is not made public, I will publish the report and people can then judge the steps and decisions that I have taken. I am happy to do that; it is part of being accountable. There will be a row and a disagreement, and people will pick up certain aspects of the report, but as Ernst and Young says in its conclusion, on balance—it is a subjective view—it believes that value for money has been achieved.
  On the public sector comparator, we have ensured that there is a fair judgment. We have considered more than 200 situations in the public sector comparator. We did not include those that involved, I hope, unique large cost overruns—for example, the Jubilee line's cost overrun was about 67 per cent.—because I believed that they would distort the overall figure. The cost overruns in the 200 situations that we considered came to about 20 per cent. on average, and that figure has been included in the public sector comparator.
  Several hon. Members rose—
  Mr. Deputy Speaker: Order. Hon. Members can see how many Members are seeking to catch my eye, so unless questions are brief—by brief, I mean one question—an awful lot of hon. Members will be disappointed.
  Andrew Bennett: I congratulate my right hon. Friend on the brave face that he has put on the statement, but that does not disguise the fact that this is a pig in a poke. Will he go back to the Chancellor and tell him that there were two cases for the PPP—first, that it was value for money and, secondly, that it transferred risk from the public sector to the private sector? Does he not accept that the Ernst and Young report does not show that the PPP is value for money? It certainly does not transfer risk from the public sector to the private sector. The contract management risk will be horrendous. The risk to the passengers of a declining service with no penalties still exists, and there is the health and safety risk as well. My right hon. Friend says that the Health and Safety Executive is totally independent, but will he confirm that it is his Department's responsibility to make available to the HSE sufficient resources to enforce the highest standards of safety in the contract?
  Mr. Byers: I believe that value for money has been achieved in the terms outlined in the Ernst and Young report. I also believe that risk has been transferred, as I outlined to the House in the examples that I just gave.
  I ensured that the Health and Safety Executive received a substantial increase not just in its own resources, but in the number of people it can employ specifically to inspect the railway system, which includes the London underground. It has the resources, which is why it can do a comprehensive job in judging whether it is prepared to agree the safety case. The HSE will be given the time to do that. There is no rush; there is no timetable. It will proceed at its own pace and arrive at its own conclusion. In my view, that is exactly how it should be.
  Mr. John Wilkinson: Does not the Secretary of State realise that a consultation has

  1135
  already taken place on the scheme that he proposes? I refer to the consultation through the ballot box in the Greater London Authority elections. Was not the proposal thrown out overwhelmingly by the electorate of London because they had no confidence in it?
  How will the Secretary of State meet the capacity demands? Over the past 11 years, passenger journeys increased by 25 per cent., or 200 million. How will that be met in the next few years by this cockshy scheme in which no one has any faith?
  Mr. Byers: I think the hon. Gentleman knows, because he served on the Standing Committee, that the provisions of the Greater London Authority Act 1999 were clear: the terms under which the transfer took place would be determined by the Government. We are determining those, as laid down in statute.
  Capacity is a key issue. That is why, under the modernisation proposals, capacity on the Jubilee line will increase by 22 per cent., on the Victoria line by 15 per cent. and on the Metropolitan and Circle lines by 17 per cent within the first 10 years. We are addressing capacity improvements within the first 10 years.
  Harry Cohen: I have spelt out in the House my opposition to many worrying aspects of this scheme, not least the fractured management and its consequences. It was interesting that the Secretary of State kept referring to the public sector as London Underground but did not mention the Mayor and Transport for London in that context. I limit myself to one brief question: who is accountable under the system—the Mayor or the Minister?
  Mr. Byers: Until the transfer, we remain responsible. The Greater London Authority Act allows us to take these decisions. When the proposals are in place, we will talk to the Mayor and Transport for London about a timetable for transfer. They will then take responsibility. Those are the provisions laid down in the 1999 Act. I know from conversations that I have had with the Mayor that they will be constructive in ensuring a smooth transition and transfer.
  Sir Sydney Chapman: Given that the Government have taken more than four years to produce this proposal to put investment into London Underground, is the Secretary of State aware that the amount of investment since 1997 has been considerably less than the comparable period before? When he talks about an investment of £16 billion over the next 15 years, does that take inflation into account, because that will be considerable over that period? If it does, will not the costs of the contracts have to be increased? Taking all things into consideration, the more one looks at the figures, the more one must conclude that the level of investment over the next 15 years will not be more than it was just before 1997.
  Mr. Byers: That is simply incorrect. If the hon. Gentleman looks at core investment he will see that the improvements under our proposals are considerably in excess of the core investment proposals that were implemented between 1991 and 1997. The significant blip upwards was due to the cost overruns on the Jubilee line extension. The Conservatives talk about the great investment that took place, but they should look at the
  1136
  figures, as I have done. They show that the blip was a result of a failure to control the costs of the Jubilee line extension. If Members look at core investment, which is what we are dealing with, they will see a huge difference—greater investment each year for the 15 years covered by the proposals that we are putting to the House this evening.
  Mr. Clive Soley: The Secretary of State will be aware that the public know that failure to invest for decades is the reason that we are in a mess now. They also know that we need money put in, and we need it fast. To be frank, if anyone messes around with this and delays it, they will not be easily forgiven. Yes, the public want it done safely and efficiently, but they want it done, and they expect the Minister and the Mayor to get on with it, and soon.
  Mr. Byers: That is the important message. We have the plans, which are ready to go, and we have the money, which is ready to be invested—some £16 billion over 15 years. The message, not only from my hon. Friend but from London's travelling public, is clear: they have had enough of politicians arguing; now, they want us to get on with the job and invest the money. That is what we want to do. We have a plan, we have the money, and now we want to get on with investment in the underground.
  Mr. John Randall: The Secretary of State will know that Metropolitan line rolling stock is the oldest on the system. Will he confirm that it will still take between 10 and 15 years for that to be replaced? Will it also take 10 or 15 years to modernise the system, and are there any plans to extend the network?
  Mr. Byers: Full details will be produced by the contractors tomorrow. Offhand, I am not sure of the specific details regarding Metropolitan line rolling stock, and I apologise for that. The information will be published—
  Mr. Pickles: Circle line.
  Mr. Byers: No, it is not the Circle line but the Metropolitan line that is being discussed. The information will be available tomorrow. What I do know about the Metropolitan line is that there will be a 17 per cent. increase in capacity on it in the first 10 years.
  Ms Karen Buck: Everyone welcomes the commitment to additional investment in the underground to be delivered through a public-private partnership, but because the Government have chosen a model of public-private partnership in which the public have lost confidence, they will need to win the safety and value-for-money arguments not only today, but every day for the next 30 years. The Ernst and Young report says that value for money is
  "part art, part science and involves a blend of subjective judgements and fact-based analysis"—
  in other words, a highly educated guess. The report says that over the seven and a half years, it is
  "less likely to support value for money".
  How can a convincing value-for-money case be made when after seven and a half years there is no pricing structure and no contractual guarantee to deliver value for money?
  Mr. Byers: The important point is the periodic review. As is only right and proper, London Underground will be in a position to negotiate changes and improvements to meet the needs of the system at that time. That is the important aspect.
  Value for money is always a subjective test. I do not regret Ernst and Young's openness in expressing its concerns about the process. I believe that there should be a debate on the issues, and I will not run away from that debate. However, having looked at all the considerations in the round, Ernst and Young reaches the conclusion, based on the figures available to it, that value for money has been achieved.
  Angela Watkinson: In view of the serious doubts expressed on all sides about the likely success of the scheme, what arrangements will the Secretary of State put in place now to ensure that there is no further disruption or deterioration in tube services to the travelling public, such as my constituents in Upminster, who live at the end of the District line, before, if, or when any noticeable improvements are made?
  Mr. Byers: The hon. Lady makes an important point about the disruption, cancellations and delays that people experience daily on the underground at present. As soon as one looks for the underlying reason for that, one finds the chronic lack of investment over generations. Now, we need to get the money invested. The money is there and we have a plan that will secure improvements. Now, we just have to get on with the job.
  Ms Diane Abbott: The Transport Sub-Committee under the distinguished chairmanship of my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) has systematically dissected the proposal technically, but I put to the Secretary of State the democratic argument. Whatever the terms of the Greater London Authority Act, the fact is that Londoners have said again and again, using every means available to them, that they have no confidence in the PPP. Londoners' support for PPP was tested to destruction in the campaign for the London mayoralty, and Labour's candidate was humiliated. Londoners do not want this; London's Mayor does not want it; and London's Transport Commissioner does not want it. Does it not make nonsense of regional devolution and does it not show a breathtaking arrogance to force that misconceived scheme down the throats of Londoners, who have said over and over again that they have no confidence in that way of proceeding?
  Mr. Byers: When the Committee reported, it had not seen the details of the contracts. Now that it has the opportunity to do so, no doubt it will consider the position.
  On the democratic points, the position is clear in the Greater London Authority Act, for which the House voted and which Opposition Members opposed. It is for the Government to determine the details of modernisation, which is then transferred to the Mayor and Transport for London.
  Mrs. Cheryl Gillan: My constituents are meeting right now in Chesham town hall with officials of London Underground to look at the
  1138
  appalling service on the Metropolitan line. They will not have been heartened, either by the Secretary of State's disgusting answer to my hon. Friend the Member for Uxbridge (Mr. Randall), or the right hon. Gentleman's lack of knowledge about one of the worst London underground lines. Can he give my constituents a guarantee that Chesham station and the branch at the end of the Metropolitan line will remain open with a full service? Can he also confirm that it appears that anybody who is 45 or over in my constituency will have ended their working life before there is any real improvement to the Metropolitan line under his plans?
  Mr. Byers: They will know that the reason for that is that we had 18 years of a Conservative Government who did not invest in the underground; denied improvements to the hon. Lady's constituents in Chesham; and did nothing about the Metropolitan line or the District line. That is the legacy that we are seeking to deal with. The Opposition have no solutions to the problems; it is we who are prepared to take tough decisions and ensure that investment goes into the underground.
  Mr. Barry Gardiner: My constituents in Kingsbury, my right hon. Friend will know, have endured speed restrictions to Wembley Park tube station for far too long. They will be as delighted as I am that one of the first things to be undertaken in the first year of the programme is the renewal of the southbound track, which will ensure that the speed restrictions are lifted. When they get to Wembley Park station they will, unfortunately, come out on a dilapidated, bankrupt station. Is the Secretary of State aware of the letter that I have received from Transport for London, which states that in its programme it has already identified £100 million for the refurbishment of the station? Does he agree that it is vital that money is spent to make sure that the station can safely control the crowds visiting Wembley and the new national stadium?
  Mr. Byers: Members will have an opportunity to see the improvements that will be delivered. The speed restrictions to which my hon. Friend refers are an example of the difficulties that will be addressed in a major track renewal programme. I am aware of my hon. Friend's concerns about Wembley Park station, and discussions are taking place at the moment about the issue.
  Mr. John Redwood: We wait four years for a PPP to come along, then this shambles arrives late on a Thursday night after newspaper reports have been written, so little confidence does the Secretary of State have in the PPP. Does the right hon. Gentleman not understand that Ernst and Young has refused to put its name to his fantasy figures? Does he not realise that he will go down in history as the man who thought that the third way meant destroying a private sector company, Railtrack, then, to be even-handed, destroying a nationalised company, London Underground?
  Mr. Byers: I hope that the right hon. Gentleman did not waste too long coming up with those comments. Of course, he failed to reveal his own views, which we heard

  1139
  when he was shadow Secretary of State. He said clearly, as Hansard on 15 July 1999 shows, that he would privatise the tube.
  The Minister for Transport (Mr. John Spellar): The Conservatives are all nodding.
  Mr. Byers: Yes, Conservative Members all agree. That is where they want to be. Speaking to the Conservative party conference on 23 September 1999, the right hon. Member for Wokingham (Mr. Redwood) said:
  "We will transfer the Underground into a series of privately-run, vertically integrated, publicly limited companies."
  He did not mention that in his comments. That is probably understandable. [Interruption.] It is always interesting to know the right hon. Gentleman's views, which are usually far more interesting than the views of the hon. Members for Maidenhead (Mrs. May) or for Brentwood and Ongar. [Interruption.] I would never get personal with the hon. Gentleman. The right hon. Member for Wokingham reveals what lies at the heart of the modern Conservative party—privatise anything. That is the reality. [Interruption.] The right hon. Member for Penrith and The Border (David Maclean) should be mindful of his blood pressure.
  Madam Deputy Speaker (Sylvia Heal): Order.
  Mr. Stephen Pound: While bids are being submitted, I could mention that we are still waiting for a down escalator at Greenford station, and we have been waiting since 1943. Most of my constituents and I could live with an integrated system where safety is taken out of the political arena. What we simply cannot live with is more time standing on a platform watching the cancellation board, while people play petty party politics with such a vital issue. Will my right hon. Friend give us some idea of the timetable for implementation? We cannot keep on waiting.
  Mr. Byers: That is the important message, which I know the travelling public in London are expressing loudly and clearly. Provided no external factors cause a delay and we can proceed—people are threatening a legal challenge to the process, which clearly will mean a further delay—the intention is that towards the end of May or the beginning of June we will see the investment going in. It can start as soon as the contracts are signed, which we expect will be at the end of May or during June.
  Mr. Nicholas Soames: Does the Secretary of State accept that his credibility, already broken-backed, has been destroyed tonight? He dismisses the report of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), the Chairman of the Select Committee, which has many experienced members who know a great deal about the subject, and which is highly critical of his proposals. He dismisses all the objections raised by Labour Members, and most damning of all, the words of Ernst and Young in the conclusion of the executive summary:
  "London Underground's recommendation that the PPP proposals deliver value for money is a subjective one which is supported by its analysis."
  1140
  After what he has done to Railtrack, the right hon. Gentleman has a nerve to come to the House of Commons to try and sell us this pup.
  Mr. Byers: The hon. Gentleman will always defend Railtrack. That is a position that he and his party have adopted. We know that £1 billion of compensation to the Railtrack shareholders is the Conservative party position. With regard to London Underground, I repeat that the subjective approach is one that the National Audit Office said will apply to the value-for-money test. That will always be the case, because in making a value-for-money test, one must consider a number of factors—not just the financial ones, but the benefits that will accrue to the travelling public.
  Ms Bridget Prentice: Those who are less than enthusiastic about the scheme need only look at the Jubilee line, which my right hon. Friend described at length and which I have to use every day. It would be a great service if it worked and if the signalling worked from time to time. They should also look at the docklands light railway and the service that it provides for my constituents in Lewisham and others. The docklands light railway is a good example to show why the scheme is the one that we want to go forward.
  Mr. Byers: My hon. Friend makes a very important point. We have an example in London of a public-private partnership that is delivering day in, day out—the docklands light railway. When people see that it can be successful, they will recognise that we are taking the right way forward.
  Mr. Edward Davey: Given the Secretary of State's experience in applying for the administration of Railtrack, what provision has he insisted that the contracts should include for orderly termination if one of the consortiums fails to deliver? Which person or body will be responsible for terminating a contract on behalf of the taxpayer and the London commuter if one of these underground Railtracks fails to deliver?
  Mr. Byers: The situation is not at all like that which applies to Railtrack. I shall keep saying it: it is not at all like that. The reality is quite different. There will be a contractual relationship between London Underground and the three private-sector contractors. There are financial provisions underpinning the viability of each. If the hon. Gentleman looks at the companies that are involved, he will see that they can call on huge financial support. London Underground will have the power to terminate if there is a failure to deliver on the contracts and it is only right and proper that it should be able to do that. Most importantly, London Underground, which is publicly owned and accountable, will be the body with that responsibility, and when the transfer has occurred, the commissioner, the Mayor of London and Transport for London will have those powers.
  Glenda Jackson: While Londoners are indeed tired of politicians squabbling about the underground, does my right hon. Friend agree that it would be helpful to allay Londoners' fears that the Mayor and his Transport Commissioner have been deliberately excluded if they could be re-engaged by the Government

  1141
  during the consultation period? The scheme, which is the only way of attracting the relevant amount and gives a clear guarantee of safety, could then be brought into being with rather more support from Londoners than is being expressed by Opposition Members, who would, as we know, simply have sold off the whole underground.
  Mr. Byers: My hon. Friend makes an important point about the position of the Conservative party, which would simply privatise the London underground. It is right to recognise the concerns expressed by people in London and others about our proposals. We must take people through the arguments to show that this is not a privatisation or part privatisation, that safety will not be compromised because the Health and Safety Executive will take the final decision and that it is value for money. It is £16 billion that will deliver real improvements. The Opposition would not match the investment; they would take it away. We are ensuring that we invest in the London underground so that real improvements can be seen not in the distant future, but in the near future.
  Richard Ottaway: The Secretary of State indicated in his statement that £4 billion of investment over 15 years would come from private finance. He said earlier today that the rest would come from fares or Government grants. The taxpayer and farepayer will not be expecting their money back, but private finance will. How will the £4 billion be repaid—or is this a debt that will be dumped on the people of London?
  Mr. Byers: It is certainly not a debt that will be dumped on the people of London. It is a commercial agreement that will secure the level of investment and guarantee the significant improvements in the London underground that we want. In the process, we will get the £4 billion of private finance, and there will be a return, provided that those private companies deliver the very significant improvements set out in their contracts. If they fail to do so, they will not receive the financial return that they would otherwise get. That will be one way in which we can ensure that they deliver on the commitments that they made in the contracts. It will be not a burden on the farepayer, but a balance between the responsibilities of Government through grant and our commitment, which we have made very clearly, which is to say that there is no need for a real-terms increase in the fares being paid by passengers.
  Jim Dowd: May I welcome my right hon. Friend's statement on the north London underground and reiterate what my hon. Friend the Member for Lewisham, East (Ms Prentice) said about the DLR, which is not only working efficiently, but was completed on budget and two months early, in contrast with the debacle of the Jubilee line? Will he confirm that he will stick rigidly to the tests of no privatisation, value for money and safety? Once those tests are satisfied, the argument should be about product, not process, and ends, not means. The end should be a better service for the people of London, for which they have waited for far too long.
  Mr. Byers: My hon. Friend is right. The first key issue is that safety should not be compromised, and it will not be. The Health and Safety Executive—the independent
  1142
  experts—will make the decision on whether the safety case has been met. Secondly, there will be no privatisation or part-privatisation. London Underground will remain in the public sector. Thirdly, in the light of the reports that we have received today, I believe that value for money will be achieved. So we can satisfy all three criteria.
  The choice for people now is whether we make progress and get the investment in, as the Government want to do, or whether we find further reasons to argue and delay, and have a political row about the way forward. I happen to believe that if we delay further, we shall be condemned by successive generations of Londoners, so the real message—and the choice for me and the Government—is to get on with the job, put the bickering behind us and invest in the London underground.
  Derek Conway: The Secretary of State's self-confidence is wondrous to behold, and I congratulate him on that, at least. Will he, however, explain to the House the following comment in section 1.4.3 of the executive summary of the Ernst and Young report? It states:
  "The contract structure is unique … Whilst the exercise is unprecedented and provides some assurance over the contract, it remains unproven."
  Given what Ernst and Young says, and given what the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), the Chairman of the Transport Sub-Committee has said, does the Secretary of State not understand why hon. Members on both sides of the House doubt what he says, just as our constituents will doubt him? My constituents will simply have to avoid the right hon. Gentleman's trains and tubes, but if they drive down the A2, they will see another monument to the Government's proven track record, because they drive into London past the dome.
  Mr. Byers: The hon. Gentleman's solution would be to privatise, whether it be the railways and Railtrack or the London underground. It is little wonder that the voters of Shrewsbury showed him where to go. I do not know whether he left by rail or road. [Interruption.] The hon. Gentleman used to be a resident of Tyneside, so we can have this sort of banter.
  Of course this exercise will be unique, because there has never been a public-private partnership on this scale before. It is therefore a truism to say that it is unique. But what it represents is £16 billion of investment in the London underground. Would the hon. Gentleman delay that? Yes, he would. He would not put the investment in; we will.
  John McDonnell: May I return to the powers of the Secretary of State and the Mayor? This public-private partnership creates an enormous dependency on a limited number of companies because of the scale of the contracts. If one or more of those companies nears financial collapse in the same way that Railtrack did, will the Secretary of State—or the Mayor—have reserve powers to bring that company into public ownership, or to take direct action in the way that my right hon. Friend did with Railtrack?
  Mr. Byers: The situation is quite different, as I tried to explain earlier. This arrangement involves the private sector working for London Underground in a contractual relationship. That is quite different from the situation that

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  applied to Railtrack, so the remedies and the powers are not the same. But, under the contractual arrangements, the Mayor and Transport for London will have the power to terminate contracts—these are normal contractual relationships—and to re-let the contracts to someone else in the private sector.
  Chris Grayling: As is common with many Ministers, the Secretary of State is conveniently misrepresenting the policy of the Conservative party, the views of independent observers and of other people in the House right across the spectrum that we should entrust responsibility to the Mayor and the Transport Commissioner, and not to the Secretary of State. I am particularly distressed by the way in which the Secretary of State has dismissed the Transport Sub-Committee report. We took evidence which showed that the most significant improvements in the scheme would be back-ended to its later years. We also took evidence that passenger growth would rise in line with capacity, which means that overcrowding will not be reduced. Yet we now hear that the Secretary of State is not taking the word of that Select Committee—
  Madam Deputy Speaker: Order. The hon. Gentleman can see that a considerable number of Members still wish to make a contribution. He should get to the point of his question.
  Chris Grayling: Will the Secretary of State confirm that he is ignoring the recommendations of the Select Committee and listening to a report that says
  "We have not sought to verify … the information … provided by management"?
  Mr. Byers: I said earlier that the Department will make a full response to the Select Committee in due course, but the hon. Gentleman ignores an important point: within the first 10 years, there will be capacity increases of 22 per cent. on the Jubilee line, 15 per cent. on the Victoria line and 17 per cent. on the Metropolitan and Circle lines. Those are real improvements. The important point is that the seven and a half year periodic review will give London Transport and London Underground the opportunity to renegotiate capacity provision. They are able to do that and I understand that it will be a priority for them. The lines with most overcrowding will be dealt with sooner rather than later.
  Mike Gapes: I welcome the statement as the beginning of the end of the uncertainty, particularly for my hard-pressed constituents who have to use the overcrowded Central line. Does my right hon. Friend agree that a failed legal challenge will lead only to further unnecessary delay? It would be another factor for Londoners to take into account in 2004—part of the cost of Livingstone.
  Mr. Byers: My hon. Friend is right to say that we must end the uncertainty hanging over the London underground. Today's decision, subject to the consultation, will do precisely that. Of course, it is for
  1144
  Londoners to judge who is delaying the investment and who wants it to be made, such as those of us on the Labour Benches.
  David Burnside: The Secretary of State is well aware of the increased industrial action that has affected and inconvenienced the general public in London and the south-east especially. Will he incorporate in these rather loose financial projections the cost between the board, the management and the unions of a no-strike deal to protect commuters in London and Greater London?
  Mr. ByersIn the Government's view, those issues are best left to the trade unions and management concerned. We know from history that Government interference in such issues is often not helpful. It is far better to have a properly negotiated agreement between the trade unions and management. That is the view that the Government support. We say to all parties involved that negotiation is often the best way forward.
  Mr. Nigel Beard: I congratulate my right hon. Friend on introducing the scheme, which will not only bring substantial private investment to modernising a long-neglected public service, but motivate contractors so that they stay on budget and on time. That was shown in the last Parliament when the Treasury Committee examined the history of private finance initiative projects, which are very similar. Furthermore, the service will stay in public hands, which gives reassurance. However, does he accept that Londoners are tired of checks, reassessments and litigation? Can he assure the House that those will be minimised and that work will begin without too much delay?
  Mr. Byers: That is the important message—we want to get on with the job and get the money invested. My hon. Friend is right to point out the good work done by the Treasury Committee on the role of the PFI and public-private partnerships and the benefits that they can bring. I am confident that, when we have the opportunity to make the investment in the London underground, tangible benefits will result.
  Mr. Mark Field: We have heard a lot about the potential financial viability of the right hon. Gentleman's programme. I am more concerned with its political viability. Does he genuinely think that he will convince Londoners that it is somehow a good thing?
  Mr. Byers: We will convince Londoners by ensuring that there is no privatisation, that the system is safe and that real improvements are being achieved. I believe that the plan we have outlined today will do precisely that.
  Mr. Neil Gerrard: Does my right hon. Friend recognise that it would be generous to describe support for the proposals among the people of London as minimal? What will be the political consequences of that?
  Mr. Byers: I understand the concerns that have been expressed, but people will see that safety is not compromised, because the Health and Safety Executive

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  will have responsibility for it; that there is no privatisation, because London Underground will remain in the public sector; and that there will be value for money and the investment will go in. The real test will be whether there are real improvements in the London underground, and I believe that there will be.
  Joan Ryan: It may be worth reminding ourselves that the largest poll of Londoners' views was taken in last year's general election, at which Labour once again swept to victory in London with by far the greatest number of seats, and that PPP was a manifesto commitment. It is privatisation that Londoners do not want. My constituents tell me that they want London Underground to stay in public ownership, with safety paramount and no more delays. They want us to get on with the investment and the improvements. The only other issue of concern to them is that the underground remains affordable. Will my right hon. Friend comment on that?
  Mr. Byers: My hon. Friend is right: the issues are safety; ensuring that there is no privatisation; and getting the investment in. I understand the concern about fares, which is why all the work that has been carried out has been based on the assumption that they do not need to be increased above the rate of inflation—so there will be no real-terms increase in fares as a result of our proposals.
  Clive Efford: In answer to my hon. Friend the Member for Hayes and Harlington (John McDonnell), my right hon. Friend said that if contracts were terminated, they would revert to London Underground, which would be free to re-let them. In the interests of accountability, so that Londoners can know who will be making the important decisions about the long-term future of the underground, does that mean that London Underground then ceases to pay the infracos that are being engaged under the PPPs, and if not, in what circumstances can those payments be terminated? Will London Underground have the right to step in at any time if the infracos fail to deliver the improvements, and not only if there is a deterioration?
  Mr. Byers: The situation will be the one that applies under normal rules of contract. If the private sector contractors fail to deliver their contractual obligations, they will be in either a breach or a fundamental breach of contract, depending on the seriousness, and Transport for London will be able to impose penalties according to the nature of the breach. TFL will have responsibility. If there is a safety issue, it has immediate step-in rights and can remove the contractor and do the work itself, billing the contractor for any work that is necessary. If there is a breach of contract, the remedies, which depend on the seriousness, are there under the normal law of contract.
  Mr. Andrew Dismore: I agree with my right hon. Friend when he says that performance is important, but let me remind him of the paragraph in Ernst and Young's report that says:
  "Performance Payments included in the analysis are only expected levels, bidders are not contractually bound to these levels, and therefore performance and subsequent payment levels could vary."
  Bearing it in mind that we have seen barrow loads of documents wheeled into London Underground today, and yet we still do not have a contractually binding
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  arrangement, what guarantee can he give that contractors will deliver what they promise and that the penalties will achieve what he says they will?
  Mr. Byers: In a lengthy reply that I gave earlier today, I said that one of the conditions that we have attached to our approval is to ensure that there are no material changes in the contracts between the position today and the time of financial closure. That was one of Ernst and Young's recommendations.
  Linda Perham: I agree that after years of neglect and threats of privatisation from the Tories, we need the investment in London Underground, and I welcome the refurbishment of my local station, Hainault, planned for October next year, but does not my right hon. Friend agree that my constituents and other London underground users would much prefer priority to be given to improvements in track and signalling, and more trains? Does he also agree that, as other hon. Members have said, there is, unfortunately, a credibility gap with the PPP, particularly among party members and the trade unions?
  Mr. Byers: When my hon. Friend has had the opportunity to examine the plan in detail, she will see that the bulk of the investment—£8.5 billion, I think—is going into track and signals. That will make a significant difference. Moreover, it is false to say that investment in stations will not improve the service. In many parts of the network—including places that most Members will know, such as Victoria, Oxford Circus and King's Cross—stations are closed at certain times of the day because of overcrowding. One of the ways in which we can change that is by changing the design of the stations, so it is wrong to portray work on stations as merely a superficially attractive approach. There are good reasons, in terms of capacity, reliability and performance, why it should be a priority.
  Mr. Iain Coleman: It is with considerable sadness that I have to advise my right hon. Friend that in my view, the overwhelming majority of the thousands of my constituents who struggle to work and back every day using the 11 underground stations in my constituency have to use a service that is dirty, chronically unreliable and expensive. It is their view that the worst possible way to try to turn the service round is to hand it over now to the Mayor and the Commissioner for Transport for London, who genuinely believe that the service is massively overcomplex, expensive and intrinsically unsafe. May I urge—indeed, beg—my right hon. Friend, even at this very late stage, to reopen negotiations with Mr. Livingstone and Mr. Kiley, so that there can be an agreed settlement between the parties, which Londoners can support? They will then be able to have the service that they deserve. I have to tell my right hon. Friend that they certainly do not support this—and they do not deserve it, either.
  Mr. Byers: The Commissioner for Transport was charged by the Prime Minister last year with the responsibility of trying to negotiate a deal with the private contractors, and was unable to do it. That is regrettable, but that was the situation. It is wrong to say that the new system will be unsafe. I know that allegations have been made, but it will be for the Health and Safety Executive

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  to determine whether the safety case is made. This is not a repeat of Railtrack on the underground. There will be no shareholders in London Underground; the travelling public will come first. I say to my hon. Friend, with his 11 underground stations and his many constituents who travel on the underground, that I recognise that the present level of service is unacceptable. The choice is what we are going to do about it? Are we to continue with constant political bickering about a solution, or shall we get on with the job? I think that for the travelling public in London, the issue now is who is going to get on with the job—and the Government intend to do that.
  Roger Casale: I welcome my right hon. Friend's statement, because although there is a time to debate such issues, there is also a time when it is the job of the Government to decide. I believe that I speak on behalf of the majority of people in my constituency who use the District and the Northern lines when I say that that time has now come. My constituents will judge my right hon. Friend's decision not on the quality of debate tonight but on the results of putting the investment in. They know that we will not get results by privatising the tube, as the Tories want to do, and they are not unrealistic enough to believe that an extra penny on income tax would produce those results, either. As my right hon. Friend will be aware, we have a very viable public-private partnership in the Merton to Croydon Tramlink. Will he continue to put the arguments about why the proposed public-private partnership is in the public interest—but, most important of all, will he please get on with the job?
  Mr. Byers: My hon. Friend speaks for many of the travelling public in London when he stresses the importance of learning from success stories such as the Croydon Tramlink, which is a good example of a public-private partnership. There are other examples in London's transport system, too, and the important message is that our proposals for London Underground will ensure that it remains in the public sector—there will be no privatization—safety will not be compromised, and we will unlock £16 billion of investment in the London underground. That is the equivalent of £5,000 for every household in London. That is the scale of investment that the Government want to see and those who delay or block it will be condemned by generations of Londoners in the future.
  Mr. Pickles: On a point of order, Madam Deputy Speaker. I seek your guidance on how we may record the fact that of the 21 Labour Members who asked questions on the statement, only five were in favour of the PPP—
  Madam Deputy Speaker: Order. That is not a point of order for the Chair.

  Housing (Haringey)
  Motion made, and Question proposed, That this House do now adjourn.—[Dan Norris.]
  8.20 pm
  Mr. David Lammy: I am grateful for the opportunity afforded by my first Thursday Adjournment debate in which I shall address the important issue of housing in Tottenham and the London borough of Haringey. This is the second debate on the housing crisis in London this week. I am especially grateful to the Speaker's Office, because I know that Mr. Speaker personally selects the subjects to be raised on the Thursday Adjournment.
  Housing impinges on life's many fundamentals, including health, security, education and employment opportunities. Good-quality, permanent housing can generate a sense of community. It is the difference between a building and a home. A real home defines a sense of self, family and personal stability. It allows people a life of dignity and, in a sense, it is that dignity that is at the core of this debate.
  No advice surgery I hold passes without a number of Tottenham parents describing the tremendous overcrowding in their two-bedroomed properties, where four or five brothers and sisters are crowded into one bedroom. That leads to poor health and safety standards for the family, little room for children to do their homework and endless sibling conflict. It is no wonder that many of our young people prefer the relative privacy of corners outdoors, on the estate, in the park or at the bottom of the street, where they can hang out with their friends, to falling out with their brothers and sisters in cramped conditions with stressed-out parents.
  We know that such overcrowding leads to a breakdown in family relations, missed educational opportunities, exposure to physical and mental health problems and a growth in the drop-out culture, in which young people bypass legal employment and become involved in crime. That was the stark reality of Tottenham in the 1980s surely in the 21st century it is time for us to move on.
  The tremendous volume of temporary accommodation is probably our biggest obstacle to moving on in Tottenham. While it feels intensely like a problem faced only in Tottenham, it is linked to homelessness in London as a whole. In that respect, I am grateful to my hon. Friend the Member for Islington, North (Jeremy Corbyn) for securing an Adjournment debate yesterday on the housing crisis in London. In that debate, he stated, rightly, that there are 48,000 homeless households in accommodation in London. Some 10 per cent. of those households are in the borough of Haringey. That is 5,000 households—1,000 more than in any other London authority—which is between 15,000 and 20,000 homeless people.
  When I speak of homeless households, I am not referring to the 532 people who literally live and sleep on the streets. That number has fallen by two thirds, thanks to the work co-ordinated by the Government's rough sleepers unit. Rather, I am referring to people, including many families with children, who are without a home and who present themselves either to Haringey social services or to the housing department as having nowhere to live.
  At present, London's population growth is not out of control, with an increase of about 2 per cent. per annum. In numbers, that is significant, but it does not reflect the

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  homelessness crisis proportionately as the homeless household rate is more than 10 times greater. In the past two years, the number of homeless households has increased by an alarming 25 per cent. That cannot all be put down to greater numbers of newly arrived asylum seekers.
  The trend in the past 10 years has been for the large-scale buying up of properties by landlords and less reputable real estate agents. It is a scandal that those private social landlords—many of them modern-day pariahs—renovate the properties to minimum standards, divide already small houses into much smaller, unappealing flats and then, what is much worse, rent them back to local authority housing departments and the National Asylum Support Service at exorbitant rates.
  If I may, I will describe the situation of a professional couple with young children in my constituency. The family bought a long lease in a privately built new block of flats in Tottenham. The flats were sold as an attractive and modern, new development with good transport links to the City and the west end. However, the developer and freeholder were soon in dispute and basic maintenance work was not done. A cycle of deterioration began common parts were not cleaned, wear and tear stayed worn and torn, the walls became dirty, the carpets stained and ripped. The front door lock and the intercom were smashed and unrepaired. Attempts to get together with other leaseholders in the block to pressure the freeholder failed.
  Families started to move out and sublet to others with less stake in the property. Leases became hard to sell without a loss. A landlord in the temporary accommodation business gradually bought up half the flats cheaply from people desperate to get out. Others rented out their flats and are living elsewhere. Soon, that couple were the only original leaseholders still living there. Their neighbours now come and go, sometimes leaving without warning—some are rehoused, some are deported and some are evicted when their rent stops being paid.
  Corridors get littered—rubbish, unwanted furniture and items left by previous tenants are thrown in the yard outside, attracting more dumping from the surrounding area. Owing to the smashed front door and the availability of discarded furniture and beds, some rough sleepers have moved into the downstairs cupboard. The common parts are used by local young people to sniff glue, smoke crack cocaine or inject heroin. Burglary is a problem and residents never know who is going to be around the corner.
  In all practical respects, the family are living in an unmanaged temporary accommodation block. The landlord who owns half the flats re-lets them to refugees and asylum seekers as bed-and-breakfast annexes and charges the local authority £250 per week. Breakfast appears to be a weekly plastic bag containing milk, a loaf of bread and a box of corn flakes.
  If that were the only such example, I would not have asked for an Adjournment debate, but this is not an isolated incident. My constituents will tell you, Madam Deputy Speaker, that there is not a street, a close, an avenue or an estate in my constituency that self-seeking landlords have left untouched. The knock-on effects are huge and equally destructive. The opportunities for families who have grown up and lived in Tottenham for
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  many years and who seek a permanent home there increasingly diminish as we risk the area becoming a colossal modern-day dormitory for people with the most desperate needs.
  Presently, planning powers are not sufficient to prevent the particularly insidious development of bed-and-breakfast annexes. Although intended to encourage home owners to buy and live in Tottenham, the recent announcement of relief on stamp duty on the purchase of properties in deprived areas will no doubt lead to the proliferation of those annexes. A knock-on effect of the annexes is the low incentive for tenants to become financially active because they know that they will never be able to afford to pay their housing costs, thus creating a poverty trap for all but the landlords.
  Tottenham's proliferation of temporary housing is directly responsible for high population transience, which detracts from our best efforts locally and nationally to regenerate the area and build a safe, sustainable community. There is up to a 20 per cent. turnover rate of people moving in and out of the area, constantly, week on week, month on month, year on year. That level of transience seriously damages any hope of community cohesion. It is exacerbated by boroughs as far afield as Redbridge and Hammersmith and Fulham placing their homeless families in Tottenham without any obligation to let Haringey council know where those families are.
  I will be honest I am extremely worried. I have said before in the House that I grew up in a working-class community in Tottenham in the 1970s and 1980s. It was a community then of primarily white working-class, Caribbean, Irish and Cypriot families. It worries me that the children of the very families who thrived and made a home in that part of London, which has always been a gateway to the rest of London—a tradition of which we are proud—should now come to my surgery and express wrongly placed resentment towards newcomers for the poverty and instability that they purportedly bring.
  Long-term residents who are housed by Haringey council find that they are unable to move to larger properties as their families expand, because those in temporary housing are naturally prioritised as permanent dwellings become available, leaving longer-term tenants lower down in the housing list.
  We must not remain silent about the real backlash that asylum seekers face because of our failure to deal with London's housing crisis strategically. Families living in temporary households are disadvantaged because of the simple fact that they are seeking temporary accommodation. They face further social exclusion as they try to settle into a new area, get their children into a new school and gain access to public services. For many, English is their second language, and the one thing that they can be certain of is that they will have to move again in due course.
  Research commissioned by Haringey council showed that of the children who had the stability gained from remaining in the same school in Tottenham for more than three years, 74 per cent. gained key stage 2, against the national average of 75 per cent. For children who had been in school for less than a year, the figure was 38 per cent. Clearly, their geographical instability was detrimental to their learning opportunities.
  Furthermore, general practitioner registration lists show 3,000 rather than the recommended 1,300 patients in many of Tottenham's surgeries. We house the highest

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  proportion of asylum seekers and refugees in the country, yet every ward in Tottenham is on the index of deprivation. When one throws together the circumstances of long-term and temporary residents living in a concentrated area of high deprivation, battling for access to overstretched public services, it is clear that there is a powder keg waiting to explode.
  My hon. Friend the Minister will know that two weeks ago I took a delegation from Haringey council to meet Lord Falconer, the Minister for Housing and Planning. I am pleased that he agreed to work with the council to commission further research to help us to understand the issues.
  The solutions need to be addressed in a pan-London framework. Local housing authorities should co-operate rather than compete. In the short term, I would like a quota system for the number of temporary housing placements in each London borough to be developed. In the medium term, we need increased planning powers to control the present mass buy-up of available properties in Tottenham. In the medium to long term, registered social landlords such as housing associations must be encouraged to take the lead in the acquisition and renovation of a large stock of good-quality temporary accommodation in London. That means providing registered social landlords with the financial means and incentives to purchase and renovate properties to a decent standard and protecting them to some extent from the financial risks involved.
  Like other world-class cities, London faces the challenge of dealing with housing need. Its economy is growing, so its population will continue to rise, with consequent housing pressure on inner-London areas. Therefore, that issue requires strategic policy development and the implementation of measures that aim to control the problem, rather than allow it to overwhelm us.
  Despite all I have said, as someone who has grown up in Tottenham I feel compelled to tell my hon. Friends that there are many success stories to applaud in Tottenham. That is undoubtedly due to the commitment of the Labour Government who have targeted deprived areas, so savagely attacked by the previous Administration. Money is most definitely going into Tottenham, with more than £100 million of investment going into regeneration. Unemployment is down 17 per cent. since 1997, our schools are improving with nine schools out of special measures. Thankfully, we are a long way from the ugly scenes of the 1980s when anger burst onto our streets, because the investments made by the Government have to some extent given my constituents the breathing space to heal those deep wounds.
  This Government recognise the moral and economic imperative of creating a nation where all people have access to a top-class education, to decent jobs, to neighbourhoods of which they can be proud and call home. My constituents certainly share that vision. One of the greatest problems holding them back from living that vision is the housing situation that keeps them chained to social exclusion. One can lengthen the chain by improving schools, the health service and crime rates, but I urge my hon. Friend the Minister to help them break free from a housing situation that keeps my constituents shackled.
  8.36 pm
  The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): I begin by congratulating my hon. Friend the Member for Tottenham (Mr. Lammy) on securing this debate on an important issue for Haringey and people across London. He set out clearly and eloquently the size of the task facing the Government in meeting the housing needs of people in London. He is right to say that this is the second Adjournment debate this week on the subject of housing in London, which shows the concern that exists and the need to find a strategic, London-wide solution.
  Two issues in particular need to be addressed and both were inherited by the Government from our predecessor. The first concerns the backlog of repairs and the need to bring social housing up to a decent standard after the Tory years of neglect and lack of investment. The second concerns the failure over those years to deal with upgrading some of the recognisable standards of what we would regard as being suitable housing. I shall deal with those matters during my speech. The main ones include the need to revise the overcrowding standards, the need to get a definition of homelessness that resonates with what people would recognise as homelessness, and the need to deal with some of the fitness standards. My hon. Friend set out clearly the consequences of those failures for his constituents.
  In looking at the need for a strategic, London-wide solution, my hon. Friend may be aware that tomorrow there will be a conference to launch the consultation process for the 2002 London housing statement. It will set out the key housing policies and priorities for the capital, and describe the contribution that local authorities, registered social landlords and other major stakeholders can make to improve the quality and the quantity of the housing stock. It will form the basis of the Housing Corporation's investment strategy for 2003–04 and give direction to the housing strategies of all the London boroughs. The Minister for Housing and Planning will address the conference and I am sure that all London Members will take a great interest in that debate and will have a lot to say about it.
  The Government are very aware of and concerned at the steep increase in the number of homelessness households in London and elsewhere, and in particular about their being placed in bed-and-breakfast accommodation. While we should be concerned about any increase, particularly about families with young children who are forced into bed and breakfast, 10 years ago the crisis in London was very much worse. That is not to say that we are complacent about the present situation; the Government have promptly taken action to address the figures showing an increase over the past couple of years.
  We are aware of the phenomenon of landlordism which has afflicted the north of the country as well as London with annexed accommodation. Although in some cases such accommodation may have advantages over traditional bed-and-breakfast accommodation, it causes severe problems—especially when landlords simply go for housing benefit and make no effort to provide the housing management that would be expected of a social landlord.
  My hon. Friend highlighted the difficulties in respect of high numbers, costs, turnover and standards. His points are well taken. The bed and breakfast unit has been asked

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  to investigate them and to talk further to Haringey. The unit is working with local authorities and colleagues throughout the Government to find ways of helping authorities to access more temporary accommodation in their own boroughs. They are considering the strategic, pan-London measures that my hon. Friend described.
  The scale of homelessness has not been properly recognised in some legislation. As my hon. Friend knows, the Homelessness Bill is completing its passage through Parliament. We shall also introduce a priority needs order. For the first time, those measures will include some groups of homeless people in London who have never had housing rights, especially 16 and 17-year-olds and care leavers. It will be a major challenge to meet their needs.
  As part of our commitment to tackling the problems of homelessness, my Department is setting up a new homelessness directorate. It will include the bed and breakfast unit and will work with local authorities, such as Haringey, to reduce homelessness and the number of people in bed and breakfast and temporary accommodation. It will also be responsible for ensuring the effective implementation of the Homelessness Bill.
  We are also introducing the "Supporting People" programme. My hon. Friend mentioned that for some people their home is not just the roof over their head. The programme will provide an opportunity for some of the most vulnerable people in our society—especially in London—to have a home with support services. They will be able to live properly. The programme will provide more sustainable communities.
  Affordable housing is of prime concern to many people in London. The Government have a range of strategies to ensure that, over time, we improve affordable housing and increase it. As my hon. Friend knows, we have increased investment in housing in London.
  My hon. Friend also identified the problem of housing standards. Many people are condemned to live in unfit housing. That is why the Government made a clear commitment to bring all social housing up to a decent standard by 2010 and a third of it up to a decent standard by 2004. Money has been put into achieving that target. It will not be an easy task for Haringey and other London boroughs that have huge repair backlogs. However, with good business planning and careful consideration of all the available investment options, I am confident that those targets can be achieved.
  My hon. Friend mentioned overcrowding and the fact that, at many of his advice surgeries, constituents turn up accompanied by one or two children, with whom they are living in a one-bedroom flat. They suffer significant problems of overcrowding, and the children have nowhere to do homework.
  The Government are intensely aware of the concern about the current overcrowding standards. The current room and space standards date from the Housing Act 1935 and have not been revised since. The fact that they have passed unchanged from 1935 to 1985 and then on into the 21st century is in itself a reason for taking a close look at them now. We have been taking a keen interest in that issue. I believe that it is time for the standards to be re-examined, although primary legislation would be required to change the overcrowding standards.
  We are currently considering the best way to tackle the problem. We need to investigate the issues that surround overcrowding and the effect of a change to the current
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  standards. My hon. Friend set out clearly the urgent need to address that serious problem, which impacts on many families in his constituency and elsewhere throughout London.
  Over the next two years we are injecting an extra £300 million above current levels into London's social housing. Even with the massive increase in investment in London's housing since Labour came to power, it is clear that it will not be possible to fill the gap by public subsidy alone.
  No one agency and no one measure will solve the problem. Our aim is to think creatively about how to make a difference. Private funds in the form of planning gain are already providing more than 2,000 affordable units in London each year, but we need to ensure that we are obtaining best value for money from public funds and private sector contributions, so we need to make better use of existing housing, whether in the social or the private sector, and we need to provide more sites on which affordable housing can be built.
  We can learn greatly from the good practice that is being piloted in some London boroughs and some of the models that they are pioneering of partnership developments involving the public and private sector, to create high-standard affordable homes in which Londoners want to live. That will also provide sustainable communities.
  My hon. Friend mentioned the range of disadvantage experienced by people in his constituency. It was in recognition of that type of disadvantage and the urgent need to address it that the Government introduced the national strategy for neighbourhood renewal, and the new deal for the community. My hon. Friend has a new deal project in his constituency.
  In conclusion, the Government have inherited some major problems with the housing stock in London and throughout the country. We inherited a backlog in the funding needed just to bring housing up to a reasonable standard, and a need to improve standards in regulation. However, we have taken structural steps to increase the funding to tackle the most pressing problems, specifically of homelessness and of families in bed-and-breakfast accommodation, and have looked to a range of measures to improve people's rights to housing and access to housing.
  I am confident that we will provide some of the solutions to the problems that my hon. Friend mentioned. I am sure that the conference tomorrow and the discussions that flow from it will be a major step forward in finding some of the strategic solutions that will apply across London and the measures that will benefit my hon. Friend's constituency. I believe that the debate has highlighted some very important issues and I am very grateful to my hon. Friend for raising them.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes to Nine o'clock.

  CORRECTION
  Official Report, 6 February 2002; In col. 989, leave out "Gareth Thomas (Clwyd W)" and insert "Simon Thomas (Ceredigion)"