Commons Sitting of 4 July 2002

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

  PRIVATE BUSINESS
  LONDON DEVELOPMENT AGENCY BILL (BY ORDER)
  Read a Second time, and committed.

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

    School Funding
    Mr. Andrew Stunell: If she will make a statement on trends in school funding since 1997. [64395]
    The Secretary of State for Education and Skills (Estelle Morris): Since 1997–98, recurrent funding per pupil has risen by an average of £670 in real terms. By 2003–04, it will have increased by over £760 in real terms.
    Mr. Stunell: I thank the Secretary of State for her reply, but I think she may agree that it tells only part of the story. She will know of the long-running campaign by Stockport and by the 40 worst-funded local education authorities to secure funding at least equal to the present national average per child. Will she undertake to press the Chancellor of the Exchequer to provide, in his comprehensive spending review, money that will allow proper funding for the children of Stockport?
    Estelle Morris: I appreciate the thought and determination behind the campaign of the F40 authorities, and I understand exactly where the hon. Gentleman is coming from. In Stockport, however, funding has increased by £570 per pupil since the Government took power. I suspect that if the hon. Gentleman had looked at the figures for the previous five years, he would have observed that the amount going to pupils in his area fell in real terms. I accept that this is about a share of a larger cake, but let there be no mistake: more money is going to every one of our schools, for all our pupils, than was the case under the last Administration.
    The hon. Gentleman knows that the Government will report very soon following their consultation document on the way forward. These are not easy issues, but I have
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    always accepted, and I accept now, that the current distribution of resources by local authorities is historic and does not reflect current needs.
    Paddy Tipping: Parents and teachers in Nottinghamshire welcome the extra funds, but will my right hon. Friend look carefully at a petition that my hon. Friend the Member for Gedling (Vernon Coaker) and I intend to present in Downing street this afternoon, calling for fair funding for Nottinghamshire schools—the same funding as pupils at schools in, say, Hertfordshire?
    Estelle Morris: I will certainly look carefully at the petition. Let me add, however—and I do not suggest for a moment that my hon. Friend denied this—that no Member would want every pupil in every part of the country to be funded at exactly the same level, because costs differ in different parts of the country. I think we all want to recognise the existence of disadvantage and the extra cost of educating children from certain backgrounds, and also the existence of different living costs.
    We will certainly consider my hon. Friend's points, but I did not want to give the impression that I entirely agreed with his comparison. The matter must be dealt with through consultation, and we will do that in due course.
    Mr. John Redwood: As recruiting and retaining really good teachers is crucial to the raising of standards, will the Secretary of State have another look at the problem of housing costs in areas such as mine, the Thames valley? Many teachers are finding it very difficult to buy their first homes or maintain a reasonable standard of living with the current funding levels.
    Estelle Morris: I entirely accept that. There are a number of issues relating to recruitment and retention in London and the home counties. The spiralling costs of housing have caused difficulties for many people—the problem does not affect only teachers—but we have many teachers, and the cost of helping them is that much greater. I am sure the right hon. Gentleman is pleased that our expenditure has helped some 1,500 teachers to buy homes.
    The Government are addressing this matter as a Government, and it would not be appropriate for my Department to deal with it separately. I entirely accept, however, that it is one factor, if not the only factor, affecting the ability of schools in the right hon. Gentleman's constituency to recruit and retain.
    Mr. Bill Rammell: There has undoubtedly been a significant increase in funds for all schools in the last five years; but as further money becomes available, as I hope it will following the forthcoming three-year spending review, will the Secretary of State ensure that additional funds are used to increase the number of pupil referral units? I think they can be very helpful in tackling poor pupil behaviour.
    Estelle Morris: Indeed—and my hon. Friend will welcome what has already happened. I am delighted to say that in September, for the first time, we shall have full-time education in our pupil referral units for every child excluded from school. It is something of a tragedy

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    that in 2002 a Secretary of State should be saying that it is the first time that that has happened, but it is a major achievement nevertheless.
    There has already been an expansion of PRUs, and if memory serves me right a further 50 will open in September throughout local authority areas. We are determined that schools should have the right to exclude students who misbehave at school and spoil learning for others, but equally determined that they should be given full-time and appropriate education.
    Mr. Damian Green: As this is the first Education Questions since the reshuffle, I congratulate the new Ministers. The whizz-kids have landed. To spread good will, as I always seek to do, I express commiserations to all Government Back Benchers over the age of 40: sad victims of prime ministerial ageism.
    On spending, the Secretary of State talks a good game. Can she explain the headline in 12 June's edition of the East Anglian Daily Times, "Schools feeling the pinch—Tight budgets mean heads have to cut back on support staff'? The article quotes one head as saying:
    "In all my 25 years as a headteacher I have never had to deal with as bad a budget".
    Does not the Secretary of State recognize—[Interruption.] Government Members seek to ignore the evidence of head teachers of 25 years' standing. Does not she recognise that the ludicrously and increasingly complex way in which schools are funded means that, whatever she thinks she is spending, the benefits are too often invisible where it matters, in the schools?
    Estelle Morris: I do not accept that at all. The hon. Gentleman spends his time scouring local papers to find one headline about one head teacher who thinks that he got less money. I have visited many schools, and I have found that head teachers say two things. The first is that they want more money. The day they stop saying that will be a very surprising day. The second is, "Yes, we've had more money under you than under the other lot."
    I take the point about funding streams, which is exactly why, over the past 12 months, we have ensured that the standards fund gives head teachers great flexibility. Indeed, when legislation that is currently in the other House is enacted, people will be able to spend standards fund money as part of their revenue funding. No other Government have done more to put money into schools and ensure flexibility. On top of that, we have ensured that money goes straight to schools and is not siphoned off. There is far more delegated money for schools now than there was under the Conservative Government.
    Mr. Green: The Secretary of State always objects to the real world intruding on her vision of reality. I suspect that somewhere she recognises how things are going wrong. Let me treat her to another newspaper cutting. It says that, in the sixth year of this Government,
    "13 per cent. leave school without basic skills in literacy. We have the worst staying on rate of almost any industrialised country. Black children are less likely to achieve."
    She cannot dismiss those words, because she wrote them, in The Observer. Will she now admit that the reason why all this extra spending has led to the failures that she correctly identifies is that the over-centralised, bureaucratic, micro-managing way in which she tries to
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    control schools is leading to a demoralised teaching profession, and we will never have the world-class education that we need as long as she carries on down this route?
    Estelle Morris: Children who leave school now without basic literacy or numeracy were educated when they were five under a Tory Government, with no literacy or numeracy strategy, no classroom assistants and no capital investment. That is why they got to secondary school without being able to read and write. I have always said that when people get to year seven in secondary school without having mastered the basic skills, their chances of doing so by 16 get less and less with each year that passes. That is exactly why we have invested in literacy and numeracy.
    I am not going to be less than honest with the nation about where we stand. Of course there is a lot more to do, and I am not complacent about that, but the hon. Gentleman might also have quoted the rest of the Observer article, which pays tribute to teachers, schools and governors and recognises the part that my Government have played in ensuring that we now have more children who can read and write and the highest standards that we have ever had.

    Over-subscribed Primary Schools
    Roger Casale: What additional assistance she plans to give to education authorities to accommodate demand for places in individual primary schools which are heavily over-subscribed. [64396]
    The Minister for School Standards (Mr. David Miliband): The planning of school places is a local matter. However, the Government want popular schools to be able to expand, which is why the Education Bill makes a promise to schools that they themselves will be able to make proposals to offer more places.
    Roger Casale: I thank the Minister for that reply and declare an interest: I have two young daughters, one of whom is applying for a reception place in a Merton school. I welcome the plans for reform, but they will give little comfort this year to parents applying for Hollymount school in my constituency, where there have been 80 applications for 30 places, or Pelham school, which is also over-subscribed. Will my hon. Friend work with the local authority in Merton to see whether anything can be done to alleviate pressures on individual schools in respect of this year, so that parents do not have to take their children up to two miles outside their local community to go to school?
    In addition to the extra money and his reforms, will my hon. Friend also ensure that—in practice as well as in theory—it is parents and not local education authorities who determine where our children go to school?
    Mr. Miliband: I am glad to say that the Government are already working with Merton LEA. My hon. Friend will know that £5 million has been given to Merton as part of the class size initiative, which has helped to hire 105 teachers and create 21 new classrooms. The capital projects that the Department is sponsoring will include the

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    specific requirement that we take account of increasing places in popular schools. There is a partnership in that regard, and we can work on it.
    Mr. Patrick McLoughlin: The Minister says that this matter is determined by local people, but when does he expect to respond to the Government's consultation paper of last year on school admissions? Has he also had a chance to read what the Leader of the House said during last week's business questions? He said:
    "I understand the frustration of the hon. Gentleman's constituents if a decision is imposed by people outside their locality."—[Official Report, 27 June 2002; Vol. 387, c. 965.]
    The comment related to Ecclesbourne school, whose governors agreed to change the catchment area. The change was supported by Derbyshire county council and Derby city council, but was overruled by the school adjudicator, who had never even visited the area. How does that constitute determination by local people?
    Mr. Miliband: We are studying the responses to the consultation, and we shall ourselves respond in due course. I am not familiar with the individual case that the hon. Gentleman refers to, but I should point out that the adjudicator is an independent person, and that for the adjudicator to become involved, there must have been local objections to the plan.
    Valerie Davey: The success of the Government's development of brownfield sites means that—certainly in the case of Bristol—more families are now living in cities. Is inner-city development a factor in the long-term planning of the Department for Education and Skills?
    Mr. Miliband: Obviously, the Department, along with LEAs, has to take a medium-term view of capital needs; that is the purpose of the asset management plans that every local authority has. On that basis, we can plan with some confidence for the demographic changes ahead.
    Richard Younger-Ross: Is it right that the lack of funding in Bovey Tracey, in Devon, should result in its not having a new school? Parents will have to transport their children to outlying developments some two or three miles away. In Shaldon, which is in desperate need of a new school hall, children have to be walked along a main road to their daily assembly and classes.
    Mr. Miliband: I am afraid that I cannot comment on those individual cases, but I do know that in the near future the Government will consult on local funding plans, and that the needs of rural schools will be taken into account.

    Further Education
    Mr. Gordon Prentice: Pursuant to her answer of 29 April 2002, Official Report, column 579W, to the hon. Member for Winchester (Mr. Oaten), what monitoring systems she has put in place to measure the effect of the additional funding for the FE sector on recruitment and retention of staff. [64398]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): Research on the implementation of the teaching pay initiative in further education colleges shows that it has been used to support the recruitment of new teachers in skill shortage areas. It has also enabled colleges to convert casual staff into permanent salaried employees.
    Mr. Prentice: That is all right so far as it goes, but how can we justify the huge pay gap that is opening up between FE lecturers and secondary school teachers? Will the Minister address a particular problem in my own constituency, where the only sixth-form provision is in Nelson and Colne college? Such students are receiving about £1,000 less in the way of resources than if my constituency had a sixth-form secondary school. That position is not sustainable and cannot possibly be justified.
    Mr. Lewis: The Government's policy is to close the gap between funding for colleges and for schools, but the reason for the size of that gap is the massive extra investment that we have put into schools in the past five years. We are implementing a wide variety of initiatives to ensure that a recruitment and retention problem in FE does not arise. In addition to the teaching pay initiative, golden hellos will be introduced from the autumn, and we intend to pay off the student loans of new teachers in shortage subject areas. I should also point out that total FE funding has risen by 26 per cent. since 1997. We accept the need to tackle the gap, but we have put significant extra resources into FE.
    Simon Hughes: I listened carefully to that reply. Will the Minister say whether strong representations have been made to the Treasury to ensure that the comprehensive spending review will address in the coming year the problem of the funding difference that exists for pupils aged over 16 and for those who have left school? Only further education colleges can cater for the latter. The Minister must know the frustration that is felt by the principals of FE colleges, who we all know do good work. However, they feel that their hands are tied behind their backs and that the work that they could do providing access to education for older pupils especially will be hampered until there is significant movement towards establishing parity between schools, post-16 education and FE colleges.
    Mr. Lewis: It is not for me to disclose details of the Department's submission to the Treasury for the comprehensive spending review—at least, not if I want to remain in my post for much longer.
    Of course, we recognise the central role played by further education in achieving our economic and social objectives. That has to be in the context of the reform agenda for further education. My right hon. Friend the Secretary of State outlined that a couple of weeks ago. The "Success for All" document dealt with reforming further education, and we have combined that reform with investment.
    The matter is not simply about closing the gap between further education and school funding. We must also raise standards in the FE sector, and the Government must contribute by making significant additional investment.

    Higher Education
    Ms Julia Drown: What steps she is taking to increase numbers of students in higher education. [64399]
    The Secretary of State for Education and Skills (Estelle Morris): By 2010, we want 50 per cent of 18 to 30-year-olds to participate in higher education. We are particularly keen to encourage greater participation among lower socio-economic and other under-represented groups. The "Excellence Challenge" programme and the AimHigher roadshows are major initiatives funded by the Government to encourage that to happen.
    Ms Drown: I thank my right hon. Friend for that reply. Will she congratulate the university of Bath on its work in Swindon? In two years, it has got 2,500 students into higher education. There are plans to expand that number to 8,000 in seven years, and that will help us to meet some of the skills shortages that exist in the town. Will my right hon. Friend agree to look favourably on bids arriving at her desk so that we can meet that expansion target? That expansion will improve vastly the opportunities open to people in Swindon, and help the Government achieve their target of getting 50 per cent. of 18 to 30-year-olds into higher education.
    Estelle Morris: My hon. Friend the Minister for Lifelong Learning and Higher Education has visited Bath university and is full of praise for it. The university has an excellent reputation, and I applaud it for extending its work to include recruiting more students. The final decision about extra places is one for the Higher Education Funding Council for England, as my hon. Friend will know. However, I am sure that she will be pleased that the Government's plans to fund extra places next year may well mean—who knows?—that extra places will go to Bath university.
    Alistair Burt: Bearing in mind her speech of last week, will the Secretary of State consider how much damage to the prospects of children from poor backgrounds entering higher education has been done over the years by failed socialist educational theory and policy, which she now spends her time apologising for? Will she ask the Minister for Lifelong Learning and Higher Education to stop berating universities and start trusting them to want the brightest and best from any background to benefit from higher education? The Government should focus on helping schools ensure that there is a stronger and appropriately qualified group of students from non-traditional backgrounds ready to benefit from higher education.
    Finally, will she deny that there are plans to penalise, financially and deliberately, those universities that are unable to comply with the personal assessment of the Minister for Lifelong Learning and Higher Education of what their socio-economic mix should be?
    Estelle Morris: The matter is more important than that cheap jibe suggests. Historically, our nation has never managed to break the link between poverty and educational attainment. That has never been achieved by either Labour or Tory Governments in the past. However, I applaud the work of many teachers and schools—and a
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    lot of the schools to which I refer are very good inner-city comprehensives—in raising standards. They are enabling children to be the first generation in their families to go into higher education.
    I have greater aspirations for our children, and we are nowhere near achieving them. We must use the strongest language to make our society understand that Britain is the only nation in the Organisation for Economic Co-operation and Development that retains a link between background and educational attainment. This Government are doing more than any other in that respect. The "Excellence Challenge" and "Excellence in Cities" programmes mean that children in years 11 and 12 from a third of urban schools this summer will have the opportunity to visit a university and talk to staff.
    We do not have all the answers. This is about raising attainment rates at 16 and 18, and making sure that working class children feel that they can make the link between school and university. We are doing that; the Tory Government did not.
    Mr. Dennis Skinner: Is my right hon. Friend aware that I have had a letter from a head teacher, too? She told me that she was thanking the Labour Government for all the money that has been put in. I have to tell her something else as well. I listened this morning to that creeping Jesus from the Liberal party— [Laughter]—but one thing makes me sick—
    Mr. Speaker: Order. That language will not do. I ask the hon. Gentleman to withdraw that remark.
    Mr. Skinner: Creeping; I withdraw creeping.
    Estelle Morris: I am grateful for the support from the head teacher in my hon. Friend's constituency. I should be grateful if he would pass on my thanks and best wishes for the work that she does at the school and that other schools do in Bolsover.
    Mr. Mark Hoban: One of the important issues about participation in higher education is student finance. Last year the Government commissioned a review of student finance. When will we get the results?
    Estelle Morris: In due course—when the review is ready. We rightly agreed to look at student finance and we will announce our findings. The figures do not support what I think the hon. Gentleman was implying. Last year there was more than a 5 per cent. increase in the number of students going to university—far greater than, for example, in Scotland where changes were made to how people pay fees. We will report in due course, but getting people from poorer backgrounds to university needs to be tackled on many levels.

    Educational Maintenance Allowances
    Mr. Colin Challen: What assessment she has made of the impact of educational maintenance allowances. [64400]
    The Minister for Lifelong Learning and Higher Education (Margaret Hodge): An independent evaluation of EMAs has been taking place since 1999. Further

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    evidence from the second year was published yesterday. The findings so far are highly encouraging. EMAs have produced large increases in participation among the target group, not only in the first year of post-compulsory education but into their second year as well.
    Mr. Challen: What does the evidence show for levels of commitment to study, performance and retention rates among young students, particularly those from lower income brackets? I understand that evidence shows that parents are not taking up EMAs on their child's behalf as much as they perhaps should and, indeed, that application levels are reduced by incomplete forms.
    Margaret Hodge: The evidence that we published yesterday is highly encouraging. It shows that in year 12 we have a 6 per cent. increase in the number of young people in full-time education—that is 1 per cent. up from the last evaluation—and a 7.3 per cent. increase in the number of young people staying on in year 13, so the retention is good. In particular, there have been increases in the number of young men, which we are pleased about, people in urban areas, which is also good news, and those who are eligible for the full maintenance allowance, which suggests those who come from the poorest backgrounds and is also good news.
    Mr. Andrew Turner: What evidence was there about attainment?
    Margaret Hodge: It is very early days to get good evidence on attainment, but it is beginning to emerge. Good evidence shows that at levels one and two qualifications attainment is up. There is also an increase in the number of young men choosing to go into higher education. I would not want to suggest that those are completely definite results from the attainment data, because it is too early. We must wait for good, solid data before we can draw permanent conclusions.
    Jeff Ennis: There is no doubt that the educational maintenance allowance pilots have been an outstanding success in my two local education authorities, Barnsley and Doncaster, where staying-on rates have increased by more than 5 per cent. Is the Department monitoring the types of courses taken by EMA students in terms of the split between academic and vocational courses? It might be useful to see whether there are different trends between courses taken by EMA students and by non-EMA students.
    Margaret Hodge: We are monitoring that data as well. We are developing our proposals for 14 to 19-year-olds to try to raise the status of vocational qualifications and to ensure progression for those undertaking vocational routes right through into higher education. We will ensure that opportunities are available to people from all backgrounds wishing to pursue all sorts of options for later careers.

    School Violence
    Mr. Desmond Swayne: If she will make a statement about the level of violence in schools. [64401]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): We are determined to ensure that schools are places where staff and students learn and work free from violence. We have always made it clear that when necessary head teachers can permanently exclude violent pupils. We have published detailed guidance for schools on preventing bullying. On Tuesday, we published a toolkit for schools on legal remedies against violent adults, and we will extend parenting orders to cover parents of pupils excluded for violence.
    Mr. Swayne: Last week, a headmaster in my constituency told me that the greatest single problem now facing the profession is no longer the Government's intrusive bureaucracy, but the sheer level of indiscipline and disorder in schools, of which violent behaviour is perhaps the most worrying. In response to written questions on the matter, Ministers have replied that the data are not collected centrally. I put it to the Minister that if he does not collect the data, how can he have any idea about the size of problem over which he is presiding?
    Mr. Twigg: I am delighted that the hon. Gentleman and the head teacher in his constituency acknowledge the work that we have done to lift some of the bureaucratic burdens on schools. We need to work together on a cross-party basis on problems involving behaviour and tackling violence. We do have statistics for violent assaults on teachers, and there are far too many of them—130 in the last recorded year. We want to ensure that there is zero tolerance of that violent behaviour, whether it is against pupils or staff, and that is what we will continue to work towards.
    Fiona Mactaggart: One of the initiatives that has really helped my local schools in Slough to deal with violent behaviour is the schools-based response to the street crime initiative whereby police officers work more closely with schools. How can we learn the lessons of what works as regards police officers working closely with schools and spread them to areas that are not part of the street crime initiative?
    Mr. Twigg: I thank my hon. Friend. This week, we were able to announce our agreement to the 34 local plans implementing and spending the £66 million package announced by my right hon. Friend the Chancellor in the Budget to tackle issues of pupil behaviour, especially in parts of the country where there are high levels of street crime and pupil truancy. We will evaluate police involvement in schools. The project has received a very positive response from schools, the police and LEAs, and I look forward to reporting back to the House as it progresses.
    Mr. Graham Brady: The last time I tabled a written question asking for the statistics on violence against teachers, I was told that the Department did not collect them. I now look forward to receiving the figures when I next table that question.
    The Minister claims that the Government believe that heads should be free to exclude violent pupils. He must know that the biggest problem that schools face is that when they exclude pupils who are violent, all too often

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    the exclusion is overturned on appeal. Will he go further and issue robust guidance to appeals panels that they must not overturn an exclusion when a pupil is violent?
    Mr. Twigg: On the hon. Gentleman's first point, the statistics are collected by the Health and Safety Executive. For the last year for which we have figures—2000–01—130 cases of serious injuries were reported to the HSE.
    On his second point, of course we will maintain a review of the guidance that we send to schools. One of our objectives is to ensure that authorities make full-time education places available to young people who are excluded from school, because that has not always been the case in the past.

    School Travel
    Charlotte Atkins: If she will make a statement on her Department's policies regarding travel to school. [64402]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): Compulsory school age pupils are entitled to free transport if their nearest suitable school is beyond statutory walking distance from their home. In other circumstances, local education authorities have the discretion to provide help with travel in accordance with locally determined policies.
    For post-16 students, there is a duty on LEAs to determine what is necessary to meet their local circumstances.
    Charlotte Atkins: Does my hon. Friend share my concern that the policy of charging over-16 students to use school buses that were free before they were 16, first, appears to be a tax on rural school students; secondly, encourages congestion around schools because parents or, indeed, pupils themselves drive to school; and, thirdly, runs counter to the Government's excellent education maintenance allowance initiative, which encourages 16-year-olds to stay in education after school leaving age?
    Mr. Twigg: I am well aware of the concern that my hon. Friend and others have expressed about this matter, which is being considered because the practice is inconsistent across the country. Further education colleges have the discretion to use their learner support funds to pay the student contribution—some FE colleges in Staffordshire do so, while others do not, and that is one of the inconsistent practices that we need to address.
    Pathfinder projects are addressing the issue, and will report later this year. As my hon. Friend suggests, we are piloting some EMA schemes aimed specifically at funding the higher transport costs in rural areas. We will take on board the lessons that can be learned from the pilots as part of the wider evaluation of the education maintenance allowances.
    Mr. Hugo Swire: Does the Minister take on board the problems of rural sparsity? Will he review the problems with Devon's education finances that arise from the county's huge school transport costs? What will his Department do about that as a matter of urgency?
    Mr. Twigg: I am grateful to the hon. Gentleman. Of course that is one of the factors that we are considering
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    in reviewing the whole local government funding system, including education funding. The hon. Gentleman refers to Devon; another Member mentioned Yorkshire—[Interruption.] Members representing all the different authorities are shouting. We want to get the best possible system that meets the different needs of rural areas, as well as urban areas. We must ensure that we do not allow school transport policies to act as a barrier to the inclusion of those who want to stay in education after the age of 16.
    Mr. Kevan Jones: May I raise with my hon. Friend the case of Mrs. Stoker and Mrs. Scott-Davey, whose children, Katie and Jonathon, attend St. Leonard's Catholic school in Durham? The children are non-Catholic, so they are not automatically entitled to free transport, unlike their Catholic neighbours. Does he agree that to discriminate against children on the grounds of religion in that way is wrong? Will he look at that case?
    Mr. Twigg: I am certainly happy to have a look at the case. I imagine that, as non-Catholic parents, they would have had the option of another, nearer school. That is how the rules work at the moment, but I am happy to take another look at that.

    Teacher Vacancies
    Mr. Roger Williams: If she will make a statement on the number of teacher vacancies. [64403]
    The Minister for School Standards (Mr. David Miliband): Information on the number of teacher vacancies in local education authorities is collected once a year in January as part of the annual census of teachers and vacancies. The provisional figures for 2002 were released in April. In addition to 9,000 more teachers entering the system in the past year, the figures show that the vacancy rate in maintained schools in England decreased from 1.4 per cent. to 1.2 per cent. In Wales, the figure is 0.4 per cent., which is a matter for the Welsh Assembly.
    Mr. Williams: I thank the Minister for that reply, but I do not think that it will satisfy the combined lobby that we received yesterday from all the Welsh teachers' unions, which are demanding that action be taken by September 2002 to reduce the burdens of administration and reporting so that they can concentrate on delivering a world-class education to our young people. As a result of those burdens, the vacancy rate problem in Wales continues and it is difficult to attract quality young people and to retain existing professionals, especially to teach those subjects, such as science and Welsh—
    Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman, but he should ask a supplementary question. Perhaps the Minister can try to reply to what the hon. Gentleman has said.
    Mr. Miliband: I will not intrude too far into the Welsh situation, but the hon. Gentleman should recognise that, in the past five years, we have got over 20,000 more teachers in the education system and over 80,000 more support staff. The Government are now considering how to negotiate a partnership with teachers so that they have

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    time to focus on teaching, so that they get leadership in relation to the curriculum and the timetable and so that we ensure that they get support from other adults and information technology to help them do their jobs better.
    Mr. Peter Pike: Schools, unions and governing bodies in Burnley are all aware of the considerable difficulty in recruiting teachers, especially in certain subjects. Does my hon. Friend recognise that that is a serious problem, and will he meet me at some stage to discuss the problem and the way forward?
    Mr. Miliband: I am always happy to meet my hon. Friend, and I shall take the matter up with him. No one on the Government Benches would pretend that the situation is perfect, but I am sure that he will be pleased to hear that the latest figures show that teacher recruitment is up 14 per cent. in a year. In certain subjects in which we have had difficulty—notably, technology—it has risen by 41 per cent. I hope that that goes some way to address some of the issues that he has raised. I look forward to meeting him.
    Mr. Phil Willis: In 1998, the former Minister for School Standards, who is now the Secretary of State for Education and Skills, wrote in a Department for Education and Employment publication, "Teacher Supply and Demand Modelling: A Technical Description":
    "It is…important to ensure that we can accurately estimate the demand for teachers in the coming years, so that we can train enough teachers to fill vacancies in schools".
    Is the Minister not therefore embarrassed that, when he replied to a written question from me last week about how many teachers were teaching at key stages 3 and 4 without the necessary qualifications, he had to rely on data from 1996? Is it not time that a curriculum and staffing survey was conducted so that we can have accurate data on planning for teacher recruitment and retention in all subjects?
    Mr. Miliband: One must be careful before plunging into the bureaucratic chase that the hon. Gentleman might be suggesting. My understanding is that the Department has significant figures—more data than have ever been published previously—on the situation around the country. We are absolutely clear on the following questions. Are there more recruits? We know that there are. Are there more teachers in the classroom? We know that there are. Is there higher pay for teachers? We know that there is. Some of the hon. Gentleman's colleagues may want to denigrate what teachers are doing and question how many teachers there are in the interests of "Focus" newsletters, but that would not be appropriate for him.
    Mr. Andrew Dismore: May I raise with my hon. Friend a concern expressed by head teachers in my constituency that the figures do not reveal the true picture? For example, they do not include posts that are filled temporarily or reflect the problem of overseas teachers who are filling a large number of the teaching positions in my constituency on a relatively short-term basis. Head teachers in my constituency are very concerned about the difficulties that they experience in recruiting teachers to fill positions permanently, especially
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    in shortage subjects. Will my hon. Friend say what is being done to ease problems of recruitment and retention of teachers in London?
    Mr. Miliband: My hon. Friend will be most pleased to hear that the vacancy rate in London over the last year has fallen from 3.5 per cent. to 2.6 per cent. Of course, there is still some way to go, and we recognise that there are problems in particular subjects and in particular parts of the country. The most important thing that we can do, however, is make sure that head teachers have money in their hands to spend on the recruitment and retention of teachers. That is why the average spend per pupil in every school in the country has gone up by £560 since the Government took office. There are a range of issues to be addressed, including housing, especially in London and the south-east. That is the purpose of the review of local government expenditure that we are currently undertaking. I hope that the review will be able to address some of the issues that my hon. Friend has raised.
    Mr. Richard Bacon: Has the Minister had the chance, since taking up his responsibilities, to consider the case of my constituent, Christopher Read, who used to design electronic control systems for Trident nuclear submarines—I raised the case with the Minister's predecessor—but who cannot yet be given a secure employment contract? Does he agree that there is a case for relaxing the rules to allow schools to give secure employment contracts to people without fully qualified teacher status? The purpose is not to exempt people from having to obtain qualified teacher status but to allow them to have secure employment in the interim. That will provide help for many schools in accordance with paragraph 5.17 of the Government's White Paper, which says that good schools should be given more autonomy over their decisions.
    Mr. Miliband: I am afraid that I have not seen the individual case that the hon. Gentleman raises. I will ask the Department to dig it out, and I will look at it. We are always interested in finding as many ways as possible of getting skilled people into classrooms as teachers and as support staff, both through the fast track scheme for graduates and through other mechanisms.

    Medical Students
    Dr. Evan Harris: What assessment she has made of the impact of redundancies of medical academics in London medical schools on the training of medical students. [64404]
    The Minister for Lifelong Learning and Higher Education (Margaret Hodge): The additional costs of training new medical students were fully taken into account at the last spending review. Staffing levels at medical schools in London and elsewhere are for each institution to determine in the light of its operational needs and circumstances.
    Dr. Harris: At a time when we are seeking to increase the number of medical students being trained, does the Minister understand the concern about the fact that hundreds of medical academics responsible for carrying out the training are losing their jobs? It seems to people

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    on the ground that, when there is good news to announce, the Government cover themselves in glory and centralise praise, but when it comes to redundancies in institutions that are almost 100 per cent. funded by the Minister's Department and the Government, she says "It is nothing to do with us, guv." Is that not too much delegation of blame? How will we look after the interests of the medical students and consultants of the future?
    Margaret Hodge: The hon. Gentleman is a member of a party that believes in the delegation of responsibility and devolution, so I am absolutely amazed by his view that there should be central control over the number of staff in each institution. He should be very careful not to muddle certain facts. Mergers, especially between London hospitals, have led to changes in staffing structures. Those changes have been made by local decision makers and local managers. Changes have also been made to the amount of money that hospitals and universities have received out of the research assessment exercise to cover the cost of training medical students—some have gained, and some have lost. For example, St George's hospital in London had a 48 per cent. increase—
    Mr. Speaker: Order. Perhaps the Minister could write to the hon. Gentleman about St George's hospital.
    Mr. Barry Sheerman: Does my hon. Friend agree that there is serious concern in teaching hospitals throughout the country following the generous increase in pay to consultants in the health sector? Many people in the teaching profession would be very pleased to receive such an increase, with very little reform to the delivery of service. However, there is an important knock-on effect, because many leading people in our medical schools say that they will not be able to recruit senior staff as a result of the pay increase for consultants.
    Margaret Hodge: I am discussing this issue with my colleagues in the Department of Health. Under the new consultants' contract, we must ensure that staff will be available to deal with patients, and that staff will be available to train the new consultants whom we require to expand services in the national health service.

    Information Technology
    Mr. Bob Blizzard: What progress has been made with increasing the amount of information technology in schools since 1997. [64405]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): ICT in schools has increased significantly since 1998. The 2001 survey showed that the proportion of schools connected to the internet had grown from 28 to 97 per cent. The ratio of computers to pupils in primary schools had improved from 1:18 to 1:12, and in secondaries from 1:9 to 1:7.
    Mr. Blizzard: May I welcome the huge increase in the number of computers in schools? However, the software requires licences. Is my hon. Friend aware that, although Microsoft will sell a site licence to a college or
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    university—for example, Lowestoft college pays it £7,000 a year—Microsoft will not sell site licences to schools? Therefore, Kirkley high school in my constituency now pays £15,000 a year in licence fees. Does my hon. Friend agree that Microsoft is unfairly hoovering money out of schools and that it is no use producing glossies with children on the front if it is charging schools too much? Will he look into the matter?
    Mr. Lewis: My hon. Friend makes an important point, and I give him the commitment that I will look into the issue. I do not want to condemn Microsoft until I have all the facts available to me—that would not be a particularly good idea! When I have the information, I shall get back to my hon. Friend.

    Special Needs Education (Gloucestershire)
    Mr. Laurence Robertson: When she next plans to discuss the provision of special needs education in Gloucestershire with the local education authority. [64406]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): The Secretary of State takes a close interest in the effectiveness of special educational needs provision in all local education authorities, through their education development plans and Ofsted inspections. Gloucestershire local education authority was required to prepare an action plan following an inspection by Ofsted in January 2002. Departmental officials are working with the authority's officers as they develop and implement their post-inspection action plan, and continue with their review of special educational needs provision in the county.
    Mr. Robertson: I am grateful to the Minister for that response. Is he aware that Gloucestershire LEA, which is controlled by the Liberal Democrats and the Labour party working together, interprets the Government's intentions regarding inclusion as meaning that it can close all the special schools in Gloucestershire'? Indeed, it has started on that programme. Does he approve of closing all the special schools in Gloucestershire? If not, will he communicate with the authority to tell it that what it is doing is very wrong?
    Mr. Twigg: I am aware of the hon. Gentleman's long-standing interest in and views on this matter. We are not seeking to say to local authorities that they must close all their special schools. That is something that needs to be determined at local level. We want to see that done properly in Gloucestershire, as in other parts of the country. We want a proper balance between the rights of parents to have their children educated in mainstream schools, if that is what they want, and the role for special schools. As part of that, Baroness Ashton is conducting a review with a working party to examine the role that special schools can play in promoting special education.

  The Solicitor-General was asked—
  SOLICITOR-GENERAL

    Crown Prosecution Service
    Mr. Bill Wiggin: If she will make a statement on the level of successful prosecutions by the Crown Prosecution Service over the last 12 months. [64430]
    The Solicitor-General (Ms Harriet Harman): There is no single, obvious success measure for prosecutions. Sometimes it is the right decision to proceed with a prosecution even when the defendant is subsequently acquitted. Of the 1.4 million cases referred to the CPS last year, 950,000 went to the magistrates court and 120,000 to the Crown court. The conviction rate in the magistrates court was 98 per cent. and in the Crown court it was 88 per cent.
    Mr. Wiggin: I am grateful to the Minister for that answer, but I am curious about how many cases failed. The Minister's initial response was that that was difficult to judge, but when the plea is either innocent or guilty it cannot be that difficult to judge whether a case has been successfully prosecuted.
    The Solicitor-General: I am not trying to avoid the hon. Gentleman's important question, but we must ask what success or failure means in this context. If a case is prosecuted when it should not have been, that is wrong; but if a case is dropped when it should not have been, that is also wrong. The point is the quality of the decision making. The CPS inspectorate says that in 93 per cent. of the decisions about whether to proceed with a prosecution, the decision is right. However, we are not complacent. Too many cases are discontinued. We need more resources, better partnership with the police and constant pressure to improve. It is too easy to assume that acquittal is a failure or that dropping a case at an early stage is a failure. Sometimes it is right to drop a case at an early stage if we do not have sufficient evidence to proceed.
    Mr. David Kidney: Can the House be assured that the CPS takes seriously the issue of domestic violence? Is it understood in the service that successful prosecutions for domestic violence today could save lives tomorrow?
    The Solicitor-General: My hon. Friend is right. Those who perpetrate domestic violence must realise that they cannot do it behind closed doors, regard it as a private matter, and get away with it. It is a violent criminal offence that will not be tolerated. Women must recognise that they do not have to put up with it, because they can have confidence in the criminal justice system taking their side and prosecuting offenders. The CPS has taken several important steps towards putting into effect that proper, up-to-date attitude. It is working closely with the police and the courts on that. In this day and age, it should not be the case that a quarter of all violence is perpetrated behind closed doors at home. That sort of thing should be stopped.
    Mr. John Burnett: What priority does the Solicitor-General's Department—
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    especially the CPS—give to large-scale fraud and what is euphemistically known as white collar crime? We have seen recent examples in the US on a huge scale. Accounts have been falsified, millions of dollars have been stolen and entire industries and markets have been undermined. We all hope that there are no such examples over here, but can the Solicitor-General assure the House that the CPS and the Serious Fraud Office have sufficient resources to deal swiftly and efficiently with large-scale fraud? Can she also assure us that the full rigour of the law will be visited on the perpetrators and their accomplices? She will know that half-measures and compromises would not be acceptable.
    The Solicitor-General: The hon. Gentleman raises that question at an important time. Since the Attorney- General and I took office a year ago, we have been in no doubt that the work of the Serious Fraud Office in prosecuting serious and complex frauds is important. Even if the fraud is huge, the people who get ripped off are often poor and they can ill afford it and its criminality. In addition, such frauds hit the confidence in our economy and our financial services, which can affect the stock market. That is why we want to ensure that the Serious Fraud Office has the capacity to investigate and prosecute those big frauds.
    When billions of pounds are at stake, the fraudsters think nothing of spending millions of pounds concealing their fraud and millions more on their legal defence teams. We have to ensure that it is not a David and Goliath situation and that the Serious Fraud Office is properly resourced at its baseline. It also needs to have the ability to go to the Treasury and apply to the reserve when the cases are big because confidence in our economy and economic system is at stake.
    Mr. William Cash: Presumably the Solicitor-General took the figures that she gave to my hon. Friend the Member for Leominster (Mr. Wiggin) from the draft annual report of the Crown Prosecution Service. I have, of course, not seen that, but it is coming out shortly. To her knowledge—perhaps this is in the draft report—has the CPS acknowledged and apologised for the catalogue of problems? Some of those were recently highlighted by the chief constable of Thames Valley police, who said:
    "The bottom line is that justice is not being done thanks to the arcane rules and bureaucracy of our criminal trial process. The public knows this, the legal profession knows this, the government know this and it is time for action. Under the current rules of the game, everyone loses…It is the system itself which is at fault, a system so flawed that it provides loopholes which no one can be blamed for exploiting."
    Will the Solicitor-General comment on the chief constable's damning observations, which were reinforced only this week, as she knows, by the fierce criticisms of the CPS by the National Audit Office and the Public Accounts Committee?
    The Solicitor-General: The chief constable raises a number of issues, some about the conduct and process of prosecution and some about the rules that govern them. The hon. Gentleman will know that the Lord Chancellor, the Attorney-General and the Home Secretary are considering the contents of the White Paper that will

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    follow the Auld report. It will address some of the issues that concern the chief constable and will be published shortly.
    On how the CPS handles cases, it is right that we are not complacent. We need more resources and better systems. However, we should not panic. We are talking about 1.4 million cases, and the inspectorate says that 93 per cent. of the decision making is right. If 93 per cent. of the decisions that the hon. Gentleman or I made were right, we would not be doing too badly. We are not complacent. Every case is critical for the victim, so we must press on. However, we need to take a balanced view and work in partnership with the police instead of being on the defensive from their criticisms.

    Lenient Sentences
    Mr. Andrew Turner: How many cases have been referred since 1997 to the Attorney-General for review of allegedly inadequate sentences. [64431]
    The Solicitor-General: Before 2000, the figures for unduly lenient sentences referred to the law officers were not collected in the way that the hon. Gentleman requests. However, 178 offenders were referred in 2000, 277 offenders were referred in 2001 and 144 offenders have been referred so far this year.
    Mr. Turner: I thank the right hon. and learned Lady for that answer. Is she aware that a serial sex offender, who was sentenced to 18 months for a string of offences against young island boys, was released having served half his sentence and, within a year of his release, abducted a 14-year-old boy from a "Children in Need" concert in Southsea, who was then raped in a beach hut? That offender was sentenced to only four years.
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    Some of the offender's earlier victims—my constituents—have been horrified to discover that members of the public have only 28 days to draw such inadequate sentences to the attention of the Attorney-General. Will the Solicitor-General review that incredibly tight deadline or, at the very least, publicise it more effectively so people know what they have to do, and how quickly, to get things put right?
    The Solicitor-General: I am only too well aware of the shocking circumstances that surround the case that the hon. Gentleman has brought to the attention of the House, and has already brought to the attention of the Attorney-General and me.
    The very worst thing is for a case to be brought to us as an unduly lenient sentence, only for us not to be able to consider it for referral because it is out of time. There are two ways in which we can deal with that. We can either extend the time limit, which is a strict 28 days, or we can ensure that people know that there is a strict time limit and ensure that they all work to that deadline. I would think that the right course of action is the latter. We need to ensure that Members and victims know that the right is there, but that it has to be exercised within 28 days.
    When the right was originally put in place, the House took the view that there was a wish for finality about the sentence—that when the judge passes sentence, that should be it, and that things should not be left for months, and then suddenly the Law Officers refer a case. There is a reason for the strict time limit, but to ensure that there is not injustice to victims we must ensure that people are aware of it and that the Attorney-General and I can consider such cases with the seriousness that they deserve. Cases where the sentence was inappropriate can then be referred to the Court of Appeal, which takes our references very seriously.

Business Statement
12.31 pm
Mr. Eric Forth: May I ask the Leader of the House to give the business for next week?
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 8 JULY—Consideration of Lords amendments to the Employment Bill followed by Opposition Day [17th Allotted Day, 1st Half]. There will be a debate entitled "Crisis in the Care Homes Sector" on an Opposition motion.
TUESDAY 9 JULY—Progress on remaining stages of the Police Reform Bill [Lords]. To follow, the Chairman of Ways and Means has named opposed private business for consideration.
WEDNESDAY 10 JULY—Conclusion of remaining stages of the Police Reform Bill [Lords]
THURSDAY 11 JULY—Debate on intelligence agencies on a motion for the Adjournment of the House.
FRIDAY 12 JULY—Debate on behaviour improvement in schools on a motion for the Adjournment of the House.
The provisional business for the following week will include:
MONDAY 15 JuLY—Consideration of Lords amendments to the Education Bill.
TUESDAY 16 JuLY—Consideration of Lords amendments to the Justice (Northern Ireland) Bill.
WEDNESDAY 17 JULY—Debate on defence procurement on a motion for the Adjournment of the House.
THURSDAY 18 JULY—Motion to approve a money resolution on the Proceeds of Crime Bill followed by consideration of Lords amendments to the Proceeds of Crime Bill.
FRIDAY 19 JULY—Private Members' Bills.
The House will wish to be informed that the business in Westminster Hall for the remainder of July will be:
THURSDAY 11 JULY—Debate on the report from the Health Committee on the role of the private sector in the NHS.
THURSDAY 18 JULY—Debate on poverty.
The House will wish to know that on Wednesday 17 July 2002, there will be a debate relating to waste from electrical and electronic equipment in European Standing Committee C.
Details of the relevant documents will be given in the Official Report.
[Wednesday 17 July 2002:
European Standing Committee C—Relevant European Union documents: 9923/01; Unnumbered EM, dated 15 March 2002, submitted by DTI: Waste from electrical and electronic equipment. 10143/01; Unnumbered EM, dated 15 March 2002, submitted by DTI: Hazardous substances in electrical and electronic equipment. Relevant European Scrutiny Committee Reports: HC 152-xxxii and HC 152-xxiv (2001–02).]
Mr. Forth: I thank the Leader of the House for letting us have those details. He will be aware that two
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significant reports on foot and mouth are now imminent. I hope he will be able to guarantee that the House will be given an opportunity to consider these reports, or at least to give preliminary consideration to them, before the House rises for the long summer recess. I am sure he would not want these important reports to go unconsidered by the House—there could be either a statement or a debate—before the recess. He would not want us to get all the way through to October without having a chance to say something about the eagerly awaited results of the reports on foot and mouth, would he? I hope that he can give us that undertaking.
Yesterday, we had questions to the Deputy Prime Minister, who now has responsibility for local government, the regions, housing and planning, matters which affect all the constituents of every right hon. and hon. Member. Yet astonishingly, the right hon. Gentleman had only about 26 or 27 minutes to give account of himself and his responsibilities to the House. I assume that this is an oversight and that we have not quite caught up with the new arrangement. I cannot imagine that the right hon. Gentleman wanted in any way to avoid answering questions. I am sure he takes a lot of pride in what he does and the way in which he does it. Please can the Leader of the House look again at whether the Deputy Prime Minister can have a full Question Time to give account of himself and his Department to the House, as that would be helpful for all right hon. and hon. Members?
When are we going to deal with the Data Protection Acts? The Leader of the House has kindly told us before that he has that in his sights and is aware of Members' anxiety. I hope he can reassure us that the Government will put something before the House before the summer recess so that we can finally resolve the anomalies that have arisen in those Acts. It would be helpful if he could do so.
The parliamentary ombudsman, in his annual report published today, launched an astonishing, blistering attack on the Government. I wonder whether the Leader of the House has had time to look at it, as the ombudsman says on page 8 that
"in November 2001 the Government rejected, for the first time, a recommendation by the Ombudsman that information should be disclosed under the code"—
the code of practice on access to Government. He continues:
"the Home Secretary refused, for reasons which I found wholly unpersuasive, to disclose purely numerical information regarding the number of times Ministers in his Department had made a declaration of interest to their colleagues under circumstances envisaged in the Ministerial Code of Conduct".
The ombudsman went on to say:
"I cannot disguise my concern at what seems to be a hardening of attitudes in departments. The bad habit of citing exemption for the first time at a very late stage of an investigation has reappeared."
Finally, on page 9, the ombudsman says:
"I am seriously concerned at these developments, which not only undermine the Code but also call into question the authority and standing of my office."
I cannot recall when someone as eminent as the parliamentary ombudsman has seen fit to make such comments in an annual report. Is the Leader of the House ashamed, and is he prepared to find time for us urgently to debate what is obviously a serious rift between the parliamentary ombudsman and the Government? I hope that at the very least he will take the opportunity to deal with the ombudsman's extremely serious criticisms.

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Finally, in Prime Minister's questions yesterday, at column 218, the Prime Minister was at it again. He said:
"The Conservative party is holding up the progress of the Proceeds of Crime Bill."—[Official Report, 3 July 2002; Vol. 388, c. 218.]
Can the Leader of the House explain what on earth the Prime Minister meant and what he was talking about? Does the Prime Minister now think that parliamentary debate on a Bill holds up its progress, or does he now expect a Bill to go straight through the House without touching the sides? If that is not so, the Leader of the House must either explain the Prime Minister's remarkable assertion, which has no basis in fact at all, or provide an early opportunity for the Prime Minister to come to the House and to apologise.
Mr. Cook: Before I respond to the right hon. Gentleman, may I congratulate him on the topicality of his Independence day tie? If I remember rightly, the independence of the United States was partly influenced by the Tory Prime Minister of the time, but we shall overlook that in the circumstances—the time has come to forgive and forget.
On the issues raised by the right hon. Gentleman, first, on the ombudsman, I do not feel that there is anything in the Government's record on which we can be impeached. After all, it is we who passed the Freedom of Information Act 2000. There were many times when I stood at the Opposition Dispatch Box and wished that we had such an Act so that we could find out what the right hon. Gentleman's Government were up to.
On the specific points made by the ombudsman about the Hinduja affair, we accept that the Cabinet Office was wrong not to provide information at the time and we have already apologised for that. I remind the House that the ombudsman came to precisely the same conclusion as the Hammond report. On the Equitable Life affair, which is also raised in the ombudsman's report, since the application for information, we have initiated two separate inquiries, one by the Financial Services Authority and one by ourselves. All matters will be fully investigated and laid before the House and the public.
As I am sure the right hon. Gentleman is aware, we have already taken steps to amend the code of conduct for Ministers so that, rather than one declaration being made at a given time, a comprehensive declaration of financial interests will be made to the permanent secretary; so that particular issue should not arise again. Against the totality of the greater openness brought in by the Government, those particular exceptions need to be kept in proportion.
We look forward to the foot and mouth reports with great interest. Their publication dates are not within our gift because they are independent reports. [Interruption.] There is nothing strange about the fact that those carrying out an independent report are responsible for its publication date. We have drawn it to their attention that it would be for the convenience of the House if the reports were published while the House was still sitting. I am sure there will be exchanges in the House on that matter and that, at an appropriate point, the House will wish to debate it in full.
I fully share the right hon. Gentleman's view that the Deputy Prime Minister could accept a longer period of time before the House, which he would richly deserve and
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by which the House would be rewarded. I would only gently point out that this is a zero-sum game—more time for the Deputy Prime Minister means less time for someone else, and I am not inundated by demands that there should be less time for any particular Minister to answer questions. However, I shall happily consider the matter and see whether we can do justice to the status and ability of the Deputy Prime Minister and to the interest in his comments. I shall take that point on board.
I do not quite understand why the right hon. Gentleman should wish to run away from the comments made on the Proceeds of Crime Bill. The fact is that his party, both here and, notably, in the other place, has resisted provisions in that Bill, and he really should not come to the Dispatch Box now and pretend otherwise. Opposition Members presumably knew what they were doing and supported what they were doing, otherwise I do not understand why they were doing it; and it is entirely legitimate for the Prime Minister to point out the totally bogus nature of the constant claims about law and order from a Conservative party which always opposes when we try to tighten up on the criminal.
Mr. Kelvin Hopkins: The stock market has fallen seriously once again and the speculation is that it will fall a lot further before we see an upturn. Does my right hon. Friend agree that that has serious implications for the interests of ordinary people, their savings and pensions, and that we should have a debate on the Floor of the House to ensure that we fully understand that and to decide what we should do about it? Does he further agree that that is another nail in the coffin of neo-liberalism and demonstrates clearly that Governments must play a greater role in managing and regulating economies?
Mr. Cook: On the last point, my hon. Friend is leaping from an innocent to a wide and general assertion, a move in which it would be extremely unwise of me to follow him. I remind my hon. Friend of the Government's excellent record on state pensions, for which we have provided an additional £6 billion over the sums that we inherited when we came to power, more than double the amount necessary simply to meet a link with earnings. We have honoured our commitment and the need to ensure that state pensioners are justifiably and properly treated.
With regard to the private pensions sector, we have taken two major steps which will help to protect people providing for their retirement. First, the introduction of the pension tax credit means that we shall be rewarding those who saved for their retirement and as a result have a little additional income, whereas the Conservative Government penalised those who had anything extra by means-testing them and clawing back benefit from them. Secondly, through the additional employment that we have created, particularly by means of the new deal for the over-50s, an additional 900,000 people over 50 are at work now compared with 1997. That is good for the economy, but it is also good for them because it gives them longer to prepare for their retirement.
Mr. Paul Tyler: Will the Leader of the House give an explicit answer to the question about data protection to which he did not refer, and will he also give the House an undertaking that if the foot and mouth reports are out in time there will a debate on them in Government time before the recess?

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On Wednesday last week, the Leader of the House was frank and robust in giving information to the House in response to my question about the RMT union. At column 872, he referred to an "oath of loyalty". This is an extremely important issue. Can he now tell the House that he is prepared to put all his correspondence with the RMT in the Library, so we can assess its importance?
A most extraordinary statement was made this week—I think that it came from No. 10 Downing street—about ministerial responsibility for the police. It dealt with the most odd idea that, somehow or other, a London Education Minister can now "oversee" street crime initiatives in South Yorkshire and that an Arts Minister in the Lords can do the same thing for Avon and Somerset. How exactly are they going to report back to this House? What is their ministerial responsibility, and will they answer questions on the matter?
On 25 June, at column 769 of Hansard, the Secretary of State for Health gave an undertaking that the draft mental health Bill could be considered by a Special Standing Committee. Has the Leader of the House been able to make progress on that?
Finally, a consultation is apparently going on at present about arrangements for visitors from our constituencies touring the House along the so-called line of route. Consultants have been appointed, but it is not at all clear whom they are consulting. I challenge any hon. Member to say whether they have been consulted on this matter, which is extremely important to us. The hon. Member for Burnley (Mr. Pike) and I took a prominent part in a debate on this subject, but we have not been asked anything about the consultation. Have the House staff been consulted, and when will there be a debate on these very important proposals?
Mr. Cook: The hon. Gentleman asks me six questions, which is entirely legitimate. I shall try to answer all of them, but he will forgive me if I am necessarily brief in trying to deal with each one.
First, I am justly rebuked for not responding to the point about data protection. I am happy to say to the House that it remains our objective to try to lay a statutory instrument on the matter before the House rises. I am not sure whether it will be possible to debate it before that but it will be laid, which will clearly show that we are taking very seriously the important issue of ensuring that Members can discharge their representative functions.
On the foot and mouth reports, I cannot give an undertaking to have a debate before the House rises. Indeed, we have only two and a half weeks left and there is a lot of business to be done in that time, but I am quite sure that the House will wish to return to the matter at an appropriate time. It may find it better to do so once it has had time to digest and consider the reports in full.
I personally have no objection to putting in the Library exchanges with the RMT. For the avoidance of any doubt, I should perhaps say that we as a group acted collectively in responding to the letter from Mr. Crow, the general secretary of the RMT. The collective response was given by my hon. Friend the Member for Streatham (Keith Hill), who is with me on the Front Bench and has given me permission to say that his letter may indeed be placed in the Library. I hope that we can address that point, but there is no mystery and nothing sinister is involved. The correspondence will merely confirm what has been said on the record.
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On the role of Ministers in relation to a number of police constabularies around the country, the arrangement has been welcomed by the police themselves. Indeed, it stemmed from the recent meeting at No. 10, which one of the police constables in attendance described as the most successful and important meeting that they have had. It is very welcome that each of the major constabularies should have a direct link with Government. Of course, accountability in respect of the police force properly remains with the Home Office, which is well represented both in this House and the other place.
I am not aware of a proposal to put the draft mental health Bill before a Special Standing Committee. Standing Committees usually consider official Bills rather than draft ones, but we are of course very keen to ensure that pre-legislative scrutiny is carried out in respect of draft Bills and we will certainly be willing to consider ways in which that can be secured.
Lastly, on the feasibility investigation into a visitor centre, since the hon. Gentleman asked the question, I should say to the House that I have been consulted by those who are carrying out the feasibility study. I hope that, as Leader of the House, I spoke for many, if not all, in the House in the answers that I gave. The process is being taken forward on a very quick time scale, because we are keen to make progress. The report will, of course, come before the House of Commons Commission, on which all the parties here are represented. Plainly, before any major development could take place, the House would have to be consulted in some shape or form.
I end by asserting what I think many hon. Members already know: my strong view is that this place requires a proper interpretive visitor centre that places stress not on the extraordinary history or wonderful architecture of the building, but on our functioning as the heart of British democracy. Every distillery in Scotland now has a visitor centre; it is high time the House of Commons got one.
Mr. Derek Foster: My right hon. Friend will have seen the reports in the broadsheets saying that the Chancellor is to announce in his forthcoming statement the national roll-out of educational maintenance allowances. Coming from a region that has always had a relatively low staying-on rate beyond the age of 16, I know that such a measure would be widely welcomed. Will my right hon. Friend give us a debate on this in advance of the Chancellor's statement, so that we can show the Chancellor and the Government how widely welcome that policy would be?
Mr. Cook: I am grateful to my right hon. Friend for his endorsement of that policy and of the commitment that we are making. Indeed, there is already evidence that, where there is financial support for children over 16, there is a higher continuation rate after the school-leaving age. That is entirely welcome, not just for the individuals concerned but for the strength of our future work force and economy. It would be indelicate of me to offer a debate on the matter before the Chancellor makes his statement, but I am sure that he, too, will welcome the support that my right hon. Friend has promised once he has made that statement.
Sir George Young: Is the Leader of the House now able to answer the question that I put to him two weeks ago, and to give the House the

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date of the Chancellor's statement on spending? The right hon. Gentleman will know that the date of the Budget is announced many weeks in advance, and this statement will arguably be even more important than that, because it covers three years. Will the right hon. Gentleman give an assurance that, when the Chancellor makes that statement, he will be open with the House about all public expenditure, including contingent liabilities, and that he will not resort to some of the dubious accounting techniques used by the private sector which have caused such turmoil on the world markets?
Mr. Cook: I assure the right hon. Gentleman that nothing would ever be further from the mind of my right hon. Friend the Chancellor than a dubious accounting technique. On the date, the right hon. Gentleman quite properly said that he asked this question two weeks ago. I was asked it again last week, and I am happy to say that my answer is consistent: the statement will be made in July. It will not be made next week, but I anticipate that next week the right hon. Gentleman will be made a happy man by hearing the date announced.
Keith Vaz: The Leader of the House will be aware that tomorrow marks the 11th anniversary of the closure of the Bank of Credit and Commerce International by the previous Conservative Government. As well as many private investors, organisations such as Channel 4 and councils such as that of the Western Isles lost a considerable amount of money as a result of that closure. Will my right hon. Friend give us a debate on the way in which the Insolvency Service deals with liquidations? A liquidation that has lasted 11 years and cost millions of dollars—possibly $1 billion—in fees is a very long liquidation. Will he also welcome the positive steps being taken by the employees and the liquidators to ensure that this liquidation is brought to a speedy conclusion?
Mr. Cook: My hon. Friend has followed this case with great diligence and activity since it first—
Mr. Forth: We did not close it; it collapsed.
Mr. Cook: With the greatest respect, my hon. Friend was not in government at the time. The Government of the time are now, happily, sitting on the Benches opposite us. I congratulate my hon. Friend on the effort that he has put into trying to achieve justice for those who were left as creditors of the bank. It collapsed amid great complexity, which explains, to some extent, the length of time that this has taken. I understand that 60 per cent. of the outstanding debt to creditors has now been met, and that there will be further dividends in the course of the next 12 months. I believe that there has also been progress on the agreement between the former employees and the bank, and I think we would all agree that the former employees should always be at the front of the queue when there is a need to meet the outstanding debts from the collapse. It is a matter of great regret that the process has taken this long, but my hon. Friend knows better than anyone else in the House the complexity of the issues involved.
Michael Fabricant: In the light of the similarities, and also the differences, between the Prime
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Minister on the one hand and President Bush and Colin Powell on the other, can we have a debate before the end of the year on the enduring relationship between the United Kingdom and the United States? On this, the first 4 July since the tragic events of 11 September, will the Leader of the House join me in wishing all Americans—both here in the United Kingdom and in the United States—a safe and happy Independence day?
Mr. Cook: I am delighted to join the hon. Gentleman in wishing all our United States friends a happy and safe Independence day. I fully share his view that there is a strong, strategic partnership between the two countries, based on two fundamental realities: we are each other's biggest trade partner, and each other's closest ally. Those long-term strategic relationships will continue. The hon. Gentleman rightly points out that today is Independence day in the United States—independence, of course, from us—and in those circumstances we should also recognise that we are two sovereign, independent countries, and we should not be unduly disturbed if, from time to time, we pursue different policies around the world, while in no way undermining the powerful partnership that is so important to both of us.
Joyce Quin: Given that the Government have recently published their regional government White Paper, which I warmly welcome, and given that there is a consultation attached to that White Paper, which will finish at the end of August, may I urge my right hon. Friend to give the House an opportunity to debate the issue so that it receives a public airing during this important consultation period?
Mr. Cook: For one moment, I was concerned that my right hon. Friend was going to invite me to recall the House at the end of August for that debate. I cannot promise a debate before the House rises, because there is a very crowded schedule, but we produced the draft local government Bill precisely because we wanted a wide consultation, not just with Members but with the local government movement. That will inform any Bill that is brought before the House, which would, of course, be debatable here. In the meantime, the Local Government and the Regions Committee is carrying out its pre-legislative scrutiny, and I am sure that it would welcome the views of colleagues.
Dr. Evan Harris: In taking the Leader of the House back to the question of medical confidentiality and data protection, may I draw his attention to my membership of the British Medical Association medical ethics committee?
In the light of the comments of the BMA this week, which draw attention to the fact that confidential medical information is released by Members on both sides of the House—on the case of Rose Addis, for example, without it being clear that her explicit consent, and not just that of her family, was granted for that release—will the Leader of the House give further consideration to the question of guidance for Members to ensure that we stay on the side of not breaching medical confidentiality?
On data protection, does the Leader of the House accept that there will still be duties of medical confidentiality on bodies to which the Data Protection Act 1998 applies and that a very strong case would have to be made for

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exemptions for MPs from the need to get explicit, informed written consent from individuals before such information is handed over?
Mr. Cook: I would not presume to give hon. Members guidance on how they pursue their individual constituency cases. That will always be a matter for the judgment of Members, and it would be wrong to try to impose any other standard on them. The key lesson of the Rose Addis case is that, in the first place, there should be discussions with those who provide the medical treatment in the hospital, because it is those who provided the medical treatment in that case who were outraged by how it was misrepresented in the Chamber.
On data protection, I shall study carefully what the hon. Gentleman said, but I am not sure that I agree with it. If a constituent comes to us to raise a complaint about the local NHS trust, it is entirely proper for the Member to assume that the constituent wants the Member to do something about it. There is clearly an implied consent there.
The statutory instrument will put those NHS trusts and other parts of the public sector back in their pre-Data Protection Act position, so that Act will not be a barrier to them answering honestly and fairly the Member of Parliament's complaint. However, it will not remove any existing considerations on patient confidentiality and it will certainly not give us any licence to pry into matters that have not been raised with us by our constituents.
Mr. David Drew: Will my right hon. Friend consider holding a debate on relations with our colleagues in the European Parliament? He will be aware that another investigation into foot and mouth is going on, held by the European Parliament. Bizarrely, Members of the House are being contacted through the individual offices of MEPs and the investigation has been accompanied by various Conservative party press releases, which do not give us a lot of faith in its being independent. The witness sessions also seem to leave a lot to be desired.
Is it not about time that we understood that if an investigation is being held by another Parliament but in this country, there are certain rules by which it should abide so that we have genuine independence rather than the charade that seems to be taking place?
Mr. Cook: I can only say that I find it challenging enough to remain on top of the rules and conduct of this House, without attempting to master the rules and conduct of the European Parliament.
Mr. Andrew MacKay: Is the Leader of the House aware of the widespread public concern following the Quintin Hann case this week about the conduct of rape trials and consequent publicity in the newspapers and elsewhere? Would it not be appropriate for a Minister to come here next week and give an initial view on whether we can amend the law to ensure that defendants remain anonymous until their cases are over and they are found guilty?
Mr. Cook: I understand the hon. Gentleman's point, and the concern about the case that he mentioned. I know that a number of newspapers have highlighted similar anxieties on behalf of the defendant
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I do not think anyone would want the balance to be redressed by a removal of victims' anonymity, which is an important consideration. Whether all the press would welcome an extension of that anonymity to defendants is a matter of judgment, but I imagine some newspapers would express concern.
The matter should of course be kept under review. We shall be examining the law on sexual offences and sexual offenders in the coming days, and the hon. Gentleman may wish to pursue it in that context.
Dr. Stephen Ladyman: I accept that this may have to take place after the recess, but could we have a debate on selective education? My right hon. Friend may know from press reports that I had to commission a study on the performance and structure of secondary education in Kent, which is a purely selective county, when the county refused to do so. It shows some incredibly worrying trends. For instance a far higher proportion of grammar schools are exhibiting falling standards than we thought, and there is a polarisation of education in the county that is clearly detrimental to pupils. When will we have an opportunity to make clear in the House the fact that selection is a Victorian strategy for education which has no part in the current century?
Mr. Cook: I congratulate my hon. Friend on his energy and initiative. I understand that the study showed good results in some state schools which are not necessarily being matched in the selective system.
This is a matter to be pursued at local level, and I commend my hon. Friend on the way in which he has stimulated the process. I remain proud that I taught in a comprehensive and that my children went to one, and I believe they have served our nation very well.
Sue Doughty: As the Leader of the House will know, the world summit on sustainable development will take place in under two months, in August and September. During debates, we have regularly asked the Secretary of State for Environment, Food and Rural Affairs to come to the House and make a statement, especially following the negotiations in Bali that constituted the final preparatory committee meeting. Those negotiations seem to have ended in failure, particularly in relation to agricultural subsidies. Will the Leader of the House make every effort to persuade his right hon. Friend to make a statement before the end of the Session?
Mr. Cook: I fully understand the hon. Lady's concern about the forthcoming summit, and the great importance attached to it. Let me say in fairness to the Government that we have made it clear that we want it to be a success, and have taken a number of initiatives with the aim of ensuring that it addresses real issues and has a real outcome.
Since Bali we have had a further discussion in Brazil attended by my right hon. Friend the Deputy Prime Minister, who has had discussions with both South Africa, the forthcoming host, and Brazil, which hosted the last summit in Rio de Janeiro 10 years ago. I understand from my right hon. Friend that the talks made good progress, and I hope we are now on course for a successful summit and outcome. We will keep the House posted.
Mr. Tony Lloyd: May I remind my right hon. Friend of the strategy the Government

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adopted two years ago, "Revitalising Health and Safety", which was rightly adopted because of the worrying increase in the number of injuries and accidents in the workplace? He will know that Sir Richard Wilson, the Cabinet Secretary, is conducting a consultation exercise to determine where the Health and Safety Commission and the Health and Safety Executive will be in the system of government. May I suggest that the exercise should be conducted very rapidly? It is important for the HSE to have certainty. I think it should end up in the Department of Work and Pensions, although others may disagree. The most important thing, however, is strong ministerial commitment to the strategy and the HSE, so that we can reduce the £19 billion cost of injuries and accidents in the workplace and, of course, the number of human tragedies that result.
Mr. Cook: I congratulate my hon. Friend on having raised that issue. It has always been a mystery to me that, although accidents in the transport industry are tragic and very grave for those involved and make mega-headlines, our press and political system do not give the same attention to the steady and, over the year, much higher toll of accidents at work. The Health and Safety Executive is an important bulwark against that trend getting worse.
We are indeed carrying out a review of the machinery of Government in order to ascertain what is the best ministerial home for the HSE. In particular, we are keen to ensure that there is close collaboration between it and the Department for Work and Pensions, to secure the best possible help for the victims of injuries at work. I assure my hon. Friend that the outcome will guarantee very real ministerial commitment on what is an extremely important issue.
Mr. John Redwood: Yesterday, the Prime Minister called for an early debate on the euro. When will the Leader of the House accede to that wise and excellent request, and when will the Government tell the House their preferred entry rate of the pound against the euro?
Mr. Cook: Even as I rise, I can see television screens all over the City of London switching on to our exchanges. The right hon. Gentleman has been here long enough to know that we never comment on currency movements. When the Prime Minister requests a debate, I shall be happy to arrange it.
Mr. Tony McWalter: Does my right hon. Friend agree that it is disappointing that the Modernisation Committee will not be able to report in time to obviate the problems faced by all hon. Members because of the 82-day recess, which means that many of the issues that we want to raise on behalf of constituents who approach us when we are working in our constituencies during September will not be dealt with on the Floor of the House? Will he seriously consider whether it is sensible to have such an enormously long time during which we are unable to bring to the attention of the House matters of serious concern?
Mr. Cook: I have already expressed my concern about the length of the recess and I fully share my hon. Friend's
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anxiety—I worry about how I am to fill in all that time in those 82 days without the House to debate matters with. I have proposed that we should change the long recess in future years so that we return in September and do not have the three-month absence. I anticipate that the House will have the opportunity to vote on that some time soon after the recess. It is a matter for the House, but I think that it would be wise to agree to shorten the long recess.
Mr. Roy Beggs: I welcome the decision of the Leader of the House to include a debate on the intelligence agencies in next week's business. The Secretary of State for Northern Ireland came to the House in March, four months ago, to answer a private notice question on the break-in at Castlereagh police station. At that time, it was rumoured that one or more of the intelligence agencies had played a part in it, but since then suspicion has shifted to the Provisional IRA. Will the Leader of the House make time available for the Secretary of State to come back to the House before the summer recess and tell us whether it was indeed the Provisional IRA that was behind the break-in, and if so, what action he intends to take against its political representatives in the Northern Ireland Executive?
Mr. Cook: The hon. Gentleman will be aware that my right hon. Friend the Secretary of State will be answering questions next Wednesday, and I am sure that that matter will arise then. Obviously, a police and security service investigation has to be dealt with with care and confidentiality, so I cannot advise on the extent to which he will be able to answer the question.
Mr. David Chaytor: In view of the publication today of the White Paper on the Liabilities Management Authority, with the expected increase in cost of the management of our radioactive waste and the prospect that it opens up of the French state-owned nuclear company taking over the management of our nuclear liabilities, will my right hon. Friend find time in the very near future for a debate on the subject, in Government time, on the Floor of the House, so that all the implications of this crucial issue can be discussed?
Mr. Cook: My hon. Friend raises a very important issue. He will be aware that the Minister for Energy and Construction has nuclear liability very much at the front of his work programme, and I anticipate that he will make an announcement in the near future. As to when the House can debate these matters again, I cannot give a commitment before its rising for the summer recess. However, there are many ways in which my hon. Friend can pursue his well-founded and genuine concerns in the House.
Dr. Julian Lewis: May we have a debate in Government time on early-day motion 1490?
[That this House notes the comments of the Right honourable Member for Greenwich and Woolwich, the Minister responsible for electoral law, that "Any provisions on European Parliament elections laid down by the Council (including amendments to the 1976 Act) need to be ratified with an Act of Parliament in the UK"; further notes that the UK is, therefore, free to adopt any electoral system of its choosing for future elections to the European Parliament; believes that, by removing the vital

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link between each elected representative and their constituents and consequently encouraging voter apathy, proportional representation has not served the UK well; also notes with concern that proportional voting systems in other parts of Europe have allowed far-right parties to gain a foothold; and further believes that the UK's next elections to the European Parliament could, and should, be held under the First Past the Post electoral system.]
I ask for the debate in Government time because 49 of the 53 hon. Members who have so far signed the early-day motion happen to be Labour Members. However, if such a debate is too embarrassing for the Government, I suggest an alternative one on the more innocuous subject of squatters' rights. In such a debate, the Deputy Prime Minister could explain whether he intends to stay in his RMT-owned flat, now that he has correctly resigned from that union on a point of principle.
Mr. Cook: My right hon. Friend has the security of a long-standing tenant, and the hon. Gentleman would not be helping himself and his constituency by suggesting that all secure tenancies involve squatters and squatters' rights.
On the early-day motion to which the hon. Gentleman refers, I fear that there are another 1,500 among which I have to choose. If I were to find a day for debating early-day motions, I might just be tempted to include a half-day on the hon. Gentleman's suggestion—if he will agree that the other half-day can be spent debating an early-day motion drawing attention to the fact that the Conservative website has no entry under "policy".
Ms Julia Drown: Constituents, bus drivers and local police tell me of their serious concern about the increasing number of dangerous incidents involving airguns and replica guns. Will the Leader of the House find time for a debate on this issue? If we want to make communities safer, we must take further action to get these dangerous guns out of circulation.
Mr. Cook: I am well aware of the concerns expressed about incidents involving airguns. Indeed, my hon. Friend the Member for Sunderland, South (Mr. Mullin) has raised very real concerns, based on what happened to a constituent of his.
Mr. Forth: The Government killed the private Member's Bill.
Mr. Cook: We have a long way to go before we rival the right hon. Gentleman's record on killing private Member's Bills.
I shall certainly draw the attention of my right hon. Friend the Home Secretary to my hon. Friend's comments. Should the Home Office wish to introduce a measure, I would be happy to ensure that we provide time for it.
Mr. Patrick McLoughlin: I refer the Leader of the House to a point made by my right hon. Friend the shadow Leader of the House. Will the right hon. Gentleman reconsider the issue of questions to the Deputy Prime Minister? Since the reshuffle, the responsibilities of the Deputy Prime Minister and the number of questions put to him have increased massively—at least I hope they have, given that
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his departmental and ministerial team has increased massively, from three to five. According to the ordered questions available this morning from the Vote Office, there will be only 50 minutes available for questioning the Deputy Prime Minister between now and Christmas. Is that really acceptable for such an important Department?
Mr. Cook: I am sure that my right hon. Friend the Deputy Prime Minister will be gratified at the excitement shown in the House about the importance of questioning him for longer, and I have already taken on board the point that was made. I shall happily look at the question rota, but before making a move I need to know that I will not be inundated at a subsequent Thursday business statement with complaints about where such time has been taken from.
Mr. Harry Barnes: Is there not an important tradition of liberal adult education—advanced especially by organisations such as the Workers Educational Association and university extramural departments—that was influential in, for example, getting people into higher education before the days of excessive modules, tests and certification? That is exemplified by the life of Royden Harrison, whose obituary appeared in The Guardian this week. It was written by my former colleagues at Sheffield university, Michael Barratt-Brown and John Halstead, and should be read by all hon. Members. May we have a debate on how to build on, further and nurture the tradition that Royden exemplified?
Mr. Cook: I am happy to join my hon. Friend in paying tribute to Royden Harrison, who brought to his work an enormous conviction and a commitment to teaching as a vocation. That commitment and sense of vocation are important if we are to have a successful education system.
For four years, I was employed by the Workers Educational Association, so I am very susceptible to the suggestion that we should have a debate on its work and on the important contribution made by adult education. That contribution is especially notable in regard to people with ability who may not have succeeded first time around during their education in school. As a responsible Leader of the House, I fear I cannot indulge my wish for such a debate, but I fully endorse everything that my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) said about the importance of education.
Andrew Selous: Will the Leader of the House consider making time available to discuss the matter of enforcement in respect of the Child Support Agency? This is a serious issue for many hon. Members, and it is a matter of great concern that many mothers are unable to ensure payment from the fathers of their children. I know that the Select Committee on Work and Pensions is very concerned about that, and I believe that the matter should have an airing on the Floor of the House.
Mr. Cook: The hon. Gentleman will know that one of the first acts of this Government on taking office in 1997 was to reform the Child Support Act 1995, and ensure that we provided improvements. In my work in my constituency, I have noted a substantial decline in the number of people coming to me expressing concern—by contrast with what happened in the period immediately

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after the previous Conservative Government introduced the legislation, when surgery time doubled because of complaints about the CSA. However, no one would deny that problems remain, and we are keen to make sure that we keep the matter under review. Where sensible improvements can be made, we will certainly want to make them.
Dr. Nick Palmer: There are still frequent reports that the US Government are considering military intervention in Iraq, with a view to replacing the Government there. My right hon. Friend will be aware that that development would be very controversial in this House. There is a possibility that it might happen during the summer recess. Will my right hon. Friend find time for a debate on the matter, so that hon. Members can give their views before the House rises?
Mr. Cook: Well, I cannot promise such a debate before the House rises. I said earlier that we already face a very congested period, and I think that I have clocked up enough bids for debate in the past 45 minutes to keep us here well into September. However, if any such action were to be taken during the recess, I should be very surprised if hon. Members did not demand that the House reconvene to consider it. At present, I do not anticipate that any such action will be taken. As I have said repeatedly to the House, no decision has been taken, and none may ever be taken.
Mr. Alistair Carmichael: Will the Leader of the House make time available for a parliamentary first—a statement from the Advocate-General for Scotland? The right hon. Gentleman may be aware that Lord Nimmo Smith in the Court of Session yesterday ruled against the Advocate-General on the question of whether she should be involved in a case being brought in connection with the legislation outlawing fox hunting in Scotland. The right hon. Gentleman will know too that Lord Hardie ruled against the Advocate-General on the same point a few months ago.
Several hon. Members have never been clear about what the Advocate-General's job involves and, if Lord Nimmo Smith and Lord Hardie are correct, it now appears that the Advocate-General is among that number. Can we have a statement to clarify just what she is here for?
Mr. Cook: The hon. Gentleman speaks as a lawyer. I defer to his interest in the case. I am not sure that I would wish to encourage any of those of my hon. Friends who share the Government with me to come to the Dispatch Box to discuss an individual court case. I think that that would be ill advised, but I am sure that my hon. and learned Friend will note what the hon. Gentleman has said.
Paul Flynn: When can we have a debate on early-day motion 1538 about Hoopers Employment Law Publicity?
[That this House believes that the service offered by Hoopers Employment Law Publicity Ltd to redundant workers in the City of Newport is of little or no value; further believes that the publicity promised by the company for tribunal cases is vastly overpriced at
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£587.50 per worker and cannot be guaranteed; commends the splendid guidance and representation of 40 of those workers by the Newport Citizens Advice Bureau at no cost and urges other redundant people to seek advice and assistance from reputable groups such as the CABx.]
The firm wrote to recently redundant constituents of mine demanding £578 for a service which is likely to be of little or no value. Is not this particularly mean and despicable scam likely to impoverish people who are redundant and have already suffered severe financial losses, and who are in any case getting splendid advice from the Newport citizens advice bureau? Should we not advise any others who are redundant to avoid this particular company and seek advice from reputable organisations?
Mr. Cook: I am not aware of the company, so I cannot express a view on its merits or otherwise, but I am happy to endorse my hon. Friend's tribute citizens advice bureaux, whether in Newport or anywhere else. My hon. Friend asks for another debate on the subject. I remind the House that one of the great beauties of having a recess is that we have a half-day debate on the date of the recess when many of these matters can be pursued vigorously. My hon. Friend the Parliamentary Secretary will be delighted to give a full reply on that occasion.
Mr. Peter Duncan: Will the Leader of the House confirm that it remains Government policy that the next elections to the Scottish Parliament will be held on 1 May 2003? Can he take this opportunity to deny persistent rumours circulating in Scotland that that is a potential date for a euro referendum and would give the Presiding Officer the opportunity to vary the date of the next elections? Surely the Scottish people have every ability to pass decisive judgment on both the euro and the Scottish Executive on the same day.
Mr. Cook: The date for the Scottish parliamentary elections is not simply a matter of Government policy; it is a matter for legislation. I suspect it would require primary legislation to change the date and I know of no suggestions that it should be changed.
Kevin Brennan: I refer the House to last week's business questions. [HON. MEMBERS: "Where's the tie?"] Will the Leader of the House find time for a debate on early-day motion 1524 in my name, on the abdication of King Edward VIII?
[That this House believes in open government and the timely release of public documents of historical interest; notes recent allegations in the Press about the Nazi associations of Wallis Simpson from public archives in the United States of America-deplores the fact that people in Britain have to rely on overseas sources for information about their own history; and therefore calls for the immediate release of all currently closed United Kingdom public records relating to the abdication of King Edward VIII.]
Is my my right hon. Friend aware of the recent American press reports about the alleged Nazi links of Wallis Simpson? Despite the very appropriate sartorial tribute today from the shadow Leader of the House to our

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American friends, is it not a disgrace that we must rely on a foreign Government for information on our own history?
Mr. Forth: At least I'm wearing a tie.
Mr. Cook: I can fully understand why some of my hon. Friends feel that they cannot compete with the right hon. Gentleman's ties, so may have given up on the effort. My hon. Friend raises a matter of history of which I am woefully ignorant and into which I would not wish to be drawn. I can think of more important, more urgent and more strategically significant things that I would wish to know about in history than the matter to which he draws attention.
Richard Younger-Ross: The Leader of the House is no doubt aware that in the Easter recess the Secretary of State for Trade and Industry said that she intended to remove the beer orders. The DTI has since had a consultation which finishes on 5 July. I understand that there is now a draft statutory instrument on the subject. Considering the concerns of the independent brewers and of the Campaign for Real Ale that this will seriously damage the small, independent, brewing industry, will the Leader of the House ensure that there is a debate in this Chamber and that the SI is not just pushed through in Committee?
Mr. Cook: I shall happily draw to the attention of my right hon. Friend the hon. Gentleman's remarks. Personally I would be keen to make sure that we stay on side with those who support real ale and the many independent breweries. I am delighted that real ales are now more freely available in off-licences around the country. I would wish to see that continue rather than dwindle.
Mr. Andrew Robathan: When will the Government respond to the parliamentary ombudsman's grave criticisms of the Government today? The report on which the criticisms are based was brought out last autumn, yet there has been no response. This Parliament set up the parliamentary ombudsman and expects the Government to respond, but the Government will not make their response. It is all very well talking about freedom of information Acts, but should not the Government show them some real credence and deliver some access to information?
Mr. Cook: First of all, as the hon. Gentleman accurately and properly says, the report was laid today; it is therefore hardly surprising that at 1.24 pm we have not responded to it.
Mr. Robathan: When will you?
Mr. Cook: Not by 1.30 pm, I have to say. Of course we will respond to the ombudsman's report, as we always do. It is not a matter of my, or any other Minister's, having to stand here talking about the Freedom of Information Act 2000. We passed that Act. We have provided the greatest transparency and openness that this country has ever seen, and we have been far more transparent and open than the Conservative Government whom the hon. Gentleman supported.

Points of Order
1.25 pm
Mr. Graham Brady: On a point of order of which I have given you prior notice, Mr. Speaker. I want to ask a question on the theme of freedom of information and openness on the part of the Government, bearing in mind the gross discrepancy between a written answer that I received on 10 April from the Department for Education and Skills and the answer that I was given orally this morning by the Under-Secretary of State for Education and Skills, the hon. Member for Enfield, Southgate (Mr. Twigg). On 10 April, having asked the Government to set out how many teachers in maintained schools have been the victim of serious assaults by pupils or parents, I received this reply from the then Minister for School Standards, the hon. Member for East Ham (Mr. Timms):
"My Department does not collect this information."—[Official Report, 10 April 2002; Vol. 382, c. 195W.]
This morning, the Minister was able to give those figures, which he said were collected not by his Department but by the Health and Safety Executive. Can you give any guidance to Ministers about the importance of giving full and open responses to written questions, rather than being deliberately evasive and trying to hide the truth that we are trying to reveal in doing our duties in opposition?
Mr. Speaker: All I can say to the hon. Gentleman is that Ministers are expected to give full and open answers.
Mr. Eric Forth: But they don't.
Mr. Speaker: Ministers are expected to do so.
Michael Fabricant: On a point of order, Mr. Speaker. Today, for the first time in my experience, an hon. Member spoke in the Chamber without a tie. That may or not be the new standard. I know that from time to time you deal with the Chief Whips of the various parties, and it might be helpful if the dress code were made clear, especially to hon. Gentlemen, who have less ability to vary their clothing than hon. Ladies. If there is a change in dress code, that is fine by me. I will come in in my chinos and open-neck shirt—or maybe I will not. Either way, I should like to know what is expected of us. I have always thought that we had to wear a jacket and tie, at least.
Mr. Speaker: Since the hon. Gentleman asks, my feeling would be that jackets and ties are best for hon. Gentlemen.
David Burnside: On a point of order, Mr. Speaker. On 22 May I raised a point of order about the Secretary of State for Northern Ireland not having answered my question on defining the status of the IRA ceasefire. Following your good offices, he immediately replied to me. In his reply, he said:
"We are reviewing our procedures to ensure that we avoid such omissions in the future".
I welcomed that—and thank you for your help on the matter, Mr. Speaker.

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On 2 June 2002, I tabled another question to the Secretary of State:
"To ask the Secretary of State for Northern Ireland, if he will consult (a) the Northern Ireland Fireworks Association and (b) other interested parties"—
which he has a statutory obligation to do—about the Explosives (Fireworks) Regulations (Northern Ireland) 2002. In Northern Ireland, that is a matter of security importance, as well as being important in terms of the regulation and safe use of fireworks. I have received no answer from the Secretary of State. Could you give me some guidance, Mr. Speaker, as to how I should take the matter further? If the Northern Ireland Office's performance in refusing to answer or avoiding questions continues, we might as well have a recess all year round.
Mr. Speaker: I would advise the hon. Gentleman to seek advice from the Table Office.
Mr. Bill Wiggin: On a point of order, Mr. Speaker. My question concerns my constituent Mr. Phillips. I have already delivered to your office a catalogue and diary of the relevant events. My constituent's sheep were culled in a contiguous cull and his farm was sprayed with FAM30—a biocide, which happened to kill his worms, into which he had diversified. Because of that, perhaps the Ministry is taking his case lightly, although he is claiming £50,000 in compensation.
I have written to the Minister on countless occasions. I have received acknowledgements of my letters, but I have not received a reply to the kernel of the problem: Mr. Phillips's compensation claim. Indeed, I wrote again on 17 January, and finally on 24 January, my letter was acknowledged and a full reply promised. On 7 March, I tabled a written question to ask when that full reply might be forthcoming.
Finally, at the end of June, I received a reply, saying that, because my constituent had gone to a solicitor as he had received no reply, the Minister felt that the case was sub judice. I cannot think of anything else that I can do to encourage the Ministry to reply to my letters, and I wondered whether you, Mr. Speaker, might have any pearl of wisdom that you might wish to cast before us.
Mr. Speaker: I am concerned that the hon. Gentleman has not received a reply. Of course he has put the matter on the record, but he could apply for an Adjournment debate—perhaps that would bring the Minister to the Floor of the House.
Dr. Julian Lewis: On a point of order, Mr. Speaker. The whole House was very concerned
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about the inadequate sentence in the rape case that my hon. Friend the Member for Isle of Wight (Mr. Turner) raised in questioning the Solicitor-General. In her reply, the Solicitor-General explained that there were two possible courses of action: to extend the period of time in which application could be made to review the inadequate sentence, or to publicise the existing period of time. I do not know whether you noticed, Mr. Speaker, but in her answer the right hon. and learned Lady said that she inclined towards the former. However, she then went on to explain at length why she was recommending the latter. That was extremely confusing to the House on a matter of considerable concern, and I wonder whether the record can be clarified in any way.
Mr. Speaker: It could well have been a slip of the tongue by the Solicitor-General. I think that that was the case.
Mr. Andrew Robathan: On a point of order, Mr. Speaker. You will correct me if I am wrong, but I understand that the parliamentary ombudsman is a servant of the House and is appointed by the House of Commons Commission. He certainly owes his allegiance to the Houses of Parliament. In the autumn, he placed a report in the Library because he could get no response from the Government. He has still received no response. Can you or the House of Commons Commission give him any advice on how he could get a response when he is carrying out his duties on behalf of the Houses of Parliament?
Mr. Speaker: The ombudsman is an Officer of the House, but he is not appointed by the House of Commons Commission. The hon. Gentleman must keep pursuing the matter. If he feels disappointed by any reply regarding that matter that he has received today or from any Minister, he must keep pursuing it.

BILL PRESENTED
  WASTE (No. 2)
  Mr. Desmond Swayne presented a Bill to grant additional powers to local authorities in England and Wales for the enforcement of controls and for the prosecution of offences relating to the unauthorised or harmful deposit, treatment or disposal of waste and the transporting of controlled waste without registering; to amend the Control of Pollution (Amendment) Act 1989 and Part II of the Environmental Protection Act 1990; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 19 July, and to be printed [Bill 162].
Orders of the Day

  Finance Bill
  [2ND ALLOTTED DAY]
  Not amended in the Committee and as amended in the Standing Committee, further considered.

  Finance Bill
    New Clause 23

      ROLLOVER OF CASH FROM ISAs AND TESSAs INTO SECURITIES
      '.—(1) There shall be inserted into the Individual Savings Account Regulations 1998 (S.I. 1998, No. 1870) following Regulation 9 (qualifying investments for an insurance component)—
      "Qualifying transfers from cash component to stocks and shares component
      9A.—(1) This regulation permits investments originally made under the cash component of an account or under a TESSA only account to be transferred into the stocks and shares component of an account.
      (2) Where on or after 1st October 2002 an account investor makes an election under this regulation in respect of an account then—

      (a) the amount of the qualifying investments then held under the cash component of the relevant account as is specified in the election; or

      (b) the amount of the funds then held under a TESSA only account as is specified in the election,

      may be applied in purchasing investments which are qualifying investments for a stocks and shares component, within the meaning of regulation 7.
      (3) The funds applied as mentioned in paragraph (2) shall be regarded as having always been validly made into the stocks and shares component of an account and any amount so transferred shall not count towards the subscription limits in regulation 4(2) and (3)(a) as the case may be.
      (4) An election made under this regulation shall be made in writing to the relevant account manager and must fulfil the conditions set out in paragraphs (5) and (6) below.
      (5) The election must satisfy such requirements under regulation 12 as would apply to an application to subscribe for a stocks and shares component of a new account.
      (6) The election must specify—

      (a) the cash component of the account or TESSA only account, as the case may be, out of which the transfer is to be made; and

      (b) the amount of funds to be transferred (not to exceed the maximum amount then held in that account).

      (7) The election made as described in paragraph (2) above shall be irrevocable."
      (2) This section comes into force on 1st October 2002.'.— [Mr. Flight.]
      Brought up, and read the First time.
      1.33 pm
      Mr. Howard Flight: I beg to move, That the clause be read a Second time.
      New clause 23 is a straightforward and down-to-earth probing suggestion. PEPs, followed by ISAs, have been very successful in attracting large numbers of people, extending down into society, to the savings habit. The structure of ISAs has been perhaps more complicated than many people might like, although that structure was chosen for good reasons.
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      As hon. Members will know, mini and maxi ISAs are available. People can invest £3,000 in mini ISAs, all of which can be in cash, and a maximum of £3,000 cash can be invested in maxi ISAs. Historically, people also have cash savings under TESSAs. When those cash savings mature after five years, the interest can no longer be part of the contract, but the principal element can be carried forward into a cash ISA. Perhaps I should have started by declaring an interest in accordance with my entry in the register, although the matter that I am raising is purely practical.
      The issue is that once people lock into the cash element of a savings plan, they cannot move out of cash into securities. In the current economic climate people will understandably be cautious and will want to stay in cash. As times move on, however, and as markets go up and down, people may want to move into securities. Indeed, the original purpose of PEPs and ISAs was to encourage investment in securities and not just in cash. The cost to the Revenue can be more in relation to cash, as the amount of tax-free interest is usually greater than the level of dividends paid on equities.
      The new clause simply proposes that people who have their cash element in mini and maxi ISAs, and in maturing TESSAs, should, if they wish, be able to invest that cash in securities, but not revert to cash in the future. Although, in principle, it might appeal to people to be able to move all the time between cash and securities, that poses both tax and administrative problems.
      The House will be aware of the need to boost savings in this country; perhaps the savings rate should not be boosted by too much in the next few years, as that may cause a recession, but it has fallen to too low a level. I accept, however, that we face difficult and out of the ordinary circumstances in the financial markets.
      I repeat that the new clause is a simple, probing amendment. I understand that there may be some degree of support for the idea in the Treasury and in the Revenue, and it would not amount to an additional cost to the Exchequer—if anything, it might be to the Revenue's advantage. I hope that the Minister will respond supportively. I candidly do not know whether the new clause is perfect or imperfect; I expect that it is imperfect, as it is on a difficult, technical matter. What it proposes, however, is eminently clear.
      Rob Marris: I welcome the fact that the hon. Member for Arundel and South Downs (Mr. Flight) has at last put forward an amendment that might—I stress the word "might"—have a beneficial effect on many of my constituents, because the issue affects many of them. I shall be interested to hear what the Financial Secretary to the Treasury says about it.
      Mr. Flight: I thank the hon. Gentleman for his kind comments. May I make the point that a healthy and strong British economy is of enormous benefit not just to all of his constituents but to every other individual? There are many issues that may appear to be macro rather than micro ones, but they are all about the efficient working and prosperity of our economy.
      Rob Marris: Those are interesting words from the hon. Gentleman, as I am not sure that they will be a sequitur to what I am about to say. I sat through most of the debate

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      on the Finance Bill yesterday, the last four new clauses put forward by the hon. Gentleman—new clause 10 on attribution of gains to members of non-resident companies; new clause 11 on capital allowances for expensive cars; new clause 12 on investment companies and trading companies; and new clause 13 on stamp duty exemption on disposal of substantial shareholding—appeared to deal with taxation issues for the very rich, which do not affect many of my constituents. When I put that to the hon. Gentleman last night, he said:
      "These clauses have been proposed by the non-political and unbiased Chartered Institute of Taxation".—[Official Report, 3 July 2002; Vol. 388, c. 357.]
      I have no doubt that they were. Interestingly, two debates later, the hon. Member for Kingston and Surbiton (Mr. Davey) moved new clause 19. He said, at column 361—
      Madam Deputy Speaker (Sylvia Heal): Order. Perhaps the hon. Gentleman could now move on to discuss new clause 23.
      Rob Marris: May I briefly finish my point, Madam Deputy Speaker? The new clause moved by the hon. Member for Kingston and Surbiton was entitled "Simpler Tax Assessment for Low-income Pensioners", and it was also suggested by the Chartered Institute of Taxation. Was this new clause suggested by the institute or does the hon. Member for Arundel and South Downs take up the institute's proposals only when they deal with the very rich?
      Mr. Flight: That is a pretty poor line of attack. I do not think that my track record illustrates what the hon. Gentleman is seeking to imply. This new clause covers a matter that has been discussed widely within the Revenue and other bodies. It has nothing to do with the Chartered Institute of Taxation.
      Rob Marris: I am grateful for that clarification. Perhaps we can now move on to debate this important subject.
      The Financial Secretary to the Treasury (Ruth Kelly): I am pleased that the hon. Member for Arundel and South Downs (Mr. Flight) recognises the important contribution that ISAs make to our savings strategy. I recognise his long-standing interest in these issues, and I know that he takes a keen interest in the workings of the ISA market. He has outlined the reasons for the new clauses, which would affect ISAs and TESSA-only ISAs. From what he said, I gather that its essence would be to allow tax-privileged cash savings to be converted into stocks and shares ISAs through what would essentially be a one-way valve. It would not then be possible to convert the equity investments back into cash.
      The hon. Gentleman mentioned current market conditions and the encouragement to cash investors to diversify their savings into equities. As he recognised, there are difficulties with the drafting of the new clause. It is a little unclear what it is precisely intended to achieve. However, I have listened with interest to his proposals. As ISAs are such an important part of our savings strategy and have already extended the opportunity to save to new
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      groups of people—particularly those on lower incomes, women and previous non-savers—we consider the rules governing ISAs extremely carefully and keep them constantly under review.
      We would have to consider the issues and implications relating to the new clause. However, I assure the hon. Gentleman that we are prepared to consider, in principle, his proposals along with other changes to the ISA regime, which may become possible when the review of the polarisation regime concludes following the Financial Services Authority's recent consultation paper. We take these issues seriously and we want to encourage savings. ISAs form a major plank of our savings policy, so we will keep the issues under review.
      Mr. Flight: I thank the Financial Secretary for her comments. Do not take too long, however, because many citizens in the constituency of the hon. Member for Wolverhampton, South-West (Rob Marris) might think, as and when markets recover, that it was a pity that they were totally locked into cash savings. I am glad that the Government are interested in pursuing the idea in principle. I made it clear that it was a probing new clause, so I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 24

      SIMPLIFYING MARRIED COUPLES ALLOWANCES
      '(1) Section 257A of the Taxes Act 1988 shall be amended as follows—
      (2) In subsection (2) the amount specified for the year 2002–03 shall be £5,535.
      (3) Omit subsections (3) and (4).
      (4) In subsection (6), after the words "entitled to relief under this section", leave out from "this section shall have effect" to the end of the subsection, and insert—
      "he shall be entitled to the relief under this section as if he had been married throughout the year of assessment.".'.—[Mr. Edward Davey.]
      Brought up, and read the First time.
      Mr. Edward Davey: I beg to move, That the clause be read a Second time.
      The hon. Member for Wolverhampton, South-West (Rob Marris) may be pleased to learn that the new clause results from another suggestion made by the Chartered Institute of Taxation. It was not suggested by the institute's Low Incomes Tax Reform Group, which was the genesis of the two new clauses that I moved last night, but by the institute's campaign for simpler taxation. This evolving campaign has a manifesto for tax simplification, and this new clause derives from the proposals for personal tax quick wins. It does not really distinguish between the wealthy and the not-so-wealthy, because both groups would potentially gain. One change in new clause 24 would lead to a gain of the princely sum of £7 per annum for pensioners aged between 65 and 74. That is not a huge amount, although £7 is arguably worth more to someone on a low income than to those on a higher income.
      1.45 pm
      The institute is keen on the changes in new clause 24 because it wants to simplify the tax system in simple

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      ways—for example, by reducing the number of boxes on the self-assessment form that drops through so many letter boxes every year, by reducing the number of civil servants who have to wade through the forms and by saving time in the private sector. Every year, we need to consider how we can simplify the tax system, and new clause 24 contains two simple proposals for advancing that agenda.
      Both proposals relate to the married couples allowance, which was recently restricted to 10 per cent. and has now been restricted to pensioners and those who were born before a certain year. That strengthens the case for reform, because the allowance is effectively withering on the vine. While it remains with us, it makes sense to make its administration as simple as possible. At the moment, different rates for the married couples allowance apply to different ages of pensioner. Someone aged between 64 and 75 in the fiscal year 2002–03 has a married couples allowance of £5,465, which is £70 lower than the rate for pensioners aged 75 or above, who receive an allowance of £5,535.
      New clause 24 seeks to equalise the allowance at the higher rate. That is not a very generous change, because it would be worth only £7 a year, but it would mean that the coding that pensioners receive would not need to be changed. Savings would also be made in the production of the self-assessment form. The CIT suggested that it would remove at least one box from the form. Coupled with other simplifications that the institute suggests, 22 boxes and one whole page could be removed from the tax form and guide. This proposal is a small step towards meeting that objective.
      The second proposal is perhaps more interesting. At the moment, if a pensioner who is eligible for married couples allowance marries, he or she can receive only a proportion of the allowance in the year of the marriage. That necessitates a complicated calculation that requires five boxes on the form and half a page in the tax guide to explain. That is a waste of time. It is an unnecessary calculation, because there cannot be that many pensioners who marry aged 66 or above.
      The amount that the Exchequer would lose by the proposed change would be tiny. The new child's tax credit will not have an in-year restriction, so the change would bring the remaining age-related married couples allowance in line with the Government's legislation elsewhere and would be a slight bonus for pensioners getting married. It could not be described as giving a huge tax incentive to pensioners to rush out and wed, but it would remove complications and give them a little extra to spend on their honeymoon. I hope the Paymaster General will take the new clause in the spirit in which it is intended, so that we simplify the tax system for elderly people.
      The Paymaster General (Dawn Primarolo): I am afraid that I have to disappoint the hon. Gentleman on his plans to alter the married couples allowance. We have discussed the systematic approach to simplifying the system before on the Floor of the House. For example, yesterday we debated making it easier for pensioners and others to comply with their obligations in the self-assessment system. I am a little surprised at his piecemeal approach to a project that he expects the Government to approach systematically and thoroughly. His suggestions are out of context.
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      It is important to remind the House of the status of the married couples allowance. The hon. Gentleman said that it sits with the priorities of Government policy, but it is difficult to understand how that can be justified. The married couples allowance has been abolished for the vast majority of married couples for good reasons. He is confusing two things: the approach to simplifying the tax system where possible, and whether it is good policy to amend an allowance that has been abolished for everyone else.
      The previous Government reduced the value of the married couples allowance for a number of years before it was phased out. In the end, the allowance did not merely support marriage; it could also be given to single parents and unmarried people who were living together. That reflected the piecemeal approach of altering and fine tuning a particular relief, which is what the hon. Gentleman wants to do.
      The Government replaced the married couples allowance with the child's tax credit and other changes to the tax system to support families with children. They decided that it was correct to protect the position of elderly people who were in receipt of the higher age-related married couples allowance. It is not right in principle to go beyond the commitment to maintain the position of those pensioners in the name of simplification, and I do not think that the new clause would provide us with that in the long run.
      A line has to be drawn and logic applied. I would hardly describe having two rates of the married couples allowance which are dependent on age as complex, although I listened carefully to what the hon. Gentleman said about the form and the boxes in the self-assessment requirement. However, that goes back to the principle, which we discussed again yesterday, that it is more important for the Revenue and the Government to approach the problem of the form's complexity by asking whether we are asking for information that we do not require and whether we can remove people completely from the tax system. It is not a matter of tinkering around with the tax relief itself.
      The hon. Gentleman rightly said that it is a relatively low-cost proposal. It is. However, I remind him that most pensioners already do not pay tax. The Government's approach to the question of support for pensioners has been extremely clear, not only in the raising of allowances but in the introduction of pension credit and minimum income guarantee, and in the numerous other ways that the Government are supporting pensioners, especially the very poorest. We are now spending an extra £6 billion a year from April as a result of the tax and benefit changes that we have made.
      I entirely appreciate and accept the principle behind the hon. Gentleman's point, which is to continue to keep the pressure on the Government to simplify the system wherever we can, but I think that he falls into the very trap into which he argues that the Government should not fall: that is, to tinker for the short term without taking a strategic approach to wider questions.
      With regret, I have to say to the hon. Gentleman—I know that he sincerely advocates this line—that I am not prepared to recommend to my right hon. and hon. Friends that they should accept the clause. If there were a vote, I would ask them to vote against. I believe that what I said last night is a much better way to approach the matter,

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      namely, the work that the Inland Revenue has undertaken with TaxAid, with the Low Incomes Tax Reform Group and the Working Together Group. That is the best way forward, and the new clause is not.
      Mr. Flight: The point that others have raised before becomes all the more important given the pension crisis and the fact that many people will not get the pensions that they expected. There are many who are already drawing pensions who will not get the increases that they expect.
      Certainly people older than 50 or 55 have saved for their old age, to the extent that they have made such savings, on the assumption that the married couples allowance would be there when they retired. When it was taken away rather arbitrarily and cut at the age of those born in 1935, that recognised that principle but a great raft of people were excluded who had still been making their retirement plans and their saving plans on the reasonable assumption that the allowance was a main part of the income tax system.
      When the Government think about their fundamental reforms, perhaps they would have to give a different—
      Dawn Primarolo: Perhaps the hon. Gentleman would explain why the Conservative Government reduced significantly the value of the married couples allowance. If the principle that he is now advocating applied, why did it not apply when the Conservatives were reducing the allowance from 40 per cent. to 10 per cent?
      Mr. Flight: That to which I think the Minister refers essentially did not affect the great majority of retired people. In relation to the tax credit, it affected those who were younger and earning more money. Secondly, for better or worse, the changes were phased.
      For those who have retired and for whom the married couples allowance was higher, that allowance was a material factor in terms of their disposable incomes. When the Minister finally got rid of the allowance, that significance was acknowledged in terms of increasing support for children, although people had to wait a year. The argument was that the moneys were better paid to children than to parents. For those who were retired, and particularly for the great bulk of people in the middle, I am not aware that there was any substitute for the loss of the married couples allowance.
      2 pm
      Perhaps the reform which the Minister plans to look at would need a different name to save face. Given the great fears and concerns of huge numbers of people over 50 about the value of their pension on retirement, the Minister should look at the problem urgently to alleviate it and honour the basis on which people saved for their retirement. It may be worth while incorporating the new clause in such reform, as there is little logic in having an allowance which changes slightly according to age, as the hon. Member for Kingston and Surbiton (Mr. Davey) pointed out. However, the more important aspect of the proposal is the restoration of something analogous to the older persons' marriage allowance.
      Mr. Edward Davey: I welcome the fact that the Paymaster General repeated her assurance of last night
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      that the Government will undertake a wide-ranging review to try to see whether the elderly person's experience of filling in tax returns and dealing with the Inland Revenue and other tax authorities could be improved by making the forms simpler and fairer. I am sure that her comments will be welcomed by people outside the House who read them.
      I obviously disagree with the Paymaster General's description of the new clause 24 as "tinkering" with the allowance. She graciously pointed out last night that I have pursued these issues for a number of years, so I hope she accepts that I am a little impatient for the overall review and a full examination of the problem. I do not apologise for a proposal of modest chunks, which would not be costly for the Exchequer. I am trying to get the Government to move a bit further as we wait for the review.
      It is a good idea to conduct a review with a wide-ranging remit, as tax simplification at all levels is about a process, not an event. We therefore need to come back to it every year and find out whether we could dispense with things that would help us to get rid of a box on the form, a page in the guidance notes or pages in the tax statute books.
      Dawn Primarolo: I concur with the hon. Gentleman, who has a long track record of pursuing the issue. As I said at 12.15 am today, we should ask first whether everyone in the self-assessment system should be part of it. If not, we should remove them from the system. Secondly, we should consider whether the form is too complex and asks for too much information or information that is not required. Consequently, we may find that changes may need to be made to the relief itself. The process is continuous—I have no qualms at all about admitting that, and have no complaints about the hon. Gentleman continuing to press me on the matter.
      I hope that I have clarified the Government's approach and explained why the new clause would make an unacceptable change to the principle of the married couples allowance. However, I agree entirely that there is not a big bang solution to the issue.
      Mr. Davey: The Minister and I agree about a lot. I accept her assurance from last night that the approach is to remove as many people as possible from the self-assessment system. However, we can envisage a different way of assessing tax for people on lower incomes. We can imagine two types of self-assessment forms, such as many other countries have. However, I do not disagree with the thrust of the Minister's remarks, given our present tax and pay-as-you-earn systems. The process underlying her thinking is correct.
      I still do not accept the Paymaster General's argument that new clause 24 is inconsistent with the Government's chosen path. It is consistent with that. I do not seek to change the Government's stated policy on married couples allowances, for which we voted. It was an overdue reform and while one can quibble about the way in which the Government went about it, particularly the delay, it was certainly needed and got money to children, which was an aim that we shared. I do not seek to go back over that ground.

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      The Government said stay on the statute book and that it will wither away over the years, but while it is there—it will be with us for two or three decades—it should be made as simple to operate as possible, and that was the intention behind the new clause.
      I know that the Paymaster General will not accept it today, but I have raised the issue. I have also raised the more strategic issue that the Chartered Institute of Taxation, like other tax professional bodies, is considering this area of simplification and coming up with a series of quick win, simple measures which the Government could embrace, thereby gaining political advantage. If the Government take up the institute's ideas, it will do not just the tax system but the Government good.
      As the Paymaster General has been generous in explaining how she sees Government policy unfolding, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn

    Clause 3

      DUTY ON BEVERAGES MADE WITH SPIRITS TO BE AT SPIRITS RATES
      Mr. Christopher Chope: I beg to move amendment No. 1, in page 2, leave out lines 20 to 25.
      This is a debate about flavoured alcoholic beverages, otherwise known as FABs, but it might better take its title from another late-night beverage, Horlicks, because the Government have made a total horlicks of this provision in the Budget.
      Clause 3 introduces a tax increase of 64 per cent.— the highest percentage increase—which is about a 12p duty increase on a standard bottle of one of these beverages. The Government justified that extraordinarily high increase in the explanatory notes on clause 3, which states that between 1999 and 2001
      "the standard pub retail price"—
      of spirit-based coolers—
      "rose by around 60 pence per bottle, despite the level of duty falling in real-terms. Tax as a proportion of the retail price is now lower for spirit-based designer drinks than for any other type of alcoholic drink in both the on and off-trades."
      Based on that information, the Government said:
      "it is no longer possible to justify the concessionary duty treatment for this particular class of spirit drinks."
      In Committee, I and other members of the Committee challenged the accuracy of the facts used by the Government to justify this massive increase in duty, which, incidentally, was introduced without any consultation with the industry. The problems that have followed would not have occurred if there had been proper consultation. I accept that the Government did not deliberately get the figures in a mess, but they were negligent because, had they had proper discussions, there would not have been this misunderstanding.
      Mr. Tom Harris: The hon. Gentleman is right to criticise the Government for lack of consultation, provided that he is attacking the 1996 Budget statement, which also introduced a major increase in tax on those drinks without any prior consultation. I do not recall the hon. Gentleman complaining about that.
      Mr. Chope: Sadly, I was not in the House in 1996. If I had been, I am sure that I would have been alert to
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      that matter. As the Committee heard, when I represented Southampton, Itchen—I did so until 1992—one of the largest manufacturing plants producing the beverages was situated there. It has also emerged, however, that the current incumbent, the Minister for Policing, Crime Reduction and Community Safety, last year opened a new production facility in the area and praised the company and work force in respect of the extra jobs that would be created by the investment, but did not say anything at that time about the fact that the Government had it in mind to change the duty regime and threaten that investment.
      On 18 June, the Economic Secretary finally admitted that the Government were wrong and that the Opposition were right about whether there had been an increase of 60p or 20p in the retail price of coolers between 1999 and 2001. He said that in 1999–2001, the retail price of coolers went up not by 60p, but by an amount
      "closer to the 20p figure suggested by the industry."
      I understand that the exact figure is 20.7p—20p is almost spot on—rather than 60p. That represents a compound interest increase of about 6 per cent. over three years. To put it in context, that is slightly less than the average increase in council tax over the same period.
      Rob Marris: I wonder whether this could be a question of mixing apples and oranges. The explanatory notes refer to the standard pub retail prices, but is the hon. Gentleman referring to the retail price in, say, a shop, or to a pub retail price? As we all know, pub retail prices can be more expensive and can increase at a greater rate.
      Mr. Chope: I am referring, as the Economic Secretary was, to the retail prices cited in the explanatory notes. The Economic Secretary has admitted—as a member of the Committee, the hon. Gentleman will have received a copy of the letter that he sent to me—that the note in question was incorrect in its reference to an increase of 60p, and that the figure is closer to the 20p suggested by the industry.
      After being forced to admit that there was such a gross error in the calculations, any decent Government would have apologised to the industry, consumers and Parliament. They would have withdrawn the proposal and deferred a decision on any tax increase while reassessing the impact of the evidence. However, I am sorry to say that that is not what the Government did; indeed, that is not the way in which they operate. The Economic Secretary had the gall to say in his letter to me:
      "I want to assure you that—while regrettable—this error does not affect our rationale for this change or its estimated impact."
      What a contrast with what the Chief Secretary, formerly the Financial Secretary, told us in Committee on 14 May:
      "One of the key issues for consideration was whether the coolers market could support the removal of the concession. Our evidence showed that it could. There is nothing improper about considering whether a market can bear the burden of taxation. Between 1999 and 2001, the consumption of coolers more than doubled, and during that period, the average pub price of a bottle of coolers rose by 60p per bottle. Some hon. Members with peerages suggested that the increase was closer to 20p, but I have to tell them that the figure of 60p comes directly from an analysis of market research data by the Office for National Statistics. Customs has discussed that figure with the industry and I am confident that agreement will be reached to clear up confusion on the part of Opposition Members."—[Official Report, Standing Committee F, 14 May 2002; c. 47.]
      The right hon. Gentleman referred to the increase in price as a key issue for consideration, but when the figure was proved incorrect, what did the new Minister say'? He did

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      not say that he was sorry and that he would go back to the drawing board. Instead, he is still blustering away, arguing that nothing has changed and that the previous arguments still apply.
      2.15 pm
      Mr. Edward Davey rose—
      Rob Marris rose—
      Mr. Chope: I give way to the hon. Member for Kingston and Surbiton (Mr. Davey).
      Mr. Davey: I want to back up the strength of the hon. Gentleman's argument by saying that, when the Committee questioned the Minister closely on the underlying rationale behind this change in the tax regime, he relied heavily on this piece of evidence. We were surprised, because there had been a change in the underlying rationale of the taxation of alcohol in other areas. The hon. Member for Christchurch (Mr. Chope) is right, and the fact that the Government have been found out suggests that this has nothing to do with rational taxation, and more to do with a raid on people's purses.
      Mr. Chope: The hon. Gentleman is absolutely right. It is apparent that the Government are motivated by prejudice rather than reason. That is their driving force, and, as so often happens, that prejudice is tinged with a certain amount of arrogance—the inevitable ingredient of this Government.
      Rob Marris: The hon. Gentleman quoted the Minister referring in Committee—I recall being there—to one of the factors. The other factor referred to in the explanatory notes is the chief medical officer's report of 2001, so the hon. Gentleman's suggestion that there was only one reason for the Government adopting this approach does not sit well with what we were told in Committee, or what is said in the explanatory notes about the health aspect of the issue.
      Mr. Chope: I have not said that that was the only justification; there were two justifications. But, in Committee—the hon. Gentleman was there; he will remember this—the Minister had to back-pedal pretty rapidly on the assertion that there was some reason for raising the tax on this particular kind of drink, when it became apparent that certain lagers and ciders with a much higher alcohol content were less highly taxed. The Minister moved back from the position of saying that the provision could be justified as a way of addressing binge drinking. Indeed, the Government's argument in Committee was that the consequence of this steep increase in tax would not involve any reduction in the consumption of coolers.
      Mr. Davey: The hon. Gentleman is exactly right. The health argument put forward by the Government was put in total disarray by the fact that they had been arguing for a reduction in tax on cider. According to the chief medical officer—and evidence, no doubt, from all our
      424
      constituencies—cider is a drink most associated with teenagers and with binge drinking. So the Government's coherence on this issue is, frankly, non-existent.
      Mr. Chope: I am grateful to the hon. Gentleman for reinforcing that point. Much as the hon. Member for Wolverhampton, South-West (Rob Marris) may try to argue the Government's case, I am afraid that the Government abandoned that particular ground in Committee, relying heavily on the 60p increase over the three-year period. Now, when that has been found to be totally wrong, they have resorted to bluster and other arguments.
      Rob Marris: Will the hon. Gentleman give way?
      Mr. Chope: Not at the moment; I must make some progress. I am sure that other hon. Members want to contribute to the debate, and the hon. Gentleman will have the chance to make his own speech later.
      The Government are still saying that the Budget duty increase will have little impact on the demand for coolers. That is why their argument that this would be a good way of addressing binge drinking is obviously ludicrous. A number of people who produce these drinks have written letters of complaint. One such letter comes from Bill Oddy, the managing director of a relatively small firm, employing about nine people. He says in his letter:
      "We believe that this decision is unfair to the consumer and, since these products are price sensitive, will have a seriously adverse effect on our industry and those related to it, including producers, bottlers and glassware manufacturers, many of them SMEs"—
      small and medium-sized enterprises—
      "who have enjoyed UK-based success in recent years bringing jobs and prosperity here. This success countered a large influx of foreign bottled beers in the late 1980s which saw UK bottlers and glass makers hit a low point."
      He goes on to say how disappointed he was that this measure was brought in without any consultation.
      In Committee, the Minister argued that the concerns of the industry were of no moment whatever. He quoted Karen Salters of Beverage Brands, using her words to make this assertion:
      "I do not think that anyone could argue that the measure will be an inhibitor on the business and will cost jobs."—[Official Report, Standing Committee F, 14 May 2002; c. 45.]
      We were slightly dumbfounded by that, so we looked up the whole quote. We found that Karen Salters said quite the reverse of what the Minister attributed to her, as she described the measure as wholly unjust and said that it would
      "stimulate a shakeout in the trade as smaller."
      producers
      "will not be able to weather the increased duty demands".
      So, Karen Salters was arguing that the measure would put the small businesses under pressure, if not out of business, but the Minister used her words, selectively quoted, to justify quite the reverse proposition. I am afraid that it is not good enough for the Government, who should act responsibly, to address serious arguments by using selective quotes that really are critical of their policy and try to turn them round so that they seem supportive.
      We are arguing that the Government should make a fresh start with the issue, because there is confusion between what is a spirituous drink and a made wine.

      425
      There was no problem over that before, because both products were in the same tax category. Now, people will be able to use spirits as a base, mix them with wine and market them without having to pay the higher tax set out in clause 3.
      To do so, however, people will have to agree their formulae and recipes with Her Majesty's Customs and Excise. I shall not trouble the House with the detail, but I have here a letter from Steve Nicholson, who is in charge of alcohol and tobacco regimes, which gives guidance on the excise duty liability of spirit-based drinks after the Budget. It runs to about three and a half pages. The guidance is incredibly vague, and because it is so vague it introduces uncertainty—indeed, it is oppressive for those who are trying to invest in the industry. That is another powerful argument for the Government going back to the drawing board, holding discussions with the industry and trying to achieve a just and fair result.
      The Government have asserted fairness, consistency and consultation, and that is what we think they should deliver on the issue. Paragraph 7 of the Customs and Excise 2002 Budget press release says:
      "The Government has taken consistent steps to deliver a fairer balance in the burden of taxation falling on different alcoholic drinks and on different types of drink producers."
      They can be true to those words only by withdrawing clause 3.
      Mr. Iain Luke: Although I support the Government proposal and oppose the Opposition amendment, I speak as an individual and as a concerned parent who has served locally as a councillor for a long time. I have seen the trends—perhaps not those in other parts of the country, but those in Scotland, where alcopops or coolers have become the predominant drink taken up by youngsters. The Treasury explanatory notes show that uptake of alcopops has doubled, but I do not believe that the increase in cider uptake, especially in my part of the world, is comparable. Such arguments are fatuous.
      During my time in Committee, I came to hold the hon. Members for Arundel and South Downs (Mr. Flight) and for Christchurch (Mr. Chope) in very high regard. I believe that they are decent, polite and knowledgeable adversaries, but this advocacy of the amendment on behalf of the drinks industry does them and their party no particular credit.
      Chris Grayling: What the hon. Gentleman says about alcopops in his part of the world may be true. None the less, does he accept the comments about cider made in Committee by the hon. Member for Kingston and Surbiton (Mr. Davey) and by me? Does the hon. Gentleman not accept that a strategy that cuts duty on one type of strong drink and raises it on another has no consistency, either in protecting industries or in protecting young people?
      Mr. Luke: I am happy with my view on drinks taxation: it should be uniform and it should be high to discourage a large uptake, although I enjoy a beverage occasionally. Specifically, drinks targeted on and taken up by the young must be addressed, so I hope that those on the Front Bench take on board the points made by the hon. Gentleman and review the matter. I am setting out my concerns about the situation in my area.
      The Economic Secretary to the Treasury (John Healey): On the objection raised by the hon. Member for Kingston and Surbiton (Mr. Davey) and echoed by the hon. Member for Epsom and Ewell (Chris Grayling), does my hon. Friend recognise that the chief medical officer's annual report for 2001 expressed concern about binge drinking and young drinkers? It also mentioned designer drinks, but it did not mention cider.
      Mr. Luke: I acknowledge those points.
      Mr. Tom Harris: Like me, my hon. Friend was present for the first couple of Committee sittings. He may recall the hon. Member for Christchurch (Mr. Chope) pointing out that alcopops are a particular favourite drink of members of Christchurch Conservative club. My hon. Friend may also remember that the hon. Member for Buckingham (Mr. Bercow) subsequently pointed out the 11.7 per cent. swing from the Liberal Democrats to the Conservatives in the Christchurch constituency at the 2001 general election. Does my hon. Friend agree that there may be a causal link between those two facts?
      Mr. Luke: I am not particularly aware of the political situation in the Christchurch constituency, but I remember the informative and polite exchange between the hon. Member for Christchurch and me on that specific issue. I shall return to it, because certain elements must be addressed.
      The Government's proposals have merit in several areas and they deserve universal support in the House. First, there is an anomaly in the tax regime that should be addressed. Secondly, given how such drinks are marketed and targeted, specifically at the younger drinker, there are moral and health imperatives to introduce this tax change. Any price increase may restrict access and discourage the purchase of what is a particularly addictive drink by the most vulnerable, young and often under-age consumers.
      I was brought up in a strongly Presbyterian household, where the consumption of strong drink was frowned upon, but I must confess that I have lapsed from those strict religious leanings. [HON. MEMBERS: "Shame."] One has to be open and honest in the House. I have become more of an irregular Episcopalian in later years. Like many of my generation, I was introduced to the demon drink through the accepted convention in Scotland at that time—sipping lager and lime.
      That mixed drink was commonly how young, inexperienced drinkers came to grips, for better or for worse, with the initially harsh taste of alcohol on the younger, more innocent palate. Alcohol was made much more acceptable by the use of a sweetener, and a dash of lime cost one old penny. Times have moved on, however, and the market has become more sophisticated. Young people today have much more money than the youngsters of my generation could ever have dreamed of.
      Rob Marris: Because of the Labour Government.
      Mr. Luke: Yes. More young people, often at an early age, are encouraged to take a drink whose true strength is often masked by sweetness, which is the basis of alcopops or coolers. Such drinks can have an impact on a younger person's health owing to greater intake prompted by sweetness and accessibility, and that can cause serious damage in later life.

      427
      The habit is strengthened through the fashionable image given to such drinks by high-profile marketing campaigns undertaken by the producers of the commodity who are promoting opposition to the tax change. Again, that marketing is aimed solely at the young and the partying life that they are so desperate to enjoy as an introduction to adulthood.
      2.30 pm
      Life for the young, if it is anything, is an experience to be enjoyed to the full, with little thought for the consequences of their lifestyle. Ageing can be a difficult process, but it can also be educative. The hon. Member for Christchurch entertained us in Committee by revealing the drinking habits of members of the Christchurch Conservative club, where, he said,
      "every hour is a happy hour".—[Official Report, Standing Committee F, 14 May 2002: c. 33.]
      It seems, however, that in that club the ageing and educative process I have described stands still.
      It also emerged from our Committee debate on clause 3 that the favourite alcopop—or cooler, as it is described in the Christchurch Conservative club—is a drink called WKD.
      Mr. John Bercow: I feel duty bound to defend the honour and integrity of the upstanding—even after their consumption of alcohol—members of the Christchurch Conservative club. Will the hon. Gentleman confirm that he is not suggesting that my hon. Friend the Member for Christchurch (Mr. Chope) secured the result he secured because of the inactivity of those members, who were busily engaged in another pursuit, and that he recognises that they were celebrating the success of their efforts to increase his majority?
      Mr. Luke: That was an entertaining intervention. The formula succeeded in Christchurch, and may indeed be adopted by other Conservative clubs to ensure success at the next general election.
      In Committee my right hon. Friend the Chief Secretary was quick—perhaps too quick—to let us know that another name for WKD was Wicked. As that libation is based on a mixture of vodka and Irn Bru, the more the Christchurch Conservative club consume it, the more the people of Scotland—where Irn Bru originates—will celebrate. Given the state of the Conservative party nationally, other Conservative clubs may seek to emulate the Christchurch club's intake of WKD. Irn Bru, which purports to be made of girders, could go a long way towards stiffening the Conservatives' performance at the next general election.
      The more serious comments I made in Committee still stand, despite the changes contained in the explanatory notes and mentioned in letters from Ministers. Whatever the price increases involved, such are the sales of coolers—promoted through the "happy hours" more commonly found in student union and trend-setting bars than in the Christchurch Conservative club—and the heavy discounts to encourage overall sales and increase bar takings, that those changes will have no significant impact on jobs in the company that produces them. The Opposition's main argument against the tax increase was that jobs would be lost.
      428
      Those who take time to study local off-sales will find that nine times out of 10 there is a cut-price offer on drinks of this kind. Marketing techniques and fashionable images aimed at the young have led them to start drinking, which often—although not always—results in a catalogue of disorderly acts, especially among young females. Drinkers in that particular group have also fallen prey to a range of well-documented drink problems in later life, which may lead to criminal activity and health problems.
      It is outrageous of the Conservative party to support an amendment of this kind. The proposal should be seen for what it is. It is not accepted by the vast majority of the population, I think it deserves little sympathy in the House, and I am sure that it will find little sympathy among my many constituents. I urge my hon. Friends to vote against it.
      Mr. Edward Davey: It is tempting to follow the speech of the hon. Member for Dundee, East (Mr. Luke) with accounts of my own revelries as a youngster, or of revelries I have observed in various political clubs across the country. I am sorry not to share my memories of those enjoyable events, but I want to take up some of the serious points that the hon. Gentleman made so well.
      It is true that there is a problem of binge drinking. It is true that many youngsters have a bit more money in their pockets than they had a few years ago, and—partly owing to advertising campaigns—are choosing to spend it on alcohol. I think, however, that alcohol problems extend across the age spectrum. Having spoken to magistrates and police in my area, I understand that alcohol is the drug behind most offences, especially violent offences, both in the home and on the streets. I am sure that the same applies in all constituencies, and I am sure that members of all parties accept that it is a problem.
      What we must decide now is how to tax alcohol in general. There are many types of alcohol, as our debates have revealed. I did not know that this "Wicked" drink existed, and I certainly did not know that it contained girders or Irn Bru. I now know that there is a huge variety of alcoholic drinks that people can purchase.
      Parliament, the Government and Customs and Excise really must develop an overall approach to alcohol taxation. I see no consistency or coherence in the present policy. Should there be changes in the retail price? The Government initially said that that was behind the strategy. Should the tax be based on alcohol content, on competition between different products, or on the impact of smuggling or cross-border shopping? There are a number of possibilities.
      The decision on which drinks should be taxed most heavily might indeed be based on health findings, as the hon. Member for Dundee, East suggested, but the Government have produced no such rationale. They have made no clear statement since their election in 1997. They have not said "Here we have a number of alcoholic products, which are varied and which are changing. Here is our overall strategy for taxing alcohol." Theirs has been a piecemeal, reactive approach, driven more by revenue-raising considerations than by anything connected with such matters as health.
      I accept that the hon. Member for Dundee, East has good intentions, but I think it unfair to castigate the hon. Member for Christchurch (Mr. Chope) or, indeed, to describe other Conservatives who oppose the present

      429
      position as "outrageous". We share the hon. Gentleman's concerns, but we are trying to probe the Government. We are asking for consistency and coherence in an important policy area.
      I shall not repeat points made by the hon. Member for Christchurch, which appeared in briefings I received from the industry and which the hon. Gentleman made very well. Let me, however, refer to an example on which he touched but did not dwell. Changes such as this have an impact on the market. The associations are worried because they fear that people may switch from coolers to wine-based drinks. As a result of a ministerial decision, Customs and Excise is having to grapple with the business of labelling and categorising, and with trading standards in the regulations, when dealing with different types of drink. When the market was taxed uniformly, some of those problems did not arise. Now Customs officers must—as the hon. Member for Christchurch pointed out—deal with such matters as the difference between spirituous drink and made wine. Even from the briefings that I have received, I know that the issue is incredibly complicated. It is not yet clear what form the regulations will take. They are still under discussion because the matter is so complicated.
      When such a tax change is made, with all its implications for the market, one has to question its root cause. The Government have not given us a good reason for this change. I am not suggesting that it is easy to achieve consistency in this area, but I am pushing the Government for it, because if we do not get it we will have little changes every year that will affect relative prices, market shares and investment decisions.
      We want to avoid such uncertainty. If we want a thriving drinks industry, which I am sure the hon. Member for Dundee, East wants, despite his reservations about some of the outcomes, we have to allow it to plan and invest and take strategic decisions. Unless there is a long-term strategy on the taxation of alcohol, problems will arise. We are worried because the Government have not shown that. That is why it is right for us to probe them further on the matter today.
      John Healey: This has been a useful short debate, although it reopens discussion on a matter that was extensively dealt with in Committee. The amendment is designed to achieve the same result as Opposition Members wanted then: to allow spirit-based coolers—or alcopops, or FABs, as the hon. Member for Christchurch (Mr. Chope) called them—to retain the concessionary duty treatment that they have enjoyed since 1988 and to continue to be treated in the same way as low-alcohol wines.
      It is clear that the pretext for reopening the argument is the fact that since we debated the clause in Committee, the Office for National Statistics has uncovered a mathematical error in the data that it supplied to Customs before the Budget, concerning increases in the retail price of coolers between 1999 and 2001. I was disappointed by what the hon. Member for Kingston and Surbiton (Mr. Davey) said. He is normally rational and moderate, but to describe the Government as being "found out" on this, when it was a genuine technical error, is a gross overstatement.
      I wrote to all Committee members and made a statement to them concerning the error. I do not propose to trawl over all the details again here, other than to
      430
      remind Opposition Members that the most important thing that I said in my letter and my statement—it could have saved us all a lot of time this afternoon if they had taken greater note of it—was quoted only partially by the hon. Member for Christchurch. My letter said:
      "I want to assure you that—while regrettable—this error does not affect our rationale for this change or its estimated impact. The fact remains that—over a period when consumption of coolers was rising rapidly—their retail price was also rising well above inflation. This suggests that the Budget duty increase will have little impact on demand for coolers, but will ensure that they are taxed at a fair rate rather than retaining their previous concessionary duty treatment."
      For the benefit of Opposition Members, let me explain as simply and clearly as I can why the mathematical error makes no difference whatever to the rationale for the measure proposed in the Bill. Contrary to the assertion of the hon. Member for Christchurch, its justification does not rest on data that have proved to be incorrect.
      Whether the increase is 20p or 60p, the fact remains that, over a period when the consumption of coolers was doubling, the retail price was rising at a rate well above inflation. That suggests to us, and to independent market analysts, that demand for coolers is very inelastic. That suggests, in turn, that we can remove the concessionary treatment of coolers without damaging the growth of the sector. That was one of the key issues that we stressed in Committee.
      2.45 pm
      Mr. Chope: The Minister says that it makes no difference whether the increase is 20p or 60p. How, then, does he explain what the Financial Secretary—now Chief Secretary—said in Committee, at column 47, where he informed us that one of the key issues for consideration was whether it was 60p or 20p? He rejected our arguments for 20p and said that it would definitely be 60p.
      John Healey: The hon. Gentleman intervened too soon and did not hear out the rest of my argument. One of the key issues, as my right hon. Friend indeed said in Committee, was whether the proposed increase in the duty rate would damage the growth of the sector. The evidence demonstrates, regardless of whether the rise is 20p or 60p, that consumption rose at the same time as prices were rising well above the rate of inflation. The sector can withstand this duty increase, and it is appropriate to make such provision.
      Mr. Edward Davey: Is the Minister now saying that the Government's taxation of alcohol is driven by an underlying rationale of price elasticities and that, where the price is deemed to be most inelastic, they believe that they can get away with shoving up the tax? Is the rationale that they will charge what they can get away with?
      John Healey: No, it is not the underlying rationale, but it is one of the factors that we take into account when considering duty changes.
      Mr. Bereow: I have to say to the Minister, who is as honest and upright a fellow as a member of this Labour Government can be, that no one believes a word of it. Everyone believes that Governments tax as much as they can get away with at any particular time.

      431
      On a lighter note, whatever the implications of the tax regime for the elasticity of demand for coolers, there is likely to be some increase in the demand for them this afternoon, in the light of the splendid news that Tim Henman has won his match.
      John Healey: I do not know whether Mr. Henman will celebrate by consuming alcopops this evening, but I am sure that the whole House will welcome his victory.
      The hon. Member for Kingston and Surbiton pressed me on the narrow point concerning the first part of the justification and rationale for the duty increase, which is, as I stress again, that in our judgment removing the concessionary treatment, whether the price increase is 20p or 60p, can be done without damaging the growth of the sector.
      Secondly, whether the increase is 20p or 60p, the fact that coolers remain the fastest growing sector in the drinks market, and now rank alongside cider as the fourth largest sector, renders obsolete the original rationale for granting them the concessionary status alongside other obscure niche products.
      Thirdly, it seems unfair that a vodka and orange mixed at the bar should be taxed differently from a vodka and orange drink pre-mixed in the bottle. It seems especially unfair that such a bottled drink should bear a lower rate of tax as a proportion of its average price than any other alcoholic drink.
      Whether the increase was 20p or 60p made no difference to our deliberations on whether it was right to retain concessionary treatment for a drink with links to binge drinking among young people, about which the chief medical officer has raised specific concerns. In a thoughtful speech, my hon. Friend the Member for Dundee, East (Mr. Luke) echoed those concerns in respect of his constituency, as did the hon. Member for Kingston and Surbiton in a moderate, measured and rational contribution.
      I genuinely hope that, based on my explanation, Opposition Members can see why the 20p–60p issue does not affect our decision that the concessionary treatment for coolers can no longer be justified, and does not warrant reopening the debate. Having said that, I am glad that this debate has enabled me to alert Opposition Members to what industry experts themselves have said about the strength of the coolers market—just as my right hon. Friend the Chief Secretary to the Treasury did in Committee when he was responsible for this clause. On 1 June, a full 18 days after our debate in Committee, Drinks International said:
      "New figures reflect the relentless march of pre-mixes in the UK on-trade. Of the top 5 premium packaged drinks…in value terms, 3 are spirits-based mixes."
      On 31 May, Off Licence News said that suppliers of "Flavoured alcoholic beverages"—one of the many alternative names for coolers—
      "are looking forward to a buoyant summer, despite duty on spirits mixers being raised recently. The sector was worth £1.4bn in 2001. This year it is estimated that the category will be worth £1.6bn."
      Although I shall not stray into mentioning individual brands, I am aware that one leading cooler manufacturer has recently forecast turnover for 2002 of £50 million—a full two hundred and fiftyfold growth in just four years.
      432
      I conclude by assuring all hon. Members that although we regret reproducing the erroneous 60p figure—which I have been happy to correct on becoming aware of it—its revision makes not one bit of difference to the rationale for the change or its estimated impact. This measure supports the steps that we have consistently taken to deliver a fairer burden of taxation on different alcoholic drinks and different producers. These drinks are spirits, they are marketed as spirits and they should be taxed as spirits. Any justification that may once have existed for affording them concessionary status no longer applies. They are well established in the marketplace and they can pay their fair share of duty—at a rate that properly reflects the nature of the alcohol that they contain. Doing so will not damage the future growth of their sector. On that basis, if the amendment is pressed to a vote, I urge the House to reject it.
      Mr. Chope: We are not convinced. The Government argued that there was significance in the 60p retail price increase—and if they did not think that, why did they include it in the explanatory notes to clause 3? Why did it feature in Budget day press releases, and why did it feature so prominently in the arguments deployed in Committee by the then Financial Secretary? Only one month after being pressed on the matter, the Government admitted that the figures on which their argument was based were incorrect. They should therefore go back to the drawing board and discuss with the industry the introduction of a rational and consistent taxation regime that fits with other alcoholic beverage duties. It appears that this type of beverage is being discriminated against badly, compared with some of the more potent lagers and ciders. That is a significant factor.
      The hon. Member for Dundee, East (Mr. Luke) made an entertaining speech and tried to draw me back into our debate in Committee on Christchurch Conservative club. The relevant extracts from Hansard have done wonders for the reputation of the club's secretary. The hon. Gentleman made some serious allegations about the use of flavourings in such beverages to appeal to the underage market, but that practice was put to an end by the Portman Group, which worked closely with the Government. In Committee, Ministers and the then Financial Secretary accepted that, thanks to the work of the Portman Group and other responsible people in the industry, hooches are no longer on the market. The hon. Gentleman's arguments may have been relevant at one time, but they are certainly out of date now. We are talking about a growing, successful and responsible part of the drinks industry, and it is a great pity that the Government have chosen to discriminate against it in this way.
      Question put, That the amendment be made:—
      The House divided: Ayes 136, Noes 276.

      Division No. 291]

      [2.55 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Bercow, John

      Allan, Richard

      Beresford, Sir Paul

      Amess, David

      Boswell, Tim

      Arbuthnot, Rt Hon James

      Bottomley, Peter (Worthing W)

      Atkinson, David (Bour'mth E)

      Brady, Graham

      Atkinson, Peter (Hexham)

      Brake, Tom

      Bacon, Richard

      Brazier, Julian

      Baron, John

      Brooke, Mrs Annette L

      Beggs, Roy

      Burnett, John

      433

      Burns, Simon

      Luff, Peter

      Burnside, David

      MacKay, Rt Hon Andrew

      Burstow, Paul

      Maclean, Rt Hon David

      Burt, Alistair

      McLoughlin, Patrick

      Butterfill, John

      Malins, Humfrey

      Cable, Dr Vincent

      Maples, John

      Calton, Mrs Patsy

      Mawhinney, Rt Hon Sir Brian

      Cameron, David

      Mercer, Patrick

      Cash, William

      Mitchell, Andrew (Sutton Coldfield)

      Chapman, Sir Sydney (Chipping Barnet)

      Moore, Michael

      Moss, Malcolm

      Chope, Christopher

      Murrison, Dr Andrew

      Clappison, James

      Osborne, George (Tatton)

      Cotter, Brian

      Page, Richard

      Cran, James

      Paice, James

      Curry, Rt Hon David

      Prisk, Mark

      Davey, Edward (Kingston)

      Redwood, Rt Hon John

      Davies, Quentin (Grantham)

      Reid, Alan (Argyll & Bute)

      Djanogly, Jonathan

      Rendel, David

      Duncan, Peter (Galloway)

      Roe, Mrs Marion

      Evans, Nigel

      Ruffley, David

      Fabricant, Michael

      Russell, Bob (Colchester)

      Fallon, Michael

      Sanders, Adrian

      Field, Mark (Cities of London)

      Selous, Andrew

      Flight, Howard

      Shephard, Rt Hon Mrs Gillian

      Flook, Adrian

      Simmonds, Mark

      Forth, Rt Hon Eric

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

      Foster, Don (Bath)

      Spelman, Mrs Caroline

      Francois, Mark

      Spicer, Sir Michael

      George, Andrew (St Ives)

      Spink, Bob

      Gibb, Nick

      Spring, Richard

      Goodman, Paul

      Streeter, Gary

      Grayling, Chris

      Stunell, Andrew

      Green, Damian (Ashford)

      Swayne, Desmond

      Green, Matthew (Ludlow)

      Swire, Hugo

      Greenway, John

      Syms, Robert

      Grieve, Dominic

      Tapsell, Sir Peter

      Hammond, Philip

      Taylor, Ian (Esher & Walton)

      Hancock, Mike

      Taylor, John (Solihull)

      Hayes, John

      Taylor, Matthew (Truro)

      Heald, Oliver

      Tonge, Dr Jenny

      Heath, David

      Tredinnick, David

      Heathcoat-Amory, Rt Hon David

      Trend, Michael

      Turner, Andrew (Isle of Wight)

      Hermon, Lady

      Tyler, Paul

      Hoban, Mark

      Tyrie, Andrew

      Hogg, Rt Hon Douglas

      Waterson, Nigel

      Holmes, Paul

      Watkinson, Angela

      Horam, John

      Whittingdale, John

      Hughes, Simon (Southwark N)

      Wiggin, Bill

      Jack, Rt Hon Michael

      Wilkinson, John

      Jenkin, Bernard

      Willetts, David

      Key, Robert

      Williams, Roger (Brecon)

      Knight, Rt Hon Greg (E Yorkshire)

      Willis, Phil

      Lamb, Norman

      Wilshire, David

      Lansley, Andrew

      Yeo, Tim

      Laws, David

      Young, Rt Hon Sir George

      Leigh, Edward

      Younger-Ross, Richard

      Lewis, Dr Julian (New Forest E)

      Liddell-Grainger, Ian

      Tellers for the Ayes:

      Lidington, David

      Mrs. Cheryl Gillan and Mr. Laurence Robertson.

      Lilley, Rt Hon Peter

      NOES

      Abbott, Ms Diane

      Banks, Tony

      Adams, Mrs Irene (Paisley N)

      Barnes, Harry

      Ainger, Nick

      Bennett, Andrew

      Allen, Graham

      Berry, Roger

      Anderson, Rt Hon Donald (Swansea E)

      Best, Harold

      Betts, Clive

      Anderson, Janet (Rossendale)

      Blackman, Liz

      Armstrong, Rt Hon Ms Hilary

      Blears, Ms Hazel

      Atkins, Charlotte

      Blizzard, Bob

      Austin, John

      Borrow, David

      Bailey, Adrian

      Bradley, Rt Hon Keith (Withington)

      Baird, Vera

      Bradshaw, Ben

      434

      Brennan, Kevin

      Gerrard, Neil

      Brown, Rt Hon Nicholas(Newcastle E & Wallsend)

      Godsiff, Roger

      Goggins, Paul

      Brown, Russell (Dumfries)

      Griffiths, Nigel (Edinburgh S)

      Bryant, Chris

      Griffiths, Win (Bridgend)

      Buck, Ms Karen

      Grogan, John

      Burden, Richard

      Hain, Rt Hon Peter

      Burgon, Colin

      Hall, Mike (Weaver Vale)

      Cairns, David

      Hall, Patrick (Bedford)

      Campbell, Alan (Tynemouth)

      Hamilton, David (Midlothian)

      Campbell, Ronnie (Blyth V)

      Hanson, David

      Caplin, Ivor

      Harris, Tom (Glasgow Cathcart)

      Casale, Roger

      Healey, John

      Caton, Martin

      Henderson, Doug (Newcastle N)

      Cawsey, Ian

      Henderson, Ivan (Harwich)

      Challen, Colin

      Hepburn, Stephen

      Chapman, Ben (Wirral S)

      Heppell, John

      Chaytor, David

      Hesford, Stephen

      Clapham, Michael

      Hewitt, Rt Hon Ms Patricia

      Clark, Dr Lynda (Edinburgh Pentlands)

      Heyes, David

      Hill, Keith

      Clark, Paul (Gillingham)

      Hinchliffe, David

      Clarke, Rt Hon Tom (Coatbridge)

      Hodge, Margaret

      Clarke, Tony (Northampton S)

      Hood, Jimmy

      Clelland, David

      Hope, Phil

      Clwyd, Ann

      Hopkins, Kelvin

      Coaker, Vernon

      Howarth, Rt Hon Alan (Newport E)

      Coffey, Ms Ann

      Howarth, George (Knowsley N)

      Cohen, Harry

      Hoyle, Lindsay

      Coleman, Iain

      Hughes, Beverley (Stretford)

      Connarty, Michael

      Hughes, Kevin (Doncaster N)

      Cook, Frank (Stockton N)

      Humble, Mrs Joan

      Cooper, Yvette

      Hurst, Alan

      Corbyn, Jeremy

      Illsley, Eric

      Cox, Tom

      Jackson, Glenda (Hampstead)

      Cranston, Ross

      Jamieson, David

      Crausby, David

      Jenkins, Brian

      Cruddas, Jon

      Jones, Helen (Warrington N)

      Cryer, John (Hornchurch)

      Jones, Jon Owen (Cardiff C)

      Cummings, John

      Jones, Martyn (Clwyd S)

      Cunningham, Jim (Cov'try S)

      Joyce, Eric

      Cunningham, Tony (Workington)

      Kaufman, Rt Hon Gerald

      Curtis-Thomas, Mrs Claire

      Keen, Ann (Brentford & Isleworth)

      Davey, Valerie (Bristol W)

      Kidney, David

      David, Wayne

      King, Ms Oona (Bethnal Green)

      Davidson, Ian

      Kumar, Dr Ashok

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

      Ladyman, Dr Stephen

      Lawrence, Mrs Jackie

      Dawson, Hilton

      Laxton, Bob

      Dean, Mrs Janet

      Lazarowicz, Mark

      Dhanda, Parmjit

      Lepper, David

      Dismore, Andrew

      Lewis, Terry (Worsley)

      Dobbin, Jim

      Liddell, Rt Hon Mrs Helen

      Dobson, Rt Hon Frank

      Lloyd, Tony

      Donohoe, Brian H

      Llwyd, Elfyn

      Doran, Frank

      Love, Andrew

      Dowd, Jim

      Luke, Iain

      Drew, David

      Lyons, John

      Drown, Ms Julia

      McAvoy, Thomas

      Eagle, Angela (Wallasey)

      McCabe, Stephen

      Edwards, Huw

      McCartney, Rt Hon Ian

      Efford, Clive

      McDonagh, Siobhain

      Ennis, Jeff

      McDonnell, John

      Etherington, Bill

      McFall, John

      Ewing, Annabelle

      McKechin, Ann

      Farrelly, Paul

      McKenna, Rosemary

      Field, Rt Hon Frank (Birkenhead)

      Mackinlay, Andrew

      Fisher, Mark

      McNamara, Kevin

      Fitzpatrick, Jim

      MacShane, Denis

      Flint, Caroline

      Mactaggart, Fiona

      Flynn, Paul

      McWalter, Tony

      Foster, Rt Hon Derek

      Mahmood, Khalid

      Foulkes, George

      Mahon, Mrs Alice

      Gapes, Mike

      Mallaber, Judy

      Gardiner, Barry

      Mandelson, Rt Hon Peter

      George, Rt Hon Bruce (Walsall S)

      Marris, Rob

      435

      Marsden, Gordon (Blackpool S)

      Shipley. Ms Debra

      Marshall, Jim (Leicester S)

      Simon, Siôn

      Martlew, Eric

      Singh, Marsha

      Meacher, Rt Hon Michael

      Skinner, Dennis

      Meale, Alan

      Smith, Rt Hon Andrew (Oxford E)

      Merron, Gillian

      Smith, Angela (Basildon)

      Michael, Rt Hon Alun

      Smith, Geraldine (Morecambe)

      Milburn, Rt Hon Alan

      Smith, John (Glamorgan)

      Mitchell, Austin (Gt Grimsby)

      Smith, Llew (Blaenau Gwent)

      Mole, Chris

      Soley, Clive

      Moran, Margaret

      Spellar, Rt Hon John

      Morgan, Julie

      Starkey, Dr Phyllis

      Morris, Rt Hon Estelle

      Steinberg, Gerry

      Mountford, Kali

      Stewart, David (Inverness E)

      Mudie, George

      Stewart, Ian (Eccles)

      Munn, Ms Meg

      Stinchcombe, Paul

      Murphy, Denis (Wansbeck)

      Stoate, Dr Howard

      Murphy, Jim (Eastwood)

      Sutcliffe, Gerry

      Naysmith, Dr Doug

      Taylor, Rt Hon Ann (Dewsbury)

      Olner, Bill

      Taylor, Ms Dari (Stockton S)

      Organ, Diana

      Thomas, Gareth (Clwyd W)

      Osborne, Sandra (Ayr)

      Thomas, Gareth (Harrow W)

      Palmer, Dr Nick

      Thomas, Simon (Ceredigion)

      Pearson, Ian

      Tipping, Paddy

      Perham, Linda

      Todd, Mark

      Picking, Anne

      Touhig, Don

      Pickthall, Colin

      Truswell, Paul

      Pike, Peter

      Turner. Dennis (Wolverh'ton SE)

      Plaskitt, James

      Turner, Neil (Wigan)

      Pond, Chris

      Twigg, Derek (Halton)

      Pope, Greg

      Twigg, Stephen (Enfield)

      Pound, Stephen

      Tynan, Bill

      Prentice, Ms Bridget (Lewisham E)

      Vaz, Keith

      Prentice, Gordon (Pendle)

      Vis, Dr Rudi

      Price, Adam

      Walley, Ms Joan

      Primarolo, Dawn

      Ward, Claire

      Prosser, Gwyn

      Wareing, Robert N

      Quinn, Lawrie

      Watson, Tom

      Robertson, Angus (Moray)

      Weir, Michael

      Robertson, John (Glasgow Anniesland)

      White, Brian

      Whitehead, Dr Alan

      Roche, Mrs Barbara

      Williams, Rt Hon Alan (Swansea W)

      Rooney, Terry

      Roy, Frank

      Williams, Mrs Betty (Conwy)

      Ruane, Chris

      Williams, Hywel (Caernarfon)

      Ruddock. Joan

      Winnick, David

      Salmond, Alex

      Winterton, Ms Rosie (Doncaster C)

      Salter, Martin

      Wray, James

      Sarwar, Mohammad

      Wright, Anthony D (Gt Yarmouth)

      Savidge, Malcolm

      Wright, David (Telford)

      Sawford, Phil

      Wright, Tony (Cannock)

      Sedgemore, Brian

      Shaw, Jonathan

      Tellers for the Noes:

      Sheerman, Barry

      Joan Ryan and Mr. Fraser Kemp.

      Sheridan, Jim

      Question accordingly negatived.

    Clause 5

      BIODIESEL
      John Healey: I beg to move amendment No. 38, in page 5, line 10, leave out—
      'the date on which this Act is passed'
      and insert—
      'such date as the Commissioners of Customs and Excise may by order made by statutory instrument appoint'.
      Madam Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 39 to 41.
      John Healey: Part of the Budget 2001 package that my right hon. Friend the Chancellor introduced to develop the
      436
      green fuel strategy was the decision to introduce a 20p per litre duty incentive for biodiesel in the Budget 2002. The Government decided to delay implementation until this year because we recognised that we would need a derogation of the EU mineral oils directive before the new rate could be introduced.
      Over the past year, we have worked to secure that derogation. Hon. Members will know that the process can be difficult and protracted, but we now expect to receive all necessary European clearance before Royal Assent, when the new rate of duty will come into force. The derogation received final approval from the EU Agriculture Council on 25 June, and is now in place. The new duty rate, therefore, awaits only clearance by the Commission as an allowable state aid. The Government expect that clearance in the next two weeks.
      However, if for any reason Royal Assent were to occur before we have been given state-aid clearance from the Commission, the UK technically would be in breach of the treaty of Rome. The amendments are simply a sensible precaution against breaching treaty obligations, although we expect to get the required clearance before the date on which Royal Assent is granted.
      Mr. Bercow: I think that the Economic Secretary has finished his speech on these amendments, so I shall ask a question to which I think hon. Members and people outside will be anxious to know the answer.
      There is an implication that the Economic Secretary might be mistaken about when clearance might be received. That is not very likely: he seemed confident that the required dates will be met, but he admitted to the possibility that they may not. That is why the Government feel it necessary to protect themselves against a possible breach of the treaty. Will the hon. Gentleman describe the revenue implications if the date that he envisages is met, and also if there is a delay?
      John Healey: We do not expect any Revenue implications. Should we not get final clearance from the Commission before the date of Royal Assent—we do not expect those circumstances—immediately we get that clearance, Customs Commissioners can sign into force this provision, and they will do so without delay.
      Mr. Simon Thomas: The speeches are so short I do not know whether they are interventions or speeches. Mine is a very short speech. I simply want to ask the Minister a question. I welcome what the Minister is doing—it is important to get that across. He obviously needs to make arrangements to be sure of compliance within Europe. Can he say something about the new biofuels that are being discussed at European level? Will that impact on the Government's planning? Will it be permissible for the Government to reduce the rate still further in future or, having agreed to this derogation—which we hope will be passed—does this now tie the Government's hands as regards any further reduction and support for biofuels in future Budgets?
      John Healey: No, this does not tie the Government's hands. Any decisions that flow from this will be for the Chancellor of the Exchequer. I will stop now because I am in danger of straying well beyond the terms of a narrow technical amendment designed as a belt-and-braces job to make sure that the Government do not fall foul of the treaty of Rome.
      Amendment agreed to.
      Amendments made: No. 39, in page 5, line 17, leave out—
      'on which this Act is passed'
      and insert "appointed under subsection (6)(a)".
      No. 40, in page 5, line 26, leave out—
      'that on which this Act is passed'
      and insert—
      'the date appointed under subsection (6)(a)'.
      No. 41, in page 5, line 28, leave out—
      'day on which this Act is passed'
      and insert—
      'date appointed under subsection (6)(a)'.—[John Healey.]

    Clause 19

      VEHICLE EXCISE DUTY
      Mr. Bercow: I beg to move amendment No. 25, in page 13, leave out lines 41 and 42.
      Madam Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 26, in schedule 5, page 135, leave out from beginning of line 38 to end of line 2 on page 136.
      No. 27, in page 136, line 4, leave out from "vehicle" to end of line 6.
      No. 28, in page 136, line 8, leave out "or (1A)(a)".
      No. 29, in page 136, line 14, leave out "or (1A)(b)".
      No. 30, in page 136, line 20, leave out "or (1A)(b)".
      No. 31, in page 136, line 25, leave out "or (1A)(a)".
      No. 32, in page 136, line 28, leave out "or (1A)(b)".
      No. 33, in page 136, line 31, leave out "or (1A)(a)".
      No. 34, in page 136, line 35, leave out "or (1A)(a)".
      Mr. Bercow: I am in the mood for brevity, Madam Deputy Speaker, as you have become aware over the past 24 hours. Other right hon. and hon. Members may wish to contribute to the debate. I should like to remind the Economic Secretary of the interest taken in this subject in Committee by my hon. Friends the Members for Christchurch (Mr. Chope) and for Arundel and South Downs (Mr. Flight). That interest was reflected in speeches from other political parties.
      Our concern all along has been about the ambiguity, if not impenetrability, of clause 19 in its unamended form and of schedule 5. Specifically, we wish to see in the Bill, as my hon. Friends previously indicated, a declaration of a nil rate vehicle excise duty for vehicles that are neither used nor kept on the public highway. We do not dispute the need to charge back VED on things that may have been vehicles if, and only if, it can be proved that they were used or kept unlicensed at one time on a public road. The terms "unregistered" and "unlicensed" could be used to clarify what the Government are aiming at. Unless there is a specific declaration in terms in the Bill that people who are manifestly innocent cannot end up copping it simply because there is no one else able to foot the bill, the concern of reputable organisations will persist that
      438
      there could be unintended consequences and financial penalty resulting from the way in which, no doubt inadvertently, the clause is drafted.
      I am also aware, as no doubt other hon. Members are, that the Government have provided themselves with their old and favourite facility: the statutory instrument. If memory serves me correctly, they are in a position to proceed on this matter through their preferred route, the negative—as distinct from the affirmative—resolution procedure. While on the subject of ambiguity and impenetrability, I am conscious of a certain irony and I owe it to the House and, more important perhaps, to people outside the House, to underline the significance of the difference between the two.
      3.15 pm
      If there is an affirmative resolution procedure and the regulations, which in due course are forthcoming, are subject to debate on the Floor of the House, however inadequate and truncated that debate might be, we shall at least have the opportunity to see whether the spirit to which we think the Government during the Committee and Report stages have committed themselves, is reflected in the terms of the regulations. If, however, we are to be fobbed off—I hesitate to use that term in relation to the Economic Secretary, because he is a decent cove—with the negative resolution procedure, there will not be another opportunity to debate this matter and we have to take the Government purely at their word—the Government purely at their word in terms of what they say and of their capacity to ensure the equity as well as the intelligibility of the regulations.
      Once again I therefore ask the Minister whether he recognises that there is a case for ensuring that only people who are guilty will face a charge and that those who have not possessed a vehicle for a long time and are thus in no sense liable for its current whereabouts will be faced with a VED charge back. That is what we want to know. It seems a reasonable request. It is not necessary to go to the wall on it, but I am not persuaded that my hon. Friends' efforts have met with the fair result that they wanted and that the Automobile Association and other organisations have a right to expect.
      John Healey: The amendments would stop the registered keepers of vehicles which ceased to be mechanically propelled from being liable for their vehicle. That would not help to tackle the abandoned vehicles problem, but it would undermine the integrity of the vehicle database that we are seeking to reinforce, and the whole thrust of our policy that those who abandon their cars are more easily called to account and made to pay would be undermined.
      The purpose of clause 19 and schedule 5 is to reduce the number of abandoned cars and to deal with VED evasion by improving the quality and integrity of the vehicle records that we keep through ensuring that the registered keepers retain liability for their vehicles until they notify the DVLA of a change in circumstances. Were the amendments successful, the registered keeper could abandon their vehicle and avoid their fiscal responsibilities for the vehicle simply by disabling it. That would not help us tackle the problem of abandoned vehicles but would undermine the thrust of our policy.
      The hon. Gentleman was concerned, as he said in rather colourful language, about innocent people "copping it". The schedule already contains clear exemptions from the

      439
      new offence of being the keeper of an unlicensed vehicle. These include circumstances in which the vehicle has been stolen, the DVLA has been notified of its disposal or that it has been scrapped, and the vehicle has been taken off the road and a statutory off-road notification has been made.
      The schedule also allows for new exemptions to be made through secondary legislation if necessary. The hon. Gentleman might see this as a strength, rather than a weakness. It could be the outcome of the discussions and consultations that the Government are conducting with stakeholders, including the AA, on the best way to implement the provisions.
      Let me again give the assurance that clause 19 and schedule 5 will not affect the current exemptions for pre-1973 vehicles and that the current system of statutory off-road notification will remain in place. On that basis, I ask the hon. Gentleman to withdraw the amendment.
      Mr. Bercow: I fear that the Minister has said his final word on the matter. I do not dispute the fact that the regulations could provide an opportunity to give reassurance to the AA, the DVLA and other organisations that may not be convinced that the clause is as fair, or will prove to be as judicious, as Ministers suppose.
      The Minister and the Paymaster General will be aware of my deep attachment to the affirmative procedure. I am very suspicious of the negative procedure. It is always supremely ineffective for Ministers to say, "Ah, but it happened when your lot were in power." I always reply, "I wasn't here, I didn't know, I'm not responsible, I couldn't care less, I won't be held to account. I will deal with that for which we are responsible now, rather than that which was ostensibly done in our name at some time in the past when I was busily completing my A-level studies." If there were to be a proper debate on the Floor of the House at a later date, we would have the chance to put to the test what the Minister is inviting us to accept on trust.
      I know that hon. Members will want to move on to consideration of the amendments relating to controlled foreign companies and a number of other important matters, so, in my usual genteel and understated fashion, I will accept the Minister's assurances and not press the matter any further. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 89

      CONTROLLED FOREIGN COMPANIES: TERRITORIAL EXCLUSIONS FROM S.748 EXEMPTIONS
      Madam Deputy Speaker: We now come to amendment No. 3.
      Mr. Bercow: Well, this is a first. One never knows what will happen on these occasions; my hon. Friend the Member for Arundel and South Downs (Mr. Flight)—
      Dawn Primarolo: I wonder whether it might help the hon. Member for Buckingham (Mr. Bercow) if he moved
      440
      the amendment and I responded to it. If he feels that I have not quite covered everything that he wanted me to cover, he can then make his substantive points.
      Mr. Bercow: I beg to move amendment No. 3, in page 64, line 16, at end insert—
      'and ceases to have effect in relation to accounting periods of controlled foreign companies beginning on or after the earlier of:

      (a) the third anniversary of the day on which this Act is passed; and

      (b) the expiry of any twelve month period during which no statutory instrument is approved under section 748A(5) of the Taxes Act 1988 (territorial exclusions from exemption under section 748).'.

      The Paymaster General made an extraordinarily helpful suggestion. As she knows, it is just that I do not want to subject the House to my tones for too long. I am thirsting to hear her mellifluous tones, and I know that hon. Members will prefer hers to mine.
      Dawn Primarolo: Clause 89 provides for a reserve power to make regulations specifying overseas jurisdictions in which all controlled foreign companies would automatically fall within the charge to tax made by the controlled foreign company rules. The aim of the measure is to protect the United Kingdom against harmful tax practices where they continue to be prevalent. It reflects the Government's determination to promote fair tax competition and to take effective action where jurisdictions do not remove the harmful features of their tax regimes. It would not be used where appropriate action is being taken by jurisdictions to remove harmful tax practices.
      The amendment accepts clause 89, but seeks to insert a sunset clause to limit the life span of the reserve power to the earlier of either three years from the date on which the Finance Bill receives Royal Assent or the expiry of 12 months during which no statutory instrument specifying a jurisdiction has been made. I know that the hon. Member for Buckingham is, as he said, very attached to the affirmative resolution procedure. The reserve power ensures that the Government would have to bring before the House regulations making it clear why a jurisdiction had been designated, and no jurisdiction could be designated unless and until the House voted through regulations to that effect.
      The clause was introduced for a specific and highly focused purpose, and we hope never to use it. But we should signal that we are serious about our desire to protect the United Kingdom's interests in the long term and to be in a position to provide that protection should harmful tax practices be introduced in the future or continued in some way. If the amendment were to be accepted, and the clause lapsed, we would have to consider reintroducing such provisions in Parliament, taking up valuable parliamentary time to have exactly the same debate.
      In 1985, the Conservative Government took the same reserve power, which could have been used against the United States in respect of unitary taxation. It did not contain a sunset clause. The hon. Gentleman takes the view that he bears no responsibility for what happened in the name of his party before he entered the House. I hate

      441
      to have to point out to him gently that there is such a thing as responsibility in politics, which is not only about discharging one's obligations but about understanding that one has to account for decisions taken in our collective names. We entirely supported the reserve power taken in 1985. The Conservatives never sought to remove the provision and, although it has not been used, it remains on the statute book as section 812 of the Income and Corporation Taxes Act 1988.
      Clause 89 provides for the Government to defend the UK's best interests in exceptional circumstances. I could not agree to recommend to the House that we limit the time period over which the power could be used without seriously undermining the Government's ability to defend our tax base. I therefore ask the hon. Gentleman to reconsider the matter. If he presses the amendment to a vote, I shall have to ask my hon. Friends to oppose it on the basis that unfortunately, in this instance, his party is not acting in the best interests of UK taxpayers.
      Mr. Bercow: The Paymaster General did her best to reassure us, but, as she knows, I am not easily reassured. As things stand, the Treasury has far-reaching powers in these matters, and we are not convinced that those powers are desirable or will be needed. We are concerned about the Government's intentions towards several Crown dependencies.
      The thrust of our proposed sunset clause is sound. If it turns out that the Government do not need these provisions, they should not rue the passage of the sunset clause because all it says is that these provisions will expire after
      "the third anniversary of the day on which this Act is passed"
      or
      "the expiry of any twelve month period during which no statutory instrument is approved"
      under these provisions.
      If the Government have had no reason to use these provisions, it is not clear why they should object to the sunset clause. However, if the Government use these provisions, they ought to be prepared to go through the minor and trifling inconvenience of returning to Parliament to renew them on the statute book, given that it is a matter of legitimate contention whether they will need these provisions.
      3.30 pm
      I was a little disappointed, particularly as the Paymaster General is rather a keen parliamentary advocate, to hear her talk about valuable parliamentary time being taken up. This is an extremely important matter. If the Government used these provisions, they would have far-reaching implications for the people and companies affected. In those circumstances, it is not unreasonable to assume that the Government would be willing to tell Parliament that, because these important provisions have expired, they need legislatively to renew them.
      Moreover, there is some form on this subject, as the Paymaster General will know. She chided me because the Conservative party did not propose a sunset clause when we were last in government. The answer is that we subsequently recognised that it would be wise to introduce all sorts of things that we did not do then. The theme of
      442
      sunset clauses was taken up enthusiastically by a number of my hon. Friends and myself during the previous Parliament.
      Rob Marris: Apart from sunset clauses, would the hon. Gentleman care to give some other examples of things that were not done that he now thinks should have been done?
      Mr. Bercow: The hon. Gentleman tempts me down a path that is not altogether virtuous and that I doubt will prove to be in my interest, but on the basis that I cannot be accused of saying something new—I merely repeat what I have said before—I shall tell him that I prefer to put it the other way round: we have done things that I should have preferred we had not done and to which I never signed up. We passed a silly treaty at Maastricht. I was opposed to it then, and I am opposed to it now. I hope that we would not pass it again.
      I shall be tempted no further down an unvirtuous path, the prospect of which the hon. Gentleman has dangled before me. However, I would tell him that a decent debate on sunset clauses has taken place. Sadly, he did not contribute to that debate because he was not a Member of Parliament at the time. I highlighted the significance and potential of sunset clauses with reference to the experience of our friends in the United States of America when, on 27 April 1999, I introduced a ten-minute Bill that related to this subject, among others.
      I was mortified that the Government did not accept my Bill. I thought that they would provide time for it. I rue the fact that it never became law, but I note that some significance and value were attached to my proposal on sunset clauses because the then Secretary of State for Trade and Industry, the right hon. Member for Tyneside, North (Mr. Byers), subsequently included a sunset clause in the Electronic Communications Act 2000.
      The then Secretary of State was very proud of the inclusion of that sunset clause. He drew attention to it during our exchanges on Second Reading and said he thought that I ought to be satisfied, having highlighted the arguments for such clauses in my ten-minute Bill, that he had introduced such a clause. The trouble is that the Government have since lost enthusiasm. Their appetite has diminished. I am not aware that there have been further such clauses. If a sunset clause was good for that Act, there is at least an argument for the Government to consider such a clause in relation to the Bill.
      However, there are other matters to discuss. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) is now in the Chamber. He has a wealth of expertise on this subject; he may be tempted to share just a portion of it and therefore I shall now, blessedly, conclude my remarks.
      Mr. Deputy Speaker (Sir Michael Lord): Does the hon. Gentleman wish to withdraw the amendment?
      Mr. Bercow:I withdraw. No, I wish to press the amendment to a Division. I am sorry, Mr. Deputy Speaker. For the avoidance of doubt, I was tempted to withdraw the amendment because I thought that you were accusing me of a parliamentary infelicity. My hon. Friends and I wish to press this matter to a vote. That is why I have been banging on about it for the past 10 minutes.
      Mr. Deputy Speaker: I think that the hon. Gentleman has now made his intentions quite clear.
      Question put, That the amendment be made:—
      The House divided: Ayes 105, Noes 305.

      Division No. 292]

      [3.34 pm

      AYES

      Amess, David

      Liddell-Grainger, Ian

      Arbuthnot, Rt Hon James

      Lidington, David

      Atkinson, David (Bour'mth E)

      Lilley, Rt Hon Peter

      Atkinson, Peter (Hexham)

      Luff, Peter

      Bacon, Richard

      MacKay, Rt Hon Andrew

      Baron, John

      Maclean, Rt Hon David

      Beggs, Roy

      McLoughlin, Patrick

      Bercow, John

      Malins, Humfrey

      Beresford, Sir Paul

      Maples, John

      Boswell, Tim

      Mawhinney, Rt Hon Sir Brian

      Bottomley, Peter (Worthing W)

      Mercer, Patrick

      Brady, Graham

      Mitchell, Andrew (Sutton Coldfield)

      Brazier, Julian

      Moss, Malcolm

      Burns, Simon

      Murrison, Dr Andrew

      Burnside, David

      Osborne, George (Tatton)

      Butterfill, John

      Page, Richard

      Cameron, David

      Paice, James

      Cash, William

      Prisk, Mark

      Chapman, Sir Sydney (Chipping Barnet)

      Redwood, Rt Hon John

      Roe, Mrs Marion

      Clappison, James

      Ruffley, David

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Selous, Andrew

      Shephard, Rt Hon Mrs Gillian

      Cran, James

      Simmonds, Mark

      Curry, Rt Hon David

      Spelman, Mrs Caroline

      Davies, Quentin (Grantham)

      Spicer, Sir Michael

      Djanogly, Jonathan

      Spink, Bob

      Duncan, Peter (Galloway)

      Spring, Richard

      Evans, Nigel

      Stanley, Rt Hon Sir John

      Fabricant, Michael

      Streeter, Gary

      Fallon, Michael

      Swayne, Desmond

      Field, Mark (Cities of London)

      Swire, Hugo

      Flight, Howard

      Syms, Robert

      Flook, Adrian

      Tapsell, Sir Peter

      Forth, Rt Hon Eric

      Taylor, Ian (Esher & Walton)

      Francois, Mark

      Taylor, John (Solihull)

      Gibb, Nick

      Taylor, Sir Teddy

      Gillan, Mrs Cheryl

      Tredinnick, David

      Grayling, Chris

      Trend, Michael

      Green, Damian (Ashford)

      Turner, Andrew (Isle of Wight)

      Grieve, Dominic

      Waterson, Nigel

      Hague, Rt Hon William

      Watkinson, Angela

      Hammond, Philip

      Whittingdale, John

      Hayes, John

      Widdecombe, Rt Hon Miss Ann

      Heald, Oliver

      Wiggin, Bill

      Heathcoat-Amory, Rt Hon David

      Wilkinson, John

      Hoban, Mark

      Willetts, David

      Hogg, Rt Hon Douglas

      Wilshire, David

      Horam, John

      Winterton, Ann (Congleton)

      Jack, Rt Hon Michael

      Yeo, Tim

      Jenkin, Bernard

      Young, Rt Hon Sir George

      Key, Robert

      Knight, Rt Hon Greg (E Yorkshire)

      Tellers for the Ayes

      Lansley, Andrew

      Mr. Laurence Robertson and Mr. Charles Hendry.

      Leigh, Edward

      Lewis, Dr Julian (New Forest E)

      NOES

      Abbott, Ms Diane

      Bailey, Adrian

      Adams, Mrs Irene (Paisley N)

      Baird, Vera

      Allan, Richard

      Bames, Harry

      Anderson, Rt Hon Donald (Swansea E)

      Begg, Miss Anne

      Beith, Rt Hon A J

      Anderson, Janet (Rossendale)

      Bell, Stuart

      Armstrong, Rt Hon Ms Hilary

      Berry, Roger

      Atkins, Charlotte

      Best, Harold

      Austin, John

      Betts, Clive

      444

      Blackman, Liz

      Edwards, Huw

      Blears, Ms Hazel

      Efford, Clive

      Blizzard, Bob

      Ennis, Jeff

      Borrow, David

      Etherington, Bill

      Bradley, Rt Hon Keith (Withington)

      Bradshaw, Ben

      Ewing, Annabelle

      Brake, Tom

      Farrelly, Paul

      Brennan, Kevin

      Field, Rt Hon Frank (Birkenhead)

      Brooke, Mrs Annette L

      Fisher, Mark

      Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

      Fitzpatrick, Jim

      Brown, Russell (Dumfries)

      Flint, Caroline

      Bryant, Chris

      Foster, Rt Hon Derek

      Buck, Ms Karen

      Foster, Don (Bath)

      Burden, Richard

      Foulkes, George

      Burgon, Colin

      Gapes, Mike

      Burnett, John

      Gardiner, Barry

      Burstow, Paul

      Cable, Dr Vincent

      George, Andrew (St Ives)

      Cairns, David

      George, Rt Hon Bruce (Walsall S)

      Calton, Mrs Patsy

      Gerrard, Neil

      Campbell, Alan (Tynemouth)

      Godsiff, Roger

      Campbell, Rt Hon Menzies (NE Fife)

      Goggins, Paul

      Campbell, Ronnie(Blyth V)

      Green, Matthew (Ludlow)

      Casale, Roger

      Griffiths, Win (Bridgend)

      Caton, Martin

      Grogan, John

      Challen, Colin

      Hain, Rt Hon Peter

      Chapman, Ben (Wirral S)

      Hall, Mike (Weaver Vale)

      Chaytor, David

      Hall, Patrick (Bedford)

      Clapham, Michael

      Hamilton, David (Midlothian)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hancock, Mike

      Clark, Paul (Gillingham)

      Hanson, David

      Clarke, Rt Hon Tom (Coatbridge)

      Harris, Dr Evan (Oxford W)

      Clarke, Tony (Northampton S)

      Harris, Tom (Glasgow Cathcart)

      Clelland, David

      Healey, John

      Clwyd, Ann

      Coaker, Vernon

      Heath, David

      Coffey, Ms Ann

      Henderson, Doug (Newcastle N)

      Cohen, Harry

      Henderson, Ivan (Harwich)

      Coleman, Iain

      Hepburn, Stephen

      Connarty, Michael

      Heppell, John

      Cook, Frank (Stockton N)

      Hermon, Lady

      Cook, Rt Hon Robin (Livingston)

      Cooper, Yvette

      Hesford, Stephen

      Corbyn, Jeremy

      Heyes, David

      Cotter, Brian

      Hill, Keith

      Cox, Tom

      Hinchliffe, David

      Cranston, Ross

      Hodge, Margaret

      Crausby, David

      Holmes, Paul

      Cryer, John (Hornchurch)

      Hood, Jimmy

      Cummings, John

      Hope, Phil

      cunningham, Jim (Cov'try S)

      Hopkins, Kelvin

      Cunningham, Tony (Workington)

      Howarth, Rt Hon Alan (Newport E)

      Curtis-Thomas, Mrs Claire

      Howarth, George (Knowsley N)

      Davey, Edward (Kingston)

      Hoyle, Lindsay

      Davey, Valerie (Bristol W)

      David, Wayne

      Hughes, Beverley (Stretford)

      Davidson, Ian

      Hughes, Kevin (Doncaster N)

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

      Hughes, Simon (Southwark N)*

      Humble, Mrs Joan

      Dawson, Hilton

      Hurst, Alan

      Dean, Mrs Janet

      Illsley, Eric

      Dhanda, Parmjit

      Irranca-Davies, Huw

      Dismore, Andrew

      Dobbin, Jim

      Jackson, Glenda (Hampstead)

      Dobson, Rt Hon Frank

      Jenkins, Brian

      Donohoe, Brian H

      Jones, Helen (Warrington N)

      Doran, Frank

      Jones, Jon Owen (Cardiff C)

      Doughty, Sue

      Jones, Martyn (Clwyd S)

      Dowd, Jim

      Drew, David

      Joyce, Eric

      Drown, Ms Julia

      Kaufman, Rt Hon Gerald

      Eagle, Angela (Wallasey)

      Keen, Ann (Brentford & Isleworth)

      445

      Kemp, Fraser

      Prosser, Gwyn

      Kidney, David

      Quinn, Lawrie

      Kilfoyle, Peter

      Reid, Alan (Argyll & Bute)

      King, Ms Oona (Bethnal Green)

      Rendel, David

      Kumar, Dr Ashok

      Robertson, Angus (Moray)

      Ladyman, Dr Stephen

      Robertson, John (Glasgow Anniesland)

      Lamb, Norman

      Lawrence, Mrs Jackie

      Roche, Mrs Barbara

      Laxton, Bob

      Rooney, Terry

      Lazarowicz, Mark

      Roy, Frank

      Lepper, David

      Ruane, Chris

      Lewis, Terry (Worsley)

      Russell, Bob (Colchester)

      Linton, Martin

      Ryan, Joan

      Lloyd, Tony

      Salmond, Alex

      Llwyd, Elfyn

      Salter, Martin

      Love, Andrew

      Sanders, Adrian

      Luke, Iain

      Sarwar, Mohammad

      Lyons, John

      Savidge, Malcolm

      MrAvoy Thomas

      Sawford, Phil

      Sedgemore Brian

      McCabe, Stephen

      Shaw, Jonathan

      McCartney, Rt Hon Ian

      Sheerman, Barry

      McDonagh, Siobhain

      Sheridan, Jim

      MacDonald, Calum

      Shipley, Ms Debra

      McDonnell, John

      Simon, Siôn

      McFall, John

      Singh, Marsha

      McKechin, Ann

      Skinner, Dennis

      McKenna, Rosemary

      Smith, Rt Hon Andrew (Oxford E)

      Mackinlay, Andrew

      Smith, Angela (Basildon)

      McNamara, Kevin

      Smith, Geraldine (Morecambe)

      MacShane, Denis

      Smith, John (Glamorgan)

      Mactaggart, Fiona

      Smith, Llew (Blaenau Gwent)

      McWalter, Tony

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

      McWilliam, John

      Soley, Clive

      Mahmood, Khalid

      Spellar, Rt Hon John

      Mahon, Mrs Alice

      Starkey, Dr Phyllis

      Mallaber, Judy

      Steinberg, Gerry

      Mandelson, Rt Hon Peter

      Stewart, David (Inverness E)

      Marris, Rob

      Stewart, Ian (Eccles)

      Marsden, Gordon (Blackpool S)

      Stinchcombe, Paul

      Marsden, Paul (Shrewsbury)

      Stoate, Dr Howard

      Marshall, David (Shettleston)

      Stunell, Andrew

      Marshall, Jim (Leicester S)

      Sutcliffe, Gerry

      Martlew, Eric

      Taylor, Rt Hon Ann (Dewsbury)

      Meale, Alan

      Taylor, Ms Dari (Stockton S)

      Merron, Gillian

      Taylor, Matthew (Truro)

      Milbum, Rt Hon Alan

      Thomas, Gareth (Clwyd W)

      Mitchell, Austin (Gt Grimsby)

      Thomas, Gareth (Harrow W)

      Mole, Chris

      Thomas, Simon (Ceredigion)

      Moore, Michael

      Tipping, Paddy

      Todd, Mark

      Moran, Margaret

      Tonge, Dr Jenny

      Morgan, Julie

      Touhig, Don

      Mountford, Kali

      Truswell, Paul

      Mudie, George

      Turner, Dennis (Wolverh'ton SE)

      Munn, Ms Meg

      Turner, Neil (Wigan)

      Murphy, Denis (Wansbeck)

      Twigg, Stephen (Enfield)

      Murphy, Jim (Eastwood)

      Tyler, Paul

      Murphy, Rt Hon Paul (Torfaen)

      Tynan, Bill

      Naysmith, Dr Doug

      Vaz, Keith

      Olner, Bill

      Vis, Dr Rudi

      Organ, Diana

      Walley, Ms Joan

      Osborne, Sandra (Ayr)

      Ward, Claire

      Palmer, Dr Nick

      Wareing, Robert N

      Pearson, Ian

      Watson, Tom

      Perham, Linda

      Weir, Michael

      Picking, Anne

      White, Brian

      Pickthall, Colin

      Whitehead, Dr Alan

      Pike, Peter

      Williams, Rt Hon Alan (Swansea W)

      Plaskitt, James

      Pond, Chris

      Williams, Mrs Betty (Conwy)

      Pound, Stephen

      Williams, Hywel (Caemarfon)

      Prentice, Gordon (Pendle)

      Willis, Phil

      Primarolo, Dawn

      Winnick, David

      446

      Winterton, Ms Rosie (Doncaster C)

      Younger-Ross, Richard

      Wray, James

      Wright, Anthony D (Gt Yarmouth)

      Wright, David (Telford)

      Tellers for the Noes:

      Wright, Tony (Cannock)

      Mr. Ivor Caplin and Derek Twigg

      Wyatt, Derek

      Question accordingly negatived.

    Clause 91

      SUPPLEMENTARY CHARGE IN RESPECT OF RING FENCE TRADES
      Amendment proposed: No. 43, in page 64, leave out from beginning of line 34 to end of line 33 on page 68.—[Mr. Salmond.]
      Question put, That the amendment be made:—
      The House divided: Ayes 151, Noes 270.

      Division No. 293]

      [3.46 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Francois, Mark

      Allan, Richard

      George, Andrew (St Ives)

      Amess, David

      Gibb, Nick

      Ancram, Rt Hon Michael

      Gillan, Mrs Cheryl

      Arbuthnot, Rt Hon James

      Goodman, Paul

      Atkinson, David (Bour'mth E)

      Grayling, Chris

      Atkinson, Peter (Hexham)

      Green, Damian (Ashford)

      Bacon, Richard

      Green, Matthew (Ludlow)

      Baron, John

      Grieve, Dominic

      Beggs, Roy

      Hague, Rt Hon William

      Beith, Rt Hon A J

      Hammond, Philip

      Bercow, John

      Hancock, Mike

      Beresford, Sir Paul

      Harris, Dr Evan (Oxford W)

      Boswell, Tim

      Hayes, John

      Bottomley, Peter (Worthing W)

      Heald, Oliver

      Brady, Graham

      Heath, David

      Brake, Tom

      Heathcoat-Amory, Rt Hon David

      Brazier, Julian

      Hendry, Charles

      Brooke, Mrs Annette L

      Hermon Lady

      Burnett John

      Hoban, Mark

      Burns, Simon

      Hogg, Rt Hon Douglas

      Bumside, David

      Holmes, Paul

      Burstow, Paul

      Horam, John

      Butterfill, John

      Hughes, Simon (Southwark N)

      Cable, Dr Vincent

      Jack, Rt Hon Michael

      Calton, Mrs Patsy

      Jenkin, Bernard

      Cameron, David

      Key, Robert

      Campbell, Rt Hon Menzies (NE Fife)

      Knight, Rt Hon Greg (E Yorkshire)

      Lamb, Norman

      Cash, William

      Lansley, Andrew

      Chapman, Sir Sydney(Chipping Barnet)

      Laws, David

      Leigh, Edward

      Clappison, James

      Lewis, Dr Julian (New Forest E)

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Liddell-Grainger, Ian

      Lidington, David

      Cotter, Brian

      Lilley, Rt Hon Peter

      Cran, James

      Llwyd, Elfyn

      Curry, Rt Hon David

      Luff, Peter

      Davey, Edward (Kingston)

      MacKay, Rt Hon Andrew

      Davies, Quentin (Grantham)

      Maclean, Rt Hon David

      Davis, Rt Hon David (Haltemprice)

      McLoughlin, Patrick

      Djanogly, Jonathan

      Malins, Humfrey

      Doughty, Sue

      Maples, John

      Duncan, Peter (Galloway)

      Mates, Michael

      Evans, Nigel

      Mawhinney, Rt Hon Sir Brian

      Ewing, Annabelle

      Mercer, Patrick

      Fabricant, Michael

      Mitchell, Andrew (Sutton Coldfield)

      Fallon, Michael

      Moore, Michael

      Field, Mark (Cities of London)

      Moss, Malcolm

      Flight, Howard

      Murrison, Dr Andrew

      Flook, Adrian

      Osborne, George (Tatton)

      Forth, Rt Hon Eric

      Page, Richard

      Foster, Don (Bath)

      Paice, James

      447

      Prisk, Mark

      Taylor, Ian (Esher & Walton)

      Redwood, Rt Hon John

      Taylor, John (Solihull)

      Reid, Alan (Argyll & Bute)

      Taylor, Matthew (Truro)

      Rendel, David

      Taylor, Sir Teddy

      Robertson, Angus (Moray)

      Tredinnick, David

      Robertson, Laurence (Tewk'b'ry)

      Trend, Michael

      Roe, Mrs Marion

      Turner, Andrew (Isle of Wight)

      Ruffley, David

      Tyler, Paul

      Russell, Bob (Colchester)

      Waterson, Nigel

      Salmond, Alex

      Watkinson, Angela

      Sanders, Adrian

      Weir, Michael

      Selous, Andrew

      Whittingdale, John

      Shephard, Rt Hon Mrs Gillian

      Widdecombe, Rt Hon Miss Ann

      Simmonds, Mark

      Wiggin, Bill

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

      Wilkinson, John

      Spelman, Mrs Caroline

      Willetts, David

      Spicer, Sir Michael

      Willis, Phil

      Spink, Bob

      Wilshire, David

      Spring, Richard

      Winterton, Ann (Congleton)

      Stanley, Rt Hon Sir John

      Yeo, Tim

      Streeter, Gary

      Young, Rt Hon Sir George

      Stunell, Andrew

      Younger-Ross, Richard

      Swayne, Desmond

      Swire, Hugo

      Tellers for the Ayes:

      Syms, Robert

      Mr. Simon Thomas and Hywel Williams.

      Tapsell, Sir Peter

      NOES

      Abbott, Ms Diane

      Cohen, Harry

      Adams, Mrs Irene (Paisley N)

      Coleman, Iain

      Allen, Graham

      Connarty, Michael

      Anderson, Rt Hon Donald (Swansea E)

      Cook, Frank (Stockton N)

      Cook, Rt Hon Robin (Livingston)

      Armstrong, Rt Hon Ms Hilary

      Cooper, Yvette

      Atkins, Charlotte

      Corbyn, Jeremy

      Austin, John

      Cox, Tom

      Bailey, Adrian

      Cranston, Ross

      Baird, Vera

      Crausby, David

      Barnes, Harry

      Cruddas, Jon

      Begg, Miss Anne

      Cryer, John (Hornchurch)

      Bell, Stuart

      Cummings, John

      Bennett, Andrew

      Cunningham, Jim (Cov'try S)

      Berry, Roger

      Cunningham, Tony (Workington)

      Best, Harold

      Curtis-Thomas, Mrs Claire

      Betts, Clive

      Davey, Valerie (Bristol W)

      Blackman, Liz

      David, Wayne

      Blears, Ms Hazel

      Davidson, Ian

      Blizzard, Bob

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

      Borrow, David

      Bradley, Rt Hon Keith (Withington)

      Dawson, Hilton

      Bradshaw, Ben

      Dean, Mrs Janet

      Brennan, Kevin

      Dhanda, Parmjit

      Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

      Dismore, Andrew

      Dobbin, Jim

      Bryant, Chris

      Dobson, Rt Hon Frank

      Buck, Ms Karen

      Donohoe, Brian H

      Burden, Richard

      Doran, Frank

      Burgon, Colin

      Dowd, Jim

      Cairns, David

      Drew, David

      Campbell, Alan (Tynemouth)

      Drown, Ms Julia

      Campbell, Ronnie (Blyth V)

      Eagle, Angela (Wallasey)

      Casale, Roger

      Edwards, Huw

      Caton, Martin

      Efford, Clive

      Challen, Colin

      Ennis, Jeff

      Chapman, Ben (Wirral S)

      Etherington, Bill

      Chaytor, David

      Farrelly, Paul

      Clapham, Michael

      Field, Rt Hon Frank (Birkenhead)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Fisher, Mark

      Fitzpatrick, Jim

      Clark, Paul (Gillingham)

      Flint, Caroline

      Clarke, Rt Hon Tom (Coatbridge)

      Foster, Rt Hon Derek

      Clarke, Tony (Northampton S)

      Foulkes, George

      Clelland, David

      Gapes, Mike

      Clwyd, Ann

      Gardiner, Barry

      Coaker, Vernon

      George, Rt Hon Bruce (Walsall S)

      Coffey, Ms Ann

      Gerrard, Neil

      448

      Godsiff, Roger

      Mahon, Mrs Alice

      Goggins, Paul

      Mallaber, Judy

      Griffiths, Win (Bridgend)

      Mandelson, Rt Hon Peter

      Grogan, John

      Marris, Rob

      Hain, Rt Hon Peter

      Marsden, Gordon (Blackpool S)

      Hall, Mike (Weaver Vale)

      Marshall, David (Shettleston)

      Hall, Patrick (Bedford)

      Marshall, Jim (Leicester S)

      Hamilton, David (Midlothian)

      Martlew, Eric

      Hanson, David

      Meale, Alan

      Harris, Tom (Glasgow Cathcart)

      Merron, Gillian

      Healey, John

      Milburn, Rt Hon Alan

      Henderson, Doug (Newcastle N)

      Mitchell, Austin (Gt Grimsby)

      Henderson, Ivan (Harwich)

      Mole, Chris

      Hepburn, Stephen

      Moran, Margaret

      Heppell, John

      Morgan, Julie

      Hesford, Stephen

      Morris, Rt Hon Estelle

      Hewitt, Rt Hon Ms Patricia

      Mountford, Kali

      Heyes, David

      Mudie, George

      Hill, Keith

      Munn, Ms Meg

      Hinchliffe, David

      Murphy, Denis (Wansbeck)

      Hodge, Margaret

      Murphy, Jim (Eastwood)

      Hood, Jimmy

      Murphy, Rt Hon Paul (Torfaen)

      Hope, Phil

      Naysmith, Dr Doug

      Hopkins, Kelvin

      Olner, Bill

      Howarth, Rt Hon Alan (Newport E)

      O'Neill, Martin

      Howarth, George (Knowsley N)

      Organ, Diana

      Hoyle, Lindsay

      Osborne, Sandra (Ayr)

      Hughes, Beverley (Stretford)

      Palmer, Dr Nick

      Hughes, Kevin (Doncaster N)

      Pearson, Ian

      Humble, Mrs Joan

      Perham, Linda

      Hurst, Alan

      Picking, Anne

      Illsley, Eric

      Pickthall, Colin

      Irranca-Davies, Huw

      Pike, Peter

      Jackson, Glenda (Hampstead)

      Plaskitt, James

      Jamieson, David

      Pond, Chris

      Jenkins, Brian

      Pound, Stephen

      Jones, Helen (Warrington N)

      Prentice, Ms Bridget (Lewisham E)

      Jones, Jon Owen (Cardiff C)

      Prentice, Gordon (Pendle)

      Jones, Martyn (Clwyd S)

      Primarolo, Dawn

      Joyce, Eric

      Prosser, Gwyn

      Kaufman, Rt Hon Gerald

      Quinn, Lawrie

      Keeble, Ms Sally

      Robertson, John (Glasgow Anniesland)

      Keen, Ann (Brentford & Isleworth)

      Kelly, Ruth

      Roche, Mrs Barbara

      Kemp, Fraser

      Rooney, Terry

      Kidney, David

      Roy, Frank

      Kilfoyle, Peter

      Ruane, Chris

      King, Ms Oona (Bethnal Green)

      Ruddock, Joan

      Kumar, Dr Ashok

      Ryan, Joan

      Ladyman, Dr Stephen

      Salter, Martin

      Lawrence, Mrs Jackie

      Sarwar, Mohammad

      Laxton, Bob

      Savidge, Malcolm

      Lazarowicz, Mark

      Sawford, Phil

      Lepper, David

      Sedgemore, Brian

      Lewis, Terry (Worsley)

      Shaw, Jonathan

      Linton, Martin

      Sheerman, Barry

      Lloyd, Tony

      Sheridan, Jim

      Love, Andrew

      Shipley, Ms Debra

      Luke, Iain

      Simon, Siôn

      Lyons, John

      Singh, Marsha

      McAvoy, Thomas

      Skinner, Dennis

      McCabe, Stephen

      Smith, Rt Hon Andrew (Oxford E)

      McCartney, Rt Hon Ian

      Smith, Angela (Basildon)

      McDonagh, Siobhain

      Smith, Geraldine (Morecambe)

      MacDonald, Calum

      Smith, John (Glamorgan)

      McDonnell, John

      Smith, Llew (Blaenau Gwent)

      McFall, John

      Soley, Clive

      McKechin, Ann

      Starkey, Dr Phyllis

      McKenna, Rosemary

      Steinberg, Gerry

      Mackinlay, Andrew

      Stewart, David (Inverness E)

      McNamara, Kevin

      Stewart, Ian (Eccles)

      MacShane, Denis

      Stinchcombe, Paul

      Mactaggart, Fiona

      Stoate, Dr Howard

      McWalter, Tony

      Sutcliffe, Gerry

      McWilliam, John

      Taylor, Rt Hon Ann (Dewsbury)

      Mahmood, Khalid

      Taylor, Ms Dari (Stockton S)

      449

      Thomas, Gareth (Clwyd W)

      White, Brian

      Thomas, Gareth (Harrow W)

      Whitehead, Dr Alan

      Tipping, Paddy

      Williams, Rt Hon Alan (Swansea W)

      Todd, Mark

      Touhig, Don

      Williams, Mrs Betty (Conwy)

      Truswell, Paul

      Winnick, David

      Turner, Dennis (Wolverh'ton SE)

      Winterton, Ms Rosie (Doncaster C)

      Turner, Neil (Wigan)

      Wray, James

      Twigg, Stephen (Enfield)

      Wright, Anthony D (Gt Yarmouth)

      Tynan, Bill

      Wright, David (Telford)

      Vaz, Keith

      Wright, Tony (Cannock)

      Vis, Dr Rudi

      Wyatt, Derek

      Walley, Ms Joan

      Ward, Claire

      Tellers for the Noes:

      Wareing, Robert N

      Mr. Ivor Caplin and Derek Twigg.

      Watson, Tom

      Question accordingly negatived.

    Clause 98

      GIFT AID: ELECTION TO BE TREATED AS IF GIFT MADE IN PREVIOUS YEAR.
      Mr. Flight: I beg to move amendment No. 4, in page 75, leave out from beginning of line 39 to end of line 6 on page 76 and insert—
      'or a series of qualifying donations made by him in one or more of the previous three years of assessment (a year in respect of which an election is made being an "elected year" for the purposes of this section).
      (2)Any such election may be made by notice in writing to an officer of the Inland Revenue before or at the time that the donor delivers the return required under section 8 of the Taxes Management Act 1970 (c. 9) (personal return) for the year in which the gift is actually made.
      (3)An election may be made in respect of an elected year only to the extent that the grossed-up amount of any gift or part-gift would, if made in that elected year, be payable out of profits or gains brought into charge to income tax or capital gains tax for that elected year. Where an election is made to treat a single gift as if it had been a series of qualifying donations made in one or more years, the sum of such qualifying donations may not exceed the amount of the actual gift.
      (4)On receipt of an election under this section, the Board of Inland Revenue shall make such payments and adjustments as appear necessary to them to leave the donor in the position he would have been in had he made the relevant gift or part-gift in the relevant elected year and the provisions of section 25(6) to (9A) of the Finance Act 1990 had then taken effect.'.
      We have previously welcomed the Government's initiative to follow United States law and practice in terms of introducing incentives for the gifting of substantial assets. As hon. Members will be aware, when the first package was introduced, it was confined to listed securities. We then argued that it should be extended to land, unlisted securities and works of art, all of which qualify for gift-aid relief in the US. The package now includes land, but not the other two assets. At this rate, unlisted shares and works of art may be covered next year and the year after that.
      In the case of land and unlisted securities, a wealthy potential donor may often be rich in assets but not particularly rich in income terms. As the incentives currently stand, they will not work particularly well and—dare I say it—there might be an element of intent that they should not. I hope that that is not so.
      There are lessons to be learned from the United States, so our simple proposal is that those gifting substantial assets but who do not have the income in the year of
      450
      gifting sufficient to qualify for the relief should be able to cast back three years or obtain relief against income in the previous three years. That would change the provisions in the Bill, which allow only a single year's carry-back, to make it easier to fit into the self-assessment regime. The amendment would allow an individual to go back three years by making a claim at the time that they submit their tax returns for the year of the gift and to split large gifts between years, through an adjustment outside the self-assessment return.
      4 pm
      The Minister may tell me that the amendment needs further technical improvement—I hope not—but we want an acknowledgement from the Government of the need for a bigger carry-back than one year if the gift aid scheme is to be really effective. That is particularly so with the gift of land and buildings, because in those cases the owners are more likely to be asset-rich but income not-so-rich.
      Our objective is to make the welcome reform of gift aid relief work. The bigger the voluntary sector the better, and we want to encourage people to give to universities and schools to build up the voluntary sector which so often does things for better value and more efficiently than the public sector. That is the motivation behind the amendment.
      Chris Grayling: I rise to speak briefly in support of amendment No. 4. Through gift aid, successive Governments have made a significant contribution to an important part of our society—the voluntary sector. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, the voluntary sector makes a significant difference across our society in a variety of ways.
      The amendment highlights the role played by more substantial gifts and endowments. In the US, major institutions, foundations and charities benefit from substantial donations from wealthy individuals who have often built their wealth in the form of assets, rather than in ready and available cash. Many people in this country—I know of some in my constituency—have the resources to be major contributors to the voluntary sector. I hope that our society will become more like the American model, with people more inclined to make substantial donations to support our major institutions or to enable significant charitable facilities to be established.
      My hon. Friend has highlighted a potential extension of the gift aid provisions that would encourage substantial donors to take a major step towards enabling charitable and voluntary organisations to build substantial foundations for the work that they do. I hope that the Minister will accept the spirit of the amendment even if, as my hon. Friend suggested, it is not drafted in a way that he finds acceptable. I hope that the Government will recognise the potential that has been developed in the US and accept that it could make a significant difference in this country. If the Government cannot accept the amendment today, I hope that they will undertake to accept the principle in the future.
      John Healey: I welcome the welcome for the tax breaks that the Government have provided to boost gifts to charity, especially through the extension of gift aid. In

      451
      many ways, the arguments that we have heard from the hon. Members for Arundel and South Downs (Mr. Flight) and for Epsom and Ewell (Chris Grayling) were a brief reprise of the discussions that we had in Committee, which turned on a concern for those who may be asset-rich, but income not-so-rich. Amendment No. 4, however, relates to gift aid, which applies only to cash. The arguments that both hon. Gentlemen voiced are not relevant to gift aid, which is not effective for gifts of assets.
      I recognise the spirit in which the amendment has been tabled, but it would add considerable complexity to a system that we have introduced to benefit both charities and taxpayers. The existing measure in the Bill will act as a prompt and an incentive to higher rate taxpayers by making gift aid relief immediately available.
      The amendment would give further time for electing to gift aid a donation by extending the time limit, but the link to the filing of the self-assessment return for the previous year is a key part of the Government's planned measure in offering the incentive of claiming relief early rather than waiting until completion of the return for the year in which the gift was made. Allowing further time for an election to be made would dilute the incentive to take a decision and make a donation.
      The amendment would go further by allowing the donation to be deemed to have been made not only in the previous tax year but also in one or more of the three previous tax years. For a small number of donors that would be beneficial, perhaps because they were unable to claim higher rate relief in the previous year but had higher rate liability in an earlier year. However, in practice, for higher rate taxpayers it would mean that earlier years would have to be reopened and tax liabilities recalculated. Clearly, taking advantage of a gift aid scheme would no longer be a straightforward part of the completion of the self-assessment return, which is the purpose of the provision.
      The current measure uses the self-assessment return to provide a straightforward mechanism for the donor to make the gift aid election and claim the relief without the need to complete any further claim forms. For the reasons I have given, I hope that the hon. Gentleman will withdraw amendment No. 4 and allow the House to report clause 98 as it stands.
      Mr. Flight: The Minister has responded negatively on the grounds that the amendment is defective. However, I had hoped to hear from him a response to the intention of the amendment. The intention was to ensure that if large donors to charities, whether by gifts of land, securities or cash, do not have sufficient income in the year of the gift to take advantage of the income tax offset, they should be able to cast back the value of the gift for up to three years and gain the full income tax incentive on the gift. I apologise for the imperfect wording of the amendment, but it is tricky territory.
      The Government reject the amendment on technical grounds, because they want to limit the income tax incentive to the year in question. Our worry is that that would not encourage major gifts, especially of property, because the income tax write-off will not work.
      I wanted the Minister to reply to the substance of my argument. Even if the amendment is defective, we will divide the House on it as a matter of principle. We want
      452
      the tax incentives for gifting highly valuable assets to work as well in this country as they have worked in the United States.
      Question put, That the amendment be made:—
      The House divided: Ayes 151, Noes 260.

      Division No. 294]

      [4.10pm

      AYES

      Ainsworth, Peter (E Surrey)

      Hogg, Rt Hon Douglas

      Allan, Richard

      Holmes, Paul

      Amess, David

      Horam, John

      Arbuthnot, Rt Hon James

      Hughes, Simon (Southwark N)

      Atkinson, David (Bour'mth E)

      Hunter, Andrew

      Bacon, Richard

      Jack, Rt Hon Michael

      Baron, John

      Jenkin, Bernard

      Beggs, Roy

      Key, Robert

      Beresford, Sir Paul

      Knight, Rt Hon Greg (E Yorkshire)

      Boswell. Tim

      Laing, Mrs Eleanor

      Bottomley, Peter (Worthing W)

      Lait, Mrs Jacqui

      Brady, Graham

      Lamb, Norman

      Brake, Tom

      Lansley, Andrew

      Brazier, Julian

      Laws, David

      Brooke, Mrs Annette L

      Leigh, Edward

      Burnett, John

      Lewis, Dr Julian(New Forest E)

      Burns, Simon

      Liddell-Grainger, Ian

      Burnside, David

      Lidington, David

      Burstow, Paul

      Llwyd, Elfyn

      Burt, Alistair

      Luff, Peter

      Butterfill, John

      MacKay, Rt Hon Andrew

      Calton, Mrs Patsy

      Maclean, Rt Hon David

      Campbell, Rt Hon Menzies (NE Fife)

      McLoughlin, Patrick

      Malins, Humfrey

      Cash, William

      Maples, John

      Chapman, Sir Sydney (Chipping Barnet)

      Mates, Michael

      Mawhinney, Rt Hon Sir Brian

      Clappison, James

      Mercer, Patrick

      Cotter, Brian

      Mitchell, Andrew (Sutton Coldfield)

      Cran, James

      Moore, Michael

      Curry, Rt Hon David

      Moss, Malcolm

      Davey, Edward (Kingston)

      Murrison, Dr Andrew

      Davies, Quentin (Grantham)

      Öpik, Lembit

      Davis, Rt Hon David (Haltemprice)

      Osborne, George(Talton)

      Djanogly, Jonathan

      Page, Richard

      Doughty, Sue

      Paice, James

      Duncan, Peter (Galloway)

      Prisk, Mark

      Evans, Nigel

      Redwood, Rt Hon John

      Ewing, Annabelle

      Reid, Alan (Argyll & Bute)

      Fabricant, Michael

      Rendel, David

      Fallon, Michael

      Robertson, Angus (Moray)

      Field, Mark (Cities of London)

      Roe, Mrs Marion

      Flight, Howard

      Ruffley, David

      Flook, Adrian

      Russell, Bob (Colchester)

      Forth, Rt Hon Eric

      Salmond, Alex

      Foster, Don (Bath)

      Sanders, Adrian

      Francois, Mark

      Selous, Andrew

      Garnier, Edward

      Shephard, Rt Hon Mrs Gillian

      George, Andrew (St Ives)

      Simmonds, Mark

      Gibb, Nick

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

      Gillan, Mrs Cheryl

      Spelman, Mrs Caroline

      Goodman, Paul

      Spicer, Sir Michael

      Grayling, Chris

      Spink, Bob

      Green, Damian (Ashford)

      Spring, Richard

      Green, Matthew (Ludlow)

      Stanley, Rt Hon Sir John

      Greenway, John

      Streeter, Gary

      Grieve, Dominic

      Stunell, Andrew

      Hague, Rt Hon William

      Swayne, Desmond

      Hammond, Philip

      Swire, Hugo

      Hancock, Mike

      Syms, Robert

      Harris, Dr Evan (Oxford W)

      Tapsell, Sir Peter

      Hayes, John

      Taylor, Ian (Esher & Walton)

      Heath, David

      Taylor, John (Solihull)

      Heathcoat-Amory, Rt Hon David

      Taylor, Matthew (Truro)

      Hermon, Lady

      Taylor, Sir Teddy

      Hoban, Mark

      Thomas, Simon (Ceredigion)

      453

      Tonge, Dr Jenny

      Willetts, David

      Tredinnick, David

      Williams, Hywel (Caemarfon)

      Trend, Michael

      Willis, Phil

      Turner, Andrew (Isle of Wight)

      Wilshire, David

      Tyler, Paul

      Winterton, Ann (Congleton)

      Tyrie, Andrew

      Yeo, Tim

      Waterson, Nigel

      Young, Rt Hon Sir George

      Watkinson, Angela

      Younger-Ross, Richard

      Weir, Michael

      Whittingdale, John

      Tellers for the Ayes:

      Widdecombe, Rt Hon Miss Ann

      Mr. Laurence Robertson and Mr. Charles Hendry.

      Wiggin, Bill

      Wilkinson, John

      NOES

      Adams, Mrs Irene (Paisley N)

      Cunningham, Rt Hon Dr Jack (Copeland)

      Allen, Graham

      Anderson, Rt Hon Donald (Swansea E)

      Cunningham, Jim (Cov'try S)

      Curtis-Thomas, Mrs Claire

      Armstrong, Rt Hon Ms Hilary

      Davey, Valerie (Bristol W)

      Atkins, Charlotte

      David, Wayne

      Austin, John

      Davidson, Ian

      Bailey, Adrian

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

      Baird, Vera

      Barnes, Harry

      Dawson, Hilton

      Begg, Miss Anne

      Dean, Mrs Janet

      Bell, Stuart

      Dhanda, Parmjit

      Bennett, Andrew

      Dismore, Andrew

      Berry, Roger

      Dobbin, Jim

      Best, Harold

      Dobson, Rt Hon Frank

      Betts, Clive

      Donohoe, Brian H

      Blackman, Liz

      Doran, Frank

      Blears, Ms Hazel

      Dowd, Jim

      Blizzard, Bob

      Drew, David

      Borrow, David

      Drown, Ms Julia

      Bradley, Rt Hon Keith (Withington)

      Eagle, Angela (Wallasey)

      Bradshaw, Ben

      Edwards, Huw

      Brennan, Kevin

      Efford, Clive

      Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

      Ennis, Jeff

      Etherington, Bill

      Bryant, Chris

      Farrelly, Paul

      Buck, Ms Karen

      Field, Rt Hon Frank (Birkenhead)

      Burden, Richard

      Fisher, Mark

      Burgon, Colin

      Flint, Caroline

      Cairns, David

      Flynn, Paul

      Campbell, Alan (Tynemouth)

      Foster, Rt Hon Derek

      Campbell, Ronnie (Blyth V)

      Foulkes, George

      Caplin, Ivor

      Gapes, Mike

      Casale, Roger

      Gardiner, Barry

      Caton, Martin

      George, Rt Hon Bruce (Walsall S)

      Challen, Colin

      Godsiff, Roger

      Chapman, Ben (Wirral S)

      Goggins, Paul

      Chaytor, David

      Griffiths, Win (Bridgend)

      Clapham, Michael

      Grogan, John

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hain, Rt Hon Peter

      Hall, Mike (Weaver Vale)

      Clark, Paul (Gillingham)

      Hall, Patrick (Bedford)

      Clarke, Rt Hon Tom (Coatbridge)

      Hamilton, David (Midlothian)

      Clarke, Tony (Northampton S)

      Hanson, David

      Clelland, David

      Harman, Rt Hon Ms Harriet

      Clwyd, Ann

      Harris, Tom (Glasgow Cathcart)

      Coaker, Vernon

      Healey, John

      Coffey, Ms Ann

      Henderson, Doug (Newcastle N)

      Cohen, Harry

      Henderson, Ivan (Harwich)

      Coleman, Iain

      Hendrick, Mark

      Connarty, Michael

      Hepburn, Stephen

      Cook, Frank (Stockton N)

      Heppell, John

      Cook, Rt Hon Robin (Livingston)

      Hesford, Stephen

      Cooper, Yvette

      Heyes, David

      Corbyn, Jeremy

      Hill, Keith

      Cox, Tom

      Hinchliffe, David

      Cranston, Ross

      Hodge, Margaret

      Crausby, David

      Hood, Jimmy

      Cruddas, Jon

      Hope, Phil

      Cryer, John (Hornchurch)

      Hopkins, Kelvin

      Cummings, John

      Howarth, Rt Hon Alan (Newport E)

      454

      Howarth, George (Knowsley N)

      Pickthall, Colin

      Hughes, Beverley (Stretford)

      Pike, Peter

      Hughes, Kevin (Doncaster N)

      Plaskitt, James

      Hurst, Alan

      Pond, Chris

      Illsley, Eric

      Pound, Stephen

      Irranca-Davies, Huw

      Prentice, Ms Bridget (Lewisham E)

      Jackson, Glenda (Hampstead)

      Prentice, Gordon (Pendle)

      Jamieson, David

      Primarolo, Dawn

      Jenkins, Brian

      Prosser, Gwyn

      Jones, Jon Owen (Cardiff C)

      Quinn, Lawrie

      Jones, Martyn (Clwyd S)

      Robertson, John (Glasgow Anniesland)

      Joyce, Eric

      Kaufman, Rt Hon Gerald

      Roche, Mrs Barbara

      Keeble, Ms Sally

      Rooney, Terry

      Keen, Ann (Brentford & Isleworth)

      Roy, Frank

      Kelly, Ruth

      Ruane, Chris

      Kemp, Fraser

      Ruddock, Joan

      Kidney, David

      Ryan, Joan

      Kilfoyle, Peter

      Salter, Martin

      King, Ms Oona (Bethnal Green)

      Sarwar, Mohammad

      Kumar, Dr Ashok

      Savidge, Malcolm

      Ladyman, Dr Stephen

      Sawford, Phil

      Lawrence, Mrs Jackie

      Sedgemore, Brian

      Laxton, Bob

      Shaw, Jonathan

      Lazarowicz, Mark

      Sheerman, Barry

      Lepper, David

      Sheridan, Jim

      Lewis, Terry (Worsley)

      Shipley, Ms Debra

      Linton, Martin

      Simon, Siôn

      Lloyd, Tony

      Singh, Marsha

      Love, Andrew

      Skinner, Dennis

      Luke, Iain

      Smith, Rt Hon Andrew (Oxford E)

      Lyons, John

      Smith, Angela (Basildon)

      McAvoy, Thomas

      Smith, Rt Hon Chris (Islington S)

      McCabe, Stephen

      Smith, John (Glamorgan)

      McCartney, Rt Hon Ian

      Smith, Llew (Blaenau Gwent)

      McDonagh, Siobhain

      Steinberg, Gerry

      MacDonald, Calum

      Stewart, David (Inverness E)

      McDonnell, John

      Stewart, Ian (Eccles)

      McFall, John

      McKechin, Ann

      Stinchcombe, Paul

      McKenna, Rosemary

      Stoate, Dr Howard

      Mackinlay, Andrew

      Sutcliffe, Gerry

      McNamara, Kevin

      Taylor, Rt Hon Ann (Dewsbury)

      MacShane, Denis

      Taylor, Ms Dari (Stockton S)

      McWalter, Tony

      Thomas, Gareth (Clwyd W)

      McWilliam, John

      Thomas, Gareth (Harrow W)

      Mahmood, Khalid

      Tipping, Paddy

      Mahon, Mrs Alice

      Todd, Mark

      Mallaber, Judy

      Touhig, Don

      Mandelson, Rt Hon Peter

      Truswell, Paul

      Marris, Rob

      Turner, Dennis (Wolverh'ton SE)

      Marsden, Gordon (Blackpool S)

      Turner, Neil (Wigan)

      Marshall, David (Shettleston)

      Twigg, Derek (Halton)

      Marshall, Jim (Leicester S)

      Twigg, Stephen (Enfield)

      Martlew, Eric

      Tynan, Bill

      Meale, Alan

      Vis, Dr Rudi

      Merron, Gillian

      Walley, Ms Joan

      Mitchell, Austin (Gt Grimsby)

      Ward, Claire

      Mole, Chris

      Wareing, Robert N

      Moran, Margaret

      Watson, Tom

      Morgan, Julie

      White, Brian

      Mountford, Kali

      Whitehead, Dr Alan

      Mudie, George

      Williams, Rt Hon Alan (Swansea W)

      Munn, Ms Meg

      Murphy, Denis (Wansbeck)

      Williams, Mrs Betty (Conwy)

      Murphy, Jim (Eastwood)

      Winterton, Ms Rosie (Doncaster C)

      Murphy, Rt Hon Paul (Torfaen)

      Wray, James

      Naysmith, Dr Doug

      Wright, Anthony D (Gt Yarmouth)

      Olner, Bill

      Wright, David (Telford)

      O'Neill, Martin

      Wright, Tony (Cannock)

      Organ, Diana

      Wyatt, Derek

      Osborne, Sandra (Ayr)

      Palmer, Dr Nick

      Tellers for the Noes:

      Perham, Linda

      Jim Fitzpatrick and Mr. Ian Pearson.

      Picking, Anne

      Question accordingly negatived.

    Clause 99
      FILMS: RESTRICTIONS OF RELIEF TO FILMS GENUINELY INTENDED FOR THEATRICAL RELEASE
      Amendment made: No. 13, in page 76, line 13, leave out Clause 99.—[Dawn Primarolo.]
    Clause 114

      CONTRACTS FOR THE SALE OF AN ESTATE OR INTEREST IN LAND CHARGEABLES AS CONVEYANCES
      Amendments made: No. 19, in page 92, line 9, leave out from first "of' to "exceeds" in line 10 and insert "the consideration".
      No. 20, in page 92, line 13, leave out from "consideration" to "exceeds" in line 14.
      No. 21, in page 93, line 1, leave out subsections (6) and (7).
      No. 22, in page 93, line 15, at end insert—
      '() Schedule [Stamp duty: contracts chargeable as conveyances: supplementary provisions] contains provisions supplementing this section.'.
      No. 23, in page 93, line 16, leave out subsection (9).
      No. 24, in page 93, line 17, leave out "applies" and insert "and that Schedule apply".[Dawn Primarolo.]

    New Schedule 1
      STAMP DUTY: CONTRACTS CHARGEABLE AS CONVEYANCES: SUPPLEMENTARY PROVISIONS—

        SUBSALES
        Introduction
        1 This Part of this Schedule has effect for affording relief from duty under section 114 (contracts chargeable as conveyances) on a subsale.
        Meaning of "subsale"
        2 For the purposes of this Schedule there is a subsale—

        where the purchaser under a contract or agreement for the sale of an estate or interest in land in the United Kingdom ("the original sale"), without having obtained a conveyance of the property contracted to be sold, contracts to sell the whole or part of the property to another person, or

        where the sub-purchaser under a subsale of an estate or interest in land in the United Kingdom, without having obtained a conveyance of the property contracted to be sold, contracts to sell to another person the whole or part of the property contracted to he sold by the original sale,

        so as to entitle that person to call for a conveyance from the original seller.
        Relief where duty paid on original sale or earlier subsale
        3 (1) Where duty under section 114 has been paid—

        on the original sale, or

        on an intervening subsale,

        duty under that section on a subsale, or subsequent subsale, is chargeable only in respect of the amount (if any) by which the chargeable considerationon that transaction exceeds the chargeable consideration on the earlier transaction.
        (2)If there is more than one such earlier transaction on which duty has been paid, the reference in sub-paragraph (1) to the chargeable consideration on the earlier transaction shall be read as a reference to the higher or highest amount of chargeable consideration on which duty has been paid.
        (3)If the subsale does not relate to the whole of the property to which the earlier transaction related, the references in sub-paragraphs (1) and (2) to the chargeable consideration on an earlier transaction shall be read as references to an appropriate proportion of that consideration.
        (4)What is an appropriate proportion shall be determined on a just and reasonable basis having regard to the subject matter of the subsale and of the earlier transaction.
        (5)For the purposes of this paragraph the chargeable consideration on a transaction is the consideration that falls to be brought into account in determining the duty chargeable on it.
        (6)Where under this paragraph duty on a subsale is chargeable in respect of part only of the consideration for the subsale, it is chargeable at the rate that would be applicable if the whole of the chargeable consideration on the subsale were taken into account.

        SUBSEQUENT CONVEYANCE OR TRANSFER
        Introduction
        4 (1) This Part of this Schedule has effect for affording relief where ad valorem duty is chargeable both—

        under section 114 on a contract or agreement ("the original sale"), and

        on a subsequent conveyance or transfer by the original seller to the purchaser, or a sub-purchaser, in conformity with that contract or agreement.

        (2) References in this Part to the purchaser under the original sale, or a sub-purchaser under a subsale, include a person by whom the rights of the purchaser, or a sub-purchaser, are exercisable by virtue of any assignment (in Scotland, assignation) or agreement (other than a subsale).
        Conveyance or transfer of property contracted to be sold
        5 (1) Where the original seller conveys the whole of the property contracted to be sold—

        to the purchaser. Or

        to a sub-purchaser in circumstances in which section 58(4) of the Stamp Act 1891 (c. 39) applies (conveyance chargeable only on consideration moving from sub-purchaser),

        the conveyance or transfer is chargeable with duty only to the extent (if any) that the ad valorem duty chargeable on it (apart from this sub-paragraph) exceeds the duty paid under section 114 on the original sale together with the amount of any such duty paid on an intervening subsale.
        (2) Where—

        the original seller conveys the property contracted to be sold to different sub-purchasers in parts or parcels. And

        section 58(5) of the Stamp Act 1891 (c. 39) applies (conveyance chargeable only on consideration moving from sub-purchaser),

        the conveyance or transfer of each part or parcel is chargeable with duty only to the extent (if any) that the ad valorem duty chargeable on it (apart from this sub-paragraph) exceeds an appropriate proportion of the ad valorem duty paid on the original sale together with an appropriate proportion of any such duty paid on an intervening subsale.
        (3) What is an appropriate proportion shall be determined on a just and reasonable basis having regard to the subject matter of the conveyance or transfer and of the earlier transaction.
        (4) Where sub-paragraph (1) or (2) applies to reduce or extinguish the duty payable on a conveyance or transfer, the Commissioners shall, upon application and upon production of the earlier instrument or instruments, duly stamped, either—

        denote the payment of the whole of the ad valorem duty upon the conveyance or transfer, or

        transfer to the conveyance or transfer the ad valorem duty paid on the earlier instrument or instruments.

        Repayment of duty in certain cases
        6 (1) Where—

        duty is paid under section 114 on the original sale,

        one or more conveyances or transfers are executed in conformity with that contract or agreement so that the whole of the property contracted to be sold is duly conveyed to a purchaser or to one or more sub-purchasers,

        those conveyances or transfers are all duly stamped, and

        the aggregate amount of the duty that would have been paid on those conveyances or transfers but for duty having been previously paid on the original sale is less than the duty paid on the original sale,

        the Commissioners shall repay the difference to the person by whom the duty was paid on the original sale.
        (2) If duty has been paid under section 114 on one or more intervening subsales, sub-paragraph (1) has effect with the following modifications—

        the reference to duty having been paid on the original sale shall be read as a reference to duty having been paid either on the original sale or on an intervening subsale;

        the reference to the amount of duty paid on the original sale shall be read as a reference to the aggregate of the amounts paid on the original sale and any intervening subsales, and

        any repayment shall be apportioned among the persons by whom those amounts were paid.

        (3) The apportionment mentioned in sub-paragraph (2)(c) shall be made on a just and reasonable basis having regard to the subject matter of the original sale and of the subsale or subsales in question.

        GENERAL SUPPLEMENTARY PROVISIONS
        Construction of references to duty on transactions
        7 Any reference in section 114 or this Schedule to duty chargeable or paid on a transaction is to duty chargeable or paid on the stamping of the instrument by which the transaction is effected.
        Transactions relating to land in the UK and to other property
        8 (1) Where a transaction relates both to land in the United Kingdom and to other property, section 114 and this Schedule apply as if there were separate transactions.
        (2) Similarly, the reference in section 114(1)(b) to a series of transactions is to a series of transactions so far as relating to land in the United Kingdom.
        (3) If, in a case where a transaction or series of transactions relates partly to land in the United Kingdom and partly to other property, the consideration is not apportioned in a manner that is just and reasonable, section 114 and this Schedule shall have effect as if the consideration had been apportioned in such a manner.
        Person claiming relief to establish entitlement
        9 It is for a person claiming any relief under this Schedule to prove to the satisfaction of the Commissioners that he is entitled to relief and in what amount.
        Construction as one
        10 Section 114 and this Schedule shall be construed as one with the Stamp Act 1891 (c. 39).'.—[Dawn Primarolo.]
        Brought up, read the First and Second time, and added to the Bill.

      Schedule 8

        CHARGEABLE GAINS: EXEMPTIONS IN CASE OF SUBSTANTIAL SHAREHOLDING
        Amendment made: No. 12, in page 153, line 36, leave out paragraph 5 and insert—
        5 (1) Where in pursuance of arrangements to which this paragraph applies—

        an untaxed gain accrues to a company ("company A") on a disposal of shares, or an interest in shares or an asset related to shares, in another company ("company B"), and

        before the accrual of that gain—

        company A acquired control of company B, or the same person or persons acquired control of both companies, or

        there was a significant change of trading activities affecting company B at a time when it was controlled by company A, or when both companies were controlled by the same person or persons,

        none of the exemptions in this Schedule applies to the disposal.
        (2) This paragraph applies to arrangements from which the sole or main benefit that (but for this paragraph) could be expected to arise is that the gain on the disposal would, by virtue of this Schedule, not be a chargeable gain.
        (3) For the purposes of sub-paragraph (1)(a) a gain is "untaxed" if the gain, or all of it but a part that is not substantial, represents profits that have not been brought into account (in the United Kingdom or elsewhere) for the purposes of tax on profits for a period ending on or before the date of the disposal.
        (4) The reference in sub-paragraph (3) to profits being brought into account for the purposes of tax on profits includes a reference to the case where—

        an amount in respect of those profits is apportioned to a company resident in the United Kingdom by virtue of subsection (3) of section 747 of the Taxes Act 1988 (imputation of chargeable profits etc of controlled foreign companies), and

        a sum is chargeable on that company in respect of that amount by virtue of subsection (4) of that section for an accounting period of that company ending on or before the date of the disposal.

        (5) For the purposes of sub-paragraph (1)(b)(ii) there is a "significant change of trading activities affecting company B" if—

        there is a major change in the nature or conduct of a trade carried on by company B or a 51% subsidiary of company B, or

        there is a major change in the scale of the activities of a trade carried on by company B or a 51% subsidiary of company B, or

        company B or a 51% subsidiary of company B begins to carry on a trade.

        (6) In this paragraph—
        "arrangements" includes any scheme, agreement or understanding, whether or not legally enforceable;
        "major change in the nature or conduct of a trade" has the same meaning as in section 768 of the Taxes Act (change of ownership of company: disallowance of trading losses);
        "profits" means income or gains (including unrealised income or gains).'.—[Dawn Primarolo.]

      Schedule 28

        DERIVATIVE CONTRACTS: TRANSITIONAL PROVISIONS ETC
        Amendment made: No. 45, in page 375, line 11, leave out sub-paragraphs (4) and (5) and insert—
        '(4) If the sum of the amounts that would, on the assumptions in sub-paragraph (6)(a) and (b), have fallen to be brought into account as regards the contract in accordance with—

        Chapter 2 of Part 2 of the Finance Act 1993 (c. 34), or

        Chapter 2 of Part 4 of the Finance Act 1994 (c. 9),

        for the purposes of computing corporation tax for an old period of the company is different from the sum of the amounts that would, on the assumption in sub-paragraph (6)(c), have fallen to be brought into account as regards the contract in accordance with Schedule 26 for those purposes (if that Schedule had had effect in relation to that period), sub-paragraph (5) shall apply as regards the amount of that difference.
        (5) Where this sub-paragraph applies, the amount of the difference shall be brought into account—

        as a credit under Schedule 26 in the company's first new period, if a greater profit or smaller loss would have been brought into account for the old period under that Schedule, or

        as a debit under that Schedule in the company's first new period, if a smaller profit or greater loss would have been brought into account for the old period under that Schedule.

        (6) The assumptions referred to in sub-paragraph (4) are that—

        section 137 of the Finance Act 1993 (c. 34),

        sections 165 to 168A of the Finance Act 1994 (c. 9), and

        paragraphs 23 to 31 of Schedule 26,

        would not have had effect in the case of the contract.'.—[Dawn Primarolo.]

      Schedule 29

        GAINS AND LOSSES OF A COMPANY FROM INTANGIBLE FIXED ASSETS
        John Healey: I beg to move amendment No. 14, in page 434, line 22, leave out sub-paragraph (4) and insert—
        '(4) Sub-paragraph (1) has effect subject to—

        paragraph 126 (application of Schedule to fungible assets), and

        paragraph 126A (certain assets acquired on transfer of a business treated as existing assets).'.

        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 15 to 18.
        John Healey: I shall be brief. Amendments Nos. 14, 15 and 18 are designed to correct a mismatch which has come to light between schedule 29 and the capital gains rules on company reconstructions. Amendments Nos. 16 and 17 deal with a problem in the drafting that was identified by the hon. Member for Arundel and South Downs (Mr. Flight) in Committee. The hon. Gentleman was assiduous throughout our proceedings in Committee, paying great attention to detail. I promised further consideration when he withdrew his amendments in Committee. Amendments Nos. 16 and 17 are the result of that further consideration. They will help to ensure that
        460
        the major reform of corporation tax treatment of intangible assets will now work in a way that all those with an interest in these matters would wish.
        Amendment agreed to.
        Amendments made: No. 15, in page 437, line 28, at end insert—
        126A (1) This paragraph applies where—

        an asset that is an existing asset in the hands of a company ("the transferor company") is transferred to another company ("the transferee company"), and

        the transfer is one in relation to which—

        section 139 of the Taxation of Chargeable Gains Act 1992 (reconstruction or amalgamation involving transfer of business), or

        section 140A of that Act (transfer of UK trade to company resident in another member State),

        applies with the effect that the transferor company is treated for the purposes of that Act as disposing of the asset for a consideration that secures that neither a gain nor a loss accrues to that company.
        (2) Where this paragraph applies the asset shall be treated for the purposes of this Schedule as an existing asset in the hands of the transferee company.
        (3) This paragraph does not apply where the transfer mentioned in sub-paragraph (1) occurred before 28th June 2002.'.
        No. 16, in page 437, line 39, leave out sub-paragraph (3) and insert—
        '(3) If the asset—

        (a)was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and

        (b)is a chargeable intangible asset immediately after the beginning of that period,

        it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
        No. 17, in page 438, line 16, leave out sub-paragraph (4) and insert—
        '(4) If the asset—

        was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and

        is a chargeable intangible asset immediately after the beginning of that period,

        it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
        No. 18, in page 444, line 5, at end insert "(and see paragraph 126A)".—[Dawn Primarolo.]

      Schedule 31

        GAINS OF INSURANCE COMPANY FROM VENTURE CAPITAL INVESTMENT PARTNERSHIP
        Amendments made: No. 35, in page 456, line 40, leave out—
        'and also includes any debentures'.
        No. 36, in page 456, line 41, at end insert—
        'and also includes any debentures'.
        No. 37, in page 458, line 20, leave out sub-paragraph (2).-[Dawn Primarolo.]

      Schedule 37

        AGGREGATES LEVY AMENDMENTS
        Mr. Alex Salmond: I beg to move amendment No. 11, in page 478, line 29, at end insert—
        '(3A) In subsection (3) at end insert—
        "(g) it consists wholly of uncrushed aggregates to be used for harbour sea defence projects or coastal erosion protection.".'.
        We were making such good progress too, but now we come to something slightly more controversial, and something significant to the economic life and environmental concerns of many coastal communities throughout the United Kingdom.
        I have debated the issue several times with the Minister's predecessor in a number of different places, including Westminster Hall and a statutory instruments Committee. Given that that Minister was promoted to the Cabinet half way through these debates, it could only be that his promotion was based on his superb ability to deliver a very bad case in a really eloquent way. That is what delivered the right hon. Gentleman's promotion. I commend the present Minister, however, and perhaps he could deliver a much better case in an eloquent way. Who knows where he might end up if he were able to do that? A number of Members across the House would appreciate a reasonable concession on this important issue.
        The amendment is specifically about exempting coastal protection defences from the imposition of the aggregates levy. We have had debates in other places at other stages of consideration on the aggregates levy as a whole, and I do not intend to repeat these arguments, except to say that there are aspects of the levy that should cause concern even for those who say that it was justified on environmental grounds.,
        For example, there is regional disparity in the impact of the levy. The levy is gathered on aggregates as produced. The Government announced that there was to be a fiscally neutral measure and proceeded to offer a small rebate on national insurance contributions. However, areas that have few people but many aggregates—for example, rural areas such as Scotland, Wales, much of Northern Ireland and much of the north of England—could end up paying a substantial proportion of the tax, whereas areas with large numbers of people will get a rebate in the form of national insurance contributions.
        An example that I shall give concerns Peterhead Bay Authority. The impact of the aggregates tax on its proposed breakwater is an extra £1.2 million imposition. In return, it will receive a rebate of about £650 in national insurance contributions. I accept that that is an extreme example, but even when a tax is announced as neutral by the Treasury, it is as well for many people in many areas carefully to count their fingers to assess what the impact will be in practical terms.
        I have a real concern. Unlike the oil tax, which, as we debated yesterday, was a surprise to many people, not least some Labour Members representing constituencies in the north-east of Scotland, the aggregates levy, to be fair to the Government, was announced several Finance
        462
        Bills ago. It went through exhaustive consultation and debate with the industry. There is nothing wrong with a consultative process in terms of the levy, but basically the problem with the tax is that the Government, after that consultation, went for a sharp change in direction, which took in things such as coastal defences and the aggregates that are used for those defences. Originally the Government had intended them not to be taxed, but that was an unintended consequence very late on in the process of consultation.
        The Government originally envisaged that aggregates used for coastal defences would be untaxed because by and large these are uncrushed, unprocessed and unmachined aggregates. The environmental impact of such aggregates is much less than the ones that have gone through an industrial process. The Government's intention in introducing the tax was to try to substitute reclaimed and recycled aggregates for machine-processed aggregates. In Peterhead Bay Authority's proposal, 99 per cent. of the aggregate to be used for a breakwater in my constituency is uncrushed, unprocessed aggregate from a quarry five miles away. There is no environmental saving whatsoever in taxing that aggregate, as large blocks of rock will be taken from one part of Buchan and moved five miles along the road to another.
        4.30 pm
        There is no environmental gain from putting the finances of that breakwater in jeopardy, but there will be a substantial environmental and economic loss if it is not built. The bay authority, like many small harbour trusts and boards the length and breadth of the country, is responsible for sea defences, protection against the erosion of beaches and sea walls, and other aspects of coastal protection. If we are to believe Government forecasts, there is a genuine possibility that much of southern England may be under water, or at least under threat, within a hundred years or so. On balance, that is bad thing, although it is a close call.
        Given those environmental problems, we can expect a greater call for coastal defences in the next generation. Many of the organisations with responsibility for defences are not multi-million-pound or billion-pound bodies—they are small trust ports or harbour authorities charged with the task of securing the defence of the coastline. In my constituency, Peterhead Bay Authority has been husbanding its resources for 10 years, and has saved up £10 million in revenue. It undertook an extensive consultation to produce the breakwater project, which will provide a calm harbour 365 days of the year—arguably the best deep-water port on the east coast of Scotland—and secure coastal defences. Late in the day, as an unintended consequence of the imposition of the aggregates levy, the authority was faced with an additional bill of —2 million, which has subsequently been reduced to about —1.2 million, but which still makes the economic viability of the project marginal.
        To be fair to the Minister, whom I met this morning, and his predecessor, every Minister or Government spokesman to whom I have spoken is sympathetic to the project in my constituency, and I am sure that they would be sympathetic to ports and bay authorities contemplating similar harbour defences throughout the country. Everyone agrees that such projects are a good thing for the environment and the economy, so why are they being taxed under the aggregates levy? It has been argued that

        463
        the objective of the levy is to secure more recycled aggregates. The technical specifications for the breakwater in my constituency make it impossible to use recycled aggregates. The authority has reduced the use of aggregates to the minimum needed to secure the calming of the harbour for which they have statutory responsibility.
        It is invidious to tax a body that is trying to discharge its responsibilities for protecting the environment and providing an infrastructure to stimulate the economy in north-east Scotland. It would be wrong to make a similar imposition on other authorities which are trying to do comparable things. It is not as if there are not exemptions from the levy. In fact, there are a total of some 22 exemptions, including, for example, the sand for children's playground sandpits. Clay pigeons are exempt from the levy—good news for clay pigeon fanciers across the country.
        Mr. Tom Harris: For real pigeons too.
        Mr. Salmond: I can hear roars of assent, and am sure that Labour Members lobbied hard, as I would have done, and now approve of the exemption of clay pigeons from that iniquitous tax.
        Harbour walls, defences and breakwaters are as important as the pursuit of clay pigeon shooting which, naturally, we all support. I urge the Government to see whether they can find a way of not penalising such important work. Coastal communities are experiencing a range of pressures—those of us representing constituencies with fishing interests are only too well aware of pressures on the fishing industry. Projects undertaken by relatively small organisations to deal with the ever-increasing environmental threat from rising seas are expensive, so it is unfair to impose an additional burden on them, given that their work is for the public good. I urge the Minister, whose predecessor was sympathetic to the argument, but unable to deliver a solution without damaging the integrity of the tax, to use his ingenuity and fresh approach to see whether it is possible to avoid the huge imposition on harbour and bay authorities across the county that is an unintended consequence of the levy.
        Sir Robert Smith: I support the amendment and the arguments of the hon. Member for Banff and Buchan (Mr. Salmond). In particular, I support his point that there are unintended consequences from not thinking through the aggregate tax, as environmental costs will be recycled back into the community. When the environmental impact of quarrying was assessed, much was found to be local to the community in which the quarry is situated. However, the tax takes money away from that community and spends it across the whole country, well away from the quarry. In Peterhead, the fact that the aggregates will have to be transported five miles suggests that any recycling, even if up to specification, would hardly reduce journey times or environmental impact.
        The Government would do well to accept amendment No. 11, which would maintain the status quo on coastal defences and allow them to find another way to close a worrying loophole, which stems from a lack of thought
        464
        about the impact of the aggregate tax and the way in which it would work. I urge the House to support the amendment, but it would be even better if the Government came up with a constructive proposal that would render it superfluous by making it possible to get coastal defences built without an unnecessary tax burden.
        Mr. Alan Reid: I, too, support the amendment tabled by the hon. Member for Banff and Buchan (Mr. Salmond).
        Climate change is leading to higher sea levels and increasingly violent storms, which means that coastal communities are under even greater pressure. Coastal communities on the Atlantic islands suffer from extremely violent storms and are under great threat from coastal erosion. The aggregates tax will simply put a greater burden on Argyll and Bute council and private individuals who want to build coastal defences to protect local villages and roads.
        The tax is supposed to have an environmental purpose, but I do not envisage any environmental benefits from imposing a tax on aggregates used for coastal protection. On islands, for example, the aggregates would be quarried and moved, in some cases only a few hundred yards, for use in coastal protection. Alternatives simply do not exist. The Economic Secretary, in his letter to me of 11 June, said that "alternatives do exist." I should certainly like to hear exactly what they are. On small islands like Tiree and the slate islands of Easdale, Luing and Seil, villages are under threat, as the tax puts a greater burden on their efforts at protection.
        Mr. Salmond: I agree with the hon. Gentleman. The alternative would be to bring a recycled aggregate, which would be suitable for some projects, many hundreds of miles by land and then over sea, but that would hardly meet environmental standards.
        Mr. Reid: That is a valid point. An alternative may exist several hundred miles away, but in environmental and financial terms a long road and sea journey would be more expensive than paying the tax. The alternatives simply do not exist on the islands.
        The purpose of the tax was supposed to be environmental, but I cannot see the environmental benefit in charging people more money to avoid having their house washed into the sea. There cannot be a much greater environmental disaster than that. I hope that the Government will listen today and accept amendment No. 11.
        Mr. Flight: I, too, support amendment No. 11, which is obvious common sense. I am not at all happy with the aggregates levy. I was in Inverness last weekend and I must warn hon. Members that I shall be in Scotland again next week, so sinking England is driving us north.
        Mr. Salmond: We will make appropriate sea defences for the hon. Gentleman's visit.
        Mr. Flight: Yes, sea defences for the invasion.
        Coastal protection work is needed elsewhere in the British Isles and I can see no logic in simply increasing the cost of that as a result of the aggregates levy. If we

        465
        cannot stop that misguided tax altogether, let us at least have the exemption that is proposed here for something that of itself serves an environmental cause.
        John Healey: I welcome this short debate and was glad to discuss the matter with the hon. Member for Banff and Buchan (Mr. Salmond) this morning.
        Let me begin by being blunt. I do not accept that there is a case for exempting virgin aggregates used for harbour sea defences or coastal erosion protection projects from the aggregates levy. The levy is designed to address the significant environmental costs of extracting aggregates, including dust, noise, visual intrusion, loss of amenity and damage to biodiversity. Those environmental costs are associated with aggregates used in coastal defences, just as they are associated with aggregates used in other construction processes.
        Sir Robert Smith: Was not the levy initially aimed at the crushing of aggregates to the fine aggregates, which gave rise to the estimates of the impact of dust, while this measure is aimed at large boulders and rocks, which do not produce that much dust or noise when put into the sea?
        4.45 pm
        John Healey: I shall come to the rationale for the clause dealing with uncrushed aggregates, and treating them in the same way as crushed aggregates, which were part of the original legislation.
        Mr. Salmond: The Minister will confirm that the Government's original intention was not to include uncrushed aggregates within the levy. I understand that he says that the Government responded to consultations with the industry and so on, but if they are environmentally damaging, why were they not included in the original Government proposal?
        John Healey: The nature of legislation is that it evolves. As the hon. Gentleman says, we are making this amendment as a result of points raised with us by the industry, which was concerned that not to do so would create opportunities for avoiding the tax and for unfair competition, to which I shall come in a moment.
        The levy, in building in a recognition of the environmental costs of extraction, recognises those costs by making the price of aggregates better reflect their true social and environmental costs; encouraging more efficient use of aggregates; encouraging the use of alternative materials such as recycled materials and certain waste products in construction; and encouraging the development of a range of other alternatives, including the use of waste glass and tyres in aggregate mixes.
        Mr. Alan Reid: Will the Minister explain where on a small island one can find those materials in sufficient quantities to substitute them for the aggregates that are being taxed?
        John Healey: The hon. Gentleman will appreciate that we simply cannot devise a fiscal regime with a particular constituency in mind. This is a UK tax regime designed to apply consistently across the piece. It is not practicable
        466
        to take into account arguments about whether a particular material is transported five miles or more in primary legislation.
        Mr. Salmond: Surely special island allowances in the fiscal regime, support for lifeline services or the passenger duty, are examples of where a fiscal regime has been tapered to meet social need and common sense, so why not do the same here?
        John Healey: Social need and other objectives are often built into tax and duty legislation. However, the hon. Member for Argyll and Bute (Mr. Reid) was putting the case of his own constituency, and that level of detail cannot be dealt with.
        I have explained why the aggregates levy was introduced on 1 April this year and I want briefly to elaborate on why this Finance Bill brings into its scope aggregates that are extracted as uncrushed aggregates.
        Rob Marris: Will my hon. Friend elucidate for hon. Members such as myself who represent constituencies in the middle of the country? Who pays for coastal erosion projects, for example, on the island of Tiree, and have special island allowances been adjusted for the increased cost that might be incurred by coastal defences as a result of the aggregates levy?
        John Healey: A feature of my hon. Friend's interventions during the passage of this Finance Bill has been a request for such factual information. An exhaustive list of the sources of support for such projects would take some time. They range from local authorities to special Government funds and, in the case of Scotland, the Scottish Executive would have a part to play.
        Armourstone, the large blocks of aggregate that are often used in sea walls or coastal protection, was brought into the scope of the levy as a result of the levy's extension to uncrushed rock. That was a necessary change. Because aggregates can be produced from rock without crushing it, consultation with the industry suggested that there was a danger of distortion of competition and the distinct possibility of avoidance.
        Mr. Alan Reid: The Minister referred to a distortion of competition, but we are talking about small islands. Does he seriously think that there will be two competing quarries on one small island?
        John Healey: The operation of the levy will encourage much greater efficiency in the use of aggregates, which will help in the sort of circumstances to which the hon. Gentleman is referring. It will also help to encourage the use of alternatives to virgin aggregates and a reduction in the amounts that are used.
        If coastal protection projects were to be exempt, as the amendment proposes, requests for exemption would inevitably be made in respect of other worthy projects such as the building of schools and roads, for which there may be the social case to which the hon. Member for Banff and Buchan referred.
        Mr. Roy Beggs: I, too, represent a coastal area, and I cannot foresee any means of reducing the amount of aggregate that is needed to provide

        467
        sea defences. Will the Minister tell us whether the Government plan to compensate those who will have the responsibility of providing sea defences by giving grant aid towards such defences?
        John Healey: If the hon. Gentleman doubts that the levy can help to encourage those who are considering plans for such projects to reduce the amount of aggregate that is involved, he might like to have a word with the hon. Member for Banff and Buchan, as that is exactly what is currently happening as a result of the levy in the Peterhead bay project, to which he referred.
        The Government are sympathetic to the fact that coastal defence projects are designed to protect the environment. We support such projects in a range of ways, but I must tell the hon. Member for Banff and Buchan that I do not propose that an exemption from the aggregates levy should become one of the ways in which we support such work.
        The hon. Gentleman also raised with me the question whether an alternative source of support may be available through the Public Works Loan Board in relation to the Peterhead bay project. I am sympathetic to that idea. As he knows, I am sympathetic to the project itself and would not want it to be jeopardised. I understand that there may be some legal difficulties in securing a loan from the board, but I would urge the local authority to explore that option with the board as a way of providing extra support.
        On that basis, I encourage the hon. Gentleman to ask leave to withdraw his amendment. If he is not prepared to do so, I ask the House to reject it.
        Mr. SalmondI thank the Minister for those last few words. Hon. Members will understand that the bay project in Peterhead is very important to my constituency, not least because of the economic benefits that could flow from it in an area that has been extremely hard pressed economically, so I welcome his sympathy and support. I also freely acknowledge that his predecessor shared a similar opinion. I hope that we can find a way forward through other mechanisms and I accept his bona fides and word on that matter.
        However, I hope that the Minister will not think that I am grudging if I wish to push the matter in principle. Although we agree that the project in my constituency and, no doubt, similar projects in other constituencies, are a good thing, a principle is involved, and I should like to spend a very few minutes explaining what I think is the disagreement in principle.
        As I pointed out, the Government originally accepted that uncrushed, unmachined aggregates did not pose the same risk of environmental damage as machine-processed aggregates. They moved from that position only because it was suggested that there might well be areas of exemption and unfair competition. Indeed, if I had proposed in the amendment again to exempt unprocessed aggregates, that would have been a fair argument against it. However, the amendment suggests only that as coastal defences are a good thing for the community, they should be exempt.
        I pointed out to the Minister that some 22 exemptions were already covered, arid I gave some illustrations involving clay pigeons and other things. I have no quarrel
        468
        with those exemptions and have suggested merely that approved coastal defence projects seem to me a legitimate exemption.
        Sir Robert Smith: Did the hon. Gentleman notice that the Minister's strongest argument was that he was frightened of agreeing to add coastal defences to the list because someone else might want to be included on it afterwards? That is one the weakest arguments to have come from the Government. Obviously, the coastal defence issue would be defined by the fact that there were no alternatives.
        Mr. Salmond: That point makes itself.
        I have a lot of sympathy with the Minister, as he has had to argue a very difficult case. His predecessor had exactly the same difficulty in Westminster Hall and in the Committee considering the statutory instrument. Ministers sometimes find themselves in that position, but they also have a wider responsibility. When a case appears very difficult to progress, it may be because there is something wrong with the argument that the Minister is being asked to deliver.
        The case of the island communities has been made. Other legislation sets out special requirements for such communities and I see no reason why the Bill should not contain similar measures. In respect of the particular case in which I have a constituency interest, it is impossible to argue that environmental damage will be caused by taking materials from Stirlinghill quarry five miles along the road, with community support, and putting them in the breakwater to calm the harbour. There is no environmental concern in my constituency.
        Rob MarrisI appreciate that that may be the case in the hon. Gentleman's constituency, but perhaps he will also accept that it might not be the case in other parts of the United Kingdom. Would not a better way of addressing the issue be for those in Banff and Buchan, Tiree and other places to seek greater grant aid, rather than to change the basis of the tax system for the whole country?
        Mr. Salmond: I thought that I was doing quite well in gaining the Minister's sympathy with regard to the Public Works Loan Board. If the hon. Gentleman is suggesting that we up the ante for grants, I would be the first to agree. None the less, he has a fair point. When introducing legislation, we have to look for unintended consequences. If the Government had said that they were going to end up taxing coastal defences without having meant to do so and were putting in place fiscal help to compensate through grant aid, his point would have been well made. We are not in that position, however, and the reason for tabling the amendment progressing the case is to advertise to the Minister that there is a genuine problem that will affect my constituency immediately and will very shortly affect island constituencies. I suggest that it will also affect coastal constituencies throughout the United Kingdom. The problem needs to be dealt with in one way or another.
        While I welcome the Minister's assurances and sympathy in relation to the Public Works Loan Board—the principle could perhaps be applied not only in my constituency, but to appropriate cases in a wider sphere—

        469
        I would like to press the amendment in principle. I believe that coastal defences are a good thing and should not be taxed, because the community purpose that they serve will increase in future, not decrease.
        Question put,That the amendment be made:—
        The House divided:Ayes 161, Noes 263.

        Division No. 295]

        [4.58 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Harris, Dr Evan (Oxford W)

        Allan, Richard

        Hayes, John

        Amess, David

        Heath, David

        Arbuthnot, Rt Hon James

        Heathcoat-Amory, Rt Hon David

        Atkinson, David (Bour'mth E)

        Hendry, Charles

        Atkinson, Peter (Hexham)

        Hermon, Lady

        Bacon, Richard

        Hoban, Mark

        Baron, John

        Hogg, Rt Hon Douglas

        Beggs, Roy

        Holmes, Paul

        Beith, Rt Hon A J

        Horam, John

        Beresford, Sir Paul

        Howarth, Gerald (Aldershot)

        Bottomley, Peter (Worthing W)

        Hughes, Simon (Southwark N)

        Brady, Graham

        Hunter, Andrew

        Brake, Tom

        Jack, Rt Hon Michael

        Brazier, Julian

        Jenkin, Bernard

        Brooke, Mrs Annette L

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        Burns, Simon

        Burnside, David

        Key, Robert

        Burstow, Paul

        Kirkbride, Miss Julie

        Burt, Alistair

        Knight, Rt Hon Greg (E Yorkshire)

        Buttetfill, John

        Laing, Mrs Eleanor

        Cable, Dr Vincent

        Lait, Mrs Jacqui

        Calton, Mrs Patsy

        Lamb, Norman

        Cameron, David

        Lansley, Andrew

        Campbell, Rt Hon Menzies

        Laws, David (NE Fife)

        Leigh, Edward

        Cash, William

        Lewis, Dr Julian (New Forest E)

        Chapman, Sir Sydney (Chipping Barnet)

        Liddell-Grainger, Ian

        Lidington, David

        Clappison, James

        Llwyd, Elfyn

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Luff, Peter

        MacKay, Rt Hon Andrew

        Cotter, Brian

        Maclean, Rt Hon David

        Cran, James

        McLoughlin, Patrick

        Curry, Rt Hon David

        Malins, Humfrey

        Davey, Edward (Kingston)

        Maples, John

        Davies, Quentin (Grantham)

        Mates, Michael

        Davis, Rt Hon David (Haltemprice)

        Mawhinney, Rt Hon Sir Brian

        Djanogly, Jonathan

        Mercer, Patrick

        Doughty, Sue

        Mitchell, Andrew (Sutton Coldfield)

        Duncan, Peter(Galloway)

        Moore, Michael

        Duncan Smith, Rt Hon Iain

        Moss, Malcolm

        Evans, Nigel

        Murrison, Dr Andrew

        Ewing, Annabelle

        Norman, Archie

        Fabricant, Michael

        Osborne, George (Tatton)

        Fallon, Michael

        Ottaway, Richard

        Feid, Mark (Cities of London)

        Page, Richard

        Fight, Howard

        Paice, James

        Flook, Adrian

        Price, Adam

        Forth, Rt Hon Eric

        Prisk, Mark

        Foster, Don (Bath)

        Redwood, Rt Hon John

        Francois, Mark

        Reid, Alan (Argyll & Bute)

        George, Andrew (St Ives)

        Rendel, David

        Gibb, Nick

        Robathan, Andrew

        Gillan, Mrs Cheryl

        Robertson, Angus (Moray)

        Goodman, Paul

        Robertson, Laurence (Tewk'b'ry)

        Grayling, Chris

        Roe, Mrs Marion

        Green, Damian (Ashford)

        Ruffley, David

        Greenway, John

        Salmond, Alex

        Grieve, Dominic

        Selous, Andrew

        Hague, Rt Hon William

        Shephard, Rt Hon Mrs Gillian

        Hammond, Philip

        Simmonds, Mark

        Hancock, Mike

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

        470

        Spelman, Mrs Caroline

        Tyler, Paul

        Spicer, Sir Michael

        Tyrie, Andrew

        Spink, Bob

        Waterson, Nigel

        Spring, Richard

        Watkinson, Angela

        Stanley, Rt Hon Sir John

        Weir, Michael

        Streeter, Gary

        Whittingdale, John

        Stunell Andrew

        Widdecombe, Rt Hon Miss Ann

        Swayne, Desmond

        Wiggin, Bill

        Swire Hugo

        Wilkinson, John

        Syms Robert

        Willets David

        Tapsel Sir Peter

        Williams, David

        Tapsell, Sir Peter

        Williams, Roger (Brecon)

        Taylor, Ian (Esher & Walton)

        Wills, Phil

        Taylor, John (Solihull)

        Wilsire David

        Winterton, Ann (Congleton)

        Taylor, Matthew (Truro)

        Yeo, Tim

        Taylor, Sir Teddy

        Young, Rt Hon Sir George

        Thurso, John

        Younger-Ross, Richard

        Tonge, Dr Jenny

        Tredinnick, David

        Tellers for the Ayes:

        Trend, Michael

        Mr. Simon Thomas and Hywel Williams.

        Turner, Andrew (Isle of Wight)

        NOES

        Abbott, Ms Diane

        Cook, Frank (Stockton N)

        Adams, Mrs Irene (Paisley N)

        Cook, Rt Hon Robin (Livingston)

        Ainger, Nick

        Cooper, Yvette

        Allen, Graham

        Corbyn, Jeremy

        Anderson, Janet (Rossendale)

        Cousins, Jim

        Armstrong, Rt Hon Ms Hilary

        Cox, Tom

        Atkins, Charlotte

        Cranston, Ross

        Austin, John

        Crausby, David

        Bailey, Adrian

        Cruddas, Jon

        Baird, Vera

        Cryer, John (Hornchurch)

        Banks, Tony

        Cunningham, Jim (Cov'try S)

        Barnes, Harry

        Curtis-Thomas, Mrs Claire

        Begg, Miss Anne

        Davey, Valerie (Bristol W)

        Bell, Stuart

        David, Wayne

        Bennett, Andrew

        Davidson, Ian

        Berry, Roger

        Davies, Geraint (Croydon C)

        Best, Harold

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

        Betts, Clive

        Blackman, Liz

        Dawson, Hilton

        Blears, Ms Hazel

        Dean, Mrs Janet

        Blizzard, Bob

        Dhanda, Parmjit

        Borrow, David

        Dobbin, Jim

        Bradley, Rt Hon Keith (Withington)

        Dobson, Rt Hon Frank

        Bradley, Peter (The Wrekin)

        Donohoe, Brian H

        Bradshaw, Ben

        Doran, Frank

        Brennan, Kevin

        Dowd, Jim

        Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

        Drew, David

        Drown, Ms Julia

        Bryant, Chris

        Eagle, Angela (Wallasey)

        Buck, Ms Karen

        Edwards, Huw

        Burden, Richard

        Efford, Clive

        Burgon, Colin

        Ennis, Jeff

        Cairns, David

        Farrelly, Paul

        Campbell, Alan (Tynemouth)

        Field, Rt Hon Frank (Birkenhead)

        Campbell, Ronnie (Blyth V)

        Fisher, Mark

        Casale, Roger

        Fitzpatrick, Jim

        Caton, Martin

        Flint, Caroline

        Cawsey, Ian

        Flynn, Paul

        Challen, Colin

        Foster, Rt Hon Derek

        Chapman, Ben(Wirral S)

        Foulkes, George

        Chaytor, David

        Gapes, Mike

        Clapham, Michael

        Gardiner, Barry

        Clark, Dr Lynda (Edinburgh Pentlands)

        George, Rt Hon Bruce (Walsall S)

        Gerrard, Neil

        Clarke, Rt Hon Tom (Coatbridge)

        Godsiff, Roger

        Clarke, Tony(Northampton S)

        Goggins, Paul

        Clelland, David

        Griffiths, Win (Bridgend)

        Clwyd, Ann

        Grogan, John

        Coaker, Vernon

        Hain, Rt Hon Peter

        Coffey, Ms Ann

        Hall, Mike (Weaver Vale)

        Cohen, Harry

        Hall, Patrick (Bedford)

        Coleman, Iain

        Hamilton, David (Midlothian)

        Connarty, Michael

        Hanson, David

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        Harman, Rt Hon Ms Harriet

        Moran, Margaret

        Harris, Tom(Glasgow Cathcart)

        Morgan, Julie

        Healey, John

        Mountford, Kali

        Henderson, Doug(Newcastle N)

        Mudie, George

        Henderson Ivan(Harwich)

        Munn, Ms Meg

        Hendrick, Mark

        Murphy, Denis(Wansbeck)

        Hepburn, Stephen

        Murphy, Jim(Eastwood)

        Heppell, John

        Naysmith, Dr Doug

        Hesford, Stephen

        O'Brien, Mike(N Warks)

        Heyes, David

        Olner, Bill

        Hill Keith

        O'Neill, Martin

        Hinchliffe, David

        Organ, Diana

        Hodge, Margaret

        Osborne, Sandra(Ayr)

        Hood, Jimmy

        Palmer, Dr Nick

        Hope, Phil

        Pearson, Ian

        Hopkins, Kelvin

        Perham, Linda

        Howarth, Rt Hon Alan(Newport E)

        Picking, Anne

        Howarth, George(Knowsley N)

        Pickthall, Colin

        Hughes, Beverley(Stretford)

        Pike, Peter

        Hughes, Kevin(Doncaster N)

        Plaskitt, James

        Hurst, Alan

        Pollard, Kerry

        Illsley, Eric

        Pond, Chris

        Irranca-Davies, Huw

        Pound, Stephen

        Jackson, Glenda(Hampstead)

        Prentice, Ms Bridget(Lewisham E)

        Jamieson, David

        Prentice, Gordon(Pendle)

        Jenkins, Brian

        Primarolo, Dawn

        Jones, Jon Owen(Cardiff C)

        Prosser, Gwyn

        Jones, Martyn(Clwyd S)

        Quinn, Lawrie

        Joyce, Eric

        Robertson, John (Glasgow Anniesland)

        Kaufman, Rt Hon Gerald

        Keeble, Ms Sally

        Roche, Mrs Barbara

        Keen, Ann(Brentford & Isleworth)

        Rooney, Terry

        Kelly, Ruth

        Roy, Frank

        Kemp, Fraser

        Ruddock, Joan

        Kidney, David

        Ryan, Joan

        Kilfoyle, Peter

        Salter, Martin

        King, Ms Oona(Bethnal Green)

        Sarwar, Mohammad

        Kumar, Dr Ashok

        Savidge, Malcolm

        Ladyman, Dr Stephen

        Sawford, Phil

        Lawrence, Mrs Jackie

        Sedgemore, Brian

        Laxton, Bob

        Shaw, Jonathan

        Lazarowicz, Mark

        Sheerman, Barry

        Lepper, David

        Sheridan, Jim

        Lewis, Terry,(Worsley)

        Shipley, Ms Debra

        Linton, Martin

        Simon, Siôn

        Lloyd, Tony

        Singh, Marsha

        Love, Andrew

        Skinner, Dennis

        Luke, Iain

        Smith, Angela(Basildon)

        Lyons, John

        Smith, Rt Hon Chris(Islington S)

        McAvoy, Thomas

        Smith, Jacqui(Redditch)

        McCabe, Stephen

        Smith, John(Glamorgan)

        McDonagh, Siobhain

        Smith, Llew(Blaenau Gwent)

        MacDonald, Calum

        Starkey, Dr Phyllis

        McDonnell, John

        Steinberg, Gerry

        McFall, John

        Stewart, David(Inverness E)

        McKechin, Ann

        Stewart, Ian(Eccles)

        McKenna, Rosemary

        Stinchcombe, Paul

        Mackinlay, Andrew

        Stoate, Dr Howard

        McNamara, Kevin

        Sutcliffe, Gerry

        MacShane, Denis

        Taylor, Rt Hon Ann(Dewsbury)

        McWalter, Tony

        Taylor, Ms Dari(Stockton S)

        McWilliam, John

        Thomas, Gareth(Harrow W)

        Mahmood, Khalid

        Timms, Stephen

        Mahon, Mrs Alice

        Tipping, Paddy

        Mallaber, Judy

        Todd, Mark

        Mandelson, Rt Hon Peter

        Truswell, Paul

        Marris, Rob

        Turner, Dennis(Wolverh'ton SE)

        Marsden, Gordon(Blackpool S)

        Turner, Dr Desmond(Kemptown)

        Marshall, David(Shettleston)

        Twigg, Stephen(Enfield)

        Marshall, Jim(Leicester S)

        Tynan, Bill

        Martlew, Eric

        Vis, Dr Rudi

        Meale, Alan

        Walley, Ms Joan

        Merron, Gillian

        Ward, Claire

        Milburn, Rt Hon Alan

        Wareing, Robert N

        Mitchell, Austin(Gt Grimsby)

        Watson, Tom

        Mole, Chris

        White, Brian

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        Whitehead, Dr Alan

        Wright, David(Telford)

        Williams, Rt Hon Alan(Swansea W)

        Wright, Tony(Cannock)

        Wyatt, Derek

        Winnick, David

        Winterton, Ms Rosie(Doncaster C)

        Tellers for the Noes:

        Wray, James

        Mr. Ivor Caplin and Derek Twigg.

        Wright, Anthony D (Gt Yarmouth)

        Question accordingly negatived. Order for Third Reading read.
        5.10 pm
        Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
        Five years ago, the Government's first Budget set out our objectives, our plans for reform, and the disciplines to achieve economic stability, higher employment and sustained prosperity. On 17 April, my right hon. Friend the Chancellor was able to report in his Budget speech that Britain had enjoyed the lowest inflation and the lowest interest rates for 40 years. For the first time for half a century, unemployment in Britain is lower than in America, Japan and Europe. In the year just ended, Britain had the highest growth of any of our major competitors.
        Last year, the main economies of the industrialised world started a synchronised slowdown. In the past, during such slowdowns Britain entered weaker and suffered longer, unable to act because of higher inflation and higher borrowing. Britain has faced this world downturn with low inflation and sound public finances, both delivered by our new monetary and fiscal frameworks. This time, the Bank of England has been able to adjust policy at the right time and in the right way. Last year, it cut interest rates seven times.
        With the support of fiscal policy, we have been able to safeguard economic stability and growth, and last year Britain was the fastest-growing G7 economy. The challenge for British industry and investors at this time is to build on hard-won stability and to accelerate productivity improvements, thereby increasing output, employment and prosperity. The economy has been stable, but it can and must grow stronger.
        Mr. Edward Davey: The Paymaster General is giving a eulogy on the Government's macro-economic performance. Will she say a few words about manufacturing? In the last four quarters, output has fallen; in the last six, manufacturing employment has fallen.
        Dawn Primarolo: As the hon. Gentleman knows, expectations are rising and output was improving in the last quarter. As he rightly acknowledges, the long and hard position of the manufacturing industries is improving—[Interruption.] It ill behoves Opposition Members to make jests or to laugh from a sedentary position about the serious issues and considerations for the British economy.
        I was stating the current position to the House and putting the Bill in that context. Clearly, it is important that we build on that increasing output, employment and prosperity, and there is a clear role for the Government in establishing the conditions necessary for that development, which must take place. The UK is—
        Adam Price (East Carmarthen and Dinefwr)rose—
        Dawn Primarolo: If the hon. Gentleman is patient, I shall give way later.

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        The UK is, and will remain, a low-tax environment, and the Bill introduces important measures to modernise tax, keep pace with real-world developments and the global economy, promote enterprise and cut red tape.
        Adam Price: I am grateful to the Paymaster General for giving way. She knows, of course, that manufacturing output is down 6 per cent. over the last year whereas retail spending is up 6 per cent. Is that not a case of simultaneous boom and bust?
        Dawn Primarolo: It is necessary that the Government establish the right framework and the stability for that growth. Of course, investment, which is very much part of the Bill, is a key driver of growth. To encourage more investment, we have, in past Budgets, cut corporation tax from 33 to 30 per cent.— the lowest rate in our history. To enable investment in high-growth, high-technology industries, clause 53 and schedule 12 extend and enhance the research and development tax credit to all companies. That means a £400 million boost for innovation and research.
        Clause 44 and schedule 8 specify an exemption for companies disposing of substantial shareholdings. That will enable them to restructure without an essential business decision being constrained by the tax system. The new relief forms part of the Government's commitment to reforming and modernising the corporate tax system, and ensuring that the United Kingdom remains a good place in which to do business.
        The Bill establishes a new regime to provide relief for the cost of intangible assets, including intellectual property and goodwill. The relief proposed in clause 84 and schedules 29 and 30 will encourage business to take advantage of opportunities in the knowledge-based economy. That is another important step in our programme of corporate reform, ensuring that our tax system supports, encourages and reflects the change in the business environment.
        Mr. John Redwood: When the Government imposed their big windfall licence fee on the telecommunications industry—a very big one-off tax—I warned that it would lead to job losses and slashes in the investment programmes of our lead sector. The Government said it would not. Will the Minister now apologise and explain what went wrong?
        Dawn Primarolo: The right hon. Gentleman has made many forecasts that turned out to be wrong. If there is a list of apologies that need to be made to the House, we may be here for a long time hearing members of the last Government apologise for all their errors.
        In clause 91 and with the reforms of North sea oil taxation, the Government recognise the need to strike the right balance between a fair share of profits for the nation from the exploitation of a scarce resource and the encouragement of investment. The 100 per cent. first-year allowances on capital expenditure, along with the commitment to abolish North sea royalties and the supplementary 10 per cent. charge, strikes that balance.
        Small businesses account for 55 per cent. of all private sector jobs, more than 10 million, and for nearly half the economy's output. Small firms are important drivers of growth and support for them is an important theme of
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        the Bill. In 1997 we cut the small companies tax rate from 23p to 21p in the pound, and in 1998 we cut it again to 20p, with a starting rate of 10p. Now, in 2002, clause 31 lowers it further, to 19p, with immediate effect.
        Clause 32 proposes a fall in the starting rate for corporation tax from 10 per cent. to zero. That means that companies with profits of up to £10,000 will pay no corporation tax, and that the tax regime for small companies is more favourable than those of any of the other advanced industrial countries.
        To fund the growth of our young companies, we need to increase business investment. Private equity investment has doubled since 1997, which is an important contribution to an entrepreneurial economy. But there is more to be done, and to maintain the momentum the Bill cuts capital gains tax to 20 per cent. in respect of business assets held for a year or more. In the case of business assets held for more than two years, it cuts the tax to 10 per cent. That means that, overall, Britain's capital gains tax regime is more favourable to enterprise than that of the United States.
        I know that for many small businesses the cost of compliance is important. The Budget set out proposals to reform the administration of VAT, to help smaller firms comply with PAYE, and to remove unnecessary regulation. Clauses 23 to 25 set out the steps we are taking to simplify and streamline the VAT regime.
        In disadvantaged areas too, however, businesses can be a catalyst for community regeneration. In recognition of that, in 2000 we designated enterprise neighbourhoods. Small business tax cuts will be supported by further measures to encourage social entrepreneurs. We introduced the community investment tax credit, creating an incentive to invest in disadvantaged communities.
        The emerging consensus on the idea of sustainable development is also an opportunity for British companies. Investing now in energy-saving technologies and techniques is the best way of getting ahead of the game and gaining an important advantage over our foreign competitors. Investment in energy-saving technologies will qualify for enhanced capital allowances at a rate of 100 per cent., strengthening our economy as we move towards our Kyoto targets. Incentives will also be introduced to drive cleaner vehicles, with a reduction in the licence fee of £30 for the most efficient cars, £55 for the least polluting vans and £35 for the least polluting motor cycles. This is a balanced approach, taking into account the needs of the economy and our communities and the need for secure employment.
        To ensure fairness for taxpayers and for business, we must act swiftly to close tax loopholes and be vigilant against tax avoidance. We have decided to act with immediate effect on the avoidance of stamp duty on property and to put an end to artificial schemes for VAT avoidance.
        The United Kingdom remains a low-tax environment, favourable to business and enterprise. That has been acknowledged by a wide range of surveys and reports from business management. The Institute of Management development study, published recently, states that the United Kingdom has better withstood the uncertainties of the global economy. The Government have put in place a comprehensive set of measures aimed at raising competitiveness and closing our productivity gap with our major competitors.

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        Another survey, conducted earlier this year, said:
        "In our analysis of the business environment the United Kingdom and the United States of America stand out as leaders in the environment they provide for growth companies."
        The Bill promotes investment in our families and communities, in those who are disadvantaged, in enterprise, in the future growth of the British economy and in the national health service and our public services, providing for the people of the United Kingdom security, opportunity and a future in which they will be able to contribute to a growing and flourishing economy. I commend it to the House.
        5.23 pm
        Mr. Flight: The Bill is, to use the old cliché something of a curate's egg. There are certainly some good things in it, such as the simplification of the VAT regime for small business, the modernisation of business taxation and, we hope, the capital allowance regime for larger companies— we hope that the one for smaller ones will not be too complex to be effective. I thank Treasury Ministers for their courtesy in Committee, where we underwent a useful process and some issues that we raised were noted for inclusion in the Bill.
        However, some bad things remain, and some for which the case was not made at all in any of our debates. I do not intend to repeat the exhaustive debate that we had on increased taxation on North sea oil exploration yesterday, but we remain powerfully convinced of the view that it will damage Britain's interests and greatly reduce extraction of the oil that remains there, at a time when our current account position is already the worst it has been in our history. I noticed that there was no response to the crude point that the loss of output will add on average about $12 billion a year to our current account deficit, although I am not saying that the tax increase is the only cause.
        Yes, we all like small business, which is the majority employer. A small tax will be popular, and we must all like it, but it is unwise of the Government to forget about the self-employed, because self-employment is crucial. The ability to make a living through self-employment has been one of this country's strengths, particularly in difficult economic circumstances. All measures tend to have contrarian effects if they are not thought through, but as we have argued, masses of modest self-employed people will have to queue up to incorporate, in order to gain—potentially—£3,000 or £4,000 a year in tax terms. The costs will be a lot greater than the Government estimate, and it is not desirable for small self-employed businesses to incur yet more regulatory costs and hassle as a result of incorporation. It would have been better to balance fiscal incentives for small businesses between the incorporated and the unincorporated.
        Mr. Edward Davey: Does the hon. Gentleman share my surprise that this is one tax cut for business that many people do not welcome? However, they do not welcome it because, as he says, it might distort choice in an unplanned and unstrategic way.
        Mr. Flight: Indeed. Many self-employed people tell me that they thought they were getting a tax cut, only to
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        discover that they are not. They ask me what they should do to get it, and I tell them to get an accountant. To be candidly cynical for a moment, the Government have not got the bang for their buck from the small business community that they perhaps expected. The point is one of principle: if the objective was pure, there should have been a mixed reduction involving the incorporated and the self-employed, rather than a reduction weighted entirely in one direction.
        The Government may regret their approach to stamp duty. It is fine and correct to attack tax avoidance, but the basic issue is whether it is right and economically sensible for business to pay 4 per cent. stamp duty. That has not been a huge issue until now because there were many schemes through which to avoid such duty; indeed, many businesses believed that the Government regarded such schemes as an incentive for business. Whether there has been a change of policy or merely a waking up to it, the fact remains that a business's physical assets—the property—are just as much of a component as the machinery and the people. Taxing them more will lead to less mobility and greater costs.
        We have debated the unfortunate principle of the alcopops tax, whereby it is okay to proceed with a tax based on data that prove bogus. On green fuels, green taxation and car legislation, I do not understand why the Government did not include liquefied petroleum gas in the incentives. Some of the fiscal arrangements, particularly those relating to company cars, may prove mind-blowingly complex.
        We had a strong debate on mandatory e-filing. Of course, technology advances and we will all comply with it, but regardless of the intention, it must be wrong to begin by saying that we will force everybody—businesses, little old ladies—to file tax returns electronically. The underlying mindset is unnecessarily authoritarian.
        I apologise for not being present when controlled foreign company legislation—the Jersey clause—was addressed in detail. I strongly object to two aspects of CFC legislation. First, it is bad for the UK as a multinational base for business. Whatever the Government may think, we are becoming less attractive in terms of tax and regulations, and are slipping down the competitive league table. If multinational companies based here become subject to an arbitrary power to change the tax rules governing their international operations—in other words, if the Treasury suddenly has random power to decide that they would not get the CFC exemption—they will face a disincentive to doing business. Arbitrariness of any sort is undesirable.
        Secondly, I believe that one element of the legislation has been mis-sold, as there is widespread support for the savings directive. It was the alternative to the silly proposal that is the common EU withholding tax, and it was effective against tax evasion. However, the Opposition certainly do not like the notion of EU tax harmonisation, and elements of the EU unfair tax competition code lean in that direction. I want this country to retain its autonomy to set taxes as we wish, as a way of encouraging what we want to encourage. Competitive taxation is healthy: anything that compromises that rather invites a tax cartel.
        Finally, 30 years ago huge negotiations took place with regard to the Channel Islands. They had a degree of independence, and they remain outside the EU. I do not

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        like the UK exerting back-door leverage to bring them within the ambit of EU initiatives. Given their particular relationship with the UK, there is some justification for that approach when it is in Britain's interests, but not when it is used to get around, by the back door, a position settled 30 years ago.
        The Prime Minister visited Jersey in June. I was amazed to read that he said Jersey had its own rights in this situation, that the Government would protect them, and that the Government were not trying to affect tax rates. Either the Prime Minister does not know what he is talking about, or he was being deliberately misleading.
        It was a pity that the new clause on the tax law commission did not get selected for debate. The exercise of trying to rewrite tax law more simply has had some success—
        Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman must not comment on Third Reading on a new clause that was not selected for debate.
        Mr. Flight: Let me put it another way, Mr. Deputy Speaker. We are faced with 505 pages of taxation—surely it is possible to have tax rules that are simpler and more comprehensible. It is a question not merely of drafting tax law more simply, but of establishing bodies that would contribute to simplifying our tax system.
        The Bill does not address the pension crisis that we face and that is largely a result of the Finance Act 1997. I shall not repeat what was said in yesterday's debate, but I hope that the Government took note of the growing concern registered by the financial community, citizens and others at the growth in off-balance-sheet, Enron-style accounting.
        People are also worried by what can only be described as the tangled web involved in getting public sector investment off the balance sheet. It seems that tax vehicles are being shaped to meet the rules rather than the substance, and I wonder whether the Government know the full extent of the liabilities that are lurking in wait. If not, given the difficult economic times, some extremely unpleasant things could happen.
        Above all, the Budget in aggregate is bad for business, and it is bad for business at the wrong time. It will do some helpful things to encourage research and development, but it also imposes massive increases in employment costs on business, just when business and enterprise face considerable problems.
        At the root of the problem and the reason why the stock exchange has been collapsing is the problem of corporate profitability. If anything, corporate profitability is contracting. Companies are finding it increasingly difficult to sustain profits, let alone increase them. Continually adding regulatory and fiscal costs to business produces a downward spiral which will then reduce pension fund values and investments still further, and so forth.
        The Chancellor thought, as ever, that he was very clever with his Budget. He went out to the focus groups who said, "Yes, we quite like the idea of hypothecating extra national insurance to pay for more health care." I think they also said, "We certainly agree with more spending but, like the Conservatives, we do not agree that more spending will be effective without the necessary reforms." The Chancellor sold the whole package on
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        hypothecation: more money to pay for more health expenditure. The figures, however, show that half of it is not that at all.
        There are £4.7 billion-worth of tax credits, bringing the total tax credit cost up to some £16 billion. As we have pointed out, those tax credits will discourage pension saving for many and are in danger of providing excess job subsidies, militating against skill training and increased productivity. It may be no accident that after four years of the working families tax credit we are now seeing productivity declining. We have not only the lowest productivity growth for some time, but falls in productivity when for five years the Chancellor has gone on saying that his Government will increase and improve productivity.
        It is no use spending huge sums on health unless those amounts will be effective. As we have said again and again, a package of increased spending without the necessary reforms should not be supported. The crude fact that in Scotland, Northern Ireland and Wales, where spending as a proportion of national income is already above European levels, delivery is even worse than in England is straightforward evidence that reform is needed. We hear of more administrators than beds and only 17 per cent. of new expenditure going to front-line delivery. Those have all the hallmarks of the inefficiency of nationalised industries the world over. The risk is that all that expenditure will in reality go on wage increases.
        In an entirely different area, the problem is becoming more apparent of the black hole in the Chancellor's plans—something like £7 billion. Indeed, it was heartening to find the Government's own new economic adviser at the Department of Trade and Industry, Vicky Price, warning publicly that the Government may be about to embark on too much spending which they will not be able to finance. The expectation is that quite soon taxes may have to increase again. Apparently the Chancellor said that he thought the statement was a spoof. Perhaps it is he who is out of touch and not the rather tough and honest speaking new economist at the DTI.
        Productivity is falling. London job prospects are the worst since 1993. Tax receipts are declining for the first time in nine years. Corporation tax receipts are down 12 per cent. and Inland Revenue receipts down 7 per cent. Hearing the rosy picture which the Paymaster General described, who would imagine that we had a crashing stock market? Of course, it happens just like that. Stock markets are not at all predictive, are they? That is not their role. But what the stock markets are telling us is that corporate profitability is vulnerable and falling. That is the key point. The worst aspect of the Budget overall is that it will be bad for business, as business has made clear.
        We have heard all the spin about the Government's wonderful finances. That is the point of raising the off-balance-sheet issue, because however one looks at it—whether one talks about sticking to the rules rather than the substance, or potentially breaking the rules—all that has been happening is that the capital expenditure side is being hidden off balance sheet. People know that. There may be several benefits in involving the private sector, but everyone knows that in reality the state of the public finances is not the rosy picture that is painted by the Chancellor.
        Yet again, we had a clever-clever Chancellor's Budget. It got all the headlines that he wanted on the day, but now people are focusing on realities such as their declining

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        pensions, businesses weighed down with tax and regulation, and the problem of sustaining profitability. This morning I turned on my radio as I was getting up and the chap said, "Yes, the Chancellor's going from boom to bust." One of the problems with allowing the savings ratio to fall so badly is that when it recovers—and it will recover in a recession—consumption falls by too much. The Chancellor has presided over a period in which overall saving has declined too much, consumption has risen too much and the external balance has gone to hell; and the time will come to pay the price for that. It was an arrogant and unwise Budget. The details of the Bill are good and bad, but there will be a growing mess for us to sort out in due course, and the Government will need more than the ability to deliver a bad case in an eloquent fashion.
        Above all—this is why we are going to vote against the Bill—there has been a foolish arrogance as regards the whole issue of North sea oil taxation. The resource of North sea oil is not the family silver in the Treasury, but one of nature's great gifts of good fortune to this country. The new tax measures mean that instead of managing it to make the most of it, we are going to under-exploit it. That will be to the country's disadvantage over the coming years.
        5.43 pm
        Mr. Luke: Thank you, Mr. Deputy Speaker. I am glad to have caught your eye in the twilight of our deliberations on the Budget and to be able to make a further contribution to the debates on the Finance Bill as it proceeds through its final stages towards enactment. As a Back Bencher new to the ways of the Budget and to the intricacies of the tax-raising powers of this House, I feel privileged to have been able to make contributions at every stage of the Budget process.
        I am glad to have witnessed at first hand the nature of the response by Opposition Members to the proposals brought to the House by the Chancellor in his Budget on 17 April. There has not generally been a great deal of heat in the arguments that they put forward, despite the contribution just made by the hon. Member for Arundel and South Downs (Mr. Flight), but sufficient light has been engendered in Committee and on the Floor of the House for us to recognise that although there have been genuine areas of disagreement, the many positive aspects of the Budget have met with general agreement.
        The Budget was carefully crafted and constructed not to deceive the British people but to create a fairer and more efficient tax regime that will benefit the majority of taxpayers, investors and companies that contribute so much to the well-being of the economy and to the UK's continued economic health and prosperity. I firmly believe that, as the Paymaster General said, the initial view of many of the informed commentators who voiced opinions on the nature of the Budget will be fully substantiated: that view was that it was a defining moment in the life of this Government.
        The major issue of this Budget is close to my heart, close to the heart of the labour and trade union movement of which I am a representative and, indeed, close to the hearts of my constituents and all those who believe in Britain: it is the health and well-being of this country in
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        the widest sense. The future of the national health service and how it will be financed was certainly the major focus of the Chancellor's Budget.
        I shall take up the points made by the hon. Member for Arundel and South Downs. In the past two to three years, the people in my constituency have noted the much improved health service in Scotland. We have done away with the internal market. We have reorganised the service in Scotland to provide a sharper, leaner service, and I believe that the money coming from the Budget will obviously deal with many of the criticisms that have been levelled at the Scottish NHS and ensure that the services are delivered properly.
        I shall not linger on this, but there has to be recognition of the fact that rates of illness are obviously higher in Scotland. There is a need for greater spending given the higher levels of cancer and coronary heart disease. It is right in a country that cares for all its component parts that the Government should take account of that in their Budget formulae.
        Leaving that aside, the Budget was certainly crafted to ensure not only that the NHS survives but to secure the health of Britain's poorest communities, the health of the British economy and the health of this country's companies and corporations—the sinews and muscles of Britain's economic health.
        I am certain that, just as the people's Budget at the beginning of the last century laid the foundations of Britain's nascent welfare services, in bringing the Budget proposals to the statute book at the beginning of the new century, this Finance Bill will reaffirm this Government's and this nation's belief in and commitment to modern, inclusive welfare provision, where wealth and opportunity are in the hands of the many, not the few.
        The Government and the Chancellor have clearly indicated the need for a process of redistribution to ensure the vitality and the very existence of Britain's poorest, most disadvantaged communities and social groups, so that they are given an injection of assistance and support, delivered, in the words that Winston Churchill used when Chancellor of the Exchequer, via the ambulances of state aid.
        Many fellow Members of Parliament will welcome those Budget provisions that directly relate to their constituencies, be they the community development tax credits and community development funds; the new incubator funds to help new innovative companies to grow; the removal of the stamp tax on the sale of property in Britain's most socially deprived areas—I am glad to say that my constituency will be one of those that benefits most from those innovative provisions—or the encouragement of small business start-ups and enterprise. All those provisions will help areas that have suffered significantly through urban and social change and economic decline to begin to make serious starts to regenerate themselves.
        I believe the Budget proposals in the round are to be welcomed. They clearly show the political differences between the two major parties, despite the many agreements that we have had in Committee and on the Floor of the House. The Government believe in social justice, equity, enterprise and opportunity, but the Opposition put business first, not the people. In Committee, the Conservative party defended the tobacco industry, just as Conservative Members have today

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        defended the drinks industry. They have promoted the abolition of inheritance tax and the complete removal of the stamp tax, while opposing the Government's prime proposal to improve this country's health service.
        Politics can best be defined as the battle of two conflicting groups of ideas, struggling to achieve popular endorsement for policies and programmes. The Budget has been branded as unwise, but the British people have clearly indicated their massive endorsement of the Budget proposals—even a majority of Conservatives endorse them—and by implication accept the means by which they are to be funded. In a question asked recently at Prime Minister's questions reference was made to our all being Thatcherites now, but the Budget and the Labour party's stewardship of the nation's finances invite us to beg to differ.
        5.49 pm
        Mr. Edward Davey: May I start by agreeing with a major point made by the hon. Member for Arundel and South Downs (Mr. Flight)? He said that the Paymaster General's opening remarks describing the performance of the British economy and its management under the Government were far too rosy; I would say that they were Panglossian. There may have been successes in the last five years, particularly Bank of England independence and the increased stability that that has given to monetary policy, which Liberal Democrats have welcomed on many occasions. To suggest that the whole picture of the macro-economy is rosy, however, is far from the truth.
        I suggest to the Paymaster General that, rather than simply reading the briefing from Treasury officials, she should go to the House of Commons Library to read the latest research paper on economic indicators, published this week. Merely browsing through that will show her that a whole range of indicators are flashing red, which the Government appear to be ignoring totally. I was therefore very worried by the right hon. Lady's speech.
        Manufacturing output has fallen in the last five quarters. Indeed, in 2001, it fell by 2.3 per cent. We can also consider other industries, such as agriculture, hunting and fishing, whose output has of course been falling for many quarters; it fell in 2000 and 2001, and it fell in the first quarter of this year. Other industrial sectors show similar falls. Manufacturing is perhaps the most worrying because of its importance to the tradeable sector. We have seen large falls in that sector, especially in manufacturing employment, which fell in 1998, 1999, 2000 and 2001, and is falling again this year. In fact, manufacturing employment is falling at around 5 per cent. a year, while manufacturing output is falling at 6 per cent. a year. Can the Government be proud of that?
        I remember that, when the Chancellor of the Exchequer was in opposition in his role as shadow Chancellor and, prior to that, as the Opposition spokesman on trade and industry, he was on the television night after night talking about manufacturing—manufacturing investment, manufacturing output and manufacturing jobs. Under his stewardship, however, we have seen declines in all those areas. He does not have a record of which to be proud.
        Mr. Tom Harris: I had not intended to intervene at this stage. I must point out, however, that when my right hon. Friend the Chancellor was making those points in opposition, it was in the context of interest rates of
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        10 per cent. or 11 per cent., which are debilitating to manufacturing industry. The fact is that we have the lowest interest rates for 40 years, which is testament to the success of the Government and to my right hon. Friend's policies.
        Mr. Davey: The hon. Gentleman is right about interest rates. The problem with the Government's management of the economy has been a totally benign approach to the exchange rate.
        Mr. Flight: With respect to the hon. Gentleman, he is wrong about interest rates. As soon as we came out of the exchange rate mechanism in 1992, interest rates fell like a stone, and they were miles lower than 10 per cent. while the Chancellor of the Exchequer was making his points throughout the period from 1992 onwards.
        Mr. Davey: I would caution the hon. Gentleman about intervening too much to praise the Conservatives' record on managing the economy. I am afraid that I will not agree with him on their overall performance, given that we saw debt triple and years of high interest rates.
        I was focusing on Labour's record. Because of the high exchange rate—which is still too high—the manufacturing sector has been haemorrhaging jobs.
        Mr. Tom Harris: Can the hon. Gentleman tell the House how the Liberal Democrats would engineer a devaluation of the pound to help manufacturing industry? I know that that is a very dangerous thing for any Government to do. I presume that the reason why the Liberal Democrats claim that they can do it is that they will never be the Government.
        Mr. Davey: We have argued consistently—it is not a new argument but one that we have been making for many years—that if the Government had a positive approach to joining the single currency and gave us an indication of when the referendum would take place, the foreign exchange markets would push sterling down to a competitive rate.
        Mr. Harris: Fingers crossed.
        Mr. Davey: The hon. Gentleman says from a sedentary position, "Fingers crossed"—
        Adam Price: Signalling effects.
        Mr. Davey: As the hon. Gentleman says, however, the signalling effects have been proven, not just in the case of the UK but in the case of Italy when it announced that the lira would join the single currency. There was a sensible, slow, gradual and sustainable depreciation, so that the lira could move in a competitive way into the single currency.
        Directly after the general election, the markets perceived that the Government, who had kept their large majority, might be more positive about their approach to, and timetable for, joining the single currency, and the foreign exchange markets reacted to that by putting downward pressure on the exchange rate. The Treasury stepped in to say, "Hold on a minute. We have no

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        intention of joining," and tried to scupper the rumours, and it was only then that the pound went back up again. That proves my point entirely.
        The Government have failed to give a clear lead on the exchange rate and so must take the blame and the responsibility for many of the thousands of jobs that have been lost in manufacturing. Let us remember that 500,000 jobs have been lost in manufacturing over the past five years.
        Rob Marris: I represent a constituency in the west midlands, the manufacturing heartland of the United Kingdom. In contrast to the hon. Gentleman's view, it seems to me that the cross rates between sterling and non-euro currencies show that the problem is that the euro is too low rather than that the pound is too high. Does the hon. Gentleman disagree with that analysis? If so, what level does he think the pound should be at?
        Mr. Davey: When we carried out a review with a whole range of independent economists who were experts on exchange rates, we published a guideline on the sort of range at which the pound could join the single currency. We challenged the Government to provide their range and enter the debate. That is how we should start to consider and face up to the issue. The Government's failure to do that concerns me greatly.
        Mr. Flight: Since the hon. Gentleman has focused on this territory, will he complete the story? The Chancellor and the Treasury are terrified that, if sterling were to depreciate significantly, inflation would be imported into this country, interest rates would rise and the housing market would crash. The Government would then become the most unpopular of all time. That completes the circle.
        Mr. Davey: The hon. Gentleman is almost beginning to suggest a conspiracy theory which says that the Government are deliberately not acting because of the housing market. I am not sure that that is the case. The Government do not control interest rates; they rightly gave power over them to the Monetary Policy Committee, which has the difficult task of trying to judge the balance between the external side and the domestic side and to deal with the dilemma of domestic inflation in sectors such as the housing market and external deflation in the tradeable sector.
        Mr. Flight: The hon. Gentleman has missed the point. The Bank of England will certainly continue to control interest rates; but given the state of the economy, the Government know that if they talk down sterling, inflation is likely to increase. If inflation increased, the Bank of England would be obliged to put up interest rates. If interest rates were put up in the current property market, with many people dangerously over-borrowing at low rates of interest, there would be the risk of a crash in the property market. That is the circle.
        Mr. Davey: The hon. Gentleman is wrong. Many people in the Treasury and the Bank of England would like a readjustment of monetary policy in exactly the way that he describes—a lower exchange rate and a higher interest rate. That would probably be a much better
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        solution. The Government could engineer that if their policies on the euro were much clearer, but the examples that I have given show that their failure to go down that route is leading them into a dangerous position in which the housing market is being allowed to overheat. That will store up trouble for the future.
        Mr. Michael Jack: On a point of detail, the Government in fact retain control of monetary policy by virtue of the fact that they set the target for inflation. Section 11 of the Bank of England Act 1998 requires the Bank and the MPC thereafter to hit that target. If the Chancellor wanted to affect the range of interest rates, he could, if he so wished, change the inflation target.
        Mr. Davey: The right hon. Gentleman makes a valid point, and I refer him to the report of the Committee that debated the Bill. I served on that Committee and argued for target independence for the Bank of England, so that the Monetary Policy Committee could set its own targets instead of the Chancellor doing it—in the same way as the European Central Bank does. I argued that because if the markets think that the Chancellor may use that remaining power to set targets and thus affect interest rates and the exchange rate, that will undermine the credibility of the inflation rate.
        Long-term interest rates show some evidence that we are still paying a premium in the UK. We have slightly higher long-term interest rates than many other of our competitor countries. That slight premium exists partly because the Bank of England does not have target independence.[Interruption.] If hon. Members wish to dispute that, I am more than happy to show them some of the figures that I have seen. I also refer them to the recent article in the Financial Times by Chris Huhne, a Liberal Democrat Member of the European Parliament.
        Mr. Redwood: If the hon. Gentleman cares to check today's Financial Times, he will see that the long bond yield in Germany is slightly higher than the long bond yield in the UK. He has only to read it.
        Mr. Davey: The House of Commons information document on economic indicators, which was published this week, shows that on 10-year Government bonds, the figure for the UK is 5, in the US it is 4.83, in Switzerland it is 3.21 and in Japan it is 1.25. My point is backed by the evidence in the latest publication from the Library.
        The Government's rosy picture of the economy is complete nonsense. Indeed, the whole strategy behind the Bill is very worrying. In the Budget, the Chancellor increased his forecasts for the underlying growth rate of the economy. He did that to try to balance the public finances. By increasing the underlying rate of growth by just 0.25 per cent., the Chancellor found £4 billion or so over the forecast period.
        The change in forecast is highly contestable, for reasons to do with the overall performance of the economy that I have discussed and, if one looks at the background documents published at the time of the Budget, the overall rationale behind it. On Second Reading, I asked why the Government had not chosen the central forecast from the Government Actuary's Department. The rationale for increasing the growth rate was that the population was increasing faster than had previously been expected.

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        The Government relied on the report from GAD for that information. However, instead of taking the central forecast from that report, the Government chose a figure in the mid-range between the central forecast and the most optimistic forecast. By doing so, they tried to provide an explanation for increasing the underlying growth forecast.
        I received no reply when I asked why the Government had decided to make that change. It was arbitrary and stealthy, and the only way in which the Chancellor could balance the books. I am concerned by that. The Government's positive spin on the performance of the economy is very worrying, because they are misleading themselves into believing their own public finance forecast.
        I support the Government on one major change: the increase in taxation to fund the extra health spending, which is key to the Budget. My hon. Friends rehearsed the argument in favour of such a policy on Second Reading of the National Insurance Contributions Bill and elsewhere, although we would not raise the money in the same way. Income tax is our preferred route because it would be fairer and more efficient. It would not hit employers and would ensure that people who enjoy high investment incomes pay their fair share.
        The fundamental question that the Conservatives have ducked is whether they support the extra money for the health service. That is the key consideration. We have campaigned for that increase in spending for many years. It is one reason why we voted against Third Reading of the Finance Bills in 2000 and 2001. It would be hypocritical to vote against Third Reading today because the Government have done what we have been calling for, albeit with significant differences. The basic thrust is right, however, which is why we support them.
        Chris Grayling: The hon. Gentleman's comments highlight the often two-faced nature of Liberal Democrat politics: on the one hand, he criticises the Government on manufacturing industry and is concerned about the predicament that it faces; on the other, he supports tax increases that place a huge additional burden on manufacturing industry. Can he explain that?
        Mr. Davey: The hon. Gentleman has not been listening. When we debated the key problem facing manufacturing, I spoke about the exchange rate. Had I spoken about the rate of taxation, he would have a point, but the key problem facing manufacturing is the exchange rate because they are the major exporters in our economy. He need only talk to a few manufacturers to know that. It is possible to be in favour both of a higher rate of tax to ensure that the health service has the money that it needs and of an exchange rate that is competitive and assists our exporters, which is why we support the euro.
        There are a few problems with the details of the Bill—the North sea oil issues and the freeze in personal allowances, for example. I think that the cut in the starting rate of corporation tax to 0 per cent. is a mistake, as the hon. Member for Arundel and South Downs explained. However, the Bill contains some good measures, such as those on amateur sports clubs, the tidying up of film tax relief and the streamlining of VAT.
        It is worth focusing on one significant aspect of the Bill and the Committee proceedings. Some 60 per cent. of the Bill—300 pages—was published in draft form for
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        consultation. That is a major and serious change. It should be welcomed by hon. Members on both sides of the House and should be repeated and extended. Conservative and Liberal Democrat Members have said that one major problem is the complexity and vastness of tax legislation. By publishing things in advance we can ensure that the professionals have a chance to make comments to us and the Government so that many of the problems are ironed out by the time the Bill is introduced. For that reason, the Committee proceedings were relatively uncontroversial. There was much agreement among hon. Members and excellent work was done, not least by the hon. Member for Arundel and South Downs, who did an exceedingly good and thorough job.
        The Government have some way to go on the simplification agenda. The Bill adds some complexities. They should continue some of the good work but also go much further. I have a radical suggestion to make. One reason why we have an annual Finance Bill is the Provisional Collection of Taxes Act 1968. We do not need a huge Finance Bill every year. One reason why the tax system is so complicated and weighty is that the Chancellor, Customs and Excise and the Inland Revenue want to get their sticky fingers on the statute book every year. We should move to a system in which a full Finance Bill is introduced every other year. That would enable the Government to undertake even more consultation on draft clauses. In the years when we did not have a proper Finance Bill, we could have a small Bill that followed the Provisional Collection of Taxes Act, to make sure that income tax and corporation tax could be collected each year. That would mean that we would not keep adding so much extra taxation legislation every year, which by its nature has a degree of complexity.
        Mr. Flight: First, I thank the hon. Gentleman for his kind comments. Secondly, I say, "Dear God, not 1,010 pages every other year!"
        Mr. Davey: I am grateful for the hon. Gentleman's intervention. If we moved to a biennial Finance Bill, I would not want that Bill to be twice the size of the present annual Bill. The purpose of the idea is to stop the tax legislation juggernaut. I think it would complement the way in which the Government are now trying to consult.
        Having spoken for 38 minutes on Second Reading, I promised myself that I would not speak for so long on Third Reading. I intend to draw my remarks to a close.
        I am delighted that the Government did a U-turn by understanding that taxation needed to increase if we were to make essential investments in our public services. I have some concerns about the amount within the economy as expressed. Similarly, I have some concerns about the way in which the Government are presenting their public finances. However, overall it was a tax rise that was needed both by the health service and to ensure that our public finances are on a secure footing. For that reason alone, we shall be giving the Bill our support in the Lobby.
        6.11 pm
        Mr. Jack: This has been an interesting Finance Bill, first, in terms of the personnel who have dealt with it on both sides of the Committee and on both sides of the

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        Chamber. I associate myself with the remarks of the hon. Member for Kingston and Surbiton (Mr. Davey) about my hon. Friend the Member for Arundel and South Downs (Mr. Flight). He did a remarkable job, in many instances singlehandedly, speaking with a rapid-fire delivery about incredibly complex matters, which he at least followed. Occasionally, the rest of us were left trailing verbally in his wake, trying to keep up with his flow of intellect. He did the proper job of probing the Government sometimes on their more technical measures, leaving the more salacious parts of the Bill to lesser beings sitting behind him.
        I acknowledge the excellent work that was carried out by my hon. Friends the Member for Fareham (Mr. Hoban), for Cities of London and Westminster (Mr. Field) and for Epsom and Ewell (Chris Grayling), who were considering their first Finance Bill. They performed an admirable task.
        On the Government Benches there was a sort of game of musical chairs. We started with the Financial Secretary who became the Chief Secretary, while the Economic Secretary was promoted to be the Financial Secretary. In the past few days, we had the pleasure of welcoming the Economic Secretary to the Treasury, the hon. Member for Wentworth (John Healey), as the new kid on the block. I tried my very best to try to read the new body language of Treasury Ministers, not always with great success. However, I think we learned something about what goes on in their minds by their demureness and the way they communicated with us.
        The hon. Member for Wolverhampton, South-West (Rob Marris) marked himself out by developing an interesting line of asking the uncomfortable question but without quite getting himself into the uncomfortable position. The Government have found someone on the Labour Benches who is prepared to ask the difficult question, and the Bill's scrutiny was made the stronger as a result.
        For a moment, I shall take up the thoughts that have been expressed by those on the Opposition and the Liberal Democrat Front Benches about the complexity and length of legislation. With no disrespect to those who have spoken of the subject, perhaps they did not press the Government to give us a definitive statement. A Bill of more than 500 pages and in excess of 125 clauses illustrates that we have added much more legislation to the statute book, and it shows that the world is a complex place and that tax law reflects it.
        I would not go so far as the hon. Member for Kingston and Surbiton and suggest that we should have a biennial Bill. Sometimes there are people who seek to avoid their just deserts. A Finance Bill must move quickly to secure the revenues for whichever Government were legitimately elected. Over the years, I have received representations from the Chartered Institute of Taxation, the Institute of Chartered Accountants in England and Wales, the Confederation of British Industry, the British Chambers of Commerce and many other individuals and organisations, all of whom, notwithstanding the tax law rewrite exercise, call for work to simplify our tax system and to improve its scrutiny.
        The publication, "Towards a better tax system", issued by the Institute of Chartered Accountants, points out that the Finance Bill of 1978 had 75 clauses and the Finance
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        Bill of 1999, 140 clauses. In 1978, 53 clauses were debated, but in 1999, only 42 were debated, which illustrates a scrutiny deficit that has crept into our proceedings. For perhaps understandable reasons of pre-legislative scrutiny, we did not go through every single clause in the current Finance Bill, but the time has now come for the Treasury to consider bringing together representative bodies who have made representations and, more importantly, have ideas about ways in which the operation of the tax system could be improved beyond the rewrite exercise. Discussion of the rewrite is timely, as next week a new measure on the topic—the second—will be published, demonstrating the totality of part of the tax universe. When preparing a Finance Bill, no Treasury Minister ever sees all the relevant parts of the Taxes Act 1988. Those Ministers only see one bit and consider one set of implications. Only when the rewrite is submitted can we see the enormity of their proposals.
        It is time to assemble a body under Treasury chairmanship, including parliamentary representatives with an interest in the subject and, more importantly, practitioners, to try to map out an agenda to simplify the tax system and improve its operation. The idea that simplification can do the surgeon's job of cutting chunks wholesale from the tax system is not realistic. The Government, and indeed the previous Government of whom I was a member, have always looked for opportunities to remove unnecessary legislation. Making legislation work better and making it more understandable, however, as well as the need to consider the effect of the tax code on the economy, provide a perfectly legitimate opportunity for people involved in tax to have their say.
        I should be grateful if the Financial Secretary in her winding-up speech nodded in that direction, and accepted the need for the Treasury to consider a meeting of interested parties to try to find a way forward. There is universal support for that, and not of a party political nature, deriving from a genuine and rational wish to establish a better tax system, which would build on pre-legislative scrutiny and the rewrite exercise for the benefit of all of us.
        In conclusion, I have often asked Treasury Ministers for an explanation or economic, arithmetical or algebraic justification of the formulae used to support their position. In a world of increasing transparency, with greater pressures for freedom of information, the Treasury must re-examine the need for clearer statements on the economic effect of its measures and their justification; the way in which things have been calculated; and indeed the very oil of the system—details on tax revenue. I have asked for forward monthly projections from the Treasury, which are required for resource accounting and with which Departments illustrate their cash flows, but so far the Treasury has been reluctant to make that information available.
        If our country's financial institutions are to map the progress of the economy, it is important that information on the cash flow of the British economy be made available to them on a regular basis. On the question of simplification, however, I hope that the Treasury is willing to be more sympathetic and call the type of meeting which I have suggested.
        6.19 pm
        Mr. Redwood: I have declared my interests in the Register of Members' Interests.
        I, too, join my right hon. Friend the Member for Fylde (Mr. Jack) in paying tribute to those Opposition Members who have worked hard in Committee—I have read of their progress—and to my hon. Friend the Member for Arundel and South Downs (Mr. Flight) who has done sterling work, as a result of which there have been improvements to the legislation.
        I am glad that my hon. Friend is asking the official Opposition to vote against the Bill on Third Reading in principle. We have heard Labour Members explain that the Bill presents a series of tax measures that they say are necessary to fund our health service. If only it were so. But when I have sought promises from Health Ministers that the taxes in the Bill would lead to the provision of consultants, nurses, doctors and other personnel whom I need in my local hospital, I can get no guarantee. I have every fear that we shall not get them quickly or in the numbers that we need.
        When I read in my papers and hear in the House from time to time of the massive losses being built up in the Post Office, the financial catastrophe that is Railtrack and the massive increase in budgets for the Government's burgeoning welfare bills, I see that this legislation is part of the Government's policy of tax and waste. It is the high taxation side to pay for large bills, many of them going on things that the public does not want, or just reflecting bad management.
        I am not just voting against the Bill because I object to the whole strategy; I am also voting against it because some of the taxes embedded in the legislation are especially damaging.
        Paul Farrelly: Will the right hon. Gentleman give the House the benefit of his wisdom in relation to the Conservative party's policy on funding the NHS, or would he admit that we still await that?
        Mr. Deputy Speaker: Order. I hope that the right hon. Gentleman will resist that invitation while we are debating the Third Reading of the Finance Bill.
        Mr. Redwood: I am grateful, Mr. Deputy Speaker.
        We need to spend money on sensible things and to raise taxes for that, but I believe that the Government are raising far too much and that a lot of it will not be well spent, which is what the public thinks.
        The first tax in the legislation that I am worried about is stamp duty. Some amendments have been made, but the Bill does nothing for an area such as mine, with high and rapidly rising house prices, in which many people who are seeking to buy for the first time will be paying rather high levels of stamp duty compared with the modest sums that they have been able to save in their short careers so far.
        That should matter to a Government who want more teachers, nurses and junior doctors, the very people who will have to pay those penal stamp duties when they are struggling to get together a deposit to buy their first flat or small house. In many parts of the country now where house prices are high and when the duties and thresholds incorporated in the legislation leave such people cruelly
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        exposed, it makes it so much more difficult to populate the public sector with the good young talent that we need. Stamp duty is becoming one of the substantial barriers to their successful mobility and employment in places of high cost.
        Mr. Edward Davey: I have just spoken to my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) and he agrees with me. Is it right that one pays stamp duty on one's first house purchase? Does not one pay it when one sells?
        Mr. Redwood: I have always had to pay it on purchase. I do not know where the hon. Gentleman has been, but it is a tax imposed when one buys a property. It is particularly hard for someone with a big student loan, who has tried to save for two or three years and put together a small deposit, to then discover that the biggest cost that they will have to face in addition to the legal bills and other necessary expenses will be stamp duty to a Chancellor belonging to a Government who say that they want such public sector workers to be able to work in expensive parts of the country as well as in cheaper parts, and then weep crocodile tears about the housing problems that they face.
        The second tax that I wish to express concern about is the one highlighted by my hon. Friend the Member for Arundel and South Downs as his principal reason for opposing the legislation—that is, the taxation that is likely to be enacted for the oil industry. Here, again, one would hope that the Government would listen and learn from their own experiences if not from those of Governments in other parts of the world. Surely they can understand that the decision to impose a large one-off tax on the telecoms industry a few years ago was one of the main reasons for the precipitate collapse in investment expenditure and employment in that industry. What was once the proud growing industry that led the renaissance of the British economy in the 1990s is now a disaster area that is leading the economy down. We hope that that will not spread to every part of the economy, but it was a very big chunk of it to hit so heavily. Please will the Government understand the damage that will be done by taking that much money out of a high-investing industry? Will they recognise that their oil taxation, which is on a smaller scale and is therefore unlikely to do so much damage will, none the less, do some damage to the investment and employment prospects of that industry?
        Mr. Tom Harris: I intervene on a point of clarification. The right hon. Gentleman mentioned the one-off tax on telecoms. Was he referring to the auction of digital bandwidths? We must be very clear that an auction is not a taxation policy. The Opposition have made mistakes about that many times before. The process was freely and voluntarily entered into by the telecoms industry.
        Mr. Redwood: It certainly was not. It was a tax on staying in business, because if the companies wished to stay in business, they had to buy a licence. The Government did not offer enough licences, of which they were the monopoly supplier, so the measure acted in exactly the same way as a tax and they were taking huge sums out of a very successful industry. Surely the hon. Gentleman can at least grasp the very simple point that if

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        £22.5billion is taken out of the pockets of companies that were going to invest a great deal, they will spend less and get into financial difficulties. Indeed, some of them went bankrupt or needed financial reconstruction.
        Rob Marris: The right hon. Gentleman seems to be setting out a very curious scenario that does not at all accord with my recollection of history. Companies were bidding for licences, and the Government were selling a state asset—access to the airwaves—for a decent price, in contradistinction to what happened when his party was in office. In Italy, for example, where a similar process was undertaken, some of the telecommunications companies simply dropped out of the bidding or failed to bid, as some in the United Kingdom did. He is trying to blame the Government for the commercial decisions and mismanagement of telecoms companies in the United Kingdom.
        Mr. Redwood: Labour Members protest too much. The policy was a tax and it did a lot of damage. I am warning the House and the Government that they are now imposing a less dramatic tax on the oil industry, but one that will have a proportionate effect on investment and jobs in the oil industry. The danger in the oil industry is that if even a marginal increase in taxation coincides with a lower oil price or some other worsening of the terms of trade of an oil company, it could lead to a very big cancellation of investment programmes.
        The Government are therefore in a paradox. If they are lucky, the oil price will increase a lot, which will conceal the impact of their taxation, but have all sorts of other unpleasant consequences for the economy. If they are unlucky, the oil price will go down, which will magnify the impact of their tax increases and lead to the cancellation of projects or to a desire in the industry not to pursue marginal North sea projects that will be very damaging. A previous Labour Government found that out in the 1970s, so one wishes that the current Government had some folk memory of those experiences and had learned from them.
        Ruth Kelly: Does the right hon. Gentleman not accept that, by introducing a 100 per cent. first-year capital allowance, it is the Government who are taking the risk of lower oil prices and not the companies?
        Mr. Redwood: One must consider the impact of all the oil tax measures that the Government are proposing, and not just the capital allowances. As the oil industry has made clear to the Government, the overall impact will be negative, and if circumstances deteriorate further on the demand or price side, further cancellations will result. I am surprised that the intelligent Minister cannot understand that.
        Mr. Flight: My right hon. Friend might also be aware that large numbers of new participants in the North sea have not got any profits on which to use a capital allowance.
        Mr. Redwood: My hon. Friend makes a very valuable point. Of course, that is exactly what I had in mind when I was saying that if other conditions deteriorated further,
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        more companies would find themselves in that position, which reinforces the fact that the overall balance of tax measures will be negative in the industry.
        My third worry about the Bill is the measures that my hon. Friend the Member for Arundel and South Downs highlighted in relation to Jersey. I think that the offshore Crown dependencies that are part of the Great Britain island group have done an amazing job for their people and demonstrated that good honest businesses that generate many well-paid jobs can be run by keeping corporate and financial taxes low and keeping regulation within bounds. I regret that the Government are not standing up for that important set of principles and for the offshore islands within the European Union in the way that they should.
        I fear that the measures in the Finance Bill are only part of a series of measures that are going to be taken gradually to make it more difficult for the offshore islands under the Crown to pursue their legitimate and decent businesses with the benefits of lower taxation and lighter regulation that are essential to their well-being. These islands are great success stories. They have little other natural advantage, but they have attracted talent and now have home-grown talent. They have good levels of employment and income as a result of concentrating primarily on financial services, and encouraging them through lower taxation and light regulation.
        The Bill is another step in the wrong direction. It may not be the killer step, but it is part of a process in which the terms are going to deteriorate for the offshore islands. It may also spark more political opposition on the islands to their continuing relationship, in its current form, with the United Kingdom. That is something that I rather regret, and we ought to be very worried about it.
        My fear about the Bill is that, when it targets specific areas or places for extra taxes without understanding the impact that it will have, it is too draconian. In other ways, however, it does not measure up to the growing storm clouds here and elsewhere in the world that might have benefited from a rather different response from a Government concerned about our future prosperity, the value of our savings, and our livelihoods.
        The Government would be well advised to take the message of the United Kingdom stock market a little more seriously. It has now been falling solidly for two and a half years. It has been falling not just because of the world background, and it is certainly not just because a few big companies in the United States of America have made mistakes, or worse, in their accounting practices and undermined confidence recently on Wall street. It is falling partly because too much tax has been taken out of companies by the Government, and partly because the Government are moving towards greater hostility to the idea of making a profit on enterprise and being able to reinvest it.
        The savings rate is too low, and our pension funds are in a state of crisis, as we debated recently in the House. The Finance Bill reaffirms the £5 billion a year tax hit on those very pension funds, which should be providing a better future for many of our constituents than they are now going to do, because of this continuing tax raid.
        The Finance Bill is the product of a tax-raiding Chancellor who really believed that British business was so successful and so profitable that it did not matter what taxes he threw at it. I fear that we are going to discover

        493
        that mistakes have been made in the Bill in its taxation of savings, its taxation of the housing market, its taxation of profits and, in particular, its taxation of the oil industry. Times are tough and different out there now. The Bill does not recognise that; it is part of the Government's policy of tax and waste, when we need a policy that promotes savings and enterprise.
        6.33 pm
        Chris Grayling: This has been a wide ranging and fairly complex Finance Bill. As my right hon. Friend the Member for Fylde (Mr. Jack) mentioned, it is the first experience of a Finance Bill for my hon. Friends the Members for Cities of London and Westminster (Mr. Field) and for Fareham (Mr. Hoban) and me. I have been impressed by the good spirit that has existed both in Committee and in these debates today. Having listened to all the arguments, however, there are still a number of points on which I take great issue with the Government over what they are trying to do.
        The issues relating to business taxation touched on by my right hon. Friend the Member for Wokingham (Mr. Redwood) a moment ago are at the heart of my concerns. The debate about national insurance contributions has taken place under a different umbrella, but that is part of a complex range of issues relating to business taxation which reflects a careless approach to business by the Government. I do not think that they understand what they are doing. Nor do I think that they understand the implications of their actions for individual companies and for industrial sectors. Moreover, the Government are doing this at a time when it is only too clear that business is under pressure. I was flicking through the financial pages this morning, and thinking that, in recent years—probably since the late 1980s—I could not remember seeing quite such consistent bad news right across the corporate spectrum.
        Precisely when the storm clouds seem to be gathering, the Government have chosen to put significant additional taxes on business. I fundamentally disagree with the comment made by the hon. Member for Kingston and Surbiton (Mr. Davey) following my intervention. Whatever the rights and wrongs of the debate on the euro, they cannot be dealt with now, but the new taxation measures on business will affect business now, they will affect profitability this year, they will cost jobs, they will cost investment and they will make a cash difference to companies when they can ill afford it. The consequence of that—inevitably, in my view—will be seen in the employment market.
        We have discussed extensively the Bill's impact on the North sea oil industry, which is probably the most acute example of the Government's failure to understand the consequences of what they are doing. The Government, in all their arguments on the North sea, remind me of a mugger who takes someone's wallet, but is kind enough to give him back the bus fare home.
        The Government talk about the capital allowance that they are making available, but at Question Time a couple of weeks ago the Chancellor referred to the £500 million that he is levying from the industry. He cannot take £500 million out of an industry that employs 300,000 people and is a significant part of the employment base, not just in Scotland, but across the country, without affecting jobs and investment.
        494
        The Budget's cumulative tax measures will have an adverse effect on businesses beyond North sea oil. We have discussed the impact of the aggregates levy and the climate change levy. In Committee, we talked about the problems that the aggregates levy will pose in remote areas where such companies are often the principal local employer and a real driving force in the local economy, yet its continuing provision will remove funding from those companies and local communities and take it back to the metropolitan areas. That, inevitably, will affect communities in such areas.
        There are, undoubtedly, good points for business in the Budget— no Government ever do everything badly— but equally there are fundamentally ill-thought-out measures. We have discussed the shortcomings of the mandatory e-filing proposals as well as the implication of the zero tax rate for small listed companies and the failure to extend that same benefit to unincorporated companies. Likewise, the measures to tackle the deductions to payments to subcontractors where there are undoubted anomalies go some way to solving the problems, but it is far from clear that they have dealt with all the difficulties that my constituents and others have raised with me.
        The Bill also contains inconsistencies. We heard this afternoon and in Committee that the Government wish to raise duties on alcopops to tackle health and social issues, but they are also cutting duty on strong ciders, which we know are also a contributing factor to the problems that the Government are trying to address through the alcopops measures. There are vehicle excise duties adjustments for low-emission cars, yet, as I argued in Committee, the measures for vans do not reflect the changes in that marketplace.
        My other big concern is key workers and the impact of the tax increases on the labour shortages in London and the south-east, to which my right hon. Friend the Member for Wokingham referred, as well as in other parts of the country that are affected by high housing costs and other high costs of living. We discussed the raised national insurance contributions during proceedings on the National Insurance Contributions Bill, but this Bill will enact a freeze in personal allowances, which will add another burden. That burden will be relatively small, but it will also be another straw on the camel's back for public service workers who find it increasingly difficult to live and work in the south-east.
        As my right hon. Friend the Member for Wokingham said, the more the Government tax those people, the more difficulty they have buying a house under the stamp duty system. That will make it less likely that they stay and work in our high-cost areas and less likely that we will have good, effective public services in those areas. If that happens, we will undermine the very areas that deliver the tax revenues that support public services across the country.
        I believe that the Finance Bill fails badly, and it comes from a Government who do not understand that if they put up taxes on an industry, it will cut jobs and invest less. The Government do not understand that if they increase the complexity of tax rules and tax regulations for small businesses and make their life more complicated, fewer people will take the trouble, invest the time and work the long hours that it takes to run a small business.

        495
        The Government do not understand that if they put up taxes for key workers, even in relatively small amounts, those people will not stay in the most expensive parts of our country. They will look to work elsewhere, and our labour and skill shortages as well as the absence of teachers, nurses and doctors will get worse.
        This Budget, and this Finance Bill, fail to address problems that are manifesting themselves throughout our country. For that reason— along with many others that we have discussed in detail over the past couple of months—I shall be joining my colleagues and voting against Third Reading.
        6.40 pm
        Mr. Mark Hoban: I share the experience of my hon. Friend the Member for Epsom and Ewell (Chris Grayling)—this is my first Finance Bill. I thought it would be remiss of me not to participate in its closing stages.
        I see a number of strands in the Bill. Let me say first that from time to time the Treasury has betrayed what could be described as a lack of understanding of the way in which businesses and people work. One example is the complexity of the relief for community and sports clubs, which have to jump through a number of hoops to claim it. Requiring treasurers of such small clubs to calculate how much expenditure is allowable and how much is not places a burden on them that I think will restrict take-up in many instances.
        Mandatory e-filing has been mentioned. A few days ago it was reported that the Inland Revenue could not even allow its staff to use e-mail. How much confidence will small businesses have in their ability to transmit their tax returns to the Revenue electronically if at this stage the Revenue cannot even sort out its own e-mail system? It is legitimate for people to ask whether it is appropriate for them to deal with the Revenue when it has manifestly failed to provide services for its own staff.
        In this and other debates, we have discussed the differential tax treatment of small businesses. It was interesting that the Paymaster General carefully used the word "company" rather than the word "business" this evening when welcoming the changes. In fact, many small businesses will lose out. I am not thinking just of sole traders; many other large unincorporated businesses and, in particular, partnerships will not be able to take advantage of the reliefs. Those that can will see a move towards incorporation, along with the costs involved in becoming a limited company—the costs of maintaining registers of shareholders, directors, mortgages and debentures, and of opening books for public inspection. The Government should consider changing the balance to remove the possibility of any deliberate or even implicit policy in favour of incorporation.
        Rob Marris: The hon. Gentleman seems to be advancing a curious, if interesting, argument. If I have not understood it properly, perhaps he will correct me. He seems to be saying that if the costs of incorporation outweigh the tax breaks in the Bill, a small business will not incorporate. So what? The business will be where it
        496
        is now. If the costs of incorporation are less than the tax breaks, it will incorporate. Again, so what? It will still be ahead of the game.
        Mr. Hoban: What we do not want to do is impose unnecessary regulatory burdens on small businesses. Yes, there will be a financial incentive if the tax benefits of incorporation exceed the costs, but do we really want to impose those costs? We do not want to place an ongoing burden on small businesses; we want those businesses to focus on building themselves up, rather than complying with rules and regulations dreamt up to keep them occupied.
        Rob Marris rose—
        Mr. Hoban: I am loth to give way to the hon. Gentleman again, but as he asks such penetrating questions I will do so.
        Rob Marris: Would the hon. Gentleman prefer the tax breaks not to be there at all? That seems to be the thrust of his argument.
        Mr. Hoban: It manifestly is not the thrust of my argument. I would like a level playing field for businesses, be they incorporated or unincorporated. They should not be forced to choose one legal form or another simply to benefit from tax breaks. The Government have shown a lack of understanding of how business operates and how people run their personal affairs.
        We have also seen the benefits of consultation, and the way in which certain aspects of the Bill have been discussed with representative bodies has been very valuable and has cut down the amount of time that we needed to spend discussing them in Committee. It is interesting to note, however, that the area of greatest disagreement has been the one on which there has been no consultation—oil taxation. The Government need to learn the lesson that consultation makes for a better Finance Bill—one that gains the acceptance of the community for which it is trying to create a suitable tax regime. The oil industry has been in uproar because the Government failed to consult it.
        This is a long and complex Finance Bill. My right hon. Friend the Member for Fylde (Mr. Jack) was right—we need simpler tax legislation to reduce the burden of compliance on business and its advisers and to make it far easier for people throughout the country to understand their own tax affairs, without recourse to expensive legal and tax advice.
        6.46 pm
        Mr. Mark Field: As with many Finance Bills, I suspect that this one will be remembered as being good for lawyers and tax accountants. They, perhaps alone, will admire the increasing complexity introduced by a somewhat meddlesome Treasury team.
        My hon. Friend the Member for Arundel and South Downs (Mr. Flight) spoke skilfully about many matters throughout our proceedings. As he said, we find the oil and gas provisions and the straitjacket imposed on the Channel Islands and other Crown dependencies especially objectionable, and that is why we will vote against Third Reading.

        497
        Even the Government's own advisers now highlight the fact that the Chancellor's growth projections are likely to prove grossly optimistic. Projections made only a matter of weeks ago now look hopelessly out of date. We are expecting to have growth of 2.25 per cent. in the current year, rising to 3.25 to 3.5 per cent. in the next financial year. On that basis alone, we have had vast acceleration in public expenditure. A Government who promised the end of boom and bust have placed their foot firmly on the spending pedal at just the wrong time in the business cycle.
        Spending on health is rising, not just for the next five years as shown in the Budget, but presumably at similar rates for the period beyond 2006–07. It seems that it will largely be business that continues to be milked. Many of us have spoken in past years about the Government's redistributive agenda, which may have seemed out of keeping with a generally fairly successful economy, but we had an interesting discussion on property and capital taxes in what seemed a fairly innocent debate on clause 115 and, as my hon. Friend the Member for Epsom and Ewell (Chris Grayling) said, it seems that the Government regard London and the south-east as fair game for a higher burden of tax, be it inheritance tax, a vast increase in stamp duty or a whole array of other corporation and income taxes; yet there is little evidence of the investment in the public sector to which the Paymaster General refers as being focused on that area.
        As the Member of Parliament for Cities of London and Westminster, I have been the first to give credit where credit is due. To a large extent, in their first five years the Labour Government have been able to be true to their watchword of stability in the economy. They have gained many plaudits for that from the business community, of which I was a member before 7 June last year. Many business people admired what the Government had done, especially when we take into account the fears that existed before May 1997. However—there is always a "however" on the Opposition Benches—although the Treasury has played the hand that it inherited in 1997 skilfully, it is fair to say that it was a very good hand. That fact has, perhaps, not been recognised as readily as Opposition Members hoped.
        In keeping with the comments of my right hon. Friend the Member for Wokingham (Mr. Redwood), I am concerned about the sense of denial and complacency in much of what the Treasury—and the Government as a whole—say about the future of the economy. For the good of the economy and the country, I hope that I am wrong, but I suspect that when we gather next year to consider another Budget and another Finance Bill—I fear that the wish of the hon. Member for Kingston and Surbiton (Mr. Davey) for a biannual Finance Bill will not come true for some years to come—the economic climate will be very different. By then, we will see the damage to business of much of the meddling to which we have referred.
        I wish Treasury Ministers the very best, because it is in the interests of this country that we have a strong economy—not least in respect of the investment in the public and private sectors that we all want to see. However, difficult times lie ahead. We have put prudence to one side, and the foot is firmly on the public expenditure pedal at what is probably entirely the wrong time.
        498
        I shall be interested to hear what the Financial Secretary has to say. I thank her and her ministerial colleagues for providing a constructive basis for our discussions in Committee, on Report and on Third Reading. However, I shall join my hon. Friends—notably my hon. Friend the Member for Arundel and South Downs—in voting against granting the Bill a Third Reading, because some serious problems lie ahead.
        6.52 pm
        Ruth Kelly: I welcome this opportunity to bring the debate on Third Reading of the Finance Bill to a close. This, too, was my first Finance Bill, and I have enjoyed it very much. I want to begin by thanking my hon. Friends and other hon. Members, the special interest groups and others who took a great interest in the Standing Committee's proceedings. Their close attention to detail and their unflagging enthusiasm have done much to smooth the Bill's passage. We certainly heard some interesting speeches—from both sides of the House—today and in Committee.
        Government is all about choices, and the Finance Bill is no exception. We have chosen in favour of economic growth and prosperity; in favour of enterprise and innovation; in favour of a sustainable future. Liberal Democrats and the hon. Member for Arundel and South Downs (Mr. Flight) have accused the Government of being Panglossian—of putting too rosy a glow on our economic success. I am the first to admit that there is great uncertainty about the world economic outlook, but the fact is that the macro-economic framework that we have put in place is the right one.
        On coming to power in 1997, we gave the Bank of England independence, and an independent Monetary Policy Committee is delivering pro-growth low inflation. It has the right symmetrical inflation target to deliver the dual objectives of growth and low inflation. We also have a tough fiscal framework. Over the next five years, net debt will rise no higher than 31 per cent., according to the figures in the Red Book. We now have the most open and transparent fiscal framework that I know of in any of the major G8 countries. The evidence of the success of that framework is clear. Long-term interest rates are at their lowest level for 40 years. We have had the longest period of sustained low inflation since the 1960s. Employment has risen by 1.5 million since 1997, and in the past year we have enjoyed the strongest growth of any of the seven largest industrialised economies.
        Mr. Redwood rose—
        Ruth Kelly: If the right hon. Gentleman will allow me, I shall make a little progress.
        The hon. Member for Kingston and Surbiton (Mr. Davey) highlighted the prospects for manufacturing. Of course, I acknowledge that world trade growth was near zero in 2001—down from 12 per cent. in 2000. It was inevitable that UK manufacturing would be hit when world trade growth collapsed, and that the internationally exposed sectors of the UK would be affected. Manufacturing output fell in all industrialised nations, but by less in the UK than in our major competitors. For example, manufacturing output in Japan fell by 13.75 per cent. last year—more than twice the fall in this country.

        499
        The first signs of tentative recovery in the manufacturing sector are appearing. The Red Book forecasts that output will gradually pick up in the second half of the year. The answer is not artificially to massage down the exchange rate, as the Liberal Democrats proposed. That has been tried in the past, and it does not work. It leads only to higher inflation, and boom and bust.
        Mr. Redwood: If everything is so stable and well run, why have we had boom and bust in the stock market and in the telecom and high-tech industries over the past five years?
        Ruth Kelly: It is clear that stock markets across the industrialised world have fallen, or does the right hon. Gentleman believe that the UK stock market has been especially badly affected? The causes have been the uncertainty of the world economic climate and the vulnerability of corporate profitability which, as the hon. Member for Arundel and South Downs pointed out, has resulted from the recent Enron and WorldCom events.
        I turn now to some of the issues raised in the debate. The hon. Member for Arundel and South Downs claimed that the Budget was somehow bad for business. It is not; it is good for business. It promotes enterprise, growth and productivity.
        The Government have introduced measures to extend the research and development tax credit to all companies. The Budget cuts the small companies rate of tax by 1p and, by means of a 10p cut, reduces the starting rate to zero. We have introduced measures to reduce the administrative burden of VAT for small companies, and to improve their cash flow. We have also introduced the community investment tax credit. The Budget will increase enterprise and promote entrepreneurship in the UK economy.
        The other major point raised in the debate concerns the North sea oil regime. It is right in principle to tax a scarce resource produced under Government licence. Every oil-exporting country has a special tax regime for that purpose. The Government are clear about our principles—to raise a fair share of revenue for the country, and to promote investment.
        That is what we have done with the 10 per cent. supplementary charge on oil, and with the 100 per cent capital allowance. The reform is right in principle, and we now have a stable oil taxation regime for the future.
        Opposition Members have criticised the Bill for its complexity, even though 152 of its pages introduced tax relief, 160 simplified the tax system and more than 200 pages were repealed.
        I know that the right hon. Member for Fylde (Mr. Jack) has a great interest in simplification. He has demonstrated a long-standing interest in the tax rewrite project, and I was privileged to serve on the consultative committee before I became a Minister. However, he suggested that the Bill has not been scrutinised thoroughly. In fact, the Government have involved just those representative bodies that the right hon. Gentleman suggested in the extensive consultation that has been carried out on the measures.
        The Bill means that the UK will remain a stable, low-tax environment, favourable to business, enterprise and innovation. The overall tax burden is lower than the
        500
        EU average, and lower than each of our main EU competitors. The atmosphere and climate in the UK are right for economic growth.
        The Bill supports innovation and entrepreneurs. It releases productive potential as it promotes sustainable development. It joins the hands of business and communities in the cause of regeneration.
        Innovation, enterprise and regeneration: those are the Government's ambitions, for the Bill and for Britain. I believe that we are achieving them, and I commend the Bill to the House.
        Question put, That the Bill be read the Third time:—
        The House divided: Ayes 277, Noes 109.

        Division No. 296]

        [6.59 pm

        AYES

        Abbott, Ms Diane

        Clwyd, Ann

        Ainger, Nick

        Coaker, Vernon

        Alexander, Douglas

        Coffey, Ms Ann

        Allan, Richard

        Cohen, Harry

        Allen, Graham

        Coleman, Iain

        Anderson, Rt Hon Donald (Swansea E)

        Connarty, Michael

        Cook, Frank(Stockton N)

        Anderson, Janet(Rossendale)

        Cook, Rt Hon Robin(Livingston)

        Armstrong, Rt Hon Ms Hilary

        Corbyn, Jeremy

        Atkins, Charlotte

        Cousins, Jim

        Austin, John

        Cox, Tom

        Bailey, Adrian

        Cranston, Ross

        Baird, Vera

        Crausby, David

        Banks, Tony

        Cruddas, Jon

        Barnes, Harry

        Cryer, John (Hornchurch)

        Begg, Miss Anne

        Cunningham, Jim (Cov'try S)

        Bell, Stuart

        Curtis-Thomas, Mrs Claire

        Bennett, Andrew

        Davey. Edward(Kingston)

        Berry, Roger

        Davey, Valerie(Bristol W)

        Best, Harold

        David, Wayne

        Betts, Clive

        Davidson, Ian

        Blackman, Liz

        Davies, Geraint (Croydon C)

        Blears, Ms Hazel

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

        Blizzard, Bob

        Borrow, David

        Dawson, Hilton

        Bradley, Rt Hon Keith (Withington)

        Dean, Mrs Janet

        Bradley, Peter(The Wrekin)

        Dhanda, Parmjit

        Bradshaw, Ben

        Dobbin, Jim

        Brake, Tom

        Dobson, Rt Hon Frank

        Brennan, Kevin

        Doughty, Sue

        Brooke, Mrs Annette L

        Dowd, Jim

        Brown, Rt Hon Nicholas (Newcastle E & Wallsend)

        Drew, David

        Drown, Ms Julia

        Bryant, Chris

        Eagle, Angela(Wallasey)

        Buck, Ms Karen

        Efford, Clive

        Burden. Richard

        Ennis. Jeff

        Burgon. Colin

        Farrelly, Paul

        Burstow, Paul

        Field, Rt Hon Frank (Birkenhead)

        Cable, Dr Vincent

        Fisher, Mark

        Caborn. Rt Hon Richard

        Fitzpatrick, Jim

        Cairns, David

        Flint, Caroline

        Calton, Mrs Patsy

        Flynn, Paul

        Campbell, Ronnie (Blyth V)

        Foster, Rt Hon Derek

        Caplin, Ivor

        Foster, Don(Bath)

        Casale, Roger

        Foulkes, George

        Caton, Martin

        Gapes, Mike

        Cawsey, Ian

        Gardiner, Barry

        Challen, Colin

        George, Rt Hon Bruce (Walsall S)

        Chapman, Ben (Wirral S)

        Gerrard, Neil

        Chaytor, David

        Gidley, Sandra

        Clapham, Michael

        Godsiff, Roger

        Clark, Dr Lynda (Edinburgh Pentlands)

        Goggins, Paul

        Green, Matthew(Ludlow)

        Clark, Paul(Gillingham)

        Griffiths, Nigel(Edinburgh S)

        Clarke, Tony(Northampton S)

        Griffiths, Win(Bridgend)

        Clelland, David

        Grogan, John

        501

        Hain, Fit Hon Peter

        Mitchell, Austin(Gt Grimsby)

        Hall, Mike(Weaver Vale)

        Mole, Chris

        Hall, Patrick(Bedford)

        Moore, Michael

        Hamilton, David(Midlothian)

        Moran, Margaret

        Hancock, Mike

        Morgan, Julie

        Harris, Dr Evan (Oxford W)

        Mountford, Kali

        Harris, Tom (Glasgow Cathcart)

        Mullin, Chris

        Healey, John

        Munn, Ms Meg

        Heath, David

        Murphy, Denis (Wansbeck)

        Henderson, Doug (Newcastle N)

        Murphy, Jim (Eastwood)

        Henderson, Ivan (Harwich)

        Murphy, Rt Hon Paul (Torfaen)

        Hendrick, Mark

        Naysmith, Dr Doug

        Hesford, Stephen

        O'Brien, Mike (N Warks)

        Heyes, David

        Organ, Diana

        Hill, Keith

        Osborne, Sandra(Ayr)

        Hinchliffe, David

        Palmer, Dr Nick

        Holmes, Paul

        Perham, Linda

        Hood, Jimmy

        Picking, Anne

        Hope, Phil

        Pickthall, Colin

        Hopkins, Kelvin

        Pike, Peter

        Howarth, Rt Hon Alan (Newport E)

        Plaskitt, James

        Howarth, George (Knowsley N)

        Pollard, Kerry

        Hughes, Beverley (Stretford)

        Pond, Chris

        Hughes, Kevin (Doncaster N)

        Pound, Stephen

        Hughes, Simon (Southwark N)

        Prentice, Ms Bridget(Lewisham E)

        Hurst, Alan

        Prentice, Gordon (Pendle)

        Irranca-Davies, Huw

        Primarolo, Dawn

        Jackson, Glenda (Hampstead)

        Prosser, Gwyn

        Jamieson, David

        Quinn, Lawrie

        Jenkins, Brian

        Raynsford, Rt Hon Nick

        Jones, Jon Owen (Cardiff C)

        Reid, Alan (Argyll & Bute)

        Jones, Martyn (Clwyd S)

        Rendel, David

        Joyce, Eric

        Robertson, John (Glasgow Anniesland)

        Keeble, Ms Sally

        Keen, Ann (Brentford & Isleworth)

        Roche, Mrs Barbara

        Kelly, Ruth

        Rooney, Terry

        Kemp, Fraser

        Roy, Frank

        Kidney, David

        Ruddock, Joan

        Kilfoyle, Peter

        Russell, Bob (Colchester)

        King, Ms Oona (Bethnal Green)

        Ryan, Joan

        Kumar, Dr Ashok

        Salter, Martin

        Ladyman, Dr Stephen

        Sawford, Phil

        Lamb, Norman

        Sedgemore, Brian

        Lawrence, Mrs Jackie

        Shaw, Jonathan

        Laws, David

        Sheridan, Jim

        Laxton, Bob

        Shipley, Ms Debra

        Lazarowicz, Mark

        Simon, Siôn

        Lepper, David

        Singh, Marsha

        Linton, Martin

        Skinner, Dennis

        Lloyd, Tony

        Smith, Angela (Basildon)

        Love, Andrew

        Smith, Rt Hon Chris (Islington S)

        Luke, Iain

        Smith, Jacqui (Redditch)

        Lyons, John

        Smith, John (Glamorgan)

        McAvoy, Thomas

        Spellar, Rt Hon John

        McCabe, Stephen

        Starkey, Dr Phyllis

        McCartney, Rt Hon Ian

        Stewart, Ian (Eccles)

        McDonagh, Siobhain

        Stinchcombe, Paul

        MacDonald, Calum

        Stoate, Dr Howard

        McKechin, Ann

        Stunell, Andrew

        McKenna, Rosemary

        Sutclifte, Gerry

        Mackinlay, Andrew

        Taylor, Rt Hon Ann (Dewsbury)

        McNamara, Kevin

        Taylor, Ms Dari (Stockton S)

        McNulty, Tony

        Thomas, Gareth (Harrow W)

        MacShane, Denis

        Thomas, Simon (Ceredigion)

        McWalter, Tony

        Thurso, John

        McWilliam, John

        Timms, Stephen

        Mahmood, Khalid

        Tipping, Paddy

        Mahon, Mrs Alice

        Todd, Mark

        Mallaber, Judy

        Tonge, Dr Jenny

        Marris, Rob

        Touhig, Don

        Marsden, Gordon (Blackpool S)

        Turner, Dennis (Wolverh'ton SE)

        Marshall, David (Shettleston)

        Turner, Dr Desmond (Kemptown)

        Marshall, Jim (Leicester S)

        Turner, Neil (Wigan)

        Marshall-Andrews, Robert

        Twigg, Derek (Halton)

        Merron, Gillian

        Twigg, Stephen (Enfield)

        Milburn, Rt Hon Alan

        Tynan, Bill

        502

        Vis, Dr Rudi

        Winnick, David

        Ward, Claire

        Winterton, Ms Rosie (Doncaster C)

        Wareing, Robert N

        Wray, James

        Watson, Tom

        Wright, Anthony D (Gt Yarmouth)

        White, Brian

        Wright, David (Telford)

        Whitehead, Dr Alan

        Wright, Tony (Cannock)

        Wyatt, Derek

        Wicks, Malcolm

        Younger-Ross, Richard

        Williams, Rt Hon Alan (Swansea W)

        Tellers for the Ayes:

        Williams, Roger (Brecon)

        Mr. John Heppell and Mr. Ian Pearson.

        Wills, Michael

        NOES

        Ainsworth, Peter (E Surrey)

        Liddell-Grainger, Ian

        Amess, David

        Lidington, David

        Arbuthnot, Rt Hon James

        Luff, Peter

        Atkinson, David (Bour'mth E)

        MacKay, Rt Hon Andrew

        Atkinson, Peter (Hexham)

        Maclean, Rt Hon David

        Bacon, Richard

        McLoughlin, Patrick

        Baron, John

        Malins, Humfrey

        Beggs, Roy

        Maples, John

        Beresford, Sir Paul

        Mates, Michael

        Bottomley, Peter (Worthing W)

        Mawhinney, Rt Hon Sir Brian

        Bottomley, Rt Hon Virginia

        Mercer, Patrick

        Brady, Graham

        Mitchell, Andrew (Sutton Coldfield)

        Brazier, Julian

        Moss, Malcolm

        Burns, Simon

        Murrison, Dr Andrew

        Burt, Alistair

        Osborne, George (Tatton)

        Butterfill, John

        Ottaway, Richard

        Cameron, David

        Page, Richard

        Cash, William

        Paice, James

        Chapman, Sir Sydney (Chipping Barnet)

        Prisk, Mark

        Redwood, Rt Hon John

        Clappison, James

        Robathan, Andrew

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Roe, Mrs Marion

        Rosindell, Andrew

        Cran, James

        Ruffley, David

        Curry, Rt Hon David

        Selous, Andrew

        Davies, Quentin (Grantham)

        Simmonds, Mark

        Djanogly, Jonathan

        Simpson, Keith (Mid-Norfolk)

        Duncan, Peter (Galloway)

        Spelman, Mrs Caroline

        Duncan Smith, Rt Hon Iain

        Spink, Bob

        Evans, Nigel

        Spring, Richard

        Fabricant, Michael

        Stanley, Rt Hon Sir John

        Field, Mark (Cities of London)

        Streeter, Gary

        Flight, Howard

        Swayne, Desmond

        Flook, Adrian

        Swire, Hugo

        Francois, Mark

        Syms, Robert

        Garnier, Edward

        Tapsell, Sir Peter

        Gibb, Nick

        Taylor, Ian(Esher & Walton)

        Gillan, Mrs Cheryl

        Taylor, John (Solihull)

        Goodman, Paul

        Taylor, Sir Teddy

        Grayling, Chris

        Tredinnick, David

        Green, Damian (Ashford)

        Trend, Michael

        Greenway, John

        Turner, Andrew (Isle of Wight)

        Grieve, Dominic

        Tyrie, Andrew

        Hague, Rt Hon William

        Waterson, Nigel

        Hammond, Philip

        Watkinson, Angela

        Hayes, John

        Whittingdale, John

        Hendry, Charles

        Widdecombe, Rt Hon Miss Ann

        Hoban, Mark

        Wiggin, Bill

        Howard, Rt Hon Michael

        Wilkinson, John

        Howarth, Gerald (Aldershot)

        Willetts, David

        Hunter, Andrew

        Wilshire, David

        Jack, Rt Hon Michael

        Yeo, Tim

        Key, Robert

        Young, Rt Hon Sir George

        Kirkbride, Miss Julie

        Knight, Rt Hon Greg (E Yorkshire,)

        Tellers for the Noes:

        Lait, Mrs Jacqui

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

        Leigh, Edward

        Lewis, Dr Julian (New Forest E)

        Question accordingly agreed to.
        Bill read the Third time, and passed.

      DELEGATED LEGISLATION
      Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
      DELEGATED LEGISLATION

        INVESTIGATORY POWERS
        That the draft Regulation of Investigatory Powers (Covert Human Intelligence Sources: Code of Practice) Order 2002, which was laid before this House on 10th June, be approved.—[Joan Ryan.]
        Mr. Deputy Speaker (Sir Alan Haselhurst): I think the Ayes have it.
        Hon. Members: No.
        Division deferred till Wednesday 10 July, pursuant to Order [28 June 2001].

        INVESTIGATORY POWERS
        Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
        That the draft Regulation of Investigatory Powers (Covert Surveillance: Code of Practice) Order 2002, which was laid before this House on 10th June, be approved.—[Joan Ryan.]
        Mr. Deputy Speaker: I think the Ayes have it.
        Hon. Members: No.
        Division deferred till Wednesday 10 July, pursuant to Order [28 June 2001].
        Mr. Deputy Speaker: With permission, I shall put together motions 5 and 6.
        Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

        LOCAL GOVERNMENT FINANCE
        That the Local Government Finance (England) Special Grant Report (No. 101) (HC 942), on Personal Social Services Performance Grant for 2002–03, which was laid before this House on 19th June, be approved.

        GOVERNMENT TRADING FUNDS
        That the draft Queen Elizabeth II Conference Centre Trading Fund (Variation) Order 2002, which was laid before this House on 19th June, be approved.—[Joan Ryan.]
        Question agreed to.

      Public Trustee (Liability and Fees) Bill [Lords]
      Motion made,
      That, during the proceedings on the Public Trustee (Liability and Fees) Bill [Lords], the Standing Committee on the Bill shall have leave to sit twice on the first day on which it shall meet.—[Joan Ryan.]
      Hon. Members: Object.

      PETITIONS

        Water and Sanitation
        7.12 pm
        Ms Julia Drown: I am pleased to present a petition, which was signed by about 300 people in my constituency, that states that safe and affordable water and adequate sanitation are an essential part of ending world poverty.
        The petition states:
        The petition therefore requests that the House of Commons takes steps to ensure that the Prime Minister and the UK Government urge all UN member governments to agree an action plan for meeting the UN agreed target to halve the number of people without access to drinking water by 2015, and to increase the UK's official development assistance to the agreed UN target of 0.7 per cent. of GNP, prioritising…water resources within that.
        To lie upon the Table.

        The Wilson Hospital
        Siobhain McDonagh: The petition has more than 4,000 signatures and states:
        The petition of residents of Mitcham and Morden
        Declares that the present provision of intermediate care services for the people of Mitcham and Morden is inadequate and that the Wilson Hospital, presently used as health authority offices, should be re-opened as an intermediate care home.
        The petitioners therefore request that the Hose of Commons urge the Secretary of State for Health to make adequate provision to protect the health of the people of Mitcham and Morden, by providing locally-based intermediate care services at the Wilson Hospital.
        To lie upon the Table.

Care Homes (Kent)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pearson.]
7.14 pm
Miss Ann Widdecombe: I am very grateful to have this opportunity to raise an issue of supreme importance for my constituents in Kent, where 236 care beds and 17 care homes have closed in the last year alone.
I am not seeking to make specific party political points in this debate. The Minister may or may not be aware that in 1990 I led a rebellion—very unlike me, of course—against the then Government on a similar issue in respect of a constituent, Florence Smith, who I believed under regulations that then existed, but which were changed, was not getting a fair deal in her care home. Today it is a widespread phenomenon for people who are in care homes to face eviction through closure.
In that debate in March 1990, when I raised the case of Florence Smith, I was supported by the now Leader of House. He said:
I am bound to ask how we, as a legislature, can have permitted circumstances in which elderly men and women—too confused and too disoriented to know what is happening to them—are evicted from residential care homes.—[Official Report, 13 March 1990; Vol. 169, c. 198.]
Tonight, I ask exactly the same question. The Government, through the care standards regulations, are assessing not the degree of care, attention and love that should be given to the elderly and the vulnerable but the extent of the physical facilities. That is causing untold hardship.
The new minimum care standards will impose a considerable cost burden on the new care homes and on their owners. It is not good enough for the Prime Minister to say, as he did when answering questions yesterday, that some of these regulations will not take effect until 2007. Some of them take immediate effect, and I shall refer to one of them specifically, but even if others do not have to be introduced for a few years, we must remember that things cannot be introduced overnight: preparations must be made now, money must be found now, plans must be made now, and an immediate financial burden results from all of that. We end up with a complete nonsense whereby married couples are unable to share a bed.
The Minister of State, Department of Health (Jacqui Smith): Rubbish.
Miss Widdecombe: I will give the exact case. Further examples include sisters separated by fixed screens, and en suite facilities that are never used because residents are incapable and need to be escorted to specially adapted bathrooms. All that regulation has not been backed up with the funding to meet it. Care home owners are therefore being driven out of business because they cannot afford the provision of the facilities now laid down as required.
For example, I have received a letter from an elderly constituent who until a few weeks ago was resident in a home that has now closed. She said:
I am nearly 70, and have been in Residential Care for the past 18 years. I suffer from short-term amnesia. We have just been told that the …Nursing Home has to close down, in a matter of weeks,
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as it cannot come up to new guidelines: i.e. en-suite bathrooms and other absurd requirements. I have been wonderfully cared for here, and have no other place to go, especially as I am on Income Support. I have written to Mr. Blair asking him what option he would take, in my position
Regulations have led not only to homes closing but sometimes to their tottering on the brink of closure, thus creating uncertainty and tensions for some of the most vulnerable people for whom they are caring.
Under the Care Standards Act 2000, it has become an offence to run a home that is not financially viable, yet homes now have to meet huge extra costs to meet the regulations. If that means that they cannot break even, they risk prosecution if they continue to function. Precisely because of that, two homes in my constituency have closed. I submit that that is not just an unsatisfactory but a profoundly cruel state of affairs.
Let us consider the case of Hawkhurst Castle in Kent. It has become another casualty of the ongoing crisis in the care home sector. Because it does not come up to specifications, it has failed to win placements from social services, and that has led to a decline in the number of residents. Kent is not exactly generously treated under the revenue support grant settlement. Kent gets for a granny in Kent only a third of what a granny in Islington would get, and it finds it difficult to meet the current standards. It is certainly not able to fund the new standards that are required. Sadly, as a result of that, Hawkhurst Castle will close on 14 August.
One resident who has been in the home for 20 years says that she would like to spend the rest of her life in what has naturally become her home. Not only does she say she is happy, but her friends who visit her say objectively that even when they arrive unannounced they find that she is well cared for, happy and content. In that same home is a man with Down's syndrome. His sister has said that the home is wonderful and the staff devoted and that the family has no idea how it will find another home.
I now turn to the case of the Greenbank residential care home and will develop the comment that caused the Minister to heckle "rubbish" at me. The proprietor of Greenbank is concerned about standard 23.11, which is due to come into force on 1 April 2007. The standard stipulates that existing homes must provide 80 per cent. of places in single rooms. Greenbank currently has 15 rooms, 13 of which are single and two double—so 86 per cent. of its rooms are single, but only 76 per cent. of the places are in single rooms. The home thus falls below the standard.
The problem is not even ridiculous. The owner says that, if a double room is converted to a single room, the cost will be about £16,000 per annum. That is the hard money involved. And what about choice? A husband and wife who had been together for 50 years would have to be split up. Even if a room that could take two people were available, it could not be used because it would take the home below the standard 80 per cent. of places. The choice should be left with the residents whom the decisions will affect. Indeed, the proprietor of Greenbank says that we are talking about counsels of perfection. It is simply not possible to meet all the requirements.
The Salvation Army care homes in the London and south-east division also raise major concerns. The sheer costs of refurbishment and staffing to bring them up to

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the new standards will only exacerbate what is already a bad situation caused by gaps in local authority funding. In the three care homes that the Salvation Army runs, it faces an estimated deficit of £340,000 for this financial year, and that is even before all the new regulations take effect. Of course, it will now be an offence to run a home that is not viable.
Refitting the Salvation Army's homes will make hundreds of thousands of pounds of new work necessary. The Salvation Army—like other care home owners to whom I have spoken, residents and the Conservative party—accepts that a Care Standards Act is, in principle, a good thing and that there is no possible objection to minimum standards. However, practicalities must be taken into account and sensible commonsense standards applied.
Probably worst hit of all are the religious orders, which now cannot even nurse their own members, because the standards cannot be met. Iden Manor in my constituency, which closed recently, was run by Roman Catholic nuns. They used to care for drug and alcohol-dependent women, a rare service to which it is not easy to find alternatives. As they told me when I visited them last weekend, they had to close because it was illegal to run a home that was not viable. With the new regulations and requirements, there was no earthly way their home would be viable.
Where will those women dependent on drugs and alcohol go now? It is not only the elderly who are affected by the present situation. It is a sad state of affairs when a devoted nursing order, which has run Iden Manor for years and years, to the huge benefit of individuals, has to close its doors simply because the physical requirements do not match up. That is God's work being destroyed by the wisdom of bureaucrats.
What is the answer to the problem, not least given that NHS beds, which are urgently needed, are occupied by people ready for discharge but who have nowhere to go? The Government should suspend the implementation of the minimum standards and follow our suggestions in the new clause 4 that we tabled when the 2000 Act was discussed. The Government rejected that new clause. At the time, we argued that while we accepted the need for minimum standards, we also needed to ensure that they did not become counter-productive. Therefore, we needed an extensive consultation period and then to subject all the standards to proper parliamentary scrutiny.
New clause 4 also suggested other safeguards to try to ensure that the minimum standards that would be imposed on those essential services would be reasonable and achievable, and that did the job of ensuring proper quality of care without making it impossible to provide that very care. The feeling in Kent, in Greenbank, Iden Manor, Hawkhurst Castle and other homes that are tottering on the brink but are not quite over it, is that the minimum standards as currently laid down—I have given the House only a selection tonight, because I could not go into full details if I wanted to hear the ministerial reply—spring from an Alice in Wonderland world in which the Mad Hatter rules. Sadly, the elderly, the sick and the vulnerable are the victims.
I ask the Minister today for the application of some common sense, before more care homes close, more residents have nowhere to go and more people are stuck
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in hospital through no fault of their own, occupying desperately needed beds. We need sensible standards and proper funding for local authorities and, at the same time, a recognition that it is the care, love and attention received, and not the presence of a fixed screen and an en-suite lavatory, that decide whether someone is happy in old age,
7.28 pm
The Minister of State, Department of Health (Jacqui Smith): I congratulate the right hon. Member for Maidstone and The Weald (Miss Widdecombe) on securing this debate on an issue that is. I agree, important and significant. She has rightly had much to say about the state of the care home sector in her area. I recognise that the care home market in Kent is not ideally balanced, and some care home owners remain under pressure to sustain viable businesses.
It is worth reminding ourselves of how we got to this position. It is important to remember that Kent, along with other parts of the country, experienced a significant, but unplanned and unmanaged, expansion in the independent care home sector as a result of the use of an uncapped Department of Social Security budget throughout the 1980s. That led to the unnecessary and completely avoidable admissions of many older people, and others, into institutional care. We are still dealing with that legacy of the 1980s.
Let me make it clear that I agree that some people will always need residential care, and we need to ensure that they get it, but the Opposition have been all too quick to scaremonger about a crisis in the care home sector. Care homes have always closed. What the Opposition choose to ignore is that new homes are opening and existing homes are expanding.
According to the independent care consultants, Laing and Buisson, there has been a drop of about 19,000 places since 1997. That is a far cry from the figure of 50,000 often bandied around by the Opposition, although I accept that the right hon. Lady did not quote it this evening. Once again, even within Kent, there is evidence of expansion in care homes. I understand that 25 care homes either received planning permission in the past year or are awaiting it so that they can extend their premises. The story is not all one way as the right hon. Lady would have us believe.
What matters, however, are not political number games but whether older people are getting the right care in the right place at the right time. The legacy that we inherited means that there are genuine concerns in the sector. We are addressing those by providing extra money, for which the right hon. Lady called, and by developing innovative new approaches to care.
The Government have made unprecedented investments in social services. Between 1996–97 and 2002–03, personal social services resources increased by more than 20 per cent. in real terms—an average real terms increase of more than 3 per cent. a year. That compares with an average annual real terms growth of only 0.1 per cent. per annum between 1992–93 and 1996–97 under the previous Government. The right hon. Lady outlined the issues on fees, but the build up of underfunding in our social services departments as a result of the level of funding provided when she was a Minister bears some responsibility for that.

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The right hon. Lady can see the results of the Government's investment in her area. Kent county council's personal social services standard spending assessment increased by 4.9 per cent. this year following an increase of 5.7 per cent. in the previous year. We acknowledge the need for continuing investment in social services. That is why personal social services resources will increase, as my right hon. Friend the Chancellor announced, by an average of 6 per cent. a year in real terms over the next three years. That increase is a result of the Budget and the Finance Bill that Conservative Members have just voted against.
We listened to the concerns of local authorities and announced the £300 million building care capacity grant last year to address how we maintain capacity in long-term care, especially for older people. Kent received £2.1 million last year and £4.4 million this year from that grant. It has enabled Kent to improve on its target of a 25 per cent. reduction in delayed transfers from hospitals by using the funds in a variety of ways.
About half the grant has been used to uplift contract prices in the types of homes that the right hon. Lady mentioned, especially in localities where supply had been under the most acute pressure. I agree that it is important for the extra resources to be reflected in fee levels. However, I disagree about who has been prepared to will those extra resources into local authorities, and we should bear in mind who has voted against them. Local councils are also choosing to spend some of their additional money on fee increases for care homes, which in Kent amounts to an increase of £2.5 million for 2002–03. It has also committed £1.54 million to domiciliary care price increases. Those have largely been funded by the grant.
Although money is important, alone it is not enough. Local commissioning arrangements also need improving. That is precisely why my predecessor formed the strategic commission group, and why I continue to chair it. We have established a new and more positive partnership between the statutory and independent social care and housing sectors at a national level. This needs to be replicated at a local level. That is why we published the agreement "Building Capacity and Partnership in Care" last October. This guidance sets down how councils and their partners should work together.
Kent council has also heeded the advice of the joint review undertaken by the Audit Commission and the social services inspectorate between November 2000 and February 2001. The report, which was published in October 2001, encouraged Kent to develop more locally sensitive commissioning through consultation with precisely the providers that the right hon. Lady is concerned about. There is a need, especially in a council with 1.3 million residents, to balance carefully the allocation of resources to the different types of need.
In addition, the Department's change agents team is to provide further assistance to the local whole systems planning groups in Kent in getting the balance and composition of local services right. That is largely due to concerns expressed not least by my hon. Friends the Member for Chatham and Aylesford (Jonathan Shaw) and for South Thanet (Dr. Ladyman). They have expressed their concerns, along with their colleagues, about the position in Kent. They have taken up especially what the Government can do to support the commissioning that is necessary for older people.
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The change agents team will also work at a regional level to analyse the structure of the market, and the trends that are evident. This will enable councils and their partners, working collaboratively, to make the appropriate decisions to ensure that the national standards for older people are achieved, and that independent living is a reality for those who wish it.
I move on to the issue of national care standards. It has always been the case—at least since 1984—that, rightly, care homes have been regulated. However, before the Care Standards Act 2000, they were regulated by 150 different authorities in a different way, often with different standards. There was confusion among users and their families, and there was confusion also among providers. That is why those providers were among some of the most vocal of those arguing for national minimum standards and for the National Care Standards Commission to enforce them.
I acknowledge that there is considerable concern and anxiety about the new care standards and how they will be enforced. Some care home providers are worried that the new standards will impose unreasonable and unsustainable costs on them and force them out of business. I shall shortly set out the action that the Government have already taken to ensure that that is not the case. However, such concern is not alleviated by hon. Members—the right hon. Lady is not alone in this—who choose to misrepresent the truth of what the standards mean. Misinformation is good neither for the older people and others who depend on care homes, nor for providers.
It is not the case that our standards prevent those who choose to share from sharing. Married couples would not be forced to separate. Existing homes do not have to have en suite bathrooms. The constant repetition of these claims by people who should know better and could read the facts which are set out in the national minimum standards does nothing to safeguard our care homes and does nothing to reassure our older people.
Miss Widdecombe: The Minister has said categorically that it is not necessary for people who want to share to be split up. How does Greenbank address the issue that the standards refer not to 80 per cent. of rooms but 80 per cent. of places? Unless it splits up the occupants of double rooms, it will not be able to meet that standard. Is the Minister saying that it need not bother?
Jacqui Smith: The answer is found precisely by recognising the right hon. Lady's concerns for a commonsense approach. Earlier this year—I wrote to hon. Members about this as well—I instructed the National Care Standards Commission to consider precisely those circumstances where the needs of older people in a home should take precedence over the type of environmental standards issues that the right hon. Lady raises. I have made it completely clear that the needs of older people should be considered when enforcing those standards. As the National Care Standards Commission itself made clear, those standards are not about closing good homes—that clarification was welcomed by care home representatives as a common-sense approach.
The right hon. Lady slipped in concerns about staffing. I must take issue with her, as it is not unacceptable for us to expect that the care homes that some of our most vulnerable older people live in should be staffed by people

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trained to care for them. The right hon. Lady seemed to imply that it was unreasonable to expect that of staff caring for vulnerable people. It is a reasonable requirement which, once again, we are matching with extra resources to ensure that care home providers can access the necessary training.
Most responsible care home providers, as I have suggested, welcome the introduction of new national standards, which aim to protect the vulnerable in our society. We are determined to take a commonsense approach to those standards, and have already done so. Long-term care, however, is not just about care homes. Increasingly, older people want the choice of staying at home. Sometimes the emphasis on the concerns of care home providers has stopped us focusing on the choices of older people. We are giving them independence through alternative, more flexible forms of provision, such as extra care housing, and more intensive home care packages to keep people in their own homes longer.
We must aim to provide more of those modern alternatives, balancing them with good, effective, high-quality residential accommodation where necessary. It is a matter of getting the balance right for local communities. Investment from the Government has given Kent a massive increase in intensive home care packages—there was a 37 per cent. increase in households receiving them between September 2000 and September 2001. There is therefore a choice of support for older people.
Another alternative for older people is intermediate care, a new service providing an essential bridge between home and hospital, which is why we have made a
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substantial investment in it. Good progress is being made on meeting the NHS plan targets. By the end of this year, compared with the baseline of 1999 to 2000, we shall have an additional 2,400 intermediate care beds; 6,200 non-residential intermediate care places; and 126,000 more people will be in receipt of intermediate care services. The 2003–04 target of an extra 1,700 non-residential places has already been exceeded. The hon. Lady called for more funding, on which there has been progress, with additional capital investment to fund intermediate care. On 6 March, we announced the allocation of the first phase of £46 million-worth of funding for 80 projects, with an increase of more than 1,300 beds. Further bids have since been approved and additional funds are still to be allocated. In Kent, the number of people receiving intermediate care services increased from 4,975 in 1999–2000 to 10,758 in 2001–02, which represents an increase in excess of 5,000 people having the services that they need to keep them out of hospital in the first place and gain fuller independence on discharge.
I therefore agree with the right hon. Lady that we need to take a commonsense approach to care homes and that we need to invest. The Government are doing so in the face of opposition from Conservative Members. We must ensure that we provide the resources needed to pay fees for residential care, but we must also provide the alternatives that older people themselves say that they want. We are accomplishing those goals and are steering away from the scaremongering that we have heard too often from Opposition Members.
Question put and agreed to.
Adjourned accordingly at sixteen minutes to Eight o'clock.