Commons Sitting of 23 July 2002

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

    HSBC INVESTMENT BANKING BILL [LORDS]
    Order for Third Reading read.
    To be read the Third time on Tuesday 15 October.

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS
  The Secretary of State was asked—
  FOREIGN AND COMMONWEALTH AFFAIRS

    Zimbabwe
    Mr. Desmond Swayne: What recent discussions he has had with his South African counterpart regarding the situation in Zimbabwe. [69576]
    Mr. Henry Bellingham: If he will make a statement on the impact of smart sanctions on Zimbabwe. [69578]
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): I met South African Foreign Minister Zuma on 20 June. We discussed a range of issues, including Zimbabwe.
    The situation in Zimbabwe is serious and deteriorating, with many facing severe poverty, hardship and starvation. The principal cause is not the drought, but the policies of the Mugabe regime. Despicably, the regime is now actively diverting humanitarian food aid, with the deputy Foreign Minister telling the public that it will go only to ZANU-PF supporters.
    Sanctions are having an impact. Yesterday, EU Foreign Ministers agreed unanimously to more than triple the number targeted by the assets and travel ban to 72, to cover the whole of the ruling elite.
    Mr. Swayne: The extension of smart sanctions is long overdue and most welcome, but how are they to be enforced? Is there any possibility of extending the net to catch businesses that support Mugabe?
    Mr. Straw: Enforcement of the sanctions is in the hands of EU member states. We have no evidence at all of any breach of the sanctions. There is a provision in the common position—this may have been implicit in the hon. Gentleman's question—for members of the ZANU-PF elite who have to attend certain international
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    gatherings. EU member states have no real discretion over that, any more than the United States has discretion over their attendance at the United Nations. However, the system is working. I am grateful to the hon. Gentleman for his welcome for the measure, and we will certainly consider its extension.
    Mr. Bellingham: Members of the ruling elite are still transiting through Europe: for example, Mugabe transited through Madrid the other day. Has the Foreign Secretary looked again at my suggestion of a ban on Air Zimbabwe flights? With the Commonwealth games coming up, has he looked at a sporting boycott? Has he spoken to the International Cricket Council about the forthcoming World cup cricket tournament in South Africa and Zimbabwe? I welcome yesterday's EU announcement, but surely it is too little, too late.
    Will the right hon. Gentleman join me in congratulating my right hon. Friend the Member for Devizes (Mr. Ancram), the shadow Foreign Secretary, on the efforts that he made in going to Zimbabwe the other day? Will the Foreign Secretary go there himself to convey these very tough messages?
    Mr. Straw: It would not be appropriate to ban Air Zimbabwe, as it would significantly inconvenience thousands of decent people from Zimbabwe—black, white and Asian—and would lead to immediate retaliation against other carriers. We would need to think carefully about that.
    Spain has refused transit visas to the Mugabe regime. The result is that, quite properly, members of the regime have been humiliated and inconvenienced by having to wait to change planes in Madrid airport, rather than being allowed into Madrid. There are international obligations that we cannot avoid, but the very fact that the Mugabe regime is making such efforts to try to get around the sanctions emphasises their effectiveness and the degree to which they are leading to the regime's isolation.
    I am glad that the right hon. Member for Devizes (Mr. Ancram) visited Zimbabwe. He was able to enter incognito and, much though I would wish to do likewise, I am told by my security people that it might be a tad more difficult for me.
    Roger Casale: Does my right hon. Friend agree that the EU's common position on Zimbabwe, with the stepping up of sanctions against Zimbabwe, is a vindication of this Government's constructive engagement with Europe? Will he make sure that, through the Convention on the Future of Europe, the EU's common foreign and security policy is strengthened? Does he agree that it is in this country's interests, as we see in the case of Zimbabwe, if the EU can punch its weight in the world?
    Mr. Straw: I agree entirely with my hon. Friend. A year ago, the clear aim of the Mugabe regime was to do its best to keep this as a bilateral dispute between the United Kingdom and Zimbabwe. As a result of action that we have been able to take, the dispute has been multilateralised to the Commonwealth and the EU.
    Mr. David Heath: We understand why the travel ban cannot be applied when

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    President Mugabe or one of his Ministers is attending a United Nations function, but is there any reason why that latitude should be extended to his entourage of staff, bodyguards and flunkeys? Would not a ban on them deter some of the flights that are being taken?
    Mr. Straw: We must act proportionately. We have now trebled the number of people subject to the ban, resulting in a list of 72, which we judge to include virtually the whole of the ruling elite of ZANU-PF. We shall certainly consider extending the ban to business men, where there is clear evidence that that would be appropriate. It is important, however, in terms of there being understanding across Africa, that it is recognised that we are acting in a proportionate and targeted way, not in an indiscriminate way.
    Mr. Douglas Hogg: Will the right hon. Gentleman cast his mind back to the post-Lockerbie sanctions on Libya? He will recall that there was a total ban on air flights to that country. Is that not a model for what we should be considering for Zimbabwe? After all, in the case of Libya, innocent people were affected by the ban.
    Mr. Straw: It is a matter of proportion, but the simple fact is that, if we were to impose a ban on Air Zimbabwe flights, it would lead to a ban on flights by British and European carriers, as the right hon. and learned Gentleman will recognise. That would gravely inconvenience thousands of ordinary Zimbabweans, including 40,000 UK passport holders. These are issues that we must weigh in the balance, but my judgment is that this would hurt innocent people more than it would hurt the regime.
    Mr. Michael Ancram: My hon. Friend the Member for West Suffolk (Mr. Spring) and I were in Zimbabwe last Wednesday. Is the Foreign Secretary aware—as I was made aware when I was there—of the obscenity of growing famine, starvation and AIDS existing alongside acre after acre of farm land that is unprepared, unsown and not producing food? Does he also understand the obscenity of displaced black farm workers, some of whom I met, who have been thrown off their farms without hope, jobs, possessions or homes? There are now 85,000 of them, and, if the 2,900 farms are closed in two weeks' time, the number could rise to 300,000. Is the right hon. Gentleman aware that the despair of people in Zimbabwe is only increased when they hear reports—I hope that they were incorrect—that, while I was in Zimbabwe, he was saying that he could do nothing to help them? Will he now assure us that he can, and will, seek to help them?
    Mr. Straw: I was indeed aware of what the right hon. Gentleman had to say, because I am an assiduous reader of the Conservative party website. I have therefore followed exactly what he has said, and his analysis is entirely correct. Zimbabwe under Mugabe is now the worst-performing economy in the whole of Africa, which is an extraordinary record, given that only a few years ago it was the best-performing economy. GDP is likely to have collapsed by a quarter in three years, the inflation rate is 122 per cent. and rising, and the unemployment rate is 70 per cent. and rising. We are profoundly concerned about the situation, as the right hon. Gentleman
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    knows. We have been doing everything we think we practically can, but we are always ready to listen carefully to specific proposals for further action, including those from him.
    Mr. Ancram: I will take the right hon. Gentleman up on that offer. Will he hold discussions, as I did last week, with his colleagues in South Africa and Malawi on the catastrophe that is about to spill over into those countries if Zimbabwe implodes? They are already feeling the effects of what is happening there. Does he not agree that a humanitarian disaster in southern Africa will affect us all, and that, if it happens, we will all be called on to help to end it? Given that we all have an interest in avoiding such disasters, will he seek to persuade our southern African colleagues that acting jointly to bring pressure to bear on Mugabe to hold fresh elections is in all our interests, but, above all, in the interests of the people who are suffering so badly in Zimbabwe?
    Mr. Straw: The answer to all those questions is yes. On humanitarian aid, yes, there is a catastrophe, which is partly being caused by drought, but which has been greatly exacerbated in Zimbabwe and the surrounding areas by the actions of the Mugabe Government. Yes, we need collective discussions with the Southern African Development Community, and they will take place at EU level. I am glad to note that the right hon. Gentleman has endorsed that.
    My right hon. Friend the Secretary of State for International Development has already allocated an extra £45 million of aid directly to Zimbabwe, as well as other amounts to the other countries of southern Africa to help cope with this crisis.
    Mr. Ancram: On the European Union, may I belatedly welcome the extension of the sanctions that was announced yesterday, six weeks after I first called for it? Is the Foreign Secretary aware that the previous sanctions in Zimbabwe were regarded as ineffective and a joke? Why did yesterday's extension not go further? Why are not spouses and families included? Why does the list—unlike that of the United States—not include the close business associates who sustain and finance Mugabe and his henchmen?
    Does the Foreign Secretary not understand that yesterday's announcement goes only part of the way? This time, the sanctions must be more than just words. The loopholes must be closed, and the sanctions must be made to bite until Mugabe is forced to realise the reality of the situation, and to call for the fresh elections without which this problem cannot be solved.
    Mr. Straw: Those of us with reasonably long memories will be only too delighted to note the right hon. Gentleman's conversion to the principle of sanctions. If the Conservatives had supported sanctions against South Africa, the evil of apartheid might have been ended a bit more quickly.
    We are working on this issue, and one spouse was included on yesterday's list—Mrs. Grace Mugabe. On proportionality, we have judged it important to target the serious and real villains—the principals in the elite—rather than being dragged into diversionary arguments about whether it is also appropriate to target spouses and

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    children. We are ready to consider the question of businesses, but I should point out that, so far as the right hon. Gentleman is concerned, there is always a great gap between the word and the deed. The biggest difference is that he calls for these sanctions—
    Mr. Ancram: And the Americans.
    Mr. Straw: The right hon. Gentleman mutters about the Americans, but our total package of sanctions is tougher than theirs. He calls for these sanctions, but the one certainty is that, had he been in my position, he would never have achieved these sanctions because he would never have had the EU on his side.

    New Partnership for Africa's Development
    Mr. Win Griffiths: What plans he has to meet the African Union to discuss the role of the New Partnership for Africa's Development in strengthening democracy and human rights. [69579]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): My right hon. Friend the Foreign Secretary, along with the Minister with responsibility for Africa, my noble Friend Baroness Amos, hold regular meetings with leaders of the African Union, and the Government are active in supporting the New Partnership for Africa's Development in all its contacts with those leaders.
    Mr. Griffiths: We have just discussed the tragic example of Zimbabwe, where Africa's democracy and human rights are being flouted in an almost unprecedented way. However, there have been successful elections in countries such as Sierra Leone, and others such as Angola and Sudan are emerging from terrible civil wars. In the light of those examples, will my hon. Friend ensure that our Government and the EU will provide the fullest support to strengthen democratic structures, and to ensure that human rights are observed as part of the package for improving the economies of those countries?
    Mr. MacShane: The answer is yes, but let us welcome the African Union itself. The union's declaration on the principles governing democratic elections in Africa includes free and fair elections, free association and impartial electoral institutions. If only those principles had been observed in Zimbabwe, the tragedy that we have just discussed would not have taken place. It is for Africa to shape its own future; it is not for the west to impose any particular values or ideas. We welcome what the African Union is doing.
    Andrew Selous: Does the Minister agree that the New Partnership for Africa's Development would stand a greater chance of success if the Presidents of South Africa and Nigeria, among others, wholeheartedly condemned the abuses of democracy and human rights, and not least the current sheer theft of assets in Zimbabwe?
    Mr. MacShane: I rather think that my right hon. Friend the Foreign Secretary did just that. However, the African Union would have had a much greater chance of success if the Leader of the Opposition had made even just one
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    reference to Africa in his keynote speech on international affairs at Chatham house earlier this year. Given that the shadow Foreign Secretary is not on holiday in Florida, I hope that he can explain to the Leader of the Opposition where Africa is.
    Ms Meg Munn: Given the terrible situation in. Africa in relation to HIV/AIDS, what role does my hon. Friend believe that the partnership can play in tackling the spread of this dreadful disease?
    Mr. MacShane: That is undoubtedly the biggest single challenge facing Africa, and it is one to which this Government—along with partners around the world and in Africa itself—have pledged real material resources. The issue will of course be raised at the forthcoming Johannesburg summit on sustainable development. I can think of no greater current challenge to humanity than ridding Africa, in particular, of the scourge of HIV/AIDS.
    Mr. Richard Spring: What encouragement can the hon. Gentleman give the people of southern Africa, where there is now so much suffering, that the worthy objectives of the African Union—to promote peace, security and stability on the continent—will be translated into concrete commitment by member nations? What actions does he foresee the international community taking through NEPAD to ensure that those objectives are met?
    Mr. MacShane: At the G8 summit in Kananaskis, there were commitments to a serious development partnership. I think it is fair to say that the Government have been working more seriously than any western or northern Government in supporting the world summit in Johannesburg on sustainable development. We are trying to break down the trade barriers against African goods in both the European Union and north America. Our commitment is to trade and economic growth, providing the material basis for a more secure and peaceful future for all the peoples of Africa.

    Saudi Arabia
    Dr. Julian Lewis: What representations he has made to the Government of Saudi Arabia in respect of statements of support for terrorist activities. [69580]
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): The Government of Saudi Arabia are well aware of her Majesty's Government's complete condemnation of terrorism, including suicide bombings. The Government of Saudi Arabia have made clear their rejection of terrorism, including in relation to the middle east peace process.
    Dr. Lewis: I agree with everything that the Foreign Secretary said, but given that our relationship with Saudi Arabia is so sensitive and important, is he not gravely concerned that on 13 April the Saudi ambassador, Ghazi Algosaibi stated:
    "When the call comes for Jihad
    There's no need for a referendum or a Fatwa'.
    The Day of Jihad is the Day of Blood.";

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    that on 9 July, he stated that Israeli actions on the West Bank were
    "far more severe than anything the Germans did when they occupied Europe in World War Two";
    and that on 5 June, he stated:
    "I do not fear death—on the contrary, I long to die as a martyr, although I am at an age that does not allow me to carry out a martyrdom operation."?
    How sad that he cannot do it, but how sad also that he is the ambassador of that country to this one.
    Mr. Straw: As I made clear, we disagree profoundly with the Saudi ambassador and we believe that terrorism, including suicide bombing, is to be condemned and that there is no comparison between what happened during the Nazi occupation of the whole of Europe and what is happening in Israel and the occupied territories.
    Lawrie Quinn: Does my right hon. Friend agree with the following statement made earlier this year by the King of Saudi Arabia? He said:
    "Regardless of its origin, terrorism must be eliminated and terrorists, regardless of who they are … must be taken to justice".
    Does my right hon. Friend agree with that, and does he also agree that some of the acts that Israel has recently perpetrated in Gaza might amount to that sort of terrorism?
    Mr. Straw: As I indicated in my opening statement, the Government of Saudi Arabia have made clear their rejection of terrorism, and the quotation that my hon. Friend has just read out is confirmation of that.
    Mr. Gerald Kaufman: In condemning terrorist atrocities in the middle east, will my right hon. Friend condemn the two terrorist acts against Israeli Jews last week, which resulted in the loss of innocent life, and, equally, the terrorist act carried out by Israeli forces in Gaza yesterday, which resulted in the death of eight innocent children as part of a state-targeted assassination? Will my right hon. Friend ascertain that no British equipment was involved in an action that was organised, to his shame, by the Israeli Minister of Defence and leader of the Labour party?
    Mr. Straw: As I made clear, we condemn all terrorist acts, including those to which my right hon. Friend has just referred. I issued a statement in which I said that I regard the action taken by the Israeli defence force as wholly unjustifiable and unacceptable. It is not acceptable that innocent people, especially innocent children, should be killed as a result of military operations of that kind.

    Bahrain
    Mr. Michael Clapham: When he next plans to visit Bahrain to discuss bilateral relations; and if he will make a statement. [69581]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): My right hon. Friend the Foreign Secretary has no plans to visit Bahrain at present. However, my right
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    hon. Friend the Prime Minister and I will meet His Majesty the King of Bahrain tomorrow and will discuss bilateral relations.
    Mr. Clapham: I am grateful to my hon. Friend for that answer, and am pleased to hear that he and the Prime Minister are meeting the King of Bahrain tomorrow. My hon. Friend will be aware that, since 1999, Sheikh Hamad has introduced widespread democratic reforms, including greater transparency, greater accountability, equality between the sexes and respect for human rights, particularly rights for women. Women can now stand as candidates in local and general elections as well as voting in them. Does my hon. Friend agree that our close relationship with Bahrain gives us the opportunity of extending the influence of democratic development and combating the conflicts in the middle east and the Gulf area in particular, without having to enter into ill-considered meddling in other people's affairs?
    Mr. O'Brien: I very much agree with my hon. Friend. It is important that we continue to support development of human rights and democratic values in the middle east. Indeed, in respect of Bahrain, we have offered advice and expertise, particularly on citizenship education. Our embassy held a conference, aimed at promoting citizenship education, which was open to the media, NGOs, Government Ministries and other bodies. We have sponsored visits to the United Kingdom for leading Bahrainis to learn about UK democracy and issues such as human rights and freedom of the press. We have provided the Bahraini Government with information on electoral boundaries, systems of government and trade unions. We welcome steps taken by the Bahraini Government to progress towards a constitutional monarchy and a democratic state. In the context of the middle east, those are very welcome developments.
    Mike Gapes: When my hon. Friend meets the King of Bahrain, will he congratulate the Government and people of Bahrain on showing that the Arabian peninsula does not have to be dominated by 14th century attitudes to women, repression of minorities and apologists for terrorism, but can be a beacon for democracy and human rights throughout the Arab world?
    Mr. O'Brien: Human rights have indeed improved dramatically in Bahrain in recent years. There are now no political prisoners and exiles have been allowed to return. We maintain a constructive dialogue on a number of issues with the Bahrainis. Bahrain is in many ways providing a lead to show that it is possible to create a more democratic state in the middle east that can participate in the international community with its head held high.

    Ukraine
    Mr. Russell Brown: What plans he has to develop links between the UK and Ukraine. [69583]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): As part of our effort to support and encourage Ukraine's transformation to a democratic state, the UK is building on established links to enhance bilateral and multilateral engagement with Ukraine.
    Mr. Brown: I thank my hon. Friend for his response. He may be aware that Ukraine recently established a consulate in Edinburgh and that the intention is to establish a Scotland-Ukraine foundation. People are looking to Ukraine for support, advice and guidance on agriculture, farming—particularly fish farming—and forestry. Does my hon. Friend see a role for the Foreign and Commonwealth Office in helping to establish and strengthen such a foundation?
    Mr. O'Brien: Yes, we very much welcomed the opening of a Ukrainian consulate in Edinburgh in February 2002. A Scottish-Ukrainian foundation or society would, we feel, help to develop UK-Ukrainian bilateral links. I shall ask our new ambassador at Kiev to see what he can do to help launch a Scottish-Ukrainian society or foundation, perhaps by holding an inaugural reception, for example.
    Andrew Mackinlay: In view of the enlargement of Europe, which we all welcome and endorse, will the Foreign Secretary ensure that Ukraine is not left out of the equation, that we will not create a new iron curtain along the Polish border and that we will recognise that communities in Belarus and Ukraine need access to their fellow kinsmen and women in Poland as well as the commerce and trade on which they depend? I am concerned that we will cut these people off if the map of Europe does not include Ukraine or Belarus.
    Mr. O'Brien: We certainly do want to ensure that there are no more iron curtains. Europe has had enough of that and is well rid of it. We want to ensure that Ukraine, Belarus and Moldova—especially Belarus—all have a record on human rights and democratic values that is to some extent better than it is today. A debate on Belarus in Westminster Hall today certainly showed that that country has a very long way to go before we can say that it would be part of the European Union, or indeed Europe in a broader sense.
    Ukraine is developing more democratic values, but we still need to have a critical engagement with it on the way forward to ensure that we can perform our close economic and political ties with Ukraine.

    Sudan
    Mr. David Drew: What recent discussions he has had with the Government of Sudan on the renewed fighting in the Sudan, with specific reference to conflict around the oil fields. [69584]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): I am happy to welcome the agreement on the Sudan peace process announced at Machakos on 20 July, which addressed the main points made in my hon. Friend's question. I shall place a copy of the text of the framework agreement in the Library.
    Mr. Drew: I thank my hon. Friend. In this rather depressing world, with all these conflicts, that is some of the best news that those of us who take an interest in Sudan could possibly hear, given that it is the world's longest-lasting conflict. As we move towards the way in which self-determination will be allowed for in the south
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    as part of the peace formula, does my hon. Friend agree that it is even more necessary to try to get a ceasefire in the area around the oilfields, in the western upper Nile, and will the Government continue to take a leading role in trying to bring the parties together so that we end this conflict once and for all?
    Mr. MacShane: It is indeed good news, but my hon. Friend is right to draw attention to the fact that this is the first major step forward in the framework agreement; there is much more to be done. The United Kingdom, together with our partners—America, Norway and Italy—will be taking an active interest. I pay tribute to Alan Goulty, the Foreign Office official who has been the Prime Minister's envoy in Sudan. British diplomacy has been shown to work, and this shows the importance of engaging with Africa.
    Mr. Alan Duncan: I join the Minister in welcoming recent developments in Sudan and join him wholeheartedly in paying tribute to American efforts in the region and those of Alan Goulty and his team from our own Foreign Office.
    A second round of talks is due to start on 12 August. The talks are designed to pick up the recent framework agreement and, for instance, add some constitutional arrangements that might better define relations between north and south. What prospects are there for a comprehensive ceasefire, not just around the oil fields but everywhere, between the Government and the Sudan People's Liberation Army, and what is the Minister's assessment of the next steps that can be taken to achieve one?
    Mr. MacShane: I do not have time to read out the text of the agreement, but there are references to the people of south Sudan, which I know will be of interest to the hon. Gentleman, who has taken a very direct personal interest in Sudanese affairs. They have the right to control and govern affairs in their region and participate equitably in the national government. They have the right to self-determination, inter alia through a referendum to determine their future status. For those hon. Members interested in Sudan, I recommend a thorough reading of the detail of this agreement. It shows that good news—really good news—can come out of Africa.
    Mr. Hilton Dawson: I welcome the tremendous news and the remarkable and assiduous diplomacy of the members of the Sudan unit, but does my hon. Friend accept that perhaps the key to this whole process and to the breakthrough has been the inclusion in the agreement of a decision to hold a referendum after a six-year interim period, which would include an option for secession, as well as an option for unity of the country? In pursuing the hard work that needs to be undertaken in the next few weeks and months, will my hon. Friend ensure that humanitarian access to the whole country is prominent in discussions?
    Mr. MacShane: That is important to a number of hon. Members who participated in a Westminster Hall debate on the subject. My hon. Friend is right about the six-year time frame. I hope that the two interested groups in Sudan will agree that it is better to keep the country together, in line with the agreed text on state and religion. Part of that

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    process is continuing the aid—£8 million is coming from the United Kingdom alone this year—and my hon. Friends at the Department for International Development are engaged in that. We should mention the role of President Daniel Arap Moi of Kenya, whose statesmanship helped to bring the agreement to fruition.

    China
    Dr. Stephen Ladyman: What recent representations he has made to the Government of the People's Republic of China with respect to the practitioners of Falun Gong; and if he will make a statement. [69585]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): We regularly raise our concerns about Falun Gong with the Chinese, both in bilateral meetings and at the UK-China human rights dialogue. Last Monday, my right hon. Friend the Foreign Secretary did so in his meeting in Beijing with the Chinese Foreign Minister, Mr. Tang.
    Dr. Ladyman: My hon. Friend's concern for the practitioners of Falun Gong is welcome. Does he agree that what is happening to Falun Gong and other religious minorities in China is extremely worrying, but that the forthcoming Olympic games provide a real opportunity for the entire international community to put pressure on the People's Republic of China to improve its human rights record and to free practitioners of Falun Gong?
    Mr. MacShane: My hon. Friend is right; I welcome his commitment to, and involvement in, this issue. Many of his arguments were raised in an excellent debate last week in Westminster Hall on the persecution of Christians in Asia. The Olympic games are an enormous opportunity for all of us to engage in every sense with China on political democracy, human rights and economic opening. The two previous Olympic games that took place in Asia—Japan in 1964 and South Korea in 1988—helped to accelerate the process of modernisation and reform and the transition from a more authoritarian form of society in those countries. I hope that the 2008 Olympic games will do the same for China.

    Israel
    Ann Clwyd: If he will make a statement on Government policy on arms sales to Israel via a third country. [69586]
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): All export licence applications for items to be exported to Israel via an intermediate country are assessed on a case-by-case basis against the consolidated European Union and national arms export licensing criteria in the light of the circumstances prevailing at the time and taking account of other relevant factors. Licence applications for goods where it is understood that they are to be incorporated
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    into products for onward export are assessed as described in my written reply of 8 July to my hon. Friend the Member for Sherwood (Paddy Tipping).
    Ann Clwyd: Given that the Israeli defence force has admitted using more weapons and munitions against the Palestinians in the month of April alone than it did in the whole of the previous 10 years, what possible justification can there be for selling any more arms to Israel?
    Mr. Straw: While I understand my hon. Friend's point of view, I do not share it. All countries have a right to defend themselves and that is made explicit by the European Union and national criteria. These are extremely difficult decisions. I had to think long and hard, as did my right hon. Friends the Secretaries of State for Defence and for Trade and Industry, who are also involved in making the decisions. They are difficult, but I am satisfied that the decisions that we made are consistent with the EU and national criteria.
    Sir Patrick Cormack: Following the killing of children in a targeted attack yesterday, will the Foreign Secretary summon the Israeli ambassador and tell him that he believes that that uncivilised conduct does nothing but harm to a country that many of us hold in real affection and high regard, which we want to see survive as a thriving, prosperous, independent, protected nation, but which is not conducting itself quite as we expect it to at the moment?
    Mr. Straw: I am making arrangements for the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North Warwickshire (Mr. O'Brien), to speak to the ambassador this afternoon. I shall ensure that the hon. Gentleman's views, which I think that the whole House shares, about the unjustified and disproportionate nature of the attack and its consequences are conveyed to the ambassador and, through him, to the Israeli Government.
    Mrs. Louise Ellman: Does the Foreign Secretary accept that Israel is entitled to defend itself from attack and that it has a specific right to defend its citizens, at least 1 million of whom are currently at threat from rockets supplied by Iran through Syria, which are ready to be fired from Israel's northern borders on its civilian population?
    Mr. Straw: As I said a moment ago, I accept the right of any country, under the UN charter. to act in self-defence. Such self-defence has to be proportionate and to take account of other circumstances. That goes without saying. On the specific issue of arms exports, I say again that if my right hon. and hon. Friends and other hon. Members read the criteria, they will see that they are a complex matrix of criteria that seek to balance some very difficult and often conflicting issues.
    Mr. Menzies Campbell: Might I ask the Foreign Secretary to consider a specific instance? If the pilot of the F-16 that fired the missile which did such terrible damage and caused so many casualties in Gaza yesterday had been using, as he may be able to in 2003, a head-up display manufactured by a British company and

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    licensed for export by the United Kingdom Government, would the Foreign Secretary have considered the export of that component to be consistent with Government policy?
    Mr. Straw: We are still getting further information about, as it were, which F-16 was used in the attack, but the contract between British Aerospace and Lockheed Martin for the supply of head-up displays is of long standing. So it is perfectly possible—I do not happen to know—that such equipment, licensed by previous Administrations or indeed by this Administration, was incorporated in that equipment.
    Of course, I share the belief around the whole House about the unacceptable nature of the attack, but there are other issues involved in the licensing decisions that we have to make, particularly when there is incorporation into a third country's products. Particularly over the past five years, all defence industries have become much more transnational—in our case, transatlantic—and what we are doing is part of a transatlantic assembly line.
    Other EU countries face exactly the same dilemma. So far as we have been able to ascertain—their information is confidential on the whole, while ours is fully public—they have acted in a very similar way. At heart, there is on the one hand concern to avoid the kind of thing that happened this morning. On the other, countries have a clear right in international law to act in self-defence, not only against other nation states but against terrorism. In addition, we as a nation have taken a strategic decision to have a defence industry. It necessarily follows that, in properly controlled circumstances, that defence industry must be allowed to export.
    Richard Burden: When a 150 sq m, two-storey apartment block is hit by a missile from an F-16 killing 15 people and nine children, how is it acceptable that British equipment could be supplied for that through a third party, whereas it would not be acceptable if we did it directly?
    Mr. Straw: The issue is more complicated than that. The equipment appears to have been misused in this case, but if my hon. Friend looks carefully at the criteria, he will find, first, that we have applied the criteria and, secondly, that the criteria seek to take account, under criterion 7, of
    "the capability of the recipient country to exert effective export controls."
    It so happens that the Quadripartite Committee itself said that the United States' conventional arms transfer policy
    "does not appear to differ in any important way from the EU Code or the UK national criteria. In some respects … it is an improvement".
    Although in a particular instance the United States may come to a slightly different decision from us or the EU, the fact is that its arms control policy and the exercise of it are, on any basis, at least as transparent and as effective as the United Kingdom's, and certainly more transparent than that of almost all of our European Union partners.
    Mr. Elfyn Llwyd: Given that, last year, direct arms sales to Israel almost doubled from £12.5 million to £22.5 million, and in the light of atrocities such as that which occurred yesterday, how can
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    the right hon. Gentleman, sincere as he no doubt is, be expected to be taken as an honest broker in the middle east peace process?
    Mr. Straw: Interestingly enough—although, of course, this is a matter of grave concern—the suggestion that we do not have a role to play in the middle east because we supply arms is not one that has been raised with me by any interlocutor in the middle east. On the issue of arms sales to Israel, it is true that the number of licences has increased, but so has the number of refusals. While, altogether, there were six refusals of specific licences in 2000, there were 31 refusals of specific licences last year.
    Ms Christine Russell: Does my right hon. Friend agree that the recent proposal by the Israeli Government to deport forcibly the families of suspected Palestinian militants from the west bank to Gaza will result in further escalation of violence rather than improvement in peace and security?
    Mr. Straw: What I would say is that violence is never justified, but I regard the threat of deportation, still more the reality, as wholly unjustified. Yesterday, I ensured that that word, "unjustified", was inserted into the General Affairs Council's conclusions when we discussed the middle east.

    Poland
    Dr. Alan Whitehead: What recent discussions he has held with the Polish Government concerning their proposed accession to the EU. [69588]
    The Minister for Europe (Peter Hain): Foreign Office Ministers have met their Polish counterparts to discuss this matter on numerous occasions in recent months and the Secretary of State will be meeting the Polish Foreign Minister tomorrow.
    Dr. Whitehead: Has my right hon. Friend had any discussions with his Polish counterparts specifically concerning the status of Kaliningrad following Poland's accession to the EU, and particularly in relation to arrangements for transits between Kaliningrad and Russia should Lithuania, too, join the EU subsequently?
    Peter Hain: I am aware of my hon. Friend's close interest in, and family connections with, Poland and, therefore, of his expertise. We are in close contact with all the countries in the region, Poland included, as of course Kaliningrad, the Russian enclave, borders Poland as it does Lithuania. It is a difficult issue to resolve: meeting the Russians' concerns that citizens of Kaliningrad should have access to the rest of Russia while at the same time making sure that borders are secure and that the EU's external border—as it will be, after enlargement—is free from trafficking that might threaten extra crime waves.
    Michael Fabricant: What discussions has the Minister had with his counterparts in Poland regarding Poland's expectations for receiving moneys for its agricultural policy?
    Peter Hain: A lot of discussions.
    Ms Gisela Stuart: Does my right hon. Friend share my disappointment that, on an issue such as Kaliningrad, which, classically and ideally, should be resolved by the EU rather than by individual member states, the French President saw fit to see Mr. Putin on Monday and therefore break ranks in many ways? That is really not helpful in terms of finding a suitable long-term solution to Kaliningrad and to a single EU external voice.
    Peter Hain: I understand and agree with my hon. Friend's desire for a much stronger external policy for the European Union. It is important, however, that, in the absence of that, we all make every effort to try to crack this problem. The Danish presidency is seized of the need to engage on this matter, and the European Commission is in weekly discussion on Kaliningrad on behalf of the whole of Europe.
    Dr. Vincent Cable: Further to the Minister's informative reply to the hon. Member for Lichfield (Michael Fabricant), was he misquoted when he was reported as having said that the European Union should press ahead with enlargement even in advance of prior agreement on radical agricultural reform? Surely, unless the Fischler reforms are agreed, enlargement to the east will be totally unsustainable.
    Peter Hain: It is much more complicated than that. If we allow countries—some of them are in the European Union—effectively to block enlargement because they want to protect their vested interests in the bloated and inefficient common agricultural policy, we will not secure that objective. We therefore need to complete the negotiations on the agricultural chapter, which are already 95 per cent. concluded. The tough 5 per cent. concerns direct payments, which is a serious issue for Poland as well. We do not want those negotiations, which I am sure can be satisfactorily concluded, to prejudice wider reform of the CAP—that is why we asked for a delay in the decision until the informal European Council in October or November—or to prejudice the wider process of enlargement. That process is crucial to the reunification of Europe and to getting countries, such as Poland. into Europe, which is where they should always have been.

    Lockerbie Disaster
    Mr. Tam Dalyell: Pursuant to his recent meeting with the Lockerbie relatives, when he expects to make a decision on setting up a public inquiry into the international aspects of Lockerbie. [69589]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): As the Foreign Secretary told the House on 11 July, he has explained to the families of the Lockerbie victims that he does not see a case for a public inquiry. A successful criminal process has convicted an agent of
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    the Libyan intelligence services of carrying out the attack. Public inquiries are less worthwhile when there has already been an exposition of the case in a criminal trial. The passage of time since Lockerbie would make a public inquiry of still more uncertain value. However, we are still considering whether aspects of Lockerbie, including international aspects, warrant further study. We shall inform the relatives of the victims as soon as we have come to a conclusion.
    Mr. Dalyell: What knowledge does the Foreign Office have of a payment of $11 million on or about 23 December 1988 from Iranian sources via a bank in Lausanne, the Banque Nationale de Paris and the Hungarian development bank to the Popular Front for the Liberation of Palestine? What knowledge does the Foreign Office have of a payment on or about 25 April 1989 to Mohammed Abu Talb, an "incriminee" of the Lockerbie trial and a long-term suspect?
    Mr. O'Brien: My hon. Friend's question is, no doubt, an appetiser for the Adjournment debate that we hope to hold later this evening. The answers to his questions are complex, and I hope to be able to set them out in the reply to that debate. I will happily try to cover that point and many, many others.

    World Service
    Mr. Fabian Hamilton: If he will make a statement on the effectiveness of the BBC World Service. [69591]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): The BBC World Service is a vitally important asset for Britain. We want it to remain the best known and most respected voice in international broadcasting. That is why, last week, we announced an uplift of £48 million in funding for it over the next three years.
    Mr. Hamilton: I am sure that my hon. Friend and the whole House agree that that is a tremendous boost for the BBC World Service. Does he agree that it played a crucial part in the recent war in Afghanistan and that it is the main source of communication among many Afghans, who listen to the World Service before any other station? Does he also agree that the Persian service has played, and continues to play, a crucial role in Iran in supporting the reformist elements of President Khatami? For example, in January 2001, 287,000 people contacted the Persian language website, but the figure had increased to 2.4 million by last month.
    Mr. MacShane: I fear that my hon. Friend has answered his own question. He is right. An increase in services using regional languages—Persian, Pashtun, Urdu, Hindi, Arabic and central Asian languages—has been provided by the World Service.
    I refer to another part of the world where the World Service has performed marvels: it has doubled its audience in the United States. I know that Mr. Alan Greenspan, the chairman of the Fed, listens to the World

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    Service. People all over America download from the World Service's internet web service accurate, impartial and non-propagandist news.

    Convention on the Future of Europe
    Mr. Colin Challen: If he will make a statement on progress at the Convention on the Future of Europe. [69592]
    The Minister for Europe (Peter Hain): The Convention has concluded its listening phase, during which it took soundings from its members and a wide range of civil society. It is now moving into its analytical phase, including working groups on specific issues.
    Mr. Challen: May I ask my right hon. Friend to contrast the almost complete absence of public debate on the Convention of the Future of Europe and on the democratic nature of the enlargement that is to take place with the £37,000 that is spent every day on euro preparations, which I estimate has amounted to £8 million or £9 million since I last raised the issue? Does that suggest that we are not really interested in encouraging public debate on the future of Europe?
    Peter Hain: No, it does not. I spend quite a lot of time travelling around Britain—I have travelled to all three nations—explaining what enlargement and the future of Europe are about. It is hard to get attention in the media for that debate, but I agree that it is essential to do so.
    On preparations for the euro, I am sure that my hon. Friend would agree that it is important that our companies, many of which are small businesses, are properly prepared for the existence of the euro in the eurozone countries, because many of them trade in the euro. That is what the Treasury plan and the money that is being spent, under the Chancellor's supervision, are designed to achieve.

    Iran
    Mr. Stephen McCabe: If he will make a statement on bilateral relations with Iran. [69593]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): The UK, through critical engagement, seeks to apply a twin-track approach in respect of Iran. We support reform in Iran while maintaining a robust dialogue on matters of concern, such as human rights and weapons of mass destruction.
    Mr. McCabe: The US State Department and Israeli intelligence have warned that Iran is a state that sponsors terrorism. In view of that, and of Iran's developing nuclear and chemical weapons and its appalling human rights record—with almost daily public executions and
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    floggings, sometimes for the most trivial offences, such as playing snooker—why is Iran a friend, yet Iraq, which has a remarkably similar record, is an enemy and a threat?
    Mr. O'Brien: At least in Iran, unlike Iraq, the Government are led by a reformist President democratically elected by the people of Iran. The UK supports President Khatami's stated objective of a civil society based on the rule of law. The UK remains committed to a policy of critical engagement, which allows us to support reform in Iran while maintaining robust pressure in relation to issues of concern, such as those mentioned by my hon. Friend. Those issues include Iranian support for terrorist groups in the context of the Israeli-Palestinian conflict, Iran's reported development of weapons of mass destruction and aspects of its human rights record. We believe that constructive and critical engagement is the best way forward.

    International Criminal Court
    Valerie Davey: What recent discussions he has had with his counterparts in the USA about the International Criminal Court. [69594]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): My right hon. Friend the Foreign Secretary had discussions with the United States Secretary of State on the ICC, resulting in United Nations Security Council resolution 1422, which was unanimously adopted on 12 July 2002 and which respects the statute of the court and allows the US to continue to participate in UN peacekeeping operations.
    Valerie Davey: I welcome that reply, but there is a clear recognition that that is a compromise. May I ask the Minister whether there will be ongoing debate or dialogue with the United States so that we do not have another US stand-off position in a year's time?
    Mr. MacShane: My hon. Friend is right. That is why the Foreign Secretary is continuing those discussions. The United States Senate, Congress and leadership have always been unwilling to sign up to the International Criminal Court. We continue to try hard to persuade them that an international rule of law in this area is the right way forward, and that will continue to be our position.
    Rev. Martin Smyth: I welcome the Minister's statement. Does he agree that this is sending a bad signal to other nations, especially when we bear it in mind that there is a fall-back position: the United States could take any action against any of its citizens? In that context, would it not be better to encourage the United States to join international law enforcement as well as international law keeping?
    Mr. MacShane: The hon. Gentleman makes his point effectively. I would hope that every hon. Member, even those who voted against the Third Reading of the International Criminal Court Bill, now supports his position.

Future of Air Transport
3.30 pm
The Secretary of State for Transport (Mr. Alistair Darling): I should like to make a statement about future air transport and airport capacity in the United Kingdom.
We have built the fourth largest economy in the world on our ability to trade. Air travel is crucial to our expanding economy and we need to plan for the future. There has been a sixfold increase in air travel since 1970, and now half the population flies at least once a year. Demand is expected to continue to grow.
The Government will next year publish a White Paper on air travel. As part of that, we will set out our concluded views on how much additional airport capacity is needed and where it should be sited. Before we do that, we need to canvass views on a range of options. So today, in advance of the White Paper, I am publishing six consultation papers covering the English regions, Scotland and Wales. A further consultation paper for Northern Ireland will be published shortly.
The key issues that we need to address are how we should respond to the continued growth in demand for air travel; how much additional airport provision is needed; and where it should be located. Just as importantly, we need to deal with the environmental impact of expansion and its effects on the people living close to airports. Providing a framework for sustainable development for the next 30 years and beyond is essential. So the consultation is the first stage in that process. It seeks views on a range of options and their implications.
I should first set out the background against which we need to plan. There has been a phenomenal growth in travel by air. In 1970, some 32 million passengers passed through UK airports. Today, that figure is 180 million. People increasingly want to travel by air, whether for holidays abroad or business travel, in an increasingly international economy. Business depends on its ability to get goods quickly to markets across the world. One third of all UK goods exported now go by air. Air travel has opened up possibilities that simply did not exist years ago.
This is not just about travel, however; the airline industry is of critical importance to economic prosperity. It directly employs 180,000 people, and as many jobs again depend indirectly on the aviation industry. Many firms choose to locate close to airports and many businesses choose to invest in the UK because of our good communications, particularly air travel.
Today we publish a range of projections of the number of people who might be expected to use each of the main UK airports over the next 30 years. Some airports will not be able to deal with even a modest increase in demand. At this time of year, of course, holidaymakers are familiar with congested airports, but this is not just a summer issue. Throughout the year, some airports, such as Heathrow, are already near their full capacity.
So doing nothing is not an option. As a first step, we of course need to do all we possibly can to make the most of existing capacity—but on any view that is not enough. The Government therefore aim to set a framework for sustainable development against which people can plan. It has to be sufficiently flexible to cater for changes in demand and in patterns of travel, but it must provide a degree of certainty too.
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It is essential that we get this right, which is why we are consulting. We will be making decisions that shape the air industry and air travel for the next generation and beyond. The need to take full account of the environmental consequences of air travel is critical, which is why, for example, the consultation asks about rail alternatives in relation to domestic air travel. Where there is increased airport capacity, we need to strike the right balance between benefits from increased travel and trade and their environmental costs. As we said in 1998, we believe that the aviation industry should cover its environmental costs. Our forecasts for demand reflect that, and the proposals on which we are consulting include strict environmental controls, paid for by the air industry.
Let me summarise the options in each consultation paper before I turn to the options for the south-east. Those, for obvious reasons, have significance for the whole country. There has already been substantial growth at regional airports throughout the country, and the Government want to encourage development of such airports. As well as making travel more convenient, that is essential for economic development all over the country. The consultation looks at how to maximise the use of regional airports. For every part of the UK, we ask how we should respond to people's increasing desire to travel by air; whether extra capacity is needed and where it should be; and in every case we seek views on the environmental impact of any future development.
In Scotland in the past 10 years the number of people using the main Scottish airports has doubled to 16 million a year, and we expect continued growth as the Scottish economy expands. The consultation paper looks at making the most of existing capacity. It asks where new capacity should be situated—should it be concentrated at one or two key airports, or spread across all Scottish airports? It asks what scope there is to develop Edinburgh or Glasgow as a hub airport for Scotland, attracting new services to a wider range of destinations, and the Scottish Executive are also publishing a report on how to improve rail links to both those airports. The consultation looks at other issues of vital concern in Scotland, such as maintaining access to London and the lifeline air links to the highlands and islands.
In Wales, the consultation paper looks at what new capacity might be needed, especially at Cardiff. BMI recently announced that it will establish a second UK base there for its low-cost airline. Wales is already a major centre for aircraft maintenance, and to develop that, the consultation includes proposals for a major aerospace park. Because two thirds of passengers living in Wales fly from airports in England, the consultation covers improved surface links to airports in both Wales and England, and looks at the potential to start up internal flights within Wales, which would improve access where surface journeys are lengthy.
The north of England has seven major airports handling 26 million passengers a year, and that number is expected to rise over the next 30 years. Expansion could support many new jobs in the region. Manchester airport is by far the biggest outside the south-east of England and demand is likely to be higher there than at any airport outside London, so the consultation paper looks at how it could be developed further to become a hub airport complementing Heathrow. The consultation also asks how to make the most of other airports in the region; whether additional

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capacity should be concentrated at one or two airports, or spread across the region; and how far rail can substitute for domestic services, particularly to London.
In the midlands, there are now 10 million air passengers a year. The consultation paper looks at what options are available once capacity at Birmingham is reached, and it considers the role of east midlands airport, which is the third largest freight airport in the country. The consultation identifies options—again over the next thirty years—including a new runway either at Birmingham or at east midlands airport. There may be more demand for services from Birmingham than from east midlands, but that needs to be balanced against the impacts of noise and traffic congestion. A new site between Coventry and Rugby might be examined: away from houses, impacts would be less, but the cost of a new airport would of course be much greater. Decisions about capacity at south-east airports will have consequences for developments in the midlands, as elsewhere.
In south-west England, demand for air travel is growing fast. Most people living in the south-west use airports in both the south-east and the midlands. The Government are keen to ensure that airports meet as much local demand as they can, so the consultation looks at the expanded capacity that might be needed at Bristol airport and elsewhere, and asks how a wider range of services could be secured. Because vital links between the south-west and London are limited, the document looks at supporting these air links and at improving rail connections to London airports.
Development of London airports will affect every part of the country and air travel to the rest of the world. One in every six of the world's international passengers start or finish their journey at a south-east airport. So those decisions affect the whole country, and they are central to the future of our United Kingdom aviation industry.
Already, 117 million passengers a year use south-east airports, and the number is likely to grow substantially. The pressures on existing London airports today are obvious enough, so on any view doing nothing is not an option. As with the rest of the country, we need a framework to cater for people's increasing wish to travel and trade. Again, of course, existing capacity must be maximised—for example, at Luton and Stansted, which have seen substantial growth of low-cost airline travel.
With Heathrow, we have a world-class hub airport. Some 15 million international passengers transfer through the airport—the biggest number at any airport in the world—and it employs 68,000 people directly, but Heathrow is already under pressure. Airlines cannot get the runway slots to operate new services. It is already at its limit. Gatwick's single runway is full for much of the day, and Stansted is rapidly filling up, too.
In the meantime, in Europe, there have been substantial developments at Paris, Frankfurt and Amsterdam, all of which want to rival Heathrow and attract its business. If we do nothing, the United Kingdom will lose out, not just in terms of flights, but in terms of jobs. So the consultation asks about the importance of an international hub airport. We believe that it is in Britain's interests to maintain a world-class global hub airport in the south-east, not just because it is good for passengers, but because it is an essential part of United Kingdom's prosperity. The key question is where should it be.
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One option is to build at Heathrow—already the fourth busiest airport in the world. That could mean an additional, shorter runway, complementing what is already there. Alongside the economic benefits, we would, of course, need to consider the environmental impact, particularly the effects on the many people who live around the airport and its flight paths.
A second option looked at is Stansted—another existing airport that could be developed to become a hub itself or to complement Heathrow. As with expanding Heathrow, costs would be less than building a new airport, but it would be necessary to improve transport links to and from the airport, and of course the impact on the local community has to be considered.
A third option is to build a completely new airport, with the option of development at Cliffe in north Kent. The advantage is the maximum flexibility to construct a new airport to meet the demands of the future. Against that, we need to consider the environmental consequences of building at Cliffe and, of course, the very substantial cost of a new airport. Those have to be balanced against the considerable benefits for jobs and economic regeneration of Kent, Essex and east London.
So the Government seek views on the merits of a new development. As well as the question of a hub airport, the consultation looks at where any other new capacity should be located.
At Gatwick, a legal agreement rules out construction of a new runway before 2019, and the Government do not propose to challenge that. So we are not putting forward any option for a new runway, but there is still some capacity that can be used in the years to come, as is already agreed locally.
The consultation also looks at the needs of other airports in the region, including Luton and an option of a freight airport at Alconbury. The consultation looks at most major airports and asks what further development is necessary and desirable and, in each case, at how to deal with the environmental effects of any development.
Air travel is crucial to our expanding economy. We need to plan for the future and to provide a framework for sustainable development for the next 30 years and beyond. The consultation is the first stage in that process. I commend this statement to the House.
Mr. Tim Collins: I thank the Secretary of State for his statement and for his characteristic courtesy in providing me with a copy of it in advance. I am very much looking forward to debating transport matters with him in the coming months, and I hope to provide him with robust but genuinely constructive opposition, since, as he will know better than any other right hon. Member, there are no easy or quick solutions to the nation's transport difficulties.
Of course the Secretary of State is entirely right to say that we must plan for the long term. As he knows, up to 500,000 jobs and something like £10 billion of gross domestic product in this country depend on the air transport industry. He will also know that there are serious concerns about the competitiveness of the UK with airports in Paris, Amsterdam and Frankfurt. He will have heard today the chief executive of BA saying:
"We in the UK are falling behind mainland Europe.-
Clearly that is not sustainable.

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The Secretary of State is entirely right to say that doing nothing is not an option. He would have been derelict in his duty had he failed to plan for growth; I am pleased to see that he did not. However, there are still detailed questions that he would expect me to ask.
On passenger number projections, the Secretary of State will know that the media today—particularly the lunchtime television bulletins—were heavily briefed about a set of figures that suggested a figure of 180 million passengers at the moment rising to an expected 400 million by 2020. Interestingly, the Secretary of State did not refer to those figures in his statement. Does he agree that straight-line predictions of growth call often be dangerous? The world has changed in recent months and will change even further in years to come.
The figure of 180 million passengers was a figure for the year 2000. Can the Secretary of State provide the House with the figure for 2001 yet? Is he aware that, since the figure for 2000 was announced, there have been a global economic slowdown as well as the events of 11 September? Is he aware that many people who earn a living predicting the future of the airline industry are not so sanguine about rapid growth as perhaps he and his officials are?
Is the Secretary of State aware that the Farnborough air show has its lowest level of commercial aircraft orders for 30 years? Is he aware that the largest airline manufacturing company in the world, Boeing, has halved production and sacked 30,000 workers in recent months? Is he familiar with the fact that Sabena has gone bust and that Swissair, Aer Lingus and BA are in financial difficulty? [Interruption.] I am sure that he is aware of these matters. In light of that, will he tell the House whether he is committed personally—[Interruption.]
Mr. Speaker: Order. The House must allow the hon. Gentleman to be heard.
Mr. Collins: I am grateful, Mr. Speaker. Is the Secretary of State saying that he personally stands by the projected figure of 400 million passenger movements by 2020, which the Department provided extensively to the broadcast media at lunchtime today?
The Secretary of State is right to say that many residents will be affected by airport expansion. Does he recognise that there is a need for certainty? He is right to consult, but does he recognise that swift decisions will be greatly welcomed by those affected? None of us wants to see the whole procedure of terminal 5 repeated—
Andrew Mackinlay: Oh yes we do.
Mr. Collins: We do not want the procedure to be dragged out indefinitely. Is the Minister aware that the compensation provided to residents affected in this country is arrived at on a different basis from elsewhere in Europe? Will he look at that?
One hon. Member is clearly very interested in terminal 5. Is the Secretary of State aware that the BAA website, even today, still says that one of the arguments for terminal 5 is that it
"would not require another runway"?
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Is he aware that the website says today that BAA is
"prepared to be legally bound that noise levels would not exceed 1994 levels",
and that it is not calling for any more night flights? Can the Secretary of State say whether the proposals that he is thinking about today relating to an extra runway at Heathrow are consistent with those assurances and undertakings?
Only last November, the Government imposed a cap on the number of flights into Heathrow. The Secretary of State will recall that the cap was set at 480,000 air transport movements. However, in the documents published today, he says that an extra runway could see that increase to 655,000 ATMs. Does the cap announced last November stand or not? Can he give any other assurances to residents living near other airports?
Will the Secretary of State address, as he did in part of his statement, the question of sharing the burden of extra capacity around the United Kingdom? He will know that a substantial proportion of passengers coming into the south-east to use airports do not actually live in the south-east. Does he have a strategy substantially to expand regional airport capacity?
At lunchtime today, I spoke with the chief executive of Luton airport, Paul Kehoe, who said that Luton airport was ready rapidly to double its existing passenger numbers from 7 million a year and could quite easily triple that figure. Has the Secretary of State taken that into account in his planning?
Does the Secretary of State believe that the Government have demonstrated joined-up government on this issue? Is he aware that, in most of the areas in which he is contemplating substantial runway expansion, the local authorities have been told by the Government in the last few days that they will also have to cope with substantial increases in the number of homes to be planted in their area, above and beyond what their residents want; and that, because of changes in the local government funding formula, they will have less, rather than more, money to help them to cope with that? How, against that background, does he expect them to expand their infrastructure to cope with extra runways?
The Secretary of State referred to the north of England, saying that the consultation looks at how far rail can substitute for domestic services, particularly to London from the north and north-west of England. Those of us who represent north-western constituencies find that a somewhat ironic observation for the Secretary of State to make in the week when the west coast main line upgrade appears permanently to have been shelved. Will he say a word about upgrading public transport access to the new runways, whether in new or old airports? Does he recognise an essential need for public transport to be upgraded?
Is the right hon. Gentleman furthermore prepared to tell the House whether the proposal for a possible new airport at Cliffe marshes is an entirely serious and worked-through proposal? The Royal Society for the Protection of Birds has said:
"in environmental terms it is hard to think of a worse site for an airport in the south east than Cliffe Marshes".

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The right hon. Gentleman will also be aware that, on page 82 of his own document, he says:
"The success of a new airport would depend crucially on its ability to attract airlines."
Has he done a feasibility study on whether airlines will be prepared to move out to Cliffe marshes? Is it not the case, as some have speculated, that this proposal has been advanced only so that the Secretary of State can look very green when he abolishes it, never having been in favour of it in the first place?
Finally—[HON. MEMBERS: "Hooray!"]—well, Labour Members may not think that these questions are important, but let me assure them that their constituents and others believe that these matters are important. The Secretary of State is quite right to be thinking about these issues, and I commend him on the spirit in which he has done so. He will have the constructive support of Her Majesty's Opposition in looking for sensible and practical solutions. Will he recognise, however, that it is essential that these decisions be taken in a swift but consultative manner? Will he say specifically that he does not expect the Government to take anything like as long to take these decisions as they took to reach a conclusion about terminal 5?
Mr. Darling: I congratulate the hon. Gentleman on his appointment to his new post. I have to say that we shall miss the hon. Member for Maidenhead (Mrs. May)—for reasons that she may not appreciate—but anyway, she has gone now. I must also commend the hon. Gentleman for another reason. He flashed across my consciousness once before, when, during the Tory leadership campaign in 1995, he described the campaign team of the right hon. Member for Wokingham (Mr. Redwood) as
"a swivel-eyed barmy army from ward 8 at Broadmoor."
Hon. Members will be aware that one of the members of that swivel-eyed barmy army is now the Leader of the Opposition. Either there has been a rapprochement, or the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has not come across this description yet.
I am conscious of the fact that many hon. Members on both sides of the House will want to ask me questions, and I shall deal with the points that the hon. Member for Westmorland and Lonsdale (Mr. Collins) has raised. I shall not criticise him for being light on policy, since, three hours into his appointment, it is probably a bit early for him to be anything else.
I appreciate the fact that the hon. Gentleman acknowledges that the Government are consulting. He went on to ask some detailed questions about matters such as Cliffe, for example, on which, by definition, we have not yet made firm proposals because we are consulting on a principle. He asked me to reach a swift decision after the consultation, and I agree with him that that is wholly desirable. It is best for everyone concerned—residents, people who are affected by airports, the industry and the travelling public—to know what the Government are proposing, and I want to bring these matters to a conclusion as quickly as I can, consistently with doing justice to the representations that are made. Moreover, the consultation period does not end until the end of November. It will therefore be next year before we publish a White Paper, but I entirely accept the point that he makes.
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The hon. Gentleman mentioned several points of detail, the first of which concerned terminal 5, Heathrow and night flights. The decision on terminal 5 holds good, and was made in the light of existing pressures on Heathrow and its two runways. The inspector acknowledges in his report that the Government are embarking on long-term consultation, looking ahead to the next 30 years. So the position on terminal 5, and on the cap on the number of flights that was referred to at that time, remains good in relation to Heathrow's current situation. Everybody knew that we would look at Heathrow in the context of the other London airports over a longer period. The Government will publish a consultation paper on night flights towards the end of this year.
As I said in my statement, there is excess capacity at Luton, and as the general manager recognises, it can be expanded. However, if the hon. Gentleman was thinking of Luton as an alternative to, say, developing Stansted, I should point out that a second runway cannot be built at Luton because of the topography, which inevitably imposes some constraint.
The hon. Gentleman asked about rail links from the north-west in particular. In developing any sensible airport policy, it is important to allow for the fact that, in some cases, people should find it easier and better to travel by rail. I accept that there are problems with the west coast main line upgrade, although as he will discover, it has not been postponed. Having discovered that Railtrack had grossly underestimated the costs and scale of the project, the Strategic Rail Authority is examining the matter from the start. So his point about Railtrack is not a particularly good one, especially as the main cause of the problem relates to Railtrack's initial setting up.
The hon. Gentleman made a general point about future projections. The document looks at the likely demand for unconstrained travel—in other words, the number of people who are likely to want to travel, or to trade, in the next few years. It also examines assumptions and options, based on constrained travel in the south-east or throughout the entire United Kingdom. The point is that, if airports are extended or new ones are built, the work will be done by the private sector, which will have to take a view on the likely levels of business. The Government are consulting on the numbers who are likely to want to fly, and how we respond. That is the point of a consultation period.
The hon. Gentleman is right in saying that, if we look ahead 30 years, there are bound to be some ups and downs. Twelve months ago—after September—people thought that the air industry would take a knock and that it would not recover. However, domestic and European travel has recovered substantially—not just because of low-cost airlines—and transatlantic journeys are also approaching previous levels. In this case, we must look ahead 30 years, which is what we are doing in the consultation documents published today. Over the next few months, the object of the exercise is to gather people's views on what they think will happen.
I thank the hon. Gentleman for recognising that doing nothing—pretending that there is no problem, or hoping that it will go away—is simply not an option. We all face this difficulty in our lives: most people want to travel by plane, and most of us have to fly from time to time, but all of us are concerned about airport expansion. Frankly, we cannot have it both ways. We must face up to the fact

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that there is an opportunity here. There are problems to be solved, but Britain's future and prosperity depend on putting them right, and that is something that I am determined to do.
Mr. Don Foster: I, too, welcome the hon. Member for Westmorland and Lonsdale (Mr. Collins) to his new post, and I thank the Secretary of State for his statement today. I begin by entirely agreeing with him that doing nothing is simply not an option. However, given that the Deputy Prime Minister accepted that "predict and provide" simply had not worked for our roads, will the Secretary of State acknowledge that it will not work for our airspace either? It is important to develop sustainable approaches to the difficult issues that the statement addresses.
The Secretary of State referred to rail substitution for domestic flights, but does he have any targets for the amount of substitution that he would like to see, given that there are currently some 365,000 domestic flights?
Given that the Secretary of State also rightly referred to the importance of our regional airports, both for their economic benefits to the regions and in reducing pressure on the south-east, will he acknowledge that it is vital that all airports operate on a level playing field, especially as regards landing fees? Is he aware that landing fees at Heathrow are among the lowest in the world?
Does the right hon. Gentleman accept that his statement, although strong on environmental rhetoric, is rather weak on the details? For example, can he tell the House his plans for the development of an EU-wide aviation fuel duty, and what action he is taking to ensure that the increases in flights do not compromise the Kyoto agreement?
Having told us that he wants to make quick decisions, can the Secretary of State tell us why we have to wait for further consultation on night flights? Could he not simply rule out any increase in night flights to or from airports in urban areas?
Why has the right hon. Gentleman given us only one option—and a highly environmentally sensitive one at that—for a new airport for the south-east, when a range of alternatives could, and should, have been provided?
The Minister for Transport (Mr. John Spellar): Where?
Mr. Foster: May I suggest that the right hon. Gentleman considers Manston as one possible base?
The Secretary of State said that the flight cap of 480,000, rightly imposed on Heathrow by his predecessor, is now up for grabs. Can he explain why it is up for grabs while the legal limits on a new runway at Gatwick seem to be set in stone? Why is there an inconsistency?
The Secretary of State will be as concerned as I am about the current problems with National Air Traffic Services and the various emergency measures that have had to be implemented, such as overtime working and retired air traffic controllers having to help out. Will he give us an absolute assurance that he has plans to ensure that there will be sufficient air traffic controllers to cope with the growth in flights discussed in the paper?
Mr. Darling: We are not in the business of what is known as predicting and providing; no one in their right
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mind would build an airport on spec. The whole point of the consultation is to obtain people's view of the likely demand and of how we respond to it in future.
I agree with the hon. Gentleman that regional airports are very important. I am sure that everyone on this side of the House would like to think that when we land at a regional airport it is a level playing field—and a level landing field as well. I am aware of his point about charges. The industry is examining that, especially in the context of low-cost airlines.
On the environment, when the Government make definite and firm proposals in their White Paper, that will be the time to consider, in respect of specific proposals, what we can do to honour our international and European obligations. The hon. Gentleman asked about the fuel duty. It is not only a matter for the European Union, but for world aviation. It would be curious if there was one regime in Europe and another for the rest of the world—all sorts of difficulties would arise.
On night flights, I said that I want to consult as quickly as possible. The hon. Gentleman and the House will be aware that a court case is pending in relation to the decisions taken by the last Conservative Government. That is before the court, and we shall have to consider it, too.
The hon. Gentleman asked why we were not looking at options other than Cliffe. It would be interesting if the Liberal party could actually come up with an option—a real proposal that we could consider.
Mr. Foster: I mentioned one.
Mr. Darling: The hon. Gentleman mentioned Manston and I appreciate the interest of Kent county council in Manston. However, the problem is that it is about 60 miles further to the east and that would pose difficulties as regards journeys into London. In addition, the further east one goes, the more one has to deal with air traffic considerations in continental Europe.
Finally, the hon. Gentleman referred to NATS and air traffic controllers. NATS is addressing the matter; there is a problem throughout Europe in attracting enough people to deal with the increased demand. Generally, however, it is doing a good job and is coping with the amount of traffic. On his point about the consultation paper, NATS and the Civil Aviation Authority were of course consulted and will need to consider any concluded proposals following the consultation.
Several hon. Membersrose—
Mr. Speaker: Order. May I say to the House that when I call a Back Bencher, I expect only one question to be asked?
John McDonnell: The Secretary of State should be aware of the sense of betrayal, anger and worry felt by my constituents who live near Heathrow. They feel betrayed and angry because at the terminal 4 inquiry we were told that there would be no need for a terminal 5. At the terminal 5 inquiry, the British Airports Authority wrote to every one of my constituents at Heathrow saying that there was no need for a third runway. Six months ago, the Secretary of State told me that the environment of my constituents would be

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protected by a cap on Heathrow, and now they are coming back for more. My constituents do not believe that this will be a short take-off runway. It will be a full runway, at the end of the day, affecting the homes of 4,000 families, three primary schools and villages and communities that have existed for 1,000 years.
I ask the Secretary of State for an assurance that he comes to the consultation with an open mind. Will he also give a commitment that, for the first time in 30 years of Heathrow's expansion, the interests of my constituents will be protected?
Mr. Darling: This is a consultation, and I made it very clear in my statement that the Government are looking at what we do to ensure that we maintain an international hub airport in the south-east. I understand the point that my hon. Friend makes about his constituents—I would expect that from any Member of Parliament representing a constituency containing an airport. However, he knows that Heathrow employs 68,000 people. There are about 100,000 people whose employment depends on the future of Heathrow. When we look at these matters, we must realise that although an airport's expansion or extension will cause some people concern, many people live around Heathrow and work there, while others fly from there on a number of occasions every year. It is not easy to marry those factors, but we need to consider the bigger picture.
Mr. Francis Maude: There will be widespread agreement with the Secretary of State that, whatever its exact path, there will be significant growth. The demand must be met, and much of it must he met in the south-east. I suspect that there is also agreement that there should be a dominant international hub airport in the south-east. However, does he accept that there is a powerful case that, to secure the long-term prosperity of Britain's civil aviation industry, with all the jobs that he rightly says depend on it, it would be better to consider the option of a new coastal airport, as other countries that have that option are doing, rather than endlessly bolting on capacity to existing inland airports? Does it not make better sense to locate flight paths over water rather than over houses? I do not know whether Cliffe is the right area, but new investment and jobs are urgently needed in the east Thames corridor.
Mr. Darling: The right hon. Gentleman makes an important point. It is worth bearing it in mind that 65 per cent. of passengers who use south-east airports live in the south-east of England, so the majority are local. On his point about a coastal airport, Cliffe is just that—it is an option to build a new airport on the Thames coast. There will be counter-arguments in respect of Cliffe, just as there are for every other airport. One of the problems in the south-east of England is that there is a limited amount of open space that has no complications and wants an airport. If he finds such a site, he should drop me a line, because I would be interested to see it.
The options are fairly straightforward. The advantage of Heathrow is that it is there already, the advantage of Stansted is that an existing airport could be extended, and the advantage of Cliffe is that it is a new site. However, I readily recognise that there are pros and cons for every site and airport. It is for us. through the consultation process, to try to reach the right answer.
Mr. Robert Marshall-Andrews: Is the Secretary of State aware that there will be huge opposition
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to the construction of a new airport at Cliffe? It will not be based on selfish nimbyism or rejection of the economic benefits but on the massive damage that will be done to the most sensitive ecological sites in Europe, which are irreplaceable. Will the Secretary of State give my constituents at least this comfort? If, during the course of the consultation process, it appears that a new airport can be ruled out on the grounds of cost or anything else, will he give swift notice of that fact, so that the blight overhanging so much of north Kent can be lifted?
Mr. Darling: It is appropriate that my hon. and learned Friend should follow the right hon. Member for Horsham (Mr. Maude); perhaps they should have a conversation with each other. That illustrates the problems that we face. I say to my hon. and learned Friend that I propose to announce the Government's conclusions after the consultation period—in one announcement rather than in bits, I hope. The whole consultation period has to run.
I say to my hon. and learned Friend, as I have said to other Members, that we must put in the balance the fact that we all know that doing nothing is not an option. There are more and more people who need or want to fly, and our future prosperity depends upon it. Indeed, many people who live near airports fly themselves.
There is no easy answer and, whatever the decision, I dare say that there will be difficulties with it. But I hope that when my hon. and learned Friend approaches the consultation, he will do so in the spirit of recognising that there could also be benefits from airport development at Cliffe and in other places, and reach a final view next year.
Mr. John Wilkinson: In his statement, the Secretary of State repeatedly suggested that environmental considerations would be of the utmost importance. As someone who has worked in the aircraft industry, supported Heathrow and always argued its merits as a premier international hub airport, may I say that constructing a new runway to the north of the existing one at Heathrow would be a development too far? Would it not be a supreme irony for many people who owe their livelihood to the airport, or who work there, to find themselves dispossessed of their homes by the construction of a runway that would fatally prejudice the environment of west London? May I therefore urge a balanced strategy, developing the London airport system as a whole, right round the capital, and the construction of crossrail through London, past Stratford, out to Stansted, to ensure the surface transport access that has so often been denied to passengers?
Mr. Darling: I appreciate the hon. Gentleman's point about Heathrow and I know that, over the years, he has supported development to maintain Heathrow's premier position. The question that we must consider in this consultation period is how to ensure that a major hub airport is maintained in the London area. The question is whether we extend Heathrow—I hear what the hon. Gentleman says about that—or develop Stansted or a new site instead. The consultation also seeks views on whether Heathrow and Stansted could be developed together and complement each other, so the options are all in play.
I would say to the hon. Gentleman—he no doubt does this—that he must also talk to people who currently use Heathrow. who are now taking a long-term view in

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relation to that airport. I know that the hon. Gentleman sometimes has difficulty in looking across the channel to Europe, but he is aware that while we in this country consider these matters, major hub airports are already being developed in Paris, Amsterdam and Frankfurt. If we do not decide what to do in a way acceptable to both residents and the industry, we could be in some difficulty in years to come.
Mrs. Gwyneth Dunwoody: The Secretary of State will know that for decades British Governments have run away from the difficult questions in aviation, so he is to be most warmly congratulated on his statement today. He will also be aware that this is a matter of some urgency. Will he therefore give me an undertaking that under no circumstances will the decisions in relation either to extra runways, or to possibly a new airport, take place after the next general election? Will he also give me an absolute assurance that the private partners of National Air Traffic Services will be able to fund the expansion of air traffic services without which none of this will be possible? Above all, will he remember that although regional airports will certainly expand, they must have the right to come into the south-east airports protected? Otherwise, regional transport will become a pariah in terms of the development of the economy.
Mr. Darling: I am grateful to my hon. Friend for her introductory words. As I said, I am determined that the Government should come to a firm view, which will be set out in the White Paper next year. It is in no one's interests that the matter should drag out. Clearly, if specific proposals are then made, some will take time to work out for obvious reasons. The uncertainty ought to be brought to an end as quickly as possible, but especially in places where there is not to be any development. She is also right that successive Governments have considered the subject and that some of them have run away from it. In the past few weeks, there have been times when I have seen why. My judgment is that in transport matters it is better to make decisions than not to make them, even though the consequences may be difficult.
My hon. Friend is also right that, on any view, we will have to cater for an increased use of air space, which will have consequent effects on air traffic control. It is important to ensure that NATS and the air traffic control system can cope with that. The consultation document touches on that. It is also important that the necessary funding comes—it is a partnership between the public and the private sectors—to ensure that air traffic control operates effectively.
Sir Paul Beresford: The Secretary of State will accept that it is obvious that there will be huge demand for development around any new runway or airport. With the London proposals in mind in particular, has his Department done any research into the extent to which it anticipates that happening, and if so, will it be published? If not, is such research anticipated and will it be published before the end of the consultation period?
Mr. Darling: The hon. Gentleman knows that the Deputy Prime Minister published proposals on housing last week. My Department and his remain in touch, of
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course and if the hon. Gentleman has questions relating to that, he can ask them in the normal way. He is right that airport developments have consequential effects, not only for housing but for businesses.
Paul Goggins: My right hon. Friend is right to propose additional runway capacity, but does he agree that an equally strong case can be made for effective ground transport links to airports? With reference to Manchester, will he consider the proposal to extend heavy rail from the airport to the west coast main line? More immediately, will he continue to liaise with the Greater Manchester passenger transport executive to ensure that the Metrolink extension to the airport goes ahead as quickly as possible?
Mr. Darling: My hon. Friend and other Greater Manchester Members will know that my Department is in touch with Manchester council about the metro. He will know that our concern relates not to the development of light rail, which we very much want, but to the fact that the costs have escalated dramatically recently and we need to get to the bottom of that for obvious reasons. He is also right that public transport links not only to Manchester but to all airports leave much to be desired. For example, Heathrow only acquired a heavy rail link recently, which is astonishing. That is something that we need to attend to in other parts of the country too.
Mr. Mark Prisk: Given that the areas immediately around Heathrow and Stansted are congested and overheating, does the Secretary of State agree that there is a wonderful opportunity, in principle, irrespective of which site is chosen, to create jobs and investment in the Thames gateway, which is the poorest part of the south-east region?
Mr. Darling: The hon. Gentleman has a point. I said that one of the advantages of a development at Cliffe would be the gains that it would bring to the Thames gateway—an area that the previous Conservative Government and this Government have been anxious to help to regenerate. The difficulty, as he probably recognises—I appreciate his generosity of spirit in suggesting that the airport should be developed somewhere other than his own area—is that people who live in the area concerned sometimes take a different view. This will be an open consultation. There are powerful arguments for development in each and every case, but we also need to take other considerations into account. That is the object of the consultation period.
David Taylor: The Secretary of State reminded the House that the polluter must pay is an important principle. I disagree with him that airport communities are being compensated for the disruption to their environment caused by aviation and regional airports such as east midlands airport. Will he reassure those of us who represent constituencies near regional airports that could be expanded that he will put in place at least a minimum and decent environmental framework to protect the people who live in such communities, in particular from the corrosive and damaging effects of night noise? As he said in his statement, east midlands airport is second or third for

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freight carriage in this country, but it has a very weak framework indeed. I can tell him that doing nothing is not an option.
Mr. Darling: I am aware of the issue at east midlands airport. Several local authorities have asked us to designate it in terms of noise control. At the moment, we do that only in south-east England. Obviously, those are all things that we need to look at as part of the consultation in relation to any development, but just so that I do not inadvertently, not mislead, but encourage my hon. Friend to think things that he should not be thinking, I am not holding out any hope of reversing my recent decision in respect of east midlands airport.
Mr. David Chidgey: In examining the options for expansion at Southampton international airport, which the Secretary of State will know is in my constituency, can he tell me whether it was discovered that the M27 motorway, the main coast railway line to Portsmouth and the little matter of Southampton city ruled out the construction of a second runway, as a previous study concluded? Is that still the case?
Mr. Darling: I know Southampton international airport. In fact, a couple of weeks ago I spent some time waiting for my train looking at it and its runway. The consultation in relation to Southampton does not envisage a second runway there but considers how Southampton and other airports in the area can be developed further and what their role should be. If anything is canvassed in the consultation that the hon. Gentleman disagrees with, or if there are matters that he thinks that we should examine further, this is the perfect opportunity for him to do that.
Mrs. Irene Adams: Does my right hon. Friend agree that devolution to Scotland was about delivering services and power nearer to the people who are represented? Will he therefore ensure during the consultation that the highly successful Glasgow airport, which is in my constituency and employs 5,000 people, is not sacrificed if the Edinburgh Parliament suddenly develops what might be described as a natural inclination to draw services to itself, and that the spirit of devolution continues to serve all the people of Scotland equally?
Mr. Darling: I am glad that my hon. Friend chose to blame the Edinburgh Parliament rather than the right hon. Member for Edinburgh, Central, who is of course well aware of the competition or rivalry—call it what you will—between our two cities. The consultation with regard to central Scotland looks at what scope there is to develop both airports. There has been growth at both. It also raises the question whether we should try to develop a hub airport, which would probably only be at one airport. In order to make it work and to get the destinations that many people in Scotland want, not just to the south of England but to Europe and the United States, it would be necessary to achieve a certain density of traffic: it might be difficult to achieve that with a hub of two airports. I hope that as Edinburgh and Glasgow are 44 miles apart, although the airports are slightly further apart than that, all of us could see the common interest in doing that, and I say that an as Edinburgh Member.
Mr. Roger Gale: The Secretary of State will be aware that, given the necessary but—in transport
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terms—relatively modest costs of improvements to the rail service, Manston airport in Kent is about 50 minutes by train to central London. In the light of his earlier answer, does he seriously suggest that Manston's potential is not under consideration in the document?
Mr. Darling: Manston is mentioned in the document, as are most major airports. My point was that, in terms of a large international hub airport, the option in Kent that is being looked at is Cliffe. In relation to Manston or indeed other airports in the region, the whole point of the consultation is to allow people to make representations. At this stage, the Government have not reached a conclusion. We will do so when we reach the stage of publishing a White Paper but there is nothing to stop the hon. Gentleman or other Kent Members making representations if they think that there is a better solution.
Margaret Moran: I welcome the significance that has been afforded to London Luton airport, which is a particularly successful public-private partnership, one of our largest employers and handles the second largest number of business passengers in the United Kingdom. I welcome the proposals for expansion, although not for a second runway, which the hon. Member for Westmorland and Lonsdale (Mr. Collins) seemed to be advocating, since that would mean tarmacking over half of Luton, probably including my house. Is my right hon. Friend aware that expansion of London Luton is predicated on the need to deal with junction 10 of the M1 and its widening? Can he advise us when a decision is likely to be made on that point?
Mr. Darling: My hon. Friend is right that, in relation to all these airports, surface communications, whether motorway or rail, need attention. I cannot tell her when a decision is likely to be made in relation to the M1. I would also say, as she raised the matter, that the options at Luton include a new runway to replace the existing runway, because, as she will know far better than I do, the topography of Luton means that it would not be possible to put a second airport there. As she will know, however, significant capacity over the next 30 years should allow Luton to develop successfully.
Mr. Eric Pickles: The Secretary of State spoke repeatedly about the need to attract a hub operation. Does he understand that that is not entirely within his gift, and that many airports in the world with spacious termini and multi-runways have never been able to attract a hub because they lacked critical mass and the co-operation of a major carrier? Given what is happening in France, Germany and the Netherlands, and the recent failure of British Airways to create a successful hub at Gatwick, what makes him think that there is a possibility of creating an additional hub at Stansted?
Mr. Darling: The hon. Gentleman is not quite right. What I said was that, clearly, Heathrow is a very successful international hub airport—one international passenger in six start and finish their journeys in the south-east, and many do so at Heathrow. The question is whether we can maintain Heathrow's position. Does it need an extension in terms of an additional runway, or would it be better to operate Heathrow in conjunction with

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a second airport such as Stansted? Alternatively, should we accept that Heathrow cannot expand enough, for whatever reason, and move the hub airport elsewhere? I accept that that does not lie entirely in the Government's hands. The people who build the airport, operate the airport and own the airlines are not the Government. Clearly, however, Government can influence these matters. We can listen to the industry and the airlines, and, because of the powers available to us, set up a framework against which all those people, as well as residents, can plan for the future.
I accept that not all these matters lie in the hands of the Government, but the logic of the hon. Gentleman's position is that the Government should stand back and see what others do to sort it out. I do not think that he is saying that. I do think, however, that the consultation period allows time for people to focus their minds. As he raised the point, I hope that it focuses the minds of everybody concerned, as it is in all our interests that we come to a firm decision sooner rather than later.
Alan Keen: Would the Secretary of State add another telling statistic to those that he is beginning to compile? I am the third Heathrow Member to speak this afternoon. One of the other two has always opposed major developments at Heathrow, while the other has always supported them. The latter has changed his mind, and I shall add another to the list of those who have moved across: because of the people living around Heathrow, I do not agree that it is possible to expand outside Heathrow without causing dreadful damage to people's lives. People are already suffering greatly, as I hope that the Secretary of State understands, but they carry on and make a major contribution to one of the world's greatest industries. Two people have therefore switched over this afternoon.
Mr. Darling: I do not quarrel with any Member who advances a particular view because it is in their constituents' interests to do so. My hon. Friend is, therefore, entitled to take that view. All I would say to him, as I said to my hon. Friend the Member for Hayes and Harlington (John McDonnell), is that the three of us are concerned about the future of Heathrow. The question is whether it can continue to be the international airport that it is without extending its capacity further. If, at the end, the consensus is yes, that is fine. But if it is no, ail of us—including Members who represent Heathrow constituencies—have to face up to the fact that, at the moment, the airport is responsible, directly and indirectly, for the employment of about 100,000 people. We must take decisions in the next year or so that will determine the future of Heathrow over the next 30 years. There is not an easy answer, as I have said time and again, and all of us have to consider both sides of the argument before reaching a view.
Mr. Graham Brady: Just 12 months after the opening of the second runway at Manchester airport, the possibility of further development would cause real concern among the communities living around it. Will the Secretary of State take on board the fact that when an airport, such as Manchester, is so close
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to a conurbation, there must be an upper limit on development? Does he accept that the airport cannot continue to grow indefinitely?
Mr. Darling: There is not a proposal to build another runway at Manchester. The view is that the existing runway capacity will be sufficient throughout the 30-year period. There is, however, an option to extend terminal capacity.
I appreciate the hon. Gentleman's point, but it reflects a common theme in our exchanges. Everyone agrees that something has to be done and that more and more people want to travel. However, when it comes to the particular, people naturally say, "Not here. Somewhere else." As he knows, I do not represent a Greater Manchester constituency, but I speak to quite a lot of Greater Manchester MPs, not least because we have rather more of them than he has. My impression is that opinion is somewhat divided.
Ms Candy Atherton: People in the south-west make fewer air journeys than anyone else in the United Kingdom. That could be because we have the lowest number of airports and slots into the south-east. The situation was not helped when, in the mid-1990s, British Airways withdrew the slot into Heathrow from Plymouth and Newquay. That was bad for the economy of Cornwall and Devon. Will my right hon. Friend seriously consider this issue in the consultation?
Mr. Darling: I know that my hon. Friend is concerned about not just air links but other links from the south-west. I have used Plymouth and Newquay airports on several occasions, and I am aware of the problems that she has encountered. The Under-Secretary of State for Transport, my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson), keeps me right about the south-west of England at every possible opportunity.
The consultation documents consider options for increasing links and for extending capacity at Bristol. I appreciate that Bristol is quite a long way from Cornwall, but I think that my hon. Friend the Member for Falmouth and Camborne (Ms Atherton) accepts that some things can be done with the smaller regional airports whereas other things cannot. However, I assure her that I perfectly understand her points and, as I suggested, my ministerial colleague will ensure that I consider all the issues.
Sir Teddy Taylor: How substantial and significant to the Secretary of State's plans is the contribution made by outstanding regional airports, such as Southend, which are anxious to expand and develop? As we are heading for a period of expansion, will he make it clear that the CAA will adopt a positive and constructive attitude to airport expansion and that it will not be unduly bureaucratic?
Mr. Darling: I hope that the latter will not be the case. The difficulty at Southend is just how much more scope for expansion there is without encountering real problems. However, it is a pleasure to hear an hon. Member say that he wants a bigger airport in his constituency. I assure him that Southend is one of the options considered in the consultation document, but it is not down for development as a major London airport. It is being considered in its own right.
Sandra Osborne: I want a bigger airport in my constituency. My right hon. Friend will recognise that

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Glasgow and the west of Scotland are served by two airports, one of which is Glasgow Prestwick in my constituency. It has a rail link and capacity for growth, so what does he say about that in his scenario of a hub for Scotland? Glasgow Prestwick excels at freight, so will he say something about the consultation on freight in relation to Scotland? Finally, does he agree that the consultation document underlines once and for all the need for the Scottish centre at Prestwick?
Mr. Darling: I agree with my hon. Friend on that point. She will know that I plan to visit Prestwick in the summer. No doubt, I will see her there.
I know that Prestwick has been through a difficult time over the years. There has been some welcome expansion brought about, for example, by the low-cost airline Ryanair and by the development of freight. My hon. Friend will see from the consultation document that the future development of Prestwick is being examined. On her point about whether it is possible to promote a passenger hub airport at Prestwick, the consultation document suggests that the development of Glasgow and Edinburgh is more likely. However, she will clearly want to make representations on behalf of Prestwick.
John Thurso: Given the potential threat to the Inverness-Gatwick air link, does the Secretary of State recognise its vital importance to the economy of the highlands? Notwithstanding the clear hints that a public service obligation will not be forthcoming, can he assure the House that the Government remain committed to it?
Mr. Darling: Having been in touch with Iain Gray, the Minister with responsibility for transport in the Scottish Executive, I am well aware that the links between Inverness and London are very important. British Airways has said on a number of occasions that it intends to continue with the link, and our discussions and consideration continue. The hon. Gentleman should be in no doubt that the link is critical.
Mr. Kevin Hughes: I welcome the Secretary of State's announcement. He is aware of the mass protest—indeed, he has had a flavour of it in the Chamber—that will result from expansion in the south and south-east. In Doncaster, not only are the vast majority of the population in favour of the project at RAF Finningley, but tens of thousands of people have signed a petition asking for an airport there. Will he agree to meet a delegation of Doncaster and south Yorkshire MPs so that we can tell him in detail about the benefits of having an airport in Doncaster?
Mr. Darling: Over the past 10 years I must have met my hon. Friend on many occasions, mostly informal rather than formal, and I know of his long-standing interest in Finningley and the development there. There has been an inquiry. The inspector is due to report in October or November—I hope that he will do so—and a decision then has to be made by my right hon. Friend the Deputy Prime Minister. That is why the proposal does not appear in the consultation document. As I said to the hon. Member for Rochford and Southend, East (Sir Teddy Taylor), it is nice to find an hon. Member who wants an
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airport in his constituency. Although all hon. Members recognise the need for airport capacity to be increased, they are generally wary about where it should go.
Mrs. Caroline Spelman: The Government's proposals for new runways at Birmingham international airport will cause great concern to my constituents because of the environmental consequences. The Department's summary document states that improvements would need to be made to the road network and the west coast main line. Does that constitute a wish list or a commitment to do something?
Mr. Darling: We are committed to upgrading the west coast main line. Unlike the party that the hon. Lady represents, we are prepared to put in the investment to make that possible, so she is in no position to criticise us on railway development.
The hon. Lady has a more substantive point about Birmingham. The consultation document recognises the fact that extending the development of Birmingham airport could have implications for people living around it. It also makes the point that jobs are associated with the airport. One of the options that was considered as an alternative to the expansion of Birmingham and east midlands airports was a new airport between Coventry and Rugby.
We all recognise the need for good air links, and Birmingham airport is a very good airport that provides links throughout and beyond Europe and is extremely popular. The hon. Lady must weigh in the balance the advantages of Birmingham and the possible need to extend it with her concerns for her constituents. None of us can have it all ways. There is no such thing as a cost-free airport with no implications one way or another.
Andy King: The people of Rugby will be devastated by what they have heard today and to know that two historic villages—Church Lawford and King's Newnham—will disappear under runways. If one had said to anybody in Rugby yesterday that there would be a new airport in Rugby and Birmingham airport will close, they would not have believed that it was humanly possible. My right hon. Friend said that Birmingham is a very successful airport. I believe that it should continue to be so and that the people of Birmingham would not want to lose their airport. Will he meet a delegation of the people of Rugby within the four-month period? [Interruption.] Four months is not long enough, because it will take them four months to get over the shock of hearing about it.
Mr. Darling: I always knew that being Transport Secretary would be good fun. Just before my hon. Friend causes himself a lot of difficulty, I must tell him that we are not proposing a new airport between Coventry and Rugby. We are saying that there is likely to be an expansion in the numbers of people wanting to fly from midlands airports. The options canvass is on whether we expand capacity at Birmingham or east midlands, or both. Alternatively, the option is whether it is worth building a new airport. No decisions whatever have been made.
I strongly urge my hon. Friend, not for my good but for his, that before he tells his constituents that they will be getting a new airport—[Interruption.] I got the

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impression that he was to tell them. Let us exercise a little caution. I say to him as I have to others this afternoon that all of us as a country know that our future prosperity depends on our ability to trade and travel. That means that difficult decisions have to be made. Let us for goodness' sake look at the options rationally, weigh them in the balance and then come to a conclusion. No decision at all has been reached on any development. Everyone should look at the consultation documents bearing that very much at the front of their minds.
Andrew Selous: Will the Secretary of State give an undertaking to look very seriously at the role of airport consultative committees, which to local people at the moment give an illusion of consultation? Will he particularly consider the issue of vectoring, whereby aircraft move from approved routes purely for time reasons?
Mr. Darling: Those are two separate matters. If the hon. Gentleman has a particular point about a consultative committee, perhaps he would let me know. I am not aware of a general concern. I am not saying that there is not one, but I am not aware of it because representations have not been made to me.
Aircraft go off route—presumably with the permission of air traffic controllers—from time to time for perfectly good operational reasons. Again, if the hon. Gentleman has specific concerns or thinks that it is happening too often above his constituency, perhaps he would let me know.
Mr. John Smith: I warmly welcome the statement as it relates to Wales: the recognition that air travel will be at the cutting edge of business communication in Wales; the concentration on development at Cardiff international airport rather than building a new airport at Severnside; and the emphasis on surface access to the airport in order to develop it. Will my right hon. Friend work closely with the Welsh Assembly to progress that excellent agenda?
Finally, may I remind right hon. and hon. Members to wear flight socks when they fly on holiday this summer? Apart from saving lives, they can be very fetching.
Mr. Darling: I will bear that in mind.
As I said in my statement, I know that the announcement by BMI to establish a second base for its new low-cost airline in Cardiff is very welcome. I have also said that surface links, not just to airports but for passengers living in Wales who want to travel from airports in England, need to be improved. I am grateful for what my hon. Friend has said, and we are of course working closely with the Welsh Assembly.
Dr. Jenny Tonge: The Secretary of State should know that my constituents are not saying, "Not here"; they are saying, "Not any more here." We already have four terminals at Heathrow and do not want any more, although one is to be imposed on us. If he
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cannot guarantee that air traffic movements will be capped at 480,000 a year and that there will be no third runway at Heathrow, which were both conditions imposed by the inspector on the granting of permission for terminal 5, what is the use of public inquiries in the first place?
Mr. Darling: As I said in reply to the hon. Member for Westmorland and Lonsdale (Mr. Collins), who speaks for the Opposition, the decision on terminal 5 was recognised as one in relation to the airport as it is now. It needs a fifth terminal to deal with the airport as it is now. The inspector noted and acknowledged in his conclusions the fact that the Government would consult on what was necessary for the next 30 years. The decision made by the Government at the time made that clear.
I appreciate the point that the hon. Lady makes on behalf of her constituents, and the subtle distinction between "Not here" and "Not any more here", but no matter what part of the country we live in, we must acknowledge that people fly. Many of her constituents fly—from Heathrow. Indeed, I would guess that the propensity to fly in the south-east of England and in Richmond is rather greater than that in some other parts of the country. It is necessary to strike a balance. As I said before, the one thing we cannot do is ignore the fact that over the next 30 years conditions will change. We need to plan for those changing conditions and we need to do it now. Pretending that there is no problem gets us nowhere.
Mr. Clive Soley: May I remind my right hon. Friend of Heathrow's importance as a premier airport to jobs and the economy in west London? If it were to decline seriously, the impact on the region would be at least as devastating as was the closure of the docks on east London. People need to understand that when making this judgment on air transport. As one who has lived under a flight path for much of my life, I admit that it is not easy to live with the noise, but I think that if Heathrow went into decline, the devastation wrought on west London would be extremely serious.
Mr. Darling: I am grateful to my hon. Friend because he has put his finger on the problem. He rightly draws attention to the concerns of people living at or near Heathrow and its flight paths, but that airport employs, directly or indirectly, more than 100,000 people. It is therefore critical that we get the decision on the future of the London airports, in particular Heathrow, right, and we need to get it right fairly soon. To leave the decision to someone else—to say that I want nothing to do with it—is not the right approach, so I welcome my hon. Friend's comments.
Several hon. Members rose—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I have important business of the House to protect. No one understands better than I the importance of the issue, but experience suggests that it is one to which the House will return.

Older People's Services
4.46 pm
The Secretary of State for Health (Mr. Alan Milburn): With permission, Mr. Deputy Speaker, I wish to make a statement on services for older people.
As the House will recall, the Budget made available substantial increases in funding, not only for the national health service, but for social services. In due course, I will outline how some of the major increases in resources for the health service will specifically assist older people. Today, I can outline to the House how older people will benefit from the extra resources for our country's social services.
Older people are the generation who created our great health and social services. They, above all others, deserve to get the best from them. The mark of any civilised society must surely be how it treats its most senior citizens. Labour Members take pride in the Government's commitment to help to secure dignity and security in old age. Increases in pensions make the average pensioner household £840 a year better off today than in 1997, and there is also special help to lift pensioners out of poverty.
It is for others in the House to explain their opposition to reductions in VAT on heating, extra winter fuel payments and free television licences, given that more than 11 million pensioners have been helped by those measures, which were introduced by the Labour Government. Eye tests are now free, whereas older people used to have to pay for them. Nursing care is now free for older people; they used to have to pay for that, as well. Breast screening is being extended to women aged over 65. Last year, the number of knee operations on older people rose by 7 per cent., cataract operations by 11 per cent., and heart operations by 13 per cent.
None the less, there is much more to do to provide services that genuinely offer security, promote independence and widen choice for older people. Ours is an ageing society. We should not fear that—in my view, it is something that we should celebrate—but it means that our public services must now rise to the challenge of delivering better, faster care with higher standards for older people. Indeed, securing improvements in older people's care is one of the key priorities of our 10-year NHS plan. Today, I can announce how we intend to take that commitment forward.
Social services have for too long been the poor relation to health services. Between 1992 and 1997, real-terms funding for social services rose by only 0.1 per cent. a year. Today. it is rising by 3 per cent. a year, and from next April that rate of growth will double to an average of 6 per cent. a year above inflation. I can confirm today that older people will be the principal beneficiaries not only of those extra resources, but of the reforms that we are introducing to secure improvements in social care, working with our colleagues in local government, the private sector and the voluntary sector.
By 2006, compared with the resources available today we will provide an extra £1 billion a year in real terms for social services for older people. Reform will be required to get the best from these extra resources. The extra £1 billion—combined with the reforms that we will make—must guarantee for older people not more of the same but faster access to a wider range of services, offering older people greater choice.
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First, we will guarantee older people faster assessment of their needs. Reforms are already in train to bring local health and social services together and to ensure that they provide a single seamless assessment process. Older people, above all others, need a one-care system, not competing care systems. Older people also need faster assessment. Some councils currently delay assessments for older people for up to nine months. That is completely unacceptable. I can tell the House today that by the end of 2004, all assessments will begin within 48 hours and will be complete within one month. Following assessment, the services to older people in need will be in place within one month. All equipment needed to help people live independently in their own homes will be provided within just one week.
These shorter waiting times will be accompanied by major reforms to ensure that older people are able to leave hospital when they are ready to do so. To accompany these extra financial resources, which will increase capacity in all aspects of older people's care, local authorities will gain the financial responsibility for older people once they are ready to leave hospital. I can tell the House that we intend, subject to legislation, to introduce this reform by April next year.
Secondly, there will be more support to help more people who need care in residential and nursing homes. For many frail or disabled older people, care homes—thanks to the efforts of care home staff—offer the best security and support. The size of the care home market peaked in the mid-1990s. Since then, it is true that the boom in the property market—especially in the south of England—combined with low increases in fee levels paid by local authorities, has led to a fall in the number of care homes beds. Laing and Buisson, perhaps the foremost analyst of the care home market, says that ideally occupancy levels in care homes should be at about 90 per cent. It estimates that occupancy levels are now running at about 91 per cent., suggesting that a modest increase in bed numbers from current levels is what is needed. We will now plan to increase the number of care home places supported by local councils.
Since last November, when we made available an extra £300 million to social services, fee levels have risen—by up to 10 per cent. in some parts of the country. The resources that we are providing from April next year will allow local councils to pay higher fees still if that is what is needed to stabilise their local care home market.
Greater stability must be accompanied by higher standards. That is what care home providers called for and, indeed, it is what the Care Standards Act 2000 enshrines. For the first time, clear national standards are in place, but we always said that we would keep the new standards under review.
The size of rooms and doors, the availability of single rooms and the number of lifts and baths are important, but they should not mean good local care homes having to close. We will therefore shortly issue for consultation an amended set of environmental standards to remove them as a requirement on existing homes, instead making it clear that they are good practice to which all care homes should aspire. We will require care homes to spell out whether they do or do not meet those standards and let those who are choosing homes make an informed choice for themselves.

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Other standards—for example, those covering qualified staff—make a greater contribution to the quality of care provided for older people. I can therefore tell the House that we will make £70 million available by 2006—ring-fenced—to support training for social care staff, most of whom currently do not have a qualification, and many of whom are employed in the care home sector.
Thirdly, we will guarantee greater choice for older people in the services that they receive. Care homes are a good option for some older people, but not for all. They are not, and must not become, the be all and end all of elderly care services in our country. Our objective is to broaden the spectrum of services available for older people to widen choice and promote independence.
To enable local councils to provide more rehabilitation services, we will earmark resources to ensure an extra 70,000 older people a year get those services to avoid them going into hospital unnecessarily or to help them leave hospital speedily when it is safe for them to do so. I can tell the House today that I intend to legislate to ensure that those and intermediate care services will be free whether they are provided by the health service or, indeed, by social services.
We will also invest in new models of supported care for older people. We will therefore resource a 50 per cent. increase over the 1997 total in the number of extra-care housing places—very sheltered accommodation—available for older people, and we will work with local authorities, housing associations and others to bring that about.
Fourthly, more older people will get the support that they need to continue to live in their own homes if they choose to do so. The choice that too many older people have faced in the past is between going into care homes or struggling on in their own homes. Just like everyone else, older people want to remain as independent as possible for as long as possible. As a result of the investment that I am announcing today, by 2005 there will be twice as many older people receiving the intensive help that they need to live at home than there were in 1995.
Charges are currently made for community equipment, such as hand rails or hoists, which can make the difference between older people becoming dependent or remaining independent in their own homes. So I can tell the House today that—again, subject to legislation—from April next year, I plan to remove those charges altogether. Through ring-fenced funding, up to 500,000 extra pieces of community equipment will be provided free of charge to an estimated 250,000 more older people.
Fifthly, older people will be given a direct choice over their own care. Direct payments have already given younger disabled people the chance to spend for themselves the resources that they are assessed as needing. Now, in line with our manifesto commitment, I can tell the House that we will make it an obligation on every local authority, for the first time, to offer older people access to direct payments. Every older person assessed as being in need of care—whether for rehabilitation after a hip operation, or for a bit of help with household chores—will be given the choice of receiving a service or, instead, receiving a cash payment to purchase care for themselves that better suits their individual needs.
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We will work with older people's organisations to make that choice a reality for tens of thousands of older people. I believe that that reform will empower older people, their families and their carers in a way that has never been possible before. Direct payments will give older people direct choices over the services that they receive.
Finally, many older people rely on more informal care from their family, their friends or their neighbours. Without the millions of carers in our country the services provided by the NHS or local councils simply could not do their job. In my view, the whole country owes our community of carers an enormous debt of gratitude. They are living proof that there is such a thing as society.
In recent years, we have provided more help to carers. Now we plan to build on that. So I can tell the House that I intend to more than double the carers grant to £185 million by 2006. As a result 130,000 additional carers will get help not just with short breaks through respite care, but with the extended care that they need so that they can continue caring. Carers put so much into the community, so it is right that they should get something back.
That is a major package of investment and reform to the services older people receive. The proposed new independent commission for social care inspection will be responsible for ensuring that councils in every part of the country deliver for older people. I can inform the House that the new commission will start operating in shadow form by the end of this year, so that it can inspect and audit how those extra resources are being used. The councils that do best will get more freedoms and greater rewards. There will be intervention for those that fail.
Those reforms and those resources will increase capacity to make choice a reality for hundreds of thousands of older people. There will be more places in care homes and sheltered housing. There will be more intermediate care services. Crucially, there will be more support for older people to live at home and for their carers. More older people will be able to gain access to more services and exercise more choice.
Increasing choice for older people is possible only because of the choice that this Government have made to put sustained levels of investment into our health and social services. As Labour Members, we know that resources plus reforms deliver results.
Our commitment is to deliver for this generation of older people and future ones. It is for those who oppose both the investment and the reforms to explain now how they would go about delivering dignity and security in old age. For our part, the emphasis must now be on helping more older people to live more independently for more of the time. When these reforms are fully implemented, there will be a greater proportion of older people being cared for at home than there is now.
After all, that is the choice most older people say they would prefer. That is what older people have every right to expect. It is what we intend to deliver. I commend the proposals to the House.
Dr. Liam Fox: I am grateful to the Secretary of State for his statement, and for making a copy available in advance. As ever, the statement is strong on rhetoric and well-delivered, but lacking in substance. It is largely a set of re-announcements and U-turns and seems to be timed more to avoid embarrassing headlines

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generated by tomorrow's report from the Select Committee on Health than anything else. It is more about managing news than managing patients.
The statement is a wish list that rings hollow when compared with the Government's record. It is littered with some real gems. We heard that "Nursing care is now free for older people"; try telling that to our constituents up and down the country. The Government might be making a contribution, but care is anything but free. We were told that "We need to stabilise the care home market"; what an incredible statement from the Secretary of State. We have been telling him that for the past three years. It is his failure to listen not only to the official Opposition and other parties, but to those involved in the care home industry that has led to the loss of more than 60,000 care home places. It is a failure entirely of the Government's own making. As patients are discharged too quickly from our hospitals to relieve the bed-blocking crisis, the number of re-admissions within 28 days is rocketing. It is a revolving-door policy for our elderly people—some dignity or security that provides.
As the number of blocked beds rises, the number of cancelled operations is going up, many of which were intended for elderly patients—some dignity or security. Perhaps the Secretary of State can tell us how many of the 100,000 extra admissions to accident and emergency departments in the past two quarters have been elderly patients denied dignity and security as a result of the Government's failure.
When the Secretary of State has the gall to stand up and say that the size of rooms and doors is important but should not mean good local care homes having to close, I have to ask where he has been for the past three years. It is too late for many homes, which have already closed as a result of the very legislation and regulations that the Government brought in. They are now telling us that they will have another look at the matter and that they will have a more flexible approach. That is too late for many homes. The damage has been done, just as the damage has been done to the security and dignity of many older people in those homes.
It is wonderful what the Secretary of State believes now, but it was not what he believed when the Care Standards Act 2000 was being rammed through both Houses of Parliament. The only word missing today was sorry. Today, he has talked about the quality of care given by care homes, but only recently he was talking about people being "banged up" in care homes. The rhetoric is different today.
We heard the right hon. Gentleman's interesting pledges on equipment, but we have heard them before. When the Audit Commission produced its report on equipment provision in March 2000, the Secretary of State said:
"It paints a very stark picture of frankly a second-rate service in some parts of the country. What we have to do now is ensure that the Audit Commission's recommendations are actioned in every part of the health service."
Of course, it became "a priority" for the Government to improve the service. We have just had the Audit Commission's follow-up to that report. After the Government making it a priority and such an important part of their programme, the Audit Commission found that users
"continue to report long delays for equipment of dubious quality … many who could benefit from equipment services are excluded by stringent eligibility criteria … waiting times for some equipment is
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up to six years … a mood of despondency is common among managers running equipment services … no progress has been made in integrating mobility services, leaving the wheelchair and orthotics services marginalised."
[Interruption.] The Government Chief Whip says that there was no money. Why was there no money if it was a Government priority to improve those services? They have been in office for five years and it has been a priority in their programme for two years. They promise so much and deliver so little.
What the Government have said about domiciliary care is unbelievable. Of course, Conservative Members welcome the introduction of what will effectively be care vouchers, which the Secretary of State mentioned today. He has, however, a stark reality to confront. When the Government came to office, 479,000 people were receiving domiciliary care. That figure has now plummeted to fewer than 400,000 in the last year. The number of people receiving care has therefore gone down dramatically under the Government's domiciliary care programme, and the shortage of capacity will limit any plans that the Government may have.
Where are all these extra care workers to come from? How will they be employed? Has the Secretary of State actually tried to find a carer for an elderly relative recently? Has he tried to find respite care? Where are these people to come from? Are they to be plucked from the carers' tree, or bought from the carers' supermarket? How are we going to attract people into these jobs? Who will carry out the assessments that the right hon. Gentleman mentioned? How many extra staff will be required for that? Who will initiate the assessments? How will urgency be accommodated within a guaranteed time?
This is certainly not good enough. The Government are making promises yet again, even though they have not kept them in the past. The good points in the proposals are those that abandon Government policy and make U-turns. This is the initiative du jour, and the elderly will see through it for the sham that it is.
Mr. Milburn: I was pleased that the hon. Gentleman was grateful for getting a copy of the statement in advance. I was even more grateful for getting a copy of his press release in advance. In fact, I got a copy of his press release even before he got a copy of my statement. Perhaps it is not surprising that he has remained on the Tory Front Bench, with such extraordinary powers of extra-sensory perception.
The hon. Gentleman said that this was a wish list for older people. It is actually a delivery list for older people. He said that the number of people being delayed from discharge from hospital was rising. That is not true; it is falling. He said that the number of cancelled operations was rising. It is not; it is falling. He said that the number of people being helped to live at home by social services was falling; it is, in fact, rising.
On the issue of community equipment, the hon. Gentleman continually bleats about the lack of provision of services yet he is never prepared to commit the necessary extra resources and earmark them for the purpose for which they are needed. That is precisely what we are doing with community equipment. One of his hon. Friends asked earlier from a sedentary position whether much of this money was earmarked. Yes, it is. Two thirds of this £1 billion package for older people is ring-fenced and earmarked specifically for the purposes that I have outlined today.

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The hon. Gentleman is opposed not only to investment but to the earmarking of investment. He wants to see extra resources going in somehow, but I am afraid that the invisible hand of the market will not deliver extra handrails. extra support, extra care home places, more intermediate care, or more domiciliary care. Those are provided only because of the investment that we are making. The hon. Gentleman's problem relates not just to what the Conservatives did when they were in government but to what he is saying while they are in opposition, and to their abject failure to match either our investment or our programme of reform.
Does anyone seriously believe that the Conservatives who landed pensioners with more poverty, VAT on fuel, and charges for eye tests that used to be free, have somehow been regenerated and reborn as today's caring, compassionate Conservatives—the sort of Conservatives you could take home to meet your mother without fear of her being mis-sold a pension? Nobody believes that, not even the hon. Gentleman. We know that public services, social services and elderly care services need both resources and reform, and that is what we are committed to delivering. The problem for the hon. Gentleman is that he cannot commit to either.
Mr. David Hinchliffe: By a strange coincidence, the Health Committee is delivering at midnight a report that has direct relevance to the statement made by my right hon. Friend this afternoon. Obviously, I am precluded from referring to the conclusions of the report, but I can refer to evidence that is in the public arena. I was struck by the evidence from a particular witness, who suggested that the entire debate on the care of older people has been hijacked by the interests of the private care home sector.
I have listened carefully to my right hon, Friend's statement, and he is clearly setting out an agenda to move away from dependence on residential and institutional care. I welcome that, but I would also welcome a commitment that he will work with the private care sector to encourage it to move away from the outdated institutional models of care that countries such as Denmark abandoned many years ago.
Mr. Milburn: As always, I pay heed to what my hon. Friend says—as Chairman of the Select Committee on Health, and as a friend of mine. His comments make perfect sense. It is obvious that, at some point in their lives, some older people may well need residential or nursing care in a care home. Some may require supported or sheltered housing, and others may require intermediate care. However, survey after survey has shown one simple thing about older people's needs and desires: they want to live as independently as possible for as long as possible. Surely, we have got to get the pendulum swinging in the right direction. That means moving away from institutional forms of care, wherever they are provided, towards a new emphasis on more individualised forms of care that support people for as long as possible in their own homes.
A moment or two ago, the hon. Member for Woodspring (Dr. Fox) described these measures as a series of re-announcements, but real money backed by
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real reforms means that, for the first time—certainly since my Department has collected such figures—the number of elderly people supported by social services will rise to more than 1 million. The proportion of older people cared for in their own homes will also rise. That is getting the pendulum swinging in precisely the right direction. The hon. Gentleman is right to say that, to deliver these changes and resources, we need to work in concert not just with our friends and colleagues in local government and the voluntary sector, but with the private sector too. That is precisely what we will do, but let there be no doubt: the direction is now firmly towards more individualised care, and less institutionalised care.
Mr. Paul Burstow: I thank the Secretary of State for giving us an advance copy of today's statement. The Liberal Democrats certainly welcome the extension of direct payments, putting cash into people's hands so that they can buy for themselves the care that they think that they need most. However, will he ensure that those who organise the purchasing of their care in the independent sector do not then find that a VAT bill has been slapped on top, and that the money given therefore goes back to the Treasury? Will he also consider ensuring that direct payments are made to those currently in nursing homes or care homes? They expected a reduction in their fees to reflect the fact that they were receiving free nursing care, but that has not happened. Will he therefore create a direct payment scheme to ensure that they get the money themselves, rather than passing it on through care home owners?
In his statement, the Secretary of State described giving councils a financial responsibility for delayed discharge as if it were some form of new privilege. Is there not a danger that, rather than delivering better care, the culture of mutual blame and buck passing between the NHS and social services will be reinforced, with patients being yet further victimised as they become parcels bundled between the two? Does the Secretary of State share the concern that the Government's over-concentration on delayed discharge is leading to a rise in the numbers discharged prematurely, only to be re-admitted as emergencies? Can he confirm that the targets set for emergency re-admissions in the implementation programme for the NHS plan have been comprehensively missed, and that a growing number of elderly people are turning up in accident and emergency departments just days after their discharge?
Carers are the backbone of our care system. Given that the oldest carers tend to have cared for the longest time—and often at the greatest cost to their own health—will the Secretary of State offer carers a direct payment to enable them to purchase respite care for themselves, rather than running the risk of those payments being held up by social services departments that are ill able to pay for such care? Does he accept the findings of the Rowntree report, "Calculating A Fair Price for Care", which points out that there is a £1 billion black hole in the finances of the care home sector? Given that the latest figures from Laing and Buisson show that a further 13,100 beds have been lost in the last year alone, just when will the free fall in the care market end? When will the Government take the actions that are necessary to stop it?
The Secretary of State made much of the extra places that would be available in care homes. His own Department's figures show that 109,900 fewer people are

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receiving home care today than five years ago. Is that because cash-strapped social service departments have been shifting the goal posts, disqualifying the frail elderly and casting them out because they can no longer afford to provide the care that those people need?
The Secretary of State has told us that there will be real-terms growth in the future, but in the first three years of the Labour Administration there was a real-terms reduction in funds for social care. There is a huge legacy of underfunding to be made good. Will the Secretary of State say a little more about the baseline for his spending plans? Is he assuming that the extra services he has announced today will receive funds on top of the £1 billion that local authorities already spend in excess of what the Government consider necessary for social services?
The Conservative party has rightly identified over-regulation in the care homes sector as an issue, but the key issue was underfunding of the sector, and today's statement did not address that. What the Government have done is say that they are prepared to trade off the vulnerable young—not to give them the resources necessary for their protection—in return for looking after the elderly better, and giving them dignity. Such a trade-off should not be accepted.
Mr. Milburn: I suppose that that counts as a warm welcome for the package of measures for older people.
It is nonsense to suggest that just because we provide extra support for older people, we cannot provide extra support for working-age adults or indeed children. As I said at the outset, we will announce further measures in due course, and further resources for precisely those groups who need help from social services. The hon. Gentleman will find that for them, too, extra investment is being made and reforms are being introduced. I know that he opposes those reforms, but he will note that the overall volume of care is increasing dramatically.
When the hon. Gentleman spoke of the number of older people being helped to live at home, he was counting a partial figure. He was counting people who receive some form of home help and some form of personal care. He was not counting those who receive, for instance, meals on wheels or community equipment assistance. The hon. Member for East Worthing and Shoreham (Tim Loughton) smiles, but for literally tens of thousands of older people, that means the difference between independence and dependence. The number of people receiving support of that kind from local authorities is not falling but rising, and it is set to go on rising as a consequence of the extra resources being provided.
The hon. Member for Sutton and Cheam (Mr. Burstow) asked whether direct payments would be made to carers. Yes, they will. We will consult in August on changes to regulations on such payments, and we intend the new regulations to be in place by the end of the year. He is welcome to respond to the consultation, and of course we shall listen to what he has to say.
The hon. Gentleman commented on the reform contained in the package. I know what he wants: he wants to snaffle the resources, but he does not want any reform. For older people, that will mean more of the same. Not a single older person whom I have met—and probably not a single older person whom the hon. Gentleman has met—wants more of the same. Older people want change in the
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services delivered to them. They want more power, more say, more direct control and a wider spectrum of choice. Of course they want a working partnership between the health service and social services, but partnership is a fudge unless it is clear who takes responsibility for each aspect of an older person's care, and that is precisely what we will make clear.
As always, the Liberals bleat nationally about shortages of resources, but the story is rather different when it comes to the position locally. When, before the last local election, I visited Liverpool—whose council was controlled by the Liberal Democrats—what was planned then was not increases in services or resources for vulnerable older people, but cuts in those services and resources.
As always, the Liberal Democrats tell one group of people one thing, and another audience another. In fact, the hon. Member for Oxford, West and Abingdon (Dr. Harris) says different things to the same audience. That is the Liberal Democrats—no more believable than their friends on the Conservative Front Bench.
Mrs. Anne Campbell: I warmly welcome today's statement by my right hon. Friend, and especially those measures that will enable elderly people to stay in their homes longer. However, will he look carefully at areas such as mine, where housing costs are high and unemployment is low? The supermarkets can always afford to pay more than social services departments, which is causing real recruitment problems. That will not change if people try to recruit help through direct payments. Will my right hon. Friend see whether extra help can be made available for areas such as mine?
Mr. Milburn: It is very important to get the resources to the right parts of the country. As my hon. Friend knows, proposals already exist for redistributing resources within local government, and there will soon be proposals for redistributing resources in the NHS. However, pay rates are not a matter for me but for negotiation between local authorities and the trade unions.
Mr. Anthony Steen: I have difficulty in understanding how any hon. Member can disagree with the spirit and sentiments of what the Secretary of State has announced. Problems of detail remain, and it is right for my Front-Bench colleagues to mention matters of concern, but the general spirit of the statement must be right.
I draw the Secretary of State's attention to the problem in Devon. There, elderly and frail people who are homebound have a supply of deep-frozen food delivered every month, which they cook in a microwave supplied by the authority. They are like homebound Boy Scouts, or participants in an outward bound scheme. Every 28 days, another crate of deep-frozen food arrives. The idea of hot meals on wheels is disappearing, as are chiropody or home help services. The elderly people involved are going into residential care prematurely.
The Secretary of State says that he will ring-fence the package that he is offering, but is he aware that the Government have ring-fenced rumble strips, road widening and traffic humps, but not social services? As a result, money is going to pay for humps and road widening, but not for hot meals.
Mr. Milburn: I am grateful to the hon. Gentleman for his welcome to the announcement. The £1 billion that will

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go into social services for older people is a real-terms figure, not just a cash figure. I think that I am right in saying that, of that, some £650 million will be ring-fenced for specific purposes, with a strong emphasis on ensuring that there are appropriate home-care services for older people. I cannot comment on the position in Devon, but in general it must be right that older people being cared for at home get an appropriate range of services. I hope that the package of measures that I have announced will help people to receive precisely that.
Mr. Peter Pike: My right hon. Gentleman has announced a very welcome package this afternoon, but severe problems can arise when elderly disabled people living in two-tier counties—where there are both shire and district councils—need adaptations made to their homes. Can we iron out such problems? In Lancashire, there has been a major consultation exercise about care homes, and a decision is imminent. Should not that decision, which is for the county council to finalise, be deferred, so that close consideration can be given to the many important announcements that my right hon. Friend has made today?
Mr. Milburn: My hon. Friend is tempting me astray, and I want to avoid that at all costs. As he said, the decision is the county council's responsibility, but the Minister of State for Health, my hon. Friend the Member for Redditch (Jacqui Smith), is keeping a close eye on the situation in Lancashire.
My hon. Friend the Member for Burnley (Mr. Pike) makes an important point about the relationship between district councils and county councils. I understand the problem, as my area of Darlington suffered from precisely those difficulties before it became a unitary authority. It is incumbent on all parties involved, especially when they are of the same political persuasion—and I do not know whether that is the case in Lancashire—to sit around a table with their partners in the private and voluntary sectors and work the problems through. In that way they can ensure that no institutional barriers, of any size or shape, stand in the way of older people getting precisely those seamless services that they need.
Mrs. Angela Browning: The Secretary of State has announced a range of measures today relating to, for example, equipment, support for carers, support for people at home and for those going into residential care. What plans has he to make any changes to the means-testing that affects all those measures?
Mr. Milburn: As I said in my statement, overall there will not be changes to the means test. I think that the hon. Lady is aware that we issued guidance in November last year about domiciliary care services, suggesting new guidance to local authorities. However, one aspect of the means test is about to disappear altogether—again, subject to legislation—and that is charging for community equipment. The hon. Lady will be aware from her constituency, as I am from mine, that as well as having a long wait for assessment and for getting equipment, older people often face a charge for it. The equipment can be simple, like a pressure mattress, a hoist, a minor ramp or
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even help with toileting. If imposing those charges deters more older people from being cared for at home, we must address that.
Let me give the hon. Lady a gentle warning. It is all very well and good for Conservative Back-Bench Members to give long wish lists of improvements they want to see. They cannot have the wish lists unless they are prepared to commit the necessary investment.
Glenda Jackson: I congratulate my right hon. Friend and warmly welcome his statement. On direct payments, will individuals be precluded from selecting from whom they wish to buy services? Many of my constituents from the ethnic minorities live in extended families where no one person cares for elderly parents and no one is registered as a carer as such. Will it be possible for them to obtain the direct payment, which would be of enormous benefit?
Mr. Milburn: Yes, in those circumstances, they can. We know that where the direct payment system has been implemented, it has worked. It has not meant that local authorities incur more costs than they do in providing a mainstream service. Disabled people who have a direct payment have chosen to appoint a personal helper from a variety of places and have been able to tailor the care that they need to their own circumstances. That seems to be the right principle.
We are moving towards a care system, I hope in both health and social services, in which the needs of the individual come first. The system is designed around the needs and comforts of the individual rather than the individual always having to fit around the needs of the service.
Dr. Vincent Cable: Since it is essential to maintain public confidence in private care homes, can the Secretary of State explain why his Department is blocking the release of an independent inquiry into Lynde house in my constituency, which is owned by the leading private provider, Westminster Health Care? Given that I wrote to him about that six weeks ago as a matter of urgency, why have I still not had a reply?
Mr. Milburn: I do not know about the individual details but I am informed by my hon. Friend the Minister of State that she intends to write to the hon. Gentleman shortly.
Mrs. Ann Cryer: I agree with everything that my right hon. Friend has said. The majority of elderly people do not want to go into care if they can manage to stay at home, because home is where their memories and friends are. From what I have seen of my own relatives, sometimes when an elderly person is released from hospital, a care package is set up. Unfortunately, however, social services departments often do not have the time to check that the arrangements are carried out satisfactorily. The service provided could be the delivery of meals or it could be someone getting an elderly person up in the morning and putting her to bed in the evening, doing the cleaning, ironing or laundry. No check is carried out on such arrangements until someone such as myself telephones and moans about something.
Mr. Milburn: My hon. Friend makes an important point. It often happens, day in, day out, that there are good intentions on the part of those concerned, but unfortunately those intentions are not always carried through. That means that we need a better system for assessing need and then implementing the services that arise from that assessment.
None of this stuff is glamorous, but it is hugely important to literally hundreds of thousands of older people. We do not want to have an endless procession of professionals—the health visitor, the GP, the district nurse, followed by the social worker and others—trailing to the older person's door. We need one single assessment process, so that the older person's needs are assessed holistically at the point at which they enter the care system, a clear decision is taken as fast as possible, and then the services are put in place. That is what we intend to do.
As my hon. Friend well knows, none of that comes for free. It is useless to pretend that we can reform the system without investing in it, and that is the problem for Conservative Members. What they want, if they would—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I have let the right hon. Gentleman go on to subjects that Mr. Speaker has taken a restrictive view on in the past. The right hon. Gentleman is also lengthening his answers when other hon. Members are trying to speak.
Mr. Andrew Mitchell: Does the Secretary of State accept that his statement this afternoon will have been listened to with particular interest in Birmingham, and that there is huge cross-party concern that Birmingham's social services are in chaos? Will he give the House an undertaking that he and his Ministers will follow very closely what Birmingham social services do to pursue the laudable objectives that he has set out tonight? If he finds that they do not pursue them in the way that all of us would expect them to, will he and his Ministers intervene directly, either by using the powers that they already have from this House or by taking the additional powers that they need to ensure that Birmingham social services deliver a decent service to elderly and vulnerable people, which they are not doing at the moment?
Mr. Milburn: Yes, of course we will keep under active review our monitoring of social services in Birmingham. That is what we are doing and we shall continue to do it. I think that the hon. Gentleman is aware that, as a consequence of that active monitoring, extra resources have been found for the social services in Birmingham, which I am sure that he will welcome. I do not want to incur your wrath any further, Mr. Deputy Speaker, but the problem for the hon. Gentleman is that he cannot commit to the resources.
James Purnell: May I draw my right hon. Friend's attention to the efforts that have been made in Tameside, where the hospital, the social services and the mental health trust agreed a long time ago to pool staff and resources so as to create a one-stop shop for older people? Will he consider the fact that that has increased and improved services available to older people? Is not that the type of bottom-up reform that we should be trying to encourage, and will he reassure me
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that this money, which is very welcome, will be aimed at the reformers and not just at bailing out the under-performers?
Mr. Milburn: My hon. Friend is absolutely right. Throughout the country, the examples are now legion of much-improved co-operation between the health service and social services. That has come about because we have provided the legal vehicles to enable the local authorities that want to co-operate and the health services that want to co-operate to do so, whether they are pooling budgets or establishing care trusts.
My hon. Friend is right that we must ensure that we get the best use of the money by ensuring that there is greater, not less, co-operation between health and social care. Why? For the very simple reason that the older person who by and large needs the health service will very often also need the support of social services or indeed housing services, and we need to see all these public services working together.
Rev. Martin Smyth: The Minister will be aware that South and East Belfast HSS trust has developed a very fine partnership, which allows both domiciliary care and respite care for the elderly. I welcome the further advance in his statement today, because I remember the days when a young woman whom I can think of, who worked in the city hospital laboratory, had to pay superannuation while she went out to look after her mother. Caring for carers is important.
The right hon. Gentleman mentioned assessment. Can he assure the House that there are enough occupational therapists in the country to do the assessments in adequate time, thus encouraging the providers of the equipment and those who make adjustments to houses to get on with the work much earlier than they have been doing?
Mr. Milburn: I agree with the hon. Gentleman on both counts. On the model of care, Northern Ireland has had the distinct advantage for many years of combined health and social services. As he is aware, we are moving towards that in England and we need much more of it. He rightly made a point about the number of people needed to staff social care services for older people. There too, there is good news. For example, the number of physiotherapists entering training has increased by 62 per cent. since 1997 and the number of occupational therapists has increased by 63 per cent. and there are increases in the number of staff employed. As he is aware, that is partly about ensuring attractive careers for those people, but also about ensuring that there are adequate resources for the services that they provide.
Ms Meg Munn: I welcome my right hon. Friend's statement, which set out a range of services that will ensure that most elderly people can stay at home, where they want to be, rather than go into residential or nursing care. I welcome in particular the statement on the speed of assessments for equipment and the provision of equipment. Can my right hon. Friend tell me whether that includes minor adaptations to people's homes, which can often be crucial to ensuring that they get home quickly?
Mr. Milburn: My hon. Friend speaks with real knowledge of these issues from her previous occupation

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outside the House. As she is aware, there are basically two strands of resources: community equipment grants, which we are going to enhance as I described and, for larger adaptations such as ramps or walk-in showers, the disabled facilities grant, which is operated by the Office of the Deputy Prime Minister. There too, there is good news, because the resources committed to the disabled facilities grant are, or will be, 50 per cent. higher, I think, in the next financial year than they were in 1998–99. She is right to issue a note of caution that we need a greater alignment between the resources available for small pieces of equipment and more major adaptations to housing. I can assure her that my hon. Friend the Minister and I will discuss those issues with colleagues.
Mr. Elfyn Llwyd: The Secretary of State said that one care system was required, not competing systems, and I welcome what he said about intermediate care services being free, whether they are provided by the health service or social services. That principle being established, will some thought be given to those people who require long-term care?
Mr. Milburn: I know the hon. Gentleman's position and that of the Welsh National party on this matter. We studied the issues around personal care at the time of the Sutherland commission and my right hon. Friend the Chancellor and I did so again in the lead-up to the Budget. In the end, we decided that that was not the right way forward for a simple reason: if we went down the personal care route, it would involve spending substantial extra public resources on the minority of better-off pensioners. Perhaps that is what the hon. Gentleman and his hon. Friend the Member for Banff and Buchan (Mr. Salmond) want to achieve; I want to commit those resources to more services for more older people, in particular for poorer older people.
Mr. Hilton Dawson: I commend my right hon. Friend for the good sense and compassion of his statement—allied to investment and modernisation, that is four ways in which the Labour party differs from the Opposition. In welcoming his response to the question about Lancashire, will he agree that this statement offers the opportunity for the private sector to develop services creatively in partnership with local authorities? It certainly gives organisations such as the Lancashire Care Association the opportunity to refrain from the very destructive industrial action that they have in effect been taking over their care home fees and to come together to create a much better service for elderly people.
Mr. Milburn: I think that I had better keep out of that particular local dispute. In general, my hon. Friend is
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right. As he is aware, it is a condition of the building capacity grant that we issued in November 2001 not only that this money should be spent wisely—the £300 million—but that in addition it should foster much closer co-operation between local authorities and between those authorities and the independent sector, including the private and the voluntary sectors. That is precisely what we would expect to see, not only in his part of the country, but in every part of it.
Mr. James Paice: The Secretary of State has bandied about a number of figures: thousands of people will gain; 70,000 would receive some free services and tens of thousands more would receive direct payments. Can he be more specific? Precisely who will receive that assistance, particularly direct payments? If he is not going to alter means-testing levels, can he be more precise? Who will not be entitled to direct payments?
Mr. Milburn: I thought that the hon. Gentleman was here when I made my statement but that might have been in body rather than in spirit. I said that henceforth every single elderly person who is assessed as part of the reformed, faster assessment process that I described will be offered the choice of a direct payment. In terms of the number of people offered that choice, that is liable to run into many hundreds of thousands.
I personally think that that is a good thing, not a bad thing. I want to empower older people. People should not be just passive recipients of services. They should have the choice and ability to shape services for themselves. I cannot think of a better way in social care services than direct payments. There will be direct payments on offer for all. Of course it is for the elderly person, their carers and families to decide whether to take advantage of that.
The hon. Gentleman asked how many other people would benefit from the package of measures that I have outlined. In terms of the number of households receiving intensive home care support, an extra 30,000 will benefit. In terms of extra rehabilitation services, an extra 70,000 will benefit. In terms of the number of people who are supported in residential and nursing care homes, it will run into several thousands.
Overall, this package of measures will benefit approximately 440,000 people. On top of that, it will benefit the 230,000 old people who are currently supported in the care homes sector. That is because we have committed the investment. The issue for the hon. Gentleman is whether he or his Front-Bench team are prepared to match it.
Several hon. Members rose—
Mr. Deputy Speaker: Order. We must now move on.

Points of Order
5.42 pm
Mr. Chris Bryant: On a point of order, Mr. Deputy Speaker. I know that you will be aware of the correspondence between the Speaker and me on Rhondda Cynon Taff county borough council's practice of circulating letters to councillors that I had written confidentially on behalf of my constituents and addressed directly to council officers. I am grateful to the Speaker for his robust written correspondence with me on the matter but for further clarification can I check whether you feel that that practice is right and proper? It is a clear breach of the confidentiality that a Member of Parliament should be able to expect in relation to correspondence on behalf of his constituents. Do you hope that the chief executive of Rhondda Cynon Taff will ensure that that practice will end as soon as possible?
Mr. Deputy Speaker (Sir Alan Haselhurst): I am grateful to the hon. Gentleman for giving notice of his intention to raise the point of order this afternoon. Mr. Speaker has asked me to say that constituents who approach their Member of Parliament are entitled to expect that the issues raised will be dealt with in a confidential manner. Where the Member considers it appropriate to refer the issue to a local government officer, it is Mr. Speaker's view that the correspondence should remain confidential between the constituent, the Member and the local government officer to whom the case has been referred, unless specific permission to make it available to other parties has been granted by the constituent. I hope that that makes the position clear to the hon. Gentleman and to the House.
Mr. Graham Brady: On a point of order, Mr. Deputy Speaker. I have just come from another place, where I was observing proceedings on the Education Bill from behind the Bar. I was surprised to hear in a response given by the Minister, Baroness Ashton, reference to a written answer supposedly given to me following a question that I tabled on Thursday—I have not yet received the answer to that question.
I make no complaint about Baroness Ashton, who gave a courteous apology in another place for the breach of courtesy, but I want to raise with you, Mr. Deputy Speaker, what I think is a gross breach of courtesy. Members in another place were given information contained in a written answer for my attention before that information had been provided to me.
Mr. Deputy Speaker: The hon. Gentleman will understand that I am not in a position to give him an instant answer to that point. I am sure, however, that Mr. Speaker will examine the matter, and I hope that, if an omission has taken place, it can be put right as soon as possible.

BILL PRESENTED
  LOCAL SUSTAINABILITY
  Sue Doughty presented a Bill to require the drawing up and implementation of strategies for promoting and increasing local or regional sustainability; to require the setting of targets for the implementation of those strategies; to specify the functions of the Secretary of State and the National Assembly for Wales; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on 14 November, and to be printed [Bill 188].

Redundancy Payments
5.45 pm
Mr. David Crausby: I beg to move,
That leave be given to bring in a Bill to remove the maximum amount of a week's pay for the purpose of calculating redundancy payments.
When the Redundancy Payments Act 1965 was introduced, the Government restricted the amount of statutory redundancy pay per week and the maximum number of weeks to 30. The cap on redundancy payment currently stands at £250 a week, and I am delighted to be given the opportunity to introduce this Bill, which is designed to eliminate the injustice faced by those who suffer the pain and anguish of redundancy, many of whom have previously earned above the £250 a week cap only to find that their redundancy pay entitlement is limited to £250 a week.
I am grateful that the Employment Relations Act 1999 ensured that a limit on a week's pay would increase in line with inflation. In a growing economy, however, wages inflation will inevitably run higher than the retail prices index, and the relative value of a week's pay calculation will fall further and further behind. I am not, of course, asking for a limitless amount, as that would be ridiculous in the case of those who are in receipt of tens of thousands of pounds per week. The cap should, however, be aimed at the level of average earnings, and it should be linked to increases in the average wage.
The Redundancy Payments Act 1965 was introduced to compensate workers who had lost their jobs. It was set up with a maximum payment of 30 weeks' pay after 20 years' employment. The effect of the maximum weekly payment is to limit the level of compensation to £7,500 to an employee who, for example, is aged 60 and has worked for the company concerned for as many as 45 years. With five years to wait for a pension, £7,500 is little enough on which to exist. When the earnings of the individual concerned have previously been above the £250 cap, however—say £500 a week—the redundancy compensation would consequently be reduced to 15 weeks' pay instead of 30 weeks' pay.
It should be obvious that, for elderly workers with little chance of further employment, those levels of redundancy compensation are derisory. A maximum weekly payment cap was included in the 1965 legislation, when employers received a rebate of 40 per cent. from the Government, and the Government of the day undoubtedly wanted to restrict the Treasury's exposure to such claims. That has now changed, with the rebate that employers received being reduced initially and then removed entirely. Employers were properly compensated for the removal of the rebate by a reduction in national insurance contributions at the time. That was done because some people considered that it was too easy for certain employers to use redundancy as a first option and to claim a rebate from the Government subsequently.
In its day, the Redundancy Payments Act was an important and welcome step forward for workers' rights. It has barely changed in nearly 40 years, however, and advances in employees' rights in other countries have passed by the British worker. To be fair, whenever there are major high-profile redundancies in this country, political pressure is inevitably exerted to provide help for
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those affected. However, the problem comes with small-scale redundancies. When added together, they are just as damaging to the community. As with a large-scale factory closure, they are just as traumatic to the individual who suffers the loss of his or her job. The time has come for the working people of this country to be paid by right simply in relation to what they have lost. They should be compensated at least at the levels that their counterparts in Europe enjoy.
I argue that point not just from the standpoint of more financial compensation, but as much in the cause of deterring multinational employers from selecting British workers simply because it is cheaper and easier to make redundancies in the UK than it is elsewhere. For example, in the Netherlands and Spain, regional employment offices must authorise redundancies. In France, Germany, Austria and Luxembourg, employers are required to fund a social plan that may cover both financial compensation and measures to alleviate the impact of redundancies.
In France, employers must consult works councils or staff representatives and send a note of the consultative meeting to the labour inspectorate. They must consider retraining, shorter or reorganised hours and two consultation meetings are required with a gap of 14 to 28 days. In Italy, employers must inform workers and, within seven days, a joint review of proposals that can last 45 days must consider alternatives to the redundancies. Individual notice is then governed by collective agreement, which involves a two-stage procedure whereby workers are covered by lay-off provisions and then by mobility provisions. Faulty procedure can mean reinstatement. The House of Commons Select Committee on Trade and Industry considered the relative UK position in January 2001. Its report said:
"The suggestion that it is easier and cheaper to dispose of employees in the UK than elsewhere seems to us to have been shown to be factually correct."
I do not want to put excessive burdens on British employers, especially those in manufacturing industry. They need all the help that they can get in the current circumstances. However, the truth is that UK law gives poor protection in comparison with legislation in other countries. The French courts clearly demonstrated the difference, to the cost of Marks and Spencer when the company announced the attempted closure of its continental branches in March 2001. Our colleagues and competitors in Europe are unlikely to allow employers to make redundancy easier, and neither should they. It is therefore intolerable that, in the event of a need for a reduction in the number of employees, the burden should be disproportionately shouldered by the British working man and woman.
We could, of course, pursue justice through European legislation so as to level the playing field, but our Government argue that subsidiarity should apply and that such matters should be left to national Governments. That is fine just as long as we do not allow British employees to miss out and remain the poor, redundant employees of Europe.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Crausby, Jim Dobbin, Syd Rapson, Mr. Michael Clapham, Mr. Lindsay Hoyle, Geraldine Smith, Mr. Kevan Jones, Mr. Bill Olner, Mr. George Howarth, David Wright, Mr. Anthony D. Wright and John Mann.

Redundancy Payments
  REDUNDANCY PAYMENTS
  Mr. David Crausby accordingly presented a Bill to remove the maximum amount of a week's pay for the purpose of calculating redundancy payments: And the same was read the First time; and ordered to be read a Second time on Friday 14 November, and to be printed [Bill 189].
DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
DELEGATED LEGISLATION

  LOCAL GOVERNMENT FINANCE
  That the Local Government Finance (England) Special Grant Report (No. 106) (HC 1019) on Special Grants for Performance Pay Progression for Teachers on any Qualified Teacher Pay Scale, for Performance Pay Progression for Teachers on the Leadership Group Pay Spine, and for Threshold Payments for Teachers Employed by Local Authorities in Children's Homes, which was laid before this House on 10th July, be approved.—[Mr. Sutcliffe.]
  Question agreed to

Public Expenditure
[Relevant documents: Minutes of Evidence taken before the Treasury Committee on 17th and 18th July on the Spending Review 2002, HC 1092-i and U.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sutcliffe.]
5.55 pm
The Chief Secretary to the Treasury (Mr. Paul Boateng): At the heart of this spending review is a passionate belief in the value of public services and in the potential of the British people. It also shows a passionate belief in the value of education in achieving that potential and of health in maintaining it. It recognises the need always to drive forward, with an emphasis on science, the creation of a competitive and productive economy with enterprise at its base. It also recognises, however, that common sense demands that, to deliver the outcomes that we desire for our country, there must be new investment. Common sense, too, dictates that this investment will not be enough without reform. Passion and common sense, investment and reform are the linchpins of this spending review.
Compare and contrast that with the approach of Conservative Members, a dispirited and lacklustre bunch still reeling after the letting of much blood. By the look on their faces, I fear that some of them are a little crazed by it all. The chairman of the Conservative party has gone; the shadow Chief Secretary to the Treasury has gone. Both have apparently been promoted. However, let me send my felicitations to the former shadow Chief Secretary, the hon. Member for Buckingham (Mr. Bercow). We will miss him; they do not often make them like that. That at any rate was clearly the view of one of the shadow Chancellors, but I will come to him in a minute. I genuinely want to congratulate the hon. Member for Arundel and South Downs (Mr. Flight) on what is a genuine promotion. He has worked hard for it, and I hope that he lasts a little longer than his predecessor.
There is something of the night about recent events. For instance, why is the shadow Chief Secretary, whoever it was to be, not opening for the Opposition in this debate? That is the precedent in the House. [HON. MEMBERS: "No."] Opposition Members must get their facts right. The previous debate on the spending review, the one before that and the one before that were all led by the Chief Secretary and the shadow Chief Secretary. A week ago, why did we discover that the shadow Chief Secretary, whoever it was to be, would not lead for the Opposition? The shadow Chancellor was going to lead, so could it be that he was absolutely determined that, whoever was to be made shadow Chief Secretary, there was no way that person would lead for the Opposition?
Mr. Michael Howard: Since the Chief Secretary asks the question, I will give him the answer. We were told that, if I opened in the debate, the Chancellor might speak in it. It is a matter of great regret that he is not coming to the Dispatch Box to defend his spending review.
Mr. Boateng: They were never told any such thing. Let me suggest a reason—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. It would be a good idea if Members settled down. This is an important debate that is unfortunately taking place in restricted time.
Mr. Boateng: I am much obliged, Mr. Deputy Speaker.
The reason why the hon. Member for Arundel and South Downs was not allowed to speak for the Opposition on this matter—
Michael Fabricant: On a point of order, Mr. Deputy Speaker. As you rightly said, this is an important debate. The Minister has been speaking for five minutes, yet so far he has not begun the debate. Do you not think that that is an abuse of the House and, more to the point, an abuse of Back Benchers?
Mr. Deputy Speaker: Fortunately, the Chair has no responsibility for the content of the speech of any right hon. or hon. Member. I was merely suggesting that the debate on public expenditure can occupy only just over four hours, so Members should quieten down so that we can listen to the arguments.
Mr. Boateng: It was the shadow Chief Secretary, the hon. Member for Arundel and South Downs, who rather gave the game away as regards the Conservative approach to the spending review. In a memo to the shadow Chancellor, he said that the reforms that the Tories would be proposing would end the NHS monopoly and entail those who can afford it making some payment for health care services. That is the view of the new shadow Chief Secretary about the NHS and about charges. That is the truth of the matter.
Mr. Howard Flight: Will the Minister add that the Government came by that confidential memo by improper means?
Mr. Boateng: I can understand why the hon. Gentleman deny the accuracy of the quote. I shall give him the opportunity to deny either that that was his view then or that it is his view now. He is not doing so. We know, then, that when Conservative Members talk about reform, they mean charging.
Gregory Barker: Have the Government ever put up prescription charges? Do you charge for spectacles, dental checks or dental care, or are there no charges in your NHS?
Mr. Deputy Speaker: Order. There are none in mine.
Mr. Boateng: The reality is that the hon. Member for Arundel and South Downs was talking about private insurance, which is the reform that the Conservative party has in store for this country should it ever again have the opportunity to exercise power.
The spending review is focused around four key objectives: raising productivity so that Britain can be more prosperous; extending opportunity by investing in education; creating strong and secure communities
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matching rights with responsibilities; and, in relation to Britain and the wider world, maximising the opportunities for our country and for managing globalisation and minimising the insecurities of the world in which we live. Economic stability and sound public finances are the basis upon which better public services can be delivered.
Difficult decisions had to be taken in the first term—the independence of the Bank of England, tough fiscal rules and strict control of the public finances. No one could pretend for one moment that any of that was easy, but it worked and it provided the basis on which to build. Five years on, the state of our public finances is sound and, despite uncertainties in the global economy, inflation is under control, interest rates have been low and stable, and employment and growth continue to rise. Over the economic cycle, we will meet our fiscal rules even on the most cautious case. We are saving £20 billion a year on debt interest and a further £10 billion through cutting the cost of unemployment. Those extra resources have made it possible to recruit more nurses, doctors, teachers and police officers than at any time in the past two decades.
Mr. John Redwood: Will the Minister give way?
Mr. Boateng: In due course.
We have never entered a period of global uncertainty in a stronger position than we do now. We will steer a steady course with the strength to make decisions for the long term. That is what the spending review is about. Holding strictly to the total spending envelope that the Chancellor set out in the Budget, we are raising departmental spending from £240 billion this year to £263 billion next year, to £280 billion in 2004–05, and to £301 billion in 2005–06—in total, by 2006, that will be £61 billion a year more for improved public services. That is what Conservative Members cannot bear to hear.
Mr. Redwood: Can the right hon. Gentleman explain to my constituents in Wokingham why our primary care trust has just received a letter saying that instead of the 76 general practitioners that we currently have, we should have only 63, and that funding is to be adjusted on that basis? Is not that a cut rather than an increase?
Mr. Boateng: The right hon. Gentleman is calling for more, not fewer, resources. He and his right hon. and hon. Friends must answer these questions. If they oppose our spending plans, what are theirs? What are their priorities and policies? What would they cut? How would they raise the money? They say absolutely nothing about that. The right hon. Gentleman knows that in supporting the money that we are passporting directly to schools on the front line, he is opposing the policies, such as they are, of his Front Benchers. He should have the honesty to say as much.
The increased investment must be matched by real and radical reform. In each area of service delivery, we will ensure that new resources are tied to reform and results. We are setting demanding national targets; introducing independent and open audit and inspection; giving frontline staff the power and flexibility to deliver; extending choice; and rewarding success and turning round failing services.
Mr. George Osborne: Will the Minister give way?
Mr. Boateng: In due course.
In the Budget, we set out our programme for the NHS. None of us can know when we might need the NHS. All of us are entitled to use it without fear of charges and without having to worry about the consequences for our loved ones when we do. That is the great success of the NHS. It is an act of collective will on the part of the British people that we will all take responsibility one for the other to relieve us all of the fear and pressure of growing ill and growing poor at the same time. That is what we owe to the founding fathers and mothers of the NHS. That is the legacy that we inherited and are determined to take forward, and that is what Conservatives opposed in 1945 and would wreck now if given half a chance.
In April, there was a Budget for the NHS. Now, there is a spending review for education. That is as we promised: schools and hospitals first. The only guarantee of prosperity in an uncertain world is the skills that are needed to cope with change. Investment in education and skills—investment that was neglected by the Conservative party—is the best guarantee of families' future prosperity, and that is the guarantee that we give to the people of this country. However, resources must be tied to reform. Reform of the primary school system has helped teachers and children to achieve a step change in standards. Today, 75 per cent. of 11-year-olds achieve the expected literacy standards, compared with just 57 per cent five years before. The work goes on. Our next task is to extend those improvements to secondary schools. The Secretary of State for Education and Skills has announced her reforms to raise standards, to enhance choice and diversity and to tackle poor pupil behaviour in our secondary schools, so that schools can develop the talents of all.
We are already delivering real results. There are more teachers, class sizes have fallen, more than 125,000 adults have been helped to improve their basic skills, and the number of students in our universities has increased by 87,000. However, there is no room for complacency. We want a culture of continual improvement. We want more children to achieve higher standards of literacy and numeracy, more teenagers to get five good GCSEs, and more young adults to stay in education and training—50 per cent. of them with experience of university by 2010.
Education is the best defence against changing circumstances; it is the best hope of future prosperity. Investing in the children of today is investing in the productive potential of tomorrow. This spending review not only divides up the cake within closed national boundaries, but seeks to make the cake bigger in an open, global economy. That is true in education, science, competition, planning, knowledge transfer, enterprise and regional development.
In each of those areas we are providing increased resources: a 10 per cent. real-terms rise in the science budget each year; and an increase in the budget of the Office of Fair Trading. from £34 million this year to £55 million by 2005–06. We are promoting independence and delegating responsibility; there are independent competition authorities, and new powers for regional
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development agencies over planning, transport and tourism. This is about the enterprise-driven economy—one in which competition and productivity go hand in hand.
There is investment in each of those areas and in housing, neighbourhood renewal, transport, the countryside, and resources to assist the implementation of the Curry report. There are resources to assist the voluntary and community sector, and the police and the Prison Service. There is investment in defence to combat the insecurity of an interconnected world, and in development as we take up arms in the war against want. That is investment that must be matched by reform.
Mr. Osborne: I am grateful to the Chief Secretary for allowing me to interrupt his pocket-book sloganising to answer my question. While he is talking about spending increases, will he put this debate in context and tell us which taxes have gone up to pay for them—and where those tax increases were spelled out in Labour's manifesto?
Mr. Boateng: The hon. Gentleman normally does better than that. There were many of us who were glad that he was not on holiday and hoped for his preferment. [Interruption.] Let me answer his question. My right hon. Friend the Chancellor laid out our policies for taxation in the Budget. As a result of the decisions that he has taken, our rates of company taxation are lower than those of all but 12 of our partners and competitors in Europe. It is because of his decisions that this country is now a preferred destination for inward investment, second only to the United States. That is because of his fiscal policies. They are the envy of the world, and the hon. Gentleman ought to have the grace to accept that.
Mr. Alex Salmond: Will the Chief Secretary give way?
Mr. Boateng: No, not at the moment.
It is important that we ensure that investment is linked to reform. That is the significance of the public service agreements. There has been much interest in the past few weeks in PSAs, and it is right that there should be. It is important that we have a proper debate, but there should not be any great party political difference on the subject. PSAs are about transparency, accountability and good governance—an agenda to which we can surely all sign up.
The charge is that PSAs are in some way a manifestation of this Government's supposed centralising tendencies, but in fact the reverse is true. By setting clear and measurable targets, publishing information on those targets, and collating the information in one easily accessible location, we empower not the Government but the people who elected us and who can use the information to hold Departments to account.
The National Audit Office has said:
"the introduction of Public Service Agreement targets, and in particular the move to outcome-focused targets, is an ambitious programme of change which puts the United Kingdom among the leaders in performance measurement practice."
Even right hon. and hon. Members who represent the Liberal Democrat tendency ought to recognise and welcome that. [HON. MEMBERS: "Where are they?"] At least one of them is present, and that is more than enough. [Interruption.] Good, another one has joined us.

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We must take this debate forward on a clear understanding of PSAs. They set out a Department's plans to deliver results in return for the investment that it receives. They are focused on outputs and not inputs. They provide a clear statement of priorities and a clear sense of direction around which all those involved in delivering can focus. They are part of a culture of transparency and accountability, but require an attitudinal shift: that all of us engage and recognise the need for continued improvement.
Mr. David Cameron: Will the Minister explain why the Lord Chancellor's Department's PSA target of paying small businesses within 30 days had to be dropped after conversations with the Treasury?
Mr. Boateng: The hon. Gentleman must recognise that the inclusion of such a target is designed to drive forward performance.
Mr. Cameron: So why was it dropped?
Mr. Boateng: If the hon. Gentleman examined the Department's performance, he would see that it is the Lord Chancellor's Department's intention and practice—it has delivered on that intention and practice—to provide a better service to small businesses. The whole point of such a target—[Interruption.] Opposition Members who question the need for targets and their value should give some credit where there has been achievement. They need also to understand that the whole point of the targets is not that they should run in perpetuity. It is rather that they should provide a focus for improvement and that that improvement should be delivered. That is the case for the example that the hon. Gentleman has cited.
Mr. John Bercow: Will the right hon. Gentleman give way?
Mr. Boateng: No, not at the moment.
As part of the spending review process, Departments set out alongside their bids their proposed PSAs. They are discussed along with the Departments' track record of delivering against existing targets, and once agreed, Departments are then responsible for reporting progress and delivering on their PSAs. The advantage of that approach is that it addresses precisely the question on Departments' performance that hon. Members on both sides of the House have raised on behalf of their constituents: they provide the opportunity to examine whether there has been progress.
Mr. Edward Davey: While the Chief Secretary is on the subject of PSAs, will he explain how the Foreign Office will meet its top PSA, which includes a target of reducing poppy cultivation in Afghanistan by 70 per cent. within five years?
Mr. Boateng: The reason why such a target exists ought to be self-evident to anybody who is concerned about drugs on our streets. When we are applying large sums of public money in order to enable the Foreign Office, the MOD and agencies that have responsibility in
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this area to take forward our anti-drugs policy, it is absolutely right that we should be able to demonstrate at the end of a prescribed period that that has made a difference.
Mr. Davey: That is stupid.
Mr. Boateng: There is nothing stupid about it. It is clearly important that Departments understand that they need to work in ways that deliver results and that those results should be measurable. Those who cry out against such targets have to explain how they intend to ensure that value for money is secured and that Departments respond in a way that is capable of demonstrating that they are making best use of the money available to them.
Mr. Bercow: Will the Chief Secretary give way?
Mr. Boateng: No, I will not allow the hon. Gentleman to intervene at the moment.
This is our responsibility, and it is ultimately for the House, on the basis of the evidence approved by the National Audit Office and the Office for National Statistics, to judge whether targets have been met and to hold Ministers and Departments to account for their successful delivery. That is about transparency and accountability, and it is a vital part of good governance.
Roger Casale: My right hon. Friend is right to stress the importance of public service agreements, which will help the public, above all, to see that the extra money that the Government are putting into public services is being wisely spent. Under the Conservative Government, public service agreements—had they existed then—would have helped the public to register the fact that no investment was being made.
Mr. Boateng: My hon. Friend makes an excellent point. Alongside PSAs lie independent audit and statutory inspection. Departments and agents are fully accountable for their performance against those targets.
Mr. Bercow: I am extremely grateful to the Chief Secretary for giving way to me. Unfortunately, his rhetorical overload cannot camouflage the Government's dismal record of underperformance. Can he answer this very straightforward question: why did the Treasury set itself a public service agreement target and guarantee to measure the level of Treasury output, only to announce now that
"it has not proved possible to measure aggregate Treasury output"?
Why should we have any confidence in the Government's performance on other public service targets if the Treasury cannot even identify and meet its own?
Mr. Boateng: Because we have met our other targets, and because 90 per cent. of all the targets set by the Government for delivery in 2002 have been met or are on the way to being met. The reality is that all the huff and puff in the world cannot hide the fact that we need to make sure that resource delivers improved performance. We have to have a transparent and accountable system, and PSAs are the best way to achieve that.
PSAs are also about devolving responsibility from Whitehall. They are about empowering primary care trusts, head teachers and governors in schools, police

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commanders and local service providers—all people to whom the Opposition would deny resources and who saw the very infrastructure within which they work eroded under 18 years of successive Conservative Administrations. We are about ensuring that by working with new partners in the private, voluntary and community sectors we create a system of public service delivery that is focused on outputs and reform and which delivers a better quality of service to all our people. We want a strong, vital and independent voluntary and community sector delivering public services in a way that promotes choice, flexibility and consumer focus, reaching out to disadvantaged groups and tailoring services to their needs. Sure start and the children's fund demonstrate how much the public and voluntary sectors working together can achieve.
It is no use the Opposition describing partnership as cliché. We have made available a significant increase in child care provision. Our approach has created and is in the process of delivering 250,000 child care places by 2006, targeted on the most disadvantaged areas. That is not only about ensuring that children get a good start in life, but about bringing women back into the workplace and enhancing and improving productivity—all things that the Conservatives failed to do when they had stewardship of our economy.
We want to build on the partnerships that have been created between the voluntary and community sectors and Government. In the course of the cross-cutting review of the delivery of public services by the voluntary sector, it became clear that there were still areas in which improvement was needed and that barriers needed to be removed. As a result, I can announce that there is to be a new one-off three-year fund worth £125 million to help such organisations in their public service work. Called futurebuilders—[HON. MEMBERS: "Oh dear."]—the aim of the fund is to increase the scope and scale of voluntary sector service delivery, to remove obstacles in the path of organisations that want to deliver services, and to provide the means to modernise operations in the long term.
It is no use the Opposition saying, "Oh dear," because as we speak voluntary organisations such as the Leonard Cheshire fund are out there, working with local authorities—[Interruption.]
Mr. Deputy Speaker (Sir Michael Lord): Order. May I say to the hon. Member for Ealing, Southall (Mr. Khabra) that that is the second time his phone has gone off in the Chamber? As far as I am concerned, that is one of the most serious crimes that an hon. Member can commit.
Mr. Boateng: Voluntary organisations are out there, working with local authorities and community groups, to deliver a better quality of service to some of the most disadvantaged and vulnerable sections of our society. We are about making sure that such organisations have at their disposal the means to deliver and take forward their plans, thus empowering and enabling local communities to take responsibility for the vulnerable, the disabled and the disadvantaged in ways that enable better delivery of public services than has hitherto been provided.
Public services exist to serve the public. When they are underfunded, as they were under the Conservatives, the people are the poorer. When they underperforrn, as they
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do when management is weak and the right systems are not in place, the people are let down. High performance must be rewarded with more responsibility and more resources. Failure cannot and will not be tolerated, so in the present review, for the first time, Departments are to introduce effective sanctions against failing institutions—not withdrawing resources and so punishing the public, but bringing about that attitudinal, cultural and systematic shift to focus attention on performance and deliver against targets of continual improvement.
That is not something to be rubbished or decried. Failing schools, education authorities, colleges, social services, local authorities, police forces and prisons—all will be enabled and empowered to deliver, but all will understand that if they fail to do so, there will be consequences. We cannot allow resources to be wasted.
We have set out a framework for progress—a framework in which resources are tied to reform in order to deliver results. It is a vision for public services that has at its heart the concrete steps that it is necessary to take to enhance opportunity and security for all in this changing world. Above all, it is about bringing together people in partnership for change—[HON. MEMBERS: "No!"] The Conservatives do not like the notion of partnership—they do not accept that there needs to be a change in the way in which we deliver services. They do not accept that because they do not trust the people and they were never prepared to make the resources available. They do not accept that because, fundamentally, they do not like public services.
We believe in public services. We believe in the values and ethos of public service. Only the Labour Government can be trusted to protect that and take it forward. That is why we are sitting over here, and the Conservatives are condemned to remain over there.
6.29 pm
Mr. Michael Howard: Unlike the Chief Secretary, who took eight minutes—almost a quarter of his speech—before he got round to the spending review, I want to talk about the review. Last week, the Chancellor had the opportunity to signal real improvements in public services to end the crisis in the national health service, to bring order to classrooms where, too often, disruptive children prevent standards from rising for all and to get the police back on the streets fighting crime. Our public services can and must be improved, but to improve them requires vision, leadership and real reform. These things the Government have constantly promised, but last Monday the Chancellor once again failed to deliver them. Today, despite the fact that he has taken personal charge of delivery in this area, he has not even come to the Dispatch Box to defend the Government's record.
Perhaps that is no surprise. Last week—
James Purnell: Will the right hon. and learned Gentleman give way?
Mr. Howard: No. The hon. Gentleman will have to wait.
Last week was not the Chancellor's first spending review, but his third. The country can be forgiven for a sense of deja vu because his recipe is always the same. First, he announces record amounts of money. We have his word for that. In 1998, the extra money was said to

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be the biggest ever investment in health and education. In 2000, it was record investment. Last Monday, it was more of the same.
Then comes the spin. With the Chancellor, not everything is what it seems. [Interruption.] It is no good the Chancellor chuntering away like a man possessed on the Government Front Bench. He should listen.
The Chancellor refuses to update his growth forecasts, even though most commentators think that they are optimistic. However, he is quick to take credit for changes in forecasts of unemployment and interest rates. If new forecasts help his presentation of public finances, he does not hesitate to use them. If they do not, he ignores them. Why did the Chief Secretary not explain why the Chancellor has ducked repeated requests to say whether he envisages yet further tax rises, even in this Parliament? He avoided the question six times on "Today" and he did so again last week in response to questions from my hon. Friend the Member for Buckingham (Mr. Bercow). Despite repeated questions, he did so yet again before the Treasury Select Committee. Why cannot the Chancellor and the Chief Secretary come clean on that?
Secondly, there are questions about the way in which the public debt is classified. Both the National Audit Office and the Statistics Commission have queried the way in which the Chancellor proposes to deal with the £21 billion borrowing of Network Rail. Why are not the Government including that borrowing in their accounts? Why is it being taken off-balance sheet? Is that not a classic case of Enron-style accounting?
The third ingredient in the Chancellor's recipe, after more money and more spin, is that he flunks real reform. Real reform means allowing teachers to restore discipline in the classroom, police officers to get back on the streets to fight crime, and doctors to treat patients without constant diktats from Whitehall. It means trusting professionals to get on with their jobs. It also means being willing to learn from success in other countries. Measured against those benchmarks, real reform of our public services has not taken place, is not taking place, and never will take place under this Government.
Mr. Tom Harris: The right hon. and learned Gentleman rightly says that reform is key. Does he agree that new funding is key? Will he commit himself to matching the extra funding that has been provided by the Government?
Mr. Howard: We will not be bound by the spending commitments that derive from policies that are failing. In due course, we shall bring forward our own spending commitments, which will derive from our policies, which will succeed. That is the difference.
David Wright: Since 1996–97, spending per pupil in the right hon. and learned Gentleman's constituency has risen by 18.9 per cent. Will he be writing to every head teacher in his constituency to say that that cash will disappear?
Mr. Howard: The hon. Gentleman may have overlooked this, but we are talking about the Chancellor's
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spending review and his plans for the future, not about what has happened since 1996–97. We are concerned with the future, rather than the past.
The truth is that Ministers want to improve public services. Of course they do. I understand that and I give them credit for it, but they simply do not know how to. As a result, they can only spend more money each year. However, more money without real reform will not work.
The Chancellor's substitute for reform is targets, about which the Chief Secretary waxed—I cannot say that he did so eloquently, but he waxed. Last week, the Chancellor gave us a new batch of public service agreements, and they are worth looking at in a little detail. For the past four years, we have been told that they lie at the heart of the Chancellor's strategy, that they are central to his drive to improve public services, and that they form the very bedrock of his agenda. He announced them in his very first spending review in a fanfare of publicity, saying that they were an "essential change", helping to ensure that the Government would do what they did "to the highest standard".
What has happened since? One independent analysis found that no fewer than 44 per cent. of the targets set by the Chancellor had not been met by the required deadline.
Four years ago, the Chancellor placed particular emphasis on targets for efficiency improvements. The purpose of these, he said, was to
"ensure that more resources go directly to front-line services."—[Official Report, 14 July 1998; Vol. 316, c. 188.]
If the Chancellor places such great emphasis on these targets, why was he unable to tell me last week why the 3 per cent. health efficiency target was first failed and then cut? Will not that lead to £890 million less in resources for patient care in the health service?
What about the Chancellor's own target for efficiency gains? The Treasury efficiency target has itself been dropped altogether. The reason given is that the Treasury could not measure its own output. Was it not possible for the Chancellor to think about that before setting the target in the first place? How can he lecture other Departments about meeting efficiency targets when he cannot meet his own?
The efficiency targets are not the only targets to be dropped or cut as a result of the Government's failure to deliver. The Home Office target on the removal of failed asylum seekers has been cut. The measurable target on fear of crime has been dropped. Instead, the Home Office will aim to increase to 1.2 million the number of crimes for which offenders are brought to justice. Presumably, the latest rise in crime will help the Home Office to achieve that goal.
In education, the failed targets on truancy have been cut, and so has the national vocational qualification target for 19-year-olds. The Government say that both were subject to "slippage" or "increased room for catch-up", as, according to the Chancellor's advisers, that should now be known.
Mr. Mark Hendrick: What are the right hon. and learned Gentleman's targets for the national health service charges to which my right hon. Friend the Chief Secretary referred?
Mr. Howard: I am astonished at the extent to which Labour Members constantly refer to charges in the health

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service. In the Chancellor's speech last month, he said that it is entirely unacceptable for the sick to pay for being sick. Are he and other Government Members completely unaware that, last year alone, about 250,000 people who had no sort of insurance cover had to pay for their own operations because they could not face the delays that they would have experienced with the national health service, which is in crisis under the Government's stewardship?
Mr. Boateng rose—
Mr. Howard: No, not at the moment. The Chief Secretary will have to wait.
Gone is the work and pensions target for promoting security and independence in retirement for tomorrow's pensioners. After the Chancellor's pensions tax, the crisis in pensions and the lowest ever savings ratio, it is not hard to see why.
What became of the Chancellor's promises over the past five years—there have been enough of them—to provide "skills for work" to invest
"heavily in education and skills"?—[Official Report, 14 December 2000; Vol. 359, c. 785.]
What happened to the right hon. Gentleman's promise to provide "new support for skills"? Does he agree with the Government's better regulation taskforce, which said last week that Government delivery of local economic development and skills training is a bureaucratic nightmare involving a maze of more than 50 Government agencies, Departments and other organisations, and 52 funding streams? Why does a training co-ordinator have to fill in up to 26 pieces of paper before starting a trainee on a work-based programme? Is that the way to encourage skills?
What of the targets that remain? The Government describe them as SMART—specific, measurable, achievable, relevant and timed—so let us see how smart they are. The Department of Trade and Industry has the target of bringing United Kingdom levels of competition and consumer empowerment and protection up to those of the best by 2006, but the level of the best is not defined, so how will the DTI or anyone else know whether consumer empowerment has reached the required level by 2006?
Roger Casale: On the subject of "how smart you are", may I ask the right hon. and learned Gentleman a question? Does he believe that it is possible for public service reforms to be successful if those reforms are not supported by appropriate financial resources? How does he imagine that those financial resources can be released if the share of Government spending were reduced to 35 per cent. of gross national product, as he wishes to do?
Mr. Howard: If the hon. Gentleman attends these debates, he will know perfectly well that I do not wish to do that. [Interruption.] Does the Financial Secretary to the Treasury wish to intervene? I do not wish to do as the hon. Gentleman suggested, and I have answered that question many times before.
James Purnell: I have attended many of these debates, and I find it impossible to find out what the right hon. and learned Gentleman's position is on tax and spending because he will not tell us, so I have had to read articles
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in which he has discussed his position. When asked whether he would match our NHS spending in the last Budget, he told The Scotsman:
"There are times when other things have to take priority over tax cuts. The crisis in the public services in this country means that this is such a time."
That was six months ago; now he will not even say whether he will match our NHS spending increases. What has happened? Have our reforms been so successful that the NHS is not now in crisis, or is his agenda really about tax cuts and reducing public spending to 35 per cent. of gross domestic product? He will not admit that because all he is interested in is spin.
Mr. Howard: If the hon. Gentleman really thinks that the Government's attempts to reform the NHS have been successful, he must be living on a different planet. What I said in the article that he quoted is entirely consistent with what I am saying now. Our spending plans for the NHS will be derived not from the Government's failed policies on the NHS but from our policies on health care, which will deliver the ideals of the NHS and succeed.
Several hon. Members rose—
Mr. Howard: I want to return to the Government's targets. I quite understand why Government Members do not want to talk about the targets, but I do.
The hon. Member for Kingston and Surbiton (Mr. Davey) referred to the targets set by the Foreign Office. The Foreign Office is meant to contribute to a 70 per cent. reduction in opium production in Afghanistan within five years. Is achieving that really within the power of the Foreign Office? If not, how on earth can it be judged to have succeeded or failed?
What of the framework the Chancellor established for his targets? He solemnly told the House in 1998 that public service agreements were a contract for the renewal of public services and that results would be demanded. He said:
"Money will be released only if Departments keep to their plans."—[Official Report, 14 July 1998; Vol. 316, c. 188.]
So how many Departments have not had money released because they did not keep to their plans? After all, the then Chief Secretary, now the Secretary of State for Transport, said:
"in both health and education, money will be released only if the Government are satisfied that we are getting the returns that we want."—[Official Report, 16 July 1998; Vol. 316, c. 597.]
Last week, the Chancellor made no reference to the possibility of funds not being released. Treasury officials at a sitting of the Select Committee could not think of a single example of a departmental budget that would be different if that Department had performed better or worse against its PSA targets.
When the Chief Secretary to the Treasury was asked by the BBC whether any Department had yet had money withheld as a penalty for not meeting its targets, he replied:
"We are not in the business of holding money back in that way."
Not only has that policy been dropped, but the current Chief Secretary does not even know about it. He has been at the Treasury for more than a year and no one troubled

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to inform him of that policy, which was meant to be at the heart of the Chancellor's strategy to improve the public services.
It is little wonder that the Chief Secretary, in his Financial Times interview this morning, said:
"Gordon called for a debate about targets and PSAs, and I think we should have one, because people often don't understand what they are there for."
Andy Burnham: A moment ago, the right hon. and learned Gentleman referred to Conservative health policies. To my knowledge, the only one that has been explained to us so far was the four-phase policy that the hon. Member for Woodspring (Dr. Fox) outlined a few months ago. Phase 1 is to persuade the public that the NHS is not working. Phase 2 is to convince people that the NHS will not work. Phase 3 is to introduce themes on learning from other countries. Phase 4 is to produce policy detail—ultimately the most difficult phase. Will the right hon. and learned Gentleman tell us which phase the Conservative party has reached?
Mr. Howard: May I give the hon. Gentleman a little advice? Next time, he should ask his Whips for better material. He and they need to do rather better than that.
I know that Labour Members do not want us to talk about their targets, but I do. What other sanctions are in place when the targets are not achieved? How are Ministers held to account for results? We have looked at the fate of some of the Cabinet Ministers from 1998 whose Departments now have the fewest targets described as "met", "met and ongoing", or "on course". What has happened to the Cabinet Ministers with the worst records in meeting their targets?
It is true that one of them—the then Secretary of State for Health—was indeed punished for his failure. He became Labour candidate for Mayor of London. Another Minister who achieved fewer than seven in 10 of his own targets was the Chancellor himself. As far as we know, he is still in post. The third, the Minister who achieved one of the worst results of all, was promoted to his current post of Home Secretary.
Meanwhile, one Cabinet Minister achieved in full more than nine out of 10 of the targets set. He had the best record of the lot, so surely he must have been promoted. Well, actually he was not—he was sacked. The right hon. Member for Islington, South and Finsbury (Mr. Smith) now sits on the Back Benches—a permanent reminder to his colleagues of the danger of over-achieving on the Chancellor's targets. So there we have it. So much for the Prime Minister taking the Chancellor's PSAs seriously. So much for their claim to reform.
Is it any wonder that Professor Colin Talbot, in evidence to the Treasury Committee, described the PSA mechanism as deeply flawed and as "a topdown, opaque process"; or that Tony Travers of the London School of Economics says that the targets represent "rigid centralisation"? Is it any wonder that even the BBC, on the night of his spending review statement, compared the Chancellor's approach with the 10-year plans of the Soviet Union?
Is the Chancellor aware that the Chairman of the Select Committee on the Treasury has said that there are so many targets that it reminds some people of Stalin's Gosplan?
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Is the Chancellor proud of the fact that he is becoming known as Gosplan Gordon? Why does he not understand that the result of that ever-tightening leash is that innovation and improvement are being strangled?
In today's NHS, doctors cannot treat patients in pain because they are not in the right Government category to fill empty hospital beds. Instead of recruiting an extra 2,000 GPs by 2004, as the Government promised, in each of the last two years, they have managed just 18.
Mr. Boateng rose—
Mr. Howard: I shall certainly give way to the Chief Secretary. I hope that he will explain why the Government have managed to recruit just 18 GPs in each of the past two years, instead of the extra 2,000 that they promised.
Mr. Boateng: Talking of GPs, does the right hon. and learned Gentleman still adhere to the view that the NHS is "a Stalinist, centralised, monolithic, bureaucratic creation, which is failing the nation"?
Mr. Howard: We are going to find a better way of living up to the ideals of the national health service. The Chief Secretary ought to pause here. Does he really think that the best way to deliver health care to the people of this country is through a centralised organisation that employs 1.3 million people, the biggest employer in the world outside China, with the possible exception of the Indian state railway? The Chief Secretary ought to reflect on the implications of his question.
In today's schools, teacher vacancies have more than doubled and more than one in two trainee teachers walk away in their first three years because they do not have enough classroom time with children. What does the Chancellor fall back on? No longer able to offer hope, the Labour party now tries to win votes through fear. The Chancellor and his colleagues try to scaremonger, based on our refusal to be bound by their figures. Yet that, of course, was precisely the position that he took in opposition: it was not until January 1997 that he described his party's spending plans.
We, too, will outline our policies before the next general election. But one thing is certain: we are determined to move away from the Chancellor's policy of money without real reform. It does not mean that we are against spending more on health, education and other services but that we are determined to break with the Chancellor's legacy of failed promises and dashed expectations. We are determined to offer something better.
Gregory Barker: Is my right hon. and learned Friend aware that after five years of increased Labour spending on health, and 53 tax rises to pay for it, bed blocking at the Conquest hospital in Hastings over the last 12 months has risen by 130 per cent., so that now one in nine beds have elderly people trapped in hospital? In East Sussex, the waiting time for women with breast cancer to receive radiotherapy—the Chancellor should be interested in this because he has been confronted on television by one of my constituents, since when the situation has got a lot worse—has risen from 12 weeks 12 months ago to 23 weeks? Where has the money gone? That is what my constituents want to know.
Mr. Howard: I am not astonished by my hon. Friend's figures. I was not aware of the precise figures for East

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Sussex, but I fear that they are typical. But that, I am afraid, is what counts as success for Labour Members. That is what they mean when they talk about the success of their policies to reform the health service. Those are the kind of figures that they have in mind.
Hugh Bayley: Will the right hon. and learned Gentleman give the House an assurance that his party's plans for improving the national health service will not include levying any charges on services that are currently available to patients free at the point of use?
Mr. Howard: I know that the hon. Gentleman is impatient to see our plans for the health service, and they will be worth waiting for. He will just have to wait a little longer and contain his impatience until we produce them. I am sure that if he is entirely objective when they are produced, he might even like them. We will have to wait and see.
The Chancellor promised the country in the run-up to the 1997 election:
"We have an instinct to serve the public interest, which is not the same as an instinct to spend."
But now the country is all too painfully aware of the instincts of this Chancellor and his party: an instinct to spend, an instinct to centralise and an instinct to interfere. It is as a result of those instincts that they have failed to deliver on the public services.
There is a better way. There is a way to achieve safer streets and better hospitals and schools. But it will not come about through more of the same. It will come about through leadership, imagination, vision, and real reform. That is what the Government had the opportunity to offer, but they have failed. That is precisely where we intend to succeed.
6.54 pm
Mr. John McFall: The shadow Chancellor made himself politically infamous when, on "Newsnight", he refused 14 times to answer a question from Jeremy Paxman about Derek Lewis. He has now refused to answer about 14,000 times questions about where he will get the money from for his plans. The question I have for the right hon. and learned Gentleman is this: how can he maintain the present level of public services without spending any money? Credibility and honesty in politics is all and, sadly, the shadow Chancellor is a sham because he gives no indication of how his party would govern this country. Until he does, he has no credibility whatever.
Mr. Howard: Can the Chairman of the Select Committee on the Treasury explain why my party should produce its spending plans now when his party did not produce its spending plans until four months before the 1997 election?
Mr. McFall: I have a simple explanation. The shadow Chancellor has stood up and, for half an hour, criticised the Government's policies rotten. If he is going to do that, he must give us an alternative vision. All we have at the moment is a blank sheet; frankly, that is not good enough for this debate.
Mr. Tom Harris: Does my hon. Friend agree that, even before the 1997 election and before the Labour party
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had published its specific spending plans, our values and core aims were well known, which is the complete opposite of the Conservative party's position?
Mr. McFall: I agree. In my position as Chairman of the Select Committee, it is important for me and the Committee to analyse the Government's spending targets and plans and, as the shadow Chancellor has said, we did that in the past week.
I thank the Chancellor for his appearance at the Select Committee last week and for the extra money provided. However, I have to say that six days' notice of an event of such significance at the end of the parliamentary Session is not good enough. If we are to take the comprehensive spending review seriously as part of a transparent and well-managed process, we have to ensure that there is more time for discussion.
I suggest also that given that the envelope for public services was announced in the Budget some time ago, it might be a good idea to have a White Paper on the draft proposals so that the Government could consult on the issues and so that we knew where the money was going to be spent. There is a two-year process associated with the review, so there is no reason why we should not have the issues up for public discussion. After all, the United States federal Government do that annually. The British Government have a way to go on that.
I welcome the substantial increase in public spending. As has been mentioned, the total level of public spending will be £51 1 billion by 2005–06. That is £61 billion extra for public services over the next three years and, in cash terms, it is the biggest rise ever. It is reassuring to know that 75 per cent. of that spending will be focused on the key areas of education and health. It is the biggest rise in spending that we have witnessed and the annual rate of spending will be 4.3 per cent. over this year's forecast.
Mr. Mark Francois: Is there not a massive irony in all of this? When new Labour came to power in 1997, we were told repeatedly that they would never be a tax-and-spend Government because that had been the failure of all previous Labour Governments since the war. Now, that is exactly what they have become.
Mr. McFall: I shall answer that in two steps. The Treasury Select Committee had a number of experts before us last week, one of whom—David Walton, the chief economist of Goldman Sachs—said that, on the average growth trend of 2.5 per cent., the Government's projections looked very reasonable and their fiscal rules would be met comfortably.
A further issue for the hon. Gentleman and his colleagues who go on about tax and spend is that, as a share of national income, public sector spending is set to grow from 39.8 per cent. to 41.8 per cent. in 2005. That is still lower than the average of 44 per cent. of national income spent over the 18 years of Conservative Government from 1979 to 1997. The figure is also low by international standards. I would remind the hon. Gentleman that his heroine, now Baroness Thatcher, presided over public spending of 48 per cent. of national income in 1982–83, three years after the previous Labour Government. So this is far from tax and spend—indeed, I would refer to it as fiscally conservative.
Mr. Bercow: I am sure that all democrats share one goal, which is to increase the engagement of the public

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with the democratic process. I put it to the hon. Gentleman that the question of the share of national income spent by the state is very important, but that it is not much discussed in the Dog and Duck. Will he tell me how, in practical terms, the increase in expenditure on education will either reduce the appalling truancy levels from which we suffer or counter the 300 per cent. rise in assaults by pupils on teachers?
Mr. McFall: I speak from experience here, after a lifetime in teaching. We have to progress the priorities. I do not know about the hon. Gentleman, but I have visited every primary school in my constituency since 1997. Without exception, every head teacher has told me that they have extra resources and that they are happy with them. The step change is taking place in primary schools, and I urge the Government to ensure that it also takes place in the secondary schools and elsewhere.
Mr. Salmond: Public spending as a proportion of gross national product might not be discussed in the Dog and Duck, but the hon. Gentleman is undoubtedly correct in what he is saying. I am not altogether sure, however, whether it places a Labour Member in a comfortable position to say that Baroness Thatcher was spending a higher percentage of GNP on public spending. The hon. Gentleman also talked about the trend growth rate of 2.5 per cent. being met. Is he saying that the bulk of the evidence before his Committee suggests that, in the current international environment, that trend growth rate is likely to be met in the next three years?
Mr. McFall: On the hon. Gentleman's first point about the previous Conservative Government's spending, this Government have increased employment by 1.5 million and cut the national debt, giving us the opportunity to spend on things that were previously a burden. On his point about the 2.5 per cent. growth trend, the Chancellor has historically always underachieved in his growth targets. This is the first occasion on which people have said that he is getting near his target. Certainly, from a macro-economic point of view, the economists who have come to the Treasury Committee have said that that target represents a reasonable proposition. We are aware that the global situation is not favourable but, as one of the economists said to us, the money is in the books until 2006; that is reassuring.
James Purnell: Does the Chairman of the Select Committee agree that the key difference between spending under Margaret Thatcher and spending now is that, under Margaret Thatcher, the money was being spent on 3 million unemployed people? Does he remember the hon. Member for Buckingham (Mr. Bercow) writing in The Guardian that he accepted that it was desirable to underspend on welfare payments so that more money could be spent on hospitals and schools? That is exactly what we have done.
Mr. McFall: Those points have been well made.
Tony Cunningham: I have listened to all this and reached the conclusion that many people on the Front Bench just do not live in the real world—
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[Interruption.] I meant people on the Conservative Front Bench, not that there are very many of them there at the moment. I visited a primary school recently, and the headmistress told me that, five years ago, the only extra resources that they had were felt tip pens. She said that they now had new buildings, new computers and nine classroom assistants, and that standards were rising all the time. She said, "If that's spin, can we have more of it?"
Mr. McFall: That is a very good anecdote. And talking of felt tip pens, I give way to the hon. Member for Buckingham.
Mr. Bercow: I am grateful to the Chairman of the Select Committee for giving way; he has been extremely generous. I am glad that the hon. Member for Stalybridge and Hyde (James Purnell) reads my articles in The Guardian. That is flattering, but I do not think that it greatly advances the debate. I asked the hon. Member for Dumbarton (Mr. McFall) what the effect of increased education expenditure would be on the truancy problem and on the problem of assaults on staff. Asked what the effect would be, he said that the spending was welcome. I hope that he will forgive me, but I want to ask him the question again, because this is important. How will the increased expenditure serve to reduce truancy or assaults by pupils on staff? Those two matters are of pre-eminent concern to thousands of teachers and parents.
Mr. McFall: Speaking of The Guardian, I read about the hon. Gentleman in that newspaper, and about his fiancée who has different political views from him. Perhaps she will balance him from here on, and perhaps that will help him with his new portfolio.
I shall refer again to my own experience. For a while, I was in charge of a truancy unit in a Glasgow school, and it was very hard keep the kids in school. One way of doing so was to enhance the status of the truancy unit, and to get more resources, teachers and classroom assistants into it. The only way to achieve that was through extra resources. The hon. Gentleman asks me how the extra resources will help. They will help in modifying behaviour by providing adequate staffing for young people; that is a good way forward.
David Wright: Is my hon. Friend aware that, in Buckinghamshire, about 220 more teachers have been employed under this Government since 1997?
Mr. McFall: My hon. Friend makes a good point. I think that that must be the last intervention that I take. It is not often that someone from the Back Benches says that, but I shall say it just in case. Other hon. Members want to speak tonight and it is important that they should be able to do so.
I welcome a number of aspects of the Government's commitment. One relates to the aid budget. I know that some of my colleagues will devote a large part of their speeches to that subject tonight. It is reassuring to find that the aid budget will be increased by £1.5 billion to reach the target of 0.4 per cent. of GNP by 2005. I am one of those who wish to achieve the target of 0.7 per cent., but we will have to do that in stages. To come from 0.2 per cent. to 0.4 per cent. in seven or eight years is a welcome development.

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The shadow Chancellor and other Members referred to targets. The Treasury Committee has looked at that issue, and I want to ask the Government whether the services will improve, now that we have the funding. Vast sums of money have been mentioned in the spending review. The individual in the local pub might not recognise those sums, but they will want to see the improvement in their services at local level. They will want to see a transformation involving shorter waiting lists, better education for young people, criminals being locked up and social nuisances on housing estates being eliminated. That is the key for the Government. Targets are extremely important.
If I have one criticism of the Government, it is that they have perhaps inflated expectations, and that the end result has been less than it was expected to be. These processes will be undertaken using targets. I note that, when the Chancellor introduced his spending review, he introduced 130 public sector agreements. That is down from 160 in 2000, and from more than 300 in the comprehensive spending review of 1998. I have described the targets as a bit vague and, perhaps, bland. Is the Chancellor satisfied that these targets will allow Parliament properly to monitor Departments' performance? Until we have a clear and unambiguous answer, we will ensure that the monitoring process takes place.
On the Treasury's public service agreements to achieve year-on-year improvements in public services' value for money, the latest Treasury annual report simply states that matters are on course, without providing any measurement. Table A2, on page 67 of the report, merely states:
"These value for money targets are monitored as part of the Treasury's Spending Review 2000".
I suggest to Ministers that we need to do more to ensure that those targets are met. If they are to be of value, they need to be simply expressed, transparent, believable and credible. Some hon. Members have mentioned poppy growing in Afghanistan, but are the Government going to report on progress on making the world a safer place—one of the seven Foreign Office targets—daily, hourly, or every five minutes? Let us ensure that the targets have a wee bit more credibility.
Do centrally determined targets that rely on command and control work? I want the Government to confirm that the targets are not centrally imposed and do not rely on command and control. Central Government must allow local initiatives to engage in diversity, but historically, Governments have not been good at that. I am talking about Whitehall and the associated culture, which must be broken. Devolution of power is essential if we are to ensure that long-term goals and proper accountability arrangements are put in place.
The targets also depend on the credibility of independent audits. We must ensure that the money does not disappear down black holes. One issue is public sector pay increases. Public sector workers have rightly made some demands, but if we allow most of the money to be spent on extra pay, we will not achieve the targets. Let us strike a healthy balance. It is important that we ensure that the money is put in, that we bring about reform, and that we achieve the required outcomes.
The Chancellor also placed a great deal of emphasis on productivity. In the past, productivity has been somewhat disappointing, with a figure of 1.3 per cent for the past
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four years. Public sector productivity has lagged behind the private sector. Value added per employee in the public sector was almost £30,000, but in the private sector it was £41,000. In the past six years, productivity in the private sector has been running at 25 per cent., compared with only 17 per cent. in the public sector. In transforming the public services, we must be very aware of productivity issues. Otherwise, international competitiveness, profitability and investment will be eroded.
When the Prime Minister appeared before the Liaison Committee, he spoke of three tough long-term issues: transport, housing and pensions. He said that he would like all-party support on those issues, and I echo that sentiment. If we are to bring about improvements in these three crucial areas, there must be some political consensus. On pensions, we have the combination of an ageing population and a trend towards economic growth in future years. However, the clash that will arise between an ageing population and the demands of the public is not peculiar to the United Kingdom.
A few months ago, I was fortunate enough to attend a meeting involving the budget chairman of the Organisation for Economic Co-operation and Development, in Washington. David Walker, of the general accounting office, said that every country in the world will experience such problems. There are several things that can be done. There could be a reduction in the provision of services, but that is very hard for politicians of whatever party to accept. [Interruption.] I note that Liberal Democrats are nodding furiously. Taxes could be increased—again, that is unpleasant medicine—or growth could be increased, and that is where productivity comes in.
I shall leave Ministers and the House with a sense of the difficulties involved. When I pressed the general accounting officer in Washington for the growth figure that will ensure that American targets will be met within 25 years, he mentioned figures of 8 to 10 per cent. Our current annual growth figure, however, is about 3 per cent., which shows the scale of the problem. This is an issue not merely for the Government, but for the entire political process and the country as a whole. Such tough long-term decisions need cross-party support, and I seek the support of the shadow Chancellor and others. Would he like to respond?
Mr. Howard: I am very happy to respond to the hon. Gentleman. When we see particular proposals for dealing with the crisis in pensions, we will of course consider them. We are prepared to look at all proposals on their merits. We are determined to provide the people of this country with public services of which they can be proud, and which they need and deserve.
Mr. McFall: That is what I call a first step towards partnership, and I welcome it.
The Chief Secretary to the Treasury mentioned the Government's four main priorities. The first is a sound economy, and we certainly must not do anything to jeopardise long-term stability. The second is good public services, and the country and our constituents deserve no less. The third is the need to recreate communities that, as our daily constituency experience shows, have been shattered. It is extremely important that we build strong communities. The final priority is the United Kingdom's place in the world in the provision of overseas aid, and I am reassured by the Government's commitment to such targets in the spending review.

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I am also pleased that such means have been provided in handsome measure, but the slogan here should be not education, education, education, but delivery, delivery, delivery. Back Benchers and Treasury Committee members will monitor these developments, and ensure that the Government are held to account for these huge—and hopefully beneficial—sums of public money.
7.18 pm
Mr. Edward Davey: I agree with much of what the hon. Member for Dumbarton (Mr. McFall) said. It is clear that he has been listening to my hon. Friend the Member for Yeovil (Mr. Laws), who serves with him on the Treasury Committee. I congratulate them both, along with other members of the Committee, on their work in scrutinising the spending review. However, it is a great shame that, because of the truncated timetable that the Government have instigated, we cannot consult their report in order to enhance our debate.
It is a genuine pleasure for a Liberal Democrat to be able to say in a public expenditure debate, "At last!" [Interruption.] One of my hon. Friend's says I should say "I told you so". I was trying to be gracious at the beginning of my speech. After three successive election manifestos and more than a decade of hard campaigning, key Liberal Democrat demands for investment in education and health at last look like they have begun to be met. The Government have U-turned on public spending, at last. No one in British politics today is in any doubt that the Budget and spending review for 2002 mark historic shifts in public investment, and Liberal Democrats welcome that unreservedly.
At last, the Government have stopped copying the Conservatives—on some things, at least. The days of adopting Conservative spending plans lock, stock and barrel appear to be long gone. At last education is receiving something approaching the scale of funding for which Liberal Democrats have long campaigned.
Of course we will question individual priorities in the education budget. We have huge concerns about the approach, and no doubt my hon. Friends will identify education needs unmet over coming months. Tuition fees are one example. But at last we can begin to shift from a debate about how much to spend to a debate about how best to spend. and that is the debate in which I intend to engage.
First, however, let me make an observation about public expenditure during Labour's first five years in office. It is directly relevant to this debate. For the record, Liberal Democrats believe that Labour made a huge strategic mistake in failing to invest properly in our public services during those first five years. Much of today's extra expenditure is necessary simply to rectify major errors of the past. It would have represented much better value for money had it happened earlier. Labour's bust-boom approach to public spending has been bad for patients, bad for pupils and bad for passengers. In his first five years the Chancellor, far from being an iron Chancellor, has been a corroding Chancellor, allowing our
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public infrastructure to rust away. Whatever his party political reasons for that, it was a huge financial and social mistake.
Hugh Bayley: The hon. Gentleman reminds us of the Liberal Democrats' pledge to raise income tax, if necessary—their qualification—by one penny, thus raising some £2.5 billion a year. Would the hon. Gentleman have put that drop in the ocean towards the Labour Government's increased investment in education, in health spending, in fighting crime or in transport? It would not have gone very far if he had tried to spread it across the total of Labour's increased spending.
Mr. Davey: Some interventions take one by surprise. That was not one of them.
We have always said in our taxation plans that our spending proposals will be fully costed. Because our proposals were covered by tax increases, they were over and above what the Government were proposing at the time. The cumulative tax rises in the alternative Liberal Democrat Budget of 2002 are very similar to the rises proposed in the Government's Budget, although obviously they would apply to different things. We would therefore have had the same resources at our disposal as the Chancellor had for the purposes of his spending review. The hon. Gentleman's point, therefore, does not take us very far.
To be fair, it must be said that where we had new Labour, now, with this extra spending, we have new Gordon. The problem is that, whereas new Labour promised us that it would not spend anything, new Gordon promises us that he will not allow anyone else to spend anything. The Chancellor must micro-manage everything. New Labour had reviews; new Gordon has regulators. New Labour had taskforces; new Gordon has targets. New Labour had new ambitions; new Gordon has new auditors. New Labour created Tsars; new Gordon is the Tsar.
Some of us here are genuine admirers of the Chancellor. He has done some very good things—establishing an independent Bank, tackling third-world debt and sorting out the Conservatives' debt mountain. All those are great achievements. However accomplished this Chancellor is, however, he simply cannot run Britain's public services from Whitehall. He must learn to let go, and to trust others.
David Wright: During our debates on the Finance Bill, the hon. Gentleman made a number of additional financial commitments on behalf of his party. Does he think that he will have to put another penny on income tax to pay for them?
Mr. Davey: If the hon. Gentleman were being fair, he would also say that I opposed some of the Government's tax reductions because they were very unwise. An example is the reduction in the starting rate of corporation tax to 0p, which the Institute for Fiscal Studies says may lose the Exchequer as much as £2.9 billion. According to the hon. Gentleman's logic, we could pocket that money for our purposes.
The Chancellor talks of a new localism, but it is a new localism that his Whitehall controls. Outside Scotland and Wales, there is precious little new democracy in Labour's

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new localism. The Chancellor effectively said that himself in his statement. Poor-performing local education authorities would be subject to takeover; poor-performing councils would be subject to new managers, or to takeover.
What happened to local democracy? Does the Chancellor not trust the voters? Does he not see how sensible were the voters of Hull when confronted with the waste of Hull Labour party and the scandal of the failed Gypsyville project? They kicked out the Labour council after 50 years.
The Chancellor should talk to the Deputy Prime Minister. Has he not seen how Islington is being transformed now that the Liberal Democrats are running it? He should also talk to the Prime Minister. Instead of being the man in Whitehall ordering takeovers, he should be empowering voters; but instead of democracy we have a new battery of centralised targets, the new public service agreements.
Mr. Tom Harris: The hon. Gentleman's personal tirade against the Chancellor is all very interesting, but do the Liberal Democrats now support failing schools?
Mr. Davey: I thought that the hon. Gentleman would do rather better than that. What the Liberal Democrats do in power, having been voted into power by the electors, is tackle such problems with proper investment, making education a priority.
What our party supports is local democracy. We oppose the idea that the man in Whitehall knows best, because so often he does not.
The new public service agreements now contain 130 targets—admittedly fewer than the 300 in 1998 and the 160 in 2000, but there are still plenty of centrally imposed targets. And what a reassuring set of targets this is. The No. 1 PSA of the Office of the Deputy Prime Minister is "Promote better policy integration". I am not sure how "better policy integration" will be measured, and when we will know that we have reached that nirvana. Perhaps it will be like the "better transport policy integration" provided previously by the Deputy Prime Minister; let us hope not.
The Home Office has a particularly good public service agreement:
"Increase voluntary and community sector activity—including community participation—by 5 per cent. by 2006".
We all look forward to seeing the Chancellor Tsar measure community activity and community participation up and down the country. Perhaps the Chief Secretary to the Treasury can tell us how it will be measured. I have an image of bowler-hatted man with clipboards touring village fetes. Presumably their first question will be "Has the number of stalls gone up this year, vicar?" As for increasing community participation, perhaps the Government have plans to slow hand-clap volunteers into joining the Women's Institute.
I would be fascinated to learn from Treasury Ministers how they plan to increase community sector activity by central diktat. We all agree with the aim—I am sure that scout and guide groups throughout the country are crying with joy at the prospect of having adult volunteers to help them—but the idea that a central Whitehall Department should target an increase in community and voluntary activity across Britain is a sign of the unbelievable hubris of this Government.
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It does not end there. I discussed this earlier with the Chief Secretary to the Treasury. Part of objective 1 of the Foreign Office simply does not make sense. It states:
"Contribute to the reduction of opium production in Afghanistan, with poppy cultivation reduced by 70 per cent. within 5 years and elimination within 10 years."
That may be an excellent idea. Indeed, we can all agree that it is a worthy aim. But can Treasury Ministers tell us how they will obtain the data? Is the source, perhaps, the Afghan Ministry of Agriculture? It is an entirely innocent question.
I presume that some of the extra cash given to the Foreign Secretary has been earmarked for the purpose of destroying Afghan poppy fields; but the National Audit Office will want to audit the data that the Government use to calculate their success in approaching that ambitious target. We need to know the answers to such questions.
The key point is that the Treasury wants us to take PSAs of that kind seriously. Page 11 of the spending review White Paper states:
"PSAs are central to the Government's strategy for improving public services."
We as parliamentarians, therefore, are right to ask questions. The problem is that when we do the Treasury does not answer them. Liberal Democrats have asked the Treasury to publish a list of the PSA targets from the 1998 and 2000 spending reviews to show which targets were passed, which were failed, which were revoked and which were amended. The Treasury has refused to answer. How can we hold Ministers to account in regard to PSAs when they do not answer parliamentary questions about them? The Chancellor, when asked about them by the Select Committee on the Treasury, also refused to give a straight answer.
We have therefore conducted our own analysis, which the shadow Chancellor used in his speech. We have consulted departmental annual reports to try to establish what progress has been made on PSAs. Unfortunately, the annual reports are not terribly helpful, but we have managed to make some progress. The record is not very good. The Foreign Office has missed 47 per cent. of its targets, the Department for Transport has missed 57 per cent., the Department for Environment, Food and Rural Affairs has missed 83 per cent., and the Home Office has missed a staggering 89 per cent. of its PSA targets. It met only four of the original 37 targets: all the others have been missed, dropped or revised.
We do not know, now, what happens when Departments miss their targets. The Chief Secretary said today that they will not be penalised, but will Ministers be sacked, or—as the Chancellor implied to the Select Committee—will the pay of permanent secretaries be docked? We just do not know.
Mr. Steve Webb: Nothing will happen.
Mr. Davey: My hon. Friend is right—nothing will happen. We have heard that the former Ministry of Agriculture, Fisheries and Food has been penalised. It has been renamed, and is now the Department for Environment, Food and Rural Affairs. If that is the sort of penalty that the Government have in mind, the focus of the PSAs will be lost.
Mr. David Laws: Is my hon. Friend aware that the Chancellor, when asked by the Treasury

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Committee about that point, said that the only sanctions would be those imposed by the Prime Minister or the electorate? Does he think that that will he good enough?
Mr. Davey: On current performance, it clearly will not be good enough. My hon. Friend is right to make the point. The Government's feelings about the purpose of PSAs seems to have changed. When they announced their PSAs in 2000, a press release issued on 3 November of that year stated:
"action will be taken where there is a risk that a Department's performance is off track."
Is that still so? What has changed? Given that so many targets in the 2000 spending review have been missed, will the Chief Secretary say what actions have been taken in the past two years? Why have they failed?
James Purnell: The hon. Gentleman's relatively thoughtful speech should embarrass the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). However, what is his view about targets and objectives? Is he completely opposed to them, or does he agree that they are worth setting? Does he agree that general targets that cannot be measured have to be set for some items, whereas clear measurable targets can be set for others? Is not it slightly foolish to pretend that everything can be measured specifically, as counterproductive targets could be set as a result?
Mr. Davey: I agree that targets are justified in some circumstances. We have argued that output and outcome targets are necessary in many areas, but the hon. Gentleman makes an interesting point about how targets should be used in different circumstances. The Government's performance should not be determined according to measurable targets, but by the degree to which they look at intangibles that cannot be measured.
My hon. Friend the Member for Yeovil and I went to New Zealand to find out how targets were used there. We were told about the dangers that arise when targets are too specific. The police in Wellington had a target for the number of breathalyser tests undertaken. Towards the end of the year, the force realised that it had not performed anywhere near the number of tests that it had contracted to do. As a result, Wellington was brought to a standstill for two days as breath tests were taken by every driver.
Government policy must be sensible and sensitive, and not driven only by targets. That is our concern today, especially as many of the targets are centrally imposed on bodies that are asked to meet them having had no part in deciding what they should be.
David Taylor: Is not the hon. Gentleman trying to have it both ways? He is making fun—perhaps justifiably—of the Treasury's target-setting process. However, he seems to classify quantitative targets as irrelevant, unachievable or capable of being fiddled, yet, if asked, he would no doubt describe qualitative targets as vague, waffly and imprecise.
Mr. Davey: The hon. Gentleman is putting words in my mouth. I did not say that there was no case for qualitative targets, or that there was a case only for
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quantiative ones. Clearly, Government objectives must be scrutinised, and we must try to find a way to ensure that we can "focus minds" on that, to use the Chief Secretary's phrase. However, in this speech I am looking at the Government's published targets and attempting to find out what the Government's intentions are. I am also trying to discover what happens when Departments do not meet their targets.
We are told that the targets are important and crucial to public service reform, but the Government have so far failed to make that case in this debate. The Chancellor was asked about the Treasury's performance in relation to targets, yet he and the Chief Secretary have failed to explain why the key target on efficiency had been missed. The Chancellor set himself a target of delivering efficiency gains of 2.5 per cent. a year. He agreed that target with himself, but he missed it, and has now dropped it.
The Treasury has other targets, such as that for underlying growth. Originally set in the 1998 spending review, that target, we have been told, has been achieved. The Chancellor forecast trend growth at 2.5 per cent. a year, but this year—hey presto!—the estimate is of 2.75 per cent. The Treasury seems to have hit that target, but a closer examination reveals that that has nothing to do with higher productivity. The Treasury has hit the target only because of higher than expected labour force growth, fed by higher than expected immigration.
At least, that is what the relevant Treasury document states, but a deeper inspection shows that the Chancellor has pulled off a nice little trick. In the past, the Treasury used to take the principal forecast of the Government Actuary to determine population growth and labour force growth. This year, for the first time ever, the Treasury has decided to override the Government Actuary. Unilaterally, the Chancellor has decided to forecast labour force growth at a higher rate than the Government Actuary. Miraculously, Britain's trend growth appears to have risen. The Treasury has hit its PSA target because it has fiddled the figures.
We have tried to investigate the matter. We are not obsessed with PSAs, but the matter is critical to the Government's forecast of public finances. By increasing by 0.25 per cent. his trend forecast for growth, the Chancellor has given himself a fiscal windfall of an extra £4 billion a year.
In the interests of fiscal prudence, therefore, we have been asking some questions about the change in the forecast. It turns out that the Treasury has done little work to justify it. It published a report at the time of the Budget entitled "Trend Growth: Recent Developments and Prospects", but a close reading of that document reveals only how little work the Treasury did to justify what was a very significant change.
The formal justification for the change was that the Government Actuary department had underestimated the extent of net immigration, and that increased net immigration has raised the size of the labour force. However, the Treasury has offered no analysis of the longer-term determinants of immigration, and no justification has been given for assuming that a recent

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upturn of immigration will be sustained in the longer term. After all, the Home Office has a PSA that requires it to enforce
"the immigration laws more effectively."
Even the major driving forces behind recent immigration flows will be cut, according to other PSAs. The Foreign Office has a ludicrous PSA, requiring it to
"reduce tension in South Asia, the middle East, Balkans and elsewhere."
That is not to be achieved through the employment of masseurs, but—presumably—through diplomacy. Yet, if the Foreign Office succeeds in reducing tension in those parts of the world, future immigration flows will presumably fall. Perhaps the Treasury has little faith that the Home Office will reduce immigration, or that the Foreign Office will reduce the tensions that create it. If the Treasury has a target to increase immigration, there is no PSA for that.
Our analysis shows that the targets are nonsense. The key weakness of the PSA system is that Departments are, in effect, judge and jury when it comes to their performance. They decide the targets, and measure performance. The targets are not agreed with Parliament, and there is no discussion with Select Committees about what they should be. They are not agreed with an external body such as the National Audit Office. Of course, Select Committees and the NAO may look at performance against targets, but most PSAs rely on data provided by—guess who—the Government.
After the Sharman report, we were promised that PSAs would be externally validated. The Chief Secretary's predecessor told Parliament on 13 March that he accepted the external validation of PSAs. He said:
"we are taking measures that add to the substantial external validation that is already carried out by the Office for National Statistics and the Audit Commission, the ability of the Comptroller and Auditor General to oversee the data systems as a whole.—[Official Report, 13 March 2002; Vol. 381, c. 893.]
That is a very welcome development, but what does it mean in practice? According to the Office for National Statistics, PSA data come from various sources: 43 per cent. of it comes from departmental surveys or statistics. 18 per cent. from agency data, 12 per cent. from local authorities and the NHS, while 13 per cent. comes from other organisations. Only 14 per cent. comes from national statistics. So Ministers retain control, directly or indirectly, of 86 per cent. of the data going into the PSAs. The National Audit Office will have a tough time giving any meaningful external validation to these statistics.
I make just one challenge to Treasury Ministers. If they are so confident that they have their own PSAs right, and, specifically, if they truly believe that underlying growth has increased from 2.5 per cent. to 2.75 per cent., let the Treasury ask either the NAO or the Statistics Commission to review the revised estimate for underlying growth. While they are at it, let them review the analysis that the Treasury has presumably done on long-term immigration determinants. The NAO did neither when it audited the Budget assumptions before the Budget. Will the Minister ask the NAO or the Statistics Commission to do that as one of their first tasks in auditing PSA data? I hope that she will give me that commitment, but I very much doubt it.
My worries in this area are profound and they have got worse as a result of the spending review statement. One of the key elements of that statement, supposedly to
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ensure that extra cash is well spent, was the development of so-called independent auditing and inspection. New audit arrangements are to be established, according to page 12 of the White Paper, to hold Departments and agencies accountable for performance against the PSA targets. In other words, five new central quangos are to be set up—a commission for health care audit and inspection, a single independent inspectorate for social care services, a single housing inspectorate, a new police standards unit and a modernised inspection regime for the criminal justice system.
These new auditing inspection regimes raise profound questions for the House. First, why do we need these new bodies at all? What was wrong with the Audit Commission? What was wrong with the National Audit Office? Why could not these experienced and well respected bodies have been enhanced and expanded? Both have value for money remits and both have experience auditing the services that the new quangos will audit.
David Wright: Of course, these new bodies are not new. In respect of housing, we are bringing together inspection regimes that are currently in place, so the hon. Gentleman's comment is false.
Mr. Davey: I was quoting what the Government were saying. I am sorry if their spin was new; the hon. Gentleman's spin is not new, but I can only quote from what the Government say in their own press release.
My second point concerns the extent of the independence of the "new"—that is a Government word—quango audit bodies. The status of the NAO and the Audit Commission were carefully debated in this House in the past. The NAO has genuine independence from Government Departments, and while it has independence from this House too, it is, in statute, a creature of Parliament, working for the Public Accounts Committee.
This plethora of new auditors will not be based on the NAO system. They will have a degree of independence but there will be no parliamentary involvement in agreeing who should head them up, as there is for the NAO. They will not report to or work closely with the Public Accounts Committee in the way that the NAO does. These independent bodies will have their budget set by the Treasury, not the House of Commons Commission, in the way that the NAO does. So these independent bodies will not have the independence of the existing audit bodies, which perhaps explains why they have been set up.
There is a third question, which is perhaps more politically profound. Will this panoply of new central auditors make any real difference? Will they not simply soak up many talented individuals who would be better employed in the front line? Will they not soak up large amounts of cash to duplicate controls on auditors elsewhere? Will they not waste the time and efforts of the professionals? We do not have to look far to see their future. Local government is already subject to an equivalent audit exercise through the comprehensive performance assessment. Anyone in local government will say what a waste of time and money that exercise is. It disrupts the work of the Audit Commission, not to mention councils around the country. The exercise looks set to waste more than £100 million. People in local

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government say that the Audit Commission's increasing concern is simply to avoid the danger of a council judicially reviewing the report made on it because of the link to future freedoms and future cash.
The comprehensive performance assessment is just a taste of things to come. Whitehall regulators, auditors and inspectors will have to be trained in their thousands to do a job best done by existing national bodies and, at regional and local level, through existing and new democratic structures.
James Purnell: The same point applies to the comprehensive review by the Audit Commission, the whole point of which is to bring together previous reviews by different sector-specific auditors in local government such as social services, education and others. In that way, we can reduce the burden of auditing for very good councils and concentrate on those which have problems. That is all about reducing the burden of auditing. Does the hon. Gentleman worry that the Tories appear to be opposing the spending while the Liberal Democrats appear to be opposing reform? Will he make any positive recommendations about reform, which is a good tradition in his party?
Mr. Davey: The hon. Gentleman anticipates what I am about to say. He should talk to local authorities in his area regarding the comprehensive performance assessment. The message that I am getting clearly is that the burdens are being increased, not reduced.
The Government talk about new localism and new local discretion while at the same time setting up new quangos, new central bid funds and new central targets. I think that their approach on new localism lacks credibility.
Liberal Democrats are concerned that far too much of the welcome increase in public spending could be wasted because of how the Government intend to manage that spending. The Government are trying to reassure us that we can trust them to spend this money wisely because they have these PSA targets but the targets are a real cause for concern. The Government also try to reassure us that value for money is guaranteed because they are establishing these new bodies. We do not believe that these bodies are a necessary or sensible way of auditing public services. We do not see how creating a new army of central auditors and regulators will help turn round public services.
Liberal Democrats have a positive alternative to ensure that we get value for money from these welcome billions. Rather than making contorted attempts to win trust for the Treasury, the Government should trust others. They should trust the people on the front line—the professionals; they should trust local communities. Above all, the Government should trust local voters. Huge tracts of public spending need to be devolved, not to quangos, for which the Treasury set a multitude of PSAs, but to democratic bodies responsible to the communities they serve. With the Conservatives against the extra spending, and given their history of destroying local government and opposing regional government, the Liberal Democrats, who welcome the money, will be the only party capable of arguing for the democratic way to better public spending.
Mr. Deputy Speaker: Order. Before I call the next speaker, may I make a plea for shorter contributions to
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the debate? An awful lot of hon. Members are seeking to catch my eye, and unless contributions are considerably shorter, an awful lot of hon. Members will be disappointed.
7.47 pm
Denzil Davies: I shall be brief, Mr. Deputy Speaker. I welcome the Chancellor's public expenditure review and the extra resources that will be put into public services. I do not think that any sensible person can believe that money alone will reform our public services, but without the money, there would be no hope. As the Chief Secretary to the Treasury said, we must see that reform goes hand in hand with the money that is put into the services. That will not be easy, but I believe that if it happens, the money will eventually find its way into the improved services we all want.
Ever since the Chancellor announced the totals of public expenditure in his Budget, various financial commentators have tried to cast doubt on the Government's ability to fund the totals without, in some cases, hefty increases in taxation. However, as my hon. Friend the Member for Dumbarton (Mr. McFall), the chairman of the Treasury Select Committee pointed out, the Chancellor's forecasts of growth for the next three years, for the purpose of the public expenditure totals, are reasonable and conservative. The forecast is a growth of 2.5 per cent. That is a prudent figure and the Chancellor has probably been more successful in the difficult art of forecasting than many in the private sector, certainly over the past few years. Therefore I believe that there is a good chance of achieving the 2.5 per cent. growth on which the public expenditure totals are based.
However, as the Chief Secretary said, nothing is certain in the kind of global economic system with which we have to live. Growth could still, for external reasons, fall short of that 2.5 per cent., although I hope that it will not. If it were to fall short of 2.5 per cent., the response should certainly not be to put up taxes, as some commentators seem to imply. Nothing could be worse for an economy. One need not be an economist, like the hon. Member for Kingston and Surbiton (Mr. Davey), to realise that an increase in taxes against the background of a lower growth rate would merely do damage and reduce growth even further.
If there were a funding deficit—I do not believe that it will happen—I suppose that public expenditure could be cut, but that is not easy either. It is not easy in practical terms when one sets out a programme for three years, and cutting public expenditure against a background of reducing growth or a reduced rate of growth would make matters worse. Therefore the point that I wish to make to my right hon. Friend the Chancellor is that, as I am sure he is well aware, the only sensible way of funding a shortfall in growth and funding the present public expenditure totals—I have to say it, although perhaps it is not fashionable these days—would be to increase Government borrowing.
The Chancellor, in the Red Book, proceeds on the assumption that what I will call the old PSBR—public sector borrowing requirement—will be about 1.2 per cent. of gross domestic product over the next three years, should the growth rate be 2.5 per cent., the basis of the public expenditure assumptions. There is a new, fashionable phrase for PSBR these days—it is not

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borrowing but a cash requirement, I believe, but let us just call it the old PSBR. Those of us who have been in this place for a long time, at least, should be allowed to call it the old PSBR.
A PSBR of 1.2 per cent. is not, I suggest, very high, so I would suggest to the Chancellor that if growth were to fall there is plenty of room to increase the PSBR as a percentage of GDP, bearing it in mind that the chances are that, with a lower growth rate, inflation would be very low, so the inflationary consequences of borrowing an increased percentage in respect of a PSBR would not have an inflationary effect.
In my view the main threat to growth, should it come. would be a fall in the rate of inflation into what I would describe as the danger zone of deflation, caused by the relentless pressure of the global economic system—call it global capitalism, if you like—on prices, then on costs, and ultimately on profits. Over the past few years, this pressure has been going on and on. Perhaps we have underestimated it, or perhaps economists prefer to turn a blind eye to it, but those of us who have constituencies where a substantial proportion of the work force—in my case about 30 per cent.—is still employed in manufacturing industry, producing goods, can see clearly. after talking to employers and employees, that the pressure is relentless. Prices cannot be increased; they must be reduced. If prices must be reduced, costs must be cut, but eventually a point comes where they cannot be cut further and profits are squeezed relentlessly. That is what has been happening, and is happening, especially in manufacturing industry.
Recently I read in one of the American newspapers that an American commentator was predicting a profitless growth over the next few years. I am still trying to work out what sort of concept a profitless growth is and I do not suppose that it really means very much. However, talking of the United States, we are obsessed with the scandals of Enron and WorldCom. Now Dr. Alan Greenspan—that wizard of central bankers, apparently—has come up with a new soundbite. A few years ago it was "irrational exuberance" when the stock market was going up. Now that the stock market is going down, it is "infectious greed" that is causing all these problems. Perhaps so; perhaps Enron, WorldCom and some other companies are going into liquidation because of the original sin of human venality, and no doubt that is there.
However, we should not forget—this is not to excuse any of these scandals or any of the people involved—the relentless pressure on profits, because prices are squeezed and costs cannot be reduced any further. The relentless pressure on prices is making people overturn or short-cut what could be called, if this is not a contradiction, the orthodox rules of accountancy. It seems quite easy for central bankers to point to original sin as the reason, but perhaps there is a problem with the system. I do not want to say it too loudly, but perhaps the present capitalist system can no longer cope with capitalism. I do not know. It is a very real difficulty, which we shall have to face.
In Britain in the last month, one of the two inflation rates—I am never quite sure whether it is headline or underlying—was 1.5 per cent. The other was 1 per cent. but let us focus on the 1.5 per cent. While reading American newspapers, I noticed that in the United States in the last two months—this is not an annualised figure—consumer price inflation, or the consumer price index, was increasing by just over 1 per cent. That is a very low
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level—almost as low as, perhaps lower than, what we have in this country, and of course in Japan it is lower still.
I return to the British figures. Given that private sector services in Britain are very prone to inflation because the service industry—or parts of the service industry—does not have to face the kind of competition that manufacturing has to, it has been estimated that, again taking the annualised figure for last month, private sector services inflation was about 4 per cent. in Britain. Public sector inflation is probably also about 4 per cent. While we have an underlying rate of 1.5 per cent., then clearly, over a whole range of manufactured products, prices must have actually fallen. That creates this enormous pressure, especially on manufacturing industry, but ultimately on the rate of growth if the trend continues, because we could move into the danger zone of deflation.
The Chancellor, when this matter is raised—I make no criticism of my right hon. Friend—tells us that the Bank of England's target is asymmetrical. It is one of those words that I have some difficulty with, but I think I understand what is meant: that if inflation is increasing—getting worse—one increases interest rates, but if inflation is falling, or falling too far, one reduces interest rates. I am not sure whether we are comparing like with like, because I suspect that when an economy moves towards very low inflation, or deflation, cuts in interest rates possibly have very little effect. I do not know how effective interest rates are anyway. I suspect that for certain major, or multinational, companies the cost of money is not a major factor, although I accept that the situation is very different for small companies. In any case, it has been clearly shown that if inflation is falling, and approaching zero, the efficacy of reducing interest rates becomes less and less.
I suspect that in a world of deflation, Dr. Alan Greenspan and many other central bankers would be redundant. The British economy, with its sadly declining manufacturing base, which is producing fewer goods domestically, with a growing—still inflationary, I think—private services sector and with the public expenditure boost that the Chancellor has now given the economy, may be able to withstand that sort of global pressure, which is driving economies towards deflation. Indeed, the Chancellor and our services sector may be able to put enough inflation back into the system to stop us getting to the danger zone of deflation. I do not know.
In that case, however, and I hope that it is the case, the Chancellor will be able, through the measures that we are debating today and his totals, not only to lay the foundation for the improvement in public services but, perhaps as a side effect, to stave off recession and deflation in the British economy.
8.1 pm
Mr. Michael Fallon: I shall begin with the nature of the comprehensive spending review process. The Chancellor often likes to make out that he has pioneered the concept of a long-term rational basis for public spending, but it is not quite like that. This spending review is the third in only four years. It comes just 15 months after the last spending review came into effect. Add to that the constant topping up of public spending programmes in each successive Budget and, indeed, in each successive pre-Budget report and we are a long way away from the sort of three-year fixed programme that the right hon. Gentleman likes to convey.

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The public spending arrangements that we now have are not, as the Chancellor maintains, so very different from the ones that we did have. Of course, it is true that since Plowden we have had annual reviews, but even those reviews posited figures for years two and three. Now, it is true that the third year of each successive CSR is simply rolled into the first year of the next one. The Chancellor would be more convincing had he started off by saying that he would put this process on to a two-year framework into which much else was added in between.
This review has one odd feature, which is that the Chancellor was boxed in from the start by the enormous hole that emerged from the last review—the need to set up and implement the Wanless report and to yank up health service spending to the European averages. That meant in turn that he became in hock to the Department for Education and Skills and to the Home Office, which looked for similar increases. In turn, that has clearly skewed spending increases elsewhere.
When we get into the detail of the announcements that are following the spending review, it may well be that the increases for defence and for local government are not really as generous as they might at first appear. That would not matter so much—the national health service, schools and crime would be top of anyone's list and, indeed, they would be top of mine—if Ministers had not pretended that this entire process was the result of rigorous, rational review that really did match results with resources and reform with money. In fact, as we discovered in the hearings of the Treasury Committee last week, no Department was penalised and no money withheld. Even the much-disgraced Ministry of Agriculture, Fisheries and Food received a substantial increase in funding.
Fundamentally, politics has driven this spending review: how to square the large post-Wanless increases given to the health service with the obvious commitment of the Government to make education a top priority and the equally obvious need to do something about rising public concern about crime. Let us not be under any illusions: this was a very political spending review, driven entirely by new Labour preoccupations.
On the spending programmes, the first and most obvious comment—it has already been made—is that much of the extra spending will go on people. If it goes on front-line people, that is good news, obviously. We are desperately short of nurses. To confirm that, we have only to look at the use of agency nurses and their predominance on night shifts as well as the ridiculous state to which the Government have reduced the health service—flying nurses in at the same time that they are flying patients out.
Of course, every head teacher would like a greater choice of teachers when selecting for a particular post. Every area commander wants more police in his division and out on patrol. If the money goes on those front-line people, I for one will be cheering. I have two great fears, however. First, the extra spending that is already flowing through from the last review seems to be going on the back line—on advisers, liaison people, co-ordinators and systems managers. If our public services really are in the firing line, one only has to pick up the Wednesday jobs section of the Guardian to see that there are some pretty well-staffed chateaux right behind the front lines.
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Some of those jobs are very worthwhile; others are more dubious. The one thing that we know for certain is that every pound spent on advisers, or administrators—on their cars, conferencing and so forth—is a pound less that is spent in the classroom, the hospital ward or out on police patrol.
The hon. Member for Kingston and Surbiton (Mr. Davey) has already articulated my second great fear. The Chancellor is overdoing it on inspectors. There are far too many inspectors. Of course, the public services should be accountable, but we will end up destroying any sense of profession—the element of trust that supports the sense of profession—if we over-inspect. The Chancellor set up four new inspectorates. Someone pointed out that they would amalgamate other inspectorates. The Government have already created dozens of new commissions and inspectorates. Far from amalgamating them, I would have liked him to ease off.
Mr. Salmond: I have been looking up the hon. Gentleman's background. Apart from working in the Conservative research department, he was a director of European Consultants Ltd. When he was doing that, was he working in the front line or the back?
Mr. Fallon: I was working in private industry and contributing to the funding of public services. I think that I have as much business experience as the hon. Gentleman, whom I am glad to see back in the Chamber.
On targets, the claim that these are actual programmes rather than simply political decisions rests fundamentally on all those public service targets. There is nothing wrong with performance targets. Any business needs and has performance targets, business plans and personal performance measures in place, as I hope that the hon. Gentleman will agree. Here as always, however, the Government blunder along. First, we had more than 600 public service targets, which were introduced a couple of Secretaries of State ago. Just a year later, those were thinned down and now they have been changed again.
What is wrong with those targets? First, they are ludicrously imprecise. Indeed, the Chairman of the Treasury Select Committee gave us some examples from the Foreign Office. Some of them are woolly and they are easy to implement or they are incapable of measurement. Secondly, as the hon. Member for Kingston and Surbiton said, they are not yet properly externally audited. It is by no means clear how the Audit Commission will ensure that that external audit is put in place. That still means that the Treasury can virtually audit itself at the moment. Thirdly, the targets are always being changed. The White Paper that sets out public service agreements for 2003 to 2006 states:
"A small number of headline targets will not be carried forward as either new PSA or SDA targets, where they have … been superseded by new targets or events."
That shows that the targets are simply what the Government say they are. They mean what the Government say they mean. Given that no penalties apply, we are in "Alice in Wonderland" territory. The targets mean only what the Treasury says they mean and at the end of day, no one loses any money—all shall have prizes.
Finally—I know a lot of other hon. Members want to catch your eye, Mr. Deputy Speaker—I want to look at the impact of the public spending programmes in west

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Kent. We have some of the most expensive housing outside London. It is difficult for us to recruit and house key public sector workers. I welcome the key workers scheme but I would have welcomed it even more if the Government had not in the first five years cut housing association budgets by almost exactly the amount that they have put into the scheme.
The Deputy Prime Minister has announced swathes of new housing for north Kent. The new housing will have to go somewhere. We have to take our share of it but I would have welcomed that announcement if it had been accompanied by a proper recognition that one cannot announce thousands of new houses without first considering the infrastructure. If the Government are going to go down the route of huge new towns, they have to look at the way in which the money is allocated and ensure that the schools, roads and surgeries are put in place first. If there is to be a big increase in housing, they need to look again at the rules governing spending to ensure that the houses are not built and occupied before the infrastructure and support for communities are put in place. At the moment, it is the other way round.
Mr. Tom Harris: I do not want to pre-empt the climax of the hon. Gentleman's speech but would I be right in saying that his argument is leading us implausibly but inexorably to the conclusion that a future Conservative Government—sorry, a hypothetical Conservative Government—will be able to maintain public spending at the levels set by the Chancellor simply by cutting bureaucracy?
Mr. Fallon: It is certainly one of the conclusions that the hon. Gentleman should draw. I have always thought that cutting bureaucracy is important. It is important for central Government above all to keep bearing down on bureaucracy if we are going to get the money into the front line.
The next example from west Kent is law and order. We need more police on patrol. Last Saturday evening, I was in West Kingsdown, a village on the A20; some hon. Members may know it. The village was delighted that a new rural warden had been appointed to help with community safety, but that warden was paid for by Kent county council. The police authority does not have sufficient funding. We need more police locally, not just rural wardens, and more police on patrol.
The impact on council funding is perhaps the biggest threat of all to the successful implementation of some of the spending programmes in my part of west Kent. As hon. Members will know, particularly those representing southern England, another review was slipped out just a few days before the spending review: the formula grant review, under which—the Government are honest enough to put the figures in the illustrative tables at the back of the document—southern shire counties such as Kent and Essex could lose substantial funding. Indeed, the Government recognise that to the extent that they have already proposed damping mechanisms to ensure our councils in the south do not lose more than a specific amount in any particular year.
Mr. Harris: Will the hon. Gentleman give way?
Mr. Fallon: No, I must be fair to other hon. Members who want to speak.
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There is a best case, there is a worst case, but Kent county council, for example, has estimated that in mid case it will lose around £62.4 million—a budget cut of around 6 per cent., a loss for Kent schools of around £20 million, a loss for social services in Kent of around £5 million. These are the examples set out in the illustrative tables for the formula grant review. I do not want funding for Kent to be cut, as it is being cut at the moment. I make it clear that I will oppose those particular cuts.
It is odd for the Government, at the same time as announcing all this spending nationally and having taken the political credit for it, to be consulting on options for transferring that spending from the south to our friends in the north. It is particularly odd to be doing it now, before we have the results of the census next year.
The spending review clearly is not just about more money. It is driven fundamentally by politics rather than economics. It is unaccompanied by serious reform of public services. It is based on made-up, moving targets. Nothing in it convinces me that public services in west Kent will get any better.
8.15 pm
Alan Howarth: The spending review, with its focus on education and research, promises well for our country. My right hon. Friend the Chancellor in his announcement about funding for science has provided an excellent first instalment. We must now wait and see what improvement the Government make in their support for the university system as a whole.
The hon. Member for Sevenoaks (Mr. Fallon) and other right hon. and hon. Members have ranged broadly and fascinatingly. I would like to concentrate on one particular issue: public expenditure on university museums and galleries and—the other side of the coin—their liability to value added tax.
The university museums deserve the Government's support, benefiting as they do so many aspects of the public good. The university museums are custodians of the oldest legacy of publicly accessible collections. They have a long and distinguished history of public engagement as well as being repositories of scholarly expertise.
The nation's first museum education service was established 90 years ago in the Manchester museum, part of the university of Manchester, a service that is now provided to 25,000 children each year and reaches out into a culturally diverse local community. University museums are particularly well placed to help to widen access to higher education. They contribute to economic regeneration as important elements in regional tourism and cultural strategies.
I refer those who wish to know something of the history of the university collections to various excellent studies by Ms Kate Arnold-Forster, who was once a pupil of mine. The Ashmolean was the first museum in England to be opened to the public, in 1683. Colleges, universities and learned societies were institutional recipients of gifts of collections from an early date. The Hunterian museum of the university of Glasgow is based on the bequest of William Hunter in 1783, and is Scotland's oldest museum. The Fitzwilliam museum derives from the legacy of Viscount Fitzwilliam, who died in 1816. Other magnificent benefactions were the Courtauld Institute of

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Art collection, established in 1931, and the Percival David collection of Chinese art, presented to the university of London in 1951. Other collections were developed by the universities over centuries as resources for teaching and research, particularly in the natural sciences.
The Sedgwick museum of geology, for example, stems from the collection of Dr. John Woodward, bequeathed to the university of Cambridge in 1727, together with detailed instructions for its preservation and educational use. Important anthropological and archaeological collections came from great scholar collectors—for example, W. M. Flinders Petrie, whose Egyptology collection belongs to University college, London.
The movement to create new public museums, national and municipal, in the 19th century did not displace the tradition of university collections. In 1868, Owen's college, later the Victoria university of Manchester, accepted the collection of the Manchester Society of Natural History, which had been rejected by the city of Manchester.
What should the Government's responsibility be in regard to the university collections? We look to Government to do their best to ensure that the universities have, all in all, sufficient funding to fulfil their and society's expectations of them. Guardianship of our cultural heritage, and the provision of access to learning about it, are among those expectations.
Some university collections are admirably managed and presented; others have been sadly neglected, with their parent universities unable to provide the necessary resources, and survival of the collections effectively depending on the devotion of volunteers. We read recently, in The Guardian of 16 July, of admirable efforts at the university of Leeds to rescue and display collections in the fields of chemistry, biology. Arabic and textiles.
The old University Grants Committee used to provide so-called "non-departmental special factor" funding to universities in recognition of their collections, but as that came through the general block grant it is not clear that it achieved any more than to stabilise existing levels of funding. To the credit of the current Government and the Arts and Humanities Research Board, a substantial proportion of the AHRB's resources—almost £8.5 million in 2001–02, rising to nearly £9.15 million in the present year—is now channelled to 52 university museums and collections. Resource, funded by the Department for Culture, Media and Sport, also contributed just over £3,850,000, to 16 university museums with collections designated as outstanding between 1999 and 2002. I very much hope that we will shortly hear of further grants through the designation challenge fund to this group of university museums containing pre-eminent collections.
The number of visits to the university museums with designated collections in 1999–2000 was almost 1.5 million. They are an important and much valued source of pleasure and instruction for the public. My own passion for museums began with childhood visits to the Barber Institute of the university of Birmingham. The recent study, "Renaissance in the Regions", commissioned by the DCMS, made it clear that the university museums should play an enhanced role in strengthening the cultural life of the regions, as well as in support of tourism and the creative economy.
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There is one particular anomaly in the financial regime for university museums to which I want to draw attention. As long as the university museums refrain from charging the public for access to their collections, they, alone among museums, cannot recover input VAT. As the House knows, other national museums and galleries were, until last year, in an invidious position. Those museums that wished to retain free access found that the VAT rules gave them a perverse incentive to introduce entry charges, since by doing so they were able to recover the VAT that they paid on expenditure incurred in providing services. By contrast, the museums that did not charge for admission were unable to recover the VAT on any associated expenditure, resulting in considerable additional cost, simply because they were not charging admission fees.
That presented an impediment to the fulfilment of the Government's policy to secure free entry to the national museums and galleries, which my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), as Secretary of State for Culture, Media and Sport, and I, as Minister for the Arts, were pursuing. It took us a long time, between 1998 and 2001, to achieve what we sought. We were stalwartly supported by the directors of the non-charging national museums and galleries. We had endless discussions with Customs and Excise and the Treasury, which did not want any chipping away at the splendid edifice of VAT and, as always, prided themselves on their resilience in the face of lobbying. I was closely in touch also with some of the great benefactors of our public collections, the National Art Collections Fund and Sir Denis Mahon, who felt very strongly about this and added their voices to the cause.
The Treasury adduced a variety of objections, both general and technical. I was particularly indebted to Ms Helen Donoghue, whose help we enlisted and who found a solution which was technically sound and at the same time protected the Exchequer's interest against a proliferation of concessions. I was even more grateful to my right hon. Friend the Chancellor for agreeing that the Finance Act 2001 should, at section 98, amend the Value Added Tax Act 1994 to include a new section 33A. That empowered the Government to specify, by statutory instrument, individual museums which, while not "engaged in economic activity," should none the less be able to recover all the previously irrecoverable VAT that they incurred. The Government duly, by order, relieved the national museums and galleries of this burden and disincentive to maintain or create free entry. I was delighted to note that my right hon. Friend the Chancellor, in his announcement of the outcome of the spending review last week, stated with satisfaction that
"since museums were opened free to the public, attendances have risen by 75 per cent."—[Official Report, 15 July 2002; Vol. 389, c. 27.]
We have the anomaly, however, following the order, that the university museums that offer free entry are the only remaining category of public museums liable for irrecoverable VAT. I should explain to the House that the term "national", as applied to museums and galleries, is an administrative term of art referring to a limited group of some 13 institutions that, for reasons of history, fall within the category. The group does not include the university museums. I should also explain that there has not been a similar problem in relation to local authority museums and galleries, as they already enjoyed VAT

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relief under section 33 of the 1994 Act, and have therefore suffered no tax penalty should they offer free entry. The rationale for the concession to local authorities was that it did not make sense for Government to fund bodies to pay tax—a rationale that applies equally to university museums. Again, private museums, which are independent of public funding, do not have a problem in this respect because they need the income that they receive from charging and can recover their input VAT.
I had argued that the university museums should be included within the scope of the new concession, and I discussed the problem with the AHRB. However, lead responsibility in Whitehall for the universities, including their museums, rests not with the DCMS, but with the Department for Education and Skills, and the university museums were not included in the order. I would ask my hon. Friend the Financial Secretary and my right hon. Friend the Chancellor, together with the Secretary of State for Education and Skills and the Secretary of State for Culture, Media and Sport, to reconsider their position on the matter.
I do not propose that the relief should apply to every university collection. Because of the manner in which some of them are housed, it would, in practice, be impossible to separate the costs associated with them from other costs of their institutions. My proposal is that, in England, the concession should be extended, by order, under the powers already established in last year's Finance Act, to those university museums that have collections that are formally designated by Resource, the Council for Museums, Archives and Libraries, as outstanding. There are 16 of those. In addition, the Sainsbury centre at the university of East Anglia, which receives AHRB funding in recognition of its quality, should be included, making it possible to abolish its entry charge.
Although there are no equivalent schemes of designation in Scotland, Wales and Northern Ireland, a limited number of university museums of appropriate quality in these territories should also be selected for relief. In Scotland, those might be among the six distinguished museums and collections, most notably the Hunterian, in receipt of funding from the Scottish Higher Education Funding Council's minor recurrent grant stream of nearly £1 million for museums, galleries and collections. In Wales, significant collections at the universities of Swansea, Aberystwyth and Glamorgan are for consideration. The forthcoming survey by the Northern Ireland Museums Council of the university collections in Northern Ireland will provide a basis on which to judge eligibility there. The Government would wish to agree the list with the devolved administrations.
I do not see any significant objections to my proposal, which, of course, is along the same lines as recommendations that have also been made by the universities. Representations to the Government have, I know, been made by Professor Sir Martin Harris, vice-chancellor of the university of Manchester, on behalf of Universities UK, by Professor Paul Slack, pro-vice-chancellor of the university of Oxford, and, jointly, by Dr. Christopher Brown, director of the Ashmolean museum, and by Dr. Duncan Robinson, director of the Fitzwilliam museum.
There is no technical difficulty. The Government have the statutory power to extend the list by order. I understand that my right hon. Friend the Chief Secretary
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to the Treasury, when he was Financial Secretary, met Sir Martin Harris, and in uttering a charming but categoric "no" to Sir Martin's plea, said that the European Union might have difficulties with the proposal. In fact, we have the words of the President of the European Commission, in a letter to Sir Denis Mahon:
"As to the question of bodies that qualify under Section 33 of the 1994 VAT Act, this is, of course, a purely national matter to be decided by the UK authorities."
Very recently, Mr. Stephen Bill, the head of indirect taxation in the European Commission, has confirmed that there is no technical objection to the original scheme or to its extension to university museums.
My right hon. Friend the Member for Brent, South (Mr. Boateng) also wrote to Dr. Brown on 9 May. He did his duty in devising arguments to oppose our case, but he was in some difficulty. My right hon. Friend said that extending the concession beyond the national museums and galleries would
"undermine the stated rationale for the scheme and be unfair to other cultural and heritage bodies."
I submit that the rationale could not be undermined by admitting to the list specific bodies that provide identical services and which, like the national museums and galleries, are substantially funded by the Government. No other cultural or heritage bodies are analogous.
My right hon. Friend's letter went on to say:
"it is not for the Government to dictate to these independent institutions whether or not they should charge for admission. That is ultimately a decision for them to make, and it would not be appropriate for the Government to interfere in that decision, because it has made no commitment to ensure universal free access to these institutions."
Of course, it is not for the Government to dictate, but they should cease to discriminate against these institutions and they should remove from them the pressure to charge for entry.
It has riot been suggested that the Government ever committed themselves to ensuring free entry. There have, however, been endless statements from Ministers about the desirability of matching excellence with access. My right hon. Friend the Minister for the Arts wrote to me on 8 May saying:
"DCMS and Resource are working in partnership with the Arts and Humanities Research Board to encourage university museums to deliver increased public access at the same time as achieving high standards of scholarship and collections care."
My right hon. Friend the Chancellor himself said plainly in his Budget statement last year:
"The Government's policy is for free museums".—[Official Report, 7 March 2001; Vol. 364, c. 301.]
The Government need not fear the cost, either. The combined turnover of the 16 university museums with designated collections in 1999–2000 was just over £18 million. The Treasury was unable to tell me, in answer to a parliamentary question, how much irrecoverable VAT was paid in respect of these museums in the past three years, but the best estimates from university sources that I have been able to obtain indicate that, setting aside any exceptional building costs, the annual aggregate is unlikely to have been much more than £500,000. Occasionally, if it was lucky, a university museum might find itself in a position to undertake a substantial new building project or refurbishment that would produce an exceptional increase in the VAT figure.

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We are looking, however, at costs affordable to the Exchequer by any standard, yet truly significant as relief for the university museums.
There is no danger that universities would seek to smuggle in other items of spending to exploit the concession. The accounts are entirely distinguishable, and Customs and Excise officials have recently made it clear that they regard the activities of university museums as being sufficiently removed from the main educational activities of the university not to be caught by the university exemption.
Nor is the designation scheme a Trojan horse. The chair of Resource, Lord Evans of Temple Guiting, has assured the Treasury that, after a minimal addition to the list in 2003, it will be closed. In any event, the Government have the safeguard that they nominate individual institutions to be added to those given relief from VAT under section 33A.
The VAT concession that I seek for university museums is feasible within existing legislation; it is affordable; it is consonant with the policy and values of the Government; and it would put an end to an injustice. My proposal provides an opportunity that should always be welcome to a tax authority—to get rid of an anomaly.
My right hon. Friend the Chancellor once fought a notable battle in the cause of free access to a university collection. As rector of the university of Edinburgh in 1972, when the then Government proposed to bring in charges for entry to museums, he insisted that the university should require that its paintings on long-term loan to the national gallery of Scotland should continue to be shown free to the people of Scotland. I hope that he, recalling that spirit in these no less heroic days, will once again raise the banner.
8.32 pm
Mr. David Ruffley: It is impossible to have an efficient economy if the biggest single spender in that economy is itself grossly inefficient. Last week's comprehensive spending review will pour billions of pounds into an unreformed leaky public sector bucket. It will pour an extra £10 per household in real terms per day, or £3,650 a year. in extra money. Spending as a share of national income in this country is rising at precisely the time that it is falling in other European Union countries. If the Chancellor carries on in the way that he is doing, within 10 years, the share of national income taken up by public spending will converge with the EU average. That is not in the national interest.
I want to show that, behind the tiresome rhetoric of money for modernisation and investment tied to reform, lies an old Labour model, not a new one. The Chancellor's model is, in fact, about 50 years out of date. I also want to suggest a modest and positive Conservative proposal as an alternative, in which the state remains the key funder—although not on the incontinent new Labour levels that we saw last week—but not the central provider chasing ever-illusory national targets. The Conservative vision will demand more genuine competition and choice for the citizen and the reform that is essential for a more responsible civil society and a wealth-creating economy. Above all, it will produce a set of reforms that never forgets that those most let down by failing public services are often the poorest in society, who have the least opportunity to opt out, unlike the middle classes.
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The great public services were designed in the decade after the second world war, when resources were very scarce. For practical and moral reasons, a consensus arose across society whereby the state would be the prime funder and intervene to ensure that rationing was delivered equitably across all sections of society. That consensus was of its time, and it has broken down and been overtaken by the realities of modern life. With increasing prosperity—driven, I am delighted to say, from 1979 onwards by the necessary supply-side reforms of Mrs. Thatcher—living standards rose. That brought a rise in consumer culture, which is desirable, and a rise in voters' demands for more responsiveness and flexibility from the great public services. Those voters now know that those services are failing.
In his statement last week, the Chancellor invited us to believe that the wants of our citizens can be met by huge public spending increases. Sadly, that logic is hideously flawed. The Chancellor is shifting the balance of the economy in favour of public sector activity at the expense of private sector activity, and in so doing he is going against international trends.
The International Monetary Fund's economic outlook report, published in May 2001, states:
"on average general government expenditure in the advanced economies (excluding Japan) declined by close to 6 per cent. of GDP during 1993–2000 with the sharpest reduction in the northern European countries."
In the 1990s, the gap between the United Kingdom and other European Union countries in terms of the share of GDP accounted for by public expenditure was high, peaking at 9 per cent. at the end of the 1990s. Now that virtuous gap is closing, and closing fast. Between 1998 and 2003, our public spending ratio rises by 1.3 per cent., but for the EU as a whole, it falls by nearly 2 per cent. Between 2000 and 2003, the gap between the UK ratio and the EU spending ratio will fall from 9 per cent. to just over 5 per cent. On current trends, British public spending will grow by 1 per cent. of GDP every five years, while the EU ratio will fall by 2 per cent of GDP every five years. If those trends continue, spending at this rate will mean that the EU's and the UK's share of GDP accounted for by public expenditure will converge by 2013. I contend that that is the Chancellor's secret agenda.
Mr. Salmond: Before the hon. Gentleman leaves that point, can he tell us whether the current percentage of public expenditure in relation to GDP is higher or lower than it was in 1983 during the golden age of Baroness Thatcher?
Mr. Ruffley: It is roughly the same, or perhaps even slightly lower, than in 1983. The hon. Gentleman must stop picking convenient dates. When my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) left office after his hugely distinguished tenure as Chancellor of the Exchequer, with record low levels of unemployment and inflation, falling debt and growing employment, the share of GDP was just under 40 per cent. That is the answer to the hon. Gentleman's question, but he must stop being selective about his dates. He is getting like Government Front Benchers in that respect, and I do wish that he would grow up.
The Chancellor's secret agenda in the medium to long term is to move the share of GDP accounted for by public expenditure up to EU levels. Moreover, there is more

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spending in the pipeline for this Parliament over and above that which was announced in the comprehensive spending review. We know that for one simple reason. Next year, the increase for transport, schools and hospitals is a whacking 7 per cent., but it is front-end loaded. We are invited to believe that, in the second and third years of the spending review, the rate of spending will decelerate.
Unfortunately, most commentators—and I am included in this list—look at what the Chancellor did in his two preceding comprehensive spending reviews. What has he done? In the middle of the so-called three-year fixed period, he has added more money to the totals that were allegedly fixed. No one believes that this Chancellor will stick to the same figures for 2004–05 and 2005–06 that were published in his documents last week. Why should anyone believe him this time when he has bust the limits in the past two spending reviews? As Andrew Dilnot of the Institute for Fiscal Studies has said:
"The three year expenditure plans are supposed to set fixed and firm limits but so far they have been floors."
This spending review is not about catch-up; it is more of a first downpayment, with more spending to follow.
It is also regrettable that this Chancellor publishes no assessment of the benefits of increased spending as against the full economic cost of that spending in lost output caused by the higher taxation that he has had to levy to finance the high spending. The United States Joint Economic Committee of Congress has done some interesting work that the Government choose not to do for this country. It notes that, in the United States, the economy loses 40 per cent. in economic welfare per tax dollar levied at current levels. The Centre for Economics and Business Research in this country has done a similar calculation, and argues that each pound raised in tax in the UK reduces national income in the medium term by more than £1.
That defect is compounded by the knowledge that the extra spending announced last week is to go into state monopoly enterprises, where, as we know, competition and proper price transparency do not exist. Instead of real reform to address those problems, the Chancellor offers us more centralised command and control state planning, which frankly owes more to eastern bloc ideas before the wall came down than to the marketised disciplines of the United States to which the Chancellor so noisily and disingenuously pays homage whenever he talks to City audiences—but not to anyone else.
The subtitle of last week's spending review should have been, "Welcome to Gordon's Gosplan", where we will have more auditors to audit and more inspectors to inspect, we will have more targets, commissions and delivery units worrying about more OPAs, PSAs, SDAs, more general targets and a hundred more pen-pushing, paper-chasing initiatives—a public spending inspector perched on the shoulder of every hospital manager, school head teacher and police inspector and every manager of our prisons and transport systems.
Unfortunately, the Government are obsessed with national standards and national targets. They think that that is the answer. The problem, as we all know, is that national standards eliminate diversity; they are its enemy. New Labour national standards are code for, "Here is what you must deliver because we say so, if you want Government funding."
Private sector disciplines set minimum quality requirements. Those standards are a safeguard and are not used to create norms and standardised products.
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Individuals choose from a wide range of different products. Choice is the mechanism that they use to satisfy their needs. They set their own standards by what they choose to buy and what they do not want to buy.
A state-led, national standard—a one-size-fits-all approach—is convenient for central Government but less good for local head teachers, NHS hospital trust managers and police inspectors, because funding is allocated to them on the basis of a centralised decision. The standards that they are told to implement are not local. Their activity will be continuously monitored centrally in a way that will undermine their freedom to innovate. Talk of devolution is therefore a cruel and empty deceit.
As evidence for that proposition, we have only to look at the wise words of Sir Steve Robson, who until recently was the second permanent secretary at Her Majesty's Treasury and, I understand, a man who thanks the Chancellor for his knighthood. A moderately dispassionate observer, he said that the forest of new targets creates
"a blame culture which stifles local initiative. Central directions are no substitute for empowerment of individual consumers which would create real incentives to create better services."
That is the comment of a highly distinguished figure—an adviser to the Chancellor, who left but 18 months ago.
What is truly astonishing is the Government's apparent belief that this year's—the 2002—model of public sector reform should be taken any more seriously than the 1998 version, or the 2000 version. In 1998, at the time of the first review, the Prime Minister stated:
"'Money for modernisation' is a contract."
In the 2000 version, the Chancellor said:
"it is by tying new resources to reform and to results and by locking in incentives, penalties, inspection and information that we ensure that … investment goes to the front-line services … At every stage, money will be tied to output and to performance."—[Official Report, 18 July 2000; Vol. 354, c. 220.]
Finally—and my personal favourite—the Chancellor, with even more breathtaking hyperbole, said in The Sun on 13 November 2001:
"There is not going to be one penny more until we get the changes."
The use of the word "contract" in those contexts must have some metaphorical significance. It certainly has no purchase on the way in which public services have been managed since 1997, under the current Chancellor. That is because the main existing set of so-called contracts—public service agreements—remain largely unenforced and unenforceable. Take the Department for Education and Skills, whose first PSA objective is to
"ensure that all young people reach 16 with skills, attitudes and personal qualities that will give them a secure foundation for life long learning, work and citizenship in a rapidly changing world."
As far as I am aware, no Minister has resigned as a result of that objective not being met. The Department failed to reach its target of reducing by one third by 2002 the number of half-days lost to truancy, even though a budget had been specifically allocated to that purpose. The only result of the failure to hit that target was—wait for it—the reduction of the target by 10 per cent. and the date being moved to 2004. Moving the goalposts in that fashion has been a deplorable feature of the wretched and useless PSA target regime.
Some of the targets are rather arbitrary. No one seems to understand where the percentages come from or what cost-benefit analysis has been carried out to produce the

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figures. Suicides are to be reduced by 20 per cent. by 2010, cancer deaths by the same percentage, and deaths from heart disease by 40 per cent. Desirable though those objectives are, what is not clear is how they were arrived at.
Mr. Bercow: My hon. Friend is offering a penetrating dissection of the failures and absurdities of the Government's performance. Does he agree that the Government are guilty of the targets they have not met, the targets they will not set, and the targets that are meaningless? Does he also agree that if Government Departments have public service agreement targets simply to publish White Papers when they have obviously already decided to publish them, it is no great achievement when they do so?
Mr. Ruffley: I am grateful to my hon. Friend for making the point that I was about to make. Let me remind him of a figure that he brilliantly exposed: 43 per cent. of the 1998 PSA targets were not met in full by June 2002. I am grateful to him for disclosing such interesting facts, which were buried away in all sorts of annual reports; clearly, the Government hoped that we would not unearth them.
Were any of the funding allocation decisions in this year's spending review the result of PSA failures? In other words, did failure inform any of the allocations? Were financial penalties imposed on under-performing and offending Departments? Professor Colin Talbot, in evidence to the Select Committee last week, said no, there were not. I thought that I would go to the horse's mouth, and I put the question to the Chancellor last Thursday. He was typically evasive and would not give a straight answer. However, we know that he was unable to name one Department that had had its spending allocation adversely affected in the new spending review as a result of failure to hit any of the PSA targets. That is eloquent testimony to the futility and utter uselessness of the Chief Secretary, his predecessors and the Chancellor. So much for the tough talk of the martinet grinning on the Government Front Bench and his predecessors.
It is clear that the present regime, which has attempted to raise productivity and activity rates in the public services, has got virtually nowhere, despite the Herculean efforts of many of the dedicated public servants in our schools and hospitals, for example. I include the nurses, doctors and support staff and everyone else in the caring professions. Has the money that the Government have devolved been properly spent so far? Have funding increases for the NHS worked? I fear that the answer is a resounding no.
Between 1997–98 and 2001–02, the total health budget in England has risen by nearly one third. However, the number of patients treated in hospitals rose by an amazing 5 per cent., from 1,211,000 per quarter to 1,267,000. The failure in productivity means that waiting lists remain above 1 million. They have remained at that level since 1993 despite a public spending increase over that period, over two Governments, of two thirds.
What about the new money promised in the spending review? No one would doubt that some earnings catch-up is important if we are to recruit and retain good quality
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public sector workers. However, the evidence suggests already that the well-being of providers, and that of the unions at the forefront, is ranked ahead of increasing capacity and activity. In the year to last March, earnings grew, according to the Office for National Statistics, by more than 5 per cent. in the public sector, outstripping private sector earnings growth for the first time in nine years.
In the NHS, during 2001–02, 40 per cent. of the budget increase went on higher pay for existing staff while only 11 per cent. went to pay for new health workers. It is not immediately obvious to anyone that this is merely a one-off catch-up for past losses. Presumably, that is why the respected and independent director of health systems at the King's Fund, Mr. John Appleby, says that a similar proportion of the new NHS spending increases will also be consumed in higher salaries.
The other problem with public sector pay is that managers in the health service and elsewhere have not been given the necessary freedom by the Government to set pay according to local conditions and to chip away—indeed, abolish—national pay bargaining. Higher salaries are, of course, necessary in certain parts of London and the south-east to ensure that workers are recruited in areas where housing costs especially are very high. However, it is madness, under national pay bargaining rules, that such increases must be reflected in other parts of the country where the cost of living, especially in terms of housing costs, is much lower.
The Secretary of State for Health trumpets his new foundation hospitals. He says that these are the best performing hospitals that will be given greater autonomy. He does not tell us whether the hospital managers involved will have responsibility for staff working practices and the setting of staff remuneration levels. The answer is almost certainly not. That is why the Government have got it all wrong. We know in advance what the results will be.
What about failing schools? In his statement, the Chancellor seems to believe that local authorities or nearby more successful schools will be able to take over failing state schools. He seems to think that that is the way to improve productivity. We have heard that for five years now, but what is really required is the threat—the stick—of private sector providers being allowed to take over the management of a failed school. However, under the review last week, private providers will have no such freedom to come in, sack, put in their own management and remove failing teachers, without the unions invoking employment law. That is a bar to innovation and to increasing productivity, but the Chancellor did absolutely zero about it in his spending review last week.
An alternative to Gordon's Gosplan form of government could begin with reforming Whitehall. I worked in Whitehall for five years before 1997, with a very distinguished Secretary of State—my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). In those years, I saw that career civil servants could do things a lot better. They need to change, and they need to change fast.
I suggest that we as a country urgently consider the lessons that can be learned from the fantastically successful public sector reforms in New Zealand, where Ministers are chiefly responsible for the strategic direction of policy, but they have contracts with new-style chief

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executives, who are responsible for achieving the outputs and for the financial performance of the Departments. That involves removing the financial control from the Treasury and giving it to those chief executives.
The chief executive has control over departmental inputs. He can employ whom he likes. He can hire and fire. He can determine the procurement policy. He can even buy and sell departmental assets, provided that that is within the capital limits as described by the departmental balance sheet. Better chief executives are employed. There are fixed-term contracts, good bonuses and remuneration.
All those things are supplemented by the complete abolition of any requirement—implicit, or otherwise—that Departments have to procure services from central, monopoly providers. That is where we should start. That is what I believe the Opposition should, and will, be considering. We need a route map of the New Zealand kind to begin a long march through the public sector culture, which so desperately needs revolutionary change.
I conclude by saying that the Chancellor's brazen tossing of taxpayers' money into what too often seems like a bottomless pit, or even a leaky bucket, is behaviour that in the private sector would put him in breach of fiduciary duty at best, or put up on a charge with a court appearance next week at worst. He has tried to bamboozle the country in saying that money will be tied to reform when it patently has not been—not this year, not the year before and not the year before that.
The Chancellor has no concrete proposals for raising productivity in the public sector, and that is why many of those services will remain in relative crisis. He is reheating failed Labour polices from yesteryear, with some new Labour topspin added for good measure, as a substitute for the serious debate about the practical solutions that this country's public services are crying out for. Someone obviously told the Chancellor that he could be the new Nye Bevan. Unfortunately, he has believed it.
8.58 pm
Paul Goggins: May I begin, as other hon. Members have done, by acknowledging the importance and timeliness of this debate? Five years ago, we had an election dominated by tax pledges, which resulted in a new Government committed to keeping within inherited spending limits. I would be the last to hide from the fact that that involved very tough discipline during the first two years, but, unlike the hon. Member for Kingston and Surbiton (Mr. Davey), I can identify the benefits that that policy created.
In particular, the policy helped to bring about financial stability, together with the reductions in debt interest, to which the Chief Secretary referred in his speech, that are now worth £20 billion a year and an economy in which 1.5 million more people are now working and dole queues are shorter than they have been for 25 years.
During that Parliament and, indeed, in the first year of this Parliament, it has become clear that, after years of underinvestment in education, health and transport, many of our public services are failing to keep pace with the capacity demands and the expectations of quality that are placed on them. People, rightly, want better services and—this is every bit as important—there is increasing evidence that people are prepared to pay for them. It is
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this shift in public attitudes that has assisted the Chancellor in allocating the £61 billion extra for spending on our hospitals, schools and public transport by 2006. This is not funny money, or double counted; it is real and people do not want it back in tax cuts. But both the public and the Chancellor demand that the money is accompanied by real reform and change.
Over a fifth of the new money is to be allocated to education. I was reminded by my hon. Friend the Member for Workington (Tony Cunningham) of a visit I made 10 years ago to a school in Germany, where I looked enviously at the state-of-the-art classrooms, computers and other modern equipment in the school. With this new money, and the money allocated by the Government in previous Budgets, classrooms like that are becoming a reality in my constituency and in those of all hon. Members. That is happening not only in the leafy suburbs, but in some of the least advantaged communities in the country.
I also welcome the £1.5 billion invested in the complete roll-out of Jobcentre Plus, not least its introduction in my constituency from next April. At the moment, the Benefits Agency deals with benefits in an office that is close to the town centre, but the Employment Service runs the jobcentre two miles away from the town centre on the periphery of our community—frankly, in the place where the Tories put it in the 1980s when their policy was to get jobcentres off the high street and out of the town centre.
From next year, Jobcentre Plus will operate in the town centre. It will provide an integrated service and will use the best of new technology to transform not just the way in which the job is done, but the life chances and opportunities of those in my constituency who are still looking for work. That is a real example of investment accompanied by reform and change in the way in which we deliver services.
I welcome also the extra money for housing, an area that has been neglected too often over the past 20 years. I welcome the money for transport and for law and order, which will deliver more police officers and speed up the criminal justice system. There can hardly be a more important issue for our constituents.
One aspect of public expenditure announced last week by my right hon. Friend the Chancellor that has been welcomed on both sides of the House—it was referred to by my hon. Friend the Member for Dumbarton (Mr. McFall)—was the increase in development assistance. In the early 1970s, the UK and others signed up to the UN pledge that 0.7 per cent. of gross national product would be spent on development aid. The original idea was that that target should be reached by the end of the decade. By 1979, we had not fulfilled that pledge, but we had at least got spending up to 0.52 per cent. Since then, countries such as Sweden, Norway and Denmark have met the target and, in some cases, exceeded it.
By 1997, our contribution had fallen to a miserable 0.26 per cent. This subject has been a priority, I am proud to say, for Labour in government. The proportion is now 0.34 per cent and the announcement made by the Chancellor last Monday was of a figure of 0.4 per cent. by 2006. That will be just above the European average, which was promised at Monterrey. In real terms, that means a doubling of the amount that we spend in this country on development assistance since 1997.

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Again, it is investment accompanied by reform. Untying of aid, which began in April last year, is critical in getting better value for money out of what we spend on development assistance. Of course the stronger focus on poverty is moving us closer to the millennium development goals to which the Government are committed. Of course, 0.4 per cent is still not the 0.7 per cent. level that we need and there are still many problems in the world to overcome—the conflicts in Africa, the problem of HIV/AIDS and the continuing difficulties faced by heavily indebted poor countries as a result of the collapse in commodity prices.
If the rate of increase announced by my right hon. Friend last Monday can be sustained, however, it would bring us to 0.7 per cent. by 2012. That would fulfil the hopes of the 240 Members who have signed early-day motion 386, and it should evoke support and welcome on both sides of the House. I say in all sincerity that, despite the neglect in the 1980s and 1990s, this ought to be an area of policy on which there is no division across the House.
There is a great deal to be optimistic about, but we also face three significant challenges. The first, to which other hon. Members have referred, is the need for an open and honest debate about the balance of benefits to be gained from the extra money going in. How much will go in extra pay for existing staff? How much will go in higher charges to private sector suppliers and contractors? And how much will go in extra and improved services for our constituents?
I do not hide from the fact that those questions are complex, or that they overlap. Nor, indeed, should we hide from the tough questions raised by my right hon. Friend the Member for Llanelli (Denzil Davies), when he spoke of the global economic pressures that are building up. I am very clear, however, that the biggest winners must be our constituents, who, of course, fund public services through their taxes. I am not against public sector workers having a decent living wage. I am in favour of a campaign to try to eradicate low pay from our public services and elsewhere. Frankly, however, we need to ensure that a disproportionate amount of cash does not go to middle and higher earners in our public services who already benefit from the low-interest mortgages on offer and have the prospect of decent pensions in retirement. They cannot have the first call on the extra money.
David Taylor: My hon. Friend rightly details some areas of expenditure that might well soak up some of the Chancellor's good intentions. Does he accept that the private finance initiative and public-private partnerships fit exactly into that category, and that, as the years roll by, they will absorb greater and greater sums of money and crowd out the ability to expand infrastructure and up the rate of activity in the public sector? Does he recognise that as a real risk?
Paul Goggins: I suspect that my hon. Friend and I have slightly different views about public-private partnerships. He has, however, anticipated my next point, which is that a strong message needs to be sent to the private sector that we are not prepared to pass on the extra money in the form of higher charges for medicines, for example, or
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more expensive contracts, to which I am sure my hon. Friend was referring. We have a three-year time frame for improvement and, over that period, all those who are engaged in or supportive of public services must fight for the principle of public services funded by taxes rather than fees, and for the practical improvements that will justify that principle. That is a fight that we have to win.
The second challenge is to change the way in which our public services are delivered. Developing capacity alone is not enough; more of the same is not enough. We have to do things differently. For example, older people often need better physiotherapy in a primary care centre rather than a long wait to see a consultant who might not be able to do very much to help them. Doing things differently also means introducing neighbourhood wardens and community support officers to complement the vital work of the police. It also means introducing better intermediate and community care for older people, to avoid delayed discharges or lengthy residential care placements that are not always appropriate. We must encourage those who run our public services to be innovative and to ensure that those services are accessible and user-friendly. We do not just need more services; we need more effective services.
The third challenge is nothing less than to bring about a change in the culture of our public services, particularly in the way in which they are planned and delivered. It was right that, in the first term of this Government, there was a huge push from the centre to bring about the kind of rapid and dramatic changes that were required in certain areas. That meant that more patients were treated and, as the Chief Secretary pointed out earlier, that primary school pupils were leaving schools with better levels of numeracy and literacy.
For long-term change to be sustainable, however, we have to have a different approach. We have to match rising national standards with a greater sense of local ownership and control. Unusually—I hope that I do not vex my right hon. and hon. Friends in saying this—I agree with the words, at least, of the shadow Chancellor. In a speech last Monday, he said that we should be
"moving decision making closer to the people, the families and communities affected. It means trusting people to know what is best for their area".—[Official Report, 15 July 2002; Vol. 389, c. 32.]
Those are noble sentiments, and as I say, I agree with the words, but there are two reasons why I doubt the spirit behind what the right hon. Gentleman said, the first of which is the small matter of the 18 years in which the Conservatives were in power. During that time, they did precisely the opposite, centralising a great deal of power and doing much to undermine local democracy. The second reason is my strong suspicion that, in the shadow Chancellor's view, "local" means cheap. It does not.
For example, in my constituency we are about to introduce a demand-responsive bus service. Minibuses and people carriers will help to get people from home to hospital, the shops, transport links, and so on. That good and effective local initiative has come about only because central Government are providing £750,000 to make it happen. A local housing trust, Willow Park, is encouraging greater tenant participation at board level, but it began with £20 million of public funding from the Government. It is assisted with funds for closed circuit television schemes and for neighbourhood warden schemes. Another example is the panel of 300 local people who are helping to set local health priorities in the

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South Manchester primary care trust. Indeed, primary care trusts are another example of Labour reforms. We need to push power and decision making downwards, but let nobody be mistaken—it is not a cheap option.
If we achieve that greater sense of local and public participation, this Government will have created a distinctive feel-good factor; not the so-called feel-good factor of the 1980s, which was based on narrow self-centredness and the exclusion of the poorest in our society, but a feel-good sense based on communities that meet needs and foster inclusion and cohesion. I believe that the money is now in the system to give us real hope that we can achieve such a society.
9.12 pm
Mr. Alex Salmond: Thank you, Madam Deputy Speaker, for calling me at the climax of this debate. I have sat here for some four hours plus, and I have listened to the debate ebb and flow, although I should say that it has mostly ebbed. [Interruption.] It is going to get better. At times, the Scottish Grand Committee has taken on a new and attractive light. If I followed the example of some hon. Members, I would leave precious little time for the Front-Bench spokesmen to sum up. I do not intend to do that, but I am strongly tempted, given the length of some of the contributions, particularly from those who discussed "productivity" in the public sector. I found that somewhat amusing.
One of the "flows" in this debate was the first class contribution from the Chairman of the Select Committee, the hon. Member for Dumbarton (Mr. McFall). His was the most thoughtful speech by a mile. He argued that the Treasury forecasts are believable because public investment is very low as a percentage of gross domestic product—much lower than in the glorious reign of Baroness Thatcher, some 20 years ago. When asked whether that is a good thing for a Labour Member of Parliament, in particular, to be saying, the hon. Gentleman said that, in the Thatcher years, public investment was wasted on unemployment, but now it is diverted towards much more useful things. To some extent that is correct, but it is not the only point about the decline of public investment in the economy.
One example is gross public investment—investment in capital infrastructure in the public sector. In 1975, gross public investment in the UK was 8.9 per cent. of GDP; by 2000, it was 1.7 per cent. Even if we include private finance initiative schemes, that figure increases to only 2.1 per cent. The Wanless report was predicated on the argument that there had been £200 billion of underinvestment in the national health service over a generation. One difficulty that I have with the Treasury team's credibility as they deal with such points is that, for the past five years, the Chancellor of the Exchequer has argued that public investment and public spending has increased when it has not, and that taxation has not increased when in fact it has.
Mr. Tom Harris: I will keep this brief. The hon. Gentleman rightly referred to a low percentage of gross national product. Is he claiming that that represents a real-terms decrease? A percentage of a pie that is becoming bigger is not the same as a real-terms decrease. I hope that Hansard gets that right.
Mr. Salmond: Which is more than the hon. Gentleman did, but never mind.
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What I am saying is that by double-counting, triple-counting and quadruple-counting the Chancellor pretended that public spending increases were greater than they were over the past five years. Now we have reached a point at which there really are substantial increases in public spending, of which I approve. Indeed, I fought an election in Scotland on the principle of direct taxation leading to direct increases in public spending. I approve of the policy. I am merely saying that this Treasury team, and the Chancellor in particular, have a track record that does not necessarily lead us to believe everything that they say, given the experience of the past five years.
The hon. Gentleman put his finger on one important point, however. The argument relating to the credibility of these figures is not to do with the balance between the public and private sectors; it is to do with whether the rate of growth will hit the Chancellor's targets and make the public spending increases affordable, or whether the international situation and other factors will crowd in and cause difficulties.
One of my reasons for being critical of the Chancellor and the Treasury team for missing the boat is that over the past five years the international economic environment has been much more benign than it is likely to be over the next few years. It will be much more difficult to sustain substantial increases in public spending in that difficult and uncertain environment.
The Chairman of the Select Committee spoke of a trend growth rate of 2.5 per cent. That is not a fancy figure in international terms. In the past 10 years the Irish economy has grown at a rate of 7 per cent., the Norwegian economy at a rate of 4 per cent., the United States economy at a rate of 3.3 per cent. and the Dutch economy at a rate of 2.7 per cent. As for the revised figure of 2.5 per cent. over the past 10 years, there was a higher average growth rate during the last five Tory years than in the past five years under the present Chancellor. The trend figure is already modest; if it is "crowded in" further, the public spending increases will be extremely difficult to meet. However, I approve of the Chancellor's conversion to the notion of honest direct taxation—a "Penny for Britain" in national insurance—as a means of financing such increases.
I am glad that the Chief Secretary has returned. He made an uncharacteristically rude, windy, feart, faint-heart, evasive and thoroughly disreputable speech, during which he refused to give way to me. I must confess that that contributed to my interpretation of his speech. I wanted to ask him a very simple question: is a review of the Barnett formula under way in the Treasury or not? Three Treasury Ministers are present, including the Chancellor. I merely ask for a reasonable "yes or no" answer, rather than an impassive scrutiny of papers.
I am tempted to say that when three people are silent a number of possibilities come to mind. Certainly silence speaks volumes on this occasion.
In the Western Mail of 10 July the Deputy Prime Minister clarified matters, saying that no review was in progress, but he conceded that information-gathering might lead to changes. Let me ask the Treasury team this: what is the difference between a review and information-gathering that may lead to changes? That is a perfectly legitimate question—one that a Chancellor of the Exchequer should be able to answer, and one that any member of the Treasury team should be able to answer. I hope that the Financial Secretary will manage to answer it when she winds up the debate.

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The importance of the question is obvious when one compares the comparable Barnett-affected figures for Scotland and the increases announced by the Chancellor. The review includes a 6.5 per cent. increase in money for health, education and transport, whereas the comparable Scottish figures show an increase of 4.5 per cent. That is the reality behind the spending review, and of the Barnett squeeze.
The irony is that many hon. Members believe that the Barnett formula protects Scottish public spending. However, at a time of increased public spending, the formula will result in rapid convergence to the average. The same thing happens in Northern Ireland, as the hon. Member for North Down (Lady Hermon) knows. It happens in Wales too, as hon. Members from that country know.
The Chancellor will have been following closely the evidence on identifiable public spending that has been given to the Treasury Committee. I was interested to note that, according to the analysis by Professor Ian Maclean—and leaving aside the unidentified spending going to huge Government Departments, to transport infrastructure and elsewhere—even identified public expenditure per head in London is almost identical with that in Scotland.
If that is regarded as unfair, why is there not a Barnett formula for London? Why is there a Barnett formula to converge spending in Scotland with the rest of the UK? The questions are not inconsequential. If the Scottish increases were on a par with the UK total that the Chancellor has announced, there would be additional spending in Scotland of £1.5 billion over the next three years. That would be worth £300 for every man, woman and child in the country.
The question therefore requires an answer. I do not favour having the Barnett formula squeeze Scottish spending, but neither do I agree with the Deputy Prime Minister, who wants to squeeze Scottish spending further and faster.
I see that the Chancellor himself is informing the Financial Secretary about what to say in her reply. I look forward to hearing it.
I do not approve of the argument that Barnett should be replaced by something even worse. That would have serious consequences for Scottish spending levels.
Many hon. Members might approve of a solution that made the Scottish Parliament responsible for raising its own revenue, and for making its own expenditure decisions. The most recent Conservative Member to adopt that position was the right hon. Member for Haltemprice and Howden (David Davis). Perhaps his fate today would render inauspicious any attempt to convince independent-minded Conservative Members about that solution, but a growing number of Labour Members of the Scottish Parliament can see the sense of not being at the mercy of a convergence formula such as Barnett. They do not want to be at the mercy of the Deputy Prime Minister either, but want a Scottish Parliament robust and responsible enough to make its own expenditure decisions.
That might not be the most popular notion with the Chancellor, who does not believe that any Government Department—or school, or hospital—should have real discretion. However, such a power would be good for the
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Scottish Parliament and for Scottish spending decisions. It would be good also for the growth rate in the Scottish economy—the key economic variable determining whether increases in public expenditure can be sustained in the long term, or whether this Chancellor is offering, in this spending review, a boom and a bust in public expenditure.
9.23 pm
Mr. Eric Illsley: I welcome the spending review and the overall spending allocations announced by my right hon. Friend the Chancellor. I especially welcome the increased spending on education and health, which are two of the Government's priorities. In the short time available, I shall dwell briefly on those two areas.
I congratulate my right hon. Friend the Chancellor on his bold commitments and on his stewardship of the economy which, despite the current economic climate and the uncertainty in the stock exchange, has made the spending increases possible. However, my main question with regard to the spending review has to do with how money is allocated and distributed to areas such as mine. The failure of some of our distribution formulae and systems has meant that some of my constituents will not benefit from the total amount announced by the Chancellor in the review. We will continue to struggle to provide better standards of education, an improved health service and better public services administered by local government simply because the distribution mechanisms are unfair in my area. The funding mechanisms for health, local government and education are biased against my constituency and other metropolitan areas.
Areas such as mine are receiving less money for health this year than they were last year, and we must address that anomaly. In 2001–02, Barnsley health authority was funded at 98 per cent. of its target. This year, it will be funded at 97.2 per cent. of its target, so technically, the money available to my local health authority is decreasing because it is funded below that target. Unfortunately, no one has an answer to this; it is not just this Government who have consistently underfunded Barnsley health authority. There was a long period under previous Governments, especially the Tories, when the funding received was considerably less than our funding target.
In its franchise plan, the strategic health authority for South Yorkshire gives the figures for the funding targets for my local health authority. As I said, funding at 97.2 per cent. means that we are 2.92 per cent. short of our funding target. Our two neighbouring authorities, Rotherham and Doncaster, are funded at 99.8 per cent. and 99.1 per cent. Even local authorities close by get more money than we do—there is no rationale behind that funding structure.
In reply to a questions that I asked the Secretary of State for Health recently, he said that Barnsley received an uplift of something like 10 per cent. at the last funding allocation. That money is going to fund that gap between 97.2 per cent. and the 100 per cent. target. The funding gap equates to something of the order of £6 million. The 2002 settlement of 10 per cent. was generous, but my health authority has had to use the increases awarded to fund the year on year gap in health funding.
The initiatives and targets placed on my health authority make up part of the problem. It cannot meet those targets because the funding is ring-fenced and has

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to go to initiative targets when the authority needs to spend money on closing the funding gap. Simply as a consequence of the lack of funding to cover that gap, my health authority is likely to be described as a failing health authority and have restrictions imposed on it. Yet a further new target has been imposed by the comprehensive spending review to cut accident and emergency admission waiting times to no more than four hours by 2004, and other targets have been reaffirmed.
My health authority, struggling as it is, 3 per cent. short of its funding target, is still already close to meeting even the new targets that my right hon. Friend has imposed because of the effort and hard work of its staff. It is not that the health authority is badly administered but that the funding is being diverted into meeting the historical underfunding in my area. My health authority will not have the money to reach the new targets, however, because it cannot keep using scarce resources to bridge the funding gap while still trying to meet the targets imposed on it.
Why is my health authority historically funded at such a low level? Why cannot the money be made available under the distribution formula to bridge that gap to give us the funding that we require in Barnsley?
On education, I welcome the increase of 6 per cent. in overall funding and the direct payment to schools. My local authority has consistently passported the extra money on education standard spending assessments through to schools and made sure that education is a local priority. Once again, funding is largely ring-fenced in terms of education initiatives and other initiatives, whereas the other services block—for example, to provide a range of other services apart from education and social services—is squeezed, again because the distribution formula does not work for my area.
I know that the local government review has been announced, but the material issued with that review says:
"Since the system can only distribute the available resources, it must be based on comparisons between authorities rather than absolute measurements of need to spend."
My local authority requires an assessment based on its needs. It requires a distribution formula based on the needs of the area; otherwise, it will simply lose out again and again. Again I ask, why is it that my local authority can get 70 per cent. less funding than other authorities, such as Manchester, Birmingham and Liverpool? There is absolutely no reason for such a shortfall in funding.
I shall bring my remarks to an end, because unfortunately, in this short debate, some hon. Members have probably been less considerate than others in taking such a long time over their speeches. My message is that unless we get the distribution formulae correct and address historical underfunding anomalies, the welcome news of the extra money for all our public services will not be recognised by the wider public.
9.31 pm
Mr. John Bercow: It has been an excellent and sometimes highly charged debate, to which there have been several first-class contributions.
My starting point is simple. In the year 2005–06, the Government anticipate spending £511.4 billion; we need to know what that means. It means that the Chancellor of the Exchequer proposes to spend no less than £16,216.39
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for every second. Translated into a meaningful statistic—on the strength of the lamentable speech by the Chief Secretary to the Treasury tonight, I think that the House and people outside will want to know what it means—it means that for the 34 minutes for which the Chief Secretary to the Treasury expected us to listen to him, we were charged a bill in public expenditure of £33,081,435.60. So when 34 minutes is taken up by the Chief Secretary, that is what the Government are spending, supposedly on the public services of this country.
The central thrust of the speech by my right hon. and learned Friend the shadow Chancellor was that simply to boast about the level of expenditure without securing the detailed constructive and effective reforms of the way in which public services are delivered will not produce the results on which the people of this country depend, and which they are entitled to expect from a Government who have had two landslides and enjoy an impregnable parliamentary majority.
As my right hon. and learned Friend said on Monday 15 July, we have heard it all before; we have heard what the Government say and seen what they fail to achieve. The truth of the matter is simply stated. In 1998, the Government promised improved public services to renew Britain. In the year 2000 spending review, the Chancellor committed himself to achieve—I quote, so as not in any way to be unfair to him—service improvements, key reforms and much-needed modernisation. No amount of flannel, no amount of rhetorical verbiage, no amount of typically aggressive and meaningless posturing from the Chief Secretary can conceal the reality that in terms of the quality of services, the Government have not delivered.
It really will not do for the Chief Secretary to fail to answer the central challenge: why have the Government now decided that the Treasury itself, which is the architect and arbiter of public service agreements, cannot measure whether it has achieved its own? To bluff, to bluster and to disdain criticism, but to fail to respond to that central challenge was a searing indictment of the generally poor speech that we heard from the Chief Secretary.
Mr. Tom Harris: The hon. Gentleman is very generous in the number of times that he gives way. At the start of this debate, his right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the shadow Chancellor, told the House that he could not commit a future Conservative Government to matching the spending committed by this Government because he was not confident that the reforms presented were adequate. Last Thursday, however, his hon. Friend the hon. Member for North Essex (Mr. Jenkin) not only committed a future Conservative Government to matching defence spending, but to improving on that spending. What reforms have been implemented at the Ministry of Defence that have so impressed the Conservative Front-Bench spokesman?
Mr. Bercow: Unfortunately, the hon. Gentleman has totally misunderstood and misquoted what my hon. Friend the Member for North Essex (Mr. Jenkin) said. The shadow Secretary of State for Defence has certainly not committed himself to increased resources beyond those that the Government have already pledged. The hon. Gentleman is wrong. I know the facts, I have seen the evidence, I have read the speeches and I have had the

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discussions. I know the position of my hon. Friend: it is a commitment to secure the quality of protection for the people of this country that we need. We are not pledged to increase resources but to devise a new, credible, effective and attractive alternative to Government failures for the delivery of public services. We are not prepared to be hidebound and narrow in our approach or to be restricted to the low-level terms of debate on which the Government insist.
The Government are stuck in an old-fashioned mindset, which says that all that matters is money. I am grateful to the hon. Gentleman because he spurs me to invest my speech with additional vigour. The people of this country are interested not in words but in deeds. They are interested not in inputs, but in outputs—not in promises, but in performance. When the people of this country make a judgment about the effective use of public expenditure, the question in their minds will simply be this: are we getting the three things that we want from the money that the Government spend, which we have given them in our taxes? The three things that the people of this country will tell the hon. Gentleman and the Chancellor of the Exchequer that they want are: results, results, and results.
In the past five years, the people have heard the promises, seen the spin, observed the misrepresentation and, above all, they have been disappointed by not merely the gap but the gaping chasm between the words that Ministers utter and the deeds that they do.
Roger Casale rose—
Mr. Bercow: I will not give way at the moment.
The conflict that exists now between the rhetoric and the reality is so stark that it ought even to embarrass the normally unembarrassable hon. Member for Wimbledon (Roger Casale).
Warming to my theme, I will deal with the specific public services. Frankly, the Chief Secretary, who is an intelligent and often an amiable man, debauched the currency of this debate from the outset. The right hon. Gentleman, who is justifiably proud of his recent promotion, seemed to forget that we are here to identify ways to improve the quality of the lives of our constituents and our fellow citizens as a whole. The reality of the Government's performance is a dismal catalogue of under-performance: of hopes destroyed, promises broken and trust betrayed.
Let us take the example of the national health service. I do not need to misrepresent the Government's position because the track record is poor enough studied according to its own lights. The Government have increased public expenditure on health since they took office by approximately 30 per cent. During that time, we had nearly 78,000 cancelled operations last year and we have witnessed that, on average, it takes four months to get an in-patient hospital appointment compared with a maximum wait of four weeks in France. As anyone who studies the situation should be appalled to discover, in today's national health service, under a benighted Labour Government who have taken more and more of our money in taxation since they took office, there are more administrators than there are beds.
The hon. Member for Dumbarton (Mr. McFall), the Chairman of the Treasury Select Committee, made a potent contribution. He drew attention to the danger of
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wage demands. He recognised the need for local involvement in the delivery of public service agreement targets. He was chary, and with good reason, of some of the rhetoric of Ministers, but the one thing that he did not appear to recognise was that, in Scotland, a constituency within which he ably represents, we see evidence of the mismatch between money spent and improvement delivered. He knows that since his party took office expenditure in real terms on health in Scotland has risen by 28 per cent., but simultaneously the average waiting time for treatment in Scotland has risen by 25 per cent.—more money spent but not a better performance delivered. That deals with health.
Roger Casale: Will the hon. Gentleman give way?
Mr. Bercow: No. The hon. Gentleman may tempt me in a moment or two if he is patient but there were other contributions. I might want to refer particularly to the excellent contribution by my hon. Friend the Member for Sevenoaks (Mr. Fallon), who was rightly sceptical of the Government's position, and the truly devastating critique of Government performance that came from the lips of my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley). Not for nothing are they the twin terrors of the Chancellor of the Exchequer on the Treasury Committee.
Let us talk about the quality of the education system. The Government have increased expenditure on education since they came to office by about a quarter. What do we see in terms of Government performance? We see that on a typical day 50,000 children play truant from our schools. We know that there has been a 300 per cent. rise in the number of assaults by pupils on staff. We observe a doubling of teacher vacancies in our state schools. We recognise the appalling burden on teachers, who have to put up with 17 pages of paper spewing forth from the Department for Education and Skills every day, amounting to no fewer than 4,440 pages a year. That is the reality of Government performance in education. Last year, fewer people achieved the Government's numeracy target than the year before.
It is no good the Chief Secretary saying that all is well and dandy when the truth is that 43 per cent. of the Government's own public service agreement targets have not been met. As I have had reason many times to observe, for the Government to fail to achieve public service targets set by independent experts would be disappointing. To fail, however, to achieve the targets that the Government have themselves set requires incompetence on a truly spectacular scale.
Of course, it is true in relation not just to health and education but to transport. Last year, one in five trains failed to arrive on time. People who experience the public transport system at the grass roots know that delay, congestion, cancellation, danger and vandalism is the regular diet. It is the normal state of affairs. It is not the exception; it is all too commonplace.
Roger Casale: Will the hon. Gentleman give way?
Mr. Bercow: I want briefly to point out the serious failings in Government performance in relation to law and order but if the hon. Gentleman is that keen, I shall be my normal indulgent self.
Roger Casale: I congratulate the hon. Gentleman on his new appointment. His contributions to debates on

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public expenditure will be greatly missed on the Labour Benches. Before he takes up his new appointment and shuts down his Treasury brief, perhaps he can tell the House whether there are any aspects of public expenditure other than defence and international development where a future Conservative Government would match the increases that the Labour Government announced last week.
Mr. Bercow: That was very disappointing. I blame myself. My natural generosity of spirit got the better of me. It is a pretty rum individual who expects the Conservative party to produce the details of its manifesto for the next election precisely 13 months after its devastating defeat at the last.
David Wright: Will the hon. Gentleman give way?
Mr. Bercow: I recognise the impatience of the hon. Gentleman. He will have to be patient.
In relation to law and order, the Government have spent more, trying, honourably and decently but unsuccessfully, to fight crime. They have increased resources by 25 per cent. in real terms. Now, crime is rising by 7 per cent., violent crime is rising by 11 per cent., robbery is rising by 28 per cent.—
Hugh Bayley: Will the hon. Gentleman give way?
Mr. Bercow: No, I will not. Street crime is rising by 31 per cent. The central proposition that the Government have not been able to answer is this: for the last five years, they have spent more money, promised reform, failed to deliver it, and presided over a continuing deterioration in the quality of public services on which the citizens of the United Kingdom depend. We are not going to be trapped in that discredited gobbledegook that says more money alone will solve the public service ills from which this country suffers. We are determined instead to listen, to look and to learn. Labour Members may be all in favour of giving power to people in European Union institutions whom we do not elect and whom we cannot remove. What a pity that they do not want to learn from the practical experience of countries that are more successful, in their public services, at translating care from a word to a deed. They have failed to do it. They have closed minds, closed ears and closed intellects. We have opened minds, opened ears and opened intellects.
We will fashion a credible policy. We will communicate it honestly. We will subject it to the scrutiny of the electorate. We are determined to get rid of the highest-taxing, heaviest-regulating, most pompous, sanctimonious, politically correct sisterhood called new Labour, and to get a Conservative Government in office led by my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), who will promise less and deliver better in the interests of people who have suffered too much too long from a Government who have nothing left to offer.
9.47 pm
The Financial Secretary to the Treasury (Ruth Kelly): We have had an interesting debate this evening, with useful and—may I say?—measured contributions from my hon. Friend the Member for Dumbarton
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(Mr. McFall), my right hon. Friends the Members for Llanelli (Denzil Davies) and for Newport, East (Alan Howarth), and my hon. Friends the Members for Wythenshawe and Sale, East (Paul Goggins) and for Barnsley, Central (Mr. Illsley).
We have talked about choices—political choices. We have made ours. In our election manifesto, we promised to put schools and hospitals first. In the Budget, my right hon. Friend the Chancellor announced the largest sustained increase in spending on the NHS since it was founded in 1948. We now have an unprecedented opportunity to re-establish the historic consensus in favour of the NHS: free at the point of use to all who need it. The Tories oppose our funding and seek to unravel that national consensus, which has endured for 50 years, in favour of charges and cuts.
The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) appealed to our compassion this evening. Why should he set out his spending plans for our scrutiny? Why, indeed. We learned two important and interesting facts this evening. First, we found out from his answer to one of my hon. Friends that he stands by his earlier comments that the NHS is a Stalinist creation. We also found out that the hon. Member for Arundel and South Downs (Mr. Flight), the new shadow Chief Secretary to the Treasury, does not deny that he wrote in a memo to the shadow Chancellor:
"The reforms which we will be proposing will end the NHS monopoly and will entail those who can afford it making some payment for health care services".
No wonder he is hiding behind the camouflage of reform. They talk about reform; instead, they mean cuts. They talk about learning from abroad; instead, they mean charges. They talk about consultation; instead, they mean forcing the sick to pay for being sick. Let them explain why they do not support our health service reforms and our money, and why they are considering charges for visits to hospitals and GPs.
In the spending review, my right hon. Friends the Chancellor and the Chief Secretary set out their commitments to education. Over the next three years, there will be a 6 per cent. real rise in education in England—the biggest sustained rise in a generation. That will include £165,000 direct to secondary school heads, rising to £180,000, and £50,000 direct to primary schools. There will be more resources for further and higher education. That is what we mean when we say "education, education, education".
I defy Conservative Members to go back to their constituencies to tell head teachers why they do not support the extra money that we are giving to secondary schools and directly to primary schools, or the 6 per cent. real terms increase in education spending. Why did the Conservatives say in their manifesto at the last election that they would support our education and health spending and our reforms, and why have they turned away from that now? What has changed? Do they believe that they were being too generous just a year ago?
Five years ago, when we came to power, we inherited a legacy of economic failure and social decay. Money was being wasted on debt and debt interest, and high unemployment was a further drain on the Exchequer. Public services were starved of resources and public servants were starved of support. Because we have cut public sector debt from 44 per cent. of national income to

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30.4 per cent. last year, and have cut unemployment by more than 700,000 and created a new framework for monetary policy and tough new fiscal rules, we are now in a position to build on the successful reforms of our first term and to introduce the investment and the reform that the public sector desperately needs.
Debt interest is at its lowest as a proportion of gross domestic product since the first world war. Debt interest payments have fallen by more than £6.5 billion since 1997, so more money has been freed up for investment every single year. Britain's debt has been reduced to the lowest level of national income in the G7 and to the lowest of all our major European competitors.
Within that framework, we have the strength to invest for the long term and to reverse the chronic underinvestment of the 18 years under the previous Conservative Government. The investment has already started to go in and we have already seen the results. Instead of 500,000 children in classes of more than 30, there are none today. There are 20,000 more teachers in schools, and 100,000 more students in universities. We have 10,000 more doctors and 39,000 more nurses, but there is still a lot to do.
Holding strictly to the public spending totals that my right hon. Friend the Chancellor set out in the Budget, we are raising departmental spending from £240 billion this year to £263 billion next year, to £280 billion in 2004–05 and to £301 billion in 2005–06. By 2006, we will have increased public spending by £61 billion, and that is £61 billion a year more for improved public services.
In each area of service delivery, we are tying new resources to reform and results, developing a modern method for running efficient public services, setting national targets with performance monitored by independent and open audit and inspection. Front-line staff will be given the power and flexibility to deliver, thereby extending choice, rewarding success and turning around failure.
There has been much discussion in the debate, not least from the hon. Member for Kingston and Surbiton (Mr. Davey), about the new inspection regime. We as a Government are determined that the extra £61 billion allocated to public services will deliver results. We are tying the resources to reform and results through streamlined arrangements for accountability and audit. I would have thought that the Opposition would welcome our new inspection regime.
Those of us who believe in public services know that we have a special duty to make sure that public money is well spent and spent efficiently. We are as determined to secure value for money as we are to secure money for services. [Interruption.] I hear jibes from those on the Opposition Front Bench, but this Government want value for money, whereas the Opposition seem to want value without money.
Points have been raised about the inspection regime, but I must point out that the National Audit Office's responsibilities are completely unaltered by the new inspection arrangements. The new bodies will amalgamate and streamline existing performance and value-for-money work, so the National Audit Office will continue to have an important and valuable role in monitoring the new arrangements.
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My hon. Friend the Member for Dumbarton made some interesting comments about public service agreements. I am extremely pleased to hear that the Treasury Select Committee will continue to take an active interest in monitoring the Government's performance against our performance targets. By setting clear, measurable targets, publishing information on each of them and collating that information in one easily accessible location, we empower not the Government, nor even the Treasury, but the people who elected us and who can use that information to hold Departments to account. The National Audit Office has said:
"the introduction of Public Service Agreement targets, and in particular the move to outcome-focused targets, is an ambitious programme of change which puts the United Kingdom among the leaders in performance measurement practice."
This is about transparency and accountability as a necessary component of good governance. We are learning from best practice in the private sector and applying it for the first time to the process of government.
Alongside the new performance targets, each Department will publish separately detailed implementation plans as to how they intend to meet those targets. They will be open to public scrutiny and debate, and I am sure that they will monitored by many hon. Members, not just those on the Select Committee. I look forward to that.
We heard several interesting contributions. I am sorry to have missed the speech by my right hon. Friend the Member for Newport, East, who gave a passionate and erudite exposition of the case for university museums and collections and for making a change to the VAT regime. I remind him that the impact of tax changes is already included in spending allocations, although I take his point as an early representation on the next Budget.
I also enjoyed the comments of my hon. Friend the Member for Wythenshawe and Sale, East, who agreed that money has to be accompanied by reform, and gave specific examples of reforms that are making a real difference in his constituency and others.
On the comments of the hon. Member for Banff and Buchan (Mr. Salmond), with whom we have had some dealings in the House over the past few weeks and months, I may say that they might have had more credibility had he not opposed the extra money that is coming through the taxation of the North sea oil regime. He cannot stand up in the House and argue for more resources for Scotland if he does not back the revenue-raising measures that go alongside that.
My hon. Friend the Member for Barnsley, Central made an impassioned plea for his local authority and for others in the north of England. The options are currently being discussed and I look forward to his active participation in those consultations. I am sure that my ministerial colleagues with responsibility for local government will take that into account.
As for Liberal Democrat Members who suggested that in the comprehensive spending review we have succumbed to the demands of the Liberal party for extra resources to be put into our public services, I should like to point out a couple of facts. By comparison with what the Liberals promised at the last election, by 2006 we

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will be spending £9 billion more than they promised on education, £25 billion more on health, £6 billion more on transport and an extra £1 billion on international development. From a sedentary position, the hon. Member for Kingston and Surbiton refers to the trend rate of growth. I know that he made that point during his contribution. We base our fiscal forecasts on cautious estimates for the trend rate of growth, and all those estimates have been audited by the National Audit Office.
By 2006, we will be investing a total of £61 billion a year in public services. We have established testing targets, independent audit, new powers, new flexibilities, new responsibilities for front-line agencies and systems of sanctions for those who fail to deliver. We are building on the successful reforms of our first term to deliver improvements in education, housing, defence, development and productivity. Resources matched by reform to deliver results—that is what the spending review sets out. I commend it to the House.
Mr. John Heppell: I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

PETITIONS

  Ian Stillman
  10 pm
  Hugh Bayley: As I rise to present a petition calling for the release of Ian Stillman from prison in India, I notice in the Chamber my hon. Friend the Member for Reading, East (Jane Griffiths) and the hon. Member for Romsey (Sandra Gidley), who have played a prominent part in pressing for his release. I pay tribute to my hon. Friends the Members for Leeds, North-East (Mr. Hamilton) and for Reading. West (Mr. Salter), who have also taken up the case of Mr. Stillman.
  The petition is addressed to the House of Commons and comes from readers of the Yorkshire Evening Press, which ran a campaign pressing for Ian Stillman's release. It notes that Ian Stillman is an inspirational aid worker who has given 27 years of his life to working with the deaf of India. It declares that he has been wrongfully imprisoned in India, and expresses concern that no provision was made for his own profound deafness at his trial—a fundamental abuse of his human rights. It also expresses great concern about his health and the fact that he has been denied appropriate treatment while in prison.
  The petition is signed by Liz Page, editor of the Evening Press, Monica Stillman, my constituent and Ian Stillman's mother, Roy Stillman, my constituent and Ian Stillman's father, and a further 5,474 people from York and surrounding areas.
  The petition states:
  The Petitioners therefore request that the House of Commons urge the Foreign Secretary to make representations to the Government of India to arrange for Ian Stillman's immediate release.
  To lie upon the Table.

Carlisle United
10.2 pm
Mr. Eric Martlew: I rise to present a petition signed by 14,991 supporters of Carlisle United football club. The petition was drawn up because the owner of Carlisle United declared that he was to withdraw the club from the football league. Since that statement has been made, however, it appears that there could be a change of ownership of Carlisle United—and we hope for that.
The petition states:
The Petitioners therefore request that the House of Commons make strong representations to the Football League to ensure that Carlisle has a club with a place in the League. If the Football League fail to do this, the Petitioners request the House of Commons to consider legislation to change the rules regarding ownership of football clubs to ensure that they recognise they are a community asset that cannot be extinguished by the wishes of an individual owner.
And the Petitioners remain, etc.
To lie upon the Table.

Manslaughter (Sentencing)
10.3 pm
Linda Gilroy: I have the petition of Mrs. Pat Cager and some 4,451 others. It states:
The Petition of Mrs. Pat Cager and others declares that her husband Tony Cager was kicked to death at their thirtieth wedding anniversary party; that Tony Cager's killer also kicked the son in the face and rendered their daughter unconscious as they went to his assistance; that the killer had thirty-two previous convictions and was out of custody on bail at the time of the killing; that the killer was convicted of manslaughter but, despite the circumstances, only received a prison sentence of four years four months; and that the Petitioners believe that this is a travesty of justice.
The Petitioners therefore request that the House of Commons urge the Secretary of State for the Home Department to review the criminal law of manslaughter and the principles relating to sentencing to ensure that manslaughter sentences adequately reflect the seriousness of the offence.
And your Petitioners remain, etc.
To lie upon the Table.

Pensioners (Free Travel)
10.5 pm
Mr. Lindsay Hoyle: In presenting this petition to the House, let me give its background. The people of Chorley and old-age pensioners in my constituency, and people in other constituencies whose pensioners suffer the same fate as those of Chorley, feel disadvantaged by comparison with pensioners in London, Wales and other places where there is free travel for old-age pensioners. That should not be, which is why I bring this petition to the House.
My hon. Friends the Members for Morecambe and Lunesdale (Geraldine Smith) and for Bolton, North-East (Mr. Crausby) also support the petition. In common with hon. Members on both sides of the House, they have campaigned strongly in support of the petition's aim of ensuring a level playing field for all old-age pensioners.

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The petition states:
The petition of residents of Chorley and others,
Declares that all old age pensioners should have free off-peak travel on buses and trains.
The petitioners therefore request that the House of Commons urge the Secretary of State for Transport to make it his policy to allow all pensioners to travel on buses and trains free of charge after 9.30 am.
And the petitioners remain, etc.
To lie upon the Table.

Lockerbie Disaster
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kemp.]
10.6 pm
Mr. Tam Dalyell: May I start my 17th Adjournment debate on the appalling crime that was Lockerbie with a personal word of explanation? Alongside some British relatives dedicated to truth and justice. and other people, not least Nelson Mandela, I helped to persuade the Libyans to surrender Mr. Fhimah and Mr. Megrahi for a trial under the Scottish judicial system in a third country. In good faith, we believed and hoped that the trial at Zeist would be satisfactory and convincing. Alas, it was not.
For an adversarial system of justice to arrive at the truth requires both of the adversaries to place before the court all information available to them. In the Lockerbie trial, the defence team of Abdel Bassett al Megrahi chose not to do so. In such circumstances, the adversarial system does not work if we want to arrive at the truth. I therefore ask the following questions.
Does the Foreign and Commonwealth Office have any knowledge of an $11 million payment having been received by the Popular Front for the Liberation of Palestine—General Command on or about 23 December 1988, evidenced by a credit to a bank in Lausanne, and moved from there to an account at the Banque Nationale de Paris, and thence to the Hungarian development bank?
Or does it have knowledge of a payment of $500,000 made on or about 25 April 1989 to the Degussa bank of Frankfurt and Mohammed Abu Talb, a convicted murderer, incriminee of the Lockerbie trial and a long-term suspect in the Pan-Am 103 bombing?
Secondly, if the Security Service had any knowledge of either payment, did it communicate that knowledge, in whole or in part, to any police force in the United Kingdom and/or to the Crown Office in Edinburgh? If such knowledge was imparted, when was it imparted?
Thirdly, did the intelligence services discover the identity of "Abu Elias", which is believed to be the nom de guerre of the person who, according to the Goben memorandum, conspired to place a bomb aboard a plane in Frankfurt on 21 December 1988, and who, according to Marwan Khreesat, was part of the Autumn Leaves conspiracy uncovered in Germany in October 1988? If so, what is believed to be the name of that individual, and were his movements between October and December 1988 detected?
Fourthly, when Mr. Alan Turnbull and Mr. Norman McFadyen went to the US embassy in The Hague on the Lord Advocate's behalf on or about 1 June 2000 to view unredacted CIA cables—recording meetings with the prosecution witness, Jiacha—was an assurance or undertaking, whether written or verbal, given by them to British intelligence or to the US authorities that they would not disclose what they had been shown?
Fifthly, on what date did the Crown witness, Mohammed Abu Talb, arrive at Zeist, and on what date did he depart? During the period he was incarcerated at Zeist prison, was he visited by Crown-listed witness Jamilla Mougrabi, his former wife, or any representatives of the prosecution, or the US Department of Justice?

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If so, who authorised such visits, when were they made and what was their approximate duration? What was the purpose of any such visits, by either the prosecution or the US Department of Justice, and was there any record in audio, video or in writing of them?
Sixthly, was the Crown witness Jiacha interviewed by, or did he meet, any representatives of the prosecution or the US Department of Justice, outwith the witness box during the period when he was a sworn witness? If so, who authorised such meetings or interviews, when and where did they take place, and who was present?
Seventhly, did the UK know of any inducements or undertakings given to Crown witness Mohammed Abu Talb to encourage him to give evidence for the Crown at the Zeist trial? If so, what is that knowledge?
Eighthly, was Crown witness Tony Gauchi, the Maltese shopkeeper, taken to the USA or to the UK at any time before he gave evidence at the Zeist trial? If so, when did such visits take place, who instigated them and what was their purpose?
I believe that there has been a catastrophic miscarriage of justice and that an innocent man is in Barlinnie tonight and every night for more than 19 years.
10.11 pm
Miss Julie Kirkbride: I support the Father of the House and congratulate him on securing the debate. When the Minister replies, I hope that he will respond to a principal issue that concerns one of my constituents, Dr. Jim Swire, who, I believe, is listening to these proceedings. His daughter, Flora, was murdered on the night of Lockerbie in the aeroplane. He has been campaigning for a long time for a public inquiry into the circumstances of that night.
I agree with Dr. Swire that, of the many incidents that have occurred in the UK, Lockerbie is the biggest mass killing that has ever taken place. There have been public inquiries into other incidents, but there has still to be a public inquiry on Lockerbie. Successive Governments have said that there should not be such an inquiry due to the legal proceedings that were taking place against suspects. Irrespective of the guilt or innocence of the individual who has been found guilty of the Lockerbie bombing, judicial proceedings are now completed and there is no prospect of anyone else facing charges. The view of the Foreign Office that there should not be a public inquiry because it might prejudice the judicial proceedings now lapses.
When the Minister answers the points raised by the Father of the House, I should be grateful if he would take up the issue of the Government holding a public inquiry into this important issue, not least in the light of the circumstances of 11 September. There is a greater need for people to feel reassured by airport security. The lessons that might have been learned from the Lockerbie incident might well be relevant a decade later. I hope that the Minister will respond to that point.
10.13 pm
Mr. Russell Brown: I congratulate my hon. Friend the Member for Linlithgow (Mr. Dalyell) on securing the debate. I was a local councillor in the area when the tragedy happened. As time progressed and we moved towards trying to secure the arrest of two
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individuals who were suspected at that time, I was heavily involved as chair of the police authority in my area. I did not receive regular information about how the case was proceeding or evidence was being drawn together. I was fairly confident that the process of pulling together evidence and pursuing the case was fairly straightforward and above board. We have been dealing with probably the worst terrorist tragedy that this country has ever seen. Heaven forbid that that tragedy is ever exceeded in any shape or form.
My hon. Friend the Member for Linlithgow had the confidence at the time to plead the case for a trial to be heard under Scottish law. That trial has been heard. An appeal on behalf of al Megrahi has also been heard. If the defence team representing that individual chose not to put forward an appropriate defence, little can be done about that. I am not convinced, however, that those in his defence team did not advance the appropriate defence to try to secure the release of their client.
Having said that, there are a considerable number of unanswered questions, to which the families need answers—only time will tell whether they will be as detailed as some of the questions that my hon. Friend has asked this evening.
I, like others, have asked about the possibility of holding a public inquiry into the incident. I have met the Foreign Secretary. On a further occasion, I met him and some of the relatives, and he clearly explained that, although a public inquiry is being called for, there is sometimes more than one way to get answers. Sometimes, public inquiries have not delivered what people have sought: truth and justice into a number of incidents that have tragically befallen families.
I hope that the Minister can give us an indication at least about whether we are moving towards a public inquiry and—if not a public inquiry—about how families in this country, America and other countries who lost loved ones can, at the end of the day, get answers to some of the basic questions that arose on the evening of that tragic event.
10.17 pm
Mr. Henry Bellingham: As the hon. Member for Dumfries (Mr. Brown) rightly points out, what the families want above all else is the truth. Like my hon. Friend the Member for Bromsgrove (Miss Kirkbride), I represent a couple of constituents—Martin and Rita Cadman—who lost their beloved son in this appalling murder, and what they want above all else is the truth.
There are a number of loose ends, and we have not had answers to our questions. There will be many excuses as to why they have not been investigated hitherto, but the time has now come to have a proper, full public inquiry. I very much hope that the Minister will be able to answer the questions posed by the Father of the House.
This is the first time for some months that we have discussed this subject. Obviously, until fairly recently much of what has been said tonight would have been considered sub judice because of the ongoing legal action. I congratulate the Father of the House on this debate, and we must have answers to those questions.
I wish to put a couple of other questions to the Minister. First, we know that the hangar in which the luggage that was in transit was being transferred on to the fatal flight

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was broken into, but we have not yet had an explanation of why there has not been a proper investigation into what happened that evening during that break-in.
Secondly, the scene of the appalling crash obviously covered many square miles, but it is common knowledge that, within hours of daylight, dozens of CIA agents were crawling over the site. We have not yet had an explanation of what they were doing there, who had liaised with them, who had given them the authority to go on to the site and exactly what they were doing.
I would just add those two questions to those posed by the Father of the House. We must have answers to those questions, but, above all else, we need a full public inquiry into this appalling murder—the worst in the country's history.
10.19 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): I congratulate the Father of the House, my hon. Friend the Member for Linlithgow (Mr. Dalyell), on obtaining this debate on an enormously serious issue.
The destruction of Pan-Am 103 at Lockerbie, with the loss of 270 lives, was the most horrendous terrorist attack ever carried out in the United Kingdom. For everyone involved in the attack, particularly those whose loved ones were murdered, the horror and tragedy of what happened on 21 December 1988 can never go away. Dr. Jim Swire wrote to the Foreign Secretary this week:
"Fourteen years ago I looked into the dead eyes of my dearest eldest daughter."
Confronted with such a savage attack on its citizens, the British Government have a moral and practical imperative to answer key questions. Who was responsible? How did they do it? Could we have stopped them? How can we make sure that it never happens again?
Despite the cynicism of those who thought we would never make progress, the Government have responded to these imperatives and these questions with an unprecedented police, diplomatic and legal mobilisation. Those efforts have produced results. Last year, the unique format of a Scottish court sitting at Camp Zeist in the Netherlands convicted Abdel Basset al Megrahi, an agent of the Libyan intelligence services, of conspiracy to bomb the plane. The conviction was upheld on appeal in March.
I am assured that the conviction answers many of the key questions. How did it happen? A bomb was loaded on to a plane at Frankfurt, concealed inside a cassette recorder. The bomb was set to explode while the plane was en route from Heathrow to New York
Who did it? One or more officers of the Libyan intelligence services, including Megrahi. We know a good deal about why. The court established that the murders were carried out:
"In furtherance of the purposes of the Libyan Intelligence Services."
I do not know what motivated the Libyan intelligence services to carry out such an attack, nor whether the attack was carried out with high-level authorisation. But we are clear that for a number of years in the 1980s, Libya used terrorism as a foreign policy lever. The destruction of Pan-Am 103 was followed by equally savage attacks on
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UTA flight 772 and the La Belle disco. The international community showed its detestation of those attacks by applying a comprehensive sanctions regime to Libya for much of the 1990s. Those sanctions demonstrated Libya's separation from the civilised world and were intended to penalise Libya economically.
In response to those sanctions, Libya has, since the early 1990s, radically changed the basis of its foreign policy. It no longer uses terror as a tool. The UK has responded to this—and particularly Libya's surrender of Megrahi and another suspect for the Lockerbie bombing—by re-establishing diplomatic relations and agreeing to the suspension of the UN sanctions regime.
However, it remains essential that Libya makes amends for Lockerbie by satisfying the requirements that the United Nations Security Council has set out. Libya took a crucial step by releasing two suspects for trial, but only when all the requirements have been met will we support the final lifting of sanctions.
The four requirements are that Libya should renounce terrorism, agree to co-operate with further police inquiries into Lockerbie, pay compensation and accept responsibility for the actions of its official. We are talking diplomatically, at senior official level, with the Libyan and American Governments about those requirements. Our discussions are progressing well, but are not yet finished.
We wish to see our relations with Libya improve and to see United Nations sanctions lifted as soon as possible. However, realising these benefits will be possible only once Libya has wholly satisfied the requirements. We will, of course, keep the relatives and this House informed of future progress on the diplomatic track.
That is our current approach to Lockerbie. I now turn to the two specific questions that my hon. Friend the Member for Linlithgow asked during Foreign Office questions this afternoon. First, he asked whether British security and intelligence services have any knowledge of an $11 million payment, having been received by the PFLP-GC on 23 December 1988.
Various reports of PFLP-GC funding emerged after the bombing of Pan-Am flight 103. The intelligence agencies investigated all those reports and found none to have any relevance to the attack. I am informed that there is no connection between the payments and Lockerbie. Indeed, I have been told that the intelligence services are not aware of any payment that corresponds with the details given in the question.
I am informed that a similar amount was paid 18 months before the Lockerbie attack, but that there is no connection between the two. The Government's view is that the PFLP-GC did not carry out the Lockerbie bombing. If that payment was related to other issues, we do not know precisely what they are, but it is our view that the lapse of time between the making of the payment and the eventual outrage suggests that the two were not linked.
My hon. Friend's second question was whether the security and intelligence services had any knowledge of a payment of $500,000 to Mohammed Abu Talb on 25 April 1989. I am advised that the answer is no; the services have no such knowledge. There were references to money in Talb's evidence given at the Lockerbie trial—$5,000 in relation to the Copenhagen bombings, a bank loan of 45,000 krone that Talb secured to start a video business, and a sickness benefit payment of 4,000 krone—

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but I am advised that the services have no references from this or any other source to amounts or dates that correspond to those mentioned by my hon. Friend.
I am aware that during the intelligence services debate on 11 July, my hon. Friend raised a number of other detailed questions. It remains the Foreign Secretary's intention to write to him with a full reply to those and the further questions that he has raised. I would say to my hon. Friend that the Lord Advocate is responsible for the Turnbull matters, and I understand that he will write to my hon. Friend about them. In relation to any possible further charges, Dumfries and Galloway police have complete freedom to investigate and bring charges as they see fit. Part of our diplomatic effort is to ensure Libyan co-operation with these inquiries.
I would like to address one other issue that my hon. Friend raised on that previous occasion, namely, the role of Eliza Manningham-Buller. The Security Service announced to the press at the time of Ms Manningham-Buller's appointment as director-general that she had previously been head of the section responsible for counter-terrorism. She held that role at the time of the Lockerbie attack—a time when that section's work was, of course, dominated by that awful event. She was head of counter-terrorism and worked on the Lockerbie case. So what? What else would she have done?
I turn finally to the important issue of a public inquiry. The Foreign Office has had regular contact with the relatives in recent years. The Foreign Secretary has met them twice in the last year to brief them on the progress of diplomatic talks with the Libyans and to discuss their interest in a further inquiry. I say "further inquiry" because there have been several inquiries already. There has been a hearing of the air accidents investigation branch, a fatal accident inquiry, an inquest, a criminal trial and an appeal. The Select Committee on Transport has reviewed aviation security in the light of Lockerbie. Numerous Departments and agencies of government have reviewed their workings to ensure that the lessons of Lockerbie have been learned. Much has been learned and many procedures have been changed. Aviation security has been entirely overhauled since 1988.
On 21 May, the Foreign Secretary met the relatives and ran through the reasons why the Government do not favour a public inquiry. Above all, we cannot see any areas of uncertainty that such an inquiry could effectively address. The trial has, as I have explained, clarified a great deal. The exact motivation for the attack is something that perhaps only Megrahi can fully explain. I hope that he will do so at some point.
Mr. Dalyell: Will my hon. Friend give way?
Mr. O'Brien: We are pressed for time, but I will give way briefly.
Mr. Dalyell: I saw Megrahi for two and a quarter hours, and he explained everything. He told me that he was a sanctions buster for Libyan Arab Airlines, which is a bit different from being a mass murderer.
Mr. O'Brien: Being a sanctions buster may well be somewhat different from being a mass murderer, but it is not my role as a Minister of the Crown to second-guess the finding of a court that has heard all the evidence and looked at all the circumstances. These issues have been looked at very thoroughly and, in my view, so far as we can evaluate this, the conviction was made as a result of the evidence put before the court.
I cannot imagine how a public inquiry would compel Megrahi to set out the details of the motivation that allowed him to act as he did. Public inquiries are poorly adapted to the handling of intelligence material, particularly material obtained through liaison with foreign services. Of course, it must be accepted that those services might not agree to disclose such material. Furthermore, a great deal of time has passed since Lockerbie. Many potential participants in an inquiry will have retired, died or lost detailed recall of some of the issues of the 1980s, even if the tragedy itself will always be burned in their minds.
As the Government cannot see the potential benefit of an inquiry, it is hard to justify such a lengthy and expensive process. With regret for the disappointment that this will cause to the families, I therefore have to repeat the Foreign Secretary's message—the same has been said in the Chamber on several occasions—that we will not be calling a public inquiry.
However, as I told the House this afternoon, we remain open to other forms of review, inquiry, scrutiny or study that will add to the families' and our knowledge of the circumstances surrounding the Lockerbie bombing. We will continue to consider the options. If we can find a focused approach that offers insight, without the shortcomings that I have mentioned, this Government will pursue it. I will seek to keep the House and the families informed, as will my right hon. Friend the Foreign Secretary.
This is a matter that we are deeply and seriously concerned about, but we want to consider it further. We want to ensure that, when we do make some judgments on how to take the matter forward, they are the right ones. We owe that to the families and, indeed, to all involved.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes to Eleven o'clock.