Commons Sitting of 27 June 2002

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    MILFORD HAVEN PORT AUTHORITY BILL [LORDS]
    Read a Second time, and committed.

    LONDON DEVELOPMENT AGENCY BILL (BY ORDER)
    Order for Second Reading read.
    To be read a Second time on Thursday 4 July.

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

    Abandoned Vehicles
    Bob Russell: What additional measures she plans to take to prevent vehicles being abandoned.[63000]
    The Minister for the Environment (Mr. Michael Meacher): We are determined that keepers of vehicles should take full responsibility for them. An accurate and complete vehicle register is crucial. We are legislating through the Finance Bill to improve the register's accuracy, and we are talking to the motoring organisations and the motor trade about implementing reform of the vehicle licensing system.
    Joint action by all enforcement agencies in Operation Cubit has led to nearly 7,500 more vehicles being on the Driver and Vehicle Licensing Agency register. Finally, we are extending DVLA's powers to wheel clamp and remove unlicensed vehicles after 24 hours.
    Bob Russell: I am grateful to the Minister for the measures that are being taken and the new measures that have been proposed to tackle an antisocial menace. I invite the Minister and his Department to examine the best practice being carried out by Colchester borough council. The number of abandoned vehicles is increasing, but because of the expertise of Geoff Kirby, the street care officer, and work in the DVLA and other agencies, the number of vehicles destroyed has been almost halved. Coupled with the Evening Gazette's "clear the wrecks"
    938
    campaign, the battle is being won. May I suggest that other local authorities around the country look at that best practice?
    Mr. Meacher: I am happy to do that. Operation Cubit operated in Kent, but there has also been a successful pilot in Newham, and I understand that three other local authorities—Wandsworth, Croydon and Southend—are following. We want to learn from good practice. If the hon. Gentleman will send me a statement or get the police and fire authorities and the local authority in his area to provide a statement, I will ensure that it is fully taken into account.
    Joan Ruddock: Does my right hon. Friend understand the tremendous frustration in the London borough of Lewisham, my local authority, where, despite a pilot project in co-operation with DVLA, there is an enormous problem of abandoned vehicles, and particularly of fictitious drivers and no records at the DVLA? Will he and his colleagues look at the very best practice, which I understand is in Holland, where the owner of the vehicle and the new buyer together have to sign the registration document?
    Mr. Meacher: I am happy also to agree to that. We have been considering a system of dual registration, both by the last owner and by the buyer. There is a great deal to be said for such a system. I am conscious of the number of unlicensed vehicles that are often abandoned. As I said, we have reduced the period that unlicensed vehicles removed by local authorities must be stored before they are destroyed. The proposals that my hon. Friend makes with reference to the licensing system are good ones, and the Government will make a further statement on the subject soon.
    Mr. Andrew MacKay: Does the Minister accept that his proposals announced today are long overdue, and that the situation is getting worse in most of our constituencies? It is essential that the owners of cars are traced and prosecuted, and that cars are removed quickly. Is it possible to ensure that more facilities are available for people who have a car that has reached the end of its life to have it decommissioned and destroyed effectively and cheaply? If that were the case, there would be less dumping.
    Mr. Meacher: I agree with both points. The problem has arisen as a result of a collapse in the value of scrap metal, in conjunction with the deficiencies of the vehicle register. We are not responsible for the first; we are trying to deal with the second. I indicated that in the relatively small area where Operation Cubit was put in place and in the relatively short time scale in which it operated, 7,450 motorists were induced to relicense their vehicles, producing £1.3 million of additional revenue. In order to get the licence, motorists had to produce MOT and insurance certificates. It is a major effort to ensure that all motorists meet their responsibilities. I had a long and useful meeting with the authorities responsible for Operation Cubit, and commissioned a report from them as to the basis on which the success of that experiment could be extended across the country. I expect to receive that any day.

    939
    On the question of motorists having opportunities to send or take their cars to an appropriate place, under the end of life vehicles directive, which becomes fully operational for manufacturers and importers in 2007, appropriate facilities are already being put in place. We announced on 21 April that the last owner will be responsible up to 2007 for ensuring that the vehicle is taken to a proper place for disposal.
    Andrew Mackinlay: Regrettably, many vehicles that are deemed abandoned were originally stolen. I urge the Minister to take up with his Home Office colleagues the need to ensure that the police communicate expeditiously with owners, as cars that languish stolen and abandoned are often vandalised, which is the real problem in a very large number of local authority areas. The police must also be sympathetic to people; when they say that they want the vehicle for forensic information, they should not present the poor owner—the victim of the crime—with a bill for its recovery, as they currently do.
    Mr. Meacher: My hon. Friend is right. Many unlicensed, uninsured vehicles without MOTs are owned by the local criminal fraternity. I understand that cars change hands in the local pub for £40 or less. We are making changes to the vehicle registration system to ensure that the last owner will be responsible, but if he wishes to avoid responsibility, the new owner is required to notify as well. That dual registration system is a way of protecting the last owner. The police whom I met as part of the meeting on Operation Cubit were extremely enthusiastic about that arrangement and were keen for it to be extended. I take his point about undue liabilities being placed unfairly on the last owner; we are alert to that issue.
    Mr. Jonathan Sayeed: We support the principle of the end of life vehicles directive, which comes into force in some four days' time, but we have to question the way in which it is being implemented. Why will the Government not say how much it will cost owners to dispose of their redundant vehicles? Will the Government compensate local authorities for the inevitable increase in dumped cars and tyres? Will they give extra support to the fire and police authorities for the £5,000 to £10,000 cost of dealing with a burnt-out vehicle? Does the Minister understand that if he fails to learn the lessons of recent history, he will be doomed to repeat the environmental mistakes of not ensuring that we have the ability to deal with problems before they occur£and the car calamity will follow the fridge fiasco?
    Mr. Meacher: I am aware that the hon. Gentleman likes to make the comparison with fridges at every single opportunity, but he is way off the mark. As he well knows, the point about fridges is that, because we were informed extremely late, after two and a quarter years' waiting and nine separate approaches to the Commission, we had only seven months in which to implement the regulation and did not have the proper technology.
    On cars, many dismantling and scrap yard facilities already meet the increased treatment standards required by article 6 and annexe 1 of the directive. We do not anticipate any problem. We have the technology, the numbers and the standards—it should not be a problem. With regard to help
    940
    for local authorities, all I can say to him is that we are aware of the situation and are considering it in the context of the current spending round.

    Packaging
    Mr. Bill O'Brien: If she will make a statement on the impact of EU directive 94/62 on the packaging and packaging waste industries.[63002]
    The Minister for the Environment (Mr. Michael Meacher): A number of industries have obligations to recover and recycle certain tonnages of packaging waste under the producer responsibility obligations. Obligated businesses have together increased the UK's recovery performance from some 30 per cent. in 1997 to 48 per cent. in 2001.
    Mr. O'Brien: I thank my right hon. Friend for his response, but the industry and local government are concerned about the impact of the directive on business through the increase in targets and the way in which the targets are operated. Those in local government are particularly worried about the impact on their collection and recycling systems and reclaiming of landfill. Under a recent declaration, we could be flooded with waste tyres from Europe. Will my right hon. Friend meet representatives of the industry and take note of the anxieties that are being expressed by those in local government? Will he also ensure that we do not allow waste tyres from Europe to be dumped in the United Kingdom?
    Mr. Meacher: My officials and I have had repeated meetings with industry representatives about targets. I have to say that the recovering and recycling performance of UK industry is low compared with the rest of the EU. We inherited one of the lowest recycling and recovery rates in the EU. Recovery has substantially increased from 30 per cent. in 1997 to 48 per cent. in 2001, and recycling has increased from 27 per cent. in 1997 to 42 per cent. in 2001. The European requirement is that there should be a steady increase in the level of recovery and recycling, and other states manage to do that. We must ensure that we have sufficient time to put in place the necessary infrastructure to enable our industry to achieve what are intended to be stretching targets.
    On tyres, there are two target dates of 2003 and 2006. I have discussed the targets with industry representatives, and we believe that we can meet them perfectly well. I am happy to receive further representations from the industry. I take note of my hon. Friend's point about not receiving waste tyres from Europe, and I am happy to talk further about how we can prevent that.
    Mr. Patrick McLoughlin: As the Minister considers the complications of the issue, will he point out to those in the industry that they could achieve a great deal by reducing the amount of packaging that they put on their goods—they seem to have made no movement whatsoever towards doing so? Do companies have any incentive to do that, or does it mean that they have to meet higher targets on recycling?
    Mr. Meacher: No, there are strong incentives for companies to reduce packaging. The regulations provide

    941
    an incentive to reduce the amount of packaging by placing a tonnage recovery and recycling obligation on business, so the less packaging a company handles, the lower are its costs. Where a business is re-using a certain tonnage of packaging, that tonnage is excluded from the obligation. That is a powerful internal incentive to reduce packaging.

    Recycling
    Gregory Barker: What progress the Government's packaging recovery note scheme has made in encouraging the growth of new recycling initiatives. [63003]
    The Minister for the Environment (Mr. Michael Meacher): The UK's packaging recovery system, including the packaging waste recovery note and the packaging waste export recovery note, has succeeded in increasing the UK's packaging waste recovery level from some 30 per cent. in 1997 to 48 per cent. in 2001.
    Gregory Barker: I welcome that increase, but the Minister would admit that we still lag way behind our European partners in recycling rates. Does he agree that that disappointing performance is not the fault of Wastepack, and can he give examples of further initiatives that have been taken since the new Secretary of State was appointed last year?
    Mr. Meacher: I am very surprised that the hon. Gentleman refers to relatively poor performance, given that I have said three times in the past 10 minutes that there has been an improvement of some 60 or 70 per cent. since 1997. Performance was extremely poor before 1997, and the hon. Gentleman's Government were responsible for that through their arrangements with industry. We have made a dramatic improvement, although it is not enough and I entirely accept that we must go considerably further. I agree that our performance is not outstanding compared with that of other EU member states, but it represents a major improvement and we are on a steady and rapid upward curve.
    The hon. Gentleman also referred to Wastepack. We did not achieve our recovery obligation in 2001£02 because Wastepack, one of the 19 registered compliance companies, failed to meet its obligation by a large margin of 235,000 tonnes. It is based in Scotland, and is therefore a matter for the Scottish Environment Protection Agency. I understand that the Scottish Minister for Environment and Rural Development is considering whether to withdraw approval from the scheme. However, the UK achieved its recycling objective and its material-specific targets. Despite the Wastepack episode, UK industry did well last year.
    Mr. Eric Illsley: What progress has been made in extending the packaging waste regulations to wood recycling? The introduction of packaging recovery notes—PRNs—would encourage recycling schemes for timber, thus reducing the amount of new timber that we must use in this country. As far as I know, the regulations do not extend to wood products.
    Mr. Meacher: My hon. Friend makes a good point. The scheme has been primarily aimed at paper and board
    942
    and has not concentrated on wood as a form of packaging. Discussions have taken place about that in Europe, and I agree with my hon. Friend that we need clearer targets and a clearer commitment to reduced wood packaging.

    Foot and Mouth
    Mr. Peter Luff: If she will visit Throckmorton to discuss with local residents the management and consequences of the foot and mouth disease burial site there. [63005]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): That is not possible at the moment. My officers are working closely with the local community to develop site restoration and management plans; I anticipate an early, satisfactory conclusion to their efforts.
    Mr. Luff: The hon. Gentleman is a compassionate, humane and diligent Minister. I therefore urge him to reflect again on the implications for local residents of the Department's actions at Throckmorton. There is growing anxiety that the cells in which 130,000 animal carcases have been buried were not properly constructed. Mysterious illnesses, such as throat infections, are striking people who live near the burial site. Their homes have become unsaleable through a combination of those circumstances and the Home Office's decision to go ahead with an asylum accommodation centre in the area.
    The Department has established a precedent by buying two houses from local residents. The Government are renting them out on the open market, and effectively they thus cost them nothing. Will the Minister consider extending that precedent to other local residents who are in pressing personal need of making a move and selling their houses, which are currently unsaleable on the market?
    Mr. Morley: The hon. Gentleman makes a strong case on behalf of his constituents, and we recognise that it was unpleasant for anybody who lived near any sites where animals were being disposed of at the height of the national foot and mouth emergency. However, the site is now closed and being grassed over. It is being properly run and monitored, and we have no evidence of pollution there. At the hon. Gentleman's request, our head of the foot and mouth claims unit has visited every family to listen to their anxieties.
    As the hon. Gentleman knows, we have no legal obligation to purchase houses, and we examine the cases on their merits. We shall consider his representation carefully.
    Mr. Eric Martlew: As my hon. Friend knows, the village of Great Orton in my constituency contained the largest burial site in England. I want to ensure that there are no more such burial sites anywhere—
    Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman, but the question is closed and relates to the constituency of the hon. Member for Mid-Worcestershire (Mr. Luff). However, there is a connection with the constituency of the hon. Member for West Worcestershire (Sir Michael Spicer)
    Sir Michael Spicer: For the reasons that my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) mentioned, does not the Minister have a duty to ensure that the existence of the burial site at Throckmorton is fully taken into account by the forthcoming public inquiry into the asylum centre?
    Mr. Morley: All the relevant issues will be taken into account in the public inquiry, and I am sure that if there is any relevance in relation to the use of the site, that will also be considered. We recognise that there is a duty on the Department in relation to the proper management of all the sites, including Great Orton, which my hon. Friend the Member for Carlisle (Mr. Martlew) mentioned, and I believe that they are being monitored and run in a proper and responsible manner. We also have a duty to minimise the cost to the public purse, and we have to look at those issues as well.
    Mr. Speaker: Order. Do Opposition Front Benchers wish to come in? The same rules apply. No, they do not.

    Special Extinguishment Orders
    Mr. David Chaytor: When she will issue a consultation paper on special extinguishment orders. [63006]
    The Minister for Rural Affairs (Alun Michael): I have now published proposals on how we will enable local authorities to close or divert alleyways on housing estates, where this is necessary to cut crime. I have also published proposals on the closure or diversion of footpaths on school premises to promote pupil and teacher safety.
    Mr. Chaytor: May I thank my right hon. Friend for that reply, and say how much the consultation paper will be welcomed by officers in the Bury division of the Greater Manchester police, who are keen to move to these special extinguishment orders? Does he agree, however, that it has taken rather a long time to get to this position? Will he assure the House that, when the consultation period concludes on 20 September, he will ensure that his Department analyses the response to the consultation as quickly as possible, so that police forces and highways authorities across the country can introduce the special extinguishment orders, in particular, to advance their work in crime prevention?
    Alun Michael: I thank my hon. Friend for that comment. Yes, this has taken a long time. That is partly because the requirements of the Countryside and Rights of Way Act 2000 are complex, precisely because there is a need to balance the closure of rights of way with the protection of them. The designation process is being used to ensure that there is no inappropriate use of this facility. I will certainly take a personal interest in ensuring that the results are analysed as soon as the consultation period is over, and that the facility becomes available to police and local authorities as quickly as possible. We have accelerated the process, although I agree with my hon. Friend that this has taken longer than I would have liked.

    Electrical Goods
    Mr. John Randall: If she will make a statement regarding her Department's strategy for recycling electrical goods. [63007]
    The Minister for the Environment (Mr. Michael Meacher): The Government are committed to increasing the reuse and recycling of all types of waste, including electrical goods. We welcome the EU waste electrical and electronic equipment directive—the WEEE directive—which may be adopted towards the end of this year, as its objectives are in line with our national strategies on waste.
    Mr. Randall: Has the Minister made any estimate of the costs to local authorities of implementing the directive?
    Mr. Meacher: The additional costs, over and above current practice, are estimated at between £190 million and £390 million. I hasten to add that the higher figure is entirely dependent on the adoption of the most expensive form of implementing the directive, which would come about if one of the requirements set down by the European Parliament in its vote on this issue were to be adopted—namely, the banning of the disposal of waste electrical and electronic equipment in the household waste stream. That has yet to be discussed, and there will be conciliation on this matter. The directive is still in draft; it will probably not be decided before the end of the year, and it remains to be seen whether that option will be adopted. It might be better to regard the additional costs as of the order of £200 million, and that will, of course, be taken into account in the current spending round.
    Mr. Colin Breed: The Minister will be familiar with the refrigerator situation. This week, we have learned that television sets might also be caught under the toxic waste provisions of the landfill directive that will come into force shortly. The recycling of television sets might seem rather strange, but, bearing in mind the change from analogue to digital, is any work being done to find out whether, rather than disposing of lots of television sets, some of them could be recycled as part of the digital switch-over?
    Mr. Meacher: I presume that the hon. Gentleman meant recycling television sets, not recycling programmes, which goes on already.
    The aim of the directive is not just to achieve a more environmentally sustainable form of disposal. The objective is to secure the recycling and reuse of component parts. That is what the directive is designed to do, and I believe that it will have a considerable effect.
    As the hon. Gentleman was good enough to make the refrigerator comparison, let me again make it absolutely clear that the circumstances involving fridges were unique. We were given only seven months to implement an arrangement for which we did not have the technology. It consisted of a regulation that came into force in exactly the same form everywhere in the Community. Member states have greater flexibility in transposing WEEE because it is a directive. The current position is very different from that involving fridges, and I do not believe

    945
    that those problems will occur again in the case of the WEEE directive or those relating to the end of life of vehicles, hazardous waste or landfill.
    Mr. David Lidington: I wish the industry and the general public could share the Minister's optimism, but his record to date does not encourage such an expectation.
    Will the Minister confirm that from next month European law will require every one of the 2 million television sets that are disposed of annually in this country to be treated as hazardous waste? That will require their collection and disposal by specially licensed operators. Is the Minister confident that the new arrangements for licensing and disposal will be ready on time—or was the spokesman for Dixons right when he said earlier this week that televisions could start mounting up like fridges?
    Mr. Meacher: I should be very surprised if a representative of Dixons, which is a very responsible company, had made such a loose and idle comment. That is certainly not the case.
    Before I answer the hon. Gentleman's question may I, with grace and enthusiasm, welcome him to his new position? I am sure he will do very well as Opposition spokesman, and I am sure he will maintain that post for a very long time.
    As I have said, the WEEE directive is still in draft. We do not know the final details, and probably will not know them until the autumn. The hon. Gentleman, however, also referred to the hazardous waste directive. There has been a delay in the determination of exactly what the waste acceptance criteria are, but the Commission recently completed that determination—rather late, but not as late as previously—and the criteria will of course be adhered to.
    I believe that the criteria are manageable, and that there will be no special difficulties. The WEEE directive will not come into operation until 2004, so we have nearly two years, and I am sure we can manage the criteria satisfactorily.
    Mr. Lidington: I thank the right hon. Gentleman for his gracious words of welcome, but I feel that the phrase he used earlier—"loose and idle"—in connection with the statement by the Dixons spokesman could serve as a summary of the Select Committee's verdict on his policy on refrigerators, which can be found in its recent report.
    My hon. Friend the Member for Uxbridge (Mr. Randall) asked about the costs of the WEEE directive, which, as the Minister says, is due to come into force in about two years and will affect everything from freezers to electronic greetings cards. It will be complicated and expensive to administer. The industry and local authorities are asking the Government to make clear whether Ministers expect the costs of administration and recycling to be borne primarily by manufacturers, retailers or local authorities. The Minister has two years in which to give people time to plan. Will he now state clearly on whom he wishes the burden of those additional costs to fall?
    946
    We are currently hearing statements from the industry like that of the director of development at Biffa Waste Services, who said—again, earlier this week
    "If you thought the fridges were bad, you wait until all these other things come through. We haven't got a strategy, we haven't got a plan, there's no consultation with industry and no communication with the public. Instead we are standing around in the corner of a field with our hands in our pockets."
    Is that not an accurate description by an industry spokesman of the lackadaisical and complacent approach that the Minister and his colleagues are taking?
    Mr. Meacher: I did see that alleged quotation from Peter Jones of Biffa Waste Services, and I was extremely surprised by it because I have always regarded him as a thoughtful representative of the industry. It was an extremely loose and rather silly statement, and when I see him I shall make that clear.
    The truth is that the directive requires member states to set up a system for the separate collection of waste electronic and electrical equipment, with a target for private households of 4 kg on average per inhabitant per year. We have two years to implement that, but as I have already made clear, changes could be made in the common position as it was left by the European Environment Council. In particular, the European Parliament has proposed that there should be mandatory individual producer responsibility, or collective producer responsibility if the former is disproportionately costly. That is one unknown. Secondly, it is proposing a higher collection target of 6 kg per head of the population and, thirdly, the banning of the disposal of waste electronic and electrical equipment in the household waste stream. That would certainly be very costly.
    It is impossible to calculate the final costs until the exact form of the directive has been decided. It is certainly not true that there has been no consultation with the industry. I cannot understand how any responsible industrial representative should say that. I have had discussions with the industry about this matter and my officials have had many more. I expect to have still more in future. We are prepared to look at the matter and to consider industry's requirements. Indeed, we want to do all that we can to assist industry, but comments such as that from Peter Jones are not helpful and not accurate.
    Mr. Dennis Skinner: Does the Minister agree that when Mrs. Thatcher was Prime Minister, she was the one who laid the basis for all these tinpot directives that he is having to deal with now, backed not only by the Tories who were in the House at the time, but by those tinpot fanatical Liberals? This lousy, rotten Common Market has a lot to answer for. There are a few moments when I have the desire to rush across there and tell them to get stuffed. Then I get back to reality and say, "Thank God I voted against it all."
    Mr. Meacher: The only point where I can agree with my hon. Friend is that I also voted against in 1974. I have changed my mind, and quite strongly, particularly with regard to the environmental acquis.
    Whatever one feels about the details of some of these directives, and I agree that they are contentious and we contend many of them, the thrust of the range of recycling and recovery directives has enormously improved the environment in this country. There is no question about

    947
    that. The state of our water, air and contamination levels have significantly improved. That is largely due to Europe. That does not mean that everything it does is right—I certainly do not think that either—and we need to be much more active, and industry needs to be involved at a much earlier stage in producing the changes that we want. Change should not just be imposed by Brussels.

    Common Agricultural Policy
    Mr. David Drew: If she will make a statement on progress towards the reform of the CAP. [63008]
    The Minister for Rural Affairs (Alun Michael): We expect the European Commission to publish its proposals for reform of the CAP on 10 July, and expect a preliminary discussion at the Agriculture Council on 15 and 16 July.
    Mr. Drew: I thank my right hon. Friend for that answer. Everyone now supports reform of the CAP, which is failing taxpayers and consumers. It is an important reason why we are delaying the entry of the new entrants to the EU. The environment is not doing well, while the CAP does not seem even to be supporting farmers' incomes. If we cannot have radical reform, is there not a case for abolishing the CAP, certainly as it is at the moment.
    Alun Michael: My hon. Friend conditions his question by saying, "certainly as it is at the moment," but the point is that we want radical reform of the CAP. We are urging the Commission to publish radical proposals, and we are pushing for—for example—a shift in support under pillar one from production subsidies to environmental and rural development measures. Such changes have proved their value through the England rural development programme. We have made it clear that that direction—which is supported by the Curry commission report, and by other countries that want reform—is the right one to take. Let us hope that all other European countries support us in that.
    Mr. David Curry: As the right hon. Gentleman said, the Commission is publishing its proposals for the mid-term review on 10 July. At roughly the same time, the Government should know how much money they will have available in the fundamental spending review, and whether they can implement the Curry report's central environmental proposals. In the Government's view, should they implement the Curry report as soon as the money is available, or should they wait until the framework has been established as part of the negotiations for the mid-term review, so that the European framework—which appears to be quite similar to the Curry report—can be put in place and a coherence between the policies established?
    Alun Michael: The Curry commission report provides a framework for reforming agriculture in this country, and we are looking to the Commission to introduce proposals on the direction of CAP reform. What would help is a significant increase in the UK's share of pillar two funding. As the right hon. Gentleman knows, such funding has historically been low—a fact for which the Conservative party is responsible. However. the most
    948
    important thing is to examine the statement, and let us hope that it is as radical as this country and some of our reform partners want it to be.
    Mr. Ian Cawsey: My right hon. Friend may be aware that, this week, the report of the Royal Society for the Prevention of Cruelty to Animals on the future of farming was published. On CAP reform, it points out that Agenda 2000 kept in place too many subsidies that are detrimental to animal welfare, that pillar one payments should have animal welfare conditions attached, and that pillar two payments should reward producers who maintain higher animal welfare standards—many of whom are, of course, in the United Kingdom. Will my right hon. Friend support those proposals as part of the negotiations?
    Alun Michael: My hon. Friend is aware of the Government's enthusiasm for improving animal welfare standards across Europe, and he is right to point to the importance of doing so. That is one way of achieving a level playing field, and the decoupling of direct livestock payments from production will assist in that regard, and in terms of addressing the environmental impact of farming.
    Mr. Roger Williams: During last week's mass lobby on fair trade, much emphasis was placed on reform of the CAP to allow third-world farmers to get a fair price for their products in world markets. What discussions has the Minister had with the Department for International Development to ensure that such reform achieves fair prices for third-world farmers?
    Alun Michael: We want to improve not only the working of the CAP, but of the world trade round. That was made clear in Doha, where my right hon. Friend the Secretary of State took a leading role in pushing for such change. The danger of building unfairness into the system is clear to us, and we want to see it improved.
    Mr. Wayne David: Will the Minister confirm that discussions on the mid-term review of CAP reform will, under the Danish presidency of the European Union, be conducted in parallel with discussions on EU enlargement?
    Alun Michael: Both of those issues are being pursued in parallel, so the answer to my hon. Friend's question is yes.
    Mr. David Lidington: I encourage the Minister to use the mid-term CAP renegotiations to put forward positive British proposals on issues that are of benefit to our own agricultural sector. For example, as he knows, British consumers and farmers alike find it immensely frustrating that we are unwilling, or unable, to ban the import of meat and meat products from countries where foot and mouth and other such diseases are endemic. The Government's argument has always been that such a ban would not be permissible under European law. Will the Minister therefore make it an objective of British policy in the negotiations to make whatever changes are needed to those European trade laws so that,

    949
    in future, we are able to ban the import of meat and meat products from all countries where foot and mouth disease is endemic?
    Alun Michael: We certainly want to have a level standard for imports. However, we do not want to introduce controls that would be impractical or inoperable in terms of market movements. The hon. Gentleman is, however, right to suggest that we should do all we can to achieve a level playing field and consistent standards with our European partners. We will also do all we can to push for radical proposals to reform the CAP to ensure that our farmers are assisted. That is why we want to see an increase in the UK's share of pillar two funding and to see the other changes for which we have argued.

    Horticulture
    Mr. Michael Jack: What plans she has to help improve the commercial performance of the UK horticultural industry. [63009]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): The UK horticultural industry is rightly proud that it does not depend on EU subsidies and has a good record of innovation and customer focus. The Department funds a substantial programme of strategic research and development in the horticultural sector and there are various opportunities within the England rural development programme for assistance to horticultural enterprises. We have recently consulted on a new round of the agricultural development scheme. The Food Chain Centre, which has been established in response to the policy commission report on sustainable food and farming, is preparing a benchmarking study on fresh fruit and vegetables.
    Mr. Jack: I am grateful for the Minister's positive view of the horticulture industry, especially as it is a fragrant day for the House with a visit by the National Farmers Union flower and plant committee. The committee's members and the rest of the horticulture industry would be interested to learn what the Department can do to help those parts of the industry that sometimes need the help of specialist chemicals that are available to our European competitors, but are not available here because of the costs imposed by the Pesticides Safety Directorate when approving the use of those treatments in the UK. Could he consider the issue again to see what may be done to ensure that our industry can compete on an equal basis?
    Mr. Morley: I understand the right hon. Gentleman's point, which can be a serious problem in relation to specialist products for which the manufacturers think that the market in the UK is too small to go through the necessary procedures. The issue has been considered by the EU in relation to the permissions given for the use of various products, including pesticides and veterinary treatments, to try to minimise the bureaucracy and expense. I am informed that overall, however, most of the chemical treatments that our industry needs are generally available.
    Mr. David Heath: I recently visited a chrysanthemum grower in my constituency who
    950
    seeks to invest, not to increase the quantity of production but to improve the seasonality of his crop to meet the demands of the supermarkets. He has applied for England rural development programme support and been told that he cannot have it because it would be classed as state aid under EU rules. Can that be right, and will the Minister look into it?
    Mr. Morley: I shall be glad to look into the details if the hon. Gentleman will provide them. The success of such applications depends on the detail. The ornamental section is very successful in this country, especially in the south-west, and I know several schemes that have been grant aided, such as packing houses and support for distribution and marketing.

    Bali Summit
    Sue Doughty: If she will make a statement on the negotiations at Bali.[63010]
    The Minister for the Environment (Mr. Michael Meacher): Progress was made on the importance of sanitation in eradicating poverty and meeting the millennium development goal on safe drinking water. Broad agreement was also reached on key issues such as the urgent need to restore fish stocks and address illegal fishing. The meeting also recognised the need for a strong focus on Africa. However, other difficult issues remain outstanding.
    Sue Doughty: I am concerned that the Secretary of State, yet again, has failed to come to the House to make a statement. On 16 May, she said that she was willing to consider making a statement to the House if she felt that there was something of substance to say on her return from Bali. Does that mean that the grave concerns here about agricultural subsidies are not sufficiently important to bring the Secretary of State to the House? Does it mean that, with only two months to go, everything is on course, apart from a few minor glitches? Does it mean that we have more or less thrown in the towel? Does it mean—
    Mr. Speaker: Order. I count about four questions there. The hon. Lady is allowed only one. We will try the Minister and see what he can do.
    Mr. Meacher: I understand the hon. Lady's frustration, but I can tell her that my right hon. Friend the Secretary of State informed Mr. Speaker and, as a courtesy, the spokesman for the Opposition that she would be attending the EU's Agriculture Council. My right hon. Friend said that she would make a statement if there was a range of issues of sufficient clarity and substance to justify one. Regrettably, and for reasons that are well understood, that is not the case.
    Of course the Government are wholly committed to a successful outturn at Johannesburg. The UK is playing a lead part in the EU to secure that, and the EU is at the driving edge of trying to achieve agreement before Johannesburg. We certainly do not lack concern about this matter. The opposite is true: we are hugely concerned that

    951
    Johannesburg should be a success, and that Rio plus 10 makes a real advance for the world environment and for sustainable development.
    David Taylor: In carrying forward the outcomes from Bali to Johannesburg, will my right hon. Friend make greater efforts still to involve and consult the UK food and drink sector? It has a great deal to offer in obtaining and achieving the sustainable targets that Johannesburg has set itself. Will my right hon. Friend say whether plans to involve that very important sector of industry are in place?
    Mr. Meacher: I am sure that we are seeking to do that. My right hon. Friend the Prime Minister made it clear from the outset that he wanted a partnership involving UK business, especially in regard to water and sanitation, financial services, tourism, energy and forestry. However, we are pleased to respond to representations from any sector of industry that feels that it can make a contribution to Johannesburg. We shall certainly receive favourably any correspondence from my hon. Friend or industry representatives.

    Fisheries
    Mr. Alex Salmond: What recent discussions she has had with EU partners concerning the fishing industry. [63011]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): I represented the United Kingdom at a meeting of the EU Council of Fisheries Ministers in Luxembourg on 11 June, together with Ross Finnie, Minister for Environment and Rural Development in the Scottish Executive, and Mrs. Brid Rodgers, the Northern Ireland Minister for Agriculture and Rural Development.
    Items under discussion included the Commission's proposals for reform of the common fisheries policy, measures to protect deep-sea species, and the cod and hake recovery plan.
    Mr. Salmond: The Minister and I attended a splendid lunch a couple of weeks ago with Commissioner Fischler, who was extremely reassuring about the concept of relative stability. However, the Fishing News has reported that Commissioner Fischler was extremely reassuring to a committee of the Spanish Parliament on the question of equality of access.
    Does the Minister share my concern that between the draft and the final version of the Commission's proposals on CFP reform there seems to have been a significant weakening of the principle of relative stability? Does he accept that, without relative stability, there can be no acceptable fisheries policy?
    Mr. Morley: I certainly accept the latter point: relative stability is an integral and important part of any CFP, including the reformed one that we want. I am confident that we can achieve that. I was reassured by what Commissioner Fischler said about relative stability, and do not detect the weakening that the hon. Member for Banff and Buchan (Mr. Salmond) perceives between the first draft and the final draft. I am convinced that the vast
    952
    majority of member states regard relative stability as being in the best interests of all our countries, based on the historical track record of all EU members.
    Mr. Bob Blizzard: On behalf of everyone involved in the Lowestoft fish fair, which took place last Saturday, may I sincerely thank my hon. Friend for coming to Lowestoft to open it and for spending so much time meeting and talking to people? That was greatly appreciated.
    On the reform of the common fisheries policy, fishermen in Lowestoft, while accepting the need to reduce fishing effort, are concerned that if that translates into a days at sea regime, our trawlermen, who travel a long distance to the Norwegian sector to catch their plaice, may be unfairly disadvantaged. Will my hon. Friend take that into account in forthcoming negotiations?
    Mr. Morley: I will take that into account. May I say how much I enjoyed opening the Lowestoft fish fair? It was good to see how much support it had from the local community. It was also very nice to visit CEFAS, the Centre for Environment, Fisheries and Aquaculture Science. It is celebrating its 100th anniversary in Lowestoft, which is a great tribute and advantage to the area.
    On a days at sea regime, the beam trawlers—there is a significant fleet based at Lowestoft—already work within an effort-controlled regime. What they have done needs to be taken into account in relation to future calculations on effort control. It is an important industry for my hon. Friend's area and we will be consulting closely with the beam trawler sector and, indeed, all sectors of the industry, on any proposals for future effort control.
    David Burnside: The Minister will be aware from the Prime Minister's answer to my question on his statement about the Seville summit earlier this week that the right hon. Gentleman either forgot or did not bother to raise the subject of fisheries at a senior level at the summit. Did the Minister's Department make representation at that summit meeting for fisheries policy to be discussed, including the very serious allegations about the Spanish presidency's misuse of its position on fisheries policy? That has been widely reported in such papers as The Daily Telegraph and The Sunday Telegraph but not in this House.
    Mr. Morley: Any member state is free to make representations to the President of the Commission. It does not necessarily mean that that will influence change, and I do not believe that the representations on the proposals for the CFP were changed. Indeed, an examination of the draft proposals, which were widely available before the final proposals, demonstrates that there has been no significant change in relation to the Commission's proposals.
    We think that the Commission is generally going in the right direction. There are, of course, issues of detail that we will want to discuss, but we think it quite right that there is a new approach towards fisheries management in the European Union—given the mistakes that have been made in the past—that is based on putting sound science and conservation management at the heart of a sustainable fisheries management regime.

    Refrigerators
    Barbara Follett: What help her Department is giving county councils with the task of the disposal of used refrigerators. [63012]
    The Minister for the Environment (Mr. Michael Meacher): In December 2001, we announced a payment of £6 million to go to local authorities to cover their costs up until March 2002 for the disposal of refrigerators. We realise that local authorities are in need of further funding, and intend to make an announcement as soon as possible.
    Barbara Follett: With Hertfordshire county council currently disposing of 3,000 fridges a month—and, despite its best efforts, it cannot do that for less than £32 a fridge—and with Government assistance unlikely to amount to more than £15 a fridge, will my right hon. Friend please look carefully at ways of helping councils meet this shortfall?
    Mr. Meacher: Two mobile plants have been operating in this country for two or three months and three fixed plants will be in operation by the end of next month, which will be able to reprocess 1.2 million fridges. Given the state of the current technology and the level of plant that has been installed, my understanding is that a competitive cost for reprocessing is about £20per unit but that as the technology improves and further plant is put in place, that may reduce to about £15 per unit. However, I am happy to look at any evidence that my hon. Friend can produce that suggests a basis for significantly different figures.
    Mr. Keith Simpson: I am sure that the whole House will welcome the Minister's comments on
    954
    recompense for county councils, but is he really satisfied that they will have any confidence in the Government following the report of the Select Committee on the Environment, Food and Rural Affairs, which estimated that the cost for this year alone would be more than £40 million? Some people reckon that the cost will probably be in excess of £100 million. The Minister has probably lost confidence in his own civil servants whom he blamed over the EU directive. If he blames his civil servants, will any of them resign or does he intend to sack them?
    Mr. Meacher: Uncharacteristically, the hon. Gentleman is wrong in almost everything that he said. First, the cost has been estimated at about £40 million this year. The Government will be making a statement on that. I certainly do not accept the suggested figure, which is nowhere near £100 million.
    Secondly, I did not blame my civil servants; they did exactly what they should have done, which was constantly to raise at formal meetings—nine times over two and a quarter years—the need for an answer to the question as to whether CFC should be removed from insulation foam. They were right to do that. The only comment that I made was that I should have been informed about the matter at the time—[HON. MEMBERS: "Ah."] I was informed in July 2001. I should have been informed much earlier and had that been so, I should have approached the Environment Commissioner, Margot Wallstrom, at a much earlier stage.
    I have not lost confidence in my civil servants, nor have I lost confidence in their ability to get on top of the problem. Indeed, by the autumn—probably October—we shall be beginning to reprocess more than the increase in the pile of refrigerators. The pile will disappear some time in the middle or latter part of next year.

Business of the House
12.31 pm
Mr. Eric Forth: Will the Leader of the House give us the business for next week, please?
The President of the Council and Leader of the House of Commons (Mr. Robin Cook): It will be a delight.
MONDAY 1 JULY—Proceedings on the Consolidated Fund (Appropriation) (No. 2) Bill. Followed by Second Reading of the Public Trustee (Liability and Fees) Bill [Lords].
TUESDAY 2 JULY—Opposition Day [16th Allotted Day]. There will be a debate entitled "Crisis in Funded Pensions" on an Opposition motion.
WEDNESDAY 3 JULY—Progress on remaining stages of the Finance Bill.
THURSDAY 4 JULY—Conclusion of remaining stages of the Finance Bill.
FRIDAY 5 JULY—Debate on modernising Britain's gambling laws on a motion for the Adjournment of the House.
The provisional business for the following week will be:
MONDAY 8 JULY—Consideration of Lords amendments to the Employment Bill. Followed by Opposition Day [17th Allotted day, 1st part]. There will be a debate on an Opposition motion. Subject to be announced.
TUESDAY 9 JULY—Progress on remaining stages of the Police Reform Bill [Lords]. The Chairman of Ways and Means has named opposed private business for consideration at 7 o'clock.
WEDNESDAY 10 JULY—Conclusion of remaining stages of the Police Reform Bill [Lords].
THURSDAY 11 JULY—Debate on intelligence agencies on a motion for the Adjournment of the House.
FRIDAY 12 JULY—There will be a debate on a motion for the Adjournment of the House.
The House will wish to know that on Monday 8 July 2002, there will be a debate relating to sustainable development and aid for poverty diseases in European Standing Committee B.
The House will also wish to know that on Tuesday 9 July 2002, there will be a debate relating to genetically modified food and feed in European Standing Committee C.
The House will also wish to know that on Wednesday 10 July 2002, there will be a debate relating to working conditions for temporary workers in European Standing Committee C.
Details of the relevant documents will be given in the Official Report.
[Monday 8 July 2002:
European Standing Committee B—Relevant European Union documents: 7727/2/02: World summit on sustainable development; 6863/02: Aid for "poverty diseases". Relevant European Scrutiny Committee Reports: HC 152-xxix and HC 152-xxxi (2001–02).
956
Tuesday 9 July 2002:
European Standing Committee C—Relevant European Union documents: 11576/01 and 11496/01: Genetically modified food and feed. Relevant European Scrutiny Committee Report: HC 152-xii (2001–02).
Wednesday 10 July 2002:
European Standing Committee C—Relevant European Union document: 7430/02: Working conditions for Temporary workers. Relevant European Scrutiny Committee Report: HC 152-xxviii (2001–02).]
Mr. Forth: I am grateful to the Leader of the House for letting us have that business.
Will the right hon. Gentleman tell us more about the comprehensive spending review? Rumours are circulating that it will be announced on 9 July, but it would be helpful to all concerned, given the importance both of the review and of people being prepared for it, if he were to give us some indication of the date, even if only to say that the rumours are not true. It would be helpful if we could have a more precise date.
The right hon. Gentleman will recall that on Monday evening the House passed, with a large Government majority—sadly, that is not unusual—a motion on the authorisation of human and veterinary medicines. I wonder how many Government Back Benchers were aware of what they were supporting on that occasion. Perhaps the House will want to return to this fairly soon, because I wonder how many of them realise that they were supporting the Government's position of broad agreement to the proposed amendments to the directive and the overall aims of the review. Let us remember that the measure affects medicines, herbs and other things about which I am sure Government Back Benchers have received a large number of letters. They then went on to support the draft directive on medicinal products for human use.
The point that I am making, and why I think the House may want to return to the issue, is that I wonder what the Leader of the House will tell his Back Benchers when they rumble the fact that they were dragooned through the Lobbies on Monday night to support those measures. What on earth will they tell their constituents, who are quite rightly writing to them, as they are to me and my right hon. and hon. Friends, to object to the intrusiveness of those measures and the effects that they will have on people's long-standing habits and use of legitimate herbs? So I hope that the Leader of the House can give his own Back Benchers some reassurance on that matter and perhaps give the House an opportunity to return to the issue, as I suspect some of them are already regretting the decision.
The other thing that we have got to return to is this: following the European Union summit, just about a week ago, the Minister for Europe was widely quoted as having said that the Government had got "exactly what it wanted" from that EU Council meeting, but the Prime Minister said:
"we did not get everything that we wanted." —[Official Report, 24 June 2002; Vol. 387, c. 624.]
Which of them was right?
Mr. Cook: It would be imprudent and unwise of me to tell the House anything about the comprehensive spending

957
review until the Chancellor has done so, but the right hon. Gentleman is, of course, fishing for when my right hon. Friend the Chancellor will do so. I am very happy to tell the right hon. Gentleman that that will happen in July, and I hope that that gives him the guidance that he is looking for, but no Government can commit themselves to a specific date for the comprehensive spending review statement until that review is completed. The right hon. Gentleman will be aware from his own time in government that such matters are subject to extensive discussion between Departments, but I would anticipate that it will happen some time comfortably before the House rises for the summer recess.
It always fills me with great cheer when the Government have a large majority, such as on Monday. I would reject the right hon. Gentleman's suggestion that there are any grounds for sadness in the Government's ever having a large majority in any vote in the House. My hon. Friends are well aware that they will be perfectly well briefed by the Department of Health to ensure that they rebut any allegations on what they have done.
Mr. Forth: Spin.
Mr. Cook: No, that is not spin; it is a matter of substance. The substance is that we must ensure that we have rigorous and agreed methods in place to ensure that those who take medicines—herbal or otherwise—are fully protected and that we ensure that they are rigorously assessed; and the Department of Health will be very happy to assist Opposition Members, as well as those on the Government Benches, in ensuring that they can respond to their constituents.
On the European summit, my right hon. Friend the Prime Minister is, of course, absolutely clear in what he said in the statement on Monday, and I refer the right hon. Gentleman to that. Of course it is always the case that those who go to a summit seek to ensure that they get the best possible deal for their country, and we secured the best possible deal. The best possible deal is not necessarily the deal that we would have written had we been in a room by ourselves without people from 14 other nations. It is in the nature of the European Union that we have to reach agreement with what the other 14 nations will sign up to as well. I am bound to say that our process of engagement, providing leadership and setting the EU agenda, has given Britain a much better deal than it ever got in the days when Britain sat at the bottom of the table, heckling everyone else and never getting stuck in to reach agreement.
Mr. Paul Tyler: Can the Leader of the House find an early opportunity for a further debate on parliamentary privilege, so that we can revisit the recommendations on that subject of the Joint Select Committee, on which I was privileged to serve? I salute and very much welcome his statement about the RMT union in his own personal respect, but I also welcome the statement that the Deputy Prime Minister released overnight on resigning from the RMT, in which he said:
"It is unacceptable that my trade union, the RMT, should dictate how a Member of Parliament should vote."
Does the Leader of the House accept that it is not just unacceptable, but a possible contempt of the House for any union or outside organisation to seek to influence the way in which those in this free Parliament vote and speak?
958
He may not recall the particular incident, but perhaps I can draw to his attention to the fact that, in the summer of 1974, when my union sought to influence my vote and my voice in the House, the Speaker took a very dim view and the union had to come to the House to apologise, in effect, for seeking to influence the way in which Parliament operates. Does the Leader of the House accept that this is a very serious issue? He has taken a very robust attitude to it. Can the House as a whole have an opportunity of showing that it does, too?
On a separate matter, may I draw to the attention of the Leader of the House the fact that, in a debate in Westminster Hall on Tuesday this week, my hon. Friend the Member for North Norfolk (Norman Lamb) found to his dismay that in answer to his concerns about the Tanzanian air traffic control system, the Minister replying, as he was the Minister for Employment Relations, Industry and the Regions, had no knowledge whatever of the issue. The Minister responsible for export control was apparently visiting a factory somewhere else—he was in the House before and afterwards, but did not attend that debate. Can the Leader of the House at least make sure that Ministers who answer debates in Westminster Hall know what they are talking about?
Mr. Cook: First, on the question that the hon. Gentleman raises about the Joint Committee on Parliamentary Privilege, I am always happy to revisit areas of privilege, because it is of great importance to the House.
On the issue of the RMT, I am happy to repeat what I said to the House yesterday. I have a long and valued relationship with the RMT, which has been useful to both of us over many years, as a source of dialogue and information—
Mr. Forth: And money.
Mr. Cook: I can certainly say to the right hon. Gentleman that elections have to be fought in my constituency, as, I suspect, they do in his constituency, too. Everything that I have received has been openly declared and registered, as the House is well aware. Although I will welcome support in fighting those elections from anybody who broadly supports Labour's values and wishes to work for a Labour victory, I am not to be bought for any particular agenda. On that basis, I decline to sign up to an oath of loyalty. I know that every other RMT MP in the House has also similarly declined.
It is not for me to pronounce on any issue of contempt; the House has well established and well worn channels in which it can establish whether contempt has occurred. First, there must be an offence. No offence has occurred in this case, as all those involved have made it clear that we are not going to sign up to an oath of loyalty to anybody outside the House. It must be a cardinal principle of membership of the House that we come here as free representatives of our constituents with, of course, a political mandate as a party. We are here to exercise our best judgment on behalf of our constituents in line with the mandate that we receive. We are not here to act on behalf of any other specific vested interest or agency.
I note what the hon. Gentleman said about the question of the debate in Westminster Hall. I will look into it. I can surmise that, as the Minister for Employment Relations,

959
Industry and the Regions was replying to the debate, the Government concluded, perhaps without sufficient information, that the Member concerned wished to raise employment issues, and that the appropriate Minister was therefore present. The issues of the Tanzanian deal are well trodden and well understood, and have been vigorously debated in the House previously. I shall make sure, however, that the issue to which the hon. Gentleman refers is investigated, and I shall make sure that I write to him about it.
John Cryer: My right hon. Friend will have seen early-day motion 1504 in the name of my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones).
[That this House notes that there is currently no provision for Early Day Motions with a high number of signatories to be debated; further notes that provision for Early Day Motions with the support of more than half the House to be debated automatically would make Early Day Motions a more effective mechanism for ensuring the concerns of the House are addressed; and calls on the Government to consider introducing such a provision.]
The early-day motion calls for a change of rules in the House whereby, if an early-day motion received the support of more than half the Members of the House, a debate would automatically follow. That would be a useful change, as issues arise frequently on which one can only secure an Adjournment debate, if one is lucky, in Westminster Hall or in the Chamber in the evening. An early-day motion on issues such as Post Office job losses would probably attract the support of at least half the Members of the House, and the suggested mechanism would thereby secure a debate on the Floor of House—and, of course, there could be a vote on the Adjournment.
Mr. Cook: I of course follow the early-day motion pages with close care and always find them rewarding. I was particularly struck by the early-day motion last week congratulating the No. 10 football team on having thrashed the Parliamentary Press Gallery football team 5:2. I am very grateful to the early-day motion pages for drawing my attention to that, since I have found difficulty in locating a description of this resounding victory for No. 10 over the Press Gallery in any of the press that I read.
My hon. Friend the Member for Hornchurch (John Cryer) makes a broad point, of which I am well aware, that there is a feeling that there should be more opportunities for private Members to nominate the issues for debate in the House. The Modernisation Committee is considering that challenge, although I would not want to suggest that we will necessarily go down the route to which he points.
Sir Teddy Taylor: As the Chancellor of the Exchequer has just made what is generally regarded as a very significant speech on the euro, do the Government not consider it appropriate to have an early debate on their policy on the euro and on the proposed timetable?
Mr. Cook: I am very happy to hear the hon. Gentleman congratulate my right hon. Friend the Chancellor on a
960
very significant speech. I look forward to more support from the hon. Gentleman for my right hon. Friend. The hon. Gentleman knows the Government's policy on the euro as well as I do, because he raises the issue even more often than I do.
Sir Teddy Taylor: The policy has changed.
Mr. Cook: No, the Government's position has not changed. Our position is that, if the five economic tests are met, we will put to the British people a recommendation that Britain should join the euro. Any timetable entirely depends on when we are satisfied that those five tests are met.
Mrs. Anne Campbell: May I bring to my right hon. Friend's attention the case of Christopher Walker, a British citizen who is the brother of Anna Walker, a resident of Cambridge and one of my constituents? Christopher disappeared from his home in Stockholm almost three months ago, and nothing has been heard of him since. The family are naturally very keen to get as much publicity for the case as possible, in case anyone has seen Christopher. I would be grateful if my right hon. Friend could give me advice about the best way of publicising this matter in the House.
Mr. Cook: My hon. Friend has taken an opportunity to raise the case in the House. I hope to raise the matter and give it a higher profile in the media so that anyone who may be aware of the whereabouts of Christopher Walker can contact the authorities or his family. The whole House will fully sympathise with the suffering and the pain that must be experienced by any family whose relative has disappeared without trace or without contact. I hope that this case will find a satisfactory solution.
I also suggest to my hon. Friend that, if she has not already done so, she might wish to discuss the case with the Foreign Office. I am sure that it will be happy to help in Sweden, where we have an excellent ambassador who was one of my former private secretaries.
Mr. Andrew MacKay: Is the Leader of the House aware that his many admirers on both sides of the House felt for him a little yesterday at Prime Minister's Question Time, because he was not able to answer as straightforwardly and honestly as he always does from the Dispatch Box during business questions? Will he find time next week to put that right by suggesting to the Prime Minister that, when the Prime Minister comes to the Dispatch Box next Wednesday at Question Time, he apologise for misleading the House by saying that share prices were higher in 1997 than they were on the day the Prime Minister responded to a question about them? That was factually incorrect. It would help occasionally for the Prime Minister to say sorry. He would gain more respect by doing so.
Mr. Cook: I am very sorry that I disappointed my admirers on the Opposition Benches, but I am rather alarmed to hear that I have them. I hope to put that right over the coming weeks.
I have to say to the right hon. Gentleman that I have checked the facts about the movements in the stock market. What my right hon. Friend the Prime Minister said to the House last Wednesday was factually absolutely

961
arithmetically correct. Indeed, as the right hon. Gentleman queries the matter, let me share with him what the market capitalisation was on 1 May 1997. [Interruption.] The first of May happens to be a very important date in the life of this Government; it was our birth. On 1 May 1997, the market capitalisation on the stock market was £762 billion. That rose to a peak of £1.553 trillion in December 1999 and, as at 19 June, the figure stood at £1.121 trillion. That is £400 billion down on the peak, but it is still substantially—£350 billion—more than it was on 1 May 1997. [Interruption.] I am not making that up, but merely reading the facts and the figures for which Conservative Members asked. I hope that we shall hear no more about the Prime Minister misleading Parliament.
Mark Tami: Is my right hon. Friend the Leader of House aware that, every week, four to eight apparently fit and healthy young people die of undiagnosed heart problems in the United Kingdom? The charity CRY—Cardiac Risk in the Young—is a self-supporting group that campaigns to increase awareness of this important issue. Will he allow for an early debate on the subject, and will he support the efforts of Doreen Harley of Connah's Quay, who lost her daughter Lisa to sudden death syndrome, and those of the Chronicle newspaper to raise funds to provide screening for hundreds of young people in north Wales?
Mr. Cook: I am aware of the organisation CRY, with which I have had contact in my constituency. I congratulate those parents who have discovered that they have offspring with heart failure on their work both to publicise the risks to young children with undiagnosed heart problems and to raise funds to take that cause further. My hon. Friend makes a valid point. The more children in such a position who are aware of it, the better able they will be to adjust to life and to ensure that they are not exposed to unnecessary risk.
Mr. Archy Kirkwood: Does the Leader of the House accept that there is a great deal of uncertainty in the farming community about the proposals that are under active consideration in Brussels on the reform of the common agricultural policy? There is a mid-term review in the course of next year and a longer-term review as part of the enlargement process through to 2006. Commissioner Fischler will produce in the next few days proposals that are advertised, if we are to believe reports in the Financial Times earlier this week, as fundamental reforms of the current structural packages of support. Will the Government take the opportunity before the summer recess to organise a debate in Government time to clarify that uncertainty?
Mr. Cook: I can certainly assure the hon. Gentleman that the Government are following the issue closely and will of course pay the greatest of heed and care to proposals to change the CAP. I have not the slightest doubt that the matter will be thoroughly ventilated in the Chamber.
I would, however, enter one general observation without necessarily committing myself or the Government to what Commissioner Fischler may propose. Although we are all committed to reform of the CAP in the abstract, we mostly reject proposals for reform when they are made. We have to complete that bridge. Most hon.
962
Members understand that we cannot continue through the 21st century with a system that is basically one of protectionism, which the growing freedom in world trade is bound to challenge and change. The sooner we ensure that it is changed on a basis that suits the farmers of Europe and Britain, the better it will be for us.
Mr. Paul Truswell: Is my right hon. Friend aware of the mounting concern in the House and beyond caused by the delays in obtaining police checks from the Criminal Records Bureau? If so, it will come as no surprise to learn that Leeds social services have not received one single return from the bureau since 1 April. As a result, 60 posts remain unfilled while they await the results of checks. That is 60 caring posts of which my constituents and those of other Leeds Members are deprived. In those circumstances, will my right hon. Friend arrange for an early statement to the House on what has gone wrong and what can be done to put it right?
Mr. Cook: My hon. Friend raises an important issue: we must ensure that those who apply for jobs with children are properly checked so that anyone who may have a record is identified before securing a post. I am not aware of the delays to which he refers, but if he writes to me I will be happy to ensure that the Home Office provides him with a full response and that we take what action we can to keep that important part of our system of protecting our children intact and expeditious.
Bob Spink: Will the Leader of the House find time for a debate so that we can discuss the importance of a new cardiac centre to the people of Essex? That would allow us to show why the facility should be provided at Basildon hospital, where it would greatly benefit those of my constituents who suffer from heart problems. We would also be able to consider ending the rather futile consultation process so that we get on with the job of providing the centre, which is much needed in Essex.
Mr. Cook: The hon. Gentleman will be delighted to hear that the Whip, my hon. Friend the Member for Basildon (Angela Smith), who has a great influence on my life, is solidly in support of his proposal. However, I know enough from long experience not to get involved in the particular siting of a unit. We are fully committed to ensuring that we expand the provision for those who are in need of cardiac surgery, and I am delighted that we have the hon. Gentleman's support on that. Perhaps in return for my offering to look kindly on what he said about the need for a unit in his constituency, he will look kindly on the need to vote for the comprehensive spending review which will provide the money.
Joan Ruddock: Is my right hon. Friend aware of the deteriorating security situation in northern Afghanistan, and the fact that female foreign aid workers are having to be withdrawn because of repeated violent attacks, including the gang rape of a French female aid worker? Given that 60 Afghan and international relief organisations have now called for an extension of ISAF beyond Kabul, will my right hon. Friend discuss this very urgent matter with his Cabinet colleagues and consider how it might be debated in the House?
Mr. Cook: The House will be aware that the British Government themselves suggested that ISAF should be

963
more widely deployed than it currently is, and that we were not necessarily satisfied with the outcome that it has been largely confined to Kabul. In order to ensure that we provided that wider coverage we needed the support of others, because it is not a task that Britain alone can, or should, attempt to undertake.
Our current strategy is to do all that we can to build up the police and military authority of the Interim Government rapidly, so that they themselves can provide better policing in the provinces within Afghanistan. In the meantime, I would join my hon. Friend, as will all Members of the House, in deploring the attacks on aid workers, which are not only distressing and horrific for the aid workers concerned, but have the result of denying the poor and the destitute of the region the assistance of aid agencies.
Miss Julie Kirkbride: Will the Leader of the House ask Ministers at the Department of Health whether they will adopt my Back-Bencher's Bill, the Vaccination of Children (Parental Choice) Bill, as a Government measure? That would have the effect of allowing parents the right to choose the single measles, mumps and rubella vaccines as opposed to the combined triple vaccine. I am sure that the right hon. Gentleman would be very concerned by research produced this morning by the Autism Research Unit in Sunderland—by Paul Shattock, the director there—which seems to provide fresh evidence that there may be a link between MMR and autism. It follows in the footsteps of other research that has been produced by Professor Andrew Wakefield and Dr. John O'Leary. If we are to protect the nation's children, is it not time the Government worked on the precautionary principle and allowed parents the right to choose between the single and triple vaccines?
Mr. Cook: I heard a very interesting dialogue this morning on the "Today" programme, which I always find a help to my digestion of breakfast, between Mr. Paul Shattock and the representative of the Medical Research Council. I hope that Paul Shattock will now respond to the invitation of the Medical Research Council to submit his research to peer group review and ensure that it is put through the same examination as other research in this area.
The fact is, though, that, as the hon. Lady will be aware, the overwhelming bulk of the medical literature on the subject, and the overwhelming tendency of the investigations that the Medical Research Council has validated, is that there is no link between autism and MMR; indeed, I heard the representative of the MRC say this morning that there is a positive case that there is no such link. It is therefore unlikely that the Department will sponsor a Bill that is contrary to the policy of that Department—a policy which is drawn up in the interests of parents and children to ensure that we provide the best possible protection for the children of the nation.
Kevin Brennan: Will the Leader of the House find time for a debate on ways to engage young people in politics, and particularly in the work of the House? Is he aware that when the singer-songwriter Billy Bragg recently appeared before the Select Committee on Public Administration, of which I am a member, he
964
accused the Committee, and Members of Parliament generally, of giving off a be-suited image that is male, pale and stale? In our rather informal proceedings here, would it not therefore be a good idea if we were to institute dress-down Thursdays in the House; and would not that have the additional merit of allowing the shadow Leader of the House to engage more freely in his penchant for colourful retro-clothing?
Mr. Cook: I have always wondered what the clothes were that the right hon. Member for Bromley and Chislehurst (Mr. Forth) wears; I am very grateful that they have now been satisfactorily labelled. This is not a matter for the Government to impose on the House, nor are there any obligatory dress standards on Members.[Interruption.] I am happy to reassure the right hon. Gentleman that I have no intention of bringing in any guidelines or statutes on the ties and shirts that he wears. It is open to Members to come to the Chamber in whatever attire they choose. provided it is seemly and decent and consistent with the Chamber. It is a matter for individual Members.
I shall be watching with the greatest interest to see what my hon. Friend the Member for Cardiff, West (Kevin Brennan) wears next Thursday.
Pete Wishart: Today, many schools in Scotland break for the summer holiday. Meanwhile, the House will sit for a further four weeks. I know that the recess is timed to coincide with the English school holiday. That means that English Members get an extended opportunity to spend time with their families; Scottish Members do not. We also have to make sure that we get our complicated child care arrangements put in place for the school holidays; English Members do not have to consider that. Does the right hon. Gentleman consider that fair and right? I know that he is looking at the summer recess for next year. Will he accommodate all parts of the United Kingdom in that review?
Mr. Cook: I fully understand the point that the hon. Gentleman makes. I recall one occasion when the House went into recess the week before the Scottish schools went back. At that time, I had two children of school age. The happy consequence was that I was in London all through August, when it turned out that my opposite numbers in the Department of Health for the Conservative Government were absent, and it was a rather useful month for me. That is inadequate compensation for being able to go on holiday with our children.
As the hon. Gentleman is aware, the Modernisation Committee is examining my memorandum, which suggested that we should rise earlier in July and come back for a period in September, before going off on a conference recess. I hope that we will be in a position to put those proposals to the House some time in the overspill, and that they will take effect next year. That will go some way to easing the problem that the hon. Gentleman identifies.
Mr. John Lyons: My right hon. Friend knows that the Daily Record in Scotland and the Evening Times reported yesterday on the re-emergence of a pyramid selling scam called "Women Empowering Women". That has surfaced in various parts of the UK,

965
most recently in the Isle of Wight. The problem is that none of it is unlawful or illegal. Will my right hon. Friend consider legislative action against such schemes?
Mr. Cook: Pyramid selling can be a great menace, and unfortunately too many people—not just in Britain, but elsewhere—have been defrauded by it. Anybody who fraudulently or by misrepresentation obtains money from another is open to a legal charge and to legal remedy, although my hon. Friend draws attention to the question whether there is a need for a specific crime relating to pyramid selling. I shall happily draw his comments to the attention of my right hon. and hon. Friends at the Department of Trade and Industry.
Mr. Patrick McLoughlin: Will the Leader of the House arrange for a statement or a debate next week on school admissions? Is he aware of the case of Ecclesbourne school in my constituency, which tried to achieve a more co-ordinated approach to its catchment area? It was supported by Derbyshire county council and Derby city council, the two authorities involved, but the recommendation was overturned by somebody called the adjudication officer, who did not visit the site, but decided that no change could be made. That is a new office and the decision is nonsense. It causes great uncertainty, particularly to parents in Kirk Langley, West Underwood and Muggington, who now fear that they will not be able to get their children into the local comprehensive school. We need a statement and we need to know the Government's position on the matter.
Mr. Cook: I hear the hon. Gentleman's support for Derbyshire council, which I hold in high estimation. I will be happy to consider with my right hon. Friend the Secretary of State for Education and Skills the points that he makes. My own prejudice has always been that such matters and local issues are best determined locally, wherever possible. We obviously have to make sure that national standards are applied and that national guidelines are followed, but I understand the frustration of the hon. Gentleman's constituents if a decision is imposed by people outside their locality.
Andrew Mackinlay: May I ask the Leader of the House when he will consider, along with the Modernisation Committee, the more even distribution of parliamentary sittings? For many months of the year, we cannot table written questions and have them answered. I should have thought that there was overwhelming support in the House for a swift resolution, which would allow that important tool for Back Benchers to be available throughout the year, instead of long periods when the Executive can be let off the hook and not subjected to the probing and scrutiny that are so essential to us.
Mr. Cook: I believe that the proposal that we should return in September will address part of the problem of the long recess in which questions cannot be tabled. My hon. Friend may be aware that the Procedure Committee yesterday published its report on questions and Question Time, which contains many interesting ideas that I am sure will repay careful study, and touches on the ability to table written questions during periods when the House
966
may not be sitting. I hope that we can return to that matter when we debate the proposals of the Modernisation Committee in the spillover.
Mr. Andrew Robathan: The Leader of the House has always correctly registered his RMT interest, which so sadly ended yesterday, but is he surprised to learn that the Deputy Prime Minister has never registered exactly the same interest? Does he know that the Deputy Prime Minister's flat, which he is keeping on, is a benefit-in-kind of approximately £12,000 a year? Is he aware that the rent has not been reviewed in 10 years? Does he think that that huge benefit-in-kind is compatible with paragraph 122 of the ministerial code of conduct?
Mr. Cook: As I recall, that specific issue was examined by the Standards and Privileges Committee, which found that there was no obligation on the Deputy Prime Minister to register it. Nor is he required to register an arrangement that is not a personal sponsorship, but a constituency agreement with his union. As for myself, I have sadly to conclude that my entry in next year's register might be just slightly shorter.
Mr. Eric Martlew: My right hon. Friend will remember that, this time last year, we were still in the middle of the foot and mouth outbreak. Following that period, the Prime Minister set up a number of inquiries. The Follett inquiry, which is chaired by Professor Brian Follett and deals with the scientific problems, and the Anderson inquiry, which deals with the lessons learned, are due to report in July. As the argument for those independent inquiries and against a public inquiry was that they would report and be debated quickly, can we have an assurance that the Government will find time to debate the reports before the summer recess?
Mr. Cook: I am sure that the House will want to examine the reports, hear about them and express its views. As Leader of the House, I fully understand that the House will want to ensure that these matters are adequately considered by it. Of course, neither I nor the Government can give an assurance on the date of the reports' publication, as that is in the hands of those who are carrying out the investigations, who will properly want to ensure that the reports are published at the time of their choosing rather than ours. None the less, we have made clear to them the great importance that we attach to their being published while the House is still sitting.
Rev. Martin Smyth: The Leader of the House will be aware of the dips in the Royal College of Nursing and, in particular, the United Kingdom Central Council for Nursing, Midwifery and Health Visiting in terms of registering nurses. Does he share my concern about people who have come out of business to be retrained, but then discover that there is no employment for them because they are not registered? A greater concern is that, when we recruit people from overseas, should not we ensure that they are registered before they are brought here, instead of allowing them to be left in the lurch to be employed by others in lower paid jobs than those that they are qualified to perform? I understand the problems, but surely we should be doing something to ensure that nurses are not victimised in that way in future.
Mr. Cook: The decision about when foreign nationals who wish to come here and practise nursing should do so

967
is essentially a matter for them. It is not for us to tell them not to come until a particular stage has been completed. None the less, we have had exchanges on this matter before in business questions, and I am aware of the delay in registration following the transfer, in which some teething problems occurred. We are working hard to ensure that that period of delay is cut to a minimum, so that those who wish to register can do so expeditiously and without the difficulties to which the hon. Gentleman referred.
Mr. Bill Rammell: May I urge the Leader of the House to organise an early debate on the draft Local Government Bill? While the Bill contains much that is to be applauded, I am very concerned about the proposal to pool local authority housing capital receipts. In Harlow and throughout much of the south-east, there is an acute shortage of homes for rent and a significant backlog of housing repairs. I would view any proposal to take away the capital receipts on which we are relying to meet the Government's decent homes standard as a very backward step, and I urge an early debate on the issue.
Mr. Cook: My hon. Friend raises an issue that is obviously very important to his constituency and others in the south-east. We have published the Bill in draft form precisely so that voices can be raised and concerns and views expressed about what is proposed. I am keen to ensure that the Select Committee on Transport, Local Government and the Regions has the opportunity to carry through its pre-legislative scrutiny of the Bill, in which it will address a number of such issues of concern. The more Bills we publish in draft, the better we will be able fully to examine them before the House is faced with debate on an official Bill. I advise him to ensure that his voice is heard by the Department and the Select Committee as these matters are considered.
Mr. Michael Fallon: Is the Leader of the House aware that in the past few weeks Swanley town council in my constituency has had to spend around £16,000 to move on three encampments of so-called travellers and to clear up after them? It is a difficult problem, but could we have an early debate in which the Government can put forward proposals that might make it easier to move on illegal encampments and to reimburse the costs that unfairly fall on very small town and parish councils?
Mr. Cook: Many hon. Members, myself included, are familiar with the problem to which the hon. Gentleman refers, and we have made efforts to deal with it in the past. He will know that it is a difficult and complex issue that is not readily amenable to a simple legal solution, but the Office of the Deputy Prime Minister, which now covers local government, is examining it to see whether we can take further steps that would be helpful.
Mr. David Chaytor: Does my right hon. Friend agree that the world summit on sustainable development that will open in Johannesburg in August is a conference of enormous importance, not least for its potential to bring the United States Government back into the frameworks of international agreement on
968
environment and development policies? Notwithstanding his earlier announcement that there will he a general debate on sustainable development in European Standing Committee C next week, will he provide Government time in the near future for a debate on the Johannesburg summit on the Floor of the House?
Mr. Cook: I entirely share my hon. Friend's commitment to the importance of the summit. It is important that we review where we stand 10 years after Rio and that we understand that, if we want to ensure that we preserve the climate and environment of the globe, we must have international decisions that secure that. I particularly welcome the summit's focus on tackling the environmental hazards experienced by the poorest people on the earth. A very simple environmental right will be access to clean water, which could remove the scandal that 2 million children die each year from drinking contaminated water. If we can get progress on that, the summit will have been well worth while. I will consider at what stage it might be appropriate for the House to hear about those matters and to what extent we can provide for that, given that we must balance it with the other commitments of business in the House.
Dr. Vincent Cable: The Leader of the House will recall the very prominent role that he played in relation to the Scott report on the Iraq supergun. Will he suggest the best way of initiating a comparable investigative inquiry into the equally scandalous Tanzania air traffic control deal, and commend it to his colleagues?
Mr. Cook: I fully rebut any parallel between those two events. The Scott inquiry flowed from two things—first, the totally secretive basis on which the rules on exports to Iraq were changed without any report to the House or comment in public and, secondly, the subsequent attempt to prosecute and convict business men who had acted fully in connivance with the Government, who denied their own role. There is no parallel with the Tanzanian air traffic control case. Whatever hon. Members may think of that decision, it is in the public domain, it was fully aired in exchanges in this House and in Westminster Hall, and nobody has made any attempt to bring false prosecutions.
Mr. Mark Francois: Can the Leader of the House find time for a debate before the summer recess on new regulations, which come into force next week, governing access to local authority planning registers by those who wish to undertake searches as part of a house purchase? The regulations threaten the livelihoods of several successful private companies that offer a service to clients wishing to search such registers, because they will impede the ability of those companies to carry out searches. The regulations threaten the viability of a number of successful small businesses and threaten to slow up the whole process of carrying out searches on behalf of those who wish to purchase houses. That is an important issue, so can the Government provide time for a debate before the recess?
Mr. Cook: I am not sure that I can promise a debate in the Chamber before the recess because we have a crowded schedule. The hon. Gentleman raised some important points and goes some way towards reinforcing the case

969
for a sifting committee to identify secondary legislation that requires debate. In the meantime, I shall draw his comments to the attention of the relevant Department.
Dr. Julian Lewis: Will the Leader of the House use his best endeavours to persuade the Chancellor of the Exchequer to be one of the Ministers responding to Tuesday's all-day Opposition day debate on the crisis in the funded pensions industry? The Chancellor could then explain precisely when he realised that his devious scam of raiding pension funds to the tune of £5 billion a year would come home to roost during his Chancellorship, not many years hence, as he obviously intended.
Mr. Cook: Decisions about who takes part in Opposition day debates are matters for the Government collectively, and we shall give due weight to the hon. Gentleman's representation. He asks about the precise point at which somebody changed their mind. Last Thursday, he mentioned opinion polls that showed that the Conservatives were on the way up. When precisely did he change his view on opinion polls? Was it possibly on Monday, when he read the latest poll, which put the Conservatives two points down and 10 points behind?
Mr. Roy Beggs: Does the Leader of the House agree that employees throughout the United Kingdom should be treated equally and have equal rights? Will he read early-day motion 1498, which draws attention to a loophole in the law?
[That this House deplores the behaviour of Argos, who are ruthlessly exploiting a loophole in the law, whereby shop workers in Scotland are not given the protection which is enjoyed throughout the rest of the United Kingdom, and sacking staff who between them have given years of loyal service to the company if they will not accept compulsory Sunday working, thus discriminating in particular against those who have family commitments or religious objections, and in general against employees in Scotland.]
970
Argos is exploiting that loophole, and employees who, for personal or religious reasons, do not wish to work compulsorily on a Sunday are being sacked. Will the right hon. Gentleman take steps to plug the loophole?
Mr. Cook: My hon. Friend the Member for Aberdeen, North (Mr. Savidge) raised that matter in business questions last week on behalf of his constituents who work for Argos.
We are not considering a loophole, but the fact that the legislation in Scotland pre-dates that in England. The legislation in England includes specific safeguards for religious and other principled objections to working on a Sunday. There has not been a problem in Scotland so far. As I said last week, I deeply regret that the company is not following the practice of other Scottish companies, which have worked on Sunday for many years, but managed to do so amicably, with the voluntary agreement of their staff. I hope that, even at such a late stage, the company will consider coming into line with normal practice.
Richard Younger-Ross: In a debate on social care in January, the Minister of State, Department of Health, the hon. Member for Redditch (Jacqui Smith), said that there would be an inquiry into why health authorities in the south-west were diverting money from services for the elderly to child care. I raised the matter with the Leader of the House, who promised to write to the Health Minister to ascertain whether there would be a statement and whether I would receive a response. I have written to the Health Minister, but I have not received a response. Does it take the Government six months to make an inquiry? How long does it take a Minister to reply to a letter from a Member of Parliament?
Mr. Cook: I am punctilious in drawing the attention of the parliamentary Clerk of the appropriate Department to matters that are raised in business questions. I shall ensure that we pursue the matter and try to get a reply for the hon. Gentleman.

Network Rail
1.18
The Secretary of State for Transport (Mr. Alistair Darling): With permission, Mr. Speaker, I should like to make a statement on progress in putting the ownership and operation of the rail network on a sound and sustainable footing, and, as part of that, steps to get Railtrack out of administration.
I shall keep the House informed over the next few weeks, but in the light of the conclusion of the sale and purchase agreement this morning between Railtrack Group and Network Rail, I thought it right to come to the House to set out the Government's strategy, progress so far and the next steps.
As the House knows, the High Court put Railtrack into administration last October. As the presiding judge said, the making of the railway administration order was
"not only appropriate, but absolutely essential".
The Government's objective is to ensure that Britain's rail network is owned and managed by an effective and competent body and thus secure a sustainable long-term future for the rail network. To achieve that, the next step is to remove Railtrack from administration as soon as possible and place the network under new ownership and strengthened management, which is committed to improving service and safety. That is in everyone's interest: that of the industry, the work force and the travelling public alike.
On the 25 March this year, my right hon. Friend the Member for Tyneside, North (Mr. Byers) told the House of the bid made by Network Rail to acquire Railtrack from its parent company, Railtrack Group plc. Although other bids would have been considered, none was received. Network Rail is a public interest company limited by guarantee, and will be run for the benefit of the whole railway, concentrating on its core priorities of operating, maintaining and renewing the rail network. There will be no shareholders, and any operating surplus will be used for the benefit of the railway system.
The company will operate on a sound commercial basis with a board and management whose performance targets will be aligned to the Strategic Rail Authority's long-term plan, as well as to the obligations to its customers under its network licence. Its directors will be accountable not to shareholders but to the company's members, who will be drawn not only from the rail industry, but will include members representing the public interest and the Strategic Rail Authority. In this way, the directors of Network Rail will be answerable to people whose primary interest is in the long-term future of the railway.
Railtrack Group and Network Rail have now concluded a sale and purchase agreement to acquire Railtrack plc. I would like to set out in some detail the terms of that agreement. In line with its original offer, Network Rail will pay £500 million—of which £300 million will be provided by the Government—as well as taking over Railtrack's debt, which now stands at £7.1 billion. This includes loans from the European investment bank and the German bank, KfW, totalling just over £1 billion, which Network Rail plans to assume.
In parallel, London and Continental Railways is acquiring from Railtrack its interest in the first phase of the channel tunnel rail link for £295 million. At a cost of
972
£80 million, Network Rail will acquire the right to operate, manage and maintain the channel tunnel rail link and the concession to manage St. Pancras station. I can tell the House that Network Rail has already secured up to £9 billion of bridge financing from commercial banks to fund its acquisition costs and to refinance Railtrack's existing debt, as well as to fund the immediate operation of the railway.
Network Rail will also put in place additional commercial financing of up to £7 billion for its medium-term requirements. This is necessary to cover operational expenditure as well as to cover substantial cost overruns inherited from Railtrack, which will have to be met. Network Rail will also need—as would any owner and operator—access to back-stop contingency funding. For this reason, the SRA will provide additional standby credit facilities; this contingency funding of last resort has been set at £4 billion. Further details of this funding and of the short-to-medium-term standby credit facilities offered to Network Rail by the Strategic Rail Authority are set out in the two minutes that I am laying before the House in the normal way. The House will also wish to know that the Rail Regulator has today issued a statement setting out his approach to a request for an early regulatory review.
These are large sums by any standards, but they are necessary, given the size of the task facing Network Rail, and they would be needed by any successor to Railtrack. There is no escaping the fact that Britain's railways need very large-scale investment—investment that we believe is essential. It is because of the need for long-term sustained investment that the Government are, through the 10-year plan, increasing the average annual investment in the railways—on top of continued support for running costs—to £4.6 billion. That is more than three times the annual average in the 10 years prior to 1997.
The public are entitled to expect that this investment will be spent efficiently and effectively. That has clearly not been the case in the past. The new company, Network Rail, faces a legacy of poor management, and of very substantial cost overruns which will have to be met. For example, when it began, Railtrack estimated that the cost of the west coast main line project would amount to about £2 billion. It is now clear that the actual cost of the work will be considerably more than that. What is now needed is a competent owner and operator, which is why Network Rail's acquisition of the railway network is so essential to the future of the railways.
This agreement is a major step towards removing Railtrack from administration and putting the rail network back on a sound footing. The next stage in the process will involve Railtrack Group plc putting this offer to its shareholders at a special meeting, which is expected to be held next month. It is for the company to decide how much it can offer its shareholders.
The European Commission is also considering whether any aspect of the support being provided needs to be cleared as state aid. However, if the shareholders of Railtrack Group approve the bid at the special meeting and the appropriate clearance is obtained from the Commission, I expect to ask the High Court for an order releasing Railtrack plc from administration thereafter.
It is obvious that Railtrack could not have carried on as it was. Even the company recognised that last summer. What is more, the division and lack of common purpose

973
that characterised the railway system during the last few years was damaging and destructive to the interests of both the industry and the travelling public.
All the evidence shows that working together is crucial to the long-term success of the railway network. Over the past few months, despite the uncertainties of administration, the new management of Railtrack has enjoyed closer working relationships with the Strategic Rail Authority as well as the Rail Regulator and the train operators—which is essential if the network is to work effectively and efficiently to everyone's benefit.
The establishment of a public-interest company in which the Strategic Railway Authority is represented will continue to foster this climate of better co-operation to the benefit of all concerned in terms of achieving the objectives set. The railways are critically important to the economic and social fabric of the country. There is now an urgent need to give the rail system stability, and I believe that this agreement is the right and best way of building a modern and efficient network.
Mrs. Theresa May: I thank the Secretary of State for his statement, and for giving me an advance copy. As this is my first opportunity to do so in the House, let me also welcome him to his new post.
I refer hon. Members to the declaration that I made on 14 January, which can be found in column 33 of Hansard.
Like the Secretary of State, I hope that today's announcement will bring an end to the damaging last few months of uncertainty on the railway, and that the new body will indeed succeed in bringing much-needed stability to the railway network—much needed because the Government's decision to put Railtrack into administration caused considerable and, in our view, unnecessary upheaval on the railways.
I am sure that the Secretary of State has seen this morning's press release from Railtrack Group. Page 8 says:
"On Friday 5 October, neither Railtrack Group nor Railtrack plc was insolvent".
The right hon. Gentleman may recall his predecessor's claim that the reason for the decision to put Railtrack into administration was that it was insolvent. Indeed, on 7 November last year the Prime Minister told us
"the fact of the matter is that the company was not solvent"— [Official Report. 7 November 2001; Vol. 374, c. 233.]
Will the Secretary of State take this opportunity to admit that his predecessor and the Prime Minister were wrong to make such claims?
The Government have belatedly decided to compensate the Railtrack shareholders whom his predecessor so deliberately wronged. Notwithstanding the caricature that the Government tried to create, the people who were really wronged were not fat cats but thousands of employees and vulnerable pensioners whose savings were put at risk.
When the Government put Railtrack into administration, the former Secretary of State said:
"I decided that I could not give Railtrack a blank cheque."
At the time, Railtrack was looking at a possible financing requirement of £1.7 billion. Now we see the Government guaranteeing funding of up to £21 billion—£21 billion of taxpayers' money. They said that they would not give a blank cheque, but that is exactly what they are doing.
974
The Government also said, through the former Secretary of State:
"we should not be seen as acting as guarantor of individual companies".— [Official Report. 15 October 2001; Vol. 372, c. 955.]
Yet now they are acting as guarantor to an individual company. Nine months after pulling the plug on the company, after increased misery for passengers and the spending of hundreds of millions of pounds of taxpayers' money, the Government have done what they said they would not do.
It is reported that administration has cost £1 million a day. Has this not been a very expensive way for the Government to do away with a company for reasons of ideology?
It is reported that the Government's guarantee for Network Rail's financing will be on the books of the Strategic Rail Authority, but not those of the Treasury—it sounds rather like WorldCom accounting to me. Can the Secretary of State confirm that the Office for National Statistics has determined that that guarantee and any further such sum can remain off balance sheet for the Government? We all know that the only reason why the guarantee is necessary is that the City has lost confidence in the Government because of the way in which they handled Railtrack.
In his statement, the Secretary of State outlined the structure of Network Rail but did not say who would own the company. The travelling public and the taxpayer have a right to know that, so that they can properly hold it to account. Will the Secretary of State answer the question of who will own the company, and will he confirm that the company's members will be Government appointees—Government sitting on the board and Government guaranteeing the funding? What comfort can he give that he will not need to give a further blank cheque to the company?
The Prime Minister promised that the railways would be "basically fixed". The only thing that seems fixed about this deal is the Government accounting. As I said earlier, Conservative Members hope that Network Rail can be made a success. We have concerns about matters such as the financing, the structure of the company and the cost to the taxpayer, but what people are worried about is whether their train will be on time tomorrow morning. The fact is that this Government have not treated transport as a serious priority. Five years and three Secretaries of State later, the Government have been forced to sit up and take notice.
We wish the new company well. The Secretary of State has promised
"a major step towards … putting the rail network back on a sound footing",
but it will take more than a Government promise to sort out the mess that his predecessor created.
Mr. Darling: First, it would be churlish not to thank the hon. Lady for her good wishes on my appointment. I fear we part company on just about everything else she said.
I had not intended to spend too much time going over what has happened in the past but as the hon. Lady raised it, it is important to remind the House of the situation that the Government faced last autumn. It is not as if Railtrack was a healthy, flourishing, thriving company. Let us be

975
clear about this. Railtrack came to the Government about a year ago. Essentially, it asked for three things in order to carry on. One was that the Government should meet uncapped additional financial support. It also wanted us to underwrite the value of its shares, and a suspension of the regulatory regime for up to four years. No Government, of whatever political colour, could meet that sort of uncapped liability—[HON. MEMBERS: "They would."] I must correct my hon. Friends. No Government would. It is no wonder that the Opposition lack credibility. Let us once and for all be clear about the facts: we were faced with a situation where a company which we had given the benefit of the doubt for some time—perhaps too long—was completely unable to carry on trading.
The sole test that the judge had to face under the Railways Act 1993 was whether Railtrack could pay its debts. The Government's position was that it could no longer do so. That is why they asked the High Court to award the order. It is also worth reminding ourselves that sitting in that court was counsel representing Railtrack. Had he taken issue with anything said, counsel would have got to his feet and said so. Instead, he said absolutely nothing.
I turn to the other matters that the hon. Lady raised. She asked about the membership of Network Rail, a company limited by guarantee. Its membership will consist of about 100 or 120 members. On the assumption that the agreements will go through, a small nominating committee, completely independent of the Government, will invite applications to be members of Network Rail. It will include the train operating companies and people with an interest in the industry. Critically, the majority of its members will come from outside the industry—from passenger groups, and from the Welsh and Scottish devolved Assembly and Parliament—to ensure that a wide range of people are included, and it will be independent of the Government. That is a far better way to ensure that the money invested in the railways is spent on the railway system itself. I repeat that it is not the Government who will run the company; it will be independent.
Incidentally, I am glad that the hon. Lady now welcomes the fact that Railtrack is out of administration. When asked in February this year whether she still thought it right to invent Railtrack, she said that she did. She has changed her mind, which is very encouraging indeed.
The hon. Lady also asked an important question about support arrangements and the finance available to Network Rail. As I have said, no matter who took over from Railtrack, it would be necessary to find substantial funds to take over the debt and meet existing commitments, and to meet the substantial cost overruns that Railtrack face, and which the successor body will have to pick up.
There is another matter about which the hon. Lady has been spectacularly wrong in the past few months, which is probably why she did not mention it much today. She has always maintained that Network Rail would be unable to raise private funds, but it has already raised £9 billion, and at extremely competitive rates. It is of course absolutely right that, initially, the Government should stand behind the Strategic Rail Authority, which is providing credit facilities for Network Rail. Such initial support will fall away as the bridging loans are
976
securitised, and ultimately, through the SRA, the Government will simply stand behind the £4 billion long-stop contingency funding that will be made available. However, on any view—be it a totally private or a totally public company—the Government, through the SRA, would need to help get the company out of administration.
I welcome the hon. Lady's concession that this Government are ending a period of uncertainty. I should point out, however, that above all we are ending a period of extremely damaging uncertainty, division and argument, which so characterised a botched privatisation that should never have taken place. More importantly, I also welcome the comments of those outside this House who are involved in the industry, who said today that this is a good chance to begin rebuilding the railway system, and to establish a properly operating system that is valued by public and private customers alike. I believe that this is a major step forward, which should therefore be welcomed by everyone in this House.
Mr. Don Foster: I thank the Secretary of State for advance notification of his statement, and I welcome him to his new and very challenging post. I also congratulate him on beginning on a high with this welcome announcement of the start of the process of Railtrack plc's being taken out of administration. As he sought to dwell on historical matters, I hope that he will acknowledge a strange irony. It is almost a year to the day since his predecessor said that my proposal to turn Railtrack into a not-for-profit company would
"introduce paralysis into the system".—[Official Report, 3 July 2001; Vol. 371, c. 137.]
His predecessor carried out a welcome U-turn, and notwithstanding our belief that the handling of the issue led to some confusion, unnecessary cost and loss of confidence among private investors, we welcome it.
However, there is one U-turn that we do not welcome. The Secretary of State's predecessor told the House categorically that no additional money would come from the Government to compensate shareholders. Since May 1996, shareholders have received some £700 million in dividends and they bought Railtrack in the first place at a knock-down price because it was undervalued by some £6 billion. I therefore see no justification for further compensation to shareholders, especially in the light of the right hon. Gentleman's predecessor's assurance that it would not be forthcoming.
Will the Secretary of State acknowledge that Network Rail does not really know what it is getting with the deal? On several occasions before administration, Railtrack failed to produce a full asset register. The asset register that the administrators were expected to produce by April has not been forthcoming, and today's statement by Network Rail specifically states that it will take the company a further 18 months to produce a full asset register and
"robust and realistic forecasts of the level of expenditure necessary to meet its output obligations."
In view of those uncertainties, can the Secretary of State tell the House whether the deal includes those properties managed by Spacia? Will they now become part of Network Rail and can he tell us at what point Government underwriting for the company will end?
The statement is welcome, but I hope that the Secretary of State will acknowledge that ending the conflict between passenger safety and shareholder profit has been

977
very necessary. We look forward to seeing whether the change of ownership will bring about an improvement in performance.
Mr. Darling: I am grateful to the hon. Gentleman for his opening remarks and I look forward to working with him. He raises two substantive questions. First, he asked about the compensation for shareholders. My view on that is straightforward. The sooner that Railtrack is out of administration and the business handed over to Network Rail, the better for everyone concerned. The Government will receive a cost advantage for that, and that is why the payment to shareholders is justified. For the avoidance of doubt, I confirm that the payment is available now provided that the shareholders of Railtrack accept it quickly at the extraordinary general meeting. It will not be available indefinitely and no one should be under any illusions about that.
Secondly, the hon. Gentleman asked about Railtrack's assets. He is right to highlight one of the problems that faced Railtrack in that it did not seem to have a grasp of its asset base or its cost base. One of the problems confronting Railtrack was the upgrade of the west coast main line and one reason why costs overran substantially was that contracts were let before the scale of the work required became apparent. That is not efficient in business terms, but it is beginning to change.
My predecessor, my right hon. Friend the Member for Tyneside, North (Mr. Byers), deserves credit for the fact that in the past few months the industry has worked together more closely than in the past. Railtrack, under John Armitt, its new chief executive, who is an engineer, has undergone a sea change in its attitude to what needs to be done, and that is very encouraging.
I should have dealt with a point raised by the hon. Member for Maidenhead (Mrs. May), and the hon. Gentleman also asked me about transparency. Network Rail's accounts will be accounted for under the Strategic Rail Authority. The big difference with what happened with Railtrack is that we will be able to see exactly what money went in, where it was spent and what is owned. In other words, under the new system we will have complete transparency, which was not always the case with Railtrack. That is becoming increasingly obvious as more and more information comes to light.
Mrs. Gwyneth Dunwoody: Is my right hon. Friend aware that this is a most welcome and long overdue statement? Railtrack has not served the community well. Ever since it was pushed into the private sector at the time of the fragmentation of the railway industry it has faced enormous problems. With its poor management and poor targets to hit, it was not capable of providing the level of care that the railway system desperately needed. Will the Secretary of State undertake to look closely at the amount of money that the new company will need? It is clear that considerable shortfalls exist.
I am sure that all hon. Members strongly support the tribute that my right hon. Friend has paid to John Armitt, but will he also undertake to discuss with the new company the need to look closely at how it works with contractors? The travelling public are sick of constant excuses. The infrastructure is very old and needs considerable maintenance, but it is not being enhanced
978
and improved at the speed or in the manner that is required. Will my right hon. Friend please look carefully at the system of contractorisation?
Mr. Darling: My hon. Friend raises two good points. First, in connection with the amount of money that the railway system needs, the Strategic Rail Authority has been speaking to Railtrack and its chief executive, John Armitt. It has been looking at a number of measures to determine what money is required and what investment is necessary, with a view to bringing benefits for rail passengers as quickly as possible.
In the past, too much attention may have been placed on what might be in 10 or 20 years' time, and not enough on what the position will be in the next five years or so. I am determined to ensure that we achieve year-by-year improvements in the service, and that the public see those changes as quickly as possible. One of the most urgent examples of where improvements are needed is the west coast main line, about which my hon. Friend the Member for Crewe and Nantwich knows a great deal.
My hon. Friend also raised the substantial matter of the use of contractors. That is of concern because one of the problems with Railtrack was that, when it was set up, it almost set out to be a virtual company. It did not do very much itself but used third parties to discharge its obligations and deliver its objectives—hence the growth in the use of the contractors.
I believe that, under any system—public or private—there will be third-party contractors. I have discussed the matter with John Armitt, and it is clear that, in the past, not enough attention was paid to ensuring that contractors did what they were supposed to do. There were many checks on the process—the tick-box approach—but not enough attention was paid to whether, and how satisfactorily, the work was done.
I have made it clear to John Armitt that, in future, the public will expect money to be invested properly, and that we will get what we pay for. I know that Richard Bowker, the head of the SRA, is also concerned about that. As far as safety is concerned, everyone must ensure that there is end-to-end accountability, regardless of who people work for and who they are answerable to. That is crucial, and we must see that the necessary mechanisms are properly in place.
I am grateful to my hon. Friend the Member for Crewe and Nantwich. The points that she made are extremely sound, and I attach great importance to them.
Miss Anne McIntosh: I begin by declaring my interest in Railtrack. I welcome the Secretary of State to his post, and wish him every success where his predecessors have failed.
I wish to speak about the independent Rail Regulator. I do not want to go over the whole sorry saga, but many questions were raised about the advice that the Rail Regulator gave the Secretary of State's predecessor, the right hon. Member for Tyneside, North (Mr. Byers), which that right hon. Gentleman indicated he would overrule. Does the present Secretary of State agree that if the new company announced today is to succeed, there should still be a prominent role for an independent rail regulator?
Will the Secretary of State explain why he proposes to downgrade the role of the independent Rail Regulator, and to institute a regulatory board? What will be that board's

979
status? How important will be the advice that it gives to the Government? Does the right hon. Gentleman not agree that the board will compromise the very independence that I presume the Government hold dear?
Mr. Darling: No, I do not. The Government have made it clear several times now that, as and when legislative opportunities arise, we will establish regulatory boards to back up regulators. That is becoming common practice, and the help that it gives to regulators has been welcomed by them. The week before last, I made an announcement emphasising the importance that we attach to independent economic regulators. Before I made that announcement, I discussed the matter with the regulator. He is happy with the proposals, and in fact has an informal board already. There is therefore no difficulty in that respect.
The regulator has welcomed today's announcement. Strikingly, however, bodies such the Association of Train Operating Companies and Network Rail have welcomed the work of the economic regulator. Tom Winsor has done a very good job over the past few years and I am quite sure that he will continue to do so. However, I think that most people will welcome a regulatory board to help and give greater depth to his deliberations. That approach is not unique to the rail industry—the Government are doing it in relation to all other regulators as well. Therefore, I do not think that the hon. Lady's points have any substance and believe that most people outside this place would accept that.
Mr. George Howarth: I, too, congratulate my right hon. Friend on these proposals, not least because there will be appropriate and clear lines of communication.
Now that my right hon. Friend has the opportunity to turn his attention in a different direction, will he agree to meet my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle), myself and others to discuss the excellent proposals Merseytravel has for a tram scheme in Liverpool?
Mr. Darling: For the avoidance of doubt, we will not be transferring Merseytram to Network Rail. I am aware of the Merseytram proposal, and I understand my hon. Friend's concern. I will be more than happy to meet one or both of my colleagues to discuss it at a convenient time.
Mr. Michael Jack: Will the Secretary of State—to whom I also bid welcome—say who will set the financial performance criteria for Network Rail? To whom will it be answerable for the achievement of those performance criteria? Who will audit its accounts and, specifically, when can we expect a detailed statement of precisely what constitutes the upgrade of the west coast main line?
Mr. Darling: On the right hon. Gentleman's latter point, the Strategic Rail Authority is discussing with Railtrack, the train operating companies and, assuming that everything goes ahead, soon Network Rail how best to deliver an improvement to the west coast main line. That is likely to take a few months yet. I am not promising an oral statement but I will make sure that the House is kept informed in some way or another, because many
980
right hon. and hon. Members have a direct interest in what happens on the west coast main line and we all want to see it improved.
The appointment of auditors is a matter for Network Rail. The company is limited by guarantee; its directors are answerable to its membership, and they will set the performance targets. Network Rail is also responsible for delivering the objectives set by the Strategic Rail Authority. One of the changes that we have made since coming to power is to bring more cohesion into the railway system. What was lacking in the past was a strategic direction to ensure systematic increases in investment that resulted in more people using the trains for travel as well as increasing freight. That is what the Strategic Rail Authority is there to do. However, Network Rail is an independent company, limited by guarantee. The directors are answerable to its members for its performance as well as its stewardship of the company, which is what the right hon. Gentleman is concerned about.
Glenda Jackson: May I welcome my right hon. Friend to his new position and also welcome his statement? With regard to investment in our new railways, who will have the lead voice in deciding the prioritisation and plan for work? Will it be Network Rail or the Strategic Rail Authority? Who will have responsibility for those railway lands still in existence which may not at first sight be necessary for railway expansion or modernisation but which could be further down the line?
Mr. Darling: I thank my hon. Friend for her welcome, and apologise to the last few speakers who also congratulated me—I appreciated their remarks. It is nice to make hay while the sun shines; I do not suppose that it will always be this way.
It is for the Strategic Rail Authority to set out the key objectives, and for Network Rail to deliver them. Network Rail is responsible for delivering on the contracts that it enters into, whether they relate to the west coast main line or the suburban rail network, but the SRA lays down the strategy. There is now a clear sense of direction. The SRA will discuss with Network Rail. the train operating companies and others what the priorities should be, something that was missing in the past.
On any lands that Network Rail has acquired that are surplus to requirements and not needed, it is for the company, not the Government, to reach a view on whether to dispose of them. I will certainly look at any particular point that my hon. Friend may wish to bring to my attention.
Mr. Nick Gibb: Although he referred to it, the Secretary of State failed to answer one of the key questions put by my hon. Friend the Member for Maidenhead (Mrs. May): how will the contingent liability represented by the £4 billion lending of last resort by the SRA be accounted for in the national accounts? To that end, what is the right hon. Gentleman's estimate of the risk of its being drawn upon?
Mr. Darling: I thought that I had dealt with that point. The SRA is providing facilities, first, to enable Network Rail to raise money to acquire Railtrack plc, to meet its

981
immediate operating costs and to take over its debts, which are about £7 billion. Network Rail has raised £9 billion commercially; it is also taking over the European investment bank loan and the other loan to which I referred. The company has already raised that money from the private sector and it intends to securitise it. The process will start later this year and, contrary to the comments of some Opposition Members, there is much interest in it in the markets. That contingent liability will therefore fall away.
Secondly, the regulator has indicated that he will hold consultations on an early review. My expectation is that, in due course, the second tranche of funding—the £7 billion—will also fall away, until it, too, is taken over by purely private sources. The remaining backstop finance is £4 billion and that will remain a contingent liability. I very much hope that it will not be called down, because I hope that by that time Network Rail will be operating on a sound basis.
I repeat what I said to the hon. Member for Bath (Mr. Foster): the SRA will account for the moneys going to Network Rail, as the hon. Member for Maidenhead spotted—not difficult, as it was all over the newspapers. The process will be open, transparent and above board.
My statement may have been over long. I went into a great deal of detail because I was anxious that the House should understand everything, but finally—for the sake of completeness—I have laid two minutes before the House, which set out in full detail, chapter and verse, with all the supporting correspondence, exactly what the contingent liabilities are; how they will he covered; and where they are accounted for: so if the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) cares to spend the rest of the afternoon in the Library with a wet cloth over his head, he is welcome to do so.
Mr. Eric Martlew: Is my right hon. Friend aware that there will be great enthusiasm on the west coast main line for the new rail company and that no tears will be shed for the demise of Railtrack? I have two questions. First, is my right hon. Friend convinced that money will be available to provide us with a fast, modern, reliable rail service on the west coast main line? This week, we have once again experienced tremendous disruption.
Secondly, Railtrack was negotiating with Virgin to buy up to 10 new railsets. As Railtrack failed to deliver the second phase of upgrading—PUG II—will Network Rail have to pick up that debt, too?
Mr. Darling: Perhaps I may repeat what I said earlier about the west coast main line and the upgrades: now that Railtrack's books have been opened by the administrator, it has become apparent that some of the assumptions that had been made do not hold good. During the past few months, the SRA has been talking to the train operators—other companies are involved as well as Virgin—and to Railtrack to decide how best the west coast main line can be upgraded to bring year-on-year improvements systematically. As my hon. Friend knows, urgent attention to many points on that line could bring substantial benefits, whereas other places could be dealt with at a later stage. That work is still under way. I am hopeful that it will be concluded in the autumn, as I have been told. At that time, I shall ensure that, in one way or another, my hon. Friend and the rest of the House are kept informed so that they know what is happening.
982
We are spending about £4.6 billion a year on average, which is three times as much as was spent during the 10 years prior to 1997. I am determined that, as that money goes in, we should try to ensure that people see improvements year on year. It may take a long time to reach the ultimate conclusion, but we need to make sure that each year brings changes that will make a difference, especially for passengers on the west coast main line. It is perhaps an indictment of successive Governments that the last substantial, large-scale investment in that line was in the 1960s when many of us were still at school.
Several hon. Members rose—
Madam Deputy Speaker (Sylvia Heal): Order. May I make a plea for concise questions and answers, as a lot of hon. Members still hope to catch my eye?
Pete Wishart: I shall be brief, Madam Deputy Speaker.
Will the Secretary of State further describe the new board of Network Rail? For example, what will be the proportion of rail user groups vis-à-vis rail operators? May I further press him to describe how the nations and regions of the United Kingdom will be represented in the new structure?
Mr. Darling: As I said earlier, it is absolutely essential that representation should be drawn from throughout the United Kingdom because, unlike the hon. Gentleman, I believe that the integrity of the United Kingdom is very important, not least in the railway system. I repeat that the company will have 100 to 120 members, and they will be widely drawn from different interests, as well as from different parts of the country. The board will be a very much smaller, more businesslike organisation. It will be focused on delivering the business, and it will not be a representative body of all the various constituent parts. The board will be a businesslike, commercially focused organisation; the membership will be more widely drawn.
Helen Jackson: I welcome my right hon. Friend to his new post. Does he recognise that his predecessor's action last autumn was so warmly welcomed by the majority of the travelling public simply because they believed that the Government were prepared to put investment in passengers, trains, stations, track and signalling before the endless investment back into a failed company and its shareholders? That drove the public support, but may I ask for an assurance that the additional funds used to bring Railtrack out of administration quickly are not at the expense of any investment proposals at present on the stocks in the network? Furthermore, may I ask my right hon. Friend to ensure that the north of England and the north of this country, as distinct from the suburban areas around London and simply the west coast main line, get the proper infrastructure in the future? We in the north have our expectations, as well as the rest of the country.
Mr. Darling: As my hon. Friend will know, I have a passing interest in the northern part of the country. I am responsible for the rail track right up to the most northerly point of the Scottish mainland, as well as that around Sheffield, so I have some sympathy with what she says. Clearly, it is for the SRA to produce proposals to ensure

983
that the money is well spent to benefit as many people as possible, but the travelling public are important, no matter where they are.
My hon. Friend asks about funding. Two things are necessary in relation to the railways. First, there has to be adequate funding. Through the 10-year plan, the Government have allocated very substantial sums on an unprecedented time scale. Spending is never normally allocated so far ahead. Secondly, it is necessary to have a competent operator. That was not the case with Railtrack. I believe that Network Rail has a far better structure.
In relation to my hon. Friend's last point, the Government, through the SRA, are providing credit facilities to enable Network Rail to raise commercial funding precisely because we believe that it is very advantageous to get private and public money into the system; it needs both. I want to ensure that as much public money as possible goes into improving the network, and the sooner we get the rescue of the railway system completed and Network Rail operating satisfactorily, the better things will be for everyone concerned.
Chris Grayling: Will the Secretary of State tell us whether Network Rail be accounted for as a subsidiary of the SRA? Will any of its debt appear as public borrowing? Will any of the finances raised from the private sector not he covered by facilities or guarantees from the SRA?
Mr. Darling: I suggest that the hon. Gentleman joins the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) in the Library this afternoon with his wet cloth. He will see that it is all set out. The position is that the SRA will account for the business of Network Rail so that everyone concerned can see what money is going in and where it is going. The Office for National Statistics is another body, which is independent of Government, that simply classifies these things as economic statistics. The point made by Opposition Members therefore has no substance. The key point is that, unlike under Railtrack, people can now see where the money is going. I commend the minutes to the hon. Gentleman. He will find all the information that he wants in them, in some detail.
Mr. Dennis Skinner: I heard my right hon. Friend refer to the board a couple of times. He said that it would be cast in a broad fashion. Will he ensure that none of the invitations goes out to the usual chattering classes? Will he take close guard to ensure that there are no Tories among the 120 people, or the smaller group? They caused the trouble in the first place. If there are any Tories in that group, they will leak to their friends in the press before you can say "Jack Robinson". The last thing that we should do is force them to have a loyalty oath. Like my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), we do not believe in them.
Mr. Darling: I strongly believe that the membership of the company should be composed of people who have the railways at heart, first and foremost. I take slight issue with my hon. Friend, however, in that I know that there are still many decent people who are Conservatives, who are appalled by the attitude of the current Tory party
984
leadership towards these matters, and who believe that we are right about the future of the railway system, and that the Tory party is wrong.
Bob Spink: Will the Secretary of State make investment available to Network Rail to enable it to deliver on the London, Tilbury and Southend line the objectives that the Strategic Rail Authority has set, particularly the 50 per cent. increase in passenger numbers over the next few years, bearing it in mind that that line is already running over capacity? That will mean that Network Rail will have to put down new track and a new station, perhaps—I hope—on Canvey Island. I believe that 3,000 of my constituents on Canvey Island use that line each day, and 5,000 people in my constituency as a whole do so. They have been very long-suffering, and they deserve a break—they deserve new infrastructure.
Mr. Darling: I am glad that the hon. Gentleman's constituents are enjoying the fruits of the economic success in this country. I shall say two things to him. First, we have made substantial sums available to invest, and the Strategic Rail Authority has the job of identifying where that money is best spent. I have no doubt that it will consider many commuter lines running into London.
Secondly, when the hon. Gentleman is travelling on one of those trains, he might like to say to his constituents that a lot of money is being invested through the 10-year plan, and that, if the Tories were re-elected, that would be cut, as they oppose every penny of that additional investment.
Mr. Kevin Hughes: There can be no doubt in anybody's mind that Railtrack was an abject Tory failure; it is as simple as that. I welcome my right hon. Friend's announcement today, and I wish him well in his new post. May I press him further on contracting out? I accept that there will be a need to contract out to third parties. What worries me, and, I think, other rail users, is contracting out to fourth, fifth and sixth parties, as there seems to be no mechanism for checking them. What we do not want is people working on rail maintenance who do not have a clue about what they are doing.
Mr. Darling: As I said to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), I am extremely concerned that there may not be the necessary supervision of contractors. As my hon. Friend the Member for Doncaster, North (Mr. Hughes) says, it is not only subcontractors who are involved but sub-subcontractors. Many contractors work extremely well and efficiently, are very well supervised, and the job is well done. There is concern, however—in Railtrack, too, to give it credit, as well as elsewhere in the industry—that, in some cases, there is not enough end-to-end accountability, not just to make sure that a process was followed or that someone ticked the right boxes to say that they did certain things, but to make sure that whatever should have been done was actually done.
As I said to my hon. Friend the Member for Crewe and Nantwich, I met John Armitt a couple of weeks ago to express my concern about that issue. He is well seized of

985
the problem and very concerned about it. Before Railtrack comes out of administration, it and then Network Rail will pay a great deal of attention to this issue. It is important that we are satisfied that we are getting what we are supposed to be getting and—critically in terms of safety—we must be sure that the work that is supposed to be done is actually done. My hon. Friend the Member for Doncaster, North makes a good point, and I thank him for his kind remarks.
Mr. Henry Bellingham: Is the Secretary of State aware that confidence in my local line is now picking up after the tragic Potters Bar crash?
However, there is a real problem with parking at King's Lynn station. My constituents find it very difficult to find parking places there after 8 am. The car park needs extending and, although the land is owned by Railtrack and the SRA, no one seems able to make a decision. Will the Secretary of State look at that issue urgently, because we need to encourage local rail users?
When does the Secretary of State expect the Health and Safety Executive report on the Potters Bar tragedy? If it finds that there was not malicious interference, but negligence on the part of the subcontracting firm, Jarvis, will he order a full public inquiry so that we can consider in detail the whole issue of subcontracting?
Mr. Darling: On the hon. Gentleman's final point, it would not be wise of me to pre-judge the HSE report's conclusions. Everyone believes that it is in the best interests of all concerned to have the report as quickly as possible, and the HSE may publish further interim reports to keep people informed. Once I have the conclusions, I will consider them and come to a view.
On the hon. Gentleman's point about King's Lynn station, I am intrigued by the fact that Conservatives Members, having argued for years that the railways should be privatised and taken away from Government, are the first to ask detailed questions about the parking arrangements at their local stations. The SRA is charged with that responsibility, and I will pass on his concerns to it. However, as he has now raised the issue and because the chances are that I will be in King's Lynn at some point, I shall find out what the position is. If there is anything further that I can add, I will let him know.
Ian Lucas: Will my right hon. Friend please confirm that responsibility for station maintenance and development will, in fact, rest with Network Rail, so that it will be the organisation to be approached if there are difficulties at local stations?
Mr. Darling: I shall be brief. That is absolutely right.
Kali Mountford: I pay tribute to my right hon. Friend for his announcement. Its key elements are the move from shareholder interest to public interest and the programme of investment, and it is important to bring those two elements together. Given the many demands that have been made of him today and the high public expectations that will result from the announcement, is it not crucial that a programme of work
986
is developed so that public confidence can quickly accrue to the new company? People's expectations will include better disabled access to platforms and improvements to railway lines. May I put in a bid for cross-Pennine routes while I am at it? Public confidence in the new network will be built if the SRA can announce soon how it will meet people's reasonable expectations.
Mr. Darling: My hon. Friend is right. Money and a competent operator are necessary. I hope that we now have both.
On my hon. Friend's more general point, we set up the SRA to ensure that we have a considered approach to these matters. It is now under extremely good management and I have not the slightest doubt that it will work with others to make sure that we get a decent railway. That will take time—let us be clear about that. There is a huge backlog of underinvestment over many years, but I hope that we shall see an improvement year on year. The SRA and others are very much seized of that point.
Mr. Andrew Miller: In welcoming my right hon. Friend to his post, may I remind him of his words about the new company spending money efficiently and effectively, something on which I am sure we would all agree? On subcontractors, does the nature of the change give us an opportunity to renegotiate contracts with some of the subcontractors to bring about the changes that he described to my hon. Friends the Members for Crewe and Nantwich (Mrs. Dunwoody) and for Doncaster, North (Mr. Hughes)?
Mr. Darling: I am sure that Network Rail will want to look at that, but I am not in a position to talk about individual contracts. However, I am sure that not only Network Rail, the Strategic Rail Authority and the train operating companies but, for obvious reasons, some of the subcontractors will want to ensure that the system works. The present situation is not entirely satisfactory.
Clive Efford: My right hon. Friend will be aware that many Labour Members think that Railtrack was merely laundering public money into private hands while giving the illusion of trying to run a railway. His statement about its demise is welcome.
My right hon. Friend referred to the fact that it is essential to deal with repairs and maintenance and the scrutiny of the quality of work carried out. Will he also ensure that the accreditation of the workers who do the work that is essential to the rail service is checked and that training is provided to ensure that they are competent? Given that forewarned is forearmed, can we learn lessons from that specific issue for the management and running of the public-private partnership for London Underground, because some of the contractors are involved in both services?
Mr. Darling: As I said, it is not the employment of contractors in itself that is the problem because that has always been a feature of the railway system. What is at issue is whether proper controls are in place to ensure that contractors and subcontractors are trained and competent to do the work and, critically, to ensure that the work is done. I do not take the view that just because someone is not directly employed by the main owner-operator,

987
whether that is public or private, there is something wrong with them. After all, most of the population work for companies in precisely that position. What is important, though, is to ensure that there is end-to-end accountability and that clear controls are not only in place but enforced.
Rob Marris: As a frequent user of the west coast main line, I welcome my right hon. Friend's statement. The west coast main line, which serves my constituency, has improved in the past six months, but much more needs to be done.
Does my right hon. Friend share my lack of surprise that Railtrack continues to deny that it was insolvent, given that trading while insolvent is a criminal offence for which directors can be held personally liable? Will he say a little more about the membership of the board and of Network Rail, the company limited by guarantee, especially in relation to trade union representatives because it is important that they are fully involved in the interests of modern industrial relations?
Mr. Darling: In relation to membership, I said that there will be between 100 and 120 members, who will be nominated by a special committee set up for that purpose. Membership will be open to anyone who has the interests of Network Rail and the railways at heart. Of course it will be open to unions, although bearing in mind what I have read over the past few days, one or two of them may not want to be involved. If they do, however, I am sure that the invitation is there.
My hon. Friend is right about the west coast main line, which is improving all the time. New Virgin trains will shortly start to appear and people will see a difference in the quality of rolling stock, which Virgin cross-country trains are also using. I want to ensure that the changes announced today and the work of the Strategic Rail Authority and others mean that we get a better railway system year on year. I am confident that that will happen. The investment is available and the right structures are now also in place.
Mr. Tom Harris: I congratulate my right hon. Friend on his statement this morning and express the hope that it will bring forward the day when we at last have a direct rail link between Glasgow city centre and Glasgow airport. Does he agree that the good wishes expressed by the Conservative party for Network Rail will ring hollow in the ears of the British public given that the only time that it expressed any interest in the rail network was when it hoped to make a fast buck by selling it off?
Mr. Darling: The Conservative party is very much on its own in still believing in its heart of hearts that Railtrack could have carried on. That is the view of the shadow Chancellor and the hon. Member for Maidenhead (Mrs. May). They still think that Railtrack was a flourishing and going concern, whereas the High Court held that it was not. They have always had a rather grudging attitude to railways and public service in general.
988
I suspect that, as we move on over the next two or three years, the big issue will be this: we have put in place substantial long-term investment. On the basis of the Conservatives' current economic policies, they would cut it; they are against every penny of that increased investment. Without investment, all the changes to structures in the world will make no difference. It is investment—sustained investment—that will make the difference. As the hon. Member for Maidenhead has been wrong on just about everything that she has ever said about Railtrack, this is a golden opportunity to move on, as her former leader used to say, and start looking at the Conservatives' policy in relation to investment in the railways.
Mr. Mark Lazarowicz: I very much welcome the clear message from my right hon. Friend to the shareholders that the current offer will not be on the table indefinitely. Given that, unfortunately, it appears from press reports that there are still some shareholders who are minded to reject the deal, does my right hon. Friend agree that it would be totally unacceptable if this revival of the rail network were to be sabotaged by anyone trying to extract an even higher settlement than the current one, which is very generous in all the circumstances? If any inordinate delay were to be caused by such tactics, would he consider legislating to bring about the establishment of Network Rail as soon as possible?
Mr. Darling: As I said, the £300 million is not there indefinitely. It is there provided we get Railtrack out of administration quickly. An extraordinary general meeting is to be fixed for, I believe, July, and I very much hope that a majority of shareholders will vote to go ahead with the sale and purchase agreement.
I am pleased that the board of Railtrack Group is recommending that the offer be accepted; a large number of shareholders have already said that it is the right thing to do. I hope that all the shareholders will reflect on not only the benefits of the offer but the fact that the alternatives, which do not include the £300 million, would mean a long period of litigation with lots of expenses. Surely it would be far better to put all this behind us and ensure that we get Network Rail set up.
Above all, let us remember that the principal people whom we are here to serve are our constituents as a whole—shareholders and non-shareholders alike—who want the railway network to be operated by a competent body, backed by the necessary investment. That is the best way to get the railways going again. I very much hope that all the shareholders of Railtrack Group will reflect on that and vote in the way that I think is appropriate.
Dr. Julian Lewis: On a point of order, Madam Deputy Speaker. You will be aware that Mr. Speaker has, on a number of occasions, admonished Ministers and reminded them of the importance of making announcements first to the House and only then to the media. On Radio 4 at 12 noon today, the headlines and the attached story were that the Transport Secretary was going to make the announcement that we have just heard,

989
and I believe that you will find, if you look into it, that the detail in that news story was too great to count as just a general airing of fact that a statement was going to be made. Will you please investigate this matter? Particularly bearing in mind the record of the previous Transport Secretary in spinning the news, it would be a shame if his successor were to go down the same path so early on.
Madam Deputy Speaker: I note what the hon. Gentleman has said but I think that on this particular occasion, intelligent press speculation would not have been too difficult.

ESTIMATES DAY
3RD ALLOTTED DAY
ESTIMATES DAY
  ESTIMATES, 2002–03

    London Underground
    [Relevant documents: Second Report from the Transport, Local Government and the Regions Committee, Session 2001–02, on London Underground, HC 387-I, Seventh Report from the Committee, Session 2001–02, on London Underground—The Public-Private Partnership: Follow-up, HC 680, and the Government response thereto, Cm 5486; and Department for Transport, Local Government and the Regions, Office of the Rail Regulator and Ordnance Survey: Annual Report, 2002, Cm 5405.]
    Madam Deputy Speaker (Sylvia Heal): I must announce that the Speaker has selected the amendment in the name of Mrs. Gwyneth Dunwoody.
    Motion made, and Question proposed,
    That further resources, not exceeding £32,972,185,000, be authorised for use during the year ending on 31st March 2003, and that a further sum, not exceeding £31,415,020,000, be granted to Her Majesty out of the Consolidated Fund for the year ending on 31st March 2003 for expenditure by the Department for Transport, Local Government and the Regions.—[Mr. McAvoy.]
    2.23 pm
    Mrs. Gwyneth Dunwoody: I beg to move, as an amendment to the motion,
    That resources be reduced by £1,000 in respect of Request for Resources 2 (Promoting modern, integrated and safe transport and providing customer-focused regulation) relating to grants to London Underground.
    The amendment would, at least officially, take away from the underground some of the moneys that are to be offered to it.
    One hazard of being a country that has produced large numbers of engineers is that sometimes we are so used to our traditional backgrounds that we forget that it is important to understand why, if a country is to remain not only economically successful but capable of contributing to a very high standard of living of its people, it must continue to employ the best skills of its people. The British have been very good at engineering over many centuries, and particularly since Victorian times, when they were in the vanguard not only of creating fantastically good transport systems but developing them in such a way that those skills were spread throughout the civilised world. It therefore is rather sad that in recent years, and certainly under previous Governments, there has been a lack of consistent investment in good transport systems. Those systems, many of which we had ourselves initiated, were allowed to run down, and one classic example has been the London underground.
    London as a capital city not only provides a most vibrant and exciting place to live but attracts some of the best brains in the world, and it is the centre of financial, political and cultural events that mean that its people require a high standard of infrastructure. Unfortunately, London Underground no longer provides that very high level of care. This is not a criticism of people who operate what is an old system; it is simply an acknowledgment

    991
    that successive Governments did not provide the cash that was essential not just to maintain but to modernise and enhance the system, and although at least one modern line has been built, that was still not enough to provide the level that is essential.
    Therefore, the incoming Government decided that they were going to look at a new way of financing the underground, and the Select Committee chose to look very closely, over a number of reports, at how that was going to be done, what its purpose was and what it was going to produce. On one occasion, the Leader of the House did reprimand me when I suggested that we had still not discussed that sufficiently on the Floor of the House, by saying that he was convinced that we had had a number of debates that had covered every aspect of the public-private partnership, but the truth is that there has not been a substantive vote, and although today might not be either the occasion or the manner that is necessary to decide such an important subject, it is perhaps instructive, on a day when we have just been discussing the debacle of Railtrack, to tell the Government that we are not convinced, as a Select Committee, that the public-private partnership is the way forward, will provide what we want or indeed is what the general public want.
    As a Committee, we looked at the history of the public-private partnership. We took evidence not only from Ministers but from those working in the industry—from those dealing with the financing and the structure, the maintenance and enhancement of the system—and we discovered that some aspects of the deal were exceedingly disquieting.
    As a Committee, we were worried that most of the arrangements for the bids had been Treasury led, to the point where Treasury officials appeared to be taking precedence over the Department for Transport, Local Government and the Regions in the negotiating, and providing individuals who were themselves directly dealing with the applicants for the bids, and yet we were not able to persuade Treasury Ministers to appear before us to discuss the implications. We said very clearly that we thought that that decision undermined the work of Select Committees, simply because the House of Commons does have a responsibility not just to ask awkward questions but to obtain answers.
    Helen Jackson rose—
    Mrs. Dunwoody: I shall certainly give way to my hon. Friend. I am delighted to see her.
    Helen Jackson: Does my hon. Friend agree, particularly as we are discussing the matter on an estimates day, and because the thrust of the Government's decision on London Underground was based on financial estimates and so-called value for money, that on criteria that varied according to advice from the Treasury, it was difficult, if not impossible, to get a balanced view from the entire Government without being able to take full evidence from the Treasury and Treasury Ministers?
    Mrs. Dunwoody: That was precisely the point that concerned the Committee. Under normal circumstances—I have been in the House longer than I sometimes care to
    992
    admit in public—one would have expected a major scheme of funding for the London Underground to be not only carried forward, but controlled at every point by the Department that was directly responsible—the Department of Transport, Local Government and the Regions. Of course, the Treasury must have an important guiding role in deciding public expenditure. Nobody disputes that.
    However, the normal procedures that all Governments follow have always meant that the Department with the controlling interest went to the Treasury, discussed the figures at various points in the spending review, asked for the amounts of money that it needed, and negotiated on the basis of information about the sum that the scheme demanded. When the Department received a reply, it undertook the negotiations with the people concerned. That is the traditional way of proceeding, and I have not heard it argued that it did not work.
    What concerned the Select Committee was that the more evidence we took, the more it became clear that the Treasury had somehow reversed its role, and was negotiating directly on a transport scheme that would determine the future of transport in our capital city and had been going on for over four years. Successive Governments have not found the money to keep such schemes going and to improve them, but we are discussing a scheme that is so complicated, and which creates and even replicates so many of the difficulties that we saw in Railtrack, that we felt that we were almost in danger of doing the same thing again.
    We wanted the Treasury to come before us and explain why it did not take that view. We produced not just one report, but reports that stated time and again that we did not think that that was the answer, and we gave our reasons.
    Chris Grayling: Will the hon. Lady make it clear that on this issue, as on so many issues that the Committee discusses, and following on from the intervention from the hon. Member for Sheffield, Hillsborough (Helen Jackson), those views were strongly held right across the Committee, regardless of members' party political persuasion and perspective on the Government?
    Mrs. Dunwoody: That was not a party political view. The Select Committee was so worried by the evidence that it took that it wanted to have a series of questions answered, and it felt that it had the right to ask the Executive to demonstrate exactly where it was going.
    Why do a Government choose to move outside Government funding for major infrastructure schemes, if they are a Government committed to improving the transport system? They do so because they have reviewed their finances and concluded that they have so many demands in any given period of time that they must prioritise, which may mean that the money that is needed for infrastructure systems is not to be found within existing Government funding. Fine.
    The Government must then consider how they intend to involve the private sector and develop the partnership and what benefits there will be. Experience teaches us that if Government enter into a deal that may raise money from the private sector, but which does not move the risk from the taxpayer to the private company, they are not providing the benefits or the long-term undertaking guarantees that they should provide.

    993
    So we asked whether the Government could convince us that there was a transfer of risk from the Government to the private company. That was not at all clear. What was clear was that because of the complicated nature of the scheme and the very involved system that was proposed, not only would we almost inevitably get into complicated disputes with the individual companies and with contracts, but there would be enormous problems for the staff involved. That would mean constant references to an arbiter, and the need to extend the powers of the arbiter to look at all the implications and come to a just and sensible conclusion.
    We considered the fact that already the shortage of funds available to London Underground was constraining capacity. The sheer length of time that the creation of the particular form of financing was taking was immediately impacting on the work of London Underground. We began to argue, as we had in an earlier report, that there should be an independent assessment, and the Government agreed, sensibly, that that was a good idea. The response that we got from the people concerned was that, unfortunately, many of the elements in the public-private partnership deal are subjective.
    Four years, and we are told at the end of that time that many of the judgments needed to work out whether the scheme represents value for money are subjective! I find that very worrying indeed. We can all bring to the table our prejudices in terms of negotiations and objectives, but if a Government are entering into massive commitments, it is essential that they should do so on the basis of clear facts, clear responsibilities, a clear transfer of risk and a clear indication of the cost to the taxpayer over a number of years. After all, the bid will have implications for public transport for over 30 years. That is an extremely long time.
    The previous Secretary of State accepted that it would not be possible to provide definitive answers on value for money; well, why not? How are we to proceed, if we are not convinced that we are committing the taxpayers' money to a deal that is in their interest? We were sure that we wanted the National Audit Office to give its view of the particular and subjective aspects of the deal. The NAO's response was sensible; it said that it could not make a political judgment.
    The public, however, do make political judgments. They look at a scheme and say, "Is this going to be what we want? Are we going to get a modern, comfortable railway and are we going to continue to pay for it not just through fares, but through the considerable subsidies that the scheme will receive?"
    Those are the considerations that should concern us. The kind of financing that was being discussed was decided, it seemed to us, not on the basis of what was essential to modernise the railway, but on the basis of what we could afford. In a sense, the matter was decided the wrong way round. The decision was taken on the method of funding, then the Government looked at what they would get under that particular arrangement.
    Geraint Davies: Does my hon. Friend accept that, contrary to a normal private finance initiative, in which money is lent to be spent up front, the nature of the scheme was that £1 billion would be spent every year and the Treasury would supply that on a yearly basis? The picture that my hon. Friend has painted in that
    994
    respect is not a reflection of the deal. With reference to risk transfer, does she accept that the penalties in the contracts, which would mean the elimination of suppliers or penalties out of their profit, under pressure from the bank, which is the third player in the relationship, would ensure risk transfer and ensure project management such as we see in large projects in the private sector, which we have not seen from London Underground in the public sector?
    Mrs. Dunwoody: The answer is no, I do not take that view. if I did so, I would not have been a party to the report that sets out in considerable detail why I think that it is wrong. I am sorry if I am not making myself clear; perhaps I should speak in simpler Anglo-Saxon terms.
    We were promised an initial saving of £4.5 million in the deal, but the Committee found that the present arrangements were flawed. Let me explain to my hon. Friend the Member for Croydon, Central (Geraint Davies) one of the reasons why. A large amount of London Underground's work is funded from the fare box. The amount that it takes from its fare box moneys towards its operating costs is higher than that which is taken in similar systems elsewhere. In 1998, London received 129 per cent. of its operating costs from the fare box, but New York received only 77 per cent. and Paris 63 per cent. When we consider the scheme, we must work out whether it will be heavily dependent on the amount that is receives from the fare box. If it will be, we should be aware that the amount that is available from the fare box is declining. Have the Government considered the implications? Who will find the difference? Will London ratepayers be faced with a considerable commitment of which they are not currently aware? If not, will the Government have to give much more substantial subsidies than we thought?
    We must understand that the original Government estimates, which said in October 2001 that 45 per cent. of the deal would be financed from Government subsidy, 30 per cent. from the fare box and 25 per cent. from private finance, may no longer be valid. The figures may have changed so radically that the House should know about it. I am worried by the current proportions in relation to the various groups involved, as I am not at all sure whether the bidders are already laying down conditions that might mean that the figures that the House has been discussing are no longer accurate. Is it true that the people who are already involved in the deal are laying down a number of specifications and saying that they will require a certain number of millions of pounds in a single input of finance immediately when the terms are signed? If that is the case, why have we not been told?
    Richard Ottaway: The hon. Lady will he aware of the Mayor of London's letter to a number of hon. Members, dated 12 June, in which he notified us that he had identified a large funding gap and was starting legal action against the Government and insisting that the PPP did not go ahead until an explanation was forthcoming. Would she consider it appropriate for her Committee to call in the Mayor of London and the Minister and try to resolve the matter?
    Mrs. Dunwoody: My Committee may no longer be there. We have already taken evidence from Transport for London, but it may have been overtaken by changes in

    995
    the existing arrangements. That is what concerns me, and I hope that the Minister will give some clear indications about that.
    There are other difficulties. London Underground will have to monitor the arrangements, and the Committee asked whether it had sufficient staff and money to do so. It will need to employ more people, not fewer. We have seen on overground rail that, unless maintenance and operation are very closely monitored and there is very skilled supervision of engineering, we will run into serious problems in operating railways. If that is so in relation to Railtrack, may not also it be true in relation to London Underground? If so, will London Underground have enough money and staff to carry out the very high level of monitoring that is required?
    The Committee was also very concerned about the sort of deal that says that companies will be able to press for better terms after seven and a half years. We took evidence and asked questions about that. We asked what would happen if the companies said at the end of seven and a half years that they did not think that they could continue and wanted substantially to increase the amounts paid by tax and ratepayers. I am afraid that we did not get a very detailed answer, so I ask the Minister again to address that point. In effect, London Underground can be held to ransom by the companies, which will be in an extremely powerful position. Who will decide what is a fair deal when we get to that point? Why is there no public interest exclusion? Why will it not be possible for the Government of the day to demand that change should come about because of the public interest? That seems something that should be automatically written into the contract, and yet, somehow or other, it is not there.
    Surely, we have learned by now in dealing with private companies that the overriding interest of the tax and rate payer on matters such as safety must mean that the Government should have the right to intervene and say that they cannot continue with the contracts in their present form because of the implications for the travelling public. If not, there will be considerable difficulties. Major upgrades and enhancements that are not properly spelt out will be another source of difficulty. Why will they not be the responsibility of Transport for London? Why will it not be possible for them to be planned and take a direct form?
    There is no 15-year public sector comparator and I am afraid that some of the figures that have been quoted have no basis in any of the published reports. The dominance of the highly constrained financial analysis as the basis for the decision-making process is ill-founded and mistaken. The Committee said:
    "The level of cost overruns"—
    we have also been discussing this issue in relation to Railtrack—
    "to which the Infrastructure companies will be exposed before they can seek an extraordinary review is paltry compared to the size of the investment programme."
    Again, I emphasise that risk transfer was one of the key reasons given to us for undertaking the deals, but we think that it is seriously undermined and could mitigate the desire to go ahead with this particular public-private interest.
    996
    We pointed out that, even at this juncture, the Government should have an alternative. I feel great sympathy for a new Secretary of State who enters a Department and is faced with a number of deals that appear half done, but we have spent more than four years arguing about how we can best come up with such a partnership deal, it is still not completed, and yet the Government are still saying "Unfortunately, there is no alternative, and even if we think that it is flawed and cannot provide the House with accurate financial information, we must nevertheless go ahead because there is no alternative."
    Governments always have alternatives. They have a number of them, as we have seen in relation to something as basic as Railtrack. They have a responsibility to exercise their political judgment. Who in the 21st century would imagine that a capital city of the size and importance of that of the United Kingdom should be reliant on an underground system that is more than 100 years old, but unable to conclude a deal to improve, change and modernise it even after four and a half years' discussion? Who would believe that a Government who are so strongly committed to transport and who care about people's quality of life could still be suggesting that we should wander forward with a deal—I say this without wishing to be unkind—that is unproven, has vast numbers of holes in its responsibilities and does not indicate that it will deliver the goods? After all, all that Governments should have the right to determine is the need to deliver the goods. We come here to decide how our public money should be spent—that is why we are elected. The link between elected Members and the prioritising of Government schemes is the fact that it is our taxpayers' money that we are spending, and we have a special responsibility to ensure that it is spent responsibly, sensibly and, above all, with a clear end in mind that will produce a good transport system.
    The Committee was not convinced. We asked to see Ministers who should have answered our questions. We published reports that we thought spelled out to the House: "Beware—this is a bad scheme, which can still be dropped and should be abandoned." Frankly, we did not get the answers that we wanted, and we have had to use a particular device to ensure that the matter is debated on the Floor of the House today. They are a grown-up Government—they should demonstrate that they understand that it is better to tell people, "We have a made mistake, and on the whole we think we ought to start again."
    2.51 pm
    Tom Brake: It is a pleasure to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who is very experienced in these matters. We are happy to add our names to her amendment; I hope that that will not do her—or rather our—cause too much harm.
    It would be churlish of me not to welcome the opportunity for the debate. I presume that this two or three-hour debate is the second and final phase of the wide consultation on the Government's part-privatisation plans for London Underground that was promised by the former Secretary of State for Transport, Local Government and the Regions. I hope that the debate will focus on the public-private partnership rather than on the personalities involved, including the Mayor of London, Bob Kiley,

    997
    former Secretaries of State and the present Secretary of State. I deplore the way in which yesterday's debate, which was supposed to be about transport in London, was hijacked by the hon. Member for Ilford, South (Mike Gapes). He made some very serious allegations during that debate, which he has declined to repeat outside the House. Yesterday's debate was all about getting Kiley and nothing to do with getting London moving.
    Mr. Barry Gardiner: Can the hon. Gentleman explain how it is possible to hijack one's own debate?
    Tom Brake: Many hon. Members thought that a debate entitled "Transport in London" would be about transport in London, but that was not the case.
    The Government have always stated that their approach to the modernisation of the underground would be based on three principles. I quote:
    "First, there must be no privatisation; secondly, safety must not he compromised; and thirdly, the contracts must offer value for money."—[Official Report, 7 February 2002; Vol. 379, c. 1126.]
    In our view, PPP falls foul of at least two of those three principles. First, does PPP constitute privatisation? I do not want to spend valuable time debating semantics. Chambers dictionary defines "privatisation" as to
    "transfer from ownership by the state into private ownership".
    The Government say that PPP does not represent privatisation, but Liberal Democrat Members and many others consider that handing over responsibility for the maintenance of the underground to two private consortia, Tube Lines and Metronet, for 30 years represents at least part-privatisation. However, the debate about whether it is privatisation or part-privatisation is not nearly as important as the debate about whether PPP compromises safety or represents value for money. I shall focus on those two points.
    Is PPP compromising safety? There is no doubt that PPP will make managing safety issues more complex owing to the fragmentation that it introduces to the industry—the very sort of fragmentation that has caused so many problems on the rail network. A network broken up into two parts will have more interfaces and there will be more opportunities for safety standards to diverge. Of course, more complex does not necessarily mean less safe, but it does mean that a greater effort will have to be put into safety standards to achieve the same level of safety than would be the case if there was not that fragmentation.
    Of still greater concern is Transport for London's assessment that PPP hands over to the infracos' financiers—not to the infracos—decision-making powers over safety matters. On 19 June, Bob Kiley wrote about that to Mr. Stephen Williams of the Health and Safety Executive. So far, he has not received a substantive response. In his letter, he said that
    "the JNP"—
    that is, Tube Line—
    "finance documents we reviewed include unusual terms which will materially affect LUL's actual ability to control and/or work in partnership with the privately owned infracos."
    He goes on to say that
    "the JNP finance documents detail mechanisms that convey to infraco lenders a panoply of powers to control or direct infraco activities. A sixty-two page 'Control Matrix"'—
    998
    identifies—
    "well over a hundred decisions Tube Lines and infraco JNP must take if the lenders so direct. These rights potentially include how works are performed, the scheduling of works, the choice of subcontractors and the settlement of disputes."
    He also observes that
    "the Metronet finance documents, which may contain similar lender rights, have not been disclosed"—
    or had not been disclosed at that point. He went to say that there had been very little in the way of a substantive reply from the HSE to the many issues that had been raised in previous correspondence, and that he wanted a full response to each of those issues. He expressed surprise that the HSE had
    "concluded that it was neither 'necessary or appropriate' for a face-to-face meeting to take place between its and TfL's counsel."
    He and I find it difficult to understand why that is the case, given the level of experience that TfL's counsel will have built up in considering and reviewing the contracts. If TfL's reading of those documents is correct, this is a very serious matter.
    Will the Minister confirm whether TfL is correct in its assessment of the documents and, if it is, what guarantees he can give the House that the financiers of the infracos will always make safety their priority? If he can provide none, PPP should be put out of its misery now.
    Ms Diane Abbott: One of the issues that Bob Kiley has raised is the use of subcontractors. Does the hon. Gentleman agree that one of the most problematic aspects of Railtrack was the increased use of subcontractors, because much of the labour they used was not permanent or skilled? We do not want that to be replicated on London's underground.
    Tom Brake: I agree. The management of subcontractors is a key priority. One of the concerns about the fragmentation of the network is that it will be possible for Tube Lines and Metronet to operate to different standards, thereby making it even more difficult to control the work that is done.
    Geraint Davies: The hon. Gentleman seems to be saying that the banks play no role in this, and that they are just leeches taking the money without providing added value. Does he agree that the banks' role is to provide a discipline to the private supplier who offers the service to the public? Does he agree that, without the banks, we are less likely to meet our targets, and with them, if the targets are not met, those private suppliers will be removed and replaced or their profits will be penalised, which will ensure that projects are delivered on time?
    Tom Brake: I agree with part of the hon. Gentleman's point. Clearly, the banks have a role in relation to infracos. However, they should not have a role in making decisions that could have an impact on safety.
    The final key question is whether PPP represents value for money. We will know the definitive answer when the National Audit Office conducts its investigation. Unfortunately, that will happen only after the financial close, when it is too late to do anything about it for the next 30 years. The NAO's remit must be changed. What is the point of finding in the next couple of months that

    999
    the Government have squandered billions of taxpayers' money on the scheme when it is too late to make any changes?
    I wrote to the Comptroller and Auditor General on 9 May to ask him to consider several specific points. They were:
    "whether the rates of return the private consortia have been granted are reasonable…whether there are sufficient controls over the charges that the private consortia are able to levy…whether genuine risk transfer has been achieved at reasonable cost, and…whether the NAO's recommendations in their December 2000 report have been followed."
    In his response on 17 June, he confirmed that the NAO was
    "continuing to monitor the PPP",
    and that it would
    "produce a report as soon as is reasonably practical in the months following financial close."
    Clearly, that is welcome.
    The NAO will have much to consider and investigate—for example, the obscene sums of money that will be dished out to Tube Lines for its PPP set-up costs, which include £36 million of so-called success fees to be given to Tube Lines' parent companies, Amey, Jarvis and Bechtel, and the more than £100 million that the Government have spent on their consultants.
    Metronet has refused to comment on the precise indecency of its golden hello, and stated that
    "it would not be appropriate to comment".
    That is bad news for Londoners. Will that be Metronet's response to any query for the next 30 years? So much for accountability.
    It is not surprising that Metronet refuses to answer legitimate questions about the amount of taxpayers' money it will receive for its efforts. However, I did not expect the same response from the Secretary of State. I wrote to him on 20 June and asked, among other questions:
    "Can you provide a detailed breakdown of the payments to be made to the two consortia?"
    I also asked:
    "Has the Government made an assessment of the validity of the consortia's claims for consultancy fees?"
    I commend the Secretary of State on the promptness of his response. He replied to me on 24 June, four days later, and I welcome that.
    I do not however welcome the content of the Secretary of State's reply, which confirmed that
    "London Underground will be verifying all development costs before any such costs can be recovered from bidders."
    That is commendable, but he has not been able or willing to state the size of Metronet's bounty. We are left to speculate about the Government's generosity and Metronet's greed.
    When the NAO makes its value-for-money assessment, as well as the nine-figure sums, it will have to take into account the fact that the start-up costs for a bond issue would be approximately £40 million, compared with between £440 million, according to The Guardian, and £570 million, according to the Evening Standard, for the Government's plan. It will also have to take account of TfL's estimate that a bond issue would have cost
    1000
    £1.7 billion less over seven and a half years. That can easily be verified, because its borrowing arrangements would be cheaper than the PPP arrangements that the Government chose. For those reasons and many others, it is highly unlikely that PPP can or will represent value for money.
    Five years ago, Labour promised miracles for the tube. The Deputy Prime Minister stated:
    "When the Greater London authority is established, the underground will, with the rest of London Transport, transfer to it."
    Several years after the establishment of the Greater London Authority, we still await the transfer of London Underground to it. He also said that
    "we will return it to the people of London."—[Official Report, 20 March 1998; Vol. 308, c. 1541.]
    Mr. Gareth Thomas: The hon. Gentleman will remember that Ken Livingstone commissioned the Industrial Society to review the PPP arrangements in late 2000. He may know that part of its document suggested that preparing a long-term alternative, such as bonds, to the PPP would take at least two years. Given the distance that we have travelled on the PPP journey, do the Liberal Democrats seriously advocate throwing all the work to one side and allowing two more years of misery before we can get started on the investment programme?
    Tom Brake: The hon. Gentleman's intervention has the useful purpose of pointing out that the Government's plan, which has taken four and a half years so far, has not been signed. A bond issue could have been resolved in a couple of years at much less cost.
    Chris Grayling: The Select Committee on Transport took evidence from Mr. Kiley, who said that he had the finance lined up and that he was prepared to start work, not planning, in six months.
    Tom Brake: I hope that Labour Members listened carefully to that helpful intervention.
    Geraint Davies: Will the hon. Gentleman give way?
    Tom Brake: I should like to conclude, but I shall give way again.
    Geraint Davies: The hon. Gentleman should accept that the bond issue is a red herring. Bonds take a large amount of money up front for investment. We are putting in money year after year; the Treasury will stump up the money every year. The only difference is the added value of private sector. Why does not the hon. Gentleman admit that the bond issue is a red herring?
    Tom Brake: I do not believe that. It is important to point out how much more the Government have spent on their proposals and how much more the bond issue could have delivered for Londoners.
    Ms Abbott: If the Government had taken a timely decision to allow the democratically elected Mayor of London and his transport commissioner to go ahead with the bond issue proposal, there would be improvements on the underground now. Far from being a red herring,

    1001
    the bond issue was the way in which the New York subway got massive investment. It is important to note, as much for the benefit of my colleagues as anyone else, that a mayoral election was fought and won on the simple subject of the partial privatisation of the underground. The people of London said then as they say now that they utterly oppose partial privatisation of their underground.
    Tom Brake: The hon. Lady is right. The mayoral elections were a referendum on the proposals for London Underground. She is right to point out that if the Government had handed over control of the tube to London's government and Londoners, the system would be up and running now, whether we accept the two years that the Industrial Society suggested for introducing the bond issue or Bob Kiley's six months. However, we still await the Government's response.
    Four and a half years on, the PPP contracts have not been signed; the tube is not in the hands of Londoners, and uncertainty surrounds who will be able to make decisions about safety. Evidence mounts to show that, for Tube Lines and Metronet, PPP is a game of "Who Wants to be a Millionaire?", in which they have the answers to all the questions that Chris Tarrant will ask. Public-private partnership is unworkable, unwanted and we should put it out of its misery now.
    I urge all the amendment's sponsors and all hon. Members to join us in delivering a vote of no confidence in the Government's handling of the tube PPP.
    3.9 pm
    Mr. Geoffrey Robinson: Madam Deputy Speaker, I am grateful to you for calling me to take part in this debate. I thank, in passing, the Chairman of the Select Committee, my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), for triggering the debate, because I can start by agreeing with her on one thing. When we started down the route of a public-private partnership—I was at the Treasury at the time—it was precisely because we had to decide what our priorities were. Those were times of extreme financial stringency, because—among other reasons—we had to take certain measures to stick to the Tory spending plans to get the economy back into a stable condition to lay the basis for what we are now able to do. My hon. Friend will agree that it would have been unthinkable for us to vote billions to the tube and the then tube management while denying the billions that urgently needed to be spent on health and education.
    Richard Ottaway rose—
    Mr. Robinson: I am willing to give way, but I cannot see what possible point the hon. Gentleman can have. It was the Tories who got us into the mess by proposing to privatise the tube, trying to make an issue of it in the 1997 general election, and neglecting to invest in the system for 18 years. However, I shall be most interested to hear what the hon. Member for Croydon, South (Richard Ottaway) has to say.
    Richard Ottaway: The hon. Gentleman said that he had stuck to the Conservative spending plans. If only the Government had really done that, there would be a lot more money in the underground today. In the last 10 years
    1002
    of the Conservative Government, we put £7 billion into the underground. Labour has come nowhere near that in the last five years.
    Mr. Robinson: I was quite right; I should not have given way. I regret doing so and I do not intend to do so again.
    We had to find a way forward, and we clearly had to go for a public-private partnership—there was no other way. Also, quite apart from the financial situation, there were other very good reasons for going for such a partnership for the tube, which I shall come to in a moment. We could skin a cat in so many ways, and when it came to public-private partnerships—which were quite innovative—there were many different options available. No. 10 had its view; the advisers to No. 10 had their view; the then Department of Transport, Local Government and the Regions had its view; I had a view; the Treasury had a view; and the Deputy Prime Minister had very strong views. We had to find a way that we could all see would carry this forward.
    With the Deputy Prime Minister's agreement—we worked together closely on this, and I pay tribute to the real work that he put in to get this going—I convened a group of four business men with experience of both the public and private sectors to make a recommendation to us. Essentially, that recommendation is what we have today: a split at a point that can logically be defended and can, from a business point of view, be implemented at least as easily as the proposal to leave it to the present London Underground management to continue on their own.
    As of today, the situation, as I understand it, is that the contracts are signed, subject to only two prior conditions: sign-off by the Health and Safety Executive. and obtaining clearance in Brussels. There is £3 billion of private finance lined up to back the scheme. So what stands in its way? Unfortunately, we have two fairly difficult road blocks still to overcome. One is the continued opposition of the Select Committee. While I pay tribute to all its work, and I recognise that, in part, its job is to make the Government's life difficult, this sort of opposition cannot be carried on to the point at which it makes it impossible for us to modernise the tube. I shall return to that in a moment.
    Harry Cohen: My hon. Friend made the interesting point that different people in government had many different views about the PPP, and some of us would argue that it has ended up as a bit of a dog's dinner. He also said that the present plan was determined by four business men. Will he put on record who the four business men were, so that we can analyse their knowledge of the situation to see whether they had a vested interest in it?
    Mr. Robinson: I shall be very happy to do that. I shall make sure that my hon. Friend will be satisfied on that point, and I am sure that he will be. I am anxious to reassure him, but I want to push on, if I may. There was a lot of other input into the matter—it was not just the four in the working group—and there had already been a lot of thinking that pretty much tended in the same direction.
    The other road block involves the opposition from the Mayor and Mr. Kiley, which is now bordering on the irresponsible. I have no personal attack to make on

    1003
    Mr. Kiley; I do not know the gentleman. I think that I have met him on only one occasion, and I have certainly not had any extended conversation with him on these matters. I would, however, say to the House that he has been out of the business for 11 years, he has six Americans working in his office, and I think that a statement was recently made in the House—which I cannot verify—that another British manager had been dispensed with.
    When Mr. Kiley made his first presentation to the London Underground board, he spoke for 55 minutes, and I am told that he spent precisely 90 seconds on what would be his plan for the underground. Whatever else one might say about the gentleman, he is not a team player; everything always has to be on his terms, or he will not go along with it.
    Mrs. Dunwoody: I do not have any mandate to defend Mr. Kiley, but I want to address this particular point. If my hon. Friend would like to look carefully at the evidence that we took, in not one but two Select Committee reports, he will find that Mr. Kiley not only spelled out what he wanted to do—and why and how he wanted to do it—but gave clear evidence to us that he knew what he was talking about. Frankly, that was quite refreshing.
    Mr. Robinson: Well, Mr. Kiley certainly talks a good fight, but if we ask, in modern parlance, whether he can "walk the walk", I do not think that we will ever know, because I hope that he is not going to be given the opportunity. My hon. Friend the Member for Crewe and Nantwich referred to the minutes of the Select Committee evidence; I have read them all.
    Tom Brake: Will the hon. Gentleman give way?
    Mr. Robinson: I want to make a little progress.
    What Mr. Kiley is saying, if we boil it down, is that Ken and Kiley together can do the job, but they cannot do it on their own. No whizz kid could do that. They are going to be dependent on London Underground management—as it was then, and as it is now—to do the job with them and for them. They are saying, "Because it is us, we'll get it done." But where is the evidence for that?
    I pay tribute to London Underground management. Given that they have been so constrained financially, and given the difficulties and pressures under which they have worked, they do a good job in running the system—particularly the public-facing operations. I regret to say, however, that they do not have experience of spending on and controlling major projects, and their track record on that is one of fiascos. They have never had the opportunity to do that in a sustained way, because of the way the finances were run—principally by the Conservatives—and, whenever they have been confronted with such a project, it has proved a failure.
    We have only to look at two examples to see that what I am saying is correct. Let us take the construction of the docklands light railway. That was in such a mess by the end that the management had to call in the private sector
    1004
    to finish it off. More recently, the Jubilee line extension was running into the sand. What did the management do? They had to bring in Bechtel to complete the job.
    Tom Brake rose—
    Mr. Robinson: I will give way in a moment.
    Lord Levene intervened in both cases. If you have to bring Lord Levene in to intervene, you are in a pretty bad state. The idea, therefore, that all we have to do is give the money to Ken and Kiley Inc. and they will magically transform the ability of London Underground management to invest in, control and successfully bring to a conclusion the major projects that need to be implemented, is just wishful thinking.
    Ms Karen Buck rose—
    Tom Brake rose—
    Mr. Robinson: I shall give way to my hon. Friend first, and then to the hon. Gentleman.
    Ms Buck: My hon. Friend is making a powerful case against the former management of London Underground. Why, if we had no confidence in them to manage those projects, do we have confidence in the very same people to manage the contract procurement for the PPP?
    Mr. Robinson: They were not managing the contracts well. On a point of general relevance, it was London Underground management who were managing the projects, splitting them up into many separate contracts, making a mess of it and not finishing it—they were failing to do the job. The point is that they had to bring in Bechtel to finish the job. It is no good trying to blame Bechtel, just because it happened to have one part of the contract but could not finish it all. It was brought in to finish the job because London Underground could not. That is London Underground's track record.
    When it came to the failure to complete the Jubilee line extension, and the need to bring in Bechtel, one of the greatest protagonists of leaving it to the tube—prior to Mr. Kiley—Mr. Dennis Tunnicliffe, finally agreed. We all felt, "Let's go for this split whereby we can have infrastructure companies that are specialists in those areas doing that particular work, and London Underground can run the tube operations and the trains as London Underground, which it does well."
    Tom Brake: I thank the hon. Gentleman for giving way, but I urge him to continue his speech afterwards, as he is revealing some very interesting facts. I hope that before he sits down he will give us the names of the four business men who decided how the PPP should be structured, for instance. He has revealed another interesting fact, however: he has said that Bob Kiley will not have an opportunity to run the tube. Is he saying that there will be a veto on Bob Kiley keeping his post after the handover?
    Mr. Robinson: I do not want to deal with interventions from Members who have nothing much to say about the real issues.

    1005
    I shall return to certain other aspects of the Mayor's position shortly, but first let me say a few words for the benefit of members of the Transport Sub-Committee, many of whom are my hon. Friends. All the Labour Members are my hon. Friends, of course, as are many from the Opposition. I believe that they are sincere in their opposition, and I think they have made some good points. Indeed, I consider that the Committee may have improved some matters. I part company with the Committee on its continuing insistence on esoteric, pseudo-scientific calculations as the be all and end all of its assessment of the PPP.
    When it comes to value for money, social cost benefit analyses and so forth, I can speak on the basis of some experience given my time in the Treasury. The whole thing is rather like a grand prize fight. In one corner we have the public-private partnership and its accountants PricewaterhouseCoopers, seconded by KPMG; in the other corner we have Transport for London. I cannot remember which accountants it went for, but I think it was Deloitte and Touche. It is seconded by a host of academics. The Government have appointed Ernst & Young as the referee who will try to find a way through the middle.
    All those people and organisations will have been commissioned at enormous cost, and each will of course come up with broadly the view that those doing the commissioning wanted to hear. Anyone with any experience of business, contracts or courts, from whatever walk of life, will know that if a consultant, an economist, an accountant or a lawyer is paid and given a brief, he will give the answer that whoever has paid him wants to hear. That is all that has been going on here.
    It is funny that Transport for London's advisers, seconded in the ring by the Select Committee, say that the PPP would be a disaster. It is equally funny that those commissioned by the PPP say that it represents value for money—that it will save £2 billion, £4 billion or whatever. Not surprisingly, the chap in the middle, the umpire, will say "It is a subjective judgment, but it is based on an objective assessment." I do not quite know how the circle can be squared.
    Mr. Andrew Dismore: Exactly the same criticisms could be made of Ernst & Young, which was employed by the Government to justify the PPP. My hon. Friend describes Ernst & Young as an umpire, but in fact it is there to advocate a course on the basis of only half the available information. As more facts emerge, Ernst and Young's analysis becomes increasingly dubious.
    Mr. Robinson: My hon. Friend should have listened to what I was saying. I said that there were two sides, the PPP and its lot doing their stuff and Transport for London and its lot doing theirs. The Government then appointed Ernst and Young and gave it pretty independent terms of reference, and it came down somewhat in favour of both sides.
    Mr. Edward Davey: Will the hon. Gentleman give way?
    Mr. Robinson: In a minute. I have already given way an awful lot, and I need no encouragement from Liberal Democrats.
    1006
    Issues such as this cannot easily be resolved in a matter of nice calculations. I do not really believe that this is what makes Londoners anxious. If we organise the partnership properly and devolve responsibility for delivery of infrastructure improvements to the private sector, we are more likely to obtain value for money than if we choose a route that has proved disastrous in the past.
    What is of real concern to Londoners? They fear that by making a division and handing responsibility for the infrastructure to the private sector in the hope that it will produce the goods, we will create another Railtrack. Indeed, many have assiduously fomented precisely that impression, perhaps because they believe in it or perhaps because they are irresponsible. Let me say as objectively as I can, however, why I think that we are not doing that.
    To understand why we are not doing that, people must first understand what went wrong with Railtrack and why. Railtrack was part of a botched, rushed privatisation, which meant that it was quoted on the stock exchange and subject to the disciplines not of the need for investment and services, but of the need to produce profits to justify a high share price enabling high dividends to be paid. There was clearly an inherent tension in the situation, to which Gerald Corbett drew attention after his resignation. Having tried to balance investment and safety needs with the pressure for profits, Railtrack was driven in the wrong direction by the three-monthly reporting systems of the City and the requirement to show ever-increasing profits, at the cost of safety and investment in services and infrastructure.
    That is not what is happening with the infrastructure companies, which have not been privatised. First of all they must provide a service. Their only remuneration relates to the service, and to the number of passengers they carry. If they do not meet the required service level—that will improve with time—they are penalised. If they do, they are rewarded. There has been talk of sanctions, which is already a big sanction. Those companies are rewarded only if they succeed—that is, if they carry passengers at least as well as is being done at present. Improvements should be built in, and the most important—which can only result from modernisation and investment—is a 20 per cent. increase in capacity, and in the number of passengers carried, over the next five or six years. If they do not achieve that, they will not be rewarded. It is as simple as that.
    Opposition Members shake their heads because they do not want to hear the facts. The sanction is this: if the companies do not provide the service, they will not be paid. If they do not improve the service, they will not be paid. If they do not increase capacity, they will not be paid. They can do all those things only by investing, which is why they have £3 billion lined up for the purpose in the City.
    Given a proper account, we can allay the public's fears. I am sure that, if we are given a chance to press ahead with the programme, benefits will result.
    Mr. Gardiner: Does my hon. Friend agree with the Comptroller and Auditor General, who said that under the PPP the private sector would not have any operational responsibilities on the network but would mainly be responsible for the work that goes on overnight while the

    1007
    system is shut down, and that operations, including those of drivers and station staff, and responsibility for safety, would remain in the public sector?
    Mr. Robinson: I am grateful to my hon. Friend because I was about to come to those points, particularly safety, but let me clarify where the split in regard to operations takes place. Drivers will be provided by the public sector, which will also set the timetable and service levels. Safety levels are set by the Health and Safety Executive, which has yet to sign off on the contracts, so that safeguard is already built in. They will be controlled by London Underground, which is already subject to them. The same standards will be imposed on the major infrastructure companies and monitored very closely. The safety issue will be emphasised in the new arrangements.
    As I have said, the contracts are signed subject to two qualifications. I sincerely hope that the judicial review will find in favour, that Brussels will not interfere, and that the PPP will be able to proceed. However, there is one very nasty storm cloud on the horizon. The Mayor and Mr. Kiley could seek to appeal the decision in Brussels if it is positive to the PPP. That could get us into another legal wrangle, which might, I understand, last up to 14 months. My hon. Friend the Member for Crewe and Nantwich, the Chairman of the Select Committee, said that we had been at it for four years. We have completed it. We are now there, but there is that one last danger: a spanner could be thrown into the works at the last moment.
    I sincerely hope that the Mayor will not allow that level of irresponsibility to be reached.
    Mr. Mark Field: Will the hon. Gentleman give way?
    Mr. Robinson: I will not give way any more.
    I urge the Mayor to accept the decision from Brussels and to let us get ahead with this. If there were to be a further delay of that order, all the work that we have done would be thrown in the air.
    Mr. Edward Davey: Will the hon. Gentleman give way?
    Mr. Robinson: I am not giving way.
    The private sector would walk. We know the damage that we are having to repair with Railtrack. The investment would not be there and we would really face delay. The only sufferers would be Londoners. Given the success that I am sure the PPP will enjoy, they can look forward to progressive improvements. If we can get ahead with the project now, those benefits will come over the next few years.
    Several hon. Members rose—
    Madam Deputy Speaker: Order. This is a short debate and many hon. Members are hoping to catch my eye, so I hope that contributions will be brief.
    3.31 pm
    Richard Ottaway: I note that the hon. Member for Coventry, North-West (Mr. Robinson) is continuing the hatchet job on Mr. Kiley that was started by the hon. Member for Ilford, South (Mike Gapes) yesterday.
    I congratulate the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on securing this debate and on the way in which she introduced it. I congratulate the Select Committee on Transport, Local Government and the Regions on its work and on the two reports that it has produced, which have been very important.
    My main concern about the way in which the matter has been handled so far relates to the delay. It was in 1996 that the right hon. Member for Oxford, East (Mr. Smith) said at the Labour party conference that we had to get on with it as quickly as possible. Mind you, in the same speech, he said that our air was not for sale, so we have to take his comments with a pinch of salt.
    The point was then made in the 1997 manifesto. Then in 1997 a motion was debated on the Floor of the House calling for swift action. Then in 1998 the Deputy Prime Minister came to the Dispatch Box with full majesty and said, "I am not going to be rushed." That is one pledge that he has stuck to.
    Then in 1999, the right hon. Member for Hamilton, North and Bellshill (Dr. Reid) said that the Government were making steady progress. Then the 2001 manifesto said that the move was
    "the best chance in a generation"
    to help the people of London. This year, the Prime Minister said that the Government would proceed when they were ready.
    In Hong Kong, a whole airport was built in four and a half years. Land was reclaimed, roads were built, railways were put in place and tunnels were dug, all in the time that the Government have been deciding what to do about the PPP. In the interim, the Government have bumbled along, making do as far as the underground is concerned, providing a patchwork service. The tragedy is that the underground has such potential, but it has been consistently underfunded.
    In the last 10 years of the Conservative Government, in cash terms, they put in £7 billion—£700 million a year. Labour Members are keen to say, "If you took out the Jubilee line, we would match the funding." It is not true. If one takes out Jubilee line funding from both Governments, the previous Conservative Government still put in more funding than this Government have done.
    Then we had the fiasco in June last year. The then Secretary of State with responsibility for transport proudly announced that the grant had doubled from £267 million a year to £520 million a year, when £775 million had been promised and work had started on that premise.
    What about the people of London? What has been happening in the interim? Simon Jenkins wrote in the Evening Standard:
    "For millions of working Londoners, the Tube is their only experience of Third World squalor. They may not visit London's prisons, mental hospitals or sweat-shops. They may not frequent the ghettos of Hoxton or the tenements of Walworth. They live in tidy homes, work in neat offices and eat in clean restaurants. But they use the Tube. It is the nastiest thing they do."

    1009
    In the meantime, the Government have been working on the PPP. The right hon. Member for Hamilton, North and Bellshill said at the Dispatch Box in 1999:
    "We have said that we will undertake that there will be a publicly accountable, publicly owned operation on the underground, that we will enter into negotiations and that we will complete those negotiations. If a mayor is elected in the course of the negotiations, we will do everything in our power to bring him or her into the consultation process."—[Official Report, 27 January 1999; Vol. 324, c. 409.]
    So much for that pledge. The manifesto in 2001 repeated it. It said:
    "Our agreement with the London Mayor and the Transport Commissioner offers the best chance in a generation to upgrade the tube."
    During the general election, there was an agreement. Mr. Kiley was appointed chairman of London Transport on 4 May 2001. It is a familiar date. People will recall that the general election was called at that time. On 17 July, with the Government's majority safely in the bag. Mr. Kiley was unceremoniously sacked. In the intervening period, the election took place. I say to the Mayor and Mr. Kiley that accepting that point was probably the dumbest thing that they did. It was probably the smartest thing that the Government did. It was certainly the most cynical thing that they could have done.
    When the Greater London Authority Bill went through the House, the Conservative party warned there would be a fractious relationship between the Mayor and the Government, and indeed the Assembly. Labour's London manifesto said in 1997:
    "We believe that both the Greater London Authority and the Mayor are needed to provide a voice for London and to take the strategic city-wide decisions about the future—promoting … a top-quality transport system".
    When the Mayor is not measuring walls to see how far his neighbour fell the other day, he has not one but two pieces of litigation on which he is embarked. I hardly call that promoting London's transport system. There is litigation over the Deloitte and Touche report, and over the funding gap to which I referred in an intervention earlier. That funding gap is serious.
    In the Mayor's letter of 12 June this year, he identified a £1.4 billion shortfall between the Government grant and the authority's funding needs. When I asked the right hon. Member for Tyneside, North (Mr. Byers) when he was Secretary of State how that gap would be filled, and said that the debt would otherwise be dumped on the people of London, he denied that that would happen.
    The debt is going to be dumped on the people of London—unless the Minister wants to intervene now to explain how the funding gap is going to be filled. I notice that he has gone rigid in case any movement may be interpreted one way or the other. The truth is that there is a debt, and the people of London are going to have to pay for it. The Minister shakes his head. That is just what the previous Secretary of State did, but an explanation is needed for the people of London.
    I turn specifically to the PPP. The Select Committee reports are devastating. The Government's response rejects those reports in language that they will come to regret. The Select Committee has an in-built Government majority. For it to call on the Government to abandon a major plank of their transport policy—indeed, it is at the centre of policy on the nation's capital—is high stakes indeed. Just to give the reason that there will be further
    1010
    delay is completely unacceptable, for reasons that were well explained by the hon. Member for Carshalton and Wallington (Tom Brake) earlier.
    In one sense, the PPP is half right. It is right to involve the private sector, which has demonstrated through countless privatisations that it is more efficient, but this particular way of using it is wrong. One of the lessons that we have learned about Railtrack is that horizontal integration, separating railway from the operations of Railtrack, is a key factor in the failure of its operation. We should have vertical integration.
    The Minister for Transport (Mr. John Spellar): Is the hon. Gentleman therefore saying that the previous Conservative Government got it completely wrong, and if so will he put on the record his denunciation of that decision?
    Richard Ottaway: The Minister is asking me to exaggerate in a way that I am not prepared to do. I am the first to admit that—for the reasons that I have just explained—things have not gone right, and I thought that that point had indeed been put on the record. I make no apologies for privatisations, 99 per cent. of which have worked. Privatisation of the airlines and the public utilities has been a tremendous success. [Interruption.] I make no apology for going ahead with the privatisation of Railtrack, but the manner in which it was done was wrong. It should have been split into the Great Western railway, the Great North Eastern Railway, and so on.
    Chris Grayling: My hon. Friend will be aware that, in restructuring the industry, the Government have chosen to pursue exactly the same model—an infrastructure provider and train operating companies—as that employed under privatisation. That is presumably a vote of confidence from the Government in the making of such a division.
    Richard Ottaway: My hon. Friend makes my next point. The Government ought to be learning from Railtrack's difficulties and adopting vertical, rather than horizontal, integration. We should have an integrated management system that hires private contractors who are paid on delivery of a service. The nub of the difficulties with the PPP is that London Underground is going to pay the infracos on the basis not of what they are actually doing, but of how they are performing. To that extent, TfL's hands are completely tied. The principle is okay in theory, but the formula is unbelievably complex. It is a completely untested mathematical model, containing thousands of minute elements, to which TfL will be bound for the next 30 years. Its complexity is outrageous. For example, Madam Deputy Speaker, if you look—
    Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am beginning to get a complex.
    Richard Ottaway: I do apologise, Mr. Deputy Speaker; I was concentrating so hard that I had not realised that the occupant of the Chair had changed.
    The formula for abatement service points for defects and failures is: ASP to the power of AS, which equals epsilon i {ASP to the power of AS, times (1 plus UT to the power of 1)} minus ASP to the power of AS over THD. That formula applies only if ASP to the power of

    1011
    AS over THD is less than epsilon i—and so on. The system will be unbelievably complex, and will provide ample opportunities for the infracos to play the system and find loopholes. Entire careers will be made out of working a way through those formulae. The situation would be comical if it were not so serious.
    Mr. Mark Field: Is not the nub of the problem that this form of PPP—consisting of a very complicated mathematical formula that my hon. Friend described far more fluently than I possibly could—above all lacks political viability? Many of us who did not support the creation of a London government are not in favour of this form of PPP, and it is clear that many London Labour MPs—other than those who are crazed by ambition to get a Front-Bench position—the Mayor of London and TfL are not in favour of it either. How on earth can this form of PPP be supported by a Government who supposedly support devolution?
    Richard Ottaway: My hon. Friend is absolutely right. The 1997 Labour manifesto makes it clear that Labour wanted the Mayor of London to run a top-quality transport system. That is a broken pledge. The entire system will be maintained by people over whom TfL will have no control or direction. If TfL identifies a problem, it will be unable to do anything about it, provided that the infracos can show that the trains are running back and forth in accordance with a mathematical formula. The system is unviable, untested and cannot be taken seriously. That is why Ernst and Young described the idea that the system would prove beneficial as a subjective view, and I agree with the Select Committee that this is not the basis on which such decisions should be taken.
    I ask the Government to think again, otherwise the people of London will be the losers. It is they who will have the ball and chain of the associated debt and problems clasped to their ankles for the next 30 years, and it is the Minister's party that will have to deal with the political consequences.
    3.45 pm
    Ms Karen Buck: If there is one person who is guaranteed to send me scurrying to the warm bosom of my own Government, it is the hon. Member for Croydon, South (Richard Ottaway). In saying that, I intend no slur on my right hon. Friend the Minister. The hon. Gentleman's description of the tube as a third-world system was completely unrecognisable. For the most part, my comments on the PPP will be rather critical of the position that we have got ourselves into, but as someone who has used the underground every day for the past 20 years, I can say that it does London no favours—and nor is it true—to describe the underground in the terms used by the hon. Gentleman. It is important that we place on the record a true reflection of the system as it is.
    Hon. Members probably agree with the Select Committee in several respects. We know that the tube desperately needs investment for maintenance and upgrade, that there has been underinvestment for most of the past two decades, and that the last thing that the underground now needs is further delay. It is critical that we start investing money as soon as possible. Even if the
    1012
    PPP delivers a significant increase in transport capacity—a moot point, and nor am I entirely convinced by the figures given by my hon. Friend the Member for Coventry, North-West (Mr. Robinson) on the scale of the increased capacity that the PPP will deliver—it will constitute only a small contribution to the additional capacity necessary to make London work. Concerned as it is with maintenance and upgrade, the PPP is not the same thing as the investment that is necessary for a first-class transport service for London in the 21st century. That is why I want to concentrate on the absolute and overriding importance of in no way allowing Transport for London's contribution to the running of the PPP—assuming that it goes ahead—to undermine other transport projects in the capital.
    The other point on which we probably all agree is that, whatever model we proceed with, the private sector—be it private finance or private companies—will have a major role to play. The Mayor of London spelled that out last week, as has Bob Kiley on several occasions. Sometimes, we descend into a crude debate on private versus public management models, but such debates completely miss the point. The question is whether the PPP before us is the right model for procuring services that will deliver improvements to our underground, and in that regard I congratulate the Select Committee on the rigorous work that it has undertaken.
    There are two areas of concern: safety and value for money. I should point out that I am not one of those who are convinced that the PPP is a major compromiser of safety on the London underground. I deplore the shroud-waving tactics that are sometimes employed in this debate. It is much too easy and glib to reduce very complex questions about resource investment, management, lines of accountability and the supervision of subcontractors to a simple formula that states that privatisation equals death, and the public sector necessarily equals top quality, guaranteed service delivery. However, the fantastic complexity of the PPP contract system does raise legitimate questions about how safety will be guaranteed and assured.
    When these issues have been discussed in the House—not least thanks to my hon. Friend the Member for Leyton and Wanstead (Harry Cohen), whose forensic analysis of them in Westminster Hall could be usefully studied by the world's leading accountancy firms, especially at the moment—the other models of PFIs that have been used to provide transport in London have been cited to demonstrate that the private sector can deliver where the public sector cannot. The Croydon tram is one example. My hon. Friend the Member for Croydon, Central (Geraint Davies) is in his place, and I acknowledge that it is a model of good practice; the Docklands light railway is another. However, those PFIs are dwarfed by the PPP contract process, and that is an important point.
    Nobody is claiming that it is impossible to put together a public-private partnership or a PFI to run transport projects. Of course that can and has been done. It is almost certainly the way forward. However, does a PPP of such epic scale and complexity offer the same scope for ensuring accountability, value for money and safety? I do not think so. The walls of the underground carry an advertising slogan for a film that claims that its plot has more twists than a bowl of fusilli, and that could also describe the contracts.

    1013
    We all hope that the Government are right. If the PPP goes ahead, as I think it will, who cannot hope and trust that the safety case will be guaranteed? I have confidence in the Health and Safety Executive and no doubt that the Government are as committed to the maintenance of safety as anybody. However, the question of blurred accountability remains within the complex contracting system. That means that those who are charged with the operation of the service—Transport for London—have to pick their way through the contracts to ensure that the travelling public are protected every day.
    Angela Watkinson: The hon. Lady is right that the Government claim that safety is the first and overriding priority and that it will never be compromised. Indeed, they have claimed that there will be a double lock on safety. However, the actual PPP contracts say very little about how safety will be improved by the London underground PPP. Instead, they provide for time-consuming, convoluted, paper-driven exercises, so it is unclear how safety will be improved.
    Ms Buck: I have absolute confidence in the Government's commitment, but the HSE and the scrutiny and step-in powers of TfL will guarantee safety. I hope that they do, but the complexity and fragmentation raise questions. My concern is political as much as anything. As I said when the statement was made in February, the proof will not be today, tomorrow and next month, but every day for the next 30 years. That is a long time to be sure that there will be no problems. If there is a problem—he it a cost overrun or an accident—it will unfortunately be irrelevant whether the fault for it can be traced to the structure of the PPP, because it will get the blame anyway.
    In the past few years—and we can argue about who is responsible—the PPP, as currently constituted, has not gained the confidence of Londoners. If we are fortunate and the lock works properly. the problem will not arise. If it does arise, we will have a major political problem.
    Mr. Gardiner: I compliment my hon. Friend on her thoughtful and well-informed remarks. She acknowledged earlier—
    Mr. Deputy Speaker: Order. Could the hon. Gentleman address the Chair rather than his hon. Friend?
    Mr. Gardiner: Of course, Mr. Deputy Speaker. Could my hon. Friend clarify her remarks about private sector contractors needing to be involved with London Underground in any event to achieve the improvements over the period of the contract? How would the safety concerns that she has identified—she mentioned the word "fudging" in relation to the PPP—be better delivered under the public sector model? That is critical to understanding why she favours that over the PPP.
    Ms Buck: The answer is simply that if the whole of the maintenance and upgrading of the trains and track are bundled together into a 30-year package, it is much more difficult for the public sector manager to scrutinise those projects. Under the contracts as currently set up, a subcontractor will report any problem to the private sector company. which will decide where responsibility for it lies and if it is in the contract with the subcontractor, it might be passed back to them to deal with. Bob Kiley was
    1014
    worried about a step-in power for TfL, but he also asked why it was stepping out of some responsibilities. If a contract is bundled up and then subcontracted, it is much more difficult for the public company to scrutinise what is happening. The letting of contracts between TfL—or London Underground, as it currently is—and companies to perform specific and discreet tasks, with a direct line of accountability, would have made such scrutiny much simpler and more manageable.
    In response to my hon. Friend the Member for Coventry, North-West, I must say that the case made by the Government—which made great sense in 1998, and I was very sympathetic to it—was mostly based on value for money. Therefore, it is no good dismissing the various analyses of value for money—whether for or against—as almost irrelevant. I apologise for paraphrasing my hon. Friend's argument, but one cannot dismiss those analyses as biased because of how and why they were commissioned when the whole core of the argument for the PPP was based on value for money. The referee report by Ernst & Young does not offer us any great confidence in the value for money of the PPP. It says that the seven and a half year comparisons, which are the only ones that the public sector will have any contractual and legal power to control, are less likely to provide support for a value-for-money argument. Over 30 years, Ernst & Young are more sympathetic to that argument, but between seven and half years and 30 years there is no legal framework for enforcing value-for-money requirements.
    The value-for-money case on which the Government rest their argument is fragile. Ernst & Young itself admitted:
    "The value for money assessment is…part art and part science and involves a blend of subjective judgments and fact-based analysis."
    Alarm bells ring for me at talk of "fact-based analysis". It is like chocolate-based confectionery—not an attractive proposition. That whole description is so vague and unspecific that it is hard to have any confidence in it.
    Geraint Davies: Does my hon. Friend accept that on some large projects, such as the channel tunnel rail link and the Jubilee line, the private sector has delivered on budget and to time? In the case of the Jubilee line, the private sector did so after London Underground had completely failed to do so. The issue is whether we should hand the management and maintenance to organisations that can deliver better than has been achieved in the past, in a way that is controlled through contracts with clearly specified outputs.
    Ms Buck: I do not want to get into a dispute about examples of other projects, but I am not convinced that either of the ones mentioned by my hon. Friend came in on time and on budget. I have no problem with giving the private sector a major role under contract and financial disciplines.
    Mr. Geoffrey Robinson: I do not want to dismiss the value-for-money argument, as of course it is important and one has to do one's best with it. I hope that my hon. Friend accepts that what I have said is at least substantially correct.
    There were two other reasons for doing it in the way that we did. First, we needed to get the money from somewhere other than from Government. I know that my

    1015
    hon. Friend will accept that. Secondly, we had to improve on the management of projects. I think that both those objectives will be achieved.
    Ms Buck: I do not want to pursue that argument much further. However, money coming from somewhere other than Government will be repaid through the fare box and through Government grant, with a significant rate of return for the private companies. Of course we need to lever in private money, but the idea that is sometimes implied—although not by my hon. Friend—that private companies will make a philanthropic contribution to public transport is slightly inaccurate.
    I happily supported the idea of the PPP in 1998 for precisely the reasons set out by my hon. Friend the Member for Coventry, North-West. In the absence of unlimited public money we need to bring in private money, but I remain unconvinced that this is the right way to go about it.
    I return to the point that the PPP is only a small part of the formula for improving London's transport infrastructure. However, the major enhancements likely to be needed over the next 30 years to increase tube capacity—referred to by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody)—are especially vulnerable to some of the value-for-money arguments about which we are concerned. When it comes to negotiating the scope for major enhancements under the PPP, Ernst & Young—the referee—said:
    "In practice, it will be difficult to resist the desire to maximise profit by the incumbent Infraco when Major Enhancements are planned. This is likely to have a negative impact on the value for money achieved although until such projects are brought forward, it is not possible to test the materiality of this issue. We have not tried to estimate what the costs of this behaviour might be, as the Major Enhancements are unknown".
    That seems to me to make us extremely vulnerable. The major enhancements are likely to be the most important matter over the next 30 years.
    How can we ensure that we can afford the whole framework of other major transport investments in London, whether it is additions to tube capacity or other transport projects such as crossrail and the east London line, if there is any risk that TfL's financial status will be compromised because PPP costs are not fully met? Other hon. Members have mentioned the matter, and I urge my right hon. Friend the Minister for Transport to do all that he can in the Department to ensure that Londoners—as taxpayers and fare payers using the transport system and London Underground—are not in any way disadvantaged by a contract between the Government and London Underground to which Transport for London is not party.
    Transport for London will be contractually obligated to the PPP. Although the infracos within that partnership have received letters of comfort underpinning their financial security, Transport for London—which is responsible for the whole range of transport provision in the capital—will be exposed to a degree of financial risk, especially between years 3 and 7.5, for which it has not received comparable financial comfort.
    If the PPP is to go ahead, the single most important thing is that TfL is given that financial security. It suggests that that might amount to £1 billion per quarter,
    1016
    but I am sure that negotiating positions on the matter are being struck already. We must make sure that the full operating costs of any PPP contracts are guaranteed by the Government, and that TfL and Londoners are protected from the financial risk. In that way, the other transport projects so essential to ensuring that London is a moving city in the early part of the 21st century can be guaranteed, and taken forward by Transport for London.
    Mr. Deputy Speaker: Order. I make another appeal for brief speeches, as many hon. Members will be disappointed otherwise.
    4.4 pm
    Chris Grayling: I begin by paying tribute to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who sadly is not in her place at the moment, for the usual expert way in which she led the inquiry, and for the very fair way in which she chairs the Select Committee.
    Perhaps the most telling point made in this afternoon's debate was made in the brief intervention by the hon. Member for Sheffield, Hillsborough (Helen Jackson), who is not in her place either. Recently, she made a number of public accusations, one of which was that I and other Opposition Members had hijacked the Select Committee. It would take a braver person than I am to attempt to hijack the hon. Member for Crewe and. Nantwich.
    Even so, the fact that the hon. Member for Sheffield, Hillsborough chose to intervene to raise doubts about the proposal reinforces the degree of unanimity in the Select Committee. We heard wide-ranging evidence during the inquiry, and we concluded that the proposal was ill thought out and wrongly focused. The PPP will not work as it is supposed to, and the tragedy is that the ultimate losers will be the passengers.
    The Committee's hopes were raised, briefly, when we took evidence from the previous Secretary of State, the right hon. Member for Tyneside, North (Mr. Byers). He made it clear that he was willing to look again at the PPP. Sadly, two months later, he had looked at it again and had not reached a different view. That is why we are where we are today.
    I want to raise four issues this afternoon. The first has to do with congestion and capacity on the tube, which is one of the biggest problems with the PPP. Those of us who use the tube regularly know just how full it can be. Last night, I boarded a tube train and people were pressing at the doors. Our underground is bursting at the seams.
    Any project to modernise the tube must create additional capacity, yet there is abundant evidence that the PPP, and the Government's other modernisation plans, will not deliver that. The background document to the Government's 10-year plan makes that clear. It states:
    "An east-west rail link, such as CrossRail, will be the crucial element in providing crowding relief to east-west Underground lines…Our modelling suggests that, without it, most east-west lines on the Underground would be more crowded than today, despite other improvements."
    That is the Government's own statement about what will follow from the PPP.
    The Select Committee took much evidence from people involved in the process more directly than Ministers. Their views on the capacity issue were very clear. Dennis Tunnicliffe said that, assuming that the PPP was delivered

    1017
    successfully, the present system would expand its peak capacity by 15 per cent. That means that capacity will remain slightly behind growth.
    London Underground admitted that overcrowding on the network would not be reduced, as demand for travel in London overall was at saturation. The practical reality of the PPP is that people of my age travelling to work on crowded tube trains today will probably be travelling on equally crowded trains for the rest of their professional lives. The PPP scheme is not the right one to resolve the problems people face every day.
    Mr. Spellar: Has not the hon. Gentleman noticed that London's population has increased by the population of Sheffield in the past 10 years? It is estimated to increase by the population of Leeds in the next 10 years, and there are also a million more people in work in this country now. Has not the hon. Gentleman noticed those pressures on the system?
    Chris Grayling: I have, and that is why I am looking to the Government to do something about the problem. The scheme that they propose, according to their own figures and those of London Underground, will not sort out the problem of underground overcrowding. The Minister has no solution to that—although he should, as it is his job to have one.
    The second point that I want to make is that the PPP is wrong in developmental terms. The Select Committee took abundant evidence to the effect that the scheme focuses on stations in its early years, and not on tunnels or trains. We were told that PPP would deliver smarter new stations over the first seven years. That is a great idea, and means that we can have lots of new tiled walls, but Bob Kiley offered compelling evidence that we should first invest in trains and infrastructure.
    We heard no evidence to suggest that at the end of that seven-year period passengers will have noticed significant improvements to their journeys, apart from smarter stations. Nine new coaches will be delivered in the first seven years. The hon. Member for Coventry, North-West (Mr. Robinson) was lambasting the record of the last Conservative Government but, between 1992 and 1997, they put new trains on the Central line, new trains on the Jubilee line, built the Jubilee line extension and put new trains on the Northern line. I will happily take an intervention from the hon. Gentleman if he wants to tell me how many new carriages this Government have added to London Underground. No? The answer is that there have been none—not one new carriage in the past five years.
    The hon. Member for Hampstead and Highgate (Glenda Jackson) was right when she wrote in The Independent five years ago that the priority needed to be channelling investment towards the core of our network. The tragedy is that, five years later, that has not happened.
    Geraint Davies: Is the hon. Gentleman aware that the Jubilee line has been started since 1997 and that it might have a few carriages?
    Chris Grayling: I admire the hon. Gentleman this afternoon; he is clearly after a job on the Front Bench. I offer him my best wishes, and hope that he gets one. He might remember that it was the last Conservative
    1018
    Government who started building the Jubilee line. No new infrastructure project has been started on London Underground since 1997.
    My third point in relation to the Select Committee's investigation is about the role of the Treasury. The hon. Member for Crewe and Nantwich referred to this in her opening remarks. A number of pieces of evidence about the Treasury's role in the project gave rise to concern. We need to bear in mind the Treasury's motivation for this project. As the hon. Member for Coventry, North-West was honest enough to say, the Treasury had difficult financial choices to make, and it chose to spend the money elsewhere. That remains true to this day. The fundamental reason for pursuing PPP is to keep the debt off the balance sheet. It is to be able to make investment without it appearing under public borrowing.
    The total amounts that the Government are talking about are deceptive. As always, they have taken everything including the kitchen sink—every maintenance budget that London Underground has had—lumped it all together and multiplied the result by 10 to create a stunning figure for the next 10 years. In reality, the amounts of money going in to the underground are comparable to—and, in many cases, slightly less than—what was being invested in the early 1990s and certainly when the Jubilee line was being built.
    One of the most disturbing things about the evidence taken by the Select Committee was the regular indication that the Treasury had intervened in the project to ensure that its phasing meant that the expensive projects took place in the later years while the cheaper projects took place in the early years. We heard evidence from a number of people that the Treasury had intervened during the process to ensure that not too much money was pushed upfront in the project. That is reflected in the fact that the focus in the early years is on smarter stations rather than on new trains or radical changes to the infrastructure. As a consequences, passengers will again have to wait for the improvements that they want.
    It is scandalous, though not untypical, that no Treasury Minister was willing to appear to discuss the project. I give credit to the Transport Ministers for their assiduous attendance at the Committee and their willingness to talk to it on request. We can have no complaints about their behaviour in that respect. In stark contrast, their counterparts at the Treasury refused and continue to refuse to participate in debates on areas such as these, even when it is palpably clear that they are pulling many of the strings from behind the scenes.
    Mr. Edward Davey: Is the fact that the Treasury intervened to make sure that the investment is backloaded, not frontloaded, evidence that public sector money will be used to invest, and that the route chosen will impose more of a burden on the taxpayer without producing value for money? The backloading proves that the taxpayer will pick up the bill.
    Chris Grayling: The hon. Gentleman makes a good point. This exercise is uncosted beyond the first seven years. If the more complicated projects are shoved into

    1019
    the second, third or fourth seven-and-a-half-year-period and not costed in the early stages, we have no idea who will pick up the bill in the end.
    Mr. Davey: We will.
    Chris Grayling: Well, it will be the taxpayer, as the hon. Member for Kingston and Surbiton (Mr. Davey) says. The contracts for the private sector contractors are, as we would expect if they are looking after their interests properly, quite tightly phrased. There is no evidence that the private sector is taking on a huge risk. As the weeks have gone by, it is clear that the Government have been taking on more and more risk but pretending that the opposite is the case, in much the same way as happened over the setting up of Network Rail.
    The Government have made great play in the past few months of the work done by Ernst & Young to assess the viability of the public and private sector options and which represents the best value for money. The former Secretary of State announced in February that he had decided to go ahead with the scheme, that he had looked at the Ernst & Young report and decided that the scheme represented value for money. Not only did the Select Committee take evidence that London Underground had not even concluded the contracts at that point and had asked the Secretary of State not to make a statement, so that he compromised London Underground in the negotiations with the contractors, but the great report upon which the right hon. Member for Tyneside, North based his judgment started with the most extraordinary health check. Ernst & Young said:
    "We have not sought to verify the accuracy of the data or the information and explanations provided by management."
    In other words, Ernst & Young had simply checked that the sums added up. It is rather as if I said to the Minister, "I have six sweets in one pocket and six in the other. I think that I have 12—could you check that for me?" The Minister could get out his calculator and add six to six to make 12, but he has no idea whether I can count or whether I have three sweets in that pocket or 10. That is the problem. The consultants did not check the detailed assumptions but simply that the baseline sums added up.
    Mr. Gardiner: Will the hon. Gentleman give way?
    Chris Grayling: I will when I have finished this point.
    To compound that shortcoming, we also learned from the report that the public and private sector comparators will cost the same amount of cash. The only difference is an accounting nicety, apparently designed to reflect a social cost saving of taking the private rather than the public route. That is not used in any other PPP or private financial initiative scheme; it is a nebulous counting concept used by London Underground. We did not even have direct factual information on which to base an assessment of the Government's judgment that one route was better value than the other. It was an accounting trick.
    Tom Brake: Does the hon. Gentleman agree that, at present, one has to be very careful of accounting niceties?
    Chris Grayling: The hon. Gentleman's point speaks for itself. I apologise to the hon. Member for Brent, North (Mr. Gardiner) for not giving way to him first.
    Mr. Gardiner: The hon. Gentleman claims that no substantive checking of the figures took place. I know that he must be aware of the National Audit Office report delivered on 15 December 2000 to his Committee, because his Committee commissioned it. Is the hon. Gentleman saying that appendix 2, which clearly sets out the methodology that the National Audit Office followed in establishing exactly what he claims has not been gone into is false, or will he accept that substantive investigations were carried out?
    Chris Grayling: I refer the hon. Gentleman to the statement made by the former Secretary of State for Transport earlier this year, when he said:
    "Last autumn, I announced that I intended to take independent advice from Ernst and Young on the evaluation process that London Underground and London Regional Transport had followed, and on the robustness of their conclusions."—[Official Report. 7 February 2002; Vol. 379, c. 1126.]
    I have referred to the health warning at the beginning of that report which, in my view, casts, at the very least, substantial doubt on the validity of the decision taken by the Secretary of State.
    This scheme does not deliver real solutions to the congestion problems on the London underground. It delivers station improvements ahead of new trains and track improvements. It is financially questionable and does not enjoy the support of the public in London, the vast majority of London Members of Parliament, the democratically elected Mayor of London or any political party apart from the governing party, yet the Government are still determined to press ahead. All I can say to them is that it is not too late to change their mind; in Mr. Kiley, we have an impressive witness, with a track record, who came to the Select Committee with a clear action plan that, in our judgment, offered an attractive alternative. The Committee has seen no evidence that the Government have given full consideration to that option.
    Mr. Spellar: If the hon. Gentleman finds the option so attractive, can he explain why his Committee said:
    "we have not been able to evaluate that plan in detail over the course of the inquiry"?
    Chris Grayling: We took evidence. We did not make detailed evaluation—that is not our job; it is the Government's job to carry out detailed evaluation.
    Mr. Kiley has a track record. He has delivered real improvements in other cities. He is the commissioner for transport in London, appointed by the democratically elected Mayor of London. At the very least, in the view of the Committee and in my view, we and the Government should be giving serious consideration to the options that he proposed. The Government constantly say that there is no alternative, yet we have heard strong evidence for one. It is not too late for the Government to take that alternative; I fear that the route that they are taking will not deliver the solutions for which they are hoping. I appeal to the Minister at the very least to think again.
    4.21 pm
    Harry Cohen: I remain convinced that the PPP system set up by the Treasury is not the best one and that it will not achieve the maximum

    1021
    modernisation of the tube. As I have told Parliament previously, I am not opposed to PPP in principle, but this model is especially poor. Four business men who gave the PPP its genesis in the Government and I question their credentials for operating a public service.
    I doubt whether the total amount of private money promised for the system will come through; it certainly has not yet done so for the main line railways. The timing is likely to delay important infrastructure improvements; and the money will be repaid at a high cost to the public pocket.
    We are living in the time of WorldCom and Enron, where there are no proper standards of auditing and accounting. Instead, auditors and accountants are complicit in deception.
    When I asked a parliamentary question about the cost of underground projects undertaken by the private sector, the reply was given in terms of the value to LUL. Actual spending is very different from the assumed value to an organisation, when that value has been set by the organisation. As an accountant, I call that bad accounting practice—exactly like the WorldCom case.
    The Treasury's alleged £2 billion saving from the PPP, based on that WorldCom approach and a comparator skewed against the public sector, must be deemed unreliable. Will the Minister tell us where the independent audit arrangements are for the PPP finances?
    I hope that the Health and Safety Executive will not be complicit in the project. It has yet to report on the tube safety plans, but I was told in another parliamentary answer that the contracts were likely to take effect this summer. That could mean that the Minister takes a decision with no informed parliamentary debate on the safety issues. Will the HSE report be available before the recess, and will there be a parliamentary debate before the contracts go ahead?
    A recently published report from the former Department of Transport, Local Government and the Regions—its 2002 report—states that the 10-year planned investment for London—buses and tube—will be made up of £7.8 billion from the public sector and £10.4 billion from the private sector, making a total of £18.2 billion. A further £7.4 billion—described as public resource, but really a public revenue subsidy—is envisaged over the period, giving an overall total of £25.6 billion. Under the proposed system, much of the public money will not go directly into work on the tube but to company profits, dividends for shareholders and directors, and interest payments to City financiers.
    Transport for London points out that there is a serious funding gap; it amounts to £1.473 billion for 2005–06 to 2009–10, including the sum of £771 million which is LUL's assessment of its funding needs in excess of the transport grant. TfL notes that an additional £170 million is necessary as a contingency reserve, for which nothing is provided in the current Government figures, despite the recommendation in the latest White Paper "Strong Local Leadership—Quality Public Services" that local authorities should have a duty to maintain adequate reserves. TfL also maintains that there is a £532 million gap over the period in provision for risks and other costs that need to be managed.
    Under such contracts, too much risk remains with the public sector. In those circumstances—as my hon. Friend the Member for Regent's Park and Kensington, North
    1022
    (Ms Buck) pointed out—there is a powerful case for Transport for London to have the equal comfort that the Government have already provided for the private infrastructure companies. That would cover risks that were outside management's control—perhaps of magnitude or low probability—which it would not be sensible to fund from the transport grant.
    The negotiations started at the behest of the Government have moved that risk from the infracos to TfL, so the Government should recognise their responsibility and provide the necessary comfort. The credit assessment agency, Standard and Poors, has already given TfL a "negative outlook" status, so the Government should rectify that with a letter of comfort and a proper funding agreement; otherwise TfL—and the tube with it—could go broke. Full-scale privatisation, which the Government say that they do not want and the public most certainly do not want, would inevitably follow.
    The DTLR admitted a shortfall of £154 million per annum but maintains that it is
    "a reasonable target for management to reduce costs and increase revenues."
    That sum is not a reasonable target; it approaches the entire operating budget of trains. PPP and PFI put more than 50 per cent. of TfL's cost base beyond its control. A high proportion of the remaining costs, such as business rates, are, in effect, fixed. The Government have pointed out that their PPP calculations were based on fares remaining constant in real terms. However, that leaves a huge rise in council taxes and huge cuts in services. The Treasury must think again.
    The Treasury insists on unrealistic assumptions of wage growth—only 1 per cent. real wage growth. Public sector pay, London living costs, rail industry pay, higher national insurance costs from the recent Budget and extra management costs to cope with the complex PPP contracts all suggest that a higher figure will be necessary. The current assumptions are a formula for a showdown with the trade unions, which will be the Government's fault. The Government have also yet to agree, and pay towards, the administration arrangements of the London Transport pension fund.
    Tube Lines, the infraco responsible for one of the three tube contracts, has submitted its draft financing documents. They show that lenders will have a panoply of powers to control or direct infraco activity in more than 100 decision areas. Bob Kiley said of that:
    "London Transport's assent to the ceding of such control to the private lending institutions would represent an extraordinary and inappropriate abdication of public responsibility."
    The documents reveal that there will be no price protection after the first seven and a half years—that is, for the remaining 22 and a half years of the contract. Furthermore, contract termination would be exorbitantly expensive: LU would be forced to be pay whatever the infraco demanded to keep it going—not the market price.
    There would be large windfall profits for the infraco's sponsors, lenders, advisers and insurers. In the case of Tube Lines alone, the amount would be more than £100 million—merely for getting the contracts, not for any aspect of its performance in improving the tube. Tube Lines' rate of return would be pushed up to 32 per cent.—not the 15 to 20 per cent. that the Under-Secretary of State for Transport told Parliament was likely. Such pay-outs

    1023
    to the infracos' buddies on all the contracts are likely to amount to about £500 million—merely for getting the contracts, not for performance.
    That is an abuse of public money. Bob Kiley said:
    "The Underground is in desperate need of investment, yet PPP has been allowed to degenerate into a simple fee-generating mechanism for investors and advisers who have so far taken no risk and will be signing contracts that shelter them from any real possibility of loss."
    As the PPP will also impose a system of fractured management of the tube, it is plain that this financial scheme imposed by the Treasury is not the best way to achieve the maximum modernisation of the London underground, or of obtaining the best value for money.
    4.30 pm
    Mr. Edward Davey: The most disturbing contribution to today's debate is that of the hon. Member for Coventry, North-West (Mr. Robinson). He talked, for example, about the capacity improvements that will come from the PPP. He showed a misunderstanding of the contracts and a lack of knowledge of the details of those contracts, which do not provide some of the benefits that he mentioned.
    In an intervention, the hon. Gentleman said that there was no other way to find the money and implied that somehow we would magically find new money through the PPP. We all know that that is not the case. We all know that the Treasury and the GLA, through TfL, will have to provide large sums to make the PPP work, so I found his fundamental misunderstanding of key aspects of the PPP particularly worrying.
    I want to take issue with the hon. Gentleman on two of his major reasons for justifying the choice of PPP. First, he argued strongly that London Underground did not have the skills or track record to undertake such a public investment programme. If that were the case, why have the Government allowed London Underground to be the main procurers and negotiators and to provide the main legal background in negotiating those highly complicated projects?
    If the Government do not trust London Underground's management to manage programmes and projects for the next 30 years, why do they trust London Underground to negotiate those projects? London Underground has never before negotiated such detailed projects. The hon. Gentleman's views do not make sense. When the hon. Member for Regent's Park and Kensington, North (Ms Buck) asked the hon. Gentleman those questions, he signally failed to answer. It is bizarre that London Underground has been given competence to procure, but not to provide.
    The second major issue in the hon. Gentleman's speech about which I want to complain is his analysis that the Government had somehow to be the umpire and that the Government commissioned Ernst & Young to provide a report that would somehow choose between the many other reports that had been published. As the hon. Member for Epsom and Ewell (Chris Grayling) said, the Ernst & Young report failed to do that for the Government, but the hon. Gentleman should ask his right hon. Friend the Chancellor why he has failed to meet Bob Kiley throughout the process.
    1024
    If the Government had wished to be an umpire, objectively judging the cases on both sides of the argument, why did the Chancellor refuse every single request for a meeting from the Commissioner of Transport for London? I find that deplorable. It came to the point where Bob Kiley's new year's resolution this year was that he would give up asking for meetings with the Chancellor. We know that the Chancellor is behind the opposition to alternatives to the PPP, so it really is a poor show that he will not even meet Bob Kiley, who has so much experience.
    The hon. Member for Coventry, North-West then talked about delays. He made a plea to TfL and GLA: he asked them not to put further steps in the way of progress. In the past few years, many people have argued that the process should be speeded up and that Londoners wanted greater investment now, but the Government have stood in the way. I refer the hon. Gentleman to the debates in Committee when we considered the Greater London Authority Act 1999, under which the GLA was established. Liberal Democrat and Conservative members of that Committee predicted that it would take as long as it has done before Ministers could sign a contract. Ministers told us that we were talking rubbish.
    I regret that we have been proved right, but that suggests that some of our other predictions about where the PPP will fail in clue course may well come to fruition. I hope that they do not. I hope that we and some of the Government's critics on their own Back Benches are proved wrong, and I do so for the sake of our wonderful city—London—and that of the travelling public. However, all the evidence that we have heard from many objective people inside and outside, and in the Transport Committee and other Committees, suggests that the PPP will fail.
    One of my major remaining concerns is that the public sector's ability to end those complicated contracts with the infracos is limited. The termination clauses are weak, and a substantial burden is likely to be placed on the public sector when those contracts have to be ended. I regret that. The Government ought to have insisted on sensible ways of ending those contracts, so that when common sense prevails it will not end up costing the taxpayer too much.
    4.35 pm
    Mr. Christopher Chope: We have had a very good debate, but it is a pity that each side has only 10 minutes for the winding-up speeches. It is also a pity that we are not debating a substantive Government motion in Government time, which is what the Select Committee requested, as we would have had a much more authentic idea of the House's view on the PPP.
    I congratulate the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on tabling the substantive motion. I am not sure that even she would wish to vote for it, but it has certainly enabled us to have a constructive debate. I do not think that people would want to vote for it because it simply refers to reducing the resources by £1,000, which would achieve nothing. People outside the House would not really understand why we would want to reduce the money for the scheme given that most hon. Members have argued for more money.
    I hope that the Minister will address the fact that the hon. Lady and her Committee have produced reports based on evidence. The powerful thing about Select

    1025
    Committees is that, when they operate effectively, they ignore the prejudice and philosophical banter, and they go for the evidence. The Select Committee has carefully considered the evidence and reached its conclusions. The Government seem intent on rejecting all that evidence without putting any counter-evidence in its place.
    The Government have insulted the people of London. They gave them the right to elect a Mayor, but when they did not vote for the right person, the Government no longer regarded the verdict of the people of London in that mayoral election as significant, and it is clear that the people of London think that this PPP provides the wrong solution.
    Mr. Gardiner: Will the hon. Gentleman give way?
    Mr. Chope: No, I will not give way at the moment because I have only a short time and almost all hon. Members who have spoken in this debate have done so at greater length than I will be allowed under these arrangements.
    The present state of the London underground is unacceptable, and it has been getting worse during the past five years. We now have an underground system that is the most disrupted, overcrowded and costly network in the world. The hon. Member for Regent's Park and Kensington, North (Ms Buck) said that we must not be too dismissive of the state of the London underground, but I refer her to the findings of the Evening Standard panel of commuters on 7 May. The panel went to Moscow, Paris, Berlin and New York and came to the conclusion that we in London had got the worst deal. On time, cost and comfort, the London underground is the worst.
    My hon. Friend the Member for Croydon, South (Richard Ottaway) rightly chided the Government for the long delay in getting to grips with the issue. We certainly had a clear policy at the 1997 general election, but I accept that it was rejected by the people. The Government had a clear policy at that election, but they have still to implement it. My hon. Friend referred to the statement that the Deputy Prime Minister made on 20 March 1998, in which he said that he would not be rushed. However, I remind my hon. Friend that the Deputy Prime Minister also said:
    "Our proposals will take a little time to establish and deliver."—[Official Report, 20 March 1998; Vol. 308, c. 1541.]
    As he anticipated that there would be a delay of about two years before the PPP was up and running, he produced a two-year interim funding arrangement. Well, it is now four and half years later and we still have not got the PPP.
    The hon. Member for Coventry, North-West (Mr. Robinson) said that the documents have been signed. I am not sure that they have. If they have been signed, why have they not been made available to TfL in their final form? TfL received documents on 8 May, but since then the documents have been further altered as a result of ongoing negotiations between the parties. I suspect that the Government will not make those documents available to TfL until after the challenge in the High Court later next month.
    Mr. Gardiner: Will the hon. Gentleman give way?
    Mr. Chope: Not at a moment, because of the time constraints to which I have referred.
    1026
    The issue that is most worrying for Londoners is the funding gap. That has been referred to by several hon. Members including my hon. Friend the Member for Croydon, South. According to the Government and London Underground, that funding shortfall is £771 million in the first seven-and-a-half-year review period. Transport for London thinks that that is £400 million to £500 million lower than it should be; it thinks that the funding gap could be well over £1.2 billion. As a result of that funding gap, Standard & Poor's, a leading credit agency, has taken a very negative approach towards Transport for London, which, in turn. could lead to it having a high financial burden. Standard & Poor's stated:
    "In order to revise the outlook on TfL to stable, Standard & Poor's would require a funding agreement between TfL and the Government to provide sufficient cash to meet agreed costs in the first review period and to establish sufficient levels of reserves to enable TfL to manage short term risks; and clarification of the circumstances in which the Government would be likely to provide additional funding. If the funding concerns are not adequately addressed and significant uncertainties remain, the rating on TfL could be lowered."
    That will add to the cost of Transport for London finding finance for all the projects that it wishes to undertake. The Commissioner of Transport for London, Bob Kiley, said:
    "The ultimate irony is that this highlights the weakness in the promise put forward by the PPP's most prominent supporters—that PPP would provide full and stable funding for rebuilding the Underground."
    That funding gap can either be met by the council tax payers of London, by the Government—through national taxpayers—or by fares. The previous Secretary of State, the right hon. Member for Tyneside, North (Mr. Byers) said that there was nothing inherent in the PPP that would require fares to increase. That, of course, is true. It is also true, however, that if there is a funding gap, and the Government refuse to meet it, the pressure is on Transport for London to raise the extra revenue from the people of London or through the fare box. We already have the prospect of the London underground being the most expensive such service anywhere in the world. Why should passengers have to pay much higher fares for a service that is still getting worse rather than improving?
    Mr. Spellar: Will the hon. Gentleman tell us how much additional funding the Opposition are committing to London transport, so that we can add up their overall transport budget?
    Mr. Chope: Clearly, the Minister anticipates that this process will continue until the next general election. If nothing is sorted out by then, we shall explain to the electorate exactly what we will do. We are facing up to the reality that there is a funding gap. The Government—for worse rather than for better—are in office, and they are responsible for answering the question of what will be done about that funding gap. The Minister is trying to find all sorts of excuses for not coming up with answers, and, up to now, he has blamed increased numbers of people living in London and the growth in the economy for the Government's failure to get to grips with the problems of London underground.

    1027
    London underground users have become the victims of a squeeze by the Treasury, which is determined that any capital investment in the infrastructure is off balance sheet—Enron and WorldCom-style accounting—even if it means delay, poor value for money and de facto abandonment of the principle of risk transfer. Meanwhile, we have Transport for London, and a Mayor who is openly hostile to the private sector. Between them, the Mayor and the previous Secretary of State, the right hon. Member for Tyneside, North have made the private sector unwilling to invest except very much on their terms. That is why we have a PPP for seven and a half years, after which it can be torn up by the private sector, leaving Londoners with an incomplete project and a substantial liability to repay the debt.
    This saga is an appalling indictment of the Government. It is a betrayal of the interests of the people of London. They deserve better. I hope that the Minister, in his reply, will assure them that we will get answers quickly, and that we will see material changes for the better in the quality of London underground.
    4.45 pm
    Mr. Spellar: On 8 May, the Government responded in full to the Select Committee's two recent reports on London Underground's modernisation plans. We welcome Parliament's continued interest in this important subject. That is what it says on my brief. That interest has been pretty thin, however, on the Opposition Benches. We have had contributions from two London Conservatives and two London Liberal Democrats. My hon. Friend the Member for Leyton and Wanstead (Harry Cohen) asked for another debate, but Opposition Members are not exactly bursting for it. They, like the public in London, are getting pretty bored with this subject; they want us to get on with it and start delivering improvements for the travelling public in London.
    It is fair to say that these plans have been subjected throughout their development to an unprecedented level of scrutiny, and not just from Parliament. They have been examined and challenged at every opportunity by numerous critics, and they represent probably the most robust and rigorous public-private partnership proposal ever. Bluntly, we can either move forward with these plans or go back to methods that failed passengers in the past. Neither the hon. Member for Christchurch (Mr. Chope) nor the hon. Member for Carshalton and Wallington (Tom Brake) had a clear answer to that.
    I also know that underground staff want to focus on running a world-class train service for customers. My hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) rightly took the hon. Member for Croydon, South (Mr. Ottaway) to task for his deplorable comments about London underground. No one denies that there are improvements to be made. We should also look at the real progress that has been made by London Underground. Last year, the amount of wasted customer time due to delays was cut by nearly 7 per cent., and more than 95 per cent. of its peak hour trains ran on time. Those improvements are being maintained—and in many cases bettered—this year. Recently, the tube broke a record by running more than 5,000 rush hour trains without a single cancellation due to missing drivers.
    1028
    Instead of the talk about third-world services and all that nonsense written by journalists, we should be congratulating those staff who have successfully delivered a frequent and reliable service under the new Central line timetable. We should also congratulate the Northern line staff who have banished memories of the "misery line"—of which headline writers were so fond—by providing a service good enough to impress even the Financial Times. Across the network, customers are now giving London Underground some of its highest ever customer satisfaction scores. It is listening to its customers and finding new ways to improve its service—for example, by implementing a range of better ticketing facilities, and putting more staff on platforms to help reduce the time trains spend in stations.
    I—even if the hon. Member for Croydon, South was not—was very impressed by the commitment and dedication to passengers demonstrated by the staff who ran a continuous 42-hour service during the recent jubilee celebrations. Within an hour of the event finishing on the Monday evening, 1 million people had been dispersed safely and efficiently, most of them on the special tube service. London Underground staff can be proud of the way that they served the public during the celebrations. They deserve better than the contemptuous remarks of the hon. Member for Croydon, South about a third-world service.
    We also know, however, that London Underground's track record on the management of infrastructure projects is less good. It is almost a tale of two jubilees. Its success during the golden jubilee contrasts starkly with the Jubilee line extension project—delivered 20 months late, yet still not providing the expected level of performance. An extra £1.4 billion had to be found to complete the project. In answer to the Liberal Democrats, there is a world of difference between contracting for a service or undertaking the negotiations for the contract, and actually trying to micro-manage that contract. London Underground's performance in trying to pull together and integrate all the elements of the contract has not been good. It has a successive record of failure on price and on time in relation to trying to micro-manage that. However, projects such as that for the docklands light railway have come in to price and on time. We want to ensure that London Underground is able to do better in future.
    We believe that the PPP will ensure better results, because it has been designed to put passengers first. Unlike alternative plans, it provides answers to the questions that really matter to the passengers. Will a service be available? How quickly will that service get me to my destination? Will the service be clean, comfortable and pleasant? Another aspect is not part of the PPP, but it is important. British Transport police are doing much work to make the service safe and secure.
    The companies involved will have to meet demanding targets to satisfy passengers on those issues. They must install high-quality equipment on time, make it work and maintain it well. However, they will also have the freedom to innovate and to look for new ways to satisfy their customers. If they succeed, they will be rewarded, not excessively, as the Mayor alleges, but with an appropriate rate of return. However, that will be balanced by the considerable risks that they will take on. If they fail, they will be penalised, with no limit to the size of the penalties. Every penny of the money provided by shareholders—some £500 million—is therefore at risk.

    1029
    That is why the plans offer the right incentives. They concentrate not on administrative processes, but on getting the right results for passengers.
    I was surprised by the comments of the hon. Member for Croydon, South who said that we should monitor inputs rather than outputs. I would have thought that the essence of modern contracting was to consider the outputs one achieves and to leave inputs to the specialists who are best able to deal with them. His remarks revealed very backward thinking.
    We know that the proposed methods work. The new Northern line trains—I have mentioned the great improvements in reliability—supplied under PFI have helped underground staff to transform the old "misery line" into one of the best performing parts of the system. The trains run at about 98 or 99 per cent. reliability.
    Mr. Gardiner: Has my right hon. Friend looked at the year-on-year funding for the tube against the successive three-year funding commitments given over the past 20 years? Has he noticed that Governments have consistently failed to deliver the investment that they promised? Does he understand therefore that, for many of my constituents, the chief attraction of the PPP is that the Government are contractually committed to putting the money in year on year and cannot suddenly decide in 10 years' time that their political priorities lie elsewhere? Does he understand that the public sector route is the route of uncertain investment—
    Mr. Deputy Speaker: Order. That is far too long an intervention for this stage of the debate, especially if it is being read.
    Mr. Spellar: But it was valuable none the less, Mr. Deputy Speaker, and very well expressed. As my hon. Friend rightly suggests, £1 billion will be sustained year on year and that will be enormously welcomed by the travelling public.
    Mr. Chope: In the time that remains, will the Minister tell us how the Government propose to fund the £1 billion funding gap that has been identified?
    Mr. Spellar: The enthusiasm of Opposition Members for Ken Livingstone and their gullibility for everything he says are truly extraordinary. We do not agree with his figures that claim a funding gap. Every passenger transport executive and passenger transport authority in the country has schemes that they rightly want for their people. However, we do not regard it as appropriate to put up a wish-list and then claim that there is a funding gap. We shall have that argument with TfL, but I am surprised that Conservative Members have become such ready allies of Mr. Ken Livingstone on this issue.
    Mrs. Dunwoody: Will my right hon. Friend give way?
    Mr. Spellar: My hon. Friend will have an opportunity to reply at the end of the debate, so I shall rattle through this part of my speech.
    1030
    This is by far the largest-ever commitment to public investment in the London underground. The plans will unlock £16 billion in all over the first 15 years, including £4 billion from the private sector. Vast sums from both Government and business will give London the modern metro that it deserves.
    My hon. Friend the Member for Regent's Park and Kensington, North identified the most important question that passengers will ask. Are the plans safe? Throughout the development of the plans, London Underground has put safety first. It has worked with private sector contractors for many years and it has an excellent safety record. It will retain unified management control of operations and its overall responsibility for safety across the entire network. The plans will allow it to take swift action, if necessary, to ensure the safe operation of the system.
    However, the assessment of whether the underground is capable of being operated safely is, quite rightly, a matter for independent experts, not politicians. The Health and Safety Executive's assessment of London Underground's safety case for the operation of these plans is continuing. Let me once again state clearly and categorically: if the HSE does not accept London Underground's safety case, the plans will not proceed.
    We want to modernise the London underground system and we have to work with private sector engineering firms to do so. That has always been true. There is no wholly public sector alternative. The real question, then, is how we engage the private sector.
    Even TfL does not oppose, in principle, a public-private partnership for the tube. Its consultation response makes this clear However, the Mayor says that he has a problem with his role under the PPP. In our view, under these plans, his role will be to ensure that London Underground and its contractors deliver the quality of service that passengers expect. That is exactly what he should be concentrating on. The Mayor's alternative plan suggests that he wants to return to the days when London Underground had to plan the details of what its private sector contractors did, when they did it and how they did it. That is the approach that failed passengers year on year. It led to the failures on the Jubilee line extension, the Central line upgrade, which has only now come right, and on dozens more infrastructure projects over the years. TfL says that it could do better, but we have to take that on trust. We must consider its track record.
    Abandoning the modernisation plans now would mean years of delay and decay while the Mayor decides what to do and how he would like to fund it. His decision to take further legal action to try to stop the plans is extremely disappointing, because the public are getting fed up with the long delays. They want us all to get on with the work, and I hope that that message is heard beyond this Chamber. Our intention remains that the modernisation plans should come into effect as soon as possible. That is what is best for London and best for the travelling public in London.
    4.57 pm
    Mrs. Dunwoody: With the leave of the House, may I say that this has been an important debate, not least because London deserves a really good underground system. The Select Committee raised several vital questions that have, sadly, remained largely unanswered. I believe that the House of Commons will need to return

    1031
    to this subject, but I am distressed that we have not at least considered alternatives to a scheme that the Committee found to be flawed and possibly unworkable. The House of Commons will, in due course. want to demand more answers and more action from Her Majesty's Government.
    Debate concluded, pursuant to Resolution [11 June].
    Questions deferred, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates) and Order [20 November 2000].

Individual Learning Accounts
[Relevant documents: Third Report from the Education and Skills Committee, Session 2001—02, on Individual Learning Accounts, HC 561-I, and the Government response thereto, HC 987; and Department for Education and Skills and Office for Standards in Education: Annual Report, 2002, Cm 5402.]
Motion made, and Question proposed,
That further resources, not exceeding £12,839,695,000, be authorised for use during the year ending on 31st March 2003, and that a further sum, not exceeding £13,409,689,000, be granted to Her Majesty out of the Consolidated Fund for the year ending on 31st March 2003 for expenditure by the Department for Education and Skills.—[Angela Smith.]
4.58 pm
Mr. Barry Sheerman: It gives me great pleasure to introduce the debate on the third report of the Select Committee on Education and Skills entitled "Individual Learning Accounts". This is an important day, because it is the day on which the House approves the moneys to deliver education programmes and policies. We also have the opportunity to debate individual learning accounts, which were an innovative and exciting new project to deliver lifelong learning and training opportunities for those who had never had them and to change the culture of training and education in this country. Ironically, however, because the programme bent too far towards a lighter touch and towards not taking too bureaucratic an approach, it ran into severe difficulties. Only last October, my right hon. Friend the Secretary of State for Education and Skills announced that the programme would be halted for the time being.
The Select Committee report was published on 1 May and it was an attempt to do what Select Committees can do best. It tried to analyse what went wrong, point out and underline the strengths of the programme and—in a creative dialogue with the Department for Education and Skills—give pointers to how it could reintroduce a new programme that would not run into the difficulties that the first one faced.
I believe that there is a renaissance of the Select Committee system and I am delighted to be part of it. I was pleased to hear part of the debate on London Underground and to participate in this important debate on individual learning accounts. However, it is a great pity that both debates have been severely truncated by the long statement arranged by Government business managers. Those of us who are interested in education do not have many opportunities to debate it, and it is deplorable that the debate in Westminster Hall on the Science and Technology Committee report on the research assessment exercise is being held on the same day.
Many hon. Members want to speak so I shall rattle through my remarks. The members of the Select Committee worked hard on the report. We knew that we would have to produce a report as soon as the Secretary of State made her comments in October. The Department for Education and Skills wants teachers to have a baseline assessment and performance review. When we formed the new Committee, we decided that what was good enough for teachers was good enough for Ministers. We introduced the same system and interviewed all six Ministers so that we could make a proper evaluation of how they intend to deliver their policies and so on.

1033
Ironically, we started with the Secretary of State, who was a few minutes late because she had been conferring with senior people in the Treasury about pulling the plug on the ILA programme. It is also ironic that by the time we completed our fast-track investigation into ILAs, on which the debate is based, two of the Ministers on whom we originally did baseline assessments and performance reviews had moved on after 11 and a half months in the Department. Indeed, the Minister who gave most of the evidence has moved back to the Treasury, in a sense from whence he came, and a new Minister has the job of responding.
I want to draw the House's attention to the amount of work that members of a Select Committee put in to ensuring that we have a thorough investigation. We take, listen to and sift through evidence, both oral and written, before producing a report. It is the role of a Select Committee not just to lambast but to scrutinise the Government. We should come up with new ideas and innovations, perhaps by thinking outside the box, that the Department might find useful.
I believe that our report is even-handed. It says that the programme went severely wrong, but it also commends it for being good and innovative. The programme allowed some interesting work to take place. It opened the door to skills and learning to people who had not had that opportunity for most of their lives and who had not accessed learning for a long time. We tried to strike a proper balance, which is what a Select Committee should do.
I want to emphasise two things. The Government did a thorough job in their recent comments on our report. They largely took it on board in a positive spirit. As Chairman of the Committee I appreciate that. However, I was also greatly disappointed, as I told the permanent secretary when he came before the Committee for his annual visit and interrogation only yesterday morning. There is such a thing in the House as a bush telegraph. We heard that an announcement on individual learning accounts mark 2 would be made very soon, before the summer recess. Unfortunately, we have now heard that that will not happen because of the ministerial changes, and that was confirmed by the permanent secretary. People who are waiting to have a crack at gaining new skills through the ILA will not get that opportunity for several months. It is almost a year since the Secretary of State came before the Committee and announced that the programme would be pulled in favour of individual learning accounts mark 2. It seemed to us as we took evidence that the approach by civil servants and Ministers was too leisurely. They said that it would take a long time to get ILAs right. I said that in a commercial organisation the lights would burn all night for many nights until a new programme was introduced.
Mr. Andrew Turner: The Chairman of the Select Committee refers to commercial organisations. Does he agree that it is not only the potential learners who suffer from the delay in introducing a new scheme, but also the many—and in particular, the small—learning providers?
Mr. Sheerman: I was about to come to that, and the hon. Gentleman is right.
In terms of being even-handed—and the report was unanimous—we went to the heart of the lessons that must be learned. The closing speeches in the last debate seem
1034
appropriate to our discussion, which also involves the relationship between a Department and a private sector partner. There are many forms of such partnerships and it is important to have the right one. The more we explored the relationship between the Department for Education and Skills and Capita in relation to individual learning accounts, the more we thought that that relationship was not right, and that there was something wrong with the contract. It seemed to us that here was a relationship with a major, well-known FTSE 100 company, with great experience in delivering services of this type. We looked beyond whatever went wrong with the wording of the contract. Sometimes we became rather irritated about commercial confidentiality; I am not sure that commercial confidentiality in these contracts was as important as was claimed. We said in our report that there should be a bit more transparency on what the deal was. Why should not the public know? It is their money. Why should we not have more knowledge?
Mr. David Chaytor: I am extremely glad that my hon. Friend has made that point, because it strikes me that whereas in the past few weeks we have been able to read in the financial pages of the major newspapers full details of the accounts of Enron, and more recently WorldCom, in minute detail, we cannot find out how much the Department has paid, out of public funding, to Capita, or what penalties have been incurred as a result of the failure to deliver the skills training.
Mr. Sheerman: My hon. Friend makes a fair point, which needs no reply from me.
I was saying that, yes, we do criticise the Department for probably getting the relationship with Capita wrong. I thought that it was refreshing that the Department came back and said that we had been right—that in renegotiation of that contract it would hope to get, if Capita—
Jonathan Shaw: Does my hon. Friend agree that one of the reasons why the relationship was not right may have been the pressure on time, as reported in the special internal audit review? That review says that the time pressures contributed to the problems experienced by the programme and that the Department was under severe pressure to deliver, leading to problems in setting up the contract with Capita?
Mr. Sheerman: There is a strong element of truth in that too; I believe that there were time pressures. However, we should also take into account the fact that the commitment to set up individual learning accounts was made in the Labour party's May 1997 election manifesto. The ILA experience developed over a very long time, and it is the responsibility in one sense of the Government and the Department that, when they decided that they had to get the programme up and running, they were under great pressure of time.
To finish my criticism of Capita, it seemed to me that the contract was not right for that major company. It seemed to the Committee that if one has a private sector partner, it should take a fair share of the risk, and it should be very clear that the private sector partner is taking a fair share of that risk; that should have been in the agreement.
Capita has great experience and knowledge across the piece and has entered into many contracts with the public sector—including, I admit, with the House of Commons

1035
and the Select Committees, because it handled some of our recruitment—and with various Government Departments, including the Department for Education and Skills. The company claims grandly that its delivery goes beyond the terms of the written agreement and beyond the written word. We were therefore surprised that Capita was not able to flag up at an early stage the problems that might occur in this type of programme, devised and constructed as it was, or to give early warning when things started to go wrong.
Some people were blowing whistles. Some were pointing out that the programme would be prone to abuse; they tended to be the little people—the small companies that were the training providers. They gave a lot of evidence to our Committee to the effect that they were worried about the laxness of the structure, and very soon after about the way in which it was operating. We have tried to ensure that our criticism of Capita is fair, and I believe that we all agreed that there were severe shortcomings on Capita's part. We also criticised the Government for not getting the contract right in the first place, but we wanted to go beyond that and say that there were lessons here for all Government Departments. We do hope that this knowledge will not remain in the Department for Education and Skills silo. Everyone should read about problems that can arise in relationships with the private sector.
My colleagues on both sides of the House know that I am not the sort of person who is averse to private sector partnerships. In fact, I believe that they are a very creative way to deliver policy and I have no qualms about that; but they must be right. They must be businesslike, and the people in the various Departments must know what they are doing when they are signing up. I believe that a reading of our recommendations will do all Departments good if they are about to embark on a relationship and a contract with a private sector partner, however complex. This contract was not rocket science; it was quite simple, and if it could go so wrong, it is no wonder that it is so difficult to get right very sophisticated contracts such as that discussed in the Chamber earlier. That is what our colleagues on the Transport Committee have argued as well. Let us use the experience creatively and learn the lessons.
We have criticised the Department, but we support the general principle of the light touch. There should not be so much bureaucracy that it prevents people having access to the programme and kills excitement and innovation. We said strongly that the criticism of events surrounding individual learning accounts should not force any Government Department, especially the Department for Education and Skills, to cease being innovative and flexible and exercising a lighter touch. Departments can still do that and take the precautions suggested by the Committee.
Our message to the Department is strong and clear: do not be deterred from being innovative and trying to avoid a vast bureaucracy every time a programme is introduced, but bear in mind the fact that there are people out there eager to learn and to get the skills for this century, who want to be more productive in their employment. They are waiting for the programme to come back, and it has
1036
been a long time a-coming. There are also, as the hon. Member for Isle of Wight (Mr. Turner) suggested, many small providers who have been hurt by the experience.
Without being too negative, I end on a note of warning. It is good to see my hon. Friend the Member for Wentworth (John Healey), who is now the Economic Secretary to the Treasury, with us. We got good value from him as a Minister in the Department for Education and Skills, in terms of his willingness to come back to the Committee time and again and to supply a great deal of information. We were very grateful for that.
I understand that the National Audit Office has almost completed its investigation. The ombudsman is also looking into the matter. We never argued that everybody who had been hurt by the cancellation of ILAs should receive compensation, but if the Government are to be true to their word, they should be honourable. They said that they would pull the plug on the programme on 7 December, but they pulled it three weeks early, on 23 November, and people were hurt by that process. We said clearly in our report that if the Government are honourable, the people hurt by that three-week change of mind, whatever the reason, should be compensated if they can prove—yes, if they can prove—that they were harmed financially by the change of date.
The Government replied that they could not give compensation across the piece. Of course they cannot. We do not expect the Government to give compensation for training that was geared up for but never delivered, but they can give compensation for a three-week period to providers who were geared up and able to supply the training, which was no longer paid for.
I shall not prolong my remarks, as I know that many other hon. Members wish to speak. I hope that people will read the report as an exemplar of a good Select Committee report and as reflecting the right relationship between a Department and a Select Committee. We achieved a balance between scrutinising a good programme that went wrong, and making sure that we drew the general lessons from the mistakes that occurred. That is what the House is about.
If there is to be a renaissance of interest in our debating Chamber and in what Parliament does, and if the Select Committees play their cards right and we do the job well, we can be at the heart of the regeneration of the life of Parliament. I know that all my fellow members of the Committee worked extremely hard on the report on a cross-party basis and are proud of it—and they have every right to be so. I am very proud to be their Chairman and I commend the report to the House.
5.20 pm
Paul Holmes: As a member of the Select Committee on Education and Skills, I am pleased that the importance of the report has been recognised by our debating it on the Floor of the House. The permanent secretary at the DFES said only yesterday that the report was very accurate and very good. The Government's recently published response accepts a good many, although by no means all, of its findings and recommendations.
The report is an important illustration of the key role that Select Committees can play in scrutinising the Executive, even though they do not as yet have enough independence or resources to do the job properly. It is

1037
also worth noting that the former Minister for adult skills, now the Economic Secretary, arid his departmental officials were, as the hon. Member for Huddersfield (Mr. Sheerman) said, in the main refreshingly open and forthright in giving evidence to the Committee about what had gone wrong with the planning and delivery of the ILA scheme. It has to be said that that approach could be commended to other Departments, some of which are less willing to admit to their mistakes.
In principle, ILAs are an excellent scheme with wide support throughout the House and the country. Many reputable and capable training providers use them to deliver high-quality training to a very large number of learners. It is therefore all the more regrettable that the report had to be a damning account of what went wrong with their design and delivery at even the most basic levels.
First, the DFES devised a scheme that had absolutely no safeguards for the legitimacy or quality of those who were registered as training providers. It provided a cowboys' charter for the unscrupulous to rip off the taxpayer and the learner alike. All that people had to do was fill in one side of A4 with their name and address and details of the bank account to which taxpayers' money could be sent. That was it; there were no quality controls whatever and no prior registration or inspection system to ensure that a company was legitimate, or that it could deliver quality training with qualified trainers or provide quality distance learning materials. The scheme was a licence for the unscrupulous to print money.
DFES officials told us that they were trying to be innovative and to avoid bureaucracy to attract non-traditional learners and new learning providers. They certainly did that; by throwing the baby out with the bathwater, they created a scheme that soared past its 1 million user target in record time, but also exceeded its £201 million budget by 50 per cent. We will probably never know how much of that £300 million was lost to fraud and scams. The question also remains whether the main reason for the scheme's sudden closure was massive budget overrun, massive fraudulent abuse or a combination of both.
Secondly, Capita—a company that was supposedly expert in such work—failed to warn the DFES of the glaring scope for abuse in the scheme. It went on to run a scheme that was widely criticised by legitimate and experienced training providers because of its poor complaints system, a call centre that often could not cope with the volume of work and computer software systems with inadequate security built in. Capita, which was paid more than £50 million for the contract, boasts in its annual reports of its experience in handling Government and local government projects, including housing benefit schemes with complex systems designed to try to prevent fraudulent claims.
Not once, however, did Capita warn the Government that, although it could implement the scheme as the Government had devised it, there was no quality control on purported training providers, which left it wide open to abuse. Worse still, Capita went on to devise software that assumed that training providers were all genuine and which had inadequate safeguards. Mr. Simon Pilling of Capita told the Committee that
"an authorised learning provider with their authorised user ID and password could go on the system and draw out information from the system."
1038
Mr. Paddy Doyle of Capita admitted to the Committee that it was "a very open scheme".
How far the fraudulent abuse went is unclear. York Consulting was given 1,500 account holders' numbers by Capita, which said that they belonged to people who had used their accounts. When York Consulting contacted those people, however, 27 per cent. of them said that they had not used them. That shows one of two things—staggering incompetence on the part of Capita, whose records were so inaccurate, or a level of fraud that if repeated across all users would amount to up to £65 million or more lost to the fraudulent plundering of accounts.
The Committee's evidence was damning on all those issues, but the Department's own internal investigations, which were published yesterday in response to the Committee's report, make equally damning reading. The special internal audit review said:
"The target to achieve one million ILAs by March 2002, meant that the ILA Team were under severe time pressure to establish a…contract with Capita…The time pressures contributed to the problems experienced by the programme—and were further exacerbated by the fact that some other key areas of ILA development and operation did not demonstrate consistently good practice. These included:…No business model was developed to help identify strengths and weaknesses in the policy options available as the programme was developed…No decision log was set up to record and track decisions made…Although a great deal of management information appears to have been collected by Capita, it was not provided to the Department in a sufficiently helpful format to indicate possible abuse of the system…or to provide the information for Ministers to decide upon action needed…Departmental guidance to learning providers did not clearly specify the requirements and expectations of the programme."
Cap Gemini Ernst & Young was asked to carry out a security report on the Department's and Capita's operation of the scheme. It says:
"The contract made no clear mandates or stipulations regarding the assessment of the security requirement or the ongoing security management."
It continues:
"No requirement was specified with regard to the determination of the security requirement, nor were existing Government guidelines regarding Security Risk Analysis followed."
It goes on:
"No structured mechanisms and procedures were established to identify promptly trends and patterns of access and usage of the system that might have indicated misuse."
It observes:
"No procedures were established to ensure that the requirements of the Security Policy were being adhered to."
It further comments:
"No procedures or plans were established for ongoing testing of the system".
It concludes:
"No procedures were established for the archiving of relevant log files for retrospective analysis."
So the reports go on—damning list after damning list of things that were not done by the Department or by Capita.
Thirdly, the Government mishandled the closure of the scheme. When the level of fraud and abuse eventually became evident, the scheme's sudden closure led to financial loss by legitimate training companies.
Mr. Andrew Turner: Before the hon. Gentleman moves on to the closure of the scheme, which was clearly

1039
a problem, he may be surprised to hear that in response to the Committee's recommendation—No. 30—that there should not be an automatic assumption that Capita should be the provider to take forward any new ILA scheme, the Government said:
"We are continuing to work closely with Capita"—
to wind down the scheme. I understand that, of course, but they go on to say:
"A successor scheme will be a major test for Capita".
That suggests that it has already been decided that those who failed last time will get a second chance, which the small private providers that have gone bankrupt will not get.
Paul Holmes: I entirely agree with the hon. Gentleman about the effect on small providers and about the fact that the Government are ignoring the Committee's recommendation that Capita should not go on to run the second scheme. I shall return to that later.
As a result of the sudden closure of the scheme, legitimate training providers lost jobs and money, and some went bankrupt. Some companies are pursuing claims for compensation by various means and have complained to the ombudsman. A particularly legitimate claim for payment can be made by companies and further education colleges that continued to complete and deliver courses that learners had begun before the sudden closure of the scheme last November despite the fact that the DFES would not honour the ILA payments for those legitimate bodies to provide that training. On 30 November, seven days after the plug was pulled on the scheme, the Association of Colleges surveyed its members. Of the 105 colleges that replied, 84 expected to lose more than £1.25 million between them, because they were continuing to provide training to honour commitments that they had made to students, but the DFES would not provide the money for that training. Surely we can rely on further education colleges to provide the documentation to show that they have legitimate students, who receive legitimate training, and that the Government should therefore pay.
The Government wrote to all training providers—more than 9,000—and learners, to tell them that they had until 7 December until the scheme closed. They warned learners not to panic, and emphasised the date. However, they closed the scheme, with no notice, late in the afternoon of 23 November. Critical Skills, an excellent training company in my constituency, consequently lost out. It completes its accounts at the end of each month and therefore intended to send the paperwork to the Government at the end of November. That would have left it a clear week until the announced Government deadline. It could supply documentation, which I have seen and has been sent to the Government, to show that it provided legitimate training to more than 190 trainees. Yet the Government will not pay for it.
Many small training firms throughout Britain are in the same position. However, I understand that the Derbyshire learning and skills council stepped in to support the legitimate training that not only Critical Skills but other companies in Derbyshire provided but for which the Department for Education and Skills would not honour its commitment to pay. If Derbyshire learning and skills council can do that, why cannot the Government?
1040
What happens next? There are many unanswered questions and I hope that the Minister can enlighten us about some when he replies to the debate. I shall begin with some well-worn questions. How many charges for fraud have the police made? How many convictions have been secured to date? Has anyone been charged over the famous disk of fraudulently obtained ILA numbers that led to the scheme's sudden closure on 23 November? Has any file been passed to the Crown Prosecution Service about the infamous disk?
When will the replacement scheme be introduced? Small training providers throughout the country await the start of a new scheme, but many are going under or bankrupt while they wait. How will the new scheme work? Will it be confined purely to information and communications training? Will it aim only at those below level 2?
Who will run the new scheme? That brings us back to the comments of the hon. Member for Isle of Wight (Mr. Turner). The Select Committee recommended that it should not be Capita; its record in administering the ILA scheme was appalling and thoroughly documented by the Department's inquiry and the Select Committee report. However, do the Government remain bound by their previous ILA contract to work with Capita, despite its shortcomings? I look forward to the Minister's answers.
5.32 pm
Jeff Ennis: I am grateful for the opportunity to participate in an important debate on the report of the Select Committee on Education and Skills on individual learning accounts. I associate myself with the remarks of the Committee Chairman, my hon. Friend the Member for Huddersfield (Mr. Sheerman), and the hon. Member for Chesterfield (Paul Holmes).
I am one of the 11 Select Committee members, who all fully support the objectives that ILAs set out to achieve when they were introduced. They were designed to open up the learning market and to place as few restrictions as possible on what people chose to learn.
The objectives included attracting new learners and providers and the programme was therefore designed to be simple and flexible for both categories, with the minimum of form filling. The ILAs fulfilled the objectives by attracting more than 2.5 million people to become account holders, and almost 9,000 training providers signed up to train through the scheme.
The concept of ILAs is especially important in constituencies such as mine, which has some of the greatest deprivation in the country. We have the lowest GDP per capita—62 per cent. of the European average—of any United Kingdom constituency. No wonder south Yorkshire is one of the three objective I areas in the country. We have low staying-on rates at schools, and low academic achievement. Both are a direct consequence of the heavy mining and engineering industries in constituencies such as Barnsley, East and Mexborough. We also have many adults with numeracy and literacy problems. The provision of some type of ILA scheme as part of an effective lifelong learning strategy is integral to the successful regeneration of former coal mining areas such as South Yorkshire, so it is vital that we get a successor scheme off the ground as soon as it is practicably possible to do so.

1041
The report highlights in great detail serious failings by the Department for Education and Skills in preparing and running the old ILA scheme. It also severely criticises Capita, the Department's private sector contractor, for various shortcomings in its delivery of the scheme. Time is short, so I do not intend to go into great detail about how all this happened: it is all in the report. Instead of focusing on the flaws and weaknesses of the old ILA scheme, it is more important for us to focus on what needs to he incorporated into the successor scheme, and it goes without saying that that scheme needs to be introduced as soon as it is practical to do so.
One of the key lessons to be learned is that quality assurance must be a prerequisite for the successor ILA. After taking many statements in evidence from witnesses, the Select Committee recommended that the Learning and Skills Council should take the lead on accreditation, implementing a fast-track registration process for providers with a proven track record of delivering quality training.
With hindsight, it seems a pity that the Learning and Skills Council's involvement in accreditation was not incorporated into the original ILA scheme, because there is no doubt that, as far as the National Institute of Adult Continuing Education is concerned, there was little or no evidence of abuse of ILAs when they were first piloted by the old training and enterprise councils. I accept, however, that the 47 local learning and skills councils are still bedding in—having followed on from the TECs—and the Department will still need to be vigilant to ensure that each of them performs effectively.
One difficult issue in the report that will require significant attention has already been flagged up: the so-called dead weight factor. I know that my hon. Friend the Member for Huddersfield, the Chairman of the Select Committee, hates that expression, so I apologise to him immediately for using it. We are talking about the number of people who would have done their training irrespective of qualifying for an ILA. A figure of some 44 per cent. is widely quoted in the report.
I am not certain how accurate that figure is, however. Given that 57 per cent. of the working-age population in England are educated only to level 2, and that 24 per cent. of adults experience difficulty with either literacy or numeracy skills, that figure appears exceptionally high. This is the client group that the new ILA should specifically target, particularly as it is people such as these who are the least likely to be offered training in the work place, and the least likely to pursue learning opportunities at home or in their local community.
Given this background, I believe that the recommendation in paragraph 73 in the report is crucial, and should form the basis for the successor scheme. Because I consider it very important, I should like to read it out for the benefit of the House. It states:
"We recommend that any successor scheme to the ILA should be focused on adults whose highest level of qualification is at level 2 or below and that particular efforts should be made to promote the scheme through employers, trade unions, community groups, approved training providers, schools and colleges."
I am delighted that the Government's response to that recommendation has been to include it in the remedial measures section of their response document, which states:
"We recommend that the successes of trusted intermediaries, such as trade union learning representatives, should be taken fully into account in designing an ILA successor scheme".
1042
Indeed, the Government's response highlights the fact that ILA community group projects attracted people who had never heard of ILAs. Two thirds of the people who came to ILAs through the ILA community group route had never heard of them before. They also encouraged more participation by ethnic minority groups—14 per cent., as opposed to 5 per cent. nationally.
ILA community group projects also attracted a larger percentage of people with no qualifications—22 per cent., compared with 16 per cent. Nationally—and 73 per cent. of people said they would not have been able to fund their learning without ILAs. Only 50 per cent. said the same about other types of provision.
Evaluation of accounts opened through the union learning fund showed that 79 per cent. related to the groups least likely to participate in learning. A project in Leicester and Lincolnshire, using small firms to promote ILA take-up, was also very successful. Such initiatives are crucial. They must become more widespread if we are to target the successor ILA more successfully to appropriate client groups and non-traditional learners.
As the hon. Member for Chesterfield pointed out, the Government are still at variance with the Select Committee on the important and difficult issue of compensation for learning providers. Paragraph 127 of the Committee's report recommends
"that the Department should at least re-imburse those bona fide learning providers who can demonstrate that they have been financially disadvantaged by the accelerated date of closure".
The Department brought forward the date by two or three weeks—I know this—after taking police advice.
The Select Committee fully appreciates the reasons why the decision was taken—the police advice aspect—and knows that, in the legal sense, the Government do not have to compensate the learning providers who have been affected. I believe, however—and I think the Committee believes—that in a moral context they should reconsider the decision.
It should be recognised that the ILA scheme was successful not just in attracting new learners, but in attracting new learning providers. Many provided courses that were out of the ordinary, some of which were both innovative and imaginative. We need to ensure that the new innovative training providers are encouraged to participate in the new ILA scheme. Some have had their fingers badly burned, while some have gone out of business.
I believe that all training providers would see it as an act of good faith if the Government changed their mind. The Select Committee is talking about compensation only for bona fide providers who can prove genuine financial hardship.
The Government have made clear their firm intention to introduce a new ILA programme, possibly in the autumn. Many Select Committee members may think that that is not soon enough, as the Chairman suggested. But we must all learn the lessons of the collapse of the original scheme. It takes time to get things right, but we must get them right this time. We must build on the many strengths of the original scheme for the benefit of all potential learners in our communities. We must again make the ILA a Government flagship that is an integral part of an effective lifelong learning strategy for the country.
5.43 pm
Mr. Richard Bacon: It is a pleasure to follow the hon. Member for Barnsley, East and Mexborough (Jeff Ennis). I agreed with just about everything he said.
I congratulate the hon. Member for Huddersfield (Mr. Sheerman) and his colleagues on a sensationally good report, produced at amazing speed. I am not a member of the Select Committee on Education and Skills, although as a member of the Public Accounts Committee I sat in on some of its hearings, which I considered to be a model for the way in which other Select Committees should do their work.
The report contains much that is worth mentioning, but I do not want to take up too much of the House's time. Let me just quote a couple of quick headlines. According to page 14,
"It should have been possible to design a scheme to encourage new providers that was not wide open to fraud or abuse by unscrupulous people posing as learning providers, but the lack of quality assurance made it almost inevitable that it would be abused."
The most extraordinary thing perhaps is that there were timely warnings. Perhaps most famously, Mr. James O'Brien of Pitman Training Group gave a warning on 20 September 2000. In criticising the lack of detail in a letter to the Secretary of State, he said:
"As a responsible training provider we were worried that this lack of detail left the scheme open to abuse, which would not be helpful to either the initiative itself, or the majority of the training sector."
The report makes it clear that it was not clear who was responsible. Paragraph 154 says:
"It is not clear who was responsible for delivering the specific outcomes of the ILA project. There does appear to have been some confusion of responsibilities."
Paragraph 169 states that the objectives were not clear:
"We are not convinced that the Government had adequately clarified the precise educational and social objectives of the ILA scheme…With a target fixed in terms of the number of accounts…it was clear that the delivery mechanism had become confused with the educational objective."
I refer briefly to the role of Capita, as other hon. Members have done. The report says on page 16:
"Surprisingly, the potential expertise of Capita in designing systems to be fraud-resistant was neither called upon, nor offered."
Later, paragraph 97 states:
"We find it hard to credit that Capita, a major player in winning contracts for work contracted out to the private sector, should not have pointed out that, without a quality threshold for providers, the ILA was a disaster waiting to happen."
Capita is a major player in a variety of aspects to do with public administration. It provides advice and services to over 120 local authorities. It collects £1 billion in council tax and business rates. It administrates the teacher superannuation scheme, which has 1.2 million teachers and 400,000 teacher pensioners. It seems that there may be a role for the National Audit Office, in addition to the report to which the hon. Member for Huddersfield (Mr. Sheerman) referred, in doing a study specifically on Capita and its relationship with the public sector, both at local and central Government levels.
As a member of the PAC, I am particularly concerned about the management, or rather the lack of management, of financial resources. I say in passing that the former Minister with responsibility for adult skills, who is now Economic Secretary to the Treasury, has been helpful to
1044
me personally and I am sure to other hon. Members in keeping me informed of progress, although there has not been as much as one would have liked. One of the most shocking things that I heard was in the evidence presented on 28 November last year, which is not in the report, but which I have a transcript of from the internet. The hon. Member for Chatham and Aylesford (Jonathan Shaw) was probing the then Minister and not getting very far. The Chairman intervened and said:
"Minister, what you are being asked by"
the hon. Member for Chatham and Aylesford is
"surely there must have been an estimate of how much this would cost year on year, an estimate. He is just asking what sort of level of overshoot is there—What are the ballpark figures you are knocking around the Department on this?"
The then Minister replied:
"At the moment because of the uncertain number of individual learning account discount payments we are going to have to pay we simply cannot give you a sense, even a ballpark I regret to say, of what the possible overspends are going to be."
So there was no control of cash whatever. There was no control of information technology.
The Audit Commission report of February 1998 entitled, "Ghost in the Machine" says on the front page:
"The overall position shows little improvement…Frauds or cases of IT abuse often occur because of the absence of basic controls, with one-half of all detected frauds found by accident. Senior management still appears to lack a commitment to improving IT security and cracking down on abuse."
Why did no one in the Department for Education and Skills take notice of that?
In relation to basic project management and financial control, again, a very good report was published by the Cabinet Office in August 1994. On page 60, at paragraph 4.42, it says;
"A project plan is agreed to identify who does what and ensure different contributions are brought together effectively. It will set strict timetables, identify interim deliverables…establish clear performance measures…There will also be tight financial control throughout, with expenditure closely monitored."
That was eight years ago. Those are not new ideas; they are obvious, common-sense ideas, which many people who work hard to pay the tax that the Government sometimes waste would be able to come up with without too much difficulty. It is not surprising, therefore, that page 11 of the report reached the following conclusion:
"We regard the failure of the Department for Education and Skills to learn from mistakes made in the past by its predecessors and other Government Departments to be one of the most disturbing aspects of the ILA experience."
I conclude by referring to the hugely important role of the accounting officer. If permanent secretaries of Departments, who are accounting officers, are not happy with the steps that Ministers propose to take, specific provision is made within British Government to enable them to flag up that fact. A document published by the Treasury in 2001, entitled "The Responsibilities of an Accounting Officer", establishes that, if a course of action is being followed that a permanent secretary is unhappy with, he can require the Minister to issue a ministerial direction, if the Minister chooses to override the advice given. Paragraph 15 of the document states:
"If the Minister in charge of the department is contemplating a course of action involving a transaction which as Accounting Officer you consider would infringe the requirements of propriety or regularity…you should set out in writing your objection to the

1045
proposal, the reasons for your objection and your duty to notify the Comptroller and Auditor General…If the Minister decides nonetheless to proceed, you should seek a written instruction to take the action in question. Having received such an instruction, you must comply…but should then inform the Treasury"
and the National Audit Office. If that has been done,
"the PAC can be expected to recognise that the Accounting Officer bears no personal responsibility for the transaction."
For a project with at best confused policy objectives, and which was not properly planned or implemented, one might have thought that a very good case existed for seeking direction. I tabled a parliamentary question, asking what directions had been given since 1997. The answer was that 14 were given: one by the Department of Trade and Industry, one by the Northern Ireland Court Service, one by the former Department for Transport, Local Government and the Regions, three by the Export Credits Guarantee Department, three by the Ministry of Defence, and—to no one's surprise—five by the former Department of Social Security. However, from the Department for Education and Skills there was a deafening silence. The scheme ended up sticking a fire hose out of a window and spraying taxpayers' money over anyone who happened to walk by.
All hon. Members will agree that the saddest thing is that this was such a good and noble idea. During the 1988 Democratic national convention, Jesse Jackson said:
"I was born in the slum, but the slum was not born in me. And it wasn't born in you, and you can make it."
That should have been the message of this programme, but what kind of message is sent by its absence for nearly a year? The message is, "I was born in the slum, but I'll remain in the slum and I cannot make it because the people who should know better—the people who are paid to know better—cannot put in place basic project management, basic information technology security and basic financial controls." That is the sad saga.
I hope that the Minister will talk about when the new scheme will be introduced to help the people who need it most. I agree that it should be directed towards low achievers, in accordance with paragraph 73. We need some specifics. The Minister needs to tell us not only when the new scheme will be introduced, but how much money has been spent in total, and how much of that was fraud. He also needs to tell us about compensation for providers. People who trusted the Government and took them at their word have gone bankrupt, and have had to sell their houses. It is not enough for Ministers simply to say, "I'm sorry, but it's not our responsibility." There is evidence on the record from departmental civil servants that the attempt was made to create a market and expand the number of providers. That places a moral responsibility on the Department to help providers who got into trouble.
The Minister should also say sorry, and if he does all of the things that I asked him to do, he will earn the respect of the House. [Interruption.] He looks as if he is about to intervene. He leaned forward with great eagerness, and I shall listen to his reply with equal eagerness.
5.54 pm
Valerie Davey: As a member of the Education and Skills Committee, I am pleased to contribute to the debate and I hope that it will mark some
1046
progress. Let us remember that much was achieved by the ILA scheme. Thousands of people benefited from it and they look to continue to benefit in the future. The Committee's report and the response from the Department will, I trust, take us a step forward. I hope that the debate is also a step towards the launch of the new scheme and that the Minister will be able to tell us when that might be.
I shall comment briefly on the Government's response to our report. That response can be summarised in two words—contrition and commitment. It was clearly recognised early on that we need to strengthen the quality checks on the learning providers and to tighten security. The Committee recognised that the balancing of wider access for learners with less bureaucracy and a wide range of new training providers was always going to involve an element of risk.
It was in part the failure to evaluate the risk that was the fault and that has led us to the current problem. The Government's response states:
"We are…reviewing our risk assessment strategy to ensure that the risks of fraud are fully considered across all of the Department's activities."
That is reassuring in one way, but those words follow a long list of groups that have sought to evaluate risk and try to prevent fraud, in the Department for Education and Skills and in other Departments. Those groups include the fraud response liaison group, which is chaired by officials from the Department for Education and Skills and involves officials from many other Departments. It was set up in 1997 and has met quarterly. The Treasury-led special investigation group was set up last year. The better governance and counter fraud group is chaired by a member of the Chartered Institute of Public Finance and Accountancy and it disseminates best practice on risk management, especially relating to fraud. All those groups are operating, and now we expect a departmental internal audit unit that will work closely with the development for the successor scheme, to ensure that the lessons learned from the ILA programme are addressed.
Given all those different groups, my concern is to ensure joined-up thinking not only for the Department for Education and Skills, but more widely across Government. We must ensure the learning of lessons between Departments. I am pleased to follow the hon. Member for South Norfolk (Mr. Bacon) who clearly recognises the importance of that work. I trust that the Opposition have some constructive suggestions and will not only describe the faults of the past. It is their job as well as ours to ensure that lessons are learned and the outcome is positive.
The element of contrition in the response makes it clear that registration for learning providers will be strengthened. The complaints procedure will be more effective and random checks will be made on providers. Those who abuse the scheme will lose their registration. Quality assurance will be more rigorous and financial controls will be stronger. That is great and it is all necessary. However, like other hon. Members, I am disappointed that the Department still seems to have sufficient confidence in the work of Capita to continue to work with it.
From the Government's response to the Education and Skills Committee, it is clear that Capita's ILA centre allowed access by registered learning providers to information that they were not authorised to receive.

1047
We need stronger security measures. The faults in the complaints system were clear. However, despite its faults, the Government and Capita took action in response to complaints, and the response lists the events that took place.
Thirdly, on risk management, the report states that the Department should have had a clearer agreement with Capita about the risks, their significance and how they should have been managed. The faults with the Capita programme were recognised, but the Government say that they are continuing to work with Capita in winding down the ILA programme. That is understandable, as has been remarked, but in their response the Government say that they and Capita gained a great deal of experience from running ILAs. We must ensure that that good experience is used in the future.
Finally, the Government state:
"We have agreed, in principle, to work with Capita in developing arrangements for a successor scheme…subject to satisfactory progress."
The ILA scheme was about innovation, and it was designed to draw new people into further education. It was about quality for the future. The report expresses clear doubts, which I share, about whether the Government should automatically continue their work with Capita, given past experience. However, the Government appear to disagree with that assessment. I hope that the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Bury, South (Mr. Lewis), will reassure the House that there has been greater scrutiny of Capita's work, and that alternative companies have been considered.
However, there are positive elements in the Select Committee report, which the Government have accepted and which will lead to an enhanced scheme in the future. One of those elements—the use of trusted intermediaries and the monitoring of group provision—was mentioned earlier, but I wish to revisit it.
For me, one of the most poignant moments in the exercise occurred when we met some members of the Union of Shop Distributive and Allied Workers who worked for a large company in the north of England. On a visit to Parliament to lobby hon. Members' they told us about what ILAs meant to them. The USDAW education officer said that the company employed between 800 and 900 people but that, before the ILA scheme was introduced, she had struggled to get as many as two or three into adult education classes at a local college.
The trade union officer said that the employer granted the use of company space for ILA participants. The scheme caused it to work together with the local education authority, a local college, and 300 employees entering further education for the first time. She told us about a man in his 40s with a severe sight impairment who had never expected to do anything other than cleaning in that company. The ILA scheme meant measures were taken to help him with his defective sight, with the result that he was able to take a computer course. The man had already applied for a more senior post in the company.
That is what ILAs do, and the effect has been replicated in work place centres up and down the country. The example that I have given shows what intermediaries such
1048
as the trade unions and others can achieve. I am delighted that the Government are looking to that good practice for the future.
I am delighted too that the Government have recognised that ILAs need to be taken forward with support from the learning and skills councils. My hon. Friend the Member for Wakefield and Mexborough—
Jeff Ennis: My constituency is Barnsley, East and Mexborough.
Valerie Davey: I apologise to my hon. Friend. However, I am afraid that I have now lost the thread of my argument.
Mr. Boris Johnson: May I intervene on the hon. Lady?
Valerie Davey: That would help me—it is very gracious of the hon. Gentleman.
Mr. Johnson: The hon. Lady has given examples of the ways in which the Government could show contrition over this sorry affair. Does she also feel that they might show their contrition by compensating those very many learning providers who entered into commercial arrangements on the expectation that the scheme would keep going, then found it violently terminated, found themselves out of pocket and are now facing the loss of their homes and other severe financial embarrassments as a result? Does she not believe that the Government's contrition should extend to compensation for the ILA providers which have been done down by this collapse?
Valerie Davey: The Committee has made its view quite clear. If evidence can be supplied that people suffered in the gap of three weeks before the scheme actually came to an end, the Committee agreed that the Government should give their situation further consideration, and I agree with that position.
The future role of the learning and skills councils is important. Their understanding of quality trainers and the way in which they can ensure that they are fast-tracked into any new scheme is an important element. That also applies to further education colleges and new providers who come forward, provided that their track record and past quality of work can be clearly demonstrated.
I wish the Department well in taking on the breadth of experience that it has at its disposal. I trust that there will be, in the short term, a statement on the relaunch of the scheme and that it goes ahead with all the blessings of this House and the hard work of many in the country who also want to see it succeed.
6.7 pm
Mr. Hugo Swire: I am most grateful to have the opportunity to speak in this debate. I am not a member of the Select Committee, but I congratulate the hon. Member for Huddersfield (Mr. Sheerman) on an excellent report. I also congratulate my hon. Friend the Member for South Norfolk (Mr. Bacon) on an extremely good speech; I agreed with almost everything that he said.
I corresponded on a number of occasions with the Minister's predecessor about an ILA provider in my constituency, the Open College for Distance Learning,

1049
which was forced into receivership on 23 March this year. The company owed more than £120,000, and although much of that was owed to the Inland Revenue, a significant amount was owed to local companies—office suppliers, accountants, local newspapers which had taken the advertising, the landlord of their office premises, and so forth. Ironically, the company was—and still is—owed approximately £140,000 from ILA schemes in England and Wales, if they had been operated properly. Incidentally, I am not sure why Education and Learning Wales, which always maintained that there was no fraud in Wales, closed its scheme, but no doubt the Minister will enlighten us.
The Open College for Distance Learning had 786 students who were enrolled before the schemes were scrapped. Of those, 100 had had their ILA accounts raided by the fraudsters, and the remaining 686 never received their membership numbers before the deadline was brought forward to 23 November because Capita was too slow. In other words, a perfectly good company has been brought to its knees through no fault of its own because of a combination of fraud and incompetence. Who is taking responsibility? After this afternoon's speeches, I am no wiser. Where does the buck stop? What plans, if any, does the Minister have to resolve this case, of which his Department has knowledge, in a way that will allow the Open College for Distance Learning to be brought out of receivership and to pay off its creditors?
East Devon—particularly Exmouth, in which the company operated—is not an area with a lot of big businesses, and the company was becoming a significant local player. Formed in April 2001, it achieved a gross turnover of £782,422 in its first financial year. In April 2001, it enrolled 166 people, and that figure increased every month until October, when the scheme was shut down without warning. The founders told me that they first heard about the closure on the 5 o'clock news.
The founders of the college, Mr. Simon Hall and Mr. Andrew Demetre, ran a good company. They employed qualified, experienced tutors and kept accurate records of their students' progress and achievements. They did that not least because they expected to be audited and inspected by the ILA scheme operators.
Who is the winner from this fiasco? It is not the local creditors or, indeed, the Inland Revenue—we have already established that. It is not the 93 people made redundant by the company, many of whom are struggling to find employment six months later. It is not the taxpayer—the company received more than £500,000 of taxpayers' money. It is not the 3,000 people who lost their money.
Almost 119,000 people registered for individual learning accounts in the south-west. The great majority of those who registered at the Open College for Distance Learning were aged between 25 and 35—just too old to have been taught IT skills in depth at school.
In a written reply, the former Under-Secretary for Education and Skills, now the Economic Secretary to the Treasury, stated:
"We are developing future plans for a successor ILA-style scheme which build on the successful elements of the ILA programme."—[Official Report, 17 December 2001; Vol. 377, c. 57W.]
As my hon. Friend the Member for Isle of Wight (Mr. Turner) pointed out, that repeated promise has had a negative effect on genuine providers; people are waiting to register in the expectation that, at any moment, their training will be provided free.
1050
Companies still struggling to operate in the sector continue to lose. As we have heard this afternoon, there is still no successor, so we have ended up with the worst of all worlds.
I understand that ILAs were originally a Liberal Democrat brain-wave, but a Labour Government implemented them and must take responsibility for the fiasco. There has been an almost unique combination of incompetence and inaction in which everyone is the loser.
The Select Committee's excellent report repeated the points made at paragraph 127 again in paragraph 25 of its conclusions and recommendations. I, too, believe that the Government should be proactive in offering compensation to the companies and people who entered into arrangements in good faith. I urge the Government to address that matter. As we all know, ILA is dead, so before continuity ILA is born—before the Government embark on a new scheme—the Minister, the Government and all those responsible should give some hope to the people who have lost their livelihood and their companies. There is not much to hope for in the Government's reply to date.
6.13 pm
Jonathan Shaw: I am grateful for the opportunity to make a contribution to the debate. I begin by referring to the former Under-Secretary of State for Education and Skills, now the Economic Secretary to the Treasury, my hon. Friend the Member for Wentworth (John Healey). Perhaps, last June, when my hon. Friend received the call from Downing street summoning him to see the Prime Minister, he did not know that ILAs were reaching boiling point. I do not know whether the Prime Minister said, "Look John, we've got the ILAs, they're a good idea and they are popular, but we think they might go belly up and you'll be in the firing line". My hon. Friend has left the Chamber, so we shall probably never know.
I pay tribute to my hon. Friend, however. He continually came to the Committee, providing us with all the detail that we wanted. He went beyond what one might reasonably expect of a Minister and a Department in the provision of the information that we needed to complete our inquiry. Now that he is at the Treasury, I am sure that he is forging a good relationship with the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Bury, South (Mr. Lewis)—I am pleased to see him on the Front Bench.
I am sure that when the new ILA scheme is introduced, my hon. Friend the Economic Secretary will ensure that there are no overspends, as occurred in the past. However, he did a good job, and it should be recognised that it was not an easy thing to confront as a new Minister, which is to his credit.
We need a new ILA, and we look forward to hearing from the Minister about when that is likely to happen. My hon. Friend the Member for Bristol, West (Valerie Davey) gave an excellent example in referring to the trade unions. The Select Committee on Education and Skills has been provided with example after example of people who were not learning and who had the opportunity to learn. The system opened up the market for people to be entrepreneurial and to provide a new way to learn to meet the demands of modern living.
Regrettably, the safeguards were inadequate, as we all know. That is why we are in the current position, and it is why the Select Committee needed to undertake

1051
the inquiry. I pay tribute to its Chairman, my hon. Friend the Member for Huddersfield (Mr. Sheerman), who steered us through this fast-track inquiry. [Interruption.] Does my hon. Friend want to intervene?
Mr. Sheerman indicated dissent.
Jonathan Shaw: There were early warnings. Not just the Department for Education and Skills, but all Departments have to take account of the reports that are written. The hon. Member for South Norfolk (Mr. Bacon) referred to a plethora of reports. He made a very good speech. He has clearly done a great deal of research on the many reports that have flagged up the dangers. If reports are written for Ministers and senior civil servants but no one looks at them, we will find ourselves in a similar position again.
The warnings in the report need to be heeded not only in the Department for Education and Skills, but right across the Government. Information technology provides us with enormous opportunities to learn, but it also provides enormous opportunities for crooks. As the pace of technological change increases, we have to keep account of the likelihood of fraud. One of the Department's own civil servants, Mr. Hall from the Learning and Skills Council, told the Select Committee that he had warned the Department as early as June 2000 that the safeguards in the proposed system were inadequate.
The Government responded by saying in paragraph 10 on page 11 that they did not want an over—bureaucratic system with lots of red tape. Of course such an approach is right, but simply saying that is not good enough. The infrastructure was in place, with the Learning and Skills Council and other agencies, to give accreditation. Too often, we heard about scams involving CDs and cold calling, and the complaints system was inadequate not just for ILA holders. If someone knocks at the door and says, "This is a CD to learn to type and the Government are paying for it", the person who answers might say, "Well, I've never heard of ILAs, but that's very nice. I'll sign up. Thank you very much." Why would anyone complain if they did not know?
There was no proper complaints system for the good providers who were angry about being ripped off by cowboys, as the hon. Member for Chesterfield (Paul Holmes) said, but they were infuriated when neither Capita nor the Government listened to them. That shows the quality of the complaints system.
There was also fraud, and we have heard how people could gain access to accounts. When the hon. Member for Isle of Wight (Mr. Turner) questioned Paddy Doyle, Capita's group board director, about one of his constituents whose account had clearly been opened fraudulently—she had not signed any piece of paper to say that she wanted to open an account—Mr. Doyle said:
"We know that has happened and we know that there are instances of that happening. It is how it happened and there are actually different ways that it could have happened and that is what I cannot answer. I am not disputing the fact that it is has happened."
One thing that we can certainly conclude from that is that it happened.
Inadequate safeguards were in place. That has been borne out by the Cap Gemini Ernst & Young report and by the internal audit. There are lessons not just for the
1052
Department for Education and Skills but for all Departments. As a consequence, the Government and Capita have had a tendency to blame one another. That is perhaps a manifestation of a problem—when one is in a bind, one starts to look around for people to blame. Both the Government and Capita are at fault, as has been acknowledged.
As for the future, the Government are committed to learning—not just through the individual learning account system but through a whole range of different opportunities for people who have not accessed learning before and who can now take advantage of the many different schemes available. The ILA concept is a good one, but appropriate accreditation is needed. We need to use the infrastructure that is available, and, most importantly, we need to reward those who target groups who have not traditionally accessed learning. The ILA has had some success in targeting those groups, but the majority of people who were taking advantage of individual learning accounts had accessed learning before. That needs to be a priority. In response to the report, I hope that, when we see the new scheme, adequate measures will be in place to encourage learning providers to target that group.
It has been a pleasure to take part in the inquiry. I hope that we have made an important contribution.
6.22 pm
Mr. John Baron: I am grateful to be called to speak in this important debate. It is a pleasure to follow the thoughtful contribution of the hon. Member for Chatham and Aylesford (Jonathan Shaw). I concur with others in paying tribute to the hon. Member for Huddersfield (Mr. Sheerman) for his incisive, professional and objective chairmanship of the Committee that led directly to this report.
As a member of the Education and Skills Committee, I welcome this opportunity to address a particularly important aspect of the affair on which other Members have touched—the failure of the Government to compensate learning providers for the accelerated closure of the scheme and the implications thereof. As a Committee, we deliberated long and hard on this issue. We reached the following conclusion:
"We recommend that the Department should at least reimburse those bona fide learning providers who can demonstrate that they have been financially disadvantaged by the accelerated date of closure of the scheme."
We felt that it is was wrong for a Government simply to turn their back on the large number of learning providers who had invested in good faith in a Government-inspired programme but who now faced financial loss, and, in some cases, ruin, as a result of mistakes made by the Government. It is wrong for a number of reasons.
First, an agreement existed between the Government and learning providers that, in my view, introduced reciprocal obligations between its signatories. Meanwhile, it is wrong because it is unfair. The Government and Capita can move on with minimal adverse effects—the then Minister even admitted that Capita was still in the running for major new contracts. The little people in this affair, however—the learning providers and the individual learning account holders—have suffered through no fault of their own. If there is any doubt about whose fault this debacle was, it may be worth briefly highlighting the twists and turns, especially towards the end of this unfortunate affair.

1053
On 24 October, the Secretary of State for Education and Skills announced the suspension of the £200 million ILA programme from 7 December 2001. She said that the programme
"has exceeded the government's expectations in encouraging very large numbers of people—and has quickly expanded beyond its capacity."
However, on 23 November, another press release suddenly announced the immediate closure of ILAs two weeks earlier than planned. No notice was given. Training providers were neither consulted nor warned.
Even now we do not know whether the decision was taken because of fraud or because the scheme was so popular and over budget that the Government pulled the plug. However, as the report clearly states, the Select Committee is sure that Capita and the Department for Education and Skills were equally to blame for the fiasco.
The little people have suffered. For example, Roger Tuckett of Henley Community Online estimated that the closure of the ILA scheme would result in 2,000 to 5,000 job losses. Mr. James O'Brien of Pitman Training Group plc and the Association of Computer Trainers told the Committee that up to 5,000 people could be squeezed out from IT training centres. He stressed that the most important thing was that
"the government had set a legitimate expectation for individuals to be able to access that learning up until the 7th December and they should honour that commitment."
The National Extension College was
"dismayed at the lack of notice over the ending of the scheme".
In addition, as the hon. Member for Chesterfield (Paul Holmes) has already pointed out, a survey of 84 colleges found that they expected to suffer a loss of income amounting to more than £1.2 million as a result of the early closure of the scheme. The loss of that money will be deeply felt by the colleges in question,
There are many more examples of losses being incurred by learning providers. However, despite all the evidence, the Government refuse to compensate learning providers. The Government's argument is that there was no contract between the Department and learning providers, and hence that they are not obliged to compensate the providers. They are splitting legal hairs so that they can run away from their obligations. There may have been no contract, but there certainly was an agreement between the Department and learning providers, and that agreement introduced reciprocal obligations between the signatories.
The Government should honour their obligations to individuals and to organisations, particularly as they unexpectedly accelerated the closure of the scheme. Many learning providers who entered the agreement in good faith must now wonder whether they can afford again to take the Government at their word. As the Committee report put it:
"Many of the smaller and more innovative providers may be unwilling to risk entry into a second ILA scheme without a contractual arrangement with the Department."
Mrs. Sammy Betson of Ipswich ITeC summed the problem up very well. She told the Committee that her cash now had taken a serious knock and added:
"The question of whether or not we would participate in a future scheme is whether we have a spoon long enough."
The Government's unwillingness to compensate learning providers for the early closure of the scheme in the two weeks in question is wrong for a number of
1054
reasons. It is wrong because there was an agreement that involved obligations on all the parties concerned. It is wrong because the decision is unfair. The Government and Capita can move on, but many small learning providers, who face financial loss and in some cases ruin, cannot. It is also wrong because learning providers will think twice before participating in any successor scheme. The parliamentary ombudsman is investigating several individual complaints and we await the findings with interest.
It is great shame that this good initiative has been so badly handled by the Government. What makes it worse is that they refuse to honour their obligations by compensating those learning providers who have suffered financial loss as a result of the accelerated closure of the scheme. It is a very high-handed approach, and some would suggest even an arrogant one. The Government must not underestimate the importance of trust in these matters. At present, very many learning providers, who will be essential to the success of any successor scheme, believe that they cannot trust the Government. I therefore ask the Government, even at this late stage, to reconsider their position and to honour their commitment to learning providers.
6.30 pm
Mr. David Chaytor: I want to focus on the Government's response to the Committee report which was published a few days ago. Other hon. Members dealt effectively with the criticisms contained in the original Committee report.
A couple of points of detail have not been raised. First, paragraph 24 of the Government's response contains an error. It is entitled "Remedial measures". It seems that there has been a transcription error because of a mistake in the title of the corresponding paragraph in the Committee report which no one spotted. The title should be "Intermediaries".
Secondly, there is an ambiguity in the Government's response. On the one hand, the response was good. It dealt point by point with the recommendations and conclusions of the original report, in contrast to some previous responses to our reports which were, to be kind, generalised. On the other, however, although the response was detailed and specific it did not deal with the full horrors of the situation.
Paragraph 5 of the response refers to the cap on the 80 per cent. discount. What is not made clear is that the cap was introduced several weeks after the launch of the original scheme. Paragraph 18 of the response—I do not recall discussing this in Committee—tells us that the cap of £200 on the 80 per cent. discount was introduced within seven weeks of the scheme's launch because the unlimited amounts of money available had been exploited and £22 million had been paid out in course fees that cost more than £200.
The total overspend on the scheme is estimated to be about £60 million on an original budget of £200 million, an overspend of just under 30 per cent. We now discover, however, that more than 30 per cent. of that overspend was incurred within seven weeks of the launch of the original scheme. That is significant new information which we did not have during the Committee's deliberations and it draws our attention to the importance of tighter budget monitoring in the Department.

1055
The permanent secretary hinted at that when he came before the Committee yesterday, although the focus was on the need to get a grip on the Department's underspend. The lesson is that financial monitoring needs to consider possible overspends as well.
In concentrating on three issues, I hope that I do not cover old ground, but instead give pointers for the future. The first is the scheme's objectives. One fundamental reason why the scheme got into difficulties was that the original objectives were not only confused but contradictory. There was a desire to open up the market and bring new providers into it, for which a generous subsidy was provided, and a desire to extend opportunities for lifelong learning to the whole population. There was also a specific objective to help people who were unable to afford further training or education.
The number of people for whom cost is a barrier to continuing their education is comparatively small—it is a minority of the population. Yet by making the scheme universal, we offered a subsidy to the public at large. A more focused objective on those who are most reluctant or least able to continue their education beyond school age is the right approach.
I shall digress briefly. I do not find the Opposition's argument about the use of the subsidy terribly convincing. They criticise the Government by saying that the Department was spraying cash around like a hosepipe out of a window, criticise them for switching off the hosepipe and then criticise them for not switching it on again to compensate for the problems caused by the switching off. It is not altogether a logical—
Mr. Bacon: Will the hon. Gentleman give way?
Mr. Chaytor: I am afraid that I will not give way because time is pressing.
The Opposition argument is not logical or convincing. However, I do think that the nature and eligibility of the subsidy are crucial. Therefore I was very pleased that my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) and the hon. Member for South Norfolk (Mr. Bacon) both referred to recommendation 73 in the Committee's report, which suggests that a future scheme should be targeted explicitly at those adults whose existing level of qualification is level 2 or below. I am pleased that they supported that, not only because I was responsible for moving the amendment to the original draft of the Committee report, which is now in the Committee report, but because I consider that that is the most effective use of public money.
I also want to speak about the mechanism. The time may have come to say that the emperor has no clothes. That is not because we adopted the scheme rather uncritically from an original idea of the Liberal Democrats—there are lessons for all of us in that—but because the original pilot scheme, run by the training and enterprise councils, concluded explicitly that there was no demand for a savings account for learning.
There had been several discussions with financial institutions to explore the issue; the heart of the original concept of the ILA was a savings account for learning, not simply a subsidy. The experience was that there was no demand for it. The public did not see the purpose of
1056
it. Perhaps the mechanism was too complex; perhaps it was an idea whose time had not yet come, but I now suspect not. Even though the pilot schemes proved the lack of demand pretty conclusively, the Department went ahead with the concept of the account, although it became simply a means for giving a discount on courses.
Therefore, although the idea of the individual learning account is attractive—I am sure that there is the germ of a good idea there—we must ask whether it would not have been, and will not be in future, simply much better and more efficient to provide fee remission to eligible designated categories of students for designated categories of courses. I flag up that suggestion and hope that the Minister might consider it in his deliberations on the future scheme.
The third point that I want to raise concerns assumptions about stimulating the market. Having learned more about the ILA saga, I do not accuse the Department of incompetence as some people have done, but I do say that it was remarkably naive in its understanding of the behaviour of the private sector in post-16 educational training operations.
Various scandals operated throughout the post-16 sector from 1993 onwards, and no doubt before to a lesser extent. They were well publicised abuses of the system, whereby huge amounts of public money—far greater than the amounts lost in the ILA affair—were expropriated by different means. After all that had happened, particularly between 1993 and 1997, it was naivety of the highest order to assume that providing a universal subsidy to bring new entrants into the market would not equally be open to abuse and exploitation and would not be effectively a blank cheque for some cowboy operators. Therefore, a rigorous accreditation system for providers must be at the heart of any new scheme.
In my concluding minute, I shall flag up other points that I would have liked to discuss at enormous length. The first concerns the assumption in the Government's response that for the new learner entering the scheme, it was like entering any other marketplace, and it was therefore his or her responsibility to make a judgment about the quality of the product on offer. That is unacceptable. The motto "caveat emptor" is not appropriate for people coming back into education. We should build into a new scheme better advice and guidance for new adult learners.
Secondly, the courses on offer, as well as the providers, should be more rigorously accredited. Thirdly, we should consider the introduction of staged payments. If the provider can collect his money simply by enroling the student, that is a blank cheque for the cowboy operator. Staged payments, which are accepted practice in public sector post-16 education, ought to be accepted practice in private sector post-16 education.
Finally, I raise the question, which emerges strikingly from the Government's response, of the number of consultants other than Capita who were employed by the Department at various stages in the development of the scheme. I have counted six who are referred to in the report. It would be interesting to know the cost of employing the consultants whose advice was sought and who were asked to evaluate various stages of the scheme. Perhaps I will table that some time as a written question.
I endorse what several of my colleagues and several Opposition Members said about the role of Capita and the assumption that Capita will carry on as before.

1057
[Interruption.] I am conscious of the time; this will be my final point. That sends a bad message to learning providers who feel that they have been cheated by the abrupt ending of the scheme. It seems that there is one rule for Capita and another rule for genuine learning providers. That is a problem which I hope that the Minister will address.
6.42 pm
Alistair Burt: This has been an excellent debate. I am sorry that there was not time to call all the members of the Education and Skills Committee who would have liked to speak.
I congratulate the hon. Member for Huddersfield (Mr. Sheerman) on securing the debate and on the quality of the report. Through him, I thank all the members of the Committee, who performed such a valuable service.
As we heard, the report was hard-hitting, correctly describing an appalling fiasco of finger-in-the-wind targets, failure to heed advice, failed delivery and a walk away from the debris of lost businesses and jobs, as well as—worst of all—the hurt caused through the lost hope and aspirations of those expecting to benefit from the scheme. Despite the constructive tone of the debate, we cannot forget how dreadful the experience has been for some people. What I have just described is the kindest interpretation of the Government's activity. I will come in due course to their self-serving and ineffectual response.
I welcome the Minister to his new responsibilities, although he is not new to the Department and can therefore expect us to show him slightly less mercy on the issue than would be usual. It has not escaped our notice that all those previously connected with individual learning accounts have moved on, their lips sealed, their silence the price of their promotion—the original Secretary of State and his junior Minister who set up the scheme, and the last junior Minister, now the Economic Secretary to the Treasury, who I am delighted to see in his place, and who is obviously well thought of by me and others for his hard work in connection with the scheme. He found the fiasco going on under his feet and stoically lived with it, in a manner that I understand all too well. However, the proper scrutiny of Government failure cannot be diverted because of decisions made in the Government's personnel department.
I shall make three quick points. First, I make clear our support for the concept of what the Government were trying to do—the expansion of individual learning to those who need it. That is why the failure has been so acute, as a number of colleagues commented—the hon. Members for Chesterfield (Paul Holmes), for Barnsley, East and Mexborough (Jeff Ennis), who described his area, where such work would have been particularly welcome, and for Bristol, West (Valerie Davey), and most movingly, my hon. Friend the Member for South Norfolk (Mr. Bacon), who spoke with passion and genuine anger, as he should, and produced a quote from Jesse Jackson of which we would all have been proud.
Secondly, we want to be positive. Of course, the report contains positive recommendations, but I shall not labour them because of time. Thirdly, this is a serious business and it is not my job to act as a ra-ra for a Government failure. I will not concentrate on the positive recommendations, although if we had more time, I would be pleased to do so. I am afraid that it is time to fix on
1058
the Government's response, as the excellence of the work of the Committee and of this debate has been ill served by a very poor response from them.
Let me explain why I feel so strongly about the response. The first page states:
"The original programme was successful and popular with both learners and learning providers. It was, therefore, with considerable regret that it had to be closed because of the serious flaws which we identified'".
Hold on a minute—the serious flaws that the Government identified were those with which the scheme had been set up in the beginning. That is what caused the problem. The Government cannot claim to be the good guys who spotted what was going wrong and acted.
The response goes on to describe what the Government have done since that time. First, we are told that they have been "managing the closure effectively". Let them explain that to all the people we have heard about, who were messed up because of the problems of dates and ending the system. They include people such as Mrs. Barbara Walsh of the Longridge teaching centre, who says:
"We are unable to plan ahead because we have been given no hint of a timescale, nor anything else which would indicate that the Government is sympathetic towards the unfortunate situation in which they have placed us. We are just hoping that a successor to the scheme will be announced soon."
Those hopes were dashed by the publication of the response yesterday. If that is managing the closure effectively, it is not very good.
Secondly, the Government say that they have been
"establishing the full extent of misuse and fraud".
They have not, because that has not been done yet either. Thirdly, we are told that they have been
"developing the outline design for a successor scheme".
As we have heard, however, the successor scheme may be up and running about a year after the closure.
That is just the Government's introduction. A series of comments suggest to the general public and the casual reader that, with hindsight, and having picked up on problems through experience of the system, the Government acted to deal with them. That is not true. The reason why the Government failed and why we are in our current position is not hindsight, but their failure to heed the advice that they were given on a variety of occasions about what they were doing. That is why public confidence in the scheme—and, alas, the Department—is at a low ebb.
Let me take a couple of examples. The hon. Member for Huddersfield, and my hon. Friends the Members for Billericay (Mr. Baron) and for East Devon (Mr. Swire), who spoke from personal experience, all raised the issue of compensation and spoke about the damage done in the market. Let us remember that the Government created that market. In paragraph 1 of their response, the Government admit that part of the intention of the scheme was to "attract new providers". Accordingly, they set up the market, but they have not dealt with the consequences of its complete destruction.
Mr. Andrew Turner: That is an important point that I do not think independent providers understood. Where Governments make markets, they can also break them, and that is exactly what this Government have done.
Alistair Burt: My hon. Friend makes an extremely good point. This afternoon, I spoke to the Association of

1059
Computer Trainers, which tells me—this is significant in relation to Roger Tuckett's estimate of some months ago that 5,000 jobs might be lost—that some 15 per cent. of IT training provider specialists have closed down. Indeed, it reckons that about 5,000 jobs have been lost as a result. Some 75 per cent. of those providers have made people redundant or made serious cuts, and 95 per cent. of them have held back on plans for future investment. That all means that those people will be very unwilling to be considered for involvement in ILA2. That is the damage that has been done by lack of confidence.
Various points were made about Capita and its failings, and questions were asked about why it should get the new contract. There is a particular reason why it might do so. If hon. Members turn to sub-appendix A of the response, which is part of the Cap Gemini summary of what happened, they will see that paragraph 2 states:
"The contract between DfES and Capita…made no clear mandates or stipulations regarding the assessment of the security requirement or the ongoing security management. This also resulted in no ILA-specific security policies or procedures."
Capita will keep the contract—unless the Minister is about to tell me that the Government are putting it out to public tender, which I doubt—because what happened was the Government's fault. They did not give clear guidelines, so they cannot blame Capita for it.
It has been suggested that the scheme was closed because of overspending. Paragraph 20 of the Government's response deals with the problems that arose in relation to the Treasury. I challenge the Minister to respond to this point. There was overspending, but the delay has already saved the Government money because the scheme has not been running. If the Minister can say that the new scheme will start with a budget that is equivalent to the old one, we will all be most impressed. He has the opportunity to do so.
Sub-appendix B of the Government's response contains this wonderful phrase about the internal audit review:
"However, it has not been possible to identify when and how some decisions on the operation of the programme were arrived at".
How convenient. We are talking about the British civil service. When a Minister sneezes, the British civil service records which nostril they go to first. To discover now that it is possible that no one knows where and how some decisions were taken is a remarkably convenient error that suits the Government well.
The final failing of the Government's response is that it gives no indication of a new scheme. People around the country have been let down. Jobs have been lost, students who were looking forward to going back into education have been disappointed, and people are in despair that there has been no suggestion of a new scheme. The Government's response has been self-serving and disingenuous and has not done credit to the decent report that was produced. That is a matter for shame. It is not, of course, possible for the Minister to resign straight away, but I suggest that the best thing that he could do, bearing in mind the inadequacy of his Department's response and the degree of difficulty and despair that is out in the country, is to make his first word to the House, "Sorry."
6.52 pm
The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): I suspect that this may be an historic moment for the House, in that three hon. Members born in Bury have spoken in succession. Perhaps not many other hon. Members would find it so.
I begin by paying tribute to the work of my hon. Friend the Member for Huddersfield (Mr. Sheerman) and his colleagues on the Select Committee on Education and Skills. I thank the members of the Committee for the fair and balanced way in which they approached their task. Undoubtedly, some differences remain between us, but we have accepted the vast majority of the Committee's findings and recommendations. I think that hon. Members will feel that the view expressed by my hon. Friend the Member for Bristol, West (Valerie Davey) about the contrition and commitment of our response is far more accurate than that of the hon. Member for North-East Bedfordshire (Alistair Burt).
I take this opportunity to pay tribute to the work of my former ministerial colleague, my hon. Friend the Economic Secretary to the Treasury. His decision, and that of the Secretary of State, to act decisively when the problems became clear, and his subsequent honesty and transparency, ensured the survival of the individual learning account concept. That point was well made by my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw). I am sure that my hon. Friend the Economic Secretary will be remembered for his involvement in the scheme as the comprehensive spending review process reaches a conclusion.
My hon. Friend the Member for Huddersfield takes a close interest in ministerial turnover, so he will know that I have graduated from being the Minister with responsibility for young people and learning to the Minister with responsibility for adult learning and skills?or, as some people told me. the Minister for ILAs. In that context, and in view of the questions that he asked. I can reassure him that I have discussed ILAs with my predecessor. I can also reassure him and all hon. Members that my commitment, and that of the Secretary of State, to the successor scheme is as strong as ever. We intend to announce details of that new scheme, including a start date, in the autumn. The ILA programme was a bold and virtuous attempt to expand adult learning and open up opportunities to many people who had consigned learning to a dim and distant childhood memory. We should not forget that for many, it achieved its goals.
However, the Select Committee has appropriately focused on why and where the programme went wrong. The report's detailed analysis, conclusions and recommendations will greatly assist Ministers as we consider the nature of the successor scheme. In the words of the Select Committee, we must be prepared to
"learn lessons from the collapse of the first version of ILAs and to bring forward as soon as practicable a more robust version which is capable of expanding Adult Learning to the benefit of each adult learner and the nation as a whole".
Let me consider the contributions to the debate. Many hon. Members referred to Capita. It is important to emphasise that the Government have acknowledged that there are lessons to be learned from what happened to the ILA scheme. There are also important lessons for Capita. There is no done deal about the successor scheme and Capita's involvement; no decision has been made.

1061
A series of criteria must be satisfied before we make any decisions about Capita's involvement in future. They include security, customer service, management capability. data handling, negotiating the overall financial settlement and appropriate revisions to the existing contract. We will have to be satisfied that Capita is best placed to ensure that the new scheme is the success that all hon. Members support.
Many hon. Members referred to compensation. The Government have no legal responsibility to compensate learning providers. [HON. MEMBERS: "Moral responsibility."] There is a debate about moral responsibility and we have had to make a difficult judgment in difficult circumstances. Labour Members have genuinely agonised over that moral dilemma. However, I cannot take lectures from Conservative Members, who told us for 18 years to leave it to the market. Those who talked about business risk and business judgment are now shedding crocodile tears for learning providers who made business choices and took business risks. I understand the genuine anxiety for learning providers who are in difficulties, but I shall take no lectures from the party that continues to believe in laissez-faire economics.
Let me deal with the points that the hon. Member for Chesterfield (Paul Holmes) made. Several investigations are under way, and some are with the police. To date, there have been 45 arrests, which have resulted in 10 people accepting cautions. Charges are being brought against 13 individuals, 12 of whom are waiting to appear in court. One person has been convicted.
On the successor scheme, I accept the points about trusted intermediaries and that trade unions and community groups have played an important part in ILAs. We want them to play an important part in the successor scheme. Many hon. Members talked about limited entry to a successor scheme. That is one of the points that we must consider to get the matter right. I do not apologise for coming to the House and not announcing details of a successor scheme. We will do that in the autumn, after we have considered all the important issues and got the framework right.
We will learn the difficult lessons of what went wrong with the ILA programme. However, I am proud of the Government's passionate commitment to the principle of lifelong learning, whether it is for the middle-aged father who is too ashamed to tell his children that he cannot read or write, for the mum who wants to return to work after years of bringing up a family, or for the low-paid, low-skilled worker who wants the chance to learn and open up new horizons. We owe each and every one of them the chance to learn. People of all backgrounds and ages having the opportunity to pursue their potential is the hallmark of a fair and decent society. It is also an essential element of our nation's capacity to compete effectively in the global marketplace.
It being Seven o'clock, MR. DEPUTY SPEAKER proceeded to put forthwith the deferred Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates) and Order [20 November 2000].

ESTIMATES, 2002–03
Question put:—
That resources be reduced by £1,000 in respect of Request for Resources 2 (Promoting modem, integrated and safe transport and providing customer-focused regulation) relating to grants to London Underground.—[Mrs. Dunwoody.]
The House divided: Ayes 33, Noes 201.

Division No.285]

[7 pm

AYES

Barrett, John

Ottaway, Richard

Breed, Colin

Pugh, Dr John

Burnett, John

Reid, Alan (Argyll & Bute)

Cable, Dr Vincent

Rendel, David

Calton, Mrs Patsy

Russell, Bob (Colchester)

Campbell, Rt Hon Menzies

Sanders, Adrian

(NE Fife)

Skinner, Dennis

Chidgey, David

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

Davey, Edward (Kingston)

Stunell, Andrew

Foster. Don (Bath)

Taylor, Matthew (Truro)

George, Andrew (St Ives)

Tonge, Dr Jenny

Gidley, Sandra

Wareing, Robert N

Harris, Dr Evan (Oxford W)

Webb, Steve

Heath, David

Williams, Roger (Brecon)

Holmes, Paul

Younger-Ross, Richard

Hughes. Simon (Southwark N)

Kirkwood, Archy

Tellers for the Ayes

Moore, Michael

John Thurso and

Öpik, Lembit

Tom Brake.

NOES

Adams, Mrs Irene (Paisley N)

Davey, Valerie (Bristol W)

Ainger, Nick

David, Wayne

Ainsworth, Bob (Cov'try NE)

Davidson, Ian

Allen, Graham

Davies, Geraint (Croydon C)

Anderson, Rt Hon Donald

Dean, Mrs Janet

(Swansea E)

Denham, Rt Hon John

Anderson, Janet (Rossendale)

Dhanda, Parmjit

Armstrong, Rt Hon Ms Hilary

Donaldson, Jeffrey M

Atkins, Charlotte

Dowd, Jim

Austin, John

Drew, David

Bailey, Adrian

Eagle, Maria (L'pool Garston)

Baird, Vera

Edwards, Huw

Barnes, Harry

Ennis, Jeff

Bayley, Hugh

Foster, Michael (Worcester)

Beard, Nigel

Foster, Michael Jabez (Hastings)

Beggs, Roy

Foulkes, George

Benn, Hilary

Francis, Dr Hywel

Benton, Joe

Gardiner, Barry

Betts, Clive

Gerrard, Neil

Blackman, Liz

Gibson, Dr Ian

Borrow, David

Gilroy, Linda

Bradshaw, Ben

Goggins, Paul

Brennan. Kevin

Griffiths, Nigel (Edinburgh S)

Brown, Rt Hon Nicholas

Griffiths, Win (Bridgend)

(Newcastle E & Wallsend)

Grogan, John

Browne, Desmond

Hain, Rt Hon Peter

Campbell, Mrs Anne (C'bridge)

Hall, Mike (Weaver Vale)

Casale, Roger

Hall, Patrick (Bedford)

Caton, Martin

Hamilton, David (Midlothian)

Cawsey, Ian

Harman, Rt Hon Ms Harriet

Challen, Colin

Harris, Tom (Glasgow Cathcart)

Chapman, Ben (Wirral S)

Havard, Dai

Chaytor, David

Healey, John

Clarke, Tony (Northampton S)

Hendrick, Mark

Clelland, David

Hepburn, Stephen

Coffey, Ms Ann

Heppell, John

Colman, Tony

Hill, Keith

Connarty, Michael

Hodge, Margaret

Cook, Frank (Stockton N)

Hoey, Kate

Cooper, Yvette

Hood, Jimmy

Cruddas, Jon

Hope, Phil

Darling, Rt Hon Alistair

Howarth, Rt Hon Alan (Newport E)

1063

Hughes, Kevin (Doncaster N)

Pickthall, Colin

Hutton, Rt Hon John

Pike, Peter

Iddon, Dr Brian

Plaskitt, James

Irranca-Davies, Huw

Pond, Chris

Jackson, Glenda (Hampstead)

Pound, Stephen

Jamieson, David

Prentice, Ms Bridget (Lewisham E)

Jenkins, Brian

Prescott, Rt Hon John

Johnson, Alan (Hull W & Hessle)

Prosser, Gwyn

Jones, Martyn (Clwyd S)

Purchase, Ken

Joyce, Eric

Quin, Rt Hon Joyce

Kaufman, Rt Hon Gerald

Rammell, Bill

Keeble, Ms Sally

Reed, Andy (Loughborough)

Keen, Alan (Feltham & Heston)

Robinson, Geoffrey (Cov'try NW)

Keen, Ann (Brentford & Isleworth)

Roche, Mrs Barbara

Kelly, Ruth

Roy, Frank

Kennedy, Jane (Wavertree)

Ruddock, Joan

Khabra, Piara S

Russell, Ms Christine (Chester)

King, Andy (Rugby & Kenilworth)

Ryan, Joan

King, Ms Oona (Bethnal Green)

Salter, Martin

Knight, Jim (S Dorset)

Sarwar, Mohammad

Ladyman, Dr Stephen

Sawford, Phil

Lazarowicz, Mark

Shaw, Jonathan

Lepper, David

Sheerman, Barry

Leslie, Christopher

Shipley, Ms Debra

Lewis, Ivan (Bury S)

Simon, Siôn

Linton. Martin

Smith, Rt Hon Andrew (Oxford E)

Love, Andrew

Smith, Angela (Basildon)

Lyons, John

Smith, John (Glamorgan)

McCartney, Rt Hon Ian

Smyth, Rev Martin (Belfast S)

McDonagh, Siobhain

Soley, Clive

MacDougall, John

Spellar, Rt Hon John

McGuire, Mrs Anne

Starkey, Dr Phyllis

McIsaac, Shona

Stinchcombe, Paul

McKechin, Ann

Stoate, Dr Howard

McKenna, Rosemary

Stuart, Ms Gisela

Mackinlay, Andrew

Sutcliffe. Gerry

McNamara, Kevin

Thomas, Gareth (Harrow W)

McNulty, Tony

Timms, Stephen

Mactaggart, Fiona

Touhig, Don

McWalter, Tony

Turner, Dr Desmond (Kemptown)

Mahon, Mrs Alice

Turner, Neil (Wigan)

Marris, Rob

Twigg, Derek (Halton)

Marsden, Gordon (Blackpool S)

Twigg, Stephen (Enfield)

Marshall-Andrews, Robert

Tynan, Bill

Martlew, Eric

Vaz, Keith

Meacher, Rt Hon Michael

Watson, Tom

Michael, Rt Hon Alun

White, Brian

Miliband, David

Whitehead, Dr Alan

Miller, Andrew

Wicks, Malcolm

Mole, Chris

Williams, Rt Hon Alan

Moran, Margaret

(Swansea W)

Morris, Rt Hon Estelle

Wills, Michael

Mountford, Kali

Winnick, David

Mullin, Chris

Winterton, Ms Rosie (Doncaster C)

Murphy, Jim (Eastwood)

Wood, Mike

Murphy, Rt Hon Paul (Torfaen)

Worthington, Tony

O'Brien, Mike (N Warks)

Wright, Anthony D (Gt Yarmouth)

Olner, Bill

Wright, Tony (Cannock)

Osborne, Sandra (Ayr)

Pearson, Ian

Tellers for the Noes:

Perham, Linda

Mr. Fraser Kemp and

Picking, Anne

Jim Fitzpatrick.

Question accordingly negatived.
Main Question put and agreed to.
It being after Seven o'clock, MR. DEPUTY SPEAKER proceeded to put forthwith the Question relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 55(1) and (4) (Questions on voting of estimates, &c) and Order [20 November 2000].
Resolved,
That further resources, not exceeding £12,839,695,000, be authorised for use during the year ending on 31st March 2003, and that a further sum, not exceeding £13,409,689,000. be granted to
1064
Her Majesty out of the Consolidated Fund for the year ending on 31st March 2003 for expenditure by the Department for Education and Skills.—[Angela Smith.]
Resolved,
That further resources, not exceeding £119,712,696,000, be authorised for use for defence and civil services for the year ending on 31st March 2003, and that a further sum, not exceeding £112,473,739,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs of defence and civil services for the year ending on 31st March 2003, as set out in HC 795, 796, 797 and 798.—[Angela Smith.]
Ordered,
That a Bill be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Paul Boateng, Dawn Primarolo, John Healey and Ruth Kelly do prepare and bring it in.

CONSOLIDATED FUND (APPROPRIATION) (No. 2) BILL
Ruth Kelly accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the year ending on 31 March 2003: And the same was read the First time; and ordered to be read a Second time on Monday next, and to be printed [Bill 156].

DELEGATED LEGISLATION
Mr. Speaker: With permission, I shall put together the motions 3, 4 and 5 relating to 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. 103) (HC 948), on 2002/03 Special Grant for Gypsy Sites Refurbishment, which was laid before this House on 17th June, be approved.
  ROAD TRAFFIC
  That the draft Road Traffic (Vehicle Emissions) (Fixed Penalty) (England) Regulations 2002, which were laid before this House on 17th June, be approved.

  LOCAL GOVERNMENT FINANCE
  That the Local Government Finance (England) Special Grant Report (No. 94) (HC 885), on Funding for Enforcement of Vehicle Emission Standards 2002, which was laid before this House on 18th June, be approved. —[Angela Smith.]
  Question agreed to.

DELEGATED LEGISLATION
Ordered,
That the Town and Country Planning (Major Infrastructure Projects Inquiries Procedure) (England) Rules 2002 (No. 1223) be referred to a Standing Committee on Delegated Legislation.—[Angela Smith.]

Trade Union Rights
Motion made, and Question proposed, That this House do now adjourn. —[Angela Smith.)
7.13 pm
Huw Irranca-Davies: I welcome the opportunity to raise this very important and timely debate in the Commons. Every year, the International Confederation of Free Trade Unions publishes a weighty document detailing the record on trade union violations globally in the year. That document of nearly 250 pages examines the extent of human rights abuses and union abuses in all four corners of the globe. It is timely not only because of the advances that have been made in many areas of the world, but because of the great strides that still have to be made to allow collective free association of trade unionists better to represent the needs of workers in all four corners of the world.
Part of the purpose of this debate is to say how far we have come, but also how far we still have to go. In the context of our collective memory, it is easy to forget how far we in this country have come. In just the past 200 years, we saw the advent of the Merthyr rising, in which 20 people were killed and many were injured, and which involved the famous Dic Penderyn, to some now very much a martyr. Such collective action is within our close folk memory, yet we have made great advances since then. However, even today, some of the worst ever abuses of trade unions and of human rights are occurring in countries sufficiently close to be travelled to by jet on a short break.
Interestingly, although the average life expectancy in Sierra Leone and Bolivia is 35, as recently as some 150 years ago it was 45 and 37 in Surrey and London respectively. We have come a very long way since then in terms of how we look after our work force, and of workers' rights to associate freely, to represent each other, and to put their interests to employers and to Government. However, on the other side of the world the story is very different.
I should take this opportunity to thank the International Labour Organisation, the International Confederation of Trade Union Regulations and many other international trade union organisations for the information that they supplied.
I apologise for giving a short history lesson, but as I will show it brings us to a very pertinent point. When the ILO was founded in 1919, it was based on the simple premise that labour is not a commodity to be bought, sold and abused but an asset that must be looked after and treasured by employers and Government. Even in 1919, people talked about the right of association for all lawful purposes, the payment of a decent wage for family life, the adoption of a maximum working week, and a weekly day off of 24 hours—matters that we talk about today as we extend rights in this country. Back in 1919, they were not taken for granted and were considered important enough to raise, as were the abolition of child labour, equal pay for men and women, and so on.
We have moved on well since then. The Philadelphia declaration, made towards the end of the second world war, reiterated the principle of freedom of expression and of association. It was followed by a raft of summits and declarations, the most important of which was—as the
1066
Minister will know—the international labour conference, at which the then employment Minister expressed support for the fundamental rights declaration, which established the fundamental rights of association and to work. Some 174 member states signed up to that declaration. In doing so, they signed up to the principle of freedom of association, and to the effective recognition of the right to collective bargaining—a basic right that we take for granted, but which, as we shall soon see, is denied to many. The elimination of all forms of forced or compulsory labour is also something that we take for granted, and there is a long way to go in terms of the effective abolition of child labour, and the elimination of discrimination in employment and occupation.
The ILO has done great work on this front, but it deals with such matters in the boardrooms of corporations and of Government. In those boardrooms, it sometimes has to face intransigence and doors that are shut in its face. However, workers in plantations and textile factories in far-flung corners of the world have to face torture, murder, abduction and rape. The ILO does a fantastic job, but as the 250 pages of the annual document show, there are individual tragedies at the chalk face.
As many people are aware, Colombia has a reputation for some of the worst abuses of trade union rights worldwide. Surprisingly, the country is a signatory to the ILO conventions, but it is described by the International Centre for Trade Union Rights as
"the most dangerous place in the world to be a trade union leader or activist."
In 2001, 184 people were assassinated, and more than 3,000 people have been killed or abducted in the past 13 years. That is an appalling travesty in what we call a civilised world. Alexander Lopez, who was supposed to attend a recent public meeting in the House, could not do so because he had been detained by the police in Colombia.
Colombia has a brief and bloody history when it comes to trade union rights. On 20 March, Luis Castillo and Juan Bautista Cevallos, members of the electricity workers' union, were ambushed and assassinated by paramilitaries. Luis Castillo had recently moved his place of work because of death threats. On 22 March this year, Ernesto Martinez of the teachers' association was assassinated outside Rio Negro. On 23 March, Jose Garcia disappeared and his whereabouts are unknown. On 25 March, two members of the oil workers' union, Jose Perez and Hernando Silva, disappeared and their whereabouts are unknown. The list goes on and on.
I shall not bore the House with the statistics for the whole year, but only last week William Gomez, the president of the national union of food industry workers, suffered the horrendous experience of the attempted kidnap of his four-year-old daughter. The suffering in Colombia goes on and on, but that country is not alone.
In Brazil, the International Metalworkers Federation describes an unprovoked attack by military police at the Ford car factory. Mexico has seen assaults on labour lawyers Arturo Justiniani and Hernandez Calzada, because they accused an airline of hiring thugs in a dispute with the Mexican pilots' association. In Turkey, 12 teachers have been arrested for supporting Kurdish language teaching in educational establishments and Amnesty International is very concerned about the Turkish record of torture of people detained. In Costa

1067
Rica, workers are systematically dismissed for signs of union activity. In Guatemala, unions in textile factories doing work for multinational corporations are systematically intimidated.
In China, South Korea and Indonesia, attacks are made on work force activists with the complicity of Governments. Anybody trying to start up a union in China that is not sanctioned faces a prison sentence of up to 20 years. Amnesty International and, I am sure, the Government, are aware of the human rights abuses in prisons in China. Trade union activity is repressed in Belarus and any democratic activity in Burma results in jail. Unions are banned in much of the middle east, including Qatar and the United Arab Emirates, which have a total ban on unions. Iraq and Syria allow only single unions, which are controlled by the ruling parties. That is an A to Z of harassment, intimidation, deaths, abductions and kidnapping that represents the complete abuse of human rights.
Over the past 10 years, the Committee of Freedom of Association of the ILO has tracked all those murders, disappearances, arrests, detentions and forced exiles, even to the extent of the declarations of states of emergency and the suspension of civil liberties that are imposed on unions. What can we do? Many people throw up their hands in despair and say that the problem is a direct result of globalisation and multinational corporations that can move easily from one place to another, and Governments that will sign away the rights of their workers in order to welcome any foreign aid investment. What can we do in the face of that situation? Well, there is much to do but it is a question of political will,
I welcome the initiatives taken by the Government, especially by the Department for International Development, and the money that has been put towards developing union activism in various countries, including many that I have already mentioned. However, during the 1980s and 1990s, the world went through a period of unfettered neoliberalism. Companies were able to go where they wanted, and do what they wanted. They faced no consequences in terms of what happened to the work force, nor in terms of what happened, implicitly or complicitly, to workers' rights. We must get away from that period, and the Government are already playing a role in achieving that. I urge them to keep on leading from the front and putting the message to our more recalcitrant partners.
The US is a signatory to the International Labour Organisation conventions, but it has not ratified conventions 87 and 98. We must put pressure on to ensure that it does so.
These are global problems, and they need global solutions. Two years ago, Anthony Giddens identified the need for Governments to collaborate with non-governmental organisations and third-sector groups worldwide, as the problem required worldwide co-operation.
International trade union representation also has a role to play. I began by referring to the Merthyr rising, but the battle has moved away from these shores and become truly transnational and international. That is how it must be fought. We must push for more ethical trading, and we must push recalcitrant Governments to change their ways.
1068
The Government are leading the way. It is a matter of political will. I urge the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Croydon, North (Malcolm Wicks), to keep on pushing hard for international agreements on the way forward. The document to which I have referred is one of despair: let us turn it into one of hope in years to come.
7.27 pm
The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): I congratulate my hon. Friend the Member for Ogmore (Huw Irranca-Davies) on securing this most important debate and bringing its international theme to the House's attention. I congratulate him also, and most sincerely, on his very well researched speech. It was laced with much compassion and eloquence, and I look forward to hearing other contributions from my new and hon. Friend in the months and years to come.
I was struck by the way in which my hon. Friend reminded us of our history, as no Member of this House must ever take for granted the rights that we enjoy in a democratic society. He also spoke passionately, as a true internationalist. He reminded us that our ethics, democratic values arid rights do not end at the white cliffs of Dover, but that we need to spread them across the earth.
The Government strongly condemn international violation of the rights of trade unions, their members, and their members' families. We fully support the work of the International Labour Organisation, which is the UN specialist agency with specific responsibility for protecting and promoting workers' rights worldwide.
The ILO was founded in 1919, at an important point in our history. It is no coincidence that that happened at the end of the first world war, and the ILO's goal was to promote peace through social justice, and to recognise internationally human rights and labour rights. Its tripartite structure, which enables workers' and employers' organisations to participate equally with Governments, is unique in the UN system.
In 1948—shortly after another world war, and again I think that that is no coincidence—a convention on freedom of association and protection of the right to organise was launched. The UK was the first country to ratify the convention, and we are proud of that. The right to organise is fundamental to democracy, yet my hon. Friend reminded us that even in the 21st century trade union rights are being violated around the world. As my hon. Friend noted, the International Confederation of Free Trade Unions 2001 survey reported a rise in the number of murdered or so-called disappeared trade unionists, and 223 is my statistic for that year.
Some 140 countries have now ratified the ILO convention on freedom of association and protection of the right to organise. In 1998, more than 50 years after adopting that convention, all 175 member states of the ILO signed up to a declaration of rights and fundamental principles at work. All those member states agreed to respect, promote and realise the ILO core labour standards, regardless of their level of economic development and—crucially—whether or not they had ratified the relevant ILO conventions.

1069
The ILO's core labour standards cover freedom of association, promotion of collective bargaining, abolition of forced and child labour and the elimination of discrimination in employment. The United Kingdom played a leading role in securing the 1998 declaration, and we continue to support the follow-up process to the declaration.
The Government provide substantial financial support to the ILO. Equally importantly, we also work closely with the organisation to ensure that the international framework to combat abuses of workers' rights throughout the world is in place and effective. The recent annual survey of the International Confederation of Free Trade Unions shows that there can be no grounds for complacency on trade union rights' violations. Indeed, some of it makes disturbing reading.
The UK has continually supported the ILO's work in defending trade union rights. We have ratified all the ILO core conventions, including those relating to freedom of association and collective bargaining, and we encourage other countries to do so. When looking at international labour rights, however, we clearly need to keep in mind the complexity of the issues involved and not underestimate the concerted effort that is needed by the whole international community to bring about change. Such change will not happen overnight. Against that background, the ILO declaration that I referred to earlier, which was adopted only four years ago, and its follow-up system of global reports are already making an extremely valuable contribution to effecting change.
The very first global report was published in 2000 and covered freedom of association and collective bargaining. The report underscored the crucial role of those rights in today's globalising world, highlighted the fact that violations still occur and set out priorities for technical co-operation aimed at reinforcing those rights. As might he expected, many of those countries criticised by the report were also highlighted by the ILO global report.
As a result of that report, an action plan to promote rights to freedom of association and collective bargaining has been agreed and is being implemented. Quite apart from the many activities that the ILO is undertaking in this area—meetings, publications, advisory services and ongoing projects—more than 20 ILO co-operative programmes have been launched. These involve many of the countries highlighted in the survey.
The ILO, more than any other body, has kept up pressure on the Burmese Government to stop their horrendous and inhumane practices of forced labour and suppression of the trade union movement. The UK has been at the forefront of the international community's efforts to bring about national reconciliation, respect for human rights and democracy in Burma. It is only through the return of the rule of law and democracy in Burma that substantive progress will be made.
In the ILO, we have worked together with the Trades Union Congress, the Confederation of British Industry and European partners in our efforts to compel Burma to comply with its obligations to end forced labour. The European Union common position on Burma is designed to bring pressure to bear for positive change. It contains an arms embargo, a visa ban, an assets freeze, a ban on high-level visits, a ban on the sale of items that could be used for torture and a ban on non-humanitarian aid. The European Commission suspended Burma's generalised
1070
system of preferences trading privileges in 1997 in response to concerns over forced labour. In addition, we do not encourage trade, investment or tourism with Burma. All these measures remain in place.
The release from house arrest of Aung San Suu Kyi on 6 May is, of course, a positive step forward. I know that all of us in this House have the highest regard for this remarkable woman who, in the most difficult circumstances, including family circumstances, has kept alight the flame of freedom in Burma. However, her release is only one of the many steps that will be required. We have called on the Burmese authorities to move ahead at an ever-faster speed to bring about substantive change in Burma.
Similarly, we remain extremely concerned about the degree of violence against all human rights defenders, including trade unionists, in Colombia. We have raised the issue with the Colombian Government and noted the concerns expressed, most recently by the TUC on a visit to Colombia in February, on the situation of trade union members in that country. We continue, bilaterally and in partnership with EU countries, to urge the Colombian Government to take effective measures to protect the lives of all human rights defenders. The Government contributed generously to the UN human rights office in Bogota, giving more than £250,000 during the past year.
Both the Burma and Colombia cases were discussed at this year's international labour conference by the ILO's committee on the application of standards—as were many other cases of trade union repression highlighted in the report to which I referred.
Rob Marris: I am sure that my hon. Friend will have noted that only Labour Members are present for this debate—a telling point. He has referred to the pressure rightly brought to bear by the EU in respect of trade union and human rights throughout the world. Turkey is an applicant member of the EU and the United Kingdom Government has a veto on such applications, so can the Minister assure the House that Turkey's record on trade union and human rights will be borne in mind by the Government when they make their assessment of Turkey's application for admission to the European Union?
Malcolm Wicks: Although I cannot discuss tonight individual applications from would-be members of the EU, I remind the House that the strength of the EU is that it is a collective of democratic states which take seriously the rights of all their citizens, including trade unionists.
It is important to realise that the ILO's approach is not sanction-based in the main, although I have mentioned Burma in that regard; it is based on awareness raising, promotion, peer pressure, consensus and technical co-operation. Such an approach is both transparent and highly effective. We should not forget that one of the first acts of the Labour Government was to honour the pledge to restore trade union rights at Government communications headquarters, Cheltenham—a more recent episode in our history. That was in conformity with our ILO obligations, following ILO criticism of previous UK Government policy.
We must realise that the ILO core labour standards are inter-related. Strong trade unions can help to combat discrimination in employment and end forced labour.

1071
We actively support the ILO in its work to promote other core labour standards, such as the elimination of child labour which is a great stain on the world economy. We support the efforts of developing countries to strengthen their democratic institutions—for example, through the electoral process, parliaments and civil society—so that all people have effective representation and participation.
My hon. Friend the Member for Ogmore mentioned globalisation and its implications. Although there is not enough time to discuss those important issues, I certainly acknowledge them. Most of us would agree that the answer is not to call for protectionism or the tearing down of international institutions—indeed, my hon. Friend wants them to be strengthened and the Government share that view. It is not a question of being for or against globalisation, as he knows.
1072
Perhaps the wisest words on this issue have come most recently from Kofi Annan, who said that our challenge is
"to ensure that globalisation becomes a positive force for all the
world's people, instead of leaving millions of them behind in squalor."
We need to think through the implications of that.
In summing up, I congratulate my hon. Friend again on raising a most important issue. It is difficult to think of an issue that has a more important impact on human beings in peril. I want to assure the House that the Government will continue to work actively and constructively with our partners in all international forums to promote the implementation of all ILO core labour standards and to bring an end to the violations and abuses of the rights of our fellow human beings.
Question put and agreed to.
Adjourned accordingly at twenty minutes to Eight o'clock.