Commons Sitting of 10 April 2003

Preamble
The House met at half—past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  LONDON LOCAL AUTHORITIES AND TRANSPORT FOR LONDON BILL [LORDS]
  Read a Second time, and committed.
Oral Answers to Questions
  EDUCATION AND SKILLS
  The Secretary of State was asked—
  EDUCATION AND SKILLS

    School Funding (Hendon)
    Mr. Andrew Dismore: If he will make a statement about the funding of schools in Hendon in 2003–04. [108240]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): According to our latest information, the London borough of Barnet has increased its schools budget by 11 per cent. or £17 million. However, it has increased its individual schools budget—that is, the funding that the education authority passes to schools for them to spend as they consider fit—by only 7.8 per cent. or £10.5 million.
    Mr. Dismore: I remind my hon. Friend that he required Barnet to passport £14.5 million—double what we received in grant. After a 24 per cent. tax increase and £11 million of cuts, the council is still £1 million light. However, the standards fund changes are the real culprit.
    Our schools are £5.6 million short of what they need simply to stand still. Copthall school, a high-performing comprehensive that my hon. Friend recently visited, is losing four teachers and cannot afford the new books for the changed GCSE syllabus. More than half the infant and primary schools are receiving an increase of less than 3.2 per cent. net. Parkfield school is receiving a zero increase; Mathilda Marks Kennedy school is actually losing 1 per cent. in cash terms. There is no prospect—
    Mr. Speaker: Order. I think that the Minister will have got the drift.
    Mr. Twigg: My hon. Friend makes his point effectively. I pay tribute to his efforts to draw attention to the situation of Barnet schools. We recognize the
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    difficulties that some face. In my original answer, I highlighted the fact that there is a considerable gap between the healthy 11 per cent. increase in the overall schools budget and the amount that is getting through to schools, and we believe that Barnet should deal with that. My hon. Friend has drawn to our attention the enormous variations in the figures for different schools. We encourage the local authority to examine its formula and find ways to support some of the schools that are doing the least well.
    Mr. Graham Brady: The hon. Member for Hendon (Mr. Dismore) rightly blames the Government in connection with the changes to the standards fund, but he did not mention the increased burden of employers' national insurance costs and teachers' pension contributions. This morning, a Barnet head told me:
    "It's breaking my heart. We've got a good school here, but we are struggling to find a penny. We are looking at at least three redundancies."
    What does the Minister have to say to frustrated heads, teachers and parents who are paying massive tax increases but see their schools being cut to the bone?
    Mr. Twigg: It is absurd of the hon. Gentleman to speak of schools being cut to the bone. Changes have been made to the local government funding formula and the standards fund. We have been able to assist several authorities that fell below the 3.2 per cent. threshold, but, unfortunately, Barnet did not fall into that category. However, at an earlier stage, when we agreed to implement the outcome of the School Teachers Review Body process, we acknowledged that the healthy increase in teachers' pay in London, especially in inner London, but in outer London as well, was one that we wanted to support. That is why Barnet received £579,000 from the London budget support grant to enable it to pay the extra money to teachers in those schools. The hon. Gentleman should recognise that that has assisted the schools, but we need to do more, which is why I shall continue to work with the borough and with colleagues, including my hon. Friend the Member for Hendon (Mr. Dismore), to ensure the best deal for Barnet schools in future.

    Specialist Schools
    Ms Meg Munn: If he will make a statement on the performance of specialist schools. [108241]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): On 1 April, the Specialist Schools Trust published its excellent latest analysis by Professor David Jesson of York university. I shall place a copy in the Library of the House of Commons. The document presents an analysis of educational outcomes and value added by specialist schools in recent years; it contains a wealth of data and I commend it to the House. To draw out one particular set of statistics: 54.1 per cent. of pupils in non-selective specialist schools achieve five or more GCSE A* to C grades, compared with 46.7 per cent. of pupils in other non-selective schools. That

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    represents a 3 percentage point improvement in specialist schools over the previous year, compared with a 2 percentage point improvement in other schools.
    Ms Munn: I welcome the clear benefits that specialist schools provide for pupils, but what about schools in challenging circumstances that would dearly like to become specialist schools, but are struggling both because they have difficulty raising the finance and because they lack the support needed to develop plans that will secure the improvements so evident in specialist schools? What help can such schools receive?
    Mr. Clarke: My hon. Friend is right. There are several sources of support. The first is the local education authority: as she knows, the director of education and the authority in Sheffield are giving Sheffield schools substantial support to become specialist schools. The second source is the wide variety of work carried out by the Specialist Schools Trust, which is generally welcomed by schools. One aspect of that support is access to a fund to help schools that are not able to raise the £50,000 by their own efforts. Money is made available to replace that as things move forward. There is substantial help and I want to encourage all schools in the country to seek specialist status.
    Mr. Damian Green: I happily endorse the support for specialist schools of the Secretary of State and the hon. Member for Sheffield, Heeley (Ms Munn). Indeed, I congratulate the hon. Lady on being one of two Labour Members who voted with the Opposition against the ten-minute Bill that was introduced by the hon. Member for Bury, North (Mr. Chaytor) to reduce the powers of specialist schools, when 135 Labour and Liberal Democrat Members were on the other side. Why does the Secretary of State think that he has visibly failed to convince his own party of the merits of specialist schools?
    Mr. Clarke: I read the debate on the ten-minute Bill with interest. My hon. Friend the Member for Bury, North (Mr. Chaytor) made an articulate speech in moving the Bill, which I am studying carefully. As my hon. Friend said in that debate, he is not opposing specialist schools, but arguing for change in the specialist school regime, which he personally favours. That is a legitimate and positive debate to have, and throughout my party we think that specialist schools play a major role in improving educational standards, and we shall support them strongly.
    Mr. Green: The Secretary of State should be aware that while we on the Opposition Benches were prepared to vote for specialist schools, for the Government's own policy, the Minister for School Standards abstained, refusing to vote for the Government's policy. Will the right hon. Gentleman now acknowledge that one of the attractions of specialist school status is the extra money that is available? Will he admit that this year's settlement has left schools throughout the country, in Labour areas as well as Conservative ones, angry and disappointed at the cuts and redundancies that they are facing? As he has heard already this morning, this has
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    made head teachers and teachers desperate for any extra money because they have been so badly let down by this Government.
    Mr. Clarke: I think that the hon. Gentleman will acknowledge that the parliamentary convention is that Ministers do not vote on ten—minute Bills. However, they listen carefully to the debate and take account of what is said.
    Specialist schools make a major difference in raising educational standards. That is why we support them, and that is set out clearly in the proposals. That is why many of my colleagues are encouraging schools in their localities to be specialist schools. That is the right way to go. It is wrong for the hon. Gentleman to suggest that the principal motive for schools becoming specialist schools is financial. I do not think that that is the case. The principal motive is the ethos of specialism, which we published a few weeks ago.
    Mr. David Chaytor: Regardless of the merits of my Specialist Schools (Selection by Aptitude) Bill, may I tell my right hon. Friend about the achievements of Derby high school in my constituency, which became the first school in the country to become a joint arts and science specialist school? Does he not think that this is an interesting development? Will he encourage more schools to apply for joint specialisms? Would not that be a particularly useful way forward for schools in rural areas?
    Mr. ClarkeMy hon. Friend's suggestion is entirely correct. As I think he would acknowledge, and as the Select Committee will acknowledge, the proposals that we put forward in "A New Specialist System" encouraged precisely that mix of specialisms that will achieve the sort of quality that my hon. Friend has referred to, both in rural areas and elsewhere. We are developing a creative collaborative approach to specialism, which is the right way forward.
    Mr. David Cameron: What would the Secretary of State say to a local business man in my constituency who supported specialist status for his local school and then received begging letters from the Specialist Schools Trust and other Government quangos, which he described as Government propaganda paid for by taxpayers? Is it right that people who have worked hard to support their local school should receive begging letters from Government bodies?
    Mr. Clarke: That is a facile point. We had an excellent reception, just before Christmas, of specialist schools and sponsors from a wide variety of different schools throughout the country, all of whom were extremely positive about the approach. Many sponsors were looking for additional means by which they could support education in this way. I do not know whether the hon. Gentleman's constituent school was present at that event, but I expect that it was. However, most sponsors—I cannot speak for the one that he mentions—are positive about the support that they give and often seek to give further support to other schools.
    Barbara Follett: As my hon. Friend the Member for Sheffield, Heeley (Ms Munn) mentioned,

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    the process of becoming a specialist school is time-consuming and difficult. The seven secondary schools in Stevenage have banded together and put in a joint application. What measures is my right hon. Friend's Department taking to encourage schools in suitable localities to do the same?
    Mr. Clarke: We are giving guidance to local education authorities to encourage that kind of thing, but I would add one important point: the process of becoming a specialist school is now entirely about one question—the ability to achieve the quality standard necessary to become a specialist school. We will be rigorous about that, but we removed before Christmas the competitive element between schools which meant that, although a school had done the work that my hon. Friend referred to and passed the quality test, it could fail a test against somebody else. All schools that do the work and pass the quality standard will get specialist status, which is a significant difference both for individual schools and the collaborative framework to which my hon. Friend referred.

    Sex Education
    Sandra Gidley: What measures he is taking to improve sex education in schools. [108243]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): From April 2003, there will be a professional development programme for teachers of personal, social and health education which includes a specialist module for sex and relationship education. Up to 750 teachers will participate this year. Those awarded qualified teacher status must now demonstrate that they are familiar with the framework for PSHE, including sex and relationship education.
    Sandra Gidley: It is probably safe to assume that a geography teacher is best placed to teach geography and a maths teacher best placed to teach maths. I welcome the announcement, but does my hon. Friend agree that it is probably not ideal that maths and geography teachers among others should teach sex and relationship education? Will he therefore go a step further and develop a programme in which trained specialist teachers deal purely with sex and relationship education and can deal with all aspects of sexuality and relationships in light of the increasing incidence of teenage pregnancy and sexually transmitted diseases? Will he also make sure that children at school have good access to information sites on the internet, the use of which is often banned by other programmes?
    Mr. Twigg: I shall not he tempted down the path of responding to the opening part of the hon. Lady's question. That would guarantee me a place in the parliamentary sketches tomorrow, so it is probably best not to.
    The hon. Lady takes a close interest in these issues. I had an opportunity, along with the Under-Secretary of State for Health, my hon. Friend the Member for Salford (Ms Blears), to appear before the Select Committee on Health as part of its inquiry into sexual health. The response that I have given today
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    demonstrates the seriousness with which we are taking the need for full training and professional development for teachers in our schools. The hon. Lady raised the specific issue of access to the internet, a matter on which I have responded to the Select Committee. Schools clearly want to be able to block access to inappropriate sites on the internet, but if material can be of assistance to sex and relationship education programmes we very much want schools to make that available via the internet. Those decisions are clearly best made at school level, but I am sure that the hon. Lady will join me in encouraging all schools to take up responsible sex and relationship education.
    Mr. Graham Allen: Does my hon. Friend accept that some of the most important skills in that area are parenting skills? Many will benefit immensely, when they have children of their own, if we ensure that they have the full advantages of education. The best teacher is not necessarily the one in the classroom—it is the one at home. Particularly in a deprived area such as my own, proper parental support for youngsters at school is probably the most important skill, even above numeracy and literacy.
    Mr. Twigg: My hon. Friend is right. Parental involvement in the delivery of sex and relationship education is clearly crucial. Our citizenship programme and the inclusion of citizenship in the core curriculum in secondary schools can play a part in parenting education for future parents—people who are now students in our schools. However, we need to look at other ways of engaging with parents. The Connexions programme is one way in which that can be delivered, but I am certainly keen to learn of other positive examples so that we can ensure that parenting education is as effective as possible.
    Statistics demonstrate that some of the work that is going on, particularly when health and education professionals work together, is already having a positive impact. The hon. Member for Romsey (Sandra Gidley) referred to the high levels of teenage pregnancy in this country, which is of great concern, but it is welcome that the latest statistics demonstrate that there has been a 10 per cent. fall in the number of under-18 conceptions over the past three years, and I hope that our policies will enable that trend to continue.

    Skills Strategy
    Rob Marris: How many further education colleges he and other Ministers in his Department will visit between 10 April and the publication of the skills strategy to discuss the strategy. [108244]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): Ministers visit colleges on a regular basis. All local learning and skills councils will have discussions with colleges and other providers on the forthcoming skills strategy during April and early May.
    Rob Marris: To help to address skills shortages, further education colleges have been invited to bid for extra learning and skills councils' moneys for additional

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    post-19 non-basic skills courses such as plumbing. Will my hon. Friend tell the House how much extra Government money—over and above that already built into baseline provision at colleges—will be available from the Learning and Skills Council nationally as part of the skills strategy for post-19 non-basic skills courses from September? If that information is not currently available, can he tell me the date on which it will be?
    Mr. Lewis: One of the great challenges of the skills strategy is to define the respective contributions of the Government, the individual and the employer. Central to that will be the creation of a funding system that is sufficiently flexible to focus not only on national outcomes such as basic skills level 2 qualifications, but on specific regional skills needs and sectoral skills shortages and gaps. One of the central challenges of the strategy will be to create a more flexible financial and funding framework that will allow us to focus resources on sectors such as plumbing and joinery, in which there are serious skills shortages. The details will be published in the strategy in June.
    Mr. Phil Willis: When the Minister visits further education colleges between now and June, will he clarify the Government's thinking on the delivery mechanism for adult learning and skills? Colleges have been asked to provide three-year plans under the success for all programme, for example. Will that be the vehicle for delivery? Yesterday, the Chancellor appeared to announce that employer-led training will be the vehicle for delivery through the training tax credits. The Minister has also said that the regional development agencies and the sector skills councils will have a key role. Are the Secretary of State and his Ministers running this programme, or is it the Chancellor? What advice would the Minister give to college principals on this matter?
    Mr. Lewis: One of the challenges of the skills strategy is to focus on the needs of the customer. The customers in this case are the individual learners and the employers. We need a combination of interventions to create a much higher level of investment in skills in this country. This is about raising the standards of colleges and training providers generally, which is why the success for all programme is so important in terms of investment and reform. It is also about stimulating employer engagement and investment. That is being done through sector skills councils, through the use of the supply chain and through the use of intermediaries such as banks, financial advisers and others. So we need a high-quality supply side, in terms of educational institutions, but we also need to incentivise the demand side with regard to individual learners and employers. There is not a choice between the two. One of the challenges of the skills strategy is to reduce bureaucracy and create a clearer and more transparent system that small and medium-sized enterprises, in particular, will be able to understand how to access far more easily than at present. The skills strategy will seek to address that.
    Lawrie Quinn: When my hon. Friend goes about his business around the country, will he consider coming to North Yorkshire, and, specifically, the Yorkshire coast and Scarborough and
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    Whitby? We have particular challenges in terms of the peripherality of our community, and of the delivery of these services in a rural context. We also have entrenched long-term unemployment, and it is a particular concern of mine that we are not getting to those people at the moment. I would welcome an opportunity to discuss these issues with some of those people, so that we can roll out the strategy effectively in my constituency.
    Mr. Lewis: It would be a pleasure to visit Scarborough on any occasion, particularly to meet my hon. Friend and his constituents. We tend to talk about skills in the context of young people doing better and of post-16 staying-on rates. We also talk about work force development in terms of adults who are already in employment. We should not forget those adults who are close to the labour market but who continue to be unemployed and find it difficult to access employment, often because of their lack of basic skills. We intend to focus our strategy in June equally on the needs of those individuals. We have record levels of employment, but we cannot be complacent about those who remain outside the labour market.
    Mr. Tim Boswell: I congratulate the Minister on having produced the quintessence of the Government's approach to everything—a combination of interventions, as he called it.
    Let us look briefly at the Government's record. Individual learning accounts are 50 per cent. over budget, and fraud and abuse are costing taxpayers £100 million. Then there is the folly of winding up national training organisations while only half the sector skills councils are in place. Given the harsh and entirely unmerited things that Ministers have said in the past about further education colleges, should we not look forward to the launch of the skills strategy in June less with anticipation than with dire apprehension?
    Mr. Lewis: When I spoke on a platform recently about skills, in the company of the director-general of the Confederation of British Industry, he said that for 20 minutes he had heard the most sensible words that he had ever heard a politician utter on the subject. I said that I did not think that that would do me much good in my own party, but it did, I hope, show that the Government are taken seriously in this regard.
    For the first time, we seek to produce a strategy across Government. This Department, the Department of Trade and Industry and the Department for Work and Pensions are working together on it. We also seek to develop a strategy which genuinely, for the first time, engages with small and medium-sized enterprises. The failure to do that has historically been a major weakness in our system.
    As for further education colleges, those in the sector themselves say that this is the most exciting reform and investment programme they have seen for 30 years.
    Sir Patrick Cormack: Will someone teach Ministers the skill of speaking plain

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    English without resorting to the appalling verbiage and dreadful jargon that smother good sense and do no credit to any holder of public office?
    Mr. Lewis: There speaks the contempt and arrogance of a party that is destined to remain in opposition for a very long time.

    Truancy
    Mr. Bill Wiggin: How many initiatives the DFES and its predecessor Department have announced since 1997 to tackle truancy. [108245]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): Since 1997 we have been working to support local education authorities with a range of measures to tackle truancy and improve school attendance. In the last year we have introduced electronic registration systems into more schools, we have co-ordinated national truancy sweeps, and we have funded behaviour improvement programmes in areas with high levels of truancy. Over the next three years, we will implement our national behaviour and attendance strategy to support schools in improving behaviour and attendance and tackling truancy.
    Mr. Wiggin: What I actually asked was how many schemes the Government had announced. Perhaps the Minister was not there on the day when the answer was given to him, but the truth about the latest Government scheme, involving bringing parents before a magistrate, is that only four out of 10 parents turned up. The local council's principal officer for inclusion said
    "It's obviously been a failure… The scheme clearly needs rethinking."
    Would the Minister care to comment on that?
    Mr. Lewis: I hope the hon. Gentleman agrees that truancy is a problem that we need to tackle, and an issue on which there ought to be national consensus. Every day 50,000 children truant, and 7.5 million school days are lost every year. Truancy leads directly to educational underperformance and street crime. What the Government are doing, for the first time, is establishing a combination of positive support and early intervention to prevent truancy and nip it in the bud when it begins. We are also ensuring that sanctions and other consequences result when parents do not fulfil their responsibility to get their children to school.
    More adults than ever before are supporting teachers. We are reforming the educational welfare service. We have nationally co-ordinated truancy sweeps. We are reforming the curriculum—and yes, we are holding parents to account for the first time when they actively condone truancy. We believe that there must be a combination of support, prevention and accountability.
    Mr. Kelvin Hopkins: My hon. Friend will be aware that truancy is often related to social difficulties in areas of deprivation, and to family breakdown and the like. This puts enormous pressure on the head teachers of very large schools in such areas, in which there is a high proportion of people with social
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    difficulties. Will my hon. Friend consider recommending the appointment of, and the provision of the necessary resources to support, specialist social workers in such schools to take that pressure off of head teachers and teachers?
    Mr. Lewis: There have never been more adults in our schools supporting teachers in their front-line classroom duties. Classroom assistants, learning mentors and Connexions personal advisers are there to make links to provide intensive support to individual young people, particularly those who are the most challenging within the school community. They also make links between what is happening in school and what is happening at home, and central to that is the role of Connexions, which addresses any barrier that is preventing young people from progressing within the education system, be it the curriculum, the relationship with the school, the situation at home, or the relationship with peers. There have never been more adults working as part of the school work force to focus on the needs of all children, but especially of those who are the most challenging to the education system.
    Dr. Vincent Cable: Will the Minister acknowledge that court action, fixed-penalty notices, parental contracts and the like are not a great deal of help with the permanent truants, who are completely out of the control of their own parents? What estimate has he made of this hard-core group, and what specific initiatives does he have for them?
    Mr. Lewis: Such observations are fairly typical of the Liberal Democrats, based as they are on the principle of all rights and no responsibilities. The hon. Gentleman will recall the recent high-profile case of Mrs. Amos, who was sent to prison as a last resort because she had consistently failed to send her children to school. However, she is now the greatest advocate of our policy. She says quite openly that she sends her children to school regularly, and her family are receiving intensive levels of support. There is no doubt that, as a last resort, fines and imprisonment lead to the triggering of action that is so important in terms of finally dealing with the underlying problems that result in such children not attending school.

    Pupil Performance (Kent)
    Dr. Stephen Ladyman: What comparison he has made of pupil performance at key stage 2 in Kent with performance among (a) comparator authorities and (b) English authorities generally. [108248]
    The Minister for School Standards (Mr. David Miliband): In 2002, Kent's key stage 2 results in English, maths and science were just below the national average, and were below those of similar authorities.
    Dr. Ladyman: Is that not pretty awful? Of course, it has come about because teachers, instead of doing what they want to do in the final year of key stage 2, have to coach the 11-plus. My right hon. Friend the Secretary of State has been reported this week in Kent newspapers as saying that he has no plans to scrap selection. Given

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    that, as we now know, we get worse results at A-level than do non-selective areas, worse results at GCSE than do non-selective areas, a higher proportion of failing secondary schools than do non-selective areas, and, now, worse results at key stage 2 than do non-selective areas, is it not about time that we made some plans to scrap selection?
    Mr. Miliband: The Government do not support extension of the 11-plus, as my hon. Friend knows. However, in the end it must be for local people to make decisions about the future of school organisation in their areas. The issue must be the standards to which he refers, and I commend him for the work that he is doing to ensure that the debate is about standards and not about ideology.

    Public Service Agreement Targets
    Mr. John Bercow: If he will make a statement on progress in meeting his public service agreement targets in relation to (a) literacy, (b) numeracy and (c) truancy in schools. [108249]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): The standards of literacy and numeracy in our primary schools are at their highest levels ever. We are committed to taking extensive action to raise standards further, and to reduce truancy to achieve the challenging targets that we have set.
    Mr. Bercow: I am grateful to the Under-Secretary for his reply. Given that the trumpeted public service agreement targets on literacy and numeracy were missed in 2002, and that the target on truancy was missed and then scrapped, why cannot the hon. Gentleman see that for the Government to fail to meet targets set by independent experts would be disappointing, but to fail to meet targets that they themselves have set requires incompetence on a truly spectacular scale?
    Mr. Twigg: I find it extraordinary that the hon. Gentleman should make those remarks in a week when the international reading literacy study has demonstrated that the standards achieved by 10-year-olds in this country are the third best of any country in the advanced industrialised world. That is a great tribute to the success of the national literacy strategy.
    We have set very ambitions targets. Since 1997, the numbers of 11-year-olds achieving the expected level in English have risen from 63 per cent. to 75 per cent. I am sure that the hon. Gentleman would want to join me in praising that great achievement. Yes, we did not hit the target, but we are not lowering it. We have an ambitious target of 85 per cent. of pupils achieving the expected levels in both English and maths from next year, and we aim to sustain that target through 2005 and 2006. I hope that the hon. Gentleman and his colleagues will support us in seeking to ensure that the vast majority of 11-year-olds reach the expected levels in English and maths.
    Mr. Parmjit Dhanda: The hon. Member for Buckingham (Mr. Bercow) mentioned primary schools quite specifically. That theme is consistent with what the right hon. and learned Member for Folkestone
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    and Hythe (Mr. Howard), the shadow Chancellor, has said. In his piece in The Guardian earlier this week, the right hon. and learned Gentleman said that 25 per cent. of primary school children could not read, write or count. How does my hon. Friend feel that that compares with the 1997 figure, when 40 per cent. of primary school children were unable to reach level 4?
    Mr. Twigg: My hon. Friend is right. The 1997 figures show that 63 per cent. of pupils achieved that level in English, and 62 per cent. in maths. There has been a very substantial improvement. The national literacy and numeracy strategy and the hard work of teachers in our primary schools have ensured that that improvement has come about.
    Mr. Nick Gibb: Is not the most common cause of truancy the fact that a pupil cannot keep up with classmates? Does the Minister agree that setting helps to raise standards and reduce truancy? Is not it therefore a cause for concern that the overwhelming majority of lessons in our secondary schools are mixed ability?
    Mr. Twigg: The causes of truancy are complex and varied. Different practices are adopted in different schools and areas to tackle that. The evidence on setting is mixed. There is evidence of successful setting in certain subjects at certain stages, and other evidence that shows successful mixed-ability practice. What is important is that we enable head teachers to study the evidence that is available and to make the best decision on setting and mixed ability for the children in their schools.

    Higher Education White Paper
    Mrs. Anne Campbell: What representations he has received from students on the White Paper "The Future of Higher Education". [108250]
    The Minister for Lifelong Learning and Higher Education (Margaret Hodge): Our consultation on the White Paper has so far received 57 responses directly from students. My right hon. Friend the Secretary of State and I have had numerous meetings with students during our visits to the universities, and as part of our regional consultations. We will publish a full report of the White Paper consultation later this summer.
    Mrs. Anne Campbell: Has my hon. Friend had time to look at early-day motion 994, which has now been signed by 49 hon. and right hon. Members? It is also supported by Cambridge university students' union, in my constituency. Will she consider the view that the early-day motion expresses, which is that, if extra money is required for universities, a measured increase across the board in tuition fees would be preferable to a system of top-up fees?
    Margaret Hodge: I have seen the early-day motion to which my hon. Friend refers, and I have considered the views that it expresses. Indeed, we considered that option when we put together the proposals in the White Paper. A number of arguments counter my hon.

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    Friend's view of the matter, perhaps the most important being that we know that there are different returns for individuals who attend different institutions and take different subjects. At its most extreme, there is a 44 per cent. difference in average returns between graduates from institutions at the two extremes of the graduate pay scale. I put this to my hon. Friend: is it really fair to ask for an even contribution from students when graduates get an uneven return from their attendance?
    Sir Teddy Taylor: Does the Minister accept that most students take the view that the replacement of grants with loans and the introduction of fees have had a devastating effect on low-income families? Would not a much better way forward be to reintroduce grants, rather that constantly expanding the number of universities? That would mean that children from poor homes had a better and more equal opportunity in education.
    Margaret Hodge: It is entirely because we accept that people from low-income backgrounds may be deterred from attending universities that we are proposing the changes in the White Paper. They include the reintroduction of grants for a third of the student cohort; the continuation of fee remission on the first £1,100 for students with low-income backgrounds; the abolition of the upfront fee, so that students have to repay only after they become graduates and start earning; and the continuation of no real interest being charged on the loans. That is a package of proposals that will counter the feelings of some students, particularly those with low-income backgrounds, that may deter them from attending university.
    Dr. Phyllis Starkey: Has the Minister seen the Open university's submission on behalf of mature students? It makes the point that 50 per cent. of students are mature students and expresses concern about the White Paper's lack of emphasis on such students and, indeed, on part-time students. How does the Minister intend to respond to that?
    Margaret Hodge: We regularly meet the Open university—indeed, my right hon. Friend the Secretary of State met its vice-chancellor only last week. I do not accept that the White Paper fails to address issues affecting mature students, and I would put two points to my hon. Friend. First, the Government's targeted support in the existing regime has been increased, which particularly helps mature students. Secondly, the White Paper contains proposals to support part-time students, introducing grants to such students for the first time ever.

    School Budgets (Norfolk)
    Norman Lamb: What assessment he has made of the impact of (a) the increase in national insurance contributions and (b) the new formula spending share on school budgets in Norfolk. [108251]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): My Department is analysing in detail the impact of the changes in Norfolk and other local education authorities on the basis of the LEA returns
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    now being submitted as a result of financial decisions. On Norfolk, I have discussed these matters closely with the director of education and the chief executive of the county and I would like to take this opportunity to welcome the county council's decision this week to add £500,000 to the extra £1.6 million that the Government were able to allocate recently to help schools in Norfolk.
    Norman Lamb: I join the Secretary of State in welcoming the extra money allocated to Norfolk county council, but will he meet head teachers in my constituency, perhaps with me, so that he could hear directly from them the scale of the problem with this year's budget? I received a letter from a head teacher on behalf of the North Walsham cluster, which set out the position of all the schools in that cluster and pointed out how many schools were facing cuts in staff and teaching support assistance. The situation is pretty bleak, so will the right hon. Gentleman meet those teachers?
    Mr. Clarke: I have already met people from schools in my own constituency and my neighbouring constituency of Norwich, North. I understand that Norfolk representatives of the National Association of Head Teachers are seeking a meeting with me and I am prepared to meet them. I have also had substantial email and letter exchanges with schools, including some in the hon. Gentleman's constituency.
    The questions that I am putting to Norfolk county council include the following. Why is 41 per cent. of the standards fund—a total of £6.3 million—being held back from schools? Why is 1 per cent. of the individual school budget—£2.84 million received during the year—also being held back from schools? Why was the non-individual school budget increased by 29.5 per cent., which is a substantial amount, much higher than that received by many other authorities?
    The hon. Gentleman may join me in considering why the Norfolk formula allocation has such wide variations in budget share per pupil—for primary schools, the lowest is an 18 per cent. decrease, while the highest is an increase of 95 per cent. The upper quartile primary schools have had embedded increases of an average of 16 per cent., with the lowest quartile receiving only 7 per cent. Those are sharp differentials. The county council does not have a system of floors and ceilings, which it should have, as we do in the country as a whole. I hope that the hon. Gentleman will join me in asking the county to explain itself on those matters.
    Tony Wright: May I express similar concerns to those of the hon. Member for North Norfolk (Norman Lamb)? I have done a survey of schools in my area and many are in exactly the same position with a shortfall in funding, perhaps requiring redundancies. They also welcome the Government's massive investment in education and the extra £1.6 million, which will go a long way. I also congratulate Norfolk county council on adding the extra £500,000. Will my right hon. Friend join me in encouraging the Norfolk local education authority to put all that extra money in the schools that are facing difficulties,

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    redundancies and staff cuts, thereby ensuring that there are no redundancies this year and, I hope, for the foreseeable future?
    Mr. Clarke: I entirely agree with my hon. Friend and, like him and the hon. Member for North Norfolk (Norman Lamb), I acknowledge the concerns of schools. However, the wide variations in the figures between schools are extremely striking. We have to understand why that is, because the budget for each individual school is affected by a combination of the Government's allocation to the LEA, the council tax increase, and the county council's formula for allocating money. We are analysing those factors carefully and I will report back to colleagues in Norfolk.

    Individual Learning Accounts
    Mr. Colin Pickthall: If he will make a statement on individual learning accounts. [108252]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): We have acknowledged the serious mistakes that were made in the design and delivery of the individual learning accounts scheme. The hard lessons learned will inform the development of a successor scheme.
    Mr. Pickthall: Despite the terrible rip-offs that bedevilled the implementation of the individual learning accounts scheme, does my hon. Friend agree that there is absolutely nothing wrong with the concept? Does he agree that unions such as the Union of Shop, Distributive and Allied Workers—and I declare an interest as a member—instituted remarkably successful partnership schemes that exceeded what the Government had envisaged? What will the Government do to enable unions such as USDAW, and the TUC, to push the programme further and do vital work for many workers who have never been involved in education since leaving school?
    Mr. Lewis: My hon. Friend is right to say that the principles that underpinned the individual learning accounts scheme were absolutely right; ILAs were successful in getting non-traditional learners back into learning and in giving purchasing power to learners so that they could choose the learning that was most relevant to their needs. Singularly successful in that process was the role of intermediaries such as trade unions and grass-roots community-based voluntary organisations, which were able to influence learners who, in the past, had found education an entirely negative experience. When we announce the details of the successor scheme in June, as part of the skills strategy, we will seek to ensure that we uphold the original principles, which are as true now as they were before.

    Sex Education
    Angela Watkinson: If he will undertake a review of the publications that will be
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    eligible for use in sex education in schools should section 28 be repealed; and if he will make a statement. [108253]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): Head teachers and governors make decisions about materials that are used in schools. They must ensure that materials used for sex education are in accordance with the personal, social and health education framework and the law, and that inappropriate materials are kept out of the classroom. Legally, section 28 has no bearing on what is taught in schools, so a review of publications is unnecessary.
    Angela Watkinson: The Minister will, I am sure, be aware of the nature of some of the publications in circulation, which contain a lot of lurid information that will do nothing to deter pupils from becoming sexually active before they are physically or emotionally mature. Parents, governors and teachers in my constituency would welcome being involved in a review of the appropriateness of any publications that may become available in schools should section 28 be repealed.
    Mr. Twigg: Such matters are best left to the school and to the professional judgment of teachers in conjunction with governors—who, of course, have a duty in law to consult parents. It is very important that parents be consulted by schools when sex education policies are being considered. I do not believe that there is widespread evidence of the sort of abuse that the hon. Lady has described, although I am always willing to look into it. However, the framework that we put in place through the Learning and Skills Act 2000 provides a robust basis for the right kind of sex and relationships education for our children in schools.

    School Budgets (South-West)
    Mrs. Annette L. Brooke (Mid-Dorset and North Poole): What assessment he has made of the impact of the increase in national insurance contributions and the new formula spending share on school budgets in the south-west. [108254]
    The Minister for School Standards (Mr. David Miliband): In 2003–04, the national increase in funding is sufficient to cover the pressures that authorities face, including national insurance. However, we appreciate that, for some authorities, low education formula funding increases, coupled with reductions in the standards fund grant, are likely to result in lower budget increases for schools. In the light of representations about that, we have announced an additional grant of £28 million, including £1.2 million for south-west schools.
    Mrs. Brooke: The Minister will be aware that Poole unitary authority is now the 145th worst funded education authority in the country. Schools face the cuts that he describes, so what action will he take to ensure that improvements in school standards are sustained in Poole and in all other hard-hit authorities across the south-west?
    Mr. Miliband: I am, of course, committed to raising school standards in Poole, as elsewhere. I thought that

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    the hon. Lady was about to congratulate the Government on the 29 per cent. increase in funding for, schools in Poole since 1997 and on the £13 million capital programme that will go into action this year. We hope to move to a system of three-year budgets and I encourage the local authority to work closely with schools to ensure that money is getting through to the front line.
    Mr. Andrew Turner: How will school budgets in the south-west, and in nearby authorities such as the Isle of Wight, be assisted by the Chancellor's steps to end national pay bargaining announced yesterday?
    Mr. Miliband: The Chancellor made himself clear yesterday when he set out a careful approach to public sector and other pay. The Government have already taken steps to ensure that there is sufficient flexibility in the education system, including the recruitment and retention allowances that are available locally. They introduce much-needed flexibility to the system.

  SOLIICITOR-GENERAL
  The Solicitor-General was asked—
  SOLIICITOR-GENERAL

    Rape Convictions
    Ms Julia Drown: If she will make a statement on recent trends in the number of convictions for rape. [108261]
    The Solicitor-General (Ms Harriet Harman): Recent trends show an increase in the number of convictions for rape, but a fall in the percentage of reported rapes that result in a conviction. Of all the serious offences of violence, rape is least likely to be reported, least likely to be prosecuted and least likely to result in a conviction. The Government and the voluntary sector are working with the police, the Crown Prosecution Service and the courts to improve both law and practice to ensure that rapists are brought to justice.
    Ms Drown: I welcome that reply. A number of people in the criminal justice system believe that rape conviction rates would rise dramatically if every initial police interview was video-recorded. Does the Solicitor-General agree with that view and will she take steps to initiate a more thorough approach to ensure that such initial interviews are video-recorded so that juries see the reality of the impact of those violent crimes on the victims?
    The Solicitor-General: My hon. Friend raises an important issue. Some police forces routinely video-record the initial complaint when the victim comes in. They do that so that she can say it once off and they put the statement together afterwards, without having to go through it slowly, stopping and starting, thereby increasing the ordeal. The question then is whether that practice can be spread to all police forces, so that all complainants have those facilities. Secondly, what is done with those video recordings? Can they be used in court as evidence to show how the victim was when she
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    first reported the incident? She might look cool as a cucumber when she actually gives evidence, but the video recording made when she first complained might show her dishevelled and distressed. There are issues about the admissibility of evidence and they are being looked at by the police, the prosecutors and the courts, together with me and my colleagues in the Home Office.
    Mr. Patrick McLoughlin: Although we congratulate the Government and support them on anything that they do to enable the successful prosecution of rape offences, will the Solicitor-General give some thought to charges against men that are made erroneously? Can the reporting of cases be not allowed unless there is a guilty verdict?
    The Solicitor-General: The hon. Gentleman raises the issue of the anonymity of a defendant on the basis that there is a great deal of prejudice against them if allegations are aired in court, in public. The victim is, of course, anonymous but the defendant's name is in the papers. The question relates to whether an acquittal would expunge all that prejudice or whether it would hang around. The issue is important. As regards openness in court proceedings, the fundamental principle is that, if at all possible, everything should be done in public and everything should be on the record: justice should not only be done but should be seen to be done. The exception for victims of sexual offences was introduced by the House, because victims were not prepared to come forward. An exception was made to the normal rule that everything is public only because otherwise victims would not report. Defendants do not have the luxury of not coming forward—they have to come forward—so the issue of deterring them does not arise, and the normal rule that everything should be in public, unless there are exceptional reasons, should prevail. There are no plans to give defendants anonymity.

    Race Hate Crimes
    Mr. Andrew Dismore: If she will make a statement on the policy of the Crown Prosecution Service towards the prosecution of alleged race hate crimes. [108263]
    The Solicitor-General (Ms Harriet Harman): The Crown Prosecution Service reviews all allegations of inciting racial hatred in accordance with the code for Crown prosecutors. All cases are considered individually on their merits. However, when considering the public interest test, the code for Crown prosecutors specifically states that a prosecution is likely to be needed in the public interest if the offence was motivated by any form of discrimination against the victim's ethnic or national origin. All such prosecutions are dealt with by specialist prosecutors in the casework directorate in CPS headquarters.
    Mr. Dismore: Can my hon. Friend say why extremists such as Abu Hamza, who regularly on our televisions and in our newspapers spews out vitriol inciting hatred

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    and violence towards Jews, Hindus, Americans and many other people, cannot be prosecuted? Surely those racist attacks that are visibly coming from his own mouth are evidence enough for a case of inciting race hatred.
    The Solicitor-General: Offences of inciting racial hatred and offences against the person such as threats to kill are prosecuted. Indeed, the Crown Prosecution Service recently reported that in the past year there has been a 20 per cent. increase in the number of defendants dealt with by the CPS for offences involving race hatred. That is against a background of a 28 per cent. increase in such defendants over the year before, and the conviction rate being kept steady at 83 per cent. There is greater determination for police and prosecutors to work together to bring offenders to justice. If there is sufficient evidence to bring about a conviction, it will nearly always be in the public interest to prosecute such offences.
    Mr. John Bercow: Given the collapse at trial of the libel action brought by the notorious revisionist historian, David Irving, against Deborah Lipstadt for her excellent book, "Denying the Holocaust: The Growing Assault on Truth and Memory", can the right hon. and learned Lady tell the House what discussions she has had with, or what advice she has offered to, the Crown Prosecution Service in relation to its policy on the circulation of revisionist neo-Nazi material?
    The Solicitor-General: If material constitutes by its circulation an offence of inciting racial hatred, if there is sufficient evidence to constitute the elements of that offence, and it is brought to the Crown Prosecution Service by the police or anybody else, it will consider whether to bring a prosecution under the code for Crown prosecutors. If the hon. Gentleman would like to bring forward evidence, the Attorney-General and I will undertake to look at it. We consider very seriously any cases that are brought to us by hon. Members, as we do those that are brought to us by members of the public and others.

    Prosecution Policy (Financial Institutions)
    Mr. David Kidney: What monitoring role she performs regarding decisions whether to prosecute in connection with suspicious transactions reported to the authorities by financial institutions. [108264]
    The Solicitor-General (Ms Harriet Harman): The Attorney-General and I superintend the Crown Prosecution Service and the Serious Fraud Office, who are independent, and they make the decisions on whether to prosecute suspicious transactions reported by financial institutions. We regularly meet the Director of Public Prosecutions and the director of the Serious Fraud Office to discuss current investigations and prosecutions.
    Mr. Kidney: Is my right hon. and learned Friend aware that bank reports to the authorities of suspicious transactions have rocketed in recent years, and that
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    there were more than 50,000 such reports last year? Given that the whole country is rightly focused on depriving terrorists of their funds, stopping money laundering and denying smugglers the proceeds of their trade in human beings, drugs and alcohol and tobacco, can my right hon. and learned Friend assure the House that the prosecuting authorities are sufficiently geared up to respond to the enormous rise in the number of such suspicious transactions?
    The Solicitor-General: My hon. Friend makes a very important point. In the past, fraud has all too often been considered as a victimless white-collar offence that is not important. My hon. Friend is right to say that money laundering, drug trafficking and human trafficking are all connected with money laundering. Prosecutors across different departments have been working together on the issue, as have ministerial colleagues. My hon. Friend will know that the Proceeds of Crime Act 2002, which introduces a new offence of failing to disclose suspicious transactions, came into force in February this year, and that further money laundering regulations placing obligations on professionals to disclose will be introduced later this year. The international fraud business lies behind a lot of other crime, and we have to gear up our act to tackle it.
    Mr. Nick Hawkins: The Solicitor-General is, of course, right to concentrate on the use of anti-money-laundering and proceeds of crime legislation against terrorism and other serious crimes such as drug smuggling. Will she accept the point that I put to her ministerial colleagues in the Home Office, however, that some financial institutions have used the legislation, which has laudable intentions, to impose extra and very burdensome obligations on customers, particularly on small charities, and have sought to increase their statutory requirements by adding requests for intrusive information for their own commercial reasons? Will she agree to meet me and representatives of charities who have contacted me to look into this matter? We do not want laudable anti-terrorism legislation being misused to intrude too much into people's personal lives and personal information and to disrupt the valuable work that charities do.
    The Solicitor-General: Of course, I agree to meet the hon. Gentleman to discuss the important issues that he raises. Clearly, a balance must be struck: on the one hand, charities and small businesses do not want to be overburdened by reporting regulations, but on the other, they are often victims of fraud themselves. Fraud against small businesses and charities is an issue that they are rightly concerned about dealing with. I would be happy to meet the hon. Gentleman and to take those issues forward.
    Mr. John Burnett: The Customs and Excise prosecution office now comes under the Solicitor-General's Department's aegis. Millions of pounds have been lost to the Exchequer in connection with the failed London City Bond and

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    Stockade prosecutions. When will those matters be resolved finally? When they are resolved, will she make a statement to the House?
    The Solicitor-General: When the matters are resolved finally, I shall certainly consider how to give the House
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    appropriate information as required on those important cases. I know that the hon. Gentleman has corresponded with and met the Attorney-General in relation to the matter, and that he takes an interest in these issues. I cannot comment further at this stage, but, clearly, we keep the issue under review.

Iraq
12.32 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): With permission, Mr. Speaker, I should like to make a statement about the situation in Iraq.
I will deal in a moment with the post-conflict arrangements. Let me start, however, with the military situation. All right hon. and hon. Members will have followed the extraordinary events of the last four days as coalition forces entered Basra and then Baghdad. We can all share the new sense of hope so evident on the faces of ordinary Iraqis who are now tasting freedom, many of them for the first time in their lives.
I know that the whole House will join me in paying tribute to the courage shown by the men and women of our armed forces and those of the United States, and their compassion in dealing with the civilian population. Some of our service personnel and some of the United States personnel have made the ultimate sacrifice to help remove the threat from Saddam's regime and to secure Iraq's liberation. We mourn them and we send our deepest condolences to their families and to their comrades in arms.
I also want to express my profound sorrow at the death of innocent Iraqi civilians as well as of a number of international journalists and aid workers. This is, I am afraid, a tragic consequence of military conflict, despite all the care taken by the coalition military forces to keep casualties to a minimum.
Given what we have seen and what we now know, there is understandable euphoria at the progress made in recent days. We must recognise, however, that the military task is far from complete. Large areas of Iraq are still not under coalition control, and units of the Iraqi armed forces are still engaged in combat. After years of brutal repression, we have also inevitably seen excesses and lawlessness on the streets as the old regime collapses. Coalition military forces will be doing all that they can to provide a secure environment for the Iraqi people.
For all the difficulties that may be ahead, we are, without question, now at the start of a new and much better chapter in Iraq's history. As our control extends, I am afraid that still more of the dark secrets of Saddam's regime will be revealed. Just two days ago, ITN's Bill Neely gained entry to Saddam's secret police building in Basra. In graphic detail, a former inmate, Hameed Fatil, described how he had been tortured, along with two of his brothers. Hameed was the lucky one; his two brothers, having been tortured, were then executed, but Hameed had to re-enact the ordeal that he had gone through before the cameras. There were no television cameras in Saddam's torture chambers—there are now, and the truth that they reveal is shocking.
As for Iraq's programmes to develop chemical and biological weapons—to develop weapons of mass destruction—we know that those programmes existed. We know that those weapons existed, and in 173 pages of damning detail the weapons inspectors have already spelt out all the questions that the Iraqi regime has failed so systematically to answer. We now will seek those answers, which the Iraqi regime failed to provide. We pledged to rid Iraq of those weapons, and we stand by that commitment.
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The recent, rapid course of events has made all the more timely the discussions on Monday and Tuesday at Hillsborough between President Bush and my right hon. Friend the Prime Minister. Those discussions were dominated by issues relating to post-conflict Iraq. Copies of the joint declaration issued by the two leaders have been placed in the Library.
Our immediate priority is to ensure the delivery of food, medicine and humanitarian assistance to the people of Iraq. My right hon. Friend the Secretary of State for International Development will make a statement on that shortly; but, in brief, British forces are already heavily engaged in the provision of humanitarian assistance and in the organisation of basic services in the areas of the south that we control. As the coalition brings security to more of Iraq's territory, the flow of assistance will increase. We are actively looking at sending police advisers to Basra to assist UK forces and to help to create a more lawful and peaceful environment as soon as possible, but our responsibilities to the people of Iraq go well beyond immediate humanitarian relief.
For a generation, Iraqi people were starved of information both about developments in their own country and in the wider world, but those days when they had to labour under the lies spread by Saddam's propaganda machine are now at an end. I am pleased to announce that a new Arabic television service, "Towards Freedom" is being launched in Iraq today, with opening statements from my right hon. Friend the Prime Minister and President Bush.
A major subject of discussion at Hillsborough was how best to help the people of Iraq build a stable and prosperous country, living in peace with its neighbours. The Hillsborough declaration emphasised that the United Nations had a "vital role" to play in the reconstruction of Iraq. The United Kingdom and United States plan to seek the adoption of new United Nations Security Council resolutions, which would affirm Iraq's territorial integrity, ensure rapid delivery of humanitarian relief and endorse an appropriate post-conflict administration for Iraq. In that context, we welcomed the appointment, by UN Secretary-General Kofi Annan, of a special adviser to work on that range of issues.
At Hillsborough, we reaffirmed our commitment to protect Iraq's oil and other natural resources, as the patrimony of the people of Iraq, which should be used for their benefit, and for their benefit alone.
Active discussions are under way among members of the Security Council to prepare the ground for those further resolutions. In addition to participating in the Hillsborough discussions, I have travelled in the past week to Berlin, Brussels, Paris and Madrid for consultations with Secretary Powell and the Foreign Ministers of Germany, Russia, France and Spain and our other NATO and EU colleagues.
It is our guiding principle that, as soon as possible, Iraq should be governed by the Iraqi people themselves. We therefore support the early formation of an Iraqi interim authority, which will progressively assume the functions of government. The coalition will need to work with the UN in establishing that body. As an initial step, I greatly welcome—I believe that the House will, too—the initiative taken by British military

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commanders in the south of Iraq to bring together local tribal leaders. I envisage at the right moment a national conference, bringing together credible representatives from all parts of Iraqi society to agree on the establishment of the interim authority.
Iraq's neighbours, too, have important interests at stake. They, like us, want to see a stable and prosperous Iraq living at peace in its region. Many of them have given valuable support to the military coalition. All will have an important contribution to make in the reconstruction phase. Last week, I saw the Turkish Foreign Minister, Mohamed Gul, and I look forward to talking to him again shortly. Next week, I will be visiting a number of Gulf states in the region.
My ministerial colleague, the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North Warwickshire (Mr. O'Brien), will shortly be visiting Syria and Iran. It is important to maintain dialogue with both those countries. Syria and Iran now have their chance to play their part in the building of a better future for Iraq. I have maintained a dialogue over the past two years with the Iranian Government and, in particular, with Foreign Minister Kamal Kharrazi, covering a wide range of issues, including some that cause us concern. As for Syria, we hope that it will now take the opportunity to make a decisive break with the policies of the past and so contribute to a better future for the entire region.
As my right hon. Friend the Prime Minister has so often emphasised, nothing would make a more significant contribution to stability in the region than a solution to the Israel-Palestine issue. That, too, was the subject of major discussion at Hillsborough. The Prime Minister and President Bush look forward to the publication of the road map as soon as Abu Mazen's Cabinet has been formed. President Bush made clear yet again his commitment and that of his Administration to implementing the road map and, as he said at the press conference, to expending the same amount of energy in the search for peace in the middle east as my right hon. Friend the Prime Minister has done in respect of Northern Ireland.
For the Iraqi people, the search for a lasting peace began yesterday. Iraq has been a country essentially at war with its neighbours and itself for the past 24 years, its people subjected to a tyranny whose full horror will become ever more apparent in the coming days and weeks.
Just 23 days ago, this House endorsed the Government's decision to resort to the use of force in order to remove the threat posed by Iraq's weapons of mass destruction and to bring the Iraqi people's long nightmare to an end. In committing our armed forces in this way, we in this House took the most difficult decision that can ever face any democracy. But we were right to do so, and today we are well on the way to achieving the objectives that we in this House set. In doing so, we have taken on new responsibilities to and for the people of Iraq, and we will apply the same energy and commitment to fulfilling those responsibilities as we have to the military task.
Mr. Michael Ancram: I thank the Foreign Secretary for his statement and for an advance sight of it.
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While the conflict is not yet over, today must nevertheless be a good moment for the Foreign Secretary. We recognise the positive contribution that he has made to the emerging situation in Iraq today, and we must all welcome the enormous progress towards liberation that has been so swiftly and effectively achieved.
Three weeks ago, this House voted to send our armed forces to war. We asked much of them and they have responded magnificently. War is grim and cruel, but we can take pride in the courage, professionalism, attitude and, most importantly, restraint of our servicemen and women in this conflict. We pay tribute to them and to the American and other coalition forces as well.
We on the Conservative Benches remember with great sadness and pride those who gave their lives in the cause of bringing liberation to the people of Iraq and thereby making the world a better and safer place. Nor should we forget those innocent but unavoidable civilian victims of war who have been killed or wounded. They have also bought freedom for their country.
The military phase is clearly not yet complete. Our thoughts and prayers must remain with the coalition armed forces in the difficult and dangerous days ahead. However, we must look to the peace as well. Many unanswered questions remain. The first problem is the increasing outbreaks of lawlessness and looting. It is legally incumbent on the coalition to ensure public order and safety and means of enforcement. I presume that there were plans in place to deliver that. I should be grateful if the Foreign Secretary could tell us what they are. For example, could there be a role for NATO in helping to produce the manpower in the short term? Have Arab states made any offers to participate in peacekeeping? What proportion of the existing police service in Iraq can be sufficiently trusted to play a central part in enforcing the law? Security is an urgent matter, not least to enable the provision of humanitarian aid.
On Tuesday in Belfast, the Prime Minister and President Bush referred to the vital role of the United Nations. Will the Foreign Secretary clarify that? What precisely does "vital role" mean? Will he confirm that the United Nations is already involved through its control of current oil revenues under last week's renewed resolution on oil for food? Is it clear to whom, legally, the revenue from Iraq's oil belongs? What progress is being made to achieve a further resolution to lift current sanctions? I believe that that is needed to enable the restoration process to proceed. Is it included in the resolution that the United States tabled in the Security Council today? What else does that resolution contain? How many resolutions should we expect as a result of the Foreign Secretary's statement today?
The Foreign Secretary spoke of early steps to set up an interim administration. Will he give us an indication of the likely timetable for reconstruction? For example, will there be a conference in Naziriyah this weekend, as has been suggested? How soon and by what process will a leader of the interim authority emerge? When does the right hon. Gentleman believe that the interim authority will be in place? What will be its relationship with the Pentagon Office of Reconstruction and Humanitarian Assistance? Will they run in tandem?
What did President Bush mean when he spoke of the United Nations helping to stand up an interim authority? When the Foreign Secretary mentioned

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endorsement, did he mean that a resolution was imperative, or can it be achieved in other ways? Who will ensure that the interim Iraqi authority is, as promised, both Iraqi and representative of all parts of the country?
It was a bit rich of the French President, who ensured that neither France nor the United Nations are involved in the liberation of Iraq, to claim that
"reconstruction is a matter for the UN and it alone".
Did the Foreign Secretary take the opportunity yesterday, when he met his French counterpart, to refute that, and to point out that France's conduct in recent weeks gives it little or no authority to pontificate now?
We welcome the Foreign Secretary's reassertion that uncovering and eliminating weapons of mass destruction remain a key objective. What independent arrangements are being made to verify the discoveries when they are made?
We have long emphasised the importance of maintaining the integrity of the state of Iraq. How does the Foreign Secretary intend to manage the inevitable tensions between Turkey and the Kurds in northern Iraq as Kirkuk, Mosul and the surrounding oil fields are liberated?
What is the Foreign Secretary's current assessment of reaction to war in the Gulf and the wider region? He mentioned the publication of the road map, which is obviously important. When will it be published—in days, weeks or months? Is he worried about the reported unhelpful activities of Syria?
The war's objectives—disarming Saddam Hussein, eliminating weapons of mass destruction and liberating the people of Iraq from oppression—were right when the House endorsed them three weeks ago. They remain right today. It is in all our interests that they are successfully achieved and that a prosperous and peaceful Iraq replaces the evil that has gone before. We must not waver in our determination to see them through.
Mr. Straw: I thank the right hon. Gentleman for his generous personal comments, which I reciprocate. Military action should not be an issue of partisan politics across the Chamber because that is bad for the country and, above all, bad for our armed forces. Thankfully, because of the official Opposition's statesman-like position, it has not been such an issue, and I express my gratitude to the Leader of the Opposition and the right hon. Gentleman, especially.
The right hon. Gentleman asked several questions and I shall do my best to reply to as many as I can. I am sure that other hon. Members will raise several of them. The increasing outbreaks of lawlessness were discussed in some detail this morning at a meeting of Ministers. The situation is, as ever, patchy, but reports as of this morning show that the situation is changing. British commanders in the south say that there seems to be less looting and lawlessness than before. They are doing everything that they can to ensure that law and order is restored and, as I said, we are looking actively at putting together teams of police advisers to assist with that role. Of course, we are aware of our responsibilities under the fourth Geneva convention, the Hague regulations and the additional protocol.
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The right hon. Gentleman asked what we meant by the "vital role" for the United Nations. I was asked that yesterday, and no doubt I shall continue to be asked it. In the end, the judgment of whether the role of the United Nations turns out to be vital will be set against history. Reality will be the referee of that. President Bush did not use the word reluctantly; he volunteered the word three times in answer to questions during his press conference at Hillsborough. The framework is as set out in the decisions announced at Hillsborough and, before that, in the Azores. This country and the United States have recognised not only the general role for the United Nations, but its vital role on not only humanitarian relief, but reconstruction.
We are working with our partners in the United Nations Security Council on one or more further resolutions. The right hon. Gentleman asked how many, and that depends on the practicalities. One resolution—1472—has been passed since the military action began. Despite suggestions that we had run into difficulties, it was agreed rapidly, thanks not least to the co-operation of Germany, which sponsored it, and the resolution's unanimous support. We look forward to similar co-operation in the future.
The right hon. Gentleman asked about likely timetables. I am sorry that I cannot provide him with explicit timetables, but we are getting on with the job as quickly as possible. He asked about the Office of Reconstruction and Humanitarian Assistance, which was established by the United States. Several of our people are working alongside General Garner and his staff. The body's function is as stated in its title—reconstruction and humanitarian assistance. It will 'work with the interim authority in the early stages, but we hope that such external institutions will be replaced relatively quickly by internal institutions that will be run for, by, and from the Iraqi people themselves.
The right hon. Gentleman asked about the reported comment by the President of France. I raised that during constructive discussions yesterday morning with Dominique de Villepin, the French Foreign Minister, and I was assured that President Chirac had not used those words. [Interruption.] Well, the right hon. Gentleman asked the question and I raised it yesterday.
We understand Turkey's historic anxieties and also the anxieties of the Kurdish people on either side of the border. We look to Turkey, as we do to every other member of the United Nations, to comply with existing UN Security Council resolutions that lay down emphatically the importance of having respect for Iraq's territorial integrity within its existing borders. I shall talk to Foreign Minister Gul again shortly.
The right hon. Gentleman asked when the road map would be published. It will be published as soon as Abu Mazen's cabinet is in place—[Interruption.] From a sedentary position, he asks whether that will be days or weeks, but I am afraid that that is a matter for Abu Mazen and Chairman Arafat, not for me.
The right hon. Gentleman asked about Syria and reports of its unhelpful activities. We hope that Syria's actions are not unhelpful, but to the extent that they are, we look to it to end any and all assistance to the Iraqi regime and to co-operate fully with the people of Iraq and coalition forces.
Mr. Mark Oaten: I thank the Foreign Secretary for advance notice of his statement. I am sure

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that everyone in the House will welcome yesterday's events in Baghdad. We hope that they mark the end of the most intense period of this conflict and although military operations will continue, a welcome end is now in sight. Liberal Democrats join the Foreign Secretary in paying tribute to our armed forces and, of course, mourning the loss of life during the conflict.
The Foreign Secretary said that he stands by his commitment to rid Iraq of weapons of mass destruction. Will he outline who he believes should take a lead role in the task of identifying and disposing of any weapons of mass destruction that may be found in Iraq? Is that now a task for coalition troops or United Nations inspectors? The Prime Minister said yesterday that independent verification would be preferable. Did he mean that UN inspectors should be given the task and, if so, when does the Foreign Secretary envisage that it will be safe for them to return?
Now that Saddam's regime has fallen, does the Foreign Secretary still envisage that there will be direct attacks on Saddam himself or is the Government's policy now safe capture? If capture is the policy, will he confirm Saddam's status? Does he regard Saddam as a war criminal who is subject to international law, or is Saddam's fate subject to a decision made by any future Government in Iraq? What advice has the Foreign Secretary sought from the Attorney-General on that point?
Finally, the Foreign Secretary has made it repeatedly clear that occupying forces have a responsibility for law and order and people's welfare under international law. We welcome his statement that police advisers will be sent to Basra but, clearly, more than just advisers will be needed. What plans exist to change the role of British troops to policing and peacekeeping, and will more troops be required to fulfil those functions?
Mr. Straw: I greatly welcome the change of the Liberal Democrats' tone. There is always space in heaven—[Interruption.] I was about to say that there is always space in heaven for sinners to repent, but for the benefit of the Hansard reporters, the hon. Member for New Forest, East (Dr. Lewis) added "bandwagon". I did not want them to be confused about what the hon. Gentleman said. The change of tone is good news and we look forward to further recantations of the Liberal Democrats' position. If they will the end, they have to will the means as well—
The Minister for Europe (Mr. Denis MacShane): The end of Charlie.
Mr. Straw: We hope not.
The hon. Member for Winchester (Mr. Oaten) asked about inspectors. As I said in my statement, we are completely committed to finding the answers to the questions—173 pages of them—raised by UNMOVIC in its last, and final, report of this phase that was published as the Security Council meeting on 7 March finished. The military forces are bound to have the initial responsibility for that because we are in occupation and, for all sorts of reasons, the inspectors are not in Iraq.
We will discuss future arrangements for verification with the United Nations, Kofi Annan and our coalition partners, but any discoveries that are likely to made—
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either by chance or in the heat of the battle—will almost certainly be made by coalition forces. Given those circumstances, I hope that there are no cries by people who did not support military action in the first place—who managed to will themselves into believing that there were no biological or chemical weapons in Iraq—that because coalition military forces make the discovery, if and when that happens, the veracity of their discovery is to be challenged. There is a reality that needs to be accepted.
The hon. Gentleman asked about direct attacks on Saddam versus his capture. I would much rather see that man put on trial as a war criminal. Unlike Saddam, I mourn for the death of any individual whether they are a criminal or innocent, and I am sure that I speak for the whole on House on that. However, I cannot say for certain in what circumstances—if any—that man will be either captured or apprehended.
On Saddam's status, we have of course taken advice from the Attorney-General. I have before me the full text of the relevant parts of the fourth Geneva convention, the Hague protocol and regulations and the additional protocol. It is likely that Saddam will be classified either as a criminal or an unprivileged belligerent. In any event, he will be put on trial if he is captured alive.
Ann Clwyd: My right hon. Friend is quite right: as the liberation of Iraq proceeds, more of the regime's dirty secrets will be revealed to the public at large. For human rights reasons alone, I am certain that the military action will be vindicated.
On war crimes, Indict's A list has 12 most wanted war criminals; its B list has 35. We know that at least one of them—Ali Hassan al-Majid—is dead, but the rest remain. Will my right hon. Friend assure me that if those people are alive, they will stand trial, preferably at a UN war crimes tribunal on Iraq which has long been awaited? Many documents will be found in the process of liberating Iraq. They will contain secrets that the regime will undoubtedly want destroyed. I hope that there is a system of preserving them so that the photographs and the documents in the police stations and cells can be used against those people who have committed those awful crimes.
Mr. Straw: I begin by paying tribute to my hon. Friend. She showed huge courage in standing up for an oppressed people in parts of Iraq and for the Iraqi people as a whole, and she has taken completely unwarranted and unjustified criticism for that. Unfolding before our eyes on the television screens is vindication enough for her stand.
War criminals were the subject of part of ministerial discussions this morning. We do not know where those people are, but if we did they would be apprehended if it were safe to do so. If they are alive and we can obtain evidence, the UK and the United States intend to ensure that they face the full rigour of the law. It all depends on the evidence because we, the United States and the international community operate trials according to the evidence, unlike the trial system operated in Saddam Hussein's Iraq. One critical part of gaining the evidence is to ensure the integrity of the evidential chain from the moment that the documents are discovered so that there

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can be no accusation later of a contamination of evidence. We are in active discussion with our armed forces and those of the United States to ensure that that happens.
My hon. Friend also asked whether war criminals would be put on trial before a UN tribunal or some other tribunal. No decision has been taken. If we establish a Government and governance of Iraq by the Iraqi people, that would be a matter of intense discussion with them. Although I appreciate the role that UN tribunals, like those in respect of Yugoslavia and Rwanda, have played, they are hugely expensive. The tribunal on the former Yugoslavia has already cost more than $500 million; the tribunal on Rwanda is getting on for $600 million for nine indictees. We have to consider whether there are other swifter, more efficient, but equally just processes to bring such people to trial.
Sir Patrick Cormack: I am sure that the right hon. Gentleman's generous tribute to the hon. Member for Cynon Valley (Ann Clwyd) will be echoed by hon. Members on both sides of the House. In order to underline the Government's determination to have a smooth transition to Iraqi rule, will he discuss with the Prime Minister the possibility of appointing a resident Minister—a member of Her Majesty's Government—to be present in Iraq during those crucial weeks?
Mr. Straw: I will certainly raise it out of respect for the hon. Gentleman, but the better approach—the one that we are following, as my right hon. Friend the Secretary of State for International Development has made clear to the House—is for us to have a senior representative of the British Government with military experience working alongside General Jay Garner of the United States. When I am in the Gulf early next week I shall discuss those issues with General Garner and our representatives, but I believe that that is the better way to proceed for the time being.
Mr. Gerald Kaufman: May I congratulate my right hon. Friend and the Prime Minister on the cardinal and indispensable role that they have played in placing a settlement between Israel and the Palestinians right at the top of the international agenda? Does my right hon. Friend agree that, as the liberation of Iraq highlights even more starkly the subjugation of the Palestinians, speedy, definitive progress on the road map will be the best way to dispel any scepticism in the Muslim world on the operations that are taking place?
Mr. Straw: I agree with my right hon. Friend and am grateful to him for his personal remarks, as I am sure my right hon. Friend the Prime Minister will be. As I have often said, delivering peace between Israel and the Palestinians requires an end to the terrible injustices perpetrated against the Palestinians. It also requires an end to the terror that the Israelis have suffered. One of the many benefits that should flow from the liberation of
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Iraq is an end to the state sponsorship of desperate terrorism, which has caused such damage and death in Israel and the occupied territories.
Mr. Crispin Blunt: Will the Foreign Secretary assure the House that the Government will continue to work towards a political settlement in Iraq which enables our troops to come home as soon as possible and that we have learned the lessons of the mistakes of the Kosovo conflict which have left our troops there four years later? The prospect is that our troops will be home from Iraq a long time before they are home from Kosovo.
Mr. Straw: Yes is the answer, but there is a big difference between Kosovo and Iraq. Part of the problem is in determining the status of Kosovo. That is still unresolved. Is it a state or part of the former Republic of Yugoslavia? No or very few institutions were functioning properly in Kosovo whereas Iraq has an institutional base. We do not want to stay a day longer than we are needed, but we will stay as long as is necessary. That is the same for the United States. The whole purpose is to liberate Iraq, to deal with the weapons of mass destruction, to help support and sustain a secure and stable Iraqi Administration and developing democracy, and then leave.
Jane Griffiths: My right hon. Friend knows that BBC Monitoring Service, based in my constituency, has provided and will continue to provide an unrivalled, swift and unbiased news and information service from the region. Will he offer a message of congratulation to the staff there who have been providing that service in the last difficult weeks and months?
Mr. Straw: Yes, I would like to congratulate those staff and the staff of many other agencies whose unseen and unsung work has made such a contribution to the success of the action.
Peter Bottomley: It was necessary to have a national understanding of the reasons for Britain to be part of the coalition. May I publicly acknowledge that one of the important factors in that was the public decision of the right hon. Member for Birmingham, Ladywood (Clare Short) to stay in the Government? That has helped many people to understand that the purpose of the action is to benefit the Iraqi people, both in and outside Iraq.
In the coming months, will the Foreign Secretary give attention to whether far more can be done to spread the message around the world that very few wars are fought between sides that are both reasonably democratic, and very few high-level and persistent civil wars occur in countries whose Governments govern with the assent of the people?
Mr. Straw: The hon. Gentleman pays a generous, but entirely well-deserved compliment to my right hon. Friend the Secretary of State for International Development. I am sure that she is grateful—
The Secretary of State for International Development (Clare Short): indicated assent.
Mr. Straw: I know that she is, but I thought I ought to check. [Laughter.]

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The hon. Member for Worthing, West (Peter Bottomley) makes an important point about democracy. Democracy is not only right in itself, but the greatest bulwark against terror, terrorism and tyranny. The events in Iraq in the past few days are fascinating to those who take an interest in the history of humankind. There was a regime that had immense power, but only the power that is exercised down the barrel of a gun; remove that, and all the power crumbles into dust. By contrast, democracy, the power of the spirit, lasts and lasts.
Mr. Tom Levitt: By some estimates, as much as one fifth of Iraq's population has fled the country in the past 20 years. Some Iraqis are in Britain today, and many of them either had or have acquired skills, professions and experience that would be invaluable in the rebuilding of their country. Will the Government be in a position to assist any Iraqi citizens who, of their own free will and in due course, wish to return to Iraq to contribute to the rebuilding of their country?
Mr. Straw: My hon. Friend is right to draw attention to the 4 million people who were forced to leave Iraq. Their number is an indication of the desperate state of that country. It is early days, so I cannot make any promises about the type of programme that we might establish to get people back to Iraq, but I remind the House that we did that in respect of Kosovo and Afghanistan, and we shall of course take that experience into account.
Rev. Martin Smyth: I join the Foreign Secretary in his tribute to the forces, but will he include the Australians, who have often been forgotten, and perhaps even the Kurds, who have been advancing from the north with the Americans?
I understand the extent of the upheaval in Iraq, but I am concerned about media reports of one officer suggesting that, if it proves necessary, some Ba'athists might take on police activities again. We must be very careful about that. Based on our experience of people who have been involved in terrorism seeking to join the Police Service of Northern Ireland, we doubt that the people of Iraq will readily accept those who have persecuted them in the past continuing in such a role.
Mr. Straw: The hon. Gentleman raises the important and difficult issue of distinguishing between the leaders of the terror and those who went along with it because that was the nature of the society. We will have to make use of many people in the middle and lower ranks of all the services who remain in Iraq so that administration can continue—indeed, that is an obligation on us under the various conventions and texts of international law. Our armed forces initially, and then the interim authority, will have to make difficult judgments about who are genuinely culpable and who can be allowed to get on with their jobs once they have shown loyalty to the new Government or Administration. That is a task that must be undertaken.
Jeremy Corbyn: Will the Secretary of State say what plans there are to establish a policing operation in Iraq to prevent further looting of many
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benign public institutions, which will remove evidence that could be used to prosecute war criminals in future? By what date does he expect British and American forces to have withdrawn completely from Iraq and handed over either to a UN international body, or to an Iraqi organisation? Will he confirm that Britain and the United States have no plans to maintain either a permanent presence in Iraq, or permanent commercial control over the Iraqi people and economy?
Mr. Straw: My hon. Friend started well, but as ever—[Laughter.] Of course I cannot give a date—[HON. MEMBERS: "Why not? Give a date."] He knows very well that I cannot give a date. I have already said in answer to a previous question that our troops will not stay in Iraq longer than is necessary. We have no interest in them staying longer than is necessary.
As for oil, yes, some have suspected that oil is an issue, but my right hon. Friend the Prime Minister has categorically answered those suspicions on many occasions, saying that if our sole interest had been Iraq's oil, we would have spared ourselves any humanitarian concern and taken the short cut to doing a deal with Saddam Hussein. The action has nothing whatever to do with oil. President Bush and the Prime Minister have repeated their commitment that the oil wealth and revenues of Iraq should be used for the Iraqi people alone. That is what will happen.
Mr. Paul Goodman: Does the Foreign Secretary believe that without a UN resolution, the coalition will represent "an occupying army" with no legal right to reconstruct Iraq? That is the view of the Secretary of State for International Development, who is in her place; is it the view of the Government?
Mr. Straw: The position is that the coalition forces have every lawful right to act in accordance with the various legal texts to which I have already drawn attention. Those rights and powers are extensive, and it goes without saying that everything that our forces and civilian personnel, and those of the United States, do will be strictly in accordance with international law.
Mr. Clive Betts: I welcome my right hon. Friend's statement, especially his comments about the need for a resolution of the Israel-Palestinian issue. No one doubts his commitment or that of our right hon. Friend the Prime Minister to the middle east peace process, but a degree of scepticism persists about the depth of the US Government's commitment. Will he state whether he believes that the Americans are prepared to face up to the Israelis on the question of illegal settlements? Without their removal, there can be no unified and viable Palestinian state. Will he also give an assurance that the timetable accompanying the road map is not negotiable and will not be stretched into the distant future as a result of backstage pressure from the Israeli Government?
Mr. Straw: I am grateful to my hon. Friend for his comment. Achieving a peace raises difficult issues for all the parties concerned. There are difficult issues for the Government and the people of Israel, because they will have to deal with the questions of settlements, refugees and east Jerusalem. There are difficult issues for Arab

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states, which will have to recognise the state of Israel. There are difficult issues for the Palestinians and the Arab states, who will have to stop terror.
As for the motives and commitment of the United States Government, I believe what I see with my own eyes: a President of the United States who is completely committed to what he says he will do. He is a man of his word and I believe that he will fulfil his commitments, first, to publish the road map, and then to exert the same energy to implement the road map as our right hon. Friend the Prime Minister has exerted in respect of Northern Ireland, which is a huge amount. He knows the importance of delivering justice to the Palestinians and security to the Israelis, not only for those people, but for the security of the whole region.
Mr. David Tredinnick: Does the Secretary of State agree that it is vital that there be no reason for the liberated people of southern Iraq to turn against British troops? Those of us who served in Northern Ireland in 1969 remember when the Catholics turned against the British forces. Will he also recall the success of the use of British police and they way they helped during the elections in the run-up to the Rhodesia settlement? Finally, will he ensure that when the bulk of the British troops return, there will be a parade for them in London, so that people can see and thank them?
Mr. Straw: Although it is early days, I think we have already seen in Basra and the south that, far from their turning against British troops, as people's terror and shock from the regime gives way to confidence in the way that British troops undertake their duties so well, they are being welcomed, not rejected. Of course there will be criminal gangs. There will be members of the Ba'ath party who do not want to meet members of the armed forces, but they will be in a minority.
As for honouring our forces, the hon. Gentleman will realise that that is a matter for my right hon. Friend the Secretary of State for Defence. However, I am in no doubt that he will be committed to ensuring that appropriate means of honouring, collectively as well as individually, the fine service of our armed forces will be found.
Laura Moffatt: My right hon. Friend will have seen press statements about the Basra maternity hospital being looted. I welcome his commitment to considering sending police to assist our troops to restore law and order in such institutions. Understandably, there is anger among doctors in Basra about those events. There is also anger among clinicians in this country. Will my right hon. Friend assure us that work will continue to restore order as quickly as possible so that babies can be born safely in a free Iraq?
Mr. Straw: Yes, I give that undertaking. I also give an undertaking to ensure that we get water and power on as quickly as possible—in some instances power has been cut not as a result of coalition action but as a result of sabotage by retreating Iraqi forces—and that there are proper medical supplies.
Mr. James Paice: The Foreign Secretary and virtually all of us in the House
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know full well that the only long-term ambition that either Britain or America has for Iraq is for it to be a peaceful and stable country, and for the action that has taken place to lead to a more stable and peaceful world. However, the right hon. Gentleman will accept that there are many people, especially in the region, who have their doubts about long-term objectives. Will he do everything that he can to ensure that those who are responsible for letting contracts for rebuilding Iraq understand that sensitivity, and that whatever the source of the money to pay for it, wherever possible Iraqi resources and companies and other resources within that region will be utilised to help to rebuild the country—rather than the activity being seen as somehow a business opportunity for other parts of the world?
On a personal note, I add that the Foreign Secretary and the Prime Minister deserve and are entitled to a few days' break over the next few weeks. I mean that genuinely. However, will they find time to consider what has been happening in one or two other parts of the world while the eyes of the world have been directed on Iraq? I am thinking particularly of some horrendous incidents in Zimbabwe.
Mr. Straw: I accept what the hon. Gentleman says about the behaviour of the coalition forces and the Governments who are behind them in the way in which we deal with post-conflict Iraq. We must show the same high standards as our armed forces have shown in the military conflict.
I am grateful to the hon. Gentleman for his remarks about time off. I have already cancelled a holiday. I took that decision when military action began. Of course the hon. Gentleman is right about conflicts that are going on elsewhere. I reassure him by saying that although these issues have not been front-page headlines, I have been very concerned, for example, about Zimbabwe and by the brutal treatment that has been shown by ZANUPF forces as they appear to be losing their grip in parts of that country. Similarly, I have been very concerned about the rising tension across the line of control between India and Pakistan.
Clare Short: The Congo too.
Mr. Straw: And the Congo. I am grateful to my right hon. Friend.
Those three issues have been subjects of discussions, not least at Hillsborough.
Mr. Kevin Hughes: Surely no one could have failed to be moved by the pictures yesterday of the jubilation of ordinary Iraqi people in celebrating their freedom. It much reminded me of when I sat watching the television when Nelson Mandela walked free from his incarceration. Does my right hon. Friend agree that the Iraqi people could do worse than consider some of the experiences that South Africa had on its road to building freedom in that country?
Saddam's evil and brutal rule is over in Iraq. Once again, brave men and women have given their lives to the great prize of freedom. We owe them a great debt of honour.
Mr. Straw: Of course I agree with my hon. Friend, including his point about South Africa. I pay tribute to

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his son, who is serving with our armed forces in the Gulf, and through his son to all his fellow comrades in arms in our services, the United States services and the Australian services.
I shall draw the attention of the House to a remark that I think says almost everything about the Iraqi regime and its complete absence of principle or scruple. It is what I heard on the radio this morning, as many others did, from Mohammed al-Duri, who was the Iraqi ambassador to the United Nations. Unfortunately, I spent many hours sitting in the same room with him listening to him explain and justify the evil nature of the Iraqi regime. He speaks extremely good English and knows what he is saying. He said, "The game is over." So for him, the killing, the terror and the lies were all a game, and he knew it. Those who think that we were wrong to take action—the apologists who are still around—need to bear in mind that one of the greatest apologists for the Iraqi regime has put his hands up and said, "The game is over."
Mr. Paul Marsden: rose—
Hon. Members: Oh no.
Mr. Marsden: Please, please. Wait for it.
Does it not say so much about the Government that as the bodies are being stacked up in the main Baghdad hospital, the Government see it as a priority to set up a new propaganda television station? Thirsty Iraqi civilians will not be impressed by replacing the 6 o'clock news with Saddam with the 10 o'clock news with Tony.
Mr. Straw: I doubt very much whether that will gain the approbation of the hon. Gentleman's constituents.
Mike Gapes: We have had many years of experience of dealing with authoritarian regimes—for example, de-Nazification, what happened in Japan and the work that was done in central and eastern Europe over the past decade. I declare an interest as chair of the Westminster Foundation for Democracy. I ask my right hon. Friends the Foreign Secretary and the Secretary of State for International Development whether early consideration can be given to how we can go forward on an all-party basis, as we have done over many years, to help the people of Iraq get a genuine, multi-party democratic system.
Mr. Straw: Yes is the answer to that. It is worth bearing in mind that the Westminster Foundation for Democracy has been active in eastern Europe. Some of those countries suffered under tyrants who were nearly as bad as Saddam Hussein, including Romania's Ceaucescu. They have emerged from those shadows to form an active, functioning democracy, and are about to come into the European Union. We can do the same, or similar, for Iraq, by giving it support to empower its own people to form that active democracy.
Several hon. Members: rose—
Mr. Speaker: Order. Provided that there are brief questions and only one from each Member, I shall be able to call all the Members who are standing.
Tony Baldry: The Foreign Secretary was right to draw attention to the failures of the war crimes
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tribunals in Bosnia and Rwanda, but there is another model that the United Kingdom and the United States initiated and were responsible for, which is the successful tribunal in Sierra Leone that has its own specific UN mandate. I wonder whether that might be a model for Iraq. It would ensure that whatever happens is under the authority of the UN and has international respect.
Mr. Straw: There are a number of models, including domestic ones. We need to consider what will work and what will be most cost effective.
Mr. Harry Barnes: Will democracy in Iraq not require even more than political parties and general elections? Will it not require extensive civil liberties so that people can form interest groups to represent their positions, such as the trade unions that have traditionally been strong in the Basra area? Will the Government see that the Iraqi labour movement is facilitated to ensure that it has a full role in the establishment of a new Iraq?
Mr. Straw: We will certainly look at that question.
Angus Robertson: May I echo the Foreign Secretary's condolences on the deaths of service personnel, civilians and journalists in conflict, and praise the professionalism of the UK armed forces? In welcoming the apparent end of the Hussein regime, I wish to ask a specific question about post-Hussein Iraq? The Foreign Secretary will be aware that there has been widespread autonomy for the Kurds in recent years, including different arrangements in the oil-for-food programme. Will the UK Government support the Kurds if they wish to maintain that devolution in future?
Mr. Straw: We greatly welcome the autonomy that the Kurds have been able to achieve. Iraq is a country with many differences within it, but it is crucial that whatever arrangements are reached they are developed and agreed by the Iraqi people within the essential framework decided by the international community—the United Nations—on the territorial integrity within the existing borders of Iraq.
Glenda Jackson: Who will decide who constitutes a credible representative of the Iraqi people in the interim Government? We are receiving reports that there is no agreement at the moment in the American Administration on the issue, and there are clear differences of opinion between the Departments of State and Defence. Will the responsibility for that decision therefore rest with the United Nations?
Mr. Straw: It will not be possible for it to be done by the United Nations simply because it would be premature for the UN to be involved in that direct way. In any event, even it was, it does not have the expertise to say that X should be a representative but Y should not be. We have agreed with the United States and the international community that those decisions will be made by the Iraqi people themselves. We have already made it clear that we want to work with the United Nations and, of course, coalition forces, but we have to

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start somewhere. As in Afghanistan, one starts somewhere, gets representative councils together at a regional level which then come together and form a national conference. They start off with an interim authority, which is what we are talking about, then, over time, more democratic and representative institutions are built up.
Mr. Desmond Swayne: What is the danger of the liberation of Baghdad being used as a justification by the regime in North Korea for acquiring its own nuclear deterrent? Will the Foreign Secretary see his Chinese and Russian counterparts to ensure that the UN takes a robust line on that issue?
Mr. Straw: I do not think that there is any excuse for the action currently being taken by North Korea in defiance of its international obligations. Yes, this is a matter that I have actively discussed with my Chinese and Russian counterparts, and, of course, with Secretary Powell, Mrs. Kawaguchi, the Japanese Foreign Minister, and many others.
Mr. John Burnett: I understand that Iraq's national debt, incurred by Saddam Hussein, is well over $50 billion. I assume that there have been discussions in connection with that massive liability. Does the Foreign Secretary believe that that debt is properly and lawfully repayable?
Mr. Straw: The hon. Gentleman would have to ask a better lawyer than me about that last question, but we are looking carefully at the issue of potential liabilities of any successor Government, and are discussing it with the international financial institutions as well as the United Nations. My right hon. Friend the Secretary of State for International Development will happily deal with that in greater detail when she makes her statement.
Mr. Mark Prisk: In his statement, the Foreign Secretary said that the search for a lasting peace in Iraq began yesterday. I agree with those sentiments. However, our armed forces are still in theatre and still face dangers, so will the Foreign Secretary clarify at what point, legally speaking, he, the Government and the coalition will regard the war as over? If, as I suspect will be the case, there is no neat point, what implications does that have for the formation of a lasting civilian Government?
Mr. Straw: I doubt that there will be a neat moment. Self-evidently, there will not be a moment when a
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surrender by Saddam Hussein is accepted because he has taken the coward's way out, if he is still alive. Certainly, all his henchpeople have taken that way out. [HON. MEMBERS: "Henchpeople!"] Women as well, I must point out, have been actively involved in the biological weapons programme. There will therefore not be a precise moment—historians will judge it later. As for international law on occupation and armed conflict, the coalition forces will be the authority until we can transfer that authority to an interim authority in Iraq and then a full Government. There will be a phased transfer according to the nature of the governmental functions to be transferred.
Dr. Vincent Cable: In view of the commitment in the statement to protect Iraq's natural resources as the patrimony of the people of Iraq, who will represent the people of Iraq in negotiations, some of which are urgent, to determine the terms and conditions of operating contracts in the oilfields and the future of things such as the production-sharing agreement with the Russian company, Lukoil.
Mr. Straw: There is a well established and, I am told, technically very good oil organisation in Iraq. We obviously have to make a decision about those right at the top of the organisation. but I am told that most people are there because of their expertise in running an oil organisation, not for other reasons. In the early stages, we will have to do our best with the available resources and people but, over time, we will get the interim authority established, then the decisions can be seen to be more legitimate. However, we have to start somewhere.
Chris Grayling: May I take the Foreign Secretary back to the question of Syria? Is there any substance to persistent reports that Syria has been harbouring both Iraqi weapons of mass destruction and now members of the outgoing Iraqi regime, and, if so, what action do he and the United States plan to take?
Mr. Straw: I am well aware of the persistence of those reports, but I am not willing to speculate on them. I can tell the hon. Gentleman that there have been conversations between my right hon. Friend the Prime Minister and the President of Syria and between our ambassador in Damascus and the Syrian Ministry of Foreign Affairs. As I have said already, we expect the Syrian Government not to take any action and to desist from any action that they have already taken, whether harbouring people from the regime or supplying or otherwise assisting them. We want them to co-operate fully with the coalition forces, as that is very much in their interest as a neighbour of Iraq.

Business of the House
1.37 pm
The Leader of the House of Commons (Dr. John Reid): The business for the week after the Easter recess will be as follows:
MONDAY 28 APRIL—Commons consideration of Lords Amendments to the European Parliament (Representation) Bill, followed by remaining stages of the National Minimum Wage (Enforcement Notices) Bill [Lords].
TUESDAY 29 APRIL—Opposition day [5th Allotted Day]. There will be a debate on an Opposition motion. Title to be confirmed.
WEDNESDAY 30 APRIL—Motion to approve a money resolution on the Regional Assemblies (Preparations) Bill, followed by Commons consideration of Lords Amendments to the Regional Assemblies (Preparations) Bill, followed by Commons consideration of Lords Amendments to the Electricity (Miscellaneous Provisions) Bill.
THURSDAY 1 MAY—Debate on Broadband on a motion for the Adjournment of the House.
FRIDAY 2 MAY—The House will not be sitting.
Right hon. and hon. Members will wish to know that the provisional business for the following week will include:
MONDAY 5 MAY—The House will not be sitting
TUESDAY 6 MAY—Second Reading of the Finance Bill.
Mr. Eric Forth: May I welcome the Leader of the House to his new responsibilities, and hope that he finds them both enjoyable and satisfying? I am sure that he will be conscious of the role that he plays as Leader of the House in representing the interests of the House at the highest levels of government. Has he had an opportunity yet to read the document issued by the Committee on Standards in Public Life entitled "Defining the Boundaries within the Executive: Ministers, Special Advisers and the permanent Civil Service"? I hope that, if he has, he will be able to assure us of an early opportunity to debate the document, and that he will make a commitment now that the Government intend to carry out its recommendations—not least, for example, that
"an independent office holder, called an Adviser on Ministerial Interests, should be established to provide advice to Ministers on compliance with those sections of the Ministerial Code which cover the avoidance of perceived and actual conflicts between their public duties and private interests, formal or otherwise."
Further recommendations include:
"The Civil Service should be established in statute."
"Special advisers should be defined as a category of government servant distinct from the Civil Service."
"A clear statement of what special advisers cannot do should be set out in primary legislation."
"The total number of special advisers should be contained in statute, with an upper limit subject to alteration by resolution approved by both Houses of Parliament."
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The report also proposes that
"An Accounting Officer should not hesitate to notify his or her concerns, in accordance with Treasury guidelines for Accounting Officers, where he or she believes that the Minister in charge of the department is contemplating a course of action relating to the operation of the press office which would infringe the requirements of financial propriety or regularity."
Under the heading "Securing the boundaries", the report suggests that
"The Government should begin an early process of public consultation on the contents of a draft Bill. The Bill should receive pre-legislative scrutiny by a Joint Committee of both Houses of Parliament."
I hope that the Leader of the House will accept that there is some important material in this report. I also hope that, if he has not already read and absorbed it, he will do so quickly and that he will make a commitment today that these matters will be dealt with urgently by the Government, covering, as they do, important matters such as special advisers and the integrity and impartiality of the civil service.
I am sure that the Leader of the House will recall what the Chancellor said yesterday, because he was sitting right beside him. The Chancellor was recorded faithfully in Hansard as saying that
"the British economy is now better placed to recognise local and regional conditions in pay, such as the extra costs for retention and recruitment that arise in London and the south-east, especially for the low-paid. In future, therefore, we plan regional price indexes showing differences in regional inflation rates; remits for pay review bodies and for public sector workers, including the civil service, will include a stronger local and regional dimension". —[Official Report, 9 April 2003; Vol. 403, c. 283.]
I am sure that the Leader of the House endorses thoroughly everything that the Chancellor said in that regard. I am sure that he is enthusiastic about it and I am sure that he will want to tell us today of the degree of urgency with which he will want to press ahead with those recommendations, and of the nature of the vehicle by which the Chancellor's excellent statement will be brought to fruition.
Finally, may I ask the new Leader of the House when we are going to see the foundation hospitals Bill?
Dr. Reid: First, I thank the right hon. Gentleman for his very gracious welcome, which I believe is fairly untypical. I will take it as being a new start, and I will respond in as emollient a fashion—[Interruption.] Well, I did my homework, as you would expect, Mr. Speaker. I have never regarded the right hon. Gentleman as a "libertarian thug" or a "Scottish brute", which I understand is how one of his former parliamentary colleagues describes him. I actually felt quite relieved that a strange journalist, Mr. Quentin Letts, should have described me in much less strong terms than the right hon. Gentleman's colleagues appear to use to describe him. I have never found the right hon. Gentleman to be those things, however, and I look forward to emollient exchanges across the Dispatch Box. I should also pay tribute to my predecessor, who I know was widely respected on both sides of the House, and to my deputy, who stood in over the last few weeks. [HON. MEMBERS: " We want Ben!"] Well, given the rate at which I change jobs, you might well have Ben in the very near future.
The right hon. Gentleman raised the important issue of the Wicks report. He will be aware that it was published only on Tuesday of this week. We will, of

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course, consider its recommendations carefully. It is too early for us to give a line-by-line analysis of it, although the right hon. Gentleman went a long way towards doing so when he took us through it. I am grateful to him for that, as there are now large passages of it that I will not have to read, having had them helpfully dictated to me. At first glance, some of the recommendations—including some to which the right hon. Gentleman referred—have already been implemented or are already happening in practice. We will look carefully at the report, however, and give it our urgent consideration, because we take this important topic seriously. We will also bear in mind, although the right hon. Gentleman did not mention it today, his constant robust opposition to over-regulation in government.
Mr. Forth: Not in this area.
Dr. Reid: I see that this is an exception to that rule.
On the British economy, I was glad that the right hon. Gentleman took the opportunity to remind us of a subject that is creating its own historic headlines in terms of the lowest inflation for some three decades, the lowest interest rates—it has been announced today that they are remaining low—since 1955, the highest number of people in work, the lowest unemployment rate and the longest sustained growth in the British economy. These things not only give us a degree of certainty in an uncertain world, but enable us to combine nationwide guarantees, as exemplified by the national minimum wage and the working families tax credit, with a degree of flexibility, as the Chancellor described yesterday. We will approach that matter with a degree of urgency, as the right hon. Gentleman requested. He asked me to calibrate the degree of urgency, and I think it will please the Liberals to know that the matter will be treated with urgency in due course.
I thank the right hon. Gentleman for his questions and I look forward to our exchanges across the Floor of the House, including those on foundation hospitals when we come to debate that issue.
I do not know whether it is appropriate to mention it on this occasion, but I was warned that, during business questions, we are expected to signify our stance by the nature of our ties and socks. I chose a tie today that I hope represents stability and certainty in a very uncertain world. I cannot say the same for the rather garish tie that the right hon. Gentleman is wearing today, but, unlike him and his colleagues, we do not take risks, either with the economy or with the social development of our country.
Mr. Paul Tyler: I am not called Tyler for accidental reasons. May I reiterate the congratulations that I and my colleagues have already given to the right hon. Gentleman on his promotion? May I draw to his attention early-day motion 1048, which relates to the UK Gulf forces trust fund?
[That this House welcomes the establishment of the UK Gulf Forces Trust Fund to channel charitable public support for members of the UK Armed Forces and attached civilians involved in the war in Iraq; notes that the fund will also benefit their dependents; congratulates
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the National Service charities The Army Benevolent Fund, King George's Fund for Sailors and the Royal Air Force Benevolent Fund, and The Royal British Legion and the Soldiers, Sailors, Airmen and Families Association and other service charities, on establishing and promoting the new fund; and calls on the Government and honourable and Right honourable Members to urge the public to give generously to the UK Gulf Forces Trust Fund.]
I am sure that, in his previous capacity as a Defence Minister, the right hon. Gentleman will have recognised what the British Legion has also told us, which is that once the focus of public and media attention has moved on from the hostilities, it is much more difficult for such a trust fund to raise the necessary sums of money from the public. As we must all hope that we are now moving into such a phase, will the Leader of the House take this opportunity to say, on behalf of the Government, that they enthusiastically endorse that trust fund for the UK Gulf forces and their dependents?
May I also draw the attention of the Leader of the House to early-day motion 1018? Will he take this opportunity to reiterate his personal commitment to removing outdated religious discrimination?
The Parliamentary Secretary will recall that, at last week's business questions, I raised the question of the Wicks Committee, and I am delighted to have gained the support of the Conservative party on that issue, albeit a week late. Will the Leader of the House now consider urgently whether the proposed civil service legislation is appropriate for pre-legislative scrutiny, either by both Houses together or by this House, because there is clearly going to be a great deal of discussion about its contents? I am sure that the Leader of the House will agree that the Wicks Committee's recommendations are very far-sighted. I think he would also agree, however, that they require careful scrutiny by the House. Will the Government therefore bring forward a draft Bill, and can we have pre-legislative scrutiny of it?
Dr. Reid: I shall deal with the hon. Gentleman's last point first. He will be aware that we are attempting to use pre-legislative scrutiny more and more for the legislation that comes before the House. Indeed, it was one of the advances—sometimes referred to as "modernisation", although it is actually a more rational way of looking at these things—introduced by my predecessor. I cannot give a commitment regarding the specific Bill, but I will certainly give a commitment to view the matter sympathetically.
I must confess that I am not familiar with the detail of either of the early-day motions mentioned by the hon. Gentleman, but I shall work through as much as I can by next week. I can say this about the first EDM: I think that anyone who has observed developments over the past few weeks will recognise that, notwithstanding all the vagaries of politics, the people who have really taken the risks—as they always do in such circumstances—are the young men and women of the British armed forces. Earlier today someone spoke of the possibility of honouring them, and I dare say that that will be considered; but I think no better honour could be bestowed on them than the expressions on the faces of some of the people filmed yesterday confronting their first few days of freedom. The confusion, anticipation, relief and joy reflected on those faces did indeed

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constitute such an honour. But any initiative, through trusts or otherwise, to raise money or look after our armed forces in some other way is to be encouraged.
As for the general issue of religious discrimination, I can only say that I am against such discrimination on any grounds—as would be expected from someone with my background, who, it seems, is prohibited from marrying the monarch or the monarch's daughter. That is a great pity for monarchs' daughters; but I personally have never had such a proclivity, and I do not want anyone to read too much into the information!
Again, the question is one of priorities. Given the range of business before the House, it may take a little time to get rid of many things that are objectionable but largely irrelevant in the modern world.
Several hon. Members: rose—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I hope I can engage the sympathy of the House. We have a crowded business schedule, and I cannot guarantee that I will call everyone who wants to question the Leader of the House. Another important statement follows, and we must then proceed to the Budget debate, to which a great many Members wish to contribute. A great many Members also wish to go home at 6 pm. There are difficulties for the Chair, and I would appreciate very brief questions and very brief answers.
Mr. Robin Cook: I congratulate my right hon. Friend on his appointment to what I believe is the most enjoyable job in the Cabinet. I hope he has as much fun at the Dispatch Box on Thursday afternoons as I used to.
Somewhere in my right hon. Friend's in-tray will be a brief setting out the agreement that most Bills to be dealt with in the next Session should be published in draft during the current Session. Many Members think that the best way of strengthening scrutiny here would be to let Parliament comment on Bills while they are still in draft, before being frozen in their final form. I should warn my right hon. Friend, however, that—I know this from experience—Departments will only come up with the goods if he continues to nag them to meet the deadlines. May I assure him that he will have my full-hearted and enthusiastic support, and that of many Members on both sides of the House, if he maintains the pressure on Departments to deliver the drafts before the summer recess?
Dr. Reid: I thank my right hon. Friend for his advice. I assure him that I will do as he suggested. No doubt that was only one of the valuable pieces of wisdom that he will pass on when we have our discussions this week. Let me repeat, on behalf of the whole House, grateful thanks for all that he did for the Government in this and indeed other positions.
Sir Patrick Cormack: As the House no longer has an opportunity to debate private Members' motions, and as certain issues can be decided only on substantive motions, will the right hon. Gentleman—whom I welcome warmly to his new task—give us an opportunity before the end of this Session to
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debate, at the very least, the new Tuesday sitting hours? Many Members whose votes secured that narrow majority of seven have changed their minds.
Dr. Reid: There are many routes to the same destination. We covered some of them a few days ago during questions to the President of the Privy Council, when I said that, whatever my own views, I did not want to be coming in with some agenda to reverse everything or anything. I also said, however, that I had an open mind, and that the House could take stock as things developed. I think it would be best to allow a reasonable time in which to try out the arrangements in practice, regardless of our original views, and to deal with issues as they arise—but only in the event of substantial and genuine practical problems. As I have said, I have an open mind. It will depend on what evidence of problems there is.
Mr. Wayne David: As my right hon. Friend will know, a Standing Committee meets from time to time to discuss the Convention on the Future of Europe. Unfortunately it was difficult to secure a quorum at its last meeting, one reason being a clash with another European Standing Committee. Will my right hon. Friend use his good offices to ensure that everything possible is done to avoid such clashes in future?
Dr. Reid: It is up to Committees to decide when they meet, and Committees are rightly jealous of their powers in this and many other respects, but I hear what my hon. Friend says, and I will do anything I can to facilitate a more convenient agreement.
Sir Sydney Chapman: Will the new Leader of the House tell us when he expects the Report stage of the Planning and Compulsory Purchase Bill to take place? As he will know, at least three months elapsed before it was rushed through its Committee stage, during which only a small proportion of its provisions were discussed. I am sure that the Minister responsible will confirm that there was no attempt at filibustering. This seems to me to be an unnecessary and inefficient way of dealing with an important measure: the inadequate time allowed in Committee means that the other place will have to deal with most of the Bill.
Dr. Reid: Although I was not centrally involved with that Bill, I know that it was widely regarded as important, indeed urgent. I am afraid that I cannot specify the exact timelines at this stage, but I will write to the hon. Gentleman as soon as possible.
Mrs. Claire Curtis-Thomas: Yesterday I learnt that someone in the Home Office had leaked the information that the Government's response to the Home Affairs Committee's report on historical sex abuse would be published on Friday for Merseyside police authority. I had no objection to the leak other than on the grounds that the Committee's Chairman did not have that information, and neither did I, as chair of the all-party abuse investigations group.
I assume that the information was leaked for a number of reasons, not least to enable the police authority to defend itself in an indefensible position, but

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I strongly object to the leaking of the information before it was given to members of the Select Committee. I also resent the fact that the document will be issued on what is essentially the last Friday of this term, which means that the subject may well drown in the proliferation of press reports on Saturday. Will the Leader of the House instigate a Home Office inquiry immediately to ascertain how such a thing can have happened?
Dr. Reid: I share my hon. Friend's concern. This is a serious issue, which I know has affected a number of her constituents. A number of groups and stakeholders have been involved in the process. I assure my hon. Friend that any information in the public domain did not come from Ministers. I have no authority to initiate an inquiry into the leak, but I want to make that plain. The Government's response will be published tomorrow; in the meantime, as I have said, I share my hon. Friend's concern.
Sir Archy Kirkwood: Will the Leader of the House acknowledge the importance of the approaching enlargement of the European Union to agriculture in this country? Given the Doha round and the mid-term review, is there not a case for an early debate on agriculture and its future in the United Kingdom?
Dr. Reid: I agree that all those things are important. Indeed, before the headlines were diverted to the Iraq conflict they featured in our discussions with our European colleagues. I am sure that they would indeed benefit from further discussion; Westminster Hall might provide a useful vehicle.
Mr. David Watts (St. Helens, North): My right hon. Friend will be aware that the current European structural fund programme ends in 2006, and that consultation is taking place between this Government and our European partners. Will he find parliamentary time for discussion of this important issue?
Dr. Reid: My hon. Friend will undoubtedly be aware that we are obliged to report on progress made against economic performance measures by 2006. I am pleased to say, however, that my hon. Friend's constituency has benefited by almost £20 million under the current structural fund programme. Economic performance will be examined in due course, and although matters may be difficult, let us hope that next time, we get as much benefit as we possibly can from the structural fund for my hon. Friend's constituency, and for the whole country.
Mr. Roger Gale: I am sure that you will share, Mr. Deputy Speaker, the appreciation of all hon. Members for the work carried out by the House of Commons post office and its staff. You will also know that the Royal Mail Group has now curtailed its evening collections from the House, and as a result the last collection is at 6 o'clock. Given the new sitting hours, that makes life very difficult for Members, who now find it necessary to process mail in the early evening to send to offices for onward work. The Royal Mail Group has
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written to me today, saying that this is not directly a result of its wishes, but is an imposition of Postcomm under the terms of its licence.
The House appears to be being treated as a business, rather than as part of the democratic process. May I ask the Leader of the House to make representations to Postcomm, and to explain the difference as subtly as he knows how, in order that the postal service that the Royal Mail Group would like to provide for us can be restored?
Hon. Members: Hear, hear.
Dr. Reid: I will look into this issue, which has been raised before. If the authority that the hon. Gentleman mentions is indeed involved, I shall try to convey his views, which are shared by all Members.
Lawrie Quinn: My right hon. Friend will probably be aware that 28 April is workers' memorial day. Given that 28,000 serious accidents and more than 300 fatalities occur in British workplaces every year, will he give close consideration to having an early debate on the Floor of the House on how to revitalise health and safety legislation?
Dr. Reid: I am aware that my hon. Friend is promoting a private Member's Bill on health and safety at work, and I have a great deal of sympathy with and support for that, as do the Government. I know that he will raise this issue for debate at every opportunity, and rightly so. It should be a matter of concern for all of us, and perhaps he might like to apply for an Adjournment debate on it as well.
Mr. John Bercow: I wish the right hon. Gentleman well in the execution of his new responsibilities. Given the growing coverage of severe acute respiratory syndrome, which was highlighted in an important letter to The Times last Thursday by Mr. Malcolm Rees, a lecturer in health economics at the University of Buckingham, which is in my constituency, may we please have a statement or a debate, in government time, on the epidemiology of the disease and the possible development of a vaccine against it, and on the advice proffered by the Department of Health to those who think that they might suffer from the disease?
Dr. Reid: I will make the hon. Gentleman's views known to my right hon. Friend the Secretary of State for Health, because this is a very important issue. In many cases, the less that is known about such issues, the more frightening they are to the public. The Government have certainly tried to do what we can to put information in the public domain. The Department of Health issued information and advice to all general practitioners, trusts and public health authorities as early as Thursday 13 March, and on Monday 7 April it issued advice to the public, and to those travelling to south-east Asia on this specific subject. Partly as a result of this timely response, to date we have had, I think, only five probable cases in the United Kingdom, compared with a total of some 2,722 in other countries.
Obviously, my thoughts are with anyone who has suffered in this way, including the hon. Gentleman's constituent, and their families. The hon. Gentleman can

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be assured that the Department of Health and the Health Protection Agency are continuing to monitor the situation, and we will try to put as much information in the public domain as possible.
Mr. Gareth Thomas: Will my right hon. Friend consider allowing a debate in Government time on the current Competition Commission inquiry and the recent Office of Fair Trading inquiry into the future of the retail supermarket industry? In particular, will he acknowledge the concern of many of my constituents in the north Harrow and Pinner districts about a possible future closure programme in respect of any new owner of the Safeway store chain, given the importance of Safeway stores to the economic health of other businesses in those district centres?
Dr. Reid: My hon. Friend will know that we take the issue of competition very seriously, and he may also know that my right hon. Friend the Secretary of State for Trade and Industry has referred four of the five proposed acquisitions of Safeway to the Competition Commission. The commission will report by 12 August, so it should not be that long before we have a response. Of course, we keep competition in all aspects of industry and commerce under constant review.
Mr. Roy Beggs: May I welcome the right hon. Gentleman to his new role as Leader of the House, on behalf of my Ulster Unionist colleagues? We may not always have seen eye to eye when he was Secretary of State for Northern Ireland, but we hope that this new beginning for him could be a new beginning for us all. I should also pay tribute to the Parliamentary Secretary for his work as acting Leader of the House; he confirmed to us all that he will be a greater star one day.
May I add my voice to those who have already called for an urgent statement on Northern Ireland? May I also call on the Leader of the House, given this afternoon's news that the visit of the Prime Minister and Taioseach to Hillsborough has had to postponed due to yet more republican intransigence, to allow an urgent debate in Government time—so that we can reflect on this issue—on the need to move on without Sinn Fein-IRA if it refuses to carry out the very necessary acts of completion that ought to have been carried out long ago?
Dr. Reid: On the latter subject, I am not completely up to date on the past hour's news, because I have been on the Front Bench. However, as promised, the Prime Minister will make a statement on wider matters before we rise, on Monday, and I have no doubt that the hon. Gentleman will wish to take the opportunity to raise certain issues with him. To judge from my limited but hopefully valuable experience of Northern Ireland—it was certainly valuable to me, as well as enjoyable—it would be a great boon to everyone if we were to draw to a conclusion the decades, and in some cases centuries, of terrible factional fighting and pain in what is a beautiful part of the United Kingdom.
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I thank the hon. Gentleman for his opening remarks, and in particular for what he said about my hon. Friend the Parliamentary Secretary. Like the hon. Gentleman, I am familiar with the refrain of the "Star of County Down", but I understand that we now have a star of the office of the Leader of the House, as well.
Mr. Richard Bacon: In his letter to the Chairman of the European Scrutiny Committee, the deputy Leader of the House acknowledged that business managers would make more time available for a debate on the European Convention "if need arises". Will the Leader of the House accept my assurance that the need and the opportunity have arisen, and that a good time for such a debate—on the Floor of this House—would be after the Praesidium has finished its discussions on 25 May, and before the resumption of the Convention in early June, so that Ministers can explain their position, and all hon. Members can explain, in a high-profile debate in Government time, their concerns to members of this House's representation to the Convention?
Dr. Reid: I am afraid that I cannot give the hon. Gentleman a specific commitment today, but he will know that we have devoted considerable time to debating this issue in various forums, including Westminster Hall.
Mr. Bacon: On the Floor of the House.
Dr. Reid: I understand the point that the hon. Gentleman makes. I lack many qualities, but I can hear and understand English, despite my accent. We will keep that issue, and many others, under review.
Andrew George: Is the Leader of the House aware that the Government suffered an effective defeat when they failed to secure a majority in this morning's delegated legislation Standing Committee considering the Sea Fishing (Restrictions) Order, which would restrict days at sea? Liberal Democrat Members prayed against the order and forced a debate, largely because the Joint Committee on Statutory Instruments found the order to be "defectively drafted". Will the Leader of the House ensure that time is found for a full report on the matter, and for a debate on the Floor of the House?
Dr. Reid: I understand that, unfortunately, there were two errors in the way that the order was drafted, but also that neither was significant or substantial. The errors related to limited aspects of the scheme and did not create any real problems for enforcement, nor jeopardise the entire vires of the order, as has been suggested. Therefore, the basic days at sea provision, one of the substantial matters addressed by the order, is not affected.
We will shortly introduce an amendment to correct those errors, and to include any adjustments necessary as a consequence of the recent agreement in the European Agriculture and Fisheries Council on amendments to the EU scheme. I cannot give the hon. Member for St. Ives (Andrew George) a specific

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guarantee that that will happen on the Floor of the House, but the amendments will be brought forward shortly to remedy the errors that I have outlined.
Mr. Tim Boswell: I am an officer of the all-party group on abuse investigations, which is chaired by the hon. Member for Crosby (Mrs. Curtis-Thomas). I endorse the hon. Lady's remarks earlier, as there is a real worry that miscarriages of justice may have taken place and that people may be in prison who should not be there. Does the Leader of the House agree that one thing at least could be done to make a positive contribution to dealing with the embarrassment caused by the publication of the report just before Easter, and the real situation that is continuing, and that that would be to arrange for an early and full debate so that the matter can be thrashed out?
Dr. Reid: I am not sure that the release of the report before Easter is an embarrassment in itself, although, as I have said already, I have considerable sympathy for, understanding of and agreement with the point made by my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) about the leak. Obviously, I shall reflect on the matter to see whether there is anything more that I think can be done to compensate, but I do not think that the necessary investigative powers are part of my remit or vires.
Pete Wishart: May I, on behalf of the Scottish National party and Plaid Cymru, also welcome the right hon. Gentleman to his new position? A consensual figure such as he is exactly what is required as the new Leader of the House. In that spirit, will the right hon. Gentleman follow the example of his predecessor in making sure that the interests of the minority parties are looked out for? Specifically, will he continue to make progress in ensuring that we have our
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rightful and fair places on Select Committees, and that a member of the minority parties gets a place on the Liaison Committee?
Dr. Reid: Not only do I have reputation for being emollient and consensual, but the hon. Gentleman knows that I am also a long-time guardian of the interests of the Scottish National party. He can be assured that I shall do everything that I can to continue that tradition.
Michael Fabricant: I was alarmed to hear the Leader of the House say that we would have a debate on broadband on 1 May.
Keith Hill: Why?
Michael Fabricant: The hon. Member for Streatham (Keith Hill) asks why I was alarmed, so I shall explain. The most controversial aspect with broadband is its availability in rural areas. Has the Leader of the House forgotten that 1 May is local elections day, particularly in rural areas? I shall try to be in the House to discuss the important question of broadband, but I and many other hon. Members of all parties are likely to be drawn back to our constituencies for election day. That could make it impossible for us to discuss the availability of broadband in rural areas. Will the right hon. Gentleman consider moving the debate away from 1 May to a time when all hon. Members can be here to discuss this important issue?
Dr. Reid: I understand the hon. Gentleman's question, but two things strike me. First, I did not anticipate that a complaint would be levelled at me on my first appearance at the Dispatch Box in my new role about the fact that the House would be having a debate on a certain matter. Normally, complaints arise for the opposite reason. Secondly, I had not anticipated a demand from the Conservative party that we should take a holiday on 1 May.

Iraq (Humanitarian Situation)
2.15 pm
The Secretary of State for International Development (Clare Short): With permission, I should like to make a statement about the humanitarian situation in Iraq, and the international planning for post-conflict rehabilitation and development.
As the House knows, it is now 22 days since military action began. Coalition forces are occupying a large part of Iraq, including parts of Baghdad. British forces are occupying much of the south-east. Our forces have been providing humanitarian assistance in the areas that they occupy, in line with their obligations under the Geneva convention and the Hague regulations. The Treasury has provided £30 million to fund these efforts, and my Department is continuing to provide advice on humanitarian issues to the UK armed forces.
In most of the country, food is not currently a major problem. The oil-for-food programme distributed additional rations in central and southern Iraq before the start of the conflict, so supplies will not run out for many families until the end of April, and we hope that the oil-for-food programme can be re-established by then. There are not, so far, the large numbers of internally displaced people and refugees that were feared. The risks remain, however, that people may move if there are shortages of food or medical supplies, or if the fighting escalates. The UN system has made contingency plans to cope with large movements of people.
The main humanitarian problems to date have involved water supplies in towns and cities to the west and south of Baghdad, where power supplies have been disrupted. Disruption to water supplies presents a real threat to health. In some areas, supplies have now been reconnected, or tankers are supplying water. The Royal Engineers built a valuable pipeline from Kuwait into Umm Qasr, from which water is being tanked to other towns. However, in other areas, the problems remain. We are monitoring the situation very closely, and are looking to do whatever we can to resolve the problems. UK forces are doing all that they can to restore power supplies in the areas that they control.
Over the past few days, we have also received reports of an increasingly serious humanitarian situation in Baghdad. Hospitals are overwhelmed with casualties. Electricity is mostly out of order. Some parts of the city no longer have piped water. Most hospitals are using back-up generators and stocks of additional water pre-positioned by the International Committee of the Red Cross in recent weeks. These are now beginning to run out.
We heard yesterday from the ICRC of violent looting in Baghdad—much more violent than what went on in Basra. The ICRC has a real fear that there will be a breakdown in law and order. There are reports of a hospital being looted and of individuals attacked and, in some cases, raped. The ICRC has said that it is temporarily unable to pursue its emergency assistance mission in Baghdad. That is very serious, as the ICRC is the organisation that gets to hospitals and keeps things running. We have offered to do all that we can to help, and since we received that complaint arrangements have
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been made to secure the ICRC warehouse in Baghdad. The warehouse stores lots of generators and hospital supplies, so it would have been a disaster to lose it.
The ICRC's senior logistician has been killed in Baghdad. I am sure the whole House would like to offer our condolences to his family and friends, and to express our support and admiration for the work that the ICRC is doing in keeping water, energy and medical facilities functioning in this very difficult situation. It really is a very fine organisation. The whole world should admire it.
There has also been looting, as the House knows, in Basra, Umm Qasr and elsewhere in the south. In Basra, some water plants have been looted and rendered unserviceable. UK forces are working with local leaders to try to restore order as soon as possible.
There are reports today that the Kurds have entered Kirkuk, and that looting is also taking place there. We are also monitoring that situation very closely.
As soon as it is safe to do so, UN agencies will return and take over responsibility for co-ordinating humanitarian support, in accordance with humanitarian law and principles. The UN has considerable experience of this role and is well prepared for operations in Iraq. Last week, the UN security co-ordinator assessed some parts of southern Iraq, and a number of UN agencies and NGOs have made initial visits to those areas. The UN will proceed area by area rather than wait for the whole country to be safe, so that it can return with the humanitarian NGOs as soon as it is safe to do so.
In the north of Iraq, local authorities, UN agencies and NGOs are providing assistance. There are some displaced people, but the great majority are being accommodated by relatives or local authorities and assistance is being provided where it is needed. The World Food Programme has succeeded in getting food over the Turkish border and it is now being distributed.
There are serious problems with unexploded mines and ordnance, some of which date back to the 1991 war, and border areas are heavily mined. The coalition is providing information to the United Nations Mine Action Service on mines and unexploded ordnance of which it is unaware. UNMAS is mapping that and is planning a programme to raise awareness of the dangers and mark affected areas and make them safe. We are supporting the Mines Advisory Group and will contribute to further humanitarian mine action through our response to the UN appeal.
On 28 March, the UN launched its flash appeal for Iraq. I committed £65 million—$100 million—from the UK on the day the appeal was launched, and contributions from the US, EU, France, Germany and the Netherlands bring current commitments to more than $1.2 billion. The total appeal was for $2.2 billion for six months, and the UN hopes that it will be partly funded by the oil-for-food programme.
The total DFID commitment to support humanitarian work in Iraq is now £115 million, made up of £32 million to the Red Cross, £78 million to the UN and £5 million to NGOs. Another £95 million is available for further contributions in response to evolving needs. In addition, the Chancellor announced yesterday that he would set aside a further £60 million for DFID to claim from the Treasury if and when needs arise.

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The House will be aware that I have made a commitment—and I believe that it is widely supported—that I will not redirect funds to Iraq from other emergencies such as southern Africa, Ethiopia and Eritrea, Afghanistan or the west bank and Gaza. Neither will I divert funds from ongoing programmes supporting development for poor people elsewhere. The Treasury has generously contributed funds so that help for Iraq is not bought at the expense of other poor and needy people.
When I made my last statement on 24 March, I said that the most important priority was to restore the operations of the oil-for-food programme. On 28 March the UN Security Council unanimously approved resolution 1472, giving the Secretary-General authority to adapt the programme to changed circumstances so that it could continue to operate for 45 days. The World Food Programme estimates that most Iraqis' current household food stocks should last until the end of April, while the UN, Red Cross and NGOs can provide assistance to cover a short gap in the programme.
The scale of need, with 16 million Iraqis totally dependent on the programme and most families partially dependent on it, means that it is critical to get the oil-for-food programme working again as quickly as we can. The World Food Programme concluded contracts last week to buy a further 400,000 metric tonnes of food aid for Iraq, which it intends to use to replenish the oil-for-food distribution system. Supplies should start reaching the region by late April, but they will reach people only if we can keep the distribution system in place. That means helping Iraqis to keep in operation 55,000 separate outlets across the country, 45,000 of which are in the centre and south of Iraq. In some parts of the country, they are still doing so. In others it will be a greater challenge, but we will work hard at it and I will keep the House informed.
We are also working on plans for reconstruction and development. The Geneva convention and the Hague regulations impose obligations on occupying powers. The House should not be disturbed or embarrassed because I am using a common term in international law. The Attorney-General advised us that it was perfectly proper under resolution 1441 and previous resolutions to take military action, but our forces have the legal status of an occupying power in an occupied territory. That is no secret and I repeat that there is nothing embarrassing about it. It is all covered by the Geneva convention and the Hague regulations. As I was saying, they impose obligations on occupying powers to provide for humanitarian needs, to keep order and to keep the civil administration operating.
Major reform and reconstruction require the authority of a legitimate Government authority. My right hon. Friend the Prime Minister and President Bush made clear in their Hillsborough communiqué that they plan to seek the adoption of a new UN Security Council resolution that will affirm Iraq's territorial integrity and make provision for an appropriate post-conflict Administration for Iraq. The UN has a vital role to play in helping the Iraqi people to establish a broad-based and fully representative Iraqi interim authority as soon as possible.
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The establishment of a legitimate Government is an essential precondition for the engagement of the World Bank, the International Monetary Fund and the international community to provide support to the Iraqi interim authority. Without the full involvement of the bank and the fund, rehabilitation would be less effective and more difficult.
Iraq is a naturally wealthy country with considerable oil resources, educated people, strong institutions and a proud history. It should be a prosperous middle-income country. In order to make progress, there will need to be agreement to reschedule and restructure Iraq's huge debt and reparations claims. Currently, there is little economic activity in Iraq apart from oil exports, which fund a massive programme of handouts through the oil-for-food programme. The reform effort will need to support Iraq in a transition from a centrally planned impoverished economy to build a modern growing economy. It will be possible to phase out the oil-for-food programme as the economy develops.
The atmosphere in the wider region is currently tense and angry, and the conflict has caused economic decline in neighbouring countries. Economic development in Iraq will benefit its people and the wider region, but we must also remember that there is a severe humanitarian crisis in the west bank and Gaza strip and that progress in the middle east requires full implementation of the road map and the establishment of a sovereign Palestinian state alongside Israel by 2005. My right hon. Friend the Prime Minister and President Bush reaffirmed their commitment to the implementation of the road map at the Hillsborough talks.
Events on the ground in Iraq will change day by day. As the military phase of the crisis comes to an end, the priority will be to provide order and humanitarian relief and to establish an Iraqi interim authority so that the longer-term reconstruction effort can begin. I will keep the House informed. Reports on the humanitarian situation are being placed in the Library of the House each weekday morning.
Mrs. Caroline Spelman: I should like to thank the Secretary of State for letting me have a copy of her statement in advance. I welcome the swift progress of the military campaign. Although the humanitarian position in Baghdad remains serious, a lengthy siege of the city could have been a major humanitarian disaster.
I join the Secretary of State in expressing my condolences to the family and friends of the ICRC worker killed in Baghdad. The ICRC reports that hospitals are stretched to their limits as a result of the fighting, which is worrying. When will Baghdad be safe enough for NGOs to deliver emergency supplies, or are coalition forces already doing so? When will the power and water supplies be restored?
There is an urgent need for the restoration of law and order. The chaotic scenes of violence and looting that we have seen in Basra are preventing aid organisations from delivering vital aid to Iraq. Does the Secretary of State believe that it is currently safe enough for them to work there? If aid agencies are unable to enter Iraq for some time, does she accept that the coalition must discharge its responsibilities under the Geneva convention to deliver aid?

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Given that the war is not over and that our forces will still be engaged in fighting the remnants of the Iraqi regime, how well equipped are our troops for keeping the peace in their humanitarian role? The Secretary of State said that the UN agencies will return as soon as it is safe to do so, but is it not a Catch-22 situation? Does she agree that there is a key role for the UN in maintaining order in Iraq now?
The Secretary of State said that the success of the oil-for-food programme depends on good distribution, which is absolutely key. However, where it is not working, are coalition troops manning food convoys, or will UN or Iraqi nationals do that? Given that the most serious food shortages are in southern Iraq, is the port of Umm Qasr working to its full capacity? We understand that only one navigation channel is open, and only for shallow shipping.
The question remains about the extent of the UN's role in the reconstruction of Iraq. In an earlier statement, the Foreign Secretary said that his opposite number now disputes that President Chirac said that the reconstruction of Iraq was a matter for the United Nations and it alone. That is very different from saying that the United Nations should have a vital role. What does that difference augur for a UN resolution on the reconstruction of Iraq? The Secretary of State has said that, without such a resolution, coalition forces will be an "occupying" army under international law. However, given the coalition's rapid progress, a resolution on reconstruction will be required sooner rather than later. If we do not get a resolution soon, what does the Secretary of State believe will be the legal position of our troops in Iraq? Does she stand by her statement of 26 March that the coalition has no authority
"to reorganise institutions or establish a new Government"— [Official Report, 26 March 2003; Vol. 402, c. 277.]
That statement seems to contradict what she said in today's statement.
We welcome the extra funding that the Chancellor has announced for humanitarian relief and reconstruction in Iraq. However, we are concerned to hear that only just over half of the UN appeal for funds has been pledged. Does the Secretary of State agree that a key lesson from Afghanistan is that a lack of funding can seriously hold back reconstruction? That could prove a problem in Iraq, too.
If our troops are to be welcomed as liberators and not as conquerors, Iraqis must be closely involved in the process of reconstruction. Will the Secretary of State say what is being done to ensure that Iraqi companies, Iraqi teachers and Iraqi doctors and nurses are fully involved in the rebuilding of their country? What consultation is taking place with Iraqi opposition groups on the form of a new Government?
I commend the troops, who have done so much to liberate the people of Iraq over the past three weeks. I also pay tribute to the courage of the people of Iraq who have come on to the streets to celebrate the downfall of Saddam's regime. We must mirror the success of the military campaign with an effective programme of humanitarian relief. The end of Saddam Hussein must herald a new beginning for the people of Iraq.
Clare Short: Let us all hope that there is not a lengthy siege of Baghdad. Yesterday's scenes were very
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welcome, but Baghdad is not yet safe or secure and the fighting is not yet over. We must not act prematurely—the situation is very dangerous. I cannot tell the hon. Lady when the UN will be able to return to Baghdad, and the NGOs tend to go in when the UN goes in. It is the Red Cross that moves in when circumstances are so difficult, but even the Red Cross is not operating at the moment, which is the real risk to Baghdad. However, we are talking to our military—who, in turn, are talking to our coalition partners—about ensuring that the Red Cross's supplies are secure and that hospitals are made secure. The Red Cross has to gain access to Baghdad and the coalition can help in getting the water supply working and getting basic drugs in.
As I said in my statement and as I have made clear before, the aid agencies will return. The UN is ready. It has a system of reviewing security, after which individual NGOs will review their own security. That is beginning to happen in the south. The progress will continue, dependent on the military situation.
As I have made clear—repeatedly, I had thought—under the Geneva convention and the Hague regulations the coalition has duties of humanitarian care until such time as things are safe, when the UN will return and take over the role. That is why the military has humanitarian advisers and why the Treasury has provided resources. There are food supplies that are not needed; the shortages have been in water, power and health supplies to some hospitals.
There has been enormous muddle in the debate on the UN's role in reconstruction.
Mr. William Cash: In the hon. Lady's mind.
Clare Short: There is no muddle whatsoever in my mind. If the hon. Gentleman is muddled, that is a great pity, because the position in international law is absolutely clear and has been agreed by all countries. By the authority under which we are taking military action, our forces are occupying forces in occupied territory, with duties under the Geneva convention and the Hague regulations to supply humanitarian relief to civilians, to keep order and to keep the civil administration running. The forces are empowered to make such changes as are necessary to keep the civilian administration running, but they are not entitled to bring a new Government with sovereign authority into being or to make big structural reforms in the country. That is absolutely clear and is agreed by all international lawyers. There were differences of view about the authority for conflict, but there are no differences whatever on this issue. The hon. Gentleman should go back to school if he thinks that that is not the case.
The resolution that will be needed in the Security Council, to which President Bush and the Prime Minister have reaffirmed their commitment, is not for humanitarian relief or for the troops to do what they have to do under the Geneva convention, but is to bring into being a Government with legitimate authority. Of course, in the meantime, our troops will consult local people in all the towns where they are operating and will take advice on issues such as whether policing can be up and running again. However, for the restructuring of the political system in Iraq, a Security Council resolution will be needed to give proper authority.

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The hon. Member for Meriden (Mrs. Spelman) said that only half the UN appeal had been funded. However, given that such a short time has elapsed, I think that that is quite good. There are billions of dollars in the oil-for-food programme; it is a question of getting that money released and getting food supplies into the country. Ships are bringing food in, but the big problem will be distributing it to people across the country.
I do not agree that a lack of money has held back reconstruction in Afghanistan; it has been a lack of order outside Kabul.
I agree absolutely with the hon. Lady that Iraqis must be engaged in rebuilding. The Iraqis are a very proud people and there are lots of educated people. The distribution system for the oil-for-food programme depends on Iraqi people. Iraqi engineers have been keeping the oil industry going, often using old technology. We must not put them to one side. They must be engaged in running their country in the interim before taking the lead in setting up the new Iraqi interim authority.
Dr. Jenny Tonge: I, too, thank the Secretary of State for being allowed advance sight of her statement. My party joins in sending condolences to the families of everyone who has been killed in this conflict—civilians, military personnel and voluntary workers.
The right hon. Lady acknowledged that the security situation in Iraq is dire and that stopping looting, fighting and further damage to infrastructure is of prime importance in allowing the NGOs and the UN to do their work. While we wait for that, will she answer a few specific questions? When will humanitarian corridors be set up? Will more British soldiers be needed to keep them secure? We have heard a little about Umm Qasr, where the deep port is not yet open, but will the right hon. Lady comment on the news that insurance companies are not insuring boats that use the port, which is inhibiting the delivery of aid?
I am sure that we have all been appalled by the harrowing pictures of civilians who have been injured during the conflict—in particular, the pictures of children. I understand that the Red Cross and Médecins sans Frontières is not operating in Baghdad at the moment and that conditions in hospitals are appalling. When does the Secretary of State expect more medical supplies to arrive? Are Army medical staff able to help in any significant way? Has any thought been given to airlifting wounded civilians—especially the children—out of Iraq to receive treatment in other countries while the situation remains as it is?
When does the right hon. Lady expect clean water to be available to all Iraqis in Basra and Baghdad? What is being done about reports that the illegal selling of water by truck drivers is going on all over the country? Will she consider making a statement to the House on the humanitarian situation in the west bank and the Gaza strip? That issue is of great concern.
Clare Short: I am sure that we all agree with the hon. Lady that the loss of any life regrettable—and all innocent civilian life. We send our condolences to all the
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families involved. Stopping the looting is of enormous importance, even for emergency humanitarian operations. The UK military had to secure Basra and ensure that our troops were safe, but the priority now is to stop looting and restore order so that humanitarian relief can flow, the Red Cross can gel access to hospitals, and the UN can come in to start the big humanitarian operation.
We favour not corridors but humanitarian space. We do not want narrow ways in; we want to open up bigger parts of the country for normal humanitarian operations. That is what the UN wants rather than humanitarian corridors. The UN thinks that there can be some return in the south and individual NGOs are planning their return.
A lot of food is already on the seas. Ships are on their way to Umm Qasr with the massive supplies of food that are needed to get the oil-for-food programme up and running again. I am not aware of a problem at the port, but I shall double-check and will get back to the hon. Lady.
Insurance companies always increase their prices massively in crises such as this. Expensive insurance is available and it is being paid for. The experience was the same in Afghanistan and in other crises. I shall double-check that point, too.
The situation in Basra will progress quickly and our troops will be able to ensure that there is enough power. Lack of power means that the water supply is not being used to full capacity. The Red Cross has patched it, but our forces and our engineers will be able to put it right.
The situation in Baghdad is much more unstable and much more worrying. Fighting is still going on and the Red Cross cannot operate at present. The priority is to secure its warehouse and to get Red Cross workers back into the hospitals. There are Red Cross supplies in the city, but the problem is getting access to them. Similarly, appeals have been mounted to help people such as the poor little boy who lost both his arms, as well as his parents, but there are problems in getting access to many of the injured in hospital. Iraqi doctors are bravely working long hours, but they have no water or electricity and they are running out of drugs. The absolute priority is to get the Red Cross in to reinstate those emergency supplies.
The allegations about illegal sales of water relate to the pipeline to Umm Qasr built by British armed forces. Water sales are not illegal in the sense that, in a very hot country with limited water, people actually make their living by supplying water. However, our troops have stopped those sales for the time being. When some people have no water and the poorest have no access to it, it is not right to charge for water.
I do not know whether there will be time for me to make a statement to the House on the west bank and Gaza. However, I shall certainly try to arrange for a written statement, as the situation there is bad.
Mr. George Foulkes: I have no doubt whatever that my right hon. Friend is the best person to lead our reconstruction efforts in Iraq. Does she agree that it is unhelpful to focus on alleged disputes and on the legalities? In circumstances such as these, the problem is to get everyone involved, to get enough resources, to achieve

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co-ordination and to keep interest going when the media spotlight turns away. I know that my right hon. Friend is involving the UN and its agencies, the rich countries, the European Community and the NGOs, but will she ask the World Bank, whose spring meeting will be held soon, to make a commitment to give resources for the long-term support of Iraq, which will need support from every possible quarter?
Clare Short: I wholly agree with my right hon. Friend. Whatever the position taken by any person or country during the run-up to the conflict, everyone must be agreed on ending the conflict, getting humanitarian supplies running again, ensuring that the future of the country is better than its past and moving forward on the peace process in the middle east so that the whole region can have a better future. We need to work to bring the international community back together. The World Bank and the International Monetary Fund cannot engage with the problems unless there is a legitimate Government. Many countries—for example, Japan—traditionally are big suppliers of aid; they want a legitimate Government and a Security Council resolution. Whatever people's views were before the conflict, everyone should use all possible influence to achieve the Security Council resolution so that we can work with the UN to set up a proper interim authority. That is certainly what the Government are doing.
Tony Baldry: I thank the right hon. Lady for the briefings posted daily on her Department's website; they are extremely helpful to everyone who wants to understand the situation.
I do not think that there are great differences between hon. Members on what is being attempted in respect of humanitarian space. Presumably, the UK Army, UK NGOs and others will focus on Basra to try to create the largest humanitarian space so as to reinstate power and water supplies and then move out from there. Will the right hon. Lady try to enlist the help of UK NGOs, many of which have considerable experience in water provision? The other day, members of the Select Committee were with the World Bank, whose president made it clear that the bank wants to support Iraq as soon as possible. However, he made it clear to us, in terms, that the bank could not do that without specific UN authority.
Clare Short: I am grateful to the hon. Gentleman. Many tributes have rightly been paid to our armed forces for their courage, but when they undertake their duties as peacekeepers, under the Geneva convention, they are undoubtedly the best in the world. They built on their experience in Northern Ireland, Kosovo, Bosnia, Sierra Leone and East Timor, and brought ISAF—the International Security Assistance Force—into being in Kabul. In their work in Basra, they are a model for the world and we can all be enormously proud of what they are doing. They want to undertake their duties under the Geneva and Hague regulations and hand over to the UN as soon as it can operate. That is clear. Their intention is to fulfil all the proprieties correctly. In the meantime, they will do everything in their power to achieve order and to keep things running.
Not many UK NGOs operated in what was Baghdad-controlled Iraq; more of them have experience in the north. Some are preparing to return and when they do
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so they will do a good job, but we must be careful not to displace Iraqis. They are a proud, educated people with a strong tradition of running the oil-for-food programme. We need complementary relationships, but Iraqis must lead wherever possible.
The hon. Gentleman is right: the World Bank and the IMF have conducted analytical work and are preparing for a needs assessment, but they cannot operate without a legitimate Government, and that requires a Security Council resolution.
Helen Southworth: What plans does my right hon. Friend have to involve Iraqi women in the reconstruction of the new Iraq, so that they can play a full part, professionally and politically as well as domestically, in creating the new Iraq?
Clare Short: Half the population of Iraq is aged under 15. As the country has crumbled, education for the younger generation has been less good. However, there are many highly educated Iraqis, including many women, who already play a significant professional role in the administration of the country. As was said earlier, Iraq is like the former Soviet Union, where people had to join the Communist party if they wanted to be a teacher. Many members of the Ba'ath party are not the real leaders of the regime, and they will need to remain in their jobs so as to continue to run their country. Women will have a role. All over the world, when the UN brings new legitimate Governments into being, it has made a point of ensuring that women are represented in those Governments.
Alistair Burt: The scale of the task to be undertaken indicates that, whatever the resources of our forces, they must be joined as soon as possible by humanitarian aid agencies. In giving evidence to the Select Committee when it examined the possible consequences of conflict, the NGOs made it clear that it would be difficult for them to operate without UN authority. That is why it is vital to indicate precisely what will happen and when. Although some NGOs have decided to re-engage, is the Secretary of State confident that the facts on the ground now mean that the first responsibility of aid agencies, regardless of who is actually in control and what the legalities may be, is the people of Iraq? Is she confident that agencies have put aside any concerns that they may have had before the conflict and that they are ready to be engaged on the scale that is necessary to support our forces and deliver properly to the people of Iraq?
Clare Short: There is absolutely no need for a Security Council resolution of any kind for the humanitarian system to operate. The UN has a duty, always and everywhere, if there is safe access, to help people on any side of any conflict. The UN is clear about that. The only question relates to operational safety. As soon as any part of the country is safe, the UN will say so. The UN has good systems for checking safety and the NGOs tend to follow its advice. Movement into the south is beginning. The UN is the bigger operator and the NGOs help to deliver services at the end of the line. Neither the UN nor the NGOs have any doubt about operating. There have been arguments about NGOs operating with the military; NGOs have reservations about that. The

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military operate under the Geneva convention and will hand over to humanitarian systems as soon as possible. That handover will not be a problem for our NGOs and our military.
Tony Worthington: The Prime Minister and the President of the United States made good progress earlier this week in saying that there is a vital role for the United Nations. Everybody is saying that humanitarian aid is necessary. Normally, that would be undertaken by OCHA—the Office for the Co-ordination of Humanitarian Affairs—which is a well-established United Nations organisation. We now also have ORHA—the Office for Reconstruction and Humanitarian Affairs—which was set up by the United States Government under General Garner. There cannot be two co-ordinators. Does my right hon. Friend believe that we are on the way to solving that problem?
Clare Short: A clear solution is available. The coalition's duties under the Geneva convention and the Hague resolutions are very considerable. To ensure that civilians are properly cared for in humanitarian terms, given the situation in Baghdad—[Interruption.] If the shadow Attorney-General, who appears not to understand the law, would stop heckling, he might learn something. We need to secure order, to get oil-for-food up and running and to get policing back. Those requirements are all covered by Geneva convention regulations on looking after civilians, keeping order and keeping civil administration running. That would be a proper role for ORHA. The UN's role is needed in the bringing into being of a legitimate Government with sovereignty. The UN can operate as soon as there is safety—it does not need any authority—and it should
lead on humanitarian issues.
Mr. Simon Thomas: I thank the Secretary of State and her officials for keeping hon. Members of all parties informed about the developing humanitarian situation—that is welcome. Will she confirm how much money is already held in the oil-for-food programme account unspent? That money could be released to the considerable benefit of the development and reconstruction of Iraq. Is a UN resolution required to release those resources and, if so, will the proposed new resolution that is being discussed include such provisions?
Will the Secretary of State confirm when sanctions on Iraq will be lifted? What steps need to be taken in the UN in terms of a resolution to that effect, so that there can be economic development that is not just based on the sale of oil? Will the UN resolution that she is discussing include the lifting of sanctions? Finally, what will she be doing in the next week or so to ensure that the resolution is finalised?
Clare Short: The oil-for-food programme involves all the oil that is legitimately sold from Iraq. All the money goes into a UN account that funds the purchase of food, medical supplies, basic repairs to water and sanitation systems, and so on. There is about $2 billion in the fund.
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Since the passing of the UN resolution to which I referred, more food is being purchased. Much of the wheat comes from Australia and therefore has to travel by sea for some time. About $5 billion is tied up in outstanding contracts. An attempt is being made to weed out those contracts that will not be fulfilled to release the money so as to make more orders. Much of the oilfield has been secured, and when oil starts to flow again, money will flow again. We have to keep the system running until the economy can grow, then it can be wound down.
The new resolution was required to give the Secretary-General the authority to act, because under the previous arrangements the Iraqi Government made orders, and they were in no position to continue to do so. That role has been taken by the UN. The authority was given for 45 days, and there will need to be arrangements to roll it forward. There is general agreement that sanctions should be lifted as soon as possible. We need a properly verified process for looking for chemical and biological weapons and for getting rid of them. Sanctions should then be lifted as rapidly as possible so that the economy can start to recover and trade with neighbouring countries can resume.
We are all working on the UN resolution that will help to bring into being a legitimate interim Iraqi authority. The main thing is to improve the atmosphere of relationships in the international system. I am going to the World Bank spring meetings with the Chancellor this weekend, and we shall do some work on that so that the World Bank can engage with the situation.
Ann McKechin: I strongly agree with my right hon. Friend about the necessity of the UN's involvement in the creation of the interim authority, especially to aid reconstruction. Does she share my concern about the comments made in the past 24 hours by the US Secretary of State, Colin Powell, to the effect that the coalition, not the UN, should determine the membership of such an interim administration? Such moves are likely to make a UN resolution to support it more difficult, which will in turn make reconstruction much more difficult.
Clare Short: I agree with my hon. Friend that there have been many different voices in Washington that are amplified into New York, and they do not help. However, what President Bush said at Hillsborough did help. He made very strong and clear comments about the need to involve the UN in the process. He is the President, so the right guy is saying the right things.
Gregory Barker: The Secretary of State said in her statement that reconstruction requires the authority of a legitimate government authority. Does she realise that under the fourth Geneva convention of 1949 and the Hague regulations of 1907, the coalition forces represent a legitimate authority? Would it not be appalling if the serious business of the reconstruction of Iraq and the absolute imperative for re-establishing civil society were held up for a day, let alone weeks or possibly even months, while horse-trading went on at the UN?
Clare Short: The hon. Gentleman might find international law irritating, but we need a law-abiding

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world with strong multilateral institutions. Under the law that we have, the reconstruction and rehabilitation of Iraq can move forward very well. The real safety of that country depends on Iraqis feeling that they are in the leadership as regards the reconstruction of their country, and the UN is needed to bring that about. That is the view of virtually every Government in the world, but not, clearly, of the hon. Gentleman.
Mr. Harry Barnes: The peculiarity of the oil-for-food programme is that the distribution of food was in the hands of the Ba'ath party, as it was coterminous with the state. That gave it a tremendous amount of extra influence over the 60 per cent. of the population who depended on that programme. The Secretary of State said that the World Food Programme has contracts for a further 400,000 metric tonnes of food that will replenish the existing distribution system. Will that distribution system be subject to radical change? If the individuals from the Ba'ath party who terrorised people turned up again, that would not be helpful in establishing a peaceful Iraq.
Clare Short: My hon. Friend is right. That is one of the tragedies involved in the prolongation for 12 years of what was meant to be a short-term sanctions regime. The people of Iraq became increasingly dependent on an overweening state, and as the economy shrivelled, handouts were all that most people had, and the regime was strengthened. That is a regrettable feature of the prolongation of the sanctions regime. We have to get the programme up and running because of the sheer scale of the operation that is needed to keep people fed in the short term. My hon. Friend is right that it was used punitively, and we have to ensure that people who were excluded are included in future distribution. We need to get it up and running again in order to phase it out as rapidly as possible. Without it, however, getting food to everyone in need would be an enormous task, and the international system has never done anything on that scale.
Mr. Paul Marsden: I congratulate the Secretary of State on her commitment to getting humanitarian aid into Iraq. Although I agree that Iraqi hospitals are in a terrible state, that is the result not only of the bombardment, but of 12 years of economic sanctions. What more can be done to give those injured civilians access to specialist medical facilities in this country and across the west?
Clare Short: The hon. Gentleman is right. The state of the hospitals and the water and sanitation systems was terrible before the conflict began. Since then, there has been some cutting off of energy supplies and power supplies. Many people are without water. Hospitals with large numbers of injured people have no power and no water, and are running out of drugs. The International Committee of the Red Cross is the heroic organisation that is operating in that situation. It has supplies pre-positioned throughout the country, and its people have been enormously brave throughout the conflict in reconnecting power, bringing in generators
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and moving water in. The biggest worry is that the Red Cross is not operating in Baghdad. That is the priority; then we must go step by step. At the moment, we have to maintain supplies of water and basic drugs—hospitals are running out of painkillers.
Mr. Tom Clarke: May I declare an interest as chairman of the all-party Kurdistan group? At our annual general meeting on Tuesday, a number of Kurds who attended expressed huge admiration for the tremendous work that the Secretary of State has done and continues to do. They understand, as common sense suggests, that there will be a period of transition before formalisation and the involvement, for example, of the United Nations. Does my right hon. Friend agree that, when that occurs, it is right to accept her advice to try to build bridges with all other nations, including the neighbouring state of Turkey? Without that, it will not be possible to rebuild northern Iraq, and the whole of Iraq, in the way that that was done following the conflict in the early 1990s.
Clare Short: I agree very much with my right hon. Friend and I am grateful for his remarks. Of course, the transition period will comprise Geneva convention obligations to keep things running; the UN humanitarian system running increasingly, and subsequently, I hope; consultations with local communities; and a process to bring the interim Administration into being. I hope that all that will run together very soon. Building bridges and connections, and getting co-operation from neighbouring countries are also important, and work on that has been going on. Tension has always existed between Turkey and the Kurdish area of Iraq, but things have gone well up to now, and we must keep that going. Turkey had sealed the border and getting humanitarian supplies through was a problem, but they are coming through now and being distributed in the north. I agree with my right hon. Friend's point, we are working on it, and there is similar progress in relation to humanitarian supplies coming in from Iran. All of us need to unite to give the people of Iraq a better future and to work together for the middle east peace process.
Mr. Chris Mullin: May I welcome my right hon. Friend's assurance that resources will not be diverted to Iraq from other areas of the world that face very serious problems? Does she think that our allies and international institutions will take the same view? Is there not a danger that events in Iraq, serious as they are, will distract attention from, for example, the catastrophic situation in the Congo or the looming famine in Ethiopia and Eritrea, where millions of lives are at stake?
Clare Short: My hon. Friend is right that that is always a danger. When humanitarian catastrophes occur, those that command media attention tend to get priority. The people affected by the non-media-attended crises are equally important, however, and they must be properly cared for. The World Food Programme's appeals are bigger than they have ever been in its history. The WFP is worried that, even if it gets the

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money, its systems, capacity, logistics and the people responsible for moving masses of food around the world will be under strain. My Department has wonderful draw-down arrangements with logisticians, engineers and health workers, as my hon. Friend knows, and we have put those at the service of the World Food Programme. There is no doubt that international systems will be very strained, in terms not just of money but of the capacity to move and attend to all the emergencies in the world. We must work hard to make sure that that is done.
Mr. Andrew Miller: Despite the differences between nations about the strategy for dealing with Saddam Hussein, the whole House will welcome the contributions made to the UN fund by the EU, particularly by France and Germany. Will my right hon. Friend convey to her opposite numbers in France and Germany how much we welcome that contribution, and will she urge other EU partners similarly to look at their responsibilities, as the EU has an important role to play in this important reconstruction programme?
Clare Short: Yes, indeed. The Netherlands has also contributed individually, as well as through the EU. I will be having a working dinner in Washington, in the margins of the World Bank meeting, with a number of Development Ministers, including my colleagues from France and Germany, to achieve the purpose to which my hon. Friend refers.
Mr. Andrew Love: My right hon. Friend mentioned in her statement the need to reach agreement to reschedule and restructure Iraq's huge debts and reparation claims. Two weeks ago, I was at the UN, and I was staggered to discover that those could amount to up to a third of the income of the country. Does my right hon. Friend accept that not only rescheduling but, in some cases, cancellation of some of those reparations 450
payments should be treated as a matter of urgency if that country is to get back on its feet, restructure and rebuild its economy?
Clare Short: My hon. Friend is absolutely right. The level of debt and claimed reparation payments is so great that they could lock a naturally wealthy economy into an inability to recover: shades of Germany after the first world war. It is very important that we get this right. Paris Club and London Club arrangements exist for rescheduling and writing down debt. It is a UN matter in relation to compensation, but the matter needs attention; otherwise, a corset will be placed around the economy and it would never recover.
Mr. Neil Gerrard: I welcome what my right hon. Friend said about the duties of occupying powers to make sure that humanitarian aid arrives and civil administration is rebuilt. Am I correct in believing, however, that it would not be legitimate for an occupying power to enter into long-term contractual arrangements with private companies that would be binding on a future legitimate Iraqi Administration? Is there any truth in the reports that we are hearing that, for example, a particular American company is already being given a long-term contract to run the port of Umm Qasr?
Clare Short: My hon. Friend's understanding of the law is basically right. In relation to much of the publicity about USAID, the development agency, and contracts with American firms to spend the money available for the first phase of the humanitarian duties under the Geneva convention of the US armed forces, they have been talked about in such a way that they sound like permanent contracts. That would not be legally possible, and most reputable companies would not accept such contracts, because they would know that that was not legally possible. It is possible to have contracts—the port has to be kept running—but the long-term future of the port will be a matter for the Iraqi interim authority when it comes into being. It is important to get the World Bank and the IMF involved to bring standards of transparency and to ensure the proper letting of contracts, and to advise the interim authority in that regard.

Points of Order
3.7 pm
Mr. William Cash: On a point of order, Madam Deputy Speaker. Before the war with Iraq, I raised on a point of order with Mr. Speaker the question of the basis on which Ministers can exercise their discretion to publish the legal advice that they have received. That question led to the Prime Minister issuing the legal advice, in summary form, that the Attorney-General had given on the legality of the war against Iraq. A similar situation seems to be developing in respect of some of the answers that we have received today about the post-reconstruction governmental situation in Iraq. On the basis of the precedent that has been established, would it be possible for the Secretary of State for International Development to supply the advice to the House as the Prime Minister did with regard to the legality of the war against Iraq?
Madam Deputy Speaker (Sylvia Heal): That is entirely at the discretion of the Minister concerned.
Michael Fabricant: On a point of order, Madam Deputy Speaker. As you know, we now have less than three hours for this debate, and I do not wish to detain the House with this point of order. It strikes me as surprising, however, that the Speaker has not used the powers that he could have used to restrict the time available for Back-Bench speeches, as I understand that more than a dozen people would like to participate in this debate. Can you give us an insight into why that decision was made, and at least recommend how long Back-Bench speeches should last?
Madam Deputy Speaker: The House, it seems, sometimes wants it both ways. It wants statements from Ministers during the present crisis, and it also wants the opportunity to have this important debate. I think that Members are probably mature enough to impose their own limit on speeches today.

Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [9 April].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,

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

    (2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

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

    (b) for refunding an amount of tax;

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

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

    (ii) so far as it is applicable to services, applies to services of every description— [Mr. Gordon Brown.]

    Question again proposed.

    Budget Resolutions and Economic Situation
    3.9 pm
    Mr. David Willetts: I begin by declaring the interests that appear in my entry in the Register of Members' Interests.
    Yesterday's Budget was overshadowed by events in Iraq, and I am sure that all hon. Members recognise that the drama of what happened in Baghdad rather overwhelmed whatever was happening in the Chamber. The collapse of an entire regime is inevitably more dramatic than what is simply the collapse of a set of economic forecasts. But even without those events thousands of miles away, yesterday's Budget statement was strangely lacking in vigour and anything that would have compelled our attention. The reason for the strange absence from the Budget statement of interest or drama was that the two crucial strategic decisions that will shape the remaining months or years of the Chancellor's occupancy of his office were both avoided in his statement yesterday, and neither of them can be delayed for much longer.
    The first evasion, of course, was on the euro. The Chancellor is in a very odd position. His defence of the declining performance of the UK economy is that at least we are doing better than the continental economies. As always, things are relative; it is not really that we are doing well, but they are doing even worse. The right hon. Gentleman cannot deliver a Budget in April saying that we are doing so much better than they are, and then turn round a few minutes, days or weeks later and say that he wants to tie our monetary and fiscal policies inextricably to the very economies whose performance he has been denouncing. As a result of that central confusion between the alibi that he presented to the House yesterday and any argument for entering the euro in the future, he has carefully avoided saying anything about the biggest single decision facing him as Chancellor.

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    However, there was a second evasion in yesterday's Budget statement, concerning what will happen to the Chancellor's fiscal plans in the medium term. He has public spending as a proportion of national income throughout the whole period covered by the Budget, gradually growing from 36.5 to 38.5 per cent. of gross domestic product, reaching a higher level as a percentage of GDP than we have seen for more than 20 years. What we need to know is how the Chancellor will finance that steady increase in public expenditure not just in real terms, but as a proportion of our national output.
    One option, of course, is more borrowing, and the Chancellor is going to borrow more. He shows his future borrowing running at more than £20 billion as far as the eye can see. As well as more borrowing, there is more taxation, and the table on page 260 of the Red Book is devastating because it shows tax revenues rising as a percentage of GDP from now until kingdom come, going upwards, well above 38 per cent. of GDP. So what the right hon. Gentleman's Budget shows is that he will have higher spending, higher borrowing and higher taxing. That is not the prospectus on which the Government were elected in 1997; it is not the prospectus on which they were elected in 2001; but it is the prospectus buried in the tables in the Red Book.
    Kali Mountford: What is the hon. Gentleman most proud of from the Conservative party's period of tenure? Was it the high borrowing or the low spending that he was most proud of?
    Mr. Willetts: I am proud of the fact that we left our economy in 1997 in infinitely better shape than we found it in 1979—that was our achievement, and all Conservative Members can still take great pride in it.
    I want to press the Chancellor on the fact that more spending, more borrowing and more taxing are in his own forecasts buried at the back of the Red Book, and that is based on a quite exceptionally favourable set of economic assumptions. He is saying that the British economy will now grow by 2 to 2.5 per cent.—whereas the International Monetary Fund has said that it might perhaps grow at 2 per cent.—and next year it will miraculously bounce back to a growth rate of 3 to 3.5 per cent., when the IMF said only yesterday that it believed that the growth rate next year was most likely to be 2.5 per cent.
    So having been caught out with his forecasts already and twice having to reduce his forecasts for this year, the Chancellor shows no compunction whatsoever in carrying on assuming that he will have high growth rates in future. He is like someone who has just lost a bet on the grand national and says that that is evidence that he is more likely to win his bet next year. He is no more likely to be proved correct in next year's forecasts than in those for previous years.
    If the Chancellor's forecasts are not correct and the outside, independent forecasters and international organisations are, the scenarios will be even worse than those set out in the Red Book. Indeed, the Institute for Fiscal Studies has warned in the last hour at a seminar on the Budget that it believes that the Chancellor will
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    face tax increases of between £4 billion and £11 billion simply to finance the public spending plans set out in the Budget if its economic forecasts, rather than the Treasury's, are correct.
    The Budget has two crucial omissions—one in regard to the euro; the other the failure to set out what the Chancellor will do when he faces the fiscal crunch of being unable to finance the spending plans contained in the Budget. But the Chancellor tried to fill the gaps that should have contained his central Budget judgments with a large amount of detail on tax credits and benefits.
    The Chancellor is one of those anoraks who is deeply interested in those things—and, I confess, so am I. I am rather intrigued by some of his proposals. I have previously debated with the Secretary of State for Work and Pensions the ideas, for example, about the reform of housing benefit, to which I give a cautious welcome. Some of the ideas in the Budget on such subjects are well worth exploring, but I have to tell the Chancellor that he will not compel the nation's attention if he makes those ideas the central point of a Budget judgment.
    Housing benefit reform and a variety of other measures that would pad out a rather thin social security uprating statement really will not do as the centrepiece of a Budget statement during a debate on the future of the nation's economy. Given that the Chancellor has offered us that material, I should like to touch for a few minutes on four of the specific topics in the Budget: the child trust fund; the Chancellor's proposal on pensions and savings; his measures to try to improve employment; and, finally, his tax credits.
    I have chosen to begin with the child trust fund, partly because there is a considerable degree of shared ground. I accept that one of the most interesting developments in the thinking about the reform of the welfare state in the past decade has been the recognition that we should think not just about the income of people who are in poverty, but about the importance of encouraging them to build up assets and pots of saving as well. Hon. Members on both sides of the House share that ground. It goes back to the Tory vision of property-owning democracy, and we wish to see more people in this country owning more assets.
    We are happy to participate in the debate on assets and poverty, but I have to tell the Chancellor that, as always, what is basically a good idea is spoilt by an obsession with making everything so complicated. Instead of one scheme, there are two: a child trust fund and a savings gateway. Those two different proposals are easily confused. His child trust fund will involve not just putting in money when a child is born, but perhaps further payments—we do not know the detail—when the child is five, 11 or 16. There will be some sort of means test because there are two values of payment— £250 or £500—so there presumably has to be a means test at four different stages of each child's life to assess whether the higher or the lower payment will be made.
    So, to choose an example at random, the Chancellor's neighbours in Downing street, with four children, would face 16 separate occasions of means-testing for their four children simply to participate in his child trust fund. It seems rather excessive to require the Prime Minister's family to submit information about their income to the Chancellor on 16 separate occasions to

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    enable him to establish exactly the size of payment that he will make into their children's bank accounts. Why could he not do it a bit more simply?
    The Chancellor's scheme stops at the age of 18, perhaps because that is when the money will be needed to pay the tuition fees that this Government have introduced. We want a scheme that carries on encouraging and rewarding saving throughout people's entire working lives. That is why our lifetime savings account not only carries forward into the future, but is far simpler and more flexible than what the Chancellor has proposed.
    The second subject that I wish briefly to raise is the question of pensioners and the importance of saving for retirement. One of the other extraordinary omissions from yesterday's Budget statement was anything about the pensions crisis facing our country. We are seeing the collapse of the post-war settlement in British pensions and the collapse of occupational funded pensions, which have been such an important part of financing the retirement of millions of people. I am surprised that the Chancellor did not feel the urge to say anything whatever about that subject, especially given his own track record in that regard. We all remember what he said in his first Budget statement in July 1997:
    "Many pension funds are in substantial surplus and at present many companies are enjoying pension holidays, so this is the right time to undertake a long-needed reform."—[Official Report, 2 July 1997; Vol. 297, c. 306.]
    That is what he said. Well, the substantial surpluses and contribution holidays are long since gone, but the £5 billion a year in tax remains. What we want to hear from him is some recognition of the effects.
    I offer the Chancellor the following suggestion. The Opposition will accept that the problems facing our funded pensions are not wholly the result of the tax increase. I do not pretend that they are solely and exclusively the result of the £5 billion a year in tax. There are many factors behind the crisis; his tax is an important one, but not the only one. We will accept that the problem is not only the tax if he will come to the Dispatch Box in return and accept some responsibility in respect of the tax and if he is willing to show just the faintest hint of recognition that his £5 billion a year tax has something to do with what is happening to the savings of millions of workers. Instead of so busily engaging in conversation on the Front Bench, why does he not take this opportunity to accept at the Dispatch Box that that tax has had an effect on the funded savings of millions of people?
    Mr. Adrian Bailey: Will the hon. Gentleman give way?
    Mr. Willetts: We are being offered a rather poor substitute for the Chancellor, but if the right hon. Gentleman will not intervene, I shall of course accept another intervention.
    Mr. Bailey: Will the hon. Gentleman give a commitment that he will reverse the decision made by the Chancellor?
    Mr. Willetts: What I am trying to find out is what the Chancellor thinks has been the effect of his decision. I
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    deeply dislike many of the 53 tax increases that this Chancellor has imposed. I would love to be able to reverse many of them. When we come to reach our financial judgment in the run-up to the next election, we will decide which ones we can afford to reverse. That is the responsible position to adopt.
    Mr. Michael Jack: Does my hon. Friend recall that the justification given by the Chancellor for ending the payable tax credit was reducing the pressure on companies to pay dividends with a view to helping them increase their investment? Does he think that that squares up with the falling levels of private investment reflected in the economic data revealed yesterday?
    Mr. Willetts: My right hon. Friend makes a very good point. He is right that one of the many forecasts that the Chancellor had to reduce yesterday in his Budget judgment was his estimate of the performance of business investment, which is not growing as he had hoped but declining.
    The wider point made by my right hon. Friend the Member for Fylde (Mr. Jack) relates to the absurd economic theory that was advanced to defend the tax increase—I am afraid that I heard it from the Economic Secretary at one point—that we could somehow encourage investment by encouraging companies to hold on to more of their retained earnings. That theory represented a complete failure to understand the role of the capital markets in allocating capital in the most effective way. The distribution of a company's profits means not that they are lost to the economy, but that they go into the capital markets to be allocated to the firms that have the best use for them. It is a sort of constipation theory of investment to say that people have to hold on to something in order to maximise investment. Of course, that theory is now being comprehensively demolished by the evidence before us.
    We are facing not only the attack on funded savings in our pensions, but the logical consequence—driving people into dependence on means-tested benefits instead. This year, 60 per cent. of pensioners will be dependent on means-tested benefits. That is not the sort of country that we want to live in and it is not what the pensioners of this country want. They want the dignity and independence of enjoying an income from their own savings, rather than to face more and more means testing.
    I ask the Chancellor to consider an example that illustrates the ultimate absurdity of his system. I have identified the position of a 70-year-old man with a basic state pension and an income on top of that of £60.07 a week. That 70-year-old pensioner, with his £60.07 income on top of his basic state pension, has achieved the apotheosis of the Chancellor's vision of how his system should work. Every week, the pensioner is paying £1.04 to the Inland Revenue and receiving £1.04 of pension credit. The two transactions exactly balance out, as he is paying £1.04 to the Chancellor's Revenue department and receiving £1.04 from the Pension Service. I suppose that we should regard that as a triumph of the Chancellor's policies in rewarding saving, but I regard the whole game as absurd.
    The situation is worse than that. Of course, I am assuming that that pensioner is at least collecting the benefit, but we know from the report published only

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    yesterday by the Select Committee on Public Accounts that there is a very serious problem with the take-up of means-tested benefit. The Committee's 12th report states that
    "between one-quarter and one-third of entitled pensioners do not claim Minimum Income Guarantee… one-third Council Tax Benefit and one-tenth Housing Benefit."
    The total amount unclaimed is in the range between £900 million and £1.8 billion. Thus, there is an enormous amount of unclaimed benefit, and as a result, all the models that the Chancellor offers to show how much better off everyone will be as a result of the benefits have the one slight problem that many people do not collect the money that he would like them to receive.
    James Purnell: Surely what matters to pensioners is whether or not they are better off, not whether or not they are means-tested. Does the hon. Gentleman accept that the number of pensioners in relative poverty after housing costs has fallen by 50 per cent. since 1997? That contrasts with the record of the Thatcher Government for whom he worked—a record of which he said he was proud. Under that Government, the income of the absolute number of people in poverty, or the bottom 10 per cent., fell by 20 per cent. in absolute terms. They were worse off by 20 per cent. Is he proud of that record, as he said earlier?
    Mr. Willetts: The point that I was making is that a lot of the figures on poverty assume take-up that simply does not exist. Even according to the Chancellor's targets, 1 million pensioners will not be claiming the benefits in 2006.
    I am also trying to address an issue that I believe the Secretary of State for Work and Pensions recognises, as he has referred to it in the past. I am trying to invite those on the Government Front Bench to consider not only the figures for today, but the impact on behaviour for the future. The question is what the scope of means-testing says to people who are considering whether to save. I do not claim that that is an original point or a distinctively Conservative one, but it seems a very powerful point that the sort of static model that we just heard advanced does not recognise.
    For the benefit of Ministers, I should like to give a quote not from a Tory, but from Ernest Bevin. The Secretary of State has previously heard me cite the quotation. which appears in Alan Bullock's biography. The remarks were made when Ernest Bevin came to his executive council of the Transport and General Workers Union in 1937 after he had painstakingly worked to try to set up a funded pension scheme for the sheet metal workers of south Wales. Much to his disappointment, the members of his union voted against having an occupational pension. Bevin reported to his executive council:
    "I think it is a tragedy for South Wales, but it appears that a large number of the men take the view that if they become party to a superannuation they are merely saving the Unemployment Assistance Board expenditure. When a large community develops a relief complex of this character it is not good for democracy."
    That is the point. Will the spread of such means-testing affect behaviour in a way that none of us support? The Chancellor and the Secretary of State for Work and
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    Pensions need to tackle that question. I believe that they understand that; it is a pity that they will not acknowledge it.
    Funded pension saving has declined and dependence on means-tested benefits has increased. That is the Government's record on pensions. It is a disaster for our country.
    Ms Karen Buck: Is not it the case that before the proposal for the pension credit, there was no value in people saving if modest savings took them just above the level of income support? The pension credit will provide an incentive to save. That is its value.
    Mr. Willetts: But there are other, better methods of alleviating poverty among pensioners that do not have the same effect on savings. When the pension credit was considered in the House, we tabled a reasoned amendment, which the right hon. Member for Birkenhead (Mr. Field) and the Liberal Democrats supported, that would have provided for the money to go towards a higher pension for older pensioners. It would have targeted poverty without the need for so much means-testing. It would not have had the same effect on incentives to save as the spread of means-testing.
    Mr. Paul Goodman: Would my hon. Friend like to comment on the following words:
    "The pension credit unquestionably adds further complexity to an already Byzantine system of retirement provision, which is causing confusion for pensioners, pension providers and those saving for their old age."?
    That is a quote from the report of the Select Committee on Work and Pensions, of which the hon. Member for Regent's Park and Kensington, North (Ms Buck) is a member.
    Mr. Willetts: I am grateful for that intervention. The report reflects a widespread anxiety that has been expressed by not only Conservative Members but the National Association of Pension Funds Ltd, the Institute for Public Policy Research—the Government's favourite left-wing think-tank—and Age Concern about the spread of means-testing. They demand that the Government at least consider reforming the benefits system as part of tackling the pension crisis.
    James Purnell: Will the hon. Gentleman give way?
    Mr. Willetts: I have given way to the hon. Gentleman once and I want to make progress.
    Instead of considering reforming the benefits system, the Secretary of State for Work and Pensions produced a Green Paper that completely ignored the state's role in creating the mess in which people find themselves. It ignored the problem of absurdly complicated benefits. Someone said that the Green Paper was so green that cows could graze on it. It is therefore not too late for the Secretary of State to present proposals for a simpler, better benefit regime for pensioners.
    Let us consider another old favourite about which we heard more yesterday: crackdowns on the unemployed. No Budget or autumn statement by the Chancellor is

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    complete without a crackdown on the work shy. Every year since 1997, the right hon. Gentleman has gone for the headlines. In July 1997, a headline read, "Labour to be tough on workshy". After the March 1998 Budget, we read: "Puritan Brown goes to war on workshy". "Brown declares war on workshy" stated a newspaper after the 1999 autumn statement. In 2000, The Sun stated, "Blitz to hit workshy". The Chancellor is good at spin. In March 2001, he got "Workfare system facing the jobless" into The Daily Telegraph. Well done! In November 2002, after the autumn statement, The Times reported, "Brown gets tougher on hardcore unemployed".
    I always watch with interest for the spin about how tough the Chancellor will be on the unemployed. Every year, a little like the man who clears up the mess after the procession has passed, I table a few parliamentary questions to ascertain what is actually happening. Of course, what happens is always different from the spin. Let me give three examples of the gap between the Chancellor's rhetoric and reality.
    First, let us consider lone parents. I shall cite the latest figures on workless, lone-parent households. A welcome and steady welcome decline occurred for several years. It began when my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was Chancellor and continued after 1997. Workless, lone-parent households declined to a low point of 680,000 in autumn 2000. The Chancellor subsequently launched his new deal for lone parents. Since then, the trend has reversed and the figures are now increasing. According to the latest statistics, for autumn 2002, there are 707,000 workless, lone-parent households.
    The Secretary of State for Work and Pensions (Mr. Andrew Smith): What has happened to the proportion of lone parents in work since Labour has been in government?
    Mr. Willetts: The total number of lone parents in work has increased. Since 1997, the percentage of lone parents in work has risen. However, the downward trend was reversed in 2000 and the position has subsequently deteriorated.
    A similar analysis applies to disabled people. Labour has been talking tough but failing to deliver. Those on incapacity benefit decreased steadily since we introduced the benefit in 1995 until 2000. Since then, the figure has risen. Now, more people are on incapacity benefit than when Labour took office in May 1997. The number is increasing, partly because of so-called reforms that the Government introduced, claiming that they would reduce it. However, people are staying on incapacity benefit for longer because they believe that if they begin to work but subsequently have to go back on incapacity benefit, its terms would be different. They do not want to run that risk. That is a classic example of the perverse effects of ill-thought-out policies. More people are on incapacity benefit now than before the Government introduced their so-called reforms.
    Mr. John Bercow: My hon. Friend's comments reflect a pervasive cynicism about the chasm between the Government's words and their actions. Does he know that, only last month, I asked the Under-Secretary of State for Work and Pensions, the hon.
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    Member for Croydon, North (Malcolm Wicks) on how many occasions jobseeker's allowance had been withdrawn from individuals who had thrice refused reasonable job offers? The Under-Secretary got into a frightful rage but was unable to give a figure.
    Mr. Willetts: My hon. Friend is right. When one asks for the number of people who have been given a mobile phone to help them find a job, or have lost their driving licences because they have not complied with the Child Support Agency, or have been sent to prison or fined because they have refused two job offers, the Government either do not have the figures or they are pathetically small. The Government have large headlines and small results. That is the story of all their welfare-to-work policies.
    Kali Mountford: Will the hon. Gentleman give way?
    Mr. Willetts: I have given way to the hon. Lady once, and I would like to make progress.
    I am sure that the Chancellor will want to touch on tax credits during the debate—I hope that he will—because he loves his tax credits. I shall begin with some common ground between us: it is important to boost the incomes of people with low-paid jobs. If we are to have a flexible labour market, people, and especially those with family responsibilities, might accept wages on which we could not expect a family to maintain itself in a decent society. In such circumstances, it is right to top up families' incomes so that they are higher than their earnings. That is a shared principle that goes back to the early 1970s when Keith Joseph introduced the family income supplement. The principle was reflected in our family credit and, most recently, in the working families tax credit. I disagreed with the Chancellor about aspects of the working families tax credit. For example, I regretted the way in which he changed the system of payment so that rather than delivering the payment as a benefit to the parent—possibly at home—it was delivered via the pay packet. That was completely unnecessary, and the Financial Secretary and the Paymaster General probably persuaded him to see sense and return to the pre-2000 regime of delivering it as a benefit, which I welcome.
    I am rather sorry that the working families tax credit disappeared at the end of last week because the new system is even worse than the one that it replaced. The new system is far more complicated and it is causing considerable distress to people throughout the country. If the Secretary of State for Work and Pensions or the Chancellor wish to intervene on this point, I would appreciate it. I talked to people at a citizen's advice bureau only last week and they told me about problems encountered by people who received the working families tax credit until last week and who will now need the child tax credit to form a significant element of their income. However, unless they had submitted the claim form by 31 January—I think that that was the deadline—there was absolutely no guarantee that the Inland Revenue could deliver the child tax credit. That will affect low-paid Families. As the Chancellor has transferred responsibility from the Department for Work and Pensions—formerly the Department of Social Security—which had at least some understanding

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    of the issues, to the Inland Revenue, he is running the significant risk of leaving hundreds of thousands of families in considerable financial distress.
    Mr. Kenneth Clarke: Is my hon. Friend aware that I asked my office to contact the Inland Revenue this morning on behalf of one of my constituents who applied in October to transfer her working families tax credit to child tax credit? She received no response to her application and was given an explanation that many applications had been lost in a warehouse. All inquiries to the Inland Revenue produced no indication of when child tax credit would be received by her or the many other poor families to whom the Chancellor boasts the credit will give such assistance.
    Mr. Willetts: My right hon. and learned Friend is absolutely right. That is a serious problem that is arising throughout the country for a simple reason: the Inland Revenue uses annual returns of income—it works on an annual basis. People fill in tax returns, or are taxed using pay-as-you-earn, and necessary adjustments are made at the end of the year. The Department for Work and Pensions helps poor people who need money immediately—week in, week out. People on low pay need their income topped up and boosted this week. I do not believe that the Inland Revenue understood the need to get the money out promptly every week or that the child tax credit needed to be delivered to families with low earnings this week because they would otherwise have insufficient money to feed their children and heat their houses.
    The Chancellor has decided—it is entirely his responsibility—that the Inland Revenue must operate as an alternative benefits agency. He might not believe in contestability of public services when it comes to health or education, but he certainly does when it comes to delivering benefits. The Inland Revenue now has responsibility to ensure that low-paid families receive a regular income. This is the first week in which it has had such responsibility and the indications are not good. They show that we will all have constituents whose families are not receiving the money that they expect and need. I know that the Secretary of State for Work and Pensions has shed responsibility for that, but if he can offer any comfort to the thousands of families who face such a considerable worry by tackling the problem, that would be welcomed by not only Conservative Members, but people struggling in citizen's advice bureaux throughout the country and hon. Members of all parties who have constituents with problems.
    On tax credits, the Chancellor has been his own worst enemy. He has constructed a system that is so complicated and confusing that many people are unable to claim the benefits to which they are entitled. If everyone had claimed the means-tested benefits to which they were entitled, an extra £5 billion of benefits and tax credits would be paid each year to families and pensioners in the UK. Had that £5 billion a year been paid to them, it would have taken the Chancellor's public expenditure and borrowing limits above the 3 per cent. rule that he set himself. It is the final irony of this Chancellor's record that it is only the failure of his tax
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    credits and means-tested benefits to reach the people who need them that has enabled him to keep his public expenditure plans within those rules. That is why we oppose the Budget and the judgments behind it.
    3.44 pm
    The Secretary of State for Work and Pensions (Mr. Andrew Smith): This Budget is for a Britain in which flexibility and fairness, enterprise and full employment go hand in hand. It champions economic strength and social justice, building on all that we have done to ensure macro-economic stability and to deliver high and stable growth.
    I want to focus on our aims of greater labour market flexibility, full employment in every region and making work pay, and on the extra measures that we are taking to help pensioners and to build a fairer society for all. First, however, let me acknowledge the albeit tepid welcome that the hon. Member for Havant (Mr. Willetts) managed to give to at least one or two of our measures. In so far as there is a shared aspiration on asset-based welfare or asset-based democracy, there is also a clear difference. He may talk about it and give a bit of a welcome for the child trust fund, but Labour is delivering asset-based democracy with 1.1 million more homeowners and net household wealth up 40 per cent. since we came into office. The difference is that he can talk, but we can deliver.
    If we look at the Budget in the round, it is clear that because of the tough decisions that Labour has taken over the past six years—making the Bank of England independent, bringing public finances under control—Britain is better placed than other countries, and better placed than it was in the past, to withstand the global downturn and to benefit when world economic recovery begins. We have the lowest inflation for 30 years, the lowest interest rates for 40 years and the highest levels of employment in our history.
    The hon. Member for Havant made light of welfare to work and matching rights and responsibilities, accusing us of big headlines and little delivery. When it comes to welfare to work and progress to full employment, surely there is no bigger headline than the 1.5 million extra people who are in jobs thanks to a Labour Government and our welfare-to-work initiatives. Those achievements did not happen by chance. They certainly did not happen because we followed the advice of those on the Conservative Front Bench. After all, the Conservatives opposed Bank of England independence, the fiscal rules, the new deal, public investment and even the working families tax credit, the loss of which the hon. Gentleman lamented. It was clear that they have learned nothing. He and his colleagues should ask themselves why, when they were in charge in the early 1980s and early 1990s, Britain was first into the downturn and suffered the most and longest. When we have produced growth in every quarter for six years, why did they twice have the British economy in recession for five quarters in a row?
    Mr. Andrew Hunter: Some commentators said today that the greater part of job creation in the past 12 months has been in the public sector, not the wealth-creating private sector. The

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    private sector continues to suffer from belt-tightening and that trend looks set to continue. Will the right hon. Gentleman comment on that?
    Mr. Smith: If the hon. Gentleman is saying that we should not be employing more teachers, more police officers, more nurses or more doctors, then he is confirming the shadow Chief Secretary's agenda of 20 per cent. cuts in public spending. The detailed figures relating to the 1.5 million extra jobs now in the economy show that whereas about 400,000 are public sector jobs, more than 1 million of the extra jobs that we have generated are in the private sector. The difference between Labour in government and the Conservatives in government is that, thanks to their mismanagement of the economy and the depth of those recessions, they cut not only public sector employment so that hospitals, schools and policing suffered, but private sector employment, too, so that unemployment rose to more than 3 million, which was enormously wasteful to individuals and to our society. I make no apology for employing more public servants to deliver front-line public services, but the success of our economic policies has resulted in more employment in the private sector as well.
    Conservative Members should ask themselves why their Government had interest rates at more than 15 per cent. for a year, whereas we have them at 3¾ per cent. Whereas we have inflation at 2.5 per cent., they had inflation at 20 per cent. in the 1980s and 10 per cent. in the 1990s. We have a cumulative current surplus over the cycle. Although, this year, net borrowing is projected to be £27 billion or 2.1 per cent. of GDP, borrowing under the Conservatives reached a high of 8 per cent. of GDP—in today's terms, £83 billion of borrowing—in just one year. The hon. Member for Havant talked about the legacy the Conservatives bequeathed to us, but they left us debt standing at 44 per cent. of GDP. Yesterday's Budget stabilises debt below 34 per cent. of GDP, as far as the forecasts go—
    Mr. Kenneth Clarke: Will the Secretary of State give way?
    Mr. Smith: Britain is not simply doing better compared with other industrialised countries, but doing very much better than in the past, including when the right hon. and learned Member for Rushcliffe (Mr. Clarke) was in charge.
    Mr. Clarke: Will the Secretary of State please stop making ridiculous claims about interest rates and inflation based on comparisons with the inflationary recessions in the 1970s and 1980s, which were quite different from the problems that are hitting this country now? Almost every country in the world can claim that it now has the lowest interest rates that it has had for about 30 years—indeed, fears of deflation are running through the developed world. In fact, the UK currently has the highest interest rates in the G7 and has done so for most of the time that the Labour Government have been in office.
    Mr. Smith: I do not think that the right hon. and learned Gentleman was listening to me. I did not simply point to the '70s and the '80s; I pointed to the '90s as
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    well—not that long ago—when, under the Conservatives, inflation was in excess of 10 per cent. The reason why there is now greater economic stability, 1.5 million more people in jobs and many more businesses thriving in our country is that we have been building an economy on a sound macro-economic foundation, following tough, firm and clear fiscal rules, assisted by the independence of the Bank of England. By contrast, he refused to put firm fiscal rules in place and opposed the independence of the Bank of England.
    Mr. Clarke: The Secretary of State is going back to the '90s, but not to the time when the economy was handed over to the present Government. When I left office as Chancellor I was able to boast of the lowest mortgage rates and interest rates for many years. This country has had 10 years of growth with low inflation. Private sector jobs were created as a result of the ongoing benefits of that and the United States-led boom. Things have changed now: public sector employment has been rising by 70,000 a month—they are not all teachers or nurses—and private sector employment is falling quite rapidly. Once they get into difficulties, the Government will find that they have lost control.
    Mr. Smith: I do not blame the right hon. and learned Gentleman for talking up his record and achievements, but he should compare current mortgage rates with what they were when he was in charge. As for his legacy, look at that debt of 44 per cent. of GDP and compare it with our achievement of getting debt below 34 per cent.
    If the right hon. and learned Gentleman is comparing different downturns in the world economy and their domestic effect, he must ask himself why it was that in the world downturn of the 1980s, employment went down by 1.3 million. In the downturn of the 1990s, employment went down by 1.6 million. Contrast that with the position in this world downturn, where employment has increased by half a million. That is the result of the macro-economic stability and the policies of economic success that we have put in place.
    Mr. Parmjit Dhanda: If the right hon. and learned Member for Rushcliffe (Mr. Clarke) is not content with main comparisons of mortgage interest rates, perhaps he should consider the growth in living standards under the present Government compared with that under the Government of whom he was a member.
    Mr. Smith: Absolutely. Living standards have been rising. Net household wealth is 40 per cent. stronger than it was when we came into office. That is a consequence of the stability that I have been talking about and the tough fiscal decisions that we have taken. That has meant more people in jobs, people being better off and successful businesses. It has meant also that we are able to invest more money where it is needed. The Conservatives ran down public services, investment and infrastructure, with unemployment of more than 3 million and millions in poverty. We are tackling poverty and, at the same time, targeting public spending on front-line services—for example, health, education, transport and crime fighting.

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    This year's Budget implements our spending review commitments with real rises in education spending, for example, of about 6 per cent. a year. As my right hon. Friend the Prime Minister highlighted yesterday, an international report finds that English primary school readers are now among the best in the world. We have the highest ever number of police officers—there are more than 130,000 officers, more than ever there were under the Conservatives. According to the British crime survey, crime is down by more than 25 per cent. Through the increase in national insurance that was announced in last year's Budget, spending on health in the United Kingdom will rise by 7.2 per cent. a year in real terms right through to 2008. That will secure the national health service as a quality service, with 25,000 more doctors, 80,000 more nurses and more than 100 new hospitals, all free at the point of need. It is because we took tough decisions, stuck to the fiscal rules and built a strong economy that we can now go further.
    Yesterday, my right hon. Friend the Chancellor of the Exchequer set out a range of measures that build on a stable foundation to promote enterprise, to tackle poverty, to protect the environment and to ensure a better quality of life for current and future generations. During the debate today and in the days that follow, Opposition Members will have to tell us whether they support our drive to improve the supply of housing and the streamlining and simplifying of planning decisions. They need to say whether they back our measures to help break down the barriers to business success by reducing red tape and simplifying tax for small businesses. These measures will bring greater flexibility to capital markets, to product markets, to housing and planning and labour markets.
    Mr. Jack: Will the Minister give way?
    Mr. Smith: On flexibility, I am happy to give way to the right hon. Gentleman.
    Mr. Jack: I wonder whether in that litany of gains that he has put before the House he can refresh my memory as to how much the loss has been in the value of pension funds, endowment policies and other similar investments since 1997.
    Mr. Smith: We should consider what is happening to pensioner incomes rather than the allegations and the figures that are thrown around by Opposition Members. It is possible to hypothesise all sorts of things about funds. What matters to pensioners is the money that they are getting. We must have regard to surveys of household income. The right hon. Gentleman and those on the Opposition Front Bench will find that pensioner incomes are up by 20 per cent. in real terms since Labour came into office.
    Mr. John Bercow: The right hon. Gentleman is focusing excessively on inputs to the detriment and perhaps even the exclusion of outputs. Given that the trumpeted public service agreement targets on literacy and numeracy were both missed in 2002, and that the target on truancy was missed, then
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    scrapped, can he not see that although it would be disappointing if the Government missed targets set by independent experts, for them to fail to meet the targets that they have set themselves requires incompetence on a truly spectacular scale?
    Mr. Smith: I heard the hon. Gentleman use precisely the same language yesterday to make precisely the same point, which was rather more effective in the original than in the repeat. He is talking about outputs, and so am I. Crime surveys show that crime is down by more than 25 per cent. If the hon. Gentleman wants to talk about outputs in the health service, he should take a look at the fact that 130,000 fewer people are waiting a long time for operations, or that, unlike the past, 98 per cent. of people suffering from cancer now get to see a consultant specialist within two weeks. Literacy and numeracy have both improved significantly since the Opposition were in office to the point where, as I said earlier, the Prime Minister could highlight international reports commending English standards in our primary schools. We are therefore doing better—[Interruption.]
    Madam Deputy Speaker (Sylvia Heal): The hon. Member for Buckingham (Mr. Bercow) asked the Minister a question and he has replied, so perhaps he would listen.
    Mr. Smith: I shall take your advice, Madam Deputy Speaker. I think that I have answered that one.
    On employment, since 1997, we have transformed our employment programmes and approach. On input, we are investing £2.2 billion in transforming Jobcentre Plus to make it the best welfare-to-work service in the world. On output, every year we are helping over a million people into jobs through Jobcentre Plus. Investment is matched by reform, for example, the introduction of the work-focused interview and an approach that matches rights and responsibilities, and makes work pay. The Budget carries reform further forward. With some parts of our country still having twice the unemployment of others, we want to get more people into work and offer a better service still to employers through local initiatives and innovation, harnessing the talents of our local managers and staff to meet the labour market needs of their communities.
    Mr. Bailey: Given the way in which the hon. Member for Havant (Mr. Willetts) rubbished the Government's rights and responsibilities agenda, perhaps the Minister would like to comment on the situation in my own local jobcentre? It offers a step up scheme, for which 102 customers have been identified as eligible, and 49 of the long-term unemployed, the most problematic people on the register, are now in employment under it.
    Mr. Smith: That is indeed a success to be proud of, and I join my hon. Friend in commending not only the programme but our front-line staff in Jobcentre Plus, who work with partners in the private and voluntary sectors and make such a success of those initiatives.
    From April next year, we will be able to take the devolution of power and responsibility to front-line staff further by giving managers powers to adapt new deals to local needs and introduce a new discretionary fund to give local managers new, enhanced flexibility to direct

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    resources to tackle local barriers to the labour market. With local discretion will go a new performance regime, with better rewards for the best performing managers and staff and a tougher approach to the worst performing, including replacing the management where that is what it takes. In every area, Jobcentre Plus specialist managers will match employers who need staff with unemployed people who need jobs. We are helping more people into work and ensuring British businesses, big and small, improve competitiveness by having access to the right employees at the right time.
    We will also target resources on areas of high need to provide a particularly responsive job placement service to employers. As nearly half of all vacancies are generated by small and medium-sized enterprises, a new team will work at the regional level across Jobcentre Plus to produce a step change in service to the small business sector, building on the success of Employer Direct, which is already taking 13,000 job vacancies a day.
    We shall also take further action to address the needs of those facing additional and particular barriers to work. From April next year, specialist account managers will work with employers in areas of particularly high ethnic minority unemployment, and a new £8 million fund will be established for local initiatives to help people to find work in those areas. To ensure that people at risk of drifting into longer-term unemployment take every chance of a job, we shall bring in weekly signing for those on jobseeker's allowance between 13 and 19 weeks of unemployment. We shall also increase the area over which new JSA claimants will be expected to travel to find work.
    In terms of making work pay, since 1997 we have reformed the system so that it pays to move from welfare into work. Too often, however, unemployed men and women say that losing their housing benefit means that it is not worth their while to work. So from next April, people on housing benefit who move into work will no longer be required to submit a new claim for housing benefit. They will simply inform the local authority and continue to be paid the out-of-work rate until their benefits are recalculated.
    Ms Buck: I welcome the proposals to offset housing benefit against income to help to make work pay in high-value areas. May I, however, flag up one worry? There are people in my constituency who have been waiting for some time for their housing benefit calculations to come through, because companies such as Capita are taking some time to do the work, and this might also happen under my right hon. Friend's new system. Those people can build up massive overpayments, the repayment of which can lead to rent arrears and, in some cases, to the issuing of eviction notices. Will my right hon. Friend do what he can to work with local authorities to ensure that tenants do not unwittingly end up with serious rent problems because of housing benefit overpayments?
    Mr. Smith: My hon. Friend makes a telling point. I acknowledge her experience and expertise in this area, and I always listen carefully to what she has to say. We are in fact already acting on these issues. We have made £200 million available to local authorities, for example, to improve their administration, which in many cases involves updating outdated information technology
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    systems. We also have a help team out there working with the worst-performing local authorities, and it is succeeding in helping to transform their performance.
    Like my hon. Friend, however, I suspect that there was something fundamentally flawed in the system of housing benefit that we inherited. That is why we are piloting the new approach—which was welcomed, at least in spirit, by the hon. Member for Havant—in which there will be a standard allowance that will depend on a person's family circumstances and income, rather than on the rent that they pay. That will be much more simple and straightforward to administer, because it will avoid having to poke around and assess every individual letting that is taking place within the housing benefit system. I know, because my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) has talked to me about this as well, that there are particular challenges involved in bringing the standard housing allowance system into areas of great rent variability, such as the constituency that she represents. We shall learn from the pilots how best to deal with that.
    There are now 200,000 more lone parents in work than there were in 1997, and, as the hon. Member for Havant had to acknowledge, their employment rate is now 54 per cent., compared with 46 per cent. when we came into office. That is good progress, but we need to do more. The Budget brings forward a package of measures to break down barriers to work. For many lone parents, the costs involved in looking for work are a disincentive. So, in a groundbreaking pilot, lone parents who voluntarily attend regular work-focused interviews and undertake job search will be offered an extra £20 a week to cover job search costs, rising to £40 extra a week—and topping up wages for a year—when they move into work.
    While the minimum wage today is £147 for a 35-hour week, tax credits—much derided by the Conservatives—raise the minimum family income for a lone parent with two children to £276, even after tax, which is almost twice as much. We shall want to do more for lone parents who want to work part-time, as for many that is an important stepping stone into work in general. The housing benefit disregard announced yesterday, which will help 90,000 people, means that for lone parents paying £50 a week part-time work will pay £213 a week. That is what we are talking about when we say we must make work pay, and help people to move from welfare to work.
    Mr. Wayne David: I acknowledge and welcome what my right hon. Friend has said, but does he recognise that much more should be done about crèche facilities?
    Mr. Smith: Child care provision of all kinds is extremely important. We have a child care strategy, and the substantial extra resources we are providing will provide hundreds of thousands of places in addition to the hundreds of thousands that have already been added to the existing number. Moreover, Jobcentre Plus means that in every area a child care partnership manager will

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    ensure that local child care provision, including advice given in jobcentres and support for employers, is properly co-ordinated.
    Mr. Bercow: Will the right hon. Gentleman give way?
    Mr. Smith: I should like to make a little more progress.
    A flexible, dynamic economy must go hand in hand with a fairer society so that everyone has an opportunity to fulfil his or her potential. Since 1997 we have reversed the long-term trend of rising child poverty and reduced the number of families living on less than £10,000 a year by a third, and the Budget allows us to go further. We will tackle the cycle of low expectation—a cycle that can take people from low income in childhood, through low pay in adult life, to low income in retirement. The Budget allows us to give all children opportunities that have hitherto been confined to the few, by giving everyone a chance to build up some savings. The new child trust fund will give every newborn child £250, with double that amount going to the poorest.
    The Budget confirms that pensioners with modest savings and occupational pensions will gain from pension credit, which will provide, on average, an extra £7 a week for half the pensioner households in the country. Here is a challenge for the Conservatives, who love to deride pension credit—along with all the other credits—and talk of people being sucked into means-testing. Half our pensioner households will be, on average, nearly £400 a year better off. Is the Conservative party going to take that money away from them? That is the question that it must answer between now and the next general election.
    Taken together, our reforms will make pensioner households more than £1,150 a year better off in real terms, with the poorest third gaining over £1,600. Most pensioners have no income tax to pay, but those who do will benefit. Age-related personal allowances for the forthcoming year will rise to £6,610 for those between 65 and 74, and to £6,720 for those aged 75 and over. No pensioner will pay tax on an income of less than £127 a week.
    Mr. Goodman: The right hon. Gentleman mentioned means-testing. According to the most recent take-up figures, did take-up of income support, jobseeker's allowance, council tax benefit and housing benefit go up or down?
    Mr. Smith: We need to do more about take-up of those benefits. I acknowledged that when the figures were published. What neither the hon. Gentleman nor the hon. Member for Havant has mentioned is the acknowledgement in that and other reports of the considerable impact that our take-up campaigns have already had. For example, 150,000 more pensioners have benefited from the minimum income guarantee by an average of £20 a week. As we roll out the new pension credit, we will contact every pensioner in the country with unprecedented energy and attention to ensure that every pensioner gets the entitlements that should be their right, and which they deserve.
    James Purnell: Does my right hon. Friend recall that the hon. Member for Wycombe (Mr. Goodman) is a
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    member of the Work and Pensions Select Committee, and that it unanimously welcomed the pension credit? It said that the pension credit
    "will ensure that most pensioners will be better off as a result of having saved for their retirement, compared to those who have not."
    Mr. Smith: I am sure that the hon. Member for Wycombe (Mr. Goodman) drafted that text, and I am grateful to my hon. Friend the Member for Stalybridge and Hyde (James Purnell) for drawing it to my attention. [Interruption.] Apparently, the hon. Member for Wycombe did not draft it.
    Mr. Goodman: I am certainly happy to acknowledge that I signed up to the report on the pension credit—if the hon. Member for Stalybridge and Hyde (James Purnell) will also acknowledge that he signed up to its concluding paragraph, which states:
    "However, the Pension Credit unquestionably adds further complexity to an already byzantine system of retirement provision, which is causing confusion for pensioners, pension providers and those saving for their old age."
    Perhaps the hon. Gentleman might also like to confirm that, although the Committee welcomed the money, it never accepted the principle of the pension credit.
    Mr. Smith: We have had an illustration of the fine tradition of compromise that underpins the standing and integrity of our Select Committee reports. However, I cannot but draw the House's attention to the fact that the hon. Gentleman supports the pension credit, whereas the hon. Member for Havant opposes it. Their position is going to come apart between now and the next general election.
    To provide greater financial security and to reduce anxiety for those who stay longer in hospital, we will ensure that, where pensioners and those receiving income-related benefits currently lose about 40 per cent. of their pension after six weeks in hospital, everybody admitted to hospital from yesterday onward will be able to keep their benefits in full for stays of up to 52 weeks.
    Mr. Andrew Miller: My right hon. Friend has sneaked in a little word—as did the Chancellor—that nobody has properly picked up. The hon. Member for Havant (Mr. Willetts) often accuses the Department of keeping things to itself. However, am I right in saying that this provision will apply to everybody who is on income support, and will that not constitute a huge benefit to the mentally ill in particular, who have complained for years that when a schizophrenic, for example, is sectioned under mental health legislation, they lose their housing benefit after a few weeks, which makes it even more difficult to get back into the community? Is this not a fantastic gain for people such as the mentally ill?
    Mr. Smith: It is a very important gain, and I am grateful to my hon. Friend for reminding the House that the provision applies to all income replacement and benefits for up to 52 weeks. For the avoidance of doubt, it will not apply to attendance allowance and disability living allowance, because those are living cost and care cost benefits that are met while people are in hospital.

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    For pensioners aged 80 or over, the Budget also introduces, from yesterday onwards, an extra payment of £100, over and above the £200 winter fuel payment, for the remainder of this Parliament. Almost 2 million people aged 80 or over will benefit.
    We have just reached the end of the largest ever consultation on occupational pensions. We shall shortly produce plans to open avenues to flexible retirement and to increase saving through proposals to make informed choice a reality, to improve the information and advice available for people planning their retirement, to simplify radically pensions legislation and red tape to make it easier for employers to provide good pensions. and to improve protection for scheme members and restore confidence in pensions. Anxiety over scheme closures undoubtedly undermines such confidence.
    Kali Mountford rose—
    Mr. Willetts: I want to take the right hon. Gentleman back to higher winter fuel payments, which he touched on briefly. He used a phrase from the Red Book, which states that the additional £100 is
    "for the lifetime of this Parliament".
    Do the Government intend, if re-elected, that the extra £100 would apply in the next Parliament?
    Mr. Smith: The hon. Gentleman can look forward to that being in our election manifesto.
    Kali Mountford rose—
    Mr. Smith: I well recall, however, how Opposition Front-Bench Members—I think including the hon. Member for Havant—were foolish enough to deride the winter payment as a gimmick when it was first introduced. At first, the Opposition were going to abolish it. Then, if I remember correctly, they were going to consolidate it in the pension. Then, in abject confusion as the election came upon them and they saw how popular the measure was, they were going to give pensioners a choice as to whether it was consolidated or paid separately. In his own interests, I urge the hon. Gentleman to think carefully and not to repeat the same mistake. [HON. MEMBERS: "We want him to repeat the mistake."] Labour Members want the hon. Gentleman to make the same mistake again, so perhaps he will.
    Kali Mountford rose—
    Mr. Smith: This year's Budget builds on our achievement since 1997. We are giving children the best start in life. We are making work pay. We are making sure that pensioners share in the country's rising prosperity.
    Kali Mountford: Will my right hon. Friend give way?
    Mr. Smith: I must draw my remarks to a close, but I cannot resist giving way to my hon. Friend.
    Kali Mountford: I am very grateful to my right hon. Friend for giving way. Does he agree that trust in pensions, especially in private and occupational pensions, is extremely important? Will he build on the
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    work of my right hon. Friend the Member for Makerfield (Mr. McCartney)? Before he left his post as Minister for Pensions, he was dealing with pension liberation schemes. People who had put money into pension schemes honestly had it virtually stolen from them in scams. Several companies were brought to book by my right hon. Friend the Member for Makerfield. I believe that the cases have gone through the courts and that the companies have been punished for their dreadful acts. Will my right hon. Friend ensure that the regulations will look at pension schemes, and protect pensioners from that sort of vile activity?
    Mr. Smith: Absolutely. My hon. Friend draws attention to a very important matter. She is right to commend the work of my right hon. Friend the Member for Makerfield (Mr. McCartney) in this area. I assure her that the fine tradition that he established will be carried forward. We will prosecute anyone who tries to defraud pensioners in this country.
    In conclusion, I believe that we have set out our vision for a fairer, more flexible and more enterprising Britain. We have rejected the Tory failings of the past—the economic instability, the high unemployment, and the under-investment in our schools and hospitals—which denied people opportunity and quality public services.
    This Budget, as with all the others over the past six years, is about building a Britain of full employment. It is about maintaining a course of prudence and stability. It is about investing in our public services.
    We reject—as I believe that the British people reject—the 20 per cent. cuts proposed by the Opposition, and the shadow Chancellor's doctrine of shackling public spending to short-term shifts in gross domestic product. That would damage public services and investment, destabilise the economy, and take us back to boom and bust. That is where the Opposition are headed with the Howard doctrine.
    The truth is that the Opposition have learned nothing, but Britain has learned that, with Labour's prudent course of economic stability and enterprise, flexibility and fairness, we can achieve full employment and quality public services, and give everyone the chance to make the most of their potential.
    This Budget carries forward the Government's work of building a strong economy and a strong society, where enterprise and social justice go together. I commend it to the House.
    4.23 pm
    Mr. Paul Burstow: I rise to address the issues to do with health and welfare, which are the principal subjects for debate today. I want especially to deal with matters connected with benefits and pensions, because yesterday's Budget statement omitted any reference to the growing pensions crisis. It did little, if anything, to reverse the Chancellor's love of complexity in our tax and benefits system. It leaves real questions about how we as a country will be able to resource, in the medium to long term, the Government's commitments—which Liberal Democrats support—to invest in our public services, most particularly in education and health. The Budget also raises questions to do with the resourcing of social care, and I shall return to that matter in a moment.

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    We have a pensions crisis in this country, but we do not have a pensions Minister at the moment. It is a particularly bad time to have a vacuum in such a key ministerial post within the Department for Work and Pensions—not least as the Green Paper consultation process comes to a close. It has been useful to hear the Secretary of State talk about his expectations for occupational pensions, but what we really need is a Minister for Pensions working now to give the public confidence that the Government are not in denial of the pensions crisis, but are taking action to deal with it.
    Why does the Prime Minister believe that managing the Labour party and appointing a party chairman is more important than tackling the pensions crisis? We have had six Pensions Ministers in six years of Labour government, so what does that say about their approach to pensions? Does it mean that every one of those Ministers was not up to the job? What does it demonstrate to the public? What confidence can people have that the Government are on top of the pensions difficulties faced by so many of our constituents? Undoubtedly, the current vacuum in respect of a Pensions Minister is sending out the wrong signal.
    More and more of our fellow citizens coming up to retirement and, indeed, many who are currently retired, face the prospect of a period of poverty. The latest Government figures show that more than one in five pensioners—2.2 million of our senior citizens—live in poverty today. As we have already heard, the Government's approach is to provide more and more means-testing. However, when he was the shadow Chancellor, the Chancellor was not in favour of means-testing. Indeed, in 1993, he said:
    "I want the next Labour Government to achieve what in fifty years of the welfare state has never been achieved—the end of the means test for our elderly people."
    So what happened? Was there a Damascene conversion on the road to government that led the Chancellor to conclude that that was no longer the way forward? We reject that view and believe that excessive reliance on means-testing is increasingly denying the poorest in our land access to the resources that they need. The Chancellor has increased means-testing and the complexity of our system. As a result, we have seen a reduction in take-up.
    The Department published figures a week ago—the Secretary of State acknowledged that they were not good enough—that bear repetition. Pensioners are currently missing out on up to £1.8 billion of benefits and up to 270,000 pensioners are missing out on housing benefit. Some 670,000 are missing out on the minimum income guarantee and up to 1.43 million on council tax benefit. As council tax bills land with a loud and disappointing thud on people's doormats, we should reflect on the failure to increase take-up of council tax benefits. In fact, we have seen a reduction in the number of people taking up such benefits to the extent that people are losing, on average, £7.60 per week.
    What additional steps are being taken to learn the lessons from the failures of the take-up campaign for the minimum income guarantee and ensure that more people take up council tax benefit? Is it not a pity that the Chancellor did not take the opportunity yesterday to
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    announce his acceptance of our policy of cutting council tax bills by £100 across the country? Given the regressive nature of council tax, that would have helped the poorest people in our country and the poorest pensioners among them.
    If take-up is already a problem, it will be even greater in respect of pension credit. The Government estimate that 3.8 million households will be eligible—half the pensioner population, the Secretary of State tells us—but that only 2.8 million will receive the benefit by October 2004. By 2006, an extra 200,000 are expected to claim it, taking the total to 3 million people. The Public Accounts Committee rightly described the Department's target as entirely unambitious in respect of driving up pension credit take-up. That is why we reject the reliance on means-testing and argue for the boosting of the basic state pension. We propose a £5 across-the-board increase, plus extra help that is targeted on the basis of age additions£10 at the age of 75, and £15 at the age of 80.
    Yesterday, the Chancellor made a welcome announcement on age addition at the age of 80. The figure of 25p has not been increased since it was introduced more than 30 years ago. However, rather than increasing the age addition, he chose to go down the route of paying it through the winter fuel allowance—the extra £100. It would be churlish not to
    welcome that extra money, but it is worth pointing out that, if we consider what the 25p would be worth today if it had been indexed to prices over the past 30 years, we find that it would stand at the princely sum of £2.19 a week. That is based on figures that were published by the Department for Work and Pensions in July last year. Obviously, they have to be updated slightly, but they give a good indication. The £100 equates to £1.92 a week. All that has been achieved by the Chancellor's largesse yesterday is a catch-up on the past 30 years of failing to index the age addition. That is hardly generous, despite the way in which it was presented. Liberal Democrats believe that the targeting of extra help to the over-80s requires a substantial extra investment. That is why we propose an extra £15 a week, or £780 a year, to the over-80s.
    Yesterday, the Chancellor made much about flexibility in the labour market. He talked about additional support and assistance to schemes to promote employment among the over-50s. However, if we are serious about addressing labour market inflexibility, we have to tackle deep-seated ageism in the labour market. Ageism denies access to employment for many thousands of our fellow citizens and it denies people their dignity and liberty. It makes no economic sense. The cost of ageism to our economy—as estimated by the Employers Forum on Age—is £31 billion a year in lost production, lost taxes and lost opportunities. What a waste of money.
    Today, one in three people who are over the age of 50 but below the age of the state pension are out of work. Some of those people have made a deliberate choice to retire, to take up voluntary work, or whatever. However, far too many of them have been tossed on the scrap heap by employers who have adopted ageist assumptions about their capacity to do the job. Age should not be seen as a proxy for a person's capability or competence to do anything; and yet, still today, surveys shows that employers use age as a criterion when

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    deciding whether to employ a person. We need age-discrimination legislation. The Government must signal that they will not wait until the last minute of the last hour of 2006 to introduce legislation under the European Union directive on equal treatment. The Government must not simply legislate for employment but legislate to deal with age discrimination across the whole economy—in terms of goods and services, whether publicly or privately provided, as well.
    I want to touch on a couple of other issues, the first of which is the child and working tax credits and the £9 million advertising campaign that we have all seen on our televisions over the past few weeks and months. From answers that the DWP has given, 2 million of the 5 million families who are entitled to this tax credit are not claiming it. Again, complexity is denying access, denying benefits and denying extra income. At the same time, the old tax credit system is winding down. A constituent came to see me last weekend and said that they had applied for the old tax credit and been told that they would have to wait because the staff who would process it were now processing all the claims for the new system. My constituent may also lose out on a maternity grant because time scales mean that they will be timed out. I hope that that will not be the case and that, when I write to the Department, Ministers will confirm that my constituent will get the tax credit and will not be penalised because of processing delays in the system.
    The Liberal Democrats welcome increased investment in the national health service. Last year, we voted for the national insurance increase because we believed passionately that extra investment was needed. However, the Labour Government spent too much time during their first term inflating figures to create the impression that substantial investment was being made. They raised expectations that were not met, thus allowing the Conservatives to peddle their current line that extra investment will not make a shred of difference to our national health service. That is a false argument, but the Government have brought it on themselves by the false figures and accounting of their first term.
    Where is the money going? Waste is a serious problem in the NHS. I offer the House some examples. Agency nurse costs have risen threefold since Labour came to power and are currently £529 million a year, half of which is spent in Greater London alone. NHS resources of £500 million are going into agency costs rather than into the provision and retention of directly recruited staff.
    Mr. Kelvin Hopkins: Would it not be sensible to bring such agencies into public ownership, as public services, so that they are non-profit making?
    Mr. Burstow: In a way, the Government tried that with the establishment of NHS Professionals—their answer to the cost of agency nurses. That body was set up to manage bank nurses and other agency nurses to provide a service to the NHS. However, that form of nationalisation produced a poorer service, which was rejected by many trusts.
    We need sensible strategic planning for the use of agency staff rather than the panic measures currently being adopted. Only 18 months ago, an Audit Commission report concluded that there was not
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    enough planning in the use of agency staff; they were merely being used as a firefighting measure to plug gaps as and when. The lesson to be drawn is that, if we want family friendly practices throughout the economy, we should be seen to have adopted them in the NHS. People are voting with their feet and leaving the NHS to work for agencies, where they find the flexibility that they are not given when they work directly for the NHS.
    There are questions about the pressure on the NHS to hit Whitehall targets that often relate not to genuine clinical needs but to other Government ambitions. For example, the Government set a target of four hours for waiting in accident and emergency departments. In March, they carried out a snapshot survey to find out how things were going. The problem with taking a snapshot is that everyone lines up for the photograph to make it look as though they are doing a good job. During the week of the Government's snapshot survey, extra agency staff were brought in, overtime was increased, and training courses and scheduled operations were cancelled so that the right figures were achieved.
    Maintenance in the health service is also a problem. When the Government took office, the cost of the maintenance backlog to deal with the peeling paint in the crumbling buildings of our health service was £2.8 billion. The Labour Government were going to save the NHS in 24 hours. What is the situation six years later? The figure for the maintenance backlog is £3.4 billion and rising. PPP has not solved that problem. What are the Government doing to deal with that long-term maintenance backlog?
    The Chancellor rightly talks of the need for long-term investment in the health service. He commissioned the Wanless inquiry, which we welcomed. We subscribe to many of its findings. However, we were puzzled by the fact that Wanless said time and again that health and social care were sides of the same coin and that they needed to be seen as part of a whole system, yet Wanless was denied the possibility of inquiring into the adequacy of social services resources. Surely it is time to hold such an inquiry, not least given the integral relationship between the two parts of the system. The NHS can begin to deliver many of the Government's targets only when its social care partners are properly resourced. That is why it is disturbing to learn that in the past six years 124,000 fewer households received home care—a 25 per cent. reduction in the number of people receiving care in their own homes. Is it any wonder that there are still problems with delayed discharge? Instead of tackling the underlying causes, a system of fines has been passed into law that will damage working relationships on the ground, but will not solve the problems. Is it not time to have a Wanless on social services funding?
    My final point on the national health service concerns prescription charges for the chronically ill. Wanless described that situation as
    "not logical, nor rooted in the principles of the NHS".
    Under rules written in 1968—an entirely different time when medical science was not as good as it is today, and when people with acute short-term medical conditions tended to live less long than they do today—thousands of our fellow citizens with chronic long-term medical conditions do not gain access to exemptions to prescription charges, but have to pay. They may be

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    exempted if they are very poor and on income support, but those on the margins pay through the nose. For example, those on incapacity benefit find themselves in a serious situation whereby, because they have just 7p more a week than someone on income support, they do not qualify for the exemptions and end up having to pay their prescription bills. It is therefore not surprising that 750,000 prescriptions issued to people with long-term medical conditions—prescriptions that could change the quality of their lives—are not being taken up. What a waste of those people's quality of life. I hear about people saying to their GP or pharmacist, "Which of these prescriptions will make the most difference to me?" Some of the people who are paying, but should not have to, are those with asthma, cystic fibrosis or Parkinson's disease. The Budget should have addressed that long-term anomaly, which Wanless identified and on which the Government should act.
    The Budget is built on a number of assumptions by the Chancellor—untested favourable assumptions about growth and investment by the business sector. It is time that the Chancellor subjected his whole Budget to an independent audit by the National Audit Office. It should not be for the Chancellor to choose the assumptions that he submits—the NAO should be able to look at the whole Budget so that we know whether we are basing our debates on firm assumptions rather than on woolly, ungrounded and unfounded assumptions.
    The Chancellor has spent six years producing Budgets that make our tax and benefits system more complicated. He has been slow to invest in our public services and he has remained in denial about the crisis in our pensions system. The problem that results is an imbalance in the economy as a whole. Manufacturing is in recession and there are serious problems of investment in the business economy. Unless the Government begin to tackle that imbalance and ensure that the long-term growth forecasts are not just Mickey Mouse figures but a reality, we will not be able to pay for the increased borrowing—which we support—to provide improvements to public services. As a consequence, the Government's whole strategy will start to unravel, allowing the case of of others who wish to make cuts in public services to be heard more effectively. That is the danger of the strategy that the Chancellor outlined. It is a high-risk strategy, and I hope that his luck holds; otherwise public services will suffer. For our constituents, that will be the biggest concern of all.
    Mr. Deputy Speaker (Sir Michael Lord): Order. Before I call the next hon. Member, I remind the House that the debate must conclude at 6 o'clock. There were three statements, so time is very limited. I ask Members to exercise a reasonable amount of discipline in making their contributions so that a maximum number of Members can be called.
    4.44 pm
    Mr. Parmjit Dhanda: Conservative Members' comments, not only today but yesterday, have focused on waste and bureaucracy. I suppose that that is what I would have expected. Yesterday, however, I went to the Library and dug out an interesting document—a research paper on parliamentary
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    questions, debates and contributions, which was released last week. I discovered in it that between 13 June 2001 and 7 November, one Member of the House, who shall remain nameless—at least for the time being—managed to ask 3,036 questions more than his nearest rival: 18 oral parliamentary questions, at the cost of, I think, £299 each, plus a staggering 4,206 written parliamentary questions at £129 a pop. Most of them were about waste and bureaucracy, at a cost to the taxpayer of more than half a million pounds. Not only do Tory policies cost us more, but Tory politicians cost us a lot more. That is an example of bureaucracy and waste if ever there was one.
    Once the dust has settled on the Budget and we look back at headline figures, four key areas will come to mind with regard to their impact on my constituency. On employment, health, education and pensions, the national figures grab attention. We are down to under 1 million unemployed, and we have the highest ever employment level. On health, by 2008, we will have some 80,000 more nurses and 25,000 more doctors. On education, we have a settlement by which we are moving towards spending 6 per cent. of GDP on our children's education. A range of measures has been introduced for pensioners over the years, but those announced yesterday will be particularly welcome to campaigning groups in my constituency.
    Sometimes, however, those measures can seem a long way away from the working man and woman on the streets of Gloucester, and the statistics do not seem to relate to them in their day-to-day lives. I can understand that. As a constituency MP, I relate most to measures such as the new deal, which has reduced youth unemployment in my constituency by 75 per cent. When Labour came to power in 1997, 347 young people under the age of 25 in my constituency were out of work. Remarkably, that figure has been cut to 71. As a result of other measures introduced by the Chancellor in the past six years, a staggering 1,297 Gloucester people have been taken off benefits during that period. I remember working as a cleaner during my holidays for just £2.30 an hour. I am proud to say that, under this Government, in October this year, the national minimum wage will be £4.50, and we are looking at implementing a minimum wage for younger groups, too.
    When we talk in statistical terms about growth, productivity and how we compare with the rest of the G7, it can be boring for the man in the street. The single most important factor, which I mentioned in my intervention on my right hon. Friend the Secretary of State for Work and Pensions, is the improvement in living standards. If we look back over the past 50 years, this country has experienced the greatest improvement in living standards since post-war times. That is hugely significant.
    I mentioned the minimum wage and the difference that it is making. Clearly, the Tories were against when it was introduced, although I think that they are in favour of it now. I do not know exactly what the Liberal Democrat policy is on the minimum wage: it is Thursday, so I think that they are against it at the moment. I gather that instead of the council tax, they propose a local income tax, although we do not know at what level that would be set. A figure of 3p in the pound

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    has been mooted, but in an internal document leaked last week, they said that they did not want to be drawn extensively on the level of that income tax.
    Mr. Andrew Love: That was on Wednesday.
    Mr. Dhanda: And on Monday.
    The Liberal Democrats fought a rather tenacious campaign in last year's local elections. At national level, they are talking about removing 1,000 jobs at British Energy by doing away with a Government loan to my constituency. It is interesting that Liberal Democrat councillors should be elected in the very ward in which they would axe those jobs, yet they tell us in their national campaigns what they would do for our local economies.
    I mentioned the headline figures for health—the 80,000 nurses and 25,000 extra doctors we propose to have by 2008. They are big ballpark figures, but I have only to look out of my office window to see a £30 million new hospital taking shape—one of scores of such developments throughout the country. We have had scores of extra nurses, dozens of extra doctors and more hospitals, and I have become the first Member of Parliament in a generation who has opened hospital wards in my constituency, rather than presiding over their closure. Of course the hospitals in Gloucestershire hope to be in the first stream of foundation hospitals. I am sure that we will return to that discussion and that it will be a very strong bid indeed.
    As well as being involved with the £30 million brand new hospital, I am the first Member of Parliament for Gloucester to preside over the opening of a huge educational establishment—a new university campus—worth £19 million. We heard about the 6 per cent. of GDP and the ballpark figures nationally. For my locality, that translates to a 7.2 per cent. increase, given the new funding formulae that have been interpreted, but there is still more work to be done.
    The formulae are tied to the tax credit system, so in local education authorities, such as Gloucestershire, that are in part leafy—it has affluent areas and impoverished urban areas, such as parts of my constituency—it is important to target the increases in education funding that have come about because of the number of people who receive working families tax credit in those areas.
    Head teachers from my constituency have come to the House to make their case directly to Ministers. As consequence and as a direct consequence of our economic position and the measures that the Chancellor has taken during the past six years, we have been able to achieve increases in our education funding formulae and, as I said, a 6 per cent. increase across the country.
    All that contrasts remarkably with what Conservative Front-Bench Members propose. Early this week, the shadow Chancellor wrote a pre-Budget piece in The Guardian in which he talked about the failure, as he put it, of primary schools under a Labour Government. He said that 25 per cent. of primary school students were failing to learn to read, write and count properly. Well, that compares with 40 per cent. of children failing to reach level 4, and 20 per cent. cuts throughout the health
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    and education systems, when he was in government. Those cuts would translate into about 678 teachers being lost in Folkestone in his constituency.
    The other headline figure that I mentioned related to pensions. There has been an awful lot of campaigning on pensions, particularly by pensioners groups, such as the T and G pensioners forum in my constituency, which has been very keen for some time to ensure that pensioners who end up being hospitalised still have dignity and can claim their pensions despite the fact that they may be in hospital for more than six or 13 weeks. Such groups will be more delighted than any others with the changes that the Chancellor has announced this week. I for one am also very grateful for some of the other changes, such as the pensioner credit, which will affect more than 8,000 pensioners in my constituency. Typically, they will be £7 a week better off, or £9 a week better off if they happen to be in a pensioner couple.
    It is important to mention a group of my constituents who have come to Westminster and campaigned on finance and Treasury issues—those involved in trade justice campaigns. Trade justice campaigners throughout the country can rightly be proud of the fact that we have made a commitment to ensure that 115 million children around the world go to primary school and get the education that they deserve. Hon. Members on both sides of the House can be very proud of that.
    4.55 pm
    Mr. Kenneth Clarke: I refer the House to my business interests in the Register of Members' Interests. After yesterday's Budget, I look forward to the day when the present Chancellor rises to make the same declaration, as I fear that we are nearing the stage when he should move on to the private sector phase of his career. I think that he is now getting into very worrying difficulties, which he still denies in the House that he faces.
    The prudent Chancellor is long gone and well behind us. Indeed, he was an iron Chancellor for the first two years to an excessive extent. He is now a classic tax-and-spend Chancellor of the Exchequer of the sort that we have seen in the past. He spends first and taxes later, he is getting into all the difficulties that such Chancellors have faced in the past, and he continues to be in denial and will not share with the House exactly what he will do to get us out of the consequences of his policies of recent years.
    In yesterday's Budget, the Chancellor gave us a pause from tax and spend. Indeed, he gave us a pause from Budget measures. It was very lucky for him that a war was raging—obviously, that is uppermost in all our minds at the moment—as it deflected attention from the paucity of his speech and the lack of any ordinary Budget judgment, comments on the economy or measures of any significance. He was almost saying "Steady as she goes", although I think that he was doing so not because he does not feel the tremors in the deck, but because he does not quite know what to do next to avoid the consequences—unless, Micawber-like, he is lucky enough to see something turn up to save him from the next stages.
    I said that the Chancellor gave us a pause from tax and spend. He certainly did so in comparison with last year's Budget and public spending statement, but he had

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    cleverly left in the pipeline tax increases which he announced last year, but which come into effect only now. Unfortunately, from the point of view of the real economy, they do so at a disastrous time of slowdown in economic activity. We all know that £7 billion-worth of national insurance increases are now coming into effect and that they will be a severe blow to business and commerce in this country. That tax on jobs comes at a time when the job market, certainly in the private sector, is already looking in a perilous state.
    Everybody has just received their council tax increases, which are miles above inflation. I shall say only en passant that I am one of the few no doubt maverick Members of the House who still think that we will never solve that problem without returning to some modernised version of rate capping, as I do not believe that local government is capable of showing restraint to the required level when the economy slows down—but that is not currently a fashionable view.
    The Chancellor of the Exchequer, who has also frozen personal allowances—another subtle and slightly stealthy way of raising personal taxation—has paused. Nothing more of any significance was added yesterday. He slightly tightened policy, but mainly by closing loopholes. My first serious point is that I think that that is ducking the problem. We now face a situation in which we are talking about when he next has to raise taxation and not whether he has to do so, and about exactly what damage he will do to the real economy, and eventually public services, when he does so.
    Yesterday's Budget included a few themes on which I shall briefly dwell. It appears that the main theme was "Building a Britain of economic strength and social justice". I know no Conservative—certainly no one-nation Conservative—who would not have subscribed to that at any time in the past 20 years. We shall hold the Chancellor to account for his delivery, but it was very near motherhood.
    The Chancellor made great play of welfare to work. There is no difference between the Government and the Opposition on the desirability of helping to move people from welfare to work. Indeed, it was the theme of the second Budget that I presented as Chancellor, but its origins go back to the time I worked with my right hon. and noble Friend Lord Young when he was at the Department of Trade and Industry on his Action for Jobs programme, which drew heavily on workfare in the United States. I marvel that the entire Labour movement, which then attacked it vigorously and intensely, now tries to prove that it can do the same and gets headlines in The Sun about tackling the work shy. As my hon. Friend the Member for Havant (Mr. Willetts) made clear in his excellent speech, we do not disagree with the Chancellor's motives—welfare to work is a desirable public policy aim. We have won the argument. However, we criticise the Byzantine complexity of the Government's methods.
    The Chancellor usually steals phrases from us, but I noticed that he did not utter the phrase that the Secretary of State for Work and Pensions recklessly used a moment ago: "No return to boom and bust." For the first time, the Chancellor did not say that. Like me, he is not sure whether a bust will occur. I do not predict
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    a bust, but the danger exists if things go wrong and his luck does not hold. He therefore no longer repeats the phrase.
    Everything for which the Chancellor claims credit and all the benefits that the hon. Member for Gloucester (Mr. Dhanda) mentioned derive from the good news in the economy in the past few years. We have had more than 10 years of growth with low inflation. I do not want to argue about the past, except to point out that the Chancellor had an excellent inheritance in 1997. We had growth and low inflation, and the public finances were returning to balance. We had fiscal rules. I aimed to achieve a balanced Budget over the economic cycle. It is a tighter rule than the Chancellor's. The International Monetary Fund agrees that it is a better rule than the golden rule, with which I once flirted. Two years into my period of office, I issued a Red Book that contained both, but I was persuaded that it was too flexible. If one achieves the golden rule, it also means that the Government are probably not contributing to savings as they should, but we were well on course.
    The Chancellor then had the good luck of a period of unprecedented global boom. We now know that it was largely led by a boom in the United States that collapsed when an asset bubble burst. He is now in trouble, to which he is not reacting because he does not know what to do.
    The Budget speech was remarkable. The Chancellor has abandoned every rule that used to apply. I acknowledge that some of them were tedious and old-fashioned, and led to lengthy speeches about monetary aggregates and every tiny tax change. That has long gone. Indeed, the Chancellor hardly delivered a Budget speech at all. He went into long, tedious details of changes in various departmental policies. As my hon. Friend the Member for Havant said, they could have been given in speeches or written answers by the Under-Secretaries of State for Work and Pensions, for Trade and Industry or for any other relevant Department.
    Like most people who are interested in economic policy, I was waiting for the description of public debt and some sort of forecast. The comparatively slow exposition of detail suddenly ended. I could not keep up with my notes as figures streamed out. After much slow delivery of fiddling nonsense about other Departments, which the Chancellor likes to command, he raced through gabbled figures. That was the only time when he addressed the so-called "hole" in his Budget. It is a good description of the problem over which he was skipping. He did not deal with the hole in the Budget at all.
    The convention is to welcome the odd measure, which I shall do briefly. I welcome what has been done for pensioners and benefit recipients who go into hospital. I have looked at the cost of that and congratulate the Chancellor on his decision. I cannot understand why none of us did that a few years ago. It is a wholly welcome measure.
    I was also going to welcome the end of national pay bargaining. I was riveted by that passage of the right hon. Gentleman's speech. I have always thought that one of the best ways to remedy deficiencies in an economy is to end national pay bargaining, which our private sector achieved many years ago. In fact, that is the advice that I give to Germans now, and we should replicate the policy in our public services. The right hon.

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    Gentleman talked about pay review bodies and setting the pay for public servants in general with regard to regional price indices. When we are trying to recruit nurses, teachers, firemen and others in high-cost parts of the country, I have always thought it absurd that we can only recruit them by setting the same basic pay rise for every nurse from Land's End to John o' Groats. But by this morning on the "Today" programme, the Chancellor had chickened out, so we may not hear much more about that. He reversed rapidly at the first threat of a national strike and I am not sure how many of us will have the courage to keep on supporting him on that. We backed away from ending pay bargaining in the public sector, but at least it got a welcome mention.
    I shall now gabble through what I regard as the real Budget, which can only be abstracted if one reads the Red Book because that shows what the Chancellor has done and what he thought he was going to do. Hon. Members only have to look at 2002 to see what is going wrong with the economy. Government consumption in that year was very heavy. It rose by 3.75 per cent., the highest rate of growth for 25 years. Government capital spending rose by 9 per cent., but business investment declined and ended the year 5.5 per cent. below what it was at the end of 2001.
    Business fixed capital investment was down 9 per cent. in 2002, the fastest decline in business investment since the 1960s. Manufacturing output fell by 4 per cent. between 2001 and 2002. That must be noticeable even in Gloucester, where it seems that good things have been happening. Manufacturing is back in recession, with more than 600,000 manufacturing jobs lost since 1997. I refer the House to a good article in the Financial Times this morning debunking the Chancellor's misleading figures about our productivity record and the competitiveness of our industry. He made totally misleading use of figures based on a slight change to the statistical base since November last year. Under the Government, productivity in the private sector has been rising at half the rate that it was under the Conservatives when Labour took over.
    On the short-term forecasts, I am, of course, going to make the same point as everyone else about the scandalous optimism of the second and third-year forecasts, but, first, what will happen this year? We are supposed to be examining that closely. The Government forecast GDP growth for 2003–04 of 2.25 per cent., which is above all the independent assessments, and they are generous at 2 per cent. That figure is based mainly on private consumption and private spending, which in turn are based on a housing boom and public sector pay rises.
    The Government are still saying that GDP growth will increase by more than 2 per cent. Presumably, they believe that the housing boom will continue to help to finance that. Government consumption is forecast to increase by 1.5 per cent. But even in the financial year on which we have just embarked, the Government are forecasting a further decline in business investment of minus 0.25 per cent. and net trade in goods and services of minus 1.25 per cent. That is how they get the 2.25 per cent. growth.
    I have given enough figures to illustrate the key point: we have reached a stage at which the wealth consuming and spending part of our economy is still growing heartily. So public spending and wealth consuming is
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    the main sustaining force behind our growth. The wealth-creating private sector—business—is declining. If business investment and productivity are so weak, the long-term expectation is that the outlook for the economy is not healthy.
    In my opinion, it is not true that that the UK is better placed than any other country in the world to withstand the forthcoming problems. To be fair to other hon. Members who wish to speak, I have no time to go into the detail of the fiscal problem that that poses for the Chancellor, which he has not addressed. His problem is not only that Government Departments are now getting better at spending the enormous sums of money that are in the books, but that the huge fall in tax revenues has made all his forecasts wrong. The big falls are in income tax and corporation tax. They are the reason why he has had to adjust his borrowing figures so much already.
    The Chancellor forecasts that his tax revenues will bound back when this country returns to big growth in two years' time. He expects his tax revenues, including from corporation tax and income tax, to start to grow again as though we had returned to the 1990s boom conditions that he enjoyed so much. I believe that that will not happen. The Treasury has returned to underestimating the likely growth in revenue, which will continue to disappoint Treasury expectations. To use the jargon, structural changes have taken place and structural problems have arisen in the Chancellor's ability to get revenue. For the reason why, return to the point I made a moment ago: it is because the tax-paying, wealth-creating part of the economy is being shrunk, whereas the tax-consuming spending part of the economy is growing. That is why all the forecasts of revenue bounding back are, in my opinion, wrong, even assuming that the growth forecasts are even remotely credible.
    The Chancellor cannot stop making the books look more attractive by promising a fantastic rebound in years 2 and 3 of his Red Book, whatever they may be. I know scarcely anyone who believes that the economy will grow by more than 3 per cent. in the year after this one and the year after that, but the right hon. Gentleman keeps pushing rosy forecasts as an excuse not to do anything. He will not get away with it. He is already taxing business, jobs and pensions in a damaging way; the only question is when and where he will have to raise taxes again. He is desperately hoping to be able to put that off until after the next election, or on to some other Chancellor of the Exchequer.
    I very much do not wish to be the Chancellor of the Exchequer who takes over from the present incumbent—a gambler who has taken a bet that probably will not come off. His successor will have a great deal of work to do to sort out the problems that he leaves behind.
    5.12 pm
    Mr. Tom Clarke: Perhaps because he is my namesake, I have a regard for the right hon. and learned Member for Rushcliffe (Mr. Clarke), but he will not be disappointed to hear that I will not take any of the advice that he has offered the House in the past few minutes. In terms of job rotation, perhaps, given his own career, he should not look in his local employment office for the post of employment adviser.

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    I reflect with great joy on the advice that he freely dispenses and the advice that he gave to Mrs. Thatcher in 1990, but I conclude that the quality of his advice appears to have deteriorated since then.
    I think my right hon. Friend the Chancellor has delivered a particularly good Budget. The politics of envy have been somewhat evident in the past few minutes, and for good reason. Let me briefly recall what my right hon. Friend inherited in 1997 from the previous Government, before referring to my constituency, where the backdrop is now very different. The former Chancellor and those who occupied that office in the Conservative Government gave us unemployment of about 3 million and the highest mortgage rates that any of us can remember; we know that neither will return, certainly not under the present Government. I do not remember inflation under the right hon. and learned Gentleman being anything like 2 per cent.
    The Budget, including the inevitable contribution to the war and reconstruction and confirmation of the public spending programme commitments, is extremely welcome. So are the main objectives of my right hon. Friend the Chancellor in my constituency. I welcome the fact that we are talking about full employment, as I did during the excellent speech of my right hon. Friend the Secretary of State for Work and Pensions. The eradication of poverty is extremely important in my constituency and elsewhere. There have been real achievements to back it up. Everything that has been said today about security for pensioners is most welcome and meaningful, and applies to virtually every part of my constituency. I welcome too what my right hon. Friend the Chancellor had to say about international development. He has attacked poverty at home and he has applied those principles abroad.
    Full employment—employment opportunities for all—is a noble idea. In addition, it is something that is practical and can well be achieved. We are clearly in pursuit of that goal, given the Government's record.
    The Government started with a number of disadvantages. For example, when the right hon. and learned Member for Rushcliffe was in government, he did not—nor did Conservative Chancellors before him—make the most of the benefits of oil revenues. If only the present Government, in addition to the growth that they have introduced, had had the benefit of those oil revenues. Under a Labour Government, many of my constituents would not have suffered as they did.
    I welcome the fact that my right hon. Friend the Chancellor has invited right hon. and hon. Members to apply the objectives of his Budgets locally. [Interruption.] If the hon. Member for Havant (Mr. Willetts) wants to intervene, I shall give way. It seems that he does not wish to do so. Earlier, he was making ridiculous noises about incapacity benefit. I hoped that when he was referring to that he would not include in that area the 20 per cent. reduction in public expenditure to which his party is committed.
    I welcome the Chancellor's view—
    Mr. Willetts: Will the hon. Gentleman give way?
    Mr. Clarke: No, I am not giving way. My time is limited. The hon. Gentleman went on for about 25
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    minutes, and he knows that I have only 10 minutes. I would relish dealing with him, but I intend to deal with more important matters.
    The Budget has delivered, as have the Government, for small businesses. Local accountability is welcomed. Reforms to housing benefit, which are important to my constituents, are to be welcomed. Such reforms are long overdue. Budgets of all sorts, delivered by whatever party, can only help to create the atmosphere in which jobs are provided and produced. That is why I want to take the opportunity to welcome the challenge that the Budget presents to Scottish Enterprise, for example. I think that it should be making more of the opportunities that the Government's economic successes provide.
    Some infrastructure has been provided in Scotland, but I shall deal with my constituency in terms of the challenge to Scottish Enterprise. If ever there was evidence of the decimation of manufacturing bases in Scotland, there is the former Gartcosh site. We have an industrial development park, but I would welcome inward investment and jobs. Scottish Enterprise has the opportunities. Unemployment in my constituency has fallen considerably, but there is still scope to reduce it further. That will remain the position for as long as the industrial park is not developed fully. That leads me to the conclusion that Scottish Enterprise can do more for my constituents, for Lanarkshire and for the people of Scotland.
    I welcome the new flexibility at jobcentres for those who are seeking work. I welcome the fact that we are monitoring local labour markets. Further, I welcome the investment that has been mentioned. We had a little debate about investment in the private sector as against the public sector. However, we will not get improvements in the health service, education, transport and law and order services unless we provide jobs, training and careers, which are essential and which my constituents would welcome. That applies very much to the caring services. The decision that pensioners should receive a full pension while in hospital is excellent. Part of the Government's community care policy is about recognising people's needs in such a situation.
    Mr. Michael Connarty rose—
    Mr. Clarke: I am particularly sorry not to give way to my hon. Friend and former Parliamentary Private Secretary, but I said that I would speak for only 10 minutes.
    Michael Fabricant: Good for you.
    Mr. Clarke: I am glad that my speech is pleasing the hon. Gentleman. I would like to say the same about his, but that would be less than honest.
    The right hon. and learned Member for Rushcliffe, the former Chancellor, took a swipe at local government, but when he reads Hansard I believe he will reflect that he was being a bit unfair. We rightly pay tribute to nurses, teachers and the police, but social services in my constituency would be very much the poorer were it not for the influence of local government. Without that influence, voluntary organisations, which make a tremendous contribution to the lifestyle of our

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    people, would be lesser bodies. I also welcome the fact that in 2003, the European year of disabled people, various Government initiatives have been introduced to try to improve job opportunities for people with disabilities and their advocates. My right hon. Friend the Secretary of State for Work and Pensions has given a particularly inspiring lead. Like the Disability Rights Commission, I would like even more opportunities for people with disabilities because they can contribute so much at every level in society, and that contribution is welcome.
    In conclusion, we heard earlier today from my right hon. Friend the Secretary of State for International Development about the G7 summit which will take place in Washington at the weekend, and which she and the Chancellor will attend. I welcome the fact that she said that apart from the inevitable discussions on Iraq there will be further discussions about Africa, Asia, poverty-focused programmes in the third world and fair trade. The essential message of the Budget on fairness and justice applies just as much internationally, and I welcome the recognition that developing countries and developed nations can make a contribution to one another. I believe that together we can improve the world and indeed improve our own constituencies for the benefit of all whom we seek to represent.
    5.23 pm
    Mr. Michael Jack: It is a pleasure to follow the right hon. Member for Coatbridge and Chryston (Mr. Clarke), whose record in the House on campaigning for people who are disabled and in need of help is exemplary, and his speech today reflected that.
    I am sorry that the Secretary of State for Work and Pensions has escaped from the Chamber. We had the usual frothy performance from him in which he attempted to paint the last Conservative Government all in black and the present Labour Government all in white, when what we are dealing with is a fundamentally different situation. As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said in his excellent speech, world economic circumstances are different now, and for different circumstances there are different solutions. The present Chancellor was dealt an extremely good hand, but listening to his Budget yesterday, I detected signs that he is beginning to squander the legacy that he was left. I shall focus on that in a moment.
    Underlying the Budget is the growth in public consumption, the decline in private investment and, in particular, the further decline of manufacturing industry. May I say that members of the Government have distorted the position of my party on the provision of public services? I would like to put on record the fact that I detest the Government's continued distortion in representing as fact the idea that we would make 20 per cent. cuts in public spending. That is not the position of our Front Bench. It relates to a remark relating to the administrative costs of government and, as my right hon. and learned Friend the Member for Rushcliffe pointed out, the growth in the rise of employment in the public sector illustrates precisely the point that my hon. Friend the Member for Arundel and South Downs (Mr. Flight) was getting at in his remarks. I just wish that, in
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    the interests of balance and proper debate, the Government would not continue to distort that position.
    Mr. Bailey: Will the right hon. Gentleman give way?
    Mr. Jack: I would like to make progress because I am conscious that if I, too, take only 10 minutes, others may yet be able to speak.
    I welcome the proposals for pensioners. I was also most interested in the idea that some local authorities could share in gains if they were able to bring new companies and businesses into their area, and I look forward to seeing more details of that proposal. I am sorry that, as we are thinking of Iraq, the Chancellor did not take up an idea about which I have written to the Treasury, which is to give some form of encouragement—perhaps through a mechanism similar to the research and development tax credit—to those in the private sector who seek to invest in the really difficult places such as Iraq. I would ask the Paymaster General, even at this late stage, to give some thought to mobilising private investment in places such as Iraq, where the expertise of such businesses will be much needed, when some encouragement through the tax system might be an advantage.
    Listening to the Chancellor yesterday was a bit like having a large Chinese meal. I felt full at the time but woke up hungry the next day. It is always dangerous to judge a Budget on the day, so I judged it today. It was no better today than it was yesterday, and yesterday was pretty boring and meaningless. The Budget had the flavour of Micawber hoping that something somewhere would turn up.
    The comments of those experts who gave their immediate reaction were quite interesting. I was particularly attracted to the words of DeAnne Julius, the former Bank of England Monetary Policy Unit member, who had an enviable record as a private economist before going on to the committee. She said of the Chancellor:
    "He is placing big hopes on a quick recovery this year and next but if that does not happen, we will see a ballooning deficit and not a shrinking one."
    Mark Cliffe, global head of economics at ING Financial Markets, said:
    "It's still not clear where the Treasury's projected revival in investment is going to come from."
    George Buckley, of Deutsche Bank, said:
    "I very much doubt that we are going to see that growth materialise."
    If it does not, all the Chancellor's hopes and assumptions will crumble to dust.
    It is interesting to note, when we look at the accuracy of Treasury forecasting—which underpins the philosophy of this Chancellor's approach—how we all ignored one very important point. In recent years, when the economy has been doing well, the Chancellor has come to the Dispatch Box and said, "The extra money that I have to repay debt is greater than I ever thought." And we all thought that that was rather good, but we did not reflect on the fact that, in its own way, it represented a considerable inaccuracy in the forecasting model that the Treasury was using. I should have thought that the penny would have begun to drop in the Treasury by

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    now, and that it would have realised that what goes up rather more quickly than the model predicts could come down with equal rapidity. I am therefore very surprised that there appears to have been no adjustment in the Treasury's economic modelling.
    If we look at the predictions that have been made over time for the borrowing requirements, we can come to some very interesting conclusions. The prediction made in 2000 for the year 2003–04, which we are now in, was for a £3 billion borrowing requirement. By 2001, that had been reduced to £1 billion. Then panic set in, and, by 2002, the Treasury was predicting borrowing of £11 billion. Last November, the prediction was for £20.1 billion, and by yesterday it was up to £24 billion. So in the space of three forecasting years, the Treasury has gone from £3 billion to £24 billion—a factor of eight. No private company could run its business on the basis of being eight times out with such a fundamental piece of analysis.
    We all listened with sublime interest to the recital of growth rates of 2.25 and 3.5 per cent.—in what? Well, we are talking about a very large figure, namely our gross domestic product. The predicted GDP figure for 2004 is £911 billion. On the basis of the Chancellor's prediction, a fall in that amount—the sum total of activity in the economy—by just one third of 1 per cent. is the equivalent of a downward adjustment of the growth forecast in the Red Book from 3.25 per cent. to 2.9 per cent.
    I estimate—using the Chancellor's methodology—that such a fall could add a further £10 billion to Government borrowing for that year. The Chancellor's method of calculation shows that a 0.75 per cent. change in the economy's predicted growth rate between 2000 and 2003 resulted in a 21 per cent. increase in borrowings. That is why it is so important for us to spend some time examining the figures underpinning the Chancellor's position—and what we see is that a minor change in a very big number can have a dramatic effect on the bottom line of Government borrowing.
    I am disappointed by the Treasury's unwillingness, despite my efforts through parliamentary questions, to reveal in public its model demonstrating the way in which it predicts tax receipts. Sadly, although the Treasury model as such is available for scrutiny, the tax receipts model is not; and unless we know exactly what is going on, no one can accurately predict the course of the economy.
    The Secretary of State talked briefly about boom and bust. That was an interesting aspect of the Chancellor's speech. The boom and bust under Labour has been the bust of personal pensions, the bust of endowment policies, and the bust of private investment. The Budget contains nothing of any note to deal with people's current worries about the future of their pension funds and, indeed, their personal savings.
    All we were given in regard to personal savings was the so-called children's trust fund. The provision of £300 million a year to help a group of non-taxpayers to save strikes me as bizarre. In fact, taxpayers—parents—will park a lot of taxable money in this great trust, and when their children are 18 they will suddenly help themselves to a nice little earner when their ISA allowances, for
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    instance, have run out. I see it as the "save for university" fund. Meanwhile, the Government are talking about encouraging talented people from overseas to come to this country, and using public money to do it. The two proposals do not add up, and I think the children's trust fund is a waste of time.
    I am very sad that inheritance tax relief was not raised by more than £20,000. It is all very well for the Chancellor to say that 95 per cent. of estates can escape. Look at the labyrinthine process in which people have to become involved to escape inheritance tax when, through no fault of their own, the value of their major asset—their house—has increased. That is the ultimate form of double taxation.
    The Budget statement contained the usual list of reviews and studies. I sometimes wonder how the great captains of industry who are involved in such projects have enough time to steer their company ships as well.
    Let me end by saying something about the tax burden. As my hon. Friend the Member for Havant (Mr. Willetts) pointed out, the tax burden will rise—but let us not forget that between 2002–03 and 2005–06, £47 billion of extra tax will be taken out of this country: £10.2 billion a year. That is indeed a heavy burden to be borne for the sake of public service improvement that is yet to be delivered.
    5.34 pm
    Kali Mountford: May I say with all possible gentleness to the right hon. and learned Member for Rushcliffe (Mr. Clarke) that it is highly unlikely that he will be faced with the problem of taking over the current Chancellor's job, however much he may wish to do so? I should also say to the right hon. Member for Fylde (Mr. Jack) that I could not disagree more with his analysis of enabling children to save. He seems to have a rather cynical view of what parents might wish to gain on behalf of their children, whereby they will want to purloin such money as a personal, tax-relieved benefit. I do not see that happening.
    In communities in my area, working-class people who are brought up on council estates want to save for their children so that they can get on better in life. Everybody aspires to the next generation's doing better than themselves. Some families have achieved that for many years, but others have found, after years of unemployment, that their ability to save for their children has been greatly reduced; indeed, in many cases it has been totally eradicated. Some families are now out of the habit of saving, so it is a very good thing for parents to have this opportunity to save on their children's behalf, with some help from the Government. That money is not there to help in a cynical way with top-up fees, for example; it will enable those aged 18—that vital time in a person's life when they reach maturity—to take decisions that they would be unable to take if they had no assets at all. It is a shame when those from an asset-based background try to deny such assets to others.
    I am somewhat confused by the argument of the hon. Member for Sutton and Cheam (Mr. Burstow). I cannot see how some form of local taxation would help the poorest pensioners; in what way would that be better than the council tax, for example? He has completely overlooked the fact that any form of local tax would, in

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    itself, be means-tested; that is the nature of taxation. [Interruption.] The hon. Member for Orkney and Shetland (Mr. Carmichael) laughs, but if he does not know how taxation works—
    Mr. Alistair Carmichael: I think that that is your problem.
    Kali Mountford: The hon. Gentleman has entirely missed the point.
    Mr. Carmichael: Tell us what the point is, then.
    Kali Mountford: The hon. Gentleman is behaving in a rather silly fashion—he ought to grow up. What is important is that the people who need the most money get it. What has been suggested would be a rather bizarre way of getting around the problem. What will best help pensioners is not giving more flat-rate money to those who can already afford everything; it is targeting money from scarce resources—
    Mr. Burstow: Will the hon. Lady give way?
    Kali Mountford: No, I shall finish this point, which I have made many times, although it obviously has not sunk in to the heads of certain feeble-brained people. The best way to help the poorest people is to make money available to them. The only point on which I agree with the hon. Member for Sutton and Cheam is that the way to tackle the problem of getting money to the families who are not claiming it is to address the question of take-up. We must establish take-up campaigns.
    Mr. Burstow: Will the hon. Lady give way?
    Kali Mountford: Yes, but I should point out that we are short of time.
    Mr. Burstow: I am grateful to the hon. Lady for giving way. Will she therefore be voting against the extra £100 flat-rate winter fuel payment for the over-80s?
    Kali Mountford: The hon. Gentleman makes what he thinks is a very clever point, but his own party and mine—
    Mr. Burstow: Will the hon. Lady answer—yes or no?
    Kali Mountford: The hon. Gentleman likes hectoring and heckling, but he does not like listening. The point is that there is a particular problem with the over-80s that needs to be addressed because they constitute the poorest group of pensioners, and unlike other pensioner groups, they never had the chance to gain from occupational pensions and private pensions. There has been a huge rise in the number of personal pension plans, but there are problems with that industry, and we may need to regulate it to ensure that pensioners and savers trust such schemes, so that they continue to invest. However, the hon. Gentleman has completely missed the point that the over-80s have had the least opportunity to save for themselves. His argument
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    simply does not work. [Interruption.] He can continue to laugh if he wants to, but he will not learn much that way, will he?
    I want to draw the House's attention to what I consider to be a very important matter in connection with work and pensions. That is the proposition that we should look more flexibly at what we can do for people who are unemployed and in receipt of benefit. In my constituency, there are 8,186 people on income support or pensions who will gain from the help that will be available to them if they should ever be unfortunate enough to be in hospital.
    However, one ward in my constituency has the highest number of people unemployed and on benefits, and the lowest income. In other wards, people have a great deal more income and a great deal more to gain. We must look at how I and my local jobcentre can tackle the community in the ward to which I referred, analyse what is going on there, and make sure that people get the help that they need—training, support and help back into work. That has to be provided on a case-by-case basis, and not according to the simple across-the-board approach that we have had to date.
    I see that time is running very short. I shall sit down now, in the interests of allowing further debate. However, I hope that the House will see the need for targeting help on those who need it most.
    5.41 pm
    Dr. Liam Fox: Someone asked me last week whether it was nerve wracking to stand up and speak in front of a packed House. I guess that we will have to wait until another day for the answer to that question, but if the debate was sparsely attended, that was counterbalanced by the quality of the speeches.
    My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) talked about the disastrous effect of introducing tax rises, and especially a tax on jobs, at a time when the economy is slowing. He reminded us that the Chancellor, in his role as domestic Prime Minister and great keeper of the real Labour truth and vision, had offered us enterprise, a family-friendly Budget, social justice—pretty much everything but places in heaven. I suppose that that was just in case there might be a place next door.
    My right hon. Friend the Member for Fylde (Mr. Jack) again made a very informed speech, in which he talked about the need for clarity in the model used to predict tax receipts. He also mentioned the Government's shameless distortion of the supposed 20 per cent. cuts planned by the Opposition. The Government know that that is not our policy. It makes me wonder sometimes what moralising politicians, who for political advantage are willing to say things that they know are blatantly untrue, tell their children about the need to tell the truth.
    It is a shame that we have not had a health debate in this debate on the Budget. Health is the Government's flagship policy. They have raised national insurance to fund rises in health service spending, but the Government are too afraid to allow the Secretary of State for Health to be paraded in front of his own Back Benchers. The Opposition would love to discuss the real health reforms that the Government might introduce in the future. In fact, we would have welcomed the chance

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    to support the Secretary of State in his policy, and to congratulate him on the forthcoming Bill for opt-out foundation hospitals. We should also like to congratulate him on persuading the Treasury to move towards local pay and the abandonment of national collective pay bargaining. My right hon. Friend the Member for Fylde can be reassured that we certainly will have the courage to stick with that policy. I hope that the Government will. I am sure that the Royal College of Nursing, the British Medical Association and Unison would have loved to have heard the Secretary of State give the House details of how local pay would be implemented in the NHS. However, we wait for another day for that.
    We have been promised much in terms of reform. In his famous interview with The Sun, the Chancellor said that there would not be one penny more until the changes necessary to carrying out the modernisation that the health service needed were secured. However, what real reform have the Government introduced? We have had some reorganisation, and the pieces have certainly been moved around. We have lots of spin to go with that, but the basic problems remain. The system is still too centralised, politicised, wasteful and bureaucratic. Its targets are entirely wrong, and drive activity in the wrong direction.
    I entirely agree with the Paymaster General, who will wind up the debate for the Government and who told the House:
    "Waiting lists, perversely, allow people to be treated not according to clinical need but on the period of time and political priorities of the Government."—[Official Report, 26 January 1993; Vol. 217, c. 962.]
    Yet that is exactly the perverse policy that the Government are following. It is a system that allows far too little choice.
    I wonder what people would make of the concept of choice expressed in a written answer from the Minister of State, Department of Health, the right hon. Member for Barrow and Furness (Mr. Hutton). Of part of the Government's choice programme, he said:
    "The trust on whose waiting list the patient is held before the start of the choice process, checks whether the patient falls within the eligibility criteria for choice."—[Official Report, 26 February 2003; Vol. 400, c. 644W.]
    What sort of concept of choice is that? The only real reform that the Government are proposing is foundation hospitals but, because of the Government's internal sensitivities, we are not allowed to debate that in the House.
    The Government's basic programme of reform on health has utterly faltered. What have we had? The consultant contract is a disaster. The GP contract is currently a disaster. Agenda for Change is not yet supported and is likely to fall into the category of disasters. Community health councils were abolished in order to provide better patient representation, but what did we get? We were told that the new supervision powers in place of those councils would guarantee that communities had a say about what happened in their area, but we are now told that they are not mandatory. The powers are there, but they do not have to be exercised.
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    We have had changes to care home regulations, resulting in the loss of 60,000 care home beds. We had a GP recruitment scheme, which was to provide 2,000 extra GPs between 2000 and 2004. With just a few months left, we have had only a little more than 400. Another plan was to send patients abroad. The cost of setting up, researching and administering the pilot scheme, which sent a total of 234 NHS patients to France and Germany, was a staggering £468,000. That is probably the greatest reform so far.
    The funding of specific services will also be reformed. Under the NHS cancer plan—one of many—the Government pledged that an extra £570 million would be directly allocated to cancer services. We were later told by the cancer tsar that directly allocated does not mean ring-fenced: it is only an aspiration. The audit carried out by Cancer BACUP found that 50 per cent. of cancer networks had not received their expected allocation of funds, as 43 per cent. reported a shortfall in promised funds of between 20 and 25 per cent. More than 80 per cent. did not expect to receive the funds in 2003–04 and 70 per cent. of strategic health authorities pointed out a huge difference between the resource requirements to meet the needs of cancer services and the resources available to primary care trusts.
    That is a pretty sorry tale and the same is true for hospices and mental health services. Everyone is asking where the money has gone. Faced with the failure to reform, new Labour resorts to type with spin, half-truths and downright lies. We are told that the Conservatives do not believe in the NHS and run it down at every opportunity. That presumably means not telling the truth because, under new Labour, telling the truth about the health service will lead to one of three consequences. People will be intimidated, like Mrs. Rose Addis; browbeaten, like NHS managers; or abolished, like CHCs.
    My area, and that represented by the Paymaster General, has three trusts, none of which has any stars. The in-patient waiting list has increased from 10,000 at the end of December 2000 to 12,894 now. Are we supposed to say nothing about that because that is a criticism of the services to patients and undermines the basis of the entire system? Of course not. It is the duty of MPs to stand up and tell the truth.
    I should like to tell the Government about privatisation. The involvement of the private sector is important. We must
    "set the parameters for future partnerships we will need between tax-funding and personal contributions … We should be opening up health care … to a mixed economy … and be willing to experiment with new forms of co-payment in the public sector."
    The Chief Secretary to the Treasury (Mr. Paul Boateng): That sounds like charges.
    Dr. Fox: Those are not my words, but those of the Prime Minister in one of his recent lectures. The Chief Secretary says that it sounds like charges; yes, it sounds very much like that to me, and all those who listened to the Prime Minister's speech would have been thinking exactly the same. The Chief Secretary is famous for scoring own goals in his television performances and he has managed one in the House, too.
    The private agenda is often mentioned. It is not the Conservative Government but the current Secretary of State who has signed a new concordat with the private

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    sector. Diagnostic and treatment centres are run by the private sector; there is private management for failing trusts; and the private finance initiative has been exalted to a near religious status. Labour Back Benchers might like to know that, last year, income from private patients in the NHS rose by 7.9 per cent., despite all the Government's rhetoric.
    We are now seeing a decline in the number of beds and an increase in the number of bureaucrats. The number of beds in 1996–97 was 198,000, but is now 184,000—a reduction of 14,000. Yet the administration and estate staff have increased from 196,000 to 224,000. A Labour document states:
    "Those who parade such figures do not realise that it is made up of people like painters and gardeners".
    I suppose that the primary care trusts and the strategic health authorities have been advertising for people to do a bit of dabbing of paint on the windows and to cut the grass, and have not been advertising for financial flow managers or public health staff. That is an absolute nonsense, and this is a Government in love with bureaucracy. However, consultant vacancies have risen from 2.3 per cent. to 3.8 per cent. in the past two years; the bill for agency nurses is now contributing hugely to hospital deficits; the number of cancelled operations has gone up from 52,000 to 81,000 since Labour came to office—and the figure worsened in each quarter of the past year; delayed discharges are a major problem and yet, rather than tackling the underlying problem, Labour has an absurd system of fines for local authorities; emergency re-admissions are up; clinical distortions have increased; and hospital-acquired infections have now reached the point where 5,000 patients a year die from them.
    The situation has become absurd. We have looked at data from the Audit Commission and others, and we have looked at the Government's figures on how clean the hospitals are. The House will be pleased to know that more and more hospitals are hitting the Government's top target for cleanliness. However, in the 20 trusts with the highest rates of hospital-acquired infection—where people are most likely to die of it—13 get the Government's top rating for cleanliness and others get the second-top rating. That will be of huge reassurance to patients. The system suffers from endemic fiddling of the figures—both by the Government and encouraged by the Government.
    The Government have thrown money at the system. Funding has increased by 21.5 per cent. in real terms; yet, by the classic measure of finished consultant episodes, activity is up by 1.5 per cent. The number of patients who were admitted to hospital last year actually fell by 0.5 per cent. It really takes talent to spend so much money and get so little back for it. We have to take the politicians out of the running of the service. That will mean abolishing the Government's central targets, giving power back to the professionals and giving real choice to the patients. The Government cannot succeed in running the health service by the present model. The Government believe that the patients are there to service the NHS, when it should be that the NHS is there to service the patients. That is the real difference.
    5.52 pm
    The Paymaster General (Dawn Primarolo): I want to return to the Budget debate and to the discussions of the past two days, but in my concluding remarks I will turn
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    to the points that the hon. Member for Woodspring (Dr. Fox) has made on the health service. I thank hon. Members on both sides of the Chamber for their contributions over the two days of the Budget debate. They will forgive me if I am unable to reply to every point in this short wind-up speech. Many thoughtful views have been expressed—by hon. Members on both sides of the Chamber, surprisingly—on a number of
    important challenges that face this country.
    Britain has sustained the longest period of economic growth and the longest period of growth in living standards for half a century. Unlike the American, German and Japanese economies, the British economy has had uninterrupted growth in every quarter over the past six years. We have the lowest inflation for 30 years, the lowest interest rates for 40 years and the highest levels of employment in our history. Despite difficult world economic conditions, we are able, because of decisions that we have made, to meet our military and security costs abroad and at home and to pay for the costs of building the peace. We are able to maintain, in full, our record of investment in schools, hospitals, transport and policing. We are able to provide help for British business, industry and commerce.
    This Budget marks a new stage for the Government. Having made reforms since 1997, we are now seeking to achieve a more flexible and more enterprising full-employment Britain—a Britain of economic strength and social justice. We have set out our detailed economic reforms, which are aimed at achieving, for each region and nation, the greater flexibility that we need to develop and maintain the global competitiveness that is necessary for us to secure our goal of full employment.
    We should be clear. The flexibility that we seek in employment and pay, and in the liberalisation of capital markets and product markets generally, is not secured at the expense of fairness to families and members of our community—quite the opposite. It is underwritten by policies to promote fairness through full employment, tackling poverty through tax credits and better public services. In his opening speech, my right hon. Friend the Secretary of State for Work and Pensions, outlined our undertakings to assist lone parents, to improve employment rates and to develop skills. All are central to our strategy.
    In an intervention, the right hon. and learned Member for Rushcliffe (Mr. Clarke) referred to a reply that had been given to his office about tax credits. He should not have been given such a reply. That should never have happened and I apologise to him. I shall be more than happy to take up personally the specific inquiry to which he referred. It is unacceptable that a Member of Parliament should have been given such information.
    Mr. Kenneth Clarke: My constituent told my office that that was the explanation that she had received locally. My office was not given that explanation, but it was given information that implied that serious delays would take place so I welcome the right hon. Lady's indication that she will look into the matter.
    Dawn Primarolo: None the less, my offer to the right hon. and learned Gentleman stands. It is unacceptable

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    that delays should have occurred and that Members of Parliament should be advised incorrectly. That needs to be dealt with swiftly.
    About 3.9 million claims for payment of tax credit have been received against an eligible population of 5.7 million. That does not include up to 1.3 million people in receipt of income support or jobseeker's allowance who will automatically receive the increase this year in their child premiums. The volume of claims is enormous and, unfortunately, errors are inevitable in some cases, but it is not correct to give the impression that there is excessive delay or that people have not been paid on time the money that was due to them.
    Mr. Willetts: Will the right hon. Lady give way?
    Dawn Primarolo: I will, but I hope that hon. Members will then allow me to reply to the debate.
    Mr. Willetts: Will the Minister assure all the people throughout the country who, until last week, were receiving working families tax credit that they will all receive this week the child credit to which they are entitled? That is the problem.
    Dawn Primarolo: The problem is whether people have applied for the credit and when. The hon. Gentleman is knowledgeable about such systems, especially the vastness of the tax credit system, to which more than 5 million people have access, so he will realise that if somebody applied late for their tax credit, it may not be possible—even with all the will in the world—to get their payment to them in time for it to be continuous. They will get the money and we are prioritising to ensure that they do. However, it would be to make a false promise to the House to give the undertaking that the hon. Gentleman requests. For example, where people have sent in wrong information, late information, incomplete information or information that we have been unable to verify, I could not make such an undertaking to the House.
    In his speech, the right hon. and learned Member for Rushcliffe talked about unbalanced growth. In particular, he suggested that the wealth-creating sectors of the economy were being neglected. The Government recognise that manufacturing is disproportionately affected by the slowdown, but the same is true across the globe, as he knows. That is why the Government have implemented a proactive enterprise agenda, which has been welcomed by the CBI in its response to the Budget, as a way of continuing to develop and enhance enterprise and entrepreneurship, and to ensure growth in the sector.
    The right hon. and learned Gentleman also suggested that the growth forecasts were optimistic. We do not agree, and nor do three quarters of the independent forecasts which, for 2003, are within or above the Government's forecast range. Since 1997, the Government have, if anything, tended to underestimate growth forecasts.
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    I entirely agree with the right hon. and learned Gentleman's point about the importance of understanding the trends in the global economy, but it simply is not true, as he said, that business investment is suffering unduly in the United Kingdom. British investment has weakened across the world—in the United States, by 12 per cent. We have also experienced that pressure in Britain. However, total real business investment for 2002 remains at 14.5 per cent., which is higher than in 1997.
    It being Six o'clock, the debate stood adjourned.
    Debate to be resumed tomorrow.

  PETITION

    New Station (Golborne)
    6 pm
    Andy Burnham: Golborne is a former pit village in my constituency and in that of my right hon. Friend the Member for Makerfield (Mr. McCartney). It stands at the crossroads of the north-west; indeed, it is hard to imagine a more strategic location. Nestled in the corner of the M6 and the east Lancashire road, next to Haydock racecourse, the town stands at the confluence of Greater Manchester, Merseyside and Cheshire on the historic Liverpool to Manchester route, yet, unbelievably, the area is the most poorly served by rail in the whole of the north-west. It bore the brunt of Dr. Beeching's axe, leaving nearby Leigh, the largest town in England, without a railway station, and Golborne stranded. People used to work locally, but with the closure of the pits and the loss of other local jobs, Golborne, Lowton and Ashton have become commuter areas. Many people have moved into the area to its new housing estates, but have no choice other than to get into their cars and join the queues on the east Lancashire road. Golborne is crying out for a station, which would be the catalyst for its wider regeneration.
    This petition, unlike many others, has Cabinet backing. My neighbour, my right hon. Friend the Member for Makerfield, and I live in Golborne and Ashton. We can assure the House that the 1,800 people who have signed our petition—neighbours and friends, as well as constituents—would use a station if they were given one.
    The petition states:
    To the House of Commons.
    The petition of residents of Golborne, Lowton, Ashton and the surrounding districts
    Declares that a new railway station in Golborne, Greater Manchester, would enhance the quality of life for residents in Golborne, Lowton, Ashton and the surrounding districts and would make public transport accessible for both business and pleasure.
    The petitioners therefore request that the House of Commons urge the Government, the Strategic Rail Authority, the Greater Manchester Passenger Transport Authority and others concerned to take steps to provide a new railway station in Golborne.
    And the Petitioners remain, etc.
    To lie upon the Table.

    Tax Credits (Scotland)
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sutcliffe.]
    6.2 pm
    Ann McKechin: This month marks one of the biggest-ever reforms of the Inland Revenue and the Benefits Agency, with the introduction of a new tax credits system for low-paid workers and people with families. It represents a comprehensive sea change in the way in which people are taxed on their income by recognising that everyone who is in work or bringing up children contributes to building a stronger economy and a stronger society, and that we should assist those who, at different times of their lives, are in need of additional support.
    Since being elected in 1997, the Labour Government have worked progressively to reform taxation policies to support workers and families. In particular, they have introduced measures to help people into work and to make work pay, and at the same time they have given more help to families when they are bringing up their children. Such measures are, of course, integral to the Government's agenda of halving child poverty by 2010 and setting ourselves the ambitious target of eradicating child poverty within a generation. In a modern society, extending opportunity for all children and ensuring that people's life chances are no longer unfairly determined by their childhood circumstances is not only morally right but essential to a strong economy and society.
    In their first Parliament, the Labour Government introduced the working families tax credit, the disabled persons tax credit and the children's tax credit. Those measures have already made a substantial difference for many low-paid workers throughout Scotland, together with other fiscal measures such as the introduction of the 10p rate of tax, increases in child benefit and the reduction in the standard rate of income tax. Since 1997, families with children are, on average, £1,200 per year better off as a result of those measures. As a result of the targeting of our reforms, households in the poorest fifth of the population are, on average, £2,400 per year better off in real terms.
    I am pleased that the Government are now able to offer a much more sophisticated and targeted system of assistance, and I know how much effort my right hon. Friend the Paymaster General has expended in the past few years to bring those plans into effect. She and her staff are to be congratulated on that real achievement in fiscal reform.
    The new tax credits introduced this month are an attempt to build on the successes of the original system in order to offer a better system of support for families and people in work. I welcome particularly the move to pay the new child tax credit to the main carer, normally the mother, rather than to the principal household wage earner. I am also delighted that, for the first time, eligibility for the new tax credits is being extended to thousands of people who were previously excluded, such as student nurses and low-paid workers without children. In fact, I understand that the Government have estimated that more than 5 million families will benefit from the new child tax credit alone, compared with 2.5 million under the old scheme. As I represent
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    part of a city in which the largest income bracket is £10,000 to £14,000, I know that that will make a real difference to thousands of our citizens.
    Recently, I held a roving surgery in my own constituency to promote the new system, and I met a disabled woman who was working part-time and had no children who will be approximately £3,500 a year better off with the new tax credits. Another constituent whom I met, however, who was in a low-paid job and had a two-year-old daughter, will be better off by approximately £2,500 a year due to a combination of both the working tax credit and the child tax credit. I was genuinely surprised and delighted at the generous support that the scheme provides, and I know that my constituents were just as pleased.
    As my right hon. Friend will be aware from recent press reports, however, it is currently estimated that only 3 million of the 5 million families in the UK entitled to the new tax credit have completed and returned their forms. I am concerned to ensure that, in Scotland, we are able to maximise the take-up rate. Only this week, the Child Poverty Action Group, while welcoming the launch of the scheme, expressed concern about the relatively low take-up and asked the Government to continue their present campaign. From speaking to my constituents, I know that many are still unaware that they may be eligible for benefits offered by the new reforms. Although I appreciate that those who were under the old working families tax credit scheme have received application forms automatically, my right hon. Friend will know that the new system widens substantially the net of beneficiaries. As employers are no longer involved in processing the administration of tax credits, little or no information is being disseminated at places of employment among the small and medium-sized enterprise employers. That, however, is where a large percentage of potential applicants such as women and the low-paid work. Is there any way in which information can be distributed through the place of employment, perhaps based on the Inland Revenue's records, which will show potentially low or lower-paid work forces.
    I appreciate the sophistication and extent of the television and press advertising in recent months, including the targeting of women's magazines, and that is certainly a big help in encouraging a positive level of claims. Clearly, however, more work in this direction is required, and possibly for a much longer, sustained period so that the message gets through to all parts of our communities. Has the Minister considered further advertising in the local and free press, together with advertising on local radio stations, particularly as evidence suggests that that is where most women or low-paid workers obtain access to news and information? Has the Minister or her staff made any contact with local authorities in Scotland about how they can use their networks, particularly in schools and nurseries, to promote the scheme?
    I have also met a considerable number of people who claim that they have received the forms but have still to complete them, and in their words, "haven't quite got round to it". Most seem unaware of the time limits: for example, that they needed to return the forms by the end of January to guarantee that their money would be paid in time for this month., or that they would lose money if they did not apply within the first three months.

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    That suggests a few problems. First, although I am sure that my right hon. Friend and staff at the Inland Revenue have made every effort to condense the application form to 12 pages, many people, particularly those with literacy problems, still find completing such a form, which is in fairly small print with a good number of boxes and a substantial amount of supplementary notes, a daunting prospect. Their first instinct is to gaze at it with perplexity, put it down and forget about it. My right hon. Friend will no doubt reply that, in most cases, applicants will be able to skip a good number of the questions, depending on their circumstances, but that is not necessarily as clear to every applicant when they look at the form.
    Secondly, many people will start looking for last year's P60 and may realise that they have lost it or that their employer has failed to provide it. That starts the tortuous search for the duplicate and, again, frustration and a degree of confusion can result. Will staff issue reminder letters to those who have received application forms but who have still to return them, and will people be encouraged to make more use of the helpline assistance?
    I was alarmed that a number of constituents have contacted my office in the past week to say that they are having substantial difficulty reaching the helpline number. My staff have phoned the number over the past couple of days and have repeatedly received a BT message that the call cannot be connected owing to the volume of calls. A number of other Members of Parliament have indicated that their constituents are experiencing similar problems in other parts of the country. Will the Minister comment specifically on what steps are being taken to tackle that problem, given that we are implementing the scheme this year?
    Last week, I attended the annual conference of One Plus—a voluntary organisation based in the west of Scotland that does a huge amount of valuable work in assisting and providing training for sole parent families. Concern was expressed about take-up and, although people are aware that a tax credit scheme is in operation, their knowledge of its scale and detail is, probably understandably, fairly vague. Some of the rules of eligibility are quite complex.
    For example, at the conference I met a woman whose 18-year-old daughter, currently a student, has just had a baby, and they both reside with her. She has been advised that she may be able to claim for tax credits as she is supporting her daughter and grandchild. A number of other women also spoke about the lack of any response so far from the tax office about their applications to confirm that their payments will be made. That highlights the need for a very high level of efficiency and support in the Revenue to ensure that the take-up of benefits is as high as possible and that payments are received on time.
    Targeted benefits are always more difficult to administer, but I fully understand and support the Government's priorities. I have been impressed recently by the work of the new pension agency, which is checking its record base, identifying pensioners on low incomes and contacting them with information about their possible eligibility to enhanced benefits, such as the
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    minimum income guarantee. In fact, my mother was one of those who received such a letter last year. Is it possible for the Inland Revenue to conduct a similar exercise for those who may now benefit from the working tax credit, which is specifically intended to benefit low-paid workers?
    Will my right hon. Friend comment on the feedback that her officials have received about the current media campaign? Does she see merit in continuing the level of the current campaign to ensure wider take-up? In particular, has her Department considered any further measures to increase participation and to chase up those who, to date, have failed to return their forms to the Inland Revenue? Does she agree that more needs to be done to emphasise the three-month period to make sure that families and low-paid workers do not lose out on that important reform?
    The new system is vital to our aims to ensure that all families and workers have a decent income and that we successfully combat poverty in Scotland and in society generally. Like my right hon. Friend, I am very keen to ensure that all those who are eligible to benefit in Scotland know how to claim and submit their applications to the Inland Revenue. The Government have made an enormous effort to get the scheme into operation. There are bound to be teething problems, as my right hon. Friend said earlier this evening, but I urge her and her colleagues to continue to work to allocate the necessary resources to ensure that the scheme is a real success.
    6.13 pm
    The Paymaster General (Dawn Primarolo): I congratulate my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) on securing this Adjournment debate in what has been a busy week. It is very timely given the introduction of the new tax credits, and I hope to deal with each of the points that she has made. In particular, I thank her not only for the support that she has given personally in the House in participating in the legislation's progress through Parliament, but for being actively involved in her constituency in assisting us to get the message across about eligibility for the new tax credits.
    My hon. Friend well knows that, as a result of the reforms that we have introduced—the working families tax credit and the disabled persons tax credit, linked to the national minimum wage and huge increases in child benefit—the Government have made significant progress in tackling poverty and low pay not only in Scotland, but throughout the United Kingdom and Northern Ireland.
    As a result of the improvements that we have made and the reforms that we have introduced, families with children in the poorest fifth of the population will be £2,500 a year better off in real terms from April 2003 compared with 1997. Our new child tax credit will be complemented by the new working tax credit, which builds on the work-based elements from the old provisions.
    On my hon. Friend's comments about publicising tax credits through the workplace, I confirm that we have done all that we humanly could to encourage all employers, including local authorities, to make available information about the tax credits, particularly

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    the working tax credit, which will still be paid through the wage packet. On future activity on publicity, training and information for potential tax credit claimants, I reassure her that the Inland Revenue will continue its activities next year, but not at the same level, to encourage people to apply.
    On take-up and the numbers who have applied for the new tax credits, I should like to take this opportunity—my hon. Friend did not do so—to put straight the record with regard to others' comments about take-up of the new tax credits. We anticipate that about 5.75 million families in the United Kingdom will benefit from the child tax credit. Of those families, about 1.3 million are in receipt of income support and jobseeker's allowance. Those families do not need to claim tax credits this year. Instead, we have increased the child premium in those benefits to ensure that they receive the same amount as they would have received had they been on the tax credits, although we plan to transfer them on to the system next year.
    I agree with my hon. Friend that it is important that families who are entitled to make a claim do so as soon as possible. That is why the Inland Revenue has spent £12 million on bringing the new tax credits to public attention. It wrote to everyone who was receiving the previous tax credits inviting them to claim. Indeed, it sent reminders and included messages in items such as child benefit books and bounty packs. It then attempted to ring as many potential claimants as possible to remind them to claim if they had not done so. Some members of the public became a little irritated at being contacted so many times by the Inland Revenue encouraging them to apply for credits when they had either simply not got around to doing so or had already done so. We can be absolutely sure that the message has got across. We believe that we are well on our way to achieving an excellent target. To date, we have received more than 3.9 million claims from families. As I told my hon. Friend, that does not include the 1.3 million who are on income support or JSA, who will receive the benefit automatically.
    Of course, it is vital to encourage people to apply by the end of January. We started advertising last August so that we could process forms in time for claimants to receive payment by the beginning of April. As my hon. Friend said, some people unfortunately did not fill in the forms at the time and may have completed them recently. That led to huge pressure on the telephone helplines and the Members' helpline. At the beginning of the week, the number of calls to the tax credit helpline was astronomical. No contact centre in the country could have handled it—indeed, all the centres put together would have struggled. We already have 1,900 people answering calls. They are handling approximately 500,000 calls a week and, on some days, the calls exceed that number.
    To deal with the extra demand this week, 150 staff were added today, 250 will be added tomorrow and 300 on Monday. A further 700 staff will be in place by early next week. Tomorrow, we shall double the capacity of calls that can be taken by the Members' helpline; we shall treble it by early next week. I understand that people are anxious, especially those who have left it late to apply, or have not received confirmation from the Inland Revenue that payments will start. The Department is doing everything that it can to provide that service to communities in the United Kingdom.
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    I should like to pay tribute to Inland Revenue staff. In the past three months, they have moved heaven and earth to try to ensure that all the applications for tax credit were speedily tackled. It is a huge achievement on their part that millions of people are receiving tax credits, and that will apply to millions more as we move through the month. Once we are finally in a position to give the exact information about what happened in the first month of implementation, I am confident that that splendid work will be demonstrated to all. The staff have not flinched from being asked to do increasing amounts. Thousands of Inland Revenue staff who are totally committed to introducing new tax credits have been involved.
    My hon. Friend asked about future publicity and methods of ensuring take-up. She is right that it is important in the next few months to stress to people that if they do not submit their application before the beginning of July, they will lose payment for the early part of the year. So long as they submit it in time, it will be backdated. That must be our next focus. We shall redouble our efforts to issue the information through the many routes that we have used, for example, the citizens advice bureaux, which have been splendid, and the Child Poverty Action Group, which has helped through updating its advice book and undertaking the training of its staff on our behalf.
    The claim forms are 12 pages long—half the length of the forms for working families tax credit, but none the less, 12 pages—because we need to get the information about the families and their structures on to our systems for the first time. Future renewals will be much easier, but we do not yet have the information and it is important to secure it. Of course, the process will continue because any new claimant will be faced with the form. As always, the Inland Revenue looks critically at the information that it sends out and the application forms that it designs, and it constantly tries to make them simpler.
    I understand that some people have been caused anxiety by the question of their previous year's income because they have wondered whether to submit a P60. We do not ask for a P60; we ask for the claimant's previous year's earnings. If anyone is in doubt about what to do, they should ring the call centre, and try to do so outside peak hours. I understand that a good time to ring is while certain soaps are on the television, because most people are watching them. Alternatively, if members of the public need assistance to complete their forms but cannot get through to our call centres, they can visit or ring an Inland Revenue inquiry centre.
    In conclusion, I thank my hon. Friend for her unstinting encouragement and support for the introduction of the new tax credits. I agree that we still face large challenges. We must get the information out to, and the claims in from, those who have not yet applied. We must deliver either weekly or four-weekly payments on time to families who are in desperate need of the money. The Inland Revenue is working flat out to process claims, including recent claims, to get award notices out, to deal with inquiries and to get payments in place.

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    I hope that my hon. Friend agrees that we have made an impressive start on a major reform. I assure her that we, too, want to ensure that the implementation of the system in Scotland and the rest of the United Kingdom goes smoothly and as well as possible to deliver the
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    important revenue to families when they need it most. The money has their name on it, and it is up to us to ensure that we get it to them.
    Question put and agreed to.
    Adjourned accordingly at twenty-seven minutes past Six o'clock.