Commons Sitting of 10 December 2003

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  WALES
  The Secretary of State was asked—
  WALES

    Police
    Mrs. Betty Williams: If he will make a statement on the change in the number of police officers in Wales since 1997. [142069]
    The Parliamentary Under-Secretary of State for Wales(Mr. Don Touhig): On 31 August, there were 7,354 police officers in Wales, an increase of more than 12 per cent. since 1997. In addition, Welsh police forces have received funding for 113 community support officers.
    Mrs. Williams: I thank my hon. Friend for that encouraging answer, and should like to declare that my eldest son is now part of those statistics.
    Does my hon. Friend agree that such an increase in the number of police officers will assist individuals such as my constituent, Mr. Noel Kennerley of Dwygyfylchi, in tackling his neighbour from hell, Richard Lloyd, as the antisocial behaviour route took such a long time? Will my hon. Friend join me in congratulating PC Mike Clements for his co-operation in dealing with that case?
    Mr. Touhig: I am aware of the case of Mr. Kennerley and I pay tribute to him for his bravery and for his commitment to tackling the scourge of antisocial behaviour. I also pay tribute to the police officer involved.
    The Government are determined to introduce measures that will overcome the problems of antisocial behaviour faced by many of our communities. Increased funding for the police service is part of that, and I am delighted that we have put so much extra funding into police numbers and that we have a record number of officers on the beat in Wales.
    Mr. Nigel Evans: Morriston hospital in Swansea has already made it clear that some of the extra police officers will be used to police its accident and emergency unit during Christmas to deal with any drunks who turn up. Will the Minister make it absolutely clear that if anybody—especially someone
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    who is drunk—turns up at an accident and emergency unit over Christmas and attacks a nurse or a doctor, they will receive a hangover that lasts well into 2004?
    Mr. Touhig: I endorse the hon. Gentleman's point, especially given the efforts to provide care and attention in our hospitals, particularly in accident and emergency departments. I have witnessed situations in London where staff have had to take considerable abuse from people who were much the worse for drink, so I endorse his remarks. If anybody is involved in an incident that brings harm to doctors or nurses caring for the public, I hope that they are punished with every severity.

    Aerospace Industry
    Mark Tami: What recent discussions he has had with the First Secretary regarding the importance of the aerospace industry to the economy of Wales. [142070]
    The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): Both my right hon. Friend the Secretary of State and I hold regular discussions with colleagues in the Assembly on a range of issues, including the aerospace industry in Wales.
    The Government recognise the value of the aerospace industry to the Welsh economy. With significantly high levels of investment, we are seeing a new age of assertiveness, development and innovation that is increasingly taking the industry to new levels of success.
    Mark Tami: I thank my hon. Friend for that answer. I am sure that he recognises the success and importance of Airbus at Broughton, so will he help to build on that success by using the short delay on the future air tanker, which the Ministry of Defence is expected to announce, further to press the case for the Airbus-AirTanker project that will help to secure many thousands of jobs in Wales?
    Mr. Touhig: I am aware of my hon. friend's strong commitment to Airbus and to the work at Broughton in north-east Wales. My right hon. Friend the Secretary of State and I have already visited that world-class facility several times. I certainly join my hon. Friend in welcoming the strong Airbus bid for the MOD contract to provide air-to-air refuelling aircraft, and I hope that it is successful. It will underpin our commitment to the continuing development of that important manufacturing industry in north-east Wales.
    Mr. Ian Liddell-Grainger: Given the importance of the aerospace industry not only in Wales but throughout the United Kingdom, there is no doubt that it must not go overseas. Airbus Industries has made a long-term commitment in this country, so will the Minister guarantee, on behalf of the British people and especially the Welsh, to press his right hon. Friends the Secretary of State for Defence and the Prime Minister to ensure that no aerospace jobs are moved overseas?
    Mr. Touhig: I do not think that the hon. Gentleman need have any worries about the efforts made by me, my right hon. Friend the Secretary of State or any of my

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    colleagues, as we shall be exerting all the pressure that we possibly can to ensure that the industry in north-east Wales goes from strength to strength. Much public investment has already gone in: £500 million for the Airbus project at Broughton and £77 million for the Red Dragon project at the Defence Aviation Repair Agency in St. Athan. The Government are committed to that development. That important manufacturing base in Wales has a strong future and we want it to succeed.

    Barnett Formula
    David Taylor: What recent discussions he has had with the First Secretary about the impact of the Barnett formula on the economy of Wales. [142071]
    The Secretary of State for Wales (Mr. Peter Hain): Regular ones. The Barnett formula is a means of calculating changes to the Welsh block from its historic base. Welsh gross domestic product per head increased by 15.6 per cent. between 1997 and 2001.
    David Taylor: The Barnett formula has now reached its quarter century, and its eponymous creator has said that it has become terribly unfair. Does the Secretary of State agree that that deeply unsatisfactory way of distributing Government grant should be replaced by a needs-based formula throughout the United Kingdom—[HON. MEMBERS: "Hear, hear."]—as that would be more equitable for the people of the English regions such as my own, the east midlands, as well as for the people and the economy of Wales?
    Mr. Hain: I thought it interesting that my hon. Friend was cheered by the Welsh nationalists—he might want to reflect on his position—but I understand the very fair point that he makes on behalf of his constituency, North-West Leicestershire, and what I want and what the Government are delivering is record investment right across Britain, rising employment and improved public services. He is nodding his head in agreement. Of course he will understand that Wales has much higher deprivation historically and ill-health problems. There were 35 per cent. more incapacity benefit claimants in Wales than in the east midlands, despite the fact that the population of the east midlands is 1 million higher. So those problems have to be tackled, and the Barnett formula was designed to address that.
    Lembit Öpik: Is the Secretary of State aware of a large, possibly Barnett-related deficit in mid-Wales health provision? For some years, the Royal Shrewsbury hospital has generously subsidised its services to Welsh patients. Does he accept that, with the best will in the world, that cannot continue? Is he willing to discuss whether the extra funding needed to remedy the problem should rightly come from the Welsh Assembly's existing budget, or possibly result from an adjustment to the Barnett formula?
    Mr. Hain: The hon. Gentleman will understand that there is record spending on health provision in Wales, including in his constituency—I am grateful to him for nodding his head in agreement—and that the Welsh
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    health budget has nearly doubled. I understand, however, that the subsidy in his constituency in respect of patients who are treated in Shrewsbury is an issue. I will certainly look into that and discuss it with the Secretary of State for Health and the First Minister.
    Mr. Win Griffiths: My right hon. Friend will be well aware that, apart from the national health service providing excellent care for people in Wales, it makes an important contribution, through employment, to the Welsh economy. What consideration has he given to the fact that it has now been established, through the Yvonne Watts case, that there is such a thing as a waiting time that can be regarded as too long? What implications does that have for the health service and the Barnett formula, given the fact that waiting times in Wales are generally longer than in England?
    Mr. Hain: These matters are being addressed. Of course the health budget that comes from applying the Barnett formula and the consequentials that flow across from the Treasury to Wales are now funding health services, reducing waiting times and improving health services in Wales. That should encourage my hon. Friend to say that things are improving under Labour, both here in Westminster and down in Cardiff as well.
    Adam Price: Professor Maclean of Nuffield college has recently estimated that the Welsh Assembly Government would receive £620 million a year extra under the needs-based allocation. Since there is a range of views on this subject, will the Wales Office consider commissioning an independent study, so that we can have an objective assessment of whether Wales would be better off under a needs-based formula or the present arrangements?
    Mr. Hain: We will continue to keep these matters under review. I note that the hon. Gentleman takes a close interest in them, but he will agree, because this is demonstrated by the facts, that wealth per head, spending and employment have been rising in Wales since 1997, and that Wales has been doing much better than most other parts of the United Kingdom and, indeed, most other parts of the world. He will also be aware that, partly because of the higher deprivation and need, total identifiable Government spending in Wales is 13 per cent. above the equivalent UK average and 18 per cent. above the English average. If the nationalists got their way, as he would wish, and Wales broke away from Britain, it would be plunged into poverty. That is the price that nationalism would have to pay.

    Employment
    Julie Morgan: What plans he has to prevent jobs in Wales moving overseas. [142072]
    The Secretary of State for Wales(Mr. Peter Hain): I will continue to fight to ensure that jobs stay in Wales, and not move overseas. Foreign firms are still choosing Wales as an attractive place to do business. Last year, employment in Wales rose by 61,000.
    Julie Morgan: I thank my right hon. Friend for that reply. What would he say to the staff at Tesco house in Maes-y-Coed road in the Cardiff, North constituency, who in July were taken to the city hall and praised by Tesco for their loyalty, and a few weeks later were told that 230 of their jobs were to go to Bangalore?
    Mr. Hain: I would join my hon. Friend in saying that that treatment is unacceptable, and that we continue to fight, as she does, for more call centre and finance centre jobs in Cardiff and right across Wales. The record shows that more and more jobs in this sector are being created. For example, The Number, which is part of the new directory inquiries network, recently opened a call centre in Cardiff creating 467 full-time and 105 part-time jobs in Cardiff. Whatever the plight of her constituents, under this Government, more and more job opportunities are being created, and her constituents will be helped to find other jobs. I agree with her, however, on her criticism of Tesco.
    Mr. Bill Wiggin: Can the Secretary of State confirm whether Hansard was correct when it reported that he thought that the transfer of call centre jobs to India could actually create a big return for the Welsh economy? Alternatively, was the The Western Mail wrong when it said that he would fight for every call centre job in Wales? Surely he did not make both statements.
    Mr. Hain: First, I welcome the hon. Gentleman to the Front Bench. We look forward to his pronouncements. May I mourn the passing of the hon. Member for Ribble Valley (Mr. Evans), who brought a certain chippy style to the Front Bench, which we very much enjoyed? I am sure that his replacement, with his old Etonian gravitas, will provide us with a different dimension, although with his boss, the right hon. Member for Skipton and Ripon (Mr. Curry) sitting next to him, I am not sure who actually speaks for Wales. We might learn that later from the Conservative party. In respect of his question, were he to read further in Hansard, he would find that both the The Western Mail and Hansard were correct, because I said that I wanted
    "to see all jobs preserved"—[Official Report, 4 December 2003; Vol. 415, c. 655.]
    in Wales and that I will fight to continue to do that.
    Mr. Wayne David: My right hon. Friend will have heard the announcement last week of 170 job losses at a garment factory in Aberbargoed in my constituency. I thank him for the support that he has given to those workers in that difficult situation, but will the Government reaffirm their commitment to long-term investment in quality jobs and quality training? That is the only way forward.
    Mr. Hain: I very much agree with my hon. Friend that that is the only way forward. It is the way forward being driven by our Government in Westminster and by the Labour Welsh Assembly Government in Cardiff. I am sure that he will recall many details of coal communities in his and surrounding constituencies that were absolutely devastated under the Conservatives. I find it astonishing that, given our record of investment, to
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    which he referred, the Leader of the Opposition on a visit to Wales last Saturday said that coal communities had
    "revived very considerably under Margaret Thatcher".
    What an extraordinary statement. Coal communities, including in my hon. Friend's constituency, were decimated under Margaret Thatcher. Under Labour, they are being rebuilt, with more jobs, more investment and higher standards of public services.
    Mr. Simon Thomas: The question asked the Secretary of State what plans he had. So far, the only plan that he has brought forward to stop jobs going out of Wales is to put tolls on the M4. Will he now look at one aspect of the Welsh economy—the 700 jobs lost in Welsh agriculture in the past year? To help prevent those jobs from being lost, I suggest a plan to help local authorities to buy local food to keep Welsh farmers in jobs. Will he do that?
    Mr. Hain: I share the hon. Gentleman's desire and interest in seeing that local produce is used by the local public sector, schools and others. Since he raised the issue of the effect on jobs of the situation on the M4, may I explain to him the reality? The truth is that the M4 at the Brynglas tunnel is increasingly choked with traffic, which affects jobs and the economy of south-east Wales. That is why the Assembly would have the option, as I discussed when I was Minister with responsibilities for transport in Wales a few years ago, of building the M4 relief road around Newport to provide an alternative, which could be tolled and built by the private sector as has been achieved around Birmingham. In that way, drivers in Wales, whether lorries or cars, would have a choice: to travel at perhaps 40 mph through the Brynglas tunnel, or to go around the new relief road and pay a toll. In the end, however, that is a matter for the Assembly.

    Higher Education
    Dr. Hywel Francis: What recent discussions he has had with (a) the First Secretary and (b) the Secretary of State for Education and Skills on the future of higher education in Wales. [142073]
    The Secretary of State for Wales (Mr. Peter Hain): Regular ones—we and our officials have worked closely to agree our proposals to transfer to the National Assembly for Wales responsibility for the remaining elements of higher education funding, including responsibility for student support in Wales.
    Dr. Francis: I thank the Secretary of State for that reply. He will be aware of the successful and excellent widening access strategies in Welsh higher education. For example, at the North East Wales institute of higher education, 50 per cent. of the students are over the age of 30. May I invite him to join me on a journey of hope whose destiny is to guarantee sustainable, fair and equitable opportunities for part-time and full-time adult students?
    Mr. Hain: Indeed, we are increasing the grants for part-time and mature students, and this is part of a new package, under this Government, of raising and

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    widening opportunities for students right across the income level. Since he referred to this matter, may I congratulate my hon. Friend on his work prior to becoming a Member of Parliament with the Community university of the valleys that he initiated—am I right in saying—in Banwen in my constituency? That work, together with the wider work that the Government are doing both here in Westminster and in Wales, is giving new hope to part-time students and to students who never thought that they would have a chance to go to university.
    Mr. Bill Wiggin: Does the right hon. Gentleman think that it is fair that the Assembly has suggested that it will pay the top-up fees for Welsh students studying at English universities or should it be using its money to support students at Welsh universities?
    Mr. Hain: The longer that the hon. Gentleman is on the Front Bench—and I hope that it will be the Opposition Front Bench—he will understand that, if the higher education Bill goes through, this matter will be devolved to the National Assembly so that decisions can be made in Wales. I hope that he will speak up for Wales and encourage that devolution.
    Compared to what we are offering to the students and families of Wales, the hon. Gentleman offers a prospectus for higher education funding that would see, on average, the number of students from each constituency in Wales cut by 400. There would be 400 fewer students from each constituency going to universities under the Conservatives when compared to our higher education proposals, which will increase the number of students getting the chance to go to university. In many cases, they will be from constituencies such as mine and they will be the first people to go to university in their families" history.
    Mr. Wiggin: We think that students should go to university based on the size of their brain and not on the depths of their wallet. How many Welsh MPs does the right hon. Gentleman think agree with him that the Government's policy on top-up fees needs to be tweaked, or is this similar to his comments on the European constitution and is just a "tidying-up exercise"?
    Mr. Hain: We are looking in detail at all the representations made to us in terms of the final proposals that come in the Bill. I remind the hon. Gentleman and the House what the choice is. The choice is between a Labour Government, who are increasing opportunities for students in Wales, who are removing the up-front fee and who are also offering more and more students the chance to go to university, and his policy, which will plunge Welsh universities back into the bankruptcy from which we have rescued them and deny thousands of students in Wales the chance of studying at university. That is the choice; we are confident that the people of Wales will back us in the choice that we are making.
    Ian Lucas: To see excellent examples of widening access, may I invite my right hon. Friend and other Members to visit the exhibition in the Upper Waiting Hall that is being held by the North East Wales institute of higher education in Wrexham? All Members will see what can be achieved and how lives can be changed by widening access to higher education. Is he aware, however, of the difficulties that a border university faces in dealing with students from England and Wales? Does he think that the Government's proposals will improve the position or make it more difficult?
    Mr. Hain: May I first acknowledge the excellent job that the North East Wales institute of higher education does with my hon. friend's support as its local Member of Parliament? I have visited that fine institute and hope that everyone will have the chance to see the exhibition. My hon. Friend will also agree that we are putting record investment into universities and creating record opportunities for students. I am sure that the specific issues that he wants to address will be solved by the new proposals that we are bringing forward—with his support, I hope.

    Police Funding
    Mr. Elfyn Llwyd: What discussions he has held with (a) the Secretary of State for the Home Department and (b) the National Assembly for Wales Government on future policing funding. [142074]
    The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): My right hon. Friend the Secretary of State and I have regular discussions with colleagues about matters affecting Wales, including future police funding.
    Mr. Llwyd: I thank the Minister for that very illuminating answer. May I draw his attention to the fact that the district auditor said recently that all police authorities are being—[Interruption.]
    Mr. Speaker: Order. The House is far too noisy. It is unfair to the hon. Gentleman.
    Mr. Llwyd: The district auditor recently reported that central Government are underfunding all police authorities drastically at this time. North Wales police authority is a responsible authority with an excellent work force and record, but it recently received a settlement that was £1.7 million down on last year. That means that it is in considerable difficulty given that it faces a £2 million increase in pension costs and a £3 million increase in staff costs. Will the Minister lend his support to increasing the authority's funding and also put right the misleading line given by the Home Office saying that Airwave would be paid for centrally because a further £330,000 needs to be brought forward for that?
    Mr. Touhig: Funding in the police service remains a top priority for the Government—indeed, it has increased by 30 per cent. since 2000 and there will be a 3.25 per cent. increase in the general grant for police services in next year's settlement. It is important to

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    recognise that the Government are committed to investment and reform in the police service. We are putting in a funding increase of 4.2 per cent.—£403 million in cash terms—for 2004–05.
    I am aware of the problems with Airwave. My colleagues in the Home Office appreciate that there has already been a good deal of expenditure on Airwave and are reviewing the position.
    Mr. Huw Edwards: When my hon. Friend meets Home Office Ministers, will he draw their attention to the letter from the chief constable of Gwent about the need to maintain resources so that the high detection rate that Gwent has successfully achieved may be sustained and the fight against crime can continue? Will he also join me in paying tribute to the chief constable, Mr. Keith Turner, on his impending retirement?
    Mr. Touhig: I echo the points that my hon. Friend makes about the retiring chief constable of Gwent. He has been a good and able officer who has had a considerable impact on policing in Gwent. Of course, the Government recognise that financial pressures exist and that they vary from one police authority to another. As I said in reply to the previous question, the Government are putting in resources and it is important for the police service to manage them effectively. I certainly urge all members of police authorities to scrutinise carefully the budget and spending proposals put forward by chief constables to ensure that we get value for money.
    Mr. Roger Williams: In the Dyfed-Powys police area, the proportion of the cost of policing that falls on council tax payers has increased from 15 per cent. to 35 per cent. in the past five years due to inadequate police grants. Why do a Labour Government insist on funding local police services through the iniquitous and regressive council tax, which bears most heavily on the lowest paid in society while the rich pay only 1 per cent. of their income?
    Mr. Touhig: In truth, the hon. Gentleman will recognise that there have been all sorts of pressures on the police service over recent years. As I said, the Government have put considerable extra funding into the police service throughout the United Kingdom. It is important that those resources are properly husbanded and managed, and I urge police authorities to ensure that they get value for money. When I chaired a local authority finance committee in a previous incarnation, I often had discussions with the police about various aspects of their budget and I was told that I could not question this or that because they were operational matters. I do not accept that. Such matters should be transparent and the public should know exactly what is going on with funding for the police service. The Government are putting in a great deal of extra resources, which should be welcomed. It is important for the police service to husband them and use them to the best of its ability.

    Waiting Times
    Mr. Jon Owen Jones: What discussions he has had with National Assembly for Wales Secretaries concerning progress in reducing waiting times. [142075]
    The Secretary of State for Wales (Mr. Peter Hain): In the last fortnight, I have met both the First Minister and the Health Minister and discussed waiting times in Wales.
    Mr. Jones: When my right hon. Friend next meets the Health Minister in Wales, will he bring to her attention the excellent chief executive's report on the health service in England, which speaks of increased new capacity, rapidly reducing waiting times and increased choice? Does he agree that one of the great benefits of devolution is that it allows the Governments in Cardiff, Edinburgh, Belfast and London to compare the success of their policies, and that the most successful should be adopted?
    Mr. Hain: I agree that we can learn from each other. My hon. Friend will understand that, under the Labour Government, the health budget in Wales will have doubled by next year compared with what we inherited from the Tories. We are seeing nearly 200,000 more patients than when we took over from the Tories, recruiting more staff, including nurses, consultants and doctors, and building more hospitals—10 new hospitals are being built, compared with 70 closed under the Tories. In addition, waiting times in key areas are decreasing.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Norman Lamb: If he will list his official engagements for Wednesday 10th December.
    The Prime Minister (Mr. Tony Blair): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I will have further such meetings later today.
    Norman Lamb: Does the Prime Minister agree with the conclusions of the Audit Commission that the council tax is "fundamentally flawed" and that this year's increases have a great impact on citizens,
    "particularly those on low and fixed incomes",
    many of whom are pensioners?
    The Prime Minister: I do agree that, as the Audit Commission said in the main part of its report, there are fundamental flaws in the council tax system—which was introduced after the poll tax, I think. However, we have put huge additional sums into local government this year, and it is important that councils understand that they have a measure of responsibility.
    Mr. Andrew Dismore: May I bring to my right hon. friend's attention the excellent work done in schools in my constituency? Perhaps he can find time to pay a visit to one of those schools. However, may I also bring to his attention the dismay felt by heads and parents in my constituency on learning that we were left out of the transitional funding for schools this year? Our schools face a serious financial crisis. Perhaps he can look into the matter—I know that in the past he has taken a personal interest in it—and see what he can do to ensure that our schools have the money that they need to continue to provide high-quality education.
    The Prime Minister: My hon. Friend is right to say that schools in his constituency have had substantial additional investment, and that results in those schools at every level—primary, GCSE and A-level—have improved. However, he has written to me about the difficulties regarding transitional funding, and I assure him that I am looking into the matter.
    Mr. Michael Howard: Is the Prime Minister aware that his Government are spending taxpayers' money advertising his proposals for student funding, including top-up fees, even though, as we all know, there has not been a vote in the House of Commons?
    The Prime Minister: It is important that we bring to people's attention exactly what is going to happen to our universities, but it is also important to recognise that, of course, that can only go through after there has been a debate in this House. I repeat that, every day. the alternatives become clearer: either an abolition of all upfront fees and a fair system of repayment under the Labour party; or, under the right hon. and learned Gentleman's proposals, a huge cut in the number of young people who are able to go to university. He was talking about this subject last week, so I say to him that the more the public look at it, the more they realise that his proposal is elitist, backward and reactionary.
    Mr. Howard: No, no, I am afraid that will not do at all. Let me try again. This was a specific question arising from a radio advertisement—I have the text here, and it says:
    "You cough up zip 'til you're blingin'",
    which, as the Prime Minister will know, means, "You pay nothing until you"re in the money." The advertisement is promoting the Government's policy on student funding, which has yet to pass the House of Commons. Does the Prime Minister approve of that?
    The Prime Minister: Surely, the issue is what is the right policy for the country—(Interruption.] Oh yes, it is.
    Mr. Speaker: Order. Let the Prime Minister answer.
    The Prime Minister: The issue is not some radio advertisement—it is what is the right policy for Britain. Let us look at the alternative, which the right hon. and learned Gentleman does not want to do. Either we abolish up-front fees, and all graduates then pay something back under a fair system of repayment, or we
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    end up cutting by 100,000, possibly 250,000, the number of young people going to university. That is the choice that he wants to run away from.
    Mr. Howard: There is a rather important question that the Prime Minister has to answer here. Does he not think that it is just a little presumptuous to start advertising the new student finance policy when 157 of his own Members of Parliament have signed a motion against it? As a result, the Bill has not even been published yet, and the Prime Minister, with his majority of 170, has had to put back the vote.
    The Prime Minister: I will tell the right hon. and learned Gentleman what I think is presumptuous: it is presumptuous is for the Conservative party to say that it is going to cut taxes at the same time that it is going to cut the funding for universities. Let us be clear about this. The Conservatives" policy is not merely to starve the universities of money in future but to make an immediate cut of £500 million a year—he can put me right if I am wrong—which means 100,000 fewer people at university. Instead of debating radio advertisements, let us debate policy.
    Mr. Howard: That is what the Prime Minister thinks about the proper use of taxpayers" money. Let me remind him of his Government's own rules:
    "Government publicity for proposals which are, or may become, the subject of legislation in Parliament remains a particularly sensitive area. Until such measures have become law, any Government publicity must neither assume nor anticipate Parliamentary approval."
    Is not the advertisement a flagrant breach of the Government's own rules?
    The Prime Minister: Let us indeed debate taxpayers" money. There is a very simple choice on student fees—[Interruption.] Oh yes, there is. Conservative Members can try to duck the choice, but they cannot duck it either now or until the next general election. The issue about taxpayers" money is this: either taxpayers pay for all student finance, irrespective of whether they have been to university, or they have our system. Will the right hon. and learned Gentleman come clean and accept that his provision means that there will be 100,000 fewer students, and in time a quarter of a million fewer? That is unfair, regressive and reactionary, and we will have nothing to do with it.
    Mr. Howard rose—
    Mr. Speaker: Order. Before the Leader of the Opposition starts, Mr. Fabricant is shouting louder than anyone else—
    Michael Fabricant: indicated assent.
    Mr. Speaker: Order. The hon. Gentleman is nodding in agreement, but he is out of order. I have told him not to shout—[Interruption.] Order. I am telling the hon. Gentleman not to shout. He is far too near me.
    Mr. Howard: Is the Prime Minister so indifferent to the abuse of taxpayers" money in contravention of his own Government's rules that he is not even prepared to

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    answer this question? If the Minister responsible for that abuse of taxpayers" money is found to have broken those rules, will he resign?
    The Prime Minister: It is unbelievable. The right hon. and learned Gentleman has five questions on the issue of student finance, and not once is he prepared to debate the real choice. It is not about some advertisement but what is the right thing for the future of this country. In our view, it is right to allow young people to go to university if they have the ability, abolish up-front fees and say that there should be a balance between the taxpayer's contribution and a fair system of repayment after graduation. That is our choice. The right hon. and learned Gentleman has an additional question, so let him, just for once, confirm that under his policy the universities would lose £500 million immediately and hundreds of millions of pounds in future, which could be paid for only by cutting student numbers at university.
    Mr. Howard: Does not the Prime Minister's refusal to answer the question show his arrogance, his indifference to the opinions of his own party and his utter contempt for the views of Parliament?
    The Prime Minister: No, because Parliament will make its decision. The question is what is the right decision for the country. [HON. MEMBERS: "No."] I should have thought that if we are debating university finance, the question is indeed what is the right policy for the country. The right hon. and learned Gentleman can sneer, jeer and make his jibes, but it becomes clearer day by day that when we get down to policy, he has nothing to say about the future of Britain.
    Mr. James Plaskitt: Does my right hon. Friend welcome the Joseph Rowntree report published this week, showing reduced poverty in the United Kingdom, but does he share my concern about even the reduced level of child poverty that still persists? How much more can we do to tackle that?
    The Prime Minister: My hon. Friend is right to draw attention to the progress that the Joseph Rowntree report indicates. With about a million children being helped, there are half a million fewer children in poverty. There have been additional sums in the tax credit system and child benefit, and in the new deal, which has helped many people off benefit and into work. However, he is right to say that we still have more to do. For the first time in a long time, the reduction of poverty and unemployment has become a key Government priority. It is a priority under this Government, but not under the previous Government. My hon. Friend should wait for the announcements of my right hon. Friend the Chancellor shortly.
    Mr. Charles Kennedy: Will the Prime Minister confirm his Government's parliamentary answers to the Liberal Democrats that if one were to levy a 50p top rate of tax for every pound above £100,000 of income, that would generate £4.7 billion? As he knows from my letter to him this week, we would use that money to stop tuition and top-up fees, introduce fair grants, deliver free personal
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    care and lessen the impact of council tax rises—nothing more, nothing less. The Prime Minister may not agree, but will he confirm that those figures add up?
    The Prime Minister: As I constantly try to say to the right hon. Gentleman, if I had to read out his spending commitments, we would need—[HON. MEMBERS: "Go on."] I can, but not in half an hour of Prime Minister's questions. He has spending commitments that total well over £15 billion. Yes, it is correct that he could raise the money to pay for student finance from a top rate of tax of 50 per cent., but he could not do that and meet all his other spending commitments.
    Mr. Kennedy: The Prime Minister says that he wants a serious conversation across the country, but he clearly does not want a serious conversation across the Floor of the House. That is why he continues seriously to misrepresent our policies. May I ask him about his policies? In reply to me last week, the Prime Minister said that raising the top rate of tax to 50p on every pound over £100,00 income would be "unfair"—his word—yet under his current proposals, a graduate who earns above £35,000 a year will pay a combined tax rate and loan repayment of 50 per cent. How can that be unfair for those with an income above £100,000, but fair for those earning above £35,000? Justify that, Prime Minister.
    The Prime Minister: I will justify it. The plain fact is that the rate would not be 50 per cent. for those above £100,000, because the right hon. Gentleman's commitments total far more than any sum—[HON. MEMBERS:"No."] Let me read some of his commitments. He cannot be saying that the only spending commitment he has is on student finance. He also has a commitment on the national health service, on the basic state pension—[HON. MEMBERS:"No."] Well, he has. I have looked—
    Mr. David Heath: Answer the question.
    Mr. Speaker: Order. Mr. Heath, I understand that the Prime Minister is answering the question in his own way.
    The Prime Minister: At the moment, I am answering it in the Liberal Democrat way, because I am reading out spending commitments. There is a £2 billion extra commitment for railways. [Interruption.] They either have these spending commitments or they do not. [Interruption.] Apparently, they do not—so the alternative Budget that they have just produced, which contains more than 40 spending commitments, has now gone as well, has it? I have to say to the right hon. Gentleman that until he gets a serious economic policy, we will not take him seriously on this or anything else.
    Ms Meg Munn: The Gleadless Valley community in my constituency is very pleased to have a Sure Start scheme. However, there are difficulties in obtaining premises for the scheme, because of some of the regulations that must be met. Will my

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    right hon. Friend ensure that regulations for Sure Start schemes do not prevent these valuable services from coming into communities such as Gleadless Valley?
    The Prime Minister: I am very happy to look into the point that my hon. Friend makes. She will know that Sure Start is now helping 400,000 children in some of the most disadvantaged areas of the country. It has been an immensely successful programme and all the evidence is that it is a good long-term investment for the future of the country. I entirely understand the point that she makes, however, and I will look into it and get back to her with a reply.
    Mr. John Maples: According to figures from the House of Commons Library, by next year, and since the Prime Minister's Government came to power, the total tax burden will have risen by a staggering £172 billion. That means that every man, woman and child in this country is paying an average of £3,000 a year more in taxes. [Interruption.] I can give him the figures. but what I wanted to ask him was whether they are correct.
    The Prime Minister: That takes no account of the fact that 1.5 million more people are in work, so of course the tax take goes up. It is like the Tories and their 60 tax rises: if the same computation is used for the Conservatives, the figure was 130 when they were in power. Let us take the £170 billion figure that the hon. Gentleman has just given: when the Conservatives were in power, the figure was £370 billion. Actually, it is all meaningless, because it depends on earnings and the tax take. The real issue is the tax burden, which is less today than in most of the years when his party was in government.
    Mr. David Stewart: Does my right hon. Friend share my concerns about the activities of loan sharks who exploit the poor and elderly and appear at the doors of the vulnerable bearing gifts on the never-never? Is it not the case that we must exploit these loan sharks and ensure that they do not rip off our poor and vulnerable?
    The Prime Minister: The point that my hon. Friend makes is addressed by the White Paper on consumer credit, which was published earlier this week and amounts to the biggest shake-up in consumer credit for about 30 years. The point to which he draws particular attention has led to the new proposal for powers for the Office of Fair Trading to fine and raid the premises of some of these cowboy lenders, if we can put it that way. Loan sharks do enormous damage to some of the poorest people in the poorest communities in the country. He is right to raise the issue, but we are satisfied that the powers that we announced on Monday will make a significant difference.
    Mr. Desmond Swayne: Despite the challenging but achievable target of the timetable to which we are working to put an Iraqi face on Iraqi security, does the Prime Minister understand that such operations inevitably fix large numbers of our troops? Will he ensure that the armed forces can recruit to make up the numbers that they require?
    The Prime Minister: First, in case I have not done so before, let me thank the hon. Gentleman for the service
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    that he gave in Iraq, for which the House and the country should be grateful. Secondly, of course the armed forces have to be able to recruit properly. That is one of the reasons why we are increasing defence spending in real terms. If he will allow me, I would simply pay tribute once again to the magnificent work that is being done by British troops in Iraq. I am delighted to say that other countries such as Japan, notwithstanding the terrorist attacks, are also going to provide troops. He is right that the challenging timetable for handover to the Iraqis is difficult, but I remain confident that, in the end, what we will have in Iraq is a stable and prosperous country. That will be a huge boost to the whole middle east, and it will be due in no short measure to the bravery and courage of our armed forces.
    Kate Hoey: The Prime Minister must know that the majority of the public, including the majority of Labour supporters, want a referendum on the outcome of any European constitution. As he is in listening mode at the moment, will he listen to those people?
    The Prime Minister: I will of course listen to people carefully on that. It is, however, important to wait until we get the results of the intergovernmental conference, which, as everyone knows, we hope will be negotiated this weekend, if not in the coming months. I believe that the constitution will protect all the red lines that we have set out, and as I have said on many occasions, the best way to deal with this is through the House of Commons, just as the previous Government did.
    Mr. Alex Salmond: In the course of the Prime Minister's big con… versation with the electorate, will he speak to people in the Scottish fishing industry, who see the European Convention strengthening the hold of the disastrous common fisheries policy, or to those in the oil and gas industry, who want the energy chapter to be made a red line issue? The Prime Minister cancelled a visit to Scotland tomorrow in order to deal with a crisis in the Convention. When is he going to start representing Scotland's vital interests in Europe?
    The Prime Minister: The way to represent Scotland's vital interests is to go to the European Council properly to negotiate our positions on issues such as energy, not to peddle the complete deception that withdrawal from the common fisheries policy will somehow help the fisheries industry in Scotland or the UK: it will not, and to say that it will is a cruel deception—but that is not untypical of the hon. Gentleman.
    Mr. Michael Clapham: May I tell my right hon. Friend that compensation payments for chronic obstructive pulmonary disease and vibration white finger are now reaching mining families and former miners? However, despite the fact that all the legal fees and disbursements in those cases are paid to solicitors by the Department of Trade and Industry, some—I must emphasise that it is a small number—are charging a success fee. Will he

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    look into the matter and take advice on how we might compel those solicitors to repay miners and their families?
    The Prime Minister: First, as my hon. Friend fairly and rightly says, £1.8 billion will soon have been paid out to former miners and their families under the coal health compensation schemes. I know that he would accept, and believe that many of the mining communities accept, that this would never have happened under any Government other than a Labour Government. It has made an enormous difference to those families. He is right, however, that—in a minority of cases, it is fair to say—there has been concern about difficulties with legal representation. I understand that the Law Society has said that it will investigate all cases of that type as a matter of urgency—and there is the power to refer complaints to the legal services ombudsman—but in the light of my hon. friend's question, I will look further into the matter myself.
    Sir Teddy Taylor: Does the Prime Minister see any prospect of progress being made in Northern Ireland after the recent Stormont elections? Is he aware that in the meantime, taxpayers—and, no doubt, the Chancellor of the Exchequer—are concerned that those who were successful in those elections are being paid 70 per cent. of their parliamentary salary, although they have no parliamentary duties, and 100 per cent. of their office costs allowance, although they do not have offices? That is costing about £40 million, which seems to be a huge waste of money. How long will the Prime Minister let it go on?
    The Prime Minister: I will let it go on for as long as we can try to get a deal together that saves the institutions and allows Northern Ireland to move forward. I am of course aware that it is an anomaly in the present situation. I hope, however, that the hon. Gentleman recognises the enormous boost that the peace process has given to Northern Ireland, and not least to its economy. When we came into office, Northern Ireland had easily the highest unemployment level of anywhere in the UK—now, it does not, and investment and jobs have poured in. Overall, the peace process has been immensely beneficial. Yes, it is true that the anomaly is there, and obviously it cannot go on for ever in these circumstances, but it is still worth maintaining the current situation to see whether we can find a way through, because in the end that is manifestly in the interests of the people of Northern Ireland and of the UK.
    Jim Sheridan: Like many of my generation and background, I did not have the opportunity of going to university, and it therefore never ceases to amaze me that such excitement is generated in this House about university top-up fees. During my right hon. friend's deliberations with the appropriate bodies, will he not forget the many youngsters in all our communities who may not have the necessary qualifications to get into university but are equally important to the long-term prosperity of this country, because they actually produce things that we need?
    The Prime Minister: My hon. Friend makes a very valuable point. It is right that many people need the
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    benefit of good vocational training and of modern apprenticeships, and this Government have implemented a modern apprenticeship programme with 200,000 people in it. It is also important to realise that many people—some from poor backgrounds who are trying to get better skills—will of course have to pay for a certain amount of that themselves. It is important that we have a system that is fair for university students and also fair for people who do not go to university. In the end, this is all about creating a modern, knowledge-based economy in which we have high levels of university education and high levels of vocational skills as well.
    Mr. Adrian Flook: If the Prime Minister gets his top-up fees through the House, will he consider the plight of A-level students who started their course this term? They will finish their exams in 2005, but because of the likely introduction of top-up fees in 2006, none of them will take a gap year. Many of them will therefore forgo doing valuable charity work. Worse, this will also create a logjam for university admissions in October 2005. Will the Prime Minister allow those particular students the chance to opt out of top-up fees?
    The Prime Minister: Let me tell the hon. Gentleman two things. First, our proposal is to abolish up-front tuition fees altogether, so students will not be paying the money that they are paying now at all. Secondly, I suggest that he goes back to his constituency and tells his constituents how many of their children would not be able to go to university at all under his proposals.
    Mr. Gwyn Prosser: Does the Prime Minister share my confidence that the recent announcement of job losses by Hoverspeed and P&O Ferries in Dover is a reflection of a short-term downturn in passenger demand, and that there is every prospect of a return to growth? Does he also agree, however, that this only emphasises the urgent need to continue to regenerate the frail economies of east Kent, and that the best way to achieve that would be to extend the new high-speed channel tunnel rail link into Dover, thus connecting one of the busiest cities in Europe to the busiest ferry port in the world?
    The Prime Minister: I know that my hon. Friend has campaigned hard on this issue, and he will know that we are still considering whether services to Dover could use the channel tunnel rail link. The Strategic Rail Authority is also consulting on improving services throughout Kent. His point about unemployment is right. As I have said to him before, I deeply regret the loss of jobs at P&O, but the most important thing is to help people to get new jobs when their jobs are at risk. I hope that the rapid response service is doing all that it can to help people to find alternative employment. He will know that one of the benefits of the sound economic management of the past few years has been that we now have 1.5 million extra jobs in the British economy.
    Mr. Ian Liddell-Grainger: I shall not make a habit of this. but I must say to the Prime Minister that I am very grateful for the settlement for Somerset. It is not adequate, but it will do.

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    Is he aware, however, that the Liberal Democrat-controlled county council is now morally blackmailing the taxpayers of Somerset into deciding what services we want to have cut over the next year? Does he not find it repugnant that a county council should resort to using the web to discuss what services people want cut?
    The Prime Minister: I was not aware of that, but I am now. It will surprise the hon. Gentleman to know that I totally agree with him. It is important that people recognise that, when the Liberal Democrats get into power on any of these councils, the tune that they sing in here—which is "spend, spend, spend" without there ever being a price—is usually reversed into "cut, cut, cut" in the local authorities.
    I Andy King: I would like to thank my right hon. Friend for meeting me, my parliamentary colleagues and representatives of those who work with the poorest in our country, at a recent meeting in his office, and for his interest in and commitment to eradicating poverty, especially among children, by 2020. Does he agree that that is in contrast with the scandal of the Conservatives, who doubled child poverty? In Warwickshire, children's centres are now coming into being because of the hard work of the Labour-led Warwickshire county council in delivering the Government's agenda, which is to end this scandal once and for all.
    The Prime Minister: My hon. Friend is absolutely right. I would like to make one additional point, which
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    is to stress again the importance of the new deal in reducing poverty in this country. About 800,000 people have now been helped by the new deal: lone parents have been helped off benefit into work; long-term unemployment has been cut; and young people who were consigned to the scrap heap and the dole for years under the Conservatives have been able to get a job. That is why any party pledging to scrap the new deal does not have the interests of the poorest in our country at heart.
    Lembit Öpik: Returning to higher education, but not tuition fees, is the Prime Minister aware of an anomaly preventing federated universities from encompassing campuses that use a local name? For example, Cardiff must call itself university of Wales, Cardiff, not Cardiff university. Given the organisational and branding implications, will he support a simple amendment to remedy that, which I hope to achieve using my private Member's Bill, without charging him a fee?
    The Prime Minister: The answer that I have to give the hon. Gentleman is not exactly earth-shattering, but here it is. We all want Cardiff to maintain its position as a world-class university. The Secretary of State for Wales will consider any proposals for changes to the constitutions of universities in Wales in his capacity as Privy Councillor.

Pre-Budget Report
12.31 pm
The Chancellor of the Exchequer (Mr. Gordon Brown): When in 1997 we made the Bank of England independent, we also froze spending for two years, cut the national debt and imposed the responsibilities of the new deal—hard choices made to restore, as the central objective of British economic policy, the goal of high and stable levels of growth and employment
Today, I can report to the House that British inflation has been at its lowest for 30 years; interest rates are their lowest since 1955; this Christmas, there are more people in work in Britain than at any time in our history; and economic growth in this country is now strengthening. While America, Japan and half the euro area have suffered recessions, the British economy has—uniquely—grown uninterrupted, free of recession, in every single quarter in every single year since 1997. Now is the time for this stable and growing economy to seize the opportunities of the emerging world recovery.
So, with the same strength to take the right long-term decisions for Britain that have guided us through the world downturn, this pre-Budget report sets out the further tough choices that we have to make: first, decisions to lock in our hard-won stability and to fund our additional obligations to the war against terrorism and Iraq; secondly, long-term choices that step up the pace of economic reform to strengthen Britain's enterprise culture, British science and the flexibility of the British economy; and thirdly, even as we come through a world downturn and because we believe that enterprise and fairness can advance only if they advance together, an additional £1 billion a year investment in Britain's children to advance our goal that not just some but all Britain's children have the best possible start in life and that no child is left behind
First, the world economy. While the USA and Japan have been recovering during 2003, growth in our biggest trading area—the eurozone—is expected to be just 0.5 per cent. In Italy, growth is 0.4 per cent.; in France, 0.2 per cent.; and in Germany, zero. But I can report that in Britain growth this year is now expected to be 2.1 per cent., meeting our Budget forecast
When I made our Budget forecast, the Opposition said it was not just incautious and wrong but "a deliberate misrepresentation" of Britain's economic prospects and not to meet it destroyed credibility. I can report to the House that not only have we met our forecast, but cumulatively since 2000 Britain's economic growth has actually been stronger than Japan, the euro area and the USA.
I can tell the House now that Britain has enjoyed the longest period of peacetime growth since records first began in 1870—130 years ago. So, Mr. Speaker, let me share this with the House: my sleepless nights have not been due to the economy nor to the Opposition. I can also tell the House that, looking forward, we expect British growth next year to increase by between 3 to 3.5 per cent. and in 2005 to increase again by 3 to 3.5 per cent.
In a world downturn, Britain has achieved growth with low inflation and with high employment. I can report that since 1997 inflation in Britain has averaged
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2.3 per cent., and that the number of jobs created in our economy now exceeds 1.7 million. Unemployment in America is 6 per cent.; in Germany, Italy and the euro area it is 9 per cent.; in France it is 10 per cent.; in Britain it is just 5 per cent. For the first time in 50 years, British unemployment is lower than that of every one of our major competitors—the euro area, Japan and America.
Even with long-term unemployment cut by 80 per cent. and youth unemployment by 75 per cent., I have read pre-Budget representations that this Government's new deal is said to be an expensive failure and should be abolished. Today, in the pre-Budget report we are setting out the evidence showing that without the new deal, youth unemployment would be twice as high; without the new deal, half the lone parents who have moved into work would not have done so; and without the new deal, unemployed men would be 20 per cent. less likely to get a job. So the challenge of this pre-Budget report is not to abolish the new deal—now, with 2 million people helped, the most successful employment programme in our history—but to strengthen its role in removing for ever the scourge of long-term unemployment in this country
We remain vigilant in regard to both inflation and the continuing risks from global imbalances, an uneven world recovery and geopolitical uncertainties. I also understand the continuing concerns of manufacturers and exporters. It is therefore urgent that world trade talks be resumed
As we achieve more balanced economic growth, fixed investment is growing this year by 2¼ per cent., with growth forecast at 6 to 6½ per cent. next year. Business investment, which was expected at Budget time to fall, is actually rising by three quarters of a per cent. this year, with 3 to 3½ per cent. growth forecast for 2004. The latest manufacturing and industrial production figures show a 1 per cent. growth in just one month, and manufacturing output—which has fallen in both North America and Europe—is expected to grow here by one quarter of a per cent. this year, and then by around 2 per cent. in both 2004 and 2005.
With the housing market and consumer spending growth now—as we forecast—moderating, we expect domestic demand and private consumption to grow by 2½ per cent. this year and in the following two years, building on six years from 1997 in which British households have averaged real rises in income above 3 per cent. a year. With—since 1997–1 million more home owners in Britain, rising household debt has been matched by rising household wealth and lower interest payments.
Because this Government will never take stability for granted, I have announcements designed to entrench that stability. First, the credibility that has come from Bank of England independence and the tough decisions to cut inflation have made possible a proactive, forward-looking approach to interest rates, cutting aggressively at the right time for the economy and, as the economy now strengthens, locking in long-term stability.
The symmetrical inflation target enables the Bank to be both pro-stability and pro-growth. The long-term credibility of our symmetrical target will be enhanced—as the independent Office for National Statistics reports in its paper published today—by adoption of the internationally recognised measure of inflation, the

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harmonised consumer prices index. It is more reliable because, taking account of spending by all consumers, this consumer prices index gives a better measure than the old RPIX measure of spending patterns. It is more precise because, as in America and the euro area, it takes better account of consumers substituting cheaper for more expensive goods. I have therefore written to the Governor of the Bank of England this morning confirming my announcement earlier this year, and confirming that from today the operational measure for inflation will be this consumer prices index, and I am setting the new inflation target at 2 per cent.
I can confirm that pensions, benefits and index-linked gilts will continue to be calculated on exactly the same basis as now. As before, the target will be symmetrical. Should the rate of inflation diverge from the 2 per cent. target by more than 1 per cent. on either side, our open letter system will be triggered. And because discipline in pay setting is essential in both private and public sectors, I have also written today to the public sector pay review bodies, informing them that our inflation target is 2 per cent.
When, in 1997, we also broke from the old annual spending rounds by setting fiscal rules over the cycle and fixed three-year spending settlements, and then paid off more debt in one year than all the debt paid off across all the 50 years since 1945, debt interest payments were reduced to just 2 per cent. of national income—lower than at any time since 1915. Those long-term decisions that we made for stability have enabled fiscal policy during this world downturn to support monetary policy, and therefore to maintain economic growth. This Government will ensure that for the long term, debt levels will remain low and sustainable. In each pre-Budget statement, we will report not just on the medium-term fiscal position, but on the long-term position. Today's report shows that while in Germany, France and the euro area state spending on pensions will rise towards 15 per cent. of GDP by 2050, Britain's figure of 5 per cent. means—I the report—that
"the UK public finances are sustainable in the long term…the UK is in a strong position relative to other countries to face the challenges ahead".
I have to tell the House that to revert to the pre-1980 position—an earnings link with pensions—would, by the end of the period, raise deficits by 3 per cent. a year just to cover this one item, with the long-term sustainability of the public finances undermined. Instead, this Government will proceed on a prudent and sustainable basis.
Essential also for long-term stability is a flexible housing market, and I welcome the interim reports this week of the Miles review on the market for mortgages and of the Barker review into barriers to housing supply. Kate Barker highlights Britain's weak private rented sector, so I will now consult, before the Budget, on a new incentive to encourage the creation in Britain of real estate investment trusts.
With flexibility central to meeting the euro's five economic tests, I am today also publishing our first report on labour, capital and product markets; and as promised in June, the draft euro referendum Bill is published today.
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Since 1997, Britain has created over 100,000 more businesses; there are 170,000 more self-employed. But more enterprising though we are, Britain still lags behind American rates of business creation and success. And just as we took hard decisions that led to a British consensus on stability, I want to build in Britain an even deeper-lasting British consensus: a shared national economic purpose that, building on our historic strengths—Britain's scientific genius, British creativity, Britain's global reach and Britain's stability—means that we become, in this era of globalisation, one of the world's most enterprising, flexible and successful economies.
I want Britain to be the best location for science and for research and development, so I can announce a widening of the successful R and D credit that will include the direct costs of software and power. As the Government examine the Lambert and Sainsbury reviews, and put forward our reforms in the structure and funding of higher education to promote excellence and opportunity for all, the Budget will consider even further improvements, including for research and technology organisations. We will, in addition, consider the right incentives to support one of our great British creative industries: British film. A flourishing British venture capital industry is vital to growth. I will also consult on raising the annual limit for venture capital trusts and enterprise investment schemes to £200,000, and on increasing for two years income tax relief for VCT investments to 40 per cent. We will extend tax relief for the cost of managing investments from investment companies to trading companies.
Small firms in Britain seeking investments of up to £2 million still face an equity gap, so following, again, the model of American small business investment companies, we will create a new framework of incentives for small business investment. We will therefore launch the first round of a new British fund for enterprise capital. To encourage new companies to enter the North sea, I will enhance the tax relief for their costs of exploration. Manufacturers and firms with turnovers up to £22 million will benefit from 40 per cent. capital allowances, which will be worth, over three years, nearly £400 million to manufacturing and industry.
So that British manufacturers and British workers do not lose out from European rules unfairly applied to British firms, the Secretary of State for Trade and Industry and I have asked Mr. Alan Wood of the Engineering Employers Federation and Siemens UK to review how procurement rules are practised in Europe and to make recommendations.
I can announce the following deregulations. Firms applying international accounting standards will not have to submit a second and separate set of accounts to the Inland Revenue. For firms with turnovers below £5.6 million, there will now be no independent audit requirement. I will extend the flat rate VAT scheme whereby firms simply pay a percentage of total turnover, lowering the VAT charged by up to 3 per cent., and for first year start-up businesses by up to 4 per cent. In total, the Government are announcing today 147 regulations for reform or removal. Because half of regulations emanate from Europe, the coming Irish, Dutch, British and Luxembourg presidencies are proposing a joint initiative to drive forward deregulation as we seek more flexible capital, product and labour markets—not just in Britain, but across Europe.

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Our goal is full employment for every region and nation of the United Kingdom, and we are closer than ever to achieving it. While the first stage of Britain's new deal was to move people from welfare into jobs, the next stage is to help people move from low-skilled work into higher-skilled work. I want to announce today that the windfall tax reserve, which was previously allocated for job creation, will now be reallocated to a new deal for skills.
To extend employer training pilots to a third of the country—from 14,000 up to 80,000 employees, most of whom have left school early and have no qualifications—we will provide £190 million in the corning year for time off and for skills training. To further that new deal for skills, everyone on jobseeker's allowance will be assessed for their skills and, starting with pilots for the long-term unemployed, they will attend a mandatory skills course.
Overall, that provides a second chance for adults—either in or out of work and without basic skills—to learn, whether through further education, work-based learning, distance learning or trade union learning. Today, further to boost such skills training, we are publishing a paper on the tax treatment of subscriptions and fees for professional bodies.
Alongside the Allsopp report on regional statistics, which is published today, the Secretary of State for Work and Pensions and I are also publishing today for the first time the full employment plans for each region of the country. For 2,000 enterprise areas, which cover high unemployment communities in a total of 417 constituencies, I can announce that, in addition to fast-track planning and abolishing stamp duty, there will—subject to state aid approval—be first-year 100 per cent. investment allowances to renovate vacant commercial premises.
I can also confirm that, as a result of the Lyons review, we will relocate out of London and the south-east 20,000 civil service jobs—to the benefit of the regions and nations of the UK. Local authorities which successfully promote small business creation should be rewarded for doing so. The Deputy Prime Minister and I propose that any additional business rate income should be shared with local authorities. Although I will consult further before the Budget, we expect local authorities to be eligible, as a result, for an additional £150 million in 2005, £300 million in 2006, rising to £450 million a year for local authorities.
Budget 2002 announced reliefs on income and donations for local amateur sports clubs. The importance of sport to our communities and to our whole country has been demonstrated most powerfully as the England rugby world cup triumph is enthusiastically celebrated all across the United Kingdom. I know that the whole House will want to congratulate the team on their success and also encourage the next generation of sportsmen and women.
There are 100,000 amateur sports clubs in Britain, which deserve greater support. Under our proposals, becoming a community amateur sports club will now bring an entitlement to 80 per cent. rates relief, which is worth between £1,000 and £3,000 a year for a typical club. By doubling today the thresholds at which community clubs are exempt from corporation tax to a
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new rate of £50,000, the vast majority will be exempted from such tax altogether. In partnership with the sports governing bodies, we will now do more to ensure that all sports clubs—roughly, over 100 in each of our constituencies—can share in the considerable financial benefits as they promote sports throughout their communities.
The Home Secretary—who will announce tomorrow the details of our £125 million fund for voluntary and community organisations—the Secretary of State for Culture, Media and Sport and I will report in the Budget on what more we can do in Britain to encourage and help all those prepared to volunteer in school sports and local sports, as well as in community service and mentoring. At the same time, we will also review the Inland Revenue's treatment of football supporters' trusts.
I have two announcements on whisky and spirits. While tobacco fraud, VAT fraud and oils fraud are now in decline, recent trends suggest that despite the freeze in spirits duties for six Budgets, an estimated one bottle in every six of spirits sold in this country is evading duty, so I will now make provision to implement in the next Finance Bill the Rogues report recommendation that we stamp spirits bottles. If, after discussion with the industry, there is still no workable alternative proposed, we will legislate. If we have to impose stamping, the Economic Secretary will discuss with the industry the most cost-effective scheme and I will then consider extending the freeze on the duty on whisky and all spirits, not just for one year but for every year of this Parliament—[Laughter.] And I drink water.
I propose also to consult on a new framework for the tax treatment of green fuels: that we make a commitment to prior announcements, three years ahead, of incentives to increase usage and thus promote investment in new fuel-efficient technologies. The Budget will announce the way forward on that measure and it will also introduce incentives for rebated low-sulphur fuel and gas oils. We will also consult on recycling revenues from landfill tax; extending eligibility for the 80 per cent. reduction from the climate change levy; and, subject to new industrywide commitments on the environment, extending in Northern Ireland until 2012 an 80 per cent. discount on the aggregates levy.
Also published today are measures extending our VAT compliance strategy and closing loopholes that involve trusts, seafarers foreign earnings deductions and tax paid on the personal income of owner-managers of small companies.
Our pension proposals, published also in detail today, include a single set of rules that set the tax-free lump sum at 25 per cent. of the value of an individual's pension fund; more flexible annuity rules; and provision for older workers to draw occupational pensions earlier. Because consultation on the proposed single lifetime tax allowance for pension savings has revealed contrasting interpretations of its impact, I am asking the National Audit Office to provide, by Budget time, an independent evaluation of the numbers affected. Our aim is to secure a broad-based national consensus on the way forward. If a decision is made to proceed, the measures will be introduced in April 2005; otherwise, the current regime will remain in place.

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I come to the coming spending round. In advance of the independent Gershon review of efficiency, the Chief Secretary has written today to all Departments asking them to bring forward their proposals for reform and cost savings in the areas of transaction services, back office services and procurement—where we propose a new Whitehall framework. With modernisation and reform the condition of future spending settlements, the Treasury will in return—for public service agreements—abolish the input and process targets, and we will abolish service delivery agreements entirely. And while local performance standards and local publication of performance data will progressively replace the national targets, the Deputy Prime Minister and I are agreed that, having already set aside for English local authorities next year an additional £3.3 billion, the Government will be prepared to use capping powers where appropriate and necessary to ensure next year reasonable levels of council tax.
I turn now to the public finances. I reported to the House last week on our resolve to ensure that our armed forces are properly supported in all they do. The whole House will wish to thank them for the service they give in peace and in war. I can also reaffirm that we will meet all our international development responsibilities in Iraq and for the war against poverty in Africa and around the world.
To date, the money spent or set aside for the war against terror, including in Afghanistan and for our action in Iraq, is £5.5 billion. I can tell the House that for Iraq £2 billion has been carried forward into the special reserve for 2003–04; and I believe it prudent and right today to set aside a further £500 million for this year, and an extra £300 million for next year—raising our allocations for the war against terrorism and for action in Iraq to £6.3 billion in total.
So, having taken account of those new provisions for Iraq and elsewhere, and the cost of incentives that I have announced for enterprise and other measures to equip Britain to take advantage of the opportunities of the global upturn, our current budget figures for 2003–04, and for the years to 2008, are, in billions: minus 19, minus 8, minus 5, zero, plus 4 and plus 8.
Our first rule is the golden rule that over the cycle we balance the current budget. Having accumulated surpluses at the start of the economic cycle at 2.1 per cent. of national income in 1999, 2.1 per cent. in 2000 and 0.9 per cent. in 2001, we not only meet our first fiscal rule—the golden rule—that we balance the budget, but even on cautious assumptions we have an average annual surplus over the whole cycle of around 0.2 per cent. of gross domestic product, meeting our first rule in this cycle by a margin of £14 billion; and even on the cautious case, moving back to balance by the end of the forecast period.
Our second rule—the sustainable investment rule—is that net debt will be below 40 per cent. of national income. I can tell the House that debt this year is actually rising to 42 per cent. of national income in France, 50 per cent. in Germany, just under 50 per cent. in America and 80 per cent. in Japan. But in Britain, debt in this year and future years will be well below 40 per cent.—at 32.8, 33.8, 34.6, 35.1, 35.4, and 35.5 per
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cent.—meeting our second rule by a margin of £60 billion, and doing so over the cycle and in every single year.
With both rules met, it is right and prudent that—as in America, Japan, France and Germany—we borrow at this, the right time of the economic cycle. Net borrowing adjusted for the economic cycle, which is forecast this year at 3.5 per cent. of national income in Germany, 3.9 per cent. in France, 4.5 per cent. in America and 6.9 per cent. in Japan, is in Britain 2.4 per cent. this year, and in future years it will be 2, 2.2, 2, 1.9 and 1.7 per cent. of national income.
Adjusted for the cycle, our deficit, as I state in our annual convergence report submitted today to the European Union, is and remains—unlike the deficits of those G7 colleagues—below 3 per cent. of GDP and below it in every single year. In each year, before adjusting for the cycle, British borrowing is also substantially below the G7 average and it is falling to just half the level of America.
Let me give the House, in detail, the comparative figures. This year, net borrowing is for France 4.2 per cent. of national income; in Germany it is 4.2; in the USA it is 4.9; and in Japan it is 7.4.—but for Britain it is 3.4 per cent. Next year, net borrowing in France is 3.8 per cent. of national income; in Germany 3.9; in America 5.1; and in Japan 6.8 per cent. In Britain, it is just 2.6 per cent. And in 2005, while for France borrowing is 3.6 per cent. of national income; in Germany 3.4; in America 4.9; and in Japan 6.9; in Britain it is just 2.4 per cent.
So compared with a British deficit reported by the Conservative party 10 years ago of 8 per cent., and an average of 6 per cent. over the early 1990s, net borrowing this year and future years to 2008–9, as a percentage of GDP, is 3.4, 2.6, 2.4, 2.1, 1.9, falling to 1.7 per cent.—with, for this and future years, the cash figures 37 billion, 31 billion, 30 billion, 27 billion, 27 billion and 24 billion—so we are able to meet all our commitments in Iraq and at home; maintain the lowest level of debt in the G7; still announce a deficit that, in each and every year, is substantially below that of America, Japan, Germany and France, meeting all our fiscal rules; and move forward with the spending plans we have set out:£15 billion pounds more a year for education, £59 billion more a year for public services and, by 2008, £41 billion more for health, allowing us to employ, in total, 25,000 more doctors, 20,000 more teachers, 80,000 more nurses and 90,000 classroom assistants, as we invest in and reform our public services.
It is sustained economic growth, built on the foundation of long-term stability and on low debt, that has underpinned our investment plans and makes them affordable for now and the future. And so I can now make two further announcements. The first is on children's benefits—and here I should declare an interest. Nothing is more important to the future of our whole country than the best schooling, services and financial support, ensuring for every child the chance to develop their potential to the full.
For mothers and fathers struggling to balance work and family responsibilities, help with child care costs—once available to just 47,000 parents in 1997—is now available to almost 300,000. But today it is time to begin to face up to a long-standing grievance: that financial

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help for approved child care be offered not just to some families but be available right up the income scale to working families facing child care costs.
So in advance of other decisions that I make in the spending review, I can announce as a first step that for every employee, whatever their income level, employers will be able—as long as the offer is made to every employee—to provide free of both employee national insurance and income tax and free of employer national insurance £50 a week for approved child care.
I can also announce that we will respond to two other long-standing concerns: help with child care costs will now be available when approved child care is provided in the child's own home; and, after consultation, we will widen the definition and therefore the number of approved child carers for whom the £50 a week or tax credits can be offered. We now expect child care places to double from 750,000 in 1997 to 1.5 million by 2006, helping over 2.2 million children in our country.
In April, for the first time our country will pass a milestone in opportunity for our children: a nursery place guaranteed to every three and four-year-old—six months ahead of our planned schedule. But we know also that the most formative years are from the cradle to the nursery school. So for 500 communities in Britain, the Minister for Children will fund school-parent links so that long before schooling begins infants are introduced to early learning and books, and support is on offer in this way to parents. Building from and including Sure Start, neighbourhood nurseries and early excellence centres, I can confirm that over the next five years there will be 1,000 children's centres—children's centres that can become, for parents as well as children, as much a focus of community life as the local school, the local place of worship and the local park. Our goal is a children's centre for every community: this generation meeting its obligations to the next.
We will be judged not just by what we do for services, but by what we do for child benefits. So building upon the new child tax credit—at a cost of £1 billion a year—we will increase, from April, the child element not just by inflation or earnings, but by 13 per cent. an extra payment to be paid to 7 million children of £180 a year, an extra £3.50 a week. And because every child should be born into a world of opportunity, not condemned to poverty, maximum help for the first child—worth just £27 a week in 1997—will rise in April to £58 and, for two children, from just £44 a week in 1997, to £100 a week.
Before housing costs, a two-child family on half average earnings will now be better off than in 1997 by £75 a week—£1 billion more a year to meet, on this basis, our goal for 2004 to reduce child poverty by a quarter, as step by step, we halve child poverty by 2010 and eradicate it in a generation.
I have one final announcement. I stated earlier that, starting in April 2005, local authorities promoting enterprise can receive from central Government £150 million a year extra, rising to £450 million a year. But from April 2004 also, I am now able to do more for local council tax payers: to allocate across the United Kingdom, free of ring-fencing, for local authorities as they set their budgets, an additional £406 million—in England, £340 million extra—making the total available to English local authorities £3.6 billion more next year than this year: cash to meet the needs and concerns of council tax payers.
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Economic stability, enterprise and fairness and the strength to make the best long-term decisions for Britain—I commend this pre-Budget report to the House.
Mr. Oliver Letwin: I draw attention to the interests that are still listed under my name but are now outdated.
It is always a pleasure to listen to the Chancellor on these occasions, and it was genuinely interesting to hear what he had to say, for example, about the housing market and child care, which we shall all study in detail. But why is it that, so often, some of the most interesting bits of the Chancellor's pre-Budget reports never make it into his speeches? Why did he not tell us that table A5 on page 190 shows that the savings ratio has halved? Why, I wonder, did he not choose to tell us anything about the tax receipt figures or about the public spending figures in the report? Does he think that those figures are less important than stamping whisky bottles? We have learned that, with this Chancellor, one needs to look at the small print. I very much doubt, though, that even the small print will say that private sector employment fell last year, that we had a record trade deficit in the last three months or that household debt is now only slightly below our entire annual GDP.
The Chancellor has congratulated himself, with characteristic modesty, on the state of the economy and on meeting his growth forecast—it is indeed a remarkable event when the Chancellor meets one of his own forecasts—but the great question is, if the economy is doing so well, why is he borrowing so much? At the time of the last election, the Chancellor said that he would borrow £10 billion this year. Since then, in a series of reports, he has raised that projection to £15 billion, £24 billion and £27 billion. Today, he has finally admitted that he will have to borrow £37 billion this year. We will have to see whether that forecast proves any more accurate than its inaccurate predecessors.
The Chancellor will have been warned about families who borrow a huge amount on their credit cards, but he is doing the same on the nation's credit card. Why is he doing all this borrowing? Is it because, as the Chancellor is fond of saying, there has been a world economic downturn? No, it cannot be, because the borrowing of £120 billion, which he has just announced, between 2002 and 2006 is taking place after the worst of the downturn, against the background of world economy upturn.
The Chancellor cannot blame the rest of the world for his own borrowing, so what reason is there for the borrowing? Is it because he is not taxing enough? The pre-Budget report tells us that the Government are taking about 50 per cent. more in tax than in 1997. The Prime Minister's promise not to increase tax at all has not stopped the Chancellor raising the equivalent of £16,500 from every household in Britain. We have had 60 stealth taxes: taxes on jobs; taxes on families; taxes on homes; taxes on pensions; taxes on savings; taxes on drivers; taxes on businesses; and of course—the biggest stealth tax of them all—a huge rise in council tax. I grant that his tax revenues have not kept pace with his overoptimistic forecasts, but that is just about the only thing that they have not kept pace with.
The real explanation for the Chancellor's borrowing is not that he has been shy about raising taxes—it is the Chancellor's spending. The Chancellor is spending

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more than £50 million an hour. The saddest thing about the taxes that people are paying now, and the saddest thing about the taxes they will have to pay later to repay the Chancellor's borrowing, is that there is very little sign that all that spending is delivering improvements on the scale that everyone wants to see.
In the past seven years, the Chancellor has allowed spending on Whitehall bureaucracy to grow by almost 50 per cent. That is £6.7 billion a year of additional spending on administration. By the time of the next election, the right hon. Gentleman's open-wallet policy on bureaucracy will have cost the equivalent of about £1,500 in extra tax for each household in Britain. Even he knows that he has a problem. That is why he today, and his spin doctors all week, have been busy making noises about his so-called efficiency review, which is intended to cut back on the extra bureaucracy that he has created.
There is an even more serious problem, however. As my right hon. Friend the Leader of the Opposition has repeatedly told the House, the Chancellor is taxing and spending and failing. We have been promised reform of the public services for years but the reform simply has not happened. Why do the latest official figures show that since 1997 spending by the Government on goods and services has risen by 59 per cent. while outputs have risen by only 14 per cent? Why has 37 per cent. more spending on the NHS produced only 5 per cent. more hospital treatments? Why has the Chancellor been hiring managers in the NHS at three times the rate at which he has been hiring doctors and nurses? Why is inflation in the public sector running five times as fast as inflation in the household sector? Does the Chancellor really think that those figures represent value for money?
The Chancellor should have used this statement to announce a new direction for public services, with choice and responsibility transferred from bureaucrats in Whitehall to parents, patients and professionals. Instead, he has been proceeding on the basis that the only answer to failing public services is more bureaucracy, more targets, more plans, more performance monitoring and more taxes, and when that fails, borrowing today and more taxes tomorrow—except, of course, on amateur sports clubs.
The Chancellor's best defence against the accusation that he has taxed, spent and failed is that he has counterbalanced that with success in monetary policy. The Chancellor has built his reputation on the framework for monetary policy that he put in place in 1997. I have congratulated him on that in the past, and I do so again today. But I hope—[Interruption.]
Mr. Speaker: Order. Hon. Members must allow the right hon. Gentleman to be heard. The Chancellor was heard, and the right hon. Gentleman must be heard.
Mr. Letwin: I hope, however, that the Chancellor is not putting that well-deserved reputation at risk by the way in which, and the time at which, he is changing the inflation index, which is at the heart of that framework. He did not explain satisfactorily why he is changing the index now, when he knows that the harmonised index is
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likely to change in the near future to include housing costs. I hope that he is not doing that as part of his compromise deal with the Prime Minister on the euro—he needs that deal more than ever, now that he is breaching the Maastricht guidelines on borrowing. I hope that he is not doing it to make rises in council tax less visible. Council tax rises forced on councils by the Chancellor and by the manipulations of the Deputy Prime Minister are causing havoc. Council tax rises are the least acceptable face of the Chancellor's strategy for taxing Britain. What does the Chancellor do about it? He tells us today that he is proposing to use capping, which the Labour party derided when in opposition, and just in case that does not work he is imposing an index of inflation that includes no reference to council tax rises.
Can the Chancellor tell us what other implications the change in the index will have? He says that pensions, benefits and gilts will continue to be uprated in the same way as now. I suspect that those words were carefully chosen. What about tax allowances? What about indirect taxes? What about tax credits? I hope very much for all our sakes that the monetary framework will remain robust. It is not only the Chancellor's reputation that relies on that. Both the prosperity of the country and our own ambitious plans for public sector reform depend on a stable anti-inflationary environment.
But micro-economic policy—the policy that sets the framework for the economic decisions of individuals and businesses—matters, too. The Chancellor has talked today about savings and pensions. I note that he has not talked about his £5 billion a year raid on pension funds—or about the Prime Minister's explanation that that was fine because the stock market was in such good shape. I note that he has not talked either about the fact that his vast expansion of means-testing is making more than 50 per cent. of pensioners—and will in due course make more than 75 per cent. of pensioners—dependent on means-tested benefits. I note that he did not mention that a newly retired couple in rented accommodation now need to have saved more than £180,000 to avoid losing between 40p and 85p in the pound in reduced benefits at some time during their retirement. I note that he did not link this misguided, means-tested approach to the fact that the savings ratio has halved. I note that he did not tell us why his forecasts about the number of people who will be affected by his new cap on pensions differ so markedly from independent forecasts. I note, in short, that he did not tell us very much at all about how he is going to make good the damage that he has done to the culture of individual and family saving in Britain. If we are to avoid more and more people becoming more and more dependent on Government handouts in retirement, that culture of saving needs to be rebuilt.
What about the Chancellor's policies announced today for British industry? When the Chancellor addressed the Labour party conference this autumn—in a speech that the Prime Minister will remember—the Chancellor said that he would be using the pre-Budget report to promote "modern manufacturing strength". We will certainly want to look carefully at the measures that the pre-Budget report contains for manufacturers. But the Chancellor has made that kind of promise before. He told another Labour conference in 1995 that he would
"implement an industrial policy so that our manufacturing industries can grow again".

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Since then—or more precisely since the Government came to power—700,000 manufacturing jobs have been lost. The present Chancellor is the longest-serving Chancellor since Lloyd George, and his policies have seen Britain lose 300 manufacturing jobs for every day that he has kept his job in the Treasury.
One of the keys to manufacturing strength is productivity, which the Chancellor used to call
"a fundamental yardstick of economic performance".
So can the Chancellor tell us why it is that productivity has, on average, grown half as quickly in the six years for which he has been at the Treasury as it was growing in the six years immediately before? Has the Chancellor heard the British Chambers of Commerce say:
"British business has a clear consensus on how the Government could improve productivity in the UK: simplify tax and regulation"?
Why does the director general of the CBI say:
"It is clearly the case that the UK has become a more difficult place to do business than it was five years ago"?
The Chancellor uses set-piece occasions such as today's to tell us that he wants to simplify tax and regulation, but his actions contradict his words. If his announcements today were reality rather than rhetoric, why did he impose a fiendishly complex change in stamp duty land tax nine days ago? Why is he imposing 15 new regulations every working day? He has today announced that he will consider abolishing 147 regulations this year. Marvellous! At his present rate of regulating, it will take him 10 days to add that many back on to the burdens borne by business. As the Prime Minister would say, the Chancellor's ambitions are not ignoble. I believe the Chancellor when he says that he wants to improve public services, and I believe him when he says that he wants to improve the prospects for British business. But the sad truth is that his ambitions are not being fulfilled—at least so far as public policy is concerned. That is because, for all his talk of reform, he is—as his neighbour the Prime Minister knows—the biggest single obstacle to reform in Whitehall.
In this pre-Budget report, we should have had announcements on public service reform. Instead, we have unreformed public services from an unreformed Chancellor, who has taxed and spent and failed. The taxpayer is paying now for the Chancellor's spending and will pay more later for his borrowing—but the money is not buying anything like the services that it should be buying, because the Chancellor has placed his faith in a bureaucracy which, instead of exercising effective control, is itself out of control.
In this pre-Budget report we should have had serious measures to reduce the regulatory burden on British business. Instead, business is paying now and is set to continue paying in lost productivity and lost competitiveness as a result of the Chancellor's suffocating blanket of stealth taxes and red tape.
The people of Britain do not want the Government to borrow more on their behalf or to tax them more later to repay that borrowing. What the people of Britain want, and what our families, our pensioners and our businesses want is the prospect of some relief from the ever-increasing burden of tax and regulation. Instead, what this pre-Budget report offers them is the prospect of paying now and paying more later.
Mr. Brown: I have just found the answer to my sleepless nights. Just as I will not take advice from a shadow Chancellor who supported a Government during the last world downturn who ran 15 per cent. interest rates, 10 per cent. inflation, lost 2 million manufacturing jobs, and had 1.5 million people in negative equity, neither will I take advice from the shadow Chancellor and his party on levels of borrowing. For 16 of the 18 years of Conservative Government, they were in deficit; for 11 of those 18 years, the deficit was above 3 per cent; in the Conservative years under the Major Government, the deficit was 6 per cent.; and it rose to 8 per cent.—the equivalent of £80 billion at Today's prices—for two years in 1992 and 1993. Yet the shadow Chancellor has the audacity to try to lecture Labour Members about borrowing.
When borrowing is actually lower than it is in Germany, in France, in Japan and in America, why is the right hon. Gentleman so obsessed about the borrowing figures? There is one reason and one reason only:it is because, as he said in The Daily Telegraph yesterday, his aim is to cut spending. He is on record—he will not be allowed to forget this, because this is something that is at the centre of the pre-Budget report-as calling for a cut in public spending to 35 per cent. of national income, which is an £80 billion cut. The leader of the Conservative party is on record as saying that he wants to cut public spending to 35 per cent. of GDP. Perhaps an even more significant figure—the chairman of the Conservative party, Lord Saatchi—is on record as wanting to go back to the 1950s and to cut public spending to 30 per cent. I have to ask the Conservatives how many hospitals and schools and how many nurses and teachers will be lost.
The shadow Chancellor is wrong on savings. The savings ratio was lower under the Conservative Government in the 1980s. He is wrong on central administration. The costs of central administration were 4.9 per cent. of national income when we came to power; they are now 4.3 per cent. and they are falling to 4.1 per cent. We will take no lectures about the cost of bureaucracy from the party that gave us the poll tax, BSE and many other bureaucratic nightmares that we had to deal with when we came into government.
When the records are looked at, it will be found that the shadow Chancellor and his party have been wrong on every issue of economic policy. Let us remember that they opposed Bank of England independence, they opposed the minimum wage, they opposed the new deal, they opposed our symmetrical inflation target and they opposed our fiscal rules. Today, they are opposing an economic policy that has given us the best growth for the past three years of all the G7 countries and a level of public investment in services that has been surpassed by no one in the last 50 years. At the same time, we are dealing with the problems of investment and reform, and he seems to have forgotten the announcements that I made about reforms in the spending review coming up. The Conservative party was 18 years in government; it is going to be 18 years in opposition.
Dr. Vincent Cable: I am happy to start by acknowledging that, in some key respects, the Chancellor has a very good story to tell. We have low inflation and low unemployment and we have had steady growth and a respectable level of public debt.

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I am afraid, however, that in other respects the statement showed the Chancellor at his worst. He trailed a long stream of complex new tax gimmicks, adding to an already over-complicated tax system. I notice that he spoke even more rapidly than usual when he got to the very dodgy numbers on the Budget. The fact is that there are a lot of red faces in the Treasury about the red ink on the Budget. The number that he has come up with today—a £37 billion deficit for the current financial year—is £10 billion more than he expected a year ago.
How does the Chancellor reconcile his optimism on the golden rule with the assessment of the independent and highly respected national institute that estimated a few days ago that there is a 50:50 probability that he is going to break the golden rule over the cycle, to which he attached so much importance? Can he confirm the story in Today's edition of The Times that he has already written a letter to the European Commission explaining that he will have to break the Maastricht rule for the current financial year?
Is not the problem that, whereas the Government have established—they should be given credit for this—a secure and stable framework for monetary policy, that credibility does not exist in fiscal policy? The reason for that is that the Chancellor decides what assumptions he wants the auditors, the National Audit Office, to investigate. Why will he not throw the Government books open to a completely independent outside assessment?
It is clear from what the Chancellor said that the main reason for the widening deficit is a shortfall in taxation. He made no attempt to explain that. Will he try to explain why the shortfall is so large?
On the spending side, the Chancellor is quite right that the main problem is the Iraq war. On the figures that he gave today, which I understood to be a revised figure of £3.8 billion, is it not the case that the money will run out next September if the cost continues at the current rate of £200 million a month? Is not the brutal truth about this war that the activity that the Government embarked upon with the full support of the Conservative party has resulted in a situation in which British taxpayers will continue to have to pay large sums? Is there not truth in the adage that there is no such thing as a free war?
I have accepted, and I do accept, that there are positive elements in Government economic policy, but will the Chancellor be equally candid in accepting some of the failings? One of the failings is a serious imbalance in the British economy. Why, for example, did the right hon. Gentleman not say a single word about the trade deficit and the balance of payments? Would he not acknowledge that there is potentially a serious problem as a result of spiralling consumer debt and the possibility that that may result in a sharp downturn in spending? Does he not accept the Bank of England's analysis that the housing market is over-valued and could well deflate? Has the Treasury done any serious risk analysis of what could happen if such scenarios evolve? Will he publish it if it has?
In conclusion, may I ask another question? The Chancellor has built a reputation not just for competent economic management but for a genuine concern for
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social justice—probably rather more so than his next-door neighbour. However, can he explain why he now presides over a tax system in which the poorest 20 per cent. of the population pay 42 per cent. of their income in tax but the richest 20 per cent. pay only 44 per cent. of their income in tax? That is why the Liberal Democrats are making proposals not to raise tax, but to create a fairer tax system by lifting the burden of tax, particularly council tax on pensioners, and by asking the best-off people in society to pay a little more.
Before the Chancellor recites the lists from the Prime Minister about Liberal Democrat spending commitments, which the Prime Minister seems to have raided from conference resolutions going back to the days of Campbell-Bannerman, may I ask the Chancellor to face a straightforward question? Why is it unfair and damaging to the economy to have a 50 per cent. tax rate on earnings of more than £100,000—on the earnings of the likes of Lord Sainsbury, Steve Norris and even the Prime Minister—when it is perfectly reasonable, according to the Government, to have a 50 per cent. marginal tax rate on a graduate teacher who, under the Government's proposals, would pay the top rate of tax and another 10 per cent. in top-up fees. It is precisely the Government's lack of sensitivity to injustices and unfairnesses of that kind that is leading to so many of their supporters deserting them.
Mr. Brown: I have great respect for the new shadow Chancellor representing the Liberal party, and especially for the policies on social justice and the other items that he took with him when he moved from the Labour party to the Liberal party and in which he still believes.
Let me deal with the hon. Gentleman's individual points. As I said in my statement, we have submitted our report to the Commission today with a letter to the commissioner saying that, in our view, we meet a prudent interpretation of the stability and growth pact. We believe that a prudent interpretation is one that takes into account a cyclical adjustment of the borrowing.
On Iraq, we have set aside £2.5 billion this year and that is a very considerable amount of public spending to make possible the action that is taken at both a humanitarian and military level in Iraq.
On balance of payments, the hon. Gentleman should look at the figures that were published this morning that show a position that is better than people had expected. We do not have the balance of payments deficit that the Conservatives had in the 1980s.
As far as debt is concerned, I have had this debate with the hon. Gentleman across the Floor of the House. Although it is true that house price debt is at a high level, mortgage interest payments as a share of income are at a far lower level than in the early 1990s. In fact, they are half what they were in the early 1990s
As far as poverty is concerned—I think that our parties share a common approach on social justice and we want to ensure that more children are taken out of poverty—the hon. Gentleman must examine the tax system that we have developed. Although the top rate is 40 per cent., the bottom rate is minus 200 per cent. because the system is based on tax and benefit integration. That is exactly the sort of tax credit system

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that the Conservative party used to support and it is not too dissimilar from the earned income tax credit system in the United States of America. It allows us to pay people money from the Inland Revenue, especially for children, if their incomes are very low. I put it to the hon. Gentleman that the number of families with marginal deductions above 70 per cent. has been reduced under this Government and, indeed, we ended the situation in which people had marginal deduction rates of more than 100 per cent., which applied when we came to power.
The problem that the Liberals have when advocating their tax policies is that whatever they do with their 50 per cent. rate, they would find a spending gap of about £10 billion to £14 billion. That is why the former Liberal Democrat shadow Chancellor, who was replaced only a few months ago—he was probably replaced for saying this—said that
"simply proposing further spending and tax rises at this stage of the Parliament is unrealistic".
The Liberals then announced another 40 spending commitments and sacked their shadow Chancellor.
Mr. John McFall: May I commend the Chancellor for his focus on a sound economic framework and especially on low inflation rates, low interest rates and high employment? I especially commend him for his vision of this country's future with the announcement of full employment strategies and children's centres for every community. Too many adults and children in this country are still left behind, so we must urgently undertake such initiatives. Will he assure me that the initiatives will become a reality in every community and that they will be up and running in a year?
May I address the Chancellor as the chairman of the all-party scotch whisky group and tell him that there is already dismay in the Scottish whisky industry about the stamping of bottles? It is a £2 billion industry that is crucial to manufacturing, so may I have an assurance that he will work with me and the industry to ensure the unanimous introduction of the initiative? As chairman of the all-party group, I could then ensure that, on his sleepless nights, the Chancellor can get his tipple.
Mr. Brown: There will be 1,000 children's centres by 2008, which will include Sure Start centres that will be converted into children's centres. I believe that most constituencies in the country will have a children's centre as a result of that. My hon. Friend will want to work with the Minister for Children, who is developing the proposals, to ensure that his constituencies and others may benefit.
I am pleased that my hon. Friend is here to speak up for the Scottish whisky industry because the former leader of the Scottish National party has now disappeared from the Chamber.
Mr. Michael Weir: I am still here.
Mr. Brown: I look forward to the intervention.
I put it to the House that if one in six bottles of spirits are escaping duty, it is incumbent on a Government who have taken action on cigarette and other smuggling to take action on that. If the industry can come up with a better proposal to deal with the problem, we will
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consider it, but if it cannot come up with a better way to stop the erosion of duty we shall legislate for the stamping proposal in the next Finance Bill. If we have to do that, I shall work with the industry and the Economic Secretary will consult the industry on the most cost-effective scheme. At the same time, we would freeze duty on whisky and spirits for the whole Parliament. We understand the industry's difficulties, but it must work with us to eliminate such loss of revenue, which is completely unacceptable and based not on accident or avoidance, but simple fraud.
Sir Peter Tapsell: As someone who has denounced the growth and stability pact from the day that it was announced, may I congratulate the Chancellor on rather belatedly reaching the same conclusion, which permeated all his rather contemptuously worded comparisons of the international performance of other countries? May we take it from those statistics that France and Germany can be regarded as free to repudiate and break all their treaty obligations to other countries in the European Union from now on?
Mr. Brown: If the hon. Gentleman is saying that the stability pact should reflect the economic cycle, deal differently with countries with low debt than those with high debt, and take account of the needs of investment in our economy, I agree with him entirely—we have advanced that view to the European Union. If he is inviting me to take his advice on every possible occasion, I should remind him that he objected to Bank of England independence. He said that
"it will make the efficient …management of"
the economy
"more difficult, lead to higher levels of unemployment than are necessary and diminish the …prestige of the Bank of England".—[Official Report, 11 November 1997; Vol. 300, c. 763.]
I think that he was wrong.
Mr. Martin O'Neill: I congratulate my right hon. Friend on yet another successful report. I especially welcome what he proposes to do to help small businesses to bridge the investment gap at the same time as offering assistance for bridging the skills gap, which we know is vital for many of our businesses and people. How have circumstances changed on the stamping of whisky bottles? The Treasury rejected that proposal as irrelevant and an undue burden on the industry 18 months ago. Has there been a dramatic change of circumstances or is the measure the Treasury's last card in the pack?
Mr. Brown: New information on trends in the fraudulent evasion of duty on whisky and spirits shows that one in six bottles are evading duty. No Government can or should ignore that and I am sure that my hon. Friend agrees that we have to take action. We did not want to implement the measure when it was proposed in the Rogues report because we did not want to create additional demand on the industry or Customs and Excise. However, evidence shows that one in six bottles are subject to such fraud and we propose that stamping is the best way to deal with the problem, although I am equally happy to listen to alternative proposals from the industry. I repeat that if the measure is introduced, it will

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be our aim to introduce it cost-effectively. We would work with the industry to achieve that and consult on freezing whisky and spirit duty as well. We would not have wished to take such action, but if my hon. Friend looks at the evidence he will see that it will be necessary unless an alternative course to guarantee the end of such widespread evasion of duty is found.
Mr. Michael Fallon: Given that the rise in education spending that was announced last month was premised on a 2.3 per cent. rise in teachers' pay, will the Chancellor confirm that the new 2 per cent. pay guideline that he is giving to the teachers review body today means that teachers' pay rises will be cut to pay for the mismanagement of the public finances?
Mr. Brown: I thought that the hon. Gentleman was against pay policy working in such a way. I told the House that I was informing the pay review bodies for the first time that the new inflation target is 2 per cent., as he would expect me to do. It is for the bodies to make recommendations and negotiations will take place in other areas to resolve pay. One of the interesting features of the past few months has been the fact that expected rises in average earnings have not happened in the way that was perhaps forecast in the Budget, so average earnings in the economy remain generally low. With low inflation, there is no need for inflationary pay settlements.
Mr. Tam Dalyell: Has it occurred to the Treasury that with the £2.5 billion that the Chancellor has set aside for Iraq, it could get half a dozen Scottish Parliament buildings? What figure has been set aside for Iraq next year—2004?
Mr. Brown: The additional figure that I announced today is £300 million. There is money in the special reserve and I shall write to my hon. Friend about the full amounts involved.
Mrs. Gillian Shephard: Will the Chancellor give further details of his proposals for green fuels? When he talks about green fuels, is he referring to biofuels, and does he think that his measures will enable the Government to meet their own targets on reducing CO2, emissions and creating a sustainable energy policy for the UK?
Mr. Brown: Although I have not read the right hon. Lady's book, I appreciate her work on pursuing green fuels and a better environment. We intend to work towards those targets. The measure that I announced today is a new form of consultation and preparation for the industry, and we are talking about biofuels. The aim is to ensure that there is such advance notice of any change and any incentives for the use of a particular type of fuel that the industry is able to respond and the full benefit goes to both the environment and the consumer very soon after the introduction. I think that the right hon. Lady will agree that when such initiatives were taken in the past, insufficient time was given to prepare the industry so that it could make available the types of fuel that were being given the incentives, and consumers
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did not always get the deal that they expected. What I propose is a form of consultation, and I or my hon. Friend the Economic Secretary will be happy to talk to the right hon. Lady about the details.
Ms Sally Keeble: I welcome my right hon. Friend's statement, particularly the commitment to stability, which is the single most important benefit that the Government can provide to my constituents. I especially welcome the new deal for skills, because a skills shortage is the biggest barrier to growth in my constituency. Will he confirm, first, that there will be no glass ceilings—or, indeed, floors—in the new deal for skills, so that people can get access to skills training across the spectrum; and, secondly, that steps will be taken to ensure that everyone has access to skills training, particularly the large number of working women in my constituency?
Mr. Brown: My hon. Friend takes a huge interest in these matters. It is our intention to give people, whether they are in work or out of work, the opportunity to get the skills necessary for them to succeed and for us to succeed in the new global economy. The courses offered go right up the skills grades, but, equally, our priority is to reach the 5 million adults who do not have reading skills and the 7 million or 8 million adults who lack numeracy skills to ensure that they have the skills necessary in a modern economy. Although the employer training pilots extend to a number of different skills and the university for industry offers courses that go right up the skills ladder, we must deal with the big problem that too many of our citizens lack the skills necessary for them to get jobs. I hope that my hon. Friend agrees that the priority in money terms should be on the adult skills programme. However, a range of courses is now rapidly becoming available, including trade union learning courses—I applaud the trade unions for their efforts to improve skills learning in this country—and we wish to expand them in years to come.
Mr. Elfyn Llwyd: First, I congratulate the Chancellor on the child care provisions and help for small businesses that he has announced, and on the relocation of jobs from the south-east, for which we have been pressing for some time. In support of some of his arguments, the Chancellor referred to the Office for National Statistics report. The ONS forecast for Wales is that gross value added per capita will fall to 74.9 per cent. by 2010. It was 88 per cent. in 1998. The Government's target for Wales is 90 per cent. Which announcement today will help to close that gap?
Mr. Brown: The main feature of the Welsh economy on which I thought the hon. Gentleman would congratulate the Government is the big rise in employment that has occurred in the past few months. I believe that 100,000 more people are in employment in Wales than were when we came into power.

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[Interruption.] The hon. Gentleman is saying that more employment is not relevant to a country's economic growth—
Mr. Llwyd: The right hon. Gentleman is not answering the question.
Mr. Brown: We get economic growth by creating employment and opportunities. If the Welsh nationalists do not realise that, they are not fit to go before the electorate.
Mr. George Mudie: One of most important and ambitious Government targets is to abolish child poverty. The Chancellor's announcements on child care are extremely important because they will allow families to take significant steps to increase their income, and his breathtaking increase in child benefits will significantly help us to meet our target. Those measures, combined with the child bonds that we are to debate on Monday, ask the House to congratulate the Chancellor on the steps that he has taken. At risk of being impertinent, does he feel that those steps will allow us to meet our target early?
Mr. Brown: The first target is for 2004, which is not far away. With the extra £1 billion that we are spending, we are determined to take thousands of people out of poverty, before housing costs are taken into account. The real tragedy of the past 20 years in our country is that for 18 of them—from 1979 to 1997—child and family poverty was allowed to increase, so little was done about it, and such an uncaring attitude towards it was taken. Our proposals are not only for wealth, through the Child Trust Funds Bill that my hon. Friend the Financial Secretary will introduce on Monday, but for child benefits, with an additional £3.50 a week from April for 7 million children—not all children—in low and middle-income households in this country. It was possible for us to argue that, during a world downturn, it was too difficult for us to make that additional investment, but I am pleased that there is support from all parties other than the Conservative party, and I hope that, in time, the Conservatives will come to support taking the action that is necessary to reduce child poverty. I hope also that 10,000 children in every constituency in this country will benefit from the change and that it will prove to be a means by which we reduce child poverty. I would like a consensus in the House and in the country on the fact that the best investment for the future that we can make is an investment in our children. I believe that that is what the country wants us to do.
Mr. Edward Leigh: The Finance Act 1998 allows for the Treasury to invite the Comptroller and Auditor General to report on the assumptions underlying the fiscal projections. The trouble is that the Comptroller and Auditor General can report only on the specific assumptions, not on the projections that result from their application. Would not it be a fairer, more transparent and better system if the Chancellor gave the Comptroller and Auditor General full freedom and independence to specify which assumptions he should audit? When will the Chancellor give the Comptroller and Auditor General that freedom?
Mr. Brown: It is interesting that the hon. Gentleman proposes that new direction in both fiscal policy and the organisation of the public finances. Before Labour came to power in 1997, there was no transparency in the system. The assumptions that we are having audited include the unemployment assumption. When they were in power, the Conservatives put in any figure, which is one of the reasons why the public finances got out of control. In addition, they assumed indirect as well as direct cost savings from spend-to-save schemes and figures were put into the documents that had no basis in fact. We have introduced a series of audited assumptions—we have them audited by the National Audit Office—which include unemployment, revenues from VAT, and the trend rate of growth. I think that the hon. Gentleman should applaud us for having a far more open and transparent system of decision making. Perhaps it is time he got his party to get up to date with some of these things.
I applaud the Chairman of the Public Accounts Committee on one thing: he is a known supporter of the new deal and has said that it reduces youth unemployment. I hope that he will persuade his Front-Bench colleagues to abandon their policy of abolishing the new deal.
Mr. Barry Gardiner: The Chancellor has rightly identified the scourge of child poverty and spoke in his report of the reliefs that he has extended for community amateur sports clubs. In the run-up to the Budget, will he investigate the possibility of giving employers incentives to run schemes similar to the ones that he has considered for children, so that the employers of workers who are able to benefit from gyms and exercise in the workplace, perhaps during the lunch break, can benefit from incentives? Obesity in adults as well as in children is also a scourge of this nation.
Mr. Brown: This is in danger of becoming a very expensive afternoon. It is difficult to calculate the cost of accepting my hon. Friend's representations. However, I agree that we must do more in respect of preventive health programmes. The lottery providing money for fitness centres was a good thing to do. As the discussion document on the next 10 years that the Government produced a few days ago said, we shall consider how to encourage and incentivise people to improve their personal health, because doing so results in less pressure on the national health service.
Sir Robert Smith: As much oil and gas remains to be exploited under the North sea as we have extracted to date. If those oil and gas resources are exploited, they provide vital revenue to the Chancellor, but if they remain under the sea, that revenue is forgone. Many jobs in my constituency depend on investment in the North sea, as do 240,000 jobs throughout the country. How does the right hon. Gentleman plan in the Budget to encourage greater exploration and appraisal, to ensure that we maximise the benefit that we get from our North sea oil and gas?
Mr. Brown: I agree that the investment incentives in the North sea for all companies have increased as a result of the changes that we made only last year.

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Equally, I think that the hon. Gentleman will applaud the fact that we have made new arrangements with the Norwegian Government so that gas from the Norwegian sector can be properly dealt with in the British sector and create jobs in Britain for the British economy. The hon. Gentleman is right that many fields in the North sea are not fully exploited. New companies must be attracted, perhaps with different technologies, to enable them to release oil resources for Britain's economy and the betterment, through tax revenues, of our society. That is why we propose to provide an incentive towards the costs of exploration for new companies that have not hitherto operated in the North sea, but which either have the technology or are developing it, enabling us to get at difficult reservoirs of oil in the North sea. The hon. Gentleman has a big constituency and economic interest in this issue, so I hope he will welcome the final detailed proposals in the Budget.
Alan Howarth: My right hon. Friend fairly drew attention to the striking contrast between the healthy and sustainable growth of the UK economy and the torpor of the eurozone economies. When does he anticipate that the European economic affairs Commissioner will announce his conversion to my right hon. Friend's sensible interpretation of the stability and growth pact, and does he agree that the persistence of slow growth in the eurozone contributes significantly to structural imbalances in the global economy and the associated perils?
Mr. Brown: My right hon. Friend has always taken a big interest in these matters. Once Europe looks at what it needs to do to face up to the challenges of the global economy, not only will the stability and growth pact changes that we have proposed be more acceptable to people but, at the same time, economic reform in Europe will move further and faster. A new social dimension that takes into account the need to get people back to work—there are 14 million unemployed—will also be taken up, and we will not have proposals such as those introduced in the past few months on VAT and corporate tax harmonisation. I therefore agree that we need to do more in a European economic strategy to get growth, and I believe that many of my Finance Minister colleagues in Europe accept that. I believe that when the Irish presidency starts in January further proposals on economic reform will be introduced.
Mr. Andrew Mitchell: Will the Chancellor of the Exchequer help us all out by confirming, notwithstanding the more than 60 tax increases made during his time as Chancellor and rocketing levels of council tax, that he is still planning to borrow from the markets over the next three years nearly £100 billion?
Mr. Brown: The hon. Gentleman's opening remark is contentious. If he looked at what he called 60 tax rises, he would see that many of them are tax avoidance measures. Is he telling me that he would not support measures to deal with tax evasion and tax avoidance in this country? Are the Conservatives saying that they
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would never have introduced many of the measures among those 60 increases? As for borrowing, I am not going to take any lectures from the Conservative party about that. It borrowed the equivalent of £80 billion and raised the national debt to 44 per cent. of GDP. It took a Labour Government to come in and sort out the problem.
Lynne Jones: Given the historically low level of net public sector debt under my right hon. Friend's chancellorship, but also the congestion on our roads and the associated break in economic growth and the shortage of affordable housing and the misery that that causes, would it not be prudent for him to budget for substantial and sustained investment in our transport infrastructure and council housing, the most efficient form of affordable housing? Is not an increase in the supply of council housing, which could be made available to economically active families of modest means, the best way of combating the stigmatisation of council housing, which was referred to in Kate Barker's report?
Mr. Brown: If my hon. Friend looks at the detail of the pre-Budget report she will find that in the past few years, and until 2006, we have been doubling public investment, doubling investment in housing and doubling key transport investments. The Government are prepared to make the necessary investment and, in the case of the national health service, ask people to pay a higher rate of national insurance so that we can do so. Those are the right decisions for the future of the country. That is the difference between the Government, who will make those investments, and the Conservatives, who have a policy of cutting public expenditure to 35 per cent. of national income and would make an £80 billion cut in public expenditure. They should be ashamed of themselves.
Mr. Nick Gibb: Table C4 of the Red Book shows net debt for 2003–04 of £27 billion. The Chancellor has now announced that that figure should read £37 billion—£10 billion higher. The rest of the five-year projections are £7 billion, £7 billion, £5 billion and £2 billion higher, making a total of £31 billion higher. Can the Chancellor explain why those figures have been revised upwards by so much in just nine months, and what would they be if they included all the private finance initiative liabilities?
Mr. Brown: First, on the PFI liabilities, we do exactly the same as the previous Conservative Government in assessing public-private partnerships and the responsibilities for off-balance sheet borrowing. If the Conservatives are now telling me that they regard every PFI project as an on-balance sheet project and that in their plan to cut public expenditure to 35 per cent. of GDP they want to cut out every PFI project as well, they are announcing a new policy today. As for the figures mentioned by the hon. Gentleman, I shall look at them. He mentioned net debt, but I think that he was talking about net borrowing. The figures for net borrowing are exactly as I announced in the pre-Budget report to the House this afternoon. There are detailed figures, both on the numbers and percentage of national income, and he should agree that while debt in other countries is

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rising to 50 per cent. and even to 80 per cent. in Japan, our debt is roughly a third of GDP, rising to, I think, 35.5 per cent. at the end of the cycle in 2008.
We have the best record on debt of the G7 countries, because we made difficult decisions, which the Conservative party would not have made, to reduce debt when we came to power and use the spectrum sale, which it would have used for other purposes, to cut debt further. That is why we have low debt interest payments, and why our record of economic management is very different from the failures of the Conservative years, for which the Opposition should still be apologising to the country.
Mr. George Foulkes: The Chancellor's measures for children will be welcomed as much by grandparents as by parents. However, will he confirm that all the measures, including the children's centres, apply as much to Scotland and Wales as to England? If not, will he have discussions with the devolved Administrations to ensure that they do?
Mr. Brown: All the measures on children's benefits apply to the whole United Kingdom, so the £3.50 rise is for 7 million of 12 million children in this country, and will mean £180 per child, whether in Scotland, Wales, Northern Ireland or England. As for the measures on children's centres, that is a matter for the devolved Administration in Scotland, but my right hon. Friend will notice that at the end of my statement I announced £400 million more for UK public spending and £340 million for England. There is an element for Scotland. Wales and Northern Ireland. The Scottish Executive will decide how Scotland's money will be spent, but I know that it wants to invest in children's services. As for tax relief on child care, national insurance and income tax would no longer be paid on that £50 by the employer or the employee, and the measure will be applicable to the whole United Kingdom.
Mr. Quentin Davies: The Chancellor congratulated himself this afternoon because, while the cost of pay-as-you-go national pension schemes on the continent have, in some cases, reached 15 per cent. of GDP, the equivalent figure here is 5 per cent. However, that 5 per cent. is another characteristically bogus Labour statistic, and the Chancellor must know—he certainly ought to—that it makes no provision at all for the cost of the pension credit, housing benefit and other benefits, the burden of which is growing a great deal, as more pensioners become increasingly dependent on means-tested benefits. Will he tell us what the real figure for the state's liability for pensions is? It certainly is not 5 per cent. Am I not right in thinking that it is about 10 per cent.?
Mr. Brown: The hon. Gentleman, not for the first time, is totally wrong. Pension expenditure and pension credit expenditure are included in the 5 per cent. figure that I announced. He is wrong to allege that we deliberately excluded pension credit expenditure from it and that we are misleading anybody about this. He should know that if one links pensions to earnings, one has a bill to pay not just in this Parliament or the next Parliament, but right across the board. That is why it is
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appropriate to count the exact cost of meeting that bill not just in one Parliament, but right across to 2050. If the hon. Gentleman looks at the figures—perhaps he has not done so—he will find that there are deficits that arise from that, which are of the order of 3 per cent. of national income for that one item alone.
That may be why the shadow Secretary of State for Work and Pensions said that "many campaigning pensioners would like to see the earnings link restored…it is not affordable and would not be well targeted…It is a wild and uncosted policy, so it is a dangerous intervention to support it." Those are the words of the shadow Secretary of State for Work and Pensions about the pensions policy of his party. It is interesting to note that the shadow Chancellor says that he does not have a clue how it can be funded. The Conservative party should go back to the drawing board.
Mr. Andy Reed: I am sure that many Labour Members, in particular, welcome the stability in the investment in public services. As my right hon. Friend knows, I have a keen interest in sport and as a rugby player still every Saturday afternoon, and it gave me almost as much pleasure hearing a Scot congratulating the England team as it did being in Trafalgar square on Monday.
On the extension of community amateur sports clubs, although it is important that that tax relief is included, will my right hon. Friend take representations between now and the Budget on increasing the amount of Exchequer funding for sport? We have seen the effect of improving sport at national level, but we need to do that at community level. By supporting community amateur sports clubs throughout the country, we can make a real difference to obesity and the nation's future.
Mr. Brown: I said that this was turning out to be an expensive afternoon. My hon. Friend should be praised for all the work that he has done. It is in no small measure due to his efforts and the efforts of his colleagues in the all-party group on sports, which considers these issues, that the 80 per cent. rate relief has now been given to community amateur sports clubs. I am able to announce today the corporate tax exemptions that will enable more sports clubs to have greater resources to devote to sports and to the community.
I was lucky enough to meet many members of the England team at No. 10 Downing street earlier this week. The Leader of the Opposition was there as well. He seemed to come in the front door, not the back door. From talking to Clive Woodward, the coach who deserves so much praise for his leadership and recognition for what he has done, it is clear that he wishes to see the rebuilding of sports at an amateur and community level. There is enormous good will in the country for what my hon. Friend is recommending. In the course of the spending review, we will look at what we can do for school sports and community sports. I hope he will agree that we have made a good start today by providing better help for 100,000 sports clubs. That, as I said, is probably 100 sports clubs in each of our constituencies.
Several hon. Members Several hon. Members rose—
Madam Deputy Speaker (Sylvia Heal): Order. We must move on to the next statement.

Benefits Uprating and Welfare Reform
2.3 pm
The Secretary of State for Work and Pensions(Mr. Andrew Smith): With permission, Madam Deputy Speaker, I should like to make a statement on benefits uprating and the employment measures in the pre-Budget report.
On uprating, I can confirm that national insurance benefits will rise by the retail prices index—2.8 per cent. From next April, retirement pension will go up by £2.15 a week for single pensioners and £3.45 a week for couples. When we came to office, the pension was just £62 a week for a single person. From April it will be £79.60 and £127.25 for couples. In keeping with the Government's aim to provide extra help to poorer pensioners and those who have saved, the pension credit guarantee will rise in line with earnings by over £3 to £105.45 a week for singles and by over £5 to £160.95 for couples. The threshold for the savings element will rise in line with retirement pension. That means that a typical single pensioner will now gain from pension credit on income up to £144 a week, and £212 for a couple.
I am pleased to report that last month, an extra 106,000 pensioners received pension credit. By the end of November more than 2.4 million pensioners were benefiting, with an average household award of £46.40 per week. The application line continues to work well, with 96 per cent. of calls answered within 30 seconds. Each week more and more pensioners are getting this extra money. All of them will gain from the increases I have announced today.
As my right hon. Friend the Chancellor set out, the child element of the child tax credit will rise by £3.50, benefiting 7.2 million children. That means that, by September next year, a single-earner family on half average earnings with two young children will be £3,750 a year better off as a result of all our measures, compared with 1997.
For the fourth year running, non-dependent deductions in income-related benefits will be frozen, benefiting around 180,000 claimants. Most income-related benefits will rise by the Rossi index—1.8 per cent.—in the normal way. I shall place details of the uprating in the Vote Office and arrange for figures to be published in the Official Report.
As well as security for those who cannot work, we are continuing our drive to help into work all those who can. Despite the downturn in the world economy, employment in the UK has continued to grow. We now have more people in jobs than ever before, and for the first time in nearly half a century, the highest employment rate and lowest unemployment rate of the major industrialised countries. That has happened not by accident, but as a result of deliberate choices for economic stability and a new approach to welfare. As the paper entitled "Full Employment in Every Region" which is published today shows, our approach is working. The UK labour market is diverse and flexible. We are better placed than our European competitors to adapt quickly to changes in the global economy.
Through our investment in the new deal and Jobcentre Plus, we have tackled the legacy of mass unemployment. Long-term unemployment, particularly
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among young people, has been slashed. With 1.7 million more people in jobs, and nearly 700,000 fewer on unemployment benefits, we have saved £5 billion on the costs of economic and social failure. Some suggest that the new deals should be abolished, but those figures show that that would be the wrong thing to do. The new deals have helped over 900,000 people into work. Independent research shows that the programmes can pay for themselves. The new deal for lone parents alone is saving the Exchequer £40 million a year.
Even the strongest labour market will have some people who do not connect with the world of work and who will need extra support to move into jobs. Although the numbers moving on to incapacity benefits each year have been reduced by a quarter since 1997, there remain 2.7 million people largely excluded from the labour market, at huge human and economic cost. A large number of them want to work and could work, if given the right help and support to do so. Last year I announced new measures to help them re-engage with the labour market.
The pathways to work pilots, combining work support, rehabilitation and financial incentives, are already under way in Derbyshire, Bridgend and Renfrewshire. Further pilots start next April. I am regularly updating MPs in pilot areas on progress and have been encouraged by the keen interest shown by hon. Members in this groundbreaking initiative. As part of the pre-Budget report, we are announcing that some basic elements of this approach will be extended from next April. Everyone on incapacity benefits will have voluntary access to support from a personal adviser.
Although our programmes have helped 230,000 lone parents into work since 1997, we want to do more. Research shows most lone parents want the choice of combining paid work with the vital job of bringing up a child, but they face many barriers along the way. One of the biggest barriers is child care. That is why we have created places for more than 1.3 million children since 1997. From next April, we will be piloting better use of school facilities outside school hours and in the holidays to provide affordable child care targeted at lone parents.
Today's pre-Budget report goes even further, with new measures to encourage employers to provide affordable child care, which my right hon. Friend the Chancellor has just set out; free child care for all those on the new deal for lone parents in the week before they start work to help them to make that transition; and free child care for lone parents undertaking work search activity in 12 pilot areas. As we remove those barriers, we will do more to help lone parents find work. Today I can announce extra job search support for parents with older children to help them prepare for the labour market and compulsory action plans for all lone parents.
As well as making work possible, we need to make sure that it pays. From next October, lone parents in a number of pilot areas who move into work will have their wages topped up by £40 a week for a year. We know that workless families in London face especially high housing and child care costs, which mean they can often find themselves little better off in work than they were on benefits. So today I can announce that we will extend the £40 a week top-up across the capital both to

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lone parents and to couples with children who have been on benefit for more than a year, making sure that work pays.
As my right hon. Friend the Chancellor said, we will also offer extra support for all jobseeker's allowance claimants aged 25 or over by piloting a mandatory, intensive work-focused course at the six-month stage of unemployment, as well as by providing extra help for those on benefits to enter self-employment. To improve the choices available to older people, those in receipt of pension credit will be able, on a voluntary basis, to access the full range of our employment programmes.
Together, today's PBR measures build on our successful approach and help to continue our drive to full employment in every region. For all those excluded from the labour market, housing benefit reform has an important part to play. From April 2004, people on housing benefit who move into work will no longer be required to submit a full new claim. We have started pathfinders of the local housing allowance in the private rented sector to be introduced in nine areas, allowing people to know in advance what benefit support they will receive. As soon as we can, we will apply a similar approach in pilots in the social rented sector. That will promote greater choice and responsibility and bridge the gap between benefit and work by allowing tenants to budget for their own rent.
In conclusion, today's statements show that this Government are delivering on our pledge of work for those who can work and security for those who cannot. Our measures will ensure that we make further in-roads into child and pensioner poverty, extend the opportunities of disabled people and reform welfare so that rights, responsibility and opportunity go hand in hand.
The House and the country will have noticed how few Conservative Members considered the war against poverty to be an issue meriting their attendance in the Chamber, although the six who are present have now neatly grouped themselves on the Opposition Benches. By contrast, Labour Members are determined to win the war against poverty. Our reforms are creating a labour market that works for the many and not the few and which achieves our goal of full employment throughout the UK—social justice and economic strength together, which is a central purpose of Labour in government.
Mr. Nigel Waterson: I thank the Secretary of State for his usual courtesy in providing an advance copy of his statement to me. I should perhaps also declare my interest, in that I have some private pension provision.
Of course, I noticed the Secretary of State's comment about how many Benches are filled, but I also notice that there is a considerable doughnutting of Government Members around him, and very few of them are out of camera shot. I should like to pass on the apologies of my hon. Friend the Member for Havant (Mr. Willetts); sadly, his flight was cancelled and he is therefore unable to be present. The House will have to make do with one brain, as opposed to two brains.
May I inquire of the Secretary of State why this statement has been made on the same day on which the Chancellor's report has been put before us? It is normal practice for the statement to be made a day or so later. Is this a good day for burying bad news or very little news?
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The Secretary of State had little or nothing to say about the Child Support Agency. Will he please update the House about the implementation of the new model? How long will people have to wait for the new computer system to work properly and for old cases to be migrated to the new system? Does he share my alarm about the evidence on this subject recently given to the Select Committee on Work and Pensions?
Will the Secretary of State also advise the House what steps he is taking to increase the take-up of council tax benefit, which continues to have the lowest take-up of any benefit? The matter bears heavily on older pensioners in areas where council tax has risen sharply, and especially the south-east, in large measure due to Government policy.
I continue to be impressed by the Secretary of State's touching faith in the effect of the new deal, but he rightly conceded that there are still far too many economically inactive people in this country. Will he also advise the House whether he shares my disappointment and that of many disability groups about the continuing lack of success in helping people with disabilities back into work? We know that about 1 million disabled people would like to work, but they are too often deterred by the artificial barriers in the system. Will he please dispel the anxieties caused by recent press leaks suggesting that the Government are going to have a major crackdown on benefits for people with disabilities?
Of course, we welcome any uprating in benefits. We will certainly not follow the example of the Liberal Democrats, who memorably voted against any uprating a couple of years ago. I noted what the Secretary of State had to say about inflation, but will he please give a cast iron assurance that the changes to the inflation index about which we heard will have no detrimental effect on the uprating of the benefits and that the existing inflation measure will continue to be applied to upratings for the foreseeable future?
We will be very interested in the outcome of the housing benefit pilots to which the Secretary of State alluded. We welcome at least some of the measures to improve child care and access to employment advice for older people, although this Government's record on age discrimination has generally been pretty dismal.
We continue to be in the midst of a severe pensions crisis. A dreadful situation is faced by pensioners who have lost everything because their company has gone down and taken their pension fund with it. Will the Secretary of State tell the House how far the Government have got in trying to find ways of compensating those workers? When will we see the pensions Bill? Will it be this year or next year? Many anxious current and future pensioners will be hanging on his answer.
May I also ask the Secretary of State about the pension credit, about which he had a great deal to say? The latest figures on its roll-out have only just been published. They show that there are still only 106,000 new claimants. The total number benefiting is still less than half the number who are eligible. That is hardly surprising given the recent Daily Express poll showing that a third of all older people had not even heard of the pension credit. More than half had no idea how the system worked or how the system worked or how they should claim their money. Nor should anyone be surprised about that. We have

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tried to tell the Government that the new system is too complex and involves too much intrusive means-testing, and that many pensioners will be deterred from applying as a result. Indeed, the Government themselves have set a target—it was confirmed the other day by his junior Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle)—under which 1.4 million of the poorest pensioners will not claim at all. Can he please confirm that that is still his working assumption?
Of course, Opposition Members would encourage all our constituents who are entitled to apply for the credit to do so, but we fear that the Government will not hit even their own modest targets. It will be a lasting legacy of this Government that they will have raised the proportion of means-testing from 38 per cent. in 1997 to 60 per cent. and even more. The Secretary of State and his Ministers should be worried by the increasing level of anecdotal evidence about the practical difficulties of telling people about this complex new system.
The other day, people from the citizens advice bureaux told me that they are starting to hear stories about the 20-minute phone call that we have already heard about taking as long as an hour or an hour and a half. Those may be isolated cases—I would be the first to concede that we are at an early stage—but if not, it is deeply worrying.
Can the Secretary of State tell me whether he intends to raise the pension credit in line with earnings or with prices in the next Parliament, if this Government should survive? Incidentally, the Minister for Pensions, the hon. Member for Croydon, North (Mr. Wicks) sought to rubbish the independent actuarial advice that we received, which said that a couple would have to save £180,000 during their working lives in order not to be reliant on means-tested benefits. If the Secretary of State does not accept that estimate, will he give the House his figure? Surely, he must have one.
Would it not be a lot simpler and much better for poorer pensioners if the Government were to adopt the Conservative party's policy—which has considerable support among Labour Members of restoring the link with earnings? They need to roll back means-testing, restore dignity to pensioners and, above all, ensure 100 per cent. take-up of pension credit.
Mr. Smith: Let me go through those points in order. The hon. Gentleman's point about the timing of the uprating statement is utterly trivial. If he had done even five minutes' research he would have noticed that last year it was made before the PBR and that in many previous years it took place on the same day because of the overlapping content of the two statements.
On the Child Support Agency, if the hon. Gentleman had studied the second quarterly report that we issued, he would have seen that the rate of case clearances of some 40,000 was three times that of the first quarter. Although the performance of the new computer system has been unsatisfactory, it is improving, but clearly needs to improve further. The hon. Gentleman referred to the Select Committee on Work and Pensions, with which we will of course work closely. It is important that it has a full report on what has gone wrong with the new
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system, whose fault it is, what is being done to put it right and when it will be working properly; and I will make it my business to ensure that it gets that report.
The hon. Gentleman mentioned take-up of council tax benefit just a few breaths before he derided the pension credit—yet the pension credit, and our promotion of it, is increasing eligibility to council tax benefit and housing benefit, because some 1.9 million pensioners are either getting more support or getting it for the first time.
The hon. Gentleman said that too many people are on inactive benefits. If the Conservatives really want to help those people, whether they be lone parents on income support or disabled people and those who have suffered ill health on incapacity benefit, they will not do it by abolishing the new deal—they will do it only by extending it. Whatever the hon. Gentleman says about the new deal for disabled people, it has helped 20,000 disabled people into work, thereby transforming lives. We need to build on that help, not abandon it, as the Conservatives would.
The hon. Gentleman queried the link between benefit increases and inflation in the future. To repeat clearly what the Chancellor said, pensions will continue to be uprated with the retail prices index and, during this Parliament, pension credit will be uprated with earnings. The introduction of the new measure for Bank of England inflation-targeting purposes makes no difference to that whatsoever.
The hon. Gentleman asked about the pensions Bill. That is a very important measure to boost occupational pension security, to help people to move more flexibly into retirement and generally to improve provision for people who are planning for their later years. The Bill will be brought before the House as soon as it is ready. The hon. Gentleman would not expect us to do so before it was ready—indeed, I suspect that he would be at the forefront of our critics were we to do so.
I was interested that the hon. Gentleman did not mention—perhaps he has not had time to see it—the important announcement made today by the Inland Revenue in association with my right hon. Friend the Chancellor's statement, whereby we are inviting the National Audit Office independently to scrutinise our assumptions on the 1.4 million cap. This whole package of radical simplifications—rolling eight tax regimes into one and more access to 25 per cent. lump sums—will lead to a terrific reduction in costs. I would have hoped that the hon. Gentleman and his colleagues might welcome that in the interests of building a consensus, but we heard nothing about it.
On pension credit, the hon. Gentleman was, unwisely, tempted to deride my figure of 106,000 extra recipients. Perhaps he had not noticed that that was just for the month of November. Take-up is accelerating and going very well, and I am confident that increasing numbers of pensioners will receive pension credit and that we will beat the 3 million figure that the shadow Secretary of State said that it would take us six or seven years to hit. We will do it much quicker than that.
The hon. Gentleman referred to his party's proposals. The whole country must know by now that his and his right hon. and hon. Friends' sums simply do not add up. Even on their own figures, they would have a £500 million black hole by year four and need £10 billion

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more within 10 years. No wonder the shadow Chancellor had to admit that they face what he called further painful decisions to show how on earth their half-baked policy, which the shadow Secretary of State himself described as wild and uncosted, can be made to appear sustainable. We will take no lectures from them, given their record. With Labour in government, the basic state pension has gone up in real terms by more than £5 for a single pensioner and by more than £8 for a couple—that is more than the Tories chose to put it up by in all their 18 years in office.
Mr. Steve Webb: I thank the Secretary of State for his courtesy in providing a copy of the statement in advance.
Briefly donning my anorak, I thank the Secretary of State for freezing non-dependent deductions for the fourth year running. I welcome that, because growing numbers of young people, particularly those who are poorer, are unable to leave the family home until they are much older, and they are penalised quite harshly through the housing benefit system.
The increase in the child tax credit is welcome, but I wonder whether the Secretary of State could clarify something. He will be aware of the "Give us a fiver, Gordon" campaign that the Child Poverty Action Group and others have been running. That is the amount that they estimate is required to help the Government to achieve their initial target of taking 1 million children out of poverty. Given that the Chancellor has come up with £3.50 instead of £5, can the Secretary of State confirm that he believes that that increase is sufficient to hit the Government's first target on reducing child poverty?
In view of the problems with the family tax credit, can the Secretary of State confirm that 0.5 million families who are entitled to it are not receiving that credit and will therefore not get the money that the Chancellor announced? Given the computer shambles that still exists in the tax credit system, is he confident that even those who have made a claim will get that money seamlessly and painlessly?
For some reason, the Secretary of State did not mention the fact that the Chancellor has frozen the thresholds at which tax credits start to taper away. Can he confirm that that is the case?
The Secretary of State said that there will be compulsory action plans for all lone parents. What does that mean? For a lone parent who has just had their first child, presumably the only necessary action plan is to try to get some sleep. What are the Government going to require of all lone parents? What will one of those action plans look like? Will it say, "Take child to park, change nappies"? How will lone parents benefit? We heard nothing other than that oblique reference.
The Secretary of State mentioned the 1.4 million pension cap. In another place, my noble Friend Lord Oakeshott pointed out that that has a very different effect from that which the Chancellor claimed. I welcome the right hon. Gentleman's reference to allowing the National Audit Office to decide who is right—I think that we know who is right—but I am slightly confused by the Government's position. I have skimmed the Inland Revenue document. It appears to suggest that the solution will be all or nothing and that,
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if the NAO disagrees with the effect of the 1.4 million cap, it will be dropped. What is the status of that issue? I am slightly hazy as to where we are on the matter. Is it all or nothing? Could there be a different figure? Could the system work in a different way?
On the pension credit, will the Secretary of State confirm that today's figure of 2.4 million individual pensioners receiving it is less than half the number of people entitled to do so? While claims can be backdated to this October, will he confirm that anyone who has not been reached by next October—that could easily be 1 million or more people—will lose out permanently because the backdating will stop and they will not be able to get more than a year's pension credit from next October? Will he confirm that those people will lose out for ever?
The one aspect of the right hon. Gentleman's statement that we do not welcome is that of the local housing allowance scheme and its extension to the social rented sector. The idea of the scheme is that people should have shopping incentives and be able to pick and choose between different sorts of rented accommodation. Does the right hon. Gentleman accept that, for my constituents, the idea of a choice between different units of social rented accommodation is a joke, and that there is a massive shortage of such accommodation? The idea of a scheme based on shopping incentives is frankly insulting.
Mr. Smith: I thank the hon. Gentleman for his welcome for our decision on the non-dependent deductions, on the increase in the child tax credit and for our reference to the National Audit Office for independent scrutiny of the taxation of pensions and the cap. He asked about the thresholds for the credits. They are as set out in the documentation. We believe that that is the right thing to do this year, in the context of carrying forward the child tax credit framework as a whole.
The hon. Gentleman asked what the compulsory action plan would involve. Clearly, it will have to be tailored to the circumstances, needs and potential of the lone parent who is having the work focus interview. If they have very young children, for example, it will be important to encourage them in relation to how they work with them in terms of nurturing and development. It would be appropriate, for example, to encourage them to avail themselves of the support of the sure start programme, or for those with older children to liaise with the children's centres.
It would be appropriate for lone parents to take a long-term view of their own personal development and of how they see themselves supporting their child. When visiting the programmes in local communities, I have been struck by the fact that, if we can get lone parents and other young parents to work with their children on nurturing and development, it is not only the children who benefit—all the evidence shows that children progress better and are less likely to live a life of poverty if they have that kind of support—but the parents as well.
There should be more emphasis on training for lone parents with older children, on what they can do to get themselves job ready and on finding out what jobs they will be able to get into. The additional support that we

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announced today—free child care for the week before people start a job and the availability of child care for lone parents looking for a job—should all help to ease what can otherwise be a difficult transition. We have done well to get more than half of lone parents into work, but when we compare the rate of employment among lone parents in this country with the typical rate in the rest of Europe, we still have some way to go. All the evidence shows that, in most cases, lone parents would like to avail themselves of the opportunities being offered because their living standards and their children's prospects would improve.
The hon. Gentleman asked about the take-up of pension credit, and whether I was confident that we would hit our target. I am confident of the progress that we are making. As I was saying to the hon. Member for Eastbourne (Mr. Waterson), it is encouraging to see the take-up rate accelerating and to see the application process working so smoothly. In our constituencies, each of us now has thousands of pensioners who are benefiting from the pension credit. Alongside my announcement today, I am publishing a constituency breakdown, so that all hon. Members will be able to see how people are benefiting in their constituencies.
The hon. Gentleman asked about the progress that is being made on child poverty, and whether we believed that the increases announced today would be sufficient to enable us to hit our target of reducing child poverty by a quarter by 2004–05, which is the first milestone that we have to reach. There are details of that in the pre-Budget report documentation, but the short answer to his question is yes, these are challenging targets, but it is right that they should be and we are confident that we shall progress to hitting them using the measures that we have announced.
Ms Karen Buck: It is difficult to over-state the significance for lone parents and couples in London of the suggested regional wage top-up. I shall he interested to see the details of the proposal, but a number of colleagues and I have been campaigning for such a measure for many years, in recognition of the much higher costs of child care and housing in London and of the fact that we have much lower lone parent participation in the labour market and much higher incidence of child poverty here than in any other region.
Will my right hon. Friend tell us how that provision will be delivered? Will it be via a premium on the tax credit? Will it increase the entitlement to the child care tax credit? Will lone parents in London be expected to have been out of work for a year to qualify for the premium, as couples will be? Will the premium in London stop after a year, and, if so, how do the Government intend to deal with the risk of parents who have settled a child in child care as a consequence of the premium improving their access to employment finding themselves unable to sustain that child care place?
Mr. Smith: I thank my hon. Friend for her welcome for the proposal. Like her, I think that it is difficult to over-state its importance across London, where lone parents and other unemployed parents face particularly high child care and transport costs, especially when
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housing benefit is withdrawn when they enter work. That is why we have introduced the measure, and we believe that it will make a real difference.
I can confirm that it is intended for people who have been out of work for a year. The work search premium is also being introduced in a number of areas, which will give people £20 a week for actively seeking work, as well as the additional help with child care that I mentioned. If they get a job, they will then get the £40 for a year. We have found with previous programmes that, after a year, people have often made the transition into a job and progressed in their work. The premium helps them to meet their initial costs, they have a new social network and outlook and tend to stay in work. Obviously, we shall monitor the provision closely. I shall let my hon. Friend have a note on the details of the calculation and its administration.
Mr. John Redwood: Like all hon. Members, I hope that my private interests in pensions will keep me above means-tested benefits in my old age and away from financial worry. Can the Secretary of State explain to my constituents, whose pension funds have been gravely damaged by the £5 billion smash and grab raid each year by the Chancellor, why it makes sense to damage their pensions, often to the point where schemes are closed or benefits cut, only to give less money back to them in the form of means-tested benefits? Is that not an outrageous mugging of our pensioners? Would it not have been better to have left more tax relief in the funds so that those pensioners, like us, could look forward to less worry in old age?
Mr. Smith: I cannot resist pointing out that the right hon. Gentleman was a member of the Government who oversaw the most calamitous mis-selling of pensions as well as fraudulent abuse of the occupational pension system, which did much to undermine confidence in that system. On pension credit, the Conservatives go on about means-testing, but the truth is that this is a million miles away from the humiliating, intrusive weekly means test of old. What worries them is that we are getting more money to the pensioners who need it most, while at the same time acting to address occupational pension insecurity through the proposed pension protection fund, measures for simplification, measures to take out cost, the development of informed choice, better financial numeracy and all the other measures that form such an important part of our strategy.
On dividend tax relief, I would take more notice of Conservative Members if their party were committed to its reintroduction. It is not, so this is all crocodile tears.
Jim Knight: If, before the 1997 general election, the Labour party had campaigned and pledged to increase employment by 1.5 million and virtually to obliterate youth unemployment, it would have been dismissed as dishonest and unbelievable. The Government's achievement in bringing down unemployment and putting more people in work through the new deal, which both Opposition parties voted against and which the main Opposition party says it would abolish, is an extraordinary tribute to my right hon. Friend the Secretary of State and his Department. However, has he considered a new deal for seaside communities, where seasonal unemployment is a

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particular issue? We need assistance to ensure not only that work pays, as my right hon. Friend says, but that it pays for 12 months a year.
Mr. Smith: I thank my hon. Friend for his praise for the new deal and its achievements. He is right, of course, that nothing could do more damage, setting back the hopes of those who would be assisted by those programmes, than the Conservative party getting the opportunity to end them. The idea that the Conservatives might save money from that to pay for pensions, or indeed to pay for anything else, is ridiculous when we take account of the fact that in cost-benefit terms the programmes are saving us money. The new deal for lone parents, as I mentioned, has been shown by research to save £40 million a year for the Exchequer. As well as the untold human damage that the Conservatives would inflict on many of the most vulnerable members of our community, they would face higher costs from abolishing the new deal, rather than saving money.
I listened closely to what my hon. Friend said about the need for action in seaside towns. My right hon. Friend the Chancellor referred to the document entitled, "Full Employment in Every Region", which we published today. If my hon. Friend studies it, he will see in its extensive analysis some interesting observations on the particular position of the labour market in seaside towns. Of course, action teams, local worklessness pilots and other intensive local programmes complement the new deal; many of them are appropriate to and applied in seaside towns. However, I will continue to listen to him and other colleagues from all parts of the House who represent seaside towns to consider what further needs to be done.
Hywel Williams: On behalf of my party, may I also thank the Secretary of State for sight of his statement? He is a busy man, but I wonder whether he has looked at the New Policy Institute report on poverty and social exclusion. If he has, he will have noticed the statement:
"Wales is noticeably worse than average for…indicators of poverty…children in workless households"
as well as young adult unemployment and concentrations of poverty. Poverty clusters around children in families without work. I wonder how such child poverty will be addressed by the 1.8 per cent. increase, following the Rossi index. To enlighten the House, for a young unemployed person who is under 25, that means a rise from £43.25 to £44.05—the princely sum of 80p.
How will such child poverty be addressed by the lack of any reference, so far as I can see, to the continuing disgrace of the social fund, which nobody seems to mention these days? Just in case the Secretary of State is tempted to refer to getting people into work, I refer to the New Policy Institute report:
"The proportion of people in poverty in households where someone was doing paid work rose from 33 per cent.…to 41 per cent."
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between 1999 and 2002. Therefore, we have an increase in the proportion of people working but in poverty. As a matter of interest for Conservative Members, although I do not know whether they read these reports—
Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman has had more than enough time to put his thoughts to the Secretary of State.
Mr. Smith: The hon. Gentleman has made quite a lot of points, so I shall try to do them justice. The new deals of all kinds have been working well in Wales. It is another interesting feature of the analysis that we have published today that throughout the UK unemployment has fallen furthest where it was highest. That shows an evening out of opportunity, which is welcome, notwithstanding the concentrations of unemployment and other deprivation, which, as he points out, can occur in particular communities.
One of the pathways to work pilots, to which I have referred, is working in Bridgend and in the south Wales valleys, where there is a concentration of people who receive incapacity benefit. It is early days yet, but the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who is the Minister with responsibility for disabled people, and I make it our business closely to monitor the performance of those programmes. The early signs are very encouraging.
On the general point made by the hon. Gentleman about the increase in benefits, I point out that one of the great advantages of the Government's child tax credit approach is that there is seamless support for children, whether or not their parents are in work, so people out of work will benefit from that increase, just as people in work will. As I was telling the hon. Member for Northavon (Mr. Webb), who speaks for the Liberal party, that will be a big factor in helping us to hit our targets to reduce child poverty in Wales, as elsewhere.
Miss Anne Begg: I welcome the Secretary of State reiterating his commitment to the new deal. About three weeks ago in Aberdeen, I helped to launch a new deal called progress to work, which is for recovering and recovered drug addicts. It is crucial that those young people get that specialist and specific help, because without it there is no way that they would ever enter the employment market. I am concerned that those people are the very ones who could be threatened should the Conservative party ever come to power and scrap the programme of new deals.
One of the main routes out of unemployment or off benefit for hard-to-place groups is self-employment. I notice that the Secretary of State said that the Government are thinking of providing extra help for those on benefits to enter self-employment. Can he give an indication of what that extra help might be?
Mr. Smith: My hon. Friend is right. As well as the general benefit of the new deal, there are those specialist elements of the programme, such as the progress to work initiatives to help drug abusers to manage their condition and to get to a position from which they can move into work. It would be an utter tragedy if the Conservative party were able to scrap them.

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As we examine the future of the new deals and our wider array of employment programmes, as well as wanting to simplify what has become, due to its incremental development, a complex structure in terms of eligibility and programme operation, I think that there will be scope—not least through the incentivised employment zone approach—to make more resources available where people with a particularly challenging history or condition are being helped. As a condition of that, however, there must be a rigorous focus on the outcome of those programmes to enable us to have sufficient flexibility in the system, so as better to reward the ones that genuinely help the hardest to help and successfully get them towards the labour market.
It has been a feature of the existing new deal programmes that self-employment is an option. That has already helped many people successfully to start their own business. We want to develop that further with the quality of advice and support that is available. Of course, it will also be helped by the measures for skills, which my right hon. Friend the Chancellor announced in his statement.
Several hon. Members rose—
Madam Deputy Speaker: Order. I must move on to the main business.

European Affairs
[Relevant document: Minutes of Evidence taken before the European Scrutiny Committee (HC 1078-ii).]
Motion made, and Question proposed, That this House do now adjourn.—[Margaret Moran.]
2.48 pm
The Secretary of State for Foreign and Commonwealth Affairs(Mr. Jack Straw): The Italian presidency of the European Union will chair the European Council in Brussels this Friday and Saturday, 12 and 13 December. Today, the House has its customary opportunity to debate the Government's priorities. I also look forward to discussing them with members of the Foreign Affairs Committee when I give evidence to them tomorrow.
The main business of the Council will be negotiations in the intergovernmental conference—the IGC—for a constitutional treaty for the EU. The Italian presidency hopes to conclude those negotiations at this European Council. The Government support that aim. Equally, the Government's fundamental concerns, like those of other member states, will have to be dealt with in any final package that we can agree.
The concerns of the Government were well spelled out in the White Paper, which I published in September and which was debated in the House on 9 September. They include retaining unanimity for treaty change and other matters of vital national interest such as tax, social security, defence and foreign policy, key areas of criminal procedural law, satisfaction in regard to energy, and issues that have emerged as further priorities during our consultations.
Mr. Bob Blizzard: As my right hon. Friend knows, I have pressed him, the Minister for Europe and indeed the Prime Minister on the energy chapter—later to become the energy articles—because of the uncertainty that it has created in the United Kingdom offshore oil and gas industry. The revised wording that my right hon. Friend has secured through negotiation meets not only my concerns—the concerns, that is, of one who represents an oil and gas constituency—but the concerns of the industry. I can confirm that, having just left an industry event organised by the United Kingdom Offshore Operators Association, where industry representatives announced that they were very satisfied with the new wording.
Mr. Straw: I thank my hon. Friend for all his work on behalf of the industry. I am glad to hear its opinions. The result that we have achieved is a consequence of the way in which the two Houses have been involved in the negotiations. Without my hon. Friend's prompting and support, and without the involvement of members of all parties in the House of Commons, I should not have been able to deploy as much weight in the IGC and to secure what I consider a satisfactory result.
It is worth putting on record the amended proposal that arrived from the Italian presidency late yesterday evening, which amends article III-157 with an additional sub-clause stating:
"such laws or framework laws shall not affect a member state's right to determine the conditions for exploiting its energy resources and the structure of its supply without prejudice to Article III-130(2) (c)".

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That article also protects a nation state's use of its own resources.
We must be eagle-eyed to ensure that that text finds its way into any final treaty that we sign, and I promise the House that that will happen. I am extremely grateful to my hon. Friend the Member for Waveney (Mr. Blizzard) for what he has been able to achieve—with, perhaps, a little help from me.
Sir Robert Smith: The proposal obviously came from the Italian Government, but what matters is getting investment into the North sea, reducing the uncertainty and protecting jobs in our constituencies. As the Chancellor recognised in his statement earlier, when pointing out how vital this industry is, it is important for the words to appear in the final text, not just in the draft.
Mr. Straw: We will ensure that they do. I have no reason to think that they will not. They emanated from the Italian presidency because it is running the IGC, but it took a great deal of discussion in the room and privately with our friends in the presidency. We also worked closely with the Government of the Netherlands. I signed a letter to the presidency, jointly with my then counterpart, Jaap de Hoop Scheffer, who is about to take over as Secretary-General of NATO, emphasising that this was the shared concern of two of the largest oil and gas producers in the European Union.
Angus Robertson: Members of the European Scrutiny Committee were provided with the text of the United Kingdom amendment, including the fourth part, which we have been asked not to release because it could damage the UK's negotiating position. I do not want to press the Foreign Secretary on the exact wording, but having looked at the Italian presidency's proposal—which some Members have said they wholeheartedly support—I am slightly worried about the lack of any mention of fiscal safeguards. Can he reassure us that other sections of the draft constitution will deal with that?
Mr. Straw: As the letter from the Dutch Foreign Minister and me made clear, what overwhelmingly concerned us was what had been in the original energy articles, and the possibility that the Commission would use qualified majority voting to take control of oil and gas energy policy issues that are properly a matter for the House of Commons or for unanimity in the Council. Any fiscal regime is a separate issue. At present we are broadly reassured, but as the hon. Gentleman knows we will continue to try to nail down any remaining ambiguities.
Mr. William Cash Mr. William Cash (Stone) (Con)rose—
Mr. Straw: I will give way to the hon. Gentleman, as I always do.
Mr. Cash: The Foreign Secretary announced the other day that there is to be a declaration about the primacy of Union law in the new arrangements, which no doubt he hopes will be settled this weekend. Even if he exercises a tentative veto, it could turn out to be a pyrrhic victory. Does he accept—here I refer to an
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answer given to me by the Minister for Europe on 8 December—that, when it comes to interpreting the constitution in the context of Union law, the issue should be decided in accordance with European Court of Justice rules rather than the rules of UK courts? Would he be good enough to explain which of the two should prevail in terms of the question of the constitution in principle?
Mr. Straw: I think that I can take that as a compliment to us on managing to secure something that the hon. Gentleman sought. I know that he may feel counter-suggestible about Ministers saying yes to some of his proposals.
Annexe 3 of the presidency's latest proposals includes a declaration for incorporation in the final Act concerning article I-5a. It states:
"The conference notes that the provisions of article 1-5a reflect existing Court of Justice case law."
I shall give the hon. Gentleman the short version of my seminar on the primacy of European law as part of a treaty that we have signed. As he will recall from the detailed wording of section 2 of the European Communities Act 1972, we are—and have been for 31 years—subject to European law as it is in treaties, directives and regulations, as interpreted by the Court of Justice. That has been the case ever since we joined the European Union. As the annexe 3 proposal from the presidency makes clear, it will continue to be the case if we have a new treaty.
If the treaty cannot be agreed at this European Council, we will continue to talk for as long as is necessary for us to obtain the right result. As the Italian Prime Minister and Council President, Silvio Berlusconi, said last weekend,
"an agreement at any price would be a serious mistake".
Of course we want an agreement as soon as possible. Those of us who have spent not just many happy hours but many happy days, weeks and weekends in the IGC—much as I admire those around the table—would be delighted to see its conclusion. The overriding question, however, is whether it is in Britain's national interest. That comes before everything else.
Let me reinforce a point that I made a moment ago in responding to my hon. Friend the Member for Waveney. Parliament has never before been involved so fully in the negotiations for an EU treaty. Thanks to the work of our Government and parliamentary representatives in the Convention, Parliament was fully briefed on proceedings there. Since May, towards the end of the Convention process, there have been seven debates or statements on the IGC or the Convention in the House. In September, we published the White Paper. I have twice given evidence since then to the European Scrutiny Committee—the first time, I am told, that a Foreign Secretary has ever done so—and twice attended the IGC Standing Committee, most recently on 1 December. My hon. Friend the Minister for Europe has attended the IGC Standing Committee three times. There have been two reports on the Convention or the IGC by our European Scrutiny Committee, and 13 by

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the House of Lords European Union Committee. All that parliamentary debate has been extremely helpful to the Government in the IGC negotiations, and as I have explained, it has helped to strengthen our negotiating position.
Mr. John Redwood: I pay tribute to the Foreign Secretary for making himself so available on these crucial matters; we are very grateful for the opportunity for such debate. Has he reflected further on the point that I recently raised with him about tabling a proposal to ensure that the European Court of Justice and other European institutions cannot interfere in British tax policy? I know that the Government wish to have a red line, but as he will know, the European Union is already crawling all over corporate tax, even without the draft constitution being in place.
Mr. Straw: The right hon. Gentleman will also be aware that other Governments share our concern in terms of pushing back the Commission's areas of activity in tax policy, and that will proceed. Separately, I can reassure him that ensuring that we get satisfaction in respect of tax being a matter for unanimity will be one of our overriding concerns this weekend, and for as long as the IGC takes.
It is in the nature of any negotiations that a consensus builds up from the relatively straightforward issues to the most difficult. That inevitably means that some of the issues that are key to the United Kingdom, including aspects of qualified majority voting or unanimity, cannot be settled—at least until this weekend—along with similar first-order issues for other countries. For example, Commission size and voting weights is not a first-order issue for us, but it is certainly an issue of profound importance to many member states.
The six meetings of the IGC that I have so happily attended have made considerable progress on many issues, and they have narrowed, but not eliminated, those issues of serious contention. We have been well served by the Italian presidency, and the meetings have been both well chaired and well managed by my colleague and friend Franco Frattini, the Italian Foreign Minister.
The presidency has responded to the six sets of discussions with two packages of proposals, the latest of which—an omnibus version—was tabled late yesterday afternoon in the French text. The English translation became available earlier today, a copy of which I have placed in the Library of the House. It includes the latest proposals, better language on the charter and on energy—we have already dealt with that—and on the so-called passerelle clauses, which are concerned with giving this or any other national Parliament a lock on any future extension of qualified majority voting. But there is still a lot of hard negotiating to be done on tax, foreign policy and other fundamental issues.
Mr. Graham Allen: My right hon. Friend will be pleased to know that I am not going to bend his ear again about the visa application of my constituent Rachel Ringham. Rather, I want to pay generous tribute to him for the way in which he and his colleagues have put themselves out to enable this place
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to be fully informed of what is going on in the IGC. I pay that tribute as one who has raised that issue repeatedly in this Chamber. As my hon. Friend the Deputy Leader of the House is in his place, I should also point out that that is how legislation should be dealt with. Regardless of whether the outcome was the one that people wanted, no one could say that the Foreign Secretary did not do everything possible to keep the House informed.
Mr. Straw: I am extremely grateful to my hon. Friend. That part of the process, at least, I thoroughly enjoyed, and the House and the country are all the better for it. I very much hope that the matter of the visa, which he raised with me this morning, has been resolved or is well on the way to being so.
Keith Vaz: I do not want this debate to sound like a love-in, but I should like to endorse what my hon. Friend the Member for Nottingham, North (Mr. Allen) said: the Foreign Secretary and the Minister for Europe have indeed put themselves before the scrutiny of the House on this issue. But can the Foreign Secretary explain the Government's current position on the charter of fundamental rights?
Mr. Straw: The current position is as we set it out in the White Paper, and my hon. Friend will recall exactly what we said. On page 39, we recited the important safeguards that had already been achieved in the course of the Convention discussions—the so-called horizontal articles, such as article II-51, which states that the charter
"does not extend the field of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks defined in the other parts of the Constitution."
The additional language in annexe 4 of the latest version of the presidency's proposals includes a formal reference to the explanation relating to the charter of fundamental rights. Paragraph 5 of the preamble makes reference to the explanation, and includes the phrase
"and updated, under the responsibility of the Praesidium of the European Convention".
There is also a declaration for incorporation in the final Act:
"The Conference takes note of the explanations relating to the Charter…prepared at the instigation of the Praesidium…which drafted the Charter and updated under the responsibility of the Praesidium, as set out below."
Such text is then reproduced. That is an important development.
Mr. David Heathcoat-Amory: In listing the issues to which the Government still had objections, the Foreign Secretary did not mention economic policy, even though the White Paper makes it clear that they oppose article 14, which insists on the compulsory co-ordination of economic employment policies throughout the member states. Is that still a red line issue? The latest draft from the presidency makes no changes whatsoever, so can the Foreign Secretary assure us that this is still a veto issue?
Mr. Straw: The right hon. Gentleman should not be quite so suspicious in thinking that, just by elision and an attempt to be relatively brief, I was dismissing this issue. As I said, there is a lot of hard negotiating to be done on tax, foreign policy and other fundamental issues, and that includes articles I-11.3, I-14.3. We have been arguing that those should be brought into line with article III-70, in which economic competence is given to member states. That is an issue not only for us but for the Union. At the moment, in respect of the same dossier, in different parts of the draft treaty, either the Union or member states variously have responsibility for co-ordinating economic policy. However, I take the right hon. Gentleman's point.
This is a good moment to remind ourselves of why we are negotiating this IGC. It is because the prize—
Mr. Blizzard: Did my right hon. Friend notice that the right hon. Member for Wells (Mr. Heathcoat-Amory), who was a member of the Convention of the Future of Europe, did not mention fishing in his worthy intervention? Yet last night in this Chamber, Conservative Front Benchers made a major issue of fishing, and suggested that this Government should go to the barricades for the removal of the common fisheries policy from the draft treaty.
Mr. Straw: That is an entirely fair point. The right hon. Member for Wells (Mr. Heathcoat-Amory) is damned by his silence.
Mr. Heathcoat-Amory: Will the right hon. Gentleman give way?
Mr. Straw: No, it is too late.
Mr. Heathcoat-Amory Mr. Heathcoat-Amory rose—
Mr. Straw: That is a separate issue, and there is no question but that we have been round this track on many occasions. The draft constitutional treaty provides for a shared competence in respect of the CFP in article 13. Except for the conservation of marine biological resources under the CFP, in article 12, that accurately reflects the existing arrangements of competences, and does not add to them.
Several hon. Members rose—
Mr. Straw: I want to make some progress, and then I shall of course give way.
Mr. Heathcoat-Amory: On a point of order, Madam Deputy Speaker. When one hon. Member mentions another hon. Member in a debate and clearly misrepresents his position, should not that hon. Member be given an opportunity to respond if he is in his place at the time?
Madam Deputy Speaker (Sylvia Heal): It is not actually a rule of the House, but lies in the hands, and is at the discretion, of the Member, in this case the Foreign Secretary, who is on his feet.
Mr. Straw: I will give way to the right hon. Gentleman.
Mr. Heathcoat-Amory: I am most grateful. Will the Foreign Secretary accept my assurance that, in the Convention on the Future of Europe, I moved an amendment to exclude fisheries from the relevant exclusive competence article? To my great regret, I did not receive the support of the Government representative on the Convention at the time. I was battling for the British fishing industry, which was abandoned by the Government representative.
Mr. Straw: It is no wonder that the right hon. Gentleman's proposal failed, because he was obviously not forensic enough. The fact of the matter is that the fisheries are a shared competence, not an exclusive competence, such as the conservation of marine biological stocks. There are good arguments for that, and they have not changed. I accept the veracity of what he says, but I do not give him many marks for his effort.
Mr. Richard Spring: Will the Foreign Secretary define for the House what exactly a shared competence is.
Mr. Straw: One that is shared between the EU and member states.
Now is a good moment to remind ourselves why we are negotiating in this IGC. As I said, the prize—a constitutional treaty that is right for Britain and for Europe—is very important.
On 1 May next year, eight of Europe's new democracies, along with Cyprus and Malta, will join the EU. Later, Romania and Bulgaria will follow, and the European Council should confirm the target of next year for the two countries to close negotiations, allowing them to join the EU in 2007. The Council will also discuss Turkey's progress towards meeting the criteria for opening EU membership negotiations. As the House knows, the Government strongly support Turkey's prompt accession to the EU once it meets those criteria.
The word "historic" is often overused, but I make no apologies for using it in the context of EU enlargement. Only 14 years ago, the iron curtain divided Europe, with central and eastern European countries trapped under communist dictatorship and sinking into economic and environmental neglect. Joining the EU will mark the culmination of those countries' transition to free and democratic societies and prosperous market economies. It is a tribute to their efforts and energy that they have made that transition so quickly.
Enlargement is overwhelmingly in Britain's interest, which is why successive British Governments have been its strongest supporters. Through enlargement, Britain will gain access to an expanded single market of 450 million people. New partners will help us better face the shared challenges of an uncertain and interdependent world. However, the problem is that the European Union of today has institutions essentially designed for six members, and it needs reform if it is to work effectively with 25. No reform is preferable to a bad reform, and, as I made clear in our White Paper on the constitutional treaty, the EU will carry on under its current arrangements if a new treaty cannot be agreed or ratified by every member state. However, if we can get the IGC right, the prize is a more efficient and effective

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EU that can meet the challenges of enlargement and is focused not on institutional minutiae, but on delivering security and prosperity to its citizens.
Joyce Quin: I greatly welcome what my right hon. Friend is saying. Will he join me in expressing pleasure in the fact that the accession countries have been involved in discussions on the constitution, so they already have a sense of ownership in respect of areas where there is strong agreement? Does he also agree that all the talk about a superstate is complete nonsense, because the last thing that the new accession countries want is to be subordinate to a superpower, based in Brussels or anywhere else?
Mr. Straw: I strongly agree with my right hon. Friend on her last point, and I shall return to that theme later in my speech. On the first point, it is extremely good—and thanks, not least, to our Prime Minister at Laeken—that the new states have been able fully to participate in the IGC. Their view, particularly their strategic view of foreign policy—based on a Europe of independent sovereign nation states—is similar to that of the UK, so I have been able to develop natural alliances with almost all of them.
In an article that I wrote for The Economist in October last year. I set out how the Government wanted a new constitutional treaty for the EU to look. I said then that it should explain
"what the EU is—a union of sovereign states who have decided to pool some of that sovereignty, better to secure peace and prsperity in Europe and the wider world."
I continued:
"It should confirm that the Union exercises only those powers which are explicitly and freely conferred on it by the member states, which remain the EU's primary source of democratic legitimacy."
I also said that the new treaty should
"draw a clear distinction between supranational and national competences".
At the start of the debate on a new constitutional treaty, it was by no means clear that that was the sort of result that we were going to get, and there has long been a debate about how Europe should work. On the one hand, there was the federalist view, which was often the result of a different history from ours or a different political culture. On the other, there were more practical Europeans—similar, I believe, to the vast majority of the British people—who wanted and still want to enhance our prosperity and influence by working together with our neighbours. The sort of constitutional treaty that I described in The Economist last year was based on that practical view.
The Government were clear about what we wanted from the IGC negotiations, but we had a choice in how to get it. We could have accepted everything that the most committed integrationists want—the view of the Liberal Democrat representative on the IGC—or we could have tried to rubbish the whole thing, which, generally speaking, was the approach of the Conservatives. However, we rejected both approaches, making it clear exactly what we wanted and working
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constructively with our partners to get there, while standing firm against changes that we could not accept. As a result, we already have many of the elements of a treaty that endorses our vision of a Europe of nation states that will work efficiently in Britain's interest. The idea of a federalist super state is yesterday's fantasy, not tomorrow's reality. The treaty that we sign will be not a federalist blueprint, but a framework for a Europe of sovereign nation states working together to achieve common aims and to combat shared challenges.
Let me cite what the House of Lords Select Committee on the EU said in a recent report. It said:
"The draft Treaty expressly states that the Union can only act within the limits of the competences which the Member States have conferred on it…We support this approach because the draft Treaty makes plain the intention that the European Union remains a union of sovereign Member States".
Our European partners recognise that, too. The leading French commentator, Alain Duhamel, has said that the Convention's draft treaty set out a great British Europe
There is a myth put about by those who would take Britain out of Europe that paints the EU as a threat to British sovereignty. It is a profoundly defeatist view of what Britain can achieve, and it assumes that cooperation with our neighbours comes at the price of diluting our national character.
This is a moment to remind ourselves of what has been said in the past about various changes to the treaty base of our relationship with the EU. I understand fully why the right hon. and learned Member for Devizes (Mr. Ancram), the deputy leader of the Opposition and shadow Foreign Secretary, cannot be present. I am sorry that he cannot be here because it is worth recalling that, back in 1992, speaking from the Back Benches on the Government side, he shot down those who claimed that Maastricht would lead to a superstate. Indeed, he argued eloquently and persuaded most of the then Opposition, including myself, that we should vote against a referendum on Maastricht. On any analysis whatever, Maastricht represented a much more profound change in the nature of the relationship—setting out the single currency and common foreign and defence policy—than anything in the current treaty.
There were some people—I shall not mention their names, but they can identify themselves—at that time who ranted about the fact that the Maastricht treaty would lead to the creation of a superstate. If we wind forward to the modest set of changes in the Amsterdam treaty, the position of Conservative Front Benchers had changed. Only 27 days after their crushing defeat in the 1997 general election, the right hon. Member for Wokingham (Mr. Redwood)—who had survived. I am happy to say-gave a balanced judgment on the Amsterdam treaty in The Times, when he wrote:
"If we sign the Amsterdam Treaty, we will abolish our country."
Other, slightly more nuanced statements—which would be easy in comparison with the dramatic and apocalyptic view expressed by the right hon. Gentleman—made similar points about the Amsterdam treaty. The country continued, after all, and was not abolished.
Then we came to the Nice treaty, and the right hon. Gentleman decided to ratchet up the hyperbole. On BBC Online, on 19 April 2000, he said:
"The proposed Nice Treaty would do what Guy Fawkes failed to do—blow up parliamentary government in Britain."

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The right hon. Gentleman is an intelligent and pleasant fellow, but he should think about what he predicted would happen after the Amsterdam treaty, which was signed more than six years ago, and what he predicted would happen after the Nice treaty three years ago. Far from our country being abolished or parliamentary democracy being blown up, our country has not only survived but prospered as never before, as was well illustrated by the silence and glum faces on the other side of the House when my right hon. Friend the Chancellor spelled out in every detail the brilliant record of this Labour Government on prosperity and our position in the world, especially compared with our predecessor.
Mr. Redwood: My point was clear: that more and more Government powers were being taken out of democratic hands and given to unelected hands. That has happened and continues to happen, and it does mean the abolition of a democratic Britain. That is why we want the Foreign Secretary to stand up for the rights of the House of Commons, instead of transferring yet more power. The Department of Trade and Industry is discussing 37 major items of policy at present, every one of which emanates from directives and policies from Brussels. It is one of many Departments that are simply doing the will of Brussels, not responding to the democratic wishes of this House.
Mr. Straw: The fundamental flaw in the right hon. Gentleman's remarks is the assumption that everything that is decided by the European Union is against our interests. If that is his view, he should confirm that he wants Britain to withdraw from the EU and that he resiles from the policy of the Thatcher Government—not of this Government—which was to accept, through the Single European Act, qualified majority voting. The Thatcher Government also accepted the fundamental principle of the single market that decisions on the operation of that market had to be agreed by QMV, otherwise what was in the interests of British people, jobs and businesses could be subverted and undermined by other countries that would not observe the law in the same way as we would.
Mr. Gerald Howarth: Will the Foreign Secretary give way?
Mr. Straw: In a moment. The truth is that for most of the time we get our way in the European Union.
Mr. Eric Forth: What a ridiculous thing to say.
Mr. Straw: What that remark illustrates is the profound lack of confidence that the right hon. Gentleman had in the ability of any Government of whom he was a member to ensure that Britain's national interests were properly represented. This Government have much more confidence in Britain and in ourselves than that. We have shown that, by engaging constructively, rather than sulking on the sidelines, we can mould the debate in Europe. We recognise that we can increase our influence, and the security and prosperity of the British people, by working together with our partners.
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Let us take problems such as illegal immigration, drug smuggling or organised crime. We cannot just wait until they reach Dover: we need to act with our partners to tackle them before they get here. So we support measures that would cut out "asylum shopping", and we have already agreed that asylum seekers' claims have to be dealt with in the first EU country in which they claimed asylum. We have agreed common minimum penalties for the most serious cross-border crimes. including terrorism and human trafficking, to ensure that they cannot go unpunished. Our police forces can now run joint investigations into drug traffickers, for example, with colleagues across the channel.
Europe is not just about tackling shared problems: it is of huge importance to Britain's prosperity, too.
Angus Robertson: Will the Foreign Secretary give way?
Mr. Straw: No, I promised to give way to the hon. Member for Aldershot (Mr. Howarth).
Mr. Gerald Howarth: The Foreign Secretary repeats the popular myth that Baroness Thatcher anticipated all the consequences before she agreed to qualified majority voting. It was precisely because she did not anticipate all the consequences that she became disillusioned. The whole purpose of the Single European Act was to achieve a common market in goods and services, which is what most people in this country thought that the common market was about. It was because the European Court, through the acquis communautaire, acquired an extension of power beyond those areas that Baroness Thatcher had foreseen—and received assurances on—that she became disillusioned with the European Union and the direction that it was taking.
Mr. Straw: I was present in the House when the Single European Act was debated. I remember that Baroness Thatcher, in alliance with Geoffrey Howe and Nigel Lawson, her Foreign Secretary and Chancellor, knew full well what was involved in that Act. Although I had, and continued to have, several disagreements with Baroness Thatcher, I would never have suggested that she was not in full possession of her faculties in respect of every decision she made. She knew about the consequences of the Single European Act, just as she knew full well, when she made her fine speech at Fontainebleau in April 1984, about the importance of Europe developing a common foreign policy and defence. The hon. Gentleman can rewrite history as much as he likes, but that is the truth. It was Baroness Thatcher who laid the foundations for a common European foreign and defence policy, which the Conservatives brought into British law through the Maastricht treaty.
Looking ahead, Europe has an ambitious agenda of economic reform to deliver jobs and growth, in which Britain is playing a leading role. One example of that process is the European action for growth initiative, which the European Council will discuss this week. Its aim is to boost competitiveness and growth by encouraging investment in transport infrastructure, telecommunications, research and development and innovation.

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Working with our European partners enhances Britain's security as well as our prosperity. Again, the agenda of the European Council is a good example. The Council will adopt High Representative Javier Solana's European security strategy, which should help us to tackle global security threats more coherently. The Council will also discuss strengthening the EU's relationship with the Arab world. Earlier this week, at the Foreign Ministers' meeting on Monday, we considered the middle east peace process, Iran and Iraq.
Acting together on foreign policy, when it is in our interests to do so, does not diminish Britain's sovereignty; it increases our influence. When I visited Iran in October with my counterparts from France and Germany, Dominique de Villepin and Joschka Fischer, I did so as the Foreign Minister of a sovereign nation state—as did they—working within a common EU position, and what the three of us achieved together, with the backing of the EU as a whole, was far more than ever we could have achieved alone.
It is also clearly in Britain's interests to work for stronger defence capabilities in Europe that complement NATO. The Atlantic alliance has been and continues to be the foundation of our security and we shall do nothing to undermine it, but it makes sense that Europe has the capacity to sort out problems on its own doorstep, such as peacekeeping in the Balkans, without always having to rely on the United States.
Hugh Robertson: Will the right hon. Gentleman give way?
Mr. Straw: As I am just coming to the close of my remarks, I shall not.
Cutting across NATO would weaken our defences and we shall not let it happen, but better European capabilities, for which the US has long argued, will help to strengthen our defence. The new articles tabled by Britain, France and Germany make clear for the first time in the EU treaty that NATO is the basis for the collective defence of its allies. Those draft articles also ensure that so-called structured defence co-operation is handled inclusively within the EU, not exclusively.
By engaging constructively and arguing firmly for what we want, we are helping to shape the debate in the IGC, and in the EU as a whole, in Britain's direction. That is what we were able to achieve in the Convention, and it continues to be our approach in the IGC negotiations. We shall carry on talking and working until we get the right result in those negotiations—for Britain and for a more effective Europe, ready to meet the challenge of enlargement.
3.30 pm
Mr. Richard Spring: I begin by paying tribute to the sometimes dangerous, often unrecognised, but highly professional work undertaken by our diplomats and consular staff throughout the world. Events such as the recent bombing in Istanbul remind us how dedicated our overseas public servants are, and I pay particular tribute to Roger Short, an exemplary diplomat, with whom I was in Istanbul very recently.
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The Foreign Secretary is correct to say that we have had many opportunities to discuss EU matters and I thank him for making himself so freely available. However, it has been six months since we last debated what could broadly be described as "European affairs",and these bi-annual debates provide a useful opportunity to update ourselves—even more so in this debate in view of the importance of recent developments not only in the European Union but in the whole of Europe. Our relationship with all European nations—not only with our EU partners—is a key component of our country's foreign policy interests. We are inextricably bound together by ties of history and geography.
The Balkans are often considered a big potential flashpoint, the area of Europe where violence and conflict are most likely to break out, as has so often been the case in the past. Much has changed since the bloody conflicts in the Balkans in the 1990s, but their legacy remains with us, and even more with populations in parts of the Balkans and the peoples of the whole of that region.
It is right to remember and to pay tribute to the dedication and bravery of the British and other NATO troops who helped to end the inter-ethnic conflicts that killed so many people and displaced so many more. The peoples of former Yugoslavia demonstrated that they were anxious to have that assistance, and progress is being made in that area, although many people are still displaced, too fearful to return to their homes, and much remains to be done in respect of criminal prosecutions.
There is much that is positive and encouraging, however. The former Yugoslav states have made great strides. Such progress is certainly worthy of recognition and encourages me in the hope that one day they will join the EU, and that the prospect of membership will spur them on to further reforms.
A key player in the wings is Russia. The relationship that the UK and our European partners enjoy with Russia is of considerable and growing importance. It has recently assumed a greater role, not merely on the European stage but on the world stage. That development is positive and I hope that Russia will continue to play a part in promoting stability on its borders. In particular, I hope that Russia will exercise her influence as facilitator of a smooth transition to a new, popular, democratic regime in Georgia. I hope very much that President Putin will remain engaged with the EU, NATO and the accession countries in a constructive and positive framework and ensure that democratic values are fully upheld in his country.
The enlargement of the EU is a process that the Conservative party—and, indeed, every hon. Member, to my knowledge—supports and I personally have strongly supported it since its inception. The end of the cold war was the catalyst that brought about the accession process that made all that possible. Countries cut off from the rest of Europe for almost half a century emerged after the Berlin wall fell, and new opportunities and potential have opened to them.
The accession of Latvia, Lithuania, Estonia, Poland, the Czech Republic, Hungary, Slovenia, and Slovakia next May will be a moment to rejoice for us all and symbolic of Europe having finally removed the remnants of the cold-war legacy. Of course, we have

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special links with Malta and Cyprus, too. The accession countries have achieved much reform already in their quest for EU membership. The eastern European countries have transformed themselves into successful, functioning multi-party democracies, with an adherence to the rule of law and respect for human rights and personal freedoms.
Angus Robertson: I agree entirely with what the hon. Gentleman says about enlargement, but does he agree that there is a certain irony in the fact that, among the accession countries, nation states such as Slovakia—a country of 5 million people, without a single centimetre of coastline—will have more direct say over the Scottish fishing industry than the devolved Government of Scotland?
Mr. Spring: I will be happy to refer to the issue that the hon. Gentleman raises in a few minutes if he will bear with me.
Political liberalisation has been matched by economic liberalisation and the values that accompany both. That bodes well not just for the countries themselves, but for existing EU member states, as fresh investment and economic opportunities open up in what was previously the eastern bloc. On their accession, those eastern European countries bring with them not only fresh ideas and expectations, but new challenges for the EU. Those countries do not bring with them the old-fashioned ideas of some existing EU members; they have only recently thrown off the influence of a centralising power, and they aspire to a close relationship with their transatlantic friends, as well as the EU, rather than being forced to make a false choice between the two. Their voices deserve to be heard. Britain should be the champion of the smaller countries of the EU, seeking to protect and promote their interests and creating an EU institutional structure to reflect that.
There are very real question marks revolving around the EU's whole direction and outlook that require much greater flexibility and a willingness to look outwards, rather than inwards, but they also involve the need to modernise the existing structure of common agricultural policy subsidy payments and structural funds. Fundamentally, the EU faces problems associated with its demography. Europe's birth rate is falling, and the population of the EU is ageing and declining. Over the next 50 years, it is predicted that Europe's median age will rise by 11.8 years. The European social model is completely unsuited to address that because of the lack of competitiveness and the human resources of countries such as India and China, which do not have expensive welfare support structures.
A further issue is how we formulate relations with countries on the borders of the enlarged EU. It is important that we come to an accommodation not only with countries in the Balkans, but with countries such as Moldova, Belarus and Ukraine. Not only is that important from the viewpoint of securing the EU's external borders, but, although their possible accession to the EU is many years away, the prospect of membership in the future for such countries will act as a spur to economic and political reform. Furthermore, we very much look forward to the date-we hope, in 2007—when Bulgaria and Romania become EU members.
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In October, I had the opportunity of visiting Turkey—a country to which we are greatly indebted because of its steadfast commitment to NATO during the cold war. Turkey is anxious to join the EU, and I hope that a formal accession process will begin at the end of next year. Turkey is making remarkable progress in its political and judicial reform process, in the latter case assisted by us. Turkey faces a number of obstacles to EU accession. First, there is opposition in France and in Germany, which has a substantial Turkish minority. Prime Minister Erdogan has indicated that he will not press for the free movement of Turkish citizens, which is an issue with Germany in particular. Let me be blunt: it is a matter of the most profound political misjudgment to deny a country a relationship with the EU simply because it is Muslim. Given the current tensions in the middle east and other parts of the Islamic world, what sort of message would be sent out if the EU rejected a Muslim country, not because of any breach of the Copenhagen criteria but because it is Muslim, albeit committedly secular? It would be offensive and would reflect a total and fundamental misreading of one of the most important current geopolitical challenges that we face. Turkey should be judged by entirely dispassionate criteria, and I expect the Government to tell our European partners that loud and clear, as we certainly do.
Elections are imminent in north Cyprus. Obviously, we cannot prejudge the result. Whatever it is, however, a massive effort must be made to establish the basis for a settlement in Cyprus before 1 May. We have the juxtaposition of a prosperous, outward-looking and legally recognised republic of Cyprus entering the EU, while north Cyprus remains relatively impoverished and diplomatically unrecognised by others. The Annan plan must be the basis for a solution. Those who counsel Turkey to wait for a formal acceptance of EU accession before substantial movement to agreement about the island do Turkey no favours. Of course there is pain and mistrust on either side. There are real ties, however, of history, kinship and affection between Britain and Cyprus. We hope that it will not be long before Turkey formally becomes part of the European family of democratic nations.
In addition, Turkey has important relationships in the region, not least among which are its friendly ties with Israel, which are a shining example of how a Muslim country can co-exist productively with the state of Israel. Those long-standing and trusted links will undoubtedly, over time, prove most valuable in that volatile and difficult part of the world.
Turning to the European Council this weekend, it is true that core elements agreed at Nice dealt with accession. At Laeken, however, issues relevant to enlargement and to the EU's future direction were raised. We welcomed the recognition at Laeken that change was required within the EU and that the citizens of its member states wanted the European institutions to be less unwieldy and rigid. The Laeken declaration was clear: within the Union, the European institutions must be brought closer to Europe's citizens, and the Union needs to be more democratic, transparent and efficient. That is the agenda that we have been championing for a long time: an agenda for a flexible, modern EU, not one stuck in a time warp of irrelevant thinking.

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The Labour party, on its big conversation website, states:
"Many citizens feel detached from its"—
the EU's"—
"institutions. Too many of its priorities reflect the problems of the past not the challenges of the future".
Typically, the Government analyse the problem correctly but fail to come up with the right prescription. The Convention on the Future of Europe was a response to the Laeken diagnosis of the challenges facing the EU—to remedy the democratic deficit, to reconnect the EU to the citizens of its member states, and to create an EU capable of meeting the economic and demographic changes of the 21st century. At this point, may I pay a genuine tribute to all those from both Houses—and to those among our MEPs—who sat on the Convention and who, faced with such a daunting task, carried our their work with dedication and a genuine desire to analyse and debate the issues? I am sorry that, despite the best efforts of many of them, what has been achieved by the Convention falls far short of what was needed.
Alas, what has emerged from the Convention, specifically the draft constitution, does virtually nothing to address and respond to the main points that were identified at the Laeken summit as being of such pivotal importance. This weekend, in the "News Review" section of The Sunday Times newspaper, the hon. Member for Birmingham, Edgbaston (Ms Stuart) wrote:
"I am not convinced the proposed constitution as it stands will meet the needs of a Europe of 25 countries. The government does not have to accept it. Enlargement will continue without it. and so will the EU".
The hon. Lady, as we know, is better placed than virtually anybody in the House to understand what really went on at the Convention and what the constitution is really for. In the same article, she said:
"From my experience inside the convention, it is clear that the real reason for the constitution is the political deepening of the union".
Is that not proof, if any were needed, of what we have been saying about the constitution having nothing to do with enlargement but everything to do with the remorseless desire for closer political union?
The Government have failed to engage in the genuine debate about the EU—a debate for which this country is crying out—mendaciously saying that anybody who disagrees with them is in favour of withdrawal. Let us examine the proposed constitution.
Ms Gisela Stuart: I would not blame the Government for not engaging in a debate on Europe. We as politicians from all parties have failed over the past 30 years to engage in a debate with the public about Europe. This is our opportunity to engage in that debate.
Mr. Spring: I have some sympathy with the hon. Lady's point. Over time, there has been a sense of denial about what is going on in the EU and about the objectives of many of our European partners. Time and time again in the House, over many years, there has been
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a projection of reality that does not always accord exactly with the reality itself. I am afraid that we have reached, in this constitution and this Convention, new heights of disconnection between what is perceived among our European partners to be happening and the view projected by those on the Government Front Bench.
In May, the Foreign Secretary said:
"No one should get obsessed about the fact that it will be called a constitution."—[Official Report, 21 May 2003; Vol. 405, c. 1030.]
He implied that it meant very little. Joschka Fischer did not seem to agree. He said:
"We have a draft constitution that is worthy of the word historic".
Lamberto Dini said:
"The constitution is not just an intellectual exercise. It will quickly change people's lives…Eventually the Union will…become an institution and organisation in its own right".
So which is it? I know what I believe. The Government are pathetically in denial of what is obvious to everybody else.
What those quotes illustrate are the Government's blatant attempts to create a false debate on this subject. I am sure that the Foreign Secretary will remember the Prime Minister saying after Nice:
"As for the idea of a future intergovernmental conference, it will deal primarily with the issue of subsidiarity."—[Official Report, 11 December 2000; Vol. 359, c. 355.]
Well, that forecast turned out to be utterly untrue. The constitution deals with subsidiarity only as an aside. The Foreign Secretary has admitted that the current provisions on subsidiarity are inadequate. The only solution is for national parliaments to be able to enforce this principle to protect their rights. The current proposals for national parliaments are totally inadequate. The Government have boasted of how national parliaments can now "vet" proposed EU laws, but what use is this "vetting" given that the Commission can ignore it, when it really should be made to abandon a proposal if enough national Parliaments demand it?
As it stands, the Convention creates constitutional primacy over our unwritten constitution, a single legal personality for the EU and a legally binding charter of fundamental rights. It aspires to a new definition of a common foreign and defence policy and explicitly states and constitutionally enshrines the primacy of EU law, expanding its roles in criminal law, asylum and immigration, economic affairs and energy. How is that not a "fundamental change"? How on earth can anyone describe it as "tidying up"?
Although the Foreign Secretary and others may choose to ignore the cumulative effect of these changes, a ratchet mechanism is clearly at work. Once a power is granted away, rarely, if ever, is it returned. The ratchet turns in one direction only.
Mr. Cash: My hon. Friend may have noticed in today's edition of The Times an interview with my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) in which he says:
"We don't agree with the principle of a constitution that sets in stone the supremacy of a European law-making institution above parliaments…The effect of the constitution would be to make the source of that authority the EU constitution, not the UK Parliament."

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Does my hon. Friend therefore agree that we are saying in express terms that we do not agree in principle with the constitution?
Mr. Spring: We have always made it plain, as the Government originally did, that there is absolutely no need for a written constitution for the European Union. The Government advanced that view, but because they move along in the slipstream of others, they have now adopted a different view.
The Belgian Prime Minister Guy Verhofstadt recently stated:
"we observe that the European Union acquires all the instruments of a federal state…The capstone is the Constitutional Treaty, which must grow to become a genuine constitution"—
some tidying-up exercise! I am afraid that I have as little faith in the Government's red lines as I do in recent anonymous briefings saying that they might consider vetoing the treaty. Several red lines have been adjusted and redrawn in a different place, and the most blatant example of that is seen from the Government's original pledge that the charter of fundamental rights would not be legally binding even though that view was rejected at the time of Nice by the European Commission and others. We await the outcome of the IGC to find out which red lines will remain and in what form. Whatever one's point of view about the proposals, what is before us is undeniably of considerable constitutional importance. In that regard, we trust the people, so today I once again call on the British Government to do the same and hold a referendum, as so many of our European partners are doing.
The regrettable truth is that an outdated bloc mentality still permeates the European Union's policy-making and strategic mindset. That mindset carries with it resonances of the 1950s and a way of thinking that moved the founding fathers of the EU, but it is wholly irrelevant to the needs of the EU today. The Government's policy on the EU has been characterised by an almost total lack of influence or results. I invite one example…just one…of a specific component of the emerging structure of the EU that can be ascribed to British vision, focus and direction. The written constitution and the incorporation of the charter of fundamental rights are clear failures of British nerve and influence. The concepts were originally opposed but then accepted and we have always been carried along in the slipstream of others. By contrast, this Government would never have achieved the creation of the single market, the substantial rebate or the opt-out on the single currency.
On 26 November, the right hon. Member for Birmingham, Ladywood (Clare Short) wrote in The Times:
"the European elite in their enthusiasm for ever-greater integration, which drives inexorably towards a superstate, is dividing itself from the people".
She went on to say:
"The debate in Britain has been painted far too much as a battle between Little Englanders and the rest. But the reality is that pro-Europeans are driving a project that leads inevitably to a superstate, which most of us don't want."
I do not think I could have put it better myself.
It is also extraordinary that the Government have made absolutely no effort to return fisheries to national and local control at the IGC, because there was a golden
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opportunity to do so. It is absolutely clear that the common fisheries policy has failed and that British fishermen get an especially bad deal, and the fact that the British Government failed even to try to put the matter on the agenda is yet another example of their ineffectiveness in Europe. We, with a clearer idea of Britain's priorities in Europe, would have done so. We would have made the restoration of local and national control over our waters a red line, as we will in any future IGC when we are in government.
The Foreign Secretary dismissed the idea of shared competence in a way that did not accurately reflect reality. He knows that article 11 of the draft treaty says:
"The Member States shall exercise their competence"—
we are talking about shared competence—
"to the extent that the Union has not exercised, or has decided to cease exercising, its competence."
That is a very different message from the idea of a competence of equals. It is absolutely nothing of the sort.
Nowhere has failure been more marked than in defence. To enter into a defence agreement with France and Germany that has absolutely nothing to do with enhancing defence capability is monumental folly. The arrangements agreed within NATO at Washington and Berlin make the widest pan-European defence co-operation possible without duplicating NATO structures. The decision has absolutely nothing to do with defence, and everything to do with politics. It undermines the very principle on which NATO was founded and which has guaranteed our security for more than 50 years.
It is argued that the EU planning cell is very small. Does anyone think that those who favour an independent EU defence capability coupled to a common foreign and defence structure will rest content? Of course not. The Times on 1 December reported the comment of Belgian Foreign Minister Louis Michel that
"We can say that the embryo of a European defence is under way and that it's an irreversible process".
I would prefer to believe the sentiments—[Interruption.] We will pass the Foreign Secretary's comment on to the Belgian Foreign Minister, whose record of accuracy on what goes on in the EU is infinitely better than the right hon. Gentleman's.
There are those who have long-held and freely expressed views of Europe being a counterweight to the United States, and who resent the US-British special relationship. There are those in the US who regard with alarm diminishing defence expenditures in Europe and the lack of political will to spend on defence capabilities. They see Europe beginning to create structures outside NATO for exclusively political purposes. Those who take a negative view of European motives and attitudes sense justification for their viewpoint. They find it incredible that our Prime Minister, of all people, should have gone along with it.
Regrettably, the British Government have played into the hands of those people on both sides of Atlantic who favour disconnection. Let us never forget that, whether European or American., we hold to the same democratic values. The world is simply a better place when we work together. The Government's commitment to the separate EU defence identity is an

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act of monumental folly and will yield nothing for our magnificent and rightly admired armed forces.
When the history of this Government is written, their failure to make any real impact on the architecture of the EU will be a defining feature. Just as they completely misunderstood how to react when Europe was divided by the Berlin wall, they have failed to argue for a flexible EU with overlapping and interconnecting relationships, co-operating closely and extensively without the centralisation and harmonisation that so obsess those who systematically and successfully are pushing political union. Throughout, Britain has been a bit-part player, never setting out its stall in the lead-up to enlargement in the way that other European leaders have done so clearly and unequivocally. The account is one of a typically lost opportunity, a failure of influence and abdication of their responsibility to the British people.
3.58 pm
Mr. Menzies Campbell: I should begin by apologising to the House for having to leave early. I have a routine medical appointment early tomorrow in Edinburgh, and in order to keep it I have to make sure that I get to Edinburgh later this evening.
The Secretary of State has been accustomed on these occasions, but not today, to saying that
"Nothing is agreed until everything is agreed."—[Official Report, 27 November 2003; Vol. 415, c. 150.]
In a sense, that theme has already started to run through this debate, because the final version of the document that will be put before the Heads of Government in Brussels this weekend is not available to us—indeed, it cannot be made available. I shall therefore stick to principles that on previous occasions I have enunciated to the House and which will guide my judgment and that of my right hon. and hon. Friends when we hear the outcome of the Brussels summit.
The first of those principles is that we, in common with the Prime Minister and his predecessor, believe that the United Kingdom should be at the heart of Europe. It is in the long-term interests of the United Kingdom to be a member of the single currency. One cannot escape a certain feeling of irony that the draft Bill on a referendum on the single currency should be published today, as nobody believes that it will be utilised before the next election. It is in the best interests of the European Union to have a treaty embodying a constitution that defines the respective powers of Brussels and the member states, and draws together the provisions of the treaty of Rome, the Single European Act, the treaty of Maastricht, the treaty of Amsterdam and the treaty of Nice.
If any Government propose to agree to a major shift in control or any transfer of significant powers from member states to European institutions, or to agree to any alteration in the existing balance between member states and those institutions, there should be a referendum of the British people. The draft treaty fulfils those criteria. As I have said on the four or five occasions when we have debated this matter in the past
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five or six months, there should be a referendum on the constitutional proposals that are likely to emerge from Brussels.
Angus Robertson: Will the right hon. and learned Gentleman give way?
Mr. Campbell: I should like to make a little progress before giving way in due course.
Our proposition on holding a referendum is entirely consistent with the support that my colleagues and I demonstrated for a referendum on the Maastricht treaty when Mr. Bryan Gould tabled an amendment. A number of Conservatives, some of whom are no longer MPs, also supported that amendment. Lord Ashdown was the first party leader to say that if a proposal were introduced to join the single currency, that would raise not just economic but political and constitutional issues, so it, too, should be put before the British people.
The Government have accepted the need for a referendum on a single currency. Indeed, why else would they publish the draft Bill today? The inference must be that they regard such a decision as having constitutional significance. In contradistinction, they do not make the same judgment about the Convention's proposals. I confess that I find it difficult to make that distinction, which appears to drive Government policy. A referendum of the kind that I have suggested would provide an opportunity to reconnect the people of the United Kingdom with Europe and make the case for Europe once again. In that regard, I share the sentiments expressed by the Foreign Secretary towards the end of his speech about the sense of vision that an enlarged European Union brings. If those brave Europeans who formed the European Coal and Steel Community in 1951 had been told that in 53 years' time there would be a European Union with 25 members, including those who, in 1951, were firmly behind the iron curtain and in thrall to communism, I doubt whether they would have believed that their sense of vision, however powerful, was capable of such implementation.
We need some stability in Europe, and there must be an end to the atmosphere of permanent cultural revolution in which Europe has existed for the past 10 years. A constitution would undoubtedly aid that objective. It is quite true, as others have argued—the hon. Member for West Suffolk (Mr. Spring), at least by implication, did so—that enlargement could take place without a constitution. However, I part company from the hon. Gentleman in my belief that that is not much of an enlargement. Indeed, a European Union so constituted and based on existing arrangements would be a recipe for sclerosis and ultimately instability. As I have said previously in the House, the Government are correct to seek to retain a veto on taxation, defence, foreign affairs, social security and own resources. There is common ground on both sides of the House about what the red lines should be. I also believe, as I have said on previous occasions in the House, that the Government are correct to seek to retain a veto on taxation, defence, foreign affairs, social security and own resources. In that regard, there is common ground in all parts of the House.
Angus Robertson: Is the right hon. and learned Gentleman aware of the consternation in the coastal communities of Argyll and Bute, Orkney and Shetland, Aberdeenshire and other parts of the country about the conservation of marine biological resources under the common fisheries policy being entrenched as an exclusive competence in the draft constitution? If it remains there, will it be the position of the Liberal Democrats to recommend a no vote in the referendum that he and I agree should take place?
Mr. Campbell: No, and I suspect it will not be the position of the Scottish national party, either. The Scottish National Party, I guess, like everyone else, will look at what comes out of Brussels in the round, consider what it regards as pluses and minuses and judge whether the final document justifies support. If the SNP takes the view that the hon. Gentleman has just expressed, it may find itself voting against a variety of proposals that it previously supported with some enthusiasm and which the people of Scotland might well regard as being substantially in their interest.
If I may say so, it is idle to speculate on how one would vote on a document that is not in final form and not before us. [Interruption.] The hon. Gentleman says from a sedentary position that the fisheries policy is one of his red lines. I do not remember him describing it as a red line on any of the previous occasions on which we have discussed the topic.
Angus Robertson: For the record—
Mr. Campbell: No. If the hon. Gentleman will allow me, I do not remember him using language to the effect that the fisheries policy was a red line and that the Scottish National party would urge the Government to adopt it as one of their red lines. If I am wrong about that, no doubt I will be corrected, but I have no clear recollection of him having made that point.
Mr. Ian Davidson: Will the right hon. and learned Gentleman clarify how enthusiastic the Liberals are about a referendum on the constitution? Will he tell us whether, as well as speaking for his party in the Commons, he is committing his party in the Lords to support a referendum on the constitution?
Mr. Campbell: I cannot commit my party in the Lords because it is composed of individuals who take their responsibilities seriously and who will vote as they think proper. As regards my enthusiasm, the hon. Gentleman has been present on the four or five occasions that I previously described. He will have noted that my enthusiasm is unlimited and that I believe there are constitutional implications. Indeed, in the principles that I set out a moment ago, I went out of my way to say that it was entirely consistent with the view that the Liberal Democrats have taken on the matter in the past.
Without rehearsing what I said earlier, I believe that where there is a material alteration in the balance between Westminster and Brussels, there is an obligation to put that before the British people. There is a political imperative as much as a constitutional imperative. If we want people to be supportive and to be—if the House will forgive the colloquialism—signed
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up, they are much more likely to be signed up if they believe they have had a hand in the decision-making process.
Against that background, I shall deal briefly with a number of issues that may feature in the discussions in Brussels, starting with the European security and defence policy. Much of the discussion in recent weeks has turned on the issue of a headquarters, although that is not formally part of the constitution that will be under discussion. I have previously expressed reservations about the need for a separate operational headquarters, and I have yet to be persuaded that there is not scope for some form of double-hatting. It is not unknown in NATO and other institutions for individuals to have two sets of responsibilities, which they may be called upon at different times to discharge.
It is helpful and hopeful that the Tervuren option has been eliminated. It is also a relief that all sides publicly acknowledge the primacy of NATO. It also appears no doubt I shall be corrected from the Treasury Bench if I am wrong—that the United States is satisfied by what is proposed, to the extent that it is no longer maintaining any objection. That has appeared to be Mr. Rumsfeld's position in the course of the past week. If that is so, it is an important indicator of the extent to which the proposals may be acceptable.
Mr. Straw: I do not presume to speak for the Government of the United States any more than I do for the Government of any other country, but I think it fair to observe that the United States Government appear to have been reassured by the discussions that took place in the North Atlantic Council and by the significant changes in the draft articles, which we led and which were agreed initially with France and Germany. They are now in the presidency proposals, and the right hon. and learned Gentleman referred to them.
Mr. Campbell: The Foreign Secretary spends more time with Mr. Rumsfeld than I do, and, although he does not speak on behalf of the American Government, I accept, as I think I am bound to do, the analysis, if I may put it that way, that he has given.
It is important to remember that we are talking about a hierarchy of operational control—first, NATO operations; secondly, Berlin-plus operations; thirdly, EU operations using a national headquarters; and, fourthly, EU operations from an EU headquarters. The last of those items seems the least likely. There is a sense in which the concentration on architecture obscures the fact that we should be concentrating on capability. From the characteristically trenchant interview that Lord Robertson gave yesterday morning on the BBC, it was pretty plain that the battle that he has fought over the period of his distinguished occupation of the position of Secretary-General has been about capability. I very much regret the fact that, when this topic is discussed, we spend more time on architecture than capability. If the position now is that there is no longer the same anxiety in the United States about what is proposed, it will be a substantial advance.
I believe that the expenditure of greater financial resources or the better spending of existing resources best secures an ESDP. One of the most interesting statistics to which Lord Robertson referred in

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yesterday's broadcast was that there are more than 1 million men and women under arms in Europe, but that at any one time a maximum of 55,000 can be put into the field. I have every reason to believe that that is a proper analysis, so a lot of time might usefully be spent on capability and, indeed, on embracing the principles of force specialisation, common procurement and interoperability, which are much more likely to give us an effective European defence capability than some of these occasionally arcane discussions about architecture.
I understand that it is expected that a security strategy will be adopted in Brussels. Those who have analysed Mr. Solana's proposals think that much more clarification is required of the circumstances in which Europe would be willing to use force. In some of the later drafts, the word "pre-emptive" has been taken out and the word "preventive" put in. Those are not simply questions of translation, as those words embody significantly different concepts. As far as Europe is concerned, by inclination, particularly since the second world war, and by economic necessity, we are tied to a rules-based approach to international affairs. It will be essential for the European Union to spell out what those rules are in order that a degree of predictability and confidence can be achieved in the strategy.
I understand that some discussion is going on about a mutual defence clause. I am agnostic on that, because I believe that it is unwise to embarrass countries with a tradition of neutrality, such as Austria, Finland, Ireland and Sweden, by insisting on a mutual defence provision that, as far as I can tell, almost exactly mirrors the provisions of article 5 of the north Atlantic treaty. Aside from the issue of legality, it is inconceivable, in the unlikely event that any member of the European Union were to be threatened or attacked, that other members of the EU would not give them military assistance if such assistance was requested. I understand that the neutrals have made the alternative proposal that instead of an obligation there should be a right to request assistance. That is entirely reasonable, because it reflects what would be the reality of the situation and has the consequence of not embarrassing those countries for which neutrality is a matter of considerable importance.
Talk of agnosticism leads me to my next point. I hope that the Government will resist any efforts to make the preamble to the constitution refer explicitly to one religious faith rather than another. There is a variety of religious faiths in Europe, as well as many people who, for their own legitimate reasons, have no faith at all. The comments of the hon. Member for West Suffolk have a particular resonance in that context, because Turkey's entry into the European Union is highly desirable not only for Turkey, but for the European Union. It is worth reminding ourselves that Turkey is a Muslim country with a secular constitution. It could easily find a commitment in the preamble to one form of religion to be an insuperable obstacle. Such a commitment is unnecessary, first, because there is a variety of traditions in Europe and we should not single out one and, secondly, because we should not have a preamble that might well prove to be an insuperable obstacle to a country whose ultimate membership of the European Union—on the assumption that it meets the
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Copenhagen criteria and makes the necessary economic reforms—is entirely in the interests of the European Union.
I would be interested to know what is the Government's position on voting rights. I hope—not piously, but wholeheartedly—that Britain's apparent support for Poland is not based on some narrow political interest. The Nice formula expires in 2009, and it would surely be sensible to review it now. When the review of the finances of the European Union takes place in 2007, it may not be easy to get a settlement if Germany, a net contributor whose attitude will be pivotal, still nurses a grievance that with twice as many citizens as Poland she has virtually the same number of votes. There has to be some effort to look ahead to try to anticipate possible difficulties. Of course, one understands the sensibilities of a proud nation such as Poland. but I would give two pieces of advice to the Polish Government, if I may be so presumptuous: first, they need to take a long view and, secondly, it is very important in these matters not to overplay one's hand.
On foreign policy, there is no doubt that where common positions can be agreed the European Union is greater than the sum of its parts. Assuming that trade is part of foreign policy, I am in no doubt that the European Union's position on the American steel tariffs was successful because EU retaliation, as permitted under the World Trade Organisation rules, constituted a much greater threat to the United States than anything that individual countries might have mustered. Accepting that fact is wholly consistent with the view that the Italian proposal for the extension of qualified majority voting to foreign policy is inappropriate. In my judgment, foreign policy should rest here, just as defence policy should rest here. Those who take a contrary view say that there is an inherent weakness in that position, because it means that Malta, for example, will have a veto. The argument is that the smallest country would be able to thwart the most powerful. That could well lead to frustration but, in my view, the principle of retaining national control over an issue of such importance clearly overrides any such disadvantage.
I have some sympathy with the Government in this debate, because it is necessary for them to fulfil their obligation to inform the House. Inevitably, however, they cannot reveal their hand, except on those issues on which they have already said that they will not give ground. They cannot conduct a public negotiation across the Floor of the House of Commons in advance of the weekend's deliberations. At the risk of overstraining a theatrical or musical metaphor, this debate is not really an overture to Brussels, but something between a dress rehearsal and a preview. We shall have a chance to assess the Government's performance when they report back next week to the critical audience of the British people.
It is true that, technically, we could do without this Convention. There have been reports—I have no doubt that they will be denied—of an apparent difference of emphasis between the Secretary of State and the Minister for Europe, but I would say to them that it is highly desirable that the Government should do all in their power to achieve a settlement that is in Britain's interests. A poor settlement would be worse than no settlement at all, but there is often a rhythm or a time for these issues, and if we were unable to reach an agreement

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this weekend it would leave the process open-ended. It would be a brave man or woman who would then predict when a settlement would ultimately be achieved.
I see that the hon. Member for Birmingham, Edgbaston (Ms Stuart) is in her place, so I shall make just one last point. I was a little surprised by her unexpected burst into print, but I suppose that we should congratulate her on overcoming her natural shyness and modesty in these matters. I feel that what has been attributed to her struck an unduly pessimistic note. I have not yet read the Fabian Society pamphlet, but I shall take an early opportunity to acquire a copy and to read it. It occurred to me that we did not hear the reservations that are now being attributed to her during the consideration of these matters by the House.
Mr. Gerald Howarth: She has seen the light.
Mr. Campbell: Perhaps that is entirely appropriate, as we approach the Christmas season.
I do not share the pessimism that is attributed to the hon. Lady, and neither do my right hon. and hon. colleagues. In proper terms, the constitution is in the interests of the European Union and the United Kingdom, and let us hope that that is what will emerge from Brussels this weekend.
4.22 pm
Ms Gisela Stuart: First, I should like to reply to the right hon. and learned Member for North-East Fife (Mr. Campbell). If he had been in some of the numerous committees at the intergovernmental conference and at the Convention itself, he would have heard many such comments over the past nine months—[Interruption.] And here as well.
While the Foreign Secretary is still in his place, I would like to remind him—if I may be so presumptuous—of some of the things that happened at the Convention, which he might find helpful. If he is told by Convention representatives that it was the Convention that had democratic legitimacy to arrive at compromises and conclusions, he will be justified in rebutting that presumption and saying, "No, it is Heads of Government who have democratic legitimacy to make those decisions." Those who were at the Convention could not bind the institutions that sent them, and the right and proper place for making such decisions is this weekend's meeting.
I would also like to put on record that, in many parts of Europe, the document is being described as a deeply British document. The reason for that is that one of the most significant institutional changes—the creation of the President of the Council—was strongly supported by the British to begin with, and accepted at a later stage with some reluctance, particularly by the smaller countries. I must offer a word of caution. Although that function significantly strengthens the institution that represents member states, it does not necessarily strengthen the representation of the individual member states. I simply point that out. There is a strengthening of that institution, which is undoubtedly recognised.
This weekend, the Secretary of State should keep in mind one thing about the document, which is that it contains three elements. One simplifies the procedures, whether those involve the new legal instruments or the
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decision making of the Council. All that is absolutely essential and it will be beneficial for enlargement. It is quite uncontentious and there would be a great danger if it were lost. The second element brings together various treaty provisions made over the past 50 years, which again I think is an achievement. It should not be lost.
What is contentious is the third element—the political one. If the Government do not feel at the end of the weekend that the political aspects are in Britain's and the Union's interest, they should not agree. It is perfectly possible to move away from the IGC and maintain the elements that are essential for enlargement. Here, I want to say something about the debate on a superstate. In an odd way, I am agnostic about it. If my children and grandchildren want to live in a United States of Europe, it is not up to me to say whether they can or cannot do so, if it is possible to create one.
I do not think that it is possible to create such a superstate, given our thousands of years of history and the commitment of the member states to the nation state but what would be damaging is an attempt to create a superstate that was contrary to a lot of traditions in Europe. It would be damaging for Europe if a small group of people tried to create something that, practically, would not work in the end. That is particularly so on the eve of enlargement, when it is so significant that those countries are coming in.
We must respect the Union's new motto, which is, "United in diversity". To respect that diversity, we need to pay far greater attention to principles of subsidiarity and proportionality. If I have one criticism of the constitution and the document as it stands, it is that I very much hope that the Government, either in the IGC or at a later stage, recognise that that aspect needs to be respected far more in practice.
That takes me to the role of the House. There is, undoubtedly, disengagement among the public in their support of the EU and the House needs to recognise that we have been guilty in respect of, or accomplices in, that disengagement. If half our domestic legislation derives from some Brussels initiative and we do not debate it, people will put all their worst fears and ignorance in one envelope and call it "Brussels", assuming that nothing good ever comes out of it. A lot of good comes out of it, but we need to start to debate it seriously here.
We spend five days discussing the Queen's Speech, which contains the Government's annual legislative programme, but we spend no time discussing the Commission's annual legislative programme. It is about time that we spent equal time on discussing the Commission's programme when the European Parliament discusses it. We had special sittings of the Standing Committee on the Convention and the Standing Committee on the Intergovernmental Conference, but even though this Parliament is the world's second-largest legislative body, with more than 1,000 Members, we struggled time and again in those sittings to be quorate—to find the 13 Members required to be present. Given that six of them had to be there and had no choice, we had to find only another seven.
Mr. Spring: The hon. Lady makes a good and interesting point on scrutiny of Commission proposals, but should this Parliament not like those proposals would she be satisfied as to the adequacy of the so-called

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vetting mechanism, as opposed to some form of rejection mechanism? Does the principle of subsidiarity need to be reinforced by some collective veto for national Parliaments of unwelcome Commission proposals?
Ms Stuart: I would certainly have preferred a stronger mechanism, but the real danger is that of mistaking the little pocket of power represented by a veto for influence. We shall have a problem if we do not take note of Commission proposals early enough here, regardless of whether they are welcome or unwelcome. The use of a red card at the end of the six-week period would constitute a blunt and brutal tool. The threat is actually greater than any influence that it might carry in itself.
Let me give a practical example. Earlier this year, the Italian presidency presented proposals on hallmarking, and industry in Britain began to alert MPs and MEPs. There was a very effective campaign involving MPs and MEPs with assay offices in their constituencies, who told the Government that they would not support the proposals. Eventually, the proposal disappeared. During the last six weeks, no red card would have been as successful as a mechanism enabling early note to be taken of what was coming, and the subsequent forging of alliances at Westminster and with Brussels.
Angus Robertson: Does the hon. Lady agree that, because of the nature of shared sovereignty, in many contexts, it is shared between Brussels and Holyrood rather than the House of Commons? Should not the Government give careful consideration to an early-warning mechanism ensuring that those elected north of the border to deal with these issues can have their rightful say?
At a time when the Government are saying that they want more transparency in the EU and welcoming the opening up of Council of Ministers meetings, is it not time for concordats in the UK to end the confidentiality of relationships involving European matters between the UK Government and the devolved Governments?
Ms Stuart: I must confess that I do not know enough about the concordats to comment on the second question, but I recall attending a Council of Ministers meeting with Scottish and Welsh colleagues. The important part of the proceedings is not one's arrival at the table in the company of a Minister from a devolved Administration; the important part always happens six, nine or 12 months earlier.
The House of Commons needs to be much more strategic and involved much earlier when it comes to Commission proposals; otherwise, we shall see more of what the latest Euro-barometer figures have shown us—about 48 per cent. support for the EU. The problem is disengagement and ignorance rather than genuine concern.
Let me say something about the Commission as an institution. I assume—I rather fear—that, as a result of one of the compromises reached at the IGC, each country will end up with its own Commissioner, and we shall not succeed in reducing the size of the Commission.
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There is a logical incoherence in the fact that, while the Commission is supposed to be a single body representing the interests of the Union and Commissioners are forbidden by the treaty to take or to seek instructions from member states, that single body retains the vestiges of intergovernmentalism. A much smaller Commission would be far more effective. If we fail to reduce the Commission's size, as I believe we will, we should at least ensure that a duty of good governance is placed on it. It is massively disappointing that, for the ninth year running, the Commission has not signed off its accounts. If the Commission were a company, I know what would have happened to it by now.
I wish all who go to the IGC a short weekend, although I doubt that it will be short. I ask them not to be sidetracked by meaningless language such as, "If we do not agree to this, we will be in the slow lane of Europe". What does that mean, other than suggesting that it is desirable to be in the fast lane? None of that makes any sense. What does make sense, in the interests of the European Union and of Britain, is that that document be seen as a good one that provides a sustainable structure. If it is not seen as such, it is better not to sign up to it.
4.34 pm
Mr. David Heathcoat-Amory: I am very pleased to follow the hon. Member for Birmingham, Edgbaston (Ms Stuart). I often found myself on the same side of the argument as her in the Convention on the Future of Europe, on which we both served. The House would expect that, because we were both sent from here to defend and to promote the interests of parliamentary democracy, and more generally to advance the principle of self-government. So it was natural that we agreed more often than we disagreed, and such agreement has been reflected in her comments this afternoon, most of which I support.
As an ordinary member of the Convention, I was often exasperated to discover that the drafting and many of the ideas that we had to consider came from above—from the praesidium—rather than from the working parties and our deliberations in the plenary sessions. So the bottom-up model that we were promised was in fact replaced by a top-down, rather familiar European model of decision making. It is apparent from the hon. Lady's recent pamphlet and from her writings that she, too, suffered from this problem in the praesidium. Many of the ideas advanced did not arise from below, but were promoted and initiated by the presidency, or by the European bureaucracy. But the hon. Lady certainly did her best to protect the interests of national Parliaments generally, and it is a matter of regret to her—as well as to us—that she was unable to strengthen significantly the subsidiarity provisions that, after all, have been part of treaty law for more than a decade.
We were promised that the constitution would provide an opportunity to entrench those provisions more assertively, and to give national Parliaments a real right to prevent the adoption of measures that are clearly against our vital interests. However, none of that is apparent in the draft that we are considering. We have only the right to object and to request a review if the subsidiarity principle is broken, which is really nothing more than we have at the minute. Parliament is already

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entitled to make objections, and the Commission is entitled to reject them. That situation, I am afraid, will continue, and I greatly regret the fact that the British Government have not made this a red line issue by backing up their assurances to this House with real negotiating vigour.
It was exactly two years ago that heads of state published the Laeken declaration, which drew attention to severe defects in the European Union, to public disillusionment with it, to the secrecy, and to the lack of effectiveness and efficiency. It declared that Europe was at a crossroads, and I agree with that analysis. Those same heads of government are now faced with a choice—one that they may well be making this very weekend. It is a choice between an open and democratic Europe that is closer to its citizens, as mandated by the Laeken declaration, or accepting the European constitution in its current form. That constitution, I am afraid, has all the familiar hallmarks: it is technocratic, centralising and undemocratic. That is the stark choice now facing the states of Europe, and I do hope that the Government, even at this late stage, will have the courage to go back to the instructions given to us all when the declaration was first published.
Of course, originally the Government did not want a European constitution at all. That was their established position, and indeed, Laeken alluded only elliptically to the possibility of a European constitution.
It is perhaps amusing—in a death-rattle sort of way—to note that objections to a constitution are still being expressed by Ministers even this week. The Guardian featured an article about the Lord Chief Justice, who advanced the proposition for a written constitution in this country. However, the Lord Chancellor—Lord Falconer—was definite in his objection to the very concept of a constitution. I quote:
"'This is not up for discussion,' a spokesman for the department said. 'If we had a written constitution it would be open to judges' interpretation and lead to a clash between judges and politicians.'"
I rather agree with that, but does the noble Lord take the same view about a written European constitution, which will have exactly the same in-built conflict between the expressed wishes of elected representatives and that of judges, particularly when the constitution that we are likely to adopt is longer, and certainly more obscure, than the treaties that it will replace?
One of the requirements at Laeken was to simplify, but the document that we have to deal with now is longer than the text that it replaces. So we are getting a written constitution, but, oddly, not one that we are writing ourselves. We are importing a written constitution, and I know of no other country in the world that has ever done that. We were told at the start to act like the founding fathers in Philadelphia in 1787, but they wrote their own constitution for their own country. We have participated in a written constitution, which we are going to adopt whether we like it or not.
Mr. Cash: Does my right hon. Friend agree that one of the worst aspects of the arrangement is that the European Court of Justice will be given such extensive power to interpret the constitution that it—the Court
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itself, let alone the judiciary—would become the pre-eminent force in driving European integration forward?
Mr. Heathcoat-Amory: Yes, I summarise the process under way here as powers being transferred from people we elect and can get rid of to people we do not elect and cannot get rid of. I notice that the British judiciary is complaining about Government plans for a supreme court, but the real supreme court will not be in this country: it will be the European Court of Justice. I agree with my hon. Friend about that.
When it became apparent that the Convention on the Future of Europe was drawing up a constitution, the Government then took fright and eventually—I would say rather belatedly—tabled more than 200 amendments. I have a copy of all the amendments here. Sadly, only a small number—about 11—were accepted in the Convention. and the rest have simply been quietly forgotten and dropped. That is a serious matter.
To take one example, asylum is a big issue, which featured prominently in the Prime Minister's party speech this year when he promised legislation and to take control of a system that had clearly broken down. The Queen's Speech promised legislation on asylum and immigration. However, it is the European constitution that will take over responsibility for that area of policy. It contains a long section on all the legislation that can be adopted by majority voting in the new Union under the terms of the constitution. The Government representative in the Convention tabled an amendment to delete those provisions and the right hon. Member for Neath (Mr. Hain), who was the Minister for Europe at the time, emphasised the importance of the issue by saying that it was a "fundamentally important" amendment. Why, then, does it not appear anywhere in the list of red lines in the White Paper? It has simply been abandoned.
The Government do not really understand that the very fact that asylum and immigration will be a shared competence of the new Union means that this House will have only a residual right to legislate in that area. My hon. Friend the Member for West Suffolk (Mr. Spring) asked the Foreign Secretary earlier in this debate what he understood by the term "shared competence". The Foreign Secretary did not know. He said flippantly that it meant a competence that was shared, but the informed answer with which he might have enlightened the House is that when the Union legislates in an area of shared competence, member state Parliaments cannot. It follows that because freedom, security and justice are listed as a shared competence, alongside almost every other policy area that the House addresses, when the Union starts to legislate, we cannot. The promises of the Prime Minister in the Queen's Speech to bring forward Bills are empty. because at the same time his Ministers are agreeing to a European constitution that will prevent him from doing so.
I challenged the Prime Minister on that point at Question Time a month or two ago. He did not appear to know the answer, so I wrote to him. He wrote back a semi-abusive reply, questioning my motives. I wrote to him again, and I understand that my query has now been forwarded to the Foreign Office. I am still waiting for a reply, but it is now very late in the day. We have

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only a few days before everything is signed. It will then be taken through the House on a whipped vote, and it will be too late.
Many of the issues that arose in the Convention on the Future of Europe that the Government complained about have been forgotten. They are no longer red line issues that the Government have promised to defend in the final days of the IGC. I was glad that the Foreign Secretary confirmed that he would still veto the red line issues on the compulsory co-ordination of economic and employment policy. I hope that the same is true for the budget rebate, which is clearly under threat. The draft constitution refers to the modalities of the Union's resources being subject to European laws by majority voting. We know that the Treasury does not like that, so I take it that that is still a red line issue, as is QMV, in any form, on tax and social security. However, those issues remain in the final draft as we enter the endgame.
At least the Government have dropped the absurd conceit that the constitution is only a tidying-up exercise. They have finally admitted that it deals with some big and important issues that they will insist on changing. I am still suspicious that we may be being softened up for a massive fudge at the end, because the Government have been so bad at defending their proposals in Committee. For example, on 20 October, we discussed article 10, the so-called primacy article. It establishes that the constitution, and all the laws flowing from it, shall have primacy over the laws of member states. That is a bald and unqualified assertion of the primacy of the constitution, and all its objectives and obligations. We know that the Government do not like the primacy clause because they tabled an extensive amendment to it in the Convention on the Future of Europe, but they seem to have forgotten that. In the Committee, we pressed the Minister for Europe on the point. He said, in reply to my hon. Friend the Member for Stone (Mr. Cash),
"the hon. Gentleman…invites me to become a Law Officer. Not having any legal qualification in or ministerial experience of that area, I am not sure that I should trespass on that territory."—[Official Report, Standing Committee on the Intergovernmental Conference, 20 October 2003; c. 20.]
He could not answer that point. So the European Scrutiny Committee asked the Attorney-General to come to the Committee to debate those matters, but he has just written to us saying that he will not do so. The Government are thus either unable to answer the points that we are making or do not want to answer them.
Mr. Spring: That is precisely the point. It is disgraceful that the Foreign Secretary had no idea what something as important as shared competences actually meant. We are constantly told that the primacy of EU law is already incorporated in the treaties and that its incorporation in the constitution is thus of no consequence. My right hon. Friend has shown how the Government fought against answering, but is not it extraordinary that the Minister for Europe is so ignorant of one of the cardinal elements of that constitutional arrangement? That is typical of the sloppiness with which the Government have approached the whole matter.
Mr. Heathcoat-Amory: My hon. Friend is right and there are many more such examples. The Minister for
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Energy, E-Commerce and Postal Services appeared before the Committee to discuss the articles relating to trade and industry. We asked him about competition policy, as all competition policy will become an exclusive competence of the Union, even domestic competition policy—the rules to promote competition in our own jurisdiction. Under the terms of the constitution, competition policy unambiguously becomes an exclusive competence of the Union. When we asked the Minister about that, he replied lamely that he would go back to his office and write to us later. Well, we are still waiting for that letter.
The Minister for Europe (Mr. Denis MacShane): As my comments have been prayed in aid, would the right hon. Gentleman also care to read into the record all my lengthy replies to the questions put on the primacy of the Union, rather than selecting the one sentence in which I announced that I was not a qualified lawyer? Perhaps he will read everything that I said so that Hansard can record my reply, otherwise the point he made is neither fair nor accurate and is really quite mendacious.
Mr. Heathcoat-Amory: That is a big word to use against a colleague and I certainly should not use it against the Minister in return. I would not say that he is my favourite living author, but I read what he writes. However, that is no substitute for debate. I shall not accept a mere letter from a Minister defending the position; we want to scrutinise it and subject it to debate. That is the point of Parliament and the object of the European Scrutiny Committee. It was that that the hon. Gentleman denied us when he lamely said that he was straying into legal matters and that he had no answer. Then, when we asked the Government's legal man to speak to the Committee, he said that he would not come. That is my objection.
Mr. MacShanerose—
Mr. Heathcoat-Amory: I will give way again.
Mr. MacShane: The right hon. Gentleman is very kind. I withdraw any adjective that is inappropriate for what has been a friendly and well-mannered debate.
I was actually asking the right hon. Gentleman to repeat not what I said on the issue in a letter but what I said in debate, in Committee, at very great length. We held a proper discussion and I am happy with the points I made. I am happy to repeat them all in my wind-up, although that may take much more time than I shall probably be allotted.
Mr. Heathcoat-Amory: Of course I have the account of the debate—I was there. I know what the hon. Gentleman said and I have read it subsequently, but it did not satisfy us. We wanted to probe and to get to the bottom of the matter. We tried again today when the Foreign Secretary gave us another unconvincing account of the primacy clause. We do not accept his view

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that the constitution merely establishes that the case law of the European Court of Justice should be entrenched in it. Apart from anything else, case law is, by definition, dynamic—it changes—so we are committing ourselves for ever to accept the case law of the ECJ. So much for the idea that the constitution will bring finality and certainty to the division of powers between member states and the Union.
Mr. Wayne David: Much of the right hon. Gentleman's argument is based on the premise that we are discussing a constitution, but does he accept what Sir John Kerr has said—that we are in fact discussing a constitutional treaty?
Mr. Heathcoat-Amory: I do not accept that. The document is called a constitution—[Interruption.] I know that the Government call it a constitutional treaty but if the hon. Gentleman consults the document, he will find that the people who drew it up call it a treaty
"establishing a constitution for Europe".
It is a constitution; it has always been called a constitution, so we are entitled to believe that it is a constitution.
Lady Hermon rose—
Mr. Heathcoat-Amory: I must press on because other hon. Members wish to contribute.
Lady Hermon: Will the right hon. Gentleman give way on that point?
Mr. Heathcoat-Amory: Very well, I will give way once again.
Lady Hermon: I am very grateful indeed to the right hon. Gentleman for giving way, and I apologise for not being present at the beginning of the debate. I had to take part in the Speaker's Committee on the Electoral Commission. May I gently remind the right hon. Gentleman that the principle of the supremacy of Community law was established by a very famous case, with which I am sure that he is familiar: Costa v. ENEL in 1962?
Mr. Cash: 1964.
Lady Hermon: I thank the hon. Gentleman. I stand corrected, the year was 1964—some years before the Conservative party acceded to the European Community, so the principle of supremacy was well known to the Conservative party and the then Prime Minister when the European Communities Act was passed in 1972.
Mr. Heathcoat-Amory: I am not going to engage in a long legal wrangle with the hon. Lady, but I ask her to glance at the article in question, which says that not just the law, to which it refers, but the constitution itself has primacy over the laws of member states. Even if one accepts that the treaty law has a kind of superiority, what we are debating now is whether that law can automatically have primacy over the domestic law that we make in the House.
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Under our constitutional arrangements, Union law only has effect in domestic law by virtue of the European Communities Act 1972, and it has been always understood that we can repeal or amend that Act to disapply EU regulations, laws or directives. Will that still survive if we sign up to a constitution that contains an unqualified assertion that the constitution and all the laws that flow from it have primacy over the laws of member states? That conflict is unresolved. We were seeking to ask the Government about that, but they have refused to answer so far, and we are entitled to our suspicions about the fact that they are not coming clean about some of the fears that they may harbour about the future direction of court judgments, both in this country and in the European Court of Justice.
Mr. Cash: Will my right hon. Friend be kind enough to give way on that very point?
Mr. Heathcoat-Amory: I will give way once again to my hon. Friend.
Mr. Cash: On 8 December, I asked the Foreign Secretary for a precise answer to the very question that my right hon. Friend has just put to the House. In effect, I asked him which would prevail—the European Court of Justice, or the United Kingdom courts—in relation to an Act subsequent to the constitution Act but inconsistent with it? The answer that I received was not only that it would be
"existing European Court of Justice case law"—[Official Report, 8 December 2003; Vol. 415, c. 245W.]—
but that the constitution "should be interpreted accordingly." In other words, it would be up to the United Kingdom courts to interpret whatever emerged from the process and that they would be bound by the European Court of Justice. That is a constitutional revolution.
Mr. Heathcoat-Amory: My hon. Friend, with legal training, makes the point very well. A massive transfer of power and authority is taking place under the constitution. We have before us a revolutionary document, so we need to scrutinise its contents with the very greatest care. We have been unable to do that because Ministers have refused to give straight answers to what we consider to be straight questions.
I have no time now to go into foreign policy—particularly the establishment of a European Foreign Minister, to which the Government no longer object, and the fact that our United Nations Security Council seat must be given up to that Foreign Minister on request—but I want to squash a myth that has been circulating: the Commission will somehow lose relative power to the Council of Ministers under the constitution. It is true that a lot of squabbling is going on about the number of Commissioners. It is rather typical of those in the European elite that they appear to be more interested in who gets the jobs at the top and who becomes President and how many Commissioners there will be than in the other powers of the constitution.
The fact is, however, that under the constitution as it is drafted the Commission gets more and stronger powers. It will get explicit executive powers, powers of enforcement, a monopoly of initiative and the ability to

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negotiate and sign international agreements on behalf of member states across a wide range of policy areas. The Foreign Minister for Europe will be a member of the Commission, and the Commission will get new lawmaking powers in particular to make what will be called a non-legislative Act, which will be binding on everybody—all the people whom we represent—without the intervention of this House. It is an abomination that the least democratic institution in Europe, which sits in private—none of its members are elected—should be able to pass non-legislative Acts as if they were Acts of Parliament. That is a new power that has been put into the constitution. It is therefore a complete myth that the Commission is in any way to become a secretariat supporting and servicing a stronger Council of Ministers.
The truth is that the constitution represents a massive transfer of power upwards to the Union. There are more policy areas in which it will operate, of which I have mentioned some. There is more majority voting in around 37 new areas—I have asked the Government for a precise number, but they cannot give it to me. Majority voting becomes easier under the new formula. In addition, all the people at the top—all the existing EU institutions—become more powerful. The only people who do not become more powerful are the ordinary people of Europe. That democratic deficit—that disconnection between ordinary citizens and European Union institutions—will become worse not better. We have not brought Europe back to the people; we have taken more powers away from the people and the national Parliaments and given them to the new Union.
Nor does the constitution in any sense bring finality or certainty to the division of powers. On that I disagree with the Liberal Democrat spokesman, the right hon. and learned Member for North-East Fife (Mr. Campbell), who has had to leave the Chamber. The incorporation of the charter of fundamental rights opens up a whole new front on new powers to be decided for us. Those shared competences, which I and others have described, again open the way to huge new powers and competences being acquired by the Union at the expense of member states. Our instructions to create that democratic Europe have therefore been completely contradicted.
I end with a solution—I never want it thought that I simply criticise the Government or am in any sense solely negative. Let the Prime Minister give the final decision on all this to the people. After all, it is their rights that are affected. The constitution starts with the following words:
"Reflecting the will of the citizens and States of Europe".
Let us ask the people what they think. In practical terms, and in terms of hard-headed, negotiating tactics, declaring that he will have a referendum would enormously strengthen his bargaining position in the endgame at the intergovernmental conference. He would then not simply have to convince a supine Cabinet and whip the proposals through the House of Commons; he would have to convince his fellow citizens that he had done a good job for them. On those grounds, and on grounds of high principle, he must take that democratic road, however late in the day, and declare that there will be a national referendum.
5.3 pm
Tony Worthington: The right hon. Member for Wells (Mr. HeathcoatAmory) said that he did not have time to go into foreign policy. I want to do so, although I doubt that I will have the same concerns as him.
I want to talk about one aspect of the proposed constitution: the relationship between foreign policy and development policy—the world of international development. I do so as a supporter of the Department for International Development, which has been one of the great successes of this Government. What I fear is that some of DFID's achievements may be undermined, or put under some kind of threat, by the arrangements that are being made in Europe. Those arrangements do not have to lead to a step backwards, but I would like an assurance from the Minister that such points are being taken into account.
DFID has been a great success. That is the experience of members of the Select Committee. Every one of them, of whatever party, feels that DFID has been a major step forward. When we go to the countries to which we give assistance, they are lavish in their praise of DFID in comparison with other international development departments. When we go to the World Bank, the International Monetary Fund or any other international forum, we find that DFID is considered a great step forward. Within a very few years, it has become the pre-eminent international development department in the world.
It was right for the Overseas Development Administration to stop being a section of the Foreign and Commonwealth Office and for it no longer to be controlled by the FCO. However, under the EU, the development and co-operation remit will be moved back firmly to the control of the equivalent of the FCO. That remit would become part of the foreign policy area that is considered by the treaty. Activities in the common foreign policy other than development issues would become pre-eminent and those issues would be downgraded, which would be unfortunate.
EU development assistance and that provided by each of the EU's individual nations come to more than half the development assistance made available in the whole world. If development assistance becomes subservient to foreign policy considerations, I fear that development issues will take a step backwards.
Let me refer to some of the gains that we have obtained from the establishment of DFID. The first and most important is that aid and development have become principled and focused. Our statute now says that the purpose of development aid is to end poverty. We hold to the millennium development goals for ourselves and were influential in saying that they should become an enormous global commitment. It is DFID's ambition that 90 per cent. of our aid will go to the poorest countries by 2006.
British development money cannot be used for purposes other than the reduction of poverty. The International Development Act 2002 insists that development policy is maintained and operated on the basis of its developmental principles, institutions and instruments. That means the reduction of poverty, which is a very simple and powerful purpose.

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We use development assistance for development. It is a long time since the Pergau dam, when aid money was used to provide sweeteners for trade or foreign policy goals. It was important that DFID broke free from the FCO and established its own mandate. I am not criticising the FCO, which has different goals and purposes, but it was important to give development its own pre-eminence and budget.
We banned tied aid so that it became clear to all concerned that the reason for development assistance was not the furthering of British industry, but the needs of the recipient country. That is in total contrast to the United States Agency for International Development, whose money is spent on American goods. It makes it clear that its purpose is to further American foreign policy goals. The principal recipient of the assistance provided by USAID is Israel. That would not happen under our policy, because our goal is the relief of poverty. For example, we would not write in provisions on assistance such as those introduced by the Americans when they consider giving AIDS money to an African country. They may say that it is a condition of the aid that the recipient country's Government buys American genetically modified food, but such an approach is anathema to us. We would not say that a country must embrace American goals before it may receive assistance.
DFID did more than just establish its independence, because the fact that it became independent brought other big players in the British Government along with it. The alliance between DFID and the Chancellor of the Exchequer has been enormously important in getting momentum behind debt relief. DFID does not go round the world as a small and marginal Department. It always has a key economic Minister involved, which is probably why its budget has increased more quickly than those of other Departments. The Chancellor's international finance initiative is the world's only show in town if we are seriously to increase aid, which needs to be done, and achieve the millennium development goals.
The situation in Britain is different from that faced by Development Ministers in other countries. The common position of European countries is similar to the one from which we moved because their senior Foreign Ministers are generally responsible for all external relationships, including development co-operation. European development policies frequently resemble foreign policies rather than development or aid policies.
During the Doha round, there could be no doubt that the Secretary of State for Trade and Industry was fully behind DFID in attempting to deliver fairness to the poorer nations of the world and against the sickening unfairness with which richer countries treat trade. The sustainable development goals of the Department for Environment, Food and Rural Affairs are based on the same principle. It would be interesting to hear about how the Minister for Europe is working actively with DFID to pursue the millennium development goals. Are the goals at the heart of British foreign policy? I shall not be critical of him if his answer is no or say that that is wrong, but if it is his answer, there is not a natural fit between foreign and development policy. I am worried that, as the European constitution develops, we will lose what we have gained.
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I praise the European Development Commissioner Poul Nielson for his contribution over the past few years. He had to work extremely hard to improve the EU's performance on development, and it has improved modestly. He has had some success in asserting development priorities and his policy has been similar to DFID's policy of pursuing the millennium development goals. Who or what will succeed him? He inherited a situation in which development policy was subsumed by foreign policy and great patience was required before the pledge of European development money could be fulfilled. There were multiple Development Commissioners and the allocation of assistance reflected a requirement to keep the neighbours of Europe happy rather than a consideration of need.
The tying in of development and foreign policies could be a major step backwards. Although there is European commitment to the millennium development goals to end poverty, only just over 40 per cent. of European development assistance goes to the poorest countries and the situation remains unsatisfactory. The head of the Overseas Development Institute, Simon Maxwell, gave evidence to the House of Lords European Union Committee. He pointed out that, in 2002, India, which has one of the highest concentrations of poor people in the world, received €14 million in new commitments and that Bangladesh received €32 million. Incredibly, Morocco received €124 million and Romania received €696 million. How can it be justified that Mauritania—a small country—received 15 times more than India in new commitments from the European Union?
In Europe, where the development function has not been separated from the foreign policy function, aid money is not put to best use. My concern is that the gains made by Poul Nielson and those working with him will he lost by aid being returned to stand securely under the foreign policy heading—after all, international development is an alternative form of foreign policy, another means by which we interact with the world. DFID has been extremely successful in that respect, but there is a huge difference between the foreign policy pursued by the United States and that advocated by ex-President Havel of the Czech Republic. Havel said:
"The time when Europe conquered the world is over. I hope the time is about to begin when Europe will stand as an inspiration to other parts of the world. As a source of effective assistance and as an example of how people and nations can live together in peace and co-operation using the world's resources with caution and mutual support."
That is what development assistance should be about; it is not the language of common foreign and security policy. There can be no doubt about the purpose of American foreign policy: it is to pursue the military, business and resource interests of the United States. It is as simple and as brutal as that. However, that form of foreign policy is incompatible with development policy and rests very uneasily under that heading.
Mr. MacShane: I draw my hon. Friend's attention to the White Paper "UK International Priorities: A Strategy for the FCO" which was presented to Parliament last week by my right hon. Friend the Foreign Secretary. I do not want to go into the details, but on page 39 my hon. Friend will find the language that he seeks in respect of progress towards poverty

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reduction, sustainable development, international finance facilities, and the New Partnership for Africa's Development. All that is at the heart of British foreign policy.
Tony Worthington: Perhaps the Minister can say where else in that lengthy document the issue is mentioned. The point is that it contains a token reference to overseas development, but the rest of the document is devoted to other purposes of foreign policy. Obviously a reference had to be made in the Foreign Office paper to matters such as sustainable development, the poorest countries, and the millennium development goals, but if the paper that I have in mind is the one that he cites, it contains little elsewhere about development goals.
Let us consider EU enlargement. That in itself is welcome, but it must be clear that the new 10 member states will come in with their own claims for assistance and for agricultural and military support. The focus of attention in the Community will swing inwards. As the new members join the EU, a new group of neighbours who want EU assistance will come closer. I do not oppose that, but we must not call the provision of such assistance international development.
Our aim in our Budget is to devote 0.7 per cent. of our income to development assistance. It must be made clear that that money is for the poorest in the world in pursuit of the millennium development goals. That funding must not be damaged by foreign policy expenditure robbing the development bank. If assistance is to be given—as it will need to be—to neighbours or those now inside the EU tent, it must not come from the British allocation that we intend to go towards helping the world's poorest people.
Lady Hermon: Great play has been made of the fact that the European constitution gives the European Community the capacity to enter into international treaties but, if my memory serves me well, it could do so before the constitution was drafted. In fact, it signed up to the Lomé convention to help poorer nations. Would the hon. Gentleman's concerns be answered if, following the introduction of the new constitution, the enlarged European community entered into more international treaties such as the Lomé convention to help the world's poor?
Tony Worthington: That is a different ball game. Funding for the Lomé convention, which was replaced by the Cotonou agreement. was not included in the EU's general budget, and was not subject to scrutiny by the European Parliament. The Minister may wish to tell us whether, in the light of what the hon. Lady said about the Lome convention, he favours the budgetisation of the Cotonou agreement. Those special agreements will lose value over time if the Doha rounds come to a successful conclusion because they provide a privileged position for some poor countries, but not others. Doha, if it is ever successful, would bring about an agreement on a principled basis rather than on the basis of previous association with European states. That is another interesting matter that deserves consideration.
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There are concerns about humanitarian assistance under the constitution. I do not mean all development assistance, but the narrow area concerned with emergency relief because of hunger, flooding, war and so on. It is important that humanitarian relief is independent and not subservient to foreign policy. The EU has strengthened that priority over the years, having established ECHO, a distinctive and, to some extent, independent body. The 1996 regulation establishing its legal status says that humanitarian aid
"is accorded to victims without discrimination on the grounds of race, ethnic group, religion, sex, age, nationality or political affiliation and must not be guided by, or subject to, political considerations".
Aid must therefore be given because of need, not because people are on the same side as us.
During the Iraq war, there was severe criticism of the US practice of providing humanitarian relief through the Pentagon. Hon. Members will remember the establishment of General Garner's operation, about which there was widespread apprehension. If humanitarian relief was seen to be associated with people on the side of the combatants, that would remove a precious principle. Bodies such as non-governmental organisations, the Red Cross and the United Nations were not on anyone's side. There have been tragic outcomes in Iraq, and the people responsible for the attacks on the United Nations and the Red Cross are reprehensible in their despicable behaviour. If we are to have satisfactory humanitarian relief operations, we must ensure that the independent approach to humanitarian affairs established by ECHO remains. Parts of the proposed constitutional treaty make it look as if humanitarian aid is part of the foreign policy remit of the European Union. I would welcome assurances from the Minister that the independence of ECHO and other humanitarian efforts will be maintained and not subsumed in foreign policy.
I hope to receive assurances that the huge gains brought about by the establishment of DFID will not be lost. A great deal of our assistance goes through the EU. It is important that the recent relatively modest improvement in European development assistance is maintained. What will replace the post currently held by Commissioner Poul Nielson? What guarantee can the Minister give me that development principles will determine the use of the money given for development policy? We must maintain the improvement that has taken place, which to some extent is taking money away from the neighbours on political grounds, and make sure that it goes towards the millennium development goals. I look forward to the Minister's response.
5.26 pm
Mr. William Cash: This morning we saw the Euro-barometer showing that only 48 per cent. of the people of Europe now support the European Union. Listening to the Foreign Secretary, as I have done on many occasions over the past few months, I do not think he would see an elephant in the room, even if it sat on him. It is crystal clear that there are numerous dangers inherent in what is proposed under the constitution, as I explained in a letter in The Daily Telegraph on 1 December and in a pamphlet entitled "The European Constitution—a Political Time-Bomb" published by the

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European Foundation on 8 October. I shall not repeat those arguments, as they are on the record. I mentioned some other aspects of this matter in the debate on the Queen's Speech when we discussed economic affairs.
I shall briefly point to the big issues that need to be faced this weekend. The entire process has been characterised by mendacity. When people say one thing, they mean another. Shared competence was mentioned, for example. When EU supporters say shared competence, that is not what they mean at all. When they speak of subsidiarity, they mean hierarchy. When they refer to proportionality, they mean disproportionality. When they speak of variable geometry, it is an oxymoron. There is no such thing as variable geometry. Either it is geometry or it is not geometry.
The worst example is that relating to defence. Enhanced co-operation is not co-operation at all. It is the creation of a hard-core Europe dominated by France and Germany. In the words of Thomas Mann, who postulated either a European Germany or a German Europe, it will be a German Europe. The French will not be able to hold out. They are engaged in the modern version of the Maginot line, yet President Chirac is quoted in The Irish Times today as saying:
"The chancellor and I will not accept an accord at any price. We want an accord that reflects our idea of a future Europe."
The article states that
"President Jacques Chirac and Chancellor Gerhard Schröder said they were optimistic about reaching a deal but it must be on their terms."
That is not co-operation; that is an ultimatum. Against that background, it will be interesting to see how the Prime Minister handles the situation.
When those involved refer to structured co-operation, they mean destructive co-operation. When they refer to sustainable growth or a social market economy, they mean an economy with low growth or none, and high unemployment. When they speak of democracy, they mean bureaucracy. That is the problem: the bottom line is that the whole process is about as honest as the accounts of the European Union, which the European Court of Auditors has not discharged for nine years.
We have dealt at some length with the principle of the constitution. It is crystal clear that the words of article I–10, in relation to which I have previously asked the Minister an extensive series of questions, have now arrived at a certain point. The Minister has said that, whether or not there is an Act subsequent to the constitution Act, the wording will be interpreted in accordance with the rules of the European Court of Justice. I hope that the hon. Gentleman will say that that means that the European Court of Justice ruling in the 1964 case of Costa v. ENEL to which the hon. Member for North Down (Lady Hermon) referred, will be displaced as far as the British courts are concerned. It would be very interesting to hear him say that, though, as in doing so he would be contradicting almost everything that the Government have said in the past couple of years.
On the fundamental questions, those of us who have generously been described as Europhobes, little Englanders or whatever can point to a number of modestly reasonable predictions that we have got right. We were right on the exchange rate mechanism and the
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growth and stability pact, and on the European constitution and where it was going. Anyone looking to strike a balance and see where the arguments have been proved right will find that it is among those of us who have consistently argued the case for a European Community that will work, rather than a European Community or European Union—which is what it has turned into—that will be dangerously unstable because of hard-core Europe and will have high unemployment and low growth. Furthermore, reports suggest that that Europe is now infected by a new tendency towards anti-Semitism that is developing in that unstable environment. Some of us—some of our forebears have fought and died for the democratic Europe that we would like to see—have rightly been disillusioned with the way things have been going. The fight will continue. We will face a political and constitutional revolution if the Prime Minister does not veto the treaty this weekend. I do not think he will—so where will that take us?
In conclusion, I return to a point that I made in a speech in Yeovil as long ago as 1995, in which I called for associated status. The argument about being in or out is not about withdrawal but about having a sensible European Union where we can co-operate but into which we will not be absorbed. I suggest that we must move to a new parallel treaty arrangement involving on the one hand a treaty of associated status with the European Union, allowing us to maintain all the best elements of what the European Community could offer, and on the other, a new treaty arrangement ensuring that there was associated status with the United States as well. That would be a true bridge that would depend on the notion of a proper and workable relationship in which we would maintain our sovereignty and independence in relation to the levers of government, but co-operate by treaty on a bilateral basis with the European Union and the United States.
5.34 pm
Mr. Tony Banks: I agree with little of the analysis of the impact of likely developments in the European Union that was given by the hon. Member for Stone (Mr. Cash), but I will say this for him: he is remarkably consistent in what he says. I am only grateful that on this occasion he said it so briefly—I shall try to emulate him in that regard if no other.
I want to raise a couple of issues that are slightly tangential to the debate, but significant to large numbers of people outside, if not inside, this House. Before I do so, I must point out for the record that I speak as an enthusiastic supporter of the European Union and the draft constitution. Nevertheless, in terms of the subject that I want to discuss—sport—the constitution is remarkably inadequate, and a lot of work remains to be done. If we are trying to bring the European Union closer to the people, there is particular relevance in the context of sport, as we have seen in recent events in this country and this city.
I personally want to see a European superstate—it certainly does not frighten me—although we have to make it democratic and accountable. History does not show that political and social development has to stop at the borders of the nation state; and who says that it is the highest form of political, cultural and economic and human organisation that we can possibly aspire to?

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Politically and economically, the imperative has always been towards federations, larger groupings, alliances and single markets. Logically, therefore, the governance of such institutions must reflect that. No hon. Member, whatever their feelings about the European Union and the constitution, would seriously believe that in 50 or 100 years the structures of Europe and the EU will in any way resemble those that we are contemplating today. The trend towards a European unitary state is irresistible. That is not to say that we should simply sit down and let it happen—we have to shape the process to ensure that we maintain a high degree of regional decision making.
I want to leave those heady issues for the moment to consider how the EU affects football in this country and the way in which European football is developing. As hon. Members are well aware, I have been a Chelsea supporter for more than 50 years, despite the fact that I am the Member of Parliament for West Ham: that gives rise to some embarrassing moments from time to time, but I can live with those. I trust that several Members had a chance to see last night's match between Besiktas and Chelsea in the AufSchalke arena in Germany. It is unfortunate that the hon. Member for West Suffolk (Mr Spring), who talked in glowing terms about Turkey, is no longer in his place. I do not disagree with him about the country and its people generally, but I hope that he would join me in condemning the behaviour of the Besiktas fans, which was utterly appalling.
If the scenes that we witnessed on our television screens had been replicated in any football arena in this country, UEFA, the European governing body led by Mr. Gerhard Aigner, would already be denouncing the club concerned, whether it be Chelsea, Manchester United or Arsenal, and demanding that we be struck out of European club competition. I detect more than a whiff of hypocrisy around the halls of UEFA in terms of the way in which it handles clubs and the national team in this country and clubs and national teams elsewhere in Europe. We are still suffering from a reputation as troublemakers in European football, largely derived from the so-called fans who follow the English national team. Club supporters whose clubs are playing in the UEFA Champions league or the UEFA cup behave very well indeed. I travel around Europe a lot with my club, and we certainly do not deserve the kind of treatment that we get from clubs and authorities when we visit the various cities of Europe.
We make European club supporters who come to this country very welcome. Yes, we segregate them, but we do not keep them back for more than an hour after the game has finished until all the transport links have gone, so that they cannot get back to their hotels or to the airport, as I found out had happened in Rome when I was there a couple of weeks ago. We treat them decently. Our police tactics are efficient, effective and sensitive. That is not the experience that we, as football supporters, have when we travel in Europe.
What we ask of our Ministers and our Government is that they stand up for the decent English club supporters and national team supporters when we travel. We do not leave our rights behind. We have dealt with the problems as we see them: our stadiums are well
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regulated, and in no circumstances would we allow the kind of scenes that we saw in Germany last night to be repeated here. Yet we know that if something like that—or even an incident of a far lesser nature—had happened here last night, UEFA would have condemned us. I believe that UEFA should take immediate steps to expel Besiktas from the UEFA cup; anything less would give rise to the justifiable accusation that UEFA was anti-English in its sentiments, its bias, and its hypocrisy. I look forward to hearing Mr. Aigner condemn Besiktas in the same way that I know he would condemn any English club, had its supporters behaved as the Besiktas supporters did last night.
The other subject that I wish to raise is summed up in early-day motion 242, which is tabled in my name and has been signed by 57 Members of all parties. It is entitled, "The effects of EU proposals on English football". It arises from the demands being made by the Commissioner responsible for the Competition Directorate, Mario Monti, who appears poised to issue a statement of objections to the Football Association premier league over the television deal with BskyB. If a prohibition notice is served, the premier league will have two months to respond before a full prohibition notice is served. At that point, the premier league would end up in the court of first instance, with the real possibility that its TV deals would be struck down. If that were to happen, league football in this country could face meltdown.
It appears that the Commissioner does not like the principle of collective selling of broadcasting rights within football. The premier league and the football league have done their very best to try to meet the Commissioner's demands half way; they even split the broadcasting rights into four live packages, which were put to a transparent and open tender policy. The Commissioner now appears to want to overturn a fair, free-market process and to break up the present deal between the premier league and BskyB.
If that happens, a number of dire consequences will follow, and that is not only my view but that of the premier league. If, for example, the premier league were forced to award a set of live matches to another broadcaster in an artificial process, it would achieve—at best—a marginal impact on UK broadcasting markets, but it would have a devastating impact on the premier league's rights, which would be reduced by 40 to 50 per cent. in value. If that were to happen, what would be the impact on the premier league—the most interesting, the most watched, and some would say the most exciting, if not the most technically proficient, football league in the world? If the deal were to be struck down, there would be no premier league matches broadcast on television from August 2004. A number of our premier league clubs—we know that Leeds are the most obvious example, but there are others—face a great many financial problems and some will clearly go straight into administration.
Clubs will be forced to sell off their top players, though God knows where or to whom they will sell them. Youth academies and youth development programmes will be threatened. The premier league's £20 million three-year funding programme for the football league to bail it out of the ITV Digital fiasco will of course go, which will leave a large number of football clubs in a precarious state. The Football Foundation,

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which receives £67 million from the premier league over four years, will itself be threatened and be in crisis, as will the Football Association, due to the loss of revenue. That will have a knock-on effect on the national stadium at Wembley.
Those are the problems that we face. I do not want the House to sleepwalk into such a crisis, which will be faced in football. It will all arise from the actions of the Commission and of Commissioner Monti himself, who appears not to understand that football needs to be organised in leagues. Those leagues need to sell their rights collectively if they are to spread that wealth among the various clubs and prosper.
To suggest, as the Commission is doing, that each club should negotiate individual rights is dangerous nonsense and if it is pushed through it will do enormous damage to football. That is happening in Italy, where the individual clubs are negotiating individual rights. The result of that was a delay to the current season as the small clubs were left with no one ready to take up the broadcasting of their matches. They could not sell their rights and therefore had insufficient revenue to pay either their players or the people who work for them or to make any further improvements to their grounds. Meanwhile, of course, the big Italian clubs were able to secure enormous and lucrative deals, but they did not have anybody to play. That is the nonsense.
Members should consider the conflict in the constitution between the competition sections and the woefully brief and inadequate item on sport. That conflict is obvious and it needs to be reconciled. I must say to my hon. Friend the Minister for Europe—I have spoken to him about this—that the matter is one of great significance to vast numbers of our citizens. If the consequences that I have described come about, I am afraid that, although that will not be the Government's responsibility, they will find themselves, as they inevitably do in such situations, very much in the frame.
We do not want clubs selling individual rights in this country, as our football would be changed absolutely, utterly and for the worst. We would end up seeing countless matches involving Manchester United playing Manchester United reserves or Arsenal playing Chelsea. That is not what people want. [Interruption.] My hon. Friend the Minister for Europe suggests that Chelsea could play Rotherham. Who would Rotherham sell their broadcasting rights to? With great respect to and due regard for Rotherham, I cannot see them being a big draw on terrestrial or satellite television, so Rotherham would likely go out of business. My hon. Friend should bear such issues in mind when he is talking about other issues: these events, which may take place at the lower levels, could have dire consequences for the organisation of our sport.
I pay tribute to the work of the premier league and to David Richards, Richard Scudamore and Philip French, who are doing their best to negotiate. The negotiations are ongoing. As you know, Mr. Deputy Speaker, usually I go straight for it—lashing out, boots and fists flying—but that would not be helpful in this case as the negotiations are poised at a delicate stage and I do not want to disrupt the situation. However, I want the Government to be fully aware of what is going on. I know that the Prime Minister is aware of this matter,
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because I have raised it with him directly, and apprised him of the significance—the potential implications—of
these events.
I believe that the Government understand the situation. I know that they realise how significant premier league football is, what it means to the great majority of our population, and what a political and economic disaster would result if the current deal between the premier league and BSkyB were struck down by the Commission led by Mario Monti. I hope that the Minister will assure me not just that he is acutely aware of the problem, but that he is doing his very best to solve it.
5.50 pm
Andrew Selous: It is always a pleasure to follow the hon. Member for West Ham (Mr. Banks), who is invariably a fluent and entertaining speaker. He was straightforward about his desire to see a European Union superstate. Although I profoundly disagree with his sentiments, I respect his honesty. He probably shares my view that the real difficulty involves those who share his agenda but pretend not to, and approach the objectives espoused by him in a less than straightforward way.
In a debate on European affairs, it is important to step back a little and look at the big picture. Unlike my father and grandfather, who left school to go straight into world wars, I—along with the rest of my generation—have not had to go through that. We should pay tribute to the European Union for playing some part in the preservation of peace on our continent during its creation. As we should all recognise, it is the first duty of any Government to preserve peace and security for their citizens.
It is right for us to welcome enlargement. The Foreign Secretary was right to describe it as historic. The fact that 10 countries that were behind the iron curtain until 1989 are about to join the European family of nations is indeed an historic event that we should all welcome. Let me point out for the record that every member of the Conservative party supported it in the House, and that it can proceed without ratification of the European constitution should that not come to pass.
I also welcome the results of the single market, which was pioneered by the British Conservatives under Lord Cockfield. I pay tribute to successive Governments who promoted that agenda: a common market without tariffs, in which we can sell our goods, is enormously valuable to us.
I have a small caveat, however. I refer to the European Union's behaviour at Cancun. I do not think that it behaved well, in a moral sense, by taking such a protectionist stance in relation to the developing countries. That was raised by the right hon. Member for Birmingham, Ladywood (Clare Short) in a recent article in The Times. The European Union should be careful to maintain a good record in this regard; otherwise, the World Trade Organisation could easily take over its function in ensuring free and fair trade between all nations.
I am a new Member of Parliament, elected only at the last general election. I am well aware of my close link with the 71,000 or so electors of South-West Bedfordshire who sent me here, and to whom I am

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directly accountable. The relationship is very clear: they know who their MP is, and I have a duty to respond to their problems and to be their champion. That is very precious, but it does not happen so far as Members of the European Parliament are concerned, under the existing, regional-based system of proportional representation. When asked who their MEP is and who their MP is, most people are unable to answer the former question with anything like the confidence that they can answer the latter.
The European constitution contains a number of threats to our parliamentary democracy, and such concerns are shared by Members on both sides of the House, regardless of their political tradition. For example, my near neighbour, the hon. Member for Luton, North (Mr. Hopkins), who sits on the Labour Benches, shares many of those concerns. As has already been pointed out, until the possible signing of the constitution this weekend, this country has always had the right to repeal the European Communities Act 1972. With the prospect of that constitution looming before us, it appears that we will lose that right. As a result, for the first time ever, European law will be supreme in this country.
Ms Stuart: The debate about supremacy of law has continued for months, and there seems to be no answer to it. But for the first time, an explicit exit clause will be provided in the constitution, spelling out the ability to leave. How does the hon. Gentleman combine the two arguments?
Andrew Selous: I can answer that question very easily. Neither my party nor I wants to withdraw from the European Union; my point is that we have always had the theoretical right to repeal the 1972 Act. The intolerable tragedy of this debate is that we have not had a straight answer, despite the best efforts of my right hon. Friend the Member for Wells (Mr. HeathcoatAmory) and many others, to the question of what the position will be after we sign the European constitution this weekend, if indeed we do sign it. This is a hugely important issue, and the lack of clarity should worry us all, whatever our perspective on these matters.
We have already talked about the importance of national Parliaments continuing to have a vital and meaningful role in the affairs of the European Union. Reference has been made to the fact that meetings of the European Scrutiny Committee are not terribly well attended on occasion, and I wonder whether my hon. Friend the Member for Eddisbury (Mr. O'Brien) has the explanation for that. He says that when Members do attend those meetings and European Union documents are placed before them, the Chairman will often move at a fast pace, taking 100 pages at a time and asking whether there are any objections to them. On one occasion, my hon. Friend sat up virtually all night to examine such documents in detail. He raised objections to several of them on behalf of British business, and the meeting was duly adjourned. He is under the strong impression that subsequent meetings were set at times when he was unable to attend. Concerns certainly do arise as to how effectively we in this House are able to scrutinise European Union directives and regulations.
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This debate has helped to clarify the question of shared competence. To many people, the phrase "shared competence" will suggest that a national Parliament has some role in the matters being debated by the country in question and the European Union. But it has been made clear during this debate what shared competence means: if and when the European Union decides to legislate in a particular area, at that point the United Kingdom and other EU members cannot. That should be a great worry to us, as should the charter of fundamental rights, which I and many others believe will simply lead to an increase in European Union, judge-led law.
The hon. Member for Birmingham, Edgbaston (Ms Stuart) said that she believes that the real reason behind the convention is furthering the political deepening of the Union. Given the 16 months that she spent as a member of the European Convention, she should know very well about that.
I think that we should look at the EU far more flexibly. If France and Germany wish to forge ahead and form a much closer relationship within the EU, neither we nor any other European country should stand up and stop them. By the same token, however, countries that want to go at a slower pace and retain more powers for their national Parliaments should not be forced to go further than they want.
Above all, we have to get rid of the absurd notion that Britain could be left behind in Europe—a point raised earlier in the debate. Europe is not a bunch of teenagers karting up the M1 to see who can get there first. It is very different from that, being about the relationship between the peoples of respective countries, how they are governed, democracy and accountability—all very important matters. The whole notion of being left behind has no real meaning in the debate. The duty of this Parliament and the British Government is always to secure in our relations with Europe the best possible deal for the British people.
What my constituents and I fail to understand is that if issues about the European constitution are—on the grounds that they are of significant constitutional importance—worthy of being put before the peoples of Denmark, Ireland, the Netherlands, Spain and other countries, why not here? I was in Denmark last week, so I know that the Danes take the issue very seriously indeed. How, then, can the British Government say that these are not constitutionally significant matters, when they clearly are to so many of our EU neighbours? If they are constitutionally important there, why are they not here?
The whole process that led to the creation of a European constitution began with the Laeken declaration, but it had explicit principles and purposes, which we seem to have moved away from rather than towards. The Laeken declaration said that the EU should move closer to its peoples; become more, not less, democratic; and be made more efficient and transparent. No one from either side of the argument seriously believes that the European constitution before us at the moment achieves any of those objectives whatever. It is also important that for the last nine years, the EU's accounts have been qualified. We know that the EU does not even use double-entry bookkeeping. Can any hon. Member name a single reputable or

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properly constituted organisation that does not use such bookkeeping? I find it astounding.
At the start of my speech, I spoke about the importance of defence, which I personally believe is the prime responsibility and duty of any Government. I am very concerned that the current position of the British Government is to reverse a policy that has always been clear about never disrupting the operational importance of NATO. I speak as a former Territorial soldier who has participated as part of the UK delegation in NATO congresses. I remember the briefings that we received from British diplomats, which always stressed that it was important to boost the European capacity within NATO; that the European pillar in NATO was tremendously important, but under-resourced; and that we should always act under the operational command system of NATO.
In respect of those matters, we can say that the establishment of an EU defence headquarters is, at best, wasteful duplication and, at worst, runs the risk of decoupling Europe from the defence support of the United States of America. It could also aid those in the United States who would like that to happen. When we consider that American blood has been shed twice in the last century to keep our continent free, we should reflect on the seriousness of what that could mean. I do not think that we should always follow the United States, or that it is always right in everything it does, but history has shown on many occasions that we were right to act alongside the Americans and that their friendship is precious.
A Labour Member raised the issue of international development aid and made many points that also concern me. The European Union gives five times more aid to countries within Europe and its immediate neighbours than it does to the developing world. That has to be a travesty of the proper principles of international development aid that aid should always go to those who are most in need. The European Union gives India €14 million and Bangladesh €32 million, but it gives Morocco €130 million and Romania €690 million. Romania hopes soon to join the European Union, and no one would seriously claim that it has as much significant poverty as India and Bangladesh. That aid distribution displays a warped sense of priorities.
We have also heard about the real problems of our fishing communities and I was present yesterday when those issues were debated at more length. I am pleased that my party is committed to coming out of the common fisheries policy, because that is the right approach. I wonder how many people realise that the CFP does not apply to the Mediterranean. It applies to all the waters around our own country, but it does not apply to the Mediterranean. That is fine for Spain, Portugal and other countries because the CFP does not apply to some of their offshore waters, but they are able to benefit from the CFP in UK waters.
Mr. Banks: Assuming that we had a Conservative Government who had come out of the CFP, what fishing policy would they implement? Surely the hon. Gentleman does not suggest that no controls on fishing
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or protection of fish stocks are necessary. Without such controls, fishermen would fish out stocks and there would be no fish left for anyone to eat.
Andrew Selous: I agree, and were we to repatriate fishing policy to the UK, as we should do—that is also the policy of the Scottish National party—it would continue to be important to take into account issues such as the sustainability of stocks. However, to give a specific example, haddock in Scottish waters is bracketed with other fish that are threatened to a much greater degree. The UK might be able to differentiate between species in a way that some of the rulings by the European Union have not done in recent months.
I am also greatly concerned that it appears that the UK Parliament is about to lose its authority over asylum policy. Originally, that was one of the Government's red lines, because they wished to retain control over it, but that is no longer the case. People on both sides of the political debate agree that our asylum system is far from perfect, but they agree that it is right that those who seek asylum in the European Union should do so in the first country they come to. Many people will remember the hijacked plane that overflew 12 EU countries before it landed in the UK at Stansted. That example makes my point powerfully. Imperfect as our current asylum policies and procedures are, the British people at least know that the ultimate responsibility and accountability for them lie with Ministers who can be questioned directly by the representatives of the British people in the House.
Those points may seem a little highbrow to many people, but I shall give the House a specific example of the effect of EU directives and regulations in my constituency. To the north of Leighton Buzzard the old Linslade road has a number of bridges, one of which has been strengthened, at a cost to Bedfordshire county council of £150,000 so that it can carry 40-tonnes lorries. That is all well and good and perfectly sensible; we need bridges to carry lorries to support trade and commerce. What could be wrong with that? A European directive required that the bridge be strengthened.
There is a problem, however. Not 100 yd down the road is a bridge owned by British Waterways. It has a weight limit of 7.5 tonnes and British Waterways has informed me that it has no requirement to strengthen the bridge and no intention of doing so. Furthermore, when the parish council of Heath and Reach, the adjacent village, found out that £150,000 of the county council's money had been spent strengthening a bridge, under the direct requirements of an EU directive, while the council had been trying to set up traffic-calming measures for years and years yet had been told by the county council that no money was available, local people were intensely irritated. I am sure that all hon. Members can understand that. Such incidents do the EU no favours.
I am not someone who brings up every example of European idiocies to muddy and blacken the name of the European Union, but where things go wrong and something is obviously not sensible, we need to give serious consideration to the wasting of British taxpayers' money at the insistence of the EU.
I want to conclude by proposing an alternative view to the remarks that we heard earlier about references to Christianity in the EU constitution. I very much hope

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that Turkey, a Muslim country, will join the EU. As a Christian, I have no problem with that and would welcome Turkey to the European family of nations. Turkey would be a welcome and important addition to the European Union. However, reference to Christianity is not a matter of opinion; it is a matter of fact. I shall not back that up by turning to the words of a politician, but shall quote briefly from the poet, T.S. Eliot, who said that
"the common tradition of Christianity…has made Europe what it is…It is in Christianity that our arts have developed; it is in Christianity that the laws of Europe…have been rooted. It is against a background of Christianity that all our thought has significance."
He makes the point more eloquently than any of us in the House could do.
I question the notion that secular humanism is the sensible, moderate, acceptable default position for all our institutions and public bodies. I want to make a small plea for tolerant, loving Christianity, as people of all faiths in this country would probably feel far more comfortable with that than with some type of secular humanist regime. I do not think that Muslims, Hindus, Sikhs or people of any other faith are worried by the fact that the established Church of this country is Christian, nor by the fact that there are Christian prayers before every sitting of Parliament. I hope that the Government will take up that matter and that they will not be offended. I do not believe that it will cause offence to people of any other faith or of no faith at all.
6.14 pm
Mr. Wayne David: For my sins, I have followed the process of drafting the European constitutional treaty for some time. I have read very carefully the 2001 Laeken declaration. I have followed the deliberations of the Convention on the Future of Europe. I have been closely following what has been discussed so far at the IGC, and the parliamentary scrutiny in the House has been very effective indeed so far. Credit has to be given to my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) and the right hon. Member for Wells (Mr. Heathcoat-Amory) on their active participation in the Standing Committee that both Houses have established to scrutinise the whole deliberation process.
Thanks, too, should be given to my right hon. Friend the Foreign Secretary and my hon. Friend the Minister for Europe for their participation in the Standing Committee on the Intergovernmental Conference. That has certainly increased the knowledge of at least a minority of hon. Members about what on earth has been going on in those deliberations. However, it is sad that so few Members of both Houses have attended both those Standing Committees. Frankly, there is no excuse for that because their meetings have been open to all Members. We are constantly told that Opposition Members place such great emphasis on scrutinising things European, but they did not make the effort to play their part in those Committee's deliberations. Unfortunately, the rhetoric does not match the reality.
Andrew Selous: I wonder how the hon. Gentleman would respond to the point that I made in my own contribution: perhaps many hon. Members are not attending those scrutiny Committees because they feel that they will have no real opportunity to contribute to the debate, to get answers, which are not forthcoming—we heard about that earlier—and to influence and change the regulations before them. If hon. Members feel that their time will not be productively spent in that way, perhaps that is the reason why they are not turning up.
Mr. David: I was referring to the Standing Committees that have been following the deliberations of the bodies to which I have referred. The hon. Gentleman is referring to the work of the European Scrutiny Committee, of which I am a member. That Select Committee is not open to all hon. Members. Nevertheless, we are pursuing an active programme of work not only to contribute to the wider debate on the future of Europe, but to scrutinise the legislation that comes to the House from the EU.
Mr. Richard Bacon: Does the hon. Gentleman agree that it would be better if the European Scrutiny Committee, of which I am also a member, were able to meet in public and that the Standing Orders should be changed to enable that to happen?
Mr. David: Speaking personally, I agree, but I want to address later in my contribution how the work of Committees needs to be considered very carefully if agreement is reached on the European constitutional treaty. I hope that that agreement will be reached, and it is important not to believe that we have somehow to put our national interest to one side to secure it. Our national interest has been protected and enhanced so far by the Government—I am sure that that will continue to happen in the deliberations this weekend—but reaching an agreement with our partners is also in Britain's national interest because Europe is at a crucial point in its development.
Next year, we will see the enlargement of the EU from 15 to 25 member states. Although enlargement has happened in the past—it is part of Europe's natural evolution—we have never seen an enlargement of such size and significance before. We would be extremely foolish if we believed that the current arrangements inside the EU could simply be transmuted into a situation where we would still work effectively with 10 more members. Such would not be the case. We need an agreement on the treaty, so that we can move forward to make the EU work more effectively, and those of us who are pro-Europeans certainly want that to happen.
Mr. Kelvin Hopkins: Like my hon. Friend, I have attended many sittings of the IGC Standing Committee. At the last one, I drew attention to the fact that even the Foreign Secretary had said that it was possible that the constitution will not be approved. He seemed fairly relaxed about that, according to the quotation—I am afraid that I was not present when he made that comment. There is also the possibility that a

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number of states might vote down the constitution in their referendums. If that happens, cannot we carry on happily as we are?
Mr. David: I agree with my hon. Friend that it would not be the end of the world if agreement were not reached this weekend. I would still argue, however, that it would be in our national interest, and our best interests, if agreement were reached. The European Union will not suddenly collapse. Enlargement will still occur. If we get agreement on a good treaty, however, things will be better for everyone, and certainly better for the European Union. For that reason, I hope that it will happen.
On enlargement, I referred to the enlargement that will take place next year, but I hope that that will not be the end of the process. I hope that Romania and Bulgaria will join soon thereafter, and Turkey too. I am glad that something of a consensus is emerging in the House about the desirability of a Muslim country such as Turkey joining the European Union. I welcome that. As well as those three states, however, we should open our arms and ensure that there is a warm embrace for the Balkan countries, which are in the process of putting forward applications. If they meet the criteria, both economically and politically, they should be able to join the European Union too. If our vision is of a European Union of that size, it is therefore all the more important that we have a European Union that operates effectively, and that the issues that have been addressed so far are successfully addressed in the foreseeable future.
I want to refer briefly to one or two of those crucial issues. A strong intellectual case exists, if we are serious about making the EU work more effectively with an enlarged membership, to have an extension of qualified majority voting. On the one hand, it is possible to protect our national interest—red lines have been drawn where we will maintain the veto—but at the same time, generally, an extension of QMV is preferable. I am also well aware that this is a controversial area in terms of how votes are weighted in the Council. Perhaps I should declare a slight interest as chair of the all-party group on Poland. I have a great deal of sympathy with the Poles when they say that the formula agreed at Nice should be adhered to, because it is on that basis that the people of Poland cast their votes to join the European Union. I hope that the Government will bear that in mind over the weekend and during the delicate negotiations that will take place.
Andrew Selous: The hon. Gentleman will know well that the Poles are particularly concerned to have some reference to Europe's Christian heritage in the preamble. Does he also share their concerns on that point?
Mr. David: I understand the points that the Poles make, but I think that that is one of the areas on which they may be persuaded that it would be better to adopt a different course. I am therefore optimistic that agreement can be reached on a sensible way forward for all parties.
One of the most important issues to have emerged so far from the draft constitutional treaty is that an objective evaluation of where power will lie in the future
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will point us to the Council of Ministers as giving the future strategic direction of the European Union. There has been concern for many years that the European Commission in particular has been more proactive than it should have been and too assertive. The new treaty will make it absolutely clear that the ultimate power inside the European Union rests with the Council and with the member state Governments. I welcome that.
That is a big issue. One of the smaller issues, but one of considerable importance, is that of subsidiarity and proportionality—unfortunate terms that do not mean a great deal to many people. They are important, because subsidiarity is the principle that defines where decisions are taken. It means that decisions should be taken at the most appropriate level as close to the people as possible. Proportionality means that the EU should not do other than what is necessary for it to do.
There is a protocol at the end of the draft treaty on those two principles and one of the key proposals in it is that national Parliaments should have a new and key role in the EU's decision-making process. I shall be frank with the House. I would dearly have liked to see that protocol strengthened so that, instead of there being a so-called yellow-card proposal, there is a red-card mechanism. However, the distinction between them is more apparent than real. The protocol explains that if the European Commission, after consultation, comes forward with a set of proposals to national Parliaments and one third of those Parliaments object to the proposals on the basis of subsidiarity, the Commission is obliged to take the proposal back and to review it. Given that there is a close relationship between national Parliaments and national Governments, such a warning to the Commission would mean that its proposal would be dead in real political terms. The provision will add something that is new and innovative. It will give greater responsibilities to national Parliaments and this House in particular, which considers its European scrutiny role to be so important.
To return to a point I made earlier, if that important protocol is agreed, it will be incumbent on the House to consider carefully how we conduct our debates on European affairs and how we conduct European scrutiny. Although I have commended the work of the House, its Standing Committees and the European Scrutiny Committee, that will not be enough if the protocol is agreed. It will therefore be important that the House—in its Committees and on the Floor—devotes far more time and effort to European issues. Given that the United Kingdom now has a number of devolved institutions, it is important that a specific and clear relationship is worked out with them on how they can express their views on the European matters that they will be asked to implement.
It is also important that the House develops links with national Parliaments in other member states and with the European Parliament. I shall again be frank, and I speak as a former Member of the European Parliament. All too often, we are parochial and inward looking in our attitudes. We need to take a broader perspective and to be true internationalists. One of the surest ways to do that is to extend our hand of friendship to other national Parliaments and the European Parliament and to make sure that we have meaningful dialogue with them so that we can together develop the EU in the way that we want.

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In September, the Government published a White Paper on their approach to the intergovernmental conference. If we study the White Paper and what has so far been agreed at the IGC, we will be able to see two things. First, we will see that the Government have been true to their words and have consistently argued with a great deal of success for the things that they announced in September. Secondly, we will see clearly that they have been successful in setting the agenda for Europe in a way that was not possible a few years ago. That is important not just in terms of our immediate considerations but in terms of Europe's future development as well.
Finally, I wish to refer to a comment made by Sir John Kerr in the Financial Times on 25 November. He was responding to a point that many Conservative Members have made. They say that we are talking about a constitution for Britain and not a constitutional treaty. There is a key difference, and Sir John Kerr said that the constitutional treaty
"is not a real constitution… Valery Giscard d'Estaing's convention on the future on Europe had no mandate to lay the foundation of a state, and it did not. Instead it drafted a treaty—an agreement between sovereign states—to simplify and replace the current confusion of treaties."
He went on to say:
"It makes no claim…to a grassroots legitimacy bypassing states and governments."
Sir John Kerr is not just any person or diplomat. He is probably one of our most distinguished diplomats and he was the secretary-general of the European Convention.
Mr. Bacon: First, does the hon. Gentleman accept that at the last COSAC meeting in Rome, the document that was circulated in English did not say constitutional treaty on the cover, as the cooked-up document that the Foreign Office has printed does, but constitution for Europe? Secondly, no matter what Sir John Kerr's views are, once the thing goes through—if it gets through—the adjective will get dropped and the document will start to be referred to using a noun.
Mr. David: I am not sure about the use of the English language. It is my understanding and that of Sir John Kerr that we are discussing a constitutional treaty. That is clearly recognised by the Government, which is why the words printed on the cover of the document that we are debating make that crystal clear. The important factor is not only the words that we happen to use, but their legal implications. If the treaty is to have force in Britain, it must be approved by Parliament because we are the sovereign body and that is what counts.
As we approach this important weekend, it is more important than ever for the House to make its collective position clear. We are Europeans and Britons at the same time—being both is not a contradiction. I am proud of being a member of the European. Union, I am proud of being British and, incidentally, I am also proud of being Welsh. In the complex modern world in which we live, we need such a perspective on how we may all live and work together on the basis of mutual respect. As I said early, I hope that the treaty will be agreed so that we may co-operate on that basis in the future.
6.32 pm
Mr. Gerald Howarth: When I
arrived at the House in the early hours of the morning, I saw a splendid-looking John Bull character carrying a placard—it made a great change from the other demonstration that is taking place outside—that said, "No surrender, stuff the Euro, rule Britannia". I would have said that those were entirely my own sentiments if my hon. Friend the Member for Mid-Sussex (Mr. Soames) had not been sitting within striking distance of me.
We have had a good debate, although it is a shame that there were not more Members in the Chamber to participate and listen. I salute the Foreign Secretary for setting a good example to his fellow Ministers on how to treat this place. As my hon. Friend the Member for West Suffolk (Mr. Spring) said, we appreciate the fact that the right hon. Gentleman attends the House assiduously and makes himself available to participate in debates rather than coming only to lecture us.
I also single out the two members of the Convention: the hon. Member for Birmingham, Edgbaston (Ms Stuart) and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). I am sure that the whole House is indebted to them for the extraordinarily hard work that they have put in over the past two years on such an important project. My right hon. Friend has been assiduous and incredibly well focused, and I salute him personally for expressing his arguments so clearly and forcefully.
At the risk of imperilling the political career of the hon. Member for Birmingham, Edgbaston, I think that she has been courageous enough to admit that she has seen the light. All of us will have been horrified, although not entirely surprised, to learn about her discovery that those on the Convention who did not support deeper integration were sidelined, because that speaks poorly of the Convention itself.
My hon. Friend the Member for Stone (Mr. Cash) has been a consistent critic of the accretion of power by the European institutions, and I believe that the whole House owes him a debt of gratitude for his constancy in that respect. The hon. Member for West Ham (Mr. Banks), who, I am sorry to see, is no longer in his place, was a brave man to refer in this week of all weeks to football played with a round ball. As one of those who was at Heathrow terminal 4 in the early hours of the morning when our victorious team returned home from Australia, I thought reference to the game with the round ball was particularly inappropriate. But he is a cheeky chappie and we all love him anyway.
This has been a broad-ranging debate. The right hon. and learned Member for North-East Fife (Mr. Campbell), who we know cannot be in his place because he has had to return to Edinburgh, made a typically gracious contribution. There was much in what he said with which I could agree, although I think that the whole House was interested to learn that Liberal Democrat Members of the other place are not expected to be bound by party policy. The hon. Member for Clydebank and Milngavie (Tony Worthington), whose interest is in development issues, spoke fluently and

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enthusiastically about the work of the Department for International Development.
My hon. Friend the Member for South-West Bedfordshire (Andrew Selous) made a significant point about the importance that we in this country attach to the connection between a Member of Parliament and his or her electorate, and the serious responsibility and accountability issues that flow therefrom. He drew the analogy with the European Union, where not only has such accountability already been lost to a large degree, but there is a great risk that even more will be lost. The hon. Member for Caerphilly (Mr. David) rounded off the debate by saying that, basically, he was in favour of everything—but he is a former Member of the European Parliament, so we might have expected that.
That brings me back to my hon. Friend the Member for West Suffolk, who, in opening the debate for the Opposition, entertained us as is his custom to a well-informed and thoughtful tour d'horizon of European issues.
Mr. MacShane: Was that French?
Mr. Howarth: It was indeed. I speak French and German, which slightly undermines those who have accused me of being a little Englander.
My hon. Friend the Member for West Suffolk drew attention to the Government's woeful failure to protect Britain's essential national interests in the European Union, and he touched on defence—a subject on which, the House will not be surprised to learn, I intend to concentrate, because we face a serious predicament in defence policy that has in large measure been caused by the Government's inability to placate both the US Administration and our EU partners.
As has been acknowledged throughout this afternoon's debate, it is NATO that, since its inception in 1948, has provided for European security. Throughout the cold war, it tied together European and north American security. It provided a counterweight to Soviet power in the east, and without NATO, history might have proved quite different. Today, NATO continues to be relevant to the security environment shaped by the events of 11 September 2001. It remains the only guarantor of European security and the best way to address the capabilities gap between Europe and the United States.
Developments within the EU threaten the primacy of NATO. The European security and defence policy began with unnecessary duplication, and is now beginning to threaten the future of the NATO alliance. We agree that Europe needs to assume a greater role in providing for its own security: currently, only Britain and France spend anything like the amount that needs to be spent on defence. We support the push to increase European defence spending from its current low base of 2 per cent. of GDP and to develop a greater European defence role, but we believe that that increased role for European countries in defence is best achieved through NATO.
NATO already has the planning and command structures in place. It already has the resources, capabilities and experience. European defence would best be achieved through NATO, which brings the advantage of involving north American allies and non-
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EU European countries. NATO has developed links deep into eastern Europe through the partnership for peace. It is therefore best placed to provide regional security in future. However, as I said earlier, it is under threat.
As we speak, there is a struggle between those who recognise that NATO should continue to be the cornerstone of European security and those who are obsessed with the creation of an autonomous EU defence capability which, in the words of the Anglo-French declaration at Le Touquet on 4 February this year, can match
"the worldwide ambition of the EU's Common Foreign and Security Policy".
Some people on the continent want to challenge what they regard as the domination of the United States. Unable to do so on their own, they are trying desperately to drag other EU states with them to create an alternative pole to the United States. As Romano Prodi said at the end of March:
"It is evident that the Iraq crisis has brought us to a new crossroads in transatlantic relations, we must choose a different path."
Jacques Chirac said as long ago as 1999 that the European Union
"could not fully exist until it possessed autonomous capacity for action in the area of defence".
I emphasise the word "autonomous".
There is a serious danger that Britain's national interests will he betrayed if the Government try to assure the United States that we are four-square behind NATO and, at the same time, seek to assure our EU partners that we are at the heart of Europe. However, that is the typical stance of "Mr. Facing Both Ways", our Prime Minister. I remind the House that he famously told The Sun how much he loved the pound, but now tells us that in principle that he is favour of ditching the pound as soon as the five economic tests are met—meaning as soon as the opinion polls indicate that the Government might win a referendum. As long ago as February 2001, the US President said that the Prime Minister had assured him
"that the European defense would no way undermine NATO."
The President said that the Prime Minister had also assured him
"that there would be a joint command"
and
"that planning would take place within NATO".
The Prime Minister repeated those assurances to the President earlier this year. Indeed, an agreement was hammered out under the Berlin-plus arrangements whereby NATO's extensive planning and force generation structures would be made available to the EU in the event of NATO declining to become involved in a military operation. By that means, the EU would have all the cost advantages of having existing structures available to it while avoiding duplication or the risk of establishing a competing institution. Yet, as we know, in September, the Prime Minister finally signed up to structured co-operation with France and Germany, agreeing to an EU planning cell outside NATO, thus flatly contradicting the assurances that he gave President Bush.

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It is hardly surprising that US Secretary of State Colin Powell has expressed his anger. Last Thursday, he said at NATO that the US cannot accept independent EU structures that duplicate existing NATO capabilities. He is not alone in that belief:
"I have been as robust as anyone in my opposition to unnecessary duplication between NATO and the EU. We need more capabilities, not paper armies and wiring diagrams connected neither to soldiers nor to reality."
So said not a US neo-con but Lord Robertson, NATO Secretary-General, at a Royal United Services Institute conference in London last Monday. To remove all doubt, yesterday morning, he told listeners of the "Today" programme:
"We cannot afford any sort of competition between the EU and NATO."
He is right, but it is significant that as he leaves his post, he thought it essential to emphasise the vital importance of not undermining NATO.
As my hon. Friend the Member for South-West Bedfordshire said, the Government risk decoupling the United States from NATO. We will be told that the change is simply a modest one, and does not have the significance that we attach to it. However, I draw the attention of the House to a succession of statements from European leaders that reveal the agenda behind the European security and defence policy. The German Foreign Affairs Minister, Joschka Fischer, described the Anglo-French St. Malo communiquè of 1998 as
"an important step for the development of the European security and defence identity, another pillar of the process of European unification".
Romano Prodi said earlier this year that Europe should abandon the NATO alliance if it wants to have a meaningful say in world affairs.
We need to take note of those clear statements about how European leaders see the role of EU defence in building a greater united states of Europe. Why do we pretend that their motives are different, when they make no secret of their integrationist ambitions? There has been much mention in our debate of the European constitution. As we know, it would, for the first time, include key elements of defence policy in an EU treaty, thus incorporating them at a fundamental level in the new European structure. It is clear that one of the effects will be that the treaty is subject to the European Court of Justice. It creates a judicial identity for the EU.
Everything in the treaty is up for grabs, even though article I-40 speaks of
"the progressive framing of a common Union defence policy"
and states:
"This will lead to a common defence, when the European Council, acting unanimously, so decides."
Although the article goes on to state that the policy of the Union
"shall respect the obligations of certain Member States, which see their common defence realised in the North Atlantic Treaty",
it is hard to see how the existing treaty commitments of member states will survive the progressive acquisition of the attributes of statehood by the EU.
The defence of the whole of Europe, including the UK, has been assured this past half-century by NATO. Those driving the development of an EU defence
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identity are concerned not with enhancing capabilities, but with investing the EU with the trappings of a nation state. They have a Parliament, a supreme court, an anthem, a flag and a currency. Add a common foreign and defence policy and a constitution, and the jigsaw is complete.
This weekend, the final drafting session on the proposed constitution takes place. Just a few weeks ago, Ministers dismissed our warnings by saying that the proposal was simply a tidying-up operation. Now the Government have been forced to accept our judgment and, as my right hon. Friend the Member for Wells said, they are threatening to withhold their consent, but I suspect that that is sabre-rattling rather than any realistic attempt to renegotiate, let alone to walk away from the constitution if they feel that it cannot be justified.
The constitution will result in energy policy, asylum policy, criminal procedure and a raft of other policy decisions being removed from Westminster. We are, as my right hon. Friend said, importing a written constitution into our laws, and importing non-legislative Acts issued by people who are not accountable.
It was reported yesterday that support for the EU project has fallen below 50 per cent. across Europe, even in France, and that it is down to 28 per cent. in the UK. We say that this sovereign Parliament has no right to surrender a vast range of powers that we hold in trust for the British people, without their express consent. In the name of the British people, we demand a referendum now.
6.47 pm
The Minister for Europe(Mr. Denis MacShane): We have had a good debate. I welcome the hon. Member for Aldershot (Mr. Howarth) to his new duties. He began with a bang of anti-Europeanism and finished with a cry of anti-Europeanism, but in the middle there were some solid points, to which I shall return. I see that he has removed the little pound sterling sign from his lapel, obviously under orders not to manifest his earlier crude anti-Europeanism.
The Government have tried to insert Parliament, as we did today, into the heart of our enduring debate on Europe. So far this year, we have had more than a dozen debates on the intergovernmental conference. I and other Ministers have responded to 16 separate Committee reports on the IGC. My right hon. Friend the Foreign Secretary and I have attended eight Committee sittings on the IGC this autumn alone.
We launched a constitutional innovation this autumn by setting up a Standing Committee on the IGC. I cannot find any precedent of a Government subjecting a treaty negotiation to full-scale interrogation by hon. Members while the negotiations were taking place. Important points were raised by hon. Members in that Committee, notably on energy policy. I pay tribute to my hon. Friend the Member for Waveney (Mr. Blizzard), the chairman of the all-party group on the offshore oil and gas industry, for raising those issues. I am happy to report to the House that we now have

1161
language on energy that meets his concerns and ours. As he told the House earlier, that has been welcomed by the North sea oil industry.
Andrew Selousrose—
Mr. MacShane: If the hon. Gentleman will forgive me, I must make progress.
That example shows how parliamentary scrutiny can work if hon. Members come along and take the issue seriously but, alas, the Opposition have not done so. Although both the Foreign Secretary and I were present at that important Standing Committee for its long sittings, no member of the Opposition Front-Bench team bothered to turn up. Of course, hon. Members read out their Rothermere press rants at the Dispatch Box, but leave to others the hard work of ensuring parliamentary scrutiny of the IGC.
At the first sitting of that important Standing Committee, only one Conservative Member was present: the hon. Member for Stone (Mr. Cash)—who else? At the second sitting, he was joined by the right hon. Member for Wells (Mr. Heathcoat-Amory). At the third sitting, that duo was joined by the right hon. Member for Wokingham (Mr. Redwood). That is a golden trio. Out of the 160-odd Conservative MPs, the three anti-Europeans of star quality who helped to destroy the last Conservative Government with their rabid anti-Europeanism were the only ones who bothered to turn up to subject the IGC to parliamentary scrutiny.
Mr. Bacon: Will the Minister give way?
Mr. MacShane: I will not do so, if the hon. Gentleman will forgive me.
The hon. Member for Stone and the right hon. Members for Wells and Wokingham can rest content that their new leader remains determined to uphold the Conservative party as the most extreme anti-European party of any of the major parties of the right in Europe. That is their affair. They are welcome to dwell in the dark recesses of anti-Europeanism for as long as they like, but the British people do not share that position. If I may make a personal statement, I see
"the EU as a huge historical achievement compared to anything Europe has ever seen",
and
"To our vigorous membership of the most hopeful organisation Europe has ever seen I feel a robust commitment which comes from both brain and heart."
Those are not actually my words, but those of Lord Hurd of Westwell. They show how far the Conservative party has travelled into the depths of anti-Europeanism.
My hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) made a particularly powerful contribution. When she was interviewed on "The World at One" about her new pamphlet—I have a copy with me and recommend that all hon. Members give it a careful reading—she told Mr. Nick Clarke that she had advanced many of her arguments in the House or in Standing Committees. I have certainly had useful conversations with her about the issues that she raises
1162
and I agree with much of what she says. She calls for a new Cabinet post for the Minister for Europe. but I am not quite sure how far that will go.
Mr. Straw: Not far.
Mr. MacShane: I hope that that will be recorded by Hansard.
My hon. Friend the Member for Birmingham, Edgbaston will be aware that almost any Question Time involving any Minister will deal with European issues. It is difficult to say "Here is a category called Europe", as Europe now touches transport, the environment and defence, as we have heard, as well as other matters. She referred in the pamphlet to one article in the constitutional treaty:
"Article 24[4] allows for the move from unanimity to Quality Majority Voting",
and said that that was unacceptable in her view. I am glad to report to her that the new draft that we will be discussing in Brussels states:
"If a national Parliament makes known its opposition within six months"
to any such passage,
"the European decision…shall not be adopted."
In a sense, by arguing her case, she has helped in winning a lot of it.
The right hon. Member for Wells taxed me with the confession that I was not a qualified lawyer. I have looked at the Hansard of the Standing Committee on the Intergovernmental Conference, however, and I could read out at interminable length section 2(1) of the European Communities Act 1972, which underlines the primacy of EU law. He is quite clear in what he says about the issue, but treaties are international law. If we sign them, we have an obligation to honour and abide by them. Pacta sunt servanda is the old Latin term, and it is honoured and enforced by tribunals and courts. There is no other way in which we can have relationships with other countries in treaty form. When the constitutional treaty is signed, it will be another European treaty. However, we have a present for him, the right hon. Member for Wokingham and the hon. Member for Stone—article 59, which allows for withdrawal. They should be honest and make it clear that that is now Conservative party policy.
My hon. Friend the Member for Clydebank and Milngavie (Tony Worthington) made an extremely important point about development aid.
Mr. Hopkins: Will the Minister give way?
Mr. MacShane: No, if my hon. Friend will forgive me.
I cannot read out all the references to millennium development goals, humanitarian aid and international development that are in the new Foreign Office White Paper entitled, "UK international priorities", but let me assure my hon. Friend the Member for Clydebank and Milngavie that I am proud, and every Labour Member is proud, of the work of the Department for International Development and the massive increase in international and humanitarian aid that it has achieved. We will never allow a return to the cuts in international aid and Pergau dam policies of the Conservative party.

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The European Union is itself a powerful poverty reduction mechanism—that is why so many poor nations are anxious to join it. The Government do not support budgetisation—a technical point to which my hon. Friend may want to return in due course.
The hon. Member for Stone, who is not here—he apologised in advance for his absence—managed in his first sentence to patronise Germany and France. I say to Conservative Members that this incessant Francophobia and Germanophobia—this rancid hostility to our European partners—does their party, and the House of Commons, no credit.
My hon. Friend the Member for West Ham (Mr. Banks) said that he was in favour of a European superstate. I cannot share that vision, because we are an association based on the nation state, one of the most important manifestations of which remains football. I hope that the behaviour of our football fans during Euro 2004 will finally lay to rest, for this new century, the lingering memories of bad behaviour. My hon. Friend discussed in considerable detail the issue of Commissioner Monti and television rights. That is being dealt with seriously by other Departments.
The hon. Member for South-West Bedfordshire (Andrew Selous) talked movingly about his relationship to his electorate, which we all share. I am therefore surprised that he wants to dissolve it by adopting the campaign by the isolationist Rothermere press for a plebiscite on whether we stay in Europe. Fewer and fewer countries in the EU of 25 are going down that road. The shadow Foreign Secretary, who has just returned from eastern Europe and the Baltic states, found no support there for his incessant clamour for such a plebiscite. He has not yet apologised, nor has any Conservative Front Bencher, for the dispatching of senior Conservative party members and elected representatives to campaign against accession countries deciding in their referendums to join the EU. That was shameful.
My hon. Friend the Member for Caerphilly (Mr. David) underlined the great importance that we attach to the need to strengthen the role of Parliament. I agree that we have a crisis in parliamentary scrutiny, but the system will not be effective unless hon. Members are prepared to turn up to do the work.
The hon. Member for Aldershot made some important points about defence and NATO, but let me quote to him a certain gentleman who said:
"Let me make sure you understand our position. We believe that Europe needs to take"
on
"more of a defence posture and should act independently of NATO—if NATO chooses not to take on the mission."
Those are the words of President George W. Bush; I am happy to quote the President of the United States in support of what the Prime Minister is seeking to achieve.
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We finish where we began. Today, we had the first major statement on Europe by the Leader of the Opposition, who told The Times that he would seek to wreck the constitutional treaty. We have the promise that the Conservatives will spend the next year refusing to accept the new treaty—even, it appears, if it is approved by Parliament. The Conservative party will sing the same old anti-European tunes under its new leader. His former Cabinet colleague, the then Foreign Secretary, now Lord Hurd, writes in his memoirs that, if we failed to ratify such treaties—then, the Maastricht treaty, tomorrow, the new constitutional treaty—
"we would by our foolishness have helped to bring about the nightmare which has always alarmed our predecessors: a continental union influencing British lives at almost every turn over which we had no control."
The Conservatives wish to live that nightmare. The Government will uphold British values and be strong in the European Union. We will support a strong Europe. We will be in Europe and help to run Europe. The Conservatives want us to get out of Europe and to run away from Europe. Their policy has got worse under their new leader. They have nothing to say to the House, to the nation or to Europe.
It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

PETITIONS

  Pension Books
  7 pm
  Mr. Roger Williams: The petition of residents of Brecon and Radnorshire declares:
  That the withdrawal of pension books would limit the degree of choice that pensioners are able to exercise in terms of how they receive their pensions, and that 1,283 people have supported the petition through newspaper campaigns.
  The petitioners therefore request that the House of Commons urge the Government not to abolish pension books.
  And the petitioners remain, etc.
  To lie upon the Table.
  Lembit Öpik (Montgomeryshire): The petition of residents of Montgomeryshire declares:
  That the withdrawal of pension books would limit the degree of choice that pensioners are able to exercise in terms of how they receive their pensions, and that 1,200 people have supported the petition through newspaper campaigns.
  The petitioners therefore request that the House of Commons urge the Government not to abolish pension books.
  And the petitioners remain, etc.
  To lie upon the Table.

Meat Fraud
Motion made, and Question proposed, That this House do now adjourn.—[Paul Clark.]
7.1 pm
Judy Mallaber: I am pleased to have secured this debate on meat fraud, and it is appropriate that I should follow the Minister for Europe, my hon. Friend the Member for Rotherham (Mr. MacShane), who pursued exactly the same issue when he faced a case of meat fraud in Rotherham identical to the one that has recently arisen in my constituency.
We are facing a sophisticated meat mafia that peddles dangerous meat in a way that other criminals peddle dangerous drugs. Julie Barrett, the director of the Chartered Institute of Environmental Health in Wales, said at its conference three weeks ago on cracking down on meat crime:
"Illegal meat is a multi-million pound trade that presents a major and growing risk to public health in the UK. The dangers are not widely understood, systems of detection are under-resourced and poorly coordinated, and the law lacks the necessary teeth to bring perpetrators to book."
In my constituency, the conspirators at Denby Poultry Products made hundreds of thousands of pounds processing and distributing more than 450 tonnes of rotten poultry to shops, supermarkets, schools, hospitals and pubs, undetected over a period of at least five years. Derbyshire police think that the meat even got into their own canteen. I invite the Minister to congratulate the Amber Valley officers, Sue Sonnex and Steve Haslam, whose salary was covered by the Food Standards Agency, and Derbyshire police, particularly Neil Perry, Darren Hunt, Nicholas Mathews, Colin Newton and Greg Dexter, on their surveillance and investigation, which led to five people being jailed for a total of 11 years for conspiracy to defraud, although the ringleader Peter Roberts is still on the run overseas.
A "Panorama" programme a few weeks ago showed footage of the raid. It described the stench of rotting flesh in the plant, rats running over people's feet, and overflowing sewage. It also showed pictures of the diseased meat. I do not welcome the fact that the police have given me their file of dirty photos, but I will happily pass it on to the Minister to have a look at. The meat was transported in unrefrigerated, maggot-ridden vehicles, and high-risk, contaminated poultry waste was taken from slaughterhouses to Denby, along with low-risk animal by-products, allegedly to be turned in to pet food, but in reality mixed and passed on to other processors and distributors and passed off as meat fit for human consumption. Anyone who looks at the video footage or the pictures in my police file would just feel sick. It is disgusting.
We do not know how many people became ill or even died as a result of this. It is all too easy for the issues involved to be given low priority, compared with more obvious and immediate dangers to human life, and for this to be reflected by a lack of urgency when serious cases such as Denby emerge. Ministers must not take this as an isolated crime. They must look at the lessons to be learned, and treat it as a serious public health and criminal issue.
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Why did it take an anonymous informant to tip off Amber Valley's environmental health officers about what was going on, when we supposedly have a licensing and meat inspection system in place? How could a vet visit MK Poultry, the Northampton cutting plant that did much of the distribution, every week, yet not notice containers saying "Reject" and "Unfit for Human Consumption"? What if Amber Valley council officers and Derbyshire police had not been prepared to put in the resources for a massive operation involving more than £1 million of police resources to tackle a conspiracy that was a danger to public health way outside Derbyshire's borders? Why do we only now have an action plan under the waste food taskforce of the Food Standards Agency when an identical meat fraud had happened in Rotherham?
My particular interest arises from the Denby Poultry fraud case, but I want the Minister to consider a range of other serious meat crime issues, including the illegal importation of meat and, specifically, dangerous imports of bush meat through illegal air freight and the illegal killing of animals for delicacies such as smokies. We have had Operation Fox, Operation Aberdeen and Operation Lobster Pot as well as operations in Ceredigion and south Norfolk. We need a consistent campaign co-ordinated across those various illegalities to crack down on meat crime. I congratulate and support the Chartered Institute of Environmental Health and its Environmental Health News on their "Stamp It Out" campaign, which aims to stamp out the illegal trade in unfit meat, which puts the health of us all at risk.
Arising from that, I have a number of issues that I want to raise with my hon. Friend the Minister. I know that she will not be able to deal with them all tonight and some will need to be raised with other Departments, but, above all, I ask her to take meat crime and fraud seriously and to give it priority as a public health issue. I also ask her to meet Amber Valley council officers and the Derbyshire police involved in the Denby Poultry investigation to hear at first hand of the weaknesses in our regulatory and legal system as well as in co-ordination between agencies, preferably with a Minister from the Department for Environment, Food and Rural Affairs, because one of the issues is the way in which this matter crosses Departments.
I ask the Minister not just to leave the issue with the Food Standards Agency, but to keep a close watch on the progress of its work and to give it added impetus. Progress is being made through the waste food taskforce report, but I have heard and received a number of criticisms of omissions from it and of the speed with which recommendations are being implemented. I shall come back to some of those.
The FSA is only one of the agencies involved. It is essential that the FSA functions well—we need it to do so—but any criticism and weaknesses and gaps between agencies undermine confidence. I hope that my hon. Friend will ensure that both all those involved in food enforcement work and the public can have hill confidence in that agency's work and the work of other agencies; she cannot just take a hands-off approach.
On the legal framework, I am calling for a new meat crime offence: to knowingly procure, process, sell, deliver or manufacture foodstuffs that are unfit for human consumption with an intent to defraud the

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consumer and place the public's health at risk. We need a separate criminal offence that will enable us to catch large-scale trading in unfit meat.
Conspiracy to defraud charges had to be used in the Denby Poultry case because offences under existing food safety regulations only carry low penalties—a maximum of two years in prison, even if the case can be taken from the magistrates court to the Crown court—but it is difficult to win conspiracy cases, and preparing them is complicated.
Also, I am told that the courts do not take seriously enough those powers that they do have in food crime cases. We need punitive and deterrent sentences. This is not a minor crime. Perhaps we could consider the criminal offences available to Customs and Excise. We need an offence that can be pursued more straightforwardly. We also need to consider the matter in the context of the police and who should be responsible for tracking down and dealing with meat crime. We need further training of enforcement agency staff on establishing evidence trails that stand up in court.
The next issue involves co-ordination between Departments and agencies. Major weaknesses were identified in the Denby Poultry case. Who has regulatory, licensing and inspection duties in slaughter processing and distribution of meat? Let us go through them: the FSA and the Meat Hygiene Service, DEFRA and the state veterinary service, environmental health and trading standards in local authorities, and now, apparently, the police when regulation fails. The Department of Health, DEFRA, the Office of the Deputy Prime Minister and the Home Office all have an interest.
I shall point out some flaws and gaps that need to be closed to prevent another Denby, but I note that it was primarily the local authority, with some FSA funding and support, and the police that investigated and pinned down the criminals. Things get worse when we add in the other areas of meat crime. On the scandal of illegal meat imports, Customs and Excise and other inspectorates become involved. Following suspicions on the origin of the foot and mouth epidemic, the Cabinet Office, as I understand it, has given the FSA a year to deliver a step change in delivery or lose control to a new centralised agency. In reply to a question that I tabled, the Prime Minister himself stressed the urgency of stamping out the practice.
I understand that a ministerial group chaired by DEFRA was to be established for co-ordination purposes. Has it met? Let me also ask the Minister to press for the establishment of a ministerial group covering all Departments with responsibility for meat crime to review such crime across the board, to look at arrangements for co-ordination to plug gaps and loopholes, and to give impetus and political commitment to the tackling of this threat.
May I ask the Minister to consider specific issues arising from the waste food taskforce report and the Denby Poultry case, or pass them to the relevant Departments? There has been concern about weaknesses and omissions in the recommendations, and in some instances action has seemed unduly slow.
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There is a huge amount of money to be made from meat fraud. We will only be able to prevent the next Denby or Rotherham case if the potential criminal can no longer obtain contaminated meat intended for rendering dirt cheap, then package and sell it on illegally, at a vast mark-up, so that it goes into the human food chain. That will require a robust audit trail of where by-products go from the slaughterhouse and where they end up. Even if they had the time, meat hygiene inspectors would still only have powers to investigate at the slaughterhouse end; DEFRA and state vets have powers relating to the rendering and pet food plants.
We need an independent body or one of the agencies to follow the whole train. We should know now where each slaughterhouse sends its diseased meat so that checks can be carried out on what happens to it at the other end. To follow the audit trail, we need information sharing. DEFRA was first asked back in 2001, by my local police and local authority officers, to provide an electronic database showing all animal by-product premises. Enforcement agencies and those in the industry need such a database to verify disposal routes and methods. Apparently, however, no list will be published until 2005. Why must it take four years? DEFRA may wish to re-license its premises, but that is no excuse for it not to publish the current list now, perhaps on its website. Why is the Meat Hygiene Service not publishing its list of licensed plants until 2004? Why is it taking so long to produce recommendations?
According to "Panorama", supermarkets said that they would accept products that carried a meat hygiene standard stamp of approval, but they need to be able to check where the meat comes from. Without the necessary information, how can anyone check the trail of meat products? Food officers need it in order to establish the legitimacy and traceability of meat during routine inspections of the premises of, for instance, butchers and caterers, and the food trade needs it in order to establish where its meat has come from and where it is going.
I have raised the issue of co-ordination and information sharing in the context of meat fraud, but it covers the whole range of meat crime. It is a serious issue—a weakness that we need to tackle.
Meat Hygiene Service inspectors are at licensed poultry slaughterhouses every day, but at present the service level agreement between DEFRA and the MHS allocates only 15 minutes a month for them to supervise the segregation, storage and disposal of waste—of animal by-products. That is woefully inadequate, and would allow the Denby and Rotherham cases to occur again elsewhere. I understand that the Food Standards Agency says it has doubled NHS resources for this purpose, but is that really adequate to cover 1,400 licensed plants?
Denby Poultry was licensed by DEFRA, and the state veterinary service is meant to visit annually to check the position. I should like the Minister to look into suspicions about whether the failure to supervise animal by-product premises of that kind is due to the fact that the service looks primarily at animal health, rather than public health, issues.
Many issues arise from this case, and a number of the principles involved affect meat crime in general. I am thinking of co-ordination, information sharing and the

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need to establish an adequate and proper regulation system. That is not to say that lessons have not been learned or that recommendations are not being dealt with; but there are omissions from the system, it is too slow, and it needs to be looked at across the board. I hope that my hon. Friend the Minister will get to grips with the situation and take responsibility, but she will need to work with other Ministers.
In the light of the Denby Poultry scandal and the problems of co-ordination between those involved, I cannot for the life of me see how extending privatisation of meat inspection and the MHS can be justified. We clearly cannot trust meat plants to conduct their own private inspections; nor do we want to add to the number of groups involved in meat inspection. So I ask my hon. Friend please to oppose the European privatisation proposals.
I am aware that I have raised a whole range of issues, and I certainly do not expect the Minister to be on top of them all, particularly given that many do not fall within her sphere; indeed, that is precisely one of the problems. The main thing that I want to hear from her tonight is that she realizes—as I am sure she does—that meat crime, specifically the meat fraud experienced in my constituency, is a very serious issue. Indeed, this is a massive issue in terms of crime, involving criminal conspiracy and the making of huge amounts of money from dirty meat. It does not get highlighted and we do not necessarily understand the dangers to public health, so I hope that my hon. Friend can give priority to it.
If my hon. Friend watches the "Panorama" film, of which I have a copy—I do not recommend that she watch it over dinner, as I did—she will hear some interesting "vox pops" from ordinary shoppers. They assumed that proper safety checks were being made throughout the food production and distribution chain, but how are consumers meant to know the dangers and what is going on? They cannot take responsibility for their own health in such circumstances. Much responsibility for their safety rests fairly and squarely with the food brokers—incidentally, a further information gap is that we do not know who the food brokers are—and with the meat industry itself. The industry must look at its own procedures, and it should be brought to book.
All the public agencies and Departments must adopt a more coherent and systematic approach to taking responsibility for tackling meat crime and meat fraud. I urge my hon. Friend to put this issue on the agenda in her meetings with her ministerial colleagues, so that we can indeed stamp out such crime. I want to be able to tell my constituents and friends and family—and, indeed, my hon. Friend's friends and family—that they can sit down and eat their dinner confident in the knowledge that they will not end up in hospital with food poisoning the next day. Let us stamp out this terrible crime. I urge my hon. Friend to take this issue on board.
7.16 pm
The Parliamentary Under-Secretary of State for Health (Miss Melanie Johnson): I begin by congratulating my hon. Friend the Member for Amber Valley (Judy Mallaber) on her choice of subject for this Adjournment debate. Meat fraud is a serious issue, and I can reassure her that all those involved with it in
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government take it seriously. I am very happy to join her in congratulating those who brought the criminals to book.
My hon. Friend mentioned the exercise in Rotherham, codenamed Operation Fox. It was shortly after the conclusion of that case that the Operation Aberdeen investigations began into a serious meat fraud that centred in her constituency. It was those two cases in particular that prompted the Government and their agencies to respond with a series of tough measures to crack down on such crimes. It is important to point out that the Operation Aberdeen investigations revealed that, at that time, the enforcement agencies' performance had not been up to the task; indeed, nor had Government policy succeeded in staying ahead of the criminals' game. Things therefore had to change if enforcers and the Government were to make a serious effort to stamp out this criminal activity. In picking up on the points that my hon. Friend has raised, I can reassure her that substantial progress has now been made.
The Government's efforts started in September 2001, some six months after the first raids in the Operation Aberdeen case, with a seven-point action plan on unfit meat. The action plan was a big step forward in tackling meat scams of the type uncovered in Amber Valley. Its first, and perhaps most significant, action was to extend the staining requirements from red meat to poultry meat by-products. As my hon. Friend will know, many of the issues that arose related to poultry meat.
Judy Mallaber: Will my hon. Friend give way?
Miss Johnson: I will, but if I do so too many times I shall have very little chance to respond to the debate.
Judy Mallaber: One issue that I did not raise, and which my hon. Friend could perhaps look at, is the staining of low-risk, as well as high-risk, waste. Without such staining, it is very hard to know whether low-risk waste is also being used improperly and entering the food chain.
Miss Johnson: I am grateful to my hon. Friend for making that point. The question of low-risk meat gives rise to slightly different issues. Low-risk products have been passed as fit for human consumption, but are not intended for such consumption. That is different from high-risk meat, and the Food Standards Agency currently believes that the staining of low-risk products would not be proportionate to the public health risk in respect of fitness for human consumption.
So the first measure was the staining requirements for poultry, and the second and third measures were to extend the staining requirements from slaughterhouses to cutting plants and cold stores. That was important, because waste is not generated only at slaughterhouses: some is generated later. Those two actions cut off two more avenues for the meat criminal.
The fourth point in the action plan was to encourage the meat industry to adopt a voluntary code of practice on the handling and disposal of animal by-products. That is important because, if we are properly to crack down on meat scams, both Government and industry must each play their part. I am pleased to say that in

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August this year the industry did indeed adopt a comprehensive code of practice, which is now being widely promoted across the industry.
The fifth point in the action plan was to improve enforcement in respect of poultry by-products. The Department for Environment, Food and Rural Affairs, which is responsible for the regulations on animal by-products, has done much to turn the enforcement ship around in the last two years. Completely new enforcement arrangements are now in place, and they have been rolled out with a comprehensive package of guidance and training in partnership with all the enforcement agencies involved. The arrangements are now backed up by revised audit arrangements to ensure that they deliver effective enforcement.
The sixth point in the action plan was to improve traceability within the meat supply chain. The FSA took that forward as part of its programme on traceability. It has been backed up by concrete measures, notably by improved record keeping and certification arrangements. Those were introduced as part of the Government's plans to implement the new EU animal by-products regulation, and include a requirement for movement certificates to be triplicated to ensure that all animal by-products are fully traceable.
The seventh point in the plan was to set up the independent waste food taskforce, which I shall deal with in a minute.
Judy Mallaber: May I ask my hon. Friend to examine more closely her previous point about the audit trail? As I understand it, we still do not have a proper independent auditor. I urge her to consider that point in more detail.
Miss Johnson: I shall come on to that in more detail later, when I clear up some of my hon. Friend's points.
To return to what was in the action plan, the independent waste food taskforce was set up. The aim was to examine not only issues covered in the rest of the action plan, but issues that emerged from the ongoing Operation Aberdeen investigations. To that end, it was important that officers from Amber Valley borough council were members of the taskforce. Indeed, they contributed much to the recommendations that the taskforce eventually made.
The waste food taskforce report was published on the day that it was received by the FSA, which immediately launched a full public consultation exercise on its recommendations. The consultation revealed that stakeholders supported the direction in which the report was pointing and also supported the measures that the Government had taken so far to crack down on meat scams. Following that, in September this year, the FSA adopted a second action plan, with the aim of taking the Government's efforts to combat meat crime several stages further. In that action plan, all 24 of the waste food taskforce's recommendations were to be acted on. Indeed, work has already started or been completed on 22 of the 24 recommendations. The work consists of 55 individual action points by the FSA and DEFRA, 27 of which have already been completed. The action points vary from the high profile to the esoteric, but together amount to a powerful suite of measures to make life more difficult for the meat criminal.
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A key part of the plan is that the FSA and DEFRA are working on a new enforcement scheme for animal by-products in licensed meat plants. The aim here is to replace the old scheme with a new one based on risk. The approach will be one of blanket and blitz, whereby each plant will have a blanket of routine supervision, backed up by blitzes targeted according to risk to trace waste from source through to its destination, in co-operation with the other enforcers involved.
It may be appropriate to say here that many of the problems arose because the agencies and enforcement bodies had not worked together as they should. My hon. Friend is quite right to say that the trick to making it effective is to ensure that that works. Much effort has gone in to ensuring that that is working across the piece. The amount of Meat Hygiene Service resources devoted to animal by-products enforcement has increased more than threefold since the Rotherham and Amber Valley scams, and the aim of this new work is to make the most effective use of existing resources and thus improve the outcomes of enforcement effort.
Further measures include the setting up of a team of 30 trained and experienced local authority enforcers whose role will be to assist investigations of alleged meat scams and to provide intelligence on what is happening in the field. That is backed up by a fund to provide local authorities with extra financial resources to investigate alleged meat scams. The Food Standards Agency is also recruiting two more investigation officers in order to reinforce that effort.
That action will not be the final word. The Food Standards Agency brought the key stakeholders together on 26 November to review the lessons learned from the Operation Aberdeen investigations. Officers from Amber Valley borough council and Derbyshire constabulary took part in that review, and the Food Standards Agency board will now consider the lessons learned. The board will also monitor the progress of the new action plan, and will formally review the outcome when the last of the action points is due to be completed in early 2005. We do think that this is an important subject.
My hon. Friend raised other issues. On the question of co-ordination between Departments and agencies, she mentioned the co-ordination work to be headed by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. The new Cabinet Committee will meet for the first time on 8 January 2004 and it will consider the issues that my hon. Friend has raised, among others.
Good progress has been made in liaison arrangements between Departments and agencies. A change of culture was necessary and is proceeding rapidly. The number of agencies is not necessarily the issue: what is important is whether the enforcers involved talk to each other. Now that we have changed the culture, liaison with other agencies is seen as part of the enforcers' day job, rather than as an optional extra. Routine and successful liaison is the reason why we have seen excellent enforcement operations recently, such as those in the Harrogate case.
On the waste food taskforce issues, the new rules in the EU animal by-products regulations tighten up the audit trail. I have already mentioned the triplication of movement certificates. I also mentioned the blanket and blitz regime. The Department for Environment, Food

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and Rural Affairs has set up a database of animal by-products premises, which is now available to all enforcement officers and will appear on the Department's website early next year. A database of licensed meat plants will appear on the FSA website shortly and the Meat Hygiene Service is devoting much more time to inspections and enforcement in plants. As I said, it has more than trebled that work. Action is occurring in all those areas.
My hon. Friend also raised the question of penalties. There are penalties greater than the maximum two years' imprisonment under the Food Safety Act 1990, because other charges—such as conspiracy to defraud, which was used in Operation Aberdeen—can be laid. In reality, proving such offences is more difficult than proving the food safety offences. As I mentioned, the EU general food law regulation 2002, which will come into force on 1 January 2005, will make it an offence to place food on the market if it is unsafe. The issue will then be subject to EU legislation, not just UK legislation. Therefore, the UK will not be able to act unilaterally to provide for offences distinct from those in the European regulation. However, the new EU legislation will clearly make a difference.
Judy Mallaber: I am aware that new EU legislation is pending, but we will still have flexibility on how we interpret and introduce it. The point that I raised about
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the new offences needed should not be pushed to one side on the grounds that everything will be done in Europe. I urge the Minister to see whether we can tackle those issues seriously when we argue for such legislation in Europe and when we implement and introduce it here.
Miss Johnson: I shall of course bear in mind the points that my hon. Friend has made. I am not familiar with the detailed requirements of the legislation; however, the point is that negotiations have been completed and we have an obligation to take it forward and implement it according to certain parameters. We shall obviously consider whether, within those parameters, there is scope for us to take up the points that my hon. Friend made. I shall be happy to write to her further about the opportunities for doing that, so that she is aware of the situation in more detail.
Meat fraud is a serious issue and we take it seriously. I must reassure my hon. Friend that there has been a step change in the way in which meat scams are dealt with since the Amber Valley fraud was unearthed. We constantly monitor progress to ensure that we stay ahead of the game.
The motion having been made after Seven o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-nine minutes to Eight o'clock.