Commons Sitting of 12 February 2004

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

    Apprenticeships (Plumbers)
    Miss Anne McIntosh: What recent representations he has received on the number of apprenticeships available for trainee plumbers. [1154510]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): I have had a small amount of correspondence on this issue, mostly in respect of young people in some areas having difficulty in finding employer placements, particularly with very small businesses. In response, the Learning and Skills Council is working with employers and colleges to expand training provision and the placements available. Plumbing is proving popular, with 7,000 on modern apprenticeships and 30,000 on college courses.
    Miss McIntosh: Many apprenticeships are available, but there is a lack of information about the host of organisations to which young people can apply. The son of one of my constituents was keen to enter a plumbing apprenticeship but was advised to obtain a waiter's position at Betty's—a popular tea room in north Yorkshire but not the best placement for a plumbing apprentice. Can the Minister give an assurance that all the agencies involved—the Employment Service, county councils and learning and skills councils—will place in the public domain information on where apprenticeships are available?
    Mr. Lewis: I can give the hon. Lady that assurance. I refer her to the work of the Modern Apprenticeship Task Force, which comprises many large employers and is chaired by Sir Roy Gardner, and the Government will announce in the next few weeks a major upgrading of our commitment to apprenticeships—with a particular emphasis on employer engagement. We are committed at local level to making it clear that modern apprenticeships are a high quality, high status route. I celebrate the fact that 230,000 young people—a record number—are undertaking modern apprenticeships this year and we intend to increase that number significantly.
    Mr. Barry Sheerman: Does my hon. Friend agree that modern apprenticeships are in a bit of a mess and that it is time the Government got a real handle on them? Whether one is talking about plumbing or any other sector, too many people have got their fingers in the pie. What sort of qualification is offered? Will the standard be the same throughout the country? Will the qualifications mean something and he transportable, with all employers recognising their value?
    Mr. Lewis: I thank my hon. Friend for displaying with particular clarity his independence in his role as Chairman of the Education and Skills Select Committee. I do not accept that modern apprenticeships are in a mess but many changes lie ahead, including improving completion rates and the introduction of apprenticeships for 14 to 16-year-olds—the details of which I will announce soon.
    Many organisations across industry welcome our intention to lift the age cap and introduce adult apprenticeships. In a global economy where the job for life is dead, it is vital to give people hope and support by ensuring that adults can retrain, upskill and change career direction. Adult apprenticeships will also be an important part of our programme.
    Mr. Phil Willis: Does the Minister agree that there is a tendency when talking about plumbers to mean people who are not capable of high academic achievement? Evidence from pathfinder projects for 14 to 19-year-olds shows that the majority of participants—particularly those age 14 to 16—will not get five good or very good GCSEs. Does the Minister agree that that group should he targeted? Will the Government tell all students at age 14 that a vocational route is of equal worth?
    Mr. Lewis: I agree entirely. We await Mike Tomlinson's interim report with great interest. Central to the credibility of the Tomlinson process will be a capacity to identify for the first time in generations a high status, high quality vocational route. The false choice often posed, as between higher education and vocational education, is damaging and dangerous. We want to make it clear to young people that they can go from a high status vocational route into higher education or go the mixed academic and vocational route—which can also lead to higher education when one is young or later in life. Those who offer that false choice prove why vocational education has often failed.
    Mr. Michael Clapham: Will my hon. Friend say more about ensuring that young people between the ages of 14 and 16 on apprenticeship schemes can link to academic studies, so that there is a clear connection between vocational and academic work? How will the learning and skills councils fit in?
    Mr. Lewis: It is important to support progression for young people and to create not cul-de-sacs but a climbing frame. There is no reason for a young person not choosing at 16 to go down the academic route to return to a modern apprenticeship and continue in education. The great challenge facing this country is to

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    develop an education programme that supports young people in their motivation to continue learning, to achieve and to be successful, not to drop out of education at 17.
    Mr. Mark Simmonds: Further to the point raised by the hon. Member for Huddersfield (Mr. Sheerman), the Chairman of the Select Committee, does the Minister accept that modern apprenticeships in plumbing and other sectors are, to put it politely, in need of attention? Take-up targets are likely to be missed, drop-out rates in some sectors are up to 75 per cent., and up to two thirds of entrants lack the supposed entry requirement of level 2 skill qualifications. What measures is the Minister taking to correct those failings before he expands modern apprenticeships to pre-16 and post-28?
    Mr. Lewis: In the hon. Gentleman's desire to turn this into a party political bunfight, we should not the get the facts wrong. We are very much on the way to meeting our target for the number of young people we want to get into apprenticeships next year, and we have record numbers now, so the idea that we are struggling to get young people in and missing our targets is complete nonsense.
    I accept the hon. Gentleman's point that we face a challenge in improving completion rates in apprenticeships and raising the quality of apprenticeships. However, let me cite the example of plumbing completion rates. For advanced modern apprenticeships, the success rate rose from 28 per cent. in 2001–02 to 42 per cent. in 2002–03; for foundation modern apprenticeships, it rose from 29 per cent. to 42 per cent. over the same period—up 13 per cent. The Government accept that improving completion rates is a major challenge, but let us build on success, not denigrate those young people's achievements.

    School Building
    Mr. Peter Pike: How many new (a) primary and (b) secondary schools have been built in England since 1997. [154511]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): Twenty thousand schools have benefited from additional Government capital investment since 1997. We do not hold information about the precise number of new schools that have been built. However, we have made available significant support to build new schools and to expand, replace and repair existing school accommodation.
    Mr. Pike: I thank my hon. Friend for that answer. The Government's record since 1997 has been excellent. However, I was disappointed to learn, following today's announcement of wave 1 of the building schools for the future programme, that the Lancashire bid, which includes schools in Burnley and Pendle, is first reserve and has not been given the green light. Yesterday, one of the head teachers in Burnley—Stephen Ball from Ivy Bank school—told me that heads in Burnley are
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    devastated by that news. We need those new schools now. We want a green light, not an amber light, so what can my hon. Friend tell me?
    Mr. Twigg: I understand my hon. Friend's disappointment, because Lancashire's proposal has real strengths in terms of its education vision and capacity to deliver. As he will know, given his comment about the amber light, Lancashire is one of only two authorities that have been placed on the reserve list: some 40 applications have not yet received even an amber light. We are absolutely committed to working with Lancashire and other authorities to secure the renewal of secondary schools in every community. That will take 10 to 15 years.
    Sir Nicholas Winterton: The Minister may be aware that a new secondary school is planned for Macclesfield to replace two schools that are closing, one of which does not have enough pupils entering it. That is part of a huge, ambitious learning zone project. I understand that the decision to pass the learning zone project is likely to be made in a matter of days, if not hours. Can the Minister give me good news for my local parents, students and all the partners in that fantastic project?
    Mr. Twigg: I fear that I must give the hon. Gentleman another amber light, rather than a green one or, as he might fear, a red one. I am not in a position to answer him now, but I will check on the situation and contact him later today.
    Mrs. Lorna Fitzsimons: Rochdale has been one of the many net beneficiaries of the huge investment in education, both primary and secondary—since 1997, primary schools have received an increase of more than 40 per cent. In furthering that commitment, will my hon. Friend ensure that the new buildings will be built in line with agreed policy on enhancing schools for the future, and reward authorities such as Rochdale that are co-locating special schools with primary schools?
    Some schools built as private finance initiative projects have only one hall. In the light of yesterday's warning about childhood obesity, that creates a problem, especially in rainy places like Rochdale— beautiful, rainy Rochdale—because children cannot take part in lunchtime activities, which generally help in maintaining their health and well-being. Will my hon. Friend consider that issue?
    Mr. Speaker: Order. The hon. Lady should try for an Adjournment debate on the subject.
    Mr. Twigg: I should be happy to respond to an Adjournment debate; my hon. Friend represents her constituency very well.
    My hon. Friend is right. We are considering an important programme of investment, but it is not simply about replacing existing buildings. It means investment and reform going hand in hand. One of the aims is precisely to address issues of healthy education, to which she rightly referred.
    Bob Russell: The House will find it difficult to accept that the Department for Education

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    and Skills does not know how many new schools have been built since May 1997. Will the Under-Secretary undertake an audit of all the demountable classrooms in my constituency in 1997 compared with today to ascertain how many have been replaced with permanent accommodation? Will he also hold an inquiry into the expansion of the Gilberd school?
    Mr. Twigg: I have to say to the hon. Gentleman that I was slightly surprised when I was given a brief that told me that we do not know the number of new schools. However, I think that that is because in some cases we are considering brand new schools, and in others refurbishment and the co-location on one site that my hon. Friend the Member for Rochdale (Mrs. Fitzsimons) described. The local process is the asset management planning process, which the hon. Gentleman's local authority should pursue with regard to demountable classrooms. If that is not happening, I encourage him to write to me.

    Primary School Funding (Leicestershire)
    David Taylor: What recent representations he has received about the level of funding available to Leicestershire primary schools in 2004–05; and if he will make a statement. [154512]
    The Minister for School Standards (Mr. David Miliband): We have received few recent representations about funding for primary schools in Leicestershire for 2004–05. My right hon. Friend the Secretary of State's proposals to restore stability and certainty to school funding include an increase in all authorities' school formula spending share of at least 5 per cent. per pupil next year—that is what Leicestershire will receive. In addition, Leicestershire will receive £3.7 million of transitional grant, which must be used to help schools in specific financial difficulties to balance their budgets by 2006–07.
    David Taylor: The quality of education in Leicestershire primary schools has been transformed by extra Government investment since 1997, but can the Minister understand local frustration that the higher standards, improved buildings and the provision of more and better paid staff are significantly constrained by a grant settlement that leaves us the least well funded local education authority in the land? We are 7.5 per cent. behind the average shire county, and the position is worsening. Will my hon. Friend meet local Members of Parliament to discuss our anomalous position and review the Leicestershire internal distribution formula?
    Mr. Miliband: My hon. Friend has been a doughty and effective campaigner for extra funding for Leicestershire. He recently attended an Adjournment debate with my hon. Friend the Member for Loughborough (Mr. Reed), when we discussed the specific needs in Leicestershire, which is, overall, a prosperous county, but has particular areas of need. Of course I will meet him and other Leicestershire Members of Parliament who are worried about the matter. However, I am glad that he acknowledges the increased funding and the base for moving forward.
    Mr. Andrew Robathan: I am sorry to tell the Minister that, notwithstanding the assurances
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    that the Secretary of State gave last summer, Leicestershire's problems have not gone away. Local headlines read, "Schools in cash crisis". Primary schools in Leicestershire are funded £4,000 per pupil less than the best-funded authority. If that is untrue, the Minister should take it up with the Leicester Mercury. Is it the case that schools that balanced their budgets through all the problems last year will not receive any transitional funding? That means that schools that managed to balance their budgets on the promise of more cake this year now have to lay off staff.
    Mr. Miliband: The hon. Gentleman was doing well until he asked me to compare Leicestershire with the Isles of Scilly, which leads to the figure of £4,000 that he cited. He knows that there has been an increase of 41 per cent. per pupil in funding for schools in Leicestershire. That is £950 extra per pupil per year compared with 1996–97. I acknowledge that there are some substantial difficulties this year and, of course, we are determined to address them. However, I am convinced that the assurances that my right hon. Friend gave the hon. Gentleman last July will be effected.
    Mr. Andy Reed: I declare a slight interest in that my son has just started at St. Bartholomew's school in my village, an excellent primary school. Both as the Member of Parliament for Loughborough and as a concerned parent, therefore, I take a great interest in these matters. I want to reiterate the comments of my hon. Friend the Member for North-West Leicestershire (David Taylor), because at that school he will receive £600 a head more than in 1997. We therefore recognise the advance that has been made. Given the difficulties that occurred last year, however, and the £3.75 million grant, we recognise that we are now moving on again and once again getting an above-inflation increase in the county. The difficulties last year have caused real problems across the county, however. I hope that my hon. Friend will agree to an urgent meeting so that we can look properly at the transitional relief that has been given to the county, and see whether we can work a way through to make sure that we build on the stability that we have had since 1997.
    Mr. Miliband: Obviously, I agree with a lot of what my hon. Friend says. We share responsibility with local government both for raising and distributing funds. How local formulae distribute money to different parts of the local education authority is a key issue for parents, pupils and teachers. Of course, I am happy to discuss that with him. We are of course keen to help with anything that we can do to ensure that the transitional grant flows to the right places.

    Student Finance
    Mrs. Anne Campbell: What plans he has made for financial support for part-time students in higher education. [154513]
    The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson): More money is being invested in part-time students. As a result, the number who will get help with their fees should more than double. From 2004–05, low-income, part-time students

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    will qualify for a course grant of £250 and a fee grant of up to £575 a year. The part-time sector makes a valuable contribution to our widening participation agenda, and the needs of part-time students will continue to be taken into account as we develop student support policy further.
    Mrs. Campbell: That is indeed welcome news and will be greatly appreciated by the 35 per cent. of students at Anglia polytechnic university who are mature part-time students. Can my hon. Friend tell me, however, whether his future plans for higher education will include the abolition of up-front fees for part-time students as well as full-time students, as well as access to the generous maintenance loans that he also proposes for full-time students?
    Alan Johnson: There are couple of points there. First, for mature full-time students, the grant is particularly important because all that they could access previously was a loan, on which an age limit applied. Now, however, that does not apply to the grant, so some of those mature students will qualify for a grant, whereas they did not qualify for a loan. On fee remission, it would be enormously expensive, as I am sure my hon. Friend recognises, for us to introduce fee remission for 42 per cent. of the higher education student population. Nevertheless, our current focus on part-time students and, with the passage of the Bill, the facility for a fee remission system, which does not exist at present, will be enormously helpful. Finally, in terms of extra help for part-time students, we do not currently know much about their difficulties because they have not been included in any previous student income and expenditure survey. From this year, they will be included for the first time, which will help us to identify their specific problems and to include them in future proposals for assistance with grants and loans.

    University Science Departments
    Dr. Brian Iddon: What representations he has received on the closure of science departments in universities. [154514]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): Both Ministers and officials have discussed this issue with a number of interested bodies and individuals, including some vice-chancellors. I have also received correspondence from several hon. Members.
    Dr. Iddon: Has my right hon. Friend noticed the quickening pace of the closure of science, engineering and technology departments? Recently, for example, the closure has been announced of chemistry departments at King's college London, Queen Mary college London, and now the prestigious department at Swansea. It is not just a matter of falling numbers, and increased tuition fees will not end those closures. Therefore, will my right hon. Friend look at the high cost of maintaining SET departments, at the damage that the research assessment exercise has already done, and at the ratio of Higher Education Funding Council for England
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    funding between arts and humanities courses, SET courses and medical courses, which I understand is currently 1:1.7:4?
    Mr. Clarke: I will look at all the points that my hon. Friend raises, and I pay respect to his consistent campaigning on this issue. I do not accept his phrase "the quickening pace", although I am aware of the particular proposals that he mentioned. During the period 1994–95 to 2002, total enrolments in full-time science-based first degrees in UK higher education institutions increased by 12 per cent., from 328,000 students to 377,000. What that hides is a varying pattern. Chemistry has been studied in the same number of universities in that time. Materials science, physics, oceanography and combinations of physical sciences have had a reduction in the number of departments. Astronomy, geology, environmental and other sciences, archaeology and geography, however, have had an increase. It is therefore a moving pattern, but I am happy to look at the issues raised by my hon. Friend.
    Mr. Nigel Evans: Does the Secretary of State accept that engineering, science and technical subjects are not seen as being as sexy as some arts subjects, which seem to attract all the funding? We are looking for value-added employment, which means that we need technicians, scientists and engineers. Is it not therefore about time to incentivise our youngsters into universities to study those subjects? If we do not do so, there will be a skills shortage at the top end, and this country will come a cropper.
    Mr. Clarke: I am happy to give the hon. Gentleman a short tutorial on the action that we are taking in each of those areas. One reason why we have proposed our foundation degree programme is to strengthen the important engineering and science base. He should also appreciate the shifting movements between subjects: yes, it is—in his words—about making those subjects sexier; yes, it is about specialist schools to encourage engineering, science and technology; and yes, it is about a better relationship between the science and engineering industries and education. All those measures are necessary and they are all happening. We will continue to take them further.
    Mr. Tony McWalter: Does my right hon. Friend accept that many hon. Members do not view his reply with equanimity? In particular, there has been a catastrophic decline in people doing A-level mathematics, which is a feeder subject for engineering and other sciences. As a result, the figures that he has just quoted on those studying science contain fewer and fewer people with advanced mathematical skills. Does he accept that many students think that maths is much more difficult than other subjects, and will he make sure that that perception is rectified?
    Mr. Clarke: I take my hon. Friend's point and do not view the situation with equanimity. We commissioned a major inquiry by Professor Adrian Smith on mathematics education, which will report in about 10 days' time, and it will reinforce my hon. Friend's concerns about the quality of higher-level mathematics

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    education, so Professor Smith and I take his point. The report will point to a number of important steps that we must to take to rectify the long-term decline in those skills. There is no equanimity because we think that the matter is burningly important.
    Mr. David Bendel: The funding system that the Government are currently trying to introduce is likely to put enormous pressure on universities—particularly the less prestigious universities—only to run courses where they can charge full top-up fees and which are comparatively cheap to put on. Does the Secretary of State accept that the new scheme is likely to lead to increased acceleration in the rate of closure of science departments?
    Mr. Clarke: As a matter of fact, I do not accept that in any respect whatsoever. My hon. Friend the Member for Bolton, South-East (Dr. Iddon) raised the issue of the money available for particular courses through the HEFCE formula, which is a key factor for universities. We must address that point, which is why I told my hon. Friend that I would examine those particular points. The Higher Education Bill, which is currently in Committee, will have a positive effect rather than the negative effect implied by the hon. Member for Newbury (Mr. Rendel).

    Open University
    Brian White: If he will make a statement on the future funding of the Open university. [154515]
    The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson): The Higher Education Funding Council for England is about to undertake a comprehensive review of how funding for university teaching is allocated. In accordance with the statement made by my right hon. Friend the Secretary of State to the House on 8 January, a major focus of this review will be how the funding system might further support the development of part-time study. The review will relate to those institutions with large numbers of part-time students and will be particularly relevant to the Open university, where all students are part-time. The Open university currently receives around £14 million in widening access and improving retention funding from HEFCE, and that will improve next year when ward-based data are used to measure social disadvantage.
    Brian White: I thank the Minister for his reply and for the work that he did in January to try to ensure that the review covers the needs of the Open university. Given the ongoing concern that the largest university in the country does not have the same access to funding mechanisms as full-time institutions, will my right hon. Friend ensure that officials in his Department and the funding agencies are aware of the objective of securing the future of the Open university?
    Alan Johnson: I congratulate my hon. Friend, who has been a great advocate for the Open university. As he says, it is the biggest university in the country, but it and Birkbeck have a particular problem because they are
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    entirely composed of part-time students. I understand that the first meeting of both organisations with the chief executive of HEFCE, Howard Newby, went well and involved positive discussions. We will ensure that we keep on top of the issue and that the review comes to fruition as soon as possible.
    Mr. Robert Key: Quite apart from the funding review, can the Minister confirm or deny that the Government are considering cutting or closing the Open university and transferring distance learning functions to other new universities?
    Alan Johnson: I deny that emphatically. In a letter to my hon. Friend the Member for Milton Keynes, North-East (Brian White) on 22 January, I described the Open university—in a fit of verbosity—as the "jewel in the crown" of British higher education. That has particular relevance on this side of the House, given its origins in the days when my hon. Friends were student revolutionaries. I reassure the hon. Gentleman that we have no plans to damage the Open university in any way.
    Helen Jackson: In discussions with the Open university, will my right hon. Friend pay some attention to the important international role that its excellence plays? It can be exported by supporting and developing links with universities in developing countries, where often the only method of communication for learners is the radio. The Open university has an important role to play in the help and support that we give to developing and poor countries.
    Alan Johnson: My hon. Friend raises an important point. Wherever we go in the world, the Open university is even more famous than some of the other more mentioned universities in the UK. [Interruption.] My right hon. Friend the Secretary of State reminds me that the Open university is now running a teacher training programme in South Africa. That is just one of the reasons why the Open university is successful. It is not concerned about imminent collapse: the concerns centre on the ability of other universities to obtain additional funding through the proposals in the Higher Education Bill. Because the Open university is composed of part-timers, it will not have the same opportunity, and the feeling is that the funding from HEFCE does not properly reflect the cost of part-time education. Those problems will be addressed in the review that my right hon. Friend announced on 8 January.
    Mr. Tim Collins: Does the Minister accept that Harold Wilson deserves immense credit for the creation of the Open university and that it has prospered and expanded under Governments of both colours so that it now represents a treasure for the whole nation? Does he recall that in times past the Open university pioneered breakfast television programming? Today, it has a successful presence on the internet. What can the Minister do to encourage the Open university to use the new possibilities created by digital interactive television?
    Alan Johnson: I welcome the hon. Gentleman's comments about the formation of the Open university.

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    I have spoken about the issue he raises on many occasions, but I have a meeting arranged with the vice-chancellor of the Open university in the coming fortnight and I will ensure that the issue is on our agenda.

    Specialist Schools
    Mr. James Gray: How many schools achieved specialist status in business and commerce in the latest group he has announced. [154516]
    The Minister for School Standards (Mr. David Miliband): Twenty-five schools were awarded business and enterprise status as a result of the October 2003 specialist school round. In addition, two schools achieved specialist status in a combined specialism—business and enterprise with sport, and business and enterprise with visual arts.
    Mr. Gray: I thank the Minister for that answer and I congratulate him on his commitment to business and commerce specialism in schools. Will he spare a thought for Abbeyfield comprehensive, a brand new school in Chippenham in my constituency, which was built under a private finance initiative scheme introduced by the Conservatives? The school spent much money and time on preparing a bid for business and enterprise specialism. It was told by the Department that the length of existence of the school did not matter and that the lack of exam statistics would not count against it, but was then very surprised to be turned down, apparently on the ground of its lack of exam statistics. Can the Minister comment on that and can he tell me whether Abbeyfield should reapply next year? If it does, will he give that application his personal and careful attention?
    Mr. Miliband: The Department does owe an apology to Abbeyfield school, in that it was given mistaken information. However, its application for specialist status did not fail because of that error; rather, there were some significant weaknesses in its bid. I can assure the hon. Gentleman that we would welcome a further application for the March round, and I should point out to him and to all Members that the Department is there to work with schools to help their bids reach the right level, so that as many as possible go through as fast as possible. That applies as much to Abbeyfield as to any other school.
    Mr. David Drew: Does my hon. Friend accept that this important venture overcomes the dreadful divide between academic and vocational studies that has bedevilled this country? Does he agree that specialist schools are an important way in which we can develop consumer education and debt advice, for example, in line with the financial education that has become more widely taught in all aspects of our secondary education?
    Mr. Miliband: My hon. Friend makes a good point. The development of business and enterprise specialisms does hold out the prospect that, along with curriculum reform, which the Tomlinson committee will discuss
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    next week, we can overcome the academic and vocational divide and encourage youngsters to combine such subjects, or general and specialist subjects, according to their aptitudes and interests. I very much welcome my hon. Friend's support for the programme.
    Ann Winterton: I know that the Minister will want to congratulate three schools in my constituency—Congleton high, Eaton Bank and Alsager—which have recently secured specialist status. I understand that to date, although specialist schools can select 10 per cent. of pupils by aptitude, very few do so. Bearing in mind the difficulties that might arise in a large rural constituency because of transport issues, and so on, will the Minister encourage flexibility in admissions to ensure that in a town such as Congleton, children go to the school to which their aptitude is best fitted, rather than to the one nearest their home?
    Mr. Miliband: There is some flexibility in the specialist schools programme to allow up to 10 per cent. of pupils to be selected on the basis of aptitude in particular specialisms, such as music and sport. We certainly would not want flexibility of a type that suggested a return to anything approaching the 11-plus. [Interruption.] Perhaps I have not understood exactly what the hon. Lady is getting at. Schools need to adhere to the code of practice on admissions, which gives some room for the flexibility that she describes. However, if she would like to explain the matter to me further afterwards, I shall get back to her.
    Jonathan Shaw: Will my hon. Friend congratulate Aylesford school on becoming a specialist sports school, hard on the heels of its receiving a share of a £60 million private finance initiative, which will provide bright new buildings? However, Ofsted has expressed the concern that specialist schools do not always fulfil the community links that they talk about in their applications. Is his Department keeping this issue under review, and what lessons has it learned in offering guidance to schools, particularly when they are reapplying for specialist status?
    Mr. Miliband: Needless to say, Aylesford school is rarely far from my thoughts, and I am delighted to offer my sincere congratulations to all concerned. My hon. Friend raises an important point. Specialist schooling is about developing centres of excellence in every school in the country that are not just for the benefit of those schools' pupils, but which are available to the wider community, other pupils and the extended community of adults. Some difficulties have arisen, and we are working with the Specialist Schools Trust on precisely that point, to ensure that all new specialist schools deliver on the community aspects of their plan and on providing a resource for the whole community, as well as on improvement of their own institutions.

    Student Finance
    Simon Hughes: How much the average student loan taken out by students was in each London borough in the 2002–03 academic year. [154517]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): On the basis of information provided by the Student Loans Company, the provisional average income-contingent student loan taken out by full-time students in the London borough of Southwark in the 2002–03 academic year was £3,900. I will write to the hon. Gentleman giving the average loan figures for other London boroughs, and place a copy of such information in the Library.
    Simon Hughes: I am grateful to the Secretary of State for that reply. Those figures—and figures given by his right hon. Friend the Minister for Lifelong Learning, Further and Higher Education for last year for the whole region—show that students who are resident in inner-London graduate with a much higher level of debt than those living anywhere else, and that outer-London students are placed third in the league table. What will he do, therefore, to ensure that his current policy, with top-up fees included, does not inevitably result in students who live in London graduating with higher debt than those who live elsewhere? That would inevitably prove a disincentive to students' coming to, and staying at, universities in the capital.
    Mr. Clarke: First, as I announced in the debate about this, the level of maintenance loans for students in London will be increased significantly. One of the main reasons why they get into debt now is the fact that they have to borrow to live, because their maintenance loans are insufficient to meet their costs. We are dealing with that, and what we are doing will make a very positive difference.
    Secondly, the decision to abolish the up-front fee means that students will no longer have to borrow money on plastic, for instance, to pay a fee that, for whatever reason, their parents would not pay. That has been happening in many homes in London.
    Both those moves represent a significant improvement for students in London.
    Kali Mountford: People such as my constituents who want an education in London are not supported by their families in the same way as many who already live in London. Is it not important for loans and fees combined to reflect the actual cost of the education that they want? My right hon. Friend mentioned credit cards. The average cost of a credit card this Christmas was £6,500. The rate of repayment is what matters, and students should be made aware of the benefits of an interest-free, affordable rate.
    Mr. Clarke: My hon. Friend is entirely right. First, we have addressed the up-front fee question. People have been getting into debt because it has not been addressed properly until now. Secondly, we have addressed the problem of the maintenance loan in London, thus reducing the pressure on those living there while receiving their education. Thirdly, as my hon. Friend pointed out, repayments after graduation will be made at a zero real rate of interest and through the tax system. That is a major improvement, at each stage, on the current state of affairs.
    Mr. Tim Yeo: Now that it is clear that the next generation of students will be
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    burdened with a record level of debt because the Government broke their promise not to introduce top-up fees, may we be clear about what that means to universities? Will the Secretary of State confirm that just as the introduction of tuition fees five years later has left universities with less funding per student in real terms, the introduction of top-up fees will not increase universities' net income by a penny, because he has not persuaded the Treasury to increase his departmental limit? This is a policy that, uniquely, achieves the triple whammy of being bad for students, bad for universities and bad for taxpayers.
    Mr. Clarke: What an extraordinary question. Perhaps the hon. Gentleman should spend a bit more time on his health or golfing responsibilities.
    The fact is that there will be upwards of £1 billion of extra money coming into universities. Do not ask me; ask Universities UK, and ask every vice-chancellor. Vice-chancellors are telling Conservative Members, just as they are telling Labour Members, that they should support the Higher Education Bill because they know that the extra resource will make a difference to their universities. What must be borne in mind—and we will point this out every day between now and the next general election—is that the vote of the hon. Gentleman and his colleagues in the House the other day was a vote to take money away from universities and to damage them. We will riot forget it; the country will not forget it.

    Children's Fund
    Norman Lamb: If he will make a statement on the children's fund. [154518]
    The Minister for Children (Margaret Hodge): The children's fund was allocated £450 million in the 2002 spending review. By September 2003, 302,000 children and families were using the services provided by the fund. However, efforts to ensure that all allocations were spent have resulted in a projected overspend. Reductions were therefore made in allocations for 2003–04 onwards.
    Following my discussions with key stakeholders, we have taken action from 2003–04 to address the most difficult problems, and I am now urgently re-examining the allocations for next year. I expect to write to partnerships in the next few days.
    Norman Lamb: I thank the Minister for that response, but how does she respond to the real anger and frustration felt locally at the far too late announcement of cuts to next year's funding allocation, which puts at risk the important work of groups such as Asperger Norfolk? Representatives of that organisation wrote to me expressing its dismay at the Government's announcement—it may result not only in jeopardising important work for children, but in redundancies—and the fact that it was made at such a late stage in the planning process for next year. Yesterday the Prime Minister confirmed that work was ongoing, so can the Minister offer any help to local groups and would she be prepared to meet a local delegation to hear directly about their concerns?
    Margaret Hodge: I certainly understand the concerns expressed by Asperger Norfolk—I received a copy of a

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    letter written to my right hon. Friend the Secretary of State—and by other voluntary organisations throughout the country. That is why we are urgently reexamining the allocations for 2004–05 to establish whether we can do any more to help. I would be happy to meet any delegations representing organisations from Norfolk to discuss their problems with them. I would also like to give an assurance that we greatly value the work of the voluntary sector in respect of the children's fund, which has been a successful programme. Such preventive work among a given group of children is precisely what we want to carry forward as we implement the Green Paper in the coming years.
    Ms Sally Keeble: I accept the problems created for the programme by the underspend, but would my hon. Friend accept that, now the projects are under way and are spending up to profile, cuts that represent a quite small amount of overall Government spending will have profound implications for the ability of some of the projects to continue and to serve some extremely vulnerable children? The work is highly valued locally and many people are anxious to see it continue.
    Margaret Hodge: Again, I am aware of problems in my hon. Friend's constituency, not least because she has talked to me about them. The projects are extremely important in providing a valuable contribution to the infrastructure and they are helping us to reach young people who could not be reached in other ways, thus preventing things from going wrong. That is precisely why I am having urgent discussions to see what we can do to help, and I hope to be able to write and inform the relevant authorities over the next few days.
    Charles Hendry: The Minister will recall the Chancellor saying:
    "The war against child poverty requires not only additional cash but also the support and encouragement of all forces of care and compassion".
    How hollow that sounds now. Against that background, will the Minister meet representatives of national voluntary organisations that work with children to explain face to face why they have been told to brace themselves for cuts of up to 30 per cent. over the next couple of years? They could then explain to her that it will mean redundancies and even the closure of some programmes. Are the budget cuts the result of mismanagement, incompetence or because the money is being diverted to other spending commitments? Does it not show that, in spite of the Chancellor's fine words, there is less rather than more cash available and precious little care and compassion?
    Margaret Hodge: I am in constant communication with all the national organisations. Indeed, just this morning I had a conversation with one of the national charities that is responsible for running several partnerships in the country. Although I understand and applaud the hon. Gentleman's current commitment to the role of the voluntary sector, it is rather sad to note that he was among the Members who opposed the Budget, which enabled the Chancellor to provide the moneys to set up the fund, which has been so successful. However, I accept that there are lessons that the
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    Government need to learn from the administration of the fund. That is why I am currently in urgent discussions with my colleagues to establish how to sort out the current position in order to ensure that the contribution of the voluntary sector to the well-being of children can be sustained over the long term.

    "Every Child Matters" Green Paper
    Mrs. Ann Cryer: What response he has received to the consultation paper "Every Child Matters". [154519]
    The Minister for Children (Margaret Hodge)The response to the Green Paper "Every Child Matters" has been extremely high. We have received more than 4,500 responses, of which I am pleased to say that more than 3,000 were from children and young people. I propose to publish a report shortly, which will set out the way forward.
    Mrs. Cryer: Did any of the responses suggest how young girls could be protected from unwanted marriage through early intervention by a school? If not, will guidelines be given to schools to help prevent these tragedies, which happen too frequently?
    Mr. Clarke: First, I applaud my hon. Friend's very good work in connection with unwanted marriages in her constituency. She recently wrote me a very long letter on the subject. I have been studying it, and I hope to meet her to discuss the best way to make progress towards tackling what I accept is a difficult and distressing problem for the young women involved.

  The Solicitor-General was asked—
  SOLICITOR-GENERAL

    Anti-terrorism, Crime and Security Act
    Hugh Bayley: If she will make a statement on the report by the Privy Councillor Review Committee on the Anti-terrorism, Crime and Security Act 2001, in so far as it relates to bribery abroad. [154530]
    The Solicitor-General (Ms Harriet Harman): The Privy Councillor Review Committee published its response to the Joint Committee on the draft Corruption Bill on 18 December. That report is due to be debated in this House on 25 February. The operation of the Anti-terrorism, Crime and Security Act 2001 continues to be under review.
    Hugh Bayley: The Privy Councillors recommended a radical simplification of the law on international bribery and corruption. Will my right hon. and learned Friend assure the House that the provisions in the 2001 Act will not be repealed until there is better, clearer and simpler legislation on the statute book? Will she ensure that the new measures are phrased in such a way that investigations taking place under the existing legislation will still be able to proceed to prosecution?
    The Solicitor-General: My hon. Friend raises various points, and I shall start by saying that the UK, as a

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    signatory to the convention on combating bribery of foreign public officials in international business transactions, takes its responsibilities seriously. The convention is the framework under which we operate. On 25 February, the House will debate the Privy Councillor report, which contains proposals on how provisions should be simplified to make them more effective. Obviously, we want simplicity, but the legislation must be effective. We need to make it work, and that is a matter that we will have to discuss and consider.
    My hon. Friend asks whether the bribery clauses in the 2001 Act will be caught by the sunset clause. The Act contains a requirement for review, as its provisions were considered to be so important, as well as sunset clauses, which ensure that Parliament must positively re-enact those powers. However, there is no question that the Act's provisions in respect of bribery will fall into abeyance as a result of the sunset clauses. I hope that that reassures my hon. Friend.
    Dr. Vincent Cable: The Solicitor-General may know that I and other hon. Members have corresponded with the police and the prosecuting authorities about allegations of bribery by UK companies in the arms export sector. Are any active investigations of that sector under way?
    The Solicitor-General: The hon. Gentleman may know that, following reports in The Guardian in relation to BAE Systems, a number of items of evidence were passed to the Serious Fraud Office. The SFO originally considered a number of issues that broadly come under the heading of bribery, but decided that there was not enough material to warrant further investigations. It will always consider material that it is given, but I cannot tell the hon. Gentleman that any prosecutions are pending or that any active review is under way at present.

    Parmalat
    Miss Anne McIntosh: What activities the Serious Fraud Office is undertaking in relation to Parmalat. [154531]
    The Solicitor-General (Ms Harriet Harman): For operational reasons, the SFO cannot confirm or deny whether this matter has been referred to it.
    Miss McIntosh: That response is a little like the answers that I get from the Advocate-General. Will the Solicitor-General answer the more general question about what precautions are in place to ensure that nothing like the Parmalat scandal could happen in this country? It would reassure many businesses, and many people affected by the scandal in Italy, to know that nothing similar could happen in this country.
    The Solicitor-General: The focus of a number of Departments would bear on that, such as the Treasury, through the Inland Revenue, and the Department of my right hon. Friend the Secretary of State for Trade and Industry, through the auditing processes. There are a number of mechanisms to combat fraud in this country. We are not complacent; we aim to be robust in ensuring
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    that tax is paid and accounts are audited and that, if corruption starts, with its dreadful effects that can cause loss of businesses, homes and people's livelihoods, it can be nipped in the bud rather than continue to grow.
    Mr. John Burnett: International financial scandals, such as Parmalat, invariably involve substantial amounts of tax evasion and tax fraud. Recent evidence of prosecution criminality in Customs and Excise has vindicated the decision to bring Customs and Excise under the aegis of the right hon. and learned Lady's Department. Even though the culture in the Inland Revenue is different, are there are any proposals to bring Inland Revenue prosecutors into her Department, not least to enable them to work more closely with the Serious Fraud Office?
    The Solicitor-General: We have acted on the proposals, following the Butterfield review, to create a separate prosecution arm for Customs and Excise, and making it accountable to the Attorney-General. The hon. Gentleman is right to say that big scandals, such as the one we have just been discussing, often involve tax evasion and tax fraud. He asks whether we should undertake the same exercise at the Inland Revenue as with the Customs prosecutors. There is a different culture, but the Attorney-General and I frequently meet the Revenue prosecutors, and hear about their cases. There is a light-touch professional superintendence, although they work effectively in their home department—the Treasury. If there was evidence that that did not provide sufficient independence, and that professional standards were not sufficient, we should obviously have to look at the matter. However, that is not the case in relation to the Revenue.

    Domestic Violence
    Mr. Elfyn Llwyd: How many representations she has received during the past 12 months on the approach taken by Crown prosecutors in cases involving women subjected to domestic violence. [154532]
    The Solicitor-General (Ms Harriet Harman): I answered oral questions in March and May 2003 on policy in relation to domestic violence cases. I have also answered a number of written questions and received numerous representations from voluntary organisations and members of the public. I am afraid that I have not counted them—I hope that the hon. Gentleman will not ask me to do so.
    Mr. Llwyd: I have no intention of asking the Solicitor-General to count them. The subject remains very important, as two women are killed each week. To be fair to the Government, they have introduced numerous useful reforms, yet Home Office figures show that in July 2002 domestic violence was, unfortunately, up by 22 per cent. Is any monitoring under way to look at the numbers of cases that fail, are discontinued or result in conviction, and whether the penalties are appropriate to the crime?
    The Solicitor-General: On penalties, the Attorney-General and I can refer to the Court of Appeal unduly

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    lenient sentences if the case has taken place in the Crown court. Such cases go to the Court of Appeal and the response can then form guidelines that are effective in the magistrates courts as well as the Crown courts. That meets the point about sentencing, but, in addition, the Home Secretary has asked the Sentencing Advisory Panel to review sentencing across the board in domestic violence cases. The panel will report in a matter of months, so we shall be able to see whether we have got the guidelines right.
    On the number of cases that fail, once a domestic violence case gets to court—whether the magistrates court or the Crown court—generally speaking, it is more likely to succeed than not. The difficulty is in actually getting such cases to court, because victims can he terrorised or pressurised to drop the case. The hon. Gentleman is right; we need to keep a close eye on cases that fall by the wayside before they get to court. My noble Friend, Baroness Scotland, the Minister for Criminal Justice System and Law Reform, leads an interministerial committee, which is examining a number of indicators so that we can report more clearly to the House whether we are succeeding in tackling domestic violence.
    Mr. Huw Edwards: Will my right hon. and learned Friend confirm that a disturbingly low proportion of those who perpetrate domestic violence are brought to court? What guidance is she giving the Crown Prosecution Service so that it can increase the proportion of those who are brought to justice?
    The Solicitor-General: The first point is that we want to prevent domestic violence from taking place, which involves getting across to women very clearly the message that they should not have to put up with violence as part of their relationship; and to men that, if they are violent, they should not get away with it. The next step involves the police, the prosecution services and all the other agencies working closely together so that, as soon as there is a case of domestic violence, they all operate together to ensure that the offender is brought to justice.
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    There also needs to be plenty of support for victims to enable to them to get to court. As a result of one measure that will be brought into effect in April, victims will be given anonymity on application to the court. If they are not prepared to come forward unless their names are kept private, the prosecutors will be able to apply to the court to say, "In this case, please can we have reporting restrictions?" That is another new measure, designed to try to ensure that prosecutions go forward and that those who perpetrate domestic violence are brought to justice.
    Mr. Dominic Grieve: I noted what the Solicitor-General said in relation to the majority of domestic violence cases that actually get to trial succeeding—of course, we all wish to see that happen—but does she agree that it is very important that, in any system to deal with domestic violence or any other crime, there should be a sense of fairness in the procedure? She will be aware that there is a principle in the Domestic Violence, Crime and Victims Bill to apply for restraining orders on acquittal. Does she agree that, if those restraining orders were to be granted on anything other than the higher, civil burden of proof. it would be seen as a way of getting round an acquittal and would bring the entire process into disrepute?
    The Solicitor-General: The restraining orders are not a way of getting round an acquittal; they are a way of getting around a problem: there may be an acquittal in the criminal court, but there is still a need for protection—the equivalent of an injunction, a non- molestation order. Currently, the person involved has to go across town to another court to apply for an injunction, where the balance of probabilities is the standard of proof. Instead of making them go across town to another court, we ask, "Surely the criminal court could swap hats, become more like a civil jurisdiction and issue the equivalent of a non-molestation order?" That is proposed in the Bill, but I have described those orders as stay-away orders, generically, because it is not a question of the criminal court operating according to lower standards, but of that court operating more like a one-stop shop, so that a woman does not have to go from pillar to post and the court can deliver the necessary orders for her protection.

Business of the House
12.32 pm
Mr. Oliver Heald: Will the Leader of the House please give us the business for next week?
The Leader of the House of Commons (Mr. Peter Hain): The business following the half-term week will be as follows:
MONDAY 23 FEBRUARY—Second Reading of the Gender Recognition Bill [Lords].
TUESDAY 24 FEBRUARY—Motions relating to the Draft Social Security Benefits up-Rating Order 2004 and the Draft Guaranteed Minimum Pensions Increase Order 2004, followed by an Opposition half-day [5th Allotted Day] (2nd Part). There will be a half-day debate entitled, "Crisis in pension scheme wind-ups", on an Opposition motion.
May I express my gratitude to the hon. Member for North-East Hertfordshire (Mr. Heald) on behalf of the House for the early notice he has given of the title of the Opposition day debate? It is 12 days away, but such notice gives hon. Members an opportunity to plan. Perhaps we can continue to discuss the titles of such motions to ensure that what appears on the Order Paper is not only consistent with what I announce, but accurately reflects the contents of the Opposition motions that he wishes to table, given that the titles that I announce sometimes do not appear on the Order Paper because of the need to conform with House rules.
WEDNESDAY 25 FEBRUARY—Debate on the report from the Privy Counsellor Review Committee on the Anti-terrorism, Crime and Security Act 2001, on a Government motion.
THURSDAY 26 FEBRUARY—Motion to approve a money resolution on the Employment Relations Bill, followed by a debate on Welsh affairs on a motion for the Adjournment of the House.
FRIDAY 27 FEBRUARY—Private Members' Bills.
The provisional business for the following week will be:
MONDAY 1 MARCH—Remaining stages on the Asylum and Immigration (Treatment of Claimants, etc.) Bill.
TUESDAY 2 MARCH—Second Reading of the Pensions Bill.
WEDNESDAY 3 MARCH—Opposition Day [6th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
THURSDAY 4 MARCH—Motion to approve a money resolution on the Carers (Equal Opportunities) Bill, followed by a debate on women, equality and human rights on a motion for the Adjournment of the House.
FRIDAY 5 MARCH—Private Members' Bills.
The House may also wish to know that, subject to the progress of business, the House will rise for the Easter recess at the end of business on Thursday 1 April and return on Monday 19 April.
Mr. Heald: I should, of course, have asked for the business for the next parliamentary week, in which case it would have been quite in order for the Leader of the House to reply "gardening"; luckily, he did not.
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May I raise two issues with the Leader of the House? Last year, he and I marched shoulder to shoulder through the Lobby to vote for a democratically elected second Chamber, which was the most popular option among hon. Members. The option that received the fewest votes was an all-appointed Chamber. Why, therefore, have the Government chosen to proceed with that option? Who was it who said:
"If there is one fault greater in a democratic society than not to consult, it is to consult and then to ignore the results"?
It was his predecessor. The Leader of the House has gone one better—he is now ignoring his own opinions, as set out in the Fabian Society speech that he made only last Saturday. If he wants to introduce a Bill, surely it must include ideas for electing the other place. May we have a statement in this place on the Government's intentions?
It has now emerged that the Home Office ignored warnings given last summer in a letter from the hon. Member for Morecambe and Lunesdale (Geraldine Smith) that illegal immigrants on pitiful wages were risking their lives collecting cockles among the currents and quicksands of Morecambe bay. The Minister's reply conceded that Home Office officials felt that
"little useful purpose would have been served by sending immigration officers",
and went on to point out that there were "resource issues". That attitude must have encouraged the gangmasters to continue the operations that led to the deaths of the 19 people. It was an appalling dereliction of duty, and hon. Members know nothing to suggest that any action has been taken to remedy the situation.
Do we live in a country where the Government do not care about clamping down on illegal immigration, or that reckless and greedy profiteers are putting people's lives at risk? Will the Home Secretary make a statement to the House today to explain his Department's lazy and complacent response to this dangerous situation? If not, we in the House and people throughout the country will know what the Government really think—they just do not care.
Mr. Hain: The idea that this Government do not care about a large number of illegal workers who died on the Morecambe sands is, frankly, beneath the hon. Gentleman—and beneath contempt.
As for doing nothing about it, may I place on record what did happen, and in doing so congratulate my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) on her excellent job in defending her constituents' interests and exposing the appalling gangmasters' rackets? Immigration officers were not present on that occasion, but police officers were. The purpose of the initiative was to ensure that the police got a grip and tackled the problem, which they, and the Home Office under the leadership of the Home Secretary, were trying to do.
Mr. Heald: Are you blaming the police?
Mr. Hain: No, I am not blaming the police; I am correcting the record. It is not true that the Government or the police did nothing. On the contrary, the appropriate officials—police officers—were on the case months ago, which is what the Home Office Minister

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concerned said in the reply that my hon. Friend the Member for Morecambe and Lunesdale received to her letter. We did not ignore the situation and there was no dereliction of duty. We were on the case, and we are on the case in other respects, such as seeking to eject a record number of illegal asylum seekers—more than any country across Europe—at the average rate of 1,500 a week.
I am glad that I stood shoulder to shoulder with the hon. Gentleman in the vote on the House of Lords. I have never hidden the fact that I have always believed in an elected second Chamber—I voted that way. The issue now is how we achieve that. First, we must get the Bill through, because it establishes a platform for subsequent consensus on final reform of the House of the Lords.
Mr. Eric Forth: No.
Mr. Hain: Yes, it does; otherwise we are defending the indefensible situation of hereditary peers remaining in the second Chamber and voting on laws of the land although they are there by accident of birth rather than by election or any other democratically accountable system of appointment. That is the position.
Interestingly, Conservative peers in the House of Lords voted solidly for a fully appointed Chamber.
Mr. Forth: They would.
Mr. Peter Hain: Ah—the cat has been let out of the bag. We have one message from Conservative Front Benchers, who are being purely opportunistic, as they always are on every policy, but another message from elsewhere—and not just a message, but a practical vote against the very policy that the hon. Member for North-East Hertfordshire (Mr. Heald) appears to be advocating. I am in favour of getting through the reform that will abolish hereditary peers and establish a more accountable and independent appointments system, and of building on that over the subsequent period. I shall happily talk to the hon. Gentleman about that. The Joint Committee, on which I hope Conservatives and Liberal Democrats will be represented, will be able to examine the system, which I hope will contain at least a strong element of direct election.
I have one final point on that matter, which is that I have been absolutely consistent in what I said to the Fabians last Saturday and in what I wrote in my book nearly 10 years ago. I have always believed that to have an entirely separate election for the second Chamber on a different date from the general election would be undesirable. I do not know what the turnout would be in such an election, and it would have the opportunity to offer a rival forum. We should examine, as the Lord Chancellor has said, the option of a secondary mandate whereby the votes cast at a general election would determine the composition of an elected second Chamber. It will be interesting to see what the Conservatives do in a serious debate on the matter, instead of their normal opportunistic posturing—which has been countered by the way in which they have voted in the other place.
Mr. Paul Tyler: Will the Leader of the House tell us whether and when we will have an opportunity here to debate the 26th report on senior salaries, which was published this morning, and—more importantly—the Prime Minister's written statement that has just been released? Does the Leader of the House recognise that the Prime Minister's spokesman has confirmed that the report means that the Prime Minister's salary will be increased to nearly £179,000?
Interestingly, the briefing given this morning referred to performance-related pay. Can the Leader of the House explain precisely how that will apply to Ministers? What would happen if there were an error of judgment at the highest levels of government? Would salary be docked if, for example, the Leader of the House made a mistake, or if the Prime Minister made a mistake and led the country to war under false pretences? Would his pay be docked sufficiently to take account of that error?
On Lords reform, can the Leader of the House confirm that there will be a debate in Westminster Hall on Wednesday 25 February? Since he has already said that he has taken the lead on this issue, and since it would seem that he alone in the Cabinet is sticking to the manifesto commitment to make the House of Lords more democratic and representative, which everyone else signed up to but has since reneged on, will he lead for the Government in that debate?
Mr. Hain: As the hon. Gentleman knows, the lead Secretary of State on the House of Lords reform Bill, which will be introduced in due course and which will abolish the hereditaries and establish an independent system of appointment, will be the Secretary of State for Constitutional Affairs. Yes, I can confirm that there will be a debate on the House of Lords on the first Wednesday after we return.
On public sector pay, the Senior Salaries Review Body recommended that Members' pay and Ministers' pay be increased in line with the general rate of inflation, which is about 2 per cent., and the Government have accepted that. I do not know whether the hon. Gentleman was suggesting that Members' pay should be docked on a performance-related basis, so that he might take a dock in pay depending on whether he performed well or badly at business questions. All that we are doing is implementing what the House has decided. Ministers' and Members' pay is linked to civil service grades. The pay review looked at civil service pay, and this is the result. The increase is in line with inflation, so I do not think that his arguments apply.
I have one other point to raise with the hon. Gentleman. I am very concerned about the number of Opposition Members who turn up for their own debates. I found it amazing that no Liberal Democrat Back Benchers were present during their party's debate on the environment earlier this week. Even more galling is the fact that the hon. Member for Lewes (Norman Baker) has tabled an early-day motion—
Mr. Speaker: Order. I must stop the Leader of the House.
Mrs. Gwyneth Dunwoody: Before we launch forth on messing up the arrangements in another place, could we look carefully at the arrangements in this House? Is the House of Commons going to continue to limp along on the totally inadequate changed hours, which are not only affecting the work of Select Committees but destroying the Refreshment Department? They are also making it impossible for schools in the north to visit the House of Commons at any sensible hour. They really are a negation of any sensible access to a democratic establishment.
Mr. Hain: My hon. Friend will be aware that I have announced that we shall review the hours, and I am taking soundings on that and consulting everyone across the Floor as well as our own Back Benchers, including her—[Interruption.] Perhaps I could address the specific issues that she has raised. First, the question of when Select Committees meet is a serious one. The Chairman of the Liaison Committee and, indeed, the Liaison Committee itself raised the issue with me when we met before Christmas. There is now an opportunity for Select Committees to meet in convenience, as it were, on a Wednesday morning, not least because the parliamentary Labour party has decided that, after the Easter recess, it will meet on a Monday evening. Perhaps my hon. Friend will look at whether that will give her an extra opportunity. I realise that there have been changes to the catering arrangements as a result of the new hours, but the Refreshment Department's income has actually gone up—[Interruption.]
Mr. Speaker: Order. The hon. Lady asked the Leader of the House a question. She should not then interrupt him.
Mr. Hain: Within the rules, I always enjoy my hon. Friend's heckling from the Bench Benches. Indeed, I admire her—
Mr. Speaker: Order. It does not help me, and the hon. Lady should not do it.
Mr. Hain: I realise the frustration that my hon. Friend and many other out-of-London Members, including me, feel about the limitation on tours and school visits. That is why I have talked to the official responsible for such visits, and we are considering making adjustments to improve the opportunities for school visits and other visits that Members arrange from their constituencies, because this has undoubtedly been a very negative outcome over the past weeks.
I think that we can move forward and resolve the three issues that my hon. Friend has raised, but I want to see a consensus created on the wider question of hours, by people on both sides of the argument talking to each other and finding a way to move forward. There is every sign that Members are showing a willingness to do that. I want us to have a vote that achieves a consensus rather than a narrow vote that leaves one side triumphant and the other side embittered.
Sir George Young: The Leader of the House has just confirmed that a Bill will shortly be introduced on the House of Lords. Will he give the House an assurance that the Government will not draw the long title of the Bill so tightly that it will not be possible to table amendments on a directly elected element?
Mr. Hain: I can give the right hon. Gentleman no such assurance.
Tony Lloyd: May I draw to the attention of the Leader of the House the importance of professional football to the national way of life? Many football supporters are extremely concerned about the recent spate of takeovers by billionaires from outside the country—such as the takeover of Chelsea—and about the current situation at Manchester United. Speaking as a Manchester United supporter, I must tell my right hon. Friend that it will not go down very well in Manchester if a takeover bid is made for United without reference to the interests of football, and if such a decision is made only in the interests of business. Can we expect an early statement from Ministers on how they intend to approach takeovers in professional football?
Mr. Hain: I recognise my hon. Friend's concern. I know that he is an avid Manchester United supporter, and that he will be mourning last night's results just as I, as an avid Chelsea supporter, am celebrating them. I understand his concern, however. The takeover of Chelsea football club, which has brought much needed relief and many tens of millions into our coffers, whereby we are now creating the best club in the world, has nevertheless raised the important issue of foreign takeovers that my hon. Friend identifies. I know that the all-party football group has done a lot of work on this matter and expressed much concern about it. It is an important issue that my right hon. Friend the Secretary of State for Culture, Media and Sport will want to take close account of. I am sure that she will also study what my hon. Friend has said and be happy to talk to him about the implications.
Mr. Dennis Skinner: I do not know about the Chelsea PFI scheme from Russia, but will my right hon. Friend have a statement made by the appropriate Minister regarding the supreme court proposals and the statement by the Lord Chief Justice, no less, that he will oppose the proposals unless he gets a £50 million prestigious home for the supreme court? We are not talking about a few rolls of wallpaper here. I regard this as blackmail, extortion or bribery. I do not know whether some legal interpretation can be made, but it ill becomes a Lord Chief Justice to act in this fashion.
Mr. Hain: Knowing my hon. Friend's fearsome reputation, I am sure the Lord Chief Justice is quivering over what he said. If the reported remarks are correct—and I do not know—I find it surprising if that is the

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principal reason for objections by the Lord Chief Justice to modernising reforms, which will establish a genuinely independent senior judiciary and a new, modern system of a supreme court, and ensure that the system of appointments to the senior judiciary is independent, rather than being in the Prime Minister's hands. I would have thought that most people of common sense around the country, including those in the Lords, would recognise that. I hope that the Lord Chief Justice will in due course do the same.
Pete Wishart: On Tuesday evening at Earls Court the British music industry will once again host the now annual, increasingly popular, Brit Awards ceremony, which, I am sure the Leader of the House is aware, is where the cream of the British music industry comes together to celebrate another year of success and achievement. The right hon. Gentleman will also be aware that the industry is currently experiencing real difficulties, mainly in the form of piracy, counterfeiting and illegal downloading. May we therefore have a debate on the British music industry, to examine these issues and to celebrate the success of what is still one of our most dynamic, creative and successful indigenous industries?
Mr. Hain: Unfortunately, I shall not be at the Brit Awards, as I shall be visiting people across Wales, although I received an invitation. I am glad that many hon. Members will take advantage of their invitations, because our music industry is vital in terms of exports and Britain's reputation world wide for being in the vanguard of modern music. I know that particular notice will be taken of the hon. Gentleman's concerns, as he was a distinguished rock musician in his previous career.
Huw Irranca-Davies: Having recently returned from a visit to Israel and the occupied territories, and spoken to members of the Palestinian Authority and the Likud Government, two things are clear. One is that everybody knows the way forward and what needs to be done. The second is that there is a literally deadly impasse at present. Will my right hon. Friend therefore try to find time for a debate on this issue on the Floor of the House, particularly in the light of continuing loss of lives on both sides, issues over the line of the security fence and the possibility of unilateral withdrawal from Gaza? It is vital that the House keep an eye on these issues and lobby for the road map to peace and for long-term peace and prosperity for all the people—Palestinians and Israelis.
Mr. Hain: My hon. Friend eloquently puts what I think is a position widely shared across the House and across all parties. He will have the opportunity to question my right hon. Friend the Foreign Secretary on this matter very soon after we return. The vision that he has offered is that there must be negotiations for an independent Palestinian state, but one that gives the Israelis the security they need from suicide bombers and
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other attacks. That is the only way forward, and the sooner they get down to the road map again and the negotiations to achieve it, the better.
Mrs. Gillian Shephard: There has already been a reference this morning to the tragic deaths of the Chinese workers in Morecambe bay. Council officials calculate that in the Breckland district council area, part of which I represent, there are some 15,000 foreign workers, some of whom are there legally, some illegally. I have been warning Ministers about the implications of this for at least two and a half years, but my efforts have been greatly hampered by the fact that it seems that no one Department is in the lead and that no one Department wants to know the facts.
There is no excuse now for Ministers not knowing the facts, in the light of the tragedy and also in the light of the report of the Environment, Food and Rural Affairs Committee on gangmasters, published last September. Will the Leader of the House arrange for an early debate on the implications of Morecambe bay and the issues raised in the Select Committee report, and allow Members to question the Government on their extremely limp response to the report?
Mr. Hain: I am grateful to the right hon. Lady for raising this point, which affects the coastline near her constituency. Indeed, it affects us all. I do not agree that there has been a limp response. We have been pursuing the gangmasters, and are doing so in the Morecambe bay area. That is the purpose of the investigation. The police—the appropriate security officials, rather than immigration officials—came in and were on the case in order to track down the gangmasters. My right hon. Friend the Home Secretary will want to consult closely on the matter—his consultations will include the right hon. Lady, if she wishes to make any representations—because this is a common problem that we have to solve together.
Mr. Kelvin Hopkins: We have seen in recent days Eurotunnel yet again falling into serious financial difficulties. In one way or another it will have to be bailed out by the public purse. Will my right hon. Friend make time for a full debate on rail freight, because only by pushing more freight through the channel tunnel will it eventually become financially viable? The same is true of the channel tunnel rail link. The only way in which it will be fully utilised and really become viable is if more freight is put through the CTR tunnels currently being constructed. Will my right hon. Friend make time for that debate, so that we may also look in particular at the way in which we can get full-scale road haulage trailers on to trains? That is the way forward.
Mr. Hain: My right hon. Friend the Secretary of State for Transport will study carefully what my hon. Friend said. I agree with everything that he said, as, I am sure, does my right hon. Friend. The objective must be to get more freight on to rail and off the roads, for environmental and congestion reasons, apart from anything else. That is one of the many reasons why

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record investment is going into the railways and will continue. The channel tunnel is a vital link for our exports.
Bob Spink: Following the NHS ombudsman's ruling against South Cambridgeshire primary care trust that a person with dementia should receive free NHS care at home, may we have a debate to explore the implications for people with all forms of dementia in residential care, whose health care should surely be funded by the NHS? We must now take the opportunity, after the South Cambridgeshire ruling, to end the discrimination against people with dementia.
Mr. Hain: The hon. Gentleman raises a problem that is common to all our constituencies. It is one of the reasons why we are introducing the Mental Incapacity Bill, initially in draft. He will have an opportunity to see whether it meets the concerns that he has identified. It is a serious issue, and I hope that those responsible locally will take note of his comments.
David Winnick: I congratulate the Government on implementing their ten-minute Bill on the 92 remaining hereditary peers. Of the Lords who sit in the upper House simply because their ancestors received titles, many have titles that were given centuries ago. Indeed, the ancestor of one was given the title on 28 June 1283. How can it be possible to defend people sitting in the House of Lords, part of Parliament, simply because their ancestors were given titles centuries and centuries ago? The matter should have been dealt with long ago, and I am pleased that the Government are to take action now.
Mr. Hain: I could not agree more with my hon. Friend. The idea that people sit in judgment on our laws, and vote on them, because a great, great, great, great grandmother was the mistress of Charles II is an astonishing democratic proposition. The Conservatives now support the hereditary peers and the principle of their remaining in the House. That will become a clear dividing line between a Labour Government who seek to modernise our democratic institutions and a Conservative Government who would seek to keep them in mediaeval times and put us in a situation in which our Parliament became a laughing stock internationally.
Mr. Eric Forth: On that very point, does the Leader of the House seriously think that this blatant cherry-picking and gerrymandering of the House of Lords will get through Parliament without full-scale reform? What the Government are trying to do—let us be quite clear about this—is to fiddle the figures in the House of Lords by removing the hereditaries, without giving us proper reform following that. The right hon. Gentleman knows very well that the official Opposition are pledged to a democratic upper House, which his party apparently now is not, so we will take no lectures from him until we have a debate to flush all of this out. We will defend the hereditaries until we get proper, full reform of the upper House, and we will not accept his crude attempt at gerrymandering.
Mr. Hain: How on earth getting rid of hereditary peers can be called gerrymandering, I have no idea. The present composition of the House of Lords, partly because of hereditary peers, is gerrymandered in favour of the Conservative party. That is the reality. There is a vast majority of Conservative peers, including hereditaries. The Government have fewer peers in the House of Lords than Cross-Benchers, let alone Conservatives. That is a form of gerrymandering against the will of the people, who elected the Government to carry out our manifesto.
The right hon. Gentleman should join us in getting rid of hereditary peers through an independent system of appointment, which is light years away from gerrymandering, taking the power away from the Prime Minister. We will then move on to find a consensus on an elected second Chamber, or at least a second Chamber with a large proportion of elected peers. If the Conservatives will back us in that venture through consultation in the Joint Committee, which my right hon. Friend the Prime Minister is calling for, we can move forward. I suspect that in the end Conservative Members, like Conservative peers, will vote against modernisation and democratisation, because they are the last vestiges of a commitment to an elitist democracy.
Andy Burnham: Can I persuade my right hon. Friend of the growing case for a debate in Government time on the future funding of the national health service? I understand that work is underway at Richmond house on primary care trust allocations for the next three years. I know that a number of my hon. Friends whose primary care trusts are still some distance from their target funding would welcome the opportunity to influence the work that is underway at the Department of Health.
Is the case not made more pressing by some of the mixed messages that we have seen this week about lower taxes and higher NHS spending, which can have only a destabilising effect on NHS staff throughout the country?
Mr. Hain: On targets and funding levels in certain areas, my hon. Friend will be aware that waiting lists have been coming down steeply throughout England. That is a sign of the huge investment that the Government are now making. Against that background, I am astonished that the Leader of the Opposition is quoted as saying in a speech this week that the Government have spent a huge amount more on the NHS and that this approach has been tried and has failed. We have recruited thousands of extra nurses, doctors and consultants to make sure that waiting times are driven down to give people relief from pain, and the Leader of the Opposition is saying that we are spending too much money. As for the shadow Chancellor, the editorial of 12 February in The Daily Telegraph says that "The Tories are all over the place on tax and spend." We are seeing opportunism again. The same old extremist policies are coming back.
Mr. Nigel Evans: Has the Leader of the House had an opportunity to read the report published yesterday entitled "Obesity, the Time Bomb" by three eminent bodies, which recommended a

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cross-Government taskforce to look into a strategy for this problem? Looking at the Leader of the House, it is clearly a problem that he does not face. He gets plenty of exercise running from Government Department to Government Department putting out fires and, indeed, starting them. However, he knows that there is a problem, particularly with youngsters, who seem to believe that they can have a Big Mac and large fries twice a day and that that will have no long-term effect on them, whereas clearly it will. They need good dietary information and good exercise opportunities. This is not a case of Billy Bunter versus Twiggy: it is a matter of getting the right balance and getting information out to our youngsters. Will the Leader of the House consider seriously setting up a cross-Government taskforce to give guidance on and a strategy for this problem?
Mr. Hain: There is a strategy for the problem that my right hon. Friend the Secretary of State for Health, in combination with my right hon. Friend the Secretary of State for Education and Skills and other Ministers, is pursuing, including my right hon. Friend the Secretary of State for Culture, Media and Sport. It is to encourage people to take more exercise. I get most of my exercise in the Neath valleys and in the gym rather than engaging in my departmental responsibilities.
We are bringing in new standards on nutritional content and we are increasing food labelling and food marketing, especially to stop or discourage advertisements that encourage young children to eat junk food and become obese. It is an extremely serious problem, and for that reason the hon. Gentleman is welcome to apply for a debate. However, the Government are on the case and will tackle the matter energetically. I am sure that his advice will be welcomed.
John Mann: I know that my right hon. Friend the Leader of the House is a radical reformer. Does he think, therefore, that we should be having some full-day debates determined by Back Benchers? May I suggest as a starting point a debate that I know would have a great deal of support? We should have a full-day debate on the legacy of the National Coal Board, during which we could consider the unresolved issues concerning canteen workers. There are also issues involving the mineworkers pension scheme. In particular, we could have a proper and full debate about scandalous solicitors. One of them has today cited my right hon. Friend in defence of why they have been double charging miners, miners' widows and their families, despite the fact that the Government have already paid them. Given that we have a radical and reforming Government, does that not warrant at least a full-day debate?
Mr. Hain: My hon. Friend raises some important issues that I, like him, as a coalfield community Member, have been very concerned about. First, on the mineworkers pensions scheme, the Government's guarantee has ensured that despite the recent deficit, mineworkers' pensions have been topped up with taxpayers' funds. Therefore, they will be guaranteed their final salary pension schemes in a way that, unfortunately, people in the private sector are not. I think that former miners will welcome that.
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My hon. Friend will know that the claim of canteen workers for equal pay is a long-standing grievance that was neglected by the Conservatives. It was resolved when I had responsibilities for energy. I know that some anomalies are still outstanding, with some individuals being not properly recognised and registered by the National Union of Mineworkers and by Arthur Scargill. That is a difficult problem.
I agree with my hon. Friend about applying for a debate on the scandal of solicitors who are taking Government money—taxpayers' money—to process compensation schemes. They are taking millions and millions of pounds of taxpayers' money and then penalising and exploiting often really sick miners by taking an additional cut of their compensation. That is a scandal. If it is not illegal, it is certainly against the code of the compensation scheme that was laid down by the court. The sooner that my hon. Friend is able to identify and, if necessary, name solicitors under privilege in the House, the better.
John Barrett: Will the Leader of the House find time for an urgent debate on the Floor of the House on the future of air transport? Since the publication of the White Paper in December, there have been demands from Members on both sides of the House for a debate. With the exception of one Westminster Hall debate, it is clear that not enough time has been provided. There is a serious demand for such a debate.
Mr. Hain: I appreciate the point that the hon. Gentleman has raised. He is free to apply for a debate at any time. When my right hon. Friend the Secretary of State for Transport made his statement and published the White Paper, I think that it was widely welcomed. There was a full opportunity then to hold him accountable.
Dr. Alan Whitehead: In view of the recent exchanges in the House on the contribution of taxpayers to provide Short money for political parties in the UK, will my right hon. Friend find time for a debate on the contribution of UK taxpayers to the funding of European political parties of which British Members are members, particularly perhaps the strongly pro-federalist European Peoples party?
Mr. Hain: The fact is that taxpayers' money does subsidise, quite properly, European political parties. It is interesting that the Conservatives have now decided to affiliate to the most federalist party in Europe. I encountered its members when I was representing the Government on the European convention. They were in favour of more and more integration, the creation of a European federal superstate and stripping Parliaments like ours of their power to maintain sovereignty over European decisions. It is an interesting body swerve by the new Leader of the Opposition that he has joined the federalist superstate fanatics in the European Peoples party.
Mr. Peter Viggers: Is the Leader of the House aware of the Government's strategy on defence medical services? Is he aware that the two main

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features of this strategy are the closure of the Royal hospital, Haslar, which is bitterly opposed, and the building of a new Royal College of Defence Medicine on the site of the Selly Oak hospital in Birmingham, at a cost of £200 million? Is the Leader of the House aware that the Government have now run out of funds and cannot develop the Selly Oak hospital, which means that their strategy is in tatters? It is not surprising that the admiral responsible for the policy has resigned from the Royal Navy rather than implement it, but it would have been more dignified if the Ministers responsible for those policies had resigned instead. Can we have a statement, because the Government policy is in tatters, and there is no plan B?
Mr. Hain: I recognise that this is an important constituency matter for the hon. Gentleman, who has raised it with the Secretary of State for Defence on numerous occasions. However, I do not accept his description of Government policy as being in tatters. Indeed, the Government are continuing to invest record amounts in defence and the defence of our country. I have read reports that the shadow Chancellor may be considering a cut in defence spending, but we shall no doubt find out next week. The issue is where we will get the money. If taxes are to be cut for the few, as the Conservatives apparently advocate, what will happen to our defence forces, let alone our hospitals and schools? That is the dividing line that is now opening up in British politics, and the people will decide that it is a Labour Government who can best protect their interests in defence and elsewhere.
Mrs. Louise Ellman: Would the Leader of the House consider a debate on terrorist activity in the United Kingdom, and could it include consideration of the disturbing facts revealed this week on the BBC programme "File on 4", which looked at the recruitment of British citizens to terrorism? Would he also note the comments of Dr. Tamimi, a senior spokesman of the Muslim Association of Britain, who is reported in the English edition of "The Jerusalem Report" on 9 February as saying that he
"occasionally acts 'informally' as a public relations adviser for Hamas"?
Hamas, of course, is a proscribed terrorist organisation.
Mr. Hain: I am obviously disturbed by my hon. Friend's account of what has appeared in "The Jerusalem Report". I am sure that the Home Secretary and, indeed, the security authorities will want to study carefully the points that she has made.
Mr. Andrew Tyrie: The Financial Secretary made a written statement today about Equitable Life, which raised more questions than it answered. We now know that the Penrose report, which was given to the Treasury more than seven weeks ago, has been given to the Financial Services Authority, the Serious Fraud Office, the Department of Trade and Industry, a group of independent actuaries and Equitable Life senior management, but it is not available to the public or the policyholders most affected. Could the Financial Secretary come to the House today to tell us when we will get that report, and
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whether it will be published in full or will be edited, given some of the comments by bodies that already have it, and given her response to a parliamentary question?
Mr. Hain: As I hope the hon. Gentleman is aware, the Financial Secretary made a written ministerial statement on 5 January which clarified our plans to publish the report in full as soon as possible, and said that Treasury Ministers will answer questions after publication. I am sure that he will agree that the issue is important. It has been raised with me on a number of occasions in recent weeks, and I am well apprised of its significance. It is an important issue to get right before a Minister comes to the House or the report is published with the Government plan of action in response. I am sure that he will understand that this is a complex matter. We have to get it right in the interests of everyone affected.
Mr. Paul Truswell: Does my right hon. Friend agree that since deregulation in 1986 bus services have declined a great deal? On that note, I draw his attention to early-day motion 519, which calls for the extension of the bus franchising system in London to the rest of the country:
[That this House recognises the success of the franchised bus network in London which has improved service quality and resulted in much greater use of services; notes the decline in bus patronage and continuing reductions in socially necessary services since the industry was deregulated outside London; and therefore calls upon the Government to change the current legislative framework in order to make it easier and quicker for local authorities and passenger and transport executives outside London to introduce franchising in circumstances where the industry has failed to provide a socially inclusive service and deliver the quality necessary to achieve patronage growth in line with national targets.]
Does my right hon. Friend agree that if that system is good enough for the people of London, it is good enough for our constituents? Will he arrange for an early debate, so that we can talk about ways in which we can give bus passengers a much better deal?
Mr. Hain: My hon. Friend's desire for a better deal for bus passengers is one that the Government and I share. I agree that the bus deregulation carried out by the previous Government was a disaster, which is why we have encouraged the rationalisation of bus services and put record amounts of subsidy into the provision of local services, as I have seen in my own constituency, especially in remote areas. That is important in ensuring that people living in rural areas have a better quality of life and much easier forms of transport.
Mr. Graham Brady: Does the Leader of the House share my disappointment that we did not reach question 14 in Education questions earlier, as that deprived Members on both sides of the House of the opportunity to express concern about the continuing crisis in school funding? Last year, there was a dreadful situation in which schools throughout the country threatened redundancies of teaching and non-teaching staff. We were assured that it would be better this year, but I have

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already received communications from schools in my constituency. The head teacher of Woodheys primary school, Mrs. Daniels, wrote to me:
"I have spent hours and hours agonising over an impossible task—I am supposed to give staff more support time, release and a better work/life balance (as promised by the government) and through not fault of my own or my governors we will have to lose all support staff, many trained in-house, in September '04."
It is a dreadful problem, which the Government promised would not happen again this year. Can we have an urgent full-day debate in Government time on school funding so that we can try to head off the crisis before it causes redundancies next year?
Mr. Hain: The real crisis would arise if the Conservatives' policy of 20 per cent. cuts in school funding were implemented. The hon. Gentleman is free to apply for a debate on this subject at any time, but the Secretary of State for Education and Skills has frequently answered questions on it. As the hon. Gentleman will be aware, an estimated 180 schools across England will benefit from the £2.2 billion capital investment programme announced today, on top of the recruitment of 25,000 more teachers and 80,000 more support staff, as well as the repair or refurbishment of 21,000 schools. That is a dramatic contrast with the Tories' record of cuts, closures and teacher redundancies. However, two problems remain. The first is getting the school funding route through local authorities right—my right hon. Friend the Secretary of State is working on that—and the second is falling rolls in certain areas, which is a big problem in my own constituency.
Mr. Gordon Prentice(Lab): May I ask my right hon. Friend about the membership of the Standing Committee considering the Higher Education Bill? What happened to the convention that the composition of a Bill Committee reflects the vote on Second Reading?
Mr. Hain: We have a significant reduction in the Government's usual majority for that Committee to just three, to reflect precisely the balance of opinion in the House. That is something of which we took account, and the usual channels accepted it, so the hon. Gentleman's point has been recognised.
Mr. Harry Barnes: Has my right hon. Friend seen early-day motion 532?
[That this House believes that the powerful campaign being run by the Daily Mirror for medals recognising the bravery of six military policeman killed in Iraq also shows the need for medals which recognise all British servicemen and women who have been killed in the line of duty as proposed in Early Day Motion 445.]
The motion supports the Daily Mirror's campaign for medals to recognise the bravery of the six military policemen killed in Iraq, but goes on to argue that there should be general provision to recognise all British servicemen and women who have died in the line of duty. As I would love to be a friend of the Ministry of Defence, will it make a statement saying that that request will be looked at favourably and granted?
Mr. Hain: This matter has been raised before by the hon. Gentleman and hon. Members on both sides of the
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House. I know that it is an important issue, as one of my constituents died in Iraq only a few months ago. However, if we focus on granting awards to people who have died on active service, there is a problem of balancing that against recognition for those who carry out their duty and come back safe and sound. We will certainly look at the matter very closely indeed, but the traditional view of the armed forces is that it would be wrong to overcompensate, as it were, for those who unfortunately die and sacrifice their lives, when others come back, having performed individual acts of bravery.
Kevin Brennan: As the pensions Bill was published today and as the Leader of the House has announced both a Second Reading and an Opposition debate on a related subject, will he take the opportunity in the meantime to speak to his Cabinet colleagues at No. 10, the Treasury and the Department for Work and Pensions to emphasise the fact that the plight of people who have lost their pensions as the result of insolvency is not the same as the Equitable Life issue, not least because many of them were compelled to join their pension schemes and never received a health warning that it was possible that their pensions would not be paid in full? Will he make sure that that point gets across while compensation is still being considered?
Mr. Hain: My hon. Friend makes an important distinction affecting Allied Steel and Wire workers in his constituency—precisely the kind of issue that my right hon. Friend the Secretary of State is studying. The question is, where can a boundary be drawn on such claims? The ASW workers were treated absolutely appallingly, along with thousands of others who suffered a similar predicament. The Government are looking at the issue in a way that will not extend the boundaries, such that could give rise to millions of potential claims but recognises the particular plight of the workers concerned. I hope that my hon. Friend will continue to discuss that matter with the Secretary of State. I am sure that my hon. Friend will welcome the pensions Bill published today, which will provide protection against precisely such exploitation and scandal in future.
In response to a note helpfully passed to me by the shadow Leader of the House, perhaps I may add to an earlier reply. If I misled the hon. Gentleman or the House in my remarks about the usual channels, I meant to say that the Committee of Selection had a Division and that the hon. Gentleman's side lost—that is the usual way of doing things when there is disagreement.
The fact remains that we have significantly reduced the normal majority for a Committee with a membership of 25 to just three. Included among its Labour Members are some who voted against the Government. [HON. MEMBERS: "One."] That shows that we recognise the strength of opinion on the Floor of the House.
Mr. Clive Betts: Will my right hon. Friend arrange a debate on the Strategic Rail Authority and its ability to remove from train operators obligations to service improvements in their original franchise agreements? Such a debate would allow me to pay tribute to the Yorkshire Post for helping to expose

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the fact that the SRA has removed from Midland Mainline the obligation to provide an hourly fast service between Sheffield and Leeds, which is badly needed. Apparently, that obligation was removed because Midland Mainline is so poor at delivering the rest of its services that the company cannot be trusted with a new one. That action was taken without consulting the passenger train executive and Members of Parliament, and with no compensation payable by Midland Mainline. The PTE was told that if it could find another operator to deliver the service, it would have to meet the cost. That unaccountable and unacceptable decision strikes at the heart of the SRA's activities and deserves a debate.
Mr. Hain: My hon. Friend will have the opportunity for a debate and my right hon. Friend the Secretary of State for Transport will want to take note of that matter. There is a record investment totalling billions of pounds to improve the railway infrastructure, with 1,400 new vehicles and many more train journeys. The railways are carrying more passengers than for more than 40 years. The Government will continue modernisation and investment to meet the transport and congestion challenges of the future.
David Taylor: In the gaps between gardening next week to which the shadow Leader of the House referred, will my right hon. Friend find time to read the National Audit Office report on the Criminal Records Bureau's early years of operation, in particular the debacle surrounding Capita's computer systems? Will he consider whether we should re-evaluate the love affair with private finance—now that the first flush of romance has paled and the initial ardour has cooled—and examine why we are being further seduced down a path that has already produced commitments for future taxpayers of £120 billion? Is not the private finance initiative prohibitive in cost, flawed in concept and intolerable in its consequences for the British people?
Mr. Hain: I do not recognise that description or outcome in the many schools and hospitals throughout the country that have been built with the benefit of
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private sector investment. Nor is the NAO report likely to be at the top of my reading list next week—when I will not be gardening but visiting various parts of Wales.
The report to which my hon. Friend refers stated that the Criminal Records Bureau has made many improvements since the problems that arose originally:
"It is now reliably delivering over twice the number of checks undertaken by the police each week than under the old arrangements into children and vulnerable adults."
That is a sensitive area and the CRB is doing much better. Admittedly, that is at extra cost, but I am sure that my hon. Friend welcomes our clamping down on all sorts of problems affecting children and vulnerable adults.
Mr. Tony McWalter: Will my right hon. Friend organise an early debate on the extraordinarily laid-back attitude of the Post Office's major shareholder—the Government? The Post Office wants to shut sub-post offices in my constituency, meaning that many residents will have to spend 10 per cent. of their pension on a taxi to collect it or wait hours for a bus—and bus drivers can accept only three passengers with Zimmer frames before others must be turned away. Where sub-post offices are closed, pensioners' quality of life is massively reduced. Will my right hon. Friend please call in such decisions for urgent review?
Mr. Hain: I can see that at this stage in the Government's life, we have a new definition of being on message among some Back-Bench colleagues. My hon. Friend makes the important point that sub-post offices often represent a vital facility in small communities. We aim at keeping as many offices open as possible and are providing record amounts of subsidy to help ensure that that is done in areas where there is no alternative facility. Lifestyle changes are helping to close local post offices, almost regardless of what the Government could do—except at prohibitive cost. The ease with which pensioners can travel to post offices is a critical issue and one of which the Post Office takes close account. I am sure that my hon. Friend's strong representations will be recognised.

CAP Reform (England)
1.26 pm
The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): With permission, Mr. Speaker, I should like to make a statement.
Last June, I had the pleasure to announce that we had secured the most radical reform of the common agricultural policy since its inception. Today, I will make a statement on how I propose to implement key features of that groundbreaking reform in England.
To place the proposals in context, it is—as I said to the House at the time—hard to overstate the importance of reform in transforming the core elements of the common agricultural policy and laying down a new direction for its future evolution. Crucially, the link between the subsidy paid to farmers and the level of production has been broken—so called "decoupling". That means that farmers' activities will no longer be dictated by what the subsidy regime requires them to produce—with all the costs and bureaucracy entailed—and frees them to farm in accordance with what the market wants.
Decoupling also reduces the environmental impact of farming by removing an incentive for intensification and over-production and by making subsidy dependent on compliance with a range of environmental standards. Moreover, decoupling of subsidy from production reduces the trade-distorting nature of the common agricultural policy and paves the way for a deal in the current round of world trade negotiations.
The challenge before us is now how best to maximise the potential benefits of the reform with our approach to implementation. In particular, which of the options available to member states should we take up? How far should we decouple? How should we apply the new decoupled scheme—the single farm payment? We consulted widely on those issues in the autumn of 2003, and received more than 800 responses. I have given careful consideration to the arguments put forward, which advocated a wide range of different approaches.
In reaching my decision, I have been guided by several key principles. They are: coherence with the Curry commission report and our own sustainable farming and food strategy launched in 2002—with the emphasis in both cases on bringing the industry closer to the market and the increasing importance of environmentally sensitive farming; consistency with our wider objectives for the CAP—including greater simplicity, transparency, minimal bureaucracy and as few deductions as possible from the basic payment available; and the need to attract the widest possible support of the stakeholder community for continuing payments to farming—which, we believe, requires moving towards a system in which public money delivers public goods. I was also determined to give as many details as I could at this stage of the scheme in order to give the industry a clear path of adjustment so that farm businesses can plan.
Those principles led me to a conviction that the more fully support is decoupled, the greater the degree of freedom farmers will be given in respect of their own business decisions. So I have decided that in England we should fully decouple all direct payments in 2005,
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including the new payments for milk producers. Therefore, a single farm payment will replace the plethora of existing schemes and simplify the bureaucracy that is associated with them. However, the exact form of the payment is also important. The options available included a straightforward allocation of available moneys on the historical basis of an individual farmer's receipts in the reference years 2000–02; and allocation of different flat-rate payments on the basis of whether land was under grass or under crops in 2003.
I have concluded that we should avoid a situation in which subsidy is allocated solely on the basis of past activities that were themselves undertaken in the context of production-linked support policies. For England, I do not believe that it would be right to adopt a purely historical approach. I do not believe we can justify to our public a situation in which at the end of this decade or later, farmers continue to receive aid wholly based on business decisions taken 10 or more years earlier in a very different policy context.
Instead, guided by the principles I outlined earlier, and having listened carefully to the many compelling and carefully argued cases put to me by the National Farmers Union, the Country Land and Business Association, the Royal Society for the Protection of Birds and others, I propose to exercise the option in the agreement to adopt a flat-rate payment per hectare.
Of course, a fully flat-rate system paid immediately in 2005 would have been the simplest and cheapest to implement. However, the redistribution and the immediate impact on some incomes that would result would be too destabilising. More importantly, it might act against the sort of behavioural change that we want to take place in helping the industry to become fit for purpose in getting closer to the market.
In order to mitigate these effects, I propose to introduce the flat rate progressively and to divide England into two regions: land in the severely disadvantaged areas—SDAs—of the less favoured areas; and all other land. A different flat rate will apply in those two regions. During the transition years—it will be the same period in both regions—a steadily increasing proportion of the funds available would be directed towards the simple flat-rate payment, with most farmers receiving an additional, but over time diminishing, payment related to the subsidies that they received in the reference period 2000–02.
I have also decided that the period for the phasing in of the flat-rate payments will be eight years, starting in 2005 and ending in 2012. The proportion of the available funds to be allocated on the flat-rate basis in each year will be 10, 15, 30, 45, 60, 75, 90 and 100. In other words, 10 and 15 in the first two years, after that rising by 15 per cent. a year until we reach 100. My intention is that the flat-rate payment element should be low in the early years to allow farmers time to adjust and plan for the situation that will appear by the end of the decade.
I recognise that the framework that I intend to implement will involve some redistribution of current subsidies between farmers and between sectors and areas, but it will be introduced over a reasonably extended period of time that allows farmers to adjust during the transition. We will end up with a system that

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is increasingly equitable between farm types; is much more market focused; has a greatly simplified bureaucracy; and can deliver a better landscape and environment, and a more sustainable long-term future for English farming.
There are many related issues that will need to be addressed over the coming months. I can say now, however, that I do not propose to take advantage of the option for so-called national envelope measures in England. Although in certain circumstances they could offer potential benefits, I judge that the accompanying complexity and loss of transparency outweigh those advantages in English conditions.
As to cross-compliance, conditions will attach to the subsidies that are payable, and we will consult on the approach to be taken in respect of those to ensure that they are implemented effectively, proportionately and, again, with the minimum of bureaucracy—an approach that we shall take to all forms of regulation. In addition, I am keen to ensure that our implementation of cross-compliance will fit into the approach of the whole farm model for regulation that is being piloted in England.
I believe that this approach constitutes a forward-looking package of measures that fits the principles I outlined earlier. It is a decisive and irreversible shift which offers huge opportunities to the industry. I know that many in the farming industry would have preferred the Government to adopt the approach of allocating aid on the basis of historic subsidies received. However, many others, including some in the farming industry, took a different view, as did some members of the wider stakeholder community; I have to take all those views into account in developing a workable system.
My Department and I will work with the industry over the coming months to implement these decisions in the best way possible, and in the spirit of partnership and co-operation with all stakeholders that has run through the Curry commission and our own sustainable farming and food strategy on the central issues here, and any other measures that might be helpful in due course.
Everybody in the farming community told us that they sought clarity in the direction of policy, and simplicity and transparency with less bureaucracy, and that they hoped that we would not implement all the options for deductions from the basic payment that were available to us. We are heeding all those calls.
I have set out today a basis for payment that I believe to be the fairest, because it moves us in the direction of public money going to support public goods across the whole of farming.
Mrs. Theresa May: I begin by thanking the Secretary of State for coming to the House to make this statement and for giving me prior sight of it.
I thank the right hon. Lady, too, for at last trying to end the uncertainly that has dogged our farmers for so long. British farming has been through the most difficult of periods in recent years, particularly in recovering from the foot and mouth outbreak, and after a great deal of uncertainty and anxiety, our farmers will at least begin to have a clearer picture of their future fate.
The right hon. Lady will know that my party has actively backed Commissioner Franz Fischler in his desire radically to reform the expensive and unwieldy
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common agricultural policy. We support the need to end the red tape, form-filling and over-regulation that came to embody the CAP, and we agreed wholeheartedly when he said that the reform could lead to a new, more market-focused agricultural industry under the slogan "freedom to farm".
However, it is hard to see how the scheme laid out before us today will achieve those goals. The last few months have indeed seen vigorous debate in the farming community about what method of allocation to adopt, but the Secretary of State has managed to come up with the one scheme that absolutely nobody recommended. She said that she received 800 responses to the consultation. How many of those supported this scheme?
Moreover, although the Secretary of State explained that in England there will be a dynamic hybrid model for the single farm payment, Wales will have an historical system with a national envelope, Northern Ireland will have a static vertical hybrid system, and Scotland, as I understand it, will have a different historical system. That means that there will be four different systems for farmers in the United Kingdom; and that will mean four different sets of rules with four different armies of civil servants implementing them on our shell-shocked farming industry. It is hard to see how that is likely to cut red tape or do away with bureaucracy. One of the clear aims of decoupling was to reduce bureaucracy. The Secretary of State said in her statement that her aims were simplicity, transparency and minimal bureaucracy. Perhaps she could explain how replacing one system with four is a simplification.
I am not alone in my concerns. Franz Fischler, the commissioner who was the architect of these very reforms, said in a letter to Ministers:
"the original intention…was that the Single Payment should be based on the historical payments…The idea was to promote competitiveness and market orientation while securing the income of farmers".
He continued:
"I would like to point out that such a departure from the historical model could have important redistributive effects in terms of payments to individual farmers resulting in some farmers obtaining significantly lower amounts".
Franz Fischler is not alone in voicing his concerns. Sir Ben Gill, president of the National Farmers Union, said earlier this month:
"The hybrid option will bring the worst of both worlds, but the advantages of neither. There is no point in changing one complexity for another."
That hardly sits well with the original idea of cutting bureaucracy.
Of course there may not just be four systems in the United Kingdom. As the Secretary of State said, there will be yet another scheme for disadvantaged areas. Britain's farmers compete not only on a global basis and with competitors throughout Europe. but with each other. Under the proposed systems, Britain's farmers will receive different levels of support but compete in the same marketplace. With four different systems, surely someone will be better off and someone the loser. Who is it likely to be? There will be huge disparities in the continuing support that our farmers receive in the coming years.
Let us look at the practicalities. Take two farmers, one on the Welsh border in Leominster and one on the other side of the border in Brecon, both currently

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growing exactly the same crop and getting the same entitlement and both continuing to grow the same produce in future. One could experience a difference of tens of thousands of pounds in the aid that they receive in future. Does the Secretary of State really believe that to be fair or amicable? Does it not encourage the perception that the English farmer will be put at a disadvantage compared with his Welsh, Scottish or Northern Ireland colleague, let alone with the French, who are doing their best to retain production subsidies?
The Secretary of State has not made clear what the announcement will mean for cross-border farms. Are we likely to see farms that straddle the border having to adopt two different systems? Will they have a choice to opt for the best one? Or has she not addressed that problem at all?
Many farmers around the country will be asking themselves today what the new scheme means for them. What figures does the Secretary of State have for possible losses to farmers in England, most notably in the dairy and beef sectors and tenant farmers, compared with other UK farmers as a result of today's decision? What, if any, mitigating measures has she put in place to deal with those problems?
The proposal is the biggest disruption that our agricultural industry will have seen in a generation. It involves a huge redistribution of support and upheaval to the lives of our farmer communities. It is essential that they know, as a matter of urgency, what the implications will be for their businesses and their families. What measures has the Secretary of State put in place to inform and guide farmers across the country about the implications for their businesses? That must be a matter of urgency. What studies have been conducted on the impact not only on farm structures but on the environment of implementing this hybrid model?
The Secretary of State said in the statement that implementation with the minimum of bureaucracy is "an approach which we shall take to all forms of regulation". She also said that she wanted to attract the widest possible support from the stakeholder community. Sadly, the statement suggests that, far from minimising bureaucracy, the Government have changed one complexity for another. Far from attracting the widest possible support, it is the one scheme that no one recommended. Far from ending uncertainty, it will leave many farmers wondering what future they have under the Labour Government.
Margaret Beckett: I am grateful to the hon. Member for Maidenhead (Mrs. May) for her initial welcome for the CAP reform proposals, although I note—and perhaps she has not caught up with this—that her view does not seem to be shared by her colleagues in the European Parliament, who have just voted against them all.
However, I am grateful to the hon. Lady, and she is right to say that we need to reduce red tape and form filling and connect people with the market. There is no question but that the biggest impact of the changes that we have negotiated is the decoupling itself, which will have a major—and, everyone believes, a positive—effect on farm incomes.
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The hon. Lady said several times that none of the consultation responses supported a fully flat-rate option. That is not correct. I am afraid that I do not have the figures with me, but it is not the case that no one supported that option.
The hon. Lady dwelt at great length on the freedom for the different constituent parts of the United Kingdom to have different structures. Northern Ireland is looking at its relationship with us, and also over the border to Ireland, where there is 100 per cent. decoupling but not on the same basis. I remind her that Wales and Scotland are able to adopt a different system—it is their free choice; they are responsible for agriculture under the devolution settlement—precisely because I negotiated that freedom for them. It would be ridiculous for me, having sought to obtain that freedom, to attack them for exercising it. It is for them to make the decisions that they believe to be right in their own context.
The hon. Lady drew attention to a letter that Commissioner Fischler sent to Ministers the other day, referring to the potential advantages of a historical payments system. I have read it with care and subsequently talked to Commissioner Fischler. I have also spoken to him since we made the decision that I announced today. I note that what concerned the commissioner particularly was whether any member state would be seeking a redistribution of itself and for that reason: seeking to redistribute the subsidies that are paid. That is not what we are doing. We are seeking to institute a different system. That system brings in its wake some redistribution, but we are seeking to minimise the degree of that. That is a rather different issue.
The hon. Lady described the system as being neither fair nor amicable and said that English farmers would be at a disadvantage, particularly vis-à-vis the French. If she speaks to the English farming community—indeed, the UK farming community—which almost universally supported decoupling, I think she will find that it believes that the French are putting themselves at a disadvantage by not 100 per cent. decoupling. I remind her of the example of Ireland, which campaigned as hard as anybody against full decoupling in the negotiations. However, once its farming community began to examine the implications—keeping two sets of systems and keeping bureaucracy in perpetuity for one of those sets—Ireland speedily decided to decouple 100 per cent. I believe that, over time, farming communities throughout Europe will reach the same conclusion as British farmers, who, perhaps because of the impact of the terrible problems that British farming has experienced in recent years, were looking more acutely at their future, rather than protecting their historical position.
The hon. Lady asked me about the overall level of redistribution. I cannot give her detailed figures for each sector immediately, but we will do what we can to make information available. What I can tell her is that the overall level of redistribution will be 13 per cent. to 15 per cent. of moneys now distributed, but that will happen over eight years. She asked about mitigating measures. Of course, we are acutely conscious of the impact on tenant farmers and various of the sectors, and we will be talking to the farming community about what is available to it.

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Let me return to one point that the hon. Lady made repeatedly in a number of contexts. She said that Ben Gill had attacked the so-called hybrid option. That is true; he said that it was not an option that we could possibly advocate. Let me emphasise that what we propose is not a hybrid system, but a flat-rate system, towards which we are moving on a transitional basis. The two are not the same. [Interruption.] If the hon. Lady waits a second, I shall explain the big difference. When the system is completed, there will be one form, one payment date and one payment for one producer. I call that simplicity.
Mr. David Drew: I largely welcome the statement, which some Labour Members will perceive as a dynamic compromise. However, some of us believe that one element has possibly been missed out, although I appreciate that the leading farming organisations would not necessarily have argued in public for it. We continue to pay a subsidy to some of the richest people in the country. I have always taken up the cause of tenant farmers, and I should like some genuine redistribution to take place, if not in the current review, to those who need some subsidy to continue their work. Will my right hon. Friend comment on that?
Margaret Beckett: As I said earlier, the Commission would certainly have set its face against a proposal for redistribution for its own sake. However, I am grateful to my hon. Friend for reminding me that I could have said a little more about one aspect that the hon. Member for Maidenhead raised. This is obviously no more than a very general picture in terms of gains and losses, but generally speaking the flat-rate payments will redistribute subsidy from more intensive to less intensive producers and to land that did not previously receive a subsidy. However, the size of the redistribution is mitigated by having two flat rates, not one. Analysis of the farm business survey suggests that general cropping farms and horticulture will gain relative to historical payments, as will cattle and sheep, both in less favoured areas and in the lowlands, but other farm types will tend to lose. Within farm types, however, there will always be cases of individual winners and losers, so even though, for example, typically, lowland cattle and sheep farms gain as a group, it will tend to be sheep farms that gain, and cattle farms, particularly intensive beef producers, that lose. In addition, in the dairy sector, larger producers tend to lose while small producers tend to gain. In relation to my hon. Friend's general remarks about smaller and less well-off farmers, one impact of the redistribution will probably be to move income towards some of those smaller farms that have had less support in the past, particularly in the hills.
Andrew George: I am grateful to the Secretary of State for advance notice of the statement, and for the statement itself, albeit after the decision is made.
This announcement represents the most significant change to agricultural support in more than a generation and is likely to have a significant and far-reaching impact on farming, as the Secretary of State acknowledges. I am surprised that the Government have not given any indication of assessments that they have made, with or without the Treasury, on the likely impact
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of the proposed model on a variety of sectors—not just on tenant farmers, traditional farming practices, the environment and new entrants to agriculture, which were mentioned today, but on many other sectors.
I do not know whether the Secretary of State intended it as a deliberate steer, but the statement as circulated to me, and to the rest of the House now, includes an adviser's note halfway down page 2: "Secretary of State: Andy"—I do not know whether that is a familiar reference to me—
"feels that, if possible, we should clarify this point about deductions".
My question to the Secretary of State— [HON. MEMBERS: "And Andy."] And to Andy. My question is whether the Secretary of State can clarify the point about deductions. I noticed that it was not clarified in the statement.
The Secretary of State said in her statement that a key principle in reaching her decision was coherence with the Curry commission and the food and farming strategy. Does she not recognise, however, that one clear outcome of that commission was the establishment of the tenancy reform industry group, which was facilitated by her Department, the key objective of which was to create a viable tenant sector for the long term? Does she not realise, however, that payment based on land will shift fundamentally the balance of agricultural support towards landowners? Given that in this country 40 per cent. of land, formally or informally, is rented, does she not accept that that will have significant impacts on the viability of tenanted farms? I thought that a Labour Government would support the sons of the soil rather than landowners who will ultimately reap the benefits from this system. What assessment has she made of the likely impact, as I think that it is likely to be far-reaching?
What assessment has the Secretary of State or her Department made of the impact of this model on new entrants to farming? It is vital that we get new blood into farming, and we need a system that enables that to happen. I am not sure whether the Secretary of State has properly accounted for that in her assessment. What assessment has she made of the impact on family farming structures? She said in answer to previous questions that she believes that the proposals will favour small family farming. She must recognise, however, that it is the bedrock of many of our rural communities and it is important that we have a system that supports that fundamental part of our rural communities.
I agree with the Secretary of State that taxpayers will not tolerate for long paying farmers merely for existing. Which public goods, however, does she have in mind—access, amenity, archaeology or farming traditions? For which of those does she want cross-compliance, and how will that be measured and enforced? As the hon. Member for Maidenhead (Mrs. May) said, concern exists about different systems in different countries and about those farms that cross those border areas. How will those questions be handled? Will she consider mitigating measures for those sectors that we know will be hard-hit? The dairy sector, as we know, is particularly hard hit, and is already going through a severe crisis.
This is the most significant change in agricultural support in a generation. So that we do not conclude that the Secretary of State is treating this House with

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breathtaking disdain, will she ensure that she allows the House an opportunity to debate these measures? This decision has been taken, and as with genetically modified crops, decisions will be taken before we get an opportunity to debate such measures. Will she ensure that we have an opportunity to debate this measure so that we can identify the problems, influence and alter those aspects, and put it to a vote of the House?
Margaret Beckett: It is a bit odd that the hon. Gentleman should talk about treating the House with disdain when we have come here to make the statement. I share the hon. Gentleman's view, however, that this is the most significant change in farming support in a generation, and that it will impact on all sectors. There are lots of figures and graphs, which I am sure we will be able to make available to the House, but which we do not have the time or opportunity to discuss now.
"Andy" is Andy Lebrecht, the director-general of the food, farming and fisheries directorate. We indeed heeded the advice and fleshed out the section on deductions. For greater accuracy, as the hon. Gentleman asked the question, let me tell him the potential deductions that we would still have to make. One would be a deduction on some scale for the national reserve—I cannot answer all the questions about the precise figures, because those are still in negotiation, they are not agreed, and we do not have the detail from the Commission. Another would be the deduction that is made for modulation, which in future will be made across the EU—and let us not forget that in this country we began voluntarily to modulate to make a deduction from the payment to support wider rural activities, when no other member state was doing that. The competitiveness pressures that Members have sometimes identified will be eased on that basis, because everybody will have to follow the same step. There will be whatever decisions we take on national modulation. In the fullness of time, there will probably be some deduction for financial discipline. That remains to be argued out and negotiated, however, and currently it does not apply. Those are therefore the only deductions that we need to make at present.
The hon. Gentleman then talked about the tenancy reform group. Yes, it has done excellent work, and I look forward to hearing from it about what we can do to assist and support tenants in the present circumstances. I also say, however, that I of course understand—we took full account of it and considered it very carefully—the anxiety that this system of payment would shift the balance of moneys towards landowners. It seems to me, however, that potential exists for landowners to reap the benefit of a changed system, no matter what we do. I am aware that situations have already occurred in which tenancies have happened to come to an end and the renewal of the tenancy has been made conditional on the entitlement being part of the landowner's asset in the new system. That is before anyone knew that we were planning to go down an area payment route. I accept, of course, that there will be an impact, and we will want to look at it.
The hon. Gentleman asked about new entrants. In relation to the deduction to which I referred for the national reserve, that is exactly the kind of purpose for
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which a national reserve could be used, and we will consider it on that basis. He also talked about the need to maintain family farming structures. Of course, one of the reasons that we began to make deductions to put them into the so-called pillar 2 was exactly so that we could do other things to support rural areas and social and economic structures in rural areas. I anticipate that that shift will also continue to occur, not just in this country but across Europe. It is therefore not just through this payment that those concerns would be addressed. We are discussing cross-border issues with the devolved bodies, but again we must talk to the Commission about what and how regulations can be drawn up, and clearly, we will examine measures in mitigation.
I make one simple point to the hon. Gentleman, who is, in effect, asking why we have made this shift. The thrust of his remarks is that we should have stayed with the historic basis, which would not, for example, have caused the shift from landlord to tenant. I take the view that it would not be consistent with my duty to this House and to the farming community as Secretary of State to encourage people to believe that over the long term it is sustainable to base the farming system wholly on historic payments in England. It is one thing to say that payments will be made in 2008, 2010 or 2012 based on what a specific farmer did in 2000–02, but entitlements and land will be traded. Soon, payments will be based not even on what the individual concerned did on a farm in 2000–02, but on what somebody else did in 2000–02. Perhaps I am unduly cynical, but the British public would require a justification, and the justification that we are offering is the best that they will get.
Several hon. Members rose—
Mr. Deputy Speaker (Sir Michael Lord): Order. Before I call the next speaker, may I say to the House that we have had a statement on a very important matter today, and that a large number of hon. Members are seeking to catch my eye? Unless questions, and perhaps answers, are shorter, an awful lot of hon. Members will be disappointed.
Paddy Tipping: Does the Secretary of State accept that she has made some difficult but decisive and correct decisions? It is decisive to change the CAP radically, it is right to decouple entirely, and it is different to accept that less favoured areas should be compared with the rest. I am sure that she knows that the announcement will not be universally welcomed in the farming community. Will she therefore ensure that the details are publicised to farmers as quickly as possible, that the Rural Payments Agency is in a position to make the changes and. most importantly, that she speaks loudly and clearly about the reforms so that the general public know that they will benefit in terms of both public good and environmental enhancement?
Margaret Beckett: My hon. Friend echoes a remark made to me a couple of days ago by an experienced individual in the farming community, who said that in his judgment this was the most difficult decision that any Agriculture Minister has ever had to take—as hon. Members can imagine, that made me feel good. My hon.

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Friend said that the decision would not be universally welcome. I shall be honest with him and the House: I expect it to be universally condemned, because people who want us do more on environmental issues will say that we are not doing enough, and people who want us to do something different on farming will also say that we are not doing enough. That is life, is it not? I assure him that we have carefully discussed the matter with the RPA. Whatever we do, the RPA must begin by establishing a system based on historic payments, and the pace of transition will assist it in making the scheme work efficiently.
Mr. Michael Jack: In welcoming the new opportunities for farmers to move closer to the markets, may I follow the comments made by the hon. Member for Sherwood (Paddy Tipping) by pointing out that if the Secretary of State is right to say that she wishes to introduce the proposals from 2005, nine months is a somewhat heroic timetable in which to introduce a change of such enormity? At this stage we do not know the shape of the final regulation or the cross-compliance requirements, and we have received no detail from the RPA about the procedures that will be involved. When will such details be made available to farmers, and in what form?
Margaret Beckett: I am grateful to the right hon. Gentleman, because his question allows me to clarify one or two points. The closing date for applications to take part in the scheme will be 15 May 2005. During this year, the RPA hopes to issue to all farms, particularly those who are in receipt of subsidy—obviously people who receive nothing at the moment and who will get something under the new scheme will have to apply—an illustrative outline of what they can expect to get under the new system. It hopes to begin making payments in December 2005 and issue them between then and June 2006.
Mr. Kelvin Hopkins: I congratulate my right hon. Friend on negotiating this significant change. I am one of those who were sceptical about previous statements, which did not seem to change very much, but this statement is clearly very different. I am also one of those who have called for a long time for a shift from price maintenance to income support systems for agriculture, and this statement seems to be a decisive shift in that direction, in which I hope that we will make further progress later. The statement also seems to be a step towards the dissolution of the CAP and the beginning of a gradual move towards national systems of agricultural support. I wonder whether my right hon. Friend will comment on that point. Will she also comment on how this decision might affect the rest of the world in the wake of the Cancun debacle, and on how poorer producers across the world react to the CAP and other unjustified systems of agricultural support that benefit only richer countries?
Margaret Beckett: May I begin where my hon. Friend ended, by saying that this decision will help to get across the message that a great deal is changing in the CAP? I had a conversation in Geneva in January with the Brazilian ambassador, who said that one of the reasons
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why countries such as his own had not fully realised or accepted the scale of change in Europe was because the negotiating mandate for the world trade talks had not changed, which is testament to the flexibility that the commissioner negotiated for himself. None of us realised that that signal had been taken in quite that way.
My hon. Friend is not right to say that this is basically the dissolution of the CAP, because there is still a great core of common provision and common circumstances. On 10 February, Commissioner Fischler said that it did not matter if different states went down different routes because that is allowed and is part of the compromise, and that the challenge was to get the best model for each situation. He also made the point that redistribution in, for example, the UK might be limited compared with that in countries with varied climates such as those bordering the Mediterranean. There is still a core element to the CAP. but I share my hon. Friend's view that the change is big and that it will be beneficial in the long term.
Mr. Douglas Hogg: May I remind the right hon. Lady that one of the anxieties faced by British farmers is that they are confronted with a raft of animal welfare regulations that are not matched in third countries that export products to the European Union? One of the important changes that should be made is to enable the EU to impose restrictions on imports into the EU of products that are not produced in accordance with animal welfare regulations imposed within the EU.
Margaret Beckett: I understand that British farmers are concerned about whether there are welfare requirements here that are not imposed elsewhere. I touched on cross-compliance but I did not deal with it in great detail. Every member state—there will shortly be 25—will, of course, be required to meet cross-compliance measures in order to obtain entitlement to payment. Many of those measures are contained within existing directives, but there is also the requirement to maintain land in a generally good agricultural condition. Events are moving in the direction of narrowing the previously perceived gap between standards in this country and those elsewhere.
Alan Simpson: The Secretary of State is right to turn her back on the historic system of funding agriculture, which was effective at shovelling bucketfuls of money into the pockets of a small number of grain barons as opposed to the larger number of working farmers. What assessment has she made of the danger of falling into the different trap of moving from funding the richest farmers to funding the richest landowners? She will know that under the proposed scheme the Duke of Westminster will probably be entitled to subsidies of £1,000 a day whether he bothers to get out of bed in the morning or not. Will she re-examine the EU proposals to impose a ceiling on the land-based subsidies so that the money clearly goes into sustainable farming, rather than sustainable and profitable landholding?
Margaret Beckett: I hear what my hon. Friend says, and obviously I am familiar with the argument on the

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issue. It is fairest to have a system that pays the same on each hectare—which it broadly will, within the two different regions—irrespective of the nature of the ownership. I repeat that it is the public goods that will be required for which public money will be paid. Although the SDA—severely disadvantaged area—split will make a difference to the receipts of the richest landowners, I urge my hon. Friend to look at the wider impact of the redistribution and not just at that one comparatively narrow point.
Mrs. Angela Browning: I am sure that the Secretary of State will be aware that the south-west branch of the NFU calculates that the scheme announced today will mean a reduction of £18.6 million a year in payments to the south-west area, primarily because it is a livestock and dairy area. She said earlier that some sectors would be adversely affected. Will she do an analysis of self-sufficiency in the livestock and dairy areas, and put it in the Library? The key test of the changes announced will be whether we produce more of our own food as a result, or suck in more imports. UK self-sufficiency has dropped in the past 8 years, from 75 per cent. to 65 per cent. Will the changes improve that situation or make it worse?
Margaret Beckett: Frankly, it would be hard to assess what impact the changes will have on self-sufficiency, because the effect on the marketplace will make an enormous difference. I recognise the concerns that the hon. Lady expresses about the impact in the south-west, but it will not be disadvantageous to everyone. People on Exmoor, Dartmoor and Bodmin moor, like those in the north Yorkshire moors, will benefit—
Mrs. Browning: They are not in my constituency.
Margaret Beckett: I am sorry that they are not in the hon. Lady's constituency. Unfortunately, we are not able to allocate subsidy per constituency. We have already got a lot of analysis and we will continue to do more. I am sure that everyone else will also analyse the proposals in detail, and that will illuminate the exact position for all of us. In overall terms, there will be winners and losers, as always happens when things change, but the impact of the movement of resources is anticipated to be about 13 to 15 per cent. over eight years. We will then have a system of support that is much more defensible, and that will be worth it.
Mr. Michael Wills: I congratulate my right hon. Friend on a skilful and historic statement. I also lend my support to those who have asked her to continue to explore how best that huge public subsidy can be used to support those who actually work the land, rather than simply to inflate the asset value of land. Now that subsidy has been decoupled from production, will it mean an end to export subsidies under the CAP, which have been so damaging to so many of the world's poorest people?
Margaret Beckett: I am grateful to my hon. Friend for his welcome, and I am especially grateful to him for taking that point on board. I know that he has been
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greatly concerned about the distorting effect of export subsidies and has expressed his anxieties about the form of reforms hitherto. He is right: what created the need for export subsidies was the overproduction for the European market. There will be no incentive for overproduction any more, so the need for export subsidies should wither on the vine. If my hon. Friend can get that message across to some of the well-meaning and honourable people who campaign against this reform, I would be grateful to him.
Mr. John Burnett: Complex rules will be necessary to calculate the payments made in the transitional period, and especially to fix the base historical payment—although admittedly that will be phased out. Can the Secretary of State confirm that there will be a fair, independent and objective appeals system, so that individual farmers can appeal against determinations made by her Department?
Margaret Beckett: My understanding is that farmers in the hon. Gentleman's area will do rather well out of the changes. However, some will feel, for a variety of detailed reasons, that they will be disadvantaged. I urge all hon. Members to tell their farming constituents to provide us with as much information as they can as soon as possible, because the more information we have, and the more accurate it is, the less the likelihood of errors. Information will also assist us when we consider how great a provision we need to make for a national reserve. Part of the purpose of such a reserve will be to deal with anomalies that cannot be dealt with any other way, with hardship cases, and with unusual circumstances— perhaps land or leases changing hands in the reference period. [HON. MEMBERS: "Appeals?"] Yes, there will be an appeals system to correct the basis of payment, but just as important is a system that deals with harmful anomalies even if the payment has been assessed correctly.
Mr. John Grogan: Does my right hon. Friend accept that today's announcement will be particularly welcomed by the completely unsubsidised horticultural sector? Indeed, the NFU horticultural committee, under the able chairmanship of my constituent, Mr. Graham Ward, has argued long and hard that if the historic payment system had been adopted it would have created market distortions in that highly successful sector.
Margaret Beckett: I am grateful to my hon. Friend. He is right, although it is important to utter the caveat that it will not be open to people to expand the areas of enterprise that they have previously had and claim extra payment on that basis. The arrangements will be for existing areas, with some exclusions for top fruit. Generally speaking. however, he is right to say that the changes will be helpful to horticulture. Many in that sector have made the grade in an unsupported market, but the changes will make a difference for some.
Mr. John Maples: Will one of the effects of the changes that the Secretary of State has announced be that a dairy farmer who currently receives a lot of subsidy but probably does not

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make any money will gradually have much of that subsidy taken away and given to farmers who currently farm profitably without any subsidy?
Margaret Beckett: There will be impacts on dairy farmers, as on everyone else. At present the dairy sector receives direct support, but we are about to move towards a system with a dairy premium. It is our proposal to decouple that premium from the beginning, and to make that part of the general approach. However, there will be winners and losers in the dairy sector, as in other sectors, and we are willing to examine the redistributive effects and see what can be done to mitigate them. In the long term, a simple system such as we propose will be to everyone's advantage.
Mr. Peter Luff: I invite the Secretary of State to say a little more about the impact on horticulture. She will know that the high-quality agricultural land in areas such as south Worcestershire and the Vale of Evesham can just as easily be used to grow subsidised cereals as unsubsidised field crops such as salad onions. Can she reassure horticulturists that they will not suffer an adverse competition effect as the high subsidies paid for arable crops such as cereals have an impact on the marketplace in the transitional period?
Margaret Beckett: I cannot say that there will be no effect in the transitional period, although I shall think some more about the point that the hon. Gentleman makes. In the longer term, payment will be made on the same basis for everyone. I know that those with unsupported crops were anxious that those who received support would be able to compete, with the assistance of that payment, against those who had never been entitled to a payment. That fear cannot be totally removed in the short term, but it should be diminished.
Mr. Andrew Robathan: I declare a very real interest, as a farmer. The changes are a sensible step in the right direction and, as the hon. Member for Luton, North (Mr. Hopkins) said, signal the end for the CAP. Presumably the money paid under the flat rate will eventually be paid straight to the landowner. Many of my local farmers are council tenant farmers, the landlord being Leicestershire county council. How does she envisage the changes affecting the relationship between the landlord and tenant, especially in starter farms, which many people still want to take on? The proposals need fleshing out.
Margaret Beckett: I am grateful to the hon. Gentleman for his welcome. I am conscious of the fact that tenant farmers are anxious about whether some council starter farms will continue to be made available. We are looking at the issue in general terms and seeing whether we can do more to assist. I can tell the hon. Gentleman that the payment will go to the person who is farming the land.
Mr. Adrian Flook: The Secretary of State said that Exmoor was a probable winner under this system, and I welcome that, but as I also represent other parts of Somerset, I cannot welcome the implications of her comments. Perhaps there is one
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silver lining—less bureaucracy, as she described it. I accept that the system is not hybrid, but the transition appears to be so. What assurances can she give that there will not be an explosion of associated regulations and bureaucracy as we move towards 2013?
Margaret Beckett: The hon. Gentleman is right: it is not a hybrid system and ultimately it will undoubtedly be less bureaucratic. But there is a transitional period, and the same invidious choice is before the House as was before the Government—between a much more compressed transition period, with a bigger impact on farm incomes and farm planning, or an extended period that would lead to greater complexity. I regret the need to make such an invidious choice, but we had to make it and on balance, given that people will understand clearly what the pattern of transition is, it will assist them in planning for the longer term.
Mr. Roger Williams: Many farmers will be very pleased that they now have some information on which to make planning decisions—although the devil will be in the detail. But perhaps the Secretary of State should give us some background on her decision to split England into severely disadvantaged areas and the rest. If she is serious about supporting the most vulnerable farming businesses and those that make the biggest contribution to the environment, will she be putting more resources into severely disadvantaged areas, or doing the opposite?
Margaret Beckett: I am not planning to put more resources into farming through the CAP than currently exist, but we do intend to try to make better use of the resources over time. One of the best ways to do that is by reducing bureaucracy and moving to a more simplified system. The less we have to absorb, the better.
The reason for the split is simple and straightforward: otherwise, the redistributive impact would have been enormous, and many questions and concerns would have been raised. So we considered an explicit split between less favoured areas and others, and as I understand it, the impact is minimal, except in the beef sector. As we examined this issue, it became increasingly clear that that was the best possible way to mitigate. The structure already exists—the map of SDAs was last
published in 1992, so everybody knows where they stand—and it seemed the best and simplest method. It was precisely because of our wish to avoid additional regulation and bureaucracy that we did not impose some other complicated system in order to mitigate, but went instead for a split between SDAs and non-SDAs.
Mr. Roy Beggs: I should begin by declaring a small farming interest. I welcome the Government's decision to allow each of the regions to determine the way forward that is most suitable for them. Does the Secretary of State agree that the growing importance of, and emphasis on, environmentally sensitive farming may nevertheless impose additional costs on farmers? For example, when restrictions are placed on the spreading of slurry, farmers will have to

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invest in tanks or stores. Will grant aid he provided to encourage such investment, in addition to the single payment?
Margaret Beckett: The hon. Gentleman makes an important point, and he is right to say that there is increasing emphasis on moving towards more environmentally sensitive farming. That is why we are considering proposals under pillar 2, and the establishment of supporting schemes. As for slurry, grants are available to deal with the impact of changes that farmers will need to make in nitrate-vulnerable
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zones. All these issues will be considered over time, but I should point out that such developments are in the long-term interest of farming and of the wider community.
We should remember one simple point. Members who are not from farming areas often ask, "Why should farming receive support when other industries do not?" The farming community's answer is simple and straightforward: it is because farmers are the custodians of the land and the landscape, and, as such, of our environment. Indeed, 70 per cent. of our land is farmed land. The farming community is right, and we should recognise that fact. This scheme allows us to make that recognition, and to move away from the previous position.

Sustainable and Secure Buildings Bill [Money]
Queen's recommendation having been signified—
2.25 pm
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): I beg to move,
That, for the purposes of any Act resulting from the Sustainable and Secure Buildings Bill, it is expedient to authorise the payment out of money provided by Parliament of—
any expenditure incurred by the Secretary of State in consequence or by virtue of the Act; and
(2) any increase attributable to the Act in the sums payable out of money so provided by virtue of any other Act.
The motion relates to a private Member's Bill promoted by the hon. Member for Hazel Grove (Mr. Stunell). In general, the Government support the Bill's provisions, except for those that I shall mention in a moment. The Bill will amend the Building Act 1984 to allow building regulations to be made for the additional purposes of protecting and enhancing the environment, facilitating sustainable development, and preventing and detecting crime. These purposes are fully in line with the Government's policies on dealing with greenhouse gas emissions, and on sustainable and safer communities, and would allow building regulations to make a greater contribution to dealing with those issues.
The Bill repeals the exemptions from building regulations requirements afforded to statutory undertakers, mainly in respect of utilities and transport undertakings. It also allows building regulations dealing with the conservation of fuel and power, or the reduction of greenhouse gases, to be applied to existing buildings.
The Bill's other main provision is the placing of a requirement on the Secretary of State to present biennially to Parliament a report on progress in the building stock in England and Wales, in connection with conservation of fuel and power, preventing waste or misuse of water, protecting the environment and facilitating sustainable development.
The Bill contains mainly enabling powers, and costs will not arise until those powers are used. Before regulations are made under the Bill, any proposals would be subject to full public consultation and the regulatory impact assessment process in order to look at the costs and benefits—including those that might need to be funded by money provided by Parliament—in respect of central Government and local government. The costs to central Government and local government would be small, and would be funded from existing resource allocations.
Mr. Oliver Heald: On 30 January, when the Minister was discussing this issue at length, he made the Government's case that clauses 2, 5 and 6 should be substantially amended. Of course, that may well happen in Committee, but if it does not and the full cost of the Bill as drafted has to be met, what will it be?
Phil Hope: The hon. Gentleman makes a good point. The Bill will be amended in Committee, and the Government are clear about which of its provisions we
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cannot support. The only direct cost in respect of the provisions that we can support is the biennial report to Parliament. We estimate that it will cost £50,000 per report, which includes £5,500 in printing and publishing costs. This sum will be funded from the existing resources of the Office of the Deputy Prime Minister.
I want to make it clear to the House that the direct costs to which this money resolution relates—hopefully, it will be passed today—are in respect of that report. The other costs will not be incurred until the building regulations are passed. Indeed, a full public consultation process and a regulatory impact assessment will examine the various costs and benefits associated with any of the Bill's measures. The Bill contains enabling powers—it does not impose those costs.
However, there are three provisions in the Bill that the Government cannot support: the report relating to the Warm Homes and Energy Conservation Act 2000, which is dealt with in subsections (4), (5) and (6) of clause 5; planning authority energy efficiency targets in respect of development plans, as described in clause 7; and energy efficiency as a condition of licensing of houses in multiple occupation, as described in clause 8.
Mr. Eric Forth: Can the Minister make it clear whether the costs that he believes will flow from this money resolution arise from the Bill as drafted, or from the Bill in the form that he assumes it will take after consideration in Committee? Is he basing his figures on an assumption on his part of what the Committee will do to the Bill, or on the Bill as it is today?
Phil Hope: That is very similar to what was said by the hon. Member for North-East Hertfordshire (Mr. Heald). I have just specified the parts of the Bill that the Government will not support in Committee or on Third Reading, and the hon. Member for Hazel Grove has accepted what we have said. The only real issue tackled in the motion is the direct costs of the biennial report. Each of the measures that we do not support would require a significant input from central Government or local authorities. We have not costed those resources, as the hon. Gentleman said on Second Reading that he would withdraw the relevant clauses. That is why we can be confident about the security of the motion.
2.30 pm
Mr. Oliver Heald: On 30 January the Front-Bench spokesman was my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), but I was present.
We support parts of the Bill. My hon. Friend made that clear when he said that no one could argue with a proposal to make buildings more energy-efficient and water-efficient, and to make homes and commercial properties more crime-resistant. He also said that clause 1 sensibly widened the ambit of the building regulations. He did, however, object to the breadth of the regulations proposed in clause 2, which he described as a mixed bag. He was particularly critical of the regime for regular inspection of security systems, because of the recurring costs to householders. He had further anxieties about clauses 2 and 3. It was clear that Conservative Members were worried about the breadth and cost of the Bill, and

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about what would be imposed on home owners. Meanwhile, as the Minister very fairly said, the Government were concerned about the ambit of clause 2, and about the other three clauses that he mentioned.
All parties agreed that the Bill should go into Committee, where it should be carefully scrutinised.
Mr. Forth: No.
Mr. Heald: I do not suggest for a moment that my right hon. Friend held that view, but it was the view of the Front-Bench spokesmen. We should also bear in mind the fact that this is a private Member's Bill.
Mr. Forth: Ah, yes.
Mr. Heald: I am glad my right hon. Friend accepts that. Anyway, the feeling on all sides was that the Bill should go into Committee and be scrutinised properly, and that requires a money resolution. As I said earlier, however, it is incumbent on the Minister to tell us the costs as the Bill stands. It has not yet gone into Committee, and we do not know what the outcome will be. The hon. Member for Hazel Grove (Mr. Stunell) has given some assurances, but I understand that they do not cover, for example, all the objections to clause 2. We need to know what the Bill would cost if it retained its present form, and what it would cost if it were slimmed down, as the Minister hopes it will be.
The Minister seems to think that the cost would be £50,000. Surely, however, all the local authorities involved, all the Government buildings and all the other Government and public sector provisions would be affected by some of the duties that the regulations are likely to impose.
Phil Hope: I am sorry that the hon. Gentleman could not be with us for the debate on 30 January, but that is understandable. This is mainly an empowering Bill, enabling regulations to be made later. It is at the point when the regulations are made that issues of cost and benefit will come into play. As these are enabling powers, they will not incur the costs that the hon. Gentleman envisages.
Mr. Heald: What, then, is the point of the motion? Is it connected only with the biennial report? If clause 2(4), which would impose a wide range of enabling provisions relating to the building regulations, is passed unamended, the consequences will be much wider than the Minister suggests. If it is amended in the way that he and I hope, it will be a much cheaper proposition. The likely costs to business and home owners should be made clear at this stage. As I have said, the Conservative Front Bench has undertaken to allow the Bill to go into Committee and in those circumstances the money resolution is necessary, but we would like more in formation about the costs.
2.35 pm
Mr. Eric Forth: We find ourselves, do we not, in a very odd position on occasions such as this. The motion requests
1606
authorisation of expenditure of taxpayers' money without giving any indication of what that expenditure will be. I will come to the Minister's £50,000 in a moment, but we—the House of Commons, the guardian of the taxpayer—are being asked
"to authorise the payment out of money provided by Parliament"
—that is, provided by the taxpayer—of
"any expenditure incurred by the Secretary of State in consequence or by virtue of the Act"
and
"any increase attributable to the Act in the sums payable out of money so provided".
For a start, that is a blank cheque. I have always wondered why we are repeatedly asked to sign blank cheques. I think we should look at this procedure one of these days and make it much more effective and responsible, but for the moment all we have is the Minister's £50,000.
Mr. Heald: As far as I know, the money spent in consequence of the regulations for which the Bill provides will not be the subject of a separate money resolution. If that is so, would not this resolution approve expenditure "in consequence" of the Bill or "attributable" to it?
Mr. Forth: The definition of what will result from the Bill is not entirely clear to me. As the Minister said, all we are discussing is expenditure flowing from an enabling measure. Whether he will return to the House and ask for yet more money if and when the consequent regulations are approved remains to be seen. Perhaps he will tell us something about that when he sums up the debate.
I take exception to something that was said earlier. The Minister had the impertinence to say that the Bill would be amended in Committee. How can he possibly know that? Was he implying that he has control over members of a Committee considering a private Member's Bill? If that is so, it is a breakthrough even for this Government. I thought we maintained the fiction, at least, that private Members' Bills were just that, and that Committee members were independent- minded Members of Parliament accountable to their constituents. Now it has been revealed that the Government control what happens in such Committees. I hope the world will note that, because it may well have interesting consequences not just for this Bill but subsequently.
The Minister then compounded the felony by saying that the Bill's promoter would withdraw certain clauses. I need not remind you, Mr. Deputy Speaker, that he will do nothing of the kind. He may ask the Committee's leave to withdraw the clauses, but if it has any spine at all the Committee may well say "No: we are all eco-freaks and sustainable-energy nuts. We do not want all these good things to be withdrawn from the The promoter may be so weak and pathetic that he is prepared to be leant on by the Government and to allow material clauses to be withdrawn, but the other members of the Committee may not allow that.
I think we should make it absolutely clear at this stage that notwithstanding the Minister's impertinent assertion that he will eviscerate the Bill, or even worse that the promoter will allow his own Bill to be

1607
eviscerated—it must be some sort of Japanese routine—we are discussing the Bill as it stands, not the Bill as we imagine it may be following its Committee stage or, indeed, as the Minister or the promoter hopes it will be.
Let us now come on to the £50,000. The Minister seemed to be confident in his assertion that the few remaining bits of the Bill, after all the gutting has taken place, would—ironically, as I read it—be the bureaucratic bits. I hope that that will not be the case. There are all sorts of gruesome things about Secretaries of State reporting, and the like. Most interesting are the provisions in clause 5(2)(c)(d) and (e), which require the Secretary of State to report on the
"effects or likely effects, of regulations"
that would emerge from the Bill,
"the efficiency with which energy is used—levels of emissions from—buildings, the extent to which—buildings have their own facilities for generating energy",
and so forth.
Those are bad enough, but worst of all are what I would call the Domesday provisions in clause 5 (3) (a) and (b). In other words, we are going to have to have a report on
"the number of buildings in England and Wales that are dwellings"
and
"the number of other buildings in England and Wales."
That is a pretty ambitious sort of measure, even for the hon. Member for Hazel Grove (Mr. Stunell) and his ecofriends. If we seriously expect the hapless Secretary of State to rely on the taxpayer to pay for that sort of nonsense, we will be into sums greatly in excess of £50,000. That is to say nothing about, as the clause continues, preparing
"a report on progress…in connection with the Warm Homes and Energy Conservation Act 2000",
which may or may not survive in the Bill. The Minister cannot say that for certain unless he is going to be rather more humble and acknowledge that he does not really know what the Committee will do. We should certainly hear more from him about that.
Mr. Heald: How confident does my right hon. Friend believe the Minister should be of the assurances given, when the hon. Member for Hazel Grove said in respect of clause 5 on 30 January 2004:
"I certainly give an undertaking to the Minister that, if the Bill gets to Committee, I will take very clearly into account what he has said…I wish to make it clear I want at least half a loaf…I shall certainly bear in mind what was said about the later provisions in clause 5, although I notice that the Conservative Front-Bench spokesman seemed to be strongly in favour of them, so that may be a matter on which further discussion is required."?—[Official Report, 30 January 2004; Vol. 111, c. 490.]
Mr. Forth: To start with, I hope that none of my hon. Friends is in favour of anything in clause 5. We claim to be the party of deregulation and repeatedly assert that we, as a party, are opposed to red tape—and clause 5 is the red tape clause. If my hon. Friend is suggesting that he and his Front-Bench colleagues are now supporting a virulently regulatory measure, I would be very interested to know it. If so, our deregulatory credentials are shot to hell—but that is a matter for my hon. Friend and his right hon. and hon. Friends, and they should not count me in on that.
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Finally, to revert to clause 5, we are to have a report on
"the number of persons living in social housing removed from fuel poverty in the report period."
I have said before that I believe that the concept of fuel poverty is ridiculous. I shall not go into further details now, but I could elaborate if anyone wanted me to. Even if one accepts the absurd notion of fuel poverty, asking for a regular report on the number of persons removed from it strikes me as a somewhat onerous requirement, to say the least—even for the Secretary of State and his thousands of loyal and efficient officials.
We therefore find ourselves in a very odd position. We are being asked as custodians of the taxpayer to sign up to what looks like a blank cheque. We are then told to make assumptions about the form of the Bill that will emerge from a Committee that has not yet sat or deliberated. Then the Minister says that he has some mysterious control over the Committee, and we are assured that the sponsor is so unsure of his own Bill that he will withdraw—or seek leave to withdraw—half of it. Finally, the Minister tells us that all the nonsense in clause 5 will be produced at very little cost to the taxpayer. I find none of that remotely convincing. It is a sad episode in the history of private Members' Bills, in which, as the House knows, I take some interest.
I note, and I hope that the House will note, that many rather interesting issues have emerged from our brief deliberation today—in respect not only of this private Member's Bill, but more generally—on which we should reflect. Until I am much more persuaded that the House should support the measure today, we should all keep our options open.
2.45 pm
Mr. Stunell: I have enjoyed listening to the contribution of the right hon. Member for Bromley and Chislehurst (Mr. Forth), but I start by thanking the Minister and the hon. Member for North-East Hertfordshire (Mr. Heald) for accepting that it is appropriate for my Bill to go into Committee, and that, to do so, we need the money resolution. I hope that the House will give general assent to that proposition.
I believe that the Bill is useful and will still be useful, as amended. It would, of course, have been more useful in its grander form, though I accept that other hon. Members—particularly the right hon. Member for Bromley and Chislehurst—would have disagreed.
I briefly reiterate the point that this is an enabling Bill. It does not, of itself, impose costs on industry, households or, indeed, on the economy as a whole. The entire purpose of the money resolution is to deal with the one aspect that I would have thought the right hon. Member for Bromley and Chislehurst would approve of—holding the Government to account for their performance in respect of the Building Act 1984 and building regulations. I believe that such a provision—one that requires the Government to give an account of, and allows the House to monitor, performance—should feature in more of the legislation that the House passes. That does not amount, in my view, to excessive regulation, but to accountability. Clause 5 is designed to ensure a degree of Government accountability for the legislation that may flow from my Bill.

1609
I conclude by saying that the £50,000 involved is half what it cost the Fees Office to keep the right hon. Member for Bromley and Chislehurst in the style to which he is accustomed.
Mr. Forth: But I am working—that is the difference.
Mr. Stunell: It is well worth it.
2.48 pm
Phil Hope: We do not want a re-run of Second Reading, as we are debating a money resolution. I emphasise the fact that the Bill is an enabling measure, which explains why the costs are as described. I should like to clarify for the hon. Member for North-East Hertfordshire (Mr. Heald) the fact that there is no separate money resolution for building regulations, but that when the building regulations are made, the statutory instrument that enacts them is debatable. The House does therefore have another opportunity to debate them, and there is also a regulatory impact assessment.
I am wary of engaging with the right hon. Member for Bromley and Chislehurst (Mr. Forth) on private Members' Bills, but all Members of the House—not just members of the Committee—will have an opportunity to have their further say on the Bill when it returns to the Chamber. I regret that the right hon. Gentleman was not in the House when we described how to collect the information about which he was so concerned. If he had been in his place—he can, of course, read Hansard—he would have known that we have a method for collecting information that incurs only the costs that I described. The costs will not arise until the powers are used, and those powers will, as I said, be debatable at a later stage. The direct costs are only those that I spelled out earlier.
Question put and agreed to.

Public Accounts
2.48 pm
Mr. Edward Leigh: I beg to move,
That this House takes note of the 64th to 68th Reports of the Committee of Public Accounts of Session 2001–02 and the 1st to 49th Reports of the Committee of Public Accounts of Session 2002–03, and of the Treasury Minutes and the Northern Ireland Department of Finance and Personnel Memorandum on these Reports (Cm 5728, 5770, 5789, 5801, 5802, 5823, 5849, 5953, 5961, 5962, 5963, 5984, 6016, 6051, 6105, 6110).
In introducing today's debate on the Public Accounts Committee, I should point out that today represents something of an experiment. Rather than have a traditional whole-day debate, we agreed this year to split it into two, with the second half to follow before the summer recess. That, I hope, will make matters more topical and allow Members to make an early start on their eager journey home for the half-term break—after, of course, listening to our debate first. I shall set a good example to those who are to follow by keeping my opening remarks briefer than in previous years. I am pleased to say that this has been a most successful year for the Committee. We have published more than 50 reports, covering the work of almost every part of the Government, from Departments of State to smaller but important and interesting bodies such as Victim Support and the Office for National Statistics. We have examined major defence spending programmes and high-profile health and private finance initiative topics. We have also considered what might be called the behind-the-scenes work that contributes so much to the quality of public services, such as that done by the various regulatory bodies. Our investigations touch on some very topical issues. I shall mention two that strike a chord in these times of increased terrorist threat: exercise Saif Sareea 2, and NHS emergency planning in England.
Saif Sareea 2, a major military exercise, took place in Oman in 2001. It was the subject of our sixth report, published just eight days before the opening shots of the war in Iraq. However, the National Audit Office report was published—and we had our hearing—some months before that. Our aim at that stage was to focus attention on learning lessons from the exercise that should have been addressed before the conflict began.
We have yet to report on the operation in Iraq, but we took evidence from the Ministry of Defence and the armed forces in January. Overall, the operation was a resounding military success. Problems with the Challenger tank during the Saif Sareea 2 exercise were overcome, and the tank performed well throughout the Iraq operation. When considering the exercise in Oman, however, we said that the MOD should ensure in future that troops sent into harsh environments were equipped appropriately. We said, for example, that they should be issued with suitable boots. We now know that there was a shortfall in desert clothing in Iraq, and that there was insufficient body armour—the latter with tragic consequences. Our hearing with Sir Kevin Tebbit, the permanent under-secretary at the Ministry of Defence, was feisty. No doubt, we shall return to the topic in July, when we have our next debate.
On the domestic front, we reported on NHS emergency planning. We found that parts of the NHS were not well prepared to handle emergency threats,

1611
such as nuclear, chemical, biological and radiological incidents. Clearly, that is a fast-moving area. I am pleased to say that the Department of Health is acting on our recommendations.
I want to emphasise that the PAC is not political. It is an all-party Committee, with a Labour majority and an Opposition Chairman. Our work is based on consensus. We never have votes, and we do not try to replicate what goes on in the Chamber of the House of Commons. We simply try to establish the facts.
People are now very sceptical of politicians, but I think that they would be amazed at the care that members of the Committee take to reach a sensible, consensual and balanced view, and at the hard work that they put in. I like to think, however, that the work is not based merely on finding the lowest common denominator that we can all agree on. Our reports are very hard hitting indeed, and I pay particular tribute to the work done by the members of the majority party.
We are not Jeremiahs, despite what some people think. We do not set out with the objective of being critical, although I fear that we often are. Our aim is to discuss the facts involved with the body concerned, and to make recommendations that can improve the delivery of public services. I believe that we have a real impact.
Over the past three years, the PAC and the NAO have generated financial savings that we reckon amount to £1.5 billion. Our recommendations are invariably accepted by the Government, because they are well founded and pragmatic. They deal not with controversy over policy, but with administration. I shall give one example of the major impact that the Committee can have. Our tough questioning of Imperial Tobacco Group representatives helped the Customs and Excise authorities in their attempts to get the company to sign a memorandum of understanding. Through working with the tobacco manufacturers in that way, the Customs and Excise service has successfully restricted the availability of tobacco products to smugglers.
In this debate last year, I quipped that Imperial Tobacco was exporting enough cigarettes to some countries for every inhabitant to be smoking several hundred a day—thus illustrating the level of smuggling back into this country. I am pleased to say that exports of the company's products to the unlikely destinations of Moldova, Afghanistan and Latvia have now stopped altogether. Presumably, exports of Nicorette patches have rocketed, but we will never know.
In the past year, several valuable members have left the Committee. I pay tribute to my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), and to the hon. Members for Croydon, Central (Geraint Davies), for Newbury (Mr. Rendel), and for Knowsley, North and Sefton, East (Mr. Howarth). It gives me great pleasure, however, to welcome to the Committee the hon. Members for Birmingham, Erdington (Mr. Simon), for Dagenham (Jon Cruddas) and for Sheffield, Hallam (Mr. Allan). The latter two are present in the Chamber today.
Membership of the Committee is not an easy ride. Members have to work hard in preparing to dissect two entirely different topics every week that Parliament sits, and they are often complex or technical. No other Select Committee has anything like our work load. Committee members work with energy, commitment and
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enthusiasm. I am indebted to them for their support, and pay tribute to them. I also pay tribute to Mr. Nick Wright, our Committee Clerk, and to the other staff, for the valuable service that they provide.
I want to focus on three themes this afternoon: how the Committee is working; how we can secure better procurement and project management; and how we can improve service delivery and regulation.
I shall deal with the Committee's approach first. We would not be effective without the considerable help of Sir John Bourn, the Comptroller and Auditor General, and his 800 staff at the NAO. The NAO's effectiveness depends, in turn, on access rights. Since last year's debate, there have been two major steps forward. In May, the Government moved the orders to implement Lord Sharman's recommendation that the CAG should audit all executive non-departmental public bodies, and that his access right should be on a statutory basis. That welcome step will enhance public accountability. I thank the Minister and his Treasury colleagues for listening to our recommendations.
The other step appears to be smaller at this stage, but may be very significant. It is the agreement between the BBC, the NAO and the Department for Culture, Media and Sport that the NAO should identify and carry out value-for-money reviews agreed with the BBC's audit committee. The results of that work will be reported to Parliament in due course. That is a very important step for which our Committee has been asking for years, and I am pleased that, with the help of the Treasury and other Ministers, we are making progress at last. I do not know why it is happening, but the Committee is grateful. Increasingly, the need for truly independent oversight of the BBC has come to the forefront of public debate. We are talking, of course, about accountability in respect of the efficient and effective use of resources, and not about the hot topic of editorial standards.
I give an absolute commitment that neither the PAC nor the NAO will ever get involved in controversies about what should or should not be said on the "Today" programme. That is not our job, which is to look at financial accountability. I believe that that is equally important, especially when more than £2 billion in licence fee payers' money is at stake. I consider the new arrangements for NAO access to be an important milestone, and a first step that I hope will pave the way for the improved financial accountability arrangements that we expect to feature in the renewal of the BBC's charter in 2006. When the charter is renewed, Committee members expect to get the same rights of access as we have for other Government Departments, although we recognise that the BBC is different.
Another development for the Committee is our expanding programme of visits. In the past, we hardly ventured beyond the Committee Corridor, but we are endeavouring to broaden our knowledge in advance of specific hearings. I hope that that innovation is welcome to Committee members.
Prior to our evidence sessions on private finance initiative prisons, we had a very impressive visit to Altcourse prison in the north-west of England. Prison officers do a very difficult job in very trying circumstances. What stood out on our visit was the general atmosphere in the prison, and the constructive and positive attitude of the staff we met. We spoke to

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prisoners, and learned at first hand about the programmes for their education and training. These days, even prisoners are conscious of standards of service delivery. They were obviously delighted to be at Altcourse rather than down the road at Walton prison in Liverpool, where prisoners are banged up for up to 24 hours a day. The visit highlighted the fact that there is a strong case for greater co-operation and learning between publicly and privately managed prisons, and we made that recommendation in our report.
Our other visits have included a trip to see the Apache helicopter at Middle Wallop, and another to the Forensic Science Service headquarters in Birmingham. Last month, at Heathrow airport, we heard an excellent presentation from Sir David Omand on the progress of improving risk management in government, and we also had a chance to see behind the scenes of customs operations at the airport. Members of the Committee also visited our counterparts in France and Germany to gain an insight into their systems of accountability. It was especially interesting to learn about other systems for delivering health and education, and about the way in which those fields are audited.
The Committee's work is not just about financial savings. We are particularly concerned about public service delivery, and I shall turn to that later. We are interested in the proper management of valuable non-monetary resources. In our 47th report, we argued that clear priorities were needed for the national film and television archive to ensure that the nation's film heritage does not, literally, rot away—as it is doing in some parts. The DCMS, the Film Council and the British Film Institute, which is responsible for the archive, have launched a full review.
When considering fisheries enforcement in England, the Committee heard about the wasteful discarding of fish when fishermen are over their quota, or want to land only the best-quality catch. That practice may account for more than two thirds of the fish killed in some species or locations. We thought that ludicrous, and argued that the Department for Environment, Food and Rural Affairs should give careful consideration to allowing the landing and sale of such catches but with the proceeds used to fund research and conservation efforts.
Turning to procurement and project management, we are talking big business. The Government are spending more than £14 billion a year on goods and services. Not surprisingly, then, the Committee is interested in how good practice might be more widely applied. Some of the examples that I am about to give are not for the fainthearted, but it is important that where things have not gone well lessons are learned for the future.
In our 44th report, we examined the development of the national IT project for magistrates courts, known as Libra. We described it as one of the worst deals we had seen—given how much we see, that is indeed a damning indictment. In just four years, the cost has more than doubled, to almost £400 million, yet magistrates courts still do not have the IT systems they need to manage their workload properly. The handling of that project by the former Lord Chancellor's Department was disastrous at every turn. It procured a contract to provide services to 42 magistrates courts committees, over which it had no real authority or
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control. It ran a poor competition and attracted only one bidder, which should most certainly have sounded warning bells in the Department. It then failed to take decisive action when the contractor, ICL, did not deliver what was required. For its part, ICL did not understand the Department's requirements, took on excessive risk and underpriced its bid. It performed poorly throughout and could not meet the target dates for delivery of the core application.
We find such stories again and again in our work, and other Members can deal with other projects throughout the IT sector that we have examined. However, I said earlier that we were not Jeremiahs and if Libra is an example of how not to manage a project, the acquisition of the London Heart hospital is quite the opposite.
Our 23rd report describes how the University College London hospitals NHS trust, through quick and well-managed risk taking, swiftly seized the opportunity to acquire the private London Heart hospital in a matter of months. That increased UCL's cardiac treatment capacity and boosted the hospital's services to patients. It is an example of an organisation using innovation and creativity, and we applaud it. We try to give credit where we can.
I have already touched on one PFI project—the Libra debacle—but so that the debate is balanced, I must tell the House that, overall, we found no overwhelming argument for or against the PFI in our 28th report, which drew together our 18 reports on the initiative over the past four years. Perhaps we came to no overall conclusion because we were not trying to be political. We have seen well considered deals, which were carefully negotiated, managed effectively and offered substantial benefits, while others have been awful. We hope that the lessons from our work will help the public sector to get the best deal for the taxpayer.
Common to different contracting approaches is the need to observe standard procurement best practice and to transfer risk adequately. If that does not happen, millions of pounds can be wasted and the past year has uncovered another litany of cases. In a class of its own was the individual learning account programme. It is likely that half the budget for ILAs—nearly £100 million—was siphoned off in fraud and abuse, which reflects the number of shortcuts taken by the Department for Education and Skills. The scheme was poorly thought-out; it was put in place too quickly and the risk management was wholly inadequate. There were innovations designed to reduce bureaucracy for new learners and new providers but, to match that, the Department should have built counter-fraud measures into the design of the scheme and set up robust monitoring.
At the Committee's hearing, the accounting officer, the permanent secretary, was frank in his acknowledgement of the scheme's shortcomings and his regret that they had occurred. That is one way of dealing very well with a Select Committee: to apologise profusely. However, he was less able to explain why those shortcomings had been allowed to occur in the first place. Accepting responsibility is important, but so, too, is the need for reassurance that weaknesses have been properly analysed and understood so that they can be identified and action can be taken.

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Departments need to make their contractors aware that being sacked is a real possibility—it should not automatically be seen as the most difficult and riskiest option. Risk transfer takes place only if Departments are willing to terminate the contract or to take legal action when a contractor fails to deliver. We will support Departments which take a tough line with the private sector.
Mr. Richard Bacon: The Economic Secretary to the Treasury bears on his back the scars of ILAs. The first Adjournment debate that I initiated in this place was on ILAs and the hon. Gentleman, who then held a different portfolio, had the misfortune to have to answer it. My hon. Friend the Member for Gainsborough (Mr. Leigh) refers to the fact that ILAs were in a category of their own, but does he agree that one of the most depressing aspects of the case was that the actions of the Department took place despite shelf-loads of advice in advance and warnings about how to conduct, or not to conduct, projects of that type?
Mr. Leigh: Yes. The programme was undertaken with the best of intentions, but some people in government and the civil service are still, sadly, rather naïve about the sort of people out there who are prepared to take the Government and the taxpayer for a ride and commit fraud. I hope that we have learned our lessons from a project that I accept was undertaken with the best intentions.
Other examples of waste that we examined included the construction of nuclear submarine facilities at Devonport. In 1999, the Ministry of Defence gave my Committee assurances that that contract was under control, yet there were further cost overruns of £314 million. The MOD admitted that it had partly funded poor performance by the contractors and had borne the cost of risks originally transferred to the contractor. We found that unacceptable and urged the MOD to get a proper grip over the final phase of the project, to avoid further cost increases and to assess fully the risks that it retains.
There was also inadequate risk transfer in the public private partnership for National Air Traffic Services Ltd., which we considered in our 48th report. The private sector partner, the Airline Group, did not have to bear risk in proportion to the control it had over the company. Risks to the taxpayer come home to roost when blind optimism over future levels of air traffic, coupled with the raiding of NATS finances by the Department for Transport and the Treasury, left the company in a vulnerable financial state.
That may sound obvious with the benefit of hindsight, but we seek to ensure real improvements in procurement and related spheres, not just improvements on paper. For example, the MOD reported that a target to reduce stock holdings had been met, but the NAO was unable to validate that. The poor quality of information was underlined by the brass nuts that the MOD valued at £83 million when they were actually worth £1.17.
We all want better public services, which is my final theme. The Committee has covered a wide range of public service issues in the past year, from support for victims of violent crime to the—should I say
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engaging?—experience offered by Government call centres. The public increasingly find it more convenient to obtain public services through call centres, with demand up by more than 40 per cent. over the past three years to an annual total of nearly 100 million calls, but the public will continue to use them only if the service is good. An astonishing 5 million callers to the child benefit centre in 2001–02 were met with the engaged tone. Would that happen in the private sector? Perhaps it would. The problem is not only the speed with which callers get through; the quality of the advice given is critical and Departments should focus their efforts on that.
Mr. Richard Allan: The point about call centres is reflected in all hon. Members' surgeries: when people cannot get through, they come to us. The difference in the private sector is that, if people cannot get through to one business, they will go elsewhere. With most Government services, there is simply no alternative.
Mr. Leigh: That is a good point. To be fair to the Government, it is worth while saying when considering such projects—whether call centres or IT projects—that the sheer size and complexity of the problem that the Government have to address is usually far greater than that ever addressed in the private sector, where call centres or IT projects are typically used to deliver one service or product, whereas, of course, inquiries to the Government are complex and range across the whole country. We must be fair to those who are trying to draw up such schemes. I acknowledge the problem, but the hon. Gentleman is right to suggest that at the end of the day we are dealing with the public and they have no choice. There is no competition or alternative, so standards should be much higher in the public sector. I am sure that we can agree with that, wherever we come from politically. Why should the standards that we expect in the public sector be inferior to those that we demand in the private sector?
Turning to an unsung but highly valued provider of public service, we considered the work of Victim Support, for instance. Although much respected by victims and witnesses, the same level of support is not available across the country, even where crime is high. Victims deserve the same support wherever they live, and that, in turn, is vital in encouraging people to report crime. We called on the Home Office to devise a proper, national strategy and to decide on the proper balance between public, private and charitable funding.
The effectiveness of the regulators is a further dimension of public service delivery on which the Committee has focused. The influence of regulation can be huge on the economy, producers, consumers as a whole and on individuals and small businesses. At its best, regulation creates a stable, reliable framework. It can improve life in all sorts of ways—protecting people's pensions, protecting them from hazardous waste and loan sharks, and so on. The key is that regulation should be effective, not heavy-handed, and should not create hidden costs and red tape.
The Committee has oversight of nearly all the major regulators, with the noticeable exception of the Financial Services Authority, and I say to the Treasury that we would like to have oversight of that as well. We

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looked at the progress that the Office of Fair Trading has made in protecting consumer interests. We found it disturbing that there is still far too little control to prevent unscrupulous lenders and debt collectors from obtaining consumer credit licences—even those with previous criminal convictions. We urged the OFT to improve its checking of applications and to work with the Home Office and the Department of Trade and Industry to get much needed access to information on criminal convictions. I am pleased that some progress has already been made. Since our report, the OFT has obtained an undertaking that it will be given access to information on unspent criminal convictions across the United Kingdom.
Public confidence in the safety of food has been undermined by high-profile issues, such as BSE, as well as up to 4.5 million cases of food poisoning a year. The Food Standards Agency was created to lead on food safety and standards, and to be an authoritative and trusted voice where public doubt occurs. Our report concluded that the agency has not yet demonstrated convincingly that it is able to do that. Despite its campaign to raise hygiene awareness in catering establishments, for instance, behaviour has not changed. More than a third of staff still do not wash their hands before dealing with the public and after using the toilet—it does not bear thinking about. We called on the agency to monitor the extent to which its advice and information are being used and to boost its profile both in the Government and with the public.
Increasingly, over recent years, individuals have been worried about the security of their pensions. The Occupational Pensions Regulatory Authority—OPRA—was set up in the wake of the Maxwell case to try and allay such fears. However, we found that it had focused too much on the detail of regulating pensions and not enough on pensioners' interests. Since then, it has embarked on an ambitious programme, supported by the Department for Work and Pensions, to establish a new kind of regulator: one that focuses on risks to pension scheme members and builds public confidence at the core of its functions.
We on the PAC are concerned not with Government policy, but with value to the taxpayer. We have seen well managed projects and programmes, we have seen successful and innovative approaches by the Government, but we have also seen huge waste over the past year. I have already mentioned the Libra project, with a £400 million overspend, £314 million additional costs on nuclear facilities at Devonport and the £97 million debacle of individual learning accounts.
I could have covered the £500 million hike in the price of Nimrod; the £3 billion spent on the foot-and-mouth outbreak, where prompter and more effective action could have reduced the toll in terms of cash and the impact on farmers; and the £2 billion that seeps out each year in benefit fraud and the fact that, for the 13th consecutive year, the NAO has not been able to accept the accounts submitted to it by the Department for Work and Pensions. I could also have talked about the working families and disabled person's tax credits, where up to £700 million has been overpaid, or the
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disastrous introduction of the new tax credits system, which has caused much unnecessary suffering to genuine and often vulnerable claimants.
Given the commitment of an extra £61 billion in Government spending over the next three years, how can we be confident that that money will make its way to improved front-line services and not be frittered away? I put that question to the Prime Minister at the Liaison Committee last week. I stress that that is not a party political point. The PAC has pointed to waste and inefficiency over many previous Administrations, and many examples of waste and inefficiency can be found in them. There is a risk—I put it no stronger than that—that those extra resources, £61 billion, might also result in extra bureaucracy, excess regulation and over-targeting. The Prime Minister gave me a limited assurance in reply, but we on the Committee will continue to watch this space.
In particular, the Committee will want to focus on the following questions. First, what is being done to reduce administrative bureaucracy on medical and nursing staff, teachers and policemen, so that they can spend more of their time providing services to the public, not in form-filling and bureaucracy? Secondly, do Departments and agencies still have excessive overheads and too many layers of management, and how can those be cut back so that resources can be ploughed back into front-line services? Thirdly, is there too much regulation and is it stifling innovation and limiting the performance of regulated services? Lastly, on targets, is there the right number of targets? Are they measuring the right thing? Are they sufficiently testing and stretching? What action is taken against those who fail to meet them?
This distinguished Committee, of which I am proud to be the Chairman, has a proud history in holding the Government to account. It continues to look at the topical issues of the day and plays a crucial role in improving the quality of public services. I commend its work to the House.
3.18 pm
Mr. Gerry Steinberg: I congratulate the Chairman of the Committee on an excellent, comprehensive speech. He has covered most of the things that I was going to say, so that is a good start. I also congratulate the hon. Gentleman on the way in which he chairs the Committee. Even though he is an Opposition Member, he is very fair, as we would expect him to be, and it is a delight to serve on the Committee under him.
I very much look forward to this debate each year because it gives hon. Members the opportunity, if nothing else, to pay tribute to the National Audit Office. Its reports are the basis of all our work, and they can only be described as excellent. I now realise that, before I served on the PAC, my knowledge of most subjects was very limited indeed. Some would probably say it still is quite limited, but I can assure hon. Members that reading those reports gives us a lot of knowledge. We get an incredible amount of information from virtually every report on each subject, and a lot of information—details, facts and statistics—becomes available to us. When hon. Members are researching any topic. I suggest that they read an NAO report that covers it. I was shocked and amazed when I heard the Leader of the

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House say, in answer to a question this afternoon, that he had not read an NAO report. Shame on him! He should read every report that comes from the National Audit Office. If he is listening to the debate, I am sure he will take that advice.
I had a little chuckle to myself a few weeks ago when I saw the publicity surrounding the Health Committee's investigation into obesity. Its members appear to have travelled all over the world—I am not criticising that at all—to find obese people. They even went to Finland—they were probably pronouncing it wrong and thought they were going to Thinland. They spent weeks investigating the subject, when all they had to do was read the report that we produced about two years ago and examine their own Chairman—that would have given them an insight into obesity. [HON. MEMBERS: "Ooh!"] I am sure he will not read Hansard.
I was surprised that the Chairman of the PAC did not mention the fact that our Committee won the parliamentary Committee of the year award—I am not quite sure whether it is a BAFTA. I thought he would have the trophy on display this afternoon. You, Madam Deputy Speaker, could have waved it above your head and shown the world what we are capable of. To be serious, though, without the NAO reports, I suspect that we would not be the Oscar winners that we are.
It is quite clear that the Public Accounts Committee is the Real Madrid of the Committee world—I was going to say Manchester United, but I changed my mind. That is particularly true since several Select Committees have come under severe criticism in the past six or seven months. There was an article by a Bernard Dineen in the Yorkshire Post last summer, entitled "Pompous MPs are feeble bullies". I shall quote directly from it:
"The worst moment in the David Kelly saga came when a loutish Labour MP said to him: 'Remember you are before the High Court of Parliament'. The High Court of Parliament? Who do these pompous MPs think they are? The Law Lords? If they had uncovered anything useful by penetrating questioning, their pomposity might be excused. But this pathetic bunch couldn't penetrate a rice pudding…The chairmen strut around, preening themselves as head of the 'powerful', 'influential', or 'formidable' watchdog…The worst committees have turned themselves into kangaroo courts, bullying witnesses and touting for publicity."
However, the article also says:
"With the exception of the Public Accounts Committee, most of them are a waste of space."
I have said how much I admire the NAO, and the same must be said of the PAC staff. They are also excellent, especially in the service that they provide for Committee members. Nothing is trouble for them and they are a pleasure to work with. I thank them for all the help that they have given me throughout the year.
Public Accounts Committee members are told that we do not have a good reputation with senior civil servants because we are supposedly a little too aggressive. They seem to forget that we work from National Audit Office reports that invariably show that the NAO has discovered weaknesses in Departments, fraud, incompetence, and so on. Frankly, the accounting officer who appears before us is responsible for those actions. It sometimes seems to slip accounting officers' minds that they sign NAO reports to show that they agree with their findings and conclusions. If they did not sign the reports, they could not be published or
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presented to the Public Accounts Committee. However, as I said yesterday, I sometimes feel that the report that I read and the report that the civil servants read are two different reports altogether, because they interpret them differently from Committee members.
There is nothing more galling to me than when an accounting officer appears arrogant and complacent, and dismissive of Committee members' questions. We have a right—indeed, a responsibility—both to Parliament and to the taxpayer to ask searching questions of the accounting officers and witnesses who appear before us. We have a right to be taken seriously and for our questions to be answered, even if Departments would rather not answer them or would prefer them not be asked so that the information would not go into the public domain.
I had a little spat with a chief accounting officer—a permanent secretary—only a couple of weeks ago. Believe it or not, it involved Sir Andrew Turnbull. Hon. Members might ask, as did I, who he is. Apparently, he is the head of the civil service. He complained to the NAO about my aggressive attitude, and Sir John Bourn passed the complaint on to the Chairman of the PAC who, I can assure hon. Members, has reprimanded me. However, perhaps Sir Andrew should take note of his Departments rather than worrying about what Committee members have to say and ask. He should look at the number of cock-ups over which he presides and the wasted taxpayers' money that goes down the drain each year which could be used to fund better public services. We are not talking about millions of pounds, but billions.
The hon. Member for South Norfolk (Mr. Bacon) is a valuable member of the Committee—even though he sits on the Opposition Benches, he is quite a nice chap. He wrote an article for The Daily Telegraph which he passed round all members of the Committee. Although I do not want to make his speech for him, I am sure he will not mind me quoting from the article. Incidentally, he took the figures from reports that the Committee had produced. I ask Sir Andrew to read the hon. Gentleman's article, which says:
"The Department for Work and Pensions has received a black mark from the auditors every year since 1988 because of the volume of fraud…Each year, between £3 billion and £7 billion goes south through fraud and error. Five years ago, civil servants running social security were slammed by MPs for not knowing if housing benefit fraud was going up or down. They still don't.
There are 40 new Apache helicopters worth more than £1·2 billion stored in a warehouse on Salisbury Plain, at a cost of £6 million, because the Ministry of Defence"—
guess what—
"didn't train enough pilots in time.
Customs & Excise loses between £7 billion and £10 billion on unpaid VAT and £7 billion on excise duties on alcohol, tobacco and fuel. The Inland Revenue says £2·5 billion is at risk annually because of income tax self-assessment."
The computer system for the magistrates courts has already been mentioned. The article says that it
"saw costs explode from £156 million to nearly £400 million",
yet it still does not work property.
"The new £500 million computer for the Child Support Agency isn't working, either: that's the one which replaced the old CSA computer"
system, which did not work either.

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"The Government Communications Headquarters expected to pay £40 million for moving the signals intelligence computer systems into its new building. Managers told the GCHQ board it would cost £20 million…it cost £400 million.
The Government thinks the National Health Service loses 16 to 20 per cent. of its budget each year through waste, mismanagement, incompetence and fraud.
Dirty hospitals kill 5,000 people a year and cost £1 billion…Clinical negligence claims cost another billion."
Those facts are all widely available in NAO reports and in the reports that we have written. Yet Sir Andrew had the audacity to complain that I was asking questions about fraud, mismanagement and incompetence. Frankly, I think that he had some cheek. I suggest that he read the NAO reports and come up with ways of saving the taxpayer those billions of pounds that are going down the drain.
Not everyone agrees with me, and I have had one or two letters from members of the public—although not from my constituents, I am glad to say. One was from a gentleman—well, not actually a gentleman—who wrote to me and described me as a part of the female anatomy, and constipated at that. I shall leave that matter there, but perhaps we cannot always get praise from everyone.
I shall describe one investigation, to highlight what I mean by waste, and by not listening to what the PAC and NAO say. The Chairman of the Committee mentioned this matter. On 21 October 2002, we held a hearing with the Ministry of Defence and the Chief of the Defence Staff regarding an exercise that the military had undertaken named SaifSareea, which was a key test of the United Kingdom's ability to conduct expeditionary warfare, and aimed at investigating what taxpayers get for their money from the MOD. That took place in Oman in September to October 2001, and was the largest deployment of UK forces since the first Gulf war, involving the movement of 22,500 personnel to Oman.
From the start of the hearing, the witnesses were defensive to the point of being dismissive of some of the questions put to them. I accept that the report from the hearing said that the exercise had been a success, but it also pointed out that two important pieces of equipment needed for desert warfare were inadequate: the Challenger 2 tanks, which the Chairman mentioned, and troops' personal equipment and clothing. Hon. Members who have been following the debate on equipment during the past year are perhaps beginning to realise what I am talking about. The problems with the Challenger tanks were addressed, but what about the personal equipment and clothing for troops in action in desert warfare? A major criticism of the 2001 exercise was that there were insufficient stocks of desert combat suits and footwear to equip the Joint Rapid Response Force.
Lo and behold, when the real thing happened less than two years later, the NAO tells us that a similar problem occurred. Again, personal equipment for the soldiers had not been provided and there may well have been—I am not saying that there definitely were—tragic consequences from some of the soldiers' not having the right body armour. Interestingly, I received a letter from a retired Major Thornton, ex of the Royal
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Northumberland Fusiliers. In something of a diatribe against the Government's policy, he made this valid point:
"It was plain to see from the TV pictures of the war that the troops did not have the correct kit, as some had for example Desert clothing whilst others had European clothing and you could clearly see some had the wrong boots on."
That criticism had been made of the SaifSareea exercise, and yet two years later here was exactly the same thing happening again.
We are fully justified in making complaints and questioning vigorously to ensure that such things do not happen again. Questions must be asked as to whether lessons learned from the exercise were heeded in events two years later. Perhaps the most important failing that the Saif Sareea exercise highlighted was the problem with asset tracking: equipment was lost in transit and no one knew where it was. That is a long-standing problem, which has gone on for years and years and remains unsolved to this day. It was the main reason for some of the problems in the SaifSareea exercise—again, we also saw it only a year ago.
Equipment in the Saif Sareea exercise was sent from the United Kingdom, but because of an unreliable tracking system, no one knew where it was or whether it had arrived. The report on the exercise made it quite clear that the two asset-tracking systems, named Global and Vital, were ineffective. The Global server routinely crashed throughout the exercise, although that was not acknowledged by the Defence Logistics Organisation. That is not surprising, because it never acknowledges anything. Vital, a consignment tracking system introduced as a result of an NAO recommendation following the first Gulf war, was by 2001 operating at around 500 per cent. capacity. During the exercise, it took 15 minutes for the in-theatre Vital system to discover the contents of a single ISO—individual spares order—container. The lack of the Vital system at the point of exit in the UK and the point of arrival in-theatre meant that if something was sent directly to the first line unit, there was no way of being able to check where it was—anywhere in the world—until it arrived at its destination.
Clearly, nothing had changed during the second Gulf war. The report on that told us that ammunition was present in abundance, although the press said that it was in short supply. However, it could not be transported from where it was to the front line because it was not known where the equipment was to transport that ammunition. The ammunition was there, but it could not be transported to the front line, so soldiers thought that there was a lack of ammunition. The problem with asset tracking had been strongly identified by the NAO and the PAC in October 2001, yet we saw the same problems a year ago. Nothing was done when we pointed out the problems. Although most Departments adhere to PAC recommendations, there are times when that does not happen and problems occur.
I have probably said more than enough, and other hon. Members want to participate, so I shall finish. I can already say that I am looking forward to the next debate on this subject, which should be in six or seven months' time.
3.37 pm
Mr. Richard Allan: It is a pleasure to follow the hon. Member for City of Durham (Mr. Steinberg), who has clearly been cowed into abject submission by his second-hand telling off from the head of the civil service.
I am new to the Public Accounts Committee, as its Chairman has already pointed out, so I was not present for the hearings behind many of the reports that we are discussing today, but I have enjoyed reading them. I cannot confess to having read all 54, and if hon. Members look at the Table, they will see what a pile they make. However, I have looked at several of them, and I shall refer to those today.
I echo the thanks that have been expressed to the National Audit Office, which has been extremely helpful in breaking in a new Committee member and offering support. The concept of accountability to Parliament, which we talk about in many contexts, is very real in, and given flesh by, the work of the NAO. The mission of the Comptroller and Auditor General is clearly focused on accountability to Parliament, and as someone who feels that Parliament should have a life independent of the Government and the Executive, I found it quite refreshing to discover one aspect of our work in which that is absolutely the case. There are many aspects of our work that are necessarily dominated by the Executive, but that is certainly not so in the case of the NAO. Parliament is clearly the sovereign body in that regard. I also pay tribute to the Committee staff, who could not have done more to help me to get to grips with the complex agenda, and to the Chairman and fellow Committee members for treating me gently—or at least, more gently than some of the witnesses who come before us.
What is special about the reports that the PAC deal with is that they allow us to make evidence-based judgments on the performance of Government functions. Much of what we do in the House is based largely on anecdotal evidence. It is necessary, in a representative democracy, that Members pick up concerns in their constituencies and bring them to be raised in the House. We sometimes have a tendency to generalise from the particular, which might mean that we do not always make accurate judgments about Government services. However, the NAO reports provide serious evidence based on the work of 800 people beavering away, plus the large number of outside contractors and experts that the NAO bring in for specific reports. The value in that evidence perhaps exceeds anything else that we do.
We ask people in every other walk of life to move towards evidence-based work. If we expect doctors and educators, for example, to perform that kind of detailed analysis of their functions to find out what works and what does not, in order to decide their future strategy, it is entirely appropriate that we should use the work represented in these reports to provide us with the evidence to inform our decisions and help us to do things better in future. Indeed, in my time on the Committee so far, I have gained a strong impression that its work is not just about hauling people in front of us to answer for what they have or have not done; it is also about agreeing measures to improve future performance.
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My particular area of interest is information technology; that is what attracted me to the Public Accounts Committee. It is an area that we have the opportunity to consider frequently, usually for all the wrong reasons, mainly that IT projects have gone sadly wrong. Speaking as someone who has worked in the IT industry and wants to see it do well, and who believes that IT has tremendous value to offer to the public sector as well as the private sector, I hope that we shall be able to shift the agenda away from the necessary work of saying what went wrong, and towards looking for solutions that will allow us to implement IT in a more successful manner in the public sector in future.
The Chairman of the Committee has already referred to the 44th report of the 2002–03 Session on the Libra project for magistrates courts. That is a classic example of how things go wrong, and how not to do them. That project ended up costing far more and delivering far less than was promised. That is precisely the problem that we usually end up with: an increase in costs and a failure to deliver what was required. In those particular circumstances, we not only paid more—the figures have been cited already—but ended up with only one part of the project, the infrastructure part. We did not end up with the specific magistrates courts applications, which would in the end deliver the extra value and allow us to do what we wanted to get people through the courts more quickly. That would be in everyone's interest. That IT project became part of the problem, rather than being something invisible that simply allowed people to do their job better, which is what IT should be when it works.
We need to be aware that IT should never be an end in itself—certainly not in the context of public services. It is simply a means to an end. That end is to provide more time for doctors, nurses, teachers and, in this case, people who work in the magistrates courts, to get on with their work. The IT should give them more time rather than taking it away, but it was clear from this case that we ended up with a huge focus on the IT system rather than on the business of the magistrates courts.
The criticism in the report was incredibly strong. The Committee certainly did not mince its words. I believe that this is the strength of PAC reports: they do not shilly-shally. As the Chairman has already pointed out, the report stated:
"This is one of the worst PFI deals that we have seen."
There is no messing around there. It goes on to consider the reasons why the PFI deal was so poor, and to give recommendations for moving on from that. It is worth our while to consider how the lessons have been learned from that. An announcement was made earlier last year that we now had a presumption against PFI for IT projects. Obviously, the report on the Libra project was instrumental in leading to that presumption. Much of the debate last year concerned PFI as a general concept, and the Chairman has referred to the report that considered PFI projects in the round. However, there are certain specific features of IT projects that make them inappropriate for PFI projects, and we have rightly come to the conclusion that PFI is normally not going to be the appropriate solution.
That brings us back to the issue of risk. The whole concept of PFI involves the transferring out of risk, yet in the context of an IT project, it is impossible to do that. The risk will always remain with the public sector

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purchaser, because the risk is that they will not be able to do their business. We saw from the Libra project report that the purchaser had gone so far down the path that when the contractor said, "We want more money or we're pulling out," it could not say, "Well, that was your risk," because if the contractor pulled out, the risk would fall back on to the magistrates courts, in that they would have no IT system. We are starting to understand that there are contexts within which we cannot effectively or meaningfully transfer the risk out, because it will remain with the public body, in that it will not be able to carry out its business.
Another aspect of IT projects, which is relevant in the context of the Libra project, is that things move on very quickly. It is impossible to define the entire specification for an IT project at the beginning and expect that specification to remain stable throughout a two-year development process. That is simply unrealistic. Perhaps, as a result of this and the other reports, we are moving towards a notion of a public-private partnership—I hate that phrase, but that is how they are described—in which services are supplied in bite-sized chunks on a cost-plus basis in which the supplier clearly shows what it will cost to deliver the next module. The purchaser then offers the supplier the price for it, with an agreed margin. That is a far more sensible way to proceed than saying, "We are going to give you X for a two or three-year project," and expecting X to stay constant throughout. Our experience tells us that X never stays constant throughout.
Mr. Bacon: Did the hon. Gentleman notice the article in The Independent, either yesterday or today, about BAE Systems, which has advocated in a recent study carried out for it by Oxford Economic Forecasting a move away from smart procurement and a return to cost-plus for complex defence projects?
Mr. Allan: That was a helpful intervention. As a good Lib Dem, I should read The Independent every day, but I cannot say that I have read that article. I will, however, go and read it later. We have heard a Labour Member quoting The Daily Telegraph, and now a Conservative Member is quoting The Independent. Modern British politics is a wonder to me.
I shall give an example of the point that I am making from local government working, and in doing so, I shall praise a council that would not normally receive praise from these Benches. Westminster council's customer relationship management system was put in place precisely on those cost-plus terms. There is a lot of scope for expansion in that regard. I suspect that as we continue to re-evaluate PFI projects, one of the themes that might emerge is that the notion of transfer of risk is sustainable only in a far more limited range of contexts than was originally imagined. It was going to be the answer to everything. It might be the answer to some things, but there are usually other solutions that are far more appropriate.
Lessons have therefore been learned from that report; it has been extremely helpful. I want to refer to two of the other reports, which show us how much work remains to be done. The 66th report of the 2001–02 Session on government on the web, and the 20th report
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of the 2002–03 Session on the use of call centres, both raise questions about the extent to which we are still unclear about how to evaluate the use of new technology. We are going ahead and introducing it, but we have not necessarily got in place the measures that we need to be able to say whether it is a success.
In the early years, the Committee looked at NHS Direct, which uses both web and call centre technologies. We had an apparent success there, but it is sometimes difficult to dig far enough to see what genuinely constitutes a success. In the context of government on the web, it is not simply a question of counting how many people have accessed a web page. Similarly, in the context of a call centre, it is not simply a question of saying how many calls have been answered. There are measures of quality and ways of defining whether those calls and web accesses saved money for the Government, but they are still not being clearly set out.
Both reports are to be seen in the context of the Government's having set broad targets saying that by 2005 all Government services must be online. Online explicitly includes call centres, which are the online option for many services. Although the reports are written in that context, I do not think that the measures to allow us to define whether the investment has been a success have yet been spelled out.
At paragraph 4(vii), the report on government on the web is explicit about that matter. In its criticism the PAC puts down a marker that needs to be picked up more generally. It says:
"Significant sums are being invested by departments and local authorities in developing Internet-based services. As yet there is very little reliable data, however, on the extent to which value for money is being achieved in terms of both better public services and improvements in efficiency. Public sector organisations need to set out the intended value for money benefits in the business cases justifying their expenditure on IT projects and monitor and report on their achievement."
That recommendation succinctly sums up the problem, which is that the Government drive has been to stick everything online. In many cases specific money has been allocated. The Government have said in this area or that area, "You can have some money to stick stuff online," but have done far less work in the form of asking whether what is online is effective and delivering an improved public service. If it is not, it is completely meaningless. Having a web page means nothing if it does not result in better delivery of public services. I say that as somebody who is interested in investment in IT. We need to remain sensibly sceptical about the outcome, unless it can be demonstrated.
Certainly some huge questions remain about government on the web. The UK online Government portal is appalling. It compares very unfavourably with those in other countries. I know that the Government recognise this themselves and are seeking to provide an alternative. We are still a long way from seeing it. If any hon. Members want to see how dire matters are, they should try looking for information about national insurance numbers. Unless one already has a degree in the structure of government, it is incredibly difficult to work out where one should go. National insurance numbers are somehow cross-cutting between the Department for Work and Pensions and the Inland Revenue. Those wanting to obtain one will find that that is administered by the employment service. There is

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incredible complexity. If people know what they are looking for, they can find it; if they do not, they cannot. That completely goes against the whole principle of putting services online and making them accessible.
The report on call centres also says clearly that we do not yet have the measures needed to evaluate success. We read at page 3 of the summary:
"While it is for departments to decide whether to set up a call centre, the Office of the e-Envoy is responsible for electronic government strategy which includes call centres. The Office has, however, limited information on the performance of call centres and the quality of service which they deliver. The Office needs to obtain reliable data to benchmark call centre performance, identify and spread good practice and press departments to tackle poor quality service where it exists."
The Minister may agree that one way to improve the quality of call centres is to use the excellent call centre resource that exists in south Yorkshire, which many people have taken as one way of providing a good call centre service. The more substantive point is that we do not yet know, and have no way of evaluating, the true effectiveness of call centres. That remains an open question, subject to the same kind of concerns as the concerns about the web investment. Is this investment truly justified? We shall not know until we have the measures by which we can evaluate the centres.
I have greatly enjoyed serving on the Public Accounts Committee to date. I commend the report to anyone, whether a Member of the House or not, who is looking for evidence—that is the key word—to evaluate the effectiveness of Government expenditure properly.
3.52 pm
Jon Trickett: I join all hon. Members who have spoken so far in first expressing my pleasure at serving on the Public Accounts Committee, and, more importantly, in paying my tribute to the staff who serve us. There is no doubt that the Committee staff go out of their way regularly to be of assistance to Members in order to make the Committee as effective as it no doubt is. And without the support of the National Audit Office, which everybody agrees is a highly professional organisation, clearly the Committee would not be as effective, nor would the public purse be protected as well as it is in the United Kingdom. There is much for us to learn from that.
As has already been suggested, the Committee can from time to time become somewhat passionate and fierce, not to say robust, in its questioning, and that is probably an understatement when it comes to our exchanges with accounting officers. We would not want to stray into being personally rude to anybody. That would not be our intention, and I am sure that the Chair would never allow that kind of atmosphere to develop. But it is true that from time to time there can be extremely fierce exchanges between us and those representing the civil service, the accounting officers.
That probably reflects the strength of feeling of hon. Members of all parties on the Committee about waste in public expenditure. Ideologically we come from different backgrounds entirely. Some of us are passionate believers in public expenditure and the necessary taxation to put right the defects that, without public intervention, the market would leave in our society. There are others who have a different point of view. They feel that the public sector should be smaller,
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to reduce taxation for understandable political or ideological reasons. However, we can all share a hatred of waste and incompetence.
Members of the PAC are sometimes in danger of becoming anoraks, in the sense that whenever we examine public expenditure we tend to see waste. That is especially the case for those of us who are regular attenders of the Committee. The UK expends about £350 billion, and we know that the vast bulk of that is well spent. It is professionally spent by public servants who are doing their absolute best to provide a service to the public. We cannot look at the part of the iceberg that is invisible. Instead, we look at the part of it that is visible in terms of waste, and there is a great deal of waste to worry about.
I shall now reflect on the PAC and Select Committees in general. Probably the PAC is the only Committee to have a debate on the Floor of the House—it was once a year, and now it is twice, with two half days—about its work. In addition, it is the only Committee that has the support of the National Audit Office. That makes the Committee extremely powerful. The NAO has statutory rights of access to data and information, which in turn makes the PAC extremely powerful. Given the national debate about the nature of our Parliament and the loss of confidence, to some extent, that the population has in politicians, I wonder whether the legislature the House—should not examine carefully the way in which the PAC is supported by the NAO, with that body's statutory powers of access to documentation and witnesses, to strengthen the work of other Select Committees. Perhaps we should consider whether the PAC's model might be transposed to other Select Committees.
Whatever we think about Lord Hutton and his report, the House cannot deny the degree to which he had access to information. Well over —100 million was spent on exploring one subject to produce one report. At least 12 members of staff were working for Lord Hutton to obtain information. He had moral rights of access that probably mirrored the statutory rights of the NAO.
Select Committees in this place do not have such powers or resources. The PAC produces about 60 reports a year. It has the support of the NAO, which has 800 staff. Most Committees have only four members of staff working for them, and produce about 12 reports a year. The NAO reports cost about £190,000 per report, compared to Hutton's £1 million for one report. If the House is really to hold the Executive to account, as it should do, and if Parliament is to become the cockpit of the national debate once more, as it has not recently been, we need to examine the Select Committee system seriously. Perhaps there are lessons to be learned from the way in which the PAC works, how it is resourced, and the fact that it has the benefit of the NAO's statutory powers, if we are to bring the Chamber and the debates that take place within it alive again.
Moving on to the work of the PAC, I shall focus on the relationship between the private and the public sectors in terms of procurement and in relation to the PFI. The PFI and the nature of public sector procurement of services and goods from the private sector are inevitably surrounded by ideological debates, and they should also be surrounded by debate about the

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details of procurement activities. The PAC regularly encounters what appear to be breakdowns in the procurement process, and I suggest that there are some systemic problems in the process, which lead to those breakdowns.
The way in which the public sector procures major contracts from the private sector is flawed to some extent. The Government are paying attention to that, and have begun to remedy some of the problems raised in the report that has already been referred to. In the process used to submit tenders for contracts worth hundreds of millions of pounds the question of competition is not addressed rigorously enough. There are a number of barriers to competition. Without competition, one cannot be certain that the best price and the best quality service will be attained. We have encountered a number of barriers, the most important of which is probably the cost of tendering. We have heard from witnesses that tendering for a single contract can cost the contractor £5 million to £10 million. There are a limited number of companies, contractors and Government partners that can invest £5 million to £10 million in preparing tender documents to win a tender, and that is a barrier to competition.
On Tuesday, the Office of Fair Trading announced that it would conduct research on competition and procurement, as it believes that there is a great deal of work that small and medium-sized companies—even large companies—are incapable of tendering for. That is troubling, particularly because a number of contractors in the construction industry have come together to form a main contractors group, which I have mentioned before. It consists of representatives from all the building contractors big enough to be able to bid for works, and they debate tendering policy and practice. If competition is already limited by the investment needed simply to submit a tender, it is greatly troubling to discover that the people who are capable of tendering meet regularly to debate tendering strategy. That suggests that we are moving from the oligopoly of a limited number of competitors to a quasi-monopolistic position. I do not know how that should be dealt with, but it is a big problem.
What happens in almost all the tendering that the PAC has looked at is that eventually—usually sooner rather than later in the tendering process—the number of contractors is de facto down to two, or more often one. The pressure of competition on the tenderer is lost, and competitive tension disappears. The single tenderer is almost in a position to dictate terms, and we frequently found that that leads to "deal creep"—a strange expression that refers to the propensity of contracts let by the Government to the private sector to exceed the original price. Let us imagine that a deal for a contract worth £150 million is ostensibly sealed with a single tenderer. Once the contract is completed, its value will have crept or even galloped up. We have seen cases in which the final outcome was a doubling or more of the original price, which partly results from the fact that competitive tension is frequently lost.
The Committee examined a number of examples of such practice, some of which have already been mentioned, so I shall deal with them briefly. Our seventh report looked at the immigration and nationality
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directorate, and we found that key figures on which future increases in productivity would be measured and payments to the contractor calculated were not finally agreed until more than a year after the contract was signed. In the case of Dartford and Gravesham hospital, the NHS trust selected two firms to submit final bids, but one of them failed to bid. The trust ended up with a single bidder. Guess what? The final bid was 33 per cent. higher in real terms than the indicative bid. In the case of West Middlesex hospital, the preferred bidder agreed to hold its price for seven months but the trust took 11 months to close the deal. The price increased after the commitment period expired, so the original undertaking had only a limited effect.
With the Libra contract, the client was left with a sole bidder. It chose not to go out to further competition and as a result, within four years the cost of the project increased from less than £200 million to about £400 million.
Those examples might be thought anecdotal, were it not for the universal experience of so-called deal creep. There is something systemically wrong in the relationship between the public procurement and tendering processes, which deeply troubles me, and the rest of the Committee.
In the delivery of contracts, there is often a breakdown in the relationship between the public and private sectors—although not as frequently as in the tendering process. Almost invariably the same names—EDS, Capita and one or two others—are mentioned in connection with a breakdown in the delivery of a contract. Today the Paymaster General released the information that EDS has paid a penalty for failure to deal with its Inland Revenue contract properly every year from 1998 to 2003–2004—£282,000 the first year, £313,000 the second, and £105,000 in 2003–2004.
The PAC inquired whether the Government keep a record of contractors and their performance, so that we can all learn the lessons of a contractor failure. I was startled to discover that no such list exists. Capita, EDS and others have failed disastrously in some contracts, have let down the public and distinguished civil servants, and may have been penalised to the extent of hundreds of thousands of pounds—but they continue to be permitted to tender. The Office of Government Commerce says that it does not hold any information about contractors' failures. That must be wrong, and something needs to be done.
Mr. Allan: Is the hon. Gentleman aware that at the very time ICL was being accepted as a contractor for the Libra project, it was very publicly making a mess of the Post Office benefit card project? The oligopoly problem to which the hon. Gentleman referred is broader. Almost every major contractor has a black mark against it, but even if they know that, who else can they go to?
Jon Trickett: I take the hon. Gentleman's point. I entered the House eight years ago, but I come from local government, which would not allow such situations to arise. In local government, any contractor is able to apply to be placed on a list of those that may bid for work in a certain category—IT, street sweeping, or whatever—and a record will be kept of its capacity to perform. If a contractor were to fail so badly as to have

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a cataclysmic effect on the service—and it sometimes comes close to that—it would not be allowed to tender until it could demonstrate that it had improved its performance capacity.
I am not suggesting that the Government should immediately introduce a blacklist, nor even that a blacklist should necessarily be introduced, but it is deeply disturbing to have no list at all of the performance capacity of particular contractors. That appears to be the situation that we have uncovered. The Government have decided to increase the amount of work that they do with the private sector through the private finance initiative and so on. Frankly, I have reservations about that. Although I entirely accept that PFI has delivered enhanced services, we need to reflect carefully in going down the track of increasingly employing the private sector to provide services that hitherto were provided by the public sector. We must get our act together in terms of tendering practice and the monitoring of contractors' performance to ensure that lessons can be learned for the future.
I hope that I shall be able to remain a member of the Public Accounts Committee. It is a fascinating Committee on which to serve, and it is a great privilege to do so. I shall be interested to hear the Minister's response to the debate.
4.11 pm
Mr. Richard Bacon: It is a great pleasure to follow the hon. Member for Hemsworth (Jon Trickett). In his book on the Treasury, David Lipsey says that when watching a hearing in the Public Accounts Committee, it is impossible to tell from Members' questions which party they come from. When I read that, I thought of the hon. Member for Hemsworth, because I listen with great interest to his contributions and questions, and have on occasion abandoned my planned line of questioning to take up where he left off.
I listened to the hon. Gentleman's speech with great interest. He is right that problems are involved in tending towards oligopoly in suppliers: that applies not only to PFI contracts, but to bank finance. A financial journalist who covers capital markets recently told me that he was worried about the capacity of the financial markets to absorb the Government's huge pipeline of social infrastructure projects. That means, of course, that prices are likely to go up. There are legion examples of the City and financial advisers running rings around the Government, perhaps the most extraordinary being that of the Ministry of Defence building. The most extraordinary aspect, which is not mentioned in our report, is that the MOD went into the swaps market without a swaps adviser, and was of course taken to the cleaners.
I agree with the hon. Member for Hemsworth about the worries that should arise if there is only one bidder for a contract. I, too, was struck by the fact that the Libra project had only one bidder. That should automatically set alarm bells ringing, as the National Audit Office told me a long time ago. Three or four weeks ago, I had a meeting with the mobile phone company, O2. It was a congenial meeting and they were a nice bunch of fellows. They told me, with some pride, that the company was bidding for the ambulance contract and that there was a
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good chance that it would get it—not least because it was the only bidder. They were very pleased about that, but it nearly turned my blood cold. I have not had the chance to raise that with the National Audit Office, but I hope that it will take notice of this debate. I say to the Economic Secretary that I would not suggest for one minute that, assuming that it was done legally, the contract should be removed from the company on the ground that it was the only bidder. However, in such a situation it is incumbent on the Treasury, the Office of Government Commerce and all the other players involved to take a particular interest in the contract to ensure that it does not go wrong.
Like other Members, I hugely enjoy being a member of the Committee. I pay tribute to Sir John Bourn and his team at the National Audit Office. I pay particular tribute to those in the press office, who are unfailingly helpful to me; and to the Committee staff here. They are ably led by Nick Wright, who is extremely good humoured when I send him e-mails at three o'clock in the morning. The other day, I suggested that if he did not like that, I could telephone him at three o'clock in the morning, but for some reason he said that he would prefer to carry on receiving the e-mails.
I wish to refer to several issues. I have served on the Committee for two and a half years and, as we consider the various projects and reports, I sometimes tend to feel that we are listening to a scratched record. The most startling example of that was our hearing on tackling benefit fraud. The National Audit Office report on the subject includes a chart, which refers to previous studies. Indeed, it stated that our Committee examined the matter in 1998. Under the heading "On the scale and nature of Housing Benefit fraud", our report stated:
"It is totally unacceptable that seven years after we last looked at this issue"—
that is in 1998, so the report is referring to 1991—
"Housing Benefit fraud should exceed £900 million, and the Department still did not have information to show whether fraud is increasing, or all the information they need on the types of fraud, including landlord fraud, and variations at regional and local level. The absence of reliable information must cast doubt over the decisions the Department have taken to invest in antifraud work and over the achievements they have claimed."
The helpful appendix of the NAO's recent report, "Tackling Benefit Fraud" places previous recommendations in the left-hand column and action taken by the Department in the right-hand column. In most cases, something is written in the right-hand column, but in the case that we are considering, it is blank. In other words, we made a recommendation in 1998 and the Department has done nothing about it. When we questioned Sir Richard Mottram about whether housing benefit fraud was increasing or decreasing, he could not tell us. He had an idea, but he could not tell us the exact position five years after we said that it was unacceptable—and that was seven years after we had previously considered the matter. That is one of the essential worries about the work of our Committee. However many good reports we publish, the Government do not listen hard enough.
In the famous agricultural fraud case involving Joseph Bowden, we had published a previous report on the business of the then Ministry of Agriculture, Fisheries and Food—now the Department of the Environment, Food and Rural Affairs—and the

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permanent secretary had had to admit that he had not read it. We had previously recommended that the Department could learn lessons on dealing with agricultural fraud from the way in which benefit administration fraud had been handled. The permanent secretary was not even aware of the report, even though it related directly to his responsibilities and was addressed effectively to his Department as well as Parliament.
In paragraph 32 of our 31st report, "Tackling Benefit Fraud", we concluded that the
"Department were unable to assure us that the number of people committing fraud. its overall value or the level of landlord fraud were reducing, although they believed this to be the case."
Paragraph 33 states:
"The Department acknowledged that the pace of change had been less than desirable."
That is one way of putting it. It continues:
"Despite efforts over the years to drive up performance, the results of their comprehensive performance assessment review in autumn 2002 had been very mixed, and the Department considered that the record of local government in administering housing benefit was not defensible."
That is an interesting sentence because it is the point where our responsibilities as a Committee end. I said to Sir Richard Mottram that if local government's record in administering housing benefit was indefensible, surely that was the point at which policy itself caused Government expenditure to be uneconomic, ineffective and inefficient. There is no way round that.
Sir Richard Mottram, who is an able mandarin, simply smiled in a delphic manner and replied that that was policy. I then tackled the Secretary of State for Work and Pensions, whom I bumped into in the coffee queue in Portcullis House. Although I would not describe his answer as delphic, it was difficult to understand. However, it boiled down to the contention that, by the time we shifted to a better system, the people whom we would need to make it work would have left. We could not therefore make changes, even though we recognised that the housing benefit fraud system, as administered by local government, was indefensible. I find that a weak reply and I should like a little more effort to be made.
It is not obvious that housing benefit must be administered by local government simply because it relates to housing, which is based in local areas. I hope that the Treasury is beginning to consider that, because too much money is at stake and too many mistakes have been uncorrected for too long.
The second theme that I want to mention is transparency. The Treasury will know that I have always taken a great interest in professional fees, not least for the Treasury building. I will not labour the point, as I made it in last year's debate, about the £25.2 million for professional fees for the Treasury building. I have a letter on my desk from the Financial Secretary—so it must be true—saying that that is apparently very good value compared with other projects. The reason I am slightly sceptical is that when we ask witnesses about the level of fees, they are not always completely candid. When we had as a witness the chief executive of Bouygues UK, which is working on the Home Office
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building in Marsham street right now, I asked him what the level of professional fees in relation to that building was. He said that they were £9 million, and he repeated it two or three times. I asked him two or three times whether £9 million was all. Finally, through gritted teeth, he said in his French accent, "No,£25 million." I had to ask him three or four times to get the right answer out of him.
When we had a hearing on Wembley stadium, I was struck by an article in the Evening Standard which said that professional fees in relation to Wembley national stadium were £82 million. I therefore asked Ms Sue Street, the permanent secretary at the Department for Culture, Media and Sport, whether that article was accurate. Her reply was,
"I am very sorry, I am advised that we do not know."
I asked her if she would send us a note, and she kindly did so. The report has been published extremely recently, so we have not yet debated it, but I refer to it because it makes the general point about professional fees. When it came out earlier this week, it elucidated the facts: professional fees relating to Wembley stadium were indeed £81 million, which covers
"Fees, Fixtures, Fittings and Equipment",
and—this is one I like—"inflation for delayed start", whatever that means; and there is no breakdown so one cannot see how much of it is inflation for delayed start. It also covers "contingency", for which there is also no breakdown, so one cannot see how much of it is contingency, and
"other costs in the Multiplex construction contract".
That alone is £81 million. That is not the half of it, however—actually, it is slightly more than half of it—because there is another line,
"Bank arrangement fees/finance costs",
which were a further —22 million. Then there are
"Legal and other professional fees",
which were a further £11 million, and perhaps the best line of all, "WNSL"—Wembley National Stadium Ltd.—"management fee", which is a further£19 million. That makes a total of £133 million.
Hon. Members may recall that the lottery grant to the football stadium at Wembley was £120 million—all of that and more went on paying the professional fees. That is why it is a subject that we need to keep under review and on which the National Audit Office needs to keep an eye.
The reason I referred to transparency is that I sometimes get the sense that we are not given as much information as would be helpful to enable us to reach considered judgments on these matters. One notable exception was the report on the redevelopment of the Ministry of Defence main building. Page 24, one of my favourite pages in any recent National Audit Office report, sets out with startling clarity how the public sector comparator is arrived at. Again, I referred to that in the debate last year, so I will not dwell on it, but it simply sets out the base costs for each item, the extra cost because of the risk, and, in the final column, the risk as a percentage of the base costs. How it is worked out is therefore transparently clear. It is obvious how easy it is to manipulate the figures, to which we referred in our report when we alluded to the fact that just by changing

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the risk factor for one item—capital expenditure—from 29.5 per cent. down to 29 per cent., the public sector comparator can be changed so that instead of it being £100,000 more expensive it is £1 million cheaper.
The Government now say that they have a much more sophisticated method of analysing risk factors and coming up with a sensible arrangement for advising Departments on what sorts of risk factors ought to be applied to their projects. In a recent hearing, when we were told by a witness that the figure for the risk factor was 24 per cent. for capital expenditure, we asked why. The reply came that that was the figure that the Treasury gave. When we asked how the Treasury got that figure, we were told that the Treasury had had a study done by Mott MacDonald, a group of engineering consultants, and that that was the figure with which it came up. Being a bit of anorak, I decided that it would probably be useful to look at the Mott MacDonald report, which is precisely what I did. In that study, the Treasury provided a list of some 60 projects, and Mott MacDonald provided a further 20 projects, making a total of 80, and it analysed them to see what the typical cost overruns had been.
It is interesting to study the Mott McDonald report in detail. The measurement of operating expenditure is covered on page 10:
"There was great difficulty in obtaining information on operating expenditure. Such information was only available on a small number of projects."
It turns out:
"Of the 80 projects initially reviewed, only 50 projects had a reasonable amount of information, and were retained for analysis. Although most of the information required on the retained projects was available, some key data was lacking."
As a result of that analysis, Mott McDonald comes up with an optimism bias, which involves calculating a percentage figure to add to the total cost of a project so as to arrive at the project's actual cost—basically, one begins with the original cost estimate and adds in the optimism bias to calculate what a project will really cost.
The Mott McDonald report contains a helpful chart that explains that for standard buildings the optimism bias is 24 per cent.; for non-standard buildings it is 51 per cent.; for non-standard civil engineering projects it is 66 per cent.; and hon. Members will be relieved to know that for standard civil engineering projects it is only 44 per cent. Having examined the chart, it occurred to me that the figures must derive from the 50 projects that Mott McDonald has studied.
At the back of the report, there is a project list containing standard buildings, non-standard buildings, standard civil engineering projects and non-standard civil engineering projects—for example, Manchester airport; terminal 4 at Heathrow; Salisbury hospital, phase 1; the Limehouse Link road; and the A34 Newbury bypass. I expected to see three columns to the right of those projects. First, a column listing the original cost estimate; secondly, a column listing the actual out-turn; and thirdly, a column listing the percentage overrun. By aggregating the percentage overruns, one could calculate an average cost overrun for standard buildings, non-standard buildings, non-standard civil engineering projects and so on.
One could not calculate the figures in the table without going through that exercise. However, I have examined the report carefully, and it does not contain
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any figures, so it is a mystery how Mott McDonald calculated the 24 per cent., 51 per cent. and 66 per cent. figures. Bear in mind that the whole purpose of referring to the report is that the Treasury advises Departments on percentage optimism bias as a direct result of it. If one asks a Department why it has included a percentage optimism bias, it will say, "The Treasury told us to".
Jon Trickett: I am listening to the hon. Gentleman's argument carefully. Does he agree that the Mott McDonald report. which is a critical document on which the Government rest much of their case about public sector comparators, measures deal creep within the public sector but fails to take account of deal creep in the private sector, which means that we end up comparing apples with pears?
Mr. Bacon: The hon. Gentleman anticipates my concluding point. I fear that this is simply another way—if a rather more sophisticated way—to provide any number that the Government require for the public sector comparator. Given that the Treasury uses the report and that Departments say that it gives them numbers based on it, it is strange that the report states that
"the study results on their own should not be used directly as a benchmark to assess optimism bias levels in current and future projects."
The report states a number of reasons for that:
"the introduction of risk management, improved procurement practices (based on greater diligence at the project definition stage), partnering"—
that is always a good one—
"more controlled cost monitoring, value management, and the application of concurrent engineering."
In other words, the basis for the numbers that are now being used is itself flawed, but the Treasury still recommends it to Departments.
I turn to the conclusion of the Mott MacDonald report, which states:
"The optimism bias recorded for projects in several recent studies have proved that there is a tendency for project managers and project owners to underestimate costs and time, and overestimate benefits for a project.
Failure to consider and actively manage the causes of optimism bias tends to result in an accumulation of unforeseen cost and time overruns, and benefit shortfalls. However, by developing strategies for the effective management of project risk areas, it is possible to reduce the optimism bias and raise confidence levels in project estimates."
This exercise, which was undertaken on the Treasury's behalf, is in fact a laudable one. Getting some form of scientific measure of what goes on inside large projects, why they go wrong and the precise extent to which they go wrong is very helpful. But I come back to my point about transparency. At the moment, there is no transparency. One cannot go through the report and discover how the figures have been arrived at, so the suspicion remains that the whole exercise is still just another way of manipulating the data, just as the public sector comparator itself too often seems to be a way of manipulating the data, in order to demonstrate the required result.
I turn briefly to the future. As I said at the beginning of my remarks, I worry that our reports and the legion warnings issued about projects in many different areas

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of government—particularly, but not only, computer projects—are so often ignored. The national health service provides us with an example of huge procurement: the National Programme for Information Technology in the NHS in England. The NPfIT concerns the provision for clinicians of electronic patient records, and it is costing a fortune. Estimates have varied. A recent announcement valued contracts in the region of £2.3 billion. That figure rose to £2.6 billion, and following the recent letting of quite a few contracts, it has reached some £4.2 billion. Indeed, it is expected to rise still higher. The problem is that however much money is spent on the programme, it will not work unless there is buy-in from the users. One of the classic problems with such projects is that the users are not consulted adequately or in time.
The magazine Computer Weekly and the NPfIT itself jointly undertook a study of this issue. A health care market research firm called Medix undertook a survey of people in the health service who might need to have contact with the programme. It asked, "What consultation has there been with you personally about the NPfIT?" One per cent. described such consultation as "More than adequate"; 3 per cent. said it was "Adequate"; 8 per cent. said it was "Barely adequate"; and 11 per cent. said it was "Inadequate". However, 75 per cent. said of such consultation that there had been "None at all", and 2 per cent. were "Unsure".
The NPfIT was so furious about these results that it issued its own press release, in which it completely ignored any of the survey's negative findings. Those who want to check the survey can do so easily, as it has helpfully been made available on the internet. That is one of the few ways in which IT manages to hoist itself by its own petard.
Slightly worryingly, the striking report by the National Audit Office—we are not really debating it; indeed, it was published only today, and we have yet to take evidence on it—large letters on page 7:
"Lessons applying more widely from the Bureau's experience are"—
it is referring to the Criminal Records Bureau—
"The importance of consulting with potential users of the service at the earliest opportunity to gain a clear understanding of how they are most likely to access the service, and responding promptly and effectively to such feedback."
In the report on the Libra project, to which other Members have referred, we offer the following warning on page 4:
"Departments will not achieve the full benefits of introducing IT if they do not redesign business processes in parallel."
The NPfIT says that it will begin redesigning the business processes, but it has already let the contracts. The warnings that we are giving are current. We have not even had the chance to consider the NAO report, listen to the evidence and issue our own report. However, the advice is clear: consult early. In respect of the second report, we already know that the NPfIT is ignoring the need to design business processes in parallel while introducing IT.
That brings me to my final point, about the Office of Government Commerce. The NAO's report on the Criminal Records Bureau states, in paragraph 13 on page 3,
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"The Office of Government Commerce Gateway Review Team raised questions about the readiness of the Bureau to go live, but accepted that there was 'no turning back'."
That raises the question of whether the gateway reviewers are culturally too close to the people whom they are reviewing.
The Work and Pensions Committee is currently conducting a study on the IT projects under way in the Department for Work and Pensions. I hope that we shall also look at that, and that the Treasury will take account of it. One of the witnesses for the study was Sir Peter Gershon, chief executive of the OGC. He was asked whether he had ever stopped a project, and also whether he had ever advised that a project was too complex. In each case he gave answers that were long, difficult to understand and non-committal, which suggests that the real answer was "No". I hope that the OGC will seriously consider publishing gateway reviews; perhaps the Treasury will give it a nudge in that direction.
Mr. Allan: I agree with the hon. Gentleman about the effectiveness of the gateway review process. I have looked into it myself, and my impression is that the process has no power to stop projects. If a red light is thrown up, it is for the Department or the public body to decide whether to proceed.
Mr. Bacon: That is true. What is also true is what I thought the hon. Gentleman was going to say: the gateway process does not apply to the health service or the NPfIT.
The central point is this. If these matters were in the public domain and MPs, members of the public and journalists could read about them, the Department might be helped to conclude that it should take a slightly more robust view, and perhaps occasionally stop projects in their tracks.
I think the OGC does a great job, and that it negotiated a fine deal with Microsoft. Sir Peter Gershon's recently conferred knighthood is well deserved. If the title "Hero of the Taxpayer" existed, he would be worthy of it, because he does a tremendous job—but he does it in very difficult circumstances. His only real power is one of suasion. He cannot point at Departments and tell them what to do.
Mr. Leigh: Sir Peter is retiring after three years as a permanent secretary.
Mr. Bacon: I am disappointed to hear that, because I think he was just getting into his stride.
One of the central aspects of the problems we face is the fact that the civil service is constantly on the move. Permanent officials actually move far more often than Ministers. I had the opportunity to have a chat with the right hon. Member for Livingston (Mr. Cook) the other day. I gave him a lift in my car. I was picking up my laundry from the launderette, as you do, and there he was walking along. As his office is in Norman Shaw South, I decided to give him a lift. He said that when he was Leader of the House one of the most extraordinary things he discovered from talking to parliamentary counsel was that when drafting Bills parliamentary counsel almost never get to talk to the same civil servant twice about the same subject, because civil servants move on so quickly.

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I was delighted to hear that Sir Andrew Turnbull is thinking of introducing four-year posts for civil servants. That will be a very interesting development, if it actually happens. I was also delighted to hear from Sir David Omand, when the Chairman and I went to Heathrow airport to visit Customs and Excise, that the Government's approach to risk management will in future be tied not just to the statements of internal control that permanent secretaries must sign, but to the spending review process. If they can get traction on that, it will be very interesting.
Another point made by David Lipsey in his book was that the Treasury and the PAC ought to be allies. I sometimes feel that we are not nearly as close allies as we should be, and I believe that one of the reasons is the fact that the information that would enable us to work more closely together is held too closely. The Whitehall culture is the same in other Departments as it is in the Treasury: "Your job is to defend your Department against outsiders". From the Treasury's point of view, Parliament is just another outsider.
As the NAO has pointed out, we are about to spend an extra £61,000 million of taxpayers' money over the next three years in the spending round. A 1 per cent. improvement would lead to an extra £14 billion going into front-line services. I have considerable scepticism about whether that will happen, but if we are to see the changes that we want and achieve the fundamental shift in the way that the Government deliver services to the public, which Sir Peter Gershon spoke about in his ongoing efficiency review, we need to use every lever at our disposal. I believe that the most important lever is transparency—and oxygen—to enable the people of this country to govern themselves, to criticise their Governments more effectively and to ensure that taxpayers get value for money.
4.40 pm
Jon Cruddas: I greatly enjoyed the speech of the hon. Member for South Norfolk (Mr. Bacon), which was consistent with his contributions in the Committee—based on a solid bank of research and technical confrontation with the important issues. Like the hon. Member for Sheffield, Hallam (Mr. Allan), I speak as a junior member of the Public Accounts Committee, having sat on it only since the end of the summer recess, but from the standpoint of a relative novice I would like to make some brief observations about the workings of the Committee and its reports.
First, the sheer scale of the work carried out by the Committee is staggering. It covers literally the whole spectrum of Government policy and ranges from the most specific examination of Government activities on a case-by-case basis to the broadest possible issues of expenditure and finance. That allows the Committee to draw unique conclusions regarding the shape of Government activity and the efficiency of expenditure. As such, it makes a major contribution to this country's public life.
Secondly, the quality of the research and advice supplied by the National Audit Office is also a credit to public service in this country. As the Chairman said, its work has been estimated to have saved the Government some £1.5 billion over the past few years: it saves £8 for
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every £1 it spends. The rigour of its approach is extraordinary and it remains the cornerstone of financial accountability in the House.
Thirdly, as mentioned earlier, the work of the NAO and the Committee is greatly aided by the Clerk, Nick Wright, and his staff. Speaking as a new member of the Committee, I want to place on the record my thanks to them for showing me around the proceedings, pointing me in the right directions and continuously replacing my lost papers.
I should like to make a couple of somewhat impressionistic comments about the workings of the Committee based on my brief time sitting on it. First, I want to record my respect for the civil service. Let us consider the rather bruising hearing that we had yesterday afternoon about the sequence of events leading to the reconstruction of British Energy. It was the most robust meeting that I have attended since being a Committee member, but the conduct of the permanent secretary at the Department of Trade and Industry, Sir Robin Young, reflected a proud tradition within our civil service.
We were examining the truly shocking chronology of events leading to British Energy finally approaching the Government for rescue aid on 5 September 2002, much of which predated Sir Robin's arrival as permanent secretary in June 2001. However, at no stage in yesterday's hearing did Sir Robin imply that he was not responsible for the decisions—or lack of them—leading to the current sorry predicament. He thus maintained an honourable convention whereby permanent secretaries take responsibility for the activities and decisions that preceded them in their Departments. Personally, I believe that that reflects most favourably on the civil service. I mention that as one of the most striking aspects of my initial period on the Committee.
The flipside is that we do not hear from the people who were, more often than not, responsible for taking the decisions that we are investigating and analysing. It seems to me—this may have been considered before—sensible to have the capacity to question those directly responsible for decisions as opposed to those currently in charge who are imbued, as I said, with the honourable predisposition for collective civil service responsibility.
My second point focuses on how the Committee works. I am impressed by the whole operation. The core political battleground between the major parties has to do with public expenditure issues and the Government's effectiveness in utilising tax revenues. For example, this morning's newspapers are awash with stories about the Conservatives trying to sort out their policy agenda with regard to taxation, spending and the public services. However, the Committee is not partisan: tribal political loyalties tend not to inform its workings, but are left at the door.
The Committee confronts issues in a non-partisan manner, but that does not mean that its members leave their ideological approaches outside the Committee Room. Rather, those approaches inform the nature of the Committee's scrutiny. By avoiding partisanship, the Committee enhances its role in scrutinising the Government. Its conclusions are thereby rendered even more compelling and penetrating.
At the same time, different members can reach different conclusions from the Committee's work, which they can use in their other political activities as Members

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of the House. My hon. Friend the Member for City of Durham (Mr. Steinberg) referred to an article by the hon. Member for South Norfolk, published in The Daily Telegraph on 2 January. I am grateful to my hon. Friend for sending it to me. The article was very good. It appeared in anticipation of a Committee hearing on managing resources to deliver better public services. The hon. Member for South Norfolk used evidence from PAC hearings to illustrate how money is wasted across Whitehall. As has been mentioned already, our work with the NAO leads the Committee to believe that an improvement of only 1 per cent. over the next three years in how the money that is already available is spent would release about £14.5 billion for front-line services. That is equivalent to a rise of 4p in income tax in any one year.
It could be assumed that PAC reports do no more than criticise Government Departments over matters to do with fraud and the inefficient use of resources. For example, the ongoing saga of the Child Support Agency computers is again in this morning's newspapers, with reports suggesting that the agency is ready to ditch kit worth £450 million. The Committee has scrutinised that matter closely. Also in this morning's papers is the NAO report on the effectiveness of the Criminal Records Bureau.
More proof of the PAC's effectiveness can be found in the evidence that it secures at its hearings and in the findings contained in its reports. As both my hon. Friend the Member for City of Durham and the hon. Member for South Norfolk noted, the auditors have criticised the Department for Work and Pensions every year since 1988 for the volume of fraud that is reported.
Another example is what we learned in our hearing yesterday afternoon: that British Energy issued a dividend worth £420 million in 1999, even though it knew that electricity prices would fall with the introduction of the new electricity trading arrangements. By 2002, British Energy was requesting urgent state aid to prevent collapse.
The Committee has also learned that Customs and Excise loses between £7 billion and £10 billion every year on unpaid value added tax, and that the benefits payment card cost about £1.1 billion before it was scrapped. We know, too, that the new GCHQ building cost £400 million, whereas the GCHQ management board was told that it cost £20 million. The managers at GCHQ thought that it would cost £40 million. The list goes on, and it is a tribute to the PAC that those problems receive an airing.
I return to the article in The Daily Telegraph by the hon. Member for South Norfolk. He ended it by stating:
"If we stopped the haemorrhage of cash from our public sector we would have to worry less about extra taxes and borrowing."
That is correct, and I pay tribute again to the hon. Gentleman for his rigorous research and activity. However, if we stopped at this point in our consideration of the PAC's work, we might be tempted to argue that money is simply being lost down a black hole, and that good money is chasing after bad. The PAC's reports might convince us that the attempt to rebuild public services is an inherently flawed economic and political strategy. The significance of that cannot be
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overstated, given that the Government are systematically reinvesting some £61 billion extra in our public services over the next three years.
I am a junior member of the Committee, but my impression is that the NAO and the PAC have also highlighted profound changes in the management of resources in the public sector. Its general analysis suggests that until recently resource management in the public sector had a number of long-standing inherent weaknesses: insufficient focus on delivery, which meant a preoccupation with the management of inputs; endemic short-termism, whereby Departments were funded on an annual cash basis, with money being handed back at the end of the year, which provided scant predictability in terms of future departmental resources and strategy; perverse incentives to spend cash before the year end; incomplete cost information, due to cash accounting procedures; insufficient measurement of performance outcomes, and a preoccupation with process; and poor project management and capabilities.
The NAO and the Committee have studied the Government's responses to those inherent problems; for example, public service agreements were introduced in 1998 and set out for each Department the aims, objectives and quantified targets needed to deliver over the spending period. The spending and control regime was also introduced in 1998, which includes a three-year comprehensive spending review period and the allocation of three-year resource budgets for Departments, plus the flexibility to carry forward unspent funds.
Another example is the move to full resource accounting and budgeting for Departments, which came into effect in 2001–02. The move to accruals-based accounting gives better information on expenditure and the analysis of Government accounts. As the hon. Member for South Norfolk pointed out, we are also aware of the efficiency review being carried out by Sir Peter Gershon, chief executive of the Office of Government Commerce. The review covers the whole public sector and will feed into and inform the spending review of 2004, to be announced in the summer.
The Committee also touched on the study of procurement led by Sir Peter, which gave rise to the formation of the OGC. I can testify to the OGC's work in its dealings with Microsoft, which the Committee discussed in one of its private meetings. The OGC deployed a systematic and effective strategy. As the NAO has stated,
"new flexibilities and changes in the way resources can be managed, if used effectively, should make an important contribution to improving public services."
Obviously, those new frameworks and disciplines are critical at a time of massive investment in public services—as I said, the amount over the next three years will be about £61 billion above previous levels.
Departments and their agencies currently spend about £421 billion, a significant proportion of which is used to deliver key services to the public. The simple point is that, while highlighting waste and inefficiency, the PAC also has a critical role in studying the relative effectiveness of new disciplines. In the private sector, discipline and efficiency pressures arise from the very nature of competition, but in the public sector, by

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comparison, alternative frameworks have to be developed. It will be fascinating to track Departments to see whether real change occurs over the next few years. I make these points to emphasise the Committee's role in scrutinising the changes that will import new disciplines and incentives to the public sector to safeguard the new investment to which the Government are committed.
The final brief point in my impressionistic take on the work of the PAC concerns the private finance initiative. In many of the Committee's meetings, many members—from different ideological perspectives—scrutinised the financial underpinnings and assumptions of PFI, as we have heard from other Members this afternoon. We looked at the MOD main building, the PFI refinancing regime, delivering better value for money from PFI projects, the new GCHQ building and so on.
When I joined the Committee I had no intuitive inbuilt hostility to PFI in principle. Harnessing private finance capital for public service priorities is self-evidently a good idea. At the same time, it allows for a more robust investment programme without jacking up direct taxation rates. Furthermore, to make a party political point, the PFI has, in theory, a critical role to play in establishing the possibility of a durable Labour Government who want to rebuild public services. Indeed, it has already played an important role.
My only real concern about PFI before I joined the Committee was that it would be used as a device to ensure that the Government's fiscal framework was reconciled with the rules of the eurozone, thus enabling early entry. Given the events and developments of the past year, that concern seems slightly out of date, which I am extraordinarily happy about.
Moreover, in theory, the PFI offers a seductive risk-transfer package for local authorities and Departments charged with delivering such services. Since serving on the Committee—in particular, since listening to my hon. Friend the Member for Hemsworth (Jon Trickett) and the hon. Member for South Norfolk—I admit that I am less convinced than I was initially about the intrinsic merits of the PFI. As I say, that conclusion is not ideologically driven; it is simply based on what I have heard. More specifically, the concern is the method by which the private sector is deemed cheaper than the public sector owing to the aforementioned public sector comparator—in effect, the tender price that the public sector would offer for any given project.
Again, as far as I can see from my limited experience on the Committee, the origin of that comparator, with its project-specific flexibility, remains a mystery. My concern is that it can become an accounting lever to ensure that large-scale capital projects are not handled by the public sector. That is legitimised by the comparator's econometrics, whereas the real objective behind it is simply promoting a belief that the public sector does not exist to achieve such building work, so a regime or infrastructure is created to legitimise such departure points.
Jon Trickett: Is my hon. Friend aware—this may have been said before he joined the Committee—that a senior member of the NAO staff described the public sector
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comparator, as it then operated, as "pseudo-scientific mumbo-jumbo"? I wonder whether my hon. Friend has a view on that.
Jon Cruddas: I am aware of that because I read the report of the annual PAC debate last year—when, I think, my hon. Friend mentioned it. It says an awful lot about the pseudo-scientific rigour attached to the device. It is an eminently flexible device whose elasticity is very useful for politicians, but it is difficult to ascertain the merits and anchorage of a body that produces theory and analysis objectively. So I have problems with it, and the remark by a member of the NAO clarifies my thoughts on the way in which I consume information in the Committee. I very much look forward to the Committee subjecting the PFI to scrutiny in the future because I am worried that the accounting mechanism may simply be used to lever work from the public sector.
To put it simply, I personally find the PAC's work extraordinarily rewarding. The Committee provides unrivalled scrutiny of the state for the benefit of the House of Commons. More importantly, it provides unrivalled scrutiny of the state for the taxpayer, and long may it continue.
4.58 pm
Mr. Howard Flight: I pay tribute to the Chairman of the Committee and all its members and to Sir John Bourn and the NAO for fantastic work on 54 reports. All hon. Members here this afternoon must agree that this has been a fascinating and incisive debate. The PAC and the NAO are very much the unsung heroes of Parliament and the civil service.
Dare I say that it is perhaps a pity that we are having the debate today, when we are about to break up for half term? It is certainly a great pity that more hon. Members have not attended. We are debating some —250 billion of public expenditure, and without wishing to sound patronising, I feel that it is pathetic that there are not more MPs here to learn something about how that money is spent. At the end of the day, if Parliament is not to be just a theatre of performance, surely its most crucial role involves that very item. The thought occurred to me—perhaps not seriously—that attendance should be made compulsory.
I am sure that the Government are somewhat disappointed that the massive increase in spending since 2000 has not, as yet, delivered more. Figures from the Office for National Statistics suggest that something like 85 per cent. has gone into public sector inflation, which is now running at 8.5 per cent.—that is up from 1.6 per cent. in 1997. The big question of our time for the Government, the Opposition and all mature economies of western Europe is how the public sector is to become more efficient. It is fairly clear that there is no great appetite throughout Europe for further tax rises, but with populations growing older, there is an increasing demand for services. The efficiency of the public sector is thus right at the centre of politics everywhere.
I shall comment briefly on the excellent speeches that have been made. I liked enormously the robustness of the Committee's vice-chairman, the hon. Member for City of Durham (Mr. Steinberg). I wholly agree with several key points that he made—namely his tactful

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criticism of the occasional arrogance of the civil service. He also highlighted the Ministry of Defence's frequent failure to manage equipment and problems with asset tracking.
The hon. Member for Sheffield, Hallam (Mr. Allan) focused on a matter about which he has a great deal more technical knowledge than I, although I have endeavoured to give it some attention over the past two years: the pretty poor record on public sector information technology projects. He quoted from the Committee's 44th report on the Libra project—we have all focused on that. We all know that such matters have been the Committee's territory for a long time because it has produced many reports on IT projects. The problems remain substantially unsolved. I learned from my prior career experience that top-down IT projects never work. Unless they start with the people concerned at the cutting edge, and work upwards with people being prepared to adapt, one ends up with a top-down system that fails.
The hon. Member for Hemsworth (Jon Trickett) was wonderfully straightforward. He articulated his frustration and sadness at the waste of public expenditure; I share that motivation myself. He suggested that parliamentary scrutiny bodies were generally inadequately resourced, and pointed out systematic problems in the procurement process. Indeed—dare I say it? —it seems to both the Government and the Opposition that relatively straightforward savings could be achieved by introducing a considerably more professional procurement process throughout the public sector. He said that private finance initiative costs of tendering were too high, which is clearly what experience shows, and he pointed out problems of an oligopoly, if not a monopoly, of supply to the public sector.
I give personal thanks to my hon. Friend the Member for South Norfolk (Mr. Bacon) for helping me to get on top of 54 reports in a relatively short time. I was interested to hear his identification of the way in which the MOD had been caned in the swaps market because it did not seek adequate advice. He also focused on the problem of having a single bidder for Government contracts, and not only on the PFI side. If one suddenly increases spending on public sector investments massively, one runs the risk of driving up prices because too few providers are available. My hon. Friend also pointed out the major problem that attempts to address housing benefit fraud, and fraudulet benefit payments in general, have been given up.
My hon. Friend also made the important point, in relation to IT, that the mandate of the Office of Government Commerce does not give it the power to prevent projects, in good time, from going off the rails. I have learned that, perhaps surprisingly. Italy is the EU country with the most effective record in managing IT projects. One reason for that is that a very small body at the centre of government, comprising partly the private and partly the public sector, has precisely that power. That body has to vet a project initially and then monitor it, and it has the power to stop public sector IT projects if they go off the rails.
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The hon. Member for Dagenham (Jon Cruddas), as a new member of the Committee, made a valuable contribution in which he stressed the problem of the natural lack in the public sector of the discipline that competition and the market bring to the private sector. He stressed the need to rethink how optimum efficiency can be achieved with the additional £61 billion that the Government are spending in the public sector.
I step back to ask what the PAC and its processes are all about. To me, the PAC's function is analogous to the internal audit function in a business. The PAC, with the NAO, is the internal auditor, although many businesses use an outside party in conjunction with their own to perform that internal audit. The PAC functions as the non-executive directors, while the House of Commons functions as the body that represents the shareholders, but the recommendations of the internal audit are essentially for the civil service and Ministers, so that they can improve the delivery of public services and learn from all the work done.
In a business context, the board's normal response to the findings of an internal audit is to continue to require information from management until it can see that the lessons learned have been implemented and the problems thrown up have been resolved. My main disappointment, from all that 1 have read, is the relative lack of effective implementation of all the lessons that the PAC and NAO have learned from all the work done. All that excellent work is recorded, and is there for the public sector, the Government and civil servants to learn from. As pointed out, that work has saved £1·5 billion, but everyone reading the reports of recent years must have stepped back and said, "My goodness me; far more than £1·5 billion could have been saved if what the PAC found had been implemented."
Of the reports before us today, I have counted 10 in which the PAC says, "We have said this before and nothing has happened," and another 20 that make the same point in essence. Many of the reports that deal with PFI and the problems associated with it repeat criticisms that have been made before.
Mr. Andrew Love: Does the hon. Gentleman accept that a considerable number of the failures mentioned in the reports are failures of the private sector, where it has been contracted to the public sector? If we could be more vigilant over how the private sector delivers some public services and some PFI contracts, we could save a lot of public money.
Mr. Flight: As, I trust, a reasonable man, I accept that there are faults on all sides.
Perhaps I may summarise some of the operative problems with PFI. Public participation has not been sufficiently on its toes to enjoy the benefits of refinancing. There have been what the PAC itself described as the complete charade of the public sector comparator, which involves paying large fees to accounting firms for demonstrating whatever one wants them to demonstrate; the excessive costs of advisers and professionals; and the issue of whether PFI is suitable for particular areas, which is largely observable from past experience.
It is a question of issues of principle rather than of laying blame on the Government or others. Those managing PFI know very clearly the problem issues to

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be resolved. I simply ask myself, "Why the hell not get a move on and resolve them?" We have all known for quite a long time what they are.
I shall be as speedy as possible in running through the areas where the PAC is in essence saying that its advice hitherto has been unheeded.
The 66th report dealt with progress in putting the Government on the web. Again, the Committee said that previous recommendations had not been implemented.
The 68th report, on the collection of fines in the criminal justice system, showed that still only 59 per cent. were being paid, at a cost of £387 million, with very little done since the problem was first highlighted.
On the management of substitution cover for teachers, the Committee reported that the Department had failed to live up to what had been requested of it in the 1992 report; effectively, nothing had been done.
On delivering better value for PEI, I have just set out the areas that need attention. The lead report was the 28th, but the 64th, 4th, 19th, 22nd, 35th, 40th and 49th all deal with the same issues, which have in different ways been raised before.
The 31st report, on tackling benefit fraud, in essence says that nothing has been done since the Committee's two previous reports about abuse within the housing benefits system. On the wider issue, it says that attempts to address such fraud seem to have been given up on, and that Sir Richard Mottram spoke in 1998 of £3 billion to £7 billion. What is actually going on to tackle the problems? Apparently, little or nothing.
The 32nd report, on the Highways Agency, comments that the data on maintenance history on motorways and trunk roads are still incomplete.
The 34th report, on progress by the Office of Fair Trading in protecting consumers' interests with regard to licensing and unscrupulous lenders says that no notice has been taken of previous comments.
The 37th report says of the Ministry of Defence and the construction of the nuclear submarine facilities at Devonport that no notice has been taken of the PAC on the cost overrun, now 62 per cent.
The various other reports concerning the MOD—the 13th, 46th and 6th—and the comments that other hon. Members have made illustrate precisely the same points, which are that the MOD takes very little notice of the PAC's warnings, including its pointing out of unnecessary cost overruns, poor management of stocks and all the problems of bad procurement illustrated by both the Apache helicopter saga and the Challenger tank saga.
The 44th report, already referred to with regard to Libra, illustrates all the problems of cost escalation of IT. Again, there is failure to take any heed of the PAC's advice, on the basis of past experience, about the contractor selected.
The Government are clearly starting to face up to the challenge of achieving better value and seeking to cut waste in the public sector. That is what the Office of Government Commerce has been about. The Opposition share its objectives. I am concerned that Sir
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Peter Gershon is stepping down. I feel that there is an element of disillusionment despite the degree of effort that is being put in. I am concerned that the four areas that have been selected are by no means central and do not cover much of the territory where there is scope for greater efficiency.
I well recollect that in the 1980s, when Lord Rayner had a similar task, he was to a large extent frozen out by the civil service and prevented from getting into those areas that he should have entered.
The Conservatives initiated the investigations that David James and his team of auditors and 30 professionals have started. It will be no surprise to Members that a major challenge is to obtain the necessary information about public sector management structures, processes and decision taking. We should all be calling for an improvement in the transparency of information that comes from the public sector.
I urge the PAC and the NAO in future to pursue explanations of why the various lessons of the past have not been learned and why their recommendations have not been put into operation more effectively. I urge them to quantify the costs of that not having been done, and to get to the bottom of why their recommendations have not been implemented. To return to my business sector analogy, where people fail in their management job. it is normally time for them to leave the business, to be replaced by people who are more competent. It is perhaps time to change business structures.
Mr. Love: I endorse the hon. Gentleman's comments about people leaving the business. As a former member of the PAC, I can remember that that is a constant frustration. Let me pick up a comment made by the Chairman of the Committee. There is an essential difference between providing a public service, given the complexity of so doing, and providing a private service, which may be much more focused. We must recognise that before we will ever get to the bottom of the real productivity challenges in the public sector.
Mr. Flight: I thank the hon. Gentleman for his comments. With respect, I think that it is the other way round. I believe that everyone is well aware of the differences between the public and private sectors, and equally well aware of the democratic element of public sector services. There have been no fundamental reforms since the second world war, and we have a public sector and a civil service that seem to lack the discipline and organisation to ensure accountability and efficiency which were not evident in the private sector 20 years ago—there were often ad hoc arrangements with people climbing ladders of seniority—but which have now become commonplace there. There are huge lessons to be learned from the private sector—here, in America and in Europe—about how to run public sector activities more efficiently. Rather than defining the differences—we all know what they are—we should stress that what we all want is a public sector that is run on an enormously more efficient basis.
I repeat the tribute to the PAC, which has done so much of the work. It seems pathetic that Members and, candidly, Governments of both hues and civil servants take so little notice of what the PAC has found.
5.19 pm
The Economic Secretary to the Treasury (John Healey): Our debate has demonstrated the special contribution that the Public Accounts Committee makes to our system of parliamentary scrutiny of the Executive. I pay tribute to its work, and in particular to its Chairman, the hon. Member for Gainsborough (Mr. Leigh), for ensuring that it searches out the reasons why projects and schemes fail or succeed, and what lessons can be learned for the future. I also pay tribute to the commitment of other Committee members. The hon. Member for Gainsborough said that they did not have an easy role, and a relative novice, my hon. Friend the Member for Dagenham (Jon Cruddas), said that the sheer scale of the work was staggering. When I served on a Select Committee, I used to collect my papers from the Select Committee pigeonholes in the Members Lobby. The envelopes in the PAC boxes were always bigger and fatter than those for other Select Committees. Those pigeonholes were always full, whereas ours were more often empty.
To amplify the point, as the Minister with responsibility for Customs and Excise, I had a discussion with its new acting chairman after his first appearance before the PAC. When I asked him what struck him most about that experience, he said that that the Committee members expected of its witnesses an extraordinary knowledge of specific subject areas. Of course, PAC members generally demonstrate such expertise themselves when cross-examining witnesses. It was once said that history is a vast early warning system, and it should certainly serve as such. The PAC's collected judgments over the years stand as a historical record on which Departments can draw if they are to avoid repeating the mistakes of the past. To pick up the point made by my hon. Friend the Member for City of Durham (Mr. Steinberg), there may also be lessons for other Select Committees and their Chairmen.
Before I comment on the relationship between the PAC and the Treasury and respond as fully as possible to a wide range of points made in our debate, I pay tribute to the assistance that the Comptroller and Auditor General and his staff give the Committee and their support for the wider good conduct of Government. Their role as independent scrutineers of Government spending and decisions is central to the accountability of the Executive. The financial audit work by the National Audit Office and its value-for-money studies continue to make an important contribution both to efforts to improve standards of financial stewardship in Government Departments and to the effectiveness of public spending. The Treasury shares that and other interests with the PAC and the NAO. We have a responsibility to ensure that taxpayers' money is used economically, efficiently and effectively. We want public services to be delivered to a high standard, and we want Departments to manage projects professionally and learn from best practice both within Government and in the private sector.
In many ways, the PAC has had common cause with the Treasury since its inception in 1862. In its first report, which I checked when preparing for our debate, it declared:
"It will be the duty of a Department, when any unexpected expenditure shall become necessary—to apply to the Treasury and state in writing the reasons for such application".
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The new audit liaison group, which is jointly chaired by the Comptroller and Auditor General and the permanent secretary to the Treasury, takes that co-operation into the modern age. I recently talked to the permanent secretary, Gus O'Donnell, about the new group and the way in which it worked. He is a proud economist by profession, but confessed to trepidation about its first meeting and the prospect of being bamboozled by accountancy, auditing and accountability experts. In the event, his fears were unfounded, but he said that he learns a lot at those meetings—I suspect that in some ways he treats them as part of his continuing professional development. That group is proving a successful forum for resolving audit and accountability matters of interest to the NAO, the PAC and the Treasury.
Mr. Bacon: While the Minister is on the subject of little groups at the centre, will he comment on the Italian central unit that has the power to stop IT projects—and contrast that with the relative lack of power of the Office of Government Commerce?
John Healey: I am not familiar with the finer points of the Italian system, but as a Minister with responsibility for seeing one or two major projects through the OGC process, I can say that although it may be principally designed for the guidance and scrutiny of project managers and sponsors, that process is observed in a way consistent with best practice elsewhere. Speaking as both a project sponsor and a Treasury Minister, I think that it is virtually impossible for a project given the red light by the new OGC process to secure the resources and support required for its implementation.
Mr. Bacon: Does the Minister agree that the gateway review process, which I welcome as a great development, could be further strengthened by publishing gateway reviews?
John Healey: I do not accept that suggestion. The process's principal purpose is to provide project managers and sponsors with an informed peer review. To that extent, the sharpness of criticism and degree of analysis can be protected and enhanced by the fact that review reports are not made public.
Mr. Bacon rose—
Mr. Flight rose—
John Healey: If the hon. Member for South Norfolk (Mr. Bacon) will forgive me, I will give way to the hon. Member for Arundel and South Downs (Mr. Flight).
Mr. Flight: My understanding is that the Italian unit has the power not just to approve projects but, crucially, to stop projects in their tracks when the perception is that they are coming off the rails. PAC reports on IT going off the rails suggest that that is a necessary power. Although the OGC may have a strong influence on approving projects, it does not have a continuing monitoring role or any effective power once a project is

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up and running. If it were perceived that, as I fear, the National Health Service IT project is coming off the rails, the PAC would not have the power to halt it.
John Healey: If the Italian unit has the power and role that the hon. Gentleman describes, its nature is different from that of the OGC. Judgments about relative effectiveness are more complex.
Mr. Bacon rose—
John Healey: The contributions to this debate have been detailed, reflective and important. I want to reflect that in my answers—but I will give way again to the hon. Gentleman.
Mr. Bacon: The Minister is extremely generous. He said that relative effectiveness was more difficult to judge, which is precisely why we need the oxygen and the transparency for gateway reviews. Then, irrespective of the OGC's power, more people would be able to see what had been said. The Arthur D. Little study on National Air Traffic Services was published by the Transport Select Committee—a rave decision. That report contained harsh criticisms and it did some good.
John Healey: I shall bear the hon. Gentleman's points in mind.
The Chairman of the Public Accounts Committee, the hon. Member for Gainsborough, emphasised the Committee's concerns, shared among Members of all parties, about standards of public sector procurement and management and ensuring that the much needed extra investment now being made in public services leads to significant improvements that the public need and deserve, and which, some would argue, are long overdue. My hon. Friend the Member for Dagenham outlined his concerns about that. The hon. Member for Sheffield, Hallam (Mr. Allan) emphasised the same point about resources being devoted to front-line operations and delivery, citing the failure of the Libra project.
The Office of Government Commerce is working hard to improve project management, and procurement arrangements and procedures, across Departments. It is worth highlighting three developments. First, a project and programme management centre of excellence has been established in each Department. Those centres are there to provide internal support and the right expertise to help more junior project managers who may require it to deliver programmes and projects.
Secondly—this will be of direct interest to the Public Accounts Committee—the accounting officer is required to confirm that major IT-enabled projects do not suffer from the common causes of failure that the Committee, the OGC and the National Audit Office have highlighted in the past. The contribution of the NAO is particularly welcome in that context.
Thirdly, proposed "big bang" projects now have greater scrutiny at an earlier stage to challenge the need for the approach and, if necessary, to ensure that more comprehensive testing takes place before operations commence. In addition, the OGC recently reinforced the gateway process, which, as I said, is based on well
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proven techniques and improves the chances that the projects that go through it will be successful in the long run.
Over the years, the Committee has been concerned about, and has revisited, some of the problems involved in the procurement and management of IT projects. These measures, taken with the OGC initiatives, should go some way towards tackling and dealing with the Committee's concerns.
The second major area that the hon. Member for Gainsborough discussed was the central question of how to ensure that extra spend in the public services gets to the front line. Together, the Prime Minister and the Chancellor set up the efficiency review that Sir Peter Gershon, to whom all hon. Members paid tribute, is leading within Government. The review has two principal objectives: first, to release major resources to the front line; and secondly, to reduce the bureaucracy faced by those on the front line.
In tackling the general point made by the hon. Member for Arundel and South Downs, I shall be specific about some of the changes that are being considered and what will flow from the review. First, Sir Peter Gershon is targeting procurement, building firmly on the work that he has already undertaken in the OGC. Secondly, he is concentrating on back-office functions, looking at the scope for serious and radical rationalisation. Thirdly, he is considering transactional services in terms of the degree to which better use of IT, perhaps to collect tax or to pay out benefits, can improve the efficiency of services. He is also ensuring that we focus not only on provision of access, but on take-up—an issue about which the hon. Member for Sheffield, Hallam expressed concern.
Fourthly, Sir Peter is considering the funding and regulation of devolved services—for instance, the inspection and regulation regimes in schools and hospitals. Fifthly, he is considering the funding and regulation of the private sector and the way in which that may, in some cases, be subsidised. Sixthly and finally, he is considering the question of productive time—for instance, how form-filling, bureaucracy and reporting can be reduced.
The conclusions on the work of the efficiency review and the requirements that it places on Departments will be published as part of the spending review. The hon. Member for South Norfolk referred to the traction, as he put it, that can sometimes be achieved by such disciplines when they are linked to the spending review. I hope that I have given him some confidence by making it clear that Sir Peter Gershon's work on the efficiency review is an integral part of the current spending review round.
The spending review will focus especially on increasing devolution to the front line, thereby enabling public service providers to respond more flexibly to local needs. Sir Peter's efficiency review is complemented by the independent review of public sector relocation, which Sir Michael Lyons is leading. The potential benefits of public sector relocation out of London and the south-east include not only cost savings to Departments through improved recruitment, retention and lower labour and accommodation costs, but better service delivery to the public whom they are there to serve.

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Let me consider the speech of my hon. Friend the Member for City of Durham. I must say that my hon. Friends do not often quote Bernard Dineen favourably and approvingly.
Mr. Austin MitchellHe is a friend of mine.
John Healey: That is news indeed.
My hon. Friend the Member for City of Durham reminded us of the PAC hearing on 21 January, and made some serious points about the relationship between members of the Committee and the witnesses who appear before it. I am sure that hon. Members recognise that the hearing on that day was on an immensely important subject, which perhaps inevitably generated more passion than the Committee's normal subject matter. It is especially important that issues that arise in such circumstances are tackled in a way that allows fair, relevant but strong criticism to be levelled, and fair and reasoned defence to be heard. Having said that, the way in which members of any Select Committee conduct themselves at hearings is a matter for them. However, I hope that my hon. Friend accepts that if witnesses feel aggrieved by their treatment, it is not unreasonable for them to make their concerns known to the Chairman. The idea of my hon. Friend being ticked off by the Chairman of the Committee or indirectly upbraided by the head of the civil service is hard to credit. I know from my hon. Friends in the Government Whips Office that he is not easily cowed.
Let me consider the contribution of the hon. Member for Sheffield, Hallam. I welcome the fact that he has joined the PAC, fresh from the Information Committee. All hon. Members and our staff have cause to thank him for his work in revamping the IT support system for hon. Members. His experience of and interest in IT were a hallmark of his contribution this afternoon. He will bring that to the PAC's proceedings.
The hon. Gentleman is right to say that the challenge of gathering sufficient evidence and data to evaluate with confidence the effectiveness of call centre operations and web-based services remains unmet. He focused especially on risk in private finance initiative information technology. He argued that it is ultimately impossible to transfer risk fully out of the public sector in IT projects. That is a valid observation and criticism, and it is one of the reasons why the Government confirmed in the summer that the PFI will no longer be used in IT. One could argue that the fast pace of change and the high level of integration of any IT system in the mainstream core business of a Department mean that it is difficult to move the risk out of the public sector and into the private sector.
Our revamped approach to PFI also included individually procured small projects, where the transaction costs and procurement time perhaps outweigh the benefits. Instead, we will establish appropriate minimum threshold values. We are introducing reforms because we, like the Committee, want PFI to be used only when it can offer the taxpayer value for money.
My hon. Friend the Member for Hemsworth (Jon Trickett) explained vividly how all Members from all parties share a hatred of waste, as he put it, whatever
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their belief in the proper role and scale of the state. I was particularly interested in his points about the Public Accounts Committee's unique powers and the unique support that it has in the National Audit Office. The points that he makes about the possible lessons for other Select Committees in that regard are, of course, ultimately a matter for Parliament, but I will make sure that my right hon. Friend the Leader of the House is aware of the points that he made.
My hon. Friend was concerned, too, about the question of penalising contractors and contractor failures. The Office of Government Commerce maintains what could be described as contact at a high level with all the main suppliers of central Government contracts. It does not, however, keep detailed information about each contract, which is properly a matter for the Department responsible. We need to bear in mind that problems with individual contracts are not always the fault of the contractor. As PAC report after PAC report has also pointed out, in some cases the initial project specifications and management could be improved, which could reduce the risk of failure.
My hon. Friend was also concerned about competition for contracts and the excessive cost of tendering. Those are valid points. As he recognised, Government are aware of those issues and are trying to make improvements by simplifying the tender processes, especially for PFIs. If he wishes me to do so, I will write to him about increasing the opportunities for small and medium-sized firms to tender.
The hon. Member for South Norfolk made four principal points and arguments. The first related to fraud, to which I will return later. The second was on professional fees. He will know that the publication produced by the Treasury in July last year, "PFI: meeting the investment challenge", includes measures to reduce the costs of consultancy fees.
The third area to which the hon. Gentleman referred was risk management. He mentioned the visit that he and other members of the Committee had paid to Heathrow recently to see how Customs and Excise implements risk management at the airport in practice. As the Minister responsible for that department, I am glad that it has been able to assist the Committee in that way. The steps that have been taken at the centre, however, are worth pointing out. In 2003, we strengthened the disclosure requirements for accounting officers to sign statements on internal control, confirming that they have discussed their review of risk management with their board and their audit committee. We have also issued guidance for those audit committees, building on the Higgs and Smith reviews for the private sector. I can confirm to the House that the NAO is currently working closely with Treasury officials on a study of risk management within Departments, and that risk management and statements on internal controls will, as the hon. Gentleman asked, be tied into the current spending review process.
The fourth major area on which the hon. Gentleman touched was cost overruns and the question of optimism by us. As for cost escalation, I am sure that all Members would accept, as one or two have pointed out, that sometimes this reflects unrealistically low initial estimates rather than unjustified cost increases. The Mott MacDonald work is an attempt to quantify that optimism by us. It is not a fudge to make projects more

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viable; it is not a fiddle to produce a set of comparators that will give the result that people wish. It is a sensible way of trying to make estimates more reliable, to reduce the risk of subsequent cost escalation. The hon. Gentleman at least describes that as a laudable project. There may well be scope to refine the process still further, but it is a serious attempt to tackle a serious problem, and I encourage him not to impugn the motives of those involved in trying to do so.
My hon. Friend the Member for Dagenham set out a clear and convincing case about the important and proper role for PFI. Investment under PFI currently represents between 10 and 15 per cent. of total investment in public services. It is important that we get it right because, as he argued, it has an important role to play. If he has not seen it, I refer him to the Treasury report that I mentioned earlier, "PFI: meeting the investment challenge", which was published in July last year. The report includes specific steps to reform the investment appraisal process, which he is concerned about, to ensure that there is no inherent bias in favour of one procurement option over another. Crucially, the assessment must also be made at the earliest practical stage—when the overall decisions are made—to ensure that there is maximum flexibility to pursue other options if they offer better value.
I am glad to say that although the Committee is ready to criticise where it considers it due, it is also willing to give credit where it is due. The 35th report on PFI in the construction service recognises that there is greater certainty on timing and cost through the delivery of PFIs. On the 22nd report on PFI refinancing, I welcome the approval and congratulation that it offers the Office of Government Commerce in negotiating agreement with providers.
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I do not go along with the recommendation by the hon. Member for Arundel and South Downs that attendance for debates such as this should be compulsory. The implication is that the Whips would conduct truancy sweeps during the course of proceedings, which I am not keen on. His contribution from the Front Bench was reflective and non-partisan in precisely the same way as other hon. Members' contributions to this afternoon's debate were, and I applaud him for that. He correctly identified the fact that how the public sector can become more efficient is a central issue for our times.
I am running out of time, and I apologise for that—time has overtaken me more rapidly than I thought it would. The debate shows that the PAC, backed by the NAO, continues to provide a highly effective continual challenge to the Executive, which is essential to the proper conduct of government and parliamentary democracy. It continues to provide evidence and cross-examination for those on both sides of this House and beyond who are actively concerned about the effective conduct of government, and it also continues to provide sleepless nights for departmental accounting officers. In that respect, this year's 54 reports, and this debate, continue the PAC's proud and professional tradition, which now stretches back nearly one and a half centuries.
Question put and agreed to.
Resolved,
That this House takes note of the 64th to 68th Reports of the Committee of Public Accounts of Session 2001–02 and the 1st to 49th Reports of the Committee of Public Accounts of Session 2002–03, and of the Treasury Minutes and the Northern Ireland Department of Finance and Personnel Memorandum on these Reports (Cm 5728, 5770, 5789, 5801, 5802, 5823, 5849, 5953, 5961, 5962, 5963, 5984, 6016, 6051, 6105, 6110).

Allotments (North-East Lincolnshire)
Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]
5.47 pm
Shona McIsaac: There are several reasons why I am pleased to have the opportunity to raise the issue of allotments in north-east Lincolnshire. First, a precedent is being set on allotment rents in Grimsby and Cleethorpes which could have profound ramifications for allotment holders throughout the country and for the allotment movement as a whole. Secondly, the Tory and Liberal North East Lincolnshire council has shabbily treated the 500 or so allotment holders in north-east Lincolnshire.
The story begins on Christmas eve, when a letter from the council was included among the cards falling on people's mats. The letter was dated 22 December, and it did not wish allotment holders a merry Christmas and best wishes for the new year. Indeed, it delivered the bombshell that allotment rents in Grimsby and Cleethorpes would increase by an exorbitant amount. The rents would increase on 1 January 2004 and again on 1 January 2005, and the overall increase for allotment plots would be 700 per cent. for a standard plot and 1,000 per cent. for concessionary plots, which are used by pensioners. The increase for this year alone was 150 per cent. Once allotment holders saw the letter, they started to contact me and my hon. Friend the Member for Great Grimsby (Mr. Mitchell) in the neighbouring constituency. They were worried about what was happening and wondered what they could do about it. I was visited by allotment holders from the Beacon Hill allotments in my constituency, which are close to my home.
I told the Beacon Hill allotment holders that I would check out other areas to see what was happening and I would check the law to see what could be done about the exorbitant rent increases. I also contacted the local council to ask how it came up with the increases and to say that my hon. Friend and I thought that they were unacceptable. I looked at allotment rents charged by North Lincolnshire council, which is the neighbouring authority. It is also controlled by the Conservatives, but they are not propped up by the Liberal Democrats as they are on the North East Lincolnshire council. Cleethorpes constituency is covered by both authorities, so I was interested to discover that allotment rents in North Lincolnshire were around £15 and any increases would be inflationary only.
As I investigated the matter, it appeared that large increases in allotment rents usually occurred only with the agreement of allotment holders and to provide new facilities on the site, such as a toilet block or washing facilities. If the 700 and 1,000 per cent. increases were to go ahead over the next two years, the allotments in Grimsby and Cleethorpes would be some of the most expensive in all England and Wales. They would become more expensive than those in affluent Wimbledon and Richmond upon Thames. It does not seem fair that allotment holders in an area of the country with a lot of deprivation will have to fork out—pardon the pun—more rent than those in the leafy south of England.
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I checked the law, which states that an allotment must be let at a rent that a tenant may be reasonably expected to pay. That hangs on what is "reasonable" and I question whether the increase in Grimsby and Cleethorpes is lawful. There is case law on the issue, from November 1981. The case of Howard v. Reigate and Banstead Borough Council was heard at the High Court. A plot holder challenged the council's rent increase on the ground that the users of other leisure facilities in the area did not face similar increases. The judge ruled in favour of the allotment holder, saying that he should be subject to the same spending and cost assessments as other recreational amenities provided by the council.
The other leisure facilities—for example, football pitches, tennis courts, swimming pools and libraries—provided by North East Lincolnshire council do not face the same increases. The allotment holders have been singled out, and they have taken up the point with the council. They claim that the increases are not lawful and should not go ahead. However, no satisfactory response has been received.
Mr. Austin Mitchell: My hon. Friend says that it is standard procedure to consult allotment holders before increasing rents—to improve facilities—but the failure to consult in this case has been characteristic of North East Lincolnshire council and the financial panic that prevails on every other issue. The council has proposed closing the advice service without consultation. It has proposed closing the education centre at the child development unit without consultation. It has proposed closing Alice house, a centre for young mothers, without consultation. It has proposed to stop the contribution to schools that it provided last year, again without consultation. Failure to consult is par for the course for that panic-stricken council.
Shona McIsaac: Absolutely. We are talking about allotments in North East Lincolnshire tonight—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Hopefully we are.
Shona McIsaac: What my hon. Friend the Member for Great Grimsby said is indicative of the way in which the local authority has been behaving recently. Indeed, it appears that there has been little or no consultation with allotment holders. As somebody said—it could have been me, my hon. Friend or one of our constituents—there appears to be a cold heart at the centre of this uncaring council.
In the light of the case law, and of the way in which the council is behaving and the possible ramifications for the allotment movement in the UK as a whole, I would like the Government to consider tightening up the law on rents, setting the criteria for what could be considered reasonable, and establishing what allotment holders can expect to get for their money. Perhaps the law on appeals could also be tightened up. So far as I can see, at the moment, when people object to such rents there is no appeal process whatsoever. In effect, local councils that want to extort more money from allotment holders can simply do so without any come-back, excluding the voices of protest and the ultimate protest of the ballot box.

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In terms of setting rents, the local circumstances of north-east Lincolnshire should be considered and the law should be tightened up. We do not enjoy the high wages that the south-east enjoys, and house prices are very low compared with other parts of the country. Many people—about a quarter of all workers—have part-time jobs. Cleethorpes has the third highest number of part-time workers in the UK, and Great Grimsby the eighth highest. So we are talking about people who do not have a great deal of money.
We should also remember that the area contains some of the most deprived wards in the country, which is why the reasonableness test should be considered. Nobody could say that this year's increase of 150 per cent.—it will be 700 per cent. next year, and then 1,000 per cent.—is reasonable, given the particular local circumstances.
The council implemented this rent increase by sending a letter dated 22 December. A letter that lands on people's doorsteps on Christmas eve or soon afterwards and says, "Your rent's going up on 1 January and you will have to start paying it on 13 January", is hardly an example of good practice or negotiation, or of coming to an agreement.
I wondered whether any of the councillors or officers had read the excellent Local Government Association report entitled "A New Future for Allotments". It says that allotments are a resource that provides a sustainable food supply and promotes healthy activity. They can be used for educational purposes and to foster community development and cohesiveness, and they provide access to nature and wildlife. And they are clearly very important as open spaces for local communities. Crucially, the report says that councils should promote allotments based on those criteria.
However, the rent increases have not promoted allotment holding in North East Lincolnshire; in fact, they have proved a complete disincentive. Indeed, people have already given up plots. Because of this year's 150 per cent. increase, one family whom I know of have given up four plots—plots that they have tended lovingly over the years. They are devastated at having to give them up.
The report is full of good practice and initiatives for the promotion of allotments, but I see none of that happening in north-east Lincolnshire.
It being Six o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitzpatrick]
Shona McIsaac: Lincolnshire is flat, but the Beacon Hill allotments in Cleethorpes are on a hill—admittedly, a small hill compared with those in other parts of the country. There is an observatory on the hill, and a bronze age burial mound. It is a beautiful part of Cleethorpes, but I have not observed the council doing anything to promote allotment holding in that wonderful part of the town. I am sure that people would take plots if the allotments were advertised as being "in the shadow of the observatory, with an ancient monument nearby", but I do not think many residents even know that they are there, because the council's performance in promoting them has been so poor.
I wonder whether the council looked at the report on allotments by the Environment, Transport and Regional Affairs Committee, or at the Government's
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response. It seems that all the good work by the Local Government Association, the Government, the Select Committee and the National Society of Allotment and Leisure Gardeners is being undermined in north-east Lincolnshire. If what is happening in that area is allowed to continue, there could be serious ramifications for the allotment movement in Britain as a whole. I have been told by the society that other councils are waiting to see whether this one can get away with it, and that if it does they may follow suit.
I am indebted to the society for the help and advice it has given me, enabling me in turn to help and advise constituents who are worried about the rent increase. I want to thank Geoff Stokes of the society in particular. He has been actively investigating what is happening in north-east Lincolnshire. According to the society, the original rent increase was unjustified, and the way in which the council went about the negotiations was all wrong.
There are many question marks over the short notice period. No one has been able to establish whether there is a rent revision clause in the tenancy agreement, but if there is not there should have been a 12-month notice period.
Following the uproar created by the allotment holders, the council is beginning to back off, which is good. We still have the 150 per cent. rent increase for this year, but it seems likely that next year's will be set aside, albeit with conditions attached. The council says that it will not proceed with the 700 per cent. increase and will limit the amount to 150 per cent. plus inflation in future if the allotment holders take over management of the site. That is good—partnership and self-management can work—but the allotment holders are being given two weeks to make what is, for them, a huge decision. That demonstrates a lack of negotiation, consultation and respect for the allotment movement. The allotment holders are being told, "Either accept huge rent increases or opt for self-management". There have not been months of negotiation to find out what is in the allotment holders' best interests.
The council has backed off from that very large rent increase, but what of the people who have already given up their plots because they could not afford this year's increase? There is no justice for them.
One independent councillor said in the local paper, the Grimsby Telegraph, that
"they are using bully boy tactics that they have used before".
To show what the atmosphere is like, a Liberal Democrat portfolio holder, at a meeting in which we were trying to resolve matters amicably, turned round and called the allotment holders "self-indulgent", refusing to listen to their arguments. That is a recipe for disaster. A partnership should be just that: is it possible to have a partnership when councillors have that sort of attitude?
A question arises from the council taking over the maintenance. If it is to take over the maintenance, which the rent is meant to pay for, what is the justification for paying the council any rent at all? If plots are to be self-managed, the allotment holders and associations should be charging reasonable rents, negotiating with other plot holders and keeping the rent for maintenance. It makes no sense whatever.

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I want to praise the work of the National Society, the Local Government Association's positive approach and the Government's positive approach towards the future of allotments, but what happened in North-East Lincolnshire has been a slap in the face for the allotment movement. Allotments are not just something to get money from. They are an integral part of our towns and cities. They are as valuable as open spaces and parks. They are part of the lungs of our urban areas, so they should be preserved.
I should like the Government to examine the legislation again. In view of what has happened in North-East Lincolnshire—where what the courts have established is being ignored—we need to toughen up the legislation to provide more protection for allotment holders from local authorities imposing extortionate increases on them.
In response to the Select Committee report, the Government said that they did not feel that there would be sufficient time to introduce legislation on the matter. I certainly appreciate that, but if it cannot be done in Government time, perhaps the Government might look favourably on a ten-minute Bill or a private Member's Bill in the future.
6.7 pm
Mr. Austin Mitchell: I congratulate my hon. Friend on so ably taking up the cause of allotment holders in north-east Lincolnshire. It is typical of the energetic and devoted service that she provides to her constituents. The matter is important because of how people are being treated.
I want to make just a brief contribution to the debate, partly because it is pleasant to be talking about nonpolitical plots and partly because it is pleasant to be in dialogue with the Minister instead of slugging it out with him in the correspondence columns of the Grimsby Telegraph. It is a real pleasure and it is good to see him in his place. Another reason for my contribution is that I am, and always have been, a strong supporter of the allotment movement. I was about to say, "ever since it began in the late 19th century", but I was not a Member then, though sometimes it seems like I was.
The allotment movement began as an aspect of municipal socialism. It was about giving the working class an opportunity to garden, dig and delve, and to grow their own crops and flowers in an urban environment. It was meant for working people. In a sense, it was an aspect of the "three acres and a cow" movement, though cows were not permitted on allotments and the allotments were not really three acres. Nevertheless, it was an important advance for the working class at the time, and it has been important to sustain it since.
It is fair to say that numbers of plot holders are falling nationally and in north-east Lincolnshire. In recent years they have halved, but there are some signs that that is turning round. Perhaps harder times are turning the numbers round, or it may be unemployment. However, there are signs that younger people are getting involved in the allotment movement, which is to he welcomed and encouraged.
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I deplore the council's sudden announcement just before Christmas that allotment holders would face a rise of 150 per cent. in rents in the new year, and that that would be followed by a rise of 700 per cent. in the following year. It is unpardonable to proceed by diktat in that way. My hon. Friend the Member for Cleethorpes (Shona McIsaac) wrote directly to the National Society of Allotment and Leisure Gardeners. Its general secretary, Geoff Stokes, looked at the problem and said that rents would average £70 as a result. That is three times the national average, and one of the highest levels in the country.
The rent rise was imposed on allotment holders out of the blue in a take-it-or-leave-it way. As I said in my intervention, the financial panic inflicted by the Liberal Democrat-Conservative coalition that runs North East Lincolnshire council is par for the course. I do not think that the council has had a fair deal from the Government in financial terms, but there was no need for that panic. Government grants have been increased by £5.7 million, and there is also a substantial grant for open spaces. Even so, the council has panicked and embarked on a series of cuts without consultation. The rent rise is just one example of that.
My hon. Friend the Member for Cleethorpes and I advised allotment holders to exert pressure on local councillors and to write and petition on the issue. The council has begun to resile from its original commitment, but it has not gone far enough. The suggestion now is that plot holders should take on the expense of maintaining and running the allotments. Self-management is a good thing and should be encouraged, but not if it is a way of foisting massive costs onto people. For example, the allotments at Macaulay lane have very poor facilities, and those at Westward Ho are subject to flooding. People will get a bad deal, so asking them to pay increased rents is not fair.
I hope that my hon. Friend the Minister will say whether the Government could give some national definition of what would constitute reasonable rent increases, and how they should be arrived at. The rises being levied in north-east Lincolnshire go far beyond inflation as defined by the retail prices index. I hope that the Minister will also say how such rises should be approached in future.
6.13 pm
The Minister for Housing and Planning (Keith Hill): I begin by congratulating my hon. Friend the Member for Cleethorpes (Shona, McIsaac) on securing the debate and on using it to raise the issue of allotments, which the Government are eager to address. My hon. Friend has highlighted the considerable concern among her constituents about rises in the costs of allotment rents in north-east Lincolnshire. Those concerns were shared by my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who also expressed unease about the lack of consultation.
I am informed that the council has identified an increase in allotment rent as one of the ways that it can increase revenue income in order to set a budget for the next financial year. Although the question of allotment rents is for the relevant allotment authority to determine, that authority is required to take into

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account the cost of managing the site, local needs, any special circumstances and the requirements of the Allotments Act 1950. In most cases, rent will be the only income from an allotment site, but the expenses incurred include everything from site maintenance and repairs to administrative costs and promotion.
Currently, of the 535 allotment tenants in Grimsby, 60 per cent. are charged at a reduced concessionary rate. North East Lincolnshire council currently has a maintenance bill of more than £76,000 for its allotments, and revenue of less than £6,000 from allotment rents. The council evidently feels that that is unsustainable, and has therefore taken the decision to increase the rent on allotments.
It is my understanding that the council is meeting allotment holders and intends to work with all parties to resolve problems arising from the changes in allotment rent. I hope that the council and the allotment holders can come to an amicable solution.
I note the observations made by my hon. Friend the Member for Cleethorpes on the Reigate and Banstead judgment, but she will understand that I am not in a position to comment on its application in this case. On the wider issues that she raised, I am glad to say that the Government announced, in "Living Spaces: Cleaner, Safer, Greener", plans to commission a full update of the English allotments survey, which will take place this year. The Government recognise that allotments are valuable green spaces that can help to improve people's quality of life by promoting healthy food, exercise and community interaction. The Government's objective is to ensure that allotments are properly preserved, promoted and cared for throughout the country.
It is well recognised that allotments can have positive effects on people's physical and mental health. They have many potential benefits for local communities in relation to increasing physical activity, mental health promotion, community networking and cohesion, and educating young people about growing food. Initiatives such as the Department for Education and Skills project, Growing Schools, encourage schools to use the outdoors for education. Allotments allow all sections of the community to produce locally grown fresh fruit and vegetables, often without the use of harmful pesticides— [HON. MEMBERS: "Hear, hear".] I am delighted to hear support for those excellent objectives of Government policy.
Good-quality local green spaces, including community gardens, city farms and allotments can and do improve the well-being of life in local communities. They provide an inexpensive form of exercise and can prove vital in communities where not everyone has their own garden and people are less likely to be able to afford supermarket prices for fruit and vegetables.
We want to encourage the provision and uptake of allotments. Initiatives such as the Asian Healthy Community Network in Kirklees, which has raised food and health issues in a community with a high incidence of heart disease, are to be commended. The network runs a healthy Asian cooking demonstration with allotment produce, and organises a festival at which people are encouraged to take up allotments.
The Government's urban White Paper recognised that allotments, along with other public green spaces, improve the attractiveness of urban areas and help to
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promote a healthier lifestyle. They, and other spaces such as agricultural and horticultural businesses, bring benefits for wildlife and the environment, act as an important educational tool and can relieve pressure on the countryside. Allotments are thus vital to enhancing the quality of urban environments and of our lives.
At the beginning of this month, the Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), announced the award of the liveability fund for three successful authorities in the Yorkshire and Humber region, which included North East Lincolnshire. The funding, a total of about £10 million for the whole region, is to be used to improve public spaces within local communities according to local need. That is an example of real practical help from the Government, directed straight to the heart of the community, providing practical help to local people. Allotments are an existing resource which should be nurtured for the benefit of the community and the environment.
I am delighted to say that there has been some growth in the uptake of allotments nationally—I concur, as is usually the case, with my hon. Friend the Member for Great Grimsby. Allotments are now being used by a wider range of the population than ever before. The good news is that, in 1998, about 35 per cent. of plot holders were under the age of 50. The proportion of women plot holders has also risen dramatically. With the recent trend for gardening on the increase, that popularity is set to continue.
Greater protection has been given to allotments from development for other purposes under the new planning policy guidance 17 note, "Planning for open space, sport and recreation". That is necessary, given—I regret to say—that the number of allotment plots declined during the Conservative Administration from about 480,000 in 1979 to fewer than 300,000 in 1996.
The guidance expects local authorities to protect facilities that are of value to local communities. The PPG makes it clear that new housing development should not be at the expense of losing recreational open space. The guidance also states that local planning authorities should have clear policies for the protection and creation of open spaces and that new housing developments should incorporate open space. Local authorities are expected to undertake assessments of need for the whole range of recreational facilities in their areas, so that they can both protect existing facilities and plan new ones where they are needed.
In conclusion, I acknowledge that there are issues to be addressed about the cost of allotments and the pressures on them from other forms of land use, and I recognise that allotment holders in Grimsby are seriously concerned about rent rises. I entirely agree with my hon. Friends about the importance of allotments and their invaluable role in local communities. The fact is that allotments remain a valued part of our communities and continue to provide pleasure to many. The Government wish to sustain them and, where possible, encourage the expansion of their use.
Question put and agreed to.
Adjourned accordingly at twenty minutes past Six o'clock.