Commons Sitting of 6 January 2004

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

    Railways
    Mr. Laurence Robertson: If he will make a statement on plans to improve rail links between London and Gloucestershire. [145864]
    The Minister of State, Department for Transport (Dr. Kim Howells): There have already been significant improvements. New rolling stock was recently introduced between London and Gloucester, and in May 2003 the number of Paddington to Gloucester trains was roughly doubled. In addition, the new Thames Trains franchise, which was announced in December, will have consequent benefits for routes between London and Gloucestershire.
    Mr. Robertson: I thank the Minister for that reply, although I must say that people in Gloucestershire who travel to London might not recognise the improvements he describes. I spoke to the Strategic Rail Authority only this morning, and it told me that there is no certainty of improved services until 2006. I understand that the SRA will not advertise the new franchises until next year, yet there is an urgent need to improve rail transport between Gloucestershire and London. Furthermore, the link with Ashchurch station, which opened only recently, has been made almost worthless by the reduction in services from that station. Many people who live in Gloucestershire choose to drive to London because of the inadequacy of the rail services.
    Dr. Howells: I am very much aware that, owing to a timetable overhaul involving the SRA, Network Rail and the train operator, Virgin CrossCountry, trains bound for Tewkesbury stopped calling at Ashchurch station last September to effect an improvement in the poor timekeeping of Virgin's cross-country services. The most recently published figures show that the subsequent improvement in the percentage of trains arriving on time has been about 20 per cent. Ashchurch retains a very good local service to Gloucester and Cheltenham, as well as to Cardiff, Worcester and Birmingham.
    Mr. Parmjit Dhanda: As the Member of Parliament for Gloucester, I am pleased
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    about the doubling of the number of trains from Gloucester to London and the enhanced regional service to Bristol and Swindon, but we have suffered in respect of some of our inter-city trains, so if the Government-funded viability study into a new station for Gloucester is completed at the end of the month and it proposes a new station on the main line, which would further enhance the service, I urge my hon. Friend the Minister to support the proposal and to do something that the Conservatives were afraid to do when they were in government.
    Dr. Howells: I look forward to receiving a copy of the survey report.
    Mr. Peter Luff: I was glad to hear the Minister refer to the Thames Trains franchise during his answer to my hon. Friend the Member for Tewkesbury (Mr. Robertson), as the company provides important services to Gloucestershire and to Worcestershire. I am also glad that the new franchise has been awarded to First Great Western, which will result in a substantial improvement to services in Gloucestershire and Worcestershire, but does the Minister agree that the only way to ensure that such an improvement is provided is to increase significantly dual-track sections on the Cotswold line, which still suffers from very long sections of single track with consequent unreliability for all passengers using it?
    Dr. Howells: I certainly sympathise with the hon. Gentleman, as the issue has long been a bone of contention with passengers. He knows, however, that laying four tracks is not inexpensive—it is a very, very expensive thing to do—
    Mr. Luff: Two tracks.
    Dr. Howells: I am sorry—two tracks. I shall certainly ask the SRA what part the project might play in any strategy it cares to come up with for services to Worcester in the future.
    Mrs. Theresa May: Any changes to rail links between London and Gloucestershire affect the main Great Western line and, indeed, Thames Trains services, as the Minister pointed out. Does he agree with the SRA that changes currently proposed to those services will bring improvements for passengers on both long distance and local services?
    Dr. Howells: That has to be the ideal objective for the SRA in anything that it does in detailing the new franchise. I should like to see improved services for people travelling over all distances on a line that I use every week. I know of the problems that people have suffered along the line and I very much hope that the recent improvements will continue.
    Mrs. May: The Minister refers to the ideal for improvements along the line, but of course the changes proposed by the SRA will be far from the ideal. The changes that the authority is making on the Great Western line mean slower trains to places such as Slough and Bourne End, no single-stop services to London from Maidenhead and Twyford and, for some

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    passengers, journey times will nearly double. The Government's obsession with targets means that passengers on local services now face slower trains, longer journeys and more overcrowding? Added to higher fares and worse reliability, is not the reality that, far from delivering improvements and a better service, the Government are delivering a failing service for rail passengers and that motorists, rail users and tube users all suffer from this failing Government?
    Dr. Howells: The hon. Lady will not be surprised if I say, no, I do not recognise that. I am sure that she will know—if she was open with us, she would say so—that the problem is her Government's appallingly botched privatisation of the railway system, which we are still trying to repair and into which we are putting a lot of money.

    Rural Bus Services
    Norman Lamb: If he will make a statement on rural bus services. [145865]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): We have an excellent record of supporting rural bus services. Since 1998, rural bus subsidy grant allocations have totalled more than £200 million. This year's allocation is £48.5 million, which supports more than 2,100 rural bus services throughout England. We have also supported some 250 projects, totalling £89 million, through the rural bus challenge.
    Norman Lamb: I thank the Minister for that response, but may I remind him that, in Norfolk, Countryside Agency funding for a number of valuable dial-a-ride services is coming to an end? In some cases, it has already come to an end. The county council has failed to plug the gap that has been left, so a number of schemes are on the brink of being lost. What action is he taking to secure sustainable funding for these very important schemes, which an awful lot of elderly people, especially those in rural areas, rely on absolutely?
    Mr. McNulty: First and foremost, that is a matter for Norfolk county council and the Countryside Agency. The hon. Gentleman has been in touch with the Department for Environment, Food and Rural Affairs to express those concerns, but he will know that Norfolk's rural bus subsidy grant allocation this year is £2.4 million—the largest in the country—and that Norfolk has also received rural bus challenge funding for six projects totalling £2.3 million. The RBC currently provides £276,000 for the flexibus project in North Norfolk.
    The hon. Gentleman raised this issue in an Adjournment debate last July and said that he would write to me to secure a meeting. The letter requesting that meeting arrived on 24 December, so I congratulate him on his speed and would say simply in response that I am more than happy to meet him and anyone else from Norfolk to discuss matters further. However, first and foremost, much of what he raises is for the county council and DEFRA, but I am happy to meet him.
    Mr. John Grogan: Does my hon. Friend accept that pensioners travelling on buses in rural areas
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    receive far less public subsidy in terms of concessionary fares than pensioners in urban areas of England, which have passenger transport authorities? Does not that underline the need for England to follow the example of Scotland, Wales and Northern Ireland in offering all pensioners free off-peak bus travel in urban and rural areas?
    Mr. McNulty: That is certainly a view, and I am more than happy to discuss it further with my hon. Friend, not least in terms of the amount it would cost. We will shortly announce another package of rural bus challenge funds, including kickstart funding, but we are clear that the bus is central to an integrated transport solution to social exclusion in rural and urban areas, not least for the elderly.
    Mr. Adrian Flook: Even before the announcement of local government funding, Lib-Dem controlled Somerset county council announced that it was considering cutting its subsidy for buses by up to a quarter, despite the fact it is a rural county. How does that accord with Government policy?
    Mr. McNulty: Happily, it does not accord with Government policy. Of course, the Lib Dems in Somerset probably have a different policy from Lib Dems in the neighbouring counties and districts. Absolutely nothing that the Lib Dems do or say accords with Government policy, which is why they will for ever remain a rump in the House and we will remain in government.

    School Transport
    Mr. Huw Edwards: If he will make a statement on his proposals for school transport. [145866]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): My right hon. Friends the Secretary of State for Transport and for Education and Skills announced joint proposals for school transport in the document, "Travelling to School: an action plan", which was published on 17 September last year.
    Mr. Edwards: I thank my hon. Friend and assure him that I would fully support a school transport Bill that ended the legalised over-crowding that has occurred in many areas, but may I also express the concern that, if there is any threat to free school transport for those who live more than three miles from school, it would have a very serious effect in rural areas such as my own, where the comprehensive schools are 15 or 20 miles apart? May I ask the Government to consider that seriously?
    Mr. Jamieson: I pay tribute to my hon. Friend for his work on school bus safety and school transport in general. I assure him that the pilots that we have announced, which we are funding with £7.5 million each year for the next two years, will examine new and innovative arrangements for providing school buses. Local people, parents, providers of services and schools would have to be consulted carefully on any proposed scheme. There might be many benefits for children who

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    do not receive any bus service provision at the moment, including those who do not get a free service when travelling fewer than three miles, which may be of great benefit to many in rural areas.
    Michael Fabricant: Is the Minister aware that Staffordshire has purchased specialised school buses from the United States of America that resist impact when stationary and have flashing lights to stop cars overtaking when children are crossing the road? May I invite him to visit Staffordshire, which once again sets the way while the rest of the nation merely follows?
    Mr. Jamieson: I would be pleased to visit Staffordshire and see the hon. Gentleman and I would also be pleased to go to other areas that have introduced American-style yellow school buses—I believe that they have been very successful. A dedicated school bus service is attractive to parents because the buses provide a safe environment and have regular drivers who get to know children. We are happy to examine any scheme under the local transport plan budget that will provide such quality transport for children going to school, as we have done recently in west Yorkshire, where we provided a substantial sum for yellow buses.
    Jeff Ennis: The Government are trying to extend to as many parents as possible the choice of the school that they want their children to attend. It is quite easy to extend parental choice to the better-off because they can use cars to get their children to school, but the situation is more difficult for working-class children. Will the Government adopt a more flexible approach to their policy on free transport to schools so that working-class parents are able to send their children to the school of their choice?
    Mr. Jamieson: I am in danger of straying into Education and Skills questions. When examining any proposal made by a local authority, we would consider whether it would reduce car use, create healthier journeys to school for children and give them the ability to cycle or walk when possible. However, we should especially consider how to create a system that would give an advantage to all children and not only those who benefit from the existing travel-to-school system.
    Mr. A.J.Beith: Will the Minister give an assurance that the introduction of pilot schemes will not lead to pressure on all local authorities to withdraw free school transport for children who, in areas such as Northumberland, might have to travel 10, 20 or 25 miles to school at high cost? Our area has already experienced the withdrawal of free transport for those over 16, which has had a consequential effect on people's willingness to carry on courses, so it is a worrying prospect.
    Mr. Jamieson: There is no intention to introduce a widespread withdrawal of the free transport system. As I said, any scheme would have to meet certain criteria and, most importantly, there would have to be careful local consultation. The plan would not come from central Government to local government because it
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    would have to be consulted on locally. We shall examine schemes to ensure that they would not disadvantage children who have to travel long distances, especially those in rural areas. It is important to remember that many children, especially those in rural areas, are not covered by the existing system. We want a much fairer system of travel to school that takes account of the needs of all children rather than only a few.

    Airport Capacity
    Mr. Bill Tynan: If he will set a date for revisiting the decisions announced in "The Future of Air Transport" White Paper in relation to demand for additional runways to be built at Glasgow International and Edinburgh airports. [145867]
    The Secretary of State for Transport (Mr. Alistair Darling): The Government's decisions in relation to additional runway capacity in central Scotland are set out in the White Paper that I published in December. These will not change in the foreseeable future, but the White Paper includes a commitment to monitor and evaluate the effectiveness of the approach that it sets out and we will report progress in 2006.
    Mr. Tynan: Obviously, the economic argument in paragraph 5.7 of the White Paper is that express freight and flown mail are the main reasons why Edinburgh may achieve an additional runway. Does my right hon. Friend agree that he should consider whether there should be an additional runway at Glasgow, based on the facts that the M74 bypass will be in place by about 2007 and that a fast rail link could make the handling of air freight and flown mail at Glasgow airport an attractive proposition?
    Mr. Darling: My hon. Friend is right. We expect air traffic to grow at Glasgow, Edinburgh and Prestwick, all of which serve central Scotland. He will no doubt bear it in mind that we do not think that any of those airports will need an additional runway before 2020, which is a considerable time away. The White Paper safeguarded the situation so that a second runway could be built at Edinburgh and, if necessary, Glasgow. Consequently, if we get the growth at Glasgow that my hon. Friend describes, it will be able to expand. We anticipate substantial expansion at Glasgow, with additional terminal facilities, as the airport continues to grow and expect people living in central Scotland in general to have a choice of not one but three airports—Edinburgh, Glasgow and Prestwick.
    Miss Anne McIntosh: Has the Secretary of State considered the problem of blighted properties between now and 2020, the compensation that may be payable, and the position between Scotland and England and between municipally owned airports and privately owned airports, such as those owned by BAA?
    Mr. Darling: Yes, I have. The proposals and the Government's conclusions are set out in the White Paper, which the hon. Lady has no doubt read.
    Mr. Brian H. DonohoeGiven that the success of Prestwick airport, as

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    demonstrated over the past few years, is down to the fact that it is in separate ownership, will the Secretary of State consider the option of selling on some airports in the United Kingdom so that Glasgow and Edinburgh can compete with each other on a proper basis?
    Mr. Darling: First, my hon. Friend is right that Prestwick airport has experienced dramatic growth compared with the position it was in four or five years ago. That is a tribute not just to the people who own it, but in particular to some of our colleagues who represent Ayrshire constituencies. I know that he has taken a keen interest in that.
    BAA, which owns Glasgow, Edinburgh and Aberdeen as well as the main London airports and Southampton, is, of course, a private company. Its position in relation to competition is something on which the competition authorities would have to decide. They now take their decisions independent of Ministers, and rightly so.

    Road Congestion
    Tom Brake: If he will make a statement on his plans for traffic congestion reduction. [145868]
    The Secretary of State for Transport (Mr. Alistair Darling): We are tackling congestion through major investment in road improvements as well as measures to improve the flow of traffic and providing improved information for road users. Last July I announced a study to explore the feasibility of options for road pricing.
    Tom Brake: The Secretary of State will recall the Deputy Prime Minister's statement that he should be held to account if he had not reduced road traffic within five years: of course, he failed. The current Secretary of State said that the Traffic Management Bill will allow our roads to be managed more effectively. When does he now expect congestion—not the rate of growth in congestion—to be reduced?
    Mr. Darling: One reason why traffic growth has been so high is that the economy has grown strongly over the past six years. There is not an economy in the world in which such growth has not been accompanied by increased car ownership.
    I have made it clear many times that the objectives set out in the 10-year plan, while admirable, were perhaps over-optimistic because the consequences of strong economic growth in relation to car ownership were not, I think, fully anticipated at the time. However, the measures that we are putting in place to deal with increased capacity on the roads and to manage better the flow of traffic on roads, as well as the longer term measures that we are considering, such as road pricing, all mean that people will continue to go about their day-to-day business, but, we hope, on less congested roads.
    Mr. Michael Connarty: The Secretary of State will know that congestion occurs not only in England but in Scotland as well. Congestion on the M74 into Glasgow has been mentioned. Similarly,
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    gaining access to Edinburgh is a great problem for people who come from north of the Forth. Is he in talks with the Scottish Executive on the need to advance another access route in the Kincardine bridge area on to the M876, or is he considering a second Forth road bridge to deal with congestion into Edinburgh?
    Mr. Darling: I know that a second Forth road bridge is a subject of great controversy in Edinburgh, with one's views depending to a large extent on which side of the Forth one happens to live. I am not aware of any current active proposals to build a second bridge at Queensferry, but I think that the Scottish Executive are considering plans to improve the crossing at Kincardine: that bridge is now quite elderly and is under heavy pressure. However, it is for the Scottish Executive to make a decision on that.
    Mr. Piara S. Khabra: My constituency is one of the most congested areas in the whole of London. Will the Secretary of State tell the House what plans his Department has to reduce that congestion, which is environmentally very damaging?
    Mr. Darling: In common with other areas of London, my hon. Friend's constituency suffers from heavy congestion. Two matters are important in relation to London, the first of which is to maintain and continue investment in public transport. My hon. Friend will know that, as a result of the tube partnership, we are putting about £1 billion into the tube every year for the next few years; and, through the grant that we give, the Mayor has improved spending on buses in London. Those two public transport measures will help. Secondly, the measures set out in the Traffic Management Bill, which we debated yesterday, will help to ease the flow of traffic in London and elsewhere.

    Speed Cameras
    Mr. Hugo Swire: What recent representations he has received on speed cameras. [145869]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): We have recently received a number of representations on speed cameras, many from road safety organisations supporting the policy to enforce speed limits using cameras. Those opposed to the policy have expressed themselves mainly through the media. Safety cameras have shown repeatedly that they reduce accidents, deaths and serious injuries, typically by 35 per cent. at camera sites and 4 per cent. across whole areas where cameras are deployed.
    Mr. Swire: Given that speed cameras now raise £17 million a year for the Treasury, will the Minister confirm that a further 3 million motorists are likely to be caught next year by the reduction of speed limits in some areas, and will he state how much extra revenue he hopes that will generate for the Chancellor's increasingly depleted Treasury?
    Mr. Jamieson: I cannot predict how many tickets will be issued next year: that will depend on how many

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    people stick to the speed limit. The hon. Gentleman might like to look at one of the cameras in his constituency—the one at Ebdford Dip on the A376 between Exmouth and Exeter. Before the camera was deployed, there were seven accidents involving death or serious injury and 11 involving personal injury. Since May last year, there have been no collisions. If he wants that camera removed, perhaps he should first talk to his constituents.
    Mr. Michael Clapham: My hon. Friend may be aware that in November 2002 digital cameras were fitted on a notorious road in my constituency—the Stocksbridge bypass. The report on the first six months indicates a very positive impact on driver behaviour. When the full-year report comes out this March will the Minister meet my hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson) and me to consider the scope for further improvement on that road?
    Mr. Jamieson: I am grateful to my hon. Friend for underlining the role that cameras play in reducing the number of people killed or seriously injured on our roads. The evidence is that the vast majority of lives saved are those of pedestrians, who are mainly children and elderly people. I look forward eagerly to the full-year analysis of the figures on cameras, and we shall examine it carefully to see whether any changes need to be made. I shall be happy to meet my hon. Friend at that time to discuss with him how cameras have contributed to the reduction in the number of people killed and seriously injured on roads in his area.
    Mr. Damian Green: Last week, the other Under-Secretary of State for Transport, the hon. Member for Harrow, East (Mr. McNulty), said on "The World at One" that he would not dismiss out of hand my proposal for a national audit of the positioning of speed cameras. Last night, the hon. Member for Plymouth, Devonport (Mr. Jamieson) did dismiss it out of hand. There is clearly deep chaos and confusion in the Department about that issue. Will the hon. Gentleman confirm whether the common-sense approach of the hon. Member for Harrow, East or his own more hysterical approach is being taken?
    Mr. Jamieson: We will look carefully at the analysis. It needs a cold, clear, objective analysis, not the more emotive approach taken by the hon. Gentleman. I do not know whether he is familiar with the A292 in his constituency—the Hythe road. Before the camera was fitted on that road, there were 27 crashes, in seven of which people were killed or seriously injured. Since the camera was fitted in May last year, there has been just one crash, resulting in a slight injury.
    Mr. Green: It is interesting that the Minister wants a partial audit, but the Secretary of State and his Department admit that there are no proper full records of how many cameras there are or where they are. That is why we need the audit that I am calling for. The Government invited us last night to do the audit ourselves, so let us start with the camera on the A45 near Birmingham airport, which the police have agreed to
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    disable, admitting that it was in the wrong place. Will the Minister now make the commitment that he failed to make last night that motorists who have been convicted on the basis of a camera that the police admit is in the wrong place should be compensated for the fines they have had to pay?
    Mr. Jamieson: It is significant that the hon. Gentleman did not mention the camera in his own area and its success in reducing the number of people killed and seriously injured. He may want to talk to some of his councillors in Ashford, who apparently are campaigning to have cameras fitted where they do not meet the criteria that we set out. He mentioned the camera on the A45—[Interruption.] Perhaps the hon. Gentleman will listen for a moment and stop chuntering. I am familiar with the camera on the A45, near the airport. My right hon. Friend the Secretary of State had a letter written to each of the partnerships, asking them to look carefully at each camera. On the strength of the responses to the letter, that camera is being removed. That leaves 3,999. Would the hon. Gentleman like to suggest some others?
    Mrs. Gwyneth Dunwoody: Will my hon. Friend make it clear that speed cameras are placed in any area only when there is clear evidence of accidents and deaths, and that those who disable speed cameras are contributing directly to the demise of people and should be made liable for that?
    Mr. Jamieson: I can confirm that the cameras in the partnership arrangements are put only at sites where there is a record of injuries or serious injuries. There must also be a record to show that those are caused by vehicles speeding. The rather hysterical debate that there has been among a minority has given succour to those who wanted to destroy the cameras. If the cameras in the two examples that I have given were destroyed or removed, more people would be killed and seriously injured.

    Railways
    Bob Spink: What discussions he has had with the Strategic Rail Authority on providing for the projected increase in rail passenger numbers. [145870]
    The Minister of State, Department for Transport (Dr. Kim Howells): My right hon. Friend the Secretary of State has regular meetings with the chairman of the Strategic Rail Authority and discusses a range of subjects related to the work of that body, including issues arising from a projected increase in passenger numbers.
    Bob Spink: Is it not typical that the Government have a target to increase passenger numbers, at the same time as having a policy to restrict passenger numbers by increasing ticket costs? The cost of a monthly season ticket from London to Southend increased just this week by £17. Is it not time that the Government got together with the SRA and planned to increase capacity on the line—for instance, by considering a new station for Canvey Island?
    Dr. Howells: That is a nice populist line, but the money to run the railways can come from only two

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    places. Either it comes from the taxpayer via subsidies, which are enormous—about £3 billion this year—or it must come from the fare box. If the hon. Gentleman wants to talk to whoever speaks these days for the Conservative party on issues relating to the Exchequer, I am sure he can come to an agreement about putting up taxes yet again to increase the subsidy to the railways, but we cannot do that because we are being very careful about how we spend taxpayers' money.
    Mr. Barry Gardiner: I was grateful that my right hon. Friend the Secretary of State met me before Christmas to discuss increasing the passenger numbers coming through Wembley Stadium station by resolving the issues between the SRA and Network Rail. Will my hon. Friend report on how the negotiations between the two bodies have advanced since then, and how close we are to resolving the issue of the bridges there?
    Dr. Howells: We are due to meet the Strategic Rail Authority and Network Rail shortly to discuss that very subject.
    John Thurso: When the Minister next meets the Strategic Rail Authority, will he ask it why it has been necessary to increase the number of staff employed in regulating the rail industry almost fourfold since privatisation? Will he also ask the SRA why it was necessary in nine months last year to spend £20 million on 26 outside contractors when it has so much in-house resource? Does that not show that the SRA has proved a costly and bureaucratic failure, and that we no longer need it as part of the rail regulatory industry?
    Dr. Howells: I certainly agree that any increase in the number of personnel involved in regulation needs to be questioned. The figures have risen dramatically, and we have certainly asked for answers to our questions about that point, and especially to those about the increase in the number of consultants who are being used, which seems extraordinarily high.
    Dr. Phyllis Starkey: The housing growth planned in the Milton Keynes area needs to be underpinned by improved transport infrastructure. Will the Minister ensure that, in considering the current bid to reopen the Bletchley to Bicester section of the east-west rail route, the SRA takes into account the extra housing growth in the area and the need to provide for that additional potential passenger growth?
    Dr. Howells: Yes, indeed. I would expect the SRA to look very carefully at projected growth in housing numbers, as well as economic growth, in those areas. There will certainly be an increase and we must have close regard to that issue in the way in which we serve the area with transport infrastructure.
    Mr. John Horam: Is the Minister aware that, in relation to numbers, one of the biggest problems in the country is on the London commuter lines, where severe overcrowding is practically a daily occurrence? Indeed, the Select Committee on Transport
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    pointed out that such conditions lead to stress and ill health. One possible answer is a modest programme to lengthen platforms so that train operators can run 12-coach trains rather than trains with a maximum of eight, six or four coaches, as they often do now. What prospect is there that the Strategic Rail Authority will introduce such a programme in the near future?
    Dr. Howells: This is a very important question. I am sure that the hon. Gentleman will know that we have just seen the largest ever orders placed for new rolling stock in the history of the railways in this country. We have also seen the difficulties of trying to run a lot of the trains on the existing infrastructure, not least because of the inadequacy of the power supply system, especially in the old southern region. He is right to raise the issue of lengthening platforms. We must look very carefully at that one. The information that I have received suggests that many of the associated costs relate to regulation that is very difficult to explain or rationalise and which should be slashed. It should be easier to build extensions to platforms, not more difficult, as that would increase capacity on the trains to which he referred.

    West Coast Main Line
    Tony Cunningham: What progress is being made on the upgrade of the west coast main line. [145871]
    The Secretary of State for Transport (Mr. Alistair Darling): The upgrade of the west coast main line is making good progress and is expected to deliver significant improvements in journey times this year and next.
    Tony Cunningham: I welcome that answer, but I hope that the new lines that are being laid in the upgrade are British made. Referring to journey times, does my right hon. Friend appreciate that one of the greatest problems is the greatly extended journey time during the upgrade? There is great suspicion that the reason for that problem has nothing to do with the upgrade, but more to do with avoiding paying the compensation that companies would have to pay for late-arriving trains. Will he look into the whole issue of timetabling?
    Mr. Darling: Yes, I will. It is important that there should be realistic and accurate timetables. In relation to my hon. Friend's first point, I think that I am right in saying that most of the steel going into Britain's railways is British. On journey times, he will know that, when the upgrade is completed next year, the journey time to Carlisle, for example, on the west coast main line will be reduced by about half an hour. I am afraid that, in the major works that are being carried out on the line—the first major works in almost 30 years—there will inevitably be some degree of disruption. Hon. Members are well aware of that. I believe, though, that once the upgrade is completed and we have the new trains that Virgin is introducing—a number of which are now appearing on the west coast main line—there will be a qualitatively better service on the west coast than there has been for 30 years.
    Sir Nicholas Winterton: I warmly welcome the huge sums of money that have been

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    poured into the west coast main line: my constituency has greatly benefited from that. Does the Secretary of State agree, however, that as well as improving the signalling and track, the upgrade must, and should continue to, include, first, car parking at railway stations to encourage people to use rail; and, secondly, the extension of platforms to enable longer and larger trains to be put on to lines to carry people who want to travel by rail?
    Mr. Darling: I agree with the hon. Gentleman. Car parks at stations are extremely important if we are to encourage people to leave their cars and go by train. My hon. Friend the Minister referred to the bureaucracy that stood in the way of lengthening platforms. When one looks at that more closely, it is clear that extending the platform by a few feet does not necessitate upgrading the entire station. One or two people thought that it did, which made the whole thing daft.
    I am grateful to the hon. Gentleman for his general welcome for the large amount of money—some £7.5 billion—that will be spent on the west coast main line. That investment is long overdue. I am grateful, too, that he takes such a realistic attitude towards the undoubted disruption that his constituents have had to endure. I hope that very shortly they will see the fruits of all that work.
    Mr. Eric Martlew: As my right hon. Friend will know, I have taken a particular interest in the west coast main line for more than a decade, and we are now at a point where we will see improvements. Yesterday, the first Pendolino train went from Euston to Glasgow. That service will be a great benefit to my constituents. However, will my right hon. Friend comment on the decision not to lay extra track in the Trent valley, which will create congestion and delays on the west coast main line? I understand that that decision was taken after the rail regulator intervened with Network Rail.
    Mr. Darling: On the first point, my hon. Friend will know that once the upgrade is completed next year, more than half an hour will be taken off the journey time to Carlisle. I am glad that he mentioned the arrival in Glasgow of the first Pendolino train—I am told that it was eight minutes early, which is a shining example to the rest of the trains going up and down the west coast main line.
    In relation to the four tracks through the Trent valley, the regulator, the Strategic Rail Authority and Network Rail are discussing whether that work is immediately necessary. We are conscious of the fact that, as my hon. Friend will know, Railtrack promised to deliver the project for £2.5 billion, which was a hopelessly, wildly optimistic estimate. At one point, the cost soared to £13 billion. Even at the current £7.5 billion, it represents a very substantial investment, and we are all duty bound to ask ourselves what is necessary to deliver these journey time improvements, bearing in mind the fact that a lot of money has to be spent on other parts of the network, too.

    Motorway Noise
    Mr. Andrew Robathan: What his policy is on the introduction of quieter road surfaces on motorways. [145872]
    The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): The Highways Agency always uses quieter road surfaces when carrying out resurfacing work on England's motorways and trunk roads. On 1 April last year, I announced a timetable for resurfacing all sections of concrete road on our strategic road network with noise-reducing material in order to provide relief from traffic noise for households living alongside noisy trunk roads. That work will be progressed in line with the priorities that were identified, which provide for the earliest relief to the worst affected properties, subject to the availability of funding.
    Mr. Robathan: Unfortunately, that will not reassure my constituents who live near the M1 in Narborough, Whetstone, Cosby and elsewhere. They were expecting to have the Ml resurfaced with quieter material this summer, but it has been put off for up to three years—because of value management work, according to the Highways Agency. Yet the Minister told me in a written answer that the resurfacing project is not the result of value management work. Will he tell me who is right— he or the Highways Agency? Will he get his act and his policy together with the Highways Agency; and will he reassure my constituents along the M1 south of junction 20 that they will have a quieter road surface?
    Mr. Jamieson: I would say very gently to the hon. Gentleman that, had it not been for this Government bringing in the new quieter road surfaces, there would have been no quieter road surfaces at all, whenever the surface was relaid. Work has to be carried out all round the country on the trunk roads and the major motorway system, including the M1 between junctions 20 and 21—I appreciate that many of the villages all the way down to Lutterworth are affected as well—but it has to be
    done in order of priority. Priority is given to road surfaces that are breaking up, and to locations where road safety is an issue, where there are potholes or where the skid value of the road has deteriorated. We carefully analyse each road that needs doing according to that list of priorities, and I can assure the hon. Gentleman that, although it is not possible this year, he will be in the three-year programme from 2005–06, when his constituents will be able to expect the Government to provide a quieter road for them.
    Mr. Derek Wyatt: Will my hon. Friend meet the parish council in Bredgar when he visits my constituency shortly? The M2 runs alongside that area, and there have been campaigns against the noise for 10 years. It is an echo chamber. It seems to miss all the criteria that we apply to these problems, but the noise is unbearable to anyone walking there.
    Mr. Jamieson: A lot of meetings seem to be resulting from our questions today. Of course, I am always happy to meet my hon. Friend and I know what a strong advocate he has been on road and transport issues in his constituency. I would be happy to meet him, because I realise that this is a problem—just as it is in Leicester—for the people living alongside a motorway. Noise can be extremely intrusive.
    Mr. John Redwood: Can the Minister tell me, either now or in writing, when the M4 between junctions 8/9 and 12 might be resurfaced with a quieter material, which we would welcome? If he is planning an expansion of that motorway, could that be linked to the introduction of sound barriers to give some relief to residents?
    Mr. Jamieson: The Highways Agency looks very carefully at the environmental impact of any improvements that take place on our roads, particularly the impact of noise on local residents. I will write to the right hon. Gentleman on the matter of the M4. As he knows, certain stretches have been resurfaced with a quieter material, but this work has to be done in order of priority. Priority has to be given to surfaces that have deteriorated, and we cannot just resurface roads that are still in good condition. I am sure that he appreciates that in terms of value for money for the taxpayer, but I shall certainly write to him about the sections of the road that he mentioned.

    Regional Airports
    Mr. Andy Reed: What steps he is taking to reduce aircraft noise at regional airports. [145874]
    The Parliamentary Under-Secretary of State for Transport (Mr. Tony McNulty): Our preference is that local solutions should be devised for local problems wherever possible. The White Paper—"The Future of Air Transport"—sets out the basic framework within which local controls should operate., and as soon as parliamentary time permits, we will legislate to strengthen the powers of airport operators to combat noise.
    Mr. Reed: I welcome my hon. Friend's answer. I am sure that he is aware that night-time noise at East Midlands airport is a major concern for a large number of my constituents. This is a complex issue, and much of the work being done by the Loughborough research centre at the university shows that the number of people awakened by aircraft noise at night is not as high as we might suspect. However, a large number of my constituents are concerned about this. Will my hon. Friend set out in greater detail what stringent noise controls are to be introduced to ensure that recent improvements are built on, so that the many people who feel strongly about this issue are reassured about the future growth of the airport?
    Mr. McNulty: My hon. Friend will know that a fairly stringent package of noise constraint measures already exists. At this stage, in the light of the publication of the White Paper, it is entirely up to East Midlands airport
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    to come forward with proposals on how it expects to grow in the context of that package. I repeat that we want to secure a local solution wherever possible. In addition, bullet point 4 of paragraph 3.11 of the White Paper states that we will consider national designation
    "if there is evidence of a major noise problem not being dealt with adequately through local controls."
    In the first instance, however, it is up to East Midlands airport to respond to what we have said in the White Paper.
    Mr. James Plaskitt: Is my hon. Friend aware of the situation at Coventry airport? There is currently no regular passenger service from there, but Thompsonfly has now announced that it intends to launch a budget airline operation from there in March. This has been done without any local consultation or consent, yet the service will rely heavily on regular night flying. This will represent a considerable environmental onslaught on many of my constituents. What powers does the Department have to help us to deal with this situation?
    Mr. McNulty: In the first instance, we would seek a local solution as any airport develops. In the last resort, however, if we feel that local solutions are not working, we can designate them nationally and take a far more stringent and legislatively focused reaction to noise and other environmental issues. That is a last resort, however, and we urge people to secure a solution locally in the first instance.

    Roads (Colchester)
    Bob Russell: When he expects work will start on the junction of the A12 Colchester northern bypass and the northern approach road. [145875]
    The Minister of State, Department for Transport (Dr. Kim Howells): The Highways Agency approved the developer's scheme for a new junction in July 2003. The planning applications are still being considered by the Colchester borough council.
    Bob Russell: I am grateful to the Minister for that reply. May I urge him to prevail on the Highways Agency to work with the national health service, which will be the principal beneficiary of the junction through the release of land to enable development to take place on a former hospital site and adjoining land? The borough council is the second major beneficiary, because of the employment and housing prospects. Third but not least is the new stadium for Colchester United football club, which is dependent on this junction. I urge the Minister and his colleagues to work with the Highways Agency and the NHS to get the junction approved sooner rather than later.
    Dr. Howells: Yes, indeed, I would be very glad to do that. I trust that the hon. Gentleman will tell the council to get a move on—especially given that the Liberals are the largest party on it.

  The Minister for the Cabinet Office was asked—
  CABINET OFFICE

    Employment Regulation
    Mr. Henry Bellingham: When he next expects to meet the chairman of the Better Regulation Task Force to discuss employment regulation. [145856]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): I have regular meetings with the chairman of the Better Regulation Task Force to discuss all aspects of the better regulation agenda.
    Mr. Bellingham: When the Minister next meets the chairman of the Better Regulation Task Force, will he discuss with him the UK's individual opt-out from the working time directive? Does he agree with the CBI and the Forum of Private Business, which have recently stated that the opt-out is vital for the UK's competitiveness? Or does he agree with his Socialist colleagues in the European Parliament and Commissioner Diamantopoulou, who both want to scrap the individual opt-out as soon as possible? On whose side is he?
    Mr. Alexander: I certainly agree that the working time directive opt-out is important, not just for the United Kingdom but for several member states. The recent European Commission communication does not say that the opt-out should go; it identifies some abuses, and asks how those can be addressed. On the point of view of the CBI, however, I would certainly agree with its director-general in his concluding interview of the year, in which he stated:
    "I am very pleased, well done to the Government you know, low inflation, low unemployment and some sustainable growth in an area of low interest rates. So probably the most successful economy in the developed world all up".
    Mr. Peter Pike: Is it not important that when we look at removing burdens, we do not equate that with removing worker protection, because many Conservative Members equate the two?
    Mr. Alexander: I find myself in full agreement with my hon. Friend. This Government make no apology for paid holidays, time off to attend to family matters, and, of course, the national minimum wage and the working time directive.
    Mr. Oliver Heald: The Minister will be aware that the TUC has today spoken of the massive hidden unemployment in Britain and has called on the Government to get a grip. Is not the reason for that that the Government are moving people from unemployment on to sickness benefits, thereby hiding the true extent of unemployment? Is not the background to that that the Government have so laden businesses with extra regulation that they are not producing the extra private sector jobs that are necessary?
    Mr. Alexander: I hardly know where to begin in answering that question. First, on the point of taking lessons from the Opposition on employment, they will of course be aware that there are historically high levels of employment in this country at this stage. Secondly, it is of course a matter of record that we have both low inflation and high employment at this stage. In relation to moving people off unemployment and on to disability benefit, again, the last people to lecture the Government are the Conservatives.

    UN Technology Summit
    Mr. David Stewart: If he will make a statement on the recent UN technology summit in Geneva on the digital divide. [145857]
    Derek Wyatt: If he will make a statement on the recent UN technology summit on the digital divide. [145860]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): My hon. Friend the Minister for Energy, E-Commerce and Postal Services represented the Government at a recent world summit on the information society in Geneva. The summit developed a plan of action to ensure that the benefits of information and communication technologies flow to all in society.
    Mr. Stewart: Does my hon. Friend agree that it is crucial to use technology to benefit billions of people in the developing world? There should not have to be a choice between pentiums and penicillin; we should be thinking about how to use the power of the internet to benefit the poor and the dispossessed.
    Mr. Alexander: I entirely agree. The real challenge is to ensure that new technologies do not exacerbate historical divides, and that is as true in the United Kingdom as it is in the world as a whole. I am proud of this Government's record of tackling the digital divide, not just in my hon. Friend's constituency but through international initiatives such as the summits attended by the Minister for Energy, E-Commerce and Postal Services.
    Mr. Wyatt: My hon. Friend may not know that I won a Commonwealth Parliamentary Association bursary to examine the digital divide, and travelled to Mozambique, Tanzania and Zambia. I concluded that what was needed to tackle the digital divide was a solar powered computer, which could be made in Africa for under £100. Will my hon. Friend use his best endeavours to persuade the Commonwealth Development Corporation and the Government to run a competition for that purpose?
    Mr. Alexander: I know of my hon. Friend's longstanding commitment to this issue. I will certainly think about it, and I should be happy to correspond with him.
    Mr. Richard Allan: Does the Minister agree that the questions "Who runs the internet?" and "How?", which are on the United Nations summit agenda, are increasingly important as the internet becomes an essential part of all our lives? To assist in that debate, will he undertake to publish as clear a statement as possible about the United Kingdom Government's policy in relation to the UN, the International Telecommunication Union and all the other bodies involved in deciding how the internet is run?
    Mr. Alexander: As the hon. Gentleman will know, a huge amount of work is being done not just domestically but internationally through a range of organisations. I shall try to ensure that the e-envoy writes to him about his observations.
    Michael Fabricant: I congratulate British Telecom on lowering trigger levels, which has led to an expansion of broadband throughout the UK; but is the Minister aware that according to the International Telecommunication Union, based in Geneva, take-up has fallen in Britain in relation to that in other countries? We have in fact dropped from fifth to 18th place. What role can the Government play to encourage those with computers whose areas provide broadband to transfer to it from dial-up?
    Mr. Alexander: I certainly think there is a role for enlightened Members of Parliament, who can speak in public debates about the benefits that can accrue to individual constituents from broadband, but I also think we should retain a sense of scale and proportion. Price is no longer a barrier in the UK—broadband prices have fallen to competitive levels in international terms—and there has been an exponential growth in the broadband market in recent years: 80 per cent. of the UK population now has access to the mass-market service. I particularly welcomed BT's announcement in November that it would make a further tranche of exchanges possible.
    Chris Bryant: Do the Government accept that there is still a significant digital divide between rich and poor parts of the country? Many poor rural and former mining constituencies, in particular, still have no access to digital terrestrial television. When will the Government ensure that freeview is available throughout the country?
    Mr. Alexander: My hon. Friend has raised two important points. The first was about digital television, in which we are one of the world leaders. We continue to make progress in that regard. The second concerned digital inclusion. We are not resting on our laurels following our significant success with broadband; we are looking more deeply at the barriers in communities such as my hon. Friend's that prevent people from adopting the internet. One barrier is caused by income levels, a second by age, and there are also cultural barriers. That is why I was so pleased with our "Get Started" campaign last year, which involved harnessing the 6,000 UK online centres in the country to tackle the digital divide of which my hon. Friend speaks.

    Policy Hub
    Mr. Edward Leigh: What evidence he has collected on the extent to which the launch of policy hub has led to improvements in policy making; and what plans there are to evaluate policy hub. [145858]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): The policy hub website was launched in March 2002 to support better policy making and policy evaluation. Since its launch, usage has grown to over 5,000 visits per month. The policy hub continually seeks views from users and key stakeholders. As a result, an improved site will be launched in February 2004.
    Mr. Leigh: The Minister will recall that in the Treasury minute response to the Public Accounts Committee report the Cabinet Office promised to monitor Departments' use of the hub. How much have they used it since March 2002, which Departments have not used it and why not, and what is the Cabinet Office doing to monitor uneven take-up?
    Mr. Alexander: The strategy unit collects evidence on monthly usage of the policy hub. Usage grew more than 100 per cent. between June and November 2003. Given that the hon. Gentleman is Chairman of the PAC, I will of course be happy to write to him on his specific request in relation to individual Departments. We are at present evaluating the hub on the basis of the number of visits to the website.
    Mr. George Foulkes: May I be, I hope, disarmingly honest and admit that I am not as au fait with the policy hub, the digital divide and the Better Regulation Task Force as some of my colleagues seem to be? Will the Minister consider ways of bringing some of us up to speed, if possible using broadband, which I have recently installed?
    Mr. Alexander: As I say, we are not declaring victory on the digital divide yet. My right hon. Friend made a serious point in saying that one of the challenges is to ensure that some of the more experienced Members of the House also benefit from the opportunities of the digital revolution. That is why we are taking forward our work in a number of online centres across the country. If he faces challenges in using his new broadband service, I encourage him to travel to one of his local online centres, where help and advice will be available.

    Business Regulation
    Bob Spink: What action he is taking to reduce the burden of regulation on business. [145859]
    The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Douglas Alexander): The Government's updated regulatory reform action plan

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    announced by my right hon. Friend the Chancellor of the Exchequer in his pre-Budget report has over 650 deregulatory measures to benefit business, charities and the public services. Over 240 of those reforms have been delivered by Government Departments since the original version of the action plan was published in 2002.
    Bob Spink: Since much of the regulation originates from Europe and this regulation causes massive unemployment, particularly hidden unemployment, is it
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    not time we looked again at our various agreements and opt-outs with the European Community and, for example, withdrew from the common agricultural policy and the common fisheries policy?
    Mr. Alexander: The UK has been leading the drive for better regulation in Europe. That is why I recently met the Spanish public administration Minister to press the case for further initiatives. It is fair to say that international observers recognise that Britain has played a leading role on the issue of better regulation, not just in the European Union but around the world.

Sky Marshals
12.32 pm
Mrs. Theresa May: (Urgent Question) To ask the Secretary of State for Transport if he will make a statement on the introduction of sky marshals on flights from the United Kingdom.
The Secretary of State for Transport (Mr. Alistair Darling): The United Kingdom aviation security regime is one of the most developed in the world and was further tightened in the aftermath of the 11 September attacks in the United States. As the House would expect, as part of their overall counter-terrorism strategy, the Government keep aviation security under permanent review and adjust measures to be taken by airlines, as and when necessary.
The measures that are available to us to use take various forms, ranging from different types of screening and searching at airports, through protection of aircraft while on the ground, to measures implemented in-flight, including steps to prevent any takeover of the aircraft cockpit, and, where appropriate, the deployment of covert armed police capability, known as sky marshals, announced by the Government on 19 December 2002.
As the Home Secretary and I announced on 28 December, in response to the present heightened state of alert in the United States, additional security measures on the ground and in the air have been put in place for UK airlines operations in the USA and elsewhere. That is judged a responsible and prudent step at the present time, but the continuing need for those measures will be kept under review. Sky marshals will be deployed where appropriate. It is the Government's policy, for obvious security reasons, not to comment in detail on when and where additional security measures are being deployed.
The House will recognise that there is an increased threat and we have to deal with that in a balanced and proportionate way. Our objective is to ensure that we deploy all the security measures available to us, as and when appropriate, while at the same time enabling people to go about their day-to-day business.
Mrs. May: I thank the Secretary of State for his reply. It is indeed an important issue that cannot and should not be taken lightly. Of course, airline passengers want to know when they board a plane that every effort has been made to ensure the safety of that flight. However, over the past 10 days a somewhat confusing picture has emerged of the approach being taken by the Government. We were told in headlines last week that sky marshals would be flying on planes to the USA that day or the next day, and that they had been in training for some months. It then emerged that the Government had not discussed the matter properly with the airlines or the pilots, and that it was not clear under what circumstances sky marshals would be used or whether the pilot would continue to have ultimate responsibility for the flight concerned. In the past few days, the suggestion has emerged that the Government's decision was taken only because of pressure from the United States Government.
We all understand that this issue touches on security matters and the use of intelligence, and that the Secretary of State is limited in some of the remarks that
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he can make to the House. But people who travel on UK airlines, both staff and passengers, deserve to know as much as possible in order to reassure them about the safety of those flights. The confusion that has emerged in the past few days has not helped passengers, and continuing confusion could impact on people's propensity to fly. Will the Secretary of State therefore explain now to the House why talks were not held with pilots and airlines to agree operating procedures before the announcement on the use of sky marshals was made?
Lack of consultation meant that the Secretary of State had to announce on the "Today" programme that pilots would be told about sky marshals on their planes. Will the pilot of any plane continue to have ultimate responsibility for the flight, and will that include refusing to fly if they are not happy with the presence of a sky marshal on the plane? One of the main concerns raised by pilots and by some members of the public has been the use of guns on board planes. What comfort can the Secretary of State give on this matter, and particularly on the type of ammunition to be used?
It is reported today that the Metropolitan police has provided 20 officers for training. How many have completed their training, and how long did it last? What is the limit of sky marshals' actions? If there is a non-terrorist-related incident on a plane, will the sky marshal be expected to get involved, or not? It is also reported today that Toby Harris, chairman of the Metropolitan Police Authority, has raised the question of liability. Can the Secretary of State confirm that no responsibility for liability will fall on the Metropolitan Police Authority, or on any other authority that provides officers as sky marshals? We all want to ensure the safety and security of all those who use planes, both staff and passengers, but it is imperative that the use of sky marshals does not lead to a reduction in security measures on the ground. In a sense, the sky marshal is the last resort—it is better to ensure that a terrorist does not get on the plane in the first place.
Underlying this whole issue over the past few days has been the question of trust in the Government. On the one hand, the Government would have us believe that the use of sky marshals is the result of a well-prepared and thought-through plan, but how can people trust such an assurance when they see the Government failing to consult properly on the proposal and failing to have the answers to a number of real, practical questions? If, on the other hand, the Government have put this proposal in place and have been forced into accepting sky marshals earlier than intended as a result of the actions of the United States Administration, they should be honest with people about that. The travelling public deserve no less.
Mr. Darling: It would be much more preferable if we could deal with this matter on a bipartisan basis because, as the hon. Lady rightly recognises, a great deal rides on it. I should make it clear that the first line of defence is to ensure that the security at airports and surrounding aircraft is as tight as it possibly can be. In the past few days, I have made the point time and again that we have tightened security at all UK airports; indeed, many passengers checking in will have noticed that there have been delays from time to time. Unfortunately, that is a result of increased security—screening individual passengers and baggage, and other measures. The

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deployment of sky marshals can be only one part of a raft of measures that we have put in place to try to prevent the possibility of somebody getting on an aeroplane and then being in a position to try to take it over.
We announced our intention to train and, if necessary, deploy sky marshals in December 2002. That has therefore been the Government's policy for more than a year before the announcement that the Home Secretary and I made on 28 December, so the idea that the policy was developed at short notice is simply not true.
The hon. Lady asked about consultation. Over the past year we have had many discussions with the aviation industry, including the airline pilots union. It has always been made clear that, for perfectly obvious reasons, the pilot would remain in charge of the aircraft.
As to the information made available, the Government will continue to keep people informed as much as they possibly can. However, the hon. Lady recognises that inevitably it is neither possible nor right for the Government to provide a running commentary on everything that is happening at a particular time. Neither can the Government allow themselves to provide information that might disclose to the very people about whom we are concerned not only what we do know, but what we possibly do not yet know. I therefore hope that she will understand that the Government will not be able to answer some of the questions that she asks now or in the future.
The hon. Lady is right that the Government intend to keep people informed. That is why the Home Secretary and I made our announcement at the end of December—because of the heightened security in the United States and, indeed, other parts of the world. We shall put in place every measure we can to ensure that the safety of aircraft in this country is as high as it possibly can be. We will continue to do that. Unfortunately, as I have said before, it is likely that this state of alert is likely to last for some considerable time. I am afraid that it is a fact of life and a consequence of the age in which we live. We will continue to be vigilant and to do whatever is necessary. We will also, of course, continue to keep the House informed.
John Thurso: Does the Secretary of State accept—I am sure that he will—that concern for the safety of air passengers is shared on both sides of the House and that any measure to counter terrorism should be given serious consideration? Does he also accept that the effort to prevent terrorist acts on aeroplanes should—and, indeed, must—remain primarily focused on ground security? I would be grateful if he would reiterate that commitment.
Does the Secretary of State accept that BALPA is quite right to be extremely concerned about the potential risk of introducing weapons on to planes? If the Government—or the United States—insist that sky marshals should be deployed, will he ensure that protocols are agreed between airlines and pilots to make it clear that the captain remains in control and in command at all times, as well as being fully apprised at all times about what is happening on his aircraft? Protocols should also ensure that only fully trained
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police officers would be used in the role, which should help to reassure passengers that the matter is being dealt with in a professional manner.
Mr. Darling: First, I strongly agree with the hon. Gentleman that ground security is paramount both here and in other parts of the world. Furthermore, sky marshals will be deployed only when we believe, on the basis of available evidence, that it is justified. It represents only one part of a wide range of measures that are available to us.
Of course the sky marshals will be highly trained. They are already highly trained and will be trained further for specific operations on aircraft. I fully understand the reluctance of pilots and the concern of others about the deployment of such people on aircraft. However, one thing infinitely worse than having a sky marshal on a plane is having a terrorist on the plane who is about to enter the cockpit. Many people recognise that in certain circumstances, based on available intelligence, it may be necessary to deploy sky marshals.
I note that the general secretary of the airline pilots union said on television this morning that it no longer objected to the deployment of sky marshals, but remains concerned about protocols to ensure that the captain will remain fully in charge. I have made it absolutely clear on several occasions that that is the case. The House may be interested to know—there has been discussion in the newspapers—that British Airways has written to me to confirm that it does not object to the deployment of sky marshals where appropriate. Its concern is exactly the same as that of the rest of us—to ensure that we have an appropriate level of security on aircraft. That is what we shall do.
John McDonnell: The intensive effort made by the Government over the past few years in respect of perimeter security at airports, especially at Heathrow, has been widely acknowledged. The Government should be congratulated on that, but it is regrettable that we are not tackling the issue on a cross-party basis. There is a divergence of views about the role of air marshals, but it is accepted that they can play a role as part of an integrated system. Will my right hon. Friend meet a cross-party delegation of Members of Parliament with aviation interests to explain the role of air marshals in that integrated system? Such a meeting would allow us to discuss in more detail some other issues in connection with perimeter security, especially at airports in the developing world. What steps are the Government taking to give countries in the developing world further support and assistance in this matter?
Mr. Darling: Of course I am happy to meet colleagues, to keep them informed and to explain what the Government are doing. I am grateful for the welcome that my hon. Friend has given to the Government's efforts. Inevitably, one consequence of our inability to provide what might be called a running commentary on what is going on is that the field is left open for all sorts of speculation. However, I am glad that my hon. Friend recognises that the Government are taking the necessary and appropriate action. We will continue to do so.
Sir Patrick Cormack: I commend the general substance of the Secretary of State's remarks, but why cannot he declare war on jargon as well as on terrorism? Why must the people involved be called sky marshals? Why cannot we use the English language properly and call them armed guards or security guards?
Mr. Darling: I have some sympathy with that proposition, but the hon. Member for Maidenhead (Mrs. May), the Opposition Front-Bench spokesman on these matters, used the term "sky marshals", so, to be helpful to her, I shall explain what they really are. They are, in fact, police officers.
Mr. Brian H. Donohoe: Will the deployment of air marshals be restricted to the US, or will their deployment be widened to include domestic and European air traffic? If so, I suggest that that would pose a security problem in this country. Also, who will pay for the air marshals?
Mr. Darling: As I have just explained to the House, the Government look at intelligence several times every day. The measures—such as sky marshals or increased security—that we deploy will vary from time to time and from place to place. However, I repeat what I have made clear in the past: the Government will not comment on where, if, or when sky marshals are to be deployed. I hope that the House will understand that. I can tell my hon. Friend that the costs of the sky marshals will be met by the Government.
Mr. Douglas Hogg: Will the Secretary of State say whether these armed guards have been deployed yet, or does their deployment lie in the future? Given that the policy has been under discussion for more than 12 months, will he say why the protocols have not yet been agreed?
Mr. Darling: On the latter point, I told the House a few moments ago that there have been considerable discussions with the airline industry over the past year. On the right hon. and learned Gentleman's first point, I have nothing to add to what I have just said to my hon. Friend the Member for Cunninghame, South (Mr. Donohoe). For perfectly obvious reasons, which I hope the House will understand, we will not explain what action we intend to take or when we intend to take it. The reason is that to do so would provide the sort of information that might be of great help to the very people about whom we are concerned.
Alan Simpson: I, too, am disappointed that there is no bipartisan approach to this matter, as I expected there to be widespread support for measures that would increase security on the ground and in cockpits and improve security for passengers. However, my specific concern is whether the sky marshals will be armed. Most members of the public would welcome the presence of police officers when that is justified by intelligence, but does my right hon. Friend understand the concern felt by pilots and the public that the inclusion of the use of guns in the remit given to sky
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marshals will result in an increased risk that air travel will be turned into a wild west in the sky, rather than in greater security for the air-travelling public?
Mr. Darling: No, I do not agree with my hon. Friend on that point. The police officers in question will be armed and will act as the last line of defence if someone tries to take over an aircraft. That is an extremely serious situation and that is why the police officers will be armed. My hon. Friend made a similar point to that made by the hon. Member for Maidenhead, but it is worth bearing it in mind that at the moment all flights are operating as usual. Even when the decision had to be taken to ground flights to Washington and the middle east, the vast majority of flights went ahead as normal. All the evidence shows, as we discussed when I published the White Paper on aviation, that people are continuing to fly. It is important that we all send the message that although we live in a time of heightened security and we need to take exceptional action on occasion, people can go about their daily business and continue to fly when they need to do so.
Mr. Simon Thomas: Will the Secretary of State ensure that we develop international protocols for the deployment of armed police officers on aircraft? Does he agree that sky marshals on incoming flights should always be public servants—police officers or the equivalent—and that private security guards should not be armed on flights? That could have security implications, and it would be better to ensure that only trained police officers play that role.
Mr. Darling: We have some experience of that. The hon. Gentleman is right—we want to ensure that those who act as covert police officers are highly trained, and we will continue to ensure that they are.
Brian White: My right hon. Friend will be aware that since 1997 one of my constituents has been trying to bring to the Government's attention—in private—some serious defects in the baggage screening process. For obvious reasons, I shall not highlight those defects. Would my right hon. Friend be prepared to meet my constituent to talk about those issues? If a passenger does not wish to travel on a plane with a sky marshal, would he lose the fare for that flight or would other flights be made available?
Mr. Darling: I recall the correspondence that my hon. Friend mentions, but my recollection is that we did not come to the same conclusion as his constituent. I or one of my colleagues will be happy to talk to my hon. Friend further about the matter. As I said earlier, it would not be a good idea to make a general announcement. The decision to deploy a sky marshal, or put any other security measure in place, is not taken lightly. It is made only when the circumstances justify it, and we cannot make specific announcements because that would play into the hands of those about whom we are concerned. I hope that my hon. Friend will understand and accept that the Government are doing everything that they reasonably can. Most people seem to accept such measures as a fact of life that we will have to live with for

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some time and that at times there is a limit to what the Government or an airline can say about security measures.
Mr. John Wilkinson: Will the Secretary of State accept from me that the public will on the whole be reassured by his statement? Can he intensify the professional discussions that his Department has had with the International Civil Aviation Organisation, the European Civil Aviation Conference, the Civil Aviation Authority and BALPA, so that we get the best professional advice available on a matter that profoundly divides the aviation community? Has he taken a view on the merits or otherwise of arming flight deck air crew?
Mr. Darling: No, I have not taken a view on the hon. Gentleman's latter point, but I am grateful to him for his general welcome for my announcement. Most hon. Members appear to welcome it, although it was not entirely clear what view the hon. Member for Maidenhead was taking. On his other point, the Department keeps in touch with international bodies constantly on the issue.
Mr. Stephen McCabe: Does my right hon. Friend agree that it is an interesting sign of the times that Labour Members are putting public safety at the top of the agenda, but the hon. Member for Maidenhead (Mrs. May) is putting the capricious claims of a trade union at the top of her agenda? When it comes to legitimate concerns and anxieties, may I take it that the Government have looked closely at the experience of other countries that have been forced to adopt such security measures for some time?
Mr. Darling: Yes, the Government follow closely what is happening in other parts of the world and keep all such matters under review. I understand the concerns of the pilots and I believe that they can be met. Most people—including the pilots' representative on the BBC this morning—accept that the age in which we live means that measures must be taken, unfortunately, that might have been ruled out of hand a few years ago. The Government's job is to ensure that we use every possible means to stop people who should not get on to an aircraft doing so, and also—where necessary and based on the intelligence we have—to deploy other measures. Most people who fly will be reassured by the fact that the Government are keeping such matters under review and will take whatever steps are appropriate.
Dr. Julian Lewis: Was the Secretary of State as surprised as I was by the suggestion by a representative of the pilots that if a sky marshal is on a plane the pilot should know his identity and where he is sitting? Will the Secretary of State undertake to ensure that any protocol agreed makes it clear that pilots will never know the identity and location of sky
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marshals? Otherwise, the first thing that a terrorist would do would be to threaten the pilot with death unless he disclosed the whereabouts of the sky marshal.
Mr. Darling: That sounds to me like one of those matters in which it would be best for me to note what the hon. Gentleman says.
David Cairns: If callers to radio phone-in programmes are any measure of the success of a Government policy—usually not—I can tell my right hon. Friend that the overwhelming majority of callers and e-mailers to the Lesley Riddoch programme on Radio Scotland yesterday, on which I spoke about sky marshals, favoured the presence of armed sky marshals on flights. Does not the presence of armed sky marshals on Qantas flights out of Sydney to Singapore demonstrate that it is a global response to an international terrorist threat and not, as some have claimed, the British Government caving in to American pressure? That myth is peddled by the same people who present the USA as a greater threat than the international terrorists.
Mr. Darling: My hon. Friend is right that all countries and airlines face this threat. How we respond depends on the individual circumstances and the intelligence that Governments receive.
Mr. John Greenway: Having suggested this proposal to the former Home Secretary more than two years ago, I welcome what the Secretary of State has said, although it is disappointing that the protocols are not in place. That is the point that my hon. Friend the Member for Maidenhead (Mrs. May) was trying to make. [Laughter.] If hon. Members listened, they might understand. Attention is currently focused on outbound flights, but I reiterate the importance of ensuring the same level of security on inbound flights. If sky marshals are on an outbound flight, are they likely to be deployed on the return flight?
Mr. Darling: I am grateful to the hon. Gentleman for clarifying what the hon. Member for Maidenhead meant to ask. The decision to deploy armed police officers on a flight depends on the intelligence and the assessment of the threat that we make. As I have said, it would be wiser not to go into details about when and where such people may be deployed.
John Mann: The TUC and British trade unions have always been loyal and reliable allies of any British Government at times of war, and that also applies to the war on terrorism. The airline pilots union is a well-informed, reliable and efficient union. Can my right hon. Friend give an assurance that it will have full and direct access to him and his Department in the coming months, so that it can continue to provide its expertise and advice on this issue?
Mr. Darling: I am meeting the airline pilots union this afternoon, so it will have all the access that it wants.
Michael Fabricant: Just for the record, the British Airline Pilots Association is an association not a union. Although the association has

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said that guns and pressurised cabins do not mix, does the Secretary of State agree that in at least two instances, once with El Al and once with Royal Jordanian Airlines, sky marshals have been used to prevent a hijack? Is not it also the case that with the use of high-technology, low-velocity guns, sadly and occasionally a pressurised cabin would be depressurised if an event were to occur?
Mr. Darling: Police officers are trained to operate on aircraft and part of that training means that they have to take into account the difficult conditions they find. I am grateful to the hon. Gentleman for the correction in his first point; no doubt, the pilots themselves would be the first to point out that they are members of an association, not a union.

Correctional Services Review
1.1 pm
The Secretary of State for the Home Department (Mr. David Blunkett): With permission, Mr. Speaker, I wish to make a statement on the next phase of our strategy to improve the effectiveness of the criminal justice system and, in particular, of correctional services.
Our objective has been to reduce crime and to transform radically the performance of the Prison Service and the probation service, and the services working in partnership with them. Since 1997, we have undertaken a unique programme of reform and investment in both services. We have provided 14,700 more prison places, including seven new prisons, and this year we are providing £900 million more in real terms. There has been a 50 per cent. increase in probation funding, and a 30 per cent. increase in frontline staff. Since 1996–97, there has been an increase of 4,300 additional staff in the probation service alone.
We do not accept the counsel of despair that suggests that offenders cannot be turned away from crime. The whole objective of correctional services must be to prevent reoffending, as well as to provide punishment and protection. Today, we are publishing our report, "Reducing Crime, Changing Lives", which sets out a progressive agenda for the future and the next steps to modernise and reform correctional services. I have placed a copy of the report in the Vote Office, together with the report from Patrick Carter. We are grateful to him and his colleagues for the work that they have done, on which we have drawn extensively in the proposals before the House today.
Prison and rehabilitation after custody can be made to work only if those subject to punishment are forced to address their behaviour. Sending more people to prison but seeing more return, only to reoffend again, is unacceptable. Addressing the causes is, therefore, essential for success.
Together with the Department of Health, we have adopted a radical new policy for health investment to tackle a range of problems, from mental health to drug misuse. This year, more than 50,000 prisoners have received clinical detoxification. 5,000 are undertaking drug rehabilitation programmes, and 40 per cent. of all prisoners have signed voluntary drug compacts. In addition, through education, training and work programmes, we have dramatically changed the opportunity for those in prison to redeem their behaviour and attitude. In 1997, figures on the educational achievement of prisoners were not collected. This year, almost 50,000 prisoners will gain basic skills qualifications and, with the Department for Work and Pensions, we have put in place the custody to work programme, which is already showing signs of significant success.
Last year, 30 per cent. of prisoners entered work or training—a transformation from the past—and 25 per cent. of prisoners had a job on release, compared to 10 per cent. a decade ago. The creation of the Youth Justice Board five years ago and of the new national probation service in 2001 has made a significant difference. The YJB has been responsible for developing the intensive supervision and surveillance programme as an alternative to secure accommodation. We are now

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looking to even more imaginative ways of using a combination of satellite tracking with peer mentoring to work with offenders in the community.
The probation service has developed drug testing and treatment orders—the first effective community sentence for drug abusers—which are now being supported by the criminal justice intervention programme. The service is developing the intensive change and control programme, which is a community-based sentence for adult offenders. There is also real momentum behind the restorative justice programme, to encourage responsibility, to address offending behaviour and to make amends to the victim where appropriate.
This month, we are piloting a radical new approach to custodial sentencing. Kirkham for men and Morton Hall for women will be the first establishments to experiment with periods of intermittent custody, such as prison at weekends.
The new sentencing framework introduced in the Criminal Justice Act 2003, is central to reducing crime and, therefore, reoffending. We have introduced new mandatory life sentences for the most heinous crimes; custody minus and custody plus, covering a range of crimes; and much tougher punishment and enforcement for breaches. I want to see robust intensive community programmes replace ineffective short custodial sentences in a way that allows us to take decisive action where breaches occur.
Those reforms will help to deliver considerable improvement in performance of the correctional services, by ensuring both joined-up policy and joined-up delivery, but we believe that we must take further steps for improvement and for more radical progress. Together with the Department for Constitutional Affairs, we will look to link the enforcement of fines and fixed penalty notices as a first deterrent, prior to the need for community or custodial sentencing. We will examine the potential for linking fines with the ability to pay as an alternative to custody. In building on existing reforms, our strategy will place renewed focus on the appropriate intervention for the specific crime.
If we are to deliver further transformation, however, we need significant organisational change. That of course includes the management of the services themselves, including the rooting out of unacceptable practices, such as racism and bullying. That is why I am announcing today the establishment of a single service to manage offenders.
The new National Offender Management Service will have direct responsibility for the punishment and rehabilitation of adult offenders both in custody and in the community. I am pleased to announce that Martin Narey, former director general of the Prison Service, will be the chief executive of the new service. We are also announcing today the establishment of the National Offender Management Board, chaired by the Under-Secretary of State for the Home Department, my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins), who has responsibility for correctional services.
In due course, we shall make separate announcements on the inspection regime, which will remain independent. We intend to learn lessons from the use of contestability within the Prison Service. Contestability
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will extend to not-for-profit and voluntary organisations, which we invite to come forward to work in partnership with the service.
We believe that the task of integrating the management of offenders is best achieved at regional and local level, where effective links can be forged and joined-up strategies developed. Those will include working with complementary services, including health, education, housing and employment.
We will create 10 regional offender managers, responsible for the end-to-end management of offenders, covering the nine English regions and Wales. We will, as part of the overall review of the location of Government posts, be looking to de-centralise more of the service.
The regional offender managers will be responsible for ensuring effective case management. They will contract for prison places, community placements, supervision and other critical interventions, as part of the new partnership approach. But I believe—perhaps that phrase is a bit hackneyed now—that the judiciary can be much better informed about the effectiveness of different forms of sentencing and be more aware of what is likely to be most effective for particular individuals. We introduced in the Criminal Justice Act 2003 the new Sentencing Guidelines Council to formulate a comprehensive set of guidelines.
I have agreed with the Lord Chief Justice and the Secretary of State for Constitutional Affairs that it is important that greater knowledge on the effectiveness of interventions, including the cost-effectiveness of different approaches, should inform the work of the Sentencing Guidelines Council. That will be crucial to the work of the judiciary and magistracy at regional and local level. In the first instance, we would seek their urgent intervention in eliminating the drift in sentence length and to seek a reduction in unjustified variation in sentencing across the country.
I expect those reforms to lead to a much more effective, consistent and transparent criminal justice system, but those who work in the service bear the brunt of both the challenges and the change for the future. I wish to pay tribute to the staff in the prison and probation services and the YJB, whose expertise has contributed so much to the achievements that I have already outlined in this statement. Those changes represent an assertion of our confidence in those who work with offenders and our belief that the new arrangements will help substantially to make their work in custody and in the community significantly more effective.
I repeat that reducing reoffending by better protecting our communities, by punishing offenders more transparently and by equipping them to avoid a return to criminality is our key objective. I know that that goal will be shared by both the House and the country, and I commend the statement to the House.
David Davis: I thank the Home Secretary for giving us an advance copy of his statement.
There are aspects of the statement that the House should welcome. I join the Home Secretary in his praise for the staff of the Prison Service, the probation service and the Youth Justice Board. The Opposition have long

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supported the work of the YJB and are glad that it is working successfully. The proposals to use the private and voluntary sectors in assisting the probation service represent an intelligent way forward. Indeed, I welcome the Home Secretary's conversion to contestability, which. I understand, is the current new Labour word for privatisation.
We also welcome the principle of localisation in the correctional service—something else that we have long called for—but it is difficult to understand how it will work with the current pressures of overcrowding in the system. How will a localised service deal with a prisoner who lives in Devon but serves his time in Durham because of overcrowding?
Let us understand what the report really is. It is the inevitable result of six years of failure. It is the inevitable result of six years of inconsistency and incompetence under the Government, and it is the inevitable result of a Home Secretary who talks tough on sentencing, who creates more crimes and more imprisonable offences but does not build enough prisons to house the increasing number of criminals and is then surprised when his prisons overflow and he is forced to put criminals into police cells, sometimes costing more than putting them up at the Ritz.
Of course we welcome the 14,700 extra prison places, many of which were due to Conservative plans and investment, but at least 8,000 more places than the Prison Service can manage will still be needed by 2006. At worst estimates, that figure reaches 22,000. That is why the chairman of the Parole Board says that home detention orders and parole decisions are made not to get the right outcome, but to alleviate overcrowding. The probation service and the Prison Service are now so overstretched that they cannot do their jobs properly. More than half of prisoners reoffend within two years of their release. Nearly three quarters of young offenders reoffend, setting many of them off on a lifetime of criminality.
Will the Home Secretary, as part of the review, commit himself to delivering a reduction in reoffending rates? Specifically, in a week in which it was revealed that one in four teenagers commits a crime, where in today's statement is a concrete proposal that will reduce reoffending among young offenders.
Mr. David Hinchliffe: A short, sharp shock.
David Davis: The hon. Gentleman wants a short, sharp shock. I am sure that he will get one shortly from his Whips.
Of course we welcome the 4,300 extra staff in the probation service, but their hands are tied by the Home Secretary. Only last week, a senior member of the probation service told me:
"We are drowning in audits and inspections and regulations and have very little time left to deal with offenders."
The Home Secretary's taste for central control is the reason why the approaches that worked abroad failed in Britain. He mentioned with approval in his statement the intensive change and control programmes. After spending many tens of millions of pounds on those
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courses, which work abroad, why are they not working here? Recently published figures show that 70 per cent. of prisoners who have been on such courses were reconvicted after nine months. For the Government, those courses represent an early route out of prison, but for the prisoners themselves, they have all too often been an early route back.
The Home Secretary quite properly talks about the 50,000 prisoners who will receive basic skills training—we welcome that—but does he not realise that, with current prison overcrowding, prisoners are often moved on before their training is complete? He also points out that 50,000 prisoners have received clinical detoxification, but only 5,000 have undertaken drug rehabilitation programmes. I can think of no better evidence to support our calls for a 10-times increase in the number of residential rehabilitation programmes, especially for the young. Will the Home Secretary finally heed our calls?
The Home Secretary said that he will examine linking fines with the ability to pay as an alternative to custody, but the House will need to be reassured that fines and community penalties will not be used to replace custodial sentences merely because the Home Secretary has already filled our jails. Does he still believe that the punishment should fit the crime, or does he believe that it should fit the number of empty cells? Is he is proposing to replace custodial sentences with fines? That is what the Carter report says, and it would mean reducing prison places by 13,000 by 2009. At the same time, he estimates a reduction by 60,000 in those under supervision in the community. Let us understand that: replace prison and replace supervision with fines. Today, one in three fines are uncollected—fines totalling
£276 million are outstanding.
In the 2002 White Paper, the Government promised us root and branch reform because
"too few criminals are caught or convicted or prevented from reoffending".
That was five years after they came to power—quite an
indictment of their own record. Make no mistake, the statement is an admission of failure by the Home Secretary. Still too few criminals are caught. Still too few criminals are convicted, and too few criminals are prevented from reoffending. On the basis of today's report, it looks as though too few criminals will be properly punished in the future.
Mr. Blunkett: I congratulate the right hon. Gentleman on the start of his response to the statement, which I found deeply encouraging. However, the remainder was deeply discouraging. The fact of the matter is that we are trying to ensure that all those with a part to play can engage in avoiding reoffending—I stressed that reoffending was at the absolute core of the proposals in the report. People who come out of prison should receive housing and heath care and should continue the training and education that they received in prison because such people often do not get that when they return to the community.
I stress that the decentralising measure is specifically designed to ensure not that we cause difficulty by overcrowding, but that when people move from one place of custody to another or from custody to the

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community, their programme goes with them so that they are managed as offenders rather than by two separate services. That is why it makes sense to join up the services and decentralise them so that that may be offered locally, to build on some of the experiments that have taken place with not-for-profit and voluntary organisations, to work with people who come out of prison, and to work alongside the probation service. The measure will help us to avoid reoffending and to reduce the number of people who must be sent to prison, thus reducing the pressure on prison places.
More prison places are needed and 3,700 additional places are in the pipeline, including those created by the new prisons at Ashford and Peterborough. Some 2,750 probation officers are in the pipeline over the next two years in addition to the 4,300 whom I mentioned. Substantial investment is going into the programmes that I outlined for education, training and health care. The projections made by Patrick Carter and his colleagues suggest that the totality of the prison population will be reduced by 13,000 by 2009. That reduction would be achieved by a combination of avoiding variation and inconsistency in sentencing, a change to the way in which we handle community rather than custodial sentences with rigorous action for breaches, and the new experiment that I mentioned on satellite tracking and peer mentoring. The scheme in Florida in which 30,000 people were on satellite tracking was a tremendous success. I am happy to learn about what works from Europe and the United States rather than about what does not work. It is clear that short sentences do not prevent reoffending, which is why I said that I thought that sensible and effective community sentences represented a much better option.
The projections are largely based on ensuring that variations and inconsistencies are eliminated. Sentence drift over the past 10 years has meant that three times as many people who come in front of magistrates now are sent into custody while twice as many people are sent into custody by the Crown court. There is enormous regional variation in the number of people sent into custody for such reasons as motoring offences. There was an interesting debate on that in the House yesterday and comment in the press, so I shall draw attention to the facts. There has been a fivefold increase in the number of males who are sent to prison for motoring offences compared with 10 years ago and a fourfold increase in the number of women. There can be no justification whatsoever for that, which is why it makes sense to ensure rigorously that fines work and to replace low-level short-term prison sentences with effective community sentences. When the Criminal Justice Act 2003 went through the Commons in the autumn, the Opposition welcomed measures such as custody minus to ensure that people are given a chance to redeem their behaviour, although they are automatically transferred to prison without going through the system again if they do not do that.
All of that adds up to a sensible approach, and I must tell the right hon. Gentleman that, unlike him, it does not pose completely contradictory questions. That approach does not query why I do not send more people to prison while at the same time asking why I do not ease prison overcrowding, nor why I do not do more with people in prison, including those on drugs, and whether I will send more people to prison in the first place, or
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whether I will spend more on residential places outside prison and, at the same time, more on people who are already in prisons, which already provide residential drug treatment and rehabilitation. The system will represent a complete transformation from that of seven years ago when virtually no one received education, training and work programmes, when there was no comprehensive health policy on mental health or drug addiction and when people left the service without supervision. All the measures that we are putting in place must be built on with an end-to-end change to the way in which offenders are handled. I hope that more people will be handled in the community and prevented from reoffending and, above all, that fewer people will have to be sent to prison in the first place and that there will be a reduction in crime rather than people rejoicing at having to be ever-increasingly tough on those who commit crime.
Mr. David Heath: I am also grateful to the Home Secretary for early sight of his statement, which I welcome. I also welcome Patrick Carter's report, which is damning in its analysis yet progressive in its recommendations. I also welcome the proposed National Offender Management Service, but given that the Prison Service and the probation service have widely differing cultures and ethos, will there be a merger of the best of both disciplines rather than one taking over the other? Will he clarify how the regional structure will not jeopardise local multi-agency functions? Given that the probation service is in meltdown—both financially and due to the scant support that it is able to offer tens of thousands of offenders—what immediate steps can he announce to rectify the situation, improve resourcing and, incidentally, improve the court system at the same time?
I, like the Home Secretary, believe that sentencing must be that which works. Given that a great many first time offenders are unlikely to reoffend, will he confirm that there will be greater emphasis, backed with resources, on pre-trial diversion? Will he confirm that his objective will be community sentences, which are credible to the public because they are relevant and visible to local communities in terms of including restoration and reparation? Will he examine again, as many people have asked him to, the provision for drug treatment in the community, which is inadequate at the moment?
Does the Home Secretary accept that no matter how much the education and training provision for those who must be in prison for the protection of the public has improved, it is still patchy and requires further improvement? Does he accept that adequate capacity in the Prison Service must exist in each region to match local needs so that prisoners are not moved from place to place but held securely in a meaningful corrective regime?
When will the Home Secretary be able to give us more details of the independent inspection regime? Does he agree that successive inspectors of prisons have performed an invaluable service to this country by pointing out the deficiencies in the present system? Will he confirm that prison deaths will be investigated with

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immediate effect by a body that is independent of the Prison Service and, indeed, the new National Offender Management Service?
Mr. Blunkett: I welcome the hon. Gentleman's positive approach to the report. Although it sometimes pains me to agree with Liberal Democrats, it is a helpful sign that we may work across parties to get the system right. I confirm that we will draw down on the best practices and the best operational management of both services when we integrate them. I confirm that we will co-ordinate from a regional level rather than running the service. There will be a commissioning organisation to encourage and support best practice locally while people integrate and draw their practices together.
I confirm that we will develop an independent role for the ombudsman to investigate all deaths in custody. It is a tragedy when any death occurs and although there was one fewer death in the past 12 months than during the previous year, there are still far too many, so we need to ensure that we learn lessons. We will continue the work of the independent inspectorate. Rod Morgan, on the probation side, and Ann Owers, on the prison side, have done a first-class job in delivering that independent view and in encouraging us to do better. Whatever framework is put in place to mirror the new service, I have every intention of that work continuing.
The emphasis of the service will be to ensure that we avoid reoffending, and we will draw down on practices employed elsewhere to achieve that. I intend not simply to replace short-term custodial sentences, but to monitor the community sentences that we spelt out in the Criminal Justice Act 2003 and the intermittent custody to be piloted in the two prisons that I mentioned so that we avoid the problem encountered with fines. Breaches have not been followed through and the fine system used by magistrates has deteriorated over many years. That has resulted in a drift into custody rather than into alternative sentences. I hope that we will work together in making the system more effective.
Mr. John Denham: I welcome my right hon. Friend's statement, which will help to build on the substantial fall in crime that has taken place over the past five or six years. His commitment to replace short-term ineffective sentences with community punishments is bold and welcome. It will take time to get all that sentencing into place and to build up public confidence, so for a long time there will be a significant number of short-term prisoners. They are currently the worst served in our prison system and in rehabilitation afterwards. Will he assure us that there will be a particular focus on the position of those who will remain short-term prisoners within the prison system and that the new system will effectively integrate not just Prison Service management and probation, but drug treatment, employment services, housing, health and other services that need to work together to ensure that those prisoners are rehabilitated?
Mr. Blunkett: Yes, I can give my right hon. Friend those assurances. Intermittent sentences and the new custody minus programme relate to short-term sentences. They will automatically ensure that people know that there is a penalty for breach and will make a difference for magistrates and district judges who use those alternatives. With the exception of breaches, for which we should step up the threat of custody, satellite tracking and home domestic curfew could be an alternative to custody where bail would otherwise be an issue in terms of remand. We expect imaginative and effective experiments in that. I strongly welcome, as members of the Home Affairs Committee will, the commendation of that Committee's Chairman.
Mr. James Clappison: Could a particularly careful look be taken at the benefits of intermittent custody and more flexible regimes for women prisoners, bearing in mind the desirability of keeping women in touch with their families, especially if very young children are involved, and that women prisoners tend not to serve sentences for the violent offences that cause most concern to the public?
Mr. Blunkett: I am up for that, if I can be colloquial for a moment. The experiment at Morton Hall will be crucial. We have just over 5,000 women prisoners, which is an increase of well over 40 per cent. in the past five or six years. It is extremely worrying. Many of those women are in prison for drug-related offences. We need to route back those who are, for instance, picked up as mules from other parts of the world and to get behind the problem in terms of the organised criminals who misuse and abuse them by engaging them in such criminality. Intermittent sentences and custody minus will help us to do that and will help people to avoid reoffending.
Mr. Keith Bradley: I welcome the statement, but seek clarification on the youth justice system. I welcome the integration of probation and prison services. Is there a similar plan to reorganise youth offending teams to be better co-ordinated with the regional structure that the Home Secretary proposes? Similarly, will the inspection service, which he will announce later, also include the inspection of youth offending teams?
Mr. Blunkett: My right hon. Friend has considerable experience of that subject. On the latter point, the inspection regime has been extended to the Youth Justice Board and the youth offending teams. We expect that to be part of the announcement on the inspection regime.
On my right hon. Friend's first point, it is critical that we get the integration with the experimental child trusts at local level and with the Connexions programme right, without losing the focus of youth offending teams and affecting the work that has to be done with those who are engaged in, or about to be engaged in, criminality. I do not want to lose the connection, which he rightly highlighted, between managing the regime as a whole and co-ordinating from the regions. However, I do not

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want to lose the new engagement with other children's services, which will also be crucial if we are to avoid reoffending.
Mr. Douglas Hogg: What will be the net increase in public sector posts, broadly defined? The Secretary of State announced the creation of the National Offender Management Service and 10 regional bodies on top of the existing probation and prison services and the Youth Justice Board. How many more public sector posts have been created, and what is the best estimate of the net increase in cost to the public sector?
Mr. Blunkett: There will be 2,750 more probation officers on top of the £100 million investment this year, which will bring into the probation service a further £110 million investment over the next two years. With those 2,750 jobs, there will be an unspecified number of additional jobs within the Prison Service to match the 3,700 places—[Interruption.] There are grumbles from the Opposition. Those are public sector posts.
David Davis: Answer the question.
Mr. Blunkett: I am giving the right hon. Gentleman the answer.
There will be fewer administrative and managerial posts. We are creating 10 management posts across England and Wales and are intent on amalgamating the central office functions of prison and probation, thereby bringing about a dramatic reduction in those who do an excellent and important job, but who are not at the front line. There will be a reduction and I am happy to return to the House to discuss the estimate of public saving that can be reinvested in ensuring that we clamp down on criminality.
Mrs. Lorna Fitzsimons: I very much welcome my right hon. Friend's statement, especially the creation of the National Offender Management Service. Everyone who has a prison in their constituency, as I do in Rochdale, knows that a seamless service makes common sense for the provision of care before, during and after imprisonment. From our direct experience at Buckley Hall, which has been in the public and private sector as both a male and female prison, we welcome the identification of the problem of short-term sentences, especially with regard to rehabilitation. The problem, which has been mentioned on the Floor of the House before, is acute for women prisoners and the women's estate, especially with their high use of class A drugs and as poly-users.
Will my right hon. Friend give some thought to simple things? For example, we discovered that when male prisoners were admitted, the male regime did not consider whether they had notified their landlords of their imprisonment, so they accrued debt. When they were put back into the public domain, they could not get housing because of their huge arrears, and those huge debts made them more liable to commit crime.
Mr. Blunkett: I am grateful to my hon. Friend for her observations, which are apposite as usual. Housing is a crucial issue. A new advisory service within the Prison Service will work with the new management service to
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ensure that we get that right. I pay tribute to the Secretary of State for Work and Pensions and the Minister for Work for their willingness to consider the whole nature of what prisoners can accumulate from their work in prison and in training to enable them to have something better than the discharge grant. They need to take up rented accommodation quickly and easily without landlords fearing that they will default. If we do not do that, it is not surprising that people reoffend. The basic thing that people need when they come out of prison, apart from support as vulnerable individuals, is housing and the possibility of a job. If we can manage that, we might have a more sane system.
Mr. Nick Gibb: This is a disappointing statement, and it is not what people thought the Labour party meant by being "tough on crime, tough on the causes of crime". The Home Secretary will be aware of concerns in the communities around Ford open prison about the increasing number of prisoners who abscond from that prison. Although Ford is an open prison, to which only short-sentence prisoners or prisoners coming to the end of their sentences should be sent, it appears that longer-sentence prisoners are being sent there as the prison system as a whole becomes more overcrowded. Will the right hon. Gentleman give me an assurance that inappropriate prisoners are not being sent to Ford—and also that if subsequent to today's statement he discovers that they are, he will see to it that that policy is changed?
Mr. Blunkett: I have already asked the new chief executive of the service to report on the operation of open prisons to me and to the Under-Secretary of State, my hon. Friend the Member for Wythenshawe and Sale, East, who has responsibility for correctional services. We are not entirely satisfied that we have got the system right, although we reject the idea that the issue is new. There has been a programme of gradual scheduled movement to open prison and rehabilitation for the past 20 years, and we have no intention of reversing that, but we believe that far more scrutiny needs to be given to those who are placed in an open prison at a particular point in their sentence. Similarly, we should consider tracking and electronic monitoring of prisoners within the open estate; transfer to an open prison is part of the transition back to the community, and given that—with all-party agreement—we are making more extensive use of home domestic curfew, it seems reasonable to do the same in open prisons. Of course, if the hon. Gentleman draws any clearly unsatisfactory incident to my attention, I shall expect action to be taken on it.
Mr. Tom Clarke: As co-chairman, with Lord Rix, of the all-party learning disabilities group, I welcome in particular the part of my right hon. Friend's statement in which he said that dialogue was taking place between the Department of Health and his own Department about prisoners with mental illness. I am sure that my right hon. Friend is aware that organisations such as Mind and Mencap take the view that there are still far too many people with learning disabilities and mental illness in prison, which

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presents problems not only for them but for health units within prisons, and that he will keep those matters under strict review.
Mr. Blunkett: I welcome my right hon. Friend's comments. The transfer of function and therefore of resourcing to the Department of Health is, in my view, a long overdue and welcome move—not least because the Department of Health has the money and will continue to have it through to 2008—that will enable us to invest in a medium-term programme that I hope will transform what happens in our prisons. Indeed, I have already seen it start to do so. There is no question but that a large number of people in our prisons suffer from mental health problems and disabilities to differing degrees. We have also tried to tackle the fact that the average reading age of prisoners in the estate is nine. Those facts speak out volumes in terms of cause and effect, and we have to deal with them as well as get tough and punish people who commit heinous crimes. The idea that we have gone soft, in the week when we have introduced life meaning life, and a dramatic change in all other sentencing in severe cases, is risible.
Mr. Steve Webb: Leyhill open prison in my constituency does good work in preparing low-risk offenders for release, but like those of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), my constituents are concerned that the wrong sort of people are being put into open conditions. Is the Home Secretary aware that within the past few weeks, a violent drugs offender seven years into a 21-year prison sentence was placed at Leyhill and promptly absconded? Will he please investigate the case as a matter of urgency, and assure us, as he has been asked to do, that dangerous people are not being put into open conditions?
Mr. Blunkett: I heard all about that prisoner during an extensive item on Radio 4—more extensive than it is prepared to offer for the whole reorganisation of the offender management system—and I am concerned. I am concerned because it is not true that that individual was transferred from category B in Scotland to category D in England; he had already been transferred to category C in Scotland. When he was transferred to England he followed the normal programme, but it is patently obvious from the fact that he has absconded that a mistake was made. An investigation of that individual case must inform the way in which we approach the broader issue that I mentioned a moment ago, of revising our approach to open prison.
Mr. David Hinchliffe: One of the big positives of the current Government's penal policy is the much closer working relationship between the Prison Service and the health service at local level. Of the two prisons in my constituency, one is a women's prison, and I am concerned that many of the women in that prison should not be there, but would perhaps be more appropriately placed in a health facility. Will my right hon. Friend state what practical steps the new board will
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take at local level to encourage the diversion of such women from the penal system to more appropriate local health facilities?
Mr. Blunkett: It has taken me longer than I intended to fulfil what I spelled out to prison governors almost two years ago, and wrote and spoke about at that time, which was developing different approaches for different categories of prisoner, and reviewing our view of the estate. That will sometimes involve what have become known within the Home Office as Carter prisons—very large prisons offering the type of facilities, including education, health care, training and work preparation and remedial action, that are needed for long-term prison residents—and sometimes secure hostel accommodation for prisoners who do not present a risk to themselves or others, in which rapid rehabilitation is the order of the day. We can link that to tougher community sentences through satellite tracking and electronic monitoring, and to intermittent custody, which allows a different form of custody for weekends but allows women to continue to hold their family together during the week. Without treating women materially differently from men in respect of the same crime—to do so would be wrong, and would breach the principle of equality—we can tailor our action to the offending behaviour of the individual concerned and ensure that we prevent their reoffending in future.
Mr. Desmond Swayne: The Secretary of State complained about what he described as the unjustifiable increase in the number of custodial sentences imposed for driving offences. Is he not aware. as many hon. Members are from their postbags, that there is a significantly greater public appetite for more custodial sentences to be imposed for certain categories of driving crime, such as driving recklessly or dangerously? Does he not think, on reflection, that the matter is better left to the courts than to him?
Mr. Blunkett: On the latter point, where people cause death and injury to others, we have toughened the law—for example, in the Criminal Justice Act 2003. I do not need any lectures from Opposition Members about that. I picked up the substantial campaign run by my hon. Friends, especially those representing constituencies in the north-east of England, following some horrendous incidents of inappropriate sentencing and examples of judges' inability to pass adequate sentences. We have given judges the power, which the transport Bill will extend, to give such sentences. My point was that the past 10 years had seen a fivefold increase in the number of minor custodial sentences, rather than fines or community sentences, imposed for similar offences. The sentences had to be minor because the alternative to custody was a fine, and the case was heard in the magistrates court; we must understand the different layers of the system. That diversion to custodial sentences was not justifiable. The Lord Chief Justice, the Secretary of State for Constitutional Affairs and I agree on that. We believe that consistency and transparency, far from failing to provide a deterrent, will help people to understand what will happen in what circumstances.
Martin Linton: If my right hon. Friend has 14,000 more prison places and 3,000 more in the pipeline, and £900 million more to spend on prisons and probation, which I very much welcome, and if he is able to free up space by shifting the emphasis to weekend prisons and intensive community programmes, which I also welcome, is there not now scope to close some of the Victorian prisons, especially those in London, that are no longer fit for service?
Mr. Blunkett: With the considerable assistance of my right hon. Friend the Chancellor of the Exchequer in the spending review, I hope to be able to negotiate the means, including bridge funding, to close and dispose of those outdated 19th century prisons that are a disgrace to the 21st century—one of which, I discovered, although it had been built in 1849, had supposedly been modernised in the 1980s. I hope that we can introduce proposals that will not only bring about a change in the regime and the working conditions of those overseeing the prisoners, but provide an estate that will enable us to achieve the goal that I have set out this afternoon.
Mr. Andrew Turner: A large number of prisoners, both nationally and in the Isle of Wight group of prisons, are from Jamaica. Could more offenders be repatriated to serve their sentences? Will the new service examine the cost-effectiveness of helping the Jamaican Government, practically and perhaps financially, to rehabilitate those offenders?
Mr. Blunkett: We made an announcement in the autumn about the return to country of origin of several hundred prisoners in the prison estate. That is now being undertaken. We are happy to look at how we can assist the receiving authorities in other countries with the continuing rehabilitation of those offenders. Obviously, we also need in place, as we have in the case of Jamaica, new visa regimes to ensure that offenders do not return to this country to commit crime.
Chris Ruane: My right hon. Friend will be aware of the case of Yvonne Scholes, a constituent of mine, who committed suicide at the age of 16 in Stoke Heath. I welcome the proposals to involve the ombudsman in inquiries into suicides and deaths in custody. What guarantees can my right hon. Friend give us to ensure that the ombudsman's recommendations will be listened to and acted upon at the highest level?
Mr. Blunkett: I well understand my hon. Friend's concern, and the tragedy for the family and others when young people in that age group take their own lives. It is a terrible personal tragedy, and we need to take whatever steps are necessary, including, as far as possible, the mentoring of those entering the custodial estate. The ombudsman's reports, which will now be mandatory in respect of any death in custody, will be published, and my hon. Friend the Minister with responsibility for correctional services will give a guarantee that we will report back on those deaths and respond to the ombudsman's reports openly and transparently.
Sue Doughty: Returning to the problem of offenders with a history of mental illness, which may have led to their offence in the first place, I welcome the Secretary of State's intention that much more of their care will be devolved to the Department of Health. In the meantime, what plans does he have to reduce the number of people who go through the revolving door of offending, going to prison and getting inappropriate care in prison because the health service has not had the resources to provide the care that they need?
Mr. Blunkett: We have an agreement with the Department of Health for 300 additional posts working specifically on mental health throughout the Prison Service. The crucial issue that the hon. Lady raises is how things are handled when people are released from prison and go back into the community. For long-term offenders, support has been provided by the probation service. For those serving shorter sentences, that has not been available. The proposals seek to redress that balance and ensure that, using a variety of support systems, we can work with the health service and social services in an integrated and joined-up approach to dealing with those long-term problems.
Mr. Martin Salter: The Home Secretary is well aware of my concerns about the need to tighten up the far too sloppy administration and supervision of drug testing and treatment orders. Given the strong link between class A drug addiction and crime, what comfort can he offer my constituents in Reading whose lives have been disrupted by drug addicts burgling their homes while awaiting a place under a drug testing and treatment order?
Mr. Blunkett: My right hon. Friend the Secretary of State for Health and I share those concerns. Over the past three or four months we have been examining how we can ensure that the 24-hour referral for probation and the 48-hour referral for treatment can be made a reality. The criminal justice interventions programme, and the new areas that we announced in addition to the original 30, will enable us to monitor how the best practice can be translated to areas across the country that are not part of the criminal justice interventions programme, and to ensure that DTTOs work effectively. Above all—I share the concern expressed by my hon. Friend—we shall ensure that when we say that someone is referred for treatment, they do start treatment rather than just have a consultation, and that nobody uses other Acts of Parliament to suggest that an individual who drops out of treatment cannot be reported. The excuses offered to us publicly and privately about why people do not do their damn job properly make us all sick to the hilt.
Mr. Henry Bellingham: That is all very well, but surely there is a real problem of drugs getting into prisons. According to the Department's estimate, almost 50 per cent. of all prisoners will take drugs at some stage during their stay in prison. How are the drugs getting into prisons? That figure is a disgrace. Will the Home Secretary do something about it?
Mr. Blunkett: Of course, that "all very well" related to an entirely different question about treatment in the community, not about prisons, but I take the hon. Gentleman's point. It is clear that prisoners are receiving drugs. We have been monitoring the situation. Fewer prisoners are apprehended and there are fewer drugs in prisons now than there were five years ago, but there are still too many. The figure is not 50 per cent., by the way; the proportion whom we believe have access to drugs at any one time is about 11 per cent—but that is not good enough. It is unacceptable, and the regimes must be tightened to identify those who are bringing drugs in. Obviously, it is those who visit prisoners and those who can provide a way of getting them into the prison estate. I have made it clear to the new management service that we need to use electronic means to detect drugs being thrown over walls and fences, and we need to make better and continuing use of dogs, which had started to be phased out, and, above all, of the testing regime for all prisoners, so that we can get to grips with the problem.
John McDonnell: In 2001 the Government decentralised the probation service to 42 local probation boards, to ensure their coterminosity with police authorities and magistrates courts areas. How does the new regional structure relate to those 42 boards and the future decentralisation of the Court Service?
Mr. Blunkett: Two and a half years ago we created a national body with a devolved administration. The new management role at regional level will continue to co-ordinate those structures, but will do so with the Prison Service and the other agencies and partners involved in rehabilitation and support. That will not disrupt the existing interface with the Court Service; I hope it will improve it by ensuring that, across the 42 regions, people can manage and commission those services more effectively.
Bob Spink: We see today more bureaucratic madness from the Home Secretary, who seems to have forgotten that prisons should have as one of their functions real deterrence. Can we move from the presumption of early release to a system in which early release must be earned by prisoners; can we have prison regimes that are tough, educating and rehabilitating; and, above all, can we have more testing and more treatment for drugs?
Mr. Blunkett: I thought for a moment that I was about to be attacked for being too liberal, but the hon. Gentleman finished his oration by asking me to do what I have just said we are doing, and intend to do more intensively and vigorously and with more joined-up policy. We will also do it with a lot less bureaucracy, because of joining the headquarters and services together, which will cut out duplication.
Mr. David Borrow: May I raise the issue of the role of the voluntary sector in prisoner rehabilitation? In 2002 I visited about a dozen projects run by the YMCA inside and outside prison. They were excellent and added to the work done by the public sector. I should like to raise with the Home Secretary
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two issues that were raised on that occasion. First, there was a need for ongoing funding. Most of the projects were short-term pilots that came to an end. If the voluntary sector is to have a key role in the process, the funding needs to be long term and built into the mainstream. Secondly, does he recognise that the voluntary sector can often add to the process things that excellent organisations such as the probation service cannot add, because it can win the confidence of offenders in a way that organisations that are seen as part of the state find difficult?
Mr. Blunkett: I agree entirely that mentoring and voluntary support are crucial. Such support can be provided on a long-term basis and relate to individuals. For obvious reasons, the professional services cannot provide such support in the same way on a daily basis. There is a serious issue about short-term funding; in other words, I am implying that we have too many pilots and not enough marshals.
Mrs. Annette L. Brooke: When does the Home Secretary anticipate that custody plus will be implemented, and what level of resources will be allocated for that implementation?
Mr. Blunkett: We intend to implement custody minus first, not least for the reasons that I have been spelling out this afternoon in terms of providing an easy, effective and visible way of dealing with breaches. We intend to pilot custody plus in 2005 and, subject to the spending review, to implement it more widely from 2006. The matter is subject to discussions with the Treasury over the next six months, however, so I am not prepared at this juncture to give the hon. Lady the detail, which I have not yet discussed with the Chancellor of the Exchequer.
John Mann: We have moved from zero to 100 people in effective drug treatment by GPs in my constituency in the past six months. That represents a very substantial saving to the taxpayer. The Home Secretary may care to get some independent auditing done of the precise savings as a contribution to the cost of this welcome announcement.
A second such saving would come from sorting out the current mess with regard to the collection of fines—one of the biggest bugbears for my constituents and me. Would it not be sensible to introduce a fines system in which we do not spend a fortune trying to chase people who do not pay fines, but use the minimum wage, which we introduced, as a way of making people contribute through community work an amount equivalent to the fine? If they refused to do so, we could put them in prison. Will the Home Secretary undertake to advance that principle in discussions with the Department for Constitutional Affairs, in order to sort out that bugbear of mine, which my constituents share?
Mr. Blunkett: I have the same bugbear, although I have to say that I am deeply relieved that my hon. Friend's constituency legitimately fell into the second round of the criminal justice interventions programme, which has made my life a lot easier. The substantive point that he makes is entirely right. As part of our report, we are accepting that we should place people in

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compulsory work if they are unwilling to pay the fine. Above all, the fine should be paid, so the prison sanction should be used. The Carter report makes it clear that there will not be a short-term gain in terms of relief of pressure on the prisons. Initially, we will have to send people to prison more readily in order to get across the message the fines are not an optional extra, but a punishment. The Secretary of State for Constitutional Affairs and I will discuss the matter, and if we could link that issue with ability to pay and what are called "day fines", which work effectively across Europe and reflect the likely number of days for which somebody would be put into prison, which are translated into the amount of money earned in those days and into the fine itself, we might start to make some sense of a new fines system that really works.

Points of Order
2.5 pm
Mr. Clive Soley: On a point of order, Madam Deputy Speaker. You may remember that on 11 November, I raised a point of order concerning News International. Since then, I have written to Rupert Murdoch, the chairman of the parent company, seeking clarification of some points. However, as a result of that point of order, other matters came to my attention that I felt I should draw to the attention of the House and on which I felt that I should ask Mr. Speaker to offer a ruling.
I have been aware for a couple of years that a small number of journalists tape record conversations with Members of Parliament. Although I am raising this issue in relation to Members of Parliament and other people who work in the House, I shall also raise it with the Press Complaints Commission, as the point on which I seek Mr. Speaker's guidance is the question of conversations recorded without consent in this House.
May I suggest that anyone in the House of Commons should tape record a conversation in only one of two circumstances? The first and most normal circumstance would be where they have gained the consent of the person involved to making the tape recording. The only other circumstance, which should be extremely rare, is where the tape recording is made without such consent in order to reveal a serious wrongdoing, by which I do not mean some minor matter of personal relationships that are not of significance. I am advised that if a tape recording were made without consent and a third party were then allowed to hear it, a criminal offence might have been committed by the person who made the recording.
The final point that I should like to draw to your attention, Madam Deputy Speaker, is that following my earlier point of order on 11 November, an approach was made to me on behalf of a News International newspaper suggesting that I should state "my negotiating position". Make what you will of this, but I have no negotiating position other than to get News International to deal properly with its internal problems and not to try to warn off MPs while they are properly investigating problems in the newspaper industry. The suggestion made to me is rather difficult to understand and a bit worrying. I understand that News International people have also been suggesting that the figure that I mentioned when I raised my point of order and referred to a £500,000 payment that it made was incorrect. New International is suggesting that the figure was only £80,000, but I think that it should be put on record that it is not my understanding that that is a true reflection of the costs.
My aim in raising this matter is to ask Mr. Speaker to consider it and perhaps to come back to the House on the recommendation concerning tape recording. May I also suggest that it might be useful to discuss the matter with the chairman of the Lobby journalists?
Madam Deputy Speaker (Sylvia Heal): The hon. Gentleman has raised an important issue, and I have no doubt that Mr. Speaker will give serious consideration to the points that he has made.
Mr. Christopher Chope: On a point of order, Madam Deputy Speaker. I hope that you

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will agree that this too is an important point of order. Last night, this House passed a programme motion on the Traffic Management Bill providing that proceedings should be completed by Thursday 12 February and that the Committee should have leave to sit twice on its first day, thereby implying some sense of urgency. Although Opposition Members would have liked more time, we understood that there would be at least five weeks, or 10 days, of Committee proceedings, starting next Tuesday, 13 January. I have now been told that the Government will not allow the Committee to begin until Tuesday 3 February, which will give the Bill just two weeks in Committee rather than the five that we had expected. Under Standing Orders, as the guardian of Back Benchers, do you have any power to order the Committee to meet sooner? The Government's behaviour on this Bill is particularly cynical and manipulative, because by having an early Second Reading they prevented the Select Committee from scrutinising it. They are now intent on preventing the Standing Committee from doing its work of scrutiny. We are familiar with this Government's guillotines truncating the torsos of Bills, but they are now, by guile, extending the guillotine to the legs as well.
Madam Deputy Speaker: The hon. Gentleman has made a point that is now on the record, and I suggest that he pursue the matter through the usual channels.
Mr. Eric Forth: Further to that point of order, Madam Deputy Speaker. Is there no protection that the Chair can offer the House in circumstances such as those that my hon. Friend the Member for Christchurch (Mr. Chope) has outlined? If the House is asked to vote on a programme motion immediately following a Second Reading on certain assumptions, or even understandings, the Programming Sub-Committee will meet fairly soon after that, presumably on the basis of those assumptions. If the Government are then free to move the start date of the Committee as my hon. Friend suggests, does that not make nonsense not only of the whole concept of programming, but of any kind of relationship that may or may not exist between the usual channels? I ask this because if the situation that my hon. Friend outlined is the case, and if there is any chance of its being repeated, the House is now completely at the mercy of the Government, who, it seems, can do anything they like, notwithstanding motions passed by this House.
Madam Deputy Speaker: I confirm what I have already said—that the matter raised by the hon. Member for Christchurch (Mr. Chope) could be pursued through the usual channels. As for the right hon. Gentleman's other point, that could well be raised in the Second Reading debate.

Orders of the Day

  National Insurance Contributions and Statutory Payments Bill
  Order for Second Reading read.
  2.11 pm
  The Paymaster General (Dawn Primarolo): I beg to move, That the Bill be now read a Second time.
  The Bill is a modest measure, which continues the work undertaken with employers on reducing paperwork and record keeping that is considered unnecessary. It is a technical Bill, and I do not intend to pore over the detail of each and every clause this afternoon—as I am sure hon. Members are greatly relieved to hear—because that pleasure awaits in Committee. Rather, I intend to give the House an overview of the reasons for the changes that are being made and of what the Bill will do.
  In 1997, the Government considered the way in which the tax and national insurance systems operated. Income tax under PAYE—pay as you earn—and class 1 national insurance contributions are paid largely by the same group of people. They are both collected in the same way—by payroll deductions administered by employers. That creates duplication of administrative effort. Both employers and ordinary taxpayers were required to deal with two different organisations in relation to their tax and national insurance affairs. That was especially the case for employers who were visited regularly by both the Inland Revenue and the Contributions Agency to check on their operation of PAYE and contributions. Therefore, my right hon. Friend the Chancellor of the Exchequer announced at the time of his March 1998 Budget that the Contributions Agency and the Inland Revenue would be merged. He said:
  "Employers and employees will…benefit from…the establishment of a single organisation to deal with both income tax and national insurance."
  At the time, that move was widely welcomed by business and by Members on both sides of the House.
  The merger was implemented by the Social Security Contributions (Transfer of Functions, etc.) Act 1999 and, again, Members on both sides of the House supported it. However, as my noble Friend Baroness Hollis made clear during the debates on the Bill in the other place, it did no more than provide for
  "a technical transfer of functions—of the Contributions Agency"—
  which was then in the Department for Social Security—
  "to the Inland Revenue and of policy responsibility for collecting national insurance contributions to the Inland Revenue and Treasury."
  She continued:
  "Over time these transfers will reduce the burdens on business and take a first step towards removing the technical differences between tax and NICs rules that employers fear will trip them up."—[Official Report, House of Lords, 10 December 1998; Vol. 595, c. 1038.]
  In the four years since that transfer, we have done a great deal of work towards that aim. Officials in the Inland Revenue regularly meet employers' representatives to discuss the issues that concern them and to see whether they can find ways to put them right.

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  A lot has been achieved since 1997. We have made significant steps towards simplifying national insurance contributions. We have abolished the entry fee. Before 1999, when people reached the lower limit for starting to pay national insurance, it was calculated as a percentage of all their income. We restructured it to ensure that only the amount of earnings above the lower limit was liable to national insurance. We have aligned the primary and secondary thresholds with the income tax thresholds so that tax and national insurance both start at the same time. We have radically simplified the number of rates of employers' national insurance by reducing them to one. We have made significant changes to the way in which the Inland Revenue is organised so that tax and national insurance matters can be administered together. For example, the Revenue now operates joint employer compliance reviews covering tax and national insurance, and has introduced some new teams for the joint handling of expatriates' tax and national insurance affairs.
  In some areas, however, the administrative alignments that we want to make require changes in primary legislation. The Bill includes those measures.
  Rob Marris: My right hon. Friend mentions the simplification that has already taken place without the need for legislation such as the Bill. Has she any idea of how much money has been saved for business through that simplification?
  Dawn Primarolo: I do not have those figures to hand, but they would have been included in the regulatory impact assessments as the changes were made. I am happy to look into that and to ensure that my hon. Friend receives a detailed answer. I hope that I will have the opportunity to respond at the end of the debate.
  Mr. John McFall: My right hon. Friend will be aware that administrative simplification is extremely important to business: indeed, the Select Committee on the Treasury has received several submissions on that issue. She mentioned the joint committee that is working with business representatives. Can she give us a flavour of the comments that they are making, as that would be helpful to my Committee's future inquiries?
  Dawn Primarolo: In going through each part of the Bill, I am responding directly to observations that have been made. Indeed, draft clauses were circulated to interested parties to check with them that the proposals in the Bill met the requirements that they identified. As my hon. Friend will be aware, some people would like a complete alignment of tax and national insurance. But that involves significant difficulties: first, the national insurance system flags entitlement to benefit; and, secondly, the increased requirements that would be placed on employers to provide the detailed information that we would require in order still to be able to judge on individuals' benefit entitlement were greater than those of the current system. To assist employers, the Government are trying to ensure that, wherever possible, the national insurance system runs in the same way as the tax system as regards inspection, appeals, payments, recovery or—as is touched on in the Bill—
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  share schemes. Perhaps I shall deal with my hon. Friend's points as I cover each clause; if not, I am happy to return to them at the end of the debate.
  Mr. Mark Prisk: Is the Paymaster General ruling out any further alignment of the various systems?
  Dawn Primarolo: I am not ruling out further alignment. It is sensible to proceed by recognising the principles of the national insurance system in terms of flagging entitlement for the individual, and the responsibility of the employer and the employee to make their contributions. However, we are continuing our consultation exercises and discussions with the teams—they are not limited by a time period, and are an ongoing central function that is now required—and if any further clear improvements can be developed, the Government will certainly consider them. I cannot say that there are any obvious ones that we would want to introduce now, but I would not like to mislead the hon. Gentleman. As businesses and officials continue to hold discussions on the day-to-day operation of the system, it is impossible to say that no other changes will ever be requested. The door is not closed, but I am not aware of having omitted anything from the Bill that would be required in this regard. Of course, certain points have been made in those discussions, and I am sure that they will be the subject of more detailed debate in Committee. At each point the Government have had to make decisions on how the system operates, and I would be happy to tell the hon. Gentleman exactly why we have made those decisions.
  The Bill aligns officers' powers to obtain information when investigating national insurance contributions with their powers in relation to tax. This relates to the point made by my hon. Friend the Member for Dumbarton (Mr. McFall). It will bring clarity for employers and introduce a consistent approach by Inland Revenue officers. Opposition Members specifically sought this move when the transfer of national insurance to the Inland Revenue was originally debated. At that time, it was recognised that differences existed between the then contribution agencies and the Inland Revenue's inspection powers. The Government felt, however, that a thorough review was needed to determine whether those differences were justified, and, if not, what type of alignment was necessary.
  We have undertaken such a review and concluded that the old national insurance powers needed to he replaced by those most commonly used for tax and other aspects of the Revenue's business. This does not amount to an extension of the Inland Revenue's powers; in fact, the reverse is the case. The Bill provides for the Inland Revenue to abandon the powers of entry and examination that it has for national insurance purposes. It does not have such powers in relation to tax matters, and it is inconsistent that it should have them for national insurance.
  We therefore propose to replace the Revenue's current power to obtain information for national insurance purposes with a power that ensures that, when the Revenue asks for information, the request is subject to third-party scrutiny to ensure that it is reasonable.

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  We consulted employers' representatives on these changes and they supported them. In particular, the Chartered Institute of Taxation has welcomed the intention behind this legislation, as has the TUC.
  Norman Lamb: Will the Paymaster General explain a little further how the third-party scrutiny will work?
  Dawn Primarolo: In judging whether it is making a reasonable request, the Inland Revenue will need to consider and refer to a commissioner. We are aligning all the processes and appeals processes in one common system, rather than keeping the two separate systems that we currently have. I am sure that the hon. Gentleman appreciates that it is much better for employers to operate one set of rules across both tax and national insurance, and to deal with only one organisation in doing so. Because of the way in which national insurance is dealt with in legislation, that cannot be achieved in a finance Bill; it requires a national insurance Bill. That is the reason for our discussing this Bill today. Perhaps I can elaborate on this matter in my next point on debt recovery, to demonstrate to the hon. Gentleman what I mean.
  Mark Tami: Will my right hon. Friend tell us how long an average case would take, using this process, and how that compares with the present system?
  Dawn Primarolo: Perhaps I can respond by giving an example that relates to debt recovery. If I explain what the powers are at the moment and how they will change, my hon. Friend will be able to see that they are proportionate. I was concerned to ensure that we were not using a sledgehammer to crack a nut, and that we were not introducing a huge amount of procedure to deal with a small issue. For example, the debt incurred in relation to class 2 national insurance contributions over a year is about £100. In my view, it would be disproportionate to operate a system separate from the tax system to recover such an amount. The Bill is therefore pushing together all the debt into one process, and operating at a de minimis level, as outlined in the legislation. How long the process will take once the minimum level that triggers the recovery has been reached depends on the employer's response. If they accepted the liability and paid it, it would take a matter of days from the requirement to pay. If they did not, and the case went to the appeals procedure, it could take slightly longer. Perhaps I could provide examples when I explain the next clause.
  The main alignment measure deals with the way in which the Inland Revenue recovers debt. The vast majority—about 97 per cent.—of national insurance contributions are collected with tax, and since 1975, any debt has been recovered under tax rules. The Bill aligns the debt recovery rules for the remaining 3 per cent. of national insurance contributions with the tax rules. Until now, national insurance contributions payable by the self-employed—mainly the £2 a week flat-rate class 2 contributions—have been recovered under different rules, which can be rather lengthy and unclear. This
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  means that a person owing both tax and class 2 national insurance contributions could face two separate actions. The Bill puts that right by aligning the periods of notice required for distraint action in England and Wales, and for the application of a summary warrant in Scotland, with those that apply to tax debts. It also aligns the procedure that applies to Northern Ireland with that of England and Wales.
  These changes are essentially a tidying-up exercise that will allow the Revenue to operate more effectively. While debt recovery might not always be a pleasant experience for the person from whom the debt is being recovered, it is obviously important that it should be a straightforward, single, swift action across all the areas in which debt is outstanding to the Inland Revenue.
  Mr. Prisk: The Paymaster General rightly says that the need to align the procedures is important, and that is welcome in principle. However, does she accept that reducing the notice period from 30 days to seven, in some cases, represents a diminution and a significant change, and that those affected need to be made aware of it? Some people who are used to the old rules could find themselves getting caught out. Can she assure the House that proper notification will be made prior to the implementation of this measure, so that those who could be caught out will be properly informed?
  Dawn Primarolo: The hon. Gentleman makes an important point. Of course, informing the individuals concerned of the change in period to seven days will be important, and that will be done. Often, when a debt is outstanding for national insurance contributions, a tax debt is also outstanding, and the tax debt is within seven days. Therefore, such a move, although it appears to be a change from seven to 30 days, actually puts all the arrangements within one procedure, with which individuals and companies are already familiar because it is the procedure that applies to tax. I am sure that he has also read, because he is assiduous in his preparation for Bills, that when the Lord Chancellor's Department conducted an extensive consultation on the question of periods of notice and best practice, seven days was the recommended notice period. Of course, the position in Scotland is slightly different, because we are following the legislation in Scotland. It is an important point, however, that we may wish to investigate in a little more detail in Committee.
  The other change in this area is a new regulation-making power that will allow the Inland Revenue to apply tax legislation to the recovery of this type of national insurance contributions debt in future, without having to introduce consequential primary legislation. Basically, that means that the rules covering tax and taxes Acts will still be subject to scrutiny, but the two sets of rules will be kept aligned so that we do not need to keep returning to the House to make primary legislation.
  As hon. Members will be aware, most national insurance contributions are outside the scope of the annual Finance Bill. The power that we intend to introduce in the Bill is similar to that which applies to the other 97 per cent. of national insurance contributions. It is therefore important to understand

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  the scale. The fact that we require primary legislation is related to the structure of national insurance. The purpose is to enable us to keep the tax and national insurance rules in alignment in future. Otherwise, as I said, we would constantly need to find space in parliamentary time for small technical Bills, when the principle on tax had already been dealt with in the House. Clearly, if we can assist the House in that way, that will be a desirable outcome.
  I want to turn to the important issue of employers' national insurance obligation on securities-based earnings. An alignment of administrative rules for tax and national insurance is important, but we are also mindful of those areas in which, because of the structural differences between tax and national insurance, alignment is not the answer. Instead, we need to make sure that we enable individuals and employers to meet their obligations in relation to national insurance contributions in a way that is fair and straightforward.
  We received representations saying that employers were facing difficulties because of the rules on paying national insurance contributions when earnings were paid in the form of shares or other securities. The majority of securities-based earnings are share based. The Government and, I think, all Members, are keen to encourage employees to have a stake in the company for which they work through share ownership. It is a good incentive, and it is good for employees' motivation and therefore for productivity. The awarding of shares recognises employees' work within the company and enables them to share in their firm's success. We therefore encourage the payment of share-based earnings by employers. Because of that, and because of the representations that we received, we have included in the Bill two measures that will offer employers choices in the way that they meet their national insurance contributions obligations when they make payments of earnings in the form of securities. We believe that those will make a positive contribution to help employers who want to reward employees through share-based earnings.
  I now want to turn to the question of recovery of primary national insurance contributions. First, the Bill extends employers' liability to cover primary national insurance contributions paid on behalf of their employees and ex-employees when the earnings have been in the form of securities. That means that both employers and employees will be able to choose how those obligations are met, and ensures that employers are not forced to carry the charge themselves. Secondly, it addresses a problem faced by employers who pay earnings in the form of restricted or convertible securities. The timing and the amount of employers' national insurance contributions on those securities are unpredictable, which gives rise to large accounting difficulties for employers. The Bill will allow an employer to ask an employee to fund the employer's secondary national insurance liability on post-acquisition earnings received from restricted and convertible securities. In doing so, however, the Bill will not introduce a new facility but will extend the scope of a facility introduced in 2000 that allowed that transfer of liability on unpredictable share option gain. That facility has been well received and applications for its
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  use have been received from more than 1,800 employers. We believe that the extended facility introduced in this Bill will also be widely used.
  Norman Lamb: In a sense, the Paymaster-General has answered my question. I understand entirely how the present restrictions might act as a disincentive to employers to offer the kind of securities that are dealt with in the Bill. Does any evidence exist, however, that trends in the offers of such securities-based remuneration by employers are being held back, as suggested by the representations?
  Dawn Primarolo: We accepted the representations made by employers that circumstances existed in which they did not feel able to offer securities or share options, on the basis that they were not properly protected in terms of the unpredictability of such options. Clearly, it is difficult to quantify how many share options would have been given, but given that we received those representations during the consultation on simplifying national insurance and tax administration—to which my hon. Friend the Member for Dumbarton (Mr. McFall) referred—and given the evidence in them, we believe that this is the correct way forward.
  In making provision for this arrangement, however, we have been careful to ensure that the central principle within the national insurance contribution system—that employers and employees have a liability, and that employers cannot transfer unreasonably liability to employees or put pressure on employees in relation to the transfer of that liability—is protected in the way that we have approached the Bill. Clearly, that is a difficult line to walk, and we have tried to ensure at all costs that the principle is maintained and that employees do not come under pressure in circumstances where share-based options, or the offer of them, would not be a sensible way forward.
  Rob Marris: Paragraph 13 of the explanatory notes says:
  "Clause 1…and supporting secondary legislation will extend the ability of the employer to recover contributions in two ways".
  and goes on to delineate them. I accept that that is in the explanatory notes rather than the Bill, but I am slightly confused by the statement that both methods of recovery require
  "the written consent of the employee".
  If the employee's written consent is required, why is primary legislation necessary to deal with what could be simply a written contractual matter between employer and employee?
  Dawn Primarolo: An employer's national insurance contribution could be transferred only in the narrow case of share options. The rest of the system protects the principle that employers pay. As I told the hon. Member for North Norfolk (Norman Lamb), the written consent of employees was considered necessary to ensure that they fully understood their obligations in accepting share options. We do not intend employees to be put under undue pressure in the transfer of earnings-based remuneration that would escape employers' NI contributions.

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  I am sure my hon. Friend agrees that, while we should try to facilitate the share options that all Members want to encourage, it is incumbent on us to ensure that there is no breach of the basic principles of the NI contributions system.
  Rob Marris Rob Marris rose—
  Dawn Primarolo: I must bear in mind that when my hon. Friend is present I should pay a little more attention to my own explanatory notes.
  Rob Marris: I thank the Paymaster General for her generosity in giving way again. Will she clarify a point for me? I may well not have interpreted it correctly, for, as she will appreciate, it is very technical. Will she confirm that if a written agreement is made between employer and employee transferring liability for the employer's contributions on security options to the employee, and if the employee does not meet the cost of that transferred liability, the Treasury will not seek to recover it from the employer?
  Dawn Primarolo: My hon. Friend is right: this is complicated. I believe he was a member of the Standing Committee that considered what became the Finance Act 2003, which engaged in extensive discussion of the new schedules on share ownership and the complexities of the requirements involved. That legislation arose from the unpredictable gains resulting from share ownership. The Government want to ensure that when a gain accrues to an individual and is realised, either the employer or the employee meets the NI liability. In these circumstances, the employee would have accepted liability, and the amount would be paid when a gain had been realised, as long as it was within the range required for NI to be triggered. I hope my hon. Friend is satisfied with that answer.
  Let me now deal with a slightly easier, more straightforward part of the Bill. The final clauses deal with statutory sick pay and statutory maternity pay. The Bill makes important reforms to the way in which the Inland Revenue oversees SSP and SMP schemes, to protect the rights of sick people and new mothers. Responsibility for their operation was transferred to the Revenue at the same time as the transfer of responsibility for NI contributions. The compliance regime was transferred from the then Department of Social Security unchanged. Failures to comply with SSP and SMP obligations are currently dealt with as a series of minor criminal offences, as is benefit fraud. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) mentioned the consultation document that we issued to businesses on the simplification of tax and national insurance; this is one of the matters mentioned in that document.
  Treating non-compliance as a criminal offence is clearly out of step with the Revenue's practice of imposing civil penalties for compliance failures, and is disproportionate to the nature of the failures involved. The Bill aligns SSP and SMP regimes with the regime governing other parts of the Revenue's business. The arrangement introduced by the Bill is identical to that introduced for statutory paternity and adoption pay by
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  the Employment Act 2002. Our proposed system of civil penalties is proportionate to the failures to which it applies, and will be easier to implement.
  It is important for an effective compliance regime to operate. The vast majority of employers comply with their obligations voluntarily, and we are grateful for that, but we should bear it in mind that a small minority seek to avoid those obligations, either deliberately or through inaction. That is unfair to employees and to other employers. The Bill will protect employees' rights and also provide a level playing field for all employers. We are also introducing regulation-making powers enabling employers' SSP and SMP records to be inspected on the same basis as their payroll records.
  All the issues I have mentioned were identified by business when the Inland Revenue actively sought, through its consultation exercise, to simplify the operation of national insurance in particular—to align its procedures with tax procedures and to remove the burdens of unnecessary record-keeping and unnecessary repeated inspections of the same material by different teams.
  As I have said, this could be politely described as a technical Bill, but it is also a crucial enabling Bill. I assure Members that these changes are important to employers who administer and pay national insurance on behalf of their employees, to employees who become ill or have children and need the protection that the state affords through SSP and SMP, and to the tax and national insurance payers—all of us, essentially—who fund the administration of the NI system. We want to ensure that the system is as efficient as possible, that it is fair and that the requirements it places on both employees and employers to give the necessary information to the tax authorities are proportionate. On that basis, I commend the Bill to the House.
  2.49 pm
  Mr. Mark Prisk: I thank the Paymaster General for her thorough opening remarks. I apologise in advance for my throat. I think it was the Chief Secretary to the Treasury who described me as sounding rather like Edgar Lustgarten. I think that today I sound more like Gollum. I apologise if there is a creak and a crack halfway through—we shall see.
  The Bill has two distinct aspects. The first part seeks to change how employers administer national insurance contributions for, as the Paymaster General said, securities or share-based earnings. That change is a direct result of the ill-considered decision by the Chancellor to impose an additional 1 per cent. on employees' contributions over the upper earnings limit.
  The second part, as the Paymaster General mentioned, is intended to align the administration of both statutory sickness and maternity payments, as well as national insurance contributions. Those changes seek, in her own words, to tidy up previous, incomplete legislation and, according to much outside expert opinion, should have been enacted some years ago.
  Both parts of the Bill, therefore, arise from past errors and oversights by the Government. If, as such, it is both an admission of those failings and an attempt to correct them, it would be churlish not to welcome it. Despite that, we intend to ensure thorough scrutiny of the Bill throughout its progress. However, our ability to fulfil

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  that parliamentary role will be hampered by the fact that significant parts of the Bill will be published in secondary legislation, at a later date. This Government, perhaps more than most, have an unhealthy habit of pushing through substantial legal change by the abuse of secondary legislation. That means that we, as a House, rarely get the opportunity to see the proposed legislation in its finished form. There always seems to be a key part missing.
  In that sense, law-making under Labour has become a bit like buying cheap self-assembly furniture: you do not know whether you have all the pieces, you are not quire sure what the instructions are telling you and you cannot be absolutely certain that it will all fit together.
  Rob Marris: It sounds like the Tory party.
  Mr. Prisk: It sounds very much like the Labour party.
  The danger is that, unlike the results of a visit to MFI, we cannot take Labour's bad laws back if we do not like the end result. Therefore, can the Paymaster General explain the scope of the secondary legislation? Which parts of the Bill will it refer to? How will it affect both taxpayers and national insurance payers? What consultation with those affected is she planning? When does she expect it to be published?
  I turn to the specific elements in the Bill. Clauses 5 and 6 seek to align the respective administration of income tax and national insurance. As such, while welcome, that part of the Bill is long overdue. As the Paymaster General mentioned, that part follows the 1998 Budget and the accompanying Taylor report, when the Government denounced the dual systems of income tax and national insurance. Ministers cited those as being unduly onerous for the 1 million or so employers who had to run them simultaneously. Indeed, the then Secretary of State for Social Security, the right hon. Member for Edinburgh, Central (Mr. Darling), told the House that
  "they have to cope with two separate sets of rules. Moreover, if they have questions, they have to deal with two separate Departments. Those starting out on their own—perhaps starting up their own business or in other self-employment—also have to deal with separate Departments on tax and on national insurance. I therefore believe that the case for change is overwhelming."—[Official Report, 8 February 1999; Vol. 325, c. 37.]
  Nearly five years later, the job is still not complete. Indeed, the Institute of Chartered Accountants in England and Wales bemoaned the Government's failure to act after even three years. In a statement, the tax faculty of the institute said that the stated merger benefits had not been achieved and that performance of the merged national insurance contribution office had in that time deteriorated. The faculty went on to highlight a string of problems. The claim forms had become more, not less, complicated. Employers would ring a dedicated helpline, only to get no reply; and if they did get a reply, they found that many expert personnel had left the service and they could not get the advice that they needed.
  Peter Bickley, technical manager of the institute, said at the time that the handling of national insurance contribution matters appeared if anything to be getting
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  worse, with a knock-on effect on the burdens placed on business and those who paid national insurance contributions. He said that it was essential that steps were taken to ensure that the merger achieved its objectives and reduced burdens; otherwise, there was a danger that the merger would fail to deliver the promised benefits. That was in 2002. Since then, of course, similar incompetence has emerged in the dismal handling of the new tax credits, for which the Paymaster General is also responsible. Therefore, can she tell the House whether performance standards are better now than they were before the merger, as was promised by the Chancellor? Has the burden of compliance gone up or down since then? Can she explain why it has taken another two years, following the statement by the institute, to bring these measures before us today? Was the delay a huge mistake or—worse—deliberate?
  Some people will say that this part of the Bill applies to just 4 per cent. of the national insurance fund. That is true but for tens of thousands of self-employed people it represents 100 per cent. of their contributions. In other words, for many people the five-year failure to clear up the rules is a real financial headache.
  I appreciate, perhaps more than most, that the Paymaster General is no friend of the self-employed. After all, it was she who imposed crude and ill-judged measures such as IR35 and the recent reinterpretation of section 660A of the Income and Corporation Taxes Act 1988. Indeed, we are told that she is now planning to clamp down on thousands—who knows, millions—more owner-managed businesses under paragraph 5.91 of the pre-Budget report, yet, just like the five-year delay on national insurance, there is to be no consultation, and no information to enable firms to plan ahead. Why will she not listen to small businesses on that matter?
  This Government, and this Minister in particular, treat the self-employed as second-class citizens. It is a woeful record, based largely on ignorance, and her actions show the Chancellor's words on enterprise to be just empty rhetoric.
  I turn to clauses 1 to 4 relating to securities or share-based earnings. That part of the Bill is a direct consequence of the Chancellor's decision to impose an additional 1 per cent. national insurance charge on employees' earnings over the upper earnings limit. There were many things wrong with the Chancellor's decision to hike up national insurance last spring. It will, for example, act as a serious drag on the competitiveness of our economy, as it is in effect a tax on jobs.
  Dawn Primarolo: I should like to give the hon. Gentleman an opportunity to correct himself. The changes on share-based provisions in the Bill have absolutely nothing—zero—to do with the 1 per cent. and everything to do with representations made to the Government by employers about the options they required in order to simplify the operation, a point that his Government, in 18 years, never addressed.
  Mr. Prisk: The Paymaster General admitted that she had not quite read her explanatory notes when she replied to an intervention from the hon. Member for Wolverhampton, South-West (Rob Marris). It is her own explanatory notes that highlight the fact that we

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  have a 1 per cent. surcharge on earnings over the upper earnings limit and that is what has triggered this decision, so she cannot try to get out of it that easily.
  Mr. David Ruffley: Just for the record and in support of my hon. Friend, the Paymaster General might like to turn to page 11 of the Inland Revenue's regulatory impact assessment. Paragraph 2 states:
  "The introduction of the 1 per cent. NICS charge on employees' primary NICS liability above the upper earnings limit could have an unintended impact on employers' ability to recover from an employee the primary NICS arising on non-cash payments of earnings",
  proving my hon. Friend's point absolutely 100 per cent.
  Mr. Prisk: Naturally, I am grateful to my hon. Friend, not least for reinforcing the point being made. It is no good the Paymaster General's saying, "It is nothing to do with us," when the Government's own documents show that this is a consequence—unintended, but a consequence nevertheless—of such action.
  Dawn Primarolo: Unfortunately, the hon. Gentleman has misunderstood. I do not dispute what the hon. Member for Bury St. Edmunds (Mr. Ruffley) said, but the point was that this was an issue regardless of whether or not there was a 1 per cent. additional liability. The provision was triggered not by the 1 per cent., but by a previous consideration.
  If the hon. Member for Hertford and Stortford (Mr. Prisk) wants to make a point about the additional 1 per cent., he is of course entitled to do so. But he should be very careful not to mislead the House; otherwise, he will need to explain whether he believes that, before the 1 per cent. was added, there was no problem and no simplification of NICs was necessary. Does he believe that—yes or no?
  Mr. Prisk: The phrase, "unintended consequence" means something that is a result of someone else's actions. That is what the Paymaster General's own documents say, and that is the truth of the matter.
  Rob Marris: I caution the hon. Gentleman against selectively quoting, be it consciously or unconsciously, from the explanatory notes. Paragraph 12 says:
  "Most employees who receive security-based remuneration earned above the"
  upper earnings limit, which is £30,000. We should note the reference to "most" employees, not all. There are companies that have share-based options for people who earn considerably less. This legislation will deal with the difficulties that those lower-earning employees would experience. The hon. Gentleman should take note of the use of the word "most".
  Mr. Prisk: Unfortunately, the hon. Gentleman is reading the wrong document. I do not know whether he has had a chance to read the regulatory impact assessment, but that is the document that we are referring to, and it uses the phrase "unintended
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  consequence". That is the line that the Government have put out. We have quoted it, and I am more than happy to do so again. [Interruption.] Well, it is in the Government's own document; if it is untrue, perhaps the Paymaster General will now correct it.
  Mr. Peter Atkinson: If the hon. Member for Wolverhampton, South-West (Rob Marris) had continued to quote from the explanatory memorandum, he would have discovered that it does indeed mention the 1 per cent. figure. It states:
  "Most employees who receive security-based remuneration earned above the UEL and the employer did not have to pay primary contributions on their behalf. From 2003 onwards there is a 1 per cent. primary Class 1 contribution".
  Mr. Prisk: The hon. Member for Wolverhampton, South-West told us that one should not quote selectively, but the danger is that that is just what he has done.
  Despite the Paymaster General's protestations, the truth is that, as she said in her opening remarks, when an employer makes a security-based payment of earnings, there is no national insurance liability until these payments are realised—for example, when options are exercised to acquire shares. At that point, the employer is liable to pay both the primary and the secondary national insurance contributions due on the employee's gain. Until 5 April last year, most employees would have already paid their contributions up to the upper earnings limit, through the usual pay-as-you-earn system. However, from 6 April 2003, as a direct consequence of the Chancellor's decision, an additional 1 per cent. has been due on earnings that exceed the UEL. That is largely in accordance with the Government's own documents. Of course, employers have faced the difficulty of trying to recover the primary contributions to which the Paymaster General referred.
  The Bill is therefore designed, we are told, to enable employers to recover these contributions through new agreements and joint elections. As such they are, as the Paymaster General said, generally welcomed by employers and outside organisations. Indeed, encouraging employee share ownership is very important. When people have a stake in their workplace, it benefits everyone. When a company's performance is enhanced by the ideas and efforts of the people who work for it, it is right that those who have contributed to such success should be able themselves to share in the rewards. And the knowledge that they have a financial stake in their company can only encourage such people to strive to perform better—to add value, if one likes—leaving not only themselves but customers, investors and the economy as a whole better off.
  Of course, promoting wider share ownership is a Conservative value. Indeed, when we privatised so many of the old Government operations, we ensured that the employees had a share. That is why more employees bought and owned shares under the last Conservative Government than ever before. As I recall, at the time the Labour party, including the Paymaster General, bitterly opposed such changes. State ownership, not share ownership, lay at the heart of Labour's beliefs.

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  [Interruption.] The hon. Member for Wolverhampton, South-West seems to be suggesting that that is still the case.
  Rob Marris: indicated dissent.
  Mr. Prisk: Now, it would seem that Labour Members have realised the error of their ways. So I do hope that in her response, the Paymaster General will confirm—as I am sure she will—her Damascene conversion to promoting wider share ownership. It is a very welcome conversion, and I certainly look forward to hearing more about it later.
  When we consider the Bill in detail in Committee, we shall be able to ensure that the clauses achieve the Government's stated aims. However, we shall also want to know why some opportunities for reform have been overlooked. Before today's debate, I took the opportunity to discuss the Bill with a number of outside organisations, including ProShare, an excellent independent organisation that promotes wider share ownership. It raised one important issue that other experts have also mentioned, and I should like to touch on it now to see whether the Paymaster General will respond. She said that she was not aware of any omissions, but this may be one that is worthy of genuine consideration.
  The problem arises when, for example, an employees' trust established by the company founder holds shares and/or cash that cannot be distributed to employees without triggering a liability to NICs for the employer company. Where, for example, the employer company is now owned by persons other than the founder—for example, an institutional investor—the shareholders may be opposed to any move by the trust to distribute benefits, as that would create a new national insurance liability for the company, and so reduce its net assets. Typically, however, a trust cannot reimburse the employer for the cost of those contributions, as that would benefit a non-beneficiary and would therefore breach its own rules. If there is no further need for an employer to fund the trust, as is usually the case, there is no opportunity for other set-off arrangements to compensate the employer company.
  Therefore the problem is that money trapped in a trust that is owed to employees cannot be released because the company, quite naturally, is concerned about a triggering of liability that it would then have to pay. In other words, we have a stalemate.
  Rob Marris: The hon. Gentleman offers an interesting example. As I understand it, he is talking about a scenario in which, for example, a family trust has become divorced from the family company because the company has been taken over. But surely that contingent liability would have been factored in when a determination was made as to what share price should be offered by the person taking over the family company. Therefore, such liability would have already been taken into account.
  Mr. Prisk: That should normally be the case, but there are a number of exceptions. My purpose in raising this issue is to share in the hon. Gentleman's concern that a problem does in fact exist, and to see whether we
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  can get the Paymaster General to elaborate on it. I understand the point that he makes; indeed, I have raised it myself.
  I understand from ProShare and other outside bodies that this problem affects a number of companies and several thousand employes. I therefore ask the Paymaster General why it has been overlooked, and whether the Government plan to address it in the immediate future. If the Government were willing to introduce appropriate amendments to the Bill on this issue, we would certainly be willing to look on them constructively.
  At the heart of the Bill lies the need to correct the Government's previous errors and omissions, and in that sense we welcome it. The need to correct the problems associated with securities-based earnings and the recovery of NICs is clear. Indeed, as the party that has encouraged more people to own shares than any other, the Conservative party wants to help to remove any barriers to wider share ownership. We are waiting to see and examine the proposals in detail, but we hope and expect to do so positively.
  At the same time, we feel strongly that the Government should have acted far sooner to realign the rules for tax and national insurance and statutory payments. It is somewhat bizarre that a Secretary of State can call the case for change "overwhelming", only for nothing to happen for five years among his ministerial colleagues. The fact that that has been to the disadvantage of the self-employed is a disgrace, and it follows on from the shoddy treatment all too often meted out to them by so many Ministers in the Government. The next Conservative Government will redress that discrimination.
  The Bill is important, but it is, as the Paymaster General acknowledged, largely technical in content. As such, I can confirm that, although we plan to scrutinise the measure properly in Committee, it is not our intention to oppose it in the Lobby at the end of the debate.
  3.10 pm
  Norman Lamb: I thank the Paymaster General for her helpful explanation of what is clearly a very technical Bill and also for the way in which she took interventions during her presentation.
  I want to make it clear from the outset that we welcome this uncontroversial and constructive Bill. It is extraordinary that, since its publication before Christmas, it seems to have passed by without comment from anyone. It seems as though no organisations have made representations in response to the publication of the Bill. We checked with several organisations, but discovered no briefings. That is not necessarily a bad thing, although the Bill is unlikely to excite people either today or in Committee.
  We also need to recognise that the Bill is part of a process that has continued for some years. The most significant step was the transfer of administration of national insurance, statutory sick pay and statutory maternity pay from what used to be the Department of Social Security to the Inland Revenue in April 1999. I heard what the hon. Member for Hertford and Stortford (Mr. Prisk) said about how slowly matters have developed since then. I share his concerns, but it is

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  notable that the transfer of responsibility, which meant that one organisation dealt with both tax and national insurance, never happened under the previous Conservative Government.
  After the transfer, we had an announcement in the pre-Budget report of 1999 that consultation would take place between the Inland Revenue, employers' representatives and so forth to assess how to reduce the technical differences between tax and national insurance. In turn, that led to the technical discussion paper, which makes pretty heavy reading, that was issued in June 2000 and considered a number of areas for possible reform. A summary of responses to that document was published in July 2001. As the hon. Member for Hertford and Stortford said, that was two years ago and progress made since then appears to have been slow.
  The Bill deals with only one of the issues in the discussion paper—the power of officers to check employers' records. I shall return to the other issues later. As the hon. Member for Hertford and Stortford said, there has been considerable criticism of the pace of change since the transfer of administration to the Inland Revenue. We have already heard that, back in April 2002, the Institute of Chartered Accountants complained that the supposed benefits of merger had simply not been achieved even three years after the merger had taken place. The institute highlighted the potential benefits that the Government had mentioned: reducing the burdens on business and people; sharing experience, knowledge and skills in combating avoidance; making better use of resources; enabling a more joined-up approach to customer service; and achieving a gradual alignment of tax and national insurance rules.
  However, areas of concern were also highlighted in April 2002: long delays in dealing with correspondence; correspondence sometimes not being dealt with at all; a less than helpful national insurance helpline for employers; lack of consistency between local offices, head offices and the employers' helpline; and national insurance issues and associated problems being downgraded in importance following the merger. Such was the analysis of members of the Institute of Chartered Accountants. Key national insurance personnel appeared to have moved on or left, leaving a gap in the understanding of issues, yet claims for repayment of national insurance had become more complicated. As we have heard, Peter Bickley, the technical manager of the institute's tax faculty, claimed that the national insurance service had deteriorated since the merger, and he described national insurance as the Cinderella of taxes, and called for urgent action to ensure that the objectives of the merger were achieved and the burdens on business reduced.
  There have also been repeated complaints about the national insurance recording system—NIRS2, as it is known. Although there seems to have been some improvement, problems are still being reported. Given that the Bill's purpose, according to Inland Revenue's own press release, is
  "to improve administration of national insurance and statutory payments and to provide a more efficient service to customers",
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  it is reasonable to ask the Paymaster General whether she is satisfied that all the criticisms made in April 2002 have now been properly addressed.
  Dawn Primarolo: It was my intention to say, should I catch your eye, Madam Deputy Speaker, that I will answer with precision every one of the allegations made in 2002.
  Norman Lamb: I am grateful for that helpful intervention.
  Furthermore, on the computer front, we have witnessed all sorts of chaos at the Revenue in recent months regarding the computer systems for the introduction of the new tax credits—a matter on which the Paymaster General gave evidence to the Treasury Committee. We also know that the contract with EDS is not being renewed. Given the problems experienced with NIRS2 and the tax credit system, can the Minister provide any reassurance that those problems are now behind us? Can she clarify the relationship between the various Inland Revenue computer systems and the systems that will go out to tender? Can she give some reassurance about the co-ordination between the different systems to ensure less confusion in future?
  Dawn Primarolo: On that narrow point, I should like to answer the hon. Gentleman's question now. As he knows, the NIRS2 computer was commissioned and brought in by the previous Government; the present Government unfortunately had to sort out the mess. The system is now stable and is working effectively. It supplies the necessary information to the national insurance system and is part of the wider contract. The hon. Gentleman also referred to tax credits, but he will be pleased to hear that the two systems are not connected. As I said, we now have a stable, operational system, thanks to the Labour Government clearing up the mess of the previous Conservative Government.
  Norman Lamb: I am grateful for that reassurance, but I have to say that I have heard reports of continuing problems with NIRS2. I hear what she says—that all the problems have been resolved.
  Dawn Primarolo: I thank the hon. Gentleman for his graciousness in giving way again. He will find that there have been no problems with the operation of the computer system. Other problems took several years to clear up because of the initial failure under the previous Government. That was connected with contributions, but the problems have now been overcome. As for the operation of the system, the computer platform is stable and operates effectively.
  Mr. Ruffley: The hon. Gentleman sat on the Treasury Sub-Committee, which produced a fine volume: "Inland Revenue Matters: Tenth Report of Session 2002–03". That all-party committee includes Labour Members, and it took evidence from the Paymaster General in the course of producing the report. The last sentence of the report states:
  "This inquiry has raised serious questions about how the Department has been led."

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  What does that say about the Paymaster General's performance?
  Norman Lamb: I am grateful to the hon. Gentleman for reminding me of the conclusion reached by that all-party committee. Certainly, the concerns raised during the Treasury Sub-Committee's inquiry into a number of matters at the Inland Revenue gave rise to serious concern about the Department's leadership. Questions were asked about whether there should have been resignations at that time. Serious concerns have been expressed about leadership at the Revenue in connection with matters such as the issue of contribution notices, the Mapeley Steps scandal, and the introduction of tax credits. The Paymaster General has tried to reassure the House about the Revenue's administration of national insurance, but we are not convinced that things will be as smooth in the future as she has suggested.
  As for the principle of the merger of tax and national insurance, the Government have chosen to take an incremental approach to reducing differences between tax and national insurance. They want to improve and, where possible, merge the administration of those two taxes. However, the Bill has little to do with what many people consider desirable—the full merger of tax and national insurance. The Paymaster General dealt with that briefly in response to an intervention, and it was also referred to in the discussion document issued in 2000.
  I recognise that significant policy issues had to be addressed if merger were to be pursued. There would be significant distributional effects, and the future of the contributory principle would need to be looked at. However, the 2000 discussion document referred to a report published in March of that year by the payroll subgroup of the Better Regulation Task Force, which described full-scale merger as a "long-term goal".
  One possible indication of the Government's intent was the 1 per cent. rise in employers' national insurance contribution applicable above the upper earnings limit that was introduced in the 2002 Budget, as the hon. Member for Hertford and Stortford noted. That increase was pretty much indistinguishable from a rise in income tax. It conveniently avoided any technical breach of the manifesto commitment not to increase income tax, even though its effect was precisely the same. However, was it also a move towards the eventual merger of tax and national insurance?
  Rob Marris: The 1 per cent. increase in employers' national insurance contributions was not akin to a 1 per cent. increase in income tax. It was levied with the specific purpose of funding the NHS. Two thirds of NHS spending goes on pensioners, who by and large do not pay national insurance contributions. The rise was an example of this generation paying for the health of the previous generation—and a good thing too.
  Norman Lamb: I am grateful for that intervention, and perhaps I should clarify what I said. For employees, there is no difference between an increase in national insurance contributions and an increase in income tax, and savers also got off scot free as a result of the way the increase was introduced.
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  Will the Paymaster General confirm whether it is Government policy to pursue merger as a long-term goal? Is that the Government's ultimate objective? I hope that she will provide some clarity on that. If so, is any time scale envisaged? What is the Treasury's state of mind on the issue? What view does it take of the potential savings for employers arising from a full merger of the two systems? Has a regulatory impact assessment been made of the effect of full merger?
  I turn now to what has been left out of the Bill, which is another matter raised by the hon. Member for Hertford and Stortford. As I said earlier, the Bill deals with only one of the issues included in the Revenue's 2000 discussion paper. It does not deal with ways to make it easier for employers to cut national insurance contributions correctly, with the definition of pay for tax and national insurance purposes and the differences of approach between the two taxes, with the assessment of national insurance contributions for UK employees seconded abroad and the guidance offered by the Revenue for people in those circumstances, or with the assessment of national insurance contributions on payment of vouchers made by third parties.
  It may be that all those matters have been dealt with in other ways, such as through secondary legislation or amendments to the guidance issued by the Revenue. However, I hope that the Paymaster General will clarify the position on each of those matters, so that we can understand exactly where things stand in the wake of the consultation exercise held two and half years ago.
  The 2000 discussion paper referred to a plan to introduce secondary legislation to implement a number of specific reforms by April 2001. Was that time scale achieved? On page 18 of the response document, it is noted that there was general agreement among those who responded to the consultation that a proposal to transfer from class 1 to class 1A the liability for national insurance contributions in respect of funded unapproved retirement benefits schemes should be adopted. The Inland Revenue responded that that would be dealt with through changes to primary legislation. Has that happened?
  It would be helpful if the Paymaster General provided us with a checklist showing progress on all the intended reforms covered in the consultation process and referred to in various other contexts. Has guidance been amended, where that has been necessary and where it has been suggested that that would happen? Has secondary legislation been introduced to deal with other matters raised in the consultation process? Are there any other outstanding issues that require primary legislation? Does the Paymaster General envisage introducing any other measures, by either primary or secondary legislation, that have not been dealt with in consultation and which are currently in the pipeline? In other words, is this the end of the reform process, or are further changes envisaged in the relatively near future?
  I shall make a few comments about the Bill's specific provisions. Clauses 1 to 4 deal with national insurance payable on securities, and make it easier for employers to recover contributions, by agreement, from employees and ex-employees. They also enable employers and employees to agree that the employee should pick up the tab for the employer's national insurance payments, in circumstances where the employer awards restricted and convertible securities to an employee. I understand that

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  the Paymaster General dealt with that point. There is a potential unpredictability about the scale of the national insurance liability when such securities are issued to an employee, because of the unknown value of the securities in the future. I can see that that could act as a disincentive to employers who might contemplate offering securities to their employees. We share the Government's objective of encouraging wider share ownership, so the removal of that disincentive is welcome.
  An exchange of interventions in the speech by the hon. Member for Hertford and Stortford addressed the point about any link with the 1 per cent. increase. It is clear from the Government's regulatory impact assessment that there is a direct link. It states:
  "Until 5 April 2003, it was unlikely that primary NICs would be due on share-based earnings as, typically, employees would have paid up to the UEL on their regular cash earnings. But from 6 April 2003 there has been a further 1 per cent. due on earnings that exceed the UEL. The two measures in this clause are intended to remove some of the restrictions placed on the employer's ability to recover the primary NICs payable with respect to securities-based payments of earnings."
  It would helpful if the Paymaster General, in the spirit of openness, could confirm that link when she responds to the debate.
  Clauses 5 and 6 deal with aligning the periods of notice required for distraint action, as between tax and national insurance. The old social security legislation provided for a 30-day notice period in respect of NI, compared to a seven-day period for tax—14 days in Scotland. It is eminently sensible to reduce the notice period for NI to the same length as for tax. As the Paymaster General said, that is in accordance with the recommendations made by Professor John Beatson QC in his review of bailiff law.
  Clauses 7 and 8 deal with the powers of Inland Revenue officers to gather information for tax and NI purposes. In essence, the Bill unifies the powers relating to tax and NI and in the process removes overbearing powers that exist in relation to NI. In a separate consultation exercise conducted by the Revenue on that specific matter, respondents had said that the NI powers were "disproportionate with few safeguards". It is a rare but welcome moment when Government actually reduce their powers in relation to the citizen. That should be celebrated and I congratulate the Paymaster General on that achievement.
  Clauses 9 and 10 deal with the compliance regime for statutory sick pay and statutory maternity pay. In contrast with the regimes for tax, NI and the new schemes for statutory paternity pay and statutory adoption pay, if employers fail to meet their obligations under the SSP and SMP schemes, they commit a criminal offence. All the other regimes provide for civil penalties. Again, the Government have recognised that criminal offences are, in their words,
  "wholly disproportionate to the compliance risk".
  The proposal therefore is to replace the criminal offences with civil penalties, which is to be welcomed, with two caveats. First, concern has been expressed recently about the Government's tendency to raise extra cash by way of increasing penalties for all sorts of breaches of administrative rules. Can the Paymaster
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  General confirm what plans the Government have for the size of the penalties in the future? Will they be pegged and what guidance will be given on the size of the penalty, up to the maximum provided for, in any particular case? Secondly, the burden of proof with a civil penalty is of course lower than that with a criminal offence, and the penalty would be imposed by the Revenue rather than a court. Can the Paymaster General reassure us that the powers will be used in a proportionate way? I am aware of the powers of the Revenue with regard to compliance with the national minimum wage. Are the powers in that area consistent with those proposed in the Bill? Is there now a consistency of approach to compliance in all the various areas of the Revenue's powers?
  The discussion document mentioned an anomaly in that there was no power for Revenue officers to inspect an employer's records on SSP and SMP. Legislation was promised—on page 6 of the responses paper—to provide such a power. Has that been achieved?
  I realise that I have covered a number of technical issues, which is inevitable in a technical measure, so it might not be possible for Ministers to provide answers to all my questions today, but I should be grateful if the Paymaster General would give an undertaking to write to me, especially given the fact that the Standing Committee is due to sit soon, with answers to each issue I have raised that she is unable to deal with today.
  The Bill is a small but important step in the right direction and we shall support it. It is long overdue; I am amazed at how long the Government have taken to introduce it, although I appreciate that primary legislation is required, which takes longer than secondary legislation. However, one hoped that it would have been drafted a little sooner, given the problems that the issue causes for employers. Despite the fact that the Bill is overdue, however, it is none the less welcome.
  3.35 pm
  Mr. David Ruffley: I begin by congratulating my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), the shadow Paymaster General, on his admirably lucid and trenchant speech. His forensic ability will be a great help to us all in exposing the technical weaknesses in the Bill and ensuring that they are thoroughly scrutinised in Committee.
  Although the Bill is by common consent a technical measure, it nevertheless illuminates how the Government run the national insurance system. First, clauses 1 and 2 were necessitated primarily by the unintended consequence of one of the Chancellor's many stealth taxes.
  Secondly, clauses 5, 6, 7, 8, 9 and 10, which relate to powers to check employers' records, to the recovery of national insurance contribution debts and to a civil penalty system for statutory sick pay and statutory maternity pay, are all changes that have been brought forward in an extremely dilatory and tardy fashion. The intervening delays that successive Labour Ministers have tolerated have been greatly to the disadvantage of hard-pressed businesses. A truly business-friendly Government would have acted sooner to cure the deficiencies under which those businesses have laboured.

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  Finally, it is regrettable, although not surprising given the Government's track record on abusing the House, that when we vote on Second Reading, important regulations will not have been made available to us and we shall not have debated them in the Chamber. I refer especially to regulations under clauses 1 and 2 relating to NICs on security-based remuneration and employees' liability. We should at least have seen those regulations in draft. I deprecate the Government's pathological tendency to try to make changes—whether technical or otherwise—through secondary legislation, which, almost of necessity, is likely to receive less than thorough scrutiny.
  I begin the body of my remarks with some comments on clauses 1 and 2, which will be of particular interest to companies and individuals who believe in employee share ownership. At present, as I hope we all know, an employer can make a security-based payment of earnings to an employee, but in the case of an options scheme, NICs liability will not arise until the options to acquire securities are exercised. In that eventuality, an employer will be liable to the Revenue not only for the secondary NICs liability, which is the amount that an employer pays, in a secondary role, on an employee's gain, but also for the primary NICs liability—the employee's own NICs liability.
  Until 5 April 2003, as the regulatory impact assessment demonstrates, it was extremely unlikely that primary NICs, which were employees' liability, would be due on any share-based earnings because, in most cases, employees would have paid their fair whack up to the upper earnings limit, beyond which—before April 2003—they paid no national insurance. I hope that that point is clear to the Paymaster General, as she did not appear to grasp it during earlier interventions.
  In practice, as the regulatory impact assessment makes clear, employers were not liable for the primary NICs liabilities of their employees because there were none above the upper earnings limit. That seems a fairly straightforward point. What the Paymaster General further does not understand, although it is spelt out in her own regulatory impact assessment, is that all that changed after 6 April 2003, when the Chancellor stealthily introduced a further one percentage point charge on earnings that exceed the upper earnings limit.
  I am afraid that I will have to repeat the rather mealy-mouthed language of the regulatory impact assessment, which talks about the introduction of the 1 per cent. NICs charge on employees' primary NICs liability above the upper earnings limit having an unintended impact on employers' ability to recover from employees the primary NICs arising on non-cash payments of earnings such as securities. Nothing could be clearer. The phrase "unintended impact" does not do full justice to the Chancellor's shameless tax-hiking cynicism in sneaking in that stealth tax, about which nothing at all was said during the 2001 general election campaign—an election, incidentally, in which tax issues figured prominently.
  During that general election campaign, Mr. Jeremy Paxman asked the Prime Minister on "Newsnight", on 22 May 2001,
  "whether any reasonable person wouldn't suppose that you…propose to increase national insurance contributions."
  The Prime Minister replied, "They shouldn't." Yet less than one year later, in the 2002 Budget, the Chancellor said that with effect from April 2003, he would raise the
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  rate of NICs paid by employees from 10 to 11 per cent., with an extra one percentage point on earnings above the upper earnings limit. In today's figures, that applies to anyone on class 1 contributions earning more than £30,940 a year. That was certainly a breach of Labour Ministers' oft-repeated pledge that they would preserve the upper earnings ceiling.
  Labour Members should mark well the fact that in our report on the 2002 Budget, the all-party Treasury Committee—I repeat that it includes Labour Members—said about the new charge:
  "To insist…that the upper earnings ceiling remains intact seems to us mere sophistry. We note this departure from previous practice could be viewed as a move of the National Insurance contribution system towards that of general taxation."
  In other words, in practice, in the real world, it is an increase for top-rate taxpayers. That stealth tax hit employees above the upper earnings limit, who are paying an extra one percentage point, but the crucial point, which I hope has been exposed by my hon. Friend the shadow Paymaster General, is that employees and employers were caught, many for the first time, by that new tax hike.
  Currently, some employers can, with employees' agreement, retain some of the securities granted to employees to cover any primary NICs liability that that employer has to make. However—I have to say, with respect, that this was not properly explained by the Paymaster General—that ability to enter into an agreement is subject to some very serious, onerous eligibility criteria. It can apply only to security-based earnings provided, first, that they are paid to former employees; secondly, that the payment is in the same year that they cease to work for that employer; and thirdly, that the employee has insufficient monetary earnings from which the employer can recover that primary liability. That is the position at the moment.
  The proposals in clauses 1 and 2 are necessary to relieve more employers than satisfy those criteria from the new tax burden that they have been saddled with as a result of the Chancellor's NIC hike. Those clauses will also allow the retention of securities by an employer to pay primary NICs liabilities arising on securities-based payments to former employees in the year after they cease to work for that employer. Are the provisions technically sensible, as I have outlined them? Yes, the clauses are welcome. However, we are forced inexorably to the conclusion that they would not have been as necessary if the Chancellor had controlled his tax addiction, rather than jacking up national insurance over the upper earnings limit.
  The clauses will make it possible for more employers, with the agreement of employees, to withhold an amount in securities equal to the value of the primary NICs liability that they pay on behalf of those employees. The problem that we face this afternoon is that clauses 1 and 2 rely on regulations, so if we are to be able to answer two important questions about the agreements, we need to see the regulations. How exactly may an agreement be entered into between an employer and employee? Secondly, what specific types of earnings will be the subject of any of the agreements? I think that the hon. Member for North Norfolk (Norman Lamb) touched on that point when he gave us his definition of

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  earnings, and mentioned the lack of one in the Bill. We do not know, because the regulations have not been produced.
  I looked for enlightenment in all the literature that the Inland Revenue has produced for the debate and turned—probably unwisely—to the frequently asked questions section of the Inland Revenue internet site. One question is:
  "Once the bill becomes an act can I ask employees to enter into these agreements?"
  The answer given on the website is that an employer
  "will be able to enter into these agreements once the bill receives Royal Assent, and the Clauses are given effect by a treasury commencement order and the necessary supporting Regulations are in force. These will be laid before Parliament following Royal Assent."
  The form that the agreements will take is a material question for the House to consider on Second Reading, but we do not know that because we do not have the regulations in front of us. We do not know whether the agreements will be in a standard form. We do not know whether they will be written in plain English so that employers will be given the comfort that their interests will not be compromised and that they will not let themselves in for excessive liabilities above those for which they should be liable.
  I assume that the regulations will be detailed and will cover such points, because there would otherwise be no need for the Government to delay revealing the details and keep us in suspense until Royal Assent. If the matter is straightforward, why can we not see the draft regulations now? Perhaps the Paymaster General will enlighten us on the form of the agreements and tell us why she has not published the regulations that will govern them.
  Mr. Prisk: I do not wish to interrupt my hon. Friend's flow, because he is making an extremely powerful point, but one problem is that there has been a five-year delay. Does he share my bewilderment and concern that although the Government have had five years to introduce the measures, they are now saying, "We need to get this through now, put a timetable on the Committee and rush ahead", when we do not know the content of the regulations?
  Mr. Ruffley: I share my hon. Friend's concern but I do not share his surprise. We have become used to the Minister who oversees the department of the Inland Revenue having lapses of concentration—to put it mildly. I urge those who think that that is a partisan point not to say so, because her recent tenure in office overseeing the Inland Revenue department is comprehensively criticised by an all-party group—the Treasury Committee, which includes a preponderance of Labour Members. I shall quote again the last sentence of our 2002–03 report on the Inland Revenue, which said:
  "This inquiry has raised serious questions about how the Department has been led"—
  a reference to the Mapeley shambles, NIC notification periods and the tax credit shambles. I share my hon. Friend's concern about the tardiness with which some of the department's business is brought to the House.
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  Clauses 7 and 8, relating to officers' powers to check employers' records, illustrate a further slackness in the Government's management of our national insurance system. National insurance contributions and the administration of statutory sick pack and statutory maternity pay were the responsibility of the Contributions Agency. That was transferred to the Revenue in 1999. We were told at the time that that would ensure an alignment of the tax and NIC rules of administration and that everything would be much more efficient, businesslike and clear. However, as the Institute of Chartered Accountants said in April 2002, on the third anniversary of the merger, progress has been slow. The ICA was justified in making that criticism.
  We were given a further commitment by the Chancellor of the Exchequer on 21 March 2000:
  "The Inland Revenue will set out options for ensuring that its officers have common and appropriate powers for their examination of employers' tax and NICs records"—
  the issue covered by clauses 7 and 8. That statement was made in the Inland Revenue Budget press notice REV10, comically entitled "Helping to Get it Right". In July 2001, the Revenue published a summary of the comments it had received following its much vaunted consultation issued in June 2000. Although clauses 7 and 8 are welcome and seem technically adequate for reducing inspection powers relating to national insurance that do not exist for straightforward income tax inspection, it tells us a lot about Treasury Ministers that it has taken the best part of five years to make the change, as my hon. Friend the shadow Paymaster General observed.
  The different inspection powers for income tax and national insurance have been difficult for some employers to understand. Clauses 7 and 8 achieve alignment. In particular, clause 7 dispenses with the powers that allow officers involved in NIC inspection to enter premises, question anyone found on those premises and compel them to provide information and documents without first subjecting those requests to third-party scrutiny. I add my voice to that of other hon. Members and ask the Paymaster General to explain in more detail how future third-party scrutiny might occur. Above all, perhaps she will explain why the misalignment rectified in the two clauses was first flagged up as something that required action during the passage of the Social Security Contributions (Transfer of Functions, etc.) Act 1999. That is hardly a great advertisement for the efficiency of Treasury Ministers.
  The concern about efficiency, and the way in which the Paymaster General dispatches business, was raised, as I said, in "Inland Revenue Matters", the 10th report of the 2002–03 Session produced by the Treasury Sub-Committee. It exposed not just one but a catalogue of administrative failures in the Revenue, oversight of which is provided by the Paymaster General herself. In relation to the Mapeley fiasco, we concluded:
  "The conflicting evidence given to the Committee by the Chairman of the Inland Revenue and the Paymaster General has not resolved the vital question of whether in future the tax haven status of bidders for Government contracts can or cannot be taken into account."
  Our Committee then examined last year's tax credit shambles—there is no other word for it. Let me remind the House that the chairman of the Revenue is the

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  gentleman responsible for the fair and proper administration of the national insurance contributions system. He had few answers as to why the tax credit system ground to a halt, and, to be honest, his evidence did not inspire confidence in his office. As was made clear, by 2 July 2003 nearly a quarter of a million applications had not been resolved, more than 100,000 unresolved applications had been received more than a month earlier, and as a result of delays the Inland Revenue had to make nearly 200,000 emergency payments. In addition, more than 400,000 applicants received their first payment of tax credits on a date later than the one of which they had been notified.
  At the time, the Paymaster General offered her commiseration, but not her resignation. The fact that a flagship project for which Treasury Ministers were responsible disintegrated as it did says a lot about the way in which Treasury Ministers run the Revenue.
  The third and in many ways most potent criticism in that report on the Revenue and its Ministers focused on the national insurance contributions deficiency notice failure. The notices are a means of informing individuals about gaps in their contribution record in any given year, so that, if they want to, they can make up those contributions. Doing so will enable them to ensure that they get their full basic state pension entitlement, so it is an important notice—or so one might have thought. Amazingly, however, no Minister was consulted or informed of the decision, taken in 1998, to suspend NICs deficiency notices. Admittedly, the responsibility belonged to the Contributions Agency, but that agency's functions had passed to the Treasury, via the Department of Social Security.
  Following the transfer of responsibility for that important function to the Inland Revenue in April 1999, the Paymaster General became the responsible Minister. It is astonishing that it took her officials until March 2003—the best part of four years—to inform her of the problem and its significance. As our Committee reported, that was not a happy state of affairs and it did not inspire confidence in the Revenue. That is why in our conclusions we stated that serious questions had been raised about communication between the Minister and her senior officials at the Inland Revenue.
  I mention those failures in the context of a Bill that purports to make the NICs system more efficient and better for the people who pay that levy, whether they are employers or employees. Many of the clauses are tardy responses to long-standing problems, and one might ask senior Inland Revenue officials and the Paymaster General herself why from time to time there appears to be a culture of complacency in that important area of public policy, which affects individual families as well as wealth-creating businesses. I make my comments more in sorrow than in anger, and certainly in the hope that a clear message will be sent to Ministers and Revenue officials that Parliament is watching them. Only then will their performance improve when implementing the provisions of the Bill—if, indeed, it is passed.
  On a less critical note, I hope, I shall close by raising a point that Deloitte unearthed in its pre-Budget analysis in December 2003. In connection with the Bill, it noted the lack of any legislation for funded unapproved retirement benefits schemes, or FURBS. It noted that when the Bill was published on 27 November 2003, the anticipated draft NIC legislation on FURBS
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  was missing. Deloitte said that it understood that the intention to effect a class IA liability on employer contributions from 6 April 2004 was overtaken by the Government's move to simplify the tax treatment of pension schemes from 2005.
  Deloitte observed that the Government's pension proposals had been published, and it appeared that from 6 April 2005 there would be no NICs on employer contributions to FURBS, either class 1 or class 1A, and in addition that there would be no NIC charge on benefits paid out of FURBS if those payments were within registered scheme limits, the employer relationship had ceased and the benefits were consistent with the new pension benefit rules. Deloitte observed that that looked as if it were good news for national insurance contributions in relation to FURBS after 6 April 2005—but the business community is not entirely sure that that reading of the situation is correct, and wants to see more detail relating to FURBS and NICs.
  If Deloitte is right, the corollary is that the contested Revenue claim to class 1 NICs on employer contributions to FURBS will continue for another year. Can the Paymaster General shed some light on that narrow but important technical point?
  In conclusion, I believe the Bill includes provisions that should have been passed years ago, or which are needed now to undo the damage caused by the pernicious tax-raising consequences of the Chancellor's own actions. As such, the provisions are not, in themselves, wholly objectionable. Nevertheless, the Paymaster General needs to answer the detailed questions posed to her this afternoon by my hon. Friend the Member for Hertford and Stortford and me.
  4.2 pm
  Dawn Primarolo: With the leave of the House, I shall respond to this afternoon's interesting debate. I shall respond particularly to points made by Opposition Members on the imposition of the 1 per cent. national insurance rise effected last year. First, however, it is important to reiterate the purpose of the Bill.
  The Bill takes forward the Government's commitment that the Inland Revenue will work with employers' representatives and others on reducing technical differences between the administration of tax and national insurance. It extends employers' options for meeting their national insurance contributions liability when paying earnings in the form of shares or other securities, and it helps protect employees' rights to statutory sick and maternity pay by improving the means of tackling employers who fail to meet their obligations.
  The hon. Member for North Norfolk (Norman Lamb) asked me a number of questions, first with regard to the accusations made by the Institute of Chartered Accountants in its report of April 2002. I confirmed in an intervention that I would answer those points. I shall also give the hon. Gentleman the time line that he requested, to demonstrate to the House that much has been done in the past five years. Not only did the Government, on their election, merge the Contributions Agency with the Inland Revenue—which the previous Government failed to do for 18 years—but there has been steady progress across the board in achieving the objectives that we set. A great deal has been achieved

  217
  since 1999—and, indeed, since April 2002, when the Institute of Chartered Accountants made its observations. The institute referred to the integration of national insurance contributions into the general work of the Inland Revenue and welcomed it, saying that there were benefits and that it had resulted in a much greater awareness of national insurance issues across the board—something that the previous Government totally failed to achieve.
  The first two points made by the Institute of Chartered Accountants related to long delays in dealing with correspondence and a failure to deal with it. I think that the performance speaks for itself, however, and I shall give the House the details. The performance of the national insurance contributions office, or NICO, in dealing with the public has been shown to be at the very highest level. Its last report, published in November 2003—the hon. Member for North Norfolk is free to go back through its previous reports—showed that more than 93 per cent. of post was dealt with completely and correctly within 15 days, and that more than 98 per cent. of phone calls were answered within 20 seconds. I wonder how many MPs' offices manage such a response rate. More than 93 per cent. of complaints to the director were investigated and dealt with within 15 days. That deals with the first two allegations.
  The next two allegations related to the employers helpline and the lack of consistency. Again, the issues relate to procedures and structures that this Government have put in place. If hon. Members wish to know how bad things were, they merely have to look at the situation pre-1997 and the difficulties that employers experienced at that time. There is now a dedicated national insurance contribution contact centre in addition to the employers helpline. The staff are trained to handle both national insurance and tax aspects of employers' queries. The report refers to a period almost two years ago when the helpline was not fully established. I ask hon. Members to ponder for a split second how long it takes to conduct training and to put such facilities in place, fully equip them and make them operational. As I said, the previous Government had 18 years and did not manage it. The feedback is currently very positive. The Inland Revenue is continually updating and reviewing guidance to ensure consistency across the Revenue and the national insurance contributions office. We have a better guidance project and are in consultation with the public and employers to ensure that the highest standards of guidance are available to staff and the public.
  I turn now to accusations Nos. 5 and 6, which are that national insurance issues and problems appear to have been downgraded and that key national insurance personnel appear to have moved on or left. There is a full integration of employer compliance reviews, with all employer compliance officers fully trained in national insurance. That is precisely what the employers said that they needed. National insurance contribution knowledge forms part of a mandatory examination programme of inspectors who will be involved in dealing with medium-sized and large businesses. A rolling programme of national insurance training is being undertaken to ensure that inspectors who completed
  218
  their initial training before the merger took place now have knowledge that goes across the whole organisation.
  How long do hon. Members seriously think that it takes to bring all that information together—one minute, or two or three minutes? That is functioning now and that result has been achieved. Staff involved in handling queries at inquiry centres have also been trained so that there is a point of contact for employers—precisely the objectives of the merger. As I said, a dedicated national insurance contact centre has been established, in addition to the employers helpline. New teams dealing with expatriate workers are trained to handle both their tax and national insurance inquiries. That is an improved service. It is going on now and it has been doing so over the past five years.
  Mr. Prisk: Will the Paymaster General give way?
  Dawn Primarolo: No, I should like to make some progress.
  Then we come to the accusation that claims for the repayment of national insurance have become more complicated—but there have been no such changes. In fact, the merger has allowed us to simplify the procedure by enabling national insurance staff handling repayments of class 4 national insurance contributions to have access to the self-assessment system so that they can quickly verify the amount overpaid through self-assessment without having to make separate inquiries to tax personnel. And we have enhanced the system to enable the automatic issue of application forms for repayment when someone has paid more than the maximum contribution in class 1.
  Those are issues that have been dealt with in consultation. Opposition Members make it sound as though nothing has been done, because they choose to believe that rather than looking at the facts.
  Mr. Prisk rose—
  Dawn Primarolo: I will not give way.
  Opposition Members repeatedly suggested that the list of aims for the merger had been left filed in some corner with no action being taken. The hon. Member for North Norfolk helpfully suggested that perhaps a timeline or checklist would help, so I shall give it to him. We received several proposals, and have acted on all but one. The first was that we should adopt the Inland Revenue tax information powers for all classes of national insurance, statutory sick pay and statutory maternity pay. That is in the Bill. The next was that we should adopt Inland Revenue inspection powers for SSP and SMP. That is in the Bill. The next was that we should repeal section 110ZA of the Social Security Administration Act 1992. That is in the Bill. The next was that we should make some minor changes to the powers to inspect employers' records contained in regulations to make the national insurance regulations match the tax regulations. That was done in 2000. The next was that we should ease the calculation of class 1 national insurance on marginal items of pay—for example, expenses—by giving employers more time to process payments. That was achieved by amending guidance issued to employers. The next was that we

  219
  should simplify the procedure for dealing with arrears and errors involving class 1 NICs by using estimation, while protecting individuals' contributory benefit entitlement. That was achieved by issuing new guidance on the calculation of NICs to Revenue staff.
  The next proposal was that we should align the definition of pay for the purposes of tax. We are making that alignment where possible, as opportunities present themselves, in consultation with employers. The next was that we should move the national insurance charge from class 1 to class 1A on employer payments into FURBS—funded unapproved retirement benefit schemes. The hon. Member for Bury St. Edmunds (Mr. Ruffley) asked why that was not in the Bill; I shall return to that in due course. The next was that we should extend the deadline for payment of NICs due in respect of employees seconded abroad. That was done with effect from the 2002–03 tax year. The next was that there should be better guidance on the tax and national insurance liability of remuneration packages of employees seconded abroad. That has been taken on board as part of the review of residence and domicile. The next was that we should make minor amendments to national insurance regulations to align tax and NICs treatment of certain travel expenses. That was completed in 2000 through regulations. The final proposal was that we should extend the scope of PAYE settlement agreements to cover third parties, which would allow third parties to account for tax and national insurance on payments that they make to the employees of others. That matter is still outstanding.
  Having suggested that nothing has been done, the hon. Member for North Norfolk asked about initiatives. I can give him examples of help being given directly to employers. They are being encouraged to make greater use of new technology instead of the traditional paper that causes many of the mistakes that come back to bite them later. That is being achieved by making online services more comprehensive and user-friendly, and by providing electronic guidance. Our business support team workshop provides targeted support to employers through one-to-one visits, enabling employers who have made mistakes to get themselves on to surer ground for the future and to avoid unnecessary obligations through promoting dispensation and PAYE settlement agreements. There are employer helplines and nationwide networks of local offices that can advise on all queries. I could go on.
  That is not a record of this Government doing nothing, as Opposition Members suggest. Their description of inaction is a correct description of what they did when they had the opportunity to change things but did nothing.
  The hon. Member for North Norfolk asked whether the Government believed that there should he a structural alignment of tax and national insurance. If he reads the employers' observations in the various studies, he will see that there are very mixed views on that issue. The biggest problem is to determine whether removing national insurance would place more obligations on employers by requiring a flag in the system relating to entitlements to contributory benefits. The Government are not attracted to the structural alignment that he suggests, for all the reasons that are widely known and outlined in the literature. Our approach is to continue to work with employers' representatives and others to
  220
  examine opportunities to align the tax and national insurance rules at a practical level, where possible, while always having regard to the importance of protecting individual benefit entitlements.
  The hon. Gentleman also asked about the penalties regime. The £300 penalty is the maximum that could be charged for each incident. In regard to statutory sick pay and maternity pay, if someone were to fail to produce their SSP records for 25 employees, the maximum penalty would be a total of £7,500. The penalties must also be proportionate to what has taken place, and cases in which an employer has failed to pay SSP or SMP do not usually involve penalties of more than a few hundred pounds. Clearly, however, we must be able to deal with such cases.
  Norman Lamb: Will the Paymaster General clarify whether determining the scale of the penalty is provided for in guidance or in regulations? I hope that she will forgive my ignorance, but I should be grateful if she would clarify how guidance is given to officers on determining the scale of the penalty.
  Dawn Primarolo: It would have to be taken into consideration whether an employer had made a genuine, and quite minor, mistake. In such cases, it is best that the mistake is just corrected. The example that I gave earlier, however, involving the complete failure of an employer to pay a large number of employees without explanation, was not a minor mistake. In such cases, we need to ensure that the penalties bite. They are not intended to be used in cases of genuine mistakes, of which the tax system has a great deal of experience, when employers and employees have done their best to get things right. Any penalty we sought in such cases, if we sought one, would have to be proportionate to what had gone wrong. There is no automatic trigger. The aim is to ensure compliance and for there to be no need to use the penalties, rather than the reverse. We do not want to assume that whatever penalties are available will be used.
  Several points were made about the Government's raising national insurance by 1 per cent. It is important to remind the House—although this matter is not connected to the Bill, it was mentioned in the debate, so I shall respond—that the 1 per cent. increase, which was supported by the general public, was the biggest ever sustained growth and investment in the national health service, amounting to more than £40 billion extra being spent until 2007–08, compared with 2002–03. As my right hon. Friend the Chancellor pointed out, it spreads the burden as widely and as fairly as possible, matching costs to ability to pay. Pensioners are not affected by those changes, as they do not pay national insurance. That ensures that the national health service remains free at the point of need, and accessible to all irrespective of income—I understand clearly that those are principles to which the Conservative party does not subscribe. That money pays for 80,000 more nurses—
  Mr. Ruffley: Will the right hon. Lady give way?
  Dawn Primarolo: No. That money pays for 80,000 more nurses, midwives and health visitors, 25,000 more doctors and 100 new hospitals in the United Kingdom—extra spending that is widely welcomed.
  Mr. Ruffley: Will the right hon. Lady give way?
  Dawn Primarolo: No. With which bit of "No" is the hon. Gentleman struggling—the n or the o?

  221
  Hon. Gentlemen sought to suggest that the arrangements in the Bill were made because of the 1 per cent. increase, which was not a stealth tax and which was clearly demonstrated and explained and widely supported. The issue at stake—as I tried to explain, but which they could not quite grasp—is that the change is necessary because any employee can receive shares whether or not they have earned above the earnings limit. The additional 1 per cent. is payable only for those earning above the upper earnings limit. Of course, those employers will be particularly affected, and the explanatory material on that has been absolutely straightforward. To say that the 1 per cent. has caused us to table the clause, however, is simply wrong. It is not the case.
  Mr. Ruffley: Will the right hon. Lady give way?
  Dawn Primarolo: No, I want to make progress.
  During the debate, hon. Gentlemen sought to raise a range of issues that are not connected to the Bill, to which I now seek to respond. The hon. Members for North Norfolk and for Bury St. Edmunds raised the issue of funded unapproved retirement benefit schemes and their absence from the Bill. We were considering including in the Bill a change to the national insurance treatment of payments to FURBS, which would have moved the national insurance liability from class 1 to class 1A. The proposal has recently been overtaken, however, by our thinking on the future of unapproved schemes under the simplified regime for pensions and the Government's pension simplification proposals published on 10 December 2003. Under those circumstances, given the potentially short-lived nature of a change in the Bill, I considered it more sensible to await the outcome of the consultation.
  Under the new regime, the national insurance status of payments into non-registered schemes will depend on the benefits paid out of the scheme, rather than being subject to national insurance in all cases. There will be no charge on national insurance contributions when benefits paid out are consistent with the general benefits that can be paid from a registered scheme. That will encourage employers to fund genuine pension benefits. It was on that basis that the proposal was removed.
  The hon. Member for Bury St. Edmunds, whom I thought was an experienced Member of the House—but there we go—knows perfectly well that regulations are produced after a Bill is passed. I can confirm, however, and it is my practice as a Minister in dealing with the Finance Bill and other Bills, that I will be more than happy to provide the Committee with the detail that has been requested on the draft regulations. I sincerely hope to be in a position to make those draft regulations available to the Committee in time for its discussions.
  Mr. Ruffley: When?
  Dawn Primarolo: Before the Bill is completed. Clearly, the hon. Gentleman would wish to have sight of them before that.
  The hon. Member for Hertford and Stortford (Mr. Prisk) asked what would happen if a family trust divorced from the original family company could no
  222
  longer pay its share-based benefits. I know of only one case of a trust being unable to pay benefits without creating a national insurance liability for the new employer, but if the hon. Gentleman knows of other cases perhaps he will tell me of them. The matter had been discussed at length with officials and with the parties involved. While I appreciate the difficulties, I am sure the hon. Gentleman is not suggesting that we should legislate for a single case.
  Mr. Prisk: I am grateful to the Minister for finally giving way. Would she be receptive to submissions on the subject? A number of outside experts—including ProShare, which I know she strongly supports—have made clear their anxieties.
  Dawn Primarolo: I am happy to confirm that I will consider any submissions on issues in the Bill that are made to my officials and subsequently to me, but it is not incumbent on the House to alter primary legislation to correct a matter which a trust has the power to change, or which places a trust in difficulty as a result of its own decisions.
  I am grateful for the opportunity to explain the issues that have arisen today. I look forward to the Committee stage, when we can expect to debate a number of points at more length. Again, I commend the Bill to the House.
  Question put and agreed to.
  Bill read a Second time.

  NATIONAL INSURANCE CONTRIBUTIONS AND STATUTORY PAYMENTS BILL (PROGRAMME)
  Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 6 November 2003],
  That the following provisions shall apply to the National Insurance Contributions and Statutory Payments Bill:
  Committal
  1. The Bill shall be committed to a Standing Committee.
  Standing Committee
  2. Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on 15th January 2004.
  3. The Standing Committee shall have leave to sit twice on the first day on which it meets.
  Consideration and Third Reading
  4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
  5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on the day on which proceedings on consideration are commenced.
  6. Sessional Order B (programming committees) made by the House on 28th June 2001 shall not apply to proceedings on consideration and Third Reading.
  Other proceedings
  7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further message from the Lords) may be programmed.—[Paul Clark.]
  The House divided: Ayes 306, Noes 145.

  Division No.21]

  [4.27pm

  AYES

  Adams, Irene (Paisley N)

  Cryer, John (Hornchurch)

  Ainger, Nick

  Cummings, John

  Ainsworth, Bob (Cov'try NE)

  Cunningham, rh Dr. Jack

  Alexander, Douglas

  (Copeland)

  Allen, Graham

  Cunningham, Jim (Coventry S)

  Anderson, rh Donald (Swansea E)

  Cunningham, Tony (Workington)

  Anderson, Janet (Rossendale &

  Curtis-Thomas, Mrs Claire

  Darwen)

  Dalyell, Tam

  Armstrong, rh Ms Hilary

  Davey, Valerie (Bristol W)

  Atkins, Charlotte

  David, Wayne

  Austin, John

  Davies, Geraint (Croydon C)

  Bailey, Adrian

  Davis, rh Terry (B ham Hodge H)

  Baird, Vera

  Dawson, Hilton

  Barnes, Harry

  Dean, Mrs Janet

  Barron, rh Kevin

  Denham, rh John

  Battle, John

  Dhanda, Parmjit

  Bayley, Hugh

  Dismore, Andrew

  Beard, Nigel

  Dobbin, Jim (Heywood)

  Beckett, rh Margaret

  Dobson, rh Frank

  Begg, Miss Anne

  Donohoe, Brian H.

  Bennett, Andrew

  Doran, Frank

  Benton, Joe (Bootle)

  Dowd, Jim (Lewisham W)

  Berry. Roger

  Eagle, Angela (Wallasey)

  Betts, Clive

  Eagle, Maria (L'pool Garston)

  Blackman, Liz

  Edwards, Huw

  Blears, Ms Hazel

  Efford, Clive

  Blizzard, Bob

  Ellman, Mrs Louise

  Boateng, rh Paul

  Ennis, Jeff (Barnsley E)

  Borrow, David

  Farrelly, Paul

  Bradley, rh Keith (Withington)

  Field, rh Frank (Birkenhead)

  Bradley, Peter (The Wrekin)

  Fisher, Mark

  Bradshaw, Ben

  Fitzpatrick, Jim

  Brennan, Kevin

  Fitzsimons, Mrs Lorna

  Brown, rh Nicholas (Newcastle E

  Flint, Caroline

  Wallsend)

  Foster, rh Derek

  Brown, Russell (Dumfries)

  Foster, Michael (Worcester)

  Browne, Desmond

  Foster, Michael Jabez (Hastings

  Bryant, Chris

  & Rye)

  Buck, Ms Karen

  Foulkes, rh George

  Burden, Richard

  Francis, Dr. Hywel

  Burgon, Colin

  Gardiner, Barry

  Burnham, Andy

  Gerrard, Neil

  Cairns, David

  Gilroy, Linda

  Campbell, Alan (Tynemouth)

  Goggins, Paul

  Campbell, Mrs Anne (C'bridge)

  Griffiths, Jane (Reading E)

  Campbell, Ronnie (Blyth V)

  Grogan, John

  Caplin, Ivor

  Hain, rh Peter

  Casale, Roger

  Hall, Mike (Weaver Vale)

  Caton, Martin

  Hall, Patrick (Bedford)

  Cawsey, Ian (Brigg)

  Hamilton, David (Midlothian)

  Challen, Colin

  Hamilton, Fabian (Leeds NE)

  Chapman, Ben (Wirral S)

  Hanson, David

  Chaytor, David

  Harman, rh Ms Harriet

  Clapham, Michael

  Healey, John

  Clark, Mrs Helen (Peterborough)

  Henderson, Doug (Newcastle N)

  Clark, Dr. Lynda (Edinburgh

  Hendrick, Mark

  Pentlands)

  Hepburn, Stephen

  Clarke, rh Charles (Norwich S)

  Heppell, John

  Clarke, rh Tom (Coatbridge &

  Heyes, David

  Chryston)

  Hill, Keith (Streatham)

  Clarke, Tony (Northampton S)

  Hinchliffe, David

  Clelland, David

  Hodge, Margaret

  Clwyd, Ann (Cynon V)

  Hood, Jimmy (Clydesdale)

  Coffey, Ms Ann

  Hopkins, Kelvin

  Cohen, Harry

  Howarth, rh Alan (Newport E)

  Coleman, Iain

  Howarth, George (Knowsley N &

  Connarty, Michael

  Sefton E)

  Cook, Frank (Stockton N)

  Howells, Dr. Kim

  Corbyn, Jeremy

  Hoyle, Lindsay

  Corston, Jean

  Hughes, Beverley (Stretford &

  Cousins, Jim

  Urmston)

  Cruddas, Jon

  Hughes, Kevin (Doncaster N)

  Cryer, Ann (Keighley)

  Humble, Mrs Joan

  224

  Hurst, Alan (Braintree)

  Murphy, Denis (Wansbeck)

  Iddon, Dr. Brian

  Murphy, Jim (Eastwood)

  Illsley, Eric

  Naysmith, Dr. Doug

  Ingram, rh Adam

  O'Brien, Bill (Normanton)

  Irranca-Davies, Huw

  O'Hara, Edward

  Jackson, Glenda (Hampstead &

  Olner, Bill

  Highgate)

  O'Neill, Martin

  Jackson, Helen (Hillsborough)

  Organ, Diana

  Jamieson, David

  Owen, Albert

  Jenkins, Brian

  Palmer, Dr. Nick

  Johnson, Alan (Hull W)

  Perham, Linda

  Johnson, Miss Melanie (Welwyn

  Picking, Anne

  Hatfield)

  Pickthall, Colin

  Jones, Helen (Warrington N)

  Pike, Peter (Burnley)

  Jones, Jon Owen (Cardiff C)

  Plaskitt, James

  Jones, Lynne (Sally Oak)

  Pollard, Kerry

  Jones, Martyn (Clwyd S)

  Pond, Chris (Gravesham)

  Joyce, Eric (Falkirk W)

  Pope, Greg (Hyndburn)

  Keeble, Ms Sally

  Pound, Stephen

  Kelly, Ruth (Bolton W)

  Prentice, Ms Bridget (Lewisham

  Kemp, Fraser

  E)

  Khabra, Piara S.

  Prescott, rh John

  Kidney, David

  Primarolo, rh Dawn

  King, Andy (Rugby)

  Prosser, Gwyn

  King, Ms Oona (Bethnal Green &

  Purchase, Ken

  Bow)

  Purnell, James

  Kumar, Dr. Ashok

  Quin, rh Joyce

  Lammy, David

  Quinn, Lawrie

  Lawrence, Mrs Jackie

  Rammell, Bill

  Laxton, Bob (Derby N)

  Rapson, Syd (Portsmouth N)

  Lazarowicz, Mark

  Raynsford, rh Nick

  Lepper, David

  Reed, Andy (Loughborough)

  Leslie, Christopher

  Reid, rh Dr. John (Hamilton N &

  Levitt, Tom (High Peak)

  Bellshill)

  Lewis, Ivan (Bury S)

  Robertson, John (Glasgow

  Lewis, Terry (Worsley)

  Anniesland)

  Liddell, rh Mrs Helen

  Robinson, Geoffrey (Coventry

  Linton, Martin

  NW)

  Lloyd, Tony (Manchester C)

  Rooney, Terry

  Lucas, Ian (Wrexham)

  Ross, Ernie (Dundee W)

  Lyons, John (Strathkelvin)

  Roy, Frank (Motherwell)

  McAvoy, Thomas

  Ruane, Chris

  McCabe, Stephen

  Ruddock, Joan

  McDonagh, Siobhain

  Russell, Ms Christine (City of

  MacDonald, Calum

  Chester)

  McDonnell, John

  Salter, Martin

  MacDougall, John

  Sarwar, Mohammad

  McFall, John

  Savidge, Malcolm

  McGuire, Mrs Anne

  Sawford, Phil

  McIsaac, Shona

  Sedgemore, Brian

  McKechin, Ann

  Shaw, Jonathan

  Mackinlay, Andrew

  Sheerman, Barry

  MacShane, Denis

  Sheridan, Jim

  Mactaggart, Fiona

  Short, rh Clare

  McWalter, Tony

  Simpson, Alan (Nottingham S)

  Mahmood, Khalid

  Skinner, Dennis

  Mallaber, Judy

  Smith, rh Andrew (Oxford E)

  Mandelson, rh Peter

  Smith, Jacqui (Redditch)

  Mann, John (Bassetlaw)

  Smith, John (Glamorgan)

  Marris, Rob (Wolverh'ton SW)

  Soley, Clive

  Marsden, Gordon (Blackpool S)

  Southworth, Helen

  Marshall, David (Glasgow

  Starkey, Dr. Phyllis

  Shettleston)

  Stevenson, George

  Marshall, Jim (Leicester S)

  Stewart, David (Inverness E &

  Martlew, Eric

  Lochaber)

  Michael, rh Alun

  Stewart, Ian (Eccles)

  Milburn, rh Alan

  Stinchcombe, Paul

  Miliband, David

  Stringer, Graham

  Miller, Andrew

  Stuart, Ms Gisela

  Moffatt, Laura

  Tami, Mark (Alyn)

  Mole, Chris

  Taylor, Dari (Stockton S)

  Moonie, Dr. Lewis

  Taylor, David (NW Leics)

  Morgan, Julie

  Thomas, Gareth (Clwyd W)

  Mountford, Kali

  Todd, Mark (S Derbyshire)

  Mudie, George

  Touhig, Don (Islwyn)

  Munn, Ms Meg

  Truswell, Paul

  225

  Turner, Dennis (Wolverh'ton SE)

  Williams, rh Alan (Swansea W)

  Turner, Dr. Desmond (Brighton

  Williams, Betty (Conwy)

  Kemptown)

  Winnick, David

  Turner, Neil (Wigan)

  Winterton, Ms Rosie (Doncaster

  Twigg, Derek (Halton)

  C)

  Twigg, Stephen (Enfield)

  Wood, Mike (Batley)

  Tynan, Bill (Hamilton S)

  Woodward, Shaun

  Vaz, Keith (Leicester E)

  Woolas, Phil

  Vis, Dr. Rudi

  Worthington, Tony

  Walley, Ms Joan

  Wright, David (Telford)

  Ward, Claire

  Wright, Tony (Cannock)

  Wareing, Robert N.

  Wyatt, Derek

  Watson, Tom (W Bromwich E)

  Watts, David

  Tellers for the Ayes:

  White, Brian

  Gillian Merron and

  Whitehead, Dr. Alan

  Paul Clark

  NOES

  Ainsworth, Peter (E Surrey)

  Davies, Quentin (Grantham &

  Allan, Richard

  Stamford)

  Amess, David

  Doughty, Sue

  Arbuthnot, rh James

  Duncan, Alan (Rutland)

  Atkinson, Peter (Hexham)

  Evans, Nigel

  Bacon, Richard

  Ewing, Annabelle

  Baker, Norman

  Fabricant, Michael

  Baldry, Tony

  Flight, Howard

  Baron, John (Billericay)

  Flook, Adrian

  Barrett, John

  Forth, rh Eric

  Beggs, Roy (E Antrim)

  Foster, Don (Bath)

  Beith, rh A. J.

  Francois, Mark

  Bellingham, Henry

  Garnier, Edward

  Bercow, John

  Gibb, Nick (Bognor Regis)

  Boswell, Tim

  Gidley, Sandra

  Brady, Graham

  Goodman, Paul

  Brazier, Julian

  Gray, James (N Wilts)

  Brooke, Mrs Annette L.

  Grayling, Chris

  Browning, Mrs Angela

  Green, Damian (Ashford)

  Bruce, Malcolm

  Green, Matthew (Ludlow)

  Burns, Simon

  Greenway, John

  Burstow, Paul

  Hague, rh William

  Burt, Alistair

  Hammond, Philip

  Calton, Mrs Patsy

  Harris, Dr. Evan (Oxford W &

  Cameron, David

  Abingdon)

  Carmichael, Alistair

  Heald, Oliver

  Chapman, Sir Sydney (Chipping

  Heath, David

  Barnet)

  Heathcoat-Amory, rh David

  Chidgey, David

  Hoban, Mark (Fareham)

  Chope, Christopher

  Hogg, rh Douglas

  Clifton-Brown, Geoffrey

  Holmes, Paul

  Collins, Tim

  Howarth, Gerald (Aldershot)

  Cotter, Brian

  Hughes, Simon (Southwark N)

  Davey. Edward (Kingston)

  Jack, rh Michael

  226

  Jenkin, Bernard

  Sayeed, Jonathan

  Key, Robert (Salisbury)

  Selous, Andrew

  Knight, rh Greg (E Yorkshire)

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

  Laing, Mrs Eleanor

  Kincardine)

  Lait, Mrs Jacqui

  Smyth, Rev. Martin (Belfast S)

  Lamb, Norman

  Spelman, Mrs Caroline

  Lansley, Andrew

  Spink, Bob (Castle Point)

  Laws, David (Yeovil)

  Stanley, rh Sir John

  Letwin, rh Oliver

  Streeter, Gary

  Lewis, Dr. Julian (New Forest E)

  Stunell, Andrew

  Liddell-Grainger, Ian

  Swayne, Desmond

  Lidington, David

  Syms, Robert

  Lilley, rh Peter

  Taylor, Ian (Esher)

  Luff, Peter (M-Worcs)

  Taylor, John (Solihull)

  McIntosh, Miss Anne

  Taylor, Dr. Richard (Wyre F)

  Mackay, rh Andrew

  Teather, Sarah

  Maclean, rh David

  Thomas, Simon (Ceredigion)

  McLoughlin, Patrick

  Thurso, John

  Malins, Humfrey

  Turner, Andrew (Isle of Wight)

  Maples, John

  Tyler, Paul (N Cornwall)

  May, Mrs Theresa

  Tyrie, Andrew

  Mitchell, Andrew (Sutton

  Walter, Robert

  Coldfield)

  Waterson, Nigel

  Moore, Michael

  Webb, Steve (Northavon)

  Moss, Malcolm

  Weir, Michael

  Murrison, Dr. Andrew

  Whittingdale, John

  O'Brien, Stephen (Eddisbury)

  Widdecombe, rh Miss Ann

  Osborne, George (Tatton)

  Wiggin, Bill

  Ottaway, Richard

  Wilkinson, John

  Page, Richard

  Willetts, David

  Paice, James

  Williams, Hywel (Caernarfon)

  Price, Adam (E Carmarthen &

  Williams, Roger (Brecon)

  Dinefwr)

  Willis, Phil

  Prisk, Mark (Hertford)

  Wilshire, David

  Pugh, Dr. John

  Winterton, Ann (Congleton)

  Reid, Alan (Argyll & Bute)

  Winterton, Sir Nicholas

  Rendel, David

  (Macclesfield)

  Robathan, Andrew

  Wishart, Pete

  Robertson, Angus (Moray)

  Yeo, Tim (S Suffolk)

  Robertson, Laurence (Tewk'b'ry)

  Young, rh Sir George

  Ruffley, David

  Russell, Bob (Colchester)

  Tellers for the Noes:

  Salmond, Alex

  Gregory Barker and

  Sanders, Adrian

  Mr. Mark Field

  Question accordingly agreed to.

  DELEGATED LEGISLATION
  Ordered,
  That the draft Charities (Alexandra Park and Palace) Order 2003 be referred to a Standing Committee on Delegated Legislation.—[Gillian Merron.]

  DELEGATED LEGISLATION

    Sixth-form College (Carlisle)
    Motion made, and Question proposed, That this House do now adjourn.—[Gillian Merron.]
    4.42 pm
    David Maclean: Cumbria learning and skills council has proposed a new purpose-built sixth-form college in Carlisle, which would have a planned capacity of 1,150. The proposals would mean the end of school sixth forms in the area. Those schools would become schools for 11 to 16-year-olds and the further education college would offer vocational courses while the sixth-form college provided academic courses.
    There are currently seven schools with sixth forms in Carlisle and district and a further education college. The funding for the new college would come from the learning and skills council and it is estimated that it would cost around £12 million. Major criticisms of the proposals have been made locally, stemming from teachers, parents and pupils. The criticisms fall into three broad categories: first, the lack of strategic thinking by the LSC; secondly, the one-size-fits-all approach; and, thirdly, the lack of consultation.
    On the lack of strategic thinking, millions of pounds of public funds have been pumped into school sixth forms in the area over the last 10 or 15 years. With the establishment of a new sixth-form college, they will be closed down and the money will be wasted. The proposal will add 1,000 surplus places, leaving many new buildings empty and possibly even leading to school closures. According to teachers and parents, the LSC appears to have no partnership with Cumbria local education authority. No meaningful dialogue appears to have taken place between the two organisations regarding the proposal. When asked, the LSC has insisted repeatedly that its responsibilities lie in education for students aged between 16 and 19, with the LEA overseeing 11 to 16-year-olds. However, the impact of the proposal on education for 11 to 16-year-olds will be very significant.
    Local people submit that the LSC will tear the guts out of schools such as Caldew school in Dalston, other schools in Carlisle, and the William Howard school in Brampton in my constituency. In the context of tonight's debate, I shall express my particular concern about the latter school. The county council will be left with a shambles, where now there is coherent provision for post-16 education. The LSC seems to be saying, "That has nothing to do with us, guv. Our remit does not cover that." However, that is not joined-up government, and the LSC's approach is not good enough.
    The second area of criticism is the one-size-fits-all approach. Seven school sixth forms will close if the proposal goes ahead. The people of Carlisle and the surrounding district will be left with no choice in the provision of sixth-form education. Parents in Carlisle and the local area have a choice of sixth forms. Even children in my constituency, who face enormous travel difficulties, have a choice. Admittedly, if they opt for a school that is not in the official catchment area they may have a transport problem, but at least they still have a choice. That will be destroyed if this one-size-fits-all approach is implemented.
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    Parents and teachers also criticise the proposals because they fail to consider the travelling distances involved for children attending a new sixth-form college in Carlisle. There is a lack of public transport provision for children travelling into Carlisle from surrounding rural communities. Travelling very long distances every day can have a detrimental impact on a child's standard of work.
    The proposals also fail to consider the nature of rural communities, and the benefits that sixth forms, such as the one at William Howard school, can have for local communities. Those benefits include teacher employment and community cohesion and identity. I shall quote the governors of Caldew school in Dalston. They belong to the constituency of the hon. Member for Carlisle (Mr. Martlew), but they wrote to me because they feel that the argument applies to their school as much as to William Howard school in Brampton. They state:
    "We are not a Carlisle school and serve a far flung rural catchment area. By the definition of the LSC we are serving a super sparse population. Agriculture, tourism and craft industries are important components of the local economy, which centres on small scale businesses. As a school we found ourselves at the epicentre of the Foot and Mouth epidemic of two years ago in Cumbria and welcome the commitment to rural areas which followed in its wake through such organisations as the Rural Action Zone. Sadly, the potential decision to remove our Sixth Form, one of those services critical to our young people's life chances, represents a backward step destined once again to marginalise the needs of the rural community in the interests of perceived cost effectiveness. We can only be dismayed by the negative impact that such a blow would have on local morale."
    The same arguments apply exactly to the William Howard school in my constituency. The proposals also fail to consider that some of the schools affected are very high achieving schools with good participation rates. William Howard school is a successful and high achieving school, as are other schools in the Carlisle district. Its staying-on rate, retention rate and results at A and AS levels are above not only the Cumbria average but the national average, and they have been so for a considerable number of years. The school offers a wide rage of subjects and opportunities at sixth-form level.
    The one-size-fits-all approach to education will not suit all children in the Carlisle and district area. It will not cater for their differing needs. Many children prefer learning in a smaller, more familiar environment.
    The third major criticism of the proposals has to do with the poor consultation. I say that the consultation process has been poor, but most parents and teachers would say that there has been a total lack of consultation. The LSC failed to consult schools in arriving at its proposal. Not one school in the area was visited by a member of the LSC prior to the publication of the proposal. One school for 11 to 16-year-olds—the Lochinvar school—was left out of the consultation altogether.
    I am told that the night that LSC representatives arrived at William Howard school to outline the plans to parents, teachers and pupils was the first time that members of the LSC had walked through the school's doors. I understand that it was the same in other schools in the area. Of course, the LSC claims that it is only consulting on its plan, but it has invented a detailed plan to remove seven sixth forms from schools in the Carlisle area without a single word of consultation beforehand, and that cannot be right.

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    Little understanding was shown by members of the LSC of the way in which schools work. There was no acknowledgment of the role of older pupils in school—for example, in working with young pupils in sport, music, drama and paired reading schemes. Older students encourage younger ones to enter further education, and they raise aspirations. In most schools with sixth forms, older pupils—fifth and sixth years—are role models for younger pupils. Key questions were also sidestepped during discussions between local parents and members of the LSC, and that did not encourage much confidence in the proposals.
    My purpose today is to put to the Minister some of the key questions that were asked by parents and governors at William Howard school and were not answered by the LSC. The schools involved have followed up by writing to and e-mailing the LSC to demand answers, but they still have not received replies to their crucial questions. I do not expect the Minister to be able to answer the questions that I have posed tonight and I am sorry that I have not had the chance to give him a long appreciation of my speech—he has had a copy for a few hours only. However, I assume that he will write a long, detailed letter to me that sets out the answers to my questions. That is my preferred option so that I may circulate copies to parents and teachers. The answers are vital if parents, governors, teachers and pupils are to be at least half-persuaded that the LSC takes their concerns seriously and is engaged in genuine consultation.
    I have several questions. First, why did the independent consultant or the LSC not visit William Howard school, or any of the other schools, and speak to the head teacher before drawing up their proposals? Secondly, how do the A-level results at William Howard school compare with the average results of sixth-form colleges in Britain, and do the Minister and the LSC believe that a sixth-form college in Carlisle could improve further on those results? Thirdly, will the Minister or the LSC specify what, if any, lack or inadequacy of sixth-form provision there is at William Howard that a sixth-form college in Carlisle would address or improve?
    Fourthly, when reaching a decision on whether William Howard school should be included in the proposals, will the question whether WHS students would be better off be paramount in the consideration? Fifthly, what additional subjects are likely to be offered at a sixth-form college in Carlisle? Sixthly, what consideration has been given to the very significant issues that would arise relating to school transport from all the outlying areas if the sixth-form class was moved from William Howard school to Carlisle? At the moment, buses that pick up students to take them to William Howard school cover 10, 15, 20 or even 30 miles. If those buses have to add another 12 to 13 miles to get into Carlisle, the journey will become unacceptably long. Seventhly, what assessment has been made of the impact that the proposal will have on attendance rates for children from rural communities in further education? That is related to the previous question, because if children have to travel a much longer distance to a huge new college in Carlisle, it will have an impact on the numbers who decide to enter further education.
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    Eighthly, what assessment has been made of the impact that there will be on traffic congestion in Carlisle if the proposal goes ahead? That is not a silly or facetious question. We all know that the centre of Carlisle has a tremendous problem with traffic congestion, and if we add many buses coming in to a new college—which is likely to be placed in the centre of Carlisle—the problems will be enormous. It is not good enough for the LSC to say that that is not a problem for it to consider because it can be sorted out before its plans are finalised.
    Ninthly, what assessment has been made of the impact of the proposal on teachers' jobs in and around Carlisle? Tenthly, what weight will be attached to the fact that if the William Howard sixth form is closed many pupils will have to make journeys of 30 or 40 miles a day if Carlisle is their only option?
    Eleventh, what consideration has been given to the number of surplus places that will be created if all sixth-form education is centred on one college? Furthermore, what discussions has the LSC held—or what discussions does it plan to hold—with Cumbria county council on how to deal with the huge number of surplus places its decision will create? That is a fundamental question, which I submit to the Minister. It goes back to one of the key criticisms of the proposal. Surely, it cannot be right for the LSC to say, "We shall reorganise education for 16 to 19-year-olds in the Carlisle area and here is our master plan. We accept that we shall leave a shambles behind because all the schools and the local education authority will have to sort out their hundreds of surplus places, but it's nothing to do with us. It's not in our remit. We're not interested. We don't care." That is not joined-up government, as I said earlier.
    Twelfth, what consideration has been given to the impact of the proposals on the aspirations of 11 to 16-year-olds in schools that could lose their sixth form? On a linked question, what about the aspirations of teachers? If the proposal goes ahead, no doubt many teachers will want to teach at a sixth-form college. Does that mean that the schools will fight over the best available teachers to teach 11 to 16-year-olds? Everyone will agree that teachers who teach across the whole spectrum of 11 to 19-year-old education are in a better position than those who merely teach one segment.
    Finally, will the LSC consider transitional arrangements whereby if the sixth-form college proposal goes ahead in Carlisle city, the sixth forms in the rural areas can run in tandem for a year or two while the system beds in and the college gets up to speed and reaches the same high standard of education as the current high achieving, well established sixth forms at William Howard and at Caldew in Dalston? I am sure that the hon. Member for Carlisle (Mr. Martlew) will not mind my mentioning the latter school.
    If the sixth-form college proves to be any good, parents will no doubt vote with their feet, as they do at present. There will thus be little opposition to the closure of other sixth forms in rural schools in subsequent years if the Carlisle college is all that the LSC cracks it up to be.

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    Those are important questions and I hasten to add that none of them was invented by me; they were all put by parents when the LSC visited William Howard to tell them of its proposals. Because the questions were sidestepped and the parents received no answers that evening, they followed them up by e-mail and letters, yet I understand that they still have no satisfactory answers.
    I do not expect the Minister to address those questions tonight; that would be unreasonable. I do not expect the LSC to have thoroughly briefed him on the high-handed, incompetent approach it adopted in Cumbria, but I do expect that, perhaps within three weeks, I shall receive a long, detailed letter from him setting out the answers to the questions.
    As the chairman of governors of William Howard said in her letter to the chairman of the Cumbria LSC:
    "The LSC would have to show beyond any doubt that students currently at William Howard would be better off than they are now to come anywhere near a convincing justification for the inclusion of the school in its proposal and the resulting destruction of what has been established. This it is completely unable to do. The governing body of William Howard School is therefore totally opposed to the inclusion of the school in the proposal for a Sixth Form College in Carlisle. Given all the relevant facts and figures such an inclusion would result in what could only be described as an act of 'educational vandalism'."
    I therefore appeal to the Minister to send the Cumbria LSC back to the drawing board to allow it to think again and withdraw these damaging proposals.
    4.59 pm
    Mr. Eric Martlew: I congratulate the right hon. Member for Penrith and The Border (David Maclean) on securing the debate and on using his position as Opposition Chief Whip to provide us with about three hours in which to hold it.
    I thank my right hon. Friend the Minister for Lifelong Learning, Further and Higher Education for spending an hour with me yesterday discussing the proposals. I still have some questions for him; I think that the right hon. Member for Penrith and The Border may have already asked the first one, but it needs a categorical answer. Will my right hon. Friend confirm that the LSC's proposals are only for consultation and that no decision has been taken, either by the Government or the LSC, that they should be the final proposals? Secondly, will my right hon. Friend tell us about the procedure that can be used to support or oppose any LSC proposal before he makes a decision? I realise—I am sure that the right hon. Gentleman does too—that we will get few answers out of my right hon. Friend today because, at the end of the day, he will have to take a decision, so we would not expect him to be specific.
    I shall deal quickly with the points made by the right hon. Gentleman. I suspect that we would not be debating this issue if every school in the Carlisle area were as good as William Howard school. Many people were surprised to see William Howard school included in the proposals—I am sure that its inclusion will be discussed—but the fact is that, overall, the number of youngsters who stay on at school and get adequate A-levels in the Carlisle area is below the county and the national averages. The number of youngsters who leave in the lower sixth form is very high in some schools.
    The reality is that we in Carlisle are underachieving, and the LSC is right to point out that problem, but I call its proposal the nuclear option, as it was designed to
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    upset the maximum possible number of people. It has achieved that aim to some extent, but it has put the issue on the agenda, when it was on the back burner for 13 or 14 years. The local authority never tackled the problem of underachievement, and I would definitely not support a system that ensured that the youngsters in Carlisle underachieved. We have some very good schools and sixth forms, but some of them underachieve and it would probably be wrong to name them. No one will be taking A-levels at one sixth form this year, and fewer than 10 pupils will do so at another school. The youngsters who have not stayed on may perhaps go into further education or whatever.
    We have a problem, and it needs to be addressed. I have spoken to all the heads teachers and the chairmen of governors of the schools in my constituency. With the exception of one school, which is in favour of the proposals, the rest are against them. I have also talked to the FE college, Carlisle college, which supports the proposals. The head teachers and the chairmen of governors of the other schools, however, do not say that the situation is good. They all accept that there has to be change, but I suspect that that change will depend on the attitude of the head teachers. When the proposals first came out, they were totally opposed to them; they were anti everything. They have now decided to go away and discuss among themselves an alternative to the nuclear option, and I look forward to that alternative being discussed with the LSC and to the LSC coming up with an alternative to its initial proposal.
    Reference has been made to Caldew school, which is in my constituency. I have visited the school and talked to the head teacher and the chairmen of governors, and one of the things that came out—the right hon. Gentleman did not refer to it in his speech—is that between 25 and 30 per cent. of the children who go to that school come from the urban area of Carlisle. Although probably 70 per cent. of the school's pupils come from rural areas, it has a large intake from the urban area. The school welcomes that because it would otherwise struggle with its numbers, and its proportion of children from urban areas will probably increase as the years go on.
    A considerable amount may come from the LSC to improve sixth-form education in the city—the right hon. Gentleman cited a figure of £12 million. I would not like all that money to go away, because I do not accept that our schools have lots of new buildings—some of them are quite old and in need of refurbishment. We need the LSC to be flexible and to provide some of that money—perhaps for a central location or elsewhere—to improve the standards and quality of the buildings in which youngsters are taught.
    I went to the city of Durham to see an alternative proposal to that which has been put forward in my area. Durham has schools for children aged between 11 and 16. Although Lochinvar school in Longtown is such a school, most of our schools are 11 to 18 schools. Durham has a sixth-form centre that is based at a local school but the centre is twice the size of that school. One might initially think that the solution was a political fudge because the council could not agree on which schools to close and open, but the system actually works. I hope that people will consider such an option.

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    I shall not take much more time from the Minister because we talked for an hour yesterday. We need to know that the proposal is for consultation—that no final decision has been taken—and that there could be flexibility with the money. We also need to be told what Cumbria county council is doing. The council is a shambles at the moment because its chief executive has left and it is weak. It has not uttered one word about sixth-form provision. Although the right hon. Gentleman was critical of the LSC, I want to know what the county council thinks of the proposals and what its alternative proposals would be. We know everybody else's proposals on a subject that is so important that the right hon. Gentleman secured an Adjournment debate on it, but all that we have heard from the county council is silence. I hope that the LSC and the county council will work together with the heads of the various schools to come up with an option that would improve opportunities for youngsters in my constituency and leave in place what is good in the area. We need to reach a point at which there is consensus on a proposal so that the Minister would see that there was little opposition to it and thus be able to rubber stamp it saying, "That's great, we've got a deal done and people are happy."
    I am conscious that the project is one of the first throughout the country although there are about 50 local learning and skills councils that are going through the exercise. It would be wrong if our LSC were seen to be totally defeated because it has pinpointed and highlighted a problem. Although I do not agree with its solution to the problem, I thank it for bringing the matter forward. I agree with some arguments made on the consultation because it has been poor in some cases. However, I am sure that the right hon. Gentleman and I both want better education for all youngsters whom we represent, whether they live in urban or rural areas.
    5.8 pm
    The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson): I congratulate the right hon. Member for Penrith and The Border (David Maclean) on securing the debate and thank him for his courtesy in advising me of the nature of his speech. I am aware of the cross-party nature of the concern because my hon. Friend the Member for Carlisle (Mr. Martlew) came to see me about it yesterday, as he said. However, I am grateful to the right hon. Gentleman for raising the matter in an Adjournment debate because it gives me a chance to discuss the Government's policy on 16-to-19 reorganisation and to address several concerns raised by him and my hon. Friend.
    It is important to say from the outset that the Government have no agenda to promote a particular type of provision for 16 to 19-year-olds. Sixth-form provision that adequately meets the needs of pupils, whether in schools, sixth-form colleges or sixth-form centres at further education colleges, is our objective and it will be paramount in our consideration of the results of the process. In many areas, 16-to-19 school, college and work-based training provision is excellent, but there is significant variation. My hon. Friend the Member for Carlisle explained that there are problems in Carlisle, which hon. Members would no doubt want addressed. Inspection reports show that there are
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    serious weaknesses in some areas of the nation and a lack of co-ordination of provision in other areas. That is why the Learning and Skills Council is in consultation with local education authorities.
    Although I cannot respond to my hon. Friend's specific point on Cumbria county council, we expect the LEA to be fully engaged in the process, as we expect students, schools, colleges and employers to be involved in a process—the strategic area reviews of post-16 arrangements—that will be undertaken in all 47 learning and skills council areas over the next two years. They are called strategic area reviews of post-16 arrangements. Carlisle is in many ways at the forefront of the process because it began a little earlier. It is right that it addresses the problem, but hon. Members should be aware that the understandable concerns expressed by the right hon. Member for Penrith and The Border need to be tackled because every one of us faces the prospect of such a review in our area over the next couple of years.
    So a review process is taking place. To assist that process, I set out in a departmental publication in September last year five key principles that should underpin the organisation of 16-to-19 provision. They cover the importance of high-quality provision; distinct 16-to-19 provision—the word is "distinct" not "discrete"; the diversity to ensure curriculum breadth; learner choice, an important consideration raised by the right hon. Gentleman; and value for money. Alongside statutory considerations, they will provide the benchmark against which we assess reorganisation proposals that come to the Department. I assure my hon. Friend and the right hon. Gentleman that no proposals have come to the Department yet, but a consultation process is under way. We have set out the five basic principles because everyone in a local area should be aware of the provisions under which we will judge proposals that are eventually submitted to us.
    Let me say a few words about each principle. First, underpinning all consideration of 16-to-19 provision should be the requirement that all provision for all learners is high quality, whatever their chosen pathway, whether it is vocational, academic or some other form. Key things to be examined include the quality of local leadership, the need for investment and the need for reconfiguration of provision, collaboration, merger or the establishment of new institutions.
    The second is distinct 16-to-19 provision to meet the particular pastoral, management and learning needs of people in that age group, wherever they learn. All young people should be attached to a 16-to-19 base, including those in work-based training when attending college. That base will have separate management arrangements with clear responsibilities for ensuring that the learning experience for all 16 to 19-year-olds is appropriate and coherent. Each young person should be assigned a tutor.
    The third principle is diversity, to ensure curriculum breadth. Although that is the third principle set out, it is no less important than the others—they are not ranked in priority order. Together, providers should support a wide curriculum offer for all 16-to-19 learners in their area. Well managed collaboration can enable popular and successful small providers, including school sixth forms, to remain viable and to share and build on their particular areas of expertise. Key features include the

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    sharing of individual provider specialties and allowing and encouraging 16 to 19-year-old learners to select courses offered by a range of providers.
    That brings me to the fourth, related principle, which is that the pattern of 16-to-19 provision should respect learner choice—an important feature of the right hon. Gentleman's speech. Where possible, students should have a choice of provider within reasonable travelling distance. Young people should have comprehensive, objective advice and guidance on the range of providers and options in their area, to inform their choices at age 16.
    Finally, the House will not be surprised to hear that reorganisation of 16-to-19 provision has to be affordable and cost effective. Any net costs should be commensurate with the expected improvement in learning opportunities.
    In accordance with the Learning and Skills Act 2000, the LSC has new powers that enable it to fulfil its planning responsibilities for post-16 provision. We expect the LSC to consult local stakeholders, including schools, the LEA, parents, students and employers, to ensure that local provision meets the needs of learners. Any reorganisation must have the learner at its heart.
    In Cumbria, the local LSC is currently consulting on its reorganisation proposals for the Carlisle area. Those proposals are at an early stage of the statutory process, and depending on the outcome of the consultation, a formal proposal may be submitted by the LSC for the Secretary of State's consideration. I am pleased that Cumbria LSC has allowed three months for consultation—a month longer than the statutory requirement—which is all well and good. I am sure that the right hon. Gentleman will accept that it would be wrong of me to prejudice the consultation or any potential future decision by the Secretary of State by offering a view at this stage on the situation in Carlisle.
    The LSC proposals are for new sixth-form provision in Carlisle. My understanding is that the LSC proposes closing either five or seven school sixth forms, or perhaps a variant of that, as local FE provision is developed.
    David Maclean: I understand that the proposal may come to the Secretary of State for determination and that the Minister would be involved in the decision, which precludes his writing to me on the questions I posed, because doing so could prejudice his quasi-judicial position. If the Minister cannot answer the 13 questions I asked because of his position, will he use his powers to insist that the LSC, either the national body or its Cumbria office, does so?
    Alan Johnson: Yes. The right hon. Gentleman, articulating as he has questions that have been asked by parents, teachers and others in the area, should receive a response, and I shall ensure that that response comes from the appropriate body, which in respect of all his questions is, I believe, the LSC. However, if there are any questions to which my Department can respond while not prejudicing our role, we shall respond. I shall ensure that an answer is given on the specific points he raised.
    The LSC proposes closing either five or seven sixth forms, or possibly a variant of that. One of the options includes the William Howard and Caldew schools. All
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    seven schools were covered by the area review undertaken in 2002 and updated in 2003. I understand that Cumbria LSC wanted all seven schools in the Carlisle area to have the opportunity to be included in the consultation. In that way, the pupils, staff, governors, parents and members of the local community served by those schools have been able to express their views about the future of all seven schools and take a full part in the consultation process. That is the situation that should prevail as part of the consultation.
    I am pleased to see that the publication of the preliminary notice outlining options for change in Carlisle has generated so much local interest. As my hon. Friend the Member for Carlisle said, we met yesterday to discuss the matter. I hope that local people continue to share their views with the local LSC so that their concerns inform the development of any proposals for the reorganisation of provision for 16 to 19-year-olds in Carlisle. The proposals by the local LSC are designed to do better for the young people of Carlisle. I hope that if those consulted do not agree with the proposals, they will make it clear how they would improve participation and attainment in Carlisle and solve some of the problems that my hon. Friend told me about yesterday.
    It is important to stress again that nothing has been decided yet. It is important to remember that the statutory process is at a very early stage. The current consultation may throw up new ideas for improving 16-to-19 education in Carlisle which will take LSC strategic planning in a new direction. I understand that the local LSC is listening closely to all the views being expressed, and it will no doubt take into account the Hansard report of this important debate.
    If, after the current consultation—my hon. Friend asked me to set out the process—the LSC decides to go ahead with the proposal that has caused the controversy mentioned this evening, it will have to publish formal proposals and there will be a further opportunity for objections and comments on those proposals. The proposals will then be considered by the Secretary of State. He will require evidence that the LSC has considered carefully the full range of options and the impact of any reorganisation proposals on local provision. Any changes must be in the best interests of present and future learners, and must follow the correct statutory process.
    Mr. Martlew: When the proposals come to the Secretary of State, is it his duty just to accept them or reject them, or can he amend them at that stage?
    Alan Johnson: The Secretary of State will take a view on the proposals. If they are rejected, it is up to the LSC to begin a process of finding another way forward. It is not a matter for the Secretary of State, from the great distance of Sanctuary house in Westminster, to make decisions on behalf of Carlisle and Cumbria. His job would be to judge the quality of the proposals.
    I can assure the House that the views of all those who have expressed objections and comments will be taken into account, should a formal proposal be submitted by the LSC. Indeed, it is the major information that my right hon. Friend the Secretary of State will look for in connection with any formal proposal that is made.

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    Let me say a word about Connexions, which is the Government's front-line support service for all young people in England aged 13 to 19. Connexions provides integrated advice, guidance and access to personal development opportunities to help remove barriers to learning and progression, and to help young people make a smooth transition to adulthood and working life. It is a new organization, and I wanted to rehearse its role. The important point about Connexions for the purposes of this debate is that we are pleased that Cumbria Connexions is undertaking a survey of young people in Carlisle in January to find out their views about the proposals. The survey will sample a representative cross-section of students in the Carlisle area. I am pleased to see that young people are being encouraged to participate in the consultation and will have the opportunity to have their say.
    I repeat that this Government recognise and value the contribution that good school sixth-form provision can make to young people's opportunities. The Government are committed to encouraging popular and successful schools to expand so that more parents can send their children to them if they wish to do so. I can assure the House that neither the Government nor the LSC have an anti-sixth forms agenda. In the context of proposals made by the LSC to reorganise sixth-form provision, should they come to the Secretary of State for decision, the impact on standards and learner choice would be the key factor that he would consider. That would include
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    whether the plans would affect the level of provision in the best local schools, but he would want to balance that against the potential beneficial impact on overall standards in the area.
    There can be no blueprint for the organisation of 16-to-19 provision, since the focus is the learner, not the institution, and local circumstances and quality of provision will vary, for all the reasons that the right hon. Gentleman set out. Schools and colleges must offer high-quality provision that meets the needs of all young people in their communities and employers both now and in future.
    In conclusion, I thank the right hon. Gentleman for raising this important issue. I hope that he is reassured, or can eventually be reassured, that 16-to-19 reorganisation proposals for Carlisle have the learner and the needs of the whole community at their heart. As with other areas, any proposals being considered for Carlisle will need to be underpinned by the five key principles that I mentioned—the importance of high quality, distinct 16-to-19 provision, diversity to ensure curriculum breadth, learner choice and value for money. I also hope that he and my hon. Friend the Member for Carlisle are reassured that the consultation process provides the opportunity for them and their constituents to be fully involved in ensuring that those principles are met in the current very important reviews.
    Question put and agreed to.
    Adjourned accordingly at twenty-six minutes past Five o'clock.