Sitting of 30 October 1996

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS

  Windfarms and Telecommunications Towers (Scotland)
  Motion made, and Question proposed, That this House do now adjourn. —[Mr. Bates.]
  9.34 am
  Sir Hector Monro: I am glad to have the opportunity to raise important planning issues in Scotland relative to windfarms and telecommunications towers. I am pleased that my hon. Friend the Under-Secretary of State is able to be with us. I know that he will give us the Government's view later.
  If I were to declare an interest, it would be a deep love of the countryside. At one time, I was a Minister at the Scottish Office with responsibilities for the environment. I was a member of the Nature Conservancy Council and of various governing bodies that are interested in the countryside. I am not, however, involved in any pressure group.
  I am concerned about the number of tele-communications towers everywhere in the countryside and the ever-increasing number of windfarms. Both types of structure are serious blots on the countryside and on the landscape generally. I believe that we require stricter controls.
  It is no use the Government, who are keen on raising standards in the countryside, producing splendid glossy papers on the countryside, on our coastline, on rural improvements, on environmentally sensitive areas, on scenic areas and special protection areas, for example, if we allow unattractive pylons and generators to spread without the most careful consideration and thought.
  Whatever we think of technical achievements, they do not enhance the scenic beauty of Scotland or elsewhere. I shall begin with telecommunications pylons. The masts sprout up almost anywhere without planning permission. I accept, of course, that modern technology is important. We must accept that the world has mobile telephones and other means of quick communication. I accept also that we need a first-class telecommunications system if we are to use such equipment.
  Masts are permitted developments stemming from the Telecommunications Act 1984, the subsequent Scottish Office Development Department guidelines—25/85—and the general development order that was introduced in 1992.
  Dame Elaine Kellett-Bowman: I accept that telecommunications masts in Scotland and elsewhere
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  are ugly. Does my right hon. Friend include in his diatribe the equally ugly electricity pylons and poles that are used instead of taking the system underground?
  Sir Hector Monro: I have not really started my diatribe. I appreciate, of course, my hon. Friend's thoughts.
  If we were to begin again by taking ourselves back to 1900 instead of living in years near to the year 2000, we would think twice about the distribution of electricity by means of vast pylons, and by smaller pylons as the supply comes nearer and nearer to individual homes. There are a huge number of vast and unattractive pylons. Some were erected during the war. There are some in the valley near my old home, which were erected during the 1940s, when no one really understood what was going on in terms of planning. There is a pylon line right through the centre of the valley floor between Langholm and Hawick, which looks most unattractive. With hindsight, I am sure that we would not allow that to happen now. Much more consideration would be given to placing pylons nearer the hillside and below sight lines wherever possible.
  Pylons cause great sadness to those who are interested in scenic beauty, and telegraph poles can be extremely dangerous when placed alongside roads. We know that cars frequently crash into them. If we were able to start again, I am sure that we would put many more heavy electrical cables underground.
  There is no requirement to obtain permission from a planning authority before erecting telecommunications masts. I appreciate, of course, that orders and guidelines emphasise that developers must take account of the countryside and, in sensitive areas, must consult local authorities. That is in black and white. It is disappointing, however, when we see what such consultations have produced. It is time to reconsider our flexible and laissez-faire attitude to developers putting up masts wherever they want; if there is a code of practice, it is not effective.
  There are masts and pylons all over the place. For obvious technical reasons, they have to be on the tops of hills or ridges, so they are extremely obtrusive; wherever one drives, one sees masts and little blocks of telecommunications structures. The masts can be 15 m high—or 50 ft, as I much prefer to use the old English terms rather than modern European jargon—and, if they are on buildings, the first 30 m is no problem, so there can be a 150 ft building plus a 50 ft tower on top, which means that a mast can be 200 ft high, without authority. That, however, is not my prime concern; I am more concerned about the free-standing towers all over the countryside.
  Mr. David Harris: Only last week, I took up that very point with my hon. Friend the Minister for Construction, Planning and Energy Efficiency, because the problem is widespread and we are now being afflicted by it in Cornwall, where mobile telephone masts are popping up all over the place in exposed positions. My right hon. Friend can rest assured that he has the backing of every hon. Member who represents a rural constituency, from Land's End to John o'Groats.
  Sir Hector Monro: How right my hon. Friend is. Nobody looks after the interests of Cornwall and the Cornish coastline more than he does.

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  The phenomenon has grown like Topsy, and I expect that my hon. Friend the Minister will say that, with hindsight, we were a little free and easy with the arrangements that we made in the 1980s and that we did not expect quite such a rash of masts. The need to provide the best possible telecommunications for the general public must be balanced against their right to retain their beautiful countryside.
  There are many anomalies: I understand from a newspaper article that I can put up a flagpole with a Union flag without authority, but that I would need to have planning authority to erect a flagpole to fly my own flag. If authority is needed to put up a flagpole, why on earth is it not needed to put up a telecommunications tower? Has my hon. Friend the Minister any idea how many masts there are in Scotland? What are we doing about sharing masts? Why should not the companies get together and share masts in the interests of the beauty of the countryside? Each police constabulary has its own system, but might not the police share with the telecommunications companies?
  I do not want more bureaucracy, especially in planning—I was once chairman of a planning committee, so I know what it can be like—but I think that in this instance we should have stricter control, with formal approval by each authority. I hope that when my hon. Friend winds up, he will say that the Government are concerned and will investigate the possibilities.
  Mr. Nigel Evans: We have some masts in the Ribble valley, and they are a blot on the landscape. The argument is that they are not in an area of outstanding natural beauty, but just on the fringes; but even the fringes are beautiful and there should be more sensitivity towards them. We also have masts in towns, and in one instance Vodafone totally ignored public opinion and erected a mast right next door to a housing estate; the public complained, a campaign ensued and eventually we won and the mast was taken down. Does my right hon. Friend agree that the companies have a responsibility not only to consult but to listen to the public?
  Sir Hector Monro: My hon. Friend had a debate on windfarms in the summer, to which I listened with great interest, because I feel about windfarms in Scotland much as he feels about windfarms in England; he is an expert on the subject and presents tremendous first-hand evidence that the Minister will no doubt take into account.
  Windfarms are far more intrusive than masts. For obvious reasons, they are often in remote parts and can be seen over a wide area; in my opinion, they are particularly unattractive. I appreciate our policy of sustainable development, which has been developed in the interests of both environment and energy, and our responsibility to Rio in terms of global warming, in the form of the Scottish renewable obligation and the non-fossil fuel obligation in England—we think up the most wonderful names for these agreements—and I do not doubt the arguments in favour of renewables, which must go hand in hand with continued reduction in fossil fuel emissions from our power stations. Perhaps the Minister will touch on the progress that we are making towards that end.
  We are making progress, but I want to highlight the balance between alternative fuels and their impact on the countryside. I am not saying that there should be a total
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  ban on windfarms, but I want stricter planning controls, greater transparency and greater attention to the views of the local people, as my hon. Friend the Member for Ribble Valley (Mr. Evans) said.
  Many alternatives are under consideration. From what happened earlier this year, wave power does not seem too promising. Solar power is useful only for individual homes, and the further north one goes in Scotland, the less sun there is and the less likely it is that it will have any practical impact on global warming. I have the highest regard for hydro power, which is most effective and can even be attractive, and we should encourage both large and small hydro schemes. We have talked before about barrages that drive generators as the tide goes in and out of great estuaries, such as the Solway barrage, which would be near my home, or the Morecambe barrage but, again, I am fairly convinced that they will not be constructed.
  The Government have shown great interest in wind power, but it is financially attractive only because of the substantial subsidy available under the obligations.
  Mr. Bill Walker: As my right hon. Friend knows, there are large hydro schemes in my constituency. Is he aware that I strongly favour increasing hydro capacity, and that those of us with experience of hydro schemes believe that they are the best way forward?
  Sir Hector Monro: Indeed, my hon. Friend is absolutely right. I saw a most effective and attractive scheme near Aberfeldy, which I am sure that he knows well, where the burn has been diverted through a pipe into a generator; from a few yards away, one would not even know that it was there, yet day by day it turns out sufficient megawatts to be valuable to the grid and it gives a good return to the landowner. We want to encourage hydro power wherever possible.
  Mr. Phil Gallie: My right hon. Friend probably recalls that I was the manager of a 100 MW hydro scheme, which ran for about 40 miles. When it was built in 1928–29, hundreds of thousands of tonnes of concrete were poured into one of the most beautiful parts of south-west Scotland. Does my right hon. Friend think that nowadays the environmental lobby would allow us to block glens and flood villages as happened in 1928–29? Would not the environmental disadvantage be difficult to overcome?
  Sir Hector Monro: I take my hon. Friend's point about large schemes. I must not get too involved in historical matters, but I well remember the development of the Galloway power scheme, in which my hon. Friend later had a significant part to play. It was turned on in 1930 and provided the first hydro power to the whole of Dumfries-shire. As a small boy, I remember turning on the first switch in my home; until then we had used oil lamps. As a wee laddie, I thought that it was something very special to turn on the first electricity at home. That part of Galloway has been enhanced and is now very attractive, with its steps and the lochs down to Kirkcudbright—well done to everyone involved. However, I agree that were we to start again now, heaven knows what the opposition would be to despoiling the countryside.

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  My difficulty is accepting the small output of windfarms when it is viewed against the serious loss of amenity in the countryside. I find it impossible to accept that windfarms do anything other than destroy the countryside. In addition, there are transmission lines to the grid system. I have no argument with windfarm operators—they have seen an opportunity and are taking it—but I simply want to ensure that any further development is more carefully thought through in the future.
  In the United Kingdom—I accept that the figures may be flexible—there were something like 13 wind turbines in 1991, whereas now there are 518, although the number is steadily increasing. Wind turbines are usually 100 ft high—or occasionally 200 ft high, which is as high as Nelson's column. Of course, the height of the blades must be added. I have seen windfarms in Wales, England, Scotland and Denmark and I am not surprised that the chairman of the Countryside Commission, charged with looking after the landscape in England, said:
  "England's scenic countryside is in danger of being turner! into a wind power wilderness".
  My hon. Friend the Under-Secretary of State, who is extremely active as the Minister responsible for industry in Scotland, will frequently have gone up and down the M74 and will know that in Lanarkshire, west of the M74, the hillside is covered with wind turbines. He must accept that they are especially unattractive and certainly do not enhance an area that needs all the help it can get to return to its former glory since having been a coal-mining area. I am sure that my hon. Friend will therefore appreciate what I am saying.
  On an average winter's day, the United Kingdom uses about 50,000 MW, yet the 40 or so windfarms produce about 64 MW a day, so the amount of electricity generated by windfarms is a minute part of what we use and out of all proportion with the despoliation of our countryside. The largest windfarm, in Wales, has 103 pylons and produces in a year what a conventional station produces in two days. At the moment, 0.1 per cent. of our electricity comes from windfarms. If the Government's target is 10 per cent., there will need to be an enormous increase in the number of turbines, perhaps to 20,000 or 30,000. However, I appreciate that technical advances may mean that more power can be produced from fewer turbines.
  I have never lived near a turbine station, but people who have and who therefore have first-hand knowledge of the problems complain not only of their unattractive appearance but of the noise of sound waves and of electromagnetic interference. Birds are also affected. We can work out the flight lines of migratory birds and perhaps avoid placing windfarms in certain locations. but pylons represent a death threat for birds. There are a great many windfarms in California and I understand that they have killed 78 eagles. I am not suggesting that the figures are similar in Scotland, but we must realise that windfarms can have a detrimental effect on the bird population. Indeed, I cannot understand why the Royal Society for the Protection of Birds does not object more strongly than it does.
  Surely the increase in the number of windfarms is due to the subsidy available under the renewable energy orders. Farmers see an opportunity for alternative land use—indeed, it is profitable for them to have a windfarm
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  on their property—but the country as a whole has to consider whether it is getting value for money from the subsidy, bearing in mind the environmental harm caused by such farms. I do not accept that there is an employment argument to be made in that respect—only very few people are required to run a windfarm.
  The most important aspect is planning—is the present system adequate? Do the guidelines give preferential treatment to would-be windfarm operators at inquiries? Are they fair to objectors, who often have greater local knowledge? In my constituency, only a few decisions have had to made about windfarms. One was approved at Carsphairn in Galloway, where the farm was welcomed by the authority and local residents—so be it. However, in my home town of Langholm, the situation was very different. The application was for a station to be built on a hill very near where I lived for the first 30 or so years of my life.
  The local authority and many residents—500 people signed a petition—objected as strongly as possible. They produced a very well-argued paper against the windfarm for the public inquiry. The application seemed to fail under several PPG 6 guidelines on renewable energy, yet the reporter, in what must be a subjective judgment—every reporter has to make a subjective judgment—approved the scheme. That, of course, was the Secretary of State's decision. Nothing further can be done about that. I shall not criticise the reporter; indeed, it would be improper to do so. However, I am suggesting that the system is weighted against objections because of the words "special need", which imply support for a windfarm.
  The reporter can disregard the normal view, which is against sporadic building in the countryside. The reporter can go through the six or seven points in PPG 6 and tick them yes or no. I disagreed with five in this instance, but the reporter agreed—such is life. The Minister should consider whether the guidelines are fair to both sections of the community, to the objectors as well as the applicant.
  The planning system should be tightened. Windfarms with 10 or more turbines have to have an environmental assessment and be reported to the Secretary of State. I would go further and suggest that all windfarms should have an environmental assessment, to be examined by the Scottish Office.
  On the credit side, Dumfries and Galloway has drawn up a windfarm strategy, and I commend the idea to all local authorities. It confirms which sites could be available and which could not. Maps have been prepared, showing where it would be possible to site windfarms without objection being expressed.
  My view is that more applications might be granted along the coast than would be acceptable. When one sails from Oban to Skye, what niggles is the number of caravan sites along the coastline. One sees acres and acres of white caravans all along the attractive coastline up the west coast of Scotland. If the caravans were green, it would be better, but they are white. I do not want to see serried ranks of windfarms along our coasts, just because that is where the wind happens to be strongest.
  Mr. Gallie: My right hon. Friend's comments on the coastline are important because, some time ago, there was great pressure for wave-generated power stations, which would virtually wipe out the whole of the west coast if

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  they were to provide any volume output. Has my right hon. Friend given any thought to wave-generated power and does he have any fears about it?
  Sir Hector Monro: I mentioned it earlier in my speech and I know that an experiment took place in Mull or Islay.
  Mrs. Ray Michie: Islay.
  Sir Hector Monro: Islay had a wave experiment, which may be continuing. My hon. Friend the Member for Ayr (Mr. Gallie) will remember the ship that was launched and taken up to somewhere near Dounreay this year. It was not a success, to say the least, and we must think carefully about the output that could be achieved from wave power. We must also think about the transmission lines from wherever the wave power centre is situated. I am in favour of any alternative that we can think of, as long as it is practical and does not despoil our countryside.
  I praise Dumfries and Galloway council for the efforts it has made to prepare the way for possible applications for windfarms, so that applicants can know which sites would be least obtrusive. I hope that none will be chosen, but at least the council has prepared the way and I give it credit for that.
  We must not forget our tourists. They come to see our unsurpassed scenery, not regiments of wind turbines stretched across the hillside. One interesting fact from the Dumfries and Galloway study is that if every site it suggests were taken up, only 123 MW would be produced. That would be a drop in the ocean, yet visually deplorable. I welcome the positive approach by Dumfries and Galloway and suggest that many councils should follow it in the future. Councils should have a restrictive policy and councillors must make their decisions carefully.
  In conclusion, I believe that we must rethink our renewable policy on windfarms. They make a small impact on global warming and we should bear it in mind that we are expecting an increased coal burn at Longannet, Cockenzie and Ferrybridge and more gas-fired stations. I am not sure that those stations are going the right way, but I do not think that windfarms will make a sufficient impact on global warming to justify the disadvantages that I have outlined in my remarks.
  I live near Chapelcross and I am delighted that nuclear power comes out with a clean bill of health. It is efficient, clean and reliable and we should bear it in mind in the future. I hope that our major nuclear power stations in Scotland run effectively for a long time and I am glad that Chapelcross has had another 10 years' extension.
  I ask my hon. Friend the Minister responsible for industry and local government to discuss with Energy Ministers whether we have our renewable policies right, given the changes in the years since the original policy was made. Yes, we must take global warming into account, but not to the extent of ruining the countryside by producing relatively little power from many windfarms. I ask my hon. Friend to think carefully about what I have said today and perhaps he can give me some encouraging thoughts..
  10.3 am
  Mrs. Ray Michie: I congratulate the right hon. Member for Dumfries (Sir H. Monro) on securing a debate on this important matter. It is generally known that the Liberal Democrats are in favour of the development of renewable sources of energy. Indeed, on the island of Islay in my constituency, as the right hon. Gentleman mentioned, wave energy has been researched and developed in conjunction with Queen's university, Belfast and it was the subject of an award two years ago.
  The hon. Member for Ayr (Mr. Gallie) mentioned the impact of hydro-electric power. Cruachan power station in my constituency is an excellent example of a station that has blended in well with the surrounding area and the environment. It is a wonderful place to visit.
  Mr. Gallie: I could not agree more with the hon. Lady's comments, but I remind her that a similar scheme was considered for Loch Lomond side and environmentalists argued that down. I am sure that that scheme would have fitted into the environment in much the same way as Cruachan.
  Mrs. Michie: That is a worthwhile point. Windfarms are a different matter and several applications for development have been made in my constituency of Argyll and Bute. Some are accepted and others fiercely opposed on the grounds of visual intrusion and possible noise pollution. Windfarms may not be erected in designated scenic areas, as the hon. Member—I cannot remember his constituency—said.
  Mr. Nigel Evans: Ribble Valley.
  Mrs. Michie: Thank you.
  Mr. Evans: We won.
  Mrs. Michie: We shall see what happens at the next election. On this occasion, I agree with the hon. Gentleman that in Scotland we try not to erect windfarms in areas of scenic beauty, but they are erected in areas that are very beautiful. We have areas of beauty everywhere in the highlands and islands.
  Planning applications are often opposed for several reasons and I have already mentioned two. They are also often opposed because, although the initial construction may generate jobs, in the end little employment is generated, as each windfarm needs perhaps only one person to look after it. Many people feel that windfarms are of no benefit to the local population and, although they might produce much-needed income for a hard-pressed farmer, they are deeply resented when erected on the estates of absentee landlords. If windfarms were erected to supply electricity to a local village at reduced cost, folk could see some point to them, but of course that is not the case.
  I ask the Minister to consider carefully the consequences when a planning decision is taken in favour of a windfarm in open defiance of local opinion. That has happened several times in Scotland. I therefore ask him to consider the proposal that responsibility for planning decisions on medium and small-sized stations should be passed to local communities and community councils with, of course, safeguards for the opinions of the local

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  authorities and a right of appeal. I also suggest that windfarms might be more acceptable, subject to the restrictions that I have already mentioned, if local communities could build their own turbines, using the electricity directly and linking into the grid to sell surplus power.
  The right hon. Member for Dumfries said that every application should be subject to an environmental impact assessment. Some of the good companies do that already. For example, Scottish Power has produced a good environmental impact assessment document, and that is something that all applicants should have to do. Like the right hon. Gentleman, I am not convince that we need so many windfarms when, especially in the highlands and islands, we benefit from hydro power. As I understand it, we have an over-capacity for electricity in Scotland anyway.
  Mr. Nigel Evans: The problem is that, given the massive explosion in the number of applications, windfarms will inevitably be sited in scenic areas of the United Kingdom. If we were to put only a small proportion of the money used to encourage wind power into energy conservation, the amount of energy saved could be greater than the output of all the wind turbines throughout the UK.
  Mrs. Michie: That is a valid point. As the right hon. Member for Dumfries said, we should question whether we are getting value for money by allowing the spread of windfarms.
  Telecommunications masts raise further fears about the consequences of planning decisions, especially for beautiful parts of Scotland, which depend to a certain extent on the tourist industry. Visitors go to those areas to enjoy the vistas over mountain, sea and loch. It is feared they will look like pincushions, with telecommunications masks and windfarm turbines sticking up all over the place.
  I am acutely aware that we in the highlands and islands cannot live in a time warp. We must move with the times, and not get stuck, immobilised, in the past. I am determined that my area should not become a theme park dotted with interpretative centres, museums and craft shops for the benefit of visitors and those who want the highlands to be left as a wilderness.
  I welcome the £46 million initiative by Highlands and Islands Enterprise to provide state-of-the-art mobile telephone coverage across the area. We need that coverage if we are to keep up, and if our businesses are to develop and flourish. National surveys have shown that mobile telephony enhances business efficiency by as much as 20 per cent. That could be worth upwards of £25 million a year to firms in the highlands and islands, and could mean the creation of a further 200 new jobs a year.
  Unfortunately, however, there always seems to be a down side to new technology. That initiative will require the installation of transmission equipment at 250 locations, from Shetland to Argyll, and from the Western Isles to Moray. I make a plea to the Minister that he ensures that good planning regulations are put in place. England and Wales have a code of practice, although I do not know whether it is adhered to. The right hon. Member for Dumfries referred to masts that are more than
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  15 m high; although he talked in feet. Companies often erect 15 m masts and then obtain permission to heighten them by 5 m. As the mast is already there, they are told, "You might as well go ahead."
  The highlands and islands are different—I hope—in that Cellnet and Vodafone have agreed with the Scottish Office to erect shared masts throughout the area. That is welcome, although other telecommunications companies, such as Orange, could erect rival masts. The case for shared masts is important, but we must consider their visual effect, and the impact that they will have on sites of special scientific interest. I do not know whether they can be camouflaged it is not possible to grow trees on the top of a ridge or a mountain to camouflage a mast. There should be full consultation on every mast that is erected.
  A national computer-generated network examines those matters, but it does not consider how coverage can best be achieved with the least possible impact on the landscape. We could be in the ridiculous position of requiring several masts to cover one glen or one area. Masts should be tried and tested first, and data should be collected from areas beyond that covered by the mast. Masts that are 15 m or higher require the construction of a track leading to the mast, which also has a visual impact.
  I am sure that the Minister will give serious consideration to those points. I hope that he accepts that planning consents and the impact of masts and windfarms raise real fears, and that he will consider ways of overcoming those fears.
  10.15 am
  Mr. Bill Walker: I congratulate my right hon. Friend the Member for Dumfries (Sir H. Monro) on obtaining this debate, and on his well-argued, well-balanced case. Few people would disagree with him.
  In the early 1980s, and even before that, the groundswell of opinion that something had to be done about the problems caused by the use of fossil fuels resulted in various initiatives. Although those initiatives were welcome, it is another matter to find viable solutions that are acceptable to the vast majority.
  Large parts of my constituency are remote and rural, or even wild. People who live in such areas do not necessarily object to masts. Some are welcome, such as those erected by the BBC and other broadcasting companies that allow people to receive television and radio signals. However, they are not so welcome when, as the hon. Member for Argyll and Bute (Mrs. Michie) said, the benefits to the local community are not so clear and obvious.
  Scotland depends on exports to survive. That is especially true for rural areas. It is difficult to imagine how we would survive without exporting whisky. I do not agree with those who argue that nothing needs to be done as we do not use much electricity and we produce a surplus. We must deal with the problem, because the export of electricity is an important part of Scotland's contribution to our well-being, and we all benefit from it. The trouble is that local people do not always see the obvious benefits.
  My right hon. Friend was right to draw attention to the advantages of hydro power, the development of which we should encourage. There is still considerable scope in

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  Scotland—including in my constituency—for further hydro schemes of all sizes; small and large. Some of the rivers that run into the Tay are not dammed by hydro-electric companies. Those rivers are often the source of the flood problems in the Tay valley. I would welcome some constructive thinking about hydro schemes to deal with that problem. One of the advantages of such schemes is that the water is controlled to some degree, and they could be part of a flood prevention scheme, such as I am keen to have for the whole of the Tay. A hydro scheme could solve the difficulties with the River Garry, which runs uninterrupted into the Tay, causing no end of problems further down.
  My right hon. Friend rightly pointed out that we need to have another look at the way in which planning operates. His local council should be congratulated on having guidelines and policy; not all councils do, and, as he will know, when planning applications are made, all hell is often let loose. No one ever wants such structures in their back yard. Councils should have guidelines suggesting what may and may not be acceptable locally.
  My right hon. Friend was also right in saying that nuclear power was reliable and safe, and did not damage the environment in any way. We in Scotland are fortunate in having nuclear power, and I wish that more had been done to promote the image of nuclear generation.
  I can think of no part of my constituency in which anyone would welcome a windfarm. Anyone considering establishing a windfarm of any kind should bear it in mind that they will encounter considerable local hostility. Unless the issue can be dealt with sensitively and with some understanding of local circumstances, we shall have problems. Large parts of my constituency are deemed environmentally sensitive areas, and must be treated as such; however, vast parts of it are not deemed environmentally sensitive, although I consider them some of the most beautiful areas in Scotland.
  Mr. Gallie: My hon. Friend probably heard the hon. Member for Argyll and Bute (Mrs. Michie) say that no planning consent should be given when it is in open defiance of local opinion. Given what he has said about his constituency, does my hon. Friend agree that that would more or less wipe out any chance of windfarms being developed in Scotland?
  Mr. Walker: As my hon. Friend suggests, there is no simplistic solution. As my right hon. Friend the Member for Dumfries demonstrated, what we need is fresh thinking, along with careful attention to detail and new guidelines from the Scottish Office.
  I personally think that windfarms may not be viable, because they do not generate much electricity and their environmental impact may well count against them. That does not mean, however, that we should condemn the idea out of hand; as my right hon. Friend suggested, it should be considered objectively and sensibly.
  As for telecommunications masts, some rationalisation is needed. Planning and control must be encouraged. If six different companies are trying to provide a service, six separate masts will not be needed. As we know from military and other equipment, masts can carry more than one type of equipment to send and receive signals. We
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  should think in terms of strategically placed masts that will cater for a variety of needs. That would be better than allowing groups or individuals to put up their own masts and compete with each other. Again, we need ideas and guidelines from councils.
  I hope that my hon. Friend the Minister will accept the view of Conservative Members that renewable energy needs to be considered. We welcome the measures that have been taken so far, but we feel that the time has come to review some practices and policies. There is strong evidence that some councils have been hostile to what I consider the best projects—hydro schemes. We should give more thought to the way in which we use Scotland's natural environment, much of which consists of water that runs out to the sea.
  10.25 am
  Mr. William Ross: I hesitate to trespass on what is basically a Scottish debate, but the issues that have been raised apply throughout the United Kingdom. Let me therefore take a few minutes of the House's time to ask the Minister some questions.
  I am deeply grateful to the right hon. Member for Dumfries (Sir H. Monro) for raising a matter in which many of us from other parts of the United Kingdom take an interest. I own a small hydro-electric plant, which provided all my electricity until some years after I first came to the House. For various reasons, it became unwise for me to continue running the plant, but I hope to do so again in the future.
  As the hon. Member for North Tayside (Mr. Walker) pointed out, hydro is a good way of producing electricity, but it is not without its costs. The hon. Gentleman will be well aware of the difficulties that we have experienced throughout the country in regard to migratory fish. The River Awe scheme, for instance, has wiped out a certain genetic race of salmon. Although I consider hydro to be the best way of producing electricity, I think that we should exercise much more caution than has been exercised in the past.
  Mr. Roy Beggs: Cannot the current technology, costly though it is, protect fish where hydro schemes are in operation?
  Mr. Ross: I want to return to that point. In the end, it is the cost that counts — the economics of production of non-fossil fuel by whatever means.
  Ultimately, all those matters are covered not by United Kingdom planning law but by EC directives. I am not convinced that all those directives have been applied throughout the United Kingdom, and I am certainly not very happy about the way in which they have been applied in Northern Ireland. In our experience — I hope that this is not the case in Scotland — applications for planning permission lack precision in regard to the height and size of generators, which sometimes change between the initial application and the building of masts. That causes enormous difficulties.
  A universal problem is the making of the environmental assessment by the applicant. I have always felt that such assessments should be made by planning authorities or Government rather than by individuals, who will sometimes be trying to make a silk purse out of a sow's ear. People throughout the country are unhappy about the present position.

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  Another problem in various parts of the country is that machine blades can reflect and interfere with television reception. There is also the safety aspect; machines keep shedding blades all over the world, and the only way of avoiding damage is to site the machines in remote but prominent areas. I hope that that will be taken into account in Scotland.
  The aspect of wind power and the like that really concerns me, however, is the cost of production. What makes hydro schemes so attractive is that the fuel costs nothing. I believe that the old method of costing was to set up a 2.5 per cent. sinking fund. As my hon. Friend the Member for East Antrim (Mr. Beggs) pointed out, there are now ways of protecting fish, albeit costly.
  I believe that it is now claimed that coal can produce electricity at a cost of about 3p per unit. The cost of non-fossil fuels, especially wind power, is a great deal higher at 8p or 9p.
  Wind production of electricity depends upon wind speed, so it is intermittent. The machines operate within only a relatively narrow range of wind speeds. For example, in my part of Northern Ireland on Monday there was a raging gale in the morning, by lunchtime the weather was calm, but by 7 pm there was another raging gale. I understand that the grid has some difficulty dealing with such changes in production, as it switches on and off.
  The contracts in Northern Ireland—I should be grateful if the Minister would enlighten us on the position in Scotland—stipulate that non-fossil fuel electricity has to be paid for regardless of whether or not it is used. How much of the production is actually used?
  The Minister will be pleased to hear that the Under-Secretary of State for Northern Ireland in the other place and the producers intend to ensure that in Northern Ireland, from next April, people will be able to buy non-fossil fuel production to boil a kettle—but they will have to pay extra for it. They will have to pay the going rate. I cannot understand why anyone would want to pay extra for electricity, but the Minister's noble Friend told me in a letter that people would be willing to do so. Will that policy apply also in Scotland and elsewhere?
  Like most people, initially I was starry-eyed about the prospect of cheap power. However, the more I have thought about it, the more convinced I have become that the Government did not think through all the consequences on entering into obligations before putting their name to a piece of paper that ties us in the way it does.
  10.31 am
  Mr. Phil Gallie: I shall be brief, to allow sufficient time for the replies. The hon. Member for East Londonderry (Mr. Ross) was right to emphasise that we are debating a United Kingdom issue. Indeed, Scottish Power is currently considering providing small, low-input windfarms in Northern Ireland. It is also considering providing an interconnector between Scotland and Northern Ireland. That has created problems relating to the requirement for transmission line runs in Scotland. A factor that we must take on board when considering windfarms is that people do not like transmission lines. If windfarms are scattered around the country, overhead transmission lines will be required. They are not popular and are environmentally disadvantageous.
  576
  Hon. Members have referred to telecommunications. One of the great benefits of privatisation is that companies have been allowed to operate in both the generation and telecommunications sectors. That has resulted in towers carrying both facilities—an environmentally welcome development. My hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) referred to the problems with overhead transmission and distribution lines. In fact, urban areas are lucky because most cables in our cities are buried under roads and pavements. However, there is an environmental consequence as those roads and pavements need to be dug up, which causes aggravation. Any thought of a major national grid buried beneath the ground is unrealistic because the cost would wipe the country out of the commercial market. There are also environmental arguments against burying cables across the country.
  I am only too well aware of the problems, especially heat, caused by windfarms. Back in 1980, when I was a district councillor, one of the first planning matters I dealt with in my ward was the application by the South of Scotland Electricity Board to build a windfarm—one wind generator—in the village of Fairlie, right next to the nuclear power station at Hunterston. The message from the community council was loud and clear, "We don't mind Hunterston C, but we don't want a noisy contraption in our village." That says a great deal about windfarms.
  I went to Wales recently and saw what was at that time the largest windfarm in Europe. It is part-owned by Scottish Power. It has 104 wind generators, but generates only a measly 30 MW. Those people who, in the past, have argued for windfarms as being environmentally friendly are now the very people who are objecting to further farms because of the problems, especially noise, that they create.
  Of course, matters have moved on and Scotland is to have 0.6 MW generators rather than the current 0.3 MW generators. The new generators are much quieter and more acceptable, but they are still a visual blot on the landscape. I sympathise with the view of the hon. Member for Argyll and Bute (Mrs. Michie) that local opinion must be taken into account. However, it cuts across the idea of environmentally friendly, renewable sources—something that meets the aspirations of every environmentalist.
  I strongly support the view of my hon. Friend the Member for North Tayside (Mr. Walker) on nuclear generation—compact sites and large-volume output. Indeed, a 2,000 MW site is quite feasible in a small area. Only one main transmission run is required and the emissions from nuclear power stations are virtually zero. There are no real problems.
  Let us consider the transmission problems in Scotland arising from the installation of power sites. Currently, we transmit some 1,800 MW of power across our border to the south. There are plans to increase that to 2,200 MW. I appeal to my hon. Friend the Minister to speak to his colleagues south of the border, to try to get early planning authority in North Yorkshire to upgrade the national grid crossover to 2,200 MW. After all, Scottish generation is environmentally friendly generation. It uses fossil fuel based on low-sulphur coal. That is environmentally friendly. Scotland can produce what is required without contaminating our atmosphere to the extent that happens with generation south of the border.

  577
  That brings me back to the comments made by the hon. Member for East Londonderry about the United Kingdom aspect. We are indeed talking about the United Kingdom and we should try to take advantage of systems across the country. I could say a great deal more, but I recognise that I must leave time for the replies.
  10.37 am
  Mr. John McFall: I shall be brief to allow the Minister time to reply.
  I congratulate the right hon. Member for Dumfries (Sir H. Monro), who has been absolutely loyal to the Monro doctrine—that the environment counts very much. I know that he has taken part in every environmental debate in this House, certainly since I have been here. On issues such as national parks, his voice and his wisdom have been very welcome. I agree with the points that he made in opening the debate.
  The issue is to embrace technological change without scarring our environment. I agree with the right hon. Gentleman that currently there is a laissez-faire attitude to the erection of masts and pylons. I am sure that we could get together and co-operate in looking at these matters.
  I accept that we all want to supply cheap, non-polluting and infinitely renewable energy and I agree that some areas in Scotland are ideal for windfarms. However, people in Cornwall, Cumbria, mid-Wales, Yorkshire and Scotland are divided between support for cleaner power and opposition to what they see as a desecration of their landscape.
  The right hon. Gentleman referred to power generation. Currently, barely 1.5 per cent. of our power needs are met by renewable energy, compared with 25 or 26 per cent. —almost 50 per cent. in Scotland—met by nuclear energy. The remainder comes from traditional fossil fuels, mainly coal and gas. Wind power must be seen in that context.
  There is an argument used by the advocates of wind power that local people come to accept turbines. A recent study by Exeter university found that in Cornwall opposition to an early windfarm at Delabole declined after several years. Even so, environment and conservation groups admit that the windfarm issue has divided their supporters. The debate is fractious and we have to accept that it always will be.
  The key, as the right hon. Member for Dumfries said, is that wind energy generation should not be unsightly, either when functioning or after the end of the life of a windfarm. Efforts have been made to that end in Scotland, but, in December 1994, 30 projects were awarded contracts under the first order made within the Scottish renewables obligation, commonly referred to as SRO-1.
  To identify planning and environmental issues associated with the development of windfarms and other alternative energy sources, an assessment of potential renewable energy resources in Scotland was published in December 1993. The assessment was carried out by Scottish Hydro-Electric, Scottish Power, the Department of Trade and Industry, the Scottish Office, Scottish Enterprise and Highlands and Islands Enterprise, with support from the Convention of Scottish Local Authorities.They put the issue of renewable energy in the context of the planning system, but I shall not read out
  578
  the relevant chapters of their report. The report contains good guidelines, but there is a softness about them. At the end of the day, we need more firmness, especially in the planning system. The right hon. Member for Dumfries asked whether the system was being fair to objectors; I do not think that it is, but I will cover that point when talking about telecommunications masts.
  In respect of telecommunications masts, planning controls in Scotland are similar, but not identical, to those in England and Wales. Scottish Office guidance to local authorities on planning and telecommunications has been set out in the Scottish Office Development Department's circular 25/85. Under the Town and Country Planning (General Permitted Development) (Scotland) Order 1992, telecommunications companies have similar powers for the installation of apparatus as they have in England and Wales. The same height restriction of 15 m applies for masts to fall within permitted development and normally express planning permission must be sought for masts higher than that. However, the prior approval procedure for permitted development rights for masts less than 15 m does not apply in Scotland. I hope that the Minister will turn his attention to that point.
  On any mast, microwave antennas may not exceed 1.3 m in any dimension and no more than 10 antennas are allowed on any mast. The order defines microwave as
  "that part of the radio spectrum above 1,000 MHz".
  That would seem to create an anomaly in respect of mobile telephone masts, because Cellnet and Vodafone networks operate at frequencies below 1,000 MHz, whereas Orange and One 2 One operate at frequencies above 1,000 MHz. In other words, it would appear that Cellnet and Vodafone masts would not be described as
  "microwave antennas and their supporting structures"
  under the order, whereas Orange and One 2 One's would. If Vodafone's and Cellnet's masts were not defined as microwave antennas, there would apparently be no restrictions on their use within conservation and national scenic areas. The Minister should look at that issue, because there would be great concern if masts were to be erected in such areas.
  I asked the House of Commons Library to research the issue. The Scottish Office told the Library that it was unaware of any difference in the planning controls on different operators and that it was unaware of the issue ever having been raised. If this is the first time that it has been raised, I should be grateful if the Minister would give it his attention, but I do not expect an immediate response.
  On the more general issue of planning control and mast development, I am aware that the four network operators met officials of the Scottish Office about three weeks ago. The Association for the Protection of Rural Scotland has expressed its concern. Scotland's four main mobile telephone operators want to install hundreds more transmitters before 2000, many in some of Scotland's most scenic areas. The APRS says that, every week, two or three new radio masts are erected by operators using "permitted development rights" that allow them to build structures up to 15 m in height without needing planning permission.
  I shall give the Minister an example. According to the APRS, an installation erected by Orange on Bonartie hill, near Loch Leven in Kinross-shire, "glows and shimmers"

  579
  when the light catches its steel framework, totally dominating the surrounding landscape. That issue falls within the guidelines, but it is causing great concern among local people.
  Scotland already has between 400 and 500 sites, but the operators want almost to double that number so as to extend their coverage throughout rural areas that have not previously been reached. The spur for that is their desire to exploit the Scottish mobile telephone market—we have no objection to that, but we must remember that Scotland has lagged behind the rest of the United Kingdom—helped by the licence requirement that demands 95 per cent. coverage of the UK. According to a Cellnet spokesman, that will mean that
  "By 2000 some 12 million people will have mobiles, double the existing number, and Scotland is one of our big target areas."
  In short, an existing problem will become worse in future and all of us have a duty to turn our attention to it.
  The highlands and islands concept with Vodafone and Cellnet has already been mentioned. I do not object to the project because it is a positive development, but the right hon. Member for Dumfries and others will be concerned about the A9 corridor and how development will proceed there, especially because it is an area of scenic beauty that attracts tourists. We do not want our landscape to be scarred, so we have a joint interest in the issue, as this debate has illustrated.
  The Orange representative, Richard Rumbelow, said that the company already had 180 sites in Scotland, mainly in the central belt, but was looking to add another 100 by 1998. Strutt and Parker, the land agent, has arranged 22 leases this year-double last year's tally-and is working on a further 20 sites in Scotland. The company says that smaller structures command rents of about £3,000 a year, with masts above 15 m earning £4,000 a year, so farmers and others have a commercial interest in the matter. Nevertheless, such development must be controlled.
  The possibility of sharing masts is important. I hope that that will be done in the highlands and islands project. Highlands and islands spokespersons have said that, on technological grounds, sharing is not possible in many cases, but I hope that efforts will be made to encourage the practice.
  The key issue is the scope given to operators by permitted development rights. The fact is that, if a company wants to build a mast on the summit of Ben Nevis, planning authorities can complain, but have few powers to do anything about it provided that the mast is less than 15 m high. Planners' only sanction is an article 4 order, under which they can forbid development in specified areas. However, according to a highlands and islands planner, Bill Hepburn, who is currently compiling guidelines for councillors:
  "that legislation is extremely difficult to enact".
  He adds:
  "I suspect that planning authorities will not actually be able to make it stick.">
  It is therefore important that, in discussions with mobile telephone operators and rural and other interests, a framework is developed to cover that issue.
  I want to give the Minister one last example. When Aberdeenshire council prevented Vodafone from hiding a large mast inside the Tower of Johnston on the Garvock
  580
  hill overlooking the Mearns in Kincardineshire—I think that that is in the Minister's constituency—and secured protection for the monument, Vodafone simply went ahead and built a much more obvious 12 m mast only 150 yd away. The intentions of the local authority were thwarted in that case as they have been in others.
  I agree that we have to reconcile environmental protection with technological innovation and I congratulate the right hon. Member for Dumfries on raising this subject today so that the issues can be examined. Fruitful discussions should proceed so that we can come to a joint agreement for the future.
  10.48 am
  The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): I, too, would like to congratulate my right hon. Friend the Member for Dumfries (Sir H. Monro) on securing this important debate, which has given hon. Members a good opportunity to have a sensible discussion about an issue of great importance. I should also like to echo the recognition given to the significant work that my right hon. Friend did for many years when he was Minister responsible for the environment at the Scottish Office, when he ensured that planning guidelines were drawn up tightly to ensure a sensible balance between development and protection of the environment. I hope that I can try to convince my right hon. Friend and others that we can achieve that balance within those guidelines and our robust planning procedures and controls.
  My right hon. Friend referred to the impact on the environment of wind turbines and telecommunications towers. I know that my right hon. Friend will understand, and I trust that other hon. Members will also understand, that it would not be appropriate for me to comment on any specific cases that are currently before the Secretary of State because that could be prejudicial to any future consideration of those proposals.
  The Government have put in place a robust and comprehensive planning policy framework to secure sound planning decisions on renewable energy development proposals. That framework consists of a clear policy of careful siting of all renewable energy developments, appropriately strengthened in the case of wind-generated types. The extension of the legislation on environmental assessment has ensured the systematic evaluation of relevant proposals. To ensure a consistent and effective application of the policy at local level, the notification procedures have been reinforced to cover all wind power developments that the planning authority is minded to approve.
  Firm foundations are set in national planning policy guideline 6 which was published in August 1994 following wide-ranging consultation with environmental, industry and community groups. NPPG 6 focuses on those renewable energy technologies that are likely to attract support under the Scottish renewables obligation, to which the hon. Member for Dumbarton (Mr. McFall) referred, and on projects connecting with the electricity distribution system. I should like to add that the principles of those guidelines and the environmental regulations should be applied to smaller projects for on-site use.
  Much of the framework applies to all forms of renewable energy-related development, but significant policy has also been set down on wind-generated energy.

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  Our policy requires all proposals for renewable energy-related developments to be given careful consideration, to ensure that the localised environmental impacts are acceptable before consent can be given. We consider that to be essential in the interests of Scotland's natural heritage. It is also part of our commitment to sustainable development.
  It almost goes without saying that those areas protected by international and national designations are scrupulously cared for within the policy framework in NPPG 6. I know that my right hon. Friend is only too well aware of that. We recognise, however, that outwith those international and nationally safeguarded areas, planning authorities may wish to identify, with appropriate justification in their development plans, other environmentally significant areas. Of course, the degree of outright protection that such areas will require will not normally be as high as that given to national or international designations, but potential developments in such areas still require careful consideration. I would therefore encourage hon. Members and those concerned about particularly important or sensitive areas within their locality to take advantage of the opportunities offered by the planning process to raise them with their planning authorities. The means exist at local level to highlight the special features that could be at risk if inappropriate development was permitted.
  My right hon. Friend referred to the work done by Dumfries and Galloway council, which I welcome. Reference was made to the Government's guidelines on such work and, indeed, paragraph 66 of NPPG 6 contains the guideline that structure plans should include policies that express the regional council's strategy for renewable energy developments.
  I acknowledge the reservations expressed by my right hon. Friend and other hon. Members about environmental assessment. I know that, for some time, he has been a firm advocate of tightening the controls on such assessments. My right hon. Friend called for the lowering of the indicative criteria threshold for formal environmental assessment set out in the Scottish Office Agriculture, Environment and Fisheries Department's circular, 26/1994, from 10 wind generators to zero. I am not sure whether one could contemplate going that far, but I am happy to undertake to consider seriously my right hon. Friend's argument. I would like to discuss it further with colleagues at the Scottish Office Agriculture, Environment and Fisheries Department and other Departments.
  On notification direction, hon. Members will be aware that the Scottish planning system operates under the general principle that decisions should be taken at the most local administrative level unless there are strong reasons for taking them at a higher one. While the Secretary of State maintains that approach to renewable energy-related development because of the possible visual impact of windfarms on the Scottish landscape, he requires to be notified by the planning authority of any application where it is minded to approve a proposal for one or more wind generators. That provides him with the opportunity to consider if the individual case raises issues of national significance and to decide to call it in for his own determination. That practice will continue to ensure that the Secretary of State is able to monitor carefully all
  582
  proposals for wind turbines and in particular their potential environmental impact. I understand the issues raised by my right hon. Friend the Member for Dumfries, but I hope that he can rest assured that his comments will be carefully considered and taken into account in the future.
  I share the concerns expressed by my right hon. Friend and others about the potential environmental harm that can be caused as a result of a spread of telecommunications networks. I represent a predominantly rural constituency, so I am well aware of the sensitivities involved. I am determined to ensure that the environmental impact of such developments is minimised. As with wind generator projects, however, it is important to take a balanced view.
  It might be helpful if I described the regulatory background relating to the erection of telecommunications towers. The telecommunications code system operators are licensed by the Department of Trade and Industry under the Telecommunications Act 1984. Their licences set target dates by which the operator must be able to provide services to a certain percentage of the United Kingdom population, and the operators are given powers to help them do that. They have the right to install apparatus on land with the occupier's agreement, as well as compulsory purchase powers and the power to carry out work and install apparatus in streets. But obligations are placed on operators. They are required, for example, to remove redundant apparatus and they must follow prescribed procedures in removing apparatus to allow public utilities to carry out street works.
  Those licences also contain important conditions designed to protect the amenity. For example, before installing any apparatus above ground, operators must notify the planning authority and allow time for it to raise objections before installing the apparatus. That notification must include details of any other proposed apparatus in the authority's area to allow the authority to take an overview of the proposals. It has 28 days in which to raise concerns and to request changes to appearance, landscape and siting. The operator is expected to attempt to respond positively.
  Tighter rules also apply in relation to designated areas such as sites of special scientific interest or of natural heritage. There are also strict rules on the way operators design their networks and implement them. For example, they are required to keep the number of items of apparatus to the minimum practicable, allowing for estimated growth in demand. They are also obliged to protect the visual amenity of properties in proximity to their apparatus as far as practicable.
  Much has been said about the general permitted development order, which allows operators to erect free-standing masts up to 15 m in height without the need to seek planning consent. I stress that they still have to notify the local authority. I am particularly concerned from experience in my constituency and elsewhere that many of those structures are crude, and although they may be less than 15 m high, they can still constitute significant structures on the landscape. I am looking to the industry to meet its environmental obligations under the terms of its licences. I do not wish to hinder developments that are generally beneficial, but it is important to reach environmentally acceptable solutions. I am therefore considering whether the permitted development right provisions might be tightened to provide better control in

  583
  relation to substantial structures of less than 15 m in height. In addition, we have embarked on reviewing the operation of the safeguards that I have mentioned.
  Earlier this month I instigated a meeting between officials and representatives of the leading telecommunications code system operators. I am sure that that meeting will be the first of a few. I intend that there shall be discussions with the industry to try to ensure a balance between allowing the significant technological development and communications improvements that were mentioned by the hon. Member for Argyll and Bute (Mrs. Michie) and the interests of rural communities, the impact on the environment and the other aspects that have been raised by my right hon. Friend the Member for Dumfries and by other hon. Members.
  In this useful debate, an important subject has been covered. I apologise to hon. Members for not having the time to reply to every issue, but I hope that I have given some reassurance.

  Human Fertilisation and Embryology Authority
  11 am
  Mr. Joseph Ashton: I thank the House and Madam Speaker for giving me the opportunity to raise this complex matter, which is of great concern to everybody in health and especially to my constituent, Mrs. Diane Blood of Worksop.
  Mrs. Blood and her husband Stephen were married in May 1991, having been courting for nine years. It was a long-standing stable relationship. Mrs. Blood worked in advertising and public relations and went on to set up her own company under the Government's enterprise scheme, doing public relations work for nursery products. That job involved advertising and matters relating to children, so she has much experience of children and babies.
  Mrs. Blood's job was a struggle at first and she dealt with publications such as Baby Magazine; First Steps; Mother and Baby; Parents; Pregnancy and Birth; Practical Parenting; Our Baby; Right Start; Twins, Triplets and More Magazine; Under Fire Contact; You and Your Baby; New Generation; Offspring; Maternity and Mothercrafi; Nursery Choice —The Complete Lifestyle Magazine for You, Your Baby and Child and others.
  I have read out that list to show that Mrs. Blood was experienced in terms of babies, in knowing what to expect after a birth. She and her husband very much wanted children and they spent much time discussing a possible pregnancy. They had the good fortune to share similar religious beliefs and believed that one of the central purposes of marriage and of human existence is to found a family. They regarded the miracle of modern reproductive medicine in aiding procreation to be of great benefit to society at large. They also believed that the personal choice of parents must be respected and that, except where necessary, the state should not interfere with personal choice in such private and family matters.
  Mr. and Mrs. Blood married in the Anglican Church using the traditional service from the 1662 "Book of Common Prayer" because that service places greater emphasis on procreation than the modern alternative service book which is now used. They regarded themselves and their bodies as joined together in holy matrimony and that is why this is a serious debate. It is about a possible mother being prevented by the state from having her husband's child. They were in favour of birth control, although her husband was against abortion. They both thought that artificial insemination was a wonderful way to help unfortunate people to have children.
  Mr. and Mrs. Blood discussed at great length how they would be prepared to have a child if they discovered that they had problems in conceiving. They agreed that they would go to any artificial lengths if Mrs. Blood was unable to conceive from her husband's sperm. They saw no objection to the posthumous use of Mr. Blood's sperm, provided that the interests of the child and the other children of the family were properly protected. The arguments in favour of such use struck them as particularly compelling, especially in the case of a married couple since their reproductive material, sperm and embryo, would create a child who would be confident of his or her genetic inheritance from natural, biological parents. They saw no objection to taking sperm from a permanently unconscious or brain-dead husband for his wife's procreative use.

  585
  Mr. Blood wished to donate his organs for the benefit of others and there is no doubt that he would have wished that sperm could be taken from him and used by his wife in the tragic circumstance of an untimely death. That would enable his wife to have the child that they had always wanted and it is the main reason for Mrs. Blood wanting her application to succeed: she wanted to respect her husband's wishes as well as her own. They discussed the issue many times, especially because of conversations that resulted from newspaper articles and the magazines that I have mentioned. Such conversations arose because of Mrs. Blood's profession.
  The couple talked specifically about newspaper items, about widows who wanted to use the sperm of their late husbands to have a baby, and they both thought that widows were right in wanting to have babies in that way. They did not think that a woman should be compelled to start again by remarrying or have to use somebody else's sperm, nor did they think that her desire to have a child should be confused with thoughts of the reincarnation of her husband.
  Mrs. Blood remembers saying that she would not want to remarry if anything happened to Stephen and that she would want his baby. He stated categorically that that was his position. She remembers that, when she went to the hospital. the conversations came back to her when her husband was ill and unconscious. They were undoubtedly strong factors in persuading her to ask the doctors to take sperm from her husband for artificial insemination.
  In 1995, Mrs. Blood's career was stable and she and her husband were ready to have a child. From that time they began trying to conceive. They installed new furniture in the spare bedroom to make more storage space and chose the name for a possible baby. Then Stephen fell ill. However, up to that time the topic of having a family was a constant source of conversation. There were some signs that they would be successful and that their desire would be fulfilled because they thought that Mrs. Blood was pregnant.
  On 26 February Mr. Blood complained of feeling unwell. Four days later he was dead. At first it was thought that he had influenza, but he was rushed to hospital because it turned out that he had meningitis. While he was in hospital two samples of sperm were taken, and Mrs. Blood wishes to have an artificially assisted pregnancy using that sperm either in the United Kingdom or abroad. Tests have shown that she would have no problems relating to that.
  On the evening of Sunday 26 February, Stephen started vomiting and at about 10 o'clock Mrs. Blood rang the duty doctor. He arrived at 11 o'clock and after conducting an examination said that there was a slim chance of meningitis and that Mr. Blood should be admitted to hospital. The ambulance arrived at 11.15 and doctors began treating Stephen with drugs for meningitis. On Monday 27 February the doctors decided to move him from Worksop to a hospital in Sheffield and Mrs. Blood accompanied him in the ambulance.
  On Tuesday the doctors finally succeeded in performing a lumbar puncture, which had been attempted several times since Stephen's admission to hospital. At about 6 o'clock the cardiac arrest team was summoned and the doctor told Mrs. Blood that although they had
  586
  kept her husband's heart beating, they were unable to sustain his breathing without a machine, and that his condition was not at all good. Mrs. Blood mentioned that they had been trying for a family and that there was a chance that she was pregnant. They asked whether she had been given any tablets to protect her from meningitis and put her on a course of tablets. They knew then that there was a chance that she was pregnant.
  Stephen Blood was moved to intensive care on the top floor of the hospital and at that stage Mrs. Blood asked the doctor to find out whether it would be possible to take a sperm sample from her husband for later use because his condition made her fear the worst. She knows now that, even had Stephen recovered, sperm retrieval would still have been sensible because his illness may have rendered him sterile. That would have given them a chance to have a child, even if her husband recovered. The idea of preserving the sperm came to her because of their discussions and because they were trying for a baby, after all the time of waiting. When Mrs. Blood mentioned taking the sperm sample, the doctor did not seem to know immediately whether it was possible.
  On the morning of Wednesday 1 March, Dr. Edbrook told her that things had got worse in the night. Hospital staff had tried to get her husband to breathe on his own by withdrawing sedation, but he was unable to do so. At that stage, Dr. Edbrook informed Mrs. Blood that, as for the sperm sample, it was an unusual request, but that the hospital happened to have the foremost expert in the field, a registrar, Mr. Tophill, who was prepared to take a sample. Mrs. Blood asked if the sperm might be infected by Stephen's illness and the expert said that it would not be.
  Mrs. Blood discussed the matter with her parents and Stephen's parents. All four agreed that the sample should be taken if possible. Mrs. Blood received counselling in relation to the taking of the sample. She was also warned that there may be some problem in relation to inheritance rights and that the sample might not be successful, but she was prepared to take that chance.
  Mrs. Blood went into the room where her husband Stephen was lying unconscious and sat with him. The woman doctor in the room told her more about the possible use of the sperm after Stephen had died. This bit is important. She told her that it would be taken to Jessop hospital first, a maternity hospital in Sheffield, but that Mrs. Blood did not need to use it there. It could be moved to wherever she wished later. The doctor mentioned the need to sign
  "an organ, or in this case semen, donor form".
  Mrs. Blood was happy to do so, but no form was ever produced for her to sign, despite her repeatedly asking whether the form had arrived. Later the same doctor said that, because of legal reasons, the hospital was not sure whether the sample could be taken, but Mr. Tophill arrived and confirmed that he was willing to take the sample.
  Before the sample was taken, Mrs. Blood was again specifically asked for consent to the procedure taking place. It was clear to her that it was important and the medical staff in the room were asked to be witnesses to her response. She assumed that she was being asked to give her consent and the consent that Stephen would have given, had he been in a position to do so. She may have been asked whether she consented on Stephen's behalf, but she certainly would have done so.

  587
  At 6 o'clock, Mr. Tophill said that the first sample had not been successful, but that he would, if necessary, take another on Saturday when he returned. He was concerned that freezing the sperm might cause its condition to deteriorate. Mrs. Blood then said that she was happy to have the treatment there and then while, technically, her husband was still alive, if that was the best option, but Mr. Tophill said that there were other alternatives, including growing sperm from a sample of testicle tissue.
  At that time, Mr. Blood was being kept alive on life support machines. I will go into detail because this is important as to whether this matter falls within the Human Fertilisation and Embryology Act 1990. Mrs. Blood was anxious that the machine should not be turned off until further attempts had been made. Dr. Edbrook said that the second test as to whether Stephen was clinically dead had not yet been done and that it would not be done until at least the following morning, depending on his clinical condition. He said that there was no reason why Stephen should not be kept on the support machines.
  Mr. Blood's parents visited him for the last time on Thursday and indicated their acceptance that he was dead. Later in the afternoon, Dr. Edbrook said that the hospital was going to do the second test as to whether Mr. Blood was clinically dead. He then confirmed to Mrs. Blood the good news that the first sample had been much more successful than the hospital had initially thought. He said that it was
  "a million times better than expected".
  He asked whether, given that the first sample had proved okay and that the second test had confirmed Stephen to be clinically dead, it would be all right to turn off the machines. Mrs. Blood agreed.
  If the insemination had taken place while Mr. Blood was alive on the machine, there would have been no problem. Mrs. Blood would have been bearing her husband's child. At that time, she thought that she was pregnant, so it may not have been necessary to use the sperm. That was why she did not agree to use it there and then. Obviously, there was great grief when her husband died and Mrs. Blood resolved to have his child by any means.
  No other child's interests in relation to inheritance rights might be affected by the use of the sperm. There is no risk to a possible child's health or to Mrs. Blood's health. The Human Fertilisation and Embryology Authority has not suggested that allowing her to procreate in such circumstances, even in other countries, would offend against the policy of the 1990 Act or moral values, or create a substantial risk of injury to any public interest. Mrs. Blood does not understand what conceivable good reason there might be for preventing her from having her husband's child by combining their reproductive material, simply because he was unable to give his written consent when he was unconscious and dying. He undoubtedly did give his consent to the taking and use of sperm so that his wife might have his child. It is not fair or reasonable, under any law or any circumstances, moral, legal or otherwise, that this woman should be denied the right to have a child by her husband.
  The sperm samples are being held at the Infertility Research Trust for Mrs. Blood. She has been invoiced and asked to pay a charge. She has paid the most recent invoice—a charge of £100—for keeping the sperm there since March. Unlike third party donors, who receive
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  payment for donating sperm, she has had to pay another £250 for obtaining the sperm from her husband. The law looks more and more like an ass.
  If Mrs. Blood is permitted to export the sperm, she can have the treatment abroad. She can have it in the European Community, in Belgium, in New York or even in Greece. Insemination can be done there, but this point of law should never have arisen. Who would have objected to the HFEA giving consent for a wife to be inseminated with her husband's sperm? What are its reasons? The way that it objected is absolutely appalling.
  Mrs. Blood applied for the sperm to be used. Her application was rejected in May 1996 and, even though the HFEA received an affidavit in June 1996, it still refused to change its mind or to review its decision in any way, shape or form. Mrs. Blood has now been compelled to go to court to seek a judicial review of the 1990 Act. It has cost between £30,000 and £50,000—she does not receive legal aid. She has had to take a second mortgage out on her house to challenge the HFEA's view of the law.
  There are 21 members of the HFEA, a quango that has discretion to use its common sense, we would think, without having to be challenged. What is the point of having this quango if we have to go to court? We may as well let people just take a chitty in, as they do to get married in a register office, yet it has refused to use its discretion.
  There has been enormous sympathy for Mrs. Blood. Throughout Britain, people's response has been fantastic. Their views are all along the lines of The Times editorial, which said:
  "How can a dead man's interests be harmed by such use"
  of his sperm by his wife? It goes on:
  "Parliament gave it"—
  the authority—
  "total discretion on the import and export of sperm and embryos."
  The sperm could be used anywhere in the world, so what is stopping it from being used here? As the editorial says:
  "The authority should now use the discretion it possesses under the Act".
  Baroness Warnock, who chaired the committee whose findings led to the creation of the HFEA, said:
  "We didn't think of this kind of contingency"
  and that the case was "extremely exceptional". Every hon. Member has sat on Standing Committees making law and has tried to imagine what could happen. We probe and table amendments, not because we want to vote on the amendment, but simply to find out what could happen.
  During the passage of the 1990 Act, no hon. Member asked, "What would happen if a man went into a coma and died?" It is no one's fault, because none of us has a crystal ball. However, we expect the people who are put in charge of such authorities or privatised industries to use their common sense to act in the public's best interests—especially if the public do not object to a given course of action. Mrs. Blood is facing that type of situation.
  Lord Winston—professor of fertility studies at Hammersmith hospital—said that it was "cruel and unnatural" for such a decision to be taken, and that he would consider introducing in the other place a Back-Bench Bill, to which he thought there would be very little opposition, to remedy a situation in which a man can donate

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  "his kidneys, his lungs, his heart and every other organ without any informed consent, but is unable to give sperm to his wife. That seems ridiculous."
  The judge who conducted the judicial review—Sir Stephen Brown, president of the High Court Family Division—said that, although he deeply regretted the law's rigidity and the case had "stirred the emotions", he had no option but to carry out the law and to maintain its dignity. There was tremendous national media interest in the case after he said that and Mrs. Blood lost the case. The Secretary of State for Health was interviewed and said that he had great sympathy for her and that he would do what he could to resolve the situation.
  Mrs. Blood has two or three options. She could appeal against the decision—although I know that her legal advisers have asked her to delay such action until we have heard the Minister's reply to this debate. There may be an appeal, depending on what the Minister says. Perhaps the Government could find time for the House to consider an amendment tabled by Lord Winston in the other place. The Act requires only one more phrase, specifying that "in normal circumstances" written consent must be provided by donors. The addition of that phrase would mean that a husband could not give consent in abnormal circumstances—such as if he were in a coma. If the couple were not married, the authority might refuse consent.
  The necessary amendment would be very small and would require very little of the House's time. Perhaps the Government could provide one and half hours after 10 pm to change the law, which could be changed in two or three weeks. I should welcome such action, but we must also deal with the matter of Mrs. Blood's costs, which now total between £30,000 and £50,000 and will increase if she appeals against the decision.
  Perhaps the Minister will say, "We can find a sympathetic hon. Member who has won the ballot for private Members' Bills." But, as hon. Members who have won the ballot know, it is very difficult to amend the law with a private Members' Bill. Hon. Members can talk out an amendment, and a sufficient number of hon. Members must come on the day to vote in favour of it. The current Session is very short, and there may be only two or three Fridays for private Members' Bills. Moreover, the election is approaching, and an hon. Member who wins the ballot may have a marginal seat and may not wish to introduce controversial legislation. So even that approach is fraught with difficulty.
  The Minister must tell us what he intends to do about the situation. Late this morning, I heard on the BBC that the HFEA has said that it will re-examine the case. I do not know what that means. Does that mean that the authority will change its mind and approve Mrs. Blood's request, after the court has said that it cannot? That seems unlikely. Will the HFEA use its discretion to allow Mrs. Blood to take her husband's sperm abroad so that she can be inseminated? I do not know, because it has said only that it will re-examine the case.
  The authority has made no guarantee, and much firmer assurances will have to be given. If not, poor Mrs. Blood—who is determined to have her husband's child—will once again have to face the harrowing experience of going to the Court of Appeal and of paying for a provision that Parliament would gladly have made in the 1990 Act, had anyone thought of it at the time.
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  I am grateful for having had the opportunity of this debate, and I thank hon. Members for listening so patiently. I look forward to hearing the Minister's reply.
  11.24 am
  Dame Jill Knight: The hon. Member for Bassetlaw (Mr. Ashton) deserves to be paid great tribute for the way in which he has presented his constituent's case. He has been very factual, but he has also been very moving. He has demonstrated what the House is all about, and has undermined the arguments of those who constantly attack hon. Members and think that they do not do their jobs. The overwhelming majority of hon. Members, from both sides of the House, behave honourably and do their utmost in serving their constituents. The hon. Gentleman has done his utmost, and I can pay no higher tribute to him than that.
  The Blood case is very sad, and no one can help but be moved by Mrs. Blood's plight. I sometimes think that only those who have lost a beloved husband can understand what such a loss means. I have lost a husband, and I understand. I have the greatest possible sympathy for Mrs. Blood. Moreover, from what the hon. Member for Bassetlaw has told the House, I have no doubts about Mrs. Blood's excellent character, her experience and interest in children or the fact that, if she and her husband had been able to have a child in the normal way, they would have been extremely good parents.
  I cannot help thinking, however, of the old adage about hard cases making bad laws. The only aspect of the speech by the hon. Member for Bassetlaw that worried me was that not one word was said about the child. I am very concerned about children. I am concerned that, when children are brought into the world by methods that I can describe only as "unnatural"—that sounds unkind, but it is not meant to be; it is meant to be factual—or by a scientific procedure, they have the right to expect the law to protect them, because they are so utterly vulnerable. They have no say in whether they are to be born.
  Some years ago, when the House considered such children, we rightly said that the child's interests should be paramount. There were no two ways about it: we said that their interests are paramount. After hearing the tragic circumstances of the Blood case, which the hon. Gentleman has explained so well, in my heart I still cannot believe that the child's position should be downgraded because of the mother's tragic despair. I am extremely sorry for Mrs. Blood, but I should be very sorry for a child who would be bound to know when his father had died.
  All hon. Members understand that a child might not be born in this case at all, and that it is not correct to say that a child would definitely be born if Mrs. Blood were successful in her request and underwent the procedure. If it were successful and a baby were born, however, the child might grow up to be imaginative. For him to have to take on board the fact that he was born as the child of a dead man, and not until many months after his father's death, would be enough to cause nightmares in that child.
  Dame Elaine Kellett-Bowman: Will my hon. Friend give way on that point?
  Dame Jill Knight: No; I should like to finish this argument first.

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  All hon. Members understand that children are sometimes born and their fathers then die. We weep about such desperately sad cases, although the mothers in such tragic cases often bring up their children very well. Surely, if the interests of the child are paramount, there cannot be any doubt that the best way to have a child is with a father and a mother. Sometimes, that is not possible because something terrible happens, such as the father being killed in an accident. Of course I am not saying that a single mother or father—it could be the mother who dies—cannot bring up a child well. Many single parents do a marvellous job of bringing up their children.
  Dame Elaine Kellett-Bowman: Will my hon. Friend give way?
  Dame Jill Knight: Forgive me, but I must finish this point. My hon. Friend must be a little patient.
  Dame Elaine Kellett-Bowman: Please do not sit down without letting me in.
  Dame Jill Knight: I shall let my hon. Friend make her point, but I must say that there can be little doubt that the ideal way to bring a child into the world is with a father and a mother. It is no use saying that that is not the best way just because tragedies can occur.
  Dame Elaine Kellett-Bowman: I rarely disagree with my hon. Friend on such matters, but I cannot for the life of me understand her strong objection in this case. Given the fact that the mother will clearly adore the child and bearing in mind the history of the family, with the father also having wanted a child, why should the child have nightmares? He should be thrilled that his parents so wanted him.
  Dame Jill Knight: How can a child be thrilled that he has no father? How can a child be thrilled that he has only one parent? He can be sad about that, but he cannot be thrilled about it.
  Dame Elaine Kellett-Bowman: He will not have nightmares.
  Dame Jill Knight: A sensitive child might well have nightmares at the certain knowledge that he was born from a dead man. That frightens me.
  Mr. Eric Illsley: Will the hon. Lady give way?
  Dame Jill Knight: Yes, but this is the last time, because we do not have much time.
  Mr. Illsley: I am grateful to the hon. Lady for giving way. Is not consent the issue? If Mr. Blood had given written consent before he died, the child would have been born to a single parent. The issue is consent, not the effect on the child of being born by a particular procedure.
  Dame Jill Knight: The hon. Gentleman's point is reasonable, but it does not address the whole situation, which is as I have described. We do not know what the gentleman might have done. We think that we know, but
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  we are not sure. We cannot judge on what can be only a presumption. We know that such a child would be born from a dead man months and months—more than a year—after the father died. I do not think that it is ever a good thing deliberately to bring a child into the world with no father.
  The hon. Member for Bassetlaw rightly made some important and sympathetic points, but those points cannot give the child a father, which is what I am worried about. It cannot be right to say that fathers do not matter much or that it does not make two bits of difference whether a father is there. If the interests of the child are paramount, we must consider the fact that a child needs a father.
  The hon. Member for Bassetlaw said that the birth was prevented by the state. It was not. It was prevented by the tragic death of the poor man. The situation is not the same as for kidney, hearts or livers because, as I am sure that the hon. Member for Bassetlaw knows, such organs can be used only if they come from a virtually living man. Hearts or livers cannot be frozen. The two situations are not the same.
  I am sorry for Mrs. Blood and her predicament, but I would be even sorrier for a child deliberately brought into the world with no father.
  11.34 am
  Mr. David Alton: The debate so far has been conducted thoughtfully. We should all be grateful to the hon. Member for Bassetlaw (Mr. Ashton) for the way in which he has put the harrowing details of the case before the House—details that illustrate the moral choices that we have to make as a result of the Human Fertilisation and Embryology Act 1990. The hon. Gentleman will know that the hon. Member for Birmingham, Edgbaston (Dame J. Knight) and I voted against that legislation because, as we said at the time, it opened a Pandora's box. The fact of being scientifically possible does not necessarily make certain actions right. We said then that the Act would inevitably lead to the Human Fertilisation and Embryology Authority having to consider circumstances such as those of this tragic case.
  I echo the words of the hon. Member for Edgbaston on how hard cases can sometimes make bad law. However, that does not relieve us of the responsibility of examining the conduct of an authority established by Parliament. I entirely agree with the remarks of the hon. Member for Bassetlaw on the conduct of the HFEA and the need to reform that body. Most of my speech will address that.
  Before I come to that, I shall follow the hon. Member for Bassetlaw in addressing some of the issues raised by Mrs. Blood's case. The hon. Gentleman cited Lord Winston, with the example of someone giving consent for their kidneys, lungs or any other organ to be taken. Many of us carry organ donor cards because we recognise the need for medicine to have access to organs to save lives. However, there is a distinction to be drawn between the organs that we give to help maintain another person's life and those elements that create new life. That is the distinction that the House and the HFEA must examine carefully.
  Many people have argued that Mrs. Blood's desire to have her husband's child should be satisfied and that it is harsh and pedantic to use the law to prevent that, but it is important to consider all the ethical issues raised by the

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  case, particularly in view of the fact that the interests of Mrs. Blood may not be as clear cut as has sometimes been suggested.
  Great emphasis has been laid on personal choice. I have never accepted that the word choice should be paramount above the right to life. In his moving introduction to the circumstances behind the case, the hon. Member for Bassetlaw mentioned the fact that Mr. Blood was opposed to abortion. He believed, as I believe, that there must be limitations on choice. People do not have the right to do certain things. Our rights language has become one of the biggest problems that we suffer. Everything is considered to be a claimed right. We do not say enough about our responsibilities, duties and obligations. The right to create or destroy life is highly contestable. Parliament has a duty to protect the interests of a child and to weigh them carefully alongside the rights claimed by parents, doctors or scientists.
  Mrs. Blood's case is not simply about rights. It raises issues of consent, but it also concerns respect for human generation, the posthumous generation of children from dead parents and, as the hon. Member for Edgbaston said, a child's need for a father.
  An act of artificial insemination after the father has died cannot represent a couple's on-going commitment to each other, nor can it lead to the welcoming of new life into an existing relationship. The father is obviously no longer present as a living human being. To use a part of him to make a child is a travesty of normal, conscious human procreation.
  The need of the child for a father is one aspect of the case which has been neglected in the public discussion despite the fact that the HFEA specifically requires that need to be taken into account in giving fertility treatment. Indeed, that was the decision the House took when we considered the 1990 legislation. It is a provision that we laid down, so the HFEA is acting on something that Parliament insisted on.
  Mrs. Blood has argued that she could have had sperm from an anonymous donor who could, indeed, be dead by the time his sperm was used in fertility treatment. It is true that single women are sometimes given fertility treatment. However, that practice is of doubtful legality and it is a matter to which the House should return in due course. I hope that the debate that has been instigated by the hon. Member for Bassetlaw today will open a review of the legislation and of the workings of the HFEA.
  To treat a father simply as a source of genetic material and as someone whose presence will not be required at any stage is to ignore the strong interests of children in forming relationships with those who bring them into being. It is well known that adoptive children who, of course, are usually adopted by couples, frequently develop a strong desire to know their birth parents. The child of a single woman is deprived not simply of his or her genetic father, but of any father, genetic or social. Children need a male as well as a female parent in order to learn about human relationships, and boys in particular need a male role model at home.
  It has been claimed that Mrs. Blood has a right to the use of her husband's sperm, but that is very doubtful. Society has a strong interest in the creation of children
  594
  in circumstances that are conducive to those children's well-being, especially when health care professionals are involved in their procreation.
  Whatever a person's desire to have a child, a single woman faces a difficult task in bringing up a child single-handed. If the father is not present at any stage, not even during the pregnancy itself, the woman is deprived of an irreplaceable source of support. Two people, in a committed marriage relationship, should be involved in the creation of a child and two people should be involved, as far as is possible, in caring for the child so created. That is a perfectly reasonable demand for Parliament to make, even though it means that from time to time there will be terribly tragic cases of the sort described today.
  It would be wrong to breach the principle that wherever it is reasonably possible, if we are deliberately creating life, there should be a father and a mother to bring up that child. That is clearly in the best interests of the child, and in saying that, I am not making any judgment about people who, through other circumstances, are having to bring up children by themselves. Most people who are in that situation would say that they would much prefer to have the support of the father or the mother, depending on who is absent.
  The hon. Member for Bassetlaw has a strong point when he talks about the conduct of the HFEA. A year or so ago, the HFEA began the process of public consultation on the use of eggs from aborted girls who were to be selected by a scientist in Edinburgh who had sought permission to do so. The HFEA felt that it was a reasonable enough proposition to go out to public consultation. It failed to take an immediate stand on the principle of the deliberate selection of unborn baby girls and the harvesting of their eggs for use in subsequent fertility treatments, which would mean that the child's mother would be an aborted foetus and the grandmother the person who allowed the abortion to take place. That was a pretty hideous proposal which, as a result of the amendment tabled to subsequent legislation by the hon. Member for Edgbaston, which I supported, was outlawed.
  That proposal contrasts with this case, and it is no wonder that people are confused. To place such importance, as the HFEA has done, on the issue of sperm donation, whereas a fertilised egg is not to be treated in precisely the same manner, raises the question of the basis on which the HFEA operates.
  The constitution of the HFEA is the genesis of its dilemmas. On 18 November 1993, BBC Radio 4 broadcast the "Analysis" programme. The presenter, the admirable columnist from The Observer, Melanie Phillips, laid bare the way in which Parliament was manipulated into passing the 1990 Act. One example concerned the way in which membership of the Warnock committee of inquiry was determined.
  On 23 July 1982, the Government had announced the terms of reference for an inquiry into the ethical issues associated with human fertilisation and embryology. That was done largely to spike an attempt by Enoch Powell, then a private Member, to ban human embryo experimentation. The Oxford philosopher Baroness Warnock was appointed to chair the committee, which reported on 18 July 1984.

  595
  During her interview with Miss Phillips, Baroness Warnock admitted that she vetoed the appointment of a particular member of the committee because of that person's religious and moral beliefs. Miss Phillips had referred to the constitution of the committee, saying that
  "the shape these committees take is so important in determining their eventual conclusions."
  Baroness Warnock replied:
  "The potential chairman is approached either by the Minister or by the permanent secretary or both. But, of course, one doesn't know how many other people have been approached.
  I sometimes get the feeling really that they sort of wade through dozens of names and then come up with someone who's a sucker and says yes. But, at any rate, after that, the thing is shrouded in mystery really.
  I was then given a kind of draft list and asked whether there were any other people I thought would be obvious choices.
  Maybe people who were not yet among the great and the good. And was, with some difficulty, allowed a power of veto."
  In the interview, Baroness Warnock then said that she used the veto to exclude one nominee on the ground of that person's religious and moral convictions. She said:
  I just knew that I couldn't work with him. We went right up to the day before publication with the civil servant saying, 'But there's nobody else in the world.'
  So, in the end, the night before publication, I said, 'Well, will you please tell the Minister that it's a very bad way to embark on working on a committee when you know that there's somebody you're not going to find easy to work with.'
  The following morning two names were suggested. So I did win on that but it was very, very hard and it took a lot of persistence."
  I subsequently wrote to the Prime Minister to protest at the way in which a parliamentary committee had been rigged and to call for a better balance on committees considering ethical questions, between those who believed that ethical actions carried consequences and those who believed that there were no consequences. My letter received a courteous enough reply, but no action was taken.
  Baroness Warnock got her committee and she got her report. However, difficult ethical questions were ruled out of court from the beginning. In her own words, the committee deliberately excluded
  "questions of when life or personhood begins."
  That comes back to the point made by the hon. Member for Bassetlaw. As that question was one of the central ethical issues in determining the new law, it seemed an extraordinary omission.
  The report was widely cited in both Houses of Parliament during the passage of the 1990 Act. The Government, having established the committee, laid the committee's proposals before Parliament and hid behind the august figure of Lady Warnock as if the Bill had nothing to do with them.
  The 1990 Act for the first time permitted destructive experiments on human embryos. The debate today is in sharp contrast with the decision this summer to destroy up to 3,000 fertilised human eggs. This debate is an extraordinary contrast to the way in which the HFEA dealt with that issue.
  The relative ease with which the Warnock committee secured its objectives became the model for the composition and operation of the HFEA. Apart from loading its membership with people who share the Warnock view of ethics, the HFEA finances itself from
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  the very clinics it is supposed to police. Fees account for 70 per cent. of the authority's income. That is utterly incestuous. It means that people cannot afford to say no too often and, in the case of the HFEA, ever.
  The HFEA earns money from the creation of spare embryos, because it is funded through the licences it grants to the clinics that create the spares and then undertake the experiments. In terms of job security and future funding, it has a built-in incentive to make the situation even worse. That is no basis for good ethics.
  The members of the HFEA were chosen so that there would be no squeamishness about the practices that it was established to regulate. Its members are a mixture of the politically and religiously correct. They include Liz Forgan, the managing director of BBC network radio, and the Bishop of Edinburgh, who said that
  "we are all horn with adulterous genes"
  and that
  "genetic engineering may be compared with corrective medicine. such as the fitting of a pair of glasses."
  Another member is the actress Penelope Keith, best known for her starring role in "The Good Life". She is a neighbour of the former Secretary of State for Health, now Secretary of State for National Heritage.
  There is not and never has been a single member of the HFEA who upholds the sanctity of human life from fertilisation. Such old-fashioned religious belief is thought of as quaint at best and as dangerous bigotry at worst.
  The HFEA behaves in an arrogant and unaccountable manner, arrogating powers to itself. For example, it has refused to allow Members of Parliament sight of the study that it undertook into the freezing of human embryos—so much for freedom of information, public disclosure or access. The HFEA has also been deceitful, and was forced to withdraw a published claim that French scientists had withdrawn their work demonstrating a link between the freezing of human embryos and subsequent disability.
  The House must return time and again to those questions and others raised by the hon. Member for Bassetlaw today. The HFEA must be reformed and members appointed to it who uphold the dignity and sacredness of human life. There is also a need to address the deep and complex questions that have rightly been placed before the House today.
  11.49 am
  Mrs. Elizabeth Peacock: I greatly welcome the opportunity to discuss this important subject and I congratulate the hon. Member for Bassetlaw (Mr. Ashton) on obtaining today's debate. It gives us time to consider the various issues and the workings of the HFEA.
  I intend to raise various questions and, perhaps unusually in the House, suggest some answers. But, as a mother myself, I want to say at the outset that I have the greatest sympathy for Mrs. Blood and the tragic circumstances in which she now finds herself. The hon. Member for Bassetlaw put across her case with great dignity and she has the sympathy of the House in the predicament in which she now finds herself.
  We are often asked whether the HFEA is doing a good job and working well. As the hon. Gentleman said, it may not be. It was established as a watchdog to oversee the test-tube baby procedure, but in practice it has become more the lapdog of the embryo research industry.

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  The legislation establishing the HFEA was argued for largely on the ground of helping the infertile to have children, but the research licensed by the authority has included studies with the opposite aim—of trying to prevent the birth of children to fertile couples, as the recent case suggests, and that has included the testing of drugs such as RU486, designed to cause abortion, as well as those designed to prevent conception.
  Does the HFEA provide full information about its work and the embryos created and used in research? It has failed to give a satisfactory account of the fate of thousands of human embryos created in laboratories under the aegis of the authority. The Department of Health, using figures supplied by the HFEA, left 175,000 embryos unaccounted for. We do not know where they are. A further set of figures on that subject were inconclusive.
  HFEA statistics have recently been criticised by one of its own members, Dr. Brian Lieberman, who pointed out that the authority's practice of citing the so-called adjusted live-birth rate as the main figure in the league table of fertility clinics is misleading, as it masks the number of twin and triplet births occurring.
  Dr. Lieberman said:
  "One is concerned not just with adjusted live-birth rates, hut with live, healthy, non-handicapped babies … I'm concerned about triple pregnancies. The higher the rate of triple births, the higher your chances of having handicapped children."
  That was reported in The Independent on 9 October 1996.
  Was the HFEA right to refuse to Mrs. Diane Blood permission to be inseminated with sperm taken from her late husband while he was in a coma? Many criticisms may be fairly levelled at the HFEA, but whatever one may think of the decision, it was following the letter of the law. The hon. Member for Bassetlaw suggested that that law should be changed.
  The requirement that a person's gametes should not be used to create embryos without explicit written consent is perhaps the only criterion that the HFEA is required to apply that is not an arbitrary restriction. All the other criteria that it is called upon to enforce, such as time limits on the keeping of embryos, the kind of scientific research for which embryos may be created, or the number of children who may be fathered by a sperm donor, are, to a certain degree, arbitrary. We may argue, as many of us do, that some of those arbitrary criteria are wrong, but at least the requirement for consent is a morally valid point.
  Should the requirement for written consent be changed in some way to allow for cases such as that of Mrs. Blood and others, tragic though they are and with which we all have sympathy? If so, it is most important that specific circumstances should be spelt out in law. It would certainly not be wise to give the HFEA discretion in the matter and it would be completely unacceptable to give it discretion over the use of female gametes. The HFEA keenly promotes egg donation. It facilitates embryo experimentation, both on so-called spare embryos left over after fertility treatment and on embryos created specifically for experiments.
  It may be true that if insemination had taken place before Mr. Blood died—the point made by the hon. Member for Bassetlaw—it would have been within the law. However, my understanding is that the HFEA needs
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  written consent for such action to be taken. I hope that my hon. Friend the Minister will confirm that when he replies. If we are now saying that that is wrong, changes will have to be made. But once a change is made, a precedent is set, whether or not the authority made the decision without the protection of the law. As we all know, much of our law is based on precedent, which then becomes case law. It is the responsibility of the House to take such action, not to leave it to the say-so of the authority or lawyers making representations.
  The HFEA, in its 1994 report on new ways of obtaining eggs for IVF treatment and embryo experiments, stated that it believes that
  "there is no objection in principle"
  to obtaining ovarian tissue from a dead woman to provide infertility treatment as long as she has given consent. In the section on using cadavers as a source of eggs to create embryos for research, it discussed only the issue of consent as a bar to using a dead woman's eggs in that way. To allow the HFEA to disregard consent would give it carte blanche to license activities involving vast numbers of embryos as guinea pigs.
  I understand that the HFEA recently banned payments to gamete donors. Surely that shows that it is restrained in its promotion of sperm or egg donation. Such a move is to be welcomed, but it must be seen in perspective. Previously, a maximum payment of only £15 was permitted to gamete donors. But the HFEA has in other cases, particularly with reference to egg donors, shown contempt for the principle of consent. It has argued that in the case of an aborted female foetus, it would be permissible to retrieve the primitive egg cells from such a baby and use them to create embryos for research. That is not yet a practical possibility, thank goodness, but technically it may be feasible.
  In such a case, as we have already heard, the mother of the embryo would be an aborted baby who could never possibly consent to the use of her eggs. The authority argued that, as next of kin, a mother should not be allowed to give consent on behalf of her dead daughter. That suggests a minefield of great moral and legal issues, which the House should consider carefully and discuss at greater length than is possible this morning.
  The HFEA has rejected the use of eggs from aborted female infants for infertility treatment. However, that decision was based not on moral principles, but on social and psychological considerations. In the event, its ruling was academic as the amendment to the Human Fertilisation and Embryology Act 1990, promoted by my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) and supported by many hon. Members, had already been approved and was subsequently incorporated into statute.
  There are objections to the workings of the HFEA. It was not established with a remit to protect the human embryo, but rather it was established to apply certain limits on the abuses to which an embryo might be submitted. The law imposes restrictions on what may be done to test-tube babies and provides wide-ranging protection for them, but it also creates broad exceptions and established the HFEA in the role of licenser of all manner of abuses of the embryo. The objection to the HFEA is not simply that it fails to protect the embryo, but that it was never intended to do so. I suggest that it was established to add a veneer of respectability to the

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  business of using embryonic humans as laboratory animals, freezing them for long-term storage and even allowing them to be the object of trade.
  The HFEA may withdraw or withhold a licence from a clinic or research project if it fails to meet required standards, but in practice those standards have little to do with showing respect for the embryo in the test-tube. A research project may fail to receive a licence because it is not scientifically sound, but it is unlikely to be rejected because it is morally bankrupt. An IVF clinic might be in danger of losing its licence to treat infertile couples because too few babies were born to its clients, but not because it destroyed too many embryos in the process.
  Time is moving on and does not allow us to discuss fully all the points arising from the debate. The matters that I have raised, like those raised by the hon. Member for Bassetlaw, suggest that we should carefully re-examine the decisions taken by the HFEA and the rationale behind them. I warmly welcome the opportunity that the hon. Gentleman has given us to discuss these important issues, which I believe the House will consider more fully in future.
  12.1 pm
  Ms Tessa Jowell: I join other hon. Members in congratulating my hon. Friend the Member for Bassetlaw (Mr. Ashton) on securing the debate. He has been tireless in his support for his constituent, Mrs. Diane Blood, and I am sure that other hon. Members will join me in thanking him again for giving the House the opportunity to discuss the important issues raised by that case.
  This is not an issue that divides the House along party political lines. It touches the conscience and sensitivities of every Member. No one could fail to have been affected by Mrs. Blood's determination in fighting her case, and to have been moved by the distress that it clearly caused her and her family.
  With such issues, the legislation must be kept under regular review. Raw human emotion is aroused, and technological advance creates moral dilemmas that may not have been anticipated only a few years ago. Precisely because of that, the House passed the Human Fertilisation and Embryology Act 1990, but the recent judicial review of Mrs. Blood's case exposed flaws in the Act and it is right that Parliament should have the opportunity to revisit the issues.
  When the Bill was debated in Parliament, the then Secretary of State for Health, the right hon. and learned Member for Rushcliffe (Mr. Clarke), said that there was
  "genuine agreement about the need for statutory regulation in this highly sensitive and fast developing area of science and medicine."
  That consensus still prevails, but I believe that hon. Members on both sides of the House will share my view that the recent case has tested the 1990 Act and identified an aspect to which the House should urgently return.
  The Government have implicitly acknowledged the inadequacy of the Act to judge such cases. The Secretary of State for Health stated that the Government did not intend to stand in the way of a private Member's Bill. While the Government seem to be adopting a disinterested stance in this case, it is not clear that the Human Fertilisation and Embryology Authority is fulfilling the role that they envisaged for it when the legislation was introduced.
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  One of the explicit purposes of the Act was to remove from the political domain the responsibility for decisions on such matters. During the Second Reading debate in 1990, the right hon. and learned Member for Rushcliffe implied that the Government intended the HFEA to be able to act independently and use discretion. He said:
  "It has been argued that, rather than having a completely independent authority, Ministers should be responsible for these matters. We decided against that, because it would place Ministers and the House in a permanently difficult position if. as a semi-political issue, it was said that Ministers should take this or that view on medical or scientific matters … The code of practice of the authority will have to be submitted to the Secretary of State and laid before the House, but some independence in medical and scientific matters is in the interests of Parliament and the Secretary of State."—[Official Report, 2 April 1990; Vol. 170, c. 915–20.]
  We can therefore assume that the authority was intended to use independent judgment in particular cases, not simply and slavishly to follow established rules and procedures. The Blood case has shown that the authority does not believe that it has such powers and independence. Ruth Deech, the chairman of the authority, said:
  "Parliament carefully constructed the…Act so that courts would not have to judge each case individually, asking questions of an applicant which may prove difficult—often agonisingly difficult—to answer. It was made clear that decisions about people's genetic and reproductive material should not be left to the discretion of doctors or next of kin."
  She seems to mean that such decisions should not be left to anyone's discretion.
  We are left with stalemate. Ministers stand back from the work of the authority, but the authority says that it can work only to the letter of the law. The court says that it cannot now substitute its discretion for that of the authority, unless the authority has acted with manifest unreasonableness. Parliament, however, intended that there should be room for discretion. A straitjacket has been created where none was intended.
  It is clear that the authority has already used its discretion once in the Bloods' case. The Act states that sperm can be stored only with the written consent of the donor, yet the authority waived that requirement after taking into account the compelling and compassionate grounds in their case.
  In his judgment, Sir Stephen Brown referred to a note of a telephone conversation that took place in March 1995 between Professor Cooke of the Infertility Research Trust, where Stephen Blood's sperm was to be stored, and Flora Goldhill, the then chief executive of the authority. In her note of their conversation, Ms Goldhill recalled that
  "The current situation was so traumatic for the wife in that the decision to turn off the life support system would be made in the next few hours that it would appear uncaring and unnecessarily bureaucratic to insist on the provision of proper legal consent at this time."
  That was a sensitive, practical and humane response.
  The authority now says that Stephen Blood's sperm was stored illegally. That may be so, but I do not believe that anyone in the House would condemn Ms Goldhill for taking that decision. She clearly reached it after careful thought in the light of the compelling circumstances of the case, and I believe that it was the right decision.
  The question that follows is this: if the authority has already acted once in this case with discretion and with attention to the special circumstances, why does it now

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  adopt the view that it can no longer exercise any discretion—and therefore compassion—in this case? Technically, perhaps, it should not have consented to the storage of Mr. Blood's sperm, but the fact that it did so suggests that agreement to the eventual use of the sperm by Mrs. Blood cannot have been ruled out.
  The Act was framed in unequivocal terms. It was the product of growing unease in the House and in the country about the pace of development in reproductive technology and the complex moral questions that that posed, and to which several hon. Members referred today. Indeed, Sir Stephen Brown states:
  "It is no doubt because the whole field of the artificial insemination with sperm obtained from a man who subsequently died was and is highly sensitive and ethically controversial that the Act of Parliament permitted no element of discretion on the part of the Authority."
  The current chair of the authority, Ruth Deech, shares this view. After the ruling she said:
  "The court's decision has confirmed, however, that the Authority complied with Parliament's wishes as set out in the HFEA Act 1990".
  She has also said:
  "The authority has been damned as heartless, stubborn and pedantic. But the law is clear and mandatory."
  That, perhaps, is the nature of the problem. Cases of this kind are by definition enormously complex and individual. No two cases will be the same and they cannot all be judged by an over-rigid set of rules. Somewhere along the line, it is vital that there is scope for informed and sensitive discretion to be exercised by properly authorised people.
  There are other problems with the legislation. We know that the issues raised by the case that we are considering today were not fully dealt with when the Bill went through Parliament. As my hon. Friend the Member for Bassetlaw has already said, Baroness Warnock, who chaired the committee of inquiry, now admits that the committee did not even hypothetically consider a case of this type; but that if it had, she felt that it would have seen no ethical or public policy objection to allowing the woman to become pregnant by her husband's frozen sperm, in this country or abroad. That acknowledgment provides important evidence of the fact that neither the Warnock inquiry nor Parliament considered the issues raised by Mrs. Blood's case.
  There are also other reasons that justify the House revisiting the issue. It is now six years since the Bill passed through Parliament. Such is the pace of change and development that, even without this case, we should now have had to consider whether the original legislation is still adequate. Mrs. Blood's case simply makes the need for further parliamentary consideration more urgent.
  Science has moved on since the Act was drafted; it is now possible for a child to be conceived posthumously by other means. As my hon. Friend said, it is now possible, outside the terms of the Act, for testicular tissue to be taken from a man in a coma and for sperm to be created from it. Today, we are calling for the House to look again at the adequacy of the legislation to judge cases of this type. There is a case for the Secretary of State for Health to intervene and instruct the authority to amend its general direction so that it can exercise greater discretion.
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  No single piece of primary legislation will ever be sufficient of itself to deal with such a complex area and with such fast-moving technology.
  Moreover, we urge the Minister to come up with proposals that will give the authority more discretion and to allow Parliament to debate those proposals on a free vote.
  Lord Winston, who has great experience of the issues surrounding fertility and embryology, is considering introducing a Bill in the other place to amend the Act and allow greater flexibility in such cases. By whatever means an amendment to the law comes about, we urge Ministers to act with speed.
  Diane Blood's case has aroused enormous public sympathy. At judicial review, Sir Stephen Brown said:
  "I have found this to be a most anxious and moving case. My heart goes out to this Applicant."
  It would seem that the authority alone is unmoved. It has sought to defend the position it has adopted by dismissing opposition to it as the product of sentiment. I suggest that any public agency such as the HFEA has a responsibility to listen to, and take heed of, public opinion.
  The HFEA has struck conflicting poses in explaining its position. On the one hand it has stated that it "profoundly sympathises" with the applicant, but its chair has also accused supporters of sentimentality. She has said:
  "Critics of the HFEA say…consent was implicit because Mrs. Blood and her late husband clearly wanted children and Mr. Blood would certainly have agreed to the procedure. This argument is understandable, but it is sentimental."
  On the issue of consent, a parallel has been drawn with cases where the courts have ruled that a woman has no right to risk her own death and that of her unborn child by withholding consent to a caesarian birth. The rulings represent a trend in which the courts have edged away from the principle that medical interventions cannot be imposed except when the patient is mentally ill or unconscious. As The Independent has said:
  "They show that the principle of consent is becoming a much more flexible concept when seeking to preserve life but not, it seems from Diane Blood's case, when seeking to create it.
  It is quite clear that public opinion is overwhelmingly sympathetic to Mrs. Blood and feels that she has been unjustly treated. There is absolutely no evidence from the case so far that any child born into Mrs. Blood's extended family would not find itself growing up in a secure and loving family. In short, it would not be disadvantaged. Mrs. Blood has incurred great hardship in meeting the enormous legal costs inherent in a case of this kind, but everyone to whom she turns wrings their hands and says that there is nothing to be done.
  Parliament is responsible for this stalemate: Parliament should resolve it by giving the authority a reasonable but not excessive amount of discretion, to enable cases at the margin to be sensitively and speedily resolved. Technology will always be faster on its feet than the legislator, but we must be able to deal with the difficult and sometimes heart-rending decisions that changing technology will force us to confront without constant recourse to primary legislation.
  I hope that this House will act and, in so doing, will recognise the suffering that Mrs. Blood's case has exposed.
  12.16 pm
  The Parliamentary Under-Secretary of State for Health (Mr. John Horam): We are all extremely grateful to the hon. Member for Bassetlaw (Mr. Ashton I for initiating this debate so early in the new Session. These are important matters and it is right that they should be debated in Parliament. I congratulate the hon. Gentleman on the moving and thoughtful way in which he put the case for his constituent.
  I should like first to remind the House of the framework within which the authority and clinicians have to operate. Fourteen years ago, in 1982, in the light of concerns about techniques such as in vitro fertilisation and the use of human embryos for research, the Government asked Baroness Warnock, as she now is, to chair a committee of inquiry. The committee's recommendations were published in 1984. There followed a consultation period. In 1986 the Government issued a consultation paper and, a year later, a White Paper which formed the basis for the Human Fertilisation and Embryology Act 1990. That Act contains important provisions on research on embryos, on the welfare and legal status of children born following the provision of relevant treatment, on the need for those providing gametes, eggs or sperm to consent to their use in particular circumstances, and on the establishment of the HFEA to regulate the whole system.
  There has been a remarkable amount of public consultation over many years. The legislation was passed on a free vote after lengthy debate in both Houses. It was the first such comprehensive piece of legislation in the world, and it provides the parameters within which the Human Fertilisation and Embryology Authority operates. The authority's role is to regulate the activities of treatment and research centres, to promote good practice and to provide information and advice. The authority is fully accountable to my right hon. Friend the Secretary of State who, in turn, is answerable to Parliament for all matters concerning the authority. It produces an annual report which is placed before the House, as well as a code of practice to guide those offering and providing treatment. Like all such bodies, the authority is subject to review every five years.
  In recent months much attention has been directed to individual cases. I can deal only with the issues that they raise and the broader framework within which decisions can be taken. Like other right hon. and hon. Members, I recognise the human side of such cases as well as the emotion that is integral to them and which they generate more widely. However, as I have said, Parliament decided that there was not to be a free-for-all in these matters, so there must be rules which must be observed by those to whom they apply. Sadly, at times, wherever the line is drawn it will result in some hard cases.
  The hon. Member for Bassetlaw spoke about the case of his constituent, Mrs. Diane Blood, who wishes to be inseminated with her late husband's sperm. The president of the Family Division has described this as
  "a most anxious and moving case".
  That point was made also by the hon. Member for Dulwich (Ms Jowell). I concur totally with the feelings of the hon. Lady and the president on this matter. We have all admired Mrs. Blood's courage and determination and have great sympathy for her. I understand that Mrs. Blood has been granted leave to appeal, should she wish to take
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  it, against the recent High Court judgment, so although she has decided to abandon her anonymity I must avoid going into too much detail.
  There are some general issues that have been widely commented upon over the past couple of weeks and which we should cover. Some of them have been dealt with during the debate. First, Parliament decided in 1990 that written consent must be provided before eggs or sperm—or, for that matter, embryos—may be stored or used for treatment or research. The notion of consent goes to the heart of the legislation and featured prominently in the Warnock report which preceded the Act. As with the storage or use of embryos, consent is not something that can simply be waived. It is a statutory requirement. I confirm that to my hon. Friend the Member for Batley and Spen (Mrs. Peacock) who raised that matter. It is a statutory requirement under the Act as passed by Parliament.
  Secondly, the 1990 Act enabled the HFEA to specify in directions the conditions and circumstances under which gametes may be exported abroad. Accordingly, in 1991, the authority issued general directions which permitted the export of eggs and sperm where written consent had been given. By the same token, it prohibited such export if the gametes could not be used for the intended purpose in the United Kingdom. Otherwise, of course, the regulation that exists in this country could simply be circumvented by removing the gametes to another jurisdiction. So once again, on the question of export, consent is a fundamental issue.
  Consent is fundamental to all medical interventions. There are many issues to be considered by those embarking upon assisted conception, including the welfare of the new child as well as that of any existing children-although there are no existing children in this case. Also, we all respect—and must respect—the right of the individual to determine what, if anything, is to become of his or her genetic material. It is not for the HFEA to try to second-guess the wishes of any patient in that regard.
  Even where consent is obtained, the welfare of the child must be considered. Paragraph 4.4 of the Warnock report said:
  "The majority view expressed to us however, saw AIH (artificial insemination by husband) as an acceptable form of treatment, where clinically indicated. We see no moral objection to its practice. We believe that where there is the intention to bring about the birth of a child and this takes place within the context of a stable relationship, such intervention is acceptable. It is simply a means of bringing together the sperm and egg of a husband and wife so that fertilisation can take place in vivo. Nevertheless we have grave misgivings about AIH in one type of situation. A man who has placed semen in a semen bank may die and his widow may then seek to be inseminated…This may give rise to profound psychological problems for the child and the mother."
  In paragraph 10.9 the report says:
  "The use by a widow of her dead husband's semen for AIII is a practice which we feel should be actively discouraged."
  Professor Michael Hull, professor of reproductive medicine and surgery at Bristol university, commented on the case of Mrs. Blood in a letter to The Times on 24 October. He said:
  "The fundamental ethical concern in all fertility treatment must be for the welfare of the offspring…Is the fact that children arc born fatherless due to accident reason enough to allow treatment which plans such an outcome? Is our society ready to abandon its foundation on the traditional family?"

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  All those concerned in this case should take that to heart.
  As the hon. Member for Dulwich conceded, the HFEA has behaved sympathetically in the case of storing the sperm. She recounted the telephone conversation that took place. It would be wrong to say that the HFEA has been unsympathetic. I know that it would wish to be sympathetic and to give full consideration to the circumstances in which Mrs. Blood finds herself. Therefore, it decided last Thursday to give further consideration to one aspect of the case, which is whether the gametes could be exported. Accordingly, I understand that Mrs. Blood, through her solicitors, has been asked if she wishes to place any additional material before the authority. I can assure the hon. Member for Bassetlaw that that will happen.
  Mr. Ashton: May I press the Minister on that? It is a welcome assurance but Mrs. Blood is now having to decide whether to go to the Court of Appeal, virtually this afternoon. That assurance is a sympathetic assurance in that the authority will look kindly towards the export of the sperm. However, is the Minister saying that there is no way in which the Government will provide the House with an opportunity to alter the law in the near future?
  Mr. Horam: I was about to come to that point. Suggestions have been made by the hon. Members for Bassetlaw and for Dulwich and others that the law should be amended to allow variation of circumstances and greater discretion in order to take into account evolving medical developments. This is genuine free-vote territory and it is for the House to determine whether it wishes to go down that route. If, in due course, it wishes to do so—it would take time—my advice would be for the House to ensure that it is in a position to take a genuinely balanced view of all the implications.
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  The present legislation was passed after substantial public and parliamentary debate and is carefully drawn. It is therefore not an area in which either policy or legislation should be tinkered with on the spur of the moment. I have listened carefully to the points made by hon. Members today and I have noted carefully the views expressed on both sides of the argument over the past few weeks.
  Mr. Michael Alison: Will my hon. Friend comment on another aspect of the post-natal well-being of the child, since the interests of the child are paramount? There is an allegation that not enough is being done to gather data about how the so-called test-tube babies get on later in life and the extent to which they are exposed to the risk of suffering from a late congenital disorder that they contracted via IVF. Those are important issues and, as I understand it, no monitoring is being undertaken.
  Mr. Horam: I am glad to reassure my right hon. Friend that two studies have been undertaken, one in Cambridge in 1994 and another at Manchester university. Both studies found that there was no real difference between children born of a frozen embryo and those born more normally.
  Finally, I am sure that we all agree that the HFEA has challenging responsibilities.
  Ms Jowell: Will the Minister give way?
  Mr. Horam: No, I have only a few moments left.
  The authority has faced a long summer and autumn in the full glare of publicity. It has an extremely difficult and often thankless task, and in my view it has acquitted itself extremely well.

  Veterinary Education and Training
  12.30 pm
  Sir Colin Shepherd: First, I thank my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, the hon. Member for Tiverton (Mrs. Browning), for coming to the House to help with a matter that is of such concern. The entire veterinary profession will be grateful to her.
  My hon. Friend will know that for some years I have served as a Privy Council-nominated member of the council of the Royal College of Veterinary Surgeons. As a lay member of that council, I express my alarm at the concern that is continually voiced by my veterinary colleagues on the council and in other sectors of the veterinary profession that there is no uniformity of standards in education and training across the European Union and the European economic area.
  My years with the council have left me in no doubt about just how seriously the Royal College of Veterinary Surgeons regards the maintenance of standards within the United Kingdom veterinary profession. It is jealous indeed.
  I need not remind my hon. Friend of the crucial need to have common high standards of theoretical, practical and ethical training throughout the EU and the EEA if there is to be public confidence in the ability of the European veterinary profession to provide for the safe movement of animals into and throughout the EU. With the removal of border checks, there is an increased need for standardised, reliable and unambiguous certification and all that flows from that in terms of confidence, especially among livestock owners. There is also a strong link between basic veterinary education and certification as we have in the United Kingdom.
  My purpose in raising the matter today is to press for progress in achieving the goal of comparable high standards across all the schools in Europe. As the royal college is obliged to register anyone who applies and has a recognised qualification from a European veterinary school, it must be beyond doubt that the letters MRCS have to be unequivocally a hallmark of quality that is completely reliable.
  I first became alarmed in early 1993. I need not rehearse the legislative background that resulted in the establishment of the Advisory Committee on Veterinary Training back in 1978 in line with the European directives, with its responsibility
  "to ensure a comparatively high standard of veterinary training in the Community".
  I am now alarmed by the fact that the committee is being denied the means to discharge its work. I refer to the reduction in the number of meetings and the withdrawal of financial and managerial support for the system of visitations to veterinary schools.
  The importance of confidence in the quality of veterinary qualifications was brought home to me by a reported experience in a United Kingdom abattoir when a Spanish official veterinary surgeon was unable to recognise the nervous symptoms displayed by a cow during an ante-mortem examination. It became clear that the OVS was not familiar with the signs of bovine spongiform encephalopathy, was unsure what action to take and did not have the nous to read the operations manual.
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  I am reliably told that much of the training of Spanish vets in food hygiene can be extremely good-perhaps better than ours. However, we need to know that it is uniformly good so that we can be confident in hiring a vet with recognised qualifications from Spain or elsewhere overseas.
  I am also reliably informed that veterinary faculties have been opened in some regions of the EU—particularly Spain, Italy and Portugal—purely on the ground of local political pressure and without regard to demand for their product or the inadequacy of funding.
  It is clear that the system of visits is vital and that they should be as rigorous and penetrating as those that have been practised in United Kingdom schools. Whereas United Kingdom schools have been visited every seven years or so, it is worrying to note that in the past 10 years only 22 of the 52 EU schools have been visited. We must bear it in mind that there is also the need to visit EEA schools and those in non-EEA states that have common borders with the EU. With visits currently planned at about four per year, there will be an interval of nearly 15 years between visits—far too long a gap.
  It is also worrying that an excessive number of veterinary students are being trained in Europe, while there is a perceived need to increase the numbers being trained in United Kingdom schools. As the Federation of Veterinarians of Europe put it in its discussion paper of May 1996:
  "Excessive student numbers add to the growing unemployment figures of veterinarians in a number of countries and result in a lowering of standards in schools which has implications not only for the state concerned but other members who are the recipients of exported animals and migrating veterinary surgeons."
  That is particularly important for the United Kingdom, as Mr. Roger Eddy, a council member of the Royal College of Veterinary Surgeons pointed out in his address to the British Veterinary Association congress in Chester this year:
  "In each of the last five years more graduates from overseas have been registered than from the UK. In 1995 only 45 per cent. of registrations were from the UK and there were more graduates from Spain than from Ireland which has always been a supplier of graduates to the UK."
  It is worrying that some courses in Italy have such deficiencies that they are technically in breach of the directives. Schools which should be declared delinquent are still turning out graduates whom the royal college still has to accept. It is also worrying that such a rigid attitude should be taken by the European Commission. Directorate-General XV appears to be concerned only with the regulation and the internal market when perhaps it would be sensible for it to collaborate with DG VI, which has to deal with the consequences of inadequate veterinary standards, as was pointed out in 1994 by Mr. Barry Johnson, the then president of the royal college, in his letter to DG XV.
  In 1994 the matter was raised in another place by Lord Soulsby, a distinguished former president of the college. He expressed the worries of livestock farmers that there was an animal disease time bomb ticking away as a result of the mad rush to a single market in the movement of animals without ensuring that the necessary standards of veterinary education and veterinary practice applied throughout the EU. He went on to say that those responsible in the Commission would bear a heavy responsibility if our worst fears regarding imported animal

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  disease were confirmed. An equal responsibility will lie on the Council of Ministers if it allows the Commission to get away with it.
  I do not think that the noble Lord had BSE in mind, but that catastrophe serves to demonstrate the scale of the problem when things go wrong. Let us not forget swine fever, Aujesky's disease or foot and mouth disease, all of which can easily achieve pandemic proportions. It is an important matter, given the need for many United Kingdom cattle farmers to restock in the aftermath of the BSE culls.
  In his reply, Lord Howe, the then Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, expressed his shared concern. In the light of the Commission's December 1993 report on subsidiarity, he said:
  "The United Kingdom supports the application of subsidiarity and will, of course, examine the results of any such review. Nevertheless, the potential costs to the Community and the UK of inadequate standards of veterinary training are such that any proposed changes would have to be examined very carefully."
  Two years on, the question must be: what further thoughts does my hon. Friend the Parliamentary Secretary have? Subsidiarity may be all right in the United Kingdom, where we trust our standards, but can we trust standards everywhere else?
  Later in his reply, Lord Howe said that
  "financial arrangements for the EAEVE visits are still unclear and discussions are continuing with the Commission to resolve the question of funding.—[Official Report, House of Lords, 5 July 1994; Vol. 556, c. 1218–19.]
  If I understand the position correctly, the Commission has now completely backed off funding, leaving it to the deans of the schools. Will my hon. Friend the Minister confirm that or put me right?
  The then Minister referred also to the withdrawal of support from the sectoral directives, which would have the effect of doing away with the Advisory Committee on Veterinary Training. Given that the Department of Trade and Industry is espousing the deregulation exercise through the simpler legislation for the internal market—SLIM—initiative, how does that square with the implied support by the then Minister for the ACVT? This is particularly worrisome because one of the ACVT working party meetings for 1996 has been cancelled. All the signals are that there is no support for the mechanism that is to be used to examine training.
  Given the conflict between the Department of Trade and Industry and the Ministry of Agriculture, Fisheries and Food, what interdepartmental consultations are taking place between the Department and the Ministry that might parallel the consultations that should be taking place between DG XV and DG VI within the European Commission?
  At the end of his reply, the then Minister said that assurances had been received that the principle of visitation is one which the Commission firmly supports. Pressure would be maintained, he said, to ensure that the proposed voluntary scheme for visitations would get off the ground and that there would be a proper programme of visits. The then Minister said that he would ensure that if deficiencies were identified, the Commission would be pressed to take action. Alas, it is clear from the
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  correspondence between the Royal College of Veterinary Surgeons and the Commission, and from the concerns and frustrations expressed by the Federation of Veterinarians in Europe in its paper, that little progress, if any, is being made.
  Throughout all the papers and comment that I have read and heard runs a common thread. That is the need for strong political pressure to be applied by most member states.
  We are fortunate in the United Kingdom in that legislation bearing on veterinary surgeons promotes a close relationship between the governing body of the profession, Ministers and Parliament. Other veterinary bodies in other member states are not so well placed. It behoves the United Kingdom, therefore, to take a strong lead in securing the equalisation upwards of standards in European veterinary education and training. I note that my hon. Friends the Members for Congleton (Mrs. Winterton) and for North Thanet (Mr. Gale), who take a keen interest in veterinary affairs, nod in assent. I know that many other colleagues who serve as honorary associates of the BVA, as I do, will share my view.
  I press my hon. Friend the Minister and the Minister of Agriculture, Fisheries and Food to take a lead and to ensure that visitations take place at a proper rate. There should be at least twice the number of visitations, or more. They should take place with proper rigour and depth. There should be proper support to ensure that there is swift analysis and reported results. We have had a hint from the BSE crisis. We just cannot afford to get things wrong.
  12.44 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Angela Browning): I am grateful to my hon. Friend the Member for Hereford (Sir C. Shepherd) for bringing about a useful debate on an important matter. It is obviously of importance to my hon. Friends who are in their places in the Chamber. Given the amount of correspondence that I receive about animal welfare, it is a great pity that veterinary standards are not, apparently, of interest to Opposition parties.
  I think that we are all agreed that to ensure the health of animals and the safety of animal products moving both within the European Union and into the Community from third countries, we must deal with extremely important matters. I agree with the concerns that have been expressed by my hon. Friend the Member for Hereford.
  It is important that veterinary surgeons from all member states who are responsible for the certification of movements are trained to a comparably high standard. We can all recognise that to ensure confidence in the internal market, it is necessary for all veterinarians to be trained to a comparably high standard in accordance with the two sectoral veterinary directives. Deficiencies in training could lead to a failure to recognise serious animal disease, and could put the EU at risk by the spread of disease through the movement of animals or their products.
  Perhaps I might draw on the specific case mentioned by my hon. Friend regarding an official veterinary surgeon and the identification of neurological symptoms. I have not been given the full details by my hon. Friend, and if the case that I refer to is not the one that he referred to, perhaps he will correct me.

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  My hon. Friend mentioned the case of a Spanish veterinary surgeon acting as an OVS at a slaughterhouse in Cornwall. The OVS was carrying out an ante-mortem inspection when she observed an animal exhibiting nervous signs. She sought advice from a senior colleague, the principal OVS. The principal OVS could not attend the slaughterhouse as she was some distance from it, and advised the OVS that she should seek the opinion of a Ministry veterinary officer. That officer attended the slaughterhouse, examined the animal and ruled out any suspicion of bovine spongiform encephalopathy.
  I can assure my hon. Friend that the correct procedures were followed and that any inexperienced veterinary surgeon would be expected to follow the same procedure in similar circumstances. It might be helpful if I say that, in the case of BSE, in about 20 to 25 per cent. of the animals which are slaughtered showing the clinical symptoms of BSE, it is only on post-mortem pathology that it is identified that the disease is of a different neurological kind.
  If I have referred to the case that my hon. Friend had in mind, I am reassured that the right procedures were followed. If it is not the same case, I would wish to take immediate steps to investigate the matter to which my hon. Friend referred.
  Sir Colin Shepherd: I am grateful to my hon. Friend for clarifying the matter, which was one that worried me. I was unable to arrive at the detail that my hon. Friend has presented to the House. My hon. Friend has set my mind at rest. Nevertheless, the importance of standards and the ability to recognise BSE symptoms are important.
  Mrs. Browning: Indeed. I think that my hon. Friend and I are at one.
  It is important that the public, too, have a right to expect the same high level of competence when their livestock or companion animals are treated by a veterinary surgeon, irrespective of his or her country of origin. In the single European market, a prerequisite for trade in animals and animal products is that consignments meet all the conditions of intra-Community trade. That is dependent upon properly completed and valid veterinary certification, to prevent the spread of disease and to protect the welfare of animals in transit.
  There have been occasional errors in veterinary certification. I can assure the House, however, that they have been taken up immediately with the member state concerned. The RCVS, the BVA and MAFF have drafted 12 principles of certification, which have been adopted by the Federation of Veterinarians in Europe, the FVE. The United Kingdom is pressing for harmonised EU standards of veterinary certification, based on these 12 principles.
  The regulatory body and competent authority for the veterinary profession in the United Kingdom is the Royal College of Veterinary Surgeons. Its council is constituted under section 1 of the Veterinary Surgeons Act 1966. It is comprised of elected members of the profession, members appointed by the six universities that provide veterinary training and members appointed by the Privy Council. As my hon. Friend mentioned, he is one such appointee and has been a member of the council of the RCVS since 1983. We are all grateful for the knowledge, experience and expertise that he brings to this debate and to many others.
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  In 1978, two European Community directives prescribed procedures for training in veterinary surgery and for the mutual recognition of qualifications in the EC, and provided for the freedom of movement and right of establishment of veterinary surgeons. The directives, which were implemented in the United Kingdom in 1980, require member states to allow any veterinary surgeon who has undergone the prescribed training and obtained a scheduled qualification to practise on any of their territories.
  The Advisory Committee on Veterinary Training was established by Council decision in 1978. Its task is to help to ensure a comparably high standard of veterinary training in the Community. As many of my predecessors in the Ministry of Agriculture, Fisheries and Food have said, we are most anxious for uniform, high standards to be applied throughout the Community and we think that the ACVT has an important role in carrying out that task by exchanging information on training methods and on the content, level and structure of theoretical and practical courses provided in member states.
  The ACVT includes three experts from each member state, one representing the practising profession, one from the veterinary science teaching institutions and one from the competent authority. It is supported secretarially and financially by the Commission. As an advisory committee, it can make only recommendations to the Commission, which holds the legal powers to ensure compliance with the veterinary training directives.
  In the United Kingdom, the Royal College of Veterinary Surgeons has a statutory duty to carry out visits to our veterinary schools to ensure uniform standards. Visits take place at regular intervals and the reports of those visits are discussed in an open forum at the RCVS council. The standards of UK veterinary training are therefore not at risk.
  In 1993, the Commission stated its intention to withdraw its financial and secretarial support for the system of visits to veterinary schools by the ACVT at the end of that year. That naturally caused considerable concern to the Royal College of Veterinary Surgeons and the British Veterinary Association. The Government shared that concern and the then Minister, my right hon. Friend who is now the Secretary of State for the Environment, instructed officials to enter into discussions with senior Commission officials in the hope that they would agree to support the ACVT.
  Later that year, MAFF officials and representatives from the Royal College of Veterinary Surgeons met the Director-General of DG XV to discuss their concerns. They were encouraged by that meeting to believe that the Commission was sympathetic to their arguments. In January 1994, the RCVS was informed by the Commission that it acknowledged the value of the present system and proposed that the responsibility for visiting should pass to the European Association of Establishments for Veterinary Education-that is, to the deans of veterinary schools, as mentioned by my hon. Friend.
  My right hon. Friend the Secretary of State for Education and Employment, the then Minister, together with senior veterinary officials, met the president of the Royal College of Veterinary Surgeons and his colleagues in February 1994. Following that meeting, she wrote to Commissioner Steichen expressing her concern that the

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  Commission was withdrawing support from the ACVT. Assurances were received from Commissioner Vanni that the Commission would continue to monitor the results of visits by the EAEVE and to receive the opinions and recommendations of the ACVT. I apologise, Mr. Deputy Speaker, but it is in the nature of my job to come across long names, which we try to abbreviate somewhat.
  The EAEVE visits are currently funded by a one-off grant from the Federation of Veterinarians in Europe and by the schools themselves, but I understand my hon. Friend's concern about funding and I shall deal with that question in a moment. A further approach was made to the Director-General of DG XV by our permanent representation in Brussels, asking the Commission to maintain direct support for the ACVT and its visitation programme. Unfortunately, the reply received indicated that further approaches were unlikely to bear fruit. Consequently, in further discussions with the RCVS by senior veterinary officials, it was agreed that the approach of the RCVS would now be to gain active support from other countries in the European Union through the FVE.
  The position has moved on somewhat since the speech by my noble Friend Lord Howe in another place, but I share my hon. Friend's frustration, and the Government and the RCVS are both still concerned about standards, and about how those standards are monitored and implemented. My hon. Friend mentioned the SLIM initiative, which the Commission is currently reviewing and which affects the legislation that covers the mutual recognition of professional qualifications.
  The United Kingdom has submitted a paper explaining the benefits of the sectoral committees, including the ACVT, because we consider it paramount that they be recognised, while suggesting possible improvements to their operation. My hon. Friend mentioned subsidiarity; the necessary definitions are still being discussed, and I share his concerns about that.
  Commissioner Monti will make proposals for simplification that have resulted from the SLIM review at the Internal Market Council in November. Once they are received and we can see what they comprise, the Government will discuss the proposals with the RCVS, because we think that it is important that its views be taken into account.
  The increased trade in animals and animal products as a result of the single market places increasing reliance on veterinary certification at the point of origin, as my hon. Friend said. That is a principle of the single market, and for it to be successful it is vital that satisfactory EU standards of veterinary education are maintained on an
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  international basis, and that a common understanding is developed and put into practice on the principles of certification.
  Previously, we have been assured that the Commission will continue to monitor the results of visits by the EAEVE and that member states will receive the recommendations and opinions of the ACVT on those visits. I share my hon. Friend's concern about the length of time that it has taken for the visits to be put in place and I assure him that we will maintain pressure to ensure that the proposed voluntary scheme for visits to veterinary schools in member states continues with a proper programme of visits and that, if deficiencies are identified, the Commission is pressed to take action, because only the Commission has the power to ensure that action follows inspection. My hon. Friend drew the parallel between the system of visits and inspection in state education. It is vital not only to inspect but to follow through when deficiencies are found.
  Sir Colin Shepherd: Some of the schools can still opt out of the visiting process by saying that they cannot afford it, so we have to maintain pressure on the schools concerned, especially on those that do not come up to the mark, and ensure that they cannot cop out on that basis. How is that to be done?
  Mrs. Browning: My hon. Friend makes an extremely good point. We shall certainly talk to the Commission about how that is to be effected, because it is clearly unacceptable for schools to opt out simply through lack of finance. I can assure my hon. Friend that I will investigate the matter and will pursue it as vigorously as possible.
  We await the proposals of the Commission for simplification as a result of the SLIM initiative with respect to mutual recognition of professional qualifications. We shall want to discuss that with the various bodies in the United Kingdom including, of course, the RCVS, but before we can agree to any proposal for change we would have to take into account the potential costs both to Europe and to the United Kingdom of inadequate standards of veterinary training. If the standards were inadequate, the possible cost would be unacceptable to many of us in the House. I am anxious that the House should be aware of our determination in the matter.
  The Government continue to support the Royal College of Veterinary Surgeons in its efforts to ensure the maintenance of high standards of veterinary education throughout the EU. Coincidentally, I have a meeting in my diary for three weeks' time with the RCVS and in view of the case made by my hon. Friend, I shall raise the matter with it then.

  Sports Academy
  1 pm
  Miss Kate Hoey: I am grateful to have the opportunity to raise the question of the British academy of sport when there is great uncertainty about its future. Time runs out at 12 o'clock tomorrow for the bids to own and run the academy. Some £100 million is on offer from the national lottery to guarantee sporting success but no one, even at this stage, knows how that success will be achieved and who for.
  The Minister has been economical, to say the least, with his vision. Since the academy was announced in "Raising the Game" in July 1995—the principle of the academy has been accepted and supported by the Labour party and, indeed, all parties for some time—the Minister has said very little. In a debate last year, the Minister said that bids would be invited after consultation. He continued:
  "They will be assessed by the Sports Council, which will announce its decision next summer."—[Official Report, 27 October 1995; Vol. 264, c. 1223.]
  It is now nearly November and not a single bid has even been opened. What has led to that delay?
  A potentially far-reaching proposal has been hindered by lack of clear direction from the Government. Even those closest to the idea—the bidders, the sports bodies, the centres of excellence and the coaches—are stumbling around in the dark. The Minister appears to be unable to get off the starting blocks and there has been indecision and uncertainty about how the academy will proceed. Just one day before the bids close, the British academy of sport is as unclear as the hereafter is to mortals. We all have a different image of paradise and that is how it is with the academy—everyone has an idea, but nobody has co-ordinated those ideas.
  The Government have spectacularly failed to supply the vision. Where have they laid out their view in any detail? Do they have a view of the details of the academy? The 56-page prospectus provokes more questions and concerns than it gives answers and reassurance. The sporting world is at a loss and is unsure whether any of the practical questions will be addressed. We all agree that we want an academy.
  Ownership of the academy will be in the hands of a new consortium and its remit will include the need to search for commercial viability. Does that mean that the new owners will have to turn to running ad hoc fitness regimes for middle managers to make money or to other non-sporting events to earn the cash? Will we see the academy hosting wedding receptions, for example? Surely the academy should be run by sport for sport and sport alone.
  One of the great unknown factors, which causes the most serious concerns, is who will pay the on-going revenue costs of running the academy. On a practical level, for example, who will pay for the young people to attend the academy on sponsorships? Will it be the academy itself or the governing body of the relevant sport? What will be the role of the young people's coaches? Will their personal coaches and mentors have a role to play? Who will pay the coaches and how will that be decided? What will be the role of local education authorities? Young people are the responsibility of the local education authority. Will the academy have the power to require athletes and sportsmen and women to
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  break the link with their local or regional clubs or the power to decide which events they participate in? Who will have priority in selection? That is especially important because of the vast sums of money involved in some sports and the ability and desire of athletes to decide where they will take part. Who will make that choice?
  The academy will, we are told, cover sports medicine, but we have had no clarification of how those medical services will be provided. Will the physiotherapy and pharmacy services be provided by the national health service or someone else? More important, what guarantee will there be that the home country sports councils will always co-operate with and participate in the financing of the academy? The royal charters give them independence, but what will happen if they choose to exercise that independence? In an article in The Times yesterday, David Miller wrote:
  "Sir Rodney Walker, the chairman of the England Sports Council … has said … that if the England Sports Council does not approve of the choice of academy site by the UK body, it will not allocate the £100 million of National Lottery funds that has been set aside for it."
  Will the Minister comment on that statement? After we have been through the whole process, will someone, somewhere, decide that they have a veto over the money?
  Incidentally, can the Minister tell us what the status of the English and the United Kingdom sports councils and their royal charters is at the moment? Why has the English Sports Council not met officially for a year? Why is it taking so long to get the financial memorandum sorted out? What confidence can we have in the future of the academy if the setting up of the UK Sports Council and its relationship with the other sports councils has still not been resolved? Surely we owe more to the new chief executive of the UK Sports Council, Howard Wells, and to the chairman, Sir Ian MacLaurin. They must be allowed to get on with the job and the problems must be sorted out quickly.
  The academy should be a linchpin in a strategy for success in British sport, but it will not succeed unless there is a clear structure, from primary schools to clubs to the national level, with bodies identifying talent and pushing it on to the next stage. Were the school sports associations specifically asked to contribute? We all want success, but of course we do not need muddle. If we are to take the country with us on an expensive academy, there is no room for muddle. Everybody needs to be aware of just what the academy can do for the individual youngster, boy or girl, who has the potential to succeed. The public must know that the academy can do something for such young people. We need much more clarity on the subject.
  A number of questions still have not been answered, but they are not new. The sports' governing bodies have been raising those questions with anyone and everyone for some time and I hope that the Minister will take this opportunity to answer them.
  Will the Minister also clarify his role in the set-up? How will the national sports recreation centres fit into the new plans? Are they being sidelined in any way? Surely all those issues should have been agreed with the relevant governing bodies before the prospectus was issued. The UK Sports Council, the governing bodies and the British Olympic Association will be crucial whichever bid wins. What will be the involvement of those bodies and why has the Minister not been able to secure more agreement on the proposals before starting the bidding process?

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  Will governing bodies lose their grants for elite training or will they be free to send competitors to train in camps overseas if that best suits their needs? Elite sport sounds glamorous, but it comes from the grass roots. It is long term and expensive and there are no guarantees. Many of our great champions get to the top despite rather than because of the system. Some people are critical of giving money to the excellent. All of us who care about sport believe that we must have excellence at the top, but the pyramid must be as wide as possible at the bottom. I am not clear about how those links will be achieved.
  The National Coaching Foundation should play a key role in the decisions on how the academy should be run. An article in the autumn edition of its newsletter was headed "Bricks and mortar, but too little vision?" It was critical of the fact that many of the proposals in the 56-page document are not clear. Bidders are not being given a clear direction in which to go. The Minister should explain how the details will work out in practice. We all want the academy to be established, but if bidders are not able to take account of the different factors, whoever wins will have to talk to sports bodies to ascertain the requirements of any particular sport. Much of that work could have been done already.
  Even though the Minister has slightly changed his mind about the use of a huge green-field, 200-acre site for the academy, the 56 pages of that document were based on the premise that it would still be a green-field site. Does the Minister accept that consultations with the sports governing bodies showed that there was no support for a large green-field site for the academy? We already have centres of expertise. We need a pinnacle—an administrative and co-ordination centre—but it must be in touch with what is happening in the regions.
  British sport wants success, but now more than ever it needs answers so that it can plan for the future. The Government have asked for bids, but their policy is not clear. Great interest was shown, but we will not know the final number of bidders until 12 o'clock tomorrow. Those bidders have been put in a difficult position, because they are being asked to provide the vision thing for the Government. The Minister should have made matters much clearer.
  I have left the Minister time to reply to my questions. If he is honest, he will accept that, since the original announcement, despite the prompting of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry), we have been unable to obtain clarification of the position. There has been no debate in the country. If the average person in the street were asked what he thought of the academy and what it was all about, he would have no idea how it relates to him and his local community, and how it will benefit local youngsters with sporting talents and abilities. I hope that the Minister will give me some answers, but perhaps the hon. Member for Sheffield, Hallam (Sir I. Patnick) will say a few words first.
  1.13 pm
  Sir Irvine Patnick: I thank the hon. Member for Vauxhall (Miss Hoey) for that courtesy: I appreciate it. My hon. Friend the Member for Falmouth and Camborne (Mr. Coe), who was in the Chamber a moment ago, has done a lot for sport.
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  I want to put down a marker on behalf of Sheffield—the city in which I was born, where I live and work, and which I represent. It has not had the difficulty to which the hon. Lady referred, although I appreciate that she argued her case in great detail.
  Sheffield has produced a glossy prospectus, which states:
  "The Sheffield-based Academy will provide all the facilities, the resources and the services necessary to achieve gold medal performances. The city's concentration on sport over the past few years has provided much of the services, the knowledge and the expertise required, along with much of the infrastructure."
  It would be wrong if I did not mention the fact that many people associate Sheffield with something that went on many years ago. However, Sheffield now has major sporting facilities, and, along with many other cities, has submitted a bid. I am sure that the Minister, with his expertise, will consider that when making his decision. I hope that the academy will not be London based, but be situated somewhere in the provinces.
  1.14 pm
  The Minister of State, Department of National Heritage (Mr. Iain Sproat): I thank the hon. Member for Vauxhall (Miss Hoey) for raising this important subject, and for allowing my hon. Friend the Member for Sheffield, Hallam (Sir I. Patnick) to say a few words. He has done tremendous work to promote Sheffield, especially with regard to sport, and I am grateful to him for the advice that he has given me in the past few months on a range of sporting issues. I look forward to seeing the bid from the city that he so ably represents.
  On 14 July 1995, the Government published the policy document "Sport: Raising the Game", which sets out a wide range of proposals designed to rebuild the strength of every level of British sport. It highlighted three vital and linked elements of sports policy. The first was the need to restore sport and, particularly but not exclusively, competitive team games to the heart of school life. The second element was to extend the sporting culture by strengthening the two-way links between schools and local sports clubs. The final element was to ensure that talented competitors at every level received the support necessary to allow them to exploit their talents to the full—all the way to the Olympic podium.
  We therefore proposed the establishment of a British academy of sport that would aim to offer the highest standards in the world in sports science, sports medicine, coaching and training facilities. Moreover, the academy would be the pinnacle of a regional network of centres of sporting excellence and academies for individual sports, which would offer more locally accessible, high-quality training facilities and support services.
  We recognised that a world-class facility would not be cheap. However, the national lottery could provide the means for its achievement. The Prime Minister announced that up to £100 million of national lottery money could be available to help to fund the establishment of the academy.
  Why are we doing this? The approach of other countries has become increasingly professional. They have chosen to provide the very best facilities for their athletes, and so should we. To date, our athletes have done well, and some have excelled. They have made the most of the facilities that are already available. We want to

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  ensure that from now on our facilities are second to none. The aim of the academy will therefore be to help our athletes to compete with, and beat, the best in the test of the world.
  A key factor in the development of the Government's proposals for the British academy of sport, and for the regional network of facilities, was the insight that I gained from my many conversations with sports administrators, governing bodies and athletes and, not least, from my visit to Australia in January 1995. I saw for myself the Australian Institute of Sport in Canberra, which provides valuable lessons for our British academy of sport. I also saw and studied the New South Wales State Institute at Narrabeen and the South Australia State Institute in Adelaide, both of which provide valuable lessons for our regional institutes of sport. I saw and studied the Australian cricket academy at Port Henley, near Adelaide, and the Rugby League academy inside, as it were, the New South Wales State Institute at Narrabeen, both of which provide valuable lessons on how academies of individual sports that are owned and run by the governing bodies for those sports might work in this country.
  I do not want to copy everything that I saw in Australia, because the opportunities and problems there are different from those we have, but I pay tribute to what Australia has achieved. I have learnt a great deal from its excellent example.
  The policy document recognised that much of what is needed to help our sportsmen and sportswomen to develop to the highest level of achievement and sporting excellence is already in place. However, it is clear that we lack a vital asset for all national sport—a British academy of sport of world-class standards, and a coherent and unified programme to allow those with the greatest talent to use that talent to best effect.
  "Raising the Game" set out the Government's proposals. We want to ensure that the academy provides a range of services for sportsmen and sportswomen and, very importantly, their coaches—top-class training facilities; expert support services in sports science and sports medicine, including advice on training techniques, nutrition and sports injuries; good-quality accommodation for short or long-stay training camps or courses; financial support for individual athletes; access to local education facilities for long-stay students; personal development programmes; use of up-to-date laboratories; and advice and access to information using the latest audio-visual techniques. The academy will be a specialist centre for the training of coaches and those in the fields of sports science and sports medicine and also a centre of excellence in research and development.
  The British academy of sport will work co-operatively with the regional institutes of sport and sports-specific academies, although such regional institutes will not be owned or run by those who will own and run the British academy of sport—or if that were to happen, I should be surprised. Of course, there is nothing to stop people attempting to do that, but at the moment we are inviting bids only for the academy.
  The Government are not in the business of nationalising sport or overly centralising it. The regional institutes will offer locally accessible, high-quality sports training and facilities; high standards of sports science, medicine and coaching; links to the British academy of sport for sportsmen and sportswomen and their coaches; and scholarships and sponsorships for individual athletes.
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  The academies of particular sports—for example, the academy of cricket, the academy of rowing or the academy of cycling—will be run by the sport's governing body; provide coaching in technical skills in their particular sport at the highest level; make use, as appropriate, of the general facilities of the British academy of sport and the regional institutes; and offer scholarships and sponsorship for individual athletes.
  In December 1995, the Sports Council conducted a wide-ranging consultation exercise on the academy with the United Kingdom's top performers, coaches and administrators, to ensure that what is put in place will have a direct impact on performance on the world stage. Written responses were invited and 12 open meetings were held in different parts of the UK. Some 1,600 people attended the open meetings and about 600 written responses were received. The responses were analysed by an independent consultancy firm and confirmed wide support for the concept, set out in "Raising the Game", of the academy as the pinnacle of a network of regional institutes and academies for particular sports.
  In addition, there was overwhelming support for three key functions proposed for the academy: that it should be an integral part of the existing programme for the overall development of excellence in UK sport; that it should provide what is needed by different sports, their national governing bodies and their top-level performers; and that it should focus primarily, but not entirely, on the needs of top-level performers.
  On 24 July this year, just over a year after "Raising the Game" was published, the Department of National Heritage and the Sports Council jointly published the prospectus inviting bids to set up the British academy of sport. Tomorrow is the closing date for bids by different consortiums, typically comprising a couple of private sector companies, a local university, a local authority and a group of well-known sportsmen and sportswomen who might be the trustees of the charitable trust that will be set up to own and run the academy.
  The prospectus is based on the proposals set out in "Raising the Game" and conclusions reached following the consultation process. It contains details of how to draw up a bid which may, at a later stage, be eligible for funding from the national lottery. The prospectus sets out a number of principles for the academy, including the following: that the successful consortium will form itself into a charitable trust, which will run the academy in the interests of British sport as a whole; that it shall have the highest standards in sports facilities and services, including training, coaching, sports medicine and sports science and other relevant matters; that it shall work closely with other sports organisations and, in particular, with the new United Kingdom Sports Council—which I hope will get off the ground as soon as the lawyers can work out the difficult details—with regional sports institutes, academies for individual sports and other bodies involved in sports-related matters; that it shall be run primarily, but not exclusively, for elite athletes, including athletes with disabilities; that it shall provide residential accommodation; and that it shall provide scholarships for athletes and encourage other bodies to provide scholarships for athletes at the academy.
  What I intend to say next will answer many of the proper questions asked by the hon. Member for Vauxhall. Unfortunately, there will not be time to deal with all her questions, but if she so wishes I can respond to them in

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  writing. The essential point about the prospectus is that it is not intended to be rigidly prescriptive about what the academy should be in every detail. It is our expectation—from what I have heard about a number of the bids, it is an expectation about to be fulfilled—that bidders will come forward with their own innovative ideas, adding value to the original concept, on how the principles I set out earlier can best be achieved.
  The hon. Lady raised important matters, such as the arrangements with local schools for young athletes. For example, young girl gymnasts reach their prime earlier than other athletes, so they are likely to be at the academy at an early age and schools must be provided for them. Depending on where the winning bid is, the winning consortium will form relationships with local authorities, grant-maintained schools, independent schools or whatever. The precise details will depend on which consortium is declared the winner.
  We are dealing with unsealed bids. It may be that a consortium that we do not think will win will actually have a good idea that, with general agreement, we will mix and match with another bid. I do not want to say what the academy will be in every detail. From what I know already about the bids, people will come forward with good, innovative ideas which I do not want to shut out. That is why the prospectus is not intended to be rigidly prescriptive.
  The assessment process will be carried out by the new United Kingdom Sports Council and the Department of National Heritage. Once a decision has been reached, the successful organisation or a shortlist of organisations will be eligible to apply to the home country sports councils for funding from the national lottery. Because of the
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  possibility of an application for lottery funding, the home country sports councils will play no part in the evaluation process.
  Miss Hoey: I asked two specific questions which I would like the Minister to answer. The first relates to the charter of the home country sports councils. Is it possible that they will have a veto? Will the Minister talk us through how he thinks that will work? Secondly, will the hon. Gentleman clarify his role? What is his job in all this?
  Mr. Sproat: The hon. Lady raises an important point about the home country sports councils. The initial judgment on who we reckon is the best contender—there may be three contenders; it depends what happens with the lottery application—will be made by my Department and the United Kingdom Sports Council. The UK Sports Council, as the hon. Lady knows, has on its board the chairmen of all the home country sports councils, so their involvement and judgment are already involved. If I may mix metaphors, the process involves quite a fine Chinese wall, but I have every expectation that, given the fact that the British Olympic Association and each of the home country sports councils are represented on it, the UKSC recommendations will be generally acceptable to the sports world.
  As for my role, much of the vision, such as it is, is my own—getting sport back into the heart of schools and recognising the importance of identifying talent at an early age and fostering it through primary and secondary school, at county and under-21 level—
  Mr. Deputy Speaker (Mr. Michael Morris): Order. We shall now proceed to the next debate, on taxation of the racing industry.

  Racing Industry (Taxation)
  1.30 pm
  Mr. Richard Spring: I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to introduce this Adjournment debate this afternoon. I thank my hon. Friend the Exchequer Secretary to the Treasury for being here to reply. This is the first opportunity I have had to congratulate him formally on his new appointment—I know that he will perform the job with his characteristic panache.
  In 1668, King Charles II commissioned the construction of a palace at Newmarket. He was the first individual to establish racing stables in the town—the first proper racing and training establishment in the world. Today, Newmarket is synonymous with racing, which has developed there successfully for more than 300 years. I have the privilege to represent the town of Newmarket in this House.
  At the State Opening last week, the Sovereign came to the Palace of Westminster in a horse-drawn carriage. The horse has played a central role in our military past, and does so now in our pageantry. At the other end of the spectrum, millions of children have learnt to enjoy riding at pony clubs. Affection for this frail, beautiful and temperamental animal lies deep in the hearts of a wide cross-section of the British public.
  Out of all that has evolved the best-ordered racing and finest bloodstock industry in the world. Recently, the industry was threatened by the arrival of the single European market and by unbridgeable VAT differentials. In Newmarket, one in three people are directly or indirectly employed in racing. The potential damage to the town and to the industry in general would have been immeasurable had the battle on VAT been lost. I therefore express again my profound gratitude to the Treasury for facilitating the introduction of the VAT registration scheme. The arrival of Sunday racing also helped.
  Last year, in response to the impact of the national lottery, my right hon. and learned Friend the Chancellor cut general betting duty by 1 per cent. I express to my hon. Friend the Exchequer Secretary, on behalf of the industry and my constituents, my thanks for the Government's action, which showed their understanding and support for the industry. It is much appreciated.
  What is not clearly understood is the immense economic importance of the British horse racing and breeding industry. It directly employs 31,600 people; if we add all those employed in ancillary services and in on-course and off-course betting activities, the total figure is 100,000 people. Income generated by the industry is more than £600 million, with substantial additional sums being spent by race course visitors away from the course.
  It is estimated that exports total £90 million, and that tax revenues, excluding general betting duty, amount to £142 million. Training and breeding employ the equivalent of one in eight agricultural workers. We are therefore debating a highly significant employer and generator of wealth and of tax revenues.
  The linchpin, of course, is the race horse itself. It is a simple equation: there has to be some incentive to become and to remain a race horse owner. After the initial purchase price, the average training cost is now £13,700 per annum. Of course, there are those to whom such a
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  sum is insignificant, but they are a small minority. The industry's viability ultimately depends on a broad and deep base of race horse ownership. I have part-owned two race horses, so I speak from personal experience. The blunt truth is that, in Britain, the risk-reward ratio is, absolutely and relatively, disastrously unfavourable and worsening.
  It has become fashionable to produce international league tables. This country, for all its long history of racing and the industry's excellent reputation, is now increasingly in the relegation zone. Nothing could more graphically illustrate that than the fact that present or potential British race horse owners are simply voting with their feet.
  This week, the second biggest individual British race horse owner announced that he was substantially scaling back the number of horses he has in training, and others, in the past few days, have made similar depressing indications of intent. Indeed, the number of owners with horses in training has fallen since last year, and the number remains below the effective threshold necessary to develop a full race programme.
  One especially clear indication that the long-term health of the industry is under threat is the fact that ownership of the key two-year-olds in training is falling. The number has fallen 21 per cent. since 1988. and, tellingly, it has fallen almost 5 per cent. in the past 12 months. About 30 per cent. of owners drop out each year.
  The reason is simple: prize money in this country is now ludicrously low, even for our most famous races. The Derby is ranked only 21st in the world. Although £850,000 might seem a considerable sum, it pales into insignificance when compared with the Dubai cup, at £2.6 million, the Japan cup, at £2.5 million, and the United States Breeders cup, at £1.8 million.
  Some years ago, the Japanese sent shock waves through the art market by purchasing impressionist paintings for record prices; they are now doing exactly the same in respect of bloodstock, much of it originally British. Today, the average flat race in Japan is worth £170,000, whereas a similar race meeting here might offer prizes of about £5,000—a truly staggering differential. Every other sport, no matter how belatedly, has had to react to the finite life of its participants—even cricket has succumbed.
  Although owners contribute the vast bulk of racing's financial input, racing does not have direct control of its financial destiny. Out of 40 countries examined, Britain languishes joint 36th in the prize money league. Expressed as a percentage of keep and training costs, prize money per horse recovered in Britain is only 21 per cent. In Japan the rate stands at 95 per cent., in Hong Kong at 143 per cent and in the United States at 47 per cent: our European neighbours in Italy and France enjoy a rate of 49 per cent., and those in Germany a rate of 45 per cent.—all more than double the UK percentage. In any given year, only 6 per cent. of new owners and 6 per cent. of all active owners cover their costs.
  This autumn, Tattersalls in my constituency recorded some remarkable auction prices for bloodstock. There is no doubt that there is more optimism in the world industry. However, 75 per cent. of the turnover was due to foreign buying. Perversely, that will exacerbate the negative impact on Britain flowing from the greater internationalisation of racing. In 1991–95, the number of British-trained horses that won or were placed in overseas

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  race meetings increased by 57 per cent. Here, in the same period, foreign-trained entrants actually decreased by 20 per cent.
  With higher prices of quality bloodstock and our low prize money returns, those deteriorating trends will become worse. The warning signs are everywhere. Owners will be less motivated to race their horses here. Ultimately, that will affect fixture lists and crowd attendance, and therefore betting levels. It is a disturbing outlook. No other industry could be more aptly described as having flesh that is willing, but a spirit that is weak.
  At the heart of the industry's dilemma is the wholly inadequate return to racing from betting turnover, which is based on a complex system that in practice brings little stability and certainty. The percentage of horse race betting turnover returned to the industry in the United States is 8.9 per cent. In France it is 6 per cent., in Ireland it is 5.7 per cent., and in Germany it is fully 14.9 per cent. In Britain, it is a derisory 1.2 per cent.
  The very success of the national lottery has had a negative impact on racing's viability. Some months ago, the Home Office produced a publication called "The Impact of the National Lottery on the Horse Race Betting Levy". It started with a reminder that the Home Office had made a commitment to monitor the impact of the lottery on the levy. The levy board prize money contribution is expected to fall in 1996–97 by £2.7 million to £27.5 million.
  In May last year, a survey suggested that three quarters of betting shop customers purchase national lottery tickets, and that between 6 and 7 per cent. now stake less money in betting shops. In consequence, the Henley centre reported that betting office turnover was down by 3.2 per cent. in 1995, or 5.8 per cent. lower than it would have been without the national lottery.
  Happily, this year, following the Chancellor's most welcome I per cent. cut in general betting duty in the Budget, the situation has begun to stabilise. Turnover for the first six months of 1996 showed a small rise of 1.8 per cent. on the same period last year. However, the announcement by Camelot last week will effectively eliminate the benefits of the cut and abort any betting turnover recovery. Many hon. Members have greyhound stadiums in their constituencies, as I do, and their future is under a cloud, too.
  I have absolutely no quarrel with the introduction of the national lottery. On the contrary, it has produced significant sums for good causes, not least in my constituency. Its inception was long overdue, but it puts an onus on the Government to consider carefully its impact. Because of the lottery, there are 3,400 fewer jobs in the betting industry than would otherwise have been the case, and 4,000 jobs are in jeopardy. By Christmas, 650 betting offices will have closed, and another 1,300 are vulnerable. The second weekly draw probably makes those figures look like an underestimate. Fresh applications for betting office licences are at their lowest since legalisation 35 years ago.
  Betting shops should, at a minimum, be able to sell lottery tickets. Equally, there is a clear inconsistency whereby punters can bet on Irish lottery numbers but not on the outcome of our national lottery. General betting duty currently stands at 6.75 per cent., and the effective
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  rate of tax on horse racing is 30 per cent. Some interested parties have called for a cut to 5 per cent.; that would at least bring the effective tax rate down to 22 per cent., compared with the pools and lottery rate of 24 per cent. and the casino rate of 17 per cent.
  I have bombarded the Minister with a plethora of statistics. Last year, when Madam Speaker gave me permission to draw attention to this problem in an Adjournment debate, I painted a rather more impressionistic picture, but in the past 12 months, as these figures starkly show, the reality has become all too apparent. The help given by the Chancellor in last year's Budget of a 1 per cent. cut in general betting duty has, to all intents and purposes, been wiped out by the new, second weekly lottery draw. The figures I have presented spell out the severe impact that the national lottery is having and will have on the racing industry.
  Some weeks ago, the jockey Frankie Dettori won seven races in a row at Ascot, which resulted in one very happy and exuberant jockey and one infinitely richer punter. But it was also a magical moment for the whole nation—a nation which throughout its history has cherished the horse in whatever shape, size or form. At the top of this equine pyramid stands the British race horse, whose future, I fear, is at best uncertain.
  I fervently hope that a material cut in general betting duty can be effected on 26 November and that my right hon. and learned Friend the Chancellor will spell out specifically that there should be a clearly defined division between help to the punter and help to racing via the levy. The Minister of all people knows that this is a remarkably successful time in Britain, with the renaissance of so many skills and industries. Sadly, however, the racing industry is proving an exception and its position and world excellence is under real threat from forces that the industry itself simply cannot control.
  I appreciate that, at this time, my right hon. and hon. Friends at the Treasury are besieged with requests for special help. I hope that I have demonstrated that racing has an unassailable case that ought to be heard sympathetically. I earnestly beseech the Minister to give the matter his generous and urgent consideration.
  1.45 pm
  Mr. William McKelvey: The hon. Member for Bury St. Edmunds (Mr. Spring) makes a most eloquent and unanswerable case for assistance for an industry that he obviously knows well and loves. Perhaps I should declare an interest, because I wish to speak briefly on the greyhound industry. I am chair of the all-party greyhound group and was recently elected as a director of the British Greyhound Racing Board-unpaid, of course. I own and run greyhounds at Shawfield, and although they may not be as expensive to run as horses, I should not like to mention exactly what it costs me to run those three greyhounds, lest my wife reads Hansard some time.
  Greyhound racing, like horse racing, has had a difficult time this year. We have lost tracks at Cradley Heath, Ramsgate and Sittingbourne. Middlesbrough is due to close in November, and the threat of imminent closure hangs over Bolton, Canterbury and Hackney. The ground on which the greyhounds run is more valuable for other uses, and we must try to reverse that trend.
  The Gerald Eve report makes it clear that greyhound racing has already spent £6.6 million on safety measures, and still has to spend another £4.8 million and

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  £1.1 million a year to obtain certification under health and safety at grounds legislation. The greyhound industry, unlike the owners of football stadiums, has no additional help to meet the cost of those measures.
  Once again, the off-course betting industry is asking that a betting duty reduction should go straight to punters. A similar duty cut last year added £27 million to the profits of the betting industry, but that industry still refuses to pay £2 million per year to the British greyhound racing fund, because its contributions are designated by the Government as voluntary. We collect an average of only 65 per cent. of the possible tally that is due.
  What I would call the respectable bookies—the big firms such as Ladbroke, Hill and Coral—pay their share, although recently some of them have argued that they may resist paying unless they get their way in some of the fund meetings. The British Greyhound Racing Board seeks a reduction of 1 per cent. in the general betting duty, with the benefits of that reduction being passed to greyhound racing and horse racing. It also wants a statutory mechanism to ensure that all moneys that are intended to benefit greyhound racing are passed to the sport and do not form part of the betting industry's retained profits.
  I know that the Government say that they are a liberalising body, but unless we in the greyhound industry have the statutory requirement, bookmakers will resist paying the full amount of money due, and they can always threaten to withhold that fund unless they get their own way.
  The British Greyhound Racing Board has been unsuccessful in obtaining a meeting with the Minister and his assistants. May I ask him—I will write to him in any case—to give the board the opportunity for a brief meeting? I know that he has been given all the relevant articles, and I am sure that he has read and understood them, but it is important that such an important part of the racing industry receives the opportunity, just as the horse racing industry has done, for a meeting with him to explain the details of what we are asking.
  I am grateful for the opportunity for this short speech; this is an important issue for us in the greyhound racing industry.
  1.50 pm
  Sir Fergus Montgomery: I congratulate my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) on raising this important issue. I must also declare an interest: I am a consultant to the National Association of Bookmakers Ltd.
  My hon. Friend's point is of great importance to bookmakers throughout Britain, because the yearly drop in the number of betting shops causes great concern. I am told that there are about 9,000 betting shops, whereas, in the late 1960s, after betting shops had been legalised, there were about 16,000. The betting industry is having great difficulty in sustaining a profit level. If it cannot sustain that level, there will be more betting shop closures and more job losses.
  My hon. Friend cited the example of Franco Dettori the other Saturday at Ascot, who went through the card and rode seven winners. That was phenomenal. A racing tipster studying all the form, receiving information and going through the card on any day happens once in a blue moon. For a jockey to have done that was incredible. I
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  cannot believe the number of people who apparently back every horse that Franco Dettori rides. Some people backed all seven horses, in all sorts of combinations and permutations, and won a great deal of money.
  The barber I go to in Victoria street does the horses, and he told me, in great rage, that he had backed only six of Franco Dettori's horses. The barber had spent about £5. If he had backed all seven, he would have won £15,000. Because he had backed only six, he won £2,000. I told him that, if I ever won £2,000, I would be grateful, because I had never won anything like £2,000 on the horses, the football pools, the national lottery, the premium bonds or anything. I can only think that I must be lucky in love.
  There is a need for a further cut in betting duty. My hon. Friend has stressed the concern over the proposed second weekly national lottery draw. The national lottery has had a devastating effect on the betting industry, but there is a simple solution, and I do not know why it has not been tried. It would help enormously if betting shops could sell tickets for the national lottery.
  I cannot understand why we cannot allow bookmakers to take bets on the national lottery. It is amazing that I can go into a betting shop, see the fact advertised that I can bet on the Irish national lottery, but not be able to put one on the United Kingdom national lottery. It does not make sense; if betting shops could sell tickets for the UK lottery, it would give bookmakers an enormous boost, and help to keep some of them in business.
  I am grateful for this chance to speak in the debate.
  1.53 pm
  Sir John Cope: I make little apology—but I do make a little one—for taking a little of the Minister's time, because the real reply to this debate will come on 26 November, from my right hon. and learned Friend the Chancellor of the Exchequer. I was the Treasury Minister involved in the VAT change to which my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) referred, so I have an interest in the matter. I am chairman of a joint taxation committee of the British Horseracing Board, the British Horse Society and other equine interests.
  My hon. Friend has set out well what, in some respects, is a specialised example of the problems of globalisation in many other sectors, but when I was in the Treasury, we thought that it was important to preserve horse racing in Britain and to adjust the taxation system to achieve that end. Horse racing is something that we do extremely well. As he pointed out, it is of great economic importance and many jobs depend on it. It is in the national and, ultimately, in the Treasury's interest that my hon. Friend the Minister and his colleagues should consider carefully the arguments that have been advanced.
  1.54 pm
  The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): May I first thank my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) for his kind words? He is recognised in the House as a tireless and effective advocate for the horse racing industry. He said that he had made an unassailable case. I must warn him that that adjective has been somewhat devalued in not so distant years, but I catch his drift and agree that he made a strong case.

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  I also thank my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery), my right hon. Friend the Member for Northavon (Sir J. Cope), my predecessor, in a manner of speaking, and the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey). I should be delighted to meet the British Greyhound Racing Board. I am just about old enough to remember when dogs ran at Stamford Bridge when I was a child, so I have a particular love for that industry.
  I acknowledge the importance of the racing industry, in all its various forms, in our national life. It is an intrinsic, colourful and particularly beautiful part of our national life. It is important and has been a success.
  I am grateful for the acknowledgment by my hon. Friend the Member for Bury St. Edmunds of what the Government have done in recent years. The allowance for owners to register for and to reclaim VAT has been important. The duty cut in the last Budget has been mentioned, and the deregulation of betting shops, which can now open on Sundays and weekends, has also been important. Many of the points that have been made have been put to me in representations from the British Horseracing Board and other parts of the betting industry.
  I want to touch briefly—to the extent that I may—on the points made about the national lottery's impact. I hope that hon. Members will understand the limitations on what I can say, because this is primarily the responsibility of my right hon. Friend the Secretary of State for National Heritage. I am aware of the many arguments that the lottery has been given special privileges, and that it unfairly distorts a sector of the economy. I think that everyone acknowledges the money that has been given to good causes as a result of the lottery, but, at the same time, it has created a large vested interest.
  There are also people who say that a Government who believe in open markets and free choice should perhaps be more sympathetic to allowing the laying of bets on lottery results. The anomaly has been raised that it is legal to take bets on the Irish lottery, but not our own. I merely report those views rather than endorse them, because, as I hope my hon. Friends understand, the difficulty of my position is that I am not directly responsible for that sector, but I hope that the Secretary of State for National Heritage will carefully consider hon. Members' points on those issues.
  I hope that the House will understand that, with the Budget only four weeks away, there is little more that I can say, but I assure hon. Members on both sides of the House that their comments will be taken into careful consideration in the run-up to the Budget.
  It being three minutes to Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

  BILLS PRESENTED
  CITY OF EDINBURGH COUNCIL ORDER CONFIRMATION
  Mr. Secretary Forsyth presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to City of Edinburgh Council: And the same was read the First time; and ordered to be read a Second time upon Tuesday 5 November and to be printed. [Bill 4.]
  EDINBURGH MERCHANT COMPANY ORDER CONFIRMATION
  Mr. Secretary Forsyth presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Edinburgh Merchant Company: And the same was read the First time; and ordered to be read a Second time upon Tuesday 5 November and to be printed. [Bill 6.]

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Kashmir (British Hostages)
    Mr. Simpson: To ask the Secretary of State for Foreign and Commonwealth Affairs when was the last time that direct information was received about the condition of the British hostages in Kashmir; and if he will make a statement. [683]
    The Minister of State, Foreign and Commonwealth Office (Sir Nicholas Bonsor): I apologise for the absence of my right hon. and learned Friend the Foreign Secretary, who is accompanying Her Majesty the Queen on the state visit to Thailand.
    We are deeply concerned about Keith Mangan and Paul Wells. The last proof of life we received was on 29 August 1995. We continue to work closely with all the countries concerned, in a joint attempt to find the kidnap victims.
    Mr. Simpson: This is the 485th day that my constituents, Paul Wells and Keith Mangan, have been in captivity. Will the Minister explain why, in all that time, no Minister has come before the House to give us a detailed statement on the Government's knowledge on the hostages' state of health or state of existence? Why has no information been given to the House about the organisations with which the Government are working, about the nature of their contacts with the Kashmiri community and about the specific action that is being taken to secure the hostages' prompt release? Will the Minister assure us that—before the hostages reach an anniversary of 500 days in captivity—a Minister will come before the House to give us an opportunity to know in detail what the Government are doing to secure the hostages' safe release?
    Sir Nicholas Bonsor: I am extremely surprised to hear those comments from the hon. Gentleman. My office has made every effort to keep him fully informed of our efforts to find out about, and, we hope, obtain the release of, the hostages. It would not help the hostages if we were to release all the information available to us. I have told the hon. Gentleman and the House that we have had no proof of life since August 1995. We are making every effort—with other members of the G4, our allies—to find the hostages. We have kept constantly in touch with the families, who know absolutely what the Government are doing. We are working to the best of our abilities with America, Germany and Norway to find the hostages, and the hon. Gentleman is being extremely unfair if he is implying that there is something that we should be doing that we are not doing. It is open to him, or to anyone else who has a suggestion, to make it.
    Mr. Devlin: I thank my hon. Friend for that suggestion, because there is a feeling on Teesside that Keith Mangan has been neglected. Although I know that my hon. Friend and his colleagues have made great efforts to keep me informed of the efforts that are being made in Kashmir—for which the Mangan family and I are deeply grateful—
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    the public perception is increasingly that more could be done. Now that we have reached the 485th day, I should very much welcome an opportunity to visit the Minister and his officials to discuss specific measures—before we reach the two-year mark, when it will be even more difficult to find those people.
    Sir Nicholas Bonsor: My right hon. Friend the Minister of State has frequently been in touch with the families, and my hon. Friend the Under-Secretary met them last week in India. There is no question of any members of either family being unaware of the Government's efforts. We keep in touch with them arid listen carefully to what they have to say to us. We have also kept my hon. Friend the Member for Stockton, South (Mr. Devlin) fully informed. If he wishes to come to see me or any of my ministerial colleagues, as he knows, our doors are always open.
    Mr. Madden: Will the Minister confirm that well-known Kashmiri political leaders have condemned hostage taking and have demanded the immediate release of hostages alive and well? Those concerns have been reinforced by numerous public demonstrations by the people of Kashmir against hostage taking. Will the Minister explain why several offers by Kashmiri political leaders to mediate and to attempt to locate the hostages have not been taken up?
    Sir Nicholas Bonsor: I am not aware that any such offer that could be taken seriously has not been taken up. The Government are in close contact with Kashmiri leaders. We have had unsubstantiated reports of sightings of the hostages. We have also had unsubstantiated reports of their death. It is difficult to get to the truth in that troubled province of India. We have made every effort to find the hostages and we shall continue to do so.

    Cyprus
    Sir Sydney Chapman: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Government's initiatives in respect of ending the partition of Cyprus. [684]
    The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): We are working closely with the United States, our European Union partners and others in support of the United Nations-led effort to achieve a political settlement. My right hon. and learned Friend the Foreign Secretary has appointed Sir David Hannay as the British Government's special representative for Cyprus. My right hon. and learned Friend plans to visit Cyprus before Christmas for talks with both leaders.
    Sir Sydney Chapman: I welcome what my hon. Friend has said. It is clear in retrospect that the partition of Cyprus after the invasion by Turkey 22 years ago should not have been tolerated. Will the Minister give an assurance that the United Kingdom Government, as a co-guarantor, the United Nations, the European Union and the United States will make the reunification of Cyprus the top international political priority in the coming 12 months?
    Mr. Davis: We take our duties as a co-guarantor seriously. Our appointment of Sir David Hannay and the

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    visit of my right hon. and learned Friend the Foreign Secretary—the first bilateral visit of a Minister to Cyprus for decades—show how seriously we take the issue. Although the task will be incredibly difficult, there may be an opportunity in the coming year.
    Mr. Cox: The House will welcome the forthcoming visit to Cyprus of the Foreign Secretary. Will his discussions with Mr. Denktas centre on the return of Famagusta-something that, as the Minister knows, has long been promised but has sadly never happened?
    Mr. Davis: I am sure that my right hon. and learned Friend will focus on every issue relating to making Cyprus a single country again, guided by the ideas of the United Nations Secretary-General. I am sure that all those matters will be in front of him when he sees Mr. Denktas and Mr. Klerides.
    Mr. Waterson: Does my hon. Friend agree that, when Cyprus accedes to membership of the European Union, it would be preferable if it did so as a whole island which was no longer partitioned? Will he also confirm that no party has a right of veto over the accession negotiations moving forward?
    Mr. Davis: My right hon. and learned Friend the Foreign Secretary said last week that it would be much more difficult to arrange entry to the European Union for a divided Cyprus. Reunification is therefore clearly desirable for that reason, but it is also desirable for its own sake to return Cyprus to what the United Nations Secretary-General has described as a bizonal, bicommunal federation. Every effort will go into that. My hon. Friend is right that, in maintaining that policy, we must ensure that no party has a veto
    Mr. Trimble: I welcome the fact that the Foreign Secretary, on his visit to Cyprus, is for the first time to meet the leader of the Turkish Cypriot community. It is right that the two communities in Cyprus should be treated equally. I urge the Minister to persuade our colleagues in the European Community to afford them similar status and to ensure that the European Community is not used by the Greek Cypriot community in Cyprus as a tool with which to beat the Turkish Cypriots.
    Mr. Davis: We have always made balanced contacts with both communities without, of course, recognising the Turkish Republic of Northern Cyprus; we recognise the proper Government of Cyprus and will continue to do so. We shall do everything possible to ensure that the European Union does everything in its power to bring that divided country together again.

    Middle East Peace Process
    Mr. Batiste: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the progress of the middle east peace process. [685]
    The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley): Redeployment from Hebron was scheduled for the end of March in the interim agreement. Both sides must abide by commitments under
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    the interim agreement. Prime Minister Netanyahu and President Arafat have both said they will do so. Concrete steps are necessary soon or there is a risk of the peace process slipping backwards. We also wish to see the reopening of the Syrian track.
    Mr. Batiste: Does my right hon. Friend agree that, since the democratic process produced a change of Government in Israel, all parties have had to adjust to changes in priorities and in the nuances with which they approach the peace process? Nevertheless, is he satisfied that all parties remain committed to its success? What steps have the British Government taken since the House rose in the summer to assist that process?
    Mr. Hanley: I agree with my hon. Friend that, in the time scale following elections, such as those in Israel, one may need to reflect. However, agreements such as the one on Hebron have already been made between the parties. They have agreed not just that Hebron should be returned, but on the other outstanding elements of the Oslo accords: redeployment from areas B and C, the rural west bank; the release of Palestinian prisoners; and free passage between the west bank and Gaza. Those are issues that have been agreed, and although I understand that the security situation changes from day to day and needs to be addressed seriously, we also need to see progress very soon.
    Mr. Kaufman: I congratulate the Minister on the reply that he has just given. Does he agree that, amid all the discourtesies and incompetences that accompanied President Chirac's visit to Israel and to Palestine, it was somewhat curious that the Israeli regime was willing to accept European Union aid, but not to accept a European Union role in the peace process? Taking into account the fact that, as the Minister has pointed out, those agreements are international, ought it not to be pointed out to the Israeli regime that, if it accepts international aid, it should also pay attention to international views on an international agreement?
    Mr. Hanley: The European Union is the largest aid donor to the Palestinians and we favour a strong European Union role supporting the peace process. We are ready to play an active part, commensurate with the scale of European Union interests and economic support for the peace process. That is why we welcome the decision to appoint Ambassador Moratinos as the European Union's special envoy. That will help the European Union to have a stronger role within the peace process. The mandate makes it clear that there is no intention to cut across the mediation role of the United States, but that we should support and complement the United States' role.
    I say to my hon. Friend the Member for Elmet (Mr. Batiste) that Britain has taken a very firm line with the European Union and with the United Nations, as my right hon. and learned Friend the Foreign Secretary made clear in his recent speech to the United Nations General Assembly. It is important that the international community works together to bolster the peace process. There is nothing inconsistent in President Chirac's visit—it was clearly part of an attempt which has been co-ordinated with actions by allies, such as the visit by my right hon. and learned Friend to Israel next week.
    Sir Mark Lennox-Boyd: Does my right hon. Friend agree that, in the light of the Israeli Government's

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    extraordinary and unacceptable pursuit of the peace process, a visit by any British Foreign Secretary to Jerusalem gives the opportunity for a visit to Orient house, and that our right hon. and learned Friend should be strongly urged to make such a visit because, by doing so, he would send a message without having to use offensive language, which would offend him as our foremost diplomat?
    Mr. Hanley: My right hon. and learned Friend's decision not to visit Orient house next week is in line with European Union policy that short working visits need not include a call on Orient house. That in no way changes our firm policy that visits are important in maintaining the European Union position of principle on Jerusalem. I paid a longer visit to Israel earlier this year and I called on Orient house. That was completely consistent with the European Union position, as is the action of my right hon. and learned Friend.
    Mr. Menzies Campbell: Last week, the Secretary of State told the House that he would not indulge in megaphone diplomacy when he visited the middle east, and that, I think, gained general acceptance throughout the House. Notwithstanding that, may we have an undertaking that he will pursue robustly the case against any further settlements in the occupied territories, not least because they are extremely provocative and they provide ready fuel for fundamentalist action?
    Mr. Hanley: Those who know my right hon. and learned Friend know that he needs no megaphone, nor will he seek to use one in the way that the hon. and learned Gentleman suggests. He will state firmly to the Israelis our position on Israeli settlements in the occupied territories. Under the fourth Geneva convention, all settlements in the occupied territories are illegal and an obstacle to peace. We have regularly raised that issue with the Israeli Government and the expansion of settlements can prejudice the final status talks. My right hon. and learned Friend will make that clear.
    Sir Timothy Sainsbury: Does my right hon. Friend agree that successful economic co-operation between Israel and her neighbours, including the Palestine entity, is an effective way of progressing and strengthening the peace process? Will he therefore consider the obstacles that exist to the use of public or private finance from the United Kingdom and the United Kingdom's considerable expertise to help that economic co-operation? For example, there are a number of obstacles which he might like to discuss with his right hon. and hon. Friends at the Department of Trade and Industry.
    Mr. Hanley: Yes, I thoroughly agree that trade can help to underpin the peace process. I have said before in the Chamber that a prosperous Palestine is a peaceful Palestine, and there is no doubt that a prosperous Israel, which is self-confident, with the freedom to trade with its neighbours and beyond, is an Israel which will maintain the peace. Trade relations between our two countries have increased greatly during the past three or four years and it would be tragic if any reduction of effort or reversal in the peace process caused a reversal in economic relations, which are so valuable to all people within the region.
    Mr. Robin Cook: The Minister will be aware that I visited Hebron and Orient house last month. Anyone who
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    has seen Hebron must be aware that there can be no peace progress so long as a city of 100,000 Palestinians is dominated by the presence of Israeli military and by road blocks around the city centre. In view of the question of the hon. Member for Elmet (Mr. Batiste), will the right hon. Gentleman confirm that the Oslo accords have the status of an international treaty and are binding on the new Government of Israel, who must now honour the commitment to withdraw the military occupation of Hebron? Finally, will he press the new Israeli Government to recognise that their legitimate aim of peace with security for Israelis can be achieved only on the basis of peace with justice for Palestinians?
    Mr. Hanley: I agree with every word that the right hon. Gentleman has said. He is absolutely right about Hebron. Unless there is a solution there before long, there will be no peace. It is the next step, but other steps clearly must follow. The right hon. Gentleman is absolutely right to say that the Israelis and any Government of the Israelis must make security a priority. It is vital for them. They must take that into account. That is why we urge restraint upon all those who might be tempted to loosen their tempers in reaction to what has happened during the last few weeks and months. Remarkable restraint is being shown. Therefore, the right hon. Gentleman is correct.
    The Oslo accords have been agreed by the parties. Prime Minister Netanyahu told my right hon. Friend the Prime Minister that he would stand by the Oslo accords—by any agreement that had been signed by Israel. I believe that he means what he says.
    Mr. Cyril D. Townsend: Has my right hon. Friend made any representation to the Israeli authorities, perhaps through our excellent consul general in Jerusalem, over the recent killing of a Palestinian youth who was throwing stones at an Israeli settler? Is it not extremely important that justice should be done in such a situation? Is he aware that the settlers, who are armed to the teeth, frequently behave in an offensive and ridiculous way?
    Mr. Hanley: I agree with my hon. Friend about that tragic action. Indeed, I regret the death of anyone in that area. I regret, too, the deaths of two Israeli soldiers in the past couple of days in south Lebanon. I regret any death. We must have peace. I admire those who do not over-react or even react in anger to such tragic actions. We need calm, peace and justice. My hon. Friend is right: justice should flow from that tragic act.

    Intergovernmental Conference
    Mr. Charles Kennedy: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress within the intergovernmental conference. [686]
    Mr. David Davis: The intergovernmental conference is progressing extremely well.
    Mr. Kennedy: I am sure that hon. Members from all parts of the House will warmly welcome such an upbeat assessment. Will the Minister clarify the Government's position in one respect? We have heard the recent contributions from France and Germany and the comments of the Foreign Secretary. If, as seems likely, a

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    federal core involving Germany and France develops for the purposes of deepening integration, what will be the Government's stance towards such a development? Will their stance be to stand to one side and wave it through but not to participate, or to stand in the way and block it? What will be the approach?
    Mr. Davis: The hon. Gentleman will have heard my right hon. and learned Friend the Foreign Secretary place the formula of the Government's policy before the House last week—that is, any proposal for flexibility must in its implementation be agreed by all and open to all. That means that any proposal can be assessed in terms of its impact on Britain's national interest at the time. That decision can be taken with respect to general or detailed proposals.
    Mr. Harris: When does my hon. Friend expect the intergovernmental conference to consider the important amendments that the Government have tabled to the treaty to deal with the scourge of quota hopping? What support have the Government received from other member states to see that that practice, which is wrecking our fishing industry, is put to an end?
    Mr. Davis: My hon. Friend raises a matter of considerable importance to the entire country and especially his part of the country. We have raised the matter with the Union and tabled our proposals. We have made it clear that we require those proposals to be discussed and debated fully, and that will probably occur towards the end of this year or early next year. It must be done well before the end of the conference so that—to answer the second part of my hon. Friend's question—we can get a clear idea of how much support we have and of what detailed argument there is in any direction. The argument will be conducted in detail and in parallel with discussions outside the IGC, which also may yield results.
    Mr. Watson: What is the Government's attitude to the Swedish Government's proposed amendment with regard to convergence for economic and monetary union? It is proposed that an employment chapter should be added to the Maastricht treaty. The United Kingdom Government are almost alone in opposing that suggestion. Will the Minister explain why they do not consider it important for the intergovernmental conference to deal with protection for jobs, and why once again they are swimming against the tide in Europe?
    Mr. Davis: The hon. Gentleman is wrong to say "almost alone". The first comment I heard on that matter came from the reflection group, in the form of a cryptic remark from a member of that group who said, "Oh my God! Not reconstructed Keynesianism again." The fact is that a number of countries are concerned about that proposal, for a simple reason. The Labour party has clearly not yet learnt that jobs are created not by Governments but by businesses and individuals. The job of government is to make it easier for that to happen—not harder by increasing bureaucracy.
    Mr. Bernard Jenkin: I thank my hon. Friend for being careful about the doctrine of flexibility. The danger, surely, is that if other countries proceed with a federal Europe, we may find them hijacking the European
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    institutions in whose jurisdiction we are included, so we are in danger of being dragged along in the slipstream of federalism unless we provide ourselves with adequate protections for the sovereignty of this kingdom.
    Mr. Davis: My hon. Friend is right. That is precisely the sort of argument, both detailed and general, that will apply when any practical proposal on flexibility comes up. It will apply not just in terms of the IGC but, if we decide on a flexible outcome, at each stage thereafter. It is only at those stages that we shall be able to assess the effects of a smaller group's actions both for that group and for the Union at large and the countries outside the group. It is critical not to lose sight of that point.

    Sudan
    Mr. Flynn: To ask the Secretary of State for Foreign and Commonwealth Affairs what contacts he has made recently with the Government of Sudan on the war there. [687]
    Mr. Hanley: I discussed the continuing civil war with the Sudanese ambassador on 2 July.
    We are in frequent touch with the various parties to the conflict and consistently tell them we look to all sides in the Sudanese civil war to make genuine moves towards peace.
    Mr. Flynn: Will the Minister recognise the work of human rights campaigner Rev. Richard Rodgers, who is fasting at this moment outside the Foreign Office to draw attention to this war, which has received very little attention—possibly because the television cameras have not witnessed the dreadful events of that war, including flagrant abuses of human rights, tens of thousands of deaths and possible attempted genocide? Is this not the right moment for Britain to use her good standing and reputation with both sides, as a post-colonial power, and to act as an honest broker by intervening to bring the conflict to a peaceful end?
    Mr. Hanley: I thank the hon. Gentleman for mentioning the work of Dr. Rodgers, of Light and Hope for Sudan. I was pleased to ask him to come and discuss his proposal with me on the 10th of this month. We had a good discussion and I asked officials to follow up his ideas with him.
    However, I must admit that, despite the excellent work of our ambassador in Khartoum, Alan Goulty, and the work of officials and others—including my noble Friend the Minister for Overseas Development, who has been in discussion with the parties—we do not believe this to be the right time to introduce a British initiative. We do not think it would be fruitful at the moment. We look for greater progress between the parties. If both sides ask us to undertake such an initiative, we shall of course willingly consider it.
    Mr. Rowe: Does my right hon. Friend have any advice for the growing number of hon. Members in this place and the other place, including the Archbishop of Canterbury, who are increasingly anxious about the

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    effects of the war on southern Sudan and who wash to give him effective assistance in the difficult task that he has to undertake?
    Mr. Hanley: My hon. Friend is absolutely righi. We are of course gravely concerned about southern Sudan. The United Kingdom, after all, is one of the largest bilateral donors of emergency aid. We have committed more than £95 million, which includes the United Kingdom's share of EC food aid to Sudan and Sudanese refugees, since 1991. The bulk of that aid is distributed through non-governmental organisations and the UN operation Lifeline, in the south. We continue to call on the Sudanese Government not to obstruct their excellent work.

    Intergovernmental Conference
    Mr. Betts: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the timetable for the intergovernmental conference. [688]
    Mr. David Davis: The intergovernmental conference is expected to conclude in mid-1997. This objective was agreed at the Special European Council in Dublin on 5 October.
    Mr. Betts: Is the Minister aware of a recent survey by the Institute of Management which showed that 68 per cent. of United Kingdom managers feel that the Government's policies have weakened the United Kingdom's position in Europe and that 56 per cent. of those managers believe that, as a result, we need a change of Government? As well as setting a timetable for the IGC, should not the Government also set a timetable for the general election to give the British people and British managers the chance to vote for a Labour Government who will be willing to give this country a new start in Europe?
    Mr. Davis: The most terrible timetable this country could face would be under a Labour Government, when we would see the shortest and fastest loss of sovereignty that the country has faced in many years.
    Mr. Cash: Will my hon. Friend take the opportunity to rule out a single currency before the Labour party does so, in line with the comments made by the shadow Foreign Secretary during the "On the Record" programme last weekend?
    Mr. Davis: I was a Maastricht Whip for too long to get sucked into the Labour party's problems.
    Mr. Robin Cook: I congratulate the Minister on having at least reached an agreement that the IGC should end by mid-1997. It is one of his few areas of agreement and he has been able to reach it only because he does not expect to be in office in mid-1997. Can the hon. Gentleman enlighten the House about the timetable for ending the beef ban? Does he recall the Prime Minister telling the House that a start would be made on lifting the ban by October and that most of the ban would be lifted by November? Will the Minister confirm that tomorrow is the last day of October and that Ministers now have no
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    idea when the ban will be lifted because they have broken the commitments they made in Florence and the promises they made to British farmers?
    Mr. Davis: I congratulate the right hon. Gentleman on his optimism, if nothing else. The Prime Minister made clear yesterday the position about Florence; I was there, so I remember it too. The decision at Florence was to make any moves on the basis of the best science available. No doubt the right hon. Gentleman has read the Anderson report on the BSE epidemic and how long it will be before it is complete. That is the best science available. When the right hon. Gentleman has read that report, I will talk to him again about the timetable before us.
    Mr. Forman: In the context of the IGC timetable, is my hon. Friend aware that many Conservative Members, from different points of view, believe that the Franco-German idea of a flexibility pact, in whatever form, would be dangerous to the interests of this country and would be a snare and a delusion from the British point of view? I make that comment because it would deprive us of the leverage that we now have in prospect of using our national veto on all those important constitutional issues where we want the principle of subsidiarity to work and we do not want to see further creeping European competence.
    Mr. Davis: I could not agree more with my hon. Friend. Two years ago, the Prime Minister made a speech at Leiden talking about variable geometry and flexibility. He did not have in mind the idea of creating some sidestep around the British veto, particularly on constitutional matters, which will change things for all time in the relationship between Europe and its constituent countries. I agree with everything that my hon. Friend said.

    Sir James Goldsmith
    Mr. Campbell-Savours: To ask the Secretary of State for Foreign and Commonwealth Affairs on what dates in the past 18 months Government Ministers met Sir James Goldsmith in their official capacity to discuss matters relating to a referendum. [689]
    Mr. David Davis: None, Madam Speaker.
    Mr. Campbell-Savours: This is intended to be a helpful question. Is there nothing that the Government can do to appease further Sir James Goldsmith's escalating demands? Is there not something more that they could concede?
    Mr. Davis: I have a great fondness for the hon. Gentleman—he and I met frequently in the past at various human rights meetings—so I shall be more charitable than I might otherwise be. However, he has not yet listed any concessions that we have made.
    Mr. Marlow: On the subject of referendums, am I right in believing that the general election result would not be sufficient for a Conservative Government to seek to enter a single currency in the next Parliament, whereas that is not the case for the Labour party? If the Labour party won the election—which God forbid—it might think that that would be sufficient and adequate instruction from the

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    British people to join a single currency. Is there not, therefore, a great deal of clear blue water between ourselves and the Labour party?
    Mr. Davis: My hon. Friend is right, certainly in one respect. We are the real referendum party in the House. The muddle in the Labour party has been the most confusing thing that the British public have seen in the past couple of days.
    Ms Quin: Can the Minister give us a little more information about the contact between the Foreign Office team and Sir James Goldsmith? I understand that the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Richmond and Barnes (Mr. Hanley), has been targeted by the Referendum party at the next election and that the Minister of State, Foreign and Commonwealth Office, the hon. Member for Boothferry (Mr. Davis), was reported to have been involved in discussions with Sir James, and we know that the Minister of State, Foreign and Commonwealth Office, the hon. Member for Upminster (Sir N. Bonsor), was sharpening his Euro-sceptic credentials in the summer with his attack on the Chancellor of the Exchequer. Is not the Foreign Office team of Ministers a vivid microcosm of the huge split on Europe in the Tory party? How does the Foreign Secretary intend to hold his warring Ministers together?
    Mr. Davis: I suppose that there could be a problem if a single fact that the hon. Lady has stated were true. I have had no contact with Sir James Goldsmith and I have no such intention now or in the future.

    Hong Kong
    Mr. Tredinnick: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Governor of Hong Kong to discuss arrangements for transition; and if he will make a statement. [690]
    Mr. Hanley: My right hon. and learned Friend the Foreign Secretary and I met the Governor of Hong Kong on 21 October. We noted that there had been useful progress this year in our exchanges with the Chinese on transitional issues.
    Mr. Tredinnick: Does my right hon. Friend agree that five years ago few would have predicted the phenomenal success of the economy of Hong Kong? Does not that success and the stability that Governor Patten has created mean that we shall be handing over the colony in very good shape next July? Is not one outstanding issue the 4,000 stateless British nationals? Does my right hon. Friend have any plans to review their position, given that some of them have served the British Crown for 30 years or more?
    Mr. Hanley: I agree entirely with the first part of my hon. Friend's question. Five years ago, when the Hang Seng stood at about 4,000, few would have envisaged that it would now be 300 per cent. higher—in the 12,000s. That is a great sign of confidence among the international business community in Hong Kong—present and future. We should be grateful to the Governor for his work in helping to create the Hong Kong that we wish to continue.
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    As for ethnic minorities, my right hon. Friend the Prime Minister announced in Hong Kong that we shall guarantee to British nationals admission and settlement in Britain in the unlikely event that they are under pressure to leave Hong Kong after the transfer of sovereignty.
    I should make it clear to my hon. Friend that no member of that community will be stateless after the transfer of sovereignty. They can apply for British national overseas passports before 1 July 1997. If they do not, and would otherwise be stateless, they will automatically become British overseas citizens. Moreover, their position in Hong Kong is secure. The Joint Declaration and the Basic Law guarantee them the right of abode in the special administrative region after handover.
    Mr. Faulds: Why have the Government allowed the Governor to wreck the through-train arrangements that had been earlier agreed?
    Mr. Hanley: The Governor has helped to create modern Hong Kong. His popularity there is quite remarkable. He continues to do an outstanding job and he enjoys enviable support in Hong Kong. His approval rating is now more than two thirds. That is pretty high by any standards in any country in the world. We have made substantial advances with the Chinese over the past two years on a wide range of transitional issues against a background of an improving Sino-British relationship and intensified ministerial contact. Therefore, I do not believe that the effect that the hon. Gentleman gives to the so-called through train is valid.
    Sir Patrick Cormack: May I revert to the matter of the 4,000 people to whom my hon. Friend the Member for Bosworth (Mr. Tredinnick) referred? Does my right hon. Friend accept that no gesture that the British Government can make between now and 30 June will be more greatly appreciated in Hong Kong? Therefore, will he think again?
    Mr. Hanley: There is no change in the Government's position. I have mentioned that my right hon. Friend the Prime Minister clarified the Government's commitment to the group. I believe that his statement has removed doubts about whether members of the group would be admitted to the United Kingdom in the unlikely event of their coming under pressure to leave Hong Kong. We are not, therefore, planning primary legislation for that purpose.

    United States of America
    Mr. MacShane: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom relations with the United States of America. [691]
    Sir Nicholas Bonsor: Relations between the United Kingdom and the United States are excellent.
    Mr. MacShane: After the Prime Minister's disastrous intervention four years ago in the United States election campaign and the phalanx of Tory officials sent from central office to help the Conservative candidate, Robert Dole, to his great election result next week, is it not a fact that on key economic issues, whether raising the

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    minimum wage or ensuring that child labour and social questions are discussed at the World Trade Organisation, we are right out of line with the US, and that the American Administration cannot wait for a change of government here in the United Kingdom, for an Administration that will speak a modern language?
    Sir Nicholas Bonsor: No. The United States and the United Kingdom are in line on almost every aspect of international affairs. We work closely together in, for example, Bosnia and in the United Nations in trying to secure reform of that organisation. We are trying to move forwards towards the liberalisation of world trade. We think alike in all major areas of international policy. The point that the hon. Gentleman has made for the second time in Question Time about support given by certain members of the Conservative party to opposition to President Clinton at the last election is fatuous. The relationship between the United States, my right hon. Friend the Prime Minister and the Government are extremely good.
    Mr. Dykes: Bearing in mind the fact that the career of the present American Secretary of State has been tangibly underwhelming, to put it mildly, will my hon. Friend promise that on Wednesday 6 November Foreign Office Ministers will contact President Clinton's staff to insist that the United States accepts European participation in the middle east peace process, and that it will put necessary pressure on some of the few extremists in Israel to ensure that a proper middle east peace process emerges from Israeli co-operation, as is desired by millions of moderate citizens?
    Sir Nicholas Bonsor: Certainly not.

    Indonesia
    Mr. Ainger: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met (i) the Indonesian ambassador and (ii) Indonesian Government representatives to discuss human rights.[693]
    Mrs. Bridget Prentice: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom-Indonesia relations. [694]
    Mr. Hanley: With permission, Madam Speaker. I should like to answer Questions 10 and 11 together.
    My right hon. and learned Friend the Foreign Secretary last discussed human rights issues with the Indonesian Foreign Minister in New York in September 1996, as I did with him in July this year in Jakarta. We meet the Indonesian ambassador and his staff regularly to discuss a wide range of issues, including human rights.
    Mr. Ainger: Can the Minister explain to the House why he continues to believe one word or any assurance given to the Government by the Indonesian regime, which is clearly responsible for the deaths of up to 200,000 East Timorese? Why will he not believe the words of Jose Ramos Horta, the 1996 Nobel peace prize winner, who said in the course of a Liverpool trial in July that British Hawk aircraft fly low over East Timor and attack
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    unprotected peasant people? If the Minister does not believe Mr. Ramos Horta, why does he not believe Bishop Carlos Belo, who said—
    Madam Speaker: Order. The hon. Gentleman must not make a speech. We are not on an Adjournment debate. We need brief questions. We are not making the progress that we normally make with Foreign Office questions. Let us get on quickly.
    Mr. Ainger: Why does the Minister not believe the words of Bishop Carlos Belo, who in relation to arms supplies to the Indonesian regime that such supplies were in the interests only of industrialised countries? Why does he not accept—
    Madam Speaker: Order. I think that the Minister has got the message.
    Mr. Hanley: We do not take the assurances of Indonesians alone. We take evidence also from a number of other sources. As for arms to Indonesia, or any defence equipment, under article 51 of the United Nations charter all sovereign states enjoy the right to self-defence. All applications to export defence equipment are examined case by case in the light of established criteria and internationally agreed guidelines.
    We do not allow the export of arms and equipment likely to be used for internal repression in Indonesia or East Timor. I discussed these issues with Mr. Ramos Horta when I met him on 24 April. I believe, therefore, that we are taking our responsibilities extremely seriously.
    Mrs. Prentice: Even if we accept the Minister's guarantees about meetings with the Indonesian Government, how can he convince us that there are regular and rigorous checks on whether that Government are telling the truth? What assurance can he give us that the Government's commitment is genuine and has not abated since the cheque has been banked?
    Mr. Hanley: As I have said, we use the diplomatic staff at our post in Jakarta to check on actions in a wide-ranging way, throughout their normal working year. Indonesia, after all, is not subject to international sanctions, and the key point when selling arms is human rights. We raise that point directly with the Indonesians and we do not sell them weapons that are likely to be used for internal repression.
    Mr. Fatchett: What about water cannon?
    Mr. Hanley: If water cannon is used to try to stop peaceful demonstrators, that is of course totally unacceptable; if it is used to stop rioters, that may be acceptable. It is totally unacceptable to use chemicals or dyes with the water cannon. The only admission that the Indonesians have been made about equipment that they have used concerned armoured vehicles which I believe were supplied by the United Kingdom in the 1960s—I cannot say which Government supplied them—and were used to counter student demonstrations in April; the Indonesians have arrested, tried and sentenced those responsible.
    Mr. John Marshall: Will my right hon. Friend confirm that if we were to ban arms exports to Indonesia, the Indonesians would get their arms from someone else and the only sufferers would be those employed in defence industries in the United Kingdom?
    Mr. Hanley: While I am sure that my hon. Friend is right, I can assure him that we would not sell arms to any country merely because it could get them from somebody else. We use very special criteria to ensure that the arms are not used for repressive purposes. We approve the export of equipment on the ground that we do not believe that it is likely to be used for internal repression. We stick carefully to that extremely important principle.
    Mr. Jacques Arnold: Does my right hon. Friend nevertheless appreciate that there are severe human rights problems in East Timor, and will he discuss those issues with our Portuguese friends, who have a long-standing insight into that territory and into what is happening there?
    Mr. Hanley: We regularly discuss East Timor with the Indonesians and they are well aware of our views. As I have said, my right hon. and learned Friend the Foreign Secretary discussed the matter with the Indonesian Foreign Minister, Mr. Alatas, at their meeting in New York in September. I accept that there have been human rights violations in East Timor, but the EU common position, published in late June, called for a significant improvement in that situation, and we would be delighted if the award of the Nobel peace prize helped in the realisation of a comprehensive settlement that is acceptable to all parties, including the East Timorese.
    Mrs. Clwyd: The Minister will know, because we have discussed the matter, that in September last year—14 months ago—I submitted a detailed report to the National Audit Office on British aid to Indonesia linked with human rights abuses. Can he assure us that his Department is not deliberately blocking the publication of the NAO report for fear of political embarrassment?
    Mr. Hanley: I can give the hon. Lady exactly that assurance. We are not holding up the report, and I believe that the NAO review of aspects of the aid programme to Indonesia will be available soon. I do not know the report's contents, but I hope that the hon. Lady will stick by its findings, because the Government certainly will.
    Mr. Hawkins: Does my right hon. Friend agree that the Opposition are seeking to destroy the jobs of many people who work for British Aerospace? Before making their case, should not the Opposition first discuss with the leader of the Manufacturing, Science and Finance Union at British Aerospace Warton how much damage he believes their proposals would cause British workers and jobs, instead of flying in the face of the facts and suggesting that aircraft are carrying out actions that they do not have the capacity to carry out?
    Mr. Hanley: Yes, we have received assurances from the Indonesian Government that Hawk aircraft will not be used in Indonesia and East Timor, and there is no evidence to suggest that those assurances have not been respected. In fact, we have investigated thoroughly reports
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    that Hawk aircraft may have been used in East Timor but found absolutely no evidence from any source to support them. However, our standard licensing procedures apply to all defence exports. Hawk export licence applications are considered carefully in the light of established criteria—that is not only to protect jobs but to protect lives honourably.
    Mr. Fatchett: As the Minister has been less than fulsome, I take this opportunity on behalf of the House to congratulate Bishop Belo and Jose Ramos Horta on being awarded the Nobel peace prize and on their work on behalf of the people of East Timor, which is certainly appreciated by the Opposition. Is not Indonesia yet another example of the Government saying one thing about human rights but acting differently?
    Is the Minister not aware of recent authoritative reports which show that pro-democracy demonstrations in Indonesia this summer were suppressed by the use of electric shock batons and water cannons, all of which were supplied by British companies? Will he explain how such instruments of torture and repression can possibly be used to promote democracy and human rights? Is it not about time that the Government came clean on their record in Indonesia and their support for a regime which stands for the violation of human rights?
    Mr. Hanley: We certainly recognise the work done by Bishop Belo in defending the rights of the people of East Timor and I congratulate him and Jose Ramos Horta. They meet the Government regularly and I congratulate them most sincerely. As for the hon. Gentleman's comments about certain pieces of equipment being used in Jakarta earlier this year, I should be grateful if he could give me evidence, chapter and verse. Is the Labour party saying that it would break off diplomatic relations with Indonesia?

    European Union Decision Making
    Mr. Gallie: To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he will take to ensure that proposals to have the veto removed from European Union decision making are rejected; and if he will make a statement. [695]
    Mr. David Davis: I crave your indulgence for 30 seconds, Madam Speaker. I hear that my hon. Friend has had a happy event in the past day or two and the words, ''We are a grandfather" are probably in order. I offer my best wishes to him, his daughter and his grand-daughter Naomi.
    With regard to my hon. Friend's question, the case for extending the use of qualified majority voting has not been made and we shall continue to oppose such proposals at the intergovernmental conference.
    Mr. Gallie: I thank my hon. Friend for his kind remarks of a personal nature and also for his response to my question, as it was the response for which I had hoped. Does not the Government's approach contrast with the policies offered by the Lib-Lab Opposition? Does not their white-flag policy on the issue pose a great threat to the people of the United Kingdom in the years ahead?
    Mr. Davis: My hon. Friend is entirely right. The Liberal party is willing to give up our sovereignty in the form of the veto on many matters, including foreign affairs. It is willing to subordinate the Western European Union to the European Union and to do almost anything to advance the cause of federalism. The Labour party, in a rather more concealed way, is aiming in the same direction.
    As for qualified majority voting and vetoes, we have heard many arguments about the unanimity requirement holding up Europe, but on Monday this week we witnessed a demonstration of how it works, and works well, when the way in which the European Union should deal with the Helms-Burton proposal came before the Foreign Affairs Council. Denmark had serious constitutional, political and judicial problems with that proposal. Because it was a matter of unanimity, Denmark was not overridden-as it might have been with qualified majority voting-and we found a perfectly good and effective policy which met all its requirements. That happened because Denmark had the veto, and the same should apply to us.
    Mr. Shore: I welcome the Minister's assurance, but will he go beyond sticking by the veto where it now exists and turn his mind to persuading our European partners that in relation to qualified majority the votes should he re-weighted, so that Britain and other larger and more populous European states have a much larger share of the votes?
    Mr. Davis: I find myself mildly embarrassed, as I entirely agree with the right hon. Gentleman. A country such as Luxembourg has one vote for 400,000 people while we have one vote per 6 million people. That should be put right, and that is one of our objectives at the next intergovernmental conference.

    Century Date Change (Computers)
    Mr. David Atkinson: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will study the consequences for his Department of the effect of the century date change on computer systems; and if he will make a statement. [696]
    Mr. Hanley: While we are in congratulatory mode, I should congratulate my hon. Friend the Member for Woodspring (Dr. Fox), the Under-Secretary of State, as this is his first Question Time for the Foreign and Commonwealth Office. I regret that he has had no questions to answer and I should be grateful if hon. Members would give him plenty of work next month.
    In reply to my hon. Friend the Member for Bournemouth, East (Mr. Atkinson), the FCO diplomatic wing has completed an initial study which shows that 60 per cent. of FCO software applications will be affected in some way. Further study is taking place to determine the risks and costs. Remedial action will then be taken. The Overseas Development Administration is taking similar action.
    Mr. Atkinson: Does my right hon. Friend agree that our future security, and that of our allies, relies on all our computer systems being millennium compliant? Will he confirm that this country is well ahead of many other
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    countries in responding to the 2000 virus and can he say what discussions he is having with our allies to ensure that they are doing the same?
    Mr. Hanley: I am grateful to my hon. Friend for raising the subject. It is important that not only the FCO but all Government Departments should heed his warnings. I can confirm that the Foreign Office is well ahead in its programme to try to ensure that we are fully resilient to the 2000 problem by no later than 31 March 1999. We are also working closely with other countries on that issue.

    Queen's Speech
    Mr. Thurnham: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received about the measures announced in the Queen's Speech. [697]
    Sir Nicholas Bonsor: None.
    Mr. Thurnham: Will the Government bear in mind the important work done by the BBC World Service and ensure that its work is properly funded? Is it not the most successful service of its kind in the world and should we not invest in its success?
    Sir Nicholas Bonsor: As the hon. Gentleman should be well aware, given where he sat in the House until recently, the Government give great support to the World Service, which does a magnificent job worldwide. We will continue to support it.
    Mr. Wilkinson: Can my hon. Friend reassure the House that the Government will be consistent with the commitment in the Queen's Speech to the pursuit of the liberal economy by the European Union? In particular, will he bear in mind the potentially disastrous consequences to our economy of the imposition of a working time directive by the European Union through the mechanism of the health and safety procedures? Were that to happen, could the Government exercise their veto and just ignore what the European Court of Justice would try to impose?
    Sir Nicholas Bonsor: As my hon. Friend knows, it is likely that the European Court of Justice will report later in November on the working time directive. The Government will have to review that report closely and consult industry to see what action needs to be taken. Should the working time directive give us difficulty, we shall work hard in the IGC to obtain an amendment of the European Union rules.
    Mr. Tony Lloyd: The Queen's Speech makes mention of the need to deal with human suffering at the international level. The tragedy that is unfolding on our television screens here, but in real life in Zaire, is one on which the attention of the whole House should be fixed. Does the Minister agree with the proposition put forward for many months by the aid agencies and by those on the ground that the answer to the situation involves not just humanitarian aid but political action by the international community? If he agrees with that proposition, will he tell the House why the Government, with other members of the Security Council, have done very little in that time to

    649
    bring the warring parties together? Will he ensure that Britain plays a leading role in bringing all the parties in Zaire, Rwanda and Burundi to the conference table to find a political solution, without which hundreds of thousands of lives will be lost?
    Sir Nicholas Bonsor: I agree that political as well as humanitarian aid and effort is required from the international community. I do not accept that this tragedy is unfolding because of the failure of the international community. There is a limit to what the international community can do to help those who will not help themselves. We will continue to strive extremely hard to try to bring this tragedy to a close.

  BILL PRESENTED
    EDUCATION
    Mrs. Secretary Shephard, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Howard, Mr. Secretary Gummer, Mr. Secretary Hague, Mr. Forth and Mrs. Gillan, presented a Bill to amend the law relating to education in schools and further education in England and Wales; to make provision for the supervision of the awarding of external academic and vocational qualifications in England, Wales and Northern Ireland; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 8.]

Business of the House
Motion made, and Question proposed,
That—
(1) Standing Order No. 13 (Arrangement of public business) shall have effect for this Session with the following modifications, namely:
In paragraph (4) the word 'eight' shall be substituted for the word 'ten' in line 43; in paragraph (5) the word 'fifth' shall be substituted for the word 'seventh' in line 45;
(2) Standing Order No. 90 (Second reading committees) shall have effect for this Session with the following modification, namely:
In paragraph (2) the word 'fifth' shall be substituted for the word 'seventh' in line 23; and
(3) Private Members' Bills shall have precedence over Government business on 13th December, 17th, 24th and 31st January, 7th, 14th and 28th February and 18th April.—[Mr. Wells.]
3.31 pm
Madam Speaker: I have selected the amendment in the name of the hon. Member for Newham, South (Mr. Spearing).
Mr. George Stevenson: On a point of order, Madam Speaker. In yesterday's Hansard at column 468, in response to my question, the Secretary of State for Education and Employment is on record as saying that she had in her possession a letter from the chief education officer of Staffordshire county council stating that the council was extremely pleased with this year's education settlement in Staffordshire. The chief education officer has no knowledge of any such letter, despite a detailed examination and search. I have asked the Secretary of State to produce the letter, but as yet no such letter has appeared.
That information was, therefore, inaccurate and misleading. Is it in order, Madam Speaker, to ask you to request the Secretary of State for Education arid Employment to return to the Dispatch Box and either produce the letter or apologise to the House?
Madam Speaker: The matter that the hon. Member has raised is not a point of order. It is a question for argument and debate. I am afraid that he must use the Order Paper to get the answer from the Secretary of State that he seeks.
Ms Joan Walley rose—
Madam Speaker: The motion has been moved formally. I call Mr. Spearing to move the amendment.
Mr. Nigel Spearing: I beg to move, as an amendment to the motion, after paragraph (3), to add,
(4) Private Members' Notices of Motions shall have precedence over Government business until Seven o'clock on Monday 18th November, Monday 16th December, Monday 27th January and Monday 24th February, and ballots for these Notices shall be held after Questions on Thursdays 7th November, 5th December, 16th January and 13th February.
(5) No Notice of Motion shall be handed in for any of the days on which Private Members' Notices have precedence under this Order in anticipation of the ballot for that day.
652
The fact that my amendment has been selected has caused some astonishment, particularly in view of the important debate on the economy that is to follow. I shall deal with the amendment almost as if it were a ten-minute Bill to follow later in the Session.
The debate to follow this one will be about taxation, and possibly about what may be included in the Budget. This issue is about the future of Parliament. Those who are astonished at the selection of my amendment convey their ignorance of the basis of Parliament. The rules of the House, what individual Members can do arid the power that they have to move motions should concern all of us. It is not a matter of prerogative of the Crown in the form of the Government of the day. The ability to move motions—this amendment, in my case—on only four Mondays for three hours each Monday between now and next summer or the general election is crucial. For two years, we have not had that ability, because of a misunderstanding by the Government, and perhaps others, of the role of the Back Bencher. We are here as individuals.
The Leader of the House may take an opposite view, but I think that he is under a misapprehension. This is an all-party issue that concerns all hon. Members. It is not a matter only for Parliament; it concerns the voters whom we represent. If the voice and vote of Back Benchers are restricted, so are the rights of the voters whom we represent.
A private Member's motion is different from an Adjournment debate. We may have time on a Wednesday to discuss the Adjournment, but as hon. Members know, the Adjournment debate is no substitute for the ability to bite in a vote if required. The leverage available to Back Benchers is being taken away.
I think that we can apply the Hacker test. Both hon. Members and those outside are amused by Jim Hacker. Let us suppose that Jim Hacker has just produced a form for benefit claimants-nothing to do with party politics. Let us suppose that he has run amok and gone wrong, and that lots of ladies who fill up the form cannot get the benefits that they want. There are letters all over the place. "Oh," says the official, "there's going to be a debate." "It's all right," says Jim. "On the Adjournment, I can get away with it. It will be late at night; I shall say I'm sorry, and they will not be able to do anything." "No," says the official. "A private Member's motion has been accepted, and they are going to reduce your income by £5,000." That is another matter.
"Moreover," says the official, "there is Question Time. Next week you must deal with Question Time, and this issue will come up. Who do you think is No. 3 on the list? Tam Dalyell." "Is that the worst?" asks the Prime Minister. "No," replies the official. "No. 6 is Tony Banks." The ability to provide enlightenment when a debate is going on makes questions very important.
Those who are Ministers now will not be Ministers for much longer. They will soon be candidates. Are they going to go back to the electors of Huntingdon, for instance—the Roundhead electors of Huntingdon—and say, "We took away the rights of Back Benchers"? Will they go to Braintree, with its Huguenot traditions, and say, "We shall not allow you to do this"—or, indeed, to the constituency of the Government Chief Whip, the right hon. Member for Eddisbury (Mr. Goodlad)?

653
In a tennis club, or indeed any club, people should not be denied the right to table motions; but here, even early-day motions—which are treasured by people who think that they are important—cannot be debated. It used to be possible, although it involved a ballot and a queue. Have we really been reduced to not even having the ability to do what is possible in the national lottery? Can we not even "put in for" a motion? That ends all the history of the House, and prevents voters from having their say through Members of Parliament.
Whatever may have happened in the past, let me ask hon. Members on both sides of the House what reply they will give if, when they go before the electorate as candidates in the election, a member of Charter 88, or any other organisation, says, "You voted to deny the rights of Back Benchers, and thence the voice and votes of the electorate." "Oh, we have Wednesdays and a few Adjournment debates," cannot be a good reply. If the Chief Whip or the Lord President is advising his friends to vote down our amendment, he must think again. Most of us will be candidates in the next election.
The relationship between the electorate and the House is now a national issue. There is a lack of confidence in our ability to deal with issues of the day, which may not be party issues, but which the electorate think that we should be able to discuss. Clearly, if we have no ballot for motions, we shall not be able to discuss them. I suggest that we diminish our democracy thereby. We diminish parliamentary procedures, and we diminish the quality of democracy of which this country has so far been proud.
The power of Back Benchers has diminished. It is diminishing. It ought to be increased.
3.38 pm
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The hon. Member for Newham, South (Mr. Spearing) has courteously and reasonably acknowledged that the House is anxious to proceed with the important economic debate that will follow, and I am sure that his view is widely shared in the House. I shall therefore speak briefly, making just three main points.
First, I personally have no doubt that the new arrangements give private Members—Back Benchers—a better deal than the old ones. Private Members will have more time: about twice as many opportunities to raise subjects. That time is better structured, and does not give rise to the occasions that, as we all know, used to occur, when an issue was discussed endlessly to prevent the next subject from being reached. That was not a very sensible use of parliamentary time. Private Members' time now comes at more convenient hours than was the case with many previous opportunities, including the Consolidated Fund debate, which used to come at a time when all normal citizens were in bed.
Sir Patrick Cormack: I am intervening now because I do not want to speak later and detain the House. The essential point made by the hon. Member for Newham, South (Mr. Spearing) is that with the old motions we could hold the Executive to account by having a vote. A series of Adjournment debates on a
654
Wednesday morning, welcome and helpful as they may be—and I pay tribute to my right hon. Friend for all that he has done as Leader of the House—are not an effective substitute.
Mr. Newton: I think that my hon. Friend's point will be covered by my next point.
Secondly, the changes were made following a very carefully considered report of a Select Committee of this House—the Jopling report. It was seen as a balanced package and was accepted by the House by a very large majority. That is not to say that it is immutable and that no changes can be made. However, if there are to be changes, they should not be made piecemeal, but should be made as part of a properly considered review. They should not be made in haste at this late stage in this particular Parliament.
Thirdly, the House may recall that in last November's debate, when we turned Sessional Orders into Standing Orders, the hon. Member for Newham, South moved an amendment in precisely the same terms, although not with the same dates, as the amendment that he moved today. That amendment was defeated by 116 votes to 19. In my view, the considerations that led to that outcome on that occasion are exactly the same today. If the hon. Gentleman pushes his amendment to a vote, I hope that the House will reject it again.
3.41 pm
Mr. Spearing: With the leave of the House, Madam Speaker—just three sentences. First, just one Opposition Member voted against my previous amendment. Secondly, the Consolidated Fund debate is now on the Adjournment, but that was not the case previously as it used to be the Second Reading of a Bill. That procedure has been diminished. Thirdly, I am advocating only another 12 hours for private Members. Cannot we afford that between now and next summer? It is more power, not less.
Question put, That the amendment be made:—
The House divided: Ayes 87, Noes 274.

Division No. 2]

[3.41 pm

AYES

Abbott, Ms Diane

Evans, John (St Helens N)

Ainger, Nick

Ewing, Mrs Margaret

Ashton, Joseph

Faulds, Andrew

Austin-Walker, John

Flynn, Paul

Beggs, Roy

Forsythe, Clifford (S Antrim)

Biffen, John

Fyfe, Mrs Maria

Callaghan, Jim

Galloway, George

Campbell, Ronnie (Blyth V)

Gapes, Mike

Campbell-Savours, D N

Graham, Thomas

Canavan, Dennis

Grant, Bernie (Tottenham)

Clapham, Michael

Hardy, Peter

Clwyd, Mrs Ann

Hendron, Dr Joe

Cook, Frank (Stockton N)

Hill, Keith (Streatham)

Corbett, Robin

Hogg, Norman (Cumbernauld)

Corston, Ms Jean

Hood, Jimmy

Cunliffe, Lawrence

Hughes, Robert (Ab'd'n N)

Cunningham, Jim (Cov'try SE)

Hughes, Roy (Newport E)

Dafis, Cynog

Jackson, Mrs Helen (Hillsborough)

Davies, Denzil (Llanelli)

Jenkins, Brian D (SE Staffs)

Davis, Terry (B'ham Hodge H)

Jones, Barry (Alyn & D'side)

Dixon, Don

Jones, Ieuan Wyn (Ynys Môn)

Donohoe, Brian H

Jones, Dr L (B'ham Selly Oak)

Dunwoody, Mrs Gwyneth

Kaufman, Gerald

655

Lewis, Terry

Salmond, Alex

Llwyd, Elfyn

Sheldon, Robert

Loyden, Eddie

Shepherd, Richard (Aldridge)

McAllion, John

Simpson, Alan

McKelvey, William

Skinner, Dennis

Mackinlay, Andrew

Spearing, Nigel

McNamara, Kevin

Steinberg, Gerry

MacShane, Denis

Stevenson, George

Madden, Max

Taylor, John D (Strangf'd)

Mahon, Mrs Alice

Thompson, Jack (Wansbeck)

Marek, Dr John

Trimble, David

Marshall, David (Shettleston)

Walley, Ms Joan

Michie, Bill (Shef'ld Heeley)

Welsh, Andrew

Miller, Andrew

Wigley, Dafydd

Molyneaux, Sir James

Williams, Alan (Swansea W)

Morris, Alfred (Wy'nshawe)

Wise, Mrs Audrey

Pickthall, Colin

Wray, Jimmy

Powell, Sir Raymond (Ogmore)

Young, David (Bolton SE)

Prentice, Gordon (Pendle)

Randall, Stuart

Tellers for the Ayes:

Ross, William (E Lond'y)

Mr. Harry Barnes and

Rowlands, Ted

Mr. David Winnick.

NOES

Ainsworth, Peter (E Surrey)

Clarke, Eric (Midlothian)

Ainsworth, Robert (Cov'try NE)

Clarke, Kenneth (Rushcliffe)

Aitken, Jonathan

Coe, Sebastian

Alexander, Richard

Congdon, David

Alison, Michael (Selby)

Conway, Derek

Allason, Rupert (Torbay)

Coombs, Anthony (Wyre F)

Allen, Graham

Coombs, Simon (Swindon)

Alton, David

Cope, Sir John

Amess, David

Couchman, James

Arbuthnot, James

Cran, James

Arnold, Jacques (Gravesham)

Cummings, John

Ashby, David

Currie, Mrs Edwina

Ashdown, Paddy

Davies, Bryan (Oldham C)

Atkinson, David (Bour'mth E)

Davies, Chris (Littleborough)

Atkinson, Peter (Hexham)

Davies, Quentin (Stamf'd)

Baker, Nicholas (N Dorset)

Davis, David (Boothferry)

Baldry, Tony

Day, Stephen

Banks, Matthew (Southport)

Devlin, Tim

Banks, Robert (Harrogate)

Dewar, Donald

Bates, Michael

Dorrell, Stephen

Batiste, Spencer

Douglas—Hamilton, Lord James

Beith, A J

Duncan, Alan

Bellingham, Henry

Duncan Smith, Iain

Beresford, Sir Paul

Dunn, Bob

Betts, Clive

Elletson, Harold

Blunkett, David

Emery, Sir Peter

Bonsor, Sir Nicholas

Evans, Jonathan (Brecon)

Booth, Hartley

Evans, Roger (Monmouth)

Bottomley, Peter (Eltham)

Evennett, David

Bowden, Sir Andrew

Faber, David

Bowis, John

Fabricant, Michael

Boyson, Sir Rhodes

Fenner, Dame Peggy

Brooke, Peter

Fishburn, Dudley

Brown, Michael (Brigg Cl'thorpes)

Forman, Nigel

Brown, Nicholas (Newcastle E)

Forsyth, Michael (Stirling)

Browning, Mrs Angela

Forth, Eric

Bruce, Ian (S Dorset)

Foster, Don (Bath)

Bruce, Malcolm (Gordon)

Fox, Dr Liam (Woodspring)

Burns, Simon

Freeman, Roger

Burt, Alistair

French, Douglas

Butcher, John

Fry, Sir Peter

Butler, Peter

Gale, Roger

Butterfill, John

Gallie, Phil

Campbell, Menzies (Fife NE)

Gardiner, Sir George

Carlisle, Sir Kenneth (Linc'n)

Garel—Jones, Tristan

Carrington, Matthew

Garnier, Edward

Cash, William

Gill, Christopher

Channon, Paul

Gillan, Mrs Cheryl

Chidgey, David

Goodlad, Alastair

Churchill, Mr

Goodson—Wickes, Dr Charles

Clappison, James

Gorman, Mrs Teresa

Clark, Dr David (S Shields)

Gorst, Sir John

656

Grant, Sir Anthony (SW Cambs)

Mitchell, Andrew (Gedling)

Greenway, Harry (Ealing N)

Mitchell, Sir David (NW Hants)

Greenway, John (Ryedale)

Moate, Sir Roger

Griffiths, Peter (Portsmouth N)

Monro, Sir Hector

Grylls, Sir Michael

Montgomery, Sir Fergus

Hamilton, Sir Archibald

Mudie, George

Hamilton, Neil (Tatton)

Murphy, Paul

Hampson, Dr Keith

Nelson, Anthony

Hanley, Jeremy

Newton, Tony

Hannam, Sir John

Nicholson, David (Taunton)

Hargreaves, Andrew

O'Brien, William (Normanton)

Harris, David

Onslow, Sir Cranley

Haselhurst, Sir Alan

Oppenheim, Phillip

Hawksley, Warren

Ottaway, Richard

Heald, Oliver

Page, Richard

Heath, Sir Edward

Paice, James

Heathcoat—Amory, David

Patnick, Sir Irvine

Heseltine, Michael

Pawsey, James

Hicks, Sir Robert

Peacock, Mrs Elizabeth

Hill, Sir James (Southampton Test)

Pickles, Eric

Horam, John

Pope, Greg

Howard, Michael

Porter, David (Waveney)

Howell, David (Guildf'd)

Powell, William (Corby)

Howell, Sir Ralph (N Norfolk)

Prentice, Mrs B (Lewisham E)

Hughes, Kevin (Doncaster N)

Rathbone, Tim

Hughes, Robert G (Harrow W)

Redwood, John

Hunt, David (Wirral W)

Reid, Dr John

Hunter, Andrew

Renton, Tim

Hurd, Douglas

Richards, Rod

Illsley, Eric

Riddick, Graham

Jack, Michael

Robathan, Andrew

Jackson, Robert (Wantage)

Roberts, Sir Wyn

Jenkin, Bernard (Colchester N)

Robertson, Raymond S (Ab'd'n S)

Jessel, Toby

Robinson, Mark (Somerton)

Johnson Smith, Sir Geoffrey

Roe, Mrs Marion

Jones, Jon Owen (Cardiff C)

Rooker, Jeff

Jones, Nigel (Cheltenham)

Rowe, Andrew

Jones, Robert B (W Herts)

Sainsbury, Sir Timothy

Jopling, Michael

Scott, Sir Nicholas

Kellett—Bowman, Dame Elaine

Shaw, David (Dover)

Kirkhope, Timothy

Shaw, Sir Giles (Pudsey)

Kirkwood, Archy

Shephard, Mrs Gillian

Knapman, Roger

Shepherd, Sir Colin (Heref'd)

Knight, Mrs Angela (Erewash)

Sims, Sir Roger

Knight, Greg (Derby N)

Skeet, Sir Trevor

Kynoch, George

Smith, Sir Dudley (Warwick)

Lait, Mrs Jacqui

Smith, Tim (Beaconsf'ld)

Lamont, Norman

Spencer, Sir Derek

Lang, Ian

Spicer, Sir Michael (S Worcs)

Lawrence, Sir Ivan

Spring, Richard

Legg, Barry

Sproat, Iain

Lester, Sir Jim (Broxtowe)

Squire, Robin (Hornchurch)

Lidington, David

Stanley, Sir John

Lord, Michael

Steel, Sir David

Lynne, Ms Liz

Steen, Anthony

MacGregor, John

Stephen, Michael

MacKay, Andrew

Stern, Michael

Maclean, David

Streeter, Gary

McLoughlin, Patrick

Sumberg, David

McNair—Wilson, Sir Patrick

Sweeney, Walter

Maddock, Mrs Diana

Sykes, John

Madel, Sir David

Tapsell, Sir Peter

Maitland, Lady Olga

Taylor, Mrs Ann (Dewsbury)

Malone, Gerald

Taylor, Ian (Esher)

Mandelson, Peter

Taylor, John M (Solihull)

Mans, Keith

Taylor, Sir Teddy

Marland, Paul

Thompson, Sir Donald (Calder V)

Marshall, John (Hendon S)

Tipping, Paddy

Marshall, Sir Michael (Arundel)

Townend, John (Bridlington)

Martin, David (Portsmouth S)

Townsend, Cyril D (Bexl'yh'th)

Martlew, Eric

Tracey, Richard

Mates, Michael

Tredinnick, David

Mawhinney, Dr Brian

Trend, Michael

Meale, Alan

Turner, Dennis

Merchant, Piers

Twinn, Dr Ian

Mills, Iain

Vaughan, Sir Gerard

657

Waldegrave, William

Wiggin, Sir Jerry

Walker, Bill (N Tayside)

Wilkinson, John

Waller, Gary

Willetts, David

Ward, John

Wilshire, David

Wardle, Charles (Bexhill)

Wood, Timothy

Waterson, Nigel

Yeo, Tim

Watts, John

Young, Sir George

Wheeler, Sir John

Whitney, Ray

Tellers for the Noes:

Whittingdale, John

Mr, Bowen Wells and Mr. Gyles Brandreth.

Widdecombe, Miss Ann

Question accordingly negatived.
Main Question put and agreed to.
Resolved,
That—
(1) Standing Order No. 13 (Arrangement of public business) shall have effect for this Session with the following modifications, namely:
In paragraph (4) the word 'eight' shall be substituted for the word 'ten' in line 43; in paragraph (5) the word 'fifth' shall be substituted for the word 'seventh' in line 45;
(2) Standing Order No. 90 (Second reading committees) shall have effect for this Session with the following modification, namely:
In paragraph (2) the word 'fifth' shall be substituted for the word 'seventh' in line 23; and
(3) Private Members' Bills shall have precedence over Government business on 13th December. 17th, 24th and 31st January, 7th, 14th and 28th February and 18th April.

SITTINGS OF THE HOUSE
Ordered,
That—
(1) Standing Order No. 11 A (House not to sit on certain Fridays) shall have effect for this Session with the following modification, namely:
In paragraph (1) the word 'eight' shall be substituted for the word 'ten'; and
(2) the House shall not sit on the following Fridays:
8th and 22nd November, 21st February, 7th. 14th and 21st March and 4th and 11th April.—[Mr. Wood.]

Orders of the Day

  Debate on the Address
  [SIXTH DAY]
  Order read for resuming adjourned debate on Question [23 October],
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  We, your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Sir Norman Fowler.]
  Question again proposed.

  The Economy
  Madam Speaker: I have selected the amendment standing in the name of the Leader of the Opposition. The amendment standing in the name of the right hon. Member for Yeovil (Mr. Ashdown) will be called at the end of the debate for Division. Speeches between 7 o'clock and 9 o'clock will be restricted to 10 minutes.
  3.54 pm
  Mr. Gordon Brown: I beg to move, as an amendment to the Address, at the end of the Question to add:
  "but note that since 1979 the Government has broken each one of its central promises: to reverse national economic decline, to cut unemployment which stood at one million when it took office, to raise investment in the United Kingdom's manufacturing industries, to cut tax, spending and debt and to build a cohesive society; regret the absence from the Gracious Speech of measures that will strengthen the supply side of the economy, expand the United Kingdom's long term capacity, ensure high levels of sustainable growth and heal social division; call for a new employment policy which moves people from welfare to work, a new education policy which equips people for the future, a new industry policy for investment that will increase small business and high technology investment in all regions of Britain; and note that these measures are the only sure way of ensuring opportunity for all and a durable recovery that will keep inflation and interest rates low, and bring long term prosperity for all."
  As we begin the last day of the debate on the Queen's Speech, let us be clear about the reasons for the interest rate rise this morning. That rise was an inevitable result of the Government's policies, and it is happening in no other country. The Government are pushing interest rates up not because of international pressures but because of a problem in Britain.
  That cannot be justified or explained by saying that we have lower interest rates than our competitors, and that Britain is merely catching up. We do not have the lowest rate in Europe or even the second, third or fourth lowest. Interest rates are already higher in Britain than in 10 other European countries. We are 11 th out of 15 for interest rates in Europe. Only Spain, Portugal, Greece and Italy have higher rates.
  The rise, which is from a higher base than that of other European countries, comes from domestically created problems which are internal to the British economy, and which the Government must explain in the debate. The rise cannot be justified by the huge strength of the economy. The Chancellor has already downgraded his

  659
  growth forecast for this year from 3 to 2.5 per cent., and in his Budget it may have to be admitted that growth is even lower. The Government are not putting up interest rates because of what is happening elsewhere or because of their success. They have been forced to push up rates because they do not believe that they can meet their inflation targets.
  The rise has occurred because, as we have been saying for the past four years, unless a recovery is based on solid foundations, a country cannot sustain anything other than sluggish growth without rising inflationary pressures. As we know, it is the same old British disease returning under the Government.
  The rise was inevitable, because the recovery has not produced the investment-led and industry-led growth that the Government predicted. It is the inevitable result of the policy of a Government who have failed to tackle the fundamental weaknesses of the economy. As a result, inflationary pressures are ready to undermine it. That is why the Government should have implemented before now the policies set out in our amendment. We have proposed those policies on many occasions, and they are right for the British economy.
  What is the nature of the economic recovery that has led to these higher inflationary pressures? It is not the industry-led recovery that we were led to expect in 1992. Industry has failed to expand in the way that it should if we are to have a sustainable recovery. Industrial production fell in the past three months. It is only 0.6 per cent. up on a year ago. Despite all the successes of individual companies, industrial output in the economy at this stage of the cycle is still weak.
  It is not a manufacturing-led recovery, either. Output has fallen over the past three quarters, and is less than 0.5 per cent. lower than a year ago. Despite some great individual success stories by many of our companies because of their efforts, manufacturing output is weak. At this stage, the recovery is not showing massive export growth, despite the devaluation of the pound. The summer economic forecast predicts that imports will grow faster than exports, and we still have the second worst trade deficit in the European Union.
  Most of all, the recovery is not investment led. We have been warning throughout about the failure of investment to rise throughout the last years of recovery. Private sector investment has been growing more slowly since the recession than in any recovery this century. At a similar stage of the cycle in the recovery of the late 1970s, investment had risen by 20 per cent. In the recovery of the early 1980s, it had risen by 30 per cent. In this recovery, it has risen by just 6 per cent., and manufacturing investment is falling. It is lower than it was a year ago. Small wonder that the Bank of England reported this year that investment growth has been weak in the recovery.
  Look at the complacency of the Chancellor of the Exchequer on investment. Every time, he and his predecessor predicted that there would be an investment recovery that would allow the economy's capacity to be strong enough to sustain growth. We were told that, in 1993, business investment would rise, and it fell by 2.5 per cent. Business investment was to rise by 7 per cent. in 1994, and it rose by only 2 per cent. It was to rise in 1995 by 10 per cent., and it rose by only 1.5 per cent. It is to rise this year by 7.5 per cent., and we wait to hear what the figures are.
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  This summer, we had the spectacle of the Deputy Prime Minister, faced with all those figures, publishing his competitiveness report and trying to tell us that, in a modern economy, because the record was so poor, investment levels were of no great significance.
  I tell the Chancellor of the Exchequer: prudence is absolutely critical to the economy, which is why the interest rate rise was necessary—the one that he has been forced to make—but prudent economic management depends for its success on the firm foundation of a strong economy that is investment rich, and which he has failed to achieve. Without investment-led growth and the export-led and industry-led recovery that was promised, we get to the problems that the Chancellor faces today.
  Mr. John Redwood: When a 10-year-old child can close a school in Labour Nottinghamshire and all the Labour party can do nothing to reopen that school, why should we believe that the right hon. Gentleman has any answers to our economic problems?
  Mr. Brown: We must be fair to the right hon. Gentleman. Like the Secretary of State for Education and Employment, he is speaking in a personal capacity. He was the man who coined the slogan, "No change, no chance". What does he think about what is happening to the economy today?
  Let us be absolutely clear that the economic fundamentals that a modern economy needs, in addition to the platform of stability that we support, are high investment in industry and in skill, and high productivity through creating employment opportunity. That is why our amendment contains exactly the proposals that the Government should be implementing.
  First, the Government should be implementing a policy for investment.
  Mr. Rod Richards: The right hon. Gentleman has said that it is his ambition to have a starting income tax rate of lop in the pound. He has not specified any parameters such as time scale, band width or whatever, but, in the most general sense, it is his ambition. Will he also say whether it is his ambition, again in the most general sense, without specifying any parameters, to have a single European currency?
  Mr. Brown: I ask the hon. Gentleman which he supports: the abolition of capital gains tax and inheritance tax, which is the priority of the Conservative party, or a lower starting rate of tax that would help everyone throughout the community. The sooner he realises that, when he goes to the electorate next year—or whenever the Prime Minister dares to call the election—he will have to defend a Conservative party that will be committed to abolishing capital gains tax and inheritance tax to benefit the few, instead of introducing a lower starting tax rate to benefit the many, the more modest he will be in what he says to the House.
  Despite everything that the Government say about low taxation, we have discovered in a publication of the Secretary of State for Social Security that, under this Government, people in Britain are paying marginal tax and benefit rates, not just of 80 per cent. or 90 per cent., but of as much as 150 per cent. For every pound they

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  earn, £1.50 is taken back. I therefore ask the hon. Member for Clwyd, North-West (Mr. Richards): what is his priority? I know what Britain's is.
  Let us examine what measures are absolutely essential.
  Mr. Tony Marlow: As always, the right hon. Gentleman complains about manufacturing investment arid growth. As all hon. Members know, the right hon. Gentleman wants to go, helter-skelter, into a European single currency, which means that he would have to meet the convergence criteria. What does he think would happen to growth and industrial investment if he attempted—helter—skelter-to meet the convergence criteria?
  Mr. Brown: The hon. Gentleman might like to ask the Chancellor that question during this debate.
  Mr. Marlow: What is the right hon. Gentleman's answer?
  Mr. Brown: If the hon. Gentleman had been listening to what I was saying, he would know that I was about to set out the measures necessary to achieve sustainable economic growth without increasing inflationary pressures.
  The Budget should contain three measures. First, we need an investment policy in which we build on a more consistent platform of stability, and tackle the investment shortfall in the economy. Even now, I believe that the Chancellor should adopt our proposals to introduce new incentives to increase long-term investment levels in science, technology, industry and small businesses—thereby increasing the economy's capacity—and our proposals to reform the loan guarantee system and the regional agencies across the country that can help to boost investment for small businesses. He should also adopt our new savings policies, which will channel investment.
  Time after time, in his complacent manner, the Chancellor has rejected our proposals, and predicted that investment will rise. Time after time, he has had to report that investment is not rising—which is one of the fundamental, underlying problems preventing growth in economic capacity without increasing inflationary pressures.
  Secondly, the Chancellor should examine a new national education and training policy that will strengthen the economy's supply side, in which we tackle the skills shortages that act as an inflationary pressure and economic bottleneck. Only a few days ago, Mary Chapman—chief executive of Investors in People—said:
  "It is notable that, as soon as we move out of recession, skills shortages start to re-emerge."
  That is why our proposals for a university for industry, individual learning accounts and school and college reform—which provide opportunity for all—will raise the economy's sustainable growth rate.
  Thirdly, the Chancellor should examine a new national employment policy—in fact, we need a national employment policy. The policy should tackle the fact that 20 per cent. of non-pensioner households in Britain have no one bringing home a wage. That figure is an indictment of the Government, who ran posters during the 1979
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  general election stating, "Labour isn't working-, and that they would sort out the dole queues. In 1979, 8 per cent. of households had no one in work. Today, the figure is nearly 20 per cent.—which is as high as the level in Spain.
  Mr. Graham Riddick rose
  Mr. Brown: If the Chancellor took action on employment, long-term unemployment and youth unemployment, and adopted our proposals for a windfall levy on the privatised utilities, he would not only cut social security costs but help the economy to run more efficiently.
  Mr. David Shaw: Does the right hon. Gentleman accept that a £3 billion windfall profits tax would be equivalent to a 20 per cent. value added tax rate on electricity and gas?
  Mr. Brown: The hon. Gentleman should consider what has been happening in the utility sector. Today, for example, the water regulator said that there were excess profits in the water industry. Further, we know that four water companies have been privatised, and have never paid a penny in mainstream corporation tax. Moreover, ordinary people around the country pay a tax rate of 24p in the pound, whereas, since privatisation, water companies pay only 2p in the pound. I believe that the hon. Gentleman will have a hard job convincing the electors of Dover that we should not impose a windfall tax on the utilities.
  I should tell the hon. Gentleman what he will have to answer for at the general election. He will have to answer for his manifesto, which stated that there are two vital messages to remember. We shall remind him of those messages throughout the campaign, the first of which is: "David lives locally." The second message is:
  "David Shaw supports lower tax."
  Tell the electors that, after 22 tax rises.
  Mr. Riddick: Will the right hon. Gentleman explain why unemployment in France and Germany is so much higher than in this country?
  Mr. Brown: The hon. Gentleman gives me a chance to point out a fact that Conservative central office statistics do not often tell him—that male unemployment in Britain is as high as in France and Germany. He cannot deny that one non-pensioner household in five has no one in work and earning a wage. That pathetic situation, after 17 years of Conservative government, stems from the under-registration of female employment, the fact that large numbers of women are not registered or given the opportunity to work, and the concentration of unemployment in no-income households.
  Hon. Members may wish to look at their personal manifestos before the election. In his personal manifesto in 1992, the hon. Member for Colne Valley (Mr. Riddick) said:
  "The state has a duty to protect the most vulnerable people in
  society."
  So why does he not support action on unemployment?
  Action on investment, skills and employment opportunity are fundamental to building the underlying strength of the economy. They were the policies that were

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  missing in the 1980s, when, in the absence of investment to expand capacity, boom inevitably led to bust. They are the essential components of success—policies that recognise that the crude free market economics practised by the Conservatives is not enough, and require the Government to assume their responsibilities to act on industrial, employment and education and training policies. But those policies are still absent in the 1990s. Without them, there are real worries about the durability of any recovery and about the threat of a return to stop-go.
  The Government's failure to address those issues has brought us to the problems we have today. The remarkable thing about the Chancellor and the whole Government is that, instead of addressing those problems, they continue to make extraordinary and extravagant claims about their record on the economy, as the Chancellor did in his lunchtime interview today. It is a record that they cannot justify.
  Nobody who listened to the claims made at the Conservative party conference about a fundamental transformation of the economy and a low inflation environment would ever have believed that an interest rate rise would come within two weeks. Inflationary pressures forced the Government to act. One would think that, after today, the Chancellor's claims about the economy would be more modest, but the Treasury press release just put out about the interest rate rise says:
  "The economy is performing exceptionally well."
  It describes the Government's record on growth as "unseen for a generation".
  Let me explain the troubling paradox for Conservative Members, because they will have to answer on it to their constituents. Everything that the Chancellor or the Prime Minister says should point to a feel-good factor in the economy, but when Conservative Members return to their constituencies, they find that people do not feel good; they feel insecure about their prospects.
  Let us look carefully at the difference between what Conservative Members say is happening to the economy and what is actually happening. For months, the Chancellor has been boasting of low inflation. For months, he has been saying that we should compare his record with that of previous Governments.
  When we examine the figures, we find that our inflation is not the lowest in Europe; it is almost the highest in Europe. Inflation is not below the European average; it is above the European average. Our inflation rate is 11th in the European league, and rising. That is how the Government's good news machine works—they compare only with their own record of a few years ago. They do not tell us that, in comparison with Europe, they are near the bottom of the league on inflation.
  Mr. Tim Yeo: Will the right hon. Gentleman confirm that inflation is now at less than one third of the best level achieved at any time by the last Labour Government, and that interest rates are now lower than at any time during that period?
  Mr. Brown: What I am pointing out—[HoN. MEMBERS: "Just say yes."' Let me tell the hon. Gentleman that, when we left government, inflation was below the European average and falling. Let me also point out that interest rates in Europe are as follows: Holland 3 per cent., Germany 3 per cent., Belgium 3.3 per cent., Luxembourg
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  3.3 per cent., Austria 3.5 per cent. and Britain 6 per cent. Is that a record of which to be proud? Are the Conservatives going to go around boasting that the Government have achieved everything they set out to achieve, and that we are 11th out of 15 in the European league? Are they going to fight the election on that? I do not think so.
  When one examines them, a pattern emerges in the statistics that come from Conservative central office. On interest rates and inflation, the Conservatives compare their record with that of the past. On growth and employment, they cannot use the record of the past, so they try to compare themselves with recession-hit Europe. At no point do they advance a case showing that they have a record on growth, employment, interest rates and inflation of which they can be proud.
  In other words, the Government always use comparisons carefully chosen for their own advantage. Through such a selective use of statistics, they suggest that Britain has been fundamentally transformed. If the Government were to choose to compare Britain's inflation and interest rates with European rates this year, and Britain's growth and employment rates with those of either Britain or Europe in previous years, they would find the truth—that they are near the bottom of every one of those leagues.
  Look at growth over the past 17 years. We should judge the Government on the growth rate, which is 1.9 per cent.—almost half what it was in the 30 years after the war. If oil is excluded, the rate is only 1.7 per cent. That is not the long-term improvement in our prospects claimed by the Government, but one of the lowest growth rates in Europe—11th out of 15 over the past 17 years, and bottom of the Group of Seven table. Once again, we can see the gap between Government rhetoric and reality.
  The essence of the Conservatives' campaign is to make comparisons with Europe only when Europe is in a period of recession, and, even then, only as and when it suits them to do so. The truth about the economy is that the Conservatives are economical with the truth. All their claims—
  Mr. Jonathan Aitken: Will the right hon. Gentleman give way?
  Mr. Brown: No, I am not giving way.
  All the Conservatives' claims are set out in today's briefing document, which tells us less about the underlying strength of the economy than about our temporary position in the economic cycle. The document barely mentions manufacturing, because the record since 1979 is that we lie 10th out of the 15 European countries. We are 11th in respect of job growth and 15th in respect of export growth—bottom or near the bottom of all those European leagues. Of course, the Government barely mention the matters I spoke about earlier—the actions that are necessary to build for the future: investment in people and industry.
  It is rather like an up-beat report from a football manager, desperately trying to avoid the sack by declaring that his team has been ahead at half-time in home games more often than not in the past 20 seasons and that it has won more corners away from home than other teams in the second half of the league. The Government omit to mention that, after they have been managers of the team for 17 years, no transformation of economic prospects has occurred, and that they hover on the verge of relegation.

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  If proof were needed that the figures are only about temporary stages in the economic cycle and not about the underlying position of the economy, we have only to look at what the Prime Minister let slip at the weekend. When interviewed on Sky Television, did he say that the economic successes that he was trumpeting were the result of a hard-won economic turnaround that would last? No, he called them
  "a benevolent phase in the economic cycle."
  That is a devastating insight—that just about every statistic used by the Government only reflects a phase in the economic cycle, and tells us little about fundamental underlying strength.
  How do we know that that is true? Because we have heard it all before. In 1986, before the election, the Government put up interest rates and then put them down again—they had a little flutter. What did the Chancellor, then a Minister in another Department, say in 1986? He said then what he has said today:
  "The real economy is doing better than it has for a generation."
  Where have we heard that before? He said then:
  "The outlook for managers is better than most managers can remember in their lifetime."
  The Government are making the same claims that they made then: that they had solved the problem of inflation; that they had got interest rates and mortgage rates down; that a fundamental transformation of the economy had occurred; and that prospects were brighter than for a generation.
  I can only say that the Government are at it again: the same deceit for the second time. There is legislation in the Queen's Speech to deal with second-time offenders. For these second-time offenders, we would certainly support a minimum sentence: a minimum of life in opposition, and life should mean life. [Interruption.] The hon. Member for Dover (Mr. Shaw) will regret his facetious remarks when he faces the electorate and is defeated.
  From his Conservative conference performance, it seems that the Chancellor is familiar with at least one school of economics—the Dolly Parton school of economics. Let me remind him of another sizeable body of economic opinion, which we might call the Nigel Lawson school of economics. That dictates that the bloated claims, the inflated figures, the exaggerated and grandiose pretensions of today will, with the passage of time and when the Chancellor has gone from office, shrink and shrivel to become remarkably slender and insubstantial—a shadow of that former vaunted glory. Now the Chancellor should know the fate that lies in wait for the overblown figures of the Government.
  This time, the Government have tried it once too often, and the British people will never trust the Tories on the economy again. The end result after 17 years is that we have moved not just from 13th to 18th in the world economic league, but to the bottom half of the European division as well.
  In one of his pamphlets, the Chancellor said that the test of whether an economy was doing well should be national income per head. National income per head in the richest country of Europe is £20,000; in Britain, it is less then £12,000. In France, it is 8 per cent. more; in
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  Germany 11 per cent. more; in Denmark 16 per cent. more. The Chancellor cannot dispute those figures, because they come not from European sources, but from the Government's own published competitiveness review.
  When the Conservatives came to power in 1979, Britain was above the European average for prosperity. Today, like it or not, we are unfortunately below average. We had double the prosperity of the poorest country; now we are only one third better off. We were 30 per cent. behind the richest country; now we are 60 per cent. behind. While the Government say that we are the enterprise centre of Europe, in reality we are in the bottom half—the poorer half—of Europe: not first for prosperity in Europe, not in the first five, but ninth out of 15 countries.
  In their 17 years, the Government have made the problems we face worse by failing to prepare for the future. A report out today from the European Commission analyses regions in Europe, and contains figures that were in the Government's regional trends survey this summer. In the main industrial regions of the UK, income per head is half that in regions such as Hamburg. Even in the most prosperous part of the country, the south-east, we are 30 per cent. behind Hamburg. Is it the Government's aspiration to boast, when we are ninth out of 15 in the European league?
  The watchword for British policy in the 1950s and 1960s was "managed decline". Now, in the 1980s and 1990s, the Government preside over mismanaged decline. Remember the slogan of 1983: "Britain great again—don't let Labour ruin it". As we now all know, the slogan was coined just as Britain's prosperity fell below that of Hong Kong and Singapore.
  Remember the false promise of 1987: "The next move forward"—just as we were making the next move backward, falling behind Italy. Now the slogan is "The enterprise capital of Europe". If anything sums up the hollowness of that claim, it is the Government's statement in the Queen's Speech a few days ago: not that we are the enterprise centre of Europe, but that they aim for Britain to be the leading European industrial power "in the medium term".
  It is an aim. It is not a statement of achievement or a promise of what we will have at the next election or just after it and it is not something for the present. The Government are admitting that we are not the enterprise capital of Europe, and that the only chance we have of catching up with France and Germany is in the medium term. If the Government had made that claim 17 years ago, when they first took office, it would have been a perfectly understandable undertaking. However, after 17 years, nobody will believe their claim that they will sort things out in the medium term.
  It is precisely because the Government have failed to sort out the fundamental and underlying problems of the economy that they have broken every election promise they made on tax, spending and borrowing. They promised to cut public spending, but, under their rule, it averages 42.5 per cent. higher than in 1979. They promised to cut taxes, but there is a higher tax burden now than in 1979. They said that they would eliminate borrowing and achieve a balanced budget, but the public sector borrowing requirement is £27 billion. National debt has doubled since 1990 under the Prime Minister's rule.

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  What are the Government going to say in their next manifesto?
  Mr. Barry Legg: Will the right hon. Gentleman give way?
  Mr. Brown: I will not give way again.
  Let me tell the House what was said in a pamphlet written by Mrs. Tessa Keswick, the Chancellor's closest confidant and special adviser until a few months ago. It is entitled "A Conservative agenda, proposals for a fifth term." She says:
  "The Government has made determined efforts to reduce public spending but has not succeeded … The Government's spending is a similar proportion of national income as it was in 1979."
  That is true, but the Chancellor cannot agree. She goes on to say:
  "Unfortunately, the overall tax burden has failed to fall. The relentless upward rise of public spending in Britain has forced up both tax and borrowing."
  Is that not a damning indictment of everything the Government said in 1979 when they took office? Is that what they will be honest enough to put in their election manifesto when the time comes?
  In addition to the 22 tax rises that we have had—the largest peacetime rises in history—including the rise in national insurance, VAT on fuel and everything else, Mrs. Tessa Keswick proposes that the Government should go into the next election with a manifesto promise to remove the zero VAT rating on food, water, books and magazines and domestic passenger transport. She says that it should be put in the manifesto. I suppose that means that they should tell the truth rather than leave it on the hidden agenda.
  How can the Chancellor deny that he supports those proposals when he is on the record, year after year, supporting the extension of VAT to food, water, books and magazines and domestic passenger transport? In fact, he wants to extend VAT to children's clothes as well. [Interruption.] If Conservative Members do not think that that is true, I can tell them what the Chancellor said. On Radio Nottingham in 1993—during this Parliament—he said:
  "I was in the House of Commons when we introduced VAT. If we could start again, we could have VAT on everything, which is the way they live quite comfortably on the continent and nobody complains about it."
  Hon. Members should know that there are more quotations from the Chancellor on this from just about every year. VAT, particularly VAT on fuel, will be a central issue at the next election. We hate VAT on fuel and will try to reduce it. The Chancellor likes VAT on fuel, and he wants to extend it. He would like to double it to 17.5 per cent., the highest level possible. We will cut it to the lowest level possible. Is that not an example of how we will deal with the problems of an unfair Britain?
  Let us remember all the central economic pledges of 1979. The Government promised to reverse national decline, but Britain has fallen from 13th to 18th in the world prosperity league and to ninth out of 15 in Europe. They claimed that industry would benefit with higher investment, but we now have the lowest share of investment of any of the major industrialised countries.
  The Government promised to lead in education. The Chancellor should explain why we have the lowest participation rate in higher education in the European
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  Union. They promised to cut unemployment. They said that Labour was not working. They should explain why unemployment, which was 1 million in 1979, is still more than 2 million. They should explain why they failed to meet their central promises to cut taxes, spending and borrowing.
  The Government's central promise in 1979 was that, somehow, they would rebuild British society. We heard the words of St. Francis of Assisi on the steps of Downing street—that where there had been discord, there would be harmony. When the Prime Minister came to power in 1990, he stood on the steps of Downing street and spoke of a nation at ease with itself, and of a classless society with opportunity for all. Last week, however, he had to agree with a courageous widow, Mrs. Frances Lawrence, that we now have a fractured society.
  After 17 years, the Government must accept their responsibility. There is no opportunity for all when executives of utility companies are paid telephone number salaries without any criticism from the Government, yet the same utilities leave pensioners unable to pay their fuel bills in the winter months. There is no opportunity for all when the Government divert resources to the assisted places scheme for a tiny minority of the population, when they could use the same resources to extend opportunity to every schoolchild in the country. There is no opportunity for all when the Chancellor agrees with the Prime Minister to make it a priority to abolish inheritance tax and capital gains tax, with half the benefit going to the richest 5,000 people in Britain, when a lower starting rate of tax would be fairer, and would encourage employment and opportunity.
  How can the Conservatives ever be the party of opportunity for all when they are responsible for the privilege and the sleaze, and they have done nothing to deal with the problems of the social fund and homeless teenagers? They were responsible for the poll tax as well as for VAT on fuel.
  Mr. Alex Salmond: Will the right hon. Gentleman give way?
  Mr. Brown: No, I am not giving way.
  Today is the last day of the debate on the Queen's Speech. Two weeks ago, at the Conservative party conference, the Prime Minister told his party and the nation that henceforth the Conservative party would display unity and single-mindedness, and that divisions and U-turns were all in the past. Last Wednesday, his policy on law and order lasted from 11 am to 4 pm. Yesterday, the new education policy lasted from 8.15 am until 10.21 am—the swiftest U-turn was made possible by the invention of the mobile telephone. As he faces the House this afternoon, the Chancellor must be relieved that Madam Speaker has banned the use of mobile telephones in the Chamber, and he cannot receive a telephone call from the Prime Minister.
  The Queen's Speech shows that, whether it is education, law and order or the economy, none of the problems that the country faces can be solved by the Government. Problems will be camouflaged, disguised, made the subject of U-turns, and exploited for narrow party political ends. The Government may even try to throw money at them, but they will never solve the fundamental problems. No amount of propaganda, no

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  Saatchi and Saatchi billboard campaigns, no selective use of statistics and no U-turns could disguise the fact that the Government offer the country only drift, which is damaging our national interest. They no longer have any purpose or direction in solving the problems we face.
  Nothing now can be sorted out by these men and women. Their 18th Queen's Speech cannot undo the damage caused by the previous 17. They should do now what they should have done long ago: they should put their record of failure before the British people, and face a general election which they will lose.
  4.35 pm
  The Chancellor of the Exchequer (Mr. Kenneth Clarke): It is always painful for the Opposition to have to talk about the economy. They do it only rarely in the House, on the ritual two or three occasions a year. We have an economy day in the debate on the Loyal Address and a debate on the Budget. Months go by and there is then another debate in the summer. The Opposition always refuse the offer of the business managers to have a debate on the economy in the spring. They never select the economy for debate. That is because it is painful for the Opposition to talk about the real economy.
  When we have the rare pleasure of listening to the right hon. Member for Dunfermline, East (Mr. Brown) make a speech about the economy, the terrible thing is that it is always the same speech. Over and over again, we have a meaningless strategy for investment. We hear also a meaningless strategy for employment. We have league tables, about which he becomes extremely muddled. The right hon. Gentleman produces more and more league tables, which he claims support his arguments. His speech, his gloom and his claims of disaster are entirely unchanging, but the real world is changing and the British economy is doing better and improving. We are producing the strongest recovery in western Europe, and the right hon. Gentleman and his party do not know what to say about it.
  Let us consider the news that is the background to the right hon. Gentleman's speech. Over the past few weeks, we know that activity, with the third quarter figures, is moving up again. It is obvious that growth is set to rise faster than in Germany and France for the fourth successive year. Trading figures for August reflected the best trading performance for nine years. Exports were referred to by the right hon. Gentleman; they are up by nearly 20 per cent. over the past two years.
  Unemployment fell by a marked amount and it is down to its lowest level for five and a half years. Consumer confidence is at its highest levels for eight years. The Labour party is finding all this good news hard to take, but there is more of it. There is more of it to come. It will come month by month all the way through to May 1997 and beyond.
  Labour Members are doing themselves no credit by seeking to deny all the obvious good news. The right hon. Member for Derby, South (Mrs. Beckett), an Opposition Front-Bench spokesman, said last week, to my absolute amazement, that the forecast recovery would be modest, short-lived and possibly jobless. I cannot think of a better description than that of the right hon. Lady's career as leader of the Labour party. On the economy, her comment is wrong, wrong and wrong again.
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  The right hon. Member for Dunfermline, East tries to produce—against a background that every member of the public knows is one of a strong and growing economy—a picture of gloom. He concentrates, as on his lecture tours, on investment. Since 1979, overall investment has grown faster in this country than in any other major European Union country. Whole economy investment has grown at about double the average rate of the 1970s. Business investment has risen by a third. Investment in plant and machinery has increased by about 50 per cent. Productivity has improved, because the quality of investment is good.
  Business investment is 7½ per cent. higher than it was 12 months ago. The Confederation of British Industry survey of investment in manufacturing plant and machinery reveals that the expectations of business are plus 18 per cent. The chambers of commerce survey produces a figure of plus 22 per cent. That is for good reason. Selective league table figures are nonsensical.
  The climate for investment is excellent because profitability is high, company finances are strong, company tax and interest rates are low by all historical standards, the economy is growing and there is demand.
  The right hon. Member for Dunfermline, East does not believe his own gloomy picture. He produced an extraordinary picture of investment intentions and said that that was why he was so gloomy. Faced with the news of the day, however—the increase in interest rates—the right hon. Gentleman said that he agreed with me that an increase in interest rates was called for. What kind of a shadow Chancellor of the Exchequer do we have? He describes an economy that, on his own account, is in decline and in crisis. Is he tightening monetary policy in the face of the dreadful picture that he describes? How is he proposing to set interest rates if he ever becomes Chancellor of the Exchequer? Will he look up a league table and see what Luxembourg is doing? That is a preposterous position, and he poses a serious threat to the economic recovery that is under way.
  Mr. Malcolm Bruce rose—
  Mr. Clarke: The only people who could doubt the health, strength and breadth of the recovery are either mad, dead or sitting on the Opposition Benches. On that note, I give way to the hon. Member for Gordon (Mr. Bruce).
  Mr. Bruce: The Chancellor will remember that the Liberal Democrats warned him when he cut the rate on 6 June that he was wrong and that he would have to reverse the cut. Does he acknowledge that he was wrong, and does he accept that, if the Bank of England inflation report to be published next week says that it still believes that he will not hit his inflation target, he may have to increase interest rates again?
  Mr. Clarke: I shall come back to interest rates in a moment. I remain confident about our inflation forecast and I have set policy to achieve it. I have said and done that consistently, and I have delivered low inflation.
  We have been hearing about U-turns and changes of policy, but the hon. Member for Gordon has changed his position even today: early this morning on the "Today" programme, he gave a confident prediction to the world that I would not raise interest rates; that was his expert

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  forecast. He said that I ought to raise them, but by lunchtime he was on the air criticising me for doing so. Half an hour later, the right hon. Member for Dunfermline, East was on the air, giving the Labour party's first solid promise to reduce VAT on domestic fuel. That has lasted until half-past 4, and now he says only that he will "try to".
  The Financial Secretary to the Treasury (Mr. Michael Jack): It will be gone by 10 o'clock.
  Mr. Clarke: Indeed, it will be gone by 10 o'clock and the windfall tax will be back. Economic policy does not require that approach; it requires decisions. The Labour party does not take decisions; it would be incapable of taking decisions on any of the great economic issues of the day—inflation, tax, public borrowing or public spending.
  Mr. Salmond: On interest rate policy, in the past 15 months, since the current Secretary of State for Scotland took office, Scottish unemployment has had the worst trend in the United Kingdom. Does the Chancellor believe that the Scottish economy is overheating; if not, why is he tightening monetary policy in Scotland?
  Mr. Clarke: Figures about the trend in unemployment in Scotland over the past 15 months are so blatantly selective as to be utterly meaningless. I am glad to say that the Scottish economy has done extremely well in the course of the recovery. Scotland is one of the strongest regions in the United Kingdom in terms of expansion, and the steps that I have taken will ensure continuing growth for Scotland for many years to come, and that is the sole aim of policy.
  I want to move on to a little policy and to bring us back to the real world of a successful economy that will strengthen for many years to come. So far, we are into the fifth year of recovery. As I have said, I have taken and will continue to take every step that is necessary to avoid all those economic pitfalls that, as all hon. Members will remember only too well, have brought to an end every previous recovery for 30 years.
  What I said in 1986 was cited at me; it was right. In 1986, we were performing better than we had for a generation and better than the rest of western Europe; we were on course for a healthy recovery, but monetary policy went wrong and we went into a recession that was deeper than elsewhere. I take the decisions that I do to ensure that that does not happen again. We are back with all the benefits of our supply-side changes, and this time they will last—as long as we have a Conservative Government.
  I shall sustain the brightest economic prospects for a generation by keeping inflation down to levels that will allow us to compete and to grow for years to come. So far, I have delivered the best inflation record for nearly 50 years, but I am determined to go on seeking to establish new records.
  We are on course to deliver our inflation target of 2i per cent. or less next year, but I am not simply aiming to deliver the target next year: decisions that I take today are aimed at the position of a Conservative Government in 18 months' or two years' time. We have to go on delivering year after year. That is why I decided to put up interest rates by a quarter per cent. this morning.
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  Let us cut through the waffle that we hear from the right hon. Member for Dunfermline, East and decide why it was right to move rates now—because, as far as I can see, most people agree that it was. The economy is extremely healthy. It is growing as I predicted it would and that growth is strengthening as the year goes on. The immediate inflationary pressures remain subdued. Producer price inflation remains very low—producer input price inflation is still negative—and earnings growth remains modest. The economy is clearly set to grow by more than 3 per cent. next year, as I think everyone will agree, and it will go on growing rapidly.
  My decisions have to be based on judgments on how we keep growth going for 18 months or two years ahead, when we will still have a Conservative Government in power. At that time, I want growth to be motoring steadily, more new jobs to have been created and Britain still to be competing, and that is why I have decided to make a small increase in interest rates now—neither of my major critics has the nerve to offer a squeak of disagreement—to ensure that we continue to deliver healthy, sustainable growth and to meet our inflation target.
  I have done what I have always done when I have changed interest rates and made monetary decisions. I intend to look ahead and to stay ahead of the game. If I had waited for the recovery to show signs of inflationary pressures, it would have been too late to act. We would have missed the opportunity, and that is what we have done in the past. Because I move in advance, I am able to change interest rates by only a quarter of 1 per cent. and that is why we can be confident that rollercoaster interest rates are a relic of the past unless we return to a Government where the right hon. Member for Dunfermline, East takes the approach to monetary policy and the state of the economy that, to my total alarm, he described only a few moments ago.
  Mr. Denis MacShane: Is not one rollercoaster that has gone up and up the national debt, which has doubled since 1990, so much so that British citizens are paying £25 billion a year to the Chancellor for his economic incompetence? That is a tax of £1,000 on every taxpayer, which we are paying for his flippant, clownish mismanagement of the economy.
  Mr. Clarke: We have one of the lowest levels of debt in relation to gross domestic product in western Europe. I shall come later to the tight fiscal policy that I am running to ensure that we control that level of debt and get back towards a balanced budget. Moreover, the level of debt in relation to our gross domestic product now is far lower than it was at any time when we had a Labour Government in the 1970s. It is nonsense to produce those preposterous figures, as the hon. Gentleman did in an earlier debate a few days ago. Proper fiscal policy and control over debt, combined with monetary policy, are the key to the sustained recovery of our economy.
  Mr. Gordon Brown: First, the reduction of VAT on fuel will be in our manifesto. Will it be in the Chancellor's? Will he do that in the Budget? Secondly, can he explain why he predicted 3 per cent. growth this year? Now that growth is not even 2.5 per cent., but perhaps less, he has an inflationary problem which has

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  forced him to act. Will he accept that the slowness of the recovery of investment since the recession is a big problem that he must face and take action on?
  Mr. Clarke: The promise on VAT on fuel is back again by 4.47 pm. Until today, the right hon. Gentleman has said that he cannot say anything specific about tax, because he wants to look at the books. At last he has got around to reading the books. If he wants to tell us about tax, can he tell us who will pay the 50 per cent. higher rate and at what level they will start paying it? How will he introduce his 10p standard rate of income tax? Who will pay the windfall tax, be it £3 billion or £10 billion, and what effect will that have on electricity, gas, telephone and water bills? If he is in a mood between now and, say, 10 o'clock this evening to produce some policies on tax, let him start answering some serious questions. He is trying to change the subject from the real economy and inflation.
  Mr. Brown: No. Our manifesto will contain proposals for the windfall tax and proposals to cut VAT on fuel. Will he tell us whether he still agrees, as he said he did in 1993, with the extension of VAT to books and newspapers, travel and children's clothes—yes or no?
  Mr. Clarke: I produce Budgets so everybody can see my tax proposals, but we have only an inkling of the right hon. Gentleman's proposals. He might have made those points in his speech, but I am delighted that he is volunteering them now. Will he say to which industries the windfall tax will apply? Will it apply to gas, electricity and water in Scotland and England? Will it apply to telecommunications? How much does he intend to raise—£3 billion or £10 billion?
  Will the right hon. Gentleman answer the question of my hon. Friend the Member for Dover (Mr. Shaw), who referred to equivalence in terms of VAT? I have not heard about that figure before—a 20 per cent. rate of VAT—but it sounds about right. The right hon. Gentleman's patent refusal to answer that question shows that he also feels that the figure is about right. My hon. Friend was right. I compare the windfall tax with income tax, and it equates to about 2p on income tax.
  If the right hon. Gentleman does not answer questions on the windfall tax, how does he expect us to take him seriously? He proposes to raise all this revenue, and we hear about the spending promises of his colleagues, but he will not answer a solitary question about the windfall tax that drifts in and out of his speeches on the economy. He usually calls it a windfall levy to avoid being too direct.
  Mr. Brown: The Conservative party has now become the "defence of the utilities" party. People in the country will understand exactly what is happening. Does the right hon. and learned Gentleman agree with me that the privatised utilities have made excess profits, especially during the recession, and that the case for a windfall tax on the utilities is supported overwhelmingly throughout the country?
  Mr. Clarke: We defend the people who work in those utilities. We defend the small shareholders in successful
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  companies. Above all, we defend the customers of the companies that supply electricity, gas, water and telephone services. They will notice that the right hon. Gentleman never answers any questions about a tax that will increase costs and result in losses for many people. The cost will fall on all those people whom the Labour party used to call the stakeholders in the utility companies, and whom he now wants to tax.
  Mr. George Foulkes rose—
  Mr. Clarke: I shall not give way. I want to get back to the point from which the right hon. Member for Dunfermline, East is trying to distract us—what is happening out there in the real economy and how policy is being pursued. I have already dealt with the fact that, above all, we seek to ensure that we hit an inflation target. The right hon. Gentleman does not even have an inflation target. He has the nerve to attack me because he is not sure that I will hit the 2½ per cent. inflation target. This country has never combined such low inflation with a recovery.
  The right hon. Gentleman must watch me taking decisions with which he reluctantly agrees and which are keeping us on course. I have achieved such a low inflation climate that I am able to move interest rates by small amounts. I bet that no hon. Member can remember when we last saw an increase in interest rates of only a quarter of 1 per cent. Past Chancellors would have given their eye teeth to live in a world where they moved interest rates by only 25 basis points, or a quarter of 1 per cent. We can all remember rates going up by 1 per cent., half a per cent. or 2 per cent.
  My approach to monetary policy of keeping ahead of the game has enabled me to keep interest rate movements within a narrow range, and it has produced the healthiest and strongest economic recovery in western Europe.
  Mr. William Cash: Is my right hon. and learned Friend aware that, in the past couple of weeks, the European Commission has introduced radical proposals for a uniform rate of VAT throughout the European Community? Does he agree that we would veto such proposals, and that it is perfectly clear from what the right hon. Member for Dunfermline, East (Mr. Brown) has said that the Labour party would not?
  Mr. Clarke: I am not in favour of a uniform rate of VAT. I am sure that we would be against that, as I am sure would most other member states. No one will go to a uniform level of VAT throughout western Europe. I am in favour of minimum levels; otherwise, attempts are made on either side of a border to win markets in particular goods by attracting customers.
  I am in favour of some approximation of taxes that bear on sales, such as excise duty, because that would help many industries in this country. I firmly believe that taxation should rest in the hands of member states. It always will, and any British or German Minister, and most of the other Ministers in western Europe, would veto any proposals to the contrary.
  As I said, our recovery is stronger than that of any of our major western European competitors. It is becoming balanced and sustainable. The whole point of our policy is to keep it that way.

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  We are generating growth without inflation. We are generating growth without a balance of payments crisis—something which damaged this country so much in the past. We are generating growth while keeping relatively low interest rates. Too often in the past, we have allowed recoveries to run out of control. We will not allow that to happen again.
  One of the guidelines which I have laid down throughout my chancellorship is no return to boom and bust. The public can see that that is what we are delivering. They can also see that the Opposition can offer only the threat of boom and bust, in equal proportions, if they run the economy in the way indicated by the right hon. Member for Dunfermline, East.
  Mr. Barry Sheerman: If the Chancellor wants to know about the real economy, he should talk to some of our manufacturing sector which, since 1992, has suffered a massive recession. Now, after just one year of good times, manufacturing is falling back; it is heading back to another recession. Is that the sort of management of the economy of which the right hon. and learned Gentleman is so proud?
  Mr. Clarke: We have had five years of recovery. Manufacturing was strong at the beginning of the recovery. Of course, there has been a slowdown, just as there has been a slowdown in continental Europe. Now, manufacturing is picking up again as the stocks that built up earlier in the year are reduced. There is no point in the hon. Gentleman and me exchanging tales about different manufacturers, although I meet manufacturers who certainly do not share his views. If he looks at the surveys done by the Confederation of British Industry and talks to the Federation of Engineering Employers, he will find that the climate among manufacturers is one of considerable optimism for the foreseeable future. That optimism is based on what we have already achieved and what we will preserve.
  Not only will we not throw away the best prospects for economic growth that we have seen for a generation by not letting inflation destroy it, but we will not throw away those prospects by letting public borrowing get out of control. Public borrowing is coming down and I shall keep it coming down towards balance over the medium term. Again, that is a clear policy objective that is not matched by the right hon. Member for Dunfermline, East, who has no such objective in this key field of economic policy.
  The public sector borrowing requirement is now half what it was three years ago. Throughout the period of the last Labour Government, it averaged almost twice as much as it is now. The hon. Member for Rotherham (Mr. MacShane) intervened earlier about the national debt. National debt, as a share of national income, has been lower every single year under this Government than it was for any single year under the last Labour Government. At the beginning of the debate, the right hon. Member for Dunfermline, East spoke about national debt. If our average deficit since 1979 had been as bad as it was under the last Labour Government, our national debt would now be twice as high as it is—£650 billion, or more than 90 per cent. of gross domestic product. That is what has happened in many continental countries, which are now trying to recover from that.
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  It is obvious that, if there had been a Labour Government in the late 1970s and the 1980s, Britain would be in the same public debt mess that half of continental Europe is in now. Instead, our debt is among the very lowest in the European Union; under Labour, it was among the highest. The right hon. Member for Dunfermline, East spreads scare stories about public finances. He tries to prepare people, in the most alarmist way, for the Budget. He has spread a scare story about a shortfall in tax revenues, by looking back at tax forecasts and comparing them with the revenue variants. The fact is that, because of profitability and growth, tax revenues are rising faster than public spending. That is why public sector borrowing is falling. That is the key element to hold on to in looking at the state of the public finances.
  Put another way, revenues are rising slower than activity. That has surprised both me and my forecasters. However, although revenues are rising slower than activity, spending is rising even slower than revenues. The Government are committed to sound, sustainable public finances—and we are on course to deliver just that. We will keep Government borrowing coming down.
  I do not intend to give away the brightest economic prospects that we have faced for a generation by giving in to the siren calls for higher public spending—calls that will come at me and at the right hon. Member for Dunfermline, East from the Opposition Benches over the next few months.
  Mr. Thomas Graham: Is the Chancellor telling us that, after 17 years, my constituents are once again going to face potholes in the road, schools falling down and empty hospital beds that could be filled with patients who need health treatment? Is that the type of system and society that you are expecting my constituents to face when you claim that Britain is booming and doing well? Tell that to the unemployed people in my constituency. Tell that to the elderly people who are waiting for a hospital operation. Tell that to the young people in my area who cannot get full education because the Government have not provided the wherewithal. Chancellor, you should be ashamed.
  Mr. Clarke: I apologise—
  Madam Deputy Speaker (Dame Janet Fookes): Order. I remind the hon. Member for Renfrew, West and Inverclyde (Mr. Graham), not for the first time, that he should address me and not the Chancellor direct.
  Mr. Clarke: I apologise to the hon. Gentleman for the fact that my NHS figures may relate to the English NHS rather than the Scottish NHS, but in England he will find that, throughout the period of our government, we have increased the level of spending on the NHS by about 70 per cent., in real terms over and above inflation. We have committed ourselves to continuing to increase spending on the NHS in real terms, year in year out. As far as I am aware, that is something to which the Labour party will not commit itself, and, anyway, it is something that the Labour party failed to deliver when it was last in office, because it is the only party in office since the war that has ever cut spending in real terms on the NHS in any single year.

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  We have run an enterprise economy that first generated the wealth to provide the finance for key public services. That is what is put at risk by the prospect of a Labour Government and it is that which puts at risk the public services in Renfrew, West and Inverclyde.
  I will achieve the target that I have set to get public spending down below 40 per cent. of national income. We will get it down there and we will keep it there. Again, the right hon. Member for Dunfermline, East has no such target and he is surrounded by people, including the hon. Member for Renfrew, West and Inverclyde (Mr. Graham), who will make it utterly impossible for a Labour Government to control either public spending or public borrowing and, therefore, taxation, and, therefore, the continued growth of the public economy.
  Mr. Hugh Dykes: Before that exchange on the NHS, my right hon. and learned Friend referred to the extremely encouraging signs of a reduction in the deficit and the rise in tax revenues, but he said that the rise in those revenues was somewhat slower than expected. Is it not even more encouraging that, by the end of the fourth quarter this year, the rise in tax revenues will accelerate, so the deficit will come down even faster?
  Mr. Clarke: That should happen, but we have to set policy just to ensure that we deliver sound public finances, because that is necessary to ensure the continued growth of the economy and the healthy state of affairs I have described. Of course, if those revenues accelerate the recovery, we will be able to keep our commitments to the great public services—that we Conservatives ensure that the real economy creates the wealth first and then we devote it to those great public services.
  The revenues are rising, although our intention is to lower taxation because we believe that that, too, is essential to the growth of the real economy.
  Mr. Gordon Brown: Those are exactly the statements that the Chancellor and his colleagues made in the early 1980s. Can he now explain to us why it is that the share of national income for public spending is exactly what it was in 1979, and why people are paying a higher share of their income in tax than in 1979? Why, with all the right hon. and learned Gentleman's great statements, has the action been exactly the opposite of what he and his colleagues have said?
  Mr. Clarke: The proportion of GDP is almost exactly the same in both cases, as the right hon. Gentleman has said, but as my hon. Friend the Member for Dover has already said, when Labour left office there was a huge unsustainable level of Government borrowing on top of taxation, which we had to tackle. That is why taxation reached its peak in 1981, as we sorted out the mess that Labour had left. Now, the level of taxation and that of public spending is far below those of 1981. We have maintained those levels, whereas they have risen much higher in the rest of western Europe, both as a proportion of spending and as a proportion of taxation taken by the state.
  We have a Government who are plainly on course to reduce the burden of spending and the burden of taxation and we have clear, measurable commitments to do so. We
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  are faced with the threat of a return to a Labour Government of high spending, high taxation, high public borrowing and pressures upon them, of which we have just heard from the hon. Member for Renfrew, West and Inverclyde, which will ensure that they will take us right back to the kind of mess we had in the late 1970s.
  Mr. Brown: If all the problems were caused in the 1970s, why is it that, since 1992, we have had the biggest peacetime rises in taxation in our history?
  Mr. Clarke: What we have had since 1992 is the fastest growth in western Europe, a huge fall in unemployment and a recovery that is combined— [Interruption.] The right hon. Member for Dunfermline, East may wish to wave away the measures that created the current economic conditions. It is true that we have got where we are today with no thanks to the Labour party, which has fought every essential measure that we have taken to take this country from recession to recovery. As far as I can see, the Opposition would fight them still and would take us back to recession again.
  We are committed to our 20p standard rate of taxation on income tax and people believe us. We are committed to the abolition of the inheritance tax and capital gains tax. People trust us to deliver that because they see our record. The Labour party, certainly on the strength of the speech we have heard today, is not capable of being trusted with any of those measures.
  I keep challenging the Opposition, and I have had some success this afternoon, to come clean and to level with the people. Labour should have a serious debate with us about Labour's tax plans, Labour's inflation targets and Labour's views on interest rates other than just responding to the day's news. How about some openness? How about some honesty from the Labour party about precisely what its approach would be to the real economy if it got into government?
  Mr. Terry Lewis: Honesty?
  Mr. Clarke: Well, it is no good the Leader of the Opposition talking all his empty pious phrases at the Labour party conference. The one memorable thing I can recall from the right hon. Gentleman's conference speech was his amazing phrase about a covenant with the British people. That strikes me as a bit of a crib from Newt Gingrich for a change—the contract with America put into slightly more Scottish language. It is a rather odd time to switch from cribbing from Bill Clinton to cribbing from Newt Gingrich. Instead of tub-thumping sermons from us, one gets decisions today. Instead of messianic waffle, one gets the results that I have described, and that speak for themselves, and they are not challenged by what the right hon. Member for Sedgefield (Mr. Blair) said.
  The threat to our position lies with the right hon. Member for Dunfermline, East and his friends. Labour needs to tax more as night follows day. It needs to tax more to pay for the new spending to which it is now committed.
  Let me quote from the conference speech of the right hon. Gentleman. In the course of one speech—not one he has repeated here yet—he promised nursery education for all and universal education for all after the age of 16 and he said that he would make available accessible and

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  affordable child care. He said that the benefit tapers must be addressed. He said that the Labour party would implement the social chapter. He talked about creating regional development agencies and introducing, by law, a statutory minimum wage. They are only some of the things that he promised in his speech in front of his party's supporters.
  The right hon. Gentleman would not be tough on public spending—he is a soft touch on public spending faced by lobbies from the Labour party. What chance is there that he will control his colleagues when he cannot even resist the temptation to make expensive promises himself? He is like every other Labour politician: they go into politics to spend more, that is what they do, and it is in their blood.
  Today, we have had enough of the Opposition's changing policy on VAT and fuel. What about the 10p starting rate of income tax about which the right hon. Gentleman has not risen to answer any questions? At the time, it struck me as sheer desperation—an attempt to outbid a tax-cutting Government with a totally incredible and wildly expensive commitment of his own—£9 billion-worth of desperate electioneering promise. The right hon. Gentleman may shake his head. I accept that he was helpful a few moments ago, although I do not remember any particular answer to any question we asked about the windfall tax, much as my hon. Friend the Member for Dover and I tried.
  Let me try the right hon. Gentleman on the 10p rate. They are straightforward questions, and he might have thought about just some of them already. Will it apply to everyone paying tax at the 20p rate now? That is a quarter of all taxpayers. If not, will it apply to half those who are paying the 20p tax? [HON. MEMBERS: "Come on, answer."] Will it apply to the first £1,000 of income liable to tax? There is no point in the right hon. Gentleman making taxation pledges and then being utterly unable to answer questions about a proposition that would cost billions of pounds.
  There is only one 10p tax that we know for certain the people would get from Labour. It is the extra 10p on the top rate of tax that the right hon. Gentleman and his colleagues want and which the right hon. Member for Sedgefield will not allow them to talk about. Who will pay the 50p rate and at what level will it start? Who does Labour regard as the wealthy who will make this contribution to its spending plans? The right lion. Gentleman is supposed to be disagreeing with his colleagues on these matters, but I do not understand how they can have disagreements when they have no policies or when no details have been worked out. How have they moved to that elevated state if none of these points can be answered?
  We have had a go at the tax on utilities, the so-called windfall levy. [Interruption.] There is no point in laughing. What is difficult about a question as to whether it will apply to telecommunications or to Scottish water as well as to English water?
  Mr. Gordon Brown: Scottish water?
  Mr. Clarke: They are all privatised, but not Scottish water. Scottish electricity generation is privatised. The right hon. Gentleman has said that he will not impose the levy on non-privatised Scottish water. That is good. Let
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  us ask him a difficult one. What about British Telecom? The Opposition are in a shambles. They are committed to £3 billion or £10 billion of spending and there is to be a one-off windfall tax to pay for permanently recurring revenue commitments on policies to which the right hon. Gentleman has signed up. I shall not ask about the tartan tax, about which the Opposition are never able to answer questions and which apparently is to go to a referendum.
  What about the London tax? A new Greater London authority is to come back with tax-raising powers. Are the people of London to have a referendum on that? Will they be told how much it might cost? What about the telecommunications tax to pay for the network? The Labour Front-Bench spokesman was careful in describing that because he said that it was not a tax but would be a modest percentage paid by subscribers to the telephone network. If they pay that modest percentage without a choice at the demand of a Labour Government, it will be a tax, and it will be paid on top of whatever amount the windfall levy produces.
  Unlike Labour, we say what our policies are. We stick to them and deliver the results and the public can see that we do that. Our policies are designed to sustain the strongest and longest economic recovery in Europe and they are doing that without inflation or overheating. We shall ensure that the recovery is for keeps. We are in our fifth year of recovery and already unemployment is down by almost 1 million and exports have gone up by nearly 20 per cent. in two years. Inflation is at its lowest for a generation and living standards are rising fast.
  We have it in our hands to transform the future of our nation for the better and for good, to break out of the cycles of the past and to raise the nation's sights. We can overtake our competitors and make Britain truly the strongest economy in Europe. In the rest of Europe, people know only too well that that is where we are headed. The only thing that stands in the way of that bright prospect for our country is the possibility of a Labour Government. Their future would not work, but ours does. That is why next spring, after further months of healthy recovery, the British people will make their choice and back the party that is consistently delivering British economic success of a kind that has not been seen before.
  5.13 pm
  Mr. Gerald Kaufman: I hesitate to criticise the Chancellor, partly because he is one of the few recognisable paid-up grown-ups in a Government of adolescent amateurs and also because he made some nice remarks about my book, "How to be a Minister", which will be printed on the jacket of the new edition which is to be published in February. It therefore affects me a little to make some remarks that are not entirely complimentary about him, although he is welcome to quote what I say on the back of any book that he publishes.
  To a large extent the Chancellor has been speaking about the past, and when he has looked to the future it was only in the short term. He has made an assumption, which for the purposes of his barnstorming speech he had every right to make, about a Conservative victory at the election and he spoke about the first 18 months or two years. The Chancellor's policies and the Gracious Speech are so lacking in substance because they do not deal with the economic and industrial future of our country beyond the next two or three years—beyond the next Parliament and into the next century.

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  The Chancellor believes in Europe and believes, by his party's standards, that he is pursuing reasonably sensible economic policies, but he should have looked towards establishing an industrial substructure that will enable Britain, regardless of which party is in power, to sustain growth and prosperity without inflation. At the end of his speech, the Chancellor spoke of his wish to overtake our competitors, but his words rang particularly hollow. Neither in his speech nor in the Gracious Speech was there any planning for the future long-term security and prosperity of this country. That is a Government obligation, regardless of party.
  The Chancellor spoke about the real economy, and that is what we ought to be discussing because it is what matters to the people. It certainly matters to my constituents, huge numbers of whom live in deep poverty, and it ought to matter to the electorate as a whole regardless of their economic circumstances.
  I strongly support the Opposition amendment because it refers to investment that will increase high technology. It is on such technology that our future and that of any developed industrial country must depend. It is depressing that the Chancellor, who is among the least foolish members of his party and Government, is not looking at the way in which technology is advancing in other countries; in this country it is not advancing sufficiently or being planned for by either the right hon. and learned Gentleman or his colleagues. I am speaking about progress in advancing Britain's future through the information super-highway.
  Hundreds of thousands, perhaps millions of jobs are at stake because, as traditional heavy manufacturing declines, these other industries are taking over. There are billions of pounds' worth of exports on which interest rates and the exchange rate depend and on which the Chancellor's championship, which I share, of keeping the options on economic and monetary union and the single currency open also depend. Investment in high technology and plans to promote it are preferable to the Government's policy of turning the United Kingdom into the low-paid sweatshop of the European Union, for that is what we are becoming. I am sure that the right hon. and learned Gentleman does not like that, but he is doing nothing to stop it.
  Dr. Keith Hampson: Some simple statistics seem to be relevant. As the right hon. Gentleman knows, the Select Committee on Trade and Industry has been considering the cable industry. There has been unprecedented investment. Billions of pounds of investment are coming into Britain from American companies which see a future here. Also, we are spending a higher proportion of gross domestic product on primary, secondary and higher education than France, Germany or Japan. How does he reconcile that dramatic turnaround from what was happening under the Labour Government?
  Mr. Kaufman: One of the problems with these debates and, frankly, one of the reasons why I am fastidious not only about taking part in them, but even about attending them, is the stale sort of exchange about what was happening in the 1970s under the Labour Government. We are talking now about the 21st century and I do not
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  want to drag in even what the Labour Government did and what I did as a Minister to expand industry, to create British Telecom, which we prepared for, and to build British Aerospace, which was a dying airframe industry. That is not what I am after, but in response to part of the hon. Gentleman's intervention I will certainly talk about the cable industry because I agree about its primacy. What I am not happy about, however, as the hon. Gentleman will hear if he continues to listen to me, is the reliance on overseas investment to expand an indigenous British industry which should have indigenous British investment.
  Developments are taking place as technology advances. Unless there is a specific guiding of policy by Government—I am not talking about public ownership or even state interventionism of the George Brown kind 30 years ago—the developments to which the hon. Member for Leeds, North-West (Dr. Hampson) has referred will be in the hands of foreign, mainly north American, companies and a huge opportunity will be lost to Britain for ever.
  As we debate this year's Queen's Speech, the technology of television is advancing. There is now a seamless link between television, computers, newspapers and telephones. On Friday, BSkyB, an enormously profitable and successful company, will make a decision on the technology accompanying digital television that will decide the future of all digital broadcasting in Britain. Yet the Government are either taking no action or holding back progress which affects the nation's prosperity.
  In the past few days. Cable and Wireless Communications has been formed from the Cable and Wireless company and a collection of cable companies that are subsidiaries of United States conglomerates. We now have a £5 billion conglomerate and there is no guarantee that through that company, which will be a major competitor, British-produced material—what we are good at and what can create more jobs—will get a fair chance on Britain's cables.
  Despite the commitment in the Queen's Speech to what the Government call getting rid of unnecessary burdens on industry, it is clear that the wholly British telephone company BT will face even stronger unfair competition. Instead of doing something about that and removing the restraints, the Government are deliberately maintaining them so that BT is hampered from competing with vastly wealthy American and Canadian conglomerates.
  Cable and Wireless Communications, in which both United States and Canadian telephone companies will be represented, will be able to undercut BT on telephone provision while having a monopoly on cable broadcasting. The Government believe in markets and competition, but because of their foolish decision BT is excluded from broadcasting to two or more homes simultaneously. American telephone companies, however—the companies that have come into Cable and Wireless Communications, including Nynex and Bell Canada, are all American—are able in Britain both to offer telephone services and to broadcast images. BT, however, is hampered from competing in the telephone sector by the fact that it is forbidden by law to broadcast to two or more homes simultaneously.
  BT is discussing with BSkyB forming a partnership to supply programmes down BT telephone lines. If that comes about, as it may do—both sides would be sensible

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  to do so—it will be one of the most powerful partnerships in the world. The News Corporation Ltd. is an incredibly powerful organisation and BT is hugely powerful, wealthy and profitable. BSkyB would also supply programmes for the cable services of Cable and Wireless Communications, so BSkyB would be in a dominant position in supplying television programmes through its satellite programmes, through cable and through whatever arrangement it is able to make with BT.
  Where at that point would the British Broadcasting Corporation, Britain's most famous brand name, be internationally? Where would it be in its own country, let alone competing throughout the world, as it should be, with its talent, skills and huge library? It would be a postulant client to BSkyB and to Cable and Wireless Communications. It would be hoping to sell them its programmes, without any commitment on the part of the broadcasters based on the binding arrangements of a partnership.
  As for the digital technology on which the BBC places so much reliance, even if Friday's decision by BSkyB generously allows one box to have both terrestrial and satellite digital broadcasting, the BBC will be living on borrowed time because terrestrial digital television is obsolescent. It is dying away, just as terrestrial television is dying. The future is in cable, in optical fibres arid in interactive and on-demand services, in addition to services that are supplied free to air. The whole ethos of public service broadcasting is at stake, together with the future of the BBC as a production organisation. Hundreds of thousands of jobs are involved, as are the many more jobs that could be created as the channels multiply next year.
  It is ludicrous that we should be facing this huge challenge from the American and Canadian companies in Cable and Wireless Communications and from BSkyB with the BBC looking totally to the past and appearing to believe that it can create a fruitful future for British communications on the basis of an impertinent and unrealistic demand for an above-inflation increase in the licence fee, which in any event would not supply much money. In addition to the BBC's ridiculous demand for an increase in the licence fee, the best that it can do is to find candle ends from internal savings and hope to receive money from the private finance initiative to fund what I repeat is in any case an obsolescent technology.
  The BBC has formed links with Flextech in the UK and with Discovery in the United States, which are American subsidiaries. I acknowledge that that is better than nothing, but those deals are paltry compared with the formidable competition that the BBC faces from BSkyB and cable television. The BBC announced yesterday that its planned Flextech channels will create, as a rival to MTV, a television version of Radio 1, but that can scarcely be regarded as the cutting edge of public service broadcasting.
  The BBC is an enormous asset to this country, not simply in prestige but in generating employment. Unless it can form a partnership with a major broadcaster, I believe that its days are numbered. The BBC will dwindle into a British version of the American Public Broadcasting Service, and its precious heritage will waste away with a diminishing audience—which will continue to diminish exponentially. A hugely profitable, productive and industrial future—we are talking perhaps about the most important industry that we possess—will be frittered away.
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  I am glad to say that the Labour party has a constructive policy for the Internet. Last year, my right hon. Friend the Member for Sedgefield (Mr. Blair) announced one instalment of the policy at the Labour party conference, and he announced another instalment at our party conference at the beginning of this month. But we cannot afford to wait even the six months before a general election. I have spoken to the Prime Minister's office and to successive Secretaries of State for National Heritage about the fact that this is a national issue and not a party issue, and that we should be doing something about it now. We cannot afford to wait six months until, as I am perfectly confident, a Labour Government are elected.
  The BBC must be told by the Government to enter into talks with BT, with Cable and Wireless Communications or with both those giants to discover whether, even at this late stage, it can be included in a partnership.
  I shall state very clearly that I believe that the current administration of the BBC—Bland and Birt, who have shown themselves to be far from adequately fitted for their vital responsibilities—should be cleared out and replaced by business-minded people who will do the job that must be done and which is currently not being done. When Sir Christopher Bland was appointed chairman of the BBC I said to myself, "That is ideal—a Tory with a background in commercial television; he is the man to take the BBC into the future." In fact, he has gone native so fast that he makes his predecessor seem like a dynamic socialist.
  The restrictions on BT must be lifted, and they must be lifted soon. As the Chancellor of the Exchequer knows, it has been some years since I graced my party's Front Bench—for what good that ever did. As Chairman of the National Heritage Select Committee, however, I urge Opposition Front Benchers to facilitate the passage, without opposition, of a Bill to remove the restrictions on BT, should the Government introduce such a Bill during this Session. I believe that most hon. Members would agree with that support. We have a major and crucial opportunity to expand our industry and our economy by assisting and stimulating the expansion of what could be our most important industrial sector as the next century begins and progresses.
  Directly and indirectly, satellite television has already created 54,000 jobs, and cable television has created a further 33,000—and the potential for job and wealth creation has scarcely been tapped. Those are the jobs and the technology of the future, and we have the sophisticated workpeople to do those jobs. That is why I am happy that my colleagues on the Opposition Front Bench, whom I praise, have tabled an amendment to the Queen's Speech giving due emphasis to modern technology and I shall have great satisfaction in voting for it.
  Mr. Harry Barnes: On a point of order, Madam Deputy Speaker. I have just received an answer to a question about lottery funding that I tabled to the Secretary of State for National Heritage. I asked whether details could be provided by constituency, in rank order. The information has been provided on computer disk in the Library. In the answer, however, the Department states that the figures for the most recent quarter cannot be provided in rank order—although the figures have been provided to the hon. Members concerned—because of the disproportionate cost of doing

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  so. I believe that it would be a simple exercise to provide the information. Perhaps I could also suggest to the Secretary of State that her Department should apply for a lottery grant so that my question can be answered.
  Madam Deputy Speaker: That is not a matter for the Chair. However, the hon. Gentleman will no doubt find other ways in which to express his disappointment.
  5.35 pm
  Sir Edward Heath: I hope that my right hon. and learned Friend the Chancellor of the Exchequer will not be embarrassed if, in what I hope will be a brief speech, I commend him on his action today on interest rates. I believe that he was absolutely right to do so, although. to some extent, I regret the situation that made such action necessary. I am sure that he realises that we cannot expect to be popular with our fellow citizens by increasing interest rates. From my experience, I know that the great majority of people were hoping that we had reached a point at which there would be no more increases.
  I also fear that the increase will create or increase a feeling of insecurity that affects many people, and that they will feel that this is only the first stage. It is commendable that the Chancellor will not hesitate to increase rates further if necessary, if this increase does not solve the situation.
  I also regret the fact that the increase is necessary because of high unemployment. I recognise, of course, how much has been accomplished to reduce unemployment, but it is still very high. For many years, some hon. Members, and some Conservative Members, have denied any connection between unemployment and the various social ills from which we suffer. Perhaps those of us with an earlier experience have never accepted that view at all. In a variety of spheres—most recently in our schools, but also in the abuse of drugs and violence on the streets—the malevolent influence of unemployment is increasingly becoming apparent. Therefore, from the social point of view, I think that dealing with unemployment should have the highest priority.
  I listened with the greatest interest to what the right hon. Member for Manchester, Gorton (Mr. Kaufman) said about one industry, and I share his views. He has brought home to us the problems that the Government face in trying to facilitate the creation of new industry and in helping it to develop at a satisfactory speed. The problem is particularly acute if the Government have been brought up on the dogma that they must not do anything to influence our industrial life. That outlook has changed gradually over the past three to four years, but the problem remains the same.
  As the right hon. Member for Gorton emphasised, the situation can be helped enormously by our official organisations—such as the BBC—which I hope will be the case. The problems facing the Chancellor and the Government are concerned not only with technology and with people making the necessary decisions, however, but with the lack of knowledge of so many UK executives of what is going on in the rest of the world. The Government try to help. The Deputy Prime Minister visits various parts of the world, including China, but we are just not coping with the rapid development of so much of the rest of the world.
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  I take the example of China, which has a rapid rate of expansion of between 8.5 per cent. and 12.5 per cent. We are not establishing ourselves in those markets as we should be. Later, we shall have an opportunity to discuss the Hong Kong situation, which I see is on the Government's agenda. When the Governor of Hong Kong said that when Hong Kong returns to China on 1 July next year, we shall still have responsibility for looking after Hong Kong, he could not have chosen a better way of upsetting Beijing and affecting the Chinese Government's future attitude towards Hong Kong and towards us. That undoubtedly affects our trading arrangements with Hong Kong. As I know from my discussions with officials in Beijing and elsewhere in China, such comments affect where they place their orders.
  As I have said before in the House, I established full relations with Beijing and one of the three main purposes was to get trade. We are at the bottom of the trade list compared with all those who followed us, such as Japan, America, Germany and France. Whereas the Japanese trade is more than £30 billion, we are trying hard to reach £3 billion. That is the contrast between those who find out what is required and produce the answer, and those who do not. It is all very well to say that we should encourage trade, but it is also a question of spreading knowledge and showing our industries how they can achieve such results. I am, therefore, grateful to the right hon. Member for Gorton for his speech.
  I know that we are getting near the Budget, so I do not expect answers from my right hon. and learned Friend the Chancellor. However, I point out that he has withstood pressures in making his decision about the bank rate and I hope that he will be absolutely firm in withstanding pressures to reduce direct taxation. From the political point of view, that is not a winner for us, for the simple reason that every Labour and Liberal Democrat candidate, and many others, will say in the constituencies, "You said that last time and what happened?" We do not want to get involved in that argument: I hope that I am being realistic.
  There has always been a section of the monetarist wing of the Conservative party which believes that if possible, one should abolish direct taxation altogether and that the whole thing should be done through indirect taxation, whereby everyone, whether wealthy or poor, has to pay taxes. That is not acceptable for me or, I believe, for the party or the country.
  The Chancellor and his predecessors have got direct taxation down to a reasonably low level. If we are to persuade people to support our policies, we must show them that we care about the things they care about. It is, of course, right for us to point out, as the Chancellor has done, how much expenditure on the health service has increased, but that does not alter the fact that people want a better health service. The cost of medicine in this country and elsewhere is constantly increasing because of the expertise of those involved in medicine. The more that they can find proper treatment for our citizens, the more the cost will be. What our people want to know is whether we shall give them everything possible in modern treatment. When we can say that that is the case, we shall get support.
  The same point applies to education. I must be perfectly honest and say that I am not sure what the position on education is at the moment, anywhere. Parents are equally confused, especially after yesterday's debate. I am not one who puts all my trust in parents' decisions. Some parents

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  know a great deal about education and what is possible, and they can make a choice for their children, but the majority of parents rely on advice from head teachers and other teachers. That is where we need to improve the situation. Teachers have been knocked about for the past 20 years. That has undermined their confidence and schools are suffering as a result. We must restore confidence to them and let them advise parents on what is best.
  I look back to the arrangements made during the second world war by Rab Butler and Chuter Ede, who ran the Ministry of Education together. They had an approach that seemed to be the right one at the time and for some time afterwards. There were three different groups: the grammar schools, which were academic, the technical schools, which prepared students for industry and the rest, and the general, co-educational schools, which looked after other children.
  There was meant to be no distinction in standing between those three groups. They were meant to provide what was necessary in education for people with particular requirements. Where it went wrong was that under the Government who were in power until 1951, money was not available—or not provided—for the technical schools to develop. The result was that social divisions were created. There were great jealousies about people going to grammar schools and about others not being able to go to technical schools and having to go to the general schools. That system collapsed.
  Ever since, the question has been what should be put in place of that system. I do not think that we have been successful in ensuring that our children get the best form of education, which will also produce those who can contribute most to our economy and to our country. That problem remains with us to be worked out. I do not believe that it can be worked out hastily—that also worries me. Plans are produced on the spur of the moment without proper consideration of the effects. Education, like health, is an area in which our fellow citizens want the Government to provide properly. They also want the Government to deal with the immense problem of unemployment.
  The Chancellor has had to leave before I could commend him on one other matter, which is the single currency. [Laughter.] He has stood absolutely firm on that, and quite rightly so.
  Mr. Lewis: He anticipated the right hon. Gentleman's comments.
  Sir Edward Heath: He saw into my mind, which is easy for everyone to do.
  The Chancellor is absolutely right to stand firm on the single currency. However, my difference with him—it is not really with him, but with the governmental line—is that nothing is being done to explain to the people what the pros and cons of the single currency are. There is complete confusion between a single currency and a common currency. Citizens write to me asking, "What is this all about a common currency and a single currency?" Nothing is being done to carry on proper public discussion about the issue.
  All those who oppose the single currency get free coverage in a hostile press, which is largely owned by foreigners. On the other side, nothing is done. I learned
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  only recently that we contributed to the work done by the Commission, which Ministers approved, explaining the pros and cons of the single currency. Like every other country, we have contributed to that work. Every other country has used the results, but our Government are not allowing them to be given to people in this country. That is disgraceful. We have contributed, but we are not allowing the discussion that should be carried on, and the Government must look at that point. [Interruption.] The chairman of the Conservative Back-Bench finance committee, my hon. Friend the Member for Bridlington (Mr. Townend), could arrange such a discussion if he wanted to instead of sitting there, grinning and laughing the whole time.
  Mr. Dykes: Does my right hon. Friend know that in Germany, every passenger on the German railway system receives a bulky pamphlet explaining the pros and cons of the single currency system? Why should we not have something like that here?
  Sir Edward Heath: My hon. Friend will have to ask the Prime Minister and the Government; I am no longer responsible. Such discussion should take place. There is so much grumbling about the money that is passed to the European Union, yet we then refuse to accept what is being offered for discussion among people in a free democracy. As I have said, that is deplorable.
  There is another point that I want to make about the European Union which is to the Chancellor's good. I had produced for me last night the latest available figures showing the extent to which we are benefiting economically from the European Union. In 1973, when I took Britain into the European Community, it took only 36 per cent. of our exports. In 1995, the last full year, the EU took 58.2 per cent. of our exports. That is the jump which resulted from our joining the European Community. In 1995, the EU accounted for 56 per cent. of UK imports of goods and 48.2 per cent. of invisibles. In 1995, we had a deficit on trade in goods of £11.6 billion. That comprised a deficit of £4.2 billion with the EU and of £7.4 billion with the rest of the world. All that points to the extent to which we benefit economically from the EU.
  In 1994, the latest year for which figures are available, 33 per cent. of UK companies' direct investment overseas was in the European Union and 54 per cent. of overseas investment in UK companies was from the 15 countries of the EU. That shows the amount of inward investment that we received. The worrying thing about that is that it means that we no longer continue to run many of our companies, which instead are controlled by overseas countries, particularly the United States.
  I have some other interesting facts. In 1994, 80 million Germans bought £17.7 billion-worth of British goods, but 240 million Americans bought only £16.9 billion-worth. The average German spent three times as much as the average American. Holland, with only 15 million people, took £9.7 billion-worth of exports from us—more than the Asian countries, China, Indonesia and the Philippines together. We sold more to Sweden than to the whole of Latin America from Mexico to Cape Horn. The Irish Republic alone, or Belgium and Luxembourg together, were better customers than Canada, Australia, New Zealand and South Africa put together.

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  That flies in the face of everything that we hear from the Euro-sceptics—one of whom, the right hon. Member for Bethnal Green and Stepney (Mr. Shore), I see sitting in the corner on the Opposition Benches—and shows exactly how much we are involved with the European Union and how foolish we would be to endanger that relationship in any way.
  One other subject on which I want to touch concerns the question that has now become prominent in party politics on both sides of the House—morality. That is now being combined with religious beliefs. That is mistaken. It has not been in the British tradition—although it has been in some European countries—to have parties either named or dominated by a particular religious belief. There is a saying that a Member owes his constituents not only his energy but his judgment. It is up to us to give our judgment about those matters.
  To say that one party is the Christian party is, first, not true, but, secondly, Britain now has a mixed population in which there are Hindus, Buddhists and Muslims, and I suspect that some of my constituents are atheists. That may also be true elsewhere. Therefore, we should abandon the idea of proclaiming that our policies are the policies because of a particular religious belief. That is really the responsibility of archbishops and cardinals. They not only can but should do it and it is up to the individual citizen, not us, to decide what he believes and which belief he wants to join.
  I hope that we may continue our political life on the road that we have always followed and which has always been demonstrated in the House. There are those who want to come to Prayers at the beginning of the day and those who do not. That is a matter for them. It would be a great mistake if we put forward our policies on the basis of a particular faith and its morality.
  I commend the Chancellor on what he has done and I hope that he will be successful, but, in addition, I want to point out the need for a much wider approach in the rapid development of modern technology. I say rapid because there are so many examples of where we have missed the bus. We now have the channel tunnel. It always receives unnecessarily bad reports in the press. However, we do not have a fast link. We have been discussing that for eight years.
  When I go through the tunnel, there is a fast link on the other side down to Nice or wherever I want to go. I went on it up to Lille a little while ago and one can travel on it to Copenhagen. But in this country there is nothing. One comes through the tunnel and slows down. Having travelled at 175 mph across the French plains with their beautiful agricultural land, one travels on this side at 35 to 45 mph. Moreover, the horrifying stink and rubbish on this side is deplorable and disgusting. Who is responsible for clearing that away under the new system I do not know, but one does not want to see it oneself, let alone allow one's visitors to see it. That is indicative of the times.
  We had the same problem when we decided to decimalise our currency. We started discussing that in 1846 and it was carried through by a Labour Government in 1966. By that time, the rest of the world had already done it. When we did do it, we did it the wrong way, because we decimalised the pound with the result that
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  inflation was given a tremendous push. Had we decimalised on 10 shillings, like the Australians and New Zealanders, we would have missed that enormous push.
  We refused to go into Europe in 1950, when the European Coal and Steel Community was founded. It took us 22 years to get in and by that time so much had already been decided. Again, we missed the boat. We cannot afford to go on like that in modern history. Above all, we cannot afford it on the single currency. The decision will have to be taken, but we must be ready to take it. There is no point in my hon. Friend the Member for Bridlington shaking his head in disagreement. I am sorry that the chairman of one of our major committees should believe that one should be unprepared for one of the most important decisions that we have to make. We must be prepared for it. That involves not only the Bank of England, but the Government. If people in the Treasury are still living in 1945, they must be removed and proper Treasury officials appointed. We do not want to be living in that age. It is time that we took some action and dealt with the matter.
  Those are the matters that are vital not only for the future of the Government, but for the future of our country.
  5.58 pm
  Mr. Malcolm Bruce: It is always a pleasure to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who has an individual style. Years of experience mean that he is no longer beholden to the Whips or the Government, and what he has to say is all the more refreshing for that. That contrasts sharply with the exchange at the beginning of the debate, when extravagant claims were made about the total wisdom on one side and the total lack of it on the other, when, as always, the truth is always somewhere in between.
  As we are debating the economy, it is relevant just to pick out the strands that the Government have highlighted in the Queen's Speech. They are right about the issues, and there is some agreement about the policies, but not necessarily about their delivery. The speech says that firm financial policies are essential to secure sustained economic growth, and continues:
  "Fiscal policy will continue to be set to bring the public sector borrowing requirement back towards balance over the medium term."
  That is a greatly watered-down version of what used to be the Government's objective, which was to achieve a balance, full stop.
  The result is that there can and should be agreement about the need for financial discipline and the need for strict inflation policies—and the need to deliver on those policies. I welcome the Chancellor's announcement of today, not because people like to pay for higher interest rates but because of the recognition that it was necessary to take action.
  Just to put the record straight: when the Chancellor announced a reduction of a quarter per cent. on 6 June, we said at the time that we thought the move was misjudged and that it failed correctly to read the pressures building up in the economy. We said that it would have to be reversed. Now the Chancellor has been forced to acknowledge that he was wrong, and he has had to adjust the rate accordingly. The signs are that next week's inflation report from the Bank of England will argue that

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  the Government are still not on course to hit their inflation targets, so the Chancellor may have to increase rates yet again.
  All this reinforces the case for removing day-to-day interest rate decisions from politicians, who are under pressure before elections to do things for electoral advantage in the short term—things that may damage the performance of the economy in the medium to long term. That is the classic way of reaching wrong decisions.
  The right hon. Member for Dunfermline, East (Mr. Brown) quoted interest rates from a number of European countries, saying that they were significantly lower than the United Kingdom's. One factor that he did not point out was that all those countries have an independent central bank, which is a significant reason for interest rates being lower there than here. It remains, however, the united view of both main parties that they have no intention of setting up an independent central bank, even though the Maastricht treaty requires one whether or not we join European monetary union. [Interruption.]
  I hear mutterings from below the Gangway to the effect that the Governor and the Bank of England have been wrong in the past. That misses the point. There will always be differences of opinion on short-term judgments; we cannot say now who is right and who is wrong about what will happen in two years' time. The fact remains that, although bankers can make errors of judgment on the basis of their economic analyses, they remain economic analyses. They are not politically based.
  This independence would remove the premium that we all have to pay for political interventions. In other developed countries operating with independent central banks, long-term interest rates are persistently and consistently lower than ours. The costs to our public sector borrowing and to private investors who must pay these premium rates in the United Kingdom are high.
  I agree with the right hon. Member for Old Bexley and Sidcup that one of the chief arguments in favour of monetary union, assuming that the criteria are met both by the core member countries and by the United Kingdom, is that such a union would exert further downward pressure on interest rates, thereby benefiting investment here and reducing the costs of borrowing. That would also assist in the management of the deficit, which this Government have failed to control.
  Dr. Hampson: This is all very nice post facto academic analysis, but I remember the hon. Gentleman a year ago saying, as did Labour spokesmen, that the economy was stagnating and needed an injection of growth. He called for a reduction in interest rates then.
  Every commentator has applauded the fact that the Chancellor overruled the judgment of the Governor of the Bank of England. Is the hon. Gentleman saying that he would have kept interest rates higher over the past two years?
  Mr. Bruce: No, but I made it clear in June that I would not have cut interest rates—and said so at the time. We also said that the Chancellor would be forced to reverse his decision, which he has. My point remains that allowing decisions to be taken in this political way requires a premium on long-term interest rates which we all have to pay.
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  Extraordinarily enough, the Conservative and Labour parties say that, if Britain opts into monetary union, they are willing to hand over the management of monetary policy to a European central bank, but they are not prepared to allow a British central bank the same responsibility inside the UK economy. That is clearly inconsistent.
  If we are to manage our economy properly in the long term, we need to remove short-term political opportunist decisions from the equation. There have been many examples in recent years of Governments taking short-term decisions to foster short-term booms for electoral advantage. That has cost the country dear in the long term.
  The right hon. Member for Dunfermline, East rightly pointed out the problems of under-investment, which have created the pressures to which the Chancellor is now facing up. We have under-investment partly because of a lack of confidence that inflation and interest rates will stay down and that the exchange rate will remain stable.
  The reason why Germany, regardless of its difficulties, has sustained its economic performance year after year for 40 years is that its people knew that inflation and interest rates would stay low, and that the mark would enjoy a stable exchange rate. That enabled the Germans to plan, and it gave them the confidence to invest at lower rates of return. with the result that many more investment opportunities were taken up in Germany than in the United Kingdom, where the risks were simply too high.
  Ms Diane Abbott: Is the hon. Gentleman really saying that the only factor in Germany's remarkable economic performance in recent decades has been low interest rates? What about German training and skills, not to mention other factors?
  Mr. Bruce: Of course other elements are involved. It is disingenuous, merely because I have highlighted one strength of the German economy, to suggest that I do not recognise its other strengths, too. I intend to deal with them later in my speech.
  The Prime Minister claims that inflation is in the box. Current low investment, however, suggests that this country's investors do not yet believe that. We shall need to sustain low inflation for rather longer before they do. In fact, inflation in the UK is still the fourth highest in the EU. We welcome the fall in unemployment, but it is still considerably higher than it was when the Conservatives came to power—and it has not improved much under this Prime Minister.
  As for growth or stagnation, the United Kingdom's economy is growing at 2.6 per cent. a year—hardly a boom. It is a worthwhile recovery; we want to ensure that it continues, and we expect it to improve slightly. The worry remains that, with a growth rate of 2.6 per cent., we are already hitting inflationary pressures. That is surely a sign of under-capacity and under-investment, both of which the Government have failed to deal with.
  When it comes to taxes, the Government are not on strong ground. They cannot even be honest. The right hon. Member for Old Bexley and Sidcup is not alone in his party or among supporters of business and industry on the issue of taxes. Organisations not previously thought of as sceptical about Government tax policy are now saying

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  strongly that the Government should not go for a tax-cutting Budget. No less a body than the Institute of Directors has said:
  "We do not now believe there is scope for further cuts in income tax … in the next Budget."
  That is astonishing coming from that organisation.
  Perhaps less astonishing, but still interesting, is the Confederation of British Industry, which said:
  "The CBI believes work force skills are crucial to business success, but … our research identifies significant current deficiencies … we have called for investment in transport to increase … These spending priorities are more important to business than tax cuts."
  The Institute for Fiscal Studies said:
  "To cut taxes now in the expectation of hitting these medium term spending plans would be dangerous."
  The Association of British Chambers of Commerce said:
  "The Government should not consider tax cuts while the PSBR remains so high … The British Chambers of Commerce urge the Chancellor to make education a spending priority."
  Perhaps most interesting of all are the comments of the right hon. Member for Witney (Mr. Hurd) at a meeting at St. Stephen's club on 25 September. He said:
  "It would be great foolishness for Conservatives … to promise that we could cut taxes without cutting public spending. It would be more honest … to promise the electorate both extra tax cuts and big reductions in public services which would be required to fund them … I do not believe that elections … can be won by reducing income tax against a background of sacked teachers or closed hospital wards".
  That is the climate in which this debate is being conducted.
  I suppose I should hope that the Government and the Cabinet are not listening to the debate, and that they will go ahead regardless with a tax-cutting Budget. I must tell them that, if they do, they will be wrong. The British people will not believe that they can sustain those tax cuts while claiming that the health service will be safe in their hands. The British public will not believe that they have a genuine commitment to the problems of the poor and to investment in education. It does not add up, and it is not honest or credible. The Chancellor has made it clear that he does not believe that the Government are trusted on taxation, and he is soft-pedalling on the issue of tax cuts.
  I will take up the point raised by the hon. Member for Hackney, North and Stoke Newington (Ms Abbott). We need to ensure that we continue to invest in education and training, so that we have people with the proper basic skills to be able to adapt to a rapidly changing world. We cannot deliver a record comparable to most of our competitors, and we will not be able to do so if we go on cutting investment in local authorities so that they cannot maintain teachers in the classroom or the fabric of our schools, let alone develop nursery education and the use of new technology within schools, which requires a great deal more equipment. Those things require investment at all levels, and that investment must be paid for, as a matter of public policy and public responsibility.
  Mr. MacShane: Is the hon. Gentleman aware that sometimes one can get money for nothing? The European Commission is offering £300 million for job creation in Yorkshire under the Resider II steel regeneration
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  programme. It has been blocked by the Minister for Small Business, Industry and Energy, who is insisting that no elected councillor should sit on the programme allocation committee. Such is the anti-European mindset of our Ministers that they are blocking that important Euro-cash for Yorkshire because of an absurd belief that only Whitehall should control the money, and that elected councillors should have no part in it. It is a scandal.
  Mr. Bruce: I am sorry that I gave way. The hon. Gentleman has made his constituency point, and I will leave it at that.
  I believe that the British public are looking for a more intelligent and honest debate about real resources. The Chancellor has talked about driving the public share of spending down below 40 per cent.—he maintains that in the Queen's Speech. That should happen as a matter of routine over the cycle, so it does not require any additional action and is no big deal. When the Government talk about driving it down further, they mean that they will have to privatise health care, unemployment and social security, and require people to pay more for health, education and services out of their private income. Most people would like to have an intelligent debate about whether that is better done through the existing institutions.
  I see heads shaking on the Conservative Benches. There is room for debate, but there is no room for dishonesty which suggests that one can cut taxes and not cut public spending, and that the consequences would not damage existing services and prevent investment in them. It is our contention that the Government should recognise that they need to press down against inflation to try to achieve stability, and ensure that the growth rates are sustainable and that we have the necessary education and skills to provide a long-term basis for the future.
  The Government must resist short-term pressures to come up with electoral gimmicks that will not work and which, worse than that, will damage the recovery we have and the possibility of ensuring a genuinely competitive economy in the long term. We need to ensure that people will invest because they believe that inflation and interest rates will stay down. We must be part of a strong monetary union, exchange rate union and European Union in which we are fully participating members, shaping the destiny rather than bobbing around in the wake of decisions made by other people.
  6.14 pm
  Sir Terence Higgins: After participating in debates on the Queen's Speech for 32 years, it feels strange to realise that one is standing up, probably, for the last time.
  When I first arrived in the House, I was taught that it was polite to refer to the arguments of other hon. Members, since we are supposed to be debating. I should like to pick up on the point about cable television which was mentioned in the fascinating speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman).
  As cable television spreads, more and more people will have a continuous feed of events in the Chamber. That is rather worrying. We now have television sets in our rooms with that facility, and more and more hon. Members are staying in their room to get on with their constituency duties and so on, turning up the volume if a speech is

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  interesting and turning it down if it is not. Consequently, hon. Members are not appearing in the Chamber. In future, that will give a create a bad impression for the public at large. I hope that, as technology improves, it will be possible to have split screen coverage, showing, for example, the work in Select Committees at the same time.
  I want to address my initial remarks to the Leader of the House and the shadow Leader of the House, who, by tradition, reply to the debate on the final day of the Queen's Speech. I am glad to see the Leader of the House here, and I hope that what I have to say will be conveyed to his shadow.
  I believe that we are suffering serious problems as a result of the decision by the former Chancellor—it was announced with virtually no consultation and was contrary to what had been recommended—to introduce a unified Budget in the autumn. I believe that that is unsatisfactory. The Opposition tend to choose the last day of the Queen's Speech debate for discussion of the economy, when we do not have the Chancellor's economic forecast, we have none of the up-to-date information, and the Budget is only a short time ahead.
  That is unsatisfactory, and, as the Chancellor pointed out in his opening remarks, it means that we have a long gap in the rest of the year when nothing is happening. One could say that the Chancellor and his colleagues could go on holiday after Christmas for the rest of the year. It also has serious effects on the congestion of our parliamentary programme. There is a little more time this year between the Queen's Speech and the Budget, but it is difficult to cram in Second Reading debates in time to set up Committees.
  I strongly advocate the suggestion floated by my right hon. Friend the Prime Minister and taken up by the Leader of the House in a debate on 11 July, that we should hold the Queen's Speech in the spring. That would be far more satisfactory. We could then have the major Second Readings through, and the Bills would be making progress. When we returned after the summer recess, the Budget would open the second part of the annual programme. That would spread our economic debates and our programme as a whole in a far more efficient and satisfactory way.
  I accept that we will not return to the old system, because the Treasury has decided that the current arrangement is rather good, for the reasons I have just mentioned. If we are not to return to the old system, there is a strong case for having the Queen's Speech in the spring and the Budget and autumn statement in the autumn.
  That has frequently happened after a general election, when the Queen's Speech has taken place in the spring. So next year will provide an ideal opportunity to carry out that reform. However, we should not then have an 18-month Session. It would be better if we then had a yearly Session such as I have described. As it is not a partisan matter, but one for the House, I very much hope that the usual channels will give the idea serious consideration.
  I should also like to commend the suggestion that was picked up in the speech by my right hon. Friend the Prime Minister at the beginning of the debate on the Queen's Speech this year. He said:
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  "I should like to move towards a position where we can announce in future a two-year legislative programme and, so far as possible, publish draft Bills and consult on the second year's Bills before they are introduced."—[Official Report, 23 October 1996; Vol. 284, c. 31.]
  That happened many years ago when we introduced value added tax. That was the first time draft Bills were published well in advance.
  That practice has much to commend it. It would give Select Committees the ability to consider Bills months in advance. Select Committees are a better vehicle for that than Special Standing Committees, and they could work more effectively if they had a longer time scale. I very much hope that we can pursue the idea that my right hon. Friend the Prime Minister proposed and that—I hope—has general support in the House.
  I should mention in passing, as no doubt we shall debate it later, that that idea seems quite contrary to the hurried introduction of particular measures, such as the proposed legislation on guns. Tragic though the Dunblane experience was, in my opinion it is unlikely that the current proposals will significantly reduce the risk of another such tragedy. Had the existing law been enforced properly, it probably would not have happened.
  The danger of driving it underground so that gun maniacs had to obtain weapons illegally is that there would be rather less check than before. I shall not labour the argument, but it is important that the legislation should not be rushed, and that we should carefully consider how to make it as effective as possible.
  Turning to the main subject of this afternoon's debate, I agree with my right hon. and learned Friend the Chancellor's view of the economy. The present prospects are extremely good, and I hope that, in his Budget, my right hon. and learned Friend does not react too dramatically to concern about the level of the public sector borrowing requirement. At this stage in the cycle, it is not wholly inappropriate.
  None the less, the economy is growing rather faster than anticipated. The latest quarterly figures show growth at 0.8 per cent., and the two previously quarterly figures were revised upwards, so I can understand the concern about that. As the economy recovers, it is important that we slow down the rate of growth in line with the anticipated growth in productive potential. By then, we shall have some idea of the size of the real underlying deficit, but we do not have a clear idea of it at the moment. I do not consider that it will be necessary to take savage steps to cut the PSBR; that would be inappropriate at this stage in the economic cycle.
  Development in the United Kingdom economy has to be judged against the background of the world economy and what is happening in Europe. I am concerned by what is virtually organised deflation in almost every European country seeking to meet the Maastricht criteria. They are doing things that they would not do were they not seeking to meet those criteria. That is dangerous.
  I hope that we can get away from the expression "single currency". We are now considering the prospect of a core currency, but there is no prospect of a single currency over the now vastly expanded European Union not only within our political lifetime, but possibly within our actual lifetime. Therefore, it is misleading to continue to refer to a single currency.
  My right hon. and learned Friend the Foreign Secretary was right in his speech in Switzerland a few weeks ago to say that, if a small core of currencies join the so-called

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  first wave and others do not join for a long time, the Union will be undermined. There cannot be a Union if some are in and some are out of what is generally regarded as its most important aspect, apart from the single market.
  Secondly, the policy that my right hon. Friend the Prime Minister has set out very clearly is absolutely right. At this stage, it would be absurd to rule out joining the single currency in the next Parliament. Inevitably, that would mean that we could not play our full part in the negotiations, and we have a responsibility to do that for the sake of the United Kingdom and the future of Europe. My right hon. Friend was right to stress that important point.
  The way in which the process is continuing gives me grave cause for concern. Europe is seeking to achieve the Maastricht criteria, but it is quite clear that the degree of convergence that we are likely to achieve on the present timetable is bound to be inadequate. That is a serious consideration.
  It would be different had we achieved convergence and a single currency, and there were then particular variations in prices and costs in a particular part of the European Union, because, at that stage, we would have given up for all time the main means of adjusting differential movements in costs and prices. That would have the inevitable effect of causing unemployment to become endemic in certain parts of the Union, or it would involve huge subsidies from one part of the Union to another. That would be unlikely to happen, and we know that such subsidies are frequently ineffective.
  That is not the position, however. Britain and the European Union are contemplating going ahead when there is inadequate convergence. The Herald Tribune and the Financial Times point out today that German economists are saying that Germany is unlikely to meet either of the main criteria. The French are employing an extraordinary method of proceeding, which is reminiscent of Mr. Robert Maxwell and the pension funds. Serious dangers are involved, and there are likely to be enormous problems.
  One must give a warning: it will be dangerous for us and for the future of Europe and the single market if we go ahead with a single currency on the present schedule with inadequate convergence. Were I being rhetorical, I would say that some of the more enthusiastic politicians in the EU seem to be acting rather like the Gadarene swine. Perhaps I sound unduly pejorative. I am suggesting not that they are going in the wrong direction, but that they are proceeding at a suicidal pace.
  Whether or not we are in the first wave, we have a responsibility to persuade the EU that the present timetable is dangerous. Whatever one's views on the single currency, and whatever decision is made about whether we are in the first wave, there is a danger that the first wave will create a core group on a basis that is not sustainable. If it goes ahead on that basis and on the present schedule without adequate convergence, the system will break down. That will be an enormous setback to the creation of the single market, and will create serious problems. Therefore, we must take part in the negotiations. We must not be excluded from them. If we
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  fail properly to play our part, the real negotiations will take place outside the normal forums. That must be borne in mind.
  Sir Edward Heath rose—
  Sir Terence Higgins: My right hon. Friend may not have agreed with everything that I have said. I note that he wishes to intervene.
  Sir Edward Heath: I am trying to find something on which I agree with my right hon. Friend. Will he first agree that we must stop kidding ourselves as to what other major countries in the European Union will do? They are determined to get a single currency, and to do so within the time period of which we are aware. There are powerful politicians who will be in place for a considerable period. The President of France is in that position. He will make sure that the programme is carried through. That is the situation that we must face.
  Secondly, why are the other major countries in the European Union so determined? They know that it is not possible to keep a single market unless there is a single currency. All history proves that. Indeed, the present world proves that. That is why they are determined to go ahead.
  Lastly, let us consider convergence and the United States of America. How much convergence does the US have? There are enormous differences between California, New York state and the southern states, yet the US is the most successful country in the world.
  Sir Terence Higgins: I take up, first, my right hon. Friend's final point. The first question put to me during my third year at Cambridge on economics related precisely to the United States. The reality is that some parts of the United States would probably gain if they did not have a single currency. Some parts of Mississippi, for example, might gain by devaluing. That is not, however, historically the way in which the United States has grown up.
  I do not accept my right hon. Friend's premise that there cannot be a single market if there is not a single currency. That is disputable.
  I am seeking to put over the case that, if Europe proceeds as some suppose, and in the pejorative terms that I used earlier, the leaders of France and Germany are likely, in pursuing a timetable in the absence of adequate convergence, to bring about the self-destruction of that which they wish to construct.
  Ms Abbott: Will the right hon. Gentleman give way?
  Sir Terence Higgins: I have little more to say, but if the hon. Lady really wishes to intervene, I shall give way.
  Ms Abbott: The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) made the real point, that the political elite of Germany and France are determined to go ahead with economic and monetary union come what may. Does the right hon. Gentleman agree that, merely because the Gadarene swine are determined to go over the clifftop, that does not mean that sensible porkers should go along with them?
  Sir Terence Higgins: There are serious problems. I understand what my right hon. Friend the Member for Old

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  Bexley and Sidcup (Sir E. Heath), who has perhaps more knowledge than anyone else of European leaders on this issue, is saying. I am saying that those leaders are putting us in a dangerous position. We should seek to persuade them of the dangers that I have described. Indeed, that is the purpose of my speech. As I have said, I have left undebated the question whether we are in or out.
  I have a strong feeling that, if the leaders of Europe go ahead with a core currency without adequate convergence, they may well find themselves—the Germans will certainly regret this—with what has been described as a camembert currency, with a soft section in the middle. We may find that that currency weakens, and that the value of sterling increases. The arrangements to prevent the value of sterling declining may have the reverse effect of what is expected. If that happens, there will be serious implications for our competitive position at that stage. It would be rather good, however, for some other sections of the economy.
  We face serious dangers. In his peroration al the Conservative party conference, my right hon. and learned Friend the Foreign Secretary quoted William Pitt in terms of saving Europe by our example. We must bear in mind what the example may be, and what the arguments are at a technical level. I understand very well the point that my right hon. Friend the Member for Old Bexley and Sidcup made about political drive, but at the end of the day—I quote someone whom perhaps neither my right hon. Friend nor I have always agreed with—we cannot buck the market.
  6.34 pm
  Ms Diane Abbott: It is a pleasure to take up the remarks of a distinguished ex-Chairman of the Select Committee on the Treasury and Civil Service. The decision whether to join the economic and monetary union is the one most important economic decision that faces the British political class. It gives me great pleasure to talk about something of substance such as the economy when over the past few weeks politicians of both major parties have been vying with one another in pontificating on morality and Christianity. I do not believe that the public have much stomach for professional politicians going on about matters of morality. We should concentrate on matters within our competence, such as the decision to join EMU.
  It seems, sadly, that the debate on EMU has been hijacked by nationalists. It has been presented all too often in the popular press as a debate between nationalists and internationalists.
  My parents came to the United Kingdom nearly 50 years ago from across the Atlantic. I am not a xenophobe and I hold no truck with petty little Englander ideas. I believe that there is a practical case against economic and monetary union on the criteria and timetable that are before us. That is the case that I hope to set out in a modest way.
  I am a member of the Treasury Committee. I served under the distinguished chairmanship of the right hon. Member for Worthing (Sir T. Higgins). During my membership of the Committee we have conducted two major inquiries into economic and monetary union. When the right hon. Member for Worthing was speaking, a colleague said to me, "I did not know that he was so anti-Europe." I said, "He is not anti-Europe, but as it
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  happens economic and monetary union is one of those matters where the more you know about it, the more sceptical you become."
  One of the arguments that the Europhiles like to advance in trying to confuse the issue is to ask, "Why are we talking about economic and monetary union now? The decisions are a long way away. The issue can wait. It is a long way down the track." In fact, 1997, next year, is the key year. It is the reference year. It is the year when the decisions of early 1988 will be taken on board. It is also the year during which Parliament will have to vote on whether to make the Bank of England independent in line with the Maastricht decisions, with a view to us going into an independent European central bank. That being so, the arguments that we should not be discussing these matters now because they are a long way ahead of us are simply tosh.
  The hon. Member for Gordon (Mr. Bruce), the Liberal Democrat spokesman on these matters, produced as Liberals are wont to do, the orthodox view of an independent Bank of England. The hon. Gentleman suggested that it would be a magical elixir that would be the cure for Britain's long-standing economic decline. The orthodoxy relating to an independent Bank of England is not exactly the fact. The issue will have to be debated next year. There is a case for an independent Bank of England, and one that bears more scrutiny than fashionable opinion has bothered to give it.
  There are right hon. and hon. Members on both sides of the House who like to talk about a European central bank as if it is nothing to worry about. They say that at the end of the day politicians will have the final say. That is completely untrue. Martin Woolf of the Financial Times has said that a European central bank would be the most powerful and politically unaccountable bank in the world. It is the political unaccountability of both an independent Bank of England and a European central bank on which the House should focus tonight and in future debates.
  Much of the argument, inasmuch as people argue rather than make assertions in a fashionable way, for an independent Bank of England, rests on the notion that there is a causal relationship between an independent Bank and low inflation. The Treasury Committee considered the issues before the hon. Member for Gordon became a member of it. We found that the factual evidence for a causal relationship was slender. There is a relationship: as fashionable opinion always says, Germany has historically had low inflation since the war and it has an independent central bank, but I always argue—the advisers and the information available to the Select Committee back me up—that to find the roots of Germany's low inflation one has to look at Germany's searing experience of hyper-inflation in the 1930s and immediately after the second world war and at a political consensus between management and labour to take inflation seriously. I challenge any of the fashionable pundits to come up with some academic evidence to show that there is a genuine causal relationship between an independent central bank and low inflation.
  Andrew Wood, our specialist assistant to the Select Committee, said:

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  "Whilst the relationship between inflation and Central Bank independence is undisputed, it is generally acknowledged that that relationship may not be causal".
  Dr. Hampson: The reverse argument is this country's track record since the war. Far too often, politicians—or the Government of the day—have interfered, and devalued. I hate to make a party political point, but it is Labour Governments who have been especially prone to do so. Governments devalued the currency to help British manufacturing industry, which was in a relatively weak position. It is that track record that led to there being little trust in the strength of the British currency—had we had an independent bank, the financial markets around the world might conceivably have had a different perception.
  Ms Abbott: I am grateful to the hon. Gentleman for mentioning one of the other shibboleths of fashionable opinion, which is that we do not want politicians interfering with interest rates and that somehow monetary policy is different from any other aspect of economic policy. I would argue that monetary policy is of course very important but no more important than any other aspect of economic policy such as fiscal policy and public expenditure. What is the basis for saying that one aspect of economic policy can be taken separately from the others? My argument is that monetary policy is too important to be left to central bankers.
  I pray in aid not some rabid right-wing Euro-sceptics or even some left-wingers but two distinguished ex-Treasury knights, two distinguished ex-permanent secretaries to the Treasury—Sir Bryan Hopkin and Sir Douglas Wass, who said in evidence to our Committee:
  "It follows that decisions about the pace and rigour of the fight against inflation ought to be taken with full consideration of the costs involved—unemployment, recession, bankruptcies not to mention the cost to the public purse arising from higher social security payments … It seems to us to be fundamentally mischievous for … these issues to be removed from the domain of … democratically elected … Government and handed to an appointed and unaccountable central bank."
  I quote a little more as this is the heart of my argument. They continued:
  "It is not the job of central bankers to judge how far it is right to go in damaging the standard of living of some members of the community or destroying the jobs of others in order to bring inflation on to some particular path. These are broad matters as much of social welfare as of economics."
  My view runs contrary to fashionable opinion: monetary policy is very important but no more so than other aspects of economic policy. The argument for taking it out of democratic control does not stand up. Monetary policy is too important to leave to central bankers, even those as urbane as the great and the good Eddie George.
  Mr. Malcolm Bruce: Is not the hon. Lady explaining exactly why there is some concern? What credibility will one's inflation target or monetary policy have if one is determined to try to vary it as and when political expediency requires? Does not that undermine confidence in the policy-making process and is not that why there is a premium on interest rates?
  Ms Abbott: The hon. Gentleman was not listening to what I was saying. I was not talking about political
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  expediency. My point is that monetary policy is not about numbers on a page; it affects unemployment, bankruptcy and people's lives in general. Because it is not just a theoretical accountancy exercise, it should remain under democratic control. Monetary policy is important but the House deals with many important issues. Why should it not be left in the hands of politicians? For too long, monetary policy has been described in the abstract rather than in terms of its effect on the lives of people in Hackney or even those in Milton Keynes.
  The distinguished Treasury knights went on to say:
  "It is inherently wrong to give such a responsibility to central bankers. Quite simply it is not their job: it is the proper responsibility of the elected representatives of the democracy and should stay with them."
  I now leave the question of an independent central bank, but the House will have to return to it. Far from it being a remote debate at the end of the millennium, the matter will be debated on the Floor of the House within 12 months.
  Labour Europhiles trying to influence the debate on economic and monetary union sometimes say that we should not worry about a European central bank because when it comes down to it, it will be under the control of ECOFIN, the Economic and Finance Council. I have heard that argument deployed by distinguished colleagues and I have even heard something similar from the Chancellor of the Exchequer. People who use such an argument need to read the treaty, which is very clear. A European central bank will by law not be accountable to any body, especially not ECOFIN. I know many colleagues are genuinely pro-European, but I plead with them to stop using the bogus argument that ECOFIN will be a counterbalance to the central bank.
  Members of the Select Committee went to the Bundesbank several times, and the Bundesbank is clear that there is no question of a European central bank being subordinate to any elected authority.
  Mr. Legg: I am grateful to the hon. Lady for giving way, but she did mention the constituents of Milton Keynes. She rightly refers to the unaccountability of a European central bank. Will she confirm that the Maastricht treaty in fact forbids politicians to give any instructions to central bankers about the central bank? If there were a camembert currency, as outlined by my right hon. Friend the Member for Worthing (Sir T. Higgins), would not there be a danger that unelected central bankers would impose even more deflationary policies on the people of Europe?
  Ms Abbott: That is so. I am happy to confirm that the Maastricht treaty forbids politicians to give any instructions to the European central bank. As to the possible deflationary consequences of EMU, I intend to deal with them later in my speech. That is a very important point.
  Another argument, or non-argument, used by people in both main parties who favour EMU, is deliberately to oversimplify the issue. They say that it will be nice to have one currency as we will not have to change money at the borders; we should just take a deep breath and plunge in. However, having a single currency involves more than simply reprinting our bank notes so that they bear the European symbol. Having a single currency

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  requires that, to a greater or lesser extent, we lock the economies of the countries involved. The seriousness and difficulty of that project are not properly explained to the public by Europhiles of any party.
  I hear people talk glibly about EMU and gloss over the difficulties of locking economies and wonder whether they have learnt nothing from our experience in the exchange rate mechanism. I followed the debate in the press and remember how all fashionable opinion, the Liberals and goodness knows who else were saying that all we had to do was join the ERM, lock our exchange rates and all sorts of magical consequences would flow from it. It was to be the silver bullet to cure this country's long-standing economic problems. We locked exchange rate parities and, as the right hon. Member for Worthing said, the thing imploded.
  People who have such confidence in the notion that one can lock the economies of major European countries according to arbitrary political timetables or the lifespan of Chancellor Kohl ought to re-examine the history of the ERM and how it exploded.
  I want to move on to what for me is one of the most fundamental problems with the EMU project—I speak as a member of the Labour party—and that is the price, in deflationary economic policies, that ordinary people are paying in Europe and may have to pay in Britain if we go into EMU on the arbitrary political timetable. In Germany—and there is no leader in Europe more committed to EMU than Kohl—they have had strikes and upheaval caused by the price that the German people are paying in cuts in public expenditure to enter EMU on the timetable. Recently, the Institute for Economic Research in Germany said that there will be a rise in unemployment and stunted economic growth if Germany tries to fulfil the entry criteria on time.
  In France, they are considering budget cuts of £7.5 billion and the unions were on the streets last year and will have a series of days of action against the cuts in health care, education and public sector pay. That is all because France has to meet the Maastricht criteria. In Spain, 300,000 people demonstrated against the cuts and the deflationary policies caused by entering EMU. In Austria, the two-year austerity programme has resulted in a record growth in the votes for right-wing parties in the recent Euro-elections.
  I like to go along with fashionable opinion as much as the next person. It is so much easier and the sunshine of one's leader's smile glows upon you, but if we consider the price that ordinary people in Europe are paying for deflationary EMU-linked policies and the prospect for communities such as Hackney, which already suffers from endemic mass unemployment, anyone who calls himself a socialist or has any concern for the population will be given cause to pause at the necessity for a Gadarene swine-like rush into economic and monetary union on that timetable and according to those criteria. It has been calculated that, to hit the criteria on the borrowing deficit, we would have to cut public expenditure by £18 billion. If my hon. Friends on the Front Bench imagine that having—touch wood—won the next election, they would ever win another one if they implemented public expenditure cuts of that magnitude, they are deluding themselves.
  I do not pray in aid left-wingers or Euro-sceptics, but the great and the good Eddie George, the Governor of the Bank of England. He said, with his usual cautious
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  understatement, that if we went into EMU on that timetable and on those criteria, without paying attention to the important and underlying differences in the European economies, particularly in unemployment
  "you would have the risk that some parts of the community would be stuck with low activity and high levels of unemployment and would have very few options for addressing them."
  That, coming from the Governor of the Bank of England, is an understatement.
  Some of my hon. Friends try to pooh-pooh a serious debate on EMU by saying, "Don't you understand, Diane, the criteria are flexible and they will be moved around. Don't worry about the criteria." I urge them to listen to Commissioner de Silguy who has said, about the notion that some Europhiles have that the criteria are flexible,
  "We require total and strict appliance of the treaty without anything being added to it. We have always said that we should not add any criteria—for example a criterion on unemployment."
  The Treasury Committee has, on several occasions, spoken to the Bundesbank about the issue of the flexibility of the criteria and, whenever we mention it, their faces freeze. The only people who think the criteria are flexible are deluded Europhiles in left-of-centre parties.
  I am glad to have the opportunity to address the House on what will be the most serious economic issue facing us in the coming 18 months. I feel that we have had a misleading debate until now. It has concentrated on issues of nationalism and so on and not on the practical and democratic issues that relate to the question of Maastricht. I am weary—so I suspect is the British public—of politicians talking about issues of morality and the family of which some of them know little and which, certainly, we have no power to affect. We do have the power to shape this country's economic future. A serious economic decision faces us within the next 18 months and, although I bow to no one in my internationalism and my wish to see Britain part of Europe, we would be irresponsible and deluded if we imperilled the economic stability and the possibility for growth by simply following fashionable opinion on the question of economic and monetary union.
  Madam Speaker: The 10-minutes rule starts operating at 7 o'clock.
  6.55 pm
  Mr. Nigel Forman: I congratulate the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) on a persuasive, entertaining and—I know—well-researched speech which put her strongly held view on the important question of European monetary union. The speech was none the worse for the fact that I have had the honour to hear it before many times in the Treasury Select Committee.
  Equally, I pay tribute to my right hon. Friend the Member for Worthing (Sir T. Higgins) for what turned out to be his valedictory remarks on the Queen's Speech in view of his regrettable decision to retire. We have always listened with the utmost respect to his remarks on anything to do with the economy and I am sorry that on occasions such as this in future we shall not have similar opportunities.
  I disagreed significantly with only one point in the right hon. Gentleman's speech. He said that he thought it would be unwise at this stage of the economic cycle to act aggressively—or words to that effect—to reduce the

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  public sector deficit still further. I shall return to the point later, but I believe that we must be somewhere near the peak of the cycle, by anybody's best reckoning; if ever there were a time when we should be acting as effectively as possible to reduce the deficit, it is now, rather than later. I beg to differ with my right hon. Friend on that.
  Perhaps the high point of the debate so far, notwithstanding the spirited speech by the hon. Member for Hackney, North and Stoke Newington, was the brio of the performance by my right hon. and learned Friend the Chancellor of the Exchequer. He put on a magnificent performance, matched only by his bravura speech in Bournemouth a few weeks ago. I commend him for that and it is good to know that the economy is safely in his hands. Long may it remain that way.
  I noted a contrast with the speech by the right hon. Member for Dunfermline, East (Mr. Brown) which seemed to be based on the woolly and meaningless notion of "addressing" various difficult issues. The verb "to address" seems to be the key to new Labour's policy. It says that it will address long-term unemployment, it will address nursery school places and it will address skill shortages. To address those big questions is not a substitute for a valid and thought-out policy and is certainly not a substitute for a fully costed policy with real numbers and real choices. I remember that Nye Bevan was famous for his much-quoted phrase that socialism has to be the language of priorities. We may be faced with a chameleon-like Labour party, which has apparently changed its ways, but it must still focus on the language of priorities if it is to be taken seriously by the British people.
  I also have a small bone to pick with the Liberal Democrats and I am glad to see their Treasury spokesman in his place. I have sat through a few days of this debate recently and I was present on the opening day. I sought to challenge the right hon. Member for Yeovil (Mr. Ashdown), the leader of the party, when he expressed one of his typically pious concerns about the size of the public deficit. When I intervened on him to ask what practical proposals he had for reducing the public debt in the short term, he simply replied, in what I considered a very inadequate way:
  "We would not cut taxes."—[Official Report, 23 October 1996; Vol. 284, c. 37.]
  That is one side of the account, of course, but it was a wholly inadequate answer.
  In the intervening period, I went away to do a little research on known and recorded Liberal public spending commitments since the autumn of 1995, when the Liberals produced something called an alternative Budget. I do not wish to weary the House; I shall simply say that, if we tot up those commitments—I have a list before me—we find that they come to more than £6 billion. The Liberals have very honestly said—I give them credit for this—that, to finance their education commitment, they would be prepared to put perhaps an extra penny on the standard rate of income tax. Broadly speaking, that could mean £2 billion. But that would still leave them £4 billion adrift, which—at this stage of the economic cycle, and
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  given the size of the current deficit—would add to the problems of the deficit and all the attendant financing problems, rather than solving any problem.
  Mr. Malcolm Bruce: Will the hon. Gentleman give way?
  Mr. Forman: Very briefly.
  Mr. Bruce: I accept what the hon. Gentleman says, in broad terms, but I must tell him that our alternative Budget and our manifesto have been strictly costed. He must not assume that commitments outside those are commitments other than the difference between what we would spend and what the Government are committed to spending. Our commitments have been not only costed, but audited by Treasury accountants and the Institute for Fiscal Studies.
  Mr. Forman: I do not think that we should take up too much of the time of the House with that point, but I will send the hon. Gentleman a list of the commitments to which I refer, and he can draw his own conclusions.
  Given that monetary policy is at the heart of today's debate, my main purpose is to commend my right hon. and learned Friend the Chancellor on the way in which he has exercised both prudence and responsibility in the conduct of monetary policy, with the aim of maintaining non-inflationary economic growth. I stress the word "maintaining". The important thing about this "recovery", as it is rather wrongly called, is that the period of growth has lasted for more than four years. If my right hon. and learned Friend continues with his current prudent policies, with any luck it will last for another four years, and perhaps for a further four years after that.
  As my right hon. and learned Friend said himself, the secret is to stay ahead of the game in monetary policy, and to move with small, timely steps. That is true whether we are talking about upward movements or downward movements in interest rates. As can be seen from the way in which my right hon. and learned Friend has conducted monetary policy recently—often in the face of contrary advice from the Governor of the Bank of England—such action has been characteristic of his methods. I suggest that today's small adjustment in an upwards direction will prove just as effective in sustaining a period of sound, non-inflationary growth as my right hon. and learned Friend's policies in the other direction.
  In the longer run, I hope that the Government will pay careful attention to the three key objectives mentioned in one of the economic sections of the Queen's Speech. The Government speak of returning the public sector borrowing requirement towards balance in the medium term. We should note that they say only "towards" balance, and refer to the medium term: their phraseology is fairly vague. They also speak of further reductions in public spending as a share of gross domestic product—ostensibly, lowering it to below 40 per cent. of GDP by 1998–99. They also speak, perhaps over-ambitiously, of doubling living standards over the next 25 years—an objective of Rab Butler's in the early 1950s, which implies a compound rate of economic growth of some 3 per cent. a year for quite a long time.
  I hope that the Government will not try to pursue incompatible objectives. I hope that they will give priority to reducing the deficit. It is vital not to saddle future

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  generations with the burden of paying off public debt, which is little more than deferred taxation under another heading. We should try to remove that deficit as soon as we reasonably can. I remind the House that, not long ago, one of my right hon. and learned Friend's predecessors was able to repay some public debt and to reach that stage in the equation.
  Within the total of public expenditure that is available, I hope that my right hon. and learned Friend will give priority to assisting the young. That means education and training, the youth service and the voluntary sector. At the other end of life, he should give priority to helping the elderly and the poorest pensioners. From time to time, I have presented proposals designed to do precisely that. I also hope that we can knock on the head the threatening idea of limiting treatment on the national health service to those over 75.
  All in all, I commend the Chancellor on his stewardship of the economy. I think that he has been running the ship very prudently and well. I am confident that, if we pursue the same course in future, we shall have not just another four or five years of Conservative government but—more important for the country—another four or five years of sustained non-inflationary economic growth.
  7.5 pm
  Mr. John D. Taylor: We have had an excellent debate, featuring many interesting contributions. I certainly enjoyed the speech of the hon. Member for Hackney, North and Stoke Newington (Ms Abbott), who spoke up for the people of the United Kingdom and reasserted the importance of democracy in this country. She said that the ordinary people should control their economic future.
  Today's announcement of an increase in interest rates came as no surprise: there were clear signs of increased inflationary pressures. If no action had been taken and then, a month later—at Budget time—the Government had reduced taxation, there would have been a further increase in those inflationary pressures. It was, therefore, an astute move by the Chancellor to act quickly, a month before the Budget, and increase interest rates. It will make it easier for him to consider the option of reducing tax next month.
  Having said that, I have to say that this debate takes place at a time when the economy of the United Kingdom is good. The Chancellor and, indeed, his predecessor deserve our congratulations on what has been achieved during the past five years. We have the lowest mortgage rates for 30 years, the lowest basic rate of tax for more than 50 years and lower unemployment than any other major European country. When we look at France and Germany, we realise how well we are doing. We have had the longest period of low inflation for 50 years. Above all—we certainly notice this in Northern Ireland—we are No. 1 in Europe for foreign investment. We in Northern Ireland share that. Companies are coming in from South Korea, Taiwan, Hong Kong, Singapore and, indeed, Indonesia.
  As I have said, Northern Ireland is sharing the improvement in the United Kingdom's economy. We have a record of high unemployment, but in recent years, even before the ceasefire, our unemployment had begun to decline. Last year, a record number of new jobs were created in Northern Ireland. Only yesterday—once more,
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  good news—Holiday Inns opened its second new hotel in Northern Ireland in three years. Tesco opened its first metro-store in the city centre of Belfast. Sainsbury made a big announcement of investment in Northern Ireland, and two new factories opened in Strabane. The news from Northern Ireland is very heartening—but there is one black spot, in agriculture, which is one of our main employers and one of the main contributors to the economy of the Province.
  The problems of bovine spongiform encephalopathy in the meat industry continually concern us, not only in rural areas but throughout Northern Ireland. Northern Ireland depends on its beef industry more than England: 50 per cent. of our beef is exported. That is why it is important for the Government to continue to give priority to resolving the problems facing Northern Ireland's beef industry.
  Interestingly, both the Chancellor and the shadow Chancellor—there was a great battle between the two of them—accused each other of not looking to the future. But, as the hon. Member for Hackney, North and Stoke Newington said, one of the most important questions for the future is whether we should have a single currency in Europe. Both the Chancellor and the shadow Chancellor avoided that issue. Both argue and both deliberately avoid the issue.
  I do not want to go into the matter in detail today, other than to say that my party reaffirms that it is against the idea of a single currency—or a core currency, as it has been called—because it would restrict our right to increase interest rates, as happened today, or to reduce them according to the circumstances that apply on a particular day in our country. It would also restrict the right of a future Labour Chancellor—the shadow Chancellor is not in his place at the moment—to reduce interest rates.
  The right hon. Member for Dunfermline, East (Mr. Brown) mentioned VAT on domestic fuel. My party voted against the Government on 17.5 per cent. VAT on domestic fuel for heating, and rightly so. I am glad to say that our votes won the day and the Government were defeated. If a future Labour Government introduced a proposal to reduce VAT on domestic fuel from 8 to 5 per cent., we would support them. However, the right hon. Gentleman did not point out that, because of the Labour party's policy on Europe, that VAT rate cannot be reduced below 5 per cent. The Opposition are committed to a position in which they will no longer have the freedom to decide whether they want zero VAT—they cannot reduce it below 5 per cent.
  The single currency is creating problems in Europe as countries try to comply with the Maastricht criteria. Look at Germany's current attitude to the Eurofighter—it is stalling because it has to reduce public expenditure. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) referred to the great TGV trains in France. They have had to be abandoned because the French Government, in an attempt to comply with the Maastricht criteria, can no longer invest capital in their railway system. Britain must avoid the problems now faced in Europe.
  I want to mention just one other European issue relating to Northern Ireland—the peace and reconciliation money that the European Community has kindly decided to give to Northern Ireland. Who would refuse money? We

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  welcome that £240 million, but we need to examine more carefully how it is invested. I want the money to be spent on schemes and projects which, in 10 years' time, we can look back upon and say, "Look at what that money achieved for the people of Northern Ireland." Instead, money is spent on, for example, teaching the Catholics how to enjoy Scottish dancing, or teaching the Protestants how to enjoy Irish dancing. Money going into such projects is basically going down the drain. In 10 years, there will be nothing for us to look back on and say, "Look what Europe achieved with its £240 million."
  The Government may propose lower taxation in next month's Budget; we shall wait and see. The people of Northern Ireland do not want lower taxation simply for electoral purposes—we want it to be related to the state of the economy and the needs of the people in our country. That involves public expenditure. Northern Ireland has reached the bottom line in that respect. Over a period of two months just before the summer recess, I visited 20 primary schools in my constituency. We have two school systems—the Catholic system and the state system. I visited both. I found that every school had budgetary problems. Teachers were being made redundant and services were being reduced, especially those for children with special problems.
  The same applies to Northern Ireland's hospitals. In my constituency, the Ards hospital is slowly being closed through lack of funding. There are also problems in the Ulster hospital. We want public expenditure in Northern Ireland to be maintained at a level—that means direct taxation being maintained at a level—that will ensure good services for the people.
  We need more public expenditure on the roads between Northern Ireland and Scotland. I know that the Confederation of British Industry in Northern Ireland wants to spend all the money on the roads to Dublin, but it does not represent the business men of Northern Ireland. I am a business man in Northern Ireland and I can tell the House that only 10 per cent. of businesses that employ 10 or more people belong to the CBI. It is more politically oriented than most of the political parties in this House. The business men of Northern Ireland want improvements to the road to Stranraer—the A75 in Scotland, as the hon. Member for Banff and Buchan (Mr. Salmond) knows—and to the A8, in which respect I am glad that my hon. Friend the Member for East Antrim (Mr. Beggs) is present. That is the gateway for Northern Ireland—
  Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. Time is up.
  7.15 pm
  Dr. Keith Hampson: I have a great deal of sympathy with the attitude of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) and of the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) towards the moralising tone in current political debate. I agree that the public do not want politicians to hector and lecture them. It does no service to the public if politicians knock the country and sow an image of self-doubt in people. We are destroying people's self-image.
  Of course there are problems—there are ghettos, there is a cycle of deprivation, there are poor families, there are deprived families, there are single families, there are
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  ignorant parents and there are delinquent children. There are bad schools, but to imagine that all schools are full of young villains tearing the place apart and that everything is of the worst is not only wrong but denies the true perspective that we should be bringing to bear. Those are not just long-standing problems in this country; they are problems faced by every modern society in the western world. It is our duty to find practical solutions, not to take the moralising attitude that some people do.
  We must live in the real world. Some people and the popular press go on about the horrors of this country; yet people abroad are desperate to come here. Even The Independent, a few weeks ago, said in its leader that this country was now "vibrant" and "exciting". In other words, we have put the buzz back in Britain. We have also put life back into the city of Leeds. When I went there 23 years ago it was a mere shadow of what it is today. It is now one of the most exciting and vibrant cities in the land.
  I know that this is a nice middle-class judgment, but when I went to Leeds there were only two restaurants in the Good Food Guide, both Chinese. Leeds now has Michelin restaurants. The whole of the inner city centre spreads down to the canal south of the tracks. There is a wonderful pedestrian area—[Interruption.] Those on the Labour Front Bench are typically doing what we expect of them. If I say that Leeds now has Harvey Nichols, they will laugh—yet I am talking about the symbols of success. Do not they realise that that is what is important?
  That success has come about not because of the Labour-controlled council in Leeds, but because of the climate of success created by the Conservative Government over the past decade. In particular, we established an urban development corporation in the city centre. At the time, it was opposed by the Labour council; indeed, it is still opposed by the hon. Member for Leeds, Central (Mr. Fatchett). That UDC has galvanised the whole city of Leeds. That is why the canal is alive and vibrant when previously it was derelict. That is why the Royal Armoury is there. That is why there are bars, bistros and restaurants. That is why people are in the city centre at night.
  None of that has anything to do with Leeds city council. What it is doing now is simply on the back of what we have shown is possible. For example, we have shown that it is possible to have a partnership between the public and private sectors. All credit to the Labour party in Leeds for having learnt that lesson. We did up one side of Boar lane. That was so dramatically successful—it has the best hotel in Leeds—that the Labour council is now doing up the other side. Government policies have shown what a catalyst such things can be. It was not a council-led initiative.
  What does the Labour council do, apart from setting up 205 committees and sub-committees, on which it has spent a great deal of money? It has real sickness benefit problems, costing council tax payers millions of pounds. The council needs to get a grip on that. Yet it says that it has no money.
  Let us consider nursery provision. In my constituency one in 10 children gets the chance of a nursery place out of Leeds city council. In the Labour wards, however, it is down to almost every single child or children having a one in two chance of obtaining nursery education. Such is the disgraceful disparity of provision by Leeds city Labour-dominated council.

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  It does not help when the leader of the Labour party also knocks Britain. We have gone from the age of excitement and enthusiasm of the 1980s into the knocking nineties. In his contribution on the Queen's Speech, the right hon. Member for Sedgefield (Mr. Blair) cited two broad, loose, flabby, generalised statistics. He said:
  "We have the lowest proportion of 16 to 18 year-olds in full-time education … of virtually"—
  thankfully he used the word "virtually"—"
  all our main competitors."
  Of course, we have a much lower ranking than the Germans. That has always been true, but he did nor say that when we took office in 1979 just 48 per cent. of 16 to 18-year-olds were staying on in education. That figure now stands at just over 73 per cent. I accept that that is still not good enough, but my God—what a rate of improvement we have seen. It has gone up from 64 per cent. in the past nine years.
  We inherited an appalling state of affairs. There is a long lead time in education, but we have started to get on top of the problem. The right hon. Gentleman then said:
  "We are 42nd in the education league."—[Official Report, 23 October 1996; Vol. 284, c. 19.]
  What on earth does that mean? I found out where that figure came from. I discovered that according to the International Institute for Management Development we are 42nd out of 46 countries. I asked the Library about the methodology used to create the statistic cited by the Leader of the Opposition. The figure was based on a survey conducted among 3,000 business men from 46 countries, who were asked what they thought about their countries' education system in terms of how it helped their economy. Obviously, business men in the Singapore regime put their country at the top, so top of the league table in which we are 42nd is Singapore. Is it surprising that the same type of survey has Chile ranked 34th in 1994, 25th in 1995 and, this year, suddenly ranked seventh? There is no sound statistical methodology behind that load of rubbish.
  The Leader of the Opposition is speaking tosh when he runs down the country by saying that we are 42nd in the education league. That comment is totally and utterly meaningless, but it does a hell of a lot of damage, because that is what other people abroad believe. That is fed through the press and people think that our children are not getting the same opportunities as others. That is ridiculous: they are getting those chances.
  Yesterday, the hon. Member for Sheffield, Brightside (Mr. Blunkett) said that Labour wanted to created a wind of change through the education world, but we have done that, and for one particular reason—we have managed to prise away so much of the decision taking from local councils. As I repeatedly ask my right hon. Friend the Secretary of State for Education and Employment, why do we call our schools "state" schools when in fact they are "council" schools? The councils decide what education methods should be used and determine whether they want grammar schools or comprehensive schools. It was, of course, a Labour Government who tried to force comprehensives on every council, but councils control
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  schools and it is they who determine how much money those schools receive relative to the council's overall budget.
  Mr. George Galloway: Rubbish.
  Dr. Hampson: I will point out two little—
  Mr. Graham rose—
  Dr. Hampson: I cannot give way because time is running out.
  We talk about whittling away the powers of councils, but let me remind hon. Members of two little facts. Until 1957, education was awarded a specific grant, 60 per cent. of which came from central Government. We then introduced a block grant. As a result of the Local Government, Planning and Land Act 1980 we allowed for virement between actual services. We abolished Whitehall's detailed control of housing projects and education. In many ways councils have more powers and they determine how much money goes to their schools.
  Those councils also perpetuated the worst dogmas in education. At last we have an instrument, in the guise of the Office for Standards in Education, which is now trying to sort out the problem. Through research it is highlighting the weakness of the nostrums on which primary education in particular was run. Unless we get the base right it does not matter what we say, and quite rightly, about the needs of the new intellectual revolution of information technology. Unless the base education is correct, one will not be able to produce the people of the calibre necessary to meet the requirements of modern-day industry. Frankly, we know how badly we are performing at the primary level. Ofsted also has evidence that shows that 40 per cent. of secondary schools are not performing as well as they should.
  Education is at the heart of the modern economy and we will be competitive only if we get our education system right. But what have we got? We have Blair's boys, professors at the Institute of Education in London, a woman in Durham and one or two other members of reputable institutions of higher education who are trying to knock Ofsted. They are gunning for Chris Woodhead, the chief inspector of schools. The right hon. Member for Sedgefield owes it to everyone to say that if he becomes Prime Minister he will keep the chief inspector of schools as a symbol of common sense.
  It is not just Mr. Woodhead who talks about the problems. The 1992 Government report also referred to them. When Lord Callaghan was Prime Minister, he said exactly the same in his speech at Ruskin college, when he said that the education system had been running on progressive methods for far too long and that we had to—
  Mr. Deputy Speaker: Order. Time is up.
  7.25 pm
  Mr. John McAllion: Against all expectations, I have quite enjoyed the debate so far. I was particularly amused by the speech of the hon. Member for Leeds, North-West (Dr. Hampson), who told the House that the Tory Government were at last beginning to come to terms with the problems affecting Leeds, after 17 years

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  in office. I do not know how long they need to be in office before actually doing something about the problems faced by the people in Leeds.
  I was also very impressed by the speech of the right hon. Member for Strangford (Mr. Taylor). It started off badly with his glowing testimony to the economic policies pursued by the Tory Government. He then went on to discuss the European Union. I was not quite sure what to make of his remarks as I am a Catholic who already enjoys Scottish dancing. I do not know whether that hinders or helps the case that he was trying to make.
  I was greatly reassured, however, that the right hon. Gentleman was at least prepared to say that the Ulster Unionists will back Labour when we table an amendment to reduce the level of VAT on domestic fuel to 5 per cent. What really amused me was the sight of so many Conservative Members nodding in agreement with him. It seems that they think that Labour is terrible because it will merely reduce the rate to 5 per cent. They all want to put it up to 17.5 per cent., but there they were nodding in agreement and attacking Labour for merely trying to reduce the rate to 5 per cent. That is sheer hypocrisy on the part of those who hold views like that.
  A number of hon. Members on both sides of the Chamber have paid compliments to the Chancellor. I hope that Conservative Members will understand if I choose to criticise his speech, in particular the inconsistency of one of the points that he made when he was in full flow. He claimed that the record of Labour in government was such that we could not possibly match the high levels of public spending which the Government have sustained, particularly on the national health service. In his very next breath, however, he argued that spending more money than the Tories was in Labour's blood and that we could not possibly match the low levels of public investment achieved by the Tory Government. Tory Members must get the line right—it must be one or the other; it cannot be both. If the Chancellor and his hon. Friends continue to make such inconsistent and rubbish arguments in the run-up to the election, they can only expect that the outcome will be as everyone else expects: they will be kicked out of office by the people with short shrift.
  The Chancellor argued that the success of what he described as the Government's firm financial policies rested upon the fact that tax revenues were rising faster than public spending and that, as a result, public borrowing was falling. Technically, he is absolutely right, but let us look behind those technicalities at the real significance of that fact. The key point of the scenario is that public spending is being cut at such a rate that tax revenues, even with a 1p cut in the basic rate of income tax, inevitably rise faster than public spending. What does that mean for the economy and the people? Let me cite the example of local government in Scotland, which this year suffered a cut of £395 million in central Government grant that would otherwise sustain the level of public services in our country.
  This summer, my hon. Friend the Member for Dundee, West (Mr. Ross) and I visited a number of social work facilities around Dundee. We went to a number of family and child centres run by the local Labour council. Unlike private nurseries, those centres are genuinely committed to transforming the life chances of the children and parents who use those centres.
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  I met one young single mother with two children who lived on the 11th floor of a 12-storey block in Dundee. She said that she was going out of her mind because she was trapped in isolation with her children. Then she heard about the family and child centres and, as a result of getting a place in one of those council centres, not only were her children given a flying start which will stand them in good stead for the rest of their school careers, but she was given the space and encouragement at the centre to take classes at the local college, where she obtained an HND qualification and greatly improved her chances of finding employment locally.
  If the only alternative available to that woman and her family had been private nurseries funded by the nursery voucher scheme, there would have been no possibility whatever of her children getting in or of her getting the kind of life opportunity that was given to her. Public spending by councils sustained a network of those centres across Dundee, thus making it possible for children to get places, but because of Government cuts in public spending this year, one of those family and child centres in Dundee has shut. If there are further public spending cuts, which have been consistently promoted by Conservative Members, more of those family and child centres will close and fewer opportunities will be available for people to get off welfare and back into work to begin the economic recovery.
  I agree with the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who warned about the shift in the balance from income tax towards indirect taxation. I welcomed the commitment by my right hon. Friend the Member for Dunfermline, East (Mr. Brown) to reduce VAT on domestic fuel. At school I was taught about the political unrest in Britain at the end of the Napoleonic wars. We learned about the Spa Field riots, the Manchester blanketeers, the Cato street conspiracy and the radical uprising in Scotland in 1920. It was explained to us that the cause of that working-class unrest was the decision by the then Tory Government to abolish income tax for the rich at the end of the Napoleonic wars and pay for it by increasing indirect taxation, which fell most heavily on the poor.
  That lesson has always stayed with me and in this debate it has made me understand that some things never change. Nearly 200 years on, a Tory Government are still increasing indirect taxes on the poor. We heard in the debate that VAT is to be extended to water, children's clothes, books and many other items and that Conservatives still want to slash tax liabilities. The Chancellor said that he would abolish capital gains tax and inheritance tax and that he would introduce tax cuts for the rich. He mocked the idea of a top rate tax for the rich. Tory Governments never change. Throughout the centuries the same old Tories have been attacking the poor to help pay for the rich.
  This is United Nations international year for the eradication of poverty and it has been marked by the establishment of an all-party group on poverty which intends to raise poverty issues. However, it has yet to be meaningfully recognised by the Government. It was not recognised in the Gracious Speech nor in any of the speeches by Conservative Members. Of course the Gracious Speech has a vision about the kind of economy and society that the Government and the Tory party are trying to create. It will have free and open markets, deregulated markets, as Conservatives always argue. It

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  will he a market in which those who own and control capital can move it anywhere in the world and in which they will be free to invest where they will get the biggest profit. They will be able to produce goods where labour costs are cheap and where the social costs are at an absolute minimum. In that market the only loyalty of the rich and the powerful will be to self-interest and enrichment.
  The greed and avarice of the rich and powerful are dressed up as enterprise and initiative and in that society the poor are discounted and discarded. They do not count or even figure in the speeches or in the thinking of Conservative Members. It is hardly what could be described as high moral ground. It is the kind of economy and society that Conservatives have been shaping for the past 17 years.
  I take issue with two of the main pillars on which this selfish Tory society rests. The first is to be found in the Gracious Speech where it states that the role of the Government is to promote what they call flexible and efficient labour markets in Britain. What does that really mean? First, it means that Britain would be the only country in the European Union not to endorse and accept the social chapter and the social protocol. The Government will deliberately place Britain outside mainstream civilised opinion in Europe and British workers will have fewer rights and poorer conditions of work than workers elsewhere in the EU. What kind of vision is that to put to the people?
  The Government have an undying opposition to a national minimum wage or, to put it another way, they lend their unequivocal support to making sure that British workers are paid poverty wages in the European markets. The job seekers allowance and the hounding of the unemployed and the slashing of their entitlement to benefit forces people into jobs at £1.50 or £2 an hour. That kind of approach, the legal shackling of trade unions, the rejection of social partnership and decent social standards in the workplace, the use of low pay and mass unemployment to impoverish—
  Mr. Deputy Speaker: Order. The hon. Gentleman's 10 minutes are up.
  7.35 pm
  Mr. David Amess: I cannot say that it is a great honour to follow the speech by the hon. Member for Dundee, East (Mr. McAllion), and I say that as a fellow Catholic. His speech shows how Catholics can differ. There were two splendid speeches from the Opposition parties, one by the right hon. Member for Strangford (Mr. Taylor), the Ulster Unionist spokesman, and the other by the hon. Member for Hackney, North and Stoke Newington (Ms Abbott). If such speeches continue to be made, we shall soon make up the three Conservative Members we have lost. I entirely agree with what was said by my hon. Friend the Member for Leeds, North-West (Dr. Hampson).
  This is the last time that I shall contribute to the debate on the Loyal Address as the Member for Basildon, a constituency that I have been proud to represent since 1983. I was the first and I shall be the last Member for that constituency. Boundary changes have meant a 68 per cent. change in the character of the constituency and it has altered in such a way that I would have had 1,000 more votes than I obtained in 1992.
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  My right hon. Friend the Member for Old Bexley arid Sidcup (Sir E. Heath) spoke about Christianity. The Labour party in Basildon could never defeat me, so it decided to attack my children. My wife and I believe in single-sex education and chose an all-boys Catholic school eight miles from where we live and outside the constituency. There are no single-sex schools in Basildon.
  The campaign against that action by my wife and myself was led by a former Labour Member, Arthur Latham. It was joined by the Liberal party in Havering and supported by the Liberal party and the Labour party in Basildon. That is a disgrace, and as a result, my wife did not want me to stand anywhere in the next general election. Those actions by members of the Labour party and the Liberal party were not Christian in any sense.
  I am about the same age as the Leader of the Opposition and the shadow Chancellor, the right hon. Member for Dunfermline, East (Mr. Brown). I was elected on the same day as the Leader of the Opposition and the leader of the Liberal party. I believe today in the things that I believed in when I was elected in 1983, but the leaders of the two main Opposition parties have completely changed their views, ostensibly for public. consumption. The Leader of the Opposition has moved to the right—Opposition Members squirm—and the leader of the Liberal party has ostensibly moved to the left. In their amendment to the Loyal Address, the official Opposition refer to 1979, so presumably that means that Opposition Members can remember 1979. So can Conservative Members, and Britain is far better than it ever was when mismanaged by the Liberal and Labour parties between 1974 and 1979.
  It should not be forgotten that the Labour party has never won elections for 22 years and has never won elections with a majority for 30 years. In the amendment, it has the cheek—I say this in the light of the speech of the hon. Member for Dundee, East—to say that it would like to build a cohesive society and to heal social divisions.
  What claptrap do we get from the Opposition? The shadow Home Secretary suggests that there should be a curfew for children at night. What a stupid idea. How on earth could such a curfew be enforced? Yesterday, the shadow education spokesman said that he wanted a legal contract that could be enforced through the courts between parents, children and schools. Those are the sort of ridiculous policies that the Labour party comes up with.
  I wish to refer to the economy's effects on my constituency. In 1983, the caring Labour party decided to erect above the town hall a huge banner showing the number of people out of work. The caring Labour party wanted every unemployed person to vote Labour. I am pleased to say that electors in Basildon were not fooled in 1983, in 1987 or in 1992. As long as unemployment continued to go up, the Labour party kept the banner up.
  Suddenly, the sign disappeared. When I asked the Labour chief executive where it had gone, he wrote to me to say that the screws were rusty. What a coincidence that, once the arrow started to go down, the screws became rusty. That is how much the Labour party cares about unemployed people.
  What policies did we hear in the stupid speech of the right hon. Member for Dunfermline, East? What suggestions did he make on employment? There is realism on the Conservative Benches. We can never return to full

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  employment. Every day, every week and every month, new technology destroys jobs. It is no good misleading people on the issue and turning it into a political football.
  Since the 1992 election, unemployment in my constituency of Basildon has fallen by 2,000. That is a lot of people back into work and I congratulate the Government on that. Obviously, there has been great disquiet about the economic downturn's effects on people's lives. Conservative Members fully recognise those, but no matter which business or local enterprise I speak to, all of them tell me that the economy is far better. They have never been so busy. That is not to say that they are not still angry about some of the things that have happened.
  Increasingly, we see on the Opposition Benches a mood of triumphalism. That arrogance came through during the Labour party conference. When I made a speech in 1987, hon. Members used to wave at me and say, "Goodbye." When I stood up in 1992, they used to stand up and wave goodbye. I do not know who runs the Labour party these days—is it old Labour, new Labour or simply the people who were elected in 1992?
  Baroness Thatcher transformed Britain for the best. There can be no doubt about it. The fact that the Opposition have changed their views on everything, it seems, is tantamount to agreeing with that. They could never ever be elected on their socialist principles. They are trying to hoodwink the general public and I hope that, when we have the general election campaign and the Opposition try to run the story, "Time for a change," the British people will ask, "Time for a change to what?" It is time for a change from dreadful speeches such as that by the Opposition Front-Bench spokesman during today's debate. I hope that the British people will decide to reject the Opposition and re-elect the Conservative Government.
  7.44 pm
  Mr. Alex Salmond: I suppose that I should start by wishing the hon. Member for Basildon (Mr. Amess) a fond farewell. His wife's proposal that he should not stand for any seat in the coming election would command much cross-party support in the House. He also misinterpreted the excellent speech of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who warned politicians of the dangers of trying to corner the market in religion.
  In recent weeks, the Prime Minister, the Leader of the Opposition and their spin doctors have been guilty of just that. It is foolish because, first, as the right hon. Member for Old Bexley and Sidcup said, cardinals, archbishops and even moderators have the right and entitlement to criticise politicians. Secondly, we live in a multicultural society. Hindus, Muslims and Sikhs in our society might feel irritated that Christianity is viewed as the only religion according to some politicians.
  Thirdly, real Christians have a tendency to bite back. The Conservative party south of the border has been embarrassed by the comments of the Catholic bishops. The Labour party north of the border has reacted hysterically to criticisms from Scotland's cardinal. Real Christians are entitled to criticise politicians. When they invite that criticism, politicians leave themselves open and vulnerable. Fourthly, the tenet of Christianity, "By your
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  deeds you are known," is applicable in this case. After all, we are conducting an economic debate on the Queen's Speech and, if morality is to surface anywhere in politics, it should do so at the heart of politics: the economy.
  I listened to an exchange between the two Front-Bench spokesmen that did not have much in it of Christian support for the dispossessed, the poor, the marginalised and the excluded in society. It sounded much more like a Dutch auction on personal taxation, so until the Labour and Conservative parties can have a conference season that does not send pensioners away empty-handed from Blackpool, or allow fat cats to be secure in Bournemouth, and until they can match their words with actions, they should heed carefully the words of the right hon. Member for Old Bexley and Sidcup and ca'canny about bringing religion into politics.
  I do congratulate the shadow Chancellor, however, on his proposal to reduce VAT on fuel from 8 per cent. to 5 per cent. I welcome his conversion to that cause, particularly because, in the debate on the Finance Bill last year, I proposed exactly that: to reduce VAT on fuel from 8 per cent. to 5 per cent. The amendment was defeated by 283 votes to seven. Seven votes is quite a large total compared with many of the votes that the Scottish National party commands in the House. The Labour party not only abstained on that vote, but the hon. Member for Edinburgh, Central (Mr. Darling), no fewer than four times in a single contribution, described my proposal as a "cynical ploy".
  With all this religious fervour creeping through the Labour Front-Bench team, perhaps I should take the attitude of, "Better one sinner that repenteth." None the less, I should like to know why it was a "cynical ploy" for me to advocate that VAT reduction last year, while this year it is represented as a political masterstroke by the shadow Chancellor. None the fewer, both the SNP and the Labour party seem to be making that proposal in the run-up to the coming election.
  I want to direct a remark to the Treasury Front-Bench team in relation to a particular VAT issue. When I was practising as an economist, one of the wisest pieces of advice I received was to remember that, to most people, anything over a million was just a big number. The point that I should like to make involves some detail and has many millions in it, but I hope that Treasury Ministers will take special note of it, because it involves the Government in legal action that could run to many hundreds of millions—perhaps billions—of pounds.
  Many hon. Members have been contacted by constituents concerned about the impact of the Government's proposed rule changes on reclaiming overpaid VAT. As the position now stands, taxpayers can reclaim for a period of three years, or Customs and Excise can make back-assessments for six years. The policy was introduced, by ministerial diktat, by the right hon. Member for Wells (Mr. Heathcoat-Amory) when he was Paymaster General—before he disappeared, earlier this year, into the anti-European never-never land of the Back Benches. We have never debated or passed that policy in the House, but it has been implemented as if it were policy.
  I have a copy of the legal opinion of three of Europe's leading tax lawyers, which I shall arrange to be placed in the Library. Their opinion is that the Government's VAT proposals are illegal because they discriminate between

  719
  taxpayers, and between taxpayers and the Exchequer. Many tens of thousands of companies across the United Kingdom are involved. The tax position is now retrospective, and it seems to breach the fundamentals of European law.
  The Government are facing a series of defeats on VAT in the courts. The first defeat happened last week in the European Court. When I raised the issue at business questions last week and asked whether the Leader of the House was slightly worried by that court reversal, he looked at me and said that he had been informed that the sum involved was only £200 million. What a great relief. Only £200 million was involved last week!
  I am informed, however, that a succession of cases can be taken to the courts, because the Government's position is fundamentally unsound. I advise Treasury Ministers to look for a reasonable compromise with representatives of industry, to review the policy and to put it on a firmer footing. Unless they do so, the issue will blow up in Ministers' faces. Perhaps the Chancellor reckons that he will not be Chancellor when it blows up in the face of the Exchequer. None the less, the wise policy would be to do something about the problem now, and I commend to Treasury Ministers the cross-party early-day motion in today's Order Paper.
  I know that the Chancellor hates tables. He makes speeches in economic debates that disregard economic statistics. He says that we should not pay too much attention to tables, because they can prove anything. It is a fact, however, that if one examines economic growth in the United Kingdom during the Government's time in office, it is slightly less than 2 per cent. per annum, which is lower than the average rate for the rest of the European Union. Moreover, no other country in the EU had the benefit of £120,000 million of North sea oil revenues. It is the most staggering achievement for that windfall endowment of Scottish resources—£24,000 per head for every man, woman and child in Scotland—to be flowing into the Exchequer and yet for the UK growth rate to be lower than the average for all the other countries in Europe, none of which has had the benefit of those resources. The Government do not have anything to be proud of in their economic record of the past 17 years.
  Let us consider the performance of some of the other countries in Europe. We heard about the performance of the Northern Irish economy from the right hon. Member for Strangford (Mr. Taylor), although I did not agree with all the points that he made. Let us consider the performance of the southern Irish economy in recent years. Last year, the UK's economic growth rate was 2.4 per cent., whereas the growth rate in Ireland was 8 per cent. A few weeks ago, while examining economic records of the past few years, I asked the House of Commons Library to perform an exercise and estimate—based on economic forecasts from the Treasury and from the Department of Finance in the Republic of Ireland—when Ireland would overtake the United Kingdom in gross domestic product per capita. The answer was that, based on current forecasts, it would happen in 2000.
  720
  In 2000, the Republic of Ireland will be more prosperous than the United Kingdom. It is already more prosperous than Wales and Northern Ireland, and by 2000, it will be more prosperous per capita than England and Scotland.
  Sir Teddy Taylor: Will the hon. Gentleman give way?
  Mr. Salmond: I am caught by the 10-minutes rule. I know that the hon. Gentleman—
  Sir Teddy Taylor: Will the hon. Gentleman give way?
  Mr. Salmond: I know that the hon. Gentleman will say that Ireland is more prosperous because of European subsidies.
  Sir Teddy Taylor rose—
  Mr. Salmond: Will the hon. Gentleman just listen for a moment, and try to contain his anti-European prejudice? Last year, the subsidies amounted to 1 billion punts of cohesion funding, which is about 2 per cent. of Irish GDP. Last year, growth in Ireland was 8 per cent., which was four times greater than the amount of GDP received in cohesion funding. That is not the explanation for the Irish economic miracle. The Financial Times has described. Ireland as the "tiger economy of Europe".
  The Irish economy does not possess great natural resources, but it is making the most of what it has. When I think of Scotland and our natural resources, and when I consider the fact that the Government are making so little of so much of Scottish resources—greatly under-performing compared with the rest of Europe, and with a growth rate that should bring shame to Treasury Ministers—it is a matter for shame, not congratulation.
  7.54 pm
  Mr. Barry Legg: I begin by dealing with the latter point made by the hon. Member for Banff and Buchan (Mr. Salmond) on the Irish Republic. As the Prime Minister has often confirmed to the House, transfer payments to the Irish Republic from the EU amount to 7 per cent. of Irish GDP. For hon. Members to understand the scale of those transfer payments, the United Kingdom would have to receive £35 billion from the EU for it to receive the same percentage of GDP. There would certainly be an effect on the United Kingdom economy if we were to receive an injection of £35 billion. So I think that the hon. Gentleman's attempt to draw a comparison between the Irish Republic and the UK is nonsense.
  Mr. Salmond: Will the hon. Gentleman give way?
  Mr. Legg: No; I have only 10 minutes.
  I had not intended to speak about the single currency in this debate, but today we have heard two excellent contributions on that subject—from my right hon. Friend the Member for Worthing (Sir T. Higgins) and the hon. Member for Hackney, North and Stoke Newington (Ms Abbott). She argued the dangers of a single currency on economic grounds, and her arguments were very soundly based. The issue will not go away. As she rightly

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  said, whether Britain joins a single currency will be the most important issue that the next Parliament must decide. Both sides of the House will continue to debate that question, and it cannot possibly go away. She made her arguments on the basis of the economic dangers, as did my right hon. Friend the Member for Worthing.
  Conservative Members, however, also feel strongly about the constitutional issues surrounding a single currency, which the Prime Minister referred to at the Dispatch Box on 9 June 1995. To adopt a single currency must mean that one accepts that there will be one state. The intervention by my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) on the speech of my right hon. Friend the Member for Worthing was very interesting, because he said that one cannot have a single market without a single currency, and gave the case of the United States as an example.
  Those who support the federal vision of Europe, as my right hon. Friend clearly does, cannot have it both ways. Yes, if we had a single currency, we would have a United States of Europe, and there would be one state: it would be unavoidable. My right hon. Friend the Member for Worthing also mentioned the issue of transfer payments, and said that the consequences of a single currency would inevitably require them.
  Even in a free market economy, such as the United States, substantial transfer payments take place between states. There would have to be a similar system in Europe to make the European currency area viable. I do not believe that the peoples of Europe form one nation, or that they are close enough to make such payments. In the United Kingdom, people in Surbiton are happy to make transfer payments to people in Huddersfield, for example, because we accept that we are one nation, the United Kingdom.
  I do not believe that the people of Europe are so close that people in Surbiton would be happy for substantial transfer payments to be made to people in Essen, Palermo or Athens, and I do not believe that people in those countries would support transfer payments to other countries in the European Union. As my right hon. Friend the Member for Worthing explained, there are great dangers in pressing ahead with the concept of the single currency.
  Today we have also heard from my hon. Friend the Member for Basildon (Mr. Amess). He certainly had good news to report from Basildon; and I can report that there is also good news from Milton Keynes. My hon. Friend said that there had been 2,000 new jobs in Basildon since the recession had ended. In Milton Keynes in the past 12 months, we have had 5,000 new jobs. Milton Keynes is middle England. The economy is doing extremely well. It is based on high-technology businesses, and 5,000 new jobs have been created. That shows the success and achievement of the Government's economic policy.
  We have a very good economic background, which is delivering a great deal of success for Britain. However, there is much more to do. I do not know whether many hon. Members have seen the Budget submission from the Institute of Directors, which is cogent and well argued.
  One of the issues to which the institute refers is public expenditure. If we are to have a really successful and competitive economy in the United Kingdom, we need to
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  cut public expenditure. We need to reduce it because the most competitive economies in the world have a much lower level of public spending than we have. They are much more vibrant, dynamic and enterprising, and they are getting an increasing share of world trade. We must cut expenditure.
  The analysis of the economy by the Institute of Directors looks at what has been happening to public expenditure compared with GDP. Most hon. Members know that the Conservative party has the objective of reducing public expenditure as a proportion of GDP. The Prime Minister has given a target of 35 per cent. and at our party conference, the Chancellor confirmed that the objective was to get public expenditure below 40 per cent. of GDP. That is one of our core policies.
  The analysis by the Institute of Directors shows how difficult it is to make progress in achieving that key objective. The institute has looked at what has happened to public spending, as a proportion of GDP, over the past four years. It notes that it has fallen from 43.4 per cent. to 42.3 per cent.—there has been a fall of only 1.1 per cent.
  Of that 1.1 per cent. fall, 0.8 per cent. has been due to a lower level of capital spending by the state. The cyclical effects on public expenditure have been positive to the tune of 0.9 per cent. Therefore, total public expenditure has hardly fallen, even though we have been trying to achieve the objective of lowering it as a proportion of GDP.
  The reason is that so much of the culture of the public sector is still geared to spending ever-increasing sums of money. One has only to take an interest in our national accounts to see that, towards the end of financial years, we still get a higher level of spending than is normal on a month-by-month basis. There are still too many incentives within the system for spending more. The Red Book shows that, although the Government have had the objective of reducing public spending in real terms, public spending comes in at a higher level in real terms year after year.
  There must be structural changes within the public sector to get spending down overall. Those structural changes should be directed towards the civil service and towards bureaucracy. We have been pioneers in privatisation, and we need to carry that forward. We need to have plans to privatise the Benefits Agency; we need a lot more imagination in our delivery of social security.
  The Secretary of State for Education and Employment has plans for pilot schemes to get the private sector involved with helping people to find jobs. One of our objectives should be to privatise much of the social security delivery system. We should be looking to privatise jobcentres, which are among the most depressing public sector organisations. We need to privatise them and to bring the free market in, so that we can help the economy to be more dynamic and help people to depend less on welfare.
  There remains a great deal to be done in our next term in office. I have no doubt that we will have policies that will work with the grain and enable us to build on the tremendous economic success that we have seen over the past four years.
  8.4 pm
  Mr. Ian Pearson: On 8 October, coincidentally during the Conservative party conference, the Government announced a U-turn. It did not receive

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  any publicity, because it was on a rather technical matter, involving companies buying their own shares or paying special dividends. The operation of the imputation tax system and its effect on tax-exempt institutions is not something that the average person in the street is particularly interested in.
  The story behind the U-turn, however, is an all too familiar one, of Government dithering, denial and delay, followed by a climbdown and belated action. That would be pretty much par for the course, but what marks this case out is that the Government's negligence has cost the hard-pressed taxpayer an estimated £1.5 billion in lost revenue at the very minimum—probably more.
  To put the matter another way, that amount is the equivalent of a penny off the basic rate of tax or about the total given out in grants to good causes since the national lottery began. It is money that could have been spent on improving education and the health service.
  Basically, we are talking about an abuse of the tax system or, in other words, a tax loophole—something that the Chancellor always denies exists, but which Labour has pointed out consistently. In this case, a range of smart schemes have been drawn up by corporate financiers which have favoured the big pension funds at the expense of other shareholders, cost the taxpayer millions each time, and distorted competition in takeover situations.
  The loophole was becoming known by the time the 1995 Finance Bill was passing through the Commons. and it was glaringly apparent well before the drafting of the 1996 Finance Bill. Selective share buy-backs were increasingly used by large companies throughout 1995, and the use of special dividends was commonplace in the water and electricity industries. Special dividends were also used in other situations, such as Lloyds bank's bid for the TSB and, more recently, Granada's takeover of Forte.
  What is more, respected financial commentators, such as Lex in the Financial Times and Graham Searjeant in The Times, pointed out the abuse. On 10 January this year, the Financial Times talked about
  "the special dividend wheeze and its close cousin the share buyback",
  expressing the view that
  "no public interest is served by a loophole that involves taxpayers subsidising corporate raiders."
  Labour, both here and in the other place, highlighted the abuse. I tabled a number of parliamentary questions on special dividends, and raised the issue on Second Reading of the Finance Bill last year. I even tabled an amendment to the Bill.
  The Government's response was to deny the problem. The Financial Secretary to the Treasury, in a parliamentary answer to me, said:
  "The payment of a special dividend does not involve a tax loophole."—[Official Report, 1 February 1996; Vol. 270, c. 862.]
  The result of that dithering and denial was that the use of share buy-backs and special dividends escalated. Figures from Kleinwort Benson show that quoted companies cut their equity capital by £3 billion from the start of this calendar year to the end of July through selective buy-backs. The cost to the Exchequer of just that is an estimated £750 million, but it could so easily have been avoided by a half-competent Government. So too could the £50 million or so that the Inland Revenue has
  724
  had to pay out to subsidise Granada's takeover of Forte, not to mention the money paid out in other special dividends.
  Exasperatedly, Graham Searjeant of The Times expressed the hope during the summer that
  "even at this late stage, the Chancellor might be stirred from his supercilious lethargy to take some action in his autumn Budget."
  If the Chancellor read that article while he was on the beach, it took him until the week of the Tory party conference to act, and then, typically, he blustered through the climbdown, conveniently forgetting his culpability.
  An Inland Revenue press release quoted the Chancellor as saying:
  "We have seen recently companies buying their own shares or paying special dividends in such a way that the proceeds end up almost entirely in the hands of those who are entitled to payment of a tax credit. This has costs for the Exchequer. and if action is not taken soon that cost would escalate."
  The Chancellor went on:
  "we will not hesitate to take any necessary further action should further evidence of abuse appear."
  At least he finally admitted that it was an abuse—a tax loophole being exploited by companies and their advisers—and in so doing he directly contradicted his Financial Secretary, who all along had said that it was not a loophole.
  Who will take responsibility for losing £1.5 billion of taxpayers' money? The Chancellor? The Financial Secretary? Nobody, it seems, but there again, that is no great surprise. If a financial director of a public company was so incompetent in managing his business's finances, he would be dismissed as soon as his blunder came to light.
  The public have a right to know exactly how much of their money has been thrown away as a result of the Government's ineptitude. If the Government dispute my figures, I challenge them to publish their own figure of the cost to the Exchequer of allowing the loophole to remain open for so long. I also challenge them to justify their rather dodgy figures suggesting that the changes that they have now belatedly made will yield only £200 million in 1997–98 and £400 million from 1998–99 onwards.
  The Government's failure to act speedily in the face of the growing scandal of share buy-backs and special dividends exposes as a myth Tory claims to economic competence. In almost any other sphere of Government spending, a Department losing £1.5 billion would be headline news. The fact that knowledge of this is confined mostly to the City of London and the Treasury cannot disguise the unpleasant truth that it is the honest British taxpayer who has had to fork out to pay for Ministers' negligence. We need answers to those questions.
  8.11 pm
  Mr. John Townend: Listening to the right hon. Member for Dunfermline, East (Mr. Brown), I began to believe that I was living in a different country. To hear the right hon. Gentleman, one would think that we had the worst economy in Europe rather than one of the best. It is not I who says that, but the independent Organisation for Economic Co-operation and Development.

  725
  I cannot believe that someone who holds himself out as a future British Chancellor does not read OECD reports. Whether the figures are for unemployment, inflation, investment, economic growth, the balance of payments, industrial production, competitiveness or industrial disputes, they are satisfactory or going the right way. All those figures are improving.
  When the right hon. Gentleman tried to rubbish the fact that we are the enterprise centre of Europe, and compared us with Hamburg on investment, I could not believe my ears. German manufacturers are not investing in Germany, because Germany is no longer competitive. Volkswagen builds factories in Czechoslovakia, not in Germany, Mercedes in the United States, and Siemens and BMW in Britain.
  In recent months, the Chancellor's success in running the economy has resulted in increasing confidence in the markets, and that is why the pound has been rising. Unfortunately, there is a black spot. Like most of Europe, we are spending, borrowing and taxing too much, but does anyone believe that a Labour Government would spend, borrow or tax less? Of course they would not. They would spend, tax and borrow more. I trust that the Chancellor, who started to deal with the problems in the previous Budget, will continue to deal with them further in this year's Budget. But all Conservative Members agree that we must have a responsible Budget, so reductions in spending should, ideally, be in excess of tax cuts.
  I have been making speeches since 1979, but I regret that not much notice has been taken of them. In 1979, public expenditure was 42.5 per cent. of GDP, and last year it was 42.5 per cent., so I hope that the Chancellor will take a little more notice of me this year.
  I suggest that we cut spending by £7 billion. I should like the Chancellor to spend £5 billion in reducing taxes and the rest on the PSBR. I wrote an article in the "Parliamentary Review" saying how we could do that, but I cannot give the details in 10 minutes, so I refer hon. Members to my article. I hope that there will be no new taxes and no tax increases in the Budget, but any impartial person must accept that the Chancellor has run the economy well, and that his judgment on interest rates has proven correct. I support his 0.25 per cent. increase today.
  It is worth saying that, if we joined a single currency, the Chancellor would not have that flexibility, and I would trust my Chancellor far more than the European bank. However, we must not ignore the fact that, had we not left the ERM thanks to Mr. Soros, or if we had gone back into the ERM in a matter of weeks, as the Opposition demanded, my right hon. and learned Friend would not have been able to present such a glowing report to the House today.
  Supporters of the ERM should now accept that they got it wrong. Hon. Members will recall how they used to claim that, if we left the ERM, interest rates would rise, the pound would fall and, as a result, inflation would rise. The exact opposite happened. Within four months, interest rates had fallen by 4 per cent., and for the last four years, inflation has been the lowest in living memory. That has formed the basis of four years' sustained economic growth.
  Those countries still in the ERM have had low growth and rising unemployment. Would the Opposition like us to have the same level of unemployment as France? Those
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  countries have had mounting fiscal problems, and their problems have been compounded by their mad rush to meet the convergence criteria for a single currency. France in particular is in a real mess.
  The main economic and political issue facing Britain in the next few years is the single currency. I regret that we do not have more open debate on that subject, but that is because the supporters of a single currency will not come out into the open. When the right hon. Member for Dunfermline, East was challenged on a single currency today, he did not mention it in his reply. We all know that he is basically in favour of it, and of a federal Europe.
  Some of those in favour of a single currency say that, if the euro comes into being, it must be in Britain's interests to join. But they will not get involved in detailed discussions or debates, because they know that, if the British people knew the full facts, they would never agree to support it.
  All agree—supporters and opponents of a single currency—that it will be a disaster unless the economies of the various countries which join converge. Eddie George is rightly worried, because the convergence criteria omit one of the most important economic factors—unemployment. Since unemployment in France is 50 per cent. more than in Germany, and that in Spain is almost double that in France, it is clear that there will be no real convergence.
  Another factor which is being ignored is the off-balance sheet liabilities—the contingent liabilities of unfunded state pensions—which in Europe are enormous. The unresolved problem is that, even if the economies converge and we have the euro, there is nothing to stop economies diverging in future. That is likely to happen in a federal state. It happens in America, where the rustbelt states have diverged from the sunbelt states, and the east from the west.
  If that happens, a country could be in deep trouble. It could not deal with the imbalances by reducing interest rates or flexibility in the exchange rates. The first of the alternatives that have been mentioned is a massive movement of population. We saw that in America, with the movement of workers from the north to the south and from the east to the west. But that would be much more difficult in Europe, because of different cultures and languages and the much smaller land base. I am sure that most countries would not want to have to accept millions of incomers.
  That leaves only one other way of dealing with the imbalances—transfers through the federal budget, as happens in America. That would mean that European taxation would have to rise dramatically. More money would go to Brussels, and European expenditure would rise dramatically as more money went to the poorer states. A federal state would become even more deeply embedded; and, like Washington, Brussels would become dominant.
  Britain's problem is that its economy is likely to diverge more than the economy of any other country, because we are different in several important ways. We are the only major oil producer in Europe, so a large rise or fall in the oil price would have one effect on Europe and the opposite effect on our economy. That would probably mean, too, that our economic cycle did not coincide with Europe's.

  727
  We also have a large floating interest rate housing debt. Most housing debt on the continent—it is a smaller debt—is fixed rate, so major changes in interest rates affect us correspondingly more. We saw the effect of the ERM on negative equity when we were a part of it. More importantly, most of our pension liabilities are fully funded and in the private sector.
  Let us consider the so-called benefits of a single currency. Transaction costs are often overstated. Even the EU says that they amount to no more than 0.1 per cent. of GDP. We trade more with the rest of the world, so we would enjoy less of the benefit. Major commodities such as oil and metals are already priced in dollars, anyway.
  The next argument is that the single currency is necessary for the single market. Canada and the USA make up the biggest single market in the world. At the Council of Europe recently. I asked a Canadian Member of Parliament whether, now that the Americans and Canadians have a single market, it would be advantageous to introduce a single currency. He said that it might be in economic terms, but that Canadians would never accept it, because they would lose their independence and be incorporated in the United States.
  It is also said that a single currency would lead to low inflation. That is a load of rubbish. Any country that runs its economy properly can have low inflation—we proved that when we left the ERM.
  It is said that there will be an interest rate premium for countries that stay outside monetary union. There might, in the first instance, but it will swiftly disappear, provided that we run our economy properly as a low-inflation economy based on sound money. Then the interest rate premium might decline, and even turn into a discount.
  As for the disadvantages, the costs will be enormous. In the past week, the Retail Consortium has brought out figures showing that conversion will cost £3.5 billion—that does not include the costs to the banks. Every accounting machine, till and computer will have to be changed, and the costs will surely be passed on to the customer. That will be bad for inflation. We all remember how decimalisation was used as an excuse to put up prices.
  What is more, we would have to hand over all our gold and hard currency reserves to the central bank—
  Mr. Deputy Speaker: Order.
  8.21 pm
  Mr. Brian David Jenkins: The hon. Member for Bridlington (Mr. Townend) mentioned exchange rates, and said that the pound has been getting stronger lately. He failed to point out that our exchange rate now is about 50 per cent. of what it was when the Government came to power in 1979.
  This evening I want to take a look at the Government's claims of long-term prosperity for all. Their record on the economy is perfectly simple: "Don't blame us for anything that goes wrong, but we want the credit for anything that goes right. If there is a recession, it is all the fault of the world economy—we can't do anything about it. But when there's a boom—aren't we doing well?"
  So let us take a look at our position in the world economy relative to other nations. Where do we fit in now? It is not where we were in the 1960s, 1970s or the
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  last century that matters; Parliament should be interested in where we are now and where we will be in the next 10 years. Beyond that it gets a little more difficult to predict with any accuracy.
  On any measure, we have been losing ground against our major competitors. I do not want to repeat all the statistics that are thrown back and forth, but under the Government's stewardship we have slipped from 13th to 18th in the international prosperity league since 1979.
  Since 1992—this shows the costs of the Government's mismanagement—almost 1 million people have signed on as unemployed in the west midlands at least once; and nearly 10 million countrywide have tasted unemployment in that period.
  I find it hard to think of 10 million people, but I can tell the House about one young man who spoke to me a couple of weeks ago. He came up to me at the bar and said, "When are you going to get rid of this lot?" He meant the Government of this country. He went on to tell me that he was 27 years old and that since he left school he had had 19 jobs and not left one of them voluntarily. He had been on short-term contracts or schemes throughout.
  I admired the young man's tenacity. I am not sure that I would have kept going after job No. 16—I might have given up. Then I began to think about his future. With no skills, he is condemned to a lifetime of working for low wages and obtaining benefits to top up his income. We pay out nearly £3 billion a year to low-wage people.
  Every pay rise this young man manages to gain will be taken away from him in benefits. He will be taxed, in effect, not at the much vaunted 40 per cent. "maximum" rate but at 150 per cent., owing to his loss of benefits.
  What is the man's future under this Government? Given their track record, it is possible to forecast his future fairly accurately. If he finds a partner, together they will try for social housing. In some parts of the country they will have a better chance of winning the lottery than of finding social housing. They may find a private rented property and get housing benefit. That will lock them into the poverty trap for years to come. They will not be able to buy because, on a short-term contract, they will find it almost impossible to get a mortgage. They will certainly face higher prices as the Conservative Government pile yet more VAT on all goods.
  If the couple have a family, they will send their children to the same school they attended—except that their children will be in larger classes than they were, being taught by some of the most overworked and stressed members of the work force. Many of the most experienced teachers will have been forced out to allow the school to meet its budget.
  This couple will have no dreams that their children will be better off than they were. They will be the first generation since the second world war not to believe that their children will be better off than they were. Our work force of the future is being given a worse start in life than the work forces of our major industrial competitors.
  If these people fall ill, they will have to go to a privately run hospital, where they will be asked if they are first-class or standard-class customers. They will live in a country where more than half the population pay top-up fees via private health schemes. The former workers, their parents, will be struggling along on ever decreasing

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  pensions. It is easy, when talking about how brilliantly low interest rates now are, to forget that many of these people put savings by in building societies all their lives and therefore rely heavily on interest rates. Low rates may be good for some; they are certainly bad for others.
  All this couple can look forward to is a place in a privately run nursing home, providing they have a house to sell to pay for it.
  We end up with a poorly skilled work force, an education system that is failing our children, declining housing conditions, short-term contracts, job insecurity, fear of unemployment and poverty in old age.
  Some firms are realising that they need skilled workers, and there are young men and women who want to work and need training. Indeed, many more firms are waking up to this fact. But over the past 17 years a lost generation has arisen. We owe those people the opportunity to acquire skills and increase their human capital, to the benefit of us all. In my area, there is one training centre catering for nearly 300,000 people. It currently has 18 apprentices. Many local colleges have given up engineering training altogether. The whole training infrastructure will have to be rebuilt, and even then it will take three years to produce the end product—the skilled workers.
  We are currently 42nd in the world skills league, but is that any wonder after 17 years under a Government who saw Britain's future as being a tourist attraction, heavily reliant on service industries? If we are doing better now, it is because of the efforts of our people and the many small firms that realise that they will have to succeed despite this Government.
  We certainly know that we have had the pain, but have we had any gain? The Government have made millions from North sea oil, billions from the sale of our assets and all the extra taxes and they have had 17 years of unbroken opportunity to govern. Have they produced long-term prosperity for all? They have looked after the privileged few at the expense of the majority. If they want to bring the feel-good factor back to Britain, the Chancellor should say to the Prime Minister tomorrow, "Let's climb into your limousine, go to the palace and tell Her Majesty, we tried, we failed and we're off."
  8.30 pm
  Sir Michael Marshall: Twenty-two years ago today I had the opportunity of taking part in the debate on the Loyal Address in the year in which I was elected. As was customary at that time, I spoke about my constituency. In what must now be my last speech on the Loyal Address, I want to return to that theme. I am glad to see my right hon. Friend the Member for Worthing (Sir T. Higgins) in the Chamber because we have shared many common causes in our part of the world.
  I should like to touch on what I see as the balance sheet of how the country's economic progress has affected my constituency over the past two decades. I make no apology for dealing with this in constituency terms because, I venture to suggest to right hon. and hon. Members, many of the problems faced by my constituency and many of its achievements can be mirrored in many constituencies throughout the country.
  For example, the decline of traditional manufacturing industry has been addressed in various ways. In my constituency, I am happy to say, we have seen the
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  emergence of an important element of the information technology industry. However, at the same time, we have seen the decline of smaller seaside resorts, as has happened in many places along our national coastline.
  I should like to pay tribute to what I see as one of the more enlightened parts of public expenditure and that is the pump priming and beneficial effect of the single regeneration budget as well as the imagination that produces fresh opportunities through millennium proposals.
  In our case, that has brought new partnerships of central and local government together with local businesses and individuals which have yielded positive results. In Bognor Regis, the recently opened SRB-funded business centre and the current millennium proposals for a pier, a pavilion and a lighthouse, are all part of a spirit of new enterprise. In Littlehampton, similar partnerships have emerged from SRB proposals.
  Currently, I place the highest importance on the submission put forward in September this year, based on a public and private partnership for the dredging of the harbour entrance. I know that my hon. Friend the Minister for Science and Technology, who is also responsible for the south coast, is keeping an eye on that proposal following his recent visit. It is only right to remind him that Littlehampton is the only major town on the Sussex coast that has not benefited so far from SRB funding.
  In Arundel, the town's natural attractions and its growth in recent years as a major cultural centre, have facilitated the continued growth of tourism. All that is positive, but Arundel immediately reminds us of the other side of the balance sheet and some of the problems that we have to overcome. We are facing major infrastructure problems which can be resolved only by action from the Treasury, together with co-ordinated Government activity. Arundel, like many other places, desperately needs a by-pass—in our case, as one of the last links in the east-west chain. However, the freezing of the present project after a decade of planning and agreement in principle within the national road building programme, threatens the local economy and the local environment.
  I was grateful to my hon. Friend the Minister for Railways and Roads for visiting Arundel during the summer recess and seeing the situation at first hand. He will be aware of the growing scale of the problem. I believe that the traffic congestion will become appalling because major work will have to be undertaken soon to meet new EU regulations on axle loads, which will affect the railway bridge at Arundel.
  That problem has to be seen as one of the effects of economic stringency in the search for a more stable economy during the lifetime of this Parliament. Now that the signs of that stability are increasingly apparent, we look for imagination and, dare I say it, a sense of urgency, to protect and develop our quality of life.
  Similar objectives apply on house building. I must raise my voice against the constant pressure for the infilling of the few remaining rural and green belt areas. For example, there is the situation involving the Ministry of Agriculture, Fisheries and Food and the former horticultural research institute in Littlehampton. Horticulture remains one of our most important industries. We have the largest glasshouse development in the country along the south coast between Chichester and Worthing. The closure of that institute was a major blow to our local economy.

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  We now have to guard against the immediate clash of policy and objectives between two Government Departments. The Ministry of Agriculture, Fisheries and Food is anxious to protect and preserve farming land such as that on which the institute was based. However, it is required by the Treasury to achieve the maximum sale price on disposal. That means that there is a temptation to sell to those who wish to maximise building for both domestic and industrial use. All that is happening at the same time as MAFF is putting forward its latest consultation initiative on the south downs as an environmentally sensitive area on which the land in question borders. Those are just some of the overall problems and achievements which I urge Ministers to recognise.
  Pensioners are a significant group in my constituency and make up one third of my electorate. I have joined that group recently and so have pledged myself to their interests with renewed vigour. I urged a better deal for pensioners in my maiden speech 22 years ago and I have been glad to see progress in the help provided for the most vulnerable as well as the general increase of the value of the state pension above the rate of inflation. That is in sharp contrast to the position in the last days of the Labour Government when pensioners' savings were being halved every two years.
  There is still much to do. One bugbear of mine has been the historic growth of ad hoc allowances such as the Christmas bonus, the over-80s supplement and other additions which have quickly become out of date. I urge my right hon. and learned Friend the Chancellor to look in his Budget at tax and benefit reform for pensioners. I believe that the raising of the capital disallowance should be built on as part of a reform of capital taxation. Above all, I look for continued progress in targeting those most in need to replace the costly and inefficient aspects of universal provision.
  I cannot end without a word about the wider world as it relates to my constituents. That means the view that they take about Britain's place in Europe and proposals for a common currency. I mentioned earlier the growth in our part of the world of high technology concerns which support the information technology and aerospace industries. I have found that the interests of those small and medium-sized businesses have provided a valuable input to my work in the House on committees such as the parliamentary information technology committee and the parliamentary space committee. In my part of the world, some larger companies such as Matra Marconi are blazing the trail well ahead of the political process in making Franco-British co-operation a success story within the wider context of the European Space Agency, which has enabled Britain to remain competitive with the United States and Russia.
  Looking further afield, we can reflect on the new strength and benefit which we derive from the Government's success in attracting inward capital. In our case, there is the Malaysian ownership of Lec Refrigeration. That is a classic case of a company that has established its base in the United Kingdom as the ideal centre from which to develop its Europewide business.
  Although I am sceptical about the economic distortion implicit in the early introduction of a common currency, and believe that the European Union's enlargement to include countries such as Hungary, Poland and the Czech Republic is a more important political priority, my
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  constituents well understand the major shift in our trading patterns. For example, they reflect on the fact that Britain now exports more to Germany than to the United States and Japan combined and they are rightly critical of those in our political system who would put our involvement and influence in the EU at risk.
  With that final endorsement of the Government's policy—as I believe that they have got the balance right—I take the opportunity to extend my best wishes to those who will follow me and to those who will remain in the House, upon whom will remain the continuing and heavy responsibility to steer the British economy in an increasingly challenging and difficult world.
  8.40 pm
  Mr. Thomas Graham: It is a pleasure to speak in tonight's debate. Last year, as every year previously, I read out a wee poem to the Chancellor of the Exchequer. I am sure that he is used to my poems, although they have never seemed to make much sense to him.
  Recently, on my way to my surgery on a wild and wintry morning in Scotland—the Minister should listen, although I do not think that she will like my story—I was driving along a country road in my constituency when I saw a man walking and decided to stop. When I reached him, I realised that I knew him, so I asked him how he was getting on. "Not so good, Tom," he said, "I am unemployed." He was a builder and a bricklayer and he could not get a job. As we were talking, he told me that another man whom I knew was not very well. "What is the matter with him?" I asked. "He is suffering from serious depression," he said, "He is a carpenter and he cannot get a job." That is a true story. Many people in my constituency want to work. They want the right to a wage and they are suffering from depression created by the Government.
  I have here a report on the construction industry which was sent to most hon. Members. The preface is by Martin Laing CBE, chairman of John Laing Construction Ltd. and chairman of the Construction Industry Employers Council. He is not known to be a Labour supporter, but the report refers to the state of the construction industry and we should bear it in mind that we are debating the economy.
  The report states:
  "The very size of the British construction industry means that when it is in recession, as it is at present, then confidence in the wider economy is also undermined. Construction emerged from recession late—in 1994—and after just one year of modest growth, it fell back into recession in 1995 where it has remained since".
  That does not auger well for the unemployed men and women in my constituency who seek work in the construction industry.
  The report also tells us how many people work in the construction industry—an enormous number—yet in the Queen's Speech, the Government provided no hope for the building workers and made no provision for them. Earlier today, when I asked the Chancellor about the broken-down schools and the potholes in the roads, he said that he was not prepared to spend any more on public sector borrowing. What does that mean? He is condemning the country to being in a state of disrepair, ill equipped for the next century.

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  The Government have lived on the proceeds of privatisation of oil, gas and much more. They have sold their silver. They have an antiques fair every week selling this and that. Do they put anything back into the nation? No, they make their rich friends richer while the poor get poorer. Unemployment is deep seated. Some 2 million people are unemployed.
  The Government continually refer back to the Labour Government in 1979. That is fine. If they continue to do that, their message will be lost. If we fast forward, by the next century I shall talk about that Labour Government and say that, in those days, unemployment was under 1 million and most of my constituents were in work; they could afford holidays, pay their rent and enjoy living. Now they do not enjoy living, because the factories are closed—they have been left empty for so long. However, I am delighted that, last week, a company invested some money in my constituency.
  Car boot sales are booming. I joked about the Minister who sat on the green Conservative Benches and used to say to the unemployed, "On your bike." The car boot sales are full of bikes. They are the bikes that went to empty factories. The people of Scotland—and of some parts of England—travelled about on their bikes, but they could not find employment.
  Young folk in my constituency work for buttons. The low wage economy is shocking. At Glasgow airport—a booming airport—I spoke to a man whom I knew. When I asked, "What are you doing these days?" he said that he was a cleaner. He was working 12 hours a day for £3.06 an hour. He received no payment for anti-social hours. Does anyone in the Minister's family work for £3.06 an hour for a 12-hour day? I do not think that any Minister's family works for such a pittance.
  I have two sons who are both computer buffs. One is an honours graduate who is unemployed. He is into the Internet and the information highway. Both my sons are very computer minded. It is unbelievable that they are unemployed in this day and age. They have applied for hundreds of jobs. They have been to interviews and just missed jobs.
  What a state we are in. The Government are talking about the possibility of dropping income tax to 20p in the pound. That is absolutely ludicrous, given that that represents a golden opportunity to invest money in education and ensure that every man and woman is capable of accessing the information highway.
  It is mind-boggling, as I am sure the Minister has seen. I have seen my son asking questions and getting answers from America within minutes. He asked questions about dyslexia and the woman who replied was a professor in America who said that she had conducted a study. My son has the power of information and education. It is the power to progress. It is mind-boggling that the Government have not sat down and made a plan to provide access to that information for every school, workplace, library and hospital—the Internet also covers medical matters. The Internet is a highway of information and we are a long way behind. The Minister would have people counting on an abacus.
  I am not really computer minded, but I watch my sons. My sons have a bit of backing from their father, but many people in my constituency can hardly afford a hot dinner.
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  Because of Government policy, they cannot afford to pay their rent or their electricity bills. VAT on fuel punishes my constituents, some of whom would do well if they had access to information and education to help them to get a job.
  Graduates are unemployed when they could be training and educating our young people. Boys such as my sons could be educating the nation in information technology. We should not squander that opportunity. It is unbelievable that, after 17 years, the Government struggle to put up an argument for why they are in power. After 17 years, they will not take the right step and have a general election.
  I see that I have only one minute left to speak, but I shall be able to complete my remarks. I heard the Chancellor of the Exchequer knock Scotland like hell. That is because the people of Scotland will have a Scottish Parliament. They will make such a success of that Parliament that it will blaze a trail for the rest of the United Kingdom to follow.
  The young people of Scotland have great talents. The same is to be said of Scottish council employees and civil servants. There is great talent also in the private sector. Scottish politicians of all parties will make an incredible success of a Scottish Government and Parliament that are based in Edinburgh. Take my word for it. We shall blaze a trail and we shall be on the highway of power, information and technology. We shall have well-educated young folk.
  8.50 pm
  Mr. Bob Dunn: I am slightly disappointed because I was hoping that some Labour Back Benchers would take the opportunity to endorse Labour's proposals for a new windfall tax. There has been no endorsement of that policy by Labour Members because they have now realised that a windfall tax on private utilities would be borne by the consumer; in other words, to pay for the tax, companies would be forced either to reduce investment or to charge higher prices. That would be new Labour, higher bills. I gather that the equivalent of a £3 billion increase in windfall tax on the utilities would be a 20 per cent. increase in value added tax.
  I am prepared to predict that, about 10 years from now, there will be very few current Members who will be prepared to admit that they were at any time Europhiles. The Maastricht treaty of the European Union is nothing less than a detailed programme and timetable for economic, monetary and, therefore, political union.
  Behind monetary union stands an unelected European central bank, which would require and have complete control of the foreign exchange reserves of each European Union member state. It would take away the right of individual member states to determine the level of short-term interest rates, exchange rates, money supply and the extent of public expenditure. As a bank, it would decide the level of taxation, a right which is now exercised by our Government and by us as democratically elected Members.
  A European central bank working with the European Commission would secure the total and absolute right to exercise those powers throughout the European Union. It would be able to take punitive action against individual nation states that could not or would not conform. Such a bank, with the Commission, would become the most powerful economic and political institution ever known.

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  The attempt to ensure that identical economies could be established in each of the very different nation states throughout Europe is both dangerous and unrealistic. It is dangerous because, as my right hon. Friend the Member for Worthing (Sir T. Higgins) said, it would create tensions within individual states, tensions that would erupt into social and economic chaos.
  We have only to look at the damage that is being done to France, where every effort to force the country into qualifying for the criteria for monetary union results in public disorder, strikes, disobedience and anarchy. There is a lack of realism, because it will take years to bring the economies of Portugal, Greece and Spain, for example, into line with those of the more advanced nations such as Britain, France and Germany.
  Everyone in the House knows that Britain trades across the world. It always has and it always will. Britain is in deficit with every European Union country, with the exception of Italy. Our profitable trade is with the rest of the world. We benefit from massive inward investment from across the globe because of our refusal to impose the social chapter.
  Labour is determined to end the Prime Minister's opt-out and to introduce the social chapter. I believe that that would bring back the nightmare of pre-1979 industrial anarchy. It is no secret that Germany, especially, resents the opt-out that has been won by the Prime Minister. That is because the Germans are losing investment and jobs to Britain.
  Germany maintains that that gives Britain an unfair advantage and wishes to eliminate it through the imposition of the social chapter. Germany would do so by the introduction of qualified majority voting, a move supported by Labour that would probably result in all reforms introduced since 1979 being eliminated. That, combined with the actions of the European Court of Justice, would see the enforcement of uniform legislation throughout Europe. Our Parliament could do nothing about that. Once protections are swept away never to return, it is all over for those of us who cherish parliamentary democracy and accountability.
  There are two significant areas of incompatibility between us and the rest of Europe, the first being pensions and the second interest rates. In the United Kingdom, the state retirement pension is paid for by those currently in work through tax payments and national insurance contributions. All private pensions are funded. It is a system through which individuals have saved money in an earmarked personal fund.
  That is not true of the continent, where in Germany, France and Italy, for example, pensions are largely funded by the state: thus a time bomb is being created in Europe where an increasing number of pensioners rely on a decreasing number of workers to provide pensions for those beyond statutory retirement age. Given the increased population of retired people, European countries will reach a point where they are unable to pay for pensions and social benefits unless they tax or raise interest rates to levels that we would consider to be unacceptable and penal.
  If we joined a single currency and entered the European monetary union, we would no longer have control over tax and interest rates. We would see our private pension funds being used to subsidise the rest of Europe.
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  The vast majority of personal borrowing in the United Kingdom is for the purchase of housing, and 90 per cent. of that is entered into at variable interest rates. Home ownership is a markedly British phenomenon. In the rest of Europe, there is little home ownership, and that which exists is on low fixed interest rates. It is clear that any rise in interest rates, for the reasons which I have given, would adversely affect British home owners more severely than their numerically fewer European counterparts.
  I am opposed to a single currency and to a federal state of Europe. The Opposition parties hold a different view, with the exception of the hon. Member for Hackney, North and Stoke Newington (Ms Abbott), who made an intelligent and courageous speech.
  The answer to the Labour party's commitment to Europe is simple. In The Sunday Times on 9 August 1992, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said:
  "Labour has converted to Europe because Europe has converted to socialism."
  That is the reason for the commitment.
  I could talk for much longer on my favourite subject of education. There are education black spots in this country, but we must remember where they are and who created them—the Labour party. Labour has condemned all our education reforms. It hates our grammar schools, the city technology colleges, parental choice, the private system and Church schools—but then it always has. Despite the Opposition's best endeavours to cover up that fact, the public are rumbling them. If I were an Opposition Member, I would not be counting my votes before they were cast. There is still a long way to go and the people are ready and willing to back us, because we are backing the people against socialism, against socialism, against socialism.
  8.58 pm
  Mr. Stephen Timms: There is a sense of unreality about today's debate. On the one hand, we have the Chancellor's sunny claims about the wonderful state of the economy and our being the enterprise centre of Europe; and there are statistics that can be called upon to support that version of reality. On the other hand, however, there is the growing fear that what we have today is just another pre-election boom engineered, like Lord Lawson's, for electoral purposes, only to lead to massive economic problems after the general election.
  Understandably, but undeservedly, the Government want to claim the credit for the current apparently relatively benign economic conditions, but behind those superficially relatively benign conditions lurks the threat of yet another disastrous bust just beyond the election.
  The finance director of a major public limited company told me last week that, were it not for the imminent election, interest rates would have been raised well before today. That is what the real condition of the economy unfortunately requires and that is why the Chancellor has reluctantly had to increase interest rates today by 0.25 per cent. Ten days ago, one of the Chancellor's advisers, Professor Congdon, said that the state of the economy was such that a 1 per cent. rise was needed, given the scale of the problems we face.
  The financial director to whom I spoke also told me that a tidal wave of cynicism would engulf any tax cuts in the Budget, because the state of the economy means

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  that they can be neither justified nor sustained. It was no surprise this morning to find the director of the National Institute of Economic and Social Research calling not for tax cuts but for tax increases to restrain inflation. That is the basis of the case that I want to develop today.
  Like everyone else, I shall enjoy a sunny pre-election boom but, in truth, the condition of the economy demands urgent measures if we are not to slide shortly into a post-boom, post-election slump, just as we have done before. Worry about the state of the economy is spreading, and the most disturbing sign of weakness is the state of the public finances. Indeed, even some Conservative Members acknowledged that fact.
  The public sector borrowing requirement remains very high, and the Chancellor's forecasts of it have proved hopelessly over-optimistic. Less than two years ago, he was predicting a PSBR this year of £13 billion, but that figure now looks absurd. Last November, he had revised it up to £22.5 billion. This summer, it was up again—to £27 billion. What he will come up with in the Budget at the end of next month is anyone's guess.
  The Chancellor's sunny optimism about the future depends entirely on the same quality of forecast that he made previously. If we are to share his optimism, we have to do so on the basis of forecasts from the same stable, which has been resoundingly discredited in the past. The Confederation of British Industry estimates that next year's total borrowing requirement could well be as high as this year's, so even the slow downward trend will have ground to a halt altogether. The CBI's concerns about Government borrowing are echoed by the Institute of Directors, which describes the state of the public finances as "ever more disturbing". In a succinct and brutal critique, it says:
  "There is nothing wrong with the Government's objectives for borrowing … The problem is the alarming lack of progress towards"
  achieving them. It is absolutely right.
  The trend in borrowing is downward only because of the unprecedentedly high PSBR a couple of years ago. In 1993–94, the PSBR stood at £45 billion, or 7 per cent. of gross domestic product. That is high compared with the level under the Labour Government in the late 1970s, despite what the Chancellor said. Judging the current level of borrowing against that benchmark is a thin line of defence, especially given that investment in the economy is so low. That is the Government's central economic failure, the source of the gathering storm clouds beyond the sunshine which the Chancellor exhorts us to bask in today—storm clouds pointed to by the interest rate rise announced today.
  Britain is failing on investment. The level of investment has recovered more slowly in the current upturn than in any other this century and, far from being the enterprise centre of Europe, we are investing less per head and less as a proportion of gross domestic product than Portugal or Spain. The welcome investment from outside Europe cannot make up for the disastrously low levels of investment from within the United Kingdom. Our economic problems will not be conquered while that continues.
  I have listened to a long succession of Conservative Members denouncing the project for the single currency, but I am doubtful whether we can overcome our
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  investment problems if France, Germany and Benelux—and, in all probability, Ireland—are in a single currency zone with low interest rates and we are outside, inevitably with higher rates. We will not be able to afford to stay outside the Euro-zone. We need that investment and so far we have failed to secure it. The Government have failed after 17 years to secure it. If we are to continue to have significantly higher interest rates than in continental Europe—we heard the figures for a number of countries earlier, not including Italy, and lower rates will be achieved in the Euro-zone—we will continue to fail to secure the investment that we desperately need.
  One of the signs that we are heading for a short-term, unsustainable boom is the growth in consumer spending. The Chancellor's statement today announcing the interest rate rise boasts of growth in retail spending of 3.5 per cent. The summer economic forecast projected that consumer spending would grow in 1997 by 4.25 per cent. The last time consumer spending grew by that amount was in 1988: two years later, inflation was at 10 per cent. and we were in the midst of a disastrous slump. In the first part of the 1990s, consumer spending averaged less than 1 per cent. growth annually. Last year, it was 2 per cent., it is now 2.5 per cent. and next year the Treasury says it will be more than 4 per cent. That would be great if it lasted.
  I questioned the Governor of the Bank of England when he attended the Treasury Select Committee in July. I asked him whether he thought that a growth in consumer spending of 4.25 per cent. was credible. He said:
  "Certainly, I would think a rate of over 4 per cent … would not be sustainable."
  Just as the Governor was right today on interest rates, I fear that he is also right on that point.
  Aside from interest rates, a number of other indicators are lining up to suggest the return of boom and bust. Barclays bank, in its latest quarterly review, points to signs that it finds worrying. House prices are beginning to spiral upwards, which will bring much-needed relief to people trapped in negative equity, but projections for increases of between 10 and 20 per cent. in the next year are alarming and point to overheating in the economy. The current low levels of retail stock relative to sales are picked out by Barclays because they will have a multiplier effect as they are corrected.
  Barclays points to windfall gains for individuals from building society mergers which might cause a surge in consumer spending. A surge of approvals is likely, we hope, for private finance initiative projects currently stuck in the bottleneck the Government have created. A significant number of lottery-funded projects are likely to start in the next 12 months. All those factors could lead to an unsustainable, short-term surge in capital spending. Barclays concludes:
  "as things stand, the risks appear skewed to a period of demand and output growth significantly above trend."
  The bank is right to warn of the risks of returning to boom and bust. If that is the outcome, after the next election we will face the dreadful problems that we had after the last one.
  If there are to be tax cuts in next month's Budget, there is no doubt whom those cuts should benefit the most. They should be targeted on the least well-off—the people who have lost out most through the policies of the Government. The bottom tenth of the population is 18

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  per cent. worse off, after allowing for housing costs, than they were in 1979. Those are the people whom the Chancellor should be targeting long before he turns his attention to more handouts for well-off people by abolishing taxes on capital gains or on inheritance.
  I warmly welcome the commitment that my right hon. Friend the Member for Dunfermline, East (Mr. Brown) gave earlier to reduce VAT on fuel to 5 per cent. The analysis by the Institute for Fiscal Studies in this year's "green budget" shows that that would benefit the least well-off disproportionately. It constitutes a key first step in the right direction, healing some of the wounds.
  The Institute for Fiscal Studies also considered the impact of a cut in the basic rate of tax to 20p in the pound. The Chancellor has said that he would like to do that in due course. The institute compared the effect of spending the £7.5 billion that would be needed to achieve the Chancellor's objective with that of spending the same money to introduce a lop tax band. Such a band could be introduced on the first £4,000 of taxable income for the £7.5 billion that the Chancellor would need. The institute has demonstrated that the 10p lower rate would be more beneficial not only to those on the lowest incomes but to middle-income earners. In fact, only the top 20 per cent. of earners would gain more from the 20p basic rate than from the lop rate proposed by my right hon. Friend. Putting at least some of that money into an increase in allowances, or a cut in the overall rate of VAT, would further increase benefits for the least well-off. That is the direction in which we should head.
  Today's interest rate rise is the Chancellor's acknowledgement of problems ahead—of storm clouds on the horizon. However attractive the figures look on the surface, the Chancellor has acknowledged, in his decision today, the problems that lurk around the corner. What we need is a permanent higher level of investment in the British economy. That alone can move us forward, but, after 17 years, this Government have failed to deliver it. It is time for another Government to take their place.
  9.11 pm
  Mrs. Ann Taylor: Today's debate really started outside the House. It started this morning, on Radio 4, when the Chancellor demanded that the shadow Chancellor virtually make a full Budget statement today. Indeed, the Chancellor more or less repeated that request in his speech this afternoon.
  I suppose that the Chancellor did that to deflect flak from the interest rate announcement that he made subsequently. Although he told the House—or tried to get the House to believe—that the fact that interest rates were going up was a sign of success, I feel that his statement to that effect carried little conviction.
  Having heard the Chancellor's boast that the rise in interest rates was a sign of success, I looked up what he had said when they fell. Lo and behold, the Chancellor believes that when interest rates go down that, too, is a sign of success. He said then:
  "Interest rates going down reflects our success in creating a prosperous economy."
  The Chancellor's attitude in the House today contrasts markedly with his attitude when interest rates have been cut. Certainly, his attitude in the House is not in line with comments that have been made outside the House, even today.
  740
  Interestingly, today's Evening Standard says that the rise in interest rates
  "awoke Tory fears that it marked a critical upward turning point which could cost the Government dear in the run-up to the General Election."
  Of course we expect Tory Chancellors to tell us that all is well in the run-up to the general election. That is one regard in which they are consistent—telling us that all is well before an election. What the Chancellor said today, and what he will doubtless repeat on Budget day, exactly parallels what happened before the 1992 election.
  I think that we all recall the last Budget before the 1992 election. In his Budget statement, the then Chancellor said:
  "The Government know and have done what is required to build a strong economy."—[Official Report, 12 March 1992; Vol. 205, c. 1063]
  The Prime Minister said that the country had steady, sustainable growth.
  We also remember the election campaign. We remember the daily press conferences, with the Deputy Prime Minister saying that the election was not about education, but about tax; that it was not about health, but about tax; and that it was not about crime, but about tax. In many ways, he was right. However, what he failed to mention was the list of 22 new taxes that the Government had in their back pocket, but which they simply failed to mention during the general election campaign. During those few days between the Tory election Budget and general election day, the economy boomed; afterwards. the country came back down to reality. Having listened to the Chancellor's equally complacent predictions today, I shudder to think what might be the 22 new taxes that the Tories might find, were they ever to be given the chance again.
  I want to say a few words about one tax—value added tax. Before the last election, the Prime Minister said:
  "I have made it clear we have no plans and no need to extend the scope of VAT."
  Yet the very year after the election, the Prime Minister and his Tory Government introduced VAT on domestic power and fuel. The Opposition take a wholly different approach from the Government on that issue. As my right hon. Friend the Member for Dunfermline, East (Mr. Brown) repeated this afternoon, Labour will reduce the rate of VAT on fuel to 5 per cent.—the minimum possible. In contrast, the Tory Government not only introduced that new tax, they tried to double it. Only the actions of the Opposition stopped that. We have been specific about our proposals. We will cut VAT on fuel.
  Mr. David Shaw: Earlier today, I asked the right hon. Member for Dunfermline, East (Mr. Brown) to confirm that the price of Labour abolishing VAT on fuel is a windfall profits tax. A £3 billion windfall profits tax is equivalent to a 20 per cent. rate of VAT. Will the hon. Lady confirm that Labour wants to hit the pensioners of this country with a 20 per cent. tax where there is only an 8 per cent. tax now?
  Mrs. Taylor: I wish that the hon. Gentleman had listened to what I have said or to what my right hon. Friend the Member for Dunfermline, East said earlier. We are not able to abolish VAT on fuel because of the way in which the Government introduced it and because of the

  741
  European Union rules that apply. My right hon. Friend made it quite clear that we will introduce a windfall tax. The calculations that the hon. Gentleman has pretended to make are wholly irrelevant.
  I want to stay with the issue of VAT on fuel. We have made it clear that we will cut the rate to 5 per cent. Will the Government say that they are willing to match that promise? Will the Chancellor do it in the Budget? Or are the Government still harbouring the intention of actually doubling VAT on fuel after the next election? The choice is clear. Labour wants to cut VAT on fuel; the Government want to double it. Ministers should make their position clear this evening.
  I hope that the Leader of the House will cast light on some VAT issues. This afternoon, the Chancellor did not deny the quotation used by my right hon. Friend the Member for Dunfermline, East, showing that the right hon. and learned Gentleman wants to extend the range of goods on which VAT is imposed, including food and children's clothes. The right hon. and learned Gentleman said one significant thing this afternoon, that he wants common minimum rates of VAT throughout the EU. In effect, that would mean giving up zero rating. I hope that the Leader of the House will confirm that and tell us when the Chancellor intends to spell out the time scale.
  Mr. Kenneth Clarke: Before any silly hares get running, I have always made it clear in all my discussions at the European Union and here that the right to retain the zero rates must remain a British option. I have always argued in Europe that we retain the right to decide whether or not we keep the zero option.
  Hon. Members: Apologise.
  Mrs. Taylor: We have got used to U-turns this week, and here is another one from the Chancellor—made between 4 o'clock this afternoon and now. If he agrees on the need to keep zero rating—[Interruption.]
  Mr. Deputy Speaker: Order. While I have been in the Chair every other Member has had a reasonable hearing. I hope that Conservative Members, not least those on the Front Bench, will give the hon. Lady a fair hearing.
  Mrs. Taylor: We welcome that U-turn as far as it goes, but we recall the Government's history on VAT. They denied that they would introduce VAT on fuel, but then did so, so I am not sure that the Chancellor's denial just now is worth a great deal.
  Over the years, we have seen that the Government are willing to put up VAT for ordinary families and pensioners. We have also heard today, yet again, exactly what are the Government's priorities—the abolition of capital gains tax and inheritance tax, which will benefit a few. The abolition of capital gains tax will cost £3 billion a year and the abolition of inheritance tax will cost £1.5 billion a year, and yet half of the benefit of that £4.5 billion will go to just 5,000 people. That is an example of Tory priorities and I do not understand how the Chancellor can contemplate that and still refuse to cut VAT on fuel.
  742
  We have heard a great deal in this debate about the economy and no doubt it will dominate much of the political discussion in the next few weeks, but other important issues have been mentioned today. We have heard a number of well-informed contributions from Members on both sides of the House. For the most part this has been a serious debate, and for Tory Members an often sombre debate, perhaps because of the announcement of the increases in interest rates.
  I should like to comment on many of the well-informed contributions that we have heard, but I will confine my remarks to a few of them. I welcomed very much the speech of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). In the past, his sentiments were often echoed on the Conservative Benches, but not in recent years. I welcomed in particular his clear statement and acknowledgement of the connection between unemployment and social unease. I thought that his contribution on that should have been listened to carefully by all hon. Members, especially those on the Conservative Benches.
  I also welcome some, although not all, of the comments of the right hon. Member for Worthing (Sir T. Higgins). I cannot say that I agreed with his economic analysis, but I appreciate what he said about the difficulties that business managers may have in the future because the Budget debate and the debate on the Queen's Speech are often so close together and cause significant congestion to parliamentary business. He made a measured contribution, as he often does on such occasions. We shall miss him in future debates, and we shall particularly miss his contributions on House of Commons matters, which have been greatly valued. [HON. MEMBERS: "Hear, hear."]
  The contribution of my hon. Friend the Member for Dudley, West (Mr. Pearson) revealed how difficult it is and how long it takes to get the Government to close even glaring tax loopholes. I thought his example was pertinent and useful to all of us. My hon. Friends the Members for Dundee, East (Mr. McAllion), for South-East Staffordshire (Mr. Jenkins) and for Renfrew, West and Inverclyde (Mr. Graham) made much of a basic fact which cannot be denied: after 17 years in government this Government are running out of excuses. They highlighted extremely well the legacy of a fractured society that will be our inheritance from the Government when the election comes.
  I wish that Conservative Members had taken up that theme of the Father of the House. While so many of them ignore it we shall not make real progress in mending some of the fractures and resolving the difficulties that have been caused by those who believe that there is no such thing as society. Over the past few days there have been salutary warnings that every hon. Member should bear in mind.
  Many hon. Members may feel, as I do, that it is difficult to believe that this Session is only a week old. We used to be told that a week is a long time in politics. On Wednesday four hours was a long time—long enough for what the Daily Mail called a precipitate U-turn. As The Times put it, four hours after the Queen outlined the final pre-election parliamentary programme of 13 Bills the Prime Minister, at a stroke, increased it to 15. Since then. the week has hardly got better for the Prime Minister. Following his concessions on the stalking Bill and the paedophile register, concessions and U-turns have come thick and fast.

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  At the end of the week, the Home Secretary consented to look at the banning of combat knives—a measure that we have been demanding for some years. The Home Secretary was still using the excuse that there were problems of definition. I have a suggestion for the Home Secretary and it is appropriate that the Chancellor is still in his place. If the Home Secretary has a problem trying to define combat knives, he should go to the Chancellor and suggest a tax on them. The Treasury will quickly come up with a definition which could be used to ban the sale of such knives.
  Yesterday's U-turn was quicker than the one on Wednesday. On the issue of caning in schools, the Secretary of State for Education and Employment proved that that right hon. Lady was for turning—or perhaps spinning, if the speed of the change is anything to go by. With apologies to some of my hon. Friends and to rugby league supporters, I have to say that in the past week the Government have let in as many goals as Manchester United, although I suspect that the recovery of Ministers will not be so rapid as that of Manchester United. I have heard the bad news this evening and as a Bolton Wanderers supporter I keep a close watch on Manchester United.
  The difference between the Government and Manchester United is that the football club's European record is somewhat better than that of the Government. The problems that the Government face over Europe have added to their confusion and difficulties. Last week the Prime Minister showed that he has so little confidence in the Minister of Agriculture that he sent four other Ministers to Europe as minders. One can picture the Minister going into the negotiations complete with his "I am a tough guy" hat and flanked by his four minders. Those minders were there not just as Ministers offering support, but to keep an eye on the Minister of Agriculture and probably also on one another.
  The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I hesitate to interrupt the hon. Lady, but her remarks are over the top. She must be aware that the United Kingdom has four Ministers with responsibility for agriculture. It is reasonable that each part of the UK should be represented.
  Mrs. Taylor: During the whole fiasco throughout the summer, it has not been Government practice to send five Ministers to all these meetings. Nor has it been practice on all occasions for each of those Ministers to come back and spin a slightly different story. With all that happening, it is perhaps no wonder that no progress is being made in Brussels.
  While those Ministers were keeping an eye on one another and trying to outdo one another, in Luxembourg on this occasion, the Chancellor of the Duchy of Lancaster was saying on the radio in London that the Government
  "may have to implement the Florence agreement".
  That is a long way from the Prime Minister's statement:
  "We aim to be in a position to tell the Commission by October that we have met the necessary conditions for decisions to lift the ban on two of the five stages".—[Official Report, 24 June 1996; Vol. 280, c. 21.]
  He also said that he expected the ban on the fourth stage to be lifted by November—within two days from now. No progress has been made on that, although we are nearly at the point by which the Prime Minister said that the ban would be lifted.
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  Confusion still exists in the Government. Consumers lack confidence and farmers face more hardship than ever. What has happened on bovine spongiform encephalopathy is typical of what happens when there is weak leadership and a Government with no sense of direction.
  This Queen's Speech was never going to be ordinary, not just because it is the last one before the general election, but because this will be nowhere near a full Session of Parliament. The Prime Minister has gone on record as saying that the election will take place no later than I May, which would mean that Parliament would be dissolved close to Easter. Of course, it could be earlier. That means that the Government had to select issues that they felt should be a priority or that were not controversial.
  I do not deny that some of the issues chosen should be given priority. I think that virtually all hon. Members agree, although I know that some Conservative Members do not, that there should be stricter controls on guns and that it is right that that should be in the Queen's Speech, but our constituents have many other concerns which have been totally ignored in the Queen's Speech that we have been debating for the past week.
  For a start, job insecurity has not been touched on. We should all remember that since the Prime Minister took over—
  The Parliamentary Under-Secretary of State for Scotland (Mr. Raymond S. Robertson): Hear, hear.
  Mrs. Taylor: The hon. Gentleman says, "Hear, hear," but he may not like it if I tell him that in Britain there are 1 million fewer jobs than when the Prime Minister took over.
  Much needs to be done. Last week, on the first day of the debate, my right hon. Friend the leader of the Labour party gave a list of issues on which the Government should have been taking action. They included a ban on the sale of combat knives, ensuring that we halve the time that it takes for persistent young offenders to come to court, ensuring that we have statutory crime prevention bodies and introducing a statutory minimum wage to tackle the worst abuses of poverty pay and the abuse of taxpayers subsidising poor employers. He said that we should have a Bill to allow capital receipts held by local authorities to be used to build new homes and that we should have a windfall tax. He explained that devolution should be a priority. The Government have had a week to consider those measures, but we still await answers—to discover whether they will make further U-turns.
  The simple fact is that 17 years should have been long enough to get more decisions right. The Queen's Speech contained yet another education Bill, correcting some of the mistakes of the past. The Government have produced 19 education Bills. The Queen's Speech contained another criminal justice Bill, correcting some of the mistakes of the past. The Government have produced 33 criminal justice measures. The Government simply will not listen. That is why they get so much of their legislation wrong.
  Enough is enough. The Government are drifting, and they are dangerous. They are drifting in a manner that is damaging the country. Thank goodness this is the last Queen's Speech from the Conservative Government.
  9.35 pm
  The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): There is something slightly curious about the hon. Member for Dewsbury (Mrs. Taylor) placing such emphasis on legislation correcting the mistakes of the past, in circumstances in which much of the legislation that she and other Opposition Front Benchers now support was vigorously opposed by them when it was introduced. Each successive piece of legislation was accepted by them only when it had been proved that it was what the public wanted and that it was the right thing to do.
  Mrs. Ann Taylor: Does the Leader of the House acknowledge that that is not quite correct, and that it is certainly not correct on all occasions? Does he recall that, in June 1988, I moved an amendment banning the sale of knives to juveniles, and that it took some years for the Government to come round and agree that that was the right decision?
  Mr. Newton: Given that the hon. Lady had been the shadow education spokesperson for some time, and one of those who had persistently opposed the education measures that the Opposition now squirm and wriggle to accept, her point does not make her case. Moreover, in preparing for the final Queen's Speech of this Parliament, the hon. Lady has not taken the precaution of reading the speech of her predecessor, the right hon. Member for Copeland (Dr. Cunningham), after the final Queen's Speech of the previous Parliament. I read it, however, because I had much fun with him in the year after the 1992 general election, after I had become the Leader of the House. Like the hon. Member for Dewsbury, he said:
  "We look forward to the next Gracious Speech, because we shall write it."—[Official Report, 7 November 1991: Vol. 198, c. 662]
  I think that she will find that she is as wrong as her predecessor was five years ago.
  As the hon. Member for Dewsbury rightly said—it is one matter that I do not dispute with her—we have had a debate in which many thoughtful and thought-provoking speeches have been made. I have not heard them all, but I heard, in particular, the speech early in today's debate by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who very courteously apologised to me for the fact that he would not be able to be in the Chamber for the reply to the debate. I am sure that his speech, weighty as it was, will be carefully studied by my right hon. Friends the President of the Board of Trade and the Secretary of State for National Heritage.
  We also heard a thought-provoking—I suppose that that is the right expression—speech from my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), which I am sure will be widely studied.
  I hope that I may be forgiven for adverting, as the hon. Member for Dewsbury did, to one other speech in the debate—that of my right hon. Friend the Member for Worthing (Sir T. Higgins), which he prefaced by saying that it was his last speech on a Queen's Speech. He will be very much missed for the contributions that he has made on this and other occasions. His remarks, and his references to issues that are of concern to me as Leader of the House, lead me into observing a tradition for the Leader of the House on such occasions—saying something on matters of interest to the House. It may be
  746
  of interest not only to the House, however, as the workings and procedures of the House—although they can hardly yet be described as a daily talking point wherever people gather—undoubtedly have attracted growing public interest in recent years.
  This is, of course, the last such debate in the present Parliament, so it is perhaps worth spending a moment or two on the very substantial changes that we have seen since it was elected in April 1992—changes which I think have contributed significantly to the further evolution of what, because of its capacity to evolve, is probably the most enduring political institution of its kind in the world.
  Although the Jopling report goes back to the previous Parliament—and, as ever, I pay tribute to my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) and to my predecessor, my right hon. Friend the Member for South Norfolk (Mr. MacGregor), for the groundwork that they did—it is in this Parliament that we have carried through what I believe has proved a radical improvement in the way in which we conduct our parliamentary business.
  There are, I know—there are one or two in sight at the moment—those who hanker for what they regard as the good old days when Members, especially Back-Bench Members, were hardly ever away before midnight and rarely before the small hours. I must frankly say that I do not, and I think that the great majority of Members share my view that the House has gained from more sensible and predictable sitting hours; from the better balance between what we do in the Chamber and what we do in Committee; from the development of voluntary agreements—I pay tribute to the hon. Member for Dewsbury and her colleagues for this—between the parties about how business is to be handled; from the greatly increased number of opportunities for individual Members to raise topics of their choice; and from the arrangements for Thursdays and Fridays, which have made it easier for Members to combine their parliamentary duties with their duties elsewhere. I once again express my gratitude to the hon. Member for Dewsbury for her part in that and to my right hon. Friend the Member for Honiton (Sir P. Emery), the Chairman of the Procedure Committee, for the part that he, too, has played.
  If I can claim particular credit for anything, it is for the associated move—not carried out without difficulty—to give the House greater notice of forthcoming business and of recesses. I hope that that is now firmly established, and I am glad to confirm tonight that I shall continue to do everything I can to consolidate that. In saying that, I am conscious that in the equivalent debate last year, I was able to announce dates for the Christmas and Easter recesses. The House will realise that our debate this year is taking a place a month earlier than its equivalent last year. It would be a little premature, especially when we have so recently returned from the recess, to attempt to predict those dates with exact precision. There are also, of course, a number of other uncertainties about the position next spring, which will have to be taken into account. However, I assure the House that as soon as I sensibly can, I shall give it details of the proposals for the Christmas recess although they will, of course, have to be subject to the progress of business.

  747
  Alongside the Jopling reforms there have been a number of other changes, which deserve at least a mention. Prominent among them is the enhanced role that we have given, or are seeking to give, to the Scottish, Welsh and Northern Ireland Grand Committees.
  The Scottish Grand Committee has met regularly in Scotland, not just in Glasgow and Edinburgh, but in a range of other locations, from Inverness to Dumfries. My right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor have taken part in the Committee's proceedings and have vigorously defended and explained the Government's policies to Scottish Members before a Scottish audience. That has been widely welcomed.
  We have also made it possible for the Second and Third Readings of Scottish Bills to be debated in the Scottish Grand Committee, which in turn, as I hope will be demonstrated again within the next couple of days, makes it easier to find room in the legislative programme for worthwhile but non-contentious Scottish Bills. We have improved the procedures in a number of other ways as well.
  We have also introduced improved procedures for the Welsh Grand Committee, with the additional ingredient that Welsh Members will be able to conduct parliamentary proceedings in Wales in the Welsh language. My right hon. Friend the Secretary of Stale for Wales is anxious to hold Welsh Grand Committee meetings under the Standing Orders agreed in the House earlier this year. Without entering the controversy between the Government and Opposition Front-Bench Members, I can say only that I hope that it will not be too long before it proves possible to secure an agreement that enables that to happen. It is very much what my right hon. Friend wants.
  In addition, as my right hon. Friend the Prime Minister told the House at the start of the debate—I look to the Benches towards the back—the Government are consulting on developing the role of the Northern Ireland Grand Committee so as to give Northern Ireland Members better opportunities to scrutinise Government policy and draft legislation and to call Ministers to account, and that, too, will be welcomed.
  On another front altogether, on which I touch only briefly for reasons that are perhaps obvious, as the result of the work of the Nolan committee, the Select Committee on Standards in Public Life and now the Select Committee on Standards and Privileges, we have put in place in the course of this Parliament a much clearer and stronger framework of rules in relation to Members' interests and to what can properly be expected of those of us elected to serve here.
  The matters on which I have touched so far have been primarily for the House itself. But if I might put on what I sometimes think of as the other half of my hat, more strictly in my role as a Minister, the Government, too, can claim credit for a number of steps that they have taken to assist the House in various ways.
  For example, five years ago, the document known as "Questions of Procedure for Ministers" and the existence, membership and terms of reference of Cabinet Committees, were either secret or supposed to be secret. Now they are all in the public domain and very much part of the landscape of our debates and of political discussion generally.
  748
  Similarly, the "Code of Practice on Access to Government Information", introduced in April 1994—I realise that there are always people who want to go further in those areas—set out for the first time clear and detailed commitments to provide information to the public and the House. That has been welcomed by the Select Committee on the Parliamentary Commissioner for Administration, chaired by my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey), who concluded that
  "the code has been an important and valuable contribution to more open Government."
  It has certainly been helpful to the House. My right hon. Friend the Chancellor of the Duchy of Lancaster will shortly be submitting a second report to the Committee.
  In that context, I should also mention the equally thorough report from the new Select Committee on Public Service, on the subject of ministerial accountability and responsibility. Again, my right hon. Friend the Chancellor of the Duchy of Lancaster will be submitting the Government's response to that report shortly. I am obviously not in a position to pre-empt his response today, but I can say that much common ground has been established between the Committee and the Government on those important issues and I hope that the Select Committee will find the response positive.
  Of no less importance in strengthening the work of the Executive and the legislature are the steps that we have taken to improve the planning of the legislative programme and the opportunities for scrutiny in the House and among those who will be affected by the measures that we pass.
  During the past three years, we have steadily developed the practice of publishing Bills in draft in advance of bringing them before the House, and I think that it is generally accepted that that has contributed materially to the quality of our legislation. In this Queen's Speech, we have carried that a further step forward by including in it not only the Bills that we intend to bring forward in this Session, but a number of those that we intend to publish in draft.
  Although it is a matter for them rather than for me—I pick up a point made by my right hon. Friend the Member for Worthing in his characteristically thoughtful way—I would welcome it if departmental Select Committees decided to contribute to that process by taking evidence on draft Bills within their field of interest, and reporting on them before the policy is set in concrete.
  I have no doubt that by exposing draft texts to the widest public consultation in that way, we shall ensure that Bills are in an improved state of readiness when they are eventually introduced and that the legislation that Parliament carries through will, as a result, be of a higher quality.
  Mr. A. J. Beith: On that principle, what has happened to the adoption Bill?
  Mr. Newton: There can be no complete commitment to the effect that Bills published in draft in one Session. will automatically qualify for inclusion in the next. There has to be some flexibility to take account of developments affecting the content of the legislative programme. In this legislative programme, a number of Bills—including those on firearms and compensation recovery and one or two others—have rightly been brought into a Session that

  749
  is inescapably shorter than a normal one. They have made it necessary to take a judgment on what other legislation we include in the programme. That embraces the point about the adoption Bill. I hope that the right hon. Gentleman will think it reasonable—I certainly do.
  Mr. Robin Corbett: Talking of orphans, can the right hon. Gentleman confirm that the Prime Minister has made an orphan of the Minister of Agriculture, Fisheries and Food, the right hon. and learned Member for Grantham (Mr. Hogg), who has returned to the Back Benches?
  Mr. Newton: I have already commented on work that the Minister of Agriculture, Fisheries and Food has been doing in Brussels. [Interruption.] I see that he is having an earnest conversation—I do not know whether he has picked up on what has just been said—with my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler). I have no doubt that it is a most congenial exchange for them both.
  As the Prime Minister told the House last week, in the longer term, we want to move towards a two-year legislative programme, consisting of Bills to be enacted in the course of a Session and draft Bills to be published for consultation with a view to their introduction in a later Session. I hope that we shall be able to carry that development forward systematically.
  Although I had not intended to originally, I should like to refer to a point raised by my right hon. Friend the Member for Worthing about the pattern of the parliamentary year. As he rightly said, although it is generally acknowledged that there have been great advantages in bringing public expenditure and taxation decisions together in a unified Budget in the autumn, the combination of that with a long spill-over and a late Queen's Speech in recent years has created additional problems—I am very conscious of them—for the business managers in handling the legislative programme. I think, however, that we have done rather more to tackle that problem this year than my right hon. Friend acknowledged; we had a very short spill-over, creating a space of about a month between the Queen's Speech debate and the Budget. That has eased, if not eliminated, the problem. So I do not think that that in itself would be a cause for a radical change of the kind to which my right hon. Friend referred and to which the Prime Minister referred in a speech earlier this year. I, too, referred to it in a debate on parliamentary procedure in July.
  I nevertheless believe that there is a case for looking at the pattern of the parliamentary year and at the possibility of the State Opening being held in the spring rather than the autumn. That is the suggestion that the Prime Minister floated earlier this year, and I am currently examining it on his behalf. We think that it could give the Session a better balance and improve the ability of the House to scrutinise the Finance Bill and other legislation without losing any of the advantages of the unified Budget. I am interested to hear that my right hon. Friend the Member for Worthing, with his long experience of those matters, sees considerable attraction in the idea.
  I come now to the subject of today's debate and, in particular, to the usual litany of gloom from the right hon. Member for Dunfermline, East (Mr. Brown). Like my
  750
  right hon. and learned Friend the Chancellor, I had a feeling this afternoon that I had heard exactly the same speech last year, the year before that and the year before that. I was reminded that, at about the time the right hon. Gentleman started making these speeches, he made one of his immortal forecasts. He said:
  "I make one Budget forecast—that, after the Budget, unemployment will rise this month, next month and for months afterwards."—[Official Report, 17 March 1993; Vol. 221, c. 289.]
  Since then, unemployment has fallen steadily in virtually every month.
  Having heard the right hon. Gentleman's speech on a number of occasions, this year it finally passed its sell-by date. I got the impression that even his hon. Friends did not really buy it and, certainly, no one else will, because his picture of decay and decline does not correspond with reality.
  Let me remind the right hon. Gentleman and the House of some of the straightforward facts. The economy is now in its fifth year of sustained growth, with exports, investment and consumer expenditure all growing. Since 1992, we have had the longest, strongest and steadiest recovery of any major EU economy. As for the gloomy unemployment forecasts, since its December 1992 peak, claimant unemployment has fallen by over 900,000 to its lowest level for over five and a half years and it is still falling. What is more, employment has risen by over 750,000 since the recovery began.
  We heard some reference this afternoon to exports, as if that was somehow a story of failure. The volume of exported goods has risen by 7 per cent. over the past year, by 17.5 per cent. over the past two years and by 30 per cent. over the past three years. The current account in the latest quarter was the best for nine years.
  We heard a lot about investment, but the climate for investment has seldom been better. As my right hon. and learned Friend the Chancellor said this afternoon, business investment is up 7.2 per cent. on a year ago and whole economy investment is up 3.2 per cent. We all know, although Opposition Members rarely refer to it, that the United Kingdom remains the No. 1 destination for inward investment into the European Union. Underlying inflation is 2.9 per cent. and has been below 4 per cent. for four years, the longest for almost half a century. As my right hon. and learned Friend said, we are achieving growth without the rapid overheating that has characterised earlier recoveries.
  If the right hon. Member for Dunfermline, East does not want to listen to those of us on the Treasury Bench, he might at least acknowledge the views of those who comment on these matters from an international perspective. I am surprised that he did not mention what the International Monetary Fund said earlier this year and what the Organisation for Economic Co-operation and Development said about the strengthening of the economy, the good performance, the good prospects and the extent to which the structural reforms had improved the outlook for the British economy.
  It may be that that last point is the clue. Of course, the structural reforms that are praised so widely internationally are exactly the changes that the Labour party has fought step by step and to which it remains inherently hostile. There can be no clearer illustration of that than the windfall tax, the detail of which is no less elusive than it was before the right hon. Gentleman's

  751
  speech. Once again, the right hon. Gentleman declined to answer any of the questions that my right hon. and learned Friend the Chancellor put to him, but it is clear that the beneficiary will not be the consumer and that the most likely casualty will be the very investment that the right hon. Gentleman claims that he wishes to promote.
  The same is true of the Labour party's policies as a whole. We heard all the same windy talk today, but we heard nothing about the policies that will really make a difference. We heard nothing about the new social chapter policy or the minimum wage policy that will raise business costs, undermine competitiveness, reduce the attractions to foreign investment and make it more difficult to sustain the fall in unemployment over which we have been presiding.
  The Queen's Speech, on which we are concluding our debate today, makes it clear that we shall not join new Labour in its new policies, because they are no less dangerous than the old ones. We shall continue with the policies that my right hon. and learned Friend set out once again in his speech today—policies to sustain the strongest and longest economic recovery in Europe and to do so without inflation and overheating. Our programme corresponds to the needs of the country and deserves the support of the House.
  Question put, That the amendment be made:—
  The House divided: Ayes 283, Noes 305.

  Division No. 3]

  [9.59 pm

  AYES

  Abbott, Ms Diane

  Campbell-Savours, D N

  Adams, Mrs Irene

  Canavan, Dennis

  Ainger, Nick

  Cann, Jamie

  Ainsworth, Robert (Cov'try NE)

  Carlile, Alex (Montgomery)

  Allen, Graham

  Chidgey, David

  Alton, David

  Chisholm, Malcolm

  Anderson, Donald (Swansea E)

  Church, Ms Judith

  Anderson, Ms Janet (Ros'dale)

  Clapham, Michael

  Armstrong, Ms Hilary

  Clark, Dr David (S Shields)

  Ashdown, Paddy

  Clarke, Eric (Midlothian)

  Ashton, Joseph

  Clarke, Tom (Monklands W)

  Austin-Walker, John

  Clelland, David

  Banks, Tony (Newham NW)

  Clwyd, Mrs Ann

  Barnes, Harry

  Coffey, Ms Ann

  Barron, Kevin

  Cohen, Harry

  Battle, John

  Cook, Frank (Stockton N)

  Bayley, Hugh

  Corbett, Robin

  Beckett, Mrs Margaret

  Corbyn, Jeremy

  Beith, A J

  Corston, Ms Jean

  Bell, Stuart

  Cousins, Jim

  Benn, Tony

  Cox, Tom

  Bennett, Andrew F

  Cummings, John

  Benton, Joe

  Cunliffe, Lawrence

  Bermingham, Gerald

  Cunningham, Jim (Cov'try SE)

  Berry, Roger

  Cunningham, Dr John

  Betts, Clive

  Dafis, Cynog

  Blunkett, David

  Davidson, Ian

  Boateng, Paul

  Davies, Bryan (Oldham C)

  Bradley, Keith

  Davies, Chris (Littleborough)

  Bray, Dr Jeremy

  Davies, Denzil (Llanelli)

  Brown, Gordon (Dunfermline E)

  Davies, Ron (Caerphilly)

  Brown, Nicholas (Newcastle E)

  Davis, Terry (B'ham Hodge H)

  Bruce, Malcolm (Gordon)

  Denham, John

  Burden, Richard

  Dewar, Donald

  Byers, Stephen

  Dixon, Don

  Caborn, Richard

  Dobson, Frank

  Callaghan, Jim

  Donohoe, Brian H

  Campbell, Mrs Anne (C'bridge)

  Dowd, Jim

  Campbell, Menzies (Fife NE)

  Dunwoody, Mrs Gwyneth

  Campbell, Ronnie (Blyth V)

  Eastham, Ken

  752

  Etherington, Bill

  Llwyd, Elfyn

  Evans, John (St Helens N)

  Loyden, Eddie

  Ewing, Mrs Margaret

  Lynne, Ms Liz

  Fatchett, Derek

  McAllion, John

  Faulds, Andrew

  McAvoy, Thomas

  Field, Frank (Birkenhead)

  McCartney, Ian (Makerf'ld)

  Flynn, Paul

  Macdonald, Calum

  Foster, Derek

  McFall, John

  Foster, Don (Bath)

  McKelvey, William

  Foulkes, George

  Mackinlay, Andrew

  Fraser, John

  McLeish, Henry

  Fyfe, Mrs Maria

  Maclennan, Robert

  Galbraith, Sam

  McMaster, Gordon

  Galloway, George

  McNamara, Kevin

  Gapes, Mike

  MacShane, Denis

  Garrett, John

  Madden, Max

  Gerrard, Neil

  Maddock, Mrs Diana

  Gilbert, Dr John

  Mahon, Mrs Alice

  Godman, Dr Norman A

  Mandelson, Peter

  Godsiff, Roger

  Marek, Dr John

  Golding, Mrs Llin

  Marshall, David (Shettleston)

  Gordon, Ms Mildred

  Marshall, Jim (Leicester S)

  Graham, Thomas

  Martin, Michael J (Springburn)

  Grant, Bernie (Tottenham)

  Martlew, Eric

  Griffiths, Win (Bridgend)

  Maxton, John

  Grocott, Bruce

  Meacher, Michael

  Gunnell, John

  Meale, Alan

  Hain, Peter

  Michael, Alun

  Hanson, David

  Michie, Bill (Shef'ld Heeley)

  Hardy, Peter

  Michie, Mrs Ray (Argyll Bute)

  Harman, Ms Harriet

  Milburn, Alan

  Harvey, Nick

  Miller, Andrew

  Henderson, Doug

  Mitchell, Austin (Gt Grimsby)

  Hendron, Dr Joe

  Moonie, Dr Lewis

  Heppell, John

  Morgan, Rhodri

  Hill, Keith (Streatham)

  Morley, Elliot

  Hinchliffe, David

  Morris, Alfred (Wy'nshawe)

  Hodge, Ms Margaret

  Morris, Ms Estelle (B'ham Yardley)

  Hoey, Miss Kate

  Morris, John (Aberavon)

  Hogg, Norman (Cumbernauld)

  Mowlam, Ms Marjorie

  Hood, Jimmy

  Mudie, George

  Hoon, Geoffrey

  Mullin, Chris

  Howarth, Alan (Stratf'd-on-A)

  Murphy, Paul

  Howarth, George (Knowsley N)

  Nicholson, Miss Emma (W Devon)

  Howells, Dr Kim

  Oakes, Gordon

  Hoyle, Doug

  O'Brien, Mike (N Warks)

  Hughes, Kevin (Doncaster N)

  O'Brien, William (Normanton)

  Hughes, Robert (Ab'd'n N)

  Olner, Bill

  Hughes, Roy (Newport E)

  O'Neill, Martin

  Hughes, Simon (Southwark)

  Parry, Robert

  Hutton, John

  Pearson, Ian

  Illsley, Eric

  Pendry, Tom

  Ingram, Adam

  Pickthall, Colin

  Jackson, Ms Glenda (Hampst'd)

  Pike, Peter L

  Jackson, Mrs Helen (Hillsborough)

  Pope, Greg

  Jamieson, David

  Powell, Sir Raymond (Ogmore)

  Jenkins, Brian D (SE Staffs)

  Prentice, Mrs B (Lewisham E)

  Johnston, Sir Russell

  Prentice, Gordon (Pendle)

  Jones, Barry (Alyn & D'side)

  Prescott, John

  Jones, Ieuan Wyn (Ynys Môn)

  Primarolo, Ms Dawn

  Jones, Dr L (B'ham Selly Oak)

  Purchase, Ken

  Jones, Martyn (Clwyd SW)

  Quin, Ms Joyce

  Jones, Nigel (Cheltenham)

  Radice, Giles

  Jowell, Ms Tessa

  Randall, Stuart

  Kaufman, Gerald

  Raynsford, Nick

  Keen, Alan

  Reid, Dr John

  Kennedy, Charles (Ross C & S)

  Rendel, David

  Kennedy, Mrs Jane (Broadgreen)

  Robertson, George (Hamilton)

  Kilfoyle, Peter

  Robinson, Geoffrey (Cov'try NW)

  Kirkwood, Archy

  Roche, Mrs Barbara

  Lestor, Miss Joan (Eccles)

  Rogers, Allan

  Lewis, Terry

  Rooker, Jeff

  Liddell, Mrs Helen

  Rooney, Terry

  Litherland, Robert

  Ross, Ernie (Dundee W)

  Livingstone, Ken

  Rowlands, Ted

  Lloyd, Tony (Stretf'd)

  Ruddock, Ms Joan

  753

  Salmond, Alex

  Tipping, Paddy

  Sedgemore, Brian

  Touhig, Don

  Sheerman, Barry

  Trickett, Jon

  Sheldon, Robert

  Turner, Dennis

  Shore, Peter

  Tyler, Paul

  Short, Ms Clare

  Vaz, Keith

  Simpson, Alan

  Walker, Sir Harold

  Skinner, Dennis

  Wallace, James

  Smith, Andrew (Oxford E)

  Walley, Ms Joan

  Smith, Chris (Islington S)

  Wardell, Gareth (Gower)

  Smith, Llew (Blaenau Gwent)

  Wareing, Robert N

  Snape, Peter

  Watson, Mike

  Soley, Give

  Welsh, Andrew

  Spearing, Nigel

  Wicks, Malcolm

  Squire Ms R (Dunfermline W)

  Wigley, Dafydd

  Williams, Alan (Swansea W)

  Steel, Sir David

  Williams, Alan W (Carmarthen)

  Steinberg, Gerry

  Wilson, Brian

  Stevenson, George

  Winnick, David

  Stott, Roger

  Wise, Mrs Audrey

  Strang, Dr Gavin

  Worthington, Tony

  Straw, Jack

  Wray, Jimmy

  Sutcliffe, Gerry

  Wright, Dr Tony

  Taylor, Mrs Ann (Dewsbury)

  Young, David (Bolton SE)

  Taylor, Matthew (Truro)

  Thompson, Jack (Wansbeck)

  Tellers for the Ayes:

  Thurnham, Peter

  Ms Angela Eagle and Mr. Jon Owen Jones.

  Timms, Stephen

  NOES

  Ainsworth, Peter (E Surrey)

  Carrington, Matthew

  Aitken, Jonathan

  Carttiss, Michael

  Alexander, Richard

  Cash, William

  Alison, Michael (Selby)

  Channon, Paul

  Allason, Rupert (Torbay)

  Chapman, Sir Sydney

  Amess, David

  Churchill, Mr

  Ancram, Michael

  Clappison, James

  Arbuthnot, James

  Clark, Dr Michael (Rochf'd)

  Arnold, Jacques (Gravesham)

  Clarke, Kenneth (Rushcliffe)

  Ashby, David

  Clifton-Brown, Geoffrey

  Atkinson, David (Bour'mth E)

  Congdon, David

  Atkinson, Peter (Hexham)

  Conway, Derek

  Baker, Kenneth (Mole V)

  Coombs, Anthony (Wyre F)

  Baker, Nicholas (N Dorset)

  Coombs, Simon (Swindon)

  Baldry, Tony

  Cope, Sir John

  Banks, Matthew (Southport)

  Cormack, Sir Patrick

  Banks, Robert (Harrogate)

  Couchman, James

  Bates, Michael

  Cran, James

  Batiste, Spencer

  Currie, Mrs Edwina

  Bellingham, Henry

  Curry, David

  Bendall, Vivian

  Davies, Quentin (Stamf'd)

  Beresford, Sir Paul

  Davis, David (Boothferry)

  Biffen, John

  Day, Stephen

  Body, Sir Richard

  Devlin, Tim

  Bonsor, Sir Nicholas

  Dicks, Terry

  Booth, Hartley

  Dorrell, Stephen

  Boswell, Tim

  Douglas-Hamilton, Lord James

  Bottomley, Peter (Eltham)

  Dover, Den

  Bottomley, Mrs Virginia

  Duncan, Alan

  Bowden, Sir Andrew

  Duncan Smith, Iain

  Bowis, John

  Dunn, Bob

  Boyson, Sir Rhodes

  Durant, Sir Anthony

  Brandreth, Gyles

  Dykes, Hugh

  Brazier, Julian

  Eggar, Tim

  Bright, Sir Graham

  Elletson, Harold

  Brooke, Peter

  Emery, Sir Peter

  Brown, Michael (Brigg Cl'thorpes)

  Evans, David (Welwyn Hatf'ld)

  Browning, Mrs Angela

  Evans, Jonathan (Brecon)

  Bruce, Ian (S Dorset)

  Evans, Nigel (Ribble V)

  Budgen, Nicholas

  Evans, Roger (Monmouth)

  Burns, Simon

  Evennett, David

  Burt, Alistair

  Faber, David

  Butcher, John

  Fabricant, Michael

  Butler, Peter

  Fenner, Dame Peggy

  Butterfill, John

  Field, Barry (Isle of Wight)

  Carlisle, Sir Kenneth (Linc'n)

  Fishburn, Dudley

  754

  Forman, Nigel

  Lawrence, Sir Ivan

  Forsyth, Michael (Stirling)

  Legg, Barry

  Forsythe, Clifford (S Antrim)

  Leigh, Edward

  Forth, Eric

  Lennox-Boyd, Sir Mark

  Fowler, Sir Norman

  Lester, Sir Jim (Broxtowe)

  Fox, Dr Liam (Woodspring)

  Lidington, David

  Fox, Sir Marcus (Shipley)

  Lilley, Peter

  Freeman, Roger

  Lloyd, Sir Peter (Fareham)

  French, Douglas

  Lord, Michael

  Fry, Sir Peter

  Luff, Peter

  Gale, Roger

  Lyell, Sir Nicholas

  Gallie, Phil

  McCrea, Rev William

  Gardiner, Sir George

  MacGregor, John

  Garel-Jones, Tristan

  MacKay, Andrew

  Garnier, Edward

  Maclean, David

  Gill, Christopher

  McLoughlin, Patrick

  Gillan, Mrs Cheryl

  McNair-Wilson, Sir Patrick

  Goodlad, Alastair

  Madel, Sir David

  Goodson-Wickes, Dr Charles

  Maitland, Lady Olga

  Gorman, Mrs Teresa

  Major, John

  Gorst, Sir John

  Malone, Gerald

  Grant, Sir Anthony (SW Cambs)

  Mans, Keith

  Greenway, Harry (Ealing N)

  Marland, Paul

  Greenway, John (Ryedale)

  Marlow, Tony

  Griffiths, Peter (Portsmouth N)

  Marshall, John (Hendon S)

  Grylls, Sir Michael

  Marshall, Sir Michael (Arundel)

  Gummer, John

  Martin, David (Portsmouth S)

  Hague, William

  Mates, Michael

  Hamilton, Sir Archibald

  Mawhinney, Dr Brian

  Hamilton, Neil (Tatton)

  Merchant, Piers

  Hampson, Dr Keith

  Mills, Iain

  Hanley, Jeremy

  Mitchell, Andrew (Gedling)

  Hannam, Sir John

  Mitchell, Sir David (NW Hants)

  Hargreaves, Andrew

  Moate, Sir Roger

  Harris, David

  Molyneaux, Sir James

  Haselhurst, Sir Alan

  Monro, Sir Hector

  Hawkins, Nick

  Montgomery, Sir Fergus

  Hawksley, Warren

  Needham, Richard

  Heald, Oliver

  Nelson, Anthony

  Heath, Sir Edward

  Neubert, Sir Michael

  Heathcoat-Amory, David

  Newton, Tony

  Heseltine, Michael

  Nicholson, David (Taunton)

  Hicks, Sir Robert

  Norris, Steve

  Higgins, Sir Terence

  Onslow, Sir Cranley

  Hill, Sir James (Southampton Test)

  Oppenheim, Phillip

  Hogg, Douglas (Grantham)

  Page, Richard

  Horam, John

  Paice, James

  Hordern, Sir Peter

  Patnick, Sir Irvine

  Howard, Michael

  Patten, John

  Howell, David (Guildf'd)

  Pawsey, James

  Howell, Sir Ralph (N Norfolk)

  Peacock, Mrs Elizabeth

  Hughes, Robert G (Harrow W)

  Pickles, Eric

  Hunt, David (Wirral W)

  Porter, David (Waveney)

  Hunt, Sir John (Ravensb'ne)

  Portillo, Michael

  Hunter, Andrew

  Powell, William (Corby)

  Hurd, Douglas

  Rathbone, Tim

  Jack, Michael

  Redwood, John

  Jackson, Robert (Wantage)

  Renton, Tim

  Jenkin, Bernard (Colchester N)

  Richards, Rod

  Jessel, Toby

  Riddick, Graham

  Johnson Smith, Sir Geoffrey

  Robathan, Andrew

  Jones, Gwilym (Cardiff N)

  Roberts, Sir Wyn

  Jones, Robert B (W Herts)

  Robertson, Raymond S (Ab'd'n S)

  Jopling, Michael

  Robinson, Mark (Somerton)

  Kellett-Bowman, Dame Elaine

  Robinson, Peter (Belfast E)

  King, Tom

  Roe, Mrs Marion

  Kirkhope, Timothy

  Rowe, Andrew

  Knapman, Roger

  Rumbold, Dame Angela

  Knight, Mrs Angela (Erewash)

  Sackville, Tom

  Knight, Greg (Derby N)

  Sainsbury, Sir Timothy

  Knight, Dame Jill (Edgbaston)

  Scott, Sir Nicholas

  Knox, Sir David

  Shaw, David (Dover)

  Kynoch, George

  Shaw, Sir Giles (Pudsey)

  Lait, Mrs Jacqui

  Shephard, Mrs Gillian

  Lamont, Norman

  Shepherd, Sir Colin (Heref'd)

  Lang, Ian

  Shepherd, Richard (Aldridge)

  755

  Shersby, Sir Michael

  Tracey, Richard

  Sims, Sir Roger

  Tredinnifck, David

  Skeet, Sir Trevor

  Trend, Michael

  Smith, Sir Dudley (Warwick)

  Trotter, Neville

  Smith, Tim (Beaconsf'ld)

  Twinn, Dr Ian

  Soames, Nicholas

  Vaughan, Sir Gerard

  Speed, Sir Keith

  Waldegrave, William

  Spencer, Sir Derek

  Walden, George

  Spicer, Sir Jim (W Dorset)

  Walker, Bill (N Tayside)

  Spicer, Sir Michael (S Worcs)

  Waller, Gary

  Spring, Richard

  Ward, John

  Sproat, Iain

  Wardle, Charles (Bexhill)

  Squire, Robin (Hornchurch)

  Waterson, Nigel

  Stanley, Sir John

  Watts, John

  Steen, Anthony

  Wells, Bowen

  Stephen, Michael

  Wheeler, Sir John

  Stern, Michael

  Whitney, Ray

  Streeter, Gary

  Whittingdale, John

  Widdecombe, Miss Ann

  Sumberg, David

  Wiggin, Sir Jerry

  Sweeney, Walter

  Wilkinson, John

  Sykes, John

  Willetts, David

  Tapsell, Sir Peter

  Wilshire, David

  Taylor, Ian (Esher)

  Winterton, Mrs Ann (Congleton)

  Taylor, John D (Strangf'd)

  Winterton, Nicholas (Macclesf'ld)

  Taylor, John M (Solihull)

  Wolfson, Mark

  Taylor, Sir Teddy

  Wood, Timothy

  Temple-Morris, Peter

  Yeo, Tim

  Thomason, Roy

  Young, Sir George

  Thompson, Sir Donald (Calder V)

  Thompson, Patrick (Norwich N)

  Tellers for the Noes:

  Townend, John (Bridlington)

  Mr. Richard Ottaway and Mr. Sebastian Coe.

  Townsend, Cyril D (Bexl'yh'th)

  Question accordingly negatived.
  Amendment proposed, at the end of the Question, to add,
  "but humbly regret that the Gracious Speech fails to set out adequate proposals to create an excellent education system for all pupils, to reform Britain's discredited system of government or to make the necessary improvements to the NHS to restore it as a first class provider of care; and further regret that measures outlined in the Gracious Speech on crime are designed for political effect rather than practical effectiveness and will do little to strengthen the police and prevent crime."—[Mr. Beith.]
  Question put forthwith, pursuant to Standing Order No. 32 (Calling of amendments at end of debate), That the amendment be made:—
  The House divided: Ayes 38, Noes 300.

  Division No. 4]

  [10.15 pm

  AYES

  Alton, David

  Maclennan, Robert

  Ashdown, Paddy

  Maddock, Mrs Diana

  Beith, A J

  Marek, Dr John

  Bruce, Malcolm (Gordon)

  Michie, Mrs Ray (Argyll Bute)

  Campbell, Menzies (File NE)

  Molyneaux, Sir James

  Canavan, Dennis

  Nicholson, Miss Emma (W Devon)

  Carlile, Alex (Montgomery)

  Rendel, David

  Chidgey, David

  Robinson, Peter (Belfast E)

  Dafis, Cynog

  Salmond, Alex

  Davies, Chris (Littleborough)

  Steel, Sir David

  Ewing, Mrs Margaret

  Taylor, John D (Strangf'd)

  Forsytne, Clifford (S Antrim)

  Taylor, Matthew (Truro)

  Harvey, Nick

  Thurnham, Peter

  Hughes, Simon (Southwark)

  Tyler, Paul

  Johnston, Sir Russell

  Wallace, James

  Jones, Ieuan Wyn (Ynys Môn)

  Welsh, Andrew

  Jones, Nigel (Cheltenham)

  Wigley, Dafydd

  Kennedy, Charles (Ross C & S)

  Llwyd, Elfyn

  Tellers for the Ayes:

  Lynne, Ms Liz

  Mr. Archy Kirk wood and Mr. Don Foster.

  McCrea, Rev William

  756

  NOES

  Ainsworth, Peter (E Surrey)

  Douglas-Hamilton, Lord James

  Aitken, Jonathan

  Dover, Den

  Alexander, Richard

  Duncan, Alan

  Alison, Michael (Selby)

  Duncan Smith, Iain

  Allason, Rupert (Torbay)

  Dunn, Bob

  Amess, David

  Durant, Sir Anthony

  Ancram, Michael

  Dykes, Hugh

  Arbuthnot, James

  Eggar, Tim

  Arnold, Jacques (Gravesham)

  Elletson, Harold

  Ashby, David

  Emery, Sir Peter

  Atkinson, David (Bour'mth E)

  Evans, David (Welwyn Hatf'ld)

  Atkinson, Peter (Hexham)

  Evans, Jonathan (Brecon)

  Baker, Kenneth (Mole V)

  Evans, Nigel (Ribble V)

  Baker, Nicholas (N Dorset)

  Evans, Roger (Monmouth)

  Baldry, Tony

  Evennett, David

  Banks, Matthew (Southport)

  Faber, David

  Banks, Robert (Harrogate)

  Fabricant, Michael

  Bates, Michael

  Fenner, Dame Peggy

  Batiste, Spencer

  Field, Barry (Isle of Wight)

  Bellingham, Henry

  Fishburn, Dudley

  Bendall, Vivian

  Forman, Nigel

  Beresford, Sir Paul

  Forsyth, Michael (Stirling)

  Biffen, John

  Forth, Eric

  Body, Sir Richard

  Fowler, Sir Norman

  Bonsor, Sir Nicholas

  Fox, Dr Liam (Woodspring)

  Booth, Hartley

  Fox, Sir Marcus (Shipley)

  Boswell, Tim

  Freeman, Roger

  Bottomley, Peter (Eltham)

  French, Douglas

  Bottomley, Mrs Virginia

  Fry, Sir Peter

  Bowden, Sir Andrew

  Gale, Roger

  Bowis, John

  Gallie, Phil

  Boyson, Sir Rhodes

  Gardiner, Sir George

  Brandreth, Gyles

  Garel-Jones, Tristan

  Brazier, Julian

  Garnier, Edward

  Bright, Sir Graham

  Gill, Christopher

  Brooke, Peter

  Gillan, Mrs Cheryl

  Brown, Michael (Brigg Cl'thorpes)

  Goodlad, Alastair

  Browning, Mrs Angela

  Goodson-Wickes, Dr Charles

  Bruce, Ian (S Dorset)

  Gorman, Mrs Teresa

  Budgen, Nicholas

  Gorst, Sir John

  Burns, Simon

  Grant Sir Anthony (SW Cambs)

  Burt, Alistair

  Greenway, Harry (Ealing N)

  Butcher, John

  Greenway, John (Ryedale)

  Butler, Peter

  Griffiths, Peter (Portsmouth N)

  Butterfill, John

  Grylls, Sir Michael

  Carlisle, John (Luton N)

  Gummer, John

  Carlisle, Sir Kenneth (Linc'n)

  Hague, William

  Canington, Matthew

  Hamilton, Sir Archibald

  Carttiss, Michael

  Hamilton, Neil (Tatton)

  Cash, William

  Hampson, Dr Keith

  Channon, Paul

  Hanley, Jeremy

  Chapman, Sir Sydney

  Hannam, Sir John

  Churchill, Mr

  Hargreaves, Andrew

  Clappison, James

  Harris, David

  Clark, Dr Michael (Rochf'd)

  Haselhurst, Sir Alan

  Clarke, Kenneth (Rushcliffe)

  Hawkins, Nick

  Clifton-Brown, Geoffrey

  Hawksley, Warren

  Coe, Sebastian

  Heald, Oliver

  Congdon, David

  Heath, Sir Edward

  Conway, Derek

  Heathcoat-Amory, David

  Coombs, Anthony (Wyre F)

  Heseltine, Michael

  Coombs, Simon (Swindon)

  Hicks, Sir Robert

  Cope, Sir John

  Higgins, Sir Terence

  Cormack, Sir Patrick

  Hill, Sir James (Southampton Test)

  Couchman, James

  Hogg, Douglas (Grantham)

  Cran, James

  Horam, John

  Currie, Mrs Edwina

  Hordern, Sir Peter

  Curry, David

  Howard, Michael

  Davies, Quentin (Stamf'd)

  Howell, David (Guildf'd)

  Davis, David (Boothferry)

  Howell, Sir Ralph (N Norfolk)

  Day, Stephen

  Hughes, Robert G (Harrow W)

  Devlin, Tim

  Hunt, David (Wirral W)

  Dicks, Terry

  Hunt, Sir John (Ravensb'ne)

  Dorrell, Stephen

  Hunter, Andrew

  757

  Hurd, Douglas

  Merchant Piers

  Jack, Michael

  Mills, Iain

  Jackson, Robert (Wantage)

  Mitchell, Andrew (Gedling)

  Jenkin, Bernard (Colchester N)

  Mitchell, Sir David (NW Hants)

  Jessel, Toby

  Moate, Sir Roger

  Johnson Smith, Sir Geoffrey

  Monro, Sir Hector

  Jones, Gwilym (Cardiff N)

  Montgomery, Sir Fergus

  Jones, Robert B (W Herts)

  Needham, Richard

  Kellett-Bowman, Dame Elaine

  Nelson, Anthony

  King, Tom

  Neubert, Sir Michael

  Kirkhope, Timothy

  Newton, Tony

  Knight Mrs Angela (Erewash)

  Nicholson, David (Taunton)

  Knight Greg (Derby N)

  Norris, Steve

  Knight Dame Jill (Edgbaston)

  Onslow, Sir Cranley

  Knox, Sir David

  Oppenheim, Phillip

  Kynoch, George

  Page, Richard

  Lait, Mrs Jacqui

  Paice, James

  Lamorrt, Norman

  Patrick, Sir Irvine

  Lang, Ian

  Patten, John

  Lawrence, Sir Ivan

  Pawsey, James

  Legg, Barry

  Peacock, Mrs Elizabeth

  Leigh, Edward

  Pickles, Eric

  Lennox-Boyd, Sir Mark

  Porter, David (Waveney)

  Lester, Sir Jim (Broxtowe)

  Portillo, Michael

  Lidington, David

  Powell, William (Corby)

  Lilley, Peter

  Rathbone, Tim

  Lloyd, Sir Peter (Fareham)

  Redwood, John

  Lord, Michael

  Renton, Tim

  Luff, Peter

  Richards, Rod

  Lyell, Sir Nicholas

  Riddick, Graham

  MacGregor, John

  Robathan, Andrew

  MacKay, Andrew

  Roberts, Sir Wyn

  Maclean, David

  Robertson, Raymond S (Ab'd'n S)

  McLoughlin, Patrick

  Robinson, Mark (Somerton)

  McNair-Wilson, Sir Patrick

  Roe, Mrs Marion

  Madel, Sir David

  Rowe, Andrew

  Maitland, Lady Olga

  Rumbold, Dame Angela

  Major, John

  Sackville, Tom

  Malone, Gerald

  Sainsbury, Sir Timothy

  Mans, Keith

  Scott Sir Nicholas

  Marland, Paul

  Shaw, David (Dover)

  Martow, Tony

  Shaw, Sir Giles (Pudsey)

  Marshall, John (Hendon S)

  Shephard, Mrs Gillian

  Marshall, Sir Michael (Arundel)

  Shepherd, Sir Colin (Heref'd)

  Martin, David (Portsmouth S)

  Shepherd, Richard (Aldridge)

  Mates, Michael

  Shersby, Sir Michael

  Mawhinney, Dr Brian

  Sims, Sir Roger

  758

  Skeet, Sir Trevor

  Trend, Michael

  Smith, Sir Dudley (Warwick)

  Trotter, Neville

  Smith, Tim (Beaconsf'ld)

  Twinn, Dr Ian

  Soames, Nicholas

  Vaughan, Sir Gerard

  Speed, Sir Keith

  Waldegrave, William

  Spencer, Sir Derek

  Walden, George

  Spicer, Sir Jim (W Dorset)

  Walker, Bill (N Tayside)

  Spicer, Sir Michael (S Worcs)

  Waller, Gary

  Spring, Richard

  Ward, John

  Sproat, Iain

  Wardle, Charles (Bexhill)

  Squire, Robin (Hornchurch)

  Waterson, Nigel

  Stanley, Sir John

  Watts, John

  Steen, Anthony

  Wells, Bowen

  Stephen, Michael

  Wheeler, Sir John

  Stern, Michael

  Whitney, Ray

  Streeter, Gary

  Whittingdale, John

  Sumberg, David

  Widdecombe, Miss Ann

  Sweeney, Walter

  Wiggin, Sir Jerry

  Sykes, John

  Wilkinson, John

  Tapsell, Sir Peter

  Willetts, David

  Taylor, Ian (Esher)

  Wilshire, David

  Taylor, John M (Solihull)

  Winterton, Mrs Ann (Congleton)

  Taylor, Sir Teddy

  Winterton, Nicholas (Macclesf'ld)

  Temple-Morris, Peter

  Wolfson, Mark

  Thomason, Roy

  Wood, Timothy

  Thompson, Sir Donald (Calder V)

  Yeo, Tim

  Thompson, Patrick (Norwich N)

  Young, Sir George

  Townend, John (Bridlington)

  Townsend, Cyril D (Bexl'yh'th)

  Tellers for the Noes:

  Tracey, Richard

  Mr. Richard Ottaway and Mr. Roger Knapman.

  Tredinnick, David

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
  To be presented by Privy Councillors or Members of Her Majesty's Household.

  Organophosphate Pesticides
  Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Lait.]
  10.28 pm
  Mr. Paul Tyler: I am delighted to note that a Minister from the Department of Health is to reply to the debate. That shows a recognition that there are wider implications for public health generally, rather than just for specific groups of occupations, from organophosphate compounds. I hope that during his preparation for his speech, the Minister managed to see tonight's BBC programme which revealed a close causal connection between OPs and chronic fatigue syndrome—what used to be called ME—as a result of the work of Professor Peter Behan.
  The potential danger to human health of exposure to OPs was first identified 45 years ago by the Zuckerman committee. That is scarcely surprising, because these potentially lethal chemicals were originally developed by the Nazis as part of their nerve gas programme. Since then, increasing evidence of the damage to the individual's nervous system, together with some specific research studies, have led to ever more stringent official guidance on the use and misuse of OPs. Tonight's short debate offers an opportunity for the Government—all the Departments involved—to set out their current policies.
  I first became concerned some six years ago, when I met a number of sheep farmers and farm workers from the south-west whose lives and livelihoods had been simply ruined by continuing ill health after dipping their sheep. Since they had been virtually forced to use OP dips, while the Government were still making that treatment for scab compulsory twice a year, the responsibility clearly lay with Whitehall.
  On re-entering the House in 1992, I gathered together an informal all-party group to investigate the matter further, and we have maintained constant pressure on Ministers. I hope that there may be time this evening for one or two of my colleagues to contribute. I am glad to see here the hon. Members for Taunton (Mr. Nicholson), for Pembroke (Mr. Ainger) and for Meirionnydd Nant Conwy (Mr. Llwyd), all of whom have been with me throughout the campaign and have met Ministers with me.
  Because of those origins, the series of questions that I wish to put to the Minister must necessarily start with the agricultural and horticultural use of OPs. First, a number of farm workers have now succeeded in obtaining industrial injury benefit for serious ill health caused by exposure to OP sheep dips. Is it not unjust that self-employed farmers with similar symptoms cannot obtain similar compensation?
  Secondly, the increasing level of precaution and recommended protective clothing for OP sheep dipping, advanced by the Health and Safety Executive in the past 10 years and more, makes it clear that the previous advice was simply inadequate. Do the Government now accept the responsibility for that former failure?
  Thirdly, the HSE guidance note, Medical Series 17, entitled "Biological monitoring of workers exposed to organophosphorous pesticides", which was originally prepared in 1980, revised in 1986, and then revised again in 1987, lists a wide range of symptoms, from simple nausea to major effects on the nervous system. The
  760
  revised version I have with me warns of complications when a victim undergoes simple operations and is subject to a common anaesthetic. Why was that advice not made available to all sheep farmers, their general practitioners, their consultants and all others concerned, as soon as it was available?
  Fourthly, the Minister of State for the Armed Forces admitted to me earlier this month, contrary to his previous assurances, that hundreds of service personnel were exposed to OP pesticides during the Gulf war. That was three years after specific warnings were given in MS 17 by the HSE and by the responsible Ministries.
  Why were those personnel needlessly contaminated with those extremely dangerous chemicals, and even told not to wear protective clothing in the Gulf because it might be damaged? Why did it take so long for Ministers to admit that mistake, and how quickly can the Government now establish whether OPs could have been the cause of widespread experience of Gulf war syndrome?
  Mr. Elfyn Llwyd: Does the hon. Gentleman share my alarm that highly acclaimed research in 1977 by Korsak and Sato, which proved that brain damage was likely to occur when a person was exposed to those chemicals, was not heeded by the Government? That danger has been known since 1977 at the very least.
  Mr. Tyler: I am grateful to the hon. Gentleman, who instances yet another example of the availability of information on OPs, which is then not made available to the key people who should know about it.
  I have a long list of additional questions from the National Gulf Veterans and Families Association, on which I obviously cannot spend sufficient time this evening, but which I will hand to the Minister after the debate. I hope that we will receive some written responses to questions, if he is unable to comment on all the issues tonight.
  Fifthly, which Department is responsible now in Whitehall for ensuring that everyone who may come into contact with OPs, or who may be called upon to treat the victims of OPs, is fully informed of their characteristic effects, the necessary precautions and remedial treatments? I hope that the Minister can assure us that it is his Department.
  Sixthly, what steps are being taken to evaluate the risks to children who have been treated with organophosphate head lice preparations, including malathion, the chemical that was used as pesticide in the Gulf war? The Pesticide Trust has issued serious warnings in recent months about these products, describing malathion as
  "a cholinesterase inhibitor which has been found to disrupt the immune system."
  It states that children are especially susceptible to absorption through the skin, and that some individuals are more sensitive than others. What are Ministers doing to warn parents about those different options and the difference between an organophosphate treatment and other treatments that may be safer?
  Seventhly, some organophosphate compounds, even the very dangerous diazanon, are now used extensively to control fleas and other parasites on cats and dogs. I understand that vets are concerned that warnings are

  761
  inadequate and labels insufficient, and that protective clothing and the dangers of inhalation are not specified. While the amounts used may be small, continuous use and the cumulative effect on especially sensitive pet owners, let alone on the pets, could be devastating. Why are Ministers apparently so relaxed about their use?
  Finally, the European Union Commissioner for Agriculture has just acknowledged in response to representations by my Liberal Democrat colleague, the Member of the European Parliament for Somerset and Devon North, that there may be a connection between the impact of OPs on the central nervous system of cattle, their immune and enzyme systems, and therefore their susceptibility to bovine spongiform encephalopathy, because organophosphate warble fly treatment was used extensively in the 1980s. It is a remarkable coincidence that countries, especially the United Kingdom, which used organophosphates for that purpose during that period have had major BSE epidemics, while other countries have escaped. Will Ministers swallow their pride and re-examine that possibility in co-operation with the European Commission?
  Dr. Tim Marrs, who is the principal adviser to the Department of Health on organophosphates, has met the members of my group a number of times. He has behind him all the expertise of Porton Down, and is reported to have made a remarkable admission to the joint meeting of the British Medical Association and the National Farmers Union on this subject at the beginning of October. Dr. Mans said that he now accepted that nerve damage was known to occur from low or medium-level repeated exposure to organophosphates, corresponding to those occurring during sheep dipping. That explicit statement seems to underline previous informal remarks by Dr. Marrs to farmers. Is that the advice that he is now giving to Ministers? If it is, why have we not been told, and will the Minister repeat that advice?
  The new warning suggests that all the previous precautions and protective clothing were inadequate, and that concentration on large doses and acute symptoms is not enough. It also suggests that longer-term chronic illnesses may be the worst results of organophosphates. The House will wish to hear that the Government are prepared to adopt the precautionary principle. If we have to wait until the continuing research, some of which will not be available until 1999, proves conclusively that organophosphates are unsafe, we shall have to wait for a long time, and many victims will suffer unnecessarily. Instead, surely we should insist that these chemicals be withdrawn until it can be conclusively proved that they are safe.
  10.38 pm
  Mr. David Nicholson: I congratulate the hon. Member for North Cornwall (Mr. Tyler) on securing this most important debate, and I am grateful to him for giving me a few minutes in which to speak.
  Like the hon. Gentleman, I became aware of the problem about six or seven years ago, when farmers in my constituency and in the neighbouring constituency of North Devon communicated to me and to the local media the severe effects which they believed, and certainly the south-west group of the NFU believed, were linked to the use of organophosphate dips.
  762
  It is fair to say that thousands of farmers throughout the United Kingdom have used organophosphate dips to treat their sheep without suffering adverse consequences. At the same time, whether in the south-west, Wales or elsewhere in the UK, dozens—probably more than dozens—of farmers and others have suffered severe or varying consequences through their use, they and others believe, of OP dips. Some are now unable to work. Others—they include personal friends in my constituency—are able to work capably and effectively most of the time, but if they get a whiff or a scent, that affects them, so there is a consequential effect after the initial OP dip infection.
  Some years ago, an all-party group of hon. Members, who are present and who, I am happy to accept, were headed by the hon. Member for North Cornwall, came together; we had a succession of meetings with successive Ministers with responsibility for agriculture, most recently with my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. Those have been most useful in exploring these matters.
  As the hon. Member for North Cornwall said, we have recently had tragic evidence of the consequences of the use of certain treatments during the Gulf war, which have produced what is known and now recognised as a medical condition: Gulf war syndrome. That is tragic, and it increases the evidence that there is a problem with these substances.
  I emphasise to my hon. Friend the Under-Secretary of State for Health and to the House that the Department of Health has an important function, not only in dealing with the points that the hon. Member for North Cornwall has raised and in communicating to other sections of the Government machine the long-held view of the National Farmers Union in the south-west that OP dips should be banned, but in communicating to general practitioners that they should be aware of and recognise the symptoms of this disease. All too often—this happens with other diseases—GPs will say only, "You're just suffering from exhaustion, a bad day or depression," and dismiss it. I have taken farmers from my constituency to raise that matter with my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food.
  I hear what the hon. Member for North Cornwall says about the recent role of his colleague the Liberal Member of the European Parliament for Somerset and Devon North in promoting with European institutions the claims of Somerset farmer Mr. Mark Purdey and others that there is a link between OP dips and bovine spongiform encephalopathy. I should be happy to hear a conclusive response from the Government on that, but, in the past six months, BSE and the various scientific speculations on it have caused so much havoc with the farming and rural communities in Britain that I caution the hon. Member for North Cornwall and his colleagues against stirring this up and widening the issue by linking the great OP dip problem with the BSE problem. That will not help our handling of the BSE issue.
  10.43 pm
  The Parliamentary Under-Secretary of State for Health(Mr. Simon Burns): I congratulate the hon. Member for North Cornwall (Mr. Tyler) on having secured this important debate. As he said, he has raised some important issues, and, if I do not have time now, I

  763
  will ensure that he is written to as soon as possible with full answers to the questions that I am unable to deal with tonight.
  I reassure hon. Members that the Government are determined to ensure, so far as is possible, that no pesticide or veterinary medicine should be approved or licensed for use if such use could be a risk to people's health. That applies both to farmers using pesticides and to people who eat the food that farmers produce.
  As the hon. Member for North Cornwall will no doubt also know, the Government take great care to ensure that a pesticide is safe before it is approved for use in the United Kingdom. All pesticides are thoroughly analysed and investigated, and approvals for use are granted only when—on an assessment of all available data by the Advisory Committee on Pesticides, or, if appropriate, by the Veterinary Products Committee—they are considered to be safe. Furthermore, UK regulatory authorities can review the substances at any time.
  Ministers in five Departments must approve pesticides before they can be marketed. That includes, under separate regulations, the Department of Health, the Department of the Environment, the Ministry of Agriculture, Fisheries and Food, the Scottish Office, the Welsh Office and the Northern Ireland Office. For veterinary drugs, the licensing authority is Health and Agriculture Ministers. Clearly, therefore, MAFF is only one of several Departments regulating the substances—an arrangement that is designed to ensure that human health and environmental considerations all play a full role in the process.
  The Government and the Veterinary Products Committee are constrained, by section 118 of the Medicines Act 1968, not to divulge information that is commercially sensitive. However, as the hon. Member for North Cornwall will know, the workings of the Veterinary Medicines Directorate and the VPC are fully transparent. In addition to its annual report, the VMD publishes a quarterly bulletin of its work, and a press release is issued after every meeting of the VPC.
  The Government also make available detailed explanations of licensing and of the suspected adverse reactions scheme, and Ministers announce the findings of the VPC on certain topics—particularly reviews of the use of OP sheep dips. Furthermore, the working party on pesticide residues and that on veterinary residues oversee the sampling of foods for pesticide and veterinary residues. Each year, the results are published and submitted to the European Commission.
  As the hon. Member for North Cornwall is aware, although others may not be, organophosphates are insecticides used on arable crops. They are also used on farm animals, such as sheep, to kill insects in the fleece—in which case they are usually used as sheep dips. They are also used on pets to kill various insects, such as fleas.
  Although there have been a few instances of adverse reactions to OPs used in other situations, most of the concerns have centred on sheep dips. As the hon. Member for North Cornwall will be aware, that is a serious problem. Because of the thickness of their fleeces, sheep suffer badly from the attention of parasites, which include sheep scab mite and flies that cause flystrike. Those infestations are major humane and economic problems. They are potentially fatal, and they cannot be left untreated. The issue of control is therefore extremely important.
  764
  Until 1984, the most widely used dips were those containing the chemical lindane, although sheep dips using OPs were also available. In that year, lindane dips were withdrawn on grounds of safety, and OPs replaced them in the market. At present, most sheep dips contain OPs.
  As the hon. Gentleman will also know, it was compulsory to dip sheep until a few years ago, although that is no longer the case. I am aware that—during an interview with the hon. Member for North Cornwall about OPs, which was broadcast this morning on the Radio 4 programme "Farming Today"—one of my officials was quoted as saying at a recent meeting with the British Medical Association that
  "he now accepts that nerve damage can occur from a medium or low level of exposure to sheep dip."
  That is entirely untrue. I repeat: that is entirely untrue. It is unfortunate that neither the programme presenter nor the hon. Gentleman was able to check the accuracy of their information beforehand.
  Mr. Andrew Mackinlay rose—
  Mr. Burns: I have a copy of the minutes of the meeting in question, and it clearly records that my official said:
  "Changes in peripheral and/or central nervous system function had been shown in some studies, while others had not shown such effects."
  Mr. Tyler: Will the Minister give way?
  Mr. Burns: I am sorry; I do not have time.
  That statement is clearly quite different from the impression given during the radio interview. I should be happy to let the hon. Member for North Cornwall see the extract from those minutes.
  Mr. Michael Meacher: Will the Minister give way?
  Mr. Burns: Very briefly, because I have only another four minutes.
  Mr. Meacher: I think that it is rather more than that.
  Whatever the truth may be about what was said by the Minister's official, will the Government now undertake an investigation into the 500 farmers who are known to be ill with organophosphate poisoning, which they have hitherto refused to do? Will the Minister accept, in view of his earlier remarks, that the licensing system is over-dependent on manufacturers' toxicity data?
  Will the Minister take steps to ensure that the evidence on which the licensing decisions are made is made available to the general public? Will he, in the light of the very effective evidence produced by the hon. Member for North Cornwall (Mr. Tyler), now impose a moratorium on the use of organophosphate dips, while instituting a programme to assist farmers with alternative methods of protecting against sheep scab?
  Mr. Burns: I am grateful to the hon. Gentleman. I would appreciate it if he would let me develop my theme, especially on the last point he raised. As I have said, if I run out of time in what is a short debate, I shall write to

  765
  the hon. Member for North Cornwall and deal with all the issues that have been raised in the debate which I have not covered.
  I now turn to the issue of what action the Government are taking. The Government are very concerned about the link which some people have claimed between their ill health and the use of organophosphorus insecticides and sheep dips. In common with many other chemicals in daily use, OPs, if misused, can give rise to adverse effects. Without doubt, some of those effects can be very serious.
  However, what is not clear is whether, when used in the approved way, these OPs can cause chronic adverse health effects in the long term to the people who are using them. Much of the evidence for long-term effects has been criticised for being anecdotal and because exposure data have been poor. Also, it is exceedingly difficult to establish cause and effect from individual cases which can be caused by other medical conditions, making diagnosis extremely difficult.
  The Government have two very clear objectives. One is to establish scientifically whether a link exists between ill health and chronic exposure to OPs. The other is to ensure that people suffering ill health which they feel may be due to such exposure get the best medical advice and care possible, and that medical practitioners have a better understanding of the symptoms which may be associated with chronic exposure to organophosphate sheep dips.
  To those ends, we are doing a great deal. First, we are funding a number of research projects, including studies on the occupational hygiene of sheep dipping and on alternative methods of control of sheep scab. One project is being carried out at a number of research institutes, with the aim of producing a vaccine. The other is aimed at obtaining a better understanding of the factors that influence the spread of sheep scab. The projects, which commenced in January 1996, will run for three years from that date.
  Most recently, and on the recommendation of the medical and scientific panel, studies costing approximately half a million pounds are being undertaken at the Institute of Occupational Medicine in Edinburgh. This study, which commenced in November 1995, will take about three years to complete and is designed to investigate the effects of organophosphate sheep dips on sheep farmers and sheep farm workers.
  The Government have also taken a number of measures to ensure that the problem is brought to the attention of the medical profession. Thus, the chief medical officer wrote to all doctors in England in 1991 and again, with the chief executive of the Veterinary Medicines Directorate, in June 1993, to alert doctors to the possibility of adverse effects from exposure to pesticides and certain veterinary medicines, and to remind them of the reporting schemes for human adverse reactions to veterinary products operated by the Employment Medical Advisory Service and MAFF's Veterinary Medicines Directorate.
  The Government also issued in April this year a revised and expanded edition of the book "Pesticide Poisoning: Notes for the Guidance of Medical Practitioners". This includes guidance on the diagnosis and management of acute OP poisoning and on chronic health effects. The
  766
  book also includes details of reporting procedures when OP poisoning is suspected.
  In the past few days, following discussions between Baroness Cumberlege and the presidents of the Royal College of Physicians and the Royal College of Psychiatrists, the chief medical officer has written to the presidents of both colleges giving the Department of Health's support to the setting up of a new advisory group to draw up guidance on how to manage patients who may be suffering from adverse effects from exposure to OP sheep dips.
  We have also been concerned to ensure that those using OP sheep dips follow the correct procedures, and to alert them to the adverse effects if they are misused. We therefore published a leaflet for farmers on the safe use of OP sheep dips. That discussed the need for sheep dipping, safe handling of sheep dips, the use of protective clothing, and possible adverse effects of OP sheep dips.
  OP compounds have been reviewed several times by the independent expert committees which advise Ministers on pesticides and veterinary products. In 1993, the Veterinary Products Committee reviewed the OP sheep dips, and found that there was no evidence to support a ban or suspension on their use when used properly.
  Following its review in 1993, the VPC recommended that the licences should continue, and that a certificate of competence should be required for the purchase of OP dips. A scheme under which a certificate of competence is required before OP sheep dips can be purchased became operative in 1995. Furthermore, the VPC set up an expert panel, the medical and scientific committee, in 1994, to examine the effects of OPs and to recommend research that might be carried out.
  To sum up, Britain has an excellent system for approving pesticides and for licensing veterinary medicines. Under both systems, the Government are advised by independent statutory committees of acknowledged experts. We listen to those expert committees and, if they tell us that a product is likely to harm people, we do not let it get on the market.
  Believe me, if any grounds emerge to think that the use of OP pesticides, or any other pesticide or veterinary drug, poses a serious threat to the health of the public or to those who will use it, we will have no hesitation in withdrawing it. But before contemplating such a step, we must assemble all the evidence and make an assessment based on the facts.
  Malathion is the only OP authorised for the treatment of head lice. There is no evidence to suggest that malathion is dangerous when used for that purpose. Like all marketed medicines, products containing malathion are continuously monitored for safety. That is important, and that is what is happening.
  The hon. Member for North Cornwall raised a number of issues with which I have not been able to deal, but I assure him once again that, as he requested at the beginning of the debate, I shall write to him as soon as possible giving him full answers on those matters with which time has not allowed me to deal today.
  Question put and agreed to.
  Adjourned accordingly at four minutes to Eleven o'clock.

TREASURY

  Fuel Duty
  Mr. Cohen
  To ask the Chancellor of the Exchequer how much revenue was raised from fuel duty in 1995–96; and how much revenue from fuel duty is estimated for each year to 2000 in(a) cash and (b) 1996–97 prices. [134]

  Mr. Oppenheim
  In 1995–96 the revenue raised from fuel duty was £15.7 billion. In the 1996 "Summer Economic Forecast" receipts for 1996–97 were forecast to be £17.5 billion. Forecasts for later years are not published.

  Incomes
  Mr. Meacher
  To ask the Chancellor of the Exchequer what has been the change in real personal disposable income each year since 1970 in the United Kingdom and each European Union state and in the United States of America and Japan. [1010]

  Mr. Jack
  The change in real personal disposal income each year since 1970 for all OECD countries can be calculated from figures available in various editions of "OECD National Accounts, Vol. II", which are available in the House of Commons Library.

ENVIRONMENT

  Workplace Assaults
  Mr. Allen
  To ask the Secretary of State for the Environment how many people were assaulted at work, by industry, for each of the last 10 years; and what plans the Government have to improve the protection of people at work from such attacks. [761]

  Sir Paul Beresford
  The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995, amended with effect from 1 April 1996, now require serious injuries to people caused by non-consensual physical acts of violence, and arising out of or in connection with work, to be reported. The figures for such reported incidents will not be available until next year, when they will be published by the Health and Safety Executive.

  The HSE has recently published new guidance for employers on dealing with violence at work, as well as producing sector specific guidance in areas of increased risk—these include retail, the health services, the education sector and banks and building societies.

  Health and Safety Executive
  Mr. Allen
  To ask the Secretary of State for the Environment if he will list, for each of the last 10 years, the number of inspections carried out by Health and Safety Executive inspectors. [659]

  Sir Paul Beresford
  The following table shows the number of inspections carried out by Health and Safety Executive inspectors in each of the last 10 years.

  Year

  Inspections1

  1986–87

  164,098

  1987–88

  159,641

  1988–89

  159,550

  1989–90

  171,580

  1990–91

  169,346

  1991–922

  175,070

  1992–93

  162,815

  1993–94

  157,032

  1994–95

  147,160

  1995–96

  124,869

  1 Inspections are planned preventive inspections by HSE's inspectorates, and site visits to monitor nuclear site licences by the nuclear safety division. They do not include reactive work such as investigation of accidents and complaints about workplace conditions.

  2 Figures for 1991–92 and beyond include inspections of the railway and offshore industries which became the responsibility of HSE on 3 December 1990 and 1 April 1991 respectively.

  Mr. Allen
  To ask the Secretary of State for the Environment if he will list, for each of the last 10 years, the number of enforcement notices issued by(a) the Health and Safety Executive's field operations division inspectorates and (b) local authority inspectors. [470]

  Sir Paul Beresford
  The total number of enforcement notices issued by HSE's field operations directorate and local authority inspectors between 1986–87 and 1994–95 is as follows:

  Enforcement notices issued by field operations directorate

  Number of notices issued

  1986–87

  19,374

  1987–88

  111,158

  1988–89

  111,054

  1989–90

  211,857

  1990–91

  212,653

  1991–92

  212,330

  1992–93

  211,825

  1993–94

  210,516

  1994–95

  210,639

  1995–96

  3,48,674

  1 Combined number of notices issued by HM agricultural inspectorate and HM factory inspectorate. Source HSC annual report 1988–89.

  2 Number of notices issued by HSE's field operations division. Source Health and Safety Statistics 1994–95.

  3 Number of Notices issued by HSE's field operations division. Source Health and Safety Commission annual report 1995–96.

  4 Provisional.

  119

  Enforcement notices issued by local authority inspectors

  Number of notices issued

  1986–87

  8,100

  1987–88

  9,520

  1988–89

  10,070

  1989–90

  10,220

  1990–91

  13,030

  1991–92

  21,680

  1992–93

  26,980

  1993–94

  20,660

  1994–95

  11,790

  Mr. Allen
  To ask the Secretary of State for the Environment if he will list, for each of the last 10 years, the number of field inspectors employed by the Health and Safety Executive, indicating the proportion of them with less than two years experience. [658]

  Sir Paul Beresford
  The information available is as follows for health and safety inspectors—factory, agricultural, quarries, mines and railways—working from area offices. Nuclear, offshore, and specialist inspectors are excluded, as are inspectors currently assigned to headquarters.

  Year (1 April)

  Inspector numbers

  Proportion with less than two years' experience (per cent.)

  1987

  757.5

  13

  1988

  712.5

  14

  1989

  724

  14

  1990

  750.5

  21

  1991

  789

  24

  1992

  826

  24

  1993

  834

  19

  1994

  841.5

  14

  1995

  783.3

  7

  1996

  807.5

  5

  Single Regeneration Budget
  Ms Walley
  To ask the Secretary of State for the Environment if he will give details, by region, for the amount of funding awarded for each round of SRB funding and give in each case the number of jobs created and directly funded as a result of the SRB programme; and, of those, what percentage of fixed-term contracts have waivers in place in respect of redundancy costs. [39]

  Sir Paul Beresford
  The SRB challenge fund provides support for between one to seven years for regeneration schemes by locally based partnerships. Funds awarded by region in the first two bidding rounds of the challenge fund and the number of jobs expected to be created or safeguarded as a result are set out in the table:

  Round 1

  Round 2

  Round 1

  Round 2

  £million

  £million

  Plans: Jobs created/ safeguarded (000s)

  Plans: Jobs created/ safeguarded (000s)

  London

  316.7

  230.0

  55

  39

  South East

  31.8

  78.6

  12

  9

  Eastern

  20.7

  35.3

  4

  9

  South West

  34.1

  37.9

  11

  13

  East Midlands

  55.9

  56.8

  24

  21

  120

  Round 1

  Round 2

  Round 1

  Round 2

  £ million

  £ million

  Plans: Jobs created/ safeguarded (000s)

  Plans: Jobs created/ safeguarded (000s)

  West Midlands

  156.7

  147.1

  37

  40

  Merseyside

  78.0

  87.5

  15

  11

  North West

  143.3

  133.2

  71

  22

  Yorks and the Humber

  202.2

  152.3

  62

  16

  North East

  80.7

  159.9

  11

  20

  It is for the partnerships themselves to determine the terms and conditions of any staff they employ directly. Partnerships have, however, been advised that they should include the waivers referred to in fixed-term contracts as any redundancy costs incurred by them as a result of the absence of such waivers would not be met from the SRB challenge fund. My Department does not collect information about the number of staff directly employed by partnerships on fixed-term contracts.

  Ms Walley
  To ask the Secretary of State for the Environment what is his estimate of the cost of rights to claims for unfair dismissal and redundancies in respect of those employed under SRB funding. [81]

  Sir Paul Beresford
  The SRB challenge fund provides support for between one to seven years for regeneration schemes by locally based partnerships. It is for the partnerships themselves to determine how many staff they employ and on what terms and conditions.

  Ms Walley
  To ask the Secretary of State for the Environment if he will review his decision to require fixed-term contracts under SRB projects to contain waivers of rights to claims for unfair dismissal and redundancies; and if he will make a statement. [33]

  Sir Paul Beresford
  The SRB challenge fund provides support for between one to seven years for regeneration schemes by locally based partnerships. It is for the partnerships themselves to determine the terms and conditions for any staff they employ directly. However, it is Government policy that fixed-term contracts should contain waivers of right to claims for unfair dismissal and redundancy, as provided under section 197 of the Employment Rights Act 1996.

  The employee's agreement to the waiver means that protection against unfair dismissal does not apply to a dismissal from employment under a contract for a fixed term of one year or more if the dismissal consists only of the expiry of that term without its being renewed. The waiver does not affect employees' rights to claim for unfair dismissal or redundancy payments in other circumstances.

  Partnerships involved in SRB challenge fund schemes have been advised that any claims for unfair dismissal or redundancy costs incurred by them as the result of the absence of such waivers will not be eligible for grant assistance where staff were employed on fixed-term contracts after the advice was issued to them.
  121
  Ms Walley
  To ask the Secretary of State for the Environment what representations he has received in respect of fixed-term contracts under SRB contracts. [32]

  Sir Paul Beresford
  Following the issue to SRB challenge fund partnerships of advice on waivers by employees on fixed-term contracts, a handful of SRB partnerships have sought further clarification of the costs which will be eligible for grant assistance from the challenge fund.

  Occupational Diseases
  Mr. Allen
  To ask the Secretary of State for the Environment which occupational diseases are not required to be reported under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995; and what proportion they constitute of all incidents of occupational disease. [656]

  Sir Paul Beresford
  The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 require reports to be made of diseases listed in schedule 3 to the regulations when a case has been diagnosed in writing by a doctor and the person concerned is currently employed in an associated work activity. Cases not meeting these criteria are not required to be reported. Information on what proportion they constitute of all occupational disease is not available.

  The most recent analysis and discussion of occupational and work-related disease statistics, including reports made under these regulations, can be found in "Health and Safety Statistics 1995/96", published by the Health and Safety Commission, on 23 October 1996, a copy of which has been placed in the Library.

  Landfill Tax
  Mr. Sheerman
  To ask the Secretary of State for the Environment when he expects all the arrangements for the landfill tax and environmental trusts to be fully developed and in place. [1149]

  Mr. Clappison
  All the arrangements for the landfill tax and environmental trusts have been fully developed and are already in place.

  The primary law on landfill tax is contained in the Finance Act 1996, which received Royal Assent on 29 April 1996. The more detailed implementation aspects of the landfill tax are set out in the Landfill Tax Regulations 1996 (SI 1996 No.1527) which came into force on 1 August 1996. In addition, the Landfill Tax (Contaminated Land) Order 1966 (SI 1996 No.1528), setting out the provisions for exempting from tax waste from clearing historically contaminated land, came into force on 1 August 1996 and the Landfill Tax (Qualifying Material) Order (SI 1996 No.1528), defining the categories of waste to which the lower rate of tax applies, came into force on 1 October 1996.

  Provisions for environmental trusts are contained in the Landfill Tax (Regulations) 1996 (SI 1996 No.1527). On 15 October 1996 the Commissioners of Her Majesty's Customs and Excise approved the Environmental Trust Regulatory Body Limited, trading under the name "ENTRUST" to act as the regulatory body for the
  122
  purposes of the environmental trust scheme. ENTRUST is responsible for enrolling and monitoring the operation of environmental trusts.

  Marine Wild life and Habitats
  Ms Ruddock
  To ask the Secretary of State for the Environment what biological and physiological parameters are monitored by his Department, in order to assess the cumulative impacts of discharges from offshore oil and gas installations on marine wildlife and habitats. [504]

  Mr. Clappison
  My Department, the Scottish Office and the Ministry of Agriculture, Fisheries and Food all maintain extensive programmes of marine monitoring, including the impact of human activities on the marine environment. In addition, the three country nature conservation agencies monitor the status of marine habitats and species in the United Kingdom waters. The Department of Trade and Industry is responsible for the overall regulation of the offshore oil and gas industry.

  Local Government Finance
  Mr. Patrick Thompson
  To ask the Secretary of State for the Environment when he proposes to issue a consolidation of the 1990 local authority capital finance regulations. [1737]

  Mr. Curry
  A draft consolidation of these regulations is being issued this week to local authorities and other interested parties. A copy is being placed in the House Library. I am inviting comments on the draft by the end of January. The new regulations will come into effect next April and will supersede the 1990 regulations.

  Vacant Offices
  Mr. Campbell-Savours
  To ask the Secretary of State for the Environment what is the policy of his Department in respect of the future of(a) 25 Southampton buildings, (b) the Patent Office and (c) the Office of Fair Trading following vacation of these premises. [441]

  Mr. John M. Taylor
  I have been asked to reply.

  I have asked the chief executive of the Patent Office to write direct to the hon. Member.

  Letter from J. C. Octon to Mr. D. N. Campbell-Savours, dated 30 October 1996:
  I am replying for the Patent Office in the absence of the Chief Executive to your Parliamentary Question to the Secretary of State for the Environment about 25 Southampton Buildings.
  The Patent Office is only a minor user of 25 Southampton Buildings and as such has no policy responsibility for the building. That now rests with the Department of National Heritage with which we have made arrangements for the accommodation of our remaining London staff. While these arrangements are helpful the future presence of the Patent Office in London is not totally dependent upon them. If the need arose we would be able to seek appropriate alternatives.

EDUCATION AND EMPLOYMENT

  Nursery Vouchers
  Sir Ralph Howell
  To ask the Secretary of State for Education and Employment what considerations led her to decide not to make it her policy to ensure that every provider accepting Government nursery vouchers registers its under-fives provisions under the Children Act 1989 and associated guidance. [763]

  Mr. Robin Squire
  The Children Act 1989 requires all day care providers to register with their local authority. Maintained primary and nursery schools and independent schools have always been exempt from the registration

  Full-time equivalent teachers employed by local education authorities and grant-maintained (GM) schools in the nursery, primary and secondary sectors: January 1990 to January 1993

  Local education authority area

  1990

  1991

  1992

  1993

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  ILEA

  18,525

  81

  —

  —

  —

  —

  —

  —

  Corporation of London

  —

  —

  14

  —

  11

  —

  15

  —

  Camden

  —

  —

  1,196

  —

  1,299

  —

  1,273

  —

  Greenwich

  —

  —

  2,196

  —

  2,234

  —

  2,033

  —

  Hackney

  —

  —

  1,715

  —

  1,604

  —

  1,550

  —

  Hammersmith and Fulham

  —

  —

  1,045

  79

  1,033

  83

  1,024

  88

  Islington

  —

  —

  1,310

  —

  1,338

  —

  1,533

  —

  Kensington and Chelsea

  —

  —

  689

  41

  795

  42

  696

  45

  Lambeth

  —

  —

  1,453

  —

  1,541

  39

  1,549

  55

  Lewisham

  —

  —

  1,818

  —

  1,411

  —

  1,777

  19

  Southwark

  —

  —

  1,714

  31

  1,695

  34

  1,705

  33

  Tower Hamlets

  —

  —

  2,115

  —

  2,118

  56

  2,232

  59

  Wandsworth

  —

  —

  1,725

  —

  1,730

  186

  1,754

  314

  Westminster

  —

  —

  1,154

  —

  1,147

  —

  1,188

  —

  Barking and Dagenham

  1,325

  —

  1,267

  —

  1,322

  —

  1,353

  —

  Barnet

  2,539

  130

  2,415

  131

  2,595

  139

  2,597

  224

  Bexley

  1,783

  —

  1,745

  —

  1,711

  —

  1,753

  20

  Brent

  2,014

  —

  2,023

  63

  2,032

  64

  2,030

  147

  Bromley

  1,996

  —

  1,958

  58

  1,938

  383

  2,080

  720

  Croydon

  2,551

  —

  2,548

  —

  2,486

  50

  2,397

  57

  Ealing

  2,309

  —

  2,202

  —

  2,143

  —

  2,130

  349

  Enfield

  2,250

  —

  2,264

  —

  2,292

  —

  2,324

  —

  Haringey

  1,618

  —

  1,553

  —

  1,605

  —

  1,589

  —

  Harrow

  1,389

  —

  1,450

  —

  1,570

  —

  1,581

  —

  Havering

  2,079

  —

  2,011

  —

  2,049

  —

  2,009

  —

  Hillingdon

  1,776

  —

  1,754

  60

  1,770

  422

  1,843

  609

  Hounslow

  1,813

  —

  1,928

  —

  1,891

  —

  1,869

  —

  Kingston-upon-Thames

  1,094

  —

  1,035

  —

  988

  —

  1,051

  60

  Merton

  1,244

  —

  1,311

  —

  1,268

  —

  1,297

  —

  Newham

  2,105

  —

  2,070

  —

  2,039

  45

  1,972

  43

  Redbridge

  1,699

  —

  1,698

  —

  1,796

  —

  1,858

  —

  Richmond-upon-Thames

  987

  —

  1,016

  —

  1,135

  —

  1,029

  —

  Sutton

  1,347

  48

  1,345

  50

  1,299

  152

  1,266

  254

  Waltham Forest

  2,158

  —

  1,917

  —

  1,976

  67

  1,903

  71

  Birmingham

  9,095

  107

  9,125

  165

  9,343

  311

  9,548

  335

  Coventry

  2,820

  —

  2,745

  —

  2,795

  —

  2,752

  —

  Dudley

  2,659

  42

  2,727

  43

  2,781

  43

  2,670

  45

  Sandwell

  2,965

  —

  2,949

  —

  2,921

  50

  2,959

  53

  Solihull

  1,906

  —

  1,860

  —

  1,795

  —

  1,857

  27

  Walsall

  2,845

  —

  2,744

  —

  2,619

  —

  2,575

  154

  Wolverhampton

  2,525

  —

  2,582

  40

  2,636

  122

  2,467

  120

  Knowsley

  1,563

  —

  1,481

  —

  1,398

  —

  1,351

  —

  Liverpool

  4,604

  69

  4,470

  65

  4,221

  69

  4,185

  69

  St. Helens

  1,846

  —

  1,713

  —

  1,656

  —

  1,679

  —

  Sefton

  2,397

  —

  2,433

  —

  2,479

  —

  2,515

  —

  Wirral

  3,031

  —

  3,099

  —

  2,924

  —

  2,963

  —

  Bolton

  2,678

  45

  2,550

  47

  2,496

  50

  2,517

  71

  Bury

  1,515

  —

  1,484

  —

  1,461

  —

  1,467

  —

  Manchester

  4,234

  —

  4,254

  —

  3,974

  —

  4,044

  —

  Oldham

  2,194

  —

  2,196

  —

  2,253

  —

  2,256

  —

  124
  requirement. My right hon. Friend does not consider it necessary or appropriate to remove this exemption, as these other providers are separately covered by education legislation.

  Teachers
  Sir David Knox
  To ask the Secretary of State for Education and Employment how many teachers were(a) employed and (b) employed in grant-maintained schools in each local education authority in England in the most recent year for which figures were available; and what were the figures in the previous six years. [1027]

  Mr. Forth
  The information is given in the following table:
  125

  Full-time equivalent teachers employed by local education authorities and grant-maintained (GM) schools in the nursery, primary and secondary sectors: January 1990 to January 1993

  Local education authority area

  1990

  1991

  1992

  1993

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  Rochdale

  2,233

  —

  1,934

  —

  1,987

  —

  1,851

  10

  Salford

  2,175

  —

  2,147

  —

  2,052

  —

  2,000

  —

  Stockport

  2,405

  —

  2,340

  —

  2,332

  —

  2,362

  —

  Tameside

  2,010

  45

  2,042

  47

  2,085

  49

  2,036

  49

  Trafford

  1,722

  —

  1,763

  —

  1,611

  —

  1,616

  —

  Wigan

  3,161

  —

  2,972

  —

  3,015

  —

  3,096

  —

  Bamsley

  1,953

  —

  1,760

  —

  1,714

  —

  1,696

  —

  Doncaster

  2,835

  —

  2,753

  —

  2,691

  —

  2,760

  —

  Rotherham

  2,474

  —

  2,522

  —

  2,464

  —

  2,335

  —

  Sheffield

  4,123

  —

  4,043

  —

  3,937

  —

  3,866

  4

  Bradford

  4,952

  —

  5,012

  —

  5,093

  66

  5,004

  66

  Calderdale

  1,859

  —

  1,791

  —

  1,806

  89

  1,827

  96

  Kirklees

  3,761

  59

  3,701

  62

  3,590

  70

  3,632

  71

  Leeds

  6,514

  —

  6,320

  —

  6,300

  —

  6,010

  —

  Wakefield

  2,882

  —

  2,909

  —

  2,748

  —

  2,741

  —

  Gateshead

  1,784

  —

  1,750

  —

  1,731

  —

  1,707

  —

  Newcastle-upon-Tyne

  2,412

  —

  2,346

  —

  2,285

  —

  2,212

  —

  North Tyneside

  1,896

  —

  1,826

  —

  1,768

  —

  1,765

  —

  South Tyneside

  1,496

  —

  1,410

  —

  1,385

  —

  1,325

  —

  Sunderland

  2,751

  —

  2,681

  —

  2,692

  —

  2,651

  —

  Isles of Scilly

  25

  —

  29

  —

  27

  —

  28

  —

  Avon

  7,282

  —

  7,401

  51

  7,996

  96

  7,612

  99

  Bedfordshire

  4,891

  45

  4,909

  44

  4,959

  51

  4,983

  194

  Berkshire

  5,866

  —

  5,892

  41

  5,892

  360

  6,080

  540

  Buckinghamshire

  5,079

  —

  5,136

  150

  4,973

  217

  5,215

  299

  Cambridge

  5,419

  —

  5,377

  —

  5,419

  10

  5,667

  367

  Cheshire

  7,863

  26

  7,956

  30

  7,968

  34

  8,072

  42

  Cleveland

  5,538

  —

  5,536

  —

  5,546

  —

  5,560

  —

  Cornwall

  3,855

  —

  3,751

  —

  3,697

  —

  3,647

  —

  Cumbria

  4,347

  —

  4,191

  —

  4,154

  102

  4,211

  341

  Derbyshire

  8,411

  —

  8,490

  127

  7,910

  139

  8,098

  285

  Devon

  7,190

  29

  7,133

  31

  7,076

  33

  7,229

  90

  Dorset

  4,604

  —

  4,476

  56

  4,512

  168

  4,389

  374

  Durham

  4,965

  —

  4,845

  —

  5,007

  —

  5,239

  —

  East Sussex

  4,571

  —

  4,524

  —

  4,673

  —

  4,908

  —

  Essex

  12,407

  —

  12,274

  —

  12,251

  205

  12,033

  1,665

  Gloucestershire

  4,213

  —

  4,349

  187

  4,042

  186

  4,090

  828

  Hampshire

  11,675

  —

  11,415

  44

  11,593

  190

  12,037

  394

  Hereford and Worcester

  5,141

  —

  5,413

  —

  5,451

  —

  5,441

  —

  Hertfordshire

  8,530

  —

  8,248

  165

  8,155

  305

  8,280

  411

  Humberside

  7,624

  —

  7,722

  —

  7,680

  4

  7,740

  5

  Isle of Wight

  987

  —

  1,008

  —

  1,021

  —

  997

  —

  Kent

  11,923

  29

  11,674

  30

  11,724

  828

  11,980

  1,709

  Lancashire

  11,756

  46

  11,761

  106

  11,733

  225

  11,922

  281

  Leicestershire

  7,886

  —

  7,764

  21

  7,830

  24

  7,570

  25

  Lincolnshire

  4,612

  105

  4,869

  185

  4,748

  479

  4,808

  935

  Norfolk

  5,840

  —

  5,564

  65

  5,687

  102

  5,791

  474

  North Yorkshire

  5,590

  —

  5,656

  —

  5,803

  —

  5,594

  —

  Northamptonshire

  5,094

  —

  5,337

  39

  5,458

  222

  5,466

  602

  Northumberland

  2,809

  —

  2,736

  —

  2,791

  —

  2,677

  —

  Nottinghamshire

  8,572

  —

  8,383

  —

  8,530

  —

  8,508

  20

  Oxfordshire

  4,167

  —

  4,042

  —

  4,150

  —

  4,206

  —

  Shropshire

  3,671

  —

  3,634

  30

  3,712

  31

  3,563

  31

  Somerset

  3,669

  —

  3,585

  —

  3,558

  34

  3,595

  46

  Staffordshire

  8,681

  —

  8,862

  —

  8,798

  —

  8,357

  55

  Suffolk

  4,911

  —

  4,949

  —

  5,277

  —

  5,276

  —

  Surrey

  6,690

  —

  6,625

  47

  6,511

  276

  6,677

  590

  Warwickshire

  4,005

  —

  3,984

  —

  3,904

  88

  3,961

  206

  West Sussex

  4,935

  —

  4,855

  —

  5,210

  —

  5,319

  —

  Wiltshire

  4,402

  —

  4,513

  —

  4,559

  34

  4,596

  112

  England

  398,542

  906

  394,945

  2,430

  394,874

  7,121

  396,331

  15,353

  1. Exclude sixth form colleges.

  2. All FTEs rounded to whole numbers.

  126 127

  Full-time equivalent teachers employed by local education authorities and grant-maintained (GM) schools in the nursery, primary and secondary sector: January 1994 to January 1996

  Local education authority area

  1994

  1995

  1996

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  ILEA

  —

  —

  —

  —

  —

  —

  Corporation of London

  14

  —

  16

  —

  15

  —

  Camden

  1,321

  160

  1,346

  165

  1,437

  173

  Greenwich

  1,984

  —

  1,939

  11

  1,981

  13

  Hackney

  1,459

  —

  1,429

  7

  1,401

  7

  Hammersmith and Fulham

  977

  86

  941

  82

  916

  85

  Islington

  1,627

  —

  1,360

  —

  1,374

  —

  Kensington and Chelsea

  670

  65

  674

  78

  702

  76

  Lambeth

  1,575

  303

  1,680

  390

  1,701

  421

  Lewisham

  1,809

  23

  1,863

  21

  1,892

  22

  Southwark

  1,739

  236

  1,687

  237

  1,751

  243

  Tower Hamlets

  2,309

  57

  2,250

  59

  2,250

  56

  Wandsworth

  1,625

  478

  1,561

  485

  1,572

  474

  Westminster

  1,160

  —

  1,121

  —

  1,145

  —

  Barking and Dagenham

  1,375

  —

  1,446

  —

  1,487

  —

  Barnet

  2,596

  649

  2,638

  720

  2,765

  732

  Bexley

  1,781

  202

  1,836

  261

  1,808

  262

  Brent

  1,962

  595

  1,971

  803

  2,066

  882

  Bromley

  2,179

  745

  2,181

  871

  2,195

  1,034

  Croydon

  2,326

  266

  2,409

  544

  2,518

  562

  Ealing

  2,077

  444

  2,097

  460

  2,119

  463

  Enfield

  2,273

  362

  2,358

  371

  2,412

  376

  Haringey

  1,719

  —

  1,730

  —

  1,894

  —

  Harrow

  1,566

  33

  1,576

  37

  1,561

  40

  Havering

  1,907

  236

  1,891

  249

  1,828

  240

  Hillingdon

  1,814

  875

  1,870

  911

  1,898

  907

  Hounslow

  1,880

  128

  1,890

  134

  1,979

  131

  Kingston upon Thames

  1,066

  202

  1,057

  208

  1,038

  205

  Merton

  1,255

  —

  1,269

  51

  1,215

  54

  Newham

  1,916

  43

  1,968

  44

  2,162

  41

  Redbridge

  1,927

  72

  1,937

  74

  1,984

  76

  Richmond upon Thames

  1,040

  —

  1,052

  —

  1,081

  —

  Sutton

  1,292

  443

  1,354

  452

  1,372

  456

  Waltham Forest

  1,718

  127

  1,706

  140

  1,674

  159

  Birmingham

  9,452

  922

  9,366

  1,087

  9,584

  1,103

  Coventry

  2,747

  —

  2,657

  —

  2,710

  —

  Dudley

  2,534

  303

  2,576

  318

  2,643

  325

  Sandwell

  2,828

  48

  2,689

  109

  2,664

  111

  Solihull

  1,836

  26

  1,845

  25

  1,828

  25

  Walsall

  2,668

  390

  2,560

  465

  2,607

  462

  Wolverhampton

  2,447

  164

  2,377

  166

  2,331

  173

  Knowsley

  1,354

  44

  1,446

  46

  1,429

  48

  Liverpool

  4,191

  147

  4,194

  204

  4,289

  230

  St. Helens

  1,637

  —

  1,635

  —

  1,575

  —

  Sefton

  2,484

  —

  2,546

  —

  2,550

  —

  Wirral

  2,885

  129

  2,927

  132

  3,026

  216

  Bolton

  2,445

  202

  2,467

  202

  2,438

  204

  Bury

  1,395

  10

  1,420

  10

  1,462

  10

  Manchester

  3,631

  —

  3,587

  —

  3,640

  22

  Oldham

  2,215

  —

  2,202

  —

  2,193

  —

  Rochdale

  1,789

  101

  1,819

  189

  1,840

  193

  Salford

  1,802

  27

  1,821

  30

  1,866

  32

  Stockport

  2,170

  —

  2,185

  —

  2,232

  —

  Tameside

  1,791

  137

  1,842

  139

  1,815

  141

  Trafford

  1,621

  192

  1,694

  205

  1,686

  265

  Wigan

  2,728

  —

  2,754

  —

  2,715

  —

  Barnsley

  1,721

  —

  1,704

  —

  1,668

  —

  Doncaster

  2,732

  —

  2,703

  —

  2,654

  70

  Rotherham

  2,403

  —

  2,440

  —

  2,347

  —

  Sheffield

  3,797

  136

  3,719

  182

  3,803

  186

  Bradford

  5,103

  342

  4,779

  400

  4,761

  413

  Calderdale

  1,814

  298

  1,769

  530

  1,780

  607

  Kirklees

  3,443

  77

  3,373

  79

  3,339

  85

  Leeds

  5,839

  75

  5,759

  71

  5,913

  71

  Wakefieled

  2,630

  —

  2,704

  —

  2,711

  —

  Gateshead

  1,759

  —

  1,715

  —

  1,687

  —

  128 129

  Full-time equivalent teachers employed by local education authorities and grant-maintained (GM) schools in the nursery, primary and secondary sector: January 1994 to January 1996

  Local education authority area

  1994

  1995

  1996

  All schools including GM

  GM only

  All schools including GM

  GM only

  All schools including GM

  GM only

  Newcastle upon Tyne

  2,112

  —

  2,104

  —

  2,051

  —

  North Tyneside

  1,649

  —

  1,639

  11

  1,630

  11

  South Tyneside

  1,342

  —

  1,340

  —

  1,320

  —

  Sunderland

  2,744

  —

  2,728

  —

  2,638

  —

  Isles of Scilly

  27

  —

  26

  —

  27

  —

  Avon

  7,504

  107

  7,677

  118

  7,675

  115

  Bedfordshire

  4,808

  586

  5,008

  629

  4,991

  626

  Berkshire

  6,149

  614

  6,171

  729

  6,203

  753

  Buckinghamshire

  5,236

  689

  5,310

  770

  5,291

  740

  Cambridge

  5,501

  1,005

  5,573

  1,029

  5,505

  1,035

  Cheshire

  7,922

  177

  8,013

  185

  8,074

  191

  Cleveland

  5,243

  —

  5,189

  —

  5,207

  —

  Cornwall

  3,561

  —

  3,675

  —

  3,658

  —

  Cumbria

  4,078

  612

  4,016

  849

  4,005

  911

  Derbyshire

  7,861

  1,069

  7,555

  1,185

  7,528

  1,259

  Devon

  7,358

  304

  7,437

  319

  7,454

  379

  Dorset

  4,330

  587

  4,393

  651

  4,397

  663

  Durham

  5,105

  —

  5,117

  —

  5,070

  —

  East Sussex

  4,779

  —

  4,899

  —

  4,904

  —

  Essex

  11,616

  4,407

  11,771

  5,165

  12,237

  5,228

  Gloucestershire

  4,195

  1,234

  4,258

  1,616

  4,259

  1,655

  Hampshire

  11,394

  1,147

  11,871

  1,348

  11,713

  1,277

  Hereford and Worcester

  5,256

  202

  5,329

  207

  5,247

  207

  Hertfordshire

  8,510

  1,256

  8,725

  1,719

  8,707

  1,736

  Humberside

  7,229

  13

  7,394

  19

  7,378

  22

  Isle of Wight

  1,013

  —

  999

  —

  994

  —

  Kent

  12,224

  3,110

  12,552

  3,724

  12,655

  4,085

  Lancashire

  12,051

  455

  12,088

  485

  11,581

  499

  Leicestershire

  7,832

  193

  7,810

  194

  7,711

  187

  Lincolnshire

  4,876

  1,344

  4,877

  1,507

  4,990

  1,612

  Norfolk

  5,808

  706

  5,898

  763

  5,840

  801

  North Yorkshire

  5,844

  —

  5,774

  2

  5,953

  2

  Northamptonshire

  5,376

  767

  5,624

  796

  5,477

  785

  Northumberland

  2,644

  42

  2,672

  45

  2,657

  44

  Nottinghamshire

  8,376

  120

  8,354

  121

  7,920

  154

  Oxfordshire

  4,363

  5

  4,426

  5

  4,155

  4

  Shropshire

  3,352

  243

  3,384

  330

  3,319

  327

  Somerset

  3,653

  49

  3,665

  76

  3,483

  81

  Staffordshire

  8,263

  267

  8,245

  279

  8,343

  283

  Suffolk

  5,391

  —

  5,466

  —

  5,380

  —

  Surrey

  6,206

  816

  6,529

  1,218

  6.938

  1,369

  Warwickshire

  4,017

  311

  4,027

  327

  3,875

  363

  West Sussex

  5,208

  —

  5,230

  17

  5,320

  18

  Wiltshire

  4,604

  759

  4,698

  1,053

  4,602

  1,134

  England

  390,430

  33,794

  392,910

  39,941

  393,334

  41,732

  1. Exclude sixth form colleges.

  2. All FTEs rounded to whole numbers.

  Schools Budget
  Sir David Knox
  To ask the Secretary of State for Education and Employment if she will list local education authorities in rank order by the proportion of the potential schools budget held back in the most recent year for which figures are available. [1025]

  Mr. Robin Squire
  The following table sets out in rank order, for each LEA in England, the proportion of the potential schools budget not delegated to schools. These figures are derived from LEAs' local management of schools budget statements for 1996–97, incorporating any amendments notified to the Department by 30 September 1996.
  130

  Rank

  Local education authority

  Percentage of PSB not delegated

  1.

  Dudley

  3.9

  2.

  Brent

  5.4

  3.

  Solihull

  5.6

  4.

  Waltham Forest

  6.1

  5.

  Islington

  6.1

  6.

  Sunderland

  6.2

  7.

  Leeds

  6.3

  8.

  Hertfordshire

  6.4

  9.

  Berkshire

  6.5

  10.

  Isles of Scilly

  6.7

  11.

  Rochdale

  6.7

  12.

  Greenwich

  6.9

  13.

  Knowsley

  6.9

  14.

  Staffordshire

  7.0

  131

  Rank

  Local education authority

  Percentage of PSB not delegated

  15.

  Northamptonshire

  7.1

  16.

  Wigan

  7.1

  17.

  Liverpool

  7.3

  18.

  Suffolk

  7.4

  19.

  Bury

  7.5

  20.

  Bedfordshire

  7.6

  21.

  Wolverhampton

  7.8

  22.

  Havering

  7.9

  23.

  North Tyneside

  8

  24.

  Oxfordshire

  8.0

  25.

  Redbridge

  8.1

  26.

  Bexley

  8.1

  27.

  Shropshire

  8.2

  28.

  Manchester

  8.2

  29.

  Sutton

  8.6

  30.

  Croydon

  8.7

  31.

  Birmingham

  8.7

  32.

  Cumbria

  8.7

  33.

  Richmond

  8.7

  34.

  Cheshire

  8.7

  35.

  Gloucestershire

  8.8

  36.

  Hamrnersmith/Fulham

  8.8

  37.

  Devon

  8.8

  38.

  Norfolk

  8.8

  39.

  Somerset

  8.8

  40.

  Stockport

  8.8

  41.

  Hampshire

  8.9

  42.

  Northumberland

  8.9

  43.

  Coventry

  9.1

  44.

  Kingston

  9.2

  45.

  Oldham

  9.3

  46.

  Bristol

  9.3

  47.

  Wirral

  9.3

  48.

  Kensington/Chelsea

  9.3

  49.

  Salford

  9.4

  50.

  North Yorkshire

  9.5

  51.

  Barking/Dagenham

  9.5

  52.

  Surrey

  9.5

  53.

  Ealing

  9.5

  54.

  Stockton on Tees

  9.6

  55.

  Hereford/Worcester

  9.7

  56.

  Enfield

  9.8

  57.

  Hillingdon

  9.8

  58.

  Essex

  9.9

  59.

  Harrow

  9.9

  60.

  East Sussex

  9.9

  61.

  Hounslow

  10

  62.

  Wiltshire

  10

  63.

  St. Helens

  10.1

  64.

  Walsall

  10.1

  65.

  Tameside

  10.1

  66.

  Corporation of London

  10.1

  67.

  North East Lincolnshire

  10.2

  68.

  Isle of Wight

  10.2

  69.

  Hull

  10.2

  70.

  Warwickshire

  10.2

  71.

  Lewisham

  10.2

  72.

  South Gloucestershire

  10.2

  73.

  Bath and North East Somerset

  10.3

  74.

  Bradford

  10.3

  75.

  Dorset

  10.3

  76.

  Merton

  10.3

  77.

  East Riding

  10.4

  78.

  Rotherham

  10.4

  79.

  North Somerset

  10.4

  80.

  Tower Hamlets

  10.5

  81.

  Cambridgeshire

  10.5

  82.

  Wandsworth

  10.5

  83.

  Barnet

  10.6

  84.

  Westminster

  10.6

  85.

  Hackney

  10.6

  86.

  Sefton

  10.6

  87.

  Southwark

  10.7

  132

  Rank

  Local education authority

  Percentage of PSB not delegated

  88.

  Lincolnshire

  10.7

  89.

  Derbyshire

  10.8

  90.

  West Sussex

  10.8

  91.

  Sandwell

  10.8

  92.

  Calderdale

  10.9

  93.

  Buckinghamshire

  10.9

  94.

  Hartlepool

  10.9

  95.

  Newcastle

  11.0

  96.

  Kirklees

  11.0

  97.

  Kent

  11.0

  98.

  York

  11.0

  99.

  Redcar and Cleveland

  11.1

  100.

  Nottinghamshire

  11.1

  101.

  South Tyneside

  11.1

  102.

  Lancashire

  11.1

  103.

  North Lincolnshire

  11.2

  104.

  Barnsley

  11.3

  105.

  Durham

  11.4

  106.

  Bolton

  11.5

  107.

  Trafford

  11.5

  108.

  Cornwall

  11.7

  109.

  Camden

  11.8

  110.

  Middlesbrough

  12.0

  111.

  Leicestershire

  12.0

  112.

  Doncaster

  12.1

  113.

  Lambeth

  12.6

  114.

  Sheffield

  12.6

  115.

  Wakefield

  12.8

  116.

  Bromley

  13.1

  117.

  Gateshead

  13.2

  118.

  Haringey

  13.6

  119.

  Newham

  14.9

  Pupil Exclusions
  Mr. David Nicholson
  To ask the Secretary of State for Education and Employment if she will make a statement on her Department's policy towards exclusions of disruptive pupils from schools; what factors underlay the restrictions on exclusions in the Education Act 1993; and what factors underlie the current legislative proposals. [878]

  Mr. Forth
  It is unacceptable for a minority of ill-behaved pupils to disrupt the education of the majority and undermine standards. Schools must have the right, as a last resort, to exclude severely disruptive pupils. The Department issued detailed guidance to schools and local authorities on "Exclusion from School" in May 1994.

  The Education Act 1993 abolished indefinite exclusion and limited head teachers' power to impose fixed-term exclusions up to a maximum of 15 school days per term. There was clear evidence that indefinite exclusion led to some pupils being left in educational limbo for long periods with nothing being done to get them back into school.

  Our current legislative proposals on exclusions would:
  (a) allow greater flexibility in the use of fixed-term exclusions by substituting a limit of 45 days in a school year - thereby increasing the opportunity for headteachers to make effective arrangements for the reintegration of the excluded pupil; and
  (b) require that, as far as practicable, independent committees hearing appeals against permanent exclusions meet when all the parties are available to attend, that these committees have regard to the discipline policy of the excluding school, and

  133
  that they take account of the interests of other pupils -thereby seeking to ensure that full and balanced consideration is given to each case.

  Surplus School Places
  Sir David Knox
  To ask the Secretary of State for Education and Employment how many surplus school places there were, and what was their cost, in each local education authority in England in the most recent year for which figures are available. [1026]

  Mr. Robin Squire
  For the number of surplus school places in each local education authority, I refer my hon. Friend to the reply that my hon. Friend gave to my hon. Friend the Member for Ryedale (Mr. Greenway) on Tuesday 19 March 1996,Official Report, columns 113–18. At a national level, the average premises-related cost of maintaining a surplus place is estimated to be £182 a year for a primary school and £303 a year for a secondary school at 1995–96 prices. The actual cost and the scope for realising savings from the removal of surplus places in practice in each local education authority will depend on local circumstances.

  Unemployment Benefit
  Mr. Ian McCartney
  To ask the Secretary of State for Education and Employment how many people who were disqualified from unemployment benefit, and what percentage of those in dispute with the Employment Service, won the right to benefit on appeal in the last year for which figures are available. [1146]

  Mr. Forth
  Responsibility for the subject of the question has been delegated to the Employment Service under its chief executive. I have asked him to arrange for a reply to be given.

  Letter from M. E. G. Fogden to Mr. Ian McCartney, dated 30 October 1996:
  The Secretary of State has asked me to reply to your question about the number of people who were disqualified from unemployment benefit and what percentage of these won the right to benefit on appeal, in the last year for which figures are available. This falls within my responsibility as Chief Executive of the Employment Service.
  Unfortunately we do not hold information on the number of successful appeal outcomes. The only information held on appeals is: the number received, the number reviewed and revised by an adjudication officer and the number submitted for determination by a Social Security Appeal Tribunal.
  This information, together with statistics on the number of adjudication officers's decisions, and disallowance rates, is contained in a published document entitled "Analysis of Adjudication Officers' Decisions". This provides information on all the main entitlement questions arising on claims, as well as disqualifications. Copies of this document are held in the Library of the House. The latest available information relates to the quarter year ending 30 June 1996.
  I hope this is helpful.

HEALTH

  Haemophiliacs
  Mr. Cohen
  To ask the Secretary of State for Health what estimate he has made of the extra cost to haemophiliacs arising from the imposition of VAT on drugs; and if he will make a statement. [141]
  134
  Mr. Horam
  There is no extra cost to haemophiliac patients receiving treatment under the national health service arising from the imposition of value added tax on drugs.

  Health Authority Deficits
  Mr. Cousins
  To ask the Secretary of State for Health which health authorities and trusts had deficits approved in the financial year 1995–96. [394]

  Mr. Horam
  The latest year for which audited accounts are available is currently 1994–95. The audited information for 1995–96 will not be available until late November.

  Mr. Cousins
  To ask the Secretary of State for Health which health authorities and trusts have been given approval to incur deficits in the present financial year; and on what date such approvals were given. [390]

  Mr. Horam
  The forecast financial positions of health authorities and trusts are discussed with the national health service executive regional offices as part of a cycle of planning and regular monitoring reviews. These outturn positions are therefore subject to revision as a result of any action agreed at these reviews. The specific approval of deficits does not therefore arise.

  NHS Trusts (Admissions)
  Mr. Redmond
  To ask the Secretary of State for Health if he will list those NHS trusts that on 30 September had restricted admissions for financial reasons. [473]

  Mr. Horam
  This information is not held centrally.

  Health Authority Administrative Costs
  Mr. Redmond
  To ask the Secretary of State for Health what was the administrative cost of running each health authority in 1995–96; and if he will give the percentage of the total funds available that represents. [428]

  Mr. Horam
  The provisional 1995–96 annual accounts for health authorities are not expected to be available until the end of November. The information requested will be placed in the Library when it becomes available.

  Mr. Redmond
  To ask the Secretary of State for Health if he will give the reasons for not making the administrative costs of health authorities part of the annual review and for not reporting on such costs in the annual review letter. [427]

  Mr. Horam
  Regional offices determine the content of annual reviews with their health authorities in the light of the most important current issues locally and nationally. Regional offices would discuss a health authority's performance against its cost target in an annual review. Where warranted by poor performance against these targets, or where meeting the targets has significant repercussions on the provision of services, the matter would be included as an issue in the review letter. Health authority costs are published by the national health service executive annually.

  Good Health Channel
  Mr. Allen
  To ask the Secretary of State for Health what plans he has to establish a good health channel on television in co-operation with the NHS and cable companies. [738]
  135
  Mr. Horam
  There are no plans at present to establish a health channel. However, the development of the NHSnet, a secure national network developed for the NHS, will offer a number of opportunities to discuss new communications techniques for disseminating information.

  NHS Trusts (Bed Linen)
  Mr. Redmond
  To ask the Secretary of State for Health if he will list those NHS trusts in the south-eastern region in which relatives are required to bring in basic items of bed linen for in-patients. [449]

  Mr. Horam
  I am unaware of any case where a national health service trust has asked patients or their relatives to bring in bed linen during a stay in hospital. Basic items of bed linen should always be provided by the NHS for its in-patients.

  Royal Oldham Hospital
  Mr. Chris Davies
  To ask the Secretary of State for Health if he will name the companies invited by the North West regional health authority in 1992 to tender for the contract to construct a waste incinerator at the Royal Oldham hospital. [14]

  Mr. Horam
  This information is not held centrally.

  Genetically Engineered Food
  Mr. Flynn
  To ask the Secretary of State for Health what estimate he has made of the number of people in the United Kingdom who have contracted illnesses as a direct result of eating genetically engineered food in each of the last five years. [1022]

  Mr. Horam
  This information is not collected. However, genetically modified foods undergo rigorous safety assessments by the independent Advisory Committee on Novel Foods and Processes and if there were any concern about possible adverse health effects, food safety clearance would not be granted.

  Acute Beds
  Sir George Gardiner
  To ask the Secretary of State for Health (1) if he will list the number of acute beds in NHS hospitals blocked by patients awaiting discharge into retirement or nursing homes within the area of each health authority or board on the most recent date for which figures are available; [844]

  (2) if he will list the number of acute beds in NHS hospitals blocked by patients awaiting discharge into retirement or nursing homes within the area of each local government social services department on the most recent date for which figures are available. [845]

  Mr. Burns
  This information is not available in the form requested.
  136

TRANSPORT

  MV Derbyshire
  Ms Walley
  To ask the Secretary of State for Transport what inquiries he has made in respect of possible financial vested interest arising from the outcome of investigations into the sinking of the MV Derbyshire; and if he will make a statement. [29]

  Mr. Bowis
  If the actions of any of the commercial interests associated with the MV Derbyshire were found to have resulted in the ship's loss, these could give rise to potential liabilities. The possible existence of any such liabilities has no bearing on the conduct of the current investigation into the loss of the ship.

  Helicopter and Aircraft Noise
  Miss Hoey
  To ask the Secretary of State for Transport what plans he has to give the Civil Aviation Authority obligations in law to consider environmental factors in areas other than aerodrome licensing. [2]

  Mr. Bowis
  My right hon. Friends the Secretaries of State for Transport and for Defence have given directions to the Civil Aviation Authority under section 72(2) of the Civil Aviation Act 1982. These require the CAA to collaborate in ensuring that air navigation services are, subject to securing the safe operation of aircraft, planned, provided and operated so as to take account—among other things—of the need to mitigate as far as possible the environmental impact of civil aircraft operations and, in particular, the disturbance to the public arising from aircraft noise, vibration and pollution.

  Rail Services
  Mr. Chidgey
  To ask the Secretary of State for Transport how many levels of service were higher under British Rail than the levels which have been specified in the passenger service requirement set out by the Office of Passenger Rail Franchising. [1048]

  Mr. Watts
  The minimum level of service required of British Rail on any route is one train per week. In practice much more extensive services have been provided. All PSRs provide higher levels of service than the minimum required of British Rail.

  A more specified answer could be provided only at disproportionate cost.

  Boeing 737 Aircraft
  Mrs. Dunwoody
  To ask the Secretary of State for Transport what action is being taken by his Department in response to recommendations made by the United States National Transportation Safety Board concerning the rudder and the yaw damper system on Boeing 737 aircraft. [1047]

  Mr. Bowis
  The US National Transportation Safety Board has made a number of recommendations to the US Federal Aviation Administration following the investigation of an accident involving a US-registered Boeing 737. The Civil Aviation Authority is monitoring the situation and will decide on what action, if any, is appropriate in the UK once the FAA has responded.
  137
  Mrs. Dunwoody
  To ask the Secretary of State for Transport how many Boeing 737 aircraft are registered in the United Kingdom; and if he will list which airlines use them. [1040]

  Mr. Bowls
  There are currently 109 Boeing 737 aircraft on the UK aircraft register. These aircraft are used by the following airlines:

  Air UK

  British Airways

  British Midland Airways

  Easy Jet Airline Company

  GB Airways

  Maersk Air

  Monarch Airlines

  Sabre Airways

  Mrs. Dunwoody
  To ask the Secretary of State for Transport how many accidents involving Boeing 737 aircraft have been recorded in this country in each of the last 10 years. [1046]

  Mr. Bowis
  The number of accidents involving Boeing 737 aircraft in this country in each of the last 10 years is as follows:

  1986: 1

  1987: 0

  1988: 0

  1989: 2

  1990: 2

  1991: 1

  1992: 4

  1993: 7

  1994: 3

  1995: 1

  These figures are based on the International Civil Aviation Organisation definition of accidents and include accidents where aircraft are damaged, or passenger or crew are injured, while aircraft are on the ground at airports. All but two of the accidents listed fall into this category.

  Leyburn to Hawes Railway Service
  Mr. Gordon Prentice
  To ask the Secretary of State for Transport what representations he has received concerning the feasibility of reopening the railway from Leyburn to Hawes; and if he will make a statement. [891]

  Mr. Watts
  My right hon. Friend has received no direct representations on this matter. The Department of the Environment and the Rural development Commission have received a bid from the Wensleydale Railway Association for funds to reopen part of the Wensleydale railway line—between Northallerton and Castle Bolton—under their rural challenge scheme 1996. The bid is currently under consideration. Both Leyburn and Hawes are situated on that line.

  Acton Rail Stations
  Mr. Spearing
  To ask the Secretary of State for Transport what studies (i) he and (ii) other bodies responsible for planning of public transport made of the advantages of electrifying the half mile of railway between Acton main line station and Action Wells 138
  junction, with particular reference to (a) public transport to and from Heathrow airport, (b) orbital passenger services in London and (c) rail freight movement. [1062]

  Mr. Watts
  [holding answer 29 October 1996]: None. The consultant engaged by the Department to carry out the London airports access study—LASAS—did, in examining various schemes to improve rail access to Heathrow, consider a rail link from Heathrow to the west coast main line, via acton Wells which would have required electrification of this part of the network. Although the WCML link was not one of the schemes shortlised by the LASAS consultants, there is nothing to prevent a promoter from pursuing the proposal if he believes that there is sufficient demand.

  The electrification of this part of the network would be an operational matter for Railtrack, which, as owner of the infrastructure, is responsible for the maintenance and improvement of the rail infrastructure.

PRIME MINISTER

  Parliamentary Delegations (Europe)
  Mrs. Peacock
  To ask the Prime Minister if he has nominated a new leader of the United Kingdom delegation to the Parliamentary Assembly of the Council of Europe and the Assembly of Western European Union. [1489]

  The Prime Minister
  Following the sudden death earlier this month of Lord Finsberg, who served with great distinction as leader of the United Kingdom delegation in the Parliamentary Assembly of the Council of Europe and the Assembly of the Western European Union from 1987, I have today appointed the hon. Member for Reading, West (Sir A. Durant) as the new leader of the delegation.

HOUSE OF COMMONS

  European Parliament
  Mr. David Shaw
  To ask the Chairman of the Information Committee if he will make it his policy that information be collected in respect of United Kingdom Members of the European Parliament with regard to(a) attendance at Parliament and Committees, (b) declarations of interests and (c) speeches in Parliament and Committees. [100]

  Mr. Waller
  I have no responsibilities in connection with recording the activities or interests of United Kingdom Members of the European Parliament. The Library does, however, receive documentation about the proceedings of the European Parliament and I have asked the Librarian to write to the hon. Member.

  HOME DEPARTMENT

    Released Prisoners
    Mr. Cox
    To ask the Secretary of State for the Home Department what was the number of prisoners released early from each London prison due to the Prison Service miscalculating their release dates. [148]

    Miss Widdecombe
    Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

    Letter from Richard Tilt to Mr. Tom Cox, dated 30 October 1996:
    The Home Secretary has asked me to reply to your recent Question about the number of prisoners serving consecutive sentences who were released early from each London prison following the issue of guidance on the application of remand time in sentence calculation.
    The information is set out in the table below.

    Establishment

    Number of prisoners released

    Belmarsh

    2

    Brixton

    0

    Downview

    4

    Feltham

    11

    Highdown

    1

    Hollo way

    0

    Latchmere House

    1

    Pentonville

    7

    Wandsworth

    12

    Wormwood Scrubs

    4

    Total

    42

    Bouncers
    Mr. Allen
    To ask the Secretary of State for the Home Department what proposals he has to regulate or license bouncers or the security companies which employ them. [404]

    Mr. Maclean
    We encourage the regulation of door supervisors through local registration schemes in which training and criminal record checks on door supervisors are a condition of obtaining a local authority entertainment licence. The Government published guidance on the operation of registration schemes in January this year.

    Mr. Allen
    To ask the Secretary of State for the Home Department what research his Department has(a) commissioned, (b) undertaken and (c) completed on possible links between doormen and bouncers and the sale of drugs to young people at pubs, clubs and fast food outlets. [406]

    Mr. Sackville
    No such research has been commissioned by the Home Office. But we have been informed by the police and other agencies that drug dealers often target clubs and similar venues frequented by young people and that staff, particularly those on the door, can condone or be a part of organised drug dealing carried out on the premises.
    140
    My right hon. and learned Friend announced on 8 October a proposal to make possible the revocation of public entertainment licences and closure of premises, with immediate effect, in cases where there is clear evidence of a serious problem relating to the supply or consumption of controlled drugs on or near the premises.

    Mr. Allen
    To ask the Secretary of State for the Home Department what representations he has received on the subject of regulating doormen and bouncers. [405]

    Mr. Maclean
    Over the past 12 months, we have received a total of eight representations specifically calling for the regulation of door supervisors.

    Mr. Allen
    To ask the Secretary of State for the Home Department if he will call for a report from the chief constable of Nottinghamshire on the sale of drugs by doormen and bouncers to young people. [407]

    Mr. Maclean
    No. It is an operational matter for individual chief officers how they deal with such problems. Nottinghamshire constabulary, like other forces, is committed to effective action to fight drug misuse and drug-related crime.

    Drug Abuse Resistance Education
    Mr. Allen
    To ask the Secretary of State for the Home Department what has been the change in the level of youth cautions in Mansfield since the introduction of the DARE—drug abuse resistance education—programme; and if he will make a statement. [764]

    Mr. Maclean
    The police force's area is the smallest geographical unit for statistics on cautioning available centrally. The readily available information is given in the table.

    Persons aged 10 to 13 cautioned in the Nottinghamshire police force area, by type of offence, sex and period

    Type of offence1

    Indictable

    Summary

    Period

    Males

    Females

    Males

    Females

    1994

    January-March

    210

    130

    44

    6

    April-June

    188

    119

    81

    3

    July-September

    176

    87

    45

    3

    October-December

    218

    127

    57

    8

    19952

    January-March

    183

    130

    65

    5

    April-June

    220

    120

    106

    18

    July-September

    172

    63

    59

    20

    October-December3

    190

    85

    66

    13

    1 Excluding motoring offences.

    2 Provisional.

    3 Nottinghamshire Constabulary have been running a pilot of the drug abuse resistance education programme across all nine of its divisions since September 1995.

    Hizb-ut-Tahrir
    Mrs. Dunwoody
    To ask the Secretary of State for the Home Department (1) if he will instruct the police to take action to limit the activities of Hizb-ut-Tahrir; [63]

    (2) what action he has taken against the Hizb-ut-Tahrir organisation. [62]
    141
    Mr. Kirkhope
    Enforcement of the law is an operational matter for chief officers of police. The Government have sought to ensure that the police have full powers to deal with racially motivated crime.

    Closed Circuit Television
    Mr. Cohen
    To ask the Secretary of State for the Home Department what is (i) the purchase cost of a closed circuit television camera, (ii) the annual cost of running it in a fully monitored system and (iii) the average amount his Department is providing in grant per camera in the current year. [143]

    Mr. MacLean
    The Government do not collect systematic data on the costs of closed circuit television systems or hardware. The purchase cost of CCTV cameras varies widely according to their specification and their operational requirements. Running costs also vary widely for the same reason. Most of the costs associated with CCTV systems are taken up by cabling and monitoring arrangements.

    The last CCTV challenge competition disbursed £17,138,047 to 259 winning partnerships. If all the schemes go ahead as planned, this will help to fund 3,277 cameras. The total cost of all the schemes is £40,156,993. Using these figures, the cost per camera is £12,254, to which the Government have contributed £5,230 per camera.

    Motor Cycle Theft
    Mr. Spellar
    To ask the Secretary of State for the Home Department what action his Department is taking to reduce the theft of motor cycles. [204]

    Mr. Maclean
    The Government are well aware of the misery suffered by the victims of motor cycle theft and is tackling this problem through a multi-agency approach as part of its overall vehicle crime reduction strategy.

    One of the key ways in which the Government are trying to reduce theft is by educating motor cycle owners on the need to take practical security precautions. The Home Office security advice leaflet specifically for motor cyclists is entitled "Putting the Brakes on Bike Theft" and it offers basic security advice on locking up, parking and parts marking. We shall be revising this leaflet shortly and will be looking to the motor cycle organisations for advice on the main messages which need to be conveyed.

    Advice for motor cycle owners is also included in the Home Office's crime prevention handbook "Your Practical Guide to Crime Prevention". The Home Office has received requests for over 2 million copies of this booklet.

    The Home Office is represented on the Motorcycle Theft Action Group on which members of the motor cycle industry and all others with an interest in crime reduction also sit. The group's work is aimed at achieving a co-ordinated and effective approach to tackling motor cycle theft.

    Home Office research into the theft of motor cycles during the 12-month period October 1994 to September 1995 was presented to the group, and the findings are being used by members to target vulnerable areas and focus initiatives where they are most needed.

    Prisons (Costs)
    Mr. Chris Davies
    To ask the Secretary of State for the Home Department what is the average annual cost of keeping a person detained in prison. [15]

    Miss Widdecombe
    Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

    Letter from Richard Tilt to Mr Chris Davies, dated 30 October 1996:
    The Home Secretary has asked me to reply to your recent Question about the average annual cost of keeping a person detained in prison.
    In 1995–96 the net operating cost was £24,200 per place.

    Child Murders
    Mr. Soley
    To ask the Secretary of State for the Home Department what has been the number of child murders by strangers in each year since 1966. [150]

    Mr. Maclean
    The available information was published in table 4A of "Criminal Statistics, England and Wales, 1994". A copy of this publication is in the Library.

    Police Costs
    Mr. William O'Brien
    To ask the Secretary of State for the Home Department (1) what guidelines are issued by his Department for the recovery of costs by a police force employing personnel to carry out routine checks in the area of a neighbouring police area; and if he will make a statement; [99]

    (2) what (a) protocols and (b) guidelines govern the deployment of county police force resources in the area of a metropolitan police force to carry out routine checks on civilian drivers; and if he will make a statement. [98]

    Mr. Maclean
    Guidance on the financial arrangements for mutual aid between police forces is contained in Home Office circular No. 38/89, a copy of which is in the Library. There is no central guidance on the deployment of officers of one force to assist another. This is a matter for the chief officers concerned.

    Fireworks
    Mr. Chris Davies
    To ask the Secretary of State for the Home Department how many people were prosecuted in 1995 for offences in connection with the misuse of fireworks. [94]

    Mr. Maclean
    The information requested is not available centrally.

    Prisons (Repair and Maintenance)
    Mr. Beith
    To ask the Secretary of State for the Home Department what recent circulars have been issued to prison works departments in respect of the buying in of materials for repair and maintenance work. [666]

    Miss Widdecombe
    Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.
    143
    Letter from Richard Tilt to Mr A. J. Beith, dated 30 October 1996:
    The Home Secretary has asked me to reply to your recent Question about whether any recent circulars have been issued to prison works departments in respect of the buying in of materials for repairs and maintenance work.
    I recently issued a note to governors introducing a freeze on discretionary expenditure and stating that expenditure should only be incurred in respect of essential items of work. This included expenditure on maintenance and minor works other than work which is already contractually committed, mandatory/statutory items, health and safety items, emergency work and work to prevent loss of places or core facilities. It has been necessary to introduce this freeze on discretionary expenditure because of recent financial pressures but we will keep the position under review.

    Crimes (Rehabilitation Periods)
    Mr. Cohen
    To ask the Secretary of State for the Home Department if he will publish a list of the rehabilitation periods for each criminal offence or category of offences listed in his paper "On the Record". [152]

    Mr. Maclean
    The White Paper "On the Record", Cm 3308, sets out the proposed new arrangements for access to criminal records. It does not list categories of criminal offences. Annexe A to the White Paper sets out the categories of occupations or posts which are exceptions to the Rehabilitation of Offenders Act 1974 and which it is intended will be eligible for full criminal record vetting checks.

    It is not possible to list the rehabilitation periods for individual offences. The Rehabilitation of Offenders Act 1974 relates to sentences rather than to offences, and provides that after varying periods of time specified in the Act, offenders are regarded as having become rehabilitated and their conviction(s) spent. The key determinant of when a conviction becomes spent is the type of sentence passed in each case, not the offence itself. When a conviction becomes spent, it does not have to be disclosed other than in certain specified circumstances. Sentences of over two and half years imprisonment can never become spent.

    Asylum Seekers
    Mr. John Marshall
    To ask the Secretary of State for the Home Department if he will list the number of claims for asylum for each month in(a) 1995 and (b) in 1996. [239]

    Mr. Kirkhope
    The information requested is in the table.

    Number of applications1 received for asylum in the United Kingdom, excluding dependants, by month, January 1995–September 1996

    Month of application

    Number of applications

    1995

    January

    3,570

    February

    3,030

    March

    3,310

    April

    2,810

    May

    3,450

    June

    3,630

    July

    3,415

    August

    3,890

    September

    4,020

    October

    4,595

    144

    Number of applications1 received for asylum in the United Kingdom, excluding dependants, by month, January 1995–September 1996

    Month of application

    Number of applications

    November

    4,715

    December

    3,540

    1996

    January

    3,310

    February

    2,850

    March

    3,145

    April

    2,070

    May

    1,755

    June

    1,730

    July

    2,515

    August

    2,140

    September

    2,010

    1 Figures rounded to the nearest five.

    Prisons (Building Costs)
    Mr. Chris Davies
    To ask the Secretary of State for the Home Department what is the projected cost through the private finance initiative of(a) building all new prisons and detention centres and (b) payments made to the private sector for all new prisons and detention centres for the first five years of their existence. [53]

    Miss Widdecombe
    Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

    Letter from Richard Tilt to Mr. Chris Davies, dated 30 October 1996:
    The Home Secretary has asked me to reply to your recent Question about projected costs of building new prisons and detention centres through the private finance initiative and payments made to the private sector for all new prisons and detention centres for the first five years of their existence.
    Under the Private Finance Initiative the Prison Service will be paying for the building and operation of new prisons as a single package. The cost of the total service (net present value) over 25 years for the three new prisons either under construction or where construction is expected to commence shortly, is £643 million, comprising £247m for Fazakerley; £266m for Bridgend; and £130m for Lowdham Grange. While we are unable to provide information about building costs only, the estimated values of the contractors' overall project costs are £77m each for Fazakerley and Bridgend and £37m for Lowdham Grange.
    The anticipated payments for the first five years of their operation are estimated as follows:

    £ million

    1997–98

    1998–99

    1999–2000

    2000–01

    2001–02

    Fazakerley

    1.75

    24.95

    25.70

    26.05

    26.05

    Bridgend

    1.75

    22.75

    24.95

    25.65

    25.65

    Lowdham Grange

    0.70

    13.75

    12.50

    12.55

    12.55

    Total

    4.20

    61.45

    63.15

    64.25

    64.25

    The 1997–98 estimated payments are based on the following opening dates: Fazakerley, December 1997; Bridgend, December 1997; and Lowdham Grange, January 1998. The estimated payments for 1998–99 have been re-priced up to 2000–01. The costs stated for 2001–02 are at 2000–01 prices as the year 2001–02 is outside the PES period.
    145

    Firearms
    Mr. Barry Jones
    To ask the Secretary of State for the Home Department how many notifiable offences were recorded by the police in which firearms were reported to have been used in Wales in 1993 and 1994; and if he will make a statement. [46]

    Mr. Maclean
    The information requested is published annually in table 3.1(A) of "Criminal Statistics, England and Wales, Supplementary tables". A copy of this publication is in the Library.

    Murders
    Mr. Soley
    To ask the Secretary of State for the Home Department what statistics he has collated on the proportion of murders which are committed by people who are known to their victims since 1980. [147]

    Mr. Maclean
    Statistics on the proportion of homicide offences which are committed by people who are known to their victims are contained in the following table:

    Proportion of offences currently recorded as homicide in England and Wales where a suspect has been identified who was known to the victim

    Year

    Percentage of all currently recorded homicides

    1980

    64

    1981

    75

    1982

    73

    1983

    74

    1984

    76

    1985

    73

    1986

    67

    1987

    65

    1988

    66

    1989

    67

    1990

    67

    1991

    68

    1992

    69

    1993

    66

    1994

    63

    Figures as at 4 August 1995.

    Home Safety
    Ms Walley
    To ask the Secretary of State for the Home Department what guidance he has issued in respect of home safety work undertaken by local authorities. [35]

    Mr. Maclean
    The Home Office does not issue guidance on home safety work undertaken by local authorities. On fire safety, however, the Home Office works closely with fire brigades and other publicly funded bodies to promote community fire safety, and produces for their use a range of publicity and information leaflets giving specific advice on fire safety in the home. Similar advice leaflets on home security and crime prevention are also produced by the Home Office and are circulated widely.

    Fire Authorities
    Mr. Gordon Prentice
    To ask the Secretary of State for the Home Department if he will list the standard spending assessment for each fire authority in England and the actual spend for 1995–96. [893]
    146
    Mr. Sackville
    The fire standard spending assessments for 1995–96 are set out in the Local Government Finance Report (England) which was published on 30 January 1995. Particulars of actual spending in respect of each brigade for that year are not yet held centrally.

    Fire Fighters
    Mr. Gordon Prentice
    To ask the Secretary of State for the Home Department how many retained fire fighters there are in each fire authority in England; and what was the number in 1992. [895]

    Mr. Sackville
    Information on the position in each fire authority at 1 January 1996 has been placed in the Library. The equivalent figures for 1 January 1992 were published in the report of Her Majesty's Chief Inspector of Fire Services for England and Wales for 1991, Cm 2008—appendix 4 on page 55.

    Immigration (Carriers Liability) Act
    Mr. Henderson
    To ask the Secretary of State for the Home Department what has been the total amount of liability incurred by all carriers under the Immigration (Carriers Liability) Act 1987: how much of that total liability has been paid; how much has been waived; and how much is outstanding. [883]

    Mr. Kirkhope
    A total of £97.59 million has been incurred by carriers since the Act came into force. Of that sum, £59.17 million has been paid, £20.74 million waived, and £17.68 million is currently outstanding.

    Donations (Political Parties)
    Mr. Gordon Prentice
    To ask the Secretary of State for the Home Department what restrictions are imposed by each member state of the EU on donations to political parties from foreign sources ineligible to vote in their elections. [896]

    Mr. Sackville
    Information on the practice in other member states of the European Union with regard to donations of this kind is not available and could be obtained only at disproportionate cost. In the United Kingdom, there are no restrictions on political parties receiving such donations, but each of the major political parties has adopted a voluntary code of practice which prohibits acceptance of donations from foreign Governments or rulers.

    Magic Mushrooms
    Mr. Flynn
    To ask the Secretary of State for the Home Department in what circumstances magic mushrooms are classed as illegal drugs. [990]

    Mr. Sackville
    The magic mushroom—psilocybe semilanceata—is not controlled under the Misuse of Drugs Act 1971, but it contains the substance psilocin and its derivative psilocybin, both of which are class A controlled drugs. Under the 1971 Act, any preparation or other product containing psilocin or psilocybin is also a class A controlled drug.
    147
    Persons have been held by the courts to be in possession of controlled drugs where they have in some way altered the natural state of the mushroom—for example, by drying—so as to constitute a preparation or other product.

    Blakenhurst Prison
    Mr. George Howarth
    To ask the Secretary of State for the Home Department what discussions he has had with United Kingdom Detention Services concerning the contracts with Her Majesty's prison, Blakenhurst. [256]

    Miss Widdecombe
    [holding answer 28 October 1996]: Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

    Letter from Richard Tilt to Mr. George Howarth, dated 30 October 1996.
    The Home Secretary has asked me to reply to your recent Question about the contract held by United kingdom Detention Services (UKDS) for the operation of Blakenhurst prison.
    The Prison Service has one contract with UKDS for the operation of Blakenhurst prison. As part of the ongoing management of that contract, there has been and continues to be regular contact with UKDS in discussion and correspondence on a broad range of issues.

  SCOTLAND

    Offshore Oil and Gas
    Ms Ruddock
    To ask the Secretary of State for Scotland what biological and physiological parameters are monitored by the Scottish Office Agriculture and Fisheries Department, in order for the Department of the Environment to assess the cumulative impacts of discharges from offshore oil and gas installations on marine wildlife and habitats. [505]

    Mr. Raymond S. Robertson
    The Scottish Office marine laboratory in Aberdeen has a wide-ranging programme of environmental monitoring in the seas around Scotland. This includes monitoring of offshore oil and gas operations designed to establish the distribution and concentration of contaminants, mainly hydrocarbons, in sediments and water. The biological effects of operational discharges, including possible cumulative effects, are also under continuing study. The marine laboratory publishes all its findings in a series of reports. The annual review describes the full range of scientific activities of the laboratory and the recently published report on "Environmental Monitoring of the Seas around Scotland 1970–1993" contains data associated with offshore operations. I have placed copies of these documents in the House of Commons Library.

    Compulsory Purchase Orders
    Mr. Welsh
    To ask the Secretary of State for Scotland what are the minimum, maximum and average times taken to reach a decision on compulsory purchase orders during each of the past five years. [249]

    Mr. Kynoch
    [holding answer 28 October 1996]: This information could be provided only at disproportionate cost.

  WALES

    Beef Industry
    Mr. Barry Jones
    To ask the Secretary of State for Wales if he will implement a temporary guaranteed price system to restore confidence in the beef industry in Wales. [25]

    Mr. Jonathan Evans
    The Government have committed £2.5 billion to various measures to support the beef industry. We have no plans to introduce a price guarantee which would do nothing to support the industry in the medium to longer term.

    Casualty Animals
    Mr. Martyn Jones
    To ask the Secretary of State for Wales what representations he has received relating to the reluctance of contractors to pick up bulls as casualty animals; and if he will make a statement. [467]

    Mr. Jonathan Evans
    None.

    Mr. Barry Jones
    To ask the Secretary of State for Wales what action he will take to alleviate problems arising from casualty stock via the over-30-months scheme; and if he will make a statement. [26]

    Mr. Evans
    The Intervention Board executive agency has allocated additional slots at designated abattoirs for casualty animals.

    Cattle Cull
    Mr. Barry Jones
    To ask the Secretary of State for Wales how he proposes to remove the backlog in the cattle culling scheme; and if he will make a statement. [27]

    Mr. Jonathan Evans
    The Government have provided an additional £16.6 million to enable the backlog to be cleared by Christmas. We are on target for a throughput of 55,000 animals a week under the scheme.

    Mr. Jones
    To ask the Secretary of State for Wales if he will restore the compensation rate in the cattle culling scheme of 1 ecu/83.3p/kg. [28]

    Mr. Evans
    This is a matter for the EU Beef Management Committee.

    Grant-maintained Schools
    Mr. Richards
    To ask the Secretary of State for Wales if he will list all capital and current expenditure on each grant-maintained school in each year since incorporation. [213]

    Mr. Jonathan Evans
    The information is set out in the following tables.
    149

    Capital and current expenditure on grant-maintained schools

    School

    1991–92

    1992–93

    1993–94

    Current

    Capital

    Current

    Capital

    Current

    Capital

    Bryn Elian

    —

    —

    —

    —

    485,753

    6,285

    Derwen

    —

    —

    —

    —

    187,104

    8,447

    Eirias

    —

    —

    —

    —

    1,437,715

    18,655

    Emrys Ap Iwan

    —

    —

    675,534

    7,695

    2,572,873

    1,502,114

    Maelor

    —

    —

    —

    —

    1,299,960

    776,172

    Pen-y-Bryn

    —

    —

    —

    —

    262,174

    9,228

    Brynmawr

    —

    —

    786,883

    156,068

    1,357,858

    1,440,649

    Cwmcarn

    517,899

    —

    857,744

    60,944

    911,486

    405,620

    St. Albans

    —

    —

    —

    —

    411,915

    5,610

    Caergeiliog

    —

    —

    —

    —

    435,543

    15,360

    Llanerfyl

    —

    —

    —

    —

    66,572

    6,837

    Mary Imm.

    —

    —

    —

    —

    —

    —

    St. Cyres

    —

    —

    —

    —

    808,996

    9,610

    Stanwell

    —

    —

    —

    —

    2,222,422

    1,159,664

    Bishop Vaughan

    583,235

    —

    2,220,813

    292,260

    2,523,603

    827,650

    Our Lady and St. Michael's

    —

    —

    —

    —

    128,140

    3,850

    1994–95

    1995–96

    School

    Current

    Capital

    Current

    Capital

    Bryn Elian

    1,732,891

    206,362

    1,877,757

    1,081,488

    Derwen

    266,160

    102,787

    274,091

    881,548

    Eirias

    2,388,784

    373,047

    2,613,405

    819,437

    Emrys Ap Iwan

    2,600,799

    414,467

    3,032,015

    289,606

    Maelor

    1,256,667

    488,972

    1,339,382

    214,604

    Pen-y-Bryn

    407,051

    77,024

    455,242

    152,397

    Brynmawr

    1,393,197

    792,903

    1,484,537

    325,191

    Cwmcarn

    956,162

    341,197

    1,074,650

    27,895

    St. Albans

    1,448,247

    643,674

    1,510,876

    44,795

    Caergeiliog

    409,665

    301,131

    440,645

    101,376

    Llanerfyl

    76,979

    63,217

    76,254

    56,673

    Mary Imm.

    1,472,931

    42,429

    1,490,579

    36,900

    St. Cyres

    3,192,764

    458,758

    2,975,336

    635,539

    Stanwell

    2,474,180

    2,119,709

    2,511,062

    598,389

    Bishop Vaughan

    2,416,363

    683,754

    2,716,334

    515,345

    Our Lady and St. Michael's

    376,413

    239,847

    394,915

    190,503

    Disabled People (Grant Aid)
    Mr. Richards
    To ask the Secretary of State for Wales if he will list all bids made in the former county of Clwyd which received grant aid for the disabled. [217]

    Mr. Jonathan Evans
    The support for people with disabilities grant scheme gave funding to projects supporting people with physical and sensory disabilities in 1994–95 and 1995–96. A list of all such bids approved for the former county of Clwyd under this scheme during these years has been placed in the Library of the House.

  DUCHY OF LANCASTER

    Compliance Cost Assessments
    Mr. Clifton-Brown
    To ask the Chancellor of the Duchy of Lancaster if he will list those compliance cost assessments published during the latest six-month period. [1738]

    Mr. Freeman
    Since April 1993, the Government have required Departments to prepare and publish compliance cost assessments with all proposed legislation presented to Parliament to assess the impact on business costs.
    150
    This includes a special test of the impact on small businesses. Since January 1996, the responsible Minister has had to certify that he has seen the compliance cost assessment and is satisfied that the regulatory proposal strikes an appropriate balance between cost and benefit.

    I have presented to Parliament today a Command Paper listing 105 CCAs published between 1 January 1996 and 30 June 1996 plus three CCAs published between 1 July 1995 and 31 December 1995 which were omitted from the previous Command Paper. Copies of the CCAs listed are available in the House Libraries. This is the fifth such Command Paper and further papers listing CCAs published in the preceding six-month period will be published at six-monthly intervals.

    Government Policy
    Mrs. Bridget Prentice
    To ask the Deputy Prime Minister what consultation his Department has had with Conservative central office concerning the co-ordination and presentation of Government policy. [905]

    The Deputy Prime Minister: I refer the hon. Lady to the reply of my right hon. Friend the Prime Minister to the hon. Member for Hartlepool (Mr. Mandelson) on 21 March 1996, Official Report, column 277.

  TRADE AND INDUSTRY

    Computers (Century Date Change)
    Mr. David Atkinson
    To ask the President of the Board of Trade what is his Department's estimate of the cost to business to enable computer systems to be millennium compliant. [451]

    Mr. Ian Taylor
    I have made no such estimate. The figure will be more substantial the later industry leaves its remedial action plan.

    Mr. Atkinson
    To ask the President of the Board of Trade if he will make a statement on the progress report made to him in September of the joint task force referred to in his answer of 24 July 1996,Official Report, column 476, on the effect of the century date change of computer systems. [1134]
    151
    Mr. Taylor
    The task force has made good progress towards its objective of achieving 100 per cent. awareness and commitment from main board level executives by end March 1997. The issue is receiving considerable attention from the news media but there is still considerable work to be done ensuring all firms check their systems and take the necessary action soon. The CBI and some trade associations are actively involved in alerting their members.

    Task Force 2000
    Mr. David Atkinson
    To ask the President of the Board of Trade what is the total budget for his Department's task force 2000; what is his Department's contribution to it; and what progress has been made to date to obtain the balance from the private sector. [450]

    Mr. Ian Taylor
    Task force 2000 was set up by the private sector, not by the Department although with its encouragement. Its budget and funding are matters for them as it is for the private sector to address the date change problem from its own resources. The Department has offered initial funding of up to £170,000 as seed corn and task force directors are negotiating with private sector companies for further funds. The task force's objective is to raise awareness of the year 2000 problem, and has already received sponsorship for a London conference.

    Wage Levels
    Mr. Spearing
    To ask the President of the Board of Trade what statutory provisions govern the objectives of sustaining a living and just level of wages. [236]

    Mr. John M. Taylor
    Pay is a matter to be determined between employers and employees in light of their particular circumstances without Government intervention. Statutory wage fixing undermines competitiveness, distorts the labour market and costs jobs.

    Coal-burning Power Stations
    Mr. Meacher
    To ask the President of the Board of Trade how many coal-burning power stations are operating in(a) each European Union state, (b) the United States of America and (c) Japan; and what percentage is equipped with flue gas desulphurisation. [1011]

    Mr. Page
    The power stations operating in each European Union state and in the United States of America and Japan, and the percentage that are equipped with flue gas desulphurisation units, are shown in the table.

    Country

    Total number of coal-fired units1

    Number of units with flue gas desulphurisation1

    Percentage with flue gas desulphurisation

    Austria

    11

    11

    100.00

    Belgium

    25

    0.0

    0.0

    Canada

    69

    0

    0.0

    Denmark

    33

    9

    27.3

    Finland

    32

    13

    40.6

    France

    37

    4

    10.8

    Germany

    288

    201

    69.8

    Greece

    18

    0

    0.0

    Ireland

    8

    0

    0.0

    Italy

    39

    8

    20.5

    Netherlands

    9

    8

    88.9

    Portugal

    9

    2

    22.2

    Spain

    40

    4

    10.0

    152

    Country

    Total number of coal-fired units1

    Number of units with flue gas desulphurisation1

    Percentage with flue gas desulphurisation

    Sweden

    29

    17

    58.6

    United Kingdom

    108

    10

    9.3

    Total European

    755

    287

    38.0

    USA

    1,175

    244

    20.8

    Japan

    95

    52

    54.7

    Source:
    WA Coal Research Database (1996).

    Note:
    1A coal-fired power station comprises one or more electricity generating units.

    Launch Aid
    Mr. Ingram
    To ask the President of the Board of Trade what is the total level of support paid to industry under the launch aid programme since its inception. [992]

    Mr. Greg Knight
    Under the Civil Aviation Act 1982, launch aid may be allocated to the UK aerospace industry for the design and development of civil aeronautics projects. Launch aid had been allocated to the industry under previous legislation. A total of £968.1 million was allocated between the 1961–62 and 1995–96 financial years. Earlier figures are not readily available.

    Mr. Ingram
    To ask the President of the Board of Trade what have been the total receipts from the launch aid programme since its inception. [993]

    Mr. Knight
    A total of £597.7 million was received by Government between the 1961–62 and 1995–96 financial years in repayment of launch aid for civil aeronautics projects.

    Mr. Ingram
    To ask the President of the Board of Trade what was the last project supported by his Department under the launch aid programme; when this took place; and what was the level of the support. [991]

    Mr. Knight
    In 1995–96 Short Brothers plc of Belfast was allocated launch aid of £16.4 million towards its contribution to the Learjet 45 executive jet. This project is still current and a further £1.32 million of remains to be allocated to the company.

    Human Genetics Advisory Committee
    Mr. Ingram
    To ask the President of the Board of Trade when he expects to announce the membership of the Human Genetics Advisory Committee. [906]

    Mr. Ian Taylor
    We will make an announcement as soon as possible when consents have been forthcoming from candidates.

    Offshore Oil and Gas Installations
    Ms Ruddock
    To ask the President of the Board of Trade (1) what are the dates or estimated dates(a) on which he proposes to announce the call for nominations in relation to the blocks to be offered in the 18 offshore licensing round for UK oil and gas exploration, (b) between which he proposes to conduct the consultation for the nomination of blocks to be offered in the 18 offshore licensing round for UK oil and gas exploration, (c) on which he proposes to announce which blocks are to be offered in the 18 offshore licensing round for UK oil and gas exploration, and (d) on which he proposes to announce the winning bids in relation to the 18 offshore licensing round for UK oil and gas exploration; [514]

    (2) if an environmental impact assessment will be required of applicants in relation to the 18 offshore licensing round for UK oil and gas exploration; [515]

    (3) what further rounds are planned for UK offshore oil and gas exploration licensing; and over what period he intends to conduct each of those rounds. [516]

    Mr. Page
    No decisions have been taken about the timing and scope of the 18th round of offshore licensing nor any subsequent rounds.

    I hope that it will be possible, however, to hold a round in 1997 and further rounds at regular intervals thereafter in order to ensure that the United Kingdom continental shelf remains an attractive investment location for oil and gas companies until well into the next century.

    Decisions about the need for environmental impact assessments in relation to an 18th round will take account of relevant legislation, international obligations and the advice provided to me by statutory and other advisers during the consultation process preceding the offer of blocks.

    Ms Ruddock
    To ask the President of the Board of Trade what action is taken by Government Departments to ensure that the level of use and discharge of chemicals in water and in drilling muds from offshore oil and gas installations remains within agreed limits for each installation. [509]

    Mr. Page
    The discharge of chemicals from offshore installations is currently regulated by a voluntary scheme. This scheme will be replaced by an internationally agreed mandatory scheme in the near future which will also regulate use of chemicals.

    I refer the hon. Member to my previous replies to similar questions on 4 June 1996, Official Report, columns 307–8 and 3 July 1996, Official Report, column 458.

    Ms Ruddock
    To ask the President of the Board of Trade what regulatory action is undertaken by the Government to ensure that the cumulative effects of discharges to the environment from offshore oil and gas installations are maintained below levels which cause damage to marine wildlife and habitats. [508]

    Mr. Page
    Exemptions from the Prevention of Oil Pollution Act are given to offshore installations at levels which are agreed in international fora as not likely to cause cumulative damage to marine wildlife and habitats.
    154
    I refer the hon. Member to my previous replies to similar questions on 4 June 1996, Official Report columns 307–8 and 3 July 1996, Official Report, column 458.

    Ms Ruddock
    To ask the President of the Board of Trade what arrangements are in place for Government officials to undertake field inspections to assess the quality and quantity of polluting discharges other than oil spills and produced water from offshore oil and gas installations. [510]

    Mr. Page
    My officials make use of transport systems provided by the industry in order to undertake field inspections to assess the quality and quantity of polluting discharges. It is understood that this practice mirrors that undertaken in other nations.

    Ms Ruddock
    To ask the President of the Board of Trade what cumulative impacts of discharges from offshore oil and gas installations on marine wildlife and habitats are taken into account when agreeing limits for the discharge and use of chemicals for each installation. [507]

    Mr. Page
    My Department is advised by the Ministry of Fisheries and Food and the Scottish Office Agriculture, Environment and Fisheries Department on the impacts of discharges to the marine environment. I refer the hon. Member to the replies given today by my hon. Friends, the Parliamentary Under Secretaries at MAFF and the Scottish Office to her questions on this topic.

    Arms Embargo (Argentina)
    Mr. Tony Lloyd
    To ask the President of the Board of Trade for what reason the Parliamentary Under-Secretary of State, the hon. Member for Amber Valley (Mr. Oppenheim), omitted the reassessments of arms embargos against Argentina since January 1991 in his answer of 13 June 1996,Official Report, column 263. [787]

    Mr. Lang
    [holding answer 28 October 1996]: In his answer, my hon. Friend the Member for Amber Valley stated that the policy on the application of the embargo on defence sales is kept under regular review. As my right hon. Friend the Member for Edinburgh, Pentlands, Secretary of State for Foreign and Commonwealth Affairs, told the House on 24 October 1996, Official Report, column 141, should the Government decide to implement any relaxation of the embargo, this will be announced to Parliament.

    Enterprise Britain Initiative
    Mr. Hoon
    To ask the President of the Board of Trade if he will list the constituencies to be visited under the enterprise Britain initiative; and what is the estimated cost of the exercise. [70]

    Mr. Lang
    [holding answer 28 October 1996]: The detailed programme is currently being arranged. The cost will depend on the number and size of the events.

    Mr. Hoon
    To ask the President of the Board of Trade what will be the cost to those attending enterprise Britain events. [163]

    Mr. Lang
    [holding answer 28 October 1996]There will be no charge for those attending the events.

  NATIONAL HERITAGE

    British Library
    Mr. Campbell-Savours
    To ask the Secretary of State for National Heritage what is her estimate of the proportion of internationally available scientific literature and patent collections available in conditions of open access at each of the British library's reading rooms. [459]

    Mr. Sproat
    The British library's science reference and information service acquires some 1 million patent specifications annually, which it estimates to constitute some 99 per cent. of the world's published output of such specifications. Sixty-one per cent. of the material held by the science reference and information service in this category is available either on open access, or is accessible to those users holding a vault pass. Of the total estimated 81,000 scientific periodicals published world-wide, the British library estimates that the science reference and information service currently receives 20,000 research titles. Material in English published during the last 10 years, and material published in other languages during the last two to three years, is held on open access, representing some 26 per cent. of the total research periodicals held by the science reference and information service. It is not possible to estimate the total number of scientific monographs published throughout the world. The science reference and information service receives some 4,500 new scientific monograph titles at research level published in the UK each year through legal deposit, and acquires foreign titles in line with the acquisition funds available.

    Mr. Campbell-Savours
    To ask the Secretary of State for National Heritage what is the total value of properties which have been sold from the British library estate. [440]

    Mr. Sproat
    The library sold its freehold in 14 Store street, London WC1, for £5.5 million on 19 August 1991. I understand that no other property held by the British library has been sold.

    Mr. Campbell-Savours
    To ask the Secretary of State for National Heritage what leaseback arrangements have been registered in the use of properties in the British library estate. [439]

    Mr. Sproat
    None.

    Mr. Campbell-Savours
    To ask the Secretary of State for National Heritage what has been the total number of voluntary and compulsory redundancies at each of the branches of the British library in the last five years. [460]

    Mr. Sproat
    No British library staff have been subject to either voluntary or compulsory redundancy prior to March 1996. Forty-nine employees of the British library accepted the terms of a voluntary redundancy programme which was offered in March 1996, 13 of whom have already left the library's employment and a further 12 of whom will do so during the remainder of the present financial year.

    Mr. Campbell-Savours
    To ask the Secretary of State for National Heritage what estimates she has of the value of the two British library related assets in Tooks court, London WC2. [438]
    156
    Mr. Sproat
    The premises at 25 Southampton buildings, London WC2, adjoin Tooks court, and house part of the British library's science reference and information service. The property, part of which is leased by the British library, was valued at £6 million as at 13 November 1995.

    National Lottery
    Mr. Barnes
    To ask the Secretary of State for National Heritage (1) if he will list the total amounts of the lottery funding awards to date in respect of each parliamentary constituency in England and Wales, indicating for each the amounts awarded in the last quarter for which figures are available and listing constituencies in descending rank order by total amounts; [519]

    (2) if she will list the total amounts of the lottery funding awards to date in respect of each parliamentary constituency in Northern Ireland indicating for each the amounts awarded in the last quarter for which figures are available and listing constituencies in descending rank order by total amounts; [987]

    (3) if she will list the total amounts of lottery funding awards to date in respect of each parliamentary constituency in Scotland indicating for each the amounts awarded in the last quarter for which figures are available and listing the constituencies in descending rank order by total amounts. [988]

    Mr. Sproat
    A full list of all awards up to 30 September, broken down by each parliamentary constituency, has been placed in the House of Commons Library today, on computer disc. The Secretary of State wrote to all members of the House on 18 October with an update of awards made in their constituencies during the last quarter. At present, the figures cannot be ranked as requested without disproportionate costs.

  NORTHERN IRELAND

    Housing Council (Visit to Japan)
    Mr. John D. Taylor
    To ask the Secretary of State for Northern Ireland what factors led to the visit to Japan by members of the Northern Ireland Housing Council; what is the estimated cost of the visit; and if he will make a statement. [47]

    Mr. Moss
    This is a matter for the Northern Ireland Housing Executive, whose chief executive has advised me that the Northern Ireland Housing Council was represented at the International Federation for Housing and Planning congress in Japan by its chairman. The congress was a follow-up to the highly successful IFHP congress held in Belfast in September 1995 which the Housing Council was instrumental in bringing to Northern Ireland. The IFHP congress provides an opportunity for the exchange of information and experience on housing and planning issues and also the development of international housing contacts. The estimated cost of attendance is approximately £3,000.

    Drumcree Incident
    Mr. McGrady
    To ask the Secretary of State for Northern Ireland what estimate he has made of the cost
    157
    of the damage to property caused by the incident at Drumcree and subsequent events during July and August 1996. [139]

    Sir John Wheeler
    Responsibility for the subject in question has been delegated to the Compensation Agency under its chief executive, Mr Denis Stanley. I have asked him to arrange for a reply to be given.

    Letter from D. A. Stanley to Mr. Eddie McGrady, dated 29 October 1996:
    The Secretary of State for Northern Ireland has asked me to reply, on behalf of the Compensation Agency, to your recent Question regarding the estimated cost of damage to property caused by the incident at Drumcree and subsequent events during July and August 1996.
    The Agency estimates that criminal damage amount to £20 million occurred throughout Northern Ireland during the period 9–14 July. Claims with an estimated value of £9 million have been received for incidents for the period of 15 July onwards. These estimates are based on the Agency's loss adjusters' current valuation of individual claims and may, of course, change as the claims proceed to settlement.

    Harbours
    Mr. John D. Taylor
    To ask the Secretary of State for Northern Ireland in the last financial year what was the contribution of each of the harbours at(a) Portavogie, (b) Ardglass and (c) Kilkeel to the income of the Northern Ireland Fishery Harbour Authority; and what was the capital expenditure by the authority at each of these fishing ports in the same financial year. [45]

    Mr. Ancram
    The following table provides details of the authority's income and expenditure in 1995–96:

    Ardglass £

    Kilkeel £

    Portavogie £

    Operating income

    101,109

    311,421

    235,292

    Capital works expenditure

    315,692

    548,111

    154,526

    Mr. McGrady
    To ask the Secretary of State for Northern Ireland how many claims were made for compensation as a result of (i) damage to property and (ii) injury to persons as a result of the incident at Drumcree and subsequent events in July and August 1996. [138]

    Sir John Wheeler
    Responsibility for the subject in question has been delegated to the Compensation Agency under its chief executive, Mr. Denis Stanley. I have asked him to arrange for a reply to be given.

    Letter from D. A. Stanley to Mr. Eddie McGrady, dated 29 October 1996:
    The Secretary of State for Northern Ireland has asked me to reply, on behalf of the Compensation Agency, to your recent Question regarding the number of claims made for compensation in respect of damage to property and injury to persons as a result of the incident at Drumcree and subsequent events during July and August 1996.
    The Agency has received a total of 2,665 criminal damage claims and 2,431 criminal injury claims for incidents that occurred during the months of July and August. Prior to July, the number of criminal damage claims being received each month was around 100 and the number of criminal injury claims was around 900 each month. Therefore 2,465 additional criminal damage claims and 631 additional criminal injury claims have been received so far for the months of July and August.

    Portavogie Harbour
    Mr. John D. Taylor
    To ask the Secretary of State for Northern Ireland what assessment he has made of the adequacy of the production of ice at Portavogie harbour; how many reports he has received of fishing boats from Portavogie going to Ardglass harbour to get ice because of inadequate production; what plans there are to increase ice production at Portavogie harbour; and if he will make a statement. [48]

    Mr. Ancram
    On 19 September 1996, the compressor on the Northern Ireland Fishery Harbour Authority's main ice plant at Portavogie broke down and had to be replaced. Only a small amount of ice was available for the Portavogie fleet during the rest of that week. Two Portavogie boats obtained ice from the authority's new plant at Ardglass, and the authority organised the delivery of ice from Ardglass to the other Portavogie boats. Ice production was back to normal on 25 September. The authority has commissioned the Sea Fish Industry Authority to undertake an in-depth assessment of the ice production and storage needs at Portavogie, and to advise on the various options by which these can best be met.

    Casualty Animals
    Mr. Martyn Jones
    To ask the Secretary of State for Northern Ireland what representations he has received relating to the reluctance of contractors to pick up bulls as casualty animals; and if he will make a statement. [466]

    Mr. Ancram
    No such representations have been received.

    Children
    Ms Mowlam
    To ask the Secretary of State for Northern Ireland how many children in Northern Ireland will be aged(a) three and (b) four in (i) 1996, (ii) 1997, (iii) 1998 and (iv) 1999. [1176]

    Sir John Wheeler
    Responsibility for the subject in question has been delegated to the Statistics and Research Agency under its chief executive, Mr. Edgar Jardine. I have asked him to arrange for a reply to be given.

    Letter from E. F. Jardine to Ms Majorie Mowlam, dated 30 October 1996:
    You recently tabled a parliamentary question asking the Secretary of State for Northern Ireland how many children in Northern Ireland will be aged (a) three and (b) four in (i) 1996, (ii) 1997, (iii) 1998 and (iv) 1999. I have been asked to reply in my capacity as Chief Executive of the Northern Ireland Statistics and Research Agency.
    Projections of the population of the constituent countries of the United Kingdom are produced by the Government Actuary's Department (London). The information requested is shown in the table below. The figures represent the projection for the age group in question at the mid-year period (30 June).

    Year

    3-year-olds

    4-year-olds

    1996

    25,015

    26,279

    1997

    24,545

    25,015

    1998

    24,233

    24,535

    1999

    23,884

    24,219

    I trust this information is sufficient and if I can be of further assistance please do not hesitate to contact me.

    Social Security Agency
    Mr. Thomason
    To ask the Secretary of State for Northern Ireland what performance targets have been set for the Social Security Agency for the current financial year. [1811]

    Mr. Moss
    I refer my hon. Friend to the reply I gave to him on 30 April 1996,Official Report, columns 455–56. However, contrary to that answer, there is no secondary target for unemployment benefit claims clearance of 85 per cent. in 53 days, but only a single target of 75 per cent. in 12 days.

    Electoral Officer's Report
    Mr. Thomason
    To ask the Secretary of State for Northern Ireland if he will publish the report of the Chief Electoral Officer for Northern Ireland of 1995–96. [1812]

    Sir Patrick Mayhew
    The Chief Electoral Officer's annual report has been laid before Parliament today. Copies are available in the Library of the House.

  SOCIAL SECURITY

    Disability Survey
    Mr. Thurnham
    To ask the Secretary of State for Social Security when he expects to receive the results of the disability survey being carried out by his Department; and when he will publish the survey. [126]

    Mr. Burt
    We expect to receive the data from the disability survey in summer 1997, shortly after completion of field work. The disability survey is a follow-up to the family resources survey and analysis will require data from the two surveys to be merged; we expect to have a combined dataset by the end of 1997. Plans are currently being made for the analysis of this large and complex dataset, but no date for publication has been decided as yet. Details will be included in the Department's research programme announcement next year.

    Audit Commission (Fraud Investigations)
    Mr. Cohen
    To ask the Secretary of State for Social Security what new powers his legislative proposals to counter fraud will provide to the Audit Commission which would avoid the use of powers specified in sections 28 and 29 of the Local Government Finance Act 1982; what legal advice he has taken concerning the use of these powers by the Audit Commission with respect to its current fraud activities; and what limitations on the commission's work in this area were indicated by that advice. [210]

    Mr. Heald
    We shall be bringing forward legislative proposals to counter fraud shortly.

    Voluntary Unemployment Deductions
    Mr. Alan Howarth
    To ask the Secretary of State for Social Security what is his latest estimate of the numbers of people who have received a voluntary unemployment deduction in the current financial year; and what is the total amount of money deducted. [416]
    160
    Mr. Roger Evans
    The information is not available in the format requested. Such information as is available is as follows.

    As at November 1995 it is estimated that some 30,000 income support claimants had a deduction from their income support payment for voluntary unemployment. The estimated average amount being deducted was £16.08 per week which equates to £25.3 million per year.

    Notes:

    1. Rates of deduction for voluntary unemployment are at 20 per cent. or 40 per cent. of the personal allowance.

    2 Sample size 5 per cent.

    3. Numbers have been rounded to the nearest thousand.

    4. The average amount deducted for voluntary unemployment was estimated using the deduction amount recorded on the income support computer system.

    5. In a small number of cases, the amount to be deducted was greater than the award of income support. In such cases the latter was used as the "actual" amount deducted.

    6. The total amount of money deducted was estimated by multiplying the average weekly deduction by the number of cases with a deduction by 52. This figure was then rounded to the nearest hundred thousand.

    Source:
    Income Support Quarterly Statistical Enquiry November 1995.

    Incapacity Benefit (Medical Tests)
    Mr. Burden
    To ask the Secretary of State for Social
    Security if he will publish evaluation studies of the standards of medical tests conducted on claimants for incapacity benefit seen by doctors of the Benefits Agency medical service. [757]

    Mr. Burt
    The performance of Benefits Agency medical service doctors is continuously monitored under local management arrangements to ensure that agreed standards of medical advice are maintained. A major study looking at the consistency of application of the all work test was recently carried out, and a report is being prepared for publication.

    War Pensions (Mustard Gas)
    Mr. Livingstone
    To ask the Secretary of State for Social Security what was the outcome of his Department's investigation started in 1986 into whether casualties contaminated by mustard gas at Bari harbour, Italy, in 1943 should be awarded back-dated war pensions; and if he will make a statement. [743]

    Mr. Heald
    This investigation was undertaken following the exceptional decision to backdate the payment of war disablement pension to an individual who had been exposed to mustard gas while serving in the Royal Navy at Ban harbour in 1943. He had claimed a war pension in 1983 and contended that he would have claimed earlier had he been aware of the precise nature of the substance with which he had been contaminated.

    The purpose of the special exercise was to identify other casualties of the incident in order to establish whether similar action was appropriate in their cases. A press notice announcing the exercise was issued and as a result of this 87 new claims for war pension were received, of which 33 were successful. In addition, 97 claims which had been made previously were reviewed. In total, of the 184 claims, 105 were successful.
    161
    The exercise confirmed that all but one were aware at the time of the incident that they had been exposed to mustard gas.

    Benefit Fraud
    Mr. Cohen
    To ask the Secretary of State for Social Security what arrangements he plans to make in respect of measures to counter fraud to ensure that claimants do not suffer damage or distress as a result of the matching of personal data which(a) are inaccurate, irrelevant or out of date or (b) relate to other individuals with the same or similar names; and if he will make a statement. [208]

    Mr. Heald
    The Department has considerable experience in matching data held on different computer systems. The detailed criteria to be matched in each exercise are tightly defined to ensure that they are relevant to the benefit concerned and could not properly belong to more than one individual. Where anomalies are revealed, they are fully checked to eliminate inaccuracies before any further investigation is carried out. All data matching activities are conducted under secure conditions to ensure confidentiality.

    Social Fund
    Mr. Timms
    To ask the Secretary of State for Social Security how many applications to the social fund were turned down on the grounds of ability to pay in 1995–96 in(a) Great Britain, (b) east London and (c) Newham; and what percentage of the total applying this figure represented in each case. [982]

    Mr. Roger Evans
    The administration of the social fund is a matter for Peter Mathison, the Chief Executive of the Benefits Agency. He will write to the hon. Member.

    Letter from Peter Mathison to Mr. Stephen Timms, dated 29 October 1996:
    The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question asking how many applications to the Social Fund were turned down on the grounds of ability to pay in 1995–96 in (a) Great Britain, (b) East London and (c) Newham; and what percentage of the total applying this figure represented in each case.
    The information for East London and Newham is not readily available and could only be provided at disproportionate cost.
    I have provided at Annex A the national information.
    I hope you find this reply helpful.

    Annex A: number of refusals on the grounds of inability to repay and as a percentage of all applications for the period April 1995 to March 1996

    Inability to repay

    Percentage of total applications

    National

    10,411

    0.4

    Figures are provisional and subject to change.

    Income Support
    Mr. French
    To ask the Secretary of State for Social Security what plans he has to align the rules for calculating earnings, provided for by the Social Security Benefit (Computation of Earnings) Regulations 1978, with the rules used to calculate earnings in the income support scheme. [1341]
    162
    Mr. Roger Evans
    I have today laid the Social Security Benefit (Computation of Earnings) Regulations 1996 before Parliament. The regulations will align, as far as possible, the rules for calculating a person's earnings for the purposes of contributory benefits, non-contributory benefits, increases for dependants and benefits for industrial injuries—except industrial injuries and diseases, old cases—with the rules used in the income support scheme. The change will remove a number of inconsistencies between benefits and reduce complexity in the social security scheme. In a small number of cases the changes may result in either benefit loss or gain.

    War Widows Pension
    Mr. Ainger
    To ask the Secretary of State for Social Security (1) if he will make it his policy that widows of Japanese prisoners of war will not have their pensions reduced because their late husbands may have died from smoking-related illnesses; [907]

    (2) how many widows have been affected by changes in the regulations controlling the level of pensions for widows of Japanese prisoners of war; [908]

    (3) how many widows of Japanese prisoners of war are currently receiving pensions; how many are receiving pensions which (a) have and (b) have not been reduced by the change in regulations related to death due to smoking-related illnesses; and how many are receiving a reduced pension as a result of those changes. [909]

    Mr. Heald
    Contrary to news reports, there has been no change in rules regarding pensions for war widows whose husbands died of smoking-related diseases.

    A war widow's pension may be awarded where the late husband's death was due to, or is substantially hastened by, any service in the armed forces. There is no automatic entitlement to a war widow's pension because the late husband was a war pensioner.

    The war pensions scheme was never intended to compensate for the effects of a personal habit such as smoking. Policy on this has not changed. Over more than 40 years that has been the policy of successive Governments; it has applied to all those who served in the armed forces, including those who were prisoners of the Japanese during world war two.

    The law does however provide for awards in respect of smoking-related conditions where there was a severely disabling mental condition—itself attributable to service and assessed for war pension purposes at a minimum of 50 per cent.—which rendered the late husband incapable of exercising personal choice and prevented him giving up the habit.

    Additionally, if there was more than one cause of death, one being smoking related and the other not smoking related but still linked to service, a war widow's pension will still be payable.

    Information on the numbers of war widows pensions in payment to the widows of former prisoners of the Japanese is not available and could be obtained only at disproportionate cost.
    163

    Female Workers
    Mr. Frank Field
    To ask the Secretary of State for Social Security what plans he has to produce a report on female workers similar to the one entitled "Male Earnings Mobility in the Lifetime Labour Market Database". [1129]

    Mr. Burt
    Analyses of earnings movements among women will be undertaken as part of the Department's current programme of work from the lifetime labour market database. Analyses of female earners were previously hindered by a lack of comprehensive data identifying women who take a career break to look after children; this problem has been largely removed in the most recent version of the lifetime labour market database.

    Invalidity and Incapacity Benefit
    Mr. Burden
    To ask the Secretary of State for Social Security how many people (i) claimed and (ii) received(a) sickness benefit for each year since 1990, (b) invalidity benefit for each year since 1990, (c) incapacity benefit short-term lower rate since its introduction, (d) incapacity benefit short-term higher rate since its introduction and (e) incapacity benefit long-term rate with invalidity allowance but without additional pension since its introduction. [744]

    Mr. Burt
    The information is in the tables.

    Table A: sickness and invalidity benefit

    Date

    Sickness benefit

    Invalidity benefit

    Claimants

    Beneficiaries

    Claimants

    Beneficiaries

    31 March 1990

    309,000

    103,000

    1,209,000

    1,209,000

    30 March 1991

    372,000

    110,000

    1,306,000

    1,306,000

    4 April 1992

    458,000

    138,000

    1,439,000

    1,439,000

    3 April 1993

    534,000

    147,000

    1,580,000

    1,580,000

    2 April 1994

    568,000

    127,000

    1,681,000

    1,681,000

    12 April 1995

    639,000

    127,000

    1,767,000

    1,767,000

    Source:
    I per cent. sample of all sickness and invalidity benefit claimants at date specified.

    Table B: incapacity benefit (IB)

    Claimants at 31 May 1996

    Beneficiaries at 31 May 1996

    IB short term lower

    711,000

    117,000

    IB short term higher

    106,000

    105,000

    IB long term

    1,580,000

    1,572,000

    IB long term with invalidity allowance and no additional pension

    n/a

    141,000

    IB long term with invalidity allowance and additional pension

    n/a

    395,000

    Source:

    5 per cent. sample from the incapacity benefit computer system. Excludes a small number of cases not held on the system.

    Mr. Burden
    To ask the Secretary of State for Social Security (1) what estimate his Department has made of the savings accruing from the abolition of the additional invalidity benefit; [732]

    (2) what factors underlay the abolition of the additional invalidity benefit following the introduction of incapacity benefit in April 1995. [730]
    164
    Mr. Burt
    The additional pension component of invalidity benefit was abolished because it was poorly targeted and did not represent value for money for the taxpayer. As additional pension was earnings-related, those with the highest earnings prior to receipt of benefit gained most and were also more likely to be in receipt of other income such as an occupational pension. The cost of additional pension was projected to rise to almost £2 billion by the year 2000–01.

    Estimates for net savings from the abolition of AP are in the table.

    Year

    Net savings (£ million)

    1995–96

    105

    1996–97

    275

    1997–98

    425

    1. Estimates are in cash terms and based on Government Actuary Department forecasts and family expenditure data.

    2. Savings are net of any income-related benefit offsets.

    Mr. Burden
    To ask the Secretary of State for Social Security what was the annual cost to his Department of incapacity benefit for each of the five years before its abolition. [731]

    Mr. Burt
    The information is in the table.

    £ million

    Year

    Expenditure

    Sickness benefit (SB)

    Invalidity benefit (IVB)

    Administration costs (SB and IVB)

    Total

    1990–91

    216

    4,431

    208

    5,071

    1991–92

    274

    5,485

    275

    6,034

    1992–93

    364

    6,210

    322

    6,896

    1993–94

    365

    7,068

    359

    7,792

    1994–95

    342

    7,705

    347

    8,394

    1. All figures except for sickness benefit and invalidity benefit expenditure for 1994–95 are from successive departmental reports.

    2. Expenditure figures for sickness benefit and invalidity benefit in 1994―95 are from the national insurance fund accounts and supersede those in the current departmental report.

    3. Sickness and invalidity benefits were replaced by incapacity benefit from 13 April 1995.

  FOREIGN AND COMMONWEALTH AFFAIRS

    Middle East Peace Process
    Sir Robert Hicks
    To ask the Secretary of State for Foreign and Commonwealth Affairs what action the United Kingdom and its EU partners are taking to persuade Israel to implement the Oslo accords as they relate to Hebron. [698]

    Mrs. Jane Kennedy
    To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the Foreign Minister of Israel to discuss developments in the peace process. [700]

    Mr. Hanley
    My right hon. and learned Friend the Foreign Secretary is due to visit Israel and Gaza on 3 November. We have made it clear on a number of occasions that implementation of those provisions of the interim agreement which relate to Hebron is an essential and urgent step in the middle east peace process.
    165
    Mr. Canavan
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the middle east peace process. [711]

    Mr. Hanley
    I refer the hon. Member to the answer I gave in the House today to the hon. Member for lElmet (Mr. Batiste).

    Taiwan
    Mr. Michael Brown
    To ask the Secretary of State for Foreign and Commonwealth Affairs what is the Government's policy with regard to the formal independence of Taiwan. [699]

    Mr. Hanley
    It is our view that the status of Taiwan is a matter for the Chinese Government and authorities in Taiwan to resolve between themselves.

    Mr. Pawsey
    To ask the Secretary of State for Foreign and Commonwealth Affairs when he last discussed Taiwan and Hong Kong with the Chinese Government. [704]

    Mr. Hanley
    I discussed Taiwan with Vice-Foreign Minister Wang Yingfan on 2 September in Peking.

    My right hon. and learned Friend the Foreign Secretary discussed Hong Kong with the Vice-Premier Qian Qichen on 26 September in New York.

    Mrs. Ann Winterton
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on relations with Taiwan. [707]

    Mr. Hanley
    We enjoy good commercial and cultural relations with Taiwan. We see great potential for the promotion of UK exports and inward investment; the attraction of tourism and educational links.

    NATO
    Mr Harry Greenway
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the accession of Poland and other states to the EU and NATO. [701]

    Sir Nicholas Bonsor
    We are firmly committed to the enlargement of the European Union and NATO.

    Mr. Wareing
    To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his Russian counterpart in respect of NATO plans for expansion into central and eastern Europe; and if he will make a statement. [710]

    Mr. David Davis
    My right hon. and learned Friend the Foreign Secretary has met the Russian Foreign Minister three times in the past five months. He has explained to Mr. Primakov NATO's response to the central Europeans' strong bids for membership, along with NATO's wish for a new relationship with Russia.

    Dr. Goodson-Wickes
    To ask the Secretary of State for Foreign and Commonwealth Affairs what consultations he has had with the Secretary of State for Defence concerning the enlargement of NATO. [713]

    Mr. Davis
    My right hon. and learned Friend the Foreign Secretary is in frequent contact with my right hon. Friend the Secretary of State for Defence to ensure that all aspects of NATO enlargement have been properly addressed.

    English Language
    Mr. Renton
    To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he proposes to take in order to encourage the use, understanding and teaching of the English language abroad. [706]

    Mr. Hanley
    Our language is a great national asset and we continue to encourage the use, understanding arid teaching of British English abroad through the medium of British organisations, goods and services. We have first-class institutions engaged in English language teaching and training, and activities of the British Council, BBC World Service, educational institutions, publishers and suppliers all serve to promote our long-term political, economic and commercial interests worldwide. The British Council-led English 2000 project, launched last year, brings all sectors together to promote the teaching and use of English into the next century.

    BBC World Service
    Mrs. Maddock
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will ensure that next year's funding for the BBC World Service will be adequate to prevent reduction in the level or number of language services. [708]

    Mr. Kirkwood
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future financial arrangements for the World Service. [719]

    Mr. Hanley
    Funding for the BBC World Service will be determined following the current public expenditure survey round.

    Dependent Territories (Government Employees)
    Dr. Marek
    To ask the Secretary of State for Foreign and Commonwealth Affairs in which dependent territories where personnel issues are reserved for the decision of the Governor, Government employees of any category have to resign if they become pregnant. [709]

    Sir Nicholas Bonsor
    No Government employees in any of the dependent territories are required to resign on becoming pregnant. However, in Bermuda personnel issues are not reserved to the Governor, who is obliged to act in accordance with the advice of the Public Service Commission.

    Economic and Monetary Union
    Mr. Jon Owen Jones
    To ask the Secretary of State for Foreign and Commonwealth Affairs how many civil servants in his Department are currently working on issues relating to economic and monetary union. [712]

    Mr. David Davis
    No FCO official is assigned exclusively to EMU, which is dealt with alongside other EU policy issues. It bears on the responsibilities of a number of FCO departments, including European Union department (internal), economic relations department and economic advisers.

    Independence
    Mr. Welsh
    To ask the Secretary of State for Foreign and Commonwealth Affairs how many countries have gained independence from the United Kingdom since 1966; and if he will make a statement. [714]

    Dr. Liam Fox
    Since 1966, the United Kingdom Parliament has granted independence to 24 countries. The last was Brunei in 1984.

    Monetary Gold (Restitution)
    Mr. Rooker
    To ask the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government will initiate a new discussion in the Tripartite Commission for the Restitution of Monetary Gold and claimant countries regarding the residue of gold and its possible distribution to individuals. [715]

    Mr. David Davis
    The tripartite commission, at our request, has already discussed this subject: it is now being considered by the member Governments—the UK, France and the US.

    Afghanistan
    Mr. Robathan
    To ask the Secretary of State for Foreign and Commonwealth Affairs what is his assessment of the situation in Afghanistan. [716]

    Dr. Liam Fox
    The situation in Afghanistan is still very fluid. We are concerned about the escalation in fighting over the last month. We urge all parties to cooperate fully with the efforts of the UN special mission to Afghanistan to find a peaceful settlement.

    Intergovernmental Conference
    Mr. David Shaw
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his most recent discussions at the IGC about employment matters with his counterparts in the European Union. [717]

    Mr. David Davis
    Employment was one of the subjects discussed at the ministerial meeting of the intergovernmental conference on 1 October.

    Royal Family (Overseas Visits)
    Mr. Tony Banks
    To ask the Secretary of State for Foreign and Commonwealth Affairs what was the total cost to his Department arising from visits abroad by members of the royal family in 1995–96. [718]

    Sir Nicholas Bonsor
    The total cost, to this Department, of official visits overseas by members of the royal family in 1995–96 was £440,092.47.

    Argentina
    Mr. Austin-Walker
    To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had recently with the Government of Argentina; and if he will make a statement. [720]

    Sir Nicholas Bonsor
    My right hon. and learned Friend the Foreign Secretary met the Argentine Foreign Minster in New York on 25 September. They had a very positive discussion covering a number of bilateral issues.

    Gibraltar
    Mr. Ian Bruce
    To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the Spanish Government in respect of failures to keep traffic flowing freely on the Gibraltar-Spanish border. [721]

    Mr. David Davis
    The delays have improved recently but traffic is still not flowing freely. There are at times extended delays. This is unacceptable. We have taken this up vigorously with the Spanish authorities to remind them of their obligations. We will continue to do so.

    United Nations Charter
    Mr. Spearing
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will state for each of articles 1 and 2 of the charter of the United Nations the relevant articles of the treaties of the European Union which incorporate its stated objectives. [235]

    Mr. David Davis
    The objectives of the European Union and the European Communities are not comparable with the purposes and principles of the United Nations. The objectives of the European Union are described in the preamble to the treaty on European Union and its opening articles, in particular articles A, B and F. The objectives of the European Communities are likewise set out in the preambles to the treaties establishing them and in their opening articles, in particular articles 2 and 3 of the EC treaty, articles 2 and 3 of the European Coal and Steel Community treaty, and articles 1 and 2 of the Euratom treaty.

    Northern Cyprus
    Mr. Cox
    To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to visit the occupied area of northern Cyprus during his forthcoming visit to the Republic of Cyprus. [962]

    Mr. David Davis
    My right hon. and learned Friend the Foreign Secretary will hold talks with President Klerides and also with Mr. Denktas in his capacity as leader of the Turkish Cypriot community. Timings and venues for the talks are to be arranged.

    International Criminal Court
    Sir David Knox
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of the preparatory committee of the United Nations General Assembly on the establishment of an international criminal court, indicating whether Her Majesty's Government will provide financial support to help to create such an institution. [963]

    Sir Nicholas Bonsor
    We have participated actively in the work of the preparatory committee. While much has been achieved, an enormous amount remains to be done. We therefore supported the recommendation of the preparatory committee at its last session that up to nine more weeks were required for further preparatory work. We also believe that we should set a date in 1998 for a conference to consider the statute of such a court. At the next session of the General Assembly, we shall need to review the progress made by the preparatory committee in its sessions in 1997.
    169
    The preparatory process is founded out of the UN regular budget to which we contribute.

    Turkey (Human Rights)
    Ms Jowell
    To ask the Secretary of State for Foreign and Commonwealth Affairs what measures his Department is taking to prevent human rights abuses against Christians in Turkey. [1097]

    Mr. David Davis
    We remain concerned about the human rights situation in Turkey and its effect on all people, including the Christian minorities. We will continue to raise our concerns with the Turkish authorities. Our embassy officials also pay regular visits to Christian communities in Turkey. The next visit is planned for November.

    Sri Lanka
    Mr. Simon Hughes
    To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet representatives of the Government of Sri Lanka to discuss the situation of the Tamil community. [266]

    Dr. Liam Fox
    My right hon. and learned Friend the Foreign Secretary has regular meetings with representatives of the Sri Lankan Government to discuss the ethnic conflict. Most recently, he saw the Sri Lanka Foreign Minister in London on 14 October.

    United Nations (Payment of Dues)
    Mr. Wigley
    To ask the Secretary of State for Foreign and Commonwealth Affairs what representations have been made by the United Kingdom Government to that of the USA concerning payment of dues to the United Nations. [702]

    Sir Nicholas Bonsor
    We firmly believe that all UN member states, including the US, must pay their UN dues promptly, in full and without conditions. We take every opportunity to urge the US to pay its UN dues, including its arrears, in accordance with its legal obligation to do so. The EU proposals for UN financial reform include penalties for member states that fail to pay their dues.

    Western Sahara
    Mr. Fatchett
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Government's policy towards the future role of the United Nations in the Western Sahara. [801]

    Mr. Hanley
    We support the UN Secretary—General and the United Nations Mission for the Referendum in Western Sahara—MINURSO—the UN operation in the region, in their efforts to bring about an end to this long—running conflict.

    Sudan
    Mr. Flynn
    To ask the Secretary of State for Foreign and Commonwealth Affairs what estimates he has assessed relating to the numbers of Sudanese civilians that have been killed as a result of warfare since 1991, indicating where possible, the ethnic group of casualties. [678]
    170
    Mr. Hanley
    No detailed figures are available. But the UN special rapporteur on human rights in Sudan suggested in his most recent report, February 1996, that 1.2 million people had died since 1983 as a result of the Sudan civil war.

    Mr. Flynn
    To ask the Secretary of State for Foreign and Commonwealth affairs what measures his Department intends to take to encourage the Government of Sudan to(a) conduct a referendum on the independence of southern Sudan and (b) bring about a ceasefire; and what discussions are planned with the Government of Sudan. [679]

    Mr. Hanley
    We continue to make clear to the Government of Sudan that we look to them to move towards a negotiated end to the civil war by declaring a ceasefire and that its continuing prosecution of the civil war stands in the way of an improvement in bilateral relations with the UK. The British ambassador in Khartoum sees members of the Government there frequently. The need for an end to the civil war is always high on the agenda.

    Mr. Flynn
    To ask the Secretary of state for Foreign and Commonwealth Affairs what measures his Department intends to take to encourage the Government of Sudan to repatriate the Sudanese who have been displaced by civil war. [680]

    Mr. Hanley
    The return of Sudanese displaced by the civil war to their local regions is not possible while the civil war continues.

    Rev. Martin Smyth
    To ask the Secretary of State for Foreign and Commonwealth Affairs which British diplomats have visited the Nuer lands of Upper Nile state in southern Sudan since Dr. Riek Machar signed the "political charter" with the Sudan Government in April 1996 to assess popular support and the support of traditional leaders (i) for him and (ii) for his signing of the charter; and what were those assessments. [994]

    Mr. Hanley
    The embassy has an active programme of visits to all parts of Sudan but has not visited the Nuer lands since July 1995.

    Mr. Frank Field
    To ask the Secretary of State for Foreign and Commonwealth Affairs if he will conduct a review of British Government policy towards the Sudan. [986]

    Mr. Hanley
    We keep British policy towards Sudan, and, in particular, what we can usefully do to help the situation in the south, under constant review.

  DEFENCE

    Porton Down
    Mr. Livingstone
    To ask the Secretary of State for Defence how long the chemical and biological defence establishment, Porton Down, aims to take to reply to letters from individuals who took part in the service volunteers programme at the establishment when they request details of their experiments. [741]
    171
    Mr. Arbuthnot
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    I have been asked to reply to your question concerning the length of time taken to respond to letters from those who took part in studies at Porton Down. The Chemical and Biological Defence Sector (CBD) at Porton Down is now part of the Defence Evaluation and Research Agency (DERA) for which I am responsible as Chief Executive.
    Staff at Porton Down aim to reply to all letters from former volunteers within 10 days. Where this is not possible, we seek to send an interim reply inside this timescale.

    Mr. Livingstone
    To ask the Secretary of State for Defence how many individuals took part in the service volunteers programme at the chemical and biological defence establishment during (a) 1994 and (b) 1995. [726]

    Mr. Soames
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    As Chief Executive of the Defence Evaluation and Research Agency (DERA) which now includes the former Chemical and Biological Defence Establishment (CBDE), I have been asked to reply to your question concerning the numbers of volunteers who participated in the service volunteer programme at Porton Down in 1994 and 1995.
    The volunteer records show that ninety six individuals came to Porton Down to take part in the volunteer programme in 1994 and fifty eight in 1995.
    I hope this information is helpful.

    Mr. Livingstone
    To ask the Secretary of State for Defence on how many occasions the chemical and biological defence establishment, Porton Down, has provided relevant extracts from(a) technical reports and (b) original laboratory data to the War Pensions Agency in response to individuals making disablement claims arising out of experiments at Porton Down as indicated in his answer of 22 July, Official Report, columns 87–88. [742]

    Mr. Arbuthnot
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    I have been asked to reply to your question concerning the provision of technical reports and original laboratory data to the War Pensions Agency when dealing with claims form former volunteers at Porton Down. The Chemical and Biological Defence Sector (CBD) at Porton Down is now part of the Defence Evaluation and Research Agency (DERA) for which I am responsible as Chief Executive.
    It is normal practice in dealing with requests from the War Pensions Agency for CBD Sector to provide confirmation of attendance and a short explanation of the tests undertaken. This includes details of any exposure to chemicals, the believed purpose of the study, an outline of the experimental methods used (where they are known) and any reaction of the individual to the study noted in the remaining records. Only on one occasion in recent years have
    172
    additional details of a volunteer's experiences been provided through release of photocopies of the laboratory record books or copies of technical reports discussing the type of study conducted.
    I hope this information is helpful.

    Mr. Livingstone
    To ask the Secretary of State for Defence what is the chemical and biological establishment's assessment of the effect on human health in(a) the short term and (b) the long term of one-off exposure to the chemical agent CN; and what research has been done by the chemical and biological defence establishment to reach this assessment. [725]

    Mr. Arbuthnot
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    I have been asked to reply to your question concerning Porton Down's assessment of the effects on human health of exposure to the chemical agent CN. The Chemical and Biological Defence Sector (CBD) at Porton Down is now part of the Defence Evaluation and Research Agency (DERA) for which I am responsible as Chief Executive.
    Short term exposure to chloroacteophenone (CN) causes a burning sensation in the throat, eyes and nose within seconds of exposure. These effects are accompanied by excessive lachrymation, a running nose and a stinging sensation of the skin. In the majority of cases these symptoms resolve themselves spontaneously within around 30 minutes of the end of the exposure.
    Exposure to high concentrations can cause long term clinical effects, namely, damage to the eye and a dermatitis of the skin. This dermatitis involves reddening, swelling and in severe cases ulceration.
    The eye effects were observed following studies of the exposure of experimental animals to riot control agents and further information was obtained from case reports from the United States following the widespread use of CN during Civil Rights Riots in the late 1960s. Information regarding the skin effects from exposure to CN and CS was obtained through limited volunteer studies carried out at Porton in the late 1960s. A copy of a technical report produced from these studies was sent to you with my letter of 21st October 1996.
    I hope this information is helpful.

    Mr. Livingstone
    To ask the Secretary of State for Defence what is the chemical and biological defence establishment's assessment of whether short-term exposure to mustard gas causes(a) chronic conjunctivitis or (b) pigmentation abnormalities of the skin; and what research has been carried out by the establishment at Porton Down to reach this assessment. [740]

    Mr. Arbuthnot
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    I have been asked to reply to your question concerning Porton Down's assessment of the effects of short-term exposure to mustard gas. The Chemical and Biological Defence Sector (CBD) at Porton Down is now part of the Defence Evaluation and Research Agency (DERA) for which I am responsible as Chief Executive.
    2,2—(bis-chloroethyl) sulphide, commonly called mustard gas, is a member of the class of chemical warfare agents called vesicants. These agents affect the skin, lungs and eyes of individuals who are exposed to either the liquid or the vapour, although the effects are more severe from exposure to the liquid.

    173
    Chronic conjunctivitis has generally been observed to occur after exposure of the eyes to mustard vapour or liquid. It can persist for several days, depending on the dose of agent, although complete healing usually follows except where very high doses are involved, in which case scarring of the conjunctiva and permanent damage may occur.
    Similarly, de-pigmentation may occur in healed skin following exposure to mustard gas agent on a sufficient scale to cause blistering.
    Information on mustard agent injuries used to produce Porton Down's assessment of the effect of exposure to the agent is taken from numerous sources. The best description of the effects continue to be the first hand accounts from First World War casualties. In the 1930s and early 1940s studies were conducted at Porton Down involving animals and service volunteers which provided considerable data. This information has been subsequently updated by the observations made by medical personnel involved in the clinical management of casualties from the Iran-Iraq war who were treated in London between 1984–988.
    I hope this information is helpful.

    Mr. Livingstone
    To ask the Secretary of State for Defence on what date the chemical and biological defence establishment published its annual report for 1995–96. [727]

    Mr. Arbuthnot
    This is a matter for the Defence Evaluation and Research Agency under its framework document. I have asked the chief executive, to write to the hon. Member.

    Letter from John Chisholm to Mr. Ken Livingstone, dated 30 October 1996:
    I have been asked to reply to your question concerning the publication date of the Chemical and Biological Defence Establishment's annual report.
    On 1 April 1995 the former Chemical and Biological Defence Establishment became part of the new Defence Evaluation and Research Agency. The DERA annual report, which includes a section on the activities of the enlarged CBDE division, was laid before the House on 16 July 1996.
    I have arranged for a copy of this year's annual report to be sent to you under separate cover which I hope you will find helpful.

    Land Mines
    Mr. Cousins
    To ask the Secretary of State for Defence what is the(a) designed maximum timed life and (b) self-destruct reliability of scatterable mine systems due to enter service with the armed forces in 1999. [392]

    Mr. Arbuthnot
    The designed maximum timed life of the land mines for the vehicle launched scatterable anti-tank mine system which is due to enter service with the Army in 1999 is classified. The design aim for the self destruct reliability of these anti-tank mines is 99.9 per cent. Testing to date has demonstrated that this is being met. Additionally, mine detonation relies on a short-life battery and any mine that fails to self-destruct will deactivate within a further short time.

    Departmental Property
    Mr. Spellar
    To ask the Secretary of State for Defence if he will publish the terms of reference for agents undertaking the sale of his Department's property. [205]

    Mr. Arbuthnot
    The terms of reference for agents undertaking the sale of my Department's property depend upon the particular circumstances of the sale in question. The details of the sales contract are negotiated with the relevant agent.
    174

    Pilots and Navigators
    Mr. Allason
    To ask the Secretary of State for Defence if he will examine the reintroduction of senior non-commissioned officers as pilots and navigators on transport aircraft and helicopters; and if he will assess the performance of their equivalents in the Army Air Corps. [836]

    Mr. Soames
    The Royal Air Force has no plans to extend the role of airmen (aircrew), who are non-commissioned officers, to encompass the role of pilots or navigators.

    Personnel Training (Bermuda)
    Mr. Allason
    To ask the Secretary of State for Defence if he will scrap the policy of charging the Bermuda Government for the training of personnel. [838]

    Mr. Soames
    No. It is our policy to recover the costs of providing training for outside customers, except in cases where the benefit to the United Kingdom is such that a subsidy can be justified.

    Recruitment
    Mr. Allason
    To ask the Secretary of State for Defence what assessment he has made of the effect of the recruitment of British dependent territory citizens on British forces. [839]

    Mr. Soames
    No specific assessment of the effect of recruitment of British dependent territory citizens on British armed forces has been made.

    Bermuda Regiment
    Mr. Allason
    To ask the Secretary of State for Defence what plans he has to incorporate the Bermuda Regiment into the British Army's order of battle. [840]

    Mr. Soames
    There are no plans to incorporate the Bermuda Regiment into the Army's order of battle.

    Merchant Vessels
    Ms Glenda Jackson
    To ask the Secretary of State for Defence if he will list the number of merchant vessels chartered for use in military exercises or operations involving United Kingdom forces, the flag nationality of those vessels, and the total cost of these charters, over the past five years. [1029]

    Mr. Soames
    During the past five years—1992 to September 1996—143 vessels have been chartered for exercise/operations. These were:

    Nationality

    Number

    Danish

    49

    German

    18

    Norwegian

    16

    Swedish

    12

    Spanish

    7

    Ukrainian

    6

    Maltese

    5

    Swiss

    4

    Panamanian

    3

    Bahamian

    3

    Finnish

    3

    175

    Nationality

    Number

    Italian

    3

    Dutch

    2

    Greek

    2

    Luxembourg

    2

    Polish

    2

    French

    1

    Swiss

    1

    Cypriot

    1

    Dutch

    1

    Liberian

    1

    British

    1

    The total cost of chartering these vessels was £42,816,794.

    Pregnancy Dismissal Cases (Legal Fees)
    Ms Short
    To ask the Secretary of State for Defence what was the cost of legal fees incurred by Her Majesty's Government in relation to the armed services pregnancy dismissal cases defended by his Department in respect of legal advice and work, separately identifying advocacy provided by lawyers in private practice; and what was the average(a) daily and (b) hourly rate contracted for the advice and work. [851]

    Mr. Soames
    The total cost of legal fees to date in the armed forces pregnancy dismissal litigation, including disbursements and VAT, is £6.8 million, the majority of which—£6.3 million—has been paid to the Treasury Solicitor's Department. Barristers in private practice have been used as advocates in the 360 cases which have proceeded to an industrial tribunal—7 per cent., of all cases—but their fees cannot be separately identified in the overall figure of £1.9 million, including VAT, which the Treasury Solicitor's Department has disbursed in respect of counsel's fees. It is not possible to calculate a meaningful average daily or hourly rate for the variety of advice given and work done.

    Proof and Experimental Station, Inchterf
    Mr. Tom Clarke
    To ask the Secretary of State for Defence what future use he is considering for the former proof and experimental station at Inchterf, Auchenreoch; and if he will preclude its use as (i) a private shooting range or (ii) an explosives testing ground. [853]

    Mr. Soames
    The former proof and experimental station at Inchterf has been marketed on the basis of a planning brief agreed with the local authority. This does not envisage the site being used as an explosive testing ground nor as a private shooting range. We are not aware that any of those who have expressed interest in the site intend to use it for those purposes.

    Air Traffic Movements (Northolt)
    Sir Michael Shersby
    To ask the Secretary of State for Defence (1) what were the number of military air traffic movements at RAF Northolt in(a) 1989 and (b) 1994; and if he will estimate the number of such movements for the year ending 31 December 1996; [855]

    (2) what was the total number of civilian air traffic movements at RAF Northolt in (a) 1989 and (b) 1994; and if he will estimate the number for the year ending 31 December 1996. [854]
    176
    Mr. Soames
    The following table provides the information requested on military and civilian movements at RAF Northolt. The 1996 estimate for military movements includes those by civil aircraft on Government business, such as MOD charters.

    1989

    1994

    19961

    Military

    9,500

    7,319

    8,450

    Civilian

    5,600

    5,425

    6,450

    1 Estimate.

    RAF Fast Jets (Maintenance)
    Mr. Gordon Prentice
    To ask the Secretary of State for Defence what steps he is taking to improve quality control in the maintenance of RAF fast jets by contractors. [898]

    Mr. Soames
    The MOD aims to place full responsibility on its contractors for the quality of the products and services which they supply. It is MOD policy to place contracts only with those suppliers who have been assessed by an accredited body to an appropriate quality management standard.

    Computer Hacking, Fraud and Theft
    Mr. George
    To ask the Secretary of State for Defence how many cases of computer hacking, fraud and theft, including theft of computer chips, his Department has recorded in the last five years. [800]

    Mr. Soames
    Consolidated records of computer hacking, computer fraud and computer theft have only been maintained across the Department since 1 April 1995. Since that date 152 known cases of theft of computers or computer equipment, including two cases of chip theft, have been recorded and there have been no reported instances of computer fraud.

    In respect of hacking I refer the hon. Member to the reply I gave to the hon. Member for South Shields (Dr. Clark) on 17 June 1996, Official Report, column 364.

    These figures do not include cases under current active investigation or sub judice.

    Computers
    Mr. George
    To ask the Secretary of State for Defence how many computers are held by(a) the Ministry of Defence and (b) the individual services. [799]

    Mr. Arbuthnot
    This information is not held centrally and could be provided only at disproportionate cost.

    Beef Purchases
    Mr. Ainger
    To ask the Secretary of State for Defence (1) how much non-United Kingdom produced beef was purchased by his Department in 1995–96; and how much has been purchased in the current financial year; [910]

    (2) if he will list the countries which have supplied beef to his Department in the financial years (a) 1995–96 and (b) 1996–97 indicating the amounts and value. [911]
    177
    Mr. Arbuthnot
    The procurement of food for the armed forces is contracted to the Navy, Army and Air Force Institutes NAAFI. My Department does not specify the source of origin from which NAAFI should obtain beef or any other meat, but expects them to seek the best market price for the product. The majority of our requirements are for frozen beef, which is not readily available from the British market.

    In the financial year 1995–96 and in the first six months of the current financial year NAAFI purchased some 1.45M kg of non UK beef, valued at £5.2 million. This was sourced primarily from South America, New Zealand and Australia.

    Argentine Destroyers
    Mr. Tony Lloyd
    To ask the Secretary of State for Defence what assessment he has made of the security threat posed by Argentine destroyers, with particular reference to those equipped with bomb-proof casing. [673]

    Mr. Soames
    [holding answer 28 October 1996]: We continue to monitor all developments which may affect our security interests in the South Atlantic. We are satisfied that the forces we maintain there, supported as necessary by reinforcements, are capable of meeting our commitment to the security of the Falkland Islands and other dependencies.

  AGRICULTURE, FISHERIES AND FOOD

    Vessels Safety Grants Scheme
    Mr. Beith
    To ask the Minister of Agriculture, Fisheries and Food if he will extend the vessel safety grants scheme to fishing boats under 12 m prior to the extension of the marine safety code to these vessels in 1997. [663]

    Mr. Baldry
    The Marine Safety Agency is developing a safety code for fishing vessels under 12 m and consultations with the industry on its requirements are in progress. I am informed that the MSA intends to publish the code early in 1997 and to bring it into force in 1998. But until the requirements of the code have been agreed and the costs of implementation calculated it will not be possible to reach decisions on any extension of the current safety grant scheme to fishing vessels under 12 m.

    Feline Spongiform Encephalopathy
    Mr. Martyn Jones
    To ask the Minister of Agriculture, Fisheries and Food what Government guidelines exist to assist veterinary staff and surgeons in diagnosing feline spongiform encephalopathy; and if he will make a statement. [455]

    Mrs. Browning
    The clinical signs and pathological lesions associated with feline spongiform encephalopathy have been published in the veterinary and scientific press in considerable detail. The first confirmation was announced in The Veterinary Record on 19 May 1990, and included details of clinical signs that would enable veterinary surgeons to identify possible cases. The signs are not dissimilar to rabies which, being a notifiable disease, veterinary surgeons would automatically report to
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    the divisional veterinary manager. Moreover, the clinical signs of FSE are in fact similar to those seen in cattle with BSE, a condition with which most veterinary practitioners and all MAFF veterinary officers are fully familiar.

    Advice was given directly to such practitioners that, subject to the elimination of rabies as a cause of disease, a free post mortem examination for FSE was available through the veterinary investigation service of MAFF. Since November 1994 the diagnosis of any transmissible spongiform encephalopathy in the laboratory, other than those produced by experimental means in the course of research, has been officially notifiable.

    Mr. Jones
    To ask the Minister of Agriculture, Fisheries and Food what Government procedures exist for(a) encouraging the reporting of and (b) collating data relating to feline spongiform encephalopathy; if he will indicate the date of inception for each procedure; if he will list those procedures which no longer operate; and if he will make a statement. [465]

    Mrs. Browning
    The Spongiform Encephalopathy (Miscellaneous Amendments) Order 1994 makes suspicion of spongiform encephalopathies in species other than cattle, sheep and goats following laboratory examination notifiable. Nevertheless, from May 1990 when the first confirmation of feline spongiforrn encephalopathy was announced, MAFF encouraged the veterinary profession to report suspicion of any cases to the local divisional veterinary manager. This was done by publication of a letter from the Chief Veterinary Officer in The Veterinary Record, as well as by local communication between DVMs and veterinary surgeons. A free diagnostic service was offered through the veterinary investigation service where a differential diagnosis was not required. Not all presentations of cases were directly through veterinary practitioners. Some were identified after referral to university veterinary departments. While the majority of cases have subsequently confirmed by examination of brain tissue at the central veterinary laboratory, the diagnosis of veterinary pathologists with experience of FSE is usually accepted as definitive.

    Following confirmation, a veterinary officer of the Ministry carries out an epidemiological investigation, where possible, involving the veterinary surgeon, the current owner, and if appropriate previous owners. As with cattle, this involves full details of the animal's medical and feeding history. Details of all confirmed cases are held centrally to allow further analysis and interpretation.

    Pet Food
    Mr. Martyn Jones
    To ask the Minister of Agriculture, Fisheries and Food what data his Department collates on the quantity of mammalian meat and bonemeal used in pet food; which manufacturers of pet food use mammalian meat and bonemeal in pet food; and if he will make a statement. [422]

    Mrs. Browning
    This Department does not collate data on the quantity of mammalian meat and bonemeal used in pet food, nor does it have any information on which pet food manufacturers use such material.

    Bovine Livestock Feeds
    Mr. Martyn Jones
    To ask the Minister of Agriculture, Fisheries and Food if he will list all known ingredients of(a) cattle cake and (b) bovine livestock feeds; and if he will make a statement. [474]

    Mrs. Browning
    It is not feasible to provide an exhaustive list of the ingredients of either cattle cake or bovine livestock feeds. However, the Feeding Stuffs Regulations 1995 list the main raw materials used in compound feeds in the European Union as well as permitted additives and protein sources. A copy of these regulations has been deposited in the House of Commons Library.

    Genetic Engineering
    Mr. Flynn
    To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the percentage of the total United Kingdom quantity of(a) grains, (b) pulses and (c) vegetables grown using genetic engineering which have been exported abroad in each of the last five years. [1019]

    Mrs. Browning
    There have been no exports of genetically modified grains, pulses or vegetables from the United Kingdom in the last five years.

    Mr. Flynn
    To ask the Minister of Agriculture, Fisheries and Food what requirements there are on(a) manufacturers and (b) retailers to indicate the use of genetically engineered ingredients on the labels of food products; and if he will make a statement. [1021]

    Mrs. Browning
    The need for genetically modified foods to be labelled is assessed by the Food Advisory Committee on a case by case basis as part of the approval process for their use.

    In line with the latest draft of the EC Novel Foods and Novel Food Ingredients Regulation, which is expected to be adopted shortly, compulsory labelling is normally required when there is a significant difference in the composition, nutritional value or intended use of a food compared to its conventionally produced equivalent, or if it is likely to give rise to ethical concerns or contain an unexpected allergen. Labelling is also required if any live genetically modified organisms are likely to be present in the food as consumed.

    Mr. Flynn
    To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the (i) quantity and (ii) percentage of(a) grains, (b) pulses and (c) vegetables grown using genetic engineering which have been imported into the United Kingdom in each of the last five years. [1023]

    Mrs. Browning
    The only food from a genetically modified crop imported into the United Kingdom in the past five years is a tomato paste that went on sale in February this year. A total of 900,000 cans have been imported from the USA to date.

    Mr. Flynn
    To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the percentage of soya products on sale in the United Kingdom which contain genetically engineered beans in each of the last five years. [1020]
    180
    Mrs. Browning
    No soya products sold in the United Kingdom in the last five years have contained genetically modified beans.

    Casualty Cows (Slaughtering)
    Mr. Ainger
    To ask the Minister of Agriculture, Fisheries and Food how many casualty dairy cows were slaughtered in each month of 1995 and 1996. [912]

    Mrs. Browning
    The number of casualty cattle handled under the over thirty months scheme are as follows for each month since the scheme began on 13 May 1996:

    Number

    May

    3,775

    June

    8,749

    July

    13,446

    August

    12,658

    September

    15,363

    October (up to 28 October)

    12,793

    These figures do not differentiate between dairy and beef cattle.

    The Ministry does not hold central records of the number of dairy cows slaughtered as casualties.

    Beef Imports
    Mr. Ainger
    To ask the Minister of Agriculture, Fisheries and Food how much beef and of what value was imported into the United Kingdom in each month of 1995 and 1996 to date. [863]

    Mr. Baldry
    Imports of beef1 into the United Kingdom during 1995 and 1996, as recorded in the overseas trade statistics, are as follows:

    Year

    Month

    £ million

    Tonnes (thousand)

    1995

    1

    34

    15

    1995

    2

    35

    15

    1995

    3

    43

    20

    1995

    4

    42

    17

    1995

    5

    54

    24

    1995

    6

    68

    28

    1995

    7

    62

    26

    1995

    8

    55

    22

    1995

    9

    69

    26

    1995

    10

    60

    24

    1995

    11

    44

    19

    1995

    12

    39

    17

    1996

    1

    38

    16

    1996

    2

    31

    13

    1996

    3

    34

    14

    1996

    4

    43

    20

    1996

    5

    44

    20

    1996

    6

    44

    20

    All figures are provisional. Branch C, Statistics (Commodities and Food) Division, Economics and Statistics Group.

    1 Beef includes the following; beef carcass meat, bovine offal and preparations of beef meat and bovine offal.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Carlisle.

Lord Vincent of Coleshill
Field Marshal Sir Richard Frederick Vincent, GBE, KCB, DSO, having been created Baron Vincent of Coleshill, of Shrivenham in the County of Oxfordshire, for life—Was, in his robes, introduced between the Lord Bramall and the Lord Gillmore of Thamesfield.
Lord Taylor of Warwick
John David Beckett Taylor, Esquire, having been created Baron Taylor of Warwick, of Warwick in the County of Warwickshire, for life—Was, in his robes, introduced between the Lord McColl of Dulwich and the Lord Griffiths of Fforestfach.

Violence on Television
2.50 p.m.
Lord Renton Lord Renton asked Her Majesty's Government:
Whether, in view of the need to improve standards of behaviour, they will ask television companies to reduce the amount of violence, crime, sex and aggressive behaviour shown on television.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, Her Majesty's Government believe that everyone has a role in helping to ensure civilised behaviour in Britain and they encourage each and every one to play their part. Parliament decided that the broadcasting Acts and the BBC Charter and Agreement provide the legal and regulatory framework within which UK broadcasters can exercise their editorial independence free from government direction.
Lord Renton: My Lords, I thank my noble friend for that remarkably cautious reply. Does he accept the view of Edmund Burke that example is the school of mankind? Does he believe that the millions of children and young people who watch television are given a good example when they see so much violence and other bad behaviour on those programmes?
Lord Inglewood: My Lords, Edmund Burke provided plenty of wisdom for us which is still relevant today. Example is one of the best ways of instruction. Of course, there are things on television which do not provide a good example to young people and citizens in general. Equally, we must not overlook instances where a good example is to be found in the broadcast.
Lord Taylor of Gryfe: My Lords, in the light of the noble Lord's statement that civilised behaviour should be
316
encouraged and that nothing which glamorises violence should be shown on television, would he apply those words to sport such as boxing?
Lord Inglewood: My Lords, boxing is an activity which is lawful in this country and which is thought by the broadcasters to be appropriate to be shown on television.
Lord Orr-Ewing: My Lords, I wonder whether anyone has drawn the attention of my noble friend to a feature article in the Telegraph on Saturday, which stated:
"Finally, Wednesday night brought sudden subversion to BBC2's 'Newsnight'. Abandoning discussion, reporting, etc., the Duke of Norfolk was described as 'the top toff' and the Lord Great Chamberlain was generally mocked. Mr. Paxman was moved to say, 'Maybe one of these days Black Rod will be told what he can do with his Black Rod.' BBC2's current affairs flagship was now indistinguishable from a Sun editorial".
Will my noble friend accept that that is hardly in accord with the words which he deployed so well?
Lord Inglewood: My Lords, I am afraid that I am unable to respond in any detail to my noble friend's question, having seen neither the television programme concerned nor the editorial to which he referred.
Lord Merlyn-Rees: My Lords, I declare an interest as president of the Video Standards Council which puts me on rather a different tack from the last questioner. Our products are classified on the basis of sex, violence and so on by the British Board of Film Classification which monitors videos and films. How does the classification for television work? Who is responsible for it?
Lord Inglewood: My Lords, as I described to your Lordships, material on television is regulated under the BBC Charter and Agreement and the broadcasting Acts. There is a clear duty on both the governors of the BBC and the Independent Television Commission to ensure programmes do not include anything,
"which offends against good taste or decency or is likely to encourage or incite to crime or to lead to disorder or to be offensive to public feeling".
The broadcasters have an obligation to exercise those duties in a manner which takes into account the Broadcasting Standards Council's code relating to broadcasting standards and the terrestrial broadcasters are committed to ensuring that their programmes meet the requirements of the viewers.
Lord Gisborough: My Lords, does my noble friend agree that the anxiety felt in relation to television is nothing compared to the anxiety felt in relation to videos? Videos contain far more violence; there are fewer controls over them and they can be watched at any time of the day or night by children.
Lord Inglewood: My Lords, many of my noble friend's points are correct. However, it is important that we do not rank the potential dangers of one against the dangers of the other and thereby debase the one which comes second in the ranking.
Lord Tebbit: My Lords, was my noble friend's original Answer a long way of saying "No"?
Lord Inglewood: No, my Lords.
Lord Elton: My Lords, does not my noble friend accept that violence has become the common currency on television as an alternative to the boredom which would otherwise be offered by the medium? It is difficult to turn on a programme and watch for more than half-an-hour without seeing several instances of people being beaten up or killed during hours when children may be able to see it and when parents may be shocked by it. Is it not the case that that indulgence in violence must escalate if it is to continue to excite the viewer? It is extremely damaging to the way in which we live in this country and should be halted.
Lord Inglewood: My Lords, my noble friend's points are well taken. Clearly there are instances when programmes containing violence should not be shown. In all those instances it is difficult to know exactly where the line one may wish to draw is to be placed. It occurred to me in preparation for this Question that Shakespeare's "Macbeth" may well fall foul of a number of tests that certain noble Lords may initially wish to apply.
Lord Desai: My Lords, can the Minister assure us that, whatever laws are passed relating to violence, the news programmes, which have to depict violence, will not be banned?
Lord Inglewood: My Lords, it is essential that there is proper treatment of news stories in a manner that is appropriate. However, it is important when defining "appropriateness" that any violence that could be shown is not shown gratuitously.
Baroness Strange: My Lords, does not my noble friend agree that a good example of courtesy and politeness is shown daily in your Lordships' Chamber? Would it not be a good idea therefore to have more broadcasting of your Lordships at work?
Lord Inglewood: My Lords, it is important that the Government do not impinge on the editorial independence of the broadcasters. However, I am sure that they will have heard my noble friend's point and I hope that they will bear it in mind.
Lord Donoughue: My Lords, I am sure the whole House regrets the decline in broadcasting standards and the growth, for instance, of tabloid television. Does not the Minister agree that the prospect in the future is more frightening with hundreds of digital channels about to be brought before us? In that context can the Minister recall that on this side of the House, during the Broadcasting Bill, we proposed amendments to introduce a quality test for digital channels and their multiplex operators? In the context of the Question, does not the Minister regret that the Government secured the
318
defeat of what would have been a strengthening of the ITC's powers and some protection against the tide of television that lies ahead?
Lord Inglewood: My Lords, the noble Lord is gamely trying to revive the dead hare that he ran before the summer. The way in which broadcasting is regulated in this country in respect of violence and pornography does not need the introduction of the quality test he describes in order to make it effective. In the Broadcasting Act we extended the scope of the regulatory regime seamlessly to include digital.
Lord Renton: My Lords, is my noble friend aware that it would be perfectly constitutional for the Government to draw the attention of the Broadcasting Standards Council to the need to insist upon higher standards? They can also draw the attention of producers to the anxiety among responsible members of the public regarding not only violence, but also bad language, shocking behaviour and unpleasant people being horrid to each that is shown on television. Can my noble friend seriously bear that in mind?
Lord Inglewood: My Lords, that is a matter that my right honourable friend the Secretary of State and I bear in mind whenever we meet broadcasters and regulators. We bear in mind also their role to help ensure civilised behaviour in this country and encourage them to act accordingly.

Comprehensive Test Ban Treaty
3.8 p.m.
Lord Jenkins of Putney Lord Jenkins of Putney asked Her Majesty's Government:
Whether they agree with President Clinton that the signatures of the declared nuclear powers to the Comprehensive Test Ban Treaty mean that testing is, in effect, already banned, even though the treaty does not formally come into force without the signatures of 44 potential nuclear states.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, the signing of the Comprehensive Test Ban Treaty by 127 states, including the five declared nuclear-weapon states, has established a strong political norm against nuclear testing. However, for the treaty to be fully effective, it must become universal. We therefore urge all states to sign and ratify as soon as possible.
Lord Jenkins of Putney: My Lords, I thank the noble Baroness for that Answer. May I remind her that on Monday, because of the prospect of a successful conclusion to the Comprehensive Test Ban Treaty, the noble and gallant Lord, Lord Carver, asked whether the Government would urgently take into consideration the recommendations of the Canberra Commission? It was not possible for the Minister to give him an answer in the wide-ranging debate on that occasion. Can the noble Baroness now say that the noble and gallant Lord will

319
receive a comprehensive answer on the urgent matter that he raised and that the Government are taking into consideration the recommendations of the Canberra Commission?
Baroness Chalker of Wallasey: My Lords, as my noble friend Lord Howe said in his reply to that debate, we shall indeed write to all noble Lords who raised detailed questions. Perhaps I may say briefly now that there are some ideas in the Canberra Commission report with which the UK strongly agrees: to name two, support for negotiations on a fissile material cut-off treaty and the continuation of the US/Russian START process. We welcome the recognition that nuclear arms control measures can only be negotiated between the nuclear weapons states themselves. But, quite honestly, the submission in the Canberra Commission report that the role of deterrence has disappeared is quite amazing because the Canberra Commission seems to be against deterrence as a concept. Anyone who has ever had anything to do with the reality of war and indeed defending this country knows that deterrence is more than just a concept.
Lord Clinton-Davis: My Lords, will the Minister kindly identify any other areas of disagreement which the Government have with the Canberra document?
Baroness Chalker of Wallasey: My Lords, this is not a suitable occasion for going into the detail of the Canberra Commission report. We have worked hard and consistently for the treaty to ban nuclear weapon testing. That is the right way to go. We are sad that India has not signed the Comprehensive Test Ban Treaty because we believe that it is in India's interests and in the interests of international security so to do. So we hope that India will soon feel able to sign. It is noteworthy that all but three of the signatories have already decided to ratify.
Lord Mayhew: My Lords, what action is being taken to try to induce the Indian Government to sign, after which certainly Pakistan will sign and the treaty can come into force? However, it cannot come into force until that happens. We understand that a Bill is on the way to ratify the treaty. We on these Benches shall certainly support it. But that means ratifying the treaty before there is any verification regime, and presumably inviting inspectors here from overseas, while the Indians can test without any verification regime in place.
Baroness Chalker of Wallasey: My Lords, the treaty is supported by almost all the international community, which includes seven out of the eight countries which have a capacity to test but which are not already prohibited from doing so by virtue of being parties to an existing international agreement. I understand the noble Lord's anxiety, but I believe that our continued urging upon India to sign the CTBT and that of so many other nations—more than 40 now—will eventually persuade India to sign. We believe that it is certainly in India's interests. We know that India has a domestic problem, but we have made sacrifices in accepting the treaty, just
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as every other signatory to the treaty has done. The Bill named in the gracious Speech will soon come before both Houses of Parliament. I am glad to have the noble Lord's confirmation that his party will support the Government in the ratification of the treaty.
Lord Jenkins of Putney: My Lords, the whole House will appreciate the Minister's comprehensive answers, in which she has done her best to compensate for the fact that there has been no recent general statement of the Government's policy on these matters. Will she see what can be done to encourage the Government to produce a general statement of their position which, as we move on into this question, will become more and more urgent?
Baroness Chalker of Wallasey: My Lords, I know that the long Recess sometimes dulls the memory. But even my addled memory tells me that I have already told your Lordships on a number of occasions the clear situation. It has not changed.

Coal Industry: Accidents
3.14 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
Whether, after the first full year of the privatisation of the coal industry, they are satisfied with the level of accidents in the industry.
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, the Government are never satisfied with the level of accidents in the coal industry or anywhere else at work. However, the evidence suggests that there has been no decline in health and safety standards since privatisation and, in some areas, greater emphasis has been placed on health and safety issues.
Lord Dormand of Easington: My Lords, I appreciate that accidents have traditionally been analysed on the basis of the rate per 100,000 man shifts. However, in spite of what the Minister has just said, what significance do the Government place on the fact that the number of fatalities in the mining industry has increased from two to five and that there has been an increase in serious accidents of 18 per cent.? Do the Government consider that the reduction in the number of mines inspectors—from 60 in 1993 to 22 at the present time—is sufficient to ensure proper safety in the pits?
Earl Ferrers: My Lords, the noble Lord is quite correct. The number of fatal accidents rose between 1994–95 and 1995–96 by three. That is to be greatly regretted. However, one has to remember that the number of man shifts worked also rose by some 22 per cent. during the same period. During that time the rate of all reportable accidents fell. The number of fatal and serious accidents in 1994–95 was the lowest on record and the number in 1995–96 was the

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second lowest. The number of people in the mining inspectorate has gone up from the figure which the noble Lord quoted.
Lord Mason of Barnsley: My Lords, will the Minister ask the Health and Safety Executive to inquire into the increasing use of contractors brought in as sub-contractors in and around the coal mines? I ask that because the accident figures of those contract workers may not be registered by the private owner and consequently the total of all casualties of all workers in and around coal mines may be entirely different from what is produced in the reports.
Earl Ferrers: My Lords, it is always difficult when one starts comparing figures. The noble Lord, Lord Dormand of Easington, was correct in saying that the figures are normally based on the rate per 100,000 man shifts. The figure for accidents in 1994–95 was 10.19, which went down to 8.44 in 1995–96. Before privatisation only British Coal collected figures in that form, but since privatisation the Health and Safety Executive has collected figures from all coal mine owners. The rates for 1994–95 are therefore only for mines operated by British Coal but the rates for the later period, 1995–96, cover all the privatised industries.
Lord Ezra: My Lords, I wish to revert to the question of mine safety engineers. Is it not a fact that the resources of the Health and Safety Executive as a whole are at present overstretched and that this applies as much to mining as to anything else? Are the Government looking carefully at this matter and aiming to put it right?
Earl Ferrers: My Lords, I do not think the resources are overstretched. Certainly they are kept fully employed. The mines inspectorate investigated the effects of privatisation on health and safety standards in the coal industry. Employees and local trade union representatives were asked how management attitudes had changed since privatisation. The general response was that there had been little change but some said that management were placing a greater emphasis on safety. I can assure your Lordships that the Health and Safety Executive mines inspectorate regularly monitors these standards.
Lord Clinton-Davis: My Lords, have the resources of the Health and Safety Executive been reduced; and if so, to what extent? To what extent is the HSE's activity impaired as a result of any such reduction?
Earl Ferrers: My Lords, in fact, there are now more inspectors than there were a short while ago.
Lord Dormand of Easington: My Lords, the Coal Authority has said that it intends to inspect every working mine at least once in each calendar year. Will the Minister say who will monitor that, particularly as the Health and Safety Executive has said in its report
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that, because some of its activity has been diverted elsewhere, it is not entirely sure how it can cope with its planned inspection of the pits?
Earl Ferrers: My Lords, I am not aware that there was a difficulty over the inspection of the pits in the way the noble Lord, Lord Dormand of Easington, suggests. I shall certainly look into the point and write to him.

Setting of Interest Rates: EMU
3.20 p.m.
Lord Tebbit Lord Tebbit asked Her Majesty's Government:
Whether it has been and remains in the national interest that the Chancellor of the Exchequer possesses and exercises the power to overrule the Governor of the Bank of England in the setting of interest rates.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, yes.
Lord Tebbit: My Lords, is my noble friend aware that I find that an extremely satisfactory and sensible Answer to the Question? But that begs the further question of why in that case is it, in the Chancellor's view, possibly a good thing to hand over that right to the governors of a new central bank in Frankfurt whom he would not be able to veto?
Lord Henley: My Lords, perhaps I may say how grateful I am that my monosyllabic reply satisfied my noble friend, just as the similar reply of my noble friend Lord Inglewood earlier, I hope, satisfied my noble friend. The second part of my noble friend's question was to some extent predictable. Perhaps I may explain to him that my right honourable friend the Prime Minister has made it clear on many occasions that the United Kingdom will only ever take part in a single currency if it is in our national interest so to do given the circumstances at the time. Any decision will be based on a hard-headed assessment of the United Kingdom national interest in terms of jobs, capital investment and the ability to sell goods and services in the world market.
Lord Bruce of Donington: My Lords, may we take it from the noble Lord's reply that the Government will not proceed with a Bill to make the Bank of England completely independent, that being one of the conditions for Britain's entry into the single currency? Is the noble Lord aware that if he can give that assurance that the Government will not introduce such a Bill, it will not only be in conformity with the Answer that he gave to the noble Lord, Lord Tebbit, but it will also please me greatly?
Lord Henley: My Lords, as my right honourable friend the Prime Minister says in another place, I refer the noble Lord to the Answer that I gave earlier. I should explain to the noble Lord that we believe that central bank independence would not be the panacea that some

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believe that it would be. The report of the panel of independent forecasters last November noted that there is no evidence that the exchange rate would be more stable or long rates lower if the Bank were made more independent.
Lord Clark of Kempston: My Lords, does my noble friend agree that if there were a central bank it could not stand aside from the political pressure of the member states? Does he further agree that even as regards the Bundesbank, which is presumed to be independent, at the reunification of East and West Germany the Ostmark and deutschmark exchange was controlled by the Chancellor of Germany, Helmut Kohl, to the anguish and dismay of Herr Pohl, who was the president of the Bundesbank?
Lord Henley: My Lords, I can accept what my noble friend has said. Further, I can say that ultimately it is the record on low inflation and not the precise institutional arrangements that matters in terms of bringing about the new arrangement. What we should look at is our recent record on inflation, and that is a good one. The Government will not jeopardise that achievement.
Lord Stoddart of Swindon: My Lords, if, as the noble Lord said in reply to his noble friend, it is in the national interest for the Chancellor of the Exchequer to be able to overrule the Bank of England in the matter of monetary policy, which is the interest rate policy, how on earth can it be in the national interest for us to join a single currency in the first stage of EMU when we shall not be able to exercise then what is apparently now in the national interest? Will the Minister further confirm for the benefit of his noble friend that Article 107 of the Treaty on European Union specifically precludes any interference either from any institution of the European Community or any national government?
Lord Henley: My Lords, I stated the position as it is at the moment. I also stated quite clearly that the Government will make the appropriate decision on the single currency at the appropriate time. It would not be right to try to make that decision in advance of that time. When it is the appropriate time we shall make that decision in terms of the national interest.
Viscount Chandos: My Lords, does the Minister condone the unsporting timing of the Chancellor's announcement of a rise in interest rates in relation to the Question of the noble Lord, Lord Tebbit? Even more importantly, does the Minister believe that the presentation of the discussions between the Chancellor and the Governor and the delayed timing of the release of .the minutes make it more difficult for the markets and the country to assess whether the decision on interest rates is right or wrong?
Lord Henley: My Lords, I would never be one to accuse my noble friend of being unsporting. I am grateful that he put down this Question on the day
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on which my right honourable friend the Chancellor of the Exchequer met the Governor of the Bank of England. No doubt the noble Lord will be looking forward to seeing the minutes of that meeting in six weeks' time. As regards the timing of making those minutes available, I believe that that is something which my noble friend Lord Mackay dealt with in response to a Question from the noble Lord, Lord Bruce of Donington, only last February when he said:
"The publication of the minutes of the monthly monetary meetings helps to increase accountability and improves the transparency of the policy process. As a result UK monetary policy has become one of the most open in the world. Earlier publication of the minutes would complicate the short-term conduct of policy".—[Official Report, 22/2/96; col. WA 84.]
Lord Dixon-Smith: My Lords, does my noble friend agree that neither bankers nor politicians have an absolutely unblemished record in this regard?
Lord Henley: My Lords, I suppose as a politician that I should be one of the first to agree with that remark. But one of the great advantages of politicians making those decisions is that they are accountable to both Houses of Parliament.
Lord Taverne: My Lords, is the noble Lord aware of the evidence that, viewed over a longer period, countries such as the United States and Germany, which have an independent central bank, on the whole have a rather better record, and in general a better record as regards inflation, than those countries which have been excessively influenced by political decisions?
Lord Henley: My Lords, if I may misquote Professor Joad, it depends very much on what is meant by the independence of those central banks. That was very much the point made by the noble Lord, Lord Stoddart of Swindon, earlier. The important point to remember is that our recent record on inflation is very good. The Government will not jeopardise that achievement. Further, it is important to remember that my right honourable friend the Chancellor of the Exchequer, who makes those decisions, is accountable to Parliament and therefore to the people.

Procedure of the House: Select Committee
3.27 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Select Committee on Procedure of the House be appointed and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees be named of the Committee:

L. Brabazon of Tara,

L. Brougham and Vaux,

L. Browne-Wilkinson,

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L. Chesham,

L. Clark of Kempston,

V. Cranborne (L. Privy Seal),

B. David,

L. Dean of Harptree,

E. Ferrers,

L. Gladwin of Clee,

L. Graham of Edmonton,

L. Harris of Greenwich,

L. Henley,

L. Hesketh,

L. Jenkins of Hillhead,

L. Lester of Herne Hill,

L. McIntosh of Haringey,

L. Mackay of Clashfern (Lord Chancellor),

L. Richard,

Ly. Saltoun of Abernethy,

B. Serota,

L. Strathclyde,

V. Tenby,

L. Tordoff,

L. Weatherill,

B. Young.—(The Chairman of Committees.)

On Question, Motion agreed to.

Privileges: Select Committee
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the Committee for Privileges be appointed and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees and any four Lords of Appeal be named of the Committee:

L. Allen of Abbeydale,

L. Campbell of Alloway,

L. Cledwyn of Penrhos,

V. Cranborne (L. Privy Seal),

L. Glenamara,

L. Graham of Edmonton,

L. Jenkins of Hillhead,

L. Mowbray and Stourton,

L. Nathan,

L. Richard,

L. Strabolgi,

L. Strathclyde,

L. Weatherill,

V. Whitelaw,

L. Wigoder;

That the Committee have power to appoint Sub-Committees and that such Sub-Committees have power to appoint their own Chairmen; and
That the Committee have power to co-opt any Lord for the purposes of serving on any Sub-Committee.— (The Chairman of Committees.)
On Question, Motion agreed to.

Address in Reply to her Majesty's Most Gracious Speech
3.28 p.m.
Debate resumed on the Motion moved on Wednesday last by Lord Gray of Contin—namely, That an humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament".
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I am delighted to open this debate on the last day of the debate on the humble Address, which is to be focused particularly, I understand, on industry and economic affairs. I am particularly glad to do so. In looking to see which noble Lords propose to contribute to this debate, I notice that in particular the noble Lord, Lord Healey, is in his place and may wish to contribute. I am sure that he will wish to celebrate with us the 20th anniversary of freedom from the last intervention and direction we had in a foreign fashion concerning our economy.
Our Government's objective, as my right honourable friend the President of the Board of Trade has said many times, is to set enterprise free. We are pursuing three clear priorities to achieve that; namely, promoting competition, championing free trade and sharpening the focus of the Government's relationship with business. As a result of our privatisation and liberalisation initiatives, competition is present to a greater degree than ever before. There is, for example, already strong competition in the United Kingdom in telecommunications and supplying larger users of gas and electricity. We are working towards opening the household energy market fully to competition in 1998. No one should be in any doubt that we shall press to hold to that target.
In the past year we have introduced competition into the supply of domestic gas. A pilot in the south-west of England has already delivered price cuts of some 20 per cent. to customers. We see no reason why they should enjoy that benefit exclusively and we want to extend it to the whole country. Indeed, it will be an advantage significantly greater than the 3 per cent. reduction in VAT which I understand that Mr. Gordon Brown now offers as a tax bribe.
The state-owned sector of industry has been reduced by about two-thirds since 1979. In the 1994–95 tax year, £2.6 billion in taxes was contributed by privatised companies which paid only £37 million in 1979—a 70-fold increase. I refer your Lordships to the OECD's recent report which praised our privatisation programme, saying:
"since privatisation, most of the utilities have achieved substantial improvements in productivity and consumers have benefited from large reductions in real prices as well as improved quality of services."

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Better performance, lower prices, better service—and the price reductions have indeed been remarkable—for example, BT's telecoms prices have fallen by 40 per cent. in real terms since 1984.
With the private finance initiative, the UK is once again in the forefront of public sector reform. The Government are moving from provider to purchaser of public services. The initiative is picking up speed, with ever more projects being set up. Indeed, earlier this month the Exchequer published a list showing that some £7,000 million-worth of deals are already agreed. That is the capital value. Earlier this month my right honourable friend the Chancellor of the Exchequer announced measures to streamline the processes involved so that the PFI will offer even more opportunities for business. The Minister responsible for local government, Mr. David Curry, has introduced major new flexibility into the way in which capital finance regulations apply to projects proposed by local authorities.
I know that my noble friend Lord Weir wishes to address your Lordships on this issue and we certainly take the CBI's point that we do not want to reinvent the wheel on every contract that is let under the initiative. That point has been taken on board and that is why something like two dozen or more standard conditions have now been set out, together with guidelines stating what might be applicable where there are transfers of investments in PFI projects.
However, we are not looking only at what we do at home, but at what we do in the world. As a traditional trading nation, free trade is particularly vital to the UK. With only 1 per cent. of the world's population, the United Kingdom is the world's fifth largest trading nation. We export more per head than either the United States or Japan. Our exports of goods and services represent around a third of our national income.
We thus have very good reason to press ahead with efforts to remove remaining barriers to trade. The President of the Board of Trade has outlined his vision of Britain at the forefront of the drive to further trade liberalisation, just as we were at the forefront of the drive to establish the European single market, in which my noble friend Lord Cockfield played such a prominent part.
The President of the Board of Trade has advocated a three-stage approach. First, the ministerial meeting of the World Trade Organisation, which will take place in December this year in Singapore, should agree a comprehensive work programme of further trade liberalisation. We have identified a number of key areas including standards and technical regulations, government procurement, tariffs, and customs procedures. We shall also be pressing for an agreement to eliminate tariffs in the information technology sector, and for completion of negotiations outstanding from the Uruguay Round for the liberalisation of trade in services, in particular telecommunications services. Secondly, a new round of multilateral negotiations within the World Trade Organisation should be launched before the end of this decade to be concluded early in the next century. Thirdly, countries should
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commit themselves to the target of achieving global free trade by 2020. We believe these steps will increase the level of absolute trade and help to raise living standards. A 2020 vision for the achievement of global free trade is meaningful, realistic and challenging. We are not simply interested in the grand gesture of that vision; we have a commitment to undertake the painstaking, detailed work that will be necessary if it is to be achieved.
In championing competition and free trade, we are also determined to sharpen the focus of our support to help business help itself. In each of the past three years the Government have published a White Paper on competitiveness which has benchmarked our competitive position. In the DTI, our key themes have been encouraging greater interaction between the science base and industry, deregulation, small firms, and partnership between government and business. On science, we launched the Technology Foresight exercise. The Foresight Challenge is giving this real muscle. We have awarded £30 million to the successful entrants, which is attracting more than twice as much investment from the private sector. In information technology, we set up the Information Society Initiative and we shall shortly be launching a major new initiative to increase general public awareness of the everyday benefits and uses of the new technologies and to facilitate access to them.
To set enterprise free the Government have also worked to free business of unnecessary restrictions and red tape. We have now amended or repealed over 750 pieces of burdensome legislation. That has resulted in businesses being saved millions of pounds annually.
However, beyond the elimination of those burdensome pieces of legislation, any business will tell you that the way in which regulations are enforced can be just as important as what they say. That is why we are introducing new rights for business: a right to clear explanations of enforcement action, an opportunity for business to put its point of view before any enforcement action takes place, and a right of appeal. In March we completed the most thorough consultation exercise ever with the small business sector through a series of 12 conferences across the country.
As I have said, that was the most complete and the most thorough of consultation exercises, but I notice that Mrs. Margaret Beckett in her foreword to Vision for Growth makes exactly the same claim. She said:
"This document represents the latest stage in one of the most comprehensive consultations with business and industry which has ever been undertaken by any political party in this country".
I have no doubt that the Labour Party consulted the CBI in Scotland, but when the CBI in Scotland had the temerity to say that it did not believe that the devolution proposals for Scotland would do anything for business, it got its knuckles rapped. I have no doubt that the Labour Party also communicated with and consulted the CBI in the rest of the United Kingdom. Its manifesto, published in July, stated:
"Business opposes a minimum wage which would undermine flexibility and is a poor way to tackle poverty".
On the Social Chapter, the CBI said that Britain's opt-out should remain and the Social Chapter was a vehicle by which greater rigidity and cost should be

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imposed. The CBI should have learned from its colleagues in Scotland because it too got its knuckles rapped for its temerity in suggesting that it did not know the way in which jobs and businesses would prosper in the United Kingdom.
Earlier in the month my right honourable friend the President of the Board of Trade announced a radical new approach to, and simplification of, the Government's support services for business. To sharpen the customer focus of those services, we will delegate design and delivery away from Whitehall to business-led partnerships, such as Business Links and trade associations. To that end, the President launched two new Challenge competitions offering funding for the most imaginative and customer-focused projects to help smaller firms. He also announced a major streamlining of centrally organised business support schemes. Before we began we had something like 140 such schemes. They have now been reduced in number to 25. We are committed to involving business and business support organisations much more in the development of that restricted number of schemes.
Business Links will play a key role in the new arrangements for business support. Following the discussion we had on this matter last year, I am pleased to be able to report that Business Links now covers about 99 per cent. of England's SMEs. It has been very successful. Something like 8,200 businesses use Business Links every week. Business told us that it wanted simpler, more accessible and better tailored support. Our approach delivers just that. It could not contrast more sharply with that set out in the document to which I have referred.
Not only are we debating the humble Address but there is an amendment in the name of the noble Lord, Lord Peston. Part of that amendment is an expression of regret at the failure of Her Majesty's Government to preserve the country's reputation abroad. I say to my noble and learned friend Lord Howe of Aberavon that he should plead guilty to that charge. When he took over as Chancellor of the Exchequer in 1979 Britain had only one reputation abroad: as the sick man of Europe. I invite my noble and learned friend to plead guilty to that charge in view of the massive adjustment to that reputation that has occurred. Both the IMF and the OECD have recently reported on our macro-economic performance. Both forecast that the UK will grow faster than any other major EU economy this year and next. The OECD has referred to our good employment record compared with many continental European countries and said that,
"policy in the last three years has provided a sound foundation for sustained economic recovery".
The IMF has said that the United Kingdom's
"recent economic performance has been enviable".
I do not believe that we have done anything but significantly improve the reputation of our country abroad, and those quotations prove it. The economy is now in its fifth year of sustained growth and has enjoyed the strongest, longest and steadiest recovery of any major EU country. Underlying inflation has been below
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4 per cent. for four years, which is the best inflation performance for almost half a century. Unemployment has fallen by over 900,000 since the start of the labour market recovery, and the rate of unemployment is the lowest in any major EU country. The growth in manufacturing productivity has been the highest in any EU country since 1980. I could go on. Mortgage rates are at their lowest level for 30 years. The number of working days lost has gone from an average of 12.9 million a year to 0.4 million in 1995. I believe I have said enough to show that we have the most favourable macro-economic conditions for a generation. That is our reputation abroad—so much so that Mr. Jan Timmer, president of Philips, has said that Britain is, quite simply,
"the most competitive country in Europe".
The Opposition may refuse to be convinced in spite of those unsolicited testimonials from Europe. In particular, they have tried to talk down our investment record. Contrary to popular opinion, business investment in the UK compares well with that of our major competitors. Since 1979 business investment has risen by a third, and that is a higher proportion of GDP than in France, Germany, Italy and the United States. What is more, overseas investors recognise our achievements in the most practical way. Traditionally, the UK is one of the world's leading recipients of overseas investment. We are the number one location for Japanese, US and Korean investment in the European Union. Not only has that created and safeguarded approximately 8,000 jobs but it has developed and modernised our industrial base, increased output, introduced new products and processes and brought in new technology and management processes.
Last year I focused particularly on the massive inward investment by Siemens in Tyneside. Since then that record has been broken not once but three times: first, by Chunghwa in Lanarkshire; secondly, by the Korean company LG which has announced its intention to locate a £1.6 billion high-tech manufacturing plant near Newport in South Wales; and, thirdly and most recently, by Hyundai, another Korean company, which has announced Europe's largest ever inward investment of £2.4 billion in a semi-conductor project in Fife that will create 2,000 new jobs. I hope that some of those who talked about the demise of Ravenscraig and Rosyth will feel a black burning shame in the morale-sapping gloom with which they predicted the future for both places. Both Lanarkshire and South Fife are well on course to have the most modern parts of the economy in the United Kingdom. It did them no good as they sought to recover to be told that they had no prospects of ever being successful.
We are now doing extremely well. One of our competitive advantages is the high level of social costs in other countries compared with our own. In the United Kingdom, for every £100 spent on wages an employer has to spend an extra £18 for non-wage costs. The same employer would have to add £32 in Germany, £34 in Spain, £41 in France and £44 in Italy. No wonder Chunghwa, LG, Hyundai and others wish to locate in

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the United Kingdom. I do not have to search for further quotations but merely look to inward investment as the best verdict on our reputation abroad.
The Government are creating in the United Kingdom the enterprise centre of Europe. The UK was indeed once the sick man of Europe but is now the most competitive country in Europe. We have nothing whatever to be ashamed of in the way that we have conducted the economy. Indeed, what has been said by others accurately reflects where we stand in the world. What is contained in the amendment is a complete misdescription of all that has been achieved in the past 17 years.
3.46 p.m.
Lord Peston Lord Peston rose to move, as an amendment to the above Motion, at the end of the Address to insert ("but regret the failure of Your Majesty's Government to manage the nation's affairs in a manner which preserves social cohesion and integrity within the United Kingdom and the country's reputation abroad.")
The noble Lord said: My Lords, in thanking the noble and learned Lord for introducing this part of the debate, I begin by drawing your Lordships' attention to the exact wording of the amendment. I emphasise that I do not regard this as a Motion of no confidence. That does not mean that I have any confidence in the Government, but I do not believe that it is right on virtually any occasion for your Lordships to debate a matter of confidence. It is much more a matter for the other place. I believe that the Minister has put his finger on it. The amendment is an expression of regret concerning the conduct of the nation's affairs by Her Majesty's Government, which implies that they ought to do better. It goes further than that—this ought to encourage noble Lords opposite—because it implies that in the past few months they could have done better. Whether or not they will is another matter.
Before I get down to the main business, one of my pleasant duties is to welcome my noble friend Lord Currie to today's deliberations. I helped to introduce him yesterday and today he makes his maiden speech. He is an economist of outstanding merit. I can say that with great confidence since I gave him his first academic post at Queen Mary College. I should like to comment on the astonishing quality of the speakers in today's debate: three chancellors of the exchequer; three commissioners; two chief secretaries; one financial secretary; and (above all) three professors of economics. They have one thing in common: all of them are life Peers. I should like to reiterate by way of an apology the introductory remarks of my noble friend Lord Williams of Elvel. There are so many topics to be covered today that I shall be able to choose only a few of them. I am afraid that what I have to say will be disjointed and I shall jump from topic to topic. It is impossible to put the whole matter together.
I advert immediately to a pledge in the gracious Speech to double living standards in the next 25 years. Whether this is meant to refer to real personal disposable income or, more correctly, to real national income, it represents a target significantly better than
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the Government's actual record since it came to power. The relevant comparison between 1979 and 1995 is a 2.4 per cent. annual growth in personal disposable income, and 2.1 per cent. for GDP, but that target implies a growth rate of 2.8 per cent. for the next 25 years. It almost looks as if the Treasury, which is unwilling to discuss the serious economic problems confronting our country, but which was desperate to put something in the Queen's Speech, looked on its shelf of forgotten pledges and dusted that one down. Looking around, some noble Lords will be old enough to remember the last time that promise was made.
Forgotten pledges or not, one of the important points is that the present incumbents will be long gone when the eventual pledge is put to the test. Of course another view is that, with the expected change of government, this gracious Speech merely anticipates the likely achievements of my honourable friend the Shadow Chancellor of the Exchequer. He is much more likely to achieve something like that than his predecessors.
Perhaps I may also draw noble Lords' attention to the fact that nowhere in the gracious Speech, having talked about that growth figure, is there a word about giving any priority to those in most need in our community when it comes to distributing the fruits of growth. No doubt we shall have a debate on the economy following the Budget. I do not want to anticipate what noble Lords will say then, but there is a matter that I must emphasise today. If we look at the Government's record, the most astonishing part of it is that since 1979 this Government's accumulated financial deficit amounts to £260 billion£260 billion of expenditure in excess of revenue. Total government debt interest has risen from £8.8 billion in 1979 to £25.8 billion today.
The gracious Speech refers to the target of budget balance in the medium term, but not now. All I can say today is that the present fiscal position is not sustainable. I do not believe that the present Chancellor will be allowed to do anything about that this side of a general election, but someone, some day, will have to face fiscal reality.
Of course, I could go further and suggest that fiscal prudence—Gladstonian principles if one likes—implies that the years of profligacy (of deficit) should not be followed by budget balance; they need really to be followed by budget surplus in order to reduce the national debt in ways other than by massive inflation.
On public expenditure, I have no doubt that my right honourable friend the Shadow Chancellor is right to stress that pledges cannot be made ahead of a serious assessment of the fiscal position, and that resources used in one place will be at the expense of those used elsewhere, either in the public sector or the private sector. But that is not to make this Government's mistake that resources do not matter. I would be willing to believe that if noble Lords opposite would explain to me why resources do matter in private medicine that they buy for themselves and private schools to which they send their children or attended themselves. When they accept long waiting lists for treatment, leaking roofs, shortage of textbooks and large class sizes in schools to which their children go, I will accept that these things do not matter in the state system.
While I am on the subject of education, perhaps I may ask noble Lords opposite whether they were at their party conference and listened to their right honourable friend the Prime Minister on the subject of education. I heard him. I was quite frankly astonished. I went immediately to my favourite reading, Dod's Parliamentary Companion. Over half of all Tory hereditary Peers went to one public school, and another six public schools account for pretty well all the rest. Clearly, the Prime Minister did not know that, and no matter how many great state schools we have, and we do, none of them appears to have been good enough for noble Lords opposite or, I suppose, for their children. When we talk about integrity and cohesion in our society, that is what we have in mind.
In his fascinating speech yesterday, the noble Earl, Lord Ferrers, talked about the hereditaries as an endangered species. He was certainly right about that. The Prime Minister was adding insult to injury. It is all very well for nasty state schoolboys like me to rough up the public school boys on the other side, but the Prime Minister should be much more sensitive.
In this general area there is another remark which I wish to make which I think in this case will be met with general agreement. I wish to praise the British winners of the Nobel Prize in this centenary year. In both cases the prize is richly deserved. Professor Merilees is a distinguished economist. His contributions have been first class, if technically rather difficult. It is not for me to push the significance of economics per se but it is a remarkable tribute to the strength of the subject in our country that we have won the prize some half a dozen times.
But that is nothing compared to the extraordinary achievements in chemistry. Sir Harry Kroto, a distinguished member of the Royal Society of Chemistry, is the latest in a long line of quite brilliant contributors to that subject. Indeed I speak with pride. We have one Nobel Prize winner who I am afraid is not in his seat at the moment: the noble Lord, Lord Porter, also won the Nobel Prize. He won it 29 years ago. I have to say that despite vulgar voices to the contrary that we occasionally hear, I remain convinced that if we are to have a successful future at all a science base, especially in higher education, is an essential ingredient.
I suppose the most extraordinary expression in the gracious Speech is:
"My Government will continue with firm financial policies".
"Continue" means, having started, will carry on the same way. When have the Government pursued firm financial policies? Possibly for a year or two in the mid to late 1980s. Other than that, profligacy with a view to electoral advantage has been the watchword. I fear that they have learnt nothing and will continue to fritter away the nation's precious assets.
While we are on the subject of consistency, it is difficult to find any set of principles that marry up the contributions of the three Chancellors of the Exchequer, the noble and learned Lord, Lord Howe, who I am delighted to see in his place, the noble Lord, Lord Lawson, and Mr. Clarke, except possibly pragmatism.
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I have read the quite excellent volumes of memoirs of the first two. They seem to have little in common with each other, let alone with the current incumbent of the post (whose memoirs I look forward to reading next year) and they are all disconnected from that other great work of recollection—the memoirs of the noble Baroness, Lady Thatcher.
What we have been privileged to observe over this period is the rise and fall of monetarism in all its forms, and the complete intellectual triumph of what I will call sophisticated Keynesianism, by which I mean the economic doctrine in which Keynes himself believed.
I exaggerate slightly, because EMU, as narrowly formulated, is monetarist in conception, but it is apparent that in reality were EMU actually to take place it would have to be accompanied by joint or co-ordinated macro-economic policy by the individual members of the Union.
One word that is missing from the gracious Speech is "employment". One phrase that is missing is "full employment". Speaking as a voice from yesteryear, neither the word nor the phrase troubles me. I remain convinced that the full employment objective is a correct one for economic policy and is attainable. I believe, a fortiori, that many of our problems of excessive public expenditure and too low a flow of tax revenue derive from the persistence of unemployment. And above all, since I stand second to no one in insisting that people should and actually do want to fend for themselves (self help is the old phrase) there is a duty of government to create an economic climate in which jobs are available and workers are trained to a level of productivity that enables them to take those jobs and to be paid a decent wage. I do not say that all the social and moral problems that dominate current debates are caused by failures on the side of industry and the economy, but I do believe that unemployment is one of the causes.
I hope that noble Lords will allow me to digress briefly to make two technical points, one of which is acutely embarrassing. The first is to reiterate what I have noted before. Certainly the inflation rate has come down, but interest rates have fallen less, so that real interest rates remain high—too high in my judgment. If the economy is to move on to a higher sustainable growth rate, real interest rates need to fall. I wrote that last week. I assume that the Chancellor was out to annoy his noble friend Lord Tebbit with today's announcement of raising interest rates. He clearly did not have me in mind. But I felt on grounds of honesty that your Lordships would rather I said what I originally wrote than weaselled and pretended that nothing has happened. I believe that interest rates are too high.
My own researches, for what they are worth, suggest that the economy is in a position where we may safely set much more optimistic employment targets. I do not suggest that the full employment rate of between 1.5 per cent. and 2.5 per cent. which existed in the 1960s is attainable, but I am coming to the view that a target nearer 4 per cent. is worth talking about. Perhaps in reply the Minister will inform us of his current advice on that highly contentious topic.
I noted the remark in the gracious Speech about deregulation and regulations, and the Minister commented on that. I wonder whether during the lifetime of the Government business overall is less regulated. The Minister referred more to the quality rather than the quantity but I wonder about that matter. The Government talk about the regulations that they remove, but what about the new regulations that they impose? What evidence is there about the net position? Noble Lords will recall that when we debated the Deregulation and Contracting Out Bill the noble Lord, Lord Rodgers of Quarry Bank, made the most sensible suggestion that there should be an annual debate on deregulation based either on some legislative proposal or on a White Paper. I still believe that that is a good idea and I commend it to your Lordships as one that we are especially well placed to debate.
The topic which dominates the media today is the struggle for the moral high ground. We are told that the leaders of all our political parties are jostling for position and why it may turn out to be a dangerous peak. I do not usually trouble your Lordships with my views on such matters—not because I regard them as unimportant, but because I find them extremely difficult. I prefer to leave them to those Members of your Lordships' House who find them simple and can speak on moral matters forthrightly and with no doubts whatever. That is my usual position.
However, in the light of the gracious Speech and the amendment standing in my name, I am moved to make a few remarks. My chief remark is that, merely because in our debates on the economy in all its forms we do not usually mention ethical questions, it does not follow that industry, trade and finance are morally free zones. Quite the contrary; ethical principles depend for their validity on universality. Therefore, those who ill-treat their fellows as employees by offering low pay and insecure working conditions cannot expect absolution on the grounds that business is business.
That is also true of the firms which in their advertising or in the small print of their terms of sale mislead consumers. Caveat emptor is good advice; but it is not a moral principle. The point of course holds for insider trading and related financial malpractice. There is more to morality than not being found out and not being proved guilty in a court of law. In that connection, can we be told how the help line of the Secretary of State for Social Security is working with respect to employers? It is widely believed that many employers connive at benefit fraud by telling their employees that they must supplement their low hourly wages by making fraudulent claims. Can we be told something about that?
One part of Government policy which I wish strongly to support is its desire to help rural communities by making life a little easier for local enterprises, notably shops. That must be right. But I must add that I am a trifle cynical of those who shed crocodile tears for their village shop while at the same time doing the bulk of their shopping at the hypermarket on the main road. If one wants the local shop to survive for both convenience and the desirability of the survival of the local community there is a price to be paid. Good intentions do not pay wages; actual purchases do.
Perhaps I may refer to the high speed rail link, with which your Lordships will be dealing tomorrow. I hope that I shall not be accused of naive patriotism when I mention how upset I become when I travel on the excellent Eurostar service as it chunters slowly through Kent only to display its full potential in France. Therefore, I strongly support the Bill and I strongly support the link. But I must add that I hope that when it comes to the purchase of land—I can make my comments totally objectively because I have no interest to declare—the landowners will be dealt with fairly. Bearing in mind Crichel Down, I hope that only minimum necessary land required to build the link will be purchased and no more. The promoters of the Bill should not be in a position to make profits from land speculation incidental to their real activity. How confident are the Government that the high speed rail link can be financed? What will be the true scale of public-sector support, both explicit and implicit?
My last rag-bag topic relates to the National Lottery which, I gather, is to have a second draw mid week. Presumably the company have pressed for that because it seeks to increase its turnover and its already excessive profits. I suppose that the Government acquiesce because it is a useful source of taxation in the ordinary sense and a form of hypothecated taxation to fund so-called good causes. I say "so-called" because in my judgment much of the money is being misspent, but I can save my grumpy views on that for another day. All I wish to argue is that little of real net value is created by the lottery. Many other activities—some in betting and gaming but, more importantly, in charities—will be hard hit by the second draw. I wonder whether the Government have thought the matter through and will in due course allow us to have some appropriate detailed statistical information on the new development.
As I come to my concluding remarks, I refer again to the interesting speech of the noble Earl, Lord Ferrers, yesterday. He reminded us of the world population explosion. Our own country, the population of which is hardly growing at all, appears tiny in that context. But tiny is not the same as insignificant. Thus, although the remarks made by the noble Earl yesterday were potentially depressing, especially when we contemplate the world which our children and grandchildren are entering, I refuse to be depressed. My reason is that, despite our problems, despite our hostile environment and despite our political agreements (they are not to be underestimated), what we have not lost is our native genius. By that I do not mean triumph in adversity—the Dunkirk spirit and all that. What our fathers and grandfathers did was marvellous, but we should never have been in that position in the first place. My view is that we have a nation crying out for new bearings and great leadership.
There is tremendous capacity for good in all our people, and I emphasise the word "all". Three million people unemployed and unable to contribute productively is not tolerable. Many men and women retired earlier than they would have wished and, again on ageist grounds, not being allowed to contribute is not tolerable. Many young people not being able to start out in life as workers is not tolerable.
Twenty years ago that was common ground between all of us and it must become common ground again. Our first priority must be to end that defeatism, especially on employment. A second is to end the defeatism which says that we can be competitive only by paying low wages and continually devaluing sterling rather than raising productivity. Third and finally, we must end the defeatism that says we are so poor that we cannot give those in need a decent life. We on this side are not defeatist. I hope that what I have said today will have persuaded noble Lords opposite that they need not be defeatist either. I beg to move.
Moved, That as an amendment to the above motion, at the end of the Address to insert ("but regret the failure of Your Majesty's Government to manage the nation's affairs in a manner which preserves social cohesion and integrity within the United Kingdom and the country's reputation abroad.").—(Lord Peston.)
4.8 p.m.
Lord Ezra: My Lords, as the noble Lord, Lord Peston, indicated in his wide-ranging speech, the issues of economic policy will again come before us when we move towards the Budget. Nevertheless, this is an occasion when appropriately we can raise some major issues of economic policy which we can discuss more fully on a later occasion when we are more aware of the Government's intentions.
The noble and learned Lord, Lord Fraser of Carmyllie, in the latter part of his speech rose to oratorical heights in referring to the Government's great economic achievements. I see his colleagues nodding in support. But of course, that is par for the course. I can remember on every one of these occasions for the past 14 or so years in which I have had the honour and privilege to be in your Lordships' House, that whoever occupied the eminent position of the noble and learned Lord, Lord Fraser, has said almost the same thing, no matter what has happened thereafter. They have said that government policies have been absolutely correct and they intended to continue to pursue them.
We are told, and no doubt the noble Viscount, the Leader of the House, will tell us when he winds up the debate, that the Government have achieved a situation in which we have a growing economy with low inflation; we have reducing unemployment; we have increased consumer spending, increasing house prices and everything is going positively. We are told that the Government will continue the mixture as before and when the time comes, and the Chancellor is willing, they will reduce taxes. That seems to be the message.
Let us, however, look at one or two issues which are hidden behind that very positive statement. The fact that the Chancellor has chosen the present time to increase interest rates suggests that he too is becoming rather worried about the way in which the economy is going and is taking a small step to try to restrain it.
The first issue which we should bear in mind is that it is potentially dangerous that we should be basing growth in the economy on increasing consumption and rising house prices. Obviously, from the point of view
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of creating a feel-good factor, those are very desirable achievements. But from the point of view of a sustained economy, I doubt it. Indeed, in advance of all recent elections, we have lived through a situation in which consumer spending has been stimulated. Certainly on at least one such occasion in living memory, it was stimulated so much that it led to one of the worst subsequent recessions which we have endured since the war. Therefore, that must be watched with great care.
One cannot help being concerned with the difference between what is happening here, with growth being fuelled by consumer spending, and what is happening in the United States where for three years running there have been record levels of investment. There is not the slightest doubt that the way in which the economy of the United States is being stimulated, no doubt also in advance of the election, is a much sounder basis than what is occurring here.
In spite of what the noble and learned Lord, Lord Fraser, said, the fact is that our level of investment generally in the private sector has been lagging behind that of our competitors. It may have increased at a higher rate in recent years, but it is lagging behind and in the case of the manufacturing industry, investment actually fell last year, far from rising at the dizzy rates which the Minister mentioned.
I heard the economic director of the CBI at lunchtime today commenting on the action taken by the Chancellor and expressing some slight surprise because she said that manufacturing activity, while it had recovered somewhat in Britain, was still fairly sluggish. Therefore, we have a situation in which this growth, which we all want to see, is based on the stimulus of consumer spending rather than on the more virtuous aspect of high investment.
It is not only the private sector but also the public sector in which investment has fallen substantially. One has only to look at the Red Book to see the way in which the Government have already slashed, and intend further to slash, public investment. In the period 1992–93 and 1998–99, public capital investment will have fallen by 25 per cent. on the Government's own figures.
The private finance initiative, to which the noble and learned Lord referred, was, I should remind your Lordships, introduced originally to increase the amount of investment in the public sector. It has now been used exclusively to replace the reductions which the Government are introducing and the extent to which public investment has fallen far exceeds the amount to which the PFI has come in to redress the balance.
The noble and learned Lord referred to the fact that £7 billion is reported to have been committed over a number of years. The Treasury's original estimate, when it introduced its savage cuts in public investment, was double that; it was £14 billion. I remind your Lordships that of the £7 billion, £3 billion is for the cross-Channel rail link to which the noble Lord, Lord Peston, referred. Surely that is quite exceptional and a one-off. We cannot expect cross-Channel rail links to be invested in every year ahead. Therefore, we have about £4 billion of

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continuing investment as a result of the PFI in order to compensate for a much greater amount of reduction in the publicly funded investment.
The noble and learned Lord, Lord Fraser, referred to the fact that there have been many problems with the PFI. It has been administered in an excessively bureaucratic manner; there have been long delays; tendering has been very costly; and it has had a seriously harmful effect on companies' balance sheets because they have had to raise the money to put into those projects. As the noble and learned Lord rightly said, that was addressed at a major conference convened by the Chancellor on 22nd October. All those issues were aired and debated openly and the Chancellor gave an assurance that they would be put right. We shall have to see. At least some action has been taken.
I turn to the question of unemployment and in particular, employment. While unemployment continues to fall—and that is highly desirable—there are still 2 million unemployed, which everyone agrees is far too high, and 900,000 of those 2 million are long-term unemployed; that is, unemployed for a year or more.
What is a particularly puzzling aspect of the present situation is that the employment figures are rising at a substantially lower rate than the unemployment figures are falling. Therefore, we must ask how that difference is to be explained. I have read a number of articles on the subject and the view which is gradually being formed is that there is an explanation in the process of what is now known as "down-sizing". That word is a rather regrettable import from the United States. Hardly a day passes when a firm does not announce that it is to reduce its labour force by substantial numbers, that it is going to down-size, in order to improve its efficiency.
The people who are down-sized are generally the older people. I am afraid that in that context, "older"— and this may surprise some of your Lordships—means people of the age of 40 and above. It is those relatively older people who are being down-sized.
The impression is that those down-sized older people are not going onto the unemployment register. They are deciding that that is it; it is very difficult to get another job; and they will retire at that relatively early age. Therefore, that goes some way towards explaining the figures. If that is true, it is very unsettling. We have a whole range of people there with excellent experience who are anxious to work but are being put off looking for jobs and not getting onto the unemployment register. Therefore, there is that apparent anomaly. That is a serious problem which I hope the noble Viscount the Leader of the House will address when he speaks to us later.
Perhaps the most serious aspect of the general economic and financial situation of the country is what is happening to the PSBR, to which reference has already been made. Although taxes were substantially raised in the early years of this Government, tax revenues, much to the surprise of the Treasury, have substantially fallen. That applies particularly to VAT. That, among others, is the reason why, despite all the forecasts that the Treasury made about the level of the PSBR, in the end that level has been much higher than it indicated.
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While talking about tax revenues, I should point out that at present about £18 billion less is being obtained from taxes than was estimated by the Treasury in November 1994. For 1997–98 the Treasury expects the PSBR to be of the order of £23 billion which in fact has to be compared with the £5 billion which it anticipated in 1994. Nevertheless, the Treasury has now decided that it will be £23 billion. However, looking carefully at what the CBI has written on the subject, it appears that the confederation thinks that that is optimistic and that we could well end up with a PSBR next year roughly at this year's level; namely, some £28 billion. If that is what an objective assessment leads one to suppose, it means that when we come to this Budget the Chancellor of the Exchequer will have exceedingly little room for manoeuvre. It will be surprising if he can do very much, if anything, at that time. One of the things that the Government might do is to say, "Let's not have a Budget; let's leave things as they are. They are going extremely well anyway, what's the point of tinkering with it?" They may say that in the knowledge that if they did have a Budget they would be able to do very little in any event. That is a suggestion that I make without attempting in any way to lead the Government into doing things that they do not want to do.
Looking further ahead to the situation after the election, whatever Government are then in power will have to face up to the fact that, as is usual in such post-election situations, they will have to introduce a number of restrictive measures. That has been widely forecast by economists. This was referred to by the noble Lord, Lord Peston, and I could also pray in aid the economists of Natwest, with whom the noble Lord, Lord Boardman, was closely connected, who have been saying for some time that the expectation is that restrictive policies will be pursued after the election and that such action would in fact damp down the level of growth. A number of measures would then have to be introduced, by whatever government is in power, to get the economy on the right path.
If we were not facing election year, I believe that the Chancellor of the Exchequer, having given us a very small foretaste of what he is tempted to do to correct the economy, would be taking much stricter measures. In fact he will not be able to do so for obvious reasons. That could come later. We face a period of difficulty. If we are to retain and keep on achieving the basic objective to which we all subscribe of having growth with low inflation and having more people at work, then great care must be taken as to how the levers of economic power are exerted.
I return to the point that I made at the beginning of my remarks. It is particularly unfortunate that, once again, we have growth in the economy fuelled by increased consumer spending. How much better it would have been if we could have said—and, indeed, if the noble and learned Lord, Lord Fraser of Carmyllie, could have said—that we take pride in the fact that the basic reason for the growth in Britain is the very high level of investment, both public and private. Unfortunately that was something he was unable to say. We must hope that some future government will achieve that aim.
4.23 p.m.
Lord Craig of Radley: My Lords, much has been made in recent years about improving our ability to spot wealth creating technologies which can be exploited to the benefit of our country. We have seen the successful launch of government-led initiatives such as Realising our Potential; the technology foresight panels; and, more recently, the Information Society Initiative for small businesses.
I had hoped that there might have been some reference to the way ahead for the Information Society in the gracious Speech. Information technology is going to have a major impact on the future and on how government is organised and managed. A chance to give those issues greater visibility may have been missed because other topics demanded too much space in the gracious Speech. I hope that it will not be missed out next time.
Sixty-seven years ago, a world-beating technology was hit upon by a young Englishman, scarcely into his twenties. His ideas were immediately, and widely, judged by his elders and betters to be impracticable, and no more than a foolish young man's dream, even though the theory of what he was proposing seemed sound enough. It was only that young man's persistence, his prolonged and utter determination to demonstrate the practical results of his ideas which won through. Against enormous indifference and an almost total lack of financial and other backing, he eventually succeeded. Many others would have given up and accepted defeat. He did not. In 1930 he patented his ideas, but for the next six years there was no industrial or government interest in the patent and no financial support for further research or development.
When the patent came up for review in 1935, that young man was unable to find even the £5 needed to renew it. By then others began to see sense in his ideas, and after further trials and tribulations the ideas were turned into reality. The reality was the jet engine; the young man was Frank Whittle. Sir Frank died last August, aged 89. It is fitting to pay tribute to his unique technical achievement, and to his determination.
That determination was not confined solely to his invention but almost more to becoming a member of the Royal Air Force, a service which he greatly admired and loved throughout his life. There will not be a Member of your Lordships' House who has not been propelled through the air by a jet engine. Some of us have been fortunate enough to be at the controls of aircraft powered by jets. What a unique technological achievement, one of the most far-reaching of this century, from which so much of mankind has benefited and will continue to benefit. But it was realised through the unique combination of inventive genius and determination. Today's inventors need the same degree of determination if they are to succeed and if the country is to benefit from their discoveries. Determination as much as technology foresight panels is required for success.
During one of the celebratory dinners marking Sir Frank's 80th birthday, I was sitting next to him. In the course of a fascinating and wide-ranging discussion
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I asked him whether he thought that there was another invention in the offing which could match in the 21st century the worldwide impact of his own development of the jet engine. I asked him, "What should a young inventor, aspiring to succeed today as you, Sir Frank, did half a century ago, be working on?". With almost no hesitation he said that he thought that it would be in the field of telepathy. He described what he meant by talking about the movement of a flock of starlings or a shoal of fish which change direction without any apparent follow-my-leader or other signal. All turn as one and move off in a new direction. His idea was that there was something, he called it telepathy, which allowed the birds or the fish to communicate or react in this unique way. It was something which one day mankind would master for its own use.
If Sir Frank was right to suggest that the next most remarkable breakthrough is going to be in the field of communication, I rather fear that the technology of telecommunication is in danger of outstripping our ability to master it and make it our servant. We need even more visible leads than we have at present and better explanations as to how the technology is going to help us all. Some proposals are contained in the latest report of the Science and Technology Select Committee on the information society. We await the Government's formal response to that report. However, I understand that the Government intend to produce a Green Paper next month which I hope will address some of the ideas contained in that report.
What is already clear is that there are technologies around that will have profound effects on the ways in which government and citizens interact. The concept of separate departmental responsibilities as the tidy and bureaucratic way of allocating and managing activities of direct interest to the citizen may well prove to be awkward and cumbersome for the individual as we move into the electronic age. I chaired a Select Committee on the decommissioning of oil and gas installations and I found it interesting that we were dealing with one government department, the DTI, as the lead department for government. The relevant Act was of course overseen by them, but they were co-ordinating the views of a raft of other departments, ranging from defence, the environment and the Foreign Office to transport, MAFF, the Scottish Office and of course the Treasury. Therefore the DTI was in effect providing a form of one stop shop to handle our inquiries. Contrast that with the way that we were provided with evidence for the Information Society Report. We were confronted by a whole range of government departments and agencies, each giving evidence covering its own particular and at times insular interests and involvement with IT. In all we took evidence from no fewer than 10 of them. John Citizen in front of his PC will soon be pressing government for more one stop shops to meet his particular needs.
Unlike the other place, the inquiries of some Select Committees in your Lordships' House do not track the activities and responsibilities of single government departments. I think that that is entirely right. However, I believe that there will be major changes in the way that government do their business with the citizen as the

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latter becomes more and more plugged into the electronic age. Over 6,000 individuals used their PCs to access the Select Committee report on the Information Society in the first fortnight after its publication on the Internet. Incidentally that was the first report of either House to be made available to the public electronically.
Government must be seen to be embracing this new technology openly and to be giving it visibility and impetus throughout the government service. I hope that the noble Viscount will be able to confirm that the Green Paper to be produced next month will be published on the Internet. No doubt there will be hurdles to cross because of ignorance, because familiar practices must be changed and adapted and because departmental responsibilities must be remodelled. Strong leadership and widespread dissemination of what is afoot will be called for. Even the organisation of government at the highest level of Cabinet and Cabinet Committees may be swept up in the changes.
There is a good book on the subject with an appropriate title: Unpredictable Certainty. The information revolution is that certainty. It is going to impact on all that we do and make and invent; on how we educate and on how we provide medical care; how we pay for goods and services; how government collect taxes, and much more. It is already proving to be transdepartmental. I hope that when the noble Viscount replies to the debate he will have a moment to say how he sees government responding—as I believe that they must—to this 21st century parallel with the impact of a Whittle jet engine.
I find it difficult in the debates on the gracious Speech to identify the appropriate day on which to raise some of these issues. None of the groupings set aside for each day of the debate quite fits. However, I hope that the overarching value to wealth creation which the information age is leading us towards falls as naturally into the topic of industry and economic affairs as any other—if not, I crave your Lordships' indulgence. I was in any case tempted to raise these issues today when the noble Viscount the Lord Privy Seal, who is chairman of the Ministerial Committee on Information Technology, is responding for the Government.
4.35 p.m.
Lord Howe of Aberavon: My Lords, one of the attractive features of your Lordships' House to which one gradually becomes accustomed is the way in which in a debate such as this a speaker of the distinction of the noble and gallant Lord, Lord Craig of Radley, is able to judge sensitively how to manage the rules of order of the House, if any, and to raise a topic as fascinating as he has done from which we have all learnt a great deal. I join him—as everyone would—in paying tribute to the memory of Sir Frank Whittle. However, I was interested in the noble and gallant Lord's confident description of his own ability to handle the controls of a jet engine. I am sure I speak for many others in the House when I say that such a prospect would absolutely terrify me.
However, one must acknowledge that the task of handling the controls of a jet engine is a great deal easier than was the task of at least half a dozen Members of
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the House—three of whom are present at the moment—of controlling the economy when they were Chancellors of the Exchequer. I see that the noble Lord, Lord Healey, nods his head enthusiastically. The noble Lord had a trying time during his tenure of that Office. I recollect that his last three budgets were introduced under an increasingly bizarre degree of surveillance. I believe that in 1977 it was that of Mr. Witteveen from the International Monetary Fund; in 1978 it was that of Mr. Pardoe, the Member for North Cornwall in the Lib/Lab Pact; and in 1979 the noble Lord was compelled to introduce a budget in consultation with myself when a general election had just been declared.
However, I must try to avoid invidious comparisons of that kind and return to the path that lies ahead; namely, the last major political set piece before the election, the Budget which the Chancellor of the Exchequer will introduce in a few weeks from now. I agree entirely, and not surprisingly, with the view expressed by my noble and learned friend Lord Fraser of the present state of the economy. However, rather than cite his judgment I wish to refer to that of the Governor of the Bank of England who said quite simply,
"Average annual retail price inflation has fallen from around 12¾ per cent. in the 1970s to 7 per cent. in the 1980s to 4½per cent. in the 1990s and to 2¾; per cent. over the last four years".
He said that we were in,
"our fifth successive year of relatively steady growth—at a rate above that of most of our G7 partners…Unemployment has fallen consistently over the past three years to the lowest…in any of the larger European economies…Accompanied…by more stable as well as lower nominal interest rates, and by much more stable effective exchange rates".
Therefore the fundamentals remain extremely good. I am reluctant to endorse that by accepting my noble and learned friend's invitation to plead guilty to any charge. He will understand that I have a professional reluctance to plead guilty to a charge, even at his invitation. However, I prefer to put it another way and acknowledge the success of Her Majesty's Government in transforming the reputation of the country as it was bequeathed to us some 17 years ago. Congratulations for that of course go to many Members of the present Administration but particularly to the present Chancellor of the Exchequer. The noble Lord, Lord Peston, was glad to claim credit for his recent introduction to this House; but I take a little credit for the fact that the first office of any kind held by the present Chancellor of the Exchequer was as my Parliamentary Private Secretary exactly a quarter of a century ago. It has taken him a long time to reach his present post.
I listened with interest to the speech of the noble Lord, Lord Ezra. It had a dismal tone about it. I was surprised by his reluctance to acknowledge that the real success of the economy—of course there are many things yet to be done—is due to three factors achieved by this Administration and its predecessors over the past couple of decades. The first factor is the liberalisation of the labour market and the almost complete disappearance of strikes in the private sector. Secondly, we have shaped an enterprise-friendly tax system. In that regard just one figure gives an interesting insight. In 1978–79, the share of taxation paid by the top 1 per cent. of income earners in this country was

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11 per cent. Last year, it had risen to 17 per cent. The share paid by the top 5 per cent. was 24 per cent.; last year it had risen to 34 per cent. It is that fruitful generation of tax revenue which the Labour Party still threatens, at least in the mind of Mr. Gordon Brown, to reverse. Thirdly, those features, together have created a hugely hospitable environment for inward investment, as my noble friend says. We can rightly see that Britain is perceived by the world outside as the enterprise centre of Europe.
The question now is: what should the Chancellor best do to preserve that? It requires above all that he should take no risks either with inflation or with the macro-economic balance. I am glad that the noble Lord, Lord Peston, has spent some of his time reading the memoirs of myself and my colleagues. I have to say that what he seems to have learnt from them shows that he still has some way to go on the learning curve. It is very sad to hear a professor of such economic distinction lapsing into the habit of dismissing monetarism as though it were a factor that had come and gone. No economic minister in the world fails to give it a position of prime importance in his economic management. Look at China, India, or even Russia, where the noble Lord will find one of his professorial colleagues from the London School of Economics advising Russian economic managers on the importance of monetary policy.
Of course one has to have an effective monetary policy; and alongside that there has to be effective management of the public sector fiscal deficit, borrowing requirement or whatever you call it. Even if Maastricht had never been invented or discovered, those would have been essential requirements for sensible economic management. That is why I welcome the decision announced today to raise interest rates by the figure identified. There has been developing in recent weeks and in almost every quarter of the market-place, near unanimity on the need for that. It is best expressed by someone whom noble Lords may be surprised to hear I admire, Timothy Congdon, of Lombard Street. We do not agree with each other about the role of monetary mechanisms in the international sense, but he has always been a very shrewd assessor of the state of monetary policy in the national economy. That is why I welcome the interest rate increase announced today.
However, that is not an alternative to fiscal prudence. The noble Lord, Lord Ezra, was entirely right to mention the need for that, as was the noble Lord, Lord Peston. It is not the case that the public debt in total for general government financial liabilities has throughout the past 17 years been going in the wrong direction. In 1979, as a percentage of nominal GDP, it was some 38 per cent.; 11 years later it had come down to 19 per cent. It is, however, right to observe, and with some anxiety, the fact that it has since been going in the wrong direction. The fact is that the forecasts of the likely out-turn in the current year range between some £25 billion and £30 billion. That is about twice as high as the expectations of two years ago. It certainly means
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that the Chancellor should take very serious account of that. The figure last month, £3.4 billion, was at least £1 billion more than expectations. Whatever one may say, and however much one may like to present a glossy view, in the fifth year of sustained growth those figures are too high. The Chancellor must take account of that fact, as I am sure he will.
He will be under pressure, as Chancellors so often are, from those with greater interest in opinion polls than in economic performance. But to them, too, I say: do not forget the extent to which the economy is now delivering the feel-good factor, which the pollsters regard as so important. I ask them: do they not have confidence in their own case? We have only to look at what has happened to unemployment: down, as I said, by 900,000 from its peak; and last month's fall was the largest for two years. That is good news. It is news to feel good about. They have only to look at their own posters. Rising living standards for the average family are up by £700 per annum since 1992. That is good news. It should be used as a foundation for economic wisdom. Taxation is not as low as in the United States, where the figure as a percentage of GDP is only 31 per cent. But our figure here of 38.4 per cent. is much lower than the 45 per cent. that is characteristic of European economies. So let the party managers as well as the Treasury Ministers count their blessings. Let them feel good, as they are entitled to do. Let them feel good, as they are also entitled to do, by feeling right, too. That makes you feel really good.
The strategic judgment is clear. The present combination of monetary and fiscal conditions is as politically benign as can reasonably be expected. Better than that, it is helping to rebuild the reputation of this Government for competent management of the economy, once one of the strongest cards of our party. If that is to be maintained, restraint on the fiscal front is equally necessary. The Chancellor has to accept that insight, and he will do so, no doubt, with the full support of the First Lord of the Treasury.
In a notable speech to the party conference, the Chancellor said:
"We have to follow one Tory golden rule. We only cut taxes when we can afford to, and when it is good for the economy".
He should not be beguiled by the misguided competition being offered by the Shadow Chancellor, bidding for ever-lower starting rates of taxation.
But that is more than enough "small print". Let me, rather impertinently, revert to my own shadowy past. My central message to the Chancellor, and even more to his colleagues, is that if he wants to go on feeling good and, above all, feeling good tomorrow, he must go on feeling right today.
I recall with some immodesty the press comment on my pre-election budget in 1983. That charitable organ of public opinion, the Daily Express, said:
"The empty budget box".
That graphic organ of public opinion, the Sun—in those days still being kind to the Conservative Government—said that,
"Like a stripper in the bible-belt, Sir Geoffrey has gone as far as he could go".

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And in the Daily Mail—and this is the real wisdom—Patrick Sargent said that it was,
"An electioneering Budget of the modern sort … meant not to tickle us in our pocket but in our sense of virtue".
I hope the Chancellor might feel encouraged, as well as fortified, by the severity of my advice.
4.47 p.m.
Lord Currie of Marylebone: My Lords, I had not expected to address the House so soon after the gracious welcome given to me yesterday. However, my noble friend Lord Peston advised me that to speak in this part of the debate on the gracious Speech dealing with economics was too good an opportunity to miss. My noble friend did not tell me that the speakers in the debate would be so distinguished. Had he done so, I might have had second thoughts. I feel extra trepidation given the fact that I believe I should be both brief and non-controversial—which is rather difficult for a business school academic such as myself. I shall have to bite my lip about one or two matters on which I should like to comment arising from what has been said and what may come later. In addition, I cannot pace up and down, as I normally do; and I lack the security blanket to which I am accustomed, namely that of the overhead transparency.
I am reminded of another debut that I made not very far from here, in the Purcell Room. It was not, I hasten to add, the sort of debut that one normally associates with that place. I was faced with a full house of executives from the construction industry. That was a number of years ago, when I headed the forecasting team at the London Business School and was still headstrong enough to think that one could predict the twists and turns of the British economy. That day my computerised crystal ball was especially gloomy, so I did not expect to be invited back. I was sorely tempted to take out my rather neglected clarinet and play a few tunes. I thought it was the only opportunity I should have to play in that wonderful recital room. I regret now that I did not, as my forecasts were almost certainly as error-prone as the music might have been. It is worth adding that most of the authoritative forecasters, the OECD, the IMF and others quoted in the debate today, rarely achieve a more than passable melody in their forecasting record.
Noble Lords will be relieved to hear that I have no such temptation today, since I should hate to lose the valued friends that I already have and those I hope to make. I hope in time to contribute regularly to the debates in this House in my three main areas of interest; namely, the economy and economic policy, education (especially higher education and management education) and constitutional reform. Today I should like to focus on the first of these.
I was born immediately after the war. My generation has seen the UK economy slip from a position of pre-eminence to 18th in the prosperity league, largely because we have had a growth rate of around 2 per cent. over the long term in the British economy over those decades. One has to be very careful in looking at the economy to ignore the froth of the ups and downs of the cycle. The underlying trend has not changed greatly. As
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a result, we have slipped down the prosperity league and are now behind most of the countries in Europe that we would wish to compare ourselves with, and in addition a couple of Asian Pacific economies. Although the slippage may have slowed a little, we are nonetheless in per capita income levels well below those countries we should like to compare ourselves with.
Things do not necessarily feel so bad. Many of us enjoy comfortable, and rising, living standards. However, that is unfortunately not the case for all. One of the reasons for that is that in the league table for per capita consumption, as opposed to that for per capita income, we are rather higher, around ninth or tenth. That is because we as a nation save rather little, and that bodes ill for the future.
This decline does matter. Without a strong economic performance it is hard to provide the services that we all value and need—healthcare, education, social care, the arts, a good built and natural environment and so on, as well as to address the problems of poverty and social justice that concern us, to provide a society of real opportunity for all, not just the few. This position can feed on itself. I notice that most of the aspiring business executives whom I have the fortune to teach at London Business School come from the more dynamic parts of the world and that many of the British look elsewhere to further their careers. It is important that we reverse that trend, and of course we can do so.
When I started my career as an economist, I thought that the primary responsibility for creating a dynamic and vibrant economy lay with government policy. I now put a slightly different emphasis on that as a result of the close contact I have had with business. Economic performance depends on both business and government, a partnership in which high quality companies work within an effective framework of rules laid down by government. Unfortunately, we have got neither element of that partnership right.
It is true that the UK has some first-rate companies that match the performance of any in the world, but we also have a long tail of bad performers. The extraordinary thing is that, the further down that tail you go, the more complacent those companies become. When asked how they are doing against their competitors, it is the best who pay heed and the worst who are the most complacent. If we could reduce that tail, we would transform the British economy. To do that requires effective management and management education—management not just to ensure short-term efficiency but also to manage the innovation and development of new products for customers and open up new markets.
In emphasising the role of management, I do not suggest that government policy does not matter; it does. Government need to create the right framework within which business can operate. That is not the same thing as simply letting market forces rip. Market forces can easily operate against the public good if not framed within the right policy context. What is needed is the right framework of rules. I would identify six elements that we need to get right.

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First, we need a stable macro-economic context for business. I shall not say more about that lest I stray into the controversial issues we were debating earlier.
Secondly, we need to enhance the education and skills of our whole population. Sustained investment in general education is one of the few things that explains differences in growth performance around the world. That is corroborated by East Asian experience. The World Bank found that investment in education for all, not just the elite, was the key explanation for the East Asian miracle of combining rapid growth with equity.
Thirdly, we need to enhance the quality of our management, not just at the top but throughout business.
Fourthly, we need a proper framework for competition and mergers policy to prevent anti-competitive behaviour and the abuse of dominant power. Without such a framework, competition can have adverse effects. This is an area where the current policy framework is deficient.
Fifthly, we need a framework for regulating those parts of the utility sectors where market forces cannot operate effectively but which are so important for other parts of the economy. We need a system that combines efficiency with openness, fairness and accountability.
Finally, we need policies that give effective help to the more disadvantaged sections of our society.
If this set of remarks came from one of my students, I think I would scribble the word "Superficial" at the bottom. I borrow their standard defence: lack of time. Despite the lack of detail and qualification, I hope your Lordships will agree with my basic argument that future prosperity depends on a well-educated labour force and effective management, operating within a sound framework of rules laid down by government. We have not got that right but I am sure that we can do so over the next five years. For that reason, I am optimistic about this country's economic future into the next century.
4.56 p.m.
Lord Boyd-Carpenter: My Lords, I feel that I am fortunate in following immediately on the speech of the noble Lord, Lord Currie of Marylebone, which we have all listened to with very great interest indeed, not least because it was a remarkable speech, particularly so for a maiden speech in this House. It will have been obvious to all your Lordships that this House acquired yesterday a Member of great knowledge and experience in economic matters who will be able to contribute frequently to our discussions. Indeed, he indicated his intention to do so.
I should like to say to the noble Lord how much we appreciated his speech, how much we welcome him to this House and how glad we are that this House has received so effective a reinforcement. The debates in your Lordships' House on economic matters have always been of significance. I make no comparisons with another place, where I was for a good many years; but this House has particular authority in dealing with complex, important public matters. In particular, it has a capacity for discussing economic problems with authority, balance and moderation.
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On behalf of all your Lordships I should like to welcome enormously the presence of the noble Lord. We particularly welcome one very unusual aspect. As I recall, the noble Lord took his seat yesterday and has therefore made his maiden speech within 24 hours of becoming a Member of this House. That is perhaps unique. I am sure it has been enormously to the benefit of this House. Perhaps I may say once again how glad I am to have the opportunity of expressing our gratitude and appreciation for a remarkable performance by a very distinguished man.
I shall not go through the career of the noble Lord. Everybody knows that he holds a Chair in economics and that enables him to have contacts with economic thinking and ideas and to address us not only based on his personal background but also as a contact with economic thinking generally.
The debate has now got under way and I should like to comment on only one or two matters on which I happen to have particular views. It seems to me very important that we should seek to maintain the level of taxation at no higher level than it is at the moment. I appreciate that that is a difficulty which faces all Chancellors of the Exchequer as they deal with the Budget. It is essential that, on the one hand, expenditure should not be authorised which will not be met from the Budget and by proper budgetary principles; and, equally, that expenditure must be restrained within reasonable limits. There is always a temptation. Ministers—as a former departmental minister myself, I know it—always have ideas and ambitions for good developments which will nonetheless involve further expenditure. The great problem for the Chancellor of the Exchequer, as my noble friend who sits behind me knows only too well, is how to restrain his colleagues from pushing good expenditure projects to an extent that results in a bad high level of expenditure and therefore inevitably in an excessive level of taxation.
I hope that your Lordships' House takes the view that we cannot possibly meet all the perfectly good causes which seek support from government finance. I suggest that we must exercise sufficient restraint to enable the level of taxation to be kept moderate. If we do not, and if taxation is allowed to rise and go on rising, it is the biggest discouragement to initiative and also, as we have seen in years past, a considerable factor in making people of ability and productive capacity go abroad to exercise those qualities in countries where taxation may seem to them to be a little less oppressive. Therefore, I shall say a few words about one or two areas of expenditure on which there is undoubtedly controversy and for which, if there were no such limiting factor as I tried to describe, there would undoubtedly be a strong case.
First, let me mention the very considerable expenditure that we now undertake on legal aid. Millions are sometimes provided in individual cases. Legal aid has become enormously expensive. It involves retaining members of the Bar of the highest distinction and the legal aid organisation—I say this with regret in the absence of the noble and learned Lord the Lord Chancellor—has become lavish in retaining counsel of the highest ability and most expensive character.

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Consequently, expenditure on legal aid, as successive questions to the Lord Chancellor have brought out, has risen steadily over the years and is still rising.
I suggest that, although it may be good to provide people who are accused of offences with able advocates to support them, nonetheless there must be a limit to it. On the whole, it is probably better to pay only moderately for the provision of legal aid, which in most cases is quite sufficient. I have been a member of the Bar long enough to recall the days when a guinea could be obtained simply for the asking. The aid could be obtained by anybody who was charged with an offence and could produce one guinea—I am speaking of before the war. It could enable an accused man to pick out in the court in front of him any individual barrister and retain his services. It was quite amusing to watch when someone asked for legal aid in that sense to observe how the more experienced and valuable counsel made a rapid rush for the exits. But it was quite a good provision and on the whole accused people received a very good guinea's worth.
I do not suggest that we should revert to that system. But I do suggest that legal aid is an expenditure which is perfectly good and helpful up to a point but is not entitled to the high priority which would justify it being extended upwards. In my submission, it is absolutely essential that taxation and therefore expenditure should be restrained to only a moderate level.
The same applies to a number of other questions. We are now undertaking big expenditure on the building of prisons and I wonder whether that is necessary. I wonder whether, as a result of the activities of our courts and, of course, the criminal classes, it is necessary to build extremely expensive additional prisons. Why is it not possible to take over abandoned army camps, install moderate security arrangements and put convicted people into them? They may not be very comfortable and they may not meet the progressive ideas of some people with regard to dealing with crime. But I try again to make the point to your Lordships that there is a limit to the amount by which we can increase expenditure and the amount to which it is therefore right to increase taxation. Therefore, although there are certain areas—I have referred to two of them and there are others—where there is always a case for additional expenditure, that case should be allowed to wait at any rate until times are easier.
Finally, I find the amendment rather curious. Obviously, there has been a search on the Benches opposite for grounds for attacking the economic policy of the Government. But it is not true that the standing of this country or its relations internally are subject to justifiable criticism. On the contrary, the prestige of this country today is probably higher than it has been for a long time. The prestige of this country is evidenced not only by the number of would-be immigrants who desire to come in, but still more—as has already been observed—by the considerable investment made in this country by foreign businesses which has considerably helped our economic position.
It is therefore an indication of the barrenness of Opposition policies that, in drafting an amendment to the Motion on the Queen's Speech, it has not been
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possible to include any practical suggestion. The amendment contains no practical suggestion and no sensible comment; it is just a vague moan, and I hope your Lordships will throw it out.
5.11 p.m.
Lord Healey: My Lords, I must start by paying a tribute to my noble friend Lord Currie for his speech of exceptional charm and humour. It demonstrated a quality which was rare among economists when I was young; that is, a certain degree of humility—it is much more common these days.
I thank my noble friend for drawing to our attention what governments, and particularly Chancellors, of all parties have always found to be our biggest single economic obstacle—the poor quality of the majority of British management. I hope that he will continue to draw our attention to that in future debates and make it one of the focuses of his comments.
I stand before your Lordships as the second Chancellor to speak in this debate; I believe a third is to address us later and a fourth most distinguished one is sitting by me as I speak. But I do not propose this afternoon to talk about the economy in general or about my own record compared with that of others, though I shall be delighted to do so on some other occasion as I have so often in the past.
I would rather talk about a subject which, like that chosen by the noble and gallant Lord, Lord Craig, is extremely important for our economy but is rarely discussed in this kind of debate with the care that it deserves; that is, the proposal for European economic and monetary union. We had some discussion on that in the debate on Monday, but it was discussed almost entirely—with one exception on the Benches Opposite—in the context of whether or not it was a good thing in terms of Britain's political relations with her continental neighbours for us to join the EMU. The question as to whether the economic case was made and what was the nature of it was ignored. I want to say a few words about that this afternoon.
The case for EMU and for Britain's membership of it stands and falls on the economic arguments and not the political ones. I must face the fact that Chancellor Kohl, who is by far the one outstanding statesman in Europe today and whom I am glad to see tomorrow will celebrate the longest period in office of any Federal Chancellor, takes the other view. He has made it clear again and again that the political case for a single currency must take precedence.
There are perhaps two reasons for Chancellor Kohl taking that line. First, he hopes to crown his political career by presiding over the introduction of European economic and monetary union before he may have to face the electorate in 1998. The other reason, I fear—even his best friends will agree with this—is that he does not claim a deep understanding of economics and has never demonstrated it. I believe that he was over-influenced by his own experience in having a single currency adopted for a united Germany six years ago. But the situation there was totally different from the problem which Europe faces in creating a single currency for up to 25 states in a few years' time.

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When Chancellor Kohl introduced a single currency in the united Germany, he did so against the public and strong opposition of his economic advisers, particularly the Bundesbank—in fact, the chairman of the Bundesbank resigned over the issue. They felt that it was not sensible to have a single currency to unite two groups which had such enormous disparity of economic performance.
To make the single currency work there has had to be a colossal flow of money over the past six years from West Germany to East Germany—between 3 and 4 per cent. of West Germany's GDP and at the moment £400 billion has passed from West to East to try to make the single currency work. Yet we discovered a week or so ago that 85 per cent. of East Germans still think that they are worse off today than they were when the single currency was introduced in 1990. And 15 per cent. of East Germans are out of work; that is why, in addition to the tremendous flow of money from West to East Germany, there has been a tremendous flow of unemployed workers from East Germany to West Germany. Those two flows are continuing at an exceptionally high rate.
The introduction of the single currency was and still is possible in a united Germany because a single currency was introduced to cover a single people and a single state under a single leader. There is therefore the readiness to make sacrifices in the West and labour mobility is possible because people speak the same language. Those conditions do not apply among the potential members of a European economic and monetary union. Nobody has yet shown how it will be possible to deal with the disparities which already exist and will continue to exist among its potential members. Germany will certainly not be prepared to make sacrifices for EMU such as it made for the German single currency. Indeed, Chancellor Kohl made it crystal clear over recent months that Germany is not prepared to go on paying to the European Community at the present rate, never mind the increased rate that would be needed if we had EMU.
My opinion—I believe it to be a growing opinion—is that the Maastricht criteria for EMU were inadequate. The convergence demanded is purely financial. It concerns the level of inflation, the level of debt, the level of interest rates and the level of exchange rates. There is no concern whatever for growth or employment. And in so far as the biggest countries concerned—France and Germany—have converged, they converged on what the Financial Times the other day described as,
"a dismal level of economic performance".
Low growth and high unemployment have been the price and condition of convergence according to the Maastricht criteria.
Even so, at the present time, as the IMF pointed out last week, only Ireland and Luxembourg already meet the criteria for EMU. France, Italy, Spain and the Netherlands hope to meet the criteria, but only by fiddling the figures. The French Government are now up in front of the statistical court—I did not know there
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was such a thing—in Brussels for including one-off privatisation proceeds next year in order to justify their claim of a 3 per cent. deficit. Mr. Prodi, the Italian Prime Minister, made it clear that two can play at that game—indeed, three, four, five or six can play at it. Even the Dutch are fiddling the figures, as Mr. Duisenberg, the Dutch central banker, pointed out the other day.
The most worrying problem is that at the moment it seems very unlikely that Germany itself will meet the criteria. We have seen the report of the six leading German economic institutes. I share my noble friend's view of economic institutes and economists, but, in my experience, they are more trustworthy if they are independent institutes than if they are government economists. I am glad to see that the noble Lord, Lord Harris, at least agrees on that. What is quite clear is that Germany cannot meet the criteria. None of the other countries can meet them without fiddling, except little countries like Ireland and Luxembourg. But that does not worry Chancellor Kohl. Indeed, he invited the Prime Ministers of Italy and Spain to meet him in Bonn the other day to tell them that whatever the French said it would be okay.
The fact which very few commentators seem to have noticed is that Chancellor Kohl wants a soft euro. He does not want the new single currency to be as strong as the deutschmark. He told us so in a speech at Easter when he said that if EMU fails, the deutschmark will go soaring up into the stratosphere and German industry will be totally uncompetitive. The fact that the markets believe it will be a soft euro is demonstrated by the fact that everyone has been moving money out of deutschmarks and into Swiss francs. The Swiss economy at the moment is crippled. It has stopped growing because its exchange rate has become, as a consequence, far too high. Even yesterday, when the report by the six economic institutes was published, making EMU less likely, the deutschmark went up on the foreign exchange markets.
Against that background it is not surprising that a large number of people who are the most enthusiastic supporters of EMU are now asking for delay. Outside Germany, M. Delors, Mr. Kinnock, the noble Lord, Lord Tugendhat, and Mr. Duisenberg, who is the leader-designate of the European Central Bank and whose job it will be if they make a muck of it to knock their heads together and put them on short rations—gruel and water—for a long period of time, want delay. Even the economists are now beginning to ask for delay. In Britain there is Mr. MacDougall and the National Institute for Industrial and Economic Research.
Others fear worse than delay. They fear disaster. The noble Lord, Lord Dahrendorf, who I fear may not be here this afternoon, has said that he has now turned against EMU because he thinks it will divide Europe rather than unite it. The one thing we can all agree is that if EMU comes about the East European countries, whose membership of the Union and the single currency are to be desired, can be ruled out. If the thing goes ahead, as Chancellor Kohl certainly wants, it will be a disaster economically and politically because the social strains created by the fight between the central bank and

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the national governments to try to return to the type of convergence which was originally intended will produce riots in the streets, as we have already seen in France, and certainly demonstrations, as we are seeing in Germany.
We must not ignore the fact that in most of northern Europe—Holland is the only exception—a majority of the people are now against EMU. Sixty-five per cent. of Germans are strongly against it. To set up an organisation of this importance against the will of so many people would be a disaster and a terrible error. Of course it is true that in southern Europe the people seem at the moment to be rather in favour of it, but that is not much comfort because none of those countries is likely to qualify without cooking its books.
"What is going to happen?", I hear your Lordships asking. It is too soon to be certain. My own view is that they will opt for delay over Chancellor Kohl's dead body. That would be wise. If they do not delay, it would be very much better for Britain to stay out than to join a system which is bound to be disastrous in its economic and political consequences. There is no reason why we should suffer from that because, as the Ernst & Young Item Club, which I think uses the Treasury model for its predictions, told us yesterday, by the end of the century, if EMU goes ahead as presently conceived, unemployment will be double among its members what it would be in Britain if Britain stays out.
What I think is the real risk facing Britain if it stays out is that we shall find the pound soaring like the Swiss franc which could have damaging consequences of a completely unexpected nature for our country. I believe that we should argue for delay. We should not fudge the criteria. I was delighted to see Her Majesty's Government's representative in Brussels yesterday join other countries in criticising the French fiddle on the 3 per cent. fiscal debt limit. If we delay, we must then add economic criteria to the purely financial criteria—criteria relating to growth and employment—and we must attack far more carefully the problem of relations between those members of the Union who join and those who do not. If all this proves to be too difficult, we must apply Healey's First Law of Holes—when you are in one, stop digging.
5.28 p.m.
Lord Taverne: My Lords, I feel sorely tempted to follow the noble Lord, Lord Healey, in his discussion of monetary union. However, he raised so many different issues which ought to be discussed separately on other occasions that I shall return to the debate on the economy. I wish to associate myself very strongly with the remarks that have been made about the excellent maiden speech of the noble Lord, Lord Currie of Marylebone. He achieved the unusual feat of remaining both non-controversial and saying a lot of things which are extremely important to the subject matter under discussion.
I am not a great fan of the present Government. But if there were to be a fair judgment of the overall general economic management of the past few years, it would
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be on the whole favourable. There are claims that we have now the strongest economy in Europe. This I believe is a rash and overblown statement and another example of the frequent occurrence of unjustified self-congratulation, which is just as common in Britain as unjustified self-denigration. If one looks at the fact that productivity is still lower in this country and that our savings and investment are lower, as the noble Lord, Lord Ezra, pointed out, and if one also looks at our poor educational standards comparatively, we cannot claim to be the strongest economy in Europe. Nevertheless, in the past few years we have been catching up and on the whole affairs have been managed reasonably well.
What has been the key to that success? I remember reading the IFS and Goldman Sachs green budget just after the 1992 devaluation. As far as I am concerned that is the source of wisdom on budgetary matters. It pointed out that the problem facing us was to make sure that consumption grew much more slowly than the growth of GDP so that there would be room for investment and exports. That required a very tough fiscal policy and major tax increases. I never thought that we would get them but we did. Taxes were put up despite the election promises, consumption was kept down and the deficit was somewhat reduced, although much more slowly and less extensively than one had hoped.
What is the need we face today? We need a much lower budget deficit, as the noble Lords, Lord Peston and Lord Ezra, have pointed out. Our budget deficit is far too high for the present state of the business cycle. Our deficit ought to be down to perhaps 1 per cent. or 2 per cent. at most at a time of healthy growth and falling unemployment. It must be much lower before we reach the top of the current cycle. That is true irrespective of the Maastricht criteria. Measures which people in the Conservative Party would normally have supported are now denounced because they happen to coincide with some perfectly sensible criteria laid down at Maastricht.
At the same time there are very pressing demands on public spending. If one looks at the main constituents of public spending, the social security budget, health and education, there are no prospects for any cuts being effectively made. Indeed, there is an overwhelming case for a certain measure of increase. If one looks first at the social security budget, all attempts at major surgery in this field have failed. The Secretary of State for Social Security, Mr. Lilley, has, rather to my surprise, proved to be a rather effective and thoughtful Secretary of State. But no one can accuse him of being excessively concerned with the reduction of inequality in our society. Mr. Lilley was determined to cut the social services budget, but he failed to do so. It is still growing even at a time when unemployment is falling. The pressure on the present system from increased life expectancy alone is considerable. So one cannot look for any cuts in the social security budget unless one really goes for a major reform of the whole welfare system, which has so far proved to be a very elusive aim.

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When one looks at the National Health Service, one sees that it clearly needs a lot more money. When one looks at our schools, our education system clearly needs a lot more money. The other day a list was published of 1,000 best schools. Where were the comprehensive schools in that list? It is a total denial of equality of opportunity which we all preach and which we all claim we wish to see, if in fact there is this huge gap between schools where one pays and schools in our inner cities.
The current fashion is to concentrate on discipline and morality. They are the obsessions of Ministers, politicians and the media. No doubt that mood will pass. But what education needs above all, important as those other matters are, is more money. There is also a new demand, as the noble Lord, Lord Boyd-Carpenter, pointed out. A recent extra demand on public expenditure has come from the Home Secretary's policy of sending as many people as he possibly can to gaol and of trying to bring our penal system more into line with the American penal system, presumably ending with their rates of crime.
If the Chancellor is the best Minister in the Government then there can be very little doubt as to who is the worst. I for one will gladly volunteer for what I understand is going to be a new society, the Penal League for Howard Reform. Figures were quoted the other day by my noble friend Lord Rodgers of Quarry Bank that the cost per average prisoner is something like £25,000 a year. With prison numbers rising from 40,000 in 1990 to what will shortly be about 60,000, the cost, if one adds on the number of prisons that will have to be built, is enormous. It amounts to something in the nature of £200-worth of personal allowances. So despite the evidence that this will only increase crime, we have the most disgraceful and wasteful public expenditure increase that one can possibly imagine. It is a surrender to the crudest form of populism, despite all the evidence which is available to the Home Secretary.
So what is the position in which we find ourselves? We need a lower deficit. We almost certainly need, and will almost certainly get, a higher degree of public expenditure. We also find that consumption is rising at 3.5 per cent. a year. We also find that there is rather a disturbing increase in the money supply. When the Chancellor has to put up interest rates at a time when the exchange rate has been rising, things are fairly serious.
Therefore, the last thing we need in these circumstances is any kind of tax cuts. The lunatic right of the Conservative Party, in asking for tax cuts at this time, has no more sense on this, as on other matters, than its mirror image, the loony left of the Labour Party, had in the 1970s and 1980s. There is every likelihood that, even with healthy economic growth, the next government are more likely to have to raise taxes than to cut them. I wish that the two main parties would be realistic enough to say so. I do not understand what Mr. Brown—who is a very sensible man, and for whom I have a great regard—is doing in promising further tax cuts. I am not generally much of a party man, but I am very glad that on the economy the Liberal Democrats are both realistic and honest.
5.37 p.m.
Viscount Weir: My Lords, perhaps I may first join with other speakers in complimenting the noble Lord, Lord Currie of Marylebone, on his excellent maiden speech. Secondly, may I humbly take issue with the noble Lord, Lord Healey? He made distinctly uncomplimentary remarks about the performance of British industrial management. With the greatest diffidence I tell him that plenty of us in industry take a similar dingy view about the performance of many politicians.
Lord Healey: My Lords, will the noble Lord allow me? He will recall that the present Secretary of State for Trade and Industry made exactly the same point that I made in a speech the other day. It was also made by my noble friend Lord Currie; namely, that there is a small number of well-performing managements, but the bulk of British industry management is below the international level, with some far below.
Viscount Weir: Thank you. My Lords, today I should like to speak about the private finance initiative. First, I must declare an interest. It arises because I am chairman of BICC, which, with its subsidiary, Balfour Beatty, is heavily involved in PFI projects as successful or preferred bidders for road schemes, hospitals and other jobs to a total of over £600 million.
Had I been speaking a fortnight ago my comments on PFI would have been almost wholly critical. In the past 10 days, however, my right honourable friend the Chancellor of the Exchequer has come forward with some proposals which the industries concerned welcome. Although I do not believe that the Chancellor has gone nearly far enough yet and I am still not at all sanguine that anything like his target of £14 billion-worth of schemes by 1998–99 will be met, nevertheless the proposals must be of some help in moving matters forward.
One bugbear has been the cost of bidding. The successful bidder can absorb his cost, but when there are numerous bidders there is, in national terms, a large loss from the wasted costs which the unsuccessful bidders incur. Those costs are a very serious matter. In the first half of 1995, the total operating profits of the construction divisions of the 10 largest contractors were a pitiful £7 million on a turnover of £4.5 billion. Indeed, it is quite likely that last year the combined PFI bidding costs of just a handful of the larger contractors totalled more than the entire operating profits of their industry. That can be neither helpful nor healthy. Those wasted costs damage the contracting industry, which is today in its weakest state for years. They also erode the pool of risk capital which must be available if PFI is to succeed. Clearly, there is also the cost of lost opportunity, where skilled engineers, estimators and surveyors are tied up and are not available to tender for overseas projects, for example. Apparently, bidders will in future be limited to a maximum of three, save in exceptional cases. That is to be welcomed in principle. It will help to reduce the waste.
At an earlier date the Treasury appeared to encourage the clients of PFI projects to make at least a partial refund of bidding costs. Save in the case of the Channel

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fast rail link, where a very modest refund was made, I have no evidence of any other bodies making such refunds. The Chancellor has now said that there will be no refunds at all. I do not believe that that will help him in meeting his own objectives.
Other complaints have related to the length of the adjudication process for bids, lack of clarity on contract conditions and, in some cases, the spirit in which the adjudication has been carried out. The cost to bidders is partly in proportion to the length of time the adjudication process takes and to the level of detailed information that is required. None of us wants to see sloppy or hurried award procedures, but to save wasted costs and time it is absolutely essential that the preferred bidder must be identified at the earliest possible stage.
It is also welcome news that the Treasury will now clarify some aspects of contract conditions. I hope, however, that these will not be framed or interpreted in too inflexible a way and that they will be derived from experience rather than theory.
Although it is rational that a PFI scheme which has a heavy weighting towards construction costs should be led by a contractor, in many cases the ongoing running costs are the main cost element. Therefore, I hope that as experience is gained and PFI becomes better understood, companies which are primarily providers of services will become much more willing than today to lead bids.
There have also been difficulties on the strictly financial side of PFI. One problem relates to the conditions under which the successful bidders for a particular scheme can eventually sell on their interest so that the limited risk capital available can, in effect, be recirculated. The Chancellor's proposals here are certainly welcome but, again, they have to be interpreted with flexibility and imagination if they are to be effective.
Two other interrelated financial problems are the degree to which a particular project is readily bankable and the cover provided if, unfortunately, a PFI client eventually has difficulty meeting his commitments towards the PFI scheme. I know that those subjects are being addressed, but a much clearer position needs to be developed quickly.
Rather more difficult than the mainly practical issues which I have mentioned so far are both the spirit and the level of competence with which some public sector clients have approached the whole scheme. I regret to say that some clients have looked at it as little more than an opportunity to conduct a Dutch auction. I have already said enough about the financial state of the contracting industry to have, I hope, made it clear that the industry simply cannot afford Dutch auctions. It is nothing but an abuse of ethical contracting procedures to adopt such an approach and it is no more likely to produce a satisfactory end result than confrontational contract management by a client ever does.
On the question of PFI clients' competence, it is essential that clients are certain that they need the project and that they are sufficiently clear about just
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what it is that they do need and what they can actually afford. That is particularly important in the health and hospital field.
Quite apart from that, clients need to be clearer than some seem to be in understanding the nature of risk and risk transfer. Without going into a very complex field, I would just say that it is pretty useless for a PFI client to try to allocate risks to the contracting party which the latter can neither ascertain nor control. The end result can be that the contractor, who does not have a strong balance sheet, is forced by prudence to take so pessimistic a view of risk that the costs are needlessly inflated.
Clients should also be clearer as to the real nature and potential of the PFI and not just regard it as simply a form of leasing or hire purchase. In that context, I was not much impressed by the suggestion that I saw last week that the MoD should consider leasing battle tanks.
Currently, the PFI requires skills not previously often needed by those in the public sector. To make up for that requires both training and the proper dissemination of experience. On the latter point, the Chancellor's remarks were encouraging. Many people in the public sector must now be prepared to be much more decisive and to take more risk than they have traditionally been asked to do. There also needs to be a proper and real willingness by some public bodies to release control of projects once they pass into the PFI scene. I can, of course, understand that it is not easy for an authority to accept that a new PFI-built road does not actually belong to it.
In conclusion, I remain a strong supporter of PFI. I want it to succeed. I am sure that most taxpayers will share that sentiment. As I have tried to say, however, this is a complex area and one that is still fraught with difficulties. I therefore support what the Chancellor is trying to do through his recent proposals to improve the situation, and if I am forced to say that he has not yet gone nearly far enough and that much remains to be done I hope that that will not be considered a meanspirited comment on my part.
5.48 p.m.
Lord Barnett: My Lords, perhaps I may advise the noble Viscount, Lord Weir, that I too would like to see the private finance initiative being more successful. The trouble is that, whether he likes it or not, the Chancellor is using PFI as a means of cutting public expenditure. That is what it is about as far as the Chancellor is concerned. He is taking account of billions of pounds which he may or may not obtain. That is the real problem, but I do not want to go any further down that road.
I say to the Minister that in the sense he put it the economy is strong. I do not dispute it. Of course, he omitted to tell us with what he was comparing its strength. It is strong compared with the past 17 years of recession. He forgot to mention that. He talked about growth with low inflation. My noble friend Lord Currie, in a notable maiden speech, pointed out that in the coming year we might. have a high rate of growth but what mattered was the average. The average of the past

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17 years has been about 2 per cent. That is far too low if we are to get anything out of the economy to help those in desperate need.
My noble friend Lord Peston—perhaps it was my noble friend Lord Healey—pointed out in his brief remarks that low inflation was not really low in the sense that we needed it. While I am delighted to see unemployment coming down, employment is not going up but down compared with what it was. That is an important matter which was not touched upon. He also did not touch to any great extent on the exchange rate. At the moment it is strong. It may be too strong for the reasons referred to by a number of noble Lords. Moreover, manufacturing industrial investment is poor on the basis of any examination of the subject. Despite the words of the Minister, although inward investment is good one would like to see it sustained in future.
That leads me to the vital decision to which no one has so far referred other than my noble friend Lord Healey. As usual, I do not necessarily agree with every word he has spoken. Having worked with him rather closely for five years, he will not be surprised that I do not agree with everything he has said. I was sorry that neither of the two Front Benches touched on the vital decision that will face whoever is in government next year. I hope that it will change in May of next year, if not earlier. I believe that my noble friend Lord Peston touched briefly upon this subject but not sufficiently. The real question that faces this country is whether it will be in or out of the economic and monetary union. Certainly, inward investment would be hit rather badly if economic and monetary union succeeded and this country was outside. I will come to that and take on board the points raised by my noble friend Lord Healey about the decision to be taken. That decision will have to be taken fairly quickly after the next general election. For that reason, it is unfortunate that both parties, including my own, have left open the subject, although in a recent important speech Mr Robin Cook left the matter a little less open than in recent times.
I suppose that the only decent outcome of the General Election would be the intervention of the Referendum Party. While I do not welcome it, during the course of the election it might provoke discussion on the important topic of whether we should be in or out of the economic and monetary union. I should like to see a successful economic and monetary union and Britain part of it, but I have considerable reservations. First, I have a very strong reservation about the European central bank. I am concerned about the control, accountability and power of that bank. The powers must take account of much more than just inflation. It would be disastrous for the economy of Europe if the European central bank was concerned only with inflation, as appears to be the case with Mr. George and the United Kingdom's central bank. To make prices alone the concern of a European central bank is far too restrictive. Indeed, the constitution of the Bundesbank and the Federal Reserve in the United States must take account of much more. They have to take account of other economic objectives—which I should like to see happen here—including growth and employment.
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My second reservation before we join is that there should be sustainable convergence, not just in the United Kingdom but in other countries. My noble friend Lord Healey referred to fiddles and cooking the books—something about which I know nothing, as he will be aware—to get borrowing within 3 per cent. of GDP. I forgot to mention in the context of the Minister's speech that public expenditure is now higher than when I left it in 1979. That is their great success story. I do not complain, because I cannot think of any areas of public expenditure today that I would like to see cut.
But sustainable convergence must occur not just in the UK—I should like to see that too—but elsewhere. As my noble friend Lord Healey pointed out, it is by no means certain that Germany will achieve it without cooking the books. That certainly applies to France. If there were economic and monetary union without us, or even with us, and Herr Waigel, the German Finance Minister, sought to impose penalties on those countries which, having forced their economies to fit within the criteria, then fell outside them, his idea simply would not work. I noted that in a recent discussion in the Commission agreement could not be reached on what the penalties should be. If one has to invoke very heavy penalties, frankly the whole of EMU will fall apart.
Another important problem which dominates the arguments of the Eurosceptics is the political one. It is said that there would not just be a federal state of Europe but the abolition of nation states and we would lose not only the pound but the benefit of the UK itself. I am bound to say to those Eurosceptics—including one or two very distinguished noble friends with whom I constantly disagree—that in practice, apart from perhaps Herr Kohl, most other states in Europe do not want to see their states disappear. It will simply not happen. I do not accept what the Eurosceptics say in that sense. There will continue to be a union of nation states with a great deal of subsidiarity, which I would have thought the sceptics would have wanted to see. Without transferring power to a democratic—I emphasise "democratic"—European Union, I would not be alarmed if that transfer were made. What I consider to be alarming from the point of view of the UK's economy is the prospect of a European Union with a strong economic and monetary union but with the United Kingdom outside it. I would be particularly concerned about that and would be alarmed by it.
It is a great delusion on the part of the sceptics that there would be a loss of sovereignty. Frankly, in the economic and fiscal sense we have very little sovereignty at the moment. I suppose the idea is that if we stayed outside we would be free to devalue. In the situation in 1964 to 1967 I strongly wanted devaluation. But the idea that somehow devaluation is a panacea is nonsense, as most of us will understand. Of course it is not. For the most part, when it has happened the benefits have been dissipated very quickly. Without EMU the pound has lost one-third of its value since the UK joined the European Community (as it was then)or certainly since 1979. I concede at once that both governments have frittered away the benefits of devaluation.

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Certainly, the present Government had a substantial devaluation—it was called "floating down"—following the disaster of the exchange rate mechanism.
Provided we have the right kind of criteria and conditions, I should be willing to join an EMU, and be happy to see us in it. But first we should not be forced in by foolish action to meet a 3 per cent. Maastricht criterion; secondly, when we do meet it, it should be sustainable; thirdly, the European central bank should have its powers changed and there should be control and accountability in the way I have described; and, fourthly, we should have real low inflation, real higher growth, and real falling unemployment, different from the current situation, and the exchange rate should not be too high, unlike the rate at which we went into the ERM.
It may well be impossible for us to join the EMU in the first phase, and I would regret that. It would not be a disaster provided the right economic policies were pursued from outside to enable us to join at a fairly early stage. I believe—I am not sure about my noble friend Lord Healey—that the economy is reasonably strong. It is stronger than the one we inherited in 1974. I see that he is nodding. In that one sense, we agree with the other side. It is slightly stronger, but not relatively in the economic sense, than what we left in 1979.
The vital economic decision we have to make is whether we should join the EMU. It may not happen by 1st January 1999. There is a strong political momentum in France and Germany, together with four or five other countries, that may ensure that it will happen, despite the enigmatic smile of my noble friend Lord Bruce of Donington. But if the UK does not join, for the reasons I have given, I hope that we shall play an active part in all areas so that it will be a better EMU when we are ready to join, which I hope will not be long delayed.
6.2 p.m.
Lord Clark of Kempston: My Lords, I add my congratulations to the noble Lord, Lord Currie of Marylebone. At the same time I should like to add my congratulations to the mover and seconder of the humble Address (my noble friends Lord Gray and Lord Colwyn).
The debate gives one the opportunity to look at the country's economic situation. I should have thought that the main thing to which people are now looking is the forthcoming Budget. Let us look at the state of the economy. Inflation is low. I do not care much for the criticism of the Benches opposite. When they were in power the inflation rate was over 25 per cent. Ours has been under 4 per cent. for many years. Unemployment is falling. One of the reasons for that is that we have a competitive advantage over our European partners in that our welfare costs, welfare taxes and so forth—the on-costs—on wages are not so great.
While talking about competition and our competitive position, I must say that it would be stupid to sign up to the Social Chapter. That is what is giving us our competitive position, or helping to. The minimum wage is misconstrued by many people who think that the minimum wage stops at the minimum wage. If the
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minimum wage goes up the gap between the higher paid worker and the lower paid worker narrows. It would mean that the differential would have to be passed on to the higher paid workers.
Many noble Lords have spoken about the single currency. I do not believe that there is any question but that that would lead to a loss of jobs in this country. I agree with the noble Lord, Lord Healey, that the amalgamation of the ostmark and the deutschmark, with the re-unification of Germany, is not analogous to joining a single currency. The trouble with the amalgamation of the ostmark and the deutschmark was that Chancellor Kohl insisted on a stupid exchange rate. He wanted one for one. Helmut PÖhl, who was chairman of the Bundesbank, would not have it. After a suitable period he resigned. There was a compromise, but even so, unified Germany's monetary system was upset because of the number of ostmarks exchanged: one for one up to 5,000, and one for two over 5,000. What the German bankers did not realise was that it was not just the number of ostmarks in the banks, but the number under the mattresses. They came out as soon as the East German savers could exchange them for deutschmarks.
Mention has already been made of our strike record. There is no doubt—I do not think anyone denies it—that it is due to the action of the Government under my noble friend Lady Thatcher. We should compare our strike record with that of our competitors abroad. Compared with France, Germany and Italy, we are in a better position. We have not lost many days in strikes.
The balance of payments is important. Our exports are going up. Some Labour critics say that too much investment from this country is going abroad. I would remind your Lordships that in many cases to break into an export market one has to have a financial base in the country. The only way one can achieve a base is to invest. In the long term, that is good. One should compare outward investment with inward investment. There is far more investment coming into this country than is going out. Why is that? Apart from our competitive position, there is our low rate of corporation tax—the lowest in Europe—at 33 per cent. with a lower rate of 24 per cent. Our unit labour costs (the costs of production) are much lower in this country. They are favourable. That is why this country receives 40 per cent. of all investment into the EU. As was said by my noble and learned friend Lord Fraser, not only are Japan, Taiwan and Korea investing in this country many US firms are also investing here.
One thing we are inclined to overlook is the role of the City of London in our economic performance. Our invisible earnings are extremely important. They are as important as our visible earnings. The exchange turnover in the City is greater than that of Tokyo. In addition, there is tourism. In 1995, 24 million came here. They spent £12 billion. That is a boost to our economy. As has already been mentioned, our production is up. On the latest figures it is up 3 per cent. The building industry is stirring. Orders are up.
The success of the economy is not as regional as it was. The economy is improving all over the UK. If we compare the totality of this Government's economic

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policy with 1979, the standard of living of every man, woman and child in this country has increased. The UK economy is healthy. That has been confirmed by the IMF. It gives the Chancellor of the Exchequer the opportunity to make prudent tax cuts.
The number one priority for any government is to control public expenditure. We have had some success in controlling public expenditure. I am worried that in many cases the tendering price for a contract given by the Government is being exceeded by many millions of pounds. There should be tighter control and anyone in charge of such a tender should be replaced.
Each department has a budget which I hope is monitored every three months. If there is an overspend which cannot be explained economies should be introduced immediately. However, we are inclined to overlook the underspend in budgets. A budget is only an estimate made at the beginning of the year and a continuous underspend might mean that the initial estimate was wrong. I believe that such a budget should be reduced. That would stop departments in the last quarter of the fiscal year issuing contracts in order to eat up the balance of the budget, thereby retaining their budget for the ensuing year.
Furthermore, as regards the control of public expenditure, more emphasis should be placed on the percentage of administrative costs to the workforce of all departments. Before any Budget the Chancellor of the Exchequer and the Chief Secretary to the Treasury receive a great deal of advice. The noble Lord, Lord Barnett, will know that such advice is phenomenal. People ask how much the Chancellor has to give away. He does not have a farthing to give away—he has no money. All he can do is reduce taxation, but that is the wrong emphasis. I believe that in the forthcoming Budget the standard rate of tax should not be reduced and advantages should be targeted towards families and small businesses. For too long there has been in our fiscal policy a divide between married couples and the remaining taxpayers. I wish to see any prudent reduction in taxation geared towards the married person's allowance. It is part of Conservative policy eventually to abolish inheritance tax. That will not be achieved this year but the Chancellor could make a start by increasing the threshold of £250,000. I should like him to examine the 40 per cent. inheritance tax and to have a differential between direct descendants and other people who benefit from an estate. The rate should be reduced for children, grandchildren and great-grandchildren in the direct line.
One of the jewels in our economic crown is the growth of small businesses. There are 1 million more small businesses than there were in 1979, making a total of 3.6 million in the UK. It is the only area of our economic structure in which we can continue to reduce unemployment. It would be a great help to small businesses if the threshold for VAT was increased. Furthermore, we have been promised less bureaucracy but I believe that the introduction of self-assessment for income tax will cause chaos. In many cases, the documents relating to self-assessment are gobbledegook and I believe that they will add to bureaucracy.
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I should like the Chancellor to examine capital allowances. There was a loophole as regards leasing and the 100 per cent. capital allowance, but it is not beyond the wit of the parliamentary draftsmen to ensure that that is closed. I should like to see the figure of 100 per cent. reimposed. Being close to a general election, the Chancellor must be careful about his Budget, which will be a tricky one. It must not be a giveaway Budget but it should give confidence to the voters. A mixed Budget to help families and small businessmen would be welcome and within the capacity of the economy. I am delighted that the gracious Speech indicates that we shall continue with firm financial policy.
Finally, I do not know where the noble Lord, Lord Peston, has been during the past few years. I believe that tabling an amendment suggesting that our reputation abroad has decreased indicates that he has not been abroad very much. Our economy, in particular our privatisation, is the envy of most countries and many countries are following our example. Therefore, I do not believe that we need bother about our reputation abroad being harmed.
I was delighted that the noble Lord, Lord Barnett, mentioned devolution. The CBI says that devolution in Scotland will harm business and consequently it should be scrapped. We have a healthy economy and I hope that we shall continue with our firm policy of the past few years. It would be folly to throw away the golden opportunity before us by introducing the social chapter or the minimum wage. We as politicians should stop running down our country's economic achievements and should start talking up our economy.
6.17 p.m.
Lord Bruce of Donington: My Lords, while I was listening to the noble Lord, Lord Clark of Kempston, I wondered not only whether he was of this country but of this world! His remarks appeared to be nothing more than a blanket endorsement of the opening speech of the noble and learned Lord, Lord Fraser of Carmyllie. The noble Lord's speech was extraordinary. One wondered whether he was living with us at all because, according to him, for the past 40 years this country has never been in better financial and economic shape. He selectively quoted some figures and I picked up in particular on the figures relating to unemployment which he said is decreasing. The Government appear to be getting away with their contention about unemployment decreasing and the press has not been discerning in picking up the deception. Of course, when the Government refer to unemployment they refer to claimant unemployment and not to actual unemployment. Whenever they want to reduce the unemployment figure all they do is tighten up the claimant rules, which automatically produces that result.
The Government have made 32 changes in statistical definitions of unemployment since they came into office in 1979. Earlier this year, the Royal Statistical Society was good enough to publish details of the consequences of the changes which have been made in the statutory definition of unemployment. It detailed its conclusions and that resulted in the artificial deflation of the

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unemployment figures by more than 1.5 million. Therefore, far from unemployment—and I mean real unemployment—going down in this country, the reverse is true: unemployment has remained substantially static at between 3 million and 3.5 million. The only thing that has varied and reduced the figure is the redefinition of what is a claimant.
The Government and their supporters make statements that we have never had a sounder economy for more than 40 years. I wonder how that squares with the observation which they have made, and made officially, concerning the measures which they have taken. They say that if it is not hurting it is not working. More recently they, or Conservative Central Office, have come up with the slogan "It hurt but it worked".
On looking at the Benches opposite, I do not see any signs of particular physical injury. I do not see that anybody there has been hurt in the slightest, nor have the sections of the community from which they normally derive their political support. I do not see those whose salaries in the City have risen from £100,000 to £300,000 being hurt in any way. Therefore, what is meant when it is said that it hurt but it worked? Whom did it hurt? The answer is that it hurt the poorer people of this country, the underclass of something between 30 per cent. and 40 per cent. of our population, of which 14 million are living below the poverty line. That does not sound to me like a whole and healthy community; it is they who are being hurt.
I hear economists, some amateur and some professional, making the statement that we must not have a consumer-led boom. What do they mean by that? They mean that consumption must not increase. But of course, if the 14 million people living below the poverty line are to have any relief, it means that their consuming power will increase. Therefore, when a stabilisation of consumer demand is advocated, in fact what is advocated is a continuous condemnation of that section of the population to a standard of life of which we in the democracy of the United Kingdom should be thoroughly ashamed.
In that connection, I am a little less happy than usual. I have been in politics since 1931, which is rather a long time. Some of my noble friends say that I am now out of the mainstream of British politics, whatever that may mean. But it simply will not wash. We should not allow 40 per cent. of the population to continue to exist in that social framework for longer than necessary. It is far better that we take risks to better their lives and to increase their consumer power than it is to obey the somewhat arid dictates of the banking community.
I am very often fascinated by the devotion that is apparent for bankers. I am bound to say that that is so among all sections of the community. In my experience, bankers are not divine. I seem to remember over the years a number of errors which have been of such astronomic proportions as to cast serious doubt on the profession as a whole, as of course distinct from the distinguished individual bankers which we have in your Lordships' House. There is an uncritical acceptance of the omnipotence and, indeed, the wisdom of bankers. And yet, provided that we comply with the existing drift
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towards economic and monetary union, if there is 100 per cent. accession to the single currency, we shall be giving complete power without any outside interference whatever for eight years following their appointment to 15 of those bankers. I have seen what bankers have done in six months. But to give a gaggle of them eight years free of any democratic control whatever seems to me to be rather daft.
I note the gradual conversion of my noble friend Lord Barnett, with whom I have had many exchanges on this matter. My noble friend is not ashamed to say—and all honour to him because at least he does not sit on the fence—that he believes in a single currency but he now qualifies that by saying provided that there is more democratic control over the European central bank, which he knows under the text of the treaty is completely forbidden; and provided that extra convergence measures are taken in order to make the economies move closer together, and he knows that that is not in the treaty and would require treaty amendment. Nevertheless, I must say that I take his conversion almost as a personal compliment, since I have been a member of his sub-committee for three or four years. That is all very gratifying.
Gratifying too are the observations of my noble friend Lord Healey. I could hardly believe my ears when I heard such distinguished support for the arguments that I have been seeking to put before your Lordships for the past four or five years. Indeed, that fills me with new hope and expectation.
We are getting near the election. One of the things which makes me depressed is the quest of all the political parties for the high moral ground. I object to that. The way to take the high moral ground is to advocate and take specific measures which in themselves tend to make society a more moral place within which to live. There are fields of action rather than fields of ambiguity. And yet, that is what is happening.
At the moment, we have the somewhat indelicate spectacle of seeking to outdo one another in the degrees of moral probity to which we should like to ascribe ourselves. The effect is not fascinating. At present we are in a position where great generalities are being uttered but we hear very little on specifics. My prediction in that connection would be that those parties who think that they can get the British people interested in supporting the ideals which they are putting forward will be sadly disillusioned if they continue not to define the things that they want to do with some precision; that applies also to the things that they will not do. That is the way to treat an adult electorate. I sincerely hope that that may happen.
I cannot really close my remarks without making some reference to the line that I and some of my colleagues have ventured to take, though not always so popularly as today, with the whole Maastricht Treaty. Here we have one of the most contentious treaties involving further limitations to our liberty and further limitations to the field within which we have to operate economically and in which we have to operate in trade, in the professions and indeed in culture, education and

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so on. Yet no party other than the Liberal Party—whom heaven preserve in triplicate—is prepared to abandon neutrality on the Maastricht Treaty. My own party supported the treaty on the ostensible grounds that it would contain the social chapter if they got back into power. Therefore, we should not be against Maastricht because it was capable, provided that we were returned to office, of embracing the social chapter for Britain. The party opposite invited support for the Maastricht Treaty because, otherwise, the opt out from the social chapter would not come into operation. I do not believe that that is the kind of attitude that a serious political party ought to take.
Although it may seem a long way back, I can well remember the time when Parliament was alive with the clash of ideas. One could put forward one's own views and convictions with as much clarity and indeed documentation as one wished. Our greatness as a parliamentary democracy fundamentally depended upon that fact. It was spread among all parties—the Churchills, the Atlees and the Bevans. But now we have a namby-pamby fear of committing ourselves to anything. I hope that that will not last.
6.32 p.m.
Lord Cockfield: My Lords, it is always a pleasure and indeed a relief to follow the noble Lord, Lord Bruce of Donington. When he rises to speak, one always experiences a slight tinge of fear that one day he might find a chink in the Government's armour. When the noble Lord sits down, we know that we have survived to fight another day. On this occasion, like my noble and learned friend Lord Howe of Aberavon, I have transferred my allegiance from the debate on foreign affairs to the debate on the economy. That is not just because, as I have argued before, it is very odd to debate the European Union, of which we are members, under the title of "foreign affairs" but principally because my right honourable friend the Chancellor of the Exchequer in his recent speech at the party conference in Bournemouth said that we ought to be concentrating on the economy. Indeed, that is what I propose to do.
However, before I go any further, perhaps I may just say that I regard Mr. Kenneth Clarke as outstandingly the best Chancellor of the Exchequer that we have had in this country since 1945. But he has had the inestimable advantage of the sound foundation provided by my noble and learned friend Lord Howe of Aberavon on which to build. When I draw attention to a number of problems which beset us at present, perhaps I may also make it clear that these problems are largely ones that he has inherited from his predecessors, both distinguished and undistinguished.
I should like to say a few brief words about the amendment tabled in the name of the noble Lord, Lord Peston, which technically is what we are debating at the moment. It is really most interesting. Here we have a distinguished economist eschewing the economy and economics (which is an intellectual discipline requiring rigour of analysis) and transferring his affections to
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social cohesion. That is one of those broad moral arguments that allow all men of good will and long speech to waffle away to their heart's content.
Lord Peston: My Lords, I am sorry to intervene but I feel that I must interrupt the noble Lord for a moment. Is he aware that the very greatest of all economists, Adam Smith—indeed, an economist that the noble Lord might just have heard of—took exactly that view of social cohesion and the primacy of the community before the economy? Those of us who have been in that tradition, which has lasted for 200 years, are perfectly happy to keep it going. We do not believe that it remotely indicates a lack of intellectual rigour.
Lord Cockfield: Yes, my Lords; I am most grateful to the noble Lord for his clarification. However, I am much more interested in the noble Lord, Lord Peston, who is still alive and among us, than I am in Adam Smith, who has been dead for approximately 200 years. Before the noble Lord interrupted me, I was about to say that the last thing I would accuse him of was waffling away. However, we all accept that he is a man of good will. Therefore, the comment I was making was in fact very fairly balanced. Indeed, when trying to tell us why he had tabled an amendment in such terms, the noble Lord himself explained that he was tailoring it to the needs of his friends sitting behind him. That was a very valid point to make.
I hope that the noble Lord, Lord Richard, will not object to what I am about to say, although I notice that he is not present in the Chamber today. However, when the noble Lord opened the debate on Monday on behalf of the Opposition, he seemed to think that life began in 1979 and that a veil could be drawn over everything that happened before that date. One only wishes that that could be so; but, unfortunately, it cannot. In this world, both as regards men and as regards countries, reputations are made and reputations are lost and, once lost, they are very difficult indeed to regain.
I shall return to that aspect later, but I want to talk specifically about inflation and the rate of interest. I am not talking about the rate of interest that the citizen has to pay to the bank or to the building society, or the somewhat attenuated rate that he gets on his deposits or savings; I am talking about the rate of interest that the Government have to pay on the borrowings that they make. That is what the Prime Minister recently described as the "blot" on our economic performance.
I raised this matter originally at Question Time on 13th March of this year (at col. 847 of Hansard). As neither Front Bench understood the point, I then explained it in some detail in the subsequent debate on the Finance Bill on 26th April (cols. 1375–8 of Hansard). I received no answer. I do not complain about that, but as the point had eluded so prominent and distinguished an economist as the noble Lord, Lord Peston, it was perhaps unreasonable for me to expect my own Front Bench to be able to deal with it. I have given the noble Lord the Hansard references to enable him to swot up and do a little homework afterwards. When he next addresses his students he can no doubt

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put the point to them and see what answer he gets. However, at least I shall give him the answer that I have to see what he has to say about that.
Yesterday, 29th October, the yield in the United Kingdom on the 10-year bench-mark bond—which is the measure usually taken in comparing interest rates—was 7.56 per cent. In Germany it was 6.01 per cent.; in France it was 5.99 per cent.; in Holland it was 5.94 per cent., and so on. What that means is that we are having to pay in interest on our borrowings 1½ percentage points more than Germany, France, Holland and a good many other countries. The absolute figures will, of course, be lower with short-term borrowings, but the differential remains very much the same. The rate of interest on longer term borrowings again will be slightly more, but the differential is much the same.
This year government borrowing is likely to reach £27 billion. A number of figures have been given but they are all about that order of magnitude. That has understandably alarmed the Prime Minister, but what ought to alarm him even more is that we are having to pay an additional 1½ percentage points of interest on that money compared with what we would have had to pay had our credit been as good as that of the Germans, the French, the Dutch and a good many other people. What we are talking about is hard cash. This is not economic theory or any of that sort of nonsense; it is hard cash; and 1½ per cent. on £27 billion is £400 million. That is the additional burden being placed on this year's Budget as a result of the fact that our credit standing is not as good as that of a whole range of other countries.
But the story does not stop there because the borrowings we make today impose a burden not just on this year but on future years as well. In just the same way, borrowings in the past impose a burden on this year and future years until such time as those borrowings are repaid. The total national debt by the end of this year will be of the order of £400 billion gross or £350 billion net. The additional 1½ per cent. we are having to pay on that amounts to something between £5½ or £6 billion, this year and every year. It will go up as long as there is an increase in the borrowing requirement from one year to another. Let me put this into perspective: £5;½ or £6 billion represents 3p. on the income tax. In other words, if over the years we had managed our affairs with the prudence of the Germans or the Dutch and a good many other people, we would today have had an income tax rate of 21 per cent. and not 24 per cent. In other words, we would be within sight of achieving what has been our long-term target of reaching 20 per cent., and we could do it without either increasing taxation or reducing expenditure in the sense that that term is commonly understood.
One might legitimately in these circumstances ask why is it that we are still so far from the promised land and still wandering in the wilderness. The answer quite simply is that we are paying the price for 50 years of financial mismanagement, well intentioned but based on delusion; 50 years in which governments, in greater or less degree, felt that they could manage the economy; 50 years of national fiscal sovereignty which has achieved nothing other than a debased currency and
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added to industrial inefficiency and unemployment and produced an excessive level of government expenditure and taxation. Compared with 1945, the pound is worth 4p. That is the price that we are paying for the illusion of national sovereignty—and illusion is all it is. The sooner we see the back of it the better.
The present Chancellor has made great strides in getting inflation under some sort of control, but after 50 years you cannot achieve success overnight. Nevertheless the financial markets remain unconvinced that this country will not once again resort to inflationary measures to solve its problems. Our ambiguous stance on the single currency adds to those fears. The extra 1½ per cent. we have to pay on our borrowings is the insurance premium the markets exact against the risk of our backsliding. We are far from out of the woods.
We are rightly proud of our recent economic performance. Ministers are fond of claiming that we have the strongest economy in western Europe. The gracious Speech said so, so it must be true. However, if one considers inflation, the position is less reassuring. We are not at the top of the league. In August—the latest month for which comparative figures for the European Union are available—the figures indicate that we were not first, we were not second, we were not third, and we were not fourth. I shall not go on any further because not until one reaches 10th place does one finally catch up with the United Kingdom. The prospect of a Labour Government with a record of financial irresponsibility inevitably adds to fears of rising inflation. I regard the past two reductions in interest rates as unwise and as running an unacceptable risk with inflation. The increase made today of ¼ per cent. is a step in the right direction, but I very much fear that there will be a real need for further steps in that direction before we reach May, however unpalatable that may be.
There have been two developments in the past two or three days to which I want to refer. This morning we had Dr. Gordon Brown committing a future Labour Government to reductions in taxation. Whatever view one may have on the specific measure he proposed—which no doubt is a cost-effective way of buying votes—nevertheless it indicates that in the background there is always this pressure in the Labour Party for giving money away, whether or not that can be afforded.
But the most worrying thing of all was what was said by Mr. Robin Cook in a television interview on Sunday. I do not think for a moment that he intended to let the cat out of the bag in the way that he did. He is a highly intelligent man; that is why he has been put in charge of foreign affairs. However, that did not stop him meddling in economics. He was handing out advice on what the Shadow Chancellor ought to do. He has been interpreted quite rightly by the media as being sceptical on the question of the single currency. But one could see something else underlying what he was saying; namely, the clear intention of resorting to inflationary measures if he thought that that could bring unemployment down.

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Inflation always initially brings unemployment down; but there is a bitter harvest to be reaped in future years. It is that kind of thing which underlines the fears that still exist today as to whether or not this country is permanently on a low inflation basis. The nearer we come to the election and the more we hear of the hidden thoughts of the Labour Party, the greater those fears will be.
I had not intended talking about the single currency—an act of considerable restraint! However, I feel it essential to say that I do not agree with a single word that the noble Lord, Lord Healey, says about economic and monetary union. My own account of the dispute between Kohl and PÖhl, which is based on conversations with PÖhl himself, is fundamentally different from the noble Lord's account, which is no doubt based on his conversations with Chancellor Kohl. It is not surprising—
Lord Healey: Conversations with PÖhl. I said exactly the opposite.
Lord Cockfield: It is not surprising that you get a different story according to which of the two protagonists, or antagonists, you talk to. My view is that PÖhl was right and Kohl was wrong, and we should have been saved, as would Germany itself, from many of the troubles into which that country ran had the advice of PÖhl been taken and not that of Kohl.
Lord Healey: My Lords, the noble Lord confirms exactly what I said. I said that Kohl made a great mistake in rejecting PÖhl's advice. I have talked to PÖhl many times about this matter. When I met Germans at an Anglo-German Chamber of Commerce function in London a fortnight ago, including Mr. Schlesinger, previously head of the Bundesbank, they all agreed about this. I made that point, and I am really rather baffled that the hearing of the noble Lord, which used to be so keen, suddenly on this occasion proves so defective.
Lord Cockfield: My Lords, I am most grateful to the noble Lord. If I traduced him by misrepresenting his views I most certainly apologise. I had understood that he was adducing an argument in favour of having political control over the central bank. But no doubt he had a totally different point in mind. At least we now agree that the banker was right and the politician was wrong. That is the strongest possible reason for having an independent central bank. I am glad that the noble Lord and I agree on that point.
Lord Healey: My Lords, I am afraid I think that on this occasion the noble Lord knew that he misrepresented my views. Sometimes central bankers are right and sometimes governments are right. It is a great mistake to do as the Maastricht Treaty proposes; namely, set up a European central bank which is not allowed to take advice from anybody outside its ranks, even from the institutions of the European Union.
Lord Cockfield: My Lords, we are now beginning to open up a major debate on the single currency, which is
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exactly what I wanted to avoid doing. I was trying to make the very simple point that in the case to which the noble Lord, Lord Healey, referred it was the banker who was right and the politician who was wrong. In my opinion politicians are very often wrong, and I am glad that the noble Lord confirms at least that point of view.
I have gone far beyond the time I ought to have taken. Finally, I agree with a very great deal of what the noble Lord, Lord Barnett, said. The whole procedure has probably been pushed a little too fast—not dramatically so, but a little too fast. I feel, as the noble Lord does, that it would be a major tragedy if at the end of the day this country did not find itself in economic and monetary union and participating in the single currency.
6.55 p.m.
Lord Harris of High Cross: My Lords, unlike the noble Lord, Lord Cockfield, I am quite keen on having this grand debate on the EMU. It goes to the heart of our economic prospects for many decades to come. I join my old friend, the noble and learned Lord, Lord Howe of Aberavon, in particularly welcoming the promise of the Government in the gracious Speech to continue with firm financial policies to combine economic growth with low inflation. Indeed, I warmly congratulate the Chancellor on his record since 1992 and agree that he is probably going in the right direction in nudging interest rates slightly upwards.
The trouble with Mr. Clarke's success, however, is that it was made possible only by our leaving the exchange rate mechanism, and yet he still hankers to return to it. The other trouble is that Labour appears to be even more blind to the dangers of monetary union. However, that was before we heard the speech of my new friend, the noble Lord, Lord Healey, who spoke with the rare authority of another former Chancellor of the Exchequer. He pointed out that monetary union had been sinking in the polls on the Continent. The latest Gallup poll in this country shows that the view once held by a few free thinkers on Europe now holds the field with clear majorities in all parties, including even 60 per cent. of the rather sadly confused Liberal Democrats. Among independent economists the weight of opinion has come down decisively against fusing together economies of differing structures and inflexible labour markets without the shock-absorber of exchange rates to cushion the unforeseeable impact of differential change.
As we witness the pain of preparing for EMU on the Continent, the Euro-elites, as the noble Lord, Lord Healey, said, and our own grandees have shifted their ground from hard economics to the rather airy-fairy politics of Helmut Kohl's "grand vision". I do not join in mocking Helmut Kohl as "an old man in a hurry"—aren't we all! He is the survivor of the generation that remembers Hitler's war. He thinks that a federal Europe is the best guarantee of peace in our time.
In that I believe him to be profoundly mistaken. The Treaty of Rome got it right in emphasising that the chief antidote to national enmities is unforced, cumulative economic integration through open markets, fair competition and free trade. The challenge I put to every

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Member of this House is the following question: why have we, the great majority of ordinary people in Britain, overcome our post-war detestation, our hatred of Japan? Has it been through slogans about moving to the heart of Asia or "punching above our weight"? No. It is by millions of consumers in free markets valuing the chance to buy Japanese cars, cameras, watches, television sets, electronic gear and so on; and the corollary of Japanese investment in British industry. The great Liberal dictum forgotten by most politicians, not least the Liberal Democrat Party, is that trade unites where politics divide.
Why do we single out Mr. Kohl? He hardly needs to punch above his weight and may anyway be in political decline. The Brussels correspondent of The Times, George Brock, whom I have not always read with close attention, recently argued that the late Nicholas Ridley had been wrong to describe monetary union as "a German racket" because,
"At the root of many British difficulties in Europe lies not one country but a pair of them: France and Germany".
Mr. Brock then explained how this axis has set the agenda and rules the roost in Europe. He continued:
"Britain is regularly wrong footed by a two-country cartel which has cornered the market in ideas on what Europe should be".
Their Europe was once described as a marriage between a guilty husband and a jealous wife. The French, who understand these niceties, managed to keep on top until German reunification. Hence Germany's reluctant consent to sink its own currency into the EMU despite suspicions that the French wanted the opportunity to curb the hard-money men in Frankfurt. It was to calm those German fears that the Bundesbank insisted on central bank independence and what is increasingly shown to be bogus and—as the noble Lord, Lord Healey, said—inadequate convergence criteria.
Against this background of Franco-German realpolitik it was always misguided and, in my view, mischievous for the British Foreign Office to think that it could play one country off against the other. Over and above that marriage in Rome, France and Germany share with other continental Catholic countries a totally different philosophy from Anglo-Saxons about the respective roles of the state and individual freedom. My noble friend Lord Rees-Mogg, also in The Times recently, exposed their collectivist thinking as being drawn from outdated Papal teaching. It puts the social cart before the economic horse and prefers corporatism and consensus to competition and challenge. Mr. Delors was the classic victim of these delusions, his "level playing field" and "Global Social Charter" being just two examples of his flat-earth economics.
Greatly daring, I would say that, if we look back to the Bruges speech, we can now see that, judged from an economic point of view, it was not our Margaret or now our Johnnie who was out of step but those fuddled, fudging foreigners. Once Germany and France decided to put their heads into a monetary noose, it was inevitable that the lesser fry would queue up to hang together, even if it meant horrendous unemployment and cooking the books on convergence.
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If all this is not sufficient to explain the collective folly we are witnessing across the Channel, most European supplicants have their own differing reasons for wishing—unlike most British (or at least most English)—to become born-again Europeans. A distinguished Spanish economist, Dr. Pedro Schwartz, in his Wincott lecture last week, mocked the muddled motives in Europe in the following words:
"The Germans want the Union to stop them falling into Nazi ways. The French want to be cured of an inferiority complex. The Italians want to become a nation. The Spaniards want to bury Franco. The Portuguese want to be French. The Greeks do not want to be Turks".
He might have added that the Belgians no longer want to be Belgian. Dr. Shwartz's crowning quip, which I commend to your Lordships, was:
"the Common Market should have been founded not in Rome but in Vienna, on Dr. Freud's couch".
Yet it is to such an unstable, unruly, disordered coalition that we are invited to delegate our future economic fortunes. And still the three party leaders shrink from a candid declaration that, while free trade is fine, there are serious questions about monetary and political union. Opposition to that enterprise is, in my view, not only in the British interest but also in the interests of the prosperity, freedom and even national self-respect of all the countries of Europe.
I have to confess my difficulty, confronted with the prospect of a Division later in the evening. Cross-Benchers do not like Divisions, in the same way as psychologists do not like blood. Neither the Government's Motion nor Labour's trifling amendment deal with this transcendent issue of Europe. What should an honest Cross-Bencher do with his vote? It is the impersonation by the noble and learned Lord, Lord Fraser of Carmyllie, of Adam Smith on the imperatives of global free trade that has persuaded me at least to contemplate a rare visit to the Government Lobbies if nothing better turns up in the concluding speeches.
7.5 p.m.
Baroness O'Cathain: My Lords, in my contribution to this debate I wish to deal solely with one sentence in the gracious Speech. In fact, it is the sentence that was quoted by the preceding speaker, the noble Lord, Lord Harris of High Cross:
"My Government will continue with firm financial policies designed to support sustained economic growth and rising prosperity, while maintaining low inflation".
Everyone in business, in commerce—in fact, everyone with any interest in the economy and the economic health of the nation, irrespective of political views—must agree with the laudable objective contained in that sentence.
What immediately strikes me is that so far in this debate there has been considerable agreement that we are in many respects in good economic shape. I believe that the continuation of the current policies is something which is devoutly to be wished. The financial policies designed to support sustained economic growth that have been followed have been successful in their objective.

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The main headline on page 1 of the Financial Times on Saturday 26th October said it all: "Economic growth at two-year high." Behind that headline is a most interesting story, a story of economic stability which has now lasted for almost five years. I have to say en passant that the contributions to this debate so far have been incredibly stimulating. One would expect nothing less from such an array of distinguished ex-chancellors, current professors of economics and ex-commissioners, but I should like to point out gently that, although, to quote a phrase already used, I am probably punching above my weight, there is in the Speech nothing which says that we are the leading industrial economy in Western Europe, rather that the Government:
" … will continue to promote enterprise and further improve the performance of the economy with the aim of creating the strongest industrial economy in Western Europe …"
Sometimes non-academic economists have to work very hard in business and industry, but they pay a lot of attention to detail. It is very easy to become carried away with rhetoric. The rest of us, who are not very good at rhetoric, find it difficult, but we stick to the text.
Economic stability is the most important factor to anyone in business. How can one plan the future financial viability of an organisation against a background of seesawing financial and economic policies? How can one make production schedules, with all the interlocking facets of orders to suppliers, marketing plans, sales programmes, export plans, to mention but four, if one has no idea how prices are likely to move in both the long and short term in the economy as a whole? How can one become involved in new product development if markets are so uncertain, particularly at home, given that a strong home market is the base for so much of our export effort? Having been a strategic planner in industry for many years, I know just how difficult it can be. As an aside, I think ruefully that I was probably born out of time because, if I were a strategic planner today, it would be so much easier than in my day because there is now a climate of economic stability as the result of firm financial policies.
In my opinion, the pattern of economic activity over the last four-and-a-half years has been more stable than at any time in the past 30 years. All of us here are used to taking statistics and time-frames to suit our own arguments. I use 30 years as a bench-mark because it is precisely 30 years ago that I first became involved in business in this country. My knowledge of working within the parameters of government economic and financial policies prior to that is academic; my knowledge since is practical. I cannot impress strongly enough upon your Lordships the sheer desperation of trying to run a business without any confidence that the plans that one makes have any chance of being relevant, due to stop-go economic policies.
This Government, headed by my right honourable friend the Prime Minister, Mr. John Major, has been in control of the economy since April 1992. I believe that it is no coincidence that the second quarter of 1992 saw the first significant downturn in UK base rates and since then they have been almost unchanged. Even today's
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news of a one quarter of one per cent. increase is nothing like the shifts that used to occur. Naturally, there is a plea for lower base rates but those with an ounce—or should I say "gram"—of economic sense will realise that to lower them irresponsibly could result in overheating the economy, which would put at risk the objective of "sustained economic growth and rising prosperity".
The problem is that economists moan when consumer expenditure is sluggish but know that when that same expenditure shows buoyancy the warning of overheating is shouted from the rooftops. Despite today's minor change, I do believe that the firm financial policies of the last few years have had the desired effect of sustained economic growth. Minor movements like that of today give the right message: proceed with care on the sustained policy course.
Since the third quarter of 1992, each three-month period has seen an increase in GDP over the same period in the previous year: 15 quarters of "sustained economic growth". No wonder I welcome the statement in the gracious Speech which pledges to continue that.
I do not believe that in this Chamber there can be any argument with the objective of "sustained economic growth". Without that growth we shall not be able to fund all the necessary aspects of our education, health and social policies, to name but three, let alone fund better and rising standards in all those areas. There is nobody in this Chamber who does not want that.
Wealth creation is of fundamental importance and wealth creation on a sound, continuing, sustained basis will further increase the prosperity of all our people and allow for greater contribution to the overseas aid budget and other areas on the "wish list". I am sure that there is consensus on that.
The same arguments apply to the goal of rising prosperity. Wealth creation is, again, an essential ingredient in attaining that goal. There has been an increase in prosperity. Unfortunately we take it for granted when we have it and complain bitterly when we do not. But the biggest success in the economic field of the Government led by my right honourable friend has been the control of inflation. I find it quite staggering and almost unbelievable to be asked by businessmen in Continental Europe, "How have you really done it?" Far from being pitied by our European colleagues, we are now envied.
I find it a most interesting phenomenon that low inflation has of itself posed a problem for business; namely, how does one continue to make sufficient profit to fund investment for future expansion when inflation rates are so significantly lower than base rate? The answer lies in a never-ending search for greater efficiency in everything that business does and a much greater realisation that marketing is the key to our continuing and increasing competitiveness in world markets. Nobody wishes to see a return to high inflation rates, but we must make sure that we are constantly aware of every single factor that can impinge negatively on those same inflation rates, not least imposed costs on business arising from dogma or theoretical exercises espoused by those who have never run a business in their life.

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One of the problems with economists is that they rapidly lose their audience when they talk for far too long on what they regard as exciting trends and statistics but which are regarded by non-economists as dry as dust material. Another problem is the old chestnut: take any number of economists and you will have an equal number of differing opinions. In the case of this non-academic economist—probably the only one speaking here today—I can only state what I find both comforting and exciting in the gracious Speech. I hope that I have been brief enough, but not too brief, to encourage everyone to support the wish that we should:
"continue with firm financial policies designed to support sustained economic growth and rising prosperity, while maintaining low inflation".
7.15 p.m.
Lord Haskel: My Lords, the sentence that I want to quote from the gracious Speech is:
"My Government will … [promote] a flexible, efficient labour market".
Those were some of the very few words in the gracious Speech regarding jobs. But one word was wrong. Industry, I feel, would have preferred the gracious Speech to have promised a flexible and efficient labour force, not just a flexible and efficient labour market.
Let me clarify the difference. A flexible and efficient labour force will help to create successful companies. With successful companies there is security, growth and prospects. But with only a flexible labour market there is uncertainty, poor prospects and division. A flexible and efficient labour force means not only a competent workforce but also a workforce with transferable skills, and with skills in numeracy, literacy, communication and computing. The market does not produce that; training and hard work does. As my noble friend Lord Peston reminded the House, it is the role of government to encourage that.
What has the drive towards that so-called flexibility of the labour market achieved? The Government have been deregulating the labour market for 17 years. During that time, as my noble friend Lord Currie reminded us, we have been steadily falling down the world prosperity league—from 13th to 18th according to the Government's own competitiveness reports. The Minister and other noble Lords told us that we are to be the enterprise centre of Europe. I am not quite sure what that means, but I know that in GDP per capita we are in fact ninth in Europe. Neither will deregulation alone produce a skilled labour force. In many parts of the country we constantly hear about skill shortages. The answer is becoming apparent: the Government's so called labour market flexibility produces division; a divided society.
Nowhere is that division more apparent than in the rising difference in wages between the skilled and the unskilled. For 30 years after the war, the difference in wages between the skilled and the unskilled was fairly constant. Since 1979, the wages of the skilled have soared and the wages of the unskilled have risen barely in line with the rate of inflation. The result is that the difference between the wages of the skilled and the unskilled is now nearly twice what it was 17 years ago.
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I presume that those who support the idea of a flexible labour market believed that the wages of the unskilled would fall to a level at which they priced themselves into a job and the wages of the skilled would rise to a level just below where they priced themselves out of a job. That difference would encourage the unskilled to become skilled. In fact, what has happened is that good employers are being held back because of a skill shortage and poor employers are helped to pay low wages by a subsidy through the social security system. In Britain in 1993, £2.4 billion was paid out in social security benefit to supplement low wages. That may lubricate the labour market but, in the absence of a minimum wage, all it does is subsidise poor employers. Perhaps the Government can tell us at what level they expect the unskilled to price themselves into work. I suspect that there is no work for many of the unskilled at any price.
The differential between the pay of the skilled and the unskilled is even more pronounced in the United States. In recent years, the wages of the unskilled in America have fallen by 30 per cent. and the wages of the skilled have increased by over 100 per cent. Have they priced themselves out of jobs and does that explain the low rate of unemployment in the United States?
I have a trick question for the Minister: where does one find 2 per cent. of the American male population of working age? The answer is gaol. As wages drop so men are turning to crime. The proof is that the arrests and prison records in the United States show that the criminal population has the same characteristics as the population doing poorly in the job market. Incidentally, an additional 5 per cent. of the American male population of working age are on probation or on parole. That means that approximately 7 per cent. of American working men are involved with the criminal justice system.
The noble Lord, Lord Taverne, told us all about the cost of prisons. Is that the price the Government are prepared to pay for promoting what they call a flexible labour market? Perhaps that is an example of what my noble friend Lord Currie referred to as market forces operating against the public good. Having 2 per cent. of the male workforce in prison is an expensive way of getting them off the unemployment register.
If work is left to the labour market, one way or the other society will pay for people's lack of skill, either through the welfare system or the prison system. How much more constructive it would be to spend that money on getting people back into work. That is why Labour's plans are designed to encourage those aged 16 to 18, who might join the ranks of the unskilled, to stay on at school. That is why Labour's use of the windfall tax is designed to get those aged 18 to 25, who might join the ranks of the unskilled, into training and into work. That is why, for Labour, welfare is no longer enough. Welfare has to be the step back to work.
The Minister pointed to the reducing unemployment figures as a mark of the Government's success. There certainly has been a decrease in the number of those registered as unemployed and drawing benefit and that I welcome—I welcome it seriously. As other noble

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Lords pointed out, there is uncertainty over exactly how many people are unemployed. My noble friend Lord Bruce told us about the changes in the methods of collecting statistics; what he did not tell us is that the Royal Statistical Society referred to the manner in which those figures are now collated as "tawdry".
The reason for the uncertainty is that the labour force survey indicates that many people are leaving the workforce early, as the noble Lord, Lord Ezra, told us, because of down-sizing; 193,000 did so in the three years to December 1995. According to Paul Gregg of the London School of Economics one in five households now has no earners. All that inactivity led the Bank of England to conclude in its recent quarterly report:
"Almost the entire net improvement in unemployment performance in the 1990s compared with the 1980s was accounted for by the rise in inactivity".
What is it that has enabled us to increase the pay for skilled workers to such an extent? Is it deregulation? Is it the attack on union power? The answer seems to be technology. It is new technology that increased the demand for skilled workers and the use of that technology enabled firms to pay them more while keeping down unit costs. Those companies and industries where new technology has been introduced more effectively have increased skilled wages far more than in those which use less new technology.
Perhaps I can give an example from my own industry—the textile industry. Germany and Italy, with their high labour costs about which we keep hearing, are still the world's largest producers of fabric, thanks to technology. Could it be that all the time, energy, money and heartache spent on deregulation and attacking employment rights was unnecessary? The economic objectives could have been better achieved by more widely encouraging the introduction and use of new technology.
Quite rightly, departments exist for that purpose in the DTI. But, sadly, the gracious Speech is silent about that. It was silent too about investing in those skills and technologies which are the key to our future economic and industrial success. As a result we can look forward to the same old drift leading to yet greater social division. It must be common ground that we find those divisions unacceptable and feel the need to do something about it.
My noble friend Lord Peston reminded us that low pay is an ethical question. That is why I support his Motion regretting the failure of the Government to preserve social cohesion. Much of the division to which his Motion refers is caused by the Government's fixation on their so-called labour market instead of a flexible and efficient labour force.
7.25 p.m.
Viscount Thurso: My Lords, the noble Lord, Lord Peston, in his opening remarks, drew our attention to the long list of distinguished and erudite speakers contributing to this debate on the economic and industrial parts of the gracious Speech. I crave your Lordships' indulgence as an undistinguished small businessman squeezing between those economic Titans.
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I am not an economist and have no understanding of the spells and incantations of that particular brand of sorcery. However, in the Summer Recess I read three books on or by former Chancellors of the Exchequer. I much enjoyed reading the biography of Gladstone by my noble friend Lord Jenkins of Hillhead, and followed that by reading the fascinating autobiographies of the noble Lords, Lord Healey and Lord Lawson. I believe both noble Lords described economics as an art form rather than a science. Having read of their experiences I would perhaps go a little further and say it is an abstract art rather than a figurative one. I am still no wiser. That has nothing to do with their ability as authors but rather more to do with my inability to take in the subject matter. Consequently, I shall confine my contribution to the industrial parts of today's debate and in particular to my own industry; that is, the hospitality industry.
Like the noble and gallant Lord, Lord Craig of Radley, I was not quite sure on which day it would be best to contribute. As my industry is one of the largest employers in the country and one of the major contributors to the economy, I thought today would be appropriate.
Consensus appears to be out of fashion at the moment. Despite that, I believe that there is a broad consensus nowadays as to the requirements and objectives of the economy; that is, that we need stable growth in a low inflation environment in order to produce a large and healthy national cake which will provide for the people of our country. I believe we also agree, though perhaps by differing degrees, that high employment is both a major objective and a principal driver of a strong economy. Where there is disagreement, of course, is on how the national economic cake should be sliced.
Clearly the creation of long-term and sustainable employment is a vital factor in a sound economy. This morning on Radio 4's "Today" programme I heard the Secretary of State for National Heritage say that four out of every 10 new jobs created in the future will be in the industry in which I work—the hospitality industry. For a long time this industry has felt that its value to the economy has not been recognised by government and it is therefore heartening to know that government understand the importance, both today and in the future, of the industry. That is in no small measure due to the opportunities we have had in your Lordships' House to debate particularly the tourism section of the industry, and I shall not therefore go over ground that has already been well trodden. However, I should briefly like to remind your Lordships of the scale of the industry.
As the report of the Select Committee on the European Communities, Tourism in the Community, which your Lordships debated last year, recognised, the industry is extremely diverse and consequently difficult to define. I use the term "hospitality industry" and refer to those businesses covered by the Joint Hospitality Industry Congress. This body, which came into being some three years ago, has representatives of more than a dozen of the main industry bodies, covering not only the traditional tourism side, such as hotels and

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restaurants, but also other parts of the hospitality industry, such as contract catering and licensed victualling.
According to the British Hospitality Association, a key member of the Joint Hospitality Industry Congress, there are today 2.5 million people employed directly in the hospitality industry. This is equivalent to 11 per cent. of the national workforce. The industry spend is currently £50 billion, equivalent to 10 per cent. of annual UK GDP. For the future, the BHA estimates that 130,000 new direct jobs will be created in the industry by 1999. The Secretary of State herself this morning estimated that the industry will produce a million new jobs over the next 10 years.
Not very long ago the hospitality industry was an economic footnote. Today it is a major driver. However, although the industry as a whole is large, it is very fragmented, made up of many different sections and comprising for the most part small businesses. It is therefore very often difficult for it to present a common front or agree a common strategy. It is consequently an industry where government leadership and support are vital if it is to fulfil its future potential. I am sorry that in his opening speech the noble and learned Lord, Lord Fraser of Carmyllie, giving a long list of successful industries, did not mention anything to do with the hospitality industry, which is one of the UK's largest employers.
It is very easy when in opposition to fall into the habit of opposing for the sake of opposing, and I do believe, however rare it is, that the Government should be given praise where praise is due. A great deal of what is required in the tourism industry is frankly plain common sense and is not party political. The Department of National Heritage has done a lot over the past few years to help the industry. Most importantly, and for the first time, those of us working in the industry feel that our views, whether agreed with or not, are at the very least being listened to and taken seriously. This is a great step forward. I would also compliment the Secretary of State on placing the industry high on her agenda and on the energy she has shown in promoting the industry both at home and abroad and in prosecuting our requirements in Whitehall. However, there is still a considerable amount which the Government can and should do to help the industry.
Let me begin with money. Everyone who speaks on tourism, whether it be in your Lordships' House or elsewhere, makes the point that the budget available for tourism support at the DNH, which in the current year is, I believe, around £46 million, is a minute investment to make when compared both with the size of the industry and with the amount of support given by the Department of Trade and Industry to other industries. We must invest for the future and the only way in which an industry as fragmented as ours can move forward is through government leadership; and that requires investment on a greater scale. It is frankly disappointing to read in this year's Department of National Heritage report that the amount projected for next year is actually to go down.
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My criticism of the Government is their failure to take the lead where they have been required to do so. I take the question of hotel classification and grading. The crown scheme introduced 10 years ago has produced widespread confusion. This has been recognised by the DNH. It commissioned research which demonstrates that the public clearly want a better scheme. While I welcome moves to produce a new scheme, I must say to the Government that, as long as such a scheme is voluntary, in my view it will fail. I believe it is up to the Government to take the lead and institute a system to which all accommodation providers are obliged to respond.
Then there is the question of our archaic licensing legislation which is needlessly complicated. A zero-based review of our licensing legislation producing something far more appropriate to today's society would result in a major boost to our industry. I also believe, particularly if we separate the licensing of premises from the licensing of people, that not only would we be able to offer the provision of food and drink at the times when our customers, particularly tourists, want them, but we would also be able to introduce more effective control against the abuse of alcohol and particularly under-age drinking.
However, I believe that the biggest challenge facing our industry is one where we shall get no help whatsoever from the Government. That is in the area of the quality of jobs which the industry is expected to provide. This morning the third report on tourism, Competing with the Best, was published by the Government. It was entitled People working in tourism and hospitality. It was on this report that the Secretary of State was commenting this morning. I have only just managed to get hold of a copy of the report and therefore have not been able to read it properly. But it appears to highlight the immense need for training and motivation within the workforce of the hospitality industry if we are to continue to improve the quality of our product and the size and profitability of the industry as a whole.
The plain fact is that a very great number of people who are employed in the hospitality industry are employed at very low—I would say far too low—rates of pay. The consequence is that we continue to fail to attract the brightest people into the industry and many of our lower paid jobs continue to be jobs of last resort. I have to say I do not believe that the industry will voluntarily change this, and consequently there is a vicious circle in many parts of the industry—and particularly at the bottom—whereby staff work in jobs they do not really want to be in, are not in the least motivated and leave as soon as they can find something better. Because of this, employers see no reason to spend on training or attempt to motivate their workforce. Conditions therefore remain bad.
Over the past 20 years or so the balance of power between capital and labour has swung decisively in the direction of capital. I believe it is an important element of a vigorous economy that there is a proper balance between labour and employers. At the moment that is not the case. Even in industries where trade union support was strong, their power has been greatly diminished. In the fragmented hospitality industry

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employers without doubt have the upper hand. Despite the efforts of many good employers, the long tail—as the noble Lord, Lord Currie, so eloquently described it—is very unwilling to train, motivate and pay those employed at the bottom of the industry. Consequently, I believe that the only way in which this vicious cycle can be broken is by the imposition in our industry of a minimum pay scale; that is to say, a return to something like the hotel and catering wages council. I believe that this will result in a virtuous circle. Where employers are obliged to pay their employees at the bottom of the scale a decent living wage, they will also be obliged to make better use of those employees. They will be forced to invest properly in training their staff, who will become better motivated.
I am not wholly convinced of the arguments for a national minimum wage, but I am certainly not frightened of the concept. In our industry I believe it is a necessity if the jobs we are to create are to be sustainable and worth while. I simply cannot understand the logic which says, as so many managers do, that the biggest problem is that we do not pay people properly or train them enough and in the same breath we vehemently oppose the most logical methods for remedying these ills. From my brief skim through today's report, it is absolutely clear that low pay has been identified as a major factor holding back the industry.
I am very proud of my industry and as a manager I want to see well paid and well motivated staff not only in my organisation but throughout the industry. I do my best. In fact in my own establishment this year, at the budget time which we are in now, I have asked all my managers to institute a voluntary minimum wage. We have chosen £4 an hour and that is being applied throughout our company. But if these million new jobs which are being created in the next 10 years are not to be for another million low paid, low skilled staff of last resort, a stick much larger than benign urging is required. Without it, they will remain jobs of last resort and unfulfilling and unwanted. They will not contribute to social cohesion as they should, but instead they will perpetuate the divisiveness which has so dogged our society.
7.40 p.m.
Lord Sanderson of Bowden: My Lords, I welcome the opportunity to support Her Majesty's Government in this debate on the gracious Speech in relation to industry and economic affairs, but I reject entirely the terms of the amendment. I believe that our country's reputation abroad on economic matters is light years ahead of the poor ratings we had in the years that ended with the winter of discontent.
As far as Europe is concerned, I trust that all those who are critical of the workings of the European Union will not forget the cost to our nation's trading position of putting at risk the very real gains that are available to us by having broken down the trade barriers in Europe. Let no one suppose that the United Kingdom would be the beneficiary from a pull-out policy, just as no one should suppose that a policy for a statutory—
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and I underline that word "statutory"—minimum wage would be anything but a tax on jobs. A windfall tax on utilities would be an oncost to consumers of water and electricity.
For those of us lucky enough to live in Scotland a tartan tax would be an unfair extra burden compared with the taxes put on citizens in other parts of the United Kingdom. While on the subject of the Scottish economy, I had the privilege in this House of taking the amendments relating to Ravenscraig when the Steel Bill was passing through and also of answering questions on the future of the Rosyth Dockyard.
I concur with the remarks of my noble friend the Minister in his opening statement. I congratulate my successors in office—turning the tables on the doom and gloom merchants of that time by the huge inward investment projects now secured for Lanarkshire and Fife.
However, this debate is one which rightly ranges over a huge canvas. Others more eloquent than I have addressed and will address the macro-economic scene. In passing perhaps I may say that the speech of my noble friend Lord Cockfield must be essential reading for anyone who wishes to understand the macro-economic position of this country.
I would like to confine my remarks to the current situation relating to small firms and also to make some remarks about two important aspects of Government policy in relation to industry. We should never underestimate the importance that is attached to the number of small businesses in the United Kingdom. We have to be constantly sure that they have a stable economic environment in which to work, with as low burdens as possible as far as bureaucracy is concerned, and that help for their development is always forthcoming. I believe that Her Majesty's Government have indeed been supportive of small businesses. The small company rate of corporation tax, which last April was reduced from 25 per cent. to 24 per cent., was indeed very helpful. I firmly believe that support for small businesses should be private sector led and that we should ensure that help is tailored to the needs of the local business community.
Incentives for these businesses are essential. There has been much talk about the fat cat's club in the press which, I presume, refers to those people who have done very well personally out of the various privatisation issues and who have been a success in their own businesses. They have been fortunate and, in some cases they have been in the right place at the right time. I would prefer to call the club the bumblebee club as those involved have been at the centre of those businesses which have served their "workers" well. My point is that if those people have gained from their positions and the businesses have succeeded, then it is essential that we attract those gains and that money into investments in the United Kingdom and thus prevent the flight of the bumblebees to far off tax shelters like the Cayman Islands.
Last year my right honourable friend the Chancellor of the Exchequer encouraged investment in the United Kingdom by the arrival of venture capital trusts. It is

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early days to measure their success, but such measures as these and tax allowances for investment in the alternative investment market are good examples of how to ensure that private capital can be reinvested to the benefit of United Kingdom businesses. I know that my right honourable friend the Chancellor of the Exchequer also introduced the enterprise investment scheme to replace the business expansion scheme. I wonder whether he has made that scheme the success that he expected it to be. If I were to hazard a guess I would say, as they say in school reports, "Perhaps he could do better".
We have listened today to a very important speech by my noble friend Lord Weir on the subject of the private finance initiative. I suppose that I should declare an interest as a director of a construction company involved in some projects. I agree with most of what my noble friend said—in fact, he has ensured that my contribution on this subject is considerably shorter than it might have been. However, I would emphasise three important points that he made. First, the costs of mounting bids is huge. That is a definite disincentive to some companies. The bidding process is inevitably complex, but to those companies which are unsuccessful—and they number not a few—there is a greater and greater need for them to be selective. Secondly, my noble friend said that we must avoid Dutch auctions. I agree entirely. If there are too many Dutch auctions in this area we shall end up with nothing to auction. Thirdly, the sooner the preferred bidder status can be reached the better. I suggest that if necessary, after that stage is reached and we have more than one preferred bidder, the Government should fund the costs of the unsuccessful.
The Chancellor's recent announcements have helped to restore confidence in PFI. I believe that it can succeed. I also believe that the area which is slowest to get off the mark and the one which is certainly causing me and others most concern, is the health area.
Finally, businesses of all sizes cannot afford a return to the boom and bust switchback of the past. Therefore, I welcome the Chancellor's corrective action today on interest rates. Low inflation must be the key to sustained economic progress in this country, hence the requirement to pin down government spending to ensure a level that avoids the unwelcome spectacle of unstoppable inflationary pressures that could wreck all the gains achieved, some very painfully. But the current record is the envy of many across the seas, notably on the other side of the English Channel.
7.48 p.m.
Lord Desai: My Lords, we have heard many good speeches today. The first I should like to mention is that made by my noble friend Lord Currie, whom I have known for a long time. He has fulfilled all my expectations by giving a succinct and brilliant speech. I am sure that he will make many more contributions to our debates in the future and I look forward to them.
We have had an almost unintended but major debate on the single currency, to which my noble friends Lord Healey, Lord Bruce of Donington, Lord Barnett and the noble Lord, Lord Cockfield, have contributed. I wish to
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speak on the single currency in a minute, but first I should like to say something about some of the issues which were mentioned by the noble and learned Lord, Lord Fraser of Carmyllie.
I accept that certain macro-economic figures are very good. Indeed, I said as much last March in an article in the New Statesman which got me into some trouble. However, we must remember that a good performance over 15 quarters is not permanence. The noble Lord, Lord Cockfield, pointed out that although we claim a lot for the macro-economic framework, we continue to pay about 1.5 per cent. for our government debt above what is paid in Germany and the United States. That shows that the market still does not trust the Chancellor of the Exchequer of the United Kingdom—whichever party is in power—to be responsible. It will take many more years before the UK's reputation for fiscal prudence is properly established.
Indeed, although I welcome the quarter per cent. increase in the rate of interest, I do not think that it is enough. Problems with high interest rates arise not so much from what consumers do (although they are spending a lot of money), but from what people suspect that the Chancellor of the Exchequer will do. We are already hearing siren voices saying to him, "Go ahead. Have tax cuts. Why not? If you are lucky, we won't get re-elected and if you are not lucky and we do get re-elected, we'll have a tough Budget next time". That is what happened in 1992. I do not think that we can conduct fiscal policy on that basis.
Although I know that the Chancellor will not take my advice any more than has the Shadow Chancellor, I strongly advise the right honourable gentleman to think seriously about increasing the rate of taxation. As noble Lords know, I am no friend of lower taxation. I never have been. I believe that we have to decide on our spending priorities. In that respect, although a lot of nonsense is talked about savage spending cuts and about controlling spending, by and large spending is difficult to control because most of the money is properly spent. Indeed, we should like to spend more on more things because the voters want more. We cannot get away from the fact that they want smaller classes and a better National Health Service. Talk about making deep cuts in public spending is simply delusion. I know that the Prime Minister is not in favour of caning, but as slapping now seems to have Christian approval, I think that those of his friends who continue to talk about the need for spending cuts should be slapped down.
We are not going to have spending cuts, but what we are going to have if we do not have the courage to tax properly are deficits. Indeed, it has been the rather unseemly haste to cut taxes which has got us into this trouble. Bold decisions will have to be made, if not in this Budget then in the next Budget, whichever party has to frame it. As was pointed out earlier, the public sector borrowing requirement in the UK economy is unsustainable. A country in the fourth year of a good recovery should be producing a surplus on its budget, not a deficit. There is no excuse for continuing to produce a deficit.

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It is argued that if you cut taxes, revenues rise. I have two points to make on that. Our major increase in income tax revenues occurred when the tax rate was cut from 87 per cent. to 60 per cent. The next set of cuts—from 60 per cent. to 40 per cent.—did not yield that much extra money. Although the income tax paid by the top 1 to 5 per cent. has increased, the tax base has shrunk, and because it has shrunk we find that, although we are in the middle of a prosperous phase, we are not collecting enough taxation to be able to afford the things that we want. I do not think that that is sustainable. Therefore, I urge the Chancellor, even if he cannot do anything else, in the stealth of the night to remove the ceiling on National Insurance contributions. That might not only bring in more money, but it might even catch some fat cats—and that is not easy. I am sure that this problem cannot easily be solved.
I come now to the Private Finance Initiative about which much has been said. We must remember that PFI is not, and should not be, a substitute for public sector investment. That is my first point. However, I should also point out that PFI is not as successful as some people claim. In the higher education sector where I work, PFI is causing much damage because nobody is paying any attention to the fact that although our capital grants have been cut on the promise that there will be PFI help, we are not going to get that help. As I have said before, I believe that very soon—probably within this financial year—one or two universities will go bankrupt. There is no provision to cover that. We have provision for hospitals going bankrupt, but no such provision for universities. Who will take over the liabilities—and the students—of universities which go bankrupt? This is an urgent problem and I do not know what we can do about it.
Therefore, although the Private Finance Initiative is welcome, it should be an addition to, not a substitute for, public sector investment. That investment has declined precipitously. That is not the kind of expenditure control that I welcome. If the Government want to control expenditure, they should do it somewhere other than in the education sector.
Returning to tax cuts, it is puzzling that although everybody claims a great deal of credit for having reduced the top rate of income tax from 87 per cent. to 40 per cent., the tax that is implicitly being paid by an unemployed person when he or she takes a job is between 80 and 90 per cent., and nobody has done anything about that tax rate. The Government have spent 17 years talking about reforming the welfare state and saying that they want to provide incentives to work, but I must advise them that lower wages are not an incentive to work and that somebody who is contemplating moving from unemployment into employment will need a tremendous boost in their income before work can become worth their while because of the tapering effect of the loss of welfare benefits. We have created a welfare state in which, by deliberately tapering the benefits to which people are entitled, the implicit tax rate is so high that many people at the lower end of the income scale find that taking a job is not worth their while. Nothing has been done about that. If the
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Government are serious about doing something about the job market, they should give that problem a greater priority.
The possible adoption of the social chapter and a minimum wage are not the problem. The real problem is the disincentive to work, which also has an effect on social cohesion. The lack of social cohesion has become a problem for two reasons. I advise all those who do not believe that the lack of social cohesion is a problem to recollect that all the debates in the press in the past month have centred on violence, child abuse, gun control, declining moral values and what we can do about our children. I do not want to be an economic determinist about this, but if the economy is going so beautifully and if we are the best enterprise centre in Europe, why is there so much trouble among our populace? Why is everybody worried about the quality of life in this country? Why do people feel insecure and threatened? I believe that there is some connection although I do not want to make too much of the point.
Many people are not part of the job market because of a lack of incentives or a lack of skills, and those who are in the job market at the lower end of the scale are often badly paid, yet those people have legitimate aspirations. There is a lot of tension and violence in some families and although the cause is not solely economic, we cannot rule out the fact that the insecurity and poverty of those at the lower end of the scale contributes to family tension and violence. That is why I strongly support that part of my noble friend's amendment in which he refers to policies which preserve,
"social cohesion and integrity within the United Kingdom."
Finally, I should like to make one or two points on the single currency. I was originally a fanatic about the single currency and my point was simple. I wanted a single currency and a federal Euro state. I make no bones about it. I believed that the only way to run a Keynesian policy was on an all-Europe basis. A strong federal state would have guaranteed that one could run a Keynesian policy without a run on the pound or a large export of capital.
Since the Edinburgh Summit (if anyone still remembers it) the programme for a strong federal Europe has been scuttled, so much so that even France and Germany are unwilling to increase the European budget and provide the transfer payments required to meet the cost of a single currency. For that reason, I have come to the conclusion that neither the UK nor any other country should be part of a single currency at the moment. One is talking of a single currency purely for political reasons which refer to a period which has gone by. We no longer need to worry about whether Germany will be part of the western alliance with German reunification. Those fears have passed. Germany's fear that if it is outside a single currency somehow the deutschmark will become too strong is also a delusion. In the past two years the German economy has shown that there is no great danger of that. I do not believe that at the moment it is in anyone's interest to rush into a single currency.

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We should not be bound by any deadlines which, after all, are man made and are not God-given law. I believe that when the case for a single currency becomes stronger we should continue to think about it, but I do not believe that we must all march in step because dire consequences will occur if a single currency is not created. After all, the single market has not yet been fully implemented. Why do we have to rush into a single currency just because Jacques Delors thought six years ago that if there was not a single currency programme Germany would escape from the western alliance? There is no possibility of that. Let us think about a single currency. I believe that there will be an evolutionary path whereby countries move closer together. There is probably a core of three or four countries—Germany, Austria, the Netherlands—which are already in a de facto single currency situation. Let them get on with it. At the moment France is killing itself to get into the single currency. France and Italy are involved in a passionate move to do it. We must insist that the Maastricht conditions are strictly adhered to before anybody becomes a member. There must be no fudging or cooking of the books and no concessions should be made. That is the only condition on which a single currency should be entered into. I believe that we will then have a longer period in which to think about a single currency, rather than thinking of a starting date and putting constraints upon ourselves. As to the question of pace, pets are not just presents for Christmas but are for life. One will enter into a single currency not just in 1998. If one is to go into it one is to be in it for a long time. There is no hurry. We must think about it carefully. When the case is stronger perhaps there should be another debate, and then go in.
8.3 p.m.
Lord Tugendhat: My Lords, like others who have spoken in this debate, I begin by congratulating the noble Lord, Lord Currie of Marylebone, on his notable maiden speech. However, I cannot associate myself with his strictures and those of the noble Lord, Lord Healey, on the quality of British management. In that respect, I identify myself much more closely with the views of my noble friend Lord Weir. One of the most striking changes which has taken place in Britain over the past 15 years is the improvement in the quality, professionalism and competitiveness of British management. I find it surprising that those connected with it, in the way that the two noble Lords are, should have formed such a contrary view.
As has been pointed out by a number of speakers in this debate, on balance the past year has been a good one for the British economy. Growth and falling unemployment have compared well with other European countries. People have enjoyed the benefits of tax cuts. Negative equity is on the wane. But one ought not to get too carried away. The current account is poor by European standards. One has only to compare it with those of France and Italy to appreciate that. The budget deficit is higher than forecast and higher than it should be. Not only has inflation failed to get below the Government's target of 2.5 per cent.; it is also very high
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by most European standards, even if it is rather low by the standards to which we are accustomed in this country.
I should like to dwell on inflation for a few moments. Some of the dangers tending towards higher inflation are well known. For instance, broad monetary growth has been running at dangerously high levels for some months. We can also see the beginnings of a consumer-led boom. For these reasons alone, now is not the time for significant tax cuts. It is the time to begin putting up interest rates if we are to avoid trouble in the second half of next year; that is to say, after the general election. I therefore welcome the Chancellor's decision today to make a small rise in rates and regard it as an appropriate precautionary measure.
There is another factor to which I should like to draw the attention of the House. I feel that hitherto it has received insufficient attention. I refer to the windfalls that will arise from the de-mutualisation of certain building societies and insurance societies during the second half of next year. At a rough estimate, that could put £23 billion into peoples' pockets during the latter six months of next year. That is a truly colossal sum. To put it into context, total mortgage lending this year will probably amount to about £17 billion. If distributed equally, £23 billion would add about 4 per cent. to personal disposable income in 1997; in other words, the de-mutualisation process will potentially have a substantial macro-effect.
All of that money will not be distributed equally. Not everyone is a member of the Halifax Building Society, or has a policy with the Norwich Union, or is involved with the Alliance & Leicester, and so forth. But a great many people are involved with more than one of those institutions. Several million people will be involved with several of them. That makes it extremely difficult to forecast how much will be saved and how much will be spent. When Abbey National converted from a mutual to a plc in 1989—some two years before I became involved with that company—and when TSB was floated, it was estimated that between 25 and 30 per cent. of the shares were sold off quite quickly. If that happens this time the effect will be to add between 1.18 and 1.5 per cent. to the underlying rate of consumer expenditure. My view is that the figure will probably be higher rather than lower because a substantial number of people will benefit from more than one of the windfalls. Against that background, I urge the Chancellor to err on the side of caution in respect of both tax cuts and interest rate rises. Few things in economics are certain, but the cornucopia to which I have just referred is about as certain as anything can be. In those circumstances it would be irresponsible to take risks on the inflation front.
I believe that there is another matter that the Government should bear in mind. It looks increasingly likely that Britain will not be in the first wave of EMU participants. To my great sadness it is probably right that we should not be, as I do not have confidence in the arrangements that seem likely to be put in place. But if EMU goes ahead—which is likely, probable, yes, but not certain—being outside will not be an easy option.

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Britain, as several noble Lords have pointed out—notably my noble friend Lord Cockfield—does not have an impressive, long-term record in terms of its public finances, price stability or the maintenance of the external value of its currency. The burden of proof will be on us to show that we can handle these matters better than the participating countries. We will not, I fear, start with the benefit of the doubt.
Others may hope to gain or consolidate reputations for sound money and responsible fiscal and economic policies by going into EMU. If we do not do so, we will have to show that we can achieve those reputations on our own. If not—if we cannot show that—then regardless of our reasons for not joining we will be classified by the international capital markets with those who are too weak or incapable of doing so.
That is a very tall order indeed. But if EMU fails to go ahead, or if it does go ahead and fails to work as its participants hope, if it fails to deliver price stability, and if it creates other problems as well, we could be on the verge of a golden opportunity to transform Britain's reputation relative to others in the world's eyes and those of its markets.
Every year before the Budget it is said that the stakes are high. This time not just the Government's reputation and the Chancellor's are being put to the test, nor even the important task of winning the election; it could also be the position in which Britain enters a new era in European and international monetary relations.
8.10 p.m.
Lord Monkswell: My Lords, last week when I listened to the gracious Speech I was concerned that there was no mention of unemployment. Therefore I was pleased when my noble friend Lord Peston moved his amendment this afternoon. One of the things to which it refers is the country's reputation abroad.
We have heard this afternoon how we have an astronomical PSBR. We know also that the Government have indulged in privatisation on a massive scale over recent years. I was reminded of the contribution made to our national debate 11 years ago by the late Lord Stockton. He pointed out:
"They have invented the one new law that there is no difference between capital and income. Under this law, apparently, you can spend all your capital on current account".
One of the phrases that will go down in history is, "selling the family silver" which I am sure most noble Lords will remember. Lord Stockton pointed out also:
"Some of the nicest fellows I have known in my life have experienced this confusion between capital and income, but they usually ended up in rather dreary lodging houses".—[Official Report, 23/1/85; col. 254.]
The superficial reputation we have abroad may be because we are got up like gay young blades having sold the family silver and having nothing to fall back on in the future. I cannot see the Prime Minister as a gay young blade. "Grey blade" might be a better description. So I was pleased about that part of my noble friend's reasoned amendment.
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If we look at unemployment, which is one of the biggest problems with which we have to contend, and the record over the past 20 years or so, we can see that on the Government's own figures, during the period of the previous Labour Government and apparently bad days in the 1970s, unemployment averaged 5.35 per cent. The minimum was 4.5 per cent. and the maximum was 6 per cent.
If we look at the figures for this period of Conservative Government since 1979, we can see that the average figure has been 9.48 per cent. The minimum was 6.5 per cent.—that minimum figure for unemployment over the past 17 years is significantly higher than the highest under the previous Labour Government—and the maximum was 12.5 per cent. We currently have an unemployment rate of approximately 2 million people.
One of the points my noble friend mentions in his reasoned amendment is integrity. We could have a big debate on the Government's integrity vis-à-vis this House: how we were misled into thinking that we were engaged before the Recess in a free vote, a reasoned debate, on the amendment to the Bill of Rights when in fact the Prime Minister advised us subsequently that it was a government ploy and a whipped Division. That does not speak of a great deal of government integrity. I do not want to go into that argument today.
I should like to look at the integrity of the Government's unemployment figures. I was at a meeting during the summer. One of the first questions I was asked following a little speech was, "What is going to be done in the future about government statistics"? We have a problem when people do not believe the statistics the Government publish. One of the problems relates to the unemployment figures. We know that the method of the calculation of unemployment figures has changed many times over the past 17 years.
The other day a colleague in the House asked me what the real unemployment figure is. I have been trying to find out some real figures. Perhaps I may take your Lordships through some figures that I have managed to obtain from the Library. They relate to 1994. It was not possible to obtain sensible figures for later years because they are not available publicly. I looked at the population in different age ranges in the UK. I took a proportion of the population in the 15 to 24 age range because some of them will be in full-time education. I calculated a figure of 5.28 million people available for the labour market. Between the ages of 25 and 59 there were 27.9 million people. In the age range of 60 to 64 there were 1.36 million males. That makes a total of 34.14 million. I chose the ages of 60 and 64 because, nominally, that is the retirement age for women and men. We heard earlier that many people expect to retire before then. I also entered an allowance for mothers involved in rearing young children. Expecting mothers of children under five to get a job does not recognise the important work that is involved in rearing young children and running a household. That allowance was 3.8 million.
The result is that we have an available workforce of 30.34 million but a workforce in employment is 25.48 million. That leaves a balance of 4.86 million

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people who were notionally unemployed. The Government figures for the same year showed 2.64 million people unemployed. I do not suggest that my figures are perfect but they show our difficulties in accepting the Government's figures for unemployment.
My noble friend's reasoned amendment then deals with social cohesion and in that respect I wish to give the House a case history. Ten years ago a young man of 25 was in reasonable employment. He and his girlfriend decided to marry and have a family. They had two children. Within a couple of years he was out of work. For years he was unable to find full-time employment. The marriage broke down two years ago and this year they were divorced. For the past two years that young man has had a regular job as a careworker. It is a half-time job of just over 20 hours a week. He is not in a position to provide for his wife and family. That is one of the results of unemployment and its effect on social cohesion.
Given the Government's record on unemployment, we can have no confidence that it will change. During the past 17 years we have experienced two major recessions resulting in mass unemployment higher than in the intervening period. I support my noble friend's reasoned amendment because it is right and just to do so. Perhaps I may commend one phrase in the Labour Party's manifesto for the next election. I refer to its commitment for stable and high levels of employment. That phrase was used in the 1945 Labour manifesto and I hope that the next election will usher in for this country and others 30 years of virtual full employment which followed the 1945 Labour victory.
8.24 p.m.
Lord Boardman: My Lords, I am sure that the noble Lord, Lord Monkswell, will forgive me if I do not follow him in ranging wide of the gracious Speech. I believe that the present economic situation is good. I do not propose to list issues such as inflation and so forth, which have been well rehearsed today.
As regards future prospects, I noted that the gracious Speech stated that the Government's financial policies are,
"designed to support sustained economic growth and rising prosperity, while maintaining low inflation".
How right that is. I had hoped that the Opposition would agree with that and would have expressed its agreement, but presumably it does not agree because it has moved a reasoned amendment.
I have looked with some care at what has been said about that amendment. I heard the speech of the noble Lord, Lord Richard, and read it on a number of occasions to see what terrible offence the Conservative Government have committed to which the Labour Party has objected. I could see nothing, apart from one or two issues to which I shall refer in a moment. I also looked to see what the Opposition propose to do better, but again there was nothing. There may be some secret message between the lines, but I cannot find it.
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However, I noted in particular that in criticising the Government the noble Lord, Lord Richard, said in justifying the amendment:
"The terms of our amendment are carefully chosen: cohesion and integrity. Cohesion is in many ways the acid test of any government's success or failure. Is the country more at peace now with itself than it was 17 years ago?".
I wonder where the noble Lord, Lord Richard, was 17 years ago. He could hardly have been in this country or in touch with it. Seventeen years ago we had the winter of discontent when the dead could not be buried, yet the noble Lord said that then, among that chaos, the country was more at peace with itself than it is today. I find that a strange statement to make in justifying its claim and it is trying to prop up its attack by arguments which are erroneous, believing that we have forgotten what happened 17 years ago.
The noble Lord went on to deal with the industrial scene. I quote his remarks because, as Leader of the Opposition in this House, I look upon them as constructive suggestions and as being a headstone for where the Opposition stands. He said:
"Nor, looking at the economic situation, did I ever expect to see such a collapse of British manufacturing industry. I was brought up to believe, as a somewhat naïve individual, that the basis of British prosperity was the export of British manufacture. No longer so. The relationship of manufacturing to total UK production has fallen from 29 per cent. in 1979, when the Conservatives came in, to less than 21 per cent. now".—[Official Report, 24/10/96; col. 30.]
I regret that the noble Lord is not in his seat in order to reply, but I wonder whether he remembers what has happened to British manufacturing during the past 17 years. Massive manpower has been replaced largely by electronics, and other changes have taken place. Industrial towns such as Corby, which was a great steel manufacturing town, are full of light industries and service industries. Of course there is prosperity which is much more real than it was when the town manufactured steel largely subsidised by government and the rest. Those were the days of 1979 to which the noble Lord, Lord Richard, happily referred. In 1979, working days lost were 60 times the working days lost in 1995. And yet that is put forward as a ground for this reasoned amendment by the Leader of the Opposition with the background of wanting a country at peace with itself. I really find it very difficult to understand.
The noble Lord referred to the collapse of the British manufacturing industry, but British manufacturing industry has risen. In 1979 it had an index of 77 and it now has an index of 101 or something like that. Growth has not been sensational but has been steady. In fact, manufacturing industry has been largely overtaken by the service industry. But during the years when the Labour Party were in office—and I hate harking back to 1979 but as the noble Lord, Lord Richard, made that comparison, I must do so—manufacturing industry decreased. But between 1979 and 1995 it increased.
I suggest that the spin doctor whom the Labour Party has used to prepare this propaganda, because it is no more than that, and the slur on British industry, should retire. I know that the amendment was moved today by the noble Lord, Lord Peston, but I spare him from my criticisms because I have the printed words in Hansard

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of the noble Lord, Lord Richard. In any event, I am not quite sure that the noble Lord, Lord Peston, provided me with such good ammunition as did the noble Lord, Lord Richard. Perhaps I shall have to correct that tomorrow. Someone has put forward these figures and presented them to the noble Lord the Leader of the Opposition in order to gain press attention, but they are not correct. That is most regrettable.
I turn now to the economy itself. Several noble Lords have spoken on the single currency. The noble Lord, Lord Barnett, greeted it with surprising enthusiasm. The noble Lord, Lord Bruce of Donington, exercised a certain amount of concern, of which we were perhaps already aware. The noble Lord, Lord Tugendhat, spoke with some wisdom through his experience in the Commission. I support the line which the Government take and I support government policy. If you have a free option, for goodness sake, keep the option open until it must be used. Why should we throw it away? The Government are keeping open that option. They are hoping to help to improve and prepare the system which is being worked out to ensure that it will be in the best interests of those who are in and those who are out. That must be the wise and sensible line to take. There is a promise of a referendum should the Cabinet decide that the United Kingdom should enter. The Conservative Party is the only party to have done that. I have a number of reservations about going in, but I am content to wait and see. I agree with a number of other noble Lords who have reservations about the idea of a European central bank, although I do not accept the criticism of the noble Lord, Lord Bruce, who said that all bankers are probably undesirable. I do not accept that, but, however good they may be, I do not wish to see a number of anonymous bankers ruling the European central bank.
One thing is quite clear. I do not believe that monetary policy can be confined to just that. Fiscal and monetary policy must both be used, certainly to control inflation. You cannot have one without the other. When we come to make the decision, that will be an extremely important factor in the minds of many of us. Many of us as well as members of the public will have grave reservations about that. But I shall leave the matter there for the present time.
8.34 p.m.
Lord Kennet: My Lords, I am sorry to have missed the foreign affairs and defence debate on Monday. I had a choice that day between visiting NATO in Brussels and talking about it here. I chose the former because opportunities to see the outer world are never to be ignored. Therefore, today I intend to profit from the traditional elasticity of subject matter in this debate in order to talk about NATO in the context of public expenditure.
We have heard a great deal in this debate about the generation of wealth but not very much about its spending. It is high time to look at NATO from the financial and economic point of view since our defence policy in itself, and some of our foreign policy too as it will affect our defence needs, look more and more like a collection of bottomless pits: bottomless and also largely unobserved.
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I believe that this country cannot afford to embark on new defence commitments without examining them very carefully indeed and discussing them publicly for their economic as well as political implications.
I start with the expansion or enlargement—the Russians call it expansion and the Americans call it enlargement—of NATO, about which the noble Baroness, Lady Chalker, and the noble Earl, Lord Howe, spoke briefly but positively on Monday. Neither mentioned the costs. The noble Earl, Lord Howe, confirmed that Parliament was to be informed as appropriate—dread word! —not consulted. He said that the Government would then lay a take-it-or-leave it protocol before the House for 21 days before accepting it.
That is one of the most crucial decisions that any British government must now take. In my opinion, EMU is nothing like as important as that. The expansion of NATO would be bad strategically and politically because it cannot but antagonise Russia; and that does matter. NATO enlargement, with all the nuclear and other uncertainties about Article 5—that is the guarantee—might well cause the Russian system to revert to paranoia, of which there are already signs, and then to xenophobia in order to find internal cohesion again by reviving the cold war.
Mr. Gorbachev spoke passionately to that very effect, across the road from here, yesterday. Russia is in its Weimar period. Do we want to risk another 1933? The danger should now be more obvious than ever because of the Russian Government's claims—and I quote the words of Mr. Primakov—that:
"When it was very important for Western politicians to draw from Russia a smooth response to the disbandment of the Warsaw Pact and to get its troops out of East Germany, the Western promises to refrain from NATO enlargement were made but were not put on paper".
That is from the BBC Monitoring Service on 9th October of this year. I ask the Government whether they have any comment on that. I do not expect the noble Baroness to respond immediately because I have given no notice of that question, but I should like a response in due course.
Ambassador Churkin, the Russian Ambassador to NATO, told me yesterday that there are interpreters' notes of the United States Secretary of State Baker and the British Foreign Secretary John Major saying precisely that.
Expansion is rapidly becoming the order of the day in Washington. Last week Mr. Portillo said in the House of Commons that we have a moral obligation to the postulant countries to take them on board. We certainly have a moral obligation to consider what interests we share with them. It is certainly a common interest to help them with their new political systems, education, economies and possibly even their own defence. But it is not in our common interest that they should join an historically anti-Russian and potentially anti-Russian alliance led by the United States. That could only produce a reaction in Russia and the Ukraine which would be against their interests as well as against our interests.
Such a Russian reaction would make it absolutely certain that our own defence expenditures would have to rise sharply: a rise which would probably assume the proportions of a new arms race. President Clinton's

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electoral concerns with the various "ethnic" votes in the Middle West must not be allowed to determine Europe's future. I earnestly trust that this will become more widely appreciated before the die is cast.
Some officials say that NATO expansion is a "done deed". But it cannot possibly be a done deed until we know how much it will cost and who is to pay for it. It would mean not only new expenditure heads; it would also mean a change in the North Atlantic Treaty which would require ratification by all the parliaments of the alliance, and parliaments are also revenue raising assemblies. Most European parliaments are not at all keen at present on what Mr. Portillo (as distinct from Mr. Rifkind) terms "hard defence"; that is, Pentagon-type as opposed to State Department-type defence. In this our parliaments differ sharply from the US Congress which has reduced America's peaceful international expending by half over the past few years, while giving the Pentagon more than it asks for.
On present showing, the US Senate (two thirds of which have to approve) is most likely to want the European allies—who they believe anyhow are a lot of freeloaders—to pay for almost everything: their own costs for the expansion of NATO, to pay for what the Central and East Europeans cannot afford, and indeed probably to pay for the equipment that the US is already telling the Eastern Europeans they will need to buy. Contracts for this last US Aerospace firms are already lobbying for in Prague and Warsaw. We will also have to pay for the anti-ballistic missile defences that Mr. Portillo thinks we need. I trust that the Government will say no to all that. NATO enlargement is an American policy; it is not a wise one, and it should not become everyone else's policy.
But that is not the only unwise policy. It adds together with the proposal for NATO ballistic missile defences against weapons of mass destruction. Already the British official co-chairing the senior NATO defence group on proliferation has written of the urgent need to correct NATO's counter-proliferation capabilities shortfall. What on earth is all that about? Back in July, the noble Earl, Lord Howe, told me in a Written Answer that NATO Foreign and Defence Ministers had,
"endorsed a comprehensive programme of work recommended by the GPD"—
that is the senior NATO Defence Group on Proliferation—
"the details of which are classified".— [Official Report, 25/7/96; col. WA 167.]
Why are they classified? May not Parliament know what has been agreed to, let alone what the "shortfall" on it is? Have the Government not waited for the studies that they commissioned before committing themselves, and the taxpayer too, to BMD, whatever hundreds of millions it might be?
I turn now in more detail to the financial implications. The Prime Minister recently announced that all domestic legislation is now being subjected to compliance costs assessments. The costs that he had in mind are those to business and the voluntary sector. That is a most enlightened idea and should have been thought of
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centuries ago. But if it is worth doing domestically, surely it should also be worth doing in respect of new foreign and defence policies?
What is the expected cost to this country, to our allies and to our potential adversaries of expanding NATO?
I have also tabled questions in that respect but have received no answers. So we are forced to seek US estimates: after all it was the United States which invented the idea and which is the driving force behind it. (That opinion was expressed by the State department itself.)
I turn now to the crux of what I have to say. There are indeed some new US estimates. Two were produced by the Congressional Budget Office in March and in May of this year. The May one estimates that over the next 15 years the cost of placing infrastructure, reinforcement capability, projection of air power, prepositioned stocks, and a limited Western presence in and for the benefit of the first four new NATO states might amount to about 125 billion dollars. It suggests that the sum might be shared among the concerned states as follows: present NATO members other than the US should pay 54 billion dollars; new NATO members should pay 52 billion dollars; and the US—wait for it! — 20 billion dollars.
So this idea is to be financed overwhelmingly by Europe, and half of the European spend is to be allocated to new members, who are broke. The paper therefore assumes that they,
"would require bilateral or multilateral financial assistance from the United States and other NATO countries";
In other words, we will also have to pay part of their share.
There have been other estimates, but no meaningful comparison is possible. There is another one from the Congressional Budget Office, and one from the Rand Corporation, which remain deeply embedded in what President Eisenhower called the "United States military industrial complex" when he was in a warning mood, in his last speech to the American people.
In his Detroit speech a few days ago, President Clinton made no financial commitment at all to the enlargement that he was promising his audience by 1999. He said if,
"we don't seize this historic opportunity … we will have to pay a much higher price down the road".
Well, that is a pretty pessimistic, but unjustified, statement.
I have quoted those American figures, but where are ours? Do they exist? I understand that they do not. It is surely overdue for them to be put together by the Treasury, prior to Treasury approval for the financial implications of the policy itself. The Government's old criterion, "value for money" and its new condition the "compliance costs assessment" should both be observed. It is quite improper for the Ministry of Defence to be backing a new international policy that we cannot afford, and leaving it to the next government to sort it out.
The costs of NATO enlargement would be concurrent with civilian enlargement costs of the European Union, which I believe are accepted by all parties without

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question. That is surely clearly beneficial. They would also be concurrent with whatever we all have to go on doing and paying for in Bosnia, which will be quite a large amount. They would also be concurrent with the cost of any BMD for NATO. At the same time, the next British Government of whatever colour will face the costs of all the defence equipment that we have been ordering nationally, including the electronic and information capabilities for the Armed Forces which our own firms are advancing so fast and so brilliantly, and which are going to spell the end of much of the rest of the equipment.
I should like to know what the view of the Treasury is on all such matters. Does the Chancellor of the Exchequer realise quite what the US counter-proliferation programme, of which our own counter-proliferation/BMD exercise is a subset, would involve in the way of British expenditures? Do they realise how very little of all this would be under any kind of British—or indeed NATO—political or military control, the reason being that only the US has the automatic sensors and triggering gear? We shall be paying for equipment which is outside of our control.
And all this is happening at a time when the interest on government borrowing is drawing up to the level of expenditure on the health service; in other words, at a time when we are in sight of the absolute zero now common in the developing world, where interest on the public debt exceeds possible revenue. Does the Trade and Industry Secretary like all these politically vulnerable weapon trades which he subsidises so heavily on our behalf? Has he forgotten the fate of the Royal Ordnance when the Shah was ousted? Has the Foreign Secretary thought through and passed to other ministers an account of the advantages and disadvantages in the Middle East of our being part of a global defence system controlled by the United States, and by a United States which thinks that Europeans should not be interesting themselves in what happens in the Middle East—indeed, by a United States which is, through the D'Amato Act, attempting to regulate our trade there, and which designates "rogue states" there?
British governments—this one or the next—will have to decide whether we really want to go ahead with these post-cold war visions of US global hegemony. One is the three year-old counter-proliferation programme which could provide all the sensors and all the practical gear for disposing of all the US-defined "rogue states". Now there is a new doctrine called "Shock and Awe", or "Rapid Dominance", which is being elaborated in the US National Defence University. These are doctrines which, with consequent policies and consequent expenditures, leave no room for the United Nations or for any international rule of law, or indeed for democratic or civilian control of the military. They will also be extremely expensive, and the world has better things to devote its resources to than ever greater militarisation.
8.50 p.m.
Earl Attlee: My Lords, before starting my substantive comments I should say that I was on the
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same parliamentary visit to NATO and SHAPE as the noble Lord, Lord Kennet. He mentioned the 120 billion dollar cost of enlargement of NATO. I am sure he will remember that that was the worst case scenario. However, the costs are certainly substantial.
Lord Kennet: My Lords, that is not correct. In the paper I referred to the range of costs is given as 124 to 150 billion dollars. I used the lowest figure of 124 billion dollars.
Earl Attlee: My Lords, I am sure the noble Lord is right. The costs are significant. The noble Lord also raised important points about the dangers of antagonising Russia when the land forces in Russia are now minimal. However, he is right to pose the question. But whether he is right in his concerns remains to be seen.
On the occasion of the debate on the Queen's Speech I have usually spoken on defence and foreign affairs. On those occasions the debate was normally replied to by the noble Viscount the Leader of the House. However, some time ago I decided that on this occasion I would concentrate my remarks on industrial problems. But the noble Viscount will also reply to this debate. It is of course a great pleasure and an honour to take part in such a debate to which the noble Viscount will reply. He has experience of commercial life and the attendant pressures. I am sure he will appreciate some of the points that I will make. However, I cannot be as high powered as some of the speakers today, and indeed my remarks will not be as exhaustive.
Over the past 17 years government policy has been to increase competition and to transfer commercial concerns to the private sector wherever possible. I support that policy because I see it as providing the nation with the highest possible standard of living for all. Of course there is the odd blot on the landscape such as RAS and the sale of defence housing, to name but a few. However, I think your Lordships would be disappointed if I thought that everything in the garden was rosy.
Let us look at the good side. We have BT, Mercury and many other telecoms operators operating in direct competition with each other. We have a highly profitable and well respected airline industry. We have successful energy companies such as BP—that was an early privatisation. At last something has been done with the railway industry. What is even better, we are now starting to see some positive reports in the media. An article in yesterday's Financial Times was upbeat and reported improvements in service and a much more commercially minded management.
The commercial concerns that I have mentioned have a common requirement; they all need licences and would not be permitted to operate without one. In many cases their licences can be revoked, curtailed or reduced and are subject to regulation. I now have to declare an interest as I am president of the Heavy Transport Association and am also a member of the BRAKE all-party study group. Unfortunately, I do not have any financial interests in road transport, but I am working on it! Road transport should be a good

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industry for many to enter, and for some cowboys, or even criminals, the streets are paved with gold, or at least with brass. The good points are that, first, one does not have to be highly educated, as being practical is more important. Secondly, sophisticated contacts and marketing are not necessarily required. Finally, the capital risk is not great. Transport assets are expensive but they lend themselves to being financed. Assets are normally easy to sell and residual values can be calculated. Even operating costs are easy to calculate, although actual rates obtained are often far less than operating costs.
However, there is a flip side. The industry is easy to get into and is extremely competitive. But unfortunately it is poorly regulated. Just as with the industries that I glowingly referred to a few moments ago, road transport operators need a licence. The purpose of an operator's licence is supposed to be to ensure that only suitable persons can operate in the road transport industry. One of the many planks of the legislation is the requirement for what is known as good repute. The problem is that operator licences are quite difficult to lose, even in the event of serious wrong-doing. In any case it is easy to operate without a licence. In general there is large-scale illegal operation and that results in unfair competition. Illegal operation is undertaken by some licensed and unlicensed operators alike.
Outside of government much is being done. There is a new pressure group, BRAKE, funded by the respectable part of the transport industry. It is not like many other groups as it recognises the need for road transport but it would like to see it become 100 per cent. safe and legal. BRAKE has identified a number of problems and has produced some excellent reports. The House of Lords Select Committee on Transport has studied the problems and has produced a report. I agree with most of its recommendations, although I think that a few are slightly ahead of their time.
The Minister in opening the debate referred to the Government's competition policy. I am certain that he does not support unfair or illegal competition, but he may not be aware how damaging such competition can be to the transport industry. The main problems are under-taxation of goods vehicles; use of stolen parts or even complete stolen vehicles; use of red diesel, thus saving fuel duty; and employing drivers who are claiming unemployment benefits. The Secretary of State for Social Security suggests disqualification for offending drivers. I would counsel against that as it would create even more serious problems; namely, disqualified drivers may turn to crime to earn a living. A better solution would be the automatic loss of good repute for an operator. Other problems are overloading of vehicles; forcing drivers by various means to drive for longer than the permitted hours; and simply not bothering to maintain vehicles. If an operator commits any of the first four of those infringements he ought to lose his good
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repute and hence his licence. That certainly should be the case if there is a second infringement.
There was a case of an operator who was convicted of stealing trailers worth several thousand pounds. However, he retained his good repute! How disreputable does one have to be to lose one's good repute? The licensing authority (the LA) can refuse to grant a licence or order a partial or full revocation of the licence. However, that weapon is not used to full effect. The licensing authority may fear making people unemployed. But what is actually happening is that the cowboy operator is using fewer people than are required to do the job properly. So in fact strict and effective enforcement could increase employment and tax returns while reducing social security costs.
The Minister, in his very upbeat opening speech, referred to reducing the burdens on business, particularly with regard to enforcement. I shall read his words carefully tomorrow. My concern is that the various authorities take into consideration the risk of a successful appeal by an aggrieved party. The noble Lord the Minister will have carefully read the report of the noble Lord, Lord Cullen. The education authority had its informed decision not to let out school premises overruled, and the police were fearful of the same problem. Both authorities knew that they were dealing with an "unsuitable person" but there were no supporting convictions. So we need to be careful how easy we make it to appeal against decisions.
If I had an illegal radio transmitter and was caught broadcasting, the transmitter would be confiscated. If I had an illegal firearm, it would be confiscated. If HM Customs and Excise catch an operator using a vehicle running on red (that is, untaxed) fuel they may well impound the vehicle. If the driver has no proper address and answers to the name of "Patrick", they definitely will. Now if the Customs and Excise can successfully impound goods vehicles, why cannot the Vehicle Standards Agency? Of course I accept that primary legislation would be required.
There are some difficulties. The authorities do not have a decent IT system, so it can be difficult to be certain that a vehicle is being operated illegally. The authorities must have the tools for the job.
My message to the Government is that the majority of operators in the road transport industry would like to run their business honestly. They would rather compete by means of making the best technical decisions, having well-trained staff and good man management. They do not want to compete on the basis of who can sail closest to the wind or even operate illegally without being caught.
On the wider front my worry is this. If the industry of which I have some understanding is not properly regulated, how can I be confident about the regulation of industries that I do not understand?
Finally, as for the amendment to the Motion, I have to say that I shall support the Government.
9.2 p.m.
Lord Harmsworth: My Lords, perhaps I may explore a project that has taken place in west Dorset under the Private Finance Initiative. It is a very exciting project, and one which I am sure the House will welcome. It certainly offers lessons for the future.
First, however, may I say that I am not discouraged by the hiccups from which this new funding activity in some areas is suffering. The projects are very complex, the art is a new one, and we are still learning. It is better to go more slowly and get matters right. Even so, the raw national statistics, and local information in Dorset, suggest a future of explosive growth for the PFI. It could well be the control of that growth, and not paucity of interest in these projects, that will exercise those involved.
Some noble Lords will recall from the debate that we held on local government in January last year that there are several major capital projects in west Dorset which are of a size that would tax the shrewdest of county councils. They include a major comprehensive school rebuild (a school which was built for 600 pupils, and now has 900) and the Weymouth relief road. The school, Colfox, is now at the forefront in exploring the possibility of PFI funding for its rebuild. The rebuild is now officially recognised by the DfEE as a "pathfinder" project. It still has to clear one or two hurdles at the beginning of next year before the starting gun for the rebuild; and the cost, at around £10½million, is about one-third of the cost of the Weymouth relief road, now so necessary owing to the closure of the naval base at Portland and the need to revive the area in some non-military way.
The Colfox rebuild is very timely. I recently had the honour of opening a new computer network in the old building of the school. It is a project that might well itself have qualified for PFI funding. It cost £100,000, to be spread over five years. And that massive learning resource, very cleverly devised by the governors and senior teaching staff, and which would surely be the envy of any school in whatever sector, will easily transfer to the new building, which will cater for cabling below floors and behind walls, etc.
One of the important consequences of the decision to use the PFI for the school rebuild has nothing to do with the school itself. It is the freeing of a bottleneck. The county council is no longer confronted with two major capital spends. The school PFI project comes under revenue expenses, and capital funds can still be directed towards the relief road. That makes me wonder whether some mechanism might be put in place for prioritising PFI projects, partly on consideration as to whether some possibly quite unconnected but beneficial side-effect is to be had out of it. Perhaps it may be possible to find some way of flagging up at business case stage, say, these possibly unconnected bonuses.
Another message which emanates from the Colfox experience is that it is very important that the public sector partner is totally clear about what stream of services it wants. This project had an advantage. The preliminary work was already at an advanced stage when the decision to try PFI was made. I suspect it will
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be the kind of project with which the private sector partner, whoever that may be, will feel fully at ease. I understand that another, similar project, though not similarly located, has had a less easy run, partly owing to the difficulty of establishing the stream of services required by the school—a task made difficult owing to certain matters out of its immediate control not being resolved in a timely fashion. This may be a point worth emphasising even more strongly than it is already in the Treasury's excellently produced booklets on how to proceed. Perhaps more emphasis should be given to the need to sort out questions of ownership, heritage matters, and so on, early enough to ensure that private sector partners are not put off.
My third thought relates to small projects. Some must surely be too small to interest private sector contractors of the required calibre, partly because of the high cost of pre-tender work, to which Members of your Lordships' House have already referred. Might it be possible to devise a mechanism whereby several small projects—say, primary schools or even mixtures of types of build and flows of services—are placed together? It would be interesting to know what scope there may be for setting up this sort of exercise.
The PFI is a most exciting concept. I worked for some time in a government department without ever fully understanding why capital and revenue public expenditure should be segregated. PFI moves me further in that direction. I welcome the erosion of the distinction.
My right honourable friends the Chancellor of the Exchequer and the Secretary of State for Health recently delivered very upbeat and encouraging speeches to the annual conference of the Private Finance Panel. I trust those speeches addressed many of the concerns so powerfully expressed by my noble friends Viscount Weir and Lord Sanderson of Bowden. In its July report the CBI cited like-for-like achieved management savings in certain projects of 14 per cent. annually over comparable publicly-operated projects and savings of 30 per cent. on the capital element. For my part, I am certain that the PFI growth that we have already seen will continue at a fast rate and that, if we handle it well, it will become an export in its own right like privatisation, which overseas has done this country so much credit. It will spread throughout the world. The road ahead contains many challenges and even pitfalls but also major benefits. I hope the Government will pursue this initiative with the utmost vigour.
9.11 p.m.
Lord Dubs: My Lords, I should like first to congratulate my noble friend Lord Currie of Marylebone on the excellent maiden speech he made earlier today.
In looking at the history of this country from 1979 to the end of the century, I think that the future will judge the Conservatives in Government to have been extremely lucky— undeservedly lucky. Let me give two examples to support that.
First, North Sea oil. Without the benefits of North Sea oil, very few of the policies that the Government have introduced since 1979 would have been possible; or the

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damage inflicted on this country would have been even greater had there not been the cushioning effects of the benefits of North Sea oil.
Secondly, in a perverse sort of way the Government were very lucky to have Black Wednesday because that at least stopped the most disastrous economic policies of all and enabled the Government to change course. Without Black Wednesday the economy would be in much worse shape than many noble Lords have claimed in the debate today.
Let me turn to three points that I want to cover briefly in the course of the next few minutes: first, energy policy; secondly, the regulation of privatised utilities; and, thirdly, if I may dare, moral standards, as that subject seems to be the fashion of the times.
I do not believe that there was any mention of the word "energy" in the gracious Speech. Yet energy is crucially important to the economy, industry and well-being of this country. Therefore I endorse with enthusiasm the amendment standing in the name of my noble friend Lord Peston, on which we shall vote shortly.
As a country, we need options in our sources of energy. We need low-cost fuel, reliable supplies of energy and environmentally safe fuels. Looking at the changing pattern of energy-use in this country, coal is in decline; gas is increasing very rapidly and in the early part of the next century will account for over 50 per cent. of power generation; and nuclear power will decline from its present level of about 26 per cent. to something in the region of 18 per cent. but will still be important. There are interesting differences between various countries. In the United States nuclear power accounts for 20 per cent. and in France for between 70 and 80 per cent., but the big expansion of nuclear energy at the moment is in Japan, Korea and China.
This country needs above all reliable supplies of energy for the future. I do not know to what extent we may face an energy crisis in the next century. We have had them in the past and I do not forecast that there will be an energy crisis. But I should have thought that at the very least we ought to look ahead and allow for what might be the worst case option—that is to say, an energy crisis some time in 20 or 30 years after the turn of the century. I have a fear that if all else fails in terms of energy supplies, we might again have to look at importing nuclear technology and perhaps importing it from the countries that will have developed the technology most; namely, Japan, Korea and China. They will be the countries which will be abreast of technology and we may not be. At the very least, there is an importance in keeping our technological skills in this area up to date, without building any more nuclear stations but certainly to keep abreast of developments.
But perhaps more importantly than that, we need to keep developing coal technology. In the United States, coal accounts for 60 per cent. of power generation. We shall be down to 20 per cent. after the turn of the century. We need to keep developing it because we may have to turn back to coal in terms of both extraction and clean and efficient use of coal for electricity generation.
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There is another consideration. If energy costs in the world are to rise—at the moment they are falling—coal would become a more economic fuel and we might wish to get out of the ground some of the coal that is left there at the moment. My fear in energy policy is that governments will not look far enough ahead. Often our timescale is only until the next election. We need to contrast that with the way in which some companies in the oil business look ahead. I went to a presentation given by the Shell oil company a couple of weeks ago. That company's scenario for the future looked 60 or 70 years ahead. I wish that the Government could look a little further ahead than just into the very short-term future.
However, looking ahead, I believe that the basis of our approach to energy should be that we must have choices of fuel which will contribute to a competitive and efficient economy. We need competition in energy, not as an end in itself but as a way of protecting consumers, both domestic and industrial consumers. We need security of supply and we need to redouble our efforts as regards environmental concerns in terms of what different fuels are doing to damage the environment.
I turn to regulation, which was comprehensively debated by your Lordships in December last year. I shall say just a little about that. When we had publicly owned utilities, they were monopolies. They had the advantage of being accountable, not so fully as I should have liked but there was an element of accountability. The difficulty with the Government's headlong rush into privatisation is that the idea of competition was left far behind. Only after the industries were privatised, have the Government given adequate thought to the way in which competition could be introduced into many of those industries, particularly gas and electricity. The problem there is that the interests of consumers were not well enough protected. So, we had the concept of the regulator.
I believe that one key problem in the privatised utilities is that they are virtually safeguarded against bankruptcy. I doubt whether the regulator could possibly allow in practice British Gas, say, to go under. I do not suggest that British Gas will do so, but the concept that we have privatised industries and then shelter them from competition means that they are in a situation of heads they win and tails they do not lose. The upshot is that the consumer is not so well protected as he might be.
Therefore, I feel that we have given the regulators awesome responsibilities. Generally, they do well; but it is a difficult task that we have set them. They have to act as if there were competition when there is not competition. Also, in a sense, they have to try to introduce competition. We have made it extremely difficult for the regulators. Let me repeat that I give them many good marks but they should not have to operate in a context which is so difficult for them. We need to look again at the way in which the regulators operate.
When I was in the United States in the summer, I noticed that in some states the regulatory boards are elected. I heard on the radio in Oklahoma City a woman

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who had the Democratic nomination to stand for election for the regulatory body. That is very good for public perception but I do not suggest that we should go all that way and have our regulators elected.
I believe that the way forward is for us to re-examine the functions of the regulators and the way in which they operate; there might be a case for examining whether the gas and electricity regulators should be merged into one energy regulator; and we have to consider whether the interests of consumers and their need to have low fuel prices are given sufficient priority in the way in which the present system operates. I am not satisfied that we have the right balance between incentives to efficiency and protection of the consumer.
Our system suffers from a lack of accountability, a lack of transparency in the way regulation operates and a little too much secrecy in the process. We need to broaden the decision-making process. Perhaps we have given too much responsibility to individual regulators. Maybe they should be buttressed by having panels of non-executive directors to work alongside and support the regulators.
We might also look again at the formula used. I fear that too few of the gains from extra efficiency in some of those industries have been returned to the consumer, whether it is the domestic or business consumer. There may be a case for looking at a profit-sharing pricing rule that would share profits between shareholders and consumers while still providing incentives for management and a fair rate of return for investors.
Perhaps I can refer briefly to morality. We have heard a lot about that recently and I do not claim to be able to compete with some of the people who have been commenting on it. I say this. A large element of morality is surely in the example set to young people. I believe it is proper to say to people, "Yes, you may get rich, provided you have worked for it and have not been too greedy"—essentially, provided they have worked for it.
But what have we seen in some of the privatised utilities in recent years? We have seen people getting very rich for doing nothing; we have seen enormous pay rises not justified by performance; we have seen massive capital gains from share options, again not justified by performance. It is no wonder people in this country are angry. When I talked of this to some people in the United States, they were quite shocked at the way matters had got out of hand here. Their view was that capitalism must operate with an element of consent and if industry pushes it as far as the privatised utilities have done in this country—not in all instances, but in many—that consent may be lacking.
I conclude with this thought. How can we expect our young people to hold high moral standards when they see what is going on? Moral standards must surely come at least as much from example as from preaching and exhortation. I urge the House to support the amendment of my noble friend Lord Peston.
9.22 p.m.
The Earl of Harrowby: My Lords, I agree with the noble Lord, Lord Dubs, as regards the benefits of Black
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Wednesday. But he will remember—I believe it is common knowledge—that it was caused by going in at the wrong rate.
I expect noble Lords will sympathise with me slightly, speaking at this stage of a 30-strong list when practically everything one wanted to say has already been said and I shall be as brief as I can with some layman's remarks. First, I want to refer to the EMU debate on 24th July on the "ins" and "outs" of the EMU and express surprise that there was no discussion during that debate on any halfway house; on any partial move towards the middle way.
The House will probably remember that my noble friend Lord Cockfield raised this subject on an earlier occasion—I enjoyed his speech today though he did not refer to this subject—when he advocated that the ecu would be pronounced legal tender. If each party to a transaction agreed with that, there would be considerable benefits in it. It would help business greatly. By their action the Government would be a willing participant in that concept, and others—if the cost of administration and buying equipment paid them—would rapidly follow suit. We would therefore have a dual economy for those who wished to benefit from it.
I remember discussing this project many years ago with a general manager of Barclays Bank. I want to make the point that that action would help to dispel the animosity growing in Europe. Our European partners are at present our friends but they are fast becoming not so. That is a dangerous situation in which to be. A willing, helpful attitude would be advisable and that would be one of the possibilities.
Those of my generation will have some sympathy with Chancellor Kohl's motivation—I certainly have—but I believe the Prime Minister is right, as my noble friend Lord Boardman has already said, in preserving his options. It is madness to give them away when one does not have to give them away. I was delighted to see—I hope I have not misinterpreted the report I read—that Mr. Cook is beginning to take the same line.
Some of what I now want to say, which is not much, has already been said by the noble Lord, Lord Barnett, with whose speech I 90 per cent. agreed. It seems to me that, anyhow, it is quite likely that there will be no EMU in 1999. The German population is two-thirds hostile to EMU. Eighty per cent. of the German population think that the Euro will be less stable than the Deutschmark. The French have so many difficulties facing them that it is possible that they, too, will be in exactly the same position. There is Air France with its deficit; there is SNCF, French railways, with an enormous deficit; there is the bail out of Credit Lyonnais; there are the social security problems which the French are trying to solve at the moment but which may bring considerable discord this autumn; and there is trouble also with financing France telecom. Will it be that convergence will not be genuine? The politicians may well try to fix the Maastricht rules. They may well succumb to financial engineering and to bending the rules. I hope not, because the consequence would be a complete destabilisation of the Euro. It is also aggravated by ignoring price parity.

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I wish the EMU well because it is necessary to show good will towards it. We should prepare for it, as the Governor of the Bank of England has already strongly advocated, whether we go in or not, and we should fully participate in the discussions of the conditions. But, at the end of the day, it is likely that the decision will be that, rather than go in at the earliest possible time, we shall want to wait and see how it fares.
The EMU will face enormous difficulties. First, it will have the indigestion of the new members which ultimately must, under logic, be expected to join, though that will take many years. Secondly, it will have the financial problems and the political upset resulting from the reorganisation of the CAP. Lastly—and this subject is not so frequently mentioned—the rigidities of the mainland European economic system will, unless they are overcome, make the Euro uncompetitive and we shall be reduced—or they will be reduced—to a fortress Europe, which would be disastrous. I remember making that point many years ago in my maiden speech in this House. Otherwise, there will be a consequential decline in living standards, which inevitably will happen on the Continent in any event.
My final point is made in parenthesis in relation to what the noble Lord, Lord Barnett, said. If and when we decide to accept ECB jurisdiction via a probationary step in the ERM or if we decide to accept euro linkage, may we please remember to do so while the sterling index stands at 85 and is not touching 90.
9.30 p.m.
Viscount Chandos: My Lords, I do not propose to make your Lordships' night much longer in the final debate on the loyal Address for what, after all, is mercifully a short Session. I shall therefore be brief in speaking in strong support of the amendment proposed by my noble friend Lord Peston, particularly in the light of the powerful case made by my noble friend in his speech as well as, however uncontroversially and subtly phrased, by my noble friend Lord Currie in his excellent maiden speech.
Perhaps I may begin by paying tribute to the Government on an unusual achievement. After nearly 20 previous gracious Speeches since they took office, from which we can trace a depressingly clear pattern; with inevitably subdued expectations as parliamentary time is limited now that the general election can finally be put off no longer; with a realistic recognition of the effects of the Conservatives' diminishing parliamentary majority; despite every allowance that can be made, this Government still manage to disappoint expectations, demonstrating new levels of muddle and indecision and providing a depressing reminder of 17½ years of broken promises and wasted opportunities.
North Sea oil has been largely squandered, with a £260 billion net increase in indebtedness, as my noble friend Lord Peston observed. Long-term investment in education, training and the infrastructure has been neglected. That is damage which will take a whole generation to repair. We have to lament the Government's failure for yet another year to bring forward the badly needed competition Bill. That is a
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stark illustration of the thin programme proposed, before and after the Prime Minister's extraordinary U-turns, and the emptiness of the claims made by the Front Bench opposite to be promoting a truly competitive and dynamic economy.
Your Lordships' House will have the opportunity to debate the economy in a month's time with the benefit, if that is not a contradiction in terms, of having seen what the Chancellor proposes in his Budget. I look forward to seeing to what extent the Chancellor pays heed to the encouragement of the noble and learned Lord, Lord Howe, to make virtue the keynote of his pre-election Budget, not baubles for the floating voter. I suspect that at least some of the Chancellor's Cabinet colleagues believe that he might now be more compliant in offering electorally appealing measures if only he had been soundly caned a little more often while at school.
There can be no doubt that today's interest rate rise represents an ominous sign of the trouble that has been stored up by this Government's policies, which may become increasingly apparent during the final months that the party opposite clings desperately to office. It is like John and Ken's cocktail bar where a frothy and initially sweet-tasting concoction slips down quite nicely, but the dangerous combination of constituents—excessive borrowing, masked in part by creative accounting coupled with chronic under-investment—can be guaranteed to leave most people with a vicious hangover.
I should like to believe that next month's Budget will contain measures that offer fair taxes for all, not loopholes for the lucky, and a focus on the quality of public spending, not just the quantity. There is no virtue in reducing public expenditure to some arbitrary percentage of gross domestic product to conform with that applying in whatever Asian country is this month's fashionable and shallow comparison if the services provided cost the consumer more—a clear risk arising from the Government's excessive, distorted and cynical reliance on PFI.
At the same time, the current spending round should not be conducted in a way that leads to VAT being introduced on asthma and incontinence products, for instance, supplied by NHS trusts, as Customs and Excise have recently ruled. Soft options such as those applied outside the process of parliamentary approval betray a government in a terminal state of decay. Whatever damage has been done to the UK economy, the forthcoming Budget could still be used to reduce poverty and disincentives to work, to start the long haul of increasing investment in education and training and to build an economy with long-term sustainable growth which is fundamentally different from the slow crawl out of the self-exacerbated recession over which this Government have presided. However, on past form I do not have high hopes that the next Budget will address those issues, although I am very much more optimistic about the one after that.
I should like to end by addressing one further specific point which may initially seem self-indulgent in the context of the appalling problems facing the long-term unemployed and those living in poverty, but which

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I believe is nonetheless important as well as perhaps being a microcosm of larger and even more damaging issues. It also illustrates why the conviction of the noble and learned Lord, Lord Fraser of Carmyllie, that the country's reputation abroad has never been higher, is misplaced. I am sure that many of your Lordships will agree that the reputation of this country's arts has been outstanding and that the arts are a vital contributor not just to our culture, but to our economy and employment also. In the past three years the Government's grant in aid to the Arts Council has been reduced by nearly 10 per cent. in real terms with a further cut being signalled in the forthcoming Budget, despite the specific commitment of the Prime Minister that the introduction of the lottery would not lead to a reduction in the current funding of the arts. I should declare an interest as a director of English National Opera, one of the major clients of the Arts Council, although I know that my remarks are, sadly, as pertinent to nearly every arts institution in the UK as to the one with which I am most familiar.
Costs have been vigorously, even savagely, cut in those institutions in a way that plenty of public companies have never even contemplated. Box office sponsorship and donor revenue have in many cases been significantly increased, but many major arts organisations with national and international reputations, such as the Royal Shakespeare Company, the West Yorkshire Playhouse, the major orchestras and the Welsh and Scottish opera companies cannot make further cuts—nor can they meet the requirements for providing three, four and five-year business plans when the only signs are that their grants will continue inexorably to be cut.
There remains massive confusion in the public's eyes about the role of lottery funding and its restrictions vis-à-vis current spending. While there are now in the new initiatives and stabilisation projects proposals for modestly using lottery funds to ease the current account problems, they are moving so painfully slowly that there seems little chance of them being available to address the existing acute and threatening pressures, let alone the longer-term problems. All the while, an estimated £300 million of allocated but undrawn lottery funds for capital projects are, or should be, earning interest—an amount of money which could on its own come close to covering the reduction in the Arts Council's grant in aid in recent years.
This should not be a partisan issue, as I believe has been demonstrated by the submissions to the Department of National Heritage and the Treasury of the noble Earl, Lord Gowrie, chairman of the Arts Council and a former distinguished member of the Front Bench opposite. I urge the Treasury to act upon these and other representations, even if only by the release of accrued interest on lottery funds, to avert irreversible damage to our national heritage leading to further significant direct and indirect increases in unemployment. I am intrinsically inclined to be thankful for small mercies. I am confident that a gesture in this area will be warmly welcomed on every side of the House. However, I harbour no illusions that the larger and even more desperate issues stand any chance of
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being addressed in the remaining months of this Government. Therefore, I strongly commend to the House the amendment of my noble friend Lord Peston.
9.40 p.m.
Lord Jenkins of Hillhead: My Lords, we have had a long and, on the whole, interesting last day of the debate on the Address. The noble Lord, Lord Currie of Marylebone, made an early and impressive maiden speech. I recall in particular the speech of my noble friend Lord Thurso, who spoke with knowledge and authority, and the experience and wisdom of the noble Lord, Lord Tugendhat, even though I disagreed with the position that he adopted at the end of his speech. That is unusual as between him and me. I also recall the speeches of, and at one stage the direct grappling exchange between, the noble Lord, Lord Healey, and the noble Lord, Lord Cockfield.
The noble Lord, Lord Healey, spoke in cataclysmic terms about the single currency. The noble Lord has the great advantage, which I am afraid I cannot share with him, of unpredictability as to what he will say on European issues. I have seen him alternate from one side to the other approximately 35 times. But one matter that is absolutely consistent about him is that whatever his position at a particular moment, he always holds it with absolute certainty.
I found much of the speech of the noble Lord, Lord Cockfield, of interest and could agree with it, though he seemed to take a rather partisan view as to where profligacy in the management of the economy had occurred. If he looks back, he will find it very difficult to match from other parties the profligate record of successive Conservative Chancellors of the Exchequer, whose names out of delicacy I will not for the moment mention. He earned a mighty rebuke at one stage from the noble Lord, Lord Peston—a justified rebuke. But I nonetheless thought that his analysis of the costs of a higher interest rate was fascinating and important.
The noble Earl, Lord Harrowby, followed some of the arguments of the noble Lord, Lord Healey. I have known the noble Earl (regrettably not very well) since we were first at an officer cadet training unit together 54 years ago. He spoke in general in warm terms about a single currency, but it seemed to me that his speech did in a way encapsulate many built-in fallacies of the British position. Right back from 1950–51 onwards we have underestimated matters and said it is not going to happen: they will not bring off the common market or the Coal and Steel Community. We have so consistently said that that it would be the merest common sense for us to insure the other way. If you are riding a bicycle along a cliff path and you are in danger of bruising your arm if you steer in one direction and in danger of falling 300 feet if you steer in the other direction, it is rather wise to steer on one side rather than the other. The wise side for us to steer on, given our experience, given our track record—"track" is appropriate here—would be to assume things are going to happen, not that they are not going to happen. However, we will all see. You can never predict the future until it has happened.

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It is a week since the gracious Speech, and already its contents seem like the most curled and faded of autumn leaves. The Prime Minister's performance in negating part of the speech within four hours of its having been delivered was extraordinary. It was obviously so from the point of view of the indications it gave of the Prime Minister's sudden switches of decision and nervous susceptibility to pressure. But there is another less obvious but equally significant consideration. The grandiloquent ceremony of the State Opening in which we indulge once a year is already in danger of being on the borderline between inappropriate fuss and magnificent historical pageant.
Part of the pageant is that the sovereign has to deliver with great solemnity words which are put into her mouth by the government of the day as their considered programme for the Session. But if the words are to be taken out almost as soon as they are put in, the balance is dangerously tilted towards farce. The present Queen in many ways, and certainly in relation to the opening of Parliament, has a higher sense of duty than had Queen Victoria. But even she, the present Queen, might be tempted to recall Queen Victoria's distaste for the ceremony. It was, she claimed in 1869, a great health hazard. It was too hot inside and too cold outside. Moreover, riding backwards in a carriage upset her.
It is typical of the Government's habit of proclaiming a general principle and then proceeding by all their practical actions to undermine it. Thus, having proclaimed in what in a way is a most un-conservative way, the total inviolability of every frozen aspect of our constitutional arrangements, they proceed to expose them to ridicule. Equally, they mount a holier-than-thou campaign, participation in which all politicians are extremely unwise to indulge, centred on the inculcation of moral principles into the young, while in practice giving them practically no facilities to do anything except to watch a declining quality of television and to have lottery draws twice as often as before.
Then we have yesterday's incident with Mrs. Shephard. On the issue I am on the Prime Minister's side. He seems to have acted for once with precipitate decisiveness. But what a way to conduct a government: to drag a Minister off the platform when she is paying what should be a dignified, authoritative ministerial visit in order to rebuke her, and then having done so, to make sure the press is informed of every detail of the rebuke. There are few less edifying sights than that of a weak man trying to make strong gestures.
I want to talk finally in this economic debate about a more agreeable subject. I certainly do not want to make a long speech at this time of night on the fifth day of the debate. My more agreeable subject is the Chancellor of the Exchequer. I believe that, on the whole, he has been a pretty good Chancellor during the past three years. That is remarkable for I do not think that he had made a great success of health, education or the Home
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Office. He is, indeed, a standing contradiction to Tacitus's great aphorism. I am tempted to give it in Latin because it is so much shorter in Latin.
Noble Lords: Go on!
Lord Jenkins of Hillhead: My Lords, perhaps I had better say that he is a standing contradiction to the fact that, had he not been Emperor, everyone would have said how good he would have been or, if your Lordships prefer it, omniwn consensu, dignis imperio, nisi imperasset. Had he not stepped to promotion over his failures no one would have realised how good he could be. One reason, perhaps the main reason, why he has been so good is that he has convictions, as he has shown over Europe, and that he has not been pushed into the vulgar fallacy that the main test of a Chancellor of the Exchequer is how quickly he can reduce tax.
As part of his argument against those pushing him in that direction, he has been kind enough to cite the analogy of the 1970 Budget and to contest the view that its relative austerity lost the Wilson government the election of that year. Not unexpectedly, I agree with him in that thesis. Indeed, it was the relative popularity of that Budget which produced the first major spurt in the Government's standing for several years and which alone opened up the possibility of winning.
The Budget could be blamed only as part of a much more subtle thesis which starts with the view that its austerities were too popular—the electorate was fed up with election bribes—and that enticed the Government into too early an election, whereas it would have been better, though I did not see this at the time, to wait six months until the recovery and the balance of payments could be perceived to be more secure.
But, be that as it may, if Mr. Clarke wishes to argue by the 1970 analogy I have two messages for him. First, while the British economy is undoubtedly in better shape than it was when he took over, it is by no means as splendid as some of the complacent claims which are made for it. I am afraid that the noble and learned Lord, Lord Fraser of Carmyllie, was a little complacent today. His was not a reflective speech, if I may say so; it was eloquent rather than reflective. On growth and on unemployment we are at present doing better than our principal neighbours. But that is far from being an across-the-board record for excellence.
On inflation, for instance, which one certainly would not think from many of the speeches we have heard, we are on 2.5 per cent., whereas both Germany and France are on 1.5 per cent. On interest rates—the noble Lord, Lord Cockfield, made the point very powerfully—we are, I make it, 1.8 per cent. above that of France and Germany. His figure was a little less but that was before today's change. And that is certainly not a gap which will narrow if the single currency comes into being with us outside it. On the public sector deficit, we are nearly 25 per cent. worse than are those two countries and show precious little sign of improving. On dead weight debt, the total of debt, however, we are marginally better.

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But what is still more significantly the case is that if Mr. Clarke wishes to be a statesman-like Chancellor, firmly giving priority to the future health of the economy over short-term snatches at electoral fixes, he should in November not just avoid the pre-election bonanzas of Butler, Maudling and the noble Lords, Lord Barber and Lord Lawson—except that, rather perversely, the latter had a post-election bonanza—all the great profligate Chancellors. And not just doing that. He should certainly not be thinking that taking a penny off income tax shows austerity. Not even a wholly neutral budget is probably right. Actually applying a slight touch of the brake would now be appropriate. I am as sure as I can be that if that is not done now—and I believe that fiscal policy should supplement and work alongside monetary policy—and even with my respect for Mr. Clarke, I do not think it will be, it will have to be done more roughly and more damaging after the election and in the course of 1997. That is the hard test of Mr. Clarke's virtue and I would guess that he will only half pass it.
9.55 p.m.
Lord Irvine of Lairg: My Lords, it is difficult to wind up four days of debate. It is a privilege to follow the noble Lord, Lord Jenkins of Hillhead, and that is also in itself a difficult task. It is a tribute to your Lordships' House that four days of high quality debate have been generated out of the thin gruel of this Government's last gracious Speech.
It was a gracious Speech designed not for the better government of the country, but for the short-term tactical objective of wrong-footing the Opposition. It fell flat on day one. The initial decision to exclude a stalking Bill and a Bill to establish a paedophile register could only have been because the opposition parties would have supported them. Therefore, the Government's ambition to portray themselves as the sole party serious about law and order would be thwarted by all-party support for those two measures. Therefore, they intended to drop them and had to be shamed into reinstating them when flushed out on the Floor of the other place.
As my noble friend Lord McIntosh of Haringey revealed to your Lordships' House last Thursday, the Labour Party, when it became obvious that those two measures were to be excluded, wrote to the Home Secretary offering its support if they were reinstated. Later, my honourable friend Jack Straw received a complete brush off from the Home Secretary. What happened on the Floor of the House is now history. The notion that the Government took up an offer that was not previously there is just false.
Noble Lords opposite no doubt will be the first to agree that the Sun is the newspaper which always tells the truth. On Thursday of last week the Sun reported:
"John Major last night sensationally caved in to Labour demands for an all-Party deal to rush in new laws against paedophiles and stalkers.
He made the amazing U-turn hours after insisting there was no room for the measures in the government's timetable. The change of heart came after Labour Leader Tony Blair dramatically turned
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the tables and offered to back the plans—with Lib-Dem support.! His move forced the Government to implement its own proposals it had already dropped.! The bizarre twist came after Ministers insisted they would not let Labour appear as the 'law and order party' by backing the plans".
The leader of the Sun, under the heading "Who's Boss?", was harsh. It stated:
"There's one lesson the Government refuses to learn. ! That the voters are fed up with them dithering about".
And that was before the Prime Minister and Gillian Shephard had their spat about the cane. The Sun continued:
"We are delighted that these vital laws will now be passed. But who is governing the country?"
Noble Lords opposite will also be ready to agree that the Daily Mail is another newspaper which always tells the truth. How galling for them to read the leader last Thursday which stated:
"If the chimes of Big Ben punctuated the pageantry for the State Opening of Parliament, it was the ticking of the electoral clock which dictated the contents of the Queen's Speech.
The Prime Minister's strategy now is to point up the differences between the real Tory party and the pale imitation led by Tony Blair. How provoking for him, then, that yesterday afternoon he was ambushed into consensus politics by Labour and Lib Democrat offers of support for government Bills to target paedophiles and stalkers".
If the Government have lost the forgiveness of the Sun and of the Mail, I doubt whether noble Lords opposite will be able to advise them where to turn.
It is some Queen's Speech when the Opposition secure the addition of two law and order Bills and, who knows, perhaps also a Bill to outlaw the promotion of the sale of combat knives. The noble and learned Lord on the Woolsack gave pride of place when opening our debate last Thursday to the Crime (Sentences) Bill. There is a dangerous feature of that Bill which it has in common with the Civil Procedure Bill which the noble and learned Lord also explained and which will receive its Second Reading next week. That is the Bill allegedly designed to pave the way for implementing the final Woolf Report.
Those Bills, together, deserve the caption, "Buy now, Pay later". The noble Lords, Lord Rodgers of Quarry Bank and Lord Windlesham, in their notable contributions to last week's debate, called attention to the increase in the prison population which will result from the implementation of the Crime (Sentences) Bill, and the associated costs of building new prisons.
The prison population is 57,500 and rising by about 1,000 per month, so today it far exceeds the corporate plan prediction of the Prison Service that the 55,000 figure would not be reached until the year 2001. The Government tell us that their estimate is that the new sentencing proposals taken together will result in an estimated increase of around 11,000 prisoners. Prison population forecasts are always under-estimates; these will be no exception. At least 12 new prisons will have to be built, so Parliament is being asked to buy this proposal today and the country will have to pay tomorrow. The noble Lord, Lord Taverne, spelt out the cost in his speech earlier today.

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I heard no answer from the noble Baroness, Lady Blatch, to the pertinent question asked by the noble Lord, Lord Windlesham. I ask it myself again: will implementation of those sentencing proposals, if enacted, be delayed until the new prison places are available? I agree with the noble Lord that that is a crucial point. It demands an answer. Nor did I hear any answer to the question put by my noble friend Lord McIntosh as to how this new capacity can possibly be achieved before the end of the century, and certainly not in the context of a funding cut of 13 per cent. for the Prison Service.
Second under the "Buy now, Pay later" principle is the Civil Procedure Bill. We are told blandly that this is to pave the way for the implementation of the report of the noble and learned Lord, Lord Woolf. But all that the Bill will do is establish a unified rule-making authority for all civil procedure in the courts of England and Wales to make a single set of simplified rules of court. Its Explanatory and Financial Memorandum beguilingly declares that:
"The Bill is not expected to have any significant financial implications".
If there was a simple cost-free panacea to the twin evils of civil litigation, which are cost and delay, it would have been discovered a long time ago. I have the distinct impression from both these Bills that the Government are willing ends but not means, trying to gain short-term political advantage without acknowledging the price that will have to be paid tomorrow.
Your Lordships' discussion on foreign affairs, overseas aid and defence on Monday brought the rich experience of this House to the debate. There were two recurring themes: the concern expressed from many quarters of your Lordships' House both for the fate of the peace process in the Middle East and for the future of the people of Hong Kong after hand-over to China next year.
In July this year I visited Hong Kong and, in September last year, Israel, in each case as a guest of the government there. I had the great privilege of an extended meeting with Yitzhak Rabin about a month before he was tragically cut down. He above all others believed passionately in the security of the state of Israel, as well as in the peace process. He saw progress in the second as a precondition of the first. It was good to hear the noble Baroness, Lady Chalker, forthrightly declare that the peace process must go forward; that the agreed redeployment from Hebron must take place, and promptly; and that Israel must urgently ease the passage of aid personnel, food, medical supplies and development assistance in the occupied territories.
In her masterly survey, my noble friend Lady Blackstone was equally resolute. All of us who are friends both of Israel and of the Palestinian people can make common cause. Agreements that were made in the name of Israel must be honoured by the government of Mr. Netanyahu. The Oslo agreement which burnt so bright and offered so much hope of reconciliation in the Middle East under the government of Prime Ministers Rabin and Peres must not be allowed to flicker out. My noble friend Lady Blackstone is surely right that the restoration of freedom of movement into and out of
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Israel, and safe right of passage between different parts of the Palestine authority, would be the best earnest of Israel's continuing commitment to the peace process.
Finally, in the foreign affairs debate, my noble friend Lady Blackstone described how the handling of the BSE crisis has heightened the disdain with which we are now regarded in Europe. The Government's conduct of that crisis has been an unfolding textbook of how neither to win friends nor to retain them, nor to influence people. First, the Government announced the problem, without any prior consultation with our European colleagues on how best to handle it both for our benefit and for theirs. Normally it is wise policy when announcing a problem to combine the announcement with the proposed solution, but not a bit of it. Hard on the heels of the first announcement came the second; that the Government's policy was to do nothing about the problem they had revealed. Therefore the beef ban followed. The Government retaliated with their ludicrous policy of serial vetoing, called, I believe, in the Civil Service trade, PONCE, the policy of non-co-operation in Europe. That failed. Then came the Florence Agreement. Next, the Government decided not to fulfil their side of that bargain. So the aim that the Prime Minister expressed to the other place last June; namely, to be able to tell the Commission by October—a month which has now all but expired—that we had met the conditions to lift the ban on two of the five stages, certified herds and animals born after a specified date, has come to absolutely nothing. A few months ago he said that the beef ban would be lifted by November. There is not a hope of that.
These are surely the politics of the madhouse. When next May the Government are ejected there will be a collective sigh of relief all over Europe. To Europeans it will appear that at long last the men and women in white coats have taken charge. It would be laughable if the damage to our national interest and to our farmers was not so great. I do not think that anything in our industry and economic affairs debate today has detracted from the thesis of the noble Lord, Lord Richard, who opened from these Benches last Thursday when he heralded the reasoned amendment which my noble friend Lord Peston has moved today.
The noble and learned Lord, Lord Fraser, trumpeted at the outset of the debate that we are recovering from a recession. I hope that we are. They dug the pit from which we may be emerging. Even this Government cannot keep us in the deepest recession for ever. However, they will be judged on the whole of their record.
I agree with the noble Lord, Lord Ezra, that there is not much to rejoice about. Investment, even now, is less than in any previous upswing; manufacturing investment was down in the past year; there are a million fewer jobs than when the Prime Minister took office. There are 2 million unemployed, with 900,000 long-term unemployed. There has been a huge expansion of public debt, with £25 billion a year spent on interest payments alone. The noble and learned Lord, Lord Howe, recognised that a PSBR of £25 billion to £30 billion is far too high and that restraint on the fiscal side is needed. And in his balanced speech the noble

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Lord, Lord Tugendhat, acknowledged that inflation is high by most European standards, even if lower than the self-indulgent standards that we have enjoyed; and that the Government's own target has not been reached.
There are 120,000 homeless families. Welfare bills have doubled as we pay for the cost of economic failure. As my noble friend Lord Haskel mentioned, one in five non-pensioner homes have no one working in them at all. More than a million children are in classes of more than 30. By the standards of France and Germany our GCSE results are lamentable. We have the lowest proportion of 16 to 18 year-olds in training or full-time education of all our major competitors. The noble Lord, Lord Currie, in a notable maiden speech emphasised the important relationship between education and training on the one hand, and growth on the other. If this is what the Government call an economic triumph, I should not like to live through what they would call a disaster. The one thing that is enduring about their claim to an economic miracle is that it is the claim that this Government always make before a general election.
My noble friend Lord Richard pointed last Thursday to what this Government have presided over£the want of respect for our institutions; the loss of sense of community; people sleeping rough; the growth of a depressed and alienated underclass. I add a few more: arms for Iraq; sleaze; boardroom rip-offs; cash for questions; Scott; Nolan; the twin doubling of crime and debt; the job insecurity and the business failures.
That is the true but unacknowledged background to the Prime Minister's claim at the last Tory party conference that Mr. Blair should not become Prime Minister because it would be his first real job. Well, Mr. Blair had a distinguished practice at the Bar before entering Parliament. I think enough of my profession and Mr. Leon Brittan, Mr. Michael Howard, Mr. Kenneth Clarke, Mr. Malcolm Rifkind, and the noble and learned Lord, Lord Fraser, to accept that they too, in time past, had real jobs at the Bar. I also have quite enough respect for the other place to accept that all its Members have real jobs. That claim by the Prime Minister was a pure expression of the arrogance of power. And the people do not like it. Neither the Prime Minister, nor his Government, has a freehold of power, only an overlong leasehold interest which is about to expire without being renewed because, as the people will shortly show, power is in their gift.
I commend our reasoned amendment to this House.
10.15 p.m.
The Lord Privy Seal (Viscount Cranborne): My Lords, may I begin by referring to the maiden speech of the noble Lord, Lord Currie of Marylebone. His reputation preceded him to this House and, if I may say so, we were not misinformed. We await his future contributions with a mixture of pleasure and dread: pleasure at his delivery and dread at the power he will add to the ranks of the Opposition.
My Lords, it is late and your Lordships have listened to an informed debate for five days. I shall try to answer as many points as I can; on others I hope noble Lords
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will allow me to write to them. I must in the short time available to me try both to weave together the themes of the past five days and to answer the day's debate, which has been distinguished, I think your Lordships will agree, even by the standards of your Lordships' House.
Perhaps I may at this point undertake to pass on the comments of my noble friend Lord Weir on the PFI to my right honourable friend.
One of the overwhelming memories that I shall take away from this afternoon and this evening—and it is an element of the debate that I particularly enjoyed—is the exchanges that took place over the European economic and monetary union. I do not think I need to repeat to your Lordships that our position as a Government is perfectly clear. Before the Opposition rupture themselves with synthetic laughter—laughter which, I have to say, I anticipated—I should say that I shall watch with the greatest of interest the development of the Labour Party's position, which I think is characterised this evening by the sound of back-pedalling more than anything else.
This is the third year that I have found myself at this Dispatch Box at this point in the debate on the Motion for an Humble Address. In my first year, I drew your Lordships' attention to the economic prospects for the country as we emerged from recession. Last year I gave evidence that those prospects were beginning to be realised. This year I will—without repeating what has been said by my noble and learned friend Lord Fraser of Carmyllie—remind your Lordships that our economic performance has continued to improve over the past year and that the prospects for next year give us cause for quiet satisfaction.
I am particularly grateful to the noble Lord, Lord Jenkins of Hillhead, for what I can perhaps best describe as a slightly shady endorsement of my right honourable friend the Chancellor of the Exchequer. Perhaps I may say to the noble Lord that the Government have stuck to their economic policies consistently and tenaciously for some years now, although consistency and tenacity are, I agree, characteristics of my right honourable friend, characteristics which I, like the noble Lord, greatly applaud.
Those policies are working. They are allowing us, as my noble friend Lord Howe has reminded us, to see sustained low inflation and, as the noble Viscount, Lord Thurso, remarks, sustained and sustainable growth. We are seeing continuous reductions in unemployment, continuing improvements in exports, continuing inward investment. I believe, like my noble friend Lady O'Cathain, that our approach has indeed been one of tenacity and courage, for we all know that the economic cycle almost never coincides with the electoral cycle and, no matter what the noble Lord, Lord Jenkins of Hillhead, may say in order to explain the result of the 1970 election, he and I have known enough members of his former party to realise that his explanation did not altogether wash with them at the time and I doubt whether it will entirely wash with them even to this day. I think that that courage is something that my right

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honourable friend the Chancellor of the Exchequer has rightly shown again today and I am grateful to those noble Lords who have recognised that.
Of course, as my noble friend Lord Tugendhat so rightly said, there is more to be done. I certainly agreed with the noble Lord, Lord Taverne, when he pointed out, for instance, that our productivity still had some way to go before we catch up with some of our major competitors. But some at least of what has still to be done is encapsulated in the legislative programme which was announced in the gracious Speech, including our continuing commitment to bringing the PSBR into balance over the medium term. That is something which has quite rightly occupied the attention of a great number of your Lordships this evening. In fact, I was particularly pleased to hear earlier this afternoon the commitment of the noble Lord, Lord Peston, to fiscal rectitude. I do not wish in any way to be unpleasant, but I must say to him that it certainly sits rather ill with the statements from every spokesman from his party who each demands more expenditure implicitly and explicitly when it comes to talking about particular cases. We must plan for future success as well as emphasising our past achievements.
Before I go any further, I want to draw attention particularly to the speech delivered by the noble and gallant Lord, Lord Craig, to whom I listened with enormous admiration. I pay tribute to his work on the Select Committee, which he mentioned, and I particularly endorse what he said about the future delivery of government services. We face imminently a radical shakeup which I hope and believe will deliver enormously improved services to the citizens of this country. I can certainly confirm to the noble and gallant Lord that the Green Paper will be available on the Internet on the day of publication. It will be available on the government information site on the Internet and the Green Paper will also be released on a CD-ROM package, available through the same outlets as the written report.
Last year I suggested that I saw the health of the nation state, as an institution, as crucial to the success of the nation as a society and indeed as an economic unit.
The Opposition, as we are constantly reminded—I gather that there was an entertaining press conference today on part of this matter—contemplates institutional reforms. Those institutional reforms seem to me, apart from their constitutional implications, to threaten in their wake economic effects as well. Our economic achievements have at least been partly built on our ability as an independent member of the European Union to take the economic decisions which we believe are right for the United Kingdom, including the question of joining EMU.
Sadly, I know that noble Lords opposite will not agree with me when I say that a classic example of that is our decision not to adhere to the social chapter of the Maastricht Treaty. In that context, again, I am particularly glad that the noble Lord, Lord Peston, raised the question of employment. Incidentally, I should perhaps also point out to the noble Lord, Lord Barnett, that not only has the United Kingdom a higher
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proportion of its population of working age in work than any other major European nation, but that the number of people in work since we came out of recession has increased by 700,000.
The evidence that the provisions of the social chapter costs jobs is overwhelming. We live in a competitive world. Our major partners' unemployment figures alone show that the social chapter represents a range of social policies that we simply cannot afford and indeed that the European Union as a whole cannot afford if it is to compete with the rest of the world. My noble friend Lord Clark was perfectly right to remind us of that.
That illustrates a very real difference between the Government and noble Lords opposite. They say that by refusing to adhere to the social chapter and by refusing to introduce a minimum wage, we shall deliver only a low-wage economy with low job security. They see the social chapter and the minimum wage as the way to avoid both those evils. In fact, well meaning though those measures might seem, they are at best counter-productive. Instead of creating jobs, they discourage employers from taking on new workers. For our part, we want to ensure that the maximum number of people are in work so that they can enjoy the chances of increased prosperity that follow from that condition.
I should like to draw the attention of the noble Lord, Lord Haskel, to some evidence. On internationally consistent definitions our unemployment rate is now just under 8 per cent. As my noble and learned friend Lord Howe, pointed out, it is falling, whereas Germany's is 9 per cent. and rising, and France's is 11.5 per cent. Indeed, the noble Lord, Lord Healey, referred to the fact that those countries have combined low growth and high unemployment. I agree with that. I need hardly point out that those countries enjoy the social chapter, whereas we do not.
If those employment figures of ours were bought at the cost of sweatshop labour, noble Lords opposite might have more of a case. But my right honourable friends the Chief Secretary and the Secretary of State for Social Security have, between them and with help of figures from the OECD, established some illuminating facts. If we take the years 1986–1991, those in the United Kingdom who entered employment enjoyed a higher degree of upward income mobility than people in Germany, France, Italy and Sweden. Only the United States scored more highly than ourselves.
On the other hand, though it is true that in the United States those in the lower decile—the lowest tenth—of earners experienced a fall of 10 per cent. in average real earnings, in this country the growth between 1985 and 1995 for that bottom decile was 10 per cent. for men and 15 per cent. for women. So the lowest earners have not got poorer: so long as they are in work, they have become richer. Therefore what matters is to help people to obtain jobs. Once there, experience shows that they improve their income quite fast. Any barrier which discourages employers from offering jobs encourages an immobile underclass of unemployed and, to borrow a phrase from a reasoned amendment of the noble Lord, Lord Peston, damages "social cohesion".

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In fact our opponents seek, through institutional means, not merely to win the political battle (which would be fair enough), but in so doing to lock the unemployed into a model which we believe is failing all the people of western Europe. We hope that our European partners will observe the practical effects of our policies on unemployment on the upward mobility of those employed at lower rates of pay. So, for the sake of the very people about whom both major parties are most concerned, our independence matters. But of what does such independence actually consist?
It consists of national institutions which are capable of taking clear negotiating positions with our partners; which are capable of insisting, where necessary, that our national interest requires us to adopt the position which we believe to be right. Similar considerations of practicality, not ideology, inform our attitude to institutional change for the United Kingdom. I have spoken on these issues before, most recently in July of this year, and I shall not weary your Lordships with yet another attempt at exposition. But underpinning our power to act is our need for strong central institutions legitimised by the authority of a sovereign Parliament.
The gracious Speech gives us one example of practical innovation. The speech referred to the publication of a draft Bill of voluntary identity cards. If your Lordships will allow, I should like to make a short diversion down that road. I regard that as a small but significant step. The Government want to make Parliament and the work of Parliament more accessible. I am sure we all agree on the value of that. The question is: how does one actually achieve it? This is an instance where, under the auspices of Parliament—formally prefigured in the gracious Speech—a draft Bill will be put into the public domain before it is brought forward for enactment.
I turn now to the reasoned amendment of the noble Lord, Lord Preston. I am sorry that so high a proportion of the speech of the noble Lord, Lord Irvine of Lairg, seems to have been written for him by some of the more downmarket newspapers. It was uncharacteristically a piece of "pinching" of other people's work, which disappointed me. I feel the noble Lord has a much better turn of phrase than the Sun.
When I first read the terms of the amendment of the noble Lord, Lord Peston, I was mystified. Perhaps I may remind your Lordships that this House is being asked to regret a putative failure on behalf of the Government,
"to manage the nation's affairs in a manner which preserves social cohesion and integrity within the United Kingdom and the country's reputation abroad".
I could appreciate, when I read these words, that there was a fine sound to some of them. They were good words and phrases—"integrity"; "reputation", although "reputation", as we know in politics, is something of a bubble; even "social cohesion". As so often with fine words we are not told how they could, in the real world, inform policy or legislation. Do these words in any way refer, for instance, to institutional reform and constitutional reform when they refer to,
"integrity within the United Kingdom".
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I hope so—and I am glad to see the noble Lord, Lord Williams, nodding. That suits us.
The economy is becoming unpromising ground, for the reasons my noble and learned friend and I have given this afternoon, for the Opposition's attack on the Government. It is hardly surprising, therefore, that they have been casting around in an attempt to find rather more solid ground to support their lumbering chargers.
As so often, they have followed their instincts. They have decided to attack our national institutions instead. This is a well-established ploy hallowed in both the strands of socialist thinking that have flourished in this country: social democracy and state corporatism. It is based on the curious assumption that not only is state control more effective but is morally superior. From there it is but a step to argue that those who control the state know best. We need only remind ourselves of what happened to the grammar schools to see that it is true; or indeed to see what happens to state owned industries when we transfer them to the private sector.
The Labour Party has so often embarked on the long march through the institutions. Now it is appeasing the nationalists and the European federalists by attacking the institutions themselves—most notably the greatest institution of all, our nation state itself.
I shall not weary the House by discussing the party opposite's devolution plans. We all know that it has answered none of the practical questions—from the West Lothian question on—of how to apply those plans. I cannot resist asking in passing what Scotland or indeed my noble friend Lord Sanderson have done to deserve from the Labour Party more bureaucracy, more politicians and more taxes than Wales. However, the reality is that if it ever implemented these proposals they would prove to be the first step on the road to the break up of the United Kingdom.
While I am on the subject of institutions, I was most interested that the noble Lord, Lord Richard, who I am so delighted to see has come back from what must have been an extremely agreeable evening, in his typically pithy and amusing speech—I must say that if ever I need a barrister I hope my solicitor will be able to retain the noble Lord's services: he is, after all, remarkably good at making the best of a bad case—accused me of a death-bed conversion on the question of reforming your Lordships' House.
There were two things wrong with that remark, if I may say so with the greatest respect to the noble Lord. First, neither I nor your Lordships' House is on our death bed; and, secondly, no conversion has taken place. My position is exactly as it was when we debated these matters so memorably in July. I am not in principle against reforming the powers and composition of this House. I never have been. No creation of man, even this House, is perfect. However, this House works well. Any reform would affect us, but it would also affect another place. Labour's two-stage proposal may never get beyond stage one. It may not even get as far as that of course. But stage one would be the worst of all worlds.

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Yet again the Labour Party is guilty of political opportunism, this time to appease its own Left-wing—that Left-wing which is becoming so restive under the oath of omerta they have sworn until after the next election.
What I say to the Labour Party is this: "You are the ones who want reform. If you were to win the next election and persist with this plan, let us at least try to devise something that might work as well as the existing arrangements. The final decision will quite rightly be taken by another place as the elected Chamber. Why not, if you win, ask another place to set up a Select Committee to examine the question rationally and to make recommendations in the context of Parliament as a whole?". I have to say to my noble friends that I am still waiting for an answer. The noble Lord, Lord Peston, will understand by now that I am puzzled by what he means by
"integrity within the United Kingdom".
When it comes to the country's reputation abroad, like my noble and learned friend Lord Fraser and my noble friends Lord Sanderson and, I believe I am right in saying, Lord Boardman, it seems a little rich to me, coming from the party which presided so memorably over the decline of our country into the basket case that it became in the 1970s. Perhaps I may make a little trip down memory lane in that that excited looks of pity in foreign eyes that I so well remember as a temporary export to California in the 1970s.
There used to be something called "The British Disease". Now we enjoy the strongest inward investment of any nation in the European Union. Companies from all over the world are willing to back our reputation with their investment and with hard cash. Clearly, this is not enough for the party opposite.
But for all these reasons we reject the terms of the reasoned amendment. It comes from a party which landed our country up to its neck in trouble in the 1970s and which has consistently opposed every successful measure that this Government have taken since 1979. It continues to oppose, and I have no doubt that it will continue to do so in the current Session, nearly every measure we bring forward even though they are designed to reinforce our success. But it carefully forgets to promise to repeal them if ever it should by some mischance be returned to power. I hope that your Lordships will see no merit in the reasoned amendment, just as I hope that the electorate will see through the same empty phrases before going to the polls. In that event this Government will have a renewed mandate, which they richly deserve, to finish the job.
10.36 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, the original Question was that an humble Address be presented to Her Majesty in the terms set out on the Order Paper, since when an amendment has been moved by the noble Lord, Lord Peston, to insert at the end of the Address the words set out on the Order Paper. The Question is that this amendment be agreed to.
Their Lordships divided: Contents, 103; Not-Contents, 158.

Division No. 1

CONTENTS

Addington, L.

Lester of Herne Hill, L.

Barnett, L.

Listowel, E.

Beaumont of Whitley, L.

Lockwood, B.

Berkeley, L.

Longford, E.

Blackstone, B.

Lovell-Davis, L.

Blease, L.

McGregor of Durris, L.

Brooks of Tremorfa, L.

McIntosh of Haringey, L.

Bruce of Donington, L.

Mackie of Benshie. L.

Callaghan of Cardiff, L.

McNair, L.

Carmichael of Kelvingrove, L.

McNally, L.

Carter, L.

Mallalieu, B.

Chandos, V.

Mar and Kellie, E.

Cledwyn of Penrhos, L.

Mason of Barnsley, L.

Clinton-Davis, L.

Mayhew, L.

Cocks of Hartcliffe, L.

Merlyn-Rees, L.

Currie of Marylebone, L.

Milner of Leeds, L.

Dahrendorf, L.

Monkswell, L.

David, B.

Morris of Castle Morris. L.[Teller.]

Dean of Beswick, L.

Nicol, B.

Dean of Thornton-le-Fylde, B.

Ogmore, L.

Desai,L.

Peston, L.

Diamond, L.

Plant of Highfield,L.

Donoughue, L.

Prys-Davies, L.

Dormand of Easington, L.

Redesdale, L.

Dubs, L.

Richard, L.

EatwelLL.

Robson of Kiddington, B.

Ezra,L.

Rochester, L.

Falkender, B.

Rodgers of Quarry Bank, L.

Falkland, V.

Russell, E.

Farrington of Ribbleton, B.

Sewel, L.

Gallacher, L.

Shepherd, L.

Geraint,L.

Stoddart of Swindon, L.

Gladwin of Clee,L.

Strabolgi, L.

Gould of Pottemewton, B.

Taverne, L.

Graham of Edmonton, L. [Teller.]

Taylor of Blackburn, L.

Harris of Greenwich, L.

Taylor of Gryfe, L.

Haskel, L.

Thomas of Gresford, L.

Hayman, B.

Thomas of Walliswood, B.

Healey, L.

Thomson of Monifieth, L.

Hilton of Eggardon, B.

Thurso, V.

Hollis of Heigham, B.

Tope, L.

Holme of Cheltenham, L.

Tordoff, L.

Hooson, L.

Turner of Camden, B.

Howie of Troon, L.

Wallace of Saltaire. L.

Hughes, L.

Wedderbum of Charlton, L.

Irvine of Lairg, L.

Whaddon, L.

Jay of Paddington, B.

White, B.

Jenkins of Hillhead, L.

Williams of Elvel, L.

Judd, L.

Williams of Mostyn, L.

Kennet, L.

Winchester, Bp.

Kilbracken, L.

Winchester, Bp.

Kirkhill, L.

NOT-CONTENTS

Addison, V.

Brabazon of Tara, L.

Ampthill, L.

Brentford, V.

Annaly, L.

Brougham and Vaux, L.

Archer of Weston-Super-Mare, L.

Bruntisfield, L.

Attlee, E.

Burnham, L.

Banbury of Southam, L.

Cadman, L.

Beloff, L.

Caithness, E.

Belstead, L.

Campbell of Croy, L.

Berners, B.

Carlisle of Bucklow, L.

Biddulph, L.

Carnock, L.

Blaker, L.

CarrofHadley, L.

Blatch, B.

Chalker of Wallasey, B.

Blyth, L.

Chesham, L. [Teller.]

Boardman, L.

Chichester, Bp.

Bowness, L.

Clanwilliam, E.

Boyd-Carpenter, L.

Clark of Kempston, L.

429

Cockfield, L.

Harrowby, E.

Coleridge, L.

Haslam, L.

Colwyn, L.

Henley, L.

Courtown, E.

Holderness, L.

Craig of Radley, L.

HolmPatrick, L.

Cranborne, V. [Lord Privy Seal.]

Hooper, B.

Crickhowell, L.

Howe of Aberavon, L.

Cuckney, L.

Huntly, M.

Cumberlege, B.

Inglewood, L.

Darcy (de Knayth), B.

Ironside, L.

Dean of Harptree, L.

Johnston of Rockport, L.

Denham, L.

Kimball, L.

Denton of Wakefield, B.

King of Wartnaby, L.

Dixon-Smith, L.

Kingsland, L.

Donegall, M.

Lauderdale, E.

Downshire, M.

Lawrence, L.

Eden of Winton, L.

Leigh, L.

Ellenborough, L.

Liverpool, E.

Elles, B.

Long, V.

Elliott of Morpeth, L.

Lucas, L.

Elton, L.

Lucas of Chilworth, L.

Ferrers, E.

Luke, L.

Flather, B.

Lyell, L.

Forbes, L.

McColl of Dulwich, L.

Fraser of Carmyllie, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Gage, V.

Gardner of Parkes, B.

Mackay of Drumadoon, L.

Geddes, L.

Macleod of Borve, B.

Gisborough, L.

Masham of Ilton, B.

Goschen, V.

Massereene and Ferrard, V.

Gray of Contin, L.

Merrivale, L.

Greenway, L.

Mersey, V.

Harlech, L.

Miller of Hendon, B.

Harmar-Nicholls, L.

Monteagle of Brandon, L.

Harmsworth, L.

Montrose, D.

Harris of High Cross, L.

Mountgarret, V.

Harris of Peckham, L.

Mowbray and Stourton, L.

430

Murton of Lindisfarne, L.

Shrewsbury, E.

Newall, L.

Skelmersdale, L.

Northesk, E.

Soulsby of Swaffham Prior, L.

O'Cathain, B.

Stewartby, L.

Oppenheim-Barnes, B.

Strange, B.

Oxfuird, V.

Strathclyde, L. [Teller.]

Park of Monmouth, B.

Taylor of Warwick, L.

Pearson of Rannoch, L.

Tebbit, L.

Pender, L.

Teviot, L.

Perry of Southwark, B.

Thomas of Gwydir, L.

Peyton of Yeovil, L.

Torrington, V.

Plumb, L.

Trumpington, B.

Pym,L.

Tugendhat, L.

Rankeillour, L.

Ullswater, V.

Rawlings, B.

Vivian, L.

Reay, L.

Wade of Chorlton,L.

Rennell, L.

Wakeham, L.

Renton, L.

Waterford, M.

Rotherwick, L.

Weir, V.

St. John of Fawsley, L.

Westbury, L.

Saltoun of Abernethy, Ly.

Wharton, B

Sanderson of Bowden, L.

Whitelaw, V.

Savile, L.

Wilcox, B.

Seccombe, B.

Wise, L.

Sharples, B.

Wolfson, L.

Shaw of Northstead, L.

Wynford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly. On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.
House adjourned at fourteen minutes before eleven o'clock.

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