Sitting of 9 July 1997

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

  European Fighter Aircraft
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]
  9.35 am
  Mr. Lindsay Hoyle: I am grateful for the opportunity to raise the crucial issue of the European fighter aircraft, and I am also grateful to the Under-Secretary of State for Defence, my hon. Friend the Member for Warley (Mr. Spellar), for being here to listen and reply to the debate. It is nice to remember that this is the 60th anniversary of Whittle's jet engine, which was developed in the north-west, so it is an opportune moment to discuss the future of the aircraft industry in the area. Clearly, this issue remains important to many hon. Members, and it is good to see several colleagues here to join the debate. This is also a timely moment to raise the subject once again.
  One set of our partners in the project—the Germans—may well take a decision on their participation in the programme at a Cabinet meeting this week, on 11 July. In the past couple of weeks, press reports have suggested that the Treasury is unhappy with the costs of the Eurofighter and is looking to reduce our commitment to it, or to cancel it altogether. Since the Government have given assurances on numerous occasions that the project will proceed, I regard those reports as nothing more than inaccurate. However, it is helpful for the Government once more to have the opportunity to reaffirm their support for the EFA project, and I hope that Ministers from the Foreign and Commonwealth Office and the Treasury will bear in mind the points that are raised in this morning's debate.
  The aerospace industry is without question one of the major sources of employment in the north-west, and the EFA is a major aerospace project in the United Kingdom at present.
  Aerospace is a major employer in Lancashire, where it forms the backbone of the county's economy. Lancashire represents the largest concentration of aerospace production in the UK. However, it is not only Lancashire that is the beneficiary of this project, as there are more than 100,000 direct employees in the aerospace sector throughout Britain. In total, 500 establishments employ people directly in the aerospace sector. The EFA project includes sites in Surrey, Hampshire, Bristol and Humberside—it is truly a national project.
  In Lancashire last year, 13,000 people, or 10 per cent. of the county's total manufacturing work force, were employed directly by the industry in more than 40 different establishments. Lancashire also accounts for
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  13 per cent. of the national total employment in the industry. In my constituency alone in 1995, 400 people were working in the aerospace industry. Having said that, we must remember that many principal contractors buy in up to 70 per cent. of their requirements. The number of indirect jobs created by the aerospace sector is therefore higher than in many other industries.
  Among the major employers are British Aerospace—particularly in Salmesbury and at Warton—Lucas Aerospace, and Rolls-Royce. In addition to the main contractors involved in the Eurofighter programme—British Aerospace, Rolls-Royce and GEC Marconi—there are 32 major equipment suppliers and 60 sub-suppliers involved in contracts for the manufacture of the airframe equipment and engine accessories.
  Mr. Eric Forth: Is the hon. Gentleman's entire argument to be based on a job creation scheme, which is what it sounds like at the moment, or will he advance any arguments about the capability of the aircraft or defence capability generally?
  Mr. Hoyle: The right hon. Gentleman seems to be a little impatient. Obviously a bad night's sleep has not done him much good—he might get better rest tonight, and become more responsible tomorrow morning.
  So far, 11,000 people have been employed in the development phase, and estimates from the industry suggest that the peak of production could provide 16,000 jobs directly and another 16,000 among suppliers of goods and services. However, there are countless other firms and many more thousands of people who are linked directly to the aerospace industry, but not employed in it. For example, there are firms in precision and high-technology engineering and electronics, metals treatment, rubber, plastics, software development and design and testing services. More than 120 companies in Lancashire alone are directly or indirectly linked to the industry.
  One example in my constituency is Computer Science Corporation of America. It has sited a new office on the Royal Ordnance factory site in Chorley, which Conservatives should remember as the subject of the disastrous decision that led to the factory's closure. CSC has created 400 jobs there, and is looking to double that number. Those are not aerospace jobs, but are linked to the aerospace industry, and more directly to the EFA. If the EFA were to be cancelled, CSC would have to consider its expansion plans.
  Other examples of firms in my constituency of Chorley alone that are closely involved in the EFA programme include: Royal Ordnance, which makes weaponry and ammunition for the project; Lyndhurst Precision Engineering Ltd.; NIS Ltd., which undertakes engineering and design of equipment and is one of the leading firms in Europe in its field; and Xelflex Precision Moulders, which makes engineering and moulding equipment. All those firms play a key role in the success of the EFA project. The aerospace industry in Lancashire has been making purchases of raw materials, components and manufacturing supplies totalling more than £1 billion per annum, and it has spent more than £70 million on industrial services.
  The EFA has not had the easiest history, because of changes in the international scene, notably the end of the cold war, and it has faced opposition because of budgetary

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  pressures within the partner nations. Most notably, the German Government, faced with the huge costs of unification and the need to cut expenditure to meet Maastricht criteria, dragged their feet on the programme for many years. In fact, in 1995 they denied their commitment, and we are back at the same point today. In mid-1992, Germany announced its reluctance to go ahead with the production as then envisaged and even hinted that it wanted to halt the programme altogether, arguing instead for a cheaper, lighter version.
  The Spanish and Italian Governments also dragged their feet, and it was decided to scale down the technical specifications in order to make the version cheaper. After a full review of the specifications and production method, a deal was reached in late 1995: Germany proposed to increase its purchase of Eurofighters from 140 to 180, while the UK would reduce its purchases by 20 to around 230. There has been continuing speculation about German involvement, despite that agreement and despite the fact that Germany is benefiting from 30 per cent. of the production work and will benefit also from future sales or the aircraft. Even now, there seem to be great doubts among certain sections of the German Government and Administration about the importance of the EFA.
  I was grateful for the support of my right hon. Friend the Prime Minister, who, in one of his first trips abroad after taking office, went to Bonn and made a point of lobbying Chancellor Kohl for stronger support for the programme. On 18 June, when he came to the House to make a statement about the Amsterdam summit, I asked my right hon. Friend about German support for EFA and expressed gratitude for his continuing efforts. He said:
  "I raised that issue with Chancellor Kohl in Bonn a short time ago and I was pleased that he confirmed that he still desires to proceed with the project. Apparently, budget discussions are going on in Germany at present, but I think it is very important that the project proceeds, for the defence of the country and for jobs and skills.''—[Official Report, 18 June 1997; Vol. 296, c. 327.]
  We are now told that the German Government will make a final decision on the programme at their Cabinet meeting this week on 11 July. I urge Chancellor Kohl and his Cabinet to re-affirm, once and for all, their commitment to this vital project. I see no reason other than internal politicking for this procrastination, and I hope that Ministers in the Foreign Office will make use of the last couple of days before that German Cabinet meeting to present the case for the EFA project. Once the decision to participate fully is taken—as I am sure it will be taken—I urge the Germans to consider it final. There should be no more lingering uncertainty and no more rumours about doubts or cancellations.
  Another line of criticism of the EFA has been unattributable complaints that its technical performance is not up to scratch. The German magazine Der Speigel claimed recently that the steering and radar mechanisms were so bad that a complete overhaul of the design was necessary. It said:
  "The flight control system is so slow that the plane is in danger of falling out of the sky at high speeds".
  Yet the aircraft has already flown 370 flight hours in prototype without any problems. It was warmly greeted at Farnborough last year, and it gave an impressive performance at Paris last month.
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  Most important, the plane's pilots testified to its ability. One pilot said:
  "The general impressions resulting from this sortie were of a fantastically powerful aircraft that was easy to operate and fly accurately". Another stated:
  "The cockpit promotes the feeling of being right on the cutting edge".
  That does not sound like a plane with problems and, although nobody would expect it to be perfect at this stage in development, it is clearly not the liability that some parts of the press make it out to be.
  Part of the problem may be the divisions within the German Government on this matter and I fear that it is being used as a political football. Sadly, with rumours and recent press reports of Treasury anxiety, I hope that similar tactics of doubt expressed by unattributed experts will not be used by the EFA's opponents in this country.
  Having said that, I cannot understand the opposition to the EFA. It has the potential to be a world-beating product, with technology and design to last us for many years, yet its opponents continue to criticise. Sometimes I wonder whether the British tendency to knock our successes is the root cause of opposition in this country—the desire to pour cold water over anything at which we do well. Perhaps some individuals or groups are waiting for the Germans to delay further or to pull out completely, so that we have a face-saving excuse to cancel the British participation in the programme.
  However, if people really do want us to cancel the EFA project, they must propose an alternative and, although there are no real arguments in favour of cancellation, we must listen to what others have to say. Of course, we could simply not replace the existing equipment and allow the country's defences to age and become obsolete. Then again, we could buy an off-the-shelf replacement from abroad. The only aircraft that can match the EFA in terms of technical ability is the American F22. Yet—at this point I am addressing the Treasury as well as the House—it is not a cheaper alternative. The Americans are not simply going to give us a fleet of their most advanced fighters; if we want the aircraft, we will have to pay for them.
  The price of such a purchase would be high, albeit cheaper than developing our own alternative; but what would be the additional costs—the costs to the British aerospace sector and to British manufacturing industry? The money is going to be spent, so why not spend it in Britain and in Europe? More than 100,000 people are employed in the aerospace sector in this country; and, at the peak of manufacturing in the EFA programme, up to 250,000 will be employed throughout all the partner nations of Europe.
  If we were to buy from abroad, most of those jobs would be lost. They are largely high-skilled, hi-tech manufacturing jobs, with high value added to the economy. They epitomise the way in which the Government have stated they want our economy to develop. As an illustration, in Lancashire the average wage in manufacturing is £14,400, yet in the aerospace sector it is £18,600.
  To lose such an important part of our economy would be a catastrophic blow, which becomes even worse when we take account of the effect on the whole country and not just the north west. Just as important, we would be signalling our intention to leave the aerospace sector. That is the danger.

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  The development of technology which can be transferred to other sectors, not simply to commercial aviation, would be lost, as would design and computer systems development—such as that carried out by CSC in my constituency. We would damage our position within the Airbus consortium. The strength and ability of Airbus to continu e technological development and to maintain the challenge to the major American manufacturers would also be damaged. Boeing and McDonnell Douglas were last week given outline permission to complete their merger, which will have a damaging effect on our aircraft industry.
  Our ability to maintain the future large aircraft project, which is both a military and a civil design, would be put in jeopardy if the parallel project of the EFA development were to be taken away. That would affect the viability of BAe regional jet production, based mainly in Hatfield, where the BAe 146 aircraft has been a major success, and one of the country's most valuable exports. Indeed, the sale of BAe Hawk aircraft throughout the world generated £12 billion of business for the UK, with about £5 billion being returned to the Treasury—a fivefold return on investment. The EFA would give similar returns.
  Some of the largest export contracts ever have involved British Aerospace projects, and have made significant contributions to Britain's balance of payments. The defence division of British Aerospace had a turnover of £5.3 billion last year. Already there has been sales interest in the EFA in countries as varied as Norway and the United Arab Emirates.
  If press reports are to be believed that some forces in the Treasury are looking critically at the EFA programme, that Department has a simple choice. It can pull the plug on the Eurofighter programme, to save £16 billion. It can leave the Ministry of Defence to defend our country with obsolete equipment. Alternatively, having saved £16 billion, it can spend a large part of that on a suitable replacement, and spend the rest of the money paying for the huge unemployment in the aerospace sector and all those industries that rely on it.
  Twenty years from now, we will still be paying for that unemployment because we no longer have an aerospace industry, our design and computing sectors are second-rate, and our balance of payments is damaged by the need to import those services from abroad, along with aircraft, while our aerospace exports have ceased to exist. All of a sudden, £16 billion does not seem a huge liability, but starts to appear more like a major investment in this country's future.
  We have sold off our motor industry and run down our shipbuilding industry. During the past 18 years, our heavy engineering and manufacturing industry has fallen to a third of its previous capacity; yet in aerospace we remain a world leader. We cannot allow the Pacific rim and tiger economies to overtake us in that sector as well, and we cannot present our American competitors with a free hand to dominate the world market for aerospace. The technology that is developed with the aircraft can be transferred to the civil aviation industry and the future large aircraft programme.
  For the sake of the Royal Air Force pilots who will have to defend this country, for the sake of the hundreds of thousands of jobs that rely on the Eurofighter project, and for the sake of the aerospace industry in Britain, which has been a success for us in terms of technology
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  and exports, it is vital that we remove all doubt, that rumours from HM Treasury cease, and that we give our full support to the Eurofighter project.
  9.52 am
  Mr. Alan Clark: A rumour is going around that the defence review will be shelved or diluted out of sight. I very much hope that the Minister can deny that. I welcome the projected defence review for several reasons—partly because it was long needed, and partly because the Secretary of State said that it would be policy-driven, not Treasury-driven. It is high time that proper consideration of policy in its widest sense governed our defence spending and deployment.
  Defence policy is made up of three components: an evaluation of our national security, a projection of our foreign policy direction over the next 20 years, and an anticipation of the industrial and economic consequences of weapons procurement. All three headings have their lobbies.
  The services are always keen to lobby for items of equipment, and in this instance the Royal Air Force undoubtedly believes its entire career structure to depend on the Eurofighter aircraft. Indeed, some argue that its survival as a service depends on it, because there is an argument—which has much to be said for it—that the Royal Air Force should be dispensed with, and that an Army air corps should support the Army, the Fleet Air Arm should support the Navy, and there should be a transport command to arrange back-up services. I am not arguing that, but the RAF is well aware of that argument, so its advocacy of EFA has an edge to it.
  The Foreign Office wants EFA mainly because of its collaborative aspects, because it regards it as a major purchasing contract that will provide cement for our relations in Europe. Then there are the arguments of the industrial lobbies, whose validity I do not doubt. I congratulate the hon. Member for Chorley (Mr. Hoyle) on the way in which he advanced those arguments. However, he would probably be outnumbered by Labour colleagues who say that the whole sum should be spent on hospitals, schools, kidney machines and so on.
  First I shall discuss the issue of national security evaluation. EFA is not an effective weapon system. It is a short-range interceptor fighter, conceived at the height of the cold war, the need for which has been overtaken by events. It has a very short loiter time, and must operate from sophisticated and hardened airfields. It does not have buddy refuelling, which means that it cannot be refuelled from tanker aircraft of identical type, but must wait and locate a slow and vulnerable dedicated tanker if it needs to take on more fuel. It has doubtful software in its targeting and direction-finding equipment, and it has as yet unsolved deficiencies in the fly-by-wire system.
  It is likely that the article in Der Spiegel exaggerated those failings, but the statement by the hon. Member for Chorley that the EFA has flown for 340 hours without problems can only be based on a press release from British Aerospace or another source; it does not relate to the facts.
  I shall now discuss the Foreign Office implications. The Foreign Office is probably in favour of the EFA because of the collaborative aspect. If the Foreign Office did its job properly, and if its staff applied their minds to the commitments that we are likely to have to undertake

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  during the next 20 years, they would see that what is required is an aircraft with very long range, which can operate off rough local airfields, and which has a relatively low-tech requirement in terms of spares and logistics—something that does not have practically every component in its structure to be new and prototypical.
  I shall now discuss the industrial and economic consequences, under three headings. The first consideration is the possibility of exporting or selling the EFA, which I believe to be nil. As the EFA does not meet our national security requirements, it is hardly likely to meet those of potential customer countries, who will undoubtedly buy something that suits their requirements better.
  Secondly, under the industrial heading, we must consider the consequences that relate directly to employment and to profits in the aerospace industry. Although the hon. Member for Chorley argued in terms of employment, he is well aware that those who are giving him his briefings are probably very profit-oriented also. The Minister will have very much in mind the fact that among the problems of United Kingdom defence procurement is the almost unbreakable interdependence between British Aerospace and his Department's procurement desk.
  Surely, now that the cold war has abated, we could look more widely—not necessarily to the United States—to meet some of our requirements in this area. In any case, if EFA is to be presented as a job creation scheme— I always have some sympathy with the Keynesian ethic—we must find a less extravagant way of paying people to make buckets with holes in them.
  The real problem is that a great deal of investment—prestige, money and service commitment—is going into a project that is essentially flawed and out of date. I agree with the hon. Member for Chorley that we must not abandon leading edge technologies. To do so would be extremely dangerous; it would mean finally forfeiting our independence as producers.
  What we have to do—it is the hardest thing of all to get past the Treasury—is maintain the research and development on the aircraft and fly prototypes, defective and dangerous though they may often be, so as to maintain our capability. At the same time, we must get out of the commitment to going into production of a large number of these aircraft. We do not need them, and they are already obsolete. They lack variable nozzle technology and other details with which I will not weary the House this morning.
  Mr. John Wilkinson: Will my right hon. Friend give way?
  Mr. Clark: Not at the moment. Everyone knows that EFA's life expectancy, even if it has a dominant capability, is only four or five years; and the likelihood of our involvement in the kind of conflict where it would be needed is probably more than four or five years distant.
  I am not arguing for the elimination of the whole project. I am saying that producing these aircraft and buying them at colossal individual cost in numbers far greater than we need would be wrong. We do not want to stock up with obsolete weaponry at this stage. On the
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  other hand, the need to maintain our R and D capability and fly prototypes is clear. So the Minister and the Department must find a way of getting out of the production contract while maintaining the capability. It will be hard; the Treasury will never fund R and D if it possibly can. There is no end product—or if there is, it will be of a type which the Treasury believes will ultimately commit it to greater expenditure: best, therefore, to throttle it at birth.
  I have described what the Minister must do; it is never too late to do it. The aircraft is not yet in production. The cost overruns are stupendous. Many sectors within its specification are defective and will need huge expenditure to put right. This is the time to close down any idea of producing the aircraft, but to maintain the research and development.
  Mr. Wilkinson: I am grateful to my right hon. Friend for giving way—
  Mr. Clark: I have finished my speech.
  Mr. Deputy Speaker (Sir Alan Haselhurst): Order. It is clear that the right hon. Gentleman has sat down.
  10.2 am
  Mr. Lawrence Cunliffe: I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on his lucid presentation. For a new Member, he has an effective insight into the problem—[HON. MEMBERS: "Of jobs"] It is my hon. Friend's privilege to concentrate on jobs. It enables him to get some experience in the Chamber, and I commend his speech this morning.
  I applaud the fact that we are having this debate. It is entirely understandable that hon. Members whose constituents work in the defence industries should be concerned about jobs for their people. The right hon. Member for Kensington and Chelsea (Mr. Clark) seems to think it wrong to battle too hard for Britain because, in an age of new technologies, things move too fast for us to keep up.
  I am a long-standing member of the aerospace and technology committee of the Western European Union, where we have been battling away with the Germans and French over the airbus for some time. Not long ago, we unfortunately lost out in the helicopter argument. Our cardinal objective in all these arguments is to present a good economic case for the viability of British aerospace productive capacity, especially when it comes to making specialist aircraft of this type.
  Rev. Martin Smyth: Does the hon. Gentleman agree that it is important to maintain our manufacturing capacity, and that relying on service industries alone would impoverish us all? Does he agree that the Treasury has a case to answer over research and development? As I understand it, it has not matched British aerospace's R and D investment pound for pound, as it should have done.
  Mr. Cunliffe: I agree. It is imperative to keep up the progress in this area, because it will affect the whole future of British aerospace technology. Treasury mandarins have always been the same. Some present in

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  the Chamber today who have had ministerial experience can, I am sure, quote chapter and verse to show how the Treasury cuts off or isolates funding.
  We have been discussing these matters in the WEU aerospace committee. Next week, I shall have talks with Karl Lenzer, the acting chairman of our committee, who will be in America for discussions. Understandably, German politicians, just like their British counterparts, want value for money. We are all in the same game; no one wants to be frivolous about public money. We are talking about 16,000 German and 10,000 British jobs.
  The right hon. Member for Kensington and Chelsea questioned the performance of the aircraft. We take pride in British quality—indeed, we claim to be the best in the world—but we need to be competitive as well as technologically sound. We have always proceeded on the basis of open competition.
  We are assured by Labour Ministers now that the Eurofighter is not to be considered under the defence review. I call that backing Britain with confidence—
  Mr. Wilkinson: The hon. Gentleman should get his facts right. I am as strong a supporter of the aircraft as he is, and I recognise the excellent work being done by the WEU committee on which he serves. I also recognise the importance of positive, joint decisions with the Germans.
  However, it is inaccurate to say that the aircraft is not to be included in the defence review. When the Chief Secretary to the Treasury made his statement on departmental reviews of spending, I questioned him on this very point. He replied that both Trident and EFA were in the review. That is not to say that the Government will not come up with a positive decision. Labour has always supported the project, and we hope that the Government will maintain that support, despite the review.
  Mr. Cunliffe: There appears to be some confusion between the information that the hon. Gentleman has and what I have been told. It is important that the House be informed as soon as possible, because that is the only way to guarantee democratic accountability.
  When I first went to the Council of Europe, there were 18 member countries. Now 40 nations belong to it. In WEU—the European wing of NATO—and the Council of Europe all the British political parties have always flown the flag together to support British interests in Europe. There has never been a division. The previous Prime Minister congratulated the delegation to the Council of Europe on how we tackled the problem of securing and advancing British interests in co-operation with our European colleagues.
  The American disposition within the defence framework is clear. I have no scruples about predicting that, in 10 to 15 years' time, American and NATO services will have disappeared from the European theatre. It is evident from the political scene on the horizon that, now that the Russians have been accepted into NATO—other countries are coming in daily—rather than deal with short-term aircraft, as the right hon. Member for Kensington and Chelsea said, the Eurofighter will fit the bill for Europe in 10 years' time, which is why the project is necessary.
  We will be dealing with a new type of NATO, with Russia playing a part—it now has a consultative role. It sounds a bit funny to say that it will be a North Atlantic
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  Treaty Organisation within the framework of Europe, but a new European defence organisation will emerge through the evolving nations that will become new members. We are perfectly capable of looking to Europe for our defence.
  Whether in technology or in performance, other parts of the world, such as Scandinavia and Asia, are declaring an interest in our project. When Japan was made an observer to the Council of Europe—America and Canada have also been made observers—it expressed an interest in the European defence scene. We therefore have allies throughout the world who support, in principle, Eurofighter's claim to be an effective weapon within our defence framework.
  Mr. Nigel Evans: Does the hon. Gentleman dismiss, as I do, the argument, which we hear time and again, that, for reasons of cost and capability, we should put EFA to one side and buy an effective and proven alternative from the United States? Does he agree that, if we do that, the jobs he mentioned—10,000 in Britain and 16,000 in Germany—would be put in jeopardy, and manufacturing skills in both countries would be lost? If those skills were lost, they would be lost for ever, and it would be extremely difficult to say whether those teams would ever work again for European defence manufacturing interests.
  Mr. Cunliffe: The hon. Gentleman makes a succinct point. The bulk of my constituents who work in the Lostock factories in Bolton and on aircraft wings in Chadderton are highly skilled technicians, from planners on the drawing board to electricians and fitters, which is why I have a direct interest in this matter. The new skill training programme introduced by the Labour Government will do much to reassure the hon. Gentleman that the skills, dedication and loyalty that now exist will be part of a follow-on process, with new apprentices in that category.
  Mr. Alan Clark: Will the hon. Gentleman give way?
  Mr. Cunliffe: The right hon. Gentleman would not give way to any of his parliamentary colleagues, but, being a charitable new Labour socialist, I shall give way.
  Mr. Clark: I am grateful to the hon. Gentleman for giving way, and particularly grateful for the candour with which he declared his political affiliation. I did not give way to my hon. Friends because I had completed my speech.
  Further to what my hon. Friend the Member for Ribble Valley (Mr. Evans) just said, I want to distinguish between manufacturing skills and design capability. In the same unpunctuated sentence, the hon. Member for Leigh (Mr. Cunliffe) referred to drawing board technicians and fitters, which are totally different categories. It is essential to maintain the drawing board capability, and full research and development. The point about full-scale employment is that the fitters' skills will be wasted if they make something that is of no use. That was the point that I was making.
  Mr. Cunliffe: If something is wrong with the design, the manpower is wasted. The right hon. Gentleman is right about design engineers. I have some in my constituency who are specialists in every sense of the

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  word, and we are proud of that. Their work must complement that of the other workers, whether on the tool bench or on the drawing board. The right hon. Gentleman makes a fair comment, but I did not understand when he said that he knows of many design defects at this time. I shall ask my design boys to see whether there is some logic in his presentation.
  Our wonderful achievements in collaboration with our European colleagues, from airbuses to helicopters, augur well, and should bring confidence and trust in the future. We are Europeans in the true sense, and are becoming totally interdependent in Europe in terms of jobs and education. That is the great case for Europe. European countries need one another, politically, economically and socially, but we must continue to plug British interests.
  10.16 am
  Mr. Michael Jack: I am delighted to see the unanimity of Lancashire Members in the Chamber today, including my hon. Friend the Member for Ribble Valley (Mr. Evans) and the hon. Members for Preston (Audrey Wise), for Blackpool, South (Mr. Marsden), for Chorley (Mr. Hoyle), and myself from Fylde.
  I congratulate the hon. Member for Chorley on how he laid out not only the strategic but the industrial case for Eurofighter 2000. He made a clear and justifiable case for the project's continuity, in contrast to my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark), who was long on criticism but short on objectivity in suggesting an alternative to the Eurofighter 2000. It sounded like the knocking copy that I have heard emanating from north American sources, who for so long have sought to do the project down. Those of us who have lived with it for many a long year have heard this story before.
  I respectfully point out to my right hon. Friend that he was in post in the Ministry of Defence when some of the specifications for the Eurofighter were being written, so perhaps at some stage outside the Chamber he will tell me whether his hand was on any of the specifications that he now denounces as inappropriate.
  May I put on record words of praise for our former colleagues, Mr. Keith Mans, Mr. Robert Atkins and Mr. Den Dover, for their fight to keep this project alive? Without their efforts, I doubt whether we would be having this debate.
  A tremendous campaign was orchestrated to influence Members of the Bundestag when it last had to make a decision on that matter. The Secretary of State wrote a helpful letter to me on this subject, saying that he would come back to me with ideas about how the current generation of Members of Parliament might also communicate with colleagues in the Bundestag, because they have the final decision on the German financial position. I should be grateful if the Minister, if not in his reply then subsequently, would be willing to act as a falcon for the exercise that this Parliament can have in influencing our German counterparts.
  I also pay tribute to the work of the trade unions. It may sound odd coming from a Conservative Member, but the trade union movement, based as it is in my constituency of Fylde, at Warton and Samlesbury, has campaigned professionally and skilfully in ensuring that
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  its German, Italian and Spanish counterparts are on side in terms of the Eurofighter project. The project is a joint effort of so many in the House and outside. We now move to a crucial phase for my constituents and those who are working on the successful prototypes operating from Warton.
  The vital success of the project, to which the hon. Member for Chorley (Mr. Hoyle) referred, is crucial to the future of the entire European aerospace industry. Without it, a great prize could be missed. In a rationalised Europe there is the opportunity for British Aerospace and the United Kingdom to be the centre of that industry. The maintenance of the technologies that the hon. Gentleman so ably described lie at the heart of the achievement of that objective.
  If the European fighter aircraft is not built, we will simply become a jobbing shop for the United States. We will lose the technology base for that and the other aerospace projects that the hon. Gentleman mentioned.
  The project is entering a crucial phase, about which I shall ask the Minister some specific questions. I know that the German Government have written into their budgetary plans a four-year sum for Eurofighter's production phase. I should be grateful if the Minister would address himself to the money that will be required in an interim period to finance the further development of production work up to the production phase itself. Is he confident that the German Government and others in German industry will find that crucial bridging finance to take us to the end of the year?
  In the Minister's judgment, is there the remotest possibility that the German Government might fast-forward their budgetary procedure, so that we might all go away for our summer holidays less concerned about the matter, or is the relevant date the autumn? Such guidance is important to us as parliamentarians, so that we might influence our colleagues in the Bundestag.
  Can the Minister assure me that he and his colleagues in the Ministry of Defence will assist right hon. and hon. Members who want to make representations to other countries in Europe?
  I watched "Newsnight", and was somewhat concerned when I heard the Minister of State for Defence Procurement say in an interview from the Paris airshow that the number of aircraft might be subject to the defence review. Can the Minister unequivocally put it on the record that not only will we order and buy the 232 aircraft, but that we will also review the Harrier GR7 replacement in the light of the European fighter aircraft, and that those numbers will not be part of that exercise?
  The Parliamentary Under—Secretary of State for Defence (Mr. John Spellar): I put that on the record in a written parliamentary answer to the right hon. Gentleman on 26 June at column 627 of Hansard.
  Mr. Jack: I am grateful to the Minister for reaffirming that. We have had so many different stories when one Minister appears on television and another Minister puts something in writing. I wanted to make certain that the two lined up together.
  I seek an assurance from the Minister that he and his right hon. Friends are not under any pressure from the Treasury to review the project in terms of numbers.

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  That might not be in his review, but I know that the Treasury never misses an opportunity to have a go at such projects. I should be grateful for the Minister's comments.
  Can the Minister tell us what he thinks is the source of briefings that continue to find their place in the pages of our aviation journals and newspapers—the endless knocking copy on such a splendid project? I want an end to such copy. We are now committed to EFA 2000. We want the aircraft to be built and properly funded. Both sides of the House—with the odd exception—are unified in our purpose. The Minister's reassurance from the Front Bench today that the project has the unequivocal support of the Ministry of Defence would be welcome.
  10.23 am
  Mr. David Borrow: Mindful of the time, I shall keep my comments fairly short and to the point. I had the pleasure of attending the launch of the Eurofighter in Warton in the constituency of the right hon. Member for Fylde (Mr. Jack) several years ago, when I was leader of the council in Preston. I also had the pleasure on 19 June of seeing the Eurofighter fly at the Paris airshow.
  During the intervening years my commitment to the Eurofighter and my confidence in it have not wavered. I have heard nothing to challenge the conviction that the Eurofighter is the right plane for the Royal Air Force. I find it strange that doubts about the Eurofighter surfaced only after 1 May. As Lord Gilbert said at the Paris airshow, the decision to go ahead with the Eurofighter as the right plane for the RAF was taken by the previous Government. In many ways it is too late now to revisit that decision.
  I shall deal with two other issues—first, the link between industrial policy, defence policy and defence procurement policy. It is essential that Britain retains the capability to produce defence equipment at the cutting edge of technology, rather than becoming entirely dependent on the United States as a monopoly supplier. That may mean that we operate in collaboration with other countries, as we have worked with other European countries on EFA.
  To abandon the project and buy an off-the-peg plane from the US would imply that, although we are committed to a defence policy that looks after our armed forces with good equipment, we are not committed to retaining the manufacturing base to build that equipment. We would be dependent on monopoly suppliers from overseas. We might save money in the short term and the Treasury might find savings if we bought the F22 instead of the Eurofighter, but 10 years down the track when the development of the next plane begins, we will not have the capability in Britain or in collaboration with other European countries. We will be held hostage to the monopoly supplier. That does not make sense from a defence or a Treasury point of view.
  Secondly, it is important to recognise the industrial strategy and the link between defence manufacture and manufacturing in general. That is particularly the case in the aerospace industry. The advances made in military aircraft development have a spin-off effect on and a cross-fertilisation with civil aviation development.
  Mr. Barry Jones: Does my hon. Friend agree that the civil side of British Aerospace's
  862
  business would take a severe knock if the Eurofighter project fell apart? Does he know that 2,800 of my constituents make the wing of the Airbus? As it happens, I am taking a deputation today to the Ministry of Defence on the future large aircraft.
  Mr. Borrow: I agree with my hon. Friend's comment. It is interesting that the future large aircraft is linked to civil aircraft through the Airbus, and there are links between the Eurofighter and other civil projects.
  The right hon. Member for Kensington and Chelsea (Mr. Clark) argued that we could concentrate on research and development, and that we do not need to employ people to carry out projects for the Eurofighter. That is nonsense. People who live in my constituency and work in the constituencies of the right hon. Member for Fylde and the hon. Member for Ribble Valley (Mr. Evans) at Warton and Salmsbury have skills that are not transferable to other parts of the engineering industry. If the Tornado and Hawk work going on at British Aircraft military division is blocked because the Eurofighter does not go ahead, the skills that exist in central Lancashire to assemble those planes will not exist in 10 or 15 years, when the next development comes along. It is a matter not simply of R and D, but of hands-on skills that are of little use to any other industry.
  In the past, my colleagues have raised the question of arms diversification. However, the skills involved in the aerospace industry are not readily transferable. The Preston technology management centre on the old British Aerospace Strand road site in Preston is considering a diversification strategy by using the intellectual property rights of British Aerospace to help small and medium-sized enterprises produce products that are not defence-based. That is one area where diversification may occur. The skills of my constituents who work for British Aerospace in Lancashire—who are among the most skilled manufacturing workers in this country—are not transferable. Arms diversification is not easy.
  We will always need a good defence industry, and our armed forces will always need good equipment, so it makes sense to ensure that we have the manufacturing base to provide that equipment. Some 620 Eurofighter aircraft will be produced initially, with 232 destined for the Royal Air Force, 180 for Germany and the others will be supplied to Italy and Spain. I had received submissions from the industry, and I do not accept that the aircraft has no export potential.
  When air forces fly planes that are made in this country, foreign countries decide that they want to buy them. A few weeks ago, the Secretary of State for Defence visited Warton in the constituency of the right hon. Member for Fylde with the Prime Minister of Australia, Mr. Howard, in order to agree the sale of Hawk aircraft to Australia. It is significant that that deal envisages an offset agreement, whereby several aircraft will be produced in Australia. If we abandon aircraft manufacturing in this country, rather than simply buying from abroad, we have the option of offset agreements. However, we would not have mastery of research into and development of those aircraft, and we would get the back end of the job.
  I want the British aircraft industry to be at the cutting edge. The Minister must recognise the importance of defence procurement in industrial policy. I should be very

  863
  worried if the EFA project were delayed, cut or abandoned. That would have serious implications not only for defence but for the future of manufacturing industry in this country in general, and in central Lancashire in particular.
  10.32 am
  Mr. Menzies Campbell: I agree with much of what the hon. Member for South Ribble (Mr. Borrow) has said. However, I think that he is wrong to claim that doubts about the Eurofighter have surfaced only since 1 May. Doubts surfaced immediately after the general election in 1992. At that time, several hon. Members, under the leadership of Keith Mans—who had a long and distinguished commitment to the Eurofighter project—and by arrangement with the Secretary of State for Defence, who laid on an aircraft for the purpose, travelled to Germany so that we could lobby our party equivalents in the German parliamentary system.
  That may be the answer to the question raised a moment ago about how best hon. Members from all parties could apply pressure to their equivalents in Germany. If the Minister has an aircraft standing by, I have no doubt that he will find many volunteers to take part in such an operation.
  In the short time available, I shall concentrate on the military elements of the matter. I start from the fundamental position that the Royal Air Force should remain a strategic service and that any effort to alter it or downgrade it to the kind of support service for which some argue would be wholly against the best defence interests of the United Kingdom. If we start from the proposition that the Royal Air Force must be a strategic service, we must accept that it has to be equipped properly. It can be equipped properly for the next 25 or 30 years only if it has Eurofighter.
  The right hon. Member for Kensington and Chelsea (Mr. Clark) described the Eurofighter as an interceptor aircraft. I must adopt a slightly different view: I have always understood the aircraft to be an agile fighter. It was designed to overcome the defects that had been demonstrated in the Tornado F3, which is an interceptor and was designed to intercept Russian bombers over the North sea from the squadron base at RAF Leuchars in my constituency. That interceptor aircraft was modified from an aircraft that had been designed as a ground-attack aircraft, and it lacks the agility of modern aircraft. That is why the F3 squadrons, of necessity, performed such a limited role in the Gulf war, and why they have been unable to fulfil all the roles that might have been expected of them in operations in Bosnia.
  Mr. Gerald Howarth: The hon. and learned Gentleman is absolutely right: one of the problems with the Tornado was that it was designed as a multi-role combat aircraft and therefore did not perform well as an interceptor fighter aircraft. Does he agree that the key point about the Eurofighter is that it is a dedicated fighter with air superiority capabilities, which is what Britain badly needs at present?
  Mr. Campbell: The hon. Gentleman is correct: the Eurofighter is capable of achieving air superiority.
  864
  However, as the Minister pointed out in a written answer on 17 June this year, it also has the capacity to take part in ground-attack operations. That is why any review of Eurofighter numbers should accept the proposition that, instead of 232 or 238 aircraft, we need 80 more than that in order to fill the gap caused by the eventual withdrawal of the Jaguar from service.
  Some hon. Members have talked about alternatives. The Grippin and the Rafale are possible alternatives, but we must accept that they have lower capabilities. There are American alternatives. We should remember that, in the last Parliament, Michael Portillo flirted—if I may use that word—with the proposition of leasing in second-hand F16s at the same time as we were leasing out second-hand F3s to the Italians. The Italians, for reasons that I need not go into, are grossly embarrassed in the fighter aircraft area. Eurofighter is probably more essential for them than for the other three project partners.
  If we went down the American route, we might get cheap unit costs, but the through-life costs would kill us—if I may put it that way. When one is gauging the cost of these projects, one must have regard to the cost not of buying an aircraft off the shelf but of maintaining and running that aircraft over its lifetime. We certainly cannot afford the F22. However, if we were to buy it, you can bet your bottom dollar that the United States would not provide all the black boxes that are essential to maximising its full capability. We would always receive an aircraft that was less capable than the top-of-the-range aircraft that the United States would maintain for itself.
  The Eurofighter aircraft has been designed to fly against the SU27—perhaps one of the most dramatic developments in aircraft design since the creation of the jet engine—and all its derivatives. SU27s are available to countries all over the world as a result of Russian export policies. Therefore, it is not inconceivable that Royal Air Force pilots, while carrying out future operations on behalf of the United Nations and exercising its peacekeeping, peace-making or peace-enforcing responsibilities, will have to fly directly against the SU27. That is why anything less than Eurofighter would be inadequate for the Royal Air Force's purposes.
  10.38 am
  Mr. Robert Key: I congratulate the hon. Member for Chorley (Mr. Hoyle) on introducing this short, but timely, debate. I also congratulate my right hon. Friend the Member for Kensington and Chelsea (Mr. Clark) on his usual robust and challenging speech and my right hon. Friend the Member for Fylde (Mr. Jack) on his very persuasive arguments.
  I also congratulate all the men and women of the Royal Air Force and their civilian support staff, and thank them for demonstrating superb professionalism at a very difficult time of adjustment. The structure and the functions of the Royal Air Force have changed. I have seen that in my constituency, and when I have visited the RAF overseas, whether in the Falkland Islands, Belize, Gibraltar, at the sharp end in Incirlik and in Germany, where the changes have been greatest. I found that at Rheindahlen and Brüggen last year, which I visited as a member of the Armed Forces Bill Select Committee.
  The RAF's withdrawal is not just an operational change; it is a fundamental change to the way of life of the RAF and all the families who so loyally follow the

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  flag. By 2002, the Tornados will have come home. The upgrading of the Tornado F3 and GR1 will give them another 20 years of service, but by then they will to all intents and purposes be the equivalent of the RAF flying Spitfires today.
  Michael Portillo's decision last September to tell our project partners that we are ready to move ahead to the production and in-service support phases of Eurofighter reflected the Ministry of Defence's conclusion that Eurofighter was the best available combat aircraft for the United Kingdom. All other considerations, including jobs, must be secondary to the military decision, but the decision has been clearly and decisively made.
  The decision was good news not just for the Royal Air Force—it was good news for Munich, Turin and Madrid—but most of all for the best aerospace work force in the world, at British Aerospace in Lancashire, and at Rolls-Royce in Bristol and Derby, as well as some 200 UK defence companies involved in the development and production of equipment for Eurofighter. It will mean up to 80,000 jobs in the UK, and some say up to 250,000 jobs across Europe, although I find that latter estimate somewhat far-fetched.
  The trouble is that there are three spectres at the defence procurement party. First is the shadow of TSR2. The week before the 1964 general election, Harold Wilson went to the north-west and promised that TSR2 would go ahead. Labour was elected. Labour cancelled it. That ghost still walks. Will Labour stick to the agreement between the Conservative Government and British Aerospace to buy 232 EF2000s? The Minister says that he will, but we will come to the reason why I believe that he should not be quite so certain.
  The second spectre is the weakened German economy. The day after tomorrow, as the hon. Member for Chorley said, is crucial to this argument, as it is when the German Cabinet holds its budget meeting. Unlike this Parliament, there is no party political consensus in the German Parliament, as members of the House of Commons Defence Committee discovered when the Bundestag Committee visited us last year. Furthermore, what assurances are there from the Minister's Spanish and Italian counterparts that they will honour the agreement to buy their complement of the EF2000s?
  Does the Minister accept that Eurofighter should be cheaper to maintain than the Tornado that it is to replace, since Eurofighter will be built with under 15,000 airframe parts, compared with 32,000 for the Tornado?
  Has the Minister decided to include thrust-vectoring in the UK specification for Eurofighter, like the Spanish? So far, only the Spanish have said that they definitely want the upgrade, which will increase the speed and manoeuvrability of the aircraft.
  Can the Minister confirm reports—which I have heard—that his Department has told British Aerospace to slash its agreed costs by 15 per cent.? If that is true, it would be very hard for the aerospace industry in this country. First the Labour Government decimated the private finance initiative programme without paying compensation to the companies, and now BAe may be forced to make savings that would put jobs at risks.
  Mr. Michael Colvin: Will my hon. Friend acknowledge that being permitted to make a reasonable
  866
  profit on a military project such as this ensures reinvestment into research and development, on which the next generation of aerospace projects depends?
  Mr. Key: Of course, my hon. Friend is absolutely right. Those profits are reasonable. They were extremely tight—let no one be in any doubt about that—given the international nature of this market.
  The third spectre at the party is Her Majesty's Treasury and the strategic defence review. I do not doubt for a moment the sincerity of the Secretary of State for Defence, the Minister for Defence Procurement, or the Under-Secretary of State who will answer today, but not once has any of them been able to deny the bottom line of a Treasury veto. In none of the Parliamentary Questions that they have answered have they been able to make that commitment.
  The strategic defence review report will go to the Secretary of State by the end of December, as he said. I believe that it will be completed—considered by Ministers—around the turn of the year, which, as a former Minister. I know only too well can mean anything up to March, which is the financial year anyway, not the calendar year. The Treasury cannot allow the defence budget to be excluded from normal spending round bargaining.
  The March 1998 Budget spending plans will be followed by a defence White Paper. Would the Minister like to deny any of this? Only after that White Paper, after the Budget, will we know the truth about the strategic defence review and the fate of Eurofighter.
  The Conservative Government put in place a defence procurement programme of which our forces and our nation can be proud. The Labour Government cannot expect—and will not get—cross-party consensus on their defence stance until the spectres of German uncertainty and the Treasury veto are laid to rest.
  10.45 am
  The Parliamentary Under-Secretary of State for Defence (Mr. John Speliar): I welcome the hon. Member for Salisbury (Mr. Key) to his new responsibilities. I also congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate and on his vigorously presented case for EFA, for the aerospace industry and, indeed, for his constituency.
  We heard worthwhile and helpful speeches from the right hon. Member for Fylde (Mr. Jack), from the hon. Member for Ribble Valley (Mr. Evans), from my hon. Friends the Members for South Ribble (Mr. Borrow), and for Leigh (Mr. Cunliffe). We also heard an interesting speech from the right hon. Member for Kensington and Chelsea (Mr. Clark).
  The interest of my hon. Friend the Member for Chorley in this vital subject is obviously shared by most hon. Members on both sides of the House, so I welcome the opportunity to underline the Government's strong commitment to Eurofighter, which will form the primary component of the RAF's future fighting capability. We are right to stress that as the key aspect to the debate.
  Hon. Members raised a number of points, which I hope to dress during my reply. The Gulf conflict and operations in the former Yugoslavia demonstrated the supreme importance of effective air power. The number of

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  countries that possess highly manoeuvrable, high-performance aircraft equipped with modern sensors, defensive aids and missiles is expected to increase. The Russian MiG 29, and the SU27, both of which are being exported and upgraded, are representative of the potential threat that Eurofighter could face over its planned 25-year life. United Kingdom forces deployed on operations in Europe and beyond are therefore likely to encounter aircraft that could out-perform existing RAF and other NATO fighters. We must not underestimate the vital importance to our forces of control of the skies.
  We all recognise that the RAF's F3 Tornado has a limited further life. It is not, as has been mentioned, an agile aircraft. It was designed to deal with the cold war threat of Soviet long-range bomber attack on the United Kingdom. The missile upgrade currently being implemented will, of course, make it a much more effective system, but that can be no more than a relatively short-term solution. The RAF's Jaguar aircraft suffers similar limitations. It is clear that both aircraft need replacement from early in the next century. That, I believe, is common ground to all concerned.
  Eurofighter will be capable of providing for air superiority and air defence—gaining control of airspace, whether to protect territory, or to enable other operations by land, sea or air to achieve their objectives. The same aircraft will also provide for ground attack and, potentially, tactical reconnaissance. Eurofighter will be able to offer operational flexibility in response to the uncertain demands of the new strategic environment and enable the RAF to reduce its current aircraft types. Indeed, this is characterised by the aircraft's short take-off and landing capability, which will allow it—contrary to the allegations of the right hon. Member for Kensington and Chelsea—to operate from a range of airfields.
  Furthermore, I can confirm that it has been designed to meet the range requirements of all envisaged missions. Eurofighter will provide interoperability with three key NATO allies. This will yield important operational advantages as well as the financial benefits flowing from economies in support.
  On the technical performance side, I am pleased to report that recent progress on the Eurofighter development programme has been excellent and that all key technical maturity criteria for entry into the production phase have now been met. That was demonstrated by the two Eurofighters that flew in formation at the Paris air show. All the seven development aircraft, two of which are twin-seaters are now flying. At the end of June they had flown more than 441 flights, amounting to about 377 hours. I am pleased to announce that the UK twin-seater development aircraft flew for the first time with two people on board on 2 July. Of the seven development aircraft, five are flying with the specifically designed EJ200 engines and two with ECR90 radar.
  The aircraft is already flying at mach 1.8. Reports from our test pilots and those of other countries who have flown the aircraft confirm that they are delighted—the aircraft is simple to fly and its performance closely matches predictions. The field of view from the cockpit is excellent. I am surprised that some press comments underrate that consideration and the importance of it.
  868
  Pilot work load during the normal operation is low. That is particularly important for a single-seat fighter, as I am sure we are all aware.
  One of our test pilots said that Eurofighter
  "is ahead of anything I have ever flown before."
  That is clear testimony to the value of involving pilots at an early stage in the design process. That was a valuable contribution by the Ministry of Defence, the Royal Air Force and British Aerospace.
  As my hon. Friend the Member for Chorley has said, there have been recent newspaper reports criticising technical aspects of the Eurofighter programme, focusing especially on the radar and flight-control system. One does wonder where this knocking copy comes from. I think that the right hon. Member for Fylde was right to identify the possible sources.
  First, I shall mention the specially developed radar system for the Eurofighter and the article that has been much quoted, which appeared in Der Spiegel. The real situation concerning the radar system, the ECR90, is that it is newly designed by a consortium led by GEC involving electronics companies from the other Eurofighter partner nations. Those companies are European and world leaders in radar technology. The ECR90 is the latest design. It comprises modern high-performance, high-reliability electronic technology with automated digital processing and reconfigurable software. In short, it is a world-beating airborne radar system and we should be proud of it.
  Progress on the development of the ECR90 radar has been very satisfactory. It has successfully undergone flights in two of the Eurofighter development aircraft. It is in line with the scheduled programme and our expectation is that the radar will meet its full specifications. Those specifications include the ability, contrary to various articles, to counter clusters of closely spaced aircraft and to discriminate precisely the high-priority target or targets.
  I move on to the flight-control systems. It is important to stress, as has already been done by the hon. and leaned Member for North-East Fife (Mr. Campbell), that the Eurofighter is aerodynamically unstable by design to enhance its extremely high levels of agility, reducing drag and enabling enhanced lift to be achieved. That makes it impossible to fly the aircraft by conventional means. The pilot controls the aircraft through a computerised digital flight-control system. That eases enormously the work load on the pilot. Among other things, the flight-control system is designed so that, in the event of pilot disorientation, rapid and automatic recovery is achieved by the simple press of a button.
  The flight-control system is clearly critical to the performance and safety of the aircraft. Accordingly, flight clearance for such a safety-critical system has been approached with great caution and rigour. In two official flight assessments so far carried out, satisfactory handling has been demonstrated.
  The engine, the EJ200, fitted to five of the development aircraft, has accumulated more than 1,000 hours of successful running time, including 300 hours in flight, as well as excellent test-bed performance. That is a tribute to the builders at Rolls-Royce.
  There has been unhelpful speculation in the media that we are seeking to cancel the Eurofighter programme or reduce the number of aircraft to be purchased. In answer

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  to the right hon. Member for Fylde, I never cease to wonder where those stories come from. Are journalists sometimes looking for a story to file so that they can get off home? We recognise, of course, that such speculation causes difficulties. That is why I very much welcome the opportunity today to set the record straight once more.
  In 1995, two parallel studies were conducted into the number of Eurofighters required. Allowance was made for training, support and attrition. It was concluded that 232 Eurofighters would be required to replace the Tornado F3 and Jaguar fleets. Of the 232, 35 will be twin-seaters and used for training purposes, although they would also have an operational capability.
  My right hon. Friend the Secretary of State for Defence has made clear the Government's intention to order Eurofighter according to the conditions and numbers established by the previous Administration. We made that clear also when we were in Opposition. We are therefore committed to the purchase of 232 Eurofighters. I made that clear in a written answer to the right hon. Member for Fylde as recently as 26 June, and I reinforced that answer in my intervention. I regret, therefore, that the hon. Member for Salisbury sought to cast doubt on this matter, which can cause only confusion elsewhere, especially with a critical decision being made this week.
  I understand that there have been criticisms of the cost of Eurofighter, and suggestions that alternative aircraft could be purchased instead. One wonders which aircraft, and that issue has been dealt with in previous speeches. Extensive operational analysis has been carried out to compare the cost-effectiveness of Eurofighter with a variety of other potentially available aircraft types and, of course, combinations, in a range of scenarios against opposing aircraft. The analysis demonstrated the excellent technical capability that Eurofighter will provide in the air-superiority and air-defence roles, and in ground-attack missions.
  When costs and the multi-role capabilities of Eurofighter were taken into account, it was clear that an all-Eurofighter fleet would be substantially more cost-effective than any of the alternative aircraft options or mixes. Compared with other solutions, the potential cost savings are considerable. Logistic costs for a single type are significantly lower. In addition, pilot training costs are reduced. A single type of full-mission simulator covers all training requirements.
  What I have said so far sets the scene on the justification for Eurofighter and the progress achieved in development phase, the numbers required and the technical position. The Government's position on the commitment to future phases is well known, and I have reinforced it this morning. We are now ready to sign the memorandum of understanding for the production of Eurofighter. We earnestly hope that our partners will also be in a position to proceed very shortly.
  We understand—this has been mentioned by a number of hon. Members, including the hon. Member for Salisbury—that there are domestic pressures in Germany. In the interests of the programme, however, decisions must be made and priorities set. We are doing all we can to urge our German counterparts to proceed with the project as soon as possible. My right hon. Friend the Secretary of State met the German Defence Minister, Mr. Ruhe, last month. He confirmed that Germany both wanted and needed Eurofighter. When my right hon.
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  Friend the Prime Minister met Chancellor Kohl on 6 June, the Chancellor made clear his personal commitment to Eurofighter.
  We were greatly encouraged, as, I am sure, were all right hon. and hon. Members, by the announcement last Friday by the German Finance Minister, Dr Waigel, that funding for the production phase has been included in the draft 1998 budget. We are hopeful that, when it meets to discuss the 1998 federal budget on Friday, the German Cabinet will take the decision to proceed to the production phase. Bundestag approval would be sought in September. I take on board the suggestion of the hon. and learned Member for North-East Fife that there is a need to involve Members on both sides of the House in lobbying in support of that decision.
  Eurofighter is the largest European collaborative defence programme. I am confident that Germany, along with Italy and Spain, will join us in the production of this highly capable aircraft. As has been said, Eurofighter will sustain tens of thousands of high technology jobs in the four Eurofighter partner nations. The UK's Eurofighter will be assembled at British Aerospace's Warton site in Lancashire from components manufactured by industries of the four partner nations, with work on the EJ200 engine concentrated at the Rolls-Royce plant in Filton, Bristol.
  The export potential for Eurofighter has been mentioned by my hon. Friend the Member for Leigh and others, and it is good. A number of countries have already expressed interest in Eurofighter. Further delays to the production phase of the programme run the risk of jeopardising Eurofighter's export potential, especially in the face of fierce and fairly ruthless competition.
  Eurofighter is also an important element of European defence co-operation. That was stressed by my hon. Friend the Member for Leigh. It is central to the future of European defence and crucial also to the future of the European aerospace industry because of the key skills, particularly those relating to systems integration, that are supported by defence investment. In short, I confirm once again that the Government are totally committed to the Eurofighter programme and are determined that it will succeed.
  Air power is an essential component of the United Kingdom's defence capabilities, and it will remain so into the future. The Government are committed to providing our forces with the best equipment available to meet the role that we demand of them on behalf of the British people as a whole. It would be indefensible to ask our brave airmen and women to undertake the hazardous missions that we may demand of them without giving them the tools for the job. We must act now for the replacement of aircraft that will reach the end of their lives in the next decade. Eurofighter is demonstrably the most cost-effective and capable solution to the clear requirement for a new fighter aircraft to meet the challenges of the next century.
  It is incumbent on us to provide this aircraft for the Royal Air Force. It will give it the aircraft that it wants and needs and help to guarantee the future of the European aerospace industry and the maintenance of tens of thousands—
  Mr. Deputy Speaker: Order.
  Mr. Alan Clark: On a point of order, Mr. Deputy Speaker. It is listed in the Register of Members' Interests that my family trust is a shareholder in Boeing aircraft. I believe that by no stretch of the imagination could Boeing be considered as an alternative supplier to EFA. The House may feel that I should have declared that interest at the outset of my speech, and I apologise for not having done so.
  Mr. Deputy Speaker: I am sure that the House is grateful to the right hon. Member.

  Fishing Fleet
  11 am
  Mr. Alex Salmond: This is the first fisheries debate of the new Parliament. I am pleased to be introducing it, and I welcome the new Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, the hon. Member for Scunthorpe (Mr. Morley), to his place. When he and I were both in opposition, we often bemoaned the lack of time allocated to this important industry. It was not just the number but the duration of such debates that made it difficult for all hon. Members with fishing interests to contribute. Now that he is in a position of absolute power—or relative power, anyway—I am sure that he will respond by saying that he will do his bit to ensure that hon. Members representing fishing constituencies around the coastline have more opportunities to debate the fishing industry in this Parliament than they had in the previous one.
  I shall direct my remarks to quota hopping, because that is the first parliamentary opportunity since the statement on the Amsterdam summit to consider the Government's claims of achievements at that meeting in detail, and to find out what progress the Minister thinks has been made since then and what hopes he has for resolving this long-running and bitter issue.
  The House will forgive me if I begin my remarks by making a couple of constituency points related to the fishing industry. I pay tribute to J. D. Buchan, who died at the weekend. He was the former chairman of the Peterhead harbour board. John was a very special man, and was a dominating influence on the development of Peterhead harbour. He was involved in the fishing industry for fully three quarters of a century, and had his skipper's ticket before the second world war, which took him into service with the Royal Navy.
  J. D. was gilled with enormous vision in all the many activities that he undertook in the fishing industry. He will be sorely missed by his family and his wide circle of friends. As a Member of Parliament, I shall miss him for the wise advice and encouragement that he gave me in the past 10 years. I should have greatly wished to be at his funeral in Peterhead today to bid him farewell, but I know that he would have insisted that I be here in my place to debate the future of the industry that was his life and work.
  I shall also to refer to a company in my constituency. International Fish Canners, which is the last canning facility in the whole of the United Kingdom. I received a fax yesterday from its managing director, Mr. Michael Clark, who wrote:
  "I am the Managing Director of the last remaining fish canning plant in the UK, based in … Fraserburgh. It is one of the key components in our group of family owned companies in the fishing industry, centred in North-East Scotland. The business was acquired in 1990 from Norwegian ownership and, since then, we have put substantial investment in to the plant and have achieved considerable success in building the business up, both in the UK and, more critically, in export markets all over the world.
  Our success led to us creating an additional evening shift of workers some 18 months ago, but regrettably, we have now had to lay off that shift.
  With the Government's recent decision to hand over control of interest rate policy to the Bank of England, and that body's well-known obsession with inflation, we can only see the pound

  873
  strengthening further. This will inevitably have further drastic effects on businesses such as ours. Not only does it effect our ability to export, but it also makes it much easier for foreign companies to dominate the UK market. We feel it is time everyone woke up to"
  the implications of that.
  Mr. Clark draws attention to the direct impact of the present strength of sterling on jobs in the processing sector. The Minister will be well aware that the catching sector of the industry is highly vulnerable and sensitive to high interest rates. I hope that he will express some concern and tell us what representations he will make to Treasury Ministers about this severe combination of potentially high real interest rates and an extremely high value of sterling, and its impact on the catching and processing sectors of the industry.
  I hope that the Minister will forgive me for making those two constituency points at the outset of my remarks. I shall keep my speech brief, because many hon. Members from fishing constituencies are present and may wish to speak. As I said, I often bemoaned the fact that not everyone had the opportunity to contribute to debates so, although this is an involved issue with a long history, I shall try to set an example.
  It is sometimes said that we have ended up with 25 per cent. of UK tonnage in Spanish and Dutch hands because individual fishermen have sold their licences to Spanish and Dutch influences. There is an element of truth in that—some licences have been sold, especially in recent years—but the House should remember where the key responsibility lies for strategic building up, particularly of the Spanish interest in the UK fishing fleet.
  The licences of about 90 elderly trawlers were initially acquired by Spanish interests. The trawlers were allowed into the "non" sector—not the producer organisations sector—and from there they built up their track record of quota, and have emerged as a significant and often dominating influence in the UK fishing fleet. The key responsibility did not lie with the individual fishermen who haphazardly or for selfish reasons sold their individual licences, but with the Ministry that allowed the licences of elderly, and in many cases, non-fishing, trawlers to be bought or acquired and a strategic interest in the fishing fleet to be built up.
  If the Minister acknowledges that key point on the line of responsibility, he must acknowledge the successor Government's responsibility to deal with the problem. It is a matter of public policy, and mistakes were made that allowed strong strategic interests to threaten the livelihoods of Scottish, English, Welsh and Northern Irish fishermen.
  Mr. Christopher Gill: Is it not fair to point out that, as it is impossible for British citizens who own licences to discriminate against nationals of other countries, they have no means by which to refuse to sell their licences to a potential owner in another European Union country? That would go against the spirit of the treaty of Rome.
  Mr. Salmond: I am not sure that the hon. Gentleman is right about that. When a private individual sells a licence—or a house for that matter—what he does is for him to decide. He is right to say that there are non-discrimination clauses for public policy, but not for private decisions made by individuals.
  874
  Perhaps the hon. Gentleman will be interested in my next point, because it brings us forward in time to the Merchant Shipping Act 1988. That Act was the most significant attempt to deal with this problem. The then Government acted on the beneficial ownership of the flagships and tried to head off the developing problem. I was on the Committee considering that legislation and, as a relatively new Member of Parliament, I moved an amendment to extend to the crews of fishing vessels the powers that the Government were seeking to give those with beneficial ownership. The amendment tried to ensure that crews had an economic interest—the Minister will recognise that phrase—in the boats on which they were fishing.
  The then Government told us that there was nothing to worry about—that everything was in hand. Clauses that they were tabling would deal with the issue; my amendments—which were supported by the Labour spokesperson on the Committee—were not only unnecessary, but troublesome in their intent. Several legal cases and many millions of pounds later, we are now reaping the dividend from that Government's arrogance.
  I do not know what Opposition Front Benchers will say in this morning's debate, but I suspect that they will not dwell too much on the history of the problem, which is littered with foolish decisions and subsequent inactivity. It would be reasonable for the Fisheries Minister to allocate to them a large measure of responsibility for the present position. Nevertheless, regardless of how that position evolved, responsibility for finding a way out of it now falls on the Minister.
  As I have said, the history is important, but some recent history might also concentrate the Minister's mind. I was interested to note that, on his return from the Amsterdam summit, the Prime Minister apparently ruled out as ludicrous any treaty amendments or changes in legislation, because, as he put it, they were not supported by any other European Union Government. That was not quite the message that the Labour party was conveying to the fishing industry before the general election, when it was still in opposition.
  On 14 March this year, Fishing News reported on a meeting between the Foreign Secretary and fishing interests at the Scottish Labour party conference in Inverness. The first paragraph states:
  "A Labour Government would have more chance of getting the treaty changes at the intergovernmental conference (IGC) to end quota hopping than would the present Government, because it has a better relationship with the European Union and fewer disputes to resolve."
  I see that some Labour Members think that that is true, but it seems that "more chance" actually meant "no chance" when the Prime Minister returned from the IGC. According to his analysis, any treaty change was out of the question—although that was not the analysis of the Foreign Secretary when he spoke to fishermen before the election.
  Writing to the Scottish Fishermen's Federation before the election, the Prime Minister said that he "would not rule out" blocking the IGC in order to resolve the issue effectively and properly. That contrasts sharply with the words of the Minister of Agriculture after the election. On 13 May, he told The Scotsman:
  "Quota hopping is not a major issue at the intergovernmental conference."

  875
  Before the election, the Prime Minister was saying that he would not rule out blocking action to halt the IGC; after the election, a Minister in his Cabinet was saying that it was not a major issue at the intergovernmental conference. Before the election, the Foreign Secretary was saying that a Labour Government would have more opportunity to resolve the issue, because of their better relationship with our European partners; after the election, the Prime Minister told the House that effective treaty change was out of the question, because it lacked support.
  Because of the Spanish Government's determination on a number of fisheries issues—particularly the issue of accelerated access to western waters—they have managed, over the past few years, to secure unanimity on issues on which they should certainly not have been supported, because they made those issues their main or sole objective at intergovernmental conferences on European Council meetings.
  The British Government had a range of objectives at the IGC. They had an objective on immigration and border controls, and they had the objective of stopping the embryo development of the European defence policy—I do not know why, and the Prime Minister said that he had achieved a major triumph in that regard when he returned from the conference. The House is entitled to ask why the Foreign Secretary was not as good as his word. Why did he not concentrate on the resolution of this long-running problem at the conference, rather than scattering the Government's objectives across a range of issues?
  Following the IGC, there was a celebrated exchange of letters with the President of the European Commission. The first word from Amsterdam was that the Government had achieved another extraordinary victory. There was no doubt in the minds of the spin doctors that the Prime Minister had triumphed yet again over foes both foreign and domestic. The Prime Minister was rather more guarded when he came to the House on 18 June. He said that modest progress had been made. Today's debate will, I hope, reveal a lesson: we do not win on spin. Real victories must be based on substance—not just on good public relations, but on legislative or substantive change.
  The obligation is fairly and squarely on the Government. The Fisheries Minister was an earnest and effective spokesperson in opposition. He and I have attended more fisheries debates than we care to remember. He was genuine and sincere in his attitude to the industry—but he is now responsible for that industry, and for telling the House today that the new licence obligations that will, or could be, placed on quota-hopping boats will be effective. That is now the policy, not a substantive change in legislation.
  I note from the European brief on sea fishing that was issued last week that the President of the Commission has written not only to the Prime Minister, but to the Spanish Foreign Minister. According to the brief,
  "Writing to the Spanish Foreign Minister, he"—
  the President, that is—
  "emphasised that his support was for measures which secured a real economic link between fishing vessels and their flag state. This did not necessitate changes or waivers to the European Union treaty.
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  The suggestions that minimum landing requirements or crew residency requirements were optional means vessel operators might use to prove economic links with their flag state, but the UK cannot impose"—
  according to the President—
  "a landing requirement in isolation on vessels flying the British flag."
  The Spanish Foreign Minister, in reply, has
  "intimated that Spain might turn again to the European Court of Justice if it feels its rights are being weakened,"
  Let me crystallise the essential difficulty. If the measures that are taken are effective enough to achieve the objective of removing the flag boats, or "hassling" them off the UK register, they will be open to challenge in the European courts. If they are not effective, of course, they will not be challenged, but we shall be no further forward. That brings us back to the question of whether a treaty change is necessary to secure the position.
  I have a number of specific questions to ask the Minister. First, if the new obligations on licence requirements do not achieve their objective of removing the flag boats within a reasonable time scale, does the Minister rule out seeking a treaty change in further negotiations at further IGCs on Council meetings? Secondly, will the Minister give an undertaking that, until we can evaluate the success or otherwise of efforts to remove the flag boats from the UK register, the 30 per cent. capacity reduction will not be implemented? As he will appreciate, if that 30 per cent. fell on the 75 per cent. tonnage that remains in Scottish, English, Northern Irish and Welsh hands, the impact on our domestic fishing communities would be very severe.
  Thirdly, will the Minister guarantee that funds will be available to decommission quota-hopping boats? Will funds be available to offer incentives to flush out the quota hoppers from the UK industry? Fourthly, what balance does the Minister expect to achieve between decommissioning or effort limitation in the flags-of-convenience fleet and those in the domestic fishing fleet? What would be a satisfactory percentage reduction in either fleet, from his point of view?
  As the Minister knows from parliamentary questions and conversations, I have supported the view of the Mallaig and North-West Fishing Association that many, perhaps the overwhelming majority, of flagged vessels have not met the Marine Safety Agency's regulations and courses on safety certification. Can he update the House on the progress of implementing measures on those vessels that would most certainly be implemented on domestic vessels? If any of my constituents, those of my hon. Friend the Member for Moray (Mrs. Ewing) or those of any hon. Member in a fishing constituency were so flagrantly in breach of MSA certification, I am certain that the agency would come down on them like a ton of bricks and stop their fishing effort forthwith. I understand, that in the past few weeks, the MSA's attitude has changed. Perhaps the Minister could update us on the success or otherwise of implementing effective changes in terms of coming down on flags of convenience boats.
  I accept that the Minister is not responsible for the situation in which we find ourselves. That responsibility lies heavily on the Conservative party. The Minister and I and other hon. Members with fishing constituencies have rightly been severely critical of the Conservative Government's attitude over a long time. I hope that, in government, the Minister will live up to the views that he held in opposition.

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  I understand from the Prime Minister that the difference between the present Government and their predecessors relates to trust. The fishing communities are by no means convinced by the deal that was sealed in Amsterdam and the exchange of letters. They are looking to see whether their trust in the new Minister and Government is justified. For that to happen, there must be effective measures backed by real action, and we could start with a strong speech by the Minister today, in which he must convince the House that the measures agreed at Amsterdam will be more effective than past attempts.
  11.21 am
  Mr. Frank Doran: This is my first speech in the new Parliament after being between seats for the past five years. People continually ask me what changes I have noticed in the House since I returned. Fishing debates used to take place late on cold, wet November or December evenings. It is a pleasant change to be here on a sunny July morning for such a debate. I congratulate the hon. Member for Banff and Buchan (Mr. Salmond) on securing the debate. Fishing is an important matter not only for those who have fishing constituencies but because fish is widely consumed, an aspect of the industry that is rarely attended to. Fish is a healthy food, and we want to increase consumption of it.
  The hon. Member for Banff and Buchan rightly focused on the issue of quota hoppers, which concerns us all. However, it is only one of the problems that the industry faces. I agree with the hon. Gentleman's analysis of the problems, and it is accepted throughout the industry and by those who have interests in it. The National Federation of Fishermen's Organisations and the Scottish Fishermen's Federation sent a joint letter to the new Minister of Agriculture, Fisheries and Food on 24 June. It baldly stated:
  "There is no dispute that the previous Government repeatedly failed to take steps to halt the expansion of the flags of convenience fleet."
  That is certainly accepted by Labour Members, and is a major cause of the problem. The hon. Gentleman spoke about the run-up to the recent intergovernmental conference. From where he sits in the House, he will make what he can of that. It was interesting to note that he did not attack the package that was secured at Amsterdam but spoke about its implementation and asked what the Government would do if what had been achieved at Amsterdam did not meet the problem and was ineffective in tackling quota hoppers.
  During my years in opposition, we were utterly frustrated by the way that the Conservative Government tackled the problem of quota hoppers. There was always much publicity before the annual fishing debate, which as I have said was usually held in November or December, about how hard the Government were batting for us in Europe. It was said that, in discussions with the Norwegians, the cutlass would be taken out, and there was a meeting in Brussels. However, rarely was anything achieved. There was tremendous frustration because all the positive measures that we knew were being implemented in other European countries, such as decommissioning, adjustments to tackle and proper conservation measures, were never accepted here because they cost money, which seemed to be the bottom line.
  We never seemed to make any progress. The Government always returned from Brussels with a meek acceptance of the deal on the table, and there was never
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  any real sign of batting for Britain. The mess that we are in is a direct consequence of the way that the Conservative Government over 18 years failed to fight properly for the fishing industry.
  Like, I hope, all those who are not Conservatives, I was extremely sceptical about Conservative pre-election claims on how they would hold the IGC to ransom. That is probably not the word that they used, but it was certainly the implication. It was said that there would be no deal at Amsterdam unless quota hopping was dealt with. Those of us who saw over the past couple of decades how the Conservatives manifestly failed to deal with the real problems were sceptical about that claim. That electioneering had a significant effect on the industry because it raised expectation.
  In the light of what was achieved over the past 18 years and what has been achieved in the first few weeks of a Labour Government, there should have been much greater acceptance of what was achieved in Amsterdam. It is the first positive move by a Government on behalf of fishing in that time. The pre-election hype has certainly affected the view of what was achieved in Amsterdam. Of course there will be difficulties in the implementation of that agreement, and no one can guarantee that there will not be a legal challenge by Spanish or Dutch fishing interests. My understanding of the agreement between the President of the Commission and the Prime Minister is that letters have been exchanged in such a way and in such terms as to attempt to pre-empt any legal argument. There has been an attempt to clarify the legal position so that, if a case is taken to the European Court, our position will be strengthened.
  It is important to implement all the steps that have been announced by the Minister for Agriculture, Fisheries and Food. The hon. Member for Banff and Buchan rightly reminded the House of his strenuous efforts to ensure that the safety regulations are properly applied and implemented. That has been an issue in these debates over the past 10 years. There was an apparent reluctance by the Conservative Government properly to police safety in the North sea. I have been greatly concerned about safety there in the context of the oil and gas industry. There was an overflow because many old fishing boats became safety vessels and we were aware of the quality of those boats and the problems that they faced. There must be a firm commitment properly to apply safety regulations. Enforcement must be common throughout the UK fleet and among the flagged-out vessels.
  Another area of enforcement that has caused me much concern is the "black fish" that are distorting some of the economics of the North sea. My major constituency interest is not so much in catching as in processing and in the activities of fish merchants. More than 3,000 jobs in Aberdeen city, many of them in small companies, depend on the sale and treatment of fish. The information that I have is that the Scottish Office, through its fisheries inspectorate, is extremely rigorous in checking fish that comes into the Aberdeen and Peterhead markets, ensuring that it comes from legitimate catches, that it is properly recorded and that there is no opportunity for black fish to get on to the market. Allegations were made to me by some of my constituents that there was no similar treatment at English ports, particularly in Grimsby.
  I tabled a couple of parliamentary questions to find out just how severe the checks were. I was told by the Scottish Office that the Scottish Fisheries Protection Agency

  879
  checked 1,670 overland consignments of fish to the Aberdeen and Peterhead markets in the 12 months to May 1997, and was told by MAFF that, in the same period, only 14 overland consignments to the Grimsby market were checked.
  That is a serious discrepancy. It backs up my constituents' allegations that MAFF in England and Wales is not doing the job that Scottish officials are doing to try to eradicate the problem of black fish. That is consistent with the lax treatment of the safety rules on fisheries vessels. I hope that the Minister can ensure that all those procedures will be tightened, because, unless we tackle all those problems—including black fish and fish conservation in the North sea—we shall face serious difficulties.
  When I was attending those fisheries debates in the House, I was conscious that, perhaps like the farmers, fishermen and fishing interests were always crying wolf. Every year, we were facing another crisis and another disaster. As the years rolled by, the same message came across and the same language was used, yet the industry survived and moved on, although perhaps slightly altered.
  Things have changed. Not only do we have a change of Government, but there is pressure, particularly from environmental interest groups, which include all of us now. Over the next few years, there will be serious changes in the industry. The whole issue of food safety and of the environmental protection of our natural resources means that the industry will face serious challenges as it moves into the next millennium.
  Through my own relationships with the Scottish Fishermen's Federation, I know that there has been a change in the way in which the dialogue is conducted. Although it is critical of the deal that was struck at Amsterdam, and I understand its reasons for that, it is engaging constructively with Government to try to find a way forward. I like to think that that is because it knows that it has a Government who want to listen.
  The fish merchants are taking the same view, and I have regular meetings with the Aberdeen Fish Curers and Merchants Association Ltd. in my constituency. The association has recently introduced a conservation policy, which would have been unthinkable a few years ago. Again, it is the beginning of a recognition of how serious the industry is threatened by these other problems. As I say, I think that that recognition is shared by all of us. It is important that the industry begins to speak in a different way and in a different language.
  I know that some sections of the industry use a different tone. We are all concerned about some of the language that we hear from certain sections, which seem to take a more fundamentalist Eurosceptic line, but I make a plea to the whole industry that it is time that it pulled together to recognise that there are common problems and issues, on which the industry should be looking to find a common voice.
  I was pleased with the response of my right hon. Friend the Minister of Agriculture to the deal struck at Amsterdam. He announced that there would be a summit of fishing interests. I hope that that will be taken as an opportunity to come together to find a common voice. The industry relies not just on fish catchers and fish merchants, but on consumers. I know that there are
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  economic and practical difficulties in the sectors of the industry coming together to find a common voice, but it is in all their interests that they should do so.
  11.36 am
  Mr. Tony Baldry: May I, first, welcome the new Fisheries Minister to his new post? He was an extremely conscientious Opposition spokesman, and I have no doubt he will be an extremely conscientious Fisheries Minister, although he may already have discovered not just the complexities of the issue in government but the constraints on any Minister as a consequence of collective responsibility and of actions by the Foreign Office and the Treasury. We have seen some of that since Amsterdam. It was a great privilege to be the Fisheries Minister, and I rise in the debate not out of any sense of self-justification but because it is important to place some comments on the record. The somewhat partial view of the hon. Member for Banff and Buchan (Mr. Salmond) should to a certain extent be challenged.
  The UK has always had an extremely liberal regime—for understandable policy reasons—for foreign merchant marine registering on our Register of Shipping. There were good reasons for that. We wanted to maintain a large merchant marine. It encouraged employment by our merchant navy and ensured better safety standards. However, it meant that, in the mid-1980s, when decommissioning was introduced as a policy throughout the European Union to restrict catches in Community waters, it was easier for foreign nationals to register their vessels over here, effectively as UK vessels. Then, as we know, they were successful in purchasing licences from UK fishermen. Therefore, to all intents and purposes, under international law, they were UK-registered boats with UK-held licences.
  As soon as that was recognised, the House and the Government sought to take steps to deal with it in the merchant shipping legislation of the late 1980s. Clearly Parliament thought that that legislation was effective and sought to enforce it as effective legislation. What we could not have anticipated—I do not think that Westminster could ever have reasonably anticipated this—was the attitude and approach of the European Court of Justice. In the Factortame case, it struck down that legislation on the basis that it was contrary to Community law and that it failed appropriately to give sufficient weight—
  Mr. Salmond: Will the hon. Gentleman give way?
  Mr. Baldry: I will give way in a second. I see the hon. Gentleman. Let me finish just this part of my speech.
  The court believed that the legislation failed to give appropriate weight to the concept of the single market and that it was thus contrary to Community law.
  The court misdirected itself, because fishing is the only area in the EU where we have national quotas, and it must make sense, if there are national quotas, for those to be for the benefit of the fishermen of that nation. If there is going to be a UK fishing quota, it must be for the benefit of UK fishermen.
  One of the things that the House cannot get away from is that it is crazy for a substantial part of the UK fishing quota to be in the hands of foreign fishermen. That was

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  clearly something on which action had to be taken. Before I tell the House what action we sought to take, I happily give way to the hon. Member for Banff and Buchan.
  Mr. Salmond: The House probably wants to concentrate on where we are now, without going too much into the past—
  Mr. Baldry: The hon. Gentleman did it too.
  Mr. Salmond: The hon. Gentleman is right. I did lay out the history of the matter; but, if he considers the Committee proceedings on the Merchant Shipping Act 1988, he will find that whether the Government's attempt to deal with the issue would fall foul of the European Court was thoroughly debated. Indeed, amendments were moved by me and the Labour party to strengthen the crews and residential requirements. The previous Government argued that those amendments would fall foul of the court which, in the light of what happened, was ironic.
  Mr. Baldry: I share one piece of advice with the new Fisheries Minister. He can guarantee that the Scottish nationalists and the Liberal Democrats, who have never had—and who are never likely to have—the responsibility of government, are always blessed with the benefit of both hindsight and foresight. That is a characteristic of all fishing debates. I, too, want to deal with the present and the future, but it is important to work out how we got here.
  Following the Factortame case, it was clear to everyone that the only way in which we would make substantial progress on quota hoppers was by treaty changes. The most convenient—and only—opportunity for treaty changes was at the intergovernmental conference. That is why we made it clear that we would not allow the IGC to conclude until the issue had been resolved.
  The quota licences could not simply be confiscated, as they had been acquired legitimately, but it was our view that once our Community colleagues appreciated that we would not allow the IGC to conclude until the matter had been resolved—the then Prime Minister and Foreign Secretary made that clear—they would start to negotiate on ways in which those licences could be decommissioned, on compensation and on how we could move forward. We made that clear in the run-up to the general election and at the Council of Ministers meeting in Luxembourg.
  The Labour party in opposition sought to give support to our approach and, at the time of the Fisheries Council, the then Leader of the Opposition, now the Prime Minister, said that the Labour party would consider not allowing the IGC to conclude. He gave the impression that he was taking a similar approach. That approach lasted until 1 May, when the Labour party changed its tune. Effectively, what was achieved in Amsterdam was no more than a restatement of the existing law. The exchange of letters is no more than what existed before 1 May. If Labour Members believe that something new was achieved at Amsterdam, they have been misled.
  The fishing industry is now in the worst of all possible worlds. Unless the Minister tells the House today that the Treasury will give substantial new money to the MAFF public spending line for decommissioning, the Government will shortly have no alternative but to introduce a very tough effort control system and a tough days-at-sea policy. No one with any understanding of this
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  issue believes that the measures that will arise from decisions at Amsterdam will have any effect on quota hoppers. There will be no reduction in the number of existing quota hoppers, and there is nothing to prevent further quota hoppers from coming on to the United Kingdom register.
  Given the decisions taken at Luxembourg about reducing the catching capacity in the European Community—they apply equally to the United Kingdom as elsewhere—the future for the United Kingdom fishing industry is extremely bleak. As I understand it, there will be very little extra money for decommissioning and, as I have said, we are about to see tough policies on effort control and days at sea. The frustration is that such policies would bear down on those parts of the industry which are effective, profitable and competitive.
  My shoulders are broad, and I am prepared to be judged by the fishing industry for my stewardship as Minister. I think that the industry's judgment may be kinder than the hon. Member for Banff and Buchan sought to give on the industry's behalf. We can say beyond peradventure that the Government have failed the fishing industry lamentably. There was an opportunity at Amsterdam, probably the only one this decade, to really sort out the problem of quota hoppers. That opportunity was missed and the fishing industry will pay the price for decades to come.
  Mr. James Wallace: The hon. Gentleman talked about his stewardship and mentioned the Luxembourg Council of Ministers, which was probably his last major involvement as Minister. In the run-up to that meeting, it had been expected—indeed, Ministers had said it—that Ministers would try to put together a blocking minority to stop multi-annual guidance programme IV going through. That did not happen, despite the fact that we had the support of the French. Can the hon. Gentleman tell us why the expectation of a blocking minority was not fulfilled?
  Mr. Baldry: I do not think that the hon. Gentleman will find any reference to my putting forward such a proposition in any debate or in notes of any meeting that I held with the Scottish Fishermen's Federation or the National Federation of Fishermen's Organisations. It was always clear to me that it would be possible for the Commission to buy off sufficient other member states for it to be impractical to put together a blocking minority.
  I made it clear to the NFFO and to the SFF that our policy was that over a quarter of the United Kingdom fleet was in the hands of quota hoppers and that, if we could sort out that problem at the IGC, we would then have some leverage and could meet our decommissioning targets. No one ever pretended that that would be cost-free, but we had to ensure that our colleagues in Europe recognised that we were serious. I believe that they did recognise that the Conservative Government were serious, but the election intervened before we had an opportunity to implement our policy.
  I fear that the United Kingdom fishing industry will pay dearly for what happened at Amsterdam. Nothing can hide the fact that it was a missed opportunity. I predict that, come the December fisheries debate, or even before then, the new Minister will have to come to the House and announce a strict days-at-sea policy. It will be

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  interesting at that time to see whether all those Labour Members who cheered the Prime Minister on his return from Amsterdam are prepared to go into the Lobby to support the Government in introducing that policy, which will be a direct consequence of their lamentable failure to capitalise on the opportunity they had at Amsterdam.
  11.46 am
  Mrs. Sandra Osborne: I congratulate my hon. Friend the Member for Aberdeen, Central (Mr. Doran) on his second maiden speech. It was different from a normal maiden speech, but it showed a great depth of knowledge of the fishing industry.
  It is a great privilege to deliver my maiden speech as the first ever Labour Member of Parliament for Ayr and the first woman Member for the Ayr constituency. However, I am not the first woman to have carried the Labour standard for Ayr. In the past we have had excellent candidates in Jenny Auld and Jean McFadden. Several male Labour candidates in Ayr have gone on to serve as Members in other constituencies. They include the late Willie Ross, former Secretary of State for Scotland, Alex Eadie and Jim Craigen. Since I live in my constituency, both my immediate predecessors were my constituency Members of Parliament.
  Phil Gallie and I were light years apart on almost every political issue, but I have no hesitation in praising his record as a hard-working Member on behalf of all his constituents. He was gracious and courteous during the election campaign and was particularly gracious in defeat on the night of 1 May. His predecessor had a somewhat different style from Phil Gallie. He was George Younger, the former Secretary of State for Scotland and Secretary of State for Defence, now Lord Younger of Prestwick. He may enjoy Prestwick as a title, but I enjoy Prestwick as my family home. In a short time, thousands of others will be desperate to become temporary residents of the Ayr constituency, albeit for only a few days, as we host the British open golf championships at Troon. I might have a spare room available if anyone is interested.
  My constituency has golf courses, 15 miles of sandy beaches and lovely countryside, which are all important, but there is a great deal more to it than that. Prestwick is home to British Aerospace, which is going through a difficult period with the announcement of an end to the production of the Jetstream aircraft, which will lead to 380 redundancies. It is also the home of the air traffic control centre which the Government have recently confirmed as the new Scottish centre, securing 700 highly skilled jobs. There is also Prestwick airport, where freight and passenger traffic is forecast to grow considerably over the next few years. Not many hon. Members can get from their homes to the nearest airport in less than five minutes, but I have that advantage.
  The other towns in the constituency include Ayr, which is a major shopping centre and the location for the South Ayrshire council, now happily under Labour control. It is both a seaside and a fishing town and it has a fine racecourse. In 1913, suffragettes burned the grandstand to the ground in support of votes for women. During the election, I went to the races with my right hon. Friend the Foreign Secretary. I backed a horse called Shadow Leader, ridden by a jockey called Osborne. It won and the grandstand survived.
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  The constituency also includes the town of Troon. It is not just a seaside and golfing resort: it is home to Ailsa Shipbuilders. Fishing, too, remains an important local industry. Since my predecessor made his maiden speech on the same subject, the local fish market has been transferred from Ayr to Troon.
  Wherever we go in the towns and villages of the constituency, we are never far away from the links with Robert Burns, Scotland's national poet, who was born in Ayr. Thanks to the Boundary Commission, his birthplace is now in the constituency of my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).
  One of the first things I had to do after the election was give up my job, after 13 years in the voluntary sector, with Kilmarnock and Loudoun women's aid. Voluntary work often goes unrecognised, so, with the indulgence of the House, I want to pay tribute to all the women who work to support abused women and their children.
  When people ask me, as has happened frequently over the past few weeks, "Why did you decide to become an MP?"—a question that many hon. Members may ask themselves from time to time—I replied, "I was too small and too old to become a firefighter." However, now that my hon. Friend the Scottish Office Minister for Home Affairs and Devolution has announced a relaxation of the rules on height and age qualifications for the fire service, I may reconsider in five years' time.
  I suppose that being a Member of Parliament is not so very different from being a firefighter. We need a head for the commanding heights of the economy; we have to deal with all the burning issues of the day; and our constituents look on us as an extension of the emergency services, to be contacted in a crisis—although they cannot yet reach us on 999.
  By tradition, maiden speeches are non-controversial. However, I must say that during the short time that I have been here, one feature that I have noticed is that the fishing industry is among the most contentious subjects. There are long-term and seemingly intractable problems, and I get an impression of an indigenous industry in a state of low morale. It is therefore to be welcomed that my right hon. Friends the Prime Minister and the Minister of Agriculture, have sought to deal with the problems with a sense of urgency and suggested summit talks with the leaders of the United Kingdom fishing industry—something that was not characterised by the previous Government, as was illustrated by the somewhat defensive speech of the hon. Member for Banbury (Mr. Baldry), a former Fisheries Minister.
  My constituency is illustrative of the fact that the industry does not start and finish with fishing vessels—it includes related industries such as fish processing, which employs many people in Ayr. I pay tribute to the all-party fisheries group. In the short time that I have been involved, I have been impressed by the commitment of all hon. Members with a fishing interest to working towards building a positive future for the industry. I have also been impressed by their strongly held views and depth of knowledge.
  I thank the hon. Member for Banff and Buchan (Mr. Salmond) for securing this debate this morning and thereby enabling me and other new Members to further our knowledge of and interest in the fishing industry. Most of my hon. Friends have been able to pepper their maiden speeches with anecdotes from their first few

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  weeks in Parliament. However, as I am making my speech after many of my colleagues have made theirs, most of my best stories have already been told. New Labour still believes in the common ownership of a good story. Perhaps that is no bad thing, as many hon. Members wish to contribute to the debate and I am interested in hearing their speeches.
  I shall end my speech by saying how proud I am to have been allowed the indulgence of the House to make my maiden speech as the first ever Labour Member of Parliament for the Ayr constituency.
  11.54 am
  Mr. Christopher Gill: I congratulate the hon. Member for Ayr (Mrs. Osborne) on her maiden speech. She spoke of her constituency with great pride and the House is left in no doubt that she will be a bonny fighter for the Ayr constituency in the years to come. The House will also appreciate her generous tribute to her predecessor, Phil Gallie.
  I congratulate the hon. Member for Banff and Buchan (Mr. Salmond) on obtaining this debate, which he opened by congratulating the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, the hon. Member for Scunthorpe (Mr. Morley), on having achieved absolute power. Later in his speech, the hon. Gentleman qualified that remark by pointing out that the Minister has responsibility for the fishing industry. I must point out that, while he has that responsibility, he has very little authority with which to discharge it. As we all know, in these matters competence rests with the European Union, not with the Westminster Parliament. That is wholly unsatisfactory to many of us, and it is a negation of parliamentary democracy.
  On 23 July 1996, when the Minister was the Opposition spokesman, he said about the common resource aspect of the common fisheries policy:
  "We must deal with that issue and remove that term from the CFP."
  Those were brave words. Later, he said:
  "We believe that the CFP should be radically reformed to allow us far greater autonomy and national control of fishing waters within our country's limits."—[Official Report, European Standing Committee A, 23 July 1996; c. 24–25.]
  It would be reasonable to suppose that by "our country's limits", the hon. Gentleman was referring to the 200-mile zone established by the last Labour Government under the Fishery Limits Act 1976.
  All that was 12 months ago. As the hon. Gentleman must realise, the only significant change in the interim was not, as I shall show, to the CFP, but the fact that he has become the hapless Minister responsible for fisheries. Nothing else has changed. Ample evidence of that is contained in the exchange of letters between the Prime Minister and Jacques Santer, the President of the European Commission, on 17 June.
  In spite of all the huffing and puffing in opposition—something to which the hon. Member for Banff and Buchan referred—and in spite of all the heady rhetoric post Amsterdam, the reality is that, as is made clear in the opening paragraph of Santer's letter, we are where we always were: on course for the eventual and total realisation of Council regulation No. 101/76, which lays down a common structure for the fishing industry. It is not a structure for national fishing industries, but a
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  structure for a European fishing industry, fishing in European waters and catching European fish. In other words, it is the old cry of equal access to a common resource.
  Time does not permit an exhaustive analysis of the President's letter, so I shall confine myself to the first paragraph, in which he says, inter alia:
  "The Common Fisheries Policy … provides for the conservation and management of fisheries resources throughout the European Community".
  That simply confirms what many of us have long known: each member state has ceded exclusive competence for Fisheries to the European Union.
  The same sentence in Santer's letter continues:
  "to assure the long-term development of the fishing industry".
  It mentions the EU fishing industry, in the singular, but not the fishing industries, in the plural, of individual member states.
  In his letter, Mr. Santer went on to mention
  "the well-being of fisheries-dependent communities",
  but that is simply a recitation of article 9 of Council regulation No. 101/76. He also mentions "the interests of consumers", which is referred to in article 1 as the "general economy".
  The so-called "special letter" does not provide any new safeguards or concessions. It simply restates something that I and others already know but which successive Governments have refused to realise: in 2002, we will reach the end of the current discriminatory transitional period, at which point part 1 of article 2 of 101/76 will come into full effect:
  "Rules applied by each Member State in respect of fishing in the maritime waters coming under its sovereignty or within its jurisdiction shall not lead to differences in treatment of other Member States.
  Member States shall ensure in particular equal conditions of access to and use of the fishing grounds situated in the waters referred to in the preceding subparagraph for all fishing vessels flying the flag of a Member State and registered in Community territory."
  Therefore, as my hon. Friend the Member for Banbury (Mr. Baldry) said, the Prime Minister achieved nothing at Amsterdam, and Mr. Santer's letter tells us precisely nothing that we did not already know. All the exchange of letters confirms is that Parliament has given away the nation's greatest renewable resource. The Government, for all Ministers' rhetoric and messianic zeal, have failed to defend a vital national interest.
  Mr. Anthony Steen: Will my hon. Friend give way?
  Mr. Gill: I am on my peroration now; I am so sorry.
  The brave new Labour Government went to Amsterdam but, on fisheries and other issues, they went belly up.
  12.1 pm
  Mr. Bob Blizzard: I thank the hon. Member for Banff and Buchan (Mr. Salmond) for providing this opportunity to debate quota hopping, which is a major issue in Lowestoft, in my constituency. Fishermen undoubtedly want those lost quotas returned and feel that they have suffered from the effects of multi-annual guidance programme IV before it has even

  887
  been introduced. There is also no doubt that, during the general election, fishermen counted on recovery of those quotas to enable them to deal with forthcoming fishing reductions. One can therefore understand the disappointment that they must feel.
  All hon. Members realise that the problem facing the Government is how to get the quotas back. As has already been said, one cannot confiscate something that has been bought legally. We can try to buy the quotas back, but other countries will not sell them, and that is the significant point. Of all European Union member states, only the United Kingdom has a serious problem with quota hopping. I asked fishermen in Lowestoft, "Can't you retaliate and hop on other people's quotas?" They replied, "You just try. You can't—they're not for sale." That is the problem. We should be asking how we got into that situation.
  There was no support for a protocol in the lead-up to Amsterdam. I believe that both the previous and the current Governments had either to make the best of a bad situation or to block the intergovernmental conference, thereby probably quitting the European Union altogether. I know many fishermen who would like to leave the EU, but that will not happen, because, as we know, it would be a complete disaster for most other UK industries.
  I am sure that most of my hon. Friends in the Scottish National party would accept those consequences of leaving the EU. Let us suspend disbelief for a moment and imagine that, on 1 May 1997, the Scottish nationalists swept to power in Scotland and achieved their aim of independence in Europe. I am sure that, at the IGC, they would not have wished to leave the EU because of the fishing issue.
  Mr. Salmond: There is a difference between blocking an intergovernmental conference and leaving the European Union. I draw the hon. Gentleman's attention to the number of times that the Spanish Government have blocked intergovernmental conferences or Council of Europe meetings to gain advantage for their fishing industry. Does he appreciate the distinction?
  Mr. Blizzard: There may be a distinction. I believe, however, that—because of the history of the previous Government's attitude to Europe and the almost total breakdown in our relationship with our European partners—the type of obstruction that was considered would have had serious consequences for our membership of the EU and for progress in other policy spheres. The new Government have made the best of the situation in which they found themselves. Statements have been made on this subject, and I hope that more fish will be landed in British ports and that more jobs will be available on those boats for British fishermen.
  Mr. Steen: As I am the vice-chairman of the all-party group on fisheries, and have the second largest port in England and Wales in my constituency, may I ask the hon. Gentleman a question? Is he aware that my fishermen say that, despite Amsterdam, no more fish will be landed in British ports than are currently landed? They say also that those landed fish will not go into British fish markets
  888
  and the British fish industry but will be packed on a lorry and sent to Spain or to Holland. That is not much of an achievement, is it?
  Mr. Blizzard: In Lowestoft, there is a trawler—which is a Lowestoft trawler with a Lowestoft company—that, purely and simply, is a quota hopper. It does not land any fish in the port of Lowestoft, although it is registered there. Proper enforcement of the agreement reached in those letters will require that that ship lands a significant proportion of its catch in the United Kingdom. It therefore seems reasonable to have every hope that the ship will land its catch either in the port of Lowestoft or in another UK port. The ship is fishing the same fishing fields off Lowestoft that it fished before it became a quota hopper.
  Lowestoft fishermen also want proper regulation of quota hoppers and for quota hoppers to be as severely inspected as the British fleet. The Government have said that they will achieve that objective, and they have started to do so, as I am sure fishermen will appreciate.
  We must also achieve an agreement between scientists and fishermen on what stocks are in the sea. I speak to scientists, who tell me one thing, and to fishermen, who tell me something else. Both groups are adamant that they are right, but they cannot both be right. I am pleased, however, that we have made some progress in Lowestoft in getting the two sides together and finding a means by which they can agree what can safely be caught to sustain stocks.
  I agree with other hon. Members that there is a fundamental contradiction between the principles of the single market and the entire basis of the common fisheries policy, which is fixing member states' allocations. The contradiction should have been dealt with at the beginning, when the common fisheries policy was drawn up, but it was not. Why was the contradiction not discovered then? It should also have been dealt with in the most recent review of the common fisheries policy, but it was not. The previous Government have told us nothing about what happened.
  We must examine those issues in preparing for the next review of the common fisheries policy, when, I think all hon. Members will agree, there will have to be radical reform. It is painfully obvious that the common fisheries policy has not worked, because it has not conserved fish. People in my constituency, like people across the UK, become very angry when they see the spectacle of fishermen throwing back dead fish, which they have to do if they are not to become criminals in their daily work. The public are outraged about such waste.
  As we work towards a new agreement, we will have to accomplish some crucial goals. We will have to ensure that, in implementing MAGP IV, fish markets can survive. If our fish market in Lowestoft collapses, for example, our entire fishing industry will collapse. It is therefore essential to maintain the markets. I look forward to the Government supporting our fishing industry and working with it, as the Spanish, Dutch and other Governments have clearly done. Such support is why their fishing industries are strong and why we have inherited a situation in which our industry is weak.
  12.9 pm
  Mr. David Curry: I congratulate the hon. Member for Ayr (Mrs. Osborne) on her maiden speech. It is good that she chose to make it on the subject

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  of fisheries, which used to be something of a minority interest in the House, which meant that debates On it took place late at night. The hon. Lady spoke with clarity, humour and commitment, although she appeared to announce her possible resignation four years from now; we shall have to wait to see whether her appreciation of the House improves as the years go by.
  I have very pleasant memories of Ayr. My wife and I stayed in a bed and breakfast there; when the landlady asked whether I wanted one egg or two—
  Mrs. Margaret Ewing: This is irrelevant.
  Mr. Curry: I am merely following the courtesies of the House, as I am sure the hon. Lady understands. I said that I would have two eggs, and my wife said that she would have the same, but the landlady said that that was only for gentlemen.
  I hope that the Parliamentary Secretary and I will find some common ground. We have frequently faced each other across the Dispatch Box and often found ourselves in agreement. He will find, as my hon. Friend the Member for Banbury (Mr. Baldry) and I found, that dealing with issues in practice is a great deal less easy than speculating on how they might be dealt with in theory.
  Fishing is a difficult industry and a difficult environment. My concern is that the Government are seeking to tackle the problem of quota hopping with measures that could have little effect in practice and could well be unsustainable in law. My fear is that licence conditions will simply not do the trick—we know, because we tried them. That is the history of the Merchant Shipping Act 1988 and the Factortame case, to which reference has already been made.
  The alternative approach is not easy. I do not pretend for a minute that the business of treaty amendment will be obtained easily or at the first attempt, but I am disappointed that the Government appear to have written it off without even giving it a serious outing at summit level, despite remarks made by various representatives of the Labour party in the run-up to the election. Also, the Government's proposals are so tentative in construction and legality that it is not surprising that the industry regards them as showing a lack of commitment.
  We have first to examine the practical utility of the measures. Three new licence conditions are proposed, which the letter from the President of the Commission to the Prime Minister suggests are either/or, not cumulative. That is the interpretation that has to be put on that letter. The first measure is the requirement to land 50 per cent. of a catch in the United Kingdom. Of course, there is already a category A pressure stock licence condition concerning visiting conditions if less than 50 per cent. is landed. The second is the requirement for the majority of a crew to reside in the UK, and the third is the requirement that most fishing trips should start from the UK.
  Mr. Steen: Will my right hon. Friend give way?
  Mr. Curry: Very quickly.
  Mr. Steen: Is my right hon. Friend aware of another letter from Jacques Santer to the Spanish Government in which he said that any country that did not want to land fish in another country did not have to do so?
  Mr. Curry: I assure my hon. Friend that I was going to refer to that letter.
  890
  We have to be careful about the first of the proposed conditions—that 50 per cent. of a catch should be landed in the UK—and must ask to what extent it will affect British fishermen, because Scottish pelagic fleets land in Holland and Norway, and English east coast vessels land in Holland. There is no point trying to introduce measures that are designed to catch quota hoppers but end up causing difficulty for our own vessels. Also, as my hon. Friend the Member for Totnes (Mr. Steen) said, products can be shipped practically straight from the dockside on refrigerated lorries to onward overseas destinations, thus bringing precious little local benefit.
  As for starting journeys from the UK, I wonder what practical impact that would have. I suspect that many quota hoppers would simply clock in at Milford Haven as they went past and that that would count as having started their journey from the UK. If the conditions are to be more rigorous, and if there is to be more substance to them, the Parliamentary Secretary will no doubt spell it out when he responds to the debate.
  The only condition that might yield some interest is the residence requirement—I suspect that it is intended to give British vessels a let-out. If it stood alone, it might produce some useful pressure but, even then, verification and control present obvious difficulties.
  Do the Government envisage further conditions—for example, a requirement that vessels be inspected as they leave fishing grounds when they are under British registration? The hon. Member for Banff and Buchan (Mr. Salmond) asked the relevant question whether the Government intend to reinforce the proposals with decommissioning measures aimed at quota hoppers, thus introducing the carrot and the stick.
  I am concerned about the legality of what is proposed. When in government, we had the experience of trying to deal with the problem by introducing legislation but then running foul of international law in doing so. That is bound to be a preoccupation.
  We have a tale of several letters. The Prime Minister set out measures to demonstrate that quotas
  "are contributing substantial economic benefits to populations dependent on fisheries … in the flag states".
  He asked the Commission to
  "look constructively at and give its opinions on any draft UK measures"
  in respect of the three conditions.
  Jacques Santer's response was very guarded. He stated:
  "With regard to the measures designed to get economic benefits for populations dependent on fisheries and related industries I should clarify that such measures may imply—"
  that is a curious word in this context—
  "requirements to be met on an alternative basis and concerning, inter alia".
  and he then mentioned the three conditions. He signed off by saying that the Commission
  "remain ready to further clarity our view on possible measures which your Government may envisage in this respect."
  If that is a sort of "come hither" message, it does not seem to burn with the unrequited passion attributed to it.
  Even that letter, however, got Mr. Santer into a certain amount of trouble. This brings us to the third letter—that from the Spanish Foreign Minister, Mr. Abel Matutes, to Mr. Santer on 19 June. It comprises five pages of fairly indignant protest. For example, he stated:

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  "during the IGC the Commission representative supported my country's position, presented in various memoranda, where we stressed among other things that to place any restriction on the activity of any Community-registered vessel, such as an obligation to unload or for the crew to reside in the flag country, was incompatible with the Treaty and with jurisprudence. In the meeting of 30 September 1996, the Commission representative stated that he followed the line agreed in the College of Commissioners. Moreover, even the British request for amendments to the Treaty was expressly based on the impossibility of introducing the desired restrictions with the existing acquis communautaire."
  The Spanish Minister gave a detailed analysis of the judgment of the European Court of Justice in the Jaderow case, one of the celebrated cases in fisheries history. He continued:
  "From this it follows that a member state, on fixing the way in which it will use its quota, in accordance with Art 5 part 2 of Regulation 170/83, cannot demand that catches or parts thereof should be unloaded in its own ports,"
  He quoted extensively from the judgment and argued that any conditions with which the British Prime Minister returned from Amsterdam would be very difficult to reconcile with European law. Jacques Santer then replied in the terms presented to the House by the hon. Member for Banff and Buchan and my hon. Friend the Member for Totnes. That seems to leave a very thin thread linking the proposed measures with effective control of quota hoppers.
  I hold no brief for the Spanish. We faced the same difficulties, and the Minister will come back to the House with the next batch of measures before long, but I am entitled to share the view of the fishing industry that the Government's proposals are likely to come under intense legal scrutiny and could well fall foul of the treaty as interpreted by the European Court of Justice. That would take us back to square one.
  I seriously doubt that the Government's proposals have the legs to finish the course, but I hope that they do. I do not want the Government to fail. We have tried to crack the problem for many years, and I have bitter experience of trying to make things work.
  Does it matter if the proposals do not work? Yes, it does. First, it matters because we have all been looking for a way to enshrine the spirit of the 1983 agreement by adding nationality criteria to beneficial ownership—in other words, to reconcile the treaty provisions on free trade and the movement of people and capital with the concept of fishing for the benefit of coastal communities in the flag state.
  Secondly, it matters because the new multi-annual guidance programme, or fleet limitation exercise, is upon us. It is crucial that it should take account of the problem of quota hoppers, and I want to know from the Parliamentary Secretary whether he intends to proceed with it if it is demonstrated that the formula will not deliver the benefits he seeks from it. It is a complicated MAGP, and I look forward to his coming back to the House and explaining how he will make effort control and days at sea work. If that is the route that he goes down, it will be a trip down a nostalgic byway, which many hon. Members will remember, having been through that debate before.
  I hope that the Government's proposals—minimalist though they are—will work. I hope that the statements about the involvement of local communities will have
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  substance. I hope that the element in the agreement about better enforcement will be given effect. However, I have the right to doubt seriously whether the proposals are more than the tiniest incremental improvement, which may well be challenged. I wish the Government luck, but I suspect that the Minister will be back to tell us that this attempt did not work and what is to be the next wheeze.
  12.19 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): I am grateful to the hon. Member for Banff and Buchan (Mr. Salmond) for providing the House with this opportunity to discuss in depth the issue of flag-of-convenience vessels, together with the Government's action to address the issue. He is right to say that, in the past, we have made common cause in arguing that we should have more time for debating fisheries. Fishing is an important industry in this country and there are many hon. Members from fishing areas who want to make their points.
  I sympathise with the hon. Gentleman's constituents and also with his comments about the effects on exports of the high pound. That is an issue for my colleagues in the Treasury, but they are well aware of the effects on exports of the high pound and of high inflation. It is ironic that the pound is so high, because people see this country as having sound fiscal management under the present Government. Nevertheless, there were measures in the Budget designed to reduce the pound's value, although it may be some time before they take effect, and I know that my right hon. Friend the Chancellor is aware of the issue.
  The importance of this subject is borne out by the large number of hon. Members who have participated in the debate. We heard from my hon. Friend the Member for Aberdeen, Central (Mr. Doran), who has made a welcome return to the House. We value his knowledge, especially of the processing sector, and the fact that he plays an active role as secretary of the all-party fisheries group. The hon. Member for Banbury (Mr. Baldry) outlined the previous Government's position. He was fair, albeit somewhat selective in his use of historical quotes. My hon. Friend the Member for Ayr (Mrs. Osborne) made a maiden speech which was witty, informative and, with offers of racing tips and accommodation for golf tournaments, extremely generous. We welcome her valuable contribution to the debate.
  The hon. Member for Ludlow (Mr. Gill) is always consistent in debates such as this—he may be consistently wrong, but he is certainly consistent and he is a long-standing contributor. He made an important point about equal access. I am on record as saying that equal access is not valid in relation to the modern common fisheries policy; in addition, it is not now relevant, given that relative stability has now been accepted by the Commission and all the other member states. We should move away from it, and the review in 2002 will give us an opportunity to do so. I, too, have been consistent and I have not changed my position on equal access.
  My hon. Friend the Member for Waveney (Mr. Blizzard) was one of the first Members of Parliament I saw as Fisheries Minister, which shows that he is a great champion of his fishing port. I take his comments on behalf of his fishermen very seriously indeed.

  893
  I shall try to respond to the points raised in the debate, but that will be difficult to do in just 10 minutes.
  Flags of convenience are important in relation to quota hopping. The issue has been raised many times both inside and outside the House, but it has been somewhat distorted and, in some cases, used as a stick to beat the European Union by people who have agendas other than the interests of the fishing industry. Over the years, that has damaged the United Kingdom's interests and our fishing industry. To some extent, the fishing industry has been misled, for example, in respect of the protocol and the intergovernmental conference.
  The previous Government's position on the IGC and the protocol was entirely bogus, as events have proved. Whether or not that action would have worked can be seen in the Government's position on the beef war. They threatened all sorts of non-co-operation, but in the end they made no progress toward getting the beef ban lifted. The same would have been true in respect of the IGC. It is true to say that, in opposition, Labour party spokespeople did not rule out the approach advocated by the Government. It would have been wrong for us to do so, because it is sensible to consider all approaches and any way to make progress. Of course, in opposition we were not in possession of the full details of our chances of making progress in that way.
  Mr. Salmond: As the Parliamentary Secretary knows, expectations were raised. The hon. Gentleman says that nothing was ruled out, but the industry feels that certain obligations were undertaken. The Government have chosen to go down the road of the protocol and licence conditions, but the industry is sceptical about the efficacy of that approach. Given that raising of expectations before the election, does the hon. Gentleman accept the obligation? The route chosen by the Government will have to bear fruit, or the industry and many Members of Parliament will be very disappointed indeed.
  Mr. Morley: I do accept that point. We made it clear that we would not rule out any approach; what we were concerned about was making some progress. We believe that the route we have taken has delivered some improvements, to which I shall refer.
  When we examined the facts and calculated the chances of our obtaining a protocol, it became clear that it was not a realistic option. As hon. Members, especially former members of the Government, know only too well, a protocol in the IGC would have needed the unanimous agreement of every single member state. It was clear to us that at least two member states—Spain and Holland, which both have an interest in quota hopping—were certainly not going to agree to any protocol that would have a meaningful effect on dealing with quota hoppers. It was not, therefore, a runner. We made it clear that we would explore all the various routes.
  Mr. Gill: Will the Parliamentary Secretary give way on that point?
  Mr. Morley: Yes, but very briefly, because I want to respond to some of the points raised.
  Mr. Gill: Does the hon. Gentleman accept that the protocol could have been obtained if the Government had
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  held up the progress of the whole intergovernmental conference? That was my point, which he has avoided answering.
  Mr. Morley: Absolutely not—I will come to it in a moment.
  Unanimous agreement was needed, but it was clear that it would not be forthcoming. We wanted to look at other ways of tackling the issue. I should make it clear that, even under the Government's proposals, the protocol would not, in itself, have removed a single quota hopper or retained any quota to the UK fishing industry, because the quota hoppers were the legal owners of their quota.
  Mr. Andrew George rose—
  Mr. Morley: I cannot give way—I must make progress and time is extremely limited.
  The right hon. Member for Skipton and Ripon (Mr. Curry) made a very intelligent contribution, but I disagree with him on whether licence conditions would be effective. I do not believe that they have been properly tried. We are applying licence conditions that are far more effective than previous ones, whereby quota hoppers had the choice of either landing 50 per cent. of their catch at a UK port or calling into a UK port, eight times a year for a minimum of eight hours. Of course, they opted for the lesser requirement, and the system was not effective.
  We believe that what we propose is effective. We also believe that it is legally enforceable, because we have the President of the Commission's interpretation. The Commission—the guardian of the treaties—took legal advice, and the fact that that advice was put in writing by the President of the Commission is important and will count for a lot in any future legal dispute over interpretation.
  The hon. Member for Banff and Buchan asked whether MAGP IV could be used if we felt that no progress was being made with licence conditions. MAGP IV is a separate issue; it is about sustainability and the proper management of our fish stocks. It is not credible or realistic to say that we will not implement MAGP IV if we do not see any progress. It is also a weak lever, because, when the previous Government said that they would not implement MAGP IV, grants for safety improvements and modernisation were stopped and we were unable to access decommissioning grants. We were not in a strong position. It was not a strong bargaining point. We cannot use funds for decommissioning in a discriminatory way, but we do not rule out a targeted decommissioning scheme. We shall be only too happy to discuss that with the industry.
  No central record is kept that would tell us how many fishermen comply with the safety training regulations. The database of the Sea Fish Industry Authority includes only fishermen who have completed courses run by a member of the Group Training Association. Many fishermen will have undertaken training from other approved training providers. The onus for complying with the regulations rests on individuals and on the skippers and owners of vessels.
  The Marine Safety Agency monitors compliance with the regulations during inspections of registered vessels. If any of the crew members do not comply with the regulations, the skipper, the owner of the vessel and the individual concerned can be prosecuted—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order.

  Middleton, Norfolk (Bypass)
  12.30 pm
  Dr. George Turner: I am pleased that, in this debate on an issue crucial to some of my constituents, I have been joined, for moral support, by several other Norfolk Members who share my interest in the strategic development of our roads in East Anglia.
  Before I talk about Middleton, I shall set the scene by saying that East Anglia is the Cinderella of our road network: a Cinderella who has been forced into shoes that have been too tight, which have hurt her increasingly as she has grown. Our Cinderella of a region needs to grow, so that our prosperity equals that of other regions.
  Cinderella is not dressed in the baubles of monster motorways. We are not looking to six-lane highways or bypasses to bypass the bypasses of the 1970s. East Anglia has not caught up with the 1960s and 1970s, and that is the underlying problem confronting people in Middleton. The lack of investment in our road network causes fatal injuries and damages the local economy; moreover, it could undermine the prosperity of our region.
  Middleton is close to King's Lynn, which is the heart of my constituency. It has a large and broadly based manufacturing sector for a town of its size. Road communications are increasingly important factors when many businesses take decisions on expansion and contraction.
  Although road improvements have been promised since the 1970s, they have not arrived. The managing director of a large and important local company said of King's Lynn:
  "The current local road network does not make it. The A47 is slow. It is dangerous and it inhibits commuting. The result costs us money and it costs us high quality people. Our analysis indicates if we were to build today in the UK, it would not be in King's Lynn and road access is the No I reason … the A47 stays as it is, the questions will continue."
  That worries local people. Given the history of Government broken promises on the timing of improvements, we believe that our local economy in East Anglia has already been damaged.
  We know that our ports of East Anglia are being prevented from fulfilling their potential by inadequate road links, and throughout the county—from King's Lynn, through Norwich to Great Yarmouth and Lowestoft—those road links are hurting. Cinderella is hurting. She is not looking for the richness of motorways, just dual carriageways—major arteries of the type that were routinely built in the 1970s. The A47 is obviously such a major artery.
  I did not want to devote my speech to economic issues. This debate was triggered by yet another tragic accident on the A47, almost two weeks ago. The timing of that accident and its seriousness—there was yet another fatality—led me, as the new Member for the constituency, to study the history of the broken promises of a bypass for Middleton.
  In doing so, I have been helped by several people. I have been pleased to have the personal support of Colin Skipper, who, as chairman of the parish council, has written to me at length and helped me to piece together a history of promises stretching back to the 1940s. He was especially helpful because he has campaigned on the issue
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  for more than a decade. Eileen Sheridan, the local councillor, allowed me to piece together newspaper cuttings, which tell a sorry tale.
  The Lynn News, which has campaigned on the issue, has correctly identified the mood of the people. I should be pleased to show the Minister pictures of the accident. We know that we have a new Government who need time to consider things, but we want to ensure that they have before them, as they consider what action to take, the information—
  Dr. Ian Gibson: Does my hon. Friend agree that many accidents occur as holidaymakers return along that road from other parts of the country to the coast—Great Yarmouth, Hunstanton, Cromer and so on—and that the nature of the accidents there has been an increasing problem in the summer months?
  Dr. Turner: My hon. Friend makes a valid point. One problem with our roads that the statistics do not show is the mix of the traffic, in which thundering lorries, caravans and vehicles driven by holidaymakers are mingled.
  Mr. Bob Blizzard: I admit that some of the thundering lorries that pass through Middleton are on their way to or from the port of Lowestoft, in my constituency.
  It is disappointing that not one Opposition Member has deigned to attend the debate and listen to discussion of an important issue in an important part of the country—
  Mr. Deputy Speaker: Interventions must be very, very brief.
  Mr. Blizzard: Thank you. Mr. Deputy Speaker. I just wanted to emphasise the strategic importance of the A47 to my constituency, which suffers from extremely high unemployment. The only possible reason why its unemployment is double or treble that in other parts of the region is the isolation resulting from the lack of adequate road and transport links.
  Dr. Turner: My hon. Friend has made valid points.
  I shall now move on to the history of Middleton, and concentrate on the immediate facts that led me to seek this debate.
  The earliest campaign that I found recorded was mounted in 1946, when the Middleton vicar referred to the need for a bypass for the village. The reason is obvious to any visitor. The A47 cuts through the centre of the village. It divides much of the residential area from the social area. If one wants to go to the pub or the school, one must cross that road.
  Twice a day, young children of all ages must cross that road, down which thunders the traffic on the way to the ports, as my hon. Friend the Member for Norwich, North (Dr. Gibson) said, the caravanners, and the travellers, who are sometimes slightly tired, for the route they travel is not easy, and their attention is not always what it should be. I understand why the people of Middleton wanted a bypass.
  In June 1971, the Government announced that the A47 would be comprehensively improved. I have in my hand a document issued by the Department of the

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  Environment in June 1974. It stated that the bypass was to be built, and asked the villagers which route they wanted it to take. Clearly, at the time of that consultation, the unsuitability of the road and the need for improvements to it were acknowledged. The villagers were told that the bypass would not be built until 1977, however.
  In due course, that promise was delayed time and again, and was ultimately broken. Since then, there have been campaigns from time to time for a bypass to be built—often triggered by the sort of horrific accident that occurred again two weeks ago. One of the worst was in 1991, when another campaign was mounted following the death of the "village Gran", May Key. The vicar was quoted at the time as saying:
  "We had all been thinking about a wedding, yet there we were standing in prayer in the middle of the road waiting for the ambulance and the police to arrive."
  The lady in question had been crossing the road to go to church for her grandson's wedding. She was a lovely Christian lady, and Gran to the whole village.
  In the past 14 months, there have been six fatal accidents in the village. In March 1996, a lorry driver was killed in a head-on crash with a Volvo. In June 1996, two people were killed in a collision between a Sierra and a lorry. In April 1997, two pensioners returning home to the Wirral, possibly from their holidays, were killed when their Fiat Uno collided with a lorry—very possibly from Lowestoft. In June 1997, there was a multiple vehicle crash in which the driver of a Ford Transit was killed. That accident, involving four vehicles—I have the pictures with me—took place yards from the school crossing.
  The villagers find it hard to understand why officials say that our accident statistics are not especially high. That must be because officials gather their statistics for rather longer stretches of road than the immediate environs of the village. Naturally the villagers believe that the number of accidents is wholly unacceptable; and that something must be done soon.
  Three times in the past two weeks, I have visited the village. On the last occasion, I went to see the children arriving at the school. About 40 of them had to cross the road. While I was standing there, a Transit van travelling towards King's Lynn came to a rather sudden stop, because the driver had just spotted a left turn in the centre of the village, which presumably led where he wanted to go. He also had to stop suddenly because a young woman was crossing the road with a pram—so he could not just turn the corner.
  Behind the Transit driver was an eight-axle lorry travelling at least as fast as the speed limit. It had to slam on its brakes, and all the rear wheels locked up. I stood with my heart in my mouth watching the lorry slide towards the Transit van. It was a bright summer's morn—thank goodness for that. I dread to think what would have happened if there had been a spot of rain on the road. The lorry would not have stopped in time, and I would have witness fatality No. 7. The lorry involved in the collision two weeks ago was carrying seven-tonne pipes—not the sort of load we would want to come off in an accident in the middle of a small village.
  I therefore understand the villagers' complaints. They have written to the local media and to Ministers in recent times with a number of important things to say. For instance:
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  "Imagine the fear that goes through your mind as you struggle with a buggy and a walking toddler across such a road, and the dread that a parent has when their 10-year-old goes out to play with their friends who live on the other side of the road."
  Another lady wrote:
  "The crossing patrol lady is there at school times and I must add what a brave lady she is. Nobody else would do it."
  I for one certainly would not.
  I pay tribute this morning to Margaret Rye, who has been doing the job for eleven and a half years, and who takes her life in her hands each time she carries her lollipop sign out in front of those lorries. I am told that people have to wait for 10 minutes, when the traffic is at its heaviest on a Saturday morning in the summer, before being able to cross. In the hands of this lady have been the lives of 40 children every school day for eleven and a half years.
  The Government must take my story into consideration when they conduct their roads review. We have been promised a fresh start. We have a new Government, so let us have a new look at the situation. Let us forget the history of the 1970s, and get it right in the 1990s, so that the bypass can be built, not talked about, in the next millennium.
  By all means let Ministers take whatever time they need. Today I seek an assurance that the Middleton bypass, which was deleted altogether from the roads programme last year, will be reconsidered; and that Ministers will keep a fresh and open mind. In that way, Cinderella will eventually get to the ball clad in shoes that fit her, even if they are not in the highest fashion.
  I know that we may have to wait a number of years. I do not want to hold out to the villagers a timetable which I know to be impossible. There will have to be time for planning, consultations and doing the job properly—we shall have to wait several more years. But the accident problem cannot wait.
  I know that officials of the Highways Agency have expressed a willingness to look again at ways in which the safety of the villagers and of those who drive through their village can be enhanced. I trust that the Minister will ensure that that is done with sensible speed and care. Consultation will be required, but the outcome must be action, not words. I do not want ever to have to come back to this Chamber again following another tragic accident of the type which, two weeks ago, led me to seek this debate.
  I thank the House for its patience, and I hope that the Minister will be able to acknowledge the two simple requests that I have made.
  12.47 pm
  The Minister for Transport in London (Ms Glenda Jackson): I congratulate my hon. Friend the Member for North-West Norfolk (Dr. Turner) on securing this debate, although I am sure the whole House will sympathise with the concerns that occasioned his seeking it. He has dealt in some depth with the problems faced by his constituents in the village of Middleton on the A47 trunk road.
  The A47 is a significant inter-regional route between the midlands and East Anglia, highlighted by its classification as part of the trans-European road network connecting the heart of England to the east coast ports. At King's Lynn several major routes converge: the Al7 from the north and the A47 from the midlands; and, at the

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  notorious Hardwick roundabout, the A149 to Hunstanton, the A47 to Norwich and the A10 to Cambridge and London.
  The village of Middleton is a few miles east of the Hardwick roundabout on the A47 between King's Lynn and Swaffham. Clearly, a route linking Peterborough, Wisbech, King's Lynn, Norwich and Great Yarmouth is of considerable significance to the region. Many consider that high unemployment and poor economic prospects are at least partly due to the inadequate nature of the A47 as a major route serving a large, relatively remote area. In a recent Adjournment debate on transport in his constituency, my hon. Friend the Member for Waveney (Mr. Blizzard) made that very point, as he did again today.
  Considerable progress has been made in improving the A47 over the past four years. Nine road schemes, including six bypasses, have been opened. Of particular significance is the £80 million Norwich southern bypass, and, most recently in 1996, the Walpole highway and Tilney High End bypass opened in the constituency of my hon. Friend the Member for North-West Norfolk. More than £150 million has been invested in A47 improvements in Cambridgeshire and Norfolk in the past 10 years. That is considerable investment by my Department, indicating the importance attached to the route.
  None the less, as my hon. Friend defined in historic detail, those seeking major improvements to the A47 had their hopes raised and then dashed by the previous Administration. In 1989, "Roads for Prosperity" announced a major expansion of the road-building programme, including full dualling of the A47, but, before most of those projects even reached the public consultation stage, reviews in 1994, 1995 and 1996 reduced the A47 programme to just two schemes: the Hardwick flyover and the Thorney bypass.
  The process for the people of Middleton was made even worse by the two-stage cuts, in which the major dual carriageway improvement was replaced by a local Middleton and East Winch bypass, to which my hon. Friend referred frequently, only for that scheme to be withdrawn two years later. I well understand the frustration of the local community, expressed on their behalf by my hon. Friend.
  On 19 June, my right hon. Friend the Minister of Transport announced the Government's proposals for a thorough review of the national road programme. Its objective will be to determine what role roads should play in an integrated transport policy. Unlike the position under the previous Administration, this review will not take place behind closed doors, looking on an ad hoc basis at what schemes could be added or deleted from any proposed programme.
  We shall consult widely between July and October, and we intend to announce the results in the spring, thus giving the opportunity for communities, local authorities, businesses and transport and environmental groups to give careful thought to the role of the trunk road network and the type of improvements that should be made.
  "East Anglia—Roads to Prosperity" and the A47 Alliance have already consistently lobbied for improvements to the A47, and will make a major contribution to the review. They see an improved A47 doing for the north of East Anglia what the A14 has done
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  for the south. However, others consider that Norfolk's central attraction is not only its countryside, coast and broads but its remoteness from major roads and motorways—[Laughter.] My hon. Friend the Member for Waveney laughs. Given his perspective, I well understand his mirth.
  One of the key issues from the review will be balancing the demands for trunk road improvements to aid economic development and regeneration with the pressures for extra environmental bypasses to communities such as Middleton. Resources for trunk roads will continue to be limited, and we will also look at the overall balance of transport spending under all headings. We need to find a co-ordinated approach to the provision of transport infrastructure that is sustainable in the long term.
  My hon. Friend has already described the considerable worries of his constituents about the environmental problems caused by heavy traffic in Middleton and the even greater concerns—which he described in graphic and disturbing detail—about road safety following the recent series of fatal accidents. My hon. Friend the Member for Norwich, North (Dr. Gibson) highlighted the fact that those concerns are not exclusive to Middleton, given Norfolk's attractions for holiday makers, and the contingent increase in traffic on its roads.
  The constituents of my hon. Friend the Member for North-West Norfolk are clear that a bypass is the only answer that can solve their problems. However, none of the recent schemes even reached public consultation stage, so there is no prospect of a bypass being built in the next few years, even if such a scheme were to be included in the Government's new trunk road programme.
  Middleton lies on the 16-mile Hardwick-roundabout-to-Swaffham section of the A47. A local bypass for the village of Narborough opened in 1992, but the remainder of the road is unimproved single carriageway. Middleton lies transversely across the trunk road, with a built-up frontage of only 100 yards on the A47. The 40 mph speed limit in Middleton is considered appropriate, and is generally observed, following improvements to signing.
  Traffic flows on that section of A47 are some 11,000 to 12,000 vehicles a day, with some 15 per cent. heavy goods vehicles. The A47 generally is renowned for delays behind heavy goods and agricultural vehicles. The accident rate over the whole section is typical for a rural A road of that type. However, that is of no comfort to my hon. Friend or his constituents. He has described the four fatal accidents on the A47 in Middleton, which occurred in the past two years. There appears to be no identifiable problem with the road that is causing those accidents.
  The Government and the Highways Agency regard the safety of all road users as one of their highest priorities, and the agency monitors all accidents on the network to see if there are clusters where changes to signing, road layout or other safety measures could make the road safer. Although no local schemes are proposed on that section of A47 in 1997–8, the agency will continue to monitor the A47 closely to determine whether any effective improvements can be identified and brought forward in the future.
  Over recent years, the Department has investigated safety in Middleton several times, and has implemented measures that have been identified as a result. The 40 mph

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  speed limit has been extended twice; signing and markings have been improved; and kerbing has been raised. The 40 mph limit is generally complied with.
  In January, officials from the Highways Agency met the parish council, police and others on site for an in-depth discussion about possible further measures and to examine ideas proposed by the parish council. It was agreed that the school crossing patrol—monitored, as my hon. Friend said, by a heroine—was located at the safest place to cross the A47, and a list of possible improvements, including improved visibility, flashing speed warning lights, village approach signs, textured surfaces, traffic lights, a footbridge and speed cameras, was considered. The village occupies a very short section of the A47, with properties adjacent to both sides, which limits the possibilities for improvement.
  Although no improvements are currently proposed, the Highways Agency would be happy to have further discussions with the parish council about its concerns, and to look again at further ideas to improve safety.
  My hon. Friend expressed the concerns of his constituents in Middleton about the environmental and safety problems caused by heavy traffic on the A47 through their village. The Government have embarked on a thorough review of the trunk road programme, and are consulting widely to ensure that the new programme makes a valuable contribution towards our integrated transport policy.
  I can give no promises about the reinstatement of a bypass for Middleton and East Winch, although, as my hon. Friend is well aware, the Government have a particularly open mind. I can confirm, however, that the Highways Agency will continue to examine further safety schemes and monitor the situation on the A47, and to discuss ideas with the local community, so that, as my hon. Friend said, he never has to return to this House to give details of yet another fatal accident.

  Freedom of Information
  12.58 pm
  Mr. Norman Baker: I am delighted to have the opportunity to raise the topic of freedom of information in the first debate on the subject in the new Parliament. It is an extremely important matter—the foundation on which the rest of our democracy is built.
  Governments have so much power over ordinary people's lives. They have the wealth of the civil service, the expertise of legislators, access to whatever information they want, a public budget to sell their ideas and guaranteed exposure in the media—all to ensure that Britain is painted as they wish it to be.
  What is the counter-balance to all that power? There is one fundamental prerequisite: access to information—the opportunity for individuals to check what Governments are telling them, to tap into alternative sources of information and to weigh up the arguments. How can ordinary people challenge the Government if they cannot find out what the Government are doing? The press cannot function properly without information, not even Matthew Parris, whom I thank for his surprising level of interest in my activities and to whom I apologise for the fact that I am again in the House representing my constituents rather than being wherever he thinks a Member of Parliament should be.
  Over the years, successive Governments in this country have found attraction in shadows and solace in darkness. In many ways we have a less open society than anywhere else in the west. In the United Kingdom the presumption has been that everything should be secret unless a reason is produced for making it public, whereas the presumption should be that everything is open unless someone decides that it needs to be secret.
  I am not advocating the publication of every Government document. Of course some matters must remain secret—sensitive diplomatic correspondence, matters affecting national security, much advice to Ministers—but surely we can open things up without bringing the house crashing down?
  Some of the matters held as closed files are beyond belief. I refer hon. Members to an article in the Observer a while back, entitled "Secrets the state dare not tell", which lists some of the files of which we are allowed to know the title but not the contents. They include the following matters of national security: taxi drivers carrying fares without depressing flag 1935–1952; police fees for surgeons 1926–1953; dangerous driving conditions at humpback bridge in Beckenham road, London 1935–1951.
  That article is now a few years old, but I have seen no evidence that the previous Government did anything to speed up the release of files, so I would not be surprised if those were still closed. Perhaps the Minister could find out. I find it difficult to believe that there was ever anything in those files that merited them being closed, but the presumption for secrecy meant that they were marked as closed, and remain so to this day for all I know.
  Then there are the parliamentary questions to which I have received answers in respect of records held but not released for public inspection. The Public Record Office tells me that the oldest document it holds dates from 1873 on the grounds of commercial sensitivity. It is difficult to

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  imagine how that can be justified. As those records are land records, I would argue that who owns what should be public anyway, as I believe it is in Scotland, although I stand to be corrected. Surely any values attached to the transactions are now irrelevant.
  The Home Office holds files going back to 1876, as another parliamentary answer this week revealed. To his credit, the Home Secretary promised in his answer to review matters since I had drawn them to his attention.
  Other examples of information being concealed are more serious. Why has so much manufacturers' data on pesticides been kept secret in the UK on grounds of commercial sensitivity, when such information is freely available in the United States? When tests were carried out on cows with the artificial hormone BST, the milk from those cows was collected and sold, and we, the public, were not allowed to know from which farms the milk had come. Why were we not told until recently? I acknowledge a step forward by the new Government, who revealed that radioactive material had regularly been dumped in the sea between Scotland and Ireland.
  Mr. Paul Keetch: Does my hon. Friend agree that the Labour party was rightly critical of the previous Administration for hiding behind the old lies that information was not centrally held and could be found only at disproportionate cost? Is he aware that the new Government are trotting out the same excuses? In answer to me yesterday at column 408 of Hansard on specified bovine material, the same excuses were used. If we are to have true freedom of information, the Government must be prepared to find out the information and make it available.
  Mr. Baker: My hon. Friend is right. Some of the answers that we have received so far have been in the same furrow as answers from the previous Government. I hope that that is a reflection of the fact that Ministers have yet to get hold of their brief. I shall cite further instances.
  More controversially, we must try to be more open about matters that have been shrouded in secrecy. Until recently, Governments would not even admit that MI5 and MI6 existed, but Stella Rimington, the first publicly named head of MI5, showed that light can be shed even on that sensitive area without compromising national security. I hope that the Government will build on the example she set in that and similar areas.
  I shall be interested to see, for example, the responses that I get next week from the Secretary of State for Defence to the questions that I have tabled about RAF Menwith Hill. We are entitled to know the basis of the arrangement between the Americans and ourselves for that base, and to an assurance that all is within the law and in the British national interest. Beyond that, there must be secrecy for operational matters, although I hope that even those will be the subject of public consideration in future.
  I raise the matter in general because I believe that it is important, but there is another reason why today's debate is opportune. We must try to establish clearly what the Government's position is. At present it is not clear, and I shall explain why.
  The Labour party has long been committed to a freedom of information Act, and produced a Green Paper on the subject as long ago as 1979. We have been told
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  that such an Act is crucial, yet no such Bill appeared in the list of legislation for this Parliament. Why not? When I asked the Prime Minister, he told me in a written answer that he wanted to consult. Elsewhere I have heard it said that no Bill is ready. What nonsense that is.
  A great deal of work has been done on potential legislation in recent years. There are Bills waiting to be plucked off the shelf, such as the Right to Know Bill introduced by a Labour Member in the previous Parliament. In January 1991, the then shadow Home Secretary, Roy Hattersley, said that freedom of information
  "is not only suitable for early enactment. It is ready for early enactment. If a Labour Government was elected… I would be able to send the headings of a Bill to a parliamentary draughtsman on the following day.'''—[Official Report, 14 May 1997; Vol. 294, c. 106.]
  In the interests of open government, I should reveal that my source for that quotation is the excellent speech made by the hon. Member for Cynon Valley (Ann Clwyd) on the first day of debate on the Queen's Speech. It was a privilege to follow such a contribution when I made my maiden speech to the House that day. I cannot understand why the hon. Lady is not in the Cabinet—or perhaps I can.
  As there are no drafting problems, do the Government really need to consult further? Opinion polls clearly show a significant majority for a freedom of information measure, and the Government have a mandate for it. It is not necessary to delay any further for technical or democratic reasons, so why was such a Bill missing from the first Queen's Speech?
  I believe that the Government are split between those who are clearly committed to such a measure and would happily introduce it tomorrow—I include the Chancellor of the Duchy of Lancaster, the right hon. Member for South Shields (Dr. Clark), in that list—and those who are more reluctant and who perhaps see benefits in, and less discomfort from, keeping things much as they have been. I suspect that that group includes some people who might be classed as the inner circle.
  If I am wrong in my analysis, I hope that the Parliamentary Secretary, Office of Public Service, the hon. Member for Liverpool, Walton (Mr. Kilfoyle), will put me right. In that case, he must come up with a much more convincing explanation for the absence of a freedom of information Bill from the Government's first legislative programme. There has been no convincing explanation to date.
  The Government must examine the practices that they have introduced and decide whether they are compatible with a culture of openness. How, for example, does the role of the Minister without Portfolio, the hon. Member for Hartlepool (Mr. Mandelson), sit with the professions of openness? He is clearly a powerful figure in the Labour party and in the Government. His fingerprints are everywhere, but in what way is he accountable? Through written questions, I was told in a written parliamentary answer from the Prime Minister.
  Since then I have asked the Minister without Portfolio a number of written questions, from which I have learnt virtually nothing about what he does. He refuses to list meetings that he has attended. So far as I am aware, he has not spoken in the House since the election, despite his central position. I dropped him a note last week informing him that I intended to refer to him in this debate and that I should be happy to give way to him, should he turn up. He has not done so.

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  Is the Minister without Portfolio responsible for the millennium dome, or is the Secretary of State for National Heritage responsible? On 18 June I asked the Prime Minister for clarification of their respective roles, with a named date for response of 23 June. So far, I have received only a holding reply.
  To give credit where it is due, the Minister without Portfolio provided me with a written answer earlier this week, stating that he would answer oral questions on the millennium exhibition—or experience, as I suppose we must now call it. I welcome that, but it deals only with the most visible issue.
  What is the role of the Minister without Portfolio in determining the future of the royal yacht? He tells me in parliamentary answers that he has no responsibility, but an article in The Guardian dated 26 June states that the British Exporters Association has had "favourable noises" from him. What exactly is his role in that? My suspicion is that he is sorting out policies behind closed doors with the Prime Minister, and that Ministers have been put up in public to defend those decisions. I hope that the Minister can tell me that I am wrong. If I am not, the present arrangements are not in the spirit of a culture of open government and are not consistent with accountability to the House.
  Then there are the responses that I have received to written parliamentary questions about public records. I asked each Department for information about documents that were passed to the Public Record Office. Some answers, such as that from the Foreign Secretary, were helpful. Others told me that the Public Records Act 1958 does not require information to be kept in the form requested and that to do so would "incur disproportionate cost". That famous phrase has been used over the years to avoid answering questions, and although it is sometimes justified, it is often abused.
  That was a curious response to receive from the Department of Trade and Industry as my question was an exact replica—apart from the change of year—of that asked by my hon. Friend the Member for Southport (Mr. Fearn) on 2 July 1990. On that occasion, the question elicited a full response, and every category that my hon. Friend specified was given a percentage correct to one decimal place. I subsequently took up the matter with the Consumer Affairs Minister, who has been most helpful and who provided the information that I requested in a very full letter. However, that means that the official answer I was given—namely, that the information that I sought was not available and could be provided only at disproportionate cost—was clearly incorrect. In this case, the information provided originally by the present Government was of a lesser quality than that provided by the Conservative Government, which is no cause for self-congratulation on the Government Benches.
  The Minister will undoubtedly tell me about the proposals that he intends to publish shortly. They will be welcome if the proposals to allow access to information are not couched in terms which enable the public sector—I hope that the Bill will apply to the whole of the public sector, including quangos—to cite exemptions. I hope, too, that the Government will not impose prohibitively expensive charges for gaining access to information. I ask the Minister to respond to those points.
  I acknowledge the positive way in which the Chancellor of the Duchy of Lancaster has answered my questions, both on the Floor of the House and in written
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  answers. I acknowledge, too, his positive response in the past few days to my question about his intentions to open up the existing code of practice on access to Government information. I remain hopeful.
  The problem is that, although we have had many expressions of support from Ministers, we have seen no concrete action to date. I appreciate that these are early days, but a freedom of information Bill could have been introduced this Session. I ask the Minister to provide a convincing explanation as to why that is missing from the first year of Government legislation. The longer we go without a freedom of information Bill, the more attracted to secrecy Ministers will become. They will find it easier not to release information, and we shall be back in the trough created by the previous Government.
  The Minister will know that I have introduced the Public Records (Amendment) Bill, which is due for Second Reading on 30 January 1998. It aims to reduce the 30-year rule to 20 years and to reduce the rule for royal documents from 100 to 20 years. That is a modest measure and in line with practice in other countries.
  I offer today to work with the Minister and the Government to create sensible, workable legislation—taking account of costs and other potential problems that he and his colleagues may envisage—in an attempt to make progress in this area. I am willing to attend meetings and to co-operate completely with the Government if the Minister wishes to make progress with the legislation in the House.
  Will the Minister take up my offer so that that legislation may proceed in advance of any White Paper recommendations? The current parliamentary timetable is very full, and the White Paper will not see any legislation—even putative legislation—before next April, May or June. Will the Minister accept my offer and introduce legislation so that the Government may restore their credentials in the area of freedom of information? That would go some way towards reversing the unfortunate impression created in some quarters that part of the Government is not enthusiastic about freedom of information.
  I hope that the Minister will not instruct his colleagues to block the Bill, citing spurious reasons for so doing. The Minister can have no sensible reasons for blocking my Bill when I have offered to work with him and to incorporate Government proposals. Will the Minister work with me on that legislation, and will the real Labour party, metaphorically, stand up and be counted?
  1.13 pm
  The Parliamentary Secretary, Office of Public Service (Mr. Peter Kilfoyle): This debate has been short, but none the less interesting and informative. I must agree with the hon. Member for Lewes (Mr. Baker) about Matthew Parris's article in The Times. The hon. Gentleman probably took exception to the valediction that a bore is born; I think that he will agree that a bore is made and not born. I pay credit to the hon. Gentleman and to the hon. Member for Hereford (Mr. Keetch) for their contributions. The hon. Member for Lewes has taken the opportunity to reflect on the considerable importance of freedom of information, and I know that many hon. Members—including me—take a strong interest in that subject.
  However, an issue of timing is involved. The hon. Gentleman has initiated this debate, and he has asked numerous questions about freedom of information and

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  other subjects in the House. Together with my hon. Friend the Member for Cynon Valley (Ann Clwyd) and the hon. Member for Aldridge-Brownhills (Mr. Shepherd), he recently presented a Private Member's Bill on public records. The hon. Gentleman misses no opportunity to let the House know the depth of his undoubtedly genuine and deeply felt concerns about those issues.
  I wonder, however, whether the hon. Gentleman has listened to a number of important points that my right hon. Friend the Chancellor of the Duchy of Lancaster has made very clearly both within and outside Parliament in the past few weeks. The hon. Gentleman paid credit to my right hon. Friend for assisting the hon. Gentleman's cause. My right hon. Friend has said clearly that the Government take freedom of information very seriously. As everyone knows, we are pledged, through our manifesto, to introducing a freedom of information Bill. The Gracious Speech made it clear that we would begin to implement that commitment through an early White Paper, setting out our proposals for FOI legislation.
  My right hon. Friend has been at pains to stress time and again that consultation is the essence of our approach. First, we will issue the White Paper very shortly—it remains my right hon. Friend's intention to do this before the House rises in a few weeks' time. The White Paper will be wide ranging—it will certainly cover public records and other issues that have been mentioned today—and will initiate a period of consultation. A few months later—probably at the beginning of next year—we shall publish a draft Bill, which is part of a significant move towards more open government. That will then lead to a further period of consultation before any legislation is introduced.
  The hon. Gentleman offered to consult with the Government in introducing the freedom of information measure. I assure the hon. Gentleman that he, other hon. Members and the wider public will have every opportunity to make their views known during the legislative process. Naturally, the freedom of information Bill, in its final draft form, will be debated extensively by the House—and no doubt in the other place. Perhaps the hon. Member for Lewes will serve on the Standing Committee that considers the Bill. I am sure that he will take part in the forthcoming debates, and my right hon. Friend and I will look forward to debating the important issues with him at that stage.
  Under the exceptionally open and consultative approach that the Government will take to FOI proposals as they develop, the hon. Member will have ample opportunity—both in the light of the White Paper and on the basis of the drafted legislation—to make clear his points or areas of concern and to engage the Government in discussions about them. I hope, therefore, that the House and the hon. Member will understand my concern that we must be careful not to embark on the consultative process prematurely, and not to get immersed in debate too soon.
  That is partly because we do not yet have the advantage of a published White Paper—let alone a published draft Bill—on which to structure our thoughts, and partly because the Government have embarked on a major exercise in working towards an important and very early
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  statement on freedom of Information. It is essential that we do not delay that process by trying to thrash out all the details beforehand.
  None the less, the hon. Member has chosen to raise some specific points in the House today, and I should like to respond to them.
  Mr. Robert Maclennan: I am grateful to the Minister for giving way. I am interested in what he has to say. Before he moves on to particular points, will he clarify the status of the White Paper? He has made it sound as though it is not so much a statement of Government conclusions as a discussion paper on which the Government might be ready to make changes if persuaded that those changes were meritorious.
  Mr. Kilfoyle: I am sure that my right hon. Friend fully intends the process to reflect the opinions expressed in the House and beyond on the substance of the White Paper. It would be entirely in keeping with the Government's intention to be open and consultative in their approach if that is the line that is taken.
  The hon. Member for Lewes referred to previous files. Admittedly, those references were somewhat dated. I assure him that I shall do everything that I possibly can to investigate the specific files that he mentioned and will come back to him. We must be careful, however, not to overlap with the debate that will take place on the contents of the White Paper.
  The hon. Gentleman said that he was not clear about the Government's position. I hope shortly to be able to make absolutely clear exactly what the process will be and where we stand in terms of openness and consultation. The hon. Gentleman also referred to the Right to Know Bill promoted by my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher). The hon. Gentleman said that there were no drafting problems. It is my recollection, however, that it contained about 83 clauses, which shows how complex the subject is. Indeed, so intent are we on getting this right that we are committed to the extra consultation to which I have referred.
  Many references were made to the Minister without Portfolio, and I am sure that he will answer for himself. As for my hon. Friend's millennium dome responsibilities, the hon. Gentleman has already had an adequate answer. My hon. Friend will be answering oral as well as written questions. When the hon. Gentleman reads accounts of what my hon. Friend may or may not think about issues that are far beyond his portfolio. I remind him that he should not, as anybody who has become a Member of Parliament will know, believe everything that is written in newspapers.
  The hon. Gentleman spoke at some length about public records. The Government agree with him that that is an important aspect of openness. My right hon. Friend the Chancellor of the Duchy of Lancaster has made it clear that our White Paper will cover that area. He has also informed the House that he hopes to see a considerable extension in the release of public records under the 30-year rule. That remains the case.
  The hon. Gentleman proposed reductions in the 30-year rule. Like the rest of the House, he will have to wait until the White Paper is published before considering what we have to say on this specific issue. Believe me, I am as

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  keen as anyone to avoid unnecessary secrecy in our public records system. When I was a Back Bencher, I tried to elicit information in the same way as the hon. Gentleman, and I know how difficult it can be. We have to remember, however, that when holding an estimated 7 billion pieces of paper—not to mention other types of record—in files that would stretch approximately 900 miles, and with about a mile of documents being released by the Public Record Office each year, major and sudden changes affecting the whole system of record review and storage are bound to involve a significant cost in time and money.
  It may interest the hon. Gentleman to know, however, given his evident view that the openness of the system is inadequate—there is much sympathy with that view on both sides of the House—that over the past five years, under the Conservative Government, more than 77,500 records held both within and beyond the 30-year period were released as a result of the review efforts of Departments and the Public Record Office. I can assure him that the Labour Government will ensure that the impetus towards openness is at least maintained if not increased, that public access to public records is improved, and that our White Paper will make proposals on that.
  I hope that I have made it reasonably clear, not least to the hon. Member for Lewes, that the Government believe in openness and that in our first weeks in office we are working steadily to achieve that aim. Many of the hon. Gentleman's representations were a reflection on previous Governments more than on the present Government, but we are determined to get this absolutely right, in an open and transparent way.
  The House should consider, for example, the recently announced decision of my right hon. Friend the Secretary of State for Health that all national health service trusts will be required to hold their meetings in public. That is the kind of development that we need after the legacy of the past 18 years: greater openness in our quangos and other public bodies. Freedom of information will meld
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  very much with the intention of the Chancellor of the Duchy of Lancaster to produce, later this year, a White Paper on better government. It will be an important element of that.
  Then there are the actions of my right hon. Friend the President of the Board of Trade, who has published for the first time an unprecedented and full explanation of why the Government disagreed with the advice of the Monopolies and Mergers Commission on the Bass, Carlsberg and Tetley merger. There is also the work of my right hon. Friends the Chancellor of the Duchy of Lancaster and the Minister of Agriculture, Fisheries and Food in preparing the ground for the setting up a food standards agency to provide substantially more open and transparent arrangements for maintaining public confidence in relation to what we eat. Those are matters of vital importance to consumers.
  I have no doubt that the Chancellor of the Duchy of Lancaster's White Paper on better government will make further important proposals on opening up our public life to the examination and scrutiny that is so important to ensure proper accountability to the House and to the nation as a whole.
  Finally, I refer again to our forthcoming White Paper on freedom of information, which will set out in detail how this Government, unlike any of our predecessors, are prepared to give a statutory right of access to every individual or organisation wishing to use it. That is evidence of our commitment to freedom of information and to open government, and I accordingly commend it to the House.
  1.26 pm
  Sitting suspended.
  1.30 pm
  Sitting resumed.

  GCSE Results (Stoke-on-Trent)
  1.30 pm
  Ms Joan Walley: It gives me great pleasure to raise on the Adjournment an issue of such importance for my constituency. I welcome most warmly the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Newport, East (Mr. Howarth), to his new ministerial position. I am pleased that he is in his place for the debate.
  Education is a burning issue in Stoke-on-Trent and in north Staffordshire. I, too, want to make education a crusade in the area that I represent. We must ensure during this debate that we put on the map the urgent education needs of Stoke-on-Trent and Staffordshire. Against that background, I make no apology for shouting loud and clear about what is needed.
  During the tenure of the previous Government, we have seen the few, not the many, receive resources for education provision. The few, not the many, succeeded in securing fantastic educational achievement, while the rest of us were left to do the very best we could against all the odds.
  We have heard much talk about failing schools, but it was the previous Government who failed us. More than anything else, I want now to press the case for fair education funding, and especially in Stoke-on-Trent and north Staffordshire.
  Why do we want fair funding? We want it so that we might do the very best for our children. All parents want to do that, and that is the feeling of all parents in my constituency. I feel that also, speaking as a parent. That is why the debate on GCSE achievement is so important.
  If we are to see any achievement, we need to have targets. We need to know where we are going and what resources are available. We need the good will of all those who are involved in making the necessary resources available. Above all else, we need the active co-operation of the Government. That is why it is so crucial that this debate is taking place.
  We have, of course, the active support of two authorities, the new local education authority of Stoke-on-Trent, and the local education authority for Staffordshire as a whole. I can tell my hon. Friend the Minister, too, that all parents, governors and teachers, along with the organisation that will seek fairer funding for schools, want to be able to set targets, so that we can secure the achievements that are needed in the area.
  Every school that serves its local community in meeting the needs of that community must have the resources properly to do its job. That is what I want to achieve from today's debate. I want an active partnership with the new Government. Ever since my right hon. Friend the Secretary of State for Education and Employment visited the area in 1996 and saw for himself what was needed, my colleagues and I in Stoke-on-Trent and north Staffordshire have sought to establish such a partnership. It is crucial that we build on my right hon. Friend's visit in 1996.
  I urge my right hon. Friend and the Government as a whole to review the standard spending assessment. The SSA is one of the most dreadful pieces of formula that I have ever come across, because it has siphoned funds from certain areas to others and left the area that I represent with huge areas of education spending deficit—more of that in a moment.
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  I urge the Government also to concentrate the £83 million that has been announced for education in the Budget on the areas that need it most. There are huge discrepancies in education resources and it is crucial that we concentrate on the areas that have done worst, at least to bring them up towards the level from which other areas start.
  As a result of the debate, I want to get bids in under the schools renewal challenge fund round, so that my area can benefit. At the same time, I have a great deal of difficulty with the bidding culture per se. It always means that some areas get left out. If, however, we could achieve a fair SSA and bring funds into my area that it has not received in past years, I would wish to use the next round of the SRCF to increase achievement in Stoke-on-Trent.
  As I said during questions on the statement when the White Paper on raising education standards was published, I want an area action zone for Stoke-on-Trent. That could make an enormous difference. It could enable a huge number of schools to work together in partnership. In my constituency, it could build on the Two Towns project, which has already done so much to raise standards, and could include other local schools, such as primary schools and nurseries. We could all benefit from that experience.
  Not least, I want a visit, if not by my hon. Friend the Minister before the end of the present term, at least by an official from the Department, so that he or she can see what is needed to get Stoke-on-Trent and north Staffordshire off to a good start. I want the visit to take place before the end of the term, because there is a real sense of urgency. Children have only one chance at school. If they do not get good GCSE results and do not do well in their standard assessment tasks; if they do not do well at primary school because their literacy levels are so far behind those of others; or if there is not proper early learning, from which all education begins, how can children in that position do well? That is why there is a real sense of urgency.
  I hope that the Minister will give me an undertaking that he will do his level best to ensure that someone from the Department visits the local education authorities in my area to see what is needed. I would want that official to visit schools in my constituency with me. I challenge anyone to tell me that the schools are not doing the very best they can in the circumstances in which they are operating.
  Let us consider examination results in Stoke-on-Trent and certainly in Staffordshire. Excellent results are achieved in part of my constituency. There are excellent results in another part but, of course, everything is relative. I am slightly hesitant about mentioning results and naming schools, because we should not judge everything by results alone. We must, however, consider where we start from, and the starting point is low levels of achievement.
  In Stoke-on-Trent, North we have above-average results in Endon and St. Margaret ward. In LEA-maintained schools in the city, results vary between 21 and 29 per cent. for five GCSEs at grades A to C. That is quite good progress in the city, given the starting baseline. When a comparison is made, it is clear that there has been a tremendous improvement over the past two or three years. At the same time, however, we have an

  913
  average GCSE achievement rate of 29 per cent., compared with 44 per cent. for all pupils in Staffordshire. The national average is even higher than 44 per cent.
  That is where I rest my case. We are not doing our best by the young people in my area if we cannot improve their GCSE attainments while at the same time improving all their education opportunities right the way through school. That must be the starting point. It is not what I would like it to be, for I would wish it to be much better. However, I recognise that in reaching the present level of achievement, our teachers, staff and governors have worked round the clock. They have done what virtually no one could have been expected to do in getting examination results as high as they are.
  There was significant improvement in Stoke-on-Trent between 1994 and 1996. That shows that our teachers, schools and children are working extremely hard. The Two Towns project has made an enormous difference, and I want all schools in my constituency to learn from it.
  Those schools are in a deprived area. That is shown by the percentage of free school meals that are taken. The National Consortium for Examination Results has shown the link between performance at GCSE and free meal entitlement of pupils, and in our area there is a large take-up of free school meals. Moreover, the city's cognitive ability scores for year seven show that children are at a disadvantage. Attendance at libraries is low, and the chronological reading age of children going to secondary school at year seven is lower than it should be—in one school that applies to 159 children out of 270.
  The standard spending assessment for Staffordshire is unfair and must be reviewed, because schools have received much less money. Primary funding for pupils in Stoke-on-Trent is £68 per child per school, which is 3.6 per cent. below the national average, and funding for secondary schools is £78 per child per school less. Funding below the national average in one year is bad enough, but when it is below average year on year, as it was under the previous Government, there is a huge cumulative effect. As a result, our larger secondary schools could be as much as £0.25 million worse off in any one year, and that figure builds up over the years.
  The cumulative effect of underfunding goes right the way through early learning, primary and secondary school funding. Many of our school buildings are in a dreadful state of repair. The chief education officer for Stoke-on-Trent wrote to me before the debate. He said:
  "We are expecting our children to raise their eyes to the stars, when in terms of their educational environment many of them have to live in the gutter.?
  That is not an insult to our schools and our pupils. Because of the neglect and disrepair that we have inherited, we have our work cut out to look to the stars, set our sights high and aim for the best achievement by all our children.
  Teachers are actually doing the building work at Jackfields nursery school, so that we can set our sights on achievement in early learning. When the school at Ball Green was closed down, Holden Lane school was promised a refurbishment programme to accommodate the influx of children. That school was top of the old county council's list of urgent repair works and refurbishment before Stoke-on-Trent became a unitary authority, and it is still top of the list. We are still no further forward in getting the money for that essential work to be carried out.
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  All our schools require money for refurbishment, early learning, lifelong learning and sports facilities, and they want to maximise the money available from the lottery and from capital challenge. They want to make a concerted effort to obtain funding. I urge the Minister to ensure that the £83 million goes where it is most needed.
  Against the background of neglect and deprivation, Stoke-on-Trent schools have achieved miracles. I mentioned the Two Towns project. I should like to pay tribute to all the teachers at Haywood high school, James Brindley high school and Brownhills high school for their hard work. In 1991, about 4 per cent. of children in those schools achieved five grade A to C GCSEs: that figure is now more than 20 per cent. That shows what we can do when we have the resources. In 1991, 77 per cent. of children took GCSEs, and now the GCSE entry figure is 100 per cent. That does not come cheap: it costs money. The staying-on rate was 20 per cent., and now it is 50 per cent. We have doubled our achievement levels. We should shout loud and clear about those achievements.
  Teachers have said to me that in the coming year as many as four staff members in a school will have to leave because of a lack of funding. They believe that the momentum of achievement cannot be sustained without extra resources. I welcome the White Paper, because it will help us to maintain the momentum. I challenge everyone to take up this important issue.
  I am aware that my time is running out, and I want the Minister to be able to respond to all the points that I have made. But I just want to mention an important event that is taking place today in my constituency. The pupils at Sneyd Green primary school are having their annual prize-giving day. I was to hand out the prizes, but it was not possible for me to rush up to Stoke-on-Trent by train and share this wonderful day with them, and then rush back. However, perhaps my time is better spent convincing the Minister that the prize we want from the new Labour Government is to have their full, undivided attention for educational need in Stoke-on-Trent.
  We should be proud of our achievements, and should give our teachers the support that they need to do their best for the children whom I represent. I am grateful for the opportunity to raise this burning issue. It will not go away, and neither will I. I look forward to working with the Minister to get something done about education in Stoke-on-Trent.
  1.46 pm
  The Parliamentary Under-Secretary of State for Education and Employment (Mr. Alan Howarth): I warmly congratulate my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) on securing the debate, and on making the case for her constituents with eloquence, passion and depth of knowledge, and with the commitment that her constituents appreciate and all hon. Members greatly respect.
  Education is central to the Government's mission, and I am extremely happy to respond to my hon. Friend. The purposes that she expressed are our purposes, and we want them to be realised in her constituency and across the country. The timing of the debate is appropriate, given the publication on Monday of our White Paper "Excellence in Schools".
  I assure my hon. Friend that I shall personally bring her concerns to the attention of the Secretary of State. As she mentioned, my right hon. Friend visited her area, and he

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  will want to be kept closely informed. He is anxious that his Department and his ministerial colleagues should respond to her as constructively and effectively as possible. Her concerns are on the map, to use her phrase.
  On Monday, my hon. Friend asked my right hon. Friend a question after his statement, causing him, as he said, to twinkle. He will continue to beam his friendly concern in her direction. The opportunity that he had to engage in discussion with teachers in her constituency was part of the consultation process that we want to maintain. Without that consultation and without a dialogue with teachers, we shall not develop the required policies, but with their assistance, we shall.
  As my hon. Friend knows better than any of us, Stoke-on-Trent has suffered from the decline in traditional manufacturing industries, upon which the area had relied economically for a long time. The schools sector has had to bear an appreciable brunt of the wider economic difficulties. Many schools in her constituency, particularly in the primary sector, date back to the 19th century, and are not as well equipped as schools elsewhere to deliver the curriculum.
  As my hon. Friend told the House, GCSE results—although excellent in some local schools—are, across the local education authority area, significantly lower than the overall average in England. In 1996, in five of the seven secondary schools in my hon. Friend's constituency, fewer than 30 per cent. of pupils attained five or more grades A to C, against an England average of 44.5 per cent. Let me say immediately, however—in agreement with my hon. Friend—that those schools should not be labelled failures. Far from it: they have been inspected, and have been found not to be failing.
  I am happy to join my hon. Friend in paying tribute to the schools in her constituency, and to teachers, other staff, governors and all who have contributed—through immensely hard work and dedication—to what has been achieved. Standards, including GCSE results, have been improved, and the achievement is underlined by the tact that it has taken place in such difficult circumstances. My hon. Friend mentioned the high proportion of children receiving free school meals, for instance. We recognise the difficulties faced by schools, and want schools in difficult areas to be able to do better. We want to give them the best support that we can provide.
  We are fully sensitive to Stoke-on-Trent's problems, but it must be said that in far too many parts of the country standards in schools are not good enough. That is why our White Paper "Excellence in schools" sets out the Government's agenda for raising standards in schools across the nation. It sets out our intention to ensure that all schools improve, through partnership with all those committed to raising standards. Our overall approach to policy will be underpinned by six principles. Education will be at the heart of government. Policies will be designed to benefit the many, not just the few. My hon. Friend expressed passionate concern that that should be so, and we share that concern. The focus will be on standards, not structures. Intervention will be in inverse proportion to success. There will be zero tolerance of under-performance, and the Government will work in partnership with all those who are committed to raising standards.
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  What does that mean for my hon. Friend's constituency? The initiatives in the White Paper will lead to improved standards in our primary schools, providing a firm foundation for further learning. That is vital to achievement in secondary schools. We want all children to be able to read and write fluently, handle numbers competently and concentrate on their work by the time they leave primary school. There will be high-quality education for all four-year-olds whose parents want it, and targets for the provision of places for three-year-olds. We will create a network of early excellence centres to spread good practice. There will be effective assessment of all children starting primary school. We will ensure that there are class sizes of 30 or fewer for five, six and seven-year-olds by 2002. We have set national literacy and numeracy targets and strategies for primary schools, and there will be a sharper focus on literacy and numeracy in the primary curriculum.
  At secondary level, we will ensure that we develop the diverse talents of all pupils. Schools need to provide the most effective forms of teaching and learning, using new technologies where appropriate, and being encouraged to develop specialisms. We believe that secondary schools should normally set pupils according to ability. We will provide best-practice resources for schools to help them to establish the most effective ways of teaching and learning.
  We will develop a national grid for learning, which will provide up-to-date teaching and resource material. There will be better-developed information and communications technology within a clear national strategy, including better initial teacher training and the training of existing teachers. We will create up to 25 education action zones, to be phased in over two or three years throughout the country in areas with under-performing schools and the highest levels of disadvantage. The zones will enable us to target education support and development where it is most needed, with additional flexibilities so that action can be taken to raise standards.
  My hon. Friend has made it plain, on Monday and again today, that she wants an education action zone in Stoke-on-Trent. I hear what she says, but, as I know she will understand, I cannot at this point announce or predict the locations of the zones. The White Paper kicks off a wide consultation, which will include consultation on the way in which education action zones should work and the way in which they should be chosen. We shall develop our ideas, and, during the consultation, we shall expect schools and local education authorities to present their own ideas and proposals.
  What I can say now is that the improvement that we all want to see in Stoke-on-Trent's schools will come about only through the new partnership that we aim to forge. Schools themselves are the key to raising standards. They will set their own targets, but they need help—not unnecessary interference, but practical help—from their partners in central and local government. The White Paper sets out what we in central Government will do; it also identities what we want LEAs to see as their rule.
  Every LEA will draw up an education development plan showing the targets that it has agreed with its schools, and explaining how it proposes to support them so that the targets are achieved. The plans will be approved by my right hon. Friend the Secretary of State, and each LEA will have one in place by April 1999. LEAs will have an important role in advising and, when

  917
  necessary, challenging schools when they are setting their targets. We have provided a clear job description for LEAs, but, in return, they will become fully accountable.
  Although some of the schools in my hon. Friend's constituency remain in Staffordshire, most are with Stoke-on-Trent's LEA. I am well aware that that LEA has existed only since April this year. I noted my hon. Friend's praise for both LEAs, and I am happy to endorse what she said. I stress that I have no reason whatever to suspect that the new LEA is failing to do its best for the children of its area. I know that Stoke-on-Trent is desperately keen to use its new unitary status to meet its people's needs, and I assure my hon. Friend that the Government, through my Department, want to work closely with the authority. I shall ensure that at the earliest opportunity—in response to my hon. Friend's specific request—the territorial team from my Department revisits Stoke-on-Trent to discuss in detail the issues that my hon. Friend raised today.
  Some of the most important issues involve resources. My hon. Friend particularly mentioned school buildings. We announced in the Budget that £1.3 billion would be available—£83 million in the current year, as my hon. Friend reminded us—for schools to start tackling the backlog of repairs. Guidance on how the money will be distributed will be issued to LEAs in the very near future.
  My hon. Friend mentioned revenue funding. She powerfully expressed the view that Staffordshire, and now Stoke-on-Trent, deserved more than the standard spending assessment had provided in the past and provided now. She called the SSA a dreadful formula, and said, making her point strongly, that she considered it to bear unfairly on her local education authorities. I can say only that we appreciate the importance of the issue, the strength of my hon. Friend's feelings and her determination. As she knows, we are reviewing the current formula in
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  consultation with local authority representatives, and we must hear what they have to say before we make final decisions about the 1998–99 SSAs in the autumn.
  Ms Walley: There is particular concern about how new unitary authorities with no experience will deal with the revised SSA formula that we want. Will my hon. Friend pay particular attention to that?
  Mr. Howarth: My hon. Friend is obviously right. It is, of course, necessary for us to do what she suggests. We must listen and we must be fair to all authorities, but my hon. Friend can be assured that the case that she has made, and the case that her local authorities make, will be considered carefully, constructively and sympathetically by those in the Government with responsibility for such matters. It is too soon to predict the effect that any changes would have on individual authorities, but the views of local government about possible changes to the formula are of key importance.
  I hope that my hon. Friend feels that she made the right decision when she decided not to visit her school today, although she would have loved to be there and I know that the school would have loved to have her there. She has fought doughtily here for it and all schools. Like her, I want Stoke-on-Trent and Staffordshire children to be able to look to the stars.
  It being 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.

  NEW WRIT
  For the borough constituency of Uxbridge, in the room of Sir Julian Michael Shersby, deceased.—[Mr. Arbuthnot.]
Oral Answers to Questions
  NORTHERN IRELAND

    Sinn Fein-IRA (Relationship)
    Mr. Rowe: To ask the Secretary of State for Northern Ireland if she will make a statement on the current relationship between Sinn Fein and the IRA. [5890]
    The Minister of State, Northern Ireland Office (Mr. Paul Murphy): In my opinion, which is clearly the opinion of many others, they are inextricably linked.
    Mr. Rowe: Given that, on almost every occasion that the IRA is shown to be pursuing its undemocratic objectives by violence, Mr. Gerry Adams not only refuses to have any words with it, but frequently gives the impression that he has no control over it, is there any benefit to the peace process in continuing to behave as if they were genuinely linked?
    Mr. Murphy: The British Government have never been of the view that they are not linked, as I said earlier. It is important to continue to seek genuine peace and reconciliation in terms of the problems of Northern Ireland. This week, we all saw the great difficulties that occurred in the Province, and I believe that there is still a case for the aide-memoire and all that accompanied it to remain on the table. Sinn Fein knows exactly what to do if it wants to join the talks process. It must renounce violence and go back to the situation of an unequivocal restoration of the 1994 ceasefire.
    Mr. Barnes: Is the link recognised by the Irish Government? Taoiseach Bruton said that there was such a link, and that it was a myth to believe otherwise. Does the Minister think that the new Irish Government will adopt that position in line with us?
    Mr. Murphy: It is hardly for me to speak on behalf of the Government of the Republic of Ireland, but I have no doubt that the public statements by the Taoiseach—and, indeed, the previous Taoiseach—are very much in line with this Government's policies.
    Mr. Maginnis: It is encouraging to hear the Minister express his awareness of the inextricable bond between Sinn Fein and the IRA, and his belief that they are the same organisation. Does he recognise that that organisation has a strategy, the core element of which is violence, and that it is unable to be persuaded, either through the good offices of the Secretary of State, the Prime Minister or anyone else, to make the transformation, to engage in the metamorphosis from violence to the democratic process? Will the Secretary of State ensure that the political process in Northern Ireland is given a chance, and is not hamstrung by constant consideration of the IRA's position within that process?
    Mr. Murphy: My right hon. Friend the Prime Minister and my right hon. Friend the Secretary of State for Northern Ireland both accept that the only way forward is to pursue peaceful democratic means—that is, to renounce
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    violence. Sinn Fein knows exactly what it has to do. If it renounces violence, it can join the train that the Prime Minister spoke about when he went to Belfast. That is absolutely the case. It seems to me that the transformation that the hon. Gentleman refers to must come within Sinn Fein's own hearts and minds. When it realises that the only way forward is through democracy and peace, it can join that train.
    Rev. Ian Paisley: If the Minister is convinced that the IRA and Sinn Fein are united, is he convinced that the IRA and Sinn Fein have infiltrated and orchestrated the residents groups, as was made clear by the deputation that I took yesterday to the Minister with responsibility for security, the Minister of State, Northern Ireland Office, who is sitting beside him? If that is so, does he agree that the Government should in no way give the IRA and Sinn Fein accreditation by negotiating with them, when Mr. Adams has made it clear that he is not for accommodation on this issue, that he organised the issue, worked hard on it for years and is now going to exploit it?
    Mr. Murphy: The hon. Gentleman is partly right, in that some of the awful events that we have witnessed in the past few days in Northern Ireland have been partly orchestrated. I do not think that that is the full story or that we should under-estimate the anger and frustration in the nationalist community. I think that everyone believes that the only way ahead lies in a proper accommodation between both sides of the community. That is why my right hon. Friend the Secretary of State has worked tirelessly for that accommodation in the past few weeks.
    Mr. Robert McCartney: Is the Minister aware that the alleged peace process has brought about the most bitter and violent confrontation that I have experienced in 60 years, and that the twin objectives of the peace process—conflict resolution with the IRA and a stable, negotiated settlement—are impossible, because the inducements necessary for the first make the latter an impossibility?
    Mr. Murphy: It is our view that the talks should be inclusive. If we cannot make them inclusive, of course we shall have to consider other methods, but I do not agree with the hon. and learned Gentleman that the events of the past few days result from the talks process. They result from the inability of both sides of the community to come to an accommodation on those important matters.
    Mr. MacKay: Does the Minister agree that the orchestrated violence of the past few days has all the hallmarks of IRA-Sinn Fein? Is it not a premeditated attempt to deflect attention from the peace process and, more important, to hide the fact that they are not prepared to enter a ceasefire, which is what is wanted by the overwhelming number of people in Northern Ireland, including the great majority of nationalists?
    Mr. Murphy: As I said earlier, there is evidence that there has been some orchestration, but I think that all hon. Members realise that, if Sinn Fein does not renounce violence and restore the 1994 ceasefire, in September we shall go ahead with the talks process. I believe that the country will be with us on that.

    Unemployment
    Dr. Stoate: To ask the Secretary of State for Northern Ireland what steps are being taken to combat long-term and youth unemployment in Northern Ireland. [5891]
    The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Tony Worthington): The Government are pursuing policies to promote economic growth and job creation and we shall also offer people constructive alternatives to benefit. In particular, welfare to work will be used to combat long-term and youth unemployment. Under the new deal, 18 to 24-year-olds will be offered training and employment opportunities with employers, the voluntary sector and an environmental task force. People who have been unemployed for more than two years will be offered employment opportunities.
    Dr. Stoate: Can the Minister tell the House how he will ensure a fair balance of resources between the two communities?
    Mr. Worthington: A total of 13,500 young people will be eligible for the welfare-to-work programme, and we shall be able to offer 3,900 places for the long-term unemployed. Obviously, we shall ensure that those opportunities are offered on a fair and equal basis to all sections of the community.
    Mr. Peter Robinson: Does the Minister accept that an important role in combating youth unemployment lies with Northern Ireland's training centres? I welcome the Government's decision temporarily to reverse the previous Government's decision on Dundonald training centre, but will the Minister ensure that the time allowed to assess that training centre is used to attempt to build it up rather than to run it down?
    Mr. Worthington: I am grateful for the hon. Gentleman's contribution to this matter and for his welcome for our decision to unite education and training, which we believe to be common sense. We shall pursue that. We need to bring together, in terms of their contribution to youth unemployment, the Training and Employment Agency and the Department of Education. As we try to build up the services for combating youth unemployment, there will be an important role for Northern Ireland politicians. We should welcome them putting their weight behind the welfare-to-work programme and the new deal.

    Peace Process
    Ms Moran: To ask the Secretary of State for Northern Ireland if she will make a statement on the Northern Ireland peace process. [5892]
    Barbara Follett: To ask the Secretary of State for Northern Ireland if she will make a statement on the Northern Ireland peace process. [5895]
    Dr. George Turner: To ask the Secretary of State for Northern Ireland if she will make a statement on the Northern Ireland peace process. [5896]
    The Secretary of State for Northern Ireland (Marjorie Mowlam): The Government are doing all they can in the talks to promote agreement on the issue of decommissioning illegal weapons before the end of July so that substantive talks can begin in September. With the Irish Government, we have tabled proposals on decommissioning that reflect the report of the international body. I am pleased to tell the House that, at yesterday's talks, a timetable was agreed for moving to a determination on this issue.
    It will be possible for Sinn Fein to join the talks only if there is an unequivocal restoration of the ceasefire, shown in word and deed. The present situation in Northern Ireland illustrates why it is so important to move towards a political settlement with some degree of urgency.
    Ms Moran: I thank the Secretary of State for her reply. Will she join me in regretting the damage that has been done to the Northern Ireland peace process by the events of last weekend? Will she accept my support and, I am sure, the support of the majority in the House, for all her efforts in trying to seek amelioration and reconciliation on this issue? What action does my right hon. Friend intend to take now to prevent a repetition of the violence and disruption we saw at the weekend?
    Marjorie Mowlam: I thank my hon. Friend for her support.
    Neither side will get the decision it wants unless we can reach some sort of accommodation between them. Only by accommodation and negotiation can we move forward peacefully, whether it be over the parade last weekend or the parades in the weekends ahead. In the end, a decision will be taken by the Chief Constable on the grounds of public safety.
    As to where we can go in future, as I have said many times in the House, over the past two years we have campaigned for a change in the law so that the criteria which form the basis of a decision on public safety can be broadened. We have said that we shall bring forward legislation in October to achieve that. It is only by accommodation that we shall be able to change the present situation.
    Barbara Follett: Does my right hon. Friend agree that the lack of a political settlement was at the heart of the tragic events of last weekend? Will she tell the House what she is doing to facilitate a political settlement?
    Marjorie Mowlam: I thank my hon. Friend for her question.
    Like my hon. Friend, I condemn the violence outright. There are two ways to make progress. First, we need measures that begin to build accommodation and trust and ensure that both sides work together to deal with the conflicting rights that were illustrated at the weekend. The main way to achieve movement in the future is by multi-party talks and moves towards a political settlement. Without a political settlement, we shall not make progress towards peace for the whole of Northern Ireland, and the microcosms of that problem, as illustrated in Drumcree, will continue.
    Dr. Turner: I am sure that the House will be delighted by the fact that my right hon. Friend is able to look

    923
    beyond the marching season. Before the details are leaked to all and sundry, will she explain to the House the basis on which she is looking for the removal of illegal weapons from Northern Ireland? Is any progress being made with the parties involved? Clearly the House must look to that as the next step.
    Marjorie Mowlam: I thank my hon. Friend for giving me the opportunity to make a statement on that matter before any further leaking in my Department takes place.
    Two weeks ago, this Government and the Irish Government delivered a joint statement to the talks process in Belfast. It outlined what we hope are constructive proposals, in which all the parties can engage, to deal with the issue of decommissioning. As I said earlier, during the talks yesterday, agreement was reached on a timetable to try to move the process forward by the end of July. That is what we want to happen.
    The proposals contain details about verification committees and how decommissioning can be put in place alongside the Mitchell international report, which refers clearly to parallel decommissioning. We hope that the parties will engage constructively in that process, so that, in September, we can start the substantive political discussions.
    Mr. Trimble: Has the Secretary of State seen the press reports yesterday and the day before about a meeting in Conway Mill, at which the leader of the Sinn Fein group on Belfast City council—supported by Mr. Gerry Kelly, one of Sinn Fein's so-called negotiators with the Northern Ireland Office—discussed how there could be a more militant campaign against the Government?
    Is the right hon. Lady aware of the threats made by the Irish National Liberation Army—a terrorist group that operates under the licence of the IRA—to shoot any of the marchers whom they do not like the look of this weekend? In the current situation, is it not necessary for the priority to be peace and, consequently, for the right hon. Lady to take measures over the next few days that will ensure peace in Belfast, rather than becoming fixated on a process which, with regard to Sinn Fein, is clearly bankrupt?
    Marjorie Mowlam: I thank the hon. Gentleman for his question.
    As the Chief Constable said at the weekend, the major problem we faced then and will face in the days to come is that of extremist elements on both sides, which ensure that the genuine protests, anger and frustration of one community are so gee-ed up that they then become a difficult situation to cope with. I assure the hon. Gentleman that the Royal Ulster Constabulary and the other security forces in Northern Ireland are doing all they can to deal with that.
    I say to the hon. Gentleman, as I say to all other constitutional politicians, that, unless we work together to get a negotiated settlement and to build trust and confidence between the two communities, whatever we say in the House will not bring peace to the streets of Northern Ireland.
    Mr. Hogg: Does the Secretary of State agree that, although it is true that those who organise and participate in the marches have a right to pursue their traditional
    924
    routes, it is in the wider interests of all that they should not march in areas where their presence is likely to trigger violence and disruption? Does the right hon. Lady further agree that, in encouraging people to practise self-denial of that sort, it is important that all of us say that, in the matters of the status of Northern Ireland and its constitution, the views of the majority—who happen to be Unionists—are paramount, overriding and absolute?
    Marjorie Mowlam: On the right hon. and learned Gentleman's point about the overwhelming rights of the majority, both he and I understand that sometimes rights are conflicting. There is the right to march, which I defend, but there is the right to live free from fear and intimidation in one's own community, which I also defend. We are trying to deal with those conflicting rights in Northern Ireland.
    Unless we can build some trust and confidence between the two sides—which is what the Churches, voluntary groups, business groups and many politicians have been trying to do—we can never deal with those conflicting rights. We have to face up to the needs and demands of both communities.
    The decision at the weekend was taken after we failed to find accommodation. I readily admit that I—with many other people who tried—failed to find accommodation. It was then up to the Chief Constable to make a decision in line with public safety. That is what he did, and that is what he will do again at the weekend. We shall be faced with stand-offs until common sense and rationality prevail, and a degree of trust is built in the two communities.
    Mr. Öpik: Given the volatile situation that often develops in the marching season, does the Minister have any plans to revisit the North report to determine whether it contains any further recommendations that might be implemented to reduce that volatility?
    Marjorie Mowlam: I thank the hon. Gentleman for his question. The short answer is yes. We supported the North report and the need for subsequent legislation, although the previous Government did not have sufficient time to pass such legislation. We supported the requirement to announce parades 21 days in advance, and such announcements have helped. We also supported an alcohol ban.
    In the autumn, we hope to revisit the report and, with the support of many hon. Members, to pass legislation providing broader and clearer criteria, so that people can make a more rational and whole decision. That is what such a revisitation will be about. It will help, but it will not be enough, because the people themselves will have to decide that they want the situation to change. We can accommodate, negotiate and change legislation, but we cannot force the people to live together unless they themselves decide to do so.
    Mr. McGrady: Is the Secretary of State aware that the unnecessary decision—whoever made it—to support an Orange march through the nationalist Garvaghy area and the considerable police brutality used in the early morning to remove the residents, was a death blow to the peace process and to peace generally? What efforts will she make to repair the damage done to the nationalist community's confidence in the impartiality of her administration?

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    In her decision-making process—regardless of who makes a decision—will the right hon. Lady ensure that decisions are not based, as they were last weekend, on the rights of evil people and on who can do the most evil? The Chief Constable said that he allowed the march to proceed to prevent a greater evil. Can we have some principle and some justice in the decision-making process?
    Marjorie Mowlam: I thank the hon. Gentleman for his question.
    I readily acknowledge the nationalist community's fear, frustration and anger, which the hon. Gentleman and other people have outlined to me, and which I have seen for myself. I do not accept the premise behind his question that might is right. Right is right, and we shall stick with that principle throughout.
    As I said to the hon. Member for Montgomeryshire (Mr. Öpik), we shall make decisions on legislation on the North report. Such legislation will be based on fairness and justice, which are the principles that have guided us throughout in our policy on Northern Ireland. I tell him, yes, we must all work to rebuild trust and confidence in Northern Ireland, and we shall do so in line with the principles that have always guided us—the principles of fairness and justice.
    Mr. MacKay: Is the Secretary of State aware that Conservative Members, from our experience over 18 years, realise that the decision that she and the Chief Constable had to make on Drumcree was an extremely difficult one, and that we believe that she made the right decision? Is she also aware that she will have the full support of Opposition Members in resuming—with or without Sinn Fein-IRA—political talks in September?
    Marjorie Mowlam: I welcome the hon. Gentleman's comments, and thank him for his support.
    We must reach a position in which there are no right or wrong decisions. If we do not do so, there will continue to be anger on both sides. We have to move towards a situation in which both sides are winners or both sides are losers. Such a possibility was not open to us at the weekend. A resolution will depend on the constitutional parties doing all they can to help in reaching by July some agreement on the decommissioning issue. We must all then, in September, get on with the substantive talks. That is what will make the difference in Northern Ireland.
    Mr. Benn: Is the Secretary of State aware that one abiding impression of the events at Drumcree last year and this year is that, when loyalist triumphalism requires it, British troops are always available to back it up, and that that indeed is the basis of loyalist loyalism, which is why they do not wish to sit down at any talks that might lead to a change in the status quo? While that remains so, is it not the case that the British presence in Northern Ireland is a part of the problem, and not necessarily a contribution to an answer?
    Marjorie Mowlam: I thank the right hon. Gentleman for his question—[Laughter] It is the nature of democracy that one takes questions from across the board—that is what the House is for.
    926
    Elements on both extremes do not want to sit down to talk. I agree with the right hon. Gentleman about that, but it is up to us in the constitutional parties to be sure that, in September, we have, sitting around the table and working towards a political settlement, representatives of the vast majority of the parties in Northern Ireland. That is what will make the difference.

    Educational Standards
    Mr. Ian Bruce: To ask the Secretary of State for Northern Ireland if she will make a statement on trends in educational standards in Northern Ireland in the past 10 years. [5893]
    Mr. Worthington: The percentage of pupils gaining 5 GCSEs at grades A to C in the past 10 years increased from 35 to 52 per cent. The percentage achieving two A-levels at grades A to E increased from 19.7 to 30.8 per cent. However, that will not he enough, and further improvements will be necessary to meet national targets.
    Mr. Bruce: I thank the hon. Gentleman for that answer. Is it not indicative of the fact that young people in Northern Ireland have demonstrated to their elders that they can get on and live together and improve what they are doing? Is it not about time that some hon. Members, inside and outside this place, took note of the excellence of what they have done?
    Mr. Worthington: I am not sure that I see the link between gaining A-levels and living peacefully together, but I certainly echo the sentiments that the hon. Gentleman expressed.
    Mr. Godman: I remind my hon. Friend that, in the last Parliament, the Select Committee on Northern Ireland, in its report on under-achievement in the education system in Northern Ireland, voiced its serious concern about the prevalence of under-achievement in schools in areas badly marked by social disadvantage. What is he going to do in response to that fine report?
    Mr. Worthington: I agree that it was a fine report, and I congratulate my hon. Friend on his contribution to it. We are responding; a Command Paper will be published that will show my hon. Friend just how seriously we have taken the report.
    The fact is that, although the achievements at the top of the Northern Ireland education system are fine, there is still a considerable tail to be dealt with. We are looking at all aspects of the report, including the raising school standards initiative and the targeting of social need, to see what improvements we can make.
    Mr. Brooke: Against the background of one third selection at secondary level in Northern Ireland, does the Minister agree that the improvement at the bottom of the spectrum has been faster in Northern Ireland in the past decade than in Great Britain? Does he see any moral for, or any read-across into, the affairs of Great Britain?
    Mr. Worthington: It is important, and a major challenge for the Government, to secure the full

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    incorporation of vocational and academic qualifications to provide the right kind of curriculum and opportunities for everyone.

    Sean Quinn Glass Factory
    Mr. Illsley: To ask the Secretary of State for Northern Ireland what decision she has made regarding Government support for the proposed Sean Quinn glass factory. [5894]
    The Minister of State, Northern Ireland Office (Mr. Adam Ingram): Under the previous Administration, the decision was taken to offer Government support for the proposed Sean Quinn glass factory. As my hon. Friend will know, this is a mobile project to manufacture glass containers in Northern Ireland. The project aims to create 330 new jobs in a socially disadvantaged area of County Fermanagh.
    Mr. Illsley: I am grateful to my hon. Friend, but I must inform him that that decision will be greeted with great dismay in my constituency, where the glass industry is a major employer. There is now over-capacity in the glass container industry, and the level of grant that has been given to the Sean Quinn project will allow that factory to undercut the present cost level in Great Britain. Will my hon. Friend look again at the project, which is bound to displace jobs throughout Great Britain?
    Mr. Ingram: My hon. Friend made a significant contribution as shadow Minister for economic affairs in Northern Ireland, and I thank him for that—he certainly made part of my job easier. On the specific points he raises, all those matters were taken into consideration by the previous Administration, and I have subsequently reviewed them. The best advice is that the matter is of a contractual nature, as a consequence of which it would be difficult to revisit the project as he requests.

  PRIME MINISTER

    Ministerial Visit
    Mr. Andrew George: To ask the Prime Minister what plans he has to visit communities on mainland Cornwall or the Isles of Scilly in the St. Ives constituency. [5920]
    The Prime Minister (Mr. Tony Blair): I have no immediate plans to visit the hon. Gentleman's very beautiful constituency, but I hope to do so soon.
    Mr. George: I thank the Prime Minister for his reply, and assure him of a warm welcome should he ever visit the good people of my constituency. If he does visit, may I recommend that he does not fall ill? In view of the cold comfort afforded on closer inspection of last week's Budget, will he intervene to protect the essential acute and cottage hospital services in Cornwall and ensure that we do not see cuts this winter, which we did not have even in the past 18 years of Conservative rule?
    The Prime Minister: What I can say to the hon. Gentleman is that the Labour Government have put the
    928
    huge cash injection of £1.2 billion into the national health service. That is about £500 million more than the Liberal Democrats were asking us for before the Budget.

    Engagements
    Mr. Stevenson: To ask the Prime Minister if he will list his official engagements for Wednesday 9 July. [5921]
    The Prime Minister: This morning, I signed the NATO-Ukraine charter; later today I will have meetings with Cabinet colleagues and with others.
    Mr. Stevenson: Is my right hon. Friend aware that the additional £2.3 billion made available for education in the Budget statement is extremely welcome? Is he further aware that the fact that £1.3 billion of those additional resources is coming from the windfall tax and is earmarked to begin to address the Tory legacy of crumbling schools is even more welcome? The task now is to ensure that those resources are made available to schools. Will he ensure that that takes place as quickly as possible?
    The Prime Minister: I certainly shall. It is the largest cash injection into schools that has been made by any Government ever, and it has been made in part—[Interruption.]—and it is a good deal better than anything afforded by the last Conservative Government. It has been made and it will be carried through—
    Mr. Hague rose—
    The Prime Minister: Just a moment.
    It will be carried through and dedicated to improving standards in schools.
    Mr. Hague: Is the Prime Minister aware of the serious impact of the Budget on local government pension funds? What estimate has he made of that impact, and what plans does he have to compensate them for it?
    The Prime Minister: The Budget measures on pensions were entirely right and necessary. They were right, first, because they remove an unjustified bias in the tax system, and secondly because they deal with the problems of public finances that were left by the previous Administration. As for the justifiability of that, I shall quote from an article in the Financial Times a few days ago:
    "abolition of the tax credit is a reform whose time has come."
    It was an article by the previous Chancellor's tax adviser.
    Mr. Hague: Perhaps we can now have an answer to the question. Has the Prime Minister read the view of the Local Government Association—which is, after all, Labour-controlled—that such a measure would result in a loss of income to pension funds of some £300 million per annum in local government? Has he read the view of the hon. Member for Putney (Mr. Colman), a member of his party, that no such increase could be afforded by local authorities without making further cuts to services to their local residents? Which cuts does he have in mind—or is

    929
    he prepared to compensate local authorities for the hundreds of millions of pounds that they will have to pay for this ill-thought-out tax increase?
    The Prime Minister: I like the cheek of a Conservative party person telling us that we should pay more money to local government. As a matter of fact—[HON. MEMBERS: "Answer."] As the right hon. Gentleman—
    Mr. Luff: Answer.
    The Prime Minister: As the right hon. Gentleman must be aware, the revaluation for local authorities does not take place for another two years. The stock market has actually risen 11 per cent. since the general election. If he knew what he was talking about, he would realise that the increase in capital value is the best news there could be for pension funds.
    Mr. Hague: The Prime Minister cannot patronise his way out of it. What he said was meaningless waffle. Anyone who knows anything about pension funds knows that a prudently run pension fund does not simply assume that increases in investment value in years to come will rescue it from its cash flow problems today. Is he aware that Staffordshire county council has said today that it will have to move £1.5 million from local services into its pension fund in the coming year? Is he prepared to see that happen, or will he compensate?
    The Prime Minister: The right hon. Gentleman asked me about prudence. Let me tell him what prudence means. [HON. MEMBERS: "No!"] All this from the party that presided over the biggest pensions misselling scandal in this country. I will tell him what prudence means; it means two things. It means, first, that we deal—
    Mr. Luff: Local government.
    The Prime Minister: It means, first, that we deal with the appalling situation in our public finances inherited from the previous Government, which means that, because of the doubling of debt under the Government in which the right hon. Gentleman was a Minister, this year we shall pay out in interest payments almost as much as we spend on the health service.
    Mr. Luff: Local government.
    The Prime Minister: Prudence also means that we tackle—[Interruption.]
    Madam Speaker: Order. Mr. Luff, keep calm.
    The Prime Minister: Prudence also means that we must take the measures to combat inflation necessary for the long-term health of this country. No doubt the difference between us and the right hon. Member for Richmond, Yorks (Mr. Hague) is that we shall take those long-term measures; he will not.
    Mr. Hague: That was just more waffle. The Prime Minister obviously does not know how local authorities
    930
    will deal with this situation. Given that he said before the election that there were
    "no plans to increase tax at all",
    and that he has now introduced 17 tax rises in a single Budget, and given that he said that he would do his "best by British pensioners" and is now making pension funds bear the brunt of those tax increases, does he now regret saying in the election campaign:
    "people want honest politics, and they are going to get it"?
    The Prime Minister: They did, because we promised the windfall tax, and delivered it; we promised more money for health and schools, and delivered it. Let me tell the right hon. Gentleman that, after the record of the Government that he supported, no one will take any lessons on broken promises from him.
    Mr. Hume: Does the Prime Minister agree that the terrible events of recent days in Northern Ireland are basically and fundamentally symptoms of the underlying and deeper disease—our failure as a people to agree on how to live together—and that the symptoms have been truly terrible? Will he therefore agree and make clear that it is a priority of this Government to do everything in their power to promote agreement, and therefore to promote stability, and lasting stability? Does he agree that the process leading to that could best take place in an atmosphere in which there was a total moratorium on all street activity and all marches?
    The Prime Minister: Let me say this to my hon. Friend: the situation in Northern Ireland over the past few days has been appalling and tragic for all the people in Northern Ireland. My right hon. Friend the Secretary of State for Northern Ireland, to whom I pay tribute for her courage and determination, has been trying—as have we all—to do the best in good faith in a situation in which all the available options are difficult.
    I would ask my hon. Friend and the other people involved in Northern Irish politics, recognising all the pressures that are on them, just as there are on us, to try as best they can to keep the wider process for a lasting political settlement going. It is a terrible situation, but I am not going to give up on Northern Ireland. I am going to carry on searching for a solution. I believe that, if there were good will on all sides, and a little give and take, understanding and reason, a solution could be found.
    Mr. Baldry: Does the Prime Minister appreciate that the hundreds of thousands of people gathering in Hyde park tomorrow will do so because they feel misunderstood and threatened by what they perceive as an urban-based Labour party seeking to impose urban values on the countryside? Although it is always possible for any Government with a large majority eventually to drive through any legislation, there can be little merit in legislation which alienates so many people who live in the countryside. [5922]
    The Prime Minister: The Labour party represents many rural constituencies—not least my own—as well as urban ones. The matter will be presented in the form of a private Member's Bill; there will be a free vote on it in the House of Commons, with Members on both sides free to make up their minds. Of course we value what happens

    931
    in the countryside. Some of the allegations that have been made—that we intend to ban shooting, fishing and all the rest—are nonsense. The debate should at least he conducted with reason on both sides.
    Mr. Cranston: Is my right hon. Friend aware of the warm welcome in the country, particularly in my constituency, for the extra £1 billion to be spent on the national health service? Will he give the House a commitment that the Government will continue to implement their manifesto promise to improve the NHS after the depredations of the Conservative party? [5923]
    The Prime Minister: I certainly shall. [Interruption.] Conservative Members may shout about it, but for those who work in the health service, £1 billion more is well overdue.
    Mr. Ashdown: Yes, but of course not this year. Will the Prime Minister confirm, in terms of the control totals, that last week's Budget means £5 billion less next year for public services?
    The Prime Minister: No. That is not correct. The right hon. Gentleman keeps getting confused about the prediction on forward inflation, which we have revised as a result of the problems that we inherited—[HON. MEMBERS: "Ah!"]—and thank goodness we now have a Government dedicated to tackling those problems instead of avoiding them. The cash going in for schools and hospitals is precisely the money that we promised, and more than the right hon. Gentleman asked for.
    Mr. Ashdown: I think it odd that the Prime Minister finds it difficult to agree with what his Red Book plainly says on page 102: the money will be diminished. The Institute for Fiscal Studies, like the Library of the House of Commons, calculates the reduction at £5 billion next year. Of course the Prime Minister is right to say that any extra money for education and health next year will be welcome, but it will be significantly reduced, beyond what the Chancellor said, by the effect of inflation. There is still £5 billion to come from elsewhere in the public services. Is that supportable, and where will it come from?
    The Prime Minister: All that happened in the Budget is that the inflation prediction was revised upwards as a result of objective circumstances. The cash limits will remain. The additional money is going into health and education.
    Opposition Members opposed the windfall tax on the privatised utilities, so there would have been no money for a school repairs programme if we had adopted the policies of the Opposition parties. The only way we shall sort out the problems in our public finances is to put the Budget deficit on a proper and secure footing. As a result of the changes that the Budget has made, within a few years we shall be cutting public debt, borrowing will be under control and we will be able to move into surplus. That is prudent finance.
    Mr. Timms: The Prime Minister will be aware that, of the 6 million or so personal pensions sold since 1988, at least 500,000 were missold, in that people who bought them would have been better off had they kept what they began with. The determination that the
    932
    Government have shown in sorting out that mess is welcome, and I welcome what my hon. Friend the Economic Secretary said about that this morning.
    However, what steps do the Government propose to renew the probity of the financial services industry so that scandals of that kind do not continue to erupt, as they were allowed to do under the previous Government? [5924]
    The Prime Minister: My hon. Friend is absolutely right. Indeed, the Economic Secretary announced today that she has received back representations from 24 of the companies most involved in the scandal of pensions misselling. The result so far of what they are doing is disappointing, so we intend to put further pressure on them to deal with the problem. That is the real difficulty that many people face at the present time, and we are determined to deal with it.
    As my hon. Friend rightly points out, it is not merely that nothing was done about this under the previous Government; but their proposal to take tax relief on pension contributions away from people coming into the schemes would have hit everyone investing in pension funds a great deal harder.
    Mr. Nicholas Winterton: The Prime Minister and his party are currently all-powerful. The House and the country accept that. He will be aware of the industrial problems in British Airways. Given that the general secretary of the Transport and General Workers Union is a strong supporter of the Prime Minister and his party, and that Mr. Boh Ayling, the chief executive of British Airways, is a personal friend and supporter of the Prime Minister, will the Prime Minister now use his authority to bring that problem to an end and prevent the inconvenience that will be suffered by many people and their families over the weeks ahead?
    The Prime Minister: I sympathise greatly with the distress caused to the travelling public as a result of the dispute. I hope that it is resolved as quickly as possible, but it must be resolved by management and trade unions. I seem to remember a great number of lectures from the Conservative party once upon a time about leaving those matters to be determined by management and unions.
    Mr. Khabra: Will my right hon. Friend send a message of congratulations and best wishes to the people and state of India on the 50th anniversary of their independence? Will he confirm that the Government are committed to strengthening our relationship with the largest secular democracy in the world? Does he recognise that the Asians and the blacks are making a useful contribution to the development of a multicultural and multi-religious society in this country? [5925]
    The Prime Minister: I entirely agree with my hon. Friend's remarks about the contribution made by the Asian and black communities to the society in which we live. We shall celebrate the 50th anniversary of India's independence both in India and Pakistan and back here in this country. I understand that you, Madam Speaker, will attend special celebrations in India. The granting of

    933
    independence to India and the strong ties that grew up then between that Labour Government and India will be strengthened under this Labour Government.
    Sir Michael Spicer: If the people of Denmark vote no in the referendum that their Government have allowed them on the treaty of Amsterdam, will that render the entire treaty null and void? [5926]
    The Prime Minister: No. That is a matter for Denmark to decide. The idea that this country should have a referendum on the Amsterdam treaty is one of the most absurd propositions that has been advanced in recent times. What happens in Denmark is a matter for Denmark, and does not affect us.
    Mr. Rammell: Comprehensive schools in my constituency of Harlow have been successfully streaming pupils by ability for decades, to the significant advantage of the pupils in those schools. In the light of that experience and the Government's White Paper on education, does my right hon. Friend agree that there is all the difference in the world between that kind of successful streaming by ability in the same school and selection at the age of 11, which condemns four out of five children to permanent failure? [5927]
    The Prime Minister: I agree with my hon. Friend. The proposals made in the White Paper are right. We need to modernise the comprehensive principle to take account of pupils' different abilities, but within the comprehensive system. That is why we support initiatives such as those being taken in schools in my hon. Friend's constituency. We do not believe that the right way to go is to return the entire system to the old 11-plus. It is right that we modernise the comprehensive system. That and other proposals in the White Paper will make a great deal of difference to the education system.
    Mr. Sanders: What support will the Government give to the proposed international English riviera film festival in April 1998? [5928]
    The Prime Minister: I thank the hon. Gentleman for giving me advance notice of that question; otherwise, it would have been rather difficult for me to answer it.
    I wish the festival well. I cannot promise Government money, but the hon. Gentleman will know of the tremendous help that my right hon. Friend the Chancellor of the Exchequer has given to the film industry in the Budget. The hon. Gentleman will also know that a working party has been established by my right hon. Friend the Secretary of State for National Heritage to examine ways to develop more. British films and to contribute to what is already a British success story but could he an even greater one. I wish the hon. Gentleman's festival well.
    Mr. Canavan: If the Drumcree fiasco was the least worst option, what on earth was the most worst option? In future, will the Government go for the best possible option, by treating both communities in Northern Ireland in an even-handed way?
    The Prime Minister: We treat, and have treated, both communities in an even-handed way. It was an extremely
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    difficult decision. The advice that was given by the head of the Army in Northern Ireland, Sir Rupert Smith, and by the head of the Royal Ulster Constabulary, was to the effect that the march should go ahead. If my right hon. Friend the Secretary of State for Northern Ireland had disagreed with that advice and overturned it, she would have been subject to even more criticism. Those are difficult—actually, impossible—decisions to make in a way that satisfies everybody.
    People must keep their minds focused on what is important—the wider process leading to a lasting political settlement. It is appalling that intransigence on both sides obscures the fact that the vast majority of people in Northern Ireland want and deserve the chance of a lasting peace there. It could be done if people would understand that, if it is to be achieved, it requires their commitment all the way through.
    Mr. Burstow: Does the Prime Minister realise that the extra £1.25 billion for education and schools next year will be almost entirely wiped out by the extra £1.2 billion real cut in local authority spending next year as a consequence of the increase in inflation in the Budget? Does he therefore accept that, next year, when it comes to giving more to education, local authorities will be confronted with the choice between making real cuts in social services, policing and other vital services? [5929]
    The Prime Minister: To repeat the point I made earlier, the hon. Gentleman is not right to say that the change made in the Budget predictions has altered the facts of the situation. The money going into schools and hospitals is real money. The £1.3 billion dedicated to the schools repair programme is in addition to anything that the hon. Gentleman's party has proposed. If the Liberal Democrats called for a vote against the Budget, that would leave the situation as it is, and no extra money would go in.
    Mr. Sheerman: Is my right hon. Friend aware that the British manufacturing sector believes that the recent Budget is the best in living memory for that sector? [HON. MEMBERS: "Oh."] Wait for it. But is he also aware of some of the disturbing trends this week, such as the downturn in engineering and other manufacturing industries that depend on exports? Will he keep a careful eye on the strength of the pound and its impact on employment and jobs?
    The Prime Minister: My hon. Friend is absolutely right on both counts. The cuts in corporation tax and in tax treatment for small businesses—which is the best package for companies, particularly the small business sector—have been widely welcomed.
    People will face difficulties as a result of the rising pound, but it is important to recognise that we will put economic management on a stable footing only if we take the decisions in relation to monetary policy and fiscal policy that allow for balanced growth. As a result of the situation that we inherited from the Conservatives, we must deal with problems on both those counts.
    It is no use Conservative Members' shaking their heads: if we do not deal with those problems, we will be left with a structural deficit in our public finances and

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    no proper control over monetary policy, which is bad for business. That is the difference between government and opposition.
    Mr. Llwyd: Will the Prime Minister tell the House which way he will vote on the hunting Bill, and why? [5930]
    The Prime Minister: I have voted before in favour of a ban on fox hunting, and I shall continue to do so. I believe that a ban may be imposed without the massive destruction to the countryside that some people fear. We are all entitled to make up our minds according to the evidence. That is what I intend to do, and I suggest that other hon. Members do likewise.
    Mr. Pickthall: Does my right hon. Friend agree that the proposals that will be advanced by the European Commission next week represent a major shift towards the Labour Government's policy of massively changing the common agricultural policy? Does that not provide an opportunity to start shifting resources from subsidising production to environmental work in the countryside, and to move from intensive farming to extensification? [5931]
    The Prime Minister: We welcome those proposals, if they have been described correctly. A change in the common agricultural policy is most important both for the future of Europe and for British contributions in Europe. If that is happening, it is a big change of heart on the part of the European Commission and other European partners, and it is very welcome.
    Mr. Townend: As the Government need to speak with one voice, will the Prime Minister tell the House whether the Government have changed their position on the single currency? Has Lord Simon, who was fanatically against the single currency before he became a Minister—I am sorry: who was fanatically in favour of the single currency—changed his view since he became a Minister?
    The Prime Minister: The hon. Gentleman seemed to have difficulty summarising my noble Friend's views. The Government will keep the option open and judge the situation according to Britain's national interests. That is the right way to do it.
    Mr. Purchase: Does my right hon. Friend agree that the antics last week of the hereditary peers down the Corridor in trying to sabotage Labour's election pledge to hold referendums in Scotland and Wales—
    Mr. Nigel Evans: Not on different days.
    Mr. Purchase: The poor chap is demented: what can one do?
    Does my right hon. Friend agree that those antics make the ending of the House of Lords in its present form more certain than ever—which, for many, cannot happen too soon? [5932]
    The Prime Minister: My hon. Friend is absolutely right: the measure was passed in another place only as a result of the votes of hereditary peers. It is also true that
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    more hereditary peers—twice or three times as many—take the Conservative Whip in the House of Lords than there are Labour peers. If we are looking for constitutional wrongs, what could be more wrong than the Conservative party depending on hereditary peers to pass the measures that it cannot get through this place because it lost the election?
    Mr. Blunt: Following the Budget's cynical smash-and-grab raid on private pensions, what provision have the Government made for people who will now wish to opt back into the state earnings-related pension scheme? [5933]
    The Prime Minister: As I have already said, it is absolute nonsense to suggest that the measure will deprive people of their proper pensions—it will not. Which party first cut tax credits? The Conservatives. Our proposal is a great deal better than that advanced by the Conservatives before the election: to remove tax relief on people's pension contributions. That really would have hurt people's pensions.
    Mr. Mallon: Does the Prime Minister agree that the most fundamental implication of what the Chief Constable did and said, and of the Government's decision, at the weekend is that it signals in a most dangerous way that, in circumstances such as those at Drumcree, decisions are made not on the basis of natural justice, equity or any semblance of principle but on the threat of greater force—paramilitary force—and the threat of greater disruption? Is it not the role of Government to address and, if necessary, confront that threat of force and to prevent that disruption, rather than to trample on the legitimate rights of those against whom the threats have been made?
    The Prime Minister: I well understand my hon. Friend's anger, but the difficulty with this situation is that there are legitimate rights on all sides and the problem is how those are balanced out in extremely difficult circumstances. We are trying to take all these decisions in the best possible interests of the people in Northern Ireland. We have tried to do that throughout. It is a very difficult situation.
    Let us be quite clear: the first thing that we should all be doing is totally condemning the violence that has erupted in the past few days. It has no proper justification. I do not want to repeat what I said earlier, but, if we focus on a lasting political settlement and the possibility of achieving it, we will realise that this is a difficult set of circumstances and we are going to have to get through it the very best we can.
    However, I know from the past couple of weeks that my right hon. Friend the Secretary of State for Northern Ireland has been trying, in total good faith all the way through, to do her best by the people there. It is very difficult, if not impossible, but she is right to try to carry on, and I will carry on searching for that settlement.
    I urge my hon. Friend and all others, once they have got over their understandable anger and dismay at what is happening, to get back to the only thing that offers a future to the people of Northern Ireland—a lasting political settlement that allows the consent of people in Northern Ireland to be uppermost. If we do that, we have some chance.

NATO Summit
3.31 pm
The Prime Minister (Mr. Tony Blair): With permission, Madam Speaker, I shall make a brief statement on the NATO summit that took place in Madrid on 8 July. I was accompanied by my right hon. Friends the Secretaries of State for Foreign and Commonwealth Affairs and for Defence. Copies of the declaration that we agreed, of our separate statement on Bosnia, and of the NATO-Ukraine charter, which we signed this morning, are being placed in the Library of the House.
The main outcome of the summit was an invitation to Poland, the Czech Republic and Hungary to begin accession talks with NATO, with the aim of joining the alliance by the 50th anniversary of the Washington treaty in April 1999. This is an historic decision and a step of huge importance, which I am confident will be widely welcomed in the House, and, indeed, across Europe and the alliance. We aim to negotiate a protocol of accession by the end of this year. This will need ratification by all NATO members as well as by the prospective new members. We shall, of course, ensure that there is a full debate in the House before British ratification.
Successful NATO enlargement has been a key objective of both the previous Government and this Government. If we can get this right, it will make a major contribution to security and stability in Europe by bringing in countries of central and eastern Europe to one of our key institutions. Our priority was a manageable and limited enlargement, involving credible candidates with reliable democratic credentials and a real ability to contribute to collective security. As I said in yesterday's discussions, NATO is a military alliance, not a political club, and its collective defence obligations have to be taken with the utmost seriousness.
We were, of course, conscious of the sensitivities of candidates which might not he asked to begin negotiations this time, and of others, such as Russia, which might fear the consequences of enlargement for them. We also wanted to ensure that the NATO door would remain open for future enlargements. We therefore strongly favoured an enlargement of three countries at this stage.
I should say a particular word about Romania and Slovenia, whose applications were especially closely considered even though there was no consensus to invite them on this occasion. Both countries have indeed made remarkable progress. Romania's new Government deserve particular congratulation on the steps taken since they took office last November. A number of allies would have liked to see Romania and Slovenia included among those invited at Madrid. All, including ourselves, saw them as strong candidates for any future enlargement, but we felt that Poland, the Czech Republic and Hungary were the limit for current enlargement. I warmly congratulate them.
There will of course be a financial price to be paid, mostly by the new members but also by existing members of the Alliance. We believe that this cost will be manageable. For example, there is no reason why Britain's contribution to NATO budgets, currently some £155 million per year, should rise significantly in real terms.
There were, of course, other disappointed applicants. We recognised, for example, the progress achieved towards greater stability by the states in the Baltic region.
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NATO leaders agreed that they expected in the years ahead to extend further invitations to nations willing to take on the responsibilities of membership, whose inclusion would serve the interests of the Alliance and enhance overall European security. We made clear our intention to intensify dialogue with aspiring members.
NATO's relationship with all its partner countries also took on a new dimension with the establishment of the Euro-Atlantic Partnership Council in May. Today's meeting with the Heads of partner countries has been taking place under the aegis of the partnership council.
Relations with two partners deserve particular mention. NATO leaders underlined the historic achievement represented by the Founding Act between NATO and Russia signed in May in Paris. Good future co-operation with Russia is vital for Europe's security.
In Madrid, we took a further important new step by signing with President Kuchma the NATO-Ukraine charter, which provides for intensified consultation between the Alliance and Ukraine. Ukraine's independence and sovereignty are vital to European stability, and the agreement with her is a further move to consolidate her key role in Europe.
We also looked at progress on the Alliance's internal adaptation, in particular the development of a new command structure. The aim is to reach final agreement by the time of the December ministerial meetings. Against this background, we warmly welcomed Spain's readiness to participate fully in the alliance once agreement on the new command structure has been reached. I should underline that, while we want to see Spain contributing fully to alliance security, we are determined to ensure that the interests of Gibraltar are fully safeguarded in this process.
We also discussed Bosnia, and expressed particular concern about the political crisis in the Republika Srpska. We called on those responsible to resolve their differences peacefully, and demanded that the police in Republika Srpska comply fully with all the provisions of the Dayton agreement. We also again urged the leaders of the region to deliver those indicted for war crimes for trial at the International Tribunal in The Hague. This issue must not and will not be put on one side.
Finally, we agreed on a further NATO summit in April 1999 to mark the 50th anniversary of the Washington treaty. That treaty has proved its enduring value in keeping the peace in Europe. But NATO has also shown its continuing relevance, and its ability to adapt to changed circumstances. NATO must continue to evolve and change as the security situation in Europe changes. The agreement on enlargement at the Madrid summit is a further important step in that process. It is an agreement which meets all of the objectives that we sought to secure. I commend it to the House.
Mr. William Hague: May I thank the Prime Minister for his statement? On behalf of the Opposition, I welcome many aspects of the Madrid summit, particularly the historic decision to extend the NATO Alliance to the east. I am glad that the right hon. Gentleman acknowledges the outcome of the summit as very much in line with the policy of the previous Administration, and that continuity is most welcome, as are his assurances concerning Gibraltar.

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Does the Prime Minister agree with me that the future stability of Europe may well depend on extending the prospects of membership to other central and eastern European nations over the coming years? What assurances did the right hon. Gentleman give to Romania and Slovenia in that respect? I agree with him that we must not undermine NATO's fundamental role as a hard-edged military alliance. Does the Prime Minister accept, however, that NATO enlargement and EU enlargement are complementary processes in many ways, and that in this respect the Madrid summit was more successful than the Amsterdam summit?
May I welcome the new NATO-Ukraine charter? Does the Prime Minister agree with me that President Kuchma's presence at the summit sent a signal to the people of the Ukraine that their nation has a positive role to play, in partnership with NATO, in spreading democracy and security throughout the world?
I agree with the Prime Minister that relations with Russia are central to the future of NATO, and that the new NATO-Russia Founding Act is an essential step in bringing Russia closer to the west. Will he assure the House that, although Russia has legitimate security interests, she will not have a right of veto over future NATO members?
Does the Prime Minister agree with me that Britain can be proud of the role that our forces have played and continue to play in Bosnia? He said that he had urged the leaders of the region to deliver those indicted for war crimes for trial, but how does he intend to take that forward in practice?
Does the Prime Minister agree that the NATO summit was an opportunity for him to reassure our allies that Britain will continue to play its full role in NATO? Did he explain to them his decision to hold a defence review? Will he confirm that some of our military commitments should be above the review, as they are essential to our defences and those of our NATO allies? Will he take this opportunity to say again that the Trident nuclear deterrent and the Eurofighter 2000 fall into that category?
What consultations has the Prime Minister had with his fellow Heads of Government? Has he reassured our German allies that the United Kingdom will not disband or withdraw the 1st Armoured Division from Germany? Did he reassure our Dutch partners that we will continue to have amphibious capabilities to co-operate with them? If those commitments are under review, are they not under threat? Is the Prime Minister aware that soundbites do not support NATO, but political action and military hardware do? Those are the two criteria that we will apply to measure the Government's commitment to our NATO allies, both old and new.
Finally, does the Prime Minister agree that the enlargement of NATO to take in former members of the Warsaw pact is an historic vindication of the resolve of those who, throughout the 1980s, rejected the simple-minded arguments for unilateral disarmament, and stood up for NATO and the western alliance in the years when that support counted the most?
The Prime Minister: I shall first deal with the politics at the end of the right hon. Gentleman's comments. The defence review has been welcomed by people in the
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armed forces, who think that it is entirely sensible. We have made it clear that it is foreign policy-led. As far as I am aware, the greatest cuts in defence made by any Government were made by his Government. With the greatest respect, we shall not take lessons from him on that. Our commitment to Trident and the Eurofighter has been made absolutely clear on many occasions.
I shall briefly deal with the points that the right hon. Gentleman made on the summit and on the NATO-Ukraine charter. We are in basic agreement. The assurances to Romania and Slovenia will be considered in good faith. We did not think it right to give a commitment that those countries will be taken in when the next round of enlargement occurs, but we have given a commitment that we will consider it in good faith.
We thought, as did the Americans and other countries, that it was right not to bring them in now, as the three countries that have joined—Poland, the Czech Republic and Hungary—have shown over a long period their commitment to the democratic process, and have got their armed forces almost up to the required state to be full members of NATO, whereas that is not yet the position with Romania and Slovenia. In the language we used, we deliberately "held the door open? to them and to other countries, and we shall continue to do so.
I agree that NATO and European Union enlargement go hand in hand. The charter with Ukraine is an important attempt to bind Ukraine even more into the European Community, but it still has a long way to go with its economic reforms. I expressed to President Kuchma the Government's full support for the action that he is taking, in the hope that he will continue that economic reform process.
Russia will not have a right of veto over new NATO members, although we must handle that issue sensitively. I concur with what the right hon. Gentleman said about the role of our armed forces in Bosnia. We keep all measures relating to the prosecution of war criminals under close scrutiny the whole time. I am immensely glad to report to the House that the British armed forces in Bosnia received the greatest of praise from all countries at the summit. They are generally reckoned to have done a superb job, often in very difficult circumstances, that have taken them far beyond the normal duties of soldiery.
Mr. Paddy Ashdown: I welcome the Prime Minister's statement, which showed that sensible and admirable progress had been made in Madrid. Even if some of it had as much to do with American domestic politics as with international necessity, it is no less welcome for that.
I have two questions, one relating specifically to Bosnia and one more general. First, does the Prime Minister agree that, while it may not be necessary to hunt down every petty war criminal in Bosnia immediately, it is urgently necessary for stability, and for withdrawal from the climate of increasing confrontation in Bosnia, to hunt out soon—or obtain soon—the more senior war criminals? Does the right hon. Gentleman agree that the sooner that is done, the better?
My second question relates to the general progress in Madrid. That progress was sensible, but short-term. We still lack a strategy. Let me give the Prime Minister an example. The armed forces of Romania, which has been excluded from NATO, are by general consent both more

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efficient and more under civilian control than those of, say, Poland and the Czech Republic. Are we now going to draw up general criteria that will be applied in the consideration of future entrants?
Does the Prime Minister accept that there is a necessary but growing divergence between the long-term strategic aims of the Americans in NATO and the Europeans in NATO? The Americans see NATO as a global institution, perhaps with implications for their policy on the middle east, while we see it as an institution concerned with security in Europe.
As an ad hoc set of decisions, the decisions that were made were sensible; but they do not yet comprise a strategy, and we need a strategy urgently.
The Prime Minister: I agree that it is important for us to take action on war criminals, and, as I have said, we keep that under constant review. There are many other things that we need to do in order to give more impetus to the process in Bosnia, which has been in danger of drifting for some time. That issue formed a large part of the more informal discussions at the Madrid summit. We hope that the proposals that now exist, and the implementation of the Dayton agreement, can be given greater force, and we are considering how we can achieve that.
As for Romania, and the question of which countries come into NATO, a range of criteria must be established before a judgment can be properly assessed; but I think that those criteria are basically fairly obvious. Of course they are to do with the state of the country concerned—with the development of democracy there, and the state of the country's armed forces; but—this is the burden of what I had to say when I addressed the summit—we must realise that NATO is a military alliance.
There was a danger that people were saying, "Let us broaden the alliance to show good faith, and introduce more and more countries." What membership of NATO means is that we guarantee that we will send our troops to a country and that, if necessary, they will die to defend that country. The country involved guarantees, vice versa, that its troops will come and die for our country. That is a profound and solemn obligation, which I believe should be undertaken only when we are absolutely clear that certain countries are ready to undertake it.
Judgments change. Two years ago, people might have said that Slovakia rather than Slovenia was the country that would come into NATO, but they probably would not say that now. The matter must be kept under review.
The right hon. Gentleman mentioned relations between the Europeans and the Americans. I think that there is a clear strategy for NATO, in that collective security is still tremendously important to us. Of course its nature has changed somewhat as a result of the welcome changes that have taken place in eastern Europe, but I believe that one of the purposes of NATO is to bind the Americans and Europe more closely together.
I took the opportunity of saying in Madrid—as, indeed, I did at the Amsterdam summit, when we discussed the idea of a common defence policy in Europe—that nothing must ever be done that would undermine that transatlantic alliance, because it is the foundation of NATO, and is entirely right in terms of defence principles.
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We were talking about Romania a moment ago. In Romania, we have our biggest bilateral defence programme in central Europe. It is far bigger than those in many other countries that urged us to take Romania into NATO.
Mr. Tam Dalyell: When President Kuchma came to the Jubilee Room last year. I asked him in his capacity as the former technical director at Baikonour whether there should be more co-operation on the tremendous science that existed in Soviet times. He gave the positive answer that, for financial and technical reasons, a great deal could be done between Ukraine and, for that matter, Kazakstan and the west for mutually beneficial purposes. Was anything said about that technical co-operation or about the unstable sarcophagus problem at Chernobyl?
The Prime Minister: I had a bilateral meeting with President Kuchma, and both those issues were raised. On the first, we assured him of our intention to carry on and to deepen technical exchange. Of course, we make quite a contribution through the know-how funds to what is happening in Ukraine.
My hon. Friend asked about the sarcophagus, the covering on the Chernobyl reactors. President Kuchma raised that with us, and we are currently looking to see how the European bank for reconstruction and development can assist in the process of finding an alternative to what is there at present—the Chernobyl reactors. It is important for this issue to be dealt with because if we are to make sure that Chernobyl is closed down by 2000, there is much work to be done. We agreed that we would carry on exchanging information on these subjects.
Mr. Tom King: I assure the Prime Minister that, on the central theme of the enlargement of NATO, I think that he will have wise and general support. I emphasise the importance of what he said about showing sensitivity to Russia in this development. There is too ready an acceptance that it must be the obvious step. It is the right step, but it needs to be carefully managed.
Can the right hon. Gentleman say anything about the costs of infrastructure improvements that may be involved in this enlargement? Is it not the case that they could result in substantial injections of foreign currency into some of the countries concerned? Is he aware that, in an existing NATO country, we cancelled a major infrastructure improvement because of evidence that criminal organisations were likely to receive a substantial share of the proceeds? I encourage him to take a close interest in how such investments will be managed in the countries that receive them.
The Prime Minister: I thank the right hon. Gentleman for his broad support. I agree that we have to be very sensitive to Russia's concerns, which is why last month we signed the agreement with Russia about our future relations. It is not possible to give a detailed breakdown of the costs, although I am advised that some of the estimates that I have seen recently are highly exaggerated.
The right hon. Gentleman's points about foreign currencies and the difficulties that were encountered over infrastructure projects are well taken. For precisely that

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reason, we have to be clear, during the negotiations about accession, that proper arrangements are made. Of course, that is another reason for us to be clear about those countries being ready for full membership of NATO.
Mr. Jim Marshall: My right hon. Friend agreed with the Leader of the Opposition that the expansion of NATO and that of the European Union would go together. Does he agree that the Western European Union should be involved in that equation? If so, will an invitation be extended to the three applicant countries to join the Western European Union? If that happens, what will be the consequences for the developing common defence policy of the European Union?
The Prime Minister: My hon. Friend is right: the WEU has an important role to play. That was precisely why we safeguarded its position in the Amsterdam treaty. Words were inserted at our behest to make it quite clear that part of the common defence policy that we certainly perceive in relation to Europe is through the WEU. Obviously, invitations to other countries are kept under review all the time.
My hon. Friend's point is well taken, and it is another reason for our belief that NATO and the WEU are the foundation stones of our common defence policy. Although we want to co-operate with European Union countries and want such co-operation to be practical, we should not rush into a common European defence policy while we are still trying to sort out basic arrangements in the alliances we already have.
Mr. Nicholas Soames: I applaud the Prime Minister's determination to ensure that it is well understood that NATO is a military, not a political, organisation. In his deliberations, was he able to come to any firm conclusion with our partners on the question of Commander-in-Chief South, and the position of the French Government? Does the Prime Minister agree that, as there are countries that have been left out—for reasons with which I entirely concur; again, I applaud what he said about them—it is important that the partnership for peace process is strengthened and deepened, so that it does not become a meaningless waiting room for those countries that want to join, but are not able to do so?
The Prime Minister: On the first point, perhaps the hon. Gentleman will allow me to be diplomatic and to say that discussions are continuing in relation to Commander-in-Chief South, but the hon. Gentleman's point about the partnership for peace process is absolutely right. I should have said that that was one of the things that was raised at the summit.
It is important that these countries understand that the way is open. A number of different factors have to be balanced there, but one reason why I was hesitant about an enlargement by live, apart from the fact that I did not think that the case was sufficiently justified on other grounds, was that it was important that we did not give the impression that, having taken in five, that was the end—that one group was in and no one else came in.
This process will have to be handled with huge care and sensitivity, not least because of the problems to do with Russia over the next period, but the partnership for
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peace has worked out far better than people thought as an initiative, and we gave it full support and agreed to intensify it.
Ann Clwyd: As the Prime Minister knows, we have not had the open and vigorous debate on this important issue that people have had in the United States, which is regrettable. If we were being sensitive to Russia, we would not have embarked on this enlargement in the first place. Does he think it responsible for NATO to encourage countries such as Poland, which are struggling with their economies, to double their defence budget at the cost of health, education and the infrastructure—all those things that are needed in an emerging economy?
How much is enlargement going to cost this country? The rumours in the United States are that it will cost us more than the United States. Lastly, will he tell us precisely what the process of ratification will be in the House of Commons? As he knows, in the United States, it is a long-drawn-out process. Can he give us some indication of the time scale for ratification in the House?
The Prime Minister: First, the process of enlargement is important. There can no doubt be legitimate disagreement about it, but I believe that it is extremely important for countries that have emerged from under the shadow of the old Soviet Union and that feel that accession is an important part of their progress towards modernisation and democracy, to be part of the NATO alliance.
Having talked to the President of Poland during the summit, I believe that Poland did not need much encouragement. It views accession as an essential part of what it wants to achieve. Indeed, the problem for NATO is not that it is having to drag unwilling countries into the NATO alliance. On the contrary, as we have discussed, the problem is that it is having to say no to many countries that want us to say yes at present.
The ratification process will, of course, be a matter for discussion, but it will be fully debated in the House of Commons. There are people in the United States who wholly oppose the enlargement process, but many of them want the United States to have an isolationist policy, which I would not like us to agree with at all. The maintenance of a strong link between the United States and Europe is an essential part of our future defence requirements and of our security. It is to the credit of President Clinton that he has been prepared to take those people on.
Sir Geoffrey Johnson Smith: I, too, applaud the Prime Minister's statement. I can confirm that the reaction of the countries to which he referred is correct, as I was able to judge for myself at a meeting in Warsaw over the weekend of the Organisation for Security and Co-operation in Europe.
Nevertheless, I hope that the Prime Minister will take into account the fact that, as NATO is a military alliance, there is also concern, among those who have welcomed expansion so far, that it could lead to tremendous diplomatic and political problems with not only Russia but those nations which might find themselves disappointed. I strongly emphasise the comments of my hon. Friend the Member for Mid-Sussex (Mr. Soames),

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who said how important it is to establish the criteria in a way that will ensure that, if those countries are not included in the expansion of NATO, there will be an expansion of the usefulness—in their eyes—of the partnership for peace and proper, and positive use of the Foundation Act which established the co-operation of discussions with Russia.
The Prime Minister: I totally agree with the right hon. Gentleman. That is precisely our intention. It is important that all these decisions are taken free from politics between the main powers. They must be taken on an objective basis that can gain some credibility. That is what we have tried to do in the arrangements that we set out. I agree entirely with the right hon. Gentleman.
Mr. Dennis Skinner: Does the Prime Minister agree that this exercise will almost certainly cost the Labour Government billions of pounds over five years? Now that those three Warsaw pact countries—the Czech Republic. Hungary and Poland—want to join, and another half a dozen Warsaw pact countries want to jump on the bandwagon, who is the enemy? It cannot be all those countries in the middle east, because successive Tory Governments have rearmed them over the years, and it cannot be China because Governments have handed over Hong Kong to that country. Who is the enemy? Why should we be spending all this money for this organisation, when we could use it on the hospitals, schools and many other projects that we need in Britain?
The Prime Minister: I am sorry to say that I cannot agree with my hon. Friend. We have no reason to think that we are talking about billions of pounds of public spending. I said earlier that I see no reason now—I will make it clear if things change—why there should be a real-terms increase in NATO expenditure at all. Much of the spending that takes place will be in those countries that want to gear themselves up for membership of NATO.
The purpose of NATO remains collective security. Yes, it is less easy today to say where a threat may come from, but we need the capability to defend ourselves properly. Collective security has been the basis of our defence for decade upon decade, and it has served us pretty well. The vast majority of countries which remain in NATO—probably all those countries—do so because they see genuine benefit in it. They would not remain in membership if they did not.
Mr. Michael Colvin: I support strongly the calls today for an enhanced role for partnership for peace. Can the Prime Minister be a little more specific about the timetable? Is he saying that the three new members of NATO will be fully fledged members by 1999, able to fulfil their obligations under article 5 of the Washington treaty? Can he be more specific about costings? He said that the cost to the United Kingdom of those three new members will not be significant. Whatever the cost, significant or not, will it fall on the defence budget or the Foreign Office budget?
We welcome what the Prime Minister said about Spain and Gibraltar, but am I to understand that the United Kingdom has vetoed Spain's membership of the integrated military structure, and will continue to do so
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until it allows its airspace to be used not only for NATO allies engaged in NATO exercises but for civil airlines using that airspace for access to Gibraltar?
The Prime Minister: On the timetable, the aim is that, by the 50th anniversary meeting in April 1999, the membership of those countries will be through. Of course, the process of accession has to be negotiated with them in detail over that period, and that is what will happen. The aim is certainly to have them all in by April 1999, and that is the agreement we reached.
The position on Spain and Gibraltar is that the Foreign Ministers have to come back in December with the details of how the command structure will be changed as a result of the internal adaptation process of NATO. We have made it clear to the Spanish Government, tactfully but firmly, that a necessary part of ensuring that any new command structure that involves Spain is in place is that we should resolve the questions over the airspace. We will continue to do that, and I hope that we will be able to resolve the issue.
The reason that we are taking that attitude is not machismo. If Spain is fully to integrate into the military command structure—we would welcome and strongly support that—it will mean consequential changes in the way that that airspace is used. We have to ensure that it is right.
Mr. David Winnick: What did the Spanish Foreign Minister mean yesterday when he spoke of Spain's "legitimate demands" of sovereignty over Gibraltar? What sort of topsy-turvy language is that? Is not an important principle involved—the right to self-determination of the people of Gibraltar? We might compare Gibraltar with the sad situation in Northern Ireland, but Northern Ireland is a divided community and Gibraltar is not. Now that Spain is a democracy, and has been for a number of years, should it not respect the wishes of almost all the people who live in Gibraltar? Surely that is not asking too much.
The Prime Minister: Fortunately, I do not have to answer for the Spanish Foreign Minister. It is important to understand that British Government policy on Gibraltar is not going to change, and that the wishes of the vast majority of people in Gibraltar are very clear.
Mr. Douglas Hogg: I support the policy of the gradual enlargement of NATO, and particularly the invitation to the three Visegrad countries. Will the right hon. Gentleman clarify policy on the Baltic states? He knows that a number of people wish to close the door permanently on any admission to NATO of the Baltic states—or at least some of them—because of the ethnic Russians in at least two of them.
Does the right hon. Gentleman agree that we should maintain the policy of admission, especially as Estonia, and probably others, will in time become members of the European Union? Meantime, as my hon. Friend the Member for Mid-Sussex (Mr. Soames) said, should we not concentrate on ensuring that the three Baltic states participate fully in the partnership for peace programmes?
The Prime Minister: I agree with the right hon. and learned Gentleman—that is one reason why we were so

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insistent that the right language about the Baltic states went into the agreement and communiqué. It was made clear that there were aspiring members among the Baltic states, and that the door remained open to them on the same basis as for others. That is important. The fact that we took such a strong view was hugely welcomed by representative of all the Baltic states who attended the dinner last night. I am sure that we have generated a great deal of good will among them.
Mr. John Home Robertson: I am sure that NATO is right to defer consideration of the application from Slovenia. However, does my right hon. Friend agree that stability in the former Yugoslavia is in the vital interest of NATO and the European Union? Does he further agree that it will be difficult to have stability in the former Yugoslavia as long as Ratko Mladic and Radovan Karadzic are strutting their stuff in the Bosnian Republika Srpska? Can my right hon. Friend envisage circumstances in which NATO forces in SFOR in Bosnia may be required to help to apprehend those indicted war criminals?
The Prime Minister: All that I can say to my hon. Friend is that we remain dedicated to bringing war criminals to justice, and we keep under review the best means of achieving that. However, that should not be taken as politic-speak for saying that the issue is being pushed into the long grass—it is not. It remains under active consideration.
Mr. John Wilkinson: May I add my words of appreciation to those of right hon. and hon. Members on both sides of the House for the Prime Minister's statement, and in particular for the charter between NATO and Ukraine and the Government's unequivocal statement of support for Ukraine? It is a favourable development, because Ukraine is the foundation stone of eastern European security.
To continue the metaphor, are not the Baltic states the cornerstone of eastern European security? Therefore, could not a similar charter between NATO and the Baltic states be drafted, signed and ultimately ratified? Notwithstanding the favourable statements made, the Baltic states feel exposed, yet they have impeccable democratic credentials, and take part, alongside NATO, Russian and Ukrainian troops, in peacekeeping in Bosnia.
The Prime Minister: The hon. Gentleman is absolutely right. The Baltic states undertake that peacekeeping role, which is one reason why we wanted to include language supportive of them in the communiqué. Obviously, we always keep under consideration the best way of improving relationships with them in defence terms. On NATO and Ukraine, it is important to understand Ukraine's absolutely pivotal role in the security of eastern Europe. The move was very good and essential for the future, not only because it assists Ukraine but because it puts in place another block of the collective security of all our countries.
Mr. Jeremy Corbyn: Does the Prime Minister accept that opposition in the United States to NATO expansion comes largely from the peace
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movement and from those who are concerned about burgeoning US military expenditure? Like many people in central Europe, they are very concerned that countries with huge gaps between rich and poor will be expected to find millions of pounds that are desperately needed for houses, hospitals and schools in order to buy new weaponry from the United States and western Europe.
Would not the situation be rather better if we were attempting to achieve de-escalation in military expenditure across Europe rather than NATO expansion right up the borders with Russia—which may well fuel another arms race between NATO and Russia?
The Prime Minister: Opposition will, of course, come from many quarters, but it is misplaced. Countries in central and eastern Europe want to be NATO members, not because they wish to engage in some new arms race—they themselves are tremendously sensitive to their own relations with Russia—but because they regard NATO membership and the collective security that that offers as the best platforms for stability for their countries, and as the best encouragement to the democratic process.
Those countries also detect a very strong connection between economic reform and NATO membership—not because of specific expenditure but because, for them, it is important to be part of the collective security that NATO represents. Being part of that collective security assists the process of economic reform in those countries, because it gives them security and confidence.
Mr. William Cash: Does the Prime Minister accept, when he says that NATO and the EU go hand in hand, that there is a potential inherent contradiction between the concept of control and command, which is part and parcel of article 5 of the NATO treaty, and the concept of progressive movement towards a common defence policy in the Western European Union? How will he reconcile that contradiction in his thinking, as he has just outlined?
The Prime Minister: We had it written into the Amsterdam treaty that we believe that our common defence is in NATO precisely because we wanted no one to be in any doubt that—in whatever arrangements for common defence we have in Europe—NATO remains for us, as for other countries, the foundation stone of our defence. NATO is a body that we have joined that, for reasons of the better satisfaction of our national interests, requires a pooling of sovereignty. The situation is similar with the European Union. They are, of course, different bodies, but the principle is the same—that, in certain respects, we are better off binding with other people than remaining outside and on our own.
Dr. John Marek: I congratulate the Prime Minister and the Foreign Secretary on the success of the Madrid summit. Hon. Members on both sides of the House believe that Spain should be integrated into the NATO machinery. As part of that process, however—to take the Prime Minister back to a question asked earlier—restrictions over Spanish airspace should be lifted. That applies not only to military but to civil over-flying. It is an important issue. I am sure that the Prime Minister will

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receive congratulations from all hon. Members if he can resolve it—which I hope he will commit himself to doing before September.
The Prime Minister: I understand the point that my hon. Friend makes, and, of course, those matters will be part of the discussions that we shall have over the next few months.
Mr. Crispin Blunt: I should like to ask the Prime Minister about the lack of differentiation between Slovenia and Romania. He spoke about the qualifications of credible candidates, which included being a reliable democracy and making a contribution to collective security. We have accepted the membership of Hungary, which does not have a contiguous border with any NATO country.
If NATO is to be a successful military alliance, surely the capacity to reinforce its members is of great importance, and Slovenia has a central contribution to make. Given that it fulfils the democratic functions—I accept that the armed forces of Slovenia are frankly neither here nor there in terms of the overall balance of NATO—why was there no differentiation? Was it because of the need for the United Kingdom to cosy up to the United States in the discussion about the arrangements?
The Prime Minister: That is a slightly strange sentiment coming from that corner, but we shall let that pass. In relation to the first part of what he said, the hon. Gentleman has a fair point in one sense, but it was felt by everyone concerned that Romania and Slovenia had to be dealt with together, and I think that that is the right way to have proceeded. It is nothing to do with cosying up to the United States or anything else; it was part of our joint position because we jointly believe in it.

BILL PRESENTED
  SOCIAL SECURITY
  Secretary Harriet Harman, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Blunkett, Mr. Secretary Dewar, Mr. Secretary Dobson, Secretary Marjorie Mowlam, Mr. Secretary Davies, Dr. David Clark, Mr. Frank Field, Mr. Geoffrey Hoon, Mr. Keith Bradley and Mr. John Denham, presented a Bill to make provision as to the making of decisions and the determination of appeals under enactments relating to social security, child support, vaccine damage payments and war pensions; to make further provision with respect to social security; 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 42].

  Disability Discrimination (Provision of Voting Facilities)
  4.16 pm
  Mr. John Heppell: I beg to move,
  That leave be given to bring in a Bill to amend the Disability Discrimination Act 1995 to make it unlawful for a provider of voting facilities to discriminate against disabled people.
  There are many reasons that I wish to introduce the Bill, but there are three main ones. The first is the "Polls Apart 1992" survey carried out by Scope, which spelled out some of the difficulties that disabled people face in getting access to polling stations. It showed that only 12 per cent. of polling stations were fully accessible, while 88 per cent. had significant barriers that would have prevented a disabled person from voting there.
  Only one out of every eight polling stations are accessible to all disabled people. A quarter had two or more steps, 13 per cent. had temporary ramps, and only one in three that needed permanent ramps had them. The survey found problems with doorways and lighting, a lack of privacy, polling booths and ballot boxes that were inappropriate or located where people with a disability could not use them, and slippery floors. I could go on and on.
  That survey on its own would have been enough to justify the Bill but, on top of that, Scope has produced "Polls Apart 1997", which is my second reason for introducing the Bill. That report will not be released until next week, so, although I have seen a copy, I shall not reveal the details. However, without giving away any great secrets, I can say that the report shows that things have not got any better. It was a bigger survey, and, in some respects and in some areas, things seem to be worse. There are, however, a few positives.
  Some councils have made enormous strides, sometimes at very little cost and, I have to say, with very little help from the Home Office. They have made amazing improvements simply by changing their attitude. Unfortunately, those councils are the exceptions that prove the rule. The third reason for introducing the Bill is my personal experience; what I have seen in my locality has appalled me.
  During the election, I went to a polling station on my own patch. I found a well-signed entry for the polling station, went through the gateway, and found a path that was 100 to 150 metres long, with, roughly every six feet, a step going down. There was a hand rail for people with a disability. I helped an elderly lady with bandages on her leg all the way down that path to get to the polling station, only to find, when I reached the bottom, that there was side access to a road. The woman could have had her taxi bring her directly to the door of the polling station, but a simple matter of bad signing had prevented it.
  All that was despite the fact that I had written to the chief executive before the elections asking him to ensure that staff were trained in matters of access and to take account of the needs of disabled people. In response, I got a self-congratulatory letter saying:
  "We think that over 50 per cent. of our polling stations are accessible to disabled people."
  That is the authority's assessment, not mine, and I suspect that, if Scope had surveyed it, far less than 50 per cent. of stations would have been found to be accessible.

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  The chief executive informed me that there was no problem because some of his inspecting officers had portable ramps that they carried around with them on election day. I wondered how they knew when a disabled person would turn up, and at what polling station, so that they could nip across in their cars with the portable ramp. To be quite honest, it was nonsense.
  I was even more surprised to find that the authority had no knowledge of the fact that there were grants available for elections—50 per cent. grants for temporary ramps and 80 per cent. for the new, more accessible polling booths. Despite the fact that, since 1993, the Home Office has paid out £179,000 in such grants, my authority was unaware of them. I had told the chief executive that I was sure that there were grants, but he said that there were not. As recently as June, he said:
  "Firstly, I have checked with the Home Office about the availability of grants for access to polling stations and, as I thought, no such grants are available."
  The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth)indicated dissent.
  Mr. Heppell: I am getting a shake of the head from the Minister—I hope that I have not got it wrong.
  Mr. Tom Levitt: No, you are right.
  Mr. Heppell: I am right—okay.
  To give credit to the chief executive of Nottingham city, he is now suggesting that £150,000 be put into the capital programme at the beginning of 1998 to try to deal with some of those problems, so things are moving.
  The Representation of the People Act requires local authorities to make polling stations accessible to disabled people, but, in my view, local authorities are clearly not doing so. One of the problems is that elections are the one area in which council officers do not take any directions from elected councillors—they can do what they like, and it does not matter what anyone else says.
  To be quite honest, it shows, because some returning officers turn into little Hitlers—any advice one gives them is considered political, and they are determined to run it their way. That is a more general point about elections. Many election officers are helpful and do their best, but many councils do not issue clear guidelines about how they should deal with disabled people. It seems that it is left to the officers' common sense. Well, let me tell the House that some people's common sense is my nonsense.
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  I find that many of the people dealing with the public during elections, in effect, tell disabled people off. They say to them, "It's really your fault—why didn't you put in for a postal vote? It's not my responsibility—you should have put in for a postal vote." My response is that postal votes are not an excuse for authorities to do nothing.
  Why should disabled people be denied the right to go to a polling station and vote when they want to? Why do they have to vote ahead of the rest of us? In the 1992 elections, it is reckoned that 3 per cent. of the population switched from Labour to Conservative. That was not very helpful to my party, but people had the right to do that —they had information right up to polling day, and could wait until the day itself to make their minds up. Why should people with a disability not have that same benefit?
  The whole postal vote system causes confusion to many people who have a disability. In 1990, the Government spent £750,000—three quarters of a million pounds—publicising the right of people living abroad to take part in British elections. As a result, 34,500 people registered: that worked out at £22 per person. The Government spent £14,500 to publicise the rights of the 7 million disabled people and the elderly to postal votes in elections; that worked out at 2p per person. No wonder people with disabilities believe that they are being treated as second-class—sometimes third-class—citizens.
  In the past few years, enormous strides have been made in recognising the needs of disabled people and the fact that they deserve civil rights. I believe that the Civil Rights (Disabled Persons) Bill, the private Member's Bill introduced by my hon. Friends the Members for North-East Derbyshire (Mr. Barnes) and for Kingswood (Mr. Berry), was the catalyst for the Disability Discrimination Act 1995.
  The Bill that I propose is not significant; it is very modest. I am not asking for civil rights for disabled people in total; all I am saying is that I want to give them the basic democratic right that the majority of us enjoy—the right to vote.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. John Heppell, Mr. Harry Barnes, Mr. Roger Berry, Mr. Vernon Coaker, Mr. Mike Hall, Mr. Neil Gerrard, Mr. Elfyn Llwyd, Mr. John Hayes, Mr. John Healey, Mr. Tom Levitt, Kali Mountford.

  Disability Discrimination (Provision of Voting Facilities)
    DISABILITY DISCRIMINATION (PROVISION OF VOTING FACILITIES)
    Mr. John Heppell accordingly presented a Bill to amend the Disability Discrimination Act 1995 to make it unlawful for a provider of voting facilities to discriminate against disabled people: And the same was read the First time; and ordered to be read a Second time upon Friday 12 December, and to be printed [Bill 43].
  Opposition Day
  [2ND ALLOTTED DAY]
  Opposition Day

    Pensions
    Madam Speaker: I have selected the amendment in the name of the Prime Minister.
    4.27 pm
    Mr. Peter Lilley: I beg to move,
    That this House condemns the Government's assault on pension funds through the removal of tax relief on dividend income of pension funds in direct betrayal of their election pledges; agrees with the National Association of Pension Funds that this is the biggest attack on funded pension provision since the War; believes the brunt of the cost of the Windfall Tax will also fall on pension funds; warns members of occupational schemes that they and their employers will have to increase contributions to maintain benefits; further warns personal pension holders that they will need to pay higher premiums or suffer significantly lower pensions; believes the Government is guilty of mis-selling personal pensions if it refuses to spell out how much this tax change will cost pension holders; demands that the Government increases the contracted out rebate to avoid large-scale contracting back into SERPS; deplores the total absence of consultation about these far-reaching changes in company and pension taxation which has resulted in shoddy, hastily prepared and ill-thought-out proposals; and calls for the Government to withdraw these measures until it has prepared a Green Paper on future reform of company taxation and its implications for pension provision.
    One of the most daunting challenges facing every developed country is that of providing decent pensions for an aging population. When the welfare state was set up, there were five working people contributing to support every single pensioner. By 2030, for every five working people, there will be three pensioners—three times as many pensions to provide.
    There are only two ways of financing pensions: by taxes and charges, or by savings and investment. Continental countries rely almost exclusively on the tax system to finance their pension provision. They use this year's taxes to pay for this year's pensions of people who have already retired. It is pay-as-you-go. As a result, they face increasingly crippling burdens of taxation, as more and more pensioners are supported by fewer and fewer people of working age. When the Minister for Welfare Reform was Chairman of the Select Committee on Social Security, he highlighted the problem of unfunded continental pension liabilities, so the House is well aware of that.
    By contrast, in this country we have encouraged people to save and invest for the future. We have enabled them to opt out of the state earnings-related pension scheme, and given them national insurance rebates to do so. When they opt out of the state scheme, their contributions are genuinely saved and invested; they go into industry and generate the profits and dividends to pay for people's pensions in 10, 20 or 30 years' time—without imposing a crippling burden of tax on our economy.
    Mr. Michael Clapham: The right hon. Gentleman will be aware that two years ago, Coopers and Lybrand carried out a study which concluded that 2.4 million people on low incomes
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    had been misled, and that their contracting out of SERPS would not pay for the administration costs of the personal pension schemes that they had entered. Therefore, what he has just said is not quite correct.
    Mr. Lilley: I am sure that the hon. Gentleman will agree that the misselling of pensions in the past by the private sector is no justification for the misselling of pensions in the future by the public sector. Measures that reduce the return to pensions, relative to costs, cannot be an improvement.
    The fact is that we have built up a huge flow of investment. As a result, we have accumulated about £650 billion of investment to pay for present and future pensions. That is not just more than any other country in Europe; it is more than all the other EC countries put together have bothered to save and invest for their future pension liabilities. Above all, it has been Conservative Government policies, encouraging savings and investment, which have put Britain in that strong position.
    Kali Mountford: A constituent of mine did exactly as you suggest, but lost nearly £7,000 of his savings. He used to be a Tory voter, but he was so disappointed by what happened with his personal pension plan that he reverted to the Labour party, thank goodness. What would you say to my constituent, who has lost such a massive sum investing in the very way that you describe?
    Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The only "you" in the Chamber at the moment is me, not the right hon. Member for Hitchin and Harpenden (Mr. Lilley).
    Kali Mountford: I apologise.
    Mr. Lilley: I should be quite happy for you to answer that question, Mr. Deputy Speaker. Still, I shall do my best. I would advise the hon. Lady to ensure that her constituent takes up his grievance with the regulators, who have given an assurance that no one will lose, and everyone will be compensated for misselling.
    Sir Nicholas Lyell: Is it not correct that the changes to advance corporation tax made by the Government in the Budget will remove, from a 30-year-old man building up a savings pension fund, not the £7,000 that the hon. Lady's constituent lost, but about £50,000 over his lifetime of work?
    Mr. Lilley: My right hon. and learned Friend is correct. I hope that the hon. Lady will write to her constituent to point out the damage being done to all such people by the actions of Labour Ministers. Meanwhile, I am sure that she will join us in the Lobby tonight.
    Mr. John Butterfill: Is it not also true that the changes that the Government propose to make to ACT have been viewed by independent observers as making it more difficult to complete the pensions review and as delaying the payment of compensation to those entitled to it?
    Mr. Lilley: That is also correct.

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    As I said, the great achievement of building up this huge volume of pension funds, which enjoyed bipartisan support in the past, was primarily due to Conservative Government policies. To be fair to the Labour party, Baroness Castle's reforms also played a part. As far as I am aware, no Labour Government before this one ever tried to penalise or discourage saving in pension funds. Therefore, the Budget changes represent a breach with that bipartisan consensus. The Budget targets pension funds for many billions of pounds a year, which will reduce investment, penalise long-term savers and permanently subject pensioners to double taxation on the income that they put into the funds.
    We should not penalise pensions provision. We need more pensions provision and savings, not less, which is why earlier this year the Conservative Government announced plans to build on our success by ensuring that, in future, every young person entering the labour force would have his or her own pension plan, funded by rebates from the national insurance system, to provide decent, secure, guaranteed funded pensions.
    Basic pension plus involved the Conservative Government putting billions of pounds into pension funds; the Labour Government's Budget involves taking billions of pounds out of pension funds. The Labour party calculated that the accumulated value of the rebates that we proposed over 44 years—that is a long period—would total some £150 billion. On the same basis, it proposes over that period to take £230 billion out of pension funds and use it for other purposes, which only Labour Governments can devise.
    There is a consensus that we should encourage more long-term saving. It is sad that, for short-term political reasons, the Government have decided permanently to discourage and penalise private pension provision, and it is no surprise that the National Association of Pension Funds described the Budget as the biggest attack on funded pension provision since the war.
    Mr. Ivor Caplin: The right hon. Gentleman has not yet responded to the question about the misselling of pensions. Ten years have elapsed since personal pensions were first sold, yet fewer than 12,000 people, including my constituents, have been compensated and more than 500,000 remain uncompensated. What did the right hon. Gentleman do about the misselling of pensions when he was Secretary of State for Social Security?
    Mr. Lilley: Like other hon. Members, the hon. Gentleman raises an important point. I intend to come to it in the order that I choose; I shall respond directly to his point.
    Mr. Dale Campbell-Savours: Will the right hon. Gentleman give way on basic pensions?
    Mr. Lilley: I shall give way to another supporter of my pension scheme, along with the Minister for Welfare Reform.
    Mr. Campbell-Savours: I want to comment on that very point. Conservatives in my constituency blame the former Secretary of State personally for the disaster of
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    recommending that the old-age pension should be privatized. They have read the literature and believe Labour's accusation that the right hon. Gentleman intended to privatise the old-age pension. Does he now have enough conscience to come to the Dispatch Box and apologise to tens of thousands of Conservative party workers throughout the country who blame him?
    Mr. Lilley: I am happy to say that, although we suffered a big swing against us generally throughout the country, there was almost no swing against us among pensioners, except possibly in the hon. Gentleman's constituency. I advise him to ask his constituents whether they would prefer a state pension based simply on the promise of future payment from future tax revenues by a Labour Government, not backed by investment funds, or a basic pension guaranteed by the Government and backed by investment funds. I know which I prefer, and which any sensible person would prefer.
    In any circumstances, a massive new tax charge on pension funds would be deplorable, but from a party that gave the electorate a clear pledge that it would not raise taxes, it is a betrayal of trust. Before the election, the then Leader of the Opposition told Birmingham business men:
    "We have no plans to increase tax at all."
    The then shadow Chancellor said on television on 8 April:
    "We've got no public spending commitments that require extra taxes.?
    The Government then come along and raise £5 billion a year—over and above the windfall tax—by imposing 17 new tax increases, by far the biggest of which falls on pension funds. That is a betrayal of trust on a scale that the Government ought to find deplorable.
    I shall first examine the direct impact of the Government's changes. Secondly, I shall consider the arguments deployed by the Government to defend their claim that the measure will not affect pensioners. In the process of that I shall deal with the issue of misselling, which hon. Members have raised, and finally I shall examine the lack of consultation about those far-reaching changes, which is a scandal.
    The Government hope to raise the very large sums that they propose to extract from the change in advance corporation tax credits without too much political pain, because the money is to be extracted at one remove from the ultimate losers, and the system is so complex that scarcely anyone understands what is happening.
    Mr. George Turner: It is too complicated.
    Mr. Lilley: We are discussing the Government?s measures, and I am inclined to agree with the hon. Gentleman.
    In the course of my professional life I have had to study the ACT system in some detail over many years, and on at least three occasions I have understood it, but it is difficult to sustain that understanding for any length of time.
    For the first time, a Government propose to tax the income generated from long-term savings. In effect the Government are imposing income tax on pensioners' dividends, which they previously enjoyed free of basic-rate tax. Previous Governments of both complexions have thought it right to encourage and reward long-term savers

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    by ensuring that they paid tax once and once only on the income that they saved, and exempting at least from the basic rate of tax any investment income generated by that long-term saving.
    My right hon. Friend the then Chancellor, Norman Lamont, adhered to that rule when he reduced the relief from the old standard rate of 25p in the pound to the new target rate of 20p in the pound. By abolishing that relief entirely—by reducing the credit from 20 to zero—the Government are in effect imposing tax at the standard rate of 20 per cent. on income generated by long-term savings.
    That is a clear breach of Labour's promise not to increase the rate of tax on anyone's income, because it falls on the dividend income accruing to pensioners. People do not immediately see it that way, because that income is building up in their pension funds and PEPs.
    The changes that have been made affect 10 million to 20 million people. In due course, the consequence of that tax burden will filter through to them in the form of higher contributions or lower pensions. Anyone whose pension fund was previously generating dividends worth £100 in a given period will now get only £80. People will have to increase their investment by 25 per cent. to get the same net income.
    The effect on the value of the final pension is not quite as ferocious, because some of the final pension that people receive from their fund is repayment of their premiums, some of the growth might be capital gains and some of their investments might not be made in equities.
    Taking those factors into account, the Association of Consulting Actuaries calculates that a 30-year-old person who was previously investing £100 a month will now need to invest £112 a month to achieve the same final pension as was previously expected. He or she will suffer a 12 per cent. penalty as a result of the Budget.
    To most people it is self-evident that, if the Government extract several billion pounds a year from pension funds, those funds will sooner or later have to find several billion pounds a year more from their contributors or pay out smaller benefits. If the Government are £5 billion a year better off, it follows that the funds must be £5 billion a year worse off.
    Astonishingly enough, the Government's response to that charge is complete denial. They claim that pension funds, pensioners and investments will not be harmed by the change. It was embarrassing enough watching the Chief Secretary to the Treasury on "Newsnight" being skewered by Kirsty Wark. He seemed unprepared for her simple question—how can the pension funds invest as much as before, if they have to pay £5 billion extra to the Government? However, the subsequent comments by the Financial Secretary to the Treasury in the House made the Chief Secretary look perfectly reasonable and thoroughly on top of his brief. She made the amazing claim:
    "The measure is good for pensions and pensioners, not bad for them … People should understand that our tax reforms Will benefit pension funds.?—[Official Report, 3 July 1997; Vol. 297, c. 507.]
    Anyone who believes that must also believe that water flows uphill—or, if one argues hard enough, that it will change direction and flow vertically. I challenge any Government Member to defend the Financial Secretary's statement that the reforms will benefit pension funds.
    Mr. Gareth Thomas rose—
    Mr. Lilley: I shall give way to the hon. Gentleman if he intends to defend the Financial Secretary.
    Mr. Thomas: On the question of tax burdens on pension funds—
    Mr. Lilley: The hon. Gentleman refuses to defend the Financial Secretary—and I can understand why. I shall give way to him later. It is only fair that the Financial Secretary should receive some defence from the Government Benches.
    Mr. Geraint Davies rose—
    Mr. Lilley: Will the hon. Gentleman defend the Financial Secretary's statement that the reforms will benefit pension funds? I shall give way if he will do so.
    Mr. Davies: Does the right hon. Gentleman accept that the actuarial practices to which he referred that evaluate pension funds on the basis of dividend flows alone are quaint and eccentric? Growth prospects are employed in the evaluation of pension funds and minimum funding requirements, in terms of future values and so on, in other countries and for other financial products, such as unit trusts. The wider Budget package offers more investment in Britain and in British industry which, in the medium term, will be good for pensions, good for pension values and good for pensioners. So the right hon. Gentleman's claims are false.
    Mr. Lilley: That effort should win the Mandelson prize for loyalty beyond the call of duty. The hon. Gentleman claims that actuaries base their practices on old-fashioned systems—such as the laws of arithmetic. If we subtract £5 billion from a fund, there is £5 billion less: that is old-fashioned arithmetic. I agree that it is out of date and does not accord with new Labour thinking, but that is how it has been done until now.
    When we study Hansard, perhaps we shall realise that the hon. Gentleman's remarks contained kernels of wisdom and that somehow the pension funds will not suffer because, according to new actuarial analysis, everything will be all right. Therefore, I invite him to address another question that the Financial Secretary could not answer. If pension funds will not be hurt by the measure, why is it necessary to protect charities and personal equity plans from its damaging effects?
    Mr. Davies: It is very kind of the right hon. Gentleman to ask me these questions—I did not realise that I was giving the speech. As I have knowledge in this area, I shall respond. My point is that there is no congruence between money not given in dividend flow and the eventual impact on pension value, because we have not taken into account the impact on equity growth due to the wider economic environment that the Budget creates. The Government have excluded charities not in order to neutralise the effects, but in order to give them the extra benefit that they deserve so much.
    Mr. Lilley: Roughly interpreted, that means that funds will grow faster if we take away £5 billion—so imagine how fast they will grow if we take away £10 billion.
    Mr. John Greenway: Is not the real point rather different? The measure will drive pension fund

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    investment managers away from investing in equities to investing in gilts. As a consequence, the gilts yield will be reduced, as will fund values. It is a question not just of the £5 billion, but of the effect that the measure will have on the financial markets, which will reduce yield.
    Mr. Lilley: I am sure that my hon. Friend, who is an expert in such matters, is correct. It is part of the law that I adumbrated in response to the Budget: the further removed the tax charge is from the taxpayer, the more damage it does as it works its way through the economy. My hon. Friend has given an example of that damage.
    As well as simply denying that taking money out of pension funds has any adverse effect, the Government's second defence is that many of the funds are in surplus. The simple fact is that no personal pension funds or money purchase funds are in surplus. By definition, there is no such thing as a surplus for those schemes. The impact of higher taxes will feed straight through to them. The changes will affect some £170 billion of such funds and 6 million people, particularly the self-employed who have been building up such a fund over a long period, all of whom will have to pay in higher contributions in future or receive smaller pensions.
    Before the end of the debate, I should like to hear from the Government whether they agree with the Association of Consulting Actuaries that, for a 30-year-old paying in £100 a week, 12 per cent. extra is required to achieve the same pension that he had anticipated. Has the Treasury come up with any of the answers to the questions that I asked last Thursday? The Chief Secretary is present. I do not know whether he is here to listen. Perhaps I may briefly interrupt his conversation. Will he pay attention for a moment? Last Thursday, I asked him a series of questions during the Budget debate. He failed to answer them. We have given him extra time from our own. May we have an answer to those questions today?
    I remind the Chief Secretary what the questions were. By how much will the contracting-out rebate have to be raised to prevent people being best advised to contract into SERPS again? How much will that increase cost the Exchequer? Was that cost included in the calculations in the Red Book and netted off against the £5.4 billion revenues, which will, allegedly, be raised by the tax? If there is to be no increase in the rebate, how many people who contribute to personal pensions will be best advised to opt back into SERPS, and how much will that cost in the long term? Will the Government advise those 6 million people of the impact that their tax changes are having on pensions that they have already taken out? Will not the Government be guilty of misselling if they fail to do so?
    I now deal with the point about private firms misselling pensions, an act that I utterly deplore. I entirely support and endorse the measures that were taken by the former Economic Secretary, Angela Knight, and her successor, who was here until a moment ago, in trying to speed up the resolution of the problem. Past misselling by private individuals cannot justify future misselling by the state. The measure that the Government are introducing will have the effect of slowing down the resolution of the misselling. Both the Association of British Insurers and the National Association of Pension Funds have agreed that it will add further months of delay to the process of
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    calculating and sorting out past misselling, because all the calculations will have to be redone, to take into account the impact that the measure will have on the costs of reimbursing people.
    If the Government believe what they say, they believe that there is no impact, so there is no change in the calculations, so they can order the companies to go ahead and give compensation at the lower level that they had intended and not at the higher level that they now believe is necessary as a result of the tax changes.
    Ms Sally Keeble rose—
    Mr. Lilley: I give way to the hon. Lady. We shall see whether she wants a higher or a lower level of compensation.
    Ms Keeble: The right hon. Gentleman made a point about the advice that the Government might provide to pensioners, but could it could be any worse than the advice that the previous Government provided? In the advertisements, they said:
    "Is the pension you're going to get the one you'd choose?"
    and
    "The right pension for you is now yours by right".
    Or how about this one?
    "The old pension rules made moving around a wee bit tricky".
    Rather a lot of people who took out private pensions will find that that advice was not very good. The right hon. Gentleman also mentioned that many pensioners did not vote Labour, but one place where they did was in Enfield, Southgate, which was the constituency of his former colleague who was responsible for those advertisements, Michael Portillo.
    Mr. Lilley: If the hon. Lady is merely making a debating point, we can move on. If she is making a serious—[Interruption.] Well, a petty-minded debating point. If, as I judge, however, she is making a serious point, she will deplore any future misselling as she deplored any that occurred 10 years ago. Surely two wrongs do not make a right. If she thinks that what occurred 10 years ago was wrong, how does she think that it is correct for the Government to make changes without acknowledging their impact on the 6 million who already have personal pensions? That is, unless she is a Labour Member who thinks that her party can do no wrong.
    The effect of the tax changes on personal pensions and other money purchase schemes is indisputable. It is true, however, as the Government have said, that many defined benefit occupational schemes are in surplus. To suggest that taking money out of such schemes, which happen to be in surplus, is harmless, let alone beneficial as the Financial Secretary says, is what might be called the classic Robert Maxwell defence. After all, Robert Maxwell made a habit, quite openly, before he moved on to straight theft, of stripping out surpluses from pension funds.
    Mr. Caplin: When was that?
    Mr. Lilley: It was when the Economic Secretary was working for him. It was when Alastair Campbell was working for him. It was when Lord Donoughue, now a

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    Minister, was working for him. That is when it was. It was all out in public. They were his henchman, apologist and fearless reporter, but not necessarily in that order.
    It is perhaps not surprising that a Government composed of Robert Maxwell's cronies should resort to his old excuses. I do not believe in guilt by association, however, and I would have expected them to be rather uncomfortable to find themselves in a Government who are doing on a huge scale what their old employer did rather more modestly. But perhaps they believe that surpluses do not belong to the pensioners. If they do, they should acquaint themselves with the view of the right hon. Member for Glasgow, Anniesland (Mr. Dewar), the Secretary of State for Scotland, who thinks otherwise.
    We had long debates on pensions surpluses during consideration of the Pensions Bill in Committee in 1995. The right hon. Member for Anniesland, who then represented Garscadden, said:
    "I do not accept that simplistic argument"—
    that the surplus belongs to the employer.
    "Most pension schemes are contributory because, if the surplus has evolved from real-term growth of assets over a period of time, a contribution to those assets has been made by the employees … morally and logically … those employees should benefit from and have a stake in any surplus."—[Official Report, Standing Committee D, 18 May 1995: c. 255.]
    So surpluses should not be taken away by Governments any more than, in the right hon. Gentleman's view, they should be taken away by employers.
    Liz Blackman: Will the right hon. Gentleman explain to the House why half the major pension schemes took tax holidays by reducing either partially or fully their contributions?
    Mr. Lilley: That was because of the splendid performance of industry, companies' profits and the stock market over the past 18 years under Conservative Governments. Many pension funds have found that their investments have grown more rapidly than they anticipated. They therefore built up a surplus. They had the opportunity either to take a contribution holiday or to increase benefits for their employees. A mixture of those two options has been put into effect by different schemes.
    Mr. Geraint Davies rose—
    Mr. Lilley: The hon. Gentleman has been given enough rope to hang himself on two previous occasions. I think that I would be cruel to give way to him again, and I do not propose to do so.
    Mr. Butterfill: Will my right hon. Friend give way?
    Mr. Lilley: On the application of the rule of frequency but not of hanging, perhaps I should not give way to my hon. Friend unless he insists.
    Mr. Butterfill: I should be grateful.
    Mr. Lilley: Very well.
    Mr. Butterfill: is it not true that even funds that are in surplus—for example, the Sainsbury fund, which has a
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    £230 million surplus in its pension fund—calculate that the effect of the Government's proposed changes will be to turn their surpluses into deficits? Sainsbury calculates that it will face a deficit of £30 million and that it will have to double its contributions as a result.
    Mr. Lilley: That is absolutely true. As a result of the change to the tax treatment of pensions, many companies that were previously in surplus no longer will be. Actuaries estimate that, on the new calculations, almost half the new funds are no longer in surplus, and many more will cease to be in surplus. Moreover, when the contribution holidays end for either employers or employees, depending on the arrangements, the jump will be all the greater, because the level of contribution will not go back to what it was beforehand, but will reach the higher level now needed to fund the taxed provision in the future.
    Many funds do not have satisfactory surpluses, and many local authorities are well aware that pension provision for their employees is not in surplus. The Association of Consulting Actuaries has calculated that an extra charge of £12 per head on council tax throughout the country will be required merely to fund the higher cost of pension provision for local government employees. Alternatively, there will have to be cuts in services throughout the country. We expect the Chief Secretary to tell us how he intends to finance that or to manage the cuts.
    One of the changes that we made in the Pensions Act 1995 was to introduce a minimum funding requirement. Currently, if a company is underfunded or is dangerously close to its minimum funding requirement, it has to inject substantial extra money. Following the previous tax changes affecting advance corporation tax, BT had to put an extra £1 billion into its fund. Many other funds may be putting in large sums now, and those initial injections attract tax relief. Companies will pay less in the years in which they pay in lump sums, and that will reduce the revenue to the Treasury in the early years. Has the Treasury taken account of that phenomenon in its calculation of the impact of the tax changes, or is it hoping that there will not be any such injections into pension funds that have become underfunded as a result of the Government's measures?
    The third line of argument that the Government deploy to explain the impossible assertion that their measures will not affect pensioners, pension funds or the level or investment is worth savouring. They claim that the combined effect of reducing corporation tax and increasing tax on dividend distributions will encourage sufficient extra investment to produce extra income to make good the £5 billion tax charge. Even Robert Maxwell did not rely on that excuse, although, had he survived to come before the courts, I can imagine him saying, "Well, your honour, I was just doing it to encourage investment."
    Arithmetically, such a scheme could work only if large sums in dividends were withheld and that was offset by an above-average return on those dividends. That is extremely unlikely, but, if large sums were withheld, tax revenues would fall correspondingly. It is clear that the Government do not expect that to happen, because they have not allowed for it in the Red Book.
    It is equally unlikely that the investments that companies would make as a result of retaining more of their profits would be more profitable than the

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    investments that they were making anyway. It is unlikely that they previously invested in less good investment opportunities and held in reserve high-yielding investments just in case the Government forced them to invest in them; but that is necessary for the Government's theory to be correct.
    What is bad about this process is that it encourages investment abroad, and to the extent that it encourages retentions, it encourages money to stay where there are less good investment opportunities, so that it is not recycled by the capital markets into small, growing, new, cash-strapped companies. The money stays with cash-rich companies that do not need it, and does not get to the cash-poor ones that do.
    I am not always 100 per cent. in agreement with my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), but when he introduced his system, he described the old one that it replaced, to which the Government want to revert, as the survival of the fattest. This scheme encourages money to stay where it is least needed. I know of no reputable economist who believes in the Government's assertion that the scheme will be capable of generating such extra economic and profit growth as to be self-financing over any period, let alone over the period of a Government.
    The changes that the Government are introducing have vast ramifications, not only for pension funds and pensioners but for company taxation as a whole. In opposition, the Labour party called for a bipartisan approach to both company and pension taxation. With regard to pension taxation, Labour said in its last Opposition document:
    "A pensions framework which changes with the government of the day will never give people the confidence they need to plan for retirement."
    Yet within weeks of its arrival in government, Labour has changed the pensions framework, legislating in haste.
    Changes of such magnitude need careful consideration, wide consultation and thorough debate. We set an example with basic pension plus, which was given thorough consideration before we published our proposals. We then said that there would be a Green Paper, in whose drafting expert groups would be involved, followed by a long legislative and consultative process enabling everyone to contribute, to ensure that the policy would be implemented to the best possible standard. In contrast, the measures in the Budget were prepared in great haste, in just eight weeks. We know that the Government cannot have been preparing them before the election; if they had been, I am sure that they would have told us, but they said that they had no such plans.
    The Minister for Welfare Reform (Mr. Frank Field): How long did the right hon. Gentleman spend considering basic pension plus?
    Mr. Lilley: About a year.
    Mr. Field: So the right hon. Gentleman was thinking about it in secret for a year?
    Mr. Lilley: Yes. I am sorry not to speak through you, Mr. Deputy Speaker. I can tell the Government that I thought
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    out my proposals in great detail for a year, and then published them. I sought consultation before there was even a Green Paper, which was due to appear next, followed by a legislative proposal. The present Government have given their proposals no proper internal consideration, have arranged no proper external consultation, and are planning to truncate parliamentary deliberation to such an extent that it is an insult both to Parliament and to outside interests that have a right to have their say on these measures.
    I urge Ministers to withdraw the proposals as they stand. I urge them to return with proposals in the form of a Green Paper, to seek wider consultation and to allow parliamentary deliberation over an extended period. We shall then give their proposals positive consideration and see what aspects we can possibly support. As long as the Government proceed with their present cack-handed, ill-thought-out approach, however, we shall feel obliged to oppose their proposals root and branch and to defend the interests of pensions, pension funds and long-term investment in this country.
    I urge my hon. Friends to support the motion.
    5.7 pm
    The Chief Secretary to the Treasury (Mr. Alistair Darling): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
    "condemns the failure of the last Government to foster security in retirement for either today's pensioners or pensioners of the future; supports the present Government's objective of a decent income for all in retirement; believes that the best way to achieve this is by developing second pensions building on the foundation of the basic state pension; commends the Government's decisive action on the past mis-selling of private pensions; endorses the measures taken in the Budget, particularly the reforms to corporation tax, which will help to create a climate encouraging higher investment and a higher sustainable growth rate increasing the capacity of the economy to support decent pensions; supports the Government's welfare-to-work proposals, which will improve the employment opportunities for thousands of people, enabling them to save for their own retirement; and welcomes the Government's commitment to review pensions and achieve security in retirement for all."
    I shall deal in turn with each point of substance raised by the right hon. Member for Hitchin and Harpenden (Mr. Lilley).
    The motion mentions misselling. The right hon. Gentleman said at numerous points during his speech that he would come to the subject of the misselling of pensions that took place, to a large extent, while the last Government were in power, but unfortunately he did not get around to addressing that central point. Rather like his right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke)—who is here now, and who said the other night that the business of pensions misselling was something of a "hare in another field"— the shadow Chancellor ignored the fact that misselling is a running sore which, sadly, has yet to be cleared up.
    Mr. Peter Brooke: I hope that the Chief Secretary will accept that the point that I sought to make was that his intervention on misselling was not a defence of what the Government were doing, although I acknowledge that it was a fair debating point.
    Mr. Darling: I shall return to Government policy, but first I should like to deal with misselling, especially as the Opposition have referred to it in their motion.

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    That reference demonstrates the Tory party's brass neck because, over the 10 years between the start of misselling and the time that they left office, they did little to sort out the problem.
    It is ironic that, on the day my hon. Friend the Economic Secretary to the Treasury publishes a further list showing what little progress has been made by many pension companies to solve the problem, the Opposition should choose to use the term "misselling". Many of the 700,000 people who were affected will wonder why the Conservatives, who were in power for so long, did nothing to prevent the problem in the first place and, when it arose, did little to resolve it. It was not until a few weeks before the election that there was the slightest flicker of interest in the Conservative Government in clearing up the problem.
    It was obvious to us on taking office that the Conservative Government had done precious little to put pressure on the companies that were guilty of misselling. I wonder why. Perhaps the Opposition could do with a lesson in history. Let us look at Conservative Government policy in the late 1980s. Their hostility to public provision is well documented, and it extended to the public provision of pensions. Their policy was designed to get people out of occupational pensions and into private schemes.
    My hon. Friend the Member for Northampton, North (Ms Keeble) drew attention to advertisements—which, I may say, were paid for by the public—which the Government promoted not just in text but on television. They wanted people to believe that the very act of going private was spiritually and materially enriching. People were persuaded that, if they took out a private pension, they would be better off, almost by definition. It is interesting to recall the name of the junior Social Security Minister at the time that policy was promoted—it was the shadow Chancellor. The other Minister, although perhaps now it is a matter of historical interest, was the man who was Prime Minister for some six years.
    Mr. Lilley: That is not true. I was never a junior Social Security Minister. I was only ever Secretary of State.
    Mr. Darling: It has nothing to do with the right hon. Gentleman. Is that not typical of the Conservative party?
    Mr. Lilley: On a point of information, Mr. Deputy Speaker. Is it not customary for someone who makes a false accusation to apologise rather than, after recognising that the person accused is not guilty, letting it be a matter for further derigration?
    Mr. Deputy Speaker: That is purely a matter for debate.
    Mr. Darling: A former Minister complains that he has been falsely accused of being a Minister. I can understand why he feels guilty about that. If he thinks that it is an insult to say that he was a junior Social Security Minister, of course I am sorry for insulting him. I did not realise that it was insulting to say that someone was a member of a Government.
    Mr. Tim Boswell: My right hon. Friend was a junior Minister in the Treasury at that time.
    Mr. Darling: He cannot deny that he was a member of the Government when these problems arose, or is that an
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    insult, too? Is it insulting to say that someone was a member of the Conservative Government? It may be; I do not know.
    The Conservative Government created the climate in which it was possible for unscrupulous salesmen to go into communities, especially former mining communities, and persuade people to leave their occupational schemes and enter private ones that were wholly unsuitable. People who should never have been allowed to sell pensions were let loose among some extremely vulnerable people and, sadly, the managements of some companies turned a blind eye to the problem.
    When we add to that the problem of lax regulation—Tory self-regulation—and the far too many vested interests that were quite happy to turn a blind eye to what was happening, it is not surprising that many people were wrongly sold personal private pensions. The Conservative Government were culpable, collectively and in some cases as individuals, because, during all the time they were in power, they did nothing about that.
    It is to the credit of Sir Andrew Large, the outgoing chairman of the Securities and Investments Board, that he brought the matter to public attention in the early 1990s. His battle, along with other regulators, was fought largely by the regulators on their own, without help from the Government, in the new climate that began to prevail in the past three or four years. Despite the misselling over the past 10 years, little progress has been made. My hon. Friend the Economic Secretary today published a report showing a lamentable lack of progress by the 24 firms that have most cases to review. Of course, there are others.
    Mr. Geraint Davies: In many cases, the commission charged on pensions was 25 per cent. That is more than the 20 per cent. tax credit about which the Opposition complain. They complain about the withdrawal of the tax credit, which is good for the public Exchequer. Will they condemn the massive commissions that were paid to people who missold thousands of personal pensions?
    Mr. Darling: For a long time, I have said that the regulator should look at the impact of commission on selling. It can put undue pressure on people who sell pensions, and that can have unfortunate consequences.
    Mr. Campbell-Savours: I was a member of the Committee that examined the Financial Services Bill. Four years before the rows about misselling broke out, we moved amendments about the disclosure of commission and the hon. Member for Bournemouth, West (Mr. Butterfill), who was also a member of that Committee, and some people who have now left the House, opposed such disclosure. The public should know that, if our amendments had been accepted, the great misselling scandal of pensions in the 1980s might not have occurred, because people would have known that they were being ripped off.
    Mr. Darling: My hon. Friend is right. If there had been the transparency that now exists, many of the problems that occurred in the late 1980s would have been avoided.
    Mr. Butterfill rose—
    Mr. Darling: The hon. Gentleman is desperate to intervene. According to the Register of Members'

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    Interests, he is well qualified to intervene on this matter. No doubt he will draw the attention of the House to that if he makes a speech.
    Mr. Butterfill: The hon. Gentleman is right: I advise the Independent Financial Advisers Association and the British Insurance and Investment Brokers Association. However, that is not the point that I wish to make. Will the hon. Member for Workington (Mr. Campbell-Savours) reconsider what he said? I did not at any time oppose the disclosure of commission. In 1986, I opposed purely the disclosure of commission when it was often necessary to disclose all the other costs of direct selling companies. In many cases, such costs were much higher than those incurred by companies that employed independent financial advisers. I urged the Committee to legislate to disclose all the costs of all companies and not single out one area, as the hon. Gentleman wished to do.
    Mr. Darling: It is interesting to note that Opposition Members, whether on the Front Bench or the Back Benches, are trying to disclaim all knowledge of what went on in the 1980s. I am intrigued that hon. Members such as the hon. Member for Bournemouth, West, who opposed the disclosure of commission, always said that such opposition was for the greater good and that many other things needed to be known as well. I would not have minded if they had argued at that time in favour of disclosing not just commission but all other factors in the make-up of the sale of a product. That is important.
    Mr. Butterfill: Will the Minister give way?
    Mr. Darling: The hon. Gentleman should contain himself. I may give way to him later. I was about to be nice to him, so perhaps he will sit patiently. In debates on the Finance Bill and in other debates, he can make helpful suggestions. In debates on a Bill on financial services, which we propose to introduce during this Parliament, I am sure that his comments will be helpful.
    Mr. Butterfill: The right hon. Gentleman is completely distorting the facts and what I said. I urged the Committee to disclose all costs, including commission paid to salesmen, but it was the Labour party and the hon. Member for Workington who did not want all costs disclosed—the hon. Gentleman wanted only insurance salesmen's commission costs disclosed. It was precisely because I felt that all costs should be disclosed that I made a principled stand on the entire subject.
    Mr. Darling: I can see now why the hon. Gentleman is retained at such generous rates. He clearly does his best for the industry.
    Mrs. Teresa Gorman: Will the right hon. Gentleman give way?
    Mr. Darling: Perhaps I could deal with one point at a time; at some point, I should like to get on to the matters raised by the right hon. Member for Hitchin and Harpenden.
    I was making the point that many people, including the hon. Member for Bournemouth, West (Mr. Butterfill), used to argue against disclosure of commission simply
    968
    because they did not want that aspect disclosed. The House may remember that we are discussing this matter because my hon. Friend the Member for Croydon, Central (Mr. Davies) raised the impact of commission on the selling of financial products. I think that all of us agree that the regulators need to examine the matter. I am all in favour of giving incentives to sales forces to sell products, but we have to watch the impact of those incentives and their propensity for encouraging the misselling of pensions.
    Mrs. Gorman: Is it not a fact that the people about whose plight the right hon. Gentleman is agonising, shedding some crocodile tears along the way of course, are the very people whose individual pension funds are to be raided by the Government—about 5 million of them? They are paying modest amounts of around £1,000 a year, and they will have to find another £100 to £150 a year to keep their savings intact—because of the depredations that the Government are about to inflict on them.
    Mr. Darling: The answer is no.
    The point that I was drawing to the attention of the House is that many people who were missold pensions have still not received the compensation that is due to them. I say this in response to the point that the right hon. Member for Hitchin and Harpenden made, at which the hon. Member for Billericay (Mrs. Gorman) may have been hinting. Frankly, I have little time for the argument that is now advanced by some pension companies that they could be making great progress, if only there had not been any change to the corporation tax regime. That might have been a statable case had they been making any progress, but many of them have not.
    When hon. Members read the parliamentary answer of the Economic Secretary to the Treasury, which will now be published, of course, they will find that the progress has been lamentably slow. In nearly every company, the percentage of cases that has been dealt with is in single figures, and that cannot be satisfactory. I hope that the pension companies that follow these proceedings will understand that the public will not tolerate such lamentable progress, when so many people are awaiting redress and cannot understand why on earth there is a delay.
    Mr. Oliver Letwin: Will the right hon. Gentleman give way?
    Mr. Darling: In a moment.
    We will continue to publish regularly companies' progress, or lack of progress, because we believe, unlike the Conservative party—presumably, if it had believed that openness was a good idea, it would have done something about it—that openness is essential. I should like to move on to some of the other points raised, but, as the hon. Gentleman seems desperate to intervene, let him do so.
    Mr. Letwin: I was merely going to inquire whether, after some 15 minutes of eloquence, the right hon. Gentleman intends to move to the subject of the debate.
    Mr. Darling: If the hon. Gentleman had sat quietly, I would have got to the points about which he asks some

    969
    30 seconds sooner. I have been asked questions and, as a member of the Government, I thought that it was my duty to answer them. Ministers are accountable to the House, and some important points have been made. The performance so far has been unacceptable, and I hope that the National Association of Pension Funds and the Association of British Insurers can find time, when they are not criticising the Government, to put some pressure on their members to resolve the matter.
    The other step that the Government are taking, which the previous Government would not take, despite being pressed to do so, is substantially to reform the Financial Services Act 1986, to ensure that we have a proper regulation system, an end to self-regulation and regulation in the public interest, which will benefit both the industry and the public. We are committed to doing that, and legislation will be introduced during this Parliament, but Conservative Members, despite this debate, still cannot answer this question: why did they so nothing about the problem when they had all the time in the world to do so?
    Let me deal with another point to which reference is made in the Opposition motion but to which, although I may be wrong about this, the right hon. Member for Hitchin and Harpenden, the Opposition spokesman, did not refer—the windfall tax. I am interested in this because, when the shadow Chief Secretary to the Treasury summed up for the Opposition at the end the Budget debate, he did not mention the windfall tax either. Over the past year or two, and certainly during the general election campaign, I got the impression that the Conservative party thought that the tax was so bad that it would form the centrepiece of its opposition to us in government, yet, in two major speeches, Opposition spokesmen did not mention the tax.
    Mr. Bernard Jenkin: Will the right hon. Gentleman give way?
    Mr. Darling: Not just now. I do not want to be accused of taking up the valuable time of the House answering Conservative Members' questions.
    It is interesting that, in the Opposition motion—never mind Conservative Members' speeches—the Conservatives are no longer defending the privatised utilities, and no wonder, because they have accepted the Budget proposals. I notice that their shares have increased since the Budget, which suggests that what we are doing is reasonable, but the new line from the Opposition is that the tax is an attack on pension funds.
    I want to make a basic point. The reason we have implemented the windfall tax is to fund a programme to get people back into work, which will enable them to make a contribution for themselves and their families, to save for their retirement and to contribute towards their pensions, so the tax is a sensible step. The Government have raised a windfall tax that will get people into work. Instead of paying increased social security bills, about which the right hon. Member for Hitchin and Harpenden certainly knows something, we can give people the opportunity to contribute. The windfall tax is entirely justified for that reason, and is widely accepted to be so. Given the strength of feeling on the Conservative Benches over the past few years, I am surprised that the tax was not referred to, although it was in the Opposition motion.
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    One matter was mentioned: the allegation that there was an absence of consultation. The Opposition motion contains the words
    "shoddy, hastily prepared and ill-thought-out".
    I have heard those words before and not too long ago. I heard them in March when the then Government introduced basic pension plus, which I do not remember being introduced with much consultation. In fact, there was not even a statement in the House.
    Mr. Jenkin: Will the right hon. Gentleman give way?
    Mr. Darling: In one moment.
    The right hon. Member for Hitchin and Harpenden, in a sotto voce exchange with the Minister for Welfare Reform, said that the proposal was prepared in secret. If that is true, the Conservative party is in no position to criticise us. I also caution the Conservative party about dressing up in new, ill-fitting clothes as the pensioners' friend. We have to remember what we are dealing with here. The Tories' record as the pensioners' friend does not bear close examination. If one considers the central plank of basic pension plus, one will remember that the tax changes that the then Government were going to make would have cost a person on average income with an occupational pension some £600 extra a year.
    Mr. Jenkin: Will the right hon. Gentleman give way?
    Mr. Darling: In one moment.
    Talking about consultation and openness, I think that basic pension plus was the first pensions policy ever to be announced without a Government Actuary's report, which is unusual in relation to social security, so for the Conservative party to accuse us of doing something that was "ill-thought-out" and without consultation simply does not stand up.
    Mr. Iain Duncan Smith: The right hon. Gentleman is busy comparing the Budget to proposals that preceded a Green Paper from the previous Government. Is he suggesting that this section of the Budget will be pushed out to a Green Paper? If he is not suggesting that, he should stop this ludicrous comparison.
    Mr. Darling: I am simply drawing attention to the fact, that just before the election, the then Government—that is what they were, despite sometimes appearing not to be so—put forward major proposals for the reform of pensions. The then Prime Minister and Ministers—I hope that I am not being rude to Opposition Members by accusing them of being Ministers—all gave the impression that that was their policy and that that was what they intended to do. When we are discussing an Opposition motion, I am entitled to draw attention to the fact that they had a proposal that would have cost someone on an average income about £600 extra a year.
    In addition, the previous Government could never say how their proposals were to be funded. At one point, over the next 20 to 30 years, the cost was rising to about £7 billion a year.
    Mr. Bernard Jenkin rose—
    Mr. Darling: I will give way in a moment.

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    It was not just we who criticised the Government or got the wrong idea about their policy—if that is what they are now telling us. Many newspapers were critical of it. The Financial Times said:
    "look at the fine print and it is clear that the scheme will involve either higher borrowing or higher taxes for 45 years".
    In The Times, Graham Searjeant said:
    "Privatising the basic state pension … will raise the tax burden."
    The Consumers Association pointed out:
    "Young people will be paying for their own pension, to meet their retirement needs, but at the same time they will be paying for their parents pension."
    My point is that the Conservative Government put forward proposals just before the election which would have hammered pensioners. They cannot stand before us today and pretend somehow to be the pensioners' friend.
    Mr. Jenkin: Basic pension plus would have given pensioners a better rate of return on their money than the present basic state pension. Will the right hon. Gentleman bear in mind the fact that we are spending time discussing his Budget proposals on advance corporation tax because the tax raised by that measure makes the windfall profit tax look rather modest by comparison? If we had followed the example that he has set with these proposals, we would have kept basic pension plus a secret until after the election.
    Mr. Darling: Some of the hon. Gentleman's hon. Friends may have some sympathy with that point.
    Before I turn to the central point raised by the shadow Chancellor, I want to talk about the pensions industry. Despite the fact that we are rightly critical of the performance of some of these companies in clearing up the misselling of pensions problem, it is sometimes easy to lose sight of the importance of the industry as an employer, a wealth creator and a service provider.
    Mr. Letwin: Will the right hon. Gentleman give way?
    Mr. Darling: Not just now.
    It is the purpose of the Government to encourage people to save and invest and to make provision for themselves. We intend to create an economic climate where we have growth and investment that will create the wealth that will enable everyone to enjoy a higher standard of living now and in their retirement. The pensions industry plays an important part in that.
    I want to return to our proposals on corporation tax—[Interruption.] Conservative Members are always complaining that we are being high-handed and are not responding to their questions: now they are complaining because I have been answering their questions.
    I shall start with an important point. The shadow Chancellor said that when Norman Lamont introduced the changes in his Budget in 1993, it was simply a matter of bringing tax rates into line. I notice that the Opposition motion opens by saying:
    "this House condemns the Government's assault on pension funds through the removal of tax relief on dividend income of pension funds in direct betrayal of their election pledges".
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    It reminded me that that accusation could more properly be applied to what happened in 1993. The shadow Chancellor told us that it was a matter of bringing tax rates into alignment, but I wonder whether he would refresh his memory and see what Norman Lamont said in his Budget speech. When talking about the reforms, Mr. Lamont said:
    "they are central to the strategy of this Budget, and they raise significant amounts of revenue."
    He went on to say that it would save the Exchequer
    "no less than £1 billion a year."—[Official Report, 16 March 1993; Vol. 221, c. 185–86.]
    At that time, the Conservative Government were not proposing to reduce the rates of corporation tax, but were simply taking that money into the Exchequer. We have to rely on the words of the then Chancellor, Norman Lamont, as I do not remember any Minister denying that that was the Government's intention. Therefore, the shadow Chancellor's assertion that all that was happening in 1993 was a minor adjustment to ensure that the rates were the same for corporation tax as for other taxes does not stand up.
    Mr. Andrew Tyrie: Will the right hon. Gentleman give way?
    Mr. Darling: The hon. Gentleman was not a Minister at the time, but I think he knew something about it. I will give way, as long as he does not accuse me of taking too long.
    Mr. Tyrie: Does the right hon. Gentleman have the end of the 1993 speech? He will find that the then Chancellor confirmed that the intention was to align all the rates at 20 per cent., that there was no intention to bring the rate to below 20 per cent. and certainly no intention ever to consider abolition.
    Mr. Darling: The point is that the then Chancellor told the House in clear terms that the purpose of his adjustments in the taxation of dividends was to raise money for the Exchequer—£1 billion of it. [Interruption.] I am just about to come to another passage which Opposition Members might find illuminating.
    Mr. Caplin: I was not in this place in 1993, but I wonder whether my right hon. Friend can refresh my memory as to whether anyone on the Treasury Front Bench at that time or the now shadow Chancellor criticised the then Chancellor for the tax change.
    Mr. Darling: I believe that, at the time, there was great criticism among members of the Government, but it involved Europe rather than tax changes. Two of the Opposition Members on the Front Bench will recall that.
    I shall press on in case Opposition Members are in any doubt about what their Government were doing. I know that they were not all on the Committee considering the Finance Bill in 1993, and they may not know what went

    973
    on. I thought that I would see whether the Government ever threw any more light on why they changed the taxation of dividends. The then Financial Secretary, the right hon. Member for Charnwood (Mr. Dorrell), told the Committee:
    "We needed to raise revenue in a way that did least economic damage … my right hon. Friend decided that to collect extra revenue"
    he would do so from pension funds
    "from a group of people with taxable capacity, but who are not taxpayers, in a way that does minimum economic damage, recognising the substantial tax benefits available to pension funds as collective savings vehicles."
    I wonder whether Opposition Members would like me to read that again. It tends to suggest that what the then Government were about was a raid on pension funds and that they were not proposing any other measures to compensate for that. [Interruption.] I see that the shadow Secretary of State for Social Security wants to intervene but is being held back by the shadow Chancellor, and no wonder.
    Mr. Duncan Smith rose—
    Mr. Darling: I will let the hon. Gentleman have his moment.
    Mr. Duncan Smith: In line with his point about the taxation of dividends, I wonder whether the right hon Gentleman can explain what he said on 31 May 1996. He said:
    "Britain lives in a global economy and the minute you even suggested taxing dividends people would go out and invest in other parts of the world."
    The right hon. Gentleman has just agreed with his Chancellor that he has taxed dividends. How does he explain his volte face?
    Mr. Darling: If I remember rightly, I believe that I was being asked about the taxation of investment income at a different rate. If the hon. Gentleman will allow me to see the article, I will be able to confirm that I made the remark in that context.
    The argument from Conservative Members that they were simply aligning tax rates does not stand up. If all I could produce in evidence was the quotation from Mr. Norman Lamont, they might have got by, but the quotation from the Financial Secretary in the comparatively quiet waters of the Standing Committee must be borne in mind. I shall repeat it. He said:
    "We needed to raise revenue in a way that did least economic damage."
    He said that he was raising money from pension funds
    "from a group of people with taxable capacity, but who are not taxpayers in a way that does minimum economic damage, recognising the substantial tax benefits available to pension funds as collective savings vehicles".—[Official Report, Standing Committee A, 15 June 1993: C. 377.]
    It is worth bearing it in mind—although listening to the right hon. Gentleman, one would not have been aware of it—that pension funds have been paying tax since 1993. Our proposed changes will not alter the fact that pension funds will continue to be free of tax on income in the form of capital gains and ordinary shares, as well as on other sources of investment income. That has a net cost to the Exchequer, but one that we feel is justified.
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    It is wrong to suggest that what we are proposing is new. In fact, the Conservative party started the process. It is equally wrong to suggest that pension funds will be left without tax advantages.
    Mr. Campbell-Savours rose—
    Mr. Darling: I will give way, but I want to make some progress.
    Mr. Campbell-Savours: Should not my right hon. Friend circulate to all Members a copy of the 1993 quote by Mr. Lamont? Many hon. Members would like to see it, and might wish to use it extensively in their constituencies.
    Mr. Darling: I am happy to make arrangements to do that, subject, as always, to the public expenditure implications. I might even pay for it myself and send it to the National Association of Pension Funds and Mrs. Robinson.
    I want to explain our proposals. We believe that it is necessary to reform the system of tax credits because it contains a major distortion, under which shareholders are better off if companies pay out profits as dividends than if they retain them for reinvestment. It is right in principle to remove that distortion. The principle that underpins our changes to the corporation tax system is absolutely right. It is for the management of companies and the shareholders to make the decisions, not for the tax system to provide an inbuilt bias.
    In the United States, where a similar system exists, pension funds take decisions on their economic merits. An important point to note is that they are as keen on the capital appreciation that then results as they are on dividends. Greater emphasis on capital growth is important. It will help companies and offer them high, long-term growth. It will ensure that they are not starved of capital by the tax system. Indeed, the importance of capital growth is something on which actuaries and others in this country might want to reflect further.
    I was pleased to note that, after the Budget, the Daily Telegraph—which I do not think is yet converted to the cause of new Labour; it certainly was not during the election, but it may be about to turn—said in its business section:
    "The quality of life in retirement … depends on the growth in the economy, reflected in the prices of shares where the contributor's money is invested. This is the point of the Brown Budget that the pension funds would do well to grasp."
    That is absolutely right. I want to emphasise that the reason we have taken this decision is right in principle. I wait to hear whether the Conservative party would repeal it were that party ever to return to power.
    The American experience is worth bearing in mind. The central thrust of the Budget is to create a climate in which the level of investment is raised. It is important to keep our eyes on that fact. Currently, the level of investment is lower than it should be at this stage of the economic cycle.
    I was interested in the speech delivered by Sir David Cooksey a few days ago, when he looked at some emerging US companies in 1975 and compared their

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    position then with their current position. He noted that they had expanded dramatically, which is a common feature of the American economy. He said:
    "It is also notable that very few of those companies pay dividends to their shareholders who prefer to benefit from growth in capital value as the companies reinvest all of their profits in the business."
    He said that that contained a lesson which we should learn.
    The value of a pension depends, to a large extent, on the value of the fund available when someone retires. Someone retiring at the height of the recession would have done less well than someone retiring now because the value of the stock market has increased; indeed, it has increased quite a bit since we came to power. It is important that those who follow these proceedings bear in mind the fact that, at the end of the day, the value of a pension depends largely on the prospects for the economy.
    I very much hope that when actuaries assess the results of our decisions, they will remember that capital growth is an important matter to take into account. When considering our proposals, they should remember that the well-being of the economy as a whole is the most important feature. Not only have we reduced corporation tax for large and small companies, but we have doubled capital allowances.
    Our goal is a long-term one—to improve this country's investment performance. For many years, our performance has lagged behind that of our major competitors, and continues to do so despite the current recovery. That may be because, in the past, there was so much concentration on the short term. Investment for the long term and for better growth will greatly benefit companies and, therefore, pension funds, which will gain in the long term. Many of those who have commented on the impact of the corporation tax changes have ignored the long term. Indeed, that is far too common a tendency in Britain. The long term is the central point of the Government's economic strategy.
    Actuaries, who often value shares largely on the basis of prospective income and take relatively little account of market values, should begin to think long and hard about what they have been doing. They have tended to inflate the effect of the loss of tax credits. Over the past few weeks, there has been much comment in the press about that. Actuaries should change their approach. In the United States, actuaries pay much more regard to market values. That is beginning to happen with some funds in this country, but it is necessary for both pension schemes and actuaries to sit down and take a long, hard look at the real effect of the loss of tax credits and to understand the Government's strategy in the long term.
    Sir Nicholas Lyell rose—
    Mr. Darling: I will not give way, because I have been speaking for too long already. We have had four days' debate on the Budget. We are now having an Opposition day, which is substantially on the Budget. Tomorrow, there will be Second Reading of the Finance Bill, and
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    there are further days of debate in the House next week. No one could say that we are curtailing debate on these matters.
    Mr. Lilley: This is an Opposition day.
    Mr. Darling: It is an Opposition day, and I am replying to the right hon. Gentleman's points.
    The steps that the Government are taking will stand this country and its economy in good stead in the years to come. For the first time in many years, Britain has a Government who are looking to the long term and who will create an environment in which there is growth and investment. That will be good not only for companies and pension funds but for all the people of this country.
    5.47 pm
    Mr. Archy Kirkwood: I am pleased that we are having this debate today. The Chief Secretary was right to say that a great deal of time has been made available, but the issues are extremely important. When I spoke in Friday's debate I expressed my support for the Government's overall strategy, particularly the welfare-to-work proposals. In a continuation of that spirit, I readily acknowledge that the Government are showing proper levels of ambition and determination in the fight against poverty.
    I share the view that improving access to employment is the only way to beat dependency and hardship. I repeat my offer of support for the Government's efforts to help the left-out millions get back into the mainstream of society. Anyone who argues against the objectives of the welfare-to-work programme is politically blind, deaf and dumb to the circumstances in this country.
    Having said that, there are grounds for strong opposition to the way the Government intend to finance their plans. I am pleased that the Opposition tabled this motion today because it is right to focus on that. How the Government spend the money is one matter but, as this important debate shows, how they intend to raise it is another. I want to concentrate on the latter.
    There are, of course, two sources of finance in the Government's programme, and we Liberal Democrats find them both difficult to stomach, primarily because of the heavy penalty that we believe they will impose, both now and in the future, on Britain's pensioners. The first tax is the windfall tax. I share the Chief Secretary's surprise that, both in today's debate and in the debates on the Budget, the official Opposition did not concentrate more on that. The second tax will be raised through abolition of the dividend tax credits reclaimed by pension funds.
    Although both sources of funds are distinct taxes, they have been introduced for the same reason and share a common provenance: the Government's almost obsessional timidity over taxation and the revenue raising conundrum that such timidity has inevitably caused. If one cannot use the fairest, most transparent and most progressive tax—which is income tax—one simply must look elsewhere. Unfortunately for British savers and pensioners, the Chancellor has turned his gaze on them.
    It is difficult to overstate the importance of the taxation straitjacket that the Government are in. As I said in last Friday's debate, the United Kingdom is faced with a

    977
    situation in which the Government have become a prisoner of their own pre-election rhetoric. They cling to the vote-winning line: "We can have gain without pain; we can raise billions of pounds without anyone having to pay; and we can magically solve the problems of chronic underinvestment in education and institutionalised unemployment with a few tax increases that are so opaque and complicated that they seem to be entirely cost free."
    Such a proposition is nonsense, and the Budget exposes it as such. There is simply no such thing as a tax for which no one must pay—a fact that encompasses both the windfall tax and the withdrawal of dividend tax credits. Together, those taxes constitute nothing less than a smash-and-grab raid on British pensions.
    It is now reasonably well documented that the windfall tax is hitting not only the so-called fat cats—I understand Ministers' emotional reaction to their having secured unconscionable and unjustifiable increases in emoluments—in the privatised utilities, but employees or customers or future investment in those industries. In some industries, all three—employees, customers and future investment—are affected.
    An equally valid argument is that it is simply not possible to take £5 billion out of the corporate sector without hurting the millions of people whose savings and future incomes are tied up in those utilities. The Government have adopted an unconscionable position on the matter. The tax will have an impact on the millions of individuals who own shares—many of whom arrived on the scene a considerable time after the windfall was gained. It may also impact on institutional investors, such as pension funds, which hold in their hands the future incomes of 19 million people with occupational or personal pensions. In years to come, those people will pay the indirect and hidden, but very considerable, costs of the windfall tax.
    The Chief Secretary tried to argue that the windfall tax poses no problems because the welfare-to-work programme will work—hopefully, it will—and enable those entering employment to make proper provision for their pensions. If the tax's objective was to raise money to start such a beneficial cycle, however, why do not Ministers openly raise the money by increasing income tax? If the tax will start such a beneficial cycle from which everyone will gain, why do not Ministers go to the electorate and say, "The most honest way to raise the money to start such a cycle is through income tax?"
    Mr. Darling: We went to the electorate and told them that we would introduce a windfall tax. Surely the hon. Gentleman will accept—I know that the Tories do not—that those companies were very rich in cash because they were sold at knockdown values. Privately, even some of those companies will admit that.
    Mr. Kirkwood: For a variety of reasons, some of which I have adverted to, it is rough justice. I simply do not accept that attacking the utilities was fairer than going to the electorate and arguing honestly the reasons for raising the money. If the Chief Secretary is right—I hope that he is—that the aim is to create a virtuous cycle from which people will benefit, income tax increases would generate such a virtuous cycle in a manner that is much fairer and more progressive and transparent than the Government's windfall proposals.
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    I accept and do not complain that the proposals were in Labour's manifesto. The Government were absolutely open and honest about the tax and they deserve credit for it, but their openness and honesty do not persuade me that the tax is right. We have a clear difference of opinion on that.
    Sir Robert Smith: Would there not be another benefit if the Government had grasped the nettle and raised income tax? If they had, perhaps the Bank of England might not currently be under such pressure to raise interest rates, doing greater damage to the economy and to potential investment.
    Mr. Kirkwood: In future, I think that the Government will regret all those indirect and untoward effects. There is an honest difference of opinion between the Ministers and the Liberal Democrats, which I accept.
    The Chief Secretary tried to justify the Government's position on withdrawal of dividend tax credits by saying that he wants to discourage companies from paying dividends rather than reinvesting profits. I understand that, and believe that he could have mounted a taxation argument to justify the Government's decision to move in that direction, but I do not think that the way in which the Government withdrew the credits, the short time frame over which they did so or the amount of money that will be raised, enable Ministers to found a sound argument.
    If Ministers had said to the House, "We are going to do this. We will have proper consultation and, over time, we will move in that direction," we would have been willing to listen. However, grabbing £5 billion overnight, as the Government have done, might damage the trust that the Chief Secretary and the Government will require if they are to reform pensions in the United Kingdom. They will need that trust in future to work with pension funds. It was a bit thin for him to say that pension funds are flush with cash and that the withdrawal is a mere bagatelle meant to refine the taxation system. I was not persuaded by that section of his speech.
    I have also re-read the Chancellor's exposition in which he tried to explain why he withdrew the credits. I was not convinced before, and I remain deeply sceptical of the Government's position. The same types of people, such as pensioners, will be hit by withdrawal of dividend tax credits as will be hit by the windfall tax. I think that withdrawal is another measure suggesting that the Chancellor is determined to avoid deployment of transparent, fair and income-related taxation, concentrating instead on complicated measures that might initially seem to be company taxes but which, in time, will be shown to have a huge negative impact on individuals' savings.
    The broad impact of depriving pension funds of £3.5 billion per annum will require each of the 19 million members of active pension schemes to contribute an extra £190 per annum simply to maintain the same growth level. That situation is deeply worrying.
    Mr. Andrew Rowe: Ministers have said that one of their intentions is to try to move from the short term to the long term. Is it not most likely that someone who sees the flow of dividends from

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    their pension fund drying up will spend their money rather than invest it in a pension scheme that has been shown to be not at all safe?
    Mr. Kirkwood: I agree that that is another indirect effect. I agree also with the Chief Secretary's view that we should consider such matters on a much more long-term basis. I will support any earnest attempts by the Government to achieve such a shift in emphasis. The hon. Member for Faversham and Mid-Kent (Mr. Rowe) is absolutely right: withdrawal of credits will not only have the effect that he mentioned but will undoubtedly cause other untoward and unforeseeable changes in people's behaviour.
    I have two questions for Ministers, which perhaps the Financial Secretary to the Treasury will deal with in her reply. Is any work being done by Ministers to consider whether the rebate awarded to those who have opted out of the state earnings-related pension scheme will be upgraded to deal with the shortfall? There is a perfectly good case for that being so. If we do not do something along those lines, people may be tempted back into the state scheme, and that would not be sensible. It is an important question, which may well determine whether we support the Opposition motion. I am inclined to do so, but, if I had a positive answer from the Government on this point, I might be tempted to vote for them and increase the congestion in the Government Lobby.
    The second question is equally important but slightly different, in that it refers to the impact of the proposals on local authorities. If the Government are to proceed as they have said, to be fair they will have to provide some compensation for local government settlements. The effect of the proposals on local government pension funds will be pretty dramatic and, in some cases, very dramatic.
    It will cost my authority upwards of £1 million; that is an employer's contribution of nearly 3 per cent. of payroll, and will come out of capped expenditure in a local authority with a relatively small amount of money to play with in the first place. If the Government are to be fair in introducing a change of this magnitude, the position of local authorities must be dealt with in some way. Even an undertaking to consider the matter at some stage in the future would encourage me to think that the Government were being more responsible about these changes than appears superficially to be the case.
    The fact that the official Treasury line seems to be that pension funds will be substantially insulated from the changes because they are "in surplus" worries me, because it assumes four things. First, that the existence of a surplus necessarily justifies a Treasury raid, despite the fact that the surplus belongs to the fund members and companies that have over-contributed. Surpluses are not necessarily a bad thing; they can be quite a good thing, but it is up to the companies and members of the fund to decide what to do when there is a surplus.
    Secondly, the assumption is that a surplus is permanent and cannot be reversed or lead eventually to a shortfall whereas, in fact, it could do so in some circumstances. Thirdly, more than half of the 19 million people with occupational or personal pensions are in money purchase schemes. For them, the concept of a surplus does not exist because their ultimate pensions are entirely dependent on the site of the fund on retirement. The Government have not taken proper account of that fact.
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    Finally, the Government seem to assume that no pension funds are in difficult financial circumstances or under financial pressure. The implication is that no one will be badly hit by the proposed changes. I think, however, that some could be badly, perhaps even fatally, hit.
    It appears that the Government have made the political judgment that pension funds are a soft target. They are seeking to raise an amount of money which is very difficult to justify and in a way which we might all regret. It is not fair on the companies involved. The actuarial revaluations that will be required and the higher administration costs and so on will drive a wedge between the Government and the pensions industry. The industry believes that the change is indefensible. There has been little or no consultation, and the industry believes that there is no logic or justice in the proposals. I am worried that that will make it difficult for the Government to make progress in this important aspect of public policy in future.
    If we consider the matter in the round, it seems that the changes are premature, ill thought out and unfair, but if the two principal questions that I have asked can he answered tonight, I shall be willing to think again. As things stand, however, the Opposition have the better of the argument in their motion about the source of the money and the way it is to be raised.
    6.4 pm
    Mr. Terry Rooney: I congratulate the shadow Chancellor on initiating a debate on pensions, something that he singularly failed to do in his six years as Secretary of State for Social Security. It is nice to see him initiate a debate on such a vital issue.
    When we consider pensions, we have to examine the history of occupational pensions, how they came about and their purpose. There is no doubt that the best type of pension scheme to be in is an occupational pension scheme on a final salary basis—
    Mr. Greenway: And which is funded.
    Mr. Rooney: indeed—unlike that of the police, I have to say. That is the best scheme to be in, provided someone has a guarantee that they will remain in employment until retirement. Sadly, that is no longer the case for tens of millions of people.
    Occupational pension schemes are a relatively modern phenomenon. They grew significantly in the 1950s and 1960s because there was a shortage of labour and such schemes were needed to entice people to work for particular companies and particular industries. There is nothing wrong with that, perhaps, but the decline in occupational pension schemes since the late 1960s and early 1970s in terms of their number and the number of members is significant and something that should worry us.
    In the 1970s, there was some recognition of the fact that millions of people are not and can never be members of occupational pension schemes. They are principally women and carers, but they also include many people in low income brackets and people who have many breaks in their employment for many reasons. Recognition came in the form of the state earnings-related pension scheme. SERPS has to be recognised as a valuable, solid scheme for millions of people, but, at the same time, we have to

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    recognise that, during the changes that took place two or three years ago, billions of pounds were taken from the future pension entitlement of members of SERPS without an iota of whingeing from the Conservatives—it was okay, because it affected individuals in a state scheme.
    We have heard much hypocrisy today, with talk about a briefing from the National Association of Pension Funds. I have to say that Anne Robinson told a different tale when she was at the Institute of Directors—perhaps it is a case of whoever pays the piper calls the tune. Millions of people will experience a dramatic reduction in their SERPS pension in years to come without an ounce of compassion being shown by the Conservatives.
    Much has been said today, wisely, about the misselling of personal pensions, but an issue of financial mismanagement that affected tens of thousands of pensioners in the late 1980s and early 1990s—the infamous home income plans—has not been touched on. Not only did people lose a great deal financially, many pensioners lost their homes because a deregulated system with no statutory back-up allowed people to rip off those who did not know any better and had no access to the right advice. People lost their homes and their investment, and finished up far worse than they ever were before.
    Many things affect the value of a pension fund, not least the investment decisions taken by fund managers, the profit record of the companies in which they invest—at this point, I should perhaps mention that the profits declined somewhat in the two recessions that occurred under the previous Government; in fact, they declined significantly—the contributions from employer and employee, and the sort of investments held, whether gilts, bonds or equities, at home and overseas.
    It is interesting that, in 1990, the Nikkei index in Japan hit 34,000 and is now down to around 19,000. Is it suggested for one minute that the Government should compensate pension funds for investments in the Nikkei? I think not. The ability of pension fund managers is crucial. There are some very good ones, but many are very bad.
    The performance league tables for pension fund managers show the same companies time and again in the top three or four, be it over five, 10 or 25 years, and the same outfits at the bottom, offering a miserable performance and depressing pension fund values, assets and returns. We have had charter marks for many years, but it is noticeable that there has never been one for the pension fund industry. If there had been, very few people would ever have earned one. We now have the minimum funding requirement, which is no bad thing, but perhaps we need a minimum performance requirement of pension fund managers, because some of them have been getting money under false pretences for far too long.
    In general, if a company is a mutual or non-commission paying, the investment is safer and will do better. In addition, if the company's title includes the adjective "Scottish", it tends to be one of the better ones—and I do not say that just because of the identity of the Minister on the Front Bench tonight. Certain institutions have a long history of being sound, solid investment vehicles, but there are far too many who are doing nothing for pensioners or investors and they should be weeded out. The sooner we have a regulatory authority that acts against incompetence, the better off pensioners will be.
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    Before I came to the House, I had the privilege of being the chair of the investment board of what I believe is the largest local government scheme in the country—the West Yorkshire local government superannuation scheme, which had about £2.5 billion of assets. In the six years I was there, the fund grew, we were fairly successful in the investments we chose, and the benefit could be seen in the employers' contribution rate dropping from 11 per cent. to 5.5 per cent. for manual workers and to 4.5 per cent. for white collar workers. Those were significant gains.
    At the same time, some of the previous Government's worst anti-public sector attitudes were on display in that, in the late 1980s, when bus companies were deregulated and local authority bus services went into the private sector, we were instructed that bus workers could no longer be members of the local government scheme. They had been in the scheme for years and had a good, well funded final salary scheme, with low employers' contributions. By diktat of the Government, new bus workers were told that they had to make their own pension arrangements, so immediately we had a two-tier pension scheme in the bus industry.
    Of course, the Conservative Government were well known for having two-tier schemes throughout the public sector, so they probably thought nothing of it. Now, however, about two thirds of those working in the bus industry have a good scheme, but the other third are at the mercy of the sharks and charlatans about whom we have heard so much today.
    The Government had other attitudes towards pension funds and their assets—one remembers their raid on the assets and surpluses of the National Coal Board, the National Bus Company's BEST scheme, British Rail and many others. Not only did they do that: they then spent Government money on behalf of the new trustees, defending them against claims that the money should be paid back. In short, they raided the money and then provided the costs of the legal defence to justify the decision being made in the first place. Many, many thousands of pensioners who worked in those industries will be far, far worse off as a result of that than of anything that might—I stress, might—emerge from the Budget decisions taken last week.
    When considering pension values and the rights and living standards of pensioners, there are two sides to the equation. It is like any accounting practice—there is the income side and the expenditure side. We well remember the savage attacks on pensioners in the 1980s: the increase in prescription charges, the introduction of charges for eye tests and dental checks, value added tax on fuel and various other measures, all of which had a disproportionate effect on those on small occupational pensions. Some Conservative Members are looking aghast—they thought pensioners were exempt from those charges, but they must have been given the wrong brief.
    Mr. John Hayes: Would the hon. Gentleman care to enlighten us as to which pensioners pay prescription charges?
    Mr. Rooney: Any pensioner who is not on income support. If the hon. Gentleman nips very quickly to the Library, he will see that I am right, and he might get back before I sit down.
    So far, this has been an interesting debate, although there seems to have been an attack of collective amnesia among hon. Members on certain Benches. It is important

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    to remember that pensions are a long-term equation and all sides need to be considered. We cannot simply allow the debate to continue as it started, with the words of the shadow Chancellor.
    6.14 pm
    Sir Nicholas Lyell: I am glad to follow the hon. Member for Bradford, North (Mr. Rooney), not least because I listened to his speech with great interest for 10 minutes and noticed that it did not contain a single word of justification for what the Government have done in respect of pensions in the Budget—not a single word.
    In the light of the Budget, people are rightly concerned about their pensions. The whole cast of this gravely mistaken Budget is wrong. In two short months, the Chancellor has allowed the living costs of the average mortgage payer to rise by about £12 a month, and has cut that individual's prospective pension—if he is around 30 years old and paying the modest enough sum of £100 a month—by some 20 per cent.
    In order to provide equally for himself and his family in future retirement, that same citizen will have to increase his contributions by some £20 per month, if he can. That is a combined increase in mortgage and pension payments of £384 a year for a fairly modest earner, and the country should realise that.
    That is profoundly wrong. The Government came into power purporting to set a high moral tone, yet they are willing to pretend that taxes can be raised painlessly by so-called windfalls; and, hoping that no one will understand the complexities of advance corporation tax, they have robbed future pensioners—pawning the future to pay for the present. I see that the Chief Secretary does not like to listen to this, and is about to depart the Chamber.
    The £5 billion per annum taxes raised from the advance corporation tax changes to pension funds is the equivalent of an extra 3p in the pound on income tax, taken from people's savings. I mean people's savings, not "the people's money", which is how the Government like to refer to public money. We are talking about money taken from real people's savings every year, and millions of pensioners and probably as many as 20 million families will suffer as a result.
    Britain can pride herself on having, over the past 18 years under the Conservative Government, increasingly funded pensions, so that, now, not only do we have the largest funded pensions in Europe, but our funding of pensions exceeds all others put together. We have put money by and saved it so that it can grow for the future.
    With a constantly aging population, that is the only way to prevent our old people—that means ourselves in the years ahead—from becoming an intolerable burden on our children and grandchildren. At one greedy, misguided stroke, the Chancellor has severely limited that benign process. He has cut our savings and increased the need to save, but has cut the incentive to save. He is spending now what should be saved up for the future.
    I am sorry that the Chief Secretary has left the Chamber, because, at the end of his speech, he tried to give some justification for what he had done by saying
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    that the fact that companies would be taxed on the dividends they pay out would make them more likely to invest. I have never heard such a wafer-thin argument, which was rightly cut to ribbons by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley). The Chief Secretary had not thought of that argument when he was skewered on "Newsnight" the other night, and I suspect that it was dreamed up, either in the Treasury or the Department of Social Security, to provide some sort of fig leaf for this gravely mistaken policy.
    We look forward to asking the Government some detailed questions. For example, how much of the money of companies that would have paid dividends is to go into investment, and therefore by how much has the £5 billion tax take been reduced to allow for the increased investment that is to give rise to the compensating bonanza, which was the substance of the Chief Secretary's argument? I do not believe that the figures will add up.
    Moreover, by taking his tax increases from these largely unnoticed funds, not from current earnings, the Chancellor is doing nothing to cut current spending, which is feared to be leading to overheating, thus causing the Bank of England to continue to increase interest rates. Hence we are moving from the benign downward spiral in costs and interest rates that has stimulated the remarkable economic recovery in the past four years and left the Chancellor with his unrivalled inheritance, into a vicious upward spiral.
    The pound rises, hitting at our competitiveness—the effect on manufacturing orders was dramatically demonstrated yesterday. Companies that increase payments into their pension schemes to replace what the Chancellor has taken out will have correspondingly less for investment; so much for his talk of under-investment. Private citizens with personal pensions who already prudently pay the maximum permitted for tax relief have nowhere to go. If they wish to save more, they must do so without the same tax relief.
    Now we hear that the Chancellor has designs on personal equity plans. What will ISA, the individual savings account, have to offer? It seems hardly likely to be better, but we wait with keen anticipation.
    Government supporters should realise what their much-vaunted new Labour Government are up to. They are up to hype and deceit, robbing the future to pay for the present. They pretend that money can be raised painlessly by windfalls, when they know that today the principal investors in the companies that they have just taxed are the very pension funds that they are already robbing by abolishing ACT.
    Before the general election, one of the aims of the Labour party was to persuade the country that it had changed—that, in its approach to business and to the personal ambitions of ordinary people, it was now more like the Conservatives, only nicer. [HON. MEMBERS: "Hear, hear."] We now know that that is not true.
    Two key Conservative principles—principles that apply to the millions of ordinary families who work hard and save hard—are thrift and self-help. By this Budget, Labour has hit both principles in the teeth. New Labour has turned its back on the pensioners of the future. Wake up Britain, and see these deceivers for what they are.
    6.21 pm
    Mr. Geraint Davies: The Opposition motion is a rambling mish-mash of ideas, cobbled together by the fag end of the previous Government. It is couched in the language of guilt and betrayal, to scare the British public into supposing that they are at risk.
    In reality, the aim of the Budget was to confront the country's endemic legacy of economic problems. That legacy consists of gross under-investment in physical and human capital, increasing debt costs—the annual cost of paying our debts is now £25 billion a year more than the cost of schools—and emerging overheating in an economy that is disabled by under-capacity and under-investment.
    The Budget was designed to confront those problems head-on, and it did, by reducing corporation tax, reducing tax on small business and investing in the skills stock of UK plc, so that we would be strong again to fight and win in the global economy.
    The Leader of the Opposition has said more than once that there is no such thing as a free lunch—although we know that there is free champagne in the Conservative leadership contest—but he does not realise that the Budget means growth and higher profitability for British industry and a simultaneously faster reduction in the country's debt. That must mean UK plc moving into balance much more quickly, and that must mean that the returns and values of pension funds appreciate more quickly.
    It was no surprise, therefore, that, on the day after the Budget, the stock market rose 80 points. Since we were elected, there has been an upward cycle of share values, which has helped pension funds.
    The shadow Chancellor, who has now left the Chamber, seemed to imply that growth did not matter, and the next moment he started talking about pension holidays, which is proof that, if industry grows because the Government provide the right environment for growth, that will compensate for the reductions in tax concessions that are given for dividends. The conditions that we have created will help pension values.
    It has again been asserted—incidentally, it was asserted by the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell)—that pension values simply rely on dividend flows. That is obviously not the case: I have previously described that idea as a quaint, eccentric actuarial practice. Real pension values also depend on overall equity growth and projections of that growth.
    We find that to be so elsewhere on the globe, and in the case of other financial products, such as unit trusts. Actuaries and the Department of Social Security need to think carefully—especially with respect to minimum fund requirements—about the definition that we now use, which we very much need to revisit.
    I want to bring to the Floor the issue of the level of dividends as a share of operating surpluses in Britain compared with that of our major trading competitors. In Britain, that share is much higher than in the United States of America, Japan or Germany, suggesting that there is an opportunity for reinvestment from retained profit to increase research and development, and to increase long-term profitability to a more globally competitive level. That is implicit in the thinking of the Budget.
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    We must consider the Budget in the context of the new culture of stability that was introduced by the delegation to the Bank of England of responsibility for setting interest rates—a change which, overnight, reduced the long-term borrowing costs of British industry by changing long-term interest rates. That change reduced costs and this change increases returns, so collectively we see an increase in the expected return and profitability of British industry. That means jobs and prosperity for Britain.
    The changes are good news for pensions. They are good news for pensioners, for workers and consumers, and for Britain.
    6.26 pm
    Mr. John Greenway: It was obvious to all hon. Members who were in the House before the general election that, whoever won, the House would find itself debating pensions fairly soon. I doubt, however, that any of us anticipated that we would be doing so in circumstances such as those that we are in tonight—the robbery of about £5 billion a year from our pension funds by the proposal on advance corporation tax in the Budget.
    Listening to some of the earlier exchanges about the proposals for basic pensions plus made by the previous Government—which, I seem to recall, were favourably received by the current Minister for Welfare Reform and by the Prime Minister—I was reminded that, before the general election, it was understood on both sides of the House that there was a need for long-term reform, to encourage more people to provide for themselves for their retirement. That recognition appears to have flown out of the window in the present Government's proposals.
    I remind the House of my many interests in insurance and financial services. I have worked in the insurance industry since 1970. I am a director of what is now a very successful insurance brokerage, which also includes an independent financial services company, both based in North Yorkshire. I am an adviser to the Institute of Insurance Brokers, and have been throughout its 10-year history.
    As the Under-Secretary of State for Social Security, the hon. Member for Southampton, Itchen (Mr. Denham), knows, in the past seven years we have had a thriving insurance and financial services group, in which we have considered in a non-partisan way some of the issues that we are debating tonight. I have one other curious interest, in that I am, and have been for six years, an elected member of the Insurance Brokers Registration Council. We are regulators. We are the authorised bodies for insurance brokers. In that role, I have hands-on experience of why the problem of the misselling of personal pensions is taking so long to resolve.
    In view of these interests of mine, hon. Members are bound to wonder whether any of them might influence what I have to say. But in fact the Budget was not bad for the company of which I am a director: the lower corporation tax and the 50 per cent. on capital allowances benefited our company. The removal of the ACT credit from pension funds will inevitably mean more new business for companies like mine—so the measure is beneficial from that point of view. The real issue, however, as my right hon. and learned Friend the Member for North-East Bedfordshire (Sir N. Lyell) said, is the fact that we are robbing the future for tax revenue today, which is a gross mistake.

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    The pensions transfer review is complex. It has been said this evening that the former Government did nothing about it, which is not true. The Economic Secretary, to be sure, has injected some urgency into the review, and that is good. Very few people in insurance or financial services fail to recognise the need for the review to be completed. I remember saying at the Chartered Insurance Institute's conference in Aberdeen, held in 1995, that insurance and the financial services industry cannot expect to regain the trust of the public until this matter is resolved. There is no shortage of willingness to resolve it, but certain problems remain.
    The IBRC authorises roughly 1,200 firms' financial services regulation. We have identified about 200 cases, involving 80 of those firms, which hinge on the opt-out and non-joiner part of the problem. As the hon. Member for Southampton, Itchen (Mr. Denham) knows, that is critical. Very few of these cases have been settled, but we have set as a target for their settlement the end of 1997. We believe that about half the cases will result in compensation.
    We have also identified about 2,800 cases involving pension transfers. A great many of them are not a problem, although I suspect that there may be some over-optimism in that regard. We have identified, furthermore, about 11,500 non-priority cases which are not yet part of the review and which still await a decision about when the industry should consider them. If the IBRC, covering 1,200 insurance firms—each one of which has a large general insurance business; this is not the main part of their business—has so many cases, we can only guess at the scale of the problem throughout the rest of the industry.
    The Government would therefore be wise to defer a decision on when the non-priority cases should be reviewed until the first phase, the priority cases, is out of the way.
    Why is it taking so long to complete and settle the reviews? Gathering the information is a slow and complex business. It was not until the autumn of last year that the software was produced to allow a loss assessment to be done in a standardised form. It would be a hugely complex task to do case by case. It should also be remembered, as against the allegations that the previous Government did nothing, that the Securities and Investments Board simplified the information that had to be asked for only as recently as January of this year.
    I have seen a letter on file from one occupational scheme that we are reviewing, answering the request for information using the latest, simplified form recommended by the SIB, as follows:
    "You will have to learn to wait."
    I urge the Government to get on the backs of the financial services and pension providers, and to chivvy along the occupational schemes. Unless they provide what are often simple scheme details, we cannot calculate precisely what the losses may be. They must be encouraged to get on with the job. The country is entitled to expect progress, and progress is precisely what the great majority of people in the industry want.
    The next huge problem concerns the feeding in of the removal of tax relief on dividend income to the calculation of what it will cost to go back into an
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    occupational scheme, and of the likely value of the personal pension policy that was sold instead. If such an equation has to be drawn up, any prospect of resolving the problem of misselling at an early date will go out of the window. Any such idea is bound to hit the buffers.
    If an occupational scheme does decide to recalculate what it will require for a person to rejoin it, it will in effect have a blank cheque: it can require whatever it wants before someone can rejoin. Yet existing members will still be subject to the same regime, governed by the tax credit removal on ACT; so current members will be worse off. It is expected throughout the industry that many occupational schemes will ask for more—but why should they?
    The Government ought to send a strong message to the industry that no allowance should be made for the tax change in any of the reviews. We should not move the goal posts because of that tax change. The calculations should be carried out as if the tax change were neutral; otherwise, the pensions transfer problem will not be solved as quickly as we would like.
    The scenario I have described would be a double whammy when it came to compensation costs. Some people might ask why an increase in compensation costs is a cause for worry. I can tell the House three reasons for that. First: who will pay? Perhaps the money will come from professional indemnity insurance or the resources of the firms concerned, if they are still in business—many of them are. But the value of the policy benefits to many policyholders in mutual companies will fall as a result of compensation payments—an issue with which the House has yet to come to terms.
    I long for the day when a non-executive director of one of the mutual life offices says, "I have had enough of this. People who did no wrong are having their benefits curtailed so as to pay for compensation to people who may have been missold personal pensions but who were at least a party to that transaction." Ultimately, the problem will have to be tackled.
    My second reason is a question of equity. Any assessment of the advice that preceded the misselling of pensions can surely be made only in the light of what were thought at the time to be the likely consequences of such advice.
    It may be argued that advisers should have paid attention to possible tax changes, such as the one under debate this evening—although there was certainly no clear warning of it. We have to make a firm judgment at some point as to the knowledge on which such advice was based. If we do not set the cut-off date for such knowledge at the time a policy was sold or the time someone was advised to leave or not to join a scheme, then we should at least settle for the time when the SIB review was announced.
    Without such a cut-off, who knows what changes to tax laws or benefits the next couple of years may hold? We shall find that, every time a change is made—it will be a long-drawn-out process for several years—we shall have to rehash the matter.
    A precedent has already been set of which the Minister may be aware. Some independent advisers have asked the SIB and the PIA whether, in calculating compensation, they can take into account the fact that the company with which the personal pension policy was arranged produces windfall shares for members. Some, such as the Norwich

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    Union, have, and there are strong rumours about what might happen to others like the National Provident Institution and Friends Provident.
    The PIA has come down firmly and said that under no circumstances should those additional benefits be taken into account. If we apply the logic of that argument, we should say that the ACT tax credit change should influence neither the calculation of the cost of returning to an occupational scheme nor the value of the pension policy that was sold. The comparison between the two is how the required compensation is calculated.
    The third reason for concern about compensation costs is that the Government's role in this matter was undoubtedly a major factor. Earlier in the debate, the hon. Member for Northampton, North (Ms Keeble) produced some advertisements with which we are all familiar. I urge the new Government to tread carefully when giving advice: whether it was right or wrong, many people thought that buying a personal pension was the right thing to do because the climate that was created encouraged that.
    Mr. Duncan Smith: It was right for some people.
    Mr. Greenway: It certainly was, but it was not right for everyone.
    My hon. Friend makes the very point that I was about to make: the fact that there was a climate in which personal pensions were regarded as attractive exonerates no one from giving bad advice on whether to opt out or not to join an occupational pension scheme. The pensions industry has agreed to take all this firmly on the chin, because it knows in its heart of hearts that people were put into those schemes, and that policies were put on to the books and accepted, when they should not have been.
    The Chancellor's decision to remove ACT tax credits from pension funds is a monumental misjudgment. For the background to this matter, one need only look at The House Magazine of 30 June—published on the eve of the Budget—in which the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) had an article about pensions.
    In another article, Allan Evans of Pearl Assurance made two telling remarks about the scale of the under-investment in pensions. In spite of the record that my right hon. Friend the Shadow Chancellor outlined at the start of this debate in comparing our record with that of other countries, the potential for more to be done could not be clearer from Mr. Evans's two comments. The first is:
    "Only 1 in 100 occupational scheme members will receive their maximum entitlement of two-thirds of final salary."
    It is no good saying that pension funds are awash with money and that everyone is on some great gravy train once they retire. That is simply not true, because only one person in 100 will get the maximum. One has only to look at the insecurity of being a Member of Parliament and at how many hon. Members, when they eventually retire, will get the maximum pension entitlement under our scheme. In the fleeting moments during the count, when even I wondered whether I had survived, the pension that I would lose was one factor for my wanting to return to the House—but it certainly was not the only one.
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    Mr. Evans's second point, which is even more telling and even more important in terms of the removal of the ACT tax credit, is:
    "the majority of people with a personal pension are making wholly inadequate levels of contribution."
    That is why the misselling scandal arose. It was not wrong to encourage people to make provision for their own future; the problem was that they merely invested their national insurance rebate, which should have been just the first building block.
    One of the reforms on which I hope for some cross-party consensus is that, if people decide not to join an occupational scheme, any employer's contribution that would have been made to an employer's scheme should be available for them to invest, as of right, in a scheme of their own. We should have done that in the late 1980s. The fact that we failed to do so is one reason why we have this problem today.
    The hallmark of the new Government's first weeks in office is to blame the previous Government's shortcomings for unpopular and difficult decisions. I make no complaint about that; if the roles were reversed, we would doubtless do the same. However, the decision on advance corporation tax credits is entirely of the Government's making. All Governments make mistakes, but it is hard to imagine a worse one, even by this Government's standards.
    6.45 pm
    Yvette Cooper: The House will welcome the sudden apparent interest shown by Conservative Members in the plight of pensioners. However, I fear that the 15,000 pensioners in Pontefract and Castleford will be a little cynical about the former Government's new-found concern for their plight. After all, it was the Conservatives who put VAT on fuel bills up to 17.5 per cent. whereas the Labour Government have cut it to 5 per cent. and abolished the gas levy, which means that pensioners in my constituency will be considerably better off this winter than they would have been had Conservative Members had their way.
    The Conservative party did little to ensure that the poorest pensioners get their full entitlement to the money that they are owed after working hard all their lives. An estimated 1,500 pensioners in my constituency do not get the income support top-up to which they are entitled, having worked so hard, which means that they lose on average £14 per week. That sum goes a long way when one does not have much money to play with in the first place. Nevertheless, the Opposition now say that they are concerned for the plight of pensioners in the future; it is worth considering their arguments in detail, if only to show that they do not add up.
    The Shadow Chancellor raised the subject of a 30-year-old now saving for her pension. She has most of her working life before her and hopes to be in work during that time to save for her retirement. What questions does she face when considering the security of her retirement? Her security depends first and foremost on her pension fund's long-term performance, which means the performance of the companies in which the pension fund invests. She will be pleased to see how well the stock market has done since the Budget—an 11 per cent. increase has done wonders for the capital value of pension funds—but she will be more interested in the long-term

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    performance of pension funds and companies, which depends most of all on the economy's long-term performance.
    The 30-year-old is also interested in whether she can stay in employment for the next 30 years, which means that she has a strong interest in not being pushed out of her job by another recession—by more of the same boom-bust cycle with which the economy has been plagued for decades, and certainly severely for the past 20 years. Her security in retirement thus depends on her ability to stay in employment and on the long-term prospects for growth in the economy.
    What would that 30-year-old have had to expect from the Conservatives for her retirement? Not very much. The former Chancellor was preparing to make exactly the same mistake in economic management as his predecessor, Nigel Lawson, made in the 1980s, fuelling another boom. No, he would not have raised taxes. No, he would not have cut borrowing. No, he would not have given the Bank of England control over interest rates. And no, as we know, he would not have been half so keen to raise those interest rates himself.
    Had the Conservatives been re-elected, we would have been on the verge of another round of disastrous economic mistakes, taking the risk that we were fuelling inflation, triggering recession once more and weakening the very companies on which that 30-year-old's pension depends. We can assume from what the shadow Chancellor has said that he would agree that he, too, would not want to cut borrowing at this stage, would not want to raise interest rates and would certainly not have given control of interest rates to the Bank of England.
    In contrast, my right hon. Friend the Chancellor has done more to promote stability in economic management than any Government since the war. He has also done more to promote the long-term rate of economic growth in the past few months than the Opposition did in their time in government.
    Let us consider the real problems for the long-term rate of economic growth, which matters for the pension funds and for long-term company performance. Low investment and skills shortages are huge capacity constraints on the economy, stopping our economy growing and preventing businesses from expanding as much as they could otherwise do. The United Kingdom's investment record is pitiful compared to that of our competitors. In 1995 we invested only 15 per cent. of our national income, leaving us 13th in the European Union league. We know that we also face persistent skills shortages, which the previous Government did little to tackle when they were in power.
    The new Government, however, have introduced new measures for investment, not just by cutting corporation tax, but by increasing capital allowances. Such measures will promote the prospects of pension funds which are so important.
    That brings me to the tax credit about which Conservative Members are so exercised. Would they have introduced that credit if they were starting all over again? Will they reintroduce it, once it is abolished? Would they really want to introduce a distortion in the tax system that encourages pension funds to demand a short-term dividend from the companies in which they hold shares, rather than encouraging those companies to
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    put their profits into investment? The tax credit directly encourages that. It is a distortion that is short-termist in its impact and probably does much to explain why we have such an abysmal investment record in the UK.
    For example, in the late 1970s dividends as a share of gross domestic product were about 2 per cent. in the UK and about the same in the United States. Over the past 20 years, dividends have risen to about 3 per cent. in the US. In the UK, dividends have soared to an almighty 6 per cent. of GDP. No wonder we have capacity constraints, if so much money is being poured out in dividends rather than being invested in the long-term future of our companies. It is madness to allow such a distortion to remain when we have the chance to do something about it.
    Mr. Letwin: The hon. Lady describes a gap of 4 per cent. of GDP. Can she tell the House where she imagines it to go? Does she accept that it may be redistributed into the industries that most require it for investment?
    Yvette Cooper: Opposition Members have a problem—they think that there is a zero sum going all the time. They do not think in terms of resources going into investment in the long term, and of allowing companies to make a fair decision without its being distorted by a tax incentive that sends the money back to the pension funds. Conservative Members have been so keen to advocate market forces in order to allow companies to make fair decisions and to send the money where they think that it will have the best return; yet the hon. Gentleman is advocating a tax credit that specifically distorts the financial decisions made by companies and by pension funds because they have an incentive to send the money back in dividends instead.
    Even honest Conservative Members know that that tax credit should go. More than 10 years ago the right hon. Member for Henley (Mr. Heseltine) told journalists that the system of subsidies for pension funds did not promote wealth creation. The remedy, he suggested, was to
    "take pension fund incentives away."
    If Conservative Members were genuinely concerned about the plight of pensioners in future, they would have done more to tackle the misselling of pensions. Theirs is the party which, when in government, encouraged hundreds of thousands of people to opt out of their work pensions into private personal pensions, and then sat back and did nothing about the scandalous misselling that took place.
    About 2,300 people in Pontefract, Castleford and Knottingley have been missold personal pensions. Fewer than one in 100 have received any compensation. More of them have died before receiving any compensation than have received compensation. I find those figures shocking. I am amazed at the gall of the Opposition when they refer to the misselling of pensions in their motion, after their irresponsible behaviour and the little that they did to tackle that misselling.
    On behalf of my constituents I welcome the determination of my hon. Friend the Economic Secretary to take tough action against companies which have not yet compensated their unlucky victims. Pensioners in my constituency and savers for future

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    pensions will be relieved to know that their prosperity and their future pensions are now in the hands of a Labour Government.
    6.56 pm
    Mr. Nick Gibb: I begin by refuting the point made by the hon. Member for Pontefract and Castleford (Yvette Cooper) about the imputation system. We would have created the imputation system if we were starting from scratch, because it avoids double taxation of company profits, first in the hands of the company and then in the hands of shareholders. The current method avoids distortion in the capital market. We have equilibrium in the capital markets through the system. The system that the Government are trying to create distorts the capital market.
    As the details of the Budget begin to sink in, the irony of it all begins to rise to the surface. The Labour party ran a general election campaign based on a promise of no rise in income tax, a promise to generate more investment in industry and, most disgraceful of all, a scare story that pensioners risked losing their pensions if a Conservative Government were re-elected. Now we see the reality—a Budget which does colossal damage to the interests of pensioners and pension funds, which will reduce investment in industry and which introduces a reduction in people's disposable income which, in all but name, is a rise in income tax.
    The ending of tax credits on dividends vandalises British pension funds to the tune of a diminution in value of about 11 per cent. At a time when the developed world is confronting the challenge of how to fund an ever aging population, and when we have in prospect a huge competitive advantage of meeting that challenge with £650 billion of pension fund assets, the Government decide to launch an unprovoked attack on those funds. That tax change will cost the average person who contributes to a personal pension £20 a month extra in pension contributions to make up the shortfall.
    For example, the tax change will result in a 30-year-old's pension fund that would have been worth £250,000 on retirement suddenly losing £50,000 in value—a reduction of 20 per cent. in the value and a consequent £20 a month extra pension contribution to make up the shortfall. For many millions of people with personal pension schemes, the shortfall will have to be made up by the individual.
    Mr. Piers Merchant: While my hon. Friend is examining the effect of that tax increase on individuals, will he also consider the cost for council taxpayers and the extra that they will have to pay to ensure that local authority pension funds are topped up? Is he aware, for example, that in the borough which covers my area—Bromley—the council estimates that the tax rise will cost it £750,000 per year, which means an increase of £6 for every council tax payer in that area on band D?
    Mr. Gibb: I thank my hon. Friend for that intervention. I agree with him, and I have similar figures from my constituency to which I shall refer later.
    Returning to pensions, the company will have to make up the difference in most—but by no means all—final salary schemes. As a result, more and more companies are likely to switch from defined benefit and final salary pension schemes to defined contribution schemes. That will shift the risk from the companies to the individuals.
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    The Chancellor of the Exchequer would have us believe that this is a no-cost Budget—a Budget for the people—but it is not a Budget for the people: it is a Budget that the people will pay for. The Chancellor described it as a Budget for the long term, but the truth is that the Budget will raise cash in the short term while creating enormous problems and increased state dependency in the long term.
    Before the Budget, the pension fund regime allowed funds to accumulate tax free. The Government have effectively removed that tax exemption. They will tax pension funds at a time when they were talking about encouraging more savings and the possibility of compulsory third tier pensions. I wonder whether the Labour Government are fully aware of all the consequences of this measure. I doubt whether the Government thought through the changes fully in their rush to legislate.
    It is odd that, while higher and basic rate taxpayers will keep tax credit on dividends, non-taxpaying individuals—the poorest in society—will lose the ability to retain tax credit on any small dividend income that they might have. That will particularly hurt pensioners, most of whom do not pay tax. The Government have surely not thought through that measure.
    Have the Government considered what will happen to the self-employed or to those in non-pensionable employment who are paying the maximum 17.5 per cent. of their net earnings into a private pension fund? As a result of the Budget, those people will find that they must increase their contributions in order to rebuild their pension funds to their pre-Budget values. However, as they are already paying the maximum amount, those people cannot increase their contributions. Why did the Government not decide to raise the limit from 17.5 per cent. to 25 per cent. of net earnings in those circumstances? Did the Government reject the idea or, as I suspect, have they not even considered it?
    What extra incentives do the Government intend to introduce to make maintaining an opt-out from SERPS worth while in the light of Budget changes that make private and occupational pensions less attractive? Have the Government proposed any new incentives? Will they provide additional expenditure to fund the extra demands on the public purse? Have the Government considered those points, or is that another aspect of the Budget that they have overlooked in their rush? Perhaps the Government do not want people to opt out of SERPS—after all, the heroine of the old Labour party introduced SERPS in the first place.
    The Budget's effects on local government were mentioned earlier. Have the Government allowed for extra spending provision to make up the revenue support grant in order to fund the extra cost on local government? Have they considered that issue? For example, West Sussex county council has calculated that, as a result of ending tax credits on dividends for tax-exempt funds, its pension fund will be an additional £3.4 million in deficit. That will necessitate increasing the employer contributions, which are currently 17 per cent. of salary, to a staggering 23 per cent. of salary.
    We must then ask: how will West Sussex county council fund that extra contribution since it is already spending up to its cap? Will the Government allow the council to allocate the extra expenditure necessary? Will they relax the cap? Have the Government considered that

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    issue? I noted earlier this afternoon that the Prime Minister had considered the matter relatively recently. He excused the mess by declaring that local authorities do not need to revalue their pension funds for another two years. Is the Prime Minister recommending that councils act in an imprudent manner and do not start making up their deficits immediately?
    If West Sussex county council is allowed to spend beyond its capping limit, it will mean a 2.5 per cent. increase in council tax. A similar problem faces Arun district council. As a result of this Budget measure, its pension fund will be in deficit by £400,000—which translates to an extra £8 a year that residents of Bognor Regis and Littlehampton must pay. Combined with the county council and police authority, that amounts to an increase of £20 a year. People will have to pay an extra £20 a month in pension contributions and an additional £20 a year in council tax. The Government were elected on the pledge that they would not increase income tax—but these are income tax increases by the back door, and the people will notice. They will know that they were misled on 1 May.
    The Government billed last week's Budget as a Budget for investment. A Budget that will tax the investing sector of the economy—the pension funds—to the tune of £5 billion a year is not a Budget that will encourage investment. A Budget that will tax the biggest spenders on plant and machinery—the utilities—to the tune of £5.2 billion will not encourage investment. A Budget that reduces the tax credit available to overseas investors, so that it is less advantageous for a corporate investor from the United States, for example, to invest in the United Kingdom, will not encourage investment.
    A Budget that proposed initially—I do not know whether the measure is still on the books—to abolish foreign income dividends, which threatens to drive out of the United Kingdom many British-based multinationals, will not encourage investment. A Budget that amends the finance leasing legislation, the consequences of which will be higher capital costs, will not encourage investment. A Budget that doubles the rate of stamp duty on property to 2 per cent.—we should note that stamp duty applies not only to houses and real property, but to any property that is sold or transferred by document, including the sales of businesses, good will and so on—will impose a significant cost on dynamic and changing businesses, and therefore will not encourage investment. They are only six measures from the Budget, which was billed as a Budget that would encourage company investment, which will reduce such investment.
    A Government who said that they would consult widely on tax legislation and who have proposed the novelty of green Budgets, are rushing ahead and pushing through legislation, the consequences of which they have not considered fully. The Government have already announced changes to the Budget: first, altering the calculation of the value of utilities for windfall tax purposes; secondly, the possible withdrawal of their ill-considered decision to abolish foreign income dividends.
    It was interesting to hear the Paymaster General's response during Friday's debate on the Budget to criticism of the Government's decision to abolish foreign income dividends. He said that international headquarters
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    companies would remain and could continue to pay dividends free of tax. However, the international headquarters companies regime is available only to non-UK owned groups.
    We have before us ill thought out and rushed legislation. The timetable for debate allows for too little consultation, which is why mistakes are being made. It is time that the Government paused to consider and to consult. It is time that they gave up their high-handed approach. The Finance Bill will not increase investment, as the Government claim, but reduce it. The Finance Bill will not create jobs, but cost jobs. It will not make pensioners more secure, as the electorate were told that a Labour Government would, but less secure.
    7.9 pm
    Mr. Tony Colman: Thank you, Mr. Deputy Speaker, for calling me to speak in the debate. I declare an interest as a councillor for the London borough of Merton and chair of the United Kingdom Standing Committee on Local Government Pensions. I am also chair of the Local Authority Mutual Investment Trust, director of Church Charities and Local Authorities and chair of Greater London Enterprise Development Capital.
    The United Kingdom Steering Committee on Local Government Pensions represents the 99 pension funds in local government. Between them they invest assets of some £60 billion under the local government pension scheme. We have 1.6 million current and deferred pensioners and 1.25 million contributing members. Our funds constitute 10 per cent. by value of all UK pension funds.
    Local government pensions are unique within the public sector in being funded rather than pay-as-you-go. We also represent teachers, the fire brigade and the police, but, of course, the previous Conservative Government had not grasped the nettle in ensuring that those schemes are funded, so council tax payers, through various levies, have to pay ever increasing costs for the police and fire brigade. I hope that the Under-Secretary of State for Social Security, my hon. Friend the Member for Southampton, Itchen (Mr. Denham), will take account of that in his pensions review.
    I particularly wished to speak in the debate because the right hon. Member for Wells (Mr. Heathcoat-Amory), in the Budget debate on Monday, and the Leader of the Opposition, in Prime Minister's questions today, quoted from a letter that I sent, before the Budget, to the Chancellor. It was dated 26 June and was acknowledged by the Treasury on 30 June. It concerned the then potential abolition of tax credits to pension funds. It said that that
    ?would add at least 3 per cent.—or £300 million—to employers' pension costs and compensation would be needed, otherwise there would be further cuts in local services unless there was an increase in the revenue support grant.?
    I hope that the following comments will be helpful to the House. No local government pension beneficiary is affected in any sense by the proposals in the Budget, which I support. It is important to remind hon. Members that the local government pension scheme is extremely well managed and is very much a model for the private sector. The hon. Member for Mole Valley (Sir P. Beresford) previously represented Croydon, Central. I wonder why he moved. Perhaps the excellent speech from my hon. Friend the new Member for Croydon, Central (Mr. Davies) was a clue.

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    The hon. Member for Mole Valley gave the local government pension scheme a clean bill of health and supported its continuance. The fact that Opposition Members could not find any holes in it shows that it is an extremely good scheme. Thousands of people who are waiting to come back into those schemes were missold pensions. I assure the hon. Member for Ryedale (Mr. Greenway) that there is no hold-up in the information being made available from the pension funds that I chair.
    Local government pension funds have returned extremely good, high returns. I particularly commend their ethical and environmental investment. I hope that other hon. Members who speak in the debate will pick up on that point, as it is important.
    I should comment on local government pension funding, which is already below 100 per cent. Hon. Members may ask "Why?" In 1990, I regret to say that the previous Government encouraged funding for local government pensions to drop from 100 per cent. to 75 per cent. to massage the poll tax bills. The reduction overall, as a result of that change, was some 6 per cent. The Lamont reduction in tax credits increased that figure further.
    The hon. Member for Beckenham (Mr. Merchant) outlined the possible impact on the funds for Bromley, but each fund varies. Some are funded at 105 per cent.; the lowest, I believe, is funded at about 75 per cent. It depends, perhaps, on the prudence of the decisions of the officers and members of each of those authorities and whether they felt that they had to support the Thatcher Government.
    It may be helpful to the House if I explain the valuation of the Essex fund, which was conducted in 1995. The Essex fund is extremely well run by Keith Neale, the borough treasurer. I particularly picked this example because the Chief Secretary, in his reply to the debate on Monday, accurately pointed out that the 3 per cent. mentioned in my letter paled into insignificance compared with the 5 per cent. that results from ill health and early retirement.
    Much of the reduction took place because of the reorganisation of local government, which was encouraged and pushed through by Conservative Members. There are further reductions to the 100 per cent. funding level. Some 1 per cent. comes from salaries, which are ahead of inflation. A further 1 per cent. comes, I am glad to say, as a result of pensioners living longer. The funding level of the Essex fund, which was 97 per cent. in 1992, dropped to 84 per cent. in 1995. I say this in terms of it being an extremely well run fund. Thus the 3 per cent. that I mentioned in my letter needs to be taken in the context of the 13 per cent. drop between 1992 and 1995.
    Having written my letter, I received advice that the chair of the Chartered Institute of Public Finance and Accountancy pension panel, Peter Scholes, who is chief executive of the London Pension Funds Authority, takes the view that the removal of the tax credits would add some 1 to 2 per cent. to costs, which is significantly lower than the figure in my letter. He has commented in public about what he felt was a very overrated knee-jerk reaction from the media.
    I very much support the proposition made by the Chief Secretary earlier in the debate, that we need to look at the valuation of funds. The valuation needs to change.
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    The largest local authority fund—if I can call it that—is American, the Californian local authority fund, which is very much looking for growth from good management. I thank my hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), who, in an excellent speech, pointed out the difference between the American and British system. We have, perhaps, seen an inflation of the cost of the loss of tax credits by many actuaries. They need to rethink the basis on which they would look at actuarial valuation in the future.
    The Chief Secretary quoted from certain newspapers. I shall quote Anthony Hilton from last Friday's Evening Standard, who said:
    "If the actuaries valued funds on the basis of their total return, and therefore took account of the capital appreciation in funds, a quite different picture of pension fund solvency would emerge."
    Mr. Butterfill: Surely the hon. Gentleman appreciates that the action that the Government are now taking will drive more and more pension funds out of investments and equities, so the capital appreciation that he desires is much less likely to happen.
    Mr. Colman: It is for every fund manager to take his or her decisions. I personally believe that the package presented in the Budget offers real hope and opportunity for businesses in this country to develop and expand. I would certainly not wish to see any of the local authority pension funds disinvest in the equity market. Perhaps Opposition Members will give different advice, but that is certainly the advice that I would strongly give.
    I echo the information that my right hon. Friend the Prime Minister gave at Question Time, that the next actuarial review is not due until April 1998. The recommendations from that will not come forward until late 1998. The impact—if there is any impact—on local authority budgets will be from 1999 to 2000 onwards. I assure the House that the impact will not be seen immediately in terms of council tax bills or an effect on services. The strength of the funds may mean that local authorities will not need additional revenue support grant. That is possible, given the mood of the country and, as my hon. Friend the Member for Pontefract and Castleford said, a strong rally in the stock market, notwithstanding the past two days of speculation about potential changes in the interest rate.
    I have received a letter, however, from the Minister for Local Government and Housing, which plainly states that when the actuarial figures are given following revaluation or the fresh look in 1998 and if it is found that there is a problem, the Government will take such factors into account in determining local authority provision for 1999–2000 and subsequent years. It is a matter of taking a view of the situation at the relevant time.
    Mr. Merchant: I have listened to the hon. Gentleman's many comments with great interest. I believe that it will be easily demonstrated that local authorities are out of pocket as a result of advance corporation tax changes. Will he join me in pressing Ministers to ensure that the authorities receive full compensation for the costs of the tax change?
    Mr. Colman: As I said, under the previous Government there was a 7 per cent. reduction in funding without a penny coming to local authorities. I made it

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    clear in my letter, to which I referred, and I make it clear again, that it is important that there are no cuts in services. In the light of the letter that I received from my hon. Friend the Minister, I believe that there is not a problem to take forward. Her letter contained important assurances. It is for us all to ensure—again, I support my hon. Friend the Member for Pontefract and Castleford—that we reassess the way in which pension funds move forward. The future looks better with the changes that were announced last week, not with the bizarre approach that has been taken in the past.
    Mr. Lilley: Will the hon. Gentleman give way?
    Mr. Colman: No. I shall continue.
    Officials of the Department of the Environment, Transport and the Regions have met local government officials today to consider those matters. I believe that there is no need for additional revenue grant, but we shall see what happens with the revaluation in 1998.
    I shall summarise. I believe that additional funds may not be needed to deal with the abolition of tax credit. The 3 per cent. consideration, which is mentioned in my letter, must be seen in the context of the 13 per cent. change between 1992 and 1995.
    Mr. Lilley: The hon. Gentleman is delivering the best informed and most interesting speech that we have heard from Government Benches, including the Front Bench. He has made an important point and I think that I have grasped it. Do I understand that he has received an assurance from the Minister for Local Government and Housing that extra finance will be available in the next financial year to meet the cost to pension funds in local government? Will the hon. Gentleman confirm that I am correct in that understanding? Will he comment on what appears to be a pledge to break a promise that the Government would remain within the established guidelines for money for that Department?
    Mr. Colman: There has been no proposal to break that pledge or to move outside the guidelines. The letter clearly states that factors will be taken into account in determining local authority provision for 1999–2000 and subsequent years.
    As a business man and chair of the UK standing committee, I believe that the Government's proposed reforms are good for UK companies. I believe also that we shall see real investment through fiscal neutrality. Companies that have been driven to having higher and higher dividends will be able to reinvest to improve their net worth. We are talking of a good proposal that will be good for the UK and good for pensioners.
    7.24 pm
    Mr. Howard Flight: First, I should disclose that I have spent 25 years in the investment management industry. I spent the past 12 running a business and I remain a director of a company that manages a number of pension fund portfolios.
    I believe that the new Government will come to rue the day that they abolished advance corporation tax refunds for pension funds. It would have been a sufficiently major
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    change without introducing it so shortly after the general election, the Labour party having not set out the proposal in its manifesto. It was, of course, challenged about it. I certainly challenged my local Labour candidate. It is a mistake, and it will be seen by the many people affected as a betrayal. From your point of view as a Government, the one thing I hope of you is that the Minister for Welfare Reform will produce a thorough review and reorganisation of our social security system. I think that you are prejudicing a major element of that—
    Mr. Deputy Speaker (Mr. Michael Lord): Order. The hon. Gentleman is using "you" and "your". The Chair is not responsible for the matters that he is discussing.
    Mr. Flight: Thank you for correcting me, Mr. Deputy Speaker.
    With the minimum funding requirement coming in this April, it is unwise to change the playing field, there being a need for things to work themselves out.
    My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), the shadow Chancellor of the Exchequer, began by highlighting the contribution to the economy that has been made by the deliberate giving of tax incentives for pension fund accumulation. It is known that about 62 per cent. of pensioners already have occupational pension schemes, and I have discovered that the distribution from private sector funds is approaching about £40 billion a year.
    If we think about that in another way, if that degree of distribution had to come through the tax system, as it does on the continent, there would have to be about 14 per cent. higher taxation. If that burden fell entirely on income tax, there would have to be about a 40 per cent. increase in income tax. The distribution from occupational pension schemes is overwhelmingly the reason why the UK has a much lower rate of taxation than the various rates in continental Europe.
    Why is it that continental European economies are suffering from what I would call Maastricht stagnation stability? It is because their tax takes are far too high. I hope that the Government's deep wish for stability, as expressed by the Chancellor of the Exchequer—we all support it—is nut in reality the appalling Maastricht-encouraged stability of stagnation that the rest of Europe has been experiencing.
    We are talking of material change. About 70 per cent. of UK dividends go to non-tax-paying institutions that receive rebates, of which the overwhelming majority are pension funds. The amount per year has been cited, but it will be more than £5 billion by the 1999–2000 tax year. It will be about £50 billion over the next 10 years. The Government's proposals will bite on those who have their own personal pension schemes. If they do not up their subscriptions, they will have pensions that are about 20 per cent. less than they expected. In that sense, there is a dangerous retrospective element in the proposed changes.
    People took out personal pensions having contracted out of state earnings-related pension schemes on the expectation that there would not he such material tax changes affecting the pensions industry. Various figures have been cited for the cash-flow consequences for the standard mid-30-year-old. In the main, the figure would seem to be between £150 and £250 per annum, depending

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    on how well he or she was providing for a personal pension. That is equivalent to a rise in his or her tax bill of about 7 per cent.
    The shadow Chancellor cited the extraordinary remarks of the Financial Secretary. I heard the Chancellor argue in the House that the changes would not have consequences such as the ones that I mentioned, because equities would appreciate as a result of the wider impact of the Budget. The track record of British companies shows that the pattern of capital investment is affected by a variety of factors, the most important of which is the exchange rate. A second factor is self-evidently a company's cash position: companies have had extremely strong cash positions. The rate of return on investment is a third factor.
    There is no evidence that retaining earnings rather than paying out dividends has any material effect on capital investment. The misplaced obsession of Will Hutton, which is based on a misunderstanding of what goes on in Germany, seems to have crept into Government thinking rather too strongly. I refer the Chancellor to the recent work of Dr. Laster and Professor Taffler at the City of London business school. They found that companies paying dividends were more likely to invest, particularly in research and development, and that those dividend-paying companies had a higher rate of such expenditure.
    The rise in dividend pay-outs has not been called for or encouraged by pension funds. It has happened largely because, with tax-free flows of money, we have had a good clearing market for the most efficient investment of returns.
    I am mainly concerned about the responses of companies and the impact on pension portfolio investment strategy. I believe that both will be negative. The ACT impact reduces scheme funding by 10 per cent. or 11 per cent., which brings many close to the 100 per cent. minimum funding requirement level. Companies are bound to shift: indeed, almost half have already shifted to money purchase schemes rather than final salary schemes. Money purchase schemes contain the cost, put the risk on to the pensioner and, at the end of the day, are pretty certain to produce a lower pension. I have seen in the industry an acceleration towards such a shift, and I believe that it will increase.
    The Government seem to have forgotten that they have created a tax distortion in favour of interest. Dividends are taxed and interest is not, so there is no logic in that. The change in strategy will produce a rise in domestic and foreign bond holdings, and interestingly a commensurate rise in emerging market equity investment, thus keeping the overall risk portfolio fairly similar, although it will be at the expense of investment in mainstream UK equities. The bond element, even though it may be prudent in some senses, is an asset that does not have the power to appreciate in capital value. Moreover, I would argue that it is not a particularly wise time in the economic cycle to be increasing bond investment, given that we have had a bull market in bonds for 17 years.
    If the Chancellor has genuinely been persuaded by the Will Hutton school of economics, he risks taking measures that will turn out to be as ill conceived as Harold Wilson's old selective employment tax. It is irresponsible to attack pension fund accumulation, which is an area of proven UK success. Moreover, for many investors there will be a retrospective element.
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    The point has already been made about those who have contracted out of SERPs. Will they have their rebate upgraded, or will they go back into SERPs, which would be undesirable for the nation? Their decisions were taken on the basis of a playing field that has now changed.
    Unless the Government increase funding, my estimate of the bottom line for local authorities is that council tax bills will increase by between £10 and £20 per person.
    The figure that has been quoted for the number of people with personal pension plans is between 5 million and 6 million. The latest information that I have obtained is that the figure is approaching 7 million people. They will be hit directly. The Government will lose the support of those 7 million people, and the support of the 62 per cent. who already receive pensions will be questionable. This issue is fundamental to the people of middle England, whom the Prime Minister is so keen to keep on side. It is a mistake from the Government's political point of view, and a grave mistake for the nation.
    7.35 pm
    Mr. John Cryer: I should first like to comment on the discussion about misselling, which is a euphemism for conning. In the 1980s, people were conned. It is extraordinary for Conservative Members to say. "It was nothing to do with us, it was all quite innocent. It arose out of the general atmosphere at the time." They created the atmosphere that gave rise to people, such as the 25,000 miners, being conned out of their occupational schemes. It is a bit like the Kray twins saying, "All right, we murdered a few people, but it was the sixties and everyone else was at it."
    I want to focus on the Opposition's motion, especially its reference to security in retirement, which is of concern to us all. In late 1995 and early 1996, there were strikes, stoppages and mass protests throughout Germany, France, Italy and Spain because of the attacks on their state pensions. That action resulted from the ludicrous attempts by those Governments to fit into the Maastricht straitjacket: cuts in public expenditure led to strikes and protest rallies. We have not had protests rallies, strikes and stoppages in this country, yet there has been an enormous reduction in the value of the state pension.
    Mr. John Bercow: For the benefit of the House, will the hon. Gentleman tell us in which year the previous Government failed to increase the state pension in line with the retail prices index?
    Mr. Cryer: I shall come to that in due course, so the hon. Gentleman will have to be patient.
    In 1979, our state pension amounted to 29 per cent. of average male earnings. By 1995, the figure had dropped to 22 per cent., and at the same time the wealthiest 20 per cent. of pensioners became increasingly well off in relation to the poorest 20 per cent., who became increasingly poor. That was largely a spin-off from the casino economy of the 1980s. As interest rates went up, richer pensioners who depended on investments did a great deal better. The economic policies that were pursued put pressure on public spending, so there was more pressure to cut the state pension. The clearest way to cure poverty among pensioners is to reinstate the link between

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    increases in the state pension and the average increase in earnings rather than prices. That link was done away with in 1981 by the previous Government.
    Mr. Butterfill: I am sure that the hon. Gentleman does not want to mislead the House, but he will remember that the link with prices was abandoned by the previous Labour Government. Inflation had become so high that they could not afford to maintain the link with prices, so only the link with earnings was maintained. It was the increase in earnings under the Conservative Government that created the anomaly to which the hon. Gentleman referred. We maintained the purchasing power of the pension.
    Mr. Cryer: That is wrong. The link with earnings was done away with by the Conservative Government in 1981, and as a result the pension has increased, but not in real terms. The link with prices was maintained during the 1980s.
    All sorts of bogus arguments are flying around about the state pension and the state earnings-related pension scheme. It is said that, with an aging population, we cannot afford the state pension. In fact, if the link with earnings were restored, by the middle of the next century the cost of the state pension would be £66 billion rather than £45 billion, the cost that would result from the present rate of increase. That could be covered by an increase in employer and employee combined national insurance contributions by less than the rate of increase during the 1980s under the last Government.
    Restoring that link would also be a star move because it would remove the means test that faces many pensioners. Hundreds of thousands of pensioners depend on income support, but hundreds of thousands who are entitled to claim it do not. That is because people who have worked all their lives, have paid into national insurance funds and feel that they are independent and capable find it deeply patronising that they must go to the DSS office, fill in a pile of forms and be patted on the head and told, "Well done—you are entitled to the money that you should have had anyway." Such people should not have to go through such a tortuous rigmarole.
    I have received many complaints from constituents about a related issue—the allowance for those over 80, which is 25p a week and has not been increased since its introduction. A number of people aged over 80 have told me that they would prefer the allowance to be abolished, because they find it so patronising to receive an extra 25p a week for turning 80. I think that the allowance should be uprated to a decent level, so that we can view it with some pride.
    That brings me to the subject of the state earnings-related pension scheme, on which there has been considerable debate. It has even been suggested that SERPS should be abolished and replaced with personal pension schemes. I speak from experience when I say that that would be a grave mistake. For a while during the 1980s, I worked as an underwriter. It may surprise hon. Members to learn that a raving firebrand like me was a yuppie for a few years, but it is true—although I could not get out of the job fast enough.
    My experience as an underwriter tells me that the idea that private pensions can replace state pensions—which provide for so many disadvantaged people—is fantasy.
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    The private pensions and insurance industries are not going to pay out for people in straitened circumstances who cannot afford to contribute the increased premiums that will undoubtedly result if SERPS is done away with.
    SERPS should clearly he rescued from the Tory attacks of the past 18 years. There was a deliberate attempt to undermine the scheme. That is where the conning came in: the aim was to persuade people to leave SERPS and sink the money into other schemes. I remember going to seminars—within the insurance industry, not public seminars—in the 1980s, in which people were told as a matter of fact that Barbara Castle had made an enormous mistake in introducing SERPS, and that they should not stick with the scheme because it would not exist in 20 or 30 years. That was a lie, but it was a lie that was put around—not just to the public, but to people working in the insurance industry. That tells us something about the atmosphere that prevailed during the 1980s, when the casino economy was in full swing.
    Another issue with which I have been involved—especially in the run-up to the election—is that of war pensions. The con that the last Government attempted to perpetrate on war pensioners stands alongside the attack on the miners and the butchery of the mining communities, and the fiasco of the exchange rate mechanism, as one of the most shameful episodes of the past five years. There was an attempt to rob war pensioners and their widows of £50 million.
    Someone with whom I worked for some years was a victim of that. In 1945, in Bremen, he was in a tank that received a direct hit. His comrade fell across him, covered in blood, and died. He is buried in a war cemetery near Bremen. My friend, who happens to be a journalist, wrote an article in The Guardian about what had happened. At the end of that article, he asked this question: "Did I fight, and did he die, so that others could come back and be robbed by a Government who are so cheap and cynical that they are prepared to listen to actuaries who, no doubt, have said, 'There are fewer war pensioners around, so you can get away with it if you sneak it out after the Budget??" That is exactly what the Government did.
    I hope and believe that the new Government will try to build the welfare state and the public services for which my friend and his comrades who died were looking in 1945, and for the sake of which they fought for freedom.
    7.44 pm
    Mr. John Butterfill: The Chief Secretary to the Treasury—who, unfortunately, is no longer present—reminded the House that I am an adviser to the Independent Financial Advisers Association. I did not intend to say anything that related to the association until the hon. Member for Workington (Mr. Campbell-Savours)—who is also no longer present—raised the issue of the Financial Services Act 1986, and the views that were expressed when we both served on the Standing Committee.
    First, I must point out that I was not an adviser to the association, or to anyone else, at that time. Secondly, I must tell the hon. Gentleman that his recollection is completely wrong. I did not suggest that commissions should not be disclosed; I said—as some Labour Members who are familiar with such matters will doubtless appreciate—that the costs of selling a pension or insurance policy are numerous. They do not just comprise

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    commission. Many companies spend most of their money on advertising and on their own direct sales forces, and do not pay commission to independent financial advisers.
    What I told the Committee in 1985–86 was that we ought to disclose all the costs, or it might appear that a product through an IFA who was paid commission was giving worse value than a product sold by a direct seller who was employing a huge internal sales force and massive television advertising. It was necessary to identify the costs of each method of sale. Unfortunately, my view did not prevail, although I argued strongly in favour of it. Had it prevailed, we might not have seen the level of misselling that ultimately occurred.
    The hon. Member for Workington mentioned the Coopers and Lybrand report, but did not mention that the report showed that there was considerably less misselling of products sold through IFAs than of products sold by direct sellers such as banks and some building societies. There would have been a good deal less misselling if more people had employed the services of IFAs. Here ends the plug. I was provoked into that statement, and it has nothing to do with the main thrust of my speech.
    The Labour patty likes to pretend that it is the great party of pensions, and that pensions derive from its activities. A little history lesson might be worth while. During the last century, people such as the Rev. William Blackley and Charles Booth were active in stirring the public conscience in regard to the plight of the elderly poor, but in many respects we have followed New Zealand and Australia. It was the New Zealand Government's introduction of a non-contributory pension scheme in 1899 that led a Select Committee in the House of Commons to recommend the introduction of a means-tested scheme in the following year. It took a while for the House to get around to it, but the result was the Old Age Pensions Act 1908, which provided a means-tested pension at a maximum of five shillings a week for all those aged 70 and over.
    Similarly, it was the example of Australia and New Zealand that led to the Old Age and Widows' Pensions Act 1940, which reduced the pensionable age of women from 65 to 60. Subsequent Governments may have had cause to regret that. The example of what has happened in Australia and in other countries such as Singapore, Chile and Argentina has led to the productive all-party debate about the ways in which pension provision can be reformed and improved.
    I am the first to salute some of Labour's ideas, in particular those from the Minister for Welfare Reform, about the way that we might move forward in pension provision. In the all-party group which I have the honour to chair, there has been much discussion about how to ensure that future generations have a better deal than the present generation.
    Our current system derives principally from the post-war Beveridge report and the consequent National Insurance (Industrial Injuries) Act 1946. It is often forgotten, especially by Labour Members, that Beveridge argued that it would be prohibitively expensive to proceed with an old-age pension that would subsidise people to the point at which they did not need to make their own savings. He envisaged that the best that the state could do would be to supplement savings. He said that it would be impossible to pay pensions immediately, because it would require at least 20 years to build up a fund sufficient to
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    start paying them. The post-war Labour Government decided to ignore that advice and to proceed on a pay-as-you-go basis whereby current taxation funded current pensions.
    Britain has provided no state fund to allow an accumulation of funds to guarantee future payments. That is why successive generations of pensioners have depended on the good will of the Government of the time rather than on an accumulated fund. It should be remembered that the Labour party, to its credit in some ways, had a scheme whereby the Government paid the higher of earnings or inflation. However, because inflation was so high in 1978, the Government could not keep up with uprating pensions in line with inflation and that system was effectively abandoned, to the fury of some of their Back Benchers.
    As the hon. Member for Hornchurch (Mr. Cryer) said, the Conservatives restored the link with prices in 1981, but they did not restore the link with earnings. Since that time, successive Governments have recognised that there is a need to improve the way in which saving is carried out for retirement. In 1958, the Conservative Government introduced graduated pensions and there were, subsequently, state earnings-related pensions. Both had significant disadvantages, which led to their effective abandonment.
    The great debate today in much of the rest of the world is whether there can be a scheme under which people will have to save to build up a fund out of which pensions can be guaranteed without the need to rely on state munificence. There have been many reports on that. There has been a series of seminars and a "Panorama" report, and the Adam Smith Institute produced proposals for "fortune" accounts. Probably the most notable work was Sir John Anson's retirement income inquiry under the auspices of the Institute for Fiscal Studies. All those studies have contributed greatly to the debate, and I hope that they will contribute to future Labour proposals.
    Belatedly, we have recognised that none of our present arrangements will address the scale of the problem that will address our society in the next century. In 1960, our working age population was 32.5 million and it supported a pensionable age population of 6.1 million. That is a support ratio of 5.3:1. By 1991, the pensionable age population had grown to almost 9 million and the support ratio had fallen to 4:1. It is predicted that by 2050 the working age population will have remained fairly constant at about 33.8 million, but that the number of people of pensionable age will have grown to 13.5 million, which gives a support ratio of only 2.5:1.
    Even those figures, which are fairly dramatic, underestimate the true scale of the problem because they relate only to people of working age and not to the percentage of the population who are in work. If they were so related, the support ratio would be even more alarming. Clearly, without some urgent action to encourage future funded provision for retirement, the burden on the future working population will be unsustainable.
    I have spoken about the actions of some Governments to reduce their liabilities. It is true that the old-age pension has fallen relative to average gross male earnings from 20 per cent. in 1950 to 15 per cent. today. If nothing is done, it will fall to about 9 per cent. by 2030. The cost of restoring the purchasing power to 20 per cent. would be £6.6 billion a year immediately, and almost £50 billion a year by 2030. Plainly, we need an alternative strategy.

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    These problems have been considered by my own committee, the all-party group on occupational pensions, and in some detail by the Select Committee on Social Security, which produced an interesting report on unfunded pension liabilities throughout the European Union. That report is worth reading because it shows the scale of the problem. By 2030, if nothing is done in the rest of the European Union, the net present value of pension schemes relative to gross domestic product in European countries will be 98 per cent. in France, 113 per cent. in Italy and 139 per cent. in Germany. It is because we have such a large provision of personal pensions that our position is significantly better at only 19 per cent. of GDP. However, even here, unless we take some dramatic action in the near future, the problem will be entirely unsustainable.
    Given that scenario, one might have thought that the Government would take steps actively to encourage personal pensions and the provision of pensions by employers. However, their vandalism in relation to advance corporation tax is precisely the reverse. That is not just the opinion of the Opposition. I am sure that Labour Members will have received press releases from almost everybody who has any interest in these matters. Writing of the Government, the Pensions Management Institute states:
    "it is very disappointing to see them introducing measures which … will have a negative effect on long-term pension provisions."
    Oxfordshire county council says that the Government's proposal will cost it an extra £2 million a year and Sainsbury says that it will have to double the amount that it contributes to its pension scheme if it is to avoid loss. The list goes on.
    The Association of Consulting Actuaries is even more critical, and says, as we have heard, that abolishing ACT credit will reduce pension funds and pensions by up to 11 per cent. The amount that will have to be saved by those who have made private provision will go up and up, because it is not just those who are saving for a long time for the future who will be affected, but those who are about to retire.
    The switch which is already taking place from investment in equities to investment in gilts, which is necessitated by the measure, has meant that the yield from gilts, and therefore from annuity rates, has fallen. People who are retiring now and buying annuities with savings from their pension schemes will immediately get smaller annuities than they expected. Therefore, the Labour party has robbed a generation of people of decent pension provision that they thought they had provided for themselves. It has taken that from the most prudent people in society—those who have bothered to save. What sort of message does that give, when we all know, as I have tried to demonstrate, that we need to encourage more saving?
    Moreover, requiring companies to make enormous additions—and we have heard what Sainsbury thinks of the proposal—to their final salary schemes will mean the death of such schemes. They have already been declining. There are fewer than 5,000 in the UK with more than 100 members and 16 per cent. of smaller companies have closed their final salary schemes as costs have risen.
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    That process will continue. I predict that, unless the Government reverse their policies, final salary schemes will, effectively, be abandoned by employers throughout this country. Many major employers are already openly saying that, for new employees, they will not have a final salary scheme; it will only be money purchase. The people who will suffer are future pensioners.
    I could go on much longer, but I realise that many other hon. Members wish to speak. However, I urge the Labour party to return to the consensus that I thought was beginning to be built before the last general election. We should consider ways of not just encouraging but perhaps even requiring people to save for their future—to build up for every individual a fortune account, a rainy day account, something that people can access when they become terminally ill or irreparably sick, or when they retire.
    If we do that together, we will have fulfilled our duty to the retirement population. However, if we gone down the road that the Labour party has gone down—of believing that, by subterfuge, it can take money away from pensioners and pretend that it is not happening because most people do not understand how ACT works—we face disaster.
    8.1 pm
    Kali Mountford: In recognising the number of declarations of expertise and interest that have been made in the debate, I feel forced to declare that my only interest is that of my constituents. When even my hon. Friend the Member for Hornchurch (Mr. Cryer) makes a declaration of interest, I find myself surprised and disadvantaged in that regard. I hope that my contribution is none the worst for that. After all, it is my pensioners' experiences that should he informing the debate.
    The shadow Chancellor of the Exchequer pointed out that there are only two sources of income for any pension revenue: that of the individuals who make a contribution to their own pension plan and that of individuals who make a contribution in their working life to their state pension. I would not disagree with that. Nor would I disagree with the fact that we have a growing, aging population and that we face challenging demographic changes, but is that not why this is the right time to have a proper pension review and to examine everything that informs how we decide our security in retirement?
    It does not seem logical that taking those two things on board—how we bring revenue together and how we stack that up so that we can afford to pay for a proper retirement for our aging population—should lead us to accept the basic pension plus scheme because, as we have to accept, pensioners are already struggling. For example, about a third of them are already on means-tested benefits and there was nothing in the scheme to help those pensioners. This is the right time to say to our poorest pensioners that we need to do something to help them and that we will talk to them about what it is exactly that they need.
    It seems to have been suggested, certainly by the hon. Member for Bournemouth, West (Mr. Butterfill), that people have to be prudent and to save. Let us remember that many of our constituents are not in a position to do that. In setting up my pension arrangements, I was advised that I had to invest at least 10 per cent. of my salary to get a good return and to have a good basic pension. Many

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    of my constituents are not in a position to make a contribution of 10 per cent. of their salary, if they have one. Many of them are low-paid and make some provision for their old age.
    I am concerned that, when those people draw that private pension, which they have prudently saved for, they will be disadvantaged by the anomalies in the means-testing system. I hear many complaints—I am sure that all hon. Members do—from constituents who have made investments and who find that they do not enjoy any advantage because they are precluded from means-tested benefits.
    Would it not be more sensible to consider the whole package of arrangements for the elderly in our communities to ensure that a review takes account of those matters? Basic pension plus did not seem to provide for that. Indeed, it seemed to place an extra burden on my youngest constituents. During the election campaign, many 20-year-olds were concerned because they would rightly be required not only to pay for the pensions of the elderly who have already paid their national insurance contributions and rightly expect to receive a state pension—the most common complaint among pensioners in my constituency is that, in making their NI contributions all those years ago, they felt that they were making an investment and they now find that those contributions have been eroded—but to pay for their own pensions in private schemes, to the tune of perhaps 10 per cent. of their income.
    That is a big burden for young people at a time in their lives when they might be buying a house on a mortgage or repaying a student loan. There is a heavy burden on them already. It does not seem fair that my constituents should bear that burden. For that reason, I was not impressed with basic pension plus, and nor were my constituents.
    Mr. Duncan Smith: I suggest that, if the hon. Lady is that interested in basic pension plus, she should read it properly. The whole process was bound around rebates over the lifetime of people's contributions to guard against just the problems to which she has referred. She also has to address the other point: that the Minister for Welfare Reform is bound to consider the issue and that he will then have to take into account the process of the national insurance fund never having been a fund for people in the future.
    Kali Mountford: It seems that the hon. Gentleman accepts the fact that this is the right time for a review. That is exactly what I am saying. We have to review the whole pension situation. To come up with a plan without proper consultation—certainly my constituents were not consulted—and to pre-empt the decision—
    Mr. Duncan Smith: There was to have been a Green Paper.
    Mr. Kevin Hughes: Keep going.
    Kali Mountford: I shall keep going. I thank my hon. Friend for that advice. This is the right time for a review, and my constituents will welcome it.
    Pension misselling caused some of my young constituents to be concerned about whether private pension provision was a sound investment. For example,
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    the constituent I mentioned earlier lost nearly £7,000. He took his case to the ombudsman and is still waiting for a reply. He is dissatisfied with the way in which he has been treated. It will seem a little rich to him for Conservative Members to talk now about pension misselling. He will want to know—certainly I want to know—why they have waited until now to discuss pension misselling.
    Why was it not dealt with a long time ago? Is this not the right time to have proper regulations? In fact, it is not the right time: it should have been done at the beginning. It is wrong to have a financial market that is not regulated properly, with the result that my constituents, who have small sums of money available to invest, lose a lot of money. It there was any robbery going on, it was of my constituent, as he would tell hon. Members.
    My constituents and I feel strongly that change is necessary and I think that the whole House agrees with that. The question is whether we will get the balance right between the contributions made to the pensions system from the state sector and the contributions made in the private schemes. We need to have regulations and proper thought in place to ensure that all our pensioners are dealt with fairly and properly.
    8.10 pm
    Mrs. Eleanor Laing: The Chief Secretary to the Treasury said this afternoon that the Government's Budget plans are plans for the long term. In fact, they are the exact opposite; they are short-term plans designed to raise money to satisfy the appetite of the new Government for immediate public spending. It is a perfect example of that old adage:
    "You can fool all the people some of the time, and some of the people all the time, but you can not fool all the people all of the time."
    I must tell the Chief Secretary that he has not fooled Conservative Members because we know what his plans for changes to ACT and the windfall tax really mean to the people of Britain.
    The Government want the country to believe that the windfall tax is a tax that nobody has to pay. That could not be further from the truth. It hits the very people who should not be hit by any taxes. If the Government were really planning for the long term, they would be encouraging people of all ages and all financial capabilities to invest for their retirement.
    In fact, the Budget discourages investment in pension schemes because it reduces people's confidence in them. My constituents have, quite rightly, been putting their money into pension schemes year after year, believing that at the end of their investment time they would receive a certain sum. The new Labour Government come along and simply take money out of the schemes, thereby reducing the amount of money that will be available for all our constituents when they need their pensions and reducing confidence in pensions as a safe form of investment. That is happening at the very time when we most need to encourage investment in pensions.
    The hon. Member for Pontefract and Castleford (Yvette Cooper) who, sadly, is not in her place, said that Conservative Members have a new-found interest in pensions. That is simply not so—it could not be further from the truth. In fact, we recognised many years ago that, for various reasons, it was essential to encourage people to make investments in pension schemes to look after

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    themselves and their families when they no longer worked. We recognised that because we read the simple sign—what is sometimes referred to as the demographic time bomb.
    Mr. Paul Flynn: That is a myth.
    Mrs. Laing: It is not a myth.
    Mr. Flynn: I refer the hon. Gentleman—[Interruption.] I apologise. I refer the hon. Lady to a splendid volume by the hon. Member for Havant (Mr. Willetts) called "The Age of Entitlement?. It contains a chapter on the myth of the demographic time bomb. It describes how previous Governments have exaggerated the effect of the baby boomers reaching retirement age in order to impose on the country a system of private pensions rather than national pensions.
    Mrs. Laing: I am afraid that the hon. Gentleman is wrong on two points. I thank him for apologising for his first mistake and recognising that I am an hon. Lady. However, I am afraid that the hon. Gentleman is wrong on his real point.
    Mr. Flynn: Read the book.
    Mrs. Laing: I understand what the hon. Gentleman is saying about the book, but even if there has been an exaggeration, there is still a demographic time bomb. There is no doubt about that. Currently, the ratio of people in work to those drawing a state pension is about 3.3:1. When I and other people who have recently become Members of the House reach retirement age, that ratio will be about 2.4:1. Even if some of the stories about the demographic time bomb are slightly exaggerated, there is still an issue that must be addressed. The previous Government were addressing it and the new Government are doing the exact opposite.
    My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) gave us some salient figures on this. I will not attempt to repeat them, but they can be read in tomorrow's Hansard. My hon. Friend's analysis was right. Because we have recognised the extent of the burden that would fall upon public expenditure in 20 or 30 years in providing for pay-as-you-go pensions, we have taken steps over many years to encourage investment in private pensions. That has been done by providing incentives, and it has worked. Although the hon. Member for Newport, West (Mr. Flynn) does not recognise this point, the Minister for Welfare Reform does recognise it and he has taken up the recommendations of the Anson report, which was also referred to in detail by my hon. Friend the Member for Bournemouth, West.
    The Anson report, backed by the Minister, recommends that it is necessary to impose a second pension on most of the earning population of this country. The attitude of the previous Government, which I thoroughly supported, was that imposition of that sort was unnecessary and that there should be encouragement rather than imposition. Therefore, incentives were put in place and the encouragement worked. As a result, the United Kingdom has more than £600 billion invested in funded pension schemes, which is more than the rest of the European Union put together.
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    I was most amused when the hon. Member for Hornchurch (Mr. Cryer), who is also not in his place, spoke about the fact that in recent years we have seen strikes in France and Spain because their Governments were cutting state pensions. That is not surprising.
    Mr. Bercow: We will see them in Britain now.
    Mrs. Laing: I would not be at all surprised.
    Matters were dealt with differently in France, Spain and other European countries because those countries failed to take the necessary steps early enough to create funded pension schemes which would produce a real level of income for their populations on retirement. It is not at all surprising that there were riots in France and Spain, and we would not be surprised if the Government's lack of financial planning brought about such a result in this country, although none of us would want that. Because of the incentives to invest in pensions, in 20 or 30 years' time, when many of us will be in need of pension provision, the state pension fund will not have to support so many people, so the burden on public expenditure will be very much less.
    If the Labour Government were really interested in planning for the long term rather than for the short term, they would not have been so critical of the basic pension plus plan proposed by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) when he was Secretary of State for Social Security. That plan was the right answer to the problem.
    The hon. Member for Colne Valley (Kali Mountford) misunderstood what the plan was all about. I can forgive her for that—indeed, I have every sympathy with her—because she probably listened to the misinformation put out by the Labour party last April. It is not surprising that she misunderstood it—so did millions of others who were made afraid of what would happen in their old age, when exactly the opposite was the truth.
    It does not matter what the Labour Government say now: the basic pension plus plan will have to come in at some time. Demographic developments over the next few decades will prevent the pay-as-you-go scheme from continuing. It will not be sustainable, so basic pension plus, or something similar, will be introduced. My hon. Friends and I will not be surprised if, in a few years' time, the Government publish a Green Paper which they will call by some other name, but which in fact will be basic pension plus. It will have to happen.
    The difference in attitude between the Opposition and the Government is that we believe in encouraging saving and investment and in changing the culture of state dependency by giving people the opportunity and the incentive to save and provide for themselves and their families. We want to help people to look after themselves and to encourage families and family life. The Government simply produce policies that do the opposite.
    There is great disappointment in my constituency with what the Government are doing. Those who have worked hard and put their money into pension schemes or some other form of savings, or who are small shareholders in the privatised utilities, are very disappointed that, having tried to provide for themselves, the first thing the new Labour Government do is take their money away from them and diminish their savings. Of course, it comes as no surprise to Conservative Members.

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    The hard-working people of Epping Forest want to know what the Government intend to do about funding their future pensions. Unless there is some sort of plan that encourages even more private investment in pensions than to date, in 20 or 30 years' time the burden on the public purse will be very heavy. Instead of continuing with Britain's advantage over the remainder of the European Union—indeed, the rest of the western world, as no country has such well funded pension schemes as Britain—and the benefits built up by the Conservative Government over the last decade and more, the people will be disappointed, and Britain will suffer the same problems as France and Spain.
    8.24 pm
    Mr. Paul Flynn: During the dying days of the Conservative Government, they introduced three wheezes designed to win the election. One was basic pension plus; another was the plan to privatise residential homes so that elderly people would have no choice other than to go into private homes; and the third was to buy a new royal yacht with public money.
    That prompted me, at the time, to ask a Government spokesman whether there was truth in the old saying that those whom the Gods wish to destroy they first make mad. Those three proposals did a great deal of damage to the Conservative party, and resulted in it being wiped out in my country of Wales, in Scotland and in Cornwall, leaving only a small number of Members on the Conservative Benches.
    Those of us who are old lags in these debates will remember that, on 12 March, we discussed basic pension plus, when the Secretary of State announced, in all its glory, that, when it matured, a man on average earnings retiring in 2040 would get a total pension of 18.1 per cent. of earnings. That is a disgracefully poor level—something to which we have not descended over the past 50 years. It was a very poor scheme.
    I am not trying to be wise after the event on the question of the misselling of personal pensions. I will not quote the question I asked Baroness Thatcher in 1989 and 1990 on that issue.
    I took Barclays bank to the Advertising Standards Authority for what I thought was a wickedly deceptive advertisement. To sell its personal pensions, Barclays gave away two free tickets to the cinema. I also complained to the relevant authority about the advertising by Midland bank. If one wants to destroy something, one gives it a bad name. A serp was an oleaginous creature that looked thoroughly repulsive—not something anyone would want around his home. The advertisement said, "Don't be a serp, when you could get yourself the sum of £5,000."
    The Conservative party has no sense of guilt about what it did at that time. It was not offering a gift, just a refund of the contributions people had paid. It was an unjustifiable incentive—popularly known as a bribe—through the national insurance scheme, and was entirely inequitable for those who did not take out personal pensions.
    I commend to hon. Members not only "The Age of Entitlement", but "Ruling Britannia" by Andrew Marr, which examined two laws passed which demeaned the House. One set up the Child Support Agency, and the
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    other brought in personal pensions. If we want to modernise our procedures, it is important to look at those failures.
    Only one Member who served on the Standing Committee foresaw the dangers of personal pensions. All through the mad years of misselling, the Conservative party was made aware of what was happening, but did nothing about it. Many Conservative Members would cheerfully declare an interest before speaking in debates, because they were profiting either directly or indirectly from the bonanza of misselling. About 2 million people were involved. We know the derisory number of people who have since been compensated. I am very happy that Ministers are taking on pension companies, as the previous Government should have done but never did.
    Beveridge has already been mentioned in this debate. It is worth remembering the point behind the Beveridge reforms, and the words of Beveridge himself. He talked about the "gross inefficiency" of contemporary pension schemes—particularly industrial pension schemes, in which a man from the Pru or the Wesleyan and General came round houses to collect 1s 7d a week.
    Beveridge said that, for every pound saved in those schemes, 10 shillings—one half the amount, for those hon. Members who are so young that they do not know or remember—was lost in commissions and because of the inefficiencies and multiplicity of the companies involved. It was a hugely wasteful system, which was why Beveridge argued for a national insurance scheme.
    The hon. Member for Epping Forest (Mrs. Laing) referred, presumably to people who are not in private schemes, as "dependent". They are, however, making contributions to the state pension and to the SERPS scheme, and their pension is not a handout, a gift or welfare, but part of an insurance scheme. Beveridge said that, if we ran the scheme as a national one, we would cut down on administration charges.
    Mrs. Laing: I certainly did not mean to imply that there is dependency. I was making the point that we have a pay-as-you-go scheme, which is a perfectly reasonable scheme for those who have worked hard all their lives and paid into it. They paid for the previous generation, and the current generation is paying for those who are now retired. They worked hard and paid into the scheme.
    The point is that, in future, there will simply not be enough working people to pay for retired people. I entirely accept the hon. Member's point that that is not dependency, and that people are simply drawing money that they have paid in.
    Mr. Flynn: That is based on the assumption that our working life will remain as it is. Someone who is aged 62, such as myself, may feel that he or she is approaching the peak of life and intends to work for a very long time. Most people of my age feel that way. Some people presume a very static life style, and assume that things will not change, but things will change enormously. Elderly people such as myself feel very patronised when we are told that we will have to retire at 60 or 65. In the next century and possibly before, people will make worthwhile contributions way beyond the age of 60 or 65.
    I should, however, reinforce the point made by the hon. Member for Havant (Mr. Willetts) in his book. He supported the previous Government's exaggeration of the

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    myth of a demographic time bomb, because he was not in favour of SERPS, which he thought was inequitable as a system.
    There is no doubt, however, that the Government have worked on the "time bomb". We have long been aware of a demographic time bomb, and of baby boomers—one of whom is now President of the United States—who would fill the school system when they were teenagers. We know that there will be such a time bomb. We also know when it will start and when it will finish. It will, however, last for a finite period, and we cannot allow it to distort all our policies.
    My questions are mainly for Ministers. I should, however, like to remind Conservative Members who were Ministers in Conservative Governments for all those long years of the promise made, in June 1979, by their then spokesman, Lord Jenkin, when he was defending the proposal to break the link between pensions and average earnings. He said that he wanted to
    ?make it clear … that it remains the Government's firm intention that pensioners and other long-term beneficiaries can confidently look forward to sharing to the increased standards of living of the Country as a whole.?—[Official Report, 13 June 1979; Vol. 968, c. 439.]
    That is a significant promise. The next day, he commented on a proposal to retain the earnings link in a modified form, and claimed that the Government's proposal would have the "same broad effect". That was a very clear promise on retaining the tie.
    Far from having the "same broad effect", however, breaking the earnings link has resulted in today's pensioners losing more than £20 a week. I asked the Library to provide me with the latest figures, and was told that the basic pension is now £62.25. The Library estimates that, had pensions increased in line with earnings, that figure would be £87.
    Ministers argue that, on average, pensioners in 1997 are better off than pensioners in 1979. The reason, of course, is that most of those who were pensioners in 1979 are no longer with us, because they have died, and many current pensioners are benefiting from the previous Labour Government's pension legislation, receiving a combination of SERPS—which is now a considerable sum if people have been paying into it since the late 1970s—and increasingly valuable occupational pensions.
    The picture is very different for those who are now in their 80s and were over pension age in 1979. Since 1979, there has been no increase in their living standards, although average earnings in real terms have increased by at least a third. Even people retiring today are not that well-off. They need an occupational or SERPS pension of at least £20 a week simply to make up for what has been lost in the basic pension. Under the Tories, unemployment among older workers deprived many of them of an opportunity to contribute to any type of second pension.
    The promise in the Labour manifesto is now in early-day motion I, which I recommend that all hon. Members read, because it will be referred to many times in the next 12 months. The manifesto promised:
    "We believe that all pensioners should share fairly in the Increasing prosperity of the nation."
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    There are many ways in which some pensioners can share in increasing prosperity.
    Mr. Letwin: Does the hon. Gentleman agree that it is slightly odd to begin a programme enabling all pensioners to share in the nation's prosperity by taking £5,000 million a year from those pensioners?
    Mr. Flynn: Does the hon. Gentleman think that it is equitable that tax advantages were enjoyed by some pensioners but that there were no tax advantages on SERPS contributions? Does he think that it is equitable that a sum was taken out of the national insurance fund, which is the property of everyone, to benefit a small number of pensioners who joined personal pensions?
    That is what happened. One group of pensioners—those who were bribed to leave decent occupational schemes, or unwisely advised to leave SERPS—gained advantages that other pensioners did not receive. As it turned out, many of them suffered because they were badly advised in that. The system is already inequitable for those who contribute to SERPS.
    Mrs. Gorman: Is it not a fact that state earnings-related pension schemes are not funded, that they come within the group of pensions that are forked out for by current taxpayers? What is so wrong and wicked about what the Government propose is that they are taking money from people who are setting aside something from their net income for their old age. That is the trick which the Government are playing on people.
    Mr. Flynn: I am shocked by the hon. Lady's immoderate language. Tomorrow I shall send her a copy of a pamphlet entitled "Our Pensions", written by Tony Lynes, which has a splendid forward by the hon. Member for Newport, West. I am sure that she will enjoy it greatly. It maps out ways in which SERPS should be reformed; the main suggestion is that it should become at least a partly funded scheme.
    If we are to continue with a pension for the next century, SERPS should be funded. I am sure that, having read the pamphlet, the hon. Lady will join us in our enthusiasm for SERPS. It is also suggested that SERPS should be managed independently of the national insurance scheme, and run by managers who will be responsible for maximising and investing much of the fund.
    The basic advantage of SERPS and other state schemes is that the total cost of administration—the wasted money—is only 2 per cent., or, in many years, even less. Someone investing in a private scheme now will lose a minimum of 25 per cent. in commission, charges and administration. Someone who does not contribute to the scheme for a long time could lose 90 or 95 per cent.
    How could Conservatives talk about the advantage of money purchase schemes without saying what a gamble they are? They encouraged people to join such schemes, but, if they study what happened to annuity rates between 1990 and 1994, they will find that someone who was to retire in 1990 but put off his retirement until 1994 and who was a customer of Norwich Union—the position is the same with other, similar companies—would have lost 35 per cent. of his pension. A third of his pension would have gone because of changes in the annuity rates and what they could buy.

    1017
    Money purchase schemes are a gamble, far worse than any other scheme. The previous Government deliberately encouraged 6 million or 7 million people, or however many it was, to join such schemes, even though no one can say what the annuity rates will be in a month's time, let alone in 20, 30 or 40 years. The precise figures of the terrible losses are only wild estimates, and could be miles out. The Opposition are taking a cynical view of what the Government are doing.
    Mrs. Gorman: The Government are talking about the surpluses of the invested pension funds, but these are sums or money built up by wise investment by the people who operate the funds. The money belongs to the people who invested, and it is that money which may mean that, by the time they come to draw them, their pensions are often much higher than they expected. It is that money—the so-called surpluses—which the Labour party is seeking to plunder.
    Mr. Flynn: The Government are removing an unfair advantage that people contributing to some schemes have. If the advantage is spread to SERPS, it would be equitable. It has never been enjoyed by people contributing to SERPS. Why on earth should one favoured group enjoy it simply because the previous Government wanted to unload what they saw as the burden of the state pension?
    Mr. Letwin: Will the hon. Gentleman give way?
    Mr. Flynn: I was going to conclude, but I shall certainly give way to the hon. Gentleman.
    Mr. Letwin: I am doubly grateful to the hon. Gentleman for giving way again.
    I fear that it is necessary to repeat the question asked by my hon. Friend the Member for Billericay (Mrs. Gorman), but perhaps I can put it a little more clearly. Does the hon. Gentleman agree that, if SERPS were an unfunded scheme, as it has been until now, it would not have made a jot of difference to the entitlement of those in it had they had received or not received the tax credit, because the money would have been absorbed in the Consolidated Fund without any increase in the entitlement?
    Mr. Flynn: The hon. Gentleman is tempting me to go over what happened under the previous Government with the Treasury supplement. I do not know whether he is familiar with the supplement, which was paid for a long time and removed by the former Leader of the House when he was at the Department of Social Security. That was the chief loss to the national insurance scheme in that period.
    The previous Government played fast and loose with the national insurance scheme by raiding it. That is why we all agree that we need reforms and new schemes. Instead of the complications, waste, huge commissions and inefficiencies of the private pension industry, we would be better of with one national scheme that was run very efficiently.
    I shall conclude by speaking about my party's approach to pensions. My hon. Friend the Minister listed in awritten answer on 30 June ways in which all pensioners could share fairly in the increasing prosperity of the nation. He said that it would be
    1018
    "through contributory pension entitlements, through other benefits, or through the income derived from savings.?—[Official Report, 30 June 1997; Vol. 297, c. 65.]
    However, the only means that anyone has so far suggested by which all pensioners could share in increasing prosperity is to restore the earnings link for the basic pension.
    We are aware of the problems involved, but that is what my party—now the Government—should be aiming at. Even if we do that, we shall not be helping those dependent on income support above their basic pension, so we also have to increase the earnings link for them. I believe that this splendid, magnificent, reforming Labour Government will do that, and we look forward to a golden age of pension reform.
    8.44 pm
    Mr. David Prior: I represent a constituency to which many people retire. Pensions are a key consideration, as they were throughout the general election campaign. The withdrawal of the advance corporation tax credit has come as a complete bombshell to my constituents, and to all those other thousands of people who are saving now to be self-reliant when they retire. I want to know whether the Labour party planned the abolition of the ACT credit before the election, and, if so, why it was not in the Labour manifesto. I hope that that question will be addressed in the Minister's winding-up speech.
    Hon. Members on both sides of the House accept that, over the next 40 years, the proportion of the population aged over 60 or 65 will grow significantly, and that the elderly will be supported by a static or declining working population. The support ratio, referred to by my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), which measures those of working age as a proportion of those of pensionable age, is predicted to worsen from 3.3:1 in 1990 to just over 2:1 in 2030.
    As medicine continues to advance, that position will deteriorate further. It is anticipated that the number of over-75s will increase from 3.9 million in 1990 to 6.3 million in 2030. The consequences, not only For pensions but for community care, health provision and long-term nursing, are enormous.
    How is that to be financed? There is a limit to tax-financed public spending, which even the Government seem to recognise. Today, public spending on old people amounts to half the total social security budget, or some £40 billion per annum. The current pay-as-you-go unfunded state pension will become increasingly expensive for future working generations as the population ages. The Government Actuary has calculated that, at current prices, spending on retirement pensions will be £55 billion in 2030, compared with £29 billion in 1994–95. That increase will have to be funded by fewer working people.
    Like all Conservative Members, I had hoped that there was a growing cross-party consensus that private pension provision, as a supplement to state provision, was a crucial part of the answer to the problem. The problem will not go away: just as one cannot buck the markets, one cannot buck the demographics. Even the European Commission has cottoned on to that, as can be seen in a Green Paper published on 10 June this year, called "Supplementary Pensions in the Single Market".

    1019
    Those in continental Europe are in a far worse position that we are and I shall quote some statistics to illustrate that. Pension fund assets as a percentage of gross domestic product were 3.4 per cent. in France, 5.8 per cent. in Germany, 1.2 per cent. in Italy, 2.2 per cent. in Spain and 80 per cent. in the United Kingdom. UK pensions investment is some £650 billion—more than the rest of Europe put together. Our pensions industry has been one of the great success stories of the last Conservative Government, and it would seem that the Commission has started to see the light just as the Labour Government begin to close their eyes.
    The Commission's Green Paper concludes:
    "Improved returns on pension fund investments are in the interests not only of workers, who have to contribute out of earned income to their pension schemes, but also of employers who also contribute. Reducing the costs of supplementary pensions for employers cuts the cost of employing a person and so directly contributes to creating jobs and to economic growth".
    To most people, that is a statement of the blindingly obvious, but not to the Government, who have just increased the cost of pensions by abolishing the ACT credit. It is bad for investment, for jobs, for competitiveness, for the public finances, for pensioners and for future pensioners. The National Association of Pension Funds said that the Budget had been
    "the biggest attack on funded pension provision since the war. It will affect not only companies, but millions of ordinary people."
    The Chancellor believed that he had found the perfect way to raise money without anyone noticing. This was to be the perfect crime, because there was no apparent victim. Attack personal pension funds and companies with defined benefit schemes, and, it might be thought, no voter will notice—but of course they will. The 28,000 employers with final salary schemes, with 11 million members and 7 million existing pensioners, will notice, as will the 7 million individuals who have taken out their own personal pension plans.
    There can be few worse examples of short-termism than raiding people's long-term retirement savings to finance today's Government spending. If this is, to use the Prime Minister's elegant phrase, "long-termism in action," Lord help us.
    The long-term funding of pensions is one of the great issues confronting all developed countries. Self-provision for long-term savings must play an important role. Surely the Minister for Welfare Reform, at least, will agree with that.
    The removal of the ACT credit is opportunist and short-term. It is robbing tomorrow to pay for today. It is penalising millions of people who were taking responsibility for their old age. In its first Budget for 18 years, Labour has shown that it cannot be trusted with the nation's pensions.
    8.51 pm
    Liz Blackman: If I had not come to the House as a result of the general election of 1 May, and had stayed in my job, give or take a few days I would have taught young people for 25 years. I invested a great deal of time and energy in those young people, but for many years I knew that their prospects of equipping themselves properly with skills that the country needs and
    1020
    of obtaining secure and rewarding jobs had been capped by the performance of the economy. I knew that the boom-bust pattern that we came to expect from the previous Government, and the appalling lack of investment in the productive capacity of the economy, would have an impact on their future.
    Our manifesto commitment to the electorate was to reverse that position, and undeniably it was overwhelmingly endorsed. Often, on doorsteps in my constituency, I found that older people were worried that we were not giving those young people a future.
    The Government will definitely be judged on our ability to sustain and increase economic growth, which means taking tough decisions—no one is denying that—and building an infrastructure on firm ground, not on shifting sands as in the past.
    Labour Members have rehearsed reasons why forecasts of the impact of advance corporation tax on pension schemes have been skewed by the way in which actuaries value those funds. We have been presented with evidence that dividend growth in the United Kingdom is high compared with that in the United States of America, where a much more conducive investment climate has been created. The distortion of the tax credit and its short-term impact have been highlighted, as has the inability of management to take unfettered decisions about pension funds.
    I have been extremely interested in some of the historical evidence with which we were presented at the start of the debate, showing that Conservative Members, past and present, have justified their approach to removing money from pension funds a few years ago, but have somehow now developed selective amnesia.
    There is no denying that we need a root-and-branch pensions review; and that we shall have, with plenty of good discussion. But the people of this country voted for a change this time: they voted positively for a Labour Government who, they knew, would invest in the future and would be fair. Our proposals offer fairness.
    8.54 pm
    Mr. John Bercow: I listened with interest to the hon. Member for Erewash (Liz Blackman) because I wondered, when she was talking about the mandate and the basis on which the British public had decided to opt for a change, whether she would have the audacity, and possibly also the intellectual power, to be able to demonstrate that in the course of making that judgment the British public had the ability to detect—weeks in advance of the general election—that the Labour party, if elected, and despite the absence in the manifesto of any such commitment, would abolish the ACT credit on dividends. Of course the hon. Lady could not demonstrate that, for the simple reason that there was not the slightest indication for several months before the election campaign, during the campaign or even in the period immediately after it, that that the Government's intention.
    This debate is an excellent opportunity to compare and contrast the records of the former Government, whom I was proud to support from outside the House, and the present Government. We may compare the records of a Government who served this country for 18 years and of an Administration who, to date, have served—or perhaps I should say mis-served—the nation for 69 days. By any

    1021
    yardstick—even if I were not a partisan contributor to the debate—it would not be difficult to arrive at the conclusion that our rhetoric was matched by reality and that Labour's rhetoric to date has been contradicted by reality.
    I am sure that the Minister will not deny that the Conservatives set out over a period a three-pronged strategy. We said that we would uphold the value of the state pension as the foundation of pensioners' incomes in retirement—that was the first prong. The second prong was to encourage individuals, not just by exhortation but by practical incentives, to provide for themselves in their retirement. Thirdly, as a party that believes it is a responsibility of Government to look after those who are unable to look after themselves, we said that we would provide through the taxpayer additional assistance for the poorest pensioners. On all three counts we manifestly succeeded.
    The effect of that success is plain for all with eyes to observe. It is plain by virtue of the fact that pensioners today are, on average, 60 per cent. better off than in 1979. It is obvious by virtue of the fact that 90 per cent. of pensioners have recourse to funds other than the state pension. It is plainly obvious by virtue of the fact that 62 per cent. of pensioners have occupational pensions; and by virtue of the fact—this should be the subject of cross-party pride—that the proportion of pensioners who are in the bottom 10 per cent. of income earners has fallen from 35 to 18 per cent. Finally, it is plain by virtue of the fact that by all agreed measures of reasonable living and basic decency, the number of pensioners enjoying the basic elements of a decent standard of living—consumer durables, reasonable incomes, and so on—is far greater than it ever has been. By all those yardsticks the Conservative Government were successful.
    The plan of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), the former Secretary of State for Social Security, to build on that success in pension provision was widely applauded. It received support from the Association of British Insurers and from Legal and General; it also received support from an enormous variety of people with professional expertise and competence in pension provision, because they recognised in the plan the seed corn of a far greater provision for the multiplicity of pensioners today—and, more particularly, tomorrow—than the efforts of any previous Government had been able to devise. So we came up with something that received support not only from the Conservative Benches but from people outside who knew that a time bomb was ticking and that a solution was required.
    In the past 69 days, all that the Government have contributed are two policies, the effect of which has been to damage the prospects for tomorrow's pensioners. The first is the abolition of the tax credit on dividends. In simple terms, stripped of jargon and technicalities, what matters and is, I presume, indisputable, is that, as a result of that policy, the amount of tax that pension funds can reclaim will be cut, as sure as night follows day. The consequence of that must be clear for all to see. It means that companies will be obliged to top up contributions to company schemes, which will necessarily impact on the sums that they can devote to other purposes. It seems reasonable to conclude that investment in the company's future will therefore suffer.
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    I found it extraordinary that, although the hon. Member for Pontefract and Castleford (Yvette Cooper), whom I am delighted to see back in her place, paid close attention to Conservative Members' arguments, which was much appreciated, she seemed determined to deny to herself even the possibility of a reduction in the short term, let alone the long term, of industrial investment by companies as a result of the tax change introduced by the Chancellor. It must logically follow that, if companies must busily top up funds depleted as a result of that policy, something else will have to give. In a sense, there is a cake, and however it is divided its total size, does not change. It is therefore not credible to argue that there are no consequences. An opportunity cost is involved in all those decisions and judgments.
    Similarly, the damage in respect of the imposition of the windfall tax is clear. One must reflect on the number of shares held in those utility companies by or on behalf of pension funds. It is flippant and unworthy of serious political debate for the Government, with a smugness that ill befits them only 69 days after their return to office, simply to prate in response to our objections that the stock market is doing thoroughly well. If they are so drunk on the temporary enjoyment of their newly acquired power to believe that that state of affairs will obtain for any length of time, they deserve to suffer. Those utilities will be hit and their investment plans threatened. They will be obliged to borrow, which will have implications for the infrastructure. In each and every case, damage will be inflicted.
    I challenge the more fiery intellectual powers in the Labour party, of whom some of us have been informed that the hon. Member for Pontefract and Castleford is a prominent example, to dispute and repudiate the arguments that Conservative Members have advanced against what they have done.
    The Chancellor of the Exchequer has been masquerading, not just for the past few weeks but for several months, as a long-term visionary. He has been aided and abetted in his task by the Minister without Portfolio, the hon. Member for Hartlepool (Mr. Mandelson). The objective has been to convey to the electorate, especially through the mass media, the impression that the Government are thinking strategically, that they have big ideas and that they possess a concept of a long-term future that will be beneficial.
    I regret to say that the reality is very different: the Chancellor has been exposed as a fraud—as a manipulative short-term opportunist, driven by the immediate needs of the moment as he embarks on a smash-and-grab raid on Britain's pension funds and pensioners' interests.
    Mr. Deputy Speaker (Mr. Michael J. Martin): Order.
    Mr. Bercow: I give way.
    Mr. Deputy Speaker: The hon. Gentleman is not giving way; he is sitting down. As he is a new Member, may I tell him that the term "fraud" is not a term that I would like to be used about any hon. Member.
    Mr. Bercow: Mr. Deputy Speaker, I apologise unreservedly: I certainly would not want to accuse the Chancellor of the Exchequer of anything ignoble. Perhaps

    1023
    it would be correct to say—and perhaps I will return to your good books, Mr. Deputy Speaker in so doing—that the Chancellor of the Exchequer has been guilty of some bad judgment, and that entirely inadvertently he has given credence to untruths. That might be a more satisfactory description of the way in which he has operated. The effect, I suggest to the House, is the same: the Chancellor gave the impression of long-term provision, but the reality is not only that long-term provision will not best be served by the policies that he has advanced, but that it will be undermined.
    My party has long struggled under the disadvantage that historically people have thought that Labour is the party of the pensioner and of pension provision. The truth is proving rather different. We, in a quiet, practical, piecemeal way, have devised policies that will serve the next generation of pensioners. In their first two months in office, the Labour Government have massively damaged the prospects of that effective future provision, which should be the subject not of partisan debate, but of all-party agreement. That is a source of regret.
    I invite the Government to reconsider their position, to recognise the dangers of non-consultation and to show some humility in the face of the overwhelming objection to their policies that the affected parties have expressed. If, as a result of that, the Under-Secretary of State for Social Security, the hon. Member for Southampton, Itchen (Mr. Denham)—not tonight, for that would smack of panic, but over a period of weeks—would say to the House, "We were wrong; we made an error of judgment; the Opposition had some valid objections; we have taken them on board; we will introduce different proposals," I and the country would be as delighted as we would be amazed.
    9.6 pm
    Mr. Oliver Letwin: I should begin by declaring an interest of two kinds—first, as the director of a bank, and secondly, as an individual living in the United Kingdom.
    The Budget was announced as a Budget for jobs—a matter of great rejoicing for all who live in the UK. Members on both sides of the House would agree that the generation of sustainable employment is one of the great objectives of the state and society.
    Conservative Members understand the logic that was applied by the Chancellor when he proposed the great change in the administration of ACT credits and their removal. That was the logic of managerial economics. The Chancellor told us on Budget day that he envisaged that by removing the tax credit on ACT, he would encourage firms—perhaps even force firms—to redirect the application of their cash now from paying dividends, an item that the Chancellor may regard as evil, improper or dubious, and instead to direct their cash flow into an item that the Chancellor regards, and which I and Conservatives generally regard, as noble: investment, because only investment in capital machinery and in research and development can keep the UK in the forefront of the industrial world.
    That was the language of managerial capitalism, for which Conservative Members are profoundly thankful. For us to be facing a Labour Government who speak the
    1024
    language of capitalism is a state of affairs vastly preferable to that which we might have faced under previous Labour Administrations, had they been returned to office. However, the move that has been made on ACT tax credits—an ostensibly obscure subject—reveals that it is purely the language of capitalism that the Chancellor and his colleagues have learnt, without in the least understanding the way in which the capital markets in this country and around the world operate, or the way in which industry operates in a capitalist economy.
    I hope that the House will forgive me if, in the next two or three minutes, I try to illustrate the grotesque error—based on absolute and profound ignorance of the operations of industrial companies—that the Chancellor has made. When large companies—most of the gross domestic fixed capital formation and investment in this country comes from large companies—take investment decisions, their managers have been trained in business schools to apply the test of a threshold rate. They look for a rate of return on their investment that matches the weighted average cost of their capital. In so doing, they make a judgment about the return on investment compared with the cost to them of raising capital.
    The ostensibly small change that the Chancellor has introduced will have a clear effect to which many of my right hon. and hon. Friends have alluded: it will lead that great bulk of British funds that currently invest in equities—and which occupy, between them, shareholdings about equal to 75 per cent. of the total equity portfolio of listed stocks in this country—to redirect their investment from this country's equity into fixed debt and equities overseas. That will reduce the supply of funds for equity in this country.
    The Chancellor may have advanced to that stage of Samuelson's invaluable work on economics that tells us that, if one removes part of the supply without affecting the demand, one will increase the price. In this respect, capital is no different from any other commodity: if the supply of equity funding is reduced and the demand remains constant, the price of equity funding will rise. The required return on equity capital in this country will rise inevitably and substantially as a result of the Chancellor's current manoeuvre.
    There will be no equivalent reduction in the cost of debt financing because—pace Mr. Hutton, who I fear has not reached the first page of Mr. Samuelson's book and who would do well to attend even the modestly socialistic courses in advanced economics offered by the university of Cambridge, let alone the rather better courses available at other universities in this country—the redirection of funds into the debt markets will have not the slightest effect on interest rates for debt because the Chancellor has handed control of those interest rates, rightly or wrongly, to another body: the Bank of England, which will use its efforts in the interest rate domain to control macro-economic considerations and the development of inflation and to manipulate the exchange rate to a degree by setting interest rates.
    No amount of increase in funding for debt in this country will reduce short-term—and even, to an extent, long-term—interest rates by any significant degree. The Chancellor's moves will result in an increase in the cost of equity, with no corresponding decrease in the cost of debt. Therefore, the weighted average cost of capital of British industry will rise substantially and permanently. As a result, many investment projects that managers are

    1025
    allowing through the net because they pass the hurdle rates will fail. Power stations that would have been built, will not be built. Telecommunications switches and large transmission lines that would have been installed, will not be installed. A whole range of large-scale investments in this country will be wiped off the slate.
    This is supposed to be a Budget for jobs, but when investment in this country is thus reduced it will have two effects on jobs. First, it will have the direct effect of substantially reducing jobs in civil, mechanical and electrical engineering and in a whole range of construction activities. Secondly, it will have an indirect effect: by reducing the level of investment in this country, firms will be made less competitive, less able to match the activities of their competitors overseas and hence less able to continue to employ people in this country.
    In that way—and beyond the issues raised by Conservative Members in many eloquent speeches in the past few hours—the Budget, by changing ACT tax credits, will have an effect on pensions and, through them, a wholly negative effect on jobs. That must be regretted by everyone in this country—not only pensioners, but those who are yet to become pensioners and who would like to have jobs.
    9.14 pm
    Mr. John Hayes: It is with slight trepidation that I follow my hon. Friend the Member for West Dorset (Mr. Letwin), who gave such a lucid and clear explanation of the problems in the analysis that the Chancellor is using in making these changes, but I shall attempt to do so none the less.
    A number of my hon. Friends mentioned the background to these changes—a background of British success. The change in the past 18 years in pension provision by individuals and in pensioner incomes has been profound. The difference between the situation in Britain and Europe was also mentioned by a number of hon. Members.
    I do not claim to have the expertise of my hon. Friend the Member for Ryedale (Mr. Greenway) in these matters, but I understand the difference between money purchase schemes and final salary schemes. The real growth in pension investment has been in company-based money purchase schemes and in private pension plans.
    My hon. Friend the Member for Epping Forest (Mrs. Laing) mentioned that the transition from public to private responsibility provided a foundation for well funded pensioner incomes into the long term which simply will not be matched by a reliance on the state pension, or even on an amended version of SERPS, as suggested by the hon. Member for Newport, West (Mr. Flynn). The simple fact is that the transition from public to private was necessary and is recognised as desirable not only by Opposition Members but by more enlightened Members on the Government side of the House.
    The pension plus proposals, which were mentioned a number of times in the debate, would have accelerated that change. They would have accelerated the evolution, which is why they were welcomed during the election campaign by many experts, by the industry and, indeed, by some Labour Members. I mention in particular the Minister for Welfare Reform, the right hon. Member for Birkenhead (Mr. Field), who in an article in The Daily
    1026
    Telegraph in February welcomed the proposals outlined by pension plus and was silenced, or at least muted, by his right hon. and hon. Friends on the Front Bench for so doing. The truth is that the recognition of the need to transfer that responsibility to individuals is clear and profound.
    The second change I wish to mention is the change in pensioner incomes, which have grown over the past 15 years even more than the average income of non-pensioners. A significant part of that growth has been because of the fact that new pensioners now have more than one income. Their extra income is clearly a personal pension plan or company pension. The number of pensioners who have dual incomes—new pensioners, as people are becoming pensioners every day of every week—is growing all the time. That has to be attributed to the success of the policies, which were mentioned by my hon. Friend the Member for Buckingham (Mr. Bercow), of the Conservative Government over the previous 18 years.
    The encouragement of people to make provision for their old age has been highly successful and has led to pensioners enjoying a higher standard of living over the past 18 years than they had previously, and one that is higher than that of their contemporaries in other countries across Europe.
    It is precisely because of the difference between us and Europe that my right hon. Friend the shadow Chancellor, when Secretary of State for Social Security, pointed out that, if we threw in our lot with Europe, we would be absorbing a significant burden from across the water, from which we had freed ourselves. He also pointed out that France in particular and Germany to a lesser extent have pay-as-you-go pension schemes and have not made the changes that we have made and would have created a burden on the British taxpayer, which he identified and warned us against.
    The consequences of the abolition of tax credits has been well explained already. The net effect is bound to be a diminution of the size of funds and damage to the prospects of those who were hoping to enjoy the benefits of those funds on their retirement. As if that were not enough, we have the double effect of the proposed changes with the impact of the windfall tax, which was well illustrated by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).
    The impact of the windfall tax will bear upon the customer, the shareholder and the consumer. Most significantly, it will bear upon funds that invest in utilities that will be affected by the windfall tax. That is a double whammy. We are talking of a double effect. The abolition of advance corporation tax credits and the impact that the windfall tax will have on investment funds are bound to lead to a less rosy picture for pensioners.
    If that is so, why have the Government gone down such a road? They have done so because it will bring them immediate financial benefit. There can be little doubt that the argument that the consequences will be invisible, that individuals will not realise that they are affected, thinking that this is some harmless and technical change, is based upon deception. It is a devious political manoeuvre, instead of confronting people with open and honest tax rises. That is the cynical political argument for attacking pension funds. It is an attack on people's futures. They

    1027
    will not know what is going on and, therefore, they may not react politically and oppose the changes that are being made.
    Mrs. Gorman: Will my hon. Friend give way?
    Mr. Hayes: No, I understand that I need to speed up rather than give way. I apologise to my hon. Friend. I would normally be happy to give way.
    In conclusion—I am moving seamlessly from page three of my notes to page 33—a considerable number of people will be affected by the Government's proposals. A conservative estimate of the numbers involved in the schemes that I have defined is about 7 million. They will be directly and detrimentally affected. I ask Opposition Members, including those on the Front Bench—
    The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): We are the Government.
    Mr. Hayes: I still think of those who sit on the opposite Benches as the Opposition because they still behave in a slightly amateurish and shambolic way, as they did in opposition.
    I ask the Government: are their measures fair? Are they appropriate? Are they wise? Are they measures that in the long term will attract criticism, approbation or the condemnation of those directly affected and of all those who care about Britain's future, including the future of Britain's pensioners?
    9.22 pm
    Mr. Iain Duncan Smith: We have had a fascinating debate, partly because so many hon. Members who contributed to it seemed to know what they were talking about. During my period in Parliament over the past five years, that is something of an exception to the rule. I shall tread carefully on this one, so as not to upset those hon. Members who clearly did not know what they were talking about.
    We seemed this evening to run out of Labour Members who wished to contribute to the debate. This is not the first time that that has happened. It happened last week on Friday during the Budget debate. I say that only in passing and not as a partisan point.
    I wish to refer to many of those who have contributed to the debate, and I shall do so as quickly as possible, given the time, in the form of a list. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made it clear that his expertise continues. He continues to illustrate the important points that relate to the issues that we are discussing. My neighbour, my hon. Friend the Member for Epping Forest (Mrs. Laing), made a powerful speech in describing the problems for future pensioners when they come to retire. Her points were well made.
    My hon. Friends the Members for North Norfolk (Mr. Prior) and for Bognor Regis and Littlehampton (Mr. Gibb) and my right hon. and learned Friend the Member for North-East Bedfordshire (Sir N. Lyell) spoke about the success of our policies and pointed out that the
    1028
    Government seem intent on attacking ordinary pensioners. They said that the key to our future economic success is the fact that we have so many funded pensions.
    My hon. Friend the Member for Ryedale (Mr. Greenway), with his expertise and knowledge, explained the difficulties of sorting out the problem of misselling and why they continue to exist. It is well worth re-reading his speech.
    My hon. Friends the Members for Arundel and South Downs (Mr. Flight) and for West Dorset (Mr. Letwin) showed their financial expertise. Their short speeches bear re-reading, because they explained why the Chancellor seems to have misunderstood the way in which markets will invest, particularly the pension fund market. Many of those funds will move into fixed debt or even equities overseas, which is hardly what the Chancellor needed. My hon. Friend the Member for Buckingham (Mr. Bercow) spoke of the Government's smugness and the way in which this measure was presented.
    The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made a good speech. Obviously, I did not agree with all of it, but I particularly agreed with his attack on the withdrawal of ACT dividend tax credits. He made a straightforward point: how can a £5 billion raid on the economy help to increase the trust of pension companies that the Government must have if they are to reform the pension system? That was a powerfully made point, and the hon. Gentleman seemed to agree with us that, as my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said, we require a Green Paper so that we can discuss this matter. I am glad that Liberal Democrat Members agree with that.
    Many Labour Members made interesting speeches. A number of them wanted to restore the earnings link. I hope that the Minister will tell us whether the Government will succumb to the blandishments and pressure from various Labour Members, especially the hon. Member for Hornchurch (Mr. Cryer). Many of us remember his father, who sat in a similar position in the Chamber, although on the other side. He gave us a hard time, but we respected him for his great skill and knowledge, and I welcome the hon. Gentleman to the House.
    Some Labour Members even spoke of moving the goalposts. Many of them attacked the way in which actuaries now calculate the funds, as though, having raided them, this could make it all better by having yet another great Government review. No doubt they will come back to that.
    I want to correct the Chief Secretary to the Treasury, because he did not complete the quotation from the former Chancellor of the Exchequer, Norman Lamont. In the final part of his speech, he said:
    "when the basic rate is eventually brought down to 20p, tax reliefs for basic rate taxpayers will, of course, be worth 20p in the pound, too. In this Budget, I have brought forward that change by restricting three specific tax reliefs to 20 per cent., not just for basic rate taxpayers, but for all taxpayers."—[Official Report, 16 March 1993: Vol. 221, c. 195.]
    It was interesting that, in its green budget, the Institute for Fiscal Studies commented on the adjustment to tax reliefs to match the tax. It said:
    "By cutting the rate of income tax on dividends to 20 per cent. to be in line with the cut in ACT, the Government of the day ensured that 'most ordinary shareholders' were unaffected by the change."
    I am sure that the Chief Secretary wanted to have that corrected before we continued.

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    The debate has shown that the Budget is a return to Hutton. The Chancellor has put up this screen—that the Government have made these changes for ideological reasons. In abolishing ACT, taxing pension funds, driving down yields and reducing the equity base of British industry, the Budget was structured around that ideology. The Chancellor's critique was clearly flawed, but he has built the Budget around it.
    Two points undermine that thesis. First, it is claimed that the majority of United Kingdom companies, particularly pension funds, are short-termist in their stockholding—in other words, in their total investment policy. A range of evidence undermines the credibility of such claims: WM Co., which is one of the most respected companies monitoring fund performance in the marketplace, has found that the opposite happens. Its recent survey found that funds typically hold individual stocks for between eight and 18 years. That is hardly what anyone could describe as a short-term holding.
    The Government claim also that, if the pressure on United Kingdom companies to pay high dividends to institutional investors can be reduced, the number of companies spending on research and development will naturally increase—insinuating that it is low as a result of the present position. However, recent research by the City university business school demonstrated that companies that pay dividends are more likely to invest in research and development, and that the R and D expenditure of dividend-paying companies is significantly higher than that of non-dividend-paying companies. That rather blows that one out of the water. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) put that point very well in his speech.
    Even given their own ideas, however, rather than increasing long-term investment, pension funds may now ask the companies whose pension scheme they administer to make good the shortfall that will result from increasing the total contributions of their work force. They could even demand bigger dividends from the companies in which they own shares. Both outcomes would reduce, not increase, resources for investment. The Government seem to be hiding behind a smokescreen in claiming that their proposals will change the way in which the market works, and the way in which businesses invest in the future. That is completely untrue.
    The most obvious victims of the abolition of dividend tax credits on ACT are the UK's 6 million personal pension holders, and its 750,000 members of company money purchase schemes.
    Dr. George Turner: I sat here all evening waiting to hear an argument from an Opposition Member that was worthy of a speech, but I decided not to use the time to which I understood I might be limited.
    Will the hon. Gentleman consider the position of a pension company that owns an important manufacturing firm in my constituency? Bespak has just reported a 26 per cent. jump in profits; its dividend is up by 13 per cent., and it has an eight-week investment programme in King's Lynn, in my constituency. As a result of its ownership of that company, the pension company's
    1030
    ACT will be 0.5 per cent. of its capital value. Are we not ignoring the main arguments and dwelling on minor issues, given that the capital value—[Interruption.]
    Mr. Deputy Speaker: Order. The intervention is far too long.
    Mr. Duncan Smith: I suggest that the hon. Gentleman should go out and argue with all the pension fund managers and the pensioners who will experience a heavy loss as a result of the Budget, rather than trying to score points.
    Pension Store has found that, for example, a 30-year-old whose fund would have been worth some £258,000 on his retirement at the age of 65 can now expect only £206,000, some 20 per cent. less. He would have to pay an extra £20 a month to make up the shortfall. The young will be hit hardest by the changes, because they have not had the opportunity to accumulate a large fund at the higher rate of return. They also need to invest a higher proportion of contributions in UK equities, the only securities hit by tax changes, to achieve high capital growth at relatively low risk.
    The National Association of Pension Funds estimates that approximately 50 per cent. of all occupational pension schemes are in deficit, which lends falsehood to the Chancellor's statement at the time of the Budget. Those funds will be plunged further into deficit by the pensions tax, and many just above the surplus line will join them in deficit. My hon. Friend the Member for Bournemouth, West made that point when he referred to the Sainsbury fund, which I believe will go from a surplus of some £200 million to a deficit of about £30 million.
    As many hon. Members pointed out, local authorities will also be in difficulties, because they will find it necessary to raise council tax. The Post Office is now even talking of putting a penny on the cost of a stamp. Local authorities, the Post Office and many others will find that this is a retrogressive tax. The authority in Kensington and Chelsea is talking about an extra cost of £1 million a year. What do the Government propose to do to sort some of this out?
    The hon. Member for Putney (Mr. Colman) said that he had received a letter from a Minister in what used to be the Department of the Environment—it is now a new multi-ministry. The letter stated that the problems of financing would be taken into account in the new settlement. Does that mean that there will be extra money? How will this be sorted out?
    Employers could be pushed into devolving responsibility for pension provision, and future savers could lose because, in effect, they will have to take a pay cut. It seems that employers will move towards money purchase schemes, which will mean that their contributions will be lower. As a result, employees will suffer a pay cut. Further evidence from the United States shows what happens when savers have to set up money purchase schemes with companies. They were given the opportunity to choose their investments and, of course, they chose conservative investments, particularly government bonds. As a result, the final yield was lower than it might otherwise have been, and they lost yet again.
    The main point of the Budget change seems to revolve around SERPS, about which my right hon. Friend the Member for Hitchin and Harpenden asked some

    1031
    questions. He questioned the Government during the Budget debate and today, and I hope that the Minister will return to those questions. My Government encouraged people to opt out of SERPS. As we know, that was done through a rebate system. The amount of the rebate was calculated by the Government Actuary in accordance with the cost of occupational and personal pension schemes that provided benefits equivalent to SERPS. The abolition of the ACT credit will make it more costly to provide benefits that are equivalent to SERPS.
    Unless there is an out-of-sequence review, the current rebates will remain in force until 5 April 2002. That means that a rebate order that is made now to redress the balance would not come into effect until 6 April 1999. Obviously, the rebates should be increased to take account of the loss of valuable investments. Can the Government estimate the cost of operating the rebates? When do they plan to announce a new rebate order? Any adjustment in the amount of contracting-out rebates would affect the overall funding of the national insurance fund and the contributions that are needed to meet fund outgoings.
    Was that all taken into account in the Red Book? Presumably that was one of the acknowledged outcomes of the abolition of ACT, on which, the Government told us, they consulted. Therefore, there must have been costings. Could they be made available to the House?
    Of course, there is an alternative strategy. It is simply to leave the rebates unaltered, which would drive people into a decision about returning to SERPS. The tax on personal pensions has reduced the incentive to opt out, and many people will look again at SERPS with a view to opting in. [Interruption.] Many Labour Members welcome that. If that is the Government's intention, they have made a political decision to move people back into SERPS and increase the level of unfunded pensions. If that is what they intend, perhaps the Minister will make it clear. Do the Government intend to leave the rebates as they are and encourage people back into SERPS?
    The Minister for Welfare Reform has said:
    "Failure to close SERPS will mean substantial tax bills for generations".
    He is obviously at odds with his Government. The Minister has now taken his place on the Treasury Bench. Perhaps as the Government have gone back to the drawing board on tax changes, the Minister has gone back to the drawing board on SERPS, and possibly on his position.
    Furthermore, the future of stakeholder pensions is at risk. An interesting point to follow is where that leaves Labour on the position for future generations at which we have said we want to look carefully with the Government. It seems that their plans to introduce second-tier stakeholder pensions have already been undermined.
    The stakeholder pension is designed to be run by approved private pension companies which rely on the market place, on dividends, to increase funds. However, under Labour legislation, any return will be diminished, because the Chancellor has abolished the tax rebate that pension funds claim on dividends received. Therefore, the Government's new ideology, as evidenced in the Budget, will ensure that the stated objective of security in retirement is increasingly difficult, if not impossible, to meet. I remind the House what was in the Labour party manifesto:
    "The provision of adequate pensions in old age is a major challenge for the future?.
    1032
    Labour was right. It has made the challenge even more difficult, particularly for the Minister for Welfare Reform, who will now have much difficulty working this little conundrum out.
    Labour has gone back to Hutton and back to SERPS, and the Minister for Welfare Reform is going to have to go back to the drawing board. The people have a new tax with which to cope, and so has the Department of Social Security. It is all about firing at the Chancellor's false target—somehow to correct this so-called short-termism. In firing at that target in the Budget, the Chancellor has hit a load of innocent bystanders, members of the ordinary public who will have to pick up the pieces and pay the price for what is clearly a return to old Labour ways.
    This new tax, for tax it is, will be a levy not just on the corporate sector. The Government thought that they could pass it off as a secret tax, and they have made a mistake. Where in Labour's election manifesto did it say that Labour would attack pension funds and raise taxation? Labour denied that endlessly everywhere. Where in the manifesto did it say that Labour would push the public back into SERPS? It did not say that.
    The Prime Minister said that he and the Government would govern as new Labour, having been elected as new Labour, yet when we look back at the way in which they have behaved, far from governing as new Labour, the Government intend to govern as old Labour, hiding tax changes from the public, sneaking them in and forcing the public to pay up in due course. [Interruption.] The hon. Member for Hove (Mr. Caplin) knows all about it; that is why he is agreeing with it. To take £5 billion out of the economy and try to pretend that the public will not suffer is absurd and a deliberate attempt to mislead them. If that is new Labour, bring back old Labour.
    Let me give the final confirmation that Labour intends to govern just like that. Until now, the Prime Minister and new Labour have been long on wonderful visions, but the public will now have to wake up to the fact that, far from visions, it is just one long tax-and-spend nightmare.
    9.42 pm
    The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): This has been a well-informed and good-humoured debate, starting with the discussion about whether it is an insult to claim that a Conservative Member was a Minister in the previous Government. I understand that the shadow Chancellor of the Exchequer wishes to point out that he was not a junior Minister in the Department of Social Security when advertisements were published encouraging people to leave their personal pensions; he was a junior Minister in the Treasury, which was responsible for the regulation of personal pensions.
    What is striking is how, despite it being an Opposition day debate, each argument from Conservative Members has collapsed in response to their record in government, their lack of concern and their inaction on the very issues that they sought to raise. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) raised the question of local authority pension funds, but my hon. Friend the Member for Putney (Mr. Colman) pointed out how, to fund the poll tax disaster, local authorities were forced into underfunding, and how the previous Government's other measures, such as those encouraging early retirement, caused financial difficulties for the funds. However, we heard not a word from Conservative Members about those damaging consequences.

    1033
    The hon. Members for Arundel and South Downs (Mr. Flight), for Epping Forest (Mrs. Laing) and for West Dorset (Mr. Letwin) spoke about investments, and the hon. Member for Ryedale (Mr. Greenway) spoke of having 20 years' experience in investment, yet I was left none the wiser as to why this country's investment performance has been so poor over those 20 years. In contrast, my hon. Friends the Members for Pontefract and Castleford (Yvette Cooper) and for Erewash (Liz Blackman) stated, quite rightly, the central importance of investment to the British economy if we are to build for the future and be able to pay for pensions. They talked about the importance of building up the value of the capital investment in British industry, which we have set out to achieve by the moves that we have been discussing today.
    I apologise for missing the speech of the hon. Member for Bournemouth, West (Mr. Butterfill), but I understand that he spoke about occupational pensions in his usual well-informed and thoughtful manner. However, my hon. Friends have reminded us of the damage that would have been done to such pensions by the proposals for basic pension plus and the tax changes that were involved.
    The hon. Members for Buckingham (Mr. Bercow) and for South Holland and The Deepings (Mr. Hayes) gave us a rosy view of the lives of pensioners in Britain today. My hon. Friend the Member for Hornchurch (Mr. Cryer) reminded us of many of the attacks on pensioners that took place under the previous Government.
    The hon. Member for Ryedale—I welcome this—commended what he called the wholly appropriate action of my hon. Friend the Economic Secretary to the Treasury in tackling pension misselling. I thank him for what he said. The right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) said that he looked forward to the introduction of individual savings accounts.
    My hon. Friend the Member for Newport, West (Mr. Flynn) added his name, partially at least, to the list of Labour modernisers by advocating a funded SERPS for the future. The hon. Member for North Norfolk (Mr. Prior) returned to the question of ACT credits. I must say that, for all the dire consequences that have been forecast tonight, we did not hear a word of them in 1993 when the process was set in train by the previous Government. That leaves me feeling that we have heard arguments of convenience rather than of commitment or principle.
    Mr. Letwin: When ACT relief was reduced previously, ACT was reduced to the same level. Will the Minister tell the House whether on this occasion the Chancellor proposes, in contradiction to the Budget, to reduce ACT to zero, having reduced the relief to zero?
    Mr. Denham: The hon. Gentleman knows that the measure was introduced in 1993 to fund the crisis caused by the ERM debacle. We heard none of the criticisms then that we are now hearing.
    The shadow Secretary of State for Social Security talked about the manifesto. What Conservative Members do not like but the people of this country do like is that we have kept our manifesto promises, in contrast to the Conservative Government after the 1992 election.
    1034
    The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked a couple of important questions.
    Mr. Bercow: Will the hon. Gentleman give way?
    Mr. Denham: I shall give way when I have dealt with the points raised by the hon. Member for Roxburgh and Berwickshire. He asked about the position of local government pension schemes.
    We believe that pension funds should benefit from improved company performance as a result of the moves that we have taken to encourage quality long-term investment, which will be reflected in long-term share values. The reduction in corporation tax will greatly assist company performance. Although the loss of tax credits will have some impact on the income of local authority pension funds, the extent to which the changes feed through to local authority budgets will depend on the overall judgments made by the funds' actuaries as they undertake the revaluations due next year. Their conclusions will not be reflected in contribution rates before the financial year 1999–2000 at the earliest. The Government will take all those factors into account in determining the level of local authority provision for that and subsequent years.
    Several hon. Members rose—
    Mr. Denham: I must deal with some further points.
    The hon. Member for Roxburgh and Berwickshire also asked about national insurance. What matters is the long-term performance of investments and the health of the companies providing occupational and personal pensions. It is the long-term rates of return on pension fund investments that are reflected in the national insurance rebates. The Budget is designed to create a better climate for investment and long-term growth. Any Government will always consider carefully representations made about the need to ask the Government Actuary to look at the long-term assumptions underlying the national insurance rebates for contracting out of SERPS.
    Mr. Bercow: Will the Minister tell the House on which page in Labour's manifesto is the commitment to abolish the tax credit on dividends? It appears to have escaped the notice of Conservative Members.
    Mr. Denham: We promised to produce a Budget for investment, for skills, to get people off welfare and into work, to safeguard the health service and to raise standards in schools. That is what we are doing. That is why the people of this country are pleased and proud that they voted Labour at the general election. We have honoured our manifesto commitments.
    I welcome tonight's debate. The future of pensions is a major political challenge. It should not be—after 18 years in power, the Conservative party should be able to claim that nothing needs to be done. That cannot happen. Conservative Members spoke as if pensions were a triumph of the previous Administration. That would bring hollow laughter from the pensioners hit by value added tax on fuel; from those whose pension planning was undermined when the Conservative Government destroyed the cross-party consensus on SERPS; from the

    1035
    one in three pensioners who today have to rely on means-tested benefits; from the 1 million or so of the poorest pensioners who do not receive the income support to which they are entitled; and from the hundreds of thousands who read the Government's advertisements telling them that they could leave their occupational pensions—and did so and were missold personal pensions. That scandal was followed by inertia and inaction.
    We have heard that more people have died a few months ago than have been compensated. The figures revealed by the Economic Secretary tell their own story. Yet the party that masterminded that disaster had the nerve to call this debate tonight. We have heard many speeches about occupational pensions, but we did not hear a word of concern from Conservative Members as membership of occupational schemes declined steadily under the previous Government, especially among men. We never heard a word of concern as the coverage and quality of some occupational schemes declined under the previous Government. The number of active members of occupational schemes fell from 11.6 million in 1979 to 10.7 million in 1991.
    Mr. Butterfill: The hon. Gentleman obviously did not hear my speech, as he acknowledged. I said that occupational schemes were declining. However, I also said that the Government's action on advance corporation tax was likely to make that decline accelerate.
    Mr. Denham: I shall come to the hon. Gentleman's point later, if I do not take many more interventions.
    Today, 12 million people are outside occupational pension schemes, many in low-paid or modestly paid work. What is their choice after 18 years of Conservative government—SERPS, worth far less than it once was, or personal pensions? Personal pensions may be all right for some, but for too many it means that their savings and taxpayers' contributions are eaten up in fees and charges. Up to £1 in every £4 of savings can be eaten up by the time they retire. The cumulative effect of charges on a 25-year plan with monthly premiums of £60 can be as high as 30 per cent. If someone has a period out of work, even more of their savings will disappear.
    I have never heard so many speeches from Conservative Members about personal pensions as I have heard tonight. I have been present at every pensions debate for the past five years, but I never heard a word about the people for whom personal pensions were inappropriate and the extent of savers' and taxpayers' contributions eaten up in fees and charges. Not a word was said, not an action taken, as taxpayers' and savers' money was poured down the drain. The concern of Conservative Members this evening for those with personal pensions has been fascinating. It has certainly not been in evidence in the past. We have heard arguments of convenience, not arguments of commitment or principle.
    The previous Government's record has left behind not only poverty for many of today's pensioners, but similar poverty facing many of tomorrow's pensioners. The Conservative Government got their strategy wrong. They failed to ensure that people's money was used to invest for the future; they failed to regulate properly to protect
    1036
    savers and savings; they failed to ensure that people could get access to a decent second pension to meet their needs in the modern labour market.
    In the dying days of their Administration came an admission of failure. The previous Government introduced a scheme—basic pension plus—the boldness of which was matched only by the damage that it would do. They would have abolished the basic state pension and imposed an ever larger bill—rising to £300 billion over the next 40 years—on today's working population and on our children and grandchildren. They were warned that basic pension plus would consign occupational pensions to history. They were right to admit that their policies had failed, but they were wrong in the remedies that they proposed.
    That is the background to today's debate, and that is why I welcome it. I should now like to explain how we should move forward. We should first be absolutely clear about the conditions that make an effective pension policy possible and affordable. The ability to achieve security in retirement depends crucially on the health and success of the wider economy and on the opportunities for all to share in that health and success. The long-term performance of the economy and the ability of everyone to participate in economic success are the key to future pensions.
    If we have a low-wage, low-skill and low-investment economy in which millions of people are in and out of work, it will always be difficult to develop a successful pensions policy to meet the needs of all. Too many people will slip through the net, as they have in the past, retiring without decent pensions. An economy that fails to be competitive in the global economy will always struggle to meet the competing demands of today's retired people, of tomorrow's pensioners and of today's working generation.
    Mr. Duncan Smith: On the basis of a long-term concern for future generations and the debt requirement, will the Minister tell the House whether the Government's policy is that SERPS should continue and be expanded or whether, as the Minister for Welfare Reform maintains, it should be wound up?
    Mr. Denham: The hon. Gentleman may have just used the 30 seconds that it would have taken to cover that point, but I shall do my best to deal with it. The Government's priorities and the Chancellor's Budget are all about tackling those deep-seated problems.
    Mr. Duncan Smith: Answer the question.
    Mr. Denham: Stop interrupting and I shall answer it.
    The Government had to establish—and we have—the correct fiscal regime for investment. We also had to commit ourselves to the conditions for stable and sustainable growth, and we have done so. In doing so, we are not only aiming to build a stronger economy, but providing the essential underpinning for decent pensions. By opening up, through the new deal, new opportunities to leave welfare, to enter work, to earn an income and to join a pension scheme, we shall enable more people who currently have no pension to enjoy one in future.
    Investment, skills and the opportunity to work and saveare the platform on which our economy and our pension policy will be built. Before the general election,

    1037
    we made it clear that a wide-ranging review of pensions would be a necessity for the Government because of the legacy that we would inherit. Some of the issues that we shall have to address arise directly from the failures of the previous Government.
    We shall have to—and we want to—talk directly to pensioners and to their organisations. The Chancellor has already taken action to cut VAT on domestic fuel and to make available better and cheaper insulation. [HON. MEMBERS: "SERPS"] That action will be supported by the new deal for young people. He has also taken action to make further cuts in some fuel bills. All those actions will help older citizens to keep their homes warm in the winter.
    Unlike the previous Government, we shall retain the basic state pension as the foundation of pension provision and ensure that it is increased at least in line with prices. [HON. MEMBERS: "SERPS?"] We are already commissioning research to establish why so many pensioners do not claim the income support to which they are entitled. We are committed to examining ways of delivering more automatic help to the poorest of today's pensioners.
    For most people, security in retirement depends on two pensions—the essential foundation of the basic state pension and an adequate second pension. Occupational pensions are one of the best ways of providing the second pension that people need in retirement. [HON. MEMBERS: "SERPS"] Unlike the previous Government, who were prepared to say goodbye to occupational pensions, we shall work with the pensions industry to examine ways in which the framework for occupational schemes can be strengthened and made more effective.
    We shall of course retain SERPS for those who wish to remain members of it. [HON. MEMBERS: "Hear, hear."] I got there, and I am sure that it was worth waiting for. We must continue to value the contribution that employers can make to their employees' security in retirement.
    The Government's aim is not to abolish the basic state pension but to establish the right balance between public and private provision. However, too many people, particularly those on low and modest incomes, find it difficult to find a second pension that gives good value for money, flexibility and security. There are many who cannot contribute to second pensions because of caring responsibilities. They contribute immensely to our society, but too many retire as a result on means-tested benefits. Our framework of stakeholder pensions will extend the opportunities to belong to a pension scheme that is flexible, secure, gives value for money and does not hit people's savings if they have a period out of work.
    We shall examine ways to use the structure of SERPS to provide better support for carers through a citizenship pension. Many of those without decent second pensions are women. Our action on pension sharing at the time of divorce is just one step—
    Mr. James Arbuthnot rose in his place and claimed to move, That the Question be now put.
    Question, That the Question be now put, put and agreed to.
    Question put accordingly, That the original words stand part of the Question:—
    The House divided: Ayes 190, Noes 353.

    Division No. 51]

    [10 pm

    AYES

    Ainsworth, Peter (E Surrey)

    Goodlad, Rt Hon Alastair

    Allan, Richard (Shef'ld Hallam)

    Gorman, Mrs Teresa

    Amess, David

    Gorrie, Donald

    Ancram, Rt Hon Michael

    Gray, James

    Arbuthnot, James

    Green, Damian

    Atkinson, David (Bour' mth E)

    Greenway, John

    Atkinson, Peter (Hexham)

    Grieve, Dominic

    Baldry, Tony

    Gummer, Rt Hon John

    Ballard, Mrs Jackie

    Hague, Rt Hon William

    Beggs, Roy (E Antrim)

    Hamilton, Rt Hon Sir Archie

    Beith, Rt Hon A J

    Hammond, Philip

    Bercow, John

    Hancock, Mike

    Beresford, Sir Paul

    Hawkins, Nick

    Blunt, Crispin

    Hayes, John

    Body, Sir Richard

    Heath, David (Somerton & Frome)

    Boswell, Tim

    Heathcoat-Amory, Rt Hon David

    Bottomley, Peter (Worthing W)

    Horam, John

    Bottomley, Rt Hon Mrs Virginia

    Howard, Rt Hon Michael

    Brady, Graham

    Howarth, Gerald (Aldershot)

    Brake, Thomas

    Hunter, Andrew

    Brand, Dr Peter

    Jack, Rt Hon Michael

    Brazier, Julian

    Jackson, Robert (Wantage)

    Breed, Colin

    Jenkin, Bernard (N Essex)

    Brooke, Rt Hon Peter

    Johnson Smith, Rt Hon Sir Geoffrey

    Browning, Mrs Angela

    Bruce, Ian (S Dorset)

    Keetch, Paul

    Bruce, Malcolm (Gordon)

    Key, Robert

    Burnett, John

    King, Rt Hon Tom (Bridgwater)

    Burns, Simon

    Kirkbride, Miss Julie

    Burstow, Paul

    Kirkwood, Archy

    Butterfill, John

    Laing, Mrs Eleanor

    Campbell, Menzies (NE Fife)

    Lansley, Andrew

    Cash, William

    Leigh, Edward

    Chapman, Sir Sydney (Chipping Barnet)

    Letwin, Oliver

    Lewis, Dr Julian (New Forest E)

    Chidgey, David

    Lidington, David

    Chope, Christopher

    Lilley, Rt Hon Peter

    Clappison, James

    Livsey, Richard

    Clark, Rt Hon Alan (Kensington)

    Lloyd, Rt Hon Sir Peter (Fareham)

    Clark, Dr Michael (Rayleigh)

    Loughton, Tim

    Clarke, Rt Hon Kenneth (Rushcliffe)

    Luff, Peter

    Lyell, Rt Hon Sir Nicholas

    Clifton-Brown, Geoffrey

    MacGregor, Rt Hon John

    Collins, Tim

    McIntosh, Miss Anne

    Colvin, Michael

    MacKay, Andrew

    Cormack, Sir Patrick

    Maclean, Rt Hon David

    Cran, James

    McLoughlin, Patrick

    Curry, Rt Hon David

    Madel, Sir David

    Davey, Edward (Kingston)

    Malins, Humfrey

    Davis, Rt Hon David (Haltemprice)

    Maples, John

    Davies, Quentin (Grantham)

    Mates, Michael

    Day, Stephen

    Maude, Rt Hon Francis

    Donaldson, Jeffrey

    Mawhinney, Rt Hon Dr Brian

    Dorrell, Rt Hon Stephen

    May, Mrs Theresa

    Duncan, Alan

    Merchant, Piers

    Duncan Smith, Iain

    Michie, Mrs Ray (Argyll & Bute)

    Evans, Nigel

    Moore, Michael

    Faber, David

    Moss, Malcolm

    Fabricant, Michael

    Nicholls, Patrick

    Fallon, Michael

    Norman, Archie

    Feam, Ronnie

    Öpik, Lembit

    Flight, Howard

    Ottaway, Richard

    Forsythe, Clifford

    Page, Richard

    Forth, Rt Hon Eric

    Paice, James

    Foster, Don (Bath)

    Paterson, Owen

    Fowler, Rt Hon Sir Norman

    Pickles, Eric

    Fox, Dr Liam

    Prior, David

    Fraser, Christopher

    Redwood, Rt Hon John

    Gale, Roger

    Rendel, David

    George, Andrew (St Ives)

    Robathan, Andrew

    Gibb, Nick

    Robertson, Laurence (Tewk'b'ry)

    Gill, Christopher

    Roe, Mrs Marion (Broxbourne)

    Gillan, Mrs Cheryl

    Rowe, Andrew (Faversham)

    1039

    Ruffley, David

    Townend, John

    Russell, Bob (Colchester)

    Tredinnick, David

    St Aubyn, Nick

    Trend, Michael

    Sanders, Adrian

    Tyler, Paul

    Sayeed, Jonathan

    Tyrie, Andrew

    Shephard, Rt Hon Mrs Gillian

    Viggers, Peter

    Shepherd, Richard (Aldridge)

    Walter, Robert

    Simpson, Keith (Mid-Norfolk)

    Wardle, Charles

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

    Webb, Professor Steve

    Smyth, Rev Martin (Belfast S)

    Wells, Bowen

    Soames, Nicholas

    Whitney, Sir Rayrnond

    Spelman, Mrs Caroline

    Whittingdale, John

    Widdecombe, Rt Hon Mss Ann

    Spicer, Sir Michael

    Wilkinson, John

    Spring, Richard

    Willetts, David

    Stanley, Rt Hon Sr John

    Willis, Phil

    Steen, Anthony

    Wilshire, David

    Stunell, Andrew

    Winterton, Mrs Ann (Congleton)

    Swayne, Desmond

    Winterton, Nicholas (Macclesfield)

    Syms, Robert

    Woodward, Shaun

    Tapsell, Sir Peter

    Yeo, Tim

    Taylor, Ian (Esher & Walton)

    Young, Rt Hon Sir George

    Taylor, John M (Solihull)

    Taylor, Matthew (Truro)

    Tellers for the Ayes:

    Taylor, Sir Teddy

    Mr. Oliver Heald and

    Temple-Morris, Peter

    Mr. Nigel Waterson.

    NOES

    Abbott, Ms Diane

    Casale, Roger

    Adams, Mrs Irene (Paisley N)

    Caton, Martin

    Ainger, Nick

    Cawsey, Ian

    Allen, Graham (Nottingham N)

    Chapman, Ben (Wirral S)

    Anderson, Donald (Swansea E)

    Chaytor, David

    Anderson, Janet (Rossendale)

    Chisholm, Malcolm

    Armstrong, Ms Hilary

    Church, Ms Judith

    Ashton, Joe

    Clapham, Michael

    Atherton, Ms Candy

    Clark, Rt Hon Dr David (S Shields)

    Atkins, Charlotte

    Clark, Dr Lynda (Edinburgh Pentlands)

    Austin, John

    Banks, Tony

    Clark, Paul (Gillingham)

    Barnes, Harry

    Clarke, Charles (Norwich S)

    Barron, Kevin

    Clarke, Rt Hon Tom (Coatbridge)

    Battle, John

    Clarke, Tony (Northampton S)

    Bayley, Hugh

    Clelland, David

    Beckett, Rt Hon Mrs Margaret

    Clwyd, Ann

    Begg, Miss Anne (Aberd'n S)

    Coaker, Vernon

    Bell, Stuart (Middlesbrough)

    Coffey, Ms Ann

    Benn, Rt Hon Tony

    Colman, Tony (Putney)

    Bennett, Andrew F

    Connarty, Michael

    Benton, Joe

    Cooper, Yvette

    Berry, Roger

    Corbett, Robin

    Best, Harold

    Corston, Ms Jean

    Betts, Clive

    Cousins, Jim

    Blackman, Liz

    Cranston, Ross

    Blears, Ms Hazel

    Crausby, David

    Blizzard, Bob

    Cryer, Mrs Ann (Keighley)

    Blunkett, Rt Hon David

    Cryer, John (Hornchurch)

    Boateng, Paul

    Cummings, John

    Borrow, David

    Cunliffe, Lawrence

    Bradley, Keith (Withington)

    Cunningham, Jim (Cov'try S)

    Bradley, Peter (The Wrekin)

    Cunningham, Rt Hon Dr John (Copeland)

    Bradshaw, Ben

    Brown, Rt Hon Nick (Newcastle E)

    Curtis-Thomas, Mrs Claire

    Brown, Russell (Dumfries)

    Dalyell, Tam

    Browne, Desmond (Kilmarnock)

    Darling, Rt Hon Alistair

    Burden, Richard

    Darvill, Keith

    Burgon, Colin

    Davey, Valerie (Bristol W)

    Butler, Christine

    Davidson, Ian

    Byers, Stephen

    Davies, Rt Hon Denzil (Llanelli)

    Caborn, Richard

    Davies, Geraint (Croydon C)

    Campbell, Alan (Tynemouth)

    Davies, Rt Hon Ron (Caerphilly)

    Campbell, Mrs Anne (C'bridge)

    Davis, Terry (B'ham Hodge H)

    Campbell, Ronnie (Blyth V)

    Dawson, Hilton

    Campbell-Savours, Dale

    Dean, Mrs Janet

    Cann, Jamie

    Denham, John

    Caplin, Ivor

    Dismore, Andrew

    1040

    Dobbin, Jim

    Johnson, Miss Melanie (Welwyn Hatfield)

    Dobson, Rt Hon Frank

    Donohoe, Brian H

    Jones, Barry (Alyn & Deeside)

    Doran, Frank

    Jones, Ms Fiona (Newark)

    Drew, David

    Jones, Jon Owen (Cardiff C)

    Drown, Ms Julia

    Jones, Dr Lynne (Selly Oak)

    Dunwoody, Mrs Gwyneth

    Jones, Martyn (Clwyd S)

    Eagle, Angela (Wallasey)

    Keeble, Ms Sally

    Edwards, Huw

    Keen, Alan (Feltham & Heston)

    Efford, Clive

    Keen, Mrs Ann (Brentford)

    Ellman, Ms Louise

    Kemp, Fraser

    Ennis, Jeff

    Kennedy, Jane (Wavertree)

    Etherington, Bill

    Khabra, Piara S

    Fatchett, Derek

    Kidney, David

    Field, Rt Hon Frank

    Kilfoyle, Peter

    Fisher, Mark

    King, Andy (Rugby & Kenilworth)

    Fitzpatrick, Jim

    King, Ms Oona (Bethnal Green)

    Flint, Caroline

    Kumar, Dr Ashok

    Flynn, Paul

    Ladyman, Dr Stephen

    Follett, Barbara

    Lawrence, Ms Jackie

    Foster, Rt Hon Derek

    Laxton, Bob

    Foster, Michael John (Worcester)

    Lepper, David

    Foulkes, George

    Levitt, Tom

    Fyfe, Maria

    Lewis, Ivan (Bury S)

    Galloway, George

    Lewis, Terry (Worsley)

    Gapes, Mike

    Liddell, Mrs Helen

    Gerrard, Neil

    Linton, Martin

    Gibson, Dr Ian

    Livingstone, Ken

    Godman, Dr Norman A

    Lloyd, Tony (Manchester C)

    Godsiff, Roger

    Love, Andrew

    Goggins, Paul

    McAvoy, Thomas

    Golding, Mrs Llin

    McCabe, Stephen

    Gordon, Mrs Eileen

    McCafferty, Ms Chris

    Grant, Bernie

    McCartney, Ian (Makerfield)

    Griffiths, Jane (Reading E)

    McDonagh, Siobhain

    Griffiths, Nigel (Edinburgh S)

    Macdonald, Calum

    Griffiths, Win (Bridgend)

    McDonnell, John

    Grocott, Bruce

    McGuire, Mrs Anne

    Grogan, John

    McKenna, Ms Rosemary

    Gunnell, John

    Mackinlay, Andrew

    Hain, Peter

    McNamara, Kevin

    Hall, Mike (Weaver Vale)

    McNulty, Tony

    Hall, Patrick (Bedford)

    MacShane, Denis

    Hanson, David

    Mactaggart, Fiona

    Harman, Rt Hon Ms Harriet

    McWalter, Tony

    Heal, Mrs Sylvia

    McWilliam, John

    Healey, John

    Mahon, Mrs Alice

    Henderson, Ivan (Harwich)

    Mallaber, Judy

    Hepburn, Stephen

    Mandelson, Peter

    Heppell, John

    Marek, Dr John

    Hesford, Stephen

    Marsden, Paul (Shrewsbury)

    Hewitt, Ms Patricia

    Marshall, David (Shettleston)

    Hill, Keith

    Marshall, Jim (Leicester S)

    Hodge, Ms Margaret

    Marshall-Andrews, Robert

    Hoey, Kate

    Martlew, Eric

    Home Robertson, John

    Meacher, Rt Hon Michael

    Hood, Jimmy

    Meale, Alan

    Hoon, Geoffrey

    Merron, Gillian

    Hope, Phil

    Michael, Alun

    Hopkins, Kelvin

    Michie, Bill (Shef'ld Heeley)

    Howarth, Alan (Newport E)

    Milburn, Alan

    Howarth, George (Knowsley N)

    Mitchell, Austin

    Howells, Dr Kim

    Moffatt, Laura

    Hoyle, Lindsay

    Moran, Ms Margaret

    Hughes, Ms Beverley (Stretford)

    Morgan, Ms Julie (Cardiff N)

    Hughes, Kevin (Doncaster N)

    Morgan, Rhodri (Cardiff W)

    Humble, Mrs Joan

    Morley, Elliot

    Hurst, Alan

    Morris, Ms Estelle (B'ham Yardley)

    Hutton, John

    Morris, Rt Hon John (Aberavon)

    Iddon, Dr Brian

    Mountford, Kali

    Illsley, Eric

    Mudie, George

    Ingram, Adam

    Mullin, Chris

    Jackson, Ms Glenda (Hampstead)

    Murphy, Denis (Wansbeck)

    Jackson, Helen (Hillsborough)

    Murphy, Jim (Eastwood)

    Jamieson, David

    Murphy, Paul (Torfaen)

    Jenkins, Brian (Tamworth)

    Naysmith, Dr Doug

    1041

    Norris, Dan

    Smith, John (Glamorgan)

    O'Brien, Bill (Normanton)

    Smith, Llew (Blaenau Gwent)

    O'Brien, Mike (N Warks)

    Snape, Peter

    O'Hara, Edward

    Soley, Clive

    Olner, Bill

    Spellar, John

    O'Neill, Martin

    Squire, Ms Rachel

    Organ, Mrs Diana

    Starkey, Dr Phyllis

    Osborne, Mrs Sandra

    Steinberg, Gerry

    Pearson, Ian

    Stevenson, George

    Pendry, Tom

    Stewart, David (Inverness E)

    Pickthall, Colin

    Stewart, Ian (Eccles)

    Pike, Peter L

    Stinchcombe, Paul

    Plaskitt, James

    Stoate, Dr Howard

    Pollard, Kerry

    Stott, Roger

    Pope, Greg

    Strang, Rt Hon Dr Gavin

    Pound, Stephen

    Straw, Rt Hon Jack

    Prentice, Ms Bridget (Lewisham E)

    Stringer, Graham

    Prentice, Gordon (Pendle)

    Stuart, Ms Gisela (Edgbaston)

    Prescott, Rt Hon John

    Sutcliffe, Gerry

    Primarolo, Dawn

    Taylor, Rt Hon Mrs Ann (Dewsbury)

    Prosser, Gwyn

    Purchase, Ken

    Taylor, David (NW Leics)

    Quin, Ms Joyce

    Taylor, Rt Hon John D (Strangford)

    Quinn, Lawrie (Scarborough)

    Thomas, Gareth (Clwyd W)

    Radice, Giles

    Thomas, Gareth R (Harrow W)

    Rammell, Bill

    Timms, Stephen

    Rapson, Syd

    Tipping, Paddy

    Raynsford, Nick

    Todd, Mark

    Reid, Dr John (Hamilton N)

    Touhig, Don

    Robertson, Rt Hon George (Hamilton S)

    Trickett, Jon

    Turner, Dennis (Wolverh'ton SE)

    Robinson, Geoffrey (Cov'try NW)

    Turner, Dr George (NW Norfolk)

    Roche, Mrs Barbara

    Twigg, Derek (Halton)

    Rogers, Allan

    Twigg, Stephen (Enfield)

    Rooker, Jeff

    Vaz, Keith

    Rooney, Terry

    Vis, Dr Rudi

    Ross, Ernie (Dundee W)

    Watts, David

    Rowlands, Ted

    White, Brian

    Roy, Frank

    Whitehead, Dr Alan

    Ruane, Chris

    Wicks, Malcolm

    Ruddock, Ms Joan

    Williams, Rt Hon Alan (Swansea W)

    Ryan, Ms Joan

    Salter, Martin

    Williams, Alan W (E Carmarthen)

    Savige, Malcolm

    Williams, Mrs Betty (Conwy)

    Sawford, Phil

    Wills, Michael

    Sedgemore, Brian

    Winnick, David

    Sheerman, Barry

    Winterton, Ms Rosie (Doncaster C)

    Sheldon, Rt Hon Robert

    Wise, Audrey

    Shipley, Ms Debra

    Wood, Mike

    Simpson, Alan (Nottingham S)

    Woolas, Phil

    Singh, Marsha

    Wray, James

    Skinner, Dennis

    Wright, Dr Tony (Cannock)

    Smith, Rt Hon Andrew (Oxford E)

    Wright, Tony D (Gt Yarmouth)

    Smith, Angela (Basildon)

    Wyatt, Derek

    Smith, Rt Hon Chris (Islington S)

    Smith, Miss Geraldine (Morecambe & Lunesdale)

    Tellers for the Noes:

    Mr. Jim Dowd and

    Smith, Jacqui (Redditch)

    Mr. Robert Ainsworth.

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
    MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House condemns the failure of the last Government to foster security in retirement lot either today's pensioners or pensioners of the future; supports the present Government's objective of a decent income for all in retirement; believes that the best way to achieve this is by developing second pensions building on the foundation of the basic state pension; commends the Government's decisive action on the past mis-selling of private pensions; endorses the measures taken in the Budget, particularly the reforms to corporation tax, which will help to create a climate encouraging higher investment and a higher sustainable growth rate increasing the capacity of the economy to support decent pensions; supports the Government's welfare-to-work proposals, which will improve the employment opportunities for thousands of people, enabling them to save for their own retirement; and welcomes the Government's commitment to review pensions and achieve security in retirement for all.

    DELEGATED LEGISLATION
    Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
    DELEGATED LEGISLATION

      SOCIAL SECURITY
      That the draft Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) Amendment Regulations 1997, which were laid before this House on 24th June, be approved.—[Mr. Kevin Hughes.]
      Question agreed to.

    PARLIAMENTARY PRIVILEGE
    Resolved,
    That it is desirable that a Joint Committee of both Houses be appointed to review Parliamentary Privilege and to make recommendations thereon.—[Mr. Kevin Hughes.]

  PETITIONS

    Dedham Vale
    10.18 pm
    Mr. Bernard Jenkin: This petition is presented—[Interruption.]
    Mr. Deputy Speaker (Mr. Michael J. Martin): Order. There must be no conversations in the Chamber while an hon. Member is presenting a petition.
    Mr. Jenkin: The petition represents the views of the ordinary voters of Dedham Vale, who are threatened by the erection of telecommunications masts in their historic landscape—a landscape immortalised in the paintings of John Constable and deserving protection. Several hundred signatures are hereto attached:
    "Wherefore your Petitioners pray that your Honourable House should urge the Secretary of State to ensure that DOE planning guidance for the protection of the natural heritage should take precedence over mobile telecommunications development; and further urges the Secretary of State for the Environment to be prepared to overturn the Inquiry Inspector's decision in respect of the above application, to ensure the protection of the historic landscape of Dedham Vale."
    To lie upon the Table.

    Ongar War Memorial Hospital
    10.19 pm
    Mr. Eric Pickles: This petition concerns the fate of the Ongar War Memorial hospital in my constituency. The hospital was built entirely by the good people of Ongar as a permanent memorial and living tribute to those who died in the first world war. The petition states:
    The Petition of residents within the constituency of Brentwood and Ongar declare that they object to the proposals of the Essex and Herts community NHS trust to cease inpatient treatment within the Ongar War Memorial hospital, and the removal of all its beds.
    The Petitioners therefore request that this House of Commons urge the Secretary of State for Health to review the proposals of the community trust.
    And the Petitioners remain, etc.
    The petition is signed by more than 5,200 people, which represents the bulk of the people of Ongar.
    To lie upon the Table.

  James Miles and Paul Loseby
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kevin Hughes.]
  10.20 pm
  Mr. Keith Vaz: I thank you, Mr. Deputy Speaker, for allowing me to raise in Parliament the important case of the detention in Venezuela of two young people from my constituency. I welcome and am grateful for this opportunity to speak on behalf of my constituents and their families, who are presently undergoing a great deal of suffering, anxiety and distress.
  Anyone who doubts the significance of Adjournment debates should take heart from their effectiveness in prompting urgent action. Just five hours ago, my office was telephoned by the Foreign Office and given dramatic new information on the case, to which I shall refer shortly.
  Some hon. Members will remember the media coverage of the detention of two men, James Miles, aged 18, of Hungerton boulevard, Leicester, and Paul Loseby, aged 20, of Greenwood road, Leicester, at Caracas airport on 4 November last year. That is how I first heard of the case. Somewhat alarmingly, Paul's mother, Mrs. Wendy Loseby, also heard of her son's arrest through a news bulletin rather than from official sources.
  The young men were on their way back from a holiday when they were apprehended with 10 kg of cocaine strapped to their chests. James and Paul say that they were frightened and distraught. On international television they said that they were forced to carry the drugs after a man put a gun to their heads near a gate of the airport terminal. The two young men insist that they approached airport customs officers to tell them about the drugs and how they came to be on their person, but due to a misunderstanding resulting from the language barrier, they were arrested and have been detained ever since.
  One can imagine the distress and trauma that the families of those young men have undergone during the past eight months. Steven and Georgina Miles and Graham and Wendy Loseby are respectable, ordinary, decent, hard-working people who have found themselves in a position totally beyond their comprehension. It is a nightmare for them. They have no access to large sums of money or experience of media attention. They were not prepared for, and never anticipated, facing a problem remotely of that proportion in this country, let alone on the other side of the world. The stress on the whole family arising from that unhappy situation cannot be quantified.
  Today, in a dramatic and astonishing turn of events, my office received a call at 4 pm from Mr. Danny Woodyear in the Foreign Office, to be told that, on 2 July, James and Paul were sentenced to four years for possession of drugs, but not for trafficking.
  On the face of it, that seems to be consistent with the version of events that they described. Neither the parents nor the Foreign Office were informed that that remarkable system of justice allowed for a sentence without a trial. We have not received confirmation that a trial took place with the defendants present.
  I wonder what the Minister of State will make of those developments when he replies to the debate. We have been told that an appeal must be lodged, and that it will

  1045
  take two months to progress the appeal. None of that information was communicated to the parents until this afternoon.
  The Mileses must find money each week for food for the young men. Whereas other inmates have families who bring food by hand into the prison, as is the custom in Venezuela, the Mileses and the Losebys are not in a position to do that, and must rely on expensive and not always reliable alternatives.
  As one can imagine, the strain on resources and on the families' physical and mental health is tremendous. In addition, there is the far greater expense of fees for lawyers dealing with the case. Worse than all that is the uncertainty, the not knowing, and the waiting, day in, day out, to hear whether there has been any progress or development in the case. Unlike the practice in our system of justice, Paul and James did not have to return to court. Bizarrely, their parents were not even told that they had to face a trial.
  Over the past eight months, I have been involved in campaigning—first, to get as much information as possible, and secondly, to have those young people brought to this country, for their own sake and for the sake of their families. I pay tribute tonight to Mr. and Mrs. Miles and Mr. and Mrs. Loseby, who have worked in a united and disciplined way. I also pay tribute to Charlotte Seebohm, Steve Evison and Bishop Bill, all of whom have been involved in the campaign.
  Under the previous Government, I secured meetings with the then Foreign Office Minister, the hon. Member for Woodspring (Dr. Fox), and the Home Office Minister, the former Member for Leeds, North-East, to pursue various measures that might alleviate the young men's conditions and secure justice, and in particular on the issue of repatriation. Ironically, until the men are sentenced, they are not regarded as prisoners, and so cannot be repatriated.
  I paid for Mr. Miles senior to visit Venezuela to see his son and his son's friend, to try to secure a lawyer and to meet officials there. A shocked Mr. Miles described his son's living conditions as a cell 30 ft by 30 ft—roughly the size of two sitting rooms—open to the air, with 73 people currently living in it. There is a hole in one corner for the toilet. Water is sometimes turned off, often for a week at a time.
  Until Mr. Miles bought some sort of mattress, the young men were sleeping on a concrete floor. The place is infested with vermin and cockroaches. Paul and James are covered in flea and mosquito bites, have lice and have had scabies. There is a great deal of fighting in the cell. Paul and James have never had exposure to or experience of such hardships. One can scarcely imagine the physical and psychological effects of having to live in such an environment.
  I have twice met the Venezuelan ambassador. On the second occasion, I was accompanied by both sets of parents. Much to our surprise, the ambassador arranged a telephone call to enable the parents to speak to the sons. The ambassador was extremely helpful, and seemed sympathetic to the idea of repatriation. However, further progress would require some general agreement of an internationally legally binding nature. In the case of Thailand, for example, such an agreement is already in place, and since 1991 has allowed for the repatriation to the United Kingdom of 30 prisoners, most of whom were involved in drugs-related offences.
  1046
  Although the ambassador subsequently called on me at my office in the House, and although I do not doubt his sincerity or concern, that has not been reflected in the attitude, actions and deeds, or lack of them, by the legal system in Venezuela.
  On 22 May 1997, I received answers from the Minister of State, Foreign and Commonwealth Office, who stated that the British Government had approached the Venezuelan Government about accession to the Council of Europe convention on the transfer of sentenced persons, and are still awaiting the Venezuelans' reply.
  Government policy is that, on humanitarian grounds, prisoners should be able to serve their sentences in their own countries. Venezuela is a highly unstable country, both politically and economically. In 1996, inflation was 103 per cent., and economic pressures of that magnitude have, in turn, led to a great deal of unrest. There have been several failed attempts at military coups in the past few years.
  Venezuela's human rights record is also dubious—most notoriously in the prison and police services. In prisons, there are frequent instances of torture to obtain confessions, corruption and appalling overcrowding. Last year's Amnesty International report states:
  "Prison conditions continued to deteriorate and often amounted to cruel, inhuman or degrading treatment. Although the government acknowledged the lack of security for prison inmates, serious overcrowding and extremely poor sanitary conditions, they failed to act to reform the prison system."
  A press report from November 1996 states that, since 1992, 360 prisoners have died in custody. In January 1994, 100 prisoners died during a riot and a fire at Sabaneta prion, Maracaibo, and, more recently, in October 1996, 30 prisoners were burnt to death at the notorious La Planta gaol in Caracas.
  James Miles and Paul Loseby are currently being held in a detention centre, La Vega, rather than a prison, thanks to initial pressure placed on the Venezuelan authorities. I record my gratitude, and that of their parents, that they were not transferred to La Planta. However, as I have already informed the House, the young men are still held in severely overcrowded conditions, with no separation of prisoners according to the severity of their alleged crimes or any other rational grounds. If the young men were to be transferred to the even worse prison conditions, I would seriously question their ability to survive such an ordeal.
  May I say at this point that I—together with, I am sure, every hon. Member—categorically condemn any use of drugs, trafficking or dealing of any sort. Those responsible should be punished severely for their inexcusable activities and for the devastating effects that drugs have on people's lives and on society as a whole. I condemn wholeheartedly such practices in any circumstances for whatever reason, and agree, in principle, that sentences should be tough and that strong deterrent measures must be enforced worldwide.
  Mr. and Mrs. Miles and Mr. and Mrs. Loseby also condemn drug dealing, but they categorically maintain that their sons are innocent victims in the real crime that has clearly been committed. These young men, who were on holiday in a foreign land far from home, were allegedly held at gunpoint and made to carry drugs against their will. However, as we have seen in numerous cases of miscarriage of justice, the relevant authorities consider that they have solved this case by arresting the two young men.

  1047
  The real criminals not only go unpunished, but remain free to continue their evil work and to ruin more lives. Whatever the precise nature of James's and Paul's involvement, it is crystal clear that extremely sinister forces remain at large and in the shadows. As these two young men fester and rot in a detention centre, evil and wicked people continue their multi-billion dollar trafficking in death, amid the apparent indifference of self-satisfied authorities who appear to have selected their sacrificial victims.
  What can the British Government do? I am delighted to see the Minister of State on the Front Bench this evening, as I know that he takes these matters very seriously. It is time to put an end to the weeks and months of waiting and not knowing because of the bureaucratic lethargy and inefficiency of the Venezuelan judicial system. It is time to act, and to fight for justice for the families of the young men.
  Was their trial free and fair, with proper legal representation and translation? Now that the trial has apparently taken place —bizarre though the circumstances were—can the Government try to ensure that the young men are repatriated promptly to serve their time in a British gaol? Like his predecessors, I hope that the Minister will exert as much diplomatic pressure as possible on the Venezuelan authorities to ensure that the matter progresses.
  Pressure for the judicial system to speed up its handling of this case will be extremely helpful. The waiting is adding to the distress of the families, not to mention the financial burden that they are ill equipped to shoulder. As I have said, conditions are bad, and the health of both young men and their families has been chronically affected.
  The fact that James and Paul have apparently been tried and sentenced makes the repatriation agreement all the more urgent We need pressure, pending the formalisation of an agreement, to allow the young people to be repatriated to serve their sentence in Britain. In the meantime, we need to see improved input from the consular section of the British embassy. It is not good enough to have to wait seven days to be told that the trial has taken place.
  There is no way in which the family can continue to support the young men in the way that they have until now. I must tell the House that, if there is no tangible progress within the next three weeks, as soon as practicable after Parliament rises I shall go to Venezuela myself to see the young men, assess their conditions, meet the lawyers acting on their behalf, and exert whatever pressure I can on the relevant authorities in Caracas. I shall, of course, do so only after consulting my hon. Friend, and only if he and the parents feel that my visit will be helpful.
  This country enjoys good relations with Venezuela. That fact alone should be an advantage in our attempt to get an acceptable solution to this problem. We should rely on our allies to act fairly with our citizens, as we most clearly do with theirs.
  Surely it is against the principle of natural justice that two families should also be punished with their children. We recognise that British citizenship does not confer
  1048
  immunity in terms of committing an offence overseas, and nor should it, but at the same time the Government have an absolute obligation to their citizens who face difficulties overseas. Whatever the cause or circumstances, one also feels that the terms and conditions of detention and punishment should be broadly commensurate with what we now generally hold to be minimal standards for the treatment of any human being, irrespective of his or her offence.
  This is a matter of human rights that transcends questions of frontier or nationality. There are many victims of such appalling circumstances in Venezuela, and numerous other countries, about whom, sadly, we can do absolutely nothing. In the case of young James Miles and Paul Loseby, there is something that we can do.
  I have attempted to outline a course of action tonight. I sincerely hope that the new Government will take notice and respond.
  10.37 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Derek Fatchett): I am grateful to my hon. Friend the Member for Leicester, East (Mr. Vaz) for bringing this matter to the attention of the House. The case of James Miles and Paul Loseby involves drug-related issues. I should like to take the opportunity to state at the outset in the strongest possible terms that the Government are fully committed to the fight against drugs, and will do all they can to stamp out the evil of international drug trafficking. We will co-operate with any country that shares that commitment.
  I very much welcome my hon. Friend's comments on that point. He was right to talk about the evil of drugs and the way in which drugs have damaged, indeed ruined, the lives of so many young people. Both of us will know from our constituencies the way in which drugs operate as a social evil.
  I also welcome this opportunity to record the actions of the Foreign and Commonwealth Office in this case. I shall first outline our knowledge of the case to date and refer to the help that we have provided for Mr. Miles, Mr. Loseby and their families. I should also put it on record that we respect my hon. Friend's strong commitment to his constituents. His support will mean a great deal to the families concerned.
  The facts are as follows, James Miles and Paul Loseby were arrested at Caracas airport on 4 November last year as they were about to board a flight. They were found to have 10 kg of cocaine strapped around their waists. They claimed that a man with whom they had been socialising had threatened to shoot them if they refused to carry the cocaine. Mr. Miles and Mr. Loseby were subsequently charged with drug trafficking. They were found guilty of possession of drugs, and they have been sentenced to four years' imprisonment.
  The British embassy in Caracas was told on 6 November by the Venezuelan police about the arrest of two—I stress unnamed—British citizens. Consular staff sought immediate access, which was granted on the afternoon of 7 November.
  The consular division of the Foreign and Commonwealth Office contacts families of British nationals who are detained overseas as soon as they have enough information to enable them to do so. In this case

  1049
  the Venezuelan authorities allowed local television and press access to the young men before the consular visit took place. That, as my hon. Friend said, was deplorable. As a result, stories of their arrest appeared before the consular division was aware of the full facts. This pre-empted a call to the families from consular staff in London.
  The press stories created confusion, because mistakes were made in reporting the names and ages of the detainees. A consular officer in Caracas established the real identities of Mr. Miles and Mr. Loseby during the visit on 7 November. The House might be interested to know that Mr. Loseby was travelling on a passport in the name of Paul Richard Clark, which added to the consular confusion.
  Consular staff cannot guarantee that they will always be able to alert families of detainees before the stories hit the newspapers. Sometimes the detainees do not want the Foreign Office, or in some cases even their families, to be informed. For reasons of consular privacy, we cannot inform families unless we have been spoken to and obtained permission of the detainee.
  What is the role of our consular services? The job of our consular staff in Venezuela is to ensure that Mr. Miles and Mr. Loseby have access to a lawyer; that they know their legal position and have information about the legal and prison system; that they receive the same level of treatment as other prisoners and are not discriminated against in any way; and that any medical problems are dealt with quickly. Any complaint of ill treatment is taken up, and will be taken up, vigorously with the police or prison authorities.
  Our staff can, and will, pass messages and money for prison comforts from their families. The welfare of British prisoners is a high priority for the Government. We are acutely aware that the needs of their families are important, too. We help them as far as possible to keep in regular contact with the prisoners.
  It is important to stress that our role is essentially humanitarian. We do not provide legal advice. It is for the Venezuelan courts to decide whether Mr. Miles and Mr. Loseby are guilty of drug trafficking. Mr. Miles and Mr. Loseby have been encouraged to take legal advice to help them with their defence and to guide them through their trial. We now, of course, know the result of that process.
  So much for our actions in Venezuela. At home, as my hon. Friend will know, the families of Mr. Miles and Mr. Loseby called on our consular division in London in November 1996. They spoke at length with the officials responsible for the welfare of Mr. Miles and Mr. Loseby, and, together with my hon. Friend, met the head of consular division, who explained fully the role of the Foreign and Commonwealth Office.
  I am pleased to say that Mr. Miles's father visited his son and Mr. Loseby at La Vega in November 1996. Consular staff in Caracas helped him by meeting him at the airport, arranging his accommodation, providing transport to La Veda, and gaining him extra access to the prisoners. Consular staff in London helped to secure a grant for Mr. Loseby from the Royal British Legion for possible medical expenses.
  My hon. Friend made strong reference to the legal proceedings. Mr. Miles and Mr. Loseby initially employed a lawyer, who had been selected and paid for
  1050
  by Mr. Miles's father. They were unhappy with the progress the lawyer was making, and chose a different one, who was officially assigned to their case by the court in April. This change of lawyer caused further delay in the already lengthy legal proceedings. But Mr. Miles, Mr. Loseby and their families did not ask the British embassy or the consular division to apply pressure to expedite the proceedings.
  Mr. Vaz: I am astonished to hear that, because Mr. Miles and his wife and Mr. and Mrs. Loseby have been in constant contact with the Foreign Office to try to ensure that the case is progressed. I have brought this matter to the attention of the House because of that pressure.
  My hon. Friend mentioned the legal proceedings. He and his colleagues, including the Foreign Secretary, have made an outstanding start in the Foreign Office. One of the great principles of the new Administration is that morality should underlie Britain's foreign policy. Does the Minister believe that it is morally or legally right for defendants to be sentenced in a foreign country that is an ally of Britain after a trial at which they were not present? Is that a proper way for the legal system to operate?
  Mr. Fatchett: I am grateful to my hon. Friend for his comments on the new Labour Government's foreign policy. They will be well received by my right hon. Friend the Foreign Secretary: he will be delighted to know that we are gaining support from my hon. Friend and in many other places.
  My hon. Friend referred to prison conditions in Venezuela, and perhaps I could comment on that.
  Mr. Vaz: My hon. Friend has charmingly taken the compliments, but has not answered my question. My concern is not about prison conditions in Venezuela, but about the fact that my constituents, who are British citizens, have been sentenced without attending a trial. How can it be right for the Government to allow a friendly country to sentence our citizens when they were not even present at their trial?
  Mr. Fatchett: I shall deal with that point. If my hon. Friend waits a moment, he will get the answer to his question.
  I accept what my hon. Friend said about prison conditions in Venezuela, which are extremely difficult. They fall some way short of what we consider acceptable. We have complained about this to the Venezuelan authorities, and, together with our European Union partners, have pressed for improvements in prison conditions. Mr. Miles and Mr. Loseby believe that the La Vega police cells, where they are currently held, provide a safer and more comfortable environment than any of the Venezuelan prisons.
  Under Venezuelan law, the young men should have been sent to a prison within eight days of their arrival in La Vega. However, our ambassador in Caracas persuaded the Venezuelan authorities, on behalf of the two accused persons, that they should be kept in La Vega until a verdict was reached. The time that they have spent in La Vega will count towards their sentence, which was recently announced.

  1051
  Our embassy in Caracas has remained in regular and almost daily contact with Mr. Lyon, Mr. Miles and Mr. Loseby's current lawyer. Our ambassador undertook to provide consular staff in Venezuela with reports of developments in the case. On 5 May, he anticipated that a verdict might be reached in a matter of months, but he stressed that that was only an estimate, and we now know that events have moved on.
  I shall deal with the two important issues to which my hon. Friend referred. The embassy contacted the court, and the court has confirmed that both men were found not guilty of trafficking in drugs, but guilty of possession. They have been sentenced to four years in prison. Venezuelan law allows for a sentence of four to six years. We immediately advised Mrs. Miles, and left messages with my hon. Friend's paging service.
  Mr. Vaz: Today.
  Mr. Fatchett: That is when we received the information. We have been unable to contact Mr. and Mrs. Loseby: we have been told that they are on holiday.
  1052
  Both men intend to appeal, and efforts are being made to ensure that they remain at La Vega until the appeal has been heard.
  My hon. Friend referred to due process. We would be unhappy if due process in Venezuela was not being followed in the way that we consider to conform to universal standards, and we have made that point.
  My hon. Friend spoke of the need to establish whether it was possible for the two convicted citizens to be returned to the United Kingdom. As he knows, we have pressed the Venezuelan Government to join the Council of Europe convention for the transfer of convicted persons, and we will continue to press the point. We hope that the Venezuelans will listen to our argument, and that it will then be possible for the two to return to the United Kingdom to finish their sentences.
  I hope that I have dealt with my hon. Friend's points. This is a difficult case—I understand all the difficulties—but, as my hon. Friend said, drug taking and drug trafficking are awful businesses, and we must all be very vigilant.
  Question put and agreed to.
  Adjourned accordingly at ten minutes to Eleven o'clock.

PRESIDENT OF THE COUNCIL

  Privy Council
  Mr. Mitchell
  To ask the President of the Council if she will list the names of those who have resigned from the Privy Council since 1967, indicating the reasons they have given. [6481]

  Mrs. Ann Taylor
  Since 1967, Mr. John Stonehouse and Mr. Jonathan Aitken have asked for their names to be removed from the list of Privy Counsellors. In both cases, the reasons given were personal.

HOUSE OF COMMONS

  Council of Europe
  Mr. David Atkinson
  To ask the President of the Council if she will arrange for the yellow Demand Form for European Printed Papers to include reports, recommendations, resolutions and orders adopted by the Parliamentary Assembly of the Council of Europe. [7105]

  Mrs. Ann Taylor
  The yellow Demand Form lists only titles which are held in stock in the Vote Office. Stocks of publications from the Council of Europe are not held but copies may be ordered through the Vote Office by use of the green Demand Form. Reference copies of many such publications are held in the House of Commons Library.

  Division Lobbies (Alterations)
  Mr. Forth
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what was the cost of the alterations to the division lobbies. [6948]

  Mr. Kirkwood
  The total cost of the alterations to the division lobbies was sonic £2,500.

HOME DEPARTMENT

  Electoral Register
  Mr. Barnes
  To ask the Secretary of State for the Home Department how many complaints(a) his Department and (b) electoral registration offices received from those whose names did not appear on registration lists for the last General Election; and if he will make a statement. [6020]
  466
  Mr. George Howarth
  [holding answer 1 July 1997]: (a) We have received around 400 complaints about non-registration for the last General Election. (b) Information on the number of complaints received by electoral registration officers is not compiled centrally and could be obtained only at disproportionate cost.

  Mr. Barnes
  To ask the Secretary of State for the Home Department what estimate he has made of the number of homeless people who fail to qualify for electoral registration because of the residence requirement; and if he will make a statement. [6013]

  Mr. Howarth
  [holding answer 1 July 1997]: Information on the number of homeless people who are not included on the electoral register is not available. The guidance issued to electoral registration officers makes it clear that no one should be denied the right to register simply because they are homeless. Although an elector must be registered at an address at which he or she is resident, that address need not be a conventional one.

  Altcourse Prison
  Mrs. Curtis-Thomas
  To ask the Secretary of State for the Home Department if category A prisoners will be housed in Altcourse Prison. [7046]

  Ms Joyce Quin
  It is planned that Altcourse prison, Liverpool, will house up to 25 category A prisoners.

  Young Offenders
  Ms Kelly
  To ask the Secretary of State for the Home Department how many persistent young offenders in Bolton, West he estimates will be affected by the Government's plans for fast-track punishment. [6474]

  Mr. Michael
  It is not possible to give an estimate of how many persistent young offenders in Bolton, West will be affected by the Government's commitment to halving the time between arrest and sentence for persistent young offenders. We are taking early action to encourage all youth agencies to deal with cases more speedily and will be monitoring progress in achieving this aim.

  We also believe that certainty and speed of outcome will send a clear message which will help deter some youngsters from offending. We are also encouraging the police and local authorities together to assess accurately the level of crime and disorder affecting the public in their area as a basis for a strategic partnership. It is hoped that this will provide a more accurate assessment of youth crime than basing a local estimate on an extrapolation from national averages.

  Mr. Rendel
  To ask the Secretary of State for the Home Department what plans he has to expand the number of non-custodial schemes to divert convicted youths from further crime. [5544]

  Mr. Michael
  [holding answer 7 July 1997]: It is the Government's policy to "nip things in the bud" with young offenders. For example, we have signalled an intention that offenders will be punished by ending the practice of repeat police cautions, introducing a new Final Warning which will trigger effective intervention by the new locally based Youth Offender Teams.
  467
  We will require the police and local authorities to identify local problems of crime and disorder and to develop a strategy to tackle local problems. This will build on best practice in preventing crime and diverting young offenders from further offending.

  We will also introduce reparation orders and a new action plan order and will introduce Youth Offender Teams to plan and supervise community sentences aimed at changing offending behaviour.

  Police Act 1997
  Mr. Beith
  To ask the Secretary of State for the Home Department when he plans to implement Part III of the Police Act 1997. [6926]

  Mr. Michael
  We will implement these provisions as quickly as possible, but a number of issues need to be addressed first. In particular, Part III cannot be implemented until a code of practice has been approved by Parliament. I hope to announce shortly the start of a consultation exercise on a draft of the code.

  Rohypnol
  Mr. Beith
  To ask the Secretary of State for the Home Department what evidence he has evaluated of the illegal use of the drug Rohypnol; and what plans he has to warn people of the dangers of this drug. [6920]

  Mr. George Howarth
  Rohypnol (which is the proprietary name for the benzodiazepine drug flunitrazepam) is controlled under the Misuse of Drugs Act 1971 as a Class C drug. Statistical data on seizures and offenders and on those presenting for treatment do not separately identify Class C drugs, but there is anecdotal evidence of the misuse of flunitrazepam in Scotland and in the London area. There were three police seizures of the drug reported to the Forensic Science Service in 1996 which implies that there is little flunitrazepam misuse in the United Kingdom.

  In accordance with a decision by the United Nations Commission on Narcotic Drugs to control flunitrazepam more tightly under the United Nations Convention on Psychotropic Substances 1971, we intend bringing forward later this year amendments to the Misuse of Drugs Regulations 1985 to increase the controls on the drug in the United Kingdom.

  Government funded publicity campaigns about the risks of drug misuse warn of the dangers associated with the benzodiazepines, such as valium and temazepam, generally. There are no current plans to highlight this particular drug within these campaigns.

  Attendance Centres
  Mr. Beith
  To ask the Secretary of State for the Home Department what plans he has to improve the facilities in attendance centres. [6921]

  Mr. Michael
  Attendance centres are operated from accommodation rented from local authorities, usually schools, with the centre making use of the facilities available at the location. The Officer in Charge of the centre can apply to the Home Office for funds to purchase additional equipment to ensure that the centre is able to offer a constructive and challenging regime.

  CS Gas
  Mr. Beith
  To ask the Secretary of State for the Home Department what plans he has to review the guidance given to the police on the use of CS gas. [6923]

  Mr. Michael
  We will review guidance to chief officers on the use of CS for dealing with public disorder in the light of any proposals resulting from current consideration of the subject by the Association of Chief Police Officers (ACPO). Guidance to chief police officers on the use of CS spray for self-defence is issued by ACPO, which keep it under continuous review.

  Urban Disturbances
  Mr. Sheerman
  To ask the Secretary of State for the Home Department how many serious youth-led urban disturbances have occurred in the United Kingdom in the past 10 years; and when and where each such disturbance occurred. [7049]

  Mr. Michael
  The information is not available in the form requested. The available information indicates that serious disturbances have occurred at:

  Location

  Date

  Wellington

  12 August 1991

  Cardiff

  30 August–3 September 1991

  Oxford

  30 August–4 September 1991

  Handsworth

  2 September 1991

  North Shields

  9 September 1991

  Bristol

  12 September 1991

  Harlesden, London

  27 April 1992

  Coventry

  12–14 May 1992

  Coventry

  22–24 May 1992

  Stockton

  14–16 June 1992

  Salford

  2–6 July 1992

  Luton

  6–8 July 1992

  Bristol

  16–17 July 1992

  Carlisle

  21 July 1992

  Burnley

  19–23 July 1992

  Blackburn

  22–23 July 1992

  Huddersfield

  22–23 July 1992

  London

  30 January 1993

  Welling

  8 May 1993

  Lincoln

  3–4 June 1993

  Whitechapel, London

  10 September 1993

  Welling

  16 October 1993

  London

  15 January 1994

  Nottingham

  15 January 1994

  Downing Street, London

  24 July 1994

  Leeds

  15 October 1994

  Hyde Park, London

  9 October 1994

  Westminster, London

  19 October 1994

  Bradford

  9–11 June 1995

  Luton

  5–6 July 1995

  Leeds

  10–11 July 1995

  Trafalgar Square, London

  12 April 1997

  Leeds

  16 May 1997

  Leeds

  18 June 1997

  Rehabilitation of Offenders
  Mr. Beith
  To ask the Secretary of State for the Home Department what plans he has to amend SI 1975/1023 relating to the Rehabilitation of Offenders Act 1974. [6925]
  469
  Mr. Michael
  I expect to lay a new Exceptions Order before the House by the end of this year. This will replace SI 1975/1023, rationalise the present categories of exceptions and include those new ones that meet the criteria of:national security;
  the protection of particularly vulnerable members of society, such as the handicapped, elderly, young or sick;
  maintaining confidence in the administration of the law and in certain licensing systems; and
  ensuring probity in the areas of banking and financial services.

  Consultations are now under way on all outstanding requests for new categories of exceptions.

  Blind and Partially Sighted Voters
  Mr. Burstow
  To ask the Secretary of State for the Home Department what assessment his Department has made of the advantages of a trial use of large print ballot papers and braille templates for elections; and what meetings officials from his Department have held with organisations representing blind and partially sighted people to discuss this issue. [6454]

  Mr. George Howarth
  Officials from this Department last met representatives of the Royal National Institute for the blind (RNIB) on 20 March 1997 to discuss proposals to help blind and partially sighted voters to vote in person. RNIB's clear print guidelines, which include advice on the use of large print and the typeface for ballot papers, were circulated by the Home Office to Acting Returning Officers in February. There is no provision in legislation for the use of templates carrying the details of candidates in braille and large print, to be used in conjunction with the ballot paper available to all other voters at the polling station. Further research would be required to test the practical and timetabling implications of such templates and to ensure that they could be used without becoming subject to error or abuse.

  Drink Driving
  Mr. Mackinlay
  To ask the Secretary of State for the Home Department (1) if he will assess the advantages of introducing legislation to increase the penalties for drunken driving and related offences; [6619]

  (2) if he will increase the penalties for drivers exceeding the permissible limits for alcohol in the blood. [6620]

  Mr. Michael
  The offence of driving when unfit through drink attracts a maximum penalty of six months' imprisonment or a fine of £5,000 or both, obligatory disqualification and endorsement of the offender's driving licence. Driving with excess alcohol in the blood attracts the same maximum penalty. We have no plans to increase these penalties or the maximum penalties for related offences.

  Handguns (Compensation)
  Mr. Frank Cook
  To ask the Secretary of State for the Home Department what steps he has taken to ensure that(a) his officials and (b) police forces provide detailed information to firearms certificate holders about the levels
  470
  of compensation they are entitled to receive for handguns and handgun accessories surrendered in accordance with the Firearms (Amendment) Act 1997. [7126]

  Mr. Michael
  By now, all firearm certificate holders and registered dealers should have received from their local police force copies of an information pack, including the full text and annexes to the Compensation Scheme as debated and approved by Parliament on 9 June. The levels of compensation are clearly set out in these documents. The pack also includes the claim form, a leaflet on how to complete the form and advice on where and when to surrender their weapons. In addition, the Home Office has written to clubs about the arrangements.

  Perjury
  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department (1) pursuant to his answer of 26 June,Official Report, column 574, how many convictions for perjury since 1979 resulted in (a) a custodial sentence, (b) a fine and (c) a conditional discharge; [6426]

  (2) pursuant to his answer of 26 June, Official Report, column 574, how many convictions for perjury since 1979 arose from court proceedings in an action for defamation. [6427]

  Mr. Michael
  The table below shows a breakdown of the number of convictions for perjury offences by type of sentence given.

  Court data held centrally by the Home Office do not separately identify actions for defamation.

  Number of persons convicted and sentenced1 at all courts for offences of perjury2 by type of disposal, 1979–1995

  England and Wales

  Type of sentence

  Year

  Total convicted

  Total sentenced

  Conditional discharge

  Fine

  Immediate custody

  1979

  135

  135

  8

  35

  47

  1980

  174

  174

  11

  59

  50

  1981

  145

  146

  6

  36

  52

  1982

  131

  133

  5

  44

  55

  1983

  139

  142

  12

  48

  47

  1984

  186

  186

  6

  54

  79

  1985

  162

  159

  17

  37

  55

  1986

  124

  125

  3

  28

  61

  1987

  167

  167

  7

  68

  52

  1988

  203

  204

  14

  49

  77

  1989

  195

  197

  11

  47

  66

  1990

  160

  161

  16

  42

  47

  1991

  166

  166

  16

  45

  51

  1992

  164

  165

  26

  46

  59

  1993

  150

  150

  25

  36

  51

  1994

  144

  144

  23

  40

  55

  1995

  193

  194

  15

  37

  94

  1 Includes persons convicted at magistrates' courts but committed for sentence at the Crown Court. Therefore some people may be convicted in one calendar year and sentenced in the next.

  2 An offence under the Perjury Act 1911 and Criminal Justice Act 1925 Sec. 36, Criminal Justice Act 1967 Sec. 89, Mines and Quarries (Tips) Act 1969 Sec. 12(2) (in part), Magistrates' Courts Act 1980 Sec. 106, Mental Health Act 1983 Sec. 126(4), County Courts Act 1984 Sec. 133 and Criminal Justice and Public Order Act 1994 Sec. 75.

  Voting (Residential Homes)
  Mr. Burstow
  To ask the Secretary of State for the Home Department what plans his Department has to introduce voting points in residential homes, sheltered housing and hospitals at elections on a trial basis. [6455]

  Mr. George Howarth
  We have no plans to do so at this time.

NATIONAL HERITAGE

  Royal Fine Art Commission
  Sir Patrick Cormack
  To ask the Secretary of State for National Heritage if he will define the roles of(a) the Royal Fine Art Commission and (b) English Heritage in commenting on major proposals for new buildings in historically and environmentally sensitive areas. [6634]

  Mr. Fisher
  Local planning authorities were advised in a DoE letter of 17 March 1997 to seek the advice of the Royal Fine Art Commission (RFAC) on development schemes of national or major regional importance. The Royal Fine Art Commission is able to examine about 140 such schemes each year, not all of which have an impact on historic environments. The Royal Fine Art Commission will examine the design quality of a building itself and its impact on its surroundings. Its recommendations have no statutory force but there is a good record of their being adopted.

  English Heritage is the Government's statutory adviser on the management of the historic environment in England. Local Authorities are advised in PPG 15 to consult English heritage on all planning applications for developments affecting the setting of grade I and II* buildings and of grade II buildings in Greater London, and on major applications for development in conservation areas. In order to give advice about the impact of new buildings on their historic environment, English Heritage must take a view on both the quality and the appropriateness of proposed extensions or new buildings. English Heritage saw over 5,000 such applications in 1995–96.

  There is some degree of overlap between these functions and the staff of the Royal Fine Art Commission and English Heritage liaise to avoid duplication.

  Seaside Piers
  Mr. Mitchell
  To ask the Secretary of State for National Heritage for which seaside piers national lottery funding has been applied for; which have been successful; and what amounts have been allocated to those successful applicants. [7182]

  Mr. Banks
  I refer my hon. Friend to the answer I gave on 4 July 1997,Official Report, column 292.

  Old Documents
  Mr. Baker
  To ask the Secretary of State for National Heritage what is the date and title of the oldest document or archival unit retained by his Department which has not been passed on to the Public Record Office for release for public inspection. [7209]
  472
  Mr. Tom Clarke
  [holding answer 8 July 1997]: The oldest document, dated 1895/6, comprises loose correspondence and drawings relating to the erection of a memorial in Windsor Castle. These were recently found in my Department and will shortly be transferred to the Public Record Office or the Royal Archivist. There is only one other registered record of papers over 30 years old retained by this Department.

  Sporting Events (Television Coverage)
  Mr. Grogan
  To ask the Secretary of State for National Heritage if he will make a statement on the absence of terrestrial television coverage of the British Lions tour of South Africa; and if this represents a breakdown of the unbundling agreement between the satellite and terrestrial television broadcasters. [7153]

  Mr. Fisher
  I understand that the South African Rugby Union own the television rights to the British Lions tour of South Africa. Consequently those rights were not covered by the voluntary code of conduct for the broadcasting of sports events which a number of UK sports organisations have adopted. However, rights to show highlights of the matches were acquired by S4C. The review of listed events will need to assess the effectiveness of the voluntary arrangements for unbundling the various types of broadcasting rights as a substitute form of access to some events.

  Freedom of Information
  Mr. Keetch
  To ask the Secretary of State for National Heritage if he will publish his Department's submissions relating to freedom of information legislation. [6033]

  Mr. Tom Clarke
  [holding answer 2 July 1997]: I refer the hon. Member to the answer given by my right hon. Friend the Prime Minister on 4 July 1997, Official Report, columns 293–94.

  English Heritage Grants
  Mr. Gordon Marsden
  To ask the Secretary of State for National Heritage what plans he has to discuss with English Heritage ways in which greater regional input can be achieved in respect of its grant-making procedures. [6575]

  Mr. Banks
  None at present. Though English Heritage's Conservation staff are based in London, they are organised in regional teams, spend much time in those regions, and liaise closely with local authorities and Government Offices for the Regions.

  Dance and Drama Students
  Mr. Luff
  To ask the Secretary of State for National Heritage what assessment he has made of the response by local authorities to the new arrangements for the funding of dance and drama students; and if he will make a statement. [6927]

  Mr. Fisher
  On 6 March the Arts Council of England announced the terms of its interim scheme for assisting the funding of professional training for dance and drama students. The scheme is administered by the Arts Council which is monitoring the level of response by local authorities to the new arrangements. As at 2 July the Council had received responses from 44 local education authorities, of which 30 had confirmed that they intended
  473
  to participate in the scheme or had agreed to provide awards, and a further four were still considering their position.

  Royal Parks
  Dr. Tonge
  To ask the Secretary of State for National Heritage what proposals he has for additional public funding for the Royal Parks. [5888]

  Mr. Tom Clarke
  My Department is reviewing all its expenditure within the overall spending plans set by the previous Government for 1997–98 and 1998–99. Spending on the Royal Parks will be considered alongside the Department's other responsibilities.

  Computers (Century Date Change)
  Mr. David Atkinson
  To ask the Secretary of State for National Heritage if he will make a statement on his Department's timetable for dealing with the Year 2000 Computer Problem; who is in charge of the project; how many staff are working on it; what is the projected cost of resolving the problem; and whether the project is on schedule. [7134]

  Mr. Tom Clarke
  The Department of National Heritage is currently auditing all computer systems that it uses for Year 2000 compliance. This audit should be complete by the autumn and it is intended to complete any remedial work by the summer of 1998. The project is being managed by the Department's Information Systems Branch with one member of staff co-ordinating the work which is being carried out by Sema Group, the Department's outsourced service provider. The Department is making use of the recent guidance from CCTA "Tackling the Year 2000". The cost of resolving the problem will be known by the autumn. The project is currently on schedule.

INTERNATIONAL DEVELOPMENT

  Debt
  Mr. Dawson
  To ask the Secretary of State for International Development if she will take steps to cancel the debt of poor countries. [7233]

  Clare Short
  The Government is pushing for full and rapid implementation of the Heavily Indebted Poor Countries (HIPC) initiative. We believe that debt relief should accompany a wider commitment by debtors to create the conditions necessary for sustainable economic growth and lasting poverty reduction. The Government has already forgiven over £1.2 billion of old loans to many of the poorest countries. We will be prepared to consider cancelling aid loans to other low-income countries where necessary, on a case-by-case basis.

  United Nations Industrial Development Organisation
  Mr. Rowlands
  To ask the Secretary of State for International Development what assessment her Department has made of the role of the UN Industrial Development Organisation. [7188]

  Clare Short
  During the last four years UNIDO has undertaken a comprehensive and impressive reform programme. Fundamental change has been made,474
  substantial staff reductions achieved and new management procedures introduced. I greatly welcome these changes and it is because of these changes that I announced on 3 July our decision to remain a member of UNIDO.

  Mr. Rowlands
  To ask the Secretary of State for International Development what are her future plans in respect of support for the United Nations Industrial Development Organisation. [7189]

  Clare Short
  We will continue to support the process of narrowing and refocusing UNIDO'S activities into high priority areas which meet the changing needs of developing countries.

TREASURY

  Unemployment
  Ms Walley
  To ask the Chancellor of the Exchequer how many persons aged under 25 years in the constituency of Stoke-on-Trent, North and nationally(a) are registered unemployed and (b) have never been employed. [6863]

  Mrs. Liddell
  The information requested falls within the responsibility of the Chief Executive of the Office for National Statistics. I have asked hint to arrange for a reply to be given.

  Letter from Tim Holt to Ms Joan Walley, dated 8 July 1997:
  The Chancellor of the Exchequer has asked me to reply as Director of the Office for National Statistics to your recent question on how many persons under 25 are (a) registered unemployed and (b) have never been employed nationally and in the parliamentary constituency of Stoke-on-Trent North.
  The measure of unemployment, derived from the quarterly Labour Force Survey (LFS), is defined on a consistent and internationally recognised basis set out by the International Labour Organisation (ILO) and counts as unemployed people who are: a) without a paid job; b) available to start work within the next two weeks and c) have either looked for work in the last four weeks or are waiting to start a job already obtained. However, largely because it is a sample survey, information is not available from the LFS in as much geographical detail as from the claimant count measure described below.
  ONS also publishes the monthly claimant count, which is based on the administrative system and includes all people claiming unemployment-related benefits (i.e. Jobseekers Allowance, Income Support or National Insurance credits) at Employment Service offices on the day of the monthly count, who on that day had signed on as unemployed and available to do any suitable work. Essentially, all people who attend an Employment Service office to sign are counted, irrespective of whether they arc actually receiving benefit.
  Data for the number of registered unemployed can only be derived from the claimant count. However, the claimant count does not have information on the numbers of people who have never been employed.
  The data you have requested for Stoke-on-Trent North can only be derived from the claimant count, as the LFS does not give details down to constituency level.
  The winter 1996/7 LFS shows that there were 1,592,000 people aged 16–24 who have never been employed (other than in casual or holiday jobs) in the United Kingdom. To put this information into context the attached table shows the total breakdown by educational and economic status. For example, you can see that, from the total of 1,592,000 nearly 83 per cent (1,322,000) were economically inactive, that is they had not looked for work in the past four weeks

  475
  or were neither available to start work in the next two weeks nor waiting to start a job they had already obtained. 1,186,000 of the total were full-time school, college or university students.
  The claimant count in April 1997 showed that there were 575 claimants under 25 in the Stoke-on-Trent North parliamentary constituency. This compared to a figure of 440,028 claimants under 25 in the United Kingdom in April 1997.

  People aged 16–24 in the Untied Kingdom who have not had a paid job, winter 1996–97, not seasonally adjusted

  Thousands

  All

  Full-time student

  Not full-time student

  All of which:

  1,592

  1,186

  406

  ILO unemployed

  270

  93

  177

  Economically inactive

  1,322

  1,093

  230

  Source:

  ONS, LFS.

  Drugs
  Mr. Leigh
  To ask the Chancellor of the Exchequer if he will list by department the total amount allocated to tackling problems relating to drugs for the five most recent years for which figures are available. [4798]

  Mr. Darling
  The Treasury does not yet hold this data centrally and information on total Government and individual departments' expenditure on tackling drug misuse is not recorded on an annual basis. The Government recognises the importance of greater clarity of information relating to drugs related issues and will therefore be appointing a "drug czar" to co-ordinate action against drugs. The drug czar will he working to the President of the Council as Chair of the Cabinet's co-ordinating committee on drug misuse. One of his or her first tasks will be to review urgently the existing drugs strategy, and put forward proposals for tackling the problem with renewed vigour. This review will include evaluating current Government expenditure.

  The most recently available estimates we currently hold were published in the White Paper "Tackling Drugs Together" in May 1995. They show that at least £526 million of expenditure in 1993–94 could be directly attributable to drug programmes and activities across the UK.

  Bereavement Allowance
  Mr. Garnier
  To ask the Chancellor of the Exchequer what is his Department's policy on equalising the treatment of sexes in respect of the bereavement allowance; and if he will make a statement. [6320]

  Dawn Primarolo
  [holding answer 1 July 1997]: There are no plans to extend the widows bereavement allowance to widowers.

  Insurance Premium Tax
  Mr. Fearn
  To ask the Chancellor of the Exchequer if he will review the rates of insurance premium tax charged on travel insurance sold by(a) travel agents and (b) other outlets. [7184]
  476
  Dawn Primarolo
  As is usual with new tax measures, the impact of the higher rate of insurance premium tax of 17.5 per cent. which front 1 April 1997 has been applied to certain specified insurance sales, including travel insurance sold by travel agents and tour operators, will be kept under review.

  Hotels (VAT)
  Mr. Fearn
  To ask the Chancellor of the Exchequer if he will establish a review of the imposition of VAT charged on tourist rates for hotel accommodation. [7257]

  Dawn Primarolo
  VAT is payable under EC legislation on hotel accommodation, and this is accurately reflected in United Kingdom law.

  Double Taxation
  Mr. Wilkinson
  To ask the Chancellor of the Exchequer if he will estimate the annual loss of revenue to the British Exchequer from the requirement under the UK/Danish Double Taxation Convention and Protocol that retired Danish citizens permanently resident in the United Kingdom pay only Danish tax upon their Danish pensions. [6449]

  Dawn Primarolo
  [holding answer 8 July 1997]: The Double Taxation Convention and Protocol permit Denmark to charge its normal tax regime on pensions paid to persons in the UK who formerly lived in Denmark. The UK will allow credit for that Danish tax when assessing the pension to UK tax. The cost to the UK exchequer will be negligible, because of the small number of pensioners who will be affected.

  Mr. Wilkinson
  To ask the Chancellor of the Exchequer what representations he has received from the Commission of the European Union that double taxation conventions between member states be harmonised.[6447]

  Dawn Primarolo
  [holding answer 8 July 1997]: I have received no such representations.

  Mr. Wilkinson
  To ask the Chancellor of the Exchequer if he will make a statement on the harmonising of double taxation conventions between the United Kingdom and other EU nations. [6448]

  Dawn Primarolo
  [holding answer 8 July 1997]: Bilateral double taxation agreements are a matter for the member states concerned. There is no process of harmonisation of double taxation conventions between the United Kingdom and other EU nations under way, nor is there a need for any such harmonisation.

  Public Expenditure
  Sir Teddy Taylor
  To ask the Chancellor of the Exchequer what is the total amount of public expenditure per head of population in each of the constituent nations of the United Kingdom in the most recent year for which figures are available. [6655]

  Mr. Darling
  [holding answer 8 July 1997]: The latest breakdown of expenditure per head of population for countries of the UK was published in table 7.1 of the Public Expenditure Statistical Analyses 1997–98, Cm 3601.

  Budget Leaks
  Mr. Cash
  To ask the Chancellor of the Exchequer if he will list the Ministers who(a) gave interviews to (b) made statements to and (c) answered questions from journalists or representatives of the Financial Times in the period of 48 hours before the Budget Statement. [7265]

  Mr. Gordon Brown
  [holding answer 8 July 1997]: No Treasury Minister gave interviews to, made statements to or answered questions from journalists or representatives of the Financial Times in the 48 hours before the Budget Statement.

  Windfall Tax
  Mr. Heathcoat-Amory
  To ask the Chancellor of the Exchequer how many Inland Revenue staff will be required to administer and collect the windfall tax. [7387]

  Dawn Primarolo
  [holding answer 8 July 1997]: The additional staffing requirement will be negligible.

  Private Finance Initiative
  Mr. Timms
  To ask the Chancellor of the Exchequer if he will place in the Library the latest list of major signed PFI/Public Private Partnerships deals; and if he will update that list at regular intervals. [7903]

  Mr. Geoffrey Robinson
  I will arrange for the list to be placed in the Library, and for it to be updated every six months.

  Personal Pensions (Misselling)
  Mr. Timms
  To ask the Chancellor of the Exchequer what progress has been made towards providing redress for the victims of misselling of personal pensions. [7904]

  Mrs. Liddell
  In my earlier reply to my hon. Friend the Member for East Ham (Mr. Timms) on 24 June,Official Report, columns 454–55 I undertook to publish information each month about the cases handled by the 24 firms which have most cases to review. These are the firms for which the regulators (the Securities and Investments Board and the Personal Investment Authority) have published targets for completion of case reviews. Below is a table containing the information provided to me by these firms about progress with their casework to end June.

  The figures in the table, which are those submitted by the 24 firms themselves, provide a benchmark from which future progress can be measured.

  The volume of cases cleared is extremely disappointing. All the firms in the table have a great deal more work to do. Some appear hardly to have begun.

  It is now imperative that all firms—not just these 24—which have sold personal pensions should make serious efforts to improve their performance in completing their caseloads. This is not only in the interests of their customers but also of their own reputations with the general public. The regulators will continue to monitor the firms' performance against the targets they have been set.

  I will decide once I have seen some further figures to measure progress what further action may be called for.
  478

  A

  B

  C

  D

  E

  F

  Hogg Robinson

  602

  50

  8

  2

  1

  0

  Colonial

  6,754

  152

  663

  503

  32

  0

  Gan

  8,358

  43

  133

  79

  63

  1

  Sedgwick

  6,731

  359

  436

  262

  64

  1

  Abbey Life

  15,993

  950

  1,116

  238

  169

  1

  Allied Dunbar

  16,422

  1,177

  761

  281

  182

  1

  Lincoln National

  12,301

  830

  541

  203

  148

  1

  Windsor Life

  7,830

  0

  164

  157

  131

  2

  London & Manchester

  6,944

  64

  493

  399

  117

  2

  Cooperative Insurance

  41,762

  1,025

  7,195

  1,280

  825

  2

  Equitable Life

  10,761

  4,097

  3,788

  437

  307

  3

  Britannic

  12,360

  0

  1,355

  728

  443

  4

  Sun Life of Canada

  25,682

  1,628

  1,279

  1,161

  1,002

  4

  NatWest

  13,192

  2,657

  1,801

  1,059

  573

  4

  United Assurance

  12,648

  382

  1,521

  783

  585

  5

  Pearl

  39,548

  897

  4,486

  3,040

  2,076

  5

  Prudential

  58,606

  35

  13,829

  12,861

  3,128

  5

  Royal London

  9,357

  138

  1,280

  748

  532

  6

  Legal & General

  33,282

  12,147

  3,442

  2,590

  2,046

  6

  Norwich Union

  6,772

  1,824

  1,009

  548

  428

  6

  Lloyds/TSB

  46,562

  4,662

  6,836

  5,166

  3,310

  7

  Royal & Sun Alliance

  14,995

  927

  1,933

  1,605

  1,213

  8

  Guardian

  8,255

  264

  1,511

  1,175

  855

  10

  Barclays Life

  16,700

  5,134

  4,413

  3,121

  2,315

  14

  A= Cases identified as requiring review, B = Of A, cases where investor was informed that information gained during assessment excluded cases for review.

  C = Number of assessments completed.

  D = Cases where redress has been offered.

  E = Cases where redress has been accepted. This is a subset of assessments completed.

  F = Cases where redress has been accepted as a percentage of cases identified for review.

  Some further cases will have been completed without redress being due.

LORD CHANCELLOR'S DEPARTMENT

  Small Claims Procedure
  Mr. Gordon Marsden
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will review the operation of the small claims procedure in respect of the requirement for cases to be heard in the place of residence of the person against whom a claim is being pursued. [6579]

  Mr. Hoon
  There is, in fact, no such requirement. In the county courts, liquidated claims are transferred to the defendant's home court on receipt of a defence. However, the plaintiff may apply for the claim to be returned to a court more convenient to him or her. The Lord Chancellor's Department is undertaking consultation on judicial case management, of which choice of venue is one element. Comments are sought by 26 September 1997.

EDUCATION AND EMPLOYMENT

  Benefits
  Mr. Chaytor
  To ask the Secretary of State for Education and Employment what assessment he has made of the costs and benefits of extending the relaxation of the 16 hour rule to all adults unemployed for(a) more than six months, (b) more than 12 months and (c) more than 18 months. [7111]
  479
  Mr. Alan Howarth
  No such assessment has been made. The New Deal announced by my right hon. Friend the Secretary of State on 3 July will provide a range of quality options for unemployed people to help them make the transition back into work, with a strong emphasis on the importance of education and training.

  The New Deal for people aged 25 and over, who have been unemployed for two years or more will include opportunities for full-time study while receiving JSA.

  In addition, and subject to Parliamentary approval, we will be expanding Workskill Pilots to four more areas of Britain so that those unemployed for six months or more will be able to take up education or training and remain on Jobseeker's Allowance. The pilots will provide us with valuable information on the extent to which allowing people to study on benefit affects their chances of gaining and remaining in employment.

  Primary Teaching
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment what steps he is taking to ensure that primary school teachers are fully able to teach technology to five to eight-year-olds; and if he will make a statement. [7055]

  Ms Estelle Morris
  The Government has announced that proceeds from the National Lottery will be made available to support in-service training for teachers in information technology. On 26 June I announced new requirements for initial teacher training, which will require all newly qualified teachers to demonstrate a knowledge and understanding of information technology, and asked the Teacher Training Agency to develop a curriculum for information technology in initial teacher training.

  Deal Primary School
  Mr. Prosser
  To ask the Secretary of State for Education and Employment if he has been able to determine the public notice issued by the Governors of the Deal Parochial CE Voluntary Aided Primary School (Kent) on 20 June 1996 to reduce the standard number from 40 to 27. [7262]

  Ms Estelle Morris
  The application is still under consideration, but a decision is expected shortly.

  Class Sizes
  Mr. Coaker
  To ask the Secretary of State for Education and Employment if he will list by local education authority the(a) numbers and (b) percentages of pupils according to the January 1997 Form 7 for (i) key stage 1 and (ii) key stage 2 in classes of (1) 31 or more, (2) 35 or more and (3) 40 or more; and if he will list the corresponding figures for 1996. [6559]

  Mr. Byers
  The available information is shown in a table, a copy of which has been placed in the Library of the House.

  Pupil Exclusions
  Mr. Burstow
  To ask the Secretary of State for Education and Employment how many children throughout England and Wales with severe learning 480
  disabilities have been excluded from schools on (a) a temporary and (b) a permanent basis (i) at present and (ii) in the last 12 months. [6621]

  Ms Estelle Morris
  In 1994–95 some 1,800 pupils with statements of special educational need were permanently excluded from schools in England. Details of exclusions in 1995–96 are currently being collated and will be available later in the year. Information of fixed period exclusions is not collected centrally.

  Data on exclusions from schools in Wales are matters for my right hon. Friend the Secretary of State for Wales.

FOREIGN AND COMMONWEALTH AFFAIRS

  Departmental Advisers
  Mr. Alan Simpson
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list each person advising or assisting his Department who has(a) membership of and (b) involvement in (i) the European Round Table of industrialists, (ii) the European Centre for Infrastructure Studies, (iii) the Competitiveness Advisory Group, (iv) Transatlantic Business Dialogue, (v) the Association for the Monetary Union of Europe, (vi) Union of Industrial and Employers Confederations of Europe, (vii) Europa Bio and (viii) the World Business Council for Sustainable Development. [5310]

  Mr. Doug Henderson
  Membership of the European Round Table of Industrialists, the Competitiveness Advisory Group and the Transatlantic Business Dialogue is on a personal basis. No advisers to this Department have reported membership of these bodies.

  Membership of the European Centre for Infrastructure Studies, the Association for the Monetary Union of Europe, the Union of Industrial and Employers' Confederations of Europe, Europa Bio and the World Business Council for Sustainable Development is on a corporate basis. Representatives from companies and organisations involved with these groups may advise Departments from time to time.

  Bermuda
  Mr. Martyn Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement of British relations with Bermuda. [6937]

  Mr. Tony Lloyd
  Britain has an excellent relationship with Bermuda—its oldest and now its most populous Dependent Territory. Although Bermuda is self-governing, Britain has retained responsibility for its external affairs and security. Independence, which was rejected in a referendum held in 1995, remains a matter for the Bermudian people to decide.

  Plutonium
  Mr. Matthew Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs what response the Government have made to the international plutonium disposition initiatives undertaken by President Clinton's administration; and if he will make a statement. [7317]
  481
  Mr. Tony Lloyd
  International expert discussions on the disposal of surplus US and Russian military plutonium have concluded that the two most promising options are the conversion of plutonium into MOX (mixed oxide of both plutonium and uranium) fuel and its subsequent consumption in nuclear power reactors, and the immobilisation of plutonium through vitrification. The UK was involved in these discussions and supports these conclusions. Future discussions are likely to focus on the most effective means of implementing these disposal options in the US and Russia. The UK will continue to participate fully in international consideration of this issue.

  EU Social Agreement
  Mr. Mitchell
  To ask the Secretary of State for Foreign and Commonwealth Affairs which words(a) are in the Social Agreement attached to Protocol 14 of the treaty on Economic Union signed at Maastricht and have not been transposed into the social chapter of the draft Treaty of Amsterdam and (b) have been added to draft articles in that draft treaty and do not appear in the current Social Agreement; and what are the reasons for the changes specified in (a) and (b) above. [7378]

  Mr. Doug Henderson
  A copy of the draft Treaty of Amsterdam has been placed in the libraries of the House. The Social provisions, which incorporate the Social Agreement, are on pages 59–66 (Articles 117–120). The changes that have been made to the Social Agreement text are intended to: incorporate elements of the existing Articles 117–120 TEC; replace co-operation with co-decision as the mechanism for consulting the European Parliament when legislation is adopted by QMV; allow the adoption by QMV of measures to encourage co-operation between Member States on combatting social exclusion; slightly broaden the provisions on the equality of men and women.

  Russia
  Ann Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what are the outstanding issues delaying the setting up of a permanent joint council between NATO and Russia; and when the inaugural meeting will take place. [7258]

  Mr. Tony Lloyd
  The NATO/Russia Founding Act which was signed on 27 May provided for the establishment of a NATO/Russia Joint Permanent Council as a forum for members of the Alliance and Russia to discuss matters of European security. The Act provides for the Council to meet within four months of signature. We expect the inaugural meeting to take place before the end of September.

  NATO
  Ann Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the consequence for the excluded European countries of US and British decisions to support a limited enlargement of NATO. [7259]

  Mr. Tony Lloyd
  Decisions on the membership of NATO are taken collectively by The Alliance. NATO's door will remain open to the applicant countries not invited to begin accession negotiations in Madrid. We are 482
  determined that NATO enlargement will not mean a reduction in security for others or the creation of new dividing lines in Europe.

  NATO's 27 Partner countries will also benefit from the new opportunities for cooperation provided by the Euro-Atlantic Partnership Council and the enhanced Partnership for Peace Programme. These encourage Partner countries to draw closer to the Alliance.

  Arms Exports
  Mr. Brady
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress he has made with his review of the mechanics and detailed criteria used in the issuing of licences for exports of conventional arms; and when he expects to reach conclusions on individual countries. [7240]

  Mr. Tony Lloyd
  The review of detailed criteria used in considering licence applications to export conventional arms, which was announced by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs on 22 May,Official Report, column 135, is being taken forward as a matter of urgency. The new criteria will be made available to the House when the review is complete. The aim of the review is not to focus on individual countries but to draw up criteria applicable to all destinations.

DUCHY OF LANCASTER

  Computers (Century Date Change)
  Mr. David Atkinson
  To ask the Chancellor of the Duchy of Lancaster if he will make a statement on his Department's timetable for dealing with the Year 2000 Computer problem; who is in charge of the project; how many staff are working on it; what is the projected cost of resolving the problem; and whether the project is on schedule. [7139]

  Mr. Kilfoyle
  Whilst the Year 2000 Computer problem effect on computer systems generally may be significant, within the Cabinet Office and its Agencies, it is likely to be minimal. It has therefore not been necessary to establish a project team to deal with the issue.

TRADE AND INDUSTRY

  Regional Aid
  Mr. Hinchliffe
  To ask the President of the Board of Trade what steps she has taken to review the existing criteria in determining eligibility for European Union regional aid; and if he will make a statement. [5376]

  Mrs. Roche
  [holding answer 26 June 1997]: The regulations setting out the criteria for eligibility for the European Structural and Cohesion Funds are due to be re-examined before the end of 1999 by the Council of Ministers, acting on proposals from the Commission. The Commission are likely to give an initial indication of their ideas for the future of the Funds in a communication in July, with detailed proposals for amending the regulations

  483
  coming at a later date. The Government is looking for a package which is affordable, simple and more efficient, and fair.

  Minister for Trade and Competitiveness in Europe
  Mr. Letwin
  To ask the President of the Board of Trade in which departments the Minister for Trade and Competitiveness in Europe has private offices; how many officials are employed in those private offices; and if she will list his special advisers. [5998]

  Mrs. Beckett
  [holding answer 30 June 1997]: The Minister for Trade and Competitiveness in Europe, Lord Simon, has one private office which serves him in both the DTI and in the Treasury. The private office consists of a Private Secretary, and Assistant Private Secretary, a Diary Secretary, a Correspondence Manager and a Personal Secretary. Lord Simon has office facilities in both departments. He has no political advisers.

  Strategic Defence Review
  Mr. Wilkinson
  To ask the President of the Board of Trade what part her Department will play in the Strategic Defence Review, with particular reference to representing the interests of manufacturing industry. [5630]

  Mr. Battle
  [holding answer 1 July 1997]: Several departments and other interested bodies will be involved in the Government's Strategic Defence Review. My Department will participate fully in aspects where the competitiveness of UK industry, and its contribution to the wider economy, arc being considered.

  Nuclear Power
  Mr. Matthew Taylor
  To ask the President of the Board of Trade if she will take steps to ensure that Euratom does nto impede the work of the IAEA in carrying out its verification inspections. [6402]

  Mrs. Roche
  My Department will continue to work closely with the IAEA and Euratom in order that nuclear safeguards inspections are undertaken in an effective and cost efficient manner which enables each inspectorate to draw its own independent conclusions.

  Mr. Taylor
  To ask the President of the Board of Trade what is the minimum quantity of fissile material that would be required for a criticality in an underground nuclear waste repository. [6403]

  Mr. Battle
  The minimum quantity of fissile material required for criticality in an underground nuclear repository would be the same as that in any other nuclear facility. This quantity is dependent on a number of factors including the geometry of the fissile material, the presence of moderating materials which reduce the velocity of neutrons, the presence of reflecting materials retaining neutrons within the system, and the presence of materials such as uranium-238, iron, and calcium, which absorb neutrons.

  Limits and conditions of authorisation for any repository being developed in the UK would be based on "Guidance on Requirements for Authorisation" which has been issued by the Environment Agencies. This states that a developer would "need to demonstrate that the possibility of a local accumulation of fissile material such
  484
  as to produce a neutron chain reaction is not a significant concern." This would be achieved by e.g. the establishment of fissile material limits on waste packages, constraints on packaging, provision of backfill and the maintenance of a high pH to suppress the solubility of plutonium.

  Car Boot Sales
  Mr. Kidney
  To ask the President of the Board of Trade what representations she has received in support of the licensing of car boot sales. [6444]

  Mr. Nigel Griffiths
  My Department has received one representation about car boot sales since the election. ITSA and LACOTS have also made me aware of concerns about certain practices. I am of course willing to consider any further representations that are made. Car boot sales can raise a number of different issues, some of which would come within the responsibility of other Government Departments.

  Climate Change
  Mr. Corbyn
  To ask the President of the Board of Trade what reports she has received from the British Antarctic Survey on the rate of temperature rises and the effect on ice melting. [6345]

  Mr. Battle
  holding answer 3 July 1997]: All of the climatically sensitive ice shelves on the Antarctic Peninsula have suffered major disintegration, which is significant and unique within recorded history and results from the fact that summer temperatures now regularly exceed 0°C. Given a continued warming, the ice shelves are predicted to disintegrate further in the coming decades.

  The British Antarctic Survey has continuous records which begin in the 1940s and show a warming of 0.5°C per decade in the Antarctic Peninsula. This is interpreted to be a regional effect, and has not been observed to the same extent elsewhere in Antarctica. It will he some time before it can he established whether these observed trends are part of a wider manifestation of global warming.

  European Patent System
  Mrs. Curtis-Thomas
  To ask the President of the Board of Trade what proposals she has to consult industrialists over the proposals contained in the EU green paper on a European patent system based on a single patent application; and if she will make a statement. [7048]

  Mr. Battle
  The European Commission's Green Paper is in the form of a questionnaire seeking views from European industry, including that of the United Kingdom, on a wide range of issues concerning the development of the patent system in Europe. We are taking steps to ensure that UK industry is aware of the Commission's initiative so that it can make its views known to the Commission and at the same time advise the Department of its position. The Green Paper will be discussed by the Standing Advisory Committee on Industrial Property which was established so that not only industrialists, representing large to small industries, but also consumer representatives and legal and professional bodies can advise the Government on all aspects of industrial property policy.

  Newspaper Publishing
  Mr. Livingstone
  To ask the President of the Board of Trade what assessment she has made of a recent report, a copy of which has been sent to her, in respect of the imposition of margins by newspaper publishers and the reduction in the amount of space available for minority titles; and if she will make a statement. [6945]

  Mr. Nigel Griffiths
  My right hon. Friend the President of the Board of Trade has recently received copies of reports from the Committee for Diversity and Pluralism and the National Federation of Retail Newsagents. All those with concerns about the distribution of magazines and newspapers must make them known to the Director General of Fair Trading. It is for the Director General to consider whether action under the competition legislation is appropriate.

  Bank of Credit and Commerce International
  Mr. Vaz
  To ask the President of the Board of Trade how many set off cases she has approved in the liquidation of BCCI; what is the total amount outstanding in respect of such cases; and what representations she has received on this subject. [7051]

  Mr. Nigel Griffiths
  The application of the rules as regards mutual credits and set off, set out in Rule 4.90 of The Insolvency Rules 1986 is mandatory in any liquidation and is not subject to any form of official approval. Once an account has been taken of what is due to and from the liquidating company as a result of mutual dealings the process of set off is automatic.

  Solar Energy
  Mr. Matthew Taylor
  To ask the President of the Board of Trade what plans the Government have to support the solar energy industry in the United Kingdom. [7345]

  Mr. Battle
  I refer the hon. Member to the answer given to my hon. Friend the Member for Stoke on Trent, North (Ms Walley) on 10 June 1997.Official Report, column 417.

  Public Records
  Mr. Baker
  To ask the President of the Board of Trade what is the date and title of the oldest document or archival unit retained by her Department which has not been passed on to the Public Record Office for release for public inspection. [7207]

  Mr. Nigel Griffiths
  [holding answer 8 July 1997]: The earliest known file, selected for the Public Record Office, but still retained in the Department under the provisions of the Public Records Act 1958 for the retention of records on grounds of continuing sensitivity, is dated 1952, title: Atomic Energy Board: minutes and papers.

  The general arrangements for retaining public records are set out in Chapter 9 of the White Paper Open Government of July 1993 (Cm 2290).

  Post Office
  Mr. Colvin
  To ask the President of the Board of Trade when the Government intends to publish its plans for the future of the Post Office; and if she will make a statement. [7651]

  Mr. Ian McCartney
  It is too early yet to say when the review of the Post Office will he completed or when we will he in a position to announce our future plans.

  EU Internal Market Council
  Mr. Mike Hall
  To ask the President of the Board of Trade what decisions were taken at the EU Ministerial Council on the Internal Market on 21 May; and what matters were voted upon. [7983]

  Mrs. Beckett
  My right hon. Friend the Minister for Trade and Competitiveness in Europe represented the UK at the Internal Market Council in Brussels on 21 May.

  The Council reached political agreement by qualified majority voting on proposals on the free movement of lawyers and in vitro diagnostic medical devices. A Common Position was agreed by qualified majority on a proposal on foodstuffs treated with ionising radiation.

  The Council discussed the Single Market Action Plan, Legislative Simplification, Reform of Customs Transit Regime, European Company Statute, Electronic Commerce, the Green Paper on Public Procurement and, in Any Other Business, attacks on Spanish produce in France, anti-dumping duties on cotton fabric and medical device safety.

  EU Telecommunications Council
  Mr. Heppell
  To ask the President of the Board of Trade if she will make a statement on the outcome of the EC Telecommunications Council on 27 June. [7982]

  Mrs. Roche
  I represented the UK at the Telecommunications Council held in Luxembourg on 27 June.

  The Council agreed a resolution on the further development of a policy for numbering in the European Community. Following European Commission presentations, the Council adopted conclusions on three Commission communications: on the further development of mobile and wireless communications in Europe (universal mobile telecommunications systems); a Commission action plan for satellite communications; and on implementation by Member States of Community legislation in the telecommunications sector. There were also lunchtime presentations by the Commission on its communication on the World Radiocommunications Conference 1997, and on its interim report on Member States' initiatives concerning illegal and harmful content on the internet.

  Trade Associations
  Mr. Page
  To ask the President of the Board of Trade when she intends to allocate ministerial responsibility for trade associations. [2870]

  Mrs. Beckett
  The Minister for science, energy and industry, John Battle MP, is responsible for policy towards trade associations.

DEFENCE

  Defence Postal and Courier Services
  Mr. Bob Russell
  To ask the Secretary of State for Defence (1) if the Defence Review will cover the Defence Postal and Courier Services of the Royal Logistic Corps; how many commissioned ranks there are in the Defence Postal and Courier Services; what is the number in each rank; and what are the corresponding figures for an average line regiment; [6768]

  (2) how many disciplinary cases within the Defence Postal and Courier Services have been initiated by military line management against civilian Defence couriers in each of the past 10 years; [6769]

  (3) for what reason civilian staff in the Defence Postal and Courier Services have been replaced by serving military personnel; and how many posts which fell vacant in the past two years were filled by serving military personnel instead of civilian (service retired) personnel. [6767]

  Mr. Spellar
  This is a matter for the Chief Executive of the Defence Postal and Courier Services. I have asked the Chief Executive to write to the hon. Member.

  Letter front T. McG Brown to Mr. Bob Russell, dated 9 July 1997:
  I have been asked to reply to your three Parliamentary Questions to the Secretary of State for Defence regarding staffing and other matters related to the Defence Postal and Courier Service. As Chief Executive of the Defence Postal and Courier Services Agency (DPCSA) I am responsible for the management within my Agency and I am therefore providing the details you have requested.
  Taking each question in turn:
  1. "For what reason civilian staff in the Defence Postal and Courier Service have been replaced by serving military personnel; and how many posts which fell vacant in the past two years were filled by serving military personnel instead of civilian (service retired) personnel?"
  Overall, no civilian posts falling vacant in the last two years have been filled with military personnel. It is in fact the case that a number of military posts have been filled by civilians.
  2. "How many disciplinary cases within the Defence Postal and Courier Service have been initiated by military line management against civilian Defence Couriers in each of the past 10 years?"
  The management of the Defence Courier Service, which is a part of DPCSA, rests with military personnel. As all disciplinary cases are initiated by line management all cases against civilian Defence Couriers have therefore been initiated by military personnel. There have been 25 cases initiated in the past 10 years. The breakdown by year, from available records, is as follows:

  1987: 2

  1990: 1

  1991: 3

  1995: 9

  1996: 5

  1997: 5

  Records are readily available only for those presently employed or who have recently left.
  3. "Will the Defence Review cover the Defence Postal and Courier Service of the Royal Logistic Corps; how many commissioned ranks there are in the Defence Postal and Courier Service; what is the number of each rank; and what are the corresponding figures for an average line regiment?"
  488
  The Review will be wide ranging and all aspects of defence will be considered in this process. In addition to issues of policy and strategy, the Review will look at how we should get the best possible output from defence resources and the contribution of our defence effort to the wider economy. As part of the MOD, the Defence Postal and Courier Service will no doubt be included in this review.
  The number of commissioned ranks within the DPCSA, an average Infantry Line Regiment (which is not easy to define) and a typical RLC regiment is as follows:

  DPCSA

  Average ILR

  General service regiment RLC

  Brigadier

  1

  0

  0

  Colonel

  2

  0

  0

  Lt. Colonel

  5

  1

  1

  Major

  9

  9

  8

  Captain

  7

  11

  21

  Lieutenant/2nd Lt.

  0

  14

  10

  24

  35

  40

  I hope this information is helpful.

  Defence Industry
  Mr. Rapson
  To ask the Secretary of State for Defence what proposals the Government have to improve co-operation with the United Kingdom defence industry. [6463]

  Mr. Spellar
  I refer the hon. Member to the answer I gave on 16 June to the hon. Member for Barrow and Furness (Mr. Hutton)(Official Report, column 78).

  Challenger Tanks
  Mr. Key
  To ask the Secretary of State for Defence how many Challenger 2 tanks have been(a) ordered from the manufacturer, (b) delivered and (c) accepted for service. [6667]

  Mr. Spellar
  Three hundred and eighty-six Challenger 2 Main Battle Tanks have been ordered from Vickers plc. To date 36 have been delivered and these have been accepted for service.

  Low Flying
  Mrs. Ray Michie
  To ask the Secretary of State for Defence if he will review the number of low-flying sorties over Scotland. [6984]

  Mr. Spellar
  As reported to the House on 20 March(Official Report, column 860), Scotland has received less military low flying than most other parts of the United Kingdom. The geographic distribution of this activity is reviewed annually.

  Mrs. Michie
  To ask the Secretary of State for Defence how many operational low-flying sorties were authorised in(a) the Highlands, (b) Argyll and Bute and (c) Scotland in each of the last 12 months. [6985]

  Mr. Spellar
  Operational low flying is only permitted in three specially designated Tactical Training Areas (TTAs) located in the Borders (which covers southern Scotland and part of northern England and is called Low Flying Area 20T), northern Scotland (called Low Flying Area 14T) and central Wales (Low Flying Area 7T). Argyll and Bute is not located within a TTA and does not see operational low flying. The numbers of operational
  489
  low flying movements, which equate to sorties in this context, authorised in each of the last 12 months are detailed below. Figures for the movements flown within the part of LFA 20T in Scotland are not recorded separately.

  Northern Scotland TTA (LFA 14T)

  Borders TTA (LFA 20T)

  1996

  July

  15

  84

  August

  6

  0

  September

  54

  3

  October

  130

  2

  November

  44

  1

  December

  47

  1

  1997

  January

  0

  0

  February

  23

  88

  March

  32

  61

  April

  150

  83

  May

  96

  36

  June

  7

  16

  Mrs. Michie
  To ask the Secretary of State for Defence what measures he is taking to reduce the need for low-flying sorties through the use of flight simulators. [6986]

  Mr. Spellar
  Flight simulators are extensively used in training but at present they can only complement, not replace, actual experience of low flying. We do, however, continue to monitor closely all developments in simulator technology.

  Eurofighter
  Mr. Hancock
  To ask the Secretary of State for Defence when he next expects to meet German Ministers to discuss the Eurofighter project. [6684]

  Mr. Spellar
  I can assure the hon. Member that very close and frequent contact at ministerial level has been and will be maintained with German Defence Ministers on Eurofighter. The Government is determined to secure a four nation commitment to move to the production phase of the Eurofighter programme as soon as possible.

  Ghurka Soldiers
  Mrs. Ballard
  To ask the Secretary of State for Defence if he will review the pensions of Ghurka soldiers who have served in the British Army. [7348]

  Dr. Reid
  Pensions paid to ex-British Army Gurkhas are regularly reviewed. Each year both new and existing pensions are increased in line with the rate of inflation in Nepal. This review, which is currently being undertaken, is effective from April each year. In addition to this, and in accordance with our responsibilities under the Tri-Partite Agreement 1947 which links the pensions paid to ex-British Army Gurkhas to pensions paid in the Indian Army, pensions paid to our Gurkhas are reviewed in the light of any changes that the Indian Army may make to ensure that equity of treatment is maintained. The results of the latest 10 year review undertaken by the Indian Government are expected to be announced later this year.

SCOTLAND

  NHS Trust Executives
  Mr. Hood
  To ask the Secretary of State for Scotland how many executive positions there are in each Scottish health trust; and what the salary is for each post. [2670]

  Mr. Galbraith
  [holding answer 11 June 1997]: Information relating to current salary of Executive Directors at Board level is shown in the table below, starting with the Chief Executive. Full information is already given in many Trust Annual Reports.

  Trust

  Number of Executive Directors

  Salary of posts £ thousand

  Aberdeen Royal Hospitals NHS Trust

  5

  78; 76; 52; 52; 44

  Angus NHS Trust

  5

  61; 90; 51; 43; 38

  Argyll and Bute NHS Trust

  5

  52; 92; 42; 38; 38

  Ayrshire and Arran Community Healthcare NHS Trust

  5

  61; 74; 53; 47; 43

  Borders Community Health Services NHS Trust

  4

  59; 71; 46; 41

  Borders General Hospital NHS Trust

  5

  62; 83; 49; 40; 38

  Caithness, and Sutherland NHS Trust

  5

  45; 62; 41; 35; 33

  Central Scotland Healthcare NHS Trust

  5

  81; 67; 48; 46; 44

  Dumfries and Galloway Acute and Maternity Hospitals NHS Trust

  5

  55; 84; 41; 40; 39

  Dumfries and Galloway Community Health NHS Trust

  5

  55; 54; 44; 42; 40

  Dundee Healthcare NHS Trust

  5

  75; 71; 56; 49; 44

  Dundee Teaching Hospitals NHS Trust

  5

  85; 92; 54; 53; 52

  East and Midlothian NHS Trust

  5

  61; 53; 46; 46; 18

  Edinburgh Healthcare NHS Trust

  5

  72; 63; 57; 53; 49

  Edinburgh Sick Children's NHS Trust

  5

  53; 81; 44; 26; 20

  Falkirk and District Royal Infirmary NHS Trust

  5

  71; 89; 47; 46; 41

  Fife Healthcare NHS Trust

  5

  66; 56; 46; 45; 39

  Glasgow Dental Hospital and School NHS Trust

  5

  56; 42; 42; 37; 5

  Glasgow Royal Infirmary University NHS Trust

  5

  83; 75; 61; 57; 51

  Grampian Healthcare NHS Trust

  5

  90; 72; 66; 61; 56

  Greater Glasgow Community and Mental Health Services NHS Trust

  5

  80; 87; 58; 53; 51

  Hairmyres and Stonehouse Hospitals NHS Trust

  5

  66; 72; 49; 45; 45

  Highland Communities NHS Trust

  4

  54; 40; 40; 36

  Inverclyde Royal NHS Trust

  5

  62; 75; 52; 42; 42

  Kirkcaldy Acute Hospitals NHS Trust

  5

  62; 87; 54; 45; 38

  Lanarkshire Healthcare NHS Trust

  5

  71; 46; 46; 45; 43

  Law Hospital NHS Trust

  5

  68; 78; 50; 48; 47

  Lomond Healthcare NHS Trust

  5

  52; 76; 45; 38; 38

  Monklands and Bellshill Hospitals NHS Trust

  5

  63; 54; 54; 45; 43

  Moray Health Services NHS Trust

  5

  58; 80; 43; 42; 40

  North Ayrshire and Arran NHS Trust

  5

  73; 83; 56; 47; 44

  Perth and Kinross Healthcare NHS Trust

  5

  65; 86; 48; 44; 42

  Queen Margaret Hospital NHS Trust

  5

  71; 79; 47; 46; 46

  Raigmore Hospital NHS Trust

  5

  61; 66; 46; 40; 39

  Renfrewshire Healthcare NHS Trust

  5

  74; 72; 54; 45; 43

  Royal Alexandra Hospital NHS Trust

  5

  62; 60; 45; 41; 39

  491

  Trust

  Number of Executive Directors

  Salary of posts £ thousand

  Royal Infirmary of Edinburgh NHS Trust

  5

  91; 69; 69; 67; 66

  Scottish Ambulance Service NHS Trust

  5

  72; 63; 57; 57; 45

  South Ayrshire Hospitals NHS Trust

  5

  66; 98; 62; 52; 48

  Southern General Hospital NHS Trust

  5

  82; 83; 55; 55; 55

  Stirling Royal Infirmary NHS Trust

  5

  64; 48; 46; 38; 17

  Stobhill NHS Trust

  5

  71; 57; 54; 53; 44

  Victoria Infirmary NHS Trust

  5

  62; 92; 46; 43; 40

  West Glasgow Hospitals University NHS Trust

  5

  81; 66; 62; 54; 51

  West Lothian NHS Trust

  5

  78; 85; 48; 47; 41

  Western General Hospitals NHS Trust

  5

  75; 89; 50; 48; 42

  The Yorkhill NHS Trust

  5

  76; 92; 55; 53; 41

  Monktonhall Colliery Site
  Mr. Eric Clarke
  To ask the Secretary of State for Scotland if the Coal Authority will transfer the cleared Monktonhall Colliery Site to the ownership of Midlothian Council. [6774]

  Mr. Wilson
  This is a matter for the Coal Authority. Under Section 3(4) of the Coal Industry Act 1994, it is the duty of the Authority to secure the best terms reasonably available for disposal of the site if a buyer cannot be found to keep the mine operational.

  Beaufort's Dyke
  Mr. Russell Brown
  To ask the Secretary of State for Scotland if he will initiate(a) a further detailed survey of Beaufort's Dyke and the surrounding area and (b) a public inquiry into the matters raised by the survey. [6643]

  Mr. Dewar
  The levels of radioactivity throughout the Irish Sea are routinely monitored by the Centre for Environment. Fisheries and Aquaculture Science an executive agency of the Ministry of Agriculture, Fisheries and Food. The most recent report, which is entitled "Radioactivity in Food and the Environment 1995", is available in the Library of the House of Commons. The monitoring undertaken since the early 1960s has not detected any measurable effect on radioactivity levels in the Beaufort's Dyke area, which remain well within internationally agreed safety levels. At the moment I see no need to initiate any additional surveys or a public inquiry.

  Mr. Salmond
  To ask the Secretary of State for Scotland if he will commission the Aberdeen Marine Research Laboratory to conduct an investigation into radiation levels in the Beaufort's Dyke area. [6830]

  Mr. Dewar
  The Centre for Environment, Fisheries and Aquaculture Science, an executive agency of the Ministry of Agriculture, Fisheries and Food, carried out comprehensive monitoring for levels of radioactivity throughout the Irish Sea. Such monitoring takes place on a regular basis and will continue. Involvement of the Marine Laboratory Aberdeen would therefore not be justified.

  Highlands and Islands Convention
  Mr. Wallace
  To ask the Secretary of State for Scotland if he will list the current members of the Convention of the Highlands and Islands, together with their qualification for membership. [6826]

  Mr. Dewar
  [holding answer 4 July 1997]: Membership comprises all MPs and MEPs whose constituencies lie wholly or partially within the area of operation of Highlands and Islands Enterprise together with nominees of the local authorities and public sector economic development agencies operating in the Highlands and Islands. A list of the current members of the Convention of the Highlands and Islands is set out below:

  Convention of the Highlands and Islands: Membership

  Council/enterprise

  Mrs. Winifred Ewing MEP

  —

  Hugh McMahon Esq. MEP

  —

  Mrs. Margaret Ewing MP

  —

  Charles Kennedy Esq. MP

  —

  Calum MacDonald Esq. MP

  —

  Robert Maclennan Esq. MP

  —

  Mrs. Ray Michie MP

  —

  David Stewart Esq. MP

  —

  Jim Wallace Esq. MP

  —

  Councillor John Wilson (Convener)

  Argyll and Bute Council

  Councillor Dick Walsh (Leader of Council)

  Argyll and Bute Council

  Councillor Peter Peacock (Convenor)

  Highland Council

  Councillor David R. Green (Vice Convenor)

  Highland Council

  Councillor Gordon McDonald (Convener)

  Moray Council

  Councillor George Steven (Convener)

  North Ayrshire Council

  Councillor H. Halcro-Johnston (Convener)

  Orkney Islands Council

  Councillor J. Sinclair (Vice Convener)

  Orkney Islands Council

  Canon Lewis Shand Smith (Convener)

  Shetland Islands Council

  Councillor James L. B. Smith (Vice Convener)

  Shetland Islands Council

  Councillor Donald M. MacKay (Convener)

  Western Isles Council

  Councillor Angus M. Graham (Vice Convener)

  Western Isles Council

  Fraser Morrison Esq. (Chairman)

  Highlands and Islands Enterprise

  Hon. Michael Shaw (Chairman)

  Argyll and the Islands Enterprise

  Jack Watson Esq. (Chairman)

  Caithness and Sutherland Enterprise

  Norman Cordiner Esq. (Chairman)

  Inverness and Nairn Enterprise

  D. Stewart Maclean Esq. (Chairman)

  Lochaber Limited

  Air Vice-Marshal George A. Chesworth (Chairman) Eric G. W. Green Esq. (Chairman)

  Moray Badenoch and Strathspey Enterprise Orkney Enterprise

  Alan J. Whiteford Esq. (Chairman)

  Ross and Cromarty Enterprise

  Brian Anderson Esq. (Chairman)

  Shetland Enterprise

  Dr. Jim Hunter (Chairman)

  Skye and Lochalsh Enterprise

  Mrs. Agnes Rennie (Chairperson)

  Western Isles Enterprise

  Dr. J. Gordon Adams (Director of Planning and Development

  Scottish Tourist Board

  493

  Convention of the Highlands and Islands: Membership

  Council/enterprise

  Alec Mitchell Esq. (Chairman)

  Aberdeen and Grampian Tourist Board

  Councillor William Petric (Chairman)

  Argyll, the Isles, Loch Lomond, Stirling and Trossachs Tourist Board

  Jim Lees Esq. (Arran Trade Director)

  Ayrshire and Arran Tourist Board

  J. Nicol Manson Esq. (Chairman)

  Highlands of Scotland Tourist Board

  Mrs. Lynne Linklater (Chairman)

  Orkney Tourist Board

  Peter Tulloch Esq. (Chairman)

  Shetland Islands Tourism

  Ernest W. Hughson Esq. (Chairman)

  Western Isles Tourist Board

  J. A. MacAskill Esq. (Chairman)

  Crofters Commission

  Bill Ritchie Esq. (Member SNH Board, Chairman NW Regional Board)

  Scottish Natural Heritage

  Councillor Valerie MacIver (Chairman)

  University of the Highlands and Islands Project

  A80
  Mr. Canavan
  To ask the Secretary of State for Scotland if he will make a statement on the upgrading of the existing A80 as the preferred line of route for the M80; and when he expects work to commence. [7183]

  Mr. Chisholm
  Consideration of how the upgrading of the A80 might be taken forward will be included in the Strategic Review of the Trunk Road Programme, which I have announced. This will include the options available for alternative routes.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Leyton Relief Road
  Mr. Chidgey
  To ask the Secretary of State for the Environment, Transport and the Regions if it is his policy that the proposed Leyton Relief Road southern section will be funded by public money. [7349]

  Ms Glenda Jackson
  The southern junction of the Leyton Relief Road with Ruckholt Road (locally known as the southern section) will be funded by the landowners: London and Continental Railways.

  Drivers (Alcohol Levels)
  Mr. Mackinlay
  To ask the Secretary of State for the Environment, Transport and the Regions if he will consider introducing legislation reducing the permissible alcohol levels for drivers. [6623]

  Ms Glenda Jackson
  We are looking at a number of options for improving road safety. The legal limit for drinking and driving is one of the issues we shall be considering.

  Heathrow Airport (Terminal 5)
  Mr. Mackinlay
  To ask the Secretary of State for the Environment, Transport and the Regions pursuant to his answer of 30 June,Official Report, column 57 (1) what assessment he has made of the consistency
  494
  between that answer and the evidence given on 27 February by Mr. Tom Dockerty at the Terminal 5 inquiry on behalf of the Department of Transport regarding the M25 and its relationship with the proposed spur road and Terminal 5; [6617]

  (2) what assessment he has made of the transcript of the evidence given by Mr. Tom Dockerty on behalf of the Department of Transport at the Terminal 5 inquiry on 27 February, including the replies to questions by the Inspector. [6618]

  Ms Glenda Jackson
  My right hon. Friend will assess the evidence in the light of the recommendations made by the Inspector when he submits his report on the Terminal 5 inquiry.

  Zinc Air Batteries
  Mr. Corbett
  To ask the Secretary of State for the Environment, Transport and the Regions what recent evaluation has been made by his Department of the suitability of vehicles powered by zinc air batteries for commercial fleet usage. [7358]

  Ms Glenda Jackson
  The Department, in collaboration with other bodies, is evaluating in a three-year field trial, the role that vehicles powered by alternative fuels such as electricity might play in minimising transport emissions. The results will be available later this year.

  In general terms, factors such as battery technology and infrastructure/recharging systems have meant that electric vehicles have not as yet gained customer acceptance due to higher price, inferior performance and range. It is encouraging that industry is responding to this through the development of systems and products such as zinc air batteries which appear to offer improvements in these areas.

  Rivers Wye and Lugg
  Mr. Keetch
  To ask the Secretary of State for the Environment, Transport and the Regions what is the estimated cost to the Environment Agency of assuming navigation authority status on the Rivers Wye and Lugg; what has been the cost to date of their assessment of these proposals; and if he will make a statement. [6362]

  Angela Eagle
  The costs incurred to date by the Environment Agency and its predecessor body, the National Rivers Authority, in promoting an Order to become navigation authority on the Rivers Wye and Lugg are estimated at £400,000 since 1995 when the proposals were first put forward. The total cost of assessing these proposals will not be known until the public inquiry into the application for an Order has closed, but the inspector's fees to date are approximately £19,000. The additional costs of managing the navigation function are unlikely to be significant, but the Agency expects to appoint one additional full time member of staff who would have significant navigation responsibilities.

  Mr. Keetch
  To ask the Secretary of State for the Environment, Transport and the Regions on what statutory basis the Environment Agency is seeking to assume navigation authority status on the Rivers Wye and Lugg; and if he will make a statement. [6363]
  495
  Angela Eagle
  The Environment Agency is seeking to become navigation authority on the Rivers Wye and Lugg by means of an Order under Section 3 of the Transport and Works Act 1992. A public inquiry into the Agency's application is currently taking place. The decision on the application will be a joint one by the Secretaries of State for the Environment, Transport and the Regions and for Wales.

  Oil and Gas Exploration
  Mr. Dafis
  To ask the Secretary of State for the Environment, Transport and the Regions if he will transfer to the Environment Agency responsibility for the regulation and licensing of oil and gas exploration and extraction. [7097]

  Angela Eagle
  The statutory responsibility for the general regulation and licensing of oil and gas exploration and extraction lies with my right hon. Friend the President of the Board of Trade. The Government has no proposals for change.

  Dry Stone Walls
  Helen Jackson
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what consultations he has had with(a) the Peak District and (b) the North Yorkshire National Parks about the destruction of dry stone walls; [7100]

  (2) what proposals he has to protect dry stone walls in areas of outstanding national beauty or conservation; and if he will make a statement. [7101]

  Angela Eagle
  Dry stone walls are an important landscape feature. The main threats to their conservation stem from damage and neglect. To help address this, the Government provides grant assistance for the restoration of dry stone walls under the Countryside Stewardship and Environmentally Sensitive Areas schemes operated by the Ministry of Agriculture, Fisheries and Food. Local authorities and National Parks also have powers to operate local environmental grant schemes which may include assistance for the management of dry stone walls and local planning authorities have planning powers to control the demolition of dry stone walls in conservation areas. There are a number of such schemes operated by the Peak District and North Yorkshire National Parks, and information on these is provided to the Secretary of State every year in the context of his discussions of the National Park Authorities' Corporate Financial Plans.

  Helen Jackson
  To ask the Secretary of State for the Environment, Transport and the Regions what estimate he has made of the number of dry stone walls which have been removed from the upland countryside over the past(a) five and (b) 10 years. [7099]

  Angela Eagle
  The latest information on national losses of dry stone walls are derived from a survey of the countryside in 1990(Countryside Survey 1990: Main Report, DOE, London, 1993). The survey estimated that the total length of dry stone walls in the uplands of Great Britain in 1990 was about 103,000 km and that the overall length of dry stone walls had decreased by about 14 per cent. since 1984. However, due to the sample design used in the survey, there were substantial uncertainties attached
  496
  to these estimates. The Department of Environment, Transport and the Regions is currently planning a repeat of this survey in 1998.

  Education Standard Spending Assessment
  Mr. McNulty
  To ask the Secretary of State for the Environment Transport and the Regions if he will review provision for the additional educational needs index within the education standard spending assessment; and if he will make a statement. [6934]

  Mr. Raynsford
  I am committed to a fair distribution of government grant to local authorities through Standard Spending Assessments (SSAs). As part of our programme of work on SSAs, we intend to review the allowance for additional educational needs within the Education SSA. The review is likely to continue into 1998.

  Hybrid Wolves
  Caroline Flint
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what representations he has received from the RSPCA on the interpretation of the legislation governing hybrid wolves; and what plans he has to meet the RSPCA to discuss these; [6989]

  (2) what plans he has to issue new guidelines to local authorities about the interpretation of the Dangerous Wild Animals Act 1976, with particular reference to hybrid wolves. [6990]

  Angela Eagle
  My hon. Friend the Minister of State has received a letter from the Director General of the RSPCA expressing the Society's concerns about the legislation covering the keeping of wolf hybrids. Officials from my Department will be meeting the Society shortly to discuss this issue.

  Under the Dangerous Wild Animals Act 1976, a licence is required to keep a wolf or a wolf hybrid where one parent is (or both parents are) of a kind so specified in the schedule to the Act. I appreciate that there are detailed arguments about the make up and characteristics of wolf hybrids and there may be different interpretations of the meaning of "hybrid" and "parent" in the context of the Act. A number of local authorities have sought to clarify the position in the Courts. I am aware that a recent Court ruling has confirmed that a licence is required to keep a wolf hybrid under the Act.

  I have no immediate plans to issue new guidance on the Act and the keeping of wolf hybrids, but I will wish to consider whether further guidance is required in the light of detailed consideration of the Court ruling and the RSPCA meeting.

  Council Houses (Solar Power)
  Mr. Dafis
  To ask the Secretary of State for the Environment, Transport and the Regions if he will ensure that new council house building schemes incorporate(a) higher insulation standards than have been required up to now and (b) consideration of the applicability of solar power. [7096]
  497
  Mr. Raynsford
  Council house building, in common with private sector house building, has to comply with the Building Regulations which include requirements for the conservation of fuel and power. Strengthened requirements were introduced only two years ago, from July 1995, since when there has been little in the way of council house building. The strengthened requirements should ensure that the annual energy consumption for space and hot water in average new dwellings is 25 per cent. to 35 per cent. lower than before. The requirements represent the minimum compliance level for new housing in England and Wales and my Department is keeping them under review. Local authorities are of course free to apply higher standards in any of their schemes. They and other house builders are encouraged to do so through my Department's Energy Efficiency Best Practice Programme. Local authorities are required by Planning Policy Guidance Note 22 to have regard to renewable energy—including solar energy. Detailed technical guidance is freely available from the DTI and my own Department on how to make the most of this energy source.

  Water Regulations (Health and Safety)
  Mr. Day
  To ask the Secretary of State for the Environment, Transport and the Regions if he will review the advantages of including health and safety requirements in those water regulations currently subject to public consultation. [6935]

  Angela Eagle
  I understand that the Water Regulations Advisory Committee considered the health and safety of the occupants of premises when formulating its proposals for water regulations. Any representations about the scope and substance of these requirements should be made as a response to the consultation document which the Committee issued on 19 June.

  Computers (Century Date Change)
  Mr. David Atkinson
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on his Department's timetable for dealing with the Year 2000 Computer Problem; who is in charge of the project: how many staff are working on it: what is the projected cost of resolving the problem; and whether the project is on schedule. [7147]

  Mr. Prescott
  The DETR and its Executive Agencies are undertaking systems audits and holding discussions with product and service suppliers to analyse the problem in detail in order to produce costed plans by October 1997. Details of costs, schedules and resources will be determined when these are produced, but the target is to complete essential changes by December 1998. Approximately, the equivalent effort of 14 staff is employed on the projects at this stage, excluding work in contracted service suppliers.

  Directors and Agency Chief Executives are responsible for addressing the problem in their businesses and in most cases each has appointed a project manager. Government Offices for the Regions are responsible for the Year 2000 compliance of their local applications. GO Central Unit has corporate responsibility for these offices and is setting up a formal project to manage all Year 2000 issues.

  Sustainable Development
  Mr. Corbyn
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to co-ordinate Local Agenda 21 plans for sustainable development; and if he will make a statement. [6599]

  Angela Eagle
  [holding answer 7 July 1997]: In his recent speech to the UN General Assembly Special Session on the environment my Right hon. Friend the Prime Minister paid tribute to the good record of United Kingdom local authorities on Local Agenda 21 and said that he wanted all authorities to adopt Local Agenda 21 strategies by the year 2000.

  The Government will be working closely with the local authority associations and the Local Government Management Board to encourage local authorities to meet this target. In doing so, we will take care not to take on a "co-ordinating" role because the strength of Local Agenda 21 derives from the ability of local authorities, community groups, businesses and others to work co-operatively for sustainable development in the light of local and regional needs.

  Empty Council Properties
  Mr. Colvin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list the 10 local authorities with the highest number of empty residential council properties. [7225]

  Mr. Raynsford
  The latest available data are for 1 April 1996 when the 10 local authorities in England with the highest numbers of reported management vacants, i.e. dwellings available for letting immediately or after minor repairs, were:

  Management vacants

  Number

  As a percentage of total stock

  Sheffield

  1,505

  2.12

  Birmingham

  1,500

  1.52

  Islington

  1,484

  4.01

  Leeds

  1,434

  1.86

  Manchester

  1,348

  1.67

  Hackney

  1,098

  2.85

  Liverpool

  1,095

  2.28

  Sandwell

  998

  2.30

  Lambeth

  885

  2.07

  Southwark

  817

  1.53

  Source:

  1996 Housing Investment Programme (HIP1) returns.

  Local Authorities (Debt)
  Mr. Colvin
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list the 10 local authorities with the highest amount of debt. [7224]

  Mr. Raynsford
  The information requested is as follows. It should be noted that authorities with high levels of debt are generally those which have undertaken capital investment and that longer term borrowing to finance capital expenditure is regulated by Government through the issue of credit approvals.
  499

  Authority

  Outstanding debt at 31 March 1996 £ million

  Birmingham

  1,218

  Manchester

  1,206

  Lambeth

  929

  Islington

  868

  Liverpool

  802

  Sheffield

  802

  Southwark

  788

  Hackney

  762

  Leeds

  697

  Tower Hamlets

  658

  Note:

  The outstanding debt figures include both long term and short term borrowing. Local authorities provide data on outstanding amounts for temporary debt and investments in the Department's regular monthly and quarterly borrowing and lending inquiries, but information on longer term debt is collected as flows i.e. transactions during the relevant period. The Department conducted special surveys in 1991, 1993 and 1994 seeking information on the amount of outstanding longer term debt and investment. The figure for 1996 has been calculated from information supplied to the Department in the 1994 survey and the regular monthly and quarterly surveys, and may include estimated values.

  Source:

  DOE borrowing and lending surveys and PWLB.

  Carers
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions what steps his Department is taking to increase awareness of the discount for council tax bills that is available to carers. [6458]

  Mr. Raynsford
  The Department will be writing shortly to all local authorities to remind them of the need to present information in council tax bills on discount disregards, including the carers disregard, as clearly as possible.

  Capital Receipts Initiative
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions for what reasons organisations of disabled people or representing disabled people have not been sent without request the consultation paper on proposals for implementing the Government's Capital Receipts Initiative. [6979]

  Mr. Raynsford
  The arrangements for issuing the consultation paper setting out proposals for a Capital Receipts Initiative in England focused on local authorities in England and a limited number of other organisations with direct interest in the proposals. However, we have already sent an additional 400 copies of the paper to other organisations or individuals on request.

  Sports Grounds (Wheelchair Spaces)
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment his Department has made of the(a) advantages and (b) disadvantages of modifying Part M of the Building Regulations so as to provide for a smaller proportion of wheelchair spaces in large sports grounds. [7081]
  500
  Mr. Raynsford
  The Approved Document for Part M provides guidance on reasonable provision of wheelchair spaces in sports stadia including an acceptance that it would be reasonable to provide a smaller proportion of wheelchair spaces in large stadia. The Department has made no assessment of either the advantages or the disadvantages of modifying Part M of the Building Regulations so as to provide for a smaller proportion of wheelchair spaces in large sports grounds.

  Postal Votes
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions what his Department plans to spend on advertising the availability of postal votes before the proposed referendum on a strategic authority for London. [7085]

  Mr. Raynsford
  No decisions have yet been taken on detailed arrangements in respect of the proposed referendum on a Greater London Authority.

HEALTH

  GP Fundholders
  Mr. Jack
  To ask the Secretary of State for Health if he will make a statement on the differences in the method of operation between GP fundholders and locality commissioning; and when commissioning will be introduced. [6746]

  Mr. Milburn
  General practitioner fundholders are allocated a budget with which to purchase for their patients those health services included in the fundholding List of Goods and Services. A range of approaches to commissioning have already begun to develop locally. Details vary, but the usual pattern is that GP practices, (sometimes including fundholders) collaborate with their health authority to plan the local health strategy, determine priorities, and in some cases also commission services for all patients to ensure that all have equal access to high quality health care.

  I announced on 26 June a programme to evaluate 20 GP Commissioning Group pilots over 2 years from April I998, to complement an assessment of the range of existing activity.

  NHS Appointments (Members of Parliament)
  Mrs. Virginia Bottomley
  To ask the Secretary of State for Health if he will list the Labour and Liberal Democrat hon. Members of the current House of Commons and of the House of Lords who have served as members of(a) NHS trusts and (b) health authorities in the past seven years. [6651]

  Mr. Milburn
  The Department does not hold all the information on trust and health authority board posts held by current members of the House prior to this Parliament.
  501
  Current Members of the House of Commons, of whatever party, are disqualified from serving as non-executive members of National Health Service trusts or health authorities. Ten Members of the House of Lords are currently also non-executive members of trust and health authority boards. Of these, one takes the Labour Whip, seven take the Conservative Whip and two sit on the cross benches.

  NHS Management
  Mr. Norman
  To ask the Secretary of State for Health how many general and senior managers currently work in the NHS hospital and community health services: and how many of these have direct contact with patients. [6941]

  Mr. Milburn
  There were 20,590 whole-time equivalent senior managers and other administrative managers employed by the National Health Service Hospital and Community Health Service at 30 September 1996. Information on how many of these have direct contact with patients is not centrally available. The Government is committed to maximising the proportion of NHS resources devoted to patient care by removing the bureaucratic processes of the internal market and reducing management costs in health authorities and trusts.

  NHS Funding Formula
  Mr. Gunnell
  To ask the Secretary of State for Health (1) if he will reconsider the recommendations made in 1994 by University of York health economists who were commissioned to produce new funding formulae for health care; [7228]

  (2) what assessment he has made of the equity of the operation of the market forces factor within the funding formula; [7227]

  (3) what change there has been in the needs weighting element of health authority allocations for 1997–98; [7231]

  (4) when he expects the review of the national distribution of central Government resources to primary and secondary health care to be completed; [7226]

  (5) what assessment his Department has made of the advantages of increasing the weighting for needs in health authority funding allocations. [7230]

  Mr. Milburn
  In 1997–98 an interim needs weighting for Community Health Services was introduced and applied to 11 per cent. of expenditure (leaving 14 per cent. not weighted for need).

  It is the Government's intention to look at how resources are distributed across both secondary and primary care to ensure that these fully reflect local population needs and operate as fairly as possible. Details will be announced in due course.

  Mr. Gunnell
  To ask the Secretary of State for Health what was the(a) actual and (b) percentage change in the health resources allocated to each region of England in the financial year following the introduction of the market forces factor in the funding formula. [7229]

  Mr. Milburn
  Allocations are made direct to health authorities and not to regions. Changes to the formula directly affect target allocations rather than actual 502
  allocations. The attached table shows the changes to health authority target allocations which resulted from the implementation of the latest market forces factor:

  Summary of changes to Health Authority target allocations from 1996–97 to 1997–98, resulting from changes to the market force factor

  Health authority

  £000s

  Per cent.

  Bradford

  -930

  -0.47

  Calderdale and Kirklees

  -1,035

  -0.43

  County Durham

  10

  0.00

  East Riding

  -1,098

  -0.46

  Gateshead and South Tyneside

  -580

  -0.40

  Leeds

  -1,687

  -0.57

  Newcastle and North Tyneside

  -881

  -0.45

  North Cumbria

  119

  0.09

  North Yorkshire

  -618

  -0.20

  Northumberland

  -805

  -0.64

  Sunderland

  -534

  -0.44

  Tees

  3,783

  1.67

  Wakefield

  -648

  -0.50

  Barnsley

  -371

  -0.40

  Doncaster

  -761

  -0.63

  Leicestershire

  -1,404

  -0.37

  Lincolnshire

  -528

  -0.21

  North Derbyshire

  -370

  -0.24

  North Nottinghamshire

  -513

  -0.33

  Nottingham

  -917

  -0.35

  Rotherham

  -465

  -0.45

  Sheffield

  -844

  -0.39

  South Derbyshire

  -917

  -0.40

  South Humber

  -408

  -0.32

  Bedfordshire

  -2,690

  -1.11

  Berkshire

  12,619

  3.59

  Buckinghamshire

  1,551

  0.52

  Cambridge and Huntingdon

  5,591

  2.98

  East Norfolk

  -1,287

  -0.51

  North-west Anglia

  1,736

  1.03

  Northamptonshire

  5,571

  2.22

  Oxfordshire

  -1,678

  -0.63

  Suffolk

  2,147

  0.79

  Barking and Havering

  -6,330

  -3.57

  Barnet

  -2,802

  -1.84

  Brent and Harrow

  -104

  -0.05

  Camden and Islington

  3,540

  1.89

  Ealing, Hammersmith and Hounslow

  9,049

  2.89

  East and North Hertfordshire

  1,086

  0.49

  East London and the City

  1,733

  0.57

  Enfield and Haringey

  -6,281

  -2.74

  Hillingdon

  4,729

  4.10

  Kensington, Chelsea and Westminster

  6,157

  3.30

  North Essex

  -7,924

  -2.03

  Redbridge and Waltham Forest

  -8,631

  -4.05

  South Essex

  -5,602

  -1.80

  West Hertfordshire

  6,937

  2.92

  Bexley and Greenwich

  -8,679

  -4.27

  Bromley

  -5,791

  -4.18

  Croydon

  -258

  -0.17

  East Kent

  -7,011

  -2.67

  East Surrey

  5,653

  3.10

  East Sussex, Brighton and Hove

  -17,524

  -5.42

  Kingston and Richmond

  -1,037

  -0.69

  Lambeth, Southwark and Lewisham

  660

  0.18

  Merton, Sutton and Wandsworth

  -3,139

  -1.06

  West Kent

  -11,332

  -2.64

  West Surrey

  8,381

  2.95

  West Sussex

  439

  0.14

  Avon

  13,840

  3.43

  Cornwall and Isles of Scilly

  -750

  -0.38

  Dorset

  1,656

  0.58

  Gloucestershire

  5,280

  2.32

  Isle of Wight

  -3.229

  -5.93

  North and East Devon

  -721

  -0.37

  North and Mid Hampshire

  -2,480

  -1.03

  503

  Summary of changes to Health Authority target allocations from 1996–97 to 1997–98, resulting from changes to the market force factor

  Health authority

  £000s

  Per cent.

  Portsmouth and South East Hampshire

  -4,378

  -1.87

  Somerset

  198

  0.10

  South and West Devon

  -842

  -0.35

  Southampton and South West Hampshire

  -4,905

  -2.08

  Wiltshire

  8,365

  3.39

  Birmingham

  1,027

  0.25

  Coventry

  64

  0.05

  Dudley

  93

  0.07

  Herefordshire

  -59

  -0.09

  North Staffordshire

  -762

  -0.39

  Sandwell

  392

  0.33

  Shropshire

  -606

  -0.35

  Solihull

  -165

  -0.20

  South Staffordshire

  -587

  -0.25

  Walsall

  -121

  -0.11

  Warwickshire

  -865

  -0.42

  Wolverhampton

  98

  0.10

  Worcestershire

  -451

  -0.21

  Bury and Rochdale

  821

  0.51

  East Lancashire

  -1.104

  -0.53

  Liverpool

  2,463

  1.29

  Manchester

  996

  0.56

  Morecambe Bay

  -471

  -0.37

  North Cheshire

  3,173

  2.49

  North West Lancashire

  -721

  -0.37

  Salford and Trafford

  1,639

  0.90

  Sefton

  1,688

  1.42

  South Cheshire

  6,376

  2.32

  South Lancashire

  -329

  -0.26

  St. Helens and Knowsley

  1,997

  1.47

  Stockport

  2,477

  2.07

  West Pennine

  538

  0.28

  Wigan and Bolton

  1,507

  0.64

  Wirral

  1,784

  1.32

  Source:

  1997–98 Health Authority Revenue Cash Limits Exposition Book.

  Vitamin, B6
  Mrs. Ray Michie
  To ask the Secretary of State for Health what plans he has to change the recommended daily intake of vitamin B6 for women; and if he will make a statement. [7243]

  Ms Jowell
  The Reference Nutrient Intake is one of several Dietary Reference Values. These estimates of nutritional requirements of healthy people are made by the Committee on Medical Aspects of Food and Nutrition Policy. They were last reviewed in 1991 and there are no plans for a further review. The current Reference Nutrient Intake of around 1.5mg/day for vitamin B6 is enough to meet the nutritional needs of virtually all healthy adults. The British National Formulary says that there is little sound evidence for claims that supplements of vitamin B6 can alleviate the premenstrual syndrome.

  The Government is acting on the advice of the Food Advisory Committee and Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment to control the sales of vitamin B6 products because of the risk of adverse effects following consumption of supplements at doses of 50mg or above of vitamin B6 The levels of vitamin B6 in dietary supplements will be limited to a daily dose of 10mg.
  504
  Products containing higher daily doses will continue to be available as licensed medicinal products, or under the supervision of a pharmacist or doctor.

  Eye Tests
  Mr. Burstow
  To ask the Secretary of State for Health if eligibility for free NHS eye tests entitles an individual to a free domiciliary visit; and what assessment his Department has made of the availability of domiciliary eye test visits. [6456]

  Mr. Milburn
  Patients eligible for National Health Service sight tests, who are unable to attend an optical practice, are eligible for a free domiciliary visit. There were 222,500 domiciliary visits paid for by health authorities in 1995–96.

  Mr. Burstow
  To ask the Secretary of State for Health for what reasons statistics on the total number of eye tests performed in Great Britain were not collected between 1989 and 1993. [6459]

  Mr. Milburn
  The Department had never collected any information on numbers of private sight tests and, in 1989, it was Government policy to restrict the amount of information required from the private sector. In 1993 agreement was reached with the optical profession on the introduction of an annual survey of a sample of opticians' workloads, which provides the information on private sight tests currently used to make estimates of the total number of sight tests.

  Basildon and Thurrock General Hospitals NHS Trust
  Mr. Mackinlay
  To ask the Secretary of State for Health (1) what costs relating to(a) legal fees, (b) financial advisers and consultants and (c) other consultants have been incurred by the Basildon and Thurrock General Hospitals NHS Trust in respect of (i) PFI proposals to extend hospital facilities at Basildon Hospital and (ii) the proposed development of land at Orsett Hospital; [6656]

  (2) with which (a) financial institutions, (b) developers and (c) chartered surveyors the Basildon and Thurrock General Hospitals NHS Trust has had discussions with in respect of developing land at Orsett Hospital; [6657]

  (3) with which (a) financial institutions and (b) developers or their agents the Basildon and Thurrock General Hospitals NHS Trust has had discussions in respect of proposals relating to a PFI concerning Basildon Hospital. [6659]

  Mr. Milburn
  Basildon and Thurrock General Hospitals National Health Service Trust has not held discussions with any financial institutions or developers relating to proposals for a Private Finance Initiative project for acute rationalisation at Basildon Hospital and Orsett Hospital. They have held discussions with the Chartered Surveyors Drivers Jonas concerning Orsett Hospital development. As a consequence, no expenditure has been incurred in respect of financial advisers; £14,900 has been incurred in respect of legal advisers; and £29,963 has been incurred in respect of chartered surveyors.

  Mr. Mackinlay
  To ask the Secretary of State for Health, pursuant to his answer of 1 July,Official Report column 146, if he will list those consultants on (a) whole-time contracts and (b) maximum part-time

  505
  contracts doing (i) eight and (ii) 10 sessions a week in the Basildon and Thurrock General Hospitals NHS Trust. [7086]

  Mr. Milburn
  The contracts of employment between the trust and individual consultants are matters for the parties concerned.

  Mr. Mackinlay
  To ask the Secretary of State for Health, pursuant to his answer of 1 July,Official Report, column 146, which members serve on the remuneration committee of the Basildon and Thurrock General Hospitals NHS Trust Board. [7083]

  Mr. Milburn
  The remuneration committee is made up of all the current non-executive board members, including the trust chairman. They are:

  Mr. Ian Macpherson (Chairman)

  Mr. Derek Harman

  Mrs. Joan Sladden

  Mr. Peter Wallis

  Mr. Melvyn Lambert

  Ms Fiona East

  Community Care
  Mr. Burstow
  To ask the Secretary of State for Health what plans he has to increase the community care budget. [6974]

  Mr. Boateng
  The level of resources for community care in 1997–98 was announced in February 1997 as part of the local government settlement. That issue is now closed. My right hon. Friend the Deputy Prime Minister will announce the government's plans for local government expenditure in 1998–99, including provision for personal social services, in the autumn.

  Drug Costs
  Ms Hodge
  To ask the Secretary of State for Health what was the average cost to public funds of a course of drugs administered in hospital. [7272]

  Mr. Milburn
  Although it is possible to be specific for costs of some courses of drugs in hospital, the wide range of different drug treatments make it impossible to specify an average cost. However, the total cost of all drugs purchased by hospitals was £874,353 million in 1995–96, the latest year for which the data are available.

  Clinical Effectiveness
  Mr. Jack
  To ask the Secretary of State for Health what definition his Department uses of "clinically effective". [7430]

  Ms Jowell
  The Departments's 1996 publication Promoting Clinical Effectiveness defined clinical effectiveness as the extent to which specific clinical interventions, when deployed in the field for a particular patient of population, do what they are intended to do—that is, maintain and improve health and secure the greatest possible health gain from the available resources. This definition is still used.

AGRICULTURE, FISHERIES AND FOOD

  Live Animal Transport
  Mrs. Ray Michie
  To ask the Minister of Agriculture, Fisheries and Food if he will introduce exemptions for Highlands and Islands farmers from the Welfare of Animals During Transport Order 1997; and if he will make a statement. [7242]

  Mr. Chisholm
  I have been asked to reply.

  The Welfare of Animals (Transport) Order 1997 enables my right hon. Friend the Secretary of State for Scotland to grant exemption from most of its provisions, to any person transporting animals within the Highlands and Islands Enterprise area. Applications for such exemption will each be considered on the basis of all the relevant circumstances and shall be granted only where the welfare of the animals would not be put at risk as a result.

  Rabies
  Mr. Vaz
  To ask the Minister of Agriculture, Fisheries and Food (1) if he will make a statement on the Government's policy on keeping the United Kingdom rabies free; [6879]

  (2) if he will review the use of (a) rabies vaccinations and (b) microchipping as alternatives to quarantine. [6880]

  Mr. Rooker
  The current arrangements for keeping the United Kingdom rabies free are contained in the Rabies (Importation of Dogs, Cats and Other Mammals) Order 1974 (as amended). This requires certain rabies susceptible mammals to be quarantined for six months on entry to the UK. In the light of our commitment to do so, we are reviewing whether alternatives to quarantine might give equal or better protection against rabies. The review is taking account of the possibilities of vaccination and microchipping of animals.

  Quarantine
  Mr. Vaz
  To ask the Minister of Agriculture, Fisheries and Food what steps he proposes to improve welfare conditions in quarantine. [6881]

  Mr. Morley
  We are currently inspecting those quarantine kennels which have signed up to a Voluntary Code of Practice for the Welfare of Dogs and Cats in Quarantine Premises to ensure they can meet all its requirements. We would like to put this Code on a statutory basis when parliamentary time can be found.

  Computers (Century Date Change)
  Mr. David Atkinson
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on his Department's timetable for dealing with the year 2000 computer problem; who is in charge of the project; how many staff are working on it; what is the projected cost of resolving the problem; and whether the project is on schedule. [7130]

  Mr. Morley
  The Ministry's Director of IT is co-ordinating a programme of millennium preparations consisting of a number of parallel projects covering different aspects of the Department's computer systems and associated technical infrastructure. Another project
  507
  has been established, within that management framework, to address "non-IT" equipment containing embedded microprocessor chip technology.

  The current rate of progress is consistent with the targets set by the Central IT Unit (CITU) of the Cabinet Office and preparations for all business critical systems are expected to be completed by 31 December 1998, subject, where appropriate, to a final check of end-of-year financial systems by April 1999.

  Headcount details are difficult to estimate precisely because the work is so diverse and involves contributions (some full-time but often involving smaller proportions of individuals' time) from staff in many parts of MAFF and its Executive Agencies, as well as external IT consultants and contractors. The overall cost of millenium preparations, however, is currently estimated to be about £7 million. Prioritised and costed plans will be provided to CITU by October 1997.

  Live Poultry Sales
  Mr. Corbett
  To ask the Minister of Agriculture, Fisheries and Food if he will outlaw the sale of live poultry door-to-door for slaughter and consumption. [7124]

  Mr. Morley
  [holding answer 8 July 1997]: It would be difficult to outlaw this trade without affecting other, legitimate trade. Meat produced in accordance with special religious and cultural requirements is available from regulated outlets, so there is no need for customers to turn to this door-to-door trade. We shall be taking steps to spread awareness of this.

  Cattle Cull (Orkney)
  Mr. Wallace
  To ask the Minister of Agriculture, Fisheries and Food on how many occasions in June 1997 the Intervention Board made arrangements for blood from cattle culled in Orkney to be transported to the Scottish mainland for disposal; what was the volume of blood involved in each case and what was the capacity of the vehicle used to transport the blood; and what was the total cost to public funds. [6976]

  Mr. Rooker
  Commission Regulation 716/96, under which the Over Thirty Month Scheme (OTMS), operates, requires the remains of cattle slaughtered under the scheme to be incinerated, or rendered and destroyed. This requirement covers the whole of the animal, other than the hide, and the Intervention Board have instigated a system of collecting OTMS blood from scheme abattoirs by means of tanker round. The blood is taken to one of two rendering plants in Great Britain for processing, prior to destruction.

  Orkney Islands Council (OIC) have a contract with the intervention board to slaughter OTMS cattle offered to the scheme on Orkney, and to destroy the remains, including the blood, in a newly developed gasification facility. Because of difficulties with the chill facilities at the OIC plant in the first few weeks of June, the Intervention Board arranged for the remains of the OTMS animals slaughtered at the plant, including the blood, to be delivered to the renderer at Kintore in Aberdeenshire for processing.
  508
  A total of 4.2 tonnes of OTMS blood was collected from the Orkney cull abattoir on three separate occasions in June by the special tanker used to collect OTMS blood from the other participating abattoirs in scotland. This vehicle has a capacity of around 22 tonnes. All the invoices for this work have not yet been received, but it is estimated that the collection service, including ferry crossing, and rendering will cost in the order of £5,000.

  I am pleased to say that the difficulties with the chills have now been resolved, that the integrated slaughter and gasification process in Orkney is now fully operational again and that the blood from the OTMS animals slaughtered on Orkney is now processed on the island.

  Wild Plant Seeds
  Mr. Corbett
  To ask the Minister of Agriculture, Fisheries and Food what steps he is taking to ensure that there are adequate supplies of domestic wild plant seed to restore meadows under the Countryside Stewardship Scheme. [7359]

  Mr. Morley
  Domestic supplies of wild plant seed are obtained from harvesting existing species rich grassland meadows. The Countryside Stewardship scheme expects wild plant seed of local provenance to be used in the re-creation of species rich grassland or the restoration of hay meadows thereby generating a market for the material.

  Weald Meadows Initiative
  Mr. Corbett
  To ask the Minister of Agriculture, Fisheries and Food (1) what is the minimum amount of grant, and over what period, for which the Weald Meadows Initiative may apply to employ a specialist adviser on the replanting of degraded grass; [7360]

  (2) if he will list (a) the grants applied for and (b) the grants given and their amount on behalf of the Weald Meadows Initiative. [7362]

  Mr. Morley
  This Department has no grant scheme that could offer support for the employment of such an adviser. Last October, shortly before the closure in England of the Marketing Development Scheme, the Weald Meadows Initiative sought a grant for a products co-ordinator and a marketing campaign for its wildflower products. This application did not fit well with the scheme criteria, and with strong competition for the limited funds available, it was not successful.

  Mr. Corbett
  To ask the Minister of Agriculture, Fisheries and Food if he will list the grants for which application can be made to replant degraded grassland in the area covered by the Weald Meadows Initiative. [7361]

  Mr. Morley
  The re-creation, restoration and maintenance of unimproved grassland can be grant aided through the Countryside Stewardship scheme. Payments of £85 a hectare per year are available for managing lowland hay meadows together with a supplement of £30 a hectare per year for fields of less than 3 ha in size. Many of the remaining valuable grassland meadows are small in size and the additional payment is in recognition of the
  509
  difficulties of managing small fields. A one year supplementary payment is also available (normally for one year but occasionally up to five years) for additional measures to assist with initial grassland management work such as scrub control or spreading hay from species rich grassland to introduce flowers and grasses.

WALES

  Bowel Cancer
  Mr. Hanson
  To ask the Secretary of State for Wales which health authorities currently allow use of CPT-II in the treatment of bowel cancer. [5594]

  Mr. Win Griffiths
  Health Authorities in Wales do not currently allow the routine use of this drug in the treatment of bowel cancer, as they are awaiting further evaluation of its clinical effectiveness.

  Social Housing
  Mr. Barry Jones
  To ask the Secretary of State for Wales how he proposes to assist unitary authorities in Wales to increase their provision of social housing in Wales; and if he will make a statement. [6100]

  Mr. Win Griffiths
  I have asked Tai Cymru to increase the provision of social housing this year. We will also assist unitary authorities through our capital receipts initiative. This will enable them to increase the provision of social housing which can include partnership arrangements with private and registered social landlords; reduce the number of local authority void properties and make more efficient use of the housing stock. I have issued a consultation paper which encourages Welsh housing authorities to determine the most effective and cost efficient ways of increasing the provision of social housing and improving existing housing stock.

  Pyrethroid Sheep Dips
  Mrs. Golding
  To ask the Secretary of State for Wales if he will make a statement on the effect of pyrethroid sheep dips on aquatic life in rivers and streams in Wales. [6387]

  Mr. Wyn Griffiths
  On 13 June the Environment Agency issued a press release about the impact on the aquatic environment, including in Wales, of synthetic pyrethroid sheep dips which describes the action that the Agency is taking. I have arranged for a copy to be placed in the Library of the House.

  Welsh Assembly
  Mr. Burstow
  To ask the Secretary of State for Wales what his Department plans to spend on advertising the availability of postal votes before the proposed referendum on Welsh devolution. [7084]

  Mr. Ron Davies
  I plan to include information on absent voting in the leaflet setting out the Government's proposals which is to be distributed to all households in Wales. These costs will therefore be subsumed within the overall costs of producing the leaflet.

NORTHERN IRELAND

  Sinn Fein
  Mr. Clifton-Brown
  To ask the Secretary of State for Northern Ireland if she will make a statement on the preconditions under which Sinn Fein will be admitted to peace talks with the Government. [5897]

  Mr. Murphy
  There is no need for a further statement on this matter. My right hon. Friend the Prime Minister made it clear in his statement of 25 June what Sinn Fein need to do to enter talks, and he published at that time the aide memoire which had been sent to Sinn Fein following their two meetings with officials in May.

  Political Process
  Mr. Mallon
  To ask the Secretary of State for Northern Ireland what discussions she has had with representatives of the Irish Government to plan the agenda for negotiations on the three strands of the political process. [5898]

  Mr. Murphy
  The agenda for talks is a matter for the participants. I hope that, in the light of previous discussions in the talks, there will be early agreement on the agenda following a resolution of the decommissioning issue.

  Peace Process
  Mr. Gunnell
  To ask the Secretary of State for Northern Ireland if she will make a statement on progress made in the peace process since 25 June. [5901]

  Mr. Nicholas Winterton
  To ask the Secretary of State for Northern Ireland if he will make a statement on the peace process in Northern Ireland. [5907]

  Dr. Iddon
  To ask the Secretary of State for Northern Ireland if she will make a statement on the Northern Ireland peace process. [5909]

  Dr. Mowlam
  I refer to the oral answer that I gave earlier to my hon. Friends the Members for Luton, South (Ms Moran), Stevenage (Barbara Follett) and North-west Norfolk (Dr. Turner).

  Mr. Gareth R. Thomas
  To ask the Secretary of State for Northern Ireland if she will make a statement on support from the United States Administration for the peace process in Northern Ireland. [5902]

  Mrs. Humble
  To ask the Secretary of State for Northern Ireland if she will make a statement on support from the United States Administration for the peace process in Northern Ireland. [5918]

  Dr. Mowlam
  The United States administration share this Government's wish to see an end to all violence in Northern Ireland and to reach a lasting political settlement which has the broad support of people on both sides of the community. My right hon. Friend the Prime Minster and the President continue to discuss developments in Northern Ireland on a regular basis. We are grateful for the close personal interest that the President has taken, and for the valuable work of Senator George Mitchell in the Talks process.

  Marches and Parades
  Mr. Gordon Prentice
  To ask the Secretary of State for Northern Ireland what additional steps she proposes to take to minimise the risk of disorder during the marching season. [5903]

  Dr. Mowlam
  I, my Ministers and senior officials have been involved in intensive discussions with representatives of the Orange Order, residents' groups and others to resolve the problem of contentious parades. These efforts will continue.

  Considerable disorder has followed the Orange Order parade along the Garvaghy Road on Sunday. While recognising the anger felt in the Nationalist community, there can be no justification for the scenes of violence witnessed over the past few days.

  Mr. Home Robertson
  To ask the Secretary of State for Northern Ireland if she will make a statement on the cost of police and military security at marches and parades. [5911]

  Dr. Mowlam
  The information requested could only be obtained at disproportionate cost.

  Ms Ward
  To ask the Secretary of State for Northern Ireland if she will make a statement on parades and marches in Northern Ireland. [5914]

  Shona McIsaac
  To ask the Secretary of State for Northern Ireland if she will make a statement on parades and marches in Northern Ireland. [5919]

  Dr. Mowlam
  The Government will continue to seek a resolution to the difficult problems of contentious marches in Northern Ireland. We remain firmly committed to the principle of local accommodation and dialogue as offering the best solution.

  An agreed settlement could not be reached at Drumcree. The Chief Constable took his decision in the interests of public safety and the Government fully supports him. Decisions on future parades will be made using the criteria set down by the relevant legislation.

  The Government is committed to bringing forward new legislation on parades later this year which will provide the basis for a new approach to this issue.

  Electricity Interconnector
  Dr. Whitehead
  To ask the Secretary of State for Northern Ireland if he will make a statement on progress towards the establishment of the electricity interconnector. [5904]

  Mr. Jim Cunningham
  To ask the Secretary of State for Northern Ireland what progress is being made towards the construction of the electricity interconnector. [5912]

  Mr. Ingram
  Progress depends on the outcome of planning applications in Northern Ireland and Scotland. Northern Ireland Electricity plc submitted a second planning application for the Northern Ireland element of the project on 4 April 1997. My right hon. Friend the Secretary of State for Scotland hopes to announce his decision on the application for the Scotland element shortly.

  Unemployment
  Mrs. Organ
  To ask the Secretary of State for Northern Ireland what steps she is taking to combat long-term and youth employment in Northern Ireland. [5905]

  Mr. Worthington
  I refer my hon. Friend to the oral answer I gave earlier to my hon. Friend the Member for Dartford, (Dr. Stoate).

  Mr. Godman
  To ask the Secretary of State for Northern Ireland what is the current number of long-term unemployed claimants; and what was the number in(a) 1991, (b) 1993 and (c) 1995. [5917]

  Mr. Worthington
  The latest available information relates to April 1997 and at that time there were 34,807 long-term unemployed in Northern Ireland. For April of each of the other years requested the numbers were(a) 50,006 in 1991, (b) 56,818 in 1993 and (c) 49,885 in 1995.

  Employment Equality Review
  Helen Jones
  To ask the Secretary of State for Northern Ireland if she will make a statement on the employment equality review being conducted by the Northern Ireland Standing Advisory Commission on Human Rights. [5908]

  Dr. Mowlam
  I refer my hon. Friend to the reply I gave my hon. Friend the Member for Greenock and Inverclyde (Mr. Godman) on Thursday 26 June,Official Report, column 623.

  Economy (Expansion)
  Mr. Mackinlay
  To ask the Secretary of State for Northern Ireland if she will make a statement on progress to expand the Northern Ireland economy. [5913]

  Mr. Ingram
  We are working with business, the community and the unions to assist companies become more competitive, to attract tourists and high calibre inward investment, and to develop and harness the talents of everyone with a contribution to make to economic development in Northern Ireland. Our task will be immeasurably easier in a peaceful, stable environment.

  Belfast Port
  Mr. Bill O'Brien
  To ask the secretary of State for Northern Ireland if she will make a statement on future proposals for the port of Belfast. [5915]

  Mr. Murphy
  Government has not yet had the opportunity to consider the possible options for the future of the port of Belfast. I understand that the Belfast Harbour Commissioners have engaged consultants to advise them on available options and have formed a special committee to consider proposals under the Ports (NI) Order 1994. The Commissioners have not yet submitted any proposals to Government.

  Cross-border Security
  Mr. Robathan
  To ask the Secretary of State for Northern Ireland what discussions she has had with the new Irish Government regarding cross-border security. [5916]

  Mr. Ingram
  Maintaining the existing high levels of cross-border security co-operation with the new Irish Government will remain as a high priority. We shall continue to keep this under regular review with the Irish.

  Irish Language Teaching
  Mr. Flynn
  To ask the Secretary of State for Northern Ireland what new proposals he has to increase Irish language. [5906]

  Mr. Worthington
  Steps have been taken to ensure an adequate supply of suitably trained teachers of Irish Medium schools. St. Mary's College of Education now offers a four-year Bed (Primary) course for those wishing to teach in the Irish Medium Sector. Pending the output of teachers from this new course my Department has approved five additional one-year Post Graduate Certificate in Education intake places each year.

  Outside the irish medium sector, where Irish is compulsory, it is a matter for individual schools to decide whether to teach Irish, and I have no plans to change that.

  Punishment Beatings
  Mrs. Gorman
  To ask the Secretary of State for Northern Ireland if she will make a statement on the incidence of punishment beatings over the last six months. [5910]

  Mr. Ingram
  Between 1 January 1997 and 29 June 1997 the number of causalities resulting from paramilitary assaults as recorded by the RUC were:

  Loyalists

  Republican

  Beatings

  40

  48

  Shootings

  32

  4

  Total

  72

  52

  Clearly this type of brutal vigilante activity is barbaric and indefensible. The RUC remains the only legitimate law enforcement agency in Northern Ireland.

  Hospitals (Complaints)
  Rev. Martin Smyth
  To ask the Secretary of State for Northern Ireland if she will make a statement on the number of complaints concerning inadequate care in hospitals in the last year. [6175]

  Mr. Worthington
  The information is not centrally available in the form requested. Information on complaints to HSS Trusts in Northern Ireland is collected by Programme of Care. Of the total number of 3,188 complaints to HSS in Northern Ireland in the year 1996–97, 1,508 were in the Acute Programme of Care and 224 were in the Maternity and Child Health Programme of Care, the two Programmes of Care which are most strongly associated with hospital based rather than community-based care.

SOCIAL SECURITY

  Means Testing
  Mr. Fearn
  To ask the Secretary of State for Social Security what plans she has to widen the scope of means testing for benefits. [4599]

  Mr. Field
  Our objective is to reduce poverty and welfare dependency and to promote work incentives. We will develop a system that supports work, savings and honesty. Our first steps are to focus on helping people off welfare and into work and to review the central areas of insecurity for older people.

  Benefit Take-up
  Mr. Todd
  To ask the Secretary of State for Social Security what steps are planned to increase the uptake of benefits by individuals entitled to them who are not currently claiming. [4866]

  Mr. Keith Bradley
  We are concerned that up to one million pensioners currently miss out on the Income Support to which they are entitled. We want to get help to Britain's poorest pensioners and are commissioning research into the reasons why pensioners fail to claim the Income Support which is their due.

  Child Maintenance Bonus
  Mr. Pond
  To ask the Secretary of State for Social Security how many parents returning to work have been paid a child maintenance bonus since its introduction, and what was the average amount paid. [5441]

  Mr. Keith Bradley
  The information is as follows:

  Child maintenance bonus statistics1

  All claimants2

  Number of bonus payments made from 7 April 1997 to 30 May 19973

  79

  Total amount of bonus payments made from 7 April 1997 to 30 May 19974

  £1,538

  Estimated average bonus payment5

  £19.50

  Notes:

  1The Child Maintenance Bonus allows people to accrue a bonus over a period of time therefore it is difficult to judge its effectiveness on 2 months data.

  2Provisional data based on claims held on the Income Support Computer System (ISCS). Information on clerically processed claims or Jobseeker Allowance (JSA) claimants is not yet available.

  3Claims authorised for payment recorded on ISCS.

  4Total amount authorised for payment recorded on ISCS.

  5Based on total amount authorised for payment recorded on ISCS.

  Source:

  Child Maintenance Bonus management information statistics.

  Back to Work Bonus
  Mr. Pond
  To ask the Secretary of State for Social Security how many people returning to work have been paid a Back to Work Bonus since the scheme's introduction; and what was the average amount of the payment. [5440]
  515
  Mr. Keith Bradley
  We will be evaluating the effectiveness of the Back to Work Bonus scheme in contributing to our welfare to work objectives, which are to provide work incentives and to reduce poverty and welfare dependency.

  The information requested is in the table.

  Back to Work Bonus statistics1

  All claimants

  Number of bonus payments made from October 1996 to May 19972

  15,000

  Total amount of bonus payments made3 from October 1996 to May 1997

  £2,487,450

  Estimated average bonus payment4

  £172.11

  Claimants with an accrued bonus at the end of May 19975

  152,000

  Notes:

  1. These figures are subject to revision.

  1 Provisional data based on claims held on the Income Support Computer System (ISCS) and the Jobseeker's Allowance Payment System (JSAPS). No clerically processed claims included. Numbers are rounded to the nearest thousand.

  2 Claims authorised for payment recorded on JSAPS and ISCS. They include 500 payments made to claimants on reaching an age threshold (age 60 in Income Support, and age 65 for men and age 60 for women in Jobseeker's Allowance).

  3 Total amount authorised for payment recorded on ISCS and JSAPS.

  4 Based on total amount authorised for payment recorded on ISCS and JSAPS.

  5 Live claims on ISCS and JSAPS with a bonus accrual plus claims which have ended with a bonus accrual but no bonus payment has been made (claimants who return to benefit within 12 weeks and have not claimed a bonus retain the amount accrued during the previous claim).

  Source:

  Back to Work Bonus management information statistics.

  Child Support Agency
  Mrs. Ballard
  To ask the Secretary of State for Social Security when the Child Support Agency will be given instructions to act on cases brought to its attention voluntarily by parents with care who are not in receipt of income support, family credit or disability working allowance. [5666]

  Mr. Keith Bradley
  The Government believes that all children are entitled to the support of both parents. Children should only be supported by the taxpayer when their parents are unable to do so.

  The Child Support Agency already takes on cases where the parent with care is not receiving a relevant benefit and there is no court order, or written maintenance agreement which was made before 5 April 1993 for regular payments of child maintenance. Where there is such an order or agreement the parent with care can continue to use the courts to enforce or vary the amounts of maintenance.

  Housing Benefit
  Mr. Cotter
  To ask the Secretary of State for Social Security what plans she has to review housing benefit; and if she will make a statement. [6291]
  516
  Mr. Keith Bradley
  Housing Benefit is one of the major components of the Social Security system. We will be examining it, and links with housing support generally with the Secretary of State for the Environment, Transport and the Regions, as part of the comprehensive review of Government expenditure.

  Retirement Pensions
  Mr. Gorrie
  To ask the Secretary of State for Social Security what plans she has to increase the 25p per week augmentation of pensions given when pensioners reach the age of 80 years. [6626]

  Mr. Denham
  We will examine means of delivering more automatic help to the poorest pensioners, many of whom are over 80. We will shortly be announcing details of a review of the central areas of insecurity for older people. We have no plans to increase the 25p weekly age addition in 1997.

  Pensioners' Christmas Bonus
  Mr. Gorrie
  To ask the Secretary of State for Social Security what plans she has to increase the pensioners' £10 Christmas bonus. [6627]

  Mr. Denham
  I refer the hon. Member to the reply I gave to the hon. Member for Colchester (Mr. Russell) on 1 July,Official Report, column 136.

  Widows
  Mr. Cohen
  To ask the Secretary of State for Social Security if she will give priority to the circumstances of widows in her general review of social security; and if she will make a statement. [6988]

  Mr. Denham
  I refer the hon. Member to the reply I gave to the hon. Member for Edinburgh West (Mr. Gorrie) on 23 June,Official Report, column 413.

  Disability Living Allowance
  Mr. Burstow
  To ask the Secretary of State for Social Security when the benefits integrity programme in respect of disability living allowance will commence; how many benefit recipients will be subject to face to face interviews; when the programme will be completed; and what is the estimated cost of the programme. [6435]

  Mr. Denham
  One of our key aims is to rebuild integrity in, and public support for, the Social Security system and the way in which public money is spent. Research indicates that we may be paying £0.5 billion a year to people who are not entitled to receive it.

  This is why we have set up the Benefit Integrity Project to focus on those people who are properly entitled to receive it. However, we regard it as essential that disabled people are treated with respect and in an unthreatening way. The administration of this programme is a matter for Peter Mathison, Chief Executive of the Benefits Agency. He will write to the hon. Member.
  517
  Letter from Peter Mathison to Mr. Paul Burstow, dated 8 July 1997:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question about the Benefit integrity Programme.
  The Benefit Integrity Project formally commenced on 28 April 1997, the first postal enquiries were issued on 6 May 1997. Starting from the end of July a two year programme will commence to visit some 150,000 Disability Living Allowance recipients at home.
  The project is due to be completed by 31 March 1999, the findings of which will help to inform decisions about future integrity work. It is estimated that the cost of the project will be £10 a year.
  I hope you find this reply helpful.

  Mr. Burstow
  To ask the Secretary of State for Social Security by what means increases in the duty on petrol are incorporated into the mobility component of disability living allowance. [6622]

  Mr. Denham
  Disability Living Allowance is increased every year, by law, by the rate of inflation as measured by the movement in the Retail Prices Index (PRI). The basket of goods used to calculate the RPI includes the cost of petrol as well as other motoring costs.

  Carers
  Mr. Burstow
  To ask the Secretary of State for Social Security what assessment she has made of the advantages of sending to each recipient of invalid care allowance information on the discount for council tax bills that is available to carers; and what estimate she has made of the cost of sending such a mailing. [6457]

  Regulated Scheme

  Discretionary fund

  Year

  Maternity payments

  Funeral payments

  Cold weather payments

  Community care grants1

  Budgeting loans1

  Crisis loans1

  1991–92

  101

  706

  6

  281

  217

  62

  1992–93

  101

  789

  6

  314

  226

  65

  1993–94

  101

  873

  6

  322

  239

  64

  1994–95

  101

  924

  7

  340

  255

  65

  1995–96

  101

  791

  8.50

  351

  271

  66

  1 Does not include awards on review.

  Mr. Burstow
  To ask the Secretary of State for Social Security what plans she has to(a) revise the criteria for awarding and (b) increase the amount of moneys available to the social fund. [6969]

  Mr. Keith Bradley
  The Social Fund is made up of two parts; the regulated and discretionary schemes. The regulated scheme is based on rules of entitlement and payments are not cash limited. Discretionary Social Fund payments are made from a national cash limited budget which is allocated to individual Benefits Agency District Offices.

  The overall size of the gross discretionary Social Fund budget, and its allocation, is decided annually. It depends principally on the size of loan recoveries expected during the course of each coming year plus planned new provision voted for each year.

  Details of the annual gross budget for the discretionary Social Fund and the principles used for its allocation are placed in the Library in March each year. The allocations principles will be reviewed as part of each annual budget setting exercise.
  518
  Mr. Denham
  We will streamline services to provide better, simpler more efficient services to clients.

  There would be little advantage in writing to all recipients of Invalid Care Allowance because, although there may be some overlap, the criteria for entitlement to that benefit and to the council tax discount for carers differ significantly.

  The cost of such an exercise is likely to be in the region of £80,000—£105,000.

  Mr. Burstow
  To ask the Secretary of State for Social Security if foster carers can claim(a) incapacity benefit, (b) invalid care allowance and (c) other non-means tested benefits and in what circumstances. [6968]

  Mr. Denham
  We will streamline services to provide better, simpler more efficient services to clients.

  Foster carers can claim Incapacity Benefit, Severe Disablement Allowance, Invalid Care Allowance, Disability Living Allowance, Attendance Allowance and other non means tested benefits provided they meet the normal eligibility criteria for these benefits.

  Social Fund
  Mr. Burstow
  To ask the Secretary of State for Social Security what was the average award made under the social fund in each of the last five years. [6977]

  Mr. Keith Bradley
  Average Payments for 1991–92 to 1995–96 are in the table. Figures for 1996–97 will be published in the Department of Social Security's Annual Report on the Social Fund later this month.

  Income Support
  Mr. Burstow
  To ask the Secretary of State for Social Security if she will withdraw new instructions issued to social security staff in August 1995 that require them when assessing eligibility for income support in circumstances where the claimant was alleging abuse or significant harm, to probe into the nature and extent of that abuse. [6970]

  Mr. Keith Bradley
  We want a system that supports work, savings and honesty; and provides better, simpler and more efficient services to claimants. The guidance on claims from young people in the circumstances described ensures handling by staff trained in these sensitive matters. The Government has no plans to withdraw the guidance which provides an opportunity to highlight cases of abuse and to take necessary action.

  As Income Support for the unemployed has been replaced by income based Jobseeker's Allowance any

  519
  further consideration of this matter will be for the Secretary of State for Education and Employment.

  Mr. Burstow
  To ask the Secretary of State for Social Security what plans she has to simplify the process for claiming income support by people who go into residential care for temporary periods. [6973]

  Mr. Keith Bradley
  We will streamline services to provide better, simpler, more efficient services to clients. We fully recognise the importance that temporary placements have in providing respite care for carers and for those needing care. We are examining the current process for dealing with benefit claims to make procedures as simple and straightforward as possible and this will include the particular difficulties which can arise for people who need to claim Income Support for temporary periods in residential care.

  Incapacity Benefit
  Mr. Burstow
  To ask the Secretary of State for Social Security when she will be publishing details of the proposals set out in the Budget statement relating to disabled people on incapacity benefit. [7082]

  Mr. Denham
  The Government strongly believes that for people of working age work is the best form of welfare. We are committed to giving opportunities to sick and disabled people who have some capacity for work to do so. Some £200 million from the windfall levy has been set aside to fund this important programme of work and other measures.

  Over the coming months we will be looking to see what changes are necessary to ensure that the particular needs of people who have disabilities or who have lost contact with the labour market because of long-term sickness are provided for. We will make more detailed announcements in due course.

  Community Care Grants
  Mr. Burstow
  To ask the Secretary of State for Social Security if she will list the number of applications for community care grants, the number of applications which were turned down and the number of refusals as a percentage of the total number of applications in each of the last three financial years. [6971]

  Mr. Keith Bradley
  The Social Fund provides lump sum payments to help with exceptional or intermittent expenses. Applications to the discretionary Social Fund are made to the discretionary fund as a whole; not to parts of it. This means that an applicant may receive either a Community Care Grant or a loan depending on the social fund officer's assessment of the nature, extent and urgency of the need and the circumstances of the individual.

  In 1995–96 for example, over half a million applicants who were refused a grant were instead awarded a loan. Similarly over 41,000 applications for budgeting loans were instead awarded a community care grant. Of those applicants who specifically request a Community Care Grant, the vast majority do not satisfy the appropriate criteria to demonstrate a grant is needed to promote care in the community. Over the three years to 1995–96, over 70 per cent. of the 1.25 million applications received annually for community care grants were refused on these grounds.

  Further details can be found in the Department of Social Security's Annual Reports on the Social Fund which are available in the Library. The report for 1996–97 will be published later this month.

  Freedom of Information
  Mr. Keetch
  To ask the Secretary of State for Social Security if she will publish her Department's submissions relating to freedom of information legislation. [6035]

  Mr. Field
  [holding answer 2 July 1997]: I refer the hon. Member to the reply given by the Prime Minister on 4 July, Official Report, columns 293–94.

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

Violent and Sexual Offences: Sentencing
Baroness Anelay of St. Johnsasked Her Majesty's Government:
What plans they have to prevent the automatic release of criminals who are guilty of repeated sexual or violent offences and who are known by the prison and probation services to present a risk to the public.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, my right honourable friend the Home Secretary has made it clear that the Government support the provisions in the Crime (Sentences) Act 1997 which require the courts to impose a life sentence on an offender convicted for the second time of a serious violent or sexual offence, unless there are exceptional circumstances. Such life sentence prisoners will not be released at the end of the relevant part set by the judge for the purposes of retribution and deterrence unless the Parole Board considers it safe to do so. We intend to implement these provisions as soon as possible.
Baroness Anelay of St. Johns: My Lords, can the Minister please give us some information about the kind of monitoring that will be available with regard to people who will be released upon licence? Is he aware that public concern on the matter will have been intensified as a result of the report last week that a person serving a five-year sentence for kidnapping, drugging and indecently assaulting a 14 year-old boy was released after serving just two-and-a-half years on the basis that he would be living in a bail hostel on licence, yet he failed to register there? Will the Government be using the probation services alone or will they be innovative and make use of the private and voluntary sectors?
Lord Williams of Mostyn: My Lords, as the noble Baroness rightly pointed out, this is a matter of great public concern. It does not relate to an offender who would be subject to the new regime. It seems to us that every possible effort must be made to ensure public safety, in particular the safety of those sections of the public who are most vulnerable. In respect of the mandatory sentence to which the Question refers, the Parole Board will have the ultimate say on release and it would, of course, make the usual full and appropriate inquiries.
Lord Avebury: My Lords, what does the Minister intend to do about the practice which was followed by
620
the former Home Secretary of increasing the tariff recommended by the trial judge and the Lord Chief Justice for life sentence prisoners? Does he believe that that is a matter for the judiciary rather than the executive?
Lord Williams of Mostyn: My Lords, the noble Lord's question relates to the decision of the judicial committee of your Lordships' House in the case of Venables and Thompson, in which Venables and Thompson had murdered the small, innocent child, James Bulger. The Home Secretary has powers to review sentence tariffs. In the case of Venables and Thompson, the trial judge gave one indication, the then Lord Chief Justice, Lord Taylor of Gosforth, gave another and the Home Secretary had the statutory power to review, which was subsequently found to have been inappropriately exercised. But the House of Lords' judicial committee did not begin to suggest that that power could not have been properly exercised within the statutory regime.
Lord Ackner: My Lords, why do not the Government consider implementing the recommendation of the Butler Committee with regard to reviewable sentences? Does the Minister agree that the reviewable sentence suggestion made by Lord Butler has the following advantages over what is proposed: it is not limited to repeat offenders; it is not restricted to the narrow range of offences as is Section 2; it requires medical evidence before it can be imposed; it does not run the risk of the criminal deciding to do in his victim to avoid a life sentence; and, finally, it does not carry the false label of imprisonment for life, which is never intended to be effective.
Lord Williams of Mostyn: My Lords, the noble and learned Lord sets out the claimed advantages of the Butler Report regime. There is certainly virtue in some of them. The Government are determined to ensure a coherent and strategically focused approach to sentencing. We need to consider the whole of the wider context, which is what my right honourable friend the Home Secretary is presently about.
The Earl of Longford: My Lords, in view of the fact that the Minister recently denounced "Howardism" in scathing terms, will he return to the philosophy of the noble Lord, Lord Hurd, who recently joined this House?
Lord Williams of Mostyn: My Lords, I have never used the term, "Howardism", although I know that my noble friend frequently has done so. I understand what he means by it as a compendious term of contempt. What the present Government wish to do, if possible on the basis of cross-party agreement, is to attend to the serious problem of prisoners being released and being a perceived and actual menace to members of the public.
Lord Mason of Barnsley: My Lords, in view of the importance of the Parole Board report, can my noble friend say who is entitled to see the report apart from the prisoner and how the prisoner can challenge it?
Lord Williams of Mostyn: My Lords, the Parole Board report is seen by officials in the Home Office; it

621
would be seen by the Home Secretary; it is shown to the prisoner, and it is capable of having representations made about it by the prisoner. Those last two aspects would be what a system of civilised justice, not least natural justice, would require.

Self-chilling Cans
2.44 p.m.
Lord Cocks of Hartcliffe: My Lords, on behalf of, and at the request of, the noble Lord, Lord Dean of Beswick, I beg leave to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in accordance with the latest reports on global warming, they are prepared to ban the manufacture and sale of chillcans.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, the Government were concerned to learn of plans to develop self-chilling drinks cans which would emit powerful climate-changing greenhouse gases. That is why my right honourable friend the Minister of State for the Environment raised the issue recently with fellow European Union environment Ministers. They agreed to invite the European Commission to investigate the situation as a matter of urgency and to bring forward proposals for appropriate action which could include the possibility of a ban.
Lord Cocks of Hartcliffe: My Lords, I thank the Minister for that Answer. Can she comment on the claim by the inventors that self-chilling cans will help to fight global warming by reducing the need for refrigerators?
Baroness Hayman: My Lords, that is a claim on which I am glad to be able to comment because it is highly disingenuous. It is not the case. Even on the most generous assumptions, the contribution to global warming from emissions from the cans would far exceed any savings in carbon dioxide emissions from reduced refrigeration. Even moderate sales of the cans would seriously undermine international efforts to reduce greenhouse gas emissions because of the high global-warming potential of HFC 134A—the gas used to chill the drink. To give a sense of the scale of the problem, the gas is 1,300 times more powerful than carbon dioxide.
Lord Bruce of Donington: My Lords, can my noble friend inform the House why, in these circumstances and after due and proper investigation by the Government, it is necessary to go to the European Commission on this matter? If it is deemed by the Minister, after all proper inquiries—I assume they were
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expensive—that there are bad effects upon health and other possible consequences, why cannot she act on her own in the interests of the country?
Baroness Hayman: My Lords, we certainly could act on our own under the Environmental Protection Act. And we certainly would, if that was the most effective way of protecting the interests of this country. If, however, because of the single market implications, it would be more effective to act through the European Union and other international efforts, then that is the correct course to pursue.
Lord Burnham: My Lords, is the Minister aware that all this is quite unnecessary? Long before the right honourable gentleman jumped on this bandwagon the soft drinks manufacturers and the brewers had decided that chilled cans were quite wrong and were not effective on either environmental or economic grounds. Further, the British Oxygen Company, within the next two months or so, is expected to announce another widget—whatever that may be—which does not contribute to global warming or ozone depletion.
Baroness Hayman: My Lords, I am interested in the comments of the noble Lord. I know that the international organisation representing the manufacturers of the gases—in this country ICI—has stated clearly that it does not consider chilled cans to be a proper use of a potentially highly dangerous gas. However, the cans were presented using the gas at a trade event in Singapore and the Joseph Company in the United States said that it was putting forward plans for them.
Lord Monkswell: My Lords, I welcome the action the Government have taken, as explained by my noble friend on the Front Bench. Can she advise the House whether representations have been made to other advanced industrial areas of the world, particularly the United States and Japan?
Baroness Hayman: Yes, my Lords. My right honourable friend Mr. Meacher has been in touch with his counterpart in the United States to express our concerns and we hope for the possibility of joint action in this area.

Quarantine
2.49 p.m.
Baroness Sharplesasked Her Majesty's Government:
When they expect to reduce or eliminate the present six-month quarantine for domestic pets entering this country.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, in the light of our commitment to do so, we are actively considering whether alternatives to quarantine may give equal or better protection against

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the importation of rabies. Because of the wide and legitimate interest in this subject, we would expect to consult at some point on the matter. Decisions on when and how to do so have yet to be taken.
Baroness Sharples: My Lords, I thank the Minister for that reply. Are her Majesty's Government in contact with the Swedish Government which, three years ago, abolished quarantine since when there have been no cases of rabies and no increase in bringing dogs into the country illegally? Also, can the noble Lord say how many years it is since a case of rabies occurred within the quarantine kennels?
Lord Donoughue: My Lords, we are in contact with Sweden. The year after it introduced the new system we sent officials there to see how it was working. We have remained in contact since. The Swedish system is one that we will look at closely and take into account when we come to our own conclusions. On rabies in quarantine in this country, the last probable case was in 1983 when a dog imported from the United States died. The scientist who investigated concluded that it was rabies, although only one of the three normal tests was able to be made.
Lord Strabolgi: My Lords, is my noble friend aware that conditions in some of the quarantine kennels are very much below standard and that government inspectors have apparently no right to enter them, although the RSPCA can? Are the Government doing something to improve the previous legislation?
Lord Donoughue: My Lords, it is true that the Animal Health Act 1981, which covers licensing, covers disease control and physical security but it has been our legal advice that it does not cover the welfare and physical comfort of the animals there. As a result, the department has introduced a voluntary code to apply to the kennels. Our inspectors are currently inspecting all kennels and have nearly completed that process. Where they meet the code that information is given to all people who intend to put animals into kennels.
Lord Hooson: My Lords, does the noble Lord agree that the ambit of this Question should possibly be enlarged to include not only domestic pets but all animals—farm animals, horses and so on? Does he further agree that with modern scientific developments and our increased knowledge of this disease it is quite unnecessary to have quarantine to safeguard the health of this country?
Lord Donoughue: My Lords, the noble Lord is correct. On a previous occasion an impression was conveyed that quarantine is fairly narrowly confined to pets. But those animals subject to it are carnivores, bats, rabbits, marsupials, primates and even rodents, although I believe journalists are exempt. It is believed that farm animals are not a danger because they are an end-host recipient and do not pass it on. In terms of bringing the
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system to an end, we shall have to be convinced that any other system ensures that the UK is, as now, rabies free and that any such system is enforceable.
Lord Montagu of Beaulieu: My Lords, how many animals have died as a result of stress and other reasons in the past 10 or 20 years?
Lord Donoughue: Died where, my Lords? I do not have the answer to that question—nor about human beings either.
Lord Molloy: My Lords, what are the numbers involved? Is contact maintained with the British Veterinary Association when this problem either increases or decreases? The British Veterinary Association is surely a valuable help to the Minister and should be kept constantly informed. Will he let me have his views on that possibility?
Lord Donoughue: My Lords, I can assure my noble friend that British vets are closely involved and of course are deeply involved in advising the ministry.
Lord Soulsby of Swaffham Prior: My Lords, I welcome the Minister's comments that any alternative arrangements would safeguard this country against the importation of rabies. The majority of the conditions for lifting quarantine have been met—an adequate vaccination policy, identification, certification and the freedom of the European Union from dog rabies and a virtual absence of fox rabies. Can he assure the House that he will speed the consideration of lifting quarantine in view of the fact that many bodies agree that it is timely to lift the quarantine regulations and requirements?
Lord Donoughue: My Lords, the noble Lord is one of the most distinguished experts in this field. We are aware of his views. I can assure him that we shall proceed on this matter with all speed commensurate with not subjecting the United Kingdom to risk.
Lord St. John of Bletso: My Lords, is the Minister aware that the United Kingdom and Hawaii are the only two countries that retain these draconian six-month quarantine rules? Is it not the case that unless the Government take on board the recommendations of the Agriculture Select Committee of another place some two years ago there will be a heightened risk of smuggling, which could indirectly bring rabies into Britain?
Lord Donoughue: My Lords, the noble Lord is right. The danger of smuggling is one of the main factors we have under consideration. I do not share the noble Lord's knowledge of Hawaii, but if I can find a way of investigating local conditions I will.
Lord Geddes: My Lords, in his original Answer I think I heard the Minister use the word "consult" in the context of alternatives to quarantine. Can he help the House by saying what other bodies, apart from the

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British Veterinary Association which was mentioned by his noble friend Lord Molloy, the Government will be consulting?
Lord Donoughue: My Lords, it is our intention to produce a discussion paper. That paper would be open to all and we would wish to listen to the views of all bodies and all members of the public.
Earl Ferrers: My Lords, can the noble Lord give an assurance that he and the Government will not be trammelled too far into giving up quarantine for rabies? Does he agree that rabies in human beings is a most terrible disease? Whenever the matter has been considered in the past it has always been thought prudent to retain our quarantine arrangements. Will he therefore not get rid of the quarantine arrangements without ensuring that any substitute is just as good?
Lord Donoughue: My Lords, I can give the noble Earl that assurance.
Lord Berkeley: My Lords, while I agree that my noble friend should take into consideration the comments of the noble Earl, Lord Ferrers, is he aware that only four human beings have died in western Europe since the last war from rabies contracted in western Europe? Will he take into consideration not only the effect it has on human beings but also the effects on dogs and other animals of being incarcerated for six months?
Lord Donoughue: My Lords, I am aware of those figures. That is one of the reasons why we are actively reconsidering the position. No doubt the noble Earl, Lord Ferrers, would say that one of the reasons why the figures in this country are so good is that we have the present controls.
Baroness Sharples: My Lords, is it not true that people who might contract rabies do not have to have the awful injections in the stomach which used to be given in the past but in fact have three injections in the shoulder and that they suffer no ill effects?
Lord Donoughue: My Lords, I believe that the position in relation to such protection is much improved in the way the noble Baroness has described.
Lord Lucas: My Lords, will the noble Lord accept my congratulations on his first Answer to my noble friend Lady Sharples? It seemed enormously helpful but gave no commitments whatever on the actual timescale of the process. Does he accept that we share the concern that this matter should be addressed speedily? Whatever the conclusion may be, there is no longer any excuse for delay. The noble Lord should be able to give us a greater commitment as to when the White Paper or the discussion paper will be produced and when he would anticipate we might expect legislation if that is to be the case.
Lord Donoughue: My Lords, I thank the noble Lord for his gracious remarks. I can assure him that we shall
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have less delay than prevailed previously. We propose to commission scientific assessments of quarantine and the alternatives. It will depend how long that takes, but we propose to publish a discussion paper and subsequently to follow that up. I am reluctant to give a date because in life that tends to be embarrassing. I can assure the noble Lord that measures will be taken as rapidly as possible.

HIV/AIDS Patients: Numbers
3 p.m.
Baroness Gardner of Parkesasked Her Majesty's Government:
What are the latest figures for the number of patients treated as HIV/AIDS in-patients and out-patients in each major London treatment centre and what is the amount of central funding for each of these centres.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, the Department of Health allocates funds for AIDS treatment and care to health authorities and not to treatment centres. In the main, information on numbers treated is also collected by the health authority. The latest information from the National Survey of Diagnosed Prevalent HIV infections shows that 8,158 individuals with AIDS or HIV infection were treated in the centres situated within the seven inner-London health authorities.
Data taken from these authorities show that the number of in-patient and day-case episodes for the seven health authorities was 19,345. I am afraid that the comparable data on out-patients are not collected. The funds for AIDS treatment and care are allocated to health authorities on the basis of AIDS case reports made to the Public Health Laboratory Service. The total amount allocated to the seven inner-London health authorities in 1997–98 for AIDS treatment and care is £132 million. As it will take some minutes to repeat the detailed information on each of the seven health authorities, I have already written to the noble Baroness with the information for each of those authorities in inner London. A copy of that letter will be placed in the Library.
Baroness Gardner of Parkes: My Lords, I thank the Minister for her reply and for the detailed report she sent me. Unfortunately, it is not current because the figures are a little behind time. Even the report that the noble Baroness has sent shows a great discrepancy between the funding and the number of patients treated within each district health authority.
I declare an interest as a trust chairman. Has the Minister seen the recent report entitled Meeting the Cost of Combination Therapy, which makes clear that the cost per patient of combination therapy varies widely, ranging from £7,000 per patient to £5,500 per patient between major treatment centres in London? In view of the fact that HIV/AIDS patients can choose to be treated

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at any centre, the actual numbers and cost can only be known after the treatment. Therefore, will the noble Baroness confirm to me the commitment of the previous government to review retrospectively the distribution of treatment and care funding for HIV/AIDS patients in order to see that the two are directly related?
Baroness Jay of Paddington: My Lords, I thank the noble Baroness for her detailed and helpful commentary on the way this money is distributed. She will be aware that, although the figures I gave were for 1995–96—unfortunately, the current figures are not yet available—there was a rise of 7 per cent. in payments to all inner-London health authorities for combination therapy for 1997–98. There appear to be discrepancies in these costs between the different authorities. I believe that those questions relate to different clinical practices, but they are being looked at by both the health authorities concerned and by the London health regions. We shall consider whether patients should have their charges based on their district of residence rather than where they accept treatment. That will raise questions about confidentiality and open access to the service, which is one of the reasons why our AIDS services have been so successful.
Earl Baldwin of Bewdley: My Lords, given the noble Baroness's Answer to my Question on 19th June to the effect that HIV/AIDS patients are believed to be doing very well on complementary medicine, can she say what funding has been made available in this area?
Baroness Jay of Paddington: My Lords, no specific funding is made available for complementary medicine. I hope I reassured the noble Earl on the earlier Question that he asked that several of the health authorities are making complementary medicine available to their patients who have HIV and AIDS. In addition, there are a number of voluntary organisations—for example, the London Lighthouse— which offer complementary therapies to the people who come to them and which are funded under Section 64 grants from the Department of Health.
Baroness Gardner of Parkes: My Lords, I refer to the reply which the noble Earl received on 19th June. I believe that on that occasion the noble Baroness said that complementary medicine combined with other combination therapies was the practice that she supported on that day. I do not believe that it was 100 per cent. complementary medicine only. Can she confirm that and also my point about looking retrospectively at the balance of money in relation to patients treated while retaining their anonymity?
Baroness Jay of Paddington: My Lords, I can confirm that I still support the position that I took in response the Question from the noble Earl. I believe that on that occasion the noble Baroness and I were at one in believing that a combination of complementary therapies and what may be described as more
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conventional drug therapies seemed to produced the best results for people with HIV. As regards the retrospective look at patients and their place of residence and where they are treated, that would be difficult because, as I said before, there is the question of anonymity. However, I shall check with those in the department who may have been working on this matter before. I shall see what the situation is and let the noble Baroness know.
The Earl of Clanwilliam: My Lords, will the Minister accept that there may be some controversy over the relationship between HIV and AIDS? Will she tell the House whether the HIV virus has been isolated and, if so, what is the report of the Medical Research Council to which we can refer to find that information? No doubt the noble Baroness will write to me if she does not have the information to hand.
Baroness Jay of Paddington: My Lords, I am not a micro-biologist or scientifically qualified in this field. My understanding is that the HIV virus was isolated some 12 to 15 years ago. Personally, I have never accepted the theory that the HIV virus was not connected with HIV infection and AIDS, but, as I say, I speak as a non-scientist.
Baroness Miller of Hendon: My Lords, will the Minister consider reviewing the allocation of HIV/AIDS funds so that they better match the distribution of the patients at the various centres?
Baroness Jay of Paddington: My Lords, that is certainly something worth looking at. But, as I said in response to the noble Baroness, Lady Gardner of Parkes, money is not directly given to particular centres. However, we hope that funding allocated to particular inner-London health authorities will be picked up by those centres which are clustered in those inner-London authorities.

Business
3.7 p.m.
Lord Carter: My Lords, at a convenient moment after 4.30 p.m., my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the NATO Summit.

Employment Rights (Dispute Resolution) Bill [H.L.]
Lord Archer of Sandwell: My Lords, I beg to introduce a Bill to rename industrial tribunals and amend the law relating to those tribunals; to amend the law relating to dismissal procedures agreements and other alternative methods of resolving disputes about employment rights; to provide for the adjustment of awards of compensation for unfair dismissal in cases where no use is made of internal

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procedures for appealing against dismissal; to make provision avoiding double recovery in cases involving both unfair dismissal and disability discrimination; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time—(Lord Archer of Sandwell.)
On Question, Bill read a first time, and to be printed.

Local Government (Contracts) Bill
Brought from the Commons; read a first time, and to be printed.
Local Government Finance (Supplementary Credit Approvals) Bill
Brought from the Commons; read a first time, and to be printed.

Business of the House: Debates this Day
The Lord Privy Seal (Lord Richard): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Bishop of Oxford set down for today shall be limited to three hours and that in the name of the Lord Annan to two hours.—(Lord Richard.)
On Question, Motion agreed to.

Jubilee 2000 Scheme
3.9 p.m.
The Lord Bishop of Oxfordrose to call attention to Jubilee 2000 which seeks to remit the backlog of unpayable debt of the poorest countries by the year 2000, with particular reference to the economic development of sub-Saharan Africa; and to move for Papers.
The right reverend Prelate said: My Lords, third world debt is an issue of crucial importance and I am grateful to the House for allowing time to debate it. I much look forward to hearing from the good number of distinguished noble Lords who have put down their names to speak, especially the noble Baroness, Lady Lestor of Eccles, who is to make her maiden speech.
The wording of the Motion refers to one of the great insights of the Bible. In ancient Israel, according to the law of Moses, every seventh year was celebrated as a sabbatical year during which the earth was left fallow and slaves were set free. The law also provided for the cancellation of all debts. What was true for the sabbatical year was true also for the jubilee year which fell every
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50 years. Understandably, this was to be celebrated with even greater solemnity. As is written in Leviticus, at chapter 25, verse 10:
"You shall hallow the 50th year, and proclaim liberty throughout the land to all its inhabitants; it shall be a jubilee for you, when each of you shall return to his property and each of you shall return to his family".
One of the most significant consequences of the jubilee was that every Israelite regained possession of his own ancestral land if he happened to have sold it or lost it by falling into slavery. He could never be completely deprived of the land because it belonged to God. In short, the jubilee was meant to restore the original order of creation in which the goods of the earth, which belong ultimately to God, were shared fairly between all human beings. The jubilee year was meant to right the injustices which might have arisen in the previous 50 years, restoring equality and in particular supporting the weak and those who had lost out. It was probably this to which Jesus referred in his famous sermon in the synagogue at Nazareth at the beginning of his ministry, recorded in the fourth chapter of St. Luke's Gospel.
His Holiness the Pope, in his important encyclical Tertio Millennio Adveniente, called for the millennium to be associated with this biblical concept of "jubilee" and now jubilee remission of debt for the poorest countries in the world is the major theme of the millennium for all the Christian churches and aid agencies.
The urgency of the matter was brought home to me in 1987 when I was meeting in Singapore with the Anglican Peace and Justice Network. At the end of the consultation we discussed when we might meet again. The representatives of the more advanced nations, who had quite enough meetings, were looking for the next meeting three or four years ahead. At that point a Brazilian bishop friend of mine literally exploded in wrath. He knew in his own experience that people, particularly children, were suffering and dying daily because of the enormous debt repayments that his country and others were having to make at that time. He knew it was literally a matter of life and death. As William Blake put it:
"The tigers of wrath are wiser than the horses of instruction".
All of us here begin with the assumption that under normal circumstances debts should be repaid. Equally, we would not be taking part in this discussion unless we knew that the circumstances under which third world debt was built up were highly abnormal. As a result of huge pressure to lend the surpluses built up by oil revenues, the massive corruption of rulers like Mobutu, with money often going on prestigious but inappropriate projects, huge debts were built up while the money very rarely benefited the poor. Now, as a result of structural readjustment programmes resulting in severe cuts in health and education programmes in order that the economy can be brought into line and the debts serviced, it is the poor who continue to suffer.
The Jubilee 2000 campaign is not concerned with all debt; it is concerned with the debt of the poorest countries in the world, debt which is in fact

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unsustainable anyway. It seeks to lift this huge burden which is crushing some of the most vulnerable people on earth.
The presumption is that under normal circumstances debts should be paid. But all civilized societies recognise that businesses go bankrupt. The limited liability company was a way of ensuring that children were not starved in order that debts should be paid. It imposed a barrier between debt incurred through lack of success in an economic venture and the daily lives of people caught up in such failure. The discharging of bankrupts does the same. In the first two months of 1992 alone, for example, 280,000 personal debtors in the United Kingdom applied to be made bankrupt. The point is that although the process of being recognised as bankrupt is certainly painful, it is also a release whereby debts are written off within a fairly short length of time and a new unencumbered life becomes possible. Such mechanisms are an essential part of civilised society as we know it. It is the complete failure of the world economic system to put in place comparable mechanisms at the international level which has brought about the present crisis and terrible suffering.
Rescheduling debt is a perfectly proper mechanism within advanced societies; for example, the massive debt of Eurotunnel can be contained and renegotiated because its existence in no way affects the bread and butter being fed to the children of its employees. On the contrary, it is actually protecting them. But rescheduling the debt of a desperately poor country merely enhances the long-term burden of people who remain unlikely to be able to pay it in the future, in a still larger form, any more than they can at present. As Julius Nyerere asked,
"Must we starve our children to pay our debts?"
Sadly, they are starving to do just that. Between 1990 and 1993, according to the World Bank, the countries of sub-Saharan Africa transferred 13.4 billion dollars annually to their external creditors, more than their combined spending on health and education. Nevertheless, the stock of unpaid interest in principle owed to official creditors still stood at something approaching 38 billion dollars in 1993, more than double the level in 1990. Two-thirds of the increase in debts stock is now due to the accumulation of interest on arrears. Indebtedness to the West has become the decisive factor into pushing the poor into ever greater poverty.
I emphasise that the scheme I am discussing does not belong to Cloud-cuckoo-land. It is, in fact, achievable. And there is a real sign of hope that it can be achieved. At a meeting of the World Bank and the IMF in 1996, the president of the World Bank and the managing director of the IMF proposed an initiative, the highly indebted poor country initiative (HIPC), for comprehensive treatment of all the debts of the poorest countries. There is a new spirit abroad, and that initiative is much to be welcomed.
It may help the House if I explain briefly what the scheme involves. It is made up of several stages: the first stage; the decision point; the second stage; and the completion point. During the first stage the country participating in the HIPC initiative could expect up to
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67 per cent. relief on debt service to Paris Club government to government creditors and comparable treatment from other bilateral and private services. During this period the country is expected to establish a three-year track record of good performance in implementing IMF and World Bank structural reforms. At decision point the creditors and participating countries decide whether or not the country should carry on and participate in the HIPC initiative. A country could opt to have 67 per cent. relief on its stock of debt if that is sufficient to achieve debt sustainability. Another option would be for the country to act as a borderline case and wait another three years before deciding which course to take.
A country participating in the HIPC initiative moves on to the second stage when it should receive up to 80 per cent. relief from eligible Paris Club debt service and other bilateral and private debt flow. In this period the country must establish another three-year track record of good performance in implementing structural adjustment reforms. At completion point the Paris Club provides relief of up to 80 per cent. on eligible debt stock and other creditors participate in the same way.
The HIPC initiative is an indication that where there is a political will, something can be done. Sadly, however, I have to say that in the judgment of experienced observers the initiative is failing badly and by itself will by no means be enough to lift the crushing burden on the poor.
One flaw is the use of projections of commodity prices, which are likely to be substantially over-optimistic, and this could be disastrous if commodity prices are falling. More fundamental is the fact that the financial institutions have made it clear from the beginning that only countries severely in need of debt relief, which are performing well by implementing structural adjustment policies, will be eligible to relief under the HIPC initiative. As the last Chancellor of the Exchequer put it, it would apply only to those countries that were,
"highly impoverished, highly indebted and performing well".
But, as has been written,
"Very few countries are both the economic equivalent [of being] at death's door while maintaining the equivalent financial fitness of an athlete".
There is also the problem of delaying the point at which a country is eligible for relief of its debt stock. Under the HIPC initiative structural adjustment programmes can be imposed for up to six years. It has been made clear by officials that it could extend beyond that period. But the need is dire and urgent. Delays of this kind simply mean more debts. Other points have been made. They include the fact that when conditions are laid down agreements upon them are conducted in great secrecy. Much more transparency is needed. Furthermore, negotiations surrounding the HIPC initiative are meant to be tripartite and to involve the debtor government, the IMF and the World Bank. But in some cases, for example that of Guyana, debt sustainability analysis—the key document for determining eligibility for assistance under the initiative—was prepared without the participation of the

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Government of Guyana. There are also other criticisms which at the moment result in the initiative failing to meet the need.
I should like to consider just one country: Mozambique. Mozambique is defined by the World Bank as the poorest country in the world. It has just emerged from a prolonged civil war that killed 1 million people. Life expectancy is 47 years and the rate of infant mortality is 145 per 1,000 live births. In 1995 Mozambique's total debt stock was 323 dollars per capita. At the same time its GNP per capita was only 80 dollars. From 1996 to the year 2000 it is scheduled to pay in the order of 400 million US dollars in debt service every year. That is way beyond its capabilities. For example, if Mozambique had paid its debts scheduled for 1994 it would have taken over nine-tenths of its export earnings. There is, however, some good news even in Mozambique. At the previous meeting in 1996 some kind of provision was to be made for that country. In other words, if the will is there something can be done.
The figures for other countries are comparable. I will not refer to the example of Zimbabwe because the right reverend Prelate the Bishop of Leicester will say something about that. UNICEF has estimated that £49 million of debt relief for Uganda, for example, could save 398,000 children under five and 13,000 women who would have died in childbirth, in addition to providing primary education for 2 million more children. It is the poorest of the poor who are literally starving and dying because money that should be spent on health and education has to service debts for which the poor are in no way responsible.
The Churches regard this issue as comparable with the campaign to abolish slavery in the early 19th century. The injustice to be righted and the suffering to be relieved are of similar proportions. The goal set by Jubilee 2000 is achievable and the HIPC initiative much to be welcomed, but as it stands the initiative is too little and too late. There must be the political will to reduce debt at a much faster rate with conditions that do not impinge so heavily upon the poorest of the poor. My Lords, I beg to move for Papers.
3.23 p.m.
Lord Callaghan of Cardiff: My Lords, the House is in the debt of the right reverend Prelate the Bishop of Oxford for bringing this important matter to our notice once again. Development aid does not have a loud political voice but in the person of the right reverend Prelate and many others in the Churches it has a resonant voice which I am sure will be heard in due course. I thank him warmly for giving us this opportunity to discuss it. I also look forward very much to the maiden speech of my former political colleague in the Foreign Office who tended my conscience every day with her approach. She has devoted much of her political life to the cause of developing countries. Indeed, in her personal life she has expressed that conviction which she holds so deeply.
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I also congratulate my right honourable friend Clare Short. I believe that she is a square peg in a square hole. We all know of her human warmth and depth of human feelings. Perhaps she is on the outskirts of British politics but she has a much more important task: to rally the support of all those countries and people who share the views that she holds very deeply. I look forward to her success in her tenure of office.
Developing countries vary a great deal. It is not all gloom. It has been most noticeable how the countries of the Southern African Development Community have progressed over the past two or three years. The growth rate of that group, at least among eight of those countries, was more than 5 per cent. per annum, and that is a most encouraging factor. But because they vary a great deal it means that some are at the bottom.
The right reverend Prelate has drawn our attention particularly to the countries of the sub-Sahara. Those countries are in a situation from which I do not see how, on any examination, it will be possible for them to hoist themselves up by their bootstraps. As far as can be foreseen, they are likely to remain in their present position for a long time. But is this inevitable? No, my Lords. One has seen how much East Asia has progressed—faster than Africa as a whole and certainly to a much greater extent than sub-Saharan Africa. I believe that the same can be achieved in sub-Saharan Africa. It is a special case, but it is not a basket case.
The right reverend Prelate focused particularly on the crushing burden of debt carried by those countries, but he also recognises that remission of debt will not cure the problem. I know his opinion on this matter. It is a necessary step but much more must be done before these countries can face the world and be in the situation in which they should be. Like him, I welcome the initiative of the World Bank in the Heavily Indebted Poor Country project for which it has set aside a considerable sum of money. The right reverend Prelate has kindly explained that to us. Like him, I have reservations about it. If as I understand it Uganda is the only country that is likely to secure some benefit from it by the year 2000, it does not appear to demonstrate the degree of urgency that is necessary. I am informed that two others may qualify, Côte d'Ivoire and Togo, but even that is very small beer in comparison with what is necessary.
It is right to establish criteria, and they seem to me to be sensible criteria. To relate the level of sustainable debt to the gross national product of a country makes obvious sense; to relate it to the export level of a country makes sense, because it is absurd that so much of the export earnings of these countries should be spent on servicing their debt. That is the case in Mozambique where, if my information is correct, 33 per cent. of the total government budget is spent on servicing debt. Just think what the position would be in this country if we had to do something similar. It would be quite intolerable. As to the criteria, I question both their timescale and conditionality. It seems to me that both are too heavy.
I do not know whether it is likely that a country in the condition described by the right reverend Prelate and Mr. Kenneth Clarke can expect to sustain a debt

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servicing burden of 20 per cent. of GNP a year. That should be looked at much more carefully, as should the period of time. That being said, we have an opportunity to push them on that. The Churches are playing their full part.
Perhaps I may do a little name dropping. The Prime Minister sent me a copy of the Denver communiqué which I of course read carefully. They spent a long time on the problem of Africa. I do not think that I have ever seen in a communiqué so much time spent on the problem of the developing countries. It is clear, as is said here, that the problem is that the sub-Saharan countries face unusually severe challenges.
This is the point that I hope will encourage the right reverend Prelate:
"This year, we aim to translate the principles of that Partnership into new concrete action to support the efforts of African countries to participate fully in the expansion of global prosperity and to spread the benefits throughout their societies".
What our leaders have done is to call upon the international financial institutions to produce reports on the progress that they are making by the annual meeting of the World Bank and the IMF. I urge the Churches to redouble their efforts in that direction to ensure that a proper review is carried out, as is suggested in other parts of the communiqué, to see whether the criteria are just and the timescale is appropriate. If we do that, we may well find that we can get some improvement.
Although when I read the communiqué I agree with it and think how splendid it is and absolutely right, having taken part in some of these things I must say that when one examines the language in detail it has a certain amount of conditionality. It is rather cloudy. We have to pin governments down on those issues before they forget what they have said. This important progress report is called for.
I want to emphasise that the communiqué also points out the important part played by private investment. That is indeed so. The IMF and the World Bank are no longer giants in that field. Ten years ago private investment in those countries was a half of the funds put in by the World Bank and the IMF in any one year. Now private investment is at least four, if not five, times as great as funds put in from official sources.
What is needed, as the Denver communiqué says, is debt relief. It calls upon bilateral countries who have debts owing to them to release them. It talks about the marginalisation that some of those countries may have to endure, and calls, above all, for growth. In the changing policies of the IMF and the World Bank over a number of years, they have now returned to the idea that growth is the way in which one can begin to relieve the poverty that undoubtedly exists, and the better it will be.
We need to have a partnership with sub-Sahara. There is a long list of what needs doing—I shall not go into it—from sound financial policies, honest governments, health research and attitudes towards women's education. The list is immense. I have hope. I am not despairing. The world's attention is being focused increasingly on the problem. There is a realisation by our leaders. What is more, there is a different frame of
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mind in Africa. Many of the leaders there now recognise that their own effort is necessary as well as efforts by ourselves—we in the rich industrial West. We should not neglect the role of the NGOs. They can play an important part in what needs to be done to overcome the problem. We are not talking about charity in this debate; we are talking about a partnership and a constructive relationship. I look forward greatly to hearing the Government's reply.
3.35 p.m.
Viscount Torrington: My Lords, I echo the words of the noble Lord, Lord Callaghan, in welcoming the forthcoming maiden speech of the noble Baroness, Lady Lestor.
I do not profess to have any special expertise which equips me to speak in this debate, other, perhaps, than a lifetime of travelling up and down Africa, and seeing at first hand the economic collapse that has affected most African countries at one time or another.
The right reverend Prelate has given us an excellent opportunity today to examine one of the several underlying causes of that collapse. I say one, but it is a very fundamental one since the availability of debt generates spending power, and it is the misuse of spending power over years, caused by the East-West rivalry which increased the pool of debt during the 1960s and 1970s which has largely brought about the problem.
The other principal contributory factors were, of course, ill-conceived and grandiose plans for modernisation—the Nkrumah palaces—military ambitions, muddleheaded economic theories, and plain bad management—by gosh management has been frightened out of Africa over the past 30 years—and endemic corruption. Even in the least corrupt countries, one or other of those factors was always present. I remember thinking—I was a fairly junior business executive at the time—when President Kaunda was persuaded to purchase 51 per cent. of the Zambian copper mines, by issuing fixed interest US dollar bonds, that tears would follow. Companies in the mining business financed by equity can raise or lower dividends as commodity prices affect profits. By contrast Zambia's copper nationalisation bonds cost the same to service when copper prices finally fell as they had cost in the heyday of the copper boom. Zambia's economy has been in a sorry state ever since, as we know.
Arms sales to Africa are another matter. The continent has at times been a dumping ground for military hardware of all types, most of it redundant, sold often at outrageous prices to countries which had no real need of it and no ability to pay. All over Africa, one comes across airports where the vines are growing over the carcases of fighters, military helicopters and transport aircraft. Virtually none of that kit ever served a desirable objective. Most of it was used for pretty undesirable objectives.
But if we turn to debt forgiveness, there is a seeming anomaly here. One school of thought I have heard recently says that we should forgive, as a starter, the military debt, but it seems a strange idea to say that

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military debt should be forgiven where genuine trade debt should not. Such a policy would seem to say that we should let countries off in respect of debt incurred for profligate unproductive purposes such as armaments, but hold them to debt incurred for agricultural and transport equipment and sound investment. Of course, sound investment can repay debt where armaments can never do so, but such a policy would send all the wrong signals.
I am sure that we have to recognise that the Cold War-inspired debt burden was a one-off situation, largely of our own creation, "we", in this context, being Britain, the United States, France, the former Soviet Union and the other purveyors of arms. The borrowers, that is the politicians of those newly independent countries who accepted and squandered the debt are mostly long gone and out of office, hopefully for ever—the evil Amins and Obotes, the Nkrumahs, the benign but misguided Nyreres and Kaundas, and now even Mobutu. Many of the profligate borrower countries are now seriously attempting the painful path of convertible currencies and fiscal rectitude. We must do what we can to help them and to repair the damage for which we are greatly to blame.
There is, as I understand it, a considerable developed market in defaulted government debt. It is possible with a simple telephone call to find out the price of Angolan debt, or Mozambique debt, or Tanzanian debt. Such debt fluctuates in value on a daily basis, depending on the market's assessment of the likelihood of repayment. Ten to 15 cents in the dollar is not uncommon and, of course, the sad fact is that the more profligate the borrower the lower the value of his debt, which gives rise to an interesting anomaly. A country which wanted to buy in its own debt should appear to be a basket case so that it can quietly soak up its debt in the market. I fear that that is a strategy too subtle for most.
The most satisfactory method of reducing debt is the debt equity swop, where a country's debt is accepted by its government in exchange for the shares of businesses being privatised for agricultural and urban development land and other non-cash—and hence non-inflationary— assets owned by hitherto overcentralised and overbearing state sectors. In effect, it would be the reverse of what I referred to in Zambia a moment ago. Incidentally, I understand that quite a bit of debt-swop activity has taken place in Mozambique to privatise formerly confiscated sugar estates and so forth.
I worry that too much debt forgiveness will not encourage thrift or sound government policies. Careful debt reduction is undoubtedly helpful, but the best of all is likely to be a combination where some of the impossible overhang is forgiven and the rest is converted into foreign investment. Thus, interest payments on state debt can become dividends from sound investments, the state can get its share of profits through the tax system without in theory having any investment, and the cost of servicing foreign investment can rise and fall in line with economic performance and commodity prices. Sound management can be seen to enhance that economic performance.
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All countries have debts, and debts are part of economic life. Ceaucescu had to run Romania without foreign debt. The result was that he had no debt, but he generated precious few assets either and left a very poor country when they finally got rid of him. Africa's debts undoubtedly need to be reduced to what Africa can reasonably carry, but a little continuing pain for past profligacy will help to instil discipline for the future. The cry should be reduction and conversion; conversion in the economic sense to foreign equity investment and conversion in the biblical sense, if the right reverend Prelate will forgive me, to the principles of good government.
3.42 p.m.
Lord Hunt of Tanworth: My Lords, I am happy to support the Motion moved by the right reverend Prelate the Bishop of Oxford. It is also a great privilege to precede the noble Baroness, Lady Lestor of Eccles, whose maiden speech we are greatly looking forward to. I can assure her that I do not intend to keep her waiting long.
It is possible to argue about the causes and responsibility for the massive debt overhang in some of the world's poorest countries; for instance, the financing of foolish white elephant projects with no hope of any economic return and bad or even corrupt management on the part of some of the borrowing countries. On the part of the lending countries, there was anxiety in the 1970s to recycle petro-dollars at the very low interest rates then prevailing, with no thought that they were likely to rise much higher, and also to maintain the export industries of the lending countries.
If guilt there is for the present situation, I suspect that it is collective guilt of both the borrowers and the lenders. But if there is doubt about the causes, there can be no doubt about the effect in the highly indebted poor countries of the crazy merry-go-round where aid is not used for development but is received and then returned to the donors in debt service. It is debt which is not repayable. It continues to be rescheduled and aid money is used for the interest payments.
Many figures have already been given in the debate and no doubt there will be many more to illustrate the situation. The debt service in sub-Saharan Africa amounts to 6 billion dollars per annum. One-quarter of all bilateral aid goes to refinance debt payments. In countries such as Nicaragua and Zambia, debt payments absorb one dollar out of every two that could be available for development aid. Of course, all that diverts aid from poverty reduction and development.
There is of course a moral case to be made about the disparity of living standards in this world. That goes much wider and is the case for aid, fair trade, technical assistance and so forth. The question of the debt overhang is a different one. It is a snowballing situation of debt which cannot be repaid and which prevents the HIPC countries from dealing with their own problems and, incidentally, deters private investors from the developed world from coming in. In many cases the problem now is one of solvency and not just liquidity.

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It was therefore a sign of great hope when last autumn the World Bank and the IMF reached agreement on a package to help the world's poorest countries in relation to their debt. It is true that some progress has since been made, but anyone who revisits what was envisaged last autumn must say that the progress has been less than what was expected or hoped for. There have been genuine technical problems, but, regrettably, there have also been signs of footdragging by certain countries, notably Germany and Japan, and I am afraid more recently by the United States.
In my view, it is therefore essential to keep up the pressure to do something about the debt overhang. As the right reverend Prelate said, it is necessary to accelerate the timetable of the HIPC initiative and to improve its terms. It is necessary also to encourage the non-Paris Club donors to match what the Paris Club countries are committed to. It is fair comment from the Cross Benches that Her Majesty's Government have a good record in these arguments. That applies to both the previous and the present Government. The Churches, the NGOs and bodies such as Jubilee 2000 can help a lot by highlighting the need for action.
In all this, however, we must be realistic. Many would like to see the cancellation of international debt. But that is totally unrealistic and, in any case, borrowing is a perfectly reasonable way of financing economic development. Others would like to link it with reform of the international monetary institutions. There is a case for that too, but it will not happen in the short term. If too much is swept into the argument and the package, it will only delay the crucial action which is necessary as regards the world's poorest countries.
The immediate need, on which progress is possible, is to deal with the debt overhang of the poorest countries in sub-Saharan Africa. That is why I particularly welcome the emphasis which the right reverend Prelate put on that in introducing his Motion. It is possible to do something about the target. The United Kingdom Government have had a good record in the argument, but the Government, the NGOs, the Churches and all of us must keep up the pressure to get something done.
3.49 p.m.
Baroness Lestor of Eccles: My Lords, I, too, am delighted that the right reverend Prelate has chosen this subject today partly because it is important, partly because interest in it has grown over the years, but in particular because it enables me to make my maiden speech on a subject in which I have had a long interest. It is an interest which I hope to sustain.
In opposition, I was twice my party's spokesperson on aid and development, as we called it then—a task now so ably carried out by my right honourable friend Clare Short. My noble friend Lord Callaghan reminded me, although I did not need reminding, that more than 20 years ago, in the Foreign Office with him, I had responsibility for many of the countries we are discussing today. In fact, it was very much under his eagle eye—I have had the same feeling today actually— that I travelled extensively to see for myself, as many here have done, the poverty in many developing
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countries and what is needed there. No one who has seen it can help but be moved and worried about countries which are hit by the burden of debt and which have been unable to raise themselves out of it.
One recalls the Brandt Report. There is growing interest in those matters today, particularly among the young. We must try to sustain that interest. In many instances, we are talking about the poorest countries. I have visited Mozambique, Tanzania, Zambia, Zimbabwe, Uganda and others. Some are poorer than others, but all suffer from economies which have not flourished. Indeed, in many instances, they have been strangled or at least hampered by the burden of debt in recent years.
My noble friend Lord Callaghan says quite rightly that it is not all gloom. And it is not. We should not present Africa as all gloom because much progress has been made. But the burden of debt is a rope tightening around the neck of countries which are striving to break free. It is never ending because, as we have heard, the poorest countries will not be able to meet their obligations.
I was very pleased when the Prime Minister said:
"International debt reduction will be a top priority. We want the benefits of debt reduction to be invested directly in reducing poverty".
That is very important. The tragedy has been that in many of the adjustment programmes which have taken place to reschedule debts, poverty has been enhanced, not reduced.
Later today, my right honourable friend Clare Short will hold a party to celebrate the launch of the new Department for International Development. In her document she notes that debt is a barrier to the international development which she and so many of us want to see. When a country gets into debt, it must go to one of the financial institutions or to sources of private means which offer further loans on stiff conditions which are often known as structural adjustment programmes. In recent years, some of those programmes have been told to adopt a human face. So attempts have been made, when economies are being restructured, not to rob a country of its seed corn. Often, a country has been robbed of the very thing which the loan is given for in the first place. Unfortunately, the human face has not always been present.
If further loans are sought from a financial institution, that institution interferes in the management of the economy of the country, which undermines sovereignty. Many figures have been given today and I do not wish to add to them. But no one can be content with a situation in which, in 1996, for example, developing countries paid 1.8 billion dollars more in debt service to the IMF than they received in new loans. That is according to the World Bank. It is a tremendous figure with which to come to terms. Since 1987, the IMF has received 2.4 billion dollars more from Africa than it has given in new loans. At the beginning no one anticipated that that would happen. But it did.
About 20 per cent. of the gross national product of sub-Saharan Africa is currently being used for debt repayment. Four times more is spent on debt repayment

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than on health. Today at Question Time, we discussed the issue of HIV and AIDS. One terrible thing in parts of Africa is that there has been progress in dealing with five major childhood diseases—for example, there has been much progress in relation to measles—and yet that progress is now being replaced by children born HIV positive. Noble Lords will be aware that HIV and AIDS is a major killer in Africa. If health and education programmes are cut in structural adjustment, we deny people access to the very thing which could educate them and help to lift them out of vulnerability. In Tanzania I saw education cut as a result of structural adjustment programmes. Everything is undermined as a result, and that is not the way forward.
Mention has been made of the highly indebted poorest countries. We were all pleased when, in 1996, the financial institutions took a big step forward by agreeing a comprehensive remit and reschedule of the debts of up to 40 countries, the really poor countries which cannot pay and are not in a position to pay. But, as we have heard, to date no country has gained relief.
Uganda will gain some relief next year. But few will be helped by the year 2000, which is what we are talking about today. It is a very worrying situation. Uganda is due to pay 200 million dollars in debt service in 1998. She will be offered 20 million dollars as relief from that burden by the initiative we are discussing. That is not enough if we hope to lift Uganda out of poverty and misery.
I believe that this debate is very timely. We have a new government, new initiatives and much more knowledge of what is taking place in relation to developing countries. There is a recognition that it is not all gloom. However, for some countries, unless debt relief takes place and unless more help is forthcoming and an appraisal is made of what is happening as regards the financial institutions, many countries and many people will continue to suffer.
Children in developing countries have the right, first, to live. Many die without ever having had the opportunity to live. They have a right to be educated so that they can be part of a new attitude and new changes. Of course, they have a right to a future. Sadly, the way in which we have dealt with some debt in the past means that they have been robbed of that. We must look again and ensure that those children are given their chance.
3.58 p.m.
The Lord Bishop of Leicester: My Lords, on behalf of the whole House, I have the privilege to congratulate the noble Baroness, Lady Lestor of Eccles, on her maiden speech. Making speeches in Parliament is not, of course, a new activity for her as she held ministerial office and she has also been her party's Front Bench spokesman on several matters, including overseas development. Given that background, it is not at all surprising that we benefited this afternoon from the noble Baroness's, wise, informed and powerful speech. I thank her for it.
My contribution to the debate is more modest. I should like to focus on a single country—Zambia, in central Africa—where I worked in the 1970s. Those
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were good times. Copper prices were high. I was teaching at the local university and money was not too much of a problem there. It was more difficult for some missionaries; for example, Father Denis, his wife and his family. They lived at the local rate. They supplemented their meagre income with home-grown food. They loved Zambia so much that they took out Zambian nationality and they are still there.
Life became more of a struggle in the 1980s as the country went through harder times. Father Denis and his family tightened their belts. Father Denis then reached his 65th birthday and a miracle happened. Unknown to him, the Mission Society back here in Britain had been paying National Insurance contributions for him. So, at the age of 65, he qualified for a UK pension. Indeed, from being the poorest man in town he became the richest. Why? That happened because he had a regular supply of foreign exchange. Something quite dramatic had happened to the kwacha, the local currency; it had totally collapsed. When I was there in the 1970s, £1 sterling would buy two kwacha but today £1 sterling will buy around 2,000 kwacha—a dramatic collapse.
Through his UK pension, Father Denis had a modest number of pounds to spend every month. With that exchange rate he had kwachas galore. I am sure that he is spending them on behalf of the many people in his community. However, while that collapsing exchange rate was perhaps good news for Father Denis, it was bad news for other Zambians. They do not have pounds or dollars to spend, but they need them to buy vital spare parts for their machinery, fuel for their transport, specialised raw materials, or medicine for their children. Without the latter, business and the country fall apart.
It is not just inflation that has crippled a country such as Zambia; so has its debt burden. Zambia now owes £4.5 billion in unpaid debt—that is, £565 per head for every man, woman and child and more than three times what a person can earn in Zambia in a year. Being realistic, there is no way that that debt could ever be repaid. Out of every £10 that Zambia receives in aid, £7 goes in trying to repay the debt burden. They are walking quite slowly up an escalator that is racing down and taking them down with it.
Of course, Zambia is not alone in its predicament; indeed, Africa as a whole spends four times as much on debt repayments as it does on healthcare. For every £1 of aid given by the developed countries, Africa pays £3 in debt servicing. Meanwhile, even though African nations have achieved a 50 per cent. increase in the volume of their exports since 1985, the cumulative loss of the purchasing power from those exports, due to price changes on global markets, amounts to over £50 billion. So the end result is individual despair and social breakdown. A country in such a state has really had only one choice: to turn to the IMF and the World Bank and ask for help to service their debts.
Those organisations will help, provided that the countries take their structural economic medicine, which means forcing open local markets to wide competition, massively devaluing local currency—as happened in Zambia—raising local interest rates, privatising state assets and cutting government spending on health,

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education and other services. In return, inducements are offered in the form of hard cash and external finance to help repay the debts. But the end result is that a debtor government loses all ability to manage their own affairs. The question is: does this medicine ultimately benefit the country or does it further weaken it, leading it further into debt and dependency?
Your Lordships will have heard of a medical report produced after a piece of experimental surgery which read that the operation had been a great success but that, unfortunately, the patient had died. Sadly, it seems that that might be the prognosis for countries such as Zambia taking the IMF/World Bank medicine. Therefore, it might just be helpful to try the complementary medicine that Jubilee 2000 suggests; namely, the creation of debt reduction packages and, in particular, the remission of the unpayable backlog of the inert debt of the poorest countries.
Commercial creditors in nations such as ours have generally already made provision against the non-payment of debts—debts which they partly brought upon themselves by over-lending in the 1980s. Indeed, some have already received tax relief on those provisions for bad debts. Then also, as part of the debt reduction packages, there will need to be hard-headed arrangements to prevent future over-borrowing along the lines described by the right reverend Prelate the Bishop of Oxford. No one pretends that this will be easy, but it can be done and it could be the medicine which might keep us all alive. Certainly the Bible says that it is rather good.
4.6 p.m.
Lord Judd: My Lords, the right reverend Prelate the Bishop of Oxford has done the House a service by providing us with the opportunity to debate this vital issue. His courage and leadership in bringing his Christian conviction to bear on the humanitarian challenges of our time is invariably challenging. I must add a word of appreciation for the outstanding maiden speech of my noble friend Lady Lestor. I can say with all honesty, both in and out of Westminster, that I have had no closer personal or political friend throughout my life than my noble friend. It has always been challenging to witness not just her intellectual and political commitment but also the principles of integrity and consistency, mentioned by my noble friend Lord Callaghan, which she has made central, without seeking any publicity, to her personal life. In our family, the fact that my noble friend is godmother to my youngest daughter is something that we have all come to appreciate and love.
When I completed my service as director of Oxfam, I was angry about the feebleness of political leadership in the world. It seemed to me to be utter madness that the poorest countries should be compelled to make debt servicing their highest priority—often at the cost of environmental responsibility—rather than building sustainable economic and social systems which would obviate their need to seek loans in the future. Worse, it seemed to me criminal that the poorest people of the world, who suffer appallingly inadequate health, education, housing, sanitation and water provision,
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should have to carry the burden of settling irresponsible debt too often accumulated by cynical rulers in the past—rulers frequently helped to, and sustained in, office by the great powers of the world, sometimes as pawns in the Cold War; indeed, rulers who had quite literally looted their own countries. It seemed to me that the big economic players in the world could not exonerate themselves from responsibility for what had happened and now they were doubling their guilt by punishing the innocent victims.
A particularly depressing paradox was that those very multilateral financial institutions which had been set up at the end of the Second World War as part of a strategy to ensure a better world should themselves be grinding the poor of the world by their insensitive and counter-productive debt policies. That is why the advocacy of organisations like Christian Aid, the Catholic Fund for Overseas Development and Oxfam is so essential. Speaking with the authority of their experience in frontline engagement they seek to cure the illness, not just to ease the pain, and to right the wrong, not just to hide some of the most obscene and unpalatable evidence of what has happened, thereby becoming accomplices to perpetuating the injustice.
Debt of the kind we are debating today is not just a matter of macro-economic policy: it is central to immediate acute human suffering and a direct cause of malnutrition, sickness, infant mortality, short life expectancy, and of mere miserable existence rather than living fully. It is therefore refreshing to hear our new Secretary of State for International Development, Clare Short, with all her status as a Cabinet Minister, repeatedly state that her department is about the elimination of poverty. A key chapter in her forthcoming White Paper must be one establishing how the Government propose to deal with debt, just as another must deal with the closely interlinked issue of environment. In writing the debt chapter she will be able to draw on the groundwork done by Kenneth Clarke as Chancellor of the Exchequer in the previous government who consistently recognised the significance of debt in the fight for a more decent world and repeatedly tried to set the pace in international deliberations. It is clear that on this issue there is no slackening of commitment by Gordon Brown. All who have had the opportunity to talk about debt with our new Chancellor bear witness to his self-evident moral and intellectual concern. I attempt the current style: Clare and Gordon; in Cabinet; a strong combination; Prime Minister supportive; results.
The facts requiring urgent action speak for themselves. In Mozambique, where one in four children dies before the age of five, debt servicing in 1996 absorbed double the amount allocated to current expenditure on health and education. In Zambia, with infant mortality rates rising, more than four times as much is spent on debt servicing as on health. In Ethiopia, where more than 100,000 children die annually from easily preventable diseases and fewer than 40 per cent. of the population has access to the most basic health facilities, debt repayments are again four times as great as public spending on health. In Niger, at the bottom of the human development index, life expectancy averages only 47 years—we should

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think of that—and only 14 per cent. of the nation is literate. Nevertheless, debt servicing takes more than the combined budgets of health and education. In Nicaragua, where 75 per cent. of the population live below the poverty line, debt repayments exceed the total social sector expenditure. In Bolivia, where over 90 per cent. of the rural population exist in poverty, debt repayments this year are three times greater than the spending allocated for the fight against rural poverty. All this is not to quantify the economic short-sightedness of putting debt servicing above sound, environmentally friendly economic investment for the future.
Against that background it was encouraging when last September at the annual IMF/World Bank meeting agreement was reached on the highly indebted poor countries initiative. Many applauded when the Bank's president, Jim Wolfensohn, proclaimed the initiative to be,
"good news for the world's poor".
It was welcomed as introducing a new type of so-called "exit strategy" based on reducing debt stocks to sustainable levels through a one-off operation. As my noble friend Lord Callaghan indicated, many had reservations that the time-frame for implementation was unnecessarily long; that the eligibility criteria were unduly stringent; and that the finance provisions were at best unclear and at worst disappointingly inadequate. However, there was a widespread disposition to see the developments as highly encouraging.
However, as the right reverend Prelate the Bishop of Oxford said, nine months later the mood has changed. Sadly—because I believe him to be genuine— Wolfensohn's words begin to look hollow. He appears to have difficulty in driving his commitment forward. The indications are that, shamefully and nonsensically, his board does not see debt relief as a priority issue. The initiative seems to be being implemented more with a view to minimising the costs to creditors than to maximising the benefits for debtors. Poverty reduction remains of marginal concern. Some of the most powerful in the Group of Seven, Germany, Japan and Italy, of course, opposed the initiative from the outset. Now, lamentably, as the noble Lord, Lord Hunt, pointed out, they have been joined by the United States, previously a strong supporter, using its influence on the boards of the IMF and the World Bank to delay implementation and minimise the level of debt relief provided.
Uganda, usually recognised as exemplary in its record of economic reform, has seen its debt relief delayed from 1997 to 1998 at what the Ugandan Government calculate as a cost of 193 million US dollars over the next year; in other words, six times the national health budget. In Bolivia, the combination of a delayed completion date for debt reduction and the IMF/World Bank's decision to set debt sustainability thresholds at unrealistically high levels will cost the country around 241 million US dollars. For creditors, that is peanuts; for Bolivia the sum is twice the national health budget and 17 times the projected spending on rural clean water and sanitation. At this rate there is little prospect of the
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global debt crisis being resolved until well into the next decade. Some heavily indebted and impoverished countries such as Guyana, Honduras, Benin, Mali and Chad may well be excluded from debt relief on the basis of the narrow financial criteria.
The initiative so warmly welcomed only last autumn may already have lost credibility with governments in the south. Countries which are expected to undertake painful economic reforms need incentives for good behaviour rather than more obstacles to climb. It is therefore essential that the Department for International Development's White Paper, supported by the Chancellor, should be designed to regenerate the highly indebted poor countries initiative and to give it real momentum. I hope it identifies new mechanisms, including some sale of IMF gold stocks, to finance earlier and more far-reaching debt reduction for eligible countries.
The White Paper should above all spell out the relationship between debt relief and poverty reduction. Debt relief is not an end in itself. Indeed, financial discipline is critically important to sustain economic performance, and inadvertently to undermine it would not be helpful. What debt relief should be about is a part in a coherent strategy for poverty elimination. Debt relief should be negotiated in such a way that it always has a direct impact on poverty. Uganda has already indicated a willingness to enter into an agreement with her creditors ensuring that debt relief is translated into investment in the country's action plan for poverty eradication. Instead of putting all the emphasis in debt relief on strict technical compliance with IMF priorities alone, equal significance should be given to convincing commitment to measurable targets for poverty reduction. Governments seeking debt relief should have to demonstrate beyond doubt how they will use the released resources for poverty reduction and should be required to enter into binding agreements to give this effect.
Whatever the pros and cons of all the detail in what Jubilee 2000 argues, those involved deserve unstinted admiration for having helped us so well to highlight such a crucial issue. Christian responsibility requires action; social justice demands action; and future world stability will be undermined without action. The Prime Minister favours action. Now all that we require from government is action. There is every reason to be confident that, with the present combination of Ministers in Cabinet, we shall get it.
4.17 p.m.
Lord Prys-Davies: My Lords, the right reverend Prelate the Bishop of Oxford has done a great service to the House, to the country and to a billion people living in the poorest countries in the world in opening a debate which focuses on the problem which we have been discussing for the past hour and a quarter.
For my part I am also grateful to the charity Christian Aid which represents the British and Irish Churches not only for the background information which it has sent about the problem but also for its campaign in support of the initiative which is embodied in the Motion before

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the House. I look at the expertise of the Members of your Lordships' House who have spoken and who are to speak in this debate. I have no expert knowledge and therefore I shall not detain the House with a long speech. However, I should like to think that in a modest way I am voicing the opinion of those thousands of people who contribute financially in a small way to Christian Aid.
The right reverend Prelate the Bishop of Oxford has spoken in clear terms about the moral issue; namely, the injustice of the poorest countries in the world, particularly in the sub-Saharan area, being required to pay huge interest and capital repayments to wealthy, mainly G7 countries. He then called for urgent and radical steps speedily to remove that injustice. I use the word "radical" because in his speech there was a radical suggestion to which I shall come.
It has been said, rightly, that the prevailing burden of debt may have been the fault of uninformed politicians in the newly independent countries, doing their very best, who received the loans, or it may be due to the corruption of local presidents, Ministers and dictators who borrowed more than was wanted, or squandered what they had borrowed on the purchase of arms or other prestige projects which were not needed by their people. But we cannot deny that a measure of responsibility rests on the terms on which the loans were made by western countries and the international agencies, and on the advice which the western countries and the international agencies offered to the new and uninformed governments of those countries as to whether or not those loans were appropriate to the needs of their countries.
By today a vicious circle has been created. Contractual repayments of interest and capital mean that less money is available to diminish the poverty of the people who had no say in those agreements. Less money is available to spend on health, education and industrial investment which are so badly needed. That in turn makes it more difficult to lay the foundation for a better future. That is the vicious circle that I see.
It is a sad commentary that this is not in a sense a new problem. I recall listening in your Lordships' House in the early 1980s to the late Lord Seebohm drawing our attention to the debt crisis affecting poor countries of the world. But it is a problem which has become much bigger, affecting more countries. In April last when my noble friend Lord Judd, who is by my side and who has borne some of the heat and burden of relief work, asked what progress had been made in reducing the multilateral debt burden of developing countries, the then Minister, the noble Lord, Lord Mackay of Ardbrecknish, said that the Government agreed that there was a problem to be addressed. I have no doubt that that was so. The Minister then said that the IMF and the World Bank would be putting forward proposals at the April 1996 meeting of the Development Commission. That was 15 months ago. It is a matter of concern—it has been expressed on all sides of the House today—that the HIPC initiative which emerged, welcome as it was, is inadequate. It is inadequate for the detailed reasons which the right reverend Prelate the Bishop of Oxford gave to the House.
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Perhaps I may draw the attention of the House to a few statistics about Uganda. In Uganda one in five children dies before the age of five from preventable diseases. That means that 398,000 children under five die per annum. Thirteen thousand women die in childbirth every year. I wonder how many centuries we have to go back in the history of Britain before we have comparable figures. Those statistics reflect a disturbing state of affairs. I believe that that state of affairs carries dangerous risks for the countries. Moreover, that an undernourished child under five with an undernourished mother should die is an affront to human dignity.
Uganda has received a promise of HIPC minimal relief next year. It is welcome of course, but it means no more than that instead of repaying 200 million dollars in 1998 she will repay 180 million dollars. The evidence from Mozambique, Tanzania and Ethiopia is broadly similar to the sombre experience of Uganda.
What is now to be done? The Motion indicates the components of a solution along the Marshall Aid lines of 50 years ago. That, at least, is how I understand the Motion. As my noble friend Lord Callaghan told the House, the remission of the debt would not bring immediate prosperity. But it can probably do more than anything else to help destitute nations build their economies. And if relief is not to hand, we fear that poverty will grow upon itself with consequences which we cannot foresee.
What is new and novel in the speech of the right reverend Prelate the Bishop of Oxford is that there should be in international law a procedure, a mechanism, comparable to or based on the principle of bankruptcy law in the domestic setting which has proved to be so workable in coping with debt. That is new. As a solicitor in the valleys of South Wales, I know that bankruptcy law makes it possible for the individual bankrupt to draw a line below his debts, and, as the right reverend Prelate the Bishop of Oxford said, to begin a new, unencumbered life. I found that concept particularly attractive.
The statistics from Uganda in effect signify that many of the countries of sub-Saharan Africa saddled with huge debts of unpaid interest on principals are bankrupt, but international law, unlike domestic law, provides no procedure to enable a debtor country to draw a line below its debts. Neither is there a receiver in international law who can look objectively at the debtor's position. The IMF is both a creditor and a receiver; and I suggest that that cannot be right.
The direction must be towards eliminating poverty of the poorest countries rather than alleviating their poverty—a distinction of which I believe the Secretary of State, Clare Short, is fully aware. If the Government desire help from the public to enable them to move forward in the desired direction, I hope that this debate, with the encouraging detailed comments of my noble friend Lord Callaghan, will have been a contribution. I hope that my noble friend on the Front Bench has been instructed by his right honourable friend Clare Short to be sympathetic to this Motion.
4.28 p.m.
Lord Rea: My Lords, I, too, thank the right reverend Prelate the Bishop of Oxford for initiating such an important debate. I thank and congratulate my noble friend Lady Lestor for her spot-on maiden speech. I also welcome my noble friend Lord McIntosh to the world of international development. He is becoming our all-singing, all-dancing spokesman. Perhaps that is appropriate since he answers Questions on heritage, I think, more than any other subject. I know that he will have been listening, and will continue to listen, to all noble Lords and will respond as well as time and the data available to him will allow.
This debate is also useful to the Government since it provides them with an opportunity to flesh out before the autumn White Paper on international development how their thinking is developing. My right honourable friend Clare Short has stated that our poverty-focused view of international development is not merely a question of overseas aid but will incorporate to an important extent the crucial role of world trade and the issue of international debt.
As many noble Lords said, the previous Government recognised the importance of debt in international development and took a few very useful initiatives, starting with Trinidad about seven years ago; and more recently, as my noble friend Lord Judd and others said, Kenneth Clarke proposed the use of gold reserves to reduce multilateral debt. I hope that we can take over that baton and gather more allies around us in taking the approach further forward than the previous Government succeeded in doing.
The HIPC initiative, discussed by nearly all speakers and described clearly by the right reverend Prelate, was, to give it its due, the first time that the international financial institutions relented a little on the principle that no debts to them could ever be written off or even reduced (written down). As pointed out in the right reverend Prelate's analysis, this initiative is proving too little, too late.
One of the early (though perhaps not early enough) benefactors of the HIPC is to be Uganda. As if anticipating this debate (Uganda seems to be the country in the news, as it were, in this debate), the Guardian today has a special section on Uganda. It is quite upbeat in its tone, with the underlying aim of encouraging investment and tourism. Reading between the lines, which describe Uganda's undoubted success in economic recovery, there are some less happy stories. Universal primary education (UPE) was one of President Museveni's electoral pledges. That laudable aim has led to a near doubling of school enrolment in one year, from 2.6 to 5.1 million. I should like to quote from an article in today's Guardian by Andrew Meldrum entitled, "Class is for everyone". The article states:
"The flood of students has filled Uganda's primary schools to bursting point, as evidenced by the students spilling out of Kyalusowe's first grade classroom.
'We are very happy with our new students and they are welcome', says Joseph Muyaja, deputy headmaster of the school … 'Last year we had 540 students and now we have 850. But we don't have
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enough teachers. For a teacher to teach more than 100 students, that's practically impossible' … some classes must be held outside under the trees.
'It doesn't work on rainy days', says Mr Muyaja … Then we must crowd all the students inside.'
The overcrowded, under-equipped situation at Kyalusowe School is matched at virtually all of Uganda's 8,500 primary schools".
What can be said for education can also be said for primary healthcare.
That is the reality of a situation in which seven times as much is being spent on debt servicing as on primary education (and 10 times as much as on primary healthcare). As my noble friend pointed out, simple measures save lives in a country with a very high child mortality rate. Oral treatment of diarrhoea and immunisation can make an enormous difference and are very cheap. There are many other countries, mentioned by noble Lords, where debt servicing costs are higher than the proportion of the national budget that can be devoted to social purposes.
Obviously the United Kingdom cannot by itself dictate the policy decisions of the international financial institutions. However, we can state the case and build alliances for widening the eligibility criteria for entry to the HIPC. One of those criteria is the need to follow the structural adjustment programmes of the IMF for two periods of three years—a situation which, as the right reverend Prelate showed, is impossible for many of the poorest countries to achieve.
We should also argue the case for deepening as well as widening the HIPC scheme, so that countries cannot merely achieve sustainability (the ability to go on servicing a slightly reduced debt) but have the burden lifted to such an extent that they can divert (or devote) the resources used to service debt to essential development which may possibly lift them right out of their historically acquired debt. (That may be a Utopian prospect when we consider that the United States has a debt of something over 1 trillion dollars. On the other hand, it has assets to balance that debt.)
The IMF has always imposed economic conditions and now speaks also of social sector conditionality—a laudable change but, as other noble Lords said, possibly "a bit rich" coming from the same source as structural adjustment programmes, which, as my noble friend Lady Lestor pointed out, have led to a decline in social spending and a reduction in the standard of life.
However, as my noble friend Lord Judd said, there is a need to ensure that debt relief measures do result in social sector expansion—or at least protection, and preferably great improvement. That has been called for for nearly 10 years by many economists and writers such as Susan George in 1989, in her book A fate worse than Debt. She called for a "3D" solution—debt, development and democracy—whereby indebted countries were allowed to pay back interest and principal over a long period of time in local currency and credit that to national development funds controlled by "authentic" representatives of the people working with the state. That was too Utopian to be accepted widely, but some "debt for development" swaps have

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been carried out, and some "debt for equity" swaps, as mentioned by the noble Viscount, Lord Torrington, over the years, mainly with commercial debt.
Oxfam has incorporated some of Susan George's ideas of over a decade ago into the fifth part of its Agenda for Reform, upon which my noble friend Lord Judd expanded; namely, to integrate poverty reduction incentives into debt reduction schemes. It states:
"Countries willing to engage in a dialogue aimed at converting debt relief into poverty reduction initiatives should be rewarded with an accelerated time-frame for debt relief".
To increase the finances for heavily indebted poor countries initiatives from 5 billion dollars over an eight-year period—which is what is proposed—to a 10 billion dollar sum by, for instance, the sale of gold reserves would largely enable the HIPCs to break free of the stranglehold in which debt holds them today.

NATO Summit
4.40 p.m.
The Lord Privy Seal (Lord Richard): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the NATO Summit in Madrid on 8th July. Copies of the Declaration which was agreed, of the separate statement on Bosnia, and of the NATO/Ukraine Charter, which was signed this morning, are being placed in the Library of the House. The Statement is as follows:
"The main outcome of the summit was an invitation to Poland, the Czech Republic and Hungary to begin accession talks with NATO with the aim of joining the alliance by the 50th anniversary of the Washington Treaty in April 1999. This is a historic decision, and a step of huge importance, which I am confident will be widely welcomed in this House and indeed across Europe and the alliance. We aim to negotiate a protocol of accession by the end of this year. This will need ratification by all NATO members, as well as by the prospective new members. We shall of course ensure that there is a full debate in this House before British ratification.
"Successful NATO enlargement has been a key objective of both the previous government and this Government. If we can get this right, it will make a major contribution to security and stability in Europe by bringing in countries of central and eastern Europe to one of our key institutions. Our priority was a manageable and limited enlargement, involving credible candidates with reliable democratic credentials and a real ability to contribute to collective security. As I said in yesterday's discussions, NATO is a military alliance, not a political club, and its collective defence obligations have to be taken with the utmost seriousness.
"We were, of course, conscious of the sensitivities of candidates who might not be asked to begin negotiations this time, and of others, like Russia, who might fear the consequences of enlargement for them. We also wanted to ensure that the NATO door would
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remain open for future enlargements. We therefore strongly favoured an enlargement of three countries at this stage.
"I should say a particular word about Romania and Slovenia, whose applications were especially closely considered, even though there was no consensus to invite them on this occasion. Both countries have indeed made remarkable progress. Romania's new government deserves particular congratulation on the steps taken since they took office last November. A number of allies would have liked to see Romania and Slovenia included among those invited at Madrid. All, including ourselves, saw them as strong candidates for any future enlargement. But we felt that Poland, the Czech Republic and Hungary were the limit for current enlargement. I warmly congratulate them.
"There will of course be a financial price to be paid, mostly by the new members but also by existing members of the alliance. We believe this cost will be manageable. For example, there is no reason why Britain's contribution to NATO budgets, currently some £155 million per year, should rise significantly in real terms.
"There were, of course, other disappointed applicants. We recognised, for example, the progress achieved towards greater stability by the states in the Baltic region. NATO leaders agreed that they expected in the years ahead to extend further invitations to nations willing to take on the responsibilities of membership and whose inclusion would serve the interests of the alliance and enhance overall European security. We made clear our intention to intensify dialogue with aspiring members.
"NATO's relationship with all its partner countries also took on a new dimension with the establishment of the Euro-Atlantic Partnership Council in May. Today's meeting with the heads of partner countries has been taking place under the aegis of the Partnership Council.
"Relations with two partners deserve particular mention. NATO leaders underlined the historic achievement represented by the Founding Act between NATO and Russia, signed in May in Paris. Good future co-operation with Russia is vital for Europe's security.
"In Madrid, we took a further important new step by signing with President Kuchma the NATO/Ukraine Charter, which provides for intensified consultation between the alliance and Ukraine. Ukraine's independence and sovereignty are vital to European stability and the agreement with her is a further move to consolidate her key role in Europe.
"We also looked at progress on the alliance's internal adaptation, in particular the development of a new command structure. The aim is to reach final agreement by the time of the December ministerial meetings. Against this background, we warmly welcomed Spain's readiness to participate fully in the alliance once agreement on the new command structure has been reached. I should underline that,

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while we want to see Spain contributing fully to alliance security, we are determined to ensure that the interests of Gibraltar are fully safeguarded in this process.
"We also discussed Bosnia, and expressed particular concern about the political crisis in the Republika Srpska. We called on those responsible to resolve their differences peacefully and demanded that the police in Republika Srpska comply fully with all provisions of the Dayton Agreement. We also again urged the leaders of the region to deliver those indicted for war crimes for trial at the International Tribunal in The Hague. This issue must not and will not be put on one side.
"Finally, we agreed on a further NATO Summit in April 1999 to mark the 50th anniversary of the Washington Treaty. That treaty has proved its enduring value in keeping the peace in Europe. But NATO has also shown its continuing relevance and its ability to adapt to changed circumstances. NATO must continue to evolve and change as the security situation in Europe changes. The agreement on enlargement at the Madrid summit is a further important step in that process. It is an agreement which meets all of the objectives we sought to secure. I commend it to the House."
My Lords, that concludes the Statement.
4.46 p.m.
Viscount Cranborne: My Lords, the House will, as usual, be grateful to the noble Lord the Lord Privy Seal for repeating the Statement. Arising out of what the Prime Minister said in another place, perhaps I may ask the noble Lord whether he will be able to assure the House that he too will arrange for a full debate before the UK ratifies the protocol of accession. As the Prime Minister—and the noble Lord—said, it is an extremely important element which I am sure this House would like to discuss.
The extension of the NATO alliance to the east was an important objective for the past Government, as it is for this one, as the Prime Minister acknowledged in his Statement. We therefore particularly congratulate the Government on their role in bringing that objective to fruition. After all, the NATO alliance constitutes a raft of security in an unstable world. I believe that European security is still the key to world stability.
So, we certainly welcome the agreement, which enables Poland, the Czech Republic and Hungary to join the alliance, and we congratulate them, just as the Government do, on their imminent accession. It is equally important that the door is held open for other countries, notably Slovenia and Romania. We welcome the sentiments expressed in that regard also in the Statement.
I am sorry that the success of NATO expansion was not matched by success in expanding the European Union in the same year. After all, the two matters are intimately linked, as I am sure the noble Lord, the Lord Privy Seal, would agree. Does he agree that the Partnership for Peace initiative played an important part
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in the process that led to this step in the expansion of the alliance and that the Partnership for Peace initiative should continue to play a role in other countries which are not yet members or who may never become members?
Meanwhile, we welcome the noble Lord's confirmation that NATO is an organisation with a hard edged purpose and in particular that Article 5 of the original treaty provides that an attack on one member should be regarded as an attack on all. I wonder, therefore, whether he could expand a little on paragraph 7 of the Declaration which states:
"Admitting new members will entail resource implications for the Alliance. It will involve the Alliance providing the resources which enlargement will necessarily require".
I wonder whether the noble Lord could tell the House what will be the real cost to the three successful candidates themselves? Equally important, can he expand a little on the assurance given in the Statement about the costs to our own defence budget?
The Statement says that there is no reason why our contribution to NATO budgets should rise significantly. Perhaps the Minister can explain why the Government are able to take that view and give us some reassurance, particularly in the light of the defence review that they are undertaking. Can he also advise the House whether our increased contribution—significant or otherwise—will reduce our capabilities elsewhere? If so, is that trade-off worth having? It may well be.
I noticed that paragraph 2 of the declaration refers to,
"building a European Security and Defence Identity within NATO".
As the Lord Privy Seal is aware, we support that aspiration. However, can he explain to the House how that clear use of the word "within" squares with that part of the draft Amsterdam treaty which refers to possible plans to integrate the WEU into the European Union? I thought I detected a clear reluctance on the part of the Government to accept that aspiration during the course of the report to both Houses of Parliament on the negotiations at Amsterdam. However, since it is clearly possible that at some time the Government may have to choose between two incompatible objectives, can the Lord Privy Seal assure the House that, if presented with such an uncomfortable choice, it is the Amsterdam aspiration that they will reject? If he can give the House that assurance, can he explain to the House how, once the Government have signed the treaty, they will go about rejecting that aspiration rather than what is contained in the Madrid conclusions?
I am glad too about what was said in relation to Gibraltar. We fully support any efforts the Government make to bring Spain and France back into the integrated structure of NATO, but not at any price. I hope that the Lord Privy Seal will be able to assure the House in rather more specific terms than the generalities contained in the Statement about the interests of Gibraltar, that there will be no weakening of the constitutional guarantees to Gibraltar which this country has already given.
In relation to Russia, clearly we agree with the sentiments of the Statement that the relationship with Russia is an important one and it is clearly right that it

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played an important part in the deliberations in Madrid. Does the Lord Privy Seal agree that this is an extremely delicate path for NATO and the allies to tread? Russia must of course be seen not to have a veto over the activities of independent nations; but we must welcome Russia's emergence as a free nation and, increasingly, as a partner for the West. We must not discourage that process and must only hope that the Madrid participants have judged correctly what is clearly an extraordinarily difficult balance.
I particularly welcome what the Prime Minister said in relation to the Ukraine—a country whose geopolitical importance is becoming increasingly apparent. We welcome the special declaration in relation to Bosnia and, most notably, once again it gives me pleasure to take this opportunity to pay tribute to the role of British troops in Bosnia—a role about which I was able to learn at least a little when I was privileged to be a junior defence Minister and an occasional visitor to that unhappy country.
I wonder whether the Lord Privy Seal can tell us in particular whether there was any discussion in plenary session or marginally in the Madrid conference as to whether the United States is prepared to extend the deadline for withdrawal of its troops from the middle of next year. Quite apart from anything else, Bosnia has shown that NATO's European members can only proceed in conjunction with the United States of America if NATO is to be an effective alliance. Some of us may feel that Bosnia has been the most difficult test that NATO has faced so far in military terms.
Finally, we welcome what has been achieved at Madrid. However, as the Lord Privy Seal will be aware—I suspect none more so than he—the nature of threats to security is fast changing. The questions of the Russian Far East, for instance, and of central Asia go far wider than NATO's immediate geographical limits; they concern Russia and many of the south European and central Asian parts of the former Soviet Union. Equally, the risk of proliferation of weapons of mass destruction is becoming increasingly serious. Can the Lord Privy Seal tell the House whether such matters will form an integral part of NATO's agenda between now and the next summit in 1999 and, indeed, at that summit itself? It is important that NATO continues to show that it can adapt to changing circumstances in good time.
From this side of the House we will do whatever we can to support what is self-evidently a good cause in an uncertain world.
Lord Wallace of Saltaire: My Lords, we on these Benches welcome the Statement as a further step in the transformation of NATO from the Cold War alliance towards the European security organisation. I regret that NATO slid towards that enlargement by a series of steps in the course of which we have granted Russia half membership of the organisation. We have followed the United States' lead and many of our European governments, including our own, have so far failed to explain to their public or their parliament the rationale for NATO enlargement as such.
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Our always excellent Library obtained for me yesterday from the Internet one publication issued this year which actually sets out the rationale for enlargement. It is a US government report to Congress on the enlargement of NATO. So far the British Government have not provided anything similar to their Parliament or public and I very much hope that they will. We do not simply want a debate in both Houses of Parliament; we want an explanation of the overall approach to enlargement, as the noble Viscount, Lord Cranborne, said, both of NATO and the European Union as to how those two linked processes contribute towards the construction of a stable European international order after the Cold War.
In that context we need to know the answer to a number of questions. What, if anything, is the role of the Organisation for Security and Co-operation in Europe? Does NATO begin with Russia as a half member to replace the OSCE? What is the future of the treaty on conventional forces in Europe, which will have to be amended? How far, as the noble Viscount, Lord Cranborne, suggested, do we see NATO in the future as a global alliance under US leadership or, alternatively, as a security organisation for this region?
I was in the NATO headquarters last Monday and was struck by the extent to which the alliance is already changing. They were talking about constructing extra wings to the building; about where they will fit in the Russian and Ukraine delegations and the others who will come. The Belgians, ever keen to make sure that they stay, are talking of offering a different site altogether within Brussels. That is fundamental change.
I am reluctant to accept, without comment, the suggestions in the declaration that it was our priority as the British Government that Poland, the Czech Republic and Hungary should be the limit of the current enlargement. It is clear that that was an American priority and the British followed uncritically the American demand that there should be only three new members on this occasion because, they argued, only three would get through the Senate in terms of ratification.
I should like to express some unease with the idea that NATO operates by consensus. That is less and less clear. NATO operates by American leadership and by the Europeans accepting that they should follow. I express also a little unease in relation to the press comment about the Madrid European Summit; it related to the extent to which the British Government have appeared to be the main cheerleader for following the Americans whatever they say and criticising the French in public for the position in which they currently find themselves. That is partly their own fault, but it is in our interests that France should, following Spain, also be integrated into the alliance.
Like the noble Viscount, I should like to ask a little more about cost and burden sharing, in particular how far the cost will fall upon the new members. After all, it is not ideal in terms of their adaptation to democracy and economic growth that they should now be spending large additional sums on defence, let alone that they should be spending large additional sums on purchasing

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new major weapons systems. There is a good deal in the American press about how major American companies are currently doing their utmost to sell to the Poles, the Czechs, the Hungarians and others F-16s, F-22s and so on. That does not seem to be in their best interests.
Future enlargement is now clearly on the agenda. As the Statement suggests, we are talking about enlargement perhaps within the next two, three or four years; possibly by current members of the European Union, Austria, Sweden or Finland; certainly now that we have made half promises to Romania and Slovenia that they will be in the next round; and then, in the long run, there is the whole question of what we do about the Baltic States and the other south-eastern European states.
I hope that within the next few months the Government will provide us with their view of the future overall strategy which they will be pursuing not only under American leadership but also with their European partners towards the construction of a stable, new European international order and of how NATO enlargement as one of the aspects of that will contribute.
Lord Richard: My Lords, I am grateful to the noble Viscount, Lord Cranborne, and the noble Lord, Lord Wallace, speaking on behalf of their parties, for the welcome they have given to the outcome of the summit. I cannot forbear from making the point to the noble Lord, Lord Wallace, that occasionally he might concede that the Americans are right. It is also conceivable that we have arrived at an independent conclusion that the Americans might be right and that therefore it is in our interests, just as much as in everyone else's interests, that we and the Americans should pursue a common policy in relation to a given issue. On this issue, to use the kind of language that he used about the way in which our decision was arrived at and the way in which it was presented in Madrid is putting it much too high. The noble Lord had his debate yesterday on this point and indeed these views were expressed vigorously from different quarters of the House. I can only say on behalf of the Government that we do not recognise them and we reject the implications behind them.
I was asked a number of detailed questions, some of which I can answer. I was asked about costs. Precise details of the costs will be worked out now that we have a decision as to which countries should or should not join. I can tell the House that preliminary NATO work gives us confidence that the costs will be manageable, but we now have to confirm that. There will of course be costs for new members but it is very much in their interests for their economies not to be distorted by excessive defence spending. Enlargement will not require that. Our forces are already well suited to the alliance's strategy of reinforcement so we do not expect enlargement to mean significant extra costs for the United Kingdom. I cannot go further than that at this stage.
The noble Lord asked about the relationship between NATO and the European Union. The two organisations are totally separate. NATO will decide, on the basis of what it considers its common interests to be, which
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countries should be asked or invited to become members of it. The same is true of the European Union. The noble Lord asked about the relationship between NATO and the Amsterdam summit, particularly that part of it which related to EU-WEU integration. One of the important points the Prime Minister made when he returned from the IGC was that we preserved the primacy of NATO in European defence. That was the object of the exercise and that we succeeded in doing. We rejected moves towards a European Union common defence. We successfully rejected the integration of the WEU into the European Union unless and until we all decided otherwise. We ensured that common defence policy would be carried out by WEU and that it should respect NATO obligations.
I do not see the difficulty that the noble Viscount, Lord Cranborne, was sketching out. The two organisations—the European Union and NATO—will no doubt develop. When they develop, it would be very foolish if one organisation paid no attention to what the other organisation was doing. But the idea that somehow we shall be forced, at some unspecified date in unspecified circumstances in the future, to take an as yet unspecified decision as between one and the other is one I would reject.
The noble Viscount asked for reassurances on Gibraltar. I give those reassurances gladly. The British policy on Gibraltar remains precisely the same.
The noble Lord, Lord Wallace, said that we had not taken the opportunity to explain to people why NATO required enlargement. Perhaps I may read one paragraph of the communiqué:
"The Alliance recognises the need to build greater stability, security and regional cooperation in the countries of southeast Europe, and in promoting their increasing integration into the Euro-Atlantic community. At the same time, we recognise the progress achieved towards greater stability and cooperation by the states in the Baltic region which are also aspiring members. As we look to the future of the Alliance, progress towards these objectives will be important for our overall goal of a free, prosperous and undivided Europe at peace".
Perhaps I may condense that into a sentence. The Government and NATO as a whole saw enlargement into eastern Europe as a potent force for attempting to ensure stability in that part of our continent. We took the view—and NATO as a whole took the view—that at this stage three was probably about right. We said that the doors may well remain open in future, particularly as far as concerns Romania and Slovenia, and we paid tribute to the progress that they had made and also to the progress that the Baltic states had made. It seems to me that that was a reasonable, sensible and balanced approach to the problems of enlargement and the problems posed by enlargement.
Noble Lords asked about a debate. Without consulting the business managers, I am sure I can commit the Government to having a debate in this House before integration. I am sure that would be right.
5.7 p.m.
Lord Wright of Richmond: My Lords, I wish to ask the Lord Privy Seal about one aspect of relations with Russia. Can the Government give any assessment, in the

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light of the Madrid Summit and in the light of the agreement with the Ukraine, whether they see any early progress in strategic arms reduction and limitation?
Lord Richard: My Lords, in the NATO communiqué there are one or two sentences in which we urge the Russians to ratify START II and commence negotiations on START III. The Russian response to that is not one I have yet seen. However, now that this enlargement decision has been taken, I hope that things may settle down a little and that it may fall on fruitful ground.
Lord Taylor of Gryfe: My Lords, the noble Lord, Lord Wallace, raised an important point in connection with costs and the implications for rearmament in Europe. My noble friend has already dealt with the question of anticipated costs of membership, but it is generally agreed that the defences of the new members are not modern and in defence terms not adequate. Do I assume that in addition to the burden of paying for membership of the club, the new members will incur as an obligation substantial expenditure in equipping themselves with new and modern arms? If that is so, it would represent a burden on the part of those countries which, with their other obligations in terms of rebuilding their economies, could be very serious.
Lord Richard: My Lords, I recognise the point that my noble friend makes. These are essentially matters for decision by the countries concerned. It is not for us to tell the Poles, the Hungarians or the Czechs that it is not in their interests to do something which they clearly decided was very much in their interests and which they have been anxious to do for some time.
I cannot go further on costs than I did in my response to the noble Viscount, Lord Cranborne, which is that we do not expect them to be crippling to the economies of those three countries. I believe I also said that we realistically hope that they will not amount to a great deal of increased defence expenditure on their part. There will obviously be some costs. They will have to adapt to the military structures of the alliance: they will have to accept a common command structure. There are a number of issues here which clearly have to be dealt with. If those countries are in favour of membership it would be very bold of us to say nay.
Lord Boyd-Carpenter: My Lords, I do not know whether the noble Lord gave an undertaking that this House will have an opportunity to debate the Statement. The question was put to him, but I was not clear as to his answer. I very much hope that there will be an opportunity for full debate on this extremely important matter.
Lord Richard: My Lords, I hoped that I was clear. I believe I was so bold as to say that I was prepared to give an assurance, without even consulting the business managers, that there would be a debate on the ratification of the Protocol of Accession. So there will be a debate and everybody will have a full opportunity to have their say.
Lord Judd: My Lords, clearly security and stability in Europe are about more than just military alliances. In
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view of the need to reassure those in Russia who see or choose to interpret the expansion of NATO as a threat, and in view of the need to have good, constructive and helpful relationships with the majority of those in the former communist empire who are unable to join NATO at this stage, was any time given in Madrid to discussing the role of the OSCE and how it can play a constructive part in overcoming these anxieties, even if they are only imagined, and promoting economic and social stability in the wider community?
Lord Richard: My Lords, the short answer is that I do not know. I shall try to find out and when I do I shall write to my noble friend with the information. The concerns that he expressed are perfectly valid and I believe they are shared by a large number of people, not excluding this Government.
Lord Rea: My Lords, can my noble friend say what the effect of this new agreement will be on the treaty for the reduction of conventional forces in Europe both on our side and the Russian side?
Lord Richard: My Lords, I think I can—when I find it. NATO tabled proposals on 20th February for the adaptation of the CFE treaty to the new circumstances in Europe. The NATO proposals tabled are compatible with the joint approach to CFE adaptation negotiations agreed by NATO and Russia and included in the founding Act. The NATO proposals are really two main objectives: one reducing the amount of arms in Europe as a whole; secondly, abolishing the old bloc-to-bloc structure of the treaty and moving to a system of national limits to reflect the new Europe. We believe that adaptation of the CFE treaty in this way will be a very important element indeed in the wider transformation of Europe's security architecture and in particular the evolving relationship between NATO and Russia. Negotiations on CFE treaty adaptation are indeed continuing in Vienna.

Jubilee 2000 Scheme
5.15 p.m.
Debate resumed.
The Earl of Sandwich: My Lords, we return to the very important issue of international debt. It is a pleasure to support the right reverend Prelate the Bishop of Oxford as one who has shared part of his experience of international development, and having myself served with Christian Aid, Save the Children, CARE and others working with Africa's poorest over the past 20 years. It is also encouraging to hear that there is so much consensus on this issue, not only in this Chamber, but also in another place. It was very encouraging also to hear the maiden speech and the sincerity of the noble Baroness, Lady Lestor.
It is said that there is always something new from Africa, but that does not necessarily mean something good. Optimism and faith in new solutions will not sustain any economy, and many areas of Africa are still

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under the shadow of civil war—the "darkness" so mercilessly described by Conrad—and the distorted nationhood so bitterly and lucidly attacked by the Nigerian writer, Wole Soyinka.
And yet with that caveat I believe that important political changes are taking place and it is time that European politicians came out again to talk positively about African economic development. The French Foreign Minister, M. Hubert Védrine, said a fortnight ago,
"We have totally to rethink our policy; the whole of Africa is on the move … France must be supportive of the movement in Africa towards emergent economies and democracies".
I am sure that the Government have taken heart from that statement by the new French Government.
The Economist recently described Africa as a "potentially emerging market" for the West. As we have heard, Africa's economy enjoyed a 5 per cent. growth rate last year compared with 3 per cent. in 1995. The African Export Import Bank has crudely put this down to,
"the strength of adjustment policies"
and "good weather conditions". I believe that we can add "human endeavour".
However, as we have heard, these broad statistics can often conceal the truth. They do not say, for example, that the poorest and most indebted countries, for whom we are holding this debate, are dependent on volatile commodities like coffee, cotton and sugar to earn their foreign currency and not on metals and petroleum which do comparatively better. They do not say that, according to the Overseas Development Institute, 60 per cent.—and we have heard a lot of figures—of the aid which flows into national earnings in the poorest developing countries, so desperately needed, is being taken out to service international debt. As has been said, the problem was again identified at the Denver G8 Summit, which focused on Africa and produced Britain's welcome new aid initiative.
Conditional aid and trade under such positive schemes as the 20:20 compact, the post-Lomé negotiations and structural adjustment programmes, are almost irrelevant without debt relief, which incidentally is not the same as an aid programme—not in the UK at any rate. I hope the Minister will confirm that it has been, and will remain, additional to the aid budget bearing in mind that 95 per cent. of debt in this country is ECGD-related. Unless something more is done soon by ourselves, the moneylenders, we are condemning the poor in these societies to gradual starvation.
The Debt Crisis Network and the World Development Movement remind us how urgent all this is. I take just two most indebted countries as an example. Mozambique—which I once visited in the midst of a civil war from which it is still earnestly trying to recover—was being asked for nine-tenths of its export earnings to pay for its debt servicing until it obtained 67 per cent. relief on its Paris Club debt under the Naples terms, as we have heard. It is now hoping for 80 per cent. relief on that debt if it meets the conditions. Tanzania, which has enormous potential for
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economic recovery, has also received 67 per cent. relief on Paris Club debt but is not likely to receive any more. In the case of countries like Uganda and Mozambique this relief only applies, I am told, to debt up to the cut-off dates of 1981 and 1984 respectively.
The ability to pay is obviously linked to the wider African economy and to political and economic reform. There have been a lot of moves lately to encourage outside investors. The change of government in Kinshasa has offered some hope of democratisation in the Congo. There is new leadership in the Horn of Africa. There have been gradual improvements in Southern Africa.
South Africa has acted as mediator in various African conflicts and is cautiously taking its pan-African responsibilities seriously. This is one reason why Washington has shown so much interest in Africa of late and has launched a major new Africa initiative. Another is that South African investors have been moving rapidly into central and east Africa.
There has been a mood of democratisation and Africanisation. President Mandela's address to the Zimbabwe Parliament on 19th May offered a challenge to our perception of Africa. "The time has come," he said,
"for Africa to take full responsibility for her woes, use the immense collective wisdom it possesses to make a reality of the ideal of African renaissance …
"It is a renaissance that must mean that Africa refuses to be a passive onlooker in a changing world, hapless victim to modern machinations of the forces historically responsible for her woes.
"Only in this way can Africa assert her right to be an equal partner in world affairs. Indeed, we have the right to claim and the obligation to ensure that Africa occupies her rightful place in the new world order in the making".
It is easy to dismiss President Mandela's words as an old warrior's rhetorical stirring of African feeling. Of course, we recognise he has a job keeping alive the ANC's aspirations in bringing home solutions. But look at his record. He has not only triumphed over one of the world's foremost evils, the apartheid state—without much help—but he has renewed in all of us a sense of moral obligation and a desire to continue the essential process of eradicating poverty, increasing security and providing leadership in that great continent. His recent forays into the Congo and other internal disputes make clear that he is determined, in the years left, to succeed where others have fallen.
We can understand what he is saying to Africa, but what is he saying to us? Let us look at the basic thesis that Africa should help itself. This, of course, reinforces the need for the OAU, ECOWAS, SADCC and other regional or international bodies to take more of the initiative, but at the same time it suggests that Europe should move away from the great power game towards this Africanising process, strengthening local African institutions instead of camping in its safe areas of mineral wealth, motorways, city elites and tourism. Is this not the real point of the African renaissance, that Europe has always pandered to dictators and hideous regimes if they suit its own purposes?
Surely that strengthens the case for good governance, democratisation and the liberal economy. Mandela and Mbeki, like Museveni, Kabila and others, seem to

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embrace pluralism and the new African realism of structural adjustment and free enterprise, but they see it also as an awakening of the skills and initiative that exist among the unemployed and in the townships. Of course, they need foreign investment, like every other state, but they must release the energy of the people too—people who have been waiting for their chance to join in the economy. That can be done through a variety of non-governmental channels—there is no time to rehearse them here—as well as through large enterprises. I believe that the Commonwealth is vital in assisting with that process.
In conclusion, I have two questions for the Minister. Now that we have heard what France says—but perhaps we have not heard it in full—does the Minister believe that the European Union is genuinely doing enough to support the process of democratisation in Africa by strengthening civil society and promoting democratic institutions outside, as well as inside, the centres of power? I am not talking here of human rights, which I regard as a separate, parallel exercise. Secondly, can the Minister guarantee that supporting those severely indebted countries in Africa through trade and investment as well as aid and debt relief will be a priority in the much-heralded new White Paper since there is a human as well as an economic imperative to help them?
5.24 p.m.
Lord Taylor of Gryfe: My Lords, this has been a splendid debate. These Benches have pricked our moral conscience on an important matter. We have had some excellent advice also from the Conservative Benches. The noble Viscount, Lord Torrington, speaks with expertise gained from dealing with international financial adjustments. However, I regret that there has been only one speaker from the Conservative Benches. I hope that that does not represent any lack of concern about the very important issue before the House. Those who have spoken have revealed a range of experience and knowledge. We have heard from people who have exercised power and authority in government as well as from those who have been involved with non-governmental organisations and in related activities.
Yesterday, the noble Lord, Lord Elton, asked a Question about the Christian content of the millennium celebrations. It occurred to me that this issue should be the highlight of our Christian commitment to dealing with the major problems in our society. This should be our celebration because the aims of Jubilee 2000 are important. But they do not concentrate on the whole question of debt which is a very complicated matter. Jubilee 2000 seeks to make a particular gesture at this time by saying that we are concerned by the issue of debt and recognise that we have to do something immediately.
Jubilee 2000 proposes,
"a one-off cancellation of the backlog of unpayable debt for the world's poorest countries—which either cannot be paid, or can be paid only with enormous human suffering. This wouldn't set a precedent for cancelling all debts repeatedly. Rather, it would be a once-only gesture to mark the millennium, a gesture showing that creditors and debtors alike have made mistakes and that the slate
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needs to be wiped clean. This would change millions of lives, without taking away the responsibility of debtors to pay their future debts".
The complications involved in sorting out world debt and the question of the World Bank initiative will require careful consideration and are important, but all we are discussing today is whether this nation should commit itself to supporting the Jubilee 2000 objective.
There are moments in history when you have to make a stand—and that stand can change the course of history. I was involved in relief work after the war and in the rebuilding and reconstruction of Europe. The great gesture at that time which changed the whole course of European history was the Marshall Plan, the 50th anniversary of which we celebrated the other day. That gesture was made at a time when Europe had been devastated, countries had been destroyed and the whole structure of the continent was in the melting pot. The impact of the Marshall Plan changed the course of history. I suggest that we have now reached such a situation.
Many noble Lords have spoken with intimate knowledge of the debt situation in Africa. They have indicated that there is a crisis. Not only does the debt situation affect millions of lives but massive social problems flow from it. There is insecurity in the world. One cannot possibly have any security or stability in a world that is so unevenly divided. There will always be a danger of war. One cannot solve the massive problem of refugees without relating it to poverty and instability in debt-ridden countries. We face a crisis that requires a major gesture, and it is good that we should make that major gesture. At the end of the Second World War when I was involved in relief and reconstruction work, this country devoted 1 per cent. of its GNP to the relief of suffering in other countries that it felt were worse off. We have never hit anything like the 1 per cent. target since. That was what we did and we all felt better for it. We were a better, more moral and less selfish nation. I hope that with new politics, new Labour, and the changes that have taken place in the political atmosphere after 1st May, we are ripe to take a new direction and to make generous gestures.
I wish to say one word about a related matter: the arms trade. The instability of the world creates a demand for arms. The excellent briefing note from Jubilee 2000 quotes the ex-president of the World Bank:
"Arms are often a prime source of external debt—military aid accounts for a third or more of total debt service in several large developing countries".
We are very active in the provision of arms. Britain uses the Export Credits Guarantee Department to subsidise arms sales in the south. In 1993–94, 50 per cent. of all export credits provided by this country to exporters related to arms sales. We cannot stand by and say that debt is a problem when at the same time arms sales are a consequence of it. So long as there is instability in the world, arms manufacturers will ply their trade. I suggest that in making this commitment to Jubilee 2000 we should recognise that we have committed sin as well as others. For example, if one compares arms purchases with

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expenditure on health services, The Economist, which has already been quoted today, has stated:
"Worldwide public-health spending on a malaria vaccine, for example, has been estimated at just $60 million in 1996. That for a disease which kills around one million people, and affects between 200 million and 400 million others, every year. Of those deaths, 90 per cent. are in sub-Saharan Africa".
Private spending is making little contribution in this area. We cannot regard ourselves as a caring Christian world unless we get our priorities right. In this case our priorities are to do several things: first, to popularise and support Jubilee 2000 and give it effect; secondly, to examine our responsibilities in arms sales; and, thirdly, in the long term to take a continuing interest in the situation in Africa by following the advice of my noble friend Lord Callaghan of Cardiff and to regard this matter not solely as a matter of debt but to make it possible for the people of Africa to help themselves. That will be done by creating trade and providing markets for their goods as well as dealing with the immediate problem of debt.
5.36 p.m.
Lord Cocks of Hartcliffe: My Lords, I thank the right reverend Prelate the Bishop of Oxford for introducing this debate. I very much appreciate the activities of the Bishops in arousing interest in the problems of our fellow creatures in other parts of the world.
Twice I have been present in your Lordships' House when your Lordships have adopted a Procedure Committee report which states that noble Lords must severely curtail the compliments and congratulations conveyed to maiden speakers in the interests of saving time. No one takes a blind bit of notice of this decision, and nor will I. It is a great pleasure to congratulate my noble friend Lady Lestor. She is an old colleague of mine. I am pleased to pay great tribute to her integrity and steadfastness. Such is her sensitivity that when we were in government preparing a questionnaire and one or two of the questions were quite sensitive, although the matter did not fall within her remit I insisted that she see the matter herself and approve it before it was published. I said that if it satisfied my noble friend it would be all right for everybody else.
I have been interested in the subject of world poverty for over 40 years. During the first famous constitutional by-election of the right honourable Anthony Wedgwood Benn in Bristol he tried to conduct the meeting as a series of seminars. I was one of the so-called specialist speakers and I spoke on this topic. That occurred nearly 40 years ago. It was one of the first acts in a very long and fruitful political relationship that I have had with the right honourable gentleman the Member for Chesterfield.
When I first spoke on this topic these countries were referred to as backward nations. It was realised that this was virtually insulting, and they were then referred to as "underdeveloped". That was also unsatisfactory and was regarded as patronising, and they became "newly-developing". However, that greater appreciation of the respect and consideration that are due to those countries has not been mirrored in the same way in the economic field.
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My noble friend Lord Taylor referred to the percentage of GNP spent on overseas aid following the war. Noble Lords who like myself grew up during the war will recall that all kinds of commodities were in short supply and were rationed. The one item that was never rationed was bread. However, the post-war Labour Government introduced bread rationing because people in other parts of the world were starving. I find it difficult to imagine such an idea being proposed today, yet it was done at that time and some of the grain went to our former enemies. I wish that we could get back to that kind of spirit now.
One of the reasons why I opposed the Common Market was that in my view it was wrong to establish a rich man's club of industrialised nations at a time when world poverty was such a problem. I do not believe that that point was fully appreciated at the time. If that burgeoning of the Common Market were accompanied by an increased distribution of resources from abroad it would not be so bad, but I am afraid that that is not happening. There is something else overlaid on that, because apart from the two previous speakers, the debate has been rather compartmentalised.
One of the great problems we now have is the protection of the environment. We are asking those countries which are not well off to restrict their consumption of fossil fuels; to take care of the environment. They say, "Well, you have had 200 years of doing all that. You have done most of the damage which exists. Now you are lecturing us and saying that we cannot do this, that or the other". There is a danger of being cast into a neo-colonial phase which will make our efforts in other fields difficult.
The statistics from Christian Aid and other sources have been useful. I shall not weary the House with a further discourse on them. But a fact which has hardly been touched on is that the provision of relief cannot be separated from the observance of human rights. I have in the past spoken in your Lordships' House about human rights in sub-Saharan Africa, particularly in relation to Sudan. The most reverend Primate made an extremely powerful visit to Sudan which encouraged everyone who is struggling with the problems there.
The human rights situation in Sudan, as noble Lords will know, is desperate. Like other countries, Sudan has an enormous debt. Some estimates put it at 16 billion dollars. Yet Sudan is being removed from the IMF. Of course grounds for removal are its poor human rights standards.
Because of the intransigence of the Sudanese Government, the people are suffering economically as well as in all sorts of other respects. That has been drawn to your Lordships' attention on many occasions, particularly by the noble Baroness, Lady Cox. On 18th January 1994 she referred to reports of detention and torture in ghost houses and the enforced Islamisation of people so that the distribution of relief and food was made almost conditional upon a conversion. In the same debate, the noble Lord, Lord Avebury, spoke about how the militant Islamists had destroyed all the institutional structures which

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underpinned the democratic system. The most reverend Primate spoke about the lack of fundamental human rights.
It is important to consider that issue in the round because there is a package here which does not apply just to economic matters. Human rights occupy a great deal of our time, and are dealt with in one or two of our newspapers. However, it is a limited form of human rights. It is limited to the UK basically. I sometimes wonder what people think of us. Like many noble Lords, I knew people who were killed in the war. I sometimes wonder what they would think now of the descriptions applied by some people to the country for which they fought and died. To listen to some people talking one would think that we live in a police state. I wish that some of the intellectual energy of highly gifted people who talk about human rights could be diverted abroad, because that would be an enormous transfusion of encouragement and effort to people who are trying to address the problems which we have here today presented.
It would be a catharsis in a way if we could combine all those issues which relate to the world, its population, its resources and its problems in one great thrust. I congratulate the aid agencies on what they are doing, in particular the voluntary work that is going on. If we could open our vision a bit and think about human rights abroad and the responsibility to try to do something about them, and the way in which lack of human rights cramps the chances of improving people's standards of living, and all that together with economic aid, that would be a great advantage. I thank again the right reverend Prelate for giving us the opportunity to debate the subject. I hope that some more thought can be given to widening the whole issue.
5.45 p.m.
Lord Redesdale: My Lords, I thank the right reverend Prelate for initiating the debate. I recognise the work that the Churches are undertaking in spreading worldwide the message that debt is becoming unsustainable. At the same time, I welcome the work of Jubilee 2000 and the debt crisis network, both of which have campaigned hard to raise public awareness of the debt crisis that the developing world faces. I take the lead of the noble Lord, Lord Cocks, and welcome the noble Baroness, Lady Lestor, and congratulate her on her maiden speech. It is heartening to welcome her to the small, happy band of Peers who regularly take part in debates on development issues.
As many noble Lords have pointed out, if unsustainable debt is allowed to continue to accumulate in the way that it has over the past decade, then there is little hope that any of the most highly indebted countries will ever be able to escape the poverty trap that spiralling debt creates and sustains.
Poverty in the most highly indebted countries will never be addressed as long as the richer countries believe that it is more important for debt commitments to be met than that there should be provision for even the most basic health care or even primary education in developing countries.
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Until recently, the multilateral institutions failed even to admit that the debt burden was unsustainable. The best that most countries can achieve is to attempt to pay the interest charges with little or no provision to pay off the capital sum. Most foreign aid is now supplied so that the existing debt burden can be serviced rather than contributing to the basic social provision which is so desperately needed.
The increase of 427 billion dollars in the long term debt of countries between 1985 and 1992 is accounted for by 220 billion dollars paid as interest, with a further 205 billion dollars added to the debt as unpaid interest. It is clear that much of the debt which should be remitted is the product of interest rather than of new principal disbursements to the debtor countries.
There is a commonly held misconception in this country that aid to developing countries is a charitable contribution. Few voters realise that a large proportion of foreign aid is provided so that developing countries can service their debt commitment. An indication of that—I mean this with no disrespect to the noble Lord, Lord McIntosh, who is sitting on the Front Bench with his Treasury hat on rather than his Department for International Development hat, if he has one—is that the cause of the debt crisis was initially based on the ill-considered borrowing that took place in the 1970s. It was borrowing based naïvely on the assumption of permanently stable interest rates of below 10 per cent. but also fuelled by the banks which needed to lend petrodollars and were lax about the criteria under which they would lend their money. The noble Lord, Lord Hunt, covered that issue.
There is an argument which suggests that if the developing world had been unable to borrow that money there would have been a severe financial crisis in the West. That point relates to the issue raised by the noble Earl, Lord Sandwich, who linked the lending of large sums of money to African dictators for political rather than for financial reasons.
Another reason why the scale of debt was ignored was the view that a country could not go bankrupt. Financial mismanagement by the poorest countries and political instability mean that the 41 countries on the HIPC list are, to all intents and purposes, bankrupt. The blame for that bankruptcy may rest with those countries. However, to a large extent, it must be extended also to those who lent the money. One of the questions that can be asked is to what extent borrowing countries are responsible for debt taken out by predecessor governments.
The noble Viscount, Lord Torrington, raised the issue of military debt and said that perhaps it should not be forgiven. An ironic situation arose in Zimbabwe when it was forced to pay to South Africa the debt of the Rhodesian Government for the military hardware used against the Zimbabweans in their struggle for independence.
The World Bank and the IMF are by far the largest creditors and should be the first rather than the last to act. The HIPC is the first attempt at addressing the problem. "We have adopted a very important initiative … we are ready to start immediately and ministers have

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urged us to do so." Those were the words of the IMF managing director Michel Camadessus speaking on the adoption of the highly indebted poor country initiative last September. They echo the sentiments put forward by the World Bank president, Mr. Jim Wolfensohn.
The HIPC was to target 41 of the most indebted countries. The draft agreement was given the optimistic title, The Solutions Paper. That is ironic because seven months on, the HIPC has achieved almost nothing. Instead of attempting to inject any urgency, the IMF, Germany, Japan, Italy and the US, seem to be actively delaying any form of implementation. Indeed, the US is pushing for an even harsher agreement on structural adjustment programmes, the pain of which the right reverend prelate the Bishop of Leicester pointed out. The US is pushing for the implementation of further structural adjustment programmes because it believes that they worked well in Poland. However, there is little correlation between the situation in Poland and that in many of the sub-Saharan African countries. It is also ironic that Japan and Germany, which were beneficiaries of the Marshall Plan after the Second World War, should be dragging their feet. As they were so greatly advantaged by debt relief it is ironic that they are not at the forefront in pushing for it.
The criteria under which any government can apply to benefit under HIPC are so stringent that even Uganda, which has adhered to structural adjustment programmes for the past 10 years and would be a prime candidate for immediate consideration, will now have to wait until April 1998 to be considered, with a completion date of not earlier than 1999. The noble Lord, Lord Judd, pointed out that the delay to Uganda will cost 193 million dollars, more than double the projected spending on education.
As the noble Lord, Lord Callaghan, pointed out, Uganda is a best-case example. Most countries deemed eligible for debt reduction will see no benefits until after the year 2000 because of the requirement that candidates undertake six years of economic reform under the IMF auspices. The experience of Uganda suggests that flexibility will be applied by creditors principally to extend the period of eligibility.
Assuming the earliest likely dates for debt-stock reduction by the Paris Club, Ethiopia will not qualify for HIPC debt reduction until the end of the year 2000; Nicaragua, the world's most heavily indebted country, will not qualify until 2001; Mozambique, Tanzania, Niger and Zambia will not qualify until 2002 and 2003; and Rwanda may not qualify at all and, if it does, it will not be until after 2003.
If the HIPC were to solve the problem of unsustainable debt these delays could be accepted. However, the scale of remission is far too limited; 8 billion dollars over 10 years with as few as 10 countries even being eligible for the programme within the next three to six years. The noble Lord, Lord Prys-Davis, pointed out that 1 billion people are suffering due to international debt. That can be seen perhaps as an unacceptably small solution to their problems.
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I realise that in one respect, in speaking to the Government I am preaching to the converted. As Clare Short, the Secretary of State, said, the Government are giving their full support to the heavily indebted poor countries debt initiative. The aim is to give the poorest, most indebted countries a once and for all exit from their debt problem. I urge her to push as strongly as we did under the previous Government and to take a lead role in pushing other countries for debt remission.
The debt problem has a very human face. Several noble Lords mentioned Mozambique. I went to Mozambique during the civil war and was lucky enough to be one of the observers of the elections after the war. It is incredible that in a country in which hardly a building stands, having been shattered by the war, and hardly a bridge is in existence, we counted between two polling stations 15 miles apart 36 people who had obviously stood on landmines and had only one leg. It is astonishing that in a country so desperately poor so much money should be sucked out by international institutions.
I have three questions for the Government. To what extent will they be pushing in the international fora for debt relief? Will there be any specific action at the G7 meeting in Birmingham next year? Are they proposing to put any debt-related issues on the agenda in Edinburgh later this year?
The right reverend Prelate the Bishop of Oxford pointed out that it is not only financially prudent that the debt crisis should be solved; it is morally unacceptable that it is not already solved.
5.56 p.m.
Earl Attlee: My Lords, I, too, am grateful to the right reverend Prelate the Bishop of Oxford for introducing the subject for debate. He explained the problem and the HIPC initiative particularly clearly.
Before saying anything substantial, I cannot resist the opportunity of congratulating our maiden speaker, the noble Baroness, Lady Lestor of Eccles. She brings her wide experience of these matters to your Lordships' House. I hope that she will be active and that we will hear from her often. She made many good points and they were well delivered. In particular, she mentioned the difficulty of the SAP—the structural adjustment programme—and how it adversely affects education and health. Education is clearly vital to future prosperity. One of the problems I experienced in Rwanda was the availability, or rather the non-availability, of skilled technicians. Education is the foundation stone for future technical training.
It seems to me that the phrase "heavily indebted poor country" is a bit of a euphemism. Perhaps in many cases it should be called "hopelessly indebted poor country". It is quite clear that some countries have no chance whatever of clearing their debts. Superficially, a policy of simply writing off the debts appears to be attractive. Of course, steps would have to be taken to avoid the problem repeating itself but some noble Lords have recognised that severe difficulties are associated with uncontrolled debt write-off. It would not encourage the affected countries to adopt sensible or sustainable

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economic policies or convince them of the need to push through market reforms. Several noble Lords have accepted that.
A problem relates to countries with severe human rights difficulties. They could receive entirely the wrong message if those problems were ignored. On the other hand, we must break the link between poverty and political instability. Completely unsustainable debt and poverty may be making matters worse.
Another disadvantage with a simple debt write-off scheme is that some countries—and Uganda springs to mind—have made strenuous efforts to overcome their problems. Many noble Lords have noted today Uganda's relative success in getting near to meeting the criteria. What message will those countries which have tried hard receive if they see other countries having their debt written off, despite having made little or no economic progress?
In order to tackle the problem of third world debt, we need to proceed on two fronts. First, we need to encourage international action to help HIPCs service and reduce their debts. My noble friend Lady Chalker led the way in the previous government by cancelling £1,000 million of debts of the poorest countries. I believe it was the noble Lord, Lord Judd, who very kindly mentioned the positive contribution which my right honourable friend Mr. Kenneth Clarke made while in government.
The Minister will be aware that some G7 countries—and some noble Lords have singled out Germany and Japan—are rather hostile to debt reduction for HIPCs. In addition, as has been pointed out by the noble Lord, Lord Callaghan of Cardiff, the US sees a golden opportunity, if that is the right term, to impose heavy conditionality. It seems that the Minister's right honourable friend, Clare Short, will have some real challenges ahead.
I should like to take a few moments of your Lordships' time in order to recognise the achievements of my noble friend Lady Chalker and the ODA, which she led with such distinction. Many noble Lords have far more experience and interest in international aid than I do. It is almost embarrassing. My friend, the noble Lord, Lord Redesdale, is one and another is my noble friend Lady Cox. However, in the two aid missions which I undertook, the ODA was pre-eminent, particularly in the field of logistics. That is fortunate, as it is my own field.
When I talked to ODA expatriate workers on the job, as it were, it was "Lady Chalker this" and "Lady Chalker that". Of course, when I talked to people at a high level, it was exactly the same story. I hope that the Minister's right honourable friend can also acquire such a high reputation because if she can she will ensure that the UK remains one of the most responsible and compassionate members of the international community.
The noble Lord, Lord Taylor of Gryfe, made the point that not many noble Lords are speaking from these Benches. I too am rather disappointed about that and I am disappointed in particular that we did not hear from my noble friends Lady Chalker and Lady Cox. However, these Benches are reasonably well populated
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this afternoon and I expect that the two noble Baronesses are actively engaged in aid work as we speak.
One real problem that I see with the HIPC initiative is the long timescale required to demonstrate economic progress. That point was picked up by many noble Lords. I do not envy the Minister's task of replying to the debate as the case for debt remission has been so well made by many noble Lords. Noble Lords have spoken with great experience of those matters. However, the Minister and his right honourable friend will also have to consider the difficulties associated with uncontrolled debt remission which I have mentioned already. In addition, they will have much to achieve in order to persuade our international partners of the need to make progress.
6.5 p.m.
Lord McIntosh of Haringey: My Lords, it gives me great pleasure to echo the thanks that have been expressed to the right reverend Prelate the Bishop of Oxford for introducing this important debate. There are a number of reasons for doing so: first, his own excellent introduction with its clear exposition of the problems and some of the solutions; secondly, the quality of the contributions, and they are literally from all sides of the House, but I have a bias towards my own side; and thirdly, the marvellous maiden speech of my noble friend Lady Lestor, who combined, as I knew she would and as she always has, moral integrity with complete intellectual conviction and coherence. It was a remarkable speech.
The thrust of the debate has been very much about the moral issues and about idealism. Indeed, that is as it should be. It is necessary perhaps to introduce the Government's position on this by referring back to the tribute which my noble friend Lord Callaghan paid to Clare Short, the Secretary of State for International Development. I want to make the theme of what I am going to say a Written Answer which she gave in another place on 26th June of this year.
As your Lordships know, Written Answers tend to be cool and cautious and probably heavily edited. But even so, what she said echoes many of the concerns expressed this afternoon. She was asked what is the Government's policy towards the proposals of Jubilee 2000 and she said:
"The Government shares many of the objectives of the Jubilee 2000 campaign, including the fundamental one of the eradication of poverty in developing countries. We believe that debt relief should accompany a wider commitment by debtors to create the conditions necessary for sustainable economic growth and lasting poverty reduction. The Chancellor of the Exchequer and I are pushing for full and rapid implementation of the Heavily Indebted Poor Countries (HIPC) initiative. We believe that much remains to be done and are pressing with urgency for the international community to provide further debt relief".—[Official Report, 26/6/97; col. WA 605.]
I suppose that I could sit down at that stage and say that the Government's views have been expressed, but no such luck because there are important issues arising from this debate which deserve fuller comment.
I am sorry to disappoint my noble friend Lord Rea and to confirm what the noble Lord, Lord Redesdale, said—that that comment will be from a Treasury point

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of view rather than an international development point of view. My noble friend Lord Judd said that it is not just a matter of macro-economic policy. Of course, he is quite right, but it is also a matter of macro-economic policy and it is one to which I am obliged to refer because there are economic and financial interests in this. There are economic costs for us all in world poverty as well as the political costs of instability to which reference has been made.
I shall not take your Lordships back at length to Ricardo's theory of comparative advantage, but you will recall that the principle is that even if other countries grow faster as a result of international trade or benefit more, we still benefit. Britain will still benefit from trade with countries which are less efficient at producing many of the things which we can produce, perhaps more efficiently.
Of course, that means that we benefit from successful development, especially in the emerging countries. There are opportunities arising for exports from this country and investment by this country. But we benefit also from successful development of the poorest countries because, after all, they are the emerging countries of the future.
Conversely, we feel the bad effects of a high level of indebtedness, not as much and not as fiercely as the poorest countries do, but we feel them as well because of the deterrence that that brings to inward investment in those countries which could come from this country. Those countries feel it because of the extent to which resources which would otherwise be devoted to investment, and above all to the relief of poverty and to social spending and development, are taken away by the need to service high debts. In the end, that has been the theme of this debate. Virtually every noble Lord who has spoken has done so with deep concern and very often with personal knowledge of conditions in the poorest countries of the world. I think I can say that about every single noble Lord, but I merely pick out a few.
The right reverend Prelate the Bishop of Leicester told us of his experiences in Zambia in the 1970s. A number of noble Lords have experience of Mozambique. The noble Earl, Lord Sandwich, has experience of South Africa. The noble Viscount, Lord Torrington, told us of his travels in a number of African countries. I have referred already to Mozambique, of which the noble Lord, Lord Redesdale, has experience, and most recently, the noble Earl, Lord Attlee, told us of his experience in Rwanda. Indeed, there are many others.
We have had many effective and, indeed, moving statistics mentioned about the degree of poverty in those countries and the degree to which poverty is entrenched and enhanced by the need to service external debt. I am not sure that I follow the complaint of my noble friend Lord Cocks about the compartmentalisation of the debate. I believe it entirely proper that noble Lords should. as they have done, concentrate on our responsibilities, as, indeed, did my noble friend. His speech was also a moving testimony to a lifetime of concern over such matters.
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I turn now to the solution, or I should say the range of solutions, which we have to consider if anything effective is to be done. I believe that it would be common ground for all of us to acknowledge that we need to ensure that when we tackle such problems we do so in a way that they do not recur. We need to be sure that anything we do contributes positively to increasing prosperity in the poorest countries and that the poorest people in those countries have a share in that prosperity. I believe that there is common ground in that respect.
However, I do not believe that we can avoid caring about policies in the countries and we cannot give aid regardless of what happens in such countries. It is a difficult distinction: it is a distinction between the deserving poor and the undeserving poor. Indeed, it is most readily typified by Alfred Doolittle, who, your Lordships will remember, featured in Bernard Shaw's "Pygmalion" as the father of Eliza. He said:
"I am one of the undeserving poor, that's what I am. Think about what that means to a man; it means that he's up against middle class morality all the time. If there is anything going and I put in for a bit of it, it is always the same story: 'You are undeserving, so you can't have it'. But my needs are as great as the most deserving widow that ever got money out of six different charities in one week for the death of the same husband. I don't need less than a deserving man, I need more. I don't eat less hearty than him and I drink a lot more. I want a bit of amusement because I'm a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality but an excuse for never giving me anything?".
There is the danger of a Treasury position being rather like that. But, all the same, if we ignore the social and economic policies in the countries which we seek to help, we will then deal with debt overhang—yes, that has been a theme of today's debate—but we will not deal with the further build up of debt or with the problem of how the money saved will actually be used for productive policies.
We must be sure that anything we do creates a climate for investment; that it makes certain that there will be primary healthcare and education; and that there will be, as I said, benefit to the poorest people and not to a wealthy elite. That is what we mean by good economic policies. We do not mean to raise the stakes or to complicate the conditions under which we give multilateral help, but we do mean to ensure that they are effectively used for investment, for health and for education. We need to ensure that there are open markets and open trade; that there is low inflation; that there are efficient honest public services; and, as my noble friend Lord Cocks said, that there is respect for human rights; and, finally, that there should not be wasteful military expenditure, as mentioned by my noble friend Lord Taylor and the noble Viscount, Lord Torrington. Those considerations must be taken into account in the way in which we allocate resources.
We must, therefore, be looking to a range of measures to help, and of course debt relief is one of them. But, in addition, there are the other classic development objectives: well-targeted aid, opening our own markets to the exports of the poor countries and encouraging private investment. Perhaps I may also refer to the Export Credits Guarantee Department and remind your Lordships that my right honourable friend Clare Short

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reminded us in a debate in the other place on 1st July that so much of investment goes to the wrong countries, and that the 50 poorest countries in the world attract very little private investment unless there is positive action taken, especially by multilateral institutions, to ensure that such investment goes where it is most needed. So debt reduction—and that is what the debate is largely about—is of course necessary but it is not sufficient. We need to ensure that it forms part of balanced, economic reform programmes.
I move on now to the other great theme of today's debate; namely, the Heavily Indebted Poor Countries Initiative, initiated last year, as noble Lords have said, by the IMF and the World Bank. I should like to emphasise that the initiative is in addition to existing debt rescheduling and sometimes relief programmes both by individual countries for bilateral debt and by the international financial institutions; and, indeed, collectively by creditor countries as members of the Paris Club and other subsequent and previous clubs. The initiative is a long stop rather than the only initiative available to us. As noble Lords have reminded us, it is concentrated mainly on unsustainable debt. The noble Earl, Lord Sandwich, who clearly knows more about such matters than I do, referred to the criterion of the debt to export ratio. I can confirm that his interpretation of it is correct.
However, we cannot—and I believe Jubilee 2000 recognises this fact—talk about the elimination of debt; we need to talk about the reduction of debt to affordable levels. Indeed, Jubilee 2000 talks about a limited number of countries—namely, those with a gross national product of below 2,000 dollars per head per year—and inert debt from the oil decade of 1973 to 1983. I am afraid that all those limitations are necessary. The important point about the HIPC is not that it is the only initiative but that it is the only one in which all the major organisations are participating, the IMF, the World Bank and the Paris Club.
Perhaps I may take the World Bank as an example. After all, it is putting 2 billion dollars into the HIPC, although it is responsible for only 7 per cent. of the outstanding debt. I should like also to mention the Paris Club. There, the prospect of the addition of Russia to the club is very welcome, but we have insisted that the Russians should only join the club on the basis that they recognise and implement their participation in the work of the HIPC.
I acknowledge that there are criticisms to be made of the slowness of some of the procedures and also that criticisms have been made as regards the secrecy of the procedures. However, the getting together of all the major creditors so that help is concentrated on the poorest rather than assisting other creditors—which might otherwise be the case—is the critical feature of the HIPC. Indeed, that is why it was endorsed at Denver by the G8 within the past month.
The right reverend Prelate the Bishop of Oxford reminded us of the millennium aspect of the problem. He told us about the Book of Leviticus and the importance of debt relief every 50 years; and, indeed, that applies even more so with the millennium. But we
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are talking here not about the relief of all debt, which might have been possible in Biblical times, but the relief of debt of exceptional years. The work of Jubilee 2000 and of Christian Aid has been enormously valuable in raising awareness in the United Kingdom of this problem. I humbly suggest to those who have been responsible for this most valuable work that the best thing to do in the next couple of years until the millennium is to exert pressure internationally. This is an international problem. I do not believe that Britain is the worst offender in all of this. I am not a devotee of the concept of sin, but I recognise the fault that exists in all of us as regards the way in which debts have been encouraged.
As has been indicated, the Government will publish a White Paper in the autumn setting out how they will promote sustainable economic development and tackle global poverty. This will be the first White Paper in the development field in over 20 years. The strategy will cover all aspects of our relationships with developing countries. I confirm to the noble Earl, Lord Sandwich, that it will cover trade and investment as well as debt. I do not suggest for a moment that we should just wait for that paper and I do not suggest that the White Paper will be a solution to all the concerns which have been properly expressed. However, the activities that we are undertaking and the views which we have expressed show a recognition of those concerns and a great deal of sympathy with them.
6.21 p.m.
The Lord Bishop of Oxford: My Lords, it remains only for me to thank all noble Lords who have contributed to this valuable debate. I especially thank the Minister, the noble Lord, Lord McIntosh. I am particularly grateful that a number of noble Lords have spoken this afternoon from their long political experience and that others have spoken from their first hand experience of the developing world. It was particularly gratifying to hear such strong support expressed this afternoon from all around the House.
It would be tempting to highlight one valuable point made by every speaker this afternoon. However, there will at any rate be one form of relief this afternoon in that I shall resist that temptation. I simply sum up the mood of your Lordships' House this afternoon by saying that there is clearly widespread concern about this issue. There is a real welcome for the HIPC initiative. The fact that all the major international instruments are collaborating in this way is a new phenomenon. As a number of noble Lords have said, there is disappointment about slow progress, conditionality and the lack of success so far. We must register that.
An important Labour Party document was issued before the present Government came to power. It is entitled A Fresh Start for Britain. It states,
"Labour welcomes discussions within the World Bank and the IMF aimed at reducing the burden of multilateral debt. But we believe that further action is needed if we are to reach a lasting solution to this problem. Labour will press, as a matter of urgency, for international agreement on further write-off of official bilateral debt owed by the poorest countries and more decisive steps to deal with the growing problem of multilateral debt".

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One cannot help noticing the words "matter of urgency", "further write-off" and "more decisive steps". We look to Her Majesty's Government to take a lead on this crucial issue in the years ahead. I am sure that Jubilee 2000, Christian Aid and the other aid agencies will take seriously what has been said about trying to exert pressure on the whole international community. However, they and we very much hope that Her Majesty's Government will take a decisive lead on this issue. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Machinery of Government
6.24 p.m.
Lord Annanrose to call attention to the case for co-ordinating relations between Ministers, political advisers, the Civil Service and Cabinet committees; and to move for Papers.
The noble Lord said: My Lords, ever since the First World War when Lord Hankey set up the Cabinet Secretariat and Lord Haldane laid down the principles governing the accountability of civil servants, British governance has been praised for its efficiency. That is very different from what happens in Washington. There each agency goes its own way in the hope that the President will come down on its side. Lord Halifax once compared American administration to a disorderly afternoon's rabbit shooting: nothing comes out where you expect—and then something emerges from the far end of the field.
In Britain, of course, traditionally policy was made by individual Ministers. They would discuss their ideas with their civil servants who would then consult their colleagues in the Treasury. A paper would then go to the appropriate Cabinet committee. After they had chewed it over, it would then go to Cabinet. So long as there was no change in the law it was up to the Minister and his civil servants to tell their colleagues if policy was being changed.
That was the pattern for making policy before 1979. Mr. Gerald Kaufman accurately described that in the book that he wrote in 1980. Unfortunately, in the 1997 edition of his book, he seems to imagine that it still holds good, but it does not.
The old system had two failings. Few Ministers had the experience of managing a large organisation, and the Permanent Secretary in effect was responsible for the efficient management of his department. But Permanent Secretaries were more interested in enlarging rather than contracting their departments. In the 'eighties fiscal crises forced the Government to insist that government departments should aim to be as efficient as private enterprises in which profit ruled. So internal markets were set up and areas of business were hived off to executive agencies or to quangos.
The second failing was personified by Sir Humphrey. My old colleague from the days of the future of broadcasting committee, Sir Tony Jay, put his finger, in his immortal television series, on a problem that
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sometimes faced Secretaries of State. The noble Lord, Lord Jenkins of Hillhead, relates in his memoirs that when he became Home Secretary he found that the Permanent Secretary would recommend a single course of action. When he asked for the file to see whether any other options had been considered, the Permanent Secretary was outraged. That was why—in part—the Home Office had become the graveyard of several political reputations.
Ministries develop a philosophy of their own. If some outside adviser was infiltrated to put a different slant on policy, he could find himself marginalised; departmental papers mysteriously failed to come his way so that he appeared in conference ignorant and idle. Even more unwelcome was a challenge from inside to the prevailing philosophy because it was very properly laid down that the department must have a single view. In other words, Permanent Secretaries claimed to have a monopoly of advice instead of a claim to co-ordinate advice.
How did Ministers defeat Sir Humphrey? Ever since 1964 (indeed before that) they brought their own political advisers into their departments, or they set up a private office, or their party financed a private think-tank. In the 'eighties special advisers in No. 10 second-guessed the policies individual Ministers put forward. Policy began to be made in No. 10 and departments were told to carry out that policy. Indeed, it became common to announce new policies to the media or to a party meeting before Cabinet had considered the matter.
But perhaps the most notable change was in Cabinet itself. In the old days papers were remitted to official Cabinet committees. It now became customary to remit business to ad hoc committees which the Prime Minister appointed. The official committees no longer met. Oral reports by Ministers replaced the minutes of Cabinet committees. Indeed at one time the Cabinet itself seems not to have discussed policy.
This lack of Cabinet papers drew comment at the Scott Inquiry. The judge said that he could not discover what government policy on arms sales was. Apparently government policy was whatever the Minister said it was. Again, in the row over the Prison Service, Mr. Derek Lewis said that the Home Secretary did not consult him before making or altering Prison Service policy.
That leads to another constitutional malaise. The House well knows what happens if a noble Lord complains about a BBC programme. He will be told smartly that that is a matter for the governors. They were set up precisely to protect the BBC from political interference in its day-to-day affairs. But what happens if there is a break-out from prison? Can the Prison Service be exempt from ministerial responsibility? If the Child Support Agency is alleged to be unfair, can the Minister say that that is no concern of his?
Whole sectors that used to be in departments have been transferred to quangos. Moreover, in the interests of reducing public expenditure, units in ministries have been disbanded, including several in the Treasury itself.

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As a result relations between Ministers and civil servants have deteriorated. Civil servants were once partners to all decisions that Ministers made. It was the duty of civil servants to listen in to their chief's telephone calls. They could save a Minister's time in taking the vast number of decisions he has to take because they came to know his mind. What is more, they were there to protect him from pressure groups, lobbies and crooks. They could also warn him if they thought that he was about to make a decision that could be challenged and lead to a judicial review. A Permanent Secretary would say, "If you do X, Minister, then in all probability Y and Z will follow. Is that what you want?"
Yet one hears of civil servants complaining that they were not called in to discuss the briefs that they had given Ministers. One hears of Ministers giving a paper to Cabinet which his civil servants had never seen. Perfectly reasonably, it seems to me, a Minister may choose to have meetings with his junior Ministers and his parliamentary private secretary without civil servants being present. But to take policy decisions in such a meeting without consulting them is another matter. One hears of Back-Benchers being brought into such meetings who, perfectly reasonably, have a particular axe to grind. That is dangerous because the power of the lobbies grows stronger every year and if a lobbyist can get an amendment to a clause in a Bill his organisation will consider that money has been well spent.
The other problem is consultation. People dislike change in their own bailiwick, even the most remarkable performers. I think in particular of the profession of law. People dislike change, and the offer of consultation is often rewarded by a blank refusal to accept the need for change. But never to consult is equally foolish. The little world in which I have some experience was amazed when the polytechnics and certain colleges were upgraded to universities without any consultation with the universities although that step had immense repercussions on funding, research and the curricula. It was contrary to the organisation of higher education in all advanced countries where distinctions are very properly made between different types of institution.
What has happened? The influence of the Civil Service has declined. Fiascos and cock-ups in governance have increased. The most recent was the BSE affair. It seems that the Civil Service brief was around for months before Ministers considered it. When the crisis broke, Ministers did not have time to review the evidence. They called in various people to give evidence unsystematically, and I thought that they were stampeded by public opinion. Not until far too late were European relations considered. And that disaster is still with us, and costing millions of pounds.
The most spectacular disaster was the poll tax. I do not wish to go over that ground again. But I think that one thing should be said. It is clear that if one does not consult local authorities—they were never consulted during the whole process—one will be in great difficulties. It is clear that the checks and balances in our unwritten constitution were insufficient to avoid the calamity which cost the taxpayer £2.2 billion.
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There is one particularly difficult problem in public administration. How can one have proposed legislation properly considered when more than one department is concerned? For instance, the item "reducing unemployment" requires an input from the DfEE, the Treasury and the DTI. There are others that noble Lords can easily bring to mind.
Considering this matter, Sir Christopher Foster suggested in a recent paper that a new kind of Cabinet committee, a task force, should be set up. Each department would be represented by a Minister and the chair should be taken by a non-departmental Cabinet Minister. He should act not as an independent, impartial chairman but as a broker between the departments. Whereas other committees respond to papers put to them by Ministers, task forces should take the initiative and put forward papers and solutions themselves and work to deadlines.
From what I hear the present Government are addressing themselves to some of those problems. Official Cabinet committees were reinstated by Mr. Major, but I hear that now on each of them sits a member of the Policy Unit at No. 10. When the Minister winds up, I wonder whether he could tell us how this Policy Unit at No. 10, under the chairmanship of the Minister without Portfolio, works? Is it there to put questions to departments? Is it there to consider the evidence resulting from consultation and then to ensure that a Bill is drafted that is logical and acceptable—in other words, to judge what the public will wear? Is it for departments rather than the Policy Unit now to put up policies and draft White Papers? Who now sets the Government's timetable and establishes deadlines for legislation? Will the Policy Unit supervise the work of departments? Will it assess their efficiency?
Are the advisers in No. 10 primarily concerned with policy, or—since many have had careers in the media—are they more concerned with ensuring that Bills and White Papers are acceptable to the electorate? In fact, are they superior public relations advisers studying polls and other devices to discover what Rousseau called the General Will?
Finally, will the Minister without Portfolio act as the presidential chief of staff does in the White House? That is to say, will he act as a gatekeeper to the Prime Minister?
I am not asking these questions with hostile intent. Nor am I blaming previous Administrations for all the diseconomies of the past 20 years. When the noble Baroness, Lady Thatcher, was Prime Minister, she had good reasons for making some of the changes in the country's governance. All I want to do this evening is set the stage for others who are far better informed than I. The House is awash with noble Lords who have first-hand experience as former Ministers or distinguished public servants; or, like the noble Lord, Lord Beloff, have pondered on these matters for years. I am a historian; and, as we all know, historians are wise only after the event—and sometimes not even then.
My Lords, I beg to move for Papers.
6.40 p.m.
Lord Beloff: My Lords, we should thank the noble Lord, Lord Annan, for initiating a debate on the important topic that is before us but we should regret that the hopes expressed in the final paragraph of his remarks have clearly not been fulfilled, for although the House comprises many people with long experience in the public service, they have not seen fit to speak in the debate. That is much to be regretted. It reminds the House once again of the great loss sustained in the premature death of Lord Bancroft.
I find it even more difficult since it means that there are no Members here who can assist me in trying to penetrate the mixture of dogmatism and insinuation that marked the treatment by the noble Lord, Lord Annan, of recent history. Some of it was very familiar; some of it was new to me. I find it difficult to know how far it was intended as an indictment of previous administrations and how far as a note of warning to the recently elected one. To begin with, 1979 shows a foreshortening of perspective which does not altogether assist in solving a very real problem. The problem arose when the position arrived at through the Northcote-Trevelyan reforms of the 19th century came up against the vastly expanded responsibilities of the modern state, bringing, as the noble Lord, Lord Annan, reminded us, considerable executive tasks on top of policy making.
During the two world wars the problem was addressed by bringing into government service, both at ministerial and official level, people from other walks of life, notably industry and commerce. However, wartime expedients have rightly not been thought altogether satisfactory in peace time. There is a great deal to be said for the original idea, which I have defended in previous debates in this House, of a core element of professional and professionally trained civil servants.
That approach has, as the noble Lord reminded us, some dangers. Within departments there are likely to be views—what may be termed departmental lore—which might impede an incoming Minister with radical and reforming intentions, although one must be careful about choosing examples. To take a point on which I agree with the noble Lord, Lord Annan, in his analysis of the recent past—namely the headlong rush into university expansion and the way in which it took place—I have no evidence whatever that civil servants in the Department for Education were hostile to the move. In some respects they may indeed have encouraged it in the hope that they would thereby acquire a power over the higher education sector that they had not hitherto managed to establish. That is a matter for historical argument. Again, the difficulty for both the noble Lord, Lord Annan, and myself is that we do not have the documents. There is an occasional shaft of light, as for instance through the Scott Inquiry—an episode important in itself but which can hardly, by extension, be used to illuminate what happens in government generally.
As the noble Lord, Lord Annan, said, there have been various attempts to bring in advisers of one kind or another from outside the Civil Service in order either to
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bolster a Minister's own opinions or to give him access to those sections of the active community whose opinions he desires to know. It was an element given some consideration by the Labour Party in its earlier years as an alternative party of government. There were members of that party who believed that the Civil Service was so much a part of the Oxbridge-educated establishment that it would be necessary for Labour governments to recruit from outside. That never acquired the status of a doctrine but may have influenced action. The first government to do so on any scale in recent years, as the noble Lord, Lord Annan, will know, was the Wilson government of 1964. The recently published diaries of Sir Alec Cairncross, a senior Treasury figure at the time, reveal the awkwardness created in the Treasury by an inability to know whose advice Ministers were taking and what was the position of such advisers in relation to the permanent Civil Service.
It is always likely that an incoming government will feel the need to bring in people from outside. The question is how they then relate to the official advisers to a Minister and whether they may sour his relations with them. An article in the current edition of the Economist suggests that the present Chancellor of the Exchequer goes around the Treasury accompanied by, I believe the phrase is, his "band of trusties" and that means that he does not receive the full support of civil servants who would otherwise have been anxious to co-operate with him. Whether or not journalism is a suitable source for our information, I merely say that this kind of thing echoes from time to time in all governments.
What worries me far more is the matter referred to by the noble Lord, Lord Annan, and mentioned in our debates in recent years; namely, the confusion that exists between the type of people and the incentive shown at its best in private industry and commerce and the type of people and the incentive most appropriate to government service. There has been a blurring of that distinction.
Many noble Lords argued, when the recruiting side of the Civil Service was privatised, that it would have deleterious results. The activities of the new body since it was established already show a pattern of applying to would-be public servants measures of performance, measures of ability and measures of personality which would be suitable if one were looking for people to enter private industry but which may not be suitable for those who are supposed to enter upon a life of public service. The qualities that make a good salesman of lingerie are not necessarily the same qualities that make a good permanent secretary or the ambassador to a friendly country.
The confusion has perhaps been accentuated by the exaggerated attention paid to the handbooks and the gurus of the business school world who appear to have developed both techniques and a jargon which, even for industry, may not be quite so appropriate as they believe. I have known some notable entrepreneurs, including the late Lord Nuffield. I do not believe that

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Lord Nuffield would have been any more successful if he had had an MBA. There are others who come to mind, whose names I shall not repeat.
That seems to me to be a serious problem. It is true that governments deal with a great number of issues which are highly specialised and which demand a knowledge of many matters which people in happier and simpler ages did not require. The problem seems to be a permanent one. Every government will solve it in a different way. Whether they solve it with the correct balance, only the future historian will be able to determine. Even now our views of some major departments in the relatively remote past, such as the 1920s and the 1930s, are being revised by successive generations of historians, as more and more archives come to light.
What is obviously important—the question was not put in the form in which I would have framed it, but I understand the thrust of it—is whether there is also a shifting balance between the Prime Minister's office and the other departments and whether in the current situation we may be moving too much towards a prime ministerial—or, as Dick Crossman used to think of it, a presidential—form of government. Again, it is far too early for those who are not involved in the arcana of Whitehall to answer that question. But some statement from the Minister about that balance would be acceptable, since some pronouncements raise questions about the shape of the new Cabinet committees and the degree to which they are more than offshoots of policy-making at the centre.
Most important of all, I repeat, is that, whatever the system—we cannot expect the system to remain unchanged—we should be able at all times to rely on government service being an attraction to the most energetic portion of the most able and ambitious young people. If that should cease to be the case—because they believe that by going into a party machine, the media or a think-tank they can get to the top by means other than hard slog and promotion within an existing service—the country would be poorly served.
6.55 p.m.
The Earl of Northesk: My Lords, like my noble friend, I thank the noble Lord, Lord Annan, most warmly for affording us the opportunity to discuss this matter. To start with, so far as I am concerned, I must disavow the praise contained in the noble Lord's final paragraph. I speak very simply out of keen interest. To my mind, the noble Lord quite rightly identifies in his Motion that good governance is in direct proportion to the quality, health and robustness of co-ordinated relationships within government.
I was very struck, in the aftermath of 1st May, by an observation from the honourable Member for Great Grimsby, who commented:
"New Labour took the politics out of politics in opposition. Now we are taking the governing out of government".
That is a snappy turn of phrase, to be sure, but then many a true word is spoken in jest. Mr. Mitchell does make a serious and very valid point about the nature of the relationship between the executive and the various
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arms of the administrative machine. It is a point of particular relevance in the context of the Motion before us today—but more of that later.
As we all know, much of the British constitution is predicated not upon laws written in statute but upon parliamentary and ministerial conventions. One of the less well acknowledged inheritances from previous administrations, the benefit of which the Government are now enjoying, is the sense in which such conventions have been eroded over recent years. The noble Lord, Lord Annan, referred to that. Indeed, notwithstanding the platform of very considerable and far-reaching constitutional change upon which the Government won their mandate, we should be conscious that, in the words of Sir Christopher Foster in the paper to which the noble Lord, Lord Annan, referred:
"the decline in the influence of civil servants … is arguably the most important constitutional development of the last 17 years".
By way of example, your Lordships will, of course, be conversant with the Haldane principle defining the relationship between Ministers and their civil servants. In passing, I ask the Minister, when he comes to wind up the debate, whether he can give us some indication of the Government's attitude towards that and whether there is any intention on the Government's part to reinvigorate it. Sir Christopher Foster expresses it thus:
"British practice has judged that efficiency and effectiveness is best based, not on a remote subordination, but on a two way relationship between the two".
He goes on:
"This relationship has been deteriorating recently—especially in home departments—with strongly adverse effects … The main causes have been the increasing number of Ministers and their tendency to deliberate and decide much more with their parliamentary private secretaries, their political advisers and often other political cronies".
While accepting that it is a matter of interpretation, I suggest that the net effect of this and other erosions has been to create an executive that is, at best, over-mighty. As it were, the inter-relationships, of which the noble Lord's Motion speaks, are out of balance. In that context, noble Lords opposite may care to reflect (as we on this side now have to do) that the rather sour fruits of opposition—that sense of impotence in the face of the might of government—have to be endured rather than enjoyed.
In that sense at least, all of us should have some sympathy with the Government's analysis of the ways in which this problem impacts upon ordinary people. Their manifesto expressed it thus:
"People are cynical about politics and distrustful of political promises".
That said, I have some difficulty in accepting that the many and varied constitutional changes that the Government espouse as the means to resolve that problem will in fact do so. The simple truth will remain; namely, that a political elite, whatever its party complexion and wherever it has its seat of administration, remains a political elite. More pertinently, none of what is proposed will address the quintessential problem of the executive's relative supremacy within the administrative machine. Indeed, it could justifiably be argued that the programme of

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constitutional change will entrench the power of the executive even more immovably into its fabric. Bluntly, that is a deeply worrying prospect.
However, that said, it pays to attempt to assess, in so far as we can, what style of administration the Government intend in that regard. My impression is that the signs are not good. It is a matter of record that there are already many more political advisers within Whitehall than has ever been the case before. I could be persuaded to accept that there is nothing wrong with that per se. However, bearing in mind that they are all unelected, unaccountable officials with, so far as anyone can tell, direct influence over the interpretation and substance of policy, I wonder whether the Minister might be prepared to make available to Parliament a specimen contract of employment broadly defining the areas of responsibility and job profile of such individuals. To do so would go a considerable way towards setting minds at rest, especially—and beneficially—with respect to the Civil Service and future recruitment to it. Or perhaps the Government have in mind a strategy of developing the principle of political secondment into an art form?
As I say, it may be that a case can be made for the use of political advisers. Notwithstanding the style and nature of the Government's programme of constitutional change, it may be that the same could be said of Mr. Christopher Foster's reference to "other political cronies". In that context, I read with considerable interest an article from Alf Young in the Herald entitled "A Britain under boardroom control". He writes:
"The real threat to the Civil Service under New Labour comes not from Millbank Tower or Walworth Road, but from the growing stream of leading British businessmen who will now preside over everything from setting the national minimum wage to the practical nuts and bolts of delivering the new administration's promised welfare-to-work programme".
Of course there is merit in any government seeking non-partisan input and advice. That gels with the insistence in New Labour's manifesto that:
"Government and industry must work together to achieve key objectives".
But it is less easy to find its relevance with the Government's stated desire to push back the frontiers of the unelected state and the statement in the manifesto that:
"Over-centralisation of government and lack of accountability was a problem in governments of both left and right".
Moreover, as Alf Young illustrates in his article, there are worrying and very considerable inconsistencies in some of the appointments. He writes:
"Even the Scottish Office is not immune from this New Labour love affair with the potentates of corporate Britain. Who can put some fresh economic impetus into the Prestwick area now that production of the Jetstream 41 aircraft is to cease with the loss of 380 highly skilled engineering jobs? Easy. Sign up Sir Richard Evans, the executive at the helm of British Aerospace, for your new Prestwick Airport task force. Isn't he the same Dick Evans who has just decided to scrap Jetstream production? Indeed he is. But who could he closer to the problem?".
I repeat that, whatever the merits of the government of the day tapping a pool of experience and talent outside the conventional political world, a political elite
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remains a political elite. And any such elite is, of necessity, antipathetic to the creation of the sort of co-ordinated relationships that we are discussing today.
There is a further aspect to the matter. Sir Christopher Foster recognises that one cause for the breakdown in relationships within Whitehall is the role of the media. In recent years a great deal of politics, particularly in the province of expression and development of policy, has been driven by the insatiable demand of the media— PR, sound-bites, spin-doctoring have all become the norm.
My own interpretation is that that is a particularly relevant consideration to this administration. I would therefore ask the Minister and his colleagues to pay especial attention to the solution to this problem that Sir Christopher advances; namely that,
"It would advance public understanding if there were a return to the convention that the first authoritative statement of a new or changed policy is made to Parliament".
The Budget and the Government's White Paper on education with their respective "leaks" are cases in point.
Moreover, as an addendum to that, I would also respectfully suggest to noble Lords opposite that a populist mandate is a very different creature from a popular one. Pursuit of policy on the basis of some kind of PR turf war between the political parties is deeply objectionable. Again the Budget is a case in point. Andrew Grice, writing in last Sunday's Sunday Times comments that:
"Brown's allies insisted that news management had been a big success",
and cites one of the Prime Minister's aides as saying that,
"Before every budget, expectations are lowered. It's just that we are better at it than the Tories".
The point is this: the substitution of policy driven by public interest with that driven by public opinion intrinsically and necessarily will ultimately lead to weak and inferior government.
In the circumstances, can we infer that there is something of a crisis at work in the relationships within Whitehall? Moreover, on the basis of the style so far manifest in the current administration, is it credible that this crisis is set to deepen rather than ease? I believe that the answer to both those questions is yes. That can only serve to damage the health and effectiveness of our democracy. Accordingly, the Government should pay due heed to the recommendations of Sir Christopher Foster that:
"for the sake of good government the Civil Service must be returned to its role in the co-ordination of advice, the implementation of policy and the drafting of government papers and bills".
For my part, I make this point to the noble Lord. If the Government are truly sincere in their worthy aspirations to re- engage the people in politics and to return governance to them, there is no alternative but to address the fundamental imbalance within government of which I have spoken. I am sure the noble Lord would allow that, without this, without addressing the core problem of the supremacy of the Executive, the consequences to our democracy will be dire.
7.7 p.m.
Baroness Park of Monmouth: My Lords, with your Lordships' permission I intend to speak briefly in the gap. I wish I had been able to take a proper part in the debate, but unfortunately I was not.
My main point is that I am extremely concerned about the dilution of the Civil Service caused, partly, through the creation of the agencies. I hope that there will be no more of them. The difference between the attitude of public service and, for instance, the idea of performance-related pay is one of the examples one has to offer. The Minister of Defence genuinely thought that performance-related pay for the Army was a reasonable suggestion. Fortunately, that was rejected.
As for the issue of the status of the Civil Service, as far back as the mid-1980s undergraduates were saying to me that they did not intend to try for the senior Civil Service; it had become like Marks and Spencers. That was not meant as a compliment.
There are too many accountants involved in the agencies; there are perhaps too many advisers and, as noble Lords have said, those advisers are not accountable. Not only are they not accountable but, by the very nature of Whitehall, it is difficult for them to have the information on which to base good advice. There is an enormous complexity and quantity of information in Whitehall. The Scott Report showed how difficult it was to ensure that any report reached everybody who ought to know about it. In the nature of things, advisers will find it even more difficult to be aware of all factors, particularly since many subjects do not concern only one Ministry. One needs only to look at the organophosphate issue to see that several ministries had been peddling along in parallel until recently.
Another point I should like to make is that the more cynical, rightly or wrongly, the public become about politicians, the more necessary it is for them to believe in something and that something must be the Civil Service, its impartiality, its wisdom and its loyalty. It is extremely important that no more should be done to reduce its standing and its value. We have seen too much overweaning power exercised, I am sorry to say in my own previous government, from the Cabinet Office. I deeply hope that that will not continue because it has very real dangers in terms of lack of accountability. It is also a procedure that will sap the belief of civil servants themselves in the value of what they do. That is an extremely important point to consider.
Lastly, there are, and have been in the past, advisers whose influence has been disproportionately great and whose right to that influence has not been sufficiently well known. I can think of at least one example in the Ministry of Defence. That is another serious danger.
7.10 p.m.
Lord Gillmore of Thamesfield: My Lords, perhaps I may take this opportunity to speak in the gap. I had not thought to intervene in the debate, but in the light of the comments of the noble Lord, Lord Beloff, and as a former "Sir Humphrey", perhaps I may be permitted a few moments.
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The noble Lord, Lord Annan, is correct to say that during the latter part of the 1980s the process by which government co-ordinated opinions and views and looked at the options underwent a change. That change stemmed from a greater reluctance at the time to use the traditional machinery of Cabinet committees. In previous times Cabinet committees had fallen into two categories: those composed of Ministers and those, often understudying the ministerial committee, composed of officials. In the late 1970s I remember taking part, as a relatively junior official, in a Cabinet committee established ad hoc. Its title was, I think, Misc.200, which indicates that there were up to 200 miscellaneous committees considering one matter or another in the course of that government. Our advice was given to Ministers from a variety of departments. Ministers on the ministerial level committee passed that on to Cabinet. The process of co-ordination between departments in Whitehall was thus established. The breakdown or the disuse of those committees seems to me a pity and can be held to blame, I believe, for some of the mistakes that were made. I hope very much that the Minister will be able to reassure the House that the re-establishment of those committees will help to ensure co-ordination between departments in Whitehall.
My second point concerns agencies. Here I am in some difficulty because, as a member of your Lordships' Committee on the Public Service, it is precisely one of the areas which we have been researching and studying. Many of us, including those who have been in the public service, have learnt a great deal which was previously unknown to us.
The issue the Government have to address is that of accountability. There is no doubt in my mind that in many respects the creation of agencies has had a beneficial effect on the conduct of public business. The delivery of simple services, whether passports or vehicle licences, has been done more effectively and efficiently and the public have benefited. But there are agencies whose tasks step very close to the politically sensitive. There, I think, the question arises of who is answerable to whom and whether the Minister or Secretary of State in charge can, to quote Aneurin Bevan's comment, be responsible for bedpans in hospitals. Who answers to whom? Can a civil servant be called upon to give evidence to a Select Committee; and, if so, when he does give evidence, is he speaking on behalf of his Minister? That question needs careful consideration. If, as Sir Christopher Foster recommends, and as the noble and learned Lord, Lord Nolan, is now suggesting, a civil servant should speak independently of his Minister, that changes the relationship between the civil servant and the Minister. That, in turn, will produce a significant shift in the role of the Civil Service and the relationship with Ministers.
In my personal experience, which is limited and somewhat specialised, the role of political advisers has been helpful provided the political adviser in a department is part of the machine. It is essential that he should be brought in together with civil servants. My experience is that civil servants rather relish and enjoy the breath of outside air and the questioning which an

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external adviser can bring. This, if properly conducted, can be a virtuous process and not one which leads necessarily to disruption within the department.
I ask the House to forgive me for intervening. I believe the matters I have mentioned are worthy of considerable thought, particularly the questions of responsibility and accountability and of co-ordination within government. For many years that was conducted through a series of Cabinet committees which, on the whole, by and large, ensured that the government were provided with advice from across Whitehall horizontally and from which, in my submission, they benefited.
7.17 p.m.
Lord Lester of Herne Hill: My Lords, we are all grateful to the noble Lord, Lord Annan, for initiating a debate on a matter of real importance—the provision of efficient and good government in the public interest. For my part, I am particularly glad that two noble Lords have spoken in the gap. Each of them has had particular practical experience. Indeed, they were exactly the kind of speakers that the noble Lord, Lord Annan, was hoping would participate in the debate. I agree with everything both have said and will not repeat any of it. I am only sorry that they were curtailed by time from giving us the benefit of their experience in more detail.
The best thing I can do is to speak very much from modest, practical experience. I had the pleasure and privilege of serving as one of those special advisers—a special policy adviser—between 1974 and 1976. I served my noble friend Lord Jenkins of Hillhead and my noble friend Lord Harris of Greenwich, who is sitting next to me, whose presence here this evening might have a slight chilling effect on what I would otherwise reveal about those days more than 20 years ago.
I do not altogether share the pessimism of some speakers about the state to which the present Civil Service has come. I shall leave it to the noble Baroness, Lady Miller of Hendon, another person with practical experience, to defend her Government's record on that when she speaks in a few minutes' time.
One aspect has not been mentioned at all. The healthiest department of government during the Thatcher and Major years, the one which renewed itself best and the one which is now in the best condition of the three branches of government, was the judicial department. It was the judicial department of government which managed to evolve some constitutional principles and began to call Ministers and civil servants to account and act as a counterweight to the domination of Parliament by the executive branch of government. But that is not the central issue raised by the debate today; and nor are judges civil servants.
I should like to deal with one or two problems which the Motion indicates. The first is the problem of securing co-operation between government
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departments. That is a perennial problem and not one created by the previous government. I am sure that it is with us now.
Professor Peter Hennessy and his colleagues published an interesting Fabian pamphlet in April. They wrote,
"One of the trickiest areas of any government is to get ministers and government departments to cooperate. Many policy objectives require the cooperation of a number of Whitehall departments, and securing this can be a problem. Whitehall is well geared to working vertically, with both ministers and civil servants representing departmental interests and defending their turf, but bad at dealing with issues that cut across departmental lines".
That was certainly my experience when I was a special policy adviser in the Home Office. I remember the problems that we had in seeking to tackle serious problems of racial disadvantage, cutting across government departments dealing with housing, education, employment, family policy, social security, policing and criminal justice. It was like rowing in treacle: cumbersome, laborious and in the end wholly ineffectual. It certainly has left enduring scars in that area.
I agree with Professor Hennessy and his colleagues that cross-departmental problems must be seen as a high priority of the Prime Minister and of the Government if they are to get the attention of high calibre Ministers and officials who can push through a solution. I agree with them that political will is the key to success.
There is a second matter I wish to refer to briefly. It is one that has arisen several times; namely, the role of political advisers and their relationship to Ministers and civil servants. Special advisers are appointed by the Secretary of State and they are his or her creatures. I was one such creature, as I have said. Although they are paid by the Civil Service they are outside its formal structure. As your Lordships know, there are two main kinds of special adviser. There is the political adviser whose job it is to stick to the Minister, manage his interests and explain the Minister to his department. In Professor Hennessy's happy phrase, those special advisers are,
"guardian angels of the political agenda which the Minister came to office with".
Then there is the other kind, the special policy adviser appointed to provide expertise and direction on specific areas of policy. That was my task in seeking to develop policy for legislation on sex and race discrimination in particular.
I am sorry to say—and I have said it before—that in my personal experience there was real obstruction at official level to agreed policy, especially on sex discrimination legislation. That obstruction was not always done as skilfully as one sees on television in "Yes, Minister" or "Yes, Prime Minister". It did not result in better government; it was sometimes downright unethical and it should not have happened. It led, among other things—if one reads the noble Lord's memoirs— to the noble Lord, Lord Jenkins of Hillhead, sending me home to write a White Paper on equality for women for want of co-operation in a minority Labour Government

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which the civil servants did not regard as having a proper mandate and probably thought would be booted out shortly at the second general election.
It was of course vital to have our ideas tested by civil servants. It was vital not to steamroller policy through. But it was counterproductive to have separate politics of the bureaucracy being pursued in the way it happened in that brief period. It was not typical; it did not happen for very long, but it was quite deplorable.
I believe that the use of outside special advisers, as the noble Lord, Lord Gillmore of Thamesfield, indicated, with appropriate qualifications and experience, in an adequately staffed ministerial policy unit—in his word "integrated" as part of the machine— should make it easier for governments to implement their policies without that kind of obstruction or other problems. I agree with the noble Lord, Lord Beloff, that everything depends on the personality, expertise, strength and integrity of the special adviser and developing a healthy, honest, professional relationship with permanent officials and Ministers.
When I was a special adviser I always made it a rule, when discussing any matter of importance with Ministers, only to do so in the presence of a private secretary. That was to avoid any impression of backstairs intrigue or improper influence. I am not sure that the reverse compliment was always paid. I suggest that that is a vital and sensible rule of practice.
It is healthy for Whitehall to be exposed to outsiders and for outsiders to learn how Whitehall works. That flourished under the previous government and I do not criticise it. There needs also to be a sufficient core or critical mass of special advisers in an effective ministerial policy unit in the Prime Minister's office and in some government departments. But the ground rules need to be appropriate and workable.
However, on the other side of the coin, which needs to be emphasised, there is a compelling need to avoid undue reliance on outside experts sympathetic to the policies of the government of the day. If they were given too much influence they would demoralise the permanent career service. If they were given too much power they would undermine the relationship between Ministers and civil servants. If they became too numerous, powerful and influential, then the Civil Service would become dangerously politicised. But we have not, with all respect to the noble Earl, remotely reached that point or anything like it in this country under the present Government or before.
I believe that it is in the public interest that the Civil Service itself should be a main source of innovation, able to command the confidence of Ministers and able to execute their policies intelligently and sympathetically. Ministers are entitled to take a close interest in the choice of their senior Civil Service advisers. Equally, I believe that civil servants are entitled to be strongly protected against being punished by transfer, non-promotion or otherwise for not pleasing their political masters. I believe that civil servants are fairly well protected against the introduction of a political spoils system, but I shall suggest one or two changes that might improve matters.
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The next point I would like to mention briefly is the need for a constitutional Civil Service. We need to ensure that the functions of the public service can be carried out within the framework of a constitutional set of values based on the principles of freedom. I believe that great progress was made in that direction by the previous government in developing a Civil Service code, largely under the leadership of Mr. Giles Radice and the Select Committee in another place, by the noble Baroness, Lady Symons of Vernham Dean, in another capacity as head of the Association of First Division Civil Servants, and by Sir Robin Butler, the Cabinet Secretary. That was a great step forward in my view. When the present Government incorporate the European Convention on Human Rights into domestic law, that again will provide a constitutional code of values and duties for Ministers and public officials. It will combat the vice of ethical aimlessness which has afflicted some parts of the public service.
I am also convinced of the need to replace what I call the East India Company (John Company) model of the Civil Service that we now have under the Royal Prerogative—based on a model that was appropriate for a chartered company in ruling India before the Mutiny— by a proper statutory system. I was lucky to participate in the joint committee of the Labour and Liberal Democrat Parties on constitutional reform a few months ago. There was common ground that there should be a Civil Service Act to give legal force to the code of conduct for the Civil Service, emphasising its political neutrality and making clearer the lines of Civil Service accountability. I am encouraged by the recent statement made by the Chancellor of the Duchy of Lancaster, Dr. David Clarke, the Cabinet Minister in charge of the Office of Public Service, who said that he was considering putting the Civil Service code on a statutory basis.
I very much hope that the Government will find the parliamentary time to introduce a short non-controversial civil service Bill, meaning that the Civil Service would no longer be regulated by Orders in Council made under the Royal Prerogative, but by orders made by statutory authority. The code could be given statutory recognition in a schedule so that it can be easily amended by secondary legislation. Civil servants would no longer be Crown servants, but would have the same employment rights and duties as all other employees, plus a few others because of their particular employment. Appeals by them against improper pressure would no longer be to the First Civil Service Commissioner, but to an independent ombudsman, as happens with the Armed Forces, or to a staff councillor, as happens with the security services. The code of conduct would need to be tidied up as well, as would the rules for appearing before parliamentary committees.
I very much welcome the fact that the Government are committed to a White Paper and to legislation on freedom of information to tackle another vice of the English bureaucracy, unnecessary secrecy. That will do a great deal to produce more accountable government. I was heartened to hear the Lord Chancellor say at last Friday's seminar that that was a high priority.

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All of those ideas, and others mentioned by your Lordships, have been stimulated by the Motion tabled by the noble Lord, Lord Annan. I very much hope that what seems to be a dry and arid subject has to some extent been given life by this evening's debate. I do not altogether share the pessimism of the noble Lord, Lord Annan, about the current condition of the Civil Service. Indeed, some of the fruits of its work have already become evident under the new Government. However, I agree with the noble Lord that there are always dangerous pressures which need to be resisted if the Civil Service is to maintain its independence, impartiality and deserved reputation for excellence.
7.31 p.m.
Baroness Miller of Hendon: My Lords, perhaps I may join the other noble Lords by thanking the noble Lord, Lord Annan, for having initiated this timely debate from the Cross-Benches. I stress the noble Lord's position as a Cross-Bencher because that indicates that the subject is a matter of important principle, and not of party political point-scoring.
The debate is timely because within hours of this Government taking power on 2nd May political appointments were being made to the Prime Minister's Office ahead even of the completion of the appointment of his team of Ministers. Indeed, on Saturday 3rd May—I repeat, on a Saturday—even though there was no national crisis of any sort, about a mere 36 hours after the polls had closed, a special meeting of the Privy Council was held at Buckingham Palace. That was so that the Civil Service Order in Council of 1995 could be amended to allow, among other things, the creation of an extra appointment in the Prime Minister's Office.
I should say at the outset that I do not see any objection in the appointment of "special advisers" from outside the Civil Service. Indeed, I agree with those, like the noble Lord, Lord McIntosh of Haringey, who say that such appointments mean that Ministers can receive the political advice and assistance that they need without in any way impugning the impartiality of the Civil Service of which we are justly proud and of which other countries are envious.
In my own all too short time on the Government Front Bench I discovered how rigidly and jealously departments guarded themselves from political involvement. Indeed, in the case of one clearly political question which the noble Lord, Lord Dubs, asked me on 5th July 1995, there was the distinct impression that no department wanted to take it on. My own colleagues also regarded it as such a hot potato that as the most junior person in the whole of the government hierarchy I was told that I had been unanimously volunteered to deal with it.
The concern to which I referred is not only occasioned by the timing of some of those appointments, but by the reluctance of the Government to make public any details of those appointments. It is difficult to understand the reasons for that evasiveness, which continues to this very day. I hope that the Minister will take the opportunity of this debate to
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answer some of the outstanding questions. If he cannot do so today, I hope that he will at least undertake to ensure that an unequivocal answer is forthcoming by 19th July at the latest.
It is a tradition of Parliament that individual civil servants should not normally be publicly criticised because they are not in a position to defend themselves. I should like to make it clear that I am not voicing any criticism of any of the 53 political advisers although by the very nature of their jobs they place themselves in the firing line and cannot expect the same exemption as a career civil servant.
The problem lies in three directions. I refer first to the haste with which some of the appointments were made and the nature of two of those appointments. I refer here to the appointment of the Prime Minister's press secretary, Mr. Alastair Campbell. No one can doubt that gentleman's abilities, but when on 10th June I asked the noble Lord, Lord McIntosh, what made Mr. Campbell better qualified for the post than a long-established civil servant, the noble Lord replied:
"I do not wish to comment on Mr.…Campbell's specific qualifications".—[Official Report, 10/6/97; col. 831.]
The noble Lord pointed out that outsiders have been appointed to the Press Office in the past—indeed, they have—but it has been customary since the departure of Mr. Joe Haines as Harold Wilson's press secretary some 20 years ago—and even before that time—for the press secretary to be a career civil servant. There is a very good reason for that. Modern communications, particularly the instancy and persistency of television news broadcasts, mean that the media should be able to distinguish between the communication of factual news and political propaganda. The proper place for the latter is not 10 Downing Street; it is Millbank Tower.
The other appointment to which I should like to refer is that of Mr. Jonathan Powell, another gentleman with undoubted talents. It is not the fact that he was appointed that raised eyebrows; it was what he was appointed as. The kite was flown that he was to be the Prime Minister's Principal Private Secretary, probably the second most senior position in the Civil Service. However, Sir Robin Butler, the head of the Civil Service, let it be known that the idea made him, and I quote, "seriously unrelaxed". That is a masterpiece of Civil Service understatement. I suppose that, translated, it means something like "seething with anger". The kite was hastily hauled down from the roof of Millbank Tower. The noble Lord, Lord McIntosh, told me in that same answer that,
"there has never been any question of his taking over the role of a permanent civil servant".
He was merely the chief of staff to the Prime Minister. I wonder what it was then that "seriously unrelaxed" Sir Robin. In his reply to my question, the noble Lord told us what Mr. Powell would not be doing, but we have yet to learn which of the duties formerly performed by the Principal Private Secretary Mr. Powell now carries out.

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The second problem is the sheer number of such political appointments—53 in all, so far. The Secretary of State for Health seems to be able to rub along with just—
Lord Lester of Herne Hill: My Lords, I am grateful to the noble Baroness, but I wonder whether in the light of what she has just said she will clarify something for me. I refer to what exactly was the role of Sir Bernard Ingham under the previous Government if it was not to produce what the noble Baroness has called "propaganda" on behalf of the then Prime Minister and her Government. Secondly, is it really appropriate to quote in this House statements attributed to the Cabinet Secretary by a newspaper when that civil servant does not have the opportunity himself to give any official explanation and when we are relying on what is really nothing more than gossip?
Baroness Miller of Hendon: My Lords, with regard to the noble Lord's first comment, my understanding is that Bernard Ingham was a factual press secretary—
Noble Lords: Oh!
Baroness Miller of Hendon: My Lords, with regard to the noble Lord's second question, from my own experience I do not know whether it is improper to quote something that Sir Robin Butler has said. If it was improper for me so to have quoted him, I apologise, but I really do not know. I am afraid that I am not experienced enough to know whether that was correct—
Lord Lester of Herne Hill: My Lords, it is not at all improper; it is simply that a newspaper attributed those words to Sir Robin. We do not know whether those were his words or what the context was. As the noble Baroness has rightly said that it is not customary to criticise civil servants by name, it seems equally inappropriate for us to rely upon what was in a newspaper when the Minister has given a very clear account of the position in the past.
Baroness Miller of Hendon: My Lords, I do not believe that the Minister commented on the particular point that I have made, but I note what the noble Lord has said.
I note that the Minister without portfolio does not have an adviser but, as the fountainhead of all political advice to the Government, obviously he would not need one. One can only hope that, in the interests of the public purse, when Ministers become more used to their jobs they may not need so many advisers.
When one talks about the public purse, there is another problem. Questions to the Prime Minister on 2nd June by two of my honourable friends and again on the 15th June elicited no information about the salary bill involved, except that five of the special advisers—we do not know which—were being paid a total of £163,000 and that the salaries of the remainder were still being negotiated. On 13th June the noble Lord, Lord McIntosh, informed my noble friend Lord Northesk in a Written Answer that information on the
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total salary bill would be provided when agreement had been reached with each individual on his employment terms.
During the election campaign the Prime Minster asked people to trust him. I am glad to see that all of these special advisers are following that exhortation by leaving their previous employment without knowing the terms of their new employment. I draw the attention of the Minister to the Employment Rights Act 1996 which requires every employee to be given a written statement of the terms of his employment not more than two months after the commencement of the employment. That is the significance of my earlier reference to 19th July. As it is clear from the small amount of information provided in the other place that the appointments had been made prior to 19th May, perhaps the Minister can tell the House when the Government will be able to overcome their coyness and publish the details. I remind the noble Lord that the Prime Minister also promised open government.
With all of these additional special advisers taking away the powers and duties of an impartial Civil Service we do not want to have the same situation as in the United States of America where whenever there is a change of administration there is a total upheaval in the machinery of government instead of the smooth overnight transition that we traditionally have. We are beginning to see attempts by this Administration to marginalise Parliament: the curtailment of Prime Minister's Questions; an attempt that was thwarted by the Speaker to move a constitutional Bill off the Floor of the other place and into Committee; the plan to set up separate parliaments and regional assemblies; and the attempt to gag a Member of another place. We also do not want to see the establishment of a system in which decisions are taken in a secret conclave where unelected advisers play a key role from which senior civil servants are excluded.
Accountability is very important. I agree with the noble Lord, Lord Annan. He said that civil servants were not just there to say "Yes, Minister" but to ensure that all of the pros and cons were carefully considered. I believe that policy decisions are to be taken by Ministers based on both political considerations and the advice that they receive from whatever quarter, including their special advisers. We do not want to see the introduction by government of cronyism. The experience of established civil servants accumulated over many years is no less valuable than the advice of the most astute politician that the Government can hire.
In supporting the noble Lord, Lord Annan, in introducing this debate, I agree with the earlier comments of my noble friend Lord Beloff that it is a pity that some of the experienced Members of this House have not spoken in this debate. However, I very much agree with the noble Lord, Lord Lester, that that deficiency was very well made up for in the gap. I urge the Government to learn at this early stage of their Administration that the Civil Service is well aware that it is its duty to carry out the Government's decisions loyally and effectively. That is what it has always traditionally done.
7.45 p.m.
Lord McIntosh of Haringey: My Lords, in preparing as far as I could for this debate I recognised that possibly three kinds of issues might be raised—on the relationship between special advisers, Ministers, civil servants and Cabinet Committees. I also recognised that those could be issues of propriety, efficiency and where power lay. This has been a remarkable debate in which serious and thoughtful contributions have been made on issues of efficiency and power. I propose to answer those aspects of the debate with the seriousness that they deserve. We have had a single speech from the Opposition Front Bench which is no more than a series of abusive comments about propriety.
Baroness Miller of Hendon: My Lords, I certainly did not say anything about propriety that was abusive. I asked the Minister some questions.
Lord McIntosh of Haringey: My Lords, I shall seek to justify what I have just said.
Lord Burnham: And to answer the questions?
Lord McIntosh of Haringey: My Lords, I shall answer those questions, too. However, those questions were put to me in such a way that they involved allegations that deserve to be treated perhaps not with contempt but without the degree of seriousness that I propose to adopt in my response to the remainder of the debate. The noble Baroness who has spoken from the Opposition Front Bench claims that there is a whole series of outstanding questions which the Government, due to coyness or evasiveness—she has used both words—failed to answer when challenged. I repudiate that charge. In no case has there been either coyness or evasiveness in the answering of outstanding questions.
The noble Baroness began by speaking about the haste of the appointments on Saturday 3rd May of Mr. Jonathan Powell and Mr. Alastair Campbell. She complained that I had refused to comment on their qualifications for the job. Indeed I did—and I shall do so again. I shall refuse to comment on the qualifications of any special advisers for their individual jobs, just as in the past Ministers would have refused to comment on the qualifications of Sarah Hogg, Norman Blackwell or any others. I do not believe that when in opposition we would have presumed to ask such questions.
The noble Baroness said that the kite had been flown and that Mr. Jonathan Powell was to be the Principal Private Secretary to the Prime Minister. She then claimed that the kite had been hauled down from Millbank Tower when I made it clear—I repeat it—that there was never any intention of appointing Mr. Jonathan Powell as the Prime Minister's Principal Private Secretary. The allegation that Millbank Tower made that claim has been specifically repudiated by me. I repudiate it again. It is an unworthy allegation. The noble Baroness chose to use press comments, which she could never verify, that the Cabinet Secretary was seriously unrelaxed about any such appointment. Since there was never any intention to make such an appointment, although I acknowledge that the phrase is
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one that Sir Robin Butler, as a witty man, might well have made in other circumstances, there is no truth to the claim that he expressed any objection to the appointment of Mr. Jonathan Powell to the post that he holds. There is no truth in any suggestion that he was to be appointed to any other post.
The noble Baroness asked me about the number of political appointments. That has been made clear on many occasions. There has never been any question of trying to conceal the number of political appointments. If one wants to make a comparison with the previous administration, it is true that there are more special advisers to the Government than in the past, but the noble Baroness forgets that the previous government also had a considerable number of expert advisers. Some political appointees to the previous government were paid at Permanent Secretary level rather than at the lower levels which are within the range for special advisers at the present time.
The noble Baroness seems to think that there is something sinister about the salary bill. I have said, and we have all said, that as soon as negotiations on salaries for all special advisers have been concluded then the total salary bill will be published. There will be no concealment of any kind. There is no special significance in two months, because of course special advisers were appointed at different times.
The noble Baroness claimed that we are seeking to marginalise Parliament, but she produced very little evidence for that claim. The number of Statements and announcements of policy that have been made to Parliament make it clear that the Government take Parliament extremely seriously. In the serious part of my speech I shall refer to the efforts that we wish to make to improve the efficiency of parliamentary scrutiny of government activities.
I move on to the rest of the debate. The noble Lord, Lord Annan, gave us some historical analysis. That was deepened by the noble Lord, Lord Beloff. The noble Lord, Lord Annan, suggested that the debate could take the form of an historical analysis or act as a note of warning. I prefer to take it as a note of warning. I prefer to think of it as being an admonition in the sense of warning rather than of reproof at this stage, because I do not believe that we have quite reached that stage.
A number of concerns have been raised about the component groups which provide advice to Ministers— civil servants, special advisers, the policy unit, and Cabinet Committees. It is proper to question, from the point of view of efficiency and the locus of power, how that works. I take first the Civil Service. I am delighted to have the opportunity to put on record the Government's total commitment to retaining a politically impartial Civil Service. The Civil Service plays a vital part in underpinning the constitution, and in sustaining good government.
The noble Baroness, Lady Park, expressed concern about devolution to agencies. I know that she has been doughty in defence of the Recruitment and Assessment Service in the private sector. I pay tribute to her for that. I was interested that the noble Lord, Lord Gillmore, thought that the agencies were beneficial. I tend to agree

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with that from my experience, in that agencies, although they are to a certain extent more remote from parliamentary control, nevertheless can be assigned specific and clear objectives. They can be held to account if they do not achieve those objectives. That was very much more difficult with the previous departmental systems.
The noble Lord, Lord Beloff, rightly drew attention to the need for the Civil Service to attract the most able. The noble Lord, Lord Lester, made the same point. I can confirm not only that we are considering bringing forward legislation to give legal force to the Civil Service code but that we are committed to do so. There is no question of us retreating from that.
The noble Earl, Lord Northesk, referred to the Haldane principles. Those principles are critical to our consideration of efficiency, because they refer to the requirement that advice given to Ministers should be based on the full evidence available from whatever source. I can confirm that we adhere to the Haldane principles. Indeed, some aspects of them are enshrined in the present Civil Service code which is to be made statutory.
The noble Earl, Lord Northesk, was concerned that special advisers might be diluting the role of the Civil Service, if I understood him aright. There is a continuing role for the provision of honest and impartial advice to Ministers. The Government benefit enormously from the Civil Service's commitment to provide that impartial policy advice. The noble Lord, Lord Annan, confirmed the necessity for that.
Special advisers provide an additional source of advice to their Minister in the development of government policy in a party political context. That has always been the role of special advisers, and there is no particular change in that. I was glad again to have the confirmation of the noble Lord, Lord Gillmore, that he had found that helpful. The noble Baroness, Lady Park, wondered why special advisers should not be accountable. I am not clear as to what she means by accountable unless she means publicly accountable. Privately, they are accountable to their employer. Publicly, surely, they are no more accountable than any others giving advice to Ministers. When we come to the freedom of information legislation I shall be interested to see whether she takes the view that advice to Ministers by civil servants or special advisers should be made public. I rather think that she will not.
We have set out clearly and openly the role that special advisers or civil servants must play. In answer to the particular point made by the noble Lord, Lord Northesk, the Prime Minister set out a copy of the terms and conditions for the employment of special advisers in the Library of the House. That is publicly available. I am not sure whether that has ever been done in the past. It includes a comprehensive description of their roles and responsibilities, which are complementary to the role of career civil servants.
An additional strand of advice which has been referred to is the policy unit at No. 10 Downing Street. There may be questions as how that relates to the old Central Policy Review Staff. It dealt with metapolicy
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above departmental level, whereas the No. 10 policy unit is set up to work closely with departments at all levels to determine longer term policy. In case there is any doubt, Cabinet Committee policy advisers may well attend when it is appropriate, but special advisers do not attend.
There appeared to be differing views about outside advice from business people and others. I take seriously the view expressed by the noble Lord, Lord Annan, although it was a historical view, that Ministers lack managerial experience and that Permanent Secretaries tended to take advantage by filling that gap. I was puzzled by the fact that the noble Earl, Lord Northesk, seemed to think that bringing outside business people into government and into contact with government, and using their services, was somehow a diminution of the efficiency of government. I do not believe that to be the case. The presence of people such as Mr. Martin Taylor of Barclays Bank, to name but one, and business people such as my noble friend Lord Simon of Highbury, to name someone in a different position, is enormously valuable to government.
One of the problems of government has always been that we do not have the movement between the private sector and the public sector which is a feature of government in the US, with all its other defects which have been referred to.
Cabinet Committees provide a framework for collective consideration of major policy issues. Let me make it clear again that in the interests of open government we have continued the proper policy introduced by Mr. John Major in 1992 of publishing the names, terms of reference and membership of Cabinet Committees.
I do not have a great deal to add to what was said by the noble Lord, Lord Annan, who referred to the growth of ad hoc committees. I believe that he was referring to ad hoc committees in the Thatcher years. My impression is that the openness of Cabinet Committees described the real situation and that those committees are as they appear to be in public. Cabinet Committees perform an essential function because they have the benefit of consideration by career civil servants, by special advisers where appropriate in main departments, by the No. 10 policy unit and by the Minister responsible for the issues discussed.
It is too early to say whether during the two-and-a-half months since the Government were elected there has been any significant change in the efficiency of government. I accept that the proof of the pudding will be evident over the next five or 10 years. I am sure that, during that period, Ministers, whoever they are, will always be willing to answer debates of this kind. At the same time, I am confident that the ability of your Lordships' House to provide expert critiques of the way in which government do their business will always be welcomed by the Government, as we have welcomed this debate.
8.1 p.m.
Lord Annan: My Lords, like the noble Lord, Lord Beloff, I was a little disturbed at being unable to rally some noble Lords who have great experience of these matters. I wrote or spoke to some 25 noble Lords and received replies much like those in the parable in the gospel of St. Luke, where the host sent his servants to bid many to come to a feast and with one consent they all began to make excuse. Indeed, one noble Lord made the reply that is in the parable; that he was taking to himself a wife! Therefore, I was most disappointed.
However, having listened to the debate, I can say that it was absolutely splendid. I was grateful in particular to the noble Baroness, Lady Park of Monmouth, and the noble Lord, Lord Gillmore, who spoke in the gap and materially enhanced our deliberations. I conclude by thanking all noble Lords who took part, and in particular the noble Minister, who has earned his salary in no less than two debates today. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Chronically Sick and Disabled Persons (Amendment) Bill [H.L.]
8.3 p.m.
Lord Ashley of Stoke: My Lords, I beg to move that the Bill be now read a second time. The Bill seeks to reverse a recent decision of the Law Lords which will have a devastating effect on the lives of disabled people. It is a decision as perverse as it is damaging; a decision which undermines the law as we have all known and understood it for 27 years. It is a decision which will force many disabled people to surrender their cherished independence at home and spend their days in institutions of residential care, in some cases at greater expense to the local authority.
The word "devastating" is not mine—although I agree with it—but that of the Royal Association of Disability and Rehabilitation. Its deep concern is shared by some 30 voluntary organisations in a consortium called "Needs Must". It has undertaken splendid work on this issue. Its concern reflects that of millions of disabled people who now face a life of disappointment, doubt and anxiety.
I have met disabled people who are deeply distressed at the withdrawal or reduction of services. The voluntary organisations are sending me many examples. The extent of the damage already caused, and even more the damage to be caused, by the ruling is not yet generally understood by the public or, indeed, by Ministers.
The ruling creates an Alice in Wonderland world where, with resources affecting assessment of need, it becomes theoretically possible for a paraplegic to have no needs—and you cannot get more bizarre than that! If a local authority states that it has no money—and some have done so—when it is assessing a person's needs it can conclude that there are no needs. That is the logic of it.
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The ruling also means that unmet need is suddenly obliterated. It has been magicked away by redefining "need". The only words which the Law Lords in their infinite wisdom forgot were—and, according to my grandchildren, they are used for magicking anything— "abracadabra" or, alternatively, "izzy whizzy, let's get busy". One way or another they magicked away an unmet need. I believe that that is scandalous because it means that if the need is unmet and unknown no one knows the extent of the unmet need and no one knows whose needs are not being met. That hiding and masking of the problem is a terrible consequence of the ruling.
There is a serious risk of the unhealthy situation of no one knowing the real needs of disabled people and the extent to which those needs are met. The ruling takes us back 30 years to the days when the problems of disabled people were hidden behind net curtains. I cannot believe that in 1997 that is progress of any kind, even by a stretch of the Law Lords' imagination.
This saga began in 1970 when, skilfully piloted by Alf Morris, the Chronically Sick and Disabled Persons Act went on the statute book. Among other things it aimed to end the scandalous lottery that meant that disabled people received help in the home, not according to their needs, but according to where they lived. That was the lottery in 1969 and previously.
Those of us who sponsored the Bill and worked on it with great intensity knew what we wanted because we knew what disabled people needed. We were in touch with those disabled people—in fact, they visited the House of Commons and the House of Lords. In Section 2 of the Act we provided that local authorities should provide such things as practical assistance in the home, alterations and adaptions, special equipment, and meals on wheels. Once a local authority had assessed the needs of a disabled person it had to make arrangements to provide the services required. Those objectives were endorsed by Parliament. The great legislative step forward was widely welcomed throughout Britain and envied in other countries. It has been accepted without demur for all these years and has enriched the lives of countless disabled people.
Although we know that some local authorities were careless in carrying out the law and did not do their duty by disabled people, the Act was a potent force benefiting disabled people. However, in a distressing turn of events, which has become known as the "Gloucestershire judgment", the whole basis of the law has been seriously undermined. Mr. Michael Barry is 82 years old. He had a stroke and several heart attacks, he is visually impaired and he uses a zimmer frame. He had been assessed as needing services from the Gloucestershire council. It provided him with a home carer twice a week for shopping, collecting his pension, laundry and cleaning, with meals on wheels four days a week.
He was informed by the council that the resources allocated by the Government were inadequate and services must therefore be reduced. Mr. Barry sought a judicial review in the High Court which granted a declaration that the council had acted unlawfully. The Court of Appeal agreed with the High Court and also held that the council was not entitled to take account of its resources when assessing need and providing for it.

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That was the nub of the problem. When the case was referred to the House of Lords, the Law Lords had to decide whether a local authority could take into account its own resources when assessing a disabled person's needs for those services listed in the 1970 Act which I mentioned.
The crucial word was "need". The Court of Appeal had held that "need" was an ordinary word, the meaning of which could not be affected by the level of resources. The Court of Appeal held that local authorities could not take resources into account when assessing need. Nevertheless, the Law Lords thought differently and overturned the ruling by three to two—a highly controversial decision. For me, one of the dissenting Law Lords, the noble and learned Lord, Lord Lloyd of Berwick, put it in a nutshell. He said:
"Every child needs a new pair of shoes from time to time. The need is not the less because his parents cannot afford them".
Likewise, the need of disabled people cannot be wished away by the poverty of local authorities. The requirements of the 1970 Act are clearly that such needs should be met and it is for the local authority to meet them.
Providing for disabled people in the community has been on a par with other statutory requirements of local authorities: it has to be done. I note that there is no mention of taking resources into account with other duties, so why should that be so in the case of disability? Is it the case that disabled people are now to be pushed to the back of the queue, as usual?
The 1970 Act removed the lottery of people receiving different services according to where they lived. The effect of the Law Lords' ruling is to restore that lottery and again provision will depend on where disabled people live and the relative wealth of their local authority. But, as the noble and learned Lord, Lord Berwick, said:
"Parliament cannot have intended that the standards and expectations for measuring the needs of the disabled in Bermondsey should differ from those in Belgrave Square".
In my view, there is no doubt about what Parliament intended, nor any doubt about disabled people's needs. Those needs were precisely the same the day after the Law Lords' judgment as they were the day before. There was no difference in the needs of those disabled people on 19th March and on 21st March.
The day before the judgment on 20th March those needs were met by the local authority, as they have been met for nearly 27 years. Therefore, there can be no question of extra new costs if the Bill before the House is passed. We simply revert to the position as everyone has known and understood it for all those years. That is a crucial part of the argument. We simply revert to the position on 19th March 1997. I hope that no one will suggest to the House that there are massive extra costs involved in the passage of the Bill: there are not. We merely seek to restore the law to what it was on 19th March, one day before the judgment.
From where would any extra costs stem? There are none. Anyone who wishes to argue about extra new costs should produce evidence of them as the situation
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was on 19th March. I await evidence from anyone who is opposed to, or even lukewarm about, the Bill. The argument about costs is absolutely bogus.
I commend the Bill which specifies that a local authority's resources cannot be taken into account either in making an assessment of need or in making arrangements to meet need. That is the position that has worked satisfactorily for 27 years. The passage of the Bill will ensure that local authorities observe the spirit as well as the letter of the 1970 Chronically Sick and Disabled Persons Act. The Bill will ensure that disabled people have restored to them the right to essential services on which they rely so heavily. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Ashley of Stoke.)
8.16 p.m.
Lord Swinfen: My Lords, I am delighted to support the noble Lord, Lord Ashley of Stoke, in this Bill. As the House knows well, he has a long and distinguished career both here and in another place in working for people with disabilities.
I hope also that the party now in power will give him the help which it gave to me over the past 15 years when I have tried to improve the lot of disabled people. The noble Lord deserves its help more than I deserved the help which it so richly gave to me over the past 15 years. I should be very disappointed if his party is not prepared to help him now.
The complex and confused state of the law relating to community care makes it extremely difficult to give appropriate and accurate advice to disabled and elderly people. While the decision a few weeks ago in the Gloucestershire case may have clarified the position for local authorities, it has exacerbated the anxieties and uncertainties faced by people with disabilities.
The decision of your Lordships' Judicial Committee was by a majority of three to two. Even the most distinguished lawyers in the land are divided as to the correct interpretation of the law. Therefore, we should all be most grateful to the noble Lord, Lord Ashley of Stoke, for bringing forward this Bill which will clarify the position. It will make it clear that a local authority's resources have no relevance to the assessment of a disabled or elderly person's need for community care services.
One of the principal aims of community care is to meet the needs of people with disabilities rather than fitting those people into existing services. That cannot be achieved without proper individual assessment of need, without taking into account any extraneous factors. I am convinced that Parliament did not intend that the standard and expectations for measuring needs should differ in various parts of the United Kingdom. The passing of the Chronically Sick and Disabled Persons Act in 1970 was a noble aspiration. Having willed the end, Parliament must provide the means. This Bill gives us that opportunity.
Without this Bill being passed into law, the working of the Carers (Recognition and Services) Act 1995 will be under threat. Already I am advised that many carers

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are being prevented or dissuaded from having an assessment of their needs. If the eligibility criteria are tightened, fewer carers will be entitled to ask for an assessment and the situation will be exacerbated.
Carers and their disabled or ill relatives will be placed at increased risk in the community without support. Carers already save the state an estimated £34 billion per year. If, as a result of the judgment in the Gloucestershire case, support is reduced to disabled people and their carers, that will probably be very costly to the health and well-being of both people with disabilities and those who care for them; and, ultimately, very expensive to the public purse. I strongly support the Bill.
8.20 p.m.
Baroness Darcy (de Knayth): My Lords, I should like to add my enthusiastic support to this small Bill which, strictly speaking, is and should remain unnecessary. It makes clear beyond reasonable doubt the duty of the local authority under Section 2 of the Chronically Sick and Disabled Persons Act 1970. The noble Lord, Lord Ashley of Stoke, was an eloquent supporter of that legislation during its passage through the other place in 1970. In his comprehensive and masterly introduction of his amendment Bill tonight, the noble Lord showed that he was very clear as to the meaning of Section 2 of that Act.
The noble Lord quoted the eloquent yet practical dissenting speech made by the noble and learned Lord, Lord Lloyd of Berwick. The noble and learned Lord was also very clear that it could not have been Parliament's intention that a local authority could say, "Because we don't have enough resources, we are going to reduce your needs". The needs remain exactly the same. Nor could Parliament have intended, to repeat the words of the noble Lord, Lord Ashley, that these needs were gauged differently in Bermondsey or Belgrave Square.
Indeed, the architect of the Chronically Sick and Disabled Persons Act, Alf Morris, showed that he was very clear as to the intention of Section 2 when in an article in The Times of 26th May he referred to a,
"perverse … ruling by the Law Lords which allows local authorities to circumvent the statutory duty to provide home care appropriate to the individual needs of disabled people".
I made my maiden speech on the Second Reading of the Chronically Sick and Disabled Persons Bill in this House. I can assure your Lordships that, so far as I am aware, none of us at any time during the passage of the legislation intended that the duty to provide appropriate care could depend upon the availability of resources.
The Second Reading of that Bill in this House was on 9th April 1970. The noble Earl, Lord Longford, in his comprehensive explanation of the Bill, referred (at col. 241 of Hansard) to Clause 2, now Section 2, as being, "mandatory beyond dubiety". So we have the interpretation of Section 2 very clearly expressed in Hansard.
The noble Lord, Lord Ashley of Stoke, portrayed very graphically the concern felt by disabled people and disability organisations. It is bad enough that the Law
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Lords' ruling has allowed local authorities to use the argument about the lack of resources to determine a disabled person's need; it is surely intolerable to go further and remove help from the disabled person after his or her needs have been recognised and have been met and after those needs have been reassessed and found to have remained unchanged. That is what happened in the case of Mr. Barry.
There is grave concern that the duty imposed by Parliament in relation to giving disabled people the support that they need to remain living outside institutions is being degraded into a mere power to help if there are sufficient spare resources. The fact that local authorities have a general duty to act reasonably does not, I think, provide much of a safeguard. All that this seems to do is to make a hotch-potch—a witches' brew—out of needs and resources: if there were no resources, could it not be argued, as the noble Lord, Lord Ashley, indicated, that it was reasonable for a local authority not to meet any need however great?
I find this particularly worrying because, in general, neither the funds collected through the council tax nor the funds provided by central government are earmarked for particular purposes. Local authorities are thus free to place a high priority on, for example, environmental conservation and the very lowest priority on helping disabled people. I am in no way knocking environmental conservation, but, let us face it, there is nothing particularly sexy about community care. Indeed, much more excitement is created by the threat to fell a beautiful tree than by the announcement of a cut in the supply of incontinence pads. As a paraplegic of 30 years' experience, I know that you cannot become more continent simply because the local authority is strapped for cash.
I return for the last time to the submission made by the noble and learned Lord, Lord Lloyd, who acknowledged that the decision by a majority of only three to two, as has been said, had allowed Gloucestershire and other local authorities to escape from an impossible position—the position of being given a statutory duty but not the wherewithal to perform it. The noble and learned Lord said that he could not help wondering, however, whether local authorities would come to regret the decision as much as Mr. Barry did. He said that the solution lay with the Government.
As the noble Lord, Lord Swinfen, said, the passing of the Chronically Sick and Disabled Persons Act 1970 was a noble aspiration. Having willed the end, Parliament must be asked to provide the means. That is what the Bill seeks to achieve. As the noble Lord, Lord Ashley, said, it would restore the status quo to what Parliament clearly intended in 1970 and what was in effect the position until the Law Lords' judgment of 20th March of this year. I hope that the Minister will bear that very much in mind when she comes to reply. I also hope that she will be able to respond, if not with enthusiasm, at any rate in a positive and constructive manner.
8.25 p.m.
Lord Addington: My Lords, the Bill is only a one-page document, but its effects, if it were to be rejected, would be incredibly wide for one simple reason: virtually all the legislation in the field is based around the fact that there are needs and so there is a demand to be met, and not around the fact that there is a limited supply of resources to meet the demand. That is something which runs through every single type of support legislation for people with special needs and learning disabilities; indeed—you name it—it is a theme which runs through. It is something which has been apparent in every debate that we have had. Individual needs—and this is a strong point as stated originally by the noble Lord—are the most important aspect.
We are talking about people who are separate units and none of them is the same. Without the type of legislation that states that you cannot say that because you have problems balancing your budget you can cut something away, every single gain in the field is under threat. The current Government have joined with me and many others speaking in tonight's debate time and time again to state quite clearly that this was good; indeed, that has happened on numerous Bills. Moreover, the principle underlines other legislation.
The code of practice for special educational needs is specifically designed to say that certain needs shall be met; it does not mention a budget. If the Bill is rejected on grounds that resources dictate whether attention will be paid to a person's needs, what will happen when the education department ultimately says, "We haven't got enough money"? I shall understand if the Minister says that that proposition is outside her brief. Nevertheless, I give her my assurance that the question will not disappear because I shall personally return to it.
Every time you say, "We can't do this because it costs money", you actually undermine the value of someone's individual rights. If the Government are about to say that they cannot accept it because there are insufficient resources available, I should point out that the noble Lord, Lord Ashley, dealt with that response clearly in his introduction. Indeed, he stated that we are not asking for new money; we are asking for money that has been used before. That aspect is something to which I and my colleagues drew attention during the last election but, there again, we were not listened to quite well enough.
Unless you underline the fact that this type of legislation is designed for people's needs, you will actually take away most that is good about it. I say that because unless you are determined to treat individuals on an individual basis, you are removing virtually every consideration. If the Government have that intention, I ask them now at least to give notice as to when they will be announcing whether these restrictions will be included in other pieces of legislation. If that is to be the case, I can assure them that they will be hearing a lot more about the subject from these Benches. I hope that the Government are prepared to accept the Bill and state quite clearly that they are returning to the aim of meeting the individual needs of individual people with certain problems.
8.30 p.m.
Lord McColl of Dulwich: My Lords, I, too, add my congratulations to the noble Lord for introducing this Bill. This is one of many proposals with which he has been associated, all designed to improve the quality of life of disabled people.
The problem we are discussing this evening follows the withdrawal of services from many elderly and disabled people in Gloucestershire because of an overspend in its budget, not because there has been any change in the needs of the disabled people. There is also an apparent inconsistency in provision of these services throughout the country due to a lack of agreed national standards.
One of the first questions which we must surely ask is, if the money is not available in some areas but is in others, what is the money being spent on? In other words, how are local authorities deciding on their priorities? In helping them to determine priorities, what guidelines will the Government give them and how will the Government monitor their performance?
It is quite clear that the vulnerable group that we are discussing this evening need the provision for which they have been carefully assessed. However, there is another reason for providing for their needs. Quite simply—this has been mentioned already—if one provides fully for their needs in one sphere, that may make them more independent and possibly reduce their needs in other areas. On the other hand if the needs of incontinent people, for instance, are not met, in the long run the total bill may be much higher than it would otherwise have been.
We ought to discuss another aspect of the whole subject of available resources. The pessimist always describes this as a lack of resources, whereas the optimist prefers to use the phrase "finite" resources. We should not neglect the great stimulus that finite resources have in compelling people to think and to work out the best way of using those finite resources in supplying the best service they can not only for disabled people but for patients suffering acute disease or injury. A good illustration of this is seen in hospital practice.
Some years ago in some parts of the country a hospital would see only one patient a month with a stab wound of the abdomen. As your Lordships can imagine, it is difficult to assess exactly how much damage has been done inside, not knowing how far the knife has been put in or what damage it has done. Therefore these patients have to undergo a major operation to have their abdomens opened up and carefully inspected to assess the damage and correct the injury.
However, in some parts of Africa it is possible to see 100 patients with stab wounds of the abdomen in an evening, especially a Friday evening. Clearly it is impossible to carry out 100 major operations in an evening. Therefore those who look after these people are compelled by finite resources to find the best way of dealing with the situation. They work out a way of detecting which of the stabbed patients needs a major operation and they become skilled at doing so. That policy results in only a few people having a major operation and therefore one avoids doing perhaps

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90 major operations in an evening. Therefore one is doing much less damage and the overall results are better. At the end of the day one ends up with a much better deal and a much better standard of care. By having tight budgetary controls the mind is concentrated to give the best service and the best service is often a cheaper service. Perhaps that is what the Labour Government had in mind in the 1970s when they introduced cash limits into the National Health Service.
The hospital service relies heavily on ward sisters, for whom I have always had the greatest respect. They are ideal managers and they dispense the milk of human kindness. They constantly have to assess the daily or even hourly needs of their patients, for example how often their blood pressure and pulse have to be taken and how many dressings have to be applied. If, however, the sister is short of nurses on a ward on a particular day for one reason or another, perhaps because of illness or a flu epidemic, she has to adapt and reduce the amount of work that is done on some patients. Her assessment of their needs is separate from the resources but inevitably, as she is assessing the needs, that merges imperceptibly into her decision of how to deploy her resources most effectively.
On a similar theme, there is an interesting situation in the National Health Service now in that some purchasing authorities have issued a statement that they are no longer prepared to treat on the NHS patients with conditions such as varicose veins, lumps of fat—which we politely call lipomas—and various lumps and bumps. That is a significant departure. It will compel those patients to seek those operations in the private sector. It would be helpful to hear the Government's reaction to that and whether they agree with that policy, which has been determined at local rather than national level. There are many problems which we have to discuss in this difficult area. I look forward to hearing the Minister's reply.
8.36 p.m.
Baroness Gould of Potternewton: My Lords, I too pay tribute to the work of the noble Lord, Lord Ashley, in bringing forward this Bill. I have listened with great interest to his views and to those of the other noble Lords who have spoken in this short but interesting debate. I welcome the chance to set out the Government's position on the Bill.
This Government are determined to improve the position of disabled people. Our manifesto made that clear. We want to improve community care services for disabled people, for other service users, and for carers. We want to improve those services, whether they are provided by the NHS, by social services, or indeed by any other agency. With that in mind, the manifesto confirmed our intention of developing a charter on long-term care services which we see as a way of ensuring people get the basic standards they can expect to lead a dignified life. We are developing our ideas on this. Our manifesto also made clear our intention to examine provisions for long-term care for elderly people. We shall make further announcements on these matters in due course. I shall be happy to pass the views
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expressed by your Lordships to my honourable friend the Parliamentary Under-Secretary of State for Health. However, in the interim we must stress that local authorities' obligations to disabled people under Section 2 do not change.
The Government believe strongly that work is the best form of welfare. We are committed to giving opportunities to work for sick and disabled people who have some capacity to do so, in the same way as we are doing for lone mothers. Over the coming months we will be looking to see what changes are necessary to ensure that the particular needs of people who have disabilities are provided for.
The Government clearly demonstrated their commitment to promoting the principles of equality of opportunity and defending the rights of all its citizens at the Intergovernmental Conference. Despite the short time the Government have been in office, they supported a new treaty Article 6a designed to combat discrimination based on sex, racial or ethnic origin, religion and belief, disability, age or sexual orientation. Just as importantly, the UK sponsored a declaration to be appended to the treaty in respect of Article 100a, one of the articles which governs the harmonisation of the EU single market. The declaration requires the institutions of the Community to take account of the needs of disabled people when drawing up measures under Article 100a. Together, these changes represent an important advance in ensuring that the interests and needs of disabled people are taken into account across all the member states of the European Union.
The Government have considerable sympathy for the aim of strengthening social services for disabled people which so clearly underlies this Bill. However, we do not believe that the route which the Bill proposes to take to achieve that aim is the right one.
To explain why this is so, I need to rehearse some of the history behind the Bill. I hope that your Lordships will forgive me for going over ground which has been covered by previous speakers.
Section 2 of the Chronically Sick and Disabled Persons Act 1970 places social services authorities under a duty to arrange certain services for individual disabled people where they are satisfied that that is necessary to meet their needs. The services concerned include practical assistance in the home; provision of recreational facilities; assistance in arranging adaptations to the home, or the provision of additional facilities designed to secure greater safety, comfort or convenience; holidays; meals; and the provision of a telephone and any special equipment necessary to enable the disabled person to use it.
The Act has long been recognised as a milestone in legislation affecting disabled people, and I would wish to pay tribute to those—including my noble friend Lord Ashley—who were instrumental in achieving its successful passage through Parliament. I know that many of your Lordships took part in the celebrations of the Act's 25th anniversary in 1995.
I took particular note of the points made by the noble Baroness, Lady Darcy (de Knayth), and my noble friend Lord Ashley of Stoke, in respect of the interpretation

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of the Act. It has been the understanding of successive governments that local authorities are able to take their resources into account in assessing a person's need for the services listed in Section 2 of the Chronically Sick and Disabled Persons Act and deciding what services to arrange. It is important to note that the circular issued shortly before the Act came into force in August 1970 stated,
"Criteria of need are matters for the authorities to determine in the light of resources."
The thrust of this debate has been the judicial review case brought against Gloucestershire social services in 1995, fully detailed by my noble friend Lord Ashley. Last year the challenge was upheld in the Court of Appeal. However, noble and learned Lords in this House, I appreciate by three to two, overturned the Court of Appeal's interpretation of the law in a judgment given on 20th March of this year. That is to say, the legal position has been confirmed to be that which the Department of Health, since 1970, has believed to apply: that authorities may take their resources into account in assessing the needs of a disabled person and deciding what services to arrange.
However, it is important to emphasise that the judgment does not give authorities a licence to stop providing services. But resources are only one of the things that should be taken into account. They must still take into account all other relevant factors. They cannot use pressures on resources as an excuse for taking an arbitrary or unreasonable decision.
Nor does the judgment mean that local authorities are no longer under any duty towards disabled people. Once a local authority has decided that it is necessary, in order to meet the needs of a disabled person, to arrange a service listed in Section 2, then it is under a duty to arrange it. That has not changed.
The noble Lord, Lord Swinfen, expressed concern that the Gloucestershire judgment would affect carers' rights under the Carers (Recognition and Services) Act 1995, and that they will not be able to obtain assessments. That is not the case. The Carers (Recognition and Services) Act gives carers who provide regular and substantial care the right to ask for an assessment of their ability to carry on caring when the person for whom they care is being assessed. The authority must take the results of the carer's assessment into account when deciding whether or what services are provided to the user. That is not changed by the Gloucestershire judgment.
The Bill introduced by my noble friend Lord Ashley seeks to reverse the effect of the ruling of the noble and learned Lords in the Gloucestershire case. If enacted, it would prevent authorities from taking account of resource considerations in assessing needs and deciding what services to arrange. They would be able to take resources into account only when deciding how to arrange services to meet the needs they have identified. Unfortunately we do not live in a world where resources can be ignored. In recognising that fact, the Government have embarked on a far-reaching review of spending priorities. Now is not the time to
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require authorities to ignore resources. Nor, I believe, would it generally be seen as fair to single out one particular group of people for this treatment.
Lord Addington: My Lords, if the Minister will give way, perhaps I may say this. The singling out of people is exactly the point that I sought to make. Most of the legislation does not take resources into account. At least that was our understanding when the legislation went through Parliament. That is the problem. A new precedent is being created where resources are being taken into account.
Baroness Gould of Potternewton: My Lords, I must disagree with the noble Lord. I do not think that this measure states that. If one considers the evidence from the Association of Directors of Social Services, it has expressed its concerns that such action would create a protected group within the population of those with community care needs who would have the right to services without regard to resources, to the certain detriment of other users. We share that concern.
Why, for instance, should resources not be a consideration in deciding on the non-residential services to be provided under Section 2 when they are a consideration in deciding on residential services which are not provided under Section 2? I regret to say to my noble friend Lord Ashley that I cannot accept his argument, nor that of the noble Lord, Lord Addington, that the Bill will not lead to a significant increase in expenditure and that it would simply ensure that existing good practice is enshrined in legislation. Resources have always been relevant to the level of need provided for.
We know, for example, that pressures on local authority budgets in recent years have led them increasingly to concentrate social services on those with the need for the most intensive support. As a minimum, the Bill will require them to undo those changes. However desirable that might be thought in principle, it would undoubtedly have a cost.
The Bill could well do more than merely undo recent changes. It is difficult to produce a precise and accurate figure for what the total cost might be if the Bill were to come into force this year or next. However, the Department of Health estimates that it could be a substantial sum and that is not something for which existing spending plans provide. Relatively modest increases in activity could have significant cost implications for local authorities. Authorities would be able to meet this only by diverting resources from other groups—such as children at risk—or from other services, including other services to disabled people. Again, the Association of Directors of Social Services has written to the Government to express its serious concerns about the substantial costs which it considers could arise as a result of this Bill.
It is important to recognise, too, that the Bill would not produce simply a one-off increase in expenditure.

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The noble Lord, Lord McColl, referred to finite resources. However, there is no finite list of services which might be provided under Section 2. For example, ways of
"securing greater safety, comfort or convenience in the home",
will change over time, particularly as new technologies develop, with the result that the needs which disabled people might be assessed as needing will also increase. This would put a continuing pressure on authorities to find more resources.
It is for those reasons that we regret that we cannot support the Bill. Nevertheless, I stress our concern that there should be an improvement in community services. I have taken careful note of all the suggestions made in this debate as to how that might be done. We shall keep community care legislation, including that which applies to disabled people, under careful review. There may be a case for change. But the best time for decisions on that will be when we are clear about the direction of other developments, such as the actions that are likely to result from our examination of long-term care for the elderly.
Although we cannot support the Bill, we understand the concerns that are behind it. To respond to the noble Lord, Lord McColl, my honourable friend in the other place, the Parliamentary Under-Secretary of State for Health, will shortly be making an announcement as to how he intends to reinforce local authorities' understanding of their continuing responsibilities to disabled people under the CSDP Act. As I said, we shall continue to keep community care legislation under careful review.
8.50 p.m.
Lord Ashley of Stoke: My Lords, I should like to thank everyone who took part in this short but very important debate. I am especially grateful to the noble Lord, Lord Swinfen, the noble Baroness, Lady Darcy (de Knayth), and the noble Lord, Lord Addington. All three have been consistent and persistent campaigners on behalf of disabled people. I can only guess at their response to the reply that we just heard. The matter will no doubt be raised on another occasion.
I thank my noble friend Lady Gould for coming to the Dispatch Box and explaining the Government's point of view. As she is not merely my noble friend, but my friend, I want to take the unusual step of exempting her personally from what I am about to say. I mean that. She has been a spokeswoman for the Government and must not take my next comments personally. I know of her tremendous personal commitment to the cause of disabled people. She is now excluded from my remarks.
It is traditional and habitual for supporters of the Government to be restrained when criticising the Government and exaggerate when attacking one's opponents. I intend to maintain that tradition of restraint. I am shocked at the inadequacy of the Government's response to this Bill. I cannot believe that a Labour Government are actually saying that they reject the Bill and support the present situation, which leads to outright discrimination against disabled people. I am shocked,
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and I am horrified. I never expected such a blank refusal to take any action on this vital issue. I find it very hard to believe. The Government really will have to think again.
Let me deal with a few points raised by the Government. They say they are determined to improve the position of disabled people. That is fine; we accept their words. But the best way of improving the position of these disabled people is to support the Bill. The Government say that they are working on ideas in relation to disabled people. How very kind! We have already worked on the ideas. In the Bill that we propose the ideas are already worked out. There is no need to work on ideas, no need to consider the problem. The answer is in this short Bill, described by the Law Society as "succinct and comprehensive". It simply reverses the Law Lords' judgment and takes us back to the position as it was on 19th March, when disabled people were being provided for at no great expense. That is all the Bill seeks to do; but that is very important.
The Government say that in the coming months they will see what is necessary. They do not need to see what is necessary. The statement suggests that this debate might never have taken place. There have been some outstanding speeches, apart from my own. They have been succinct, clear, eloquent and powerful. The Government simply cannot say, "We are now going to see what is necessary", as if people did not speak. The words of the debate will appear in Hansard tomorrow. They have been spoken and they will be there in black and white. The facts and opinions have been brought forward in the House of Lords. The Government cannot say that they will see what is necessary as if no debate had taken place.
The Government say that they are proud of the amendment in Article 6a in the European treaty. That is fine. I was among those who asked the Government to bring in the amendment. It helps in matters of discrimination and I congratulate the Government. It represents a beginning in Europe. But if they want to tackle discrimination not merely on a European level, the best way of tackling it is by backing this Bill. The effect of the Law Lords' judgment is to discriminate against disabled people in their own homes. There could not be worse discrimination than that. The Government should think again.
The Government say that this Bill is not the best route. In that case they should suggest an alternative, realistic route. Instead of expressing vague generalities about thinking, considering and assessing the matter in the future, they should tell us what they intend to do. I know that they have been in office for only a short time. But they have had time to assess the 1970 Act and the way in which it has been working. It is not good enough to say simply that this is not the best route.
I am afraid that the Government are utterly wrong when they say that the understanding of governments is that local authorities could take resources into account all these years. If the Government believed, when they were in office 18 years ago, that the resources should be taken into account by local authorities, they should have said so during that time. There is no point in stating

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now, after 18 years out of office, that they believed resources were being taken into account. The fact is that if local authorities were taking resources into account, they were breaking the law. The law was clear and categorical. It is the Law Lords who have now changed that by their ruling. If the Labour Government were so assured when in office that local authorities were taking resources into account, they should have objected. Any Government should object to the law being broken, by local authorities or anybody else.
The Government referred to a circular. Circulars do not matter all that much. They are advisory, they offer guidance etc. But the law is the law; and local authorities should have observed the law. In fact, most did. They had been making provision for disabled people in accordance with the 1970 Act. It has been a patchwork; it has not been applied as assiduously and perfectly as it should have been. Nevertheless, local authorities have been making these provisions.
I am afraid I have spoken for rather longer than I had intended. I wanted to emphasise the fact that I exempt my noble friend, my great friend, Lady Gould from the remarks I have just made. It was a comment on the Government.
The final and crucial point is this. The Government stated tonight that this Bill will lead to significant amounts of money being made available. That is totally wrong. It does not matter what calculations civil servants in the Department of Health make. They are wrong. The Government must respond to the challenge that I put forward. On 19th March, a very short time ago, there was no massive financial commitment, no great drain on resources. So we come to 21st March, after the Law Lords' judgment. Where does that massive demand come from? All we ask is to go back a couple of months. There is no phenomenal demand.
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It is quite wrong for the Government to say that massive amounts of money will be involved with this Bill. I remind the Government that it was the Labour Party in opposition who derided the Department of Health when the Berry Bill outlawing discrimination was going through the other place. It was the Department of Health which said that it would cost a fortune—I have forgotten the actual figure; I think it was £1 billion or £1.5 billion. The figure was plucked from nowhere. It was quite unrealistic. The Labour Opposition rightly derided the department for manufacturing a grossly inflated and exaggerated figure.
The Government make the claim about large amounts of money being entailed under the Bill but they should think again. If they insist, they should produce the evidence for their claim. If the evidence is there and massive amounts of money are involved, we shall think again. But we want the evidence. Until we have that, the Government must reconsider.
This problem will not go away. I have seen enough disabled people suffering to convince me. I have received fax after fax from the RNIB and other societies about people who are suffering now. And it is only the beginning. The flood will come when more people are denied vital resources. I hope that the Government will think again. I ask the House to support the Bill.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Imperial College Bill
The Queen's consent signified and Bill reported from the Unopposed Bill Committee without amendment.
House adjourned at one minute past nine o'clock.

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