Sitting of 13 February 1998

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

  Employment of Children Bill
  Order for Second Reading read.
  9.34 am
  Mr. Chris Pond: I beg to move, That the Bill be now read a Second time.
  When I chose today as the date for the Second Reading of my Bill, I did not realise that we would be celebrating something of an anniversary. Today, as we know, is Friday 13 February; by coincidence, the previous Bill providing national legislation on this issue received its Second Reading on Friday 12 February 1932. One hon. Member speaking in that debate on the Children and Young Persons Bill commented:
  "If we accept this Bill…it is just 24 years since the last Children's Bill was introduced",
  adding rather plaintively:
  "Must we wait for another 24 years?"—[Official Report, 12 February 1932; Vol. 261, c. 1233.]
  Actually, the wait was a little longer than that—66 years almost to the day.
  That hon. Member's wait might have been rather shorter. Nearly 25 years ago, in March 1973, a private Member's Bill with the same title as this one went into Committee. It, too, was called the Employment of Children Bill, and the private Member concerned was a Mr. Jeffrey Archer. I understand that the Bill was something of a potboiler, and is still available in airport lounges around the country.
  Although Mr. Archer had come only 16th or 17th in the ballot, and although he admitted to being just a little half-hearted about the Bill—which was originally a Labour measure, and which he had taken off the shelf, having nothing much else to put in its place—it had a very fair wind. As Mr. Archer noted in Committee,
  "There has been a demand for it in the constituencies, and it is wanted by all parties. We shall all be glad to see it passed into law and on the Statute Book."—[Official Report, Standing Committee C,14 March 1973; c. 7.]
  The same might be said of the present Bill of the same title. Nearly 170 hon. Members signed the early-day motion supporting the Bill, and most of the signatures were collected in the space of a week. The Bill's sponsors, many of whom are in the Chamber this morning, have provided tremendous support, for which I thank them, and they represent each of the three main parties. At its First Reading, three of the 11 sponsors were Conservatives. Soon afterwards, we lost one of those three—not because he was no longer a sponsor, but because he was no longer a Conservative.
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  Let me take this opportunity to wish the hon. Member for Leominster (Mr. Temple-Morris) a happy birthday. Although he cannot be with us this morning, for reasons that we understand, he can comfort himself with the thought that yesterday he was exactly six years younger than the most recent national legislation on child employment. He will not mind my saying that I am not referring to the 1973 Act—which was never signed by the Secretary of State, and therefore never came into force.
  As well as the support for the Bill in the House, there is considerable support outside. I pay tribute first to the Low Pay Unit, an organisation with which I worked for many years before entering the House and with which I am still proud to be associated. The unit helped to draft the Bill, and for many years has carried out research on the extent of child labour. It has also campaigned for better protection for children at work.
  As hon. Members will know from their postbags, the Bill is also supported by many other organisations, such as the major children's charities, including the National Society for the Prevention of Cruelty to Children, NCH Action for Children, Save the Children, the Child Accident Prevention Trust and the Children's Rights Office. The Trades Union Congress and individual trade unions, many of which have done much work on the issue over the years, support the Bill, as do individual employers who want to ensure that where children are employed they are given appropriate protection, that their safety and welfare are not damaged in the process and that their education does not suffer. Those employers include the National Federation of Retail Newsagents, which supports the Bill. One of its spokespeople told the BBC on Wednesday evening that this
  "is a very good Bill and the Federation supports it".
  The federation and the distribution organisations played a constructive and helpful role in helping to shape the Bill. I pay tribute to Soroptimist International, many of whose members are here to listen to the debate and have pledged their support for the Bill as part of their work on the rights of the child.
  Apart from having a broad base of support, there are many other similarities between the 1973 Employment of Children Bill, which was never brought into force, and the 1998 Bill. I am pleased to see my hon. Friend the Under-Secretary of State for Health in the Chamber. His predecessor a quarter of a century ago explained that the 1973 Bill was designed to deal with the shortcomings of the Children and Young Persons Act 1933:
  "The first is the existence of a good deal of undesirable variation among local authorities, which at present have law-making powers in the matter of conditions and terms of employment for youngsters."
  The Bill, he said, would introduce a
  "uniform pattern of law-making throughout the country".
  So, too, would the Bill before us. He went on to explain:
  "The second purpose …is that power should be taken to enable the scrutiny of a child's employment to be undertaken not only after he has started work…but before he takes his first step into the job."—[Official Report, Standing Committee C, 14 March 1973; c. 4–5.]
  The present Bill has a similar purpose, although clause 10 allows a grace period of a month between the commencement of employment and the issue of the work permit.

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  Had the 1973 Bill become law, its namesake Bill before us today might have been less necessary, but although the 1973 Bill progressed through all its stages to become an Act, as I have said, it was never signed by a Secretary of State and it has continued to gather dust on the shelves.
  Local authorities at the time argued, understandably, that they had insufficient resources to implement that legislation. The Government decided to try to implement its best features through modern byelaws, which were adopted by some local education authorities, but still left us with patchy regulations that are difficult to enforce.
  Mr. Andrew Rowe: As a sponsor of the Bill, I feel ashamed that, as I have explained to the hon. Gentleman, I cannot be here for the whole debate; I apologise for that. Does he agree that one of the enormous difficulties, both in this sector and in relation to vetting volunteers, for example, is that, with the best will in the world, the regulatory authorities often take so long that the contract, as it were, has expired before the necessary procedures have been carried out? I am sure that, later in his speech, he will explain how the Bill will deal with that.
  Mr. Pond: I thank the hon. Gentleman for that intervention. As he has to leave, and given that he is a sponsor and great supporter of the Bill, may I briefly respond to that point now? He is right to say that many employers feel that the way in which the permit system operates does not allow for flexibility in children's employment. That is why the Bill states that an employer, once a permit has been applied for, may employ a child for a period of grace of one month, until the local authority issues that permit. If, after that one month, a permit has not been issued, the employment must cease. The employer must, of course, apply for a permit in advance. In that way, we can retain the flexibility that employers need, but provide the protection that children deserve.
  As a result of the events that I have described, a quarter of a century of providing greater protection for Britain's working children was lost. We must ensure that history is not allowed to repeat itself on this occasion. A further opportunity was missed to provide that protection more recently, when the European Union considered a directive to provide greater protection for children at work. For more than two years, the previous Administration blocked the measure, arguing for special treatment for the United Kingdom. That was a cruel irony, given that Britain's working children needed that protection rather more than children elsewhere in Europe.
  At the beginning of the 1990s, the European Commission tells us, Britain accounted for one third of the working children throughout EU countries, yet Britain's children had less protection than those in any other member state. A recent Council of Europe report singled out six countries in Europe as having extensive child employment: Turkey, Romania, Bulgaria Spain, Italy—and the UK.
  Mr. Denis MacShane: I wish my hon. Friend's Bill every success, but on the European and international aspect, has he read the remarkable report in
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  the Financial Times of 4 February, which said that child labour throughout the world is on the increase, despite globalisation and foreign direct investment, and that more than 250 million children work around the world? Is he aware that the previous Government sabotaged attempts by America and France to put the employment of children on the agenda at the World Trade Organisation summit in Singapore in December 1996? Does he agree that, like charity, eliminating child labour throughout the world must begin at home, which is why I wish his Bill every success?
  Mr. Pond: I thank my hon. Friend for that support and agree with him that we must view children's employment in this country, especially children's illegal employment, in the context of what is happening in the world. One of the points that international organisations such as the International Labour Organisation and the Council of Europe constantly make is that, throughout the world, children are being used as a hidden but important part of the labour force and are therefore being placed at risk.
  It is a great danger to say that the only problems of illegal and exploitative child employment happen elsewhere in the world. Unless we deal with that issue in this country, we shall not be in a position to deal with it in some poorer countries. I am pleased that the Secretary of State for International Development has made that point on several occasions in the House.
  I have said that the EU directive was resisted by the previous Government, who argued at the time that the directive would be a threat to the British tradition of newspaper delivery. We hear echoes of that argument today. The Government at the time secured an opt-out from one of the directive's main provisions: the weekly limit of 12 hours' work during term time for school-age children; current UK legislation and byelaws allow, between them, up to 17 or 20 hours a week.
  The directive has still not been implemented in Britain, but the present Government have given a commitment, which I welcome, to implement it urgently. However, without further lengthy consultation, the opt-out that was negotiated by the previous Government will have to remain in place for the time being. One of the main purposes of the Bill is to implement that 12-hour limit, bringing us into line with every other EU country.
  In the remaining time that I have at my disposal, I want to outline why we need the Bill, drawing on some of the evidence of the extent and effect of unregulated child employment. I then want to describe how the Bill seeks to tackle those problems.
  I think that all of us in the Chamber are aware of the extent of child employment in this country. It is well documented. Surveys by the Low Pay Unit in London and Birmingham, by Norfolk county council, by Paisley and Greenwich universities and by the TUC all come to similar conclusions: about four in 10 school-age children have some form of paid employment during term time. That implies that children represent a hidden work force of almost 2 million throughout the country.
  Why is that in itself a problem? All of us agree that an early glimpse of the world of work can be beneficial. It encourages a sense of independence and responsibility, and provides extra pocket money for the things that children want, which parents nowadays often cannot afford. We have to recognise that, with a fifth

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  of households not having an adult in employment, in many households, the child may be the only member of the family bringing in any earnings, however small.
  Mr. Jeremy Corbyn: I understand what my hon. Friend says about the number of households with no adults in employment, but it is dangerous to say that, because there are many unemployed adults, we should encourage children to work to supplement the family income. Surely the issue should be addressing the need for adult work rather than promoting child work to assist family income.
  Mr. Pond: My hon. Friend makes an important point. We must understand the circumstances in which children are employed. Even if we do not condone such employment, we must accept that for many families the income may be important. The Bill tries to provide better protection for children, to ensure that they are not placed at risk. I shall return to some of my hon. Friend's concerns.
  Problems arise when children's safety is placed at risk, when the work damages their education or when they are exploited as cheap labour. Research shows that about three quarters of all children who are employed in the UK are employed illegally in terms of the 1933 legislation and local authority byelaws. That suggests that 1.5 million children are working illegally.
  The Department of Health briefing for the debate states that
  "this does not mean that these children are all employed in sweatshops. In the majority of cases, it means simply that the child is not registered for work."
  I agree that the majority of children do not have work permits, and the Bill seeks to address that. The absence of such permits causes concern, because employers who fail to secure work permits for the children whom they employ will find that their employers' liability insurance is null and void. If a child is involved in an accident, the employer will be personally liable. Employers who fail to secure work permits are likely to be infringing the law in other ways, and the Bill seeks to address that.
  We should not be complacent about the fact that the majority of children are employed without work permits. Hon. Members will have seen the reports of a survey that was published this week by the Low Pay Unit. The survey was based on more than 1,000 school-age children in the north-east, and confirmed the findings of earlier studies that were undertaken elsewhere in the country. The survey found that almost 40 per cent. of working children were employed before 7 o'clock in the morning or after 7 o'clock in the evening, although that is specifically prohibited under the 1933 legislation. The Bill would treat such infringements rather more seriously than does the present law.
  Almost one in 10 of the boys in the survey were doing jobs that are prohibited by the Employment of Women, Young Persons and Children Act 1920 and the 1933 Act. They included work on building sites, door-to-door selling or factory work. A quarter of the children were below the legal working age of 13. One in 10 12-year-olds were working, as were one in six 11 and 12-year-olds. We cannot dismiss illegal child employment as simply a paperwork error by absent-minded employers. I have no doubt that the majority of employers are themselves
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  victims of the complexities of the current law. The Bill seeks to address that as well, and proposes tough measures against employers who wilfully put children at risk by breaking the law.
  Another reason for not being complacent about illegal child employment is that it places young people's safety at risk. An analysis by the Child Accident Prevention Trust of an earlier Low Pay Unit survey found that more than a third of employed children are involved in accidents at work. Injuries included cuts and burns, those resulting from road accidents, falls, broken bones and assaults. Nearly a third of those accidents required medical attention.
  A boy in my constituency who was, I think, below the legal minimum working age at the time, was hit by a lorry while on his newspaper round. His hopes of a promising future in football were dashed in a few moments. Among the 317 reported fatalities and serious injuries since 1990 was a 14-year-old boy who was employed in a Manchester bedding factory for £1 an hour. His arm was trapped in an unguarded machine and he sustained severe injuries. The employer was fined £200 with £438 costs for illegally employing the child. A 15-year-old boy fell into a vat of water that was used to rinse metals, in a company near Birmingham where he was employed to make tea and sweep up. The boy suffered irreversible brain damage and poisoning. Those are the dramatic cases that make the headlines, but day in, day out children are placed at risk of injury because of inadequate enforcement of the law. We have a responsibility to provide them with the protection that they deserve.
  Hon. Members will be pleased to know that I do not propose to go through the Bill clause by clause. They will have had adequate briefings on the Bill, especially from the Library, which I commend, and from the organisations that support the measure. I shall merely describe its general objectives. The Bill was carefully drafted after consultation with major children's charities, trade unions, local authority child employment officers and employers. I am grateful to the Low Pay Unit and the Public Bill Office for their help and guidance.
  We have sought to build on existing foundations rather than start from scratch. The Bill incorporates the main provisions of existing legislation, as well as the European Union directive and the draft model byelaws that were proposed by the Department of Health. In only a few, albeit important, respects are wholly new provisions proposed. The intention is to create a measure that takes from the best of what exists and has been extensively consulted upon, to achieve a workable and effective measure that will provide the protection that children deserve.
  I shall first outline what the Bill does not do. I say to hon. Members who are confused by its title that it is not part of the Government's welfare-to-work strategy. It does not outlaw or prohibit the employment of children. I appreciate that in that respect in may fall short of the aspirations of some hon. Members, including my hon. Friend the Member for Islington, North (Mr. Corbyn). I am aware that International Labour Organisation convention 138 requires member states to prohibit, as far as possible, the employment of children who are below school age.

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  The Council of Europe social charter is based on the presumption that childhood should principally be a time for education and training rather than employment. The Bill falls short of those aspirations and international agreements, as does the European directive.
  Mr. Corbyn: ILO convention 138 is central to the debate. Will my hon. Friend confirm that if the Bill became law, it would prevent Britain from ratifying that ILO convention?
  Mr. Pond: The Bill would improve protection for children, but it would not fully meet the requirements of that convention. However, the current arrangements and the EU directive do not meet those requirements either. I agree with my hon. Friend that we should work to achieve for our children the best protection that is required under international agreements. The Bill is a step in that direction, but I accept that in itself it would not fulfil all those requirements.
  The Department of Health briefing reminds us that many children want to work and that child employment is an established tradition which, for better or worse, the Bill does not seek to challenge. As I have said, we recognise that properly regulated child employment can be beneficial as long as it is not allowed to compromise the child's safety, well-being and educational prospects. The Council of Europe acknowledges that. It states:
  "Not all child work is harmful to a child's well-being. Rather, child work involves a spectrum. At one end of the spectrum, some kinds of work are wholly beneficial to the child's health and development, teaching skills, building self esteem, building a sense of solidarity and loyalty within a family and providing a bridge to the adult world of work. At the other end of the spectrum is work that is wholly detrimental to a child, such as bonded labour, commercial sexual exploitation, sexual and physical abuse in the workplace and hazardous industrial work."
  The Council states that whereas there can be no clear-cut universal definition of where on the spectrum child work becomes unacceptable, article 32 of the convention on the rights of the child defines three areas where the child has the right to protection. The first is in the area of economic exploitation. All hon. Members will agree that the example that was published this week by the Low Pay Unit of the child who was earning 33p an hour for delivering newspapers can be considered only in the realm of economic exploitation. Secondly, the Council of Europe refers to hazards to health and development; and thirdly, it refers to interference with a child's education. I think that we can all agree that those are sensible measures showing the divide between which forms of child employment are acceptable and which are unacceptable. The Bill would ensure that the first of those are permitted, while the second are outlawed.
  I stress that the Bill does not prohibit child employment—and it certainly does not prohibit newspaper delivery by children. There is a myth that all or most child employment consists of the delivery of newspapers. In fact, almost twice as many children are engaged in other forms of employment. I am a little disappointed that the Department of Health briefing encourages the notion that the Bill might threaten the delivery of newspapers by children. Such anxieties have
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  been fuelled by the Newspaper Society, the trade association for newspaper publishers, in a press release dramatically headed:
  "New Bill Threatens Work For Young News Deliverers".
  It does no such thing, as the people who really know—the retail newsagents who employ children to deliver newspapers—are fully aware. As I said, the National Federation of Retail Newsagents supports the Bill, which it sees as no threat to newspaper deliveries by children.
  That is what the Bill does not do; this is what it does do. First, it would limit the maximum working week during term time to 12 hours. That is the limit originally proposed under the European Union directive and the limit which already exists in every other EU country. According to the Low Pay Unit survey this week, about 14 per cent. of children work more than 12 hours a week. Current legislation, made up of the 1933 Act and local authority byelaws, allows children to work legally for up to 17 hours a week, or 20 hours a week for those aged over 15. Added to a normal curriculum school week, plus an expected 15 hours of homework, it means that children only just into their teens can legally work 60 hours or more a week.
  The argument for limiting working hours to 12 per week is strong. There is evidence that children's employment beyond such hours can result in a decline in school performance. The work of Sandy Hobbs and Jim McKechnie in Paisley shows that there is a fairly clear tendency for longer hours of child employment to be associated with poor performance at, and commitment to, school. Research suggests that working 10 hours or more a week can have an adverse effect on a child's school performance. The authors do not argue that there is necessarily a causal link between the two, but I think that most of us would agree that there is likely to be a link between the number of hours that a child is employed and his performance at school. The increasing responsibilities that we are placing on children through their schoolwork should make us think carefully about whether the limit on working hours, which was set several decades ago, is appropriate to modern circumstances.
  The Trades Union Congress survey, which was carried out by MORI, found that more than a quarter of children working during term time were often or sometimes too tired to do their homework or schoolwork because of their job. One in 20 admitted to playing truant in order to do paid work instead. Sometimes it is more blatant. The Times Educational Supplement last week reported that one student sat her examination wearing her supermarket overall to make sure that she was back at work in time for her shift. It reported that retailers were putting pressure on sixth-formers to work hours that damaged their chances of A-level success. Is that sensible when the Government rightly place education as the first, second and third priority? We need to ensure that our attempts to build an education system for the new century are not undermined by child employment practices more appropriate to the previous century.
  Mr. Richard Shepherd: I support and commend the Bill. However, will the hon. Gentleman allay the concern felt by many of us, which has grown out of our own experience in the delivery of newspapers? I am aware that much of the criticism of the Bill has focused on this point. I did a morning and evening

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  delivery and a Sunday morning round, so the number of hours I worked were above 12. For most of us, the school holidays were important as we tried to get in as many newspaper deliveries as possible, so the 12-hour limit would inhibit the ability of young kids to do what most of society would not consider to be a damaging occupation.
  Mr. Pond: I thank the hon. Gentleman for his intervention and for his support for the Bill. I can give him the reassurance that he sought. The 12-hour limit in the Bill relates only to term time, not to the school holidays. The National Federation of Retail Newsagents says that the 12-hour limit is acceptable, because it would allow children to do a newspaper round during the week and also another job or additional newspaper deliveries at the weekend. The 12-hour limit has been carefully chosen for that very purpose.
  The Bill would provide a uniform overall structure. At present, the law on child employment is complex. It is based on a mix of national legislation and local byelaws, many of which are pitifully out of date. Some local authorities still prohibit the employment of children as lather boys in barber shops or outlaw the extraction of sugar beet from the ground by hand. I have no objection to outlawing such practices, but I would prefer to focus more seriously on the real threats to child safety today. That is why the Bill specifies the types of jobs that children can and cannot do, wherever they live in the country, by establishing a list of appropriate and inappropriate jobs based on both the EU directive and the guidance from the Department of Health. The Bill retains some flexibility for local authorities to build on that platform of basic provisions, but provides much greater uniformity than currently exists.
  The Bill would improve the enforcement of the law, which currently is poorly enforced. Part II of the Bill deals with that problem. An employer who wishes to employ a child must apply for a work permit from the local education authority, as is the case now. However, unlike the current provisions, the Bill involves the home and school in the decision on whether a particular type of employment is appropriate. We want to stimulate a dialogue between parents, children, employers and schools about children's employment. The Bill recognises that children have a right to be consulted about the process of issuing permits. A permit will not be issued unless a local authority is satisfied that the employment is suitable to the child, having consulted the home and school, and also that the employer is an appropriate person to be employing children.
  I do not believe that it is an onerous process. It goes only a little beyond the existing arrangements and the advice that we have had from the Department of Health. The permit system would help to ensure that children were not permitted inadvertently to be employed illegally. Penalties would be tougher than at present for employers failing to apply for a permit, and tougher still for those who employed a child illegally outside the conditions established in part I. We need to ensure that employers know their responsibilities. We need also to ensure that where employers wilfully place children at risk, we will come down hard on them. If the Bill becomes law, many rogue employers may look back on Friday 13 as being very unlucky.
  Mr. Corbyn: I thank my hon. Friend for giving way again. The issue of local government and the control that
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  it could impose is important. However, the record of local government in this matter is appalling. No local authority that I know of takes its responsibilities seriously; very few investigate malpractices in the employment of children; and hardly any have ever registered any children in work. Does my hon. Friend have any indication that matters will improve in future?
  Mr. Pond: I am aware of the great amount of work that my hon. Friend has done over the years on the issue. I accept that there is a very real problem with the way in which local authorities currently enforce the law. Many of them are very good and take their responsibilities seriously. They do everything that they can, within limited resources, to enforce the law. The Bill would improve on that position by ensuring that there was a uniform set of regulations, rather than the current confusion, which makes the problem of enforcement both more expensive and more difficult for local authorities.
  Mr. Crispin Blunt: The record of councils across the country in licensing anything is woeful. In Hammersmith and Fulham, for example, the time required to get a building permit is lengthening. The idea that councils will be able to process a permit application in four weeks is laughable. Later in the Bill's passage—if it is not held up by the antics of hon. Members on other Bills—I wonder whether the hon. Gentleman will examine that four-week provision.
  Mr. Pond: I thank hon. Gentleman for that helpful intervention. The four-week period was one of the issues raised in the consultation process while the Bill was drafted. Employers especially said that, currently, it is difficult to obtain a permit—even for the few employers who decide to apply for one—because of delays at local education authorities. That is why we built into the Bill the four-week grace period. We realise that responsibility runs both ways. If employers are to undertake the process of applying for a permit, local education authorities will have to take their responsibilities seriously and ensure that they meet that deadline.
  Mr. Rowe: Further to that point, this seems to be a matter in which some delegation to parish councils or, in cities, local councils might work perfectly well. Those councils have quite an interest in increasing their responsibilities, and they are much closer to the people applying for the permit and to the children who are likely to be involved. That might work much better.
  Mr. Pond: I thank the hon. Gentleman for his intervention, which, again, was helpful. We shall have to examine the provision in the context of what is happening in local authorities generally and within the structure of local government, to determine the most appropriate level at which such a provision should be applied. We shall have to think seriously about the issue.
  While working on the Bill, I often thought about that young man in my constituency who was injured while doing a harmless newspaper delivery round. One could not really blame the lorry driver involved in that incident—after all, international freight lorries and children on bicycles are not a good mix in the early hours of the morning. One could not blame the parents. None of us as parents would allow our children to be hurt and

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  injured if we could possibly avoid it or knew that it might happen. One could not blame the employer. The law is complex and outdated, and I am sure that that employer would never wilfully put young lives at risk. No one is to blame. Yet a schoolboy is seriously injured, and his prospects are damaged.
  Today, we have an opportunity to do something to provide the protection that working children deserve; to ensure that they are not exploited as cheap labour, that they are not placed at risk and that their education and prospects are not damaged. If we fail to take that opportunity, we shall all be to blame. I commend the Bill to the House.
  10.12 am
  Mr. James Paice: I am grateful to you, Mr. Deputy Speaker, for calling me so early in the debate. I congratulate the hon. Member for Gravesham (Mr. Pond) both on introducing the Bill and on the manner in which he has done so. Undoubtedly, there is a need to change some aspects of child legislation, and I congratulate him on dealing with the issue. However, I should like to mention a few possible consequences of the Bill, some of which he may have intended, and some of which may have been unintended.
  The hon. Member ended his speech by mentioning the sad accident in his constituency of a newspaper boy and a lorry. Hon. Members have to accept—we sometimes find it difficult—that legislation cannot solve everything. We cannot say that the Bill will stop another newspaper boy being hit by a lorry. We have to be a little careful in our choice of language so that we do not lead people to believe that we can achieve the unachievable.
  Most cases of what could be called the abusive employment of children that one hears about—the hon. Member mentioned some, and I have a copy of research by the Evening Standard on such practices in London—are already illegal. The problem is that the enforcement measures are not sufficiently tight or rigorously applied. Therefore, I am more concerned about some of the Bill's provisions on hours of work, for example, than about those on enforcement. The hon. Gentleman is absolutely right to be attempting significantly to tighten up enforcement. I am not convinced that it is necessary to do very much about hours, other than to bring them in line with the European directive, as we are obliged to do.
  The hon. Member will probably take it from what I have said—I hope that it is understood—that I shall certainly not oppose the Bill. I hope that it will receive its Second Reading today and proceed to Committee, so that some of those issues can be explored properly.
  My principal concerns are about both the unintended and the intended consequences of the Bill. Among the intended consequences, clause 2 clearly stipulates—it could not be bolder—that only two hours can be worked on a Sunday. I respect those who, for religious reasons, maintain the view that Sunday is a special day and that two hours work should be the maximum. However, that view is no longer widely held and does not recognise what is happening in the real world, particularly in employment.
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  The hon. Member rightly said—I congratulate him on emphasising it—that children's work is not only about the retail delivery of newspapers but covers a vast number of activities. Some of those activities, such as jobs in supermarkets, can be done by children only at weekends. He has undoubtedly already thought seriously about the matter—otherwise it would not be dealt with in the Bill—but I ask him to think again about that two-hour Sunday limit.
  Perhaps we could simply say that no more than five hours can be worked on Saturday or Sunday, or that a total of seven hours may be worked over the weekend. It is too inflexible to stipulate a maximum of two hours on Sunday and five hours on Saturday, given the vast range of activities that are available to young people.
  Audrey Wise: Given the vast range of people available for work and unable to get it, starting with school leavers, why should retailers seek to have 13-year-olds doing that type of work?
  Mr. Paice: I certainly will not get into an argument about retailers' recruitment policies. We know that many retailers employ children below school-leaving age part time in filling shelves and other activities. If they are providing those opportunities, it would be unwise for the Bill to provide that children under school-leaving age—they may be 15 years or 15 years and nine months; they are all covered by the Bill—should not work more than two hours on Sundays.
  I very much hope that the hon. Member for Gravesham will think more flexibly on that limit in view of the vast range of activities available not only in traditional retail businesses but as a result of the widespread advent of Sunday markets—which, although I realise that they are the bane of many people's lives, are providing many work opportunities. Agricultural employment, which I shall deal with shortly, must also be considered.
  The Bill applies the same rules—adopting a blanket approach—to all children from 13 years to 15 years and 10 months. As all parents and teachers know, such an age range covers a vast range in children's development and abilities. I should much prefer the Bill to allow some variation in the maximum hours that can be worked, according to the age of a child. Clearly, it would be wise to apply the proposed 12-hour rule to children of 13, and perhaps it would be wise to apply it to children of all ages who are at school. However, I think that a 25-hour maximum during schools holidays would be too low for 15-year-olds. I should like the Bill to reflect the changes that children undergo between those ages.
  The Bill would repeal section 18 of the Children and Young Persons Act 1933, thus removing from local authorities the power to make byelaws covering the ages to which I have just referred. I am happy about that—I see that the hon. Member for Gravesham is grinning. I have nothing against local authorities, but the hon. Gentleman was right to say that we have ended up with a hotch-potch of byelaws across the country, whereas there should be standard rules. If we prevent local authorities from making those byelaws, we need to find another way to vary the age structure.

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  Clause 7 would allow the Secretary of State to vary the maximum weight that children can carry and
  "the types of physical, chemical and biological agents"
  with which they can work, and so on. It also states that the Secretary of State
  "may make different provisions for children of different ages and different types of work."
  If it is possible to allow for variations in types of work, I see no reason why it should not be possible to vary the number of hours that children can work at different ages.
  Schedule 2 would repeal the byelaws that, where applied, allow 13-year-olds to do light agricultural and horticultural work. That worries me. The hon. Member for Gravesham referred to the pulling of sugar-beet by hand. Many activities that were commonplace on farms in 1933 are no longer so today. However, there are still many light activities with which farmers' sons and daughters want to help, and are perfectly able to do so, at the ages of 10, 11 and 12. As I understand it, that would be illegal under the Bill because they would be under the 13 years of age threshold. That is very unjust. We are not talking about forced sweatshop labour; it is natural that farmers' children should want to be involved in the family's activities.
  When I had a livestock farm, I remember my sons at that age helping me to feed and gather in the sheep, to bottle-feed lambs and to do various ordinary but important little jobs—
  Mr. Patrick Nicholls: Collecting the eggs.
  Mr. Paice: My hon. Friend mentions the collection of eggs, but my hens did not seem to lay many.
  I appreciate that the definition has been taken from other legislation, but clause 19 defines work as
  "any tasks, duties or other work undertaken by virtue of a contract, whether express or implied and…whether orally or in writing, in connection with a trade or occupation carried on for profit"—
  profit is clearly the objective in owning a farm, although many farmers would say that there is not much profit in it at the moment—
  "whether or not the person undertaking the work receives any reward for his labour."
  I am not an expert in the interpretation of the law, but my understanding is that that definition would cover the activities to which I have referred. I hope that the promoter of the Bill will consider that point carefully and not adopt too blinkered an approach, if I may put it that way, to the 13 years of age threshold.
  I am wholly opposed to the exploitation of children, but some of the activities traditionally undertaken by children, even those below the age of 13, do not involve exploitation but may still be caught by the Bill.
  Dr. Nick Palmer: Does the hon. Gentleman accept that the European directive appears to be fairly explicit in this regard? Although virtually everyone would accept that a little private introduction to the family farm would not run into legal difficulties, if we attempted to define it in the Bill as a legal activity, we should run into trouble with the directive.
  Mr. Paice: That is a perfectly fair point. The European directive does not make specific mention of the case that
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  I have just outlined, but I hope there is a way to define work in the Bill so that the activities that I have just described are not caught by it. There are various ways to tackle such problems, and I am sure that it can be done without the head-on confrontation with the directive which the hon. Gentleman suggests.
  Why do children work? The hon. Member for Gravesham said that a child's income can often be an important part of the household's income. It is perfectly reasonable for hon. Members to be worried about that. This is probably not the right time to deal with that issue, but we should not blind ourselves to the fact that the children themselves value their income. We live in a society in which teenagers are besieged by advertisements that target them directly. Teenagers are presented with a raft of material goods that they ought to have if they are to be up with the times. They need much more money than I dare say most of us required when we were 14 or 15. It is unrealistic to expect many parents to provide sufficient pocket money to pay for the compact discs, clothes and other things that teenagers want. Therefore, we must recognise that it can be important for children to earn some money.
  The hours set out in the Bill are more restrictive than those under the European directive. My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) mentioned out-of-term work. The Bill specifies a maximum of five hours a day and 25 hours a week, whereas the directive stipulates seven hours a day and 35 hours a week. That brings me back to the point about ages.
  I entirely recognise the logic in saying that 25 hours a week is probably more than enough for a 13 or 14-year-old. However, a 15-year-old, who might have only a few months to go before leaving school, should be able to work longer hours. I hope that the 35-hour week specified in the directive could be incorporated into the Bill, especially given that the Bill provides a full two-week break, or proper holiday, which is perfectly right. In those circumstances, there is a case for arguing for a 35-hour week for older children.
  Audrey Wise: How long a holiday does the hon. Gentleman take? Is it only a fortnight?
  Mr. Paice: I am sorry that the hon. Lady wants to lower the tone of the debate to one of such stupidity. She knows perfectly well that the holidays in this place are very different from school holidays. I am talking about the two-week holiday specified in the Bill; I completely support that. Children are to be entitled to two weeks away from work; what they do with that time is entirely up to them. I am simply suggesting a maximum of 35 hours a week for 15-year-olds for the weeks other than the two when it is proposed that they should not be allowed to work.
  Part of my concern in that regard relates to what I consider to be one of the Bill's unintended consequences. I am thinking about the effect on the work experience, not jobs, effectively undertaken as part of a child's education. It is a matter for which I had some responsibility under the previous Government, who did quite a lot to improve the entitlement to one or two weeks' work experience during compulsory schooling and to make sure that it was far more effectively used. Instead

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  of young people sitting and watching for a week or being given a mundane sweeping job, we set out to make it a much more structured process, with clear outcomes demanded and continuous assessment. However, even that could be caught by the Bill unless there is a specific exemption. If the hon. Member for Gravesham were to say that he did not intend that to be the case, I would respect that. That is why I suggest that it is an unintended consequence of his Bill.
  The Health and Safety (Young Persons) Regulations 1997, which are clearly linked to the issue, certainly apply to work experience. I had the somewhat difficult task of working out how they should be implemented in respect of work experience for schoolchildren.
  We all understand the value of work experience and would not wish it to be jeopardised by the Bill. However, it seems clear to me that it would be caught, so I urge the hon. Gentleman to address that and the issue of a full working week. If a child of 15 is to undertake work experience, it has to be a full week, rather than the 25 hours proposed in the Bill. That is making the rash assumption that we are talking about out-of-term work. Actually, work experience usually takes place during term time, so it may well be caught by the 12-hour week. I suggest to the hon. Gentleman that a specific exemption for work experience may be an appropriate way forward.
  I have spoken for longer than I intended. I conclude by saying that it is unacceptable for young children to work very long hours or in onerous conditions, as it can damage their education and their health. Although we do not talk about it very much, it can also destroy their childhood, which is very precious and, in this day and age, is far too short for most of them.
  We must not believe that we can solve everything. Whatever we do, it will not stop every accident. It will not stop one item in the Evening Standard—the ubiquitous gangs of traffic lights windscreen cleaners, who are probably self-employed. However, we can make a difference. As the hon. Gentleman wrote in his article in the Parliamentary Review,
  "Much of this employment is wholly beneficial".
  That was slightly stronger than his speech this morning, but it is a perfectly admirable statement.
  It is the House's role to examine all the consequences of a Bill—not only the intended ones, which one can oppose or support, but the unintended ones, and to take an objective view on whether all those consequences are more serious and damaging than the principal objectives of the Bill. I do not believe that any of the consequences to which I have referred are insuperable—I am convinced that they can be overcome—but they are real and important. In wishing the Bill well, I hope that the hon. Gentleman will consider the points that I have made.
  10.32 am
  Mrs. Llin Golding: First, I should declare an interest as a trustee of the National Society for the Prevention of Cruelty to Children and a trustee and patron of a number of smaller charities which do such good work to help and protect children. Let me say how delighted I am to be asked to support the Bill and how pleased I am that my hon. Friend the Member
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  for Gravesham (Mr. Pond) has joined the many hon. Members who care passionately about the rights and needs of children.
  What image does the words "child labour" bring to mind? Is it the children of Victorian Britain sent up dark chimneys or down black mines—the children of the industrial revolution? Or is it children in the sweatshops of the so-called third world, tied to looms, held in debt bondage or working in dangerous factories in conditions of slavery? Whatever image it is, it will be one of overworked, underpaid exploitation. Although it has to be recognised that there are good employers, far too many working children in Britain, while not experiencing conditions as bad as those I have mentioned, nevertheless face unacceptable working practices.
  All of us present today are here to stand up for the rights of children. We know that we have the power to change things—and what better place to start than on our own doorstep? Many people react with disbelief when told that a large percentage of the 2 million working children in our affluent country are more often than not employed illegally, exploited and subjected to physical dangers. They may not be the dangers that we conjure up in our minds, but we must address them. It is more than time that the law was brought up to date to protect working children and, today, thanks to my hon. Friend's Bill, we have the opportunity to do so.
  There was a time when if children went to school at all, it was seen as an interruption of their working hours rather than a necessity or right. Later, when the Children and Young Persons Act 1933 was introduced, the difference between the minimum school-leaving age and the age when employment was allowed was very narrow, so the line between work and education was much clearer.
  Since then, the school-leaving age has been raised to 16, widening the gap and allowing children to seek an extended variety of part-time employment. As my hon. Friend said, sadly, the Employment of Children Act 1973, which was introduced to give local authorities certain enforcement powers, was never implemented. Although the Children Act 1989 stresses the welfare and educational needs of children, no effort has been made to implement the legislation, which would have taken into account the changed circumstances of the higher school-leaving age.
  We have been left with totally inadequate legislation that is hardly ever enforced or understood, and, for the most part, is ignored by employer, child, parent, school and local authority. As the my hon. Friend the Under-Secretary of State for Health well knows, in England and Wales the legislation rests with the Department of Health, the enforcement with local education authorities, and the responsibility for the employment of 16 and 17-year-olds with the Department for Education and Employment, under the employment section, because, under United Kingdom law, 16 and 17-year-olds are not children but young people. It all adds to the confusion, as the Minister will recognise. Indeed, only yesterday I received a letter from him about child labour, stating:
  "Full implementation of the Young Workers Directive in respect of adolescents will involve legislation being passed by DTI (in the case of most young workers) and the Department of the Environment, Transport and the Regions (in the case of sea-based young workers). A review of our reservation on Article 32 of the Convention will need to take account of the detailed implementation

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  proposals. The timetables for implementing both sets of regulations are currently unclear. Officials here are in contact with the two departments".
  No doubt they will need to be in contact with many more Departments.
  Hon. Members will note from my hon. Friend's letter that he does not intend to ignore article 32 of the United Nations convention on the rights of the child, which seeks to protect children from exploitation at work that would damage their health or education. Indeed, knowing his track record, I would not expect him to do so. Perhaps he will also see all this as a crying need for a Minister for children, or, at the very least, a children's commissioner. Perhaps the review that he has set up in respect of child employment will also consider establishing a complaints procedure for children, preferably with a children's commissioner.
  I also want to bring to the attention of the House a letter that a lady wrote to me in support of the Bill. She has three daughters, aged 17, 15 and 12. All have at some time been employed delivering papers six evenings a week. They live in a rural village. One daughter was paid £3.70 a week. Another, whose round covered a slightly larger area, was paid £5 a week. The third, who had a much larger area of delivery, was paid about £6.50 a week, because she had to go outside the village into the country on main roads without footpaths. The employer recognised the danger and decided to give her a little more money.
  One of the daughters also collected the money for the paper bills because it was more convenient for people further out in the country to pay in that way. If the paper bill was, for example, £2.76, she might be given £3, with the extra money being a tip. However, she was expected to take that money back to the newsagent, who decided whether she was entitled to the tip, or even a percentage of it.
  The mother recently found that the 12-year-old was working illegally, so she has stopped her. The newsagent should have known. This is a genuine case of dangerous exploitation of young people. As the Minister knows, cases of exploitation of children are almost never pursued. If the mother had taken the case to the local authority, it would have been able to do very little about it.
  I received another letter from a lady about the Children (Performances) Regulations 1968. She had encouraged her children to take part in amateur shows. They had got together with friends to form their own group. They enjoyed singing and dancing, providing entertainment for elderly people. They felt that they were making a contribution to the community. The lady said that there must be hundreds of children who do constructive things rather than going around terrorising their neighbours and experimenting with alcohol and drugs, and that we should recognise their work. She believes that the regulations are too restrictive and need to be updated for a modern world. They crush children's dreams, ambitions and enterprise. They must be reconsidered. Children need to be encouraged away from the television and computer games to use their talents and imagination in live performances. That gives them confidence to appear before people and knowledge of the world outside the home.
  I know of the Minister's long-standing commitment to children, and I pay tribute to his work to improve their rights. Even if the Bill does not cover all the issues that
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  need to be addressed, I am sure that he endorses its principles and will seek to bring forward an effective and enforceable Government Bill to prevent the exploitation of children.
  We do not want to stop children working—far from it. We want them to have the full protection of the law when they are at work. I whole-heartedly support this excellent and long-awaited Bill.
  10.42 am
  Mr. Archy Kirkwood: I am pleased to take part in the debate. I was honoured by the invitation of the hon. Member for Gravesham (Mr. Pond) to sponsor the Bill, and pay tribute to him for using the opportunity afforded to him to introduce it and for his model consultation exercise beforehand. Those of us who know him expected nothing less. He has given an excellent example of how to proceed. The House is indebted to him for that process and for bringing forward this important Bill.
  I join the hon. Member in paying tribute to the Low Pay Unit. From a Scottish point of view, I also pay tribute to the work of the university of Paisley in bringing forward some of the research that has led to the Bill.
  I was taken aback when I examined some of the background to the Bill. The Library briefing was particularly instructive. I did not know that the House had taken so long to revisit this important subject—the most recent deliberative examination was in 1933. A House of Commons that is too busy to examine such issues is too busy full stop. In anticipation of the establishment of a Parliament in Edinburgh in 1999, I think that decentralisation might reduce the overload of business in the House and it might not be such an unconscionably long time before we return to the issue.
  Even if the Bill achieves nothing else, the hon. Member for Gravesham has contributed to the important educational process of bringing the issue into the public domain and giving it the attention that it needs. I understand that there are some difficulties with the Bill. I hope that the Minister will say what the Government think about that. However, raising the issue has been an important service. The publicity that it has generated has forced me and many others to re-examine the matter. I hope that the Government will give the Bill careful consideration. It is important for a new Administration to review all such legislation carefully and prudently and come up with a coherent response. I do not know why the Government cannot accept the Bill in principle and promise to enshrine it in law. I do not know what that would cost them.
  I listened carefully to the hon. Member for South-East Cambridgeshire (Mr. Paice). I agree that those of us from rural constituencies have a different perspective from those representing places such as Islington, although I pay tribute to the work that the hon. Member for Islington, North (Mr. Corbyn) has done on the subject. He is right to keep our thoughts focused on the wider canvas, but half a loaf is better than no bread. None of the minimum standards set in the Bill preclude International Labour Organisation conventions in the longer term. I understand the hon. Gentleman's impatience and frustration. Improvements could be made in Committee to ensure more flexibility on the employment of children in a rural context. That is different from factory-driven sweated labour for 13-year-olds.

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  Getting the balance right is important. Knowing the hon. Member for Gravesham as I do, I am confident that he will be assiduous in paying attention to the detailed and balanced points that are being made today. Friday debates are more meaningful and constructive than many of our debates during the rest of the week. Flexibility and decentralisation are important, but the Government must make their position clear this morning. I hope that the Minister will give us an idea of the time scale that the Government have in mind on this important process.
  The framework should be set in a Europewide context. As the single market develops, it is increasingly important to establish common minimum standards for decent pay and safe working conditions for children. We must ensure that our European sister democracies are as assiduous as we are in enforcing framework rules. The European Union is ahead of us in legislating on the issue. It is a shame that we are behind. I hope that the Minister will use our current presidency to promote some of the ideas being discussed today to ensure common standards and levels of enforcement throughout the United Kingdom.
  The framework set out in the Bill is right. We must introduce a system of work permits so that the home, the school and the employer can agree about acceptable working conditions. The other half of the equation is a system of monitoring and enforcement that involves local authorities.
  The hon. Member for Islington, North said that, on the whole, local authorities have a poor record of monitoring enforcement. That is generally true. However, local authorities would say in their defence that Parliament is for ever laying duties and responsibilities on their shoulders. Local authorities' failure to fulfil those responsibilities is often due to not a lack of will but a lack of resources. It should not be up to the hon. Member for Gravesham to say that he needs hundreds of thousands, or even millions of pounds—I do not know what it would cost—because we all have a duty in this regard. I am not making a narrow point. It is all very well for Parliament to pass good and onerous measures, but if we do not will the means it is pointless trying to will the ends.
  Mr. Corbyn: The hon. Gentleman is absolutely right: unless we provide the finances that enable local authorities to carry out proper control and inspection functions, they will not happen. It is not that local authorities do not want to undertake those duties: they simply do not have the resources. Representatives of social services and child welfare departments from many local authorities tell me that they can barely cope with the statutory requirements for children at risk, never mind examining the plight of children who are being exploited in employment.
  Mr. Kirkwood: I thank the hon. Gentleman for that intervention, which reinforces what I have said. I am sure that the hon. Member for Gravesham is well aware of that fact, given his experience in this area. We join the Minister in seeking to win some extra resources from the Treasury—I am sure that he, with his powers of persuasion, is well able to do that. I hope that he will make that commitment—I shall certainly help him in any way I can.
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  I encourage young people to take on employment. I know that there are problems with poor working conditions, sweated labour and so on, but I believe that properly organised work in a controlled and safe environment is a positive experience for young people. It is important that the Bill be enacted quickly before the introduction of the minimum wage—which I support, subject to certain standards and safeguards. If we require employers to pay their employees a minimum of £3.50 or £3.60 an hour, unscrupulous employers or those at the margins of the law may be inclined to employ more young people in order to avoid their legislative requirements. Legislation such as the Employment of Children Bill was necessary before, but it is even more urgent now. It must be in place before the widespread implementation of the minimum wage.
  It is essential that the House takes steps to ensure that young people know their rights. The present rules are clearly a mess; the legislation has fallen into disregard, disrepute and desuetude. That is a matter of real concern. We need to establish clear rules and ensure that they stick. Everyone must abide by them.
  I support young people's right to participate in a positive employment experience during the school year. The hon. Member for South-East Cambridgeshire referred to work experience. My local authority in south-east Scotland is making positive use of work experience for young people, particularly during school holidays. I am sure that the hon. Member for Gravesham will take that matter on board.
  I found my experience in preparing this Bill very beneficial. I did not appreciate the extent to which young people work in this country: 2 million children are a huge part of our young population. I did not realise that the laws of the land were in such a bad way. It is essential that we recognise that conditions have changed completely since 1933. The Sunday experience is one example. The social outlook regarding Sundays, particularly in areas such as mine, has changed dramatically.
  The House must seize this opportunity: the moment is right to change the legislative process. Whatever happens to the Bill, I hope that its principles will be enshrined in legislation. I hope that some responsibility will remain in the hands of the hon. Member for Gravesham, whose track record in this area is second to none. He came to the House with a reputation as an acknowledged expert in this field, and I do not believe that there are many advisers in the Department who know as much as he does about this subject. The House should recognise that fact. If we do not seize this opportunity now, the Minister will have to offer a pretty convincing excuse for delaying or for refusing to accept the proposals. It is my great privilege and pleasure to support the Bill.
  10.55 am
  Audrey Wise: My hon. Friend the Member for Gravesham (Mr. Pond) talked about illegal employment, and we join him in deploring that. However, I do not wish people to think that simply legalising work or allowing legal work to continue will make everything all right. Even if the Bill were enacted and fully enforced—and that is a very big "if"—we would still be looking with equanimity at appallingly long working hours for children.

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  A child's workplace is, and should be, the school. We should view 12 hours' paid employment not in isolation, but in the context of the school week, having regard to homework and the extra demands that are placed on children all the time. A legal 12-hour working limit would simply confer respectability on an excessive practice. A 13½-year-old child in my constituency who attends a typical high school has a 32½-hour school week, with six hours of homework plus possibly 12 hours' legal work. That is not good enough. It amounts to a 50½-hour working week for a 13-year-old.
  We are told that half a loaf is better than none—I do not see why, in 1998, we must talk in terms of half loaves when it comes to the protection and development of our children. A child of 13 must do his work at school while he is developing physically, mentally and emotionally. Labour Members are completely convinced of the correctness of the maximum 48-hour working week for adults, yet we are proposing 50½ hours' work for a 13-year-old.
  A 15-year-old attending a typical school in my constituency—it is not a particularly pushy school, but a normal school which seeks to bring out the best in its pupils—would have 15 hours of homework. If that 15-year-old were also employed for 12 hours, it would increase his working week to nearly 60 hours. I do not see why we should head down that road in 1998. It is not good enough to say that it is a step in the right direction or that half a loaf is better than none. It is not I who would be eating that half loaf: it would be the youngsters. I believe that they should have a full loaf.
  I am one of the few hon. Members whose working life started at 15 years of age. I am not talking about a holiday job, but a proper job. I did not have to go to school and work 40 hours or more on top of that: my working hours as an employed 15-year-old were a lot less. My work gave me opportunities to develop physically and intellectually. We should not be satisfied with talk of steps in the right direction.
  My hon. Friend the Member for Gravesham rightly referred to the extent of illegal working, but employers get away with it because the present laws are feeble and are not enforced, and the penalties are inadequate. Can we be sure that this legislation would be enforced? I think not, especially as no extra resources would be provided. My solution to the problem is simple. We should enact legislation in line with International Labour Organisation convention 138, which would prohibit employment of children under school-leaving age. That would be infinitely easier to enforce.
  The Bill is incredibly complex. It contains lists of what is and is not permitted. Incidentally, I am not sure why it is thought that waitressing is light work and suitable for a 13-year-old. It is a very hard job, as is car washing. The proposed enforcement and licensing system is complex. If we cannot enforce present laws, I do not see how we shall enforce these provisions. It would be much easier to enforce a simple adherence to ILO convention 138.
  The Bill could affect the relationship between home and school. My hon. Friend the Member for Gravesham pointed out that some kids have to supplement the family income, and that the only worker in some families is a 13-year-old. Under the Bill, if the school thinks that work would interfere with a child's education, it should not agree to a work permit. That would put schools in a
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  delicate position in their relationship with parents. Schools are already pressed and have suffered staff cuts, so they are in no position to undertake this addition to their work.
  I am sceptical about the Bill for the child's sake. I also do not approve of children being used as cheap labour. At a time when 16-year-olds cannot obtain work, why should 13-year-olds be so eagerly sought by employers? The answer is that they are cheap. If there is so much work to be done that we need the labour of 13-year-olds, 14-year-olds and 15-year-olds, who already have full-time school work, why are 16-year-olds unemployed? Even the welfare-to-work system, which I support, does not come into operation until the kid has been unemployed for six months. That is an implicit acknowledgement of the level of youth unemployment. There is youth exploitation through the use of cheap labour of 13 to 15-year-olds, and youth unemployment after the age of 16. That is an untenable situation. Kids should not be exploited as cheap labour when their proper work is at school. I do not accept that working excessive hours is character building; nor should we excuse it, given the extent of adult unemployment.
  The Bill's complexity is not my hon. Friend's fault: it is bound to be complex because it tries to reconcile impossible and contradictory objectives. It tries to protect children while allowing them to work far too long and be a supply of cheap labour. I agreed with a great deal of what my hon. Friend said, but I was disquieted when he explained that the 12-hour limit was carefully chosen to allow two newspaper deliveries and another job at weekends. That is not the way in which to decide how many hours our children should work.
  I hope that the Government will review the current position, and will decide that we should have higher ambitions for our children than half a loaf. I also hope that the suggestion of my hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) about a children's commissioner will be pursued. A children's commissioner is an overdue addition to our protective mechanisms. I commend her for introducing that concept into the debate.
  Having expressed scepticism about the Bill, I urge the Government to undertake a thorough review with the objective of preventing employers from using our children as cheap labour, to their detriment.
  11.5 am
  Mr. Nick St. Aubyn: I listened carefully to the debate. It is possible warmly to applaud the principal objectives of the Bill while questioning the practical results of its passing into law. The hon. Member for Gravesham (Mr. Pond) reminded us that he used to work for the Low Pay Unit. He used to campaign for the principle of a minimum wage. Although we may applaud the aim of eliminating exploitation at work, we should question the practical results of the minimum wage legislation currently before the House, and of this Bill if it is not subjected to rigorous scrutiny.
  We must ask ourselves why the Children and Young Persons Act 1933 has been in force for such a long time. It was W. C. Fields who said:
  "Anybody who hates children and dogs can't be all bad."
  It is not because we hate children that we have neglected this area of the law. In fact, I would say that we love children almost as much as we love dogs. As the father of five, I do not want to neglect the needs of children.

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  Not only parents, but teachers, social workers and responsible employers are involved in looking after the interests of children in work. The hon. Gentleman said that much of that work is wholly beneficial. He did not say why, so perhaps I can help him. Work induces self-esteem in children. Teenagers in particular need to develop self-esteem. Earning money by their own efforts, which they can spend on their family, on their friends and on themselves, is undoubtedly one of the most powerful ways in which to earn that self-respect outside the academic field. Work experience may play an important part in helping children who are not academically gifted or inclined to mature.
  Given that background, it is right that we should question the benefits of the Bill in terms of cost. I agree with the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) that there is no point proposing the Bill without a clear idea of the costs involved. I am a member of the Select Committee on Education and Employment which has been examining the costs of further education colleges' franchising training programmes. Even in the most franchised programmes, the cost to the educational establishment is at least £20 per place. It would be naive to assume that the cost of administering permits for LEAs would be less than £20 per child.
  We have been told that nearly 2 million children are currently in work in this country. One must assume that the permits would have to be renewed annually, so we are talking about a minimum cost for the LEAs of £40 million a year to introduce the Bill. To put that in context, that is the same amount as the Government tell us they will have to spend to reduce primary school class sizes for early years to a maximum of 30 per class. Clearly, that is a significant cost and we have to ask what benefits will be achieved.
  The hon. Member for Gravesham mentioned the distressing fact that one third of children who work are involved in accidents, and that one third of those require medical attention. More than one in 10, therefore, are involved in an accident of concern. It would be helpful to put that into context. How many of those children participate in games and sports? How often do children participating in such activities risk serious accidents and, unfortunately, sometimes suffer serious accidents? It is a fact of growing up that children are exposed to risk, and it is part of the maturing process that they have to learn to cope with that risk. In dealing with truly threatening situations—which all of us want to see eradicated—is it really right to adopt the ideas of the Bill in terms of regulation and the excessive use of officialdom?
  Many people are involved in the welfare of a child. If the 1933 Act had been so neglectful of the needs of children, we would by now have seen a campaign in the press—built around evidence of sweatshops, abuse and children at risk—which would surely have had an impact on the House at some point over the past 60 years. The fact that that has not happened suggests that the isolated cases that the hon. Member for Gravesham cited—distressing as they are—are just that: isolated. If he has more convincing evidence, he should present it. It would help to convince those of us coming to the debate in a spirit of constructive criticism and it would also help him
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  to convince the Minister that those tens of millions of pounds are needed to implement the Bill to achieve the objectives which, in the long run, we all share.
  We are told that those at work in this age group comprise one third of those at work across the whole of Europe. I know how diligently our European partners compile their statistics, but one has to question whether, in this case, greater regulation in Europe has not merely resulted in there being more hidden employment of children in that age group in those countries. Is it desirable to move to a situation where the problem is driven more underground, rather than to have a clear idea in this country of what is going on?
  If a child is coming to school looking tired, inattentive and unable to take part in lessons, it is to be expected that the teachers involved will raise this with the parents and, in some circumstances, the social services. If more resources are needed in that area, surely that would be a more direct and effective way in which to bring pressure to bear.
  Judy Mallaber: I am puzzled by the hon. Gentleman. He seems to be suggesting that there should be no rules and prohibitions at all as they would be far too expensive to enforce. He thinks that we should let the matter lie, as clearly there is not a problem if it is not reported. We would argue that there is a problem because we do not have enforcement, and that there is such a confusion of byelaws that it is hard to see which rules are necessary. Can he enlighten me on whether he thinks there should be rules and enforcement?
  Mr. St. Aubyn: I hope that the hon. Lady knows me well enough by now to believe that I favour regulating the matter. The question is how much further we should regulate to improve the situation, and whether the costs are justifiable and obtainable from the Minister and his Department. If we end up creating a new burden on local authorities without providing them with the money to pay for it, the Bill will be neglected or other vital duties of councils will suffer.
  It is entirely consistent to applaud the principles behind the Bill while questioning its practical results. We must ask ourselves why the Bill proposes that there should be no work between 7 pm and 7 am when the European standard is between 8 pm and 6 am. Over one third of those children identified in surveys two years ago were working before 7 am, and half were working after 7 pm. Clearly, we want to ensure that children are safe, but, as I have explained, we have to recognise that children will take risks in their lives. It is for the hon. Member for Gravesham and his supporters to justify this tighter limit, which will clearly have an impact on more than three quarters of those currently employed in that age group.
  Why has there been a change in the wording in the Bill compared to the 1933 Act, which was carefully drafted to ensure that those involved in activities such as babysitting would not be affected by the legislation? The Act refers to work in terms of a person
  "who assists in a trade or occupation"
  undertaken for profit. The Bill proposes a new definition—no doubt taken from good legislation, but not in this context—and refers to tasks and duties
  "in connection with a trade or occupation carried on for profit".

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  Is there not a risk that someone will argue in the not-too-distant future that someone going out to work in their own business who engages a babysitter to look after their children will be engaging that person "in connection with" their business? I am not a lawyer, but there is a risk in changing the definition.
  The Bill goes further, in terms of limiting the hours. If a child who undertakes a full newspaper round has a stable at home with a pony in it, and the child spends five hours looking after that pony, that extra work is not covered by the Act. If, however, the child is fond of ponies and goes to the commercial stable up the road and asks to help—for free and in the child's spare time—to look after the ponies, the child will have to be turned down under the Bill as it is drafted. The people running the stables will have to say, "I am sorry. Even if I let you do this for love, I will be breaking the law and will be risking a fine."
  Clearly, there may be ways in which well-intentioned legislation can have the opposite results to what is wished. Minimum wage legislation could lead—and, no doubt, will lead—to job losses. The Bill may lead not just to protecting the few—with which I agree—but to denying many more children the opportunity to gain self-esteem and to find their way in the world through valuable work experience.
  11.19 am
  Mr. Kelvin Hopkins: I very much welcome this debate; we are indebted to my hon. Friend the Member for Gravesham (Mr. Pond) for using the opportunity that he won in the ballot to bring this issue to the Floor of the House. I am pleased to follow my hon. Friend the Member for Preston (Audrey Wise), with whom I very much agree.
  All hon. Members will deplore the exploitation of children at work. We know that, in some countries, children work hard and long in appalling conditions, sometimes bonded for repayment of debt, invariably receiving pitiful wages and suffering ill-health and poor life expectancy as a result.
  If we are effectively to challenge such dreadful exploitation, we must first put our own house in order by ridding Britain of illegal child labour and by setting the highest minimum standards for our young people. Indeed, I would go further and say that we should constrain and restrict the extent of child labour in general.
  Children must be protected from the dangers and disadvantages of illegal, unsafe and unhealthy employment and, if they work, they should be properly paid. The Bill raises many of the issues that need to be addressed, but I do not believe that it provides the protection and standards that we should expect and demand. Other hon. Members have dealt with specifics, and I add my concern to theirs. I believe that we need much stronger legislation than the Bill.
  Like the Government, I am especially concerned about education. We have become aware that our schoolchildren have not been achieving as well as they should; their achievements compare unfavourably with those of schoolchildren in other developed nations. Moreover, there is a wide diversity of achievement in schools, which reflects the fact that the advantages of affluence and the disadvantages of poverty are key factors in education.
  696
  Poverty is a root cause of many of our problems, including educational under-performance. The gulf between rich and poor is greater in Britain than in most other developed countries, and much greater than in some. The proportion of those living in poverty is much higher, in relative and absolute terms, in Britain than in continental Europe, for example. Educational weaknesses mirror those disparities in wealth.
  It is not surprising, therefore, that so many youngsters seek employment to bring in more money. If their parents have little money to give them, children want to gain more through work, which is often illegal, usually excessive and poorly paid, and sometimes dangerous and unhealthy. Significantly, that work is always tiring; children go to school weary and unable to take full advantage of what educational opportunities they have.
  The fact that 30 per cent. of all working children in Europe are British is a scandal. These children, usually from the less-well-off families, perform less well in education and go into poorly paid work—if they can get it—when they leave school. The cycle repeats itself with their own children.
  In my schooldays, my parents did not let me do a paper round on weekdays in school terms, but my family were comfortable, and extra money was not a problem. I do not know whether my education benefited, but I would certainly have done less well in school and been less able to concentrate and learn if I had trudged into class after a long paper round. The option of not working as a child is less attractive to the less well-off, especially, I would guess, to the children of single parents.
  In dealing with children's employment, we must address two issues. First, there must be laws to restrict and regulate child labour, with minimum standards defined and enforced. When I read the Bill, I had a strong impression that it was too weak and that the proposed standards were too low. I ask Ministers to consider seriously what standards would be appropriate—mention has been made of the International Labour Organisation convention 138, which could be a starting point.
  Secondly, we must address the more difficult question of poverty, low incomes and inequality which underlies so much child employment. Poverty in Britain is a national scandal which the Government must tackle. A sufficient minimum wage, decent benefits and, above all, a return to full employment are essential. We must consider measures to ensure income redistribution during the Government's term of office and beyond. Tight regulation, high minimum standards and the elimination of poverty would put an end to the exploitation of children. We owe it to them to succeed in those objectives.
  The hon. Member for Guildford (Mr. St. Aubyn) referred to the self-esteem that children derived from employment. I suggest that they work more for money than for self-esteem, although they might derive from work some self-esteem that they do not get elsewhere. That is not the point, however. Children should derive their self-esteem from success in education and from success in later life, which depends on good education.

  697
  Their education must come first; work must take second place. We should restrict child labour to the very minimum and encourage children to study at school.
  Mr. St. Aubyn: Surely the hon. Gentleman recognises that some children are not academically inclined. If the whole focus is on academic achievement, it will be hard for such children to learn that principle of self-esteem.
  Mr. Hopkins: I do not agree. Low self-esteem and low performance at school is characteristic of our society; in effect, we tell a large number of young people, "You're not going to succeed in school, so don't bother." I believe that all children, at whatever level, should be able to achieve their maximum potential. That means that we must focus on their education. If they are failing in school, we should give them extra resources and attention; we should not send them out to work or, as my hon. Friend the Member for Bolsover (Mr. Skinner) would say, give them a brush and stick them up a chimney.
  11.25 am
  Mr. Paul Burstow: I congratulate the hon. Member for Gravesham (Mr. Pond) on initiating this debate and on introducing the Bill. I shall briefly outline the views of Liberal Democrats on this very important topic.
  I agree with the hon. Member for South-East Cambridgeshire (Mr. Paice), who said that, all too often in the House, we take the view that, simply by enacting legislation, we can transform things—we believe that we can do far more to solve problems than we actually can. Nevertheless, as the hon. Gentleman recognised, we can make a difference through legislation, although we should not exaggerate what we can achieve.
  The legal framework covering child protection in employment dates from the 1920s and 1930s—the era of William Brown and his schooldays. In reading up for the debate, I was interested to note that child protection was only a small part of the purpose of the Children and Young Persons Act 1933, which dealt primarily with criminal justice issues. I am sure that William Brown would have been delighted to know that Parliament decided, at that time, to abolish the whipping of children under 14. That gives us an idea of how far things have moved on—or, at least, how far we hope we have moved on.
  I also noticed, in preparing for the debate, how often such issues are debated in the House because of a private Member's Bill rather than Government legislation. Although I welcome the fact that the hon. Member for Gravesham has promoted the Bill, I hope that the Government will introduce their own legislation. I await with interest the Minister's response today.
  The debate helps to keep child employment on the public agenda. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) rightly said that the fact that so long has elapsed since Parliament legislated in this area is disquieting. A number of concerns need to be addressed. Four out of 10 children in Britain currently do some form of work. Seven out of 10 working children work illegally. That must be a cause of concern to the House.
  698
  The MORI survey commissioned by the Trades Union Congress in 1996 revealed that 20 per cent. of 11-year-olds and 23 per cent. of 12-year-olds were working illegally, as current legislation provides for a minimum starting age of 13. Four out of 10 worked before 7 am and half the children polled worked after 7 pm, both of which are illegal.
  The Liberal Democrats do not want to stop children taking the opportunity to work, as it gives them a sense of independence and responsibility—for example, independence of an over-reliance for entertainment on the television, the internet and computers. However, work must not inhibit a child's learning, and his schooling and family life must not be sacrificed or put at risk.
  Interestingly, the work of the Low Pay Unit demonstrates that the work being undertaken by young people is very diverse. We are not talking merely of paper rounds and of earning pocket money. For many children, it is about supplementing the family income.
  The problem is not only the age of the legislation. The legislative framework is there and, arguably, could be made to work. The Employment of Children Act 1973—a private Member's Bill that was enacted—provided a way forward. The Minister is not in his place at the moment, but perhaps I shall have a chance to intervene on him later to ask why the 1973 Act was never implemented and why the Government will not take the opportunity to review it, to enable it to be used. As the excellent Library briefing demonstrates, the Act provides a route through regulation, which would enable considerable tightening of the law without the need for lengthy review and the process that I am sure the Minister will outline. The Government have a tool available to make a difference.
  A serious issue is compliance, by children, parents and employers, as well as the other agencies that have a responsibility under the legislation. To echo something that several hon. Members have said, including my hon. Friend the Member for Roxburgh and Berwickshire, when passing such measures, we must be mindful of the fact that by imposing new duties, particularly on local authorities, without giving the necessary additional resources to do the job, we shall be imposing burdens that will ultimately result in the authorities not doing those things, choosing not to do other things that they already have a duty to do or cutting other services. Local authorities are already under pressure and we must be mindful of that fact when we deal with such legislation.
  Non-compliance is the most crucial issue. Why is there non-compliance? Is there a mass movement of civil disobedience against the 1933 Act? I think not. Sadly, non-compliance has much more to do with complete and utter ignorance of the existing legislation, on the part of not merely the public at large but those in authority at a local level and those acting as employers. Some of that ignorance may be wilful, but much of it is because of the lack of available information to make people aware of their obligations. Therefore, awareness raising and information must be an important part of this debate, the Government's response and the way in which we proceed.
  The European Union directive seems to provide a basis for moving forward, and the Government are reviewing matters to find out how they can bring it into our law. I should be interested to hear from the Minister how soon that will be. We have been told that it should be by the end of this calendar year.

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  This debate is a useful way to increase the awareness of the House and the general public. The previous Government sought a number of opt-outs from the EU directive, and we have heard arguments from Conservative Members that the problem is not that great, so there is no need to legislate for change. The evidence presented today and much of the other evidence supplied to us in the form of briefings demonstrate that there is a problem and a need for action.
  The hon. Member for Gravesham made a powerful case for the Bill. Having the chance to work is valuable to children, and we must ensure that we do nothing to prevent employers from offering them legitimate opportunities to work. The legal framework is 65 years old today, and it is 66 years since the previous Second Reading debate on such legislation, which is an incredible period of time. At the moment, the law makes 1.75 million children into law breakers. For that reason, we welcome the Bill as a way of raising some important points with the Government and promoting reform. The detail of the Bill will need considerable scrutiny, for the reasons mentioned by hon. Members on both sides of the House, but we wish it well and hope that the Government will respond positively to its measures.
  11.35 am
  Mr. Paul Goggins: I congratulate my hon. Friend the Member for Gravesham (Mr. Pond) on his choice of child employment for his Bill and on the eloquent way in which he opened the debate. Given his years of campaigning against low pay and on employment issues generally, he must be satisfied to have produced a Bill that will strengthen the protection for children at work.
  Perhaps the most important function of Parliament is to afford protection to those who are not always in a position to defend themselves. We have a special responsibility to protect children. I sincerely hope that the Bill and the arguments advanced today will help to strengthen substantially the safeguards for children who work.
  I am pleased that, in the main, we have not been talking about children who take on small tasks to earn a little extra pocket money. We all know youngsters who go baby-sitting or clean cars—indeed, some hon. Members, including myself, have children who do so. I agree with my hon. Friend that excessive work is not character-building for children, but, at the right time and place and with the right controls, a little work of that sort can help to foster self-reliance and a sense of maturity. At that level, it is to be welcomed. What is not welcome is the exploitation of children at work, and the Bill would remove such exploitation.
  Britain has long-standing legislation to prohibit children from working in certain locations and to impose age and time limits. All that the Bill seeks to do is what the Government are pledged to do in so many other areas of life—to modernise, humanise and move towards conditions that are appropriate for the new millennium.
  We have heard about research findings on the issue, and I have further evidence that reinforces the general picture. A couple of years ago, the Greater Manchester Low Pay Unit—an excellent organisation which offers expert advice to low-paid people and vulnerable workers—carried out research in the Manchester area to find out how many children are in part-time work. In a
  700
  survey that included a substantial number of 13, 14 and 15-year-olds, it found that nearly half were doing some form of paid work. Just over one third were involved in some sort of delivery work, typically milk and newspaper rounds, and one fifth were regular baby-sitters. However, I was more disturbed to find that nearly one third did shop work, waiting, manual labouring, catering or contract cleaning. I agree with my hon. Friend the Member for Preston (Audrey Wise) that that work is more appropriately done by adult workers, particularly unemployed adults who are desperate for work.
  Many of those jobs are done illegally, either because they are deemed by law to be unsuitable or because of the hours. Interestingly, the unit found that few children worked more hours than they were supposed to, but large numbers either started too early or finished too late. About 40 per cent.—nearly half—worked before 7 am and 30 per cent. finished after 7 pm. Also, 70 per cent. of the working schoolchildren polled in the Manchester survey earned less than £2 an hour, with one sixth receiving less than £1 an hour. It is a source of great concern that some 30 per cent. of those surveyed claimed to have started work before they reached the age of 13, another clear breach of the law.
  As hon. Members have said, passing laws is not enough. Parents and employers should exercise proper responsibility and ensure that children are not employed in illegal circumstances. It would be much better for all concerned if the Bill were passed into law and the Government gave a strong lead by backing a tough approach and encouraging more rigorous enforcement.
  Much is already being done to improve the situation. I welcome the Government's commitment on the European directive and the signs that they understand that further improvements are necessary, but it cannot be left to local authorities to police the system. They have an important role to play, but the strong message from the debate is that they will require substantial further resources to do it. They must be given a strong lead nationally.
  I wish to emphasise two aspects of the Bill further. First, I applaud the provisions in part II that make transparent the obligations of public authorities, employers, schools and parents. The proposed work permits offer the prospect of an approach altogether more rigorous than the current system of registration. That would assist public authorities to police and monitor the system and in ensuring a proper and helpful relationship between a child's welfare and progress at school and his or her eligibility to undertake part-time work.
  Secondly, I strongly support the strict limits on Sunday working. The previous Government favoured greater deregulation, but I believe that that would be a grave mistake, not for reasons of religious observance, which are a matter of personal choice and belief, but in the interests of family life. There is great anxiety about family life, and to reinforce Sunday as a regular family day would help us all. Sunday is also a day for ensuring that homework is finished and that proper preparations are made for the week ahead.
  The exploitation of children, whatever form it takes, is unforgivable. I hope that today marks a turning point in the protection of children at work. A small amount of the right sort of part-time work can be a positive

  701
  additional activity for children, but their main task is to learn, and our principal duty is to protect them. The Bill will help us to fulfil our part of the bargain.
  11.41 am
  Mr. Crispin Blunt: There is no doubt that it is proper to have regulation and legislation to protect children. The hon. Member for Gravesham (Mr. Pond) is to be congratulated on introducing the Bill, because one great problem is ignorance of existing legislation and regulation. That is why so many of the people who employ children are in violation of the laws and regulations as they stand. However, in seeking to address that problem and the inconsistency of regulation across the country, with local authorities having different byelaws which they largely do not enforce, the Bill, as currently drafted, goes too far. It is a classic case of overcorrection.
  People who take systematic advantage of children in the workplace will be in breach of any standard that hon. Members could happily enact. The system of licensing proposed in the Bill will not address the central problem of people taking advantage of children in employment. Hon. Members have already spoken about the burden of licensing. My hon. Friend the Member for Guildford (Mr. St. Aubyn) mentioned a figure of £40 million. The hon. Member for Sutton and Cheam (Mr. Burstow) pointed out that if additional burdens are to be placed on local authorities, resources must be made available to them.
  The licensing regime proposed in the Bill will cause worse problems. I do not believe that many local authorities, as they are currently managed, are capable of managing a licensing regime that could produce licences in four weeks. Employers who wish to behave properly and get licences will apply for them but find that, after four weeks, the opportunity that they have given to a child to do some part-time work must end because they have not received a licence. Many employers who wish to employ children on paper rounds or whatever will not bother to try to get licences. We shall drive out of the area of regulation probably the majority of people who want to give opportunities to children. That will have two effects. First, people will say that it is not worth going through the burden of trying to get a licence. The opportunities for children to do paper rounds, or other work that the House agrees that they should be able to do, will disappear. Secondly, employers who do not get licences will be in violation of the standards. They might as well be hung for a sheep as a lamb, so there will be greater abuse of children.
  The proper way to regulate is to establish standards in the House, and there are some points on standards in the Bill. It should then be for police and local authorities, in the normal way, if cases are brought to their attention, to prosecute people guilty of abuse. If we overlay the matter with a massive regulatory regime involving every local authority, we shall bring it into disrepute. We want to identify the people who take unfair advantage of children beyond the standards that we set, and then properly prosecute and punish them. Such behaviour is so scandalous that there is a clear case for them to be properly punished with serious penalties in the courts.
  702
  The hon. Member for Luton, North (Mr. Hopkins) saw the priority wholly in terms of education. I agree with other hon. Members that training and work experience are an important part of education. The opportunity for children to work should be encouraged, in a part-time way at the margin, as they grow towards adulthood, as part of their education and of preparing them for adult life.
  Mr. Hopkins: Will the hon. Gentleman distinguish between child employment outside school hours and work experience as part of the curriculum in school hours?
  Mr. Blunt: I agree that work experience in school hours is welcome, but I would not want to deny work experience to children who want to take opportunities for it on their own, outside school hours, organised by people outside schools and the formal education system. There is a role for more informal experience outside the school authorities.
  Mr. St. Aubyn: Does my hon. Friend agree that there are some children who are antipathetic to school for whom it is important to have experiences that are not related to school? If everything that they do is tied to school, it might be counter-productive and serve only to antagonise them in regard to the process into which we are trying to pull them.
  Mr. Blunt: My hon. Friend makes an important point. We should be seeking to enrich the experience of children in the sense of horses for courses. All children are different and develop in different ways. For some, work experience might be more important than formal education. We should not try to establish set standards to try to force children to fit a particular framework. I fear that the Bill's licensing regime will significantly reduce opportunities for child employment, while imposing standards honoured in the breach rather than the observance.
  I agree with my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice), who referred to the rules governing the two-hour limit on Sundays. That, I think, is out of date. It would be better to regulate for an overall length of time that could be worked over weekends, and to allow parents and children to judge for themselves how that should be split between Saturdays and Sundays.
  11.49 am
  Mrs. Christine Butler: I, too, congratulate my hon. Friend the Member for Gravesham (Mr. Pond) on presenting such an important Bill. The debate is indeed timely, after 66 years. I was amazed to hear the comments of some Opposition Members, who seemed only to want a deregulatory regime.
  Let us refocus on the main issue, which is the vulnerability of children who may or may not be employed, legally or illegally, in today's Britain. They are vulnerable because they are young: because they are young, they are all too easily exploited. That is central to the Bill, and we should not forget it.
  I welcome the Bill. I should like it to go further and to be broader in its scope, but I understand the reasons behind it. It is not dramatic; it does not ask for a great deal. It simply suggests that there should be a better regulatory framework—a framework that is consistent

  703
  across the country, that is better enforced and that protects the welfare and well-being of young people more effectively. For the purposes of the Bill, children may be defined as those who are under the upper school leaving age limit. I also welcome the Government's proposed review, which I believe is already under way. I hope that it will be all-embracing, and that it will go beyond the Bill in increasing protection for children at work.
  I accept that we must consider the technicalities, but I denounce the way in which some Opposition Members gave technical reasons for not supporting the Bill—or, indeed, the principle of the Bill. I abhor that, because I think that we should all support the principle.
  Mr. Blunt: I have heard no Opposition Member oppose the principle of the Bill. Opposition Members are keen to make legislation and regulation effective, respected and known about, and for that legislation and regulation to work.
  Mrs. Butler: That is not how I understood the comments of Opposition Members, who argued against nearly all the Bill's proposals and seemed to want provisions that had more to do with the free market and deregulation. They support the interests of children, however, and the two positions strike me as incompatible. Perhaps it is up to those who will wind up the debate to explain: I shall be interested to hear what my hon. Friend the Minister—as well as the Opposition spokesman—has to say.
  I should like all employers and putative employers of children to be licensed or registered, although dialogue between home, employers and school is essential, whatever precise form it takes. It is never too soon to start talking about the issue. Indeed, let us start now: let us not wait until the end of the year. I want to see a significant improvement in registration, consistent across the country. Employers should be certified as fit and proper people to employ children, and should be able to convince authorities that conditions in the workplace are suitable for children. Such an extra provision in the Bill might mitigate some of the complexities involved in processing permits quickly. At least parents, children and councils would know who were likely to be fit and proper employers, and which establishments had suitable conditions. That is the main point that I wanted to make.
  I agree with all who have said that our main concern should be children's health, welfare, training and education. I could not disagree more with Opposition Members who suggested that training and education could take place in a laissez-faire context. I have much sympathy with my hon. Friend the Member for Preston (Audrey Wise), who referred to the ILO agreement and suggested that we should prohibit all child employment; but I know from my experience as a parent, and my experience of other people's children, that many children would be aggrieved if we were too prescriptive and prevented them from taking part-time work on a reasonable basis that could be properly regulated. That is the crux of many of the Bill's provisions. We have no such enforcement now; we seem to have a complete disregard for, and almost complete ignorance of, the current legislation. It is entirely ignored, and I was not aware of the details until a short time ago.
  Ms Ruth Kelly: Is not one of the reasons for the high level of non-compliance with the law
  704
  a basic ignorance of that law? There is some national legislation, but there are also hundreds of byelaws. I have a particular interest, because many of the towns and other areas surrounding my constituency have non-compliance rates of up to 98 per cent. Does not the Bill give us an Important opportunity to simplify and standardise the legislation?
  Mrs. Butler: I entirely agree.
  As I have said, I support the Bill, and welcome the Government's decision to conduct a root-and-branch review of all aspects of child employment. I hope that we shall have a more enforceable and simpler regime that will do more to protect our working children. I commend the Bill, with the proviso that the Government should do their work. I hope that we shall hear from them before the end of the year, following what my hon. Friend the Minister says today.
  11.58 am
  Mr. Jeremy Corbyn: This has been an interesting and important debate. The Bill of my hon. Friend the Member for Gravesham (Mr. Pond) gives us the opportunity to debate the issues of child labour, which were discussed in the previous Parliament only in Adjournment debates; I presented a private Member's Bill, but it was not debated. I should declare an interest: I am chair of the Stop Child Labour campaign in Britain, and my hon. Friend the Member for Preston (Audrey Wise) is its vice-chair. The purpose of the campaign is to ensure that International Labour Organisation convention 138 is enacted into British law: we have made that clear in an amendment to early-day motion 712, which was tabled by my hon. Friend the Member for Gravesham.
  Child labour is an appalling problem world wide. Millions of children throughout the world are denied any education because they are forced to work in rice fields or in factories that make training shoes or toys. Many children in Pakistan are slaves. We use the euphemism "bonded labour"; it is, in effect, child slavery. Child slavery and child sex slavery exist in many parts of the world.
  The whole purpose of the international conventions is to protect children in the most dangerous and vulnerable situations. If we insist as a country, as we rightly do, that United Nations, International Labour Organisation, World Health Organisation and other conventions should be agreed or imposed world wide, the least we can do is ensure that all those conventions apply within the terms of British law. We should not ask for exemptions for ourselves when we condemn other countries that seek exemptions which mean that children are grossly exploited.
  Once a huge number of children are employed in a disgraceful and dangerous situation, as they are in many parts of the world, the interests of the employers are not to ensure that those children are well paid, well regulated and protected, but to oppose education authorities and others who try to get those children to leave work and go to school. The struggle against child labour in the 19th century was often with neanderthal factory owners who opposed compulsory state education. One of the great events in labour movement history, the Burston school strike, was in part about the power of the farming community to drag children out of the classroom to take stones off fields.

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  It is horrible to say this, but there is still much exploitation of children in our society. My hon. Friend the Member for Gravesham pointed out that probably 2 million children work in this country. It is difficult to know exactly how many children are in work. Most are unregistered, unregulated or unvisited by social services, by education welfare officers or by anyone else. The danger and possibilities of serious child exploitation is ever present in our society.
  The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made a perfectly fair point about local authorities. They do not necessarily want a lot of child labour, but, if we ask an inner-London, inner-Birmingham or any other local authority to regulate and look into child labour, they say, "No chance." Social workers can barely keep pace with the number of statutory referrals that they have. Education welfare officers cannot deal even with the number of statemented pupils in our schools. It is not possible for those local authorities to go round to clothing factories in Hackney, Islington, Lambeth or Lewisham to find out whether children are working.
  There is another side to it, which I suspect is the reason why some of the figures look progressively and refreshingly low in other European countries. They probably hide the problem. Throughout this continent, refugee and migrant children live twilight existences illegally. Often, they are the most grossly exploited people on earth because their parents have no redress in law or anything else; they lack any legal status.
  Rightly, we all sign petitions demanding the end of child labour in other parts of the world. We recognise that the problem is far worse and the exploitation far greater in other parts of the world, but we should also be prepared to look behind factory doors here and consider the danger that many children in our society face.
  The idea that child labour is necessarily safe is not something one should take lightly. Appalling accidents still happen on farms, with children working near or around farm machinery. Youngsters doing newspaper rounds are exposed to traffic dangers or worse. Carl Bridgewater was murdered while delivering newspapers to a farm, which shows the danger of children being out on their own. Unfortunately, we do not live in a particularly safe society.
  There is an international campaign to protect children and to ensure that they go into education rather than to work at too young an age.
  There have been worldwide campaigns against child labour, and an important tribunal in Mexico in 1996 drew attention to the problems of child labour and bonded labour. I should like to quote from ILO convention 138, which was framed in 1973—interestingly enough, the year in which the House last debated legislation on this subject. It builds on many of the conventions about the minimum age for employment in agriculture, clothing and other industries. Part of the convention states:
  "Considering that the time has come to establish a general instrument on the subject, which would gradually reduce the existing ones applicable to limited economic sectors, with a view to achieving the total abolition of child labour, and
  Having determined that this instrument shall take the form of an international Convention, and adopted in 1973."
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  Article 1 of the convention is brief. It states:
  "Each Member for which this Convention is in force undertakes to pursue a national policy designed to ensure the effective abolition of child labour and to raise progressively the minimum age for admission to employment or work to a level consistent with the fullest physical and mental development of young persons."
  Article 2.1 is also brief. It states:
  "Each Member which ratifies this Convention shall specify, in a declaration appended to its ratification, a minimum age for admission to employment or work within its territory".
  It is stated that that must be deposited with the ILO director-general. Article 2.3 states:
  "The minimum age specified in …paragraph 1 of this Article shall be not less than the age of completion of compulsory schooling and, in any case, shall be not less than 15 years."
  If we have signed up to that international convention, we should ratify it and carry it into law. I was sorry to hear that the legal advice that was given to my hon. Friend the Member for Gravesham shows that his Bill would prevent ratification of that ILO convention. I may be wrong about that, but it is important to look to the Government for legislation to ensure that the ILO convention is ratified.
  In July, my hon Friend the Member for Preston and I had a useful meeting with the Minister who will reply to the debate. We had a long discussion about the problems of child labour. The Minister was extremely helpful and we left that meeting in a positive frame of mind. We said that the exploitation of children is detrimental to their education. I agree with my hon. Friend the Member for Preston that a child who works for 12 hours a week is carrying a big burden on top of his normal schoolwork and homework.
  High unemployment means that many children are able to get jobs because they are not covered by minimum wage legislation, which in any case applies only to agriculture. Many adults could be out of work, but children can be in work for up to 12 hours a week to supplement the family income. The pattern of child employment shows that children from poorer families tend to work more hours than those from wealthier families who can afford to pay for the things that children want and need.
  I hope that the Minister understands and accepts the concerns about child labour that many of us have been expressing for a long time. We should ratify ILO convention 138 and frame legislation accordingly, to ensure that we are in line with international conventions.
  The Bill contains serious problems, the first of which relates to the large number of hours that children are allowed to work. My hon. Friend the Member for Preston spoke about that. Secondly, the Bill does not state, presumably because the Government would not allow it to state, how its regulatory regime would be funded. I have tabled parliamentary questions on that subject, and have been told that there is no standard spending assessment specific budget heading for the monitoring of child employment by local authorities. Presumably, that is one of the reasons for local authorities not carrying out serious monitoring. That has been left to universities and to the organisers of campaigns.
  I hope that, in the review, the Minister will recognise that although it is not necessarily wrong for a local authority to carry out any regulatory regime, it must be adequately funded to do so. The point made by my

  707
  hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) is crucial—Britain needs a children's commissioner. He or she could examine the dangers of exploitation of children, the problems of child employment and what goes with that, and the anomalies in existing legislation. We need someone who can speak up and influence Departments, legislation and public opinion on the question of the treatment of our children.
  Children must have the opportunity to grow up happily, to learn safely, and to develop into society. When I go into cafes, restaurants, pizza bars or whatever—being a vegetarian, I do not go to burger bars—it saddens me to see young people looking rather tired at the end of work on a Saturday. We see youngsters going into school looking tired because they have already spent an hour or two delivering newspapers on the streets. It is not glamorous; indeed, much of it is dangerous. It is certainly detrimental to the children's education.
  If the regulatory regime provides for the school to decide whether a young person works, intolerable pressures will be put on that school. Many schools will just say that they will not allow any child to work, or say that they will allow all of them to work, or they will consider each individual case. The latter puts pressure on the school to make a value judgment on whether the family needs the child to work. That is not the right job for a school.
  I look forward to the Minister's speech. I hope that his review will be thorough and will take evidence from other organisations and people. Above all, I look forward to a commitment from the Government that, at long last—we have waited since 1973—Britain will ratify ILO convention 138 and will play its part in ending the disgraceful exploitation of children not only around the world, but in this country.
  12.11 pm
  Mr. Barry Gardiner: What may we expect of hon. Members, unless it be that they should take care of those who are without power? Children in Britain are without direct access to power. For that reason, the obligation on us today is all the more onerous to have a care for them. I could hardly contain myself when I heard the hon. Member for Hogwash—the hon. Member for Reigate (Mr. Blunt)—saying that our role in this Chamber is not to set standards. If we are not to set standards, who is?
  Often in these debates, we hear hon. Members congratulated on their good fortune in having come so high in the ballot for a private Member's Bill. Interestingly, today no one has congratulated my hon. Friend the Member for Gravesham (Mr. Pond) on his good fortune; instead, we have all congratulated him on his good sense in using this opportunity to give voice to the needs of our nation's children so that we protect them against both injury and exploitation.
  The Bill does not ignore the great benefit that children can derive from engaging in the world of work. The sense of responsibility, the independence and the mature co-operation in a commercial context, which work can bring to children, are of real value.
  My eldest child, Jess, is a singer and has performed, from the age of 11, at the Almeida opera and on Radio 3. I am proud of the rigorous hours of training and rehearsals that he has worked. The experience of working with
  708
  professional musicians, conductors and recording technicians is one which he will never forget. Above all, he will retain the sense of being treated as a fellow professional—not a child, but an artist of equal importance in a successful production. However, such benefits must not be purchased at the expense of childhood itself. It is vital that a child's school should always be aware of and support any child's employment, as the Bill would stipulate.
  When it was discovered, not a few months ago, that the footballs used in our national game were made by child labour on the Indian subcontinent, it rightly became a matter of national news and of public outrage. How remarkable therefore that, during all that time, little uproar was raised in defence of our own children and about the conditions in which they have been employed. Yet we know that almost 1.5 million children in Britain are employed illegally, and that one third of them have been involved in an accident at work. We have allowed an almost casual disregard of child employment to prevail in Britain, dismissing such employment as merely paper rounds and babysitting. It is not.
  I pay tribute to the Low Pay Unit for its research, which has highlighted more than merely the bald official statistics on injuries and deaths of children in the workplace from contact with machinery, falls from a height and other causes. It is shocking enough that even one child in Britain should die in legal employment, but the unit's research has uncovered the appalling scale of illegal employment of children under 13 and outwith the hours of 7 am to 7 pm.
  Those of us with children know to our cost how early mornings and late nights can be singularly corrosive of family life. Children are less patient with their parents in such circumstances. Much more important, tired children learn less in school. Critically, children are more exposed to all the potential health and safety risks in their workplace when they are tired.
  Mr. St. Aubyn: Given that all hon. Members oppose the illegal employment of those under 13 and putting children at risk in the workplace, and that those matters are already dealt with in existing legislation on health and safety and on employment of children, how will the Bill help to address those issues?
  Mr. Gardiner: I shall deal later in my speech with the very important matters not only of regulation but of enforcement of regulation, which have been mentioned by many hon. Members.
  I particularly welcome clause 4(4), which stipulates:
  "No person shall employ a child to do any work which, on account of the nature of the tasks involved or the particular conditions under which they are performed, is likely to be harmful to his safety, health or development; or to his attendance at school, his participation in vocational training or guidance programmes…or to his ability to benefit from the instruction so received."
  It seems that that is one of the central focuses of the Bill.
  Part II of the Bill seeks to provide an enforcement system through the issuing of permits involving the local education authority, parents, schools and the local police. It is here that what weaknesses there are in the Bill are most manifest. Clauses 12, 13 and 16 rightly provide that the child's school must be notified and consulted at all stages on the issuing of permits and their amendment.

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  It would be helpful to include in clause 15 a continuing requirement not only on the employer to update the local authority record on 1 January and 1 July each year, but on schools to reassess their own agreement to the employment continuing.
  Clearly, many schools, on first being approached by parents for their agreement, may say that they would be prepared to allow a child to undertake some employment, but they will want to see how the work affects the child's performance at school. Unless an automatic obligation is placed on schools to renew their consent, it may be that, as the child's achievement declines, it is forgotten that the child is in employment outside of school life; the two factors may not be correlated.
  Having been a councillor in local government for many years, I am acutely aware of the ever-increasing work load placed on local authorities by the House. As has been said, it is not simply a matter of making regulations; those regulations have to be enforced. The resource implications of such enforcement are, sadly, clear to anyone involved in local government.
  Local government budgets are strained in meeting their present statutory obligation to protect children. New legislation will inevitably add to that burden, but that does not mean that new legislation that attempts to codify the existing regulations is not right and necessary.
  My hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) set out only too clearly the difficulty involved in providing the necessary resources that could give us confidence that we might see any real enforcement of the Bill's provisions. The split of Government responsibility for children between different Departments—the Department of Health, the Department of the Environment, Transport and the Regions, and the Department for Education and Employment—is detrimental to the resolution of the problem. I certainly echo and support my hon. Friend's call for the Government to consider appointing a Minister for children.
  Employers do exploit children. Few would doubt that the reason why most employers take on children is that children are cheap, but they are also compliant. They can be got to work at times and in conditions that an adult might resist. They are also less likely to protest about harassment by their employer—and such harassment of children clearly exists. That is why any employment must be assessed and permitted for children only if it can be clearly shown that such employment is a net benefit to the individual child. It is the child who must be our primary consideration and, broadly speaking, the system of permits set out in the Bill seeks to ensure that.
  Children are born to love their parents. Very soon, they grown to judge them; rarely do they end up forgiving us. Let us resolve today to remove one more obstacle to that forgiveness, and speed the Bill on its way.
  12.24 pm
  Shona McIsaac: I welcome the Bill, and I applaud my hon. Friend the Member for Gravesham (Mr. Pond) for the excellent and hard work that he put into the Bill and during his years working at the Low Pay Unit. He has brought a wealth of experience to today's debate and his Bill has given us the opportunity to discuss an extremely important issue.
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  Like my hon. Friends the Members for Preston (Audrey Wise) and for Islington, North (Mr. Corbyn), I do not think that all work is bad for children. When I was a teenager, I would have been horrified had I not been allowed my wee Saturday job in a well-known high street chemist. It gave me the opportunity to earn a bit of money to spend on the things that I wanted. As a teenage girl, I bought mainly clothes and make-up, but it was all about growing up, becoming independent and choosing to buy the things that I wanted. I did not want Mum's smelly old Vosene, for example. I wanted to buy the shampoos that I was reading about in the girls' magazines.
  We cannot condemn all employment for children, but the debate is not about that. It is about the abuses of the system, and I am concerned about them. Some children work extremely long hours. When I was a teenager, my employer did not break the regulations; teenagers were paid exactly the same rates as other members of staff. However, I was lucky. At the time, some of my friends were working for a pittance, as teenagers still do today. In addition, some work in dangerous conditions. We must do all we can to protect children in those circumstances.
  Like other Members, I am concerned about the impact of employment on schoolwork. When I was a teenager, I did not find that my job impacted on my performance at school, but my propensity for staying up until 2am watching trash horror films on television did.
  I have discussed the issue with education welfare officers of North East Lincolnshire council, which is responsible for the towns of Grimsby and Cleethorpes. They are most concerned about abuses of the system—not just about children who might be tired at school, but about non-attendance because of work. One recent example involved a 14-year-old girl who was absent from school. An education welfare officer visited her home and found that she was being picked up in a van and driven south to a factory in Lincolnshire to pack pork pies. Her shift was from 2 o'clock to 10 o'clock, so she simply was not at school. We must stop such abuses.
  In Lincolnshire, there is a tradition of gangs of children working in factories. They are hired by a ganger, who collects them and drives them to the factory. The ganger, not the factory, pays the children. The factory may be unaware that it is employing someone of 14 and may assume that he or she is 16. It is a shady form of contract work. The practice is also prevalent in the agricultural sector. At harvesting time, gangs of children are driven to work. Certainly the regulations are often breached in respect of the hours that the children work.
  The education welfare officers are concerned about the agriculture sector because abuses do not occur only in the summer holidays. Sometimes it happens in term time, resulting in non-attendance at school. One of the worst examples that the officers came across recently was an eight-year-old selling flowers in the centre of Grimsby. I am sure that we all condemn such exploitation.
  A couple of loopholes concern me. I hope that my hon. Friend the Minister will address them. In the food processing industry in Grimsby, 16-year-olds who have just been given a national insurance number dupe employers by saying that they have left school, when they should still be there. The processing firms have responded when education welfare officers have raised the issue with them.

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  The European Union directives have been mentioned. As I understand them, they will give less protection to children who work in some respects, such as start and finish time. We should be more protective of our children.
  Even in winter, there are many people at the seaside in Cleethorpes on Sundays. A lot of children work there—perfectly legitimately. We must address that. Patterns of employment are not the same across the country.
  I welcome the Bill and the Government's review of such important issues. The Department of Health and the Department of Trade and Industry have set up a working group, which will report by the end of the year. That shows the Government's commitment to addressing the serious issues. I hope that my hon. Friend the Member for Gravesham can work with the review, contributing some of the excellent aspects of the Bill to ensure that we protect children who are being abused in the workplace.
  12.32 pm
  Mr. Ross Cranston: I congratulate my hon. Friend the Member for Gravesham (Mr. Pond) on introducing the Bill. I first came across his name in 1977, when he was the co-author of an important book called "To Him Who Hath". Another co-author was my right hon. Friend the Minister for Welfare Reform. The book addressed several issues that are still on the agenda, such as the relationship between taxation and poverty, and how regressive taxation can be. It also contained an interesting European dimension, showing how we were taxed less than elsewhere.
  I am pleased that my hon. Friend and I were elected at the same time. Other hon. Members have mentioned his time at the Low Pay Unit, where he worked for almost two decades, producing a stream of pamphlets and articles. He took up the important issue of the exploitation suffered by many in low-paid work. I congratulate him. In a way, the Bill is a culmination of the many years that he has spent toiling on the issue.
  I shall concentrate my remarks on children of pre-school-leaving age. Hon. Members have already said, I think correctly, that work can create a sense of responsibility, self-respect and self-discipline. The Bill recognises the fact that we must not eliminate the possibility of young people's entering work. However, there are three important caveats. The first is exploitation. My hon. Friend the Member for Cleethorpes (Shona McIsaac) mentioned examples of exploitation from her constituency and my hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) referred to exploitation in terms of pay rates. The Low Pay Unit publication "Fair Play for Working Children" gives several serious examples of exploitation.
  The second caveat is the health and safety concern. My hon. Friend the Member for Gravesham addressed that issue in his remarks and gave several examples of young people who were seriously injured while working. The third caveat concerns the impact that work can have on education, and I shall spend a few minutes on that point. The TUC commissioned an important study by the MORI organisation which found that some 28 per cent. of working children said that they were often or sometimes too tired to do their homework or their school work. Some 4 per cent. said that they played truant from school because they had to work. My hon. Friend the Member for Cleethorpes referred to such a case in her constituency.
  712
  That is a serious problem. There is strong evidence of the link between homework and achievement at school—even the previous Government acknowledged that. This Government have taken several important steps to ensure that children, who may not otherwise do their homework, can attend homework clubs. Some 8,000 such clubs are planned by the turn of the century, at a cost of £200 million. My right hon. Friend the Secretary of State for Education and Employment has emphasised the importance of homework and the fact that it makes a real difference. Even though there are advantages in young people's undertaking work, there should be limits on what they are able to do.
  As hon. Members have said, the current legislation is a patchwork. It is a complex hotch-potch. The basic law is the Children and Young Persons Act 1933, and its key section—section 18—is clearly drafted. It imposes limits by stating that school-age children cannot work before 7 am and after 7 pm, and cannot work more than two hours a day, including Sunday. However, superimposed on that legislation are many other complex provisions, including the Employment of Women, Young Persons and Children Act 1920, the Children Act 1972 and local authority byelaws which, in many cases, were introduced as a result of the Employment of Children Act 1973. Although that Act was never proclaimed, draft regulations gave rise to local authority action.
  There are limits on these provisions. The basic provision in section 18 of the 1933 Act covers only employment. As the hon. Member for Guildford (Mr. St. Aubyn) pointed out, the definition of employment in that Act is assisting in a trade or occupation carried on for profit, so it would not cover the job of babysitter. There are other relevant regulations, such as the Children (Performances) Regulations 1968 and the Health and Safety (Young Persons) Regulations 1997. There is a case for the Bill on the grounds of the complexity of current provisions alone.
  Reference has been made to international instruments. My hon. Friends the Members for Preston (Audrey Wise), for Islington, North (Mr. Corbyn) and for Luton, North (Mr. Hopkins) mentioned ILO convention 138 on the minimum age for admission to employment. I want to correct something they said about the nature of that convention. This country has not ratified it, unlike some other European countries, such as France, Germany, Italy, Spain and Sweden. The European directive is not inconsistent with the ILO convention, and nor are the provisions in the Bill.
  The ILO convention seeks to do away with child labour. Article 7 clearly states:
  "National laws…may permit the employment or work of persons from 13 to 15 years of age on light work"
  subject to limitations. The first limitation is that it should not be
  "harmful to their health or development"
  and the second is that the work should not be
  "such as to prejudice their attendance at school…or their capacity to benefit from the instruction received."
  Paragraph 4 of article 7 enables adherents to the convention to
  "substitute the ages 12 and 14 for the ages 13 and 15".

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  It would be wrong to go away with the impression that the convention is inconsistent with part-time work for children who have not left school. It aims to do away with child labour, but it allows part-time work.
  Mr. Hopkins: I referred to the ILO convention as a minimum starting point. It is a basis to work on, but I would go beyond it.
  Mr. Cranston: I agree, it is a basis, and the European directive is consistent with it.
  The other international instrument that has been mentioned is the convention on the rights of the child. This country is an adherent to that convention: it came into force in the United Kingdom in 1992. It sets out important rights for children. The basic right is that we must always take the best interests of the child into account. Article 12 states that we should listen to what children say, for example when we make administrative decisions. I would extrapolate on that, and say that we have to listen to children when making legislation. The TUC survey shows that children say that they do get tired, cannot do their homework and, in some cases, play truant. We must take that into account in making laws.
  The key provision is article 32 of the convention, which says that children have to be protected from exploitation, and from performing work
  "likely to be hazardous or to interfere with the child's education, or to be harmful to the child's health or physical, mental, spiritual, moral or social development."
  To that end, article 32.2 says that states shall provide for a minimum age for admission to employment, for appropriate regulation of the hours and conditions of employment and for appropriate penalties or other sanctions to ensure the effective enforcement of the article. A number of hon. Members have referred to the under-enforcement of the current laws.
  I refer also to the EC directive, to which others have referred, which contains an important provision on risk assessment in articles 6 and 7. We must ensure that, on health and safety grounds, any employment will not adversely affect children and young persons who are working. The directive also contains absolute limits on the amount of time a child can work. For example, a 12-hour limit is specified; that is different from the current law in this country where, as my hon. Friend the Member for Gravesham pointed out, a child can work up to 17 hours a week during term time. Under the directive, we are rightly obliged to reduce the hours a child of school age can work.
  Article 11 of the directive states that children should have a period free of any work during school holidays. It is important for young people to have a couple of weeks free from any work. The previous Government negotiated certain opt-outs from the directive, and we have discussed one of those—the opt-out which relates to Sunday employment and the fact that children can work up to eight hours on Sundays.
  I take the point that my hon. Friend the Member for Cleethorpes made about changing employment patterns in some parts of the country. However, my hon. Friend the Minister was right when he said in December that the provision allowing eight hours' work on Sundays
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  was—to use his colourful language—"dead in the water." Children, as he said, need time with their families and friends, and for their school work. Eight hours is simply too long. In addition, my hon. Friend the Minister of State, Department of Trade and Industry said that the other provision—the two-week break during school holidays—was appropriate so that children could have a rest from school and other work.
  I now turn to enforcement. Under the UN convention, we are obliged to introduce an effective enforcement regime—which, clearly, we are not doing. There are various reasons why local authorities are not able to enforce the law, but the fact is that they are not doing so.
  In 1991, the Low Pay Unit confirmed that much employment was illegal and unregistered. In 1995, a GMB report showed that only 15 of the 108 local authorities had employment officers specifically dealing with children. It also showed that there were few prosecutions—only 11 in the previous year, for example. In February 1997, Labour Research reported that, in Blackburn, only 4 per cent. of employers who should have been registered were, in fact, registered.
  Law enforcement is important not only in this area, but more generally. If a law is not properly enforced—or if it is not enforced at all—not only it, but the whole legal process falls into disrepute. I look forward to hearing from my hon. Friend the Minister about the Government's proposals to improve enforcement.
  Under the 1933 Act, children under 13 may not work, but the TUC survey found that one in five 11-year-olds and one in four 12-year-olds said that they were working. It also showed that the legal maximums were not being observed and that many children were working longer than two hours a day during term time.
  The Bill contains some interesting and innovative proposals on enforcement. Under clause 11, children would have to have a certificate from their parents to say that they were fit for the work that they were doing. Head teachers would be involved and the police would have to be notified. The whole enforcement regime is toughened up under part II which, I believe, is especially valuable in putting enforcement well and truly on the agenda.
  Again, I congratulate my hon. Friend the Member for Gravesham. The Bill is the culmination of all his work over the years before he entered the House and it deserves a serious response from the Government. From what my hon. Friend the Minister has done in the past and said recently, I know that he will consider it seriously. The Government are committed to human rights—we shall debate the Human Rights Bill on Monday. They are dedicated to employment rights and also to children's rights. I very much look forward to my hon. Friend the Minister's response.
  12.52 pm
  Angela Smith: I congratulate my hon. Friend the Member for Gravesham (Mr. Pond) on promoting the Bill. I have never understood the custom that hon. Members should be congratulated on drawing a high place in the ballot—that is a matter of good fortune—but I congratulate my hon. Friend on his choice of subject. He has considerable expertise and experience in the matter, for which he is widely respected, and I pay tribute to him for promoting the Bill. I know that he

  715
  consulted many experts in drafting it, as its length and detail testify, and I am sure that the House will recognise and applaud his commitment to the issue.
  As I awoke in my constituency this morning, I heard the dulcet tones of my hon. Friend being interviewed on my local radio station. I do not share the view of some hon. Members that work for children is inherently bad. My hon. Friend described the many jobs that he had had as a child. The interviewer said, "It doesn't seem to have done you any harm, does it?" My hon. Friend replied, "I don't know; some people say it must have done, because I am now a Member of Parliament." I do not believe that it has done him any harm; indeed, perhaps it helped him in promoting the Bill.
  The Bill focuses not merely on the employment of children, but on the problems inherent in child employment. I share many of the experiences of my hon. Friend the Member for Cleethorpes (Shona McIsaac), although while I was still at school I worked for a high street retail store—not a chemist—for many years. I found it a valuable experience. However, many children work in conditions that are not safe for them and they are not given the appropriate clothing or equipment. The fact that probably one in three of children in employment are injured at work, sometimes seriously, should give the House cause for concern. I was upset to hear the hon. Member for Guildford (Mr. St. Aubyn) refer to those as isolated incidents. One in three is not an isolated incident. As about 2 million children work, the fact that one third are injured at work is extremely serious and important.
  We must also deal with the possibility of exploitation. My hon. Friend the Member for Islington, North (Mr. Corbyn) mentioned the Burston school strike. In the summer, I was honoured to be asked to address the annual rally in support of teachers who fought for decent education standards for children in rural areas. One reason for the Burston strike was that teachers took great offence that, come harvest time, children would regularly be dragged out of school for several hours a day, and sometimes the whole school day, to work in the fields. Perhaps, the action taken by teachers—punching the farmer on the nose—was not the best way forward. My hon. Friend the Member for Gravesham has proposed far more effective enforcement procedures in the Bill.
  Educational disadvantage and the fact that children can be too tired to work effectively in the classroom have also been mentioned. I endorse that view whole-heartedly from my experience. When I was a sixth-former at Chalvedon school in Pitsea, I helped out in what was then called the remedial department for children with special needs, helping youngsters who needed a little extra coaching and support to read and write. I was a mentor to one child in particular and asked him what he did with his day. Often, he would get up at 5 or 6 am to muck out a stables—that would interest one Conservative Member—go to school, nip off at lunch time as he was employed for a short time in a local shop and then return to school for the afternoon. Sometimes, he would work in the evenings as well. He was a bright, bonny lad, full of enthusiasm for life. It cannot be a coincidence that his educational attainment was below average. He was working excessive hours.
  Mr. St. Aubyn: Is the hon. Lady going to tell us that the young boy was called Richard Branson?
  Angela Smith: Unfortunately not. He did not have certain advantages that would have enabled him to reach
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  such a high place in life. Undoubtedly, he suffered from low educational attainment at school despite so many efforts by the school to help and support him.
  Problems with employment are not automatic and can be tackled. Employment for children can bring certain advantages for both child and family, if properly regulated. Those include a degree of responsibility and independence. Also, such work improves social skills. Many children mix, perhaps for the first time in their lives, with people of different age groups outside their family relationships and that is a benefit.
  I was fortunate in my employment as I was generally well treated and reasonably well paid. Not all my school friends were so fortunate. As for the effects on my school work, my bad A-level result had more to do with late-night television—like my hon. Friend the Member for Cleethorpes—and Hammer House of Horror films than with the shop I worked for. By enabling me to earn money when I was 14, 15 and 16, my job helped me to stay on at school at 17 and 18 and take my A-levels. The money that I brought into the household, generally for my benefit, was a great advantage in that it helped me to pursue my education.
  About 40 per cent. of 11 to 16-year-olds work during the school week, which is more than in any other European country. We estimate that about 75 per cent. of those children are employed illegally. Some illegality arises from ignorance of the law. It is clear that the regulations are inadequate, but they are also not widely known. That is a great problem for employers. With some employers, it is ignorance of the law, but, with others, it is lack of regard for the law. The Bill does not try to stop children working, but seeks meaningful, practical, protective legislation. It must be workable and understandable, and strike a balance between protecting children and allowing them freedom of responsibility.
  I am proud to be a sponsor of the Bill. I pay tribute to the work of my hon. Friend the Member for Gravesham. My office is three doors along from his on the same corridor. When I go home at midnight or 1 am, he is still there late at night writing his Bill, and he was up early this morning on the radio. I congratulate him. By introducing the Bill, he has given great publicity to the issue. But for the Bill, we would not have had a debate across the country about child employment. It would not have been discussed and there would not be such widespread concern. I await with interest the Minister's response. As hon. Members have said, I am sure that if the Minister works with my hon. Friend the Member for Gravesham, we can produce workable solutions to the problem and ensure that we protect our, children adequately.
  1 pm
  Dr. Nick Palmer: I welcome the Bill, for which there is a clear need because of the European directive and the significant changes in how children work. There are one or two matters where the Bill has not taken account of all those changes, to which I shall return.
  It is true that the Bill adds new regulations where the situation was vague or locally variable. I would be surprised if we got through the debate without hearing the words "nanny state" from Conservative Members. I am tempted to say that a nanny state is appropriate for children, but I shall be less polemical and try to say in a little more detail why most of us feel the need further to restrict child labour and what the consequences might be.

  717
  Three reasons have pre-occupied the House. First, we want to avoid diverting so much time into work that children's education and reasonable free time suffer. I am not one of those who believe that childhood should be a golden age untainted by adult experience, filled with nothing but school, playground and the gathering of flowers. Let us be honest: childhood can be boring. We need to give children the opportunity to develop their interests. We should not force ideas of an idyll on them, but it is vital that they have enough time and energy to study. Everyone would agree that they should have reasonable time to enjoy life.
  Secondly, we must avoid the wholesale substitution of adult labour by underpaid child labour, a point made forcefully by my hon. Friend the Member for Islington, North (Mr. Corbyn). That was not a great problem when most children worked on paper rounds because not many adults seek such work. It is now a problem, as hon. Members have made clear. We should beware of exploitation masquerading as work experience. Thirdly, we want to prevent physical and mental stress that could make children ill or affect their development into healthy adults.
  The first two issues were dealt with by other speakers, so I shall add only brief comments. Diversion of time is well covered by the Bill, and I support the Government's rejection of the Conservatives' proposal to open the floodgates to full-time Sunday work. That was a very unconservative idea and I do not think that it commands wide support, even among their traditional supporters.
  The under-cutting of adult labour is not directly the subject of the Bill, but it will feature in the broader discussion on the minimum wage. Attention there has so far focused on whether people aged 18 to 25 should be paid the same for doing the same work as older people. In view of the extensive child work reported in this debate, we will need to decide whether there should be a lower limit for children. It may be assumed that a child will probably not be paying rent or paying for food, and is thus less dependent on other income; but I would argue that even 13-year-olds should not be paid massively less than what an adult would receive for exactly the same work, as often happens nowadays.
  I want to deal with the third point—the prevention of physical and mental stress that could affect the development of a child—in more detail. That is addressed by the inclusive and exclusive lists that are required by the European directive. The problem with the "list" concept is that it is difficult to think of every aspect in either an inclusive or an exclusive context. For example, if I understand the rules correctly, it would be illegal for children to carry milk that was not in a suitable container—presumably because of the risk of breaking glass—but legal to carry bottles of mineral water, which are heavier and equally likely to break. The Committee stage will play an important part in refining such measures as far as possible; we are required to introduce the lists by the European directive, but I think that further adjustment may be needed.
  I now turn to a technological issue. I feel strongly that 13-year-olds should be allowed to do computing work, both as self-employed people and on behalf of employers, and either in offices or—as is more likely—at home.
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  The Bill envisages clerical work in an office environment. That, I think, really means traditional office duties such as filing and photocopying—the kind of work that we are familiar with in the House. We ought to recognise that an increasing number of children are talented programmers, capable of earning a good deal over the internet from their own homes. I know of one 10-year-old who is currently grappling with the problem of opening a dollar account to handle his income from American buyers of his computer games.
  I am not sure whether self-employment is covered by the current or the proposed law. I suspect that the idea of self-employed children is relatively new, but I predict that it will become fairly common in the context of computers. In any event, one of Britain's strengths is in computer skills, and we should avoid accidentally outlawing their use for pay by children in the 13-to-16 age bracket.
  On the exclusion side, the European directive states that the work should be cultural, artistic, sporting, advertising, or—for 14-year-olds—
  "work experience or training programmes or light work".
  I could not find those restrictions in the Bill, which merely lists exclusions for 14-year-olds. Some seem to have been inherited from past legislation and byelaws, and could perhaps be reviewed today. For instance, there seems to be no real reason why a 15-year-old should not work in a cinema, or help to prepare sandwiches.
  More importantly, the positive emphasis on experience and training contained in the directive seems to be missing in the Bill. If we—rightly—stress the importance of training from the age of 16, it seems reasonable to support it for working children as well. I suggest a presumption in favour of allowing work where there is an element of training for possible future full-time employment.
  Overall, however, the Bill fully deserves the extensive discussion that has been devoted to it today. I am delighted that my hon. Friend the Member for Gravesham (Mr. Pond) was successful in the ballot, that he chose this topic—on the basis of his long experience—and that the Government have broadly welcomed the Bill. I hope that it will be allowed to proceed to Committee.
  1.8 pm
  Mr. Patrick Nicholls: I agree with the hon. Member for Basildon (Angela Smith), who referred to the curious tradition of congratulating hon. Members on coming first in the ballot. I have never understood that either. In this instance, however, we can offer congratulations of a different kind. The hon. Member for Gravesham (Mr. Pond) entered the House with a formidable reputation for concern for the poor and the welfare of children. I hope that he will not mind my saying—given that we have exchanged views in various contexts over the years—that the fact that I may not have agreed with every jot and comma of what he has said about how he would go about the task in hand does not for a moment lessen my admiration for the objectives that he has set himself. The way in which he introduced the Bill was a model of its kind. I am delighted that Front Benchers duly noted that, for it was a superb performance.
  During the debate, we have heard that there is a plethora of law on this subject; indeed there is. Wading through that plethora of law without the benefit of civil servants was made vastly easier by Julia Lourie in the House of Commons Library, and I am grateful to her for

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  her help. The key statutes are well known. We have talked about the Children and Young Persons Acts 1933 and 1963 and the curiously ill-fated Children Act 1972, which contained some good ideas that never came to fruition.
  It is worth reminding ourselves of the definition of a child for these purposes. In England, a child of compulsory school-leaving age will be between 15 years and eight months old and 16 years and three months old. That is the definition that we are working to, and I think that it is accepted that it will remain.
  Under section 18(1) of the 1933 Act, a child cannot be employed below the age of 13, subject to a caveat. After the age of 13, that child can be employed in certain circumstances. Under section 18(2), byelaws can be made that effectively provide for higher standards, except in relation to the circumstances in which a child below the age of 13 can be employed. Inevitably, those variations give rise to anomalies. In the main, the Bill seeks to take the good practice in the 1933 Act and the model byelaws and to ensure that that good practice—that best practice, if you like—is enshrined in the Bill.
  There are two exceptions to that approach. The first is that, under the present law, it is possible, in very limited circumstances, to employ a child under the age of 13. When I was preparing myself for the debate, my reading of clause 4 was that its effect—I did not quite understand at the time whether this was also its intent—would be to make it impossible to employ a child under the age of 13 in any circumstances except one. It appears that the Bill would permit children under the age of 13 to take part in performances under the Children and Young Persons Act 1963 and in accordance with the Children (Performances) Regulations 1968. Clause 8 says:
  "Nothing in this Part or in any byelaw…shall prevent a child from taking part in a performance".
  Apart from that, the general prohibition on employing a child under the age of 13 remains.
  As I say, when I came into the debate, I was not entirely sure whether that was merely the effect of the Bill or the policy intention behind it. I suspect that it was the policy intention. Either way, it is a point which needs to be addressed. Obviously, the Minister will want to take it on board when he sums up, but there are one or two comments that I want to make about it. I say that without in any sense trying to undermine the Bill's generality.
  Under the present law, there are limited circumstances in which a person can be employed under the age of 13: where the employer is a parent or guardian, and the employment is light agricultural or light horticultural work. I accept to the hilt—anyone coming from a rural background or representing a rural seat would—that the farmyard is a dangerous place; we know that. However, it is not my reading of the situation that the dangers and the negligence of parents and guardians on farms are so inherently high that we have to have total prohibition.
  My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) made the point that it would be wholly unrealistic to say to farmers: "The very limited ways in which you might bring your children within farming are absolutely inappropriate." I personally would need much convincing about that—I suppose that I had better come clean and say that I do not know how I could be convinced.
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  I hope that, on reflection, the hon. Member for Gravesham will consider the matter. Even under the present law, there are very limited circumstances in which regulations can be made under the byelaw to allow horticultural work by someone under the age of 13. I hope that he will take that on board and think about it. The only justification for completely ruling out such work would be if the evidence was that, on the whole, the operation of that exemption has meant that a substantial number of children are being seriously injured. I do not think that that is the position, and I hope that that will be taken into account.
  On a preliminary reading, I did not appreciate the significance of the definition of "work" in clause 19, which states that it
  "means any tasks, duties or other work undertaken by virtue of a contract, whether express or implied and (if express) whether orally or in writing, in connection with a trade or occupation carried on for profit, whether or not the person undertaking the work receives any reward for his labour."
  However, under current legislation, a person who assists in a trade or occupation carried out for profit is deemed to be employed notwithstanding the fact that he receives no reward for his labour. Those two definitions can be compared in several ways. On one reading, the Bill's definition is looser or more liberal than the one under the present law. I cannot imagine that that was meant to be the case, and I hope that the Minister will address that. If the differences are significant, we should like to know about them.
  The second major difference between existing legislation and the Bill, if it or a similar one becomes law, relates to the basic provision that, in law, a child over the age of 13 in certain specified circumstances can work for up to 17 hours. Under the Bill, a child will be able to work for only 12 hours. I appreciate that it is slightly unfair for an Opposition or Government spokesman to criticise arbitrary decisions by offering such a decision of his own. One tends to do that because it comes with the territory. It is a slightly unfair form of debate, and I shall try to avoid it.
  I do not share the school of thought, nor I think does the hon. Member for Gravesham, although the hon. Members for Preston (Audrey Wise) and for Islington, North (Mr. Corbyn) would—I put it more brutally than they would—that the Bill is fundamentally misconceived because it gives parliamentary approval to a practice that some people would say is in principle wrong. In one sense, that approach has the benefit of being absolutely consistent.
  I appreciate that on this issue we are simply trading arbitrary possibilities. However, if 12 hours can be justified, why are 17 hours absolutely wrong? What about 18, 19 or 20 hours? There is a problem in that part of the Bill. We shall hear from the Minister, and no doubt the hon. Member for Gravesham will have discussions about the Bill, but I wonder whether the limit should be as low as 12 hours.
  If the Bill is enacted in roughly its present form, the legislation will be in accordance with the EC directive. I do not wish to reveal any obsession when I say that there is an artificial aspect to the debate, because I understand that when, in due course, the EC directive is implemented, as it will have to be, it will mean that if we legislated in a way that was incompatible with that

  721
  directive, although that is unlikely, the directive would stand. That is the effect of our accession to the treaty of Rome. That would be somewhat sad, because such policies should be decided once and for all and under whatever terms, for better or for worse, in the House. It would be sad if the initiative of the hon. Member for Gravesham merely gave us nothing more than an opportunity for debate because the legislation could be overtaken by an EC directive.
  In at least one respect, the Bill as drafted is even more draconian than the directive. I should welcome the Minister's views on that. I understand that, under the terms of the directive, outside term time, children must be restricted to working no more than seven hours a day or 35 hours a week. Clause 1 restricts that to five hours a day, not seven, or to 25 hours a week, not 35. To that extent, it is more draconian. It would be useful to hear more about that. I also hope that we shall hear something—although not too much—about paper rounds. We all appear to agree that we do not want paper rounds to be prohibited, so I hope that the Minister can reassure us that that will not be a problem.
  Tied up with that matter is the debate about only two hours' work on a Sunday. Given that the nature of a Sunday has changed, it is a legitimate point to raise. A number of hon. Members have suggested that the way to tackle that problem is to consider the weekend as an overall package.
  I want to saya word about the prescriptive element of the Bill and about the enforcement arrangements. The hon. Member for Castle Point (Mrs. Butler) suggested that some of my hon. Friends—and, by implication, me—might undermine the principle of the Bill by criticising the enforcement arrangements. I assure the hon. Lady that I do not approach the matter in that way. If the Bill is to pass into law, I want there to be enforcement arrangements that work.
  I hope that the Minister will say something about enforcement arrangements. The enforcement procedures in the Bill will produce a blizzard of paperwork. To some extent, the hon. Member for Gravesham admits that by providing a fail-safe in clause 10, to give time for the paperwork to be put in place. I wonder whether that will really happen. If the paperwork is too complicated, that will not aid the enforcement of the law. It will mean that we shall have the same problem that we have had up to now—that the law will not be enforced at all. I hope that the hon. Gentleman will reconsider and ask himself whether it is really necessary to be so prescriptive. A number of hon. Members, on both sides of the Chamber, have rightly referred to the present law's unsatisfactory nature and the fact that it is flouted, often out of sheer ignorance, as people do not know what the law is.
  Under the Bill, the law will be clarified. Except in very narrow circumstances, byelaws will not come into play. There will be uniformity across the country. That should take care of enforcement. Nothing is more damaging to the implementation of the law than two people who are in similar circumstances having a discussion, with one of them saying that the law is something, and the other saying that the law is something else. Both are right, because different byelaws apply in different places.
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  My concern about the enforcement arrangements in the Bill is that they are so tight that I can envisage their not being carried out. That is not a good idea.
  I have two final points. I do not want to be unfair. I assure the hon. Member for Broxtowe (Dr. Palmer) that I had no intention of using the words that he accused me of wanting to use. As an avid listener to "Just a minute", I am not going to make the mistake of saying precisely what they were.
  On the slightly different point of the different definitions of "work" and "employment", the hon. Gentleman wondered whether the Bill would cover some very young self-employed computer buffs. That point occurred to me, too. My understanding is that it would not apply to a self-employed computer prodigy, unless he decided to employ one of his less-gifted siblings, who was also below the age of 13, which would be a problem.
  One or two lawyers' points appeal to me as a lawyer. I note that the Bill would repeal sections 18 and 59 of the Education Act 1944. My understanding is that they have already in effect been repealed by being consolidated under section 559 of that Act. However, that is the sort of detail that can be dealt with in Committee.
  There is a great deal in the Bill that is good. It clears up ambiguity and ensures that people will know what the law is. All hon. Members can agree on its starting point.
  Ultimately, if the Bill is to be a success, it will have to take on board some of the points that have been made by Opposition Members. For example, the narrow circumstances in which those below 13 can be employed should be re-examined. Moreover, I hope that the hon. Member for Gravesham—and the hon. Member for Castle Point and others—will accept that, when Opposition Members talk about enforcement arrangements, we are trying not to undermine the Bill, but to ensure that it works.
  1.24 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Paul Boateng): The House owes my hon. Friend the Member for Gravesham (Mr. Pond) a debt of gratitude for enabling us to discuss an important issue. No one could bring to the issue his depth and breadth of knowledge, which is based on a lifetime's experience and work. I think that his work has influenced us all in our approach to the issue.
  The Bill is an important one. Although the Government are not able to accept it, it will undoubtedly inform and shape policy development on the issue. We do intend to develop that policy. The Government's business and concern—which we share with my hon. Friend—is that children should not be exploited or endangered at work. All that we do must be designed to achieve that end.
  The House should be in the business of ensuring that we protect childhood. A theme that has run through hon. Members' speeches is that nothing is more valuable than childhood—a period in which a child is allowed to grow and develop as an individual and is not circumscribed by the world of work. That is not to say for one moment that work is not valuable or that experience of work is not important to a child as he or she grows up. Nevertheless, the most valuable thing for any child is time—to grow, to play and to do all that children do—without having to worry about an employer. There is precious little time in life without those worries, and we must ensure that it is preserved for children.

  723
  This has been a good debate, not least because of the range of experience and opinion that has been shared by hon. Members on both sides of the House. However, it must be said that there is a difference between us and them—between a Labour Government's approach to the issue and the previous Government's legacy. We should not believe for a moment that, in their 18 years in power, they did not have an opportunity to act on the issue—they declined to act. Furthermore, they tried to make a fetish of deregulation.
  I hear Conservative Members complain that this is the first party political speech in this debate—but that is my job. I am a Minister, and it is my job to point out where they failed. They did fail. I am glad to see the hon. Member for Guildford (Mr. St. Aubyn) beginning to stir and to give some indication that he will get to his feet. I wanted to say a few words, not too many, about him—although I shall not be as deprecating as my hon. Friend the Member for Brent, North (Mr. Gardiner), because, after all, this is a Friday. Nevertheless, there was something of a whiff not so much of sulphur but of methane about the hon. Gentleman, not so much of the pony in the back paddock but of the pony down the pit. Listening to him, one felt that had he been in the House when it discussed the Shaftesbury legislation, he would have opined that that legislation would have worked against the development of self-esteem in the young people concerned. Sitting at the checkout for hours does very little to develop a young persons's self-esteem; nor does being bussed to a pork pie factory, as described by my hon. Friend the Member for Cleethorpes (Shona McIsaac). It is our job, in which we are aided by the Bill and the work of my hon. Friend the Member for Gravesham, to make sure that that sort of thing does not happen—under Labour it will not.
  Mr. St. Aubyn: This is not only 13 February but Friday 13 February. It is the Minister's unlucky day, not mine. He has said that he does not intend to support the Bill, which rather undermines his position. Surely he accepts that self-esteem is important, especially for the most disaffected children. It is those children whom he is attacking, not me.
  Mr. Boateng: I said that I would spend only a short time dealing with the hon. Gentleman. It is time that I passed on to the hon. Member for Reigate (Mr. Blunt) because it was he who suggested—at least, this was his subtext—that if a child was not particularly academic, it was all right for that child to work. That sticks in our gullet, because whether a child is academic or not, there is no reason why he should be subject to exploitation. That child, too, must be protected, and we will protect him.
  Mr. Blunt: As usual, the Minister is creating Aunt Sallys, which appears to be an occupational hazard for members of new Labour. They are programmed to say what they assume everyone thinks, and they then bring their assumptions to the House. If the Minister reads the text of our proceedings, he will see that I, too, object to people being categorised. I said that people should not be stereotyped; nor should our ways of dealing with them.
  Mr. Boateng: We will read the text and reflect on the subtext. We must remember what the Opposition failed to do when they were in government. Let us move on.
  724
  I want to concentrate on what we are going to do, because that is what interests the nation. Let us first turn our minds to the European directive, which was adopted as long ago as 22 June 1994. The previous Government did absolutely nothing to deal with the needs and concerns that arose as a result of that directive.
  We have acted. Yesterday, my right hon. Friends the Secretaries of State for Health and for Scotland signed and laid before the House the regulations that will bring the directive into effect and take forward our agenda. It is an important piece of work because the directive required member states to bring their domestic legislation into line with its minimum requirements within two years of its adoption. The previous Government did not do it; we have, and the regulations have been laid.
  The major effect of the regulations will be to bring the existing protections of children into line with the requirements of the directive and, importantly, to provide greater standardisation, as is envisaged in the Bill. That has been the call from all hon. Members during the debate. We recognised that the position was unacceptable and unsatisfactory, and that we needed the standardisation that was lacking.
  The regulations will extend the provisions of the Children and Young Persons Act 1933—in Scotland, the Children and Young Persons Act 1937—to include restrictions currently contained in local authority byelaws on children's working hours on Saturdays and during school holidays and on minimum rest breaks. The new regulations will also give children two weeks free from work during school holidays, and local authority byelaws will have to contain a list of jobs that 13-year-olds will be permitted to do. The controls on children's involvement in performances contained in the Children and Young Persons Act 1963, and the Children (Performances) Regulations 1968 will be amended specifically to include children employed in sport and advertising, including modelling, which is a cause for concern.
  During school terms, national working time limits will be two hours for weekdays, five hours for Saturdays—eight hours if the child is aged 15 or over—and two hours for Sundays. During school holidays, national working time limits will be five hours for weekdays and Saturdays—eight hours if the child is aged 15 or over—within a weekly limit of 25 hours, or 35 hours if the child is aged 15 or over, and two hours for Sundays. Currently, some of those limits are set by local authority byelaws, but they can differ from authority to authority, and cause confusion. We have ended that confusion.
  I want to say a few words about Sundays, which have been mentioned by a number of hon. Members on both sides of the House. We believe that Sunday is a special day for the family and for children to relate to their parents and their siblings. It is a day on which there ought to be a focus on family life. Children should have an opportunity to mix with friends and family and to do their homework. We all know from experience the importance of making sure that children have a space in which to do their homework.
  The matter was raised by my hon. Friend the Member for Dudley, North (Mr. Cranston), when he stressed the vital nature of ensuring that we do nothing to undermine the important steps that the Government have taken to promote education. That is why we refused to go along with what the previous Government proposed, not least

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  because it undoubtedly would have had a damaging effect, to which several hon. Members, including my hon. Friends the Members for Luton, North (Mr. Hopkins), for Preston (Audrey Wise) and for Islington, North (Mr. Corbyn), have referred, particularly in relation to employment in supermarkets. It could have resulted not only in the substitution of very young workers for teenagers and other workers, but in driving down wages and conditions in that sector.
  That was never the intention of the legislation. It bears very much on the point rightly made by hon. Members that, as a nation, we must be only too aware of our need to comply with the highest international standards.
  Had we allowed young children to be exploited—that is what it would have amounted to—in supermarkets on a Sunday, toys made by poor young hands in the third world could have been sold by young hands in this country, replicating the exploitation that we want to counter globally. That is the importance of our international commitments.
  This country has traditionally given life and force to international treaty obligations and sought to make real the impact of international law. We want to do that for legislation on the employment of children, using International Labour Organisation convention 138 as a breath of fresh air, invigorating our system of protection for children. We take a similar view on the United Nations convention on the protection of the rights of the child. We want to make the best use of international law for our citizens.
  The Government fully and unequivocally support the principles behind ILO convention 138. This country's laws relating to workers below the minimum school leaving age provide equivalent or better protection in some cases. That does not mean that we should not do better. We are actively seeking solutions to the technical problems that have so far prevented ratification of ILO 138. We hope that they will be resolved soon.
  Nothing in the Bill contradicts ILO 138. If we had been able to accept the Bill, it would not have precluded us from ratifying the convention, as we are determined to do. We can take forward in another way the body of work that my hon. Friend the Member for Gravesham wants us to take into account.
  Mr. Corbyn: I am interested in what my hon. Friend has said, and I am pleased that he accepts the principles of ILO 138. If and when ratification takes place, that convention will be part of British law. I assume that all legislation, including European Union directives, will have to be compatible with it.
  Mr. Boateng: We are satisfied that when we have overcome the technical difficulties and taken into account the special considerations that relate to children and young people between 16 and 18 and to younger children who live on farms, no aspect of the directive or domestic law will conflict with the ILO convention responsibilities. All our work is designed to bring that about.
  Mr. Nicholls: The Minister mentions fanning. Are the Government prepared to consider the case that could be made for replicating the narrow circumstances in which
  726
  children under 13 can currently be employed? The case for having no exceptions could be argued on its merits, but there is one exception in the Bill. If the Minister cannot tell us his view today, will he at least say that he does not have a closed mind and is prepared to consider the issue?
  Mr. Boateng: We certainly do not have a closed mind, and we are actively examining that issue. It is important to explore and take on board the needs, concerns and practices of agricultural communities, and officials are currently charged with that responsibility. We are satisfied that we can move forward in this area and ratify the convention. That is our objective, and we are determined to fulfil it. I am grateful to my hon. Friends for the work that they have done in that field.
  Several hon. Members have referred to the abuse of regulations and breaches of the law in this country, and local authorities' responsibilities in that regard. The hon. Member for Sutton and Cheam (Mr. Burstow) referred to the specific responsibilities of local authorities. Local authority experience varies. My hon. Friend the Member for Cleethorpes gave a good example of how the North East Lincolnshire local authority is actively involved in identifying abuse and working to solve it. I congratulate that local authority on its efforts. My hon. Friend the Member for Islington, North also has considerable experience—on which we are anxious to draw—in this area.
  Abuse occurs particularly in the semi-informal sweatshops that have developed in some communities, and the local authorities are clearly having real problems dealing with it. While recognising the resource issues involved—I am afraid that I cannot give local authorities much comfort in that regard—we must ensure that we promote best practice. We must also encourage local authorities to work with voluntary organisations. The Stop Child Labour campaign is a classic example of what may be achieved when voluntary charitable organisations work in conjunction with local authorities, with the full support and co-operation of Government. We shall seek ways of advancing our agenda of good practice in this area within the limited resources currently available.
  In conclusion, I turn to the future programme of work. Hon. Members have asked what the Government intend to do over and above the measures that I have outlined. I pay particular regard to the points made by my hon. Friends the Members for Bolton, West (Ms Kelly), for Broxtowe (Dr. Palmer), for Newcastle-under-Lyme (Mrs. Golding)—who speaks with considerable authority about children's issuess—nd for Wythenshawe and Sale, East (Mr. Goggins). I shall show the House the way forward.
  We must not let the matter rest with changes to regulations designed to satisfy minimum EC standards. We envisage a larger programme of work. The Minister of State, Department of Trade and Industry and I have set up a review of all child employment legislation. The review will be undertaken by a group of officials from the Department of Health, the Department of Trade and Industry, the Department for Education and Employment, the Cabinet Office and the Health and Safety Executive, all of which are all players and stakeholders in this field. Expert practical advice will be provided by the National Child Employment Network, which provides, inter alia, a forum for people who work in the field of child employment to exchange best practice information.

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  The review will also seek the views of other interested parties drawn from a wide cross-section of interest in this area. We want to hear from the agricultural community and from those involved in newspaper publishing. There is no threat to the paper round, and there never has been.
  I want to make particular reference to the role of the Low Pay Unit, whose work in this area is first class. It has an enormous contribution to make as we take the policy forward. I have written to ask it to participate in the research sub-group, and I hope that it will accept that invitation.
  The terms of reference of the review working group are to consider the present arrangements for protecting children, including regulatory arrangements, levels of protection and enforcement; to examine any research or other evidence that it considers necessary from any source, including interested organisations and individuals; to make any necessary investigations; to draw up any proposals necessary to ensure that children's health, safety, welfare and development are strictly protected, and that they are shielded from exploitation; and to report to us by the end of 1998. We do not intend to hang around. There is much to be done, and I sense a determination in the House that we should do it.
  We are enormously grateful to my hon. Friend for promoting the Bill. I hope that, in the light of my remarks, he will feel able to withdraw it, so that the work can continue. He can be sure that by this debate we have taken an important step forward in protecting the rights of all our children.
  1.52 pm
  Mr. Pond: With the leave of the House, Mr. Deputy Speaker, I thank the Minister for that encouraging statement. All of us know that he shares our commitment to doing something about this problem with some urgency. His statement will reassure us that action will be taken. We have waited 66 years, so I suppose that another few minutes will not make much difference.
  We have had a good debate, and it has shown the importance of the subject. It has highlighted the expertise and efforts of hon. Members who have worked on this issue for many years. I am happy to say that several hon. Members made generous comments about the Bill. Such generosity does not apply to the remarks of my hon. Friend the Member for Basildon (Angela Smith), who revealed my nocturnal habits, or to those of my hon. Friend the Member for Dudley, North (Mr. Cranston), who reminded us that I have been at this since 1977. That is not as far back as 1933, but it is on the way.
  In case any hon. Members still have any doubts about the importance of this issue, I should say that, a few minutes ago, I was handed a Health and Safety Executive press release. It plans a prosecution following an investigation into asbestos removal activities by a firm during 1994, 1995 and 1998. That firm employed three boys of school age in contravention of the Employment of Women, Young Persons and Children Act 1920.
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  The debate has been useful, because it has clarified a number of issues. There has been a difference of opinion on some of them, and much agreement on others.
  My hon. Friend the Member for Cleethorpes (Shona McIssaac), the hon. Member for South-East Cambridgeshire (Mr. Paice) and others referred to the number of hours worked, and to Sunday working in particular. I was pleased to hear my hon. Friend the Minister reaffirm the fact that the proposal by the previous Government on this matter is dead in the water. We must limit work on a Sunday because it would mean a considerable expansion in the number of children working and would open up a new area of children's employment.
  I say to my hon. Friend the Member for Cleethorpes that it is not only about whether work will take place—clearly it will—but about who undertakes that work on a Sunday. There was a danger that we could substitute children for adults in the Sunday trading sector.
  The 12-hour limit was mentioned and I hope that the Minister will seriously consider that in the interdepartmental review he has announced. It is an appropriate limit, and not an arbitrary one. I can tell the hon. Member for Teignbridge (Mr. Nicholls) that there is evidence that once hours exceed that level, there is a trade-off in terms of educational achievement.
  Some hon. Members felt that the Bill was too lax in its provisions, particularly my hon. Friends the Members for Preston (Audrey Wise) and for Islington, North (Mr. Corbyn). There were points during their speeches when I felt that the Bill was mainly concerned with building regulations—that is, that chimneys should be wide enough to allow children to go up and down them without hurting themselves. I assure my hon. Friends that my purpose was rather more progressive, and I intended to move towards the solution that they also wish to achieve.
  I was pleased by the assurances from my hon. Friend the Member for Dudley, North and the Minister that there is no suggestion that the Bill would contravene ILO resolution 138, which the UK will ratify as soon as possible. The UK will also implement the EC directive without further delay. We have heard concrete statements from the Minister about the intention to move forward as we try to provide children with the sort of protection for which hon. Members have expressed the need.
  We have heard a number of important assurances and I know that I and the supporters of the Bill will be looking carefully to see that the momentum is maintained in terms of achieving the objectives. I am pleased that the Low Pay Unit—which has worked so long and hard on this issue—will be an integral part of the review process. On the basis of the assurances we have received during the debate, I am sure that the Bill's supporters would feel it appropriate that I beg to ask leave to withdraw the motion.
  Motion and Bill, by leave, withdrawn.

  Police Bill
  Order for Second Reading read.
  1.58 pm
  Mr. Andrew Mackinlay: I beg to move, That the Bill be now read a Second time.
  I am pleased to introduce the Bill to the House. I say, by way of introduction, that I have been interested in police history and insignia for some time. Soon after my election as a Member of Parliament, my interest led me to being introduced to a number of police forces and their representative bodies and federations. I am pleased to have had friendships with the federations of the British Transport police, the Ministry of Defence police, the Atomic Energy Authority police and many others. I mention that because, a long time ago, I was referred to as a consultant to the Atomic Energy Authority police federation, and I want to make it clear that I am not—my association with it is one of friendship and common interest in police matters.
  I was also prompted to pursue the matters that are set out in the Bill because the Port of Tilbury police are based in my constituency. Their genesis was hundreds of years ago in a police force that predated the Metropolitan police; indeed, they claim to be the second oldest police force in the United Kingdom. The Port of Tilbury police were part of the Port of London police, who were a substantial police force until a score of years ago.
  The Port of Tilbury police are a proud, albeit small, force, and I pay tribute to the existing residual force and the people who have served in the Port of Tilbury and Port of London police over the decades. I am pleased to have a close association, as a friend, with their small federation.
  The Bill would do a number of things. First, it would place a long overdue statutory protection on the terms "police", "police force", "constable", "constabulary" and other related titles. Parliament should jealously guard the use of those words; the custodianship of the application of those terms should be vested in the Home Secretary.
  There is a danger that a plethora of individuals or organisations will describe themselves as police officers or police forces, or will use the term "constable", but have no real mandate to do so. I do not need to spell out the dangers if those terms are used lightly and devalued through flippant use. It is time that the provisions outlined in clause 1 were enacted, so that the use of the important descriptions and titles was restricted.
  Clause 3 would require, for the first time, that the many police forces that are not what are collectively known as "Home Office police forces" be listed. I include in the category of "Home Office police forces" the Scots constabularies and the Royal Ulster Constabulary.
  Other police forces, some of which will be well known to hon. Members, have proud traditions and are much valued by the public, with whom they have a considerable interface. I refer to the British Transport police, the Ministry of Defence police, the Atomic Energy Authority police and the Royal Parks constabulary. Within a stone's throw of the Palace of Westminster, one could meet constables in uniform from three of those forces. The schedule lists those bodies that contain officers who could be described as police officers.
  730
  Part II of the schedule lists a number of other police forces, many of which are very small numerically, but, in almost every case, wear traditional police officers' uniforms. We must limit the number of names that could be included in part II. I am not saying that there should be an embargo on the number of police forces, but I want the Home Secretary to be able, for the first time, to control the growth of police forces and to use his good offices to ensure that certain standards apply, and that there are proper inspections and management and professional controls.
  The independence of the individual sworn constable should be guaranteed regardless of the commercial interests of the owning body. I say that deliberately because a number of the forces are in private ownership and are owned by companies. I very much regret that. It is not appropriate for police forces to be in private ownership, but I do not want to labour that point today. Parliament has dealt with it, most recently in the case of the British Transport police, who are largely owned by the various private railway undertakings, and so forth. Many of the harbour and ports police, who are sworn in under pretty old, Victorian legislation, are in private ownership, as are the Northern Ireland Airport police, based at Belfast international airport.
  I am concerned that there is a disparity in standards. For instance, the Port of Tilbury police are subject to the work of the Police Complaints Authority and so, I understand, are the Port of Liverpool police. However, there is no logic to this as Dover Harbour Board police—not an insignificant constabulary—is not. I should have thought that the Home Secretary would want some consistency throughout police forces.
  The Minister of State, Home Office (Mr. Alun Michael): My hon. Friend makes some good points about consistency, but I must ensure that he is not under a misapprehension on one point. He referred to the British Transport police being owned by a variety of private organisations. In fact, the British Railways Board continues in existence solely to act as the police authority for the British Transport police. Money goes to the board to run that authority, it acts as the single overseeing body and that is where ownership lies.
  Mr. Mackinlay: I am obliged to my hon. Friend and stand corrected. Nevertheless, other forces are in private ownership and commercial considerations can sometimes impinge on the role and duties of the constable. That is what the Bill would avoid.
  I also want to ensure that there are proper training standards. Some of the forces listed in part II of the schedule receive from their owning bodies—both in the public and private sector—diligent and proper training to a Police and Criminal Evidence Act 1984 standard. Some do not.
  The Bill would give the Home Secretary sufficient leverage to ensure that all constables were trained to a certain standard. The term constable—a proud office—should encompass training to a minimum standard laid down by the Home Office. The Bill would enable the Home Secretary to do that and to ensure that if any organisation wanted to add to the list of police forces set out in part II of the schedule, it could do so only after they had been inspected and the Home Secretary was

  731
  satisfied about management controls, training and so forth. It is not improbable that a number of applications could be made. Indeed, the Greenwich Parks police, the Wandsworth Parks police and the Royal Borough of Kensington and Chelsea Parks police are sworn in under London local government legislation and, in theory, there could be 32 parks police in London. I think that that would be unhelpful and unwise; it underlines the fact that we need to take control of the matter.
  I am not opposed to parks police in London boroughs, but if there is significant growth of such forces, there is a case for a single London parks police whose services could be hired out to boroughs. I do not want to discuss that now, but to point out that we could have 32 parks police in London. If parks police are good for London, why not for the rest of the country? We must recognise that that could happen soon. There is an urgent need for control.
  I am a member of that minority that takes great interest in insignia. I look at the plate badges of police officers. The majority of people, on seeing a police officer's uniform, cannot distinguish between the Metropolitan police, the Port of Tilbury police, the Royal Parks constabulary and the Wandsworth Parks police. They see only police officers. We have a duty to ensure that they are all to a certain standard.
  Mr. David Heath: Clause 1(2)(iii) appears on cursory examination to prevent police authorities from using the word "police". I am sure that that is not the hon. Gentleman's intention. Police authorities are a key part of police governance. If they are no longer allowed to use the word "police" in their titles, an amendment may be necessary.
  Mr. Mackinlay: I am sure that that is not so. Clause 1 refers to the Police Act 1996, which allows the use of such titles, but adds that their use should also be extended to the bodies listed in the schedule. If I am wrong, that is a point of detail which could be cleared up in Committee. Home Office forces clearly have such a right in existing legislation. I want to move on because several hon. Members, including Front-Bench spokesmen, have kindly given their time to be here today. I am grateful for their consideration of my Bill.
  Clause 2 is important. Mr. Deputy Speaker, if you and I walked down Whitehall, we might bump into a British Transport police officer. If we witnessed a crime, the officer would have no more competence or jurisdiction to deal with it than you or I. Outside the curtilage of railway properties, such officers have no more than the common law powers of every citizen. If we continued down Whitehall to the Ministry of Defence opposite Downing street, we would probably bump into MOD police officers, whose uniforms are almost indistinguishable from those of Metropolitan police officers except for their cap badges. Again, they have no competence in the street other than as ordinary citizens. If we went through Horse Guards into St. James's park, we might meet, perhaps in Birdcage walk, members of the Royal Parks constabulary, who have competence only within the curtilage of the royal park.
  Life is not simple. Things requiring the attention of police officers often occur just outside the curtilages wherein these important and professional police officers
  732
  have competence and jurisdiction. Of course, they do not stand by the rulebook in such circumstances, but use their common sense to deal competently with incidents. Nevertheless, the situation is unfair to police officers, who may not be insured or who could be the subject of challenge in the courts. My Bill would mean that, in the absence of a Metropolitan police officer or a "Home Office police officer"—in the vicinity of, say, Sellafield, where the Atomic Energy Authority police patrol—officers covered by clause 1 would have the powers and competence of a constable. They could act in support of police officers drawn from the Metropolitan police or one of the county constabulary when necessary, and do so with the full knowledge that they had the powers of a constable.
  Mr. Peter Atkinson: Perhaps the hon. Gentleman can solve a mystery for me. One day last summer, outside this very building, a police officer was directing coaches that were parking opposite Abingdon green. Noticing the unusual badge on his helmet, I asked him which force he belonged to. He said that he belonged to the Royal Parks constabulary. Apparently, Abingdon green is a royal park.
  Mr. Mackinlay: Abingdon green may well be, but I am not sure that the highway is. I bumped into a British Transport police officer outside St. Stephen's entrance. Although he was clearly off duty, if an incident had taken place there he might have been the first police officer available, without having the powers and competence of a police constable. My Bill seeks to remedy that.
  Hon. Members will recall the news footage of the poll tax riots a few years ago, when a scaffolding bar was pushed through the windows of a police car in the vicinity of Trafalgar square. It was a British Transport police car. A couple of years ago, riots in Northumberland avenue were instigated by—supposedly—football fans following an international competition, and a Ministry of Defence police car was attacked.
  The forces defined in part I of the Bill are highly professional. In some parts of the United Kingdom, MOD police are invariably armed, and the force is substantial, comprising some 4,000 officers—much more than some "Home Office police" forces. The Atomic Energy Authority constabulary is also very much an armed police force, which obviously means that we trust its members and recognise their professionalism and competence. The British Transport police are much valued by the public, and are seen every day to be carrying out their duty of maximising public order, assisting the public and, in some instances, having to arrest people. The Royal Parks constabulary also does a very professional job, especially in maintaining security and ensuring that ceremonial events are properly policed—along with other agencies.
  This is a timely measure. The forces specified in part I should be given the full powers of constable where that is appropriate and necessary, in extremis. I hope that the House will also be persuaded of the need for some capacity to control standards and the growth of other smaller police forces to be vested in the Home Secretary.
  2.17 pm
  Mr. John Greenway: I congratulate the hon. Member for Thurrock (Mr. Mackinlay) on securing the debate. With typical resilience, he has pursued the issue

  733
  for several years. I agree with him that there is an issue; I am not persuaded that this is the right time or the right way in which to address it, but no doubt the Minister will say something slightly more official on behalf of the Home Office.
  The issue has arisen before. The hon. Gentleman and I both commented on it in the Standing Committee considering the Bill that became the Police and Magistrates' Courts Act 1994. I suppose that anyone outside the House who heard what the hon. Gentleman has said today would think, "This seems an awfully good idea; what is the stumbling block?" When we were in government, there was always a Home Office Minister on hand to tell us what the stumbling block was, but we are now in opposition, and I have sought no official advice from the Home Office. What I shall say is entirely my own reaction to what I read yesterday when the Bill was available for the first time in the Table Office.
  I do not mean to disparage the hon. Gentleman in any way, but this is not the first time in recent weeks when, at around 2.15 pm on a Friday, we have found ourselves discussing a Bill that was printed only about 36 hours earlier. It does not help us to prepare or to consult organisations that would clearly be affected by the Bill, were it to be given a Second Reading.
  The issue is perhaps more relevant to police forces that are listed in part I of the schedule—particularly the British Transport police and the Royal Parks constabulary—than to those in part II. I know that the hon. Member feels equally strongly about the Ministry of Defence police, but the British Transport police do an excellent job and there is an issue as to what needs to be done, if anything, about their powers and the exercise of control over their function. Clearly, however, there are some major problems with the House accepting the Bill.
  Arguably, there is an issue about whether certain police authorities should call themselves police, as they are not police in the conventional sense of the word. I do take issue with the hon. Gentleman, however, on clause 2, where he seeks to give the powers of a constable to constables in these other police forces. The powers of a constable are unique and historic. It surprises people that many of the powers that constables exercise daily are the powers that are invested in the citizen. The police whom the hon. Gentleman seeks to bring into the ambit of the Bill are able to operate for that reason; they are trained to know just what citizens' powers are available to help them with their work.
  I ask whether a sufficient case has been made about the mischief that the Bill seeks to address. I take the hon. Gentleman's point that, given the growth of the private security industry, we would not wish to have a plethora of other police forces, but all the existing police forces work in either public or extremely tightly controlled areas such as docks or Atomic Energy Authority establishments. Doubtless, we shall want to have the time and opportunity to delve into the history of all those forces. I am sure that we would find that they are properly constituted.
  I could say much more about this matter, but I want to leave the Minister ample opportunity to respond. I am not entirely clear whether this is the view of the official Opposition, but my personal view is that there are issues
  734
  here that should be addressed. The Minister is likely to agree. It will be for the Government to consider how that might be taken forward. I feel sure that Conservative Members would want to co-operate and to take part in any consultation on these matters which the Government thought fit to introduce.
  2.23 pm
  The Minister of State, Home Office (Mr. Alun Michael): I welcome the opportunity to debate the jurisdiction of the larger non-Home Office forces. I pay tribute to my hon. Friend the Member for Thurrock (Mr. Mackinlay), who has been tireless in promoting and representing the interests of non-Home Office police forces. His persistence in bringing the issue of their jurisdiction to the Floor of the House is legendary and explains all the relationships to which he referred. I remember his energetic efforts in this area during the passage of the Police and Magistrates' Courts Act, and I agree that we need to be clear and precise about the issues: who is a police officer, what is a police force and, equally, what is not a police force and who is not a police officer.
  During the debates on that Act, a variety of different organisations were referred to and I cannot resist the temptation to refer again to the Barnet Dog Handlers, which, we discovered, was technically a police force, although it did not really exist and it did not have any employees. They do not seem to have been sighted over the past three or four years or, indeed, for several decades before that.
  Other forces are clearly part of the police family and observe the same standards, supervision and training. That is especially true of the British Transport police, who deal daily with members of the public, albeit in the limited environment of the railways, and who have to observe exactly the same standards of behaviour and arrest, and so on, as the police generally.
  Such non-Home Department forces are an important and intrinsic part of policing and of the maintenance of law and order. Because of the Government's desire to deliver the best policing, we welcome the idea that we should provide an effective and efficient working relationship between Home Department forces and other forces. Therefore, I sympathise with the Bill's good intentions. We are already considering some of the issues that my hon. Friend raised.
  We need to balance the desire for an extension of jurisdiction for some non-Home Department forces against the necessity of maintaining clear areas of responsibility and accountability between them and Home Department forces. Above all, we must guard against leaving scope for confusion over responsibilities or for conflict in operations between the forces. The arrangements in the Bill are directed at a clear target on which we are agreed, but they may have accidental and unintended consequences in that they would give jurisdiction in areas where my hon. Friend would not want it. That is the basic problem with the Bill. It attacks a mischief, a problem that needs to be resolved. However, we must make sure that it does precisely what it intends to do and does not accidentally have effects that were not intended.
  It is important to bear in mind the fact that any legislation needs to be justified by the facts and to have proportionate objectives. The naming of police authorities

  735
  has been referred to. There are such residual elements in the context of the naming of joint bodies. The Police Federation, the Association of Chief Police Officers and the Superintendents Association are allowed for by legislation. I am sure that such issues should also relate to joint bodies such as the Police Information Technology Organisation, and so on, to ensure consistency.
  The Bill's provisions are the main issue. As the hon. Member for Ryedale (Mr. Greenway) said, the Bill was published just yesterday, and there has not been time to go through it in detail. I appreciate the reasons for that. It is difficult for a Back Bencher to introduce legislation covering all the bases, but my hon. Friend the Member for Thurrock has made a brave effort in bringing important issues to the House.
  The Bill contains provisions for regulating the use of the term "police" and related terms, and for amending the law on the powers of certain constables. The clauses would radically alter the existing arrangements for the so-called non-Home Office forces. First, they would place new statutory restrictions on the use of some terms describing police officers and forces and, secondly, they would provide for enlarged jurisdiction for constables in non-Home Office police forces so that they could wield their full powers and privileges anywhere in England and Wales. Of course, there are corresponding provisions for Scotland and Northern Ireland.
  I understand that, broadly, the condition is that the constable must think that the circumstances require him or her to exercise those powers and that either another constable is asked for help or there is no other constable available. The Bill also seeks to regulate the power of the Secretary of State in respect of non-Home Department police officers. I can see the attraction in the proposal to extend the jurisdiction of all constables in non-Home Office forces, so that they can exercise their powers anywhere in England and Wales to assist the public or a local police force. Members of the British Transport police who have left transport territory and are perhaps travelling by car between one railway station and another to pursue their duties could come across an incident and face a problem. The fact that they should be able to give assistance to the local police force because of their experience makes sense, but it is a complex area that needs careful consideration.
  The main point is constitutional. The limited jurisdiction of some of the forces reflects their constitutional position. By and large, the non-Home Office forces are not about policing the general public. As I have said, the British Transport police do, but that is not the case for some of the other forces listed in the schedule. Some of them are about protecting private property; some are about protecting specific interests. It would be wrong—
  It being half-past Two o'clock, the debate stood adjourned.
  Debate to be resumed on Friday 6 March.

  Remaining Private Members' Bills

    ELECTIONS (VISUALLY IMPAIRED VOTERS) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 13 March.

    NATIONAL HEALTH SERVICE (EQUITY OF FUNDING) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 3 July.

    PUBLIC HOUSE NAMES BILL
    Mr. Deputy Speaker (Sir Alan Haselhurst): Not moved.

    COMPANIES (MILLENNIUM COMPUTER COMPLIANCE) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 6 March.

    REPRESENTATION OF THE PEOPLE (AMENDMENT) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 6 March.

    EMPLOYMENT RIGHTS (DISPUTE RESOLUTION) BILL [LORDS]
    Order read for consideration (as amended in the Committee).
    Hon. Members: Object.
    To be considered on Friday 20 March.

    EMPLOYMENT (AGE DISCRIMINATION IN ADVERTISEMENTS) BILL
    Order read for resuming adjourned debate on Question [6 February], That the Bill be now read a Second time.
    Hon. Members: Object.
    Debate to be resumed on Friday 3 July.

    CHRONICALLY SICK AND DISABLED PERSONS (AMENDMENT) BILL [LORDS]
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 13 March.

    COMMUNITY CARE (RESIDENTIAL ACCOMMODATION) BILL
    Order for Third Reading read.
    Hon. Members: Object.
    To be read the Third time on Friday 20 March.

    REFORM OF QUARANTINE REGULATIONS BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday 6 March.

  Iraq
  Motion made, and Question proposed, That this House do now adjourn.,—[Mr. Dowd.]
  2.33 pm
  Mr. Tam Dalyell: As reported in Hansard on 10 February, I asked the Foreign Secretary:
  "Does the House have the clear, unambiguous undertaking that, before military action is taken, we will return to the Security Council of the United Nations for its clear, unambiguous endorsement of that military action?"
  The Foreign Secretary replied:
  "A large number of diplomats in the Foreign Office have been working towards precisely that objective for several days. We hope to table the resolution in New York this week and I hope that the resolution will gain the support of the Security Council, so I certainly give my hon. Friend that assurance."—[Official Report, 10 February 1998; Vol. 306, c. 149.]
  In the Queen's counsel opinion of my hon. and learned Friend the Member for Medway (Mr. Marshall-Andrews), that is a watertight undertaking. I ask my hon. Friend the Minister whether that is still the position.
  On 12 February 1998, in column 561 of Hansard, I asked for an assessment of the situation between Iran and Iraq and about the story in that day's edition of The Times. I should like to tell my hon. Friend the Minister that, in October, my wife and I went on holiday to Iran on—I hasten to say—a paid-for bus tour. In Tehran, in Tabriz, in Kashan, in Hamadan, in Yazd, in Shiraz and in Isfahan, one sees war memorials of the type that one would see in many villages and towns in Britain. They are war memorials of the quite appalling Iran-Iraq war, in which the Iranians lost the kind of casualties that we lost in the first world war.
  The truth is that the Iranian people loathe Saddam Hussein. Yet it was the view of all the people we met, and certainly the official view of the Iranian Government, that they are absolutely against any type of proposed British-American air strike against Iraq.
  What discussions have the Government had with the Government of Iran? After all, Iran and Iraq are neighbours, and supposedly one of the objects in taking action would be to prevent any attack—either with biological or chemical weapons, or with other nasty weapons—that Saddam Hussein could make against his neighbours.
  It was on 24 July 1968 that I had the misfortune—I think that I was the last hon. Member to have had such a misfortune, which is duly recorded in columns 587 to 666 of the Hansard of that date—to be called to the Bar of the House, with Mr. Speaker King putting his black cap on, because of my talking too freely to the late Lawrence Marks about chemical and biological weapons at a Select Committee visit to Porton. So I have had over 30 years of intense interest in the problems of chemical and biological weapons.
  I should therefore like to go through a letter that has been written both to the Defence Secretary and to the Foreign Secretary—about which I rang his office this morning—from a man whom I have known for over 35 years: Stephen Rose, of the department of biology in the Open university and director of the brain

  739
  and behaviour research group. He says to my right hon. Friends that he is writing as someone
  "with more than 25 years of direct personal and professional experience of the use of chemical weapons in general, and by Saddam Hussein against Iran and the Kurds in particular, to try to impress upon you the enormous potential genocidic hazard of your declared intentions to attempt to destroy the Iraqi"—
  chemical, biological and nuclear—
  "capability by sanctioning bombing."
  Professor Rose says that he does not deny the need to attempt to enforce United Nations sanctions. Neither does he deny the evidence that the Iraqi regime is manufacturing and has putative stockpiles of those agents. He continues:
  "But your military advisers will surely have pointed out to you that bombing such stockpiles will not destroy more than a fraction of the agents. Most will be dispersed into the air, much as was the case during the last Gulf War and in the attempt to destroy the Iraqi stockpiles subsequently. You will be aware of the claim that Gulf War syndrome was caused at least in part by low level exposure to such released agents. You must also know of the difficulties that the US has experienced in safely destroying its own stockpiles by incineration.
  So if the bombing is effective we are faced with the inevitable uncontrolled release of large quantities of lethal agents, including presumably nerve and mustard gas, as well as anthrax and radioactive materials. These agents will drift over significant areas of Iraq, resulting in further illness and death amongst its already impoverished citizenry, and will not stop at Iraq's borders, with potential but incalculable danger to citizens of neighbouring friendly states. The result will be that by a sort of dreadful collusion with Saddam, the US and UK governments will be directly contributing to genocide.
  Whatever the logic of threatening military action to back up diplomatic pressure, its use in this context can only be disastrous, increasing innocent people's misery, bringing no obvious political gains, and casting a lasting shadow over the UK's claims to be embarking on an ethical foreign policy. I urge you, even at this late stage, to accept a political compromise, even if imperfect, rather than take this doom-laden step."
  I would ask for some comment on Professor Rose's analysis.
  I shall address myself to the Foreign Secretary and then to the Prime Minister; but first to the Foreign Secretary. I shall read out a resolution drafted not by me—I was slightly late for the meeting, having listened to two former Secretary-Generals of the United Nations, Boutros-Ghali and Perez de Cuellar, explaining that they believe that the proposed action was unlawful—but by Deputy Provost Councillor Allister Mackie, chairman of the Linlithgow constituency Labour party, and the Deputy Provost of the area of West Lothian which the Foreign Secretary and I represent.
  The resolution reads as follows:
  "That Linlithgow Constituency Party of the Labour Party views with dismay the threats and statements made by the Prime Minister, Tony Blair, and the Foreign Secretary, Robin Cook, in relation to the British Government's policies towards Iraq.
  Although opposed to Hussein's Regime in Iraq, this CLP believes that Britain's and the world's interests would not be better served by a war of aggression on the part of the American and British Governments, without unambiguous world support.
  Further, we are of the view that, taking into account the Government's proposals to reduce financial support to One Parent Families, introducing tuition charges to students, the proposals to reduce payments to disabled persons, and the continuing pressure on local Government to reduce levels of service, due to lack of adequate financing of local Government, the finances of the
  740
  UK could be put to better use than waging war on an innocent people, whose sole criticism is that they were governed by an unacceptable leader.
  Thus we call upon the 2 above-named Government Ministers to consider if they are pursuing personal agendas rather than the interests of the people of the UK, who they were duly elected and appointed to serve.
  It is the view of the Members of this CLP that their conduct in relation to this matter is irrational and indeed illegal, and therefore we call upon Mr. Blair and Mr. Cook to reconsider with urgency further pursuit of their war-inducing threats and statements.
  In particular, we call on the Government, in view of the stated doubts of two former UN General Secretaries and several international lawyers to make public the legal basis on which military action would be taken."
  I had the opportunity when he kindly saw me for some 25 minutes to put into the hands of my right hon. Friend the Prime Minister the legal opinion of Mr. Marc Weller, an international lawyer at the centre of international studies in the university of Cambridge—supported by other international lawyers whose names I have given to Downing street.
  For 21 years, I had the privilege of representing the people of Broxburn and Uphall. I do not think that they want their present representative, my right hon. Friend the Foreign Secretary, prancing around the middle east trying to drum up support for allowing the British to use bases from which to launch weapons of awesome destruction. I not only think, but know, that some of their representatives and former representatives are as dismayed as I am at my right hon. Friend's recent action and attitude.
  For 35 years, I had the privilege of representing Stonyburn, a former mining village in West Lothian which is now in the Livingston constituency. The people of Stonyburn have spoken through their councillor, Provost Joe Thomas of West Lothian council. He told me this morning that he was aware of widespread concern among my former constituents in Stonyburn at the uncompromising nature of the threatened war against Iraqi people. He said, "Violence does not solve problems. Violence creates problems." I have to tell my right hon. Friend the Foreign Secretary that there are people in Stonyburn praying that no action is taken. Those people sent me, and now my right hon. Friend, to the House of Commons. If there is military action, we can imagine pictures many times those of Dunblane flashing round the world.
  I am one of comparatively few—a dwindling number of hon. Members who have actually worn the Queen's uniform, done gunnery and experienced the smell of cordite. Perhaps we are a bit less relaxed about unleashing war than those who have never been in a military situation. I am hesitant to claim great military virtue, but I wear the tie of the Royal Scots Greys, now the Scots Dragoon Guards, and I had the opportunity of sitting in his room and reading to my right hon. Friend the Prime Minister the letter from the colonel of the regiment to The Times. I spoke to Field Marshal Sir John Stanier and I repeat part of the letter that I read out to my right hon. Friend:
  "The conduct of a successful air war is a politicians dream; it avoids the mud and blood of a ground campaign and enables wars to be fought without getting your hands dirty. Unfortunately air wars are never successful in isolation. If you wish to expel an invading dictator from say, Kuwait or the Falklands, you have to go there and drive him out. The same applies to stopping him from doing some things that you don't like."

  741
  He concludes:
  "Perhaps if we attempted to improve the lot of Saddam Hussein's people by offering a reduction in sanctions in exchange for evidence of his abandonment of weapons of mass destruction, a more realistic result might be achieved."
  When my right hon. Friend the Prime Minister goes up the Downing street staircase at night, with the pictures of his predecessors on the wall, he might pause for a moment to look at the picture of Anthony Eden. Saddam Hussein is no Gamal Abdel Nasser. Nasser was an impressive figure. I had the good fortune to be asked to see him in his house in Cairo in 1964. Unless we are very careful, Saddam Hussein will be perceived in large parts of the Arab world—and not only the Arab world—as another Nasser. Is that what we want?
  2.50 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Derek Fatchett): My hon. Friend has a reputation for having a long-standing and principled interest in these matters. I fear that when he comes to read the record of his speech, he will be disappointed with its content, not least because—somewhat out of character—he has quoted others to cloak personal attacks on my right hon. Friends the Prime Minister and the Foreign Secretary. That is unworthy of him. I fear that he will regret it when he reads his speech.
  I welcome the opportunity to reply to the debate and bring my hon. Friend and the House up to date with diplomatic activity. I have just returned from the middle east, where I spoke to leaders in Oman, the Emirates and Egypt. Three key points emerged from those discussions.
  First, there was unanimous strong support in each of those countries for the notion that Saddam Hussein must comply with the Security Council resolutions. There is no need to remind those countries of the threat that Saddam Hussein poses to the region. Their Arab cousins in Kuwait know that. My hon. Friend quoted Field Marshal Stanier. Saddam Hussein, the dictator, was driven out of Kuwait by military action. That action was necessary, but it was not supported at the time by my hon. Friend. If we had taken his preferred course of action then, the countries in the Gulf that I have visited this week would have been under even greater threat from the weapons of mass destruction that Saddam owns and is developing.
  Secondly, there was wholesale support for exhausting every diplomatic opportunity. The United Kingdom agrees with that. I shall tell the House in a few moments about some of the actions that we are taking.
  Thirdly, there was a strongly held view that if Saddam Hussein did not take the opportunities provided by diplomacy, he alone would be responsible. Those opportunities are available to him. All that we are asking is that he should abide by Security Council resolutions.
  My hon. Friend quoted several authorities. I shall quote no authorities; just one basic principle. In diplomacy, a word given should be a word honoured. The word that Saddam Hussein gave when he agreed to allow the United Nations Special Commission inspectors to do their work is being broken. We know Saddam Hussein's record. We now know that his word is worth very little. A basic tenet of diplomacy is that a word should be followed and a promise that is committed should be carried through.
  742
  Those three principles were clearly reinforced by my contacts in the Gulf and the middle east this week. All those countries want UNSCOM to do its work without restriction so that it can find the biological and chemical arsenal that exists within Iraq. My right hon. Friend the Foreign Secretary published the extent of that arsenal last week and referred to the success that UNSCOM has already enjoyed in locating weapons of mass destruction.
  In his opening remarks, my hon. Friend recognised by implication the danger that Iraq poses to other countries in the region. At no point during his 18-minute speech did my hon. Friend try to deny that Saddam Hussein has chemical and biological weapons. My hon. Friend recognises that fact. If he were to talk to those in the Arab countries near Iraq—rather than those who enjoy the comfort of Westminster—he would appreciate the real threat that those weapons represent.
  UNSCOM must be allowed to do its work without restriction. There is no reason for agreeing to any position less than that which is enshrined in the Security Council resolutions. Our basic principle is that those resolutions must be agreed to, implemented and complied with.
  I told my hon. Friend that I would inform him of the diplomatic efforts that are being made. The United Kingdom has played a leading role in those efforts. A meeting of European Ministers in Panama on Wednesday issued a statement, which I draw to the attention of the House. European Union representatives at the meeting called upon Iraq to comply with the relevant United Nations Security Council resolutions, and in particular to permit UNSCOM to carry out effective inspections of sites where it suspects that vital information or chemical and biological weapons are concealed.
  A Gulf Co-operation Council meeting of Foreign Ministers on Wednesday also issued a very strong statement condemning Saddam Hussein both in terms of his denial of the United Nations and his arsenal of weapons of mass destruction. The United Kingdom's position is supported by countries such as Australia, Canada, Poland—and the list continues. It is clear that no one in the United Nations does not want to see Iraq comply with the United Nations Security Council resolutions.
  Some claim that we should not consider the military option and that we should ask Saddam Hussein to play the game in a decent way—he old public school rules. I suppose that we could go to the palace in Baghdad and say, "Isn't it about time, Saddam, that you allowed the arms inspectors to do their job?" Does anyone imagine that Saddam Hussein would respond by opening the door to Richard Butler and the arms inspectors and allowing them to get on with their business? It is fanciful to believe that that will occur.
  There is pressure on Saddam Hussein to allow the inspectors to do their job because he understands the consequences of his failure to comply with the United Nations Security Council resolutions. The military option, to which my hon. Friend refers regularly, is key to our ability to negotiate and ensure that there is compliance. Without that option, the diplomatic process could not be successful. We have always sought—and continue to seek—a diplomatic resolution.
  The representatives of the five permanent members of the Security Council met yesterday, and they will continue to have further meetings in the hope and the expectation

  743
  that a Security Council resolution will be forthcoming in the next few days. That will enable the diplomatic process to continue to work towards our sole objective: ensuring compliance with Security Council resolutions.
  Without the pressure and without the potential risk to the regime in Baghdad, there would be no possibility of compliance with Security Council resolutions. In the past seven years, Saddam Hussein has denied weapons inspectors access to sites. My hon. Friend is right to say that chemical and biological weapons are wicked and evil. He should join the campaign that we are waging to ensure that Iraq is clear of weapons of mass destruction.
  The history of this century shows us that if we play the game in such a way as to appear to offer appeasement to dictatorship, the consequences are more horrific than standing up to a dictator. That is why we have taken this position.
  Mr. Dalyell: Will my hon. Friend give way?
  Mr. Fatchett: No, I must finish. My hon. Friend had 18 minutes, and left me with a shorter time to reply.
  My hon. Friend rightly referred to the state and condition of the people of Iraq. We share his humanitarian concerns. That is why the United Kingdom Government are leading the call for an extension of the "oil for food" regime. The people of Iraq should have greater access to oil revenues, so that their humanitarian needs can be meet. That is crucial.
  I hope that my hon. Friend applauds that humanitarian gesture. He should ask himself what has happened to the "oil for food" scheme and resolution 986 in the past few
  744
  years. Why have the Iraqi people been denied access to food? It is not because of the United Nations or the United States. If the red smoke of envy and resentment can be cleared from Saddam Hussein' s eyes, he will see that. Nor is it because of the actions of my right hon. Friend the Foreign Secretary. It is because of the actions of Saddam Hussein and his treatment of his own people.
  I applaud the position taken by both the Conservative party and the Liberal Democrats. The Government are determined to ensure that the United Nations resolution is upheld. Over the years, my hon. Friend has been a great supporter of the United Nations. If we back down, and if Security Council resolutions become negotiable, the legitimacy and integrity of the United Nations will be damaged for ever. We are the friends of the United Nations, and we respect international law. We are determined to ensure that Saddam Hussein complies with Security Council resolutions, because that is the only way to make progress.
  My hon. Friend raises these issues time and again, and he will do so on Tuesday. I ask him to think about the consequences of appeasement, and of not pushing Saddam Hussein hard to ensure compliance. We have taken the right course, and we shall continue to follow it, because that is in the best interests of the people of Iraq, the people of the region and the United Nations.
  Question put and agreed to.
  Adjourned accordingly at two minutes past Three o'clock.

DUCHY OF LANCASTER

  Civil Servants
  Mr. Forth
  To ask the Chancellor of the Duchy of Lancaster how many civil servants in his Department at grade 3 or above have(a) resigned, (b) retired before pensionable age and (c) moved to different responsibilities within the Department since 1 May 1997; if he will indicate the Ministers to whom each was responsible; and if he will make a statement. [26931]

  Dr. David Clark
  For this purpose, the Cabinet Office includes the Prime Minister's Office and the Office of Public Service and its executive agencies. Grades 1–5 were replaced by the Senior Civil Service on 1 April 1996. One civil servant of grade 3 and above has resigned; none have retired before pensionable age; and five have moved to different responsibilities within my Department since 1 May 1997. The civil servant who resigned was responsible to me and, of those moving, three were responsible to me and two to the Prime Minister.

  Mr. Duncan
  To ask the Chancellor of the Duchy of Lancaster if he will list by grade the number of officials in his Department at grade 3 or above who have(a) taken early retirement, (b) taken official leave, (c) been dismissed, (d) changed jobs within the Department, (e) moved to another Department and (f) been offered and rejected an alternative position (i) within the Department and (ii) in another Department since 1 May 1997. [27466]

  Dr. David Clark
  [holding answer 5 February 1998]: For this purpose the Cabinet Office includes the Prime Minister's Office and the Office of Public Service and its executive agencies. Grades 1–5 were replaced by the Senior Civil Service on 1 April 1996. The numbers relating to staff at equivalent levels to the old grades, for my Department, are as follows:

  Grade 1

  Grade 2

  Grade 3

  (a)

  nil

  nil

  nil

  (b)

  information not held centrally

  (c)

  nil

  nil

  nil

  (d)

  nil

  1

  4

  (e)

  nil

  4

  7

  (f) (i)

  nil

  nil

  nil

  (f) (ii)

  nil

  nil

  nil

  Millennium Compliance
  Mrs. Gillan
  To ask the Chancellor of the Duchy of Lancaster what steps he is taking to increase confidence in the Government's handling of the millennium computer compliance problem. [29509]
  400
  Dr. David Clark
  The Government intend to increase public confidence in their handling of the millennium bug problem by continuing with our policy of open public scrutiny. As I outlined in my reply to my hon. Friend the Member for Dumfries (Mr. Brown) on 30 January 1998,Official Report, columns 403–04, I shall provide regular reports to the House.

MINISTER WITHOUT PORTFOLIO

  Millennium Dome
  Mr. Llew Smith
  To ask the Minister without Portfolio what assessment his Department has made of the advantages of installing photovoltaic solar cells in the Millennium Dome; and what proposals there are to use photovoltaic technology(a) in the Millennium Dome and (b) in the Millennium Experience exhibition. [28202]

  Mr. Mandelson
  The cladding of the Millennium Dome, which will house the Millennium Experience, is translucent, allowing through natural daylight. The New Millennium Experience Company considered installing photovoltaic cells but concluded that this would reduce translucency and hence increase the power needed for artificial lighting. The NMEC is, however, currently investigating the potential for using a number of sustainable power sources within the Dome for demonstration and educational purposes.

LORD CHANCELLOR'S DEPARTMENT

  Queen's Counsel
  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department what is the greatest number of unsuccessful applications made for silk by a barrister in the last 10 years. [28500]

  Mr. Hoon
  According to departmental records, the greatest total number of unsuccessful applications made by a barrister who has applied in the last ten years is twenty five.

  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department what is the shortest time a barrister has practised at the bar before taking silk in the last 10 years. [28502]

  Mr. Hoon
  According to departmental records the shortest time that a barrister has practised at the bar in the last ten years before taking silk is thirteen years.

  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many High Court judges had their applications for silk rejected at their(a) first, (b) second and (c) third attempt. [28506]

  Mr. Hoon
  Of the ninety seven High Court Judges currently in post, nineteen had their first application for silk rejected, six had their second application rejected and two had their third application rejected. Nine High Court Judges did not take Silk.

  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the greatest number of applications for silk made by an individual who has taken silk in the last 10 years. [28501]
  401
  Mr. Hoon
  According to our departmental records, the greatest number of applications made by an individual who has taken silk in the last ten years is fifteen.

  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department what estimate he has made of the number of QCs who are non-practising. [28503]

  Mr. Hoon
  The Lord Chancellor's Department does not keep records of whether QCs are practising or non-practising, because the Lord Chancellor has no Ministerial responsibility for the practice of individual barristers.

  Brazilian Mahogany
  Mr. Alan Simpson
  To ask the Parliamentary Secretary, Lord Chancellor's Department what amount of Brazilian mahogany has been(a) acquired and (b) specified by his Department in (i) 1996 and (ii) 1997; and for what purpose. [28391]

  Mr. Hoon
  No Brazilian mahogany has been acquired or specified by my Department in either 1996 or 1997.

  Immigration Determinations
  Ms Oona King
  To ask the Parliamentary Secretary, Lord Chancellor's Department where members of the public can obtain access to comprehensively indexed collection of determinations by immigration adjudicators. [28303]

  Mr. Hoon
  There is no collection of indexed adjudicator determinations in existence. Copies of adjudicator determinations are retained on tribunal files, and are available to members of the public with permission from an adjudicator.

  Immigration Appeal Tribunal Decisions can be obtained from the Supreme Court Library on demand. They will also soon be available to subscribers on the Electronic Immigration Network Database via the Internet. This service should be available from April.

WALES

  Private Residential Homes (Abuse)
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Wales how many cases of abuse were reported against the elderly in private residential homes in Wales over the last five years. [26987]

  Mr. Win Griffiths
  While local authorities in Wales investigate all complaints made to them by or on behalf of elderly people in private residential homes, there is no clear or agreed basis for defining abuse in these circumstances. The information that is collected is therefore not available on a consistent basis but my officials will work with local authorities to examine how an effective reporting framework can be developed as an essential tool in helping to measure the quality of care provided for elderly people in residential homes.
  402

  Wind Farms
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he proposes to continue granting permissions for the establishment of wind farms; and if he will make a statement. [28615]

  Mr. Win Griffiths
  Responsibility for determining planning applications for wind farms rests initially with local planning authorities. The Secretary of State is responsible for determining appeals and applications which have been called in. Decisions on all such applications should be made in accordance with Government Policy set out in Planning Guidance (Wales): Planning Policy, Technical Advice Note (Wales) 8: Renewable Energy, and policies in development plans, unless material considerations indicate otherwise.

HOME DEPARTMENT

  Passport Fees
  Mr. Quinn
  To ask the Secretary of State for the Home Department if he will make a statement on passport fees. [29769]

  Mr. Mike O'Brien
  The Privy Council has approved an Order in Council, the Consular Fees Order 1998, which gives authority for an increase in passport fees on 26 March. The fee for a standard 32 page passport will increase from £18 to £21 and for a 48 page passport from £27 to £31. The fee for amending an existing passport will increase from £5 to £11, to reflect the economic cost. The cost of a separate passport for children will be £11 for a passport valid for five years. An additional charge of £10 will be introduced for those making applications in person in the United Kingdom and for applications made abroad to reflect the greater cost of providing these services. The fee for a collective passport, for organised trips for schools and youth groups, will remain unchanged at £40.

  This is the first general increase in passport fees since November 1992 and, for the over 80 per cent. of applicants who apply by post, is in line with the level of inflation for the period. In relation to the cost of travel abroad, a fee of £21 for a standard ten year passport still represents very good value for money.

  Prison Service
  Dr. Palmer
  To ask the Secretary of State for the Home Department if he will make a statement on the resources available to the Prison Service. [29957]

  Mr. Straw
  Following the Audit of Prison Service Resources last summer, I made available to the Prison Service additional funding of £43m over two years to increase capacity and regime activity. In the event, the Service has done well in containing costs and has not had to call on the extra provision for 1997–98.

  I am now making available £112m in 1998–99 on top of the existing budget of £ 1,704m.

  This will be used to fund continued use of Her Majesty's Prison Weare, to build six more houseblocks, to fund conversion of accommodation to cell usage to hold extra prisoners in new prisons and to carry out

  403
  repairs on the prison estate. It provides additional staffing and funding for regime activities, to keep prisoners constructively occupied.

  With this money, this Government have provided for 1,540 new places in prisons and have supported the placing of an additional 2,280 prisoners in existing accommodation.

  Asylum Seekers
  Mr. Burstow
  To ask the Secretary of State for the Home Department how many asylum seekers are currently held in category A prisons. [29182]

  Mr. Mike O'Brien
  [holding answer 12 February 1998]: The available information on persons detained solely under Immigration Act powers in those prisons in England and Wales that contain category A accommodation is given in the table.

  I regret that reliable information on the detention location of asylum seekers can be obtained only by examining individual case records and is, therefore, only available at disproportionate cost.

  Persons recorded as being detained solely under Immigration Act powers in prisons in England and Wales which contain category Aaccommodation1 2as at 31 December 19973

  Prison establishment

  Total detainees

  Belmarsh

  9

  Bristol

  7

  Doncaster

  3

  High Down

  19

  Manchester

  2

  Other

  2

  Total

  42

  1 These prisons may also contain accommodation of categories other than category A.

  2 Detainees may be held in accommodation of a category other than category A.

  3 Data are provisional.

  Cannabis
  Mr. Flynn
  To ask the Secretary of State for the Home Department what was the total cost in police time of detaining, arresting and prosecuting all those cautioned, prosecuted or convicted of offences involving cannabis in each of the past five years. [29138]

  Mr. George Howarth
  [holding answer 12 February 1998]: The information requested is not collected for any such offences either centrally or locally. The cost of doing so would be prohibitive in terms of money and police resources.

  EU Asylum and Immigration Policies
  Mr. Beith
  To ask the Secretary of State for the Home Department what discussions he has had with European Union nations concerning asylum and immigration policy since 1 May; what decisions have been made on policy matters; and if he will make a statement. [28845]

  Mr. Straw
  Since 1 May 1997, I have attended two formal Justice and Home Affairs (JHA) Councils, on 26–27 May and 4–5 December 1997, and two informal JHA Councils, on 9–10 October 1997 and 29–30 January 1998. At each of these, asylum and immigration policy 404
  has been discussed, as it has usually been at regular bi-lateral meetings with my counterparts from other member states of the European Union.

  The decisions on immigration and asylum policy matters adopted by the Council since 1 May 1997 are:

  A resolution on combating marriages of convenience:

  A Decision on the exchange of information concerning assistance for the voluntary repatriation of third-country nationals:

  A Decision on monitoring the implementation of instruments concerning asylum:

  A Resolution on unaccompanied third-country national minors:

  A Joint Action concerning the financing of specific projects in favour of asylum seekers and refugees;

  A Joint Action concerning the financing of specific projects in favour of displaced persons who have found temporary protection in the member states and asylum seekers;

  An Action Plan concerning the influx of migrants from Iraq and the neighbouring region.

  Ministers of the member states of the European Union, meeting as the Article 18 Committee—established by the Convention determining the State responsible for examining applications for asylum lodged in one of the member states of the European Communities (Dublin Convention)—have also adopted, since 1 May 1997:

  Rules of procedures of the Committee set up by Article 18 of the Dublin Convention:

  Conclusions on the practical application of the Dublin Convention.

SCOTLAND

  Local Authority Expenditure
  Mr. Ernie Ross
  To ask the Secretary of State for Scotland if he will make a statement on Scottish local authority expenditure constraints in 1998–99. [29916]

  Mr. Dewar
  The 1998–99 local government finance settlement is extremely tight and councils will have to make difficult choices when they set their budgets for next year. There is no scope to increase overall support for councils but, following discussions with the Convention of Scottish Local Authorities, I am pleased to announce a scheme which will allow many councils throughout Scotland to increase spending on front-line services by a further 0.25 per cent. of base budgets on top of the limits determined by my provisional capping principles. I hope that councils will direct this additional spending at our shared priorities, such as education. To offset this increase they will have to reduce their capital expenditure by the same amount.

  I am also determined to keep council tax levels down, so local authorities will be allowed to take up this flexibility only if they keep their Band D council tax increase next year below £60. Councils will continue to face difficult decisions but this scheme will allow them the flexibility to make their own choices suitable to their local circumstances.

  I have placed a copy of Scottish Office Finance Circular 3/98, which describes the details of the scheme, in the Library.
  405

  Foxes
  Charlotte Atkins
  To ask the Secretary of State for Scotland which Scottish fox destruction societies have had their government grants cancelled. [28629]

  Mr. Macdonald
  None. Under a modified grant scheme to be introduced on 1 April 1998 the cost of the upkeep of hounds will no longer be supported, following a review which found these costs to be disproportionate to the benefits achieved.

PRIME MINISTER

  National Pensioners Convention
  Mr. Gordon Prentice
  To ask the Prime Minister when he last met representatives from the National Pensioners Convention. [29572]

  The Prime Minister
  While I have not had any formal meetings with the National Pensioners Convention (NPC), their representatives have met my right hon. Friend the Secretary of State for Social Security and the Parliamentary Under-Secretary of State for Social Security, my hon. Friend the Member for Southampton, Itchen (Mr. Denham), who is responsible for pensions. The most recent meeting was on 28 January.

FOREIGN AND COMMONWEALTH AFFAIRS

  Lost and Stolen Items
  Mr. Malcolm Bruce
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list those items valued at more than £25 stolen or lost from his Department since 1 May 1997; and if he will make a statement. [27798]

  Mr. Doug Henderson
  [holding answer 5 February 1998]: The following list has been compiled.

  Item

  Date

  Value (£)

  Telephone answer machine

  June 1997

  50

  Computer printer and screen

  June 1997

  450

  Computer processor

  June 1997

  1,000

  Laptop computer

  October 1997

  3,000

  Arms Exports
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions on arms exports from Britain he held during his visit to South East Asia in 1997; and if he will make a statement. [29119]

  Mr. Fatchett
  Defence sales issues, including our new criteria for considering export licence applications, were discussed in Indonesia, Malaysia and the Philippines during my right hon. Friend the Foreign Secretary's visit to the region in August 1997.

  Correspondence
  Mr. Yeo
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he expects to reply to the 406
  letter of 2 December 1997, from the hon. Member for South Suffolk regarding his constituent, Mr. Reginald Clarke. [29384]

  Mr. Fatchett
  We await further details from the High Commission in Nairobi about this case. The Migration and Visa Department will write to the hon. Member within the next few days.

  Ponsonby Rule
  Mr. Mitchell
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to the answer of 16 December 1997,Official Report, column 101, if he will list all such treaties subject to the Ponsonby Rule laid before Parliament since 1 January 1997 indicating the last date of the 21 day period; and what form notification of Parliament took in respect of each treaty. [26236]

  Mr. Tony Lloyd
  A total of 15 treaties subject to the Ponsonby rule have been laid before Parliament since 1 January 1997. They are listed below. The last day of the 21 day period is indicated on the list. These treaties have all been laid with an Explanatory Memorandum (EM) bringing to the attention of Parliament the main features of the treaty with which it is laid.

  Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Canada.

  Publication reference: Canada No. 1 (1997) Cm 3582

  EM No. 1

  Presented to Parliament: 24 March 1997

  Last date of 21 day period: 12 June 1997.

  World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty.

  Publication reference: Miscellaneous No. 8 (1997) Cm 3728

  EM No. 2

  Presented to Parliament: 30 July 1997

  Last date of 21 day period: 20 November 1997.

  Protocol to the Partnership and Co-operation Agreement, establishing a partnership between the European Communities and their Member States, of the one part, and the Russian Federation, of the other part.

  Publication reference: European Communities No. 8 (1997) Cm 3733

  EM No. 3

  Presented to Parliament: 13 August 1997

  Last date of 21 day period: 24 November 1997.

  Protocol to the Partnership and Co-operation Agreement between the European Communities and their Member States, of the one part, and Ukraine, of the other part.

  Publication reference: European Communities No. 9 (1997) Cm 3734

  EM No. 4

  Presented to Parliament: 13 August 1997

  Last date of 21 day period: 24 November 1997.

  Protocol to the Partnership and Co-operation Agreement, establishing a partnership between the European Communities and their Member States, of the one part, and the Republic of Moldova, of the other part.

  Publication reference: European Communities No. 10 (1997) Cm 3735

  EM No. 5

  Presented to Parliament: 13 August 1997

  Last date of 21 day period: 24 November 1997.

  407

  World Intellectual Property Organization (WIPO) Copyright Treaty

  Publication reference: Miscellaneous No. 9 (1997) Cm 3736

  EM No. 6

  Presented to Parliament: 13 August 1997

  Last date of 21 day period: 24 November 1997.

  Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Antigua and Barbuda concerning the investigation, restraint and confiscation of the proceeds and instruments of crime.

  Publication reference: Antigua and Barbuda No. 1 (1997) Cm 3741

  EM No. 7

  Presented to Parliament: 20 August 1997

  Last date of 21 day period: 24 November 1997.

  Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia concerning the investigation, restraint and confiscation of the proceeds and instruments of crime.

  Publication reference: Australia No. 1 (1997) Cm 3742

  EM No. 8

  Presented to Parliament: 20 August 1997

  Last date of 21 day period: 24 November 1997.

  Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Colombia concerning mutual assistance in relation to criminal matters.

  Publication reference: Colombia No. 1 (1997) Cm 3743

  EM No. 9

  Presented to Parliament: 20 August 1997

  Last date of 21 day period: 24 November 1997.

  Protocol drawn up, on the basis of Article K.3 of the Treaty of European Union and Article 41(3) of the Europol Convention, on the privileges and immunities of Europol, the members of its organs, the deputy directors and employees of Europol.

  Publication reference: European Communities No. 12 (1997) Cm 3767

  EM No. 14

  Presented to Parliament: 8 October 1997

  Last date of 21 day period: 24 November 1997.

  Treaty of Amsterdam amending the Treaty on European Union, the treaties establishing the European Communities and certain related acts including the protocols with final act, declarations and consolidated versions of the Treaty on European Union and the treaty establishing the European Community.

  Publication reference: European Communities 14 (1997) Cm 3780

  EM No. 16

  Presented to Parliament: 29 October 1997

  Last date of 21 day period: 26 November 1997.

  Draft Agreement relating to the commission established by the convention for the protection of the marine environment in the North-East Atlantic 1992.

  Publication reference: Miscellaneous No. 11 (1997) Cm 3796

  EM No. 17

  Presented to Parliament: 12 November 1997

  Last date of 21 day period: 10 December 1997.

  Convention between the Government of the United Kingdom of Great Britain and Northern Ireland, the Government of the French Republic, and the Government of the Federal Republic of Germany concerning scientific personnel at the Max Von Laue-Paul Langevin Institute.

  Publication reference: Miscellaneous No. 12 (1997) Cm 3821

  EM No. 18

  408

  Presented to Parliament: 10 December 1997

  Last date of 21 day period: 27 January 1998.

  Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Hong Kong Special Administrative Region of the People's Republic of China for the surrender of fugitive offenders.

  Publication reference: Hong Kong No. 1 (1998) Cm 3843

  EM No. 19

  Presented to Parliament: 16 January 1998

  Last date of 21 day period: 13 February 1998.

  Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Hong Kong Special Administrative Region of the People's Republic of China for the transfer of sentenced persons.

  Publication reference: Hong Kong No. 2 (1998) Cm 3844

  EM No. 20

  Presented to Parliament: 16 January 1998

  Last date of 21 day period: 13 February 1998.

TREASURY

  Asbestosis
  Mr. Clapham
  To ask the Chancellor of the Exchequer how many people were diagnosed as suffering from asbestosis in 1996 in each(a) parliamentary constituency and (b) local authority area. [29234]

  Mrs. Liddell
  [holding answer 12 February 1998]: The information requested falls within the responsibility of the Chief Executive of the Office for National Statistics. I have asked him to arrange for a reply to be given.

  Letter from John Fox to Mr. Michael Clapham, dated 13 February 1998:
  The Chancellor of the Exchequer has asked the Director of the Office for National Statistics (ONS) to answer your recent question on the number of people diagnosed as suffering from asbestosis in 1996 in each (a) parliamentary constituency and (b) local authority area. I am replying in the Director's absence.
  The only information centrally available covers deaths from asbestosis in 1996. There are no registers kept on cases of asbestosis diagnoses whilst people are still alive. Data from Hospital Episode Statistics (Department of Health) are not suitable because they relate to the number of treatments rather than the number of individuals.
  The deaths figures are given in the following table:

  Deaths from asbestosis in England and Wales by local authority of residence, 1996

  County

  Local authority

  Greater London

  15

  Barking and Dagenham LB

  5

  Havering LB

  1

  Hillingdon LB

  1

  Lambeth LB

  1

  Newham LB

  4

  Redbridge LB

  1

  Southwark LB

  1

  Tower Hamlets LB

  1

  Greater Manchester

  2

  Rochdale MD

  1

  Salford MD

  1

  Merseyside

  7

  Knowsley MD

  1

  Wirral MD

  6

  409

  Deaths from asbestosis in England and Wales by local authority of residence, 1996

  County

  Local authority

  Tyne and Wear

  8

  Newcastle upon Tyne MD

  1

  North Tyneside MD

  3

  Sunderland MD

  4

  West Midlands

  1

  Walsall MD

  1

  West Yorkshire

  1

  Wakefield MD

  1

  Bedfordshire

  1

  South Bedfordshire CD

  1

  Cheshire

  2

  Crewe and Nantwich CD

  1

  Macclesfield CD

  1

  Cumbria

  1

  Barrow-in-Furness CD

  1

  Derbyshire

  1

  Erewash CD

  1

  Devon

  4

  Plymouth CD

  3

  Torbay CD

  1

  East Sussex

  1

  Hove CD

  1

  Hampshire

  5

  Gosport CD

  1

  Havant CD

  1

  New Forest CD

  1

  Southampton CD

  2

  Kent

  2

  Canterbury CD

  1

  Gillingham CD

  1

  Lancashire

  1

  Blackburn CD

  1

  Staffordshire

  2

  Stafford CD

  2

  Surrey

  1

  Woking CD

  1

  Wiltshire

  1

  Kennet CD

  1

  Unitary authorities

  Bath and North East

  Somerset UA

  1

  Bristol UA

  1

  Cardiff UA

  1

  Denbighshire UA

  1

  Hartlepool UA

  1

  Isle of Wight UA

  3

  Kingston upon Hull UA

  1

  Newport UA

  1

  Stockton-on-Tees UA

  2

  Total

  68

  Notes:

  1. The table shows only those local authorities in which a death occurred. Similar data at parliamentary constituency level could be presented only at disproportionate cost.

  2. Deaths from asbestosis were identified as those certified with an underlying cause coded to ICD9 code 501 (International Classification of Diseases Ninth Revision).
  410

  Absenteeism
  Mr. Malcolm Bruce
  To ask the Chancellor of the Exchequer if he will estimate the rates of absenteeism in his(a) Department, (b) agencies and (c) non-departmental public bodies, for (i) 1995–96, (ii) 1996–97 and (iii) 1997–98 to date; and if he will make a statement. [26573]

  Mrs. Liddell
  [holding answer 5 February 1998]: I refer the hon. Member to the answer given by my right hon. Friend the Chancellor of the Duchy of Lancaster to my hon. Friend the Member for City of Durham (Mr. Steinberg) on 10 February 1998, Official Report, column 116. The figures in the table are estimates of average days of sickness absence per member of staff for the financial years requested, and may not therefore be consistent with the published figures, which are on a calendar year basis.

  Absenteeism rates Chancellor's departments and agencies

  Financial year

  1995–96

  1996–97

  1995–98(to date)

  (a) Departments

  Customs and Excise

  11.8

  12.6

  10.3

  Government Actuary's Department

  11.5

  12.6

  6.4

  Inland Revenue

  9.5

  10.1

  9.6

  HM Treasury

  6

  6.8

  5.3

  (b) Agencies

  Royal Mint

  4.4

  4.3

  4.9

  National Savings Agency

  13.6

  11.4

  9.6

  Office for National Statistics

  14

  12.5

  10.3

  Valuation Office Agency

  9.3

  8.9

  7.1

  (c) The non-departmental public bodies for which the Chancellor of the Exchequer is responsible do not employ any staff.

  Smuggling
  Mr. Cotter
  To ask the Chancellor of the Exchequer, pursuant to his answer of 22 January 1998,Official Report, column 648, if he will list the (i) trade associations, (ii) public agencies, (iii) organisations and (iv) individuals who have contributed to the production of the report on alcohol and tobacco smuggling, cross border shopping and fraud currently being prepared by HM Customs and Excise; and if he will make a statement. [28527]

  Dawn Primarolo
  Seventy-one trade associations, public agencies and organisations contributed to the production of the review report. In addition 14 individuals contributed mainly from the fields of health and the off licence trade.

  Action on Smoking and Health

  Alcohol Concern

  Association of Alcohol Misuse Co-ordinating Committee

  Association of Convenience Stores

  Association des Brasseurs De France

  John Barker Vending

  BASS Brewers PLC

  The Benefits Agency

  Bonded Warehouse Keepers Association

  Bracken Bank Stores

  411

  Brewers & Licensed Retailers Association

  British Institute of Innkeeping

  British International Freight Association

  British Medical Association

  British Retail Consortium

  British Tourist Authority

  British Vehicle Rental & Leasing Association

  Campaign For Real Ale

  Cancer Research Campaign

  Castle Supermarket

  Caxton Tower Wines Limited

  Danish Brewers' Association

  De La Rue

  Department for Education and Employment

  Department of Trade and Industry

  Department of Health

  Department of the Environment Transport and the Regions

  DGXXI

  Dover District Council

  Dover Harbour Board

  Driver & Vehicle Licensing Agency

  Duty Free Confederation

  E. T. Logistics Limited

  Faculty of Public Health Medicine, Royal College of Physicians

  Federation of the Retail Licensed Trade Northern Ireland

  Federation of Wholesale Distributors

  Freight Transport Association

  Gin & Vodka Association of Great Britain

  Glenwood Stores

  Hanslope Wines

  Health Promotion Wales

  The Home Office

  Imported Tobacco Products Advisory Council

  Independent Family Brewers of Britain

  Institute of Alcohol Studies

  Institute of Trading Standards Administration

  Irish Revenue Commissioners

  Kent County Constabulary

  Local Authorities Co-ordinating Body on Food and Trading Standards

  Maclay Group

  Merseyside & Cheshire Alcohol Services Limited

  Ministry of Agriculture Fisheries & Food

  Morison Stoneham Chartered Accountants

  Mulcaster Public Relations and Marketing

  National Association of Alcohol Misuse Co-ordinating Committees

  National Association of Cider Makers

  National Association of Cigarette Machine Operators

  National Criminal Intelligence Service

  National Federation of Retail Newsagents

  Oddbins

  The Offey

  The Portman Group

  Dr. Martin Raw

  Road Haulage Association

  John Sainsbury's Supermarkets PLC

  Scotch Whisky Association

  412

  The Scottish Council on Alcohol

  Scottish Licensed Trade Association

  Scottish & Newcastle

  The Scottish Office (Industrial Policy Division)

  Shepherd Neame Master Brewers

  Small Independent Brewers Association

  Swedish Tax Administrations & Customs

  The Tobacco Alliance

  Tobacco Manufacturers Association

  Unite de la Lutte Anti-Fraude (UCLAF)

  United Kingdom Warehouse Keepers Association

  University of Nottingham—Division of Respiratory Medicine

  VIDS Off Licence

  The Wholesale Confectionery & Tobacco Alliance Ltd.

  William Grant & Sons Limited

  The Wine & Beer Company

  Wine & Spirits Association of Great Britain & Northern Ireland

  Yale Wines Ltd.

  Zenith Off Licence.

  Mrs. Lait
  To ask the Chancellor of the Exchequer what methods are used to dispose of seized smuggled or bootlegged alcohol and tobacco and its products. [27926]

  Dawn Primarolo
  Customs aims to dispose of seized alcohol and tobacco by the most environmentally friendly means. Beer is recycled into agricultural products, and spirits into methylated spirits, although more recently Customs have set up arrangements which allow the resale of bulk consignments back to the originating UK manufacturer. Wine and tobacco products, because of their limited shelf life and the need to store them in the right conditions, are destroyed.

  Mrs. Lait
  To ask the Chancellor of the Exchequer how many WTE customs officers have been working on countering the smuggling or bootlegging of tobacco and alcohol in each year since 1991. [27931]

  Dawn Primarolo
  The following number of Excise Verification Officers have been deployed by Customs to counter excise smuggling at the beginning of each financial year since the advent of the Single Market on 1 January 1993:

  Year commencing: 1 April 1993: 230

  Year commencing: 1 April 1994: 230

  Year commencing: 1 April 1995: 240

  Year commencing: 1 April 1996: 260

  Year commencing: 1 April 1997: 330.

  These frontline officers are backed up by specialist investigation and intelligence teams whose resources have been increased since 1993.

  Prior to the introduction of the Single Market on 1 January 1993, Customs staff at ports of entry dealt with the full range of social and fiscal prohibitions and restrictions; there was no separate group dedicated solely to countering excise smuggling.

  Customs and Excise
  Mrs. Lait
  To ask the Chancellor of the Exchequer what is the total budget of the National Investigation
  413
  Service of Customs and Excise for the current financial year; and what is the anticipated end of year outturn figure. [28475]

  Dawn Primarolo
  The Budget for the National Investigation Service for the current financial year is £95,162,053. The end of year outturn is anticipated to be in line with this.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Council Tax
  Mr. Woolas
  To ask the Secretary of State for the Environment, Transport and the Regions what would be the average council tax for each local authority in England if each authority's net revenue expenditure 1998–99 was set at the provisional capping level and, excepting the receipts from each local authority's share of NNDR, had to be met entirely from council tax receipts. [28285]

  Mr. Raynsford
  I have today placed in the Library of the House a table showing the information requested.

  Lost and Stolen Items
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list those items valued at more than £25 stolen or lost from his Department since 1 May 1997; and if he will make a statement. [27803]

  Angela Eagle
  [holding answer 5 February 1998]: The total value of those items valued at more than £25 each that have been stolen or lost from my Department and its Agencies since 1 May 1997 is £15,427. The cases comprise 16 items of IT equipment, one electronic stapler, one dictating machine, one portable telephone, 16 pagers, nine radios, two sets of clothing and one pair of binoculars.

  Theft and Fraud
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment, Transport and the Regions what is his estimate of the cost of theft and fraud to(a) his Department, (b) its agencies and (c) non-departmental public bodies in (i) 1995–96, (ii) 1996–97 and (iii) 1997–98 to date. [27802]

  Angela Eagle
  [holding answer 5 February 1998]: I am able to provide the following information about the cost of theft and fraud to (a) the Department of Environment, Transport and the Regions, (b) its agencies and (c) non-departmental public bodies in (i) 1995–96, (ii) 1996–97 and (iii) 1997–98 to date.

  1995–96 cost (£)

  1996–97 cost (£)

  1997–98 to date cost (£)

  DETR (central)

  112,510

  148,219

  52,256

  Agencies

  108,646

  52,991

  27,117

  NDPBs

  157,283

  74,725

  96,062

  The information on agencies and NDPBs is that available centrally in DETR and the costs are the most recent estimate net of recoveries.
  414
  The costs include those borne on the Administration and Programme Votes.

  Local Plans
  Mr. Chope
  To ask the Secretary of State for the Environment, Transport and the Regions if HM Government have(a) made and (b) proposes objection to the contents of the draft Verwood, Three Legged Cross and St. Leonards and St. Ives Local Plan. [28523]

  Mr. Raynsford
  The Secretary of State made eight objections in January 1993. These objections have been maintained.

  Mr. Chope
  To ask the Secretary of State for the Environment, Transport and the Regions if the Government will direct East Dorset District Council to withdraw the Verwood draft local plan. [28482]

  Mr. Raynsford
  The Secretary of State has no power to direct withdrawal of a draft plan.

  Mr. Chope
  To ask the Secretary of State for the Environment, Transport and the Regions if he will introduce a maximum period within which a local authority has to adopt a draft plan after completion of all stages prior to adoption; and if he will make a statement. [28481]

  Mr. Raynsford
  No, but we will be issuing a consultation paper on changes to development plan procedures shortly.

  Committee on Standards in Public Life
  Mr. Stunell
  To ask the Secretary of State for the Environment, Transport and the Regions what progress has been made on the public consultation on the Third Report on the Committee on Standards in Public Life (Cm 3702) announced by the Prime Minister on 8 July 1997. [28313]

  Mr. Raynsford
  Following the end of the consultation period on 31 October 1997, we have been considering carefully with the Local Government Association and other interested bodies how best to develop a new ethical framework designed to ensure the highest standards of conduct by all those involved in local government. We intend to publish our proposals in the next month or so.

  Housing (Hampshire)
  Mr. Hancock
  To ask the Secretary of State for the Environment, Transport and the Regions how much money has been allocated by(a) his Department and (b) the Housing Corporation to support new social housing in the Portsmouth City Council area in each of the last five years. [27549]

  Mr. Raynsford
  [holding answer 6 February 1998]: The Department provides funding for new social housing through grant-in-aid to the Housing Corporation. The grant is allocated to Registered Social Landlords through the Housing Corporation's Approval Development Programme. Local authorities may also choose to invest in new social housing. Local authority spending on the provision of new social housing by Registered Social Landlords which meets the Housing Corporation's criteria is reimbursed by Local Authority Social Housing Grant from the Corporation.
  415
  Allocations for the provision of new social housing by Registered Social Landlords in Portsmouth are shown below. Additional social lettings are also provided through grants to tenants to help them buy a new home and vacate their existing dwelling for reletting, and the Housing Corporation's Do-It-Yourself Shared Ownership scheme for tenants (DIYSO). Expenditure on these home ownership schemes is excluded from the figures below.

  £m

  Year

  Approved Development Programme

  Local Authority Social Housing Grant

  1993–94

  4.02

  4.68

  1994–95

  4.44

  1.20

  1995–96

  1.61

  0.86

  1996–97

  6.22

  1.59

  1997–98

  2.00

  0.54

  Notes:

  1. 1997–98 figures are start of year allocations.

  2. The figures include allocations for new build social housing and the purchase and rehabilitation of existing private sector properties for social housing. The figures exclude allocations for works to existing stock owned by Registered Social Landlords; temporary social and market rent housing; grants to help tenants buy a new home and vacate their existing property for reletting; and the Housing Corporation's Do-It-Yourself Shared Ownership scheme.

  Waste Management
  Mr. Sheerman
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what steps he is taking to encourage local authorities to choose a recycling route for waste management in place of incineration; [28509]

  (2) what independent scientific advice he has sought in respect of the optimum size of a waste to energy facility which will not undermine the potential for mechanical recovery of recyclables; [28459]

  (3) what steps he is taking to ensure that each local authority regularly receives the option of establishing a properly balanced waste management strategy. [28460]

  Angela Eagle
  The option to establish a properly balanced waste management strategy is open to all local authorities at any time. It is for each local authority to decide on its use of the various waste management options within its available resources.

  In October 1997 I announced that the Government accepted in full the recommendations of the Review Group on the Local Authority Role in Recycling, which reported in February 1997. One of its key recommendations was that Waste Disposal Authorities should work closely with their constituent Waste Collection Authorities to establish a fully integrated municipal waste management strategy.

  The Department is also shortly to issue revised guidance to local authorities on the preparation and revision of recycling plans. I hope that all local authorities will look at all the available options for managing waste in developing an integrated municipal waste management strategy with other authorities, the public, the private and voluntary sectors. Recycling is to be preferred to incineration with recovery if and when it represents the
  416
  best practicable environmental option. Equally, incineration with energy recovery is generally likely to be preferable to disposal.

  That guidance also advises authorities developing integrated strategies that the high capital costs of energy from waste plants generally require long-term waste contracts to be agreed. Local authorities considering energy from waste will therefore wish to guard against over-reliance on this option, and will wish to take a view on likely future developments in waste management practices and technology. In particular, they will wish to ensure that the use of energy from waste plants does not divert waste from recycling and composting, and, indeed, allows scope for increases in recycling and composting activity.

  The Department has not sought independent scientific advice on the optimum size for waste to energy incinerators.

  Mr. Sheerman
  To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received on accelerating public inquiry procedures for waste incineration at waste to energy plants. [28507]

  Mr. Raynsford
  I am not aware of any specific representations on accelerating public inquiry procedures for waste incineration at waste to energy plants, although my officials maintain a regular dialogue with the Energy from Waste trade association.

  Public Servants (Political Impartiality)
  Mr. Stunell
  To ask the Secretary of State for the Environment, Transport and the Regions when proposals to reform the Housing and Local Government Act 1989 relating to politically restricted posts will be brought forward; and if he will make a statement. [28314]

  Mr. Raynsford
  The Government remain firmly committed to the principle of political impartiality among senior and other front line public servants, but we are reviewing the restrictions on political activity by local government officers to ensure that their detail and coverage are appropriate. We intend to publish proposals for consultation by the early spring.

  Waste Water Treatment
  Mr. Hancock
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the extent and cause of eutrophication in Langstone Harbour; and what counter-measures his Department has taken. [28705]

  Angela Eagle
  Advice from the Environment Agency indicates that Langstone Harbour is subject to effects of eutrophication such as regular and extensive dense weed growth. The Agency has identified water from the Eastern Solent as the major source of nutrients in the Harbour.

  The Environment Agency has not taken any counter-measures in the Harbour. However, the Agency has considered the case for designation of the Harbour as a eutrophic sensitive area as part of the first review of designations required by the Urban Waste Water Treatment Directive. We shall be considering the Agency's recommendations from this review shortly.
  417
  Mr. Hancock
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the official water category status under the Urban Waste Water Treatment Directive of the Solent area; and what plans he has to alter this status. [28798]

  Angela Eagle
  The Solent is an estuarine water body under the Urban Waste Water Treatment Directive. Sewage treatment works which serve a larger than 2000 population equivalent and which discharge into estuaries are required to meet the Directive's secondary treatment standards. The Environment Agency considered the potential for identification of the Solent as a eutrophic sensitive area, in order to make recommendations to Government on the first review of designations required by the Directive. We shall be considering the Agency's recommendations from this review shortly.

  Mr. Hancock
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what preliminary research his Department undertook prior to the determination of the standards required in the discharge consents granted to Southern Water's waste water treatment plants in the Solent; and by what means his Department evaluates the current discharge consents; [28799]

  (2) what standards were applied to the procedures used to determine the standards required for the discharge consents for the proposed new Southern Water sites at Portsmouth and Havant; and what assessment he has made of the extent to which these standards were complied with; [28801]

  (3) what assessment he has made of the ability of the proposed new Southern Water sites at Portsmouth and Havant to meet the required water quality standards; [28702]

  (4) what assessment the Environment Agency has made of the compliance of the current storm overflow at Budds Farm with EU water standards; [28650]

  (5) what account the Environment Agency took of representations from local people in determining the standards required in the discharge consent for Langstone Harbour and the Solent. [28800]

  Angela Eagle
  The existing standards for the discharges to the Solent were set by the Environment Agency to secure compliance with all relevant environment quality standards contained in EC Directives in force at the time. The Environment Agency is required to review discharge consents at least every four years.

  So far as the current proposals are concerned, the Environment Agency undertook a substantial review of existing data in 1993–94 to confirm that the Solent should be designated as an estuary under the terms of the Urban Waste Waster Treatment Directive. This means that all qualifying discharges into the Solent, including the Portsmouth and Havant schemes, are required to receive secondary biological treatment by 2000.

  The Environment Agency will derive the appropriate quality standards for the Portsmouth and Havant discharges by applying national policy and technical guidance relating to water services companies' discharges. This is currently set out comprehensively in the AMP2 Guidelines Version 2 in the Environment Agency's Discharge Consents Manual.
  418
  An important element of the proposals is to provide secondary biologically treated effluent for flows arising from the Portsmouth, Havant and Hayling Island catchments discharging through the Eastney long sea outfall into the Solent. The Environment Agency is currently determining the consent applications and has employed external consultants to audit the proposals rigorously to ensure they fully comply with the requirements of all relevant Directives. So far as the Bathing Water Directive is concerned, the Environment Agency will ensure continued compliance with the Imperative standards and is assessing the achievement of the more stringent Guideline standards.

  All relevant EC Directives have been taken into account in assessing the compliance of the current storm overflows at Budds Farm. In particular, the Dangerous Substances Directive and the Urban Waste Water Treatment Directive apply directly to Langstone Harbour. The Environment Agency exerts control for the purposes of the Dangerous Substances Directive by imposing upon water services companies, requirements for limiting trade effluent discharges to sewers. Studies have shown the impact of the storm overflows in relation to the Urban Waste Water Treatment Directive sensitive waters requirements are not significant. The treatment scheme will also address aesthetic improvements to storm overflows and will significantly reduce spill frequencies in recognition of the important commercial, amenity and conservation interests within Langstone Harbour.

  The Environment Agency has issued, for comment, copies of discharge consent applications and supporting documentation to all statutory consultees, including local authorities, the County Council, MAFF (Centre for Environment, Fisheries and Aquaculture Science), Southern Sea Fisheries and English Nature. The Environment Agency will take account of their comments when determining the discharge consents. The applications have also been advertised in accordance with the Control of Pollution (Applications, Appeals and Registers) Regulations 1996. The Environment Agency has responded to all correspondence received, which will also be taken into account when determining the discharge consents.

  Mr. Hancock
  To ask the Secretary of State for the Environment, Transport and the Regions what guidance his Department issues on the appropriate treatment of waste water in(a) estuaries and (b) sensitive water areas. [28707]

  Angela Eagle
  The EC Urban Waste Water Treatment Directive lays down requirements for treatment of waste water discharged to estuaries and designated sensitive areas. All discharges to estuaries serving population equivalents greater than 2000 must receive secondary treatment. Discharges to sensitive areas must receive more stringent treatment involving the removal of nitrogen or phosphorus. The Environment Agency is responsible for determining, through the discharge consent system, how these requirements should be applied in particular cases. However, in July 1997, my Department issued a Guidance Note for dischargers and regulators on the implementation and interpretation of the Directive's requirements, which had been developed in consultation with other Government Departments, the water industry and its regulators.
  419

  Housing (Tenancies)
  Mr. Hunter
  To ask the Secretary of State for the Environment, Transport and the Regions if he will enable housing corporations to use introductory tenancies and selective lettings in the way that local authorities were enabled to do under the Housing Act 1996. [28864]

  Mr. Raynsford
  Housing companies which are registered with the Housing Corporation as Registered Social Landlords (RSLs) are subject to the Corporation's Performance Standards and Regulatory Guidance. These will allow RSLs to use assured shorthold tenancies effectively as introductory tenancies, in defined circumstances.

  The Housing Corporation requires RSLs to seek the agreement of the relevant local authority when contemplating the use of such introductory tenancies.

  Drinking Water Quality
  Mr. Todd
  To ask the Secretary of State for the Environment, Transport and the Regions what steps he is taking to ensure that standards of lead in water at the domestic tap meet future health standards. [28720]

  Angela Eagle
  Water suppliers must ensure that the water they supply complies with the standards that have been set for drinking water quality. New standards for lead will be introduced by the new EC Drinking Water Directive when it is adopted.

  Out-of-Town Retail Developments
  Dr. Tonge
  To ask the Secretary of State for the Environment, Transport and the Regions for what reasons the Government do not hold central records of planning permissions granted for major out-of-town retail developments. [28635]

  Mr. Raynsford
  Most decisions on planning applications for major out-of-town retail developments are taken by local planning authorities. They provide statistical returns of all major "retail, distribution and servicing" applications which they handle, in order to provide an overall picture of planning activity. These data do not classify applications by location. The Government are anxious to keep their requirements for data from local authorities to a necessary minimum. We do, however, propose to set up a system with the Planning Inspectorate, which should enable us to provide information on such permissions granted on appeal or following call in by the Secretary of State for recent and future development.

  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions how many planning permissions were granted on appeal or following call-in by the Secretary of State for major out-of-town retail developments(a) between January 1988 and April 1997 and (b) since 1 May 1997. [29210]

  Mr. Raynsford
  [holding answer 12 February 1998]: The information requested is not held on this basis. The results of appeals are not classified by size or by location. It is, therefore, not feasible at the moment to assemble such information, except at disproportionate cost. We propose to set up a system with the Planning Inspectorate, which should enable us to provide this information for recent and all future developments.
  420

  Ordnance Survey (Scotland)
  Ms Roseanna Cunningham
  To ask the Secretary of State for the Environment, Transport and the Regions how many people are employed by Ordnance Survey in Scotland, broken down by job category; what facilities for map making the Ordnance Survey maintains in Scotland; and if he will provide a breakdown of Ordnance Survey spending in Scotland as a ratio of overall spending in each year since 1990. [28551]

  Mr. Raynsford
  [holding answer 11 February 1998]: Ordnance Survey in Great Britain currently employs 66 people in Scotland, 63 of whom are based in the seven Scottish field offices which are located in Inverness, Aberdeen, Glenrothes, Edinburgh, Glasgow, Hamilton and Ayr. These people are directly involved in the surveying and capturing of mapping data to update the National Topographic Database (NTD) and other related products (eg ADDRESS-POINTtm). In addition, Ordnance Survey Scottish Region is responsible for the re-mapping of parts of Cumbria. The data collected are sent to Ordnance Survey's headquarters in Southampton where they are incorporated into the NTD and related databases; no actual map making is carried out in the field offices.

  The table provides a breakdown of the types of jobs Ordnance Survey staff based in Scotland are engaged in:

  Job title

  Number of staff

  Region Manager

  1

  Chief Surveyor

  5

  Surveyors

  49

  Administrators

  5

  Survey Assistants

  3

  Field Sales Executive for Scotland

  1

  Regional Account Manager for Scotland

  1

  Assistant Regional Account Manager for Scotland

  1

  Total

  66

  In addition to the people included in the table, many of 1,300 Ordnance Survey staff based at its headquarters are also engaged in activities related to the capture of mapping data (eg from aerial photographs, the taking of which is co-ordinated from Southampton and undertaken from an aeroplane which flies from Blackpool), and the production of maps and related products, of both Scotland and the rest of Great Britain.

  Ordnance Survey updates its maps primarily in relation to the local rate of change in the landscape. Thus more work is done locally where new roads, housing estates, etc are created than in mountain and moorland areas. No specific breakdown of effort has been made in the past between England, Scotland and Wales but systems will be put in place to provide such statistics to the Scottish Parliament (the hon. Lady may already be aware that the subject matter of the Ordnance Survey Act 1841 is reserved in the Scotland Bill published last December). The best estimates currently possible are that Ordnance Survey expends approximately 7.5 per cent. of its total out-goings on re-mapping Scotland and that this fairly reflects a combination of continuous revision caused by new developments in Scotland and periodic revisions to cover the whole country.
  421

  Standard Spending Assessments (Buckinghamshire)
  Mr. Lidington
  To ask the Secretary of State for the Environment, Transport and the Regions what the Social Services SSA for Buckinghamshire County Council for 1998–99 would be calculated on the basis of the composition and weighting of the SSA formula in 1997–98(a) in cash terms and (b) per head of population in Buckinghamshire. [28738]

  Mr. Raynsford
  [holding answer 11 February 1998]: If calculated using the SSA formulae applicable for 1997–98, and the data and national totals applicable for 1998–99, the Personal Social Services SSA for Buckinghamshire Country Council would be: (a) £54.205 million; and (b) £114.22 per Buckinghamshire resident.

  Executive Mayors
  Sir Norman Fowler
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to introduce executive mayors; on what timescale; and if he will make a statement. [29228]

  Ms Armstrong
  [holding answer 12 February 1998]: In our consultation paper "Local Democracy and Community Leadership", which we published on Monday 9 February, we recognised that there is a strong argument for councils' adopting political and management structures which involve a separation of executive and representational roles. It will be open to local authorities to pilot such structures, including those of executive mayors, if the Local Government (Experimental Arrangements) Bill is enacted. This Bill, to which the Government are giving all the support that they can, is currently being considered in another place. I will consider the responses we receive to the consultation paper, and we will publish our proposals in a White Paper later this year.

  Industrial Land (Reclamation)
  Mr. Llwyd
  To ask the Secretary of State for the Environment, Transport and the Regions what projects his Department is funding to restore land previously used for industry to its natural state. [29374]

  Mr. Raynsford
  Through its programmes and agencies the Department of the Environment, Transport and Regions sponsors a range of projects in which the reclamation of land forms a part. Land is reclaimed for both hard end uses such as housing, commercial and industrial development, and soft end uses, for example parks and forestry. Further information is available in the Department's Annual Report 1997 (Cm. 3607), but it is not possible to list projects individually, nor to identify the previous land use.

  Local Government Finance
  Mr. McLoughlin
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his oral statement of 5 February 1998,Official Report, column 1258, on local government settlements for Derbyshire, on what evidence he based his statement that there were difficulties in financing Derbyshire for some years under the previous administration. [29140]
  422
  Mr. Raynsford
  [holding answer 12 February 1998]: In their representation on the proposed settlement, Derbyshire pointed out that they had the lowest cumulative increase in cap limit of any shire county between 1989–90 and 1997–98; and among the lowest cumulative increase in Government assessment of need to spend over that period.

  Mr. McLoughlin
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his oral statement of 5 February 1998,Official Report, column 1258, on Derbyshire's local government settlements, what plans he has to redress the effects of the discrimination in recent settlements which he has identified. [29142]

  Mr. Raynsford
  [holding answer 12 February 1998]: My right hon. Friend the Secretary of State for the Environment, Transport and the Regions has made several changes to the distribution of Government grant to local authorities to improve the overall fairness of the local government finance settlement. He has also made clear his intention to passport a wider range of increases in SSAs through the capping guidelines. We shall hold discussions with local government during 1998 to identify further possible improvements to the way in which grant is distributed among authorities.

  Mr. McLoughlin
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his oral statement of 5 February 1998,Official Report, column 1258, on local government settlements for Derbyshire, what assessment he has made of the level of discrimination in local government settlements for those counties whose standard spending assessments are lower than Derbyshire. [29141]

  Mr. Raynsford
  Standard spending assessments (SSAs) vary between authorities for a number of reasons. These include variations in local circumstances, such as total population and numbers of children of school age; and the way in which those variations are treated in the calculation of SSAs.

  Jubilee Line
  Sir Norman Fowler
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what estimate he has made of the final cost of the Jubilee Line extension; and if he will make a statement; [29484]

  (2) if he will make a statement on the problems causing delay in the construction of the Jubilee Line extension; [29486]

  (3) when he expects that the Jubilee Line extension will be in operation; and if he will make a statement. [29485]

  Ms Glenda Jackson
  London Underground announced on Monday 9 February that it now plans to open a full through Jubilee Line service from Stanmore to Stratford in the spring of 1999.

  The Jubilee Line Extension is one of the largest construction projects in Europe. With a project of this size and complexity, problems are bound to arise. Serious delays arose when tunnelling on two contracts had to be stopped for some months as a precautionary measure following the 'New Austrian Tunnelling Method' collapse on the Heathrow Express project. Additional delays arose from construction problems at some stations, in particular

  423
  the complex Westminster station where construction has taken place around the existing District and Circle Lines and very close to the foundations of Big Ben. Tunnelling and other civil engineering works are now complete, fitting-out is under way and the new trains are being introduced to passenger service on the existing Jubilee Line. Development of the high technology signalling system for the line is however taking longer than anticipated, leading to the need to prepare and install more conventional signalling for use until the new system is ready.

  London Transport currently estimate the total cost of completing the Extension to be £2.76 billion.

  Sustainable Development
  Mr. Gray
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the function of the Sustainable Development Unit. [29437]

  Angela Eagle
  The Sustainable Development Unit is located in the Department of the Environment, Transport and the Regions. Working with the Scottish Office, Welsh Office and Northern Ireland Office, it has a Government-wide remit to promote sustainable development and concern for the environment across Government. The Unit's work programme includes the review of the UK Sustainable Development Strategy; the Greening Government initiative; Freedom of Access to Information on the Environment; Government promotion of Local Agenda 21; and sponsorship of and responding to the Government Panel on Sustainable Development, the UK Round Table on Sustainable Development and the Royal Commission on Environmental Pollution.

  French Lorry Drivers' Dispute
  Miss McIntosh
  To ask the Secretary of State for the Environment, Transport and the Regions how much compensation has been paid to British hauliers following the French lorry drivers' dispute in 1997. [29388]

  Angela Eagle
  This information is not available. Because British hauliers had advance notice of last year's dispute, most managed to avoid the disruption, and so it is expected that few claims will have been submitted.

DEFENCE

  Computer Systems
  Mr. Clifton-Brown
  To ask the Secretary of State for Defence if he will list each major new computer system that(a) his Department, (b) non-departmental bodies and (c) agencies under his responsibility have purchased in the last five years; what was the initial purchase cost and what was the final cost; what was each system's (i) planned and (ii) actual date of commissioning; what major computer systems will be purchased by bodies in categories (a), (b) and (c) in the next financial year; and what is their estimated cost. [27837]
  424
  Mr. Spellar
  The Ministry of Defence defines major computer systems as those whose estimated costs exceed £50m. Many of these systems are acquired in a phased manner, with delivery and payment occurring over a number of years. Projects which have completed their delivery over the past five years are shown in Table 1.

  Table 1 Projects completed

  System

  In service date (ISD)

  Total cost (£ million)

  AD CIS

  Air Defence Command and Control Information Systems (Army)

  1995–96

  71

  BATES

  Battlefield Artillery Target Engagement Systems (Army)

  1996

  360

  DAWN

  Delivery of the Abbey Wood Network (Procurement Executive)

  1996

  70

  Table 2 contains projects which have delivered some elements during the past five years, with further phases to be delivered over the next financial year and beyond.
  Table 2. Projects to be completed

  UNICOM: Unit Computing Project (Army)

  CASH: Computer Assistance Support to Headquarters (Army)

  CHOTS: Corporate Headquarters Office Technology System (MOD Centre)

  FAAITS: Fleet Air Arm Information Technology System (Navy).

  Information concerning the costs and In Service Dates of UNICOM, CASH and CHOTS are published in Table 8 of Chapter 4 and Annexe E of the Statement on the Defence Estimates 1996 (Cmd 3223). For FAAITS, the original estimate of programme cost was £50m; the majority of the phases of the project have been delivered, with final elements to be delivered by August 1999.

  Major computer systems under development are set out in Table 3. These systems will deliver over the next financial year and beyond.
  Table 3. Projects under development

  LITS: Logistics IT Systems (RAF)

  CAPITAL: Resource Accounting and Budgetary System (MOD Centre)

  UPKEEP: Naval Logistics System (RN)

  ASPECT: Computer Support Tools for Procurement Executive

  RAF CCIS: Command and Control Information System (RAF)

  CATT: Battlegroup Trainer (Army)

  CSS: Command Support System (Navy)

  JBD: Battlespace Digitisation (Joint)

  TAFMIS: Training Administration Financial Management Information System (Army Training and Recruitment Agencies)

  AFPAA: Armed Forces Personnel Administration Agency Information System

  PPA: Pay and Personnel Agency Partnership Programme.

  The allocations of funds to the projects in Table 3 are included in the Department's Long Term Costings. The Department's internal plans represent projections and assumptions which inform advice to Ministers on the

  425
  affordability of particular elements of the Defence Programme. Accordingly, I am withholding the costing information requested, which constitutes internal decisions and advice, under Exemption 2 of the Code of Practice on Access to Government Information.

  Information on the original estimates of cost and planned In Service Dates, where these are relevant, is not held centrally and could be provided only at disproportionate cost.

  In addition to the above there are certain security-related projects, information about which I am also withholding under Exemption 1 of The Code of Practice on Access to Government Information.

  Theft and Fraud
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence what is his estimate of the cost of theft and fraud to(a) his Department, (b) its agencies and (c) non-departmental public bodies in (i) 1995–96, (ii) 1996–97 and (iii) 1997–98 to date. [27762]

  Mr. Spellar
  [holding answer 5 February 1998]: The estimated cost of fraud and theft to the MOD, its agencies and non-departmental public bodies for the years 1995–96, 1996–97 and 1997–98 to date is as follows:

  Value £000

  1995–96

  506.5

  1996–97

  466.2

  1997–98 (to date)

  75.0

  These figures relate to in-house cases of fraud and theft and are based on reported suspicions and proven cases. They are subject to change as investigative and disciplinary action progresses.

  The cost of fraud by contractors is difficult to quantify because it may not affect the Department's funds directly and may involve conjecture about what would have happened otherwise. Costs recorded in a given year may also relate to cases first identified several years before. Subject to these qualifications, the costs for the years in question (on conviction) were:

  Value £000

  1995–96

  2.7

  1996–97

  0.0

  1997–98 (to date)

  0.0

  Lost and Stolen Items
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence if he will list those items valued at more than £25 stolen or lost from his Department since 1 May 1997; and if he will make a statement. [27763]

  Mr. Spellar
  [holding answer 5 February 1998]: Reported cases of loss arising from proven or suspected theft are held centrally on a summary basis. Items or
  426
  groups of items valued at more than £25.00 lost through suspected or proven theft since 1 May 1997 are as follows:

  £

  Batteries

  110

  Clothes

  2,287

  Arctic clothes

  6,955

  Bedding and furniture

  150

  IT modem

  199

  Tableware

  1,400

  Binoculars

  519

  Aluminium strips

  2,187

  Balances

  997

  Laser printer

  800

  Television

  340

  Lap top computers and computer parts

  15,000

  Tool kit

  307

  Vehicle straps

  536

  Petrol

  120

  31,907

  The MOD keeps no central record of items lost other than through theft or fraud. Potential losses are investigated by Commands and budget areas with a view to recovering the item in question and preventing a recurrence. Write-off action must be pursued where a loss is established. Individual losses are separately identified in Appropriation Accounts only where the value exceeds £100,000. Below that figure they are recorded in bulk, and the identification of individual cases valued at more than £25.00 could be undertaken only at disproportionate cost.

  Absenteeism
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence if he will estimate the rates of absenteeism in his(a) Department, (b) agencies and (c) non-departmental public bodies, for (i) 1995–96, (ii) 1996–97 and (iii) 1997–98 to date; and if he will make a statement. [26634]

  Mr. Spellar
  [holding answer 5 February 1998]: I refer the hon. Member to the reply given by my right hon. Friend the Chancellor of the Duchy of Lancaster on 10 February 1998, Official Report, column 116. Information for 1997 will not be available until later this year. The Ministry of Defence has recently taken steps to raise awareness of the issue of absenteeism by producing a booklet for line managers and staff to encourage best practice in monitoring and improving attendance.

  Empty Properties
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence what is his estimate of the(a) annual cost and (b) total value of the empty properties owned by (i) his Department, (ii) his agencies and (iii) other public bodies for which he has responsibility, in (A) 1995–96, (B) 1996–97, (C) 1997–98 to date and (D) 1997–98 full year. [26635]

  Mr. Spellar
  [holding answer 5 February 1998]: There are no central records held and the information could be provided only at disproportionate cost.
  427

  Buildings Refurbishment
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence what is his estimate of the cost of buildings refurbishment carried out by his Department in(a) 1995–96, (b) 1996–97, (c) 1997–98 to date and (d) 1997–98 full year; and if he will make a statement. [26637]

  Mr. Spellar
  [holding answer 5 February 1998]: The information is not collected centrally.

  Ammunition (Test Centre)
  Mr. Ainger
  To ask the Secretary of State for Defence if it is his policy to continue to implement the NATO standardisation agreements for small calibre ammunition by conducting in-service surveillance of ammunition at a NATO-certified test centre in the United Kingdom. [28042]

  Mr. Spellar
  [holding answer 9 February 1998]: The Ministry of Defence's current policy on the implementation of NATO standardisation agreements for small calibre ammunition is that in-service surveillance is carried out at a NATO certified United Kingdom test centre. It should be noted that the policy also covers qualification approval and production tests at the test centre.

  Porton Down
  Mr. David Atkinson
  To ask the Secretary of State for Defence if he will make a statement about his recent initiatives concerning former Porton Down volunteers. [28897]

  Mr. Spellar
  This is a matter for the Chief Executive of the Defence Evaluation and Research Agency (DERA). I have asked the Chief Executive to write to the hon. Member.

  Letter from John Chisholm to Mr. David Atkinson, dated 13 February 1998:
  I have been asked to reply to your request for a statement on the recent initiatives concerning Porton Down volunteers.
  Throughout their history, the Ministry of Defence laboratories at Porton Down in Wiltshire, now the Chemical and Biological Defence Sector of the Defence Evaluation and Research Agency (DERA), have been involved in the research and development that has underpinned the UK's biological and chemical defence capability. Volunteers from the Armed Forces have been a vital part of the research programme as subjects in a whole range of trials. In all, over 20000 volunteers have visited Porton Down; in the last thirty years, more than 5000 have participated in projects looking at defence against or medical treatment for chemical and biological agents.
  The vast majority of the volunteers who have visited Porton Down have come and gone, quite unconcerned about their attendance. Indeed, studies have always been, and continue to be, carried out with the utmost regard for the safety, health and well-being of volunteers. Nevertheless, in the last few years about 150 have enquired about the trials in which they took part, sometimes out of curiosity, but sometimes because they have concerns about their health and wonder whether there is a link.
  In the past, many of the actual records and reports of the experiments were, quite justifiably, kept secret in the interests of national security. Understandably, this has fuelled the concerns and uncertainties. Further, some people have not known where to go for information, or they believe that it is being withheld. The recent initiatives, prompted by the Minister for the Armed Forces, are aimed at making it easier for former volunteers to get information about their attendance at Porton Down.
  428
  DERA has set up a dedicated helpline to take enquiries from former volunteers (0845 603 9140) and has produced a leaflet to explain the type of information and help that may be available, with useful addresses. Staff at Porton Down will look at individual records and formal technical reports to provide volunteers with as much information as possible about the trials in which they participate. It will also be possible for former volunteers to visit Porton Down to see the records for themselves or to talk to the medical and scientific staff about their experiences.
  I hope that this information is helpful.

  Trident
  Mr. Alan Simpson
  To ask the Secretary of State for Defence, pursuant to his answer of 12 January 1998,Official Report, column 135, where each of the 23 UK personnel working in the US and the four US employees working in the UK are located; and if he will make a statement on their current duties. [28819]

  Mr. Spellar
  As of 11 February 1998, the number of UK personnel stationed in the US reduced to 22, following the disestablishment of the Personal Secretary post in Washington. Of these, four are located in Washington and a further three in California with duties associated with the 1958 UK/US Mutual Defence Agreement: the remaining 15 are located at Crystal City, Arlington, Virginia (12), Kings Bay, Georgia (1), New London, Connecticut (1), and Laurel, Maryland (1), with duties associated with the Polaris Sales Agreement, as amended for Trident.

  Of the four US personnel serving in the UK, three are located at Bristol and one at Barrow. Their duties are related to the Polaris Sales Agreement, as amended for Trident.

  In this context it has been brought to my attention that in my reply to my hon. Friend's related question on 12 January 1998, Official Report, column 136, I referred inadvertently to the "Atomic Control Office Washington". This should have read "Atomic Co-ordinating Office, Washington".

  Hunting
  Charlotte Atkins
  To ask the Secretary of State for Defence what restrictions in respect of hunting are placed on armed forces personnel in the United Kingdom. [28631]

  Mr. Spellar
  Participation in hunting may not take priority over military commitments. Personnel must be of an appropriate skill level and must wear the appropriate protective headgear. Transport of horse and rider, and any hunt subscription, must be met entirely at private expense.

  Vermin Control
  Mr. Gray
  To ask the Secretary of State for Defence what is his policy on setting snares for fox control in areas of his Department's estate where there is regular public access. [29311]

  Mr. Spellar
  Snares set for the purposes of fox control are not placed in areas of regular public access on the Defence estate.

  Mr. Gray
  To ask the Secretary of State for Defence what is his policy on the use of rifles as a means of vermin control at night in areas of his Department's estate which are being used for military training at that time. [29312]
  429
  Mr. Spellar
  For obvious safety reasons, access to areas of the Defence estate where military training is taking place at night is restricted.

SOCIAL SECURITY

  Benefit Integrity Project
  Mr. Burstow
  To ask the Secretary of State for Social Security (1) how many of the disability living allowance awards re-examined as part of the Benefit Integrity Project up to 31 December have been referred to a fraud officer; and of those how many have been(a) recommended for prosecution, (b) prosecuted for fraud and (c) cleared of fraud; [29180]

  (2) how many (a) terminally-ill people receiving payments under Special Rules, (b) paraplegics, (c) quadriplegics, (d) people who are both deaf and blind, (e) double amputees and (f) people who fall within the Benefits Agency's definition of severe mental impairment have been mistakenly included in the Benefit Integrity Project to date. [29181]

  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. Benefits should go to those who are properly entitled to benefit. This is why we have continued with Benefit Integrity Project.

  The administration of this programme is a matter for Peter Mathison, Chief Executive of the Benefits Agency. He will write to the hon. Member with further details.

  Letter from Peter Mathison to Mr. Paul Burstow, dated 12 February 1998:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Questions regarding the Benefit Integrity Project (BIP).

  pre-August

  August

  September

  October

  November

  Total

  Double Amputees

  5

  1

  1

  0

  2

  9

  Deaf and Blind

  4

  0

  1

  2

  0

  7

  Severe Mental Impairment

  3

  3

  8

  1

  0

  15

  Quadriplegics

  126

  76

  15

  11

  6

  234

  Special Rules

  3

  13

  2

  10

  2

  30

  Paraplegics (includes Tetraplegics)

  67

  13

  11

  13

  4

  108

  Total

  208

  106

  38

  37

  14

  403

  Note:

  Figures are provisional and subject to change.

  Disability Benefits
  Mr. Winnick
  To ask the Secretary of State for Social Security if she will review the disability benefits assessment made in respect of Mrs. Carol Preston of Stockport. [29205]

  Mr. Denham
  The administration of the Benefits system is a matter for Peter Mathison, Chief Executive of the Benefits Agency. He will write to my hon. Friend with further details.430

  The BIP was conceived as a response to the Benefit Review which identified a potential for up to £499m DLA fraud annually; it is essentially a measure designed to secure benefit integrity—that is to get the right amount of benefit to the right people—rather than an explicitly anti-Fraud measure. The methodology adopted, which takes account of the sensitivities involved in approaching large numbers of the most seriously disabled people in society, makes it unlikely that overt fraud will be uncovered but maximises the likelihood of revealing incorrect provision.
  As at 31 December 1997, the BIP has identified 89 cases in which fraud was suspected, of which 36 have been referred to the Benefit Fraud Investigation Service for further investigation, which have not yet been completed. In the remaining 53 cases, fraud staff in the Disability Benefits Directorate decided that there was no realistic prospect of determining whether fraud had occurred and the files were closed without further action.
  Special action is taken to try and minimise unnecessary disruption to customers suffering from certain categories of illness so they will not be contacted as part of BIP. These include customers suffering from; a terminal illness (where life expectancy is likely to be under six months); quadriplegics; paraplegics; people who are both deaf and blind; double amputees and those within the BA definition of severe mental impairment. These categories were introduced following a meeting with Disability organisations in June 1997.
  From June 1997 customers included in these categories have been identified from computer records. A small number of customers have more than one disabling condition and our computer records make provision for only one to be recorded, as a result some customers in the relevant categories have not always been screened out. Since November 1997 a clerical check of these records has been introduced to identify as many as possible of these cases. Regrettably there is a small number of customers whose clerical records do not provide sufficiently detailed information for us to identify them as persons who should not be contacted. I apologise for these errors.
  The number of customers mistakenly contacted is set out in the attached table.
  Whilst all efforts are taken to avoid these customers being contacted, should it occur, and evidence is gathered, the Adjudication Officer would have to take the information into account when deciding entitlement. Entitlement to DLA is based on the effects of a person's disabling condition on their day-to-day life, rather than on the basis of the disabling condition itself.
  I hope you find the reply helpful.

  Letter from Peter Mathison to Mr. David Winnick, dated 12 February 1998:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question regarding whether she would review the disability benefits assessment made in respect of Mrs. Carol Preston of Stockport.
  A request for a review of this decision was received on 18 December 1997. It was supported by the local Citizens Advice Bureau who provided more detailed information about Mrs. Preston's need for care at night. A different Adjudication Officer looked at the papers again and referred the case to a Benefits Agency Medical Officer for advice. The AO's decision was notified to Mrs. Preston on 9 February 1998.
  I hope you find the reply helpful.
  431
  Mr. Winnick
  To ask the Secretary of State for Social Security in how many cases in the last five years officials involved in assessing claims for disability benefit have been disciplined for reducing or refusing such claims. [29204]

  Mr. Denham
  The administration of Disability Living Allowance is a matter for Peter Mathison the Chief Executive of the Benefits Agency. He will write to my hon. Friend with further details.

  Letter from Peter Mathison to Mr. David Winnick, dated 12 February 1998:
  The Secretary of State for Social Security has asked me to respond to your recent Parliamentary Question regarding how many cases in the last five years officials involved in assessing claims for disability benefit have been disciplined for reducing or refusing such claims.
  There have been no recorded cases within the last five years.
  I hope you find the reply helpful.

  Mr. Winnick
  To ask the Secretary of State for Social Security how many people have had their disability benefit reduced in the last 12 months. [29202]

  Mr. Denham
  The administration of Disability Living Allowance is a matter for Peter Mathison the Chief Executive of the Benefits Agency. He will write to my hon. Friend with further details.

  Letter from Peter Mathison to Mr. David Winnick, dated 12 February 1998:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question regarding how many people have had their disability benefit reduced in the last 12 months.
  The number of Disability Living Allowance and Attendance Allowance customers in Great Britain who have had their benefit reduced in the 12 months ending November 1997, is 28,900. This figure includes renewal cases and reductions as a result of changes other than to the disability, for example, hospitalisation. It is a rounded figure based on the 5% extract.
  I hope you find the reply helpful.

  Miss McIntosh
  To ask the Secretary of State for Social Security what plans the Government have to reduce the disability living allowance and which groups representative of disabled persons she has consulted. [29510]

  Mr. Denham
  Disability benefits, including Disability Living Allowance, are included in the Department's Comprehensive Spending Review, which was announced on 11 June last year. The review is an important step in our plan to modernise and improve the Social Security system, so that it helps people to work as far as they are able; provides appropriate support to those who cannot work; and makes the most effective use of the resources available.

  No decisions have yet been made. When we have identified specific proposals we will consult disabled people, their organisations and others with an interest. We will not implement any changes without first consulting them.

  Jobseeker's Allowance
  Mr. Kirkwood
  To ask the Secretary of State for Social Security if she will revoke the Jobseeker's Allowance (Amendment) Regulations 1998 (S.I., 1998, No. 71) which were laid before the House on 23 January 1998. [29436]
  432
  Mr. Keith Bradley
  We will be revoking the Jobseeker's Allowance (Amendment) Regulations 1998 (S.I. 1998 No. 71) in due course.

  Elderly People
  Mr. Hunter
  To ask the Secretary of State for Social Security if it is her policy that social services should backdate financial assistance for elderly people living in residential or nursing homes who did not claim assistance when their savings fell below £16,000 because they were unaware that assistance was available. [28865]

  Mr. Boateng
  I have been asked to reply.

  There is no provision for social services departments to backdate financial assistance for elderly people living in residential or nursing homes who did not claim assistance once their savings fell below £16,000.

AGRICULTURE, FISHERIES AND FOOD

  Beef Imports
  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his oral answer of 22 January 1998,Official Report column 1136, for what reason he was unable to provide a written reply to the hon. Member for North Dorset on the subject of beef imports from the European Union. [25941]

  Mr. Rooker
  [holding answer 27 January 1998]: I have now written to the hon. Member, and placed the letter on the board. I apologised to the hon. Member via a telephone message late on 22 January since I was not able to reply on that date as promised. I was unable to consult the relevant officials in time as they were undertaking surveillance operations away from London.

  Civil Servants
  Mr. Duncan
  To ask the Minister of Agriculture, Fisheries and Food if he will list by grade the number of officials in his Department at grade 3 or above who have(a) taken early retirement, (b) taken official leave, (c) been dismissed, (d) changed jobs within the Department, (e) moved to another Department and (f) been offered and rejected an alternative position (i) within the Department and (ii) in another Department since 1 May 1997. [27457]

  Mr. Morley
  [holding answer 5 February 1998]: Since 1 May 1997, one member of the Senior Civil Service in grades equivalent to former Grade 3 and above has taken early retirement. All members of staff in these grades are officially entitled to take annual leave of up to 30 days a year. No members of staff in these grades fall into the other categories.

  British Produce
  Mr. Hoyle
  To ask the Minister of Agriculture, Fisheries and Food (1) what plans he has to encourage the public to support British farmers by buying British produce; [28456]

  (2) what plans he has for a campaign to promote the sale of British farm products in supermarkets and local shops. [28374]
  433
  Mr. Rooker
  My colleagues and I take every opportunity to promote British produce, but a Buy British campaign would contravene the Treaty of Rome. Our aim is to encourage UK producers to provide the kind of food that everyone will want to buy, and to market it effectively.

  Rural Assistance
  Mr. Hoyle
  To ask the Minister of Agriculture, Fisheries and Food what assistance he plans to provide to those rural communities which are dependent upon agriculture during the present farming crisis. [28457]

  Mr. Rooker
  I have no plans, at present, to make any additional payments to farmers other than those announced by my right hon. Friend in his reply to my hon. Friend the Member for High Peak (Mr. Levitt), on 3 February 1998,Official Report columns 591–92.

  Beef Products (Labelling)
  Mr. Gray
  To ask the Minister of Agriculture, Fisheries and Food what steps he is taking to enable supermarkets to be in a position to label beef guaranteed BSE-free. [28646]

  Mr. Rooker
  The Government have adopted stringent safeguards, based on the most up-to-date scientific advice, with the objective of ensuring that consumers are not exposed to the BSE agent through the beef they buy, whether the beef is purchased from supermarkets or independent butchers.

  BSE
  Mr. William Ross
  To ask the Minister of Agriculture, Fisheries and Food if he will list the numbers of BSE cases confirmed in(a) Northern Ireland, (b) Scotland, (c) Wales, (d) England, and e) each EU country in (i) 1997 and (ii) 1998. [28797]

  Mr. Rooker
  The table shows the number of cases of BSE confirmed in 1997 and 1998 for the relevant countries.

  County

  1997

  1998

  Northern Ireland

  28

  1 as at 9 February 1998

  Scotland

  165

  18 as at 9 February 1998

  Wales

  375

  32 as at 9 February 1998

  England

  4,307

  419 as at 9 February 1998

  Belgium

  1

  — as at 27 January 1998

  France

  6

  1 as at 27 January 1998

  Germany

  2

  — as at 27 January 1998

  Luxembourg

  1

  — as at 27 January 1998

  Netherlands

  2

  — as at 27 January 1998

  Portugal

  30

  2 as at 27 January 1998

  Republic of Ireland

  77

  9 as at 27 January 1998

  As far as the United Kingdom is concerned, some of the cases confirmed in 1997 will have been reported in 1996. The majority of the cases confirmed in 1998 were reported in 1997.

  Data for other EU Member States are notified by the Commission. The latest figures for 1997 were supplied on 20 January 1998.
  434

  Cattle Passports
  Mr. Todd
  To ask the Minister of Agriculture, Fisheries and Food what steps his Department will take to ensure that the cost of cattle passports will be shared throughout the value chain. [28719]

  Mr. Rooker
  We expect that the cattle passport charges which will pay for the computerised Cattle Tracing System will be reflected in the price paid to cattle breeders by their customers, and thence passed up the marketing chain. Moreover, farmers should benefit from the introduction of the Cattle Tracing System through improved customer confidence, which should in turn help demand for farmers' products.

  Food Standards
  Mr. Todd
  To ask the Minister of Agriculture, Fisheries and Food what steps he is taking to ensure that food imported into the United Kingdom and consumed within the United Kingdom is subject to the same food standards regime as food produced in the United Kingdom. [28718]

  Mr. Rooker
  Most products of animal origin imported for human consumption from member states or from third countries must comply with harmonised Community rules. These rules are intended to ensure that, in general, equivalent health requirements apply whatever the origin of the products. Products not subject to Community rules may be imported only if they comply with our national rules. Food which fails to meet food safety requirements can be refused entry into the UK or it can be seized and taken before a Magistrate for condemnation, under provisions of the Food Safety Act 1990.

  Publications
  Mr. Gale
  To ask the Minister of Agriculture, Fisheries and Food if he will list by title the publications produced by his Department between 1 May 1997 and 31 January 1998. [26332]

  Mr. Morley
  [holding answer 9 February 1998]: Publications produced by the Department between 1 May 1997 and 31 January 1998 are listed as follows:

  Farm Woodland Premium Scheme Rules and Procedures booklet

  Food Standards Agency report

  Environmentally Sensitive Area Scheme (Stage IV)

  Organic Conversion Information Service booklet

  Environmentally Sensitive Area Scheme Standard costs booklet, Part I

  Integrated Administration and Control System (IACS) Field numbering booklet

  Arable Area Payments Scheme Explanatory Guide for 1998

  Beef Labelling Scheme Explanatory Guide

  Sheep Annual Premium Scheme Quotas explanatory booklet

  Countryside Access Scheme—handbook for farmers

  Countryside Stewardship Scheme—Information and How to apply booklet

  Arable Stewardship Scheme—Information and How to apply booklet

  Environmentally Sensitive Area Scheme (Stages II & III)— Guidelines for Farmers booklets

  Environmentally Sensitive Area Scheme—Explanatory notes booklet

  435

  Apple and Pear Orchard Grubbing Up Grant Scheme 1998 Explanatory booklet

  ESA Monitoring Reports

  Flood and Coastal Defence Newsletter (Issue 10)

  Sheep Scab Leaflet

  Is Your Sprayer Fit for Work—leaflet

  Environmental Protection (R&D Newsletter)

  The Approval and Use of Oil Dispersants in the UK

  FAWC Newsletter

  Science into Practice Leaflet

  VMD Surveillance Report

  A.C.N.F.P. Annual Report

  FA.C. Annual Report

  Basic Horticultural Statistics for the United Kingdom

  Help and Advice for Businesses on Business Link

  B.S.E. Progress Report

  F.A.W.C. Report on the Welfare of Laying Hens

  Pig Space Requirements Guidelines

  E.S.A. Leaflets:

  The Broads

  Somerset Levels

  44th Report/small Holdings

  45th Report/small Holdings

  Annual Report of the Working Party on Pesticide Residues 1996

  Cattle Identification Record and Movement Guide

  Forward Programme for the Poultry Industry

  Steering Group on the Chemical Aspects of Food Surveillance Annual Report

  Clean Livestock Policy

  VMD Report Brochure

  Controlling Soil Erosion

  Pesticide Usage Survey Report No. 136

  Food Allergy Leaflet

  Pesticide Usage Survey Report No. 141

  Quarantine for Pets

  Pesticide Poisoning of Animals etc. 1996

  Pesticide Usage Survey Report No. 135n

  Campaign Against Illegal Poisoning Newsletter No. 21

  Countryside Stewardship Scheme—Arable Stewardship

  Stewardship News

  Bovine TB in Badgers

  F.A.W.C. Report on Welfare of Dairy Cattle

  FAC Newsletter Winter 1997

  Guide to Plant Varieties Act 1997

  Executive Summary Bovine TB in Badgers

  Ministers Response to Bovine TB in Badgers

  Food Standards Agency leaflet

  9 Reports for the Pig Welfare Advisory Group

  Success with Farm Shops

  State Veterinary Journal April

  State Veterinary Journal August

  State Veterinary Journal October

  32nd Report River and Coastal Engineers

  Egg Marketing Inspectorate Annual Report.

  Hill Farmers
  Mr. Gill
  To ask the Minister of Agriculture, Fisheries and Food what representations he has received regarding 436
  the increased payments to hill farmers announced on 22 December 1997; and if he will make a statement about his decision not to allocate the total compensation to the LFA. [28735]

  Mr. Rooker
  [holding answer 10 February 1998]: The Department has received a great many representations following my right hon. Friend's statement on 22 December 1997, Official Report, columns 677–79. EU rules on agrimonetary compensation limit the extent to which Member States can favour one type of production over another by concentrating aid on particular groups of recipients. Cattle and sheep farmers outside the less favoured areas (LFA) have also been affected by green rate revaluations, and, in our judgment, the balance of the revised package announced on 3 February 1998, Official Report, columns 591–92, is fully justified and equitable.

  Tobacco Subsidy
  Mrs. Lait
  To ask the Minister of Agriculture, Fisheries and Food what progress is being made in abolishing the tobacco subsidy to EU growers. [29051]

  Mr. Rooker
  The Commission is expected to introduce its proposals for reform of the tobacco regime at the Agriculture Council on 16/17 February. The Government will continue to press for disengagement from support. With producer Member States in a majority, abolition of the subsidy is unlikely.

  Meat Imports
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food if he will list each country from which(a) beef, (b) sheep meat, (c) pigmeat and (d) poultry meat was imported into the UK during 1997. [29309]

  Mr. Rooker
  The tables list the countries from which beef, sheep meat, pig meat (including bacon and ham) and poultry meat were dispatched to the UK between January and October 1997, the most recent month for which data are available.

  Imports of beef sheep meat, pig meat (including bacon and ham) and poultry meat between January and October 1997

  £000

  Beef

  Irish Republic

  95,688

  Netherlands

  30,320

  Australia

  23,047

  Uruguay

  22,222

  Argentina

  14,599

  Botswana

  14,329

  Namibia

  13,661

  Zimbabwe

  12,714

  Germany

  12,374

  Brazil

  12,182

  New Zealand

  7,429

  France

  5,416

  USA

  3,267

  Belgium—Luxembourg

  3,044

  Spain

  2,055

  Denmark

  1,355

  Swaziland

  691

  Austria

  607

  Italy

  525

  Other

  440

  437

  Imports of beef, sheep meat, pig meat (including bacon and ham) and poultry meat between January and October 1997

  £000

  Sheep Meat

  New Zealand

  187,566

  Australia

  20,462

  Irish Republic

  3,240

  Germany

  3,167

  Spain

  2,888

  Netherlands

  2,197

  France

  1,845

  Uruguay

  1,341

  Belgium—Luxembourg

  922

  Chile

  795

  Argentina

  501

  Other

  941

  Pig Meat

  Denmark

  267,690

  Netherlands

  205,571

  France

  48,750

  Irish Republic

  40,501

  Germany

  16,140

  Belgium—Luxembourg

  10,500

  Italy

  7,554

  Spain

  4,728

  USA

  1,363

  Sweden

  1,090

  Other

  1,843

  Poultry Meat

  Netherlands

  131,067

  France

  112,221

  Irish Republic

  19,770

  Brazil

  19,482

  Denmark

  18,638

  Belgium—Luxembourg

  15,375

  Germany

  11,745

  Spain

  9,034

  Italy

  8,288

  Thailand

  6,040

  Austria

  797

  Other

  884

  Note:

  All data are provisional and subject to amendment.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what checks are made on meat imports from other EU countries which originate from non-EU countries. [29308]

  Mr. Rooker
  All consignments of all animal products imported into the European Union (EU) are subject to checks at designated Border Inspection Posts (BIPs) regardless of the Member State for which they are destined. All consignments are subject to documentary checks. The levels of identity and physical checks are laid down in Community legislation and are determined by the product and country of origin. Once consignments have passed through a BIP, Single Market rules permit random spot checks only at the final destination.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what studies his Department has undertaken concerning the incidence of meat and meat products from other EU countries which originated from non-EU countries but have been relabelled as of EU origin. [29307]

  Mr. Rooker
  None. Monitoring of label information on food sold in the UK is the responsibility of locally based food law enforcement authorities.
  438

  Sheep Premium
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the mechanism for calculating sheep annual premium payments at EU level in respect of the setting of the average market price in the EU; and if it will be his policy to direct higher levels of premium towards those parts of the Union with lower prices. [29306]

  Mr. Rooker
  I recognise that the rise in the average EU market price for sheepmeat in 1997 is almost entirely attributable to the revaluation of currencies in particular sterling. At the same time, the price of sheepmeat on the domestic market has fallen sharply. I cannot accept, however, that we should seek to reshape the rules for the calculation of the Sheep Annual Premium simply because they do not suit the UK in any particular year. When sterling weakened, UK producers were to some extent over compensated. I cannot, therefore, agree that supplementary premia should be paid in those Member States where the average market price is below the Community average.

  Rural Communities
  Mr. Keetch
  To ask the Minister of Agriculture, Fisheries and Food if he will list the parliamentary constituencies which he defines as being rural and the criteria he uses for defining rurality; and if he will make a statement. [27345]

  Mr. Morley
  There is no generally accepted definition of what is rural. For example, the Rural Development Commission defines rural communities as those with up to 10,000 inhabitants. The Organisation for Economic Co-operation and Development defines rural areas as those with a population below 150 inhabitants per square kilometre. But other definitions may be appropriate for particular circumstances.

  In terms of parliamentary constituencies the review of Parliamentary Constituencies 1991 defined Borough Constituencies as 'predominantly urban' and County Constituencies as
  'containing more than a small rural element'.

  Lists of County and Borough Constituencies are available in the Library.

  Milk Production
  Mr. Colvin
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the accuracy of his Ministry's milk production figures; what is the current year's national milk quota; and what assessment he has made of how close to the target the level of United Kingdom milk production will be. [27705]

  Mr. Rooker
  The wholesale milk production figures are compiled by the Intervention Board using returns submitted by approved purchasers of milk. Adjustments are regularly submitted by those purchasers throughout the year, in an attempt to maintain as accurate a figure as possible. The figures are supplied as a guide as to how the UK's milk production is measuring against quota. The Intervention Board is wholly reliant on purchasers to provide accurate production figures in order to compile their production statistics.
  439
  Direct sales are not monitored against quota during the quota year.

  As at February 1998 the national milk quota for the 1997–98 quota year (including quota in the National Reserve) stood at:

  Wholesale: 13,936.2 million litres

  Direct sales quota: 229.3 million litres.

  The production figures to the end of January 1998 show butterfat adjusted delivery figures running 110.74 million litres ahead of the quota profile for the period April 1997 to January 1998. It is not possible to make a reasoned assessment of UK production against quota until after the current quota year has ended on 31 March 1998.

  Cornish Handline Quota
  Ms Atherton
  To ask the Minister of Agriculture, Fisheries and Food what plans he has to increase the Cornish handline quota. [28178]

  Mr. Morley
  The UK's quotas for 1998 are due to be allocated to industry in March. As in previous years, there will be a separate allocation for the mackerel handline fishery. The uptake of quota will be monitored closely so that appropriate steps can be taken to keep the fishery open.

TRADE AND INDUSTRY

  Electricity Industry
  Mr. Rammell
  To ask the President of the Board of Trade if she will ensure that local and national consumer organisations have an opportunity to make representations in the event of a bid for the Energy Group pic and Eastern Electricity by(a) Nomura International and/or (b) Texas Utilities. [29496]

  Mr. Nigel Griffiths
  Nomura International stated publicly on 10 February that it had withdrawn from talks with The Energy Group. Following Nomura International's announcement, Texas Utilities stated publicly that it continued to be in talks with The Energy Group which may lead to an offer. In the event of a bid which qualified for consideration under the Fair Trading Act 1973, my right hon. Friend the President of the Board of Trade would decide, in the light of the advice of the Director General of Fair Trading (DGFT) and the views of the Director General of Electricity Supply (DGES), whether or not to refer the merger to the Monopolies and Mergers Commission (MMC). The DGFT and DGES would, in formulating their advice and views, take account of any third party representations, including any representations they received from consumer organisations.

  Written Answers
  Mr. Redwood
  To ask the President of the Board of Trade when she expects to answer the questions from the hon. Member for Wokingham tabled for answer on 29 October 1997 (reference 13046 and 13042). [29535]

  Mrs. Beckett
  The right hon. Gentleman received an answer to his question 13046 on 29 October 1997,Official Report, column 826.
  440
  As regards his question 13042, I replied yesterday.

  I apologise that the original question was not picked up by my Parliamentary Branch. Each morning notice of questions is now obtained electronically from HMSO. However the system has no trace of having received electronically question 13042. Steps are being taken to ensure that this does not recur.

EDUCATION AND EMPLOYMENT

  Iraqi Students
  Mr. Brake
  To ask the Secretary of State for Education and Employment how many Iraqi students are currently attending British universities; if he will list the subjects which they are studying; and what assessment he has made of the sources of their funding. [29303]

  Dr. Howells
  The latest figures for the 1996–97 academic year show that there were 143 Iraqi students on higher education courses in higher education establishments in the UK. Their subject of study and source of funding are given in the table.

  Major source of tuition fees:

  Number

  English or Welsh LEA/SOEID/DENI award

  10

  Other UK sources1

  7

  Overseas government/funding

  16

  No award or financial backing (pays own fees)

  66

  Institutional waiver/no fees

  23

  Other sources of support

  13

  Not known

  8

  Total

  143

  Subject of Study:

  Engineering/Technology

  51

  Physical sciences

  19

  Medicine/dentistry

  14

  Business/Administrative studies

  10

  Mathematical/computing science

  10

  Subjects allied to medicine

  9

  Biological sciences

  7

  Languages

  5

  Other science

  5

  Law

  4

  Creative arts and design

  3

  Social/economic/political studies

  3

  Education

  2

  Combined studies

  1

  Total

  143

  1 Includes Research Councils, Government departments, Training Councils, and UK industry and commerce.

  Ofsted Inspections
  Mr. Campbell-Savours
  To ask the Secretary of State for Education and Employment (1) if he will make a statement on whether Ofstead has made a comparison between its judgments of inspected schools' performance and a corresponding value added assessment based upon longitudinal pupil records in those LEA areas where such value added data are available; [28519]

  (2) what were Ofsted's definitions for each school year from 1993–94 of judgments in inspection reports stating pupils' achievements of Key Stage 2, and which were (i) in line with national expectations, (ii) below national

  441
  expectations, (iii) in line with national standards, (iv) below national standards, (v) in line with national norms, (vi) below national norms, (vii) in line with national averages and (viii) below national averages. [28520]

  Mr. Byers
  These are matters for HM Chief Inspector of Schools. I have asked him to write to my hon. Friend and to place a copy of his letter in the Library.

  New Deal Awards
  Mrs. Browning
  To ask the Secretary of State for Education and Employment if he will publish the criteria for the New Deal money being awarded to schools where his Department prioritise the bids. [27825]

  Mr. Byers
  In the first round of the New Deal for Schools the criteria that were used to decide which applications would be successful were the contribution of the proposed projects to improvements in educational standards, their urgency, and their soundness and cost-effectiveness.

  In the second phase of NDS, local education authorities (LEAs) and the Funding Agency for Schools (FAS) have been asked to prioritise all their applications into four objective categories which relate to building condition. In deciding allocations to schools, we shall follow these priorities, also taking account of the nature of the work proposed, the overall cost, and the outcomes which would be secured, including in particular higher educational standards, and value for money.

  Employment Service (Ethnic Monitoring)
  Mr. Dismore
  To ask the Secretary of State for Education and Employment what information will be provided by the planned ethnic monitoring of the Employment Service's New Deal clients. [27242]

  Mr. Alan Howarth
  Responsibility for the subject of the question has been delegated to the Employment Service agency under its Chief Executive. I have asked him to arrange for a reply to be given.

  Letter from Leigh Lewis to Mr. Andrew Dismore, dated February 1998:
  The Secretary of State for Education and Employment has asked me to reply to your question about ethnic monitoring of New Deal clients.
  Once the New Deal for 18–24 year olds is launched nationally in April we will be collecting information by ethnic origin in relation to the numbers of young people eligible for New Deal; invited to initial interview; starting on Gateway programmes; placed in unsubsidised jobs; starting on the four New Deal options and starting in self-employment. Information will also be collected by ethnic origin on the destinations of those leaving the New Deal options.
  Our approach to ethnic monitoring on New Deal has been developed in consultation with the Commission for Racial Equality.

  I hope this is helpfulp

  Welfare to Work
  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment if he will list the borough and district councils which comprise the Colchester District under the Welfare to Work New Deal proposals. [27295]
  442
  Mr. Alan Howarth
  Responsibility for the subject of the question has been delegated to the Employment Service agency under its Chief Executive. I have asked him to arrange for a reply to be given.

  Letter from Leigh Lewis to Mr. Bob Russell, dated February 1998:
  The Secretary of State for Education and Employment has asked me to reply to your question relating to the borough and district councils which comprise the Colchester District under the Welfare to Work New Deal proposals.
  I list below those councils whose responsibilities fall within the area covered by the Colchester District of the Employment Service:

  Braintree District Council

  Causeway House

  Bocking End

  Braintree

  Essex CM7 9HB

  Chelmsford Borough Council

  Civic Centre

  Duke Street

  Chelmsford

  Essex CM1 1JE

  Colchester Borough Council

  PO Box 884

  Colchester Town Hall

  Colchester

  Essex COl 1FR

  Maldon District Council

  Prince's Road

  Maldon

  Essex CM9 5DL

  Tendring District Council

  Town Hall

  Station Road

  Clacton-on-Sea

  Essex COB 9BU

  I hope this is helpful.

  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment who has been selected as the private sector Lead Partner in the Colchester District for the Welfare to Work New Deal proposals. [27296]

  Mr. Alan Howarth
  Responsibility for the subject of the question has been delegated to the Employment Service agency under its Chief Executive. I have asked him to arrange for a reply to be given.

  Letter from Leigh Lewis to Mr. Bob Russell, dated February 1998:
  The Secretary of State for Education and Employment has asked me to reply to your question about the private sector lead partner for New Deal in the Colchester District.
  The competition to identify private sector organisations to lead the organisation and delivery of New deal for 18–24 year olds in Colchester and seven other locations in England and Wales has reached the shortlisting stage. Five organisations have been shortlisted in respect of Colchester. They are:

  Capita Group Pic.

  Instant Muscle Ltd;

  North & Mid Essex Chamber of Commerce and Industry;

  443

  SEETEC Business Technology Centre;

  Training and Business Group (London) Ltd.

  We expect the identity of the successful private sector organisation to be announced by the end of February.

  I hope this is helpful.

  Home Energy Efficiency Programmes
  Mr. Matthew Taylor
  To ask the Secretary of State for Education and Employment how many tenders have been(a) submitted and (b) awarded for home energy efficiency programmes under the New Deal; and in each case what is the average cost for placement. [27279]

  Mr. Alan Howarth
  Responsibility for the subject of the question has been delegated to the Employment Service agency under its Chief Executive. I have asked him to arrange for a reply to be given.

  Letter from Leigh Lewis to Mr. Matthew Taylor, dated February 1998:
  The Secretary of State for Education and Employment has asked me to reply to your question about the number of tenders that have been submitted, and awarded, for home energy efficiency programmes under the New Deal.
  I regret that this information is not yet available because we are still in the contracting process for the New Deal. Although the New Deal started in 12 Pathfinder Districts on 5 January, full national coverage will not be in place until April. It will be some time after this before all contracts will have been signed.
  I am sorry I cannot be more helpful at this stage.

  Further Education
  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to impose tuition fees on students studying for the Postgraduate Certificate in Education/Certificate of Education (Post 16). [28906]

  Dr. Howells
  I refer the hon. Member to the reply I gave to my hon. Friend the Member for Walthamstow (Mr. Gerrard) on 2 February 1998,Official Report, columns 564–65.

  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to increase the number of places available to train teachers of further education to meet the expansion of student numbers forecast for the next four years. [28907]

  Dr. Howells
  It is for universities and colleges to decide what courses to offer in response to demand from students and employers, including demand for potential teachers of further education. We are keeping the situation under review and will continue to consult with the sector.

  Mr. Willis
  To ask the Secretary of State for Education and Employment what is the total amount of government funding allocated to British further education institutions in 1998–99; and what the amount was in each of the past five years. [28909]

  Dr. Howells
  The Department will allocate £3,114m in 1998–99 to the Further Education Funding Council. The table shows the levels of funding in the last five years, including payment in respect of claims for demand-led funding in 1996–97 and 1997–98.444

  £ million

  Year

  Amount

  1993–94

  2,778

  1994–95

  2,914

  1995–96

  3,025

  1996–97

  3,154

  1997–98

  3,138

  The responsibility for further education colleges in Scotland and Wales lies with my right hon. Friends the Secretaries of State for Scotland and for Wales.

  Mr. Chaytor
  To ask the Secretary of State for Education and Employment what discussions he has had with the Further Education Funding Council on current budget deficits of further education colleges. [28694]

  Dr. Howells
  Departmental officials are in regular contact with the Further Education Funding Council on a range of issues affecting further education colleges.

  Student Loans
  Mr. Willis
  To ask the Secretary of State for Education and Employment what is the minimum age at which borrowers with existing student loans will continue to be repaying such loans; when the decision was taken to raise the age limit from 50 years; and for what reasons Parliament was not informed. [28911]

  Dr. Howells
  The cancellation arrangements applying to the existing student loan scheme are set out in the Education (Student Loans) Regulations 1998. The maximum age at which a borrower might be repaying his or her loan under these arrangements is 59 in cases where the borrower was aged 40 or over when the loan was taken out, and 49 in other cases. We have no plans to change the cancellation arrangements for borrowers under the existing scheme.

  The Government are proposing that the age at which the liability to repay income contingent loans is cancelled should be 65. This is because income contingent loans will typically be repaid over a longer period than loans made under the existing scheme. The decision to set the age limit for cancellation at 65 was one of a number of detailed decisions about the implementation of the new arrangements that we have made since we first announced our proposals for student support on 23 July 1997. It was published in the "Progress Report on New Student Support Arrangements in Higher Education from 1998–99" which was placed in the Library and distributed to other interested parties last month.

  The cancellation arrangements applying to borrowers taking out income contingent loans from 1998–99 will be set out in regulations to be made later this year under the Teaching and Higher Education Bill, once enacted.

  Higher Education
  Mr. Willis
  To ask the Secretary of State for Education and Employment what is the total amount of government funding allocated to British higher education institutions in 1998–99; and what the amount was in each of the past five years. [28908]
  445
  Dr. Howells
  The total Government funding for higher education institutions in England for 1998–99 and the previous five years is given in the table. The total includes the grant to the Higher Education Funding Council for England, the grant to the Teacher Training Agency (for initial teacher training and INSET), and the public contribution to fees.

  Funding for higher education institutions

  £ million

  Total funding

  1993–94

  4,291

  1994–95

  4,561

  1995–96

  4,696

  1996–97

  4,606

  1997–98

  4,664

  1998–99

  14,682

  1 In addition higher education institutions will receive an estimated £130 million in private contributions to fees in 1998–99 under the Government's new higher education funding policy.

  Primary School Admissions Procedure
  Mr. Kidney
  To ask the Secretary of State for Education and Employment what legal advice he has received about the application of the Rotherham Judgment of 4 December 1997 to primary schools admissions procedures. [28706]

  Ms Estelle Morris
  The Department understands that the recent judgment on Rotherham LEA's admission arrangements confirms the primacy the legislation gives to meeting an expressed parental preference when allocating primary and secondary school places, while making clear that the use of catchment areas is not in itself unlawful.

HEALTH

  Tobacco Advertising
  Mr. Peter Bottomley
  To ask the Secretary of State for Health what additional bans on tobacco advertising he estimates will be in effect by May 2002. [28820]

  Ms Jowell
  A common position text on the European Union Tobacco Advertising Directive (on banning tobacco advertising) was agreed at the Health Council meeting on 4 December 1997. This text will now be considered by the European Parliament.

  Following completion of the EU Parliamentary process and adoption, and if unchanged, the following timetable will apply to the Directive:

  Timetable

  by the end of year 3

  domestic legislation to be implemented

  by the end of year 4

  application to written press

  by the end of year 5

  application to sponsorship

  by the end of year 8

  application to existing sponsorship of exceptional global events which have been allowed subject to diminishing levels of sponsorship and voluntary reduction of associated advertising.

  446
  1 October 2006 is the final date by which the Directive must be implemented in its entirety.

  Secure Units (Females)
  Dr. Cable
  To ask the Secretary of State for Health how many local authority secure units exist in(a) London and (b) the Home Counties (i) in total and (ii) for young females. [28792]

  Mr. Boateng
  The table gives the number and location of secure units as at 11 February 1998, in England. All units are approved to accommodate boys and girls.

  Secure Accommodation: current national local authority provision England

  Unit

  Local Authority

  London

  1. Stamford House

  Hammersmith and Fulham

  2. Orchard Lodge

  Southwark

  Rest of England

  1. Clare Lodge

  Cambridgeshire County Council

  2. Barton Moss

  Salford City Council

  3. Watling House

  Staffordshire County Council

  4. Thornbury

  Oxfordshire County Council

  5. Stoke House

  Coventry City Council

  6. Swanwick Lodge

  Hampshire County Council

  7. Atkinson Unit

  Devon County Council

  8. Eastmoor

  Leeds City Council

  9. Lincolnshire

  Lincolnshire County Council

  10. Leverton Hall

  Essex County Council

  11. Clayfields House

  Nottinghamshire County Council

  12. Aldine House

  Sheffield City Council

  13. Dales House

  Lancashire County Council

  14. Briers Hey

  Lancashire County Council

  15. Redbank SU

  St. Helens Met. Borough Council

  16. Redbank (Vardy)

  St. Helens Met. Borough Council

  17. St. Catherine's

  St. Helens/Nugent Care Society

  18. Sutton Place

  Hull City Council

  19 Redsands

  Cheshire County Council

  20. Beechfield

  West Sussex County Council

  21. St. John's Earlswood

  Birmingham City Council

  22. Dyson Hall

  Liverpool City Council

  23. Vinney Green

  South Gloucestershire County Council

  24. Brunei

  Derbyshire County Council

  25. St. lohn's Tiffield

  Northamptonshire County Council

  26. Aycliffe

  Durham County Council

  27. Lansdowne

  East Sussex County Council

  28. Kyloe House

  Northumberland County Council

  Whittington Hospital Trust
  Mrs. Roe
  To ask the Secretary of State for Health when the new Chairman of the Whittington Hospital NHS Trust was appointed; and if he will make a statement. [29502]

  Mr. Milburn
  Dr. Michael Abrams was appointed on 27 January to chair the Whittington Hospital National Health Service Trust until 31 October 2001.
  447

  Tuberculosis
  Mr. Love
  To ask the Secretary of State for Health how many people with tuberculosis have been detained against their will in each of the last 10 years; when each person was detained, where they were held, and for how long. [29503]

  Ms Jowell
  The information requested is not routinely collected.
  448
  A person with infectious tuberculosis of the respiratory tract may be detained in hospital under section 37 of the Public Health (Control of Disease) Act, 1984. This would happen only when all other routes to establish treatment compliance has been exhausted and the person was deemed a risk to public health. Although compulsory admission to hospital is allowable under the law, compulsory treatment is not.

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.

Bank of England Bill
Lord McIntosh of Haringey: My Lords, I beg to move that this Bill be now read a second time. This Bill is a further step in our determination to modernise the British economy and to equip the country for the new global economy of the future.
First, it gives the Bank of England operational independence to set interest rates to meet the Government's inflation target. It will do so through one of the most open, accountable set of procedures of any central bank in the world. Secondly, the Bill implements the first stage in the modernisation and reform of supervision and regulation of the UK's financial services industry. The new Financial Services Authority launched last year will enjoy the confidence of consumers and industry alike, giving London and the UK industry as a whole a huge competitive advantage.
The Bill underpins our economic approach: to secure long-term stability and the promotion of high and stable levels of growth and employment. It enshrines our commitment to increased openness and accountability, which in turn leads to the enhanced credibility in monetary policy that the world now demands. The Bill will provide the stable platform business that the country needs, and it will increase confidence in this country's commitment to low inflation in the future.
Price stability—low inflation—is an essential precondition of achieving the Government's objectives of high and sustainable levels of economic growth and employment. Inflation hits business, savers and pensioners alike. It causes uncertainty. It discourages investment and in the end hits jobs. This country has paid a heavy price for a successive cycle of boom and bust. Because of that legacy, our long-term interest rates have been higher than they should have been, and higher than those in other countries.
The new framework will not only deliver low inflation but generate greater confidence in long-term decision making in Britain, which in turn will lead to lower long-term interest rates. We have seen some benefits already. Britain's long-term interest rates fell immediately following the Chancellor's announcement last May and they have remained lower since that time, falling by nearly a full percentage point—7.4 per cent. on 5th May and around 6 per cent. today.
In the modern economy, markets demand increasing openness and transparency in decision making. That is one of the purposes of this Bill. They want to know that the Government are fully committed to low inflation and have the determination to see that commitment through; where the institutions are in place to deliver that
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commitment; and where the responsibility of the Chancellor and the Bank are clearly set out. This Bill will enable us to deliver our economic objectives. We have the opportunity to usher in a new era of stability, a platform on which to build for the future. That is another milestone in our determination to modernise Britain's economy, creating a modern bank that can meet the new requirements of the 21st century in a global economy where clarity of purpose is essential.
Noble Lords will forgive me if I do not go through the Bill clause by clause. Rather, I should like to address in more detail the principal features of the Bill.
It sets in place a clear division of responsibility between the Chancellor and the Bank. The Chancellor will set the target for price stability, and he will do so every year. The target announced by the Chancellor last year provides a rigorous, open and precise definition—a target of 2½ per cent. The Bank has the responsibility for achieving that target and, subject to that, supporting the economic policy of the Government including their objectives for growth and employment. So the Bank and the world at large is quite clear as to the objectives: price stability in support of the objectives of growth and employment.
The composition of the monetary policy committee itself will ensure a broader base of decision making. No one individual can dominate. It is a blend of experience from the Bank and outsiders appointed by the Chancellor because of their knowledge and experience. And of course the decisions are free from party political manipulation. The interests of the country will come before the interests of the party of Government. Decisions will be made with the long-term interests of the economy in mind. The Bank will also be fully accountable, not just to the Chancellor but to Parliament.
First, the MPC has to meet rigorous reporting requirements. It will be required to announce all its interest rate decisions immediately. Minutes of each meeting will be published and if there is a vote then the voting record of each member recorded. The Bank's quarterly inflation report will be put on a statutory basis. It is another instrument of accountability—one of the principal ways in which the explanations of the MPC can be assessed and subject to scrutiny outside the Bank.
Parliament will have ample opportunity to scrutinise the Bank: through an annual debate following the publication of the Bank's annual report; also through the Treasury Select Committee, which has said that it intends to call MPC members to appear before it. The fact that all the information is published and that discussions and decisions are open will in itself create accountability. All that is new and is a direct result of our determination to modernise the decision-making process.
Secondly, there is a clear procedure when the Bank misses its target, which the Chancellor set out in his letter of 12th June 1997. If inflation is more than 1 percentage point higher or lower than the target, the Bank will be required to publish an open letter to the Chancellor. Again, there is complete clarity and transparency. In the letter the bank must set out the following: why the target was missed; what action it has

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taken; how long it will take to get back on target; and how the measures it proposes are consistent with the Bank's monetary policy objectives—price stability and its duty to support the Government's growth and employment objectives.
And thirdly, there will be an increased accountability through reform of the Bank's constitution. So Part I of the Bill makes much needed changes to the Bank's management structure to enable it to fulfil its new role. The court will be expanded, and it is our intention that it will reflect the diverse interests of the City, business and industry. It will also reflect the nations and regions of the United Kingdom. And it will hold the Bank to account.
The Bill also gives an enhanced role to the non-executive directors of the Bank who will ensure that the Bank performs its functions effectively and manages its resources efficiently. They will review the Bank's performance as a whole, including the procedures of the monetary policy committee, and publish their own report every year. There is a new post—that of the senior member—who will lead the non-executive directors. Those three measures all add up to far greater accountability than ever before.
Part I of the Bill makes provision for the Bank's finances to ensure a secure foundation for the future. The Bank has long been funded by a voluntary arrangement for the banking sector. Now we are putting the main features of the existing scheme on a statutory basis. Because we are doing that it is appropriate that all those who benefit from price stability and the Bank's role in the financial system should pay, which includes building societies as well as banks.
With the transfer of banking supervision to the Financial Services Authority, it is important to look at the overall impact on the financial sector of cash ratio deposits and the new charges to be levied by the FSA. I want to make very clear that the intention is that the overall cost to the financial sector should be no greater than before and probably less. Both the Bank and the FSA will bear down on costs to the industry and therefore the public. We will ensure not only that banking regulation is effective, but that the costs are fully justified. For that reason we have been consulting on the cash ratio deposits scheme during the passage of the Bill.
Perhaps I may now turn to Part III of the Bill, which transfers banking supervision from the Bank of England to the new single regulator, the Financial Services Authority. This is just the first step of a much wider reform which we promised and which was the result of consultation while we were in opposition. As the House will be aware, the Government are currently drafting a new Financial Services Reform Bill that will formally put in place a regulator with clout and respect at home and throughout the world. Last October we launched the FSA, which has taken over from the Securities and Investments Board. It will in due course take over from the supervisory functions of the self-regulating organisations, the insurance directorate of the Treasury,
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the Building Societies Commission and the Friendly Societies Commission. Nine regulators will be replaced by just one.
For years now there has been a consensus developing that reforms were necessary. The industry and the public knew that the present system had to go: it was cumbersome, expensive and fundamentally flawed in concept; it failed the public—look at the pensions scandal, my Lords. And it was an ineffective burden on business. It pleased no one. Regulation should be complementary to the business process and not a hindrance. It should give consumers and public alike confidence in the integrity of the system.
In the global economy, where markets are changing every day, where innovation and diversity are essential, the need for a new regulator that has power and flexibility has never been greater. The objective of the reform is again to enhance transparency and improve accountability through a simpler framework for the industry as a whole. The framework recognises that the industry is changing fast; that the traditional boundaries between banks, insurance companies and building societies are increasingly blurred. Many firms now offer a wide range of financial services.
That is why it is important in this Bill to start the reform process by transferring banking supervision to the FSA. The Bank of England of course retains responsibility for the stability of the financial system as a whole. But this Bill transfers supervision to the FSA.
There is another step in the modernisation of the old system. Clear divisions of responsibility between the Treasury, the Bank and the FSA are set out in a new memorandum of understanding, which was published last year and which is available in the Library of the House. The memorandum is based on principles of clarity, transparency, elimination of duplication and regular exchange of information between the three institutions. That is another first; never before have different responsibilities been so clearly set out. The memorandum also establishes a standing committee which will meet on a regular basis, and ensure an appropriate and co-ordinated response to any failure or collapse in the future. The Financial Services Authority, as the single regulator, will be able to provide effective and consistent regulation across financial services sectors. Traditional boundaries between those sectors are being eroded, and that process will doubtless continue. It is vital that we have a regulatory structure that reflects the way in which the modern financial services industry is structured. The new single regulator is also about clarity for the consumer. The ordinary person should not be faced by a vast array of different regulatory bodies, whose responsibilities are separated by boundaries that are obscure to the person in the street.
The same logic applies with equal force for complaints and compensation. So the single regulator will be matched by a single compensation scheme and a single independent financial services ombudsman. The FSA has published consultation documents on proposed arrangements for compensation and complaints. All this will be the subject of a further Bill that will be put

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before this House in due course. But given that the present Bill is the first step, let me say a few things about the new regulatory structure that we are working towards.
As the Chancellor announced when launching the new authority last October, the FSA will have a range of statutory objectives. These are: sustaining confidence in the UK financial sector and markets (working on an agreed basis with the Bank of England—the memorandum of understanding between the Treasury, the Bank and the FSA sets the framework for co-operation in this area); protecting consumers by ensuring that firms are competent and financially sound and give their customers confidence in their integrity, while recognising consumers' own responsibility for their financial decisions; promoting improvement in public understanding of the benefits and risks associated with financial products; monitoring, detecting and preventing financial crime; and pursuing these objectives in a way which is efficient and economic and ensures that costs and restrictions on firms are proportionate to the benefits of regulation; facilitating innovation in financial services; and taking account of the international nature of financial regulation and financial services business.
The FSA will be required to report annually to the Treasury on the performance of its functions and how it has sought to achieve its objectives. It will also be required to publish its budget for consultation and to publish estimates of the costs and benefits of proposed new or modified rules. The key to the FSA's regulatory role will be the authorisation of those carrying on business ill the relevant areas. It is consistent with having a single regulator that there should be a single authorisation requirement and a single process for considering applications. The particular activities which any particular authorised person may carry on within the scope of his authorisation will be determined by the FSA.
It is right to arm the regulator with an effective array of sanctions. This will ensure that we enjoy effective regulation. But the powers must be adequately balanced. The FSA must itself be subject to the discipline of a satisfactory appeals mechanism. We propose to create a new single tribunal to consider all disputes arising from the FSA's exercise of its powers against authorised persons. The tribunal will be entirely independent of the FSA and will be managed as part of the court service. This is an important advance on the present range of financial services appeal mechanisms which are set up and run on various lines.
As we have said, the FSA will be responsible for authorisation and regulation of all those insurance, deposit taking and investment businesses currently regulated by several separate bodies, including the professional bodies. The FSA will also have extensive supervisory powers over Lords.
Noble Lords: Oh!
Lord McIntosh of Haringey: My Lords, I meant to say Lloyd's. That would have been a useful change, would it not?
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Finally, in Part IV, there are two additional measures. First, the Bill makes provision to improve the efficiency of the gifts market through the transfer of the gilts registration and brokerage functions of the National Savings Stock Register with the Bank of England's registrars department. Secondly, the Bill also provides for the modernisation of the central money markets office which will allow the market to work with computer records alone. This will not only reduce costs but strengthen London's position as an international financial centre.
This Government have made and continue to make significant reforms to the institutions and the practice of economic policy in Britain. This Bill is an important part of those reforms. It gives operational independence for setting interest rates to the Bank of England. It does so through one of the most open and accountable set of procedures of any central bank. It reforms the governance of the Bank to reflect its new role and reflects current best practice. It secures the funding of the Bank through the statutory cash ratio deposits scheme, reforming the national financial reporting requirements of the Bank with more open financial disclosure and an up-to-date dividend policy, and with the transfer of banking supervision it represents the first step towards a new structure for financial regulation. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)
11.24 a.m.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord for introducing the Bill. I have to say that he left me rather breathless with his gallop through the various provisions. I am not sure whether he gave us some new information concerning the Government's plans for the regulatory authority they intend to set up. Obviously we shall have to read the latter part of his speech with some care to see whether there is anything new there.
I have learnt since coming to this side of the House that, as always in these matters, one has to take a look at the Labour Party's manifesto before one decides how to tackle any particular issue. If it is in the manifesto, I have learnt that there is no point in trying to have a discussion with the Government as their answer to everything is, "It is in the manifesto". The manifesto states,
"We will match the current target for low and stable inflation of 2.5 per cent. or less. We will reform the Bank of England to ensure that decision-making on monetary policy is more effective, open, accountable and free from short-term political manipulation".
I am not entirely sure whether that accords with the Bill in front of us. I looked further to the business manifesto which states,
"For the Bank of England we propose a new monetary policy committee to decide on the advice which the Bank of England should give to the Chancellor".
This Bill goes a great deal further than that. Indeed, I do not believe that it fulfils the manifesto commitment; it goes much further. I suppose that it is perhaps the first Bill on which the Government cannot claim the

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safety—if I can call it that—of the Salisbury doctrine. However, the Minister should not get too worried about that remark.
On 7th February the Chancellor spoke of the policy which eventually appeared in the manifesto. He said,
"I believe that any consideration of whether to give the Bank operational responsibility for setting interest rates must be preceded by two steps. The Bank must demonstrate a successful record in its advice and build greater credibility".
That was one of the steps. Within four days of 1st May the Chancellor decided that the Bank had demonstrated a successful record and in those four days had built that greater credibility. They are clearly quick builders at the Bank! Perhaps they should be recruited to build the millennium dome or even the new Scottish parliament building because both of those seem to need speedier builders than is the case at present. On the fourth day, with a metaphorical roll of drums and fanfare of trumpets, the Chancellor announced that he was going for an independent central Bank. When I heard that announcement I felt sure that we were on our way to obeying the Maastricht criteria, and on our way into the single currency.
However, as with so much else in this tinsel town of sound bites, the drums and the trumpets were not quite what they seemed. The Bank is not to get proper independence, only operational independence. Who will be the principal beneficiary? It will be the Chancellor and the Government who hope by this move that they can shuffle off responsibility for interest rates. I doubt whether that will be nearly as easy as the spin doctors hope. There are two reasons for that. First, the Chancellor sets the inflation target and, secondly, he appoints, or has a finger in the appointment, of all the members of the monetary policy committee.
On the first point, as we have heard, the Chancellor has told the Bank that it must aim for an inflation target of 2.5 per cent. I notice that the Minister did not add, "plus or minus 1 per cent". That makes a slight difference because those of your Lordships who do not need a calculator can quickly calculate that 3.5 per cent. is the upper limit of that target, which is a considerable weakening of the target set by Kenneth Clarke.
I have no doubts that the monetary policy committee will meet its target. It will, in the words of an old Scots expression, "Mak siccer"; that is, make sure. It will always err on the side of caution and it will always put interest rates up faster and higher, and reduce them slower than may be merited by a regard for the whole economy. Anyone who doubts that should look at Clause 11 of the Bill which states,
"In relation to monetary policy, the objectives of the Bank of England shall be—
(a) to maintain price stability".
In another place the Chief Secretary got into some difficulty reading his own Bill. He did not seem to understand that maintaining price stability took precedence over all other considerations. The clause further states,
"and subject to that, to support the economic policy of Her Majesty's Government, including its objectives for growth and employment".
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I repeat the words "subject to that". Quite clearly the maintenance of price stability is the principal function of the Bank. I have no doubt that later today some of your Lordships—there is certainly a distinguished roll call of speakers in this debate—will talk about the separation of monetary and fiscal power. Alternatively, as one of the Government's own Back-Benchers in another place, Diane Abbott—she is a critic of the policy—said, the Government are handing over,
"one of the most important levers of economic power to an unelected quango".
Last week I read of the concerns of the Labour-dominated Scottish Affairs Select Committee in another place. It was not complimentary, or perhaps I should say hopeful, about welfare to work. Discussing unemployed young people it said,
"The committee did not feel that the implications of a possible slowdown in economic growth for the new deal"—
that is, for young people—
"and other unemployed clients had been fully thought through".
Indeed, it was a little before its time because Scottish unemployment figures this week started to increase again. That does not seem a good symbol of how successful welfare to work will be.
One of the members of the committee, Mr. John McAllion, pointed out that the Bank of England had raised interest rates five times since the Government gave it control over monetary policy. He is quoted in the Scotsman as saying,
"There is a macro economic policy being pursued by Government and the Bank of England which seeks to slow down the economy. That is the problem".
And certainly the Scottish economy has now seen that; and the North of England too. I suspect that it will move south as the months progress.
My concern is that the Bank will be so determined to succeed in meeting the targets set for it by the Chancellor that it will indulge in monetary overkill; and that concern is clearly shared by some of the Government's own supporters. A read of the Bank minutes of 7th and 8th January lends weight to my concern. Three members voted for an increase in interest rates. At the most recent meeting, we know that three members also voted for an increase in interest rates—probably the same three although we do not know that yet. As Robert Chote said in a Social Market Foundation pamphlet,
"One danger is that the economy will suffer if the Bank uses its interest rate policy to pursue low inflation while the Government uses budgetary policy to pursue employment, growth and votes. This is a recipe for high interest rates, excessive Government borrowing and an over-valued pound".
My second reason for concern surrounds the composition of the monetary policy committee. Your Lordships can see the composition set out in Clause 13. First, the governor and two deputy governors will be appointed by Her Majesty. That, as we know, is by the Government, or more specifically by the Chancellor. Those appointments are to be for five years. Two members have to be appointed by the governor after consultation with the Chancellor. They have to be appointed for three years. And four members are appointed directly by the Chancellor, also for three

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years. I do not think that there is a lot of independence there. This is really a quango bank—and this from the party which railed against quangos in the former government and made all sorts of blood curdling threats to quangos and quango members. And what do they do? They create a new quango and hand over to it control of monetary policy. And there is little in the Bill to tell us who might be appointed and how widely the members may be drawn.
I listened to the Minister talking about the court, but I am more concerned about the monetary policy committee. When I consider the current membership of the monetary policy committee it does not persuade me that the membership will be widely drawn. Unless one considers Oxford and Cambridge to be representative of the kingdom beyond London, the membership is certainly drawn from a narrow geographical base; and academia seems to be extremely well represented. It might not be a had idea to have someone from industry, although perhaps not the members from academia who some of your Lordships may think would be wiser and better on the monetary policy committee. But, so far as I can see, there is no one from manufacturing industry, and no one from any further north than whichever is the furthest north of Oxford or Cambridge.
As your Lordships will find out shortly, we shall be considering a Bill which will set up separate governments with considerable powers, in Scotland and Wales. Why should there not be someone on the monetary policy committee from almost anywhere else in the kingdom north of Oxford or Cambridge, but in particular from Scotland? That person would have knowledge of the Scottish economy. I believe that it will begin to operate slightly differently because the aims and objectives of the government in Edinburgh may well be different from the aims and objectives of the Government here. While I am on the subject, will any parts of the Bill fall within the areas to be devolved to Scotland or Wales?
It is not just the control of the appointments which worries me. It is the short term of office for the appointees: five years for the governor and two deputies, and three for all the rest. I would not go quite as far as the Fed in the United States which has 14-year terms. But perhaps we should look at other central banks. Perhaps they are better described as independent central banks. The Bundesbank, for example, has an eight-year term. Indeed, Gordon Brown, in a speech in May 1995 when speaking only of an advisory monetary policy committee, not one with operational independence, suggested a seven-year term.
Who is appointed, for how long, and how independent they will be are issues which the Government must address. Is there a danger that the Chancellor will pack the committee with like-minded people? Sir Samuel Brittan in his evidence to the Treasury Select Committee in another place put it better than I can when he said,
"Monetary economics is not a hard science. An attempt to confine the monetary policy committee to so called experts will simply enthrone the conventional wisdom of the moment".
No doubt we shall hear more about that from some of the economists who will take part in the debate today.
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I am sorry that the noble Lord, Lord Eatwell, is not taking part. I nearly referred to him as my noble friend because in Treasury debates over the past three or four years we have been sparring partners across the Dispatch Box. I understand that the noble Lord teaches on a Friday and finds it difficult to be here. However, I should not like him to be left out of the debate. I could not help note what the noble Lord said to the Treasury Select Committee:
"Moreover, there is a tendency in monetary policy matters to regard certain propositions as 'obvious' and anyone who questions such propositions to be at best a nit picking academic and at worst a crank. Yet the notion that the theory of monetary policy is 'obvious' and 'pragmatic' is belied by the fact that the theory and practice of monetary policy has undergone quite radical revisions over the past 20 years".
He went on to ask,
"If views held 10 years or 15 years ago were so obviously right then, why are they so obviously wrong now'?".
I shall tempt some of the professors of economics who will speak later to debate that proposition for two or three minutes. Those interests are central to who is to be appointed to the committee, by whom, and for how long.
Another issue that I suspect Back-Benchers may raise is this. Is this semi-independent quango bank the forerunner of a proper independent central bank à la Maastricht? If the Prime Minister ever plucks up the courage of the Chancellor's convictions and decides that we should enter EMU, will we have another Bank of England Bill?
I turn briefly to other parts of the Bill. I wish to say a few words about Clause 37 and Schedule 7. It is an important clause dealing with disclosure of information by the Bank. In paragraph 3 of the schedule a table sets out those authorities to whom the Bank can disclose information and the functions for which such disclosure can be made. Sub-paragraph (2) then gives the Treasury the power by order to amend the table. The 11th report of the Select Committee on Delegated Powers and Deregulation said at paragraph 19,
"The power to amend the Table is potentially wide, and the appropriate degree of parliamentary control depends on the uses to which it will be put. The House may wish to consider whether it is not of such significance as to justify amending the Bill to provide for the affirmative resolution procedure, rather than the negative procedure currently proposed in the Bill".
I think that the Delegated Powers and Deregulation Committee has been rather kind to the Bill. That is all the more reason for the Government to take on board its recommendation for change. I hope that in his summing up the Minister can assure the House that the Government will change the paragraph from the negative procedure to an affirmative resolution along the lines suggested by the Delegated Powers and Deregulation Committee.
I turn to that part of the Bill which removes from the Bank its supervisory role. It seems odd that the Bank cannot be trusted with banking supervision, yet it can be trusted with monetary policy and interest rates. I know that the failures of BCCI and Barings are used as examples of the failure of the current regulatory system. I certainly recall debates when I answered for the Treasury about Barings, and I am in no doubt that the Bank did not cover itself in glory in that case. But

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no regulatory system is infallible. No one can tell me, or your Lordships, that the super SIB would have done any better with regard to Barings. If the Minister thinks it would, perhaps he can tell us why, but without using the 20/20 vision of hindsight.
What does the removal of its prudential supervision do for the status of the Bank? What does the removal of its role in the bond market and public debt do for the status of the Bank? Can the Government be confident that they are is not diminishing the standing of the Bank?
The Government seem determined to create a super regulatory body with a huge range of regulatory responsibilities. I understand the possible attractions of greater simplicity—although I remain to be convinced that that will happen. I understand the attractions of a kind of one-stop shop for regulation. But is there not a danger that the range of its responsibilities may lead to its taking a broad overview of those responsibilities, and not looking in great detail at the individual parts of those responsibilities?
The creation of one body does not in itself mean better regulation. The creation of one body does not make the complexities of financial products any less. In the creation of the super body it will be essential that those involved do not become so absorbed in the creation and administration of the large bureaucracy that they cease to pay detailed attention to the financial markets they are to police.
Getting this matter right is essential for the health and reputation of the City. Getting it right is essential for the security of the individuals who entrust their money to the financial sector. And getting the position of the Bank right is essential for all of us, since we are all affected by interest rates—those with mortgages, those with savings, those in business, those in employment, and those seeking employment.
The ability of Chancellors, controlling both monetary and fiscal policy, to control inflation has been clearly proved by my right honourable friend Kenneth Clarke. His success was helped in part by the open structure he put in place to deal with the relationship between the Chancellor and the Treasury on the one hand and the governor and the Bank on the other. The Bank's advice was clear for everyone to see; the Chancellor's view and decisions were also there for all to see, and the wisdom of his judgment was there for all to see and to judge, and for the other place to call him into account. That fundamental answerability to Parliament, to the people, was there for all to see. That transparency, that responsibility and answerability is being removed by this Bill.
As so often, I am grateful to the noble Lord, Lord Healey, for explaining in his usual helpful and succinct way the attraction of this policy for the Government. It is a gimmick to be used as an apologia by failed Chancellors to shuffle off their failures on the Bank of England. I hope that the noble Lord is being less than charitable—but I fear.
11.42 a.m.
Lord Taverne: My Lords, I hope to be brief. I shall say little about the detailed provisions of the Bill, and at Committee stage perhaps return to some of the questions discussed in another place; for example, about making the appointment confirmation procedure for members of the Monetary Policy Committee a matter for the Treasury Select Committee. Again, there may be points that we want to raise about the cash ratio deposits and the more detailed provisions of Part III.
We regard this as a good Bill. It is very much in line with the Liberal Democrat manifesto. We think it right to give operational control for short-term interest rates to the Bank. We think it right to isolate decisions on short-term interest rates from political considerations. Yet the Bill still maintains a degree of accountability. The Chancellor sets the target and there is a prominent role for the Treasury Select Committee. So, in general, we support the Bill.
However, I wish to examine some of the implications. I turn first to the benefits. The introduction of the Bill has had, and is likely to have, a beneficial effect on long-term interest rates. That is extremely important to business and investment, and one has to bear in mind that a 1 per cent. reduction in long-term interest rates is equivalent to something like £3½ billion a year lower expenditure to the Exchequer.
The second benefit—arguable, no doubt, on the Opposition Benches—is that the Bill paves the way for our entry into monetary union. If and when we do enter monetary union, it will require a relatively small change to the Bill. Again, the longer-term stability in inflation that is likely to be promoted will help to make the economy converge. But the issue I wish to raise is the implication of the Bill for fiscal policy.
The Monetary Policy Committee's sole task is its concern with inflation—although it can take into account external shocks. The Monetary Policy Committee is not concerned with exchange rate policy. Yet the level of the exchange rate is of vital importance to the economic future of this country, and indeed our relations with the European Union. We cannot say that we will simply leave inflation to be controlled by the Bank and not take account of the impact that will have on the exchange rate.
First, if the control of inflation is left entirely to the Bank, the only way of lowering the exchange rate is by squeezing inflation down through a recession, which will eventually enable the Bank to lower interest rates. But if consumption is high, ever higher interest rates in the shorter term will keep the exchange rate higher as well. We do not wish to see a situation whereby only through recession will the Bank be in a position where it can lower interest rates again.
Secondly, if we are to join a monetary union, as the Government seem to wish, then we shall need two years of a stable pound in relation to the euro. Whether that means joining the exchange rate mechanism is perhaps a matter for argument. What cannot be disputed is that very important criterion of a two-year period of stable relationship between the pound and the euro. But if

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interest rates are high, it will be a relationship with a high pound against the euro, which in the long term could do considerable damage to this country.
Once there is a firm commitment—perhaps following a "yes" vote in a referendum—no doubt the market will ensure stability. That is what has happened to the other likely entrants into EMU. The reason the lira is stable in its relationship with the other currencies is that the market expects, very reasonably, that Italy will be one of the founder members. Once the pound is committed to becoming a member of the euro, then it is likely that the market will ensure stability. However, it would be a serious consequence, as I said, if that were to be stability at a high rate.
We could, I suppose, rejoin the European exchange rate mechanism at a central rate, 15 per cent. lower than the present rate of the pound; and, combined with the clear intention then to join, it might for a while stay there—but only if we keep interest rates lower, and that is something which the Bank may not be able to do because it has a remit to control inflation.
There are only two ways in which the exchange rate can be brought down. The first would be through recession—I have already referred to that. The second would be through a more restrictive fiscal policy. To my mind there is no doubt which course the Chancellor should choose. He should create circumstances through his fiscal policy in which the Bank of England can lower interest rates. That of course means that the Chancellor would have to consider tax increases. There is a great deal of talk about the Chancellor's "war chest". That is irrelevant for this purpose.
If we need lower exchange rates and therefore lower interest rates, the only way to achieve that is through fiscal policy. I ask the Minister not necessarily to deal with the problem straight away but to make representations to the Chancellor and ask him, or someone else, to explain, if the analysis is wrong, why it is wrong. If it is right, is it really the intention of the Chancellor of the Exchequer to let interest rates rise until there is a recession, keeping the exchange rate high as a result, with all the consequent adverse effects on manufacturing? Will he leave it all to interest rates or is he ready to control consumption by fiscal means?
The Bill does not free the Chancellor of the Exchequer from responsibility for inflation. Fiscal and monetary policy must work together. What the Bill does is to remove political temptations to follow an irresponsible interest rate policy. But if the control of exchange rate policy is not a matter for the Monetary Policy Committee, in the end it is still a matter for the Chancellor himself and for fiscal policy.
11.50 a.m.
Lord Roll of Ipsden: My Lords, I may not be able to stay to the end of the debate and if so I apologise to your Lordships now. I served on the court of the Bank of England for 10 years but I do not think that that creates an obligation to declare an interest in the parliamentary sense of the word. It has added considerably to my interest in these matters which started way back in the late 1920s and 1930s when
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I studied and taught economics. I believe that no one who lived through those years or who has studied their history can possibly underestimate the importance of monetary matters and the arrangement for managing monetary policy in our country, including the role of the central banks.
Perhaps I may remind your Lordships that that was a period which proved that errors are not the monopoly of any one party and that politicians can be as much subject to error as can central bankers. I remind the House that it was a Conservative Chancellor who took us back to the gold standard at the old rate in 1925 with the most baleful consequences, not only for our economy but for the whole of society.
I wonder whether new Labour remember that as well as what I might call "antique" Labour: it was a Labour Chancellor, the great iron Chancellor, Philip Snowden, who showed that by an unthinking and too close embrace of what was then called "sound finance" one could inflict enormous havoc on the economy and on our society.
Thus I approach the subject in a somewhat relaxed manner. Unlike the three previous speakers, I cannot refer to an election manifesto. Therefore, I have to refer entirely to my own experience as an economist, as a public official and, in the past 30 years or so, as a banker.
I referred to the experiences of the late 1920s and 1930s because I suspect that one way or another they have left their mark on the thinking of many people. I suspect that some of the anxieties about the Bill, to which I shall refer shortly and which may well be expressed in the debate, go back to the experiences of those days.
In its 300 years of history the Bank of England has undergone many changes. Even in the 10 years that I served on the court and certainly since, a lot of the ritual and ceremonial has been greatly eased. The court now meets once a month instead of once a week. The committee of the Treasury has been abolished and so on. But, oddly enough, the Bank of England has undergone few basic changes in that period and those changes have been at long intervals.
The first change after its foundation came 150 years later in the great Bank Charter Act of Robert Peel. That stamped its image on the Bank, the image of the bullion committee and the Ricardian economics and made the Bank what it was for almost the whole of the 19th century and the early years of this century. The Bank, allowing for the circumstances of the time, was the equivalent in economic matters of the British Navy. In the 19th century the British Navy was responsible for safeguarding the pax Britannica and the Bank of England was responsible for virtually preserving the world economic and financial equilibrium, the equilibrium Britannicum.
One hundred years later came the great change in 1946, the Bank of England Act of 1946 and the Bank Charter also of 1946. I remind your Lordships—if that is necessary—that it was just after the war in the days of the Labour government. That Act did two important things. First, it nationalised the Bank; it put the stock of

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the Bank in the Treasury. Secondly, it imposed upon the Bank the control, as regards policy, of the Chancellor by stipulating that the Treasury might give directions to the Bank. It has taken almost another 50 years for the next big change to occur. It is embodied in the Bill.
In the past few years there has been a great deal of debate. So far as I am aware, the question of the nationalisation or de-nationalisation of the Bank of England has not been seriously considered. There may be extremists of the Hayekian school who might wish to privatise the Bank, as they might wish to privatise money altogether. But I do not think that that is seriously considered.
However, the other matter, the control by the Treasury of the policy of the Bank has been debated a great deal under the heading: should the Bank be independent? The stimulus was perhaps what was happening elsewhere—in the Fed, the Bundesbank, and, more recently, the Bank of France, the Reserve Bank of New Zealand, the Bank of Italy, and so on.
Noble Lords may recall that when one of our number, the noble Lord, Lord Lawson, was Chancellor of the Exchequer, he came out in favour of the independence of the Bank of England. His cogently argued proposals are reproduced in his highly interesting memoirs, if noble Lords wish to refer to them. About four years ago I had the pleasure and privilege of chairing an independent panel of former high civil servants, former central bankers, economic academic experts, industrialists and legal experts from this country and elsewhere. I am gratified to say that the report produced at that time, which I have here, contains almost entirely the provisions of the Bill in broad outline and essence. We came out in favour of what we called an independent and accountable Bank of England which would have considerable control over monetary policy.
If I may refer to a non-central point of the debate, we raised the question of supervision to which the noble Lord, Lord McIntosh, devoted much attention. We did not make an absolute recommendation as regards supervision but we raised the question of whether it was right for an institution which was the lender of last resort also to be the supervisor of the very institutions for which it might have to provide succour in times of difficulty.
Of course, since then, the Government have decided—broadly speaking, rightly—to unify financial supervision and naturally the supervision of the banking system. The decision was not welcome in the Bank of England, although I suspect that that was largely due to the timing and the manner of the decision and its announcement rather than its substance. At any rate, once the decision to unify regulation and supervision is taken, it is difficult to see how banking supervision can be left out.
I come to the central point of the debate and the provisions of the Bill: the control of monetary policy. I believe that there is a good deal of misconception about this. It is somehow thought in many circles that monetary policy by itself can be controlled by one entity or another—whether it is the Governor of the Bank of
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England, the monetary policy committee of the Bank or the Chancellor of the Exchequer himself. Monetary policy is only one aspect of a whole arsenal of economic policies. Fiscal policy has been mentioned a great deal today. It is difficult to base any kind of judgment on the institutional arrangements by looking exclusively at one instrument of economic policy alone.
In the foreword to the report of the panel which I had the honour to chair, I make the point that monetary policy by itself cannot be guaranteed to achieve the objectives of stable economic policy. It can do a great deal to stabilise prices in certain circumstances, but even that it cannot entirely guarantee. That depends on many other things, including fiscal policy and micro and macro economic policies of all kinds. Therefore, to isolate one among the whole arsenal of economic policies is wrong.
Nevertheless, it is right that monetary policy in the strict sense of the word should be firmly placed upon the shoulders of the Bank of England, subject to the Chancellor fixing once a year the general objective of monetary policy. That is in line with the recommendations made in the report to which I referred and I have every reason to believe that it will work properly. Of course, it cannot be entirely separated from fiscal policy or indeed from any other government policy. As has been pointed out by the noble Lord, Lord Mackay of Ardbrecknish, it will be extremely important to see how it is fashioned when we know the Chancellor's Budget and the arrangements to be made within it which must somehow or other complement or supplement what is being done in regard to monetary policy now.
It is impossible to find a single means of ensuring monetary, fiscal, let alone economic, stability. It is a subject which requires the co-operation of a great many institutions. A great many policies must link together. In my view, the Bill before us—which I hope will not be delayed too long in its passage through the House—does a great deal to clarify those matters. It is right that the Bank of England should be given operational responsibility in relation to monetary policy, as defined in the Bill, subject to the annual decisions or the overriding decisions of the Chancellor which may occur in certain circumstances, as provided for in the Bill. The Bank can be called to account, and I am sure that if it fails in its task it will be.
The Bill deserves support. I hope that it will have a quick and easy passage and that it will contribute greatly to the better ordering of our affairs.
12.2 p.m.
Lord Desai: My Lords, it is a humbling experience to follow the noble Lord. Lord Roll of Ipsden, whose books I used to read nearly 40 years ago—I am referring to economics in my undergraduate days.
In general I welcome the Bill, but we are merely legalising what has already happened. We therefore have little choice in relation to amending the Bill, except for the next round of monetary policy, and I have no intention of saying anything on that. This is a Bill which

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puts into statute what has already happened. We now have to consider what we think about what has happened.
In that regard let me say one thing. As the noble Lord, Lord Mackay of Ardbrecknish, said, in a sense in the last regime under Mr. Kenneth Clarke we already had the beginnings of transparency in the conduct of monetary policy. Though people used to mock it and call it the "Ken and Eddie Show", it was a significant innovation when the meetings between the Chancellor and the Governor were open and the minutes published and so forth. That transparency was a good first step in the context of monetary policy. Upon election, the Labour Government went one step further and the Ken and Eddie Show did not become the Gordon and Eddie Show: we reverted to the monetary policy committee.
In a sense, the transparency continues. Indeed, as the latest set of monetary policy minutes shows, we even learnt of differences between members of the monetary policy committee. I believe that to be an extremely good thing. One of the things that gave a mystique to monetary policy—quite unjustifiably in my opinion—was the secrecy which surrounded it. People never admitted to holding rival views in relation to monetary policy. Now we know—it is healthy knowledge—that there are genuine differences of opinion among people who have a lot of experience and who are looking at the same evidence but arriving at different results.
One thing I have learnt over the course of my career as a professional economist is that economics, especially when it comes to policy making, is more a matter of judgment and less a matter of technique. Therefore we require judgment. It is good to know that there exists a heterogeneity of views among the members of the monetary policy committee and it will be for the markets to judge how much to take that on board.
The first time we have a decision in which, let us say, four people are for raising interest rates and three are against, and interest rates rise, there will be much more trouble than when three people say raise the interest rates and the rates do not have to rise. At least we have some experience of that.
I am not a signed-up member of the independent central bank school. If we have to have it, it is a good way of having it, but I do not believe it is a magic formula. The independent central bank doctrine arises from an excessive admiration for the Bundesbank. I do not share that excessive admiration for the Bundesbank, certainly not from the way the German economy has developed over the past five years—nobody could have excessive admiration for the Bundesbank.
Be that as it may. Let me turn to the parts of the Bill in which I am interested; that is, Part II—monetary policy—and Part III. The noble Lord, Lord Mackay, invited me to comment on why it was, as my noble friend Lord Eatwell said, that the truths of yesteryear are the fallacies of today and how therefore we can rely on academics to run our monetary policy. I have always believed in the adage that academics are the worst people to run monetary policy because there is nobody better.
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Various things have happened over the past 20 years which have caused this major change in the way we think about macro economic policy. One material change is due to the fact that, following the breakdown of the Bretton Woods agreement and the development of various technological innovations, economies are much more open than they used to be. Capital movements are now perfectly legal—they were not legal under Bretton Woods—and therefore every national economy is subject to much more international fluctuations than before.
An analogy we used to use was a hydraulic analogy—pumping things up and down, or driving cars along highways. Now it is more like steering a ship. We are subject to wind, tide and waves. We have some control, but we are not completely sure where we are going. We may have to change our course and tack here and there, but we are much more subject to forces beyond our control which we must take into account when steering the ship forward. It is not like driving down a highway.
That is the first change. The second change is that, because of that change and partly because of a change in thinking, we have much less faith in policy as such than we used to have. When my noble friend Lord Peston was a student and in his first few years of teaching, economists had much greater faith. We knew about models; we knew about policy; we knew which policies we were able to change and what would happen as a result. Again, the analogy is that of the motor car. Now we know that, when the policy maker changes something, the people out there are not stupid. They can anticipate the change; they can take action which will counter the intention of the policy maker. Therefore, the effectiveness of policy as such is much less when markets are intelligent and international.
Whatever we do in terms of policy making, the first objective must be not to make things worse than they already are; just do not make a mess; indeed, set up a framework within which people know how you will function. People want a stable framework rather than a stable policy. Even as you may change from one day to the next, as long as people know the framework of decision making and that is laid down, your policy will not be thwarted by the market as much as it would be if you had not told it the story.
I say to the noble Lord, Lord Mackay, that those are two reasons why things change in economics. I am glad that when things change economists change their views. It would be much worse if economists did not change their views when things changed. However, it still remains the case that the co-ordination of monetary and fiscal policy is required for good policy. But, as many noble Lords have already remarked, it is not clear right now where the institutions of co-ordination of fiscal and monetary policy are in the present system.
Perhaps I may make an analogy with the European Central Bank. As noble Lords may be aware, Sub-Committee A of the European Communities Committee is taking evidence on the working of the European Central Bank. Whenever the question of the accountability of the European Central Bank is brought up the answer is given that there will be a great deal of

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liaison between ECOFIN—the Council of Finance Ministers—and the president of the European Central Bank. They will be attending each other's meetings. At the European level we will have institutionally embodied open and transparent co-operation between the fiscal authorities and the monetary authorities. Of course, the fiscal authorities will be much weaker after EMU starts than they are in particular countries right now. Even so, there will be a transparent mechanism.
In the present system there is a good deal of co-ordination. I have no doubt that the Chancellor can talk to the governor and so on. But it is not clear, post-Bill and the present arrangements, where the co-ordinating institutions in monetary and fiscal policy will be. It would be good over the next few months for my right honourable friend and the Government to clarify for us either by practice or by an announcement that these institutions exist and that we will benefit from them.
This is one of the reasons for the problem with the exchange rate. I have said before in the House and outside that we missed a chance in last July's Budget to have a much greater deflationary bite. That would have left an easier atmosphere for the Bank of England, which would not have had to rely so much on interest rates. This is a matter of judgment and people may disagree. It is said that fiscal policy is a blunt instrument and monetary policy is a smooth instrument for fine tuning. I do not believe a word of it. I still think that had the Chancellor done that when the economy was booming we would have had fewer rises in interest rates. I could be wrong and he could be right, but it remains true that the lack of co-ordination of monetary and fiscal policy shows up in an over-valued exchange rate. The over-valuation of the exchange rate is partly due to interest rate rises and partly due to the fact that sterling is a safe haven in the context of oncoming EMU, as people are very nervous about the Italians and the Spaniards joining the EMU, so they are all buying sterling and we are suffering a little from that.
From that point of view, price stability is the dominating objective of monetary policy. Price stability in a closed economy is sufficient to get growth or whatever else one wants. But price stability alone in an open economy does not take care of the exchange rate fluctuations. Therefore, we need something somewhere else to try to get the exchange rate down to a level which yields stability. The Government have already forecast a slow-down in the growth rate in the next calendar year and I am sure that my right honourable friend, when he presents the Budget on 17th March, will take the necessary counter-cyclical measures.
I am worried, although the noble Lord, Lord Roll of Ipsden, approved of it. about the division of responsibility as to lender of last resort and banking supervision. If you are going to be the lender of last resort, and if you are in charge of avoiding systemic risk in the banking system, as you have to be as the Bank of England, not having banking supervisory powers or the information banking supervision may give you requires that you have other open and transparently laid down sources of information. For example, how quickly will
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the Bank of England know that swift action may be required? We know from what happened with Barings that something can happen over a weekend and you have quickly to take a measure of whether a great amount of information is required. It is not clear to me from Part II and Part III of the Bill how the separation will work. It is perfectly desirable to have banking supervision with the FSA—I do not deny that—but that leaves the lender of last resort with insufficient information. I have to worry about that. I wish the FSA great success but we shall have to wait to see whether the FSA will be sufficient to take care of the problems that the Bank of England should have taken care of in addition to being lender of last resort.
In the meantime, I welcome the Bill and I wish it a speedy passage.
12.18 p.m.
Lord Boardman: My Lords, I share a number of the reservations expressed by the noble Lord, Lord Desai, although I do not agree with all his conclusions. The most popular argument in favour of the Bill is the way in which other banks—the Bundesbank and the United States Federal Reserve Bank—have apparently, so it is said, been successful. That success needs some qualification. The noble Lord, Lord Desai, referred to a more recent example but history will recall that the Bundesbank was in existence in the 1920s during the time of the massive economic problems and inflation at fantastic rates after the First World War. It was also subject to pressure from its government on the merger of the Deutschmark and the East German mark. In neither case can it be said that it provided the independent safeguard for the economy and for inflation that was claimed. The Fed was in operation in the 1930s when there were massive problems in the United States. I mention those points as a reminder to those who quote a central bank as being an economic solution. It is not quite as clearcut as some would suggest.
As has been said several times today, economic policy is a mixture of fiscal policy and monetary policy. Until May of this year the Chancellor had control of the two levers of economic policy; namely, the fiscal lever and the monetary lever. He could work those as he believed best for the economy as a whole. If he wanted to, the Chancellor could reduce certain taxes in order to encourage growth. He recognised that if that should lead to pressure towards inflation he would be able, at a suitable stage, to control it on the interest rates. No longer will he be able to do so under this Bill. His responsibilities cover the areas of growth, unemployment and living standards for which he is accountable to Parliament. He has lost one of the powerful instruments which he could apply. The present position is that since May there have been five interest rate rises—a sixth is predicted—in order to control consumption. That has raised the value of the pound and severely cut our exports and attracted imports. These are matters which the Chancellor cannot control through interest rates. It has been said that the instruments left to him are fiscal ones, which may not be attractive or right to use at the present time.

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In contrast to what I believe would be the right strategy, he has taxed savings. He has introduced pension taxes and proposes them on PEPs and TESSAs to reduce investment. It seems absolutely illogical. It has been said that no previous Chancellor has attempted to make that move apart from my noble friend Lord Lawson who suggested very clearly when he was in office that it should be done. The proposal was rejected.
The Chancellor is responsible for a massive passing of the buck. He puts up interest rates, with the effect of that on mortgage borrowers and so on, and can then say, "It is nothing to do with us. It is entirely due to the Bank of England". It is as if he were turning to Marks & Spencer and saying, "The Bank of England is not mine. It has the Act which gives it authority to do these things."
However, when one analyses, as my noble friend did, who or what is controlling interest rates, it is something of a charade to say that the Bank is purely independent. I believe he called it a massive quango of nine appointments to the monetary policy committee. Only two of the appointments are in the hands of the Governor of the Bank of England and those are subject to consultation with the Chancellor. So all nine appointments are controlled by the Chancellor. One wants to hear why it could not be just a Treasury committee. It is in fact a Treasury committee, but if it were called that then the Government would take the blame for raising or lowering interest rates. Either move brings enemies. When interest rates are increased it hurts mortgage borrowers and so on. When they are reduced it penalises all those who rely on income from their savings in building society deposits and the like. To say to those who complain, "It is nothing to do with me; go along and see Mr. Eddie George" is just passing the buck.
Having said that, I am sure that the present membership of the monetary policy committee is highly competent. I do not doubt that it will act independently so far as it is able to do so. But it leaves the chairman with one lever only which he can apply and that is the fiscal lever. It is like riding a horse which has lost one side of its mouth. One has a very uncomfortable ride with very little control over where one is going to go. That is the kind of position that this Bill will leave for the Chancellor of the Exchequer.
There will be two bosses in charge of the economy, one elected and the other not. Yet both have a powerful influence on the economy. The old system provided the governor very much with the right levers. He could give very powerful advice to the Chancellor. The Governor's ultimate weapon was always to say, "If you don't like what I say and you are not prepared to take my advice, I shall resign". The prospect of the Governor of the Bank of England resigning put most Chancellors into a very worried state of mind indeed.
That is only the first part. What we have to visualise is the precedent being set for the establishment of the central bank of the EMU. The monetary policy committee will be replaced by six remote foreigners—five, if we promote one member ourselves—who will
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soon control our monetary policy and serve the interests of 14 other nations as well as ours. That is not a subject for discussion today. We shall no doubt have some interesting opportunities to do so in the future.
I turn to a few other points. The supervisory function of the Bank of England is now to be transferred to the Financial Services Authority. I am reminded of remarks made by the present Chief Secretary to the Treasury, Mr. Alistair Darling, to the City and Financial Conference in November 1996. He said,
"A blanket approach, the creation of a 'super regulator' won't do. I know that it makes for convenient shorthand hut the idea that if all the regulators are rounded up and put into one building then we will have a system that will solve all our problems simply won't wash. We believe that in the long run the primary distinction between financial stability and consumer protection should be looked after by different bodies".
I very much agree with that. The Bank of England has a knowledge and expertise to judge systemic risks in the banking system. Many of the people who were trained and who practise in that field will be going across to the FSA. I doubt whether one can get any better supervision than that by the Bank of England or indeed anything equal to it. I know that it has its problems and that not everything has gone smoothly and well. But we should retain that facility.
As regards the credit ratio deposit scheme, I welcome very much the inclusion of the building societies. I hope that in due course the scheme can be extended to any similar credit institution. The rate at which credit ratio deposits are subscribed by the banks has been done in order to cover the whole of the banking operation including supervision. It is obviously important that there must be a substantial reduction in that now that the supervisory role has gone to the FSA, which will no doubt be making further charges.
There are a number of occasions when the Bank requires individual banks to provide privileged information which is needed for bank supervision and the like. There should be in the Bill a provision to safeguard the banks, if and when that arises, from any legal action for complying with any such requirement or an acceptance that if that safeguard cannot be obtained they need not comply with the request. When the Minister replies I hope that he will be able to give that assurance. There are a number of other points that will no doubt arise in Committee. We shall have an opportunity to raise them at that time.
12.29 p.m.
Lord Peston: My Lords, I warmly welcome the Bill. My noble friend Lord McIntosh of Haringey reminded us that its introduction was an election commitment, but it is a sensible thing to do anyway. Apart from anything else, it legalises—that is probably the right word—the situation that has existed de facto since May 1997. The noble Lord, Lord Roll, reminded us that it is 10 years since the then Chancellor, now the noble Lord, Lord Lawson, first raised the matter when the then Prime Minister rejected it. That has always mystified me. I should have thought that what we are doing today is exactly the sort of thing that we could have expected a Conservative Government to do.

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Of course, 10 years is nothing in terms of making economic policy. The other day at Questions, when my noble friend referred to the aim of achieving global free trade by 2020, I was reminded that that would be almost exactly 200 years since David Ricardo laid the foundations for the theory of free trade. With regard to rational economic policy-making, it is probably sensible to think in terms of centuries rather than decades.
I should like to pay tribute to my right honourable friend the Chancellor of the Exchequer on his enormous courage, which this Bill emphasises. He actually did something which has been long overdue. Someone was required simply to say, "Do it". I hope that it will now be done. It looks as though the Bill is the first step on the road to meeting the Maastricht criteria as far as the independence of the central bank is concerned. Perhaps my noble friend will tell us later whether it is. We shall certainly explore that point in Committee.
Referring to the courage of my right honourable friend the Chancellor, I do not think that this is a matter of passing the buck. Not at all. My view is that if it all goes wrong, I do not see how a Chancellor will be able to blame the Bank of England. It will the government of the day and the Chancellor who will be crucified if it all leads to a disaster in macro-economic policy-making. I do not think that this lets him off the hook at all. Indeed, I am sure that noble Lords opposite and their colleagues in another place would not dream of letting the Chancellor off the hook. This is a sensible move in terms of economic policy-making.
Macro-economic policy can function efficiently with an independent bank, provided certain conditions are met. One condition is that the overall objectives of economic policy must be spelt out clearly. As noble Lords are aware, I regard low inflation as one valuable end, but it is only one of the many valuable ends which we ought to be seeking.
The other aspect of policy working is, as the noble Lord, Lord Taverne, put it, that the Treasury must adopt an active fiscal role. The Bill enhances the Treasury's role rather than weakens it. It places much greater obligations on the Treasury. At this point, I say that I welcome the new form in which the inflation target is to be put. Technically, it is much more sensible to specify a mean and then a range rather than an upper limit. Again, my right honourable friend the Chancellor has moved in the right direction.
Having been welcoming so far, my loyalty is tested by the current antics of the monetary policy committee. It appears to be split between leaving the interest rate unchanged or putting it up. However, what this country needs immediately, and as part of preparation for entry into EMU, is a significant lowering of the interest rate, which would then allow the rate of exchange to find a lower level in the market. That would restore the competitive position of United Kingdom industry, especially manufacturing industry. I do not believe that economic policy-making—not merely in the past year, but earlier—has given anything like enough weight to the real economy and to industry. I have listened to the remarks made by my noble friend Lord McIntosh—and
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I know why he makes them—but he is still much more worried about keeping the City and the financial markets happy than about those who are actually producing things. We do not have to go back to David Ricardo to remind ourselves that the financial system exists for one purpose and for one purpose only; namely, to make the real economy work better. It has no value whatever in its own right. Therefore, with regard to the monetary policy committee, I hope that what we observe is merely temporary insanity.
The noble Lord, Lord Mackay of Ardbrecknish, made a point about membership of the monetary policy committee with which I agree entirely. It is a completely non-party point because during the past 10 years or more that I have been a Member of your Lordships' House, many of my colleagues have asked how one can ever get to serve on any committee if one lives further north than Cambridge. It has nothing to do with parties; it seems to have everything to do with the London-Oxford-Cambridge triangle. We should do something about that. One or two of those serving on such committees should have not merely Scottish accents, but perhaps even Yorkshire or Lancashire accents. I agree with the noble Lord, Lord Mackay. I do not know the solution and whenever I am asked why an economist in other than London, Oxford or Cambridge is not asked to serve on such committees, I say, "I don't know, but I am in the right place".
I totally support the Bill with regard to moving the regulatory function away from the Bank of England. To put it as mildly as I can, the Bank's record in terms of regulation has been less than good. Here, I disagree with the noble Lord, Lord Mackay. I cannot believe that the new body will not do better. Indeed, on past experience I do not see how it could do worse.
I hope that the new legislation will not be as complicated as all other pieces of legislation on financial control have been. I should like at last to see a piece of financial control legislation that I understand and that other noble Lords—and the Minister!—understand. In that sense, I do not envy my noble friend Lord McIntosh: one day he will have to introduce that Bill to this House. I shall help him as much as I can with it! For now, I ask him a straight question: does my noble friend have any idea when we might get such a Bill?
The Government are rightly committed to openness and accountability in economic policy in general and therefore in monetary policy. I welcome everything that the Bill does to move us towards that end. Obviously, we shall examine such points in a great deal more detail when your Lordships sit as a Committee, but I should like now to ask one or two questions. It is probably not appropriate for my noble friend to answer them now, but I wanted to give notice that we shall want to raise such points later.
We are told that the new court will be responsible for the Bank's "objectives and strategy". One of my difficulties is that I have no idea what that could possibly mean. What are those "objectives" and what is the "strategy" separate from monetary policy? I hope that we can consider that in Committee. Does my noble

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friend Lord McIntosh agree that the transparency criterion ought then to be applied to the operation of the new court since its significance has been enhanced?
My own view is that as part of transparency, the Bank should publish its own economic forecasts. It publishes its inflation document now in which we get a snippet or two of its forecasts, which I never trust because I always wonder why certain bits have been included, knowing that a vast amount of other stuff is not there. The Bank should be asked to publish its forecasts in total.
On the question of transparency and accountability, I wonder whether your Lordships might want to consider whether one day we should set up a Select Committee on Economic Policy to take evidence, to hear witnesses and to publish reports on the conduct of the Bank of England and the pursuit of economic policy. I do not think that this is a matter that needs to be left only to the other place.
The question of the reserve powers has arisen. I know that my right honourable friend the Chancellor at some point said that they would be used only rarely. I think that we should table some amendments in Committee so that we can understand what "rarely" means and clarify what is meant by the expressions "the public interest" and "extreme economic circumstances". I can, however, well understand a Minister not wanting to spell out in detail what he would regard as "extreme economic circumstances".
The question has been asked—I have asked it myself previously: on a scale of independence, how independent will the new Bank of England be? It looks to me as though it will probably be as independent as the New Zealand Central Bank—although I am not sure. Partly because of the length of time for which members are appointed, it looks as though it will be rather less independent than the Fed and a good deal less independent than the Bundesbank. One way of dealing with the matter is to have some detailed discussion in your Lordships' Committee.
I should like to make two points about the reserve powers. If we enter EMU, as I believe we should, will those reserve powers be remotely compatible with the Maastricht requirements? I do not believe that they would. The question arises whether somewhere in the European Union the equivalent of those reserve powers should be given a proper statutory basis.
Clauses 11 and 12 are important, but what happens if the Bank of England fails to pursue the right objectives or claims that it has pursued them but has not succeeded? My noble friend has referred to the famous letter. We do not ever want to see such a letter because we do not want the Bank to fail. However, if there were such a letter, what would happen? In particular, are there any provisions for the sacking of the relevant people? The noble Lord, Lord Boardman, referred to the governor threatening to resign. I believe I am right in saying that on the whole governors of the Bank of England do not resign. Nowadays, no one appears to worry about firing anyone. Surely, a failed Bank of England monetary committee and governor should be told, "Goodbye—and there is no severance pay". I accept that that would be a radical departure.
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Clause 12(3)(b) makes reference to a notice to be laid before the other place. Why is there no provision for the same notice to be placed before your Lordships? When dealing with matters of this kind my noble friend the Minister used the word "Parliament". Given that he is not a person to make such a mistake, one wonders whether he is assuming that Parliament and the House of Commons are one and the same. Without wishing to be too prickly about your Lordships' rights and interests, I believe that when matters of that kind are laid before the other place they should also be laid before your Lordships so that they can at least say something about them.
Further, in Clause 12(1) the word "may" appears. Does my noble friend agree that in that context the word really means "must"? We have spent hours and hours in your Lordships' House discussing legislation in which the word "may" appears. The lawyers tell us that the word "may" means "must". If it does not mean "must", the whole clause makes no sense. Perhaps my noble friend can deal with that matter.
I believe my noble friend Lord Desai said that there was no point in amending this Bill and that noble Lords were simply here to talk about it and then allow it to pass into law. I hope that my noble friend the Minister does not take that view because there are all kinds of useful ideas that can improve the Bill enormously. I hope that he will provide us with an opportunity when we sit as a Committee to press upon him suggested amendments not of a very controversial kind which will improve the Bill in due course.
12.43 p.m.
Lord Cockfield: My Lords, I felt it singularly appropriate that this debate should have been preceded immediately by Prayers. This is a subject that requires more than the degree of wisdom that is usually vouchsafed to man, let alone politicians. I am also greatly touched that during Prayers we had the presence on the Government Front Bench of the Government Chief Whip, which shows a degree of humility in the face of difficult issues rarely shown by the present Government.
It is now over 50 years since the control of monetary policy was seized by the Labour Government of 1945. The result has been absolutely disastrous. Monetary policy is simply the upmarket description of manipulating the value of money. During a period of over 50 years the value of the pound has fallen to four pence. This is a matter in which governments of all descriptions have participated.
The Earl of Longford: My Lords, I thank the noble Lord for allowing me to intervene. Does the noble Lord agree that over the past 50 years the standard of living in this country, more particularly that of the working class, has doubled? It is not a bad record when you think of it.
Lord Cockfield: My Lords, it is a splendid record, but one good record does not in any way justify a very bad one in another field of activity. In this particular field of activity the record is extremely bad. It can be

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fairly said that many of the problems in this country in both the social and economic fields are due to the failure of monetary policy. The relatively poor performance of the British economy—I accept that it has improved in recent years—is due in considerable measure to the way in which monetary policy has been used. Among other things, monetary policy has been responsible for inflation which has destroyed people's savings, particularly those on modest incomes. I do not know whether the noble Earl regards that as good or bad. I believe that it is one of the matters that has contributed to poverty in old age.
The way in which monetary policy has operated has resulted not only in a relatively poor performance in output but, in large part, it has been responsible for the boom-and-bust characteristic, or what used to be referred to as stop-go. We merely alter the names of exactly the same phenomena. Monetary policy and the way in which it has operated has been responsible for that and many of the other failings of the British economy. The poor performance of the British economy relative to other leading economies is due ultimately to poor education, training and management, indifferent investment and other factors of that kind. These matters must be tackled in themselves. No magic wand described as monetary policy can be waved to cure these problems. It does nothing of the sort. If anything, it does precisely the opposite.
Against that long background of failure in this field, one wonders why politicians have persisted with such an approach over a period exceeding half a century. There are various explanations of this. One of the simplest, and a very odd one, is that politicians show a singular inability to learn from experience. They fear that if they change their policies or show any tendency to learn as things go along, they will be accused of inconsistency or of changing their minds.
The Earl of Longford: My Lords, I thank the noble Lord for allowing me to intervene again. Is it true to describe the noble Lord as a distinguished politician who has served at the highest levels in government?
Lord Cockfield: My Lords, if the noble Earl wishes to be complimentary I am only too glad to accept his compliment. If he is accusing me of having changed my mind—which I have not—I also regard that as a compliment. Sometimes I regard that fact as a criticism. I quite welcome the intervention of the noble Earl on these matters. One of the factors is politicians' fear of being accused of changing their minds and reneging on policies.
There is another aspect. I refer to what is claimed to be the democratic legitimacy of governments. This is an argument that is used against your Lordships' House. It is said that the other place is elected. I believe that the other place, or indeed any politician, is elected to get things right, not to get things wrong. If politicians get things wrong, they do not have democratic legitimacy. One has only to look at what has happened over the past 50 years—of course the noble Earl's memory on these matters goes back much further even than mine—and
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one can see the way monetary policy has been used to further aims which are not entirely creditable. There it is.
The question that one immediately has to ask is, if politicians cannot and ought not to be entrusted with this particular function, why is it better to delegate it to bankers? That I regard as an open question. The only points that one can make are these: while the conduct of monetary policy in this and many other countries has never produced the results that were claimed for it, nevertheless, in some other countries, the independence of a central bank has produced greater stability in the value of money, and, on the whole, greater economic progress. That is one argument.
The second argument is of course that bankers are less subject to what are politely described as political pressures. In that respect, I do not agree with the noble Lord, Lord Peston, that there should be a hire-and-fire mentality as regards the Bank of England monetary committee, because the moment one brings that in, one subjects those people, once again, to political pressures. At any rate, I believe that there is a much better case, if one takes the view, as I do—I agree that it is not universally accepted—that a function of monetary policy is essentially to control the value of money. That is a function much better exercised not by governments who have a political interest—in the worst sense of that term—in this matter; it is something much better entrusted to someone who is independent.
That is where my criticism of the Bill comes. I give the Bill a cautious, if hesitant, welcome, but of course it is only one step in the right direction, because it creates a Bank of England which is not entirely independent. It is still far too much under the influence of politicians. That comes out particularly if one looks at Clause 12. It is not just that the so-called inflation target is to be fixed by the Chancellor of the Exchequer; it is that when one comes to Clause 12 it will be the Chancellor of the Exchequer who says what stability in prices means. We saw that in Alice Through the Looking Glass, and that is not a very good precedent for this sort of thing. We also find of course that it is the Chancellor of the Exchequer who will say what the economic policy of the Government is. That might strain his imagination from time to time, but, nevertheless, it is another area in which the parameters can be moved, in which the goalposts can be shifted, and in general matters can be fudged.
I do not agree with my noble friend Lord Mackay of Ardbrecknish in criticising the present Chancellor of the Exchequer for having got rid of this somewhat unwanted baby by handing it over to the Bank of England. I do not know what Mr. Brown's motives would have been, but I have always taken the view that, if government are doing a job which they should not be doing, and if government are doing a job which not only they ought not to be doing but which they are doing badly, then the right answer to that problem is to give it to someone else whose job it is to do it and, it is hoped, will do it well.
That was the argument that I always used in the case of privatisation: that it was absurd for governments to be trying to run industries, and running them badly,

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when they should not be running them at all, and should pass them over to someone who might do the job a great deal better. That view has been borne out by the experience of the past 10 years, or so, except for one or two blips recently into which it is, perhaps politest, not to go in any detail. Nevertheless, that is a main point.
I want to draw a clear distinction between monetary policy and fiscal policy. There is the big difference that fiscal policy deals with matters that the Government themselves are doing; it relates to the level of government expenditure; it relates to the level of taxation; it relates to the form of taxation. Those are all matters within the core responsibility of government. where they themselves can decide what happens. In the case of monetary policy, they are trying to alter part of the environment in the hope that people will react in a particular way. However, experience over the past half century shows that people, unfortunately no doubt from the Government's point of view, regrettably do not react in the way that the Government themselves hope.
I shall say merely that I have reservations about the Bill, essentially because, in my view, it does not go far enough; but, apart from that, it is a step forward, even if a hesitant and incomplete one.
12.55 p.m.
Lord Shore of Stepney: My Lords, it is tempting to follow the noble Lord's observations on our experience in the post-war years. He has given an account of them which I do not think that everyone in the House is prepared to accept. Surely we have all to accept with some humility that the great aim of the post-war period of using economic policy to enhance prosperity, and, above all, to conquer the scourge of unemployment, has been extraordinarily difficult to reconcile with stable prices and an acceptable level of inflation.
I have to say straightaway, as I turn to the Bill itself, that I do not believe that it will make any great contribution to that end. Is the idea that Chancellors of the Exchequer are so—what?—feeble in their moral character that they cannot resist the short-term pressures of an approaching election? One or two have succumbed to that temptation, but, for the most part, they have been entirely honourable men who have sought to serve the country and to serve, in particular, those two objectives which I mentioned at the beginning of my remarks.
I am not therefore in favour of Chancellors, including the present one, down-sizing their job, abandoning very important controls over the economy. I use the word "down-sizing" because I am conscious that it is not just a matter of giving up direct control over interest rates, which is one of the crucial determinants of economic growth and prosperity in this country; it goes much further than that. My right honourable friend's aims are to strip the chancellorship completely. He wants to join, as we know—he has said it; he advocates it—an arrangement in Europe in which we have for ever abandoned any control over interest rate policy, any control over exchange rate policy, because we are part of a single market, even to accept serious and penalty-laden parameters on his own right to borrow.
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The aim—I put it in a simple way—is to give up the whole idea of macro-economic policy as being a responsibility of the Chancellor; and for the Chancellor, as it were, to transform himself into a Chief Secretary. That does not seem to me to be a satisfactory aim either for this Government or for the present Chancellor.
I have a major criticism of the measures in the Bill. I am not referring to what are, to my mind, rather minor measures about openness, greater supervision and supervising the very many different activities of the City. No, it is not that. I am concerned about the central abandonment of control over interest rates. Clause 10 sets out in terms the abdication by the Treasury of control over Bank of England interest rates. Clause 11 gives the Bank of England, hardly surprisingly, the duty to enforce an inflation policy laid down by the Chancellor of not exceeding 2.5 per cent.
What on earth does anyone believe will happen as a result of that? The weight of controlling inflation will inevitably fall upon the Bank of England. As we know, it has raised interest rates—in my view, given its terms of reference, perfectly sensibly—on five separate occasions. Moreover, in spite of the good results of recent economic indicators, it believes that it may have to raise them again. That is a proper reflection of its anxieties about inflation.
What has happened as a result and what was happening before the Government changed on 1st May? The exchange rate was rising rapidly and most disadvantageously for this country. In terms of the deutschmark and European currencies, we have managed to return to the level from which we fled, or were expelled, in total confusion on that famous day in 1992. We have not quite reached that stage yet and I hope that we will not.
The point was properly raised, almost surprisingly, by the noble Lord, Lord Taverne, of the implications of the rise in the exchange rate for fiscal policy. They must be spelt out. One cannot ignore what is undoubtedly the biggest threat to the ongoing prosperity of this country. which is the massive increase in the exchange rate as against the European currencies. That is not to mention the further undermining of our own competitiveness which follows from the appalling events in South-East Asia and the great devaluation crisis there.
Perhaps for a moment I may dwell on the effects which the exchange rate has already had. There is a mass of statistics and information, but for the sake of simplicity I frequently refer to the CBI's quarterly survey. It is up to date and covers about 1,000 firms of varying sizes throughout the British economy. It sends a regular questionnaire to its member firms. There is one question which it always asks and it is included in the January 1998 report. Firms are asked about their optimism about export prospects for the year ahead. The balance is given between those who are positive and those who are negative. The figure for January 1998 stands at minus 22 points. That is the present estimate of British industry of its export prospects in the years ahead. Two additional points are worth reporting. It is not just a snapshot at this moment in time, but what has been the volume of export deliveries during the past four

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months? The process is under way. The figure is minus 15 points in the balance between those whose exports had risen and those whose exports had fallen. Finally, there is a volume of export orders for the year ahead. Again, the figure is down on the balance between the positive and the negative at minus 21 points.
That is serious and it has provoked public concern. Incidentally, it has provoked the TUC and the CBI to lament and point to the dangers to employment and the future of our manufacturing industry. They are entitled to do that, but I am a little surprised, particularly at the TUC. Indeed, there is a certain irony. The TUC is complaining about high exchange rates when it and the CBI are committed to the European project of a single currency. Let them complain when that happens and who will listen to them? It is an extraordinary demonstration of what could well happen in the future.
I should also mention the dangers and penalties which this country has experienced as a result of exchange rate policy or the abandonment or temporary surrender of it. The noble Lord, Lord Roll, in his admirable history of this century, rightly pointed to the disastrous decision of a then Conservative Chancellor of the Exchequer in putting us back on the gold standard in 1924. He mentioned the other disastrous decision of the Labour Chancellor of the Exchequer, Lord Snowden, to return to the gold standard in 1931.
I would add two more recent decisions. Have we forgotten the disaster which occurred when we joined the exchange rate mechanism and found ourselves unable to control interest rates in the effort to maintain an exchange rate? What do we believe will happen if we as a country are so foolish—I do not believe that we shall be—to join the single currency and to abandon forever any possibility of controlling our own fortunes. I said "controlling" but I like the metaphor "navigating", used by my noble friend Lord Desai. Economic policy is not about control, it is about steering and navigation. If we give up the instruments of navigation, as we would be doing, we shall have no influence on our own future.
1.6 p.m.
Lord Cobbold: My Lords, I am in the camp of those who welcome the Bill. I agree with the noble Lord, Lord Peston, that it was a forthright step of the new Labour Chancellor last year to grant operational independence to the Bank of England in the management of monetary policy.
Although I welcome the move towards independence, I cannot but feel a touch of sadness in respect of the other main feature of the Bill which deprives the Bank of its supervisory role over the banking system. This role, historically shrouded in the mystique of a relationship built up between the Bank and the City over the centuries, inevitably deprives the Bank of an important part of its traditional role. By and large, with some exceptions, it has performed that role with skill and discretion over the years, earning the respect not only of the City but of central banks and financial institutions throughout the world. There are good
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reasons for the new proposals, as explained by the noble Lord, Lord McIntosh. But nevertheless, it is sad to see the breaking of such a long-standing tradition.
There are some interesting contrasts, as was pointed out by the noble Lord, Lord Roll, between this Bill and the Bank of England Act 1946. In addition to nationalising the Bank, that Act formalised for the first time the Bank's powers of regulation of the banking system which are now being taken away. The 1946 Act, in the drafting and subsequent implementation of which my father played a key role as deputy governor, was introduced by the post-war Labour Government which, like our present Administration, had a very large majority. As had been noted by other noble Lords, attitudes at that time were very different.
While we are influenced by 50 years of battling with inflation, it was the great depression of the 1930s and its consequences that drove their thinking at that time. When the Bill was given its Second Reading in your Lordships' House in January 1946, Lord Pethick-Lawrence, for the Labour Government, made it clear beyond doubt that major decisions on monetary policy, domestic or external, were the final discretionary responsibility of the Chancellor of the Exchequer rather than of the Bank of England, which was not responsible to any body of public opinion. New Labour has certainly come a long way since then.
It is interesting also that in the House of Commons debate on the 1946 Act, Robert Boothby quoted Abraham Lincoln's famous statement that the privilege of creating and issuing money is not only the supreme prerogative of the government, it is the government's greatest opportunity. Money will cease to be master and become the servant of humanity. Democracy will rise superior to monetary power.
We have all learnt, possibly with one or two exceptions—for example, the noble Lord, Lord Shore—from the inflationary bruises of the past 50 years. We have seen and understand now the temptations of democracy. But certainly those old sentiments die hard and are still manifest in the Bill that we are considering today.
Indeed, as has already been said, Clause 11(b), gives the Bank a second objective beyond, although subject to, the maintenance of price stability; that is, to support the economic policy of Her Majesty's Government, including their objectives for growth and employment. Furthermore, in Clause 19 the Treasury retains reserve powers to give the Bank directions in respect of monetary policy if it is satisfied that the directions are required in the public interest and by extreme economic circumstances.
The implications of those reserve powers go beyond the purely philosophical. The Government have expressed their intention to join the European single currency if certain economic criteria are met. But one criterion they must meet in those circumstances is that the national central bank is independent and its statutes must be compatible with those of the new European central bank. It is doubtful, whether, with the reserve Treasury powers, the Bank of England, under the terms of this new Bill. will meet those criteria. Therefore,

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I join the noble Lord, Lord Mackay, in asking whether the Government are planning a second Bank of England Bill in a few years' time.
In practice, the Bank has already been operating for some months under the new monetary policy regime. It is significant that this week we have seen minutes of the first meeting of the MPC where there has been a difference of opinion on whether or not interest rates should be raised. There can be no doubt that the real tests of independence are still to come.
Indeed, I am concerned as we look ahead to a situation in which perhaps 11 nations have joined a single currency, with sterling remaining as a satellite currency on the outside. The sterling money market is deep and very liquid. There is a great variety of derivative instruments in which to operate. Sterling is indeed a trader's currency, a playground for foreign exchange dealers and for hedge funds. In the circumstances, and given differing phases in the economic cycles of this country and the euro area across the Channel, sterling could suffer from bouts of extreme volatility. In that event, the monetary committee of the Bank may be faced with some extremely difficult choices.
I am optimistic by nature and I wish it well but it will require very close liaison between the Treasury and the Bank to ensure that independence wins for the Bank the long-term respect of the British people.
Lastly, in that context, I believe that the Government should quickly announce the re-appointment of the present Governor. I understand that there may be something in the Financial Times this morning which I have not seen. That would be a confidence-inspiring gesture. With the difficult times which I believe may lie ahead, the Bank is best placed if it is in the hands of someone as experienced and respected as the present Governor.
1.13 p.m.
Lord Randall of St. Budeaux: My Lords, I should like to look at the Bill before us today, which I fully support, in the context of Britain's entry into the European monetary system to see how it can contribute to that process. I appreciate that that does not fall entirely within the scope of the Bill and I recognise that there will have to be further legislation for that purpose. Nevertheless, the courageous and imaginative step of my right honourable friend Gordon Brown, Chancellor of the Exchequer, in creating an independent Bank of England in relation to monetary policy, is certainly a necessary step towards EMU membership.
Rather than making a wide-ranging economic speech today, I should like to look at some of the specifics in the Bill before us. I start by referring your Lordships' House to Part I, Clause 1, which refers to the court of directors of the Bank of England.
Presently, the Bank of England has a governor, a deputy governor and 16 directors of whom four are executive. Under this Bill, there will be a governor, two deputy governors and 16 directors all of whom will be non-executive. All those non-executive directors will form a committee of non-executive directors. It is
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interesting that that committee will be chaired by a very senior director appointed by the Chancellor. It is difficult to understand completely from the wording of the Bill what exactly that means, but I believe that we can assume that that person will be someone of considerable clout.
We know also that that committee of non-executive directors will have the power to set up specialist sub-committees for scrutiny, monitoring and reviewing. I believe that that is extremely significant. But also the committee of non-executive directors in particular will be empowered to review whether the monetary policy committee is doing its job properly—for example, whether it has carried out sufficient data collection about what is going on in the regions in order that the task of formulating monetary policy can go ahead properly. Therefore, it would seem that the new committee of non-executive directors will have a powerful scrutiny function.
The question that arises in my mind is how exactly the MPC and the committee of non-executive directors will work together, as they seem to have overlapping responsibilities. I very much hope that in Committee we shall be given a clearer understanding of that: alternatively, perhaps the Minister could comment on that in his winding-up speech.
It is clear that the committee of non-executive directors will have as its chairman a senior non-executive person who will be appointed by the Chancellor of the Exchequer to look after the interests of the shareholders of the Bank; that is, of course, the Government. The upshot is that we have a Bank of England advisory committee—namely, the monetary policy committee—which appears to have responsibility for advising the governor on monetary policy, being reviewed by the committee of non-executive directors headed by a very senior chairman appointed by the Treasury.
What is the consequence of that? It is that the Government, in devolving powers for determining interest rates to the governor of the Bank of England seem to be retaining influence over monetary policy through the MPC via the committee of non-executive directors. That is very significant.
The question that arises is whether the Government's approach to influencing monetary policy is reasonable. I believe that the answer must be an emphatic "yes". In fact, I wonder whether it even goes far enough. Perhaps I may explain to the House why I take that view. In the near future, there is no doubt in my mind that Britain will he joining the EMU. I was in Brussels on Monday talking to the commissioner responsible for such matters, and the thinking levels which prevail in Brussels and those which prevail in Britain seem to be at such variance that it makes such visits worth while. However, the European Bank itself will be extremely independent. If one looks at the Maastricht Treaty and the other treaty articles, it will be seen that, in treaty terms, the bank is unchallengeable. So the control of monetary policy will rest with the European Central Bank, and the committee of the ESCB (the European system of central banks).

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It is interesting to note that the executive of the European Central Bank will have five members and the committee of the ESCB, if I may put it that way, will have about 11 voting members, each of whom will be governors of the banks from the member states which have joined the EMU. So we are in a position, quite unlike that of the Federal Reserve, where the representatives of member states on the ESCB will have more votes than the executive directors of the ECB. That means that the power will rest with the ESCB.
Therefore, in the UK case, that means that the Governor of the Bank of England, currently Eddie George, will be a voting member of the ESCB and part of the group which determines interest rates and elements of monetary policy. The conclusion that I draw from that part of the Bill is that the monetary policy committee and the committee of non-executive directors will be key organisations in influencing the governor and, therefore, the ESCB. In that case, I believe that the Government are absolutely right in strengthening the committee of non-executive directors because its influence will be so very important when we join the EMU in the near future.
The question I would ask in that respect is whether the Government have gone far enough in emphasising the calibre of the members to be appointed to the Bank of England. It is a crucial committee. The Government have emphasised the importance of high qualifications for the senior member of the committee of non-executive directors, but I wonder whether we can go further. I shall be interested to hear the view of my noble friend the Minister on whether he feels that perhaps more could be said in Schedule 1 to the Bill about the calibre, or even experience, needed by members of the court. I am not suggesting that the schedule should go into too much detail on this, but I should have thought that we ought to have people with good sound banking experience, and certainly with good sound experience in scrutiny work. Those qualities should be mandatory, but I am not sure we necessarily need such detail in the Bill; but, my goodness, we should have an understanding in that regard. Does the Minister agree that the calibre of all non-executive directors is just as important as the calibre of the senior non-executive director appointed by the Chancellor of the Exchequer, which is referred to in the Bill? My inclination would be to table an amendment either in Committee or on Report. Nevertheless, I shall seek the advice of my noble friend in that respect.
I should like to say a few brief words about Clause 3(4) under which the Chancellor of the Exchequer may designate one of the directors to chair the subcommittee of non-executive directors. That person will indeed have considerable influence with the Treasury, the Bank and, ultimately, with the ECB and the ESCB. Perhaps my noble friend the Minister could tell the House what the working relationship will be between the senior non-executive director and the two deputy governors. One of those governors will have direct executive responsibility for monetary policy to support the Governor, while the other one will have responsibility for financial stability. So there is considerable overlap
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there. Much has been said in press reports about the Bank of England having complete independence for monetary policy. However, is it not the case that there will be more co-operation in arriving at interest rate decisions between the Bank and the Treasury than perhaps press reports have indicated?
I turn now to accountability and transparency about which I feel most strongly. I have in mind Clause 4 of the Bill which touches on the question of accountability. Again, in Brussels, I see a changing position in that area. When one talks about a strongly independent central bank, that does not seem to be consistent with the notion of accountability and transparency. Much debate is taking place on the matter with which I personally agree; namely, that one can and must have accountability and transparency with this banking system. Certainly, in order to carry the people along with the whole question of EMU and central banks, the EU believes that there is a need to be open about the affairs of the ECB and the ESCB.
At present, the proposals are that the ECB must produce a report every three months on the activities of the ESCB. Moreover, annual reports will be produced for the European Parliament, the Commission and, I believe, the Council of Ministers. Again, I may be wrong—and, if so, I shall seek my noble friend's advice—but deliberations certainly take place in the governing council of the Bank of England which are still being run in a confidential way. Such matters refer to monetary policy arrangements. I noted most carefully the remarks of my noble friend in his excellent opening speech that the quarterly report requirement would be put into statute. I believe he also said that other reports would be produced.
However, having said that, I should be grateful if my noble friend can tell me whether, despite what he said in his opening remarks, he believes that there will be further pressure for the Bank of England to be more open in its deliberations than is the case at present, although Britain will initially be outside the EMU. Does my noble friend agree that it would be desirable to look again at the question of openness in the Bill, so as to at least match the standards currently being considered in the European Union even though we will not be joining EMU in the first wave? There were other matters that I wanted to raise but time is cutting me short. I believe that the Bill is an excellent one and deserves the full support of this House.
1.29 p.m.
Lord Stewartby: My Lords, I should begin by declaring certain interests. I am deputy chairman of an international bank and chairman of its audit committee. I am also a director of a building society. In the 1980s, as a Treasury Minister, I was responsible for the Banking Act of 1987. For four years until the end of last year I was a member of the Securities and Investments Board, latterly the Financial Services Authority. It is tempting to enter into the wide-ranging debate on monetary policy, as many other speakers have done. Although I wish to say a few words about that, I want to concentrate on certain matters relating to

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supervision which have not been so heavily covered in your Lordships' remarks so far but which constitute a major part of the Bill.
As regards monetary policy, it seems to me that the vital step was taken by my right honourable friend Mr. Kenneth Clarke when he was Chancellor in opening up a much more transparent discussion of policy decisions about interest rates, and that the present further step was sooner or later an inevitable consequence of that greater transparency because it was not reasonable to have a continuous debate as to whether there was a dispute between the Chancellor and the Governor, and whether it was politically derived, or how it was to be interpreted. It seems to me that the present proposals are themselves sensible and practical but the debate has correctly drawn attention to the fact that one cannot separate monetary policy in isolation from other aspects of the economy, as my noble friend Lord Cockfield and many others, including the noble Lord, Lord Roll, said. There will be tensions in that relationship. I do not necessarily believe that the Bill has provided all the answers, but it will be an evolving scene.
The most important consequence of these changes—which go back a few years—is that there is now an attempt by the monetary authority to anticipate future inflationary pressures. In the past there was too much of an inclination to take measures—particularly in relation to interest rates—only after the signs of substantial change in the economy had become all too evident, and at that stage, in arrears, it was necessary to implement much sharper interest rate moves in order to correct those positions. I believe that the present system and the one now proposed are designed to ensure that the monetary authority looks ahead and tries to anticipate what will be needed in the way of monetary conditions to ensure reasonable economic stability in terms of inflation. I do not think it is possible at this stage for any of us to guess how well it will perform, but I am sure this is the right way to approach the matter. It will not abolish the business cycle; no government and no monetary authority can do that. However, I hope that it will succeed in making that cycle less violent so that the economy does not become too over-heated or, if some slowing down is necessary, does not require a full-blown recession.
I turn to the supervisory matters in the Bill. When we were discussing what should be included in the Banking Bill in the 1980s we were faced with the potential conflicts of the Bank of England as a supervisor and as a lender of last resort to which noble Lords have alluded. At that time—I suppose one could fairly describe it as an interim solution—we felt that it was necessary to have some separation from the mainstream of the Bank of England for the supervisory process. That is why the Board of Banking Supervision was set up. It was a sensible step at that time, but the world has moved on. Banking and securities markets are increasingly overlapping and to have separate supervision for banking and for securities markets is no longer such an evident virtue as it was some years ago.
Other countries are moving in the same direction. There is a growing case now for ensuring that supervision of these coalescing markets—which are
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becoming increasingly international and therefore more complex—should be handled in a way which is separate from the traditional functions of central banking and notably monetary policy. That throws up some other difficulties of course. If the Bank of England is to remain responsible for the stability of the system, it needs a great deal of information about individual institutions. Whereas it was able to gain this through the supervisory role, it will now either have to have it at second hand, or it will have to duplicate part of the lines of communication between institutions and their supervisors.
A number of comments have been made about the costs of regulation and supervision. I am more concerned about the costs to the institutions which are being supervised than about the actual costs of running a regulatory system. My experience of the Financial Services Authority was of a cost-conscious organisation, tightly run and operating its budget in a disciplined way. It was run by high calibre, dedicated people who realised that they were spending other people's money and were cautious about it. Of course in any organisation economies can be made but I do not believe it to be an extravagant body in its nature. Indeed there should be possibilities for saving because some duplication in the current system should disappear with the integration of various forms of supervisors into the FSA. If you have a liberal financial centre with the reputation of the City of London, in order to be a world class financial centre it needs world class regulation and supervision. The proposals which we now have are likely to assist us in retaining that status for London.
I mentioned that markets are becoming more international. This means that the international dimension has to be taken into account by supervisors. That has added to the complication and the cost of supervising major international banking, insurance and other financial institutions. In my view the danger is that one has excessively detailed and intrusive supervision. Supervisors have to strike a balance between having the necessary level of understanding of the institutions they are looking after but not trying to tell insurance companies, banks and others how to run their businesses. Despite what the noble Lord, Lord Peston, said, I think that with one or two unfortunate exceptions the Bank of England has carried out its role pretty well. I hope that its approach to supervision can be preserved in the context of the new organisation.
However, the Financial Services Authority will face difficulties in that it has to look in two different directions. On the one hand it has to protect the position of the consumer at the retail level; on the other it has to ensure the soundness of big international institutions. My own view, from experience both as a practitioner and on the SIB, is that more emphasis needs to be placed on high level controls on defined lines of accountability and responsibility; on the calibre of the individuals at that level; and on the general culture of compliance throughout an organisation. I say in parenthesis that I doubt whether the Barings affair would have developed as far as it did with such catastrophic consequences if that company had had its equity publicly quoted and had followed the requirements of

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having an independent audit committee which asked awkward questions of the company's auditors. If that had happened I do not believe that it could have ended up the way it did. However, one can say that with the benefit of hindsight. We need to learn the lessons of these affairs. There is a triangular memorandum of understanding between the Treasury, the Bank of England and the Financial Services Authority designed to deal with the situation of there no longer being a bilateral relationship between Treasury and Bank but a triangular one and the lender of last resort not being the supervisor of institutions in the financial sector. I hope that this will work in practice. It is a sensible memorandum in its concept.
However, when serious problems arise, they come suddenly. It is difficult enough on a bilateral basis between Whitehall and the Bank to achieve rapid decisions in such cases. With a triangular arrangement I fear that it will take a little longer. I am also bound to wonder whether the traditional role of the Bank of England in assisting the stability of major companies in the economy as a whole, beyond deposit takers, will be catered for under the new arrangements. I remember the 1970s when there was a collapse of the property sector. The Bank of England was able to use its offices to secure lifeboat support in a way which went beyond the banking institutions themselves. Under the new arrangements I do not see how that will be provided for.
Finally, while I accept that the movement towards a very large omnibus regulator for financial activities of different kinds is now inevitable, and in many ways desirable, we have to accept that there are inherent problems of managing any large organisation. This will be a large, diverse organisation which will have to face in different directions at times. It will not be easy to run it in a way which meets all its objectives. It will need common standards, but it will need to apply them in different ways. This will be a tremendous task for the management of the authority. I have great confidence in Howard Davies and his team. I do not think that there could be better people to try to bring this about. But it is a major task. It is not one which has been attempted on this scale in any other country. I wish it well, but 1 have to keep my fingers crossed.
1.41 p.m.
Lord Bruce of Donington: My Lords, every now and again Parliament has laid before it a Bill of a highly specialised nature, dealing with a specific section of our economic and financial activities and the institutions that administer them. It is right that that should be so. We have had today a quite limited but nevertheless penetrating analysis on the nature of the steps proposed and the effect of them on the immediate environment of those concerned. So far as it goes, that should be done.
However, we have to be careful that when we have considered these questions on their intrinsic merits, we have to restore them into the context into which they are taken. The context is the fortunes of the nation as a whole. Where do the steps to be taken lead us? What effect do they have on the ordinary lives of citizens?
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In our capacity as Members of Parliament, and in one House or the other, we are not only enjoined to examine the activities of experts, we have to take a general view as to what happens to the population as a whole. How do these steps affect them? How relevant are they to their happiness or unhappiness, their fortunes or misfortunes? The overriding duty of Government is not to consider matters in isolation but within the context of the nation's fortunes a whole.
I have but little qualification to address the House in what may be considered presumptuous terms. I remember well in October 1990 when all the political parties, and the Bank of England, took a decision to enter into ERM. I, together with a few of my colleagues in both Houses and of all parties, ventured to dissent from that proposition because we thought it would lead to considerable trouble. Who was right and who was wrong in those circumstances? The experts put forward and supported the proposal that we should enter the ERM—and nonsense! I remember it well. My own party started the issue off three days before the Conservative Party conference in the October. The Liberal Party had decided automatically anyway because they had been fond of it from the beginning. The Conservative Party had decided, and the Bank of England agreed. But who was right? In fact we were right.
I say this in order to defend the position of the politician as against the expert. My old chief, Aneurin Bevan, had the saying—I still regard it to be a profound truth—that the expert should be on tap, never on top. That event well illustrated that saying.
Today we are discussing a Bill which takes away specific powers from the Government and hands them to the Bank of England. I shall refer again later to the section of the 1946 Act. The section provides for directions to be given by the Treasury or the Government to the Bank of England. Section 4(1) of the 1946 Act—the noble Lord, Lord Cockfield, regards the policy as an unqualified disaster—states:
"The Treasury may from time to time give such directions to the Bank as, after consultation with the Governor of the Bank, they think necessary in the public interest".
That is emphatic. There have been many endeavours today to demonstrate to this House that these provisions really do not mean what they say, that there is not really much difference anyway, that this has been unofficially always the position and that we need not bother much about them. But the words are specific in the Bill. The Bill states:
"In section 4(1) of the Bank of England Act 1946 … at the end there is inserted, 'except in relation to monetary policy'."
That seems to be quite emphatic. It is so important that it has to be put in law. There is no question of any regulation or understanding. The step is so important that the House has to legislate for it. Moreover, it can only reverse it or give some amelioration for its provisions, under a later section of the Bill which requires a regulation to be laid for affirmative resolution within a period of 28 days—or whatever it is—when it is in the public interest, or when there is an economic event of some disastrous importance. What those circumstances are, one does not know, or whether they

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would have applied, for example, on 2nd September 1992, and how catastrophic that might conceivably have been.
What are the effects of this step? As we know perfectly well—and numerous examples have been given in this debate—there have been five or six "hikes" in Bank rates so far. What effect has that had? It is common ground and few would dispute it that the exchange rate of the pound has been such as to over-value the pound against both the dollar and the deutschmark. That in itself has had further consequences. The over-valuation has meant that British exporters are finding it increasingly difficult to export British products. On the other hand, importers find it very much easier to import from other countries as a consequence.
What are the results of exporters finding it more difficult and importers finding it easier to conduct their affairs? First, it must be remembered that the CBI comprises both importers and exporters, and that the importer section is probably highly gratified. That is reflected in the inconclusive nature of some of the voting. But what happens in the meantime? It means that more unemployment occurs. Firms are there to make a profit, and if they cannot export their goods and see even less prospect of orders materialising in the future, they will cut down on their labour force. The joint effect is that pressure is put upon the whole of British industry, because of the less competitive nature of our domestic manufacturers, which is unable to export so easily and, again, find it difficult economically to compete with imports entering the country. There is a "double whammy" effect.
But that is only part of the story. What is the other result of a rise in interest rates? Surely it is the effect on loans to the ordinary public—on mortgage rates, and so on. There is a diminution in spendable income for those who have taken out mortgages on their houses: they have less money to spend. If there is less money to spend, there is less effective consumer demand. Less consumer demand, together with competition from importers, once again has an adverse effect on British industry. Indeed, more than that, it affects the attitude of the ordinary person who is subject to the extra charges on income, and if they are unemployed, their employment prospects suffer.
Overall, there is a further effect, which has a further adverse influence on British policy. Concurrent with the events that I have described, there is a deterioration in the balance of payments, making the position even worse. It makes it more difficult for the Government to continue to look after the affairs of the ordinary person. And it is the ordinary person that we have not heard very much about. I have not heard from the Government, or from those who have supported the Government in this matter, any mention of full employment. To me, that is surprising. We are living in times when the figure for the unemployed in the United Kingdom is at least 2,800,000, and probably very much higher than that. Yet no observation has been made as to how the steps that are to be taken by the Bank under the new laws will improve the lot of those who, through no fault of their own in most instances, are unemployed.
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No indication has been given as to what, in view of the adverse circumstances created by an over-valued pound and an over-hyping of local interest rates, will happen to domestic investment. We all know perfectly well that although the bank rate may be 7¼ per cent., that is not the rate to small businesses. On any overdraft they arrange, the rate is more like 12 per cent. to 13 per cent., and in some cases 15 per cent. or more. That is also true of temporary loan facilities. Those are the facts. They certainly do not produce a sense of euphoria and well-being among the thousands of owners of small businesses upon which the future of this country is said fundamentally to depend. On the contrary, the tendency is that more small businesses are failing, and at an alarming rate. The evidence is that numbers of people are being deterred from setting up small businesses.
Those are the matters which, I respectfully suggest, have to exercise our minds as we consider the situation from our own perspective—which in some cases is limited to university precincts and academic institutions and is not always embarrassed by any contact with real life as it is lived by millions of our people. I pay honour to them. They are entitled to their point of few. The noble Lord, Lord Cockfield, spoke about what he regarded as the disasters of the Labour Government of 1945. Perhaps I may point out that in the quarter of a century that followed—and the credit belongs to the then Conservative governments as well as Labour governments—the inflation rate over the whole period did not average more than 3.6 per cent., which is perilously near the 3.5 tolerance mentioned earlier. Moreover, unemployment never exceeded 3 per cent. of the total as compared with the 22 per cent. it reached at one time (when the noble Lord, Lord Cockfield, was active in this House) at the hands of Sir Geoffrey Howe, as he then was.
We ought, therefore, to take a further look at this matter before we throw our hands up in ecstasy, even in Brussels, where, I observe today, the new parliamentary building has been opened, at a cost of some £670 million, to accommodate 700 MEPs for a certain number of weeks a year. We ought to take another look. Above all, when restoring the arguments to the setting from which they emerge, we should always have regard to the aim, which is not, unfortunately, explicitly stated in my party's manifesto, of full employment. Full employment—or employment where the unemployed are only marginally higher than the vacancies, which is the old definition—is of prime regard to our country.
I hope therefore that we may pause to reflect on these matters when, within a couple of years, the regulations have to come in suspending the existing amendment to Clause 4, which in certain grave economic circumstances, or certain unforeseen events, will soon be upon us unless we are very, very careful indeed.
1.59 p.m.
Lord Sudeley: My Lords, I have two interests to declare, both concerned with Lloyds Bank, which, in the experience of the Independent Banking Advisory Service, has caused more complaints than any other bank.

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The first case concerns the loss of our two old estates in 1893. Whatever our debt accumulated through the agricultural depression at that time, that debt was covered twice over by very large assets. Nevertheless, we were defeated in our intention of selling one estate and keeping the other when the bank filed a petition for bankruptcy against us to force the immediate payment of the debt on the nail. Nothing was left. The bank is adamant that it has no information about why it did that. It was all so unnecessary when we had such large collateral.
The second case concerns the handling by the bank, as executor and trustee, of 63 freehold reversions in my grandmother's estate. In her will, my grandmother stipulated that no reversions of properties were to be sold until the leases fell in. The bank did the opposite and sold all the properties at what they would fetch at auction without reserves, when all auctions had rings. The bank insists that it has not kept records of the reasons for the sale.
The Bill is divided into two halves: the transfer to the Bank of England of control over interest rates and the transfer from the Bank of England of its old supervisory role to the Financial Services Authority.
To deal first with interest rates, we are told that the Bank of England is setting them in line with government policy to set the target on inflation. But who creates the inflation except the banks themselves, lending more money than they have? This scenario would be relieved if, in line with the thinking of the Christian Council for Monetary Justice, the meetings of which in another place are chaired by the Member for Great Grimsby, all laws protecting money lenders—that is to say usurers, who lend without risk—were rescinded and banks were therefore obliged to put the large resources at their disposal where they are needed, at risk in industry. That has happened in Germany to some extent, and more especially Japan. The Government have a great opportunity to improve the national economy as a whole.
To revert to the domestic difficulties created by usury, there is too much debt because the more debt is created the better banks do. Why, otherwise, do banks make excessive loans without ascertaining properly whether debtors can repay, only to involve themselves in a conflict of interests in their roles as creditor and service provider, usually to the detriment of the customer?
In advising on debtor strategy, owing to their obsession with liquidity or what is called the cardinal rule in business—that liquidity or cash flow is more important than capital—the banks ignore collateral when they should not, and at advanced level the banks simply do not have enough specialist expertise to deal with debt.
The body which does have that expertise is the Bankruptcy Association. Let me pay a quick tribute to its huge successes. It found that creditors accept informal arrangements for debtors because they see that the Bankruptcy Association's fees in setting up the arrangements are minimal. The association has reached agreements with banks and other lending institutions for
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as little as five pence in the pound and it has also saved hundreds of matrimonial homes, even where there has been a second charge on the property.
I turn to the supervisory role. We know that the Bill is the first stage. The second stage is to amend the Financial Services Act 1986. The second piece of legislation will be published in draft form for consultation in the summer. Perhaps I could offer a few comments on it.
What are the problems in the light of which, as perceived by the Independent Banking Advisory Service, the supervisory role under the Financial Services Authority needs enlargement? Banks are incapable of regulating themselves. There are three areas where the Independent Banking Advisory Service has identified abuse. The first is false affidavits. The Independent Banking Advisory Service has found that many affidavits sworn by bankers are untrue. Many statements are made deliberately and untruthfully to achieve the result which the bank needs. This is compounded by banks making contemporaneous notes of untrue events and conversations, to cover their position, should the case come to court.
Secondly, there is concealment of information. Banks have total control of their own records, and if they stonewall there is nothing anyone can do. If you sue the bank, it hides behind lack of documentation. If the bank sues you, documentation is found or discovered or there is further documentation to support the matter being raised.
Thirdly, there is abuse of the present unnecessarily complex legal system with its endless appeals. Banks use the legal system as a backstop to prevent serious complaints being fairly resolved. With the banks' vast resources providing expensive teams of legal advisers, the bank customer is outspent, outgunned, locked into a long process to the bank's advantage, regardless of the issue or complaint.
What are the solutions? The National Consumer Council urges that statutory force should be given to the code of practice provisions. The Government must empower the Financial Services Authority to make compliance with the banking code a licence condition, and the new regulatory body must be responsible to the Government, not to the banks.
I conclude with three detailed recommendations of the Independent Banking Advisory Service. First, there must be a public record available for inspection regarding serious complaints against a bank, together with the result and determination. Secondly, the new regulatory body must have power and clout, similar to those of Customs and Excise, with search powers. Banks do not provide discovery of documents to their detriment, even when subject to a court order. Thirdly, secret notes and memoranda regarding discussions and meetings with customers—often untrue and used in legal action later—must be outlawed. Instead, all notes and records of meetings where agreements on security and holding of assets are discussed are to be agreed with the customer and signed at the time.
Powerful though banks may be, they are, thankfully, sensitive to political pressure.
2.7 p.m.
Lord Montague of Oxford: My Lords, when I read the minutes of the last meeting of the monetary policy committee, I found the following statement:
"An immediate move in interest rates—"
that means upwards—
"would send a clear and early signal to the labour market of the Monetary Policy Committee's determination to achieve the inflation target".
I mention that because I want to move straight away into the composition of the monetary policy committee. I am an industrialist. Anyone who has run factories throughout the land and thinks that raising interest rates is sending a signal to the labour markets that we should curb a wage demand has not worked in any of the factories for which I have been responsible. When interest rates are increased, the first thing that happens is that the unions say, "Right, we want a corresponding wage increase". And that takes me to the composition of the members of the monetary policy committee.
At the moment we have eight economists. We have heard some wonderful things from the economists today, but the point made at the beginning by the noble Lord, Lord Mackay, in relation to the importance of having people from the sharp end, is extremely relevant. That is why I am pleased to read at Part II. Clause 13(4) of the Bill:
"The Chancellor of the Exchequer shall only appoint a person under subsection (2)(c)"—
as a member of the monetary policy committee—
"if he is satisfied that the person has knowledge or experience which is likely to be relevant to the Committee's functions".
I take heart from that. I interpret it as implying that the Chancellor will be moving in the same direction as the Fed. The equivalent of the monetary policy committee in the Fed has 12 members. I am sure that the House will be interested to know that only five are economists; three are bankers; one is an expert in business administration; one an expert in finance and insurance; one an entrepreneur with manufacturing knowledge and one experienced in financial institutions. The Fed seems to be doing quite a good job and I very much hope that we can learn from that.
Whatever we have depends on confidence; it is not only a matter of structure. It is therefore timely that there should be an article in the newspaper today to which it is appropriate to draw attention. It is imperative that there is confidence in the country in relation to the Bank of England, the monetary policy committee and the Chancellor. The example I give the House shows what might happen and what should therefore be avoided. The Financial Times contains a long and what seems to me to be an authoritative article indicating that next week it will be announced that Mr. George has been reappointed as the governor. It goes on to state that Mr. George has not yet been told about that; he will be told about it next week. However, Bank of England officials are already commenting on it. It also states that, contrary to what is in the Bill—that the governor will be appointed for a term of five years—consideration was given to appointing Mr. George for two years. However, that was reconsidered and it will in fact be five years.
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That kind of article is destabilising. It is the sort of thing that destroys confidence. I presume that it is the long hand of some spin doctor and I hope that, wherever the spin doctor may be, we can have less of spin doctors and more decisions taken and announced in a proper manner.
I turn to a further aspect of the new Bank of England with principal responsibility for interest rates. As I understand it, the Bank of England will be asked to audit itself. I wonder whether that is sensible. Again, as I understand it, and I may be incorrect, the audit will take the form of the quarterly edition of the Bank of England's inflation report. I hardly think that the Bank of England is likely to criticise itself and therefore I wonder whether there is a case for looking at who should be responsible for conducting an independent assessment of the Bank. I heard mention earlier today that it is something that could be undertaken by a committee of this House. That is a thought worth pursuing.
I turn to the new unifying body, the Financial Services Authority. For a period I was the chairman of the National Consumer Council. It was during that period that I frequently had to discuss with the then Minister responsible, Michael Howard, the extent to which the Financial Services Act was likely to be successful. Naturally, we were not in total agreement. I fear that the line that I had to take with him has proved correct; namely, that it absolutely failed to win consumer confidence. The new unifying body must have as an important objective the gaining of consumer confidence.
You do not gain consumer confidence when you speak and write in language which they cannot understand; you do not gain consumer confidence when there are adverts on the television with type of a size that cannot be read; and you do not gain consumer confidence when voice-overs on the television state requirements at such a speed that they are absolutely incomprehensible. I very much hope that the new unifying body will be sensitive to the needs of consumers and not just to the requirements of supervising their practitioners.
We have said nice things about the Bill which I think are totally justified. They lead on to nice things about the Chancellor, which I think are totally justified too. I want to draw attention to another decision the Chancellor has taken. It really has nothing to do with the Bill but you have to see these things in the round. It is worth mentioning how important I believe it to be for the country that the Budget has been moved to the spring. It has been destabilising for commerce that Budgets have turned up in November, the peak time of seasonal trading in the year, which has very often disrupted trading. That is another wise decision of the Chancellor.
Coming back to the minutes of the monetary policy committee and comparing those minutes with the minutes of the federal open market committee, which is responsible for the same matters in America, I draw to your Lordships' attention a difference between the two sets of minutes which I think might be valuable to

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consider. As we know from the last minutes of the monetary policy committee, the identity of the dissenters was given but no reason for their dissent. Of course you can follow the minutes and assume that where they did not follow the decision, that was naturally where the dissent came from, but it is not necessarily so. In the case of the minutes of the federal open market committee, they give an explanation for the reasons for dissent. The dissenters make a statement as to why they dissented. That could be very useful and I therefore draw that to your Lordships' attention.
I welcome the Bill, but it will not be about the nitty gritty; it will be about management competence. The management competence of the people involved can make it a success and lack of management competence can ruin it.
2.16 p.m.
Lord Spens: My Lords, Friday the 13th is probably a good day to discuss the Bank of England. I took to bed the latest inflation report of the monetary policy committee. Normally its reports send me to sleep but this one made me sit up because of a sentence on page 9. It said:
"But there are few reasons to expect sterling's rise to continue".
That surprised me because earlier this week I was doing some figure work based on the State of the Union speech of the President of the United States. In it he said he was quite certain that America would reduce its deficit of 11 noughts to one nought—in other words, it would balance the budget. I have also been reading the Chancellor's views on a balanced budget. It seems to me that they will both coincide at more or less the same time. Given that sterling and the dollar are the two world trading currencies of any consequence, the implications of that are quite frightening.
I put the figures into my computer, gave it a kick and out came some astonishing scenarios, which may or may not happen around the year 2000. The first is that the Stock Exchange valuations of then will be far in excess of what they are today. The market will go up and up and up both in America and here. The same will apply to exchange rates. That has already happened in Asia. People forget that in Asia there has been a devaluation of Asian currencies against sterling and the dollar on a massive scale. If these two scenarios come to bear, there is little doubt that sterling and the dollar will dominate the world in two or three years' time and will virtually destroy every other currency, including the Deutschmark.
My calculations show that there will be four Deutschmarks to the pound in two years' time. I am not an economist but I am an accountant and a banker. I can remember when there were four Deutschmarks to the pound. It was in my youth, in the days before we really started to devalue. If that happens, and if the Government have no policies to link—it is the absence of linkage which worries me—the sterling exchange rate to the monetary policy committee—we shall see blood on the streets, to quote a famous politician. We are already starting to see blood on the streets of France. It
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will not be long before that stretches to Germany. We shall see real problems in the common market. Although I am an EMU person, I do not believe that it will ever happen for those reasons. Under those circumstances I question whether this Bank will ever be independent.
I turn to supervision. I declare a passing interest in that I suppose most Members of this House know that I am currently suing the Bank of England, and principally their supervision department. I do not want anyone to think that I am biased in anything I have to say, because I am not. I am suing the Bank for "unlawful" interference in my employment contract. I stress the word "unlawful" because I believe that there has been a culture of incompetence and dishonesty in the supervision department of the Bank of England for some time.
I give two examples. The first is BCCI, which people dismiss, but which actually lost the best part of £10 billion not only for people, particularly Asians, in this country, but also for many people around the world. As a result, it has been swept under the carpet. I know that the noble and learned Lord, Lord Bingham, prepared a report, but it was a very poor one and was probably not based on any of the paperwork which has now come to light. There have now been some five trials of BCCI employees, culminating in the trial of a Mr. Gokal last year, when a great many Bank of England documents from the supervision department suddenly became available. I shall quote one such document. In 1984–85 BCCI lost £285 million. That loss was made up by a contribution from the parent company, which extracted the money from its staff benefit funds. That was picked up by Price Waterhouse, the auditors, and a paper was sent to the Bank of England. On that paper was a comment from the head of supervision, Mr. Quinn. Very simply, I would describe his comment as, "Blimey, they have nicked the pension funds". He actually wrote:
"We will of course have to meet to consider the implications for BCCI's future here and their solution in sequestering staff trust fund shares itself raises questions of legality and probity".
That is really Bank of England talk for, "They have nicked the pension funds". That was something that Robert Maxwell was to do five or six years later. I am absolutely astonished that no one in the Bank of England resigned, was fired or anything else. Picking up the point made by the noble Lord, Lord Peston, people should have gone.
The person who was head of supervision when all this was happening was the present governor. He was promoted. The present governor is about to be re-engaged for a second term. The former governor at the time, and who obviously had the decision in his hands, is now a Member of this House. It is an astonishing culture. Nowhere else in business could that have occurred; absolutely nowhere could two people responsible for such a disaster have survived. Therefore the transfer of supervision is very important.
I would like to make one small point, which is an anecdote from my case. During the criminal trial a document turned up from the Bank of England. It is a document which I can only call an options paper; namely. "What to do with Lord Spens". There were

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three options, the first of which is the only relevant one because the other two were reasonable. The first I shall quote,
"To pressure Fenhalls [my chairman] into action by threatening reconsideration of recognition".
That is why I am suing the Bank of England. What is interesting is that this paper went from the head of supervision to the supervisory board, which at the time was chaired by the governor and the deputy governor who were present. On the way, that options paper was passed to a lawyer. The lawyer presumably commented—it is in the minutes of the supervisory board meeting—that what they were proposing to do was illegal. However, two weeks later that is exactly what they did.
In those circumstances the Bank of England can have no credit for banking supervision in this country. The sooner that that is taken into the arms of someone such as the noble Lord, Lord Stewartby, the better for everyone. I recommend the Bill wholeheartedly.
2.25 p.m.
Lord Thomas of Macclesfield: My Lords, I wish to make it clear right at the start that I very much support the Bill which seeks to modernise, to make more efficient, to make more accountable, and to improve the supervision of, the Bank of England. Indeed, until the noble Lord, Lord Spens, spoke a few moments ago I was surprised that earlier speakers had dismissed BICC and Barings as unfortunate accidents. In either case, we are talking about hundreds of millions of pounds.
The case of BICC brings another element of evidence to bear. I think that I am right in saying that no clearing bank lost a penny piece in that collapse. That was because we all made sure that we were never exposed to BICC on a daily basis—
Lord Boardman: BCCI.
Lord Thomas of Macclesfield: My Lords, I am sorry, I mean BCCI. We were not worried about the name. We were worried lest we were exposed to it. The club knew—we all knew—what the situation was, yet no action was taken. It is doubly damaging that many of those who lost money in the United Kingdom were members of a minority ethnic group.
Talking of the club again, now in terms of Barings, that bank, its institutions and people were undoubtedly held in too high a regard by the supervisors. I cannot believe that any other small and unfashionable financial institution would have been allowed to behave as Barings had been behaving for some considerable time. As someone who has been supervised personally for the past 20 years and come away with a completely clean bill of health, I totally support improving the supervision.
However, that is not my main point. I want to remind my noble friend on the Front Bench that there have been three major changes already. First, we have seen some of the larger building societies—some of the largest of their kind in the world—move to become banks. Secondly, we have seen the introduction of a new
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liquidity ruling, which we never had previously. Only in recent years has every financial institution had its own matrix to which it has to respond.
My third point relates to supervision being moved from the Bank of England. Since time immemorial, the tax—that is what it really is—on financial institutions has been that misnomer, cash ratio deposits (CRD). It has been calculated on eligible liabilities. I would not have made a big song and dance about it previously, but as the law is now changing, now is the time to reconsider it. That is despite the introduction of the new liquidity matrix under which all banks and building societies have to work.
It has very little to do with supervision; it is more a simple way to tax banks to pay for the Bank of England. However, it has now become a perverse action as well as inefficient. A prudent financial institution, particularly a smaller one, will always ensure that it has more retail deposits than retail lendings. In that way it is not dependent on the wholesale money market; it can act more prudently and it will not be banner headlines in the press or cause concern to the Bank of England.
By calculating on the basis of eligible deposits one is penalising banks that run their affairs in a more prudent way. I believe that the time has come to examine the matter again. The calculation has been made in that way for a very long time because it is regarded as neat and easy. It will not necessarily be in the interests of the big banks who are substantial borrowers in the wholesale money market but it will be a test to see whether the cartel among the big banks still operates.
The Bank of England has been a public sector organisation since 1947. Why does it require the tax on banks to be inflation proof? Effectively, it is inflation proof because as deposits increase as a result of inflation the tax collected goes up proportionately. Some noble Lords may have noticed a radical change—probably a revolution—in banking. One looks for enormous changes in productivity year on year. Should the Bank of England be exempt from that discipline? I ask my noble friend to consider how a provision can be written into the Bill to ensure that the Bank of England continues to improve its productivity and efficiency.
2.31 p.m.
The Earl of Home: My Lords, at the outset I should declare what may be a conflict of interest in that I have worked for a bank in the City of London for the past 31 years which has been supervised by the Bank through good times and bad. My experience differs somewhat from that of the noble Lord, Lord Spens, and other noble Lords. In declaring a conflict of interest I admit an unashamed bias towards the admirable way that the Bank has operated during the past three decades that I have been in the City. Every institution has its own problems. Some of the Bank's alleged mistakes have been talked about today. I cannot, however, agree with the noble Lord, Lord Peston, that any institution must be better than the one that is there now. I can think of many other regulatory bodies around the world set up for a similar purpose which do not appear to be doing as well as the Bank of England in its current position.

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My noble friend Lord Mackay of Ardbrecknish commented on the unseemly haste with which the Chancellor announced the move envisaged in the Bill. In the interests of time and after a long parliamentary week, I shall not repeat those comments. I should, however, raise one point on the speed with which the Government acted in May. I do not believe that they took any notice of the international reputation of the Bank of England. That view is, I believe, shared by the noble Lord, Lord Cobbold. Perhaps the Government did not worry about how widely respected the Bank of England is. Central banks and other banks around the world set enormous store on the words of the Bank of England not only for its advice but for the way it looks after their subsidiaries in the City of London. The announcement that the supervisory function of the Bank was to be peremptorily taken away caused considerable international consternation. I know that because I was travelling overseas at the time of the announcement.
Can the Minister inform the House what briefing was given to our ambassadors and high commissioners around the world prior to or coincidentally with the announcement? I fear the answer may be that none was sent until some time after the event, but I should be delighted to be proved wrong. I make the guess that our long-suffering foreign service had to respond to some very alarmed central bankers and their inevitable questions without any knowledge of the Government's true intentions. The reaction I experienced among those central bankers was that, at best, the Government had treated the Bank of England in a most cavalier way. More often their reaction was worry that the new Government somehow knew that something was wrong with the Bank, and they wanted to know what had happened.
Most noble Lords have commented upon the composition and remit of the MPC. We have heard erudite remarks on monetary policy. I shall merely emphasise one or two points on that aspect of the Bill. One is that I am delighted to agree this time with the noble Lord, Lord Peston. He is concerned, like me, by Clause 19 under which the Chancellor reserves the ability to overrule the committee in extreme economic circumstances. That presumably gives him flexibility to do more or less as he likes if the going gets tough. But what are extreme economic circumstances? Does sharply rising unemployment give justification for the Treasury to intervene? Does a high level of bankruptcies also give just reason? Does a high level of repossession of houses by mortgagors constitute an excuse? Any of those circumstances can be caused by high interest rate movement set by the MPC. I only hope that a strong adverse movement in the opinion polls is not also deemed to be an extreme economic circumstance.
That part of the Bill gives the Chancellor the excuse to say in public that interest rates are not his fault if they go up. He will, I am sure, claim credit if they go down because of other measures that he has taken. But the Chancellor has already succeeded in hoodwinking many people. Indeed, he has hoodwinked the Member for Great Grimsby, Mr. Austin Mitchell, who said that the
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decision to give the governor the power to raise interest rates had already led to instability in that rates had been raised four or five times.
Until the Bill becomes law, neither the governor nor the MPC has the power to raise interest rates without reference to the Chancellor. Any movement we have seen since the election has therefore been the Chancellor's responsibility. Nonetheless he has succeeded in persuading one of his colleagues in another place that interest rate rises are no longer his problem. Interest rate rises are his problem. He cannot shirk that responsibility.
I turn to the Bank's supervisory functions and to the new FSA. Many noble Lords have today raised questions, and there are still some other unanswered ones. At present several different bodies oversee the operations of, say, an investment bank. Some of those, from my own experience, have been slow to act. They spend a long time coming to any conclusion. There is the real danger that by putting them all together extra layers of command will be created. The whole process of regulation could become even more bogged down than it is at present as checks are made interdepartmentally that what is being said does not affect anyone else.
It is far from clear from what has been so far said, and from what is in the Bill, that just because everything is under one roof the system will become more streamlined. Government spokesmen have said that there is competition between the various bodies at present. The new structure tells me nothing to allay my fears that external competition will not become internal competition. We can only hope that the Government are not here setting up a bureaucratic nightmare.
It is also far from clear—this was a point raised by the noble Lord, Lord Desai—what will happen to the concept of the lender of last resort, and when the Bank will be empowered to intervene. In response to a pertinent question in another place, the Economic Secretary to the Treasury said:
"The Government expect that interventions … will he extremely rare, and practised only if there were to be a serious systemic threat".— [Official Report, Commons. 11/11/97: col. 804.]
The Minister went on to say that the memorandum of understanding between the Bank and the Financial Services Authority emphasises a need for co-operation and an exchange of information. I hope that that will not simply turn out to be a pious hope. Crises blow up very quickly, as we saw in 1967 and 1974. Unless that exchange of information is updated daily, almost hourly, much time will be wasted at the worst possible moment in trying to establish the facts and who agrees with them before anyone can start to concentrate on the remedy.
We need to know what evidence the Bank must require, first, from the FSA, which will then probably have to be put into a different form and submitted to the Treasury before it is allowed to intervene. Can it, on its own bat, set up a lifeboat, as it did so effectively in 1974? At what stage does the Chancellor give it permission to act?
In support of the remarks made by my noble friend Lord Stewartby, lifeboats have in the past not been launched just to rescue banks. In a much quieter way

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the Bank has also been the catalyst in persuading banks to assist other industries which are not in danger of sinking but have perhaps sprung a leak and need some temporary flotation bags. I do not see how, under the proposed structure of responsibilities, the Bank can continue that very useful function.
Indeed, during the course of regular supervisory meetings, the Bank picks up some very useful information about other sectors of industry. In future, if this intelligence is imparted at all it will go to an authority which has no interest in sectors other than those it supervises. I fear that a useful and informal two-way street of information will he lost to us.
There is a further aspect to the disclosure of information which is of great concern to banks and which was touched upon by my noble friend Lord Boardman. Increasingly, supervisors and regulators are asking for information which is, in effect, privileged. But supervisors understandably require and request it so that they can gain the full picture of the position of the individual institution. It would be helpful if the Minister could assure the House that when banks disclose privileged information to supervisors there will be adequate safeguards protecting them from legal action from third parties because they have been required to disclose that privileged information.
Obviously, banks want to be entirely open with the FSA. That is to everyone's advantage. But we live in an increasingly litigious society and we do not want a lawyer sitting beside us every time we have a meeting with the FSA. Assurances from the Minister at some stage during the passage of the Bill would be most welcome to the House and to the City.
Noble Lords also raised the question of the costs relating to the FSA. Many figures have been bandied about and it is hard to know which to believe. However, it seems to be agreed that at present some £75 million of the Bank of England's expenditure relates to public goods and that the cost is financed by cash ratio deposits. This rate is currently 0.35 per cent. of eligible sterling liabilities.
Given that the Bank will no longer have the supervisory function costs, banks and building societies—I believe that those two categories should be expanded in due course—which currently fund those costs should not have to carry the burden at the same rate as today's purely to fund the activities of a Bank which will be responsible largely for financial and monetary stability. The British Bankers' Association calculates that the rate could be reduced to only 0.1 per cent. of eligible liabilities in the comparatively near future which it believes would be a fair long-term rate. I am grateful to the Minister for his remarks on that topic during his opening speech and I hope that we shall be able to discuss the issue further during the passage of the Bill.
Fees for supervision are to be charged by the FSA so the Bank of England would be making an undue amount of money if the rate of CRDs is left where it is. It would be to everyone's advantage if, in future, the Bank were funded somewhat differently. I hope that the
1436
Government will review the system of funding sooner rather than later or, at any event, before the next piece of legislation envisaged by the Minister.
Perhaps the Government will look further at the way in which the FSA charges fees because that needs to be kept under review. In the debate in another place, the Economic Secretary to the Treasury said that,
"bringing under a single regulator nine different structures thus avoiding all the duplication that has caused such chaos in the financial community, will provide the opportunity for effective regulation at lower cost".
The Minister himself said earlier that it is hoped that costs will be lower. The financial community has some doubts on that score. In particular, small institutions, which at present pay for the costs of one or two of the nine regulators, are understandably worried that they will now have to pay a proportion of the huge costs of the infrastructure of an institution which embraces nine different disciplines. Not surprisingly, those smaller institutions fear that their costs will far outweigh the benefits derived from reducing a small amount of the overlap.
Through the removal of the supervisory function of the Bank, I am extremely worried that the Government will make it a less attractive place in which to work and soon it will no longer be able to attract the admirable quality of staff which it has done in the past. I fear too that existing staff will start to look elsewhere as they see disappearing opportunities for widening the scope of their work. The Chancellor has taken away a large part of the rationale of the Bank and has given to it, probably only for a fairly short time, as we have heard today, a veneer of independence through the MPC.
I hope that the Government will take many of the points made during the course of the debate. Most have been made by noble Lords with practical experience of how the City of London works and who have a real desire to see that the pre-eminence of London as a financial centre is maintained.
The Government could further assist the morale of the Bank by confirming the report in the Daily Telegraph this morning of the re-appointment of the Governor of the Bank of England to which I, for one, although not all noble Lords in the Chamber, certainly look forward.
Other financial centres are snapping at the heels of London as the centre of the European financial world. We cannot afford to damage the morale and standing of one of our most respected institutions and I fear that that is what this Bill will do.
2.49 p.m.
Lord McIntosh of Haringey: My Lords, perhaps I may begin by expressing my gratitude to all noble Lords who have taken part in this extremely wide-ranging debate. If one had to count the minutes of debate over the past nearly four hours, I would think that the proportion would probably be two to one—that is, two parts on wider economic policies and one part only on the detailed provisions of the Bill. However, I do not shrink from that and, indeed, I do not shrink from the responsibility of responding to the whole debate.

1437
Today's debate has not only been wide-ranging in scope, it has also been wide-ranging in time. We have heard a good deal of speculation about the future of economic and monetary union and British participation in it, and we have had some extremely fascinating speeches going back over monetary and economic policy for more than 50 years. We are especially grateful in that respect to the noble Lord, Lord Roll of Ipsden, and the noble Lord, Lord Cockfield. When the noble Lord, Lord Cobbold, referred to what he described as the horrendous nationalisation of the Bank of England in 1946 and spoke of the intervention of Lord Pethick-Lawrence in your Lordships' House in February of that year, I wonder whether the noble Lord, Lord Cockfield, realised that my noble friend Lord Longford, who intervened in his speech this afternoon, actually spoke in that debate in 1946. Of course, I should say that my noble friend spoke as Lord Pakenham rather than under his present Irish title. Nevertheless, perhaps the noble Lord would like to join me in looking back to the debates of 1945 and 1946. Indeed, they certainly are most fascinating.
I was struck today by the extent to which there has been a very general welcome for the Bill. Of course, that is tempered—it had to be tempered by definition from the Opposition Front Bench. It was tempered by the noble Lord, Lord Cockfield, who described his welcome to the Bill as being "hesitant". However, it was more than tempered in the cases of my noble friends Lord Shore and Lord Bruce regarding approval of future participation in European monetary union and, indeed, in far more of the wicked devices of the rest of Europe.
Lord Shore of Stepney: My Lords, I do not object at all to my noble friend the Minister, in his good humoured way, taking up the question of the link between all this and later developments towards the single currency. However, the weight of the remarks that I made, and of those made by others. was really aimed at the direct effect of what has been done on the exchange rate and the consequences that flow therefrom.
Lord McIntosh of Haringey: My Lords, I entirely accept that and I intend to refer to it in my later remarks, just as I shall refer to the many speeches which questioned the relationship between this Bill and European monetary union.
However, before I go any further—I was about to say to kick into touch, but I do not want to interfere with the noble Lord, Lord Spens, kicking his computer. In the trade it is called percussive maintenance, and the noble Lord may be grateful for that term of art in the future if he is to continue kicking it. Nevertheless, I want to kick into touch the issue of the reappointment of Eddie George. Noble Lords should not be misled by any speculation, especially conflicting speculation in press reports. An announcement will be made in due course on that issue.
The noble Lord, Lord Mackay, started by teasing us about our manifesto, our business manifesto and different statements over a period of up to four years. Indeed, I believe that his quotes from different
1438
Opposition spokesmen of the time went back to 1995. Of course, different things were said over the four-year period during which we consulted on what should happen about the Bank of England. The noble Lord. Lord Boardman, quoted Alistair Darling in 1996 and I have no doubt that he quoted correctly. However, the thrust of their teasing was that there was something wrong with announcing immediately after the election that we were going to hand over responsibility for short-term interest rates to the Bank of England; as, indeed, we did on 6th and 7th May. I take the issue extremely seriously. Like the noble Lord, Lord Taverne, I believe that we would have been extraordinarily irresponsible if, knowing that that was the right thing, we had not done it straight away. The noble Lord. Lord Taverne, has pointed out—as I did in my opening speech—that the immediate effect of that action was to decrease long-term interest rates thereby saving the Treasury hundreds of millions of pounds in unnecessary interest.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord for giving way. If it knew that it was the right thing four days after the election, surely the Labour Party knew it was the right thing a couple of months before then when it wrote its manifesto?
Lord McIntosh of Haringey: My Lords, we have to react to things as the opportunity arises. It was not an issue that was raised at the time of the election. I am grateful for the support of the noble Lords, Lord Taverne and Lord Cobbold, and of my noble friend Lord Peston for the immediate action that we took. While I am referring to my noble friend Lord Peston, he referred to timescales in economic policy and looked back 200 years to David Ricardo. I seem to recall the bursar of an Oxford college who criticised the college's investment policy on the grounds that the past 200 years had been wholly exceptional!
We have had a great deal of debate on the wider issues of monetary policy. I am grateful in particular for the instruction which I have received from the noble Lord, Lord Roll, on this issue. He is quite right in saying that monetary policy is far from being the whole of economic policy. That is why it is not entirely relevant to this Bill for the noble Lord, Lord Boardman, to repeat the complaint which has frequently been made that what we have been doing leaves the Chancellor with only the fiscal tool rather than the control of interest rates. Although the noble Lord, Lord Cockfield, does not claim that monetary policy is all of economic policy, he takes a quite different view. He blames monetary policy for all other evils including, as I heard him, poverty in old age which strikes me as rather strange.
A number of noble Lords have poured scorn on the provision in the Bill for a clear and open inflation target. The noble Lord, Lord Mackay, thought that this was a loosening of the target compared with the previous government. The previous government had a range of 2.5 per cent. or less, which is considerably wider than the possible range we have now. I must point out to the noble Lord that under the previous government inflation

1439
went down to 2.5 per cent. over the whole 18 years they were in power. At least we have a clear and unambiguous target.
I cannot accept the comments of noble Lords that because we have a target for inflation we should have targets for all the other complex elements in economic policy. One cannot really have targets for inflation, the exchange rate, the interest rate, and employment and growth. If one did, one would tie one's hands in almost every respect in economic policy and one would guarantee failure. In the wide-ranging overview of economic policy to which we have been treated this afternoon, I think there has been an element of unreality. Price stability is not an end in itself. It is an end in the Government's thinking because it is a pre-condition for high and stable rates of growth and employment. I can express our view best by quoting Mr. Alan Greenspan in his Humphrey-Hawkins testimony in July 1997 when he said,
"Our objective has never been to contain inflation as an end in itself. hut rather as a precondition for the highest possible long-run growth of output and income—the ultimate goal of macroeconomic policy".
I commend that to my noble friend Lord Peston who said in simpler but true words that it is a case of getting the real economy to work better.
I turn at last to the Bill and to the criticisms and comments that have been made about the Bill. The fundamental point to which noble Lords have referred concerns the operational autonomy given to the Bank of England to meet price stability. As many noble Lords have recognised, this gives the benefit of long-term stable policies and a macro-economic environment. I believe that point was recognised by the noble Lord, Lord Roll. It is one of the many long term measures that we are taking. It has been generally well received. My noble friend Lord Desai expressed modified rapture, if I may put it in Gilbertian terms, on independence, and worried whether we were not being seduced by excessive admiration of the Bundesbank. If he takes part in our Committee stage, he will see the extent to which our recipe is our own recipe and not one copied slavishly from other countries.
The Bill also strikes the right balance between independence and democratic accountability. It provides that the Government should set the target and the Bank deliver on it, as indeed, it has done. The Bank reports to Parliament regularly. It sends an open letter if it is missing the target of 1 per cent. above or below the 2.5 per cent., and it creates one of the most open and accountable systems of any central bank in the world.
My noble friend Lord Desai referred to the "Ken and Eddie show". I am happy to acknowledge to the noble Lord, Lord Stewartby, that the innovation which Mr. Kenneth Clarke introduced was indeed a proper precursor of what is being done now. This is not a privatisation of the Bank. It is not doing what I learn now the then Mr. Nigel Lawson wanted to do—to create the full independence of the Bank. The noble Lord, Lord Cockfield, recognised the extent to which the Bank is still under government control. Unlike him, a number of noble Lords welcomed that.
1440
My noble friend Lord Randall asked whether we would match the openness of the ECB and the ESCB. The provisions are already open and transparent. We publish the minutes of the decision-making committee. My noble friend Lord Montague says that the minutes should reflect the discussions. He echoes what my honourable friend Mrs. Helen Liddell said at Report stage in the House of Commons. It is certainly a matter that we shall consider.
I can do no more than acknowledge the point raised by a number of noble Lords, notably the noble Earl, Lord Home, about the disclosure of privileged information and the question of legal privilege. There is no change at present in the provisions of the Banking Act. But we are aware of the concerns of the British Bankers' Association and we shall certainly be addressing them.
A considerable amount of debate took place on the respective roles and membership of the monetary policy committee, the court, and the committee of non-executive directors. There was much criticism that they were too Oxbridge and London based—based too much on the financial services, with too little reflection of manufacturing industry in particular, and of the regions and country of the United Kingdom. Sir Sam Brittan was quoted as saying that the people on the monetary policy committee are those who are likely to reflect the conventional wisdom of the moment. In the absence of my noble friend Lord Eatwell, the noble Lord, Lord Mackay, spoke of my noble friend's reference to the need for practical experience. I rather think that my noble friend Lord Eatwell was saying in updated words what Keynes said in the general theory. He said that practical men who believed themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist. We might reflect on that when we consider the balance of membership.
I was grateful for the support for membership from the noble Lord. Lord Boardman. I was a little discouraged to hear from the noble Lord, Lord Cockfield, that we cannot trust either politicians or bankers. That makes life somewhat difficult when making appointments.
Let me make the respective roles clear. The monetary policy committee is responsible for the formulation of monetary policy. The committee of non-executive directors is responsible for reviewing the procedures of the monetary policy committee rather than policy. In response to my noble friend Lord Randall and other noble Lords, Clause 2(4) of the Bill states that the court's aim,
"shall he to ensure the most efficient use of the Bank's resources".
So, to respond to my noble friends, Lord Montague and Lord Thomas, the combination of the court and the committee of non-executive directors does seem to cover the waterfront of ensuring that the Bank is well run.
My noble friend Lord Peston asked whether members of the monetary committee could be sacked. The answer is no—under Schedule 3, paragraph 9 only if they are unfit or unable to perform their duties, not for poor

1441
performance. There were conflicting views as to what was the appropriate term of office, so it is possible that we have got it right.
The result is that we have, in the provisions of the Bill relating to the governance and finance of the Bank of England, a modern bank, in line with the new role of the Bank and reflecting current best practice. There are provisions for greater financial disclosure; and there are greater provisions for a new secure source of funding through the cash ratio deposits. That was a matter of considerable controversy, and I shall not give definitive answers. My noble friend Lord Thomas in particular questioned the relevance of cash ratio deposits based on deposits rather than lending. He raised a question as to why the tax on banks should be inflation-proofed. I undertake to see that the matter is discussed with him before we reach the next stage of the Bill since he raises serious issues.
The functions of the Bank of England in relation to financial stability are set out very clearly in the memorandum of misunderstanding—I am in Freudian slip mode today, my Lords—the memorandum of understanding. Additionally its functions are fundamentally related to monetary policy. But they are also related to financial stability, which means, above all, the supervision of payment systems; agency functions for Her Majesty's Government, including the printing and issuing of notes; and commercial functions such as taking deposits. I do not think there is any lack of clarity as to the role of the Bank of England in relation to the Treasury and the Financial Services Authority.
A question was raised regarding the role of the Bank as lender of last resort and how that fits in with the provisions for the Financial Services Authority. My noble friend Lord Desai was particularly concerned about the separation and was worried, as were a number of noble Lords, about what is the necessity of avoiding crises such as Barings and BCCI. I was interested in the comments made by my noble friend Lord Thomas on BCCI. There is no way in which we can guarantee that fraud and abuse of that kind will not appear and cause damage before it is identified.
The purpose of the memorandum of understanding, if I may say so to the noble Lord, Lord Stewartby, is very much that there should be a rapid exchange of information. There is provision in it also that the Bank should collect information for the FSA so that we have the same unity of thrust in dealing with financial crime as we have at the moment; indeed, I hope considerably better.
The noble Earl, Lord Home, talked about the need for a lifeboat. I wondered whether he was referring to the analogy made by my noble friend Lord Desai of economic policy being navigation rather than decision. The immediate answer is that the memorandum of
1442
understanding provides for early Treasury involvement. It is an issue which we can discuss at length, if need be, in Committee.
The single regulator won general approval. The noble Lord, Lord Mackay, was worried about whether the single regulator could deal adequately with individual investments. But there was support for the single regulator, notably from Opposition Benches and the noble Lord, Lord Stewartby. There is a need to control the costs of the single regulator and it is necessary that the rules of the FSA should reflect the needs of the different kinds of businesses regulated. That is a matter to which we shall pay great attention. I hope that we shall be able to satisfy noble Lords in the later stages of the Bill.
I have left myself little time to deal with the issues with which I promised to deal about EMU and the reserve powers. I repeat what I said at the outset, that the Bill does not make the Bank compatible with EMU and is not intended to do so. The operational autonomy for the Bank is closer to the EMU model than the previous arrangements, but noble Lords are quite right to say that in two particular respects it does not meet the Maastricht requirements. The Government still have the responsibility of determining what is meant by "price stability". The Government retain reserve powers in Clause 19 for use under extreme economic circumstances. I say to my noble friend Lord Peston that I shall not attempt a definition; but I will say that it is intended that the powers should be rarely, if ever, used and they will need parliamentary approval if they are used.
I repeat to the noble Lord, Lord Mackay, that the commitment of the Government is that if and when we make progress to EMU we will need the prior agreement of the Cabinet, Parliament and the people of this country. I realise that none of that will satisfy my noble friends Lord Shore and Lord Bruce and we shall have to continue to disagree.
This is only the first step in regulatory reform, as has been recognised. I cannot say in advance of the Queen's Speech when the second stage will take place, but I can say that we are already working on the Bill. Some features of it have already been announced. We intend to publish a draft Bill in the summer and this Bill is seen as a first step towards a more comprehensive reform.
The noble Lord, Lord Cockfield, welcomed it as a first step, though hesitant and incomplete. I believe that it is less than hesitant and more than incomplete. I believe that it deserves the support of your Lordships at this time. I commend the Bill.
On Question, Bill read a second time.
Lord McIntosh of Haringey: My Lords, I beg to move that the Bill be committed to a Grand Committee.
Moved, That the Bill be committed to a Grand Committee.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
House adjourned at fourteen minutes past three o'clock.

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