Sitting of 18 March 1998

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

Internet
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]
9.34 am
Mr. Derek Wyatt: Before I open the debate, I should like to declare an interest. I hold two software consultancies—neither is internet—based—with Integrated Communication Projects and with Channel Dynamics.
A copy of my speech will be placed on the website www.iwks.com later this morning. Sadly, that is not my constituency website, which is in preparation.
Mr. Andrew Miller: It will be on the House of Commons website, as well.
Mr. Wyatt:I am sure that it will be there soon.
The internet is the most important peacetime invention this century. We should consider four events that have taken place in this country and across the Atlantic since 1 May 1997. First, the general election results were posted first on the internet. Secondly, following the death of Diana, Princess of Wales, thousands of websites were set up as people around the globe shared their grief; indeed, the worldwide web became for three weeks the worldwide wake. Thirdly, in the Louise Woodward case, Judge Hiller Zobel put his judgment on the internet first. Fourthly, in the Monica Lewinsky affair, the Drudge Report website reported on the alleged problems in the White House before all other media.
The internet's ubiquity continues at a pace that has never been experienced by any industry. If we fail to understand that, and fail to educate and enable our citizens equally, we shall concede economic, social and political advantages to other countries—particularly to America—for ever.
I am pleased that we are holding this debate, and I wondered which Minister would reply to it. At first, I thought that it might be my right hon. Friend the Secretary of State for Culture, Media and Sport, because what travels on the internet is a software issue, and his responsibility. Music sales on the internet in 1997 topped $52 million, and book sales through the likes of amazon.com are set to reach $2.2 billion by 2002.
Then I thought that my right hon. Friend the Chancellor of the Duchy of Lancaster might reply, because he is charged with producing information legislation, which must be internet-friendly, and with delivering electronic services to our citizens, which is just as important. I then suspected that my right hon. Friend the Home Secretary
1200
might reply, because encryption and pornography come under his wing, and he would be interested in Oracle's work with the American Department of Defense—but no.
I thought that my right hon. Friend the Chancellor of the Exchequer might be present. How people do business on the internet, and where, if at all, they pay taxes is crucial, and electronic commerce is vital. E-commerce business will be worth £20 billion in Europe by 2001. Moreover, and more worryingly, President Clinton wants no taxes on e-commerce. However, my right hon. Friend is understandably busy this week.
As we are putting together a national grid for learning via local internet providers, a university for industry, and lifelong learning initiatives, I thought that my right hon. Friend the Secretary of State for Education and Employment might be present, but I see him not.
Finally, I expected my right hon. Friend the Secretary of State for Social Security to be present. If she is to issue more than 15 million smartcards, which must be internet-friendly, it would be smarter for her to be present so that I could tell her about the new cards that use radio frequency technology. I do not see her.
The Minister for Science, Energy and Industry has been fielded, because the Department of Trade and Industry is in charge of regulation of the internet. I welcome him, and look forward to hearing his reply to the debate.
Mr. Ian Taylor: I am listening with great interest to the list of Departments that could have taken responsibility. Under the previous Government, the issues that the hon. Gentleman raises were focused on by the Department of Trade and Industry, where I was a Minister. I am delighted that my successor is here today. The former Chancellor of the Duchy of Lancaster was responsible for the Government on-line system, which is continuing under this Government.
Mr. Wyatt: I thank the hon. Gentleman for his intervention. I accept that, in this instance, he probably knows more about the subject than I do.
Mrs. Cheryl Gillan: Will the hon. Gentleman give way?
Mr. Wyatt: Let me get going.
Sadly, I do not think that it is possible to regulate the internet. It is possible to regulate the 250 United Kingdom internet service providers, but only if they are connected via a telephone line. Hughes Olivetti, Astra, Eutelsat, Motorola and Teledesic provide satellite services that can deliver the internet with their own return path. It is difficult to know how they will be regulated.
It is also not possible to make some non-European providers pay VAT. We have failed to regulate that, and have therefore failed to provide a level playing field for our own industry. Moreover, while books and newspapers are zero-rated for VAT, internet services, including electronic books, incur VAT at 17.5 per cent. Why is that? Incidentally, the converse is true of regulating broadcasts. As BT has admitted, many thousands of viewers now view UK television via a telephone line through their personal computers, which is actually illegal.
The internet may be hidden in cyberspace, but, as this overview demonstrates, it is all-pervasive. It may be hard to tie down, and extremely hard to tie down within

1201
Government, but that is not an excuse for no action, and it is not an excuse for the existing scenario in Whitehall, which, frankly, is farcical. Because no single Department is in charge of the internet, it falls into the black hole of cyberspace. Few Cabinet Ministers understand it: many still have no e-mail addresses, and they clearly do not look regularly at their own departmental websites, which are woefully inadequate and make us look like bumbling amateurs.
The editorial in the February edition of a magazine that I know that we all read avidly, Government Computing, put it another way:
"Making the red box electronic without looking at how ministers and their senior civil servants work is like putting satellite positioning on a buffalo cart."
Why is Whitehall not like Silicon Graphics? Silicon Graphics has about 22,000 employees, each of whom has a website. At the end of the day, wherever they are in the world, they leave a short note of their activities. While they are at play or asleep, a series of intelligent agents moves through the sites, reads them and decides who else in the company needs the information. When the decision has been made, the notes are deposited in the relevant website, so that, when a Silicon Graphics employee next logs on, he or she has a fast-track business opportunity. How do we even start to emulate that scenario?
The internet is not new. As an academic and political tool, it is more than 30 years old. It has been rebooted over the past five years, for two reasons. A Briton, Tim Berners-Lee, working in the CERN laboratories in Switzerland, created the underlying protocol for the worldwide web as early as 1991. In any other country, he would be a folk hero, but we hardly know him in this country, and—sadly for us—he now works in the media laboratory at Harvard.
A year later, in 1992, Marc Andreessen, a mere student at the university of Illinois, helped to create Mosaic at the university's national centre for supercomputing applications. Mosaic is what we now call an internet browser. In 1994, Andreessen took his idea to Silicon Valley, and helped to start the company Netscape.
In 1995, a young hopeful by the name of Bill Gates said that the internet would not work; in 1995, a young hopeful by the name of Bill Gates told his senior vice-president of Multimedia, Rob Glasher, that the idea of putting radio stations on the internet was simply nuts. Today, Real Networks, Rob Glasher's company, is listed on the Nasdaq. It parks 650 radio stations—including, I am proud to say, Invicta in Kent—30 broadcast companies, and 35 record labels. Already, 40 million RealPlayers have been downloaded directly from its website. Indeed, as I talk, my speech, with pictures, could be seen across the world—not via cable television in the UK, because only cable viewers in the UK can watch, but via the internet. But hon. Members have guessed: we have no facilities for radio or for broadcasting Parliament on the internet.
Mr. John Maxton: In fact, the BBC's website broadcasts Prime Minister's Question Time live.
Mr. Wyatt: I am aware of that.
1202
It is to the immense credit of Bill Gates and his brilliant team at Microsoft that he has travelled the road to Damascus and changed his mind about the internet. The pity is that his company now seeks to control every living form that breathes on it.
The UK statistics given by the Internet Service Providers Association are revealing. At the end of 1997, 1.5 million people had access to the internet at home, and 3 million had access to it at work. At the end of this year, the figures will be 2.7 million and 3.7 million respectively. At the end of 2000, they will be 4.2 million and 4.7 million respectively.
The UK market is growing at a rate of 80 per cent. annually. By the end of this year, when four separate companies—BSkyB, British Interactive Broadcasting, British Digital Broadcasting and Cable and Wireless—launch digital television in some form or other, more people in the UK will be on the internet than already watch the existing analogue satellite and cable channels. That social change has been almost totally ignored, especially by BDB, whose set-top box has no internet access.
The internet is what Andy Grove, the chief executive of Intel, called a 10X force for change. Intel was formed 26 years ago, when two men wrote a statement of intent a page and a half long and with it raised $2.3 million. Two businesses were born: Intel, which has become the fourth largest company in the world, and Venture Capital, which now accounts for 30 per cent. of all new businesses in California. The UK is the seventh largest economy in the world; California is the eighth largest. The venture capital market in the UK is worth less than 2 per cent. of our businesses, and much of that is composed of management buy-outs rather than start-up companies.
The internet makes it possible for a virtual venture capital market to develop. As the structure and ownership of the internet is still largely American, the Americans will hear of the opportunities first, and will invest first. As one who lobbied the Chancellor on a venture capital fund, I was pleased to hear in yesterday's Budget statement that £50 million had been allocated. That is a start.
We are late to the dance floor. The Singapore Government have already set about making sure that they lead the world by creating the first internet-based society. Likewise, the Norwegian Government have announced a desire to give their businesses the edge by ensuring that theirs is the first pan-European country to follow Singapore's example, through an initiative termed the public sector network—a joint venture by the Ministry of National Planning and Co-ordination and the Norwegian Association of Local and Regional Authorities.
If we are not careful, the internet will create the biggest brain drain, virtual or otherwise, that Europe has ever experienced. The consequence will be much higher levels of unemployment throughout Europe, especially in the UK.
Let me give an example of the internet business world as it affects our own young people. Orbital Technology is a three-year-old Scottish company whose founders came across the Java language while at their respective Scottish universities. They realised that they could create something special with it, and set about creating what I can best describe as an archive retrieval system. They were lucky: they raised the first tranche of money—

1203
£3 million—but when they came back for refinancing in the UK, they could not find further investment. In the end, they had to resort to America. I was with them at the venture capital forum at Comdex last November, when they sought an extra £10 million and found it.
Mr. Tam Dalyell: Before my hon. Friend leaves the subject of Scottish universities, let me say that I know something about it, and can reinforce the importance of what he is saying.
Mr. Wyatt: I thank my hon. Friend.
In New York, the elected mayor has just won the rights to a $70 million venture capital fund, because he recognises the need to rival California. In the UK, our new regional development agencies have no venture capital fund attached to them, but they need to. The new sixth cause in the people's lottery has no place for a people's venture capital fund. We must persuade the Secretary of State of its value.
The problems are compounded by the millennium bomb issue. At midnight on 31 December 1999, millions of computers will fail to recognise that the next day is 1 January 2000; instead, they are likely to recognise it as 1 January 1900. I advise hon. Members to avoid flying that week, and to check their bank accounts.
Mrs. Gillan: Does the hon. Gentleman agree that the Government's handling of the year 2000 computer problem is just as chaotic as the scenario that he outlined at the beginning of his speech, involving policies on the internet and the information technology industry as a whole?
Mr. Wyatt: I think that we have made a start; what we have not done is put enough money in. I read in today's Financial Times that the Australians had given all the financial services until 30 January to declare their millennium bomb agenda. If it is not in place by 30 June, they will not be able to trade.
Mrs. Gillan: I saw that article. Does the hon. Gentleman agree that, if the Government do not tackle the year 2000 computer problem, that will pose a great threat to the internet itself?
Mr. Wyatt: I am going to come on to how the internet is affected by the bug.
We have TaskForce 2000 to help to create awareness of the problem. Its parliamentary briefing paper, which was sent to me on 5 March, said:
"The cost to the UK economy is over £50 billion."
Later, it said:
"The Government needs to provide high level leadership now. It is currently not doing so."
We have been concentrating on the millennium bug as it relates to computers and computing, but not on how it will affect the internet or our banks. Tim Sweeney, director general of the British Bankers Association, said that British banks would not be able to prepare for a switch to a single European currency at the same time as they work to prevent a rash of damaging computer crashes on 1 January 2000. I wonder, then, how those European countries that will be first to the euro will manage. So far,
1204
the Government have allocated £330 million to the whole millennium bug issue; the banks, interestingly, have allocated £1.65 billion.
The national grid for learning has somehow been separated out from the university for industry and our lifelong learning initiatives, which makes no philosophical sense. As the national grid for learning is now constituted, a secondary modern school in my constituency, Sittingbourne community college, with its outstanding headmaster, Alan Barham, and his dedicated staff, cannot shout from the rooftops how it has created a reading scheme for its youngsters who, when they enter the school at 11, have reading ages of just over nine, but, six months later, have caught up. His is a CD-ROM approach. Under the current local mosaic plan for the national grid, no other school would be able to share in that scheme, except those in north Kent.
Another school in my constituency, Fulston Manor, has, through the brilliant work of its head of media, Gwyneth Windsor, developed its own CD-ROM explaining GNVQ provision. It sent it to the Department for Education and Employment. This is the reply that the school received:
"Although an interesting idea…I am
also
"afraid that there is also a lack of technical expertise within the Department to enable us to take you any further forward"—
and that is the Department that is challenged with responsibility for the national grid for learning.
Because the impact of the internet is global, and because it will lead to a fundamental structural change at every level in our communities, I want to make some recommendations for the Government to consider. The first is to create a new Department, the Ministry of Communications, to include responsibility for telecommunications, broadcasting, regulation, software, encryption, libraries, millennium bugs, the Post Office, village halls, community centres and, crucially, the internet.
The second is to charge that Department with the training and education of all Ministers, their Departments, this House and all its Members of Parliament by immediately appointing six internet tsars. The third is to make it responsible for ensuring—and that means giving it the power to ensure—that all Government Departments and agencies become internet led by the end of this year.
The fourth is that the new Ministry will not be created in the style of other Ministries, but will act as the catalyst for change within Whitehall by having a team of 24 Members of Parliament, matched in turn by 24 software experts, who are loaned on sabbatical by the major players in the industry.
The fifth is that the Ministry's philosophy will be based on teleworking, and will again act as a showcase for the rest of Whitehall. Two thirds of the Department would work with the Scottish Parliament, the Welsh Assembly, Stormont—soon, we hope—and the new regional development agencies. Staff would oversee NHS trust hospitals and help local education authorities. They would be flying internet evangelists
The sixth is that, by 2002, every home will be given a computer. That will cost no more than the current expenditure on the millennium dome. The money must be allocated from the lottery. That would be a much better way in which to welcome in the 21st century.

1205
The seventh and last is that internet access at home would be free for the first 10 hours of every week. Figures supplied by the Media Intelligence Bureau cost the use of the internet at £3.87 per hour, compared with £1.67 for a trip to the movies and less than 12p an hour to watch free-to-air television.
I return to my central theme. The internet is the most important peacetime invention of the 20th century. We can no longer ignore it. It is the key to re-tooling and re-skilling our society. At the World Economic Forum at Davos, 20 per cent. of those surveyed thought that electronic commerce would completely reshape how they do business. Another 59 per cent. said that it would lead to significant change.
If this Government sit on their "internet-free" hands for much longer over this issue, any chance we have of creating a modern, post-industrial society will be lost for ever. The internet is the gold standard of the 21st century.
9.54 am
Mr. Christopher Fraser: The importance of this debate is underlined by the sheer size and scope of the internet and its undoubted effect on society. The statistics are impressive, but I question the figures of the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), as accuracy in this sector is difficult to gauge.
The purpose of my comments is to consider the concept of the internet from a social and philosophical point of view. I bow to the hon. Gentleman, as he has an intimate knowledge of the technology. I have no intention of commenting on that side of things.
The Government propose to provide resources to give all schools access to the worldwide web, but do not say how they will monitor it when the web is available in those schools. When considering the benefits, Ministers must be prepared to commission research to highlight the educational benefits of such links, and to take responsibility for ensuring that unsuitable material is not available to school children.
There is an obvious need to limit access to unsuitable material from the eager eyes of young school children. Technological tools must be available to teach us to programme what children cannot see, as my hon. Friend the Member for Esher and Walton (Mr. Taylor) advocated when he was a Minister.
Mr. Maxton: May I point out that, if the hon. Gentleman had ever been on the internet, he would know that all the browsers already provide such tools, which stop access to whatever material anyone wishes to use?
Mr. Fraser: Those tools are not overly efficient, and there is clearly no international code available at the moment.
Mr. Brian White: Will the hon. Gentleman give way?
Mr. Fraser: No, I will continue. Many hon. Members want to speak in the debate.
1206
All parents know that children are inquisitive and naive. They remember things that they should not. Unfortunately, the internet offers a high potential risk that they will come across unsavoury material. We must seek to protect them, and, of course, all society, from the unsolicited advances of unscrupulous people.
I seek assurances this morning that the internet's influence, the ready access of information and easily digestible facts and opinions presented as fact, will be subjected to evaluation within schools, in order to measure how useful the medium is as part of the learning process. There is no guarantee that information obtained on the web is accurate. It must be true that more information is not necessarily better information.
One problem is that anyone can present himself or herself as an authoritative source on the worldwide web. Like junk mail or telephone salesmen, persistence may triumph more often than the truth. I cannot accept the view of computer nerds, as they are called, that the internet is with us, and therefore we must bow before its unstoppable growth and development. I am not against this technological wizardry. We should embrace it, but not be ruled by it.
Appearing before the Select Committee on Culture, Media and Sport, a representative of Microsoft admitted to me that the development of the web had had a cultural impact and produced its own culture. When I asked about the web's cultural impact, he could not do better than acknowledge that it was an interesting question. I asked him whether there was anything in this life that would not be affected and influenced by the new technology. His answer: there was nothing that he could think of. I find that alarming. There is already a booming industry on the internet, with little or no regulation.
Writing in The Scotsman last year, Professor Gordon Graham echoed my earlier theme on the possibilities of a negative influence on the internet. He said:
"I regularly receive, via the Internet, some of the most unadulterated rubbish I have ever read; rubbish that would not pass the scrutiny of even the most careless and indifferent editor, or programme producer. But, of course, on the Net, it does not have to pass any scrutiny at all—the Net has no editors."
Mrs. Gillan: Does my hon. Friend agree that one of the infuriating problems about the internet is unsolicited e-mail, known in the business as "spam", and that the Government probably need to address the problems faced by internet users in that area? In the same way, we receive aggravating, unsolicited faxes through our machines.
Mr. Fraser: I agree entirely.
Gordon Graham also warned that, in an education environment, those using the internet would have to be very discriminating; that was my point exactly. I accept that unsuitable material could be blocked in certain circumstances. None the less, children must not be led to think that messages flickering on a PC screen always represent educational gospel.
How do we monitor internet use, especially in the privacy of a child's bedroom? The internet may help to inform, but it may not always teach. It is no substitute for the subtlety of the pupil-teacher relationship.
When those questioned tell us that they do not know the exact extent of the advances that internet technology will make in the coming year, let alone in the next five years, there is a possibility that society's acceptance of the technology will not keep pace with developments.

1207
If that is so, regulation—if it is possible to regulate the area at all—may also fail to keep pace. As our children so often know more than we do about the applications of the technology, it is possible that those legislating in this place will know less about the technology and its impact than those whom both the technology and the legislation affect. That would be an extraordinary position, which I have never heard of before.
Some say that the net should be linked free to homes not connected to the telephone system. I heard that suggestion in the Select Committee, when a question was put to a witness about allowing access to the net so as to overcome the problem of the contrast between information-rich and information-poor families.
However, is it right to encourage people with limited resources to be influenced and seduced by goods and services that they can ill afford, promoted in an endless stream? Such people should be encouraged to see the internet as a source of information, to enhance their quality of life, rather than being overwhelmed by everything that it can offer.
Can the Government offer any guarantee that material received through the net will not be subversive, immoral or unethical? I suspect that they cannot.
Dr. Nick Palmer: Does the hon. Gentleman agree that nearly everything he says apples to the print medium too, and has done for many years? Would he expect the Government to give a guarantee that no schoolchild could obtain subversive or pornographic material from a newsagent?
Mr. Fraser: As the hon. Gentleman will know, the difference is that the internet is international, and it would be far harder to sue a service provider thousands of miles away than to get hold of a newspaper editor. Also, as the debate is about the internet, I should like to confine my comments to that subject.
I should be happy for the internet to be available in every home and school in the country, but there is evidence that it is difficult to regulate and police effectively and efficiently throughout the world, with so many diverse ethical, moral, commercial and social standards to contend with.
The Government must consider regulation carefully. I welcome the establishment of the Internet Watch Foundation, and also the report that 2,000 items have been removed from the domestic web as a result of complaints. I support the foundation's work towards setting up an international rating system for legal material that would allow users to deny access to their children as well as to themselves.
However, that will not guarantee that certain information on the internet will not be seen by anybody, because the system has its own leaks. I do not want to be a merchant of doom, but we must address the serious issues of what the internet is, how it operates and how we should legislate to ensure that its standards are acceptable, given the few quantitative and qualitative checks currently in place.
We must not do that alone. The debate must take place on a international platform, with an international agreement to enforce its conclusions. I accept the many benefits that the technological revolution brings, but we must keep a sensible eye on the problems that the worldwide web will undoubtedly produce.
10.3 am
Mr. Ian Stewart: Thank you, Mr. Deputy Speaker, for allowing me to speak in this important debate. It is clear that the internet and informing and communicating technology have revolutionised business and transformed the relationship with customers, but in the public sector their effects have been less dramatic.
We still have to see whether the full benefits of the internet and informing and communicating technology—ICT—can be realised in the delivery of public services. That was the subject of the recent POST—Parliamentary Office of Science and Technology—report, which I welcome as it outlines some of the key issues that we face in dealing with the internet and ICT in general.
I apologise to you, Mr. Deputy Speaker, and to the Minister, because I shall have to leave before the end of the debate to be involved in parliamentary business elsewhere.
I shall draw attention to another paragraph from the POST report "ICT and Democracy", because it clearly describes my own concerns and attitudes towards the internet and informing and communicating technology in that context. If those technologies are to do anything worth while, they must relate to people. That is fundamental to our role as public servants.
The paragraph says:
"In terms of their contribution to the processes and institutions of 'democracy', ICT could 'merely' improve the communication of facts and policies within the Government and with citizens, businesses and other governments. A more fundamental change would be to use ICT to facilitate greater participation and deliberation through formal consultation and informal debate using electronic means. Even more radical, 'reinventing democracy' postulates that the combination of globalisation and local autonomy enabled by ICT will change the entire raison d'etre of national government. In practice most experiments in using ICT in the democratic process have started at the community level, and could well comprise the type of community initiative supported by Lottery funds."
My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) referred to the possibility of using lottery funds.
The report identified three key points. The first was
" 'teledemocracy' which could enable people to participate in debates and decision-making from their homes or community centres (e.g. 'citizens' juries')".
The second was the prospect of
" 'fully wired' MPs with public e-mail, homepages, electronic voting and electronic links into information and administrative systems".
The third was
"much improved electronic links between different tiers of Government to provide citizens with a coherent view of their Government and Parliament."
The report also identified some of the key issues facing us as Members of the House in connection with the relationship between us as public servants, and the community.
Now I shall come closer to home, to my city of Salford, and talk about some of the implications for my constituents in Eccles. Some interesting initiatives are taking place, one of which is the GEMISIS—government, education, medical, industrial and social information super-highway—project, run by a partnership between Salford city council, the university of Salford, the further

1209
education sector, sixth forms and other schools, and the local hospital. Through an initiative called the "virtual chamber", members of the chamber of commerce in Manchester and Salford are linked to the GEMISIS project.
I am the pilot Member of Parliament, linked to the whole network. It is important for me, as a public representative carrying out such a pilot scheme, to evaluate the benefits—and also any aspects which may not be beneficial. Like most of my colleagues in the House, I am keen to enhance public access to Government. However, we must also ensure that we do not create an uncontrollable monster.
Mr. Ian Taylor: I am not sure that the hon. Gentleman mentioned the company that was involved in that project. If my memory serves me well, it was Nynex, which is now part of Cable and Wireless. I draw attention to the project because it is an example—it is not the only one in the United Kingdom—showing that one of the benefits of growth in the cable industry has been local cable franchises working with the community.
Mr. Stewart: The hon. Gentleman has stolen my thunder. He is correct, of course, that Nynex, which is now part of Cable and Wireless, is the key provider in the project. I shall deal with its role later in my speech.
As I am the pilot Member in the project, Cable and Wireless is cabling my constituency office—putting me on line, cabled for video conferencing and e-mail, which I can use both in my constituency office and in my Westminster office. I shall therefore have access to all the partners that I have mentioned; and those partners—especially schoolchildren and other students—will have access to me as their Member of Parliament.
The implications of internet developments for democracy—specifically for local democracy—are immense. They will also force us to revisit our views on our function in society as representatives and to evaluate whether the benefits of such developments outweigh their disadvantages. I do not include in those disadvantages hon. Members' ability to relate and communicate directly and immediately with constituents and organisations; I believe that such direct communication is a benefit. However, hon. Members sometimes need respite, and should therefore ensure that there is integrity in any system we establish.
I hope that my hon. Friend the Minister for Science, Energy and Industry will be mindful of what I said in my maiden speech about the millennium bug. I welcomed the Government's initiative in establishing Action 2000, which stood in stark contrast to the previous Government's inaction on the problem. Although they had long known about the problem, they took no initiative in solving it.
Nevertheless, there is more to do about the millennium bug. Although providing greater finance would be helpful, other action can be taken. As I said in my maiden speech, it would be sensible for the Government to encourage and co-ordinate local partnerships comprising commerce, industry, education and local government. The partnerships could identify good practice, which could subsequently be shared across the United Kingdom.
10.13 am
Mr. Brian Cotter: I should declare an interest in the debate, as I—like other hon. Members—have an e-mail address and was one of the first hon. Members on the international website. However, I do not want to present myself—or lay myself open—as an expert, expected to know an awful lot about the subject.
The hon. Member for Mid-Dorset and North Poole (Mr. Fraser) made a timely reference to the fact that hon. Members have to be well informed on the subject if we are to legislate on it. Perhaps we should all join the recently established all-party internet group. There is great potential for improvements in the delivery of public services by innovative internet use, which will allow savings in tedious and repetitive work.
The previous Government produced the Green Paper "Government Direct", which was warm in words but short in public investment. I hasten to add, however, that the hon. Member for Esher and Walton (Mr. Taylor), who is in the Chamber, was notable in his desire to obtain money to support the Green Paper's objectives. Unfortunately, that money was not forthcoming.
Liberal Democrats very much believe that the state has a directional role to play in setting the agenda for change, in encouraging the private sector to develop solutions, and in explaining to citizens the benefits of the changes that the internet makes possible. The new Government seem to be more enthusiastic about the internet, but I should mention—as other hon. Members have done—the problem of the millennium bug.
Although Robin Guernier was appointed to head an organisation established to deal with concerns about the millennium bug, he was sidelined after highlighting the problems that Government might face in implementing a solution. His organisation was replaced by Task Force 2000, which had only a part-time chairman. Moreover—I do not know whether people realise it—its three top executives were not to be put in place until January 1998. If they were not in place, they were not able to do the job.
Mrs. Gillan: Does the hon. Gentleman agree that the situation is even worse than that? Action 2000 had a one-day-a-week chairman, and it appointed a director only a few days ago.
Mr. Cotter: I thank the hon. Lady for that clarification, and for making the point that I was trying to make. The organisation's top staff have only recently been appointed to deal with a problem that should have been dealt with, and perhaps solved, so that everyone in the United Kingdom knew what to do about it. It is a great concern.
Mr. White: One of the problems with the millennium bug is that—as the hon. Gentleman said—the public debate has been about personalities rather than the real issues. The longer people carry on talking about personalities, the less we will talk about the real issues of the 2000 problem.
Mr. Cotter: That is certainly correct. However, we have to talk about personalities, because people will deal with the concerns.

1211
I very much welcome the Government's statements on giving children access in school to the internet. It is very important that they should have keyboard access, and not only an e-mail address. We will therefore require more equipment, not only in schools but in public buildings.
Mr. Maxton: Surely it is not a matter only of an e-mail address or of allowing kids occasional access to a keyboard? The state of Texas has taken a decision not to buy any more textbooks. Every child receives a laptop computer, with access to the internet, and receives information in that manner. Is that not how we should proceed with education in this country?
Mr. Cotter: The hon. Gentleman has a very good point, although I am slightly conservative and do not want all paperwork to go out of the door. Books are very available.
We welcome the pilot project in Newcastle, for example, where jobcentres have put vacancies on line, and job seekers can access jobs and call employers directly.
I should like also to put in a little plug for Weston-super-Mare. It is part of a trial area in which information on resorts, bookings, hotels—including pictures and details—and other tourist attractions in the constituency is available on the internet.
I should like to address the following three issues: infrastructure, systems and security. Infrastructure must reach everyone who wants to get on line, especially in country areas. There is a risk of concentration of services in towns where there are many people. With cable companies cherry-picking in towns and cities, there is a danger of a new poverty: the information have-nots—very much in rural areas. It is difficult being unemployed with no car, in a village with no bus service. Electronic job-searching from the local village hall, or eventually from home, will uplift not just the jobless but disabled people, carers and others who, for one reason or another, are tied to the home.
There is huge scope for development in systems, such as in job seeking, finding a way around the benefits maze, lodging tax returns, and many areas of local and national government, such as local government planning applications.
I want to touch on the question of security. I say "touch on" it because it is a very big subject. A BBC News report on the internet, entitled "The Great Encryption Debate", which reminds me of the children's book "The Great Pie Robbery", is a big story on the continuing debate, which has been followed by many on the internet, who are asking what encryption is. It is a system of security, which is of concern.
There is a contradiction between wanting encryption for security, so that messages can be confidential and encoded by the sender, and wanting privacy in personal messages. Most people accept that some limit is necessary. We, like the Government, are concerned about the use of the internet by terrorists, race-hate groups, criminal gangs and the like.
The proposed key system could enable security services to tap into the internet as need be. At the moment, by Government agreement, telephones can be tapped when
1212
necessary. Encryption will cause difficulty in accessing systems. I do not pretend to be able in today's debate to solve such problems.
Mrs. Gillan: Does the hon. Gentleman agree that one of the problems of encryption is that, once one has a code and can access internet details, one can also access both historical records and any future messages that pass between sender and receiver? A telephone tap is a one-off measure by which one can listen to a conversation. There is no historical record.
Mr. Cotter: I thank the hon. Lady for advancing the debate. She succinctly puts our concern. I shall not in this short debate dwell any longer on the subject, but merely highlight it as a problem. Solutions will be difficult to find, but the matter needs to be addressed. The Government need particularly to address on the one hand problems about who could be going through the internet, and on the other concerns about the privacy to which individuals are entitled.
Commercial companies are already exploiting the internet in many ways. The enterprise zone is very important. This country is very well placed to go forward, because our firms and organisations are technically well endowed. I hope that the Government will address the many problems raised in this debate.
10.24 am
Mr. Andrew Miller: Perhaps the new computer tsars described by my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) should be called "caesars". In reflecting on how bad the Government and the House are on the matter, he ought to reflect on what happened before. I pay tribute to the hon. Member for Esher and Walton (Mr. Taylor), who took a very progressive view in very difficult circumstances under a very unprogressive Government.
In 1992, the vision in the House, and indeed in British industry, was lamentable. Computers were things down corridors, dealt with by IT departments. This House was the only one in Europe, bar Turkey, that did not have a fully fledged network. Advances since then have been extraordinary. I was at the recent opening of the House exhibition on computer services, where one of the Clerks pointed out—I shall be more chivalrous than he—that, when Madam Speaker came to the House as a secretary, quill pens were still in use. We have advanced a very long way since then.
In October 1996, as a result of a recommendation of the Information Committee, the House took the decision to put the full Hansard text on the web. That was a very progressive step. At last year's European telework conference in Stockholm, I challenged other European Governments to do the same. Only the Swedish Government at the moment can anywhere near match what we are doing in that field.
I shall touch on just two points, and on one or two others tangentially; it is difficult to wrap up the subject in such a short time. I turn first to trading on the net, or e-commerce. I encourage hon. Members to look carefully at the speech of Lord Haskel, which was made in another place in October 1997, in which he set out a number of answers to the points raised by my hon. Friend the Member for Sittingbourne and Sheppey. I shall not re-run those points.

1213
In a fairly light-hearted article on e-commerce recently, I set out a point similar to that made by my hon. Friend the Member for Broxtowe (Dr. Palmer) when he intervened on the hon. Member for Mid-Dorset and North Poole (Mr. Fraser). My hon. Friend said that there is not a great deal of difference in the regulatory regime necessary to deal with points about access for children in this respect and that needed to deal with access to hard copy. Exactly the same argument applies to trading.
Trading between two individuals is based on trust. The key issue is how to establish that trust. Are two people simply getting together, one passing over the goods and the other passing over the money; or are there intermediary devices, such as a bank card or, over the telephone, a credit card? If such trading is done by telephone with a credit card, what is the difference between personal trading of goods and services between supplier and consumer on the telephone and on the internet? There is no difference.
The credit card is used as the vehicle for trust. Establishing relationships that will create the same trust is the key factor that will help the evolution of e-commerce. One needs to know that the information is reasonably protected, and the system is not open to abuse.
There were early experiments in e-commerce on the Merseyside web, on which it was possible to buy an Everton football strip five or six years ago. From small beginnings, the system has evolved to the supply of office furniture. Now large-scale trading occurs across national boundaries. There are still many difficulties for the finance sector, which financial institutions are examining in detail.
My hon. Friend the Member for Sittingbourne and Sheppey mentioned the case of my constituent Louise Woodward. A large-scale electronic campaign, of which I was at the centre, has raised many thousands of pounds for the defence. It would be inappropriate for me to go into the many reasons why I am firmly convinced of Louise's innocence. I hope to do that when she is safely back home.
I wrote a letter yesterday to Mr. Al Gore, the Vice-President of the United States, setting out some of the problems we need to address on the international regulation of internet-related issues. First, I brought to his attention an e-mail from an allegedly reputable firm of lawyers in the United States. I cannot read the text of that e-mail, because it would be decidedly unparliamentary. It is obscene, disgraceful and libellous. It has been put in the public domain by a firm of lawyers allegedly representing the other side of the case.
Secondly, my constituent has also received hate mail, including some that purports to come from a prison in the United States. It is not acceptable that hate mail, including death threats, should come from anyone, let alone someone in prison.
Thirdly—perhaps all hon. Members might pay attention to this—how do Members of Parliament deal with being libelled on the internet? I have asked several of my hon. Friends with a legal background, who recommend laying down the writ in the country that will provide the greatest return.
Mr. Clive Betts: For the lawyer.
Mr. Miller: Yes, that is usually the advice.
1214
A lawyer in Texas—who appears to have lost his marbles, judging from some of what he has written—has made certain accusations against me. He says:
"That is the same Andrew Miller that was standing in the middle of the river of cash flowing from Zurich to the dream team."
The dream team was my constituent's defence. I look forward to him repeating those comments on the streets of London, so that we can make some money for the defence. These are serious issues that need to be considered.
I understand the case made by my hon. Friend the Member for Sittingbourne and Sheppey for establishing a super-Ministry. I believe that that exists in No. 10 Downing street, because the issues cross departmental borders. Departments cover everything from the difficulties of the year 2000 problem, through intellectual property rights, to the law of libel and inciting hatred. They cannot be boxed off to one Department. It would be a neat idea to dump it all on my hon. Friend the Minister for Science, Energy and Industry—
The Minister for Science, Energy and Industry (Mr. John Battle): I should be delighted.
Mr. Miller: I am sure he would, given his interest in the subject, but that would present serious problems for the organisation of that complex issue.
I should like to respond to some of the points that have been made about the year 2000 problem. I acknowledge the work that the hon. Member for Esher and Walton started on that. He took some steps in the right direction. It took a long time to persuade the public, businesses and the House of the nature of the problem. I do not expect an entirely truthful answer, but I suspect that he had great difficulty with his ministerial colleagues, most of whom did not know how to switch on a computer. I note that he is closing his lips tightly.
Public awareness is rapidly increasing. I had discussions yesterday with senior people in the Department of Health about what action they are taking. Like my hon. Friend the Member for Sittingbourne and Sheppey, I am nervous of flying in 2000. Let us hope that convincing proof comes from all areas of industry that they are doing the job that needs to be done.
The problem is particularly difficult for small and medium-sized businesses. I know that my hon. Friend the Minister for Small Firms, Trade and Industry is doing a lot of work on that. There are some complexities with the front end delivery mechanisms of public services, but they are being examined in great detail. I commend to the House the most recent quarterly report from my right hon. Friend the Chancellor of the Duchy of Lancaster, which sets out, in several hundred pages, the action that the Government are taking.
As my hon. Friend the Member for Sittingbourne and Sheppey said, some web tools will be in difficulty because of the problem. Some parts of the web outside the control of this country could come to a grinding halt in 2000. We need to engage in the discussions that are starting with other countries to ensure that the advantages of the evolution of the web are not delayed by the year 2000 problem.
This debate could go on for a long time. We are considering a major subject which impacts on every aspect of Government and every member of society. I am

1215
pleased that the House is taking the matter seriously. I wish my hon. Friend the Minister well in his endeavours in this exciting time.
10.38 am
Dr. Julian Lewis: In the three or four minutes that the hon. Member for Ellesmere Port and Neston (Mr. Miller) has generously left me, I should like to refer to the impeccable timing of yesterday's Evening Standard report, headed "Police hunt 15 Internet bombs made by children". The report began:
"Police are searching for 15 lethal home-made bombs taken home by London schoolchildren. The explosive devices, copied from a design on the Internet, are from the same batch as one which blew apart a telephone box in Sidcup this month.
They are made of copper tubing packed with a simple but powerful explosive.
A police spokesman said: 'Given the damage to the phone box, which was blown apart, they could maim or even kill."'
Mr. Battle: Will the hon. Gentleman give way?
Dr. Lewis: No, I will not give way in the tiny amount of time I have available: I am sure the Minister will understand.
Another aspect of the internet which can have a lethal effect on a person's reputation is the use of the internet to defame, libel and undermine people, in private or public. I have personal experience of this. The story goes back to 1993, when a magazine called Scallywag thought it would make a reputation for itself by defaming the then Prime Minister, my right hon. Friend the Member for Huntingdon (Mr. Major), by accusing him of having an adulterous relationship with a caterer.
My right hon. Friend took legal action against the editors of the magazine and the shell company which published it, but had to discontinue it because they had no assets. Had he continued, my right hon. Friend would have run up huge costs, which would have been awarded against the magazine and its impecunious editors. The editors would then have gone bankrupt, and my right hon. Friend would have had to pay his own legal costs, which would have been enormous. After that so-called triumph, the magazine decided that anyone was fair game. If the Prime Minister could not stop it, who could?
Every married member of the then Conservative Cabinet became a fair target for accusations of adultery, and every unmarried member became a fair target—in their eyes—for accusations of secret homosexuality. Sometimes married members were accused of that as well. In November 1994, the magazine made allegations of that sort about me. By dint of finding out the identity of the printers and the main distributors—attempts had been made to keep them secret—I was able to take legal action in this country which cleared my name and collapsed the magazine as a going concern.
It was my misfortune that, at that time, the internet had just come into existence, and the magazine went on it. To this day, the same filthy lying allegations about my private and political life are repeated on the internet. I did what anybody would do under the circumstances, and where there was a course of action. I sued the internet provider, Demon Internet Services, in Britain. It promptly closed down the site, and I received a settlement which I felt was a vindication. However, the site, predictably,
1216
was opened by an internet service provider abroad. There is no effective action I can take to prevent that provider from continuing to blacken my name.
My selection as a candidate was imperilled by this filth. My period as a prospective parliamentary candidate for my seat was damaged by this filth. My election campaign was, to some extent, undermined by this filth. It is filth on an international level. It may bring smiles to the faces of some Labour Members because it happened to a would-be Conservative Member of Parliament. It could just as easily happen to them.
10.42 am
Mrs. Cheryl Gillan: I start by giving hearty congratulations to the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) on securing this debate. He has been in the House for a short time only, but he has a reputation for taking a great interest in and having great expertise on this matter. I congratulate all those who have taken part in the debate, although I am sorry that some hon. Members who have been waiting patiently have not been able to take part—particularly my hon. Friend the Member for Esher and Walton (Mr. Taylor).
The matter is of great importance to the United Kingdom, not least because we generate more than a fifth of all world internet traffic. We are one of the major players in this field, way ahead of any other European country, and it is important that we maintain our competitive advantage.
Like the hon. Member for Sittingbourne and Sheppey, I am surprised that the Minister for Science, Energy and Industry, the hon. Member for Leeds, West (Mr. Battle), is here to answer the debate, although I welcome him to the Dispatch Box. I thought that the Chancellor of the Duchy of Lancaster might put in an appearance, particularly as he has spent so much time promoting the delivery of Government services over the net and is responsible for year 2000 compliance.
Instead, the Minister—an honourable and generous gentleman—has been put in this position because the Government's policy in this area is clearly a shambles. The policy vacuum was displayed admirably by the hon. Member for Sittingbourne and Sheppey.
The Chancellor of the Duchy ought to be here, not least because he spends so much time promoting his electronic red box. I do not believe that that red box has been a great success with his colleagues. Will the Minister confirm how many Ministers currently use electronic boxes on a daily basis?
In a debate of this nature, it would be unforgivable not to pay tribute to my hon. Friend the Member for Esher and Walton. As a member of the last Government, he made much progress in this area. To be fair, the present Government have continued many of his programmes—so many that they have made no original contribution to this policy area in their 10 months in power.
The hon. Member for Eccles (Mr. Stewart) was a little curmudgeonly when he said that nothing had been done under the previous Government. My hon. Friend the Member for Esher and Walton was responsible for the Central Information Technology Unit, Government on-line, the Information Society initiative, the launch of the super-highways initiative, the launch of TaskForce

1217
2000 and the launch of the schools on-line project. He made it possible for all schools to connect to the internet, and introduced "IT for all". That is an impressive record. My hon. Friend left the Government a golden legacy, which has not been fulfilled.
The internet has developed rapidly, and has penetrated almost every corner of the world. It has wiped out national borders, and provided a medium of communication which has enabled people to talk and do business between China and Chesham and between Amersham and Addis Ababa. Governments are rightly interested in ensuring that it is used to its fullest potential in education and business. However, some Governments and people are frightened by the implications of free, uncensored communicational transactions. My hon. Friends the Members for Mid-Dorset and North Poole (Mr. Fraser) and for New Forest, East (Dr. Lewis) outlined those problems.
Governments are worried not only because communications can go uncensored, but also, more importantly, because transactions can avoid the tax net. Many global issues—including regulatory regimes and legal implications—should be considered by the Government.
The UK has first-class service providers, and most are doubling their customer base in each year. However, the Government have lost the momentum established by the previous Government, and are not addressing the problems.
I should like to raise a few of those with the Minister. Can he tell the House what progress the DTI is making on encryption, which was mentioned by the hon. Member for Weston-super-Mare (Mr. Cotter)? The DTI's proposals have been met with some concern by providers, including the proposal to register crypto keys with third parties. Perhaps he can tell us how that will work, and why technical experts say it is not feasible.
The Opposition have raised questions about the telecommunications charges between the UK and European countries, which remain disproportionately high. What are the Government doing to address the problem?
Domain names are causing concern to providers. Will the Government be opposing the US Department of Commerce proposals on internet governance, in so far as these involve an assertion of US jurisdiction over the key resources? In a written answer, the Minister for Small Firms, Trade and Industry, the hon. Member for Hornsey and Wood Green (Mrs. Roche), admitted that there was a delay in sorting out the problem, and we need to know what action the Government are now taking.
What plans do the Government have to tax commerce on the internet? If they are working on proposals for taxation, have they considered the ease with which service providers, for example, can operate from other parts of the globe? Are they going to encourage this succesful industry by creating the right framework in which the service providers can operate?
The internet has been growing rapidly. It is entirely based on computers and cyberspace, and computers—in about 95 weeks—will face the universal deadline of the
1218
year 2000. There can be few problems more serious or pressing than the millennium bomb, which will affect not only the internet but every business and public service in the world that has embedded chips or microprocessors in any of its systems.
As hon. Members have said, it would be wrong of me not to raise the fundamental questions relating to the Government's handling of computer compliance for 2000, which has proved to be disastrous. The Government have lost the impetus that was started by my hon. Friend the Member for Esher and Walton. TaskForce 2000 was abandoned and Action 2000 was set up, but the director has only just been appointed on a full-time basis. Initially, funding was £1 million; that rose to £10 million but, on 30 March, we read that the Prime Minister would write a blank cheque. After 10 months' inaction, the Government are now panicking.
Will the Minister confirm that Ministers first met to discuss this problem only a few weeks ago? The hon. Member for Ellesmere Port and Neston (Mr. Miller) praised the quarterly report of the Chancellor of the Duchy of Lancaster, but, if he read it properly, he would find that the Chancellor of the Duchy of Lancaster was incapable of correctly transferring information from the departmental reports to the departmental summary.
The costs associated with the problem are escalating rapidly; the Government have been remiss in allowing the impetus that was created under the previous Government to be thrown away over the past 10 months. They have neglected the business sector, and many regard Action 2000 as inaction 2000.
I hope that the Minister will show that there has been a radical rethink in Government policy on technology. The internet is only one facet of the computing revolution, which can benefit the United Kingdom and the whole of mankind. However, without a coherent policy and a Minister to consider the whole picture—including millennium compliance—we can look forward only to chaos and mayhem.
We need a strong hand on the tiller to secure the future of the internet business for UK companies and to avoid the inevitable disaster arising from the failure to ensure millennium compliance. The Minister should turn back the clock—just as he has continued the science and technology policies of the previous Government, he should continue their policies on the internet and the millennium bomb. If he fails to do so, this country will be severely affected, and our internet businesses will find that they are operating in a very unfavourable world environment.
10.52 am
The Minister for Science, Energy and Industry (Mr. John Battle): I thank my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) for initiating this important and serious debate—my only regret is that we do not have time to discuss it further. As I have been left little time in which to reply to a full debate, I have a suggestion: I have been taking notes on my Psion 5, which I shall load on to my PC, so that what I would have said will be available at tlo.battle@dti.gov.uk—or, indeed, on the websites of the Government, of the Department of Trade and Industry or of the House of Commons. Perhaps we can eclipse space, if not time, in our desire further to discuss these matters.

1219
My hon. Friend said that the internet would be the key to re-tooling and re-skilling, and that it would reshape how we do business. I underline that, and also give my hon. Friend a clue about why I am here. As a Minister in the DTI, I am responsible for ensuring that the banner above the Department bears the word "competitiveness". For the United Kingdom to be competitive, we must ensure that the internet is a vital tool for business, that youngsters, schools and the whole of society can take advantage of that tool, and, of course, that the Government get the matter right in house. We are moving from the information age into a digital economy, where e-trade and e-commerce will truly transform what we have seen so far.
Some hon. Members have expressed concern about crime on the internet, but I should point out that the police—I cannot go into detail—are using the internet to track criminals. The internet, as I am sure we all accept, is an ambivalent tool. We need Government-wide co-ordination across all Departments to ensure that we can take advantage of the new possibilities that are offered by computing and the internet.
As my hon. Friend said, it is worth remembering that the worldwide web was pioneered by a British scientist, Tim Berners-Lee, at CERN, which is a science project in particle physics that has been, and will continue to be, sponsored and supported by Government—it is important that we remember what comes out of the science base.
When I first entered the House of Commons, I asked for a computer modem point to be put on a shelf that I was given as an office in the Cloisters downstairs. I was told that we were offered the privilege only of a telephone. To link one's computer to one's home or constituency office was unknown at that time. I managed to do so, but, for obvious reasons, I ended up with a rather larger phone bill than everyone else. As Members of Parliament, we need to use the equipment—I think that, especially since the general election, most hon. Members appreciate the need to communicate through computing and the internet.
I shall focus on electronic commerce, as the possibilities it offers for small and medium enterprises to open new markets are of central importance. Today, 27 per cent. of companies in Britain—including nearly 40 per cent. of large companies—have a website, and 29 per cent. of small businesses are developing one. A survey showed that 81 per cent. of the respondents believed that the website would be important to their businesses. Moreover, small businesses buy parts on the internet.
My hon. Friend the Member for Ellesmere Port and Neston mentioned his problem with American lawyers. I suggest that he looks at the web page "Welcome to Helpnet", which offers advice in psychiatry, although it notes that it is not meant to be a substitute for psychotherapy. He mentioned trusts and money. Bay Shore Trust in Canada offers over the internet a loan in 60 seconds to Canadian citizens with a bank account. Finance is an important area; it will be critical for small and medium enterprises to organise back-up finances over the internet. There will be new ways of doing business and finding support for business.
Mr. White: Under Britain's presidency of the European Union, negotiations are taking place with
1220
the Americans about domain names. Does the Minister agree that it is important that that is sorted out quickly, as it could help to develop commerce?
Mr. Battle: The matter was raised by the hon. Member for Chesham and Amersham (Mrs. Gillan), and I agree that we have to get it right—indeed, we shall take a lead in ensuring that we get it right in international negotiations.
I pay tribute to the hon. Member for Esher and Walton (Mr. Taylor), who initiated schemes such as "IT for all" and the GEMISIS project, which my hon. Friend the Member for Eccles (Mr. Stewart) mentioned. We are enhancing those schemes and pushing them forward, as I am sure that the hon. Member for Esher and Walton will appreciate.
I give an example. My hon. Friend the Member for Ellesmere Port and Neston explained that he was engaged in the GEMISIS project in his constituency. I have met the chief executive of Cable and Wireless, who briefed me on the wide range of the company's projects. The GEMISIS project has the potential and vision for "IT for all" to ensure that everyone has skills and that society is not divided into those with access and those without access. We should emphasise not only business and educational uses, but social and cultural uses.
Despite what the hon. Member for Chesham and Amersham said, we have given a major boost to "IT for all"—our aim is that, by the end of the year, the public will have access to a minimum of 4,000 sites, half of which will form a national network of learning centres where the public can acquire basic IT skills.
Mrs. Gillan: That was our idea.
Mr. Battle: The hon. Lady says that that was the idea of the Conservative party, but we are making it work better, just as we are with the Information Society initiative for businesses, which helps smaller companies to seize the opportunities—there are now 60 such schemes up and running, and 20 more will be opening in the next few months. Either she is in favour or against the programme—I do not understand why she should object to our developing the initiative, using the support of business links.
The enterprise zone is a new idea, which will complement the programme for business. It will link internet sites that have been judged by business information experts to be authoritative, and will be clearly signposted in a language that business can understand. We are helping businesses to access reliable information that they need from the internet, including on how to raise finance, and we have developed new initiatives.
In 1995, in opposition, we conducted exhaustive research into the super-highway and its uses, and published a full report, "Communicating Britain's Future". In government, we have begun to wire up the schools and launched the national grid for learning and the university for industry. Those new ideas, brought to fruition by this Government, were not thought of by the previous Administration.

1221
The university for industry will be a new kind of institution that delivers courses to adults at home, in learning centres and at work, exploiting the number of homes with PCs and realising the potential for lifelong learning at work.
My right hon. Friend the Prime Minister has committed the Government to ensuring that 25 per cent. of their services are capable of being carried out electronically by 2002. My right hon. Friend the Chancellor of the Duchy of Lancaster has piloted—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must now move on to the next debate.

Community Care
11 am
Mr. Paul Burstow: The fifth anniversary of the introduction of community care is on 1 April, so today is a good time for us to debate the subject. I know that several hon. Members want to speak about some of the issues that come under this wide topic. My intention is to concentrate primarily on services for older people, whereas others may want to talk about matters such as mental health and children's services.
What stands out for me in all the writing on community care is the overwhelming weight of anecdotal evidence supporting the need fundamentally to rebalance our health and social care system. At present, the economics of health and social care has the unintended effect of driving people into high-dependency, high-cost institutional care rather than supporting them at home. I want to illustrate what that means in practice, and to make some suggestions about the way forward.
Few would argue with the aims of community care, but the evidence gathered by the National Association of Citizens Advice Bureaux and others—reflected, I am sure, in the mailbags and surgeries of many hon. Members—shows that community care has failed to deliver, and is better described as crisis management than as care management.
I want to make the case for complementary national and local strategies that involve older people and carers in their conception, implementation and evaluation, are genuinely cross-departmental and multi-agency, and promote improvements in public services through learning and local experimentation.
In its report "The Coming of Age", the Audit Commission illustrated the vicious circle of crisis management that health and social care are locked into because of bed blocking, cost shunting and buck passing. The consequence is that elderly people are funnelled into inappropriate institutionalised care. The report said:
"The pressure on expensive hospital beds and the use of nursing and residential homes is making it hard to free up resources for alternative services that might start to ease the situation."
The number of older people being admitted to hospital is growing. Pressures on hospital beds are increasing. People are being discharged sooner, and more people are receiving expensive residential and nursing-home care. As a result, there is less money for preventive and for recuperative and rehabilitation services.
The number of people using acute services and the speed of their discharge are increasing, and so is the number of people being readmitted. Figures obtained last March by my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) reveal that as many as 100,000 people a year aged 75 or over become emergency readmissions to hospital within 28 days of discharge.
For far too many older people, admission to hospital is simply the first step to their premature loss of independence. Eight out of 10 new residents of care and nursing homes come directly from hospital. Increasing hospital throughput has, in turn, increased pressure on older people and their carers—often the elderly husband or wife—to make snap decisions about where they are to live out their remaining years.

1223
Nearly two thirds of social services gross expenditure on the care of older people in England is spent on residential care, but only one in 20 people aged 65 or over currently need long-term care other than in their own homes. The emphasis on residential care is hardly surprising, given the perverse financial incentives. The Audit Commission found that in almost every case, it is cheaper for social services departments to use residential care in preference to devising a care package to support independent living.
The net cost of domiciliary care in 1996 was about £197 a week, which was considerably more than the net cost of a place in an independent residential care home, at £94 a week. The differences are caused by the interplay of a nationally applied means test for residential care, and locally determined eligibility criteria for domiciliary care.
Evidence gathered by NACAB demonstrates how the original objectives of community care have been distorted. Targeting of support is a clear aim of community care, but the reality for far too many people is of care rationing, with longer waits for assessments and care provision, tightening eligibility criteria and more and increasing charges. The consequences represent a false economy for society.
The NACAB report "Rationing Community Care", said:
"Excessive targeting of scarce resources on those in greatest need is leading to inadequate preventative measures in terms of support services in the community for both carers and care users, which may result in more costly institutional remedies becoming necessary."
NACAB has drawn to my attention some cases that illustrate the point. A woman on income support was told that help was available at £7 an hour, and social services suggested that she take out a loan to pay for it. In January, a woman in Wales was told that, under a revised scheme, her charges would double, from £21 to £42 a week, because she was not in receipt of income support. She cannot afford the new charge, as she has high living costs, including the cost of constant heating and of electricity to power her stair lift and other aids. She is refusing to pay the increased charge, and is prepared to go to court if necessary.
Funding for services that promote independence will remain vulnerable to cuts as long as health and social care remain locked in a vicious circle of acute medical intervention and high-dependency institutional care. Two services illustrate the point, and the Minister may be familiar with them, as I have tabled quite a few written questions on them: continence care and chiropody.
Currently, 3 million people in the United Kingdom—5 per cent. of the adult population—are affected by incontinence, which increases the risk of hospitalisation by 30 per cent. for women and 50 per cent. for men. It has been estimated that the cost of health care for incontinence stands at £1.4 billion annually, not including the costs of informal care and of the inappropriate use of long-stay beds for people for whom incontinence is the prevailing condition.
Incontinence is one of the key triggers of admission to residential care, as it places great strain on carers. It makes no sense at all—least of all for the taxpayer—to place such a burden on carers, but Age Concern has found that, increasingly, continence products are being rationed in absolute numbers per month rather than on the basis of medical need.
1224
The same false economies beset chiropody services. A joint study by the Joseph Rowntree Foundation and Age Concern found that foot troubles constituted the commonest physical health problem associated with chronic difficulties in daily living. Nearly seven out of 10 over-85-year-olds cannot cut their own toenails, and rely on chiropody services.
It is hardly surprising, then, that 70 per cent. of the case load of national health service chiropodists is made up of older people; but it is very depressing to learn that 40 per cent. of NHS chiropodist managers report budget cuts this year. Investment in chiropody services represents value for money, preventing the need for costly emergency admissions to acute beds.
Where do we go from here? The Secretary of State often refers to the need to remove the "Berlin wall" between social and health care services. He is right to some extent, but it is not as simple as that, because there is also a need to address the relationships between Departments.
Changes need to be made in the way in which community care operates. In particular, there need to be clear guidelines and minimum standards for community care provision. For example, guidance on standards, inspection and charging for domiciliary care is long overdue.
The choices about eligibility and charging that are currently made at local level are, in fact, national issues, as they ultimately turn on the question of funding. There is no excuse for this Government to pass the buck, as the previous Government did. The Labour party came to power with a clear commitment to take action on the issue of what people have a right to expect from social services.
The Labour manifesto stated:
"We will introduce a long-term care charter' defining the standard of services which people are entitled to expect from health, housing and social services"—
a laudable aim that we look forward to being delivered. Clear national minimum standards for the provision of continence and chiropody services need to be high on that list to be studied.
It is also clear that structural change at the local level is again on the national agenda. The Select Committee on Health has been looking into it and the Government's Berlin wall rhetoric points to it. It is far too easy to assume that changes to structure will solve everything. Some politicians—I do not exclude my party from this—have an unhealthy interest in structure. Simply aligning health and social care misses the point—it merely moves the interface.
The fact is that many of the services that need to co-operate to meet the needs of older people are already covered by local government. In particular, the aligning of health and social care would leave out the housing dimension, which the Health Select Committee rightly drew attention to before the general election as the
"neglected part of the community care framework".
The problem, both nationally and locally, is departmentalism and a lack of co-operation within, let alone between, agencies. It is a question of culture and accountability, not structure. The debate about structure should not be allowed to divert attention away from the simple truth. Even if it proves possible to make all the different cogs in the welfare system fit smoothly one with another, the level of resources is inadequate to oil the wheels.

1225
Indeed, the Audit Commission's director of health and social service studies, David Browning, is reported in Community Care magazine as giving short shrift to those who argue for major structural changes, such as setting up a single or joint agency between health and social services. An experimental programme is necessary, trying out different approaches and mixes of multi-agency working—for example, initiatives such as those in Somerset, south-west Hampshire and Wiltshire, where district nurses have started to take on social care management functions and in some cases have direct access to social services funds, following a comprehensive needs assessment. In south Bedfordshire, health visitors can set up meals on wheels for clients via a phone call to social services, and social workers can arrange for elderly people to be visited by one of the trust's district nurses.
I said that a fundamental re-balance between health and social care was necessary. I want the balance to be tilted back towards home-based care, such as occupational therapy, physiotherapy, and rehabilitation. The results can be startling. In a scheme developed in Devon, three quarters of those thought to require residential care on admission to a rehabilitation centre needed no continuing social care support on their return home. When compared to the cost of discharging directly into residential care, the savings were as much as £2,000 per person.
Unnecessary admissions, bed blocking and readmission rates can be reduced, but breaking out of the vicious circle into a virtuous one is a high-risk strategy in a public service where failures are rightly condemned, but successes rarely celebrated. The social services inspectorate and the Audit Commission are working in Devon to try to establish what the crucial success factors of such projects could be. However, the Devon experience is based on a long period of operation, which predates the introduction of community care. Social services departments coming late to such schemes may struggle to find the start-up and running costs of such ventures.
The development of such services lends itself to an experimental approach because it is out of diversity that examples of good practice can become universal. In that respect, the winter pressures initiative is a good example. Imaginative approaches have been tried, particularly around prevention of admissions and rehabilitation, but with the funding due to run out on 31 March, the scope for innovation has been constrained. Furthermore, given the one-off nature of the initiative, some positive schemes may soon have to stop. Simply imposing new conditions on the use of the coming year's special transitional grant is unlikely to sustain existing best practice, let alone spread it more widely.
Government must foster the conditions for innovation. In a recent report entitled "Community Health Care for Elderly People", the Clinical Standards Advisory Group highlighted four barriers to collaborative working. The first is different professional and organisational cultures, and I hope that in that respect, the legal and accounting restrictions that often get in the way of inter-agency working will be removed as that would do much to realise common goals between different agencies.
The second barrier is the fact that the geographical boundaries of health and local authorities are not coterminous. I hope that the Minister may be able to say
1226
something about what mechanisms he plans to use to realise the national health service White Paper's exhortation to GP consortiums to use boundaries conterminous with social services.
The third barrier is the financial constraints on social care and I hope that the Minister will be able to tell us the Government's intention for special transitional grant in 1999–2000. Will SSA and revenue support grant be adjusted upwards, or will ring fencing continue? I also hope that the Government will consider establishing an innovation fund to pump-prime, for periods of two to three years, joint projects between housing, social and health services and the voluntary sector to test out different approaches to delivering preventive services, which must involve carers and older people right from the outset.
Such an experimental programme should involve the SSI and the Audit Commission in monitoring and evaluation to ensure that the lessons learned and the good practice that emerges are widely shared and understood by managers and practitioners, and should draw on the work of the recently established preventive task group. Perhaps the opportunity could also be taken to pilot the extension of direct payments to those over-65s who want them. That would put them in the driving seat in determining the right care package to meet their individual needs.
The fourth barrier is the lack of shared compatibility of information systems, which is apposite given the previous debate. The decision to withdraw supplementary credit approvals for capital investment in information systems to underpin community care is undoubtedly inhibiting progress in that area. Again, I would welcome an indication from the Minister as to the intentions in that area.
I would add a fifth barrier, which is planning overload. While partnership is undoubtedly the key to achieving both health and social care objectives, the current plethora of planning requirements, ranging from community care plans and health improvement programmes to joint investment plans, can prove a distraction from delivering service outcomes. I hope that the social services White Paper will dovetail with the joint health and social care agenda in the NHS White Paper and rationalise the situation.
The overwhelming weight of anecdotal evidence supports the case for a fundamental re-balancing of priorities between health, housing and social care. The approach should be experimental and should involve older people and their carers. Help the Aged recently published a report called "A Life Worth Living: The Independence and Inclusion of Older People", which contained a sentence that summed up the challenge:
"We are in danger of needing more and more ambulances downstream to fish people out of the river for want of fences upstream to stop them falling in."
Unless we find ways in which to break the vicious circle of crisis management, we shall continue to condemn older people to a life of dependency, when community care should deliver independence and dignity.
11.16 am
Mr. David Hinchliffe: First, I pay tribute to the hon. Member for Sutton and Cheam (Mr. Burstow) for obtaining this debate. In general, I agree broadly with

1227
virtually everything that he said. It is a great pity that we have precious few debates on such a fundamentally important area as community care. During my time in the House, with the exception of the 1993 legislation, every debate on community care has been initiated by Back-Bench Members, which is a great pity when one considers the crucial impact that such provisions have on our constituents.
I must inform the House that I spoke to the hon. Member for Sutton and Cheam yesterday to establish what area of community care he intended to approach. I did so for a particular reason. In 1995, I was surprised to receive from the Minister's predecessor a parliamentary answer indicating that the Department of Health had established a difference between the formal definitions of community care and care in the community. Having been around community care for a long time because of my work background, I regarded the two terms as meaning the same, but under the previous Government, a new definition arose. Care in the community came to refer to mental health and provision for people who had been in psychiatric hospitals. Community care meant the areas to which the hon. Gentleman referred—elderly and disabled people.
This morning, I will stick to the same area as the hon. Gentleman, but I must place on record my belief that it is important in the near future to debate mental health and provisions for the elderly and the learning disabled. I am conscious that both areas require much attention, and I am aware that the Minister may want to discuss policy initiatives with the House.
The Government face a series of key challenges on community care as a direct consequence of the way in which the previous Government, over 18 years, effectively privatised community care provision in a manner that has directly affected service levels and the nature of provision. The hon. Member for Sutton and Cheam mentioned that in describing the inappropriate care models into which people may be pushed. I want to consider the history of why we are where we are now and why the Government face tough challenges in re-establishing some coherence in community care instead of leaving the job lot to the private market, which was the essence of the previous Government's policy.
I await with interest the shadow Minister's contribution, because he normally gives a robust performance in such debates, and especially his defence of the previous Government's record on care of the elderly. They were responsible for some fundamental changes that were very much for the worse. The policy change over their 18 years stemmed largely from a little-publicised decision in 1981 to allow the use of supplementary benefit to supplement the costs of home provision of private or voluntary care. That later became income support. The decision profoundly affected the nature of community care provision, especially for elderly people. That point was picked up by the hon. Member for Sutton and Cheam.
The direct consequence of the previous Government's decision—I believe that this was deliberate—was, from 1981 onwards, a huge explosion in the provision of private nursing home and residential care in a way that distorted the nature of community care provision, especially for the elderly and disabled. The matter has still to be addressed by the new Government. It will take many
1228
years to skew provision away from the emphasis on institutional care that was mentioned by the hon. Member for Sutton and Cheam.
I have established from the Library that £3 billion was used for the scheme between 1981 and 1993, when the community care changes occurred. Anyone considering that logically would realise that the money would have been far better invested in the community services that the hon. Member for Sutton and Cheam mentioned rather than in a huge expansion of institutional care, which was on the way out even in the 1970s. We have gone in the opposite direction to most other European countries because of the dogma of the Conservative party, which believes in private medicine, private medical care and private provision. That has been detrimental to properly planned community care which enables people to remain in their own homes. I shall expand later on what we should do about that.
I take issue with one point made by the hon. Member for Sutton and Cheam. He said community care was introduced on 1 April 1993. He understands the point that I am going to make. Community care was not introduced then; there was a change in its administration. It existed in a variety of ways long before institutional care, or even the workhouse, was invented. It has generally been the province of a carer in a family, usually a female relative. He will accept that all that happened in 1993 was an attempt to unravel the shambles that followed the 1981 decision. The National Health Service and Community Care Act 1990 was Treasury-driven because of alarm about how the income support budget had shot through the roof as a result of the 1981 decision.
The 1981 decision had several policy consequences that the Minister understands and will no doubt address later. An outdated model of provision that was on the way out, in cross-party policy terms, as far back as the 1970s has been resurrected by the privatisation of community care. Institutional provision for elderly people is now everywhere. I am not knocking such provision because there are some very good care and nursing homes in the private and voluntary sector. Some are less good, as the Minister will accept. His current review and the White Paper may tackle that in due course.
What concerns me about the privatisation of community care and the development of institutional models is the way in which public perceptions of what elderly people need were narrowed down to focus on such provision. That was unhelpful. For people of a certain age—we all hope that we shall reach such an age—there is now a perception that the appropriate care may be institutional. We should ask serious questions about that, as other countries are doing, and consider how we can use available resources to develop alternatives to give people a proper choice so that they do not have to go into institutional care. I accept the point of the hon. Member for Sutton and Cheam that some resources invested in institutional care could be better used to ensure that people have the choice of remaining in their own homes.
I fear that a consequence of privatisation has been the development of a huge market in private care, both residential and nursing, and in private insurance to encourage the view that we all need to insure ourselves privately so that, when we are gaga, we can be looked after through some institutional provision. It worries me that that perception has been allowed to float around this place without being challenged.

1229
The hon. Member for Sutton and Cheam mentioned the third report of the Health Select Committee in the 1995–96 Session. Interestingly, his predecessor was a member of the Committee. She was usually—in fact, always—totally uncritical of the Conservative party's performance in government. However, this report exposed a good deal of what that Government did, and stated:
"We are very disappointed with the Government's response, which attempts to shuffle off responsibility and does nothing to meet the needs of some of the most vulnerable members of society."
His predecessor said that, or at least subscribed to it in the report. That shows the extent to which people were concerned about what had happened.
The report also made some profound comments about the idea that there is a great demographic crisis. The first paragraph of its of summary of conclusions said that that belief was based on "unsound evidence" and was "downright alarmist". That alarm has been whipped up by private business interests who want to create the view that we must build more and more institutions for the elderly and pay more and more to insurance companies to ensure that we are looked after in old age. I accept that the royal commission on long-term care for the elderly will examine those issues, but I make a plea for us to move away from such narrow thinking and to broaden our views of care of the elderly in the way, in many respects, in which the hon. Member for Sutton and Cheam mentioned.
The second direct consequence of the changes of the 18 years of Conservative rule was a double whammy for the elderly in that people in their 60s, 70s, 80s and 90s in my constituency have endlessly raised with me their anxiety. that, throughout their working lives, they have paid national insurance and taxation on the assumption that, on reaching old age, free care would be available. They were paying for a national health service that offered them free care.
When they reached that stage, the NHS gradually, with a nod and a wink from the Department of Health, withdrew from free care. Such people were means-tested and found that they had to pay for the care they had already paid for. People are deeply unhappy about that, because they have been misled. People who fought in the second world war and who are still around deserve our consideration. That is a grievance affecting thousands or even millions of people who feel that they have been badly let down.
Mr. Nicholas Winterton: I apologise for not having been here for the whole of the debate. The hon. Member for Wakefield (Mr. Hinchliffe), who is currently Chairman of the Select Committee on Health and whom I hold in high regard, has drawn attention to the fundamental injustice of what has happened. Does he agree that at no stage has the House voted for the change that took place by deceit, which is that services that had hitherto been provided within the health service were ultimately taken out of the health service, so that people who believed that they would be looked after in their retirement now have to pay for their care and perhaps utilise all the savings that they have accumulated during their working life?
Mr. Hinchliffe: I am grateful for that intervention from the hon. Gentleman, for whom I have the greatest respect
1230
and under whose chairmanship of the Select Committee I served for several years. If I can do half as good a job as he did as Chairman of the Select Committee, I shall be a happy man, because he did a first-class job, to the extent of being removed from that position by his own Government. At this point, I should put down a marker and hope that my hon. Friend the Minister listens when I say that I hope that that does not happen to me.
The hon. Member for Macclesfield (Mr. Winterton) is absolutely right: the changes took place without any statutory change or debate in the House. That brings me to my third major point about the consequences, which is that there has been what I believe is a deliberate blurring of the boundaries between the national health service and local authority social services, which was formalised by the community care changes that took place in 1993. That blurring has taken place in the way described by the hon. Gentleman and I believe that the previous Government and the Department of Health actively encouraged the shunting of costs from the NHS to local authorities, because it meant that local authorities, which were largely Labour-controlled, could be blamed for making a mess of functions that had previously been carried out quite successfully by the NHS.
The key issue in the contemporary policy debate is that, without any debate in the House or serious thought being given to the results, we now have two separate systems impacting on the care of elderly people and disabled people in the community; they often offer exactly the same services, but one—the local authority provision—is means-tested and the other is free. That is absolute nonsense. I would encourage my hon. Friend the Minister to look at some of the evidence taken in the Select Committee in recent weeks. We have asked every witness, including Department of Health officials, to define the boundaries between the NHS and local authority social services. So far, nobody has managed to do it, but that is what faces our constituents daily when they require community care in their own homes and they frequently have to do battle to determine which agency has responsibility.
The best example examined by the Committee in recent weeks is that of a person requiring a bath within the community—a bath within his or her own home. Is it a nursing bath or a care bath? That person wants a bath but, depending on whose argument is strongest, that bath might be a means-tested bath or a free bath. In Yorkshire, we take such matters seriously, because people do not like paying for things that they do not have to pay for. The serious point is that it is absolute nonsense that that is the policy consequence of the previous Government's 18 years of blurring boundaries and shunting the provision of care toward the private sector. We now do not know who is responsible for what at local level.
Last week, the hon. Member for Isle of Wight (Dr. Brand) offered a good suggestion which came the closest yet to defining the difference between a medical bath and a social bath. He says that it
"depends on whether you have medical oil in the bath or a little yellow duck."
That is a pretty good stab, given the nonsensical situation, and I should like to hear the Minister's thoughts on how he intends to unravel the consequences of 18 years of nonsense from the Conservative party.
There are several other areas I should like the Government to address and, knowing the Minister, I am sure that he will respond to these points. He will be

1231
familiar with them already, given that the social services White Paper is expected shortly. First, there is the question of resources. I sincerely welcome and congratulate my hon. Friend and his colleagues on what was announced in the Budget yesterday and what has been done since 1 May last year. In a sense, it makes my job as Chairman of the Select Committee on Health harder, because I would far rather have the sort of relationship with Ministers that the hon. Member for Macclesfield had with the Conservative Secretary of State and Ministers when he was Chairman. The current Labour team are doing an excellent job in terms of the resources that they have won for the NHS.
I qualify that welcome by making the point that, when we consider community care, we are not dealing only with the NHS, but with the ability of local authorities to provide care. In my area, social services are making cuts of about £5 million this year in addition to £6 million last year and that is happening across the country. My hon. Friend the Minister knows that and what its impact will be on people's ability to obtain services within their own home. Therefore, it is not only my hon. Friend, but his colleagues in other Departments and the Treasury, who ought to be aware of the implications of the current spending restrictions. The needs of carers in particular are directly affected by problems at local authority level.
I make a plea that we should look radically at introducing different models of care. We should do what other countries have done and have a fundamental shift away from the emphasis on institutional care for elderly people. I do not want to end up in wall-to-wall geriatrica in my old age; there should be something different to look forward to, even if I need care. There are models on offer that are preferable to that sort of approach to care of the elderly. For example, Denmark made the provision of care homes illegal in the 1980s because putting people into institutional care is deemed a diminution of human rights. Following the point made by the hon. Member for Sutton and Cheam, let us look at housing models of care provision, because that is surely the way forward, even for people who need a substantial amount of nursing care.
I hope that the long-term care commission will be looking at that issue, but I ask my hon. Friend the Minister to study the possibility of introducing sheltered and very sheltered housing models where, instead of people paying huge care costs from their capital, which uses it up, they can invest their capital in assisting with care provision, so that, when they move on or die, there is some capital left apart from that which has been used to benefit themselves and others during their time in those sheltered establishments.
Finally, there is the question of boundaries. Without pre-empting the Select Committee's conclusions on the boundaries between the NHS and social services, I have to say that the current arrangements are unsustainable, wasteful and extremely expensive. When I look at my local social services departments and community health trust, I, as the local Member of Parliament and as someone who worked in social services for donkey's years, cannot tell my constituents the differences between what they do because they cover the same functions. I cannot understand the reason for having two separate bureaucracies doing the same job, and I hope that the Minister will look radically at those issues and challenges.
1232
I urge hon. Members to view the care of elderly people in policy terms through our own vision of what we would like to be available for ourselves when we reach the stage of requiring care. I would not want for myself what is currently on offer, so I hope that, over the next 10, 20 or 30 years, my hon. Friend the Minister and his colleagues and successors can achieve a radical transformation that humanises the care of elderly people along the lines that I and the hon. Member for Sutton and Cheam have suggested.
11.39 am
Dr. Evan Harris: I also congratulate my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) on securing this debate. I am pleased to see that the Minister is in his place. I think that everyone recognises that he has made an energetic start to his portfolio responsibilities. He has visited my constituency and the city of Oxford on several occasions, and was well received. The fact that we may cross swords on policy and funding matters from time to time does not mean that I doubt his ability or the high levels of energy that he expends. I also commend the hon. Member for Wakefield (Mr. Hinchliffe), the Chairman of the Health Committee. We hope that he will do such a good job as Chairman that the Government may indeed be tempted to try to move him on.
I am particularly pleased to speak in this debate as I have tried, without success, to secure my own Adjournment debates on social services in my local authority of Oxfordshire and on community hospitals. Oxfordshire county council received a very bad settlement in terms of grant, standard spending assessment for social services and capping limit. Oxfordshire also faces the closure of community hospitals, including the loss of beds at Abingdon community hospital in my constituency. My cup runneth over today, as I have just heard about cuts of up to £12 million to Oxford university funding. That falls outside the scope of this debate, but it seems to me that such bad news stories happen all at once and usually in groups of three.
I shall examine the funding problems of Oxfordshire county council as it is a good model for the conflict and tension between the provision of satisfactory local authority social services care for the elderly and its impact on the health service, particularly in the form of pressure on acute beds. All authorities have stories to tell about the false economies that underfunding of local-authority-provided social services care can cause in the acute sector.
The cuts facing Oxfordshire county council in social services alone amount to £5.55 million—or 7 per cent—this year. Those cuts will effectively mean reduced services in family centres, which support families with young children. They are important preventive measures that help to avoid children being at risk. There will also be cuts to respite centres that offer the carers of multiply disabled children a much-needed break, allowing them to spend time with their other children or simply to have time to themselves.
Cuts in the number of social workers for children and families and for disabled or elderly people across the county will mean delays in assessment, and therefore delays in finding placements and delivering care. Elderly people in residential homes in Oxfordshire will no longer

1233
be entitled to a reduced charge for their first four weeks. The charge for transport, meals and service for those attending day centres will increase to a flat rate of £5. Charges for relief for carers will be increased—Oxfordshire is no longer able to offer even a few hours relief per month free of charge.
Charges are being introduced for day care for clients with learning disabilities who live at home. The mental health budget, which is already small and overstretched—as it is in many parts of the country, in our shires and inner cities alike—will be cut by 9 per cent. That will mean more cuts in day care for a group of people who desperately need somewhere to go during the day. The food subsidy for meals on wheels will be discontinued, leading to a price increase from £1.40 to £2.10 per meal. Charges for domiciliary laundry will also be introduced.
I shall deal in a moment with the financial causes of what has happened, but we must ask whether the changes are the result of a political decision or whether the county council was forced by circumstances to introduce them. I can inform the House that the cuts were agreed by the Liberal Democrat and Labour groups on the council. The Conservative group disagreed because it wanted to take yet another £1 million from social services for political reasons.
We must recognise—as the Liberal Democrat and Labour groups did—that those people who use social services are less well able to organise campaigns of the kind that are launched in an attempt to save local libraries or museums or to prevent teacher sackings. There is great concern that the most vulnerable people in areas such as Oxfordshire will have to pay the price of the Government's adoption of flawed and insufficient Conservative spending plans for this year and next.
The funding increase for the county council, at 3.1 per cent., is inadequate even to cover inflation and added duties. It takes no account of the demographic changes that have resulted in rising cost pressures. The number of elderly people in the area is increasing. In discussions such as these, we often regret the fact that there are more elderly people needing domiciliary care. However, we should welcome that fact: it is a sign that the health service is succeeding, that public health measures are improving, and that people are living longer in retirement. We hope that people's retirement will be happy, but it will not be if they fail to share in the country's increased wealth and the growth in the economy. The welfare state and social services support should grow accordingly: people should not suffer cuts to services affecting them and their loved ones who may be ill.
The increase in funding for Oxfordshire—I know that this applies to many other county councils—was not sufficient to cover the increase in the number of children, particularly children with special needs, in the area. Cutting children's services and support for at-risk children will have repercussions in the form of disruption in class, for example. The county simply will not be able to achieve the education results that the Government and the Liberal Democrats wish to see in our schools.
Unfortunately, despite every councillor being elected on a platform of not cutting services and raising local taxes, it was not possible for the county council to increase resources and thus avoid cutting social services
1234
for local council tax payers. I have received many letters criticising the fact that the county council is still capped and so must cut social services support and care in the community. I have received as many letters from people who are distressed that, under the new Government, cuts in social services provision are the same as before—if not worse.
In many care areas, it is not good enough for the Government to have said, "Things can only get better." It is not right to deprive democratically elected local authorities—which in Oxfordshire received a 100 per cent. mandate on the day of the general election for this—of the ability to raise the funds necessary to preserve existing services when the Labour party stood on a platform of seeking to protect and enhance such services.
Mr. Nicholas Winterton: Does the hon. Gentleman believe, from a professional point of view, that there was an adequate transfer of resources from the national health service to social services? The hon. Member for Wakefield (Mr. Hinchliffe) made the point that social services had to assume huge additional responsibilities for functions that were previously provided by the NHS. Does the hon. Gentleman believe that there was an adequate transfer of resources to enable local authority social services departments to undertake those important responsibilities?
Dr. Harris: No, I do not think so. We are now entering the sixth year of the special transitional grant. However, the scale of funding is not enough. I had intended to address that point later, but I shall tackle it now, as the hon. Member for Macclesfield (Mr. Winterton) has helpfully introduced it.
It is not acceptable for the Secretary of State, in an article in The Daily Telegraph, or for anyone else, to claim that community care has failed when many hon. Members feel that it has never been tried—because it was never funded adequately by the previous Government. It was unfair to expect social services to cope, particularly with elderly people leaving NHS care and long-stay hospitals and the mentally ill leaving asylums.
Mr. Hinchliffe: It is important to clarify the Secretary of State's comments in the article, which I read. He was talking specifically about the perception, in relation to mental health, that there were people within the community who were a danger to themselves and to others. The Secretary of State said not that community care had failed but that serious questions remained as to whether, in order to secure the safety, health and well-being of those people and the community, they should have the option of acute psychiatric provision locally.
Dr. Harris: I am grateful to the hon. Gentleman for explaining the Secretary of State's comments. The Department of Health also issued clarification following the publication of the interview, explaining that the emphasis should be on those few tragic cases—which I fear may always occur—involving assaults and occasionally murders in the community.
Since my election, a community care patient has murdered a family in Abingdon in my constituency by burning down a house. There was also the well-known

1235
Newby case in Oxford. I have read the reports at length. Although they raise questions about adequate communication between the multiple agencies involved—particularly with regard to housing in the Abingdon case—there was a clear problem of underfunding, including in the acute sector. People are pushed out of care extremely quickly in order to free up beds because occupancy levels in the acute sector are well over 100 per cent. in many mental health wards. Hon. Members will recognise that figure.
There are also inadequate resources in the community to keep an eye on people and give them support. The Government will soon have to decide whether community enforcement orders, under which people are supervised and forced to take medication, are the only way out of the problem. I express no view on that, as this is not the appropriate time at which to do so. But no one wants to go back to the days of asylums. Where the changes have worked and have been adequately funded, they have been welcomed.
In the case of Oxfordshire and many other counties, the root cause of the funding pressures facing the county council this year and next has been an inadequate settlement and an inadequate standard spending assessment for social services, which increased nationally by only £91 million, even before inflation and demographic changes were taken into account.
The blame for that does not lie entirely with the Government, because they were wedded—wrongly, the Liberal Democrats believe—to Conservative spending plans, which were a catastrophe for social services. The Government suggested that things would get better after the election, but in Oxfordshire we shall have to wait until the year after next—if then—for things to start being turned round.
That, sadly, will be too late for many people, who will suffer now. When we speak about cuts in care for elderly and vulnerable people, we ought to remember that those people may well die, and will certainly have a reduced quality of life, if they do not get adequate care.
It is difficult for people in my constituency to understand why, in order to fund the commitment not to increase taxes on the wealthy, the most vulnerable—the users of social services—must pay. The two pledges—to improve services and save the NHS, and not to raise taxes—are incompatible. It cannot be done.
I shall deal now with the interaction between care in the community and the health service. There are two problems. The first is the media's concentration on the acute sector in hospital care. Politicians of all parties may be to blame, as the best proxy that we have for measuring how the health service is performing are waiting list figures.
Those figures are flawed, because they do not take account of the time spent waiting for the initial out-patient appointment, the time taken for investigations and then the time taken to see a surgeon, perhaps, to get on the waiting list. They are also flawed because, for many operations that used to be offered, such as those on uncomplicated varicose veins, which used to have a long waiting list, the waiting time is now infinite because the operation is not available. The result is a fiddling of the figures, not necessarily deliberately, by health services that are reducing the number of operations offered.
1236
Waiting list figures are nevertheless a useful proxy for measuring the health service. Because of that, we tend to concentrate on them—certainly, the media do—at the expense of everything else. Extra effort is put into reducing waiting lists—I understand that there is to be a statement this afternoon expanding on that, as we heard on the radio this morning—but we must ask whether additional resources might be better spent in community care, perhaps to free up beds in the acute sector so that waiting lists can be tackled.
The second problem is the concentration on crisis management in the health service. Money announced in July last year is allocated in November last year to be spent by April this year on avoiding a winter crisis. As any business person or any good public service budget manager knows, money can be spent far more efficiently and to far greater good if notice is given that it is coming and the time constraints are not so tight.
However, we recognise that many innovative schemes were produced by the winter pressures money. Anglia and Oxford health region got a good share of that funding and, by working with the social services departments of all the local authorities in the area, put in place some excellent schemes, such as the hospital at home, step-down care and increased support to stop people being admitted in the first place.
The question is what will happen next winter. Will that funding be continued? I should be grateful if the Minister could tell us whether it will be recurrent or whether there will be a similar exercise next winter, which will not be as efficient as allowing social services some extra funding to pick up the costs of people who have been moved into their budgets in the residential care sector with the winter pressures money.
The pressure on emergency admissions is no longer just a winter phenomenon; it exists all year round, because social services are failing to cope all year round. When we do not offer support for carers, there is an increase in emergency admissions. In hospital parlance those are called social admissions. That is a poor term. In my experience as a hospital doctor, those are people who desperately need to be seen and desperately need treatment, but they are there because they cannot cope with their home circumstances.
Delayed discharge is another aspect of the problem. The figures show increases in delayed discharges, despite the extra money for winter crises.
Liberal Democrats propose a lifting of the cap in local authorities to allow local people democratically to elect authorities to spend money on social services and care for the most vulnerable. We also propose that some health service money should be spent directly on community care, to relieve the pressure on the health service and improve community care.
In a spirit of co-operation, I offer the Minister some ideas about how the welcome extra money allocated in the Budget might be devoted to community care, not only to improve services there, but to save money and create space in the acute sector by tackling the waiting list problems that were inherited from the previous Conservative Government and exacerbated by the adoption of that party's spending plans.

1237
Unlike other Opposition parties, the Liberal Democrats always present an alternative Budget. Over and above the sum that the Government have allocated this year, we allocated additional money from cyclical surpluses to the NHS, so that an extra £250 million would be spent on three areas.
The money should be used to save community hospitals that are currently under threat in Oxfordshire, Essex, Cornwall and other parts of the country, as the Minister knows from previous Adjournment debates. Those community hospitals can work with social services to provide good community care through the three Rs of community care: recuperation, rehabilitation and respite care.
People who have had their operation can be moved out of busy, noisy, intensively nursed acute wards into more appropriate local care near their families to recuperate before going home. If they need rehabilitation, they can receive physiotherapy or occupational therapy and their houses can be modified while they are in a cheaper bed in a community hospital. Respite care can be given for one in four, six or 10 weeks, according to need, to enable carers to cope more easily and to reduce emergency admissions.
We want more money to be allocated to community care for mental health to take the pressure off the acute sector in mental health, and we want more care for carers, perhaps through specific targeted funding and by implementing the recommendations for the assessment of carers' needs, as laid down in the Carers (Recognition and Services) Act 1995, which has never been properly funded.
By giving more resources to social services departments in local authorities and to the NHS for spending in the community to release money in the acute sector, we can give the elderly and vulnerable people in Oxfordshire and elsewhere the care that they deserve.
11.57 am
Dr. Julian Lewis: As a new Member, it has been a privilege for me to hear for the first time the hon. Member for Wakefield (Mr. Hinchliffe) speaking on a subject on which he has a fine reputation in all parts of the House. If I understood his argument correctly, he said that we should move more in the direction of community care in the long-term treatment of the elderly, much as we have already done in the long-term treatment of the mentally ill.
As some hon. Members present will know, I was fortunate enough to introduce a Mental Health (Amendment) Bill when I was drawn second in the private Member's Bill ballot. I shall refer briefly to three categories of people who are affected by community care for the mentally ill: people who may kill; people who need what might be termed "a periodic MOT"; and people who need a place of refuge.
On his thoughtful speech, the hon. Member for Oxford, West and Abingdon (Dr. Harris) was a little too glib when he attributed to shortage of resources the problem of homicides committed by people released from psychiatric institutions into care in the community. I am sure that he does not mean that generally, because it is certainly not true.
1238
It is a little strange that people are prepared to take chances with the lives of citizens by releasing people into the community, knowing that there is a significant risk that they may harm others—often members of their own families. By contrast, if one applies the same argument to the capital punishment debate, it is often said that one must not risk accidentally executing one innocent person, even if it means that 99 guilty people escape the gallows.
That shows a slightly different sense of values. There seems to be a complacency about taking the risk of releasing potentially lethal people into the community, but none about taking the risk of accidentally executing someone who is innocent. I am sure that the families of those who have been killed by people who were wrongly released into the community would have a lot more to say on that subject.
One must not throw the baby out with the bath water as one moves in the direction of community care for people who need a periodic MOT. There are people who suffer acute suicidal depression which cannot be coped with through care in the community alone.
There used to be a system which I understand—I am not an expert in this field—was known as "the revolving door." The idea was that people would be encouraged to live their lives normally in the community as far as possible; but, when they felt a crisis coming on, there would be an institutional facility available for them—to give them an MOT, to give them a service, to get them back on track. Then, perhaps, they would not require any more in-patient treatment for another three or four years. That process could continue steadily for the rest of their lives.
I am concerned that the shift towards community care and away from institutional treatment for people who are mentally ill, creditable though it is in general, has deprived such people of the facilities they need from time to time to keep themselves on the straight and narrow.
I refer now to the people about whom I was concerned when I introduced my private Member's Bill, which, sadly, was talked out in five and a half hours of precious parliamentary time, perhaps to little avail, on 12 December last year—people who need a place of refuge. It is often said that there are insufficient beds for people who suffer acute psychiatric breakdowns. That is not necessarily the case.
The problem is that, as a result of the mass closure of institutions, such beds as remain are not sufficiently compartmentalised between different people with different mental illnesses. Even where a bed is available in a psychiatric unit for someone who is suffering from an acute psychiatric, potentially suicidal, breakdown, the GP, or other medical officer in charge, will not want to recommend that that person takes it if he or she will thus be placed in an environment with seriously disturbed people, which could only harm rather than help his or her condition.
I hope that the Government will think again about blocking the Bill that has been reintroduced in another place by Lord Rowallan. I am pleased to say that it has been given the Second Reading there that it was denied in this House. I hope that the Government will think ahead a bit more about creating a strategy whereby those who, from time to time, need admission to a psychiatric unit can have a bed there to enhance their condition, not to make it worse.
12.3 pm
Mr. Patrick Nicholls: I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on his choice of subject for debate. He and I might have slight differences about solutions in given circumstances, but nobody could criticise him for having introduced the debate or the manner in which he did so.
The debate so far has been characterised by an understanding—I hope that it will continue in the time remaining—that, although we may disagree from time to time on how to achieve a given end, it is, as the hon. Member for Wakefield (Mr. Hinchliffe) said, ultimately about ensuring that our elderly people receive the care that we expect and hope for. That aspiration is shared by hon. Members on both sides of the House.
When I was preparing for the debate, I recalled having seen many years ago a rather dramatic advertising poster in the maternity unit of a hospital in Exeter. It struck me as rather apposite. It said, "The first seven days are the most dangerous in your life", and some wag had written underneath, "And the last seven are not devoid of hazard." In a sense, that is where I am coming from.
The hon. Gentleman made it clear that, although this is a wide-ranging debate, he wanted to talk about care of the elderly. I shall say a word or two about that as well. We are, after all, living in a greying population. The figures are dramatic. Between 1951 and 1996, the proportion of the population aged 65 or over increased by 66 per cent. The number who are 75 and over has increased by a dramatic 136 per cent.
At present, there are some 10 million pensioners in the UK. Eighteen per cent. of the general population are over pensionable age. Two thirds of those who are over 75 are women and more than three quarters of them are aged 85 and more. In 1993, a man of 60 could expect to live for another 17.8 years and, inevitably, a woman 21.9 years. Old people account for some £20 billion of spending in health and social services every year. Nobody need be in any doubt that we have a greying population, which imposes obligations and concerns on us that were not foreseeable in 1950.
I was particularly pleased to hear the hon. Member for Oxford, West and Abingdon (Dr. Harris) pinch one of my lines. One often hears about this, and it is often presented as a problem, but it is not. Not so long ago—certainly in our grandparents' generation—if someone was 50, their time was virtually up. These days that is not the case. If it were, several hon. Members in the House at the moment would feel more than nervous. It is good news that people are living so long. We are in the business of trying to ensure that they live for as long as possible and that they have a good quality of life for as long as possible—one that we would enjoy.
What people want when they consider care in their old age is affordable, quality health care. They do not want their hard-earned savings, for which they may have worked all their lives, to be gobbled up in their last two or three years. After a life in which they may feel that they have achieved some modest material success, they do not want to have nothing to leave to their children. There cannot be an hon. Member who has not had experience of difficult cases about where the money is going. Sometimes the concern is felt every bit as much by those who will not be able to leave something as it is
1240
by those who think that it is not right that they will not inherit. Those are the two principal considerations that must be dealt with.
To some extent, community care for the elderly has grown like Topsy; we have not had a firm policy, it has just occurred. We have heard about the way in which community care has developed and about the changing role of local authorities. The Government are to be complimented—I say this quite straightforwardly—on having set up in December the royal commission to examine the short and long-term options for sustainable funding for long-term care for elderly people in the UK, both in their own homes and in other settings, and within 12 months to recommend how and in what circumstances the cost of care should be apportioned between public funds and individuals. That is a succinct statement of what the commission will examine.
The commission has yet to report, so it is early days, but has the Minister had any preliminary thoughts on the matter? He shakes his head slightly, but he must have had, because he has announced a number of other initiatives, for which I commend him. I hope that he will say something about the composition of the commission, under Sir Stewart Sutherland, which represents a roll call of the good and the great. The Minister will know that certain groups, such as care providers, charities and lobbying groups, are anxious because they are not represented on the commission.
Private sector providers of residential and nursing home care are worried that their voice may not be heard in the commission. Barry Hartley, chairman of the National Care Homes Association, said:
"We are extremely disappointed that there is no representation from the private care sector on the Commission or of care practitioners. The private care sector has a wide ranging knowledge of how the current system works and it also has experience and expertise of the funding of long term care which may well not be available elsewhere."
We must take that on board, because it addresses head on the worries of the hon. Member for Wakefield about trends under the previous Government.
I thought for a moment that he had not realised that the Conservative party was no longer in government. I share his confusion, because it takes a while for such things to sink in. I do not intend to attack the Minister yet, because he has not been in post for long enough, but he must say how he sees the future. I understand where the hon. Gentleman was coming from, but do not entirely agree with him. However, I agree with him on some issues.
We would all like to stay in our own homes and among our families for as long as possible in old age, but that will not be an option for everyone. The hon. Gentleman used the word dogma. We should not be dogmatic and say that local authorities should provide care because it is wrong for the private sector to make a profit from it. I do not have the slightest interest in who provides care; I want to ensure that the best care is provided.
Mr. Hinchliffe: The hon. Gentleman misunderstands my point, which is that privatisation of care has led to people taking a limited view of the models available. The private sector has shown a lack of imagination, which is not to say that all private care homes and nursing homes are bad. They offer extremely backward models, and I am

1241
surprised at the lack of exciting policy development, given that the sector is desperate for challenges such as I have proposed.
Mr. Nicholls: I am grateful for the hon. Gentleman's clarification, which shows that our views are not so far apart. I accept that people should stay in their own homes for as long as possible. Some people, wrongly but sincerely, feel uneasy about transferring community care from the local authority sector to the private sector.
Mr. Burstow: Does the hon. Gentleman think that the bias in the market is a problem? Community care in the home—domiciliary services—costs more than residential care. Surely there should be a level playing field.
Mr. Nicholls: It costs what it costs. Community care is not cheap, but people will demand it if it is the right option. The Government of the day are responsible for its delivery, or for explaining why it is not being provided. Some people think that private sector provision of residential accommodation is wrong.
My mother was a matron for Devon county council, so I have probably spent more time in part III residential accommodation than any hon. Member. Her last appointment was to a purpose-built state-of-the-art old-people's home. I lived there for a time and have no criticism of the standard of care provided. We could compare private sector and local government sector facilities, but it is quality of care that is important. There would be more money to go round if care could be provided more cheaply, and I would not object if it was increasingly provided by the private sector. How does the Minister view the development of private sector care?
Mr. Ivan Lewis: I seek clarification. We all agree that quality of care, not who provides it, is the most important issue. A number of local authority homes closed when the Conservative party was in government, not because they provided care that was not equal to that provided by private sector establishments, but because financial arrangements for community and residential care were deliberately skewed in favour of the private sector so as to stimulate that sector and to disadvantage the local authority sector. Does the hon. Gentleman accept that decisions should have been made on the basis of quality, not on the basis of ideology?
Mr. Nicholls: I would agree if I accepted the premise—but I do not. Once local authority care was properly priced, we could find out what it cost. There are exceptions, but my experience in Devon is that private sector residential care is less expensive than local authority care. Some people are more comfortable in traditional part III residential accommodation, but they must have a choice. I think that I am at one with Devon social services department on that.
I was impressed by the remarks of the hon. Member for Wakefield about people finding it increasingly difficult to understand whether they or the state is responsible for their care. The Minister will correct me if I am wrong, but I understand that the problem stems from the inception of the welfare state. Now, however, more people are more
1242
prosperous and are living for longer, so they are more likely to need care, but might lose their money by paying for it. Such people tell me and every other hon. Member, "I've paid my dues, I'm entitled to care."
The problem is that the national insurance system gives people the moral right to be looked after in their twilight years but does not provide the funds to pay for it. The Minister's petty brutalisms about not wanting lectures from Conservative Members are an engaging part of his speeches, but how will he deal with that problem?
A Labour Whip said to me the other day, "We are all Tories now." I am not sure whether that is entirely true. I am not referring to the hon. Member for Liverpool, Wavertree (Jane Kennedy). The aura of Toryism sits ill on a number of Labour Members but, ignoring his radical youth, it sits well on the Minister. I have invited the hon. Gentleman to visit my constituency and a hospital there. If he felt able to do so, he would see a number of things that might be relevant to today's debate and he would thoroughly enjoy that, but now we all want to hear—once we have heard the ritual petty brutalisms—how he sees the future.
12.19 pm
The Parliamentary Under-Secretary of State for Health (Mr. Paul Boateng): I have never been accused of delivering brutalisms that are petty, and I do not intend to begin today.
The less said about the speech of the hon. Member for Teignbridge (Mr. Nicholls) the better, but I certainly look forward to visiting his constituency. I shall arrange for a suitably equipped person to ride shotgun as I enter the heartlands of true Toryism.
The hon. Gentleman mentioned the lady Government Whip who had said, "We are all Tories now." I am assured by my hon. Friend the Member for Liverpool, Wavertree (Jane Kennedy)—who is sitting next to me, but who must of course be silent during the debate—that it was not her. I am asked to make that clear, and I do so, being one always to take the advice of my Whips—particularly that of my hon. Friend.
This has been a good debate. In many ways, it has been characteristic of what is meant to happen on Wednesday mornings. On Wednesday mornings, hard-working and committed Back Benchers are supposed to talk about the subjects that they know best, rooting their speeches in experience gained from their constituencies and their lives. All Back Benchers who spoke today did that, and the House owes them—especially the hon. Member for Sutton and Cheam (Mr. Burstow)—a debt of gratitude. The hon. Gentleman brought to the debate a depth of experience and commitment that was especially welcome.
I always look forward to the hon. Gentleman's many questions about incontinence and chiropody. Not only does considering those questions and reflecting on the answers—which I am required to do—pass the time during my journey between the House and my home; they highlight two critical aspects of continuing care, not least the care of the elderly. This Government are committed to opposing and combating social exclusion. In that context, issues relating to incontinence and chiropody are very important in practical terms. If there is no toenail-clipping service enabling an elderly person to go to the local newsagent, that person is being marginalised.

1243
The Government are concerned about the distinctions between a health bath and a social care bath. I know that those distinctions also concern my hon. Friend the Member for Wakefield (Mr. Hinchliffe), who performs his role as Chairman of the Health Committee in such a distinguished way. We have spent much time considering the matter, but it is not at the forefront of the mind of the person who is waiting for a bath and who wants his or her dignity to be protected. We must ensure that the interface between health and social care is more efficient. We are determined that the boundary should be managed properly and, later in the year, we shall produce a White Paper setting out our thinking.
Such boundaries will inevitably exist. That is the central aspect of reconfiguration: if, by the wave of a magic wand, we were to reconfigure health and social care tomorrow, a boundary somewhere would still have to be negotiated. We want to ensure that we manage the boundary better than we have in the past: that is why it is so important that the White Paper holds out the prospect of pooled budgets. When health and social care can be managed better by that means, it is one way forward—but only one way; of itself, it does not answer all the questions.
The effective pooling of budgets will be helpful and I know that many local authorities and people in the health care sector look forward to the time when they will be able to underpin their joint planning in that way.
Mr. Burstow: The Minister may be about to deal with the issue of conterminosity between GP consortiums and social services departments. What mechanisms will he introduce to provide incentives for coterminosity?
Mr. Boateng: We have made clear in the White Paper that we expect social care boundaries to be taken into account in the formation of primary care groupings, and we have no doubt that they will be. It should be recognised, however, that some of the good practice highlighted by the hon. Gentleman and others in any event involves social workers—whether in the statutory or the voluntary sector—working ever more closely with the primary care team.
1244
I was interested by what my hon. Friend the Member for Wakefield—backed up by the hon. Members for Sutton and Cheam and for Oxford, West and Abingdon (Dr. Harris)—said about the capacity of health visitors and GPs working in the primary care team to gain access to meals on wheels and other aspects of social care. We want that to be made easier. We need a structure that is patient-focused, empowering people to maintain their independence and giving them choice. We should be keen to provide better care and better outcomes for individuals. We need to be better at measuring what we do in terms of outcomes and the value that we add to the lives of vulnerable people.
In the few minutes that remain, I want to make a couple of points which, I fear, cannot do justice to the breadth and quality of the debate. We have made new resources available. For health alone, in addition to the £500 million announced in yesterday's Budget statement, £1.2 billion has been provided, including an additional £0.3 billion to deal with winter pressures. The hon. Member for Oxford, West and Abingdon should note that Oxford has done particularly well out of that. The good news is that much of the money that has been channelled through the NHS has gone to social services departments, which have used it to build on existing good practice. We are talking about establishing better systems for rehabilitation and recuperation and taking more care with multi-disciplinary assessments in terms of both admission and discharge.
I have mentioned the care of the elderly. This morning I attended a seminar, or conference, organised by the Alzheimers Disease Society. We examined the way in which we could, through joint working, better meet the needs of that particularly vulnerable group. I pay tribute to the ADS for its pioneering work in that sector. There is new money and local authorities and health authorities are learning to use it better, but we cannot be complacent—we must be constantly vigilant.
On mental health, of course, much needs to be done. My right hon. Friend the Secretary of State for Health has made it clear that he regards that as a priority. His remarks on care in the community and its failures were well received.
Mr. Deputy Speaker (Mr. Michael Lord): Order. We must now move on to the next debate.

Employment Agencies
12.30pm
Mr. Phil Hope: Thank you, Mr. Deputy Speaker, for giving me the opportunity to initiate this debate. I raised the problem of employment agencies in my constituency in my maiden speech some nine months ago, and it seems only fitting that we should debate the subject again after the excellent Budget of my right hon. Friend the Chancellor of the Exchequer.
I thank Corby borough council, local employers and schools in the constituency for their work to tackle the problem. I am keen to use this opportunity to describe the problems we face in Corby and to make some suggestions to the Minister of State of ways in which to tackle the issue nationally.
I agree with the words that the Minister spoke in Manchester earlier this year to the Institute of Personnel and Development, when he stated that the Government's intention was to promote skilled, adaptable and motivated employees. He said that the Government's concept of flexibility was qualitatively different from that of the previous Government. That meant that this Government believed that the work force should be adequately trained and continuously developed, and should receive guaranteed minimum standards, enjoy equality of opportunity, be fully involved in achieving business objectives and build their own feeling of job security in the process.
We in Corby share that view, and we are delighted that a review is taking place of employment issues and the employment status of agency workers. I hope that this debate will be an opportunity to contribute to the review that the Department is undertaking. However, the starting point is grim; we have a long way to go.
An employment agency supplies temporary workers to local companies. The Employment Agencies Act 1973 and the subsequent regulations govern their operation. However, working for an employment agency can be a nightmare.
A good example involves John, who was 16 when he worked for an agency. He used to do the twilight shift at a sandwich-making factory from 5 o'clock to 10 o'clock at night. He would go to school during the day and, at 5 o'clock, begin his shift. He would do that on Monday, Tuesday, Wednesday, Thursday and Friday—five nights a week. Not surprisingly, John did not do awfully well at school.
Jane and Sarah, two young women who are older than John, had an appalling introduction to the world of work when they left school. Over one 10-day period, the agency bus—which employment agencies use to pick up workers at 6 o'clock in the morning, for example—failed to pick them up for their assignment. During the same period, they were given a night shift for which they were totally unprepared; they were told simply to be there. One night, they were left to walk home from the factory because the agency bus did not turn up to pick them up. One evening, they had to work a 13-hour shift, which is simply unacceptable. They were promised compensation; that promise was broken.
Ann, a mature worker whose income was the only money going into the family, worked for four days on a five-day assignment, but could not work on the fifth day.
1246
Her contract said that she would be penalised for not turning up, and she was: by being paid only £1 an hour for each of the 35 hours that she had worked that week. Harsh penalty clauses directly affected her ability to feed her family. Frankly, the 1930s queue at the factory gate has been replaced by the 1990s queue for the agency bus.
House of Commons Library research estimates show that, nationally, there are some 10,000 agencies, covering every sort of employment. In 1995, it was estimated that some 880,000 people were placed in temporary jobs each day.
Mr. Andrew Reed: I particularly thank my hon. Friend for raising this debate today; 880,000 people is a significant number. Does he accept that there are examples of the problem in places such as Loughborough, where hotels that have not sold enough beds overnight send employees back home? Is that the sort of thing that he wants raised in the debate? Will that not ensure that we can raise the profile of those people, who have genuine commitments in terms of bills, but who are turned away from work each day just because there is not enough work for them on that particular day?
Mr. Hope: I thank my hon. Friend for that intervention. That is exactly the sort of problem that exists not just in Corby, but elsewhere. I dare say that, as we speak, the 1995 figure is getting worse. It would not be surprising if today, in Corby and throughout the country, more than 1 million people are going to work on an agency contract and not on a proper employment contract.
A 1997 survey by the Northamptonshire chamber of commerce, training and enterprise in Corby showed that 50 per cent. of medium firms had used agency labour in the past three years, and that 81 per cent. of large organisations had used such labour.
We estimate that nearly 3,000 people a year in Corby get work through one of the 20 employment agencies in a rather small town. Agency working has become endemic; it has become the norm for young people starting work for the first time. It has almost become the way in to work for most people seeking jobs.
There are reasons for that. Agency working is high in Corby—and perhaps elsewhere in the country—because of the diversity of its local industry, much of which is in the food processing and manufacturing sector. Many businesses in that sector have fluctuating work force demands because of changing markets, seasonal demands and so on.
Companies stopped using overtime to deal with those fluctuations, and began to take agency staff on poorer contracts to cope with those changes. Therefore, the pressure has grown in Corby for a largely low-skilled labour force, who are available seven days a week, work a variety of hours and can be hired or fired at will. We have now reached saturation point. Most of the workers—manual or skilled—have signed up with agencies, which means that they have cornered the market, and companies cannot get the labour they require.
The point about agency working is how exploitative it is. In Corby, working for an agency usually means no sick pay, no holiday pay, and poverty wages of £2.50 an hour. One agency boasted in an advertisement that it was the

1247
highest-paying agency in the area, at £3.75 an hour. Of course, there is no job security—a job one week, and no job the next.
Mr. David Drew: I welcome the debate that my hon. Friend has secured. May I share with him a problem that I had in my constituency?
One of my major employers signed an agreement with an agency and, over time, it decided that the people the agency had employed were worthy of being taken on permanently, yet the agency said that it had an agreement with the company, and refused to release those workers. Thankfully, pressure was brought to bear, and the agency eventually agreed that it would end its contract with both the company and the people with the agency; but it shows the problems where people are prevented from taking permanent jobs because of an agency's actions.
Mr. Hope: My hon. Friend is absolutely right. I have experience of exactly the same problem. Agencies charge what is called an introduction fee. If the agency worker is offered a permanent contract in a company, the agency demands a fee of about £300 to release the individual from his or her contract to take up the permanent contract with the company. That is a straight exploitative practice that we should try to end.
There are other forms of abuse. As well as having no sick pay or holiday pay, earning poverty wages and enduring those blockages to getting a permanent job, workers sometimes have to pay for their own factory overalls, or for cleaning them—all out of the poverty wages that they receive.
We also see confusion over responsibility for health and safety checks. Agencies are supposed to screen workers before placing them with food manufacturers or processors. However, the agencies' quality checks are not always as they should be, which can put at risk not only the agency worker but the consumer of the product that the company sells.
Bad practice, of which I have mentioned some examples, is rife, yet few agencies have been prosecuted, and even fewer closed. The regulatory framework of the 1973 Act is so minimalist that practically anything goes.
It is not only individuals who are affected; the impact on the local economy is profound. Agency work has created a culture which allows people to drift, in which work is not secure or well paid, and which stores up problems for the future. In Corby we are developing a low-wage low-skill economy; we even see people's skills deteriorating rather than improving as we would like them to.
That can lead to a downward spiral. Other employers are not attracted to the area because of the effect that bad practice has on the labour market, and we also see the depression of other wage rates because agency wage rates are low. There can be a climate of fear; I cannot emphasise that fact too much. Ordinary workers in the factories are threatened that, if they do not abide by what the company says, their jobs will be given to agency staff—and agency staff will not complain, for fear of being victimised and never being offered an agency contract again.
Young people, in particular, are victims of those circumstances, and a damaging culture affecting them is growing up. Their working hours are clearly interfering
1248
with their school work and educational performance. Older students working twilight shifts, and night shifts at the weekends, are lowering their educational performance and expectations. I believe that there is evidence that agency working can also be an incentive to truanting for younger children. In one school in Corby, the head teacher conducted a survey that revealed that 79 per cent. of the sixth form, and 39 per cent. of year 11 students, were working for employment agencies.
Those figures are huge, and they represent a desperately poor introduction to the world of work, because there is no proper training and no career path. I have seen evidence, which I have been exposing to the local press—I have also forwarded examples to the Minister—of abuse of the regulations governing under-age working, night working and so on.
Companies in Corby have complained to me about young people having the wrong attitude to work, saying that they do not have the work ethic that young people used to have. However, some companies are breeding that poor work ethic by using agencies that give young people the experience of starting work with poor pay, no job security, no loyalty and no prospects.
Families are affected, too. Families now relying on agency work rather than permanent contracts have to survive on low wages, and they cannot plan for the future, because of job insecurity. They have no income to cover for periods of sickness or holidays, or for children being ill, or even to save up for their pensions. They have no rights over their working hours, and no opportunities to progress and develop. I have seen examples of men and women who have been working for agencies for years. They may gain skills, but they do not gain the qualifications that they need to progress.
Companies use agency labour because they believe that it saves them money, and the problem of having to recruit. However, in Corby the 1997 survey showed that at least half the companies that used employment agencies were dissatisfied with the quality of people they were getting. That is not surprising. The over-reliance by companies on employment agency labour means that business efficiency suffers. The people they take on are, through no fault of their own, less reliable and less efficient. They also show less commitment—inevitably, because they are always being moved from one factory to another—and need greater investment if they are to progress.
Even more worrying is the impact on Government policy. The new deal for young people will be undermined if young people are excluded from the quality jobs and training on offer because they are taking up poor-quality agency assignments. Our "fairness at work" proposals will all be undermined if agency workers are excluded from the measures.
Our social exclusion strategy, too, will be undermined; wages will be low, insecurity will be high, and the general downward spiral of poor jobs, low skills and lack of personal development will get worse. That all reinforces an anti-learning culture that is the reverse of what we need to promote our social exclusion strategy.
What will be the role for employment agencies in future? At its best, the employment services sector has a significant contribution to make to businesses, by acting as a responsible partner offering a strategic contribution to human resource planning, and as a "best practice" employer of a flexible work force.

1249
However, a deregulated labour market that allows unscrupulous agency practices and businesses to flourish must be dealt with. We need action to control the cowboys who simply break the rules, as well as to deal with those who conform to the bare minimum standards. Crucially, the Government need to act to avoid the creation of a two-tier work force that would undermine the strategy for improving employment standards, and thus the nation's economic performance.
It is in the national interest that all parts of the work force have access to minimum standards of employment protection and benefits, and to training and development. Flexibility in business needs to be matched with responsibility.
I have some suggestions about the way forward, to which the Minister may consider responding. I believe that we need a comprehensive audit of what is happening in employment agencies. I have already given some figures, but the Department of Trade and Industry workplace industrial relations survey of 1997 will focus on people employed as the staff of an employment agency but not on the hundreds of thousands of people who are taken on on agency contracts.
There is an urgent need for a review of the scale and impact of employment agency working on families and communities, on the economy and on the implementation of wider Government initiatives. I ask the Government to consider undertaking that audit. We could use the skills and resources of the health and safety inspectorate, or perhaps of the local trading standards officers, who in Corby have been helpful in raising awareness of abuse. Perhaps we could use the Audit Commission. We have the resources, and we could do a comprehensive survey.
We should extend legal protection to agency workers. That should be a vital part of our strategy. I ask the Government to consider ways of applying the new legislation already planned, in such a way as to help agency workers. For example, the statutory minimum wage would, at a stroke, reduce much of the abuse of agency workers. The European directive on part-time workers' equal status, the working time directive, the young workers directive and the social chapter, taken together, could help to deal with the problems.
We are looking forward to seeing the fairness at work legislation on union recognition. There are examples of agencies such as Manpower, which is a national employment agency with a properly negotiated recognition agreement with the Transport and General Workers Union. Perhaps we could ensure that employment agencies are included within the ambit of the recommendations. We should certainly seek to outlaw zero-hours contracts.
Even that will not be enough. The current regulations under the 1973 Act, which is now 25 years old, specifically do not include terms or conditions of employment. In practice, anyone can walk in off the street, put a board up in a shop window and start an employment agency. Such cowboy agencies are giving the better agencies a bad name.
I believe that it is in the interests of the good agencies to have a proper system of licensing, standards and regulation. I ask the Government to consider developing
1250
new standards of operating guidelines to regulate the industry, drawn up in consultation with all the relevant organisations.
Let us see some operating guidelines that cover wages, statutory sick pay, holiday pay, guaranteed minimum hours, proper job descriptions, parental leave and union recognition, as well as outlawing harsh penalty clauses and introduction fees, and making training an essential part of an agency contract. They should also provide for reference checks to ensure that young people are not working under age, and that, if young workers are at school, the school is fully informed about the work they are asked to do.
We need to take forward a variety of strategies. I should like local authorities to follow the example of Corby borough council, which is leading the way locally in drawing up fair employment charters in collaboration with local businesses and employment agencies. Perhaps local authority trading standards officers could be given the function of monitoring and enforcing the law and the regulations, and of promoting good practice.
Could the Government encourage businesses to recruit young people as permanent staff through the modern apprenticeship system, rather than as agency workers? Perhaps we could encourage more businesses to make their production plans more effective, so that firms can have a trained, flexible work force committed to one company. We could also ask the Department for Education and Employment to publish guidelines for schools to combat the effects of agency working, and to promote a proper balance of work and study for students.
It is 25 years since the law governing employment agencies was created, and now we need new and modern employment laws for a new and modern Britain.
12.48 pm
The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): I am grateful to my hon. Friend the Member for Corby (Mr. Hope) and to other hon. Members for raising the issue of employment agencies in the labour market and specific related concerns, both in their own constituencies and wider afield. In the time available, I shall try to deal with most of the points raised by my hon. Friend the Member for Corby. I undertake to write to him on the matters that I do not deal with in this debate—in which he has given a powerful and sometimes moving description of the world of work for many people in Britain who work in agencies.
Agencies play an important role in a well-functioning and flexible labour market, but some operators give the industry a very bad name. I shall take the opportunity provided by this debate to say something about that matter.
In Committee on the National Minimum Wage Bill, I said that agency working can provide legitimate access to labour markets. In the best examples, it can provide flexibility for employers and employees in the arrangements they make with one another. I do not oppose agency working or its growth in the labour market, provided that it is not used to undermine employees' access to basic minimum standards.
As my hon. Friend the Member for Corby said, a variety of problems can be experienced by agency workers, including low pay, lack of holiday entitlement,

1251
poor training and absence of sick pay. Some of the better agencies already offer workers those entitlements, but regrettably many do not. The Government have already embarked on our programme to ensure that all workers receive the minimum standards to which they are entitled. When I say "all workers", I include those who work for agencies.
My Department's employment agency helpline has received more than 10,000 public inquiries annually, about 10 per cent. of which are from workers who have experienced problems so serious that a formal investigation by my Department's inspectorate has been necessary. One third of the cases involved a failure, or an apparent failure, to pay workers correctly or on time. A further third of complaints investigated were either of a general nature, or involved issues related to the written terms of a contract or the lack of a contract.
In recent years, some agencies—such as ABC Contracting Services—have had a practice of putting workers on penalty-pay contracts, in which those who become sick or absent for other reasons are paid as little as £1 per hour for work they have already done. That is not an acceptable practice, or the type of behaviour that gives industry a good reputation. Such practices damage or destroy the industry's reputation.
Standards of a few agencies are unacceptably poor. Last year, for example, a complaint investigated by myself involved a worker who had been underpaid in the constituency of my hon. Friend the Member for Corby. Despite assurances that the matter would be corrected, the agency had to be approached by my Department several times before it eventually paid the worker the money that he was owed.
Such poor standards are simply unacceptable. My Department is determined to enforce the provisions of the Employment Agencies Act 1973 in agency standards, and we shall regularly bring prosecutions in magistrates courts to do so.
Two cases that were heard earlier this month included one in which the agent was both fined and ordered to pay a worker unpaid earnings, with interest, totalling more than £3,700. Another case heard this month involved a company illegally charging workers fees for work-finding services. A fine of £5,000 was imposed in that case for only two offences. Current prosecution levels are greater than at any time since the legislation came into force in 1976.
My Department can also apply for orders prohibiting—for up to 10 years—unsuitable persons from running agencies. The first six such applications were obtained during the latter part of 1997, and ranged from periods of three years to the 10-year maximum. Another seven such cases are currently before industrial tribunals. I can announce today that several more cases are in the pipeline.
In addition to investigating public complaints, my Department conducts proactive checks on specific concerns. We make periodic unannounced enforcement checks—sometimes targeted on agencies in specific towns—of agencies' compliance with the legislation. In Corby, on 9 December 1997, 20 such agencies were visited by a team of six of my Department's inspectors. Some of the agencies were found not to be complying properly with the regulations, and have been instructed to take corrective action.
1252
I make it quite clear to the House that the Government will not tolerate the type of worker abuse uncovered in such cases. Most reputable operators and trade associations, such as the Federation of Recruitment and Employment Services and the Agents Association, welcome our tough approach.
Other measures—such as introduction of the working time directive, which will be implemented by 1 October 1998—will ensure that agency workers receive three weeks paid annual leave. Agency workers will also, of course, be covered by the national minimum wage. Young workers, and agencies, will also be covered by the young workers directive.
Much of the regulatory framework applying to the industry is now 20 years old. Since coming to office, we have intended to consult on updating that framework. More resources are now being applied to the matter, and we hope shortly to publish a consultation document. I am sure that the views expressed in this debate will be considered in that consultation process.
The employment status of some groups of workers is another specific concern. Some employers have attempted deliberately to make employment status unclear, to avoid employment or other legislation. For some months, my officials have been reviewing employment status issues involving various groups of workers whose position is less than clear, including agency workers. The review is almost complete, and we shall shortly consider what action to take on the issue.
The practice of some employers to contrive in creating a bogus self-employment status—so that workers are denied their rights—cannot persist. Confusion in employment status is not only unhelpful to workers, but, equally important, costly for British business. Good employment practices—in which employers invest in training and education, and in skilling, upskilling and re-skilling—should not be undermined by poor employment practices in the workplace, in the labour market or in the provision of goods and services.
Employers require a level playing field in competition. However, as bad employers have been able to undermine the ability of good employers to compete by paying low wages, some employers have engaged also in contractual arrangements with their employees that are based not on improving service quality but on the downward spiral of poor pay, poor conditions and poor training, and on little or no investment in the work force.
Britain must have a high-value economy based not on the lowest common denominator of poor standards but on investment and the highest possible standards. Employers and employees have an obligation to each other. The employee has an obligation to the success of the enterprise in which they work, and the employer has a responsibility towards the employee. Partnership is the only way forward for successful businesses in the United Kingdom. The Government will respond to unfair competition that is based on unfair practices by providing minimum standards for all workers in the labour market.
The "Fairness at Work" White Paper will state our plans for achieving decent minimum standards at work while maintaining a flexible labour market and improving competitiveness. Central to the White Paper is the implementation of our manifesto commitment on union recognition. The White Paper's inclusion of other issues will be decided soon. We have considered many representations on those issues.

1253
Once the White Paper is published, I am sure that my hon. Friends will be assured that the Government—with industry and trade unions—are searching for a vastly different system of co-operation in the workplace, and want development not only of minimum standards of care and duty to employees but investment in the workplace that involves both employers and workers, to ensure the success of those companies.
Mr. Phil Sawford: I note and welcome my hon. Friend's statements that the regulations—which are now 20 years old—should be reviewed. The main issue is enforcement. My hon. Friend the Member for Corby (Mr. Hope) was correct in his constructive suggestions on how the regulations might be properly enforced. However, I think that a third aspect of the matter is dissemination of information—finding ways in which we can get the message explaining their rights to agency workers.
Will the Minister consider establishing an information programme, so that people working in agencies know where and to whom they can take their complaints if they feel that their rights are being breached? It is an essential part of the enforcement process.
Mr. McCartney: We already do that. That is why the hotline receives more than 10,000 inquiries a year from agency workers who want sound advice and assistance. In addition, on the implementation of the national minimum wage, significant resources will be made available to ensure that employers and employees know of their obligations and rights in respect of the legislation. Every time that we provide new minimum standards in the labour market, it will be our intention to provide information for employers and employees to ensure successful implementation of legislation. I thank my hon. Friend for his comments.
Any hon. Member who has evidence of potential or actual breaches of health and safety issues relating to young people working illegally in the labour market should let me know about it. The Health and Safety Executive will take immediate action to rectify the situation.
Mr. Deputy Speaker (Mr. Michael Lord): Order. We must move on to the next debate.

Street Furniture (Rural Areas)
1 pm
Mr. David Prior: I start by apologising for the rather prosaic title of this Adjournment debate on the Order Paper: the impact of street furniture on the rural environment. By street furniture, I mean the whole clutter of signs, railings, bollards, concrete kerbing, street lights, telecommunication masts, concrete traffic islands, raised roundabouts and the like, which have migrated remorselessly from urban areas, where they may be acceptable, to the rural environment, where they are not. As the Council for the Protection of Rural England has remarked,
"We must not abandon our rural landscape to death by a thousand cuts. It is not always the major attacks—the out-of-town shopping centres, the new dual carriageways—that do the most harm. The slow accretion of smaller alterations ultimately can be far more damaging."
I pay tribute to the Norfolk Society, the Norfolk branch of the CPRE, which first brought the issue to my attention in its excellent and graphic booklet, "Norfolk in Peril", which is subtitled "Halting the Destruction of our Countryside: Our Highways and Byways, an important resource that must be protected for present and future generations before it is too late". I also pay tribute to the Sharrington Society, which brought my attention to the construction of two monstrous new motorway-style signs, measuring 3.5 m wide and 3 m high on the A148 between Fakenham and Holt in my constituency. Sharrington now has six signs, all on the A148, and within a mile—all for a village of approximately 60 houses. The signs are clearly out of place in such a small village.
I am not wearing the mantle of Mrs. Snell of "The Archers". I am not against change for the sake of it; I am rather in favour of progress and of some enlightenment. The battle against street furniture and clutter is not one for prohibition. No one argues that road signs or adverts should be banned altogether. One argues for sensibility, tact, and above all, good design. Good design defies contempt, no matter how familiar it becomes. Bad design, overkill and bad siting, not standardisation alone, is the enemy. One has only to compare a new BT telephone box with an old one, look at a line of orange concrete sodium lighting poles or see a telecom mast on top of a hill to know exactly what I mean. We need designs for the countryside, not for urban environments. We must safeguard our local idiosyncrasies and character; that is what makes our rural areas special.
I shall draw an analogy with agricultural practices. Not many years ago, farmers were being encouraged to rip up hedges, fill in ponds, burn stubble, implement drainage schemes and plough marshes. Intensive production was the name of the game, and huge damage was done to our countryside and wildlife. Today, the pendulum has well and truly swung the other way. For that change we have much to thank my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) for.
We now have sites of special scientific interest and areas of outstanding natural beauty; places such as the Norfolk broads have national park status; new legislation protects hedgerows; we have environmentally sensitive areas and nitrate sensitive areas. The Royal Society for the Protection of Birds and the National

1255
Trust have more members than all political parties combined. Most importantly, a massive countryside lobby is articulating the views of country people. Yet our highways and byways, which snake through our countryside—some 5,900 miles in Norfolk alone—seem almost completely unaffected. I shall cite four examples to illustrate my point.
The first example is the roadside verge. Road widening has destroyed many wide grass verges. Roadside hedges and trees have often been killed through damage to root structure and consequent water deprivation. There is no longer room for walkers, horses or cyclists to get off the road. Ironically, the widening and straightening of roads leads to faster driving, which calls for hazard warnings, white lines and speed restriction signs. Above all, country lanes have become less aesthetically pleasing. Experience tells us that, when new roads are built and old roads "improved", traffic expands to fill them.
The second example is roadside signs. Too many road signs damage the natural beauty of rural areas. One only has to drive down the Al2 in Essex, with its flock of advertising boards, visit Stonehenge, with its melee of road signs, or enter any of the smaller rural towns in my constituency, with town name, speed limit and "please drive slowly" signs, and lights and road markings, to see the damage that has been done. Such over-signing distracts drivers or encourages drivers to ignore the signs. Our villages look increasingly urban. Am I the only one to feel cross at all the byroad signs strewn across the county? They are out of context in the local area and unnecessary.
As one of my constituents pointed out, such new monstrosities were designed
"for the benefit of a driver of a 7.5 tonne vehicle with 90 per cent. sight disability."
The painted aluminium street signs on metal posts are in stark contrast to the traditional white cast iron and wood finger signs. Some brown tourist signs have effectively become roadside billboards—a means of getting around the ban on roadside advertising.
In Salthouse, a tiny coastal village in north Norfolk through which the coast road runs, there is an array of 58 highway signs and dozens of bollards in the space of a few hundred yards. In Sheringham, a lovely seaside town, one is greeted by a raised black and white roundabout surmounted by metal signs. There are numerous examples of grass roundabouts being concreted over, ugly concrete and metal railings around village ponds, and concrete flood pans over fords. They represent in aggregate all the paraphernalia of a people who seem not to care about or be in sympathy with the countryside.
The third example is lighting. There are increasingly few places in England where one can look up into the night sky to see stars in all their transcendental beauty without being suffused by an unwelcome orange glow, which emanates not just from towns but from more and more small towns and villages. What is worse, except perhaps electricity pylons, than columns of tall concrete posts, topped by orange overhead lights? The wonders of a starlit night are as important to many as the finest daytime view.
1256
My fourth example, on which I shall be brief as I am straying from the subject of the debate, is telecommunication masts and electrical transformers. Those ubiquitous and ugly developments must be subject to full planning permission with more public consultation, and mast sharing must be enforced rigidly where possible. I therefore welcome Cellnet's attempt to improve the design of masts through its student design awards and the fact that it is keen to promote more mast sharing as well as notifying local authorities and holding public meetings before making planning applications. However, the order concerning general committed development needs to be revised to give local planning authorities the opportunity to consult properly on intrusive developments.
Mr. Lembit Öpik: Does the hon. Gentleman agree that light pollution, especially in the countryside, is becoming a serious problem, particularly for Britain's thriving amateur astronomy industry?
Mr. Prior: I entirely agree with the hon. Gentleman. I want to make a few specific recommendations to the Minister, one of which picks up the hon. Gentleman's point.
First, the Government should publish a best practice guide on the design and siting of street furniture. The emphasis should be on minimising clutter and maximising local distinctiveness. Perhaps county councils could run local competitions. I hope that the countryside traffic measures group sees that as an important part of its role.
Secondly, planning controls should be extended to include the impact, siting and design of lighting. Why cannot lighting be traditional in design, be at a lower height, shine downwards and be a natural white, rather than a suburban sodium orange? There should be a presumption against new lighting on all roads. Perhaps the Government and local authorities should consider designating and protecting special dark areas.
Thirdly, the traffic signs regulation orders governing the erection of road signs and their supporting poles and structures should be revised to restrict the number of signs and reduce their visual impact. The environmental impact should also be reduced. A code of best practice should be published to encourage highways authorities to review the environmental impact of their signing policies.
Fourthly, new ways should be sought to reduce traffic speeds with minimal visual intrusion. For example, local authorities should have the power to impose a uniform speed limit throughout a village—possibly as low as 20 mph. Small country lanes could also be designated as quiet lanes. That would be a new category of road, with a lower speed limit than the current national 60 mph on A and B roads.
Fifthly, traffic calming schemes should make use of existing or traditional rural features, such as hedges, walls and bends in the road. Road straightening and verge elimination should be a last resort. Perhaps new research could be commissioned on safety. It is becoming increasingly clear that over-signing and road straightening are not having the desired effect. Indeed, in some cases they are having the opposite effect, as repetition reduces impact.

1257
Sixthly, national planning guidance on outdoor advertising should be revised to reduce visual impact. The areas of special control should be widened and the current proposal for relaxing advertising restrictions on local authorities should be dropped.
The Department of the Environment acknowledged the problem of clutter in its discussion paper in 1994, launching its quality in town and country initiative. The Department accepted that the
"design and use of roads, the impact of parking, signs and roadside furniture all affect the quality of an area."
It went on:
"The Government wishes to encourage traffic management schemes which show great sensitivity to the impact of a street on the local environment.…Everyone has a part to play…and local people can help identify surplus signs that;can be safely removed."
Some county councils are starting to recognise the importance of the issue. In December 1997, Norfolk county council published a booklet called "Highway Corridor", which states:
"In a county with a strong, rural character as Norfolk, roads are also an integral part of our perception of, and access to, the countryside.…The design of signing, kerbs, lighting and surfacing and realignments will all affect the appearance of the surrounding rural countryside as does the maintenance of roadside boundaries, trees and verges."
I strongly welcome the nascent co-operation of the Norfolk Society and the county council in the design process. I congratulate the county council on reverting to finger signposts in several instances.
I also congratulate Derbyshire county council, which has published an environmental code of practice on highway signs with the aim of creating
"a safe and well-managed highway while causing the minimum visual damage to the environment."
That has to be a step in the right direction, but we cannot rely on a few forward-thinking councils. Central Government need to set an example and bring pressure to bear on councils and the Highways Agency.
I welcome the fact that the Minister of Transport understands that countryside clutter "provokes howls of displeasure", and is determined that traffic management schemes should meet environmental as well as transport objectives. However, we need action, not rhetoric, from the Government. We need a change in the psychology in the Department. The mindset of the Minister's officials must be changed. It is ludicrous that signs on the new Wymondham bypass in Norfolk have increased in size—and, of course, cost. I was depressed to note, as I drove along the A140 from Norwich to Ipswich last weekend, that bigger signs are in preparation.
The Department of the Environment, Transport and the Regions should urgently review the size and design of all road signs and establish a presumption in favour of small, well-designed signs. My right hon. Friend the Member for Suffolk, Coastal started that change. There is a worry that the process has stalled. I hope that the Minister will be able to reassure us today.
I can do not better than to end almost where I started, by quoting from "Norfolk in Peril":
"One of Norfolk's greatest treasures has always been its remarkable network of ancient lanes and roads with their often narrow and winding routes; beautiful hedgerows and wild flowers;
1258
unspoiled verges and sheltering trees; the old discreet white direction signs; grass verged walkways and lack of urban concrete kerbs; and their unlighted beauty in a wonderful countryscape.
These lanes and roads are the envy of the world. They are relatively unique as they follow, in some cases, very ancient rights of way. Their hedges and verges have been the home to a wonderful and varied wildlife. Their very narrowness and winding nature have served during this age of faster modes of transport to keep vehicles at low speeds. Thus have the wildlife thrived and these ancient ways have, in their own way, created a calming influence on those that might otherwise be tempted to speed through the countryside but simply cannot because of these beautiful in-built and meandering natural designs for traffic calming."
1.15 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): I congratulate the hon. Member for North Norfolk (Mr. Prior). He had no need to apologise for or regret what he regarded as the dullness of the title of his debate. The issue that he has raised is of great importance. I am sure that all hon. Members have seen and been appalled by the consequences of ad hoc, unco-ordinated developments and decisions in the countryside.
The Government value the countryside highly as an environment in which people live and work and as one of this country's great assets. We are fully committed to the integration of environmental and transport issues at national and international level and at local level, as is well demonstrated in the topic that we are debating today. This is why we now have a Secretary of State for the Environment, Transport and the Regions, why we are developing an integrated transport policy, and why policy responsibilities for land use and transport planning have been brought together.
We have placed particular emphasis on the development of an integrated approach to transport and land use planning, traffic management and streetscape design in town and country. We have said that consideration of rural issues will permeate all our thinking as our integrated transport policy is brought together. That is why, among other measures, we are giving £50 million a year to rural transport, which will enable a substantial expansion in subsidised bus services in rural areas.
The Government believe that most of the day-to-day decisions that impact on the quality of the rural landscape must be taken locally in consultation with those affected. However, those decisions should be taken in the context of coherent policies and against a background of good practice.
We are actively encouraging good design in the countryside that takes account of the special character of a local area. Revised planning policy guidance note 7 reinforces that emphasis on maintaining and enhancing local distinctiveness. It promotes countryside design summaries and village design statements. Produced with the co-operation of local communities, they can bring greater confidence and coherence to design in a local area, and reinforce a high quality of design—a point that is clearly of particular importance to the hon. Member for North Norfolk.
On a practical level, the Department is a member of, and is actively supporting, the Countryside Commission's countryside traffic measures group—as is Norfolk county council. The group, which was launched last July, aims to take forward, in partnership with local authorities,

1259
demonstration projects that will investigate the extent to which local traffic management and traffic calming schemes can be effective in meeting their traffic objectives, while being designed with sensitivity to the countryside environment in which they are set, as well as forming part of wider traffic and transport strategies for a rural area.
The village speed control project—in which the then Department of Transport collaborated with the Scottish Office, Welsh Office and County Surveyors Society—showed that gateway features are not effective in achieving sustained speed reductions unless accompanied by additional traffic calming measures within the village. This highlighted the tension between the objectives of achieving reductions in noise and air pollution—as well as road safety improvements—through reducing vehicle speeds, and the direct, visually intrusive, effects of proven speed-reducing measures. The CTMG will provide the opportunity to discuss rural traffic management issues more widely, to share experience and to disseminate good practice.
We are bringing to this the lessons learned from working with the English Historic Towns Forum on the development of more environmentally sensitive traffic management measures in historic town centres. In particular. this exercise demonstrated the value of an interdisciplinary approach from all the professions involved in finding acceptable solutions where aesthetic and traffic management considerations are in conflict, and also the importance of consultation with all interested parties and the implementation of solutions that have the support of local residents and businesses.
Through research based on demonstration projects planned by the CTMG, we will examine and make proposals on the detail of design approaches and guidance which meet wider needs of traffic movement and road safety, while respecting the diversity and local distinctiveness of the countryside. The hon. Gentleman will be interested to hear that the demonstration projects include one to develop low visual impact and low-cost, traffic calming techniques on the A149 between Hunstanton and Cromer in his constituency. Other projects will be implemented in Cumbria, Devon, Hampshire, Suffolk and Surrey.
The Countryside Commission is also undertaking research to investigate a broad range of factors and how road use impacts on them and to identify suitable criteria for determining appropriate traffic calming measures in rural areas. A separate research project will be reporting soon on possible new and more sensitive approaches to design of traffic signs—I trust the hon. Gentleman will welcome that—other street furniture and road layouts.
A basic premise of the CTMG research will be that traffic calming and traffic management design solutions have tended to be applied too systematically and inappropriately in the countryside—a point made by the hon. Gentleman. In addition, the Countryside Commission is developing ideas for reducing the intrusive nature of traffic in the countryside and maintaining the tranquillity of rural lanes as part of a more holistic approach to traffic management.
1260
The results of all these studies are intended to produce researched recommendations on good design practice which will be made available to highway and traffic authorities generally. The hon. Gentleman raised in particular the issue of sign clutter. We agree that traffic signs should not be put up or left in place unless they are appropriate for safe and efficient traffic management.
We are currently updating and revising the traffic signs regulations so that traffic authorities can use sign designs developed for new traffic management purposes without having to get them specially authorised by the Department—for example, speed camera signs. We shall continue to remind local authorities that they have a statutory duty under the Road Traffic Regulation Act 1984 to have regard to local amenity in placing signs.
We have also reviewed the previous Government's proposals for further relaxations in the design and use of boundary signs. We have concluded that there is no safety or traffic management benefit in signing boundaries of shire district councils, and that we should not encourage a proliferation of unnecessary signs by adding district boundary signs to the traffic signs regulations. We recommend, whenever possible, that local authorities review and audit their signs as an on-going process to ensure that they are still relevant and necessary, and that they are clear, well maintained and achieving their intended purpose.
We published updated guidance last November on the principles of good sign design. Chapter 7 of the traffic signs manual includes examples of how to design signs effectively so that they are not larger than they need to be for the information they contain. It also points out that yellow backing boards can be useful in some circumstances, but that they can also be environmentally intrusive and may be devalued by over-use.
The point has often been made to the Department that 30 mph repeater signs through villages are visually intrusive. However, it remains true that drivers are unlikely to observe the speed limit unless it is clearly signed and reinforced by the general road environment. The village speed control project—to which I referred earlier—was set up specifically to address this problem. Repeater signs are, of course, not required if a system of street lighting is provided—but this in itself is a controversial issue.
Some lighting schemes can appear inappropriate in a rural village, but lighting may be needed to help pedestrians and cyclists to move about safely. Street lighting can also help to reduce crime, and the fear of crime, by improving personal security. We recognise that poorly designed and installed street lighting can be unsightly and can detract from the visual amenity of the area. Uncomfortable, distracting glare and wasteful light pollution can result, but good design practices can reduce or eliminate these undesired effects.
With this in mind, my Department and the Countryside Commission last year published "Lighting in the Countryside: towards good practice". We believe this guide will be a valuable tool in showing local planning authorities, professionals and members of the public the benefits of good practice in this area, and how to a Street chieve it. I trust the hon. Gentleman will welcome that.

1261
Achieving a high quality of design is particularly important for standardised equipment, which is a familiar part of the street scene in town or country. In sensitive locations, the design and siting of street furniture can be crucial in avoiding an impression of unnecessary or incongruous clutter. Others, including the Royal Fine Art Commission, have also expressed concern about this issue.
I hope I have made it clear that I am fully aware of, and concerned about, the issues that the hon. Gentleman has raised, and that my Department is involved in a continuing process of developing good practice initiatives and guidance in consultation with the local authorities and other bodies responsible for the visual appearance of the countryside.

Iran and Iraq
1.27 pm
Mr. Tam Dalyell: My credentials for initiating what I gather is the first debate in the House on relations with Iran for many years are that, in October, I spent 17 days on holiday with my wife on a bus tour of Iran, organised by the British Museum Travel Company. The tour leader, Raphael Marinello—who expertly led the visit—and Dr. Sheila Candy, the deputy director of the western Asiatic department of the British museum, would agree on the kindness and warmth shown towards us by the Iranian people. It was in no way an official visit, but I did get the impression that there was a good case now for dialogue. The demonising of Iran should be something of the past, and the fatwa and the difficult case of Salman Rushdie should not cut out negotiations with the new political leadership in Teheran. The more locked in we are to commercial relations, the harder it will be for the hardliners to wreck relations.
Against that background, I wish to ask my hon. Friend the Minister of State two questions of which I have given notice to the Foreign Office. What initiative to develop relations with Iran can we expect during the British presidency of the EU? Is a presidency visit to Teheran—for example, at political director level—contemplated? As regards the fatwa, have the Government recently invoked the help of any Muslim leader—for example, President Assad of Syria—at least to downplay that difficult issue?
I referred to my visit in October, and one of the things that would strike any visitor from the west was the war memorials in Tabriz, Hamadan, Kashan, Rashd, Isfahan, Shiraz and Yazd. Those war memorials are of first world war proportions, as 1 million Iranians were lost in that terrible Iran-Iraq war. No one has greater cause than the Iranians to loathe the regime of Saddam Hussein, yet they do not support the American-British military action that was proposed in certain circumstances.
The latest edition of Persia Update reported:
"The Leader said the US pursues a purely American agenda in its confrontation with the Iraqi government, and added that the US bears the responsibility for civilian victims of any military attack on Iraq."
I am glad to say that the Iranian attitude to the Americans seems to be softening—perhaps, after the football World cup, it will soften a good deal more, because, as we know, the two nations have been thrown together. We are at a moment in history when the traditional friendships between the British and Persian peoples might well be restored.
I come briefly to the question of the Shi'ites. I quote from the most recent edition of Dialogue, which is published by the Public Affairs Committee for Shi'a Muslims. It says:
"However, bombing Iraq—still a likely option despite widespread international revulsion"—
that is what it thinks; it is not what I think—
"would be both wicked and futile. It would be unlikely to achieve its goals, whatever they are, but it would dangerously destabilise the region. Healthy Iraqis and a self-confident Iraq are far more likely to bring down the regime. A regime as isolated and psychotic as Saddam's would find it difficult to cope with normal relations with the world."

1263
I ask, against that background, what progress is being made in New York in discussions with Iraqi authorities on the new British-inspired Security Council resolution to increase the sale of oil for food. If the Iraqi Government prove slow to accept the resolution, should we not aim to improve the conditions of the Iraqi people, as well as readmitting more Iraqi oil to world markets? Should not a European Union delegation go to Baghdad, to show the Iraqi people that the Security Council wants to help them?
In an article in The House Magazine of 9 March, my hon. Friend the Minister wrote:
"Meanwhile, we are looking at what we can do for the Iraqi people. Saddam Hussein's obstinacy in refusing to accept the Security Council demands, or implement properly the oil-for-food programme, has caused the Iraqi people untold misery. Following the Secretary-General's report to the Security Council on 30 January recommending the oil-for-food programme should be expanded, we again took the lead at the UN in drafting and negotiating a Resolution (SCR 1153), which more than doubles the amount of oil Iraq is allowed to sell to purchase humanitarian goods. The new figure is US $5.2 billion every six months. The programme has safeguards in place to ensure the benefits go to the Iraqi people and not the regime."
I suggest to my hon. Friend that, if we do not help specifically with the pumping equipment, the resolution will look like a false gesture. All those who have personal experience of Iraq will testify to the breakdown of vital equipment. I think that Ministers should hear what my hon. Friend the Member for Glasgow, Kelvin (Mr. Galloway) says when he returns from Iraq—he will have first-hand knowledge.
I refer to a question that I asked the Prime Minister on 16 March:
"pursuant to the oral answer of the Secretary of State for Foreign and Commonwealth Affairs of 10 March 1998, Official Report, columns 307–8, what criteria he will use to determine the extent of Iraq's compliance with the recent agreement between Iraq and the UN to allow inspections to take place; and if he will submit these criteria to the scrutiny of the French, Russian and Chinese authorities as members of the Security Council."
The Prime Minister replied:
"Security Council Resolution 1154 was adopted unanimously by the Security Council. All members agreed that further violations of Iraq's obligations under the relevant Security Council Resolutions and the Memorandum of Understanding signed in Baghdad would be followed by the severest consequences.
The question of Iraqi compliance will be dealt with in reports to the Security Council from the United Nations Special Commission and the International Atomic Energy Agency."—[Official Report, 16 March 1998; Vol. 308, c. 450.]
We should be clear about whether the British think that, with the Americans, they have the right, in difficult circumstances, to launch a military attack without going back to the Security Council. The Chinese ambassador to the United Nations and others have made definite statements that three members of the Security Council take the view that no military action should be taken without a clear, unambiguous decision having again been taken by the Security Council. In the light of what Marc Webber and other international lawyers have said, are Britain and the United States entitled under international law to let loose traumatic air bombardment without having returned to the Security Council?
The last time that I had an Adjournment debate to which my hon. Friend the Minister replied, I slightly overran, so I make only one further point. Like many colleagues, I sat through the Budget speech of my right
1264
hon. Friend the Chancellor of the Exchequer—it was, rightly and justifiably, proposed as a green Budget. I listened to everything that he said about carbon emissions and pollution, and I welcome the anti-pollution measures, including those on vehicles. However, compared with what could be done in western Asia to help the world's atmosphere, anything that we do in western Europe is entirely marginal.
One of the most striking aspects of my visits both to Iran in October 1997 and to Iraq in 1994 was the extent of the pollution and broken-down equipment. In Iran, oil refineries had had to be moved quickly from the Iraqi border to the area between—heaven help us—Shiraz and Isfahan, which created pollution in Pasagandai and Persepolis. Even if we do not take into account the ancient monuments, that is sad—the pollution in that part of the world is terrible.
If we are serious, as I believe we are, about saving the planet, it really is high time that we established fruitful relations even with regimes that we may consider rather less than perfect. I hope that, after Kofi Annan's visit and all that has happened, the tone of the dialogue between west and east becomes somewhat more dignified and that our approach to the Muslim world becomes friendlier. I end with the reflection that there are many, many moderate Muslims in this country who desperately want improved relations.
1.39 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Derek Fatchett): I want to pick up on the concluding comments of my hon. Friend the Member for Linlithgow (Mr. Dalyell) about our relationship with the Muslim community in the United Kingdom and with the religion of Islam. We should avoid at all costs demonising any one religion in the world.
One of the tasks that I have set myself is to ensure that, whatever representations I make, I never fall into the trap of viewing the world as divided between religions. A small but, to my mind, significant event during the recent Iraq crisis was that, for the first time, we had a meeting in the Foreign Office with leaders of the Muslim community in the United Kingdom. I am determined that those meetings should continue and should take place not only during a crisis but as regular events that will give us an opportunity to understand each other much better.
Whenever I have visited the middle east and other parts of the Islamic world, I have taken the opportunity to stress the need for multi-faith co-operation. I had the pleasure of visiting the Sheik of Al-Azhar at Al-Azhar university, which was an important opportunity to make it clear that when we define issues in the United Kingdom, we never differentiate by religion but consider the basic values.
My hon. Friend spoke movingly about the war memorials in Iran and said that the 1 million dead constituted a tragedy on the scale of the first world war. That was a painful but apposite reminder of the scale of the Iran-Iraq war and of the number of lives that were lost—indeed, wasted—in those years.
Iran and other countries in the region have every reason to be fearful of an Iraq with Saddam Hussein and weapons of mass destruction. The Iranians, along with the Kurds, have experienced Saddam's use of chemical weapons. The war memorials graphically underline and emphasise

1265
the importance of the Security Council resolutions and the world's commitment to ridding Iraq under Saddam Hussein of weapons of mass destruction.
My hon. Friend has been vigilant on the matter, and I congratulate him. It is an important parliamentary function to ensure that there is proper questioning and debate on such issues. He has always made the point that he was opposed to the threat of military action in our dealings with Iraq. I want to put it on the record that I have never had any doubt that he is as opposed to chemical and biological weapons as anyone else. We differ not on objectives but on means.
My hon. Friend must consider how the Kofi Annan memorandum of understanding could have been achieved without the threat of force by the United Nations and the international community. That is the key question. We would all love the world to be able to take rational decisions.
If leadership were always rational, we would not have to deal with crises such as arose with Iraq, but the fact is that we were dealing with a leader who had invaded one of his Arab neighbours; who had used chemical weapons against his own people and the people of Iran; and whose violations of human rights and of traditional processes of international relations were well known to us.
Both in Baghdad and on his return to New York, Kofi Annan said that diplomacy can go a long way, but that diplomacy backed by resolution and force goes a lot further. That is surely a vindication of the position that we took, and poses starkly and dramatically to my hon. Friend the question of what would have happened had the threat of force not been available to Kofi Annan in his negotiations.
On his return to New York, Kofi Annan said that the British Prime Minister was a true peacemaker and peacekeeper for the United Nations. That shows what can be achieved by the intertwining of diplomacy with the threat of force. In international relations, force is sometimes a representation of our failure to achieve our objectives through diplomacy, but sometimes it has to be used or threatened.
We welcome the memorandum of understanding and hope that Saddam Hussein will adhere to the agreements and commitments that he has made, but Saddam's record of keeping his word does not suggest that my hon. Friend could bet on it with any confidence. On each and every occasion in the past, Saddam Hussein has broken the commitments that he has given to the international community. It is in the interests of the people of Iraq and of the wider region that he should keep his word on this occasion, and we in the international community have said that, if he does not, he will face the severest consequences.
There is no doubt about what that means. It is understood in Baghdad. To find excuses for any further breach would be beyond the imagination and wit of any defender of Saddam Hussein. This recidivist has been given so many opportunities that, if he breaks the current agreement, the international community's patience will well and truly have run out.
Last week, I visited Kuwait: a country and a people who know Saddam Hussein very well. People there know what happened when Saddam invaded their country seven
1266
years or more ago, and they are still extremely cautious, with good reason. They are also extremely grateful for the position taken by the international community and supportive of the position taken by the United Kingdom Government.
I saw our troops in Kuwait last week and took the opportunity to thank them for their contribution. They are living in trying and difficult circumstances, but nobody can doubt their commitment and professionalism. I am sure that I speak for the whole House when I congratulate them, and thank them for the work that they have done in their role as peacemakers and peacekeepers.
My hon. Friend raised some important points about the oil-for-food regime and the need to deal with humanitarian concerns about the ordinary people of Iraq. The fact that we are talking about the way in which Saddam Hussein has been able to pervert the oil-for-food humanitarian regime for his own purposes, rather than using it to feed his own people, is one of the most damning indictments of his regime.
We are determined that the ordinary people of Iraq should not be punished for the decisions taken by their leadership. They are not responsible for those decisions. Indeed, if they were to exercise what we would consider a basic human right and criticise the regime, their lives would be short. We know the regime's record. It is difficult for the people to criticise the regime or to contemplate a change of regime, because the risks are so great. They are clearly not responsible for the decisions of a totally irresponsible and out-of-control leadership, and it is our task to help them if we can. We are determined to do so.
My hon. Friend referred, kindly, to resolution 1153, which the United Kingdom, with consensus, steered through the Security Council. It more than doubles the amount of money available from the sale of oil and oil revenues for humanitarian purposes. We certainly welcome that, and will continue to encourage the process.
In addition, we have announced a European Union conference to look into ways in which we can get additional humanitarian aid to the Iraqi people—my right hon. Friend the Secretary of State for International Development made an announcement last week about additional aid from the United Kingdom to the people of Iraq. The conference is still in the planning stage and is an important initiative and innovation by our Government. However, whatever the European Union does, it is important that it supports Security Council resolutions and in no way contravenes them. Our role is to be supportive, not in competition or contravention.
Mr. Dalyell: Will the Government consider the critical question of pumping equipment, without which it might be impossible to implement resolution 1153?
Mr. Fatchett: My hon. Friend makes a valid point, which I understand. I have regular meetings with representatives of the Iraqi Opposition, and that is one of the points that they have made about the nature of the infrastructure in Iraq. We shall certainly take their points and that made by my hon. Friend into account.
This is a double-headed debate, so I shall now refer to Iran. I probably ought to congratulate my hon. Friend on his technique of opening up two issues in one debate, which shows great parliamentary skill and diligence.

1267
He made some important points about our relations with Iran and asked a number of detailed questions, which I shall come to.
First, we welcome the changes that appear to be taking place in Iran and the election of President Khatami. We hear the noises and see the potential warming of relationships. We hope that those changes will develop constructively in the region and more generally. There are some positive signs, and we are watching them. We welcome Iran's decision to ratify the chemical weapons convention. It is important, and we certainly applaud it. We also welcome Iran's condemnation of terrorism and the terrorist attacks in Algeria and Egypt. Again, those are extremely positive signs. We hope that Iran will continue to move in that direction. As we have said on many occasions, we are prepared to judge the new regime not by the rhetoric of the past, but by its record and what it achieves and sets out to do in future.
All students of Iran—my hon. Friend probably stands equal to all of us in that respect—will be fascinated by the internal political processes there. Clearly, a struggle for dominance, in terms of values and ideology, is taking place, and we shall watch that struggle and encourage those who want a more open Iran that will engage with the international community.
My hon. Friend asked about the European Union and the United Kingdom presidency; progress has already been made. Our tactics have to be double-headed. We have to ensure that we encourage positive developments within Iran, while being cautious about other developments and characteristics of the regime there, to ensure that we get the balance right between the two.
My hon. Friend will be delighted to know that at the General Affairs Council in February, under the British presidency, European Union Foreign Ministers decided to increase the level of political contact with Iran, by lifting the ban on bilateral ministerial visits imposed after the Mykonos verdict last year. Therefore, the European Union is sending a first, encouraging sign to the regime in Iran that we certainly want to encourage a warmer relationship, but some caution still runs alongside that. We are also discussing how and at what level political contacts with Iran should be enhanced. My hon. Friend questioned the level of those contacts—that matter is under discussion within the European Union. In principle, the issue is how we enhance discussion and not necessarily whether we should do so. Clearly, there is no veto on developing those contacts.
We are prepared to welcome the positive signs, but we want more concrete and positive indications from the Iranian Government in certain areas. We shall be considering the following areas of caution. First, we have to be sure that the Iranian Government are not involved in the development of weapons of mass destruction. If they intend to come back more closely into the international community, they could make it abundantly clear that no programme for weapons of mass destruction is being carried out there. I am sure that my hon. Friend shares that objective. It will be an important element in the development of relationships.
Secondly, we have to be clear that the Iranian regime is not continuing to sponsor terrorist activity on its own initiative. That has happened, and it is crucial that it should not in future. Much of that terrorism has been designed to subvert the middle east peace process. Again,
1268
we must ensure that the Iranian Government are not sponsoring terrorism with that purpose. My plea on that issue is: yes, we shall be cautious, but we want progress from the Iranians and a clear indication that they are not the sponsors of terrorism within the region or elsewhere in the world.
My hon. Friend mentioned Salman Rushdie and asked whether we could refer to another Islamic country to intervene in the case. The fatwa against Salman Rushdie remains a significant impediment to better relations between Iran, the United Kingdom and the European Union. It is totally alien to our values for one state to declare what is in effect a death sentence against a citizen of another state. It is wholly alien for us to negotiate in any way or conciliate about our own basic values. Salman Rushdie's right to publish and his freedom of speech are crucial elements in our political democracy, and we therefore should not allow those basic rights and principles to be negotiable. Therefore, we await a positive response from the Iranian regime on the issue. We know what the regime has said in the past, and it has not gone far enough.
My hon. Friend's suggestion was constructive—that we should look for a third country—but I do not think that it is the way to make progress with Iran. The best way to make progress on the fatwa and other issues is through direct contact between Iran, the European Union and the United Kingdom. The fatwa and Salman Rushdie will be key elements in the development of the relationship, and they must be tackled by the Iranians in discussions with the United Kingdom and our European Union partners.
It has been a pleasure to respond to the points raised by my hon. Friend, who is a keen observer of the middle east and has a good knowledge of the countries and the region. We are determined to show that we are even-handed in our approach to the region, and have clearly set out our position and our values in relation to Iraq. As my hon. Friend said, we look forward to the day when Iraq will again assume its position in the middle east commensurate with its history, its potential for the future and the abilities and expertise of its people. There could be no better middle east than one in which Iraq was free, democratic and pluralistic and had the ability to play that full role in the region, and one in which Iran was readmitted to the international community and felt part of it, reflecting its values.
On Iran, the signs are encouraging. We are cautious, but we are opening up the relationship. We need to be confident that the Iranians will move in the right direction and make it possible for us to remove that caution.
Mr. Dale Campbell-Savours rose—
Mr. Fatchett: Does my hon. Friend want to intervene?
Mr. Campbell-Savours: I shall wait and see.
Mr. Fatchett: All right.
Again, I congratulate my hon. Friend the Member for Linlithgow on introducing the subject. In the 20 or so minutes that I have been speaking, I hope that I have been able to set out clearly the Government's position. I shall probably have disappointed my hon. Friend yet again in some of my remarks. One thing about our relationship is that at least I consistently disappoint him, so he will

1269
probably have known exactly what I was going to say on one issue, but perhaps I have managed to say something new and fresh on the other, and he will be pleased with that.
Mr. Campbell-Savours rose—
Mr. Deputy Speaker (Mr. Michael Lord): The hon. Gentleman ought not to intervene after the Minister has completed his speech in a debate of this sort.
Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. I understood that under the procedures I was able to do so.
Mr. Deputy Speaker: No, this is not that sort of debate.
Mr. Dalyell: My hon. Friend had my permission.
Mr. Deputy Speaker: Even so, the Minister had completed his speech and summed up. However, if the hon. Member for Workington (Mr. Campbell-Savours) wants to make a brief contribution, he may do so.
Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. I have now lost my half a minute and my opportunity to speak, and I strongly object.
Mr. Deputy Speaker: The occupant of the Chair ruled last week on a similar position, and I have made the position clear. This is a half-hour debate for one Back Bencher to put his point to the Minister and for him to respond.
It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Oral Answers to Questions
  WALES
  The Secretary of State was asked—
  WALES

    Uniform Business Rate
    Mr. Blunt: What representations he has received from Welsh businesses regarding the future of the uniform business rate. [33426]
    The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): Several representations, as part of our regular consultations with Welsh businesses.
    Mr. Blunt: When the new national assembly is in place, is it possible that the uniform business rate could be a useful source of revenue for the assembly and Welsh councils, in addition to the resources already provided?
    Mr. Hain: We are, in common with our counterparts in England, reviewing the business rate. We will consult businesses closely about it because several representations have been made on its reform. I am sure that the outcome will assist Welsh businesses, which are benefiting from a Wales run by a Labour Government.
    Mr. Rowlands: Is my hon. Friend aware that companies in my constituency are much more concerned about possible cuts in European structural funds? Will he pay as much attention to that as to business rates?
    Mr. Hain: Yes, I will. My hon. Friend raises an important point because today's news from Brussels is very disturbing. I will make sure, as will the Secretary of State, that Ministers in Wales bat hard for Wales and fight our corner to get a good deal from Brussels on the structural funds. Wales is one of the poorest regions of Europe. Our gross domestic product is only 80 per cent. of the European average, and we should qualify for objective 2 status. Many of our communities in west Wales and the valleys, such as my hon. Friend's constituency, should qualify for objective 1 status. We will bat hard to achieve that.
    Mr. Llwyd: Given that the Government are supportive of local government, should we not now be thinking of giving more discretion back to local authorities in setting business rates? The problem is that there is often not enough sensitivity to smaller firms and firms that have just started up. Is it not time to remove the dead hand of central Government and to revert to the way things were?
    Mr. Hain: Businesses have suffered from the dead hand of a Tory Government for nearly two decades. We are consulting small businesses in Wales about the balance of the new structure. There is a demand for local autonomy, but there is equally a concern that Welsh businesses do not suffer costs additional to those in England. We will consult generally on the matter, and with Welsh businesses very closely.
    Mr. Öpik: Given the difficulties in my constituency following the closure of D. C. Evans in Newtown and
    1272
    MDM in Machynlleth, is the Minister prepared to discuss the uniform business rate and other issues directly with sacked staff on his forthcoming visit?
    Mr. Hain: I am indeed willing to discuss those and other issues. I am due to meet the hon. Gentleman in his constituency. Nevertheless, many Welsh businesses welcomed yesterday's Budget, which was an enormous boost for business and enterprise in Wales. It should give businesses cause for optimism amid the many difficulties from which they have suffered in the past 18 years.

    Farmers
    Mr. Wigley: What steps he has taken during the past four weeks to improve the economic prospects and cash-flow position of farmers in Wales; and if he will make a statement. [33427]
    The Parliamentary Under-Secretary of State for Wales (Mr. Win Griffiths): We recognise that the current problems have created serious difficulties for the industry. The beef export ban is a major factor that we continue to pursue vigorously. The right hon. Gentleman will know that we have recently secured a major breakthrough in lifting the ban in Northern Ireland, which is the first step toward the resumption of trade in United Kingdom beef. On 25 February, we announced that about £70 million will be paid by the Government in meeting the costs of BSE-related schemes for specific risk material controls and the new computerised cattle tracing system for Great Britain. That is in addition to the £85 million we have pledged in aid to livestock farmers to help to counter the effect of the strength of the pound. On Monday, my right hon. Friend the Secretary of State announced a study into ways in which we can speed up common agricultural policy payments to farmers.
    Mr. Wigley: In welcoming the progress made in respect of the export of beef from Northern Ireland to Europe, may I press the Minister to say what prospects there are of making progress in exporting beef from Wales on the basis of a date-based scheme? What is he doing to press that issue in Brussels, and when does he expect to be achieved?
    Mr. Griffiths: We are obviously keen to see the beef ban lifted across the United Kingdom and in Wales, and we are pressing the case strongly in Brussels. I hope to take the opportunity at the next Council meeting at the end of this month to put the case for Wales strongly in Brussels.
    Mr. Alan W. Williams: I congratulate the Minister and his fellow Welsh Office Ministers on their part in putting pressure on the Ministry of Agriculture, Fisheries and Food and the Commissioners in Brussels. The progress that has been made in respect of certified herds will bring great relief to farming in Wales, because beef exported from Northern Ireland will expand demand for beef across Britain. May I echo the point in respect of beef from cattle born after August 1996? We are quite certain that feed was clean after August 1996, so will the Minister exert maximum pressure for the lifting of the ban on that beef as well?
    Mr. Griffiths: My right hon. Friend the Secretary of State has discussed this issue often and regularly with my

    1273
    right hon. Friend the Secretary of State for Northern Ireland, and we are continuing to press as strongly as we can for steps to be taken to get the beef ban lifted as a whole. However, my hon. Friend will appreciate that we have a great deal of ground to make up because of the bad taste left in Brussels by the way in which the previous Government handled the issue.
    Mr. Evans: When will the Minister recognise the depth of the crisis facing farmers and their associated suppliers? The crumbs of comfort that he has announced shrink in comparison with the problems they now face. Their incomes have been cut by a half this year and are still declining. There have been cuts in the hill livestock compensatory allowance, and deadweight limits and lower prices in the over-30-months scheme. Beef on the bone has been banned and now there is the threat to ban green top milk. Yesterday's Budget was a further slap in the face for farmers, with 4.4p a litre on petrol, in addition to the steep 4p increase in July. Finally, the pound is still strong today, which is not helping farmers. How many more farmers is the Minister prepared to see go bust before they get some real action from this complacent Government?
    Mr. Griffiths: It is a pity that Conservative Members did not take sufficient interest in the BSE crisis when it first broke, because, if they had, we would not be in this situation. The Government wish that we had not had to start from this point, but unfortunately, the previous Government left us in a pit about 500 m deep, out of which we are now pulling ourselves. Yesterday's Budget was generally welcomed by farmers on "Fanning Today", which was broadcast at 6.30 am today. I suggest that the hon. Gentleman gets up a bit earlier so that he becomes better informed.

    National Assembly
    Mr. Nicholas Winterton: What response he has received to his proposals for the establishment of regional committees within the National Assembly for Wales. [33428]
    The Secretary of State for Wales (Mr. Ron Davies): There has been a very favourable response. We are determined that the assembly will work for the benefit of the whole of Wales and next month, my advisory group will seek views on the number and boundaries of regional committees to help to achieve that.
    Mr. Winterton: I am grateful to the right hon. Gentleman for that response. He will be aware that my constituency of Macclesfield is in the county of Cheshire, which abuts north Wales. Is he aware that, now that he has announced the fact that the assembly is to be located in Cardiff, there are many people in north and central Wales who are deeply concerned that their views will not be heard in Cardiff? Bearing in mind that, from many parts of north Wales, it is easier to get to London than to Cardiff, what assurances can he give the people of north, west and central Wales that their views and their interests will genuinely be taken into account in the new assembly?
    Mr. Davies: I am not sure whether the hon. Gentleman asks that question on behalf of his constituents or those of my right hon. and hon. Friends who represent Welsh constituencies.
    1274
    The question of accessibility was a major factor in deciding to locate the assembly in Cardiff. I am determined to ensure that we have a network of contacts linking the assembly in Cardiff with all parts of Wales, and I am presently holding discussions with the Welsh Local Government Association in order to achieve that. We have a system of proportional representation—which the hon. Gentleman could not find it in his heart to support—which ensures that we have political plurality within the assembly. Of course, we shall also have a system of regional committees, which is at the heart of the hon. Gentleman's question.
    Mr. Donald Anderson: The city of Swansea may qualify for a regional committee, but that will be poor consolation for the loss of the assembly. My right hon. Friend should be well aware of the intense anger in the city at the way in which many people feel that we have been used—particularly because the Secretary of State first broached the subject of Swansea guildhall as an option. If the key consideration was the capital city status of Cardiff, why did the Secretary of State not say that at the start and save us a lot of bother? As together we used to criticise the Conservative Welsh Office for centralising everything in Cardiff, can my right hon. Friend produce any clear evidence—chapter and verse, citing investment or jobs—that that has changed?
    Mr. Davies: My hon. Friend has raised several points. I take this opportunity to express my appreciation to the people of Swansea and the local authorities for the way in which they presented their case, and to my hon. Friend and his colleagues who pressed the case for Swansea very vigorously.
    When it became clear last autumn that the city hall in Cardiff was not available, I was of the view that it would be appropriate to allow local authorities in Wales to make submissions to the Welsh Office offering any buildings in their areas. I believe that the debate in Wales was taken forward because we received many submissions not just from Swansea, but from throughout Wales. During the consultation process on the submissions, it became clear that the overwhelming majority of opinion favoured Cardiff. That obviously bore very heavily on my decision.
    As to the latter part of my hon. Friend's question, I intend to develop—together with my colleagues—an economic strategy that spreads economic prosperity throughout Wales. The need to attract inward investment to all parts of Wales—particularly to the west—is a central part of that strategy.
    Mr. Ancram: Following that answer, does the Secretary of State appreciate what a figure of fun he has become both inside and outside Wales over the location of the assembly? Did he not hear the mockery that met his announcement last Friday? Apparently, having suddenly discovered where the capital city of Wales is, the Secretary of State is now compelled to do what the White Paper told us categorically last July he intended to do anyway and locate the assembly in Cardiff—although he still cannot tell us where in the city it will be situated. Does he accept that his dithering and posturing programme of indecision, sheltering behind what is clearly a sham and bogus beauty contest, has caused great bitterness in various parts of Wales that have been exploited? Will the Secretary of State now apologise to

    1275
    the people of Wales for his crass performance, and will he reimburse those councils that have incurred costs because of it? Will he now make way for someone who can do his job properly?
    Mr. Davies: No, no and no are the answers to the right hon. Gentleman's questions. With an attitude like that, it is little wonder that the previous Conservative Government had a reputation for disastrous financial and economic performance.
    The right hon. Gentleman has consistently urged me to pay more than I need to for an assembly building. He is arguing that I should be both profligate and irresponsible—and I shall certainly not be either. Much as he dislikes it, I am determined to get value for money. I know that the right hon. Gentleman has been a strong supporter of devolution for all of the past two and a half weeks, but he should temper his new-found enthusiasm with a little better judgment.
    Mr. Alan Williams: May I underline to my right hon. Friend the bitterness and disillusionment felt in Swansea at his announcement? Does he not realise that the arguments that he found so compelling last Friday were every bit as compelling before he even launched his consultation process, and have led to the conclusion in Swansea that the low-cost Swansea bid was simply used as a bargaining counter against the two expensive Cardiff bids? Where does Swansea go, now that our Secretary of State has abandoned it?
    Mr. Davies: My right hon. Friend is wrong on two counts. It was not my desire, nor was it the effect of my discussions with Swansea, to use the city as a bargaining counter. He is also wrong to suggest that I have abandoned Swansea. I have done neither of those things. As I told my hon. Friend the Member for Swansea, East (Mr. Anderson), it is my intention to work with the people of Swansea to try to ensure that the economic prosperity experienced by much of south-east Wales is shared in south-west Wales.
    The decision that I had to take in respect of the location of the assembly was not what was good for Swansea, but what was good for Wales and for the assembly itself. During the discussions that have taken place over the past three or four months, it became clear that there was a compelling case for Cardiff. I hope that my right hon. Friend, his hon. Friends and the people of Swansea will understand that it is now in everyone's interests to get behind the assembly project in Cardiff, because that is the way in which we shall have a successful economy and a prosperous Wales in the future.
    Mr. Paterson: If he will make a statement on progress on the Welsh assembly. [33429]
    Mr. Ron Davies: Excellent progress is being made. The Committee stage of the Government of Wales Bill has been completed. Following calls from all parties and the advice of my advisory group, I have tabled amendments to allow the assembly to adopt a cabinet-style system of government, should it wish to do so. My advisory group will publish a wide-ranging consultation document next month on the assembly's
    1276
    internal working arrangements. Last Friday, of course, I announced that the assembly will be located in a new building in Cardiff.
    Mr. Paterson: How can the Secretary of State say that excellent progress is being made, when we have graphic evidence this afternoon from Labour Members that Wales is bitterly divided, following the shambles of the consultation process? Will the right hon. Gentleman, who has dithered all along on the matter, make a clear statement this afternoon about where in Cardiff the assembly will be built, and when? If he cannot make that decision, will he make way for someone else who can?
    Mr. Davies: The hon. Gentleman invites me to take a decision based on short-term political considerations, not value for money. I will not do that. I will make sure that the public interest is properly protected. I am looking for the best deal, not just the quickest fix.
    Ann Clwyd: Does my right hon. Friend agree that the twinning proposal adopted by the Scottish Labour party as a means of achieving better representation of men and women in the Scottish Parliament is an excellent idea and the way forward for Wales as well?
    Mr. Davies: That is a matter for the Scottish Labour party. I fully appreciate the arguments in favour of ensuring that there is a proper gender balance in the assembly when it is elected. I draw my hon. Friend's attention to paragraph 4.7 of the White Paper, which states:
    "In particular, the Government attaches great importance to equal opportunities for all—including women, members of ethnic minorities and disabled people…greater participation by women is essential to the health of our democracy. The Government also urges all political parties offering candidates for election to the Assembly to have this in mind in their internal candidate selection processes."
    That is a part of the White Paper that I personally wrote, and I stand by every word of it.
    Mr. Ieuan Wyn Jones: The Secretary of State will be aware that, during the Committee stage of the Bill, I and my colleagues argued strongly for a European committee to be included in the national assembly. Does he realise how important that is, bearing in mind the future of structural funds? In the meantime, will he take no nonsense from the Department of Trade and Industry? Will he push the case for a new NUTS—nomenclature of units of territorial statistics—designation area for Wales, to make sure that west Wales and the valley areas that need it will achieve objective 1 status? Will he give the House an assurance that, at the appropriate time, he will appear at the Council of Ministers to argue the case?
    Mr. Davies: I discussed the questions that the hon. Gentleman raises yesterday with my right hon. Friend the President of the Board of Trade, and I impressed on her the strength of feeling that exists in Wales. As my hon. Friend the Member for Neath (Mr. Hain) said, the Government believe that we have a strong case for objective 2 status across Wales, and for objective 1 status in west Wales and the valleys. I assure the hon. Gentleman that it will be my intention, and that of my colleagues, to ensure that, when the negotiations start—

    1277
    today's announcement is the start of the negotiations, not the completion—we will continue to press that case as vigorously as possible.
    On the establishment of a European Committee, there was a strong case before today's announcement to have such a Committee in the assembly. During the early part of next month, my advisory group will produce a consultation document inviting views on the nature of the committee structure in the proposed assembly. I very much look forward to the observations and submissions that no doubt will come from the hon. Gentleman and his party on how the internal organisation of the assembly should be structured.
    Mr. Barry Jones: In the opinion of my right hon. Friend, which would fill an empty factory quicker in the town of Buckley—a regional committee, an assembly, or the current Welsh Office? There is concern in Buckley about the 70 jobs that we lost at the Optec factory, which was a grave blow, and we would welcome any help that my right hon. Friend can give to help my constituents back into work at that factory.
    Mr. Davies: I am grateful to my hon. Friend, who has raised this matter with me before. I have indicated that I shall continue to work with him. I have discussed with the Welsh Development Agency what measures we can take to get proper employment into the factory to which he referred. It would be wrong of us to view the assembly as a means of creating job opportunities. The assembly must be a means of creating a new democracy, and that new democracy in Wales will be the means by which we can improve the performance of our economy. We should not view the location of the assembly as a means for economic regeneration or urban redevelopment.
    Mr. Ancram: I warmly welcome the Government's conversion to our proposal for the more accountable cabinet structure rather than the committee structure that was previously in the Bill. Does the right hon. Gentleman realise, however, that there is still considerable—and real—fear in parts of Wales that their regional interests will be submerged by the demographic majority in the south? Will he look again at giving Members of the Assembly real, rather than consultative, powers to protect their regions? In particular, powers with which to ensure significant economic, social and cultural decisions will require positive assent from all the regions in Wales.
    Mr. Davies: No, I will not do that. The right hon. Gentleman has not thought through his case. If we were to give the regional committees the blocking mechanism that he suggests, the cabinet system of government, which he now welcomes, would not be capable of being operated in Wales. Further, he has long argued that the assembly should be seen as a mechanism to strengthen local government. If we were to strengthen the regional system of committees in the assembly, that would be nothing less than an attempt to second guess the role played by local authorities. Because I want to have strong, developing local government in Wales, and strong cabinet government for the Welsh assembly, I am not inclined to accept the right hon. Gentleman's suggestions.
    Mr. Rhodri Morgan: Does the Secretary of State agree that one of the virtues of devolution is that it is a
    1278
    clean break with Tory sleaze and the corruption-ridden semi-colonial past? Does he further agree that one of the two options that he presented for the location of the Welsh assembly—the one located around Crickhowell house—is the very embodiment of Tory sleaze and that corruption-ridden past? A previous Tory Secretary of State, David—now Lord—Hunt, signed the lease with the company of his predecessor Tory Secretary of State, Nicholas Edwards—now Lord Crickhowell—and a building that cost Associated British Ports, Lord Crickhowell's company, £11 million suddenly became worth £22 million, representing 100 per cent. profit overnight to two Tory Secretaries of State.
    Mr. Davies: The substance of my hon. Friend's question is whether we should locate the assembly in one of two sites that we have identified in Cardiff. I have a great deal of sympathy with much of what he said, but my decision must be based on what is good for the assembly, for Cardiff and for Wales.

    NHS Waiting Lists
    Mr. Ian Bruce: If he will make a statement on trends in NHS waiting lists in Wales since May 1997; and what targets he has set over the next four years. [33430]
    Mr. Win Griffiths: The latest information shows that the number of residents waiting for in-patient or day case treatment at 31 December last year had risen by 5.1 per cent. since June 1997. The number of residents waiting for out-patient treatment over the same period had decreased by 0.9 per cent. Reducing waiting lists is a Government priority, and my right hon. Friend the Chancellor announced in his Budget yesterday an additional £25.126 million next year for the health service in Wales, most of which will be used specifically to reduce the number of patients waiting for treatment to below what it was when we took office.
    Mr. Bruce: I am grateful to the Minister, but like the Under-Secretary of State for Scotland, the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), and the Secretary of State for Health, he refuses to say what targets will be set for the next four years. Reducing waiting lists is a Labour manifesto commitment, but no target has been set. Surely the money given by the Chancellor is too little, too late? Does the Minister accept that, unless he sets targets for the next four years, there is no chance of the health service achieving what we all want it to achieve?
    Mr. Griffiths: In Wales, the Conservative Government lamentably failed. For all their trumpeting of their achievements in the health service, 22,000 more people were waiting for treatment when they left office than when they came in. We shall use the money to ensure that fewer people are on waiting lists at the end of the next financial year than when the Conservative Government left office. We shall work out our targets exactly. I assure the hon. Gentleman that it is our objective to cut waiting lists, not to let them rise hopelessly, as his Government did over 18 years.
    Mr. Hanson: Will my hon. Friend confirm that, since the general election, more than £85 million has been put

    1279
    into the national health service, in addition to money that was allocated by the previous Government? That is more than £1 million for every vote in the majority that the hon. Member for South Dorset (Mr. Bruce) had at the election. In-patient waiting lists increased by 22,000 in the past 18 years, which is why he has a majority of 77 votes and why there is a Labour Government.
    Mr. Griffiths: My hon. Friend is right. The additional resources that my right hon. Friend the Chancellor has made available for the health service in Wales will reduce waiting lists. It is our objective to ensure that they reduce steadily over the lifetime of this Parliament.

    Livestock Prices
    Mr. Livsey: If he will make a statement on the current market prices of cattle and sheep in Wales. [33431]
    Mr. Win Griffiths: Meat prices for cattle and sheep in Wales are significantly below those of a year ago. In addition to the short-term help that the Government are providing to livestock producers, I am discussing with farming unions in Wales how Welsh agriculture can be viable for the long term.
    Mr. Livsey: While acknowledging what the Minister said about the Government's recent assistance to farmers, will he note that more than 1,000 lambs were sold a week ago at Talgarth market in my constituency for between £23 and £27 a head, which is £15 down on last year's price? The main reason for that fall in price is the strength of the pound. The headlines in tonight'sEvening Standard state that the pound is at a nine-year high. Will he ask his right hon. Friend the Chancellor, who is almost beside him, to do something about the devaluation of the green pound to ensure that prices are competitive for farmers and that they can survive?
    Mr. Griffiths: My right hon. Friend the Chancellor is not almost beside me; he is beside me, as the hon. Gentleman should have seen from where he was standing.
    Is devaluation Liberal Democrat policy? We presented a very successful Budget yesterday, and we must look at everything that we are trying to achieve through it. Farmers in rural Wales have welcomed extra money being made available for rural transport schemes. The Welsh Office is paying a great deal of attention to consultation with farming unions in Wales and with other rural interests to ensure that we promote and strengthen Welsh agriculture at a time when aspects of economic policy are not, in the short term, meeting all their objectives. I assure the hon. Gentleman that we shall do everything possible to ensure that Welsh agriculture survives this difficult time and makes good for the future.
    Madam Speaker: That was far too long an answer.

    Student Grants
    Mr. St. Aubyn: If he has met student groups' representatives to discuss the future of the maintenance grant for students in Wales. [33432]
    Mr. Hain: Yes.
    Mr. St. Aubyn: Given the concern about the fall in applications for places in the autumn, what will the
    1280
    Minister do if the number of students taking up places is seriously down this year? What plans has he to make up the shortfall if there is spare capacity?
    Mr. Hain: I was not aware that Guildford was in Wales—[HON. MEMBERS: "Irrelevant."] No, it is relevant. The hon. Gentleman is clearly unaware of the fact that university applications are holding up very well, not just in Wales but throughout Great Britain. In some universities—Aberystwyth, for example—the number of applications has risen by 2 per cent., and there is no reason to suppose that the new funding arrangements that we have introduced are penalising students or deterring them from applying for places.

  The Prime Minister was asked—
  PRIME MINISTER

    UN Security Council
    Q 1.[33406] Mr. Godman: When he last met President Clinton to discuss matters relating to the reform of the Security Council of the United Nations.
    The Prime Minister (Mr. Tony Blair): I did not discuss that particular issue in relation to the Security Council of the United Nations during my Washington visit last month, but we do consult closely with the United States on matters relating to the reform of the Security Council.
    Mr. Godman: Judging by what I heard in Washington last week, it appears that Kofi Annan' s intervention in the Iraqi crisis has upset and angered many gung-ho Republican Congressmen. It therefore seems unlikely that Congress will sanction the payment of the $1.5 billion that is owed to the United Nations. Would it not make sense to alter, or modify, article 27 of the Charter of the United Nations and Statute of the International Court of Justice to allow for the removal of the voting rights of Security Council member states that are in arrears with their subscriptions? The idea might cause apoplexy on Capitol hill, but it is worth considering, is it not?
    The Prime Minister: I think that it could cause quite a few tremors in many places, but I understand the point that my hon. Friend is making. We very much hope that Congress will approve the proposal that is currently before it, so that the arrears can be paid. I strongly support Amnesty International's "Get up, sign up" campaign to mark the 50th anniversary of the universal declaration on human rights, and we were delighted to sign up on 3 February.
    Dr. Julian Lewis: Does the Prime Minister intend to involve the Foreign Secretary in any future discussions on the reform of the Security Council, or does he intend—following the diplomatic disasters involved in the Foreign Secretary's trips to India and Israel—to send him on a third and final trip in the course of his up-coming Cabinet reshuffle?
    The Prime Minister: The hon. Gentleman knows the answer to the last part of his question.

    1281
    Just a couple of weeks ago, Conservative Members were urging us to be more active in ensuring that Israel lived up to its obligations under agreements that had been signed. It is rather unfortunate that the hon. Gentleman should make such a criticism of the Foreign Secretary now.
    Mr. Dalyell: In view of this morning's Adjournment debate on relations with Iran, and the thoughtful and constructive response of the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), will the Prime Minister reflect on how we can improve relations with a country containing 60 million people—a country, incidentally, whose pollution problems, along with those of its neighbours in Iraq, are appalling in terms of the release of carbon into the atmosphere?
    Madam Speaker: Order. I do not require the Prime Minister to answer that question if he does not wish to. The main question relates to the Security Council of the United Nations, but I did not hear the hon. Gentleman utter a word about that. Does the Prime Minister wish to respond? If not, he does not have to.
    I believe that questions should be in order. The hon. Member for Linlithgow (Mr. Dalyell) knows full well what the question says, and what our procedures are. I think that he tried to put one over on me, and I am not having that.

    Engagements
    Mr. Whittingdale: If he will list his official engagements for Wednesday 18 March.
    The Prime Minister: This morning, I had meetings with Cabinet colleagues and others and, later today, I shall have further such meetings.
    Mr. Whittingdale: Will the right hon. Gentleman confirm that his own Red Book shows that, as a result of the Budget measures, an extra 250,000 families will face a marginal rate of taxation and benefit withdrawal of 60 per cent. or more? Rather than improving work incentives, will not that considerably reduce them?
    The Prime Minister: No. That is entirely wrong. As a matter of fact, the Budget will increase work incentives dramatically because it will take a whole lot of people out of paying national insurance. It will mean that a whole lot fewer people pay tax and that poverty traps for the vast majority of people will be reduced. I should have thought that a Budget that makes work pay and helps get people back to work would be supported even by the neanderthals in the Conservative party.
    Mr. Savidge: Following a Budget that was focused on social justice and on rewarding work, and given the centrality of a national minimum wage to achieving both objectives, has the Prime Minister had any indication from the Leader of the Opposition as to whether he will now support that Government policy, or whether he will go into the next election campaigning for a return to poverty pay?
    The Prime Minister: We have not yet had a policy from the Conservative Opposition, but I will keep the
    1282
    House informed when we get one. This Budget will mean that no family with earnings of less than £220 a week will pay any income tax at all. Any family with a full-time worker has a guaranteed income of £180 a week. Child benefit is up. There is new help for child care. There are cuts in corporation tax and small business corporation tax. It is a Budget that both helps people back into work and rewards both enterprise and fairness. That is a new Labour Budget and we are proud of it.
    Mr. Hague: The biggest single tax change in yesterday's Budget was a change to corporation tax, which will cost businesses £3.5 billion in the next two years. When he delivered the Budget statement yesterday, why did the Chancellor of the Exchequer neglect to make that clear?
    The Prime Minister: Business has welcomed the changes that have been made. The Budget will mean that, when the changes are through, business pays less tax than before.
    Mr. Hague: Actually, the Confederation of British Industry spoke about the "adverse impact" of that particular policy. The right hon. Gentleman has spoken about the cut in corporation tax, which, according to the Red Book, gives businesses £700 million in two years' time. Other changes in corporation tax, which the Chancellor glided over in his speech, will cost businesses £2,000 million in the same year. That is in the Red Book—or, apparently, in the Prime Minister's case, the unread book. Will he now admit that yesterday's Budget increased the total tax on businesses for the whole of the rest of this Parliament?
    The Prime Minister: "No" is the answer to that. As we have made clear throughout—this is the reason why business welcomed the Budget—it allows us to move to a situation where businesses are going to have corporation tax reduced. Indeed, corporation tax under this Government—a Labour Government, I remind the right hon. Gentleman—is the lowest that it has ever been.
    Mr. Hague: I have to give the Prime Minister a few more details. How can "No" be the answer to my last question when the total tax reductions for businesses shown in the Red Book add up to £1,600 million and the increases add up to £3,800 million? Is the table in the Red Book—which contains the Treasury's own official figures—correct when it shows a large increase in business taxation for the rest of this Parliament?
    The Prime Minister: For the reasons that I have already explained to the right hon. Gentleman and that were explained by the Chancellor last year, the fact of the matter is that, once the changes are all through, there is a reduction in corporation tax, not an increase. As I have said, this Government have cut corporation tax twice since being in power—a rather better record than that of the right hon. Gentleman's Government.
    Mr. Hague: Is it correct that business taxation has been increased for the whole of the rest of this Parliament—yes or no?
    The Prime Minister: As I have just said, the rate of corporation tax has been cut.
    Mr. Hague: It is a pity that the Prime Minister cannot look at a piece of paper issued by his own Government

    1283
    and say that what it says is true. Why was the Chancellor not straight about that when he presented the Budget yesterday? Why should we not have next year's Budget read out by the Foreign Secretary? He does not care what he blurts out or whom he offends, so he should read out the Budget. After five interest rate rises and rumours of more, with the pound at a level that is strangling the life out of exporters, and with manufacturing output down for five months in a row, does the Prime Minister think that this was the time to add billions of pounds to the tax bills of British businesses?
    The Prime Minister: Let me remind the right hon. Gentleman again that we have cut corporation tax and small business tax. As a result of the changes going through, businesses will pay less tax, not more, which is why business has welcomed the Budget. What is the right hon. Gentleman's policy? He says that he opposes all the changes. He opposes all the revenue measures although in the past he has proposed them—the fuel escalator, for example. He wants more money to be spent, although he opposes all the measures to raise it. He wants to cut tax and borrowing, and he wants action to tackle the pound, he says—although the only action to tackle the pound lies in raising revenues, not depleting them. The fact of the matter is that his figures do not add up, and the real loser by the Budget is the credibility of the Opposition.
    Mr. Hague: The Prime Minister says that the figures do not add up, but the figures that I am reading out to him are the Chancellor's figures, out of the Chancellor's own book. The tax rises for British business are yet another step in the step-by-step betrayal of business in this country. After all the hype of yesterday, now, in the cold light of day, businesses face higher taxes, a crippling exchange rate and falling output. Is not the message to businesses that the Government are not on their side?
    The Prime Minister: No; we are on their side, which is why they have welcomed the Budget. The only people who have not welcomed the Budget are the Conservative party. When we hear their figures today—[HON. MEMBERS: "Your figures."] No; we have cut corporation tax and small business tax. When we hear all the Conservatives' comments today, the fact of the matter is that their figures simply do not add up. I can tell the right hon. Gentleman that if he wants to stop raising revenue while at the same time increasing spending, one of the toddlers on the Chancellor's new child care scheme with a set of beads could make a better job of opposition than the present Opposition.
    Mr. Ian Stewart: From what the Leader of the Opposition has said today, it is clear that the official Opposition cannot count and cannot read. [HON. MEMBERS: "Question?"] Does the Prime Minister agree that over the past 18 years the Tories' high levels of taxation have penalised those on low incomes? Does the Prime Minister—
    HON. MEMBERS: "Question?"
    Madam Speaker: Order. If the Opposition had been quiet they would have heard the hon. Gentleman put a question. I have been listening, and he has put his question.
    Mr. Stewart: Does the Prime Minister accept that the taxation system should pay work? Will he ensure that
    1284
    the proposed system of working families tax credit is implemented as soon as possible, so that the families in my constituency of Eccles and throughout the country can benefit as soon as possible?
    The Prime Minister: Yes. The scorn of Opposition Members is due to the fact that they do not care about the low-income families who will benefit from the Budget. We have cut not merely corporation tax and small business tax, but national insurance. The effect of raising child benefit, with the extra help with child care and the working families tax credit, will both make work pay and help families in poverty. The Budget is good for all of Britain.
    Mr. Ashdown: As the Prime Minister knows, we broadly support the new direction set in the Budget. [Interruption.] I suppose we would have to, as more of its provisions were drawn from our manifesto than from the Prime Minister's. However, as the Prime Minister also knows, we regret what we regard as the Government's timidity on the environment, and we believe that the provisions in the Budget are inadequate to deliver the right hon. Gentleman's personal promises on health and education. I ask the Prime Minister a very specific question: are rising hospital waiting lists now at an end?
    The Prime Minister: As the Secretary of State for Health will say, we will lower national health service waiting lists—by spending more money than either the Conservatives or the Liberal Democrats were intending to spend. I should point out to the right hon. Gentleman—because, as he knows, 1 always like to be very welcoming to Liberal Democrats—that, while he is saying that we have not done enough to meet our environmental targets, other Liberal Democrat spokesmen are criticising us for raising petrol prices.
    Mr. Ashdown: The reason for that criticism is very simple: the Prime Minister has cut emission targets from 20 per cent. to 8 per cent.
    However, let us return to hospital waiting lists. The Prime Minister says that hospital waiting lists will be cut, which is welcome, but cut from what level—from the level that he inherited, from today's record level or from the even higher levels that will be reached in the next few months?
    The Prime Minister: Very simply, from the levels that we inherited; that is our promise, and we will keep it. The only way in which we can lower national waiting lists—which have been rising since March 1995—is by putting extra cash into the health service. This year, we have provided an extra £300 million. As was announced in yesterday's Budget, next year an extra £1.7 billion will go into the health service. That is a lot more money—even by the Liberal Democrats' arithmetic—than the £1.1 billion that they were promising before the general election. We will get waiting lists down and deliver on our pledge. We will keep our promise, but we will do it while keeping a tight grip on public spending—because we promised that, too.
    Ms Oona King: Is the Prime Minister aware that the recent genocide in Rwanda of 1 million people in three months is possibly the worst the world has seen? It is

    1285
    worse than, for example, the deaths of 180 million Africans in the slave trade or 6 million Jews in the second world war for one reason: the United Nations did not exist and was not there watching when those horrific genocides occurred. In the light of that fact, although I speak as someone of African and of Jewish descent, I appeal to anyone of human descent to help to ensure that victims of genocide do not go unhelped. Will the Prime Minister give his assurance that the United Kingdom will be a friend and staunch ally to Rwanda? Will he also push for the IMF and the World bank—as a minimum measure—to reduce Rwanda's crippling debt burden? If we do not prioritise genocide, our priorities must be wrong.
    The Prime Minister: I thank my hon. Friend for her question. Since the 1994 genocide, we have put about £190 million of aid into Rwanda. We are continuing to work, both within Europe and with other countries, to ensure that Rwanda gets the debt relief that it desperately needs for its future. Although we have been able to help many of the families who were victims of genocide with the aid that we have provided, I agree with my hon. Friend that more can be done. We will see what we can do—both within the European Union and elsewhere—to increase the help that we are giving.
    Mr. Baldry: Does the Prime Minister know that, this year, Oxfordshire county council has a £3.5 million deficit in its education budget, which is leading to very severe cuts in school budgets, such as that of the Warriner school? The cuts are being made at a time when people in Oxfordshire are having to face a double-digit increase in council tax bills. Given that much of the £250 million for education that was announced yesterday seems to be for inner-city education action zones, is the Prime Minister satisfied that sufficient money is going into education in English shire counties?
    The Prime Minister: I do not doubt that more could go in, but the fact is that—quite apart from yesterday's Budget announcement—in the coming year, an additional £800 million will go into education spending, which will help areas such as Oxfordshire. That sum is £800 million more than the previous Government were, before the general election, intending to spend on education.
    I understand that many schools still face problems. We have always said that our first priority would be to sort out the public finances, which we have done, and that our second priority would be to invest in our schools and hospitals—on the basis that we are not simply throwing money at them but achieving long-term reform that improves standards and makes possible the excellent service that people want them to perform. I sympathise with the current problems of the hon. Gentleman's constituents, but, next year, we will put in extra money, which is a lot more than the previous Government planned to spend.
    Mr. Efford: Will my right hon. Friend join me in welcoming the news that the family of murdered teenager Stephen Lawrence have accepted the Home Secretary's assurances and will take part in the public inquiry? Will he also join me in condemning journalists who have managed to get articles into daily newspapers that have denigrated the people in my constituency and portrayed them all as racist? Does he agree that such reporting does
    1286
    nothing to address the issue, which exists throughout our society, or to bring together the whole community, including the good people in my constituency, which is overwhelmingly not racist, to attack and address the issue?
    The Prime Minister: I am obviously pleased that the inquiry is now back on foot, and I very much hope that it will continue to be so. I obviously understand and sympathise with the position of the Lawrence family, and I am delighted that a suitable agreement has been found. As for my hon. Friend's constituents, I believe that the vast majority of people in this country want to live in a society where, irrespective of people's race, they are treated equally and are of equal status. That is a fundamental principle, which I am glad to say is shared by every single mainstream political party in the House. That is one reason why we can be optimistic about the future of race relations.
    Mr. Gorrie: When traditional Labour voters ask why the Government are sticking to Tory expenditure plans and Tory Treasury rules, which will result in yet further cuts in essential services in the coming year and create the worst services in living memory, how does the Prime Minister respond to such supporters, who feel betrayed?
    The Prime Minister: My hon. Friends tell me that the hon. Gentleman used to be in a Conservative coalition on Edinburgh council some time in the early 1990s, so I do not think that we should be too persuaded by what he is saying. We are sticking to very tight spending plans—that is right—but within those spending plans it is completely wrong to say that we are spending the same sums of money as the Conservative party on the same things: we are not.
    We are actually spending more money on health and education than the Liberal Democrats ever asked for. They shake their heads, but they should read their manifesto. We are spending about double what they wanted on, for example, education and health. It is absurd for the Liberal Democrats to oppose every measure that raises revenue, such as the windfall tax, but end up saying that they want all the spending, or that it all comes out of their 1 p on income tax. I am sorry but, in government, there is a bottom line of credibility, and the Liberal Democrats are not meeting it.
    Mr. White: Given that bus services have been devastated since deregulation in 1985, particularly in rural areas, does the Prime Minister agree that yesterday's announcement of £500 million for transport, and particularly £50 million for rural areas, will be especially welcome in my constituency, but that it is only a start, and more must be done to achieve our sustainable transport objectives?
    The Prime Minister: Yes. About three quarters of our rural communities do not have a proper or regular bus service. That is the legacy that we have inherited. I hope that the rural transport fund will at least give some forward relief to people who need a proper rural bus service and that, in future, we are able to do more. The £500 million over and above what the Conservatives planned to spend is an additional indication of how it is quite wrong to say that we are sticking to Conservative

    1287
    spending plans. We are not sticking to Conservative spending plans, but we are sticking to Labour's tough rules on financial prudence.
    Mr. Greenway: Will the Government's review of child benefit include the option of ending the separate taxation of men and women? Would not that be the inevitable consequence of taxing child benefit?
    The Prime Minister: No, I do not accept that. I hope, from the indication given by the Leader of the Opposition yesterday, that the Conservatives do not object to the review in principle. We have to look at all the factors. If we are to increase child benefit by substantially more than inflation—yesterday we announced a 20 per cent. increase in child benefit, which is the largest for decades—the question of how best to do it is properly on the agenda. I hope that the Conservative Opposition will react constructively to our proposals when we table them.
    Mr. Tony Clarke: Contrary to the official Opposition's announcement yesterday that they support little of the Budget, will my right hon. Friend join me in congratulating our right hon. Friend the Chancellor on his announcement about child care tax credits? The proposal will not only empower those parents who want to go to work but enable them to do so in the knowledge that up to 70 per cent. of the cost will be met by the Government. Will my right hon. Friend announce when the credit will come into force so that my constituents can take full advantage of it? Will he also ensure that the child care offered is of a sufficient standard to give parents comfort about how their children will be looked after while they are at work?
    The Prime Minister: The changes come into effect next year. The £300 million for child care that my right hon. Friend the Chancellor announced some time ago will take effect far sooner. My hon. Friend is right. Many families, even those earning up to £30,000 a year, will benefit from the proposals, which will allow them to afford decent and quality child care. That is why our proposals are important. We do not want to prevent people from staying at home and looking after their children if they wish to, but they should have the choice to go out to work, knowing that they will get some help with the costs of child care.
    Mrs. Spelman: Does the Prime Minister believe in principle that the tax system should favour marriage or be neutral between married and unmarried couples?
    The Prime Minister: Whenever we have this debate, I am perfectly happy to say that, if people can give us a sensible proposal on how to assist marriage, we are prepared to do so. It is as well to be honest about the problems we face. As my right hon. Friend the Chancellor pointed out yesterday in relation to the married couple's allowance, single parents get the same allowance at the same rate as do unmarried couples with children. It does not seem rational to focus the help in that way. It is better to do what we announced yesterday and help children, because that helps all families. That is the best way to do it. Of course I believe in marriage, but
    1288
    every time that we ask for proposals from people who want to assist the process, it is difficult to get one that makes sense.
    Mr. Linton: Will my right hon. Friend reassure my 87-year-old constituent in Battersea, who has had to suffer a five-month delay for her knee operation, that the Government are fully committed to tackling the backlog in waiting lists that grew so rapidly under the previous Government? Will he assure us that the £500 million announced in yesterday's Budget, coming on top of £1.5 billion in last year's, will be dedicated above all to reversing the rise in hospital waiting lists, to honour the pledge on which the Government were elected?
    The Prime Minister: Yes, of course it will. The money that is going in today will be additional money to help reduce national health service waiting lists—again way over and above anything that was asked for by the Liberal Democrats or promised by the Conservatives. However, it will take time—it was always going to take time. Once we have the finances sorted out, as we have done, we shall be able to get additional money in. That is the right way to do it, so that the investment that we put into the health service and our schools carries on year on year. We have to get away from the system under the Conservatives, in which spurts of spending were followed by cuts.
    Mr. Butterfill: The Prime Minister is well known for his concern for the safety of British citizens travelling abroad, and in particular the safety of Members of this House. As hon. Members will want to avoid getting a hostile reception in overseas territories over the Easter recess, will the Prime Minister publish the itinerary of the Foreign Secretary?
    The Prime Minister: The hon. Gentleman and his hon. Friends said during the debate we had on Iraq that we were being remiss in not taking a high-profile attitude in the European Union to ensure that the obligations entered into were adhered to. That settlement was one part of those obligations. My right hon. Friend the Foreign Secretary was entirely justified in doing what he did, and the hon. Gentleman would do better to support him.
    Mr. Barry Jones: Does my right hon. Friend accept that, from time to time, Government Back Benchers will have critical opinions of his Government as well as supportive ones? Does he know that, since he has visited my constituency, the Airbus factory has received £123 million of investment, the Toyota factory has received £130 million of investment and the £40 million Flintshire bridge has been opened, and that, try as I might to be critical, I cannot? Will he accept also that the Budget was magnificent?
    The Prime Minister: On balance, I would agree. Some people may not like some old-fashioned sycophancy—but not me. I am grateful for what my hon. Friend said, although it may mean that I make slightly fewer constituency visits in future. The money has been given on the basis of highly efficient production and it is a tremendous tribute to those who work in the two plants in his constituency. I am delighted they have done so well and I look forward to coming back and announcing new jobs in his constituency later.

ROYAL ASSENT
Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

Consolidated Fund Act 1998

Fossil Fuel Levy Act 1998

Wireless Telegraphy Act 1998

Nuclear Explosions (Prohibition and Inspections) Act 1998

NHS (Waiting Lists)
3.31 pm
The Secretary of State for Health (Mr. Frank Dobson): Madam Speaker, yesterday's Budget has, rightly, been well received. It confirmed new Labour's reputation for economic competence. It was a Budget for enterprise, a Budget for work and a Budget for families, and it was a Budget for our national health service.
The £500 million the Chancellor announced yesterday takes to £2 billion the extra money that the Government have put into the health service in the 10 months we have been in power. That £2 billion in ten months is about £5 million extra for the health service for every single day of the coming year. That is more than the Tories ever planned, and even more than the Liberals promised.
I intend to put that money to very good use. At the general election, we promised to save the national health service and to modernise it. We have kept that promise, as we keep all our promises. We have saved the national health service; we are modernising it. We are doing that in partnership with the million people who work in the health service. We have asked them to work in new and better ways, and we have matched that by extra funds.
When we took over, waiting lists had been rising since 1995, and record numbers of patients were waiting for treatment. I made it clear that the first priority for the NHS was to ensure that the health service avoided a winter crisis. I asked the people working in the health service to make contingency plans, to break down the Berlin wall between hospitals and community and social services, and to make sure that emergency and urgent cases were treated promptly.
NHS and social services staff responded magnificently. The Government provided an extra £300 million, and, with the help of the 1,500 special schemes introduced this winter, the NHS has treated record numbers of emergency cases and record numbers of people off the waiting lists.
As top priority was given to emergencies, waiting lists have grown despite all the hard work of the staff. I set that priority, and the health service met that priority—I congratulate it on doing so. That effort was not simply a one-off for the winter, however; it was a long-term investment for the future. It has put in place new partnerships between general practitioners, hospitals and social services to tackle long-standing problems, which had denied some people high-quality treatment at home or in the community. Those new partnerships will endure.
Now we shall build on those partnerships. We shall bring the same combination of investment and modernisation to bear down on waiting lists. Today, I can spell out that our top priority for the coming year is to reduce waiting lists, using the extra £500 million that my right hon. Friend the Chancellor announced in his Budget yesterday. That £500 million comes on top of the extra £1.2 billion for the NHS next year that had already been announced.
Of that extra money, £417 million will be invested in the health service in England. Three hundred and twenty million pounds of that will go directly into cutting waiting lists; it will be invested in more operations, more surgical and medical sessions, more doctors, more nurses, and more flexible seven-day working. It should result in the biggest increase in the number of operations in the history

1291
of the NHS and the biggest ever cut in waiting lists. The money will be earmarked and targeted to deliver what patients most want—shorter waiting lists.
Each health authority and trust will have to play its part, and each will be set a challenging individual target. The waiting lists action team will step up its advice and support, and performance will be closely monitored in every part of the country. Best practice will be identified and spread, and everywhere standards will be driven up. There will be rewards for those who hit their targets and sanctions for those who do not. The chief executive of the NHS, Alan Langlands, will oversee performance in meeting those targets; he will regularly report to me personally.
The rest of the extra money will also be invested in cutting waiting lists. The flow of operations will be maintained by building on the success of the new ways of working that were pioneered this winter, and through better primary, community and mental health services. We shall also start to modernise the waiting list system, which is archaic. Some of the extra money will be spent on pioneering new streamlined appointment systems so that day case patients can book the date that suits them for an operation. Again, we shall manage the new investment closely to ensure that our objectives are delivered.
I said last year that the waiting lists were like a supertanker—it would take time to slow them down, longer to bring them to a stop, and even longer to turn them around. Waiting lists are still growing, but, as our measures bite, we shall halt the rise, and, by the second half of the year, they will be coming down. Through targeted investment, good management and innovative change, we shall do better than the Tories ever did. In the 18 years of Conservative government, the number of people on waiting lists rose by more than 400,000. In the next 12 months of a Labour Government, the numbers will fall, and will continue to fall.
By April next year, I expect hospital waiting lists in England to be shorter than the 1.16 million record level that we inherited from the previous Government. That is the target. Delivering that target will be a significant stepping stone towards fulfilling our pledge to reduce, in this Parliament, waiting lists by 100,000 from the level that we inherited.
The target is ambitious, but I am confident that, provided we do not encounter a dreadful winter or major epidemic, we can meet it. [HON. MEMBERS: "Ah."] Fools opposite apparently think that the system could cope with a major epidemic; perhaps they think that we could cope with the arrival of an asteroid. I am confident that the target can be met, because our ambition to cut waiting lists is shared by the people who do the work in the health service, as well as by the people who need operations.
The Budget was a defining moment, because it showed clearly what new Labour means: enterprise, efficiency and fairness going together. The Government's sound management of the economy has enabled us to find more money for our priorities, and in particular for health. As a result, there can be extra investment.
I am determined to ensure that patients and taxpayers get full value for that investment. That will require modemisation and reform, and I know that the staff of the
1292
NHS will match our commitment with their own. It was a new Labour Budget for a new health service, delivering on our promises to the people at the general election.
Mr. John Maples: In the general election campaign, the Labour party made a specific promise: to reduce waiting lists by 100,000. The Secretary of State talks a lot about ambitious targets and supertankers, but I wonder whether the electorate would have been so impressed if they had known that it was a five-year promise. Somehow, reducing waiting lists by 20,000 a year does not sound quite so impressive. Even he should be able to turn a supertanker round in less than five years.
Since the general election, far from falling by 100,000, waiting lists have risen by 100,000, and they have almost certainly continued to rise this winter, and will probably do so this summer. Labour made another promise, intimately connected with waiting lists: to spend more money than us, every year. Our spending plans were criticised in the most exaggerated and emotional terms and denounced as inadequate. Has Labour done better? No, it has not. [Interruption.]
Labour Members do not like this figure, but, for 18 years under the Conservatives, the national health service budget increased by an average of 3.1 per cent. a year over and above inflation. Under Labour, the increase for last year and next year will average 1.8 per cent.
Yesterday, the Chancellor said that there would be £500 million more for health, but the Red Book details show that the increase is only £420 million for England, of which only £340 million is being spent on the NHS. Why is England getting only 84 per cent. of the money, when it got 90 per cent. of the winter emergency money? According to the Red Book, which many members of the Government have clearly not read, England is getting £420 million out of the £500 million. What is the other £80 million—the difference between the £420 million allocated to the Department and the £340 million for the NHS—to be spent on?
Will the Secretary of State confirm that hidden away in the Red Book was an increase in the estimate of inflation for next year; that the estimate of the gross domestic product deflator was raised from 2.75 per cent. to 3 per cent.; and that that will reduce real spending in the NHS by £90 million? When that is taken into account, the £500 million becomes not £420 million or £340 million but £250 million extra in real terms for the NHS in England.
The Secretary of State says that he intends to spend £320 million on reducing waiting lists, and that he will get us back to where he started in two years' time. What an achievement: he will have turned his supertanker 360 deg, and gone absolutely nowhere in two years. Will he go a little further and promise the House that his pledge to reduce waiting lists by 100,000 from the figure that he inherited will have been fulfilled by May 1999?
Can the Secretary of State confirm that the national health service budget increased in real terms by only 1.27 per cent. in 1997–98; that, even with the extra £500 million announced yesterday, the increase in real terms will be only 2.3 per cent. in 1998–99; that the average real-terms increase between 1979 and 1997 was 3.1 per cent.; and that, if the NHS budget had continued

1293
to be increased at the same rate under Labour as it was under the Conservatives, the NHS would have an additional £940 million to spend next year?
The Secretary of State has been all over the media, congratulating himself on the extra £500 million, which now turns out to be £250 million. We should like to know what happened to the £2 billion that was being trailed across the Sunday newspapers a couple of weekends ago. That really would have made a difference, and that is what the Secretary of State wanted, but he failed in his negotiations with the Chancellor. That was new Labour 1, old Labour 0.
Far from crowing about his success, the Secretary of State should be apologising for his failure. Since the election, waiting lists have gone up 100,000 and the cash has gone down by £940 million. Is that what he means by saving the NHS—with longer waiting lists and less money?
Mr. Dobson: It is clear from that response that I need to keep the figures simple, because the hon. Gentleman finds them difficult to understand. Since we got in, we have found £2 billion more than the Tories provided for in the Budget for the current year and that for next year. That is £2 billion more than they intended to spend in their last Red Book.
That money is not unreal money or discounted money, but will go on real operations, carried out by real doctors, in real operating theatres, helped by real nurses and other people, and it will treat real patients. That is why it has been welcomed by representatives of doctors, nurses, NHS managers and the unions representing other people who work in the health service.
There is no point in the shadow Secretary of State comparing chalk with cheese. I am comparing what we are providing in this year's and next year's Budgets with what was provided by the previous Tory Chancellor of the Exchequer in his last Budget. When we take those into consideration, we find that there is £2 billion more than the Tories ever intended. I might add, for good measure, that there is £1 billion more than the Liberals promised.
Audrey Wise: Does my right hon. Friend agree that the full use of operating theatres, which at present stand empty for some part of the week in many parts of the country, would mean that we could use the capital resources of the NHS as well as the professional skills of surgeons and others far more effectively? Has he noticed that, in the days of the Tory Government, when waiting list reductions took place at all, they took place as a result of making people wait to go on the waiting lists? I congratulate my right hon. Friend on a far more straightforward approach to the problem.
Mr. Dobson: I certainly agree with much of what my hon. Friend says. Clearly there will have to be a lot more operations in operating theatres in the coming year. From my discussions with representatives of the people who have to do that work—no one in this House will do it: it will be the people in the hospitals—I am convinced that they are ready, willing and keen to do it. We have now found the money to enable them to do it.
We have to get away from the ludicrous situation that has prevailed, admittedly for years, in the health service, in which theatre crews—surgeons, anaesthetists, nurses
1294
and others working in the operating theatre—have had to stand down for the last six weeks or two months of the financial year because their health authority could not afford to pay the small additional amount to look after patients after they had been operated on. We have to get away from that nonsense, and we are going to get away from it.
Dr. Evan Harris: The Liberal Democrats welcome this overdue action on the crisis in waiting lists, and we welcome the overdue and tiny extra spending on community care, but does the Secretary of State accept that, if he followed the costed Liberal Democrat alternative Budget, there would be much more than the £1.7 billion available to spend on those problems next year—in fact, double that? He says that he will modernise waiting lists—that is the new euphemism, modernise—but does that mean that he will change the goal posts?
Can the right hon. Gentleman assure me that all operations will still be offered in the NHS next year that are offered now? Can he assure us that in-patient waiters will be tackled, that this will not just be a blitz on day case waiters, and that hips will be done as well as toenails? Will long waiters be tackled—people waiting over a year, whose number has tripled to over 68,000 since May?
Given the recruitment crisis among doctors, nurses and physios—a recruitment crisis not helped by staging their pay award—where will all the extra doctors and nurses and professions allied to medicine come from to do all these extra operations?
Mr. Dobson: The motto of the Liberal Democrats appears to be: think of a number, put it in their election manifesto, and double it when they lose. At the general election, they said that they wanted £540 million a year extra for the health service. We have put £2 billion into the health service over the first two years, which is roughly double what they advocated. It is difficult for them to criticise us for spending twice as much as they would have, had they by some freak of fate won the general election, which they did not.
I confirm that we intend to reduce the in-patient waiting list. We are making a special effort to ensure that the 18-month waiters list is eliminated by the end of this year. As we progress in getting the waiting list down, waiting times should come down as well. It will be a long, hard struggle for the people working in the national health service, but they asked for the extra money. Representatives of the British Medical Association, the Royal College of Nursing and health service managers have welcomed the money. I do not understand why Opposition Members appear to be the only people who do not.
Mr. David Hinchliffe: I warmly welcome today's announcement, and congratulate my right hon. Friend on the manner in which he has won huge additional resources for the NHS, which will directly affect many of the problems that the Government have inherited from the Conservatives.
I urge my right hon. Friend, in using the money, to build on the obvious success of the winter beds initiative to establish closer working relationships between the

1295
national health service and social services, and to tackle the problems of the Berlin wall to which he referred. The issue is directly related to bed blocking. Will he also consider the problems facing local authority social services departments, many of which are making significant cuts in their budgets? Does he recognise that there is a partnership between local authorities and the NHS, and that local authorities should be enabled to their play their part in resolving these difficult problems?
Mr. Dobson: My hon. Friend, who does such a good job chairing the Health Select Committee and has devoted a substantial part of his parliamentary life to promoting the interests of the NHS and social services, is right to say that we need to draw on the good experience of the way the NHS, social services departments and certain voluntary bodies used the extra £300 million for the winter.
I may be letting out some terrible secret, but it was easier to convince some of my colleagues of the ability of the NHS to respond and to put money to good and immediate use when I could point to the immense success of the initiatives taken in the winter. They are a credit to everyone concerned. More than 1,500 new schemes were introduced, and I asked for reports on them all.
I asked for honest reports, because, if they were put together quickly, it is likely that, out of 1,500, one or two may have turned out to be a total frost. If we are going to learn from one another, we need to learn from the things that work well and the things that go badly. It is on the basis of our experience of the brilliant efforts of the NHS and social services with the money for the winter that I am confident that we can have equal success with targeted funds to tackle the waiting list problem.
Mr. Tom King: Is the right hon. Gentleman aware that, while it may seem a clever debating point here to quote Conservative years two and three as though they were likely to be the expenditure levels in the NHS, every year the Conservative Chancellor for the year in question substantially increased health expenditure, which led to the 3 per cent. increase in real terms in health expenditure quoted by my hon. Friend the Member for Stratford-on-Avon (Mr. Maples)? Is he aware that this year is clearly the most difficult that my local Taunton and Somerset NHS trust has ever faced, and that the trust is likely to be in deficit? I do not see the sums announced in the Budget as likely to make a significant difference to that situation.
Mr. Dobson: The right hon. Gentleman obviously knows better than the people representing nurses and doctors, but he certainly does not know too much about his own Government's spending plans, because we are talking not about years two and three, but about years one and two—the year we are in now started off as a Tory year. There was a Tory Government at the beginning of this financial year, so we are not comparing oddities or theories; we are comparing the amount of money that the Tory Government allocated for this year—we started the year with that and did the allocations for the health service on that basis.
I fully accept that a great number of health authorities and trusts are in severe financial trouble, as they were under the previous Government. When we took over, 60-odd of the 100 health authorities were in debt, as were
1296
120-odd of the 400-odd trusts, so that is no novelty. We have reduced that debt by reintroducing financial rigour into the health service, at the same time as people are doing more work.
Mr. Dale Campbell-Savours: I warmly welcome the statement, for which we have all called over a long period. However, I have a problem in west Cumberland that has to be resolved, which is that loose talk by consultants in Carlisle Hospitals NHS trust about the configuration of services in Cumbria is totally undermining morale in West Cumberland hospital. That has to stop. Is my right hon. Friend prepared to look into those matters on my behalf? We are very worried indeed.
Mr. Dobson: My hon. Friend raises an important point. When there is any question of reorganisation of the health service, everyone finds it disturbing, but it behoves everyone involved to try to adopt a reasonably moderate tone in what they say about such matters.
Mr. Bernard Jenkin: Like you used to in opposition?
Mr. Dobson: Let me tell the hon. Gentleman—
Madam Speaker: Order. I shall tell the hon. Gentleman something: he will not be called for his question if he shouts from the Back Benches. He is a Front-Bench spokesman.
Mr. Dobson: I can say that I have probably taken a more rational attitude to hospital change in my constituency than any other Member of the House of Commons. I have been in favour of amalgamating two great teaching hospitals and of amalgamating into those two great teaching hospitals a large number of other small hospitals in the area. Not many Tory Members of Parliament can say that.
Sir Geoffrey Johnson Smith: Is the right hon. Gentleman aware that one of the reasons why waiting lists have increased is that some health authorities and trusts have been advised, and in some cases instructed, not to send patients out of area or even to private hospitals—some of them non-profit—which can carry out the surgical or other treatment to a standard equal to that offered by the NHS, and in some cases at less cost?
Mr. Dobson: Generally speaking, if someone is sent for an operation in the private sector, it is not at less cost. Some people running loss leaders may manage it, but generally speaking operations are more expensive in the private sector. However, the restrictions on where health authorities can send patients were part of the system we inherited, and we are getting rid of them because, like the hon. Gentleman, I think that they are stupid.
Mr. Kevin Barron: Will my right hon. Friend tell us how quickly patients currently on waiting lists are likely to see action as a result of the new investment in the national health service?
Mr. Dobson: The people who run the health service will know that money is available. We are telling them that they can start making the necessary plans, and,

1297
from 1 April, incurring the necessary expenditure in the knowledge that the money is coming. As soon as 1 April arrives, people who would not be treated but for the extra £500 million that the Chancellor has found will begin to be treated. Additional people will be treated.
Mr. Nicholas Winterton: Medical treatment and medical care should not be the battleground of party politics. Does the Secretary of State agree that advances in medical skills and technology mean that, year by year, additional burdens are inevitably placed upon the national health service? The East Cheshire NHS trust in my constituency benefited from the winter beds initiative. If the money that the Secretary of State is spending in an attempt to reduce waiting lists achieves that objective, I am prepared to say from this side of the House that I at least will be eternally grateful, as will my constituents.
Mr. Dobson: Yet again, I thank the hon. Gentleman, who, in days gone by, was a distinguished Chair of the Health Select Committee and member of the Social Services Select Committee. He has always spoken up for the national health service.
I recognise the hon. Member's point entirely: technological changes and pharmaceutical improvements offer a challenge to the national health service. However, I would like to change morale within the service.
From the point of view of patients and clinicians, the new technology is wonderful and brilliant. It means that people who could not be treated in the past may now receive treatment. Those who could be treated in only an inferior manner and were offered palliative care can now receive treatment to cure their condition. We must change the whole approach, so that the national health service feels confident enough, and is sufficiently well funded, to look to and welcome change, and to deploy it in the best interests of patients.
Judy Mallaber: I hope that hon. Members on both sides of the House will offer warm congratulations to the Secretary of State on securing the additional money. Will my right hon. Friend ensure that at least some of the extra £500 million will be used to introduce new and better ways of managing NHS waiting lists?
Mr. Dobson: Yes, indeed. I like to keep statements short, so I referred only briefly to our intention to move away from the archaic manner in which waiting lists are put together and managed. The treatment of patient data and information is a scandalous disgrace. The national health service is the only major institution in the country that stores basic data on fairly scrappy bits of paper that have a tendency to get lost. We must introduce much better information technology, for the benefit of all.
Mr. Crispin Blunt: Is the Secretary of State aware that, at the time of the general election, the Labour party displayed in my constituency a poster promising shorter waiting lists? I have asked my local hospital about the length of waiting lists in each specialty area of treatment available to my constituents. What poster may I expect to see if the right hon. Gentleman fails to deliver shorter waiting lists by the next general election?
Mr. Dobson: We will not fail to deliver. I would be interested to learn whether the hon. Gentleman displayed
1298
a poster in his constituency at the last general election saying that waiting lists would rise under a Conservative Government—because that was inevitable.
Mr. Dennis Skinner: Does my right hon. Friend agree that it would be much easier to reduce waiting lists if we could start to change more dramatically the dodgy system that we inherited from the Tories in respect of the NHS? I do not think that my right hon. Friend has an easy task—it is probably the biggest nut to crack in government. Did he hear the Chancellor of the Exchequer refer to the extra £500 million that will go into the contingency fund? Will my right hon. Friend keep an eye on that money? He needed some of it last winter, and I think he might need it again this year.
Mr. Dobson: I understand the point that my hon. Friend makes. I am not evading his question if I say that everyone working in the health service shares my view and wants the comprehensive spending review to produce a new approach to funding of the NHS, so that the NHS will know for the next three years what resources it will get, and will be able to plan properly and deal with them. I am reasonably confident that the comprehensive spending review will enable us to do that, to the infinite benefit of the people who work in the health service and, even more so, of the people they look after.
Rev. Martin Smyth: I welcome the statement. I read in the papers in Northern Ireland this morning that £13 million is going there. We welcome that, but unfortunately we cannot question the Minister on how it will be spent.
I underscore the point made by the hon. Member for Wakefield (Mr. Hinchliffe): much bed blocking is due to the fact that social services cannot take people into residential accommodation. Does the Secretary of State agree that the problem does not arise just at the end of the financial year, and that purchasing authorities do not pace themselves properly earlier in the year so that people can be operated on, instead of money being held back lest emergencies develop?
Is it not important that the attitudes of managers and administrators should be changed? Often people get a letter when they are on their way to work, on the morning that they are required to present themselves for an operation. That is a waste of health authority time.
Mr. Dobson: I take on board the points that the hon. Gentleman makes. In Northern Ireland, the national health service and social services have worked closely together, which was extremely helpful last winter. I was privileged not long ago to hand over the nursing innovation of the year award jointly to people in the NHS and social services in Northern Ireland, which I am sure was well deserved. Northern Ireland was also well represented among those who did not quite make the final.
Mr. Peter L. Pike: I congratulate my right hon. Friend on the good news that he announced this afternoon. He will know that one of the waiting lists consists of people suffering from multiple sclerosis, who are considered suitable for treatment with

1299
beta-interferon, but who cannot receive it. Will some of those people be able to benefit from the additional money that is being made available?
Mr. Dobson: It may be so, but the decision will have to be taken by the clinicians involved. There are disputes among doctors as to the effectiveness of beta-interferon for substantial groups of patients.
One of the points that I am making to the pharmaceutical industry as it introduces more and better ways of treating people is that it must do its part of the job of identifying patients suffering from degenerative diseases who will benefit from a particular new drug. Often the drug will benefit only 17, 23 or 30 per cent. of patients, and we cannot allow false hopes to be raised in the remaining patients or in doctors. We must have a clearer, more sensible system, so that people are not misled into believing that something that has been discovered will cure them, when it will not.
Mr. Andrew Lansley: I am sure that the Secretary of State is right to say that nurses, doctors and representatives of health trusts will welcome additional resources, not least because they know that the increase in health resources this year and next is below that which is necessary to maintain services and to respond to demography and technology change.
Will the right hon. Gentleman explain why, if the additional resources arise from an underspend in this financial year, they are not being made available to the NHS in this financial year, rather than being carried forward and being made available in the next financial year? Will the additional resources for winter pressures and the additional £500 million of which the Secretary of State speaks be consolidated into the NHS baseline expenditure for negotiation with the Chancellor of the Exchequer and the Chief Secretary for 1999–2000 and beyond?
Mr. Dobson: The hon. Gentleman has clearly consolidated the £300 million into his figures. The fact that we found the £300 million reduces the apparent increase for next year, as he knows, and he has drawn upon that.
On general funding, I know, the hon. Gentleman knows, and everybody in the country knows, that the national health service does not have at its disposal all the resources it needs. That is why we are having a comprehensive review of spending by the Department of Health and all other Government Departments—so that we can change the priorities and ensure that, in future, the national health service has sufficient sustainable funds to be able to do its job properly, which I assume all of us want.
Ms Karen Buck: Will my right hon. Friend join me in paying tribute to the magnificent work done by national health service staff during the past winter, particularly in the hospitals that serve my constituency—St. Mary and St. Charles? Does he agree that the £500 million that he has announced this afternoon will lift pressure from health service staff by giving them the tools to do the job?
Mr. Dobson: It will indeed lift the pressure on health service staff, but they are applying further pressures on
1300
themselves, because the nursing and medical professions are more dedicated to improving the quality of performance, to measuring outcomes and to having evidence-based medicine for the benefit of patients than they have ever been. It is our job to encourage and sustain them in that, and the £500 million will go a long way down that road.
Mr. Edward Davey: Earlier this afternoon, in answer to my hon. Friend the Member for Oxford, West and Abingdon (Dr. Harris), the Secretary of State said that, by the end of this year, waiting lists will have been cut so that no one will have been waiting for 18 months or more for an operation or treatment. Does he recall that, on Thursday 19 February this year, his Department issued a press release in his name, which said:
"by the end of March nobody should be waiting over 18 months for treatment."
When is it? Is it March this year or December this year?
Mr. Dobson: It would be a bit of a respite for all of us if it was December this year. The hon. Gentleman should know—allowing for the fact that he is a Liberal—that, generally speaking, financial matters and figures in the health service are calculated on the basis of financial years, which end on 31 March.
Dr. Howard Stoate: Does my right hon. Friend agree that one of the most important features of his proposals is that money will now be tied to outcomes? How will he ensure that it is put to best possible use, so that people in my constituency and elsewhere will see genuine improvements in their services?
Mr. Dobson: As I said in my statement, there will be incentives to ensure that people spend the money where it is intended, and sanctions for those who do not.
Mr. Andrew Tyrie: Will the Secretary of State answer at least one of the concerns raised by my hon. Friend the Member for Stratford-on-Avon (Mr. Maples)? In 1998–99, how much of the £500 million is accounted for by the increase in the GDP deflator from 2.75 per cent. to 3 per cent., set out in the Red Book on page 108?
Mr. Dobson: If the hon. Gentleman wants to talk about the GDP deflator, he should know that one does not set it against the £500 million extra; it should be set against the £36 billion or £37 billion that the health service will be getting as a whole. I emphasise yet again that, whatever he may say about Red Books, Green Books, or any other books for that matter, the fact is that the people working in the health service, who will have to do the work, who deal with the operations, welcome this money, because it is an extra £500 million that will be spent on real nurses, real doctors and real operations.
Ms Julia Drown: This extra much-needed money for the health service will be welcomed by my constituents, just as the winter pressures money made a real difference to Swindon patients this year, and made the winter much better than it was last year. Will my right hon. Friend encourage trusts and the waiting list task force to take into account suggestions

1301
from patients and front-line staff, so that together we can get the best ideas about how services can be provided more efficiently and effectively, and thereby help to reduce the waiting lists?
Mr. Dobson: I entirely agree with my hon. Friend—that is what we are trying to do.
Mr. Tony Baldry: May I return to the point made by the Chairman of the Select Committee? Will any of the money go to local authority social services? If it does not, it will be difficult for Oxfordshire county council to play its part in moving patients on from hospital, and beds will inevitably be blocked. We all welcome extra money for the NHS, but defeating waiting lists will be difficult unless social services can play their part.
Mr. Dobson: The success of the winter initiative was that social services and the national health service co-operated to a greater extent than ever before, and most of it will remain in place. I said in my statement, albeit briefly, that some of the money will go on community services—I thought that I had made that clear. We have ring-fenced the additional money that is going to social services for community care for the coming year, and one of the conditions is that some of it must be spent on improving arrangements between social services and the NHS. I think that we are doing what the hon. Gentleman wants us to do.
Mr. John Gunnell: May I thank my right hon. Friend for his statement and for being explicit about the Liberal Democrats' election manifesto promise of £540 million per year for the NHS? Will he say what he would have been able to do had he been limited to the Liberal Democrats' spending promise, because that would give the lie to the bleating we heard on this subject from the leader of the Liberal Democrats yesterday?
Mr. Dobson: I agree with my hon. Friend. Every Member of Parliament is supposed to be a person of honour, so I would expect every elected Liberal Democrat to say that they do not want funds over and above the £540 million that they asked for to be spent in their areas, and generously to allow the money to be spent in other areas.
Mr. Nick St. Aubyn: Is the Secretary of State aware of the latest research, which shows that, because of the withdrawal of tax relief on health insurance premiums, an additional £60 will have to be spent on operations in the current financial year? According to his party's calculations, that is equivalent to 60,000 operations. Does he accept—as we warned him—that cancelling tax relief on health insurance premiums has led directly to significant increases in hospital waiting lists?
Mr. Dobson: It is difficult to reconcile what the hon. Gentleman says with the insurance industry's
1302
announcement that the measure has not made a blind bit of difference, and that people are still paying their premiums. I cannot work out what to take notice of.
Dr. Brian Iddon: Partly as a result of the closure of Bolton royal infirmary, which is now a speculative building site; partly as a result of the lack of 24-hour accident and emergency provision at Leigh infirmary; and partly because admissions are brought in from a wide area because new facilities at the Royal Bolton hospital are adjacent to the M61, accident and emergency work at the hospital has increased by 20 per cent. Will my right hon. Friend please bear in mind the fact that Wigan and Bolton health authority must address that problem urgently? I am pleased by yesterday's announcement.
Mr. Dobson: We shall certainly bear that fact in mind, because we do not want local people in any area to suffer as a result of changes in the health service. We want them to benefit, so we shall consider the points made by my hon. Friend.
Mr. John Greenway: Will the Secretary of State tell us more about how the money will be distributed around the country? He knows that waiting lists grow for different reasons in different areas, and can increase because of lack of provision, or because one health trust is not as efficient as another. Rural North Yorkshire, with which he is familiar, has problems, although waiting lists are not as bad as in other parts of the country.
Does the right hon. Gentleman agree that people would be a little happier about the announcement if they were able to cheer because some of the money was coming to them? Can he assure people in North Yorkshire that the pattern of money going from rural areas to inner cities will not predominate in relation to this money?
Mr. Dobson: Let me make two points. First, about 90 per cent. of the money will be allocated according to the usual formula, so that every area gets some; but a certain amount will be held back to deal with crises or to encourage those who need a bit of encouragement. Secondly, as one who represents an inner-city seat within about a quarter of a mile of the House, I can tell the hon. Gentleman that my health authority received one of the 20 smallest allocations in the country. The area that the hon. Gentleman represents received a good deal more in percentage terms—and I know that his hon. Friends like percentages.
Mr. Tom Levitt: I know that my right hon. Friend is a great believer in long-term planning, so I feel I must alert him to a problem that he may face before the end of the life of the current Parliament. What will happen to all the new doctors and nurses who will be recruited, when no significant waiting lists are left to be reduced?
Mr. Dobson: If—as I hope—we hit the target, there will sadly still be more than 1 million people waiting for treatment. I hope that those doctors and nurses will remain in the employ of the national health service, reducing the figure much further.
People sometimes suggest that waiting lists are not important. Some of the academics who write about health care seem to think that, but we can usually assume that

1303
they are not waiting for operations. Many people waiting for operations are in pain, and their lives and subsequent health may be endangered. I also think that long waiting lists damage the reputation of the health service in a way that practically nothing else does. They are dreary and apparently disorganised, and it looks as though our system—the most efficient in the developed world—is not doing its job properly. That is why it is important to reduce waiting lists.
Mr. Jenkin: After all the irresponsible hype and propaganda that was conducted by the right hon. Gentleman's party in opposition, cannot the British people be forgiven for expecting increased resources for the health service under his party in government, to match, at the very least, what the Conservatives gave year on year on year?
Can I communicate to the right hon. Gentleman the real despair in Essex Rivers Healthcare MHS trust, which is having to close small hospitals around north Essex because it is experiencing the tightest financial circumstances in my memory, if not the tightest for the last 10 or 20 years? Will the right hon. Gentleman re-examine the formula for allocating resources across the health districts, which he has manipulated to favour the inner cities rather than the shires? The same has happened with local government.
Mr. Dobson: Let me make it clear that we changed the formula to reflect need, and added an element to allow for the problems of ambulance services in rural areas. If there has been any fixing of the allocation since we came to office, it has been in favour of rural areas. That is why many people in inner cities are not very happy with the present position, and want it to be re-examined. I must tell the hon. Gentleman that we clearly do need to re-examine the system when areas as deprived as the east end are not getting their fair share.
Mr. Neil Gerrard: My right hon. Friend will know from his recent visit of the serious concern about the way in which Redbridge and Waltham
1304
Forest health authority is managing its waiting lists and its budgets, and about the cuts that it is making in community services. Does he agree that waiting for treatment for mental health problems in the community matters just as much as waiting for an operation in hospital? Will some of the £500 million go into community services? Will my right hon. Friend ensure that whole-service trusts dealing with community services as well as hospitals do not fiddle their hospital waiting lists by cutting community services?
Mr. Dobson: I can confirm that my hon. Friend's health authority will receive its normal allocation, and that money will go into mental health care. On occasion, people suffering from severe mental episodes turn up at hospitals and have to be admitted to wards where they not only occupy beds but make life intolerable for others, which is bad for them and bad for everyone else. We are trying to deal with that important problem.

Questions to Ministers
4.24 pm
Mr. Andrew Robathan: On a point of order, Madam Speaker. On 15 January, at Treasury questions, the Chief Secretary to the Treasury quoted some figures on pension returns, as reported in column 477 of the Official Report. The figures interested me, so I tabled a parliamentary question. On 20 January, I received a response saying that the question would be answered as soon as possible.
Those were figures quoted by the Chief Secretary. It is now nine weeks since he did so. I have re-asked the question, and have just been told that it will be answered as soon as possible. Is there anything that you can do to encourage Ministers to answer questions more quickly?
Madam Speaker: There is nothing further I can do. I have answered points of order from the hon. Gentleman and other Back-Bench Members on this issue. The Government, I am sure, are very aware of it. No doubt, as he has raised a point of order yet again with me, they will look at it and respond as soon as possible.

Disabled Persons and Carers (Short-term Breaks)
4.25 pm
Mr. Huw Edwards: I beg to move,
That leave be given to bring in a Bill to provide for assessments of health and social needs of disabled persons to include assessments of the needs for short-term breaks for the disabled persons and any carer.
Every right hon. and hon. Member will have in their constituency a silent army of dedicated, selfless carers. They care for people with a wide variety of needs: people with physical disabilities, learning disabilities, mental health problems, chronic sickness and degenerative conditions. Carers can be of any age, and from all walks of life. One in seven of the adult population are estimated to be carers, the great majority of whom are women. Any of us could become a carer at any time.
That army of carers has increased in recent years, with the shift from institutional to community care, with the increase in the number of elderly people, and as a result of medical advances to sustain the lives of many people who would formerly not have survived. Those are the triumphs of our welfare state, but they have led to a disproportionate reliance on informal care, and care by women.
In recent years, our statutory agencies have put increasing responsibility on informal carers as a result of community care legislation. The National Health Service and Community Care Act 1990 gave local authorities a duty to undertake individual care assessments. The need for respite care, or short-term breaks, has increasingly been recognised as a major unmet need, but it is not specified in community care assessments. The Bill's aim is to give people with disabilities and carers the right to be assessed for respite care and to have that care provided, if they are so assessed.
It is important to establish appropriate respite care—to involve carers in decisions about their need for respite care. The Bill therefore extends the Carers (Recognition and Services) Act 1995, which was introduced by my hon. Friend the Member for Croydon, North (Mr. Wicks).
That Act gave statutory recognition for the first time to the role of carers and their right to have their needs assessed, but it gave no right to the provision of services. That is why Lord Rix, chairman of Mencap, introduced a private Member's Bill similar to this Bill in the House of Lords in 1996. I am privileged to have been asked by Mencap to reintroduce that Bill into the House, and I thank it for the help that it has given me in promoting the Bill.
According to Mencap, 100,000 people with severe learning difficulties and their carers are not receiving much-needed respite care. Only 32 per cent. knew about respite care. Almost one in five carers who applied for respite care were refused it by a local authority or health authority.
In recent weeks, I have met groups of carers in my constituency. Those I have met have stressed the value they place on respite care for the person for whom they are caring. Respite care offers an opportunity to meet new people, for personal development, to be more independent, and to enjoy a new environment. In effect, short-term breaks for people with disabilities have the same attractions as they have for all of us.
1306
Carers I have met say that they need short-term breaks too, to allow them to lead more ordinary lives, to recharge their batteries by going away for a couple of weeks, a few days or even a few hours—to spend time with their partners, their families and friends, to spend more time with their other children, to catch up with the housework, to go shopping, or simply to catch up on their sleep.
However, Mencap's research showed that four out of 10 carers had not been out for an evening in the past six months, and one in five not for the past five years. One mother wrote to me:
"I am very grateful for the 3 hours per week respite that we have through our Mencap Family Carer, but I am conscious of how fortunate we are compared to most others."
A short-term break may be covered in the carer's own home by a sitting service; it can be inexpensive, a small investment, but its value can be immense.
Respite care can be cost-effective, as has been shown by research carried out at the university of Brighton, where I worked before entering the House. The needs of carers were studied, and it was found that supporting carers can maintain their health, thus reducing the cost of hospitalisation and breakdowns among carers.
Respite care enables carers to return to work, which reduces the cost of benefits and increases tax and national insurance revenues. If carers could not or would not care, the responsibility would fall on the state. Official carers would be paid and receive time off and annual leave, whereas informal carers get next to nothing.
There are many forms of short-term break—holiday breaks, emergency breaks, family-based care and sitting services. In many areas, there are good examples of respite care provided through local authority social services and voluntary organisations. The all-Wales mental handicap strategy was a progressive strategy that established good collaboration between voluntary and statutory agencies. It was a progressive programme, with ring-fenced resources, but it lacked the statutory framework of rights that carers, and the people for whom they care, need.
However, respite care is scarce in many areas. Too much depends on where the carer happens to live. The aim of the Bill is to make respite care universally available, to raise standards nationally and to enshrine a right to a specific form of care, thereby imposing a duty on local authorities.
I am grateful for the support that many organisations have given me for the measure—organisations such as Mencap, the Carers National Association, Sense, the National Aids Trust, Age Concern, the British Medical Association and many other voluntary organisations. I am grateful, too, to the hon. Members on both sides of the House who have signed early-day motion 1090. However, it is the carers, more than others, that the House should thank—and society should thank them, too.
The Chronically Sick and Disabled Persons Act 1972 was piloted through the House by Alf Morris, who then represented Manchester, Wythenshawe. That Act was rightly seen as a charter for the disabled. Arguably, it was the most significant piece of legislation on disability in the post-war period, and it was passed by a Labour Government and implemented by a Conservative Government. The present Government have established a royal commission on long-term care, and we intend to make specific representations to it about the need for respite care.

1307
My Bill will reinforce the work that the Government are doing to enhance the rights of people with disabilities. We need to establish a charter for carers, and the Bill will establish the right of carers to respite care and short-term breaks. It has cross-party support, and I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Huw Edwards, Ms Chris McCafferty, Mr. David Amess, Mrs. Betty Williams, Mr. Roy Beggs, Mr. Dafydd Wigley, Mr. Desmond Swayne, Mr. Paul Keetch, Mr. Malcolm Wicks, Mr. Steve McCabe, Mr. Anthony Wright and Laura Moffatt.

DISABLED PERSONS AND CARERS (SHORT-TERM BREAKS)
Mr. Huw Edwards accordingly presented a Bill to provide for assessments of health and social needs of disabled persons to include assessments of the needs for short-term breaks for the disabled persons and any carer: And the same was read the First time; and ordered to be read a Second time on Friday 24 April, and to be printed [Bill 150]
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [17 March].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

    (a) for zero-rating or exempting a supply, acquisition or importation;

    (b) for refunding an amount of tax;

    (c) for varying any rate at which that tax is at any time chargeable; or

    (d) for any relief, other than a relief which—

    (i) so far as it is applicable to goods, applies to goods of every description, and

    (ii) so far as it is applicable to services, applies to services of every description.—[Mr. Gordon Brown.]

    Question again proposed.

  Budget Resolutions and Economic Situation
  4.34 pm
  Mr. Peter Lilley: Yesterday's Budget was the first that I have heard in which not a single measure introduced by a Chancellor of the Exchequer was costed. He gave no idea where the extra spending that he announced will come from. Overnight, we have been able to examine the small print and determine where the costs will fall. There will be a large cost, and it will fall on ordinary families and on businesses—which, ultimately, will have to pass on that cost to consumers, or reduce the number of those they employ.
  The Chancellor pretended that we would have lots of goodies at no cost. He tried the oldest trick in the book: pretending that there is such a thing as a free lunch. What he really gave us was a menu without prices. I steer clear of establishments with such practices, because, although their presentation may be top class, one gets very small portions and pays very large bills. In paying the bill for the Chancellor's menu, we shall discover that he has, once again, betrayed the Prime Minister's promise to the British people not to impose any taxes other than the windfall tax.
  Before the general election, the Prime Minister promised Birmingham business men:
  "We have no plans to increase tax at all."
  He told the BBC:
  "What I have said is the programme of the Labour party, and that does not imply any tax increases at all."
  Now—as we saw in last week's debate—Ministers are trying to airbrush those pledges out of the picture. They want us to think that the only pledge that matters is their narrow promise not to raise income tax rates. So when the Prime Minister made vows to his party conference,

  1309
  we should have taken no notice of him? When he gave unequivocal answers to the media, they counted for nothing? We should have read his lips, and seen "lots more taxes"? What arrogance from the Government. It tells us an awful lot about new Labour. Although new Labour thinks that words are cheap, British taxpayers will discover that believing Labour's words will cost them dear.
  This Budget is new Labour's second tax-raising Budget. It raises taxes by another £2 billion a year, on top of the massive tax rises introduced in last July's Budget.
  If Ministers are so keen—as they were last week—to direct us to the text of their manifesto pledges, will they tell us where in their manifesto they promised to cut the married couple's tax allowance? Perhaps in the section entitled "Supporting the Family"? Where did they promise to clobber businesses with almost £20 billion in extra taxes? In the section they headed "Promoting Enterprise"? Where did they spell it out that they would cut mortgage interest tax relief? Was it in the section on home ownership? Where did they spell out the increase in employers' national insurance charges for employees earning above the average wage? Where did they spell out three petrol duty hikes in 16 months? Where in their manifesto did they say that they plan to tax child benefit for upper-income families?
  Ms Joan Ryan: Does the right hon. Gentleman agree that BP's announcement that it is reducing petrol prices in rural areas by a further 2p—totalling a 4p reduction in the past month—clearly shows that it approves of the Budget and is responding to the Chancellor's challenge to work with us in helping rural areas?
  Mr. Lilley: That is a bit rich. Although the Government have hiked petrol tax three times in the past 15 or 16 months, Ministers claim credit for oil companies absorbing some of those increases because of low oil prices. They claim credit for that? The Government insult rural motorists by offering £50 million over three years, to compensate for almost £1 billion in extra taxation. Come off it. Read out something else from the brief next time.
  Yesterday, the Chancellor may not have spelt out the cost of any of his policies, but his Red Book makes it clear. It shows that the share of national income taken in tax is set to increase. By the end of this Parliament, he will be taking nearly 3 per cent. more of national income in tax. That is the cost of Labour's tax programme; that is the cost of its stealth taxes. Public finances are strong, but because they are strong and doing even better than we expected, it should be possible to get back to a balanced Budget with fewer tax increases, not by adding to them as the Chancellor is doing.
  The reason Labour is having to put up taxes is that it is breaking another pledge: its promise to cut the cost of the welfare state. Before the election, the then leader of the Labour party used to trail around editors' offices, particularly of right-wing newspapers, saying that, just as it took a Republican President such as Richard Nixon to recognise communist China, and just as it took a white President such as Pik Botha to do a deal with the
  1310
  African National Congress—[HON. MEMBERS: "It was P. W. Botha."] Well, whoever did it. The then Labour party leader said that it would take a Labour Prime Minister to cut the size of the social security bill.
  Many editors thought that the then Labour party leader meant what he said. Indeed, Labour made cutting the social security bill a specific pledge in its manifesto. As part of its top pledge, it said that it would decrease the share of national income spent on the bills of economic and social failure. Labour said that it would cut the size of the welfare state, but since the election, every change that the Government have initiated in the welfare state—not those that they inherited from me—has involved increasing the cost of welfare; increasing spending on the welfare state, not reducing it.
  The Red Book shows that yesterday's Budget will add another £10 billion to the cost of welfare this Parliament. That destroys Labour's promise and its claim that its programme could be financed without increasing taxes. Instead of reducing social security spending, Labour is increasing it. That is why people are having to pay more tax.
  The Government do not even expect the welfare changes that they have introduced remotely to pay for themselves. It is clear from their figures that they expect very few extra people to be enticed back to work by the changes that they have made. I invite the Chancellor to tell us how many people he expects to be taken off the unemployment register as a result of the changes that he announced yesterday. Either he does not know or the number is so small that he will not tell. It is certainly invisible in the accounts that he published yesterday.
  If unemployment is higher in two years' time than it is now, will the Chancellor admit that all his programmes have failed? We said—we have said all along—that we would support the Government if they brought forward the right welfare reforms. If they tackle the poverty trap, reduce the number of people who are dependent on benefit and bear down on the costs of the welfare state, they will certainly deserve the support of the whole House. This Budget does nothing of the kind. It increases spending, extends the number of people who are dependent on benefits and lumbers more people further up the income scale with greater disincentives to work.
  The Red Book shows that the number of families facing a marginal deduction rate of more than 60 per cent. will be increased by 250,000 as a result of the changes that the Government have introduced. Therefore, more people will face greater disincentives, not fewer. As the Financial Times pointed out this morning in its analysis of the Government's child care credit:
  "the assistance tapers so that help will be given for childcare costs for one child in families with incomes up to £22,000 and for two or more children in households with incomes up to £30,000".
  The Government are bringing households with such income into the benefits system. The truth is that extending help up the income scale to people with good jobs will not get people into work.
  People can get off welfare and into work only if there are jobs for them to go to. Our reforms succeeded in creating jobs hand over fist. Before the election, unemployment had been falling month in, month out for more than four years. That momentum has continued. The good news today is that unemployment is down again, as the continued consequence of our reforms.

  1311
  The previous Government bequeathed a golden economic legacy of low inflation, steady growth, rising living standards and falling unemployment, which has come down to 5 per cent.—about half the level of France and Germany.
  The new Government are betraying that golden economic legacy, putting this country's economic achievements at risk. After just 10 months in office, they have already hit pension funds with a £5-billion-a-year pensions tax, which means £5 billion a year less for British industry to invest. They have hit industry with a new quarterly payments regime that will cost companies £2 billion a year during this Parliament. In aggregate, industry will have to pay nearly £20 billion extra in taxes during this Parliament.
  The Government have reduced the rate of corporation tax, but they have increased the burden falling on British companies. Businesses have been hit with higher national insurance contributions for employees earning more than the average level. That will hit high-tech companies, which the Government claim to want to promote. Because the Government have taxed business and savings, interest rates have had to go higher, driving up the exchange rate and hitting our exports.
  Almost every economic decision that the Government have taken has helped to push our manufacturing sector towards the brink of recession. For five months in a row, output from manufacturing has fallen.
  Mr. Geraint Davies rose—
  Mr. Lilley: Doubtless the hon. Gentleman wants to tell us that that is what he was elected to achieve.
  Mr. Davies: Does the right hon. Gentleman agree that, arithmetically, only about a quarter of the exchange rate is explained by relative interest rates? Does he further agree that the real reason for the high value of the pound is the uncertainty over the euro—the fact that the drachma decided to come in and that nobody knows what the rate will be? The fact that people are investing in sterling is a testimony to the prudent policy of my right hon. Friend the Chancellor. People know that investing in sterling is an investment in certainty and stable policies for the future.
  Mr. Lilley: The hon. Gentleman made a brave try, but he is in difficulty because he does not know his Chancellor's policy on the exchange rate. We also do not know the Chief Secretary's policy. He was asked five times on "Newsnight" last night whether he thought that the exchange rate was at the right level. The Chancellor has said that he wants a stable pound. Does he want it stable at the present level, or does he want mobile stability?
  Whatever the Government say, their friends in the Trades Union Congress have become disillusioned with their policy. Their analysis says:
  "Because of the combined impact of the exchange rate, higher interest rates and tight public spending controls, unemployment will start to rise by the end of this year."
  The Conservatives commissioned the Centre for Economics and Business Research, which has one of the best track records in recent years for forecasting the performance of the economy, to calculate the likely
  1312
  performance resulting from the combined effects of the two Budgets that the Chancellor has introduced compared with what would have happened under unchanged Conservative policies. It concludes that the main impact has been on the level of investment, which has been lowered by the taxes on business. As a result, the economy will grow more slowly and unemployment will be 100,000 a year higher under Labour than our policies would have achieved.
  Thanks to decisions taken by our party in government, Labour inherited a buoyant economy that was generating increased tax revenues, taking people off welfare and helping to reduce public expenditure. That means that there was no need for the extra taxes that Labour has thrust on businesses and ordinary people. What it has done will damage investment and enterprise and will jeopardise our golden economic legacy.
  As well as arranging for that analysis of the economic impact of the Chancellor's policies, we commissioned a study of the impact on individual households of the changes introduced in this Budget and the previous one. It shows that the Chancellor got his figures wrong. In the Red Book, a table shows that almost all households are better off as a result of this Budget—although the Government had to publish a corrigendum, showing that all the figures that they published were too rosy. Even the corrected figures are wrong, because they take account only of direct taxes. The Labour Government think that people do not have a car, do not drink, do not smoke, do not have a pension and do not save: all those ways in which this and the previous Budget hit ordinary households were not taken into account.
  We asked the experts to look at a typical family with a couple of children and a mortgage, who contribute to a personal pension and own a car; we shall assume that they are not smokers, because they are a virtuous couple. The study showed that, next year, as a result of the changes introduced by the Chancellor, every household at all levels of income will be worse off. In the year after—when his increase in child benefit and the change to working families tax credit comes into force—only households with an income below £16,000 will be better off. All households of that type with an income above £16,000 will be worse off, as a result of the combined effect of direct and indirect taxes, increased by the Chancellor.
  One thing we have learnt about the Chancellor—from books, of course, and from leaks from No. 10—is that he suffers from a psychological flaw. That flaw seems to inhibit him in consulting people about his policies before he announces them. He does not even consult his own officials sufficiently. We found that in his first Budget—he clearly had not consulted in detail about the plan that they cooked up in opposition, to scrap advance corporation tax credits. The Government did not realise that that meant abolishing foreign income dividends and, in turn, abolishing ACT and, in turn, that they would have to replace it with quarterly payments. They then had to come back yesterday and revise the system, because it was putting too great a squeeze on business. That was muddle enough.
  The Government also had the muddle on individual savings accounts and abolishing personal equity plans and tax-exempt special savings accounts. The original proposals were a dog's breakfast, which would retrospectively have hit the most prudent the hardest. We

  1313
  may not have won the vote in the debate the week before last, but we won the argument. We could see from the expressions on the faces of Ministers that the Government would have to come back with a changed policy. It may be better than what they were proposing last November, but as the Institute for Fiscal Studies pointed out today, the Government could clearly have achieved almost all of that change by adjusting TESSAs, to allow people to take out their money sooner than was previously the case.
  Mr. Gerald Howarth: Was not the original proposal indicative of Labour's total hostility to wealth creation? The Government have done a U-turn because of the arguments promoted by my right hon. Friend the shadow Chancellor and because their focus groups told them that the proposals were not popular. This is not a policy change out of principle—it is a policy change because they know that the proposal is unpopular in the country.
  Mr. Lilley: My hon. Friend is right, but the damage has been done. The Government have revealed what they want to do to people's savings. That destroys trust, and it means that the likelihood of people saving as much in these ways in future is limited, because they fear that the Labour party might come back and change the system retrospectively, to damage them once again. That is why the Government forecast in the Red Book that the savings ratio is set to fall hard and fast in the years ahead. They themselves have undermined the savings culture in this country.
  The Chancellor's failure to consult is revealed by more than the muddle arising from the changes to ISAs; he clearly has not thought out all the consequences of the move from family credit to working families tax credit. He recognises that, in 500,000 households, the woman could on average lose £40 a week to the benefit of the breadwinner into whose pay packet the money will be paid.
  Although people will be given a choice about how the money will be paid, the Chancellor does not say how that choice will be exercised. He says that the choice is for the household, but will it be for the man or the woman? It will be a new source of discord for low-income families. Will he tell the House what will happen if they cannot agree? In her speech to the Fawcett Society, the Financial Secretary was unable to say what would happen, but perhaps she can tell us now. This is another matter about which there has been no consultation because of the Chancellor's psychological flaw.
  Yvette Cooper: Will the right hon. Gentleman give way?
  Mr. Lilley: Perhaps the hon. Lady was consulted—I believe that she was recently married, so she will be able to tell the House how she will reach agreement with her spouse.
  Yvette Cooper: If the right hon. Gentleman dislikes the working families tax credit so much, will he say whether a future Conservative Government would abolish it?
  Mr. Lilley: The question is whether the Labour Government will fulfil the promises in their manifesto
  1314
  last year, not what will be in our manifesto in four years. They promised that they would reduce the cost of the welfare state and not plough further billions of pounds into it.
  We also want to know whether the Minister for Welfare Reform still believes what he said when he commented on the Conservative Government's proposal to pay family credit through the wage packet. In a reasoned and thoughtful contribution, he said:
  "Whatever scheme is enacted, if the parents behave as we hope we ourselves would behave, it would be irrelevant. But we are concerned with that minority—it may or may not be substantial—of families in which money for the children is not paid over to the wife. We must draw on our experience to decide whether it is more likely that the money will go where Parliament wishes it to go—towards the welfare of children—if it is paid to the mothers rather than the fathers. I believe from my experience and that of many other organisations that more money will get to children in those families where something is wrong if we pay the money to mothers rather than fathers."
  The House has a right to know whether the Minister for Welfare Reform has altered his view on that. Conservative Members realise that the problems exist—we listen to reason and do our homework—but the Chancellor has not learnt from experience.
  Again, on the proposal to tax child benefit for those on high pay, the Chancellor is too confused and muddled to spell out the details. He rushes to say that the proposal will be implemented, but he does not know how that will be done. I tell him that he faces some serious dilemmas. If he decides to tax on the basis of the income of the whole household, he must do away with independent taxation and take into account the joint income of husband and wife. However, if he does not do that, and taxes only the recipient of the child benefit—usually the mother—that will be very unfair, as modestly paid women who receive the benefit will have to pay tax on it because they are working, whereas the wives of rich husbands will not pay any tax on it, and will be given it in full.
  The Chancellor hinted at a third option, whereby child benefit will be taxed only if one or other member of the household is liable to the 40 per cent. rate of tax. That infringes the principle of independent taxation and will prove unfair because, unlike at present, the couple will have to reveal to one another which tax band they are in.
  If the Chancellor insists on making those whose household contains one or more members who are liable to tax at 40 per cent. pay a tax on their child benefit, a couple with a combined income of £50,000 might not have to pay, while someone with an income of £30,000 would. How can that be fair?
  Mr. Robert Sheldon: The right hon. Gentleman referred to child benefit. I had something to do with its introduction to replace the child tax allowances. That change was undertaken on the basis of an agreement between our two parties that child benefit would be uprated in the same way as the allowances were. The previous Government broke that promise, and the new Government have tried to restore some of the advantages that we—and, indeed, the Opposition of the day—foresaw.
  Mr. Lilley: That is a fair enough point. The right hon. Gentleman played a distinguished part, and he will remember that child benefit replaced a tax allowance. Is it

  1315
  not extraordinary to tax a tax allowance? That is a strange proposal. It is the sort of idea that the Chancellor cooks up in the Paymaster General's Park lane flat or in one of his country retreats in Italy or France, without consulting officials.
  The Secretary of State for Education and Employment (Mr. David Blunkett): Perhaps the right hon. Gentleman will recall for us the attitude that his party took towards joint and several liability for men and women under the poll tax, and tell us what action he took as Secretary of State for Social Security. Perhaps he will tell us whether he is for or against the proposal in the Budget.
  Mr. Lilley: We abolished the poll tax and replaced it with the council tax. The Government have introduced the biggest rise ever in council tax. Before the general election, the Prime Minister—
  Mr. Blunkett rose—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. Both right hon. Gentlemen must sit down. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) is not going to give way.
  Mr. Lilley: I did not want to cause you to rule out of order a long debate on the poll tax, Mr. Deputy Speaker.
  Before the general election, the Prime Minister tried to convince the British people that Labour's days of redistributive politics were long gone, but the more one looks at the Budget, the more its redistributive nature becomes clear. Perhaps the title of the Red Book, "New Ambitions for Britain", provides a clue.
  Yesterday, the Prime Minister was sitting on the Front Bench. His ambition was to win the general election. Standing at the Dispatch Box was the Chancellor. His ambition is to win the leadership of the Labour party. He has his own agenda and needs to convince Labour Back Benchers that he is on their side. That is why the Budget conflicts with the Prime Minister's promises: the Prime Minister made promises to appeal to the British electorate, and the Chancellor breaks them to appeal to the Labour selectorate.
  The Government believe in slick presentation and think that it is more important than keeping their promises. They think that they can tell us that black is white, spending is saving and taxes are good for us. They say that they want to encourage pension provision and they put a £500-million-a-year tax on pension funds. They say that they are the friends of business and they put nearly £20 billion of tax on business. They say that they are really country folk at heart and then slap the best part of £1 billion of extra taxes on motor fuel and gasoline, and believe that they can buy off rural anger by insulting people with £50 million for rural buses over three years. They say that this is a Budget for women and children, but they create a situation in which up to 500,000 women and children could lose £40 a week.
  This Budget betrays the Government's pledges to middle Britain, it betrays their promise to reduce spending on the welfare state and it betrays the golden economic legacy that we bequeathed them. The Chancellor may
  1316
  have seen the waving Order Papers yesterday, but the people of this country will see the bills of his Budget landing on their doorstep in the months and years to come.
  5.5 pm
  The Secretary of State for Education and Employment (Mr. David Blunkett): The official Opposition seem to have gone into a paradox and a paradigm of denial. (HON. MEMBERS: "Which?"] It is both. First, the right hon. Member for Hitchin and Harpenden (Mr. Lilley) cannot remember the poll tax. Then he can remember only that the Conservative Government replaced it, as though they had inherited it from the Opposition. Now, having forgotten the introduction of the poll tax, the Opposition have forgotten the instruments with which they imposed it. They followed that up this afternoon with the most wonderful denial of all—they pretended that we started the process of reducing the married couples' allowance and mortgage interest relief at source, when it was them. Then they invent a new research project in 24 hours that proves that the British people are not on average £250 per family better off, with the lowest 20 per cent. on average £500 better off, but that everyone is worse off.
  Suddenly, all the things that happened yesterday are no more. This is an entirely new political stance. It is not simply a caricature of the Government's position, but a terrible dilemma—waking up in the night, sweating and thinking, "I wish I had introduced those policies," and then remembering that one is in opposition and has to go on the "Today" programme to denounce them. Is the right hon. Gentleman against the policies or in favour of them? Is he envious of them or contemptuous? We are not absolutely sure.
  Mr. Nick Gibb: We are.
  Mr. Blunkett: No doubt during the debate the hon. Gentleman will be able to tell us exactly what the shadow Chancellor actually believes in. is he in favour of the cut in corporation tax? Is he in favour of the cut in corporation tax for small companies and the cut in employers' national insurance for the lower paid and for all employees? Is he in favour of the cut in capital gains tax on long-term investment? Is he in favour of the cut that the Chancellor has already made in value added tax on fuel?
  Mr. Gibb: Of course the Opposition are in favour of the cut in corporation tax. It was the Conservative party that brought down the rate of corporation tax from 52 to 33 per cent. However, we are against the big rises in the burden of corporation tax that this Government have imposed on business in their two Budgets since 1 May.
  Mr. Blunkett: As my right hon. Friend the Chancellor pointed out in his brilliant presentation yesterday, we have cut corporation tax to its lowest ever level. So this not hearing, not thinking, not seeing and then denying seems to be becoming a terrible habit.

  1317
  Let us face it industry and commerce know better about what they feel and think than Opposition Members. That is why the British Chambers of Commerce have said:
  "This is a valuable Budget for enterprise and employment. It is both prudent and positive."
  I will give way to the right hon. Member for Charnwood (Mr. Dorrell) so that he can explain why he does not believe that they are right.
  Mr. Stephen Dorrell: The Secretary of State wants a little clarity. I wonder whether he can clear up one thing that was left unclear at the end of yesterday. During the Budget speech, the Chancellor said first that an extra £100 million would be allocated to tackle the skills gap. Later, he said that an "additional £250 million" would be allocated for education—those are his words, not mine. Arithmetic suggests that that would be £350 million for the Secretary of State's Department. However, when we consult the Red Book in the name of the Financial Secretary, we see that the Secretary of State will get not £350 million as the Chancellor announced at 4 pm yesterday, but £250 million. I would be grateful if the Secretary of State could clarify whether the Chancellor or the Financial Secretary is right.
  Mr. Blunkett: One thing that is certain is that it is £250 million more than the Opposition would have allocated. I am always delighted to give way, because I am not afraid of the Opposition in the way that they appear to be afraid of us. It is £250 million for education and skills that will be spent in addition to the £2.25 billion that my right hon. Friend the Chancellor has earmarked for education since the general election. He has been able to do that precisely because, as the shadow Chancellor said this afternoon, we have done better than the Opposition expected. That is praise indeed, and I hope that he will not be churlish. He should congratulate us and say that he is delighted with our performance so far, and that they are finding it difficult to lay a finger on us or undermine what we are doing.
  The bulk of the British people would want to congratulate us on the Budget. After all, its three key pillars are: work—making sure that people are in work and that work pays; enterprise—enabling small, medium and large businesses to flourish; and reinforcing and supporting children and the family.
  Mr. John Townend: If the burden of taxation on companies was coming down year on year, I would congratulate the right hon. Gentleman, but will he confirm that there will no benefit from reductions in taxation until after 2000? Page 18 of the Red Book shows that companies will pay £1.6 billion extra in 1999–2000 as a result of the quarterly payment of corporation tax. In 2001, they will pay another £2 billion, and only £700 million will be offset by corporation tax reductions. Even in that year, the overall burden of corporate taxation will rise by £1.3 billion.
  Mr. Blunkett: I did not hear the hon. Gentleman denounce the British Chambers of Commerce. I think that he may be the chairman of a Back-Bench
  1318
  committee; if so, he understands the system that applies in other developed nations. The introduction of a phased quarterly payment system inevitably means a phased-in approach and a carry-over point.
  The reason why business and commerce are enthusiastic about what we are doing is precisely because the Chancellor is underpinning a long-term strategy to ensure that this country will never again have the boom-bust that the previous Government inflicted on us. A so-called boom 10 years ago led to the most enormous bust in term of people's jobs, livelihoods, homes and fears, and the large-scale unemployment from which we are only now recovering.
  I would have hoped that the Conservatives would congratulate us on reaching the level of unemployment that we bequeathed to them. The new unemployment figures today show a further 14,000 off the claimant count and that we have got back to the position of June 1980. Some 150,000 people gained jobs in the final quarter of last year, an acceleration of what was happening before the general election. We will support long-term policies to ensure that that continues.
  I want to ask the shadow Chancellor some simple questions, and I will be happy to give way to him if he wants to answer. Does he support the measures that we have taken to make work pay? Does he support the working families tax credit scheme and child care disregard, about which my right hon. Friend the Secretary of State for Social Security will say more tomorrow? Does he support our measures to ensure that the taper is gentler, so that people do not lose out when they take jobs? Two thirds of people who experience the 70 per cent. taper will be better off because of the measures taken yesterday which will genuinely make work pay. Above all, does he support the new deal, which is all about preparing people for the world of tomorrow and equipping them with confidence, skills, social experience and the expectation of having a job?
  I ask those questions because I understand that, in an interview in The Independent on Sunday the shadow Chancellor was asked such questions and, in talking about the Conservatives' attitude, said that a
  "debate at this point would be bad for our party."
  I do not know whether it is bad for his party but I should have thought that the new deal was good for young people.
  To paraphrase the television advert, there may be the odd person who is mad enough to be against the new deal. There may be a couple of people—the Leader of the Opposition and the shadow Chancellor—who are misguided enough to be against it. When they get to a sect of 10 they may think that there is a cult against it. When they get beyond the membership of the Tory party, say 1,000, it is such a movement that it is difficult to be against it. When there are 100,000, it is a revolution and the Tory party will change its mind to be in favour of it.
  The shadow Chancellor must come clean. Will he, in a fortnight's time, take on the challenge? Will he or the Conservative party in Smith square take on a new deal youngster? If they took on rehabilitating the Leader of the Opposition, they would have a lifetime job—no danger of losing it after only six months.
  Mr. Geoffrey Clifton-Brown: Will the right hon. Gentleman confirm that the new deal will be

  1319
  paid for entirely by a one-off windfall tax, and that the number of long-term unemployed has decreased greatly in the past six months? How long does he expect that reduction to go on for, and what will pay for the new deal when unemployment starts to rise?
  Mr. Blunkett: I had hoped that the hon. Gentleman would welcome the challenge and say that he would take someone on in his office as a gesture of good will. He makes a serious point, which I shall answer. Of course the new deal is being paid for from the windfall tax; everyone knows that. The shadow Chancellor condemned the windfall tax. On 3 July last year, he suggested that the windfall tax would either be bad for consumers because it would put prices up or bad for shareholders because, if the regulator held prices down, shares would fall. He was wrong on both counts. Prices have fallen in each of the affected industries, and the share price has gone up by 23 per cent. The FTSE index is now at 5,800–1,000 above what it was on 3 July when he made that suggestion.
  The intention is to ensure that people are prepared for long-term jobs and have the social skills needed. That is why the Chancellor yesterday announced a series of new measures that will enable us to carry our programme forward, making it possible to ensure that work pays but also making it possible for us to extend what we are doing so that more people can benefit from the new deal. Another £100 million will be devoted in the next two years to ensuring that 70,000 people aged over 25 will have the sort of opportunities available to those under 25. We are piloting those programmes to ensure that people can learn from them and gain skills.
  There is £50 million to extend the gateway. Whatever the Opposition are against, they should never be against preparing people for meaningful work through social and educational skills. A substantial part of the extra £50 million will be used to make it possible to help those in the greatest difficulty, those facing particular problems in their lives. They would be expected to be dependent on the welfare state unless their problems are overcome. Inevitably, they would be long-term dependent on the welfare state unless we invested in the gateway.
  For the partners of those who receive jobseeker's allowance we have allocated an extra £60 million to ensure that they have the opportunities that were previously denied them. Couple that with the announcements that my right hon. Friend the Secretary of State for Social Security will make later this week in respect of child care. Couple that with the 12 pilot programmes—six projects from September this year and a further six a few months later—that we are initiating for disabled men and women to ensure that they can get back to work and have an opportunity to take advantage of the disregard brought in by my right hon. Friend the Chancellor.
  All that is a positive programme of change for the future. It secures the long-term gains that my right hon. Friend the Chancellor has already set in place through his changes to the Bank of England and with his Budget of 2 July. It is a long-term programme for a long-term Government ensuring that the economy of this country is in safe hands and that the stability we seek provides stable growth with low inflation. That is a prize worth having, and it is a prize which all of us on the Labour Benches will work to achieve.
  5.20 pm
  Mr. John Townend: The Budget lives up to the reputation of the Government, in that it treats the House of Commons with contempt. At one time, the contents of the Budget were revealed first to the Cabinet and then to the House of Commons. Now, the political spin doctors receive the details first and we Members of Parliament read them in the press. That is done to soften us up for bad news on Budget day, but what really annoys me is that the details are not even spun with truth—they think that in that way, when the Budget is not as bad as expected, middle England will be relieved and welcome it.
  It would be churlish of me not to acknowledge that I agree with some of the contents of the Budget. We all accept that being able get more money on benefit than in work is wrong; we all want the poverty trap to be reduced and eliminated. I have always strongly believed in the concept of a balanced Budget, so I welcome the Chancellor's aspirations in that respect.
  However, those are as yet only aspirations: Labour Members must not forget that, when the Conservatives were in office and Lady Thatcher was Prime Minister, we achieved a balanced Budget—indeed, we had a substantial surplus for several years. It was only when Lord Lawson started to shadow the deutschmark at DM3 to the pound and my right hon. Friend the Member for Huntingdon (Mr. Major) joined the exchange rate mechanism that things started to go radically wrong.
  I remind Labour Members that the current Chancellor was very keen that we should join the ERM, and when we came out of it, he called for us to rejoin it within a matter of weeks. I should be happier if I thought that the Chancellor believed in a balanced Budget for its own sake, but I have a sneaky feeling that his desire to join economic and monetary union and the single currency is the driving force.
  My other major criticism is that the Chancellor's success in reducing the deficit is not the result of taking tough decisions and reducing the excessive level of public expenditure in this country that we have borne for some years, but the result of increasing the overall burden of taxation. Labour is reverting to type: it is, and always has been, a high-tax party. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) pointed out, the secret is given away on page 119 of the "Financial Statement and Budget Report", which shows that, in the last year of the Conservative Administration, the total tax take with social security contributions was 36 per cent. of GDP, yet now the graph is going up and up, and the projections show that it will reach nearly 39 per cent. of GDP. The Labour party will preserve its record of leaving office with the overall burden of taxation higher than when it went in.
  The big increase was the boost that the Government tried to hide last year by stealthily hitting private pensions and the corporate sector. The people in the front line of the main tax increases this year are motorists. Again, the Labour party has confirmed itself as the anti-motorist party par excellence. It fiddled the system: motorists expect one increase a year, but we have had two in nine months—4p the first time and 4.4p this time.

  1321
  Anyone who thinks that raising the tax on petrol way above the level of inflation will stop people driving cars does not understand how people live today. I do not know anybody who drives any less; they just spend less on other things, including their family. The only people who actually stop driving are poor people, especially those living in the countryside. Are those the people whom the Labour party wants to hit? Low-income car owners in my rural constituency are to be discouraged from travelling into Hull and York in their cars because of the cost, so they will be unable to get the benefit from the free museums the Chancellor favours so much. What a warped sense of priorities.
  Mr. Don Foster: Does not the hon. Gentleman recall that it was the Conservative party that introduced the 5 per cent. above inflation escalator? Presumably, he was critical of that, but does he agree that if you use that sort of escalator—it is now sensibly set at 6 per cent.—it is important that there is an offset in terms of a reduction in vehicle excise duty? The great pity of the Budget is that it does not contain clear proposals on that subject.
  Mr. Townend: I shall deal with our position in a few minutes. Because of the distances and the infrequency of public transport that one experiences living in a small village—nearly everybody needs a car—£50 million over three years for rural transport is peanuts. Most Labour Members have probably never lived in a village, so they do not realise that, if there is only one bus a day, which is doubled to two buses a day, not only will that cost hundreds of millions of pounds across the country, but people will still need to use their cars.
  The increase in petrol duty will also increase business costs. The Government say that industry should be competitive, but do they think that industry does not use petrol? Do they think that fewer goods will be delivered because they have put up the price of petrol? Will there be fewer calls by salesmen? I suggest that this is an increase too far—enough is enough. It is time that one party in the House started to speak up for the motorist. I hope that my right hon. Friend the Member for Hitchin and Harpenden is listening when I tell him that we should abandon road fuel escalation and say that there should be no more increases above inflation.
  Corporate car drivers are being hit yet again with another penal increase. That increase is surprising, because it hits the very people whom new Labour is always saying it wants to encourage—the managers, salesmen and entrepreneurs who are all part of middle England. What is the sop? We are going to have a £50 reduction in vehicle excise duty for small cars and clean cars, but what is small and what is clean? If it means small new cars, that will hit the poor, who mainly own older and second-hand cars.
  Mr. Geraint Davies: Is the view the hon. Gentleman is expressing his personal view, or does it reflect the wider view of the Conservative party? Is it just an odd little view?
  Mr. Townend: I am speaking for myself, but I would not be at all surprised if on Monday, when I go into the Lobby to vote against Labour's proposals on petrol, my right hon. Friend the Member for Hitchin and Harpenden is with me.
  Mr. Geraint Davies: He does not share that view.
  Mr. Townend: That is a matter for my right hon. Friend. I represent a rural constituency, and I shall fight
  1322
  on behalf of the motorists. Enough is enough. There comes a point when one should not go any further and, when 80 per cent. of the cost of petrol is tax, I believe that we have reached that point.
  The cornerstone of the Government's Budget is the welfare-to-work package, including family tax credit and national insurance contributions reform. While the Chancellor's motives are praiseworthy, there remain many unanswered questions and some serious reservations. First, although I welcome the abolition of the national insurance entry fee—I always thought that it was nonsense—I am a little disturbed about who will meet that cost. It will hit the high-productivity, high-tech and high-wage firms that the Government claim that they want to encourage. Many firms that pay high wages operate—or are trying to operate—in the export industry, and that cost will reduce their competitiveness even further.
  Secondly, as my right hon. Friend has said, the reforms were first mooted as supposedly reducing the cost of the social security budget, which was getting too big for the country to afford—it was getting out of hand. As we have heard today, far from reducing that cost, the Budget will increase it. People do not realise that the pensioners will pay for that. The Government stole £5 billion from the occupational pension funds last year in order to finance it—and it will do that this year, next year and every year. I think that that is awful. Married couples will also contribute £1 billion. That is appalling, as it signals a withdrawal of support from the institution of marriage at a time when most people believe that marriage breakdown is the major cause of many social problems.
  Thirdly, I have doubts whether it should become the accepted wisdom that most mothers should work and their children should be left with child minders. I am old-fashioned enough to believe that the best environment for bringing up children is in the home with the mother as carer. As a result of the costs that we are now incurring, which will increase over time, we could reach the stage where it will cost as much to get mothers into work as it will cost to get them to look after their own children. We must consider that.
  My fourth criticism is that the Government appear to have no policies designed to reduce the growing problem, not of lone parents or single mothers, but of unmarried mothers. I believe that Britain has the highest number of unmarried mothers in Europe—and that number is growing. We must address that situation and encourage young women not to have children outside marriage.
  I must also ask where all the new jobs will come from. The main failure of the Budget is that it does nothing to encourage the Bank of England to reduce interest rates and the value of the pound. Indeed, the market's first reaction to the Budget was to push up the pound even further. That will cause our exporting industries to shed labour.
  Despite all the incentives and the money that will be spent in an attempt to get people into work, I think that the Government will find that a significant number of people are unemployable or do not want to work—I call them the "professional unemployed". Constituencies such as mine have many such people. Unemployed people come to Bridlington from Sheffield, Leeds and Halifax. believing that it is far better to live by the seaside. They certainly do not come to Bridlington seeking work, because there is none.

  1323
  I turn briefly to the other taxes in the Budget. Stamp duty on more expensive houses has been increased. That is a return to the traditional Labour taxation of envy: it is a tax on mobility. Why should executives, entrepreneurs, export salesmen—and Prime Ministers—who must move house frequently have to pay that extraordinary level of tax? Someone who buys a house for just over £500,000 must pay the Government £15,000 in tax. That is a tax on mobility, and it is wrong.
  I make it clear that I have a lifetime's experience in the alcohol industry. That industry is facing difficult times because of cross-border shopping and smuggling. The Financial Secretary should not laugh, because she is responsible for that problem. [Interruption.]
  Mr. Deputy Speaker: Order. There is far too much noise in the Chamber.
  Mr. Townend: Not only are the Government losing an enormous amount of revenue but, as I have warned from my own experience, organised crime is taking over the smuggling. Only last week smuggling gangs used guns in Dover. The only long-term answer to this problem—the Chancellor, who is pro-European, should realise it—is a progressive reduction in the differential between our duties and those of the French and Belgians.
  Far from accepting that there is a problem and dealing with it progressively—we know that it cannot be solved in one go—the Government have made it worse by increasing duties on wine and beer yet again. The barriers came down in January 1993 and we have seen a massive increase in smuggling every year since then. Has the differential been reduced in that time? No, it has not. It has not even stayed the same: the differential on wine has increased by 18.4 per cent.
  The same principle applies to tobacco. I do not smoke, but I know that, by increasing the duty on tobacco by more than 5 per cent., we will encourage more people to buy from smugglers. If people buy cheap tobacco, they will smoke more. Is it not incredible that duty is not paid on half the hand-rolled tobacco used in this country? The Government have accepted that there is a problem because they have not increased that duty this year—but they have not reduced it, either.
  The Budget must be considered not in isolation, but together with the last Budget delivered nine months ago. Although I accept and support several measures, I believe that many people have done badly. Savers, pensioners and pension schemes have done badly. Companies have done badly through the windfall tax and the collection of corporation tax on a quarterly basis. Marriage has been undermined. The Budget does nothing to create jobs, as all the emphasis is on getting people to apply for jobs. The motorist has been savagely attacked and the overall burden of taxation continues to rise.
  The Government's Budgets will not be judged now. Hon. Members should consider that the Budgets that receive the most cheers from their supporters on Budget day are often the ones that come home to roost. We shall judge the Budgets in two years' time according to whether unemployment, growth and taxes are higher or lower. Despite some beneficial measures, such as the reform of national insurance contributions, the whole complicated welfare-to-work package will he judged to be successful only if it gets the professional unemployed into work. I regret that I am pessimistic, because I do not think that the carrot will work without the stick.
  5.38 pm
  Mr. Derek Foster: The House has been highly entertained by the hon. Member for East Yorkshire (Mr. Townend). He said that he had lifelong experience in the alcohol industry—which I believe explains a lot about his speech. As if that were not bad enough, he went on to blame my hon. Friend the Financial Secretary for his problem. I have been an almost lifelong teetotaller, and I have been the butt of many jokes in that regard. People say to me, "It must be terribly depressing waking up in the morning and knowing that that is as good as you will feel all day." [Interruption.] I am glad that that entertains my right hon. and hon Friends.
  I have sat through 19 Budget debates in my parliamentary experience. This is probably the first one in which I have taken part. Year after year, I have listened to Conservative Members in government announcing proposals that increased the burden of taxation while claiming great credit for reducing the rate of income tax. It therefore comes a bit rich to hear the Opposition's charges against my right hon. Friends.
  My right hon. Friend's speech yesterday was a tour de force. When I listened to the shadow Chancellor, I wondered why, if things were so magnificent on 1 May last year, we won a landslide victory.
  Mr. Andrew Lansley rose—
  Mr. Foster: I also wondered why, if the Budget was as bad as the right hon. Gentleman said, it has been so well received in the City, by the business community and by families throughout the country. The Opposition protest too much. The language of betrayal is exaggeration in the extreme.
  Mr. Lansley rose—
  Mr. Foster: I shall give way in a moment.
  Just before the Labour party conference last year, my right hon. Friend said that he wanted a crusade against unemployment and poverty. I know that my right hon. Friend is often accused of being ambitious, but such ambition is worthy of the brightest and best of any generation and would have united the Labour party at any time during its 90-year history. It is the reason why I joined the Labour party, and why I am so enthusiastic about the Budget, which has been the first powerful clarion call for a crusade against unemployment and poverty.
  I welcome the widespread improvements offered by all the new deals. My right hon. Friends the Chancellor and the Secretary of State for Education and Employment deserve credit for putting so much drive, energy and money behind those powerful new programmes. Now they are to be extended in a way that the Employment Committee—which, as the House knows, I chair—called for some weeks ago. We asked the Secretary of State to build in sufficient flexibility to respond to the changing nature of the jobs market. We pointed out that there were other groups that deserved priority.
  A few short weeks later, the money and the political drive are there to extend all those initiatives. Now those aged 25 to 50 are being substantially catered for, and the over-50s are being brought into the programme. Now there is a substantial improvement to the new deal

  1325
  for single parents, and the new deals are being extended in various other imaginative ways. I welcome that whole-heartedly.
  I promised to give way.
  Mr. Lansley: I am grateful to the right hon. Gentleman, even though he has moved on a little. He criticised former Conservative Chancellors for, as he put it, increasing the tax burden while reducing the rate of income tax, although perhaps he will acknowledge that Conservative Chancellors left the tax burden as a proportion of gross domestic product unchanged, as compared with 1979. Why does the right hon. Gentleman think that it is such a triumph for the Chancellor of the Exchequer to increase the burden of taxation while not reducing the rate of income tax?
  Mr. Foster: It is a triumph for the Chancellor to increase the burden of taxation and to receive accolades from the electorate for doing so. That was what the Opposition achieved over 18 years, which irritated and frustrated me greatly at the time.
  The new deal is being extended considerably and is entirely welcome. If we are to get large numbers of single parents into work, which is what I want, the child care package is crucial. I am glad that my right hon. Friends have recognised that. However, if single parents are not to be locked into the low-wage, part-time, temporary sector of the jobs market, we must write into the single parents' new deal a substantial education and training option. At least 40 per cent. of single parents have no qualifications. We need to enhance their employability and earning capacity, if we want to make it worth their while to get a job.
  The new deals would not have been introduced by the Conservatives. They still do not know whether to support the programme. The programme to make work pay would not have been initiated by them. I pay tribute to the shadow Chancellor because of the imaginative work that he did to reform the welfare state. Incidentally, most of that was pretty punishing to groups of needy people, but he did tackle the problem.
  We have moved on a little further. The concept of making work pay is an exciting one. It will be extraordinarily difficult to pull off, because the complexities of the barriers to work for various groups of people are beyond the majority of Members of Parliament and perhaps beyond many civil servants to negotiate. I am certain that making work pay will be as crucial to modernising the welfare state as the high and stable level of employment written into the White Paper of 1944 was to the proper funding of the welfare state when it began.
  I have signed up whole-heartedly to the concept of increasing the number of employable people, not just because it is good for them and good for society, but because it makes economic sense. The pool of employable people will bear down on inflation and allow the Chancellor to run the economy at a higher rate of growth than would otherwise have been the case. As Professor Layard said in his evidence to the Employment Committee, the net result of that should be a net increase in jobs.
  Another group who deserve priority are those who are already in work. Some 80 per cent. of the work force over the next decade are already in work. My right hon. Friends
  1326
  are missing a trick, because there is a far greater and earlier payback to the Government from enhancing the productivity of those who are already in work than there will be from increasing the employability of those who will move into work. We must do both.
  Moreover, although the schools agenda has greater political saliency and may have more profound effects in the long term, within the realistic life of the Government—say, within the next decade—there is a greater return if we invest in the people who are already in work.
  In the next Budget, I shall look for tax breaks for companies to invest in training. If we are not going down the levy route, we must make it worth while for companies to invest in training. I shall explain why.
  I have cited before the case of House Thorn Lighting, in Spennymoor in my constituency, whose managing director said, "We discovered that with every pair of hands we got a free brain." That expression highlights the problem that we are trying to solve: we do no more than scratch the surface of the skill and creativity of our work force. It is the companies that are the most adaptable, flexible and able to respond quickly to market situations that release the creativity of their work force and make them partners in the management of change and in improving productivity and quality. Thorn Lighting does that, as does another company in the north-east.
  Nissan spends 7 per cent. of its turnover on training. The average for British industry is below 1 per cent., and for French and German companies it is between 2 and 3 per cent. It is small wonder that, in 14 years, Nissan has made itself the most efficient motor manufacturer in Europe. If we are to make an impact on our competitiveness—which we must—over the next five to 10 years, this is where the greatest return will be made. I urge my right hon. Friend to pursue strongly his lifelong learning agenda, and to remain strongly in favour of encouraging business to train those who are already in work.
  The hon. Member for East Yorkshire and the shadow Chancellor referred to the high pound, which is a severe problem for most of Britain's manufacturing industry. I hope that there is not an enclave of people in the Treasury who still believe that a high pound is good for British industry—that, as a strong currency was good for Germany and Japan, British industry should have to live with the overvalued pound. Such people forget that Germany and Japan achieved a high currency through economic efficiency and economic strength. While those were being built up, they did not have to cope with the problems of an overvalued currency.
  It seems clear that the Monetary Policy Committee will have to raise interest rates. If that is the case, short-term funds will flow into the pound, raising it even further. Some, including the Manufacturing Science and Finance union, warn that 100,000 jobs may be at risk because of the overvalued pound, so we must take the matter seriously. I read that those at No. 10 and No. 11 Downing street do take it seriously, and that they are rather worried about the problem. It is about time that they started to do something about it, because if we lose 100,000 jobs over the next 12 months, it will undermine all the new deals, making work pay and the modernisation of the welfare state.
  Mr. David Willetts: What the right hon. Gentleman is saying goes to the heart of the Chancellor's

  1327
  Budget judgment. I put it to the right hon. Gentleman that he is saying that, because of the Budget judgment, the City expects interest rates to rise, and that that is why the exchange rate has firmed since the Budget, giving rise to his fears about unemployment. What he just said is a fundamental attack on the Chancellor's Budget.
  Mr. Foster: I am pointing out to the Chancellor what many of us know to be true in our constituencies: unless we begin to take seriously the overvalued pound and find some way of dealing with it, it will hit us in the face later this year or next, and could undermine our entire economic strategy. Therefore, it should be taken seriously.
  For the past 40 or 50 years, successive Chancellors have tried to discover an economic strategy in which exports and investment drive forward growth. For a while after we had been blasted out of the exchange rate mechanism—much to the pleasure of some Opposition Members—it seemed as though the Conservative party had stumbled into a half-competent economic strategy: exports forged ahead and interest rates fell. Now we have the opposite problem. The question is, where are the jobs to come from?
  We may end up with a large pool of employable people who are job-ready but without jobs to go to. We must take that seriously, because if we succeed in making people employable and enhance their ability to go straight into work, they will be severely disillusioned if there is no work for them.
  We cannot look to exports to drive growth. Despite the enormous amount that my right hon. Friends have done to encourage business investment, which is why the Budget has been welcomed by the business community, I cannot see that, on the brink of even a mild recession, business investment will drive growth. So what can we look to? Perhaps we should look to public investment—perhaps to the private finance initiative.
  Perhaps at last the PFI will spring into life. I read in the Red Book that there are only £1.5-billion-worth of signed deals this year, and that next year there should be £3-billion-worth of signed deals. With PFI and conventional public investment, growth is still not as high as it was a couple of years ago. The PFI will not drive growth. Perhaps conventional public investment will, but it is reducing and is planned to reduce still further, according to the Red Book.
  It is time for my right hon. Friends to begin to take seriously the problems of the definition of the PSBR. I shall explain why. Let us take Newcastle airport. It is a successful airport in a rapidly growing industry—tourism. It is wholly owned by the local authorities. The commercial banks are bending over backwards to lend money to develop the airport on the strength of its balance sheet or its assets. That investment would immediately produce jobs in the construction industry in the north-east, where we badly need them. Ultimately, it would produce jobs at the airport, too. It would enhance the competitiveness of a regional airport in a rapidly expanding industry. What can be more sensible than to invest in it?
  However, because the airport is wholly owned by the local authorities, it falls foul of the PSBR regulations. Such investment would amount to further borrowing by central Government and is therefore disallowed. None of our European competitors treat such investment in
  1328
  that fashion. It is not required by the Maastricht criteria, so why do we have the most restrictive PSBR regulations in Europe? They were introduced, I believe, in 1976, when we had to bring in the International Monetary Fund. It is time that we reviewed them.
  We could invest not only in Newcastle and Teesside airports but in the Post Office. The Post Office is longing to be liberated by commercial investment so that it can respond to its own rapidly expanding market in a changing marketplace. I know that my right hon. Friends will not be able to respond to my remarks immediately, but I want to open up the debate. Let us look again at the PSBR regulations to see whether there is a way to fuel growth by sensible investment of this nature.
  My constituency contains 600 square miles of rural territory. I wrote to my right hon. Friend the Chancellor last Friday to urge him to introduce compensatory measures to offset increases in petrol prices. We are trying to make work pay for the working poor in the countryside, but increased transport costs are a great deterrent. I asked my right hon. Friend to reduce vehicle excise duty on the basis of post codes in rural areas, although I am not bothered how that should be done.
  I urge Treasury Ministers to take the problems of rural areas far more seriously. I welcome what they have done, and spending the £50 million on imaginative public transport schemes in rural areas would be a good investment. However, the extra money will disappear if it is spread thinly over existing services.
  I make a final plea to Treasury Ministers: £50 million is welcome, but it only scratches the surface of the problem of making work pay for the working poor in rural areas. I make a clarion call for a crusade against unemployment and poverty. I eagerly look forward to future Budgets that will drive ahead with such a crusade so that we become a far more civilised society.
  6 pm
  Mr. Don Foster: I am delighted to speak after the right hon. Member for Bishop Auckland (Mr. Foster), who made a thought-provoking speech that hon. Members will have enjoyed. He and I correspond almost daily: we share surnames and initials and are for ever passing on misdirected post to each other.
  I agree with many of the points made by the right hon. Gentleman and support what he said about the widening of eligibility criteria for the new deal. He was right to stress the importance of training, and used Nissan as an example. I hope that Ministers listened to him carefully.
  The right hon. Gentleman was more provocative about other issues. He was right: we must do more about the vital issue of job creation, and should not just talk about job readiness. Having got people ready for jobs, there must be jobs for them to go to. I agree with him about the controversial issue of redefining the public sector borrowing requirement. The construction industry would benefit from such a redefinition, as would other sectors. Most student loan is repaid as debt, so if it were not treated as part of the PSBR, additional funds would be released for investment in that sector.
  The right hon. Gentleman's most controversial remarks were about the pound. He may have upset Treasury Ministers—especially the Chief Secretary, who spent a great deal of time on "Newsnight" last night trying not to

  1329
  make remarks similar to the right hon. Gentleman's remark about the pound being overvalued. Hon. Members will have noted the right hon. Gentleman's honesty.
  I join the right hon. Gentleman in giving qualified support for the Budget, which is in the right direction. Unlike the official Opposition, I am honest enough to say that we welcome some aspects of it, fundamentally disagree with certain measures and are disappointed by others. Pensioners could have been given additional support to tackle the serious problem of pensioner poverty. The Chancellor rightly made more resources available for children and had the opportunity to do the same to deal with the plight of the elderly.
  This morning's edition of The Guardian quotes a pensioner, who said:
  "I was hoping for a decent hike in the old age pension, especially when he said he was increasing child benefit by 20 per cent.—mind you, at my age I should have known better."
  It is a pity that he thinks that way. Our alternative Budget offered to increase the over-80s pension supplement from 25p a week to £5 a week, which would have helped the oldest and poorest pensioners.
  We are also anxious about the environment. We welcome the £50 million of support for rural transport, but many cuts in rural transport occurred because local authority budgets had been cut. Although the boost to public transport in rural areas is welcome, it will simply make up for local council cuts.
  The Government have made two significant and worrying U-turns. First, the Labour manifesto claimed:
  "We will lead the fight against global warming through our target of a 20 per cent reduction in carbon dioxide emissions by the year 2010",
  but paragraph 5.28 of the Red Book—on page 72—makes clear that the Chancellor is committing the Government only to the European Union's target of an 8 per cent. carbon dioxide emissions reduction by 2010.
  I particularly look forward to hearing the Government's comments on their second U-turn. In 1994, the Labour party, when in opposition, promised an environmental Green Book to accompany the financial Red Book. The Financial Secretary reiterated the promise when she said:
  "We have every intention of keeping that promise from the first full Budget."—[Official Report, 10 July 1997; Vol. 297, c. 1062.]
  Sadly, that promise has been broken. Instead of a book, which should have had several pages at least, we have only one green page—page 78—in the Red Book.
  It is not surprising that the Government broke their promise; the Budget does so little for the environment that there is little with which to fill a Green Book. The Budget contains a modest energy efficiency scheme; there is no carbon tax; there has been backsliding on CO2 emissions; and fuel duties still represent tax rises—they have not been used to bring about a switch from vehicle excise duty as we recommended.
  Cuts in VED are referred to, but there are no details about how they would work. The Liberal Democrats proposed a £10 VED rate for cars up to 1,600 cc to compensate for petrol price increases, whereas the Chancellor's measures will, as the right hon. Gentleman
  1330
  rightly pointed out, leave motorists in rural and other areas worse off. No wonder Charles Secrett, director of Friends of the Earth, said:
  "This Budget is about as green as a smog alert."
  We have other worries. For example, we are disappointed that the anomaly of differential two-tier tax rates on insurance products has been resolved by raising VAT for both to 17.5 per cent. We are worried about higher rates of stamp duty and believe that they could be especially harmful for people such as widows in high-price housing areas who want to trade down to smaller houses. The increase in stamp duty from £5,000 to £10,000 will be difficult for them.
  We welcome many features of the Budget, not least the measures to help small businesses and tighten up on offshore trusts. We welcome measures to tackle unemployment, not least through the boosting of skills—and changes in national insurance contributions. We welcome the introduction of a fiscal responsibility code, which—rather like the independent Bank of England—was first proposed by the Liberal Democrats. We welcome measures to provide attendance allowances for women. That is another move that Liberal Democrats proposed some time ago. We are delighted not only that the Government have accepted our proposal, but that they have now accepted that it should be backdated. They did not agree with that last July.
  As I have said, we welcome the extension of eligibility for the new deal. We welcome the plans that will reverse the Government's earlier proposals for independent savings accounts, personal equity plans and tax-exempt special savings accounts; and, of course, we welcome the fact that, judging by this one, Budgets seem to be starting to plan for the long term. We broadly welcome the Government's ambitious welfare reform package—particularly their introduction of a new system of tax credits, including much-needed child care improvements and a sizeable shift in the tax burden to help the least well off.
  I was disappointed by the reaction of the shadow Chancellor, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who is not in the Chamber now. He made it clear that he did not favour redistribution. Indeed, we gain the impression from the comments of some Labour Members that they are not particularly interested in redistribution.
  Mr. Tony McNulty: Name one.
  Mr. Foster: The Prime Minister would be a good example, in view of some of his remarks. Liberal Democrats, at least, welcome the redistribution proposals in the Budget and welcome the principle of redistribution.
  I shall ask Ministers two questions about the welfare reform package. First, why is the cut in lone parent benefits, against which we have argued vociferously, to be made in the near future while the offsetting benefits that are due to be introduced through working families tax credit will not reach pay packets until April 2000? We urge the Government yet again to consider whether they wish to proceed with that cut.
  Secondly, I wonder whether the Chancellor is aware of information given by the Institute for Fiscal Studies in a post-Budget presentation today. The institute points out that, although 1.1 million people will have better work

  1331
  incentives as a result of the working families tax credit and other measures, some 2.8 million will have worse incentives. According to the institute—the point was also made, rightly in my view, by the shadow Chancellor—it will now be impossible to predict the net effect of the measures on employment. It is impossible to say whether jobs will be created in the way that both the right hon. Gentleman and I consider vital.
  The Budget contains some measures that we may welcome in principle, but which we do not think go far enough. We believe that there are three reasons why the Government have not allowed themselves to go as far as they should have. First, they have agreed—wrongly, in our view—to stick to Tory spending limits. At least, that is what they said up until yesterday: they told us that they would stick to the overall control total for 1998–99. Those who analyse the Red Book, however, will discover that the Government have broken the clear promise that they made to the House—although it is one of the broken promises that Liberal Democrats welcome.
  The second problem that has constrained the Chancellor and the Government is their refusal to consider raising the level of personal income tax. As has been pointed out, the Government have raised taxation overall in their package, but what has been raised is regressive taxation, not—as we would have liked—progressive taxation. The Government's failure to consider raising income tax levels means that they have no mechanism with which to control the current consumer boom and its effect on the economy.
  The third problem is the Government's continued uncertainty about our membership of the European currency. It was no surprise to read today that the pound had reached a nine-year high, which threatens to create problems for our exporters and to lead to higher interest rates. With no controls on either our membership of the European currency or the ability to raise income tax, the pound will be left bobbing around, out of control.
  Those constraints, with the Government's apparent determination to build up a war chest of money that they will be able to spend in the few years running up to the next general election—it is currently estimated that it will amount to £123 billion by the end of the Parliament—mean that the Budget has simply not gone far enough, especially in relation to public services. The extra cash for health and education falls far short of what is needed: it is just a drop in the ocean.
  The trouble is—the Chancellor did not mention this in his speech—that the extra money he announced was largely offset by the upward revision of inflation, which means the cutting of about £750 million from real public spending next year. That cancels out almost all the spending increases announced by the Chancellor. It also means that the black hole in the Government's finances caused by higher inflation has cut a massive £6.8 billion from the real value of public spending plans for 1998–99, which are now well behind the proposals of the last Conservative Chancellor.
  I shall now mention two aspects of public spending that I consider particularly important. The first is health. We heard much about the Government's commitment to health in today's statement by the Secretary of State for Health and, as hon. Members will remember, the Labour party's manifesto for the last election said:
  "We will rebuild the NHS…cut NHS waiting lists by 100,000".
  1332
  Since then, the pledge has been somewhat watered down. In yesterday's Budget statement, we heard that the NHS would have an additional £500 million, but that is much less than the £2.25 billion that we said was necessary in our alternative Budget. Furthermore, with the higher GDP deflator hidden away in the Red Book, the amount available to the NHS will be worth nearer to £400 million in real terms.
  Given the pressure on the Budget caused by inflation rate trends in the NHS and the millennium computer time bomb problem, it is worrying that the Chancellor seems to believe that that amount will be enough to cut waiting lists in the way described by the Prime Minister today at Prime Minister's Question Time. We do not think it will be possible.
  To sum up my views about the situation in the NHS:
  "Opposition Members welcome any additional resources for the national health service and any plan to break down the appallingly high waiting lists. However…When health costs are rising faster than even ordinary inflation, the sum that the Chancellor has provided today will barely cover the basic inflationary pressures that the health authorities face, far less deal with their huge backlog of structural repairs."—[Official Report, 1 November 1988; Vol. 139, c. 826.]
  Those are not my words; they were spoken by the current Chancellor nearly 10 years ago, when his party was in opposition. What he said 10 years ago we believe today about what this Government are offering to the health service.
  We remember the Government's commitment to make education their number one priority. They also told us that it was their intention that the share of GDP spent on education would rise over the lifetime of a Parliament. With the Chancellor's announcement, unfortunately, they are not making any progress on that promise. The share of GDP has hardly altered over previous years. In fact, if anything, it has made a small downward movement.
  The question is whether the education proposals will deliver much at all. According to the spin doctors, who had a field day up to and including yesterday, much is going to happen, but when the £250 million—that, of course, is in comparison with our Budget proposals for £2.5 billion—was announced, the Chancellor did not mention the effects of the upward revision of inflation.
  Because the increase in inflation affects the entire education budget, the net extra that yesterday's Budget offers for education is, in fact, only £148 million. Of that, £100 million will go to the new skills programme and £10 million to education action zones, both of which we welcome—but that leaves only £38 million extra for our schools. We welcome that, but, frankly, it is not very much.
  Mr. Phil Willis: Does my hon. Friend agree that the Budget announcement—and, indeed, the announcement of the Secretary of State for Education and Employment—included no resources whatever to support the learning age? The idea that we can build lifelong learning in the next millennium on absolutely no resources is hypocritical—sorry, I should not use that word. It is misguided.
  Mr. Foster: I entirely agree with my hon. Friend. I do not know whether he noted that, when the announcement came about the small extra amo,unt of money for education, and it was made clear that there was no extra

  1333
  money for further or higher education, we also had an announcement that there was to be a continuation of the Oxbridge colleges' money. For a Government who concern themselves with providing for the many and not the few, that seemed bizarre.
  As my hon. Friend knows only too well, there is a desperate need for additional money in higher education. Sir Ron Dearing, for example, said that, if we are to address the falling qualities of libraries, teaching facilities and especially information technology, we need £365 million this year, £575 million next year and £1 billion by 2000. The Government have, in practice, offered no new money in the Budget. Before it, they offered £165 million, of which £40 million is to improve access, and they will top-slice higher education budgets by £150 million by reclaiming the new tuition fee element.
  As the Under-Secretary of State for Education and Employment, the hon. Member for Birmingham, Yardley (Ms Morris) will know, the £165 million is not new money; it comes simply from staging Higher Education Funding Council grant payments so that the Government make a saving.
  The House may be interested to know that Baroness Blackstone said:
  "I have tried to say as clearly as I can that we are committed to trying to find additional funding for universities."—[Official Report, House of Lords, 10 March 1988; Vol. 587, c. 188.]
  It is clear from yesterday's Budget that the Government have failed in their effort to find additional funds for universities. Sadly, they have failed also to find any additional money for further education. Baroness Kennedy recently commented that our Cinderella further education sector needed
  "a sustained and massive investment in tackling the backlog of underachievement in the population to create a self-perpetuating learning society".
  The reality from yesterday's Budget is that no additional money is to go into the further education sector.
  There is some additional money for our schools and for skills, both of which are welcome, but there is no additional money for further or higher education. There is no opportunity, then, to start to address some of the problems that need to be tackled in our education service.
  Yes, the Government are committed to reducing primary class sizes for key stage 1 pupils, but we argue that we should reduce class sizes for all primary school children. There is little or no additional money to help tackle the backlog of repair and maintenance work in schools. There is no opportunity to start to put in place early-years education for three as well as four-year-old children whose parents want it.
  There is no opportunity to start to introduce a cap on technology and science class sizes in secondary schools, or significantly to increase the amount of money for books and equipment in schools. There is no additional money really to tackle the problems that I have described in further and higher education and, in particular, to start to give some support to part-time students in both further and higher education. This Budget has moved in the right direction, and for that we welcome it, but it has disappointed in a number of sectors, not least in funding for higher and further education.
  Mr. Tim Loughton: I have listened intently to what the hon. Gentleman has
  1334
  said. Before he finishes, will he perhaps undertake that his Liberal Democrat colleagues will turn up this year during the Standing Committee stage of the Finance Bill and go through the detailed work of criticising and amending the Budget—making the points that he has been making in detail—rather than, as last year, contributing 15 minutes out of the 26 hours of debate, which was undertaken mostly by Conservative Members? The hon. Member for Gordon (Mr. Bruce), the Liberal Democrat spokesman, appeared for just 30 minutes in the whole week.
  Mr. Foster: I am certainly not going to make any commitments on behalf of my hon. Friends. They can make commitments for themselves. Earlier today, one Conservative Member told us what his views were and, when asked whether he was speaking for himself or the party, pointed out that he was speaking for himself. We then heard the shadow Secretary of State for Education and Employment, the right hon. Member for Charnwood (Mr. Don-ell), say that that is the way in which Conservatives always speak, so I shall let my hon. Friends speak for themselves as well.
  We welcome the direction in which the Budget has gone. It has huge gaps, not least its failure to address the need to provide support for pensioners and to tackle this nation's environmental problems. We welcome a number of its measures, but argue that they simply do not go far enough. However, given that there is a movement and direction in this Budget that we support, we give it the qualified support that the right hon. Member for Bishop Auckland also gave it.
  6.28 pm
  Mr. Alan Simpson: I offer the Chancellor of the Exchequer congratulations on introducing four extremely important principles in this Budget, which could easily be overlooked in the detailed exchanges.
  I congratulate my right hon. Friend on raising child benefit. In particular, it is important that the House notes the Prime Minister's comment at today's Question Time—that a belief that tax policy should favour the child, rather than judge the household, underpinned that change. That is extremely important when we place our children in the context of the best assets that a society has. If we can recognise that as a Budget principle, we will be much the better for it.
  The second thing that I wish to congratulate the Chancellor on is his decision to reduce value added tax on the installation of home insulation products. Again, it may involve a relatively small amount in actual terms—perhaps no more than an extra 40,000 properties a year are likely to benefit—but it establishes a tax principle that will be central to how we view economics in the next century. The principle is this: it is wrong for any Government to tax energy-saving more heavily than energy-consuming. Labour fought for that argument in opposition, and I am pleased to see that in government we have stuck to the principle for which we argued, and made the decision to reduce VAT on home insulation products.
  Mr. Loughton: On that point, will the hon. Gentleman admit that the Government have reneged on the campaign

  1335
  that the Financial Secretary to the Treasury led two years ago, in that the VAT reduction applies only to grants from local authorities, not to energy-efficient goods in general, which anyone here, even the Lord Chancellor, could go down to B and Q tomorrow and buy?
  Mr. Simpson: No; I think that we are at the first stage of a process that will move the whole eco-taxation agenda on to a significant point. It will profoundly shift the way in which we think about the relationship between taxation, economics and the environment, and I am pleased that we have made that start.
  That fits in with the third factor on which I congratulate the Chancellor—the beginnings of a framework of green taxation. Spirited as was the defence by the hon. Member for East Yorkshire (Mr. Townend) of the rights of the private motorist, if we are to continue to exist on a planet and in an environment that will sustain us all, we must face the consequences of Kyoto. The principles of contraction and convergence that came out of the Kyoto agreement will force us all down a path which not only will mean that we take seriously our responsibilities for environmental taxation, but will probably become the central pillar of taxation policy for the 21st century.
  Finally, I thank the Chancellor for issuing a pre-Budget consultation document. Many of us complained for years that the House was not taken seriously during the process of Budget formulation and consideration. This year—for the first time to my knowledge—a Chancellor has published a pre-Budget report, and invited contributions and responses.
  I assumed that that invitation included me, and I had the temerity to submit my own Budget to my right hon. Friend about a week ago. Not much of it appeared in the Budget statement yesterday, but I am certain that the Chancellor has tucked it up his sleeve and is ready to unfold it in the next Budget, or perhaps later this year.
  I shall describe some of the "big picture" issues against which the Budget must be measured, which the House has not properly addressed so far. Those focus on three factors—the real prospect of a recession, the case to be made for a reflationary and reinvestment programme, and the relationship between work and welfare.
  When I wrote my Budget submission, I was greatly influenced by several commentators who had written about the changes that had taken place in the global economy over the past year. Those range from—before the Budget—people such as Robert Reich, the former American Secretary for Labour, to—after the Budget—Roger Bootle, one of the most senior economists and commentators in the United Kingdom.
  Neither of those is a known member of the "usual suspects" group in the parliamentary Labour party, but each warns that the world is sitting at the edge at a large unco-ordinated global contraction, of which we have seen only the beginnings. To retain a monetarist obsession with the risks of inflation is to flirt with the real danger of missing the next war, because the serious challenge we face is the risk of an unco-ordinated global recession.
  In that context, we must address some of the contradictions that one finds in almost every modern economy, such as the signs of boom and the signs of bust appearing at the same time—a boom in consumer spending and credit debt, co-existing with a bust in manufacturing output and manufacturing investment.
  1336
  Those are new and difficult problems for any Chancellor and any Government to deal with, but deal with them we must. The likelihood is that the consequences already being seen to follow from the Budget statement will accelerate rather than delay the point at which the contradiction will have to be dealt with.
  The value of the pound has already increased today. That makes it almost certain that, when the Monetary Policy Committee meets, it will raise interest rates. The fall in manufacturing and manufacturing investment that will follow will add to the Budget predictions for manufacturing industry, which have been downgraded from a presumption of 1.5 per cent. growth this year to an assumption of growth between 0 and 0.5 per cent.
  That is all likely to come through in the second half of this year, when the welfare-to-work programme will be producing people who are at the point of looking for work. We shall face a real problem if employers are having to make decisions about whether they can retain existing employees, at the same time that we as a Government are asking them to take on the new trainees and recruits coming through the welfare-to-work programme. At that point we will be asked serious questions about where the work is to be found.
  When the Institute of Fiscal Studies said that, out of this year's Budget, it would be possible for us to release between £3 billion and £3.5 billion for public investment, it was being excessively cautious. The real figure, as the hon. Member for Bath (Mr. Foster) said, is probably more; between £5 billion and £10 billion could have been released. That reinvestment is what we need for a publicly led and publicly financed programme to deliver real jobs in the real economy.
  I looked at several of the newspapers this morning, and saw that one of them announced that the Chancellor had declared war on the work-shy. If we can inspire young people and others among the long-term unemployed to go into the welfare-to-work programme, and if we give them the skills to enable them to participate and the enthusiasm to seek permanent work, where will that work be found, if the economy is on the point of a serious and possibly sustained downturn?
  I believe profoundly in our new deal proposals. There is nothing more important for a society than finding productive, secure and well-paid work. Yet, in the broader economic context in which the new deal is having to be framed, it may be difficult for us to deliver on that. I draw a comparison with the previous and probably better known "new deal" introduced by President Roosevelt after his victory in America in 1932. There are significant factors in what underpins each of the two approaches that are entirely different.
  Under Roosevelt, the new deal programme built 651,000 miles of roads, 78,000 bridges and viaducts, and 38,000 municipal buildings; 2 million young people went into youth conservation work. The Government of the day introduced a minimum wage and price controls, regulated the financial markets and abolished child labour. Huge numbers of teachers were involved in keeping open rural schools that would otherwise have been closed on economic grounds, while the economies that supported their communities were rebuilt, underpinned and strengthened.

  1337
  That all took place around a presumption that public borrowing was not a carnal sin, and did not make one blind. It was the basis on which to rebuild a sensible economy. People in work were themselves tax contributors rather than welfare dependents.
  The Government of the day borrowed to accomplish those goals. The issue was not whether they had debt, but where the debt was owed and how it would be used. Those are still the central issues, and will determine how we underpin a reflationary package to deliver real jobs in the United Kingdom economy.
  There is no point in saying that we can leave it to the private sector. If there is one absolutely clear lesson to be learnt from the Tories' 18 years in power, it is that they gave the free market freedoms to do anything it liked, and that the one thing it did not do was reinvest massively in long-term job security in our economy. In those 18 years, our downgrading of private investment—in which the United Kingdom has always failed to meet the Organisation for Economic Co-operation and Development average—was made worse by the planned collapse of public investment and the planned sell-off of public assets.
  When the Tories came to power in the late 1970s, net public wealth as a proportion of gross domestic product was 70 per cent. When they left power, it had been run down to 10 per cent. It was an exercise in long-term asset stripping rather than long-term reinvestment.
  How will we underpin a real, serious and sustainable new deal programme? Although I do not urge that we build 651,000 miles of new roads—I am not a roads-supporting person—I remind Ministers that there is a rough equivalence in the number of houses in the UK that are miserably insulated and desperately in need of upgrading to modern home insulation standards. In the second appendix to my Budget submission, I outlined the basis on which the Government could begin the first stages of a 15-year programme to end fuel poverty in the United Kingdom.
  The programme would require us to upgrade 500,000 properties a year for each of the next 15 years. Consequently, we would immediately create sustainable work for many of today's unemployed. We would also raise the quality of life of the many households who live in miserable, unhealthy accommodation. We would save money for health service, and raise the standard of the United Kingdom's capital housing stock. Environmentally, the programme would save large amounts of carbon emissions, and it would create a virtuous circle, in which all will win and none will lose. That is how we can create work, wealth and well-being.
  We could also develop comprehensive national programmes to restore and rebuild public transport infrastructures in all our towns and cities, and to serve all our rural areas. However, such programmes will not be created by providing a few market incentives.
  Although the £500 million provided in the Budget will be a start in developing such programmes, it will allow us—if we spread the amount over three years, across the country—only to draw up the plans, not to deliver the networks. Again, we will need a public investment-driven programme, which would underpin welfare to work and
  1338
  provide the arena in which we will allow people who are not work-shy to find a real and useful place in our economy.
  The Chancellor, in accomplishing those objectives, may wish to examine and embrace other tax principles. One principle is very simple: a public stakeholding should be attached to every public subsidy—an interesting notion, which Conservative Governments studiously avoided in their 18 years in office. I shall develop later the point that those Governments were very good at shifting the locus of public subsidy from personal welfare towards corporate welfare.
  Those who say that we should not attach conditions to public subsidies to the private sector might like to examine the United States' community reinvestment legislation, in which the private and financial sectors' social obligations are legally binding, and cover matters such as community reinvestment and not-for-profit work in local communities. Their obligation is one of demonstrating how public moneys will be used to benefit the communities from which that money is drawn.
  Organisations such as Greenpeace, Friends of the Earth and the Association for the Conservation of Energy have all, in their own way, stated the colossal potential of environmental technologies and environmental repair in generating real, sustainable jobs. The sooner we seriously embrace our Kyoto obligations and an environmental agenda, the sooner we will engage in the economics of the next century.
  Accepting those obligations will dovetail with some of the issues and contradictions that we will have to resolve in the transition to a welfare-to-work system. The Chancellor was absolutely right to set himself the task of reducing poverty, and particularly of reducing the outrageous marginal tax rates that fall on the poorest in the land.
  Often, those who move from welfare to work face marginal tax rates of up to 96p in the pound. If they receive passported benefits—such as free school meals or school travel—the reclaim rate may amount to 117p for every 100p they earn. That is crazy. Therefore, trying to connect the benefits system with the wage system is an extremely important idea and objective.
  Connecting the two systems will, however, have some real difficulties, and the House must not be deluded about them. The House attempted twice before to develop its own version of working families tax credits. On each occasion, it failed to enact workable legislation. The first problem—making the proposals complex and unworkable—was the legacy of an obsession with means-tested benefits.
  The problem is not only the administrative difficulties of moving family credit from the welfare system to the work system—by means of income tax—but the relationship between whatever system eventually emerges and the remaining aspects of the means-tested benefit system. If we are left with a legacy of clawing back housing benefit and council tax rebates, we will discover that exactly the same poverty traps remain, but appear at different points. We may try to introduce different tapers and stages at which the clawbacks occur, but it will simply make a monster of the current mess.
  I make those comments not to be critical of the idea of connecting the systems, but to acknowledge the scale of the complexity that we will have to sort out. If there is

  1339
  one possible way in which the process can be made simpler, it is by simplifying the process by retreating from means-tested benefits. The simplest way of delivering a new system would be to return to many of the Beveridge assumptions about universal platform entitlements underpinning the benefits system, and to a progressive taxation structure—however it is constructed—as the means of claiming back benefits from those, at whatever position in the earnings scale, who are deemed not to be entitled to be net beneficiaries.
  Returning to those earlier assumptions would remove the barriers between welfare and work. We remove the complexities of collection not by diving into separate taxation processes on individual benefits but by taxing overall disposable income. It is called progressive income tax—[Interruption.] Yes, it is unashamedly redistributive; but that is what society should do. We cannot tackle poverty without redistribution.
  The idea that poverty will right itself if there is accelerated growth is nonsense. We inherited from the previous Tory Government a wider gap between rich and poor than this country has ever seen. That is because the Tories abandoned a recognition that the market has no interest in redistributing to the poor; it becomes self-serving to the rich. A redistributive tax policy is nothing to be ashamed of.
  In considering how welfare to work and the working families tax credit might fit into the redistributive process, it is important that the House looks at the lessons that must be learned from Canada and the United States before it adopts any particular structure of a scheme. The equivalent to the working families tax credit in the United States has to be underpinned by food vouchers. I have yet to see a case for embracing the reintroduction of food vouchers in the United Kingdom. In Canada, the costs of going down such a path have been extraordinarily high.
  At some point, any Government must ask themselves whether the costs of fundamental change in the welfare system outweigh the specific benefits of that change. The answers are to be found in different variations on this theme: a return to universal benefits and welfare system, tax thresholds that are adjusted to take the working poor out of tax paying rather than in pursuit of a lower rate of tax, and a rise in the initial tax disregard for those entering work.
  The Chancellor has been absolutely right to go down the path of raising environmental taxation. He has been absolutely right to raise the amount of support that goes directly to children. He would also have been right if he had followed the same logic and raised the amount of support that goes to pensioners and disabled people. He would also have been right if he had said that we should go down the route of directed public investment, which would be the basis of a planned reflation of the economy.
  I expect that, at some point, the Tories will say that all this is unaffordable; that the welfare burden is simply unsustainable in a modern economy. I must concede that there might be one sense in which they are right. Cuts in personal welfare under their Administrations effected a shift towards corporate welfare.
  Allowances for and non-taxation of industry must amount to about £30 billion a year—just over £18 billion in capital allowances, £4.5 billion in direct grants, £4.1 billion in export credit guarantees, mainly in export support grants, and a whole series of other packages.
  1340
  In their own way, they are all forms of welfare dependency. If the Chancellor needs to look for money, and if tough decisions are to be made, we should begin by looking at corporate welfare.
  Every day of every week, the Government's spending Ministries are besieged by businesses—mainly big business—saying, "Of course we will come to your country, but we need you to pay us. We need you to put together an incentives package that will make it worth our while. We want you to build the buildings for us, give us the land, train the work force and put in the infrastructure. While you are at it, we would like you to have a word with the local authority and ask them to give us a 10-year exemption from business rates. Don't talk to us about crisis loans; we want grants." If welfare is demeaning, we should try first removing the unaffordable, unsustainable, demeaning burden on business, and allow it to stand on its own two feet.
  If we do not want to do that, we should introduce conditions on the use of public money in return for the investment or non-taxation with which they are graced. The idea of a stakeholder economy ought to extend to the notion that the Government, on behalf of the people they represent, take a stake in—or hand a different form of stakeholding to—the industries that are publicly subsidised by being allowed not to pay tax as the rest of us do.
  It would be interesting to invite the Home Secretary to consider the behaviour of some corporations. Rather than judging lone-parent families, we should look at the morality of some of the lone-parent corporations and their conduct around the globe. They are terribly flighty. They take money in one place, get into a relationship in one country, spawn offspring, and then do a runner to somewhere else. Someone flashes a wad of cash somewhere else, and they are off. The behaviour of lone-parent companies, which have often had multiple partners, does not make them good parents.
  We ought to ask the Home Secretary whether there is a need for lone-parent company classes in parenting. We should ask whether there is a need to curfew capital; whether it should be back in the country by 9 o'clock. There are a series of ways in which we can use the assets that this country still has in abundance to meet all the needs and aspirations that are found in the Chancellor's statement and the new deal.
  Nothing is more important than putting the country back to work. To do so in an environmentally sustainable way is certainly our biggest challenge. That is the really exciting agenda of the next century. If we can shift our spending from warfare to welfare, from speculation to environmental repair and reinvestment, we will find that we have all the resources necessary to deliver not only a new deal but a sustainable deal for a new century. The sooner we embrace that in a Budget, the better society will be.
  6.56 pm
  Mr. Geoffrey Clifton-Brown: This was one of the most over-hyped, over-spun, media-spectacle Budgets that I can remember. Indeed, one is not disappointed by the two opening sentences of the Chancellor's Budget speech. It is a good idea to remind the House that he said:
  "Only once in a generation is the tax system fundamentally reformed. The Budget I bring before the House and the country today begins the task not just of modernising taxation but of modernising the entire tax and benefits system of our country."—[Official Report, 17 March 1998; Vol. 308, c. 1097.]

  1341
  The Chancellor gives himself divine status. A previous Chancellor coined the phrase that a Budget celebrated on the day is often regretted at leisure. History will judge today's Chancellor by whether he lives up to the very high expectations that he set himself in his opening remarks.
  We know that the Budget is delivered against a macro-economic climate of falling growth, rising inflation, falling unemployment and, the joker in the pack, rising money supply—at some 10 per cent. a year, which is unsustainably high. What did the Budget do? It took me some little while to discover—buried deep in the Red Book in table B.20 on page 118—that it is a fiscally tightening Budget, to the tune of £4.8 billion this year and £2.9 billion next year.
  Added to the fiscal tightening in the previous Budget, through the windfall tax and advance corporation tax credits, fiscal tightening amounts this year to £11.8 billion and next year to £9.9 billion. The question is whether that will be sufficient to avoid having to increase interest rates at the next Monetary Policy Committee, bearing in mind the effect that that will have on the value of the pound.
  Part of the macro-economic situation is the City's verdict on the Budget. What happened? The pound soared to a nine-year high. The group chief economist of the Hongkong and Shanghai Banking Corporation, Roger Bootle, said:
  "It's a considerable disappointment that will put a lot of pressure on the Monetary Policy Committee to raise rates."
  So the pound is likely to go still higher. As I predicted in a recent speech on the economy, manufacturing industry is already beginning to go into negative growth. If we are not careful, the economy will go into recession in two or two and a half years.
  We delivered one of the brightest economic situations that this country has seen since the war. We left a golden legacy, in which growth exceeded inflation. It is a bitter disappointment that the rate of growth is falling. The Red Book predictions show it falling from 2.5 per cent. to 2 per cent. this year and to 1.75 per cent. next year, which will be unsatisfactory even if it is achieved. On the day that the Budget was delivered, the retail prices index rose disappointingly from 2.5 per cent. to 2.6 per cent.
  How is the Budget to be judged? There are some welcome elements, but most of the welcome measures come with a "but". One could welcome the decrease in corporation tax for large and small companies to 30 per cent. and 20 per cent. respectively, but that has to be considered in the context of the overall burden of taxation on business, which has considerably increased because of the withdrawal of associated tax credit in the previous Budget and, perhaps more importantly, the quarterly filing of corporation tax for large companies. That will place a burden on companies.
  The Chancellor made much of trying to introduce a climate in which small businesses would thrive. He said that he was trying to reduce bureaucracy, but, nine months into the Government's term of office, I see no sign of them reducing bureaucracy—quite the contrary. As I said in art intervention on my hon. Friend the Member for Maidenhead (Mrs. May) yesterday, the measures that the Government are accepting from the European Commission, particularly in the social chapter, such as the
  1342
  decision at the recent meeting to allow works councils for small firms with fewer than 50 employees, will add considerably to the burden on small businesses.
  The Budget will increase taxation as a proportion of gross domestic product. That can be seen from chart B2 on page 119 of the Red Book. The prediction is that the overall burden of taxation will be 38 per cent. next year. Given that our major economic rival, Germany, with which we compete directly in many markets, has an overall taxation burden of 39 per cent., the situation is serious. The prediction is based on some optimistic assumptions for levels of growth. If those predictions are not sustained, the level of taxation is likely to go over the magic figure of 40 per cent.
  The level of Government expenditure as a proportion of GDP is also mentioned in the Red Book. That figure is also likely to go over the magic figure of 40 per cent. in the near future. With our major rivals such as the United States, Japan and Korea all having a ratio well below 40 per cent., it is bizarre that a Government who claim to be sticking to the Conservative expenditure plans are not doing so, as a detailed examination of the Red Book shows.
  One of the disappointments is that the Government cannot control social security expenditure, contrary to what they are proclaiming publicly. Table B18 on page 128 shows that the social security budget is likely to rise by £4 billion over the next two years. The Government are predicting that they will not be able to stick to the expenditure plans.
  I have already said that the Budget has some welcome measures, but there is always a "but". One could welcome the changes to employers' national insurance contributions. However, the overall rate of national insurance contribution for employers is rising to 12.2 per cent., placing a considerable burden on companies, largely in the high-tech and financial sector, that are the backbone of our economy and are helping our balance of payments. They will be hit by the measure.
  National insurance is an odious tax. It would be more intellectually honest to abolish it and put the burden on income tax. That would be a properly progressive tax, with those who earned more paying more of their share of tax, instead of having a vastly complicated tax that takes up a lot of time for accountants and the Contributions Agency. All that could be abolished if the system were simplified. I welcome the Chancellor's decision to merge the Contributions Agency with the Inland Revenue. I also welcome the measures to ask the Inland Revenue to help new firms setting up payroll tax. Those are two positive measures.
  The Chancellor largely got away with his Budget last night, and the media were on the whole satisfied with it, because he had hyped in advance that middle England—the middle classes and the opinion formers—would be hit. In the event, they were not—or were they? We might just have to wait for the small print. Those of us who know a little about such matters can already divine some of the measures that will hit the middle classes.
  One might welcome the reduction of capital gains tax from 40 per cent. to 24 per cent. for assets that are held for 10 years, but let us think about that. If inflation is 2 per cent., over 10 years the asset will depreciate by 20 per cent. If, as is more likely, the rate of inflation is over 4 per cent., the asset will depreciate by 40 per cent.

  1343
  In other words, the gain caused by inflation will be more than the reduction of tax that the Chancellor is making. By not allowing indexation of gains, we are going back to the bad old days of the high-inflation Governments of the 1970s, which taxed inflation on gains. That is unfair and unsatisfactory. I hope that, by the time the Finance Bill is published, the Government will have had a re-think.
  Another disappointment is that, as the Red Book shows, the savings ratio has declined sharply in the past year—by about 1 per cent. It is predicted to decline again in the coming year. Is that surprising, when a retrospective tax was announced to put a lifetime ceiling on the new individual savings accounts and abolish PEPs and TESSAs? What are small savers to think when they might be taxed later? The Government are breaking faith with small savers.
  It is a tribute to my right hon. Friends the Members for Hitchin and Harpenden (Mr. Lilley) and for Richmond, Yorks (Mr. Hague) and all my hon. Friends, who have conducted a vociferous campaign, based on huge numbers of letters, that the Government have been persuaded that a lifetime limit of £50,000 on the new ISAs is discriminatory, particularly against the young, and unworkable. The Government have listened to the savings industry as well. I welcome that very much.
  Mr. Loughton: A U-turn.
  Mr. Clifton-Brown: Indeed.
  I should like to examine one or two of the largely welcome social measures in the Budget in a little detail. The working families tax credit suffers from a number of defects. The Womens Budget Group, an informal think tank of economists, social policy experts and women's organisations, believes that the replacement of family credit with the working families tax credit will lead to women and their children losing. Because the man is usually the breadwinner, he will get the tax credit, rather than it going to the woman.
  The same would apply to taxing child benefit. It is often the low-earning or non-taxpaying wife who obtains the child benefit. Taxation would be calculated on the man's marginal rate. She would suffer. We welcome the increase in child benefit, but we regret that those on even basic rates of tax will suffer.
  I wish to comment on the increase in petrol duty. The House of Commons estimates that the Chancellor has raised tax revenue by £1 billion this year, on top of the £695 million he raised in last year's Budget. This is a savage rise, which particularly hurts those people in rural constituencies who depend on the car for a lifeline.
  People in my constituency have to use the car to get to the post office to get their benefit, to go to the doctor's surgery, and to do their basic shopping. It is all very well the Government saying that the problem is due to the previous Government's deregulation of the bus system, but there will never be a bus system in a rural area that is convenient for every single person—young, middle-aged and old. That is unrealistic. Those in rural areas need a car, and they are clobbered every time in the name of a so-called environmentally friendly tax.
  There are many other more satisfactory ways of producing a green Budget. One is to reduce VAT on insulation materials. This is a so-called welcome benefit,
  1344
  but it is miserly because it is applied only to Government schemes. Why does it not apply across the spectrum? The Chancellor should talk to our European Community officials in Brussels to see if we can get a derogation to apply the benefit across the spectrum, so that all insulating materials can be free of VAT. In that way, instead of the home energy efficiency scheme insulating 3.5 million homes, it would get to all 10 million homes which need it, and some of the poorest people would benefit.
  The real disappointment of the Budget is that it fails to deliver for the health service and for education. The Government claim that they have a wonderfully reducing debt and a strong economy, but they should listen to the figures. Let us look at the health service. The £500 million which was greeted—or was not greeted—with such glee by Government Back Benchers yesterday is 1.2 per cent. extra for the health service. When we were in government, we put in, year on year on year, 3 per cent. extra in real terms.
  My constituents in Gloucestershire will see their waiting lists rise because the funding is not being increased at the same rate as for urban areas. We have a bed-blocking problem in Gloucestershire, and 100 people who should not be in hospital are there simply because the funding is not available to provide them with a domiciliary, residential or nursing care package. They are in beds which should be occupied by people who need operations. The doctors are there to perform the operations, but they cannot be carried out, because the money is not there to get the people our of hospital. The waiting lists lengthen, and people who need operations do not get them.
  Ms Claire Ward: The hon. Gentleman has a selective memory of my right hon. Friend the Chancellor's speech. He refers to the increase in petrol duty and its effect upon the rural communities. He forgets that the Chancellor also introduced an extra £50 million for rural transport. He referred to the health service, but he forgets that we have put more money into the health service than the Conservative Government ever intended. We have done likewise in education. I am interested to hear the—
  Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Lady is in danger of making a speech. Interventions must be brief.
  Mr. Clifton-Brown: I rather wish I had not given way to the hon. Lady, but as I did, I will answer in robust terms.
  The Chancellor has raised £1 billion from the extra petrol duty. The £50 million for special rural schemes transport is peanuts in comparison, and my constituents will feel the harsh economic effects of that increase in petrol tax. The £50 million is welcome, and here I make a special plea to the Chancellor. My constituency has an excellent community bus scheme, which has been going for 15 years. I hope that money will go not only to new schemes but to existing ones.
  Mr. Shaun Woodward: Does my hon. Friend agree that the intervention by the hon. Member for Watford (Ms Ward) showed what we all know—that Labour Members have no understanding whatever of the

  1345
  needs of rural communities? Does he agree that they are given to the kind of patronising claptrap which suggests that £50 million for rural transport will solve the problems that the Government have created with their Budget?
  Mr. Clifton-Brown: My hon. Friend is right. He moves in his constituency, and he goes to the local employment service and doctors' surgeries. He knows, as I do—and as every Member who properly represents a rural community knows—the real hardship that the increase in petrol duty will cause.
  Mr. Paul Keetch: The hon. Gentleman knows my constituency very well, and I must say that I find astonishing what he says about the great things done by the Tory Government. Does he remember the village schools, pubs, shops, postal services and bus services closed under the Tory Government? I have no great support for Labour Members who do not understand rural constituencies, but this is one issue that the Tories—who were thrown out of vast swathes of rural Britain—do not understand, either.
  Mr. Clifton-Brown: I was the only Conservative Member of Parliament in the country who had a positive swing towards to me at the election. I do not recall a single time when I was trying to defend a rural school or bus service on which I received support from any Liberal Democrats.
  The Budget is a wasted opportunity in terms of the amount of resources going to the health service. In terms of education, the position is even worse. I calculate that the increase—even with the extra £250 million yesterday—this year will be less than 1 per cent. That is a disgrace, and experienced teachers in my constituency will continue to leave schools and class sizes will rise. Special needs pupils will not get the statementing they need.
  The previous Government were able to provide great public services at the same time as reducing the burden of taxation. I hope that the Government will do better in the rest of their term. Otherwise, when they reach the next election, the electorate will deliver their verdict.
  7.17 pm
  Mr. Geraint Davies: This is an amazing exhibition from the Opposition. In today's newspapers—from The Sun to the Financial Times and everything in between—there has been almost universal acclaim for the brilliance of the Chancellor's Budget. [Interruption.] Conservative Members may laugh, but they are in the minority. It is all very well pretending that the media do not really understand the issues—I suggest that they understand the issues much more than Opposition Members.
  The centrepiece of the Budget—making work pay—goes alongside a number of other themes on which I will not dwell, as the media and right hon. and hon. Friends will articulate them in detail. I want to combat the somewhat pathetic points made by the Leader of the Opposition and other Opposition Members.
  The Budget contains measures for supporting families with children through child benefit rises and encouraging business by lower corporation tax and special concessions
  1346
  for small business. The Budget provides extra cash for education and health, £500 million for public transport, more support for the environment and—all-importantly—the setting of a long-term economic framework for the prosperity of Britain in a global marketplace.
  The Leader of the Opposition said that the initiatives on corporation tax, small business tax, the challenge funds for universities in terms of venture capital, the reduction in national insurance and the reform of capital gains tax were all the idea of the shadow Chancellor of the Exchequer—that they were all your ideas.
  Mr. Deputy Speaker: Order.
  Mr. Davies: I apologise if—
  Mr. Deputy Speaker: Order. The hon. Gentleman must sit down when I am on my feet. I am trying to help him to remember the convention of the House that hon. Members refer to one another in the third person. Remarks must be addressed only through the Chair.
  Mr. Davies: I apologise, Mr. Deputy Speaker—I was not suggesting that you had claimed those tax policies as your idea. The suggestion was that they were the idea of the Conservative party. If they were—and of course they were not—why were they not implemented in the 18 years of Conservative Government? Why, instead, did we have years of drift that ended in £400 billion of public sector debt?
  I come to that well-trodden, pedestrian point that the Prime Minister claimed that there would be no new taxes under Labour. Frankly, no voter believes that a new Government will not reshape the fiscal terrain to deliver their ambitions on poverty, on environmental sustainability, on employment, on security and on building a coherent society and future prosperity. Everybody knew that our pledge was that the lower and higher rates of income tax would not be increased—and they will not be. Indeed, I am confident that the overall tax burden will be less by the time of the next general election.
  Mr. Woodward: The hon. Gentleman says that the overall tax burden will have come down by the time of the next election. Will he explain the Government figures which suggest that, this year, the burden in terms of net taxes and social security contributions is 37.2 per cent., whereas the projection for 2001–2 is 38.5 per cent.? By using simple mathematics, can he explain by what magical trick the proportion will be reduced in the final week before a general election?
  Mr. Davies: There is not going to be an election next year. The key point is that the centrepiece of the Budget is making work pay. Our strategy is to translate claimants into taxpayers—we shall create opportunity where there was despair. By creating an economy based on work, we shall establish a virtuous cycle.
  The Conservative Government characteristically built an economy of spiralling taxation and low success. Their mismanagement meant that there were hidden taxes—for example, the BSE crisis cost £3.7 billion, and the underpricing of shares in the privatisation programme cost £5.7 billion. Moreover, it took the Labour Government to

  1347
  give the Bank of England independence, which is saving £6 billion a year in terms of the repayment of Government debt, as long-term borrowing costs are the lowest for 30 years.
  Another myth is that the Conservatives are the friends of rural areas—we have just heard that claptrap from the hon. Member for Cotswold (Mr. Clifton-Brown). Tory Members scoff at the £50 million for rural infrastructure, but that is not an insignificant amount. Part of the Tory legacy is the scrapping of rural transport as a result of deregulation, which was a complete disgrace. I am glad that our partners in the business community are responding to the challenge of the new Labour Administration. For example, BP today issued a press release saying that it would reduce relative prices of petrol in rural communities, which is a very welcome step.
  Mr. Loughton: We have heard that red herring several times this evening, but will the hon. Gentleman acknowledge that the reduction in the oil price may have something to do with the fact that, over the past six months, the price of a barrel of oil has fallen from $20 to less than $13?
  Mr. Davies: No. I am talking about the urban-rural differential, not the average price. The increases in fuel taxes are broadly in line with those imposed by the previous Administration, yet the Conservative party has now performed a cynical U-turn in an attempt to get more votes.
  The Labour Government are introducing an environmental package. There is a policy shift from taxing the vehicle to taxing use. That is a sensible step, not only for people who work in car factories, but for the environment. Moreover, we are spending £500 million extra on public transport—we hope to continue that policy in future Budgets.
  Mr. Clifton-Brown: Does the hon. Gentleman accept that a shift in taxation from the vehicle to its use is exactly what discriminates against rural dwellers, whom I want to protect?
  Mr. Davies: That is why we are spending £50 million on rural transport, which the Conservative party destroyed.
  On families, child benefit will rise by 20 per cent., which is the biggest ever increase. What is remarkable is that, after the idea of progressive taxation on child benefit had been floated, the Leader of the Opposition called it a betrayal. I cannot believe that the Conservative party, which used to talk about targeting, has changed its policy so cynically—it is outrageous and pathetic.
  The Leader of the Opposition then claimed that we were on the brink of recession—that jobs were at risk because of an overvalued pound and high interest rates. However, the figures for February, which have only just been released, show that an extra 13,700 people are in
  1348
  jobs, and that unemployment is at 4.9 per cent., which is the lowest level for 18 years—since June 1980, in fact, very shortly after Labour were in office.
  Mr. Woodward: Will the hon. Gentleman give way?
  Mr. Davies: I shall take the hon. Gentleman's very predictable intervention.
  Mr. Woodward: Can the hon. Gentleman say what the sterling-deutschmark exchange rate is this evening as a result of yesterday's Budget? Does he agree that the pound is overvalued?
  Mr. Davies: At a guess, I think it is about DM3.2 to the pound. [HON. MEMBERS: "Wrong."] Anyway, it is in that area. I understand the rather simplistic point that the hon. Gentleman is trying to make. He is saying that sterling is too high—
  Mr. Owen Paterson: Will the hon. Gentleman give way?
  Mr. Davies: I shall give way to the hon. Gentleman in a moment, as he is wearing a very nice tie.
  The Leader of the Opposition said that Britain was on the brink of recession because of the exchange rate, but if the export market is in such a bad way, why do the 1997 figures show that Britain has a trade surplus for the first time since 1985? Moreover, that surplus is the largest since 1982—£4.5 billion for 1997, as opposed to £1.8 billion in 1996. That is hardly an export-driven recession.
  Mr. David Ruffley: Will the hon. Gentleman give way?
  Mr. Davies: In a second. Please sit down. There is a big queue and I will take you one at a time, if you can contain yourselves in your seats—
  Mr. Deputy Speaker: Order. I think that I may have to help the hon. Gentleman again. While I am on my feet, I appeal for rather less exuberance on the Opposition Benches.
  Mr. Davies: In difficult trading conditions, with sterling high, goods have been holding their own and services have been expanding, owing to the quality and productivity improvements in the British economy.
  The shadow Chancellor should realise that the exchange rate cannot be explained entirely in terms of relative interest rates. The pound is strong because there is international confidence in the British economy and, not least, in the British Chancellor and his Budget. That is unfortunate in some senses. Everyone realises what a good job we are doing.
  There is also great uncertainty over the euro. Will there be a strong independent bank? Will there be political fudges? Did the fact that it was announced on the very day of the Budget that the drachma would be part of the euro have any impact? Of course it did, because some people feel that it might drag down the average value of the euro, increasing uncertainty and making sterling a refuge currency. We understand that.

  1349
  There is uncertainty in Asia and a recession in Japan, and Europe—I am thinking of Germany in particular—has been depressed by having to fulfil the Maastricht criteria quickly. All that has contributed to the strength of the pound, alongside the fact that we are at the top of our economic cycle. The United States is in a similar situation to ours, and our exchange rate with the dollar has been steady for about 15 months.
  The pound is holding up, as a function of the good job that we are doing; markets are up; pension values are up; and things are looking good.
  Several hon. Members rose—
  Mr. Davies: I shall give way to the chap with the pink tie.
  Mr. Deputy Speaker: Order. We are not chaps. We are hon. Members in the House.
  Mr. Paterson: I am touched by the gallant comments about my tie, but I am shocked that the hon. Gentleman should dismiss as simplistic a question about the exchange rate. Does not he realise that 20 per cent. of the British economy is based on manufacturing and that tens of thousands of people are worried stiff about the exchange rate, which, for his information, has gone to DM3.05?
  Mr. Davies: I realise that there is concern, but it is worth looking at the trade figures and at how well we are doing under difficult conditions. The uncertainties that I described are temporary—they may take a year or so to get out of the system—but we are creating conditions, with long-term policies, in which we are doing well despite the strength of the pound. Employment and prosperity prospects will continue to improve.
  Mr. Ruffley: What reasons can the hon. Gentleman give the House for the downgrading of the gross domestic product forecast for 1998, from 2 per cent. to 2.5 per cent.?
  Mr. Davies: As I said—[HON. MEMBERS: "Resign."] Unfortunately, I have no job. There has been a modest reduction in growth prospects, and I do not deny that that is partly linked to the prevailing exchange rate, but that does not contradict anything that I have said.
  The introduction of working families tax credit is greatly to be commended. As with almost every other measure, we still do not know whether the Opposition support it. The 10p tax rate has not yet been introduced, and Opposition Members may scoff, but we inherited a legacy of a £400 billion deficit, and at the right time we will introduce the lower rate.
  The Leader of the Opposition and the shadow Chancellor suggested that everybody loses, but among those who gain are families; the unemployed; the low-paid; small, medium and large businesses; the environment; people in education; and people in health. Almost everybody gains. It is a brilliant Budget: a Budget for jobs and work. After 18 years of drift, uncertainty and U-turns, we have a framework for success. I am proud to be here to support it.
  7.34 pm
  Mr. Tim Loughton: It is always entertaining to follow the hon. Member for Croydon, Central (Mr. Davies), so I shall not take offence at the fact that he failed to comment on my tie, of which I am rather proud. I apologise to you, Mr. Deputy Speaker, for any over-exuberance among Opposition Members, but we have certainly had far better entertainment than anything that is on television this evening.
  This is a Budget of prudence and stability. We know that because the Chancellor found it necessary to repeat it 17 times yesterday. It was mirrored in the green Budget and last year's ISA consultation paper, in which the Paymaster General constantly referred to the "prudent and sensible" savers from under whose feet he was so keen until yesterday to pull the rug. As William Blake said:
  "Prudence is a rich, ugly, old maid courted by Incapacity."
  The trouble is that we are never treated to any clue as to what prudence and stability in the Chancellor's economic dictionary actually amount to. What is a stable and prudent level for the ratio of public debt to national income, for example? What is a stable and prudent level for the public sector borrowing requirement at a time when yesterday's edition of The Sun—on the reverse of a rather fetching picture of Melinda Messenger—was briefed to say:
  "The Iron Chancellor, Gordon Brown, will use today's Budget to raise a fortune in taxes to start paying off the £420 billion national debt"?
  Of course, that did not happen. The complete failure of that to happen as The Sun had been briefed did not deter it from printing a picture of a dwarf Chancellor today under the headline,
  "Hi-ho, Hi-ho, it's off to work we go".
  Mr. Ruffley: Gordon Messenger.
  Mr. Loughton: It could be Gordon Messenger. I do not know whether it is Dopey or Grumpy; it certainly is not Bashful. The article refers to
  "a revolutionary Budget designed to get every jobless person in Britain back to work."
  Perhaps it has something to do with the lapdog nature of certain elements of the press that they should be completely misled on one day and be perfectly happy to go along with what they are told the day after.
  In not reducing the national debt, the Chancellor missed a golden opportunity to go into public sector surplus. Instead of any explanation, we were treated to additional alliterative variations on prudence, with the glorious phrase:
  "prudence for a purpose: to meet the people's priorities."—[Official Report, 17 March 1998; Vol. 308, c. 1112.]
  Despite the hype, the soundbite frenzy and the alliteration, the Budget will more accurately go down as the transvestite Budget, for it is not what it seems: it has undergone an unprecedented tarting up by the spin doctors.
  Yesterday, we heard an implicit threat to tax child benefit. Child benefit has had a bit of a makeover: a little blusher here, a lot of lip gloss there, and it is known as modernisation of the welfare state, dependent on that old

  1351
  favourite, the children's review, which we were promised yesterday, to add to the 150-odd reviews that are already in the pipeline.
  The Budget was hailed originally as a triumph for businesses, but by the end of the day, when the foundation and mascara had started to crack and run, many burdens on business were revealed, not least the working families tax credit, the assessment and verification of which will be down to the companies themselves.
  A major reason why that Conservative idea was dropped in 1985 concerned the additional burdens on small businesses, in particular. In addition, there are bad employers who will deliberately hold down wages now that they have a greater knowledge of their employees' entitlements.
  Yesterday, we also had a variation on the nanny state—it has become the subsidised nanny state, quite literally, and the proposals for generous child care put far greater reliance on anyone other than the parents looking after children.
  We also saw some tokenism on museum charges. I greatly welcome free admission to museums, but what were we treated to? Just £2 million, which is a drop in the ocean and, in any case, does not apply to all national museums. The National Art Collections Fund said that it is more like a stop gap than a long-term solution. It is a betrayal of another Labour election manifesto pledge, when only last week it was hyped that we would need at least £40 million to guarantee free admission to our national museums.
  Of course, we had the prospect of the 10p starting rate of tax dangled alluringly in front of us yet again, but not today. Again, it is jam tomorrow, or in this case, jam tart.
  I could go on, but I want to mention three main features of the Budget that are seriously flawed. The first is tax and in particular the changes to capital gains tax. The second is ISAs and the third is another example of the soundbite and presentation triumphing over reality and substance, in the form of the supposed environmental measures.
  Mr. Geraint Davies: I know that hon. Members bring to this Chamber personal experiences, which they weave into their words. I wonder where the references to transvestites and tarts and so forth come from in the hon. Gentleman's past.
  Mr. Deputy Speaker: Order. That is an unworthy comment, which the hon. Member would do better to withdraw.
  Mr. Davies: In that case, I shall withdraw it.
  Mr. Loughton: I should like to declare a rather relevant interest, Mr. Deputy Speaker, as I have worked in a merchant bank for the past 14 years, dealing in particular with personal equity plans and managing private clients' funds.
  On CGT and tax, it was a watchword of successive Conservative Chancellors on tax to "keep it low, keep it simple". Indeed, when the noble Lord Lawson was Chancellor, he made a virtue out of abolishing a tax in every year that he delivered a Budget. The proposed changes to CGT represent a minefield of confusion and
  1352
  complication, which can be welcomed only by the accountancy profession and those engaged in producing new computer software for the finance industry.
  By my calculations, before yesterday's Budget, we already faced the prospect of five different income tax rates: 20, 23 and 40 per cent. for most incomes, and 10 and 32.5 per cent. for dividends. If that were not complex enough, under yesterday's proposals for CGT tapering, there will be no fewer than 18 new different rates of CGT for private individuals, on non-business assets alone. That makes 23 different rates of tax for dividends and CGT alone—hardly, "keep it simple."
  The indexation system may not have been perfect, but it was certainly straightforward and workable. Now it is to be replaced by a far more complicated system. As my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) said, it is a swiz. The freezing of indexation for the next 10 years will amount to much more than the reduction of 16 per cent. in CGT rates for higher rate taxpayers and 9.2 per cent. for basic rate taxpayers, for those who are prepared to lock away their equities in a cupboard for the next 10 years and leave them untouched.
  The changes are a nightmare for fund managers, who already face the prospect of spending millions on new computer systems to deal with ISAs and will now have to adapt their computer systems for a far more complicated taxation system than I have ever experienced. They will have three weeks in which to do it before the proposal starts on 6 April. I know of no other country that has such a complicated system. I cannot believe that it will survive the full rigours of the Finance Bill Standing Committee—I certainly hope that it will not. It represents a major flaw in the Budget, and other implications stem from it.
  Taxation considerations will now wag the tail of the dog of investment prudence. People will hang on to shares for all the wrong reasons. What is the problem with holding shares in one blue-chip pharmaceutical company, for example, or even a food producer—the hon. Member for Croydon, Central had great and detailed knowledge of that industry before he left its employ some while ago—for the space of two years? If the value has gone up a lot, one takes a profit and reinvests it and the capital in another United Kingdom blue-chip company, such as engineering. That is what managed fund managers do all the time, but under these proposals, people will be clobbered for the full extent of CGT, at the 40 per cent. rate.
  I am also greatly concerned about the confusion that will be caused and the extra expense that will fall on shareholders, let alone the fund managers running their funds, with the ending of pooling. One would have to work out the exact date on which each stock, scrip dividend or whatever it might be was acquired and which level of the tapering CGT rate applied to it. That will be a field day for accountants.
  Also, the proposal gives no incentive for badly performing companies to perform better if they know that shareholders are locked in, fearful of taking a higher capital gains tax rate. If there is no threat of selling, why need a managing director get his act together?
  I am also concerned about the ending of bed and breakfasts. Bed and breakfasting has been legitimate for the ordinary investors of middle Britain, so that they can take advantage of an annual CGT allowance without

  1353
  having to dispose of decent blue-chip investments. The impact on smaller shareholders with pooled funds would be that, if they were investing in a good, performing blue-chip unit trust and they wanted to take advantage of their annual CGT allowance, they would not be able to bed-and-breakfast it and buy it back the following day, but would have to sell it and look for an alternative investment, regardless of how well the fund was performing and how much they would like to stay with that fund manager. Otherwise, they would risk facing a much bigger CGT bill when they sold a larger holding at a later date. All that was done yesterday with no warning, and the sum total of the proposals will be severely to limit people's ability to manage their assets.
  On ISAs we saw the biggest U-turn of all. I cannot recall a time when so big a U-turn has been conceded by so few in the face of such a tremendously bad reception by so many discontented investors. Let us be charitable. We welcome the Damascene conversion in the wake of a concerted and professional campaign by the finance industry and Conservative Members. However, it is more than a touch ironic that the Government have caved in to the campaign by the City, or that self-regulatory trade body in the City to which the Chief Secretary referred just two weeks ago in regard to putting an end to the nonsense of self-regulation, which was too often more a matter of self-interest than of public interest.
  Certainly the self-regulatory organisations have won the day over the Chief Secretary and the Paymaster General in this case. I hope that that sets a good precedent for listening to the professionals and climbing down accordingly in the future, on other highly flawed measures contained in the Budget. It will be good to see a repentant Paymaster General when he reveals himself from behind the Speaker's Chair later in the Budget proceedings.
  What a climbdown it has been. Alongside ISAs, PEPs and TESSA holdings will keep their tax-free status, and in the light of their success, people will be able to add an extra £9,000 full contribution to them in the next tax year. There will be no lifetime limit, and the £6,000 general PEP contribution that we have been able to make in the past 11 years will simply be replaced by a £5,000 contribution into ISAs over the next 10 years, and one's capital will be fully accessible. ISAs will be free of CGT and income tax.
  What I have just described is little different from the PEP regime, which still prevails under a different acronym and has done so well for the past 11 years. In other words, we could have avoided all this upheaval and all the costs of the consultation process—I shall be interested to learn how much the Government have had to spend on the farrago that it has turned out to be. We could have avoided all the uncertainty caused to investors, who, as my hon. Friends have said, have been a major factor in the drastic slippage in the savings ratio from 11 per cent. to the 9 per cent. forecast in the Red Book.
  We could also have avoided all the hassle among PEP providers, who are faced with little time and a big bill to install new systems, and at the same time face competition in Germany, Luxembourg and Dublin, which has been hotting up and taking advantage of the vacuum in the savings market in this country. We could have avoided all that by amending and simplifying the current, successful PEP system. 1 would have liked modifications on merging
  1354
  single-company PEPs with general PEPs, and improving their attractions and accessibility to cash. It could have been done by a little adjustment without the cost, upheaval and hassle that we have had.
  Not content with substituting acronyms—the term ISA was always a sign of hope for divine intervention, because it is the Muslim word for the prophet Jesus—the Paymaster General made the new system much more complicated. There are many unanswered details for the Standing Committee to consider. How will the separate elements that will comprise the ISA be regulated? How can people get the best advice in the hurly-burly of the Tesco queue while paying for their frozen peas and totting up their discount vouchers on this week's star yoghurt bargain buys?
  Will uninvested equity cash in ISAs be liable for interest or will it not attract any, as promised in the consultation document? If the latter, does the interest go to the stockbroker, who obviously needs it? What best advice will be available for fledgling investors, to deter them from staking all on, for example, a Thailand single-country fund or an Australian uranium mine? That can happen now, and it may happen in future unless best advice is available at an affordable cost, particularly to new savers.
  There is also the problem of benchmarking and kitemarking, which were flagged up by the Chief Secretary and have apparently been outlawed by the European Union because they represent pre-authorising financial products.
  The Budget has left little time for providers to get new computer systems for ISAs up and running by April 1999. Most of the Investment Management Regulatory Organisation cases, and the fines that resulted from them, came about because of bad, inadequate administration. The proposals will be a bonanza for computer software manufacturers. I welcome that; it is a recommendation to buy shares in companies involved in that part of the market.
  Only two weeks ago, the Government were arguing that the major problem with PEPs and TESSAs was the tax relief lost to the Treasury, which amounted to some £1.5 billion. As the Chief Secretary said, there is no point in continuing to give tax relief to people who can already afford to have significant sums locked up for long periods.
  In several long-winded contributions, Labour Members have railed against the fat cats who had as much as £50,000 invested in their PEPs. What has changed in the past two weeks? The proposals now allow PEPs and TESSAs to continue and allow holders to take out ISAs as well. As well as attracting new ISA investors, that will result in a rather greater loss of tax relief to the Treasury. What is new? What has happened in the past two weeks? I do not understand it, but I welcome it. I am glad that the Government now admit that, if they are to achieve the necessary objective of deepening everyone's savings pot, they must forgo tax relief on savings, because that is the major incentive to save.
  Even the new proposals are a major missed opportunity. There is still no real incentive to attract this elusive band of new savers. The Prime Minister said on 3 December:
  "There will be 6 million extra savers as a result—6 million people who will be able to save but at present cannot."—[Official Report, 3 December 1997; Vol. 302, c. 349.]

  1355
  That was not refuted in yesterday's Budget speech. I trust that it still holds good, but why? Who are the heaving horde of 6 million awaiting the Paymaster General's signal to throw their money at new Labour's new savings plan? Where are they? Are they too shy to show themselves? Perhaps they are the people who will inhabit the spurious 4.4 million new dwellings that are supposed to be needed.
  Mr. Clifton-Brown: My hon. Friend makes a serious point. Does he agree that there are considerable dangers in the supermarket selling of ISAs? Customers will be encouraged to invest in ISAs by someone without any financial experience. They could be an unsuitable form of investment for them.
  Mr. Loughton: My hon. Friend makes an apposite point. Even if the mechanism is more sophisticated than the potential investor struggling through the checkout queue, good advice may be available at the point of entry, but what guarantees that good advice will prevail thereafter? Who will give best advice, especially to new investors, when it is time to switch out of that supermarket's financial product into that of a rival? There is no guarantee of continuity of best advice. As people in the financial industry know, best advice costs. The proposals take no account of such costs.
  I am keen to identify the elusive horde of 6 million. Are they the 6 million crowd that will queue up to explore the internal organs of the millennium dome's androgynous figure? It is a mystery greater than Loch Ness or anything on "The X Files".
  For the less well-off, there is no attraction in replacing a capital gains tax allowance of £6,800 with an ISA with no CGT implications. Most such people get nowhere near capital gains like that. The income on a £5,000 portfolio of equities at a yield of 3.2 per cent.—an average market yield currently—would be £128 in net dividends plus a £14 tax credit for the next five years only. That is highly likely to be wiped out by charges alone. Instead, it is likely that most new savers will use ISAs as tax-free bank accounts, to transfer existing cash from non-tax-free bank accounts. They will use them as a short-term savings plan to save for Christmas or summer holidays, and thereby not add a penny of new money to savings—and especially not to long-term savings.
  The absence of a bonus credit system or a link to the benefit system means that there are no incentives in the ISA proposals for new savers. It is a lost opportunity. The Paymaster General has failed, although he has considerably redeemed himself by not putting the PEPs and TESSAs system to the torch, as he had proposed. The whole exercise has been a shambles, a lesson in how not to rush into things dogmatically; if it ain't bust, don't fix it. The industry has been left with a more complicated system, and the consumer is left confused and disoriented without even the compensation of the thrill of the promised monthly prize draw, which has now, alas, been dropped.
  I am a member of the Environmental Audit Select Committee. When it was set up, it was described by the Deputy Prime Minister as a terrier to snap at the heels of Government, but only last week it turned into a savage rottweiler, with the report that it issued. I am glad that the Financial Secretary is here, because she was dragged
  1356
  kicking and screaming to give evidence to us and has had to reverse her opinion of us. The Budget's environmental content, contrary to some of the spurious claims made in verbose terms by Labour Members earlier, is purely tinkering, and has already been given the thumbs down by the environmental groups. Their summary was that Brown is going green only at the edges.
  The Budget is not what it seems. Of the £500 million extra of public transport money, at least £290 million will be gobbled up to patch up the London underground. The VAT reduction on energy-saving materials applies only to people claiming grants under existing Government efficiency schemes. Again, I am glad that the Financial Secretary is here because, ironically, she led the vote to try to get VAT exemption for all energy-efficiency products. Of course, the Government have not done it; it is not even a halfway house, but is a token measure.
  The Financial Secretary to the Treasury (Dawn Primarolo): I shall return to the subject of energy-saving materials and the campaign against the Conservative Government later, but, as Conservative Members have commented on the fuel escalator, will the hon. Gentleman tell the House whether he supports the recommendation of the Environmental Audit Select Committee that the escalator should be set higher than the Government have set it?
  Mr. Loughton: The Select Committee's report was a joint effort, when many of us made representations, but the report as a whole has been endorsed by all of us on the Committee. However, I am happy to speak on the subject of fuel. As the Royal Automobile Club has pointed out, the Budget has brought in £2.75 billion extra from motorists, which is 14 times the enhanced sum that is to be given to public transport. Motorists pay £30 billion a year in taxes, yet less than a third of that comes back to transport. The Budget was described by one environmental group as not much better than a smog alert.
  Nothing in the Budget backs up in any way the speeches made by the Deputy Prime Minister, about the need to move to greater use of brown-field sites for housing development. Rhetoric is one thing, but nothing will happen unless it is backed up by tax incentives for developers to take advantage of that form of land for future house-building requirements. Nothing in yesterday's Budget advanced that policy at all. All that is a long way from the Select Committee's recommendation that environmental taxes should be recycled into incentivising environmental improvements. It is a con: the Government are unashamedly using the environmental concern tag to justify increasing taxes on general consumption.
  The real test of the Budget will be the impact on the pound and on interest rates. The hon. Member for Croydon, Central failed to understand that the Budget has caused the continuation of the relentless rise in the value of sterling. It now stands at more than DM3.05, which is a nine-year high; and it is up against the euro and the dollar. The value of sterling is crucifying manufacturing exports: in the three months to November, exports to non-EU countries fell by 1.6 per cent. and imports rose by 3.8 per cent. If that trend continues, it will be absolutely disastrous for this country's manufacturing industry.
  The Chancellor displays an attitude of, "Not me, guv—it's not my fault; it's all down to the Bank of England. It is responsible for the sterling rate and for interest

  1357
  rates—they are nothing to do with me." It is a disgraceful indictment of the Government that the Chancellor is prepared to stand by and do nothing as industry is squeezed by the pound. The Budget also makes interest rate rises far more likely, as several Labour Members mentioned. The gilt market fell heavily after hours last night and fell again this morning. Consumer spending is likely to rise by more than 4 per cent., as the Government's figures showed yesterday.
  I started by saying that the Budget should go down as the transvestite Budget. I trust that, by the end of the Committee stage on the Finance Bill, the Chancellor will have allowed us to amend it, so that it is a more palatable bedfellow for those on both sides of the House and for all parts of the United Kingdom.
  8.2 pm
  Mr. David Prior: No Chancellor since the war could have come to the Dispatch Box with a better economic background, consisting of the most successful economy in Europe, low inflation, falling unemployment and strong public finances. Judged by the Maastricht criteria, we probably have the only economy in Europe that could have passed without smoke and mirrors. As the Chancellor—perhaps we should now call him "the guardian of the people's money"—said, this is a "once in a generation" opportunity for radical change, and it is against that background that the Budget must be judged.
  There are parts of the Budget that I welcome, but the macro-judgment will ultimately overwhelm the micro-parts. If the Chancellor has read the economy wrongly, the resulting recession will overwhelm his policies on trying to get people back to work. I fear that he has it wrong. He seems utterly unaware that manufacturing industry, which employs about 4 million people directly and 8 million indirectly, and which is responsible for two thirds of total exports, has been suffering for several months.
  As Graham Mackenzie, the director general of the Engineering Employers Federation, said:
  "The key issue for engineering and manufacturing remains the exchange rate."
  There is a growing weight of evidence that UK manufacturing companies are now reviewing their investment plans. Jack Smith, the chairman of General Motors said only a week ago:
  "sterling's strength has turned the UK into a high-cost economy for inward investments".
  The same has recently been stated by Honda.
  Many companies that have struggled to export over the past year and have taken lower margins on their exports so as to retain markets are now concluding that at DM3-plus to the pound, they will have to review their activities. We shall soon see companies such as British Steel making a final decision on capacity in the UK. British Steel's view is:
  "The undue emphasis currently placed on UK interest rates to combat inflation is resulting in the UK manufacturing sector—and within it the UK steel industry—bearing the brunt of the anti-inflation medicine…yet the manufacturing sector is itself exhibiting few signs of inflationary pressures."
  1358
  The problem of the high pound has been aggravated by two policy mistakes by the Government. The first is that interest rates, which have gone up five times since Labour came into office, are too high and the inflation target of 2.5 per cent. is too rigid, failing to take into account the fact that inflation is running at about 0.5 per cent. in the manufacturing sector, as compared with 4.5 per cent. in the service sector. The great risk that, in the process of trying to stamp out that 4.5 per cent., a large part of British industry will be condemned to death. That is exactly what happened in the early part of the 1980s, as Labour Members may remember.
  Interest rates alone are not a satisfactory way of addressing the problem, and the Chancellor, by failing even to mention that during his Budget statement, has missed an opportunity to tackle it. It is widely accepted that Britain currently has a two-speed economy; why are the Government persisting with a policy that is unnecessarily damaging British manufacturing industry?
  The second policy mistake was to tax pensions and savings heavily and put pressure on companies' cash flow through the abolition of ACT. The tax on pensions will cost about £5 billion per annum. Corporate cash flows will be hit to the tune of £20 billion over the lifetime of this Parliament despite the welcome reduction in corporation tax and some alleviation for small and medium companies.
  My fear is that we are about to enter an unnecessary recession with rising unemployment, rising imports and falling exports and that, for all the Chancellor's exhortations about ending the stop-go cycle, he is contributing to it. We need a better balance between fiscal and monetary policy to allow a progressive reduction of UK interest rates, which would lead to a more competitive and realistic exchange rate. If we do not do that, export order intake will continue to weaken as it has for more than a year now. Imports will rise and unemployment will stop falling. All that will be compounded by the problems in south-east Asia and stagnant growth in Japan.
  I shall now deal with some of the micro-aspects to the Budget. I have already said that I am concerned that unemployment will start to rise at the end of this year. Despite that, I welcome the Chancellor's attempts to remove the poverty trap and to make employment more attractive, but how does that square with the minimum wage and the adoption of the social chapter—two measures which will, over time, push up the cost of employment to employers and counteract the policies to remove the poverty trap?
  I am also concerned that those measures—especially the increase in national insurance contributions over £81 a week—will work against skilled higher-paid people. Against a background of tuition fees and loans for student maintenance, it is vital that the labour market provides real incentives for the individual to learn skills through higher education.
  I am disappointed that there is no change to business rates. Of all the taxes raised from small businesses, business rates are the most damaging, because they are a fixed charge unrelated to profitability. A reduction in business rates for small companies is long overdue, and I am sad that the Chancellor has not taken the opportunity to alter the rates in this Budget.
  I am particularly concerned about rural transport as I represent a rural constituency. Many poor people in the country have no access to public transport and no

  1359
  reasonable prospect of securing such access. They already find it extremely difficult to run a motor car. The increase in the tax on petrol of 4.4p per litre is a real blow to many of my constituents, who will not view the £50 million rural transport fund, spread over three years, as any solution to their problems. That fund is a triumph of presentation over substance—and it also says something about the Government's obsession with presentation.
  The Budget does not mention the most unkind tax hike of all—the increase in council tax bills, especially in rural areas. Council tax has increased by an average of about 8.5 per cent. this year. In many rural areas, including my constituency, it has risen by more than 14 per cent. at a time when services—especially social services and education services—are being cut. The increase in the landfill tax from £7 to £70 per tonne will have another knock-on effect for local government.
  What should I say to the pensioner in my constituency who wrote to me last week? He will now pay an extra 4.4p per litre for his petrol, higher council tax and more for a pint of beer. In April, he received an extra £1.96 on his basic pension. He told me not to take any political hogwash from this Government—although he supported them at the last election. After this Budget, it will be difficult to give an answer.
  I support some aspects of the Budget. For example, I support the reduction in corporation tax rates and the Government's genuine efforts to reduce the poverty trap and to get people back to work. I am pleased that the Government have ended the retrospective tax on PEPs and TESS As. However, judged against the economic background and the opportunities that the Government had in this Budget, it is disappointing and uninspiring.
  The Budget does not begin to recognise what is happening in the real manufacturing economy of this country. It does not do enough for small businesses and it continues to discriminate against rural areas. Perhaps above all, the Government have missed an opportunity to take a real, radical look at the tax and benefit system.
  8.12 pm
  Mr. Shaun Woodward: Rarely has the House been subjected to a Budget that has been so highly trailed, so widely leaked and based on so much rhetoric and so little substance. As my right hon. Friend the Leader of the Opposition said yesterday, the Budget makes many claims but is ultimately a step-by-step betrayal both of the Labour party's election promises and of the British people.
  The Government have produced a Budget that I believe will be viewed as an abdication of responsibility. It will go down as a Budget delivered by a Chancellor who ducked the real challenges of the British economy and confused opportunity with opportunism. It will go down as a Budget of which the magician Paul Daniels would have been proud.
  Yesterday the Chancellor made much of the fact that this is a once-in-a-generation Budget. Yet, if we examine the Chancellor's claims, something appears to be missing—perhaps the Budget's centrepiece has been left out. One can only conclude that the right hon. Gentleman and the Prime Minister had conversations at Chequers last weekend that led to some distortions of the Budget statement.
  1360
  The Chancellor told us yesterday that the Budget would end the unemployment and poverty traps—indeed, much has been made of the working families tax credit. However, it is difficult to see how, at a cost of just a few billion, it will be possible to wipe out poverty. That is a laudable aim with which all hon. Members agree, but it is difficult to see how it will be achieved with that sort of money. How will it be funded? Funding this year will be provided largely by the road fuel escalator. We must consider that many of those at whom the working families tax credit will be directed will also be hit hardest by the increase in fuel duty.
  I know that that is the case in my constituency. I have received many letters today from constituents describing their real worries about how they will get around in rural areas. Those worries are not alleviated one jot by the promise of an extra £50 million spread over three years. I am afraid that that simply shows that the Labour Government do not understand the real needs of the countryside and the rural areas of our country.
  This Budget has ducked the true challenges of our country. It has exercised opportunism at every turn. The Government could have taken many opportunities to help this country, but they did not do so—undoubtedly because the focus groups did not reveal to the Chancellor and the Prime Minister that the time was right.
  I take the example of the proposed reforms to capital gains tax. The report entitled "Budget 98 Alert" produced by Ernst and Young and released this morning states:
  "The taper does not encourage risk taking since it benefits success but offers no relief for losses. In fact, losses on investment become less valuable, as they reduce gains before tapering."
  The devil is always in the detail, and I suspect that, as the details emerge, we shall identify many faults with this Budget—just as we did with the last Budget.
  The Chancellor announced yesterday a cut in corporation tax—a move welcomed by all Conservative Members. Yet, as my right hon. Friend the Leader of the Opposition revealed this afternoon, if one looks closely at the figures, one can see that, while the Chancellor gives with one hand, he uses the hands of every Minister on the Treasury Bench to grab back. Business will lose as a consequence.
  This Budget does nothing to address the imbalances built up in the economy as a result of the appreciation of sterling—imbalances that have worsened significantly since July. It appears that the Chancellor thinks that he has washed his hands of short-term macro-economic policy since last June. Ernst and Young describes that as "benign neglect". The Opposition will hold the Chancellor to account for that benign neglect because it is an abrogation of his responsibility as Chancellor.
  Yesterday the Chancellor had nothing substantial to offer manufacturing. The figures for the fourth quarter of 1997 show that manufacturing grew last year by 0.9 per cent.—less than 1 per cent. Next year, it is estimated that output growth will be between zero and 0.5 per cent. Last November—just four months ago—the Treasury issued the optimistic projection that manufacturing output would grow by 1.5 per cent. to 1.75 per cent. There has been a pretty dramatic revision in just four months, and that is a serious problem for manufacturing in Britain. What hope did the Chancellor hold out in his Budget to those in manufacturing?

  1361
  The Prime Minister this afternoon made much of how business welcomed the Budget. Perhaps it would be better if he stopped reading the newspapers and went out of his bunker in Downing street and his anaesthetised road shows, and met some of the people whose incomes he is clobbering so hard. What would he see, if he went out? The hundreds of thousands of people who do not have subsidised jobs but real jobs, and who are facing the prospect of real unemployment.
  Those are the kind of people throughout the country who know that sterling is overvalued. Labour Members were unable to tell us this evening what sterling closed at against the deutschmark, such is their disregard for the consequences of their Budget. Those people face the prospect of a life on the dole. It is all very well for the Government to invent wonderful schemes such as the welfare-to-work scheme, but at the same time they must guarantee the jobs of the people who are in work at present. The Budget will not do that.
  If the Chancellor and the Prime Minister had taken the time to read the releases from the Engineering Employers Federation, they would see that it gives a cautious welcome for the cuts in corporation tax, but the real issue for the EEF is the exchange rate. Export orders have been severely declining over recent months and matters are expected to get worse over the coming year.
  Last night, as Ministers were offering soundbites all over the media, the Chief Secretary was pressed repeatedly by Jeremy Paxman on "Newsnight" to say whether he believed that sterling was overvalued. Could he give an answer? No. Five times he was pressed for a simple yes or no, and five times we were subjected to paragraphs of verbose effusion but no simple answer.
  If the Chief Secretary spent a little more time out of the television studio and travelling round the country, he would see the damage that the Government's terrible policy is doing to our country.
  We do not have to take hon. Members' word for it. Numerous firms today produced their reports of the consequences of the Budget, and it is very bad news for manufacturing. Goldman Sachs expects at least two quarter point rises in the coming weeks. Charterhouse expects the same. The Hongkong and Shanghai Banking Corporation describes the Budget as a "considerable disappointment" in its approach to macro-economic policy. As KPMG say, unless the Budget is quickly followed by interest rate falls, the problems of manufacturing industry will remain and the prospects for economic activity this year and next may end up looking even more pessimistic than the Chancellor's own forecast.
  That means that there is the prospect of recession. Manufacturing output is at record lows. Alongside that, we have the problems of managing a dual economy, with the service sector output up almost 4.5 per cent. last year.
  Co-ordination of monetary and fiscal policy in the medium term is a matter for a Chancellor, yet yesterday we saw the Chancellor abdicate that responsibility because he believes that, since last June he no longer has responsibility. He gave it away. The problem is not for him now, but for those in manufacturing. The Chancellor had the opportunity, but he threw it away, leaving the prospect of a hard landing.
  1362
  The Chancellor said that he wanted stability, but what sort of stability is there for those in manufacturing who face the prospect of a return to boom and bust—the stop-go policy that the Chancellor claimed yesterday he intended to eschew?
  What sort of stability is it, when the Government revise their figures in just four months, from a growth of manufacturing at almost 2 per cent. to zero. Even on their own figures, a recession is in sight, but what did the Chancellor do?
  We must look at other challenges, not least the challenge of controlling a consumer boom. It still exists in the high street, although the figures are marginally declining. The Chancellor again ducked the issue, because he wants to be the iron Chancellor, and he has his eye on the house next door. Consumer spending this year is forecast to grow between 3.75 per cent. and 4 per cent. That is higher than previous estimates, and the Budget has done nothing to restrain demand.
  The combination of strong consumer demand and low industrial output is projected to lead to a deterioration in current account balance. After a surplus of £4.5 billion in 1997, the current account is now projected to fall to a deficit of £6.5 billion this year and £6.75 billion in 1999. The glossy book entitled "New Ambitions for Britain" will all too soon become for many people an ambition to survive in Britain. [Interruption.]
  Hon. Members may laugh, but the laugh will be removed from their faces when they must answer the questions from those in manufacturing whose jobs they will have destroyed through the Budget. Betrayal is the hallmark of the Budget. Step by step the Government are betraying each of their promises. Step by step they betray the British people.
  Labour Members make much of what the Government are doing with taxation. The hon. Member for Croydon, Central (Mr. Davies) was unable to understand from the Red Book that not only is the tax burden going up next year, 1998–99, but that it goes up in 1999–2000 and 2001. Unless I am wrong and the hon. Gentleman expects the quinquennial Act to be repealed, at the next election we will see that the figures have gone up and up. Under Labour, as sure as eggs is eggs, taxes go up. The tax burden of the United Kingdom will go up with this Government.
  People were led to believe that there would be no new taxes under Labour and that the tax burden would fall, but the reality is quite different. Over the next few years, measures will be announced whereby the personal sector will be hit by tax increases of at least £4 billion in 1998–99, which is equivalent to 2p on the basic rate of tax. What kind of way is that to honour a pledge? The Government are putting taxes up and pretending to the public that they are doing nothing of the kind.
  Despite the smoke and mirrors of the Budget, taxes are going up as a percentage of GDP. Even before the Chancellor stood up yesterday, taxes had gone up by £790 a year for the average family. It will not stop there. On 1 April, mortgage interest relief will be cut from 15 per cent. to 10 per cent.—another hit at middle Britain. Furthermore, there is the not too thinly veiled promise of child benefit being taxed in the future.
  The British people should be warned that the Chancellor is after their money. He has only one ambition—to use his office to move to the house next

  1363
  door. [Interruption.] Hon. Members want me to sit down. They do not like hearing the truth. They do not like hearing that yesterday they tried to persuade the country that they were being generous on the health service. What did you do on the health service? You promised—
  Mr. Deputy Speaker: Order. The hon. Gentleman may have to join the same class in procedure as the hon. Member for Croydon, Central (Mr. Davies).
  Mr. Woodward: I am grateful for the correction, Mr. Deputy Speaker.
  Hon. Members may like to know that the £500 million that they were promised yesterday for the health service will do little to get near the annual increase of 3 per cent. that the health service received under the Conservative Government. What will happen to hospitals such as Burford and Witney community hospitals in my constituency? They will be closed. Hon. Members may not like to know that, under their Government, that is what will happen. The reality is that the community health trust budget in Oxfordshire has been cut by £1.5 million. The county has been told to find the savings, and community hospitals will be closed. The proposal is an attempt to hoodwink the public, as is the Government's paltry promise of £50 million to deal with rural transport.
  It is sad that so many people in this country will be disappointed by the Budget. Many in this country will see that this step-by-step betrayal of the people will result in unemployment, hospital closures, and closures of more village schools. The Government have misled the people. Sooner or later, the people will reject the Government.
  8.30 pm
  Mr. Owen Paterson: Thank you, Mr. Deputy Speaker, for calling me to speak in the debate on the Budget.
  I speak as someone who, until 1 May, spent his whole career in manufacturing industry, travelling the world in a business that exports 95 per cent. of its production. I also speak for North Shropshire, which is a hard-working part of the country that depends on agriculture and small industry.
  The Government do not bring credit on the House in their approach to the current economic situation. The people of this country are not stupid; they know perfectly well that it was Conservative policies that brought 23 consecutive quarters of growth, that created 1.4 million jobs and that halved the number of unemployed 18-to-24-year-old males—down to 40,000 in the last year. It is childish of the Government to make out that the great economic revolution has occurred since 1 May. Doing so does not bring credit on the House or the Government.
  We are in our present position because hideously difficult decisions were taken from 1979 onwards by four Conservative Governments. Most of those decisions were taken in the teeth of the bitterest opposition from Labour Members—and from Liberal Democrats, represented at the moment by a solitary soul.
  We heard a splendid speech this evening from the hon. Member for Nottingham, South (Mr. Simpson), which showed that the Novosibirsk tendency is still there. In my experience, a country prospers if it has fewer politicians,
  1364
  fewer bureaucrats, less Government interference and, ultimately, less taxation, but there are still some glorious old dinosaurs in the Labour party who would regard me as hell on wheels.
  We have to recognise that the Government have made some of the right noises and that there are elements in the Budget that free-market capitalists such as me might welcome. One of the most interesting innovations is amalgamating the Contributions Agency with the Inland Revenue. As one who would like government reduced and costs reduced, I think that that may be an interesting, innovative measure. It will be desperately complicated for the Government to bring about, but if they do, well and good. If the Government want to be really radical, I suggest that they study the possibility of amalgamating national insurance contributions and income tax. As someone who has been in business, I know that the complication of filling in forms and serving Government takes an inordinate time.
  I do not want to be churlish. There are elements in the Budget that show that the Government have learnt a little, but they still do not understand how a business and a capitalist economy work. Everything in the glorious Red Book may come to naught. Someone has gone to tremendous trouble to produce these figures, which, sadly, may all be absolute rubbish because of two desperate blunders made by the Government soon after they came to office. Handing over independence of the Bank of England to a small group of advisers has deprived the Chancellor of one of the vital tools in controlling the speed of the economy. Every week the Prime Minister gets in the phrase "boom and bust". It is a good phrase and it goes down well with the focus groups, but he has taken away one of the most crucial brakes on the economy—the ability to handle interest rates.
  We also had the quite unnecessary Budget after the Government came to power which, according to the Confederation of British Industry, lobbed £22 billion-worth of extra taxation on the country, including the iniquitous £5 billion on pension funds. When consumer spending is running ahead, it was ludicrous to load the extra taxation on the productive sector—the savings sector—and not to try to reduce consumer activity. Those two blunders have come to a most dreadful head in the exchange rate.
  It has been interesting to listen to Labour Members, particularly the hon. Member for Croydon, Central (Mr. Davies), who quite obviously do not understand the impact that the exchange rate is having. It is extraordinary that they did not know that the pound has today gone to DM3.05, the highest figure for nine years. To turn up to a Budget debate and dismiss as childish the intervention made by my hon. Friend the Member for Witney (Mr. Woodward) is bizarre. Manufacturing industry is on the brink of a serious recession. I hope that the Minister is listening carefully.
  We heard eloquent speeches from my hon. Friends the Members for North Norfolk (Mr. Prior) and for Witney, with figures from the Engineering Employers Confederation. In my industry, plants are closing and jobs are being lost. The potteries in neighbouring constituencies are suffering badly. Orders are down as much as 40 per cent.
  There is an extraordinarily naive passage in the Red Book that says, in effect, that the Government are not quite sure why orders have been holding up. That is not

  1365
  surprising from a Government who have never been in business. There is a run-over. These are long-run contracts, but that period is coming to an end and the Government must understand the impact that the exchange rate is having on manufacturing industry.
  Agriculture has hardly been mentioned. I represent a rural seat and am on the Welsh Affairs Committee. Every time I go to the market, farmers tell me that they are desperately worried about the exchange rate. That was when the pound was under DM3. There are now 3.05 deutschmarks to the pound. In agriculture, it is simply not possible to switch production when producing one product. There is no flexibility of production. Farmers are tied into a world market and are going bust.
  There are knock-on costs and a multiplier effect. What about feed merchants? What about agricultural implement suppliers? I know some who have not sold a tractor or plough for six months. They are in desperate trouble, yet the hon. Member for Croydon, Central turns up to the Budget debate and does not understand the impact of exchange rates. It is disgraceful. That was the main topic of conversation in Oswestry market today. I rang the local National Farmers Union representative and I have talked to farmers. They are frantic because they believe that the Budget does nothing to lower the exchange rate.
  On television last night, the Chief Secretary refused five times to say whether the pound is at the right level. That is pathetic and totally unacceptable. His boss, the Chancellor, when prodded by Mr. Humphrys on the "Today" programme, also refused to give an opinion on the exchange rate. The Red Book is worthless if the man in charge does not have control of or some influence over the exchange rate.
  The Red Book presumes that manufacturing will continue to grow at a stable rate, but it casts a horrible shadow. Growth is forecast to go down from between 2 and 2.5 per cent. to between 1.75 and 2.25 per cent. next year. There is a huge question mark over the stability of manufacturing. I have no doubt that manufacturing will go into recession. According to the Red Book, inflation is still stubbornly high at 2.75 per cent. That will have a further impact and it will bite into the figures.
  The minimum wage and the social chapter, both of which are inflationary, will have a huge impact on businesses. If employers are forced by the Government to pay people more to produce the same amount of product, that is inflation on wheels. If they are forced to make employees redundant, the state will have to pick up the tab, and that is inflationary.
  The Red Book does not mention the sharply inflationary impact of the minimum wage and its impact on differentials and social spending. The horrific indication is that the Government, who planned to cut social spending, will increase it. That is clear in the Red Book, but we know full well that Labour Members, from the Prime Minister down, have not bothered to read it properly.
  Other elements will also drive up social spending. The Budget introduced the flagship innovation of the working families tax credit. Similar schemes have been tried in Australia and Canada, have proved extremely expensive and have not worked. When the Conservative Government considering such a measure, the Minister for
  1366
  Welfare Reform and the Chancellor dismissed it out of hand. If the Minister were here tonight, it would be interesting to hear why they have now changed their mind.
  I want less Government involvement in business. The working families tax credit will put a huge burden on the personnel and finance management of relatively small businesses. I rang up a business that employs about 100 people. The finance director was extremely concerned. He will be required to have detailed figures on the circumstances not just of his employees but of their spouses, other members of their household, or their partners. Do we really expect finance managers, who have budgets to meet, bank managers to deal, with, customers to talk to and suppliers to visit, to ring round and find out the circumstances of each new employee?
  Dawn Primarolo: No.
  Mr. Paterson: I am delighted that the Minister says no; I should be grateful if she would explain the measure. Labour Members were quick to criticise the Child Support Agency: hon. Members have daily received a flood of correspondence on the problems thrown up by the CSA. The Budget requires finance directors in small businesses to take on a burden similar to that of the CSA.
  I come from a rural constituency where transport is a key provision. Nothing in the Budget will be good for North Shropshire. My constituency contains 98 villages. The car, the van and the lorry are basic to the functioning of the economy, and without them it does not work. It is inconceivable that a comprehensive scheme of public transport could be created in an area such as North Shropshire, where there is economic activity in every one of those 98 villages.
  Lobbing a huge increase on fuel tax will not make North Shropshire businesses competitive. The Chancellor's humbug words about competitiveness come at a time when there has been a dramatic fall in the price of crude oil from $20 to $13 a barrel. It is ridiculous to impose increases to the tune of 23p a gallon: unleaded petrol is now £3.08 a gallon. We should talk in gallons, because litre is a weasel word and conceals any increase. The increase on diesel is 29p a gallon, which is even worse. Labour Members made polite reference to my tie. This tie was transported in a van burning diesel. All hon. Members are wearing goods that were carried by road. This ludicrous prejudice against motor transport is unacceptable to me as a representative of a rural constituency.
  The Budget will jack up motorists' costs by £2.75 billion. To take £30 billion a year from motorists and claim that a pathetic £50 million for rural transport will help is childish. Each bus that may be aided by that little £50 million fund should bear a memorial sticker reading, "Funded thanks to the countryside march." This is clearly a panic measure introduced as a desperate attempt to obtain a press release in rural areas. It simply will not wash.
  The other big issue in Oswestry market this morning was the cost of fuel. It is a crippling tax on farmers and small businesses in my constituency, and I strongly oppose it.
  Finally, I want to say something about taxation. It was clear in Prime Minister's Question Time today—revealingly—that the Prime Minister has not read his own Red Book. I remind him of the words of Lord Dunrossil,

  1367
  who said in the 1955 Budget debate, with admirable clarity, "all taxation is bad." We in North Shropshire have had to suffer a 13 per cent. hike in council tax because Labour Members voted for a Bill that has grossly switched funds from rural areas to northern and inner-city areas. I consider it iniquitous that Sedgefield received a 13 per cent. increase in standard spending assessment while Shropshire received only a 3 per cent. increase.
  I know that others wish to speak but, before I finish my speech, I invite Labour Members who have not read it to turn to page 116 of the Red Book, which features the real bite in the Budget. There, tragically, we see taxation rising from 38.1 per cent. of gross domestic product to 40.1 per cent. in 2002–3.
  In all my experience, I have never visited a country that has been over-governed, interfered with or taxed to prosperity. This is a thoroughly bad Budget for North Shropshire, and a thoroughly bad Budget for Great Britain.
  8.46 pm
  Mr. Andrew Lansley: I am grateful for the opportunity to speak towards the end of a debate in which forceful points have been made. I am pleased to follow my hon. Friend the Member for North Shropshire (Mr. Paterson), who has experience of the manufacturing industry—as has my hon. Friend the Member for North Norfolk (Mr. Prior).
  There are Conservative Members with direct experience of manufacturing who speak with feeling and conviction about the circumstances in which industry is now being placed by the rise in interest rates, and, more particularly, the level of the exchange rate. I think that it would be wrong for us to debate the Budget without dwelling not only on the measures in it, but on the consequences for industry, particularly manufacturing industry.
  Many of my hon. Friends have referred to the Chancellor's opening remarks. He said that Chancellors had a once-in-a-generation opportunity to reform tax law. The right hon. Gentleman might have referred to a once-in-a-cycle opportunity; once in a generation might be stating it a bit too strongly. This Budget, however, was characterised, both before and during its presentation, by what is colloquially known as hype—much of which was not subsequently found to be justified.
  In so far as the Chancellor had a once-in-a-cycle opportunity to reform tax law, I fear that he did not take it. He took only part of the opportunity, in relation to welfare reform. I shall say more about that later. I feel, however, that, at this stage in the economic cycle—with the benefit of the dramatic increases in tax receipts that occurred both last year and this—he had a once-in-a-cycle opportunity to achieve a one-off downward shift in the proportion of gross domestic product taken in tax.
  Alternatively, if it was to be taken in tax, it could have been used in a way that, in the longer term, would reduce the extent to which the public sector had to meet future obligations. Damagingly, however, there was no evidence of that—quite the reverse.
  As my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) forcefully mentioned at Prime Minister's Question Time, table 3.3 of the Red Book, on page 48, tells us that an increase of a quarter of a
  1368
  million in the number of families with high marginal deduction rates occurred as a consequence of the Budget. I know that the Prime Minister was told the best figure to offer, and talked about the marginal deduction rate of 70 per cent. or more, where two thirds of people have the effective marginal deduction rate reduced. None the less, paying 60 per cent. or more as an effective tax rate is a high figure for 1 million-plus families, an increase of 250,000 families. As a consequence of the Budget and of the withdrawal of benefit, they are brought into a situation, effectively, of welfare dependency and relatively high marginal tax rates.
  Dawn Primarolo: Does the hon. Gentleman accept that he is missing the point, because all those families will be better off as a result of the working families tax credit and child care tax credit? He has not made any reference to that at all.
  Mr. Lansley: The Financial Secretary is being uncharacteristically ungenerous to me, in that I had only started, and was certainly planning to come on to the working families tax credit.
  I make no bones about it: it has to be proven whether the working families tax credit is an improvement on family credit, but, when one makes the comparison, one has to take into account the fact that the working families tax credit and the child care credit in particular, which goes alongside it, are going to consume—well, the Financial Secretary will know the numbers, I hope, better than me, as the Red Book is in her name. I will not do her the injustice of suggesting that she did not read it before she published it.
  We are talking of £2.5 billion extra in total costs, including tax credits, going through this system. There is every possibility that, if £2.5 billion were expended even through the family credit system, it would have lifted many of those families out of some of the poverty trap consequences of the interaction between family credit and housing benefit. I do not dispute her point that those families will be better off. However, I hope that she will not dispute the fact that many of them will, as a consequence of the withdrawal threshold and the withdrawal of credit over £90, effectively pay quite a high marginal rate of tax as their earnings increase.
  Dawn Primarolo: There have been many references by Conservative Members to the Institute for Fiscal Studies. Will the hon. Gentleman welcome the fact that the institute agrees with the Treasury, and that the Chancellor's Budget proposals have reduced the number of people who face very high marginal rates of tax—that is, above 70 per cent.—by over two thirds, reducing the worst effects of the poverty trap?
  Mr. Lansley: I am sorry that I did not explain myself. I thought that I had made precisely that point. Far from missing that point, I had acknowledged that, as table 3.3 shows, the number of families affected by 70 per cent.-plus marginal rates of tax has been reduced by two thirds.
  However, I also make the point, which is made in the same table—which the Financial Secretary published—that, at the 60 per cent. rate of withdrawal, the figure goes up from 750,000 to more than 1 million. Therefore, one has to take those two points together and balance them. It would not be reasonable to take one without the other.

  1369
  May I characterise the Budget overall? When I had an exchange with the right hon. Member for Bishop Auckland (Mr. Foster)—he will forgive me if I have got his constituency wrong—
  Mr. Derek Foster indicated dissent.
  Mr. Lansley: Good. I would not like to commit an indiscretion and get the constituency wrong.
  When the right hon. Gentleman was speaking, he was kind enough to give way to me. The impression I gained from his answer was that he felt that the Budget had gone well.
  When talking about the work of Finance Ministers, a French Finance Minister said that the art was to pluck the goose with the least amount of hissing. The impression I got from the right hon. Gentleman was that he felt that the Chancellor had got away with plucking the goose with relatively little hissing. I must remind him that all past evidence suggests that the goose does not hiss straight away; it can take time. The right hon. Gentleman ought to consider the Budget carefully and remember the old saying, which is a bit of a cliché, that the Budget that is cheered on the day is the Budget that people are sorry about some time later.
  I shall trespass on the patience of the House further, if I may, and refer again to table B8 on page 116, which my hon. Friend the Member for North Shropshire (Mr. Paterson) also mentioned. It is significant that the tax burden will rise, and the table shows an increase from 38.1 per cent. of GDP to 40.1 per cent. by 2002–03.
  Two other rather more significant political facts are also to be gleaned from that table. First, the bulk of the increase occurs between 1996–97 and 1998–99. We are now in the throes of a substantial increase, by more than 1.5 percentage points, in the amount of GDP taken in tax, at a time when total GDP has been growing relatively strongly—certainly in the early part of that period, although less so now.
  That implies that the Budgets of last July and of yesterday are impacting in the short term to increase taxes substantially, yet there is no offsetting reduction in the tax burden that will come later. As successive Budgets come along, and the Chancellor feels that he has to assuage the demands, not least by Labour Members, for public expenditure, we shall find that the tax burden continues to rise beyond the figures in the table.
  There is a second interesting point in the table. When we look at the disaggregation between different kinds of taxes, we see that the biggest increases are not in corporation tax. As we know, there have been changes in corporation tax and large cash flows out of industry in tax because of the consequences of changes in ACT, but also some offset through the reduction in the main rate.
  The biggest increases as a proportion of GDP are in income tax, which increases from 9.5 per cent. at the beginning of the period to 11.1 per cent. at the end, and in excise duties, which rise from 4.1 per cent. to 4.8 per cent. That is pretty significant, because for the poor benighted goose—that is, in this context, the personal sector that pays taxes—it is through income tax and excise duties that the pain of taxation is felt.
  1370
  Over the next two or three years, we shall find that it is in precisely those areas of personal taxation and excise duties that the public will begin to feel the costs beginning to flow through to them, and they will not be remotely sanguine about the Chancellor's Budgets.
  The Chancellor has gone for a Budget designed in the main to make everybody feel good. It is a "feel-good Budget", because it would be difficult to object to help for families as the centrepiece of a Budget. However, over time, that feel-good factor will be translated, in the individual personal circumstances of families, into a judgment about whether they will lose in the long run, and whether they blame the Chancellor for the changes in their personal disposable income. Labour Members will learn painfully, as the Conservative party learned in government, that it is not the spin doctors who get one into or out of trouble, but performance, economic management and outturns.
  At the heart of the Budget is the problem that such things will turn out badly for the Chancellor, not least in that people's net disposable income will not in future reach the levels they had hoped for.
  The Chancellor talks of suppressing wage inflation and trying to hold down increases in wages. No doubt that will happen, as many people will be chasing fewer jobs when the jobs market is depressed by the recession in manufacturing, the impact of the national minimum wage and other factors. Moreover, the Chancellor will take a greater proportion of whatever money they earn.
  It might be interesting to consider the Labour party manifesto, as Labour Members have so much to say about it. The manifesto states:
  "How and what governments tax sends clear signals about the economic activities they believe should be encouraged or discouraged."
  The Chancellor's past two Budgets have sent us a very clear message: he wants to discourage profits. Profits will take the pain of the Budget, because of the disadvantages of the ACT change to cash flow, which will be hit hard. Presumably, because of his reduction in the married couples' allowance, the Chancellor wants also to discourage marriage. By his own admission, if he wants to tax something, he wants to discourage it.
  Like many Opposition Members, I was worried that the Chancellor seemed to take it for granted that, in the long run, taxing child benefit for higher earners would be the right thing to do. A strong point was made earlier in the debate about the character of child benefit and the fact that it was introduced to replace a tax allowance. Therefore, by extension, the idea is illogical that child benefit received by higher-rate taxpayers should be taxed away, as the benefit was designed to replace a tax allowance that recognised, in the benefit system, the cost of looking after children. The benefit also reflected the value that all stratums of society place on bringing up children.
  Undermining the universality of those benefits would be regrettable. There are few instances in which a single benefit can so readily and generally be targeted against those sections in society where costs fall, where poverty or financial hardship arise, and where, very often, child benefit plays a particularly valuable part in family incomes and in ensuring that sometimes relatively low-earning wives of high-earning husbands have an addition to their income that is expressly available to them, for spending on their children.

  1371
  The shift from family credit to working families tax credit has already been dealt with in the debate, so I shall not dwell on it. However, if it is the centrepiece of the Budget and a key welfare-to-work policy, two questions arise.
  First, how can the Government present a Budget containing such a major measure, but not present that measure within the context of the Government's overall welfare reforms? Why has not the Government's Green Paper on welfare reform been presented either before or with the Budget, so that we might understand whether—somewhere in the structure of their welfare reform—there are elements to off-set significantly increased welfare expenditure and extension of dependency to higher-earning families? If the measure falls within the context—as I should certainly hope that it does—of wider welfare reforms promoting self-provision and acting to stem otherwise longer-term growth in liabilities in the welfare budget, we were not told about it. That is a pity.
  Secondly, how will the measure—particularly the child care tax credit—impact on demand for work? As has already been briefly mentioned in the debate, it is not at all obvious that the measure's consequence will be to enable many women to look for work who were previously unable to do so for financial reasons. There are several reasons for that consequence.
  First, a substantial part of the measure's impact may be to persuade currently working mothers that it is better to take part-time rather than full-time employment because of the extent to which additional earnings will be clawed back with withdrawal of the credit.
  Secondly, the measure may create circularity within communities, in which substantial benefit is derived from looking after one another' s children rather than one's own children. Everyone registers as a child minder; everyone receives their £150; and everyone claims back their £105. We might create some rather closed circles of people taking in, as it were, each other's washing, but not create any net external benefit to the economy.
  I do not dispute that families with children will derive financial benefits from the process by virtue of the taxpayer subsidy, but that does not mean that some of the claimed benefits for the wider economy will necessarily be achieved. Even if, as a consequence, a larger active population seeks work, it does not follow that the number of jobs available in the economy and the number of people entering work will increase.
  Let us remember how the process works. If labour supply in the marketplace increases, demand is normally stimulated by a reduction in the price of labour. Yet we know that, by the time the measure is introduced, the Labour Government will have introduced a national minimum wage. Thus the price of labour will not be able to adjust downwards in order to encourage employers' demand for it. Employers may find that more people are seeking work, but that it is not necessarily in their economic interest to take those people into work. The net consequence will be rises in unemployment, not necessarily rises in employment.
  I shall quote again from the Labour manifesto, just to see whether I can keep irritating the Labour party:
  "An explicit objective of a Labour government will be to raise the trend rate of growth".
  It struck me that, when the right hon. Member for Dunfermline, East (Mr. Brown) was responding to the Budget in the debate on 30 October 1996, he criticised
  1372
  the then recovery because it was not investment-led or manufacturing-led, but was too much consumption-led. Yet we have the same now. There is a failure in investment, and a failure to support manufacturing so that it can lead the recovery on the part of the Government.
  The right hon. Member for Dunfermline, East has reduced his expectations for the trend rate of growth. I shall not bore the House with the figures—suffice it to say that the rate is predicted to go down to 2 per cent. or below in 1999, compared with well over 3 per cent. in the early part of 1997.
  A whole page of the Red Book is devoted to an apologia for the Government not achieving the investment-led growth they were anticipating. Business investment is predicted to fall from a 7.75 per cent. increase in 1997 to 4.5 per cent. to 5 per cent. in 1998, to 3 per cent. to 3.5 per cent. in 1999 and to 2.5 per cent to 3 per cent. in 2000. Far from investment driving forward, it will not sustain the economic cycle. The Treasury is making its excuses for the trend rate of growth not being higher. It says that the level of investment in capital productivity is not sufficient to achieve it.
  I conclude with two specific points. The first relates to health spending; it is something of a pedant's point. It is very strange that the Government have found that, towards the end of the financial year, principally as a result of demand-led expenditure not coming up to predictions, £1.5 billion will be left over.
  The proper way for the Government to proceed would be to reduce public borrowing in this financial year by £1.5 billion. Then, if they wanted, they could raise public spending next year above the pre-existing control total by £1.5 billion. It is a bogus manoeuvre to carry forward the money from 1997–98 to 1998–99. All they are doing is pretending that there will be less public spending next year and more public borrowing this year—which they will be able to reduce next year. It is a device to massage the figures for the Government's benefit—a bogus device.
  I am pleased to see an Education Minister on the Government Front Bench. Yesterday afternoon, not exactly under cover of darkness but under cover of the Budget, the Government pushed out an announcement on Oxford and Cambridge college fees. I have the honour to represent two Cambridge colleges. The Government's decision was regrettable. From 1999, it could take more than 8 per cent. of the value of the addition to college fees, year by year, from the additional grant.
  The Government talk about excellence, and announce a university challenge based on research excellence, but they hit at part of the independence of colleges in Cambridge and Oxford that has been at the heart of the maintenance of standards and excellence in those two fine institutions. It is a disappointment to Cambridge university. It will also be a disappointment to many in the House and beyond. It is a pity that the Government chose so transparently to push the measure out at a time that suggested that they were ashamed of their plan.
  The measure was in the character of the Budget, which is more redistributive and egalitarian than the Government would have people believe. Sometimes, the net result of egalitarianism is not to benefit those whom it is intended to make prosper, but to diminish us all—and to diminish our economic prospects.

  1373
  That brings me back to my goose. The Chancellor was able to call on many golden eggs that have been laid by the goose of economic prosperity created by the previous Conservative Administration. He has set about strangling that goose, after having gently plucked it.
  9.11 pm
  Mr. David Heath: I recall an amusing book written by Jane Austen in her early days, called something along the lines of, "A Partial and Prejudiced History of England". The subtitle promises that the history will contain very few dates. I hope to make a partial—but, I hope, not prejudiced—speech on the Budget that will contain very few statistics. It is more important to concentrate on the outcomes of the Budget statement than to bandy about figures in the sterile way that is so often evident in such debates.
  As we have already said, the Liberal Democrats applaud many of the measures in the Budget. Many of the policies are moving in the right direction, although some are not moving far enough and others are not quite in the right direction, but veering off to one side. However, there is much to recommend and many policies that we have advocated over many years. I hope that the moves on child care are as successful as the Government intend. The reforms to national insurance, the long-overdue support for carers, the also overdue change of heart on the ISA—on which many of us have argued with Treasury Ministers—and the help for the unemployed are welcome.
  The outcomes are what counts. My constituency is a genuinely rural constituency—not green welly rural, but black welly with mud on rural. The Budget will not have all the effects that the Government desire in my constituency, simply because so much is not applicable to the area. To borrow a phrase from my hon. Friend the Member for Torbay (Mr. Sanders), the Budget seems to have bypassed Somerset in many ways.
  There is nothing for pensioners. I have more pensioners in my constituency than the average. Nothing in the Budget commends itself to them or makes their lives easier. Instead, measures such as increases in petrol costs, which affect people on fixed incomes more than others, work in the opposite direction.
  I see nothing in the Budget on housing. Housing in rural areas has been a problem for a long time. The right-to-buy policy denuded many of our villages of any social housing for ordinary people, and the housing stock tends to be older, in more exposed positions, and damp. We should have seen a Government initiative to change the structure of VAT on home insulation—not just for specific schemes, but on a wider basis—to make a real difference to the lives of many people.
  Farming communities in my constituency have never had it so bad as they do now. The strong pound is a major influence on the difficulties that farmers face, yet the Budget has been judged in such a way that the pound has risen to a more unsupportable level than previously. That will make life more difficult, yet we have received no satisfaction from the Minister of Agriculture, on the specific help that he will give to the dairy or beef sectors in areas such as Somerset.
  The Budget will not help the smallest businesses, although there was welcome help for smallish companies. It is hard to see where help is coming from, for the small
  1374
  companies in the non-incorporated sector. Some measures should not have formed part of the Budget, but should, of necessity, have formed part of the Government's overall programme—for example, the major reform of the uniform business rate, which is positively inimical to small business.
  Mr. John M. Taylor: The concept of a small business is one that we are all fond of, but it may have a plurality of definitions. What does the hon. Gentleman think is a small business?
  Mr. Heath: The hon. Gentleman is right to say that there is a plurality of definitions. It depends on the context and the sector that we are talking about. I am talking about small, non-incorporated businesses, such as a lone trader, a partnership or a small retail business that has been crucified in recent years and to which the Budget is of little assistance.
  I wish to refer to car tax. It is absolutely right that we should stress the difficulty in the Government's proposals. As is common knowledge, we have campaigned for a long time for a shift in taxation, so that we increase the proportion on fuel, and balance that by a substantial reduction in vehicle excise duty. That is not only environmentally friendly, but means that for many people in rural areas who depend on their cars as the principal means of transport, there is a neutrality or even a benefit because of the typical mileage done in a year.
  Many households in isolated villages have to have more than one car to allow people to live a life at all. The cars tend to be older, and the people will not be helped by the speculative Government suggestion about changes in excise duty. Most important, they will not be helped by the fact that the Government have gone ahead with an increase on petrol duty immediately, but are not prepared to change vehicle excise duty for another two to three years, if at all. That is the crux of the proposals.
  Mr. Adrian Sanders: My hon. Friend mentioned farmers, small business men and the problem of increased petrol duty, which affects tourism. He has not mentioned pensioners, but I am sure he will. [HON. MEMBERS: "Yes, he has."' Does my hon. Friend agree that, from a west country perspective, this is not a good Budget for the south-west?
  Mr. Heath: I agree. My hon. Friend may have missed the passage of my speech in which I mentioned pensioners, but Ministers on the Treasury Bench have noticed that I mentioned them once or twice. He is absolutely right, however, in saying that the Budget is not good for the south-west.
  I commend the Government for at least making a start on the important issue of public transport. It is extraordinary to hear Conservative Members talk about the iniquity of providing only £50 million for rural transport. Rural transport is so atrocious because of deregulation, which the Conservative Government introduced, and because they starved local authorities of money for years, so that public transport could not receive the necessary support. Nevertheless, £50 million will not go far in providing adequate support to meet the needs of people in rural areas.
  The additional expenditure on the health service is welcome but, again, it does not go far enough. I am worried that, because of their pledges, the Government

  1375
  will concentrate on waiting lists to such an extent that there will be a reduction in primary health care and in the number of community hospitals in rural areas. Moreover, there seems to be nothing to improve policing in rural areas, which is another major issue.
  My prime concern, however, is education, in which I have been involved for the past 12 years, as leader of a county council and chairman of a local education authority—it is something about which I care passionately. I welcome the extra money for education, but once the various elements—the effects of inflation and the adjustment to the deflator—have been taken into account, that money is whittled away and little benefit remains.
  Setting aside the total amounts and the general picture, I must ask about the distribution of the money that will be made available. In this respect, I shall be openly parochial about Somerset. Recently, the Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells), visited schools in my constituency—I hope that he liked what he saw—but those schools are working against a background of a starvation of funds that has continued year after year.
  We hear the Government's rhetoric and their promises of additional money for education, but that money does not come to Somerset schools. Last year, the council tried to spend more on the education service, but it was capped—by a Labour Government applying Conservative policy. We looked to this year's local government settlement for extra expenditure, but we found a real-terms reduction. We applied for money that was released as a result of the scrapping of the assisted places scheme, but we were given nothing.
  The effect is that teachers are being lost and class sizes are becoming larger. Children, including my own, in Somerset schools have seen no benefit from the change of Government; indeed, things have got worse. Until people start to notice a difference in our schools, why should they believe the Government's rhetoric?
  People see that the local education authority is spending massively above its standard spending assessment—they do not doubt its commitment to education—but also that the expenditure per child is low. They also see that, on any register, the authority's efficiency is high—in Somerset, the number of vacant places is among the lowest in the country, and the administration costs per child are, by a long way, the lowest in the country. They ask why Somerset and the west country are not receiving the benefits that the Government have promised.
  I make a plea to the Government. Things can only get better in Somerset. Because of the Government's commitment to Conservative spending limits, we have had 19 years of Conservative government. That is long enough, and we want a change. The Budget should have provided the opportunity to make that change—my regret is that it has failed that test.
  9.23 pm
  Mr. David Willetts: I begin by commiserating with the Financial Secretary, who seems to be rather light on support this evening. Three Labour Back Benchers have spoken in this debate, and two of them criticised the central macro-economic judgment of the Budget.
  1376
  I have just had the pleasure of listening to five successive speeches by Conservative Members. I did not expect such a pleasure when we returned on 1 May in rather depleted numbers. There are enough Labour Members to go round, and they have just been told by the Chancellor that this is the biggest, most exciting and significant Budget for a generation, yet his performance seems to have emptied the stalls.
  I cannot believe that that is because the Financial Secretary is in any way unpopular with her colleagues, so I can only conclude that it is because the Budget is unpopular with them. That is the only remaining explanation.
  Mr. Blunkett: It is because they did not want to listen to you.
  Mr. Willetts: The Secretary of State says rather discourteously that it is because they did not want to listen to me, but it is not as if they were in earlier and left when I arrived: they have not been around all day, and have not spoken up for the Budget.
  The right hon. Member for Bishop Auckland (Mr. Foster) made it clear that he was worried about a Budget that had led to an expectation of interest rates having to rise further, leading in turn to upward pressure on the exchange rate and to a threat to manufacturing industry. That was also the central argument of the hon. Member for Nottingham, South (Mr. Simpson). Of the three Labour Back Benchers who have made speeches today, two criticised the Budget, which was meant to be a once-in-a-generation affair.
  By contrast, my hon. Friends the Members for Cotswold (Mr. Clifton-Brown), for East Worthing and Shoreham (Mr. Loughton), for North Norfolk (Mr. Prior), for Witney (Mr. Woodward), for North Shropshire (Mr. Paterson) and for South Cambridgeshire (Mr. Lansley) all made effective contributions.
  I want to ask the Financial Secretary about the Government's commitment to what they rather pompously call "best accountancy standards" in the presentation of financial information. I want to find out to what extent she will live up to that grandiose commitment and whether she can explain the Chancellor's rather baffling passages on national insurance contributions.
  The Chancellor said:
  "I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country."
  We understand that, but he went on to say:
  "Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and.£81 will have their right to benefits protected."
  He then said:
  "So, from next April, 20 million employees in Britain will benefit by paying £1.28 a week, or £66 a year, less in national insurance."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
  Because of those remarks, many newspapers claimed today that the Budget involves the lower earning limit for employees' national insurance contributions being increased from £64 to £81, but I cannot find that anywhere in the Budget arithmetic. Indeed, the paragraph about the saving of £1.28 a week refers solely to the entry fee.

  1377
  The Financial Secretary has put her name to a Red Book that is supposed to be committed to high standards. Where will we find in it the costing of increasing the employee's lower earnings limit from £64 a week to £81 a week? If it is not there, how will it be included in future Budget arithmetic—if, indeed, the Chancellor intends to deliver the measure?
  I have some questions about the working families tax credit. The other week, I had the pleasure of listening to the Financial Secretary giving a speech on that very subject to the Fawcett Society. Unfortunately, she was not able to stay to answer detailed questions. We understand that—she was in Budget purdah and could not be drawn further. It was a desperate attempt to show that the Treasury was not being run by the lads and that people were fighting the women's corner. Now that she has the Budget out of the way, she can tell us a bit more.
  My first question concerns wallet versus purse. When I was a single male policy wonk in the policy unit—probably the sort of person who is the bane of the Financial Secretary's life—I was rather keen on the earned income tax credit. One of the reasons why it did not happen was wallet versus purse. If the money was paid to the man—it still normally is the man—through the pay packet, what would be the chances of women in certain circumstances receiving the money to spend on the children?
  The Government claim to have solved that problem, but it is clear from statements in the "Financial Statement and Budget Report" and elsewhere that only if both partners in the marriage agree will the money be paid to the wife, whereas, under the current arrangement, it is specified in law that the wife is the claimant, and the family credit is therefore paid to the wife unless she specifies otherwise. That is a significant change, and it is not one that is good for family life.
  Mr. Blunkett: The right hon. Gentleman has had several hours to think about the question that I put to the shadow Chancellor earlier: if the Conservative party invented joint and several liability, why are Conservative Members so exercised about finding a way forward under the working families tax credit scheme, which allows us to ensure that that situation is reversed, so that we have the mirror image of it?
  Mr. Willetts: That is a complete diversion from the central issue. I was raising the problem raised by the present Minister of State, Department of Social Security. As the shadow Chancellor explained, when these measures were debated last time, the Minister of State said that of course, for most families this would not be an issue—I accept that, because for most families it is not—but
  "we are concerned with that minority—it may or may not be substantial—of families in which money for the children is not paid over".
  That is the point on which we have not had a clear response from the Government. It concerned the Minister of State 10 years ago, and it should concern the Financial Secretary now.
  What about marginal rates and the notorious table 3.3 on page 48 of the FSBR, which shows that the number of families facing marginal deduction rates of 60 per cent.
  1378
  or more has increased from 760,000 to 1,010,000— an increase of about 250,000—under the Government's new proposals? The gain that the Government make under these proposals is that they will have got rid of the high marginal rates—those over 90 per cent.—which would largely disappear. However, the Minister must recognise that the Government are paying a high price for that.
  Many families that have an income which means that they are beyond entitlement to family credit will now face withdrawal of working families tax credit combined with income tax and national insurance contributions that mean that their marginal rates will go up. Rather conveniently, the table stops at the 60 per cent. figure, when the working families tax credit taper is 55 per cent. It would be interesting if the Minister would add another line to the table and give the deduction rate at 50 per cent. or more, and give the figures both under the current and her proposed system. I fear that there will be a massive increase in the number of families facing the combined deduction rates of more than 50 per cent. That would have a serious impact on the labour market, and the Minister should deal with it in her reply.
  Thirdly, on two-earner couples, family credit goes to two distinct family types at present. The first type is the married couple where the wife normally does not work; the second is the single parent. As a result of the big extension of working families tax credit, this type of assistance will for the first time go to two-earner couples. We know that working wives—it is normally the wives—are particularly sensitive to changes in marginal rates. We want some assurance from the Minister that the Government have considered seriously the implications for patterns of labour force participation of extending high marginal rates, particularly to a pattern of two-earner couples who previously did not experience such rates.
  Finally, let us hear about the burdens on business—a point so ably put by my hon. Friend the Member for North Shropshire (Mr. Paterson)—because it is a very significant issue indeed. That is the other reason why the earned income tax credit was not implemented in 1986; it was partly the feminists worried about wallet versus purse and partly businesses worried about being unpaid benefit payers as well as tax collectors for the Government.
  Some curious things will happen as a result of the tax credit. Those wives who succeed in getting the credit paid directly to them will find that great, bold innovation, an Inland Revenue order book. The Inland Revenue will pay cash direct to non-working wives. I will be interested to hear how that is supposed to be delivered in practice.
  I have a few questions about the Budget's child care provisions. I recognise that the child care disregard in family credit has not had a high take-up. We might expect single parent take-up to be high, but I understand that only 25 per cent. of them have taken it up, and then only for a modest amount. The Minister could go on and on about the low rate of take-up of child care disregard for family credit, but will she try to explain why she thinks it is so low? It is easy to say that it is because of the way that the system has been constructed, but is that the whole story?
  Is it perhaps that families might prefer informal arrangements for child care rather than formalised ones? Many families do not want the pattern of child care which is eligible for the disregard under family credit, and which will be eligible for assistance under the new child care credit. Many families prefer the neighbours, the

  1379
  grandparents, the mothers-in-law or a network of people on the same estate. Either the Government will face continuing very low take-up rates or they will increase the financial pressures on such informal networks to be converted into institutional arrangements, which may not go with the grain of what many families want.
  Another reason for the low take-up is that it is easy to focus on the demand side, to come to the House with ingenious ideas on vouchers, credits, benefits or tax credits that are supposed to help child care, but what about the supply side? It is difficult to set up a child care facility through a local authority planning system. What about the regulatory burden that some local authorities impose on people trying to set up such facilities? What about the way that VAT affects people who provide child care?
  I will be interested to hear whether the Government have any proposals to make it easier to supply child care. If supply of child care remains restricted while demand for it is encouraged through these further incentives, the Minister will find only that the price goes up and that hefty profits are made by the small number of regulated providers who meet the requirements of her child care credit. The benefits will not go to families but will be passed on to the small number of people providing the services.
  I do not want go on too long, but perhaps I can make one or two wider points. There is an old Treasury story, which I think is told of Lord Healey, although I cannot believe it is true of him.
  Mr. Blunkett: It is bound to be true then.
  Mr. Willetts: Who knows? Lord Healey was said to treat his speech writer rather badly. He delivered one of those speeches that we used to hear from Chancellors of the Exchequer in which he read out an account of how the British economy faced the most appalling problems and the rate of inflation, the balance of payments deficit and the public sector borrowing requirement were too high. He continued, "But this Government has a set of policies which will solve these problems." As he turned over the page, there was a note from the speech writer saying, "From now on, you are on your own".
  The point is that this Government are now on their own, but it is the other way around. They have inherited a strong economy, with low unemployment and declining PSBR. They have, thank heavens, left my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) as Chancellor of the Exchequer for a while in control of public expenditure.
  What do the Government get up to as soon as they are on their own? They get up to introducing expensive measures, which are carefully planned so as to avoid being counted as public expenditure. We heard how the entire new deal and welfare to work do not fall within the control total. We are told that people participating in the scheme will receive not a benefit, but an allowance equivalent to the benefit, which means that, helpfully, they do not count as unemployed for the purposes of the claimant count. Perhaps that is one of the reasons why the Government lost their nerve and decided not to change the definition of the claimant count after all.
  When and if unemployment starts to rise, Ministers will discover one of the uncomfortable consequences of those expensive measures. That is what has blown apart similar
  1380
  schemes in Scandinavian countries where they have been tried before. When unemployment is low, it looks fine to spend large sums on a relatively small number of unemployed people and a number which, thank heavens, is falling—but wait until the cycle turns and the number of unemployed people starts to rise. Wait until the Government suddenly find that their commitments of thousands of pounds per person have to be delivered to rising numbers of unemployed people. Wait and see what the business sector will say when the corporation tax increases, which are so blatantly revealed on page 16 of the Red Book, start to bite—the transitional measures just happen to involve an extra £15 billion in corporation tax payment over the next four years.
  If the economy slows down and the Government find their welfare-to-work measures costing even more and the corporate sector being squeezed between a high exchange rate and an increasing burden of corporate taxation, at that point the picture will look rather different. At that point, the Chancellor's mettle will really be tested.
  9.41 pm
  The Financial Secretary to the Treasury (Dawn Primarolo): I shall try to deal specifically with the questions asked by the hon. Member for Havant (Mr. Willetts) in the short time left in the debate.
  Mr. Clifton-Brown: There are 20 minutes left.
  Dawn Primarolo: I do not need prompting by Conservative Members.
  Those questions involved, first, purse-to-wallet transfers; secondly, marginal rates; thirdly, what happens to two-earner couples; fourthly, the burden on business; and fifthly, take-up of child credit.
  It is noticeable that, for all their concerns about the independence of women, no Conservative Member has mentioned the fact that it was a Conservative Government who introduced joint and several liability for the poll tax. Despite being repeatedly asked by my right hon. Friend—[Interruption.] I am happy to discuss at any time the poll tax and the £14 billion that the Conservatives wasted on it. I paid my poll tax and I am sure that Conservative Members pay all their taxes—at least, I sincerely hope they do.
  However, to return to the debate, I shall try to answer the questions asked by the hon. Member for Havant. There will be no compulsory transfer from purse to wallet. That has been made clear. Partners will be able to choose who receives the payment and we shall adapt the family credit rules. I know that the hon. Gentleman is knowledgeable about family credit, so I shall not read out the fact that couples on family credit can already choose the person to whom it should be paid. We are already looking at the family credit rules to ensure that there is no compulsory transfer from purse to wallet.
  Mr. Woodward: Will the Financial Secretary give way?
  Dawn Primarolo: I shall answer the five questions asked by the hon. Member for Havant and then take interventions.
  On the question of marginal rates, the hon. Gentleman fundamentally misunderstands—or chooses to misunderstand—that the working families tax credit and the child care tax credit will mean that more people will

  1381
  gain and will be better off. That means that more people will have support from the child care credit, particularly women who do not currently receive such assistance. There was little reference during the debate to their experiences. The hon. Gentleman also asked what would happen to two-earner couples. Clearly, they can choose to whom the credit is paid.
  The hon. Gentleman also asked about the burden on business. The Government are very good at consulting with business, as we have clearly shown in a number of areas—particularly regarding proposals in this Budget. We shall consult extensively with business, as we did in extending the pay-as-you-earn advice and support that business will receive from the Inland Revenue regarding the merger of the Contributions Agency into the Inland Revenue, which will reduce burdens on business.
  As regards the take-up of child tax credit, the hon. Gentleman speculated about the child care strategies that families adopt. He should remember that the new deal allocates money to assist with the provision of 50,000 training places for child minders. My right hon. Friend the Secretary of State for Education and Employment will make announcements in the next few weeks about the national child care strategy on which his Department is working extremely hard. It will deliver on women's desires for a comprehensive child care strategy.
  Let us look at the comments in support of the Budget. The Kids Club Network says that it is very pleased with the amount that the Chancellor has announced. It says:
  "We think it is very realistic and very generous. He has listened to parents."
  The Parents at Work organisation says:
  "This is a major breakthrough. For the first time, the Government has recognised the high costs of child care and that they have been a real obstacle to the opportunities for women and will keep millions of children out of poverty."
  The Government's proposals are widely supported and welcomed by millions of women in this country, yet no Opposition Member—with the exception of the hon. Member for South Cambridgeshire (Mr. Lansley)—commented on that. It speaks volumes about the lack of women on the Opposition Benches that the Opposition have failed to understand the importance of our contribution to women's lives.
  Mr. Don Foster: The Minister will recall that I welcomed the Government's child care proposals—as did my hon. Friend the Member for Somerton and Frome (Mr. Heath).
  The Minister referred to the Kids Club Network. Does she acknowledge that, in its remarks on the Budget, it also points out that, in order to meet the Government's aspirations, there must be an additional 90,000 qualified child minders or people in similar positions? How do the Government plan to ensure that training courses will be provided to meet that need? Under their current plans, it will take 36 years to find 90,000 additional child minders.
  Dawn Primarolo: The Government are aware of the scale of the problem that we are facing as a result of the neglect by the previous Government in making any investment in child care. We clearly need a longer-term strategy. This is only one Budget, which simply lays
  1382
  the foundations for our policy. My right hon. Friend the Secretary of State for Education and Employment has made it clear that we must develop a five-year strategy. He will set out that strategy and how it will be achieved.
  In spite of all their scoffing, Conservative Front-Bench Members when in government failed absolutely to put in place any training or provide any child care places. They did not give any support to women who were excluded from the work force because of the lack of available child care places—and now they laugh at us.
  Mr. Willetts: I ask the Minister to clarify one point. She repeated one sentence from the Government's document on the working families tax credit and said that there will be no compulsory transfer of resources from women to men. The next sentence says that couples will have the right to elect to whom the credit is paid—the man or the woman. Is the Minister saying that the woman who is currently the claimant of family credit has the right of veto—yes or no?
  Dawn Primarolo: I made it clear that couples can elect to do either. The payment can go to the woman. The transfer of the rules from family credit into the working families tax credit will need to be fine-tuned.
  The Government have laid down the principles for the operation of the working families tax credit. I will take no lectures from Conservative Members about the benefits for women. For 18 years, they forced women back into the home unpaid, drove down their wages, created an insecure labour market, made no investment in child care and left women on their own struggling; yet they now claim to be the guardians of women. That will not wash, and that is why the reports in the press today welcome the Government's proposals.
  Various other issues were raised in the debate. For all that Conservative Members have said, small business reaction to the Budget has been favourable.
  Mr. Paterson rose—
  Dawn Primarolo: I will give way in a moment.
  Small businesses welcomed the Budget. They said:
  "The Chancellor has delivered a Budget for both employers, employees and consumers. Small businesses with long-term investment will benefit. More people will be encouraged into the jobs market and at the same time consumers will have more money in their pocket."
  Those were presumably not the small businesses in the hon. Gentleman's constituency to which he spoke on the telephone this morning. Perhaps he could tell us what his party's policies are to help business, if he does not support what the Government have done.
  Mr. Paterson: I can inform the Minister that the Federation of Small Businesses, to which I spoke this morning, is extremely concerned about the cost and difficulty of administering the new scheme. Will she please give me an answer to my question, which was posed by the financial director I mentioned, who reckons that he will have to take on one extra person purely to administer all the extra paper required by the new scheme? From a sedentary position, the Minister said no. I should be grateful if she would answer in detail from a standing position, so that I can tell the financial director tomorrow morning.
  Dawn Primarolo: The hon. Gentleman can tell the financial director tomorrow morning that the Government

  1383
  will be consulting business on the administration of the working families tax credit, and that the Government's track record is to reduce the burdens on business, not to increase them.
  I urge the hon. Gentleman to read the press release put out today by the Federation of Small Businesses. It welcomed the merger of the Contributions Agency and the Inland Revenue as a help to business. It welcomed the inheritance tax threshold being raised to £223,000, and the employers' start to national insurance contributions being raised to £81.
  The Federation of Small Businesses welcomed the 40 per cent. first-year capital allowances; the Inland Revenue's new role to assist businesses in setting up payrolls for their employees; and the downward taper on charging capital gains tax. It welcomed the review of national insurance contributions paid by the self-employed; the review of industrial and commercial use of energy to gauge the method of taxation; and the £50 million venture capital fund to invest in small businesses.
  Mr. Paterson rose—
  Dawn Primarolo: While I am on the subject of what was welcomed—the hon. Gentleman can address himself to this, from a standing position—today the UK's bus and coach industry welcomed the Chancellor's decision to give an immediate cash injection of £50 million to rural transport. In a second press release entitled "Tax break joy for buses and coaches", the industry welcomed the Government's restoration of the bus fuel duty rebate. Perhaps the hon. Gentleman wishes to reply to that point.
  Mr. Paterson: I am grateful to the Minister for giving way a second time. Will she please tell us who will analyse the status and the affairs of the relations of employees in small businesses?
  Dawn Primarolo: I advise the hon. Gentleman to go and lie down in a dark room, rest for a little bit and then familiarise himself with the current family credit scheme. If he then re-reads the proposals in the Budget, he will be suitably embarrassed by the ridiculousness of his proposition. He would do well to take lessons from the shadow Chancellor, who, when asked to comment on why he would not be putting forward any alternatives to the Budget, particularly on employment creation, told The Independent on Sunday that that would be difficult at the moment because it
  "would be bad for our party."
  He said that it would divide them, and would only reopen discussions about what their policy should have been at the last election.
  The Budget that my right hon. Friend put before the House yesterday cut taxes for all employees and helped families with business. It particularly assisted the 20 per cent. of the poorest families with children, who will gain on average £490 a year. Over the next two years, families with children will gain up to £1,500. No family earning less than £220 a week will pay income tax. Any family with a full-time worker is now guaranteed a take-home pay of at least £180 a week. Couples with two children, on an income below £17,000 a year, will receive 70 per cent. of their eligible child care costs. That is a first, and it will improve
  1384
  the opportunities for parents, particularly women, to return to the labour market, and ensure that people are lifted out of the poverty trap.
  Mr. Lansley: Will the Financial Secretary now answer this question? The Chancellor of the Exchequer said yesterday:
  "Further reforms will…ensure that no one pays national insurance for the first £81 of their weekly earnings."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
  The Red Book, at paragraph 3.31, says:
  "The lower earnings limit for employees will remain unchanged (at £64 in 1998–99)."
  Which is accurate?
  Dawn Primarolo: I have just covered that point. I am not sure that the hon. Gentleman was listening, so I shall repeat it. There is a tax cut for all employees who pay national insurance contributions—a gain of more than £65 a year.
  The hon. Member for East Yorkshire (Mr. Townend) referred to smuggling. The Government announced a wide-ranging review in the Budget last July, to look at smuggling and fraud involving alcohol and tobacco. The Government take the effects of smuggling and fraud extremely seriously, which is why the review was set up. We continue to take action to crack down on smuggling and on the criminals who take part in this pernicious activity. We will not let up in our efforts to stop smuggling and smugglers, and our efforts are increasingly successful. The House can rest assured that we will act to make life even more uncomfortable for those who flout the law and defraud the honest taxpayer.
  I am disappointed that the comments from the trade today appear to condone smuggling. Mr. David Swan of the Tobacco Manufacturers Association said:
  "We estimate that more than a million smokers are already buying black market cigarettes and tobacco."
  Gallaher said:
  "This is a green light for bootleggers."
  The Wine and Spirits Association said that this is a "crime-boosting Budget." The Brewers and Licensed Retailers Association said that the Budget
  "sends a clear signal to criminals that crime really pays."
  Those comments are irresponsible. There is no change in tobacco duty until 1 December, no change in alcohol duty until 1 January, and no change in spirit duty at all. It is unacceptable for those organisations to encourage people to believe that duty has already been increased.
  This is a Budget for stability, for reform of the tax system and for a modern welfare state that lifts people out of poverty rather than trapping them in it. We want a modern economy, modern schools and modern hospitals in an environment where investment and reform go hand in hand. It is a Budget for enterprise, for families and for a safer environment. It is a Budget for the future, and casts off the doubts, insecurities and the poverty of the past that were created by the Conservative party in government.
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

  Domestic Violence
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert Ainsworth.]
  10 pm
  Dr. Vincent Cable: I am grateful for the opportunity of this Adjournment debate. At first sight, it has little or nothing in common with the Budget debate, but having listened for the best part of three hours to hon. Members discussing the conflict between the wallet and the purse and gender conflicts over finance, I realise that there is a direct link between the Budget debate and a discussion about what happens when families break down.
  Like many Adjournment debates, this is prompted by a local constituency concern, although it has wider implications. My hon. Friend the Member for Richmond Park (Dr. Tonge) and I represent the borough of Richmond. Like many boroughs, it established 10 years ago a forum for domestic violence under the police-community consultative group. More recently, it established a women's information centre to deal with domestic violence. I have been increasingly involved in the centre's work, and as a result have been educated on some of these problems, and have drawn several conclusions.
  I have been struck by the fact that the women's information centre is an extremely valuable and important part of the local community. It handles roughly 1,300 cases a year, and is vastly over-subscribed. The professions who work there have a hand-to-mouth existence. They devote an enormous amount of their time to fund raising and to fighting their way through the thickets of the different agencies that are responsible for women's welfare. The system for dealing with cases of domestic violence does not work.
  Having become involved in the work of the forum and the women's centre, I have learnt at first hand the horrific statistics and facts about domestic violence, of which I suspect many people are unaware. It is now well established that about one in 10 women are victims of physical violence that leads to hospitalisation. Domestic violence is mostly against women: there is some violence against men, but it is a small problem. About one in three women experience some form of violence; about one in eight experience violence throughout their relationship; and about two in every five murders of women are the result of disputes involving domestic violence—roughly one every three days. Those are horrific statistics.
  It is important to have this debate not only to highlight my constituency concern and the work and problems of the local women's groups, but to give the Government an opportunity to explain how they intend to approach this problem. I am well aware that this problem has a history: it did not suddenly arise.
  For the best part of two decades, women's groups have established refuges, and public consciousness of this matter has gradually increased. In 1993, the Select Committee on Home Affairs produced a valuable report, which provided many of the recommendations on which current policy is based. The 1995 inter-agency report from the Home Office took the matter one stage further, as did the family law reform in 1996. We are dealing with an incremental process.
  1386
  I thought it important—given that a new Government were in office, and given the possibility of a burst of energy and reforming zeal—that some outstanding points on the agenda would now be tackled. In the rest of the time left to me, I want to suggest—in an aggregate sense, and subsequently in more specific ways—some of the problems that I hope the Government will tackle. I am glad that both the key Ministers have taken the trouble to be here.
  I feel that two key philosophical points need to be made. First, it should be recognised—I think that such recognition is now widespread, but the need for it should be reiterated—that we are dealing with a serious crime. Domestic violence is not just an accident or a faux pas; it is a crime. It has taken a long time for that to be accepted. It is rather like drunken driving or rape, in that it is a crime that needs to be punished. It needs to be dealt with appropriately by the courts, and by the judicial process generally.
  The other point is more subtle, and perhaps less generally appreciated. It is much better to deal with matters such as this with preventive action than to deal with them subsequently. I have been staggered by the vast amount of public resources absorbed by problems of domestic violence that, with a little imagination, and perhaps better policy, could have been avoided.
  A valuable study conducted in Hackney—I am sure that the Minister is aware of it—suggests that some £5 million a year is spent as a result of domestic violence being unchecked, the subsequent action by social services departments and the necessary process in the courts. It has been estimated that the aggregate cost in London is about £300 million. That expenditure is not necessary, and it could be avoided if policy were approached in a slightly different way. Let me suggest a few ways in which we could deal with the problem.
  I want to concentrate on funding. Ministers may imagine that, as a Liberal Democrat, I will suggest a new tranche of public expenditure, but that is not my objective. I recognise that there is already quite a lot of public expenditure in this area; the issue is how to use that expenditure better within existing budgets.
  As one who has come to the problem from outside, I am struck by the number of agencies that exist. There is the safer cities programme, to which some boroughs have access and some do not; there is the single regeneration budget; there is the national lottery, which is available to some parts of the country but not others.
  The women's refuges—I have discussed the matter with them— are in the extraordinary position of having to deal with some 25 different revenue streams, potentially, in order to fund their activities. The Department of the Environment, Transport and the Regions provides quite a few; the Department of Health provides others. I do not know whether the Minister knows this, but I gather that one of the key services—the help line—is due to finish on 31 March as a result of the ending of the Department of Health grant.
  The issue, however, is not simply one of money being available or not available. It is about the vast complexities of funding in the sector, and about ways of reducing those complexities. Let me make some specific suggestions.

  1387
  First, the Home Office could simply keep track of all the expenditure, some of which is in the domestic violence budget and some of which is not. That would give us a comprehensive picture of how much was being spent, where it was going and why it was being allocated.
  My second suggestion rather goes against the grain of my belief in the unshackling of local government. I think that, as long as we have capping and close central direction, some ring fencing of central Government money may be a helpful way of dealing with such matters. For example, specific allocation of social services training funds to domestic violence would be one way of ensuring that all boroughs had access to proper funding. Alternatively, money could be ring-fenced for special provision for looking after children in refuges. I know that that is another concern of the women's movement. Ring fencing could also apply more generally to refuges.
  Those are all temporary fixes, however. My main recommendation in regard to funding is that it would be very desirable if the Government arranged for the Home Office to have a fund—a pot of money—for which different projects could compete in an open market and a transparent process.
  That was the main concern of the groups in Twickenham. They are not asking for more money or for the Minister to take out his cheque book. They ask for a clear process in which they can compete on merit with other projects for a pot of Home Office money that is available to all parts of the country, and demonstrate the merit of their work. In that way, they could provide some sustainable long-term funding for their activities.
  One of the key criteria in judging access to that pot of funding, which could be existing money that is put under a different heading, is that projects should be preventive, rather than dealing with problems after they have already occurred. I hope that the Minister will seriously consider that point.
  The other sets of recommendations are not to do with money—I am sure that they have already been debated within Government. The first involves public awareness. Over the past few years, there has been a campaign, directed almost exclusively at women, under the heading, "Don't stand for it". One could argue that the audience should be men rather than women, but the campaign has raised awareness. Much has been done, but it is clear that much more could be done, in terms of good leadership from the Government and to increase public awareness.
  Let me take a few examples. As I understand it, few hospital accident and emergency wards collect statistics on injuries sustained as a result of domestic violence. That information is vital to get a picture of how serious the problem is and the type of families that are most vulnerable. However, at no stage, as far as I am aware, has any effort been made to make the Department of Health conduct that sort of statistical collection.
  It is clear to those of us who work closely with the police that, in recent years, their awareness of these problems has enormously improved. Just as with race relations, the police are among the more sophisticated agencies in dealing with these problems, but there is an enormous gap between the best police officers, who are, in many ways, probably the best agents, and the worst, where the canteen culture is still alive. A lot more needs to be done with the police.
  1388
  The same is true of the judiciary. I am talking not about the crass judges who think that a good beating may be the best way of dealing with a domestic situation, but more sophisticated problems of how judges deal with the award of access to children in a situation of domestic violence. Those are the sort of issues that need to be discussed with the professionals and that I suspect have not been adequately dealt with.
  Finally, a whole raft of legal initiatives could be taken forward by a Government who were determined to be innovative and to reform in this sector. They already have the Family Law Act 1996 to build on, but a whole set of other things seem highly relevant. It appears that a woman who is not on benefit would have to pay, for example, about £1,000 to get a court injunction to stop her partner committing violence. Access to the courts is extremely difficult.
  Legal innovation is possible in another area. We could borrow from some of the experience in the United States. There is, I think, a well-known experiment in Duluth, Minnesota, where victimless prosecution is being launched. The woman is not required to go through the whole process of enacting her horrific experiences, but the police take a proactive role in prosecution.
  Probably the key issue, and one that my constituents have raised with me directly, is the role of the Crown Prosecution Service. It is notorious that very serious offences, including grievous bodily harm, are downgraded to lower charges, so that they can be taken through lower courts, probably for genuinely intelligent reasons of trying to increase the chances of securing a conviction. However, that effectively undermines the seriousness of the crime. I hope that that is something else that the Government, in their review of legal processes, will consider carefully.
  I thank the Government for taking a close interest in the debate. I hope that they will exercise some leadership. I particularly hope that they will reconsider funding, which is excessively complicated and creates serious barriers to some agencies at grass-roots level, such as those in my constituency that are trying to work in this sector. I hope that the Government will make a fresh attempt to examine some of the consciousness-raising and legal reform issues that are at the heart of this complex and tragic problem.
  10.14 pm
  The Minister of State, Home Office (Mr. Alun Michael): There is a tradition in the House of congratulating any hon. Member who is successful in obtaining an Adjournment debate. On this occasion, however, I would rather congratulate the hon. Member for Twickenham (Dr. Cable) on the use that he has made of the debate, and on his constructive and thoughtful contribution, to which I am delighted to be able to respond positively.
  I am also pleased that the hon. Gentleman noticed that, as well as my being here to answer the debate, my hon. Friend the Member for Lewisham, Deptford (Ms Ruddock), the Under-Secretary of State for Social Security and Minister for Women, is also present. The existence of my hon. Friend's role, and the close co-operation that we are giving to the task of examining domestic violence and other violence against women, illustrate the Government's approach and the importance that we attach to the issue.

  1389
  The hon. Gentleman was right to describe the statistics as horrific, because domestic violence continues to be the single most common form of violence against women, accounting for 17 per cent. of all violent incidents recorded by the 1996 British crime survey.
  Recent new research published by Crime Concern reports that, in some parts of Britain, one woman in nine are the victims of severe beatings by partners each year. That is slightly worse than the statistics that the hon. Gentleman cited. He was right to say that domestic violence must be regarded, and underlined, as a serious crime, rather than, as it was in the past, as less serious than other forms of violence.
  The hon. Gentleman stressed the need for prevention, which touches on one, indeed two, of the Government's major themes in dealing with crime. One of our favourite themes is to prevent crime wherever possible, and we are considering all sorts of ways of creating partnerships to understand and deal with the problems of crime at local level. The second is the idea of dealing with problems quickly when they arise—to nip things in the bud rather than allowing them to drift on for a long time until they become so serious that nobody can ignore them.
  The hon. Gentleman mentioned the value of voluntary organisations, many of which make a tremendous contribution to publicising the issues and in giving help, support and advice to people who find no help elsewhere. They also help in developing the forum activities that have helped with exchanges of views, with the education of the public, and with mutual education about how to tackle the problems.
  I certainly agreed when the hon. Gentleman said that the process of growing awareness of the problem of domestic violence had been slow. That growth in awareness has been inexorable, but it has taken place over a long period. Awareness is far greater among the police than it was a few years ago, and most police forces now have carefully thought-out policies, and work much more closely with local welfare organisations and voluntary organisations representing women. None the less, they are aware that they still need to do more. That sensitivity, plus the will to continue to improve their standard of response, is the keynote for the future.
  The hon. Gentleman showed great financial restraint, for a Liberal Democrat. He did not spend the same penny again and again, and tell us that we simply needed to re-order the money already available. He was right to say that there is a variety of sources, and that the availability of finance is complex, and it is difficult to find a way through. The trouble is that changing funding is complex, too, and if we are not careful we could accidentally shut off the sources of supply to some valuable organisations.
  Some sources of funding, such as single regeneration budgets, already embed concern about issues of violence, including domestic violence, within a wider context. It is important to see domestic violence not as existing in a backwater but as part of the wider picture of society in terms of dealing with crime and with other social problems.
  I underline a very clear theme in the Crime and Disorder Bill—which is currently wending its way through another place, and will soon reach this
  1390
  House—which is a local partnership approach in identifying local problems of crime. Such an approach must include identifying the local nature and profile of crimes of domestic violence, promoting the joint responsibility of police and local authorities to identify those problems in a crime and disorder audit, and considering not only statistics but people's experience—by working with voluntary organisations and those with direct experience—to get to grips with the reality of domestic violence and produce a strategy to deal locally with crimes and the causes of crime.
  The hon. Member for Twickenham also mentioned the courts. There are many ways in which domestic violence issues are dealt with in the courts, and he was right to seek both simplification of that process and improved access to the courts. The Government believe strongly in such improvements. However, we are looking also for ways in which we might deal with the gaps in legislation.
  For many years, we campaigned for legislation to deal with stalking. We were delighted to be able shortly after the general election to implement the Protection from Harassment Act 1997. Precisely in accordance with a belief in prevention rather than cure, the Act goes rather wider than its title might suggest, by allowing a variety of forms of harassment to be dealt with.
  An order may be granted, for example, on the basis of evidence not only from the victim but from professional witnesses, thereby allowing certain activities to be forbidden. Serious criminal penalties may apply to the breach of an order. We are including similar provisions in the Crime and Disorder Bill, and are generally improving legislation to make our systems work well.
  Downgrading cases is always a difficulty, and the matter requires much attention. One way of dealing with it is an improved relationship between police and the Crown Prosecution Service. My right hon. and learned Friend the Attorney-General is pushing through reforms on the matter as quickly as possible. The reforms will lead to an improvement generally in how crime is prosecuted, and will provide significant benefits in dealing with domestic violence and violence against women.
  It is certainly true that violence against women remains a blot on society, and that tackling it must be a priority. We must not tolerate a culture in which it is accepted, or in which its victims are afraid to speak out. The hon. Member was right to say that, although things have improved, there is still acceptance of violence in some areas and in some cultures. I have been working with my hon. Friend the Minister for Women because of concerns about that situation. Moreover, my right hon. Friend the Secretary of State for Social Security and Minister for Women recently announced in the House a national strategy to tackle all forms of violence against women.
  We are certainly determined that domestic violence will be dealt with effectively. To that end, Home Office Ministers are working with Ministers from other Departments to review all policies dealing with domestic violence. The hon. Member rightly said that men can be victims of domestic violence. Although that matter should not be overlooked, a person's sex is a significant factor in the likelihood of his or her being a victim or perpetrator of domestic violence, and in the seriousness and impact of domestic violence attacks. We must therefore concentrate on the experiences of women.

  1391
  Tackling domestic violence—both causes and effects—is a huge task, and much of the work will have to fall to local agencies. However, Government have a part to play. We provide court funding to the Women's Aid Federation in England, Wales, Scotland and Northern Ireland, and revenue funding for women's refuge spaces. Through the special grants programme, we have made funds available to the Women's Aid Federation (England) to develop training opportunities, resources and facilities for local refuges. Other funding supports projects in Scotland and Wales. Local projects in England are funded through the single regeneration budget challenge fund.
  Future funding issues are being examined in the context of the increased priority being given to the matter by the Government, and the interdepartmental strategies that are being developed to combat domestic violence through both prevention, and information and support for those who have already been victims. It is very important that the issue is dealt with across Government; it is not an issue just for one Department—not even the Home Office, with its responsibilities for crime or the Department of my hon. Friend the Under-Secretary of State, given her concern for women's issues.
  All colleagues in all Departments need to recognise the relevance of health, education, local government and a variety of Government responsibilities to deal with the matter. We are at the moment looking very carefully at the best way of developing a new interdepartmental campaign of information and publicity to ensure coherence that aids understanding, so that people know how and where to get help.
  I should mention—the hon. Member for Twickenham mentioned the domestic violence help line—that we have recently given the Women's Aid Federation (England) extra funding to enable it to continue to run the domestic violence help line. The federation will have financial difficulties in the coming year, as I was told when I met its representatives earlier in the week, but it is looking for ways to continue to run the operation. Very often, due to the patchwork of provision, people need somewhere nationally to go, if only to ask where they can get help and be given advice.
  We said in opposition that care and concern for victims would be one of our priorities in government. That is absolutely right. There needs to be a switch in the attention that the criminal justice system, as well as the public service, gives to needs of victims. Within weeks of coming to office, my right hon. Friend the Prime Minister kept that promise by announcing an increase of £1 million a year for Victim Support, which will enable it to establish a national telephone help line for victims of crime, and to develop its court-based and local services.
  On 1 October 1997, to help victims further, we brought into force the provisions of part IV of the Family Law Act 1996. That is a very important enactment, which provides
  1392
  strengthened powers of arrest where violence is used or threatened. It also amends the Children Act 1989, so that, when an emergency protection order or an interim care order is made for the protection of children, an exclusion order can be attached, permitting the removal from the home of the suspected abuser, rather than the removal of the child. Those provisions are important.
  Partnership between agencies at a local level is extremely important. I have already referred to the partnership required between local authorities and the police in developing local crime prevention partnerships. We certainly expect the crime audit required under the Crime and Disorder Bill to identify the level of domestic violence in an area. Local partnerships will be required to develop a strategy for addressing it in the wider strategy for crime reduction needed in the area.
  In June, we set up an interdepartmental review to identify ways of improving the situation of all vulnerable witnesses. That includes victims of domestic violence—although it includes a number of others as well. Sometimes people are affected by domestic violence but not in ways that are easily recognised. I am thinking of adults with learning difficulties, disabled people, and people who have speech difficulties or language problems. For that reason, the review is very wide-ranging, and will consider the whole process from the investigation to the trial and beyond. It looks at the role of many of the agencies and professionals involved.
  There are many issues to be addressed. Many, if not all, are relevant to the needs of victims of domestic violence, among the ranks of vulnerable witnesses and defendants. Such people have a right not to be intimidated. Unfortunately, some of the weakest and most vulnerable in our society have found it most difficult to see a fair trial. We expect to receive the working group's report very shortly. We shall certainly want to respond to it as quickly and as positively as possible. It will make a considerable contribution to improving the standard of justice.
  The hon. Member for Twickenham has opened a wide-ranging debate. Indeed, the subject would have justified a debate of hours rather than half an hour. I congratulate him on packing a great deal into his speech, and I hope that I have been able to give some indication of our approach.
  Domestic violence is not an issue to be dismissed as though it were a natural part of a women's personal life. It is not an issue that has been exaggerated by a few extremist campaigners. It is a blot on our society that affects victims physically and emotionally, directly and indirectly, in the short and long term. It wrecks lives. We want it to be recognised for the crime it is, and we are determined that it will be tackled effectively.
  Question put and agreed to.
  Adjourned accordingly at half-past Ten o'clock.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Air Quality
  Mr. Ainger
  To ask the Secretary of State for the Environment, Transport and the Regions what is his assessment of the improvement in air quality in relation to(a) benzene, (b) oxides of sulphur, (c) lead, (d) PM10, (e) volatile organic compounds, (f) oxides of nitrogen and (g) ozone which will be achieved by the specifications for fuel quality and emissions (i) contained in the common position agreed by the Council of Ministers on the proposed Auto-Oil Directive and (ii) proposed by the European Parliament to the proposed Auto-Oil Directive. [33933]

  Mr. Meacher
  [holding answer 12 March 1998]: Explanatory Memoranda 9856/96, 8827/97 and 8939/97 explain that the standards agreed in the common positions on the Auto-Oil fuels and cars directives will deliver very significant reductions in road transport emissions. They will make an important contribution to improving air quality and to achieving and maintaining our National Air Quality Strategy objectives, especially in urban areas. The European Parliament's proposals for more stringent standards would make a further contribution to improving air quality, not least by facilitating the uptake of cleaner vehicle technologies. The extent of the further reductions has not yet been evaluated.

  The table gives a snapshot of the estimated emission reductions in the UK which would result from the Auto-Oil fuels and cars common positions. The benefits will continue to grow beyond 2010 as cars achieving these emissions standards represent a greater proportion of the vehicle fleet. These reductions are in addition to those which are already forecast as a result of existing emissions standards and other measures, which are shown as a "base case" figure. They take into account expected traffic growth, as predicted in the 1997 National Road Traffic Forecasts.

  Estimated emissions reductions (thousands of tonnes)

  Pollutant

  NOx

  VOCs

  CO

  PM10

  Base case emission levels in 2005

  222

  170

  1,625

  12.4

  Emission levels in 2005 with implementation of 2000 standards

  201

  155

  1,430

  11.2

  Percentage change

  9

  9

  12

  10

  Base case emission levels in 2010

  183

  135

  1,530

  14

  Emission levels in 2010 with implementation of 2000 and indicative 2005 standards

  125

  99

  930

  9.4

  Percentage change

  32

  27

  39

  33

  Note:

  All emissions units in thousands of tonnes and rounded (except for PM10).

  Freehold Purchase
  Mrs. Lait
  To ask the Secretary of State for the Environment, Transport and the Regions how many cases of freehold purchase are being currently pursued under the Landlord and Tenant Act 1987 in the Leasehold Valuation Tribunals and in the Lands Tribunal. [34740]

  Ms Armstrong
  As at 30 November 1997 there were 858 outstanding cases at leasehold valuation tribunals relating to the purchase of freeholds of leasehold houses and flats. This total includes 39 cases where the original landlord had failed to comply with the right of first refusal provisions of the Landlord and Tenant Act 1987 and the tenants were acquiring the freehold from the subsequent purchaser.

  As at 16 March 1998 there were 48 outstanding appeals against decisions of leasehold valuation tribunals at the Lands Tribunal.' Information as to the subject matter of these appeals is not available.

  Local Government Pensions
  Mr. Harvey
  To ask the Secretary of State for the Environment, Transport and the Regions how many of those in the local government pension scheme retired before 5 April 1978 by local authority; how many contributed to provision for a widow's pension; and how many of these widow's pensions are being taken. [35062]

  Ms Armstrong
  The information requested is not held centrally. Individual pension fund authorities may be able to provide it.

  Core Policy and Administration Group
  Mr. Swinney
  To ask the Secretary of State for the Environment, Transport and the Regions what are(a) the number of staff employed in (b) the salary bill for and (c) the administration costs of his Core Policy and Administration Group. [34779]

  Angela Eagle
  At 1 January 1998, the number of staff in the Headquarters element of my Department is £3,586 and the 1997–98 forecast outturn for the salary and other running costs is £211,644,000.

  Common Land
  Mr. Walter
  To ask the Secretary of State for the Environment, Transport and the Regions what is the total area of common land in England; and what is the total area of common land over which the public has rights of access by(a) statute and (b) individual access agreements. [34605]

  Angela Eagle
  The total area of common land in England is approximately 370,000 hectares. Members of the public have statutory access rights to about 20 per cent. of this land. We do not have details of the area of common land subject to individual access agreements.

  Mr. Walter
  To ask the Secretary of State for the Environment, Transport and the Regions what is the total area of each national park and within those national parks the total area of(a) common land and (b) common land covered by agri-environmental schemes. [34606]
  609
  Angela Eagle
  The total area of each National Park, the total area of common land and the total area of common land covered by agri-environmental schemes in each Park is set out in the table.

  Square kilometres

  National Park

  Total area

  Total area of common land

  Total area of common land covered by agri-environmental schemes

  Exmoor

  693

  46.3

  46.1

  Dartmoor

  953

  349.7

  349.7

  Lake District

  2,292

  620

  618

  Northumberland

  1,050

  0

  0

  North York Moors

  1,436

  233.8

  222.1

  Peak District

  1,438

  15.3

  13.2

  Yorkshire Dales

  1,769

  468.1

  102.2

CULTURE, MEDIA AND SPORT

  Works of Art
  Mr. Baker
  To ask the Secretary of State for Culture, Media and Sport if he will estimate the total value of works of art held by the Government. [34516]

  Mr. Chris Smith
  [holding answer 13 March 1998]: No complete valuation exists of works of art held by the Government. Monetary values for works of art are generally assessed for the purposes of purchase, sale or insurance. This does not apply to the Government, because, in general, works of art held by the Government are neither traded nor insured.

  Mr. Baker
  To ask the Secretary of State for Culture, Media and Sport how much has been spent by the Government since 1 May 1997 on acquiring works of art; and how much has been realised from the sale of works of art. [34468]

  Mr. Chris Smith
  [holding answer 13 March 1998]: Since 1 May 1997 the Government Art Collection has spent £98,041 on purchases of works of art. No works of art have been sold from the Government Art Collection. The Foreign Office has spent approximately £20,000 on purchases.

  We have not been notified of any other purchases or sales by other Government departments.

  Government Funding
  Mr. Spring
  To ask the Secretary of State for Culture, Media and Sport what recent representations he has received from organisations concerned with(a) sport, (b) tourism, (c) the arts, (d) museums and galleries, (e) libraries, (f) royal palaces and parks, (g) the built heritage and (h) film requesting increases in Government funding. [34731]

  Mr. Chris Smith
  [holding answer 16 March 1998]: I am in regular contact with, and receive a great many representations from, all parts of my Department's sectors. A number of them touch on the issue of funding.

  National Lottery
  Mr. Gibb
  To ask the Secretary of State for Culture, Media and Sport if he will list those Government initiatives which(a) have been and (b) have been proposed to be funded by the National Lottery. [34962]

  Mr. Chris Smith
  [holding answer 17 March 1998]: I refer the hon. Member to the reply my hon. Friend the Minister for Sport gave on 9 March 1998, Official Report, column 23. My hon. Friend made clear that Lottery money will not fund Government spending programmes. The initiatives to be funded under the new good cause proposed in the National Lottery Bill will be determined by Order subject to the affirmative resolution procedure in both Houses of Parliament. Subject to the approval of Parliament, the first three initiatives will support healthy living centres; out of school hours activities, including childcare; and the provision of information and communications technology training for serving teachers and librarians. These initiatives were widely welcomed and supported in the responses to the White Paper, "The People's Lottery" (CM3709).

  Public Bodies
  Mr. Burns
  To ask the Secretary of State for Culture, Media and Sport if he will publish a list of non-departmental public bodies(a) he has abolished since 1 May 1997 and (b) he has established since 1 May 1997; and what are the planned annual running costs of those that have been established since 1 May 1997. [34827]

  Mr. Tom Clarke
  [holding answer 17 March 1998]: The information is as follows:

  a. NDPBs abolished since 1 May 1997

  Treasure Trove Reviewing Committee1

  b. NDPBs established since 1 May 1997

  Treasure Valuation Committee1

  Annual running costs—1997–98 £1,049; 1998–99 £4,550

  Football Taskforce2 £100,000—This is the total amount that has been allocated to the Taskforce. It is not possible to split the total between running costs and non-running costs ie research.

  1The Treasure Trove Reviewing Committee was reconstituted as the Treasure Valuation Committee in September 1997 as a result of the Treasure Act 1996.

  2The Football Taskforce has been set up with a specific remit with funds provided by the Department (£50,000) and the English Sports Council (£50,000).

FOREIGN AND COMMONWEALTH AFFAIRS

  British Council
  Mr. Howard
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future of the British Council. [34619]

  Mr. Fatchett
  As the United Kingdom's principal agency for cultural relations overseas, the British Council will continue to contribute to the achievement of the Government's foreign policy objectives including the enhancement of the United Kingdom's influence and prestige overseas, the spread of good government and the promotion of exports in the cultural and education and training fields.

  European Communities
  Mr. Swayne
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the extent to which article K7, if incorporated into United Kingdom law, would be binding on future parliaments. [34795]

  Mr. Doug Henderson
  The European Communities (Amendment) Bill will not incorporate Article K7 into UK law.

  There is no question of Article K7 binding future Parliaments.

  Tibet
  Ann Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has sought and obtained from the Chinese Government about the fate of the Panchen Lama. [35044]

  Mr. Fatchett
  Concerns for the whereabouts and welfare of Gedhun Choekyi Nyima, the Dalai Lama's choice of Panchen Lama, have been raised at successive rounds of EU/China human rights talks, and by my right hon. Friend the Foreign Secretary when he visited China in January. The Chinese Government have replied that the child is living with his family and going to school.

LORD CHANCELLOR'S DEPARTMENT

  Lord Chancellor's Residence
  Ms Roseanna Cunningham
  To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 9 March 1998,Official Report, column 22, if he will list those societies and groups which have made written requests to visit the Lord Chancellor's official residence; if he proposes to accommodate these requests; what his policy is in respect of future requests; and if he will make a statement. [35031]

  Mr. Hoon
  Since 6 March, the number of requests to visit the Residence has grown. By 13 March 1998, 58 letters have been received. The Groups and Societies which have made written requests to visit the Residence are as follows:

  Barbican Tuesday Club

  Clapham Common Architectural Society

  Evesham Art Society

  Faculty of Pharmaceutical Medicine of the Royal Colleges of
  Physicians of the United Kingdom

  Friends of Dulwich Picture Gallery

  Friends of the Whitworth Gallery, Manchester

  Hadlow Women's Institute

  Heart of England Heritage

  Kensington and Chelsea National Trust Association

  London Appreciation Society

  National Trust for Scotland

  Sheffield 41 Club

  South West London Decorative and Fine Arts Society

  612

  Staines Ladies

  University of the Third Age in Cambridge

  Unnamed art group

  Unnamed group of senior citizens

  Unnamed theatre group.

  All letters requesting visits to the Residence are acknowledged, and when the final arrangements for opening the Residence are made, information on these arrangements will be sent to all who write on the subject to the Lord Chancellor or his officials. They will then be able to arrange visits to the Residence.

  Legal Aid
  Mr. Willis
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the amount of legal aid recovered as a percentage of the amount paid out during each of the last three years where(a) non-franchised firms of solicitors were acting for the assisted persons and (b) franchised firms of. solicitors were acting for the assisted persons. [34135]

  Mr. Hoon
  The information requested is not readily available and could be obtained only at disproportionate cost. Legal Aid Board records show only those solicitors' offices which hold a franchise and do not specify whether the franchise was in force when the work carried out on a closed case was undertaken. To answer the question would require the checking of individual case payment records across England and Wales.

  Mr. Willis
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the amount of legal aid recovered by the Legal Aid Board from successful injury claimants during each of the last three full years. [34134]

  Mr. Hoon
  The amount of legal aid recovered by the Legal Aid Board from successful personal injury claimants, in respect of cases closed during each of the last three full financial years for which records are available, was as follows:

  Year

  £ million

  1994–95

  145.64

  1995–96

  184.36

  1996–97

  212.36

  Mr. Willis
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the total amount of legal aid paid to assisted persons for personal injury work during each of the last three full years for which records are available. [34132]

  Mr. Hoon
  The total gross amount of legal aid paid to lawyers representing assisted persons in personal injury work (including medical negligence), in respect of cases closed during the last three full financial years for which information is available, was as follows:

  Year

  £ million (gross)

  1994–95

  190.08

  1995–96

  239.57

  1996–97

  274.18

HEALTH

  Primary Care Trusts
  Mr. Kenneth Clarke
  To ask the Secretary of State for Health what management resources he is planning to make available to the development of the primary care trusts; and what estimate he has made of the costs of management that will be needed to(a) develop and (b) service these at each stage. [34231]

  Mr. Milburn
  Primary care trusts will be funded from within the overall health authority/primary care group management cost envelope. Where a primary care trust merges with a community National Health Service trust the management cost envelope will be further adjusted.

  Physiotherapy
  Mr. Nicholls
  To ask the Secretary of State for Health if he will state(a) the turnover among physiotherapists in the National Health Service and (b) the vacancy rates for such physiotherapists. [34545]

  Mr. Milburn
  The information requested is not collected centrally. For the information that is available on turnover and vacancies for physiotherapists in the National Health Service I refer the hon. Member to the reports of the Review Body for Nursing staff, Midwives, Health Visitors and Professions Allied to Medicines, copies of which are in the Library.

  Mr. Nicholls
  To ask the Secretary of State for Health what are the present waiting lists for those waiting for treatment within the NHS from physiotherapists. [34544]

  Mr. Milburn
  The information requested is not available centrally.

  Millennium Compliance
  Mr. David Atkinson
  To ask the Secretary of State for Health by what means his Department is monitoring the millennium compliance of the computer systems involved in the provision of care services by health authorities and trusts; and if he will make a statement on progress. [34806]

  Mr. Milburn
  The National Health Service Executive, through its regional offices, is closely monitoring the progress of health authorities and trusts on their millennium compliance work. An executive letter, EL(97)59 issued in October 1997 to all chief executives, set deadlines for completing stages of the compliance work against which performance is monitored.

  Year 2000 projects are now fully underway in all NHS organisations and it is anticipated that all will complete detailed project plans, inventories of systems and resource plans by the second deadline of 31 March 1998.

  Mr. David Atkinson
  To ask the Secretary of State for Health what discussions he(a) has held and (b) plans to hold with the private health sector on the need for computer systems to be millennium compliant. [34805]

  Mr. Milburn
  Discussions on the millennium issue have been ongoing since November 1997 with one of the largest companies in the private health sector. It is hoped that these discussions will be broadened to include all major health sector companies in the near future.
  614
  It is our policy to collaborate fully on the millennium problem with all organisations, both in the private and public sectors, where interests overlap and mutual benefit can be obtained.

  Juveniles (Secure Accommodation)
  Mr. Clappison
  To ask the Secretary of State for Health, pursuant to his answer of 11 March 1998,Official Report, column 203, where the six new places in local authority secure accommodation planned for since 1 May 1997 will be provided; and how many places have been planned for since 1 May which will become available after the end of 1998. [34867]

  Mr. Boateng
  The six places comprise 2 at Dyson Hall (Liverpool) and 4 at Thornbury House (Oxfordshire).

  We have instituted a review of the whole range of secure accommodation for young people held on remand, including the local authority secure estate. The review is examining how to make better use of the existing and planned accommodation to ensure that provision is more consistent and coherent, and that regimes tackle criminality and meet the educational and other needs of these young people. We will be considering the outcome of the review, which is due to report shortly, when planning the implementation of these proposals. The review will help inform whether there should be a further expansion of the secure estate.

  Dr. Cable
  To ask the Secretary of State for the Home Department what are the current criteria for admittance to a local authority secure unit; and what plans he has to change these. [34802]

  Mr. Boateng
  I have been asked to reply. Local authority secure accommodation is provided for young people generally between the ages of 10 and 18 who are likely to cause serious injury to themselves or others if placed in other forms of accommodation. Section 25 of The Children Act 1989 sets out the criteria which must be met before a child being looked after by a local authority can be placed, and if placed, kept in secure accommodation. We have no plans at present to change these criteria. Additionally, children sentenced under Section 53 of The Children and Young Persons Act 1933 may be kept in secure accommodation where my right hon. Friend, the Home Secretary considers that to be the most appropriate placement.

  Factor VIII
  Mr. Hinchliffe
  To ask the Secretary of State for Health what time scale he has given for health authorities to provide all under 16 year olds and new patients requiring the synthetic version of blood product Factor VIII with this treatment; and what advice he has given to those authorities which previously restricted its availability because of budgetary constraints. [34957]

  Mr. Boateng
  Health Service Circular HSC 033 requests chief executives of health authorities and trusts to take the necessary steps to ensure that new patients and patients under the age of 16 have access to recombinant Factor VIII as soon as supplies allow after 1 April this year, if their clinicians recommend this treatment.
  615
  The circular acknowledges that many health authorities have previously decided not to fund this treatment on the basis of the clinical evidence of effectiveness and safety relative to cost. It makes clear that extra funding will be provided in 1998–99 to cover new patients and children under 16 who were not already receiving recombinant Factor VIII prior to 26 February, and who were not covered by current contracting arrangements.

  Copies of the circular are available in the Library.

  Leagues of Hospital Friends
  Mr. Walter
  To ask the Secretary of State for Health what was the total capital expenditure by leagues of hospital friends on capital projects for the National Health Service in financial years(a) 1995, (b) 1996 and (c) 1997; and for each year what was the value added tax paid for those projects by (i) the NHS Executive, (ii) NHS Trusts and (iii) the leagues of friends. [34838]

  Mr. Milburn
  Information about donations to the National Health Service is recorded in NHS trusts annual accounts. The amounts donated by the leagues of hospital friends is not, however, separately disclosed.

INTERNATIONAL DEVELOPMENT

  Development Assistance
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development how much her Department will spend on bilateral development assistance programmes through UK NGOs for development and relief activities in(a) 1997–98 and (b) 1998–99. [34972]

  Clare Short
  Information on spending through UK NGOs for development and relief activities funded by the Department for International Development's (DFID) bilateral development assistance programmes is not held centrally in the format requested. A full answer to the question could be provided only at disproportionate cost.

  Emergency Assistance
  Sir Alastair Goodlad
  To ask the Secretary of State for international Development how much her Department expects to spend on bilateral emergency assistance in(a) 1997–98 and (b) 1998–99 and in respect of how many countries this expenditure will be incurred. [34976]

  Clare Short
  In 1997–98 we estimate that expenditure on bilateral emergency aid will be around £65 million. Over 60 countries have received assistance. Provision for 1998–99 is currently being considered within the Department's resource allocation round.

  Details of bilateral emergency aid are published each year in the British Aid Statistics. The next issue, which will include final expenditure figures for 1997–98, is due for publication in December 1998. Copies will be made available to the Libraries of both Houses.

  Sir Alastair Goodlad
  To ask the Secretary of State for International Development how much her Department expects to spend in(a) 1997–98 and (b) 1998–99 through NGOs to alleviate suffering in respect of disaster, refugee and emergency situations. [34971]
  616
  Clare Short
  In 1997–98 we estimate that expenditure on bilateral emergency aid will be around £65 million. Although we are unable to say currently how much of that will be spent through particular channels, over the previous three years around a fifth of bilateral emergency aid has been channelled through NGOs. Provision for 1998–99 is currently being considered within the Department's resource allocation round.

  Volunteer Sending Agencies
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development what sums her Department will provide in(a) 1997–98 and (b) 1998–99 to volunteer sending agencies; how many will receive funding in each year; and in how many countries. [34973]

  Clare Short
  Final figures for 1997/98 are not yet available.

  My Department estimates that £23.844 million will be provided to the 4 main UK volunteer sending agencies [Voluntary Services Overseas (VSO), International Corporation for Development (ICD) and United Nations Association for International Service (UNAIS) and Skillshare Africa] in 1997/98. This will help fund the work of approximately 2,080 volunteers in around 60 countries.

  Future years allocations are being considered within the Department's Resource allocation round.

  Kosovo
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development what discussions she has had with the UN concerning assistance to the people of Kosovo. [34858]

  Clare Short
  To date, I have not held any discussion with the UN on this issue.

  Sir Alastair Goodlad
  To ask the Secretary of State for International Development when she will next meet her EU counterparts to discuss assistance for Kosovo; and if she will publish the agenda of the meeting. [34852]

  Clare Short
  I shall next be meeting EU counterparts at the Development Council in Brussels on 18 May. At present, assistance to Kosovo is not on the agenda.

  The European Community Humanitarian Office (ECHO) are continuing to monitor the situation in Kosovo and have already decided on a small increase to Kosovo under their global plan for 1998 agreed on 5 March.

  Sir Alastair Goodlad
  To ask the Secretary of State for International Development what steps her Department has taken to assess the aid needs of Kosovo. [34854]

  Clare Short
  Officials of my department are meeting representatives of NGOs active in Kosovo on 19 March to receive an update of their recent activities and to exchange assessments of the current situation and needs.

  Our current assessment is that although the situation is extremely serious, it does not constitute an humanitarian crisis.

  We will continue to monitor the situation carefully.
  617
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development when she plans to meet officials from the OSCE to discuss the assistance needs of Kosovo. [34853]

  Clare Short
  At present, I have no plans to meet Organisation for Security and Co-operation in Europe (OSCE) officials.

  Wildlife Conservation
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development how much her Department expects to spend in(a) 1997–98 and (b) 1998–99 on projects relating to the conservation and management of wildlife; and in respect of how many countries this expenditure will be incurred. [34975]

  Clare Short
  Information can be provided in terms of our expected expenditure in 1997–98 for biodiversity as a total, but no separate figures are available for conservation and management of wildlife. I regret that figures are also not available on the number of countries in which this expenditure will be incurred.

  Uganda
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development what steps her Department is taking to support multi-party democracy in Uganda. [34893]

  Clare Short
  My Department is continuing to work closely with the Foreign and Commonwealth Office to ensure that the Government of Uganda are aware of the importance Her Majesty's Government place on multipartyists being given an adequate opportunity to present their case in the run up to the 2000 Referendum.

  In Uganda itself we are funding a £250,000 civic and votes education project to improve Ugandans' awareness of their democratic rights and responsibilities, and to strengthen the capacity of the Ugandan Electoral Commission.

  Joint Funding Schemes
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development how much she estimates her Department will spend in(a) 1997–98 and (b) 1998–99 on joint funding schemes; how many development projects will be financed through these schemes; and how many United Kingdom NGOs will be involved. [34974]

  Clare Short
  My Department estimates that £36.156 million will be spent on development projects through the Joint Funding Scheme in 1997–98. This will involve approximately 1,780 projects managed by around 128 UK NGOs.

  Future years allocations are being considered within the Department's Resource allocation round.

  Macedonia
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development if she will make a statement on the future of the United Kingdom's aid programme to Macedonia. [34856]
  618
  Clare Short
  The United Kingdom has spent almost £4 million in Macedonia since 1993–94 when assistance was first provided through the Know How Fund. We expect to spend around £600,000 in 1997–98 and will expand the programme significantly in 1998–99.

  Following discussions with other donors and local partners we will focus on the priority sectors of Small and Medium Enterprise Development, Good Government (initially focusing on media and police training) and the Financial Sector.

  The main project planned for the next two to three financial years will be to develop three regional small and medium enterprise development centres in Western and Southern Macedonia; two of the three are planned for the ethnic majority Albanian towns of Tetevo and Gostivar.

  Albania
  Sir Alastair Goodlad
  To ask the Secretary of State for International Development if she will make a statement on the United Kingdom's aid programme for Albania. [34855]

  Clare Short
  The United Kingdom's bilateral developmental assistance to Albania has totalled over £5,700,000 since 1992/93. This sum includes bilateral emergency aid, but most of this funding has been disbursed through the Know How Fund in the form of technical assistance.

  In 1996/97 the Know How Fund spent some £937,000 in assistance to support Rural Development, Good Government/Public Administration and the Health and Financial Sectors.

  The disturbances in the first half of 1997 disrupted Know How Fund activity severely and the programme effectively restarted only in the autumn of last year. We expect to have spent around £400,000 in 1997/98.

  More funds will be made available in 1998/99 with the focus continuing to be Health, Rural Development, Good Government and the Financial sector (with a particular emphasis on strengthening regulatory frameworks).

  Economic and political transformation in Albania will take some time. We aim to support the reformist Government of Prime Minister Fatos Nano, as well as private organisations and NGOs, with carefully targeted support in key areas which will benefit the widest range of individuals and groups.

  Over £292,000 of bilateral emergency aid to Albania in 1997/98 was in support of organisations providing relief following civil unrest. This was primarily disbursed through the International Committee of the Red Cross and non-governmental organisations.

  We also remain in close contact with other multilateral donors to which we contribute, such as the World Bank and the European Union Phare programme, to influence, monitor and co-ordinate activities. Through our membership of the EU we contribute approximately 15 per cent. of the Phare programme in Albania.

SCOTLAND

  Student Grants
  Mr. Moore
  To ask the Secretary of State for Scotland how many Scottish students at Scottish universities did not receive payment of grants awarded to them by the SAAS within(a) one week, (b) two weeks, (c) four weeks and (d) eight weeks of their course commencing; and for each figure, what percentage of Scottish students at Scottish universities this represents. [26055]

  Mr. Wilson
  The table shows, in relation to Scottish students1, the numbers of applications not processed' within the time parameters specified and the percentages of students this represents. It is important to recognise that these figures take no account of when individual applications were actually received by the Agency. The figures therefore do not indicate how long the Agency took to process applications, nor do they provide an accurate measure of the number and proportion of applications which were not processed within the Agency's target time.

  Weeks after the start of courses

  Number of applications from Scottish students not processed

  Percentage of Scottish students

  1

  25,114

  34.8

  2

  22,810

  31.6

  4

  17,637

  24.5

  8

  8,545

  11.9

  1For the purposes of this answer, Scottish students are defined as Scottish domiciled students in receipt of an award at a Scottish university.

  2The information relates to the date of processing, rather than date of receipt of the payment, because the former is known while the latter can vary. (Students who did not receive their payments at the start of the academic year would receive their payment 3 to 4 days after processing).

  Land Information Register (Highland)
  Ms Roseanna Cunningham
  To ask the Secretary of State for Scotland what discussions he has had with Highland Council regarding their cost estimates for the establishment of a land information register in their region; and if he will make a statement. [34123]

  Mr. McLeish
  The Government have had no specific discussions with Highland Council regarding the establishment of a land information register in its region, though we are aware of this initiative.

  The Land Register of Scotland operated by the Registers of Scotland Executive Agency is a modern map-based register of title, which gives details of ownership of properties which have been sold after individual counties become operational in the Register. It will be extended to all the counties of Scotland by 2003. In those areas for which Highland Council is the responsible authority, there already exists substantial ownership and other information available to the public in the Register of Sasines which is the national register of deeds and has recorded property transactions in Scotland since 1617.

  Pre-school Year Children
  Mr. Sarwar
  To ask the Secretary of State for Scotland what forecast his Department has made of the number of pre-school children in each of the next five years. [34019]

  Mr. Wilson
  Estimated numbers of pre-school year children in each of the next five years are given in the table. These estimates are based on the Registrar General's latest (1996) mid-year population estimates and the 1996-based projected number of births produced by the Government Actuary's Department. These have been adjusted to show ages as at 28 February. No account has been taken of future deaths or migration, or of children whose entry into the pre-school session or primary one may be deferred.

  Pre-school session

  Number of pre-school year children1

  1998–1999

  61,371

  1999–2000

  59,303

  2000–2001

  59,559

  2001–2002

  58,283

  2002–2003

  58,107

  1The figures for 1998–99 and 1999–2000 are based on the 1996 mid-year population estimates adjusted to show ages as at 28 February 1996. Figures for the remaining years are based on the 1996-based projected number of births and adjusted to 28 February. These adjustments are calculated by subtracting one third of the mid-year population at a specific age and adding in its place one third of the mid-year population one year older.

  Primary Schools
  Mr. Sarwar
  To ask the Secretary of State for Scotland how much was spent per pupil at primary schools in Scotland in real terms in(a) 1979, (b) 1989 and (c) the most recent year for which figures are available. [34020]

  Mr. Wilson
  The information is given in the table. 1995–96 is the latest financial year for which information is currently available. The figures, which are derived from local authority financial returns, do not include the cost of home to school transport, school meals, education authority central administration costs and loan charges.

  £

  Year

  Amount

  1979–80

  1,203

  1989–90

  1,780

  1995–96

  1,866

  Note:

  Expenditure per primary school pupil, adjusted to 1995–96 prices using the GDP deflator

  Drug-related Crime
  Mr. Sarwar
  To ask the Secretary of State for Scotland what studies his Department has commissioned to ascertain what amount of crime is drug-related in Scotland. [34017]

  Mr. McLeish
  The Scottish Office commissioned research on "Heroin Use and Crime" by the Addictions Research Group of the University of Strathclyde, which was published in 1990. We are currently funding a collaborative study, which is being carried out at Ruchill Hospital, to assess whether methadone prescribing in Glasgow is associated with changes in drug injecting,
  621
  crime, health and social functioning. The relationship between crime and substance misuse remains a priority area for future research.

  Electoral Arrangements
  Mr. Home Robertson
  To ask the Secretary of State for Scotland if he will list those wards proposed under the Third Statutory Review of Electoral Arrangements which include electors in more than one parliamentary constituency; and if he will make a statement on the need for special arrangements to be adopted by returning officers to deal with elections at the same polling station on the same day. [34234]

  Mr. McLeish
  The third Statutory Review of Electoral Arrangements is not yet complete. The information requested is not held centrally; however, inquiries are currently being made to see if this information can be obtained for those reports already submitted and 1 will write to my hon. Friend. Where local government and Parliamentary elections are held on the same day, returning officers will need to ensure that sufficient equipment and staff are provided for polling stations within the polling places designated by local authorities. Returning officers are entitled to recover any such costs under Section 15(4) of the Representation of the People Act 1985.

  Police Expenditure
  Mr. Allan
  To ask the Secretary of State for Scotland how much money was spent on (i) capital projects, (ii) training, and (iii) pension provision(a) by each police force and (b) in total, in each of the last three years; and what is the amount allocated for each of the forthcoming years for which plans have been made. [34704]

  Mr. McLeish
  The information on capital and pensions expenditure for the last three years is set out in the tables. Expenditure figures for training by forces are not held centrally.

  £000

  1994–95

  1995–96

  1996–97

  Police capital expenditure

  Central

  1,883

  1,446

  1,514

  Dumfries and Galloway

  519

  1,069

  2,543

  Fife

  5,681

  4,969

  1,240

  Grampian

  2,495

  4,127

  2,756

  Lothian and Borders

  3,489

  2,914

  3,001

  Northern

  1,775

  1,429

  2,027

  Strathclyde

  7,880

  9,801

  12,708

  Tayside

  1,414

  1,507

  2,009

  Total

  25,136

  27,262

  27,798

  Net expenditure on police pensions

  Central

  1,450

  2,437

  2,722

  Dumfries and Galloway

  1,470

  1,535

  1,535

  Fife

  2,897

  3,080

  4,574

  Grampian

  3,160

  5,811

  6,863

  Lothian and Borders

  10,010

  12,384

  14,683

  Northern

  2,725

  2,749

  3,404

  Strathclyde

  28,338

  37,178

  43,227

  Tayside

  4,806

  6,267

  6,917

  Total

  54,856

  71,441

  83,925

  622
  Capital allocations for 1997–98 and 1998–99 are set out in the table. No plans have been made yet for future years pending the outcome of the Comprehensive Spending Review.

  £000

  1997–98

  1998–99

  Police capital allocations

  Central

  1,173

  693

  Dumfries and Galloway

  867

  1,023

  Fife

  1,347

  1,128

  Grampian

  1,738

  994

  Lothian and Borders

  2,317

  2,044

  Northern

  2,800

  6,750

  Strathclyde

  10,098

  6,250

  Tayside

  1,870

  1,337

  Total

  22,210

  20,219

  The Secretary of State does not allocate expenditure for training or pension provision. Within the budget set by each police authority, expenditure on training will be decided by the chief constable and pension provision will be dependent on the number of police officers who retire each year.

  Sex Discrimination
  Mrs. Fyfe
  To ask the Secretary of State for Scotland (1) if he will place in the Library a copy of the external legal advice, based on two opinions by Patrick Elias QC, on the subject of the Jepson case and proposals to amend sex discrimination legislation; [34878]

  (2) what external legal advice he has sought from persons with relevant expertise in Scotland on sex discrimination in relation to the Scotland Bill; and if he will list the persons consulted and make a statement on the advice received. [34880]

  Mr. McLeish
  [holding answer 17 March 1998]: The Government do not ordinarily disclose the terms of legal advice and do not consider that it is appropriate to disclose any specific legal advice received in relation to the matters referred to in the question.

  Boundary Commission
  Mr. Ernie Ross
  To ask the Secretary of for Scotland if he Will list the member of the Boundary Commission for Scotland. [35530]

  Mr. Dewar
  I have reappointed Dr Charles M Glennic CBE and Professor Urlan A Wannop to the Boundary Commisson for Scotland from 1 January 1998 to 31 Deacember 1998.

  The other members of the Commission are:
  Madam Speakar—ex officio Chairman;
  The Hon Lady Cosgrove appointed as Deputy Chariman by the Lord President of the Court of session from 1 January 1997 to 31 December 1999.

  Agricultural Science Agency
  Mr. Ernie Ross
  To ask the Secretary of State for Scotland When the revised Framework Document for the Scottish Agricultural Science Agency Will be published. [35531]
  623
  Mr. Macdonald
  The revised Framework Document has been published today and a copy has been placed in the Library.

EDUCATION AND EMPLOYMENT

  Buildings Refurbishment
  Mr. Malcolm Bruce
  To ask the Secretary of State for Education and Employment 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. [26686]

  Dr. Howells
  [holding answer 5 February 1998]: The estimates detailed in the following table are for DfEE HO buildings only.

  Year

  £

  (a) 1995–96

  4,271,081

  (b) 1996–97

  4,195,382

  (c) 1997–98 to date

  2,255,263

  (d) 1997–98 full year

  2,507,281

  All of the refurbishment work was part of the Department's long-term plan to ensure the operational efficiency of the offices concerned.

  Empty Properties
  Mr. Malcolm Bruce
  To ask the Secretary of State for Education and Employment 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. [26684]

  Dr. Howells
  [holding answer 5 February 1998]: The following is a breakdown of costs and values:

  £

  Financial year

  Property owner

  (a) Costs

  (b) Values

  1995–96

  DfEE HO

  2,834,468

  7,935,850

  Employment Service

  8,600,000

  4,100,000

  Other Public Bodies

  444,000

  272,000

  Total

  11,878,468

  12,307,850

  1996–97

  DfEE HO

  2,811,928

  3,135,850

  Employment Service

  7,900,000

  3,600,000

  Other Public Bodies

  445,000

  847,000

  Total

  11,156,928

  7,582,850

  1997–98 to date

  DfEE HO

  see full year

  see full year

  Employment Service

  see full year

  see full year

  Other Public Bodies

  203,000

  see full year

  Total

  203,000

  see full year

  1997–98 full year

  DfEE HO

  2,312,576

  1,700,000

  Employment Service

  6,100,000

  4,800,000

  Other Public Bodies

  418,963

  430,000

  Total

  8,831,539

  6,930,000

  New Deal
  Mr. Willetts
  To ask the Secretary of State for Education and Employment if he will provide a breakdown of patterns of expenditure in 1998–99 on(a) young and (b) long-term unemployed participants in the New Deal by travel to work area or other suitable locality. [29689]

  Mr. Andrew Smith
  I have placed in the Library a list of the client volume planning assumptions for each New Deal unit of delivery which the Employment Service is using to plan provision for young unemployed people aged 18–24. However, actual take-up of each element of the New Deal for 18–24 year olds will be determined by the needs of individual clients, and it is not therefore possible to predict what the precise pattern of expenditure will be. Similarly, actual take-up of particular elements of provision will determine expenditure within the New Deal for long-term unemployed people aged 25 or over.

  Mr. McCabe
  To ask the Secretary of State for Education and Employment how much of the windfall tax proceeds devoted to the New Deal will be used(a) to employ staff in the Employment Service, (b) to purchase computers or furniture for the Employment Service, (c) for advertising; (d) for employment of staff or purchase of furniture or equipment by TECs, (e) for pay in respect of New Deal participants and (f) for employment subsidies. [32789]

  Mr. Andrew Smith
  The windfall tax proceeds devoted to the New Deal programmes for unemployed people aged 18–24 and for long-term unemployed people aged 25 or over will provide help in making the move from benefit into work for the whole of this Parliament. Each programme will offer help to everyone who becomes eligible. Everyone who joins the New Deal for 18–24 year olds will receive help tailored to individual circumstances. Accordingly, total expenditure in each year will be determined by the number of people who actually join the programme and the precise pattern of help they require, and cannot be predicted in advance.

  A large part of the New Deal for 18–24 year olds will be delivered through partnership arrangements rather than by Employment Service (ES) staff. These arrangements are currently being finalised before the programme's national launch in April, and it is therefore not yet possible to determine the overall impact on ES staffing.

  Changes to the ES infrastructure in terms of accommodation, furniture and IT equipment will also depend on local delivery arrangements and their impact in each Jobcentre. Expenditure on each of these items will be known only when these plans are finalised and linked to the numbers of young people actually joining the programme.

  The New Deal programmes have a total marketing budget for the life of this Parliament of up to £24 million.

  As far as advertising is concerned the current programme of marketing to employers is aimed at raising interest to provide unsubsidised vacancies in the Gateway and subsidised places for the Employment Option. There will also need to be further advertising to launch the New Deal for those above 25 years of age as well as continuing to maintain employer involvement after the initial phase of interest. The amount of future advertising—over the

  625
  life of the Parliament—will need to be assessed once we have established how much additional marketing is required to encourage further employer participation or to communicate other key New Deal messages. The TECs in many of the Delivery Units are working alongside the ES as key strategic partners. Where they take responsibility for managing some elements of the programme (such as one or more of the options) then they may need to employ staff and may even require some infrastructure investment. However, while the delivery arrangements are still being negotiated it is not possible to anticipate this impact.

  The fact that the New Deal programme is demand led and largely determined by client choices means that there is no fixed split between expenditure on employment subsidies and New Deal participants. This flexibility which New Deal clients will have is a very important feature of the programme and it means that expenditure on particular elements is difficult to forecast at the outset.

  Part-time Education
  Mr. Willis
  To ask the Secretary of State for Education and Employment (1) what estimate he has made of the cost of extending student loans to part-time students in(a) further and (b) higher education; [32822]

  (2) what plans he has for further assistance for students in part-time education. [32823]

  Dr. Howells
  We agree with the Dearing Committee's recommendation that extending loans to part-time students in higher education should not be a priority. The Department estimates that the costs of extending loans to part-time students in higher education would be of the order of £350 million per year in the short term, depending on take-up. No estimates have been made of the costs of extending student loans to part-time students in further education.

  We do recognise the needs of part-time students and have taken positive steps to ensure that they are not financially disadvantaged. Students in higher education who are unfortunate enough to lose their jobs, through no fault of their own, will be able to have their fees remitted. Eligibility for Access Funds will be extended to part-time students in higher education from 1998–99. In addition, the Department for Education and Employment and the Department of Social Security are reviewing, as the Dearing Committee recommended, the interaction between benefit entitlement and part-time study.

  Physical Education
  Mr. Spring
  To ask the Secretary of State for Education and Employment what recent representations he has received from Her Majesty's Chief Inspector on the state of physical education and sport in schools; and when he expects next to receive a report on this matter. [34737]

  Ms Estelle Morris
  Her Majesty's Chief Inspector of Schools reports annually to my right hon. Friend the Secretary of State on the standards and quality of physical education and other subjects taught in schools. His Annual Report for 1996–97, published on 3 February, also reported on extra-curricular sporting activities.
  626
  Mr. Spring
  To ask the Secretary of State for Education and Employment what recent representations he has received from teacher training institutions on the state of physical education and sport within the Initial Teacher Training Scheme. [34739]

  Ms Estelle Morris
  None.

  School Sports
  Mr. Spring
  To ask the Secretary of State for Education and Employment what steps he has taken to encourage schools to extend sporting opportunities outside school hours. [34220]

  Ms Estelle Morris
  [holding answer 16 March 1998]: The Department works closely with the Department for Culture, Media and Sport and with other agencies to provide a range of sporting opportunities within and beyond the school curriculum. The Government are also keen to encourage out of school hours clubs in schools and in other community premises, including sports clubs. We will shortly publish a national framework for out of school hours learning, which will acknowledge the valuable work already done to motivate young people and help them become more active learners, and suggest ways in which this can be developed. The New Opportunities Fund will administer £200 million of Lottery funding for out of school hours learning, including sporting activities.

  Mr. Spring
  To ask the Secretary of State for Education and Employment what steps he has taken since I May 1997 to encourage greater co-operation between schools and local communities in sports matters. [34207]

  Ms Estelle Morris
  [holding answer 16 March 1998]: Co-operation between schools and their communities is always important, and particularly so where such co-operation leads to the more effective use of resources and the development of school-community links. The Government will shortly publish a national framework for out of school hours learning, which will acknowledge the valuable work already done by schools and youth and community workers, as well as others, to motivate young people and help them become more active learners through a variety of different activities, including sport.

NORTHERN IRELAND

  Schools
  Mr. Trimble
  To ask the Secretary of State for Northern Ireland how many Ministerial visits to schools have taken place since 1 May indicating the number to(a) controlled schools, (b) integrated schools, (c) Catholic maintained schools and (d) voluntary grammar schools. [34416]

  Mr. Worthington
  There. have been 13 Ministerial visits to schools since 1 May:

  (a) controlled schools—8 visits

  (b) integrated schools—2 visits

  (c) Catholic maintained schools—2 visits

  (d) voluntary grammar schools—1 visit.

  Mr. Trimble
  To ask the Secretary of State for Northern Ireland if she will list the amounts paid for the years 1994–95, 1995–96 and 1996–97 to the Council for
  627
  Catholic Maintained Schools under paragraphs (a) 11, (b) 13, (c) 14 and (d) 15 of Schedule 8 of the Education Reform (Northern Ireland) Order 1989. [34415]

  Mr. Worthington
  The information is as follows:

  £

  1994–95

  1995–96

  1996–97

  Paragraph 11

  964,621

  963,233

  1,136,183

  Paragraph 13

  35,542

  32,064

  38,020

  Paragraph 15 recurrent

  1,204,000

  1,257,975

  1,465,000

  Paragraph 15 capital

  54,391

  114,959

  147,927

  No grants are paid under paragraph 14.

  Tuition Fees
  Mr. Welsh
  To ask the Secretary of State for Northern Ireland what estimate she has made of the cost of financing tuition fees for the fourth year of study for Northern Ireland domiciled students studying at Scottish universities; and if she will make a statement. [34125]

  Mr. Worthington
  [holding answer 12 March 1998]: The estimated cost is about £550,000.

  Royal Ulster Constabulary Reserve
  Mr. William Ross
  To ask the Secretary of State for Northern Ireland if she will list for each police division in Northern Ireland the number of (i) full-time and (ii) part-time RUCR officers. [34004]

  Mr. Ingram
  [holding answer 12 March 1998]: The numbers of Full-Time and Part-Time Royal Ulster Constabulary Reserve Officers in each Division as at 10 March 1998 are shown in the table:

  Tally of RUCR FT and RUCR PT by financial division details as at 10 March 1998

  Financial Division

  R Con FT

  R Con PT

  Grand Total

  A

  229

  196

  425

  B

  378

  45

  423

  D

  358

  270

  628

  E

  376

  198

  574

  G

  163

  142

  305

  H

  232

  29

  261

  J

  145

  110

  255

  K

  161

  17

  178

  L

  263

  104

  367

  N

  235

  23

  258

  0

  179

  60

  239

  P

  115

  109

  224

  S (HQ)

  68

  0

  68

  X (MSU)

  68

  0

  68

  Z (TRAINING)

  29

  0

  29

  Grand Total

  2,999

  1,303

  4,302

DEFENCE

  Ministerial Meetings
  Mr. Randall
  To ask the Secretary of State for Defence how many meetings have been requested with his Department's Ministers by(a) Labour and (b) Conservative hon. Members; and how many meetings have been granted in each category. [31293]
  628
  Mr. Spellar
  It is not our normal practice to refuse requests for meetings with hon. Members although on occasions it has been suggested that a meeting would be either untimely or unnecessary, or should be held with a Minister other than the Minister to whom the request had been made.

  In addition to regular meetings with Ministerial colleagues our Departmental records show that Ministers have had meetings with the following numbers of hon. Members from the Labour and Conservative parties.

  Labour hon. Members 29

  Conservative hon. Members 5.

  Employee Travel
  Mr. Baker
  To ask the Secretary of State for Defence if he will estimate the cost of employee travel on office business, broken down into(a) fuel allowances, (b) unproductive time during travel, (c) other costs related to car transport and (d) costs related to public transport, for (i) 1994–95, (ii) 1995–96, (iii) 1996–97 and (iv) 1997–98. [32443]

  Dr. Reid
  [holding answer 3 March 1998]: The information is not held in the form requested and could be obtained only at disproportionate cost. The only figures readily available relate to Motor Mileage Allowances paid to MOD Civilians using their private cars for official business during the financial year 1996–97. These amounted to £8.76 million.

  Millennium Compliance
  Mr. David Atkinson
  To ask the Secretary of State for Defence if he will make a statement on the recent discussions on the millennium compliance of computer systems at the US Department of Defense at which his Department was represented; which other countries were invited or were represented; and what the outcome was. [33380]

  Mr. Spellar
  The US Department of Defense hosted a meeting in Washington on 18 February 1998 to discuss the impact of the Year 2000 problem on interchange of Defence-related electronic information between Allied Nations and on equipment that is in common service with a number of Nations. In addition to the US and UK, Canada and Australia were also represented. It was agreed that a senior level steering group would be set up to review progress on ensuring that interconnections between Allied Nations were Year 2000 compliant, to ensure that Year 2000 modifications made to an equipment by a Nation were notified to other Nations using the same equipment and to consider the inclusion of "Year 2000 tests" within multinational military exercises.

  Gulf Presence
  Mr. Gordon Prentice
  To ask the Secretary of State for Defence what is the latest estimate of the cost of maintaining the British military presence in the Gulf. [34464]

  Mr. George Robertson
  The costs incurred to the end of February amounted to some £3 million. The current estimate of the total additional cost for the preparation,
  629
  deployment and recovery of forces is £12 million, and an additional £0.5 million per month to maintain the forces while in theatre.

  Loan Service Officers
  Mr. Hancock
  To ask the Secretary of State for Defence how many loan service officers are currently stationed in(a) Qatar, (b) Oman, (c) Bahrain, (d) Kuwait and (e) the United Arab Emirates. [34711]

  Dr. Reid
  As at 12 March 1998, the total number of UK loan service personnel stationed in the countries listed was:

  Country

  Total

  Qatar

  0

  Oman

  102

  Bahrain

  1

  Kuwait

  58

  UAE

  11

  Berlin Airlift
  Mr. Nigel Jones
  To ask the Secretary of State for Defence what plans he has to commemorate the fiftieth anniversary of the Berlin Airlift. [34762]

  Dr. Reid
  I am glad to say that the courage of those who took part in the Berlin Airlift, and the success of the operation to sustain the people of Berlin and their freedom, will be celebrated by a series of events in Berlin over the summer.

  RAF bands will play at the traditional wreath laying ceremony and at various concerts. The Queen's Colour Squadron and aircraft from squadrons associated with the airlift will participate in events and ceremonies marking the 50th anniversary of the start of the airlift. The Battle of Britain Memorial Flight Dakota will fly in the colours of a squadron that flew in the airlift.

  Aer Lingus Viscount Crash, 1968
  Mr. Wigley
  To ask the Secretary of State for Defence if he will make a statement on the new evidence he has received concerning the involvement of a second aircraft in the crash of an Aer Lingus Viscount in the Irish Sea on 24 March 1968. [34809]

  Dr. Reid
  [holding answer 17 March 1998]: I have received no new evidence about the involvement of a second aircraft in the crash of the Aer Lingus Viscount in the Irish Sea on 24 March 1968.

  Mr. Wigley
  To ask the Secretary of State for Defence what recent representations he has received, and discussions he has had, concerning the Aer Lingus Viscount crash in the Irish Sea on 24 March 1968; and if he will undertake to discuss the matter with his counterparts in the Irish Government. [34812]

  Dr. Reid
  [holding answer 17 March 1998]: The Ministry of Defence has received a number of questions from the media and a letter from the Celtic League on this subject. I have not received representations from the Irish Government, but would be happy to respond if there were to be any.
  630
  Mr. Wigley
  To ask the Secretary of State for Defence if he will make a statement on the exercises in the Irish Sea on the day of the Aer Lingus Viscount crash in March 1968; if RAF or other aircraft participating in those exercises are recorded as having been lost; and if United Kingdom naval vessels picked up any person, dead or alive, from the Irish Sea on the day of the crash. [34881]

  Dr. Reid
  [holding answer 17 March 1998]: There is no indication of any UK military exercise in the Irish Sea on the day of the crash. No person, dead or alive, was picked up by British naval vessels in the Irish Sea on that day.

HOME DEPARTMENT

  Prisons (Self-Injury)
  Mr. Sutcliffe
  To ask the Secretary of State for the Home Department how many recorded incidents of self-injury there were in each(a) public and (b) private prison in (i) 1995, (ii) 1996 and (iii) 1997. [32102]

  Ms Quin
  [holding answer 2 March 1998]: The numbers of incidents of self harm reported by Prison Service establishments in the relevant years are set out in the table. There are a number of factors that are responsible for the uneven pattern of the figures in the table, across establishments and time.

  Local prisons, owing to their role as reception and allocation centres, tend, in general, to have to deal with more difficult prisoners, including those likely to self harm. Also a single prisoner can generate a large number of self harm incidents in any one year. The table shows that the rise in the number of incidents from 1994–95 to 1995–96 had been partly reversed in the following year.

  Incidents of self harm 1994–95 to 1996–97 in prison service establishments directly managed

  Establishment

  1994–95

  1995–96

  1997–98

  Acklington

  27

  20

  23

  Albany

  7

  4

  11

  Aldington

  0

  0

  0

  Ashwell

  1

  3

  1

  Askham Grange

  0

  5

  4

  Aylesbury

  31

  21

  18

  Bedford

  14

  0

  18

  Belmarsh

  34

  138

  26

  Birmingham

  43

  238

  77

  Blantyre House

  0

  0

  0

  Blundeston

  13

  10

  24

  Brinsford

  237

  301

  157

  Bristol

  11

  53

  19

  Brixton

  24

  53

  19

  Brockhill

  0

  1

  11

  Bullingdon

  0

  49

  43

  Bullwood Hall

  126

  312

  0

  Camp Hill

  19

  15

  11

  Cardiff

  39

  123

  78

  Castington

  24

  12

  4

  Channings Wood

  14

  17

  10

  Chelmsford

  0

  56

  147

  Coldingley

  2

  0

  2

  Cookham Wood

  32

  49

  46

  Dartmoor

  47

  44

  47

  Deerbolt

  170

  109

  114

  Dorchester

  5

  0

  28

  Dover

  15

  8

  9

  Downview

  3

  2

  4

  631

  Incidents of self harm 1994–95 to 1996–97 in prison service establishments directly managed

  Establishment

  1994–95

  1995–96

  1997–98

  Drake Hall

  7

  5

  14

  Durham

  65

  207

  13

  East Sutton Park

  0

  3

  1

  Eastwood Park

  n/a

  61

  176

  Elmley

  0

  49

  243

  Erlestoke

  3

  6

  3

  Everthorpe

  0

  10

  46

  Exeter

  48

  0

  21

  Featherstone

  7

  8

  27

  Feltham

  99

  532

  241

  Ford

  2

  1

  0

  Frankland

  32

  52

  32

  Full Sutton

  21

  46

  33

  Garth

  12

  14

  28

  Gartree

  7

  37

  8

  Grendon

  5

  14

  14

  Glen Parva

  79

  80

  43

  Gloucester

  73

  29

  47

  Guys Marsh

  8

  8

  22

  Haslar

  5

  4

  12

  Hatfield

  3

  0

  4

  Haverigg

  2

  5

  7

  Hewell Grange

  0

  0

  0

  Highdown

  34

  66

  44

  Highpoint

  50

  32

  2

  Hindley

  20

  74

  40

  Hollesley Bay

  18

  61

  19

  Holloway

  386

  192

  135

  Holme House

  42

  82

  154

  Hull

  105

  128

  90

  Huntercombe

  19

  12

  6

  Kingston

  1

  0

  8

  Kirkham

  5

  1

  2

  Kirklevington

  0

  0

  0

  Lancaster

  3

  5

  4

  Lancaster Farms

  66

  67

  33

  Latchmere House

  0

  0

  0

  Leeds

  75

  57

  59

  Leicester

  25

  25

  22

  Lewes

  119

  21

  16

  Leyhill

  0

  0

  1

  Lincoln

  18

  53

  208

  Lindholme

  14

  9

  3

  Littlehey

  47

  11

  38

  Liverpool

  19

  72

  127

  Long Lartin

  8

  22

  36

  Low Newton

  69

  109

  47

  Maidstone

  1

  3

  7

  Manchester

  59

  98

  86

  Moorland

  37

  54

  42

  Morton Hall

  1

  0

  1

  Mount The

  4

  5

  16

  New Hall

  325

  260

  116

  North Sea Camp

  1

  0

  0

  Northallerton

  79

  61

  61

  Norwich

  64

  65

  76

  Nottingham

  13

  7

  2

  Onley

  32

  100

  49

  Parkhurst

  152

  46

  2

  Pentonville

  19

  71

  51

  Portland

  32

  25

  31

  Prescoed

  0

  2

  0

  Preston

  39

  29

  67

  Ranby

  6

  11

  30

  Reading

  51

  41

  70

  Risley

  131

  168

  126

  Rochester

  10

  8

  15

  Rudgate

  0

  0

  0

  Send

  0

  0

  0

  Shepton Mallet

  13

  9

  8

  Shrewsbury

  14

  18

  32

  Springhill

  1

  1

  0

  632

  Incidents of self harm 1994–95 to 1996–97 in prison service establishments directly managed

  Establishment

  1994–95

  1995–96

  1997–98

  Stafford

  76

  44

  35

  Stafford Hill

  0

  2

  0

  Stocken

  8

  12

  9

  Stoke Heath

  50

  61

  50

  Styal

  156

  108

  92

  Sudbury

  0

  1

  1

  Swaleside

  26

  31

  9

  Swansea

  36

  37

  61

  Swinfen Hall

  6

  8

  32

  Thorp Arch

  2

  1

  3

  Thorn Cross

  2

  8

  3

  Usk

  7

  16

  1

  Verne, The

  34

  8

  6

  Wakefield

  38

  18

  24

  Wandsworth

  42

  156

  168

  Wayland

  16

  73

  25

  Wealstun

  n/a

  2

  2

  Wellingborough

  2

  0

  0

  Werrington

  17

  15

  11

  Wetherby

  42

  48

  52

  Whatton

  3

  3

  1

  Whitemoor

  26

  0

  45

  Winchester

  9

  9

  36

  Woodhill

  41

  146

  155

  Wormwood Scrubs

  107

  20

  85

  Wymott

  64

  7

  15

  Sub-Total

  4,529

  5,834

  4,923

  Contractually Managed

  Blakenhurst

  42

  23

  29

  Buckley Hall

  n/a

  38

  12

  Canterbury

  27

  14

  9

  Doncaster

  180

  350

  359

  Wolds

  n/a

  37

  28

  Sub-Total

  249

  462

  437

  Total

  4,778

  6,296

  5,360

  Children's Hearings
  Mr. Beith
  To ask the Secretary of State for the Home Department what assessment he has made of the effectiveness of the Children's Panel and Children's Hearings system in Scotland; and what assessment he has made of the advantages of introducing elements of this system in England and Wales. [33596]

  Mr. Michael
  Research commissioned by the Scottish Office regarding the effectiveness of the Scottish Children's Hearing system is expected to be completed later this year. This research includes a study into decision making in the children's hearing system and a three year longitudinal study examining outcomes for a cohort of children referred to Reporters in 1995.

  In developing proposals for reform of the Youth Court in England and Wales, which are set out in the White Paper "No More Excuses: a new approach to tackling youth crime in England and Wales" (Cmnd 3809), we considered the available information about the youth justice systems in other jurisdictions, including the civil Children's Hearing system in Scotland and family group conferencing approaches in New Zealand. The proposals for reforming the Youth Court, which are set out in chapter 9 of the White Paper, aim to reflect best practice from these different approaches in a way which is consistent with the youth court arrangements in England

  633
  and Wales. In particular, our longer term proposals for a youth panel which would be responsible for agreeing a "contract", which would be overseen by the Youth Court, with certain young offenders (those appearing before the Youth Court for the first time and who plead guilty) provide an opportunity for a restorative approach to be introduced. These contracts would ensure that the young person made amends to the victim or the community at large and would tackle the causes of the offending behaviour. Experience in Scotland, in New Zealand and elsewhere has informed our consideration of how best to deal with young offenders in England and Wales and the development of the proposals set out in "No More Excuses" and in the Crime and Disorder Bill.

  Driving (Drugs)
  Mr. Keetch
  To ask the Secretary of State for the Home Department what legislation covers those driving while under the influence of drugs. [34413]

  Mr. Michael
  Section 4 of the Road Traffic Act 1988 makes it an offence to drive or attempt to drive a mechanically propelled vehicle on a road or other public

  Drugs driving offences: Maximum penalties

  Offence (with provision)

  How prosecuted

  Maximum punishmen

  Disqualification

  Endorsement

  Causing death by careless driving when under the influence of drink or drugs (section 3A RTA 1988 as added by RTA 1991)

  Indictment

  10 years imprisonment or level 5 fine (£5,000), Or both

  Obligatory

  Obligatory 3–11 penalty points

  Driving or attempting to drive when under the influence of drink or drugs (section 4(1) RTA 1988)

  Summarily

  6 years imprisonment or level 5 fine (£5,000),Or both

  Obligatory

  Obligatory 3–11 penalty points

  Being in charge of a mechanically propelled vehicle when unfit to drive through drink or drugs (section 4(2) RTA 1988)

  Summarily

  3 months imprisonment or level 4 fine (£2,500), Or both

  Discretionary

  Obligatory 10 penalty points

  Failing to supply specimen for laboratory test Summarily (section 7 RTA 1988)

  Summarily

  (a) Where specimen required to ascertain ability to drive—6 months or level 5 fine (£5,000) or both (b) in any other case, 3 months or level 4 fine (£2,500) or both

  (a)Obligatory (b) In any other case, discretionary

  Obligatory (a) 3–11 penalty points (a) 3–11 penalty points (b) 3–11 penalty points

  Prison Service (Pensions)
  Mr. Allan
  To ask the Secretary of State for the Home Department what assessment he has made of the pension provision made for staff by private sectors prison contractors relative to arrangements in the public sector; what is his policy of pension provision to private sector contractors; and if he will make a statement. [34682]

  Ms Quin
  Pension arrangements for staff employed at privately managed prisons are a matter for the contractors, although Her Majesty's Prison Service, when considering bids for the management of prisons, requires details of bidders' personnel policies so that it can assess whether these might in any way affect the prison's operation.
  634
  place when unfit to drive through drink or drugs. It also makes it an offence to be in charge of a mechanically propelled vehicle in the same circumstances. A constable may arrest a person without warrant if he has reasonable cause to suspect that an offence has been committed. Section 7 of the Act empowers a constable to require a suspect to provide a specimen of blood or urine for a laboratory test where he is advised by a medical practitioner that the condition of the person might be due to some drug.

  The Act defines a person as being unfit to drive:
  "if his ability to drive properly is for the time being impaired".

  It defines drugs as:
  "any intoxicant other than alcohol"
  and can therefore include drugs of all kinds.

  The Road Traffic Act 1991 added the offence of causing death by careless driving when driving a mechanically propelled vehicle under the influence of drink or drugs. The same definition of being unfit to drive applies.

  The available penalties for the offences are set out in the table.

  My right hon. Friend asked the Prison Service on 19 June 1997 to consider plans for establishing a case for returning contractually managed prisons to the public sector. As part of that work, all aspects of the remuneration of Prison Service staff have been studied in relation to their private sector counterparts. That work is still in progress and its findings are due to be reported shortly.

  Police Expenditure
  Mr. Allan
  To ask the Secretary of State for the Home Department how much money was spent on (i) capital projects, (ii) training and (iii) pension provision,(a) by each

  635
  police force and (b) in total, in each of the last three years; and what is the amount allocated for each of the forthcoming years for which plans have been made. [34684]

  Mr. Michael
  The information requested in respect of actual expenditure in years 1994/95 to 1996/97, and estimated expenditure in 1997/98, is set out in the table. This is taken from police authority returns to the Chartered Institute of Public Finance and Accountancy (CIPFA). Detailed estimates for 1998/99 will not be published by CIPFA until later in the year.

  £000

  1994–95

  Capital expenditure

  Training expenses

  Net pensions costs

  Avon and Somerset

  10,409

  3,516

  16,969

  Bedfordshire

  1,525

  1,240

  4,252

  Cambridgeshire

  2,141

  1,010

  5,407

  Cheshire

  2,698

  1,644

  7,528

  City of London

  2,142

  280

  4,971

  Cleveland

  1,622

  783

  7,978

  Cumbria

  1,558

  347

  5,702

  Derbyshire

  3,766

  2,274

  7,753

  Devon and Cornwall

  4,591

  2,567

  13,930

  Dorset

  2,794

  301

  5,972

  Durham

  2,252

  1,527

  6,905

  Dyfed Powys

  1,421

  878

  5,148

  Essex

  n/a

  n/a

  n/a

  Gloucestershire

  1,903

  1,059

  4,805

  Greater Manchester

  11,774

  6,191

  35,158

  Gwent

  2,081

  1,056

  4,739

  Hampshire

  4,943

  3,474

  13,610

  Hertfordshire

  2,122

  1,804

  5,850

  Humberside

  2,556

  1,814

  9,189

  Kent

  3,832

  762

  12,510

  Lancashire

  6,127

  3,391

  16,771

  Leicestershire

  3,106

  180

  10,129

  Lincolnshire

  n/a

  n/a

  n/a

  Merseyside

  6,140

  4,221

  26,041

  Metropolitan Police

  69,768

  2,911

  154,666

  Norfolk

  2,052

  1,792

  6,897

  North Wales

  2,423

  1,074

  5,771

  North Yorkshire

  2,021

  787

  8,946

  Northamptonshire

  1,936

  416

  6,107

  Northumbria

  10,437

  2,776

  19,933

  Nottinghamshire

  5,346

  3,303

  11,397

  South Wales

  6,089

  2,001

  14,513

  South Yorkshire

  6,461

  2,672

  11,121

  Staffordshire

  3,302

  270

  11,610

  Suffolk

  1,465

  772

  5,872

  Surrey

  3,776

  2,347

  7,318

  Sussex

  3,769

  2,148

  12,704

  Thames Valley Police

  8,093

  4,637

  12,687

  Warwickshire

  4,069

  404

  4,180

  West Mercia

  4,668

  2,507

  9,489

  West Midlands

  17,164

  1,085

  29,945

  West Yorkshire

  7,155

  4,028

  27,367

  Wiltshire

  4,561

  567

  4,143

  Total

  246,058

  76,816

  595,983

  £000

  1995–96

  Capital expenditure

  Training expenses

  Net pensions costs

  Avon and Somerset

  7,533

  3,414

  17,780

  Bedfordshire

  1,824

  1,067

  4,890

  Cambridgeshire

  1,518

  1,066

  5,871

  Cheshire

  1,924

  2,068

  10,074

  City of London

  1,061

  373

  6,848

  636

  £000

  1995–96

  Capital expenditure

  Training expenses

  Net pensions costs

  Cleveland

  1,974

  787

  7,950

  Cumbria

  706

  341

  6,145

  Derbyshire

  2,729

  2,544

  10,416

  Devon and Cornwall

  2,815

  2,604

  17,661

  Dorset

  1,583

  297

  6,947

  Durham

  2,896

  1,567

  7,218

  Dyfed Powys

  847

  973

  7,036

  Essex

  n/a

  n/a

  14,045

  Gloucestershire

  750

  1,075

  5,635

  Greater Manchester

  14,173

  6,913

  43,809

  Gwent

  2,208

  864

  3,695

  Hampshire

  4,065

  3,541

  17,316

  Hertfordshire

  2,894

  1,599

  6,060

  Humberside

  2,648

  1,975

  11,228

  Kent

  7,429

  625

  15,046

  Lancashire

  5,099

  3,281

  19,662

  Leicestershire

  6,432

  292

  10,888

  Lincolnshire

  3,489

  1,219

  7,786

  Merseyside

  8,220

  3,747

  29,934

  Metropolitan Police

  91,639

  3,145

  150,347

  Norfolk

  1,259

  1,894

  8,489

  North Wales

  3,573

  1,173

  7,489

  North Yorkshire

  1,820

  837

  8,459

  Northamptonshire

  1,403

  437

  5,470

  Northumbria

  11,880

  2,948

  26,636

  Nottinghamshire

  6,228

  3,133

  11,732

  South Wales

  6,078

  3,367

  18,828

  South Yorkshire

  4,538

  2,456

  12,700

  Staffordshire

  3,174

  303

  11,377

  Suffolk

  890

  684

  7,137

  Surrey

  3,468

  1,807

  7,803

  Sussex

  5,347

  2,793

  17,438

  Thames Valley Police

  7,064

  4,537

  15,992

  Warwickshire

  2,709

  367

  5,004

  West Mercia

  3,648

  2,219

  8,875

  West Midlands

  19,548

  846

  34,304

  West Yorkshire

  5,781

  3,802

  25,775

  Wiltshire

  1,762

  572

  4,032

  Total

  266,446

  79,552

  681,827

  £000

  1996–97

  Capital expenditure

  Training expenses

  Net pensions costs

  Avon and Somerset

  4,491

  3,471

  22,452

  Bedfordshire

  1,435

  1,065

  5,451

  Cambridgeshire

  967

  402

  7,280

  Cheshire

  4,073

  2,720

  9,824

  City of London

  1,571

  263

  7,247

  Cleveland

  1,990

  866

  10,346

  Cumbria

  2,020

  427

  7,511

  Derbyshire

  2,727

  2,483

  11,073

  Devon and Cornwall

  4,455

  2,346

  17,926

  Dorset

  1,425

  322

  7,618

  Durham

  1,954

  2,089

  10,078

  Dyfed Powys

  1,833

  1,123

  6,379

  Essex

  6,113

  4,289

  14,809

  Gloucestershire

  1,474

  1,013

  6,892

  Greater Manchester

  12,955

  7,453

  45,286

  Gwent

  2,459

  1,235

  8,410

  Hampshire

  5,840

  3,691

  15,633

  Hertfordshire

  2,263

  2,140

  6,701

  Humberside

  3,512

  1,869

  11,706

  Kent

  7,327

  801

  19,191

  Lancashire

  3,842

  4,194

  22,482

  Leicestershire

  4,448

  430

  12,400

  637

  £000

  1996–97

  Capital expenditure

  Training expenses

  Net pensions costs

  Lincolnshire

  1,919

  1,364

  8,267

  Merseyside

  5,777

  2,870

  33,147

  Metropolitan Police

  63,240

  2,835

  156,582

  Norfolk

  1,787

  2,034

  10,639

  North Wales

  4,221

  1,594

  7,956

  North Yorkshire

  2,849

  793

  11,038

  Northamptonshire

  1,790

  481

  6,310

  Northumbria

  10,273

  2,933

  26,220

  Nottinghamshire

  6,744

  3,553

  13,144

  South Wales

  6,117

  4,881

  19,667

  South Yorkshire

  5,501

  2,651

  15,927

  Staffordshire

  3,493

  428

  14,190

  Suffolk

  1,962

  789

  8,494

  Surrey

  4,481

  1,935

  9,566

  Sussex

  11,151

  3,649

  18,680

  Thames Valley Police

  9,124

  4,695

  16,244

  Warwickshire

  1,707

  528

  5,253

  West Mercia

  3,366

  2,524

  10,535

  West Midlands

  12,673

  3,577

  40,305

  West Yorkshire

  11,349

  4,519

  30,677

  Wiltshire

  1,444

  537

  7,496

  Total

  250,502

  93,862

  757,032

  £000

  1997–98 Estimates

  Capital expenditure

  Training expenses

  Net pensions costs

  Avon and Somerset

  3,707

  3,564

  24,741

  Bedfordshire

  2,873

  1,030

  5,997

  Cambridgeshire

  1,517

  670

  8,597

  Cheshire

  3,662

  2,867

  9,470

  City of London

  1,146

  491

  7,205

  Cleveland

  1,678

  953

  9,451

  Cumbria

  2,013

  539

  8,138

  Derbyshire

  6,609

  2,291

  12,430

  Devon and Cornwall

  4,619

  2,564

  20,343

  Dorset

  1,741

  313

  8,225

  Durham

  2,290

  1,697

  9,121

  Dyfed Powys

  757

  1,076

  6,519

  Essex

  6,113

  4,512

  16,300

  Gloucestershire

  2,299

  1,056

  8,489

  Greater Manchester

  12,014

  7,995

  50,089

  Gwent

  1,275

  1,563

  8,144

  Hampshire

  6,594

  3,957

  18,499

  Hertfordshire

  2,383

  388

  8,421

  Humberside

  5,292

  2,012

  12,428

  Kent

  12,950

  1,059

  19,427

  Lancashire

  5,623

  4,318

  22,650

  Leicestershire

  3,020

  465

  11,754

  Lincolnshire

  2,949

  1,616

  8,546

  Merseyside

  7,278

  3,540

  39,256

  Metropolitan Police

  53,958

  3,829

  172,780

  Norfolk

  6,717

  2,102

  11,376

  North Wales

  4,632

  1,436

  10,223

  North Yorkshire

  3,462

  841

  11,976

  Northamptonshire

  3,984

  530

  6,937

  Northumbria

  10,764

  3,397

  28,670

  Nottinghamshire

  5,563

  3,470

  14,651

  South Wales

  8,327

  3,251

  22,745

  South Yorkshire

  7,433

  3,121

  16,700

  Staffordshire

  4,829

  485

  15,446

  Suffolk

  1,990

  829

  8,550

  Surrey

  8,060

  2,001

  10,414

  Sussex

  13,394

  3,444

  22,624

  Thames Valley Police

  13,486

  5,471

  18,733

  638

  £000

  1997–98 Estimates

  Capital expenditure

  Training expenses

  Net pensions costs

  Warwickshire

  2,104

  696

  6,191

  West Mercia

  4,458

  2,575

  11,496

  West Midlands

  11,821

  3,981

  42,150

  West Yorkshire

  6,590

  5,248

  34,259

  Wiltshire

  3,634

  762

  6,431

  Total

  275,608

  98,005

  826,592

  n/a = not applicable

  Prisons (London)
  Mr. Cox
  To ask the Secretary of State for the Home Department what is the education funding in the current financial year for each of the London prisons. [34715]

  Ms Quin
  The total education budget figures for the current 1997–98 financial year for each of the prisons in London are as listed.

  Prison

  £

  Belmarsh

  450,000

  Brixton

  357,300

  Downview

  228,700

  Feltham

  330,400

  Highdown

  345,000

  Holloway

  352,834

  Latchmere House

  18,000

  Pentonville

  481,323

  Wandsworth

  167,000

  Wormwood Scrubs

  260,000

  Mr. Cox
  To ask the Secretary of State for the Home Department what is the total budgeted funding for the current year for each of the London prisons. [34716]

  Ms Quin
  The total budget figures for the current 1997–98 financial year for each of the prisons in London are as listed.

  Prison

  £

  Belmarsh

  25,272,000

  Brixton

  17,502,813

  Downview

  6,148,492

  Feltham

  16,197,897

  Highdown

  14,790,150

  Holloway

  17,823,732

  Latchmere House

  2,542,918

  Pentonville

  17,338,055

  Wandsworth

  20,232,252

  Wormwood Scrubs

  20,966,248

  Obstructions (Prosecutions)
  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department how many prosecutions have been brought and convictions secured for placing goods for sale, advertising boards and other obstructions on the pavement in each year since 1992. [34756]
  639
  Mr. Michael
  The data held centrally on the Court Proceedings database do not separately identify such offences.

  Fire Service
  Mr. Efford
  To ask the Secretary of State for the Home Department if he has reached a decision on the application under section 19 of the Fire Services Act 1947 of the London Fire and Civil Defence Authority to reduce its firefighting resources. [35341]

  Mr. George Howarth
  I have today advised the London Fire and Civil Defence Authority that my right hon. Friend has agreed to its application to close the Barbican and Shooters Hill fire stations, to change the arrangements for the provision of fire cover on the River Thames and to a consequent reduction in the establishment of London Fire Brigade of 80 firefighting posts.

  The statutory responsibility for the provision of an efficient fire service rests with the local fire authority. In considering applications by fire authorities for reductions in firefighting resources, my right hon. Friend has to be satisfied that there has been adequate consultation and that, following any reductions, national standards of fire cover can continue to be maintained. In fulfilling this function, my right hon. Friend relies on advice from Her Majesty's Inspectorate of Fire Services.

  Both my right hon. Friend and I are satisfied that the London Fire and Civil Defence Authority has consulted widely over its proposals. There has also been opportunity over some months for representations to be made direct to the Home Office and a considerable number, including representations from right hon. and hon. Members. have been received. These have all been thoroughly considered, particularly those relating to the proposed closure of the fire stations at the Barbican and Shooters Hill. We have taken into account the points raised by hon. Members in the debate on the Adjournment of the House on 9 March 1998, Official Report, columns 291–9. We have sought the professional advice of Her Majesty's Inspectorate of Fire Services, and specifically of Her Majesty's Chief Inspector.

  The advice that we have received from Her Majesty's Chief Inspector is unequivocal that, following the proposed reductions, the London Fire Brigade would still be able to meet fully the agreed national standards of fire cover in the areas immediately affected by the changes and elsewhere in the capital. The Chief Inspector has, in particular, confirmed that the Authority's proposal to cover the fireground currently served by Shooters Hill from the fire stations at East Greenwich, Plumstead, Woolwich, Eltham, Lee Green and Bexley is wholly consistent with the continued maintenance of the national standards, as is the proposal to cover the Barbican fireground from the fire stations at Dowgate, Clerkenwell and Shoreditch.
  640
  Taking full account of this advice, and after the most careful consideration, my right hon. Friend has therefore decided to approve the Authority's application. The implementation of these proposed changes is now a matter for the Authority.

SOCIAL SECURITY

  Parliamentary Questions
  Mr. Oaten
  To ask the Secretary of State for Social Security how many parliamentary questions she has answered since 1 May 1997(a) in total and (b) which have taken more than four weeks to respond to. [34839]

  Mr. Denham
  As of 16 March 1998 we have answered 2,229 Parliamentary Questions of which 64 have taken more than four weeks to respond to.

  Notes:

  1. The figures do not include recesses.

  2. Figures were taken from the Department's Parliamentary Questions database and may be subject to some degree of error.

  Pensioner Incomes
  Mr. Webb
  To ask the Secretary of State for Social Security which organisation is carrying out research for her Department on the non take-up by pensioners of their entitlement to income support; at what cost and over what timescale; and if she will place a copy of the organisation's proposed research methodology in the Library. [34691]

  Mr. Denham
  [holding answer 16 March 1998:] Research has been commissioned comprising in-depth interviews with pensioners currently claiming and not claiming, but potentially eligible for, Income Support (IS). Pensioners will be selected to cover key demographic characteristics. The interviews will explore the reasons for not claiming Income Support, and the views of claimants and non-claimants to give an insight into what encourages, as well as discourages, claims for IS.

  This is being followed by a quantitative survey of eligible non-claimant pensioners to identify the relative importance of the various factors deterring potential claimants; and to assess whether different factors are important for different sub-groups; and whether different groups of pensioner non-claimants are experiencing different levels of hardship.

  Finally, the project will also include focus groups with advice agencies.

  Contracts worth a total of £282,000 have been awarded to Social and Community Planning Research and the Office for National Statistics.
  641
  The project was begun at the end of last year and will take a year to complete.

  An estimated one million pensioners are not taking up their entitlement to IS and my right hon. Friend the Secretary of State recently announced details of a number of pilot schemes to be run from April this year to find the best way to provide more automatic help to the poorest pensioners.

  The pilots will start next month and run for six months in Glasgow, York, Preston, Stroud, Lambeth, East Renfrewshire, Torbay, Torfaen and South Staffordshire local authorities.

  The pilots will have two main objectives. They will test the best ways of finding potential IS claimants by matching records held centrally and locally. The pilots will then test the best ways of reaching potential claimants by visiting them at home, ringing them or writing to them.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security what(a) percentage and (b) number of single pensioners have a total income of at least £100 per week from (i) all sources, (ii) sources not including the state pension and (iii) sources not including any state benefits. [33524]

  Mr. Denham
  The information is set out in the table.

  Weekly income of pensioner couples (£) in 1995–96

  Definition of income

  At least£200

  At least £160

  At least £140

  Gross income from all sources

  Number

  1,450,000

  1,950,000

  2,300,000

  Percentage

  53

  73

  86

  Gross income excluding State pensions

  Number

  800,000

  950,000

  1,100,000

  Percentage

  29

  36

  42

  Gross income excluding State benefits

  Number

  700,000

  850,000

  950,000

  Percentage

  25

  32

  36

  Notes:

  1. The information is based on gross unequivalised weekly income before housing costs and benefit income at July 1995 prices. Reported incomes from the State pension and all benefits were subtracted from gross income to give the income distribution shown. The results are based on survey respondents' identification of different elements of benefit income, and therefore are subject to misreporting.

  2. The Pensioners' Income Series gives estimates for pensioner units. A pensioner unit is defined as a single person over State Pension Age (SPA) or a couple where the man, defined as the head, is over SPA.

  3. Numbers of pensioner units are rounded to the nearest 50,000, percentages to the nearest 1 per cent.

  4. The Pensioners' Incomes Series 1995–96 is to be revised, owing to a number of inaccuracies. The revised version of the publication will be issued as soon as possible. The figures above are not affected by these problems.

  Source:

  The Pensioners' Incomes Series.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security (1) if she will estimate how many couples aged over 60 years would become eligible for income support if the applicable amount, including the pensioner premium was(a) £200, (b) £160 and (c) £140 assuming (i) no change in capital limits and (ii) an upper capital limit of £16,000 and lower capital of £10,000; [33520]

  (2) if she will estimate the cost of increasing the applicable amount, including the pensioner premium, for
  642

  Single pensioner with weekly income of at least £100 in 1995–96

  Definition of income

  Number

  Percentage

  Gross Income from all sources

  3,050,000

  70

  Gross Income excluding State pensions

  1,050,000

  25

  Gross Income excluding State benefits

  700,000

  16

  Notes:

  1. The information is based on gross unequivalised weekly income before housing costs and benefit income at July 1995 prices. Reported incomes from the State pension and all benefits were subtracted from gross income to give the income distribution shown. The results are based on survey respondents' identification of different elements of benefit income, and therefore are subject to misreporting.

  2. The Pensioners' Income Series gives estimates for pensioner units. A pensioner unit is defined as a single person over State Pension Age (SPA) or a couple where the man, defined as the head, is over SPA.

  3. Numbers of pensioner units are rounded to the nearest 50,000, percentages to the nearest 1 per cent.

  4. The Pensioners' Incomes Series 1995–96 is to be revised, owing to a number of inaccuracies. The revised version of the publication will be issued as soon as possible. The figures above are not affected by these problems.

  Source:

  The Pensioners' Incomes Series.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security what(a) percentage and (b) number of pensioner couples have a total income of at least (i)£200 per week, (ii)£160 per week and (iii)£140 per week from (1) all sources, (2) sources not including the state pension and (3) sources not including any state benefits. [33525]

  Mr. Denham
  The information is set out in the table.

  income support for couples aged over 60 years to (a) £200, (b) £160 and (c) £140 assuming (i) no change in capital limits and (ii) an upper capital limit of £16,000 and lower capital of £10,000. [33521]

  Mr. Keith Bradley
  Not all the information is available. Figures for total numbers eligible could be produced only at disproportionate cost. The information set out in the tables is based on the numbers who, on current take-up levels, could be expected to claim.
  643

  Estimated extra number1 of couples aged 60 or over claiming income support if the applicable amount, including the pensioner premium, was increased

  Existing capital limits

  Capital limits of £10,000 and £16,000

  Applicable amount of £200 per week

  710,000

  785,000

  Applicable amount of £160 per week

  500,000

  550,000

  Applicable amount of £140 per week

  290,000

  330,000

  1Rounded to the nearest 5,000

  Estimated cost1 of increasing the applicable amount in income support for couples aged 60 and over

  £billion

  Existing capital limits

  Capital limits of £10,000 and£16,000

  Applicable amount of £200 per week

  4.1

  4.4

  Applicable amount of £160 per week

  2.0

  2.1

  Applicable amount of £140 per week

  1.0

  1.1

  1Rounded to the nearest £100 million.

  Note:

  These figures include costs incurred in Housing Benefit and Council Tax Benefit due to the alignment of the applicable amounts in these benefits with those in Income Support. It has been assumed that the changes in the capital limits apply only to couples where at least one is aged 60 or over.

  Source:

  May 1996 Income Support Quarterly Statistical Enquiry, 1995–96 Family Resources Survey.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security (1) if she will estimate how many single people aged over 60 years would become eligible for income support if the applicable amount, including the pensioner premium, was £100 assuming(a) no change in capital limits and (b) an upper capital limit of £16,000 and lower capital limit of £10,000; [33522]

  (2) if she will estimate the cost of increasing the applicable amount, including the pensioner premium, for income support for single people aged over 60 years to £100 assuming (a) no change in capital limits and (b) an upper capital limit of £16,000 and lower capital limit of £10,000. [33523]

  Mr. Keith Bradley
  The information is not available in the format requested. Figures for total numbers eligible could be produced only at disproportionate cost. Information is available based on the numbers who, on current take-up levels, could be expected to claim.

  The estimated extra number of single people aged 60 or over claiming Income Support and the associated cost if the applicable amount, including the pensioner premium, was £100 is:

  (a) 790,0002 with no change in capital limits at cost of £3 billion3; and

  (b) 935,0002 with an upper capital limit of £16,000 and a lower capital limit of £10,000 at a cost of £3.3 billion3.

  These figures include costs incurred in Housing Benefit and Council Tax Benefit due to the alignment of the
  644
  applicable amounts in these benefits with those in Income Support.

  Source:
  Income Support Quarterly Statistical Inquiry May 1996 and Family Resources Survey 1995–96.

  Notes:

  1. Changes in capital limits are assumed to apply only to single people aged 60 or over for the purposes of the costings.

  2. Rounded to the nearest 5,000.

  3. Rounded to the nearest £100 million.

TREASURY

  VAT Refunds (Sports Clubs)
  Mr. Pendry
  To ask the Chancellor of the Exchequer what has been the estimated VAT refund to(a) recreational sports associations, (b) voluntary sports clubs and (c) charitable sports clubs under the Value Added Tax (Sport Physical Education and Fund Raising Events) Order 1994. [34255]

  Dawn Primarolo
  No separate figures are available.

  Euro Information Unit
  Mr. Mitchell
  To ask the Chancellor of the Exchequer how many staff and at what level are employed in the Treasury's Euro information unit; what funding he has sought for it from Europe; and what contacts it will maintain with(a) the finance ministries of member countries and (b) the EMI. [33808]

  Mrs. Liddell
  Full details of the Euro Preparations Unit (EPU) are included in press release 156–97 available from the press office of HM Treasury.

  The Government are involved in a constructive dialogue with the European Commission to examine what financial assistance might be available from the Community budget to help with the Government's information campaign.

  The EPU is in regular contact with officials in other finance ministries. The Bank of England is closely involved in the work of the EMI; the Governor of the Bank of England is a member of the EMI Council.

  Tobacco
  Mr. Cotter
  To ask the Chancellor of the Exchequer what research he(a) has commissioned, (b) has evaluated and (c) plans to commission on the numbers of under 16s who, since the European border restrictions were removed in 1993, have purchased cigarettes bought on the continent and illegally resold in the United Kingdom which do not display English language health warnings. [34699]

  Dawn Primarolo
  No research has been commissioned and there are no plans to do so.

  Mr. Cotter
  To ask the Chancellor of the Exchequer when representatives from the Police, HM Customs & Excise and the National Weights and Measures Laboratory and Ministers from his Department last met to discuss the issue of tobacco imported from Belgium and illegally resold in the United Kingdom. [34701]

  Dawn Primarolo
  There have been no such meetings.
  645
  Mr. Cotter
  To ask the Chancellor of the Exchequer if he will press for upward harmonisation of tobacco taxes at the next meeting of EU member states' finance ministers. [34700]

  Dawn Primarolo
  It is Treasury Ministers' current intention to discuss the minimum rate of excise duty for tobacco products in ECOFIN following production of the European Commission's report on their review. Government policy in this area is to allow Member States a continuation of fiscal sovereignty, but underpinned by a regime of sensible and realistic minimum rates. In the case of tobacco we advocate a cash floor to the duty on cigarettes and higher minimum rates for the other tobacco products.

  MIRAS
  Mr. Wigley
  To ask the Chancellor of the Exchequer if he will list the estimated tax expenditures under the MIRAS system for(a) each United Kingdom nation, (b) each English region and (c) the UK, for (i) 1970, (ii) 1979, (iii) 1989 and (iv) the last available two years, expressed in current prices. [34872]

  Dawn Primarolo
  Country and regional estimates of the cost of mortgage interest relief for 1989–90, 1995–96 and 1996–97 are published in Table 5.3 of the 1996 and 1997 editions of "Inland Revenue Statistics", copies of which are in the Library. Estimates prior to 1982–83 are not available. Estimates for 1982–83 onwards can be found in the 1993 edition of "Inland Revenue Statistics". The estimates for all these years are based on analyses of family expenditure surveys up to 1995–96. The estimates for 1996–97 are projections based on applying the same country and regional distribution as in 1995–96 to the total figure for 1996–97.

  Estimates at the United Kingdom level for all years from 1962–63 to 1996–97 are published in Table 5.1 of "Inland Revenue Statistics 1997".

  VAT
  Mr. Corbett
  To ask the Chancellor of the Exchequer what percentage of the total amount raised from value added tax is paid directly to the European Commission; how much this raises at the current rate; and what the yield to the Commission was in each financial year since the introduction of VAT. [34695]

  Dawn Primarolo
  [holding answer 16 March 1998]: VAT contributions to the European Community are assessed from VAT bases calculated in a common manner across all member states. A uniform Community rate is applied to the VAT bases to arrive at the actual contributions. The Community rate for 1997 was a maximum of 1.16 per cent., but the actual rate paid by the UK was 0.52 per cent.allowing for the abatement to offset the low level of UK receipts from the European Union's General Budget.
  646
  Member states did not commence paying VAT based contributions until 1979. Since then, the UK has paid the following amounts during each calendar year:

  Year

  £

  1979

  843,683,425

  1980

  776,155,832

  1981

  1,060,209,936

  1982

  1,554,368,023

  1983

  1,668,927,244

  1984

  1,665,401,210

  1985

  2,089,417,074

  1986

  1,743,046,245

  1987

  2,277,429,915

  1988

  1,265,213,455

  1989

  2,243,863,837

  1990

  2,919,974,035

  1991

  770,987,557

  1992

  2,183,357,515

  1993

  1,953,652,009

  1994

  1,316,266,329

  1995

  3,637,792,072

  1996

  2,059,438,539

  19971

  1,664,864,875

  1The 1997 accounts are finalised in December 1998, so the contribution may be adjusted.

  Parliamentary Questions
  Mr. Robathan
  To ask the Chancellor of the Exchequer when he expects to reply to the question from the hon. Member for Blaby of 20 January 1998 relating to pensions (Ref. 24129). [34882]

  Mrs. Liddell
  [holding answer 17 March 1998]: I did so on 21 January 1998, Official Report, column 530. If the hon. Member had intended to inquire about figures for returns on pension funds' investments, which the Chief Secretary gave to the House on 15 January 1998, Official Report, column 478, the source was a report published by the WM Company in January 1998.

  Public Bodies
  Mr. Burns
  To ask the Chancellor of the Exchequer if he will publish a list of non-departmental public bodies(a) he has abolished since 1 May 1997 and (b) he has established since 1 May 1997; and what are the planned annual running costs of those that have been established since 1 May 1997. [34837]

  Mrs. Liddell
  [holding answer 18 March 1998]: The Treasury has neither abolished nor established any non-departmental public bodies since 1 May 1997.

  Excise Duty (Sparkling Wine and Cider)
  Mr. Timms
  To ask the Chancellor of the Exchequer what plans he has to equalise the excise duty levied upon low-strength sparkling wine and sparkling cider. [35340]

  Dawn Primarolo
  The Chancellor's Budget Statement announced a reduction of 20 per cent. in the duty on low-strength sparkling wine and a 20 per cent. increase in the duty on sparkling cider. I can confirm that these changes are an important step in the process of aligning the duty rates for these competing products and that the rates will be fully aligned in the next Budget.

  Pensions Mis-selling
  Mr. Love
  To ask the Chancellor of the Exchequer what is the latest estimate of the numbers of cases of personal pensions mis-selling in the categories(a) priority and (b) other; what is the estimated cost of compensation for each group and the timescale for the completion of the review by the companies concerned; and if she will make a statement. [35082]

  Mrs. Liddell
  I refer the hon. Gentleman to the answer I gave to my hon. Friend the Member for East Ham (Mr. Timms) on 12 March 1998,Official Report, column 315.

DUCHY OF LANCASTER

  Focus Groups
  Mr. Mullin
  To ask the Chancellor of the Duchy of Lancaster how much his Department(a) has spent since 1 May and (b) is planning to spend on focus groups. [34965]

  Mr. Kilfoyle
  I refer the hon. Member to the answer I gave to the hon. Member for Gordon (Mr. Bruce) on 5 March 1998,Official Report, columns 763–64.

  Freedom of Information
  Mr. Shepherd
  To ask the Chancellor of the Duchy of Lancaster if he will list those countries with freedom of information acts which exclude from the scope of the legislation(a) the law enforcement functions of the police, (b) the law enforcement functions of the immigration service and (c) the security and intelligence services. [35110]

  Dr. David Clark
  Information held by my Department about overseas freedom of information acts is not comprehensive. Using known examples however, the answers are:(a) the US Freedom of Information Act does not cover the police (as it is a Federal Act) and also excludes certain operational files of the FBI; (b) none: (c) the Australian Freedom of Information Act wholly excludes that country's security and intelligence services while the US Freedom of Information Act excludes certain operational files of the CIA. In general, even where countries exempt rather than exclude law enforcement, security and intelligence functions from their Freedom of Information Acts, the level of actual protection for such information remains high.

  Mr. Baker
  To ask the Chancellor of the Duchy of Lancaster what procedure and criteria will apply in respect of the appointment of the Information Commissioner; how long his or her term of office will last; and if he will make a statement. [35035]

  Dr. David Clark
  The formal procedure for appointing the Information Commissioner and details of his or her term of office will be set out in the draft FOI Bill which I intend to publish later this year for public consultation.

  Mr. Baker
  To ask the Chancellor of the Duchy of Lancaster what appeal procedure will apply in respect of decisions reached by the Information Commissioner. [35036]
  648
  Dr. David Clark
  As proposed in paragraph 5.16 of the White Paper "Your Right to Know", decisions of the Information Commissioner would be subject to judicial review. The White Paper indicates why this is preferred to a substantive right of appeal.

  Mr. Baker
  To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the procedures which will be put in place to ensure full public accountability of the work of the Information Commissioner. [35032]

  Dr. David Clark
  Paragraph 5.11 of the White Paper "Your Right to Know" proposes that the Information Commissioner should be required to publish an annual report (and special reports where necessary) to Parliament on the operation of his or her function; and to publish reports on the outcomes of investigations.

TRADE AND INDUSTRY

  Text Telephones
  Mr. Levitt
  To ask the President of the Board of Trade for what reasons text telephones with large display screens, for the use of people whose hearing and sight are both impaired, are not available in the United Kingdom; and if she will amend the relevant regulations to make them available. [34343]

  Mrs. Roche
  There are no regulations restricting the availability of text telephones with large display screens in the UK. OFTEL is consulting on proposals for improving telecommunications services for people with disabilities and the Government will be consulting shortly on their proposals to implement the Amending Voice Telephony Directive, which covers the provision of services for disabled people.

  Fireworks
  Mr. Hoyle
  To ask the President of the Board of Trade if she will restrict the sale of fireworks to the general public to within a specified period around 5 November each year. [34595]

  Mr. Nigel Griffiths
  [holding answer 16 March 19981: I share the concerns of my hon. Friend to ensure that fireworks are sold for only a limited period round events such as bonfire night and religious festivals eg diwali. The private Member's Bill of my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) gives power to restrict the sales period and we will be discussing this with representatives of the firework industry, consumer groups and others.

  Telecommunications
  Mr. Bill Michie
  To ask the President of the Board of Trade if the Office of Telecommunications has the power to specify that telecommunications companies should consult with other organisations regarding their joint response to an emergency or a potential emergency; and if she will make a statement. [34176]

  Mrs. Roche
  [holding answer 16 March 19981: Public Telecommunications Operators have a requirement in their Telecommunications Act 1984 licences to consult the authorities responsible for emergency organisations

  649
  and other departments of central and local government designated by Oftel, in making plans and arrangements to respond to emergencies.

  Inward Investment
  Mr. Jim Cunningham
  To ask the President of the Board of Trade what level of financial support she proposes to offer the English Regional Development Organisations for 1998–99. [35202]

  Mr. Ian McCartney
  The ten English Regional Development Organisations continue to make a significant contribution to the work of the Invest in Britain Bureau, to the overall success of the UK in attracting inward investment and in particular to their own region's performance. Having considered their future plans I have today offered £10.94 million of grant in total for their inward investment promotion activities for 1998–99.

  This represents a 4.49% increase in the RDO grant total, and is to enable the UK to remain competitive in promoting its locational advantages in the face of increasing competition for mobile inward investment projects. I have allocated the grants as follows:

  £000

  RDO

  1998–99 Grant

  Northern Development Company (NDC)

  1,665

  INWARD Ltd. (in the North West)

  1,393

  Yorkshire and Humberside Development Agency (YHDA)

  1,415

  West Midlands Development Agency (WMDA)

  1,314

  East Midlands Development Company Ltd. (EMDC)

  984

  Devon and Cornwall Development International (DCDI)

  954

  London First Centre

  1,015

  West of England Development Agency (WEDA)

  600

  East of England Investment Agency (EEIA)

  800

  South East Regional Investment Limited (SERIL)

  800

  All grants are offered on an annual basis for an agreed programme of future activities aimed at maximising value for money in inward investment work at regional level.

  Engineering
  Mrs. Curtis-Thomas
  To ask the President of the Board of Trade what meetings(a) she and (b) her Ministers have held with the Engineering Council since 1 May 1997; what was the subject of the discussions; and what future meetings are planned. [35040]

  Mr. Battle
  I met Dr. Alan Rudge, the Chairman of the Engineering Council, and Mr. Michael Heath, the Director General, on 27 November 1997. A wide range of topics were discussed, including the role of engineering and engineers in international competitiveness and the public perception of engineers and engineering in our society.

  Lord Simon spoke on the subject of competitiveness and engineering skills at last year's Annual Conference of the Engineering Council, and my right hon. Friend the President of the Board of Trade is expected to address this Annual Conference on 30 April.

  I also hope to address the Senate of the Engineering Council in December of this year.
  650
  In addition, officials of the Department of Trade and Industry are in frequent, almost daily, contact with the Engineering Council on a wide range of issues and I welcome their proposed advertising campaign on engineering.

  Mrs. Curtis-Thomas
  To ask the President of the Board of Trade if she will alter the title of the Chief Scientific Adviser to reflect his engineering responsibilities; and if she will make a statement. [35041]

  Mr. Battle
  The title, role and remit of the Chief Scientific Adviser, Sir Robert May, are matters for my right hon. Friend the Prime Minister who received his advice directly. There are currently no plans to make any changes to these arrangements. In this context, "scientific" is interpreted broadly to encompass scientific, engineering and technological issues, as for instance, in the guidelines on the use of scientific advise in policy making, published in March 1997 by the Office of Science and Technology.

  Millennium Compliance
  Mr. David Atkinson
  To ask the President of the Board of Trade what steps the World Bank is taking to ensure that the computer systems with which it is engaged are millennium compliant. [33860]

  Clare Short
  I have been asked to reply.

  The World Bank is actively promoting the need for millennium compliance and organising guidance for its client countries. Bank Country Directors have been charged with approaching senior country officials to raise awareness of the issue. Countries are being urged to designate executive sponsors and to identify a specific agency and staff to be responsible for carrying forward their own work and for relating to international donors. The Bank has also instructed staff to investigate compliance on current projects and to ensure requirements on compliance are included in future contracts.

  The Bank's aim is to put tools into the hands of developing country governments to enable them to identify the problem, to prioritise systems, and to protect those systems which are key to the economy and public order and well-being. It has initiated a project to develop a toolkit for review and prioritisation systems. It also proposes to catalogue all the types of assistance available from IT companies. It plans to roll out a series of seminars through developing countries to raise awareness of the issues and these facilities.

  We have contributed £10 million to the Bank's trust fund for information development in order to promote and support new bank authorities.

WALES

  Health Problems (Blaenau Gwent)
  Mr. Llew Smith
  To ask the Secretary of State for Wales if he will make a statement on health problems in Blaenau Gwent. [33433]

  Mr. Win Griffiths
  The poor health and well-being of some communities in Wales, such as Blaenau Gwent, is a matter of concern to me. The Chief Medical Officer has advised me that a complex range of factors are likely to
  651
  be involved in influencing the health of communities. We shall shortly be publishing a Green Paper which will provide the basis of a new public health strategy for addressing inequalities in health in Wales.

  Farm Incomes
  Mrs. Ann Winterton
  To ask the Secretary of State for Wales what representations he has received about farming incomes since 1 March. [33435]

  Mr. Ron Davies
  I am continuing to receive representations from farmers and others drawing my attention to the decline in farm incomes over the past year.

  National Assembly
  Mr. Flight
  To ask the Secretary of State for Wales if he will make a statement on his powers, with regard to England, which will be transferred to the Welsh assembly. [33436]

  Mr. Ron Davies
  These powers generally relate to small parts of England and are adjacent to Wales; they reflect the need to make sensible administrative arrangements on water and fisheries. The details will be contained in a transfer order under clause 22 of the Government of Wales Bill, which will be subject to affirmative resolution procedure in both Houses of Parliament.

  Mr. Gibb
  To ask the Secretary of State for Wales what representations he has received from Welsh hon. Members regarding the siting of an assembly. [33439]

  Mr. Ron Davies
  On 3 February, 1 placed in the library of the House a list of all those who responded during the public consultation period.

  I have received many representations—both in the form of correspondence and questions—from hon. Members.

  Mr. Wilkinson
  To ask the Secretary of State for Wales if he will list the criteria for the selection of a site for the Welsh assembly. [33440]

  Mr. Ron Davies
  The most important criteria were value for money; suitability for purpose of the proposed solution; and accessibility for members of the public.

  Mr. Ruffley
  To ask the Secretary of State for Wales if he will make a statement on the location of the National Assembly for Wales. [33444]

  Mr. Ron Davies
  I announced my decision on Friday 13 March 1998,Official Report, column 358.

  Mr. Garnier
  To ask the Secretary of State for Wales what representations he has received from Welsh businesses regarding the setting up of the proposed National Assembly for Wales. [33455]

  Mr. Ron Davies
  The National Assembly Advisory Group have received written representations from the Federation of Small Businesses, the House Builders Association and Antur Dwyryd-Llan Cyf. In addition,652
  members of the National Assembly Advisory Group recently held a consultation meeting with business representatives and trade unions.

  Green-field Sites
  Mr. Edwards
  To ask the Secretary of State for Wales if he will make a statement on developments on green-field sites in Wales. [33438]

  Mr. Win Griffiths
  We place great importance on the need to encourage and promote more sustainable patterns of development. Appropriate guidance is already in place. "Planning Guidance (Wales): Planning Policy of 1996" stresses that full and effective use should be made of land within existing urban areas. The use of appropriate vacant land within urban areas can assist regeneration and relieve pressure for development on greenfield sites.

  Green Belts can prevent urban sprawl and assist in urban regeneration. I have written to Welsh authorities encouraging them to give serious consideration to Green Belt creation and propose to ask for a progress report.

  Mrs. Betty Williams
  To ask the Secretary of State for Wales if he will make a statement on developments on greenfield sites in Wales. [33453]

  Mr. Win Griffiths
  We place great importance on the need to encourage and promote more sustainable patterns of development. Appropriate guidance is already in place. "Planning Guidance (Wales): Planning Policy of 1996" stresses that full and effective use should be made of land within existing urban areas. The use of appropriate vacant land within urban areas can assist regeneration and relieve pressure for development on greenfield sites.

  NHS Waiting Lists
  Mr. Gray
  To ask the Secretary of State for Wales what recent representations he has received regarding hospital waiting lists in Wales. [33443]

  Mr. Win Griffiths
  Other than in respect of individual cases, none. Reducing the time people have to wait for treatment, within the emphasis on emergency care, remains a priority for the Government. In recognition of this, I welcome the Chancellor's announcement yesterday,Official Report, columns 1097–1112, of additional moneys for NHS Wales next year, much of which will be used to target the growth in inpatient waiting lists.

  Structural Funds
  Mr. Alan W. Williams
  To ask the Secretary of State for Wales if he will make a statement on the future of the European structural funds in Wales. [33445]

  Ms Lawrence
  To ask the Secretary of State for Wales if he will make a statement on the future of European structural funds in Wales. [33437]

  Mr. Hain
  The Government will consider the European Commission's proposals for reforming the Structural Funds and respond vigorously. There will be detailed negotiations over the coming months. We are committed to ensuring that Wales continues to secure the maximum benefit from the Funds after 1999.

  Abattoirs
  Mr. Llwyd
  To ask the Secretary of State for Wales how many representations he has received about the operating costs of abattoirs; and if he will make a statement. [33446]

  Mr. Win Griffiths
  We have received several representations. We have consulted the industry on the implementation of EU Directive EEC/96/43 on Financing of Veterinary Inspections and Controls and will be considering carefully all the responses made. The Meat Hygiene Service has also recently commenced a consultation exercise with the industry on meat hygiene inspection charges for 1998–99 and we will be taking note of responses there also.

  The Government recognise the effect that current problems have had on the industry. In order to help the industry through this difficult time, we have announced that charges for implementing Specified Risk Material controls on cattle, sheep and goats in fresh meat plants will not now be recovered from the industry from 1 April 1998, as previously planned.

  Landfill Sites
  Mr. Dafis
  To ask the Secretary of State for Wales what representations he has received on the disposal of calcium sulphate filter cake at landfill sites in Wales. [33447]

  Mr. Win Griffiths
  We have received a number of representations about landfill sites in Wales, some of which have made reference to the disposal of calcium sulphate filter cake.

  Farmers
  Mrs. Laing
  To ask the Secretary of State for Wales what representations he has received since 1 March about problems facing farmers. [33448]

  Mr. Win Griffiths
  We are continuing to receive representations from farmers and others drawing our attention to the problems in farming over the past year.

  Mr. Spring
  To ask the Secretary of State for Wales what representations he has received regarding HLCA payments to Welsh hill farmers. [33451]

  Mr. Win Griffiths
  We have received a range of representations from industry bodies and hon. Members concerning HLCA rates. My right hon. Friend and I have also met, separately, representatives of the National Farmers' Union of Wales and the Farmers' Union of Wales as part of the Autumn Review. Payments under the 1998 scheme started this month.

  Welsh Language
  Mr. Boswell
  To ask the Secretary of State for Wales what steps he is taking to extend knowledge of the Welsh language in England. [33449]

  Mr. Ron Davies
  My priority is to support the Welsh language within Wales. A wide range of benefits will flow from that.

  I am always happy to explain our policies for the language, and the progress we are making to implement them, more generally.

  Ambulance Service
  Mr. Touhig
  To ask the Secretary of State for Wales if he will make a statement on the establishment of an all-Wales ambulance trust. [33450]

  Mr. Win Griffiths
  I announced the establishment of a new single ambulance trust for Wales on 26 February. This followed a three month consultation exercise during which the people of Wales were given the opportunity to express their views on the proposals. My right hon. Friend the Secretary of State and I considered all the responses to the consultation together with advice from others, including the independent assessors I appointed to examine the proposals, before reaching our decision. We are satisfied that the overwhelming benefits to patients identified in the consultation document could be realised and a decision was taken to merge the existing ambulance services from 1 April 1998.

  Manufacturing Industry
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will make a statement on the prospects for manufacturing industry. [33452]

  Mr. Hain
  Business Strategy Ltd and Cambridge Econometrics forecast that manufacturing output will grow faster in Wales than in the United Kingdom as a whole for the foreseeable future.

  Wildlife Conservation
  Mr. Randall
  To ask the Secretary of State for Wales if he will make a statement on wildlife conservation in Wales. [33454]

  Mr. Win Griffiths
  We are fully committed to wildlife conservation in Wales and pursue policies which conserve sensitive sites, habitats and species. These include the designation and protection of areas of environmental sensitivity such as Special Protection Areas; support for a programme of biodiversity action in Wales both at the local and national level; priority to the promotion of sustainable development; and a commitment to the Government's international nature conservation obligations such as those imposed by the EC Habitats Directive.

  In addition, I am developing an all-Wales agrienvironment scheme encompassing the key components of existing schemes such as Tir Cymen and Environmentally Sensitive Areas. The criteria for the new scheme include the protection of species and habitats identified in the UK's Biodiversity Action Plan.

  Beef
  Mr. Barry Jones
  To ask the Secretary of State for Wales what initiatives he has taken to assist beef farmers in Wales. [33534]

  Mr. Win Griffiths
  The Government recognise the serious problems that the current difficulties have created for the agriculture industry and we have responded positively. Just before Christmas the Government announced an aid package worth £85 million for the livestock industry. This exceptional and one off aid package is both substantial and realistic given the
  655
  pressures on public spending. This is in addition to the £1.4 billion already budgeted to support the beef sector during the current financial year.

  We have also recently announced that some £70 million will be paid by the Government in meeting the costs of BSE related schemes. In order to help the industry through this period, charges for implementing Specified Risk Material controls on cattle, sheep and goats will not now be recovered from the industry from 1 April 1998, as previously planned. Additionally, the entire start-up costs and the first year of the running costs, including enforcement, of the new computerised Cattle Tracing System will be funded by the Government.

  The right hon. Friend the Secretary of State for Wales met representatives of the Farmers' Union of Wales, the National Farmers' Union and the Country Landowners' Association on 9 February to discuss the long term future of Welsh agriculture.

  Rural Schools
  Mr. Öpik
  To ask the Secretary of State for Wales what plans he has to introduce measures similar to those proposed in England to protect rural schools from closure; and if he will make a statement. [33992]

  Mr. Hain
  In Wales, the Secretary of State has the opportunity to call in any proposals for schools to be closed and is obliged to do so where any objections are raised. The close links existing between the Welsh Office and the local education authorities mean an automatic call in procedure is not needed.

  The Secretary of State would not normally be prepared to approve closure of a popular and effective school unless the alternative proposed would offer a higher quality and equal diversity of education at total lower cost than would have been available had the school remained open. The guidance also emphasises that he would not expect to approve the closure of any school where there was strong parental opposition unless he was convinced that it was not possible to provide satisfactory education across the curriculum and across all age groups. I also acknowledge the vital importance of schools in many rural communities in Wales.

  Agenda 2000 (Agriculture)
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Wales if he will make a statement on his Department's response to the European Commission's Agenda 2000 consultation document on agriculture. [34494]

  Mr. Win Griffiths
  The Government have given the European Commission's consultation document on Agenda 2000 a broad welcome. The Welsh Office will continue to work closely with farming unions in Wales to identify and argue for the needs of Welsh agriculture, as the reform process goes forward.

  New Deal
  Mr. Gareth Thomas
  To ask the Secretary of State for Wales if he will make a statement on the progress of the New Deal in Wales. [33441]
  656
  Mr. Hain
  I am delighted to say that we have made good and rapid progress in implementing the New Deal for young people in the South-West Pathfinder area.

  To date, well over 2,000 interviews with unemployed young people have been completed and almost 1,200 jobs pledged by more than 250 employers. A further 400 employers are expected to sign-up in the next three months.

  This represents an excellent start to our crusade to bring hope to young people and one which we will build on when the New Deal is launched throughout Wales in April.

  Youth Services
  Mr. Simon Hughes
  To ask the Secretary of State for Wales what are his proposals for extending youth services throughout Wales. [33442]

  Mr. Hain
  Our proposals for extending youth services will be explored in a Green Paper for Wales on lifelong learning, which we expect to publish very shortly.

MINISTER WITHOUT PORTFOLIO

  Complaints
  Mr. Hawkins
  To ask the Minister without Portfolio what records he keeps of complaints made by him in his official capacity to media organisations and individual journalists on their reporting and commentary on(a) the Millennium Dome and (b) other Government business; and how many such complaints have been made since 2 May 1997. [35106]

  Mr. Mandelson
  I keep no such records (but can recall few such complaints).

AGRICULTURE, FISHERIES AND FOOD

  New Covent Garden
  Mr. Jack
  To ask the Minister of Agriculture, Fisheries and Food (1) when he plans to introduce legislation to enable him to sell the new Covent Garden market; [25910]

  (2) if he will make a statement on his plans for the future ownership and operation of new Covent Garden market. [25911]

  Dr. John Cunningham
  The Government believe that they should not retain assets they do not need. However, any change in the status of New Covent Garden Market would be subject to Parliamentary time being available.

  Ministerial Visits
  Mr. Nicholls
  To ask the Minister of Agriculture, Fisheries and Food how many overseas countries he has visited since 1 May 1997. [32065]

  Dr. John Cunningham
  I have visited 10 overseas countries since 1 May 1997. They are: Belgium, the Netherlands, Sweden, Luxembourg, France, Italy, Germany, South Africa, St. Lucia and Spain.

  Fishing Industry
  Sir Richard Body
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his answer of 3 March 1998,Official Report, column 598, on the fishing industry, what estimate he has made of the levels of employment in the inshore United Kingdom fisheries industry which would be sustainable on (i) extension and (ii) lapse of derogation on the 12 mile fisheries limit after 2002. [33965]

  Mr. Morley
  In 1996 there were some 5,600 under 10 metre vessels in the UK fishing fleet. Many of these and other inshore vessels would be adversely affected if the restrictions on access by foreign fishing vessels within 12 mile limits were not extended beyond 2002. The Government have not made estimates of possible future changes in the levels of employment. The restrictions were continued after the mid-term review of the Common Fisheries Policy in 1982. As I indicated in my reply to the hon. Member on 3 March 1998,Official Report, column 598, it is the Government's firm intention for these restrictions to remain after 2002.

  Mr. Mitchell
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his answer of 2 March 1998,Official Report, column 496, if he will raise each of the fishing measures listed at the next Council of Ministers meeting. [34861]

  Mr. Morley
  The future of the Common Fisheries Policy after 2002 is not on the agenda of the next meeting of the Fisheries Council. Such matters are, however, expected to be relevant to the following meeting.

  Agriculture Expenditure
  Mr. Jack
  To ask the Minister of Agriculture, Fisheries and Food in what areas of budgeted agricultural expenditure the appreciation of the pound sterling since 1 April 1997 has reduced planned sterling expenditure; and by how much. [33810]

  Dr. John Cunningham
  It is not possible to identify precisely what proportion of the difference in total expenditure compared to estimated requirements is accounted for by changes in the sterling exchange rate.

  Suckler Cow Producer Subsidy
  Mr. Paul Marsden
  To ask the Minister of Agriculture, Fisheries and Food if he will list the average subsidy paid per suckler cow producer for each year since 1979. [34259]

  Mr. Rooker
  Listed in the table are the average sums received by claimants of Suckler Cow Premium under the Suckler Cow Premium Scheme since 1984–85:

  £

  Year

  Payment per producer

  1984–85

  473

  1985–86

  470

  1986–87

  491

  1987–88

  635

  1988–89

  638

  1989–90

  1,003

  1990–91

  1,171

  1991–92

  1,207

  1992–93

  1,512

  658

  £

  Year

  Payment per producer

  1993–94

  2,303

  1994–95

  2,345

  1995–96

  3,701

  1996–97

  5,684

  Figures are derived from the annual Farm Business Survey and relate to England and Wales. The figure for 1996–97 takes account of additional BSE related payments made to producers that year. Information for the earlier years and on a UK basis are not readily available and could be provided only at disproportionate cost.

  Farm Bankruptcies
  Mr. Paul Marsden
  To ask the Minister of Agriculture, Fisheries and Food how many farmers(a) nationally and (b) in Shropshire went bankrupt in each year since 1979. [34271]

  Mr. Morley
  The national data are set out in the table. Data by county are not available.

  Number of bankruptcies in the agricultural and horticultural sectors: England and Wales 1979–1997

  Bankruptcies of self-employed individuals

  Company1 insolvencies

  Total

  1979

  55

  30

  85

  1980

  50

  34

  84

  1981

  70

  51

  121

  1982

  78

  54

  132

  1983

  98

  74

  172

  1984

  155

  77

  232

  1985

  136

  102

  238

  1986

  130

  128

  258

  1987

  172

  126

  298

  1988

  163

  73

  236

  1989

  142

  78

  220

  1990

  198

  111

  309

  1991

  266

  135

  401

  1992

  313

  191

  504

  1993

  277

  157

  434

  1994

  231

  166

  397

  1995

  218

  99

  317

  1996

  168

  89

  257

  19972

  125

  40

  165

  1Including partnerships.

  2Not including data for the fourth quarter.

  Source:

  Department of Trade and Industry.

  Lindane
  Mr. Andrew George
  To ask the Minister of Agriculture, Fisheries and Food if he plans to ban the use of Lindane. [34785]

  Mr. Rooker
  Lindane has been used widely as a pesticide and in human and veterinary medicines for many years. In 1995, the independent Advisory Committee on Pesticides (ACP) reviewed a very substantial body of evidence on the toxicology of lindane in the course of a review of its agricultural uses; the Committee concluded that approvals should continue, as there was no evidence of an unacceptable risk to human health. The ACP also reviewed lindane's non-agricultural uses in 1992 when the same conclusions were reached.
  659
  Whilst the balance of our scientific advice is that insufficient evidence has been presented to justify immediate withdrawal of lindane, the Government are always ready to consider new findings. Lindane is currently the subject of a review under Community pesticides legislation and is also under discussion in the context of international negotiations on the long range transport of certain chemicals in the atmosphere. A pesticide can, of course, be withdrawn at any time, and I can assure the hon. Member that the Government would not hesitate to act if there was a real risk to human health or the environment.

  Correspondence
  Mr. Steen
  To ask the Minister of Agriculture, Fisheries and Food when he expects to reply to the letter from the hon. Member for Totnes of 21 January regarding the withdrawal of suckler cow quota from Mr. Ian Pedrick of Broadmoor Farm, Marlborough. [34951]

  Mr. Rooker
  [holding answer 17 March 1998]: My noble Friend the Parliamentary Secretary replied to the letter of 21 January from the hon. Member on 16 March.

  Agriculture Council
  Mr. Drew
  To ask the Minister of Agriculture, Fisheries and Food what was the outcome of the Agriculture Council held in Brussels on 16 and 17 March; and if he will make a statement. [35495]

  Dr. John Cunningham
  I chaired the third meeting under the United Kingdom Presidency of the European Union Council of Agriculture Ministers on 16–17 March in Brussels. My noble Friend Lord Donoughue, Parliamentary Secretary responsible for the farming and food industry, represented the United Kingdom. My noble Friend Lord Dubs, Under-Secretary of State for Northern Ireland was also present.

  The Council agenda included two very important issues relating to BSE.

  The Council first considered Commission proposals for amending the terms of the export ban on UK beef, with tighter controls over beef and beef products imported into the UK and then re-exported, but with significant easing of the ban through a Certified Herds Scheme to be operated in Northern Ireland. This proposal, which narrowly failed to receive a qualified majority in the Standing Veterinary Committee earlier this month, was adopted decisively by the Council, a qualified majority voting in favour. Only Germany and Belgium voted against, with Spain and Luxembourg abstaining. This decision represents the first step in lifting the world-wide ban on UK beef, and has been welcomed by farming organisations not only in Northern Ireland but in the United Kingdom as a whole.

  The Council returned to the important issue of specified risk material (SRM). The Standing Veterinary Committee earlier this month rejected a Commission proposal for a Community system of rules on the removal of risk material from cattle and sheep. I explored with Council
  660
  and Commission the possibility of finding support for alternative arrangements which would reflect not only the varying incidence of BSE in different member states but also the need for member states with high levels of protection against BSE—notably the United Kingdom and France—to safeguard this level of protection for public safety in any future system. The Council confirmed by a majority (from which only Finland, Spain and Sweden stood aside) the rejection of the Commission's latest formal proposal. The Council invited the Commission now to propose to the Standing Veterinary Committee that its earlier Decision on SRM, which would provoke trade problems, should not come into force on 1 April as previously decided, but should be deferred to allow further time for discussion. At ministerial level a qualified majority was established for this next step.

  The Council agreed unanimously a Decision to approve the equivalence agreement on trade in animals and animal products between the European Union and United States. The agreement will be signed when a qualified majority in the Council establishes that the US has published satisfactory draft legislation recognising the distribution of animal diseases in the EU. The Council's Decision represents a decisive stage on the part of the EU in concluding an agreement which will be important for trade in animal products between the EU and US, to the economic advantage of both sides.

  Commissioner Fischler introduced a proposal to update and extend current EU legislation on the welfare of laying hens. The proposal would substantially increase the minimum welfare requirements applying to laying hens throughout the Union. I welcomed this proposal on behalf of the Council and undertook that the UK Presidency will now arrange for the necessary discussions at technical level.

  Finally, the Council discussed a communication from the Commission about food, veterinary and plant health control and inspection. The Commission took note of concerns voiced by several member states about aspects of the present arrangements, and undertook to act on them.

  Set-aside
  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what was the total area by county, and the average payment per hectare in each of those counties, of set-aside land in(a) 1995, (b) 1996 and (c) 1997. [34604]

  Mr. Rooker
  Payment rates per hectare on land set-aside apply for England as a whole. The payment rates that applied and areas of land set-aside under the Arable Area Payments Scheme in each of the three years requested are as follows.

  Payment rates (£/hectare)

  1995

  1996

  1997

  Set-aside

  340.94

  338.03

  325.83

  Additional voluntary set-aside

  239.25

  237.21

  228.65

  661

  Area set-aside under the Arable Area Payments Scheme

  hectares

  1995

  1996

  11997

  Avon

  2,557

  2,295

  1,500

  Bedfordshire

  9,735

  8,097

  5,160

  Berkshire

  6,703

  5,159

  3,342

  Buckinghamshire

  10,033

  8,233

  5,509

  Cambridgeshire

  27,522

  21,931

  12,473

  Cheshire

  2,986

  2,393

  1,509

  Cleveland

  2,161

  1,717

  947

  Cornwall

  4,663

  4,027

  2,733

  Cumbria

  1,238

  1,077

  748

  Derbyshire

  4,215

  3,587

  2,207

  Devonshire

  7,408

  6,575

  4,467

  Dorset

  8,329

  6,724

  4,611

  Durham

  6,502

  5,010

  2,964

  Essex

  28,281

  21,868

  13,116

  Gloucestershire

  12,622

  10,364

  6,673

  Greater London

  906

  655

  511

  Greater Manchester

  735

  560

  396

  Hampshire

  17,802

  13,843

  8,919

  Hereford and Worcester

  13,709

  10,480

  6,483

  Hertfordshire

  10,985

  8,547

  5,126

  Humberside

  28,047

  21,210

  11,723

  Isle of Wight

  1,757

  1,326

  912

  Kent

  18,028

  13,933

  8,926

  Lancashire

  2,137

  1,709

  1,083

  Leicestershire

  14,803

  10,839

  6,369

  Lincolnshire

  47,145

  36,072

  20,149

  Merseyside

  1,283

  1,057

  645

  Norfolk

  33,212

  25,571

  16,269

  Northamptonshire

  17,709

  13,955

  8,266

  Northumberland

  13,053

  10,096

  5,672

  Nottinghamshire

  13,136

  10,120

  5,686

  Oxfordshire

  19,718

  15,762

  9,921

  Shropshire

  10,900

  8,311

  4,969

  Somerset

  5,993

  4,995

  3,262

  Staffordshire

  6,819

  5,470

  3,250

  Suffolk

  27,524

  21,893

  13,341

  Surrey

  3,125

  2,374

  1,811

  East Sussex

  5,764

  4,836

  3,713

  West Sussex

  7,027

  5,953

  4,029

  Tyne and Wear

  1,419

  1,124

  664

  Warwickshire

  11,980

  9,618

  5,891

  West Midlands

  840

  622

  367

  Wiltshire

  17,489

  14,400

  8,947

  North Yorkshire

  29,358

  22,552

  13,208

  South Yorkshire

  6,161

  4,794

  2,718

  West Yorkshire

  3,565

  2,638

  1,534

  11997 distribution of set-aside by county is provisional

  Unit

  Locations

  Number of staff

  Total salaries £000

  Estimated admin costs £000

  Information Division

  Central London

  78

  1,500

  1,237

  Legal Group

  Central London, Tolworth, Brecon, Swansea, Exeter, Harrogate, Maidstone and Peterborough

  121

  3,500

  1,189

  Economics and Statistics Group

  York and Central London

  203

  3,500

  488

  Information Technology Directorate

  Guildford, Central London and Cambridge

  325

  6,292

  130,612

  Finance Group

  Central London, York, Alnwick, Guildford and Bristol

  251

  4,835

  2,102

  1This includes budgets which ITD administer for the whole of core MAFF e.g. training, consultancy, maintenance, accommodation etc.

  662
  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what was the total area of set-aside land in the United Kingdom in(a) 1995, (b) 1996 and (c) 1997. [34603]

  Mr. Rooker
  The total area of land set-aside under the Arable Area Payments Scheme in the United Kingdom was 605,360 ha in 1995, 476,821 ha in 1996 and 295,334 ha in 1997. In addition 36,534 ha and 15,209 ha were set aside under the Five Year Set-aside Scheme in 1995 and 1996.

  Ministers and Top Management Programme
  Mr. Swinney
  To ask the Minister of Agriculture, Fisheries and Food how many staff are involved in the Ministers and Top Management Programme; where these staff are based; and what are the total salary bill and the administration costs for this programme. [34783]

  Mr. Morley
  There are currently 38 staff and four Ministers in the Department's secretariat which is located in Central London. The total salary bill for the secretariat, excluding Ministers, is £937,000. The total estimated administration costs (including Ministers salaries of £142,000 but excluding other salaries) are £714,000 per year.

  Current gross annual salaries (basic salary plus any pay additions and specialist allowances) have been used for the salary bill.

  Departmental Services
  Mr. Swinney
  To ask the Minister of Agriculture, Fisheries and Food what are(a) the number of staff employed by, (b) the salary bill of, (c) the location of offices used by and (d) the estimated administration costs in the current financial year of his Department's (i) Press and Information Service, (ii) Legal Service, (ii) Economic and Statistics Section, (iv) Information Technology Service, and (v) Financial Planning and Control Programme. [34786]

  Mr. Morley
  The information requested is shown in the table. Current gross annual salaries (basic salary plus any pay additions and specialist allowances) have been used for the salary bill. The latest estimated annual administration costs include all non-pay running costs and capital, less VAT recoveries. Money from receipts is not included.

  Consultants
  Mr. Swinney
  To ask the Minister of Agriculture, Fisheries and Food what is the total value of contracts sourced by his Department with(a) non-IT and (b) IT external consultants in (i) London and (ii) Scotland. [34784]

  Mr. Morley
  The information requested by the hon. Member could be provided only at disproportionate cost.

PRIME MINISTER

  Engagements
  Mr. Cranston
  To ask the Prime Minister if he will list his official engagements for Wednesday 18 March. [33419]

  The Prime Minister
  This morning I had meetings with Ministerial colleagues and others. In addition to my duties in the House I will have further such meetings later today.

  Public Appointments
  Mrs. Lait
  To ask the Prime Minister how many of the appointments to public bodies which he has made since 1 May 1997 have been from the Public Appointments Unit list. [33258]

  The Prime Minister
  My aim is that appointments to public bodies should be from a wide range of sources. The Public Appointments Unit is one source as are advertisements for specific posts. I have made twenty-one appointments since 1 May to bodies listed in "Public Bodies" one of which was from the Public Appointments Unit list.

  Ministerial Visits
  Mr. Forth
  To ask the Prime Minister, pursuant to his answer of 3 February 1998,Official Report, column 581, on ministerial visits, if he will list the occasions prior to 1 May 1997 when the personal companion of a Minister travelling on official business was not a spouse. [33370]

  The Prime Minister
  I am not accountable for previous administrations.

  Government Reviews (Wales)
  Sir Raymond Powell
  To ask the Prime Minister if he will list each Government review currently taking place which affects Wales; and in each case, if it is intended to be completed before the proposed date for elections to the Welsh Assembly. [33701]

  The Prime Minister
  My Government have in place a wide programme of reviews which are intended to underpin their work, and that of my right hon. Friend the Secretary of State for Wales in particular, in extending democratic accountability; increasing economic prosperity and improving the quality of life for people throughout Wales; and realising Wales's potential within the UK, Europe and the wider world.
  664
  A summary of the reviews being undertaken currently by the Welsh Office is as follows:

  Welsh Office Reviews

  To be completed before Assembly Elections

  Health

  Review of Health Authority allocation formula

  Yes

  Review of NHS Capital Charges

  Yes

  Review of Health Promotion arrangements in Wales

  Yes

  Location of various activities of the Welsh Health Common Services Authority after 999

  Yes

  Review of the number and configuration of NHS Trusts in Wales

  Yes

  Education

  Review existing exemptions from Statutory requirements to teach Welsh at Key Stage 4 in 10 secondary schools

  Yes

  Review the National Curriculum taught in Wales and examine options for slimming down the curriculum taught in primary schools

  Yes

  Review of the role of the Welsh Language Board in Welsh language education

  Yes

  Planning

  Review of Opencast Coal Planning Policy

  Yes

  Review of Minerals Planning Guidance

  No

  Review of Planning Guidance (Wales) Planning Policy

  No

  Review of Planning Guidance (Wales) Unitary Development Plans

  No

  Local Government

  Review of the arrangements for ensuring democratic accountability of local government, the conduct of elected members and officers and the systems for financing local services and promoting Best Value

  Yes

  Transport

  Fundamental Review of transport policy including review of the Welsh trunk road programme; the development of an integrated transport policy; buses; regulation of the railways

  Yes

  Social Services

  Review of Purchasing Requirements for, and provision of, Drug and Alcohol Residential and Community Facilities in Wales

  Yes

  Agriculture

  Review of the Habitat Scheme

  Yes

  Review of the Meat and Livestock Commission

  Yes

  Common Agricultural Policy Administration Study

  Yes

  Finance

  Comprehensive Spending Review

  Yes

  Iraq
  Mr. Dalyell
  To ask the Prime Minister what discussions Her Majesty's Government have had with the Chinese over their interpretation of recent UN
  665
  Resolutions, in relation to authorising the commencement of military action, undertaken in the name of the United Nations against targets in Iraq. [34318]

  The Prime Minister
  During the recent Iraq crisis we maintained close contact with all members of the Security Council, including the Chinese.

  Security Council Resolution 1154 was adopted unanimously by the Security Council. All members, including China, agreed that further violations of Iraq's obligations under relevant Security Council Resolutions
  666
  and the Memorandum of Understanding signed in Baghdad would be followed by the severest consequences.

  Rupert Murdoch
  Mr. Gray
  To ask the Prime Minister when he last met Rupert Murdoch; where that meeting occurred; and what was discussed. [35061]

  The Prime Minister
  I refer the hon. Member to the reply I gave to the hon. Member for Lewes (Mr. Baker) on 5 March 1998,Official Report, column 702.

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

Royal Assent
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Consolidated Fund Act,

Fossil Fuel Levy Act,

Wireless Telegraphy Act,

Nuclear Explosions (Prohibition and Inspections) Act.

Vitamin B6
2.37 p.m.
Earl Baldwin of Bewdley Earl Baldwin of Bewdley asked Her Majesty's Government:
What is the basis for proposing a toxicological safety factor of 300 for Vitamin B6 while approving a factor of less than 10 for fluorides added for dental health purposes to the public water supply.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, I feel that I must say to the noble Earl, with great respect, that in this instance he is simply not comparing like with like. We are back in the territory, familiar to your Lordships' House, of comparative risk assessment, but to engage in that rationally we really do need to compare apples with apples, and not apples with oranges. The more appropriate comparison would be the safety factor of five applied by the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment to the lowest intake of Vitamin B6 reported to have an adverse affect on humans. A safety factor of 300 was applied to the lowest level of Vitamin B6 causing adverse effects in dogs.
Earl Baldwin of Bewdley: My Lords, I am grateful for that reply. However, I would still press the noble Baroness as to whether there is not something askew in this matter of risk assessment. The understanding, according to the papers that have been issued, is that the risk of 300 is calculated on proposals for humans. I still ask how the Minister can possibly justify treating an essential vitamin which we all need as though it were a dangerous drug and at the same time permit a substance, for which, and I quote from the Department of Health's Report No. 41, Dietary Reference Values:
"No essential function … has been proven in humans",
to be distributed through the water supply where we all drink it at a level not far below the toxic dose. They cannot both be right.
Baroness Jay of Paddington: My Lords, I hesitate to get into detailed discussion of those two facts at Question Time. Perhaps it would be more appropriate to arrange a longer debate through the usual channels, as the noble Earl and I have already discussed. Vitamin B6 is not prohibited like a dangerous drug. It continues to be sold in food supplements at the level which is widely regarded as appropriate for human consumption.
On the question of fluoride, perhaps I may quote to the noble Earl from the Government's latest statement in the Green Paper, Our Healthier Nation, published last month, which states that the Government are,
"concerned to explore ways of bridging the gap between those who are opposed to any fluoridation of the water supply and those who believe that only in this way can the children most at risk be protected against the damaging effects of tooth decay … but it is of the view that fluoridation offers an important and effective method of protecting the population from tooth decay".
Lord Campbell of Croy: My Lords, as all water in Britain contains fluoride—in some areas, in the optimum proportion for the protection of teeth—are the Government making it publicly clear that fluoridation is intended simply to top up the fluoride that is already there naturally in water?
Baroness Jay of Paddington: My Lords, as I said in answer to the noble Earl's supplementary question, we are aware of the strong views which exist on both sides of the argument. That is why we have issued the Green Paper as a consultation document rather than taking a specific view although I have indicated the Government's overall position. The noble Lord is right in saying that fluoride exists naturally in water and that the fluoridation of the water supply to one part in a million can reduce the amount of tooth decay in children from similar backgrounds from one-third to one-half.
Lord Avebury: My Lords, can the Minister say how many millions of people in the United Kingdom are now drinking fluoridated water and whether she agrees that there is not a single iota of epidemiological evidence to show that any harm is being caused to any individual by drinking such water? Will the Government now take steps to persuade all those local water companies which have not yet done so to extend the benefits of fluoridated water to the rest of the population so that a great deal of suffering and dental treatment can be avoided?
Baroness Jay of Paddington: My Lords, I am afraid that I cannot answer the noble Lord's first question about how many millions of people are now drinking water containing fluoride because, as the noble Lord, Lord Campbell of Croy, mentioned, a great deal of our water contains fluoride naturally. On the noble Lord's question as to whether studies have shown any adverse effects from drinking fluoridated water, as I understand it, studies in the United States have shown that where there is a high concentration of fluoride, there might be the potential for visible markings on the surface of the teeth of children and others drinking it. However, that is not true of those low levels of fluoride in the water which I have suggested are appropriate to reduce tooth decay.
The Countess of Mar: My Lords, am I correct in my understanding that the general sale of Vitamin B6 is being limited because there is the possibility of neurological damage to people taking very high doses but that that is reversible when they stop taking the medication? How many people have been found, on epidemiological studies or clinical examination, to have neurological damage, and what proportion of people are suffering from neurological damage because of organophosphates?
Baroness Jay of Paddington: My Lords, I shall have to write to the noble Countess and provide the precise statistics on the relative numbers. I am sure she will be aware of the suggestion that 1.2 milligrams of Vitamin B6 as a daily intake for women is sufficient to maintain their health and certainly will not cause any neurological condition. That is the safe level at which it can be taken to good effect.
Lord Stoddart of Swindon: My Lords, does my noble friend agree that the Government's policy on this and other matters is quite irrational? Does she agree that many children and adults use toothpastes that contain fluoride which over a long time builds up in the body? If that is supplemented by the addition of fluoride to drinking water it may constitute a health hazard. Does my noble friend agree that the addition of fluoride to drinking water is mass medication and that children's teeth would be better taken care of if they had an improved diet and parents were advised accordingly?
Baroness Jay of Paddington: My Lords, I certainly do not agree that the Government's position on this or any other policy is irrational. In this very complicated area of relative risk assessment, which noble Lords and I have discussed on many occasions, we seek to assess the extremely expert scientific advice that is given to the Government. It is not rational for Ministers to try to second guess the scientific evidence of those in an expert position to advise the Government. As to the specifics of fluoride in children, as I said in reply to the noble Lord, Lord Campbell of Croy, there are varying views. For that reason, although the Government have expressly stated their opinion about low levels of fluoridate in water, they have asked for wider consultation so that all views can be taken into account.
The Earl of Clanwilliam: My Lords, does the noble Baroness accept that the fluoride which occurs naturally in water is a sulphide whereas that which is added by human beings is a sulphate? Does the Minister accept that there is some concern over the Committee on Toxicity? Has that committee been instructed to examine the use of fluorides and, if so, what was the result?
Baroness Jay of Paddington: My Lords, no, the COT has not been asked to advise on fluoride. I understand the scientific point that the noble Earl raises, but I refer him to evidence, particularly that from
710
the United States, which suggests that it is only with very high doses of fluoride in water occurring naturally or with supplements that ill effects are recorded.
Earl Howe: My Lords, is the Minister aware that the subject of Vitamin B6 is one which over the past few months has caused great concern to a large number of people and that those individuals feel that the Committee on Toxicity has not considered all of the relevant evidence? Does the noble Baroness have any comment to make on that? Is it too late for the Committee on Toxicity to reconsider the whole question?
Baroness Jay of Paddington: My Lords, I am aware that there has been considerable interest in this matter particularly on the part of those who represent the industry and the complementary medicine interests. However, the COT considered over 100 scientific papers from national and international journals before reaching its recommendation. As I said in answer to my noble friend Lord Stoddart, the Government see no reason to reopen that inquiry.

Trade Union Representation
2.47 p.m.
Lord Islwyn Lord Islwyn asked Her Majesty's Government:
What discussions they have held with the Confederation of British Industry and the Trades Union Congress on trade union representation at the workplace.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the CBI and TUC met the President of the Board of Trade on 9th December to present their joint statement on trade union recognition. The Government have held discussions with both organisations subsequently.
Lord Islwyn: My Lords, does the Minister agree that trade union recognition should be automatic when a majority participating in the ballot are in favour, and that the trade union should then have the right to be consulted on matters which affect the working lives of its members, whether it be pay, working conditions or future job security? Likewise, does my noble friend agree that the trade union should be involved in partnership to raise the training and skill level of the workforce? Finally, does my noble friend agree that there has been a tendency on the part of the CBI to sabotage a clear electoral commitment by the Labour Party?
Lord Clinton-Davis: My Lords, I do not propose to enter into vituperative allegations about any of the representations that have been made. We are searching for a solution to strongly held views on both sides of the argument. It is important that the manifesto commitment that we made should be clearly understood. People should be free to join or not to join a union. Where they decide to join and a majority of the relevant

711
workforce votes in a ballot for the union to represent them the union should be recognised. I believe that this underlines one of the points that has been made by my noble friend. This promotes stable and orderly industrial relations. There will be full consultation on the most effective means of implementing this proposal. That still stands.
Lord Garel-Jones: My Lords, is it not the case that now the Social Protocol has been elevated to the status of the full Social Chapter under the treaty these matters will be decided in Brussels and not here?
Lord Clinton-Davis: My Lords, no. This is a matter which will be decided on the basis of arguments that we are hearing from both sides. At the end of that time, the Government, having sought to reconcile the views—I hope that we shall be successful in doing that—will make their decision.
Lord Rochester: My Lords, I understand that the Minister cannot tell us the Government's decision on this controversial question today, but can he assure us that, as a means of bridging the gap between the views of employers and trade unions that has emerged in discussions, the Government are giving careful consideration to the proposal that a trade union should be recognised where that course is desired by a majority of those voting in the relevant work unit, provided that a minimum percentage of those eligible to vote takes part in the ballot?
Lord Clinton-Davis: My Lords, the noble Lord has put his finger on one of the main areas of contention in the respective views that are being put forward. I do not propose to take the argument any further on the Floor of the House this afternoon. We shall announce our decision in due course once all the representations have been heard and we have made our assessment. I can assure the House that a substantial area of full agreement was reached between the parties. There is another area of partial agreement between the parties, and we are left with the residue where insufficient progress has been made. There has been a great advantage in undertaking these discussions to identify, and, in some respects, reconcile competing points of view.
Lord Evans of Parkside: My Lords, does my noble friend accept that if the CBI's proposals on workplace recognition were adopted, this country might face some serious industrial unrest? Does he accept that if a trade union were subsequently derecognised because it could not obtain the support of more than 50 per cent. of a company's entire workforce—a virtually impossible task, because those not voting would be counted as voting against—the chances are that that union would immediately ballot its membership in that plant seeking support for industrial action to maintain recognition in those areas of the company's workplace where it already had recognition?
Lord Clinton-Davis: My Lords, I recognise the strength of my noble friend's views on this matter, but,
712
as I have already said, I am not prepared to come down on one side or the other at this stage. I have reflected the manifesto commitment into which we entered. That is a clear pledge. The whole purpose underlying our approach is to ensure that there is a recognition of the dignity of work and of the people on the workshop floor: that they have an entitlement to a say; in other words, that there should be fairness and equity in the workplace. That is the underlying proposition. I do not want to contemplate the situation where we reach an impasse where industrial lines are taken by both sides, and the draconian consequences spelt out by my noble friend were to take place. That is the very thing that we want to avoid.
Lord Dixon-Smith: My Lords, does the Minister agree that good and successful industrial relations in the workplace—to use the technical jargon—are not dependent exclusively upon the presence and operation of trade unions; and that there are many successful business enterprises in this country that work well and are successful in this area without a trade union presence?
Lord Clinton-Davis: My Lords, 88 per cent. of the large enterprises in this country recognise trade unions. That is the appropriate riposte to that question.
Lord Dean of Beswick: My Lords, bearing in mind that successive governments of this country have been signatories to the ILO, have the Government sought its advice on this issue?
Lord Clinton-Davis: My Lords, no. It is not appropriate for us to discuss this issue with the ILO, and certainly not at this stage. We are committed to internationally recognised standards at work. That is why we are determined to respect our international obligations at the ILO, which is far more than our predecessors did, and was one of the reasons why we recognise trade union representation at GCHQ.

Northern Ireland: Use of Plastic Baton Rounds
2.54 p.m.
Lord Stallard Lord Stallard asked Her Majesty's Government:
When the new guidelines concerning deployment of plastic bullet rounds will be available to the Chief Constable of Northern Ireland.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, I understand that the Association of Chief Police Officers has completed an extensive review of the handling of public order and of the use of plastic baton rounds. Representatives of the Association of Chief Police Officers met officials recently to discuss the findings of that review. The results will be put forward soon for

713
consideration by Ministers. Following that consideration, appropriate guidelines on the deployment of plastic baton rounds will be issued to chief police officers, including the Chief Constable of the Royal Ulster Constabulary. I expect those guidelines to be issued before the summer.
Lord Stallard: My Lords, I am grateful to my noble friend for that reply, but I think that the Government have left it too late to introduce these new guidelines, as the officers who are intended to use these plastic bullets need a great deal of training, and the marching season is just days away. They have no new guidelines so they will be operating under the old guidelines which have, as my noble friend will be aware, caused many deaths, including the deaths of young children, and caused hundreds of people to be permanently disabled. The Government should be considering a complete ban, in line with the 1982 European Parliament decision to ban the use of all plastic bullets throughout Europe.
Lord Dubs: My Lords, as my noble friend said, the RUC already operates and uses these plastic baton rounds under force orders. It is trained, as is the Army, to use them. Plastic baton rounds are used by the police and Army in Northern Ireland only when there is a significant risk to life or property of some importance—for example, people's homes—and their use is the only means to protect against those threats. The Government regret the need to deploy them, but sadly the scale and nature of violence in Northern Ireland is such that it remains the view of the chief constable and Her Majesty's Inspector of Constabulary that they are needed.
Lord Hylton: My Lords, will the Government work towards achieving the minimum use of plastic bullets generally and, more particularly, at night, because of the risk of inaccurate firing? Will they try to raise the seniority of officer who has to sanction their use in Northern Ireland aligning the position more closely with that in England?
Lord Dubs: My Lords, I understand that the officer who sanctions the use of plastic baton rounds has to be the senior officer on the spot. I am not sure that we can go higher than that, given that it is important that the decision is taken in the light of the particular circumstances at the time. It may reassure the noble Lord to know that, with the exception of events during the past two marching seasons, the use of plastic baton rounds has decreased significantly; for example, last October/November one was used in each month; last December, 170 were used during the Apprentice Boys march in Derry on 13th and 14th December. We want to use them as little as possible
Baroness Denton of Wakefield: My Lords, does the Minister agree that the way to create the minimum use of plastic baton rounds would be for there to be no rioting or violence on the streets? If that were to happen there would be no need for plastic baton rounds.
Lord Dubs: My Lords, I thank the noble Baroness for that question, and of course I very much agree with what she says. Since the troubles in Northern Ireland, nearly 1,000 members of the security forces—that is, police and Army—have been killed, and over 14,000 have been injured. Their lives are on the line every day.
Lord Marsh: My Lords, without underestimating the seriousness of the problem, is it not a source of some congratulation that this is probably one of the few countries where civil disturbances of this seriousness are put down by rubber bullets rather than live ammunition?
Lord Dubs: My Lords, yes. We use plastic baton rounds because they are less harmful than any other weapon available to the security forces.
The Earl of Carlisle: My Lords, what research is being conducted into producing a new round which does not have such an incapacitating effect as the plastic bullet?
Lord Dubs: My Lords, I do not have the answer to that question. Over time significant improvements have been made in the safety of plastic baton rounds and I assume that that continues. However, I shall write to the noble Lord with an answer to his question.
Lord Monson: My Lords, does the Minister agree that a petrol bomb is a lethal weapon and that therefore the security forces should not be inhibited from using plastic baton rounds against those who throw petrol bombs?
Lord Dubs: My Lords, yes, petrol bombs represent a serious risk to the lives of members of the security forces. We will look to the new guidelines to ensure that the security forces have plastic baton rounds at their disposal. However, they will continue to be trained to use them in limited circumstances when it is necessary to do so.
Lord Stallard: My Lords, is the Minister prepared to accept that plastic bullets have been proved to be counter-productive and that throughout Northern Ireland there is massive resentment against their use? Communities on both sides have been almost alienated from the security forces by the use of such bullets, which are lethal weapons. It is a bit much to say that they are necessary to protect property in case it is damaged when they are not used to protect property anywhere else in the United Kingdom.
Lord Dubs: My Lords, I repeat that we would like not to have to use them and would not do so if the circumstances in the streets of Northern Ireland were such that that would be a safe course to take. They are used by the security forces only in extreme situations, normally when there is a risk to life or to property of some importance; for example, the homes of people when they are threatened. I hope that there will soon come a time when we do not have to use them.

Freemasons: Disclosure of Membership
3.1 p.m.
Lord Waddington Lord Waddington asked Her Majesty's Government:
What is their policy towards the freemasons; and what are the implications of this policy for the United Kingdom's adherence to the European Convention on Human Rights.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, the Government have a policy in relation to openness and transparency about members of the criminal justice system who are freemasons. This policy is consistent with Article 8 of the European Convention on Human Rights.
Lord Waddington: My Lords, I thank the Minister for his Answer. Did not the noble and learned Lord the Lord Chancellor argue against judges being required to disclose membership of the freemasons not least, no doubt, because once the Home Secretary has said that people might think that a freemason would not act impartially, the logical next step is to ban freemasons from the Bench entirely and end our tradition of making appointments on merit alone? If the Home Secretary is right, as he said in his press statement, that membership of secret societies—in the plural—can raise suspicions of partiality, how can he justify picking on one such society, demanding that it produces lists of members, and trying to argue that in spite of that blatant discrimination there was no breach of the convention? Does not the Minister feel just a twinge of unease at this attack on the freemasons when he recalls that one of Hitler's first acts was to ban the freemasons in Germany?
Lord Williams of Mostyn: My Lords, the decision which was reached by the Government was based substantially on the 3rd Report of the Home Affairs Select Committee of the Session 1996–97, during which time the committee had a Conservative chairman during the currency of the previous regime. The freemasons are not being picked on. The committee stated that a better solution lies in the hands of freemasonry itself by openness and disclosure. I know of no other secret society—perhaps because it is secret—which has caused the kind of concern that freemasonry has caused. The Home Secretary and the noble and learned Lord the Lord Chancellor have stated firmly that for new appointments to the criminal justice system, including judges, whether full time or part time, a necessary precondition of appointment will be the requirement to register yes or no to the simple question, "Are you a freemason?".
Lord Monkswell: My Lords, does the Minister agree that bearing in mind the experience in living memory of virtually all the Continental countries being subject to a police state, requiring secrecy on the part of people in working together to oppose the regime, and bearing in mind that the Combination Acts in this country were abolished in the last century, it cannot be part of our British way of life to tolerate secret societies in our midst?
Lord Williams of Mostyn: My Lords, two separate points are involved. First, is any man—most members are men—entitled to join the society he wishes? It seems to me anyone is entitled to join and be a member of a lodge if he wishes. Equally, as regards such sensitive areas, the public are entitled to know whether practitioners in the criminal justice system are freemasons. The other place has a register of interests and so does your Lordships' House. I see no difficulty about that.
Lord Henley: My Lords, can the Minister confirm that the Home Secretary has had a meeting on this subject with the noble and learned Lord, Lord Bingham, Britain's most senior judge? Can he also confirm that the noble and learned Lord, when giving evidence to the Select Committee, stated:
"No one has ever been able to suggest that there has ever been a vestige of evidence that any judge in any case ever in this country has been diverted from his duty by any conflict arising from freemasonic association"?
Lord Williams of Mostyn: My Lords, the Home Secretary and the Lord Chancellor have constant contact with the Lord Chief Justice on appropriate areas of common interest. This morning I read in the newspapers what the Lord Chief Justice is reported to have said. Of course, as it was in the newspaper as it was undoubtedly 100 per cent. accurate. My proposition is that perception is extremely important. If people feel that they are not being dealt with openly by police officers, magistrates, prison officers, probation officers or judges they ought to have their suspicions, even if groundless, put at rest. Openness is a useful corrective to wrongly based suspicion.
Lord Ewing of Kirkford: My Lords, for the avoidance of doubt, as lawyers would say, can we assume that the noble and learned Lord the Lord Chancellor, as the holder of the most senior legal office in England, would have to declare whether he was a member of any secret society?
Lord Williams of Mostyn: My Lords, the noble and learned Lord the Lord Chancellor has no secrets of any kind.
Lord Waddington: My Lords, the Minister referred to the Home Affairs Select Committee. Is it not correct that that committee originally concluded that there was no need whatever to register membership of the freemasons; that it was only after the general election that the new Labour chairman sought to use the Labour majority to change the conclusion; and that the conclusion reached does not connect in the slightest degree with evidence given to the Select Committee?
Lord Williams of Mostyn: My Lords, I believe that the noble Lord is wrong. The committee's report made the principal recommendation that police officers, magistrates, judges and Crown prosecutors should be required to register membership of any secret society. If there is nothing to hide, if there is nothing to be ashamed of, why not be open?

Tyne Tunnels Bill
3.8 p.m.
Read a second time, and committed to an Unopposed Bill Committee.

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

The Arts
3.9 p.m.
Lord Puttnam Lord Puttnam rose to call attention to the importance of the arts in the life of the nation; and to move for Papers.
The noble Lord said: My Lords, before raising my cultural banner, may I just say how grateful I am to the extraordinary number of your Lordships who have chosen to speak in this debate. I must admit that in my naivety, when this was first discussed, I thought there was a strong possibility that I would be required to speak for five hours. I saw this as a cynical manoeuvre by the Chief Whip to ensure that the hard-working Peers on this side of the House had an afternoon off. That is clearly not the case.
It is exactly 50 years since T. S. Eliot published a slim volume entitled Notes Towards the Definition of Culture. In it, he asserted:
"Culture may be described simply as that which makes life worth living".
It is a wonderfully simple formulation. It is an expression of an inner truth with which all of us can surely identify precisely because, I am sure, we have all felt it at one time or another.
The arts are an essential element of the cultural and creative lifeblood of any nation. They sustain the conscience and vitality of a society. One measure of any community wishing to regard itself as truly civilised is the quality and depth of its artistic achievement.
I am extraordinarily honoured to open today's debate, taking place as it does against a backdrop of considerable and well-publicised upheaval in the artistic life of this country. Some of those changes, such as the role of the National Lottery in funding support for the arts, are already having a very profound impact. Other changes may prove more far-reaching and their impact rather less predictable.
I wish to address three principal issues: the nature of change; the "schism" that I believes continues to bedevil our concept of the arts in this country; and the relationship of the arts with government.
One change is the development of new digital technologies which have the potential to alter radically the way in which art is created, communicated, enjoyed and, some would argue, even defined. Another change is the shift towards a "creative economy" whose principal output depends on the imagination of individuals rather than the manufacture of tangible goods. The results of some of those changes will take time to make themselves felt—10, 15 or perhaps even 20 years.
Ideas about what constitutes art inevitably change with time. That is only healthy. Ideas about the purpose of art may also be subject to earnest and constant debate. But the imaginative power of the arts—their unique capacity to enable us to see the world and ourselves afresh—remains immutable. How many noble Lords sitting in this Chamber 100 years ago would have dreamed that the "kinematograph"—that ghostly medium of moving images then barely two years old—would, along with its progeny, become widely acknowledged as probably the most influential art form of the 20th century?
Many of the self-appointed custodians of traditional culture dismissed cinema as little more than a novelty, another craze for the hoi polloi which would quickly burn itself out amid the gloomy city slums where it had most firmly taken root. Other less mean-spirited souls took a more enlightened and altogether more benevolent view. No less an artist than Tolstoy warmly welcomed the advent of cinema and set his sights on writing a screenplay. Sadly for us, his dream never came to fruition. But in hailing the invention of cinema, Tolstoy recognised that art is first and foremost a means of communicating ideas and emotions. Film was dubbed "the great democratic art" by some early commentators precisely because it could be enjoyed by all, regardless of class, income or educational ability.
As I know from my own experience, for far too long our film industry was bedevilled by a schism between those who saw the cinema solely in terms of art and those who saw it purely through the "box-office" window. So I am delighted that the film industry is at last learning to speak to government with something approaching a single voice. I have no doubt that the resulting dialogue will eventually benefit both the artistic quality and the commercial success of British film-making.
The debate about cinema is just one of a whole series of false dichotomies that have plagued public discussion of the arts in this country; the old versus the new, artistic quality versus commercial imperative and, of course, the most damaging of all, highbrow versus lowbrow.
Our concepts about the form and function of art have undergone many radical shifts in the course of this century. Modernism and post-modernism, in a variety of forms, ignited furious debate. Yet, if the history of the past 100 years has taught us anything, it is that we must continually remain open and receptive to innovation and experiment. What shocks us today becomes mainstream tomorrow. We must actively cultivate that "generosity of vision" which, while remaining critical, can encompass the new.
Perhaps it was because she understood precisely that point that Jennie Lee, our first Minister for the Arts, once described herself as "the Minister for the Future". But that is only half the story. This country is fortunate in having an extraordinarily rich and diverse artistic heritage. Our poets, playwrights, musicians and painters have all left us works which are enjoyed and admired around the world, in many cases by those who have never had the opportunity to visit the United Kingdom and perhaps never will. The plays of Shakespeare, the prose of Dickens and the music of Elgar: each, in its own way, offers a unique glimpse into the imaginative life of this country. Art is an ambassador on behalf of the nation, helping to shape the way in which others see us. It is also the means by which we accurately calibrate the changes taking place within our society. If I am given a choice between a focus group and the work of a perceptive and independently-minded artist, I know which I should trust for an acute sense of our political reality.
The relationship between the arts and the state is necessarily delicate. The arts cannot survive without the state. But they thrive best at a healthy distance from the state. The 20th century offers plenty of chilling examples of what happens when that distance is diminished. The arts rapidly diminish with it.
Even in the most enlightened state, there will never be enough funding for the arts. However, if we want them, we simply have to find a way of paying for them. It is my hope that today's debate will help to stimulate ideas about how best that might be achieved.
I welcome warmly the announcement made in yesterday's Budget which, against a background of financial constraint, provides evidence of the Government's commitment to excellence in the arts and access to the best of our arts. As well as government, business has a role to play in promoting the arts. Backing from business rose by 20 per cent. in 1996–97 to almost £100 million. The Department for Culture, Media and Sport and the Association for Business Sponsorship of the Arts are undertaking a radical review of how business can be encouraged to give even greater support to the arts.
The National Lottery is an increasingly important source of finance. Some £1.2 billion has been injected through our arts councils over the past three-and-a-half years. For me, the most interesting new initiative arising from that is the arts councils' "stabilisation scheme" which allows selected arts institutions a one-off subvention, akin to a dowry, intended to secure their long-term financial and administrative stability.
A much more difficult task for the long term in arts funding is to find a sustainable equilibrium in our commitment between the past, the present and the future. That is an extraordinarily delicate task and one which I hope some of your Lordships will address. On the one hand, we have a duty to understand, protect and conserve our artistic tradition, our buildings, our paintings, our sculptures and our manuscripts along with all the other concrete expressions of our cultural and spiritual life. The buildings and gardens of this country
720
are among our greatest national treasures. As the late Lord Clark of Saltwood put it with characteristic eloquence:
"If I had to say which was telling the truth about society, a speech by a Minister of Housing, or the actual buildings put up in his time, I should tend to believe the buildings".
Yet those buildings require constant care and attention if they are to survive for the enjoyment of future generations.
As recent events in the Palace of Westminster demonstrate, undertaking that duty can be a costly and, at times, even an unpopular task. That is no reason for evading the responsibility. Future generations are unlikely to thank us for bending to a fashionable clamour stoked by the media, principally in their own interests.
Some of your Lordships may have seen an article published in The Times last Wednesday in which Mr. John Tusa, director of the Barbican Centre, argued that the Government had effectively abandoned any concern for the traditional arts in favour of courting the luminaries of the shiny new world of the "creative industries"—fashion, pop music and film. In the past, Mr. Tusa has had many important and perceptive things to say about the arts. But in this instance his argument seemed intent on sustaining that desperately damaging and reductive schism between concepts of high and low art to which I referred earlier.
Of course, there will always be those who seek to defend "the purity and integrity" of the higher arts, concerned by the demands—as they would see it, the threatening demands—of greater public access. It has become all too easy to interpret any move to broaden our conception of the arts, to enhance access, as somehow diminishing "quality"; invoking that ubiquitous catchphrase, which even recently—and to my amazement—found its way into your Lordships' Chamber, "dumbing down".
I feel that I owe your Lordships some examples of what I think "access" really might mean. Over 8 million people a month now tune into Classic FM—wildly in excess of anyone's initial expectations. Although sneered at by some purists, it has, to its immense credit, significantly extended the audience for classical music in Britain. It has launched a magazine which is far and away the most successful in the sector, and a record label which will invest over £5 million in recordings of new classic music over the next five years.
A recent production of "Madam Butterfly" at the Royal Albert Hall played to a 96 per cent. capacity audience, 60,000 people, many of whom had never been to a live opera before. Those individual triumphs—and I could cite a dozen more—clearly indicate that traditional forms of art, even "high" art, and broad access are not mutually exclusive.
Reaching out beyond the core audience for any arts activity—be it ballet, dance, theatre, or the fine arts—is always dangerous and never easy. But it can, indeed it must, be done; if artistic endeavour in this country is to have any chance of a vibrant future. Williams Morris, a

721
great artist and educationist, and one of my personal heroes, looked forward to a time when, as he put it,
"all men would he artists, and the audience for art would be nothing short of the whole people".
The arts and education are inextricably intertwined. That has always been true in a cultural sense. But evidence from around the world suggests that, in the 21st century, a successful meshing of arts and education will become ever more essential to social stability and economic success. Much, much more can and must be done if we are to take advantage of the extraordinary stimulus that the arts can offer to the education of the next generation.
In addition to being an invaluable educational asset, the BBC is the most powerful patron of the arts in this country. Its contribution is in every respect vastly greater than the sum total of central government funding. To that extent, it is no exaggeration to say that it fulfils the role once held by the Church. The BBC has served as a unique and honourable example of what politically and commercially disinterested patronage can achieve—from live opera to comedy, from the finest documentary to productions at the cutting edge of contemporary drama. It is an asset whose value to Britain is utterly incalculable.
I believe it is fair to say that, in every country of the developed world, it is now fully accepted that the arts cannot be left totally to the mercy of the market place. That being so, the question is: how do we continue to promote and build on the core values of our cultural heritage without resorting to a suffocating form of "curatorial narrowness?"
We are experiencing the emergence of a new global economy, fundamentally driven by two things—information and images— and these themselves are becoming practically synonymous as a result of digital technology. That may well mean expanding our whole notion of culture to embrace many new areas—for example, fashion, architecture, design, photography and even computer design—which have until now been largely excluded from serious discussion.
As my right honourable friend the Prime Minister has put it:
"Our future depends on our creativity".
We have to find the energy, the confidence and the organisation to exploit the opportunities that lie ahead, while never ceasing to promote an enduring commitment to excellence. In a world in which the shared assumptions of religion, community and tradition are disintegrating, the arts provide an increasingly vital means of identity and communication between communities and nations.
Art may be used to glorify power. It may celebrate revolution, or reaction. But all true art touches us because it is the expression of the human spirit, of our human spirit, and truly great art can reach out and
722
awaken, or reawaken, that shared humanity across generations as much as across cultures. John Ruskin observed:
"Great nations write their autobiographies in three manuscripts, the book of their deeds, the book of their words and the book of their art. Not one of these books can be understood unless we read the other two, but of these three, the only trustworthy one is the last"—
our cultural heritage. It is an honourable and an entirely inspiring thought, and one that I hope we can keep in mind throughout today's debate. My Lords, I beg to move for Papers.
3.25 p.m.
Baroness Rawlings: My Lords, we are truly grateful to the noble Lord, Lord Puttnam, for initiating this important and potentially wide-ranging debate, demonstrated by the many distinguished speakers who will take part today. Artistic production is not an imaginative big bang out of nothing. It needs the nourishment that our heritage provides, even if it does so only to reject it. Today's art is tomorrow's heritage.
Many of your Lordships will no doubt be stressing the economic importance of the arts. They employ 2.5 per cent. of our workforce nationally. The performing and contemporary visual arts have an annual turnover of more than £1 billion. Their overseas earnings amount to £6 billion a year and design and related activities are worth £12 billion a year. The film, "Four Weddings and a Funeral" alone grossed £160 million, and the musical "Cats" over £100 million. That is an impressive list of which we can be proud.
The arts are an important part of our national identity. The creation by the previous government of the Department of National Heritage, with a Minister of Cabinet rank, was not only a recognition of its growing economic importance but also of its role in defining our national identity. By creating the National Lottery, the previous government also generated undreamt of funds.
In Italy they go further by combining the position of deputy Prime Minister with that of Culture Minister in the dynamic form, at present, of Walter Veltroni. The trouble only arises, as it did in France, when government interference results in using art to manipulate the national identity. With the rebranding of Britain as "Cool Britannia", Labour has entered the arts world with enthusiasm as if it were some down market shopping mall with, to quote John Humphrys, "infernal muzak"— an image of new Britain filled with possible pitfalls.
First, the polished image of "Cool Britannia" has already been tarnished and scarred by the success of the countryside march and by the accusations of betrayal made in a recent edition of the New Musical Express. Secondly, in its unbalanced approach, Labour has supported the cultural industries; but, by and large, they do not need the Government's support. They are an outstanding success by themselves. The success of British architects, designers, writers and musicians is not due to state intervention: it has come about because people want and appreciate what they produce.
After having accused the Conservatives for years of starving the arts, Labour is now trying to kill them off. The back-tracking on free access to museums is a case

723
in point. The measures announced yesterday are divisive and insufficient: £2 million for apparently one year only to maintain free entry to those museums which do not currently charge is, I believe, a sop and not a long-term solution. The radical proposal to privatise the Royal Opera does not reflect Labour's faith in the private sector; it is actually likely to reduce access, which the Labour Party claims it wants to maximise. The rationale, I fear, of the plan lies in the perception that Covent Garden is élitist. Élitism has no place in "Cool Britannia"; populism does. We are back to the old cynical adagio—give them panem et circenses. But what attracts the largest numbers is not always of the highest quality.
Thirdly, the manipulation of identity requires increasing government intervention. Wherever one looks there are signs that the arm's length principle is being eroded by the Government. For example, the National Lottery Bill, which has just completed its passage through your Lordships' House, makes provision for the distributing bodies to draw up strategic plans, the contents of which, though, are under the firm direction of the Secretary of State. With this increased intervention the arts will inevitably decline. The result will be pressure to conform to the overall design of "Cool Britannia", thus totally stifling all originality and creativity.
Finally, last month the Government announced that for two years from September primary schools will no longer be expected to follow the required programmes for art, music and dance. This surely will undermine the development of talent. Our great British talent has been the driving force behind the success not only of the cultural industries but of all the arts of our nation. The Secretary of State may want to reflect on the words of Blake,
"Let it no more be said that states encourage arts for it is the arts that encourage states".
3.31 p.m.
Lord Jacobs: My Lords, I congratulate the Government on offering albeit small support to museums and art galleries to enable them to continue not to charge entry fees. I hope that when they have all the figures before them the Government will be able to increase that sum in forthcoming years. I am less confident about the proposal to privatise the Royal Opera House at Covent Garden if it is urged at the same time that a limited number of tickets should be priced at a more popular level. I do not believe that one can remove the financial support to the opera house and at the same time hope that a limited number of tickets will be offered at a lower price. That seems to me to be an unusual form of economics.
In discussing the importance of the arts the National Lottery cannot be excluded. Let us consider for a moment that £10 billion will be contributed by the British public over the next five years. I recognise that most of the British public will contribute to that huge sum of money in the expectation that perhaps a dream will be fulfilled. However, most of them agree that the likelihood of that is small. I believe that reflects perhaps undue optimism but at the same time great generosity
724
not only of spirit but in terms of money-giving. We should all be grateful for that. How the money will be spent has already, broadly speaking, been decided. There are five, or perhaps now six, different funds under which the money will be distributed. For the arts there are two major funds, the arts lottery fund and the millennium lottery fund. Each of those funds is to receive no less than £2 billion over five years. Those sums are beyond any expectations we might have had just a few years ago. However, I question whether it is possible for the private sector—which is supposed to produce between 25 and 50 per cent. of matching funds—to match these huge sums.
I organised a private survey to determine where the private funding comes from. Some 14 millennium projects were surveyed. The people who were approached all agreed without exception to respond to the survey but unfortunately they asked to withhold their names. Nevertheless the results of the survey were interesting. In every case the projects outside London were fully funded and there was confidence that the projects would go ahead. However, the funding came from European funds and much of it from local authority funds. In some cases local authorities confirmed that they had reciprocal arrangements with other local authorities to provide the necessary funds. As regards 14 major projects we did not trace a single penny of private funding as most of your Lordships would know it; that is, funding from private individuals or corporations. Therefore the funding of these projects is proceeding well, but there is a problem in London.
London, of course, does not have a central local authority with vast sums. It would be easier to support a project in Manchester or Birmingham than in London. Therefore private funding means just that; namely, money has to come from corporations and from private individuals. I share with others a vision of an arts urban regeneration on the South Bank of the Thames. A large number of exciting projects are already in existence there and new ones are being built. At the eastern end there is the Globe Theatre and the Tate Museum of Modern Art, which is of course a new project. The National Theatre is undergoing a vast amount of work. I refer also to the Hayward Gallery and the Festival Hall. About 25 per cent. of the British population can reach those buildings within about one hour's travelling time. Therefore those arts attract not only tourists—of whom there are many millions—but also about a quarter of the British population.
A scheme that has recently been in the news is the South Bank scheme. That is one of the few schemes for which private funding has been secured. However, ironically, public funding is missing in this case and therefore the project cannot proceed. A Member of your Lordships' House has been exceptionally generous in providing the private funding. I am connected with the Tate Gallery project. That project is in a different position from the other projects. The Tate Gallery project is financed by the millennium lottery fund whereas the other projects I have mentioned are financed by the arts lottery fund. One may ask what the difference is. It is simple to explain. The arts lottery fund provides 75 per cent. of all the finance required whereas the millennium lottery fund

725
provides 50 per cent. I have asked the Government whether there is a satisfactory explanation for this. The difference between the figures is considerable. The South Bank scheme needed £20 million of private finance. The Tate scheme at £130 million will need £80 million of private finance, of which I think about £3 million will come from local authorities. That is a vast sum and represents no less than 60 per cent. of the total cost of the project.
At the moment the National Theatre is undergoing total restoration. However, it already has three first-class theatres. When £40 million has been spent it will still have three first-class theatres. They will perhaps be a little more attractive, but I do not think they could be more comfortable as they are already comfortable. This is not really a new project. I do not condemn what the National Theatre is doing; I support it. Yet the National Theatre is receiving no less than £30 million out of its £40 million from the arts lottery fund. Of all the projects in London, the Tate Gallery project is, I believe, the one entirely new project. The gallery will open in the year 2000; it did not exist before. That project will receive only £50 million—although that is a significant sum—out of a total of £130 million. This matter needs to be looked at. I believe we all recognise that this country requires additional arts facilities in London as well as additional facilities throughout the country. I remain concerned that London-financed projects are finding the position much more difficult than those financed from outside the capital city.
3.39 p.m.
Lord Birkett: My Lords, I congratulate the noble Lord, Lord Puttnam, on an exceedingly timely Motion.
I am increasingly fed up with much of what I read about the arts and much of what I fear about them; not, I hasten to say, in your Lordships' House but often in the newspapers and sometimes on television. I am fed up with the journalistic cliché that the artists of this country are the "luvvies" as though they are effete and mindless creatures, whereas some of the best intellects in the land are to be found among the artists. I am fed up with the fact that the arts are always accused of an endless bleat for more money. If the artists of the land have to speak out every day for more money it is because scarcely within living memory has decent support for the arts existed in this country. I am fed up with the thought that they are somehow spoilt and self-indulgent people, when actually the rigours and disciplines of the arts are as strong as in any manufacturing industry. I am fed up with applause from politicians of any party who have contributed very little by their policy to the wellbeing of the arts. I am fed up with patronising pats on the back for the artists of this country because they have somehow managed to survive with almost no sustenance whatever.
Sustenance is of course necessary. Let us consider the conditions of our orchestras in this country. There is scarcely one which is not teetering on the edge of disaster. How ironic that only a few days ago it was announced in America that the Boston Symphony Orchestra's reserve fund has now reached 100 million
726
dollars. And before anyone says, "That's the way to do it", let us not forget that in America there have been tax breaks to encourage sponsorship of the arts—something we have looked for for centuries and found notably missing from yesterday's Budget.
Let us consider the condition of our theatres, some of the most distinguished of them on the point of closure. Look at the condition of our opera houses, in disarray. We are all waiting to read Sir Richard Eyre's report on the daft notion that the Royal Opera House and English National Opera should somehow share their home and physical resources. I regarded that in the light of a well-timed provocation rather than a serious proposition.
What about our museums? They are in danger of their time-honoured free entry being eroded, with the nation having to pay for the treasures in them. Let us not forget that it is most actively in our museums that the past, present and future merge.
When, I ask, will we have a government that will recognise the importance of the arts to this country? When will they recognise that not because the arts are enjoyable, which they often are; not because they are decorative, which they often are; not because they provide an escape, as they often do from the rigours of every day life; and not because they are the jam on top, the reward a nation deserves only if it works hard enough, but because they are important? They are important to education, for example. The whole of history, geography, language and science can be discovered within the arts. They are important to social awareness. They make us more aware of each other. They are also the image of our society. As the noble Lord, Lord Puttnam, said, culture is what distinguishes the civilised nations from the uncivilised nations. The arts are the poetic voice that teaches us things that nothing else can—no report, no White Paper, no Green Paper and no statistics can possibly teach us such things. It is the singer's voice, the dancer's limbs, the painter's brush, the actor's imagination, or the camera's perception which teach us about society because they teach us about ourselves.
When, I ask, will we have a government who recognise that properly, not in their words only but in their deeds?
3.44 p.m.
Lord Renton: My Lords, although I greatly admired the eloquence of the noble Lord, Lord Birkett, I do not share all the gloom that he expressed although he made a very sound point about the anxiety with regard to operas and orchestras. I go with him that far.
I am sure that I speak for other members of the All-Party Arts and Heritage Group, of which I am joint president, when I welcome the debate and thank the noble Lord, Lord Puttnam, for the way in which he introduced it, with moderation and in an informative way.
Art is important in the life of a nation. We should all strive to increase its importance. I hope that this debate may do so. If the arts were even more widely appreciated among the masses—is that a phrase one is allowed to use in our classless society? —I would say

727
that there would be less crime, more understanding between various parts of the community and perhaps more national pride.
Therefore, like the noble Lord, Lord Puttnam, I wish to stress the importance of the part that the arts should play in our education system. Although it is good that the Government now insist that the curriculum in primary schools should contain English, maths, science and religion, I have to point out that it also includes information technology—a subject of which I must confess I am happily ignorant. Would it not be better if, instead of having to learn information technology while children are still very young, in those formative years they should have the opportunity to learn art, music and drama?
I must confess that from the age of six I was made to recite poetry; and from the age of 14 I was made to act in Shakespearian plays. Of course if such education were to result from the present teaching of English, which is a compulsory subject, that would be splendid. But will there be such a thing as poetry reciting? Will that happen? Britain used to be an international example for the use of drama in schools. But now fewer than half of all local education authorities fund drama teaching. That is a serious omission on the part of those who do not do so. Perhaps they do not have the funds. The Government should consider that.
Under the United Nations charter of human rights, art is a fundamental right for everyone. The noble Lord, Lord Rix—alas he cannot be present because he has another parliamentary commitment this afternoon—has asked me to mention the arts for people with learning difficulties. That is an expression which I think is less satisfactory than mental handicap. Everyone has a learning difficulty of some kind. I cannot play the piano with more than one finger. The noble Lord, Lord Rix, is chairman of MENCAP, of which I am past president. Every year MENCAP holds a wonderful art exhibition. It contains a wide range of artistic skills. Some of the people who exhibit brilliant pictures cannot even talk, but their lives and other people's lives are enriched by what they do. Also we have our MENCAP Gateway Festivals which are wonderful variety shows in which only mentally-handicapped people take part and give splendid performances. The last was in Birmingham last autumn. The performances were very well attended.
Recently, MENCAP started a major project called Dilston College, which is in Northumberland. It is designed to be an international centre of excellence for mentally handicapped people in the performing arts. We are steadily learning to appreciate the talents of people with such handicap and to value their contribution to our shared artistic heritage. Can we hope that the Government will help them to lead a fuller life, perhaps by giving some help at Dilston College? I hope that we shall receive an answer from the noble Lord, Lord McIntosh, who is to reply.
I join with others in stressing the vital contribution that the arts make to the economy. They repay many times over the financial support that they receive from the Government. Our art galleries and museums are a
728
great tourist attraction, especially when admission is free. The Government should be thanked for what they are attempting to do in that regard. I hope that they will succeed in keeping our museums and galleries free and open. It will benefit the economy by helping the tourist trade.
As mentioned, in 1996 our tourist industries contributed nearly £10 billion to British exports. That is even more than our construction industry earned overseas. Above all, the more the arts are stimulated by government financial help, the more employment will be created. I know that that is a major consideration on the part of the Government.
I wonder whether I may dare to mention this—I hope it is not considered irrelevant or impertinent; and I speak merely as a life Peer. If the hereditary Peers were not allowed to speak in this debate, the number of speakers would be halved.
3.52 p.m.
Lord Strabolgi: My Lords, as an hereditary Peer, I am very glad to follow the noble Lord. Lord Renton. Like him, I wish to say how grateful I am to the noble Lord, Lord Puttnam, for initiating this debate. I am also delighted to hear about the Chancellor of the Exchequer's concession over museum charges, which will allow the British Museum, the National Gallery, the National Portrait Gallery and the Tate to retain free admission, I hope for many years. I thought that the noble Baroness who spoke from the Opposition Front Bench was somewhat ungenerous in her reference to that.
Sadly, the position is not so hopeful concerning our regional collections; and it is about those difficulties that I wish to say a few words. The Museums Act of 1845 enabled town councils to establish public museums of art and science for popular instruction and entertainment. Our Victorian forebears believed, as the present Government believe, that the arts should be for the many and not for the few. The last 40 years of the 19th century saw most of the municipal museums being established. Many industrialists were great philanthropists, like their counterparts in the United States, and they helped to endow their home towns with galleries and museums; and they would often bequeath their own collections to them. The current exhibition at the Royal Academy is most impressive and, I believe, was a revelation. It gives an idea of the wealth that there is of fine paintings and sculpture from over 100 regional collections—a number being of grade A importance. Sadly, some of those works of art have to be kept in the vaults or the reserve collections and are usually not available for public exhibition, due to a lack of funds. Sometimes the local education services provided by the museum have had to be cut. That is because many regional museums are facing a financial crisis, as the local authorities that run them are under severe financial pressure, and museum funding is often a low priority.
The Bowes Museum, for example, a museum of national importance, is facing great difficulties. The hard-pressed local authority, Durham County Council, has been reported as requiring a cut of £30,000 from the

729
annual grant for the Bowes, and that could mean that the museum will have to be closed from November to March. I welcome the announcement that was made yesterday by my noble friend Lord McIntosh that the Government have invited Mr. Richard Foster to carry out a review of the present position and to make recommendations. Let us hope that that will help to save the museum and to retain for public view its important collection, which includes an E1 Greco and a Goya.
At Aylesbury, the Buckinghamshire County Museum has had its grant of £750,000 cut by 30 per cent. by the local authority, and the purchase fund has been reduced by a quarter; that is notwithstanding the fact that, in 1996, Aylesbury won the Museum of the Year award. Government support for the National Heritage Memorial Fund has been much reduced by the previous government in the past few years. I say that particularly to the noble Baroness, Lady Rawlings. In 1993–94 the fund was awarded £12 million; that was reduced to £8.8 million the following year by the previous administration, who again slashed it to £5 million for 1997–98.
Successive governments have always stated that the responsibility for running regional museums rests with local government or the universities. That apparently remains the policy of the present Government. It is surely not enough just to have a designation system to recognise important collections, first set up by the Conservatives and backed by Labour; nor merely to have a code of good practice; nor even to have a new access fund. What is needed is also real financial help from central government for the hard-pressed local authorities. Otherwise, the losers will be the local people, who will be deprived of some of their cultural links.
3.57 p.m.
Lord Charteris of Amisfield: My Lords, first, perhaps I may congratulate the noble Lord, Lord Puttnam, on initiating this extremely interesting debate. My intervention will be short and, I hope, sharp. We all know from our study of history how important art and the arts are in all communities. We think of the Greek plays, the history and poetry of Rome and Egypt; and, coming down to modern times, all primitive societies, even the mud men of Papua, New Guinea, have their own form of art, as do the Aborigines of Australia. That is not my subject; noble Lords know about it already. It is merely a matter of interest. I wish to elaborate on a matter that your Lordships may not know about. It was mentioned by the noble Lord, Lord Strabolgi. I refer to the money given to the National Heritage Memorial Fund.
I had the good fortune to be chairman for 12 years of the National Heritage Memorial Fund from the time that it was started, on April Fool's Day 1980. Perhaps I may tell your Lordships how it came about, in case anyone has forgotten. In 1946, the socialist government, with much imagination, set up the National Land Fund with the product of £50 million from the sale of surplus war equipment. It was not placed under private trusteeship but left in the hands of the Treasury. The Treasury did one or two things with the money, but 10 years later, in
730
the 1950s, the Conservative government took back the original £50 million, leaving only £10 million. That is a hell of a way to treat a memorial fund. On we went, until we came, in 1978, to Mentmore. The house was up for sale. It and its contents could have been bought for £2½ million. But the Treasury, who were then running the National Land Fund, said, "No, we do not think we can do that." The house was put up for sale and was lost.
Then came a Green Paper, a White Paper, a Bill and the whole rigmarole, setting up in place of the National Land Fund the National Heritage Memorial Fund. That fund had private trustees, not controlled by the Government, and £12.4 million, which was all that was left of the £50 million from 1946. That £50 million would by then have been worth £600 million. I had the great honour of running the fund for the first 12 years of its existence. During that time we managed to spend £130 million. We saved 12 country houses and bought some famous pictures, music scores and all kinds of things. We did a jolly good job.
Noble Lords: Hear, hear!
Lord Charteris of Amisfield: Thank you very much, my Lords. I was waiting for that! When I left the fund, the noble Lord, Lord Rothschild, took it over. At the same time came the National Lottery fund and a lot of money. There are now two funds, the lottery fund and the National Heritage Memorial Fund, but we should not forget that it is only the National Heritage Memorial Fund which is a memorial to the people who died for this country.
This is how the fund has been financed since I gave up the job: in 1993–94 it received £12 million; in 1994–95, £8.7 million; in 1996–97, £8 million; and in 1997–98, £5 million. In 1998–99 it will receive £2 million, which in my opinion is a damned insult.
I beg your Lordships to remember the memorial aspect. Perhaps it does not matter; I do not know. I believe it does matter. The National Lottery money is very good and keeps coming in, but it may stop one day. There may be reasons why it will change. With the National Heritage Memorial Fund, under separate trustees, there will always be help.
4.3 p.m.
Lord Crickhowell: My Lords, I add my thanks to the noble Lord, Lord Puttnam, for initiating this debate. I shall follow him on one issue close to home. I am not one of the admirers of the noble and learned Lord the Lord Chancellor, but I am an admirer of Barry, Pugin and this great building. I am thankful that over the past two decades it has been so splendidly restored. I believe it right that work on the accommodation for the Lord Chancellor should maintain the high standards set elsewhere in the building. I fear that on this subject the criticisms of the noble and learned Lord the Lord Chancellor are part of a regrettable attitude to our heritage. That is one of the central themes about which I intend to speak.
Like the noble Lord, Lord Puttnam, I shall address the balance between the old and the new. For many of us it has been entertaining to observe the speedy

731
abandonment of New Labour by so many self-appointed spokesmen of the arts who had so recently prostrated themselves at the feet of Mr. Blair. Amusement, however, is tempered by anxiety about what is now in store for the arts. It is of course true that the arts, particularly museums and the performing sectors—music, theatre and opera—have faced financial difficulties for a good many years. I feel free to speak in strong terms today because I have been a consistent advocate for the arts in government and out, and gave them practical support as a Minister.
I believe it was not wrong for the Conservative Government to expect that a much greater share of arts funding should come from the private sector, particularly after corporate and personal tax rates had been cut. The weakness of the policy was that it demanded too great a change too quickly and underestimated the difficulties that would arise when recession came.
Despite all that, the 'eighties and early 'nineties were years in which the arts in Britain thrived and our worldwide reputation for music, theatre and opera had never been stronger. The threat that now faces the arts is not just a lack of money but of attitude. It is particularly ironic that the trendy populists and the pop artists should now be among the disillusioned after a period when Mr. Blair and his marketing men appear to have believed that only the so-called populist arts mattered. The fear exists that quality is to be pushed on one side in favour of the tawdry gimmick of "Cool Britannia", when what matters is quality. For most arts organisations the central problem remains lack of money and the inability to plan long-term programmes.
The Treasury is unlikely to become more generous. There appear to be only two means of escape from the mess we are in: a tax regime that gives more effective encouragement for private finance and the lottery. Much has been done in the first phase of the lottery, concentrated on capital programmes, to safeguard the nation's heritage and to modernise the buildings in which arts organisations work, though, sadly, not to create great new buildings.
The priority now is different. The urgent, overriding need is to secure adequate revenue funding. For many organisations it is literally a question on which their survival may depend. The 1993 Act provides the power to switch lottery funding from capital to revenue projects. The Government have promised review and action within months. It is important that they deliver. That is my first priority for action.
My second priority is to do something effective to tackle acute problems that face some important provincial and national museums. The Chancellor's small gesture yesterday, discriminating as it does against museums which already make charges, will not resolve those problems.
The noble Lord, Lord Strabolgi, spoke of the provincial museums. Top of my list is the need to recreate the British galleries at the Victoria and Albert Museum. For too long their condition has been a national disgrace. It is a humiliating experience to visit them after visiting the Indian and Far Eastern galleries,
732
for which generous overseas funding has been provided. Plans are being prepared, but the full funding is not yet secure. We have already waited too long. If this country is able to produce hundreds of millions of pounds for a temporary display at Greenwich, we ought to be able to provide the much more modest funds needed to conserve and display the treasures of Britain in the V&A.
This debate coincides with a defining moment in the history of the Arts Council of England. I have no objection if the chairman wishes to reduce the council to manageable size or to prune the overblown bureaucracy. However, reform must not be at the expense of expert knowledge or appropriate regional input; nor should it involve the abandonment of the arm's length principle. Past history and present government attitudes do not encourage the belief that ministerial interference will improve matters. "Dumbing down"—a phrase quoted by the noble Lord, Lord Puttnam—and the absurd and potentially disastrous proposals from Ministers about the future of the ENO and Covent Garden provide a stark warning of the dangers of following that route.
Two events, the Millennium and the enlargement of the European Union, and the fact that so many people care for the arts prompt the thought that 2,000 years of European culture—I include cinema—are a heritage, with all its rich diversity and creativity, that we need to carry into the next millennium so that it provides the foundation for further creativity, and caters for the needs and aspirations of vast numbers of people, our minds always open to the new, but never dismissing the old. We must pass on to the next generation quality, creativity and diversity, not just the populist fashions of the moment, represented by presentational gimmicks under a plastic dome.
4.10 p.m.
Lord Jenkins of Putney: My Lords, in joining in the congratulations rightly pressed upon my noble friend Lord Puttnam on introducing the debate, I was tempted to go over the top and say that it was the best thing he had done since "Chariots of Fire". But that would be entirely untrue: he has done three or four exceedingly good things between "Chariots of Fire" and today.
I hope that this debate may be the Government's chariot of fire. After all, it is their first venture into support of the arts. As a member of the Labour Party, of course, I receive it with rapture—perhaps modified rapture; nevertheless it is a good start. I hope to see them follow that path. There are one or two signs which are encouraging; for example, the need for free entry into national exhibitions. The methods by which the Government are approaching that policy clearly indicate that it is their intention to return to free entry to the national museums. I feel sure that when my noble friend responds to the debate he will not dissent from that. It may be a long way round, but times have changed and it is no longer possible to do it in a week as happened when I was Minister for the Arts.
Perhaps I may commit a solecism in the first of my minutes by quoting myself. After I ceased to be Minister for the Arts I wrote a little book and, if your Lordships

733
will permit, I should like to read from it. I state, "From these years"—that is to say, the years immediately prior to that time,
"stem a number of convictions tested by experience. For example, there is no line to be drawn between the arts and entertainment; high skill can be wasted on trash: and trash can be transmuted by skill into something like art; all art has an economic base; the sources of finance for art and entertainment must be various; in the arts there must be many employers and consumers; artists can easily be corrupted by money and even more easily lost for ever because of lack of money; that to produce an apex of high art it is necessary to have a wide based pyramid of competence".
I learnt too that,
"geniuses do not spring out of nowhere; art reflects the society that begets it but also influences that society; art can as easily be killed by Government neglect as by Government suppression; it is the duty of Government to provide all those art forms which cannot be sustained by other sources of finance and to provide means for all its people to have access to them; that developments in the arts and communications frequently foreshadow the general trend and direction in which society is moving. As Oscar Wilde said, life imitates art.
"I also learned that the arts are interdependent upon each other, and should be seen with entertainment, the media of communication and with all the means of mechanical and electronic reproduction of performance as a single area of Government concern; that together the whole area is economically viable but separately must decline".
It seems to me that the Government have learnt that lesson in the formation of the Secretary of State for culture, sport and so forth. I continue in my book:
"I saw that there must be universality of concern but multiplicity of control; that we must aim towards self-administration of art by artists and their organisations, but that the State has a vital role to play in fostering art and artists and in bringing them to the people.
"Finally, I became convinced that once men and women were mated and were housed and fed, art was the thing that mattered and many of the other preoccupations of mankind were but chaff in the wind".
I see that the Government have accepted the principle of free entry. I see also that they are beginning to approach one of the great necessities of our time. It is not sufficiently realised that the excellence of our performance over the wider field in films is now building upon "Chariots of Fire". An extraordinary film—I make no comparison between one and the other—was "The Full Monty", which succeeded simultaneously in being both rude and decent. It was a remarkable film; a blockbuster; a world beater. It seems to me that we can do the same in other fields of the arts if we set about it in the right way. My point is that our performance—this applies to musicians as much as to actors—is bred in small groups throughout the country.
I received a letter from a former director of the New Victoria Theatre in Stoke-on-Trent. He drew to my attention, and no doubt to the attention of other noble Lords who received the booklet circulated by him, the number of most successful artists who, having started in that small, still struggling theatre in Stoke-on-Trent, have gone on to gain world renown. I refer to such people as Bob Hoskins, Ben Kingsley, Gerda Stevenson, Alison Chitty, Mike Leigh and Alan Ayckbourn.
It is the small theatres throughout the country which are presently in trouble. I hope that when the Government come to examine the subject of distribution and the need for access, they will pay special attention
734
to the small theatres because a number have already had to close and several others are in difficulty. Urgent action is needed at this time.
That is the essence of what I wanted to say and although I have not taken all my allotted time—yes, I have—I shall sit down.
4.19 p.m.
Lord Hindlip: My Lords, I should like to thank the noble Lord, Lord Puttnam, for introducing this debate, in relation to which I suppose I should declare an interest as chairman of Christie's, the auctioneers.
The debate has attracted wide interest, which is in itself encouraging, and, like other noble Lords. I have received a number of letters and briefing papers about it. I was particularly pleased to receive a letter from the National Campaign for the Arts. This quantified what many of us have long suspected—and indeed what the noble Lord, Lord Birkett, was so eloquently fed up with—that a very high proportion of the population of the United Kingdom visit museums—36 per cent. Our museums receive more than 100 million visitors a year. That is an enormous figure which, I am sure, any government would take note of. Despite this, though, the same briefing paper points out that government funding for the arts in the United Kingdom has fallen by £42 million in real terms since 1992 and, as the noble Lord, Lord Puttnam, pointed out, though lottery funding has gone a long way to redress this drop, it is not guaranteed always to be there. The noble Lord, Lord Charteris, mentioned that aspect.
In fact, I do not take too pessimistic a view. I found three things in yesterday's Budget to encourage us that the Government are taking seriously their role over the arts. I think it would be churlish not to thank the Chancellor, particularly for his promise to ensure free entry to museums. I used to think that government had to take on the role of the leading patron of works of art which private individuals held in the 18th and 19th centuries. Like the noble Lord, Lord Puttnam, I am now no longer convinced that this is true. I think it is better for government to try to encourage private patronage rather than become patrons themselves.
Experience tells us that when art is politically motivated it tends to become pompous and pretentious. Fortunately, most of the monuments to fascism and communism have been destroyed. But if you take even a great artist like Rubens, he becomes far less great when he commemorates the life of Marie de Medici. Those noble Lords who were lucky enough to have seen it I am sure would agree that Vaux le Vicomte, built by the same team who constructed Versailles, is a much finer building, with finer contents done for a private individual than for a government.
We also all know the cliché of the camel being a horse designed by a committee. Today, government patronage is bound to be run by committees. Despite the fact that I find the building beautiful, I wonder about what is going to go into the Millennium Dome, and I also wonder whether the money would not be better spent supporting institutions like the National Gallery

735
and the Tate Gallery in all its various forms throughout the country, which I am sure noble Lords would agree—in fact several have already said it—represent the best of the past and also give us the best chance of putting great works of art on view for the public in the future.
To revert to the theme of private initiatives, I should like to draw your Lordships' attention to three examples of private patronage. One is from the past, a picture by Stubbs, surely England's greatest painter, which has just gone on view in the National Gallery. It was commissioned by a Prime Minister, but in a private capacity. There is a rumour that the picture was to have been an equestrian portrait of King George III. But Lord Rockingham fell out with his monarch and the portrait was never painted. I think it was a good thing.
There are two other examples to which I should like quickly to draw your Lordships' attention. One is the truly remarkable collection of pictures, put together by Janet de Botton, which has just gone on view in the Tate Gallery. It is an extraordinary collection which even the most enlightened museum director could not have formed. It needed the individual taste, flair and determination that only a private individual can bring to collecting works of art. I am sure your Lordships would not approve of everything in that exhibition. I am equally sure that your Lordships would not approve of everything in an exhibition from another great patron of art, the noble Lord, Lord Saatchi. I refer to the Sensations exhibition in the Royal Academy last year. But, interestingly, the Royal Academy's own poll showed a 90 per cent. approval rating for that exhibition. There was nothing androgynous about it. To pick up from what the noble Lord, Lord Jenkins, said, that was the full Monty.
Private patrons also supply another vital ingredient. They provide the money to buy works of art. Of course one must look to the public good, particularly when these works of art are acquired or held on to with taxpayers' money. Over the years though, even without tax incentives, private collectors have been extraordinarily generous in lending to museums. We should encourage and promote this partnership between private and public patronage. In my remaining half minute I should like to suggest three ways of doing so.
I should like further to commend—I was very pleased to see that it was mentioned in the Budget—the system of offers of acceptance in lieu. That was strengthened yesterday. I do not know whether the noble Lord, Lord McIntosh, had anything to do with it, but, on behalf of private owners, I should like to thank the Government very much for doing this. I should also like to commend the system of conditional exemption which again was the subject of mention in the Budget. It has served the country well. Lastly, I should like to suggest that the Government look at the possibility of reducing the level of capital gains tax on works of art. That would be enormously stimulating to private collecting in this country.
4.27 p.m.
The Marquess of Bath: My Lords, a nation gets awarded the character that it deserves. By neglecting to promote some aspect of this character, that aspect becomes increasingly insignificant within the image which other nations regard as our worth. And this might also hold true for the way future generations of our own nation come to regard what we ourselves were worth.
The evidence is abundant that here in Britain we have the potential to excel in the performance of all the arts. But these arts can only flourish when given patronage and financial encouragement. The potential is certainly there, but it is for society to bring it to fruition; and it is for government to give society the necessary lead on how this can be done.
There is a danger if the arena for artistic performance is permitted to become too centralised, with the regions required to focus upon what is going on within the capital city, to discover the potential of their own individualistic excellence. The situation will become healthier if we can revive the notion of there being a thriving local culture within each region: proud of its own traditions, and of its aesthetic potential.
Government should therefore assume the responsibility to promote the re-emergence of the English regions, so that they are encouraged to create their own local artistic excellence, in distinction from one another, and in competition with one another to draw the maximum number of tourists to come and be entertained in the significant regional manner. But this should involve the creation of regional assemblies whose main purpose will be to tailor the quality of life within that territory, so that its true individualism can be perceived for what it best might become.
It should also be the responsibility of the regional assemblies to promote the full artistic potential of those who are still at school, through the format of the education that they put on offer. There should be state-run schools within each of the regional systems, specialising in some particular aspect of the arts: whether that might be specifically in the arts, in music, drama, ballet or cinema. It could be said in passing that this might be parallelled in schools for sporting excellence, too.
Then once the artists have left the nest, so to speak, government should promote the keenness of regional competition through the constant incentive of prizes—not exclusively for artists who dwell in those regions, but on an international basis, so that artists from other cultures feel encouraged to come to these shores to compete with those of our native talent; and in so doing introducing elements of their own cultures to inspire the participants within ours.
Finally, there is the question of improved display: a display at sites of easy access for the region as a whole. It should not be necessary for an aspirant artist to visit the capital city to discover the inspiration for his native art. The finest collections should be on his very doorstep. The regional assemblies should be in a position to allot funds to transform existing museums so

737
that they can fulfil this required function. Funds should also be used to put on arts festivals where the special character of the region can be publicly proclaimed.
The artistic potential of the nation is thus indirectly linked to the government's ability to enable the English regions to re-emerge in a spirit of their most colourful individualism. So the most significant step which government could take today in the encouragement of the arts will be in the creation of our regional assemblies. I urge that this step should be taken without delay.
4.34 p.m.
Lord Beloff: My Lords, the noble Lord, Lord Puttnam, is to be congratulated on introducing a debate which has managed to produce a speech suggesting that the history of this country be run backwards. I have no doubt that the noble Lord, Lord Puttnam, in his professional capacity, might find some way of doing that. However, I found his own speech a little depressing in that I believe it illustrated one of the worries about the arts that people like myself—they call me a highbrow without causing offence—have reason to feel; that is to say, a certain tendency to regard the arts not as individual expressions of particular human capacities, but as a sort of spectrum running all the way from acknowledged high art—the works of Bach or Beethoven—to any other form of public entertainment which is not itself a simple object of commerce.
The noble Lord was unfair to Mr. John Tusa whose article in The Times did reveal very real worries on the part of many lovers of the arts. It is not only a question of money. Money has figured largely, as might be expected, in our debate and no doubt subsequent speeches will again refer to the importance of public and private patronage.
But there is also the question to which Mr. Tusa drew attention, which is that if one is to have a country vibrating with the enjoyment of art and its creation, it is important that those who set the tone for public life take that into account. It was depressing to many of us that the incoming Prime Minister should, for three much-advertised parties in Downing Street, confine his appreciation of the arts to what I believe is known as "pop music". I do not believe that pop, pop, pop is the sound that we most like coming from No. 10 Downing Street.
Similarly, the Secretary of State for Education, no doubt with the best of intentions of doing something about our apparent inabilities in numeracy, literacy and information technology (whatever that may be), has downgraded the importance of the arts, particularly music, since it is the art with which I am most concerned.
One of the most encouraging things over the past few decades, which have been mostly discouraging, has been the evidence of the widespread interest in the making of music all over the country and the enormous number of young artists of promise, both vocal and instrumental, who have come forward through the competitions at Leeds and the concerts at St. John's Smith Square, which is our local concert hall. If they are no longer to
738
have the possibility of taking music lessons in particular in the schools, it is going to be very hard to see where the stream of performance is to come from in the future.
This year we celebrate the 200th anniversary of the birth of Donizetti, a rather more important musician than some of those admired by the Prime Minister. When Donizetti was eight years old he went to a school in Bergamo which provided free teaching of music to the sons of the citizens of that city. I wish that our much richer cities, far away from this little Alpine town, could make sure that if there are Donizettis about, they will not be lost to the British public.
It is important that the difference between art and other forms of entertainment, which are perfectly respectable in their way, should constantly be made clear to the young, otherwise they will fall in with the fashion of peer groups and the fashions transmitted to them by American television and other inroads on our cultural life. They will then be less valuable as citizens because they are less concerned with the things that matter most. It seems to me that Members of your Lordships' House who do not have ancestral mansions or other forms of ability either to acquire or to display works of art can at least take that task upon themselves as they go around the country and meet the young.
I speak with some feeling because one result of my growing infirmity is that I can no longer attend art exhibitions. I can no longer stand in picture galleries without incurring considerable pain, so I am very much restricted to the two institutions which the noble Lord, Lord Puttnam, rightly commended to us, Classic FM and the BBC. It is their music which keeps hope alive that this country will still enjoy the artistic renaissance which its young fully deserve.
4.41 p.m.
Lord Balfour of Inchrye: My Lords, twice in the past three years I have found myself the only speaker on the arts in the debates following the Queen's Speech, so it is a relief to find that I am one of many speakers today, even if I am No. 13. I congratulate the noble Lord, Lord Puttnam, on initiating this debate.
Since my last speech, in October 1996, much has happened in the world of the arts, notably a change of government with a new attitude and approach to the arts. While commending much of what the Government have been doing in various other areas, I regret that the arts are not among them. I deplore the worshipping at the populist altar, to the almost total exclusion of an appreciation of the more life-enhancing, lasting and what I consider to be worthwhile forms of artistic expression. Reluctantly, I entirely agree with Sir Peter Hall's opinion that neither of the two major parties cares much about the arts and that most of our present-day politicians are philistines. I say that despite the encouraging news yesterday on museum admission charges.
The last government's preoccupation with market forces above all other considerations inevitably led to a descent to the lowest common denominator, while the monotonous regularity with which they dumped successive Ministers on the arts—most of them quite

739
useless appointments—has only been exceeded by the frequency of governmental changes in Italy. Every politician now bares his or her populist credentials: baseball caps worn back to front, and knowledge of and attendance at Britpop awards are deemed obligatory, but surely it is not necessary to resort to such behaviour to earn the respect of the electorate. Far from it—I recall how the late and much lamented leader of the Labour Party was once asked a number of questions about popular culture. I think he got one right.
I must say how much I agree with a recent letter to The Times which suggested that the noble and learned Lord the Lord Chancellor, far from being censured for availing himself of the opportunity to borrow pictures from the national collections, is to be congratulated. The correspondent went on to say that it ought to be compulsory for all Ministers of the Crown to have at least 30 pictures from the collections and to attend art appreciation courses. What a splendid idea, which I would extend to the Shadow Cabinet!
In a speech at the Mansion House in March 1997, the Prime Minister said:
"The arts and cultural industries have been on the side-lines for too long. They are not peripheral to our lives. I want them to be part of the main agenda".
Like the noble Lord, Lord Beloff, I sometimes wonder exactly what "the main agenda" is. Some weeks after taking office, the Prime Minister was photographed at a reception at 10 Downing Street talking to a pop music idol whose foul and abusive language on TV and radio, loutish behaviour both on the ground and in the air and open advocacy of drug-taking do irreparable harm, not credit, to this country. My local paper described the conduct of some of the fans of this band in the streets near the performing venue. It was, quite simply, disgusting. I note that some in the pop music world have already started criticising this love affair with the Government, saying that it is bound to end in tears or, in the case of the Deputy Prime Minister, a bucket of iced water. No wonder a British businessman in Tokyo, attending the exhibition of British art on loan from the Tate, remarked,
"In terms of its image, Britain needs all the help it can get. British culture should be seen to counterbalance had behaviour".
I dislike intensely this new, so-called "culture" which really consists of a clique of pop stars, record producers, models and fashion designers, and I regret the ostracising of the really important individuals in the arts today. When will leading figures in the theatre, like Peter Hall, Harold Pinter and Tom Stoppard, or in music like Peter Maxwell-Davies, Harrison Birtwistle or Charles Mackerras, or writers such as Ted Hughes, Beryl Bainbridge or Martin Amis be invited to 10 Downing Street? They are the cultural individuals whose work does good for this country, not the "celebrity" icons of "Cool Britannia" which, in reality, is nothing but the trumpeting of the tacky, tawdry, trivial, trite and, above all, the transient.
Simultaneously with the Government's view of the arts, there is a perpetual lowering of standards in the media, which is hardly conducive to the well-being of the arts in the life of the nation. Naturally, no coverage of the arts can be expected in the tabloid
740
press—unless it focuses on some scandal—but it has seriously declined in recent times in the so-called "quality press" also. BBC Radio 3 is a travesty of its former self, while Radio 4 is about to axe its excellent programme "Kaleidoscope" and the late Frank Muir's autobiography was thought "too literary" for listeners. Those are just a few examples of a deplorable trend. George Orwell's words apropos Hollywood are entirely applicable here:
"It is always assumed that anything demanding thought, or even suggesting thought, must be avoided".
I have argued before in this House that the arts ought to be placed alongside education. The noble Lord, Lord Puttnam, also made that point. I say that despite the dismal level of education that we have reached as a result of the policies pursued during the past 30 years. I am delighted that the Secretary of State is trying to improve education. I am pleased to note that my view was endorsed by the noble Baroness, Lady Blackstone, who, in an interview in The Times a year ago said:
"We need to rehabilitate the arts as a legitimate area of public policy. One way is to start putting them back where they belong—at the heart of education. Arts and education feed each other. Schools and colleges are the source both of the artists and the audiences of the future".
I agree with every word of that.
In conclusion, I must express my disquiet at the current state of music in schools. A recent survey has shown a nationwide shortfall of more than 700,000 instruments, and about £40 million is said to have been cut from music teaching budgets in the past three years. Sir Simon Rattle has observed:
"Having fought the last government about what the curriculum might look and sound like, now to find ourselves at odds whether music is important enough really to be on the curriculum at all is horrifying to all of us, because we see the possibility of a generation of children who never have the chance to discover the power of music".
I earnestly hope that the Government will take heed of those words, spoken by one of our most widely admired personalities in the arts who really does do something to boost the artistic reputation of this country.
4.47 p.m.
Lord Sainsbury of Preston Candover: My Lords, at the time of the election, the Labour Party published a document with the rather ambitious title, Create the Future, in which it was said that British artists and people with creative talent will only be able to fulfil their potential when they have the wholehearted support of a government with an effective strategy. "When indeed?" as the noble Lord, Lord Birkett, asked so eloquently. Today, no one in the arts can believe that that wholehearted support is evident.
I too saw the article by John Tusa and felt that it represented a widely held feeling. For those of your Lordships who did not see it, perhaps I may quote just one sentence. Mr. Tusa said that he thought that the Prime Minister was signalling,
"that Oasis is as important to Britain as opera, that chat shows are as important as novels, that T.V. soap operas are more valuable than live theatre and that all sorts of other key ingredients of the arts matter not at all".

741
In the weekend press there were reports, seemingly emanating from the Department for Culture, Media and Sport, which was perhaps only kite-flying, that opera at the Royal Opera House was likely to be privatised; in other words, that we should be returning to the 1930s, and discarding our greatest opera company that, despite the crises that affect all opera, has been so successful over the past 50 years.
In the brief time available this afternoon it is upon this apparent danger to the cultural life of the country that I feel as a past chairman of the Royal Opera House I must comment, even though it may be very hard for your Lordships to believe that privatisation can be a serious option. The example to justify so-called privatisation of opera was said to be the Metropolitan Opera House in New York that flourishes without public subsidy. What ignorance that revealed. First, the Met benefits from the economies of scale of having no fewer than 1,700 more seats than Covent Garden. Secondly, the wealth of New York is many times that of London in terms of potential benefactors. Thirdly, the Met, like the Boston Symphony Orchestra, has a huge endowment built up over many years of tax breaks for art patrons and non-socialist governments. Those reasons make New York no model for London.
The comparison that could, and I suggest should, be made is with European opera houses which are similar in size to the Royal Opera House. In London the Royal Opera House and the English National Opera together receive less than £30 million from Arts Council grants. The equivalent figure in Paris for opera and ballet at the Bastille and the Gamier is about £78 million. Berlin's three opera houses receive over £80 million, while Munich has about £66 million. In other words, the Royal Opera House and English National Opera together receive between a half and a third of the subsidy of opera houses in Europe. It is not surprising therefore that seat prices have as a result been much higher in London, although not as high as is often suggested. At the ROH, for example, almost 40 per cent. of all opera seats and over 60 per cent. of all ballet seats in the past season were below £35.
It is six years since I was chairman of the Royal Opera House, but I must declare an interest in the future of the ROH in my present capacity as chairman of the governors of the Royal Ballet, the trustee body that holds the Royal Charter. Sharing the Royal Opera House with the opera company, the ballet will he greatly threatened if opera at the ROH is privatised and consequently reduced to occasional seasons as in the 1930s, or is damaged by gross under-funding in the future. It is hard to believe that at the very time we are to have an opera house properly equipped for the next century, with far better facilities both for the artists and the public, we are to abandon or greatly reduce public support for the opera company and thus make it impossible to achieve the full potential and greatly increase access by being able to give far more performances of opera and ballet than was ever possible in the past.
742
The new opera house will also be able to reach out to millions through greatly increased broadcast and television performances. Already between 3 million and 4 million watch ballet and opera on television. Over 2 million watched the Royal Opera House performances over Christmas, and 2.9 million watched the gala at the closure of the opera house.
London must surely continue to enjoy world-class opera and ballet and rival the very best in Europe. Our objective must be to make possible the achievement of the very highest standards. The Royal Opera House as a centre of excellence can bring benefits for all opera and ballet throughout the land, and opera and ballet should be seen by many more millions on television. This deserves what at the election was described as the wholehearted support of the Government.
4.54 p.m.
Baroness Rendell of Babergh: My Lords, in speaking on the importance of literature I must declare an interest, for although I would hardly claim to have contributed literature to the nation I have certainly produced a lot of fiction. As my noble friend Lord Jenkins has just informed the House, there should be no clear line of demarcation between art and entertainment. In 1990, 64,000 books were published in this country. That figure had increased to 102,000 by 1996. The publishing industry contributes about £1 billion per annum to the UK economy through exports. But talk of numbers and sales is rather to state what publishing is worth to the economy than to the nation's cultural and intellectual life. National life benefits enormously from the quality of published material and this is in a healthy and flourishing condition. Perhaps nothing reflects taste among readers so clearly as last Sunday's general bestseller list in the Sunday Times with works by Ted Hughes, Peter Ackroyd and Bill Bryson at its head.
Poetry is enjoying a revival. Some of this interest is due to the Poems in the Underground project which drew the attention of tube train travellers to previously unknown treasures. Both the Whitbread and W. H. Smith awards, although open to fiction, biography and travel-writing, were won by the same book of poetry: Ted Hughes' Tales from Ovid. Hundreds of arts festivals are held in the United Kingdom each year, about 50 of which are devoted to literature or include important literary events. Among these are established favourites: the Edinburgh, Cheltenham and the Hay Festivals as well as such relative newcomers to the scene as the Female Eye National Festival of Women's Writing and the Daphne du Maurier Festival at Fowey in Cornwall. The literary festival provides pleasure, instruction and general enjoyment to thousands, encourages reading and does as much as anything to promote love of literature. Creative writing schools also provide great stimulus to potential writers. Many more have been established in recent years. While it may be true that writing cannot be taught, where there is talent, keenness and ambition the latent gift can be encouraged to express itself. The Arvon Foundation has been spectacularly successful at achieving this. In August that veteran assembly the Writers' Summer School will convene for the 50th time at Swanwick in Derbyshire.

743
I am concerned by the plight of young writers starting out for whom the public lending right does little, supplying as it does extra funds to those popular authors in little need of it and practically nothing to the young and struggling. There is a case for revision of the public lending right so that it provides more substantial funds to such authors, perhaps by offering a smaller slice of the cake to the successful and popular—or, dare I suggest, nothing at all? —and a bigger slice to those with only one or two literary novels to their name. We are all familiar with the image of the pram in the hall as the enemy of promise but perhaps a more powerful adversary is the spectre of want. Not everyone, however talented, is as motivated as Anthony Trollop and gets up at five and writes before going off to his or her job.
It has been said that our England is a nest of singing birds. I paraphrase that and say, less euphoniously, that our United Kingdom is a nest of singing birds. No doubt some of them will go on singing without outside aid as they have always done, but there is something disquieting about imagining the creative output that may be lost because insufficient attention has been paid to latent talent. However, the National Lottery has enabled the Arts Council to address problems which earlier it was unable to tackle. Since the Arts for Everyone scheme was announced in the autumn of 1996, under the express element, literature awards totalling £1,107,000 have been made for 287 projects and, under the main element, just over £2,000,000 has been awarded to 20 projects. Two more rounds are still to come. Young people and the disabled have been particularly targeted. A sum of £475,000 from Arts for Everyone has gone to the Hiatus project in Birmingham involving young people in producing television dramas. Bournemouth libraries have benefited through a workshops project linking the creative aspect of writing with an active enjoyment of reading. Thanks to a grant from the same source, the Poetry Society has launched a two-year programme to bring poetry to the people.
Something in the region of 200 literary awards are presented in this country each year. The Arts Council's Writers' Awards go to the winners of 15 separate categories: fiction, poetry, genre fiction, biography and so on. Each award is of £7,000. Such an award is enough to keep a young author during the writing of a book. The Arts Council is presently looking at ways to expand this project and increase the number of categories. Perhaps it should also consider that young creative writers need places in which to work, havens of peace and quiet important to any author, and set aside funds for the setting up of such retreats. The Eastern Arts Board is currently conducting a feasibility study into the possible establishment of a residential centre which would aim to attract professional writers from all over the country seeking a retreat in which to work.
Books need readers. As well as through advertising and the media, literary festivals, book clubs and reading circles, much is being done and needs to be done to reach potential readers by the means of literary evenings in libraries and theatres and author lectures and readings. One enterprising publisher I know takes her young authors into pubs and clubs to read from their work to a clientele who might otherwise never hear of them. The
744
buying of books is difficult or impossible for a large number of people and they depend on the public library. It is vital that public libraries are maintained and stocked with the best literature publishing has to offer.
The Arts Council is working intensively through schools and libraries to encourage reading. With the National Year of Reading set to start in September, we note that most libraries in the United Kingdom will be holding special events to encourage involvement. The Library Association's two reading initiatives Sharing a Story and Playing Around with a Book are expected to continue throughout the year and summer reading campaigns are planned. The libraries' involvement is invaluable for their role in highlighting the importance and pleasure of reading. Literature is probably the only branch of the arts which may be enjoyed at no cost at all.
The National Year of Reading should make a significant difference in literacy levels. Exploring values and life itself through literature may be more effective in developing useful and happy citizens than the formal teaching of morality, while violent and anti-social behaviour may to a large extent be the result of lack of experience in the organisation and expression of emotion. The discerning reader learns something new and valuable every day.
Books face great competition from a vast range of entertainment, but literature manages to hold its own. It will only continue to do so through persistent promotion along the lines that I have mentioned and through the encouragement of aspiring writers. In his splendid introduction to the debate my noble friend Lord Puttnam mentioned Tolstoy and the writing of a screenplay. A British Tolstoy may be out there, waiting to be found.
5.2 p.m.
The Earl of Carlisle: My Lords, it is a pleasure to follow the noble Baroness, Lady Rendell. I am grateful to her, as I am sure all noble Lords are, for having drawn attention to the promotion of literature through prizes. We all—the House, the nation and the arts—owe a great debt to the noble Lord, Lord Puttnam, for initiating the debate. He said that art is an ambassador.
For the past three or four years I have had the pleasure and privilege of working in the Baltic states. Noble Lords may recall that in 1991, after the Berlin Wall came down, the three Baltic states—Estonia, Latvia and Lithuania—which are much undersized states compared with their eastern neighbour, produced what was called a singing revolution. They won through song. They linked hands from Tallinn down to Vilnius, and they held massive singing festivals in Tallinn. The Russians called it a day and walked out. Art has political and cultural significance.
In his maiden speech on 18th December 1997, during the debate on the Unstarred Question on free access to museums, asked by the noble Earl, Lord Clancarty, the noble Lord, Lord Puttnam, at col. 813 of the Official Report said:
"Victorian Britain was engaged in nothing short of a massive experiment in public education",
in the South Kensington area 150 years ago. Our arts and our culture through our museums need to regenerate that theme and also embark upon a massive experiment in public education.

745
Like all noble Lords, I have no constituents. About one morning every fortnight I invite A-level pupils from a variety of schools—from Wells to Harrow. This morning, 10 Harrovians came to your Lordships' House. They sat in the other place and had a tour. One of them said, "We want to know more about the Office of the Lord Chancellor. Can we see where he lives?" I said, "Not yet but when the refurbishment is completed I hope I may be able to take you there".
I salute the noble and learned Lord the Lord Chancellor, who is not in his place today, for all that he has done to refurbish that once magnificent set of Pugin Rooms. I should be wary of giving the noble and learned Lord the Lord Chancellor advice. The last time that one of my ancestors did so, it was the fifth Lord Carlisle. At the age of 35, like the noble Lord, Lord Owen, who is not in his place, he became Foreign Secretary, and like the noble Lord so far, he never held Cabinet office again.
In the 1750s that Lord Carlisle attempted to offer advice to the Lord Chancellor on a measure to facilitate divorce. Lord Hardwicke referred to my ancestor as an adulterous young aristocrat. The noble and learned Lord the Lord Chancellor is a distinguished advocate and Scotsman. I suggest that he introduces into his chambers a Raeburn portrait of a Scotsman who was also a learned Lord, because last month the National Portrait Gallery held an exhibition of Raeburn paintings. Those noble Lords who visited would not have been disappointed.
That exhibition had several results. It introduced English people to the works of a great Scottish portrait painter. It introduced them to 18th and 19th century Edinburgh. It boosted the numbers of people visiting the National Portrait Gallery, who may never have visited it at all.
I have now another salutation. It is to the noble Earl, Lord Clancarty, and his colleague on the Cross Benches, the noble Lord, Lord Freyberg. Since 14th May they have persistently and determinedly encouraged and exhorted, and no doubt provoked, the Treasury Bench with string after string of well-worded, incisive Questions.
I know that he does not like being called the Captain of the Gentlemen-at-Arms, but I salute him and his team in his department for enabling free access to museums for the foreseeable future. When he replies perhaps he will explain the words, "for the foreseeable future".
I shall explain what Dr. Charles Saumarez-Smith and the National Portrait Gallery are doing to encourage energetic and imaginative access. First, they are building a £10 million restaurant on the top of the museum, which may generate wealth to be spent on the museum, and enable more people to see around it and, it is hoped, make donations. Secondly, it is installing an escalator to enable people to get to the top floor. It will need private sponsorship and the support of everyone.
When showing people around this House, I realise that our young people are deficient in their basic knowledge of British history. Our museums and galleries, in particular the National Portrait Gallery, have a substantial role to play.
746
There is an omission in the debate. No Member of the Bishops' Benches is to speak. Perhaps one of them will speak in the gap. I wish to draw attention to our nation's greatest, sublime and soaring monuments; the cathedrals. I hope that when necessary the Bishops will apply to the National Lottery because it would be a tragedy if we allowed the cathedrals to return to their condition at the end of the Second World War.
My final point—
Noble Lords: Time!
The Earl of Carlisle: My Lords, I shall deal with it later. I hope that the Lindisfarne Gospels are returned to where they belong. They are the greatest pieces of 8th century work belonging to Europe.
5.11 p.m.
Lord Crathorne: My Lords, it is a pleasure to speak in this debate which was so eloquently introduced by the noble Lord, Lord Puttnam, and to affirm the importance of the arts in the life of the nation. In a debate with so many speakers it is difficult to cover new ground, but I wish to discuss two points which have been mentioned only briefly. I shall begin close to home.
This morning, about 50 members of the All-Party Parliamentary Arts and Heritage Group went to the Tate Gallery to see the wonderful exhibition of paintings by Bonnard. It was truly a life enhancing experience. I mention that group, which was earlier referred to by the noble Lord, Lord Renton, because of all the organisations within Westminster it is most concerned with the subject of today's debate. As secretary of the group, I receive many letters stating how much the visits and events we organise enhance the lives of MPs and Peers at Westminster. I am glad to say that I have received letters to that effect from my noble friend Lord Renton. Since the election, new Members of Parliament have been slow to join, but the numbers are now increasing.
This morning at the Tate, we all welcomed the Budget news that money would be made available to some museums in order to prevent them having to charge entrance fees. The all-party group has been working hard on that problem with the Secretary of State. We are delighted about the announcement and feel that we can claim a small amount of credit for it.
Having called attention to the importance of arts in the life of Parliament, I shall move to a different point; the built heritage. I am pleased that the noble Lord. Lord Puttnam, referred to the built heritage and left us in no doubt about this feelings. Architecture is one of the arts and is as important as painting, opera and even film making. In many ways, it is the most important of the arts because we are surrounded and influenced by architecture. We are conditioned by our environment. I sometimes wonder whether there is a connection between the fact that we in this Chamber are so well behaved and the exceptional environment in which we operate. In addition, I am pleased about the improvement to the Lord Chancellor's environment.

747
The present Government have stated that they are committed to new design and architecture. This is fine. However, they have been silent about historic buildings and have not sufficiently indicated the fact that they value buildings of the past. Perhaps I should declare an interest as chairman of the Georgian Group, which is one of the statutory bodies charged with protecting Georgian buildings. There is a painful contrast between the amount of money and attention being lavished on the Millennium Dome at Greenwich, as mentioned by other noble Lords, and the vague financial commitment to secure the future of the Royal Hospital at Greenwich which was recently designated a World Heritage Site. That group of buildings is superb and the Government must consider committing money to it from somewhere.
Another case which comes to mind is the Royal William Victualling Yard in Plymouth. It is another magnificent complex of buildings which seemed destined to become a retail shopping outlet with backing from the Department of the Environment, Transport and the Regions. That is not the best use for those buildings and a more acceptable scheme appears to have been overlooked.
I conclude by making a plea to the Government. Please do not underestimate the importance of the built heritage in the life of the nation.
5.16 p.m.
Baroness Amos: My Lords, I thank my noble friend Lord Puttnam for initiating today's important debate. I believe that the arts are integral to our society. Artistic activity can inspire people's knowledge and imagination and it is important that this is recognised.
To date, the contributions that I have made in your Lordships' House have been in the arena of human rights and equality, but I shall depart from that in today's speech. In the short time available to me, I should like to comment on the importance of development and investment in the arts and in particular the importance of investment in new writing. I must at this point declare an interest as one of the directors of Hampstead Theatre.
Whenever I travel, I am always reminded of the way in which British theatre leads the world. I strongly believe that we need to find ways in which we can build on its worldwide reputation and success. In order to maintain that success, we must invest in development. We need adequate investment in the creative artist and in art form development as an entity in itself.
In recent years, many arts companies have paid less attention to experimentation and the nurturing of new talent because of financial constraints. That is having a particular impact on theatre. We need to support and promote talent as it emerges so that we continue to reap respect and admiration around the world. But it is also important to develop an appreciation of the arts among our young people and I would endorse the comments on the important relationship between art and education. For example, Hampstead Theatre recently made a new departure by producing a set of plays, all of them new writing, targeted at young people. To date, it has
748
been a great success and it has been heartening to see the way in which large numbers of young people have become engaged with those productions.
In plays, big and bold statements can be made about how we live our lives, and that was certainly true in those plays. They can provide diverse groups of people with an opportunity to understand how others live, simply to enable them to see the other side of the question. They can open up new vistas, challenge our preconceived ideas and also provide us with a sense of community. They can help us to express our emotions. It was good to see those young people laugh, cry and be moved by the content of those plays.
Therefore, it is important that we celebrate the breadth and depth of the talent which exists. But in celebrating it, let us remember also that practical support must be given if our arts companies are to maintain their position in the worldwide market. For that to happen, we must invest in development and commit to the new.
We live in a diverse society, a society where it is important that majority and minority voices are heard and where minority cultures need to be respected. For those reasons, greater access to the arts is vital. That can be achieved only by a creative approach to funding and a serious debate about the sometimes, I believe, fake assumptions which are made about art which is popular. Because something is popular or commercial, it does not mean that it must be of poor quality. Money is one of the keys to access. Low prices make the arts available to those who can ill afford that luxury. But as important, it removes the barrier between the arts and those who have never felt their right to participate in them. It is important to create an environment which allows many rather than the few to participate in a diverse and rich range of activities.
I very much endorse the partnership approach. Let us not forget that there would be no performing arts in this country if artists, back-stage staff and all the personnel who look after and produce the work did not, in some way or other, contribute to that partnership. It is that partnership which will deliver greater access to the arts and will deliver also the opportunity to celebrate and enjoy the rich diversity which is at the heart of our society. I very much hope that the Government will continue to support new developments and invest in the new.
5.22 p.m.
Lord Inglewood: My Lords, like other noble Lords, I must start by thanking the noble Lord, Lord Puttnam, for introducing this important debate.
There are a myriad of arguments—and noble Lords will have heard many of them—for having a thriving arts sector. In my comments, I should like to focus in particular on the economic aspect, not because I disparage the other aspects but simply because an industry which contributed £9.6 billion in 1996 to our country's exports must be taken seriously as an economic entity. Also, I do not propose to provide answers to questions. Rather, I wish to make points which can contribute to a wider debate.

749
It is a truism—but it is nevertheless true for all that—that we are living in an age of technological revolution. At the time, it is often very difficult to identify the characteristics of a revolution. But it is clear that at the centre of that revolution lies the value of intellectual property. Central to our nation's success in making the most of the intellectual property that we can generate is creativity. And central to encouraging and promoting creativity is a thriving arts sector. Of course, that revolution is taking place in a world where our fellow citizens have more money and time than ever before.
Against such a background, we need a national debate about the role of the arts and creativity in society very much along the lines of the one that we had in this country in the 19th century about science and education. We must take forward that debate in as rounded a way as possible.
I believe that that is already starting. Some of your Lordships may remember in the last government the so-called "Cool Britannia" initiative which became a theme of the then opposition party's approach to the arts and those issues. We know what happened on 1st May and I do not wish to rehearse that particular piece of history. But the crucial question which we must ask ourselves is how we develop and encourage creativity and then exploit it so that here, in this country, we become winners in the next century.
There are a number of points at which we should look most carefully. One of the characteristics of creativity is that it is essentially anarchic and anti-establishment. It follows by definition that any political party which gains office becomes, by virtue of that act, part of the establishment. It is probably naïve, and probably it will not happen, for governments to expect to receive a lot of gratitude from parts of the arts sector. It is the price that is paid for having a thriving arts sector.
Just as creativity and the arts are becoming economically more important, in turn they become engines of economic regeneration in the wider country. Last weekend, I was in the north-east of England and saw the "Gateshead Angel"—the "Angel of the North". Quite apart from any other consideration, how on earth could Gateshead have promoted itself to the extent it has by taking any other form of advertisement? In the north-east one sees projects such as the Baltic Flour Mills and the Sunderland glass museum which will be major employers in the locality. We have seen that in the north with the Tate in Liverpool. In a world where more travel will take place and people have more leisure, that is a way of creating jobs where they are needed.
The arts is a very important instrument of realpolitik for this country. After all, if it is not a tautology, the English language is the lingua franca of the globe. The Government put money into the World Service, as much as anything else, to increase their influence around the globe. The noble Lord, Lord Puttnam, referred to film. British films are admired everywhere. Mention has been made also of architecture. Our architects are some of the most esteemed anywhere in the world. We look
750
at the work of the British Council. We see our nation's interests being promoted not by fire power but by soft power.
In all that, the role of the Government is very important. The principal benefits come from the Government being an enabler and a patron rather than a direct deliverer. The noble Lord, Lord Puttnam, mentioned William Morris as one of his heroes. He is also one of my heroes. In his essay Hopes and Fears for Art he said that gods and governments cannot help those who do not help themselves. We must try to ensure that in whatever patronage the Government can bestow, they bestow it wisely and bravely in the national interest. For example, in an article in The Times, written by my noble friend Lord Hurd of Westwell, he mentions specifically the spectacular new British embassy building in Berlin.
Having said that, I am still not convinced—and I speak looking back to my time in the then Department of National Heritage—that the administration and systems of government in this country are really addressing that problem as well as they should. On the one hand, there is the Department of Culture, Media and Sport but yet, in that general area, the DTI plays an important part. Those noble Lords who travel by Tube may have seen the poster for Powerhouse UK, which is about design. In turn, fashion is the responsibility of the DTI.
I am concerned also—I hope not in a destructive way—about the role of the Department for Education and Employment. I understand the financial constraints against which it operates. But if one looks at the activities of the arts sector, how much money is being spent on things which really should be paid for from the education budget rather than the arts budget? Of course, educational access is important but sometimes I suspect that educational access is being paid for by the arts part of our nation's budget when it should be paid for from the educational part of the budget. Again, if one looks at the lottery and the way that is operated, a lot of what is being done is entirely laudable and in the public interest. But it is providing funds for the DFEE.
In the context of education, historical perspective is very important. After all, things do not happen in the abstract. There is a need for the disciplined rigour of context, albeit that the new creation may be interpreted in a radical or unexpected manner or may quite simply be a rejection of the past. Today's enfants terribles will become tomorrow's old masters.
In many ways, I believe that the economic and political characteristics of the arts are similar to those of the environment. After all, in the early 1980s, greenery—if I may put it that way—was a radical political theme, but now it has become a mainstream one. Perhaps we may see the same here. Equally, the economics of this sector are difficult to measure. That poses problems for bean counters in the Treasury and elsewhere. The relationships between the payments and the benefits are not always so obvious. Again, if I may use a rural analogy, it is somewhat like my home area where subsidies are paid to hill farmers to benefit the Lake District and the visitors who go there on their holidays.

751
In an era where the state is, quite rightly, withdrawing from certain funding activities, how will the arts generate the money that is needed? We cannot have the arts without the necessary funding. Of course, there will be some central government money, some lottery money, some sponsorship and some money from what I might call "sales proceeds", be it the selling of pictures or the selling of tickets. But perhaps—and I put this forward knowing that it has been put forward by others—we ought to have some kind of US-style tax breaks.
The future presents a particular kind of problem for those who may not be successful in the arts. As the father of two daughters, it is not only a case of, "Would you put your daughter on the stage Mrs. Worthington?", it is also: would you want your daughter to marry an unsuccessful solicitor or an unsuccessful artist? I believe that the standard of living that one would get if married to the former would probably be rather better.
There are many important issues related to this topic. The great paradox is that, as the noble Lord, Lord Puttnam, said, digital technology is going, in certain respects, to revive the traditional Renaissance, humanist concept of education, linking the scientific and the creative. Without the creative, we shall not be able properly to exploit the scientific innovations which seem to be endemic to our age and at which we in this country are so good.
5.31 p.m.
The Earl of Clancarty: My Lords, I, too, should like to thank the noble Lord, Lord Puttnam, for instigating this important debate. It has been difficult to know how to react to the news of yesterday's Budget, after the extraordinary newspaper predictions at the weekend which raised the expectations of a lot of people in relation to the national museums and galleries. But now that the dust is settling things do look better than they did in December. I give a cautious welcome to the Government's initiative.
Can the Minister confirm that this is the beginning of a firm commitment to free all the national museums and, if so, what is the time-scale and the amounts of money involved? Can the Minister also give us some idea of the future position of anomalous museums, such as the Bradford Photography Museum? I understand that the extra £2 million to selected national galleries will help to maintain the status quo in terms of free admissions—this is clearly good, though I am worried that the conditions attached to this fund may allow a culture of commerce and finance to strengthen further its control on museums. The Government must now help the charging museums, with the one simple condition attached that their charges must be lifted.
As the noble Lord, Lord Strabolgi, has told us, there is also at present, as a result of government cuts, tremendous concern for the regional local authority museums, a large number of which now charge for admission. I would greatly welcome the extension of the legislation that already exists in Scotland where local authorities have,
"to ensure that there is adequate provision of facilities for the inhabitants of their area … for … cultural activities".
752
That is interestingly-worded legislation, as the use of the phrase "cultural activities" appears to blur the distinction between consumption and production. Within the present structures this provision should be a bargain made among central government, local authorities and the people of the area, yet it seems clear that, with the latest round of cuts, central government is not keeping up its end of the bargain.
I want now to turn to another matter, and make a few observations on the problems of being an artist in Britain, in particular those artists who have survived—and have done so up to now—on benefits or a mixture of benefits and part-time work; and also on the nature of the work that they are carrying out, and its position within society.
As your Lordships are doubtless aware, and as we heard earlier, there is a growing rebellion among many pop musicians, writers, artists and others over the Government's plans for welfare to work. Successful pop musicians, for instance, have argued that they could not have reached the positions that they are now in without the long periods on benefit when they were free to experiment and develop their musical ideas—perhaps for 10 years or more. There are a number of ironies here: Tony Blair and his Government proclaim a vibrant contemporary culture but they would not he able to do so without those they laud having come through a particular system of support. Tony Blair has been erecting a "house of culture", but ignores or refuses to admit the foundation stones on which it is built. Another irony is the fact that those among creative artists who have the voice to be critical are precisely the successful ones, at least they are the commercially successful ones, in the Government's own terms of their assumed identification of art with commercial success.
But what about those artists who cannot or choose not to operate in a commercial sense, who are engaged in long-term—that is to say, lifelong—"independent research, what in science is termed "blue skies research" but is also I believe extremely important in the arts? The long-term broadly non-commercial situation is a reality for the great majority of artists living and working in the UK. Extremely successful commercial artists are the exception rather than the rule.
Gordon Brown said yesterday:
"We will make work pay".
What then of the work of the artist? From the artist's point of view, does Gordon Brown mean that he will make the work you already do pay, or does he mean that he will make you do work which pays? Because this asks us to think about what we actually mean by the terms "work" and "value". Is it possible for this Government to accept that the contribution that artists make to culture is through the work that they do rather than through paying taxes from earnings which would be a bonus on top of that work? Gordon Brown has made it clear that the Government want to make sure that people are not better off on benefit doing nothing than they would be working. Artists may be on benefit, but they are not doing nothing—they are working. Theirs is a cultural work. Could not the Government or society itself agree to pay the artist what he or she would

753
receive as benefits for being unemployed, as a payment for this cultural work which is their major contribution to society? When or if the artist comes into the position where he or she is able to pay taxes, they would no longer need these payments.
At present we are in danger of streamlining the funding, the facilities (including museums and galleries) and work structures they have to inhabit into a commercial cultural system without anomalies. In that sense, this is a government that seems to like "tidying up". The tighter and more controlled the structures that the Government set up, the more a culture will be created which, for all its apparent variegation, will be prescribed, determined only by those structures. We should instead be allowing for a diversity of artistic projects ranging from those that function in the market place to those which might be seen as a cultural equivalent of blue-skies research. Otherwise the end result might be that we face a situation like that in the former eastern bloc countries where their authorities countenanced only socialist artists: we would support only commercially-viable artists.
Perhaps one of the good things that has come out of this present situation is the desire on the part of many artists and others no longer to live a lie. If the artist is presently supported for not working, why cannot he be supported for working as an artist? There are at present a great number of artists, writers and musicians working on very low incomes all over Britain. Gordon Brown may say that he wants to expand the opportunities for work, but the effective result may be simply to stop artists from being artists. I present this not as a demand, but as an appeal to legitimise a situation which already exists, but which is largely hidden. Its revealing could change the whole nature of the cultural landscape in this country.
5.39 p.m.
Lord Montague of Oxford: My Lords, my noble friend Lord Puttnam, in his excellent speech opening this debate, referred to the profound effect of the lottery. As an immediate past millennium commissioner I would like to take noble Lords on a quick canter around the country—stopping not for a second in Greenwich—to discuss some of the excellent projects which are newly taking place. We must remember—as we have heard several times this afternoon—the importance of buildings.
The noble Earl, Lord Carlisle, asked a most interesting question; namely, whether we can do anything for cathedrals. We are doing so. I refer to the completion of the St. Edmundsbury Cathedral. This project will complete the north transept and the cloisters and will link the chapel and the unfinished tower. That will complete the last substantially incomplete English cathedral. Our noble friends the bishops are able to apply for funding and are doing so. That is to be welcomed. We have heard today about books. In Norwich we are building a great library. I say "we" but we are providing only 50 per cent. of the cost of this great library and the great square which will be built in Norwich. There will be a millennium library, a business
754
and learning centre and a heritage attraction. In London, in addition to what is happening at Greenwich we are helping the British Museum. We have given it £30 million towards its £94 million cost of putting to good use the central area which will arise as a result of the moving of the British Library.
Durham is being dubbed the renaissance city of the north. There will be a theatre, a centre for lifelong learning and a new library. In Newcastle there will be an interactive visitor centre where the secrets of life will he unveiled and the mysteries of evolution and life on earth explored. Each of these projects to which I refer will cost at least £100 million, of which the Millennium Commission will provide half. An observation has been made that only £50 million is being made available to the new Bankside Tate Gallery. When the Millennium Commission came into being we decided that we had to have some ground rules under which people applied to us for funding. The ground rules stipulated that we would provide either 50 per cent. of the cost of a project or £50 million, whichever was the greater. It is up to applicants whether or not they apply to us. The Tate applied to us on that basis. When there are projects to finance up and down the land a body such as ours must follow a strict financial discipline: otherwise, every single project could overrun its budget and will reapply to us for additional funds. That is why we have established these rules which we shall not vary.
In Manchester the Lowry Centre will be built, comprising exhibition space to feature that great English artist, L.S. Lowry of "matchstick men" fame. There will also be built a 1,650-seat lyric theatre. Portsmouth Harbour can come alive for visitors. A great tower will be built from which one can see "HMS Victory" and the British fleet, all of which will now go to Portsmouth. The commander-in-chief is already located there. That will be a great spectacle. From the tower one will be able to see the Isle of Wight. It will be a hub of activity and, I am sure, a great attraction.
In Bristol there will be built two theatres and a science centre. In Cornwall the Eden project will be established. What a tremendous project that will be. A great, deep quarry will be partially covered over. The scheme will be designed by the same architects who built the Eurostar station at Waterloo. There will be a similar imaginative design by Eden in Cornwall. In addition to being a great attraction to visitors it will provide much economic benefit to Cornwall, which is one of the poorest, albeit most glamorous, parts of the country. In Birmingham there will be the Millennium Point with new multimedia technologies and a home for historic and modern artefacts. A Hindu temple will be built in the west Midlands. I do not know whether noble Lords have seen the temple that was built in Neasden which received much publicity. It is a quite magnificent affair. I have not seen anything like it before. I could not believe I was in Britain. I urge noble Lords to visit it if they have not done so. It is exciting, stimulating and a true work of art.
The Earth Centre near Doncaster is being built in an area of high unemployment for miners for whom there is no other work. It will be used for environmental research and as a sustainable technology centre.

755
Sheffield will have a new art gallery and a public winter garden which will revitalise the centre of Sheffield. In Northern Ireland there will be the Odyssey Project, a science centre and an IMEX cinema. I hope my noble friend Lord Puttnam will agree that these new IMEX cinemas are a magnificent new cinematic art and quite fascinating. I urge those who have not visited one to do so. In Wales there will be a new botanic garden. We have heard about the importance of gardening. In Scotland we shall link Glasgow and Edinburgh by removing the obstacles which stand in the way of the canal which used to exist. That will bring pleasure to many.
We are not forgetting that the millennium is the mark of a Christian period. We shall provide the funds to floodlight 400 churches. I pay tribute to the noble Lord, Lord Crickhowell, who became so angry with us on one occasion when we would not provide funds for the new opera house in Cardiff. If he had not become angry with us I doubt we would have taken the subsequent decision that another similar project on the same site should go ahead. There will be a new lyric theatre in Cardiff.
The noble Lord, Lord Crathorne, referred to the Royal William Yard at Plymouth. We had some proposals for that and we were disappointed that it is now to be a retail centre. I agree with the noble Lord that that is a quite unsuitable purpose for that magnificent site. I have spoken for seven minutes and I am so grateful that my time is up because I do not have time to say anything about Greenwich!
5.47 p.m.
Lord Feldman: My Lords, I, too, congratulate the noble Lord, Lord Puttnam, on introducing this debate today with his customary eloquence. It has given us the opportunity to discuss a subject which is close to our hearts and of great benefit to our nation.
I had the good fortune to come from a family where the arts were considered important and were encouraged. My father was a good amateur violinist. My sister, Fenella, became an actress and her Hedda Gabler received even more acclaim than her roles in the "Carry On" films. My son Nicholas has achieved great success in the music charts. At school, as a form of light relief from work, I organised many visits to the theatre, the opera and concerts. I realised then that you have to catch them young.
It seems to me that we should reconsider a long-standing idea to give the under-18s an arts passport which would give them access to selected arts venues around the country without charge. I am sure this will have an enormous effect on the future of the arts in our country. As my noble friend Lord Inglewood has suggested, perhaps the cost could be met from the education budget. The Government raised expectations on what would happen to the arts if and when they won the election, implying that more money would emerge and that there would be more support and encouragement for all the arts. So far there is great disappointment throughout the arts, although the Chancellor helped yesterday as regards museums and galleries.
756
I understand that the creative industries task force includes film, video, television, design, rock and pop music, but why deny representation to the other arts such as classical music, theatre, opera, ballet and museums? Are they not creative too?
I hope that the noble Lord, Lord Puttnam, whom I respect, will understand it if I say that John Tusa did not create a schism by his article. In fact the schism was created and caused by the Government's rather clumsy approach to the matter. During my term on the English Tourist Board I worked to establish a closer relationship between tourism and the arts. As a result, the London Arts Season was created to bring tourists to London in February and March—an off peak time of the year—in 1994, 1995 and 1996. The season brought together all the arts in London and brought £75 million of additional revenue to the capital. It was followed in 1995 by a national year long campaign called the Festival of Arts and Culture which produced £150 million.
Let me give noble Lords some statistics. Fifty per cent. of overseas visitors are drawn here by our arts and heritage. Each year our West End theatres alone sell 12 million tickets, of which 4 million are sold to overseas visitors. More than 50 million visitors come to our museums, galleries and historic properties every year. The arts-related spend on tourism is over £3 billion a year. However, the value to our nation from the arts does not just rest with buying tickets or paying an admission fee. There are substantial economic benefits too.
Overseas visitors arrive in our planes, ships and ferries. They eat in our restaurants. They travel on our buses, trains and in our taxis. They stay in our hotels and they buy goods in our shops. All these activities create jobs, and I have found that arts tourists come hack again and again. The arts, whether sponsored or commercial, lead to job creation on a large scale, adding to the life, fulfilment and prosperity of our nation.
I find it intriguing that after the general election, the name of the Department of National Heritage was changed. Much of the arts that we celebrate are part of our cultural heritage, so yet again New Labour has carried out an unnecessary exercise in rebranding. This reminds me of Sam Goldwyn, the great American film producer, who, when told by a critic that his films were always full of old clichés, was extremely upset. The great man called together his directors and screenwriters and said, "Gentlemen, enough of the old clichés. Give me some new clichés!". New Labour has given us many new clichés, but no new money for the arts.
I believe that we should continue to align tourism with the arts. One project which I feel is important is the establishment of an arts bureau in London which, combined with a tourism element, would promote the arts within our country and around the world on a 12 months of the year basis. I hope that the application that we made for lottery money will in time prove successful. Something like that would boost the arts, bringing more visitors to our country. It would also bring increased economic benefits.

757
I wholeheartedly agree with the spirit behind the debate. It is to be hoped that something good will come of it, that some new ideas will emerge and, more importantly, will be put into effect.
5.53 p.m.
Lord Freyberg: My Lords, I, too, thank the noble Lord, Lord Puttnam, for initiating this timely debate. There is one important issue that has been neglected for many decades which I urge the Secretary of State to address as part of his departmental review. That is the redistribution of works of art in our national collections.
There are several reasons why that is necessary. At the moment, thanks to historical accident, important works of art are often housed in inappropriate museum collections when they would be seen and appreciated by far more people if they were accommodated somewhere else. For example, the Victoria and Albert Museum, while largely a museum for the decorative and applied arts, also owns a considerable number of fine paintings by such artists as Degas, Fantin Latour, Ingres, Delacroix and Tiepolo, to say nothing of the 415 magnificent oil sketches by Constable. All those languish largely unknown and unseen compared with the large numbers of people who enjoy comparative works in the National and Tate galleries.
One of the reasons for the V&A's large holding of pictures is the National Gallery's refusal from the beginning to accept work by living artists. When in 1887 John Sheepshanks gave more than 500 pictures to the South Kensington Museum (as the V&A was then called) he did so with the intention that they should form the nucleus of a National Gallery of British Art. Ten years later the Tate Gallery was built at Millbank for just that purpose. If the Tate had existed earlier, it is certain that they would have gone there. It is lamentable that no one has had the imagination or nous in the past 100 years to arrange for their removal to the place where they would be properly appreciated.
The Constables were bequeathed to the V&A for a slightly different reason. At that time, in 1888, the National Gallery refused to take oil sketches, though it was happy to accept Constable's large oils from the same source. Today no such distinction is made. Meanwhile drawings by Constable are divided between the Tate, the V&A and the British Museum. Surely it would make sense for scholars and the general public alike to reunite this great collection as a pair to the Turner bequest.
Whatever else the public perception of the V&A may be, it is not of a major art gallery with a range of paintings, prints, drawings and a vast number of watercolours, from 14th century Italy to present day Britain. Visitors largely ignore these elements of its holdings and instead prefer to think of it as the greatest decorative and applied arts museum in the world. That is what they come to see. If its unsung pictures were moved to a more appropriate setting, several whole galleries would be freed for some of its massive reserve collection currently languishing in its capacious cellars and storerooms.
758
Similarly, visitors do not go to the British Museum for its decorative arts collection. But it exists, as do equivalent anomalies in all the major London museums. One of the greatest problems in redistributing works of art is the understandable reluctance of museum directors to let go anything in their collection, however sensible the idea might be in principle. This is why it is necessary for the Secretary of State to get involved, to bash heads together, or at least to convene a rational discussion of the whole issue and force museum directors to be practical rather than territorial.
One of the ways museums have attempted to redress this situation in the past has been to arrange for works isolated in the wrong museum to be placed in a more suitable location on long term loan. For example, the V&A's Bellini has been on the walls of the National Gallery since 1895. That is obviously the right place for it and it would not make sense for it ever to return to South Kensington. Unfortunately, other loans are often made on the understanding that the objects will eventually return to their original home no matter how illogical that would be.
It should be noted that the director of the National Gallery, Neil MacGregor, took an excellent lead in this direction a couple of years ago, presumably hoping to kick-start others in the same direction. He handed over some fine miniatures to the Victoria and Albert Museum, which already boasts the national collection of miniatures, and a number of Greco-Roman Fayum portraits to the British Museum.
What is important for all the museums is that they should concentrate on their core purposes and remedy the accidents of history where practical and appropriate. They should be encouraged to examine properly the merits of placing particular articles in relevant museums, even if the ownership of these works is not changed.
I do not suggest that the regrouping should be clinical and absolute, but commonsensical. It would, for example, be a great shame to deprive the V&A of its range and mixture of exhibits in its period galleries. But we must be sensible about it where anomalies are obvious.
As regards wholesale reorganisation between the museums, there are two substantial precedents. They lie in the fur and feathers of the National History Museum that once were all housed at the British Museum along with the Elgin Marbles, until common sense removed them to South Kensington. Meanwhile the V&A was established in 1852 as a Museum of Manufactures. It quickly developed as a museum devoted to ornamental art, while its industrial side also grew to such an extent that in 1913 the Science Museum was founded.
The imminent removal of contemporary art works from the Tate Gallery to Bankside is an ideal moment to take stock of which other works of art are stranded in uncongenial collections and where they would be most appreciated and visible.
The major museums and galleries of London have for too long been left the victims of their history and patronage. It is time to reconsider their scope and

759
function, not singly, but as a group, serving the public rather than themselves. It would surely make sense to rationalise the most glaring anomalies.
6 p.m.
Lord Dholakia: My Lords, perhaps I may also add my congratulations and thanks to the noble Lord, Lord Puttnam. This debate gives me a golden opportunity to focus attention on minority arts. I thank the noble Lord, Lord Montague of Oxford, for mentioning some very interesting examples, and in particular the Neasden temple. Just for information, over a million people have visited the temple over a period of about two years. A substantial number of them are from different faiths. That shows the importance of such a beautiful and wonderful structure.
Just before I entered the House I was handed a leaflet from an organisation called ADiTi. I was asked whether it was at all possible to mention the organisation. It is the national umbrella organisation for South Asian dance. It is doing some very noble work in the community. As noble Lords will know, dance is one of the most powerful and eloquent means of self-expression. The thing that impressed me most when I read the leaflet was that the organisation's funding has been withdrawn by the Arts Council of England. It asks:
"How is this a reflection of the Arts Council's commitment to cultural diversity?".
It is just as necessary to establish cultural relations within groups which co-exist within a society, as when they exist in the form of separate states. Indeed, it could be argued that it is even more important to do so when those groups are differentiated not only by race but by all kinds of social traditions, which are very often not understood by members of other groups living in close proximity. It has often been said that racial differences act like a trace element in the body politic, exposing all the weak places. When the arts are neglected and under-valued by the state, the result of that neglect will show up most clearly in its effect on ethnic minorities.
As early as 1976 I headed a department at the Commission for Racial Equality which also had a responsibility for the arts. We began to be aware of a sense of neglect, amounting to discrimination, being experienced by artists from ethnic minorities living and working in this country. We found that the official view of the Arts Council of Great Britain at the time was that no special need was recognised and no special policy was required—in effect, there was no need to change anything. The same attitude was held, with some honourable exceptions, by most regional arts associations and local authorities. In other words, the contribution which could have assisted towards the creation of an integrated society was ignored.
At that time, the first condition of eligibility for any kind of public funding was that the artist or artists concerned should be "professional" in the sense then considered to be the first condition of eligibility for public money.
To be fair, after a certain amount of educational endeavour on our part, the Arts Council eventually had a change of heart. In 1980, it announced a policy of
760
"affirmative action" in relation to the art and artists of ethnic minorities. I am glad to say that that state of affairs still exists today. We also found that for lack of money, space and opportunity, most people in this country had seen very little of the work of ethnic minority artists living in our own communities.
After the first of several meetings with the chairman and members of the All Party Parliamentary Heritage Group, the suggestion was made that we should organise a programme of performances, at the Commonwealth Institute, in which every possible ethnic minority in Britain should be represented—not merely West Indians and Asians, but Africans, Chinese, Poles, Ukrainians, Scots, Welsh and Irish. The audience was entirely invited, and consisted largely of representatives from local authorities from all over Britain. It was the first time that people gained an idea of the arts that were available on their doorstep.
After that, a small trust was formed, funded by the Gulbenkian Foundation. It organised no less than 22 festivals in cities all over Britain, all of which provided an opportunity for the best artists in local communities to perform in public for the first time.
But today, after more than a decade of cuts across the board in arts funding, the ethnic minority artists, who had only just begun to catch up, are once again disproportionately disadvantaged. That must be a shocking indictment of a society, when art exemplifies the finest contributions in the life of its citizens. When resources are scarce, competition becomes keener. A sense of grievance among the losers is evident. Low expectation based on had experience leads to alienation, and to the kind of behaviour that we all deplore and regret.
Britain, rather to its own surprise, has a world-wide reputation for pre-eminence in the arts. However, that reputation is built on a lop-sided Euro-centric projection of our society. It is surely of vital importance to be recognised as the multi-racial, multi-cultural society that we are, and that that should be represented in all that is good for our country.
6.6 p.m.
Viscount Bridgeman: My Lords, I, too, wish to thank the noble Lord, Lord Puttnam, for initiating this debate. Several noble Lords have spoken about the plight of the smaller museums in this country, and I wish to speak briefly about that category. The current magnificent exhibition at the Royal Academy bears striking witness to the treasures that are in the possession of museums across the United Kingdom. At this stage I must declare an interest as a director of a company which holds archives of photographs of pictures owned by museums and art collections. It is in the small museums in this country that we see the funding difficulties at their most stark.
Let us take a museum in a large town in England. It will probably have negligible endowments. It is likely to be under the control of a local authority which is itself under considerable financial pressure and where the priorities for the arts are not as high as we would like. There was the case of one major city whose very fine

761
museum came under the control of the parks and cemeteries department! If, in addition, the museum is unfortunate enough to be in one of the newly constituted unitary authorities, experience has unfortunately shown that the problem is further exacerbated. Unlike its larger brothers, it will not have the resources to fund a profitable publications department, which is likely barely to break even. It is also unlikely to have a booming tourist trade. Its limited hanging space may well be further reduced by a sense of obligation to the community, and indeed the need to earn cash, by hiring some of its valuable space for contemporary exhibitions, thus compelling it to keep even more of its works of art in its reserve collections away from public access. The noble Lord, Lord Freyberg, referred to the reserve collections of the larger V&A. That is much more crucial with a smaller collection.
It is a vicious circle. Everybody loses—the nation's heritage, in the form of the public who are denied a sight of these works, and the museums themselves because their works will not have the earning potential from reproduction rights; and so back to the public again, since the ability to acquire new works will in many cases be all but extinguished. These are the Cinderellas of the museums world. Their contribution to the history, the culture, and indeed the contemporary life of the communities they serve is beyond measure. The lottery grants have been a lifeline, but with the grant to the Arts Council, in common with the other lottery funds, to be cut by £60 million per year, this invaluable group must not be the ones on the margin which are forgotten.
The lottery grants have been a great help to capital projects, but perhaps I may make a plea for some form of parallel revenue funding. I take as an example a very fine provincial museum collection which last year loaned 120 of its pictures, more than ever before, nationally, locally and overseas. It could not afford to take part in the exchange programme, so this was a purely good-will gesture. The paperwork involved in this operation is ever-increasing. The net result will almost certainly be a cutback on its activities for the current year. Capital projects are one thing; revenue support is another.
I conclude on an encouraging note. Three years ago Sheffield galleries were on the point of collapse. There was serious talk of closures. Sheffield, the seventh largest city in England, gave the third lowest grant to its museums. However, thanks to an enlightened initiative by the City Council, two of the largest museums have been made into an independent trust. Sheffield was a fortunate recipient of lottery funds and the curator now has the prospect, for the first time in years, of a development fund and a purchasing fund. The Sheffield example is the very best kind of matching effort, matching lottery grants with imaginative local initiatives. I very much hope that the Secretary of State will be as generous as he can to this most deserving category of museums in this country.
6.11 p.m.
Lord Ponsonby of Shulbrede: My Lords, I begin by joining in the thanks to my noble friend for giving us the opportunity to debate this important Motion. I am in the somewhat unfortunate position that the noble Lord,
762
Lord Dholakia, has given my speech for me. Nevertheless, as seems to be traditional in your Lordships' House, I shall go ahead and say it all again.
I too wish to concentrate my comments on the influence of Britain's ethnic minorities on arts today. Many noble Lords have spoken about the sheer vibrancy of the arts in Britain. I wish to argue that this is in large part due to the influence of our ethnic minorities and that we should not only recognise this but celebrate it and promote it.
The problem I have is in trying to cite specific examples. There is such an amalgamation of different ethnic groups with different art forms and different levels of cultural influence that it is impossible to define any boundaries and in some ways it is invidious to attempt to do so. Nevertheless, I wish to give examples, and I shall do so.
In the world of dance I would cite the choreographer and dancer Shobana Jeyasingh, who has a new show opening in the coming week in which she will fuse western contemporary music with classical Indian dance forms in a very exhilarating performance.
In the world of theatre I would cite the Tara Arts Theatre, an Asian theatre group based in my own borough of Wandsworth, which has recently toured the country with Molière's Tartuffe.
In the world of sculpture I would cite Keith Khan, an Asian Trinidadian living and working in London, whose sculptures have been seen by tens of thousands of people at the Notting Hill Carnival.
I would also cite the Notting Hill Carnival itself as a form of art. It is the largest street festival in Europe and has a tremendous vibrancy, which anyone who attends can see.
In the world of poetry I would cite Benjamin Zephaniah, who is such a well-established poet that one hears him on Radio 4 almost every week.
In the world of literature I would cite recent Booker Prize winners, Ben Okri, Salman Rushdie, Kazuo Ishiguro and Arundhati Roy. These are all British writers writing on their experiences outside Britain and contributing to British literature.
I would also cite the art form of food and cooking. I do not know whether members of the Catering Committee of your Lordships' House regard food and cooking as an art form; perhaps they should do so. I should like to cite Peter Gordon's restaurant, the Sugar Club, where he fuses Pacific cookery with European cookery, creating a new type of food.
In the world of music, which is perhaps the simplest example, I would cite the band Simply Red, which I believe is the Prime Minister's favourite pop group, which draws on the reggae tradition, of which I suspect some noble Lords have heard. I would also cite the group Cornershop, which is currently topping the charts in Britain with Punjabi lyrics and joins together classical Indian music with British pop music.
The point I wish to make is that artistic traditions are feeding off each other and creating new arts forms. Young people, particularly in metropolitan areas, take all this for granted; it is nothing new to them. I believe

763
that many of these arts represent the voice of youth and the voice of social cohesion, and that alone is a cause for celebration.
I know that there is some concern that cultural diversity has not been properly serviced by our funding system, a point made by the noble Lord, Lord Dholakia, and my noble friend Lady Amos. Although I am sure those are valid criticisms, the last thing I want to do on an occasion like this is to complain. Perhaps it is inevitable that our funding and training institutions will lag behind what is happening on the arts scene today. I hope that their shortcomings will be overcome, but I suspect that there is a degree of inevitability about them.
I believe that one of the central reasons for Britain's vibrant arts is its cultural diversity. I believe that this is a cause for celebration, and I thank my noble friend Lord Puttnam for giving me the opportunity to draw this to your Lordships' attention.
6.16 p.m.
Lord Eden of Winton: My Lords, I hope that the noble Lord, Lord Puttnam, who so eloquently introduced this debate, will forgive me if I hijack it for a moment in order to draw your Lordships' attention to the problems currently afflicting the Royal Armouries museum.
The Royal Armouries is Great Britain's oldest national museum. For eight years I had the honour to be its chairman. During that time plans were developed which have now found fruition in the establishment of the Royal Armouries in three different locations: at Leeds; at Fort Nelson, above Portsmouth; and at the Tower of London. Yet with three locations the Royal Armouries still has the same grant-in-aid as it had when it occupied only part of the Tower of London. Now spread throughout the three areas, it has the opportunity, which it has seized, more imaginatively and more adequately to display its world-renowned collection of arms and armour.
The museum was able to go to Leeds because, with the help of the Government, it became the first private finance initiative museum to be established—I believe that it is so far the only one. But, as noble Lords will appreciate, because of the involvement of the private sector, the Royal Armouries museum is unable to benefit from the revenues derived from admissions, retailing, catering and hiring facilities, which go directly to the private sector investors. That restricts the amount of revenue income that the armouries may be able to draw.
At Fort Nelson the Royal Armouries has been developing the most imaginative displays of its artillery collection. It has enormous potential, as the noble Lord, Lord Montague of Oxford, mentioned when referring to Portsmouth. It is all part of the Portsmouth defence of the realm heritage, which is well worth a visit. The Royal Armouries will be making a modest bid for assistance from lottery funds to enable it to proceed with the full display of its artillery there. I hope that, as a result, both at Fort Nelson and at Leeds, it will be able to display—through the medium of pageant, historical
764
presentations and much educational work—the history of warfare over the ages, demonstrating man's infinite capacity to inflict horror upon his fellow beings.
The Tower of London remains the one crucial problem which the Royal Armouries museum is now facing; yet it is surprising that it should be a problem at all. The Royal Armouries, as a working arsenal and as a museum, has been at the Tower of London for more than 700 years. It is a vital and central part of the Tower exhibits and exhibition. In 1983 the National Heritage Act came into being and established the Royal Armouries as an independent trustee-managed body. But more recently, during the period of the last government, the Royal Palaces Agency came into existence, charged with the responsibility for managing the unoccupied Royal Palaces, which include the Tower of London.
The Royal Palaces Agency, not surprisingly, wants full control over everything that goes on in the Tower of London. Frankly, it seems to be offended by the sheer presence of the Royal Armouries in the Tower. The result is that the Royal Armouries is no longer able to raise funds in the Tower for its own operations. It did a deal recently in which it gave up its commercial income on the promise that it would receive a financial settlement. It was expecting at least £600,000 a year; it was offered, as I understand it, £200,000—half of the expected proceeds from the shop which it has been forced to give up and which it was hoping to open in the newly-displayed White Tower.
The Tower as a whole makes a substantial profit. Last year its income from admissions was £15 million. The Royal Armouries was asking for 4 per cent. of that. All it has been offered is 1 per cent. The adult admission to the Tower is currently £8; the Royal Armouries was asking for 30p of that, but it is to receive less than 10p. Frankly, that is offensive and also shortsighted, particularly for a national museum which had more than 3 million visitors in the past year.
A grave injustice is being committed. It is quite extraordinary that such damage is being done to a vital part of our nation's heritage by the department of heritage, all apparently being brought about because of the overweening ambition of one of it minions. I ask the noble Lord, Lord McIntosh, who has sat so patiently throughout the debate, to help me by bringing to the attention of his right honourable friend the Secretary of State the urgent need for him to take an interest in this matter; to see the Royal Armouries trustees and the Master of the Armouries in order to correct a grave injustice.
6.25 p.m.
Lord Gibson: My Lords, there are few people in public life today who will actually deny the central importance of the arts; but how many who attain political authority really mean what they say? They mean it in Opposition, but they tend to be less enthusiastic in government, and that applies to both sides.
We must hope that the views of the noble Lord. Lord Puttnam, find favour with the Government that he supports. He made a powerful case for the arts and

765
I congratulate him on bringing it forward so effectively. The addition to your Lordships' House of so formidable a practitioner of the arts is a real bonus.
The fact is that too many people in this country still think of the arts as, while desirable, no more than the icing on the cake to be trimmed when economy requires it. Benjamin Britten put it even more strongly when he received the first Aspen Award in 1964 and in his acceptance speech observed,
"The average Briton still thinks of the arts as suspect and expensive luxuries".
That is 30-odd years ago and perhaps we have come on a bit since then.
Why is it wrong to think like that? To find the answer we have only to think what past societies are remembered for: as a number of your Lordships have said, primarily their cultural expression, their painters, architects, poets and composers; furthermore, the liberating effect of the arts on society. The first thing a dictator does is to constrain and suppress the arts. It is the liberating effect which so abundantly justifies the public support for the arts.
Public subsidy, supported by private, has enormously widened public demand for music and drama throughout the country and brought a national musical and artistic life with a richness and variety undreamt of 50 years ago. It could not have been done without subsidy. However, it would not have been nearly as well done if we had not created an Arts Council to dispense the funds and thus protect the recipients of those funds from political interference. But there is the rub. As the size of public provision has grown, it has become more difficult for politicians to resist interfering; more tempting for them to ignore the "arm's length" principle, which was the original reason for the existence of the Arts Council. What could illustrate that better than Mr. Smith's apparent readiness to determine the future of opera in London with the Arts Council little more than a spectator of events? As someone who chaired the Arts Council 25 years ago, in the days when Ministers of both political parties observed the arm's length principle scrupulously, I find that very sad. I see one former Minister still in his place; I am sorry that the other has left because I like to be even-handed in these matters.
Still, I congratulate Mr. Gerry Robinson on his appointment as the next chairman. His public remarks so far seem to be very much to the point and he is clearly not a man to be pushed around. The Government which appointed him will clearly want him to be a success. Good luck to him! But he will need it. Apart from yesterday's welcome announcement of some help—though not much—for museums, the Government have not so far shown themselves to be very sympathetic to the arts. Many speakers have already referred to severe cuts in arts support. However, in the little time left I propose to speak of the arts in education.
The Prime Minister asserted that the arts are central, not peripheral. Many of us hoped that he meant it and that a Labour Government would extend to secondary schools the compulsory inclusion of art and music in
766
the curriculum, it being already compulsory in primary schools. But they have moved in the opposite direction. It is now, for at least the next two years, compulsory in neither.
Of course I understand that the Secretary of State is trying to make more room for basic skills and I am not pleading for a return to progressive, so-called "child-centred" education which may even fail to teach children to spell. Far from it. What I am pleading for is the arts as a means of arousing in children a desire to learn more, and I am saying that this happens most noticeably in very young children. There is plenty of evidence that where children are introduced to the arts early it helps to improve their basic skills as well, and certainly that their whole attitude to school—their motivation, their bearing and their involvement—all improve when they begin to experience the arts at an early age.
Of course I understand that the Secretary of State has no intention of excluding the arts from the primary curriculum. I know that he wants head teachers to make use of the arts. But as I understand it, it is to be left to head teachers to decide how, and how much, to use music, drama, painting and so on to help children. And I fear this will mean that in schools in relatively well-off areas, with a high proportion of pupils from professional and middle class families, it will be easier to include the arts and head teachers who want to do so will be able to, while in deprived areas, with children from the poorest homes, where inclusion of art and music is perhaps even more essential, it will be much more difficult; and, with fewer peripatetic musicians available, it will be almost impossible.
This is the reason for the concern which many of us feel about this single, to us important, move, and I only hope that the Minister, when he replies to the debate, will be able to say something to alleviate our concern.
6.31 p.m.
Lord Hastings: My Lords, I think I should declare some sort of interest in that I have been actively involved in the world of ballet for some 66 years. Quite recently I had to retire on the ground of age as a governor of the Royal Ballet after 23 years, and currently I am chairman of the Dance Teachers Benevolent Fund, which covers teachers in every aspect, from classical ballet, contemporary and modern, right through to ballroom and Latin American dancing. That is relevant to my remarks about education, although the noble Lord, Lord Gibson, rather pre-empted what I was going to say.
A few years ago, under the previous government, when we were debating the Education Reform Act, they included music in the core curriculum. An amendment was moved by the noble Baroness, Lady Birk, that the words "the arts" should be inserted instead. Being late in the evening, the amendment was lost by 26 votes to 27. Most of the 27 had walked in from the Library and most of the 26, who had listened to the debate, including myself, voted for the Labour amendment. By so small a margin was damage done to the teaching of drama and dance throughout the entire education system, which has

767
suffered quite considerably as a result. Now the same thing, alas, is going to happen to music. It will, no longer form part of the statutory core curriculum.
What the last government did—and this Government are repeating the mistake—was to undermine the possibility of creativity in the arts in general in schools and enjoyment and appreciation of them. I say to this Government, who say that education is their flagship, that an education that does not expose students from the earliest of ages throughout their careers at school to the arts in general—and even to one particular art in some schools—is not a fully rounded education. I hope that they will review this and cancel the present policy. I believe it is vital to the whole future, in the words of the noble Lord's Motion, "life of the nation".
The noble Lord, Lord Puttnam, will remember that when he and I were together in Florence celebrating the 75th anniversary of the British Institute of Florence and that marvellous film "Chariots of Fire" had a gala showing I told him that I was not at all happy about the record of the Conservative Government in their support of the arts. I thought it had been inadequate and mean minded and I was hoping for something better from the next Labour Government. So far, I am afraid I am disappointed. I dare not ask the noble Lord, Lord Puttnam, whether he is. But the fact is that there have been cuts in real terms, theatres have closed and will continue to close, and the situation is not very promising.
That brings me to a particular complaint in that I strongly object to the misuse of the word "élitism", which nowadays is used in government circles and in the media as a derogatory term. If we are talking about elitism, surely we are talking about high standards, quality and excellence, and not mere affluence, which seems to be uppermost in the minds of those in government circles and in the media, correlating it with the higher intellectual forms of art—"highbrow art", the noble Lord, Lord Puttnam, said. That must surely be wrong and I hope it will be put a stop to.
That brings me to a matter which I think the Government must take into account when they are considering the whole problem of the arts. I refer to the question of prestige, which is a fact of life whether they like it or not. Our friends on the Continent, as we heard from the noble Lord, Lord Sainsbury, have no difficulty in recognising the importance of prestige and they give subsidies roughly three times those received in this country. Prestige is important for the reputation of our country as well as to the tourist industry, which engenders millions of pounds—far more than any subsidies given out. The fact is that we have a reputation for being a philistine country.
The noble Lord, Lord Hindlip, quoted statistics from the National Campaign for the Arts. I think that reputation is probably unfair on millions of ordinary people who enjoy the arts and get education and stimulation and sometimes spiritual comfort out of them. Therefore, I am hopeful that when and if this Government manage to save a lot of money by reforming the welfare state and by preventing waste in both central and local government which we know exists, they will spare a few dimes for the arts and
768
change their attitude, because I am afraid that the philistinism starts at the very top, in government circles, in the Treasury and in Cabinet. That attitude must change; and the sooner it changes, the better.
6.38 p.m.
Viscount Simon: My Lords, there have been some notable contributions today made by people who have an intimate knowledge of the subject about which, I have to admit, I do not. I have a great love of classical music, particularly baroque and baroque choral music: hardly a day passes when I do not listen to some. But that is the extent of my knowledge. I hope that my completely different approach in tonight's debate will be both controversial and will provide food for thought. Your Lordships may be surprised when I tell you that my contribution to the debate is solely confined to the practical effects of music on crime and disorder, which is also an important part of the life of the nation.
There are many among us who like modern pop music—personally, I loathe it. The stronger the beat the more it is liked. I cannot for one moment imagine that there is one noble Lord here today who has not heard the boom, boom, boom emanating very loudly from cars driven, usually, by the youth of today. Not only can the youth not hear emergency vehicles approaching but, in time, they will not be able to her anything due to deafness brought on by the excessive volume. Some councils are addressing the problem of excessive noise from car stereos as, I believe, youngsters in Weston-Super-Mare have discovered when they are not only heavily fined but have their equipment confiscated as well.
I do not know if there has been any research into the effect of the strong, hypnotic beat, but I would not be surprised if it were found that it made people aggressive and less tolerant of others.
But I return to classical music. In just three weeks, rowdy groups of teenagers, who used to menace passengers, wreck equipment and scrawl graffiti, have quietly faded away from the Tyneside Metro station of Shiremoor. Why? —you may well ask. The noble Lord, Lord Beloff, might be encouraged to learn that these youths, accustomed to the beat of modern music (if it can be so described), cannot stand the sound of Delius being played. I am led to understand that the early indications are that reports of juvenile disorder have been considerably reduced and, therefore, the initial trial is regarded as a success. The volume of music is pitched so that it can be appreciated by those who like it and loud enough to deter those who do not. Your Lordships may be interested to learn that the youths were initially subjected to orchestral and choral extracts from Delius's Hassan which was broadcast for 12 hours each day. Chief Inspector Allan Curry of the Northumbria police said that vandals,
"were not disposed to standing around when this music was played".
He also said
"we will try any new idea to reduce crime and disorder".
Curiously, the idea of using classical music in the fight against crime was picked up at a seminar on security which discussed ways in which music can have

769
a psychological influence on people in public places. In some instances I am not sure if I agree with such manipulation but, in the case of potential criminal actions, I approve and hope that this initial trial will be extended.
So, it has been shown that classical music as one form of the arts, can be important in reducing crime in certain circumstances and this, in turn, must be of benefit to the nation, and to the life of the nation.
6.42 p.m.
Lord Rotherwick: My Lords, in the 17th century Thomas Hobbes wrote in Leviathan,
"no arts; no letters; no society; and which is the worst of all, continual fear and danger of violent death: and the life of man, solitary, poor, nasty, brutish and short".
In 1874, in another place, Disraeli said,
"upon the education of the people of this country the fate of this country depends".
In 1997 Tony Blair declared the priorities of the Labour Party in power to be, "Education, education, education".
It is my primary contention that the arts are about many things—relaxation, entertainment, spiritual values, and above all, education. Who can deny the educational value of the award-winning films of the noble Lord, Lord Puttnam, among them "The Mission", "The Killing Fields" and "Chariots of Fire"? Who can deny that the thousands of schoolchildren visiting our museums and galleries are enjoying an educational excursion? And who can deny that our theatres daily portray aspects of history, emotion, action and consequences that both edify and educate their audiences? All three—cinema, museums and theatres—train and educate young Thespians and technicians to go abroad, as did the noble Lord, Lord Puttnam, and prove themselves to be the best.
It is my secondary contention that the Government, in pursuit of education as a priority, should assist the arts in their many forms to provide the level of services that it has been their custom to do. That need not mean a wholesale subsidy for all-comers as I shall now demonstrate.
The total government grant-in-aid for the London museums, which do not charge for entry—that is to say, the Tate Gallery, the National Portrait Gallery, the British Museum and the National Gallery—was £27·7 million in 1986–87 and had risen to £75 million in 1996–97. Over the same period the total number of visitors had risen from 9·1 million to 15·1 million. That means a government subsidy of £3·04 rising to £4·97 for each visitor. Many of these are tourists and I do not believe that they should be assisted to this level, especially when many overseas museums charge an entrance fee. Obviously, museum trustees should always have the final say in charging policy, but I recommend that the Government should think again about the level of support they provide for the cultural and educational aspirations of overseas visitors and consider new ways of tapping into these lost revenues.
770
The film world is dominated by America where seven Hollywood studios control 90 per cent. of US distribution income and make one-third of all American films. The Hollywood system of giving artists a contract incorporating a share of the net profits has been subject to much dispute over the past three or four decades. The trouble centres round the accounting procedures used by the studios to calculate net losses on films such as "JFK", "Batman, the Movie", and "Coming to America". In preparation now is the Garrison litigation, which cinema experts consider may lead to the end of Hollywood's domination of the milieu.
This may be a window of opportunity for the British film industry which already has a reputation for excellence, particularly in the training and nurture of world-class technicians and award-winning actors and actresses. However, despite the tax breaks available to wealthy "angels" the funding of British films has always been problematical. Fresh ideas and top quality scripts go overseas and in the process millions of film-goers are treated to re-written versions of British history. Those of us in the know can laugh as Audie Murphy wins the European war single-handedly in film after film. But many of our citizens "learn" the amended versions and believe the message it insinuates. Some of these films expose hitherto unknown passages of history while others make a travesty of it. In "Braveheart" William Wallace is credited with cuckolding the future English King and, by implication, fathering Edward III. In reality, Wallace was executed in 1305 and Edward III was not born until 1312, making it the longest gestation period in history. How much better it would be if a government, in pursuit of education as a priority, were to give better tax incentives to individuals to fund more accurate British films.
Drama in Britain is alive and is a clever way to educate the people in a range of subjects. It is of itself a very telling voice of the people. British theatre is dominated by the smaller auditoria, often with little or no grant support; for instance, the Little Theatre Guild, the highly respected Almeida and the threatened Greenwich theatre, and by repertory companies, all of whom feed the internationally-known venues such as the RSC, the National and Drury Lane. The repertoire ranges from Ayckbourn and Agatha Christie through Chekhov and Ibsen to Shaw and Tennessee Williams. Never mind the Bard and his famous lines beginning,
"all the world's a stage";
all the world is to be found in our theatres. The growing practice of touring companies performing in schools and village halls is to be commended, but a government in pursuit of education as a priority might well consider the possibility of providing financial assistance sufficient to ensure that by the time every child has reached 16 years of age he or she has attended at least one live theatre performance.
Finally, I would ask the Minister whether either the amount or the pattern of funding is adequate from a government in pursuit of education as a priority.
6.49 p.m.
Lord Chorley: My Lords, I too express my thanks to my old friend, if I may so describe him, the noble Lord, Lord Puttnam, not only for initiating this debate, but for his outstanding speech, starting us off nearly four hours ago.
I should like to address two issues. The first is the role of the arts in, to use that rather portentous phrase, cultural diplomacy. I refer to the work of the British Council, of which I am a deputy chairman. I refer secondly to the health of our regional galleries and museums. On the face of it, they may seem unconnected themes, but they are linked by a common problem and thread, which is: where should we draw the line and the boundary between state funding on the one hand and private and local funding on the other?
I shall illustrate my first theme, cultural diplomacy, with a quotation from the Evening Standard of 9th March this year. Under the banner headline "Othello conquers China" and the lower headline,
"The National stuns Beijing in 'emotional phenomenon'",
the first paragraph of the article states:
"Britain's National Theatre pulled off a spectacular triumph in Beijing at the weekend when it brought one of the least demonstrative audiences on earth to its feet in scenes of tears, cheers and flowers with the acclaimed Sam Mendes production of Othello that is half way through a round-the-world tour".
That tour was organised by the British Council. Prior to that, there had been performances of Othello in Warsaw where a friend of mine who saw it had exactly the same story to tell.
Thinking of that, I could not help but be reminded of an occasion eight or 10 years ago when the Royal Shakespeare Company had a similar success succès fou in Budapest. Our ambassador sent us the letters that he received and they were astonishingly heart-warming. That was just before the collapse of the Russian Empire, so I believe that over the years, bit by bit, cultural diplomacy played its part in the great victory that led to the end of the Cold War. So, one can indeed say that the pen is mightier than the sword—or, at any rate, a good deal cheaper.
I could go on to give all sorts of examples in all the main fields of the arts in which the British Council is closely involved. However, I say simply that all that has been achieved against a background over the past 20 years of relentless cuts in our parliamentary grant. There have also been relentless investigations. Two years ago we were forced to reduce our UK staff by one-quarter (1,200 staff). In carrying out all our work, we as a nation spend a fraction of the amount spent by our main competitors, France, Germany and the United States.
I must now turn to my second theme, which concerns our great regional collections, to which reference has already been made. Both yesterday and today we have heard about the Bowes Museum and the Buckinghamshire Museum. There are many other examples of regional museums being in difficulties. We all know that many are run down and dowdy. I suspect that some of them are steadily falling behind in conservation work. Acquisition budgets, the lifeblood of
772
any gallery, have been cut. The acquisition grant of the National Galleries of Scotland has been cut from £1.8 million to £660,000 in three years. A number of noble Lords have referred to the appalling cut in the grant of the National Heritage Memorial Fund from £12 million to £2 million—and so it goes on. The list is endless.
One cannot help contrasting that attitude with that of our predecessors when one has seen the splendid exhibition of regional art in England which is currently at the Royal Academy and which reminds us of the exuberant self-confidence and civic pride of our Victorian forebears, who both conceived and made possible what was then the wholly new concept of public provision. Much of the art that they bought was contemporary. I refer, for example, to the great pre-Raphaelite painters, whose work is being so splendidly selected and shown at the Royal Academy. How much contemporary art can our galleries afford to buy today?
Here, one must pay tribute to the tremendous work of the National Art Collections Fund, which in 1997 managed to offer grants of £3·2 million. But the NACF cannot do it alone; nor can the noble Lord, Lord Sainsbury, and his family trust. What a contrast there is between the richness and confidence of those Victorian businessmen—we tend to deride them now—with the mean and measly attitude of state provision today when, as a nation, we are infinitely richer and more prosperous than 100 years ago.
However, one might ask: why state provision at all? Today the Government take about 40 per cent. of our GDP; 100 years ago the proportion was probably 10 per cent. So, inevitably, if we wish to consider ourselves a civilised society, the Government must take a greater responsibility. Given the lottery, they are the new patrons. Of course, the lottery is project-based, but the running costs of our museums and galleries really must be the responsibility of the Government.
However, the Treasury keeps moving the goalposts. We thought that we had the National Lottery well protected in the 1993 Act. Not a hit of it—we now have a sixth good cause which, on any commonsense ground, should be funded from taxation. I quite understand why Chris Smith wants to use the sixth good cause—because he cannot get the money from the Treasury.
We see the budgets of the National Heritage Memorial Fund, English Heritage and the Arts Council being steadily eroded. Much has been made of the Chancellor condescending yesterday to help over museum admission charges. We pat him on the back and say, "Thank you". But the question should never have arisen. It should be taken for granted that such costs are the responsibility of government. We are a rich society and if we wish to be considered a civilised society, government (whether local or national) should take responsibility for the running costs of our museums and galleries; or, if we are to adopt that ghastly concept of "rebranding Britain" and if we are to sell ourselves abroad culturally, the funding of the British Council. The mark of a civilised society is surely proper provision for these things by the state.

773
I believe that although he has "wobbled", as the noble Lord, Lord Gibson, said, Mr. Chris Smith and his arts Minister, Mr. Mark Fisher, are on the side of the angels. However, the Treasury shows all the signs and hallmarks of wishing to lead the Philistines. The 64,000 dollar question is: where do the Government as a whole stand? We have hard-pressed curators in the regions and they are not impressed by big show-biz and pop parties at No. 10. Time will show, but I suggest that at the moment the national jury is out.
6.57 p.m.
The Lord Bishop of Ely: My Lords, I apologise for failing to put my name down for this debate and I am grateful for the opportunity to fill in the gap as I gather that we are slightly ahead of ourselves. I promise to be within the accustomed time limit of four minutes.
It is not possible for me to ignore the fact that at the bottom of my garden lies Ely Cathedral. Faced with that reality, I am bound to dissent from the proposition that the arts, or art, have in some way replaced the Church and tradition. I acknowledge the fact—and it is a fact—that the Church assumes a lower profile in the life of the modern British public. I acknowledge and welcome the fact that there is an enriching contribution from the ethnic communities to the artistic life of the nation. I have attended the Hindu festival of Diwali and have very much enjoyed Indian dance in the company of my right reverend friend the Bishop of Bradford.
However, it is surely the case that liturgy is a living and changing art form. At the time of the funeral of Diana Princess of Wales it was apparent that there was a need for public liturgies. Many Bishops, including myself, took part in public memorials and the saying of prayers in cathedrals, parks and public places because the cathedrals were too small for the number of people who wanted to assemble. Liturgy is indeed an art form and is alive in our culture today.
I celebrate and warmly welcome innovation in the arts, as did the noble Lord, Lord Puttnam, in his splendid introduction to this debate. But art is a tradition and has a history. Its theory goes back to the very origins of western culture in the writings of Aristotle. The relation of art to human imagination and public life is not revolutionised by digital technology; rather, the latter is interpreted by the former. There is still a very warm and living contribution to be made to art by the Church. We in the Churches are very conscious of the duties that we owe to the nation in the inheritance that we have received. I invite any noble Lord who is here to visit Ely Cathedral to see its transformation over the past few years by way of restoration. Magnificent work has been done in that building. Ely Cathedral like many others in this country has programmes of music. That music crosses the whole spectrum. In my case we have a Rave in the Nave, which on the basis of some of the speeches this afternoon I do not advise noble Lords to attend: the band of the Royal Marines Plymouth and the University of Cambridge Music Society—all playing to capacity audiences. The Church makes a vast and continuing contribution to the performance of high
774
quality music, largely at its own expense. That includes the commissioning of new works which sometimes are regarded by congregations as controversial.
Much of this debate has concerned the Government as patron of the arts. That is well understood. There are still a number of rich people who are prominent patrons of the arts, and there are some practitioners who have become very wealthy by performing the arts. I remind noble Lords that there are also some very poor people who give vast amounts of affection and time to care for the heritage of this nation in its parish churches. I believe that it behoves us to appreciate, respect and support them.
7.2 p.m.
The Viscount of Falkland: My Lords, this debate has been eagerly awaited by your Lordships' House, and the number of speakers bears testament to that. It has also been eagerly awaited outside the Chamber, if that can be judged by the amount of briefing material that has landed on our desks. We have a star player in the noble Lord, Lord Puttnam, who introduced the debate so ably. I believe that the Benches opposite are extremely fortunate to have the noble Lord, Lord Puttnam, among their number. I remind noble Lords that at one time he was a firm supporter of the SDP—the same origins from which I sprang—but we then went our separate ways. I am quite sure that with the noble Lord's expertise and experience (which I will deal with in more detail in a moment) the party opposite will make good use of him. The debate today has brought forth so many different points and subjects from which other debates could spring. I shall not attempt to deal with all of them in a winding up speech.
The noble Lord, Lord Puttnam, is very well placed to deal with a subject on which he only touched: the problems of the arts and the new technologies, globalisation and other areas which so intrigued him. I recall some years ago being a member of a film group who with other noble Lords, some of whom may be present today, visited Pinewood post production of one of the noble Lord's films: "Memphis Belle". I was struck by the enthusiasm of the noble Lord. He is a creative producer who takes an interest in every element of his films. On this occasion he was particularly proud of the special effects which were produced by computer—the newest technology—to portray the flight of a Second World War American bomber. It was a true story which was told very well in the film, but the effect of daylight bombing raids over Germany and the effect of the flak on the crew of the aircraft was all achieved by computer.
I do not know whether the film was very successful. I see the noble Lord nodding, and I am very glad of that. I enjoyed it enormously. I went home to discuss it with my wife. I said that David Puttnam (as he was in those days) had been very interested in the new technologies but I wondered whether they were going too far and affected the balance between the development of character in film and the new technologies. I believe that to some extent that has happened in American cinema. I do not say that that occurred in the noble Lord's film.

775
I fear from his remarks that there is a danger to the values so well expressed by the noble Lord. I believe that the noble Lord was rather harsh on John Tusa. What John Tusa said had to be said and was a good time to say it. I am glad that it created some dissent.
I am also glad that the New Labour Party—the people's party—is now slightly treading on the toes of the arts establishment because it is creating much heat and energy. We have had some of that from the noble Lord, Lord Birkett. I have never seen him so impassioned when speaking from the Cross-Benches, and for good reason, but I do not take such a pessimistic view. I believe that the heat and the passion which has been generated—there were echoes of this in the debate today—can produce some good.
This morning together with a number of other noble Lords and Members of the other place I was lucky enough to visit the wonderful exhibition at the Tate Gallery of the paintings of Pierre Bonnard. I congratulate the Tate Gallery on one of the most superb exhibitions of French painting that I have ever seen. It was beautifully displayed in an order which gave proper sense to the exhibition. The beautiful paintings move one as they should. One of the great things that art does, apart from informing and entertaining, is to move one. Films should also move one. Films are not just for entertainment. They can entertain without moving; they can inform and challenge. Film can become art but that is difficult for a collaborative work involving many elements, both creative and technical.
Essentially, when we introduce art education to children we give them an opportunity to appreciate our historical culture and to become more involved in whichever art attracts them most, whether it be literature, music, cinema or whatever. When they come across great works they should become emotionally moved. I was moved today by the exhibition at the Tate Gallery. I see the noble Lord, Lord Crickhowell, nodding in agreement. It was an astonishing occasion. I only wish that every child in the country could see that exhibition. Unfortunately, such exhibitions are very expensive to stage and that would not be possible. I hope that the Government will take on board a good deal of what has been said today about education and the arts because that is supremely important.
Because of the constraints of time I simply follow the path trodden by the noble Lord, Lord Beloff, and other noble Lords. I refer to music. Like other parents who have been lucky enough to have had their children educated in the private sector, I have always made sure that mine have had a proper arts education. They still do. If my youngest child attended a school where there was no arts education, I would remove him from that school. I consider that to be essential not only to his instruction but to the quality of his life and his future success both domestically and professionally.
What has happened to music in schools is not just a scandal, it is a disaster. To take away music from the curriculum of primary schools, in addition to taking away the ability to have free instrumental tuition in schools has had a disastrous effect. I have had one piece of briefing newspaper which I have thrown aside, but
776
I remember the figure. Since 1994 apparently 300,000 children have been unable to take up any musical training. That is in a country which produces, not from private schools but from state schools mostly, a national youth orchestra which is unparalleled in the world. What is the DfEE doing? Will the Secretary of State for Culture, Media and Sport—a cumbersome title—take that on hoard, and try to get to grips with the DIEE to get something done about that?
I should like to move now to museums and galleries. "Culture, Media and Sport" is a cumbersome title, but we have good reason for not being too irritated by it. because the exhibition at the Royal Academy, which has been mentioned by many noble Lords, is sponsored by the Peterborough Football Club, the chairman of which is a long-time supporter of the Liberal Party. I make a distinction between the Liberals and the Liberal Democrats, but I think that he is still fond of us. He is Mr. Peter Boizot, creator, as some of us know who eat cheaply, of the excellent PizzaExpress Group. He has cleverly brought to the attention, by sponsoring the exhibition of the regional collections, the problems of galleries and museums throughout the country.
As many noble Lords have said, the galleries and museums throughout the country, many of which are late Victorian and which sprang up after the Great Exhibition, have suffered from diminishing funding which has put many of them on the brink of going out of business altogether. It may be a good idea for some of them to go out of business, but they should not be forced to do so in these circumstances. The museums and galleries need to get their act together and join with government to try to rationalise the situation. They must co-operate in order, if necessary, to cut the number of galleries in the same way that we have had to cut the number of racecourses around Britain and a number of other things, to tailor the numbers to modern funding abilities. That is something about which I should like to hear more from the Government.
I was extremely pleased that we heard from the right reverend Prelate. I hope that he was not prompted by remarks from someone who said that the Church should have a voice, though, even if he was, we were glad to hear him. I hope that he will not take this as a bitter note of criticism—the noble Lord, Lord Sudeley, is not here but the right reverend Prelate will probably be hearing from him in due course, because it is normally a debate introduced by Lord Sudeley which attacks the Church for not using the Book of Common Prayer and the King James Bible.
But the noble Lord has a point. He has always had a point. I cannot understand why the Church, which, after all, has the Book of Common Prayer and the King James Bible, which are as fundamental to British cultural and literary life as Milton and Shakespeare—they are part of the rhythm of our national language—appears to fail to take that on board. What they call accessibility is one thing. I do not like accessibility. People have to work to get the best out of things. I wish that they would make more effort to see that, where it is required, ancient forms are preserved.

777
Having ended on that rather ratty point. I look forward to the noble Lord's answer. I am optimistic, unlike the noble Lord, Lord Birkett. I am slightly better tempered today, and slightly more optimistic, but I may well become like him in due course.
7.26 p.m.
Lord Luke: My Lords, I have seldom followed a speech with every sentiment of which I have agreed. We have had a long and interesting debate. For that, like many other noble Lords, I must thank the noble Lord, Lord Puttnam. Like the noble Lord, Lord Jenkins, I first heard of the noble Lord when he produced that wonderful film "Chariots of Fire", which I enjoyed all the more because I was privileged to know Harold Abrahams in his latter years. I am sure that we would all agree that that was one of those rare films which one can see again and again and still enjoy as much as the first time.
The noble Lord's speech was thoughtful, involving and, as has been seen during the whole of this evening, most effective in stimulating your Lordships' subsequent efforts. What are the arts? What is art? I have tried to construct a list. I have obviously left some out, but I have done my best: it includes painting, sculpture, opera—here I must mention my noble friend Lord Sainsbury, and I hope that the Government will think again about their purported plans for the opera, as we are all very worried about them—ballet, music, dance, theatre, photography, film, poetry, literature, mentioned by the noble Baroness, Lady Rendell, of whom I am a great fan, architecture, gardening as an art, which no one else has mentioned, cooking, so originally mentioned by the noble Lord, Lord Ponsonby of Shulbrede—of course it is an art—and I had never thought of liturgy as an art, but as the right reverend Prelate said, of course it is.
Art uplifts the spirit. It is for aesthetic enjoyment, for pleasure, for relaxation. It helps self-understanding and thereby self-expression. It is a vital part of education, as several noble Lords emphasised. I must mention in particular my noble friend Lord Renton, who underlined the importance of art in educating those with learning difficulties.
I improved my education today, because I did not know the story that my noble friend Lord Hindlip told us about Stubbs and the then Prime Minister. The mind boggles slightly, does it not? History is one of the most important subjects in the curriculum. It is brought to life by art. The noble Lord, Lord Strabolgi, mentioned, as did my noble friend Lord Bridgeman, and the noble Lord, Lord Chorley, the excellent exhibition at the Royal Academy of pictures from regional galleries. I must mention one in particular, because it brought back memories from my earliest childhood. It is the painting of the little boy standing in front of the Puritans and being asked, "When did you last see your father?". That is probably why I have been interested in history all my life. That was in my very first history book. Now I know where it came from.
778
The arts help us to see who and what we were, and therefore how we can best confront ourselves and our own lives. Art relieves stress. It helps to bring about the complete human being. It enhances creativity, as was said by my noble friend Lord Inglewood. It is therapeutic in every sense of the word. As a product of the imagination, it encourages the development of imagination, as the noble Lord, Lord Puttnam, said. The noble Viscount, Lord Simon, made the interesting point that classical music can discourage crime. I did not know that.
"I will give you more than directions concerning fishing. I would fain make you an artist".
So said Izaak Walton. Was he right? Is fishing an art? Indeed, is speech-making an art or is it a craft? I suggest that the noble Lords, Lord Birkett and Lord Beloff, are examples of speech-making as an art, but where it is a craft there is this poor effort of mine.
The endless productions we see on television are sometimes art, sometimes craft and sometimes neither. However, the continuous arguments about funding the arts and the impossibility of being able to compromise on excellence mean that, however generous the Government or other funding bodies, there will always be a gap between the aspirations of the many to partake in the arts and their provision in a way and at a cost which is reasonable. Hence television, which at its best is staggeringly good at making art for everyone.
Education is a lifelong process. My education is continually being improved by television. I learn from a great deal that it shows, although sometimes television is trite and shallow and far too overbearing in its condescension towards ordinary mortals such as myself—at least that is what I think. But the arts owe television an immense debt of gratitude, as do many other activities. However, it can only show what is available to be seen, so it must never be used as an excuse for a diminution of support for the arts. Living art is about new talent, new imagination and new perceptions, all of which, sadly, need funding.
Someone—I do not know who—said that the trouble with the arts is that those who practise art do not always provide an acceptable product. In my opinion, Classic FM is an excellent case in point, as mentioned by the noble Lord, Lord Puttnam. BBC's Radio 3 used to be very nice, but it always had to educate one with sometimes difficult modern music. Classic FM never tries that one, and I think it is marvellous. The station has enormously increased the enjoyment and knowledge of classical music in this country.
In 1836, Lord Melbourne said:
"God help the Minister that meddles with art!"
I do not know the exact context, but I am sure that he would not have approved of the constant meddling with art indulged in by all modern governments, I suppose as a condition of subsidy. I wholeheartedly support what was said on that point by the noble Lord, Lord Gibson.
The noble Lord, Lord McIntosh, who is the Captain of the Yeomen of the Guard, and not as described by the noble Earl, Lord Carlisle, is by far the most versatile speaker on the Government Front Bench and we look forward to his speech. I wish to ask him two or three

779
questions. While welcoming the Chancellor of the Exchequer's attention to the arts, is any money going to the museums and galleries which have already been forced to charge for admission? Are they not caught in a catch-22 situation. Can he confirm that only an extra £2 million will come from the Government and that only for one year? The rest of the money will come from National Lottery sources.
With regard to the Bowes Museum, I am delighted to hear that steps are being taken. It is one of our great regional museums and I hope that it will not be forced to curtail its activities or, even worse, to close. Finally, can the Minister do anything to address the problem at the Tower raised by my noble friend Lord Eden? I had not heard about it, but that kind of thing should not happen at all.
7.25 p.m.
Lord McIntosh of Haringey: My Lords, my noble friend Lord Puttnam has been congratulated by every speaker, and rightly so. He has opened up a remarkable debate on a wide range of subjects. Looking back at all the contributions, he united us on the big issues, even though we disagreed on many secondary issues. We are all united on the centrality of art in our society and we have pride in being so good at it. That is one of the aspects that has come to light as a result of speeches on almost every art form.
In responding to the debate, my job is largely to express the Government's point of view and to defend them when they are criticised. However, first, I wish to refer to three themes which have run through the debate. I am not sure whether I shall become personally involved in all of them. The first is the classic debate between high and low art and high and low culture. My noble friend Lord Puttnam was criticised for appearing to allow a leak in the dyke of high culture by referring to some matters which other noble Lords do not think of as being what the noble Lord, Lord Beloff, proudly described as "highbrow". A number of noble Lords took part in that debate, almost all on the highbrow side.
I issue only one word of caution: let us never be quite so clear that we know what is high and what is low culture and will be seen to be so in 100 or 200 years. Your Lordships will remember the great kitsch scene in Brecht and Weill's "Mahagonny", where the retired loggers, are persuaded that they have come to heaven on earth and have to listen to appalling barrel organ music. Eventually they say: "Das ist ewig kunst"; it is eternal art. I believe that we might sometimes fall into that trap.
The next issue is the debate between the economic and aesthetic importance of art. If my exposition, such as it is, of the Government's position tends to concentrate on the economic importance of art, that is not because I in any way underestimate the aesthetic importance or the centrality of art in our society, not just in our economy. However, your Lordships must understand that if the Department for Culture, Media and Sport is to obtain money for the arts it must persuade other departments, notably the Treasury, that there are economic benefits for our society, too.
780
The third theme which ran through the debate more prominently than I expected—and I was pleased—was the dual importance, first, of art in education and, secondly, of art as education. I hope to refer to both those issues as I set out my stall.
I repeat that we are brilliantly good at art in so many ways. I am not talking about "cool Britannia". The noble Lord, Lord Chorley, spoke of the National Theatre production of "Othello" in China and there are many such examples. I shall comment on the work of the British Council later. But, after all, in an art form which was not referred to very much, we won nine Oscar nominations this year and six Oscar nominations last year. That must be worth something.
Before I leave the general points, I should like to illustrate the economic versus the aesthetic view and the social versus the individual view by quoting somebody who is probably not quoted very often in your Lordships' House. Trotsky, in Literature and Revolution, 1924, said:
"Even the successful solution of the elementary problem of food, clothing, shelter, even of literacy would in no way signify a complete victory of the new historic principle, that is, of Socialism. Only a movement of scientific thought on a national scale, and the development of a new art. would signify that the historic seed had not only grown into a new plant. but had even flowered. In this sense, the development of art is the highest test of the vitality and significance of each epoch".
I hope your Lordships will agree with the last sentence of that.
For me, there are also, as those who have ever read or owned Everyman's Library will remember from the inside front cover, the words of Shelley, who said:
"Poets are … the trumpets which sing to battle … Poets are the unacknowledged legislators of the world".
In many ways, there are poets in this House. They are among the legislators. Perhaps that is not a bad thing.
I start by saying that the Government acknowledge and welcome the diversity of art—and that comes back to the discussions we have had on high versus low art forms. A number of noble Lords, and notably the noble Lord, Lord Dholakia, and my noble friends Lord Ponsonby and Lady Amos, have referred to the diversity which has come to our culture, particularly in recent years, from writers such as Ben Okri, Salman Rushdie, Kazuo Ishiguro and many others, and the contribution which art can make to the building of a multi-cultural, multi-racial community. The point made by the noble Lord, Lord Dholakia, that art is central to that mission, is very well taken.
Noble Lords will be fed up with the mantra of this Government "for the many, not the few". But in this case, it is appropriate that I should remind the House of it and remind the House how determined we are not just to promote the arts but to promote the arts for as many people as possible. I realise that the noble Lord, Lord Birkett, with his passionate defence of the artist's contribution to society, will feel that that is an inadequate argument. I hope that as I proceed, he will feel less than fed up about much of what we are doing.
The next issue arises as regards what is the proper role of government in the arts. Government have a fundamental responsibility to make possible a mature,

781
civilised society, and the arts are integral to that. Therefore, it is right that the Government should have arts at the heart of many of their policies. I say to the noble Lord, Lord Gibson, that it is not the Government's job to decide on individual grants or to dictate to artists how they should work. But government subsidy for the arts enables a wide range of artistic activity not dominated by commercial consideration and it widens access by providing the arts in places where the commercial presenter would think it not profitable to go.
The noble Lord, Lord Hindlip, referred to the necessity for both private and public sponsorship of the arts. About 18 per cent. of the income of the arts in this country comes from central government. That is a reasonable proportion, although the argument will continue in different arts as to where it applies. My noble friend Lord Jenkins, reflecting on his time as Minister for the Arts, represents a view to which many of us would wish to return but the cold winds of globalisation and economic competition make it extremely difficult for us. However, I agree in particular with the noble Lord, Lord Inglewood, that the Government should be an enabler rather than a provider so far as possible.
When referring to the economic aspects of the arts, a number of noble Lords have talked as though we concentrate too much on the mechanical rather than the creative arts. That is not the case. I say to the noble Lord, Lord Feldman, that the Creative Industry Task Force includes the arts and music as well as design, media, film, software and publishing. I should say to the noble Lord. Lord Crathorne, that it includes also architecture and the built environment. It is designed to improve the economic circumstances in which our creative industries—a phrase I do not like—can develop and flourish. I say to the noble Lord, Lord Inglewood, that it is addressing also the issues of intellectual property and piracy. It is quite important that those should be included.
I turn now to the really fundamental issue of education to which many noble Lords referred, and quite rightly. The noble Lords, Lord Gibson, Lord Hastings, Lord Inglewood and many others appeared to be very worried by the fact that the national curriculum, particularly in primary schools, now includes more specific provision for the three Rs and is more flexible in other areas. They should not be afraid. I am surprised that anybody should object to specific provision for the three Rs being made in our primary schools. I thought that that was a point which was now quite widely agreed. We are not saying that artistic education, cultural education, should be downgraded either in our primary or secondary schools. But there should be a greater degree of flexibility and less of the prescription to schools by central government as regards what should be done which was, I am afraid, a feature of the final years of the last administration. I hope that the years will show that the change will not be to the disbenefit of education in the arts in either our primary or our secondary schools.
782
The noble Lord, Lord Feldman, proposed something which he called an "arts passport" for under-18s. If he looks at the new audience programmes which were announced yesterday, and which will be elaborated upon in the next few days, he will find that we are doing very much the same as he proposes.
Particular attention was quite rightly paid to music in schools. Certainly the statistics are appalling. The number of children learning instruments has gone down significantly in recent years. With the noble Lords, Lord Beloff, Lord Balfour, Lord Hastings and the noble Viscount, Lord Falkland, I agree about the importance of music teaching in our schools.
We have set up a music forum which is concerned with the music industry more widely but it has identified straight away music education in schools as one of its priorities. It has not yet reached conclusions because there are still issues to be determined as to whether we need a national body to promote music in schools and how we can involve working orchestras and players in our schools. However, we have that problem in hand and we are addressing it seriously. I should add also that the National Endowment for Science and Technology and the Arts, (NESTA) which is an important part of the National Lottery Bill—which has just passed through your Lordships' House unscathed—includes a recognition of the need for financial support for individuals of particular talent in the arts in music and all the other arts as well as in science and technology.
Before leaving that point, perhaps I may refer to the subject of literature, raised by my noble friend Lady Rendell, and another noble Lord. My noble friend referred to the National Year of Reading. I should like to add to what she said about the importance of promoting libraries. Indeed, we are working together with the Department for Education and Employment on major programmes for promoting the work of our local libraries.
Until we heard the speech of the noble Lord, Lord Chorley, for which I thank him, we did not hear much about the importance to our economy of the arts as exports. I acknowledge the work of the British Council, which is in the forefront of presenting the best of British creativity through over 2,000 arts events to be mounted this year. The noble Lord chose one, but I could give at least 20 examples. However, I shall spare your Lordships that exposition. If the arts are as important to our economy as I believe they are—£50 billion in our gross national product—then the export value of our artistic industry should not be underestimated. I believe the figure for that is £12 billion.
I feel that I have already dealt as far as I can with music in schools. However, I should like to refer briefly to the suggestion made by my noble friend Lord Simon as regards crime and disorder. Indeed, he spoke of Delius having charms to soothe the savage breast. I must say that it sounds a little like "anti-musak" to me, and I do not care for it. Nevertheless, I have no doubt that the Home Office will be interested in what my noble friend said and in the experiment that he described.
Surprisingly, until the speeches made by the noble Lord, Lord Rotherwick, and the noble Viscount, Lord Falkland, there was very little reference to the film

783
industry. In a way I am glad of that, because the very high powered film policy review group which we have established will be reporting next Wednesday. Therefore, there is very little that I can say about its conclusions—indeed, nothing I can say about them—I can only speak about its objectives. We are concerned to double the domestic market share of British films and to ensure that we have a larger and more diverse audience for film in general and for cinema in particular.
We are also concerned to ensure that the training provision fully meets the industry's needs and that there is a financial framework which facilitates and encourages investment in the British film industry. Incidentally, I should tell the noble Lord, Lord Rotherwick, that there were very significant improvements in the tax treatment of film finance in the July 1997 Budget. When the noble Lord studies it, I hope that he will agree that those improvements were very significant and widely welcomed by the industry. The review group is also interested in export performance and in attracting inward investment. We look forward to receiving that report shortly.
I suppose that it is tempting fate in the presence of the noble Baroness, Lady Rawlings, to refer to the National Lottery legislation. However, a number of noble Lords referred to the need for more flexible funding within the existing distributors on the National Lottery. I believe that the National Lottery legislation, which your Lordships approved, will go a good way towards achieving that aim. What we cannot do—and, indeed, will never be able to do—is put revenue funding on an equal footing with capital funding. If we were to do so, revenue funding would gradually silt up the amount of money available so that there would be no capital left.
However, we can ensure that distributors seek out need rather than waiting for applicants to come to them. We can also help distributors to cut down on bureaucracy and require them to produce strategic plans which will ensure that applicants know the way their minds work, and avoid time-wasting with irrelevant applications. We have allowed distributors to pool funds in joint schemes and to use vouchers. I believe that all those initiatives are significant improvements which I hope the noble Lord, Lord Crickhowell, and the noble Viscount, Lord Bridgeman, will recognise.
The noble Marquess, Lord Bath, made a passionate plea for our regional culture. One of the things that we are doing within the National Lottery is to encourage regional distribution funds and thereby promote regional culture. The regional development agencies which the Department of the Environment, Transport and the Regions is to establish will include members from the Department of Culture, Media and Sport to give effect to that aim. The same will be true of all lottery delegation.
I leave that point with thanks to my noble friend Lord Montague of Oxford for saving me from the necessity of spelling out the wonderful projects of the Millennium Fund, which will cover all parts and all regions of this country, and, indeed, all countries of this nation outside Greenwich—to which, too, I shall refrain from referring.
784
Many things remain for us to do. We recognise that fact. For example, NESTA is still not in place. I recognise the point that the noble Lord, Lord Charteris, made on the need to keep up the endowment of the National Heritage Memorial Fund, and the same will be true of NESTA. Indeed, the noble Lord, Lord Chorley, has been most helpful as regards our thinking in that respect.
The noble Earl, Lord Clancarty, made a strange comment about us only encouraging commercially successful artists. In due course, I believe that the noble Earl will find that that is not the case. One of the points about NESTA is that we are prepared to take risks which the venture capital market is not necessarily prepared to take. Indeed, I believe that that is something significantly different. We want to work with local authorities very much more than we have in the past. We do not want to dictate to them, but we recognise that there are difficulties with the constraints on local authority expenditure.
The noble Viscount, Lord Bridgeman, said that local authority museums were the Cinderellas of the museum world; and, reluctantly, I acknowledge that that has at times been the case. I shall return to regional museums later because many noble Lords referred to them. However, the noble Lord, Lord Freyberg, made a particular point about the redistribution of collections. That is one of the issues we are considering as part of our departmental spending review. By late summer, I hope that we shall have something positive to say to him.
I said that there were many things that we still need to do; and, indeed, that there are probably many things that we have not done right. We have still not settled the issues surrounding the Royal Opera House. The noble Lord, Lord Sainsbury of Preston Candover, spoke powerfully on that point. It is not true to say that we have been considering privatising it, which is what the noble Lord suggested. Indeed, that has not been part of our consideration. The noble Lord, Lord Gibson, seemed to think that we were taking control of the future of the Royal Opera House and of English National Opera and putting it into the hands of the department. However, they were always in the hands of the department rather than those of the Arts Council, and the review is being undertaken by an independent body chaired by Sir Richard Eyre. Therefore, I hope that the noble Lord will not think that we are being too intrusive in that respect. The report is due by 1st May and I hope that the noble Lord will be happy with its findings—
Lord Gibson: My Lords, the point is that the committee chaired by Sir Richard Eyre will report to the Minister and not to the Arts Council, which would have been the case in my day.
Lord McIntosh of Haringey: My Lords, the national institutions are not funded by the Arts Council—
A noble Lord: They are!
Lord McIntosh of Haringey: Well, my Lords; as always, I yield to the greater knowledge of noble Lords. I shall have to think about whether there is any point to

785
be made about the involvement of the Arts Council. The noble Lord is right to say that the Eyre Committee will report to the Minister. I should also say to the noble Lord, Lord Jacobs, that it is true that we have not yet sorted out the South Bank. Indeed, that will involve us in very intensive discussion within the next few days and weeks.
I now turn to regional museums. That leads me to the changes which were announced in the Budget yesterday. Speculation at the weekend on the amounts of money that would be made available—particularly that mentioned in the Independent on Sunday—was wide of the mark. That is regrettable. A £9 million package was announced to promote access and education at museums across the country, and up to £5 million for the new audiences programme for the arts to help arts organisations broaden their audiences; to bring new people to the arts; and to encourage young people to participate. Initiatives supported under the new audiences programme will include a scheme to offer reduced price tickets for school leavers, additional touring funds, support for orchestras to build closer links with young audiences and regional challenge schemes including those to assist educational and social regeneration. Only in the next two weeks will we be able to make further announcements about the kind of schemes that will be supported.
Many noble Lords asked me about regional museums. The disparity in funding between regional museums, local museums, Ministry of Defence museums and national museums is a great problem. I do not pretend that we have found the answers to that. However, our departmental spending review will consider that issue, among others, and we shall report on it before the summer Recess. I must respond directly to the noble Lord, Lord Eden of Winton. I was not aware of the problems that he described with the Royal Armouries Museum but I shall write to him and place a copy of my letter in the Library for the benefit of other noble Lords. Although I am unable to propose a solution for regional museums, I acknowledge the importance that is attached to them which has been evident in this debate. I am conscious of the difficulties that they have experienced over many years as a result of reductions in funding.
Noble Lords will be aware that before the election we committed ourselves to the spending plans of the previous Chancellor for this year and next year. Therefore the prospect of large windfalls, other than those announced by the Chancellor of the Exchequer in his Budget, is not great. However, we shall certainly bear in mind the points that noble Lords have made.
I have exceeded my time, although I believe that we are within the time that is allocated for the debate. I conclude by thanking all noble Lords who have taken part in the debate. It has been enormously helpful for the Government to hear the wide range of expertise and passion that has been expressed this afternoon. I hope that my response has not been too discouraging for those noble Lords who have taken part in the debate. I repeat my thanks to my noble friend Lord Puttnam for making the debate possible.
7.52 p.m.
Lord Puttnam: My Lords, I shall not detain the House long. On behalf of the House I thank the Minister for what has been a frank and sympathetic summing up, probably as befits the subject. It is left to me to thank noble Lords for providing and sustaining what I found to be a fascinating, informative, wide-ranging and good-natured debate. I am very much in your Lordships' debt for making it so.
I identified wholly with just about everything that has been said this afternoon, most particularly with the views of the noble Lords, Lord Gibson and Lord Hastings, regarding the role of the arts in education. There is no more important issue. I believe that there is absolute unanimity in the House on that. I say "just about" because I detected some level of misunderstanding, but that of course is in the very nature of art. Petty squabbles in the world of the arts, as in politics, quickly become splashy news stories for a voracious press. I did not for a moment suggest that Mr. John Tusa created schism, but I felt that in some respects his article sustained it. By not making common cause within the arts we become extraordinarily easy meat for those negative instincts that always seem to be lurking within the Treasury. That does our case no good whatsoever.
Perhaps I may finish with a rapid canter around four heroes, or five if you include my love of Donizetti, or six if you include my affection for my right honourable friend the Secretary of State for Culture, in whom I have enormous faith and confidence. He is a good man doing a difficult job. My first hero is Diaghilev. Had he lived during my era, Diaghilev would probably have made the greatest of all film producers. In some respects I am glad that he was not a competitor! He wrote a letter in June 1921 to the London press, having received ghastly reviews from the Sunday Times and the Daily Express for the opening of his opera, "Chout". The letter makes the case far better than I could as to why I would always urge generosity towards the new. Diaghilev wrote,
"When I was sixteen, I heard someone say that not a single melody was to be found in all of Wagner; at twenty. I was told that Rimsky-Korsakov's music was mere mathematics: at twenty-five, that Cézanne and Gauguin were frauds. As for Debussy! Strauss! Le Douanier Rousseau! Matisse! For fifteen years people hooted at them, without even suspecting they were making fools of themselves".
Art, I am happy to say, has no fixed point in time. It evolves, mutates and changes. I see that very much as a strength and not a weakness.
Another hero of mine and of the noble Lord, Lord Inglewood, is William Morris. I have already quoted him but I must quote once more. He said that he looked forward to the time when,
"all men would he artists, and the audience for art would he nothing short of the whole people".
That is why I am passionately in favour of inclusivity not exclusivity. Another very important hero who is no longer much discussed is Sir Robert Meyer, to whom I owe an enormous debt. Robert Meyer's "Music for Children" resulted in my going at the age of 11 to the then newly built Royal Festival Hall to hear a Saturday morning concert. It was for me an utterly transforming

787
experience. I am not sure that I ever got over it. I had never heard an orchestra before. My son—my fourth hero—yesterday conducted an orchestra in two schools in North London, one in the morning and one in the afternoon. He is an enthusiastic young conductor. He told me that before starting either concert he asked the audience how many of them had ever heard an orchestra before. He told me that in both cases a tiny smattering of hands went up. That worries me more than I can say because it seems to me that many children today are being denied that very transforming experience which altered my life and, I have to say, is possibly the reason I am in this House today. My Lords, I beg leave to withdraw the Motion.
Motion fir Papers, by leave, withdrawn.

Multilateral Agreement on Investment
7.56 p.m.
Lord Razzall Lord Razzall rose to ask Her Majesty's Government what steps they are taking to ensure that the impact of the proposed multilateral agreement on investment is more widely appreciated.
The noble Lord said: My Lords, I am most grateful to the House for the opportunity to review the proposed multilateral agreement on investment. If, for the purposes of my speech, I refer to it from now on as the MAI, I do not refer of course to the company of which the noble Lord, Lord Hollick, is chairman. I thank in advance the noble Lords who will participate in this discussion. I look forward with eagerness to the Minister's response.
I hope noble Lords will think that the timing of this debate is opportune. Although talks on the MAI are currently deadlocked, discussions will recommence in April. Therefore now is a good opportunity for this House to hear from the Government their view as to the likely progress of the negotiations and for the House to reflect concerns which have emerged in recent months as to the implications of signing the treaty in its current form.
For the benefit of noble Lords not familiar with the background to my Question I should explain that the MAI has emerged following the recent and successful GATT round. It is the acceptance by government that consequent upon multilateral agreements on trade in goods (GATT) and multilateral agreements in services (GATS) the time has come for similar rules on investment in the form of a multilateral agreement on investment.
I suppose the motivating factor for this must be that foreign direct investment is now a significant creator of growth and jobs. Indeed, in the period from 1973 to 1996 foreign direct investment flows multiplied 14 times from 25 billion US dollars per annum to the 1996 figure of 350 billion dollars per annum. It is estimated now that perhaps two-thirds of the investment in what is known as the third world comes from foreign direct investment. Therefore the multilateral agreement on investment is of vital potential importance to mirror the GATT and the GATS treaties.
As noble Lords will realise, the OECD has attempted to negotiate with its 29 member countries, and five countries I think with observer status, a proposed MAI. The first of the three core principles of MAI is non-discrimination. Participants agree to treat foreign investors and investment no less favourably than they treat their own investors; and they agree not to discriminate among investors of different countries which sign up to the MAI. Secondly, national and local government will agree to accept that they cannot restrict foreign investment in any form, such as restriction on buying privatised companies, or in any sector except for defence. The third core concept is that national or local government cannot impose "performance requirements", for example, to ensure local employment, control currency speculation, or require a minimum period for investment.
Noble Lords might ask what the particular concern is about this apparently laudable objective. The first and overreaching problem, I submit, is how little consultation and public debate has so far taken place. When Renato Ruggiero, the Director-General of the World Trade Organisation can boast in February 1998 that,
"We are writing the constitution of a single global economy".
one would have expected some widespread discussions in the press and media as to the issues involved. After all, the latest GATT round took 10 years to reach satisfactory resolution. The fear shared by many is that we are backing into a treaty by stealth which will have a far reaching and permanent impact upon the global economy.
I am grateful to many of the NGOs and other organisations which have expressed their concerns about the proposed treaty. In the time available there will not be time to list all their anxieties. The fact that an anxiety has not been expressed does not mean that I give it any less importance. However, perhaps I may list some of those concerns. I shall be grateful for the Minister's response to them.
The first anxiety relates to the secrecy with which the negotiations have been conducted throughout the world. Although the Government have denied it, a recent report by the European Parliament's Committee on External Economic Relations highlighted its regret that until now the negotiations have been conducted "in the utmost secrecy" with national parliaments being excluded. In fact most negotiators concerned with the MAI now admit that the process of consultation has been inadequate and has contributed to many of the problems that I raise today.
There are a number of serious concerns about the environmental impact of the proposed treaty. First, in my submission, the Government have failed to provide adequate assurances that the MAI will not conflict with existing international environmental treaties. On 18th June 1997, Angela Eagle responded to a Written Question in another place:
"We shall also want to ensure that obligations under multilateral environmental agreements are fully safeguarded".—[Official Report, Commons, 18/6/97; col. 166.]

789
Despite that desire, we have yet to see detailed analysis of the potential conflict of the MAI with international treaties.
During the Adjournment Debate in another place on 23rd February of this year, Barbara Roche gave an assurance that trading pollution quotas "would not be prohibited" under the MAI. I wonder how the Minister can give such categoric assurances when the OECD's analysis of the relationship between the MAI and multilateral environmental agreements is still being revised. In fact even the US Government, who have performed the most wide-ranging environmental analysis of the MAI, have reserved their position on the relationship between the MAI and the Kyoto Protocol.
Secondly, there is concern about the effects on existing environmental legislation. Ministerial statements so far about the MAI's impact do not address the chief concerns expressed by a number of NGOs. As I understand it, the Government's position is that so long as environmental legislation is non-discriminatory it should be safe from legal challenge. The problem is that that ignores the fact that in certain cases discriminatory environmental legislation is legitimately needed to fulfil environmental goals and is clearly allowed under international agreements. For example, the UN Convention on the Law of the Sea mandates the use of discriminatory measures to ensure countries gain fair compensation from foreign fishing fleets with access to their fishing resources. The UK has asked for an exemption from the MAI for its fishing regulations. Yet any developing country signing the MAI will undermine its ability to control the fishing fleets of richer countries, weakening its bargaining position when negotiating access to its fishing grounds.
Worse still, under the current MAI text, multinational companies could claim compensation on the basis that environmental regulation has effectively expropriated their assets or profits. That has already happened under the NAFTA investment chapter which uses identical language to that contained within the MAI. For example, in Canada the US Ethyl Corporation is suing the Canadian Government for 250 million US dollars for banning its production of a petrol additive that was found to be poisonous. The OECD has acknowledged that this is a controversial area and has promised to reconsider the language on expropriation. However, it is unclear when action will be taken.
The flagship environmental protection measure in the MAI is the proposed binding clause which would prevent countries lowering environmental and labour standards to attract investment. However, as the proposal has evolved, it has departed from its original intent which was to prevent the scrapping of environmental laws leading to a legal "race-to-the-bottom", and to block the establishment of high pollution industrial zones, as currently exist in countries such as Mexico and Brazil. Instead the clause has been restricted to preventing one country gaining a competitive advantage over another by lobbying the government for a derogation from regulation for a specific investment.
The Government make much of the association of the voluntary OECD guidelines on multinational enterprises with the MAI as a way of providing greater environmental and social safeguards. However, that emphasis on the guidelines is arguably disingenuous because the text of the MAI firmly reiterates their non-binding character and does not allow them to be used in any way as an interpretive guide to the treaty.
Many other concerns have been raised. Time does not permit me to raise them tonight. But the fundamental argument and tenet is that inadequate consultation has taken place on the fundamental issues raised by the treaty. I welcome the Government's response on this. It may well be that we now have the opportunity to deal with that. It appears that the United States currently may not wish to sign the treaty. There are two hot transatlantic issues which still require to be resolved. The first is the issue of expropriation of foreign investment and investment in dubious foreign regimes, and the problem as regards that of the Helms-Burton Act against Cuba and the D'Amato law against Iran and Libya. Secondly, there is the perennial problem that bedevilled the GATT round of negotiations. It is best summarised by the demand of France and Canada in particular to be able to permit a continual cultural subsidy of their film industry in order to prevent, in their view, the domination of the Hollywood blockbusters.
If the United States is going to delay signature of this extremely important treaty, I hope that the Government will take the advantage of addressing in the negotiations a number of the concerns that NGOs and other bodies have raised with them. I hope that by asking this Question today I have cast a little light on what is clearly a difficult but important subject.
8.8 p.m.
Lord Judd: My Lords, the noble Lord, Lord Razzall, is to be thanked for giving us the opportunity to debate this issue, although briefly. He referred to opportune timing. Another reason that the timing is opportune is that yesterday we had the Budget. For anyone considering the implications of the MAI, the agreement may be historically considerably more far reaching than anything that was said yesterday in that significant Budget.
The noble Lord also referred to NGOs. He was right to do so. They are an increasingly important part of the total political life of our society, speaking as they do with the experience of engagement. Among some of the NGOs with which I have been privileged to work in my life, and with which I am still closely involved, there is deep anxiety about some aspects of this agreement.
It is highly significant for our own economy, but it is pivotal to the economic and social development of the third world. Of course the agreement has been introduced as an essential cornerstone of the new world economic system, based as it is on the principles of liberal economics and the ascendancy of the market. But equally essential in the responsibility of government are the specific arrangements designed to ensure that all nations have a real opportunity to reach the point at

791
which they can gain access to participation in the market and also the arrangements to meet the needs of those who will probably always be at a disadvantage.
The limitations of the market, to which the noble Lord referred very sensibly, in relation to environmental strategy—and indeed few people know more about this than my noble friend who will reply—which is fundamental to the survival of the species, also have to be recognised. The market will not deal adequately with those.
For all those reasons, it is therefore very encouraging to note the Government's positive position on the environmental clauses of the agreement, and on the relationship of the MAI to the OECD guidelines on multilateral enterprises—although I must say I share the anxiety of the noble Lord, and shall need to be convinced that these guidelines will be more than pious aspirations unless given some real muscle.
At the same time, it is good to hear of the Government's apparent commitment on labour issues. The effective application of the ILO convention should surely be a condition for membership of the MAI. There is a good deal of evidence that increased capital mobility and the threat of relocation are exerting downward pressure on labour and environmental standards as governments compete to attract foreign investment. The growth of free trade zones, labour market deregulation and the spread of flexible working practices, which often deny workers the rights enjoyed by full-time or permanent workers, are all examples of that.
Could my noble friend therefore enlighten the House as to why a top-down set of general obligations, inevitably with numerous individual country exceptions and disagreements, has been the basis for the negotiations, rather than a sector by sector bottom-up approach, which was followed in the General Agreement on Trade and Services? Will my noble friend the Minister agree that, as many developing countries still have economies dependent upon agriculture or natural resource extraction, powers need to be retained by them to ensure that those sectors are managed for the good of local people and not just for short-term profit?
Have the Government, for example, examined the evidence from countries like Tanzania, Uganda and Zambia, where, already, game parks, theme parks and private lodges for the very rich are springing up, with directly adverse consequences for pastoralist communities as huge areas of once common grazing land are fenced off? Would one of the ways of containing that danger be to have a broad list of general exceptions to the MAI to be drawn up in consultation with the developing countries, covering natural resources, utilities and, for example, social services?
On debt—on which I am glad to note the Chancellor of the Exchequer is giving such a strong lead—will my noble friend assure the House that the MAI will not be allowed to undermine debt relief initiatives for public, Paris Club, commercial or multilateral debt?
On expropriation, does my noble friend agree that there is some ground for concern about the words, "measures having equivalent effect"? Could that not allow companies to challenge legitimate national
792
policies on taxation, health and safety, and environmental or labour laws as creeping expropriation? What can be done to tighten up the definition of "expropriation"?
As I understand it, the proposals will permit investors to sue governments for breach of the MAI. But what of the corresponding right for citizens to claim for any damages caused by investors? What of the right of citizens as stakeholders to be able to present evidence to tribunals, and to bring cases relating to the lowering of standards, provisions or compliance with the OECD guidelines?
Of course, as the noble Lord explained in introducing his Question, the anxieties also centre on our own society. We need to know a good deal more about how the MAI will affect the role of foreign investment in meeting national, regional or local development goals in OECD countries like our own when they are reliant on such foreign investment. What, for example, will be its precise impact on regional development authorities, on best value as distinct from compulsory competitive tendering, or on the new deal for regeneration? What are the Government doing to guarantee protection of these under the MAI? I am sure that my noble friend the Minister will correct me if I am wrong, but how can the need for such exceptions be reconciled with what I understand has been the Government's position so far in the negotiations; namely, to achieve the smallest possible number of country specific exemptions from the MAI?
I should like to underline what the noble Lord, Lord Razzall, said in his introduction. This agreement is almost certainly necessary in some form. Nobody questions that. There are plenty of indications that the Government are taking very seriously its wide ramifications. All that is reassuring. But I ask the Government to take very seriously the issue of consultation. It is one thing occasionally to meet briefly with representative bodies and explain what is happening and ask for comments. It is quite another— and I believe that this is central to the health of an open, democratic society—to recognise that many of these bodies have unrivalled insight into the practical implications of what will result from measures of this kind. Therefore, it would be remiss not to see as a high priority the need to consult with them in the fullest sense about what can be done to make sure not only that the objectives of the agreement are in broad terms laudable, but that the detail—the detail is what is often so crucially significant—is sound too.
We understand that there may be delays in the negotiations, that target dates will not be met. Indeed, it is intriguing to find that apparently even the United States has profound second thoughts about quite how far it wants to go or enthusiastic it wants to be about the agreement in its present form. Some people may be frustrated by that delay. I hope that the Government will take it as a great opportunity. They inherited this situation. They took over a baton in a race that was already under way. It would provide the Government with a great opportunity. I hope the Minister will be able to reassure us that they will, in the fullest sense of consultation, take the opportunity to speak to those who

793
are working on the ground. And let us remember that only yesterday the Chancellor of the Exchequer gave a great vote of confidence to those organisations working on the ground by making special provision to support them in their battle against world poverty so far as the international work is concerned.
It is therefore most important that the Government consult fully not only with the agencies working overseas, but also with the local authorities, the regional and professional bodies in this country, and indeed the non-governmental organisations central to the fight against poverty in our own society.
8.18 p.m.
Lord Ponsonby of Shulbrede: My Lords, I, too, wish to thank the noble Lord, Lord Razzall, for introducing this debate. I have to say that it is a poor reflection on this House that this is a short debate with only five Back-Bench speakers when this has been a live issue for a number of weeks now at the other end of the Palace and has been far more fully debated than we are managing to do in this House.
I rise to support my noble friend the Minister. I, like every noble Lord, I suspect, have been flooded with briefing material from concerned groups. I have read the articles, notably in the Guardian newspaper, which have so criticised both the MAI and the Government's response to it.
I thought it might be useful to the House to describe my own experience of working for a multinational company in the third world and in the former Soviet Union. My example is where the American company for which I worked made an investment in excess of 100 million US dollars in two oilfields. After the investment was made, an additional tax was imposed on us by the host country's government. It took us two years of intensive lobbying, through the American Government, to get the tax lifted. In the meantime we had paid 30 million dollars in this tax alone, money which could have been put back into the business. In addition to this, we found that we were continually having to defend our environmental record and our employment practices in the local courts and to local regulators and institutions. It was our experience that other local companies did not have to defend their activities in this way. One should not underestimate the crippling effect on a business of its managers spending all their time writing reports and attending hearings rather than getting on with managing the business.
For us the issue was not the standards to which we were forced to comply but the non-compliance of our competitors. It was this which continually undermined our business. This is in direct contradiction to the point made by my noble friend Lord Judd about international investors always seeking a downward pressure on environmental standards. That is not my experience.
The net effect was that the business with which I was associated failed, with on all sides. The host government, in particular, is disappointed as it had expected to receive substantial benefit as a result of the company's investment through additional taxation revenue, which will now not be forthcoming.
794
The question is whether an MAI would have helped us. In this example, the answer is probably no, as we already had the US Government lobbying for us, and I suspect that they had a greater political leverage than any multilateral treaty would ever have. Nevertheless, in general terms, some form of legally binding level playing field for investors will encourage investment internationally, which will, in turn, I believe, increase prosperity for all. In particular, it should encourage companies from smaller, less influential countries to invest in the third world. This is a goal worth striving for, and the Government are right to attach a high priority to it.
Some of the articles, particularly in the Guardian newspaper, have been totally over the top in their criticisms of international business, they have also been totally over the top in their criticisms of my noble friend. Nevertheless, the briefings I have received from the NGOs seem to me to raise a number of valid issues, which I believe deserve to be responded to in detail, and I am sure that my noble friend will do that.
Both my noble friend Lord Judd and the noble Lord, Lord Razzall, raised a number of issues on environmental standards, social protection, national sovereignty, the extent to which exclusions can be applied and—the central point made by my noble friend Lord Judd—extending consultation during the period of delay.
In conclusion, from my perspective the MAI should be about one thing: aiding third world development. The MAI will do that through encouraging investment. I urge my noble friend to resist going down the blind alleys of trying to codify investment rules between currently rich countries. The countries within the OECD already have mature investment climates and I am not sure how much is to be gained by trying to codify them. I understand that the devil is in the detail, but I ask my noble friend the Minister to measure each detail by the yardstick of how it will aid third world development. I look forward to my noble friend's reply, particularly regarding the issue of consultation.
8.24 p.m.
The Earl of Sandwich: My Lords, anyone who remembers the Ethiopian famine will be startled, and perhaps delighted, by the trade and investment taking place in Addis today. This morning I read an upbeat report describing massive new investment in the Ethiopian economy—more than 4.000 projects proposed, with combined capital of 4.9 billion dollars, one-fifth of the projects from overseas, rapid privatisation, deregulation of energy and banking sectors, huge investment in roads and communications, decentralisation and a budget surplus to go with all that.
Such a transformation of three decades of civil war and Marxist-Leninism into an African Wirtschaftswunder seems scarcely credible, and yet this is the current African dream. According to the Prime Minister, Mr. Meles Zenawi, economic development is

795
items one, two and three on his agenda. President Museveni of Uganda and a number of other African leaders share his vision. They no longer want to be held up by outsiders who may have alternative straitjackets, whether from a socialist, liberal, child labour, environmental or any other perspective. They are, in short, the ideal partners for the MAI on an ideal level playing field, if such exists.
Why is this vision too much to swallow for the NGOs, whose ultimate objective is the same—prosperity for the people of Ethiopia? To some extent, NGOs, many of which are still active in Ethiopia, seem left behind in the newly reborn, liberalised state, which in theory should benefit greatly from freed-up foreign direct investment.
Yet, as the noble Lord, Lord Judd, said, the NGOs have legitimate fears about the MAI. They see a new entrepreneurial class taking advantage of globalisation at the expense of the poorest sections of society. Their concern is to strengthen marginal groups such as small farmers, coastal fishermen, the landless and the urban poor, who will continue to need—as indeed do groups in this country—regional aid, concessional loans, subsidised agriculture and trade protection, the opposite of what most investors want and the kind of soggy, unlevel playing field which the MAI and the WTO would like to avoid.
Noble Lords may remember the shrimp-turtle syndrome, the dispute between US environmental laws insisting on escape holes for turtles in giant shrimp nets and the four major Asian shrimp exporters, India, Malaysia, Pakistan and Thailand, who want to sell more shrimps to the US. There is something symbolic about the thrusting shrimp of privatisation outswimming the poor old turtle of protection. Again, the NGOs take the side not only of the turtles but of the local fishermen and farmers whose livelihood has been swamped by the demands of fish farms and trawlers all along the coasts of Asia.
Our supermarkets, which have recently become interested in ethical trade and investment, do not want—at least under this Government—to be seen by their consumers as exploiters of the poor. This moral dilemma is, again, not good for the prospects of the MAI.
It seems that, following their Paris meeting with the OECD, the NGOs, having vehemently opposed the MAI, are now at least reconciled to its existence. The DfID is about to publish its own report recognising the safeguards which must be put in place to meet the concerns of NGOs and of the least developed countries in particular. I wish them well. I applaud the efforts of this Government to take on board such NGO concerns and to involve the NGOs in policy discussion.
However, having attended a DfID presentation today, I am left wondering what that department can do to alleviate the undeniably adverse effects of the MAI on the least developed countries as well as explaining the benefits. I understand the new thinking which uses academic terms like "pro-poor" or "fair and sustainable trade and investment"; and I see the positive value of freer and fairer trade. But no one should expect too
796
much of the DfID as honest broker among the seven government departments involved in the MAI. A lot of money is about to go into capacity building at a fairly high level to try and support the negotiating stance of the LDCs in the OECD meetings or—by proxy—of the DfID when it has to face the six other government departments. I will be grateful to hear from the Minister which of those departments are represented here today.
The LCD's worst fear must be that the DfID will turn round and persuade them what stance to take or, more likely, what changes they should be implementing. I hope the Cabinet Office, the Treasury and others will not leave DfID on its own or automatically expect it to play second fiddle to the DTI. It cannot lose sight of its principal objective of poverty alleviation, as the noble Lord, Lord Ponsonby, said. It may have to depart from the free market orthodoxy, as will be the case in the post-Lomé negotiations.
Going back to the situation in Ethiopia, we are still far from a genuinely level playing field and the game is already messy. Procurement in Addis can be a nightmare with bureaucracy, regulation and all the old problems of getting from A to B. It is still a fragile society in the process of reconstruction. The MAI is never going to be a cure, nor even a rapid means to growth. As the DfID knows, it will only help as an agreement if a domestic regulatory framework is already in place alongside all the other prescriptions with which it has to deal from the IMF, the World Bank and even the NGOs with which the Government have to deal. If the negotiating pattern becomes too complicated, who can blame the Ethiopians for refusing to go to meetings when they have the urgent business of development to attend to?
The distillation of the NGOs' fears is the loss of the authority of central government to the whims of the international market. Of course, we know that there are good companies so that is inevitably a general statement. Such concerns were only half met by the World Bank President, James Wolfensohn, when he published last year's world development report. He said,
"For many the lesson of recent years has been that the state could not deliver on its promise. Many have felt that the logical end point of all this was a minimalist state. Such a state would do no harm, but neither could it do much good".
I hope the Minister in his reply will confirm that the creation of a minimalist state which is not in any position to protect its weaker citizens is not part of the objective of this Government's trade policy.
8.33 p.m.
Lord Rea: My Lords, I too thank the noble Lord, Lord Razzall, for the timely choice of tonight for asking this Question. Noble Lords may be interested to hear that a report in that scurrilous newspaper the Guardian of 18th February quoted a source close to the talks on the MAI in Paris as saying that the MAI was "dead in the water for now." That was because of a failure to reach agreement on the agenda for a ministerial meeting in April by the negotiating team. As the noble Lord, Lord Razzall, said, the United States is one of the chief objectors to the form that the agreement has so far reached. It may be therefore that my noble friend will

797
have plenty of time, as other noble Lords have said, to propose changes while the agenda is being worked out. There is also the chance that the impasse is so great that the agreement is truly drowned and cannot be resuscitated. I am sure that my noble friend will have something to say about that.
Before discussing the MAI, it is worth looking at the economic setting in which it is being negotiated. Although it will mainly be applied in the OECD countries where 85 per cent. of foreign investment takes place, like other noble Lords I want to concentrate on its impact on less developed countries. For the same reason as many NGOs with an interest in the developing world, I am in general wary of the effects of globalisation on the people of the poorest countries—and the poorest people in countries which are not so poor. Like those NGOs, I am concerned about the exploitation of the generally lower environmental regulatory standards of LDCs—I hope it is all right to use these acronyms in this select company—by both foreign and local investors, and the failure or inability of some countries to enforce even those lower standards. The rape rather than sustainable harvesting of the world's remaining rainforest is the best known, but by no means the only example.
Globalisation and GATT give transnational corporations a big head start because of their ability to undercut and out-perform small enterprises and farmers in all countries, not just LDCs. It is difficult, though not impossible, for independent small firms and farmers to build up their strength without some degree of protection, whether it be through tariffs, special regional grants, tax breaks, low interest loans or other assistance. The tiger economies and Japan all used those methods while building up their economic strength.
I am aware that globalisation is a fact and that sniping at it will have no effect. Of course, it enables a huge increase in trade and, to a lesser extent, wealth creation to take place which probably benefits the majority of us. But it is very much a system which follows the parable of the rich man and his three servants:
"Unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall he taken away even that which he hath".
For our discussion tonight I should add "relatively speaking" because some of "those who have not" may actually obtain a job as a result of inward investment. However, in LDCs it will usually be a poorly paid job even if conditions in some transnational corporation projects are better than in local sweat shops.
In contrast, the TNC usually repatriates as high a proportion of its profits as it can; after all, that is why it is in business, though I am aware that some forward-looking firms contribute to social projects and causes in the countries where they operate and plough back their investments into them. However, it is large companies mainly based in the United States and Europe which gain most from the enormous economic activity that globalisation and GATT permits.
Karl Marx got it wrong in predicting the inevitable demise of capitalism through its internal contradictions. In fact, it has proved capable of survival and expansion
798
because it has been much more adaptable than Marx thought. It has, usually reluctantly, agreed to the necessity of regulation, taxation to support a complex infrastructure, and conceded some hard won rights to workers. It has reached the mature phase of capitalism described as "imperialism" by Marx. But it is a far more subtle form of imperialism than the gunboat imperialism of the 19th century. It is much cheaper and more profitable to dominate other countries economically, with debt playing a big part, than to rule and police them ourselves, even indirectly. All European powers sooner or later realised that in the two or three decades after the 1939–45 war. I could develop that theme further, but in view of the limited time I will refrain.
The main question in my mind is whether the MAI can be categorised as a measure which increases the ability of capital, usually through the activities of the transnational corporations, to make profits and shift wealth from poorer countries to richer countries. Or is it a measure which can ameliorate the social and environmental impact of often extremely large foreign investments?
I know that my noble friend is working hard to achieve that latter purpose. But I am concerned that the MAI may be used to undermine the economic assistance and support that some countries, or local authorities in this country, may be giving to indigenous enterprises. In order to get some industrial or commercial projects up and running, they need a sheltered environment, just as a young tree needs a shelter to protect it from grazing animals until its trunk is strong and its bark is thick enough to withstand nibbling. My noble friend Lord Judd knows from my personal experience of this why I say that with some feeling.
I am concerned that this agreement may hinder the growth of indigenous enterprises as its rules will not allow countries to provide the economic sheltering measures which are needed to help them to take off because they will be regarded as discrimination against foreign investors. I hope my noble friend will be able to reassure me on this; that is, of course, if he thinks that the agreement can he revived at all.
8.40 p.m.
Lord Newby: My Lords, the MAI is a hugely important initiative for the UK, for the other OECD countries and for the developing world. It will, as the OECD's own documentation admits, limit national sovereignty to a degree. I am therefore very surprised that noble Lords who are usually extremely vigilant on the subject of UK sovereignty have not participated in the debate. It is to be hoped that they will return to it when they have learnt more about the subject. But the fact that they have not done so is itself evidence of the need for this debate.
Here we have in the MAI a major measure which will constrain the freedom of action of signatory countries. Yet despite the noble efforts of the NGOs and the activities of the Guardian, the extent of the debate so far in this country has been worryingly narrow. If the draft agreement were at an early stage of its consideration, this might not matter, but in theory at

799
least the deadline for the completion of the negotiations and the completion of the agreement is extremely tight. That gives a number of causes for considerable concern.
First, as has been said by many speakers, the process to date has neither been as broad nor as open as it should have been. Only the world's most developed countries have been involved in the detailed negotiations even though the agreement is clearly intended to be extended to developing countries, and even though, to quote the European Parliament resolution adopted recently,
"the draft … reflects an imbalance between the rights and obligations of investors, guaranteeing the latter lull rights and protection, while the signatory states are taking on burdensome obligations which might leave their populations unprotected".
The fact that many of the potential signatory states had not been involved in those negotiations casts a significant cloud over the negotiations themselves.
It is also clear that the NGOs have not been adequately consulted. In this respect it is instructive to compare the process during which the Kyoto convention was drawn up with the negotiations on MAI. At Kyoto, despite the chaos, or apparent chaos, of the negotiations in the last days and hours, every country had a say and the NGOs played a major role in brokering an agreement. It seems to me self-evident that such an agreement is much more likely to be durable, and to be applied and to work. The secrecy and exclusiveness of the MAI negotiations are therefore extremely worrying and it is hardly surprising that the developing countries and the NGOs smell a rat.
The second area of concern is that the likely impact of the agreement is still in some areas vague and in others the subject of serious dispute. It is instructive to hear the Government's response to specific issues which have been raised over recent months. My noble friend Lord Razzall referred to some of these. For example, on environmental standards, the Government in February, in the shape of the Minister, Barbara Roche, said:
"we will continue to press for a binding commitment not to derogate from environmental and labour standards in order to attract specific investments".
Yet it is by no means clear today at least that on the environment and on other matters the Government's requirements have been met. Indeed, in the performance requirements section of Chapter 3 of the latest draft, paragraph 4—which confirms that contracting parties can continue to pursue environmental policies which protect human, animal and plant life and health—is in square brackets with the rather alarming footnote stating:
"A majority of delegates see no need for paragraph 4".
It is also noticeable that the EU has called for an impact assessment of MAI to look at its social, environmental and development consequences. So far as I am aware, no such audit has been completed by any of the negotiating countries or any of the potentially contracting parties. At this stage of the negotiations, that seems to be a fairly major problem.
Many other areas of contention remain and many of them have been touched on this evening. For example, I agree with the noble Lord, Lord Rea, about the need to look at derogations to allow for support for fledgling
800
industries. Those have been used to such good effect in Japan, South Korea and other countries in south east Asia. The effect of the agreement on the freedom of action of local government to pursue its social goals has also been raised by many organisations both here and internationally. Again, one feels that the draft does not deal adequately with this.
One particular area of concern for me is the unequal position in which the multinationals and the small developing states which might become contracting parties—the "vulnerable states" to use the Commonwealth jargon—will find themselves when disputes arise. In those circumstances, the multinationals have access to top quality, hugely expensive legal advice. A small, vulnerable developing country simply does not. It does not have the advice immediately at hand within its domestic bureaucracy and it is often constrained in terms of budget regarding the advice it can procure. The disputes panels themselves will almost certainly be drawn from a group of experts who come from the developed rather than the developing world and may indeed consist principally of experts from the country of origin of the multinational which is making the complaint. This disparity, when one gets to the dispute settlement stage, is already seen within the disputes settlement procedures of the WTO. It is causing significant concern there. If the MAI was to be introduced without some kind of equalisation measure, its credibility could be significantly undermined.
Like the principle of free trade, the principle of increased free flow of investment capital is one which we support and one which is highly desirable. We accept that there need to he anti-discrimination rules to deal with the problems set out by the noble Lord, Lord Ponsonby. Anyone who has done business in many countries of the third world and the former Soviet Union knows that arbitrary action by government—discriminatory action almost at a whim, depending on the view of the current minister in charge—can have a devastating effect on the ability of companies to protect their investment and to get a decent return.
Clearly, to the extent that the MAI protects investment flows from that kind of discriminatory action, we will support it. However, as with the principle of free trade, any lasting framework must be carefully put together and must contain derogations to deal with difficult cases. Some of those have been dealt with this evening. It may well be that an MAI can be produced which eases the free flow of capital while allowing countries adequate safeguards over legitimate areas of domestic policy making. It is, however, clear that the present draft is not such an MAI. More time is needed for a more inclusive debate.
I therefore ask the Minister to give us an assurance that the concerns expressed by the developing countries and the NGOs about the current draft will be addressed even at this late stage in partnership with them by drawing them into the further negotiations on the draft agreement. Will he further give an assurance that the UK Government will not sign the MAI until such further negotiations have been satisfactorily concluded?
8.50 p.m.
Lord Mackay of Ardbrecknish: My Lords, this has been an interesting debate. I am sure that we are all grateful to the noble Lord, Lord Razzall, for raising it. It is an issue which has been aired on the Floor of the other place on a number of occasions since last summer, both in debate and at Question Time.
I am going to approach it from a slightly different point of view from most noble Lords who have already spoken. I start off by looking at the importance of foreign investment, not only for under-developed or developing countries, but also for developed countries. In this country we have huge inward investment which is especially important in areas of high unemployment. For example, the North-East of England has had considerable improvement in its economy and employment, thanks to inward investment. In Scotland, since 1981 over 100,000 jobs have been created or safeguarded, thanks to inward investment. The electronics industry, especially in Scotland, is of very considerable importance. In other parts of the country inward investment has recreated the motor industry and that is of considerable importance.
Some noble Lords who have taken part in debates on economics in the previous Parliament know the reasons why this country is attractive to inward investors. They are very important. Perhaps the Minister can remind us of the extent of inward investment into this country. My recollection is that we have a greater share of inward investment into the European Union than any other European Union country. Indeed, we get a fair share of inward investment from other parts of the European Union.
We are also—and this is important—large outward investors. We invest in many parts of the world beyond these shores. I understand that we may well be second only to the United States as outward investors. If that is the case I suspect that the European Union may be a greater outward investor than the United States. Perhaps the Minister can help me about that.
During the speeches this evening I occasionally wondered if all the words that we have exchanged in this House and the other place about the advantages of free and open trading and markets, were a little bit of throw-back to people who perhaps thought that free and open markets were not really the best way to proceed. Whether it be in the European Union or through GATT or GATS, which is trade and services, I believe that they were all important for the people who took part.
Perhaps the most important thing that many of us can do to help under-developed countries is not so much to put our hands in our pockets and give charity, as to put our hands in our pockets and buy their goods. I sometimes think that that is much more important. If they are to have goods for us to buy, not only must they have investment which is generated locally, but they also require foreign investment and expertise. That is a point which the noble Lord, Lord Ponsonby, made very dramatically about the countries emerging from the former Soviet empire.
802
Therefore, what we are looking at tonight is a sort of GATT for inward investment. I cannot see anything wrong with the broad principles. When I first read them I wondered why anybody was arguing about them especially as, like other noble Lords, I became deluged by material from the NGOs and from the Guardian. Your Lordships will not be surprised to know that I am not too impressed about being bombarded with material from the Guardian, but I appreciate that some of your Lordships may consider that fairly close to Holy Writ and therefore one has to take account of it.
Distilling it all down, it seems to me the principles are that a country should treat foreign investors in the same way as it treats its own investors. I am sure that the noble Lord, Lord Clinton-Davis, will confirm that they should be treated neither less nor more favourably. As noble Lords have heard me say before, I do not believe in the level playing field otherwise the teams would not change ends at half time. We have to get as near to the proverbial level playing field as we can. So it is important that foreign investors are not treated less favourably or more favourably.
The other principle is that there should be no discrimination between countries as regards inward investment. There are a number of others. If a company invests in a country it must be able to take profits and dividends out of that country. I believe I detected that one of your Lordships was perhaps a little uneasy about that.
There is a suggestion from the NGOs' material and from the Guardian that somehow or other foreign companies can use MAI to go into another country and even a developed country such as ourselves. I have read letters in the Scottish press, clearly generated by the NGOs, suggesting that the new Scottish Parliament would have no power to say to foreign investing companies, of which we have many in Scotland, "You must abide by our regulations on environmental protection. You must abide by our health and safety laws and labour laws".
Nothing that I have read leads me to the conclusion that they could do anything other than that. I do not believe that they could take a Scottish Government, the United Kingdom Government or any government, to court if a government insisted that a company obeyed the rules and regulations which were common in that country for all companies operating in it. I do not believe that a multinational company could disgorge effluent into the Clyde, which would be illegal if it were a local company. I am sure that that is the case. Therefore, I have some difficulty with the attitude of the NGOs. The noble Earl, Lord Sandwich, knows a great deal more about these matters than I do. I was interested to hear that he also was a little puzzled about their attitude.
As I mentioned, the Guardian seemed to be running a bit of a campaign. I was particularly interested because it did not involve an under-developed country, but a developed one. It concerned a case in Canada involving the Ethyl Corporation of Canada and a product known as MMT. I hope that the noble Lord will help me because it is a good example of what was being said in

803
the Guardian or the NGOs—I cannot quite remember where I saw the material. It said that the company was taking the Canadian Government to court because the company wanted to do things which the Canadian Government did not allow anyone else to do. It transpired that that is not quite true. The Canadian Government have not banned the material MMT, but its importation, which is slightly different. If MMT had been banned and no Canadian company could manufacture it or sell it, that appears to me to be perfectly sensible. The Government have every right to say to an inward investor, "You cannot do it either". But if in fact they are not doing that to their own indigenous companies, then it seems to me to be discrimination if they are doing that to incoming companies.
One thing that worried me—and it is slightly topical for your Lordships—is that in one of the Guardian articles was the suggestion that as regards predatory newspaper pricing, Mr. Murdoch had claimed that an amendment placed by your Lordships in the Competition Bill might in fact fall foul of any MAI. I suspect that it would not, because the law would affect an indigenous company if it decided to predatory price, just as much as an inward investing company.
I noticed that Clare Short said that there was no chance of signing by the end of April. I believe that she said that in the Commons just recently. From all that I have read I am pretty certain that that is the case; namely, that there will be no conclusion.
Can the Minister help me on a number of things? I am puzzled about the fishing question. I have a considerable background interest in the fishing industry. I certainly would be concerned if anything was to prevent us from coming to some sort of agreement with our European Union friends about the licensing of what are called "quota hoppers" in the future. I am also concerned about the position of the United States. I am always suspicious of them in trade matters. That comes from my experience, for a very short spell, as the aviation and shipping Minister. I have that in common with the noble Lord, Lord Clinton-Davis, who is to reply.
The United States runs a pretty extensive protection regime in these matters. Indeed, in aviation one of the great disputes between us is that foreign airlines just cannot get into the United States at all. One of the reasons why European airlines, like British Airways, want partnership agreements of one kind or another with American airlines is in order to get round the discrimination practised by the United States. Of course, that does not apply only to aviation: it is the same in merchant marine. No non-American shipping line can pick up cargo in one US port and take it to another. That seems to me to fall foul of any MAI that may be written. It will be an interesting test of the United States' determination and dedication to free markets to see whether it will abandon those two policies.
I understand that France has said that it will not sign if the US is given an exemption from the Helms-Burton law which enforces a boycott on Cuba also on non-US citizens and companies. I wonder whether the Minister can tell me whether the British Government agree with the French and whether they too will be digging in their heels on Helms-Burton.
804
Noble Lords will not be surprised to hear me say that I am very much in favour of free markets. Some of your Lordships will have heard me speak previously on the European Union and the like. However, I am nervous—and not only on behalf of the weakest countries in the world; that nervousness springs also from the fact that very powerful players will be looking for exemptions for themselves when they should not be doing that. If they are seeking exemptions, they should be doing so for the least powerful countries in order to allow them the opportunity to develop.
We in this country run a pretty open system when it comes to trade policy—we have done so for generations—and to investment. Ensuring such an open system world wide should be our aim. I believe that the stronger we can make world trade, the better world trade will be and the more opportunities the poorer countries will have to catch up with the kind of economic development that we take for granted.
9.1 p.m.
Lord Clinton-Davis: My Lords, first, I congratulate the noble Lord, Lord Razzall, on raising this important subject which, in my view, has not been sufficiently debated in Parliament, but that is not the fault of the Government. It is a pity that these issues are often shrouded with a degree of generality which tends to spoil some of the arguments.
I assure the noble Earl, Lord Sandwich, that I speak on behalf of the Government. Although I happen to be a Minister at the DTI I assure him that we are totally ad idem with the Department for International Development on this. I say at once that there has been an undoubted change between the negotiating posture adopted by this Government and that of our predecessors.
A number of noble Lords have referred to issues of social abuse and to the environment. We have pursued those matters vigorously and we intend to continue so to do because we have to be satisfied that those issues are being appropriately addressed in the further discussions and negotiations that are to take place.
Although I have engaged in, I think, quite fruitful discussions with a number of non-governmental organisations, I am disturbed by the sort of generality to which I have just alluded where, somehow, some perceive every multinational organisation as something tremendously malign. I have even heard it suggested that the apartheid regime in South Africa could not have been destroyed if MAI had been in existence. Such arguments cause the mind to boggle somewhat. The fact is that the importance of what was done by American multinationals in particular probably did almost as much as anything else to destroy that corrupt regime. We must get this matter into some reasonable perspective.
Several noble Lords, not least the noble Lord, Lord Mackay, have referred to the importance of the flow of investment across national borders. It is important; it is an integral part of economic reality globally and, usually, it is a very welcome prospect. As noble Lords have said, the United Kingdom is a significant source and recipient of investment. The noble

805
Lord, Lord Razzall, said that at the beginning. Our economy would certainly be much weaker, and it would be very different, if we bad not received the contributions made by companies the world over. We are the second largest source of outward direct investment to developed and developing countries alike. That is a fact that we must not overlook. In fact, only the United States invests more overseas than we do, so we have a strong interest in being able to create a framework in which foreign investment can prosper and make its full contribution to the global economy.
It must never be forgotten that for developing countries attracting foreign investment is absolutely crucial if they are to achieve greater stability, be able to diversify their often fragile economies, provide jobs and improve the welfare of their people. I believe that they look at this somewhat differently from some NGOs and from the attitude taken in some of the articles in, for example, the Guardian recently.
As my noble friend Lord Ponsonby said, what is essential for stimulating and maintaining overseas investment is the assurance that it will not be subject to discriminatory and unreasonable treatment which can only have an unsettling and adverse effect. Therefore, I say absolutely unequivocally that for us and, I think, for many others involved in the negotiations, non-discrimination has to be the essential underlying point about MAI. My noble friend Lord Ponsonby described most graphically some of the problems that can arise. He did so from his own experience of the activities of a multinational for which he was working. As the noble Lord, Lord Mackay, put it, the principle about non-discrimination is that foreign investors should be treated no less well than domestic investors or each other.
Of course, multinationals must have respect for the domestic law. They are answerable to the courts in the countries in which they are operating. A noble Lord referred to the inequality of representation. Some people had the misfortune to instruct me, in my previous incarnation, as their solicitor while others went to more powerful firms. Curiously, sometimes I won. I am afraid that that is a fact of life that cannot be avoided. It happens in this country and all over the world. I believe that the argument about expropriation to which my noble friend has referred is absolutely right.
An interesting point was made by my noble friend Lord Judd who has enormous experience in this field in view of his work with Oxfam and as a former Opposition Front Bencher in this House, whose work I enormously respect. He and I have been involved in a number of campaigns. He referred to a form of creeping expropriation. I have not heard it put in quite that way. None of the NGOs with which I have had dealings has put it in those terms; but it is an interesting prospect that must be looked at carefully.
The repatriation of profits is extremely important. I vividly remember when dealing with transport matters that British Caledonian was virtually brought to its knees because it could not repatriate profits from West Africa. Do we want to have that kind of situation? Should there not be some framework to ensure that a
806
company which takes the trouble to invest in poverty-stricken countries has recourse to the moneys that it has built up? Of course, it cannot behave in an excessive manner, but I do not believe in that particular case that was the situation. We support these basic principles; but there are some important issues on which we seek greater satisfaction. I shall return to those in a moment.
If an agreement can be reached which increases confidence and security for foreign investors, if our specific concerns are properly addressed and if the detailed terms are right, we shall sign it. It is quite clear that there is some way to go. At the present time there is something of an impasse. I am not convinced that if all of this is adjourned generally with liberty to restore (if I may put it that way) we shall return to a better state of affairs. It will give us more time to negotiate, but sometimes delays can have an adverse affect. In many instances, the best results can be achieved when minds are concentrated on the essential issues.
It is true that the time limit for the OECD ministerial meeting was extended until April 1998; but at a high level meeting which took place last month to prepare for that event the United States said that it was not ready to reach an agreement. But all of the OECD countries accepted that they should intensify their efforts to resolve outstanding issues with a view to making as much progress as possible at the April meeting, and that OECD Ministers should then decide what to do next in the light of that progress. For us in the United Kingdom the most important outstanding issues are: the treatment of environmental and other regulatory issues; the question of labour standards; and the listing of exceptions by which countries may reserve the right not to accept MAI non-discrimination obligations in full in particular sectors or in relation to categories of governmental activity.
I should like to make it plain that we have moved a great deal since May. We have taken the lead in the discussions that have taken place in ensuring that the MAI will not undermine regulation in these areas. That is essential and attainable. Since all participants in the negotiations now recognise this need, it is a most encouraging sign. First, we have pressed hard that unambiguous affirmation in the MAI of commitments to sustainable development and core labour standards, as dealt with by the ILO, is a matter of great importance to us. Secondly, the close association between the MAI and the OECD guidelines for multi-national enterprises—collective recommendations by OECD governments to multinationals on good corporate behaviour—is no less significant. Thirdly, there must be a strong and binding provision to avoid the waiving of environmental or labour standards as an inducement to attract particular investments. The majority now share our strong line on these points, but a minority remains to be persuaded. If we are successful I believe that the MAI will become the first trade or investment agreement with such substantive provisions. However, all negotiating parties agree that it must be clear in the MAI that normal government regulation of environmental, labour, health, safety and all other fields will be unaffected and unimpeded by the agreement.

807
I should also mention that it was this Government who proposed a review of the MAI and environmental policy. It is not correct to say that all that is shrouded in secrecy. Five of the developing countries have been there as observers, and eight have been closely involved. The other factor that is important is that internally at least I and my officials have been at great pains to consult the NG0s, companies, commercial interests and trade unions to keep them fully abreast of what is happening. I have had several meetings. I propose to have another one before the discussions take place in April. We will also review the position with them after that. Can I do any more about that? They have been kept abreast of the situation, and it is my intention that that should continue.
I should like to put on record, because I was particularly attacked in what I thought was a somewhat malicious article in the Guardian, that I have some credentials in this field. I was European Commissioner with responsibility for the environment for four years. I have been involved with NG0s, including environmental ones. Those are causes which I hold close to my heart today. The Government are determined to ensure that there is no risk that there will be an undermining of environmental protection and labour standards. I have said that again and again.
Far from being a threat to those matters, I believe that the MAI provides a useful opportunity to encourage all participants to raise their standards. We do not believe that it would he right or practicable to make the MAI a mandatory instrument whereby particular environmental or labour standards would be imposed on other countries. The developing countries would not want that to happen, because there would then be a real risk that potential members would be deterred from joining, without achieving any improvement in standards. So the Government are working hard to raise international labour and environmental standards in the appropriate fora.
I shall deal now with some of the other questions which were raised. One noble Lord mentioned lowering standards to attract investment—a downward spiral of deregulation. I have already dealt with that. The noble Lord, Lord Mackay, raised a concern about the Ethyl case. I do not want to become involved in what is an extremely complicated matter. I cannot easily summarise the position, but if the noble Lord wishes me to write, I shall do so. He can tell me about that later.
On the subject of fisheries, there is no question of our current policies being affected by the MAI. On the subject of air services and the Jones Act on maritime services to coastal ports in the US, I rather share the noble Lord's view. We have discussed those matters privately on many occasions. I find them offensive. The claims made in relation to Helms Burton and the ISLA for extra-territorial jurisdiction are unacceptable to us, and we have made that clear to the US through the EU. There is complete agreement on that matter so far as concerns the EU.
One of the questions that arose related to exceptions. The Americans have asked for a large number of exceptions, including a sweeping exception for all
808
subsidy programmes, present and future, retaining the freedom to deny to non-US-owned companies subsidies which they offer to US-owned companies. That could represent serious damage to our interests. So the EU, under our presidency, has been pressing the US hard on that point. In fairness, the US has complaints against some proposed European exceptions. Although we have been able to make some progress, there is still a significant gap. At the end of the day we will all need to be satisfied about the balance of commitments. A package has to be reached, of course. If that is not achieved, there will be no agreement.
I should deal also with the issue of investors being allowed to challenge the state. Some people have viewed that with great horror. I cannot understand it myself. It is not a threat to democracy. Private interests can and do mount legal challenges to state decisions in this country, as both governments know only too well. They do it in other democracies, and binding international arbitration for investor-to-state disputes has existed for many years in the UK's numerous bilateral investment treaties. What is new in the MAI is binding international arbitration for investor-to-state disputes in a multilateral agreement over a range of issues wider than in existing bilateral treaties. There is some advantage in that.
A point was raised about local government or regional development agencies. We have consulted local authorities and they have raised no problems about the issue. No developing country will be required to enter into the MAI against its will. Many of the more advanced developing countries found it to be an attractive opportunity. Argentina, Brazil, Chile, Hong Kong China and Slovakia already have observers at the negotiations and are keen to join at the earliest possible stage. They do so because they understand that inward investment is critically important to them.
We do not want to see the interests of the poorest countries damaged. We are not in the game for that purpose. We want to see opportunities opening out to the developing world as a whole. We are placing in the Libraries of both Houses copies of a document showing that, at the suggestion of the United Kingdom in the negotiating group of the MAI last year, all OECD members are reviewing the compatibility of national laws relating to the environment with the MAI. The result of our review—that there is no incompatibility—will be placed in the Library tonight. There is general agreement among negotiators that there should he language in the MAI to clarify that normal, legitimate government regulations, including that on the environment, are not adversely affected by the MAI. The next major stage in the process will be the meeting in April when OECD Ministers collectively can have the opportunity to review progress and the prospects of achieving a satisfactory agreement.
I welcome what has been a balanced debate and I thank the noble Lord for initiating it. I hope that I have done some justice to most of the points that were raised. In a debate of this kind—and I recognise that I must sit down in a moment—it is not easy to answer every point. However, we will consult more widely. I take on board that there may well be room for improvement in the

809
whole structure of consultation. I am delighted that many of your Lordships took the view that I should apply that concept, and I will do so.
In our presidency role, we will be co-ordinating our plans with our European partners. As regards the domestic side, next week I shall meet the main NGOs following previous meetings. It is my desire that Parliament should be kept thoroughly informed. The best way to achieve that is for Questions to be tabled about the issue. I shall not do so; that is for others. I wish to underline our view that this is a potentially useful agreement. We must get it right and we will support it so long as it is in the right terms.
Lord Rea: My Lords, before the noble Lord sits down—we have about one minute—can he amplify his answer to a question raised by the noble Lord,
810
Lord Newby, and I about derogation for fledgling industries? Will it be handled through exceptions or in a general way?
Lord Clinton-Davis: My Lords, in the European Union in negotiations which take place with countries seeking accession, we are used to recognising that they cannot all immediately take on board the obligations which fall on them in accepting the acquis communautaire. The same principle will arise in this case. We recognise that we must be practical about such matters. There is no use in introducing legislation which can have no real effect because countries and organisations are not ready to implement it. One needs training programmes to help in that respect. However, derogations are commonly recognised and I see no reasons why that should not be the case in this respect.
House adjourned at twenty-four minutes past nine o'clock.

  Turkey: Human Rights Undertakings
  Turkey: Human Rights Undertakings
  Livestock Farm Incomes
  Livestock Farm Incomes
  Salmon and Sea Trout Stocks: Protection
  Salmon and Sea Trout Stocks: Protection
  BSE: Phillips Inquiry Telephone Line
  BSE: Phillips Inquiry Telephone Line
  BSE: Phillips Inquiry Staff
  BSE: Phillips Inquiry Staff
  House of Lords Reform
  House of Lords Reform
  Smuggling: Revenue Losses
  Smuggling: Revenue Losses
  Fraud Report 1996–97: Internet Publication
  Fraud Report 1996–97: Internet Publication
  Surrendered Handguns: VAT Liability
  Surrendered Handguns: VAT Liability
  House of Lords Spokesmen and Senior Civil Servants: Pay Comparisons
  House of Lords Spokesmen and Senior Civil Servants: Pay Comparisons
  Unemployment Rates
  Unemployment Rates
  Crime Prevention Expenditure
  Crime Prevention Expenditure
  Firearms Compensation: Fraudulent Claims
  Firearms Compensation: Fraudulent Claims
  Corwen Bypass
  Corwen Bypass
  London Fire Service: Proposed Reductions
  London Fire Service: Proposed Reductions
  Scottish Agricultural Science Agency: Framework Document
  Scottish Agricultural Science Agency: Framework Document
  Scotland: Rating of Riding Schools and Livery Stables
  Scotland: Rating of Riding Schools and Livery Stables
  Scotland: Analysis of Examination Results 1994–97
  Scotland: Analysis of Examination Results 1994–97
  Benefit Fraud
  Benefit Fraud
  Disability Benefits: Prices and Earnings Link
  Disability Benefits: Prices and Earnings Link
  Hospital and Community Health Services Weighted Capitation Formula
  Hospital and Community Health Services Weighted Capitation Formula
  Roadside Emission Testing: Code of Practice
  Roadside Emission Testing: Code of Practice
  Bristol City Council: Publicising of Ombudsman's Report
  Bristol City Council: Publicising of Ombudsman's Report