Sitting of 23 March 1998

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  SOCIAL SECURITY
  The Secretary of State was asked—

  Retirement Pensioners
  Sir Teddy Taylor: If she will make a statement or the total number of retirement pensioners (a) at the latest available date, (b) five and (c) 10 years ago. [34043]
  The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): There were 10.7 million retirement pensioners at 30 September 1997 Five years ago there were 10.3 million pensioners and 10 years ago there were 9.9 million pensioners.
  Sir Teddy Taylor: Retirement pensioners are now a substantial proportion of the community. Is the Minister aware of the genuine concern and alarm among pensioners about reports of a fundamental review that might lead to the retirement pension being means-tested? Can the Minister give a clear and categorical statement
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  that that is untrue? Can he confirm that he and his fellow Ministers will resign if there is any such Government proposal?
  Mr. Denham: I am pleased to make it clear to the House that we have a manifesto commitment to retain the basic state pension as the foundation for retirement provision and to uprate it at least in line with prices. We have more than honoured that commitment by taking the unprecedented step of issuing winter fuel payments to all pensioners who have fuel bills this winter.
  Mr. Duncan Smith: More than a week and a half ago the Minister attended a dinner held by the Association of Consulting Actuaries at which the chairman told the Government that
  "they must stop loosening the foundations on which the hitherto robust system of Occupational Schemes is built."
  The chairman also said that the ramifications of the Government's first Budget on coming to power
  "were clearly not thought through at the time of the Mini-Budget."
  The Minister was sitting next to the chairman. Did he agree with those sentiments?
  Mr. Denham: At that enjoyable dinner, which the hon. Gentleman also attended, I was able to make it clear that the Government wish to support and strengthen the framework for occupational pensions. During the pensions review we are looking at the regulatory system for occupational pensions and how the best occupational schemes can be marked by a quality pensions award. We are also examining ways to improve pension scheme members' understanding of their schemes and their entitlements.
  Sir Teddy Taylor: On a point of order, Madam Speaker. In view of the Minister's unsatisfactory and ambiguous reply, I give notice that I intend to raise this matter on the Adjournment

  Violence Against Women
  Ms Squire: If she will make a statement on the Government's plans to tackle violence against women. [340441]
  The Parliamentary Under-Secretary of State for Social Security (Ms Joan Ruddock): The Ministers for Women have been working with Ministers from across Government Departments on this issue. A national strategy for England and Wales on tackling all forms of violence against women will be published in the autumn. The Scottish Office is producing a strategy on tackling all forms of violence against women in Scotland, along the same lines as the national strategy.
  Ms Squire: I welcome my hon. Friend's statement about a national strategy. Is she aware that the demand for refuge accommodation by victims of domestic violence throughout England, Wales and Scotland has increased? For example, last year, in Dunfermline, 246 women had to be turned away, and throughout Scotland more than 4,000 women and 6,000 children were turned away because of a lack of suitable accommodation. Does she agree that there is no excuse for violent criminal behaviour that causes women and children to flee their homes and that it is vital that combating domestic violence remains a Government priority?
  Ms Ruddock: One of the prerequisites of any effective national strategy is access to accurate statistics. In our early discussions between Departments, we found many gaps. My hon. Friend will wish to know that in Scotland a research survey was commissioned by the Scottish Office to review service provision for women who had suffered domestic violence. It was published on 16 March.
  I wish to announce to the House today that, with the Department of the Environment, Transport and the Regions, our women's unit is commissioning a survey and a research report that will review the current accommodation and support needs of women fleeing domestic violence in England. Local authorities and the Women's Aid Federation (England) Ltd. will be involved and we will ensure that our Scottish colleagues are kept informed of the methods and results.
  Mrs. Gillan: Given the concern about violence against women, will the Minister tell us whether she agrees with the Secretary of State for Social Security, who believes that it is only by appointing more women judges that the Government can show that they are taking domestic violence seriously, or with the Lord Chancellor who, when putting down the Secretary of State, said that
  "We cannot have positive discrimination"
  in making judicial appointments and that he had
  "the fullest confidence that all judges, regardless of gender, already deal with cases of domestic violence with impartiality and consideration for the victims of domestic violence"?
  I can see the Secretary of State prompting the Minister. Will she tell us independently who she agrees with the Secretary of State or the Lord Chancellor?
  Ms Ruddock: I assure the hon. Lady that we are all concerned with achieving equality of opportunity. The Lord Chancellor has made it absolutely clear that he
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  believes that more women should have the opportunity to reach the highest levels in the court and justice system. We are all engaged in that and we have every confidence that, whatever judge is sitting on domestic violence issues, justice will be done.

  Child Support Agency
  Mr. McNulty: If she will make a statement on the Government's policy in respect of reform of the Child Support Agency. [34045]
  Mr. Baker: If she will make a statement on the principles underlying the Government's review of the Child Support Agency. [34052]
  The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman): This Government believe that all children are entitled to the financial and emotional support of both their parents, wherever they live. We are examining closely all aspects of the child support system and we expect to bring forward our proposals for consultation by the summer.
  Mr. McNulty: I thank my right hon. Friend for that response. Most people will agree with the principle of the CSA, but not with the cack-handed way in which it was introduced by the previous Government. Will she ensure that the outcome of any review is both fairer and simpler not just for parents and children, but for CSA staff, and that it is clearly linked both with the excellent Budget proposals on families and children and with the forthcoming Green Paper on welfare reform?
  Ms Harman: My hon. Friend is absolutely right. Hon. Members on both sides of the House agree on the principle that parents should support their children. We further agree that that principle has not been put into practice properly by child support legislation and the agencies that work under it.
  I invite the House to consider three further points. We face some difficult choices in the necessary reform of child support. First, what is the appropriate balance between the interests of the first and second families? Secondly, what is the right balance between a clear, simple and straightforward system and a complex system that deals very closely with individual needs? Thirdly, what is the right balance between the need of parents with care to receive income for their children and the interests of taxpayers not to have to support other people's children? Those are the three issues that the House will have to discuss further and come to an agreement on.
  Mr. Rendel: Does the Secretary of State expect any new formula to apply only to new cases, or will it apply also to cases that have already been agreed under CSA regulations—which would lead to difficulties such as cases being reopened and redecided and a lot of losers?
  Ms Harman: The hon. Gentleman makes an important point. We are trying to reform a system, but it is difficult to do so when we have a great tangle and a sense—and the reality—of injustice. For people who have had incorrect awards made and those who have had correct awards made but who have failed to pay, the issue of transitional arrangements will be critical in achieving public

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  confidence in the new and reformed system that we should like to see evolve. We will discuss with the hon. Gentleman and his colleagues how to deal with the transitional arrangements
  Mr. Wicks: Given that the great majority of mothers and children on income support receive no child maintenance from their fathers, will the Secretary of State consider setting a new target to tackle the tough cases: the men who are determined never to pay a penny? In my advice surgery on Friday night, I met a mother who had supplied all the information that was needed to the CSA. Two years on, she is still not receiving a penny.
  Ms Harman: My hon. Friend is absolutely right: there is a huge sense of grievance among absent parents— usually fathers—when there is a delay in assessing maintenance and then, suddenly, they are hit with large arrears that might turn out to be incorrect; there is also a burning sense of grievance among parents with care— usually mothers—that although a correct award has been made, fathers sometimes avoid paying.
  We are dealing with difficult issues. We need to keep a sense of principle—that parents should be prepared to pay—but the system must also be fair. The problem is that the principle of parental payment has been undermined by very poor delivery and a failed administration.
  Miss McIntosh: Does the Secretary of State agree that the Child Support Agency plays a crucial role in helping abandoned families? What percentage of staff time is spent processing matters relating to absent parents, whether they be male or female? How many appeals under the new procedure are being processed?
  Ms Harman: There are 8,000 members of staff dealing with the 600,000 live case load, as it is called, but there are 800,000 further cases where no assessment has been made. I will write to the hon. Lady with any further detailed information that she wants.
  It is not always a matter of an abandoned family. It is difficult to talk in absolutes about first or second families. The fact is that many marriages end in divorce, with faults on one or the other side, or on neither. Many children start life without their parents living together. We must strip away the ease of moral judgment and get a system that is fair to the taxpayer, the parent and, above all, the child.

  United Nations Commission on the Status of Women
  Jane Griffiths: If she will make a statement on the recent meeting of the UN Commission on the Status of Women. [34046]
  Ms Ruddock: In my role within the presidency of the European Union, I was delighted to represent the views of the European Union at the meeting of the Commission on the Status of Women at the United Nations earlier this month.
  The issues addressed were women and violence; women and armed conflict; human rights of women; and the girl child. A copy of the statement I delivered at the UN has been placed in the House of Commons Library.
  Jane Griffiths: Is my hon. Friend aware of the importance attached by women's organisations to
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  the previous UN meeting in Beijing in 1995 and the criticism levelled at the previous Government for having taken no action following that meeting? In view of that, have this Government taken action, in particular to protect the girl child against all forms of exploitation?
  Ms Ruddock: I thank my hon. Friend for her question. The United Kingdom's participation in the CSW this year has been very successful. Throughout, our delegation has led on the need fully to implement the aims of the global platform for action. On the human rights of women, we argued for an end to customary and traditional practices that are harmful to women and girls such as female genital mutilation. On women and armed conflict, we proposed the creation of an international criminal court that would integrate a gender perspective in its statute. On violence against women, we called for national plans such as those that are in train in this country. On the girl child—a matter specifically mentioned by my hon. Friend—we were able, against very tough opposition, to get agreement on the provision of information and counselling services, to be carried out on a confidential basis, for both adolescent boys and girls, especially on the subject of personal relationships.

  Disabled People
  Mr. Keith Simpson: What the benefit status of people with disabilities who take part in the welfare-to-work scheme will be. [34047]
  Mr. Denham: The Government's new deal for disabled people will be offered to people with disabilities or long-term illnesses in receipt of the following out-of-work benefits: incapacity benefit, severe disablement allowance and income support.
  Mr. Simpson: I thank the Minister for that answer, but can he give the House an assurance that people with disabilities who participate in the Government's welfare-to-work programme will not lose any of their entitlements, especially if they are put on to the jobseeker's allowance?
  Mr. Denham: Yes. Participation in the programme will be voluntary, but the House will recognise that the Government are implementing a strategy with several strands: we want to improve the quality of personal advice for disabled people who are seeking work; we want to tackle discrimination in the workplace; we want to make work pay—in last week's Budget, we announced the introduction of a tax credit for disabled people; and we want to reform the benefits system by, for example, introducing the 12-month linking rule for those on incapacity benefit.
  Mr. Skinner: Does my hon. Friend agree that we do not need lectures from the Tories, whom we constantly had to fight during those tawdry years of Tory government to get disability legislation that would give equality to the 6 million disabled people in Britain? Will he also bear in mind the fact that the last thing we need from a Labour Government is a tax on disabled people's benefits? I was associated with the group Disability Rights Now in campaigning against the Tories. To prevent Downing

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  Street from being daubed with paint again, would not it be a good idea for the Prime Minister to stop inviting tinpot so-called music makers to No. 10 and instead to invite the disability rights people to discuss these important matters?
  Mr. Denham: I can assure my hon. Friend that my right hon. Friend the Prime Minister has met organisations of and for disabled people to discuss welfare reform. I am sure that my hon. Friend welcomes the announced introduction of a disabled persons tax credit and that he will also recognise the importance of establishing the disability rights task force, which will lead to a disability rights commission and comprehensive and enforceable rights for disabled people.
  Mrs. Browning: Is the Minister aware that there are types of disability whereby people fail to find work because of basic communication problems, despite their intellectual ability and training or higher education qualifications to do that work? What plans does he have to build on the previous Government's piloting of the mentoring system, under which such people had someone alongside them, both at interview and in the workplace, not to do training or the job, but to deal with communication difficulties?
  Mr. Denham: We are anxious to explore a variety of ways in which we can enable disabled people who want to work to get into work. This Government—unlike the previous Government—have allocated £195 million from the windfall tax to fund a series of innovative schemes to consider the different ways in which the barriers that disabled people face in getting into work can be overcome. Bids are being received for the first 20 of those additional schemes. The hon. Lady will, I am sure, be keen to see which schemes have been put forward by the wide variety of voluntary organisations and others who have been involved in that process.

  Lone Parents
  Mr. Fitzpatrick: If she will make a statement on measures relating to child care in the Government's new deal for lone parents. [34048]
  Ms Harman: The new deal for lone parents is, for the first time, offering lone parents an opportunity to work. It is already available in eight areas of the country and it will be rolled out nationally to new claimants of income support next month. The new deal is backed by our national child care strategy, which includes substantial help with the cost of child care through the new child care tax credit that was announced in the Budget last week.
  Mr. Fitzpatrick: I thank my right hon. Friend for that positive response. I recently had the opportunity to visit the Alpha Grove lone parents association on the Isle of Dogs in my constituency. It was very enthusiastic about the opportunities being offered under the new deal. Will she ensure maximum co-ordination between her Department and the Department for Education and Employment in introducing the new child care provisions so that lone parents can access them as soon as possible?
  Ms Harman: I am working closely with my right hon. Friend the Secretary of State for Education and
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  Employment to ensure that we develop a national child care strategy that meets the needs of women for affordable, high-quality and accessible child care in all neighbourhoods. That is important not only for children's development, but particularly in helping lone parents into work. I know that the Benefits Agency—and the jobcentres—will work closely with voluntary organisations such as the Alpha Grove project to ensure that the new deal for lone parents serves the community.
  Mr. Duncan Smith: Last week there seemed to be a bit of a dispute between the Institute for Fiscal Studies and the Department of Social Security and the Treasury about the cost of child care credits. The Red Book allowed for £1 billion for the programme, but the IFS estimated that it could cost £4 billion, assuming that take-up rates are in line with present take-up rates for general benefits. The family credit take-up rate of 70 per cent., which is sometimes criticised by the Government, would not seem out of line with the cost of £4 billion
  What take-up rates have the Government allowed for in the child care credit assumptions? If their estimate is wrong and take-up is higher, will they guarantee that they have no intention of capping the amount that can be paid out?
  Ms Harman: With new proposals such as this, we cannot simply refer to the take-up rates of existing benefits. The previous Government got into all sorts of problems when they grossly overestimated the take-up for child care allowance under the old family credit rules. Indeed, that is one of the reasons we have had to make a change and get rid of the child care allowance under family credit, introducing a proper new child care tax credit.
  We do not think that the IFS figures are right. We think that the Treasury assumptions are right. The estimated cost of £250 million a year is based on expectations of demand and of the ability of the registered child care base to respond to that demand.
  Ms Hewitt: Does my right hon. Friend agree that a comprehensive strategy must include time for parents to care for their children themselves, as well as nurseries and child minders? Does she further agree that the opportunities for part-time, as well as full-time, work under the new deal will enable many lone parents who so choose to combine earning a living and taking advantage of the working families tax credit with looking after their own school-age children?
  Ms Harman: My hon. Friend is absolutely right. Those who have received the new deal for lone parents have warmly welcomed the fact that, so long as they can work 16 hours, which many can manage during a school week if their children are at school full time, they will get the top-up on their pay. Just as we will help people whose pay is depressed by ill health or disability, we will help those who can work only 16 hours or so to have decent take-home pay. What is more, we will help them with the costs of child care so they can be in work and make work pay.
  Mrs. Virginia Bottomley: I want to reinforce the point made by the hon. Member for Leicester, West (Ms Hewitt). Is the Secretary of State aware that a

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  growing number of mothers feel insulted by the Government's apparent denigration of the contribution of women who choose to care for their children at home? She needs to emphasise strongly the point that she made in reply to the hon. Lady.
  Will the Secretary of State repeat her assurance of co-ordination with the Department for Education and Employment? She might care to meet the group of women, working part time for a well-known national company, who have been told that, as a result of the Government signing the social chapter and other measures, it is no longer in the company's interest to employ them part time so they have the choice of being full-time mothers or full-time employees: a choice that they were not forced to face under a Conservative Government.
  Ms Harman: I do not know what company the right hon. Lady is talking about, but if she wants to suggest a meeting, I shall be more than happy to consider it. I take exception to her suggestion that we appear to denigrate mothers who stay at home to look after their young children. Our proposals are simply a recognition of the fact that women are voting with their feet and going out to work. Nearly half the people in the work force are women and more than half the women with children under five—let alone those with children over school age—are working. The previous Government took no notice of that and did not support women in their choices.
  We simply say that when women go out to work, instead of leaving them to struggle on their own to balance home and work responsibilities, we will help them with a flexible benefit system, advice and help regarding work, and proper child care. Mothers who stay at home will also receive the extra child benefit that my right hon. Friend the Chancellor announced in the Budget last week.

  Stakeholder Pensions
  Mr. Flight: What representations she has received on the expected participation rates in the proposed stakeholder pension. [34049]
  Mr. Denham: We have received more than 200 responses to the recent consultation on stakeholder pensions. The majority are from organisations including financial services businesses, employers, employee groups and trade unions. The Government see a key role for such organisations, particularly in partnership with each other, in developing and promoting stakeholder pensions.
  Mr. Flight: If the pension fund industry recommends overwhelmingly that for the stakeholder scheme to succeed—in terms of adequate participation—it will need to be compulsory or have some degree of compulsion, is that something that the Government will consider?
  Mr. Denham: It is true that a number of submissions to the pensions review strongly support compulsory second pensions. We already have a compulsory pensions system—the vast majority of employees are compelled to be members of both the basic state pension and a second pension. We made it clear that we would consider all representations received by the review, including those on compulsion, and would respond in due course.
  Mr. Flynn: Will the Minister say that he is not minded to hand over the running of stakeholder pensions to those
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  very firms that mis-sold at least 2 million personal pensions and left a large number of people facing poverty in their retirement years? Has he seen the Eagle Star submission, which lavishly praises the state earnings-related pension scheme, saying that it is the most portable of all pensions, is best value and has charges down to one tenth of those charged by the private firms? Indeed, Eagle Star complained that the only fault with SERPS is that its merits are not properly understood. Will he ensure that SERPS is properly considered and that we can have a rejuvenated form of it, independently funded and run, and separate from the national insurance scheme?
  Mr. Denham: I have indeed read the Eagle Star evidence to the pensions review and can assure my hon. Friend that those are important issues for consideration by that review. He will also want to pay tribute to my hon. Friend the Economic Secretary for her action to clear up the problems of pensions mis-selling—in stark contrast to the record of the Conservative party, which did nothing to tackle that scandal although it was obvious for years that it needed to be dealt with
  Mr. Viggers: Despite numerous references to low-cost pension schemes, does the hon. Gentleman agree that in fact pension costs will inevitably be high and that if any new scheme is not compulsory it will lead to a pensions benefit trap, which will be unfair and unacceptable?
  Mr. Denham: On his question about compulsion, I refer the hon. Gentleman to the answer I gave some moments ago. I do not accept that it is inevitable that funded second pensions have to be as expensive and as inappropriate for those on low incomes or those who suffer intermittent working patterns as many personal pensions are today. I am confident that stakeholder pension schemes will be able to offer value-for-money, flexible second pensions to many people who cannot get such a pension at present.

  Benefit Integrity Project
  Mr. Oaten: What representations she has received about the benefit integrity project. [34050]
  Ms Harman: I have received a great many representations about the benefit integrity project. I have taken action to improve the quality of decision making in the project and am discussing it further with organisations of and for disabled people.
  Mr. Oaten: Is the Secretary of State aware that one of the impacts of the benefit integrity project is that each month up to 80 disabled people lose their vehicles and have no means of transport? Does she regret that? Will she step in to stop it taking place?
  Ms Harman: I very much regret the fact that if it is decided under the benefit integrity project that people are not entitled to higher-rate mobility allowance, their Motability car is taken away, but that if the benefit is restored on review it is by that time too late because the car has gone. The hon. Gentleman raises an important point that disability organisations have raised with us. We are talking to Motability about it and are determined to sort it out.
  Mr. Blizzard: I welcome the extra safeguards that my right hon. Friend has introduced into the benefit integrity project to protect people when it appears that their benefit may be reduced or disappear under the project. Will she consider suggestions made by DIAL, the disablement information and advice line, that would result in fairness for disabled people under the project? For example, where additional evidence is required from a doctor, it suggests that the doctor concerned should interview the disabled person before responding, because doctors often do not know that person as, frequently, disabled people are not ill people.
  Ms Harman: My hon. Friend makes an important point. The Government have a responsibility to ensure that, when we pay benefit, those in receipt of it are properly entitled to it. However, we are also concerned that, in checking people's benefits, we do not take benefit away from people who are entitled to it. As I said to the hon. Member for Winchester (Mr. Oaten), giving it back later after review or appeal does not sort the situation out. We want to ensure that we get decisions under the benefit integrity project right first time. On 9 February, I introduced an extra safeguard so that no decision to reduce or remove altogether entitlement can be made simply on the evidence of the claimant; we should have a further check. We are always open to suggestions about how to ensure that that happens. It is our duty to ensure that recipients do not receive benefit to which they are not entitled but we must also do all that we can to make certain that we do not take away from disabled people income to which they are entitled and on which they are dependent.
  Mr. Boswell: Given that the Secretary of State has made much of the new safeguards, how many further such checks have been made and how many cases are outstanding? Is she satisfied that, after the safeguards have been implemented, there will be no more cases of inappropriate withdrawal of benefit?
  Ms Harman: We do not yet have a breakdown of cases after 9 February, but I shall let the hon. Gentleman know as soon as we do because of his long-standing interest in the issue. Two thousand cases have been reviewed following a benefit integrity project decision to reduce or altogether remove benefit. Of those, 500 have had benefit instaured. Those figures showed us that too many decisions were going wrong and that we had to put in the extra safeguard. We do not yet have the analysis of the outcome of reviews and the ratio of correct decisions after 9 February but the intention of that change was not only to make things look better or to assuage people's fears but to get a better quality of decision making. If that has happened, the number of people whose benefit is restored under review should fall because we would hope not to have taken away the benefit in the first place.
  Mr. Swinney: The House will welcome the 9 February announcement about improving decisions under the benefit integrity project. Before 9 February, many people had their benefit withdrawn and have lost appeals. I met one of those people at my surgery on Saturday in Brechin, a desperate lady who failed to secure an appeal. I suspect that, if her case had been examined after 9 February, she would have been in a much better position. Will the
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  Secretary of State undertake to re-examine all cases considered before 9 February where benefit was reduced? The problem is causing enormous hardship to many vulnerable people.
  Ms Harman: The objective of the 9 February change was to make the initial decision under the benefit integrity project more likely to be correct. We are trying to speed up reviews so that people do not have to wait 10 or 20 weeks before their cases are reassessed. As the hon. Gentleman knows, the rule for examining entitlement under the review involves considering legal entitlement and the evidence. The review is a second check. He knows that the appeal system is independent. Hon. Members will agree that we must check that people in receipt of benefit are entitled to it and that their circumstances have not changed in such a way that they are no longer entitled to it. We must ensure that the initial benefit review decision is correct.
  Dr. Iddon: I am sure that my right hon. Friend realises that those who are mentally ill and who have the threat of losing benefit hanging over them can experience special problems. Are any special instructions given to the benefit integrity project on the reassessment of people with those special difficulties?
  Ms Harman: MIND is one of the organisations that have been prepared to talk to us about how we can improve the initial letter that lets people know that there is a review process under way and tells them what their rights are in relation to that. There are clearly difficulties regarding people suffering mental ill health and we want to make sure that we work fairly by them. One of the problems is that, because we wanted the letter not to be alarming and frightening, the original letter notifying people that they were going to be reviewed lulled them into a false sense of security about what the process was about; as a result, people did not always bring forward the necessary information. A balance must be struck between letting people know what the exercise is about and not unduly scaring them. We are grateful to MIND and other organisations for working with us to try to get the situation right.

  Low-income Home Buyers
  Mr. Webb: What plans she has to improve the help given to low-income home buyers with their mortgage interest payments. [34051]
  The Minister for Welfare Reform (Mr. Frank Field)rose—
  Mr. Burns: Ah.
  Mr. Field: The hon. Gentleman says, "Ah"—
  Madam Speaker: Order. This is taking much too long. Members should put their questions briefly and Ministers should answer them briefly. The previous question, although an important one, took eight minutes, which was far too long. The hon. Member for Northavon (Mr. Webb) has asked his question and is waiting for an answer.
  Mr. Field: The best form of protection for all home owners is private insurance, and we are working with the

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  industry to develop better products and to improve take-up. We shall consider changes to the benefit arrangements as that work progresses.
  Mr. Webb: I am grateful to the right hon. Gentleman for that response. Is he aware that, when it surveyed unemployed people on income support, his own Department found that, whereas only one in six mentioned child care, one in three mentioned loss of help with housing costs in low-paid work? Does he accept that the lack of help with mortgage interest for people in low-paid jobs is a serious barrier to moving off welfare and into work? Does he have any plans to deal with that?
  Mr. Field: As the hon. Gentleman knows, the Government are reviewing welfare reform and will report on their findings on Thursday. The House should be aware that the scheme favoured by the hon. Gentleman, if it was modelled on housing benefit, would cost about £750 million. If there were £750 million spare, it would be interesting to see whether the House decided to spend it in the way the hon. Gentleman wants, or in other ways.
  Mr. Pike: Can my hon. Friend confirm that, as soon as MIRAS is changed next month, the benefits system will be changed to ensure that people are not put in difficulties with their interest payments?
  Mr. Field: As my hon. Friend knows, the payments made for mortgage interest are a tracking arrangement and we shall, in due course, take into account changes in the mortgage interest rate.

  Disability Benefits
  Mr. Winnick: If she will make a statement on the proposed changes to disability benefits. [34053]
  Mr. Denham: As announced in the Budget statement, we shall provide extra help for disabled people who want to work through the extension of the invalidity benefits linking rule and the removal of voluntary work limits from October this year. In addition, the transformation of disability working allowance into the more generous disabled person's tax credit from October 1999 will mean extra financial help for those who get a job.
  Mr. Winnick: Does my hon. Friend accept that the Labour party has always been the champion of the disabled? I hope that we shall always remain so. If he does, does he also accept that those who are disabled and not in a position to work should in no way be penalised and that there is no justification for means-testing or taxing the benefits received by the disabled? In that way, we could demonstrate our continued support for those who suffer disability.
  Mr. Denham: My hon. Friend is right to say that there will be those who are not able to work, but who are sick or disabled, and I can assure him that they have nothing to fear from this Government. The Government will always provide support for those in genuine need and, in the course of the welfare reform reviews that are taking place,
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  we shall look at the best ways to provide support for those disabled people who are unable to take opportunities to work.
  Mr. Gibb: Will the Minister now answer the question asked by the hon. Member for Walsall, North (Mr. Winnick) and say whether the Government intend to tax or means-test the disability living allowance?
  Mr. Denham: We have clearly set out the basis on which we are approaching welfare reform. We recognise the extra costs involved for those who have disabilities. In the course of that welfare reform, we must identify the right way of providing support for those who need it.

  Benefit Payments
  Mr. Simon Hughes: What is the average delay between applications for benefits and payment of benefits by agencies accountable to her Department. [34054]
  Mr. Field: This Department deals with over 20 benefits. There are 48 targets measuring performance on the clearance of new applications. We are currently achieving 90 per cent. of those targets.
  Mr. Hughes: That was a pretty obscure answer, but no doubt it can be pursued. Does the Minister accept that, whatever the general position may be, in some places there are huge delays between the application for, and the payment of, benefits? That can mean the loss of entitlement. I understand that the causes of delay are often overstretched staff, people off sick, posts unfilled and a 25 per cent. cut in finance. Does the Minister accept that one thing he could do would be to reinstate district office factors, so that terribly over-pressed offices, such as mine in south London, which have to deal with many asylum seekers, mentally ill people and other difficult cases, have the funding to deal with their heavy and difficult case load? That would allow such applicants to get their benefits as soon as anyone else.
  Mr. Field: If the hon. Gentleman writes to me, I shall consider that idea seriously.
  Mr. Burns: Would the right hon. Gentleman care to comment on the delays in the payment of winter fuel benefits to non-income support pensioners, who are having to wait up to nine weeks for what is becoming a summer supplement, not a winter fuel benefit? Would he also care to comment on the 9,000 pensioners on income support and living in residential homes who have erroneously received cheques—some of which have been cashed while others have not? Will the Government seek to claw back that money?
  Finally, on the question that the Secretary of State failed to answer last Thursday, is the Minister aware of the developing problem among some non-income support pensioners which has meant that, instead of couples receiving two cheques for £10 each, some are receiving two cheques for £20 in winter fuel benefits? What will the Government do to rectify that cock-up?
  Mr. Field: In answer to that eight-minute question, I should like to remind the hon. Gentleman that, probably

  15
  by the end of this week, all 10 million or so pensioners will have received their payments. Only 15,000 are still waiting to receive them. The benefit had to be introduced from scratch because the Opposition, when in government, did not think it important to deliver extra help in that way.
  When the hon. Gentleman was in government and the Government of the day used to come to the House waving pieces of paper, not a day went by when he did not get up and tell the House about how important those pieces of paper were—the most important, in fact, since the previous day. His approach to Government initiatives could not have been more constructive. Since going into opposition the hon. Gentleman has fallen among bad friends. I believe that his constituents would prefer the constructive Member whom they had representing them in the days when the hon. Gentleman sat on Government Benches to the person who has clearly become a whinger in opposition.

  Old-age Pension
  Mr. Corbyn: When she expects to announce the basis on which the state old age-pension will be calculated. [34055]
  Mr. Denham: We said in our manifesto that the basic state pension will be retained as the foundation of pension provision in retirement and be increased at least in line with prices. We are considering all aspects of the basic pension as part of our pensions review, which will report later this summer.
  Mr. Corbyn: Can the Minister confirm that, since the Conservatives broke the link with earnings in 1980, £11 billion has been taken out of pensioners' pockets; and that to reinstate the link would cost £500 million a year? Reinstatement would eliminate poverty among some people in retirement and reduce the pressure on those approaching retirement to take out expensive and inefficient private pensions instead of relying on state provision. Will the Minister ensure that the pensions review guarantees a return to the link with earnings which the Tory Government so cruelly broke?
  Mr. Denham: The pensions review is considering all those issues and we are consulting closely with representatives of pensioners' organisations—something that the Conservatives never did in their 18 years in government. Ahead of the outcome of the pensions review, the Government have taken the unprecedented step of making £200 million available for winter fuel payments this year, and will do the same next year.

  Cancer Treatment (Women)
  Dr. Gibson: What steps she is taking to ensure that women receive equality of treatment for ovarian and other cancers throughout the United Kingdom. [34056]
  Ms Ruddock: The Ministers for Women are deeply concerned about women's health and are routinely in contact with colleagues at the Department of Health. I am aware of a recent parliamentary meeting on ovarian cancer organised by my hon. Friend the Member for Brentford and Isleworth (Ann Keen) and concerns that were
  16
  expressed at that meeting about inequalities of treatment. My right hon. Friend the Secretary of State for Health has set out the Government's intention to improve the consistency of treatment for cancer in our White Paper "The New NHS".
  Dr. Gibson: I thank the Minister for that answer. She will be well aware that, each year, 6,000 people are diagnosed with ovarian cancer and 4,000 women die from it. Does she agree that clinical treatments should be equalised throughout the country, and that women should be provided with all the clinical options so that they can participate in decision making on the treatment? Does she further agree that, in the national health service, treatment with Taxol is not provided equally across the country, and that that is a sad indictment of the NHS internal market and the high cost of that drug?
  Ms Ruddock: Since the meeting that I mentioned, I have raised that issue with the Department of Health. That Department is aware of variations in cancer services, and the availability of drugs such as Taxol is one aspect of that variation. I understand that health authorities and trusts are working to remedy that, but we must leave them some discretion to tackle first what they regard as the most pressing local needs.
  People are, however, right to expect broadly similar services wherever they live. The White Paper guarantees that everyone with suspected cancer will be able to see a specialist within two weeks of a request by their GP for an urgent appointment, and that guarantee will apply to those suspected with breast cancer from April 1999, and to all other cases of suspected cancers from the following year.

  Pension Funds
  Dr. Julian Lewis: What representations she has received on the impact of the abolition of the advance corporation tax dividend on pension funds. [34058]
  Mr. Denham: A number of organisations with an interest in pensions have written about this matter.
  Dr. Lewis: Will the Minister encourage private pension fund managers to inform their pension holders by how much they must increase their monthly contributions to make up the shortfall in their pension funds—or would the Government rather keep their victims in ignorance, in the finest traditions of the late Robert Maxwell?
  Mr. Denham: That is a remarkable question from the party that was responsible for the mis-selling of personal pensions on an unprecedented scale. I make it clear that it is a responsibility of private pension providers to provide best advice to holders of their policies.
  The best thing that we can do for pension provision is to lay the basis for sound, sustainable economic growth, which achieves high levels of investment and produces the wealth from which all our pensions will be paid. I believe that both the Budget in July 1997 and last week's Budget will achieve just that.
  Mrs. Dunwoody: Is it not important that people are given accurate information about their pensions, whether

  17
  from the private or the state sector? Is my hon. Friend aware that it was a previous Labour Government who sent in the inspectors of Mr. Robert Maxwell and produced a report which said that, under no circumstances, should he ever be given any support, and that a Conservative City of London proceeded to lend him as many millions as he asked for?
  Mr. Denham: My hon. Friend makes an interesting point. I agree that it is important to ensure that people receive accurate information about their pension provision. That is why the Government have set up the pensions education working group to examine how to raise the level of awareness about financial and pensions information. I anticipate receiving that group's report in the next few weeks.

  Violence Against Women
  Ms Southworth: What plans she has for tackling violence against women. [34059]
  Ms Ruddock: The purpose—
  Ms Southworth rose—
  Ms Ruddock: I think that hon. Members are trying to follow your diktat, Madam Speaker, and make their questions rapid and brief.
  Madam Speaker: It also applies to Ministers.
  Ms Ruddock: I shall try, Madam Speaker.
  The purpose of the national strategy on tackling all forms of violence against women is to create a safer environment for women at home and in the outside world by working to eliminate all forms of violence against women and to empower women to challenge abuse. It will cover the safety of women in personal relationships, on transport, at work and in the community.
  Ms Southworth: Will my hon. Friend join me in welcoming the two-day conference that will be held in my constituency next month, when local agencies will meet to develop a community plan to take action against domestic violence? Does my hon. Friend agree that those kinds of partnerships are essential if we are to deal with domestic violence, which is an abhorrent crime in which the perpetrators attempt to intimidate the victims so that they are too afraid and ashamed to speak out? Can my hon. Friend confirm that the Government will speak out on behalf of the victims and will root domestic violence out of our society?
  Ms Ruddock: I thank my hon. Friend for her question. I confirm that the Government are absolutely clear about the fact that domestic violence must be stamped out. I certainly commend the conference to which my hon. Friend referred and I commend partnerships. I recently witnessed an excellent partnership in Norwich involving the local authority and the housing department, which have worked with the police to enable a community care alarm provision for the elderly to be used also by victims of violence. There are many good practices out there from which we can all learn.
  Mr. Brazier: I welcome the Minister's earlier answer. Will she confirm that one form of domestic violence that
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  is even more common than violence against women is domestic violence against children? Will she reassure the House that children, who have no votes or voices, will be included in the Government's consideration of domestic violence issues?
  Ms Ruddock: The hon. Gentleman is absolutely right: the whole Government are deeply concerned about all aspects of child abuse. When we examine domestic violence—which is categorised as violence affecting adults—we also take into account the effects of such violence upon children. The hon. Gentleman is correct to believe that we are building that consideration into our strategy of concern. My colleagues across government are also paying particular attention to all aspects of child abuse, which we wish to see removed from our society.
  Lorna Fitzsimons: Although we acknowledge the insidious crime of domestic violence, it is important that the Government strategy makes people aware that our priority is not only domestic violence but all forms of violence against women. Will my hon. Friend tell us something about the cross-departmental workings that are going on to ensure that women can participate fully in the home, in the world of work, on transport and in the community without the fear of violence?
  Ms Ruddock: I reiterate that the strategy that we are developing seeks to combat all forms of violence against women, including violence against women on transport. In terms of cross-Government working, I assure my hon. Friend that the women's unit and the Ministers for Women are having key input into the co-ordinated transport strategy document being developed by our colleagues in the Department of the Environment, Transport and the Regions. It is essential to put women's concerns into all aspects of Government policy. We know that women fear violence when travelling on public transport and we hope that we can do much to make it safer for them in reality while addressing their real fears.

  Winter Fuel Payments
  Mr. Baldry: What percentage of those entitled have received their full entitlement of help towards winter fuel costs. [34061]
  Mr. Denham: Winter fuel payments have been an enormous and unprecedented exercise involving the issue of almost 10 million payments to more than 7 million pensioner households. As of today, payments have been dispatched to more than 99 per cent. of eligible pensioners. About 15,000 payments remain to be issued over the next few days.
  Mr. Baldry: I am sure the Minister will agree that, until recently, the scheme was a bit of a shambles, with large numbers of payments being made very late in the day. After all the problems this year, can he give the House an undertaking that, if the scheme continues for a further year, it will run more smoothly next year?
  Mr. Denham: I do not agree that winter fuel payments have been a shambles. They have been a great success. The Opposition did nothing to provide pensioners with help with their winter heating bills over 18 years in office.

  19
  The winter fuel payments will be made again next year, and we shall examine the procedures to see what, if any, lessons can be learnt from this year's successful exercise.

  Pensioner Incomes
  Mr. Dismore: What assessment she has made of inequality in pensioner incomes. [34062]
  Mr. Denham: We want today's and tomorrow's pensioners to enjoy security in retirement. Income inequality between the best and worst-off pensioners has grown since 1979, and estimates show that that inequality is set to widen in the future.
  Mr. Dismore: Is my hon. Friend aware that a quarter of pensioners are on income support, and that pensioner
  20
  poverty is a serious problem, particularly in Burnt Oak and Colindale wards in my constituency? Next week, I am due to visit a pensioners luncheon club. Can my hon. Friend tell me what progress I can report to those pensioners when I meet them?
  Mr. Denham: A quarter of pensioners are entitled to income support, but many of them are not receiving it. That is why, next month, we are launching nine pilot projects using the most up-to-date computer data techniques to identify those pensioners. We shall work with local authorities and local voluntary organisations to find the best ways of encouraging them to do so. I hope that, on my hon. Friend's visit to the lunch club, he will raise awareness of the Government's action for the poorest pensioners.

Police Complaints and Discipline
3.31 pm
The Secretary of State for the Home Department (Mr. Jack Straw): With permission, Madam Speaker, I wish to make a statement about the Government's response to the Home Affairs Committee report into police disciplinary and complaints procedures. I am placing in the Library a copy of the response to each of the Committee's conclusions and recommendations. I thank all members of the Committee for the thoroughness of their work.
I begin by praising the honesty and integrity of the vast majority of police officers in this country. Their job is a difficult and dangerous one. As a society, we make huge demands of them. We have a police service that is one of the finest in the world.
The reputation of the service is put at risk, however, by a very small minority of officers whose behaviour falls below the standards that the public rightly expect. The actions of those officers undermine the work of honest officers, and shake public confidence in the service as a whole.
I am therefore determined to give the police service the powers it needs to deal effectively with that small but corrosive minority of bad officers. The Home Affairs Committee's report made a compelling case for change. I am announcing today the steps that I am taking to implement most of its recommendations.
A debate on reform of these procedures has been going on for five years, since the previous Government launched a consultation paper in 1993. At the heart of that debate has been the issue whether arrangements in the service should be brought more into line with normal employment practice in other fields. The burden of the Home Affairs Committee's report is that they should.
The time has come for the Government to take decisions on the report's recommendations and to act upon them. I have been helped in this by the constructive and professional approach adopted by the Police Federation, the Police Superintendents Association and the Association of Chief Police Officers.
One illustration of this approach is the widespread agreement already achieved with the staff associations that the police need new procedures for tackling poor performance by individual officers, and procedures that are separate and different from those needed to deal with disciplinary matters. I accept the Committee's recommendation that the new procedures should be introduced without delay.
Let me deal first with procedures for discipline. First, I have decided that the standard of proof in disciplinary cases should be changed from the criminal to the civil standard. I am alive to the argument that some officers might be less likely to tackle criminal behaviour through anxiety that this change could leave them vulnerable to unfounded or malicious complaints. However, the civil standard of proof has operated fairly in the police service in Scotland, and there is no evidence that this has undermined officers' effectiveness there.
Moreover, I have every confidence that, with this change, police officers as a group will continue to act in the public interest. Nevertheless, I am discussing with the
22
police associations the possibility of conducting attitudinal research to monitor the effect of the change among police officers.
There are circumstances in which conduct may constitute a breach of discipline although it has not been proved to be a criminal offence. However, at present an officer acquitted of a criminal offence may not be charged with an equivalent disciplinary offence, principally because the standard of proof is the same in criminal and in disciplinary proceedings. In future it will be possible for officers to face both disciplinary and criminal action on the same facts. This will bring the police into line with the position of most others in the public and private sectors.
I am also accepting the Committee's recommendation to end the "right of silence" of officers in disciplinary hearings, and to apply the same modified caution as laid down in the Criminal Justice and Public Order Act 1994.
At the moment, officers who face the loss of their job or rank as a result of a disciplinary proceeding are entitled to legal representation at all stages of formal disciplinary action. The Committee recommended that this right should be maintained only for those officers who are at risk of losing their jobs.
However, I have decided to retain the status quo, so that officers facing reduction in rank also retain their right to legal representation. In addition, I am rejecting the Committee's recommendation that discipline hearings should be held in public—although the public have a right to know the outcome of proceedings, it would in my view be manifestly unfair to officers facing discipline to have their cases dealt with at a public hearing.
For the most serious cases, the Committee recommended that chief officers should have available to them a system of "fast track" dismissal. I have decided to accept this recommendation. This system will need detailed and careful work before it can be ready for implementation. There will be discussions with the police staff associations about the appropriate procedure. The fast-track procedure will be within a framework of a fixed timetable of no more than six weeks from beginning to end. The procedure would include the right to legal representation and the right of appeal. Officers will be able to be suspended from duty immediately, as is the case now.
There is one serious defect in the present practice that causes very great public concern. This is where a police officer's retirement on ill-health grounds is agreed before disciplinary proceedings can be completed, thus ending all prospect of disciplinary action against an officer. As the House knows, the inability to complete disciplinary hearings after the Hillsborough disaster has quite rightly been a cause of great anger and frustration to the families of victims.
The procedures will therefore be strengthened so that where accused officers claim that they are unable, through ill health, to appear at disciplinary hearings, matters can be decided in their absence, but with appropriate safeguards. I shall also be securing a rigorous application of the existing regulations so that any outstanding disciplinary matters have to be completed before any application for early retirement can be considered.
I intend to take firm action against officers convicted of criminal offences connected with their work. At present, police authorities may apply to me for a

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certificate to forfeit the pension of any such officer, but this is at their discretion. In future, police authorities will be asked to refer all such cases to me automatically. It is abhorrent that public money should be paid out to those very few officers who are convicted of criminal offences and who abuse their position of trust.
It is my aim to introduce all these changes in England and Wales with effect from 1 April 1999. As the Northern Ireland discipline regime mirrors the one for England and Wales, I have consulted my right hon. Friend the Secretary of State for Northern Ireland on my response. My right hon. Friend agrees with my proposals, and will be implementing them in Northern Ireland.
Let me turn now to the Committee's recommendations on complaints, which need to be considered separately. Independence and openness are the key to greater public confidence in the police complaints system. The Committee's proposals point the way forward. However, some of its proposals require legislation, and many have significant resource implications. Against that background, I intend to make progress on those changes that do not require primary legislation.
I accept the Committee's recommendation that the Home Office should conduct a detailed feasibility study of different arrangements for an independent police complaints investigation process. I also accept the Committee's view that, in the absence of a totally new investigative body, fundamental changes to the complaints process would be premature, but that, in the meantime, the Police Complaints Authority should make robust use of its existing powers.
I accept in principle the Committee's recommendation that the PCA be given the powers and the funds to commission independent investigations in cases where there is reason to believe that the existing process is inadequate. However, that would involve significant extra costs, which I am afraid make early change here unlikely.
The Committee recommended that either the PCA or any other independent review body should be able to undertake investigations whether or not the matter has been the subject of a complaint. In the light of this, I am minded to propose that, as Home Secretary, I should be given a power to request or require the PCA to initiate and oversee such investigations where this is in the public interest.
Many people make a complaint about the police, which, for one reason or another, is not then recorded. The Committee proposes a relatively straightforward change to the recording of complaints, which would make the current system more responsive to public concerns. It suggests that all representations that could constitute a complaint should be registered by the police, with a right of appeal to an independent body for the complainant where there is a disagreement; and that it should be possible for a complaint to be registered directly with the PCA in certain circumstances. I accept those recommendations.
I have considerable sympathy with the criticism of the Committee that the existing arrangements are not sufficiently open to public scrutiny. The Committee therefore recommended that investigating officers' reports should be subject to disclosure on the same basis as other documents relating to a complaint. It also recommended
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that investigation files relating to deaths in custody should generally be made available to the deceased's family before inquests.
Those recommendations raise difficult issues. The reports of investigating officers form a class that the courts have ruled is entitled to public interest immunity, although the police can be directed to disclose a report where a court is satisfied that the public interest of disclosure would outweigh the public interest of preserving confidentiality.
On inquests, the High Court has held that a person is not entitled in advance of the inquest to see copies of statements provided by the police to coroners. At the moment, the release of such documents is at the discretion of the police, but I accept some of the Committee's criticisms, and I am therefore giving further consideration to the scope for changes in this area.
My detailed response to the Committee deals with other confidence-building changes that it has recommended. Some of the recommendations on the complaints system that I have accepted will require primary legislation. The Government will look for suitable opportunities to introduce such changes. Much detailed work and consultation is required with ACPO, the police staff associations, the Association of Police Authorities, and other interested parties. This further work and consultation will begin straight away.
In considering the Committee's recommendations, I have paid full regard to the implications for all police officers who every day fight crime and disorder, and who protect the public. I have no intention of making police officers more vulnerable to malicious complaints about the way in which they do their jobs; but, equally, we must deal robustly with wrongdoing by a very small minority of police officers if public trust is to be preserved. Uppermost in my mind has been protecting the deservedly high reputation and standing of the police service as a whole.
In this country, we police by public consent, and that consent depends on public confidence and trust. The measures that I have announced today will strengthen the people's trust and confidence in their police service, and I commend them to the House.
Mr. James Clappison: I am grateful to the Home Secretary for letting me have a copy of his statement in advance. As I think he already knows, my right hon. Friend the Member for North-West Cambridgeshire (Sir B. Mawhinney), the shadow Home Secretary, is unable to be present because he is at a funeral.
Before making a number of detailed points, let me ask the Home Secretary whether he agrees that the overwhelming majority of our policemen and women are honest, decent and brave, and that they are as anxious as anyone for the small minority whose conduct falls below the required standard to be dealt with effectively.
Is the Home Secretary satisfied that the new arrangements following the change from a criminal to a civil standard of proof in disciplinary cases will contain sufficient safeguards to protect honest and decent police officers from unfounded and malicious complaints? In particular, is he satisfied that there will be sufficient safeguards in cases in which serious allegations have been made, and in which serious sanctions could follow? Will

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the same standard of proof—which is now to be the civil standard—apply in both the less serious and the more serious types of case? What will the position be in cases that could lead to criminal charges?
The Home Secretary has said that he is alive to the risk that some officers might be less likely to tackle criminal behaviour through anxiety as a result of the changes that he has announced today. Will the research into attitudes to which he referred take full account of that, and will that research be wide-ranging and cover each of the 43 police forces? Does the Home Secretary accept that there is a difference between criminal behaviour on the part of an officer and inadequacy on the part of an officer in the face of a particular situation, and does he agree that the disciplinary procedure should reflect that? On the fast-track procedures, will regard be given in future to the need not to prejudice a criminal trial when such procedures are operating? There is also the question of retirement on ill-health grounds before disciplinary proceedings. Will it be possible for disciplinary hearings to be held under existing arrangements when an officer cannot be present as a result of ill health?
If hearings can be held under existing arrangements, will the Home Secretary tell us exactly what changes he is proposing? Will he also say whether any of the measures that he proposes will have an effect on police officers' own pension contributions? Will he tell us what will be the remit of the feasibility study for an independent complaints process, and whether its report will be published?
Finally, does the Home Secretary agree that, in seeking to deal with corrupt and bad police officers, we should never lose sight of the need to protect good and honest police officers, who form the vast majority?
Mr. Straw: I entirely accept that the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney) cannot be present because he is attending a funeral. I also entirely concur—as was suggested by my opening remarks—with the opening and closing observations of the hon. Member for Hertsmere (Mr. Clappison) about the high levels of probity among the vast majority of police officers. The changes in the disciplinary process are needed to protect not only the public, but through officers.
The hon. Gentleman asks eight specific questions; I shall deal with them as quickly as I can. Will there be sufficient safeguards to insure against unfounded malicious complaints that lead to disciplinary action? Yes, I believe that there will be. One of the matters that the Select Committee considered is whether there should be a new offence of making a malicious complaint, but it decided against that. The associations, which made the suggestion, are not especially enthusiastic about it, although I have already told them privately that if they can make a strong argument in the light of experience, I shall consider it. The vast majority of investigations that lead to serious disciplinary action being taken against police officers are not promoted by complaints from members of the public, but arise through internal investigations by the police.
The hon. Gentleman asks whether the burden of proof would be the same in serious, less serious and more serious cases. Yes, it would be but the application of that burden of proof in practice will be higher the more serious the case, because that is the way in which tribunals operate.
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The hon. Gentleman also asks whether the research into attitudes, which we are discussing with the police associations, would take full account of the anxieties of police officers—yes, it would. He also asks whether it would examine practice in all 43 forces. I doubt whether that would be possible, because it would inevitably be a sample survey, but we shall cover as much of the country as we can.
The hon. Gentleman asks whether I accept that there is a clear distinction between criminal behaviour by a small minority of officers and officers' inadequate conduct in the heat of circumstances. I accept that. One of the changes that the associations have already embraced is a need to deal with poor performance in a separate way from disciplinary processes.
The hon. Gentleman asks whether the fast-track procedure should be set up in a way that should not prejudice criminal trials. That will be a sine qua non of using that procedure. Disciplinary action that leads to the dismissal of an individual but does not prejudice a subsequent criminal trial can be taken in many other walks of life, such as the Prison Service and the police service in Scotland.
The hon. Gentleman asks whether existing arrangements provide for the hearing of cases of officers who are absent on grounds of ill health. In practice, they do not. I shall write to him about whether the small print provides that they should, but, whatever it says, the truth is that at the moment officers can evade proceedings on disciplinary grounds if they put in a sick note.
The hon. Gentleman asks whether the feasibility study into complaints will be published. I intend to publish as much of it as possible.
Mr. Chris Mullin: I welcome my right hon. Friend's statement: rarely has a Select Committee report been responded to as swiftly and as fully as this one. Will he accept from me that this is a good day not only for those of us who care about upholding public confidence in the police, but for the Select Committee system as a whole?
It is now up to chief officers robustly to use the new disciplinary powers that they have been given and not, as some have in the past, to fail to use the powers at their disposal when they should have done.
I was not sure what my right hon. Friend was saying on complaints, but one of the difficulties presented to us during our investigation was that chief constables occasionally refused to refer a complaint to the Police Complaints Authority: the authority wanted to pursue a complaint, but it was hamstrung. Is my right hon. Friend saying that he will allow the PCA to pursue complaints that it deems should be pursued?
Mr. Straw: I thank my hon. Friend, who is the Chairman of the Select Committee, for his remarks. I pay tribute to members of the Select Committee for their work, but I particularly want to pay tribute to my hon. Friend. I entirely share his view that this is a good day for the Select Committee process.
In 1979, the Leader of the House, Mr. St. John-Stevas, as he was then, proposed the establishment of the departmental Select Committee. There was some scepticism about whether the process would advance the work of the House. I am in no doubt that it has, and this

27
report shows that a Select Committee is far better placed than an interdepartmental inquiry to bring out the issues that are central to the problem of police complaints and discipline. It is a good example of Parliament and Government working together.
I assure my hon. Friend the Member for Sunderland, South (Mr. Mullin) that I shall urge chief officers to use these powers robustly. The Police Federation has said that chief officers have not used some of their present powers robustly, and that is a fair criticism. They have the power not to allow retirements on ill health until disciplinary processes have been completed. Too often, they have taken the easy way out and have got rid of a bad apple by allowing him to retire early: they must stop doing that.
My hon. Friend asked whether the Police Complaints Authority will be able, of its own volition, to initiate an inquiry if a chief officer fails to pass a case on to the authority. I propose that the Home Secretary of the day should be given the power to direct the PCA to initiate an inquiry in such circumstances.
Mr. Richard Allan: The Liberal Democrats welcome the Select Committee report, and are pleased that the Home Secretary has responded to it so positively. Will he explain how he plans to widen access to the findings of the complaints procedure?
My hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) and I expressed concern about the use of public interest immunity to block a recent report into the goings-on at Harrogate police station after allegations of serious sexual harassment. Does the Home Secretary share our view that greater rather than less access is in the public interest? Will he rectify the current situation whereby large amounts of taxpayers' money are spent but no findings are published?
Will the new restrictions on retirement and ill health apply to all ranks, including the most senior? Some of the more controversial cases in recent years have involved senior ranks up to chief constable. Will they be subject to the same rules? Will the Home Secretary consider putting in place a mechanism whereby junior officers can raise issues of concern about the use of the lower burden of proof? We share the Committee's view that the lower standard of proof is appropriate, but junior officers have a legitimate concern about possible abuse by senior officers. Does the Home Secretary plan to offer junior officers a way to raise such concerns?
I hope that the Home Secretary shares our view that the outcome of these changes should be an increase in the morale of the police by sorting out the odd few bad apples, and an increase in public confidence, which should be a good measure of whether the system is effective. People should go through the formal procedure rather than resort to the civil courts, as they have increasingly been doing.
Mr. Straw: I thank the hon. Gentleman for his support for my statement and for the work of the Select Committee.
I am giving further consideration to the complicated problem of providing greater public access to the findings of the complaints procedure. People who are subjected to the disciplinary process have rights, which is why the
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courts have taken the view that public interest immunity should apply to them as a class, save if a court decides that PII should not apply in the interests of justice.
We are considering whether, under the Freedom of Information Bill, some of the constraints on the publication of reports by the Police Complaints Authority should be lifted. I shall inform the House of my conclusions at a later stage.
The new proposals will apply to ranks up to and including the rank of chief superintendent. Discipline of ACPO ranks—chief officers—are dealt with by police authorities. I accept that there may be some implications for police authorities, and we shall discuss those matters with the Association of Police Authorities, the Association of Chief Police Officers and the new staff association for chief officers, whose new acronym I forget.
The hon. Gentleman asks whether I accept that police officers may have some legitimate concern about the way in which the new process, particularly the lowering of the burden of proof, will work. I accept that there is some concern, and I have discussed that with the Police Federation. I hope that, over time, the concern is allayed. It has not been a problem for the police service in Scotland, or within the Prison Service. Even after a chief officer's disciplinary finding, there is a careful, two-stage appeal process, first to an independent tribunal and then to the Secretary of State himself.
Lastly, the hon. Gentleman asks whether I believe that the changes will raise police morale. Yes, I firmly believe that, because police morale and the dedicated, hard-working majority of officers are severely and disproportionately damaged by the work of a bad minority.
Mr. Kenneth Clarke: Is the Home Secretary aware that the only occasion on which I received a certain amount of barracking from a small section of the audience at a Police Federation conference was when I announced proposals on police discipline that were exactly the same as those that he has announced? Would he not be deterred by that, because I think that, in the many years that have followed, opinion has moved yet further, and that the vast majority of honest, hard-working police officers in the federation and elsewhere will accept that the proposals will enhance the already high reputation of the police service and not be a threat to it?
Has the Home Secretary firmly decided beyond further consultation that the possibility of disciplinary proceedings following acquittal on a criminal charge will proceed? It must be right to say that the facts that might demonstrate innocence on the criminal charge could still illustrate conduct that falls far below that which is expected of a serving police officer. It must be right for chief constables to consider that.
As many cases can give rise to criminal proceedings against a police officer or against a complainant and to possible disciplinary proceedings against a police officer, following his earlier reply, would the Home Secretary say that, in all ordinary circumstances, it must be right for the question of criminal prosecution and criminal proceedings to be disposed of altogether before any disciplinary proceedings start? It is difficult to conceive how, under the fast-track procedure or in any other way, criminal proceedings might not be prejudiced by findings at a

29
disciplinary proceeding to the disadvantage of either the officer or the cause of justice if the complainant benefits from a rather abrupt disciplinary hearing.
Mr. Straw: I pay tribute to the right hon. and learned Gentleman for his work on this matter. I am sure that the robust line which I have no doubt he took in dealing with this matter before the Police Federation some five or six years ago has helped to open up the debate. It is a matter for regret that, although his successor as Home Secretary initially endorsed the position that the right hon. and learned Gentleman when he was Home Secretary set out in a speech to the Police Superintendents Association in September 1993, he later backed off from making those changes. Some of them could have been introduced some time ago if it had not been for that.
The right hon. and learned Gentleman asks whether I accept that the changes may result in officers being dealt with under the disciplinary process although they have been acquitted by a criminal court. The answer is that, by changing the burden of proof, that must be the case. In some instances, officers either will not be proceeded against on a criminal charge because of the Crown Prosecution Service's view of the evidence, or will be proceeded against and acquitted but may still, rightly, be found guilty under a disciplinary process.
The right hon. and learned Gentleman asks whether I accept that, in all but the most exceptional cases, the criminal trial should be dealt with before any disciplinary processes are disposed of. I do not accept that. It depends on individual circumstances. It is rare for a police officer to face a charge of dishonesty, except in grave circumstances, and I am advised by the chief officers concerned that, in many such cases, it is essential for the officers to be dealt with, disciplined and away from the police service before the inevitably much longer criminal processes take their course.
However, I have made it clear that it is self-evidently critical that disciplinary processes in these circumstances would precede a criminal process only where the Crown Prosecution Service has taken the view that subsequent court proceedings would not be prejudiced.
Mr. Robin Corbett: I welcome my right hon. Friend's statement. Does he agree that the big difficulty is that the police are still seen to be investigating complaints themselves? I urge him to drive on as quickly as possible with measures to enable a more independent Police Complaints Authority to handle these matters sensibly, fairly and effectively, to attract the support of both police and public.
Mr. Straw: I certainly accept that part of the problem with the perception of the existing system is that the police are seen to be investigating themselves. This is a system that has grown up. It has been the subject of criticism by the Select Committee on Home Affairs, by hon. Members on both sides of the House and, it is fair to say, by the Police Federation, which represents the majority of officers, who also want an independent investigative process.
That said, my experience is that, precisely because the police investigate themselves, they conduct almost all these investigations with great rigour and considerable independence. However, there remains the problem of public perception.
30
It is for that reason that I have undertaken to conduct the feasibility studies to find out ways in which we can inject greater independence into the process of investigation of serious matters. I do not think that there is any case for greater independence in the process of investigating less serious matters, which, in other walks of life, are dealt with by internal management in any case.
My hon. Friend calls for a more independent PCA. The PCA is robustly independent. The issue is not its independence, but the independence of the investigative process itself.
Mr. Douglas Hogg: I welcome the Home Secretary's statement, and agree with much of it. However, may I direct the right hon. Gentleman to two issues: the balance of burden of proof, and pensions? Does he accept that, in serious cases, there must be great concern if the burden of proof is the civil one rather than the criminal one? Will he please look at that again?
Does the right hon. Gentleman accept that, although it is right that forfeiting a pension entitlement should be considered when a police officer is convicted, it is also right that the rules of proportionality should be observed, and that pensions should not always be forfeited; that should happen only in serious cases? Will he deal with the question asked by my hon. Friend the Member for Hertsmere (Mr. Clappison) on a police officer's contributions? Those are contributions that the police officer has made. Are they to be forfeit as well? That would seem to be a form of expropriation.
Mr. Straw: I do not accept the right hon. and learned Gentleman's view that there will be great concern about the change in the burden of proof. I know that he took a different view when the matter came before the Select Committee. I think that, overwhelmingly, the advantage is in changing the burden of proof. There is no question of that in my mind. The only result of the present very high burden of proof is that police officers who are obviously guilty of the most serious corrupt practices are able to get away with their crimes—and crimes they are.
However, I have already said that I accept that there are anxieties among police officers. We will monitor the case. We will discuss how to do so in a positive way through attitudinal research, the terms of which we will agree with the police associations.
On the issue of forfeiting pensions, the right hon. and learned Gentleman asks whether I accept that the rules of proportionality should apply. Yes, of course I do. The sorts of case that we are thinking of are those in which police officers have been convicted of very serious corruption charges. In those circumstances, I do not believe that it is right for such officers to go on drawing pensions at public expense even while they are still in prison. That is unacceptable and has to end, but what I am talking about—to answer his third question—is that part of the pension that has been provided at public expense, not that part of a pension that is being provided out of the deferred salary of the police officer himself or herself.
Helen Jones: I welcome my right hon. Friend's reference to the tragedy suffered by the families involved in the Hillsborough disaster. Does he

31
accept that one of the greatest griefs felt by those families is that one of the senior police officers involved was able to avoid disciplinary proceedings by retiring? Can he assure the House that that will not happen in similar cases in future? Will he take this opportunity to deal with the concern of those families that what he is introducing today cannot be made retrospective?
Mr. Straw: As I said in my statement, I accept that the families and friends who lost loved ones at Hillsborough are right to be angry about the fact that disciplinary proceedings were avoided by an early retirement. That matter is made even worse because the regulation that exists today, and which I believe existed eight or nine years ago, gives police chiefs a discretion not to allow a retirement in such a case. Therefore, I am not changing the regulation: I am ensuring its rigorous enforcement.
My hon. Friend asked why I could not make the changes retrospective. It is a fundamental principle that new criminal or disciplinary proceedings cannot be imposed retrospectively. It would not stand up in a court here, where it would plainly be seen as an abuse of process; nor would it stand up in the European Court of Human Rights in Strasbourg.
Mr. Tim Boswell: Further to the exchanges about Hillsborough, and as the right hon. Gentleman made it clear that the start date is to be 1 April, will he clarify whether any new disciplinary cases opened after today, which relate to alleged offences that have either already taken place or that take place before the start date, will be covered under the old procedures for burden of proof?
Mr. Straw: I think that the hon. Gentleman may have misheard me. The start date is 1 April 1999, not 1998. There is a great deal of work to be done to ensure that the regulations are properly drafted. I wish that we could begin before that date, but we cannot. I will write to the hon. Gentleman in detail about the point at which the start date will come into operation. My anticipation is that it will operate from the point at which a disciplinary offence is committed.
Mr. John McDonnell (Hayes and Harrington): My right hon. Friend may be aware that I have tabled a number of questions about disciplinary procedures in each police authority, asking for information on the number, the duration, the cost and the outcome, including any early retirements by any officers involved. Is my right hon. Friend aware that there has been some concern about the number, the duration, the cost overall, and the lack of outcome from those inquiries? That is why I welcome the proposals that he has announced today.
Does my right hon. Friend accept that the number of police inquires are a direct reflection of a failure in management? What measures will be put in place to strengthen management within the police service to accompany the reforms?
Mr. Straw: I share my hon. Friend's concern about the lack of outcome in quite a number of the inquiries. They can be enormously disproportionately expensive, continue for years, tie up huge numbers of officers, and then produce no outcome. No one is satisfied with such a process.
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The issue of management is a bit of a chicken and egg situation. Managers in the police service, from sergeants upwards, know that bad officers can plead a right of silence that is now far more comprehensive than that available to their criminal suspects. They also, rightly, have very good legal advice made available to them. Therefore, they can give the run-around to managers, especially those who may not be at the highest level. In some forces, that has led to a management retreat from taking on officers who are corrupt or who operate below the standards expected of them.
It is my hope and anticipation that these changes will strengthen the management of the police service at every level, and I certainly intend to ensure that that happens.
Mr. Nicholas Soames: In joining the Home Secretary in congratulating the Home Affairs Select Committee on its excellent report, may I ask him to draw to the attention of the Prime Minister and the Leader of the House this rare occasion on which a Select Committee report has been dealt with so promptly, to the added credibility of the Select Committee system and its importance in holding the Executive to account?
Will the right hon. Gentleman also explain how, given the fact that disciplinary hearings have rightly been held in private, matters will enter the public domain so that those who have made the complaint will know the results of that complaint?
Finally, will the regulations apply to the Ministry of Defence police as well?
Mr. Straw: I shall pass on the hon. Gentleman's point about Select Committee reports to my right hon. Friend the President of the Council. Meanwhile, I concur with his congratulations to the Select Committee and—if I may say so—I accept his congratulations to myself.
The hon. Gentleman asks how complainants will know what has happened to the complaint; as happens now, they will be written to. He also asks whether the public will be able to attend disciplinary hearings against police officers. That does not happen in any other employment cases, so I thought that it would be unacceptable to apply it to the police.
It is worth drawing to the attention of the House the fact—if I may repeat it—that the overwhelming majority of disciplinary cases, particularly those involving serious allegations against police officers, have not arisen as a result of a complaint either by a suspect or by members of the public: they have arisen as a result of internal investigations by the police. The hon. Gentleman asks whether the changes will apply to the Ministry of Defence police. No, they will not specifically apply to them, but I shall certainly draw his remarks to the attention of my right hon. Friend the Secretary of State for Defence.
Maria Eagle: I welcome my right hon. Friend's statement, but I think that he said that the police force involved in the Hillsborough tragedy could have required the senior officer responsible to undergo the disciplinary proceedings that he was finally spared by retiring on the ground of ill health. If my right hon. Friend encountered such a situation in future and felt that a senior officer had been let off the hook, what steps would he

33
take, or be able to take, to ensure that the senior managers of the force discharged their responsibility in carrying out disciplinary proceedings more fully?
Mr. Straw: I hope that, following the changes that I have announced today—they will come into force on 1 April next year—such a circumstance will not be able to arise. We are tightening up the regulations and imposing much clearer guidance, both on police authorities and on chief officers, about the operation of the disciplinary procedures.
Mr. John Wilkinson: I add my appreciation to that of other hon. Members of the Home Secretary's endorsement of the majority of the Select Committee's recommendations on the enhancements of police discipline and performance in the service.
In the concluding remarks of his statement, the right hon. Gentleman said that consent in policing depends on public confidence. Is he absolutely confident that, when the new police authority for London is established, the Commissioner of Police of the Metropolis will receive the full political backing that he will require to take on some of the tough cases of corruption that we know exist in the Metropolitan force? Currently, that backing is provided by the Home Secretary in person, who is answerable to the House of Commons.
Mr. Straw: I am quite sure that the police authority for London will give the Commissioner of the day full backing for the investigation of any complaints against individual police officers on disciplinary matters. The hon. Gentleman uses the phrase "full political backing". I make it clear to him that chief police officers have duties that are entirely separate from those of police authorities in disciplinary matters up to and including the rank of chief superintendent.
Chief officers across the country decide to initiate proceedings—or have them initiated—against members of their forces not on political grounds, but on the basis of the evidence that is put before them. I have no doubt whatever that that will continue to be the case in the Metropolitan police district.
Mr. David Winnick: Does my right hon. Friend recall that, in the past year, the Commissioner of Police of the Metropolis and the chief constable of the West Midlands both stated that they were unable to deal with dishonest and corrupt police officers under the present circumstances?
I welcome the announcement that my right hon. Friend has accepted a change in the disciplinary system. Does he agree that it will be welcomed not only by chief constables but by the vast majority of honest police officers—the very people he mentioned—who are ashamed of having in their ranks the small number of corrupt and dishonest officers who are rotten to the core, and that the sooner the bad ones go, the better it will be for the police, good order and the community as a whole?
Mr. Straw: My hon. Friend is quite right to draw to our attention the remarks of a number of senior chief officers who gave evidence to the Select Committee, including the current Commissioner of Police of the
34
Metropolis, Sir Paul Condon, who complained about the inadequacies of the present system. He said
"The system must allow for the effective investigation and punishment of wrongdoers"
within the police service.
My hon. Friend was also right to say that the changes will be welcomed by police officers of every rank. The issue reminds me of the situation with teachers: the people who suffer most from bad teachers are the overwhelming majority of good teachers. Those who suffer most, alongside the public, from bad police officers are the overwhelming majority of good police officers.
Mr. David Heath: I welcome the Home Secretary's statement. Does he recognise the role of police authorities in assuring, in the public interest, the probity and rigour of the complaints and disciplinary procedures? Will he consider the value as a tool of police management of assessing the pattern and number of complaints, whether substantiated or not, against individual officers or units of command?
Mr. Straw: I certainly recognise the importance of police authorities in ensuring that adequate procedures are established for dealing with discipline and complaints within their services. I acknowledge that the pattern and number of complaints may be an indicator of a police force's performance, but such figures should be used with care, because the number of complaints arising in a difficult-to-police inner-city area is always likely to be higher than in quieter, more rural areas, and that is no criticism of the police concerned.
Several hon. Members rose—
Madam Speaker: Seven hon. Members are rising who have been doing so for a long time. If we can proceed without repetition and with a little speed, I should like to call them all.
Gillian Merron: I welcome my right hon. Friend's clear and pragmatic statement, and in particular his commitment to greater openness, which, as he will know, is a big issue in Lincolnshire. I discussed that issue at a recent meeting with him arising from the case of Inspector Dena Fleming, who alleged sex discrimination against her employers and was suspended for two years on disciplinary charges that were subsequently dropped, following a report by Humberside police that remains under wraps, and an industrial tribunal ruling of victimisation.
Will my right hon. Friend give me some assurances about the fast-track dismissal proposals, especially when victimisation is involved, as Inspector Fleming might have had more of a struggle to clear her name had the chief constable had the opportunity to dismiss her earlier?
Mr. Straw: I understand my hon. Friend's concerns. As she said, they have already been the subject of a meeting between us. The proposal for fast-track dismissals is not for the kind of case that she has in mind but for a situation in which a police officer has been caught red-handed committing a serious crime of dishonesty or corruption; the evidence against him or her is overwhelming; and it is in the public interest for that

35
officer to be removed from the service as quickly as possible. Even in those circumstances, the officer would have full legal representation, and there would be a proper right of appeal.
Mr. David Lock: Does my right hon. Friend agree that nothing saps the morale of police officers more than going through an investigation, giving evidence in court and finding that it is not accepted by the jury because of their lack of confidence in the police? Does he equally agree that, if police officers give evidence in court and it is not only not accepted but shown not to be correct, counsel, the Crown Prosecution Service and other officers ought to have a duty to ensure that disciplinary action is considered promptly and efficiently against the officer in such circumstances?
Mr. Straw: In the interests of brevity, the answer to both my hon. Friend's questions is yes.
Ms Jenny Jones: My right hon. Friend says that disciplinary hearings will not be heard in public. Therefore, who will have access to the written record of such proceedings?
Mr. Straw: The outcome of the proceedings would be made public to the complainant if there were one, and otherwise to the police authority. As I said, in the overwhelming majority of serious cases there is no public complainant, because the investigation has been prompted by internal police processes and not by a complaint from a member of the public.
Mrs. Louise Ellman: Is the Home Secretary aware that deep outrage persists over the Hillsborough tragedy, partly because officers were allowed to escape disciplinary procedures, despite the Police Complaints Authority's claim that they had neglected their duty? Can he offer any hope whatsoever that the officers concerned will have to face justice; and can he offer any other forum to enable parents to pursue their concerns?
Mr. Straw: As my hon. Friend knows, and as I have explained in her presence to parents and relatives of those who died at Hillsborough, with great regret, I cannot offer any comfort to those seeking a disciplinary process at this distance against officers alleged to have been responsible through negligence for what happened. It would be wrong of me to hold out that hope, because it cannot be fulfilled.
We want to ensure that such a circumstance does not happen again and that the Police Complaints Authority does not, as happened at Hillsborough, again recommend disciplinary action against officers who then retire through ill health and so escape any disciplinary process. That is wrong, and everyone knows it. I am trying to ensure that it does not happen again.
Fiona Mactaggart: May I welcome the speed of this response? If the same action had been taken following the speech by the right hon. and learned Member for Rushcliffe (Mr. Clarke) in 1993, how many officers would not have walked away without being the subject of disciplinary investigations?
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On his suggestion about examining more independent inquiries, will my right hon. Friend consider whether it would be appropriate to establish an automatic system of independent inquiry into cases of members of the public who are shot dead by an armed policeman? One of the great strengths of this country is that our police are not armed. There are questions about how effective the PCA is in investigating such matters, and there is a case for inquiries to be automatic on such occasions.
Mr. Straw: On my hon. Friend's first question, when the right hon. and learned Member for Rushcliffe (Mr. Clarke) was Home Secretary, he proceeded with great vigour on the issue. Sadly, he was translated to Great George street as Chancellor of the Exchequer in May 1993, and then, as far as police discipline was concerned, the system went into reverse. I cannot say how many corrupt police officers escaped their just deserts as a result of the failure of my immediate predecessor to implement the recommendations of his predecessor, but some must have done so.
My hon. Friend also asks whether, under the PCA, there could be an automatic independent inquiry if someone was shot by the police. Such matters should not be subject to a system that is wholly separate from the other procedures that we are establishing.
At the moment, if a death appears to have been caused by police action—however justified that action—the PCA automatically launches an inquiry. By definition, at the moment that investigation is undertaken by a police force, but by a different police force. Any changes should wait on general changes to the system and the introduction more generally of an independent element for investigations.
Mr. Ross Cranston: As a member of the Home Affairs Select Committee, may I, too, warmly welcome my right hon. Friend's statement? Is not the answer to the point about the standard of proof raised by Conservative Members that the civil standard operates in other comparable jurisdictions and for other professional bodies perfectly satisfactorily?
Mr. Straw: The answer is yes.
Mr. Derek Twigg: I thank my right hon. Friend for keeping his promise to the Hillsborough families by making these proposals. I know that he has met them, and has been closely involved.
I am concerned that, while the officer involved, Chief Superintendent Duckenfield, was thought unfit to be able to carry on, the families had to go through independent inquiries, mini-inquests, inquests and further emotional, difficult time—and they are still fighting. That is an ironic comparison.
Given that disciplinary proceedings were at one time contemplated, I am worried about the behaviour of the South Yorkshire force. Disinformation and propaganda were used to try to defend the police officers in charge. That was not helpful in respect of subsequent disciplinary proceedings. In considering the detail of his proposals, will the Home Secretary examine how police forces react to high-profile disciplinary cases?
Mr. Straw: I thank my hon. Friend for his first remarks. There is no doubt that the families are right to

37
feel a strong sense of injustice about the failure of the system to secure disciplinary process against those who appear to have been responsible, through their negligence, for the dreadful disaster at Hillsborough so many years ago.
On the more general point about the behaviour of forces, the way in which some in the South Yorkshire police tried, quite wrongly, to minimise what had happened was a very unedifying saga, to say the least. In the words of Lord Justice Stuart-Smith, some, including Chief Superintendent Duckenfield, uttered "disgraceful lies" about who was responsible, in order to evade their own responsibility.
I cannot say that such circumstances will never happen again, but I can say that there has been a profound change in the culture and attitude of the police service since Hillsborough. I believe strongly that my announcement today will reinforce that change, and ensure much higher standards should such a disaster happen again.

Statements by Ministers
4.31 pm
Mr. Nicholas Soames: On a point of order, Madam Speaker, relating to a question that I asked the Leader of the House last Thursday. Given that there was a Government statement last Thursday on the expenditure of £45 million on replacing outdoor lavatories for children, could you impress on the Government the importance of Ministers coming to the House when they have important news to impart?
You will be aware that the Foreign Secretary has returned from arguably the most important trip of his presidency of the European Union Council of Ministers, which touched on matters vital to this country. I and many other Conservative Members believe that he handled it extraordinarily well. Given that comparison, is it not right that he should come to the House and make a statement on what happened?
Madam Speaker: I take very seriously the hon. Gentleman's point of order. I know that a number of statements are forthcoming this week. Perhaps we shall hear from the Foreign Secretary, but I do not know yet. I will do what I can.

Concessionary Television Licence (Amendment)
4.33 pm
Mr. John Swinney: I beg to move,
That leave be given to bring in a Bill to create greater flexibility in the definition of sheltered housing that is eligible for concessionary television licences, to reflect developments within the structure and management of sheltered housing.
I am pleased to have the opportunity to propose this Bill, which is designed to deal with some of the anomalies inherent in existing legislation on granting concessionary television licences to areas of sheltered housing. The issue came to my attention as a result of constituency cases where sheltered housing complexes have found it difficult to secure concessionary television licences.
The sages of the House will have a wry smile at a new boy discovering an issue that he considers a gold mine of anomalies, only to discover that he is not the first to arrive at the treasure. As I looked further into this issue, I discovered that many hon. Members had raised it before. I pay tribute to those hon. Members who have asked questions, led debates in the House and written letters to Ministers on the subject. I noticed from Hansard extracts that you, Mr. Deputy Speaker, were involved in pursuing the previous Government on this matter.
I am grateful to those hon. Members who have pioneered the issue and who have agreed to support my Bill. I am delighted that it has attracted cross-party support, especially from several of the supporters of a recent early-day motion, led by the hon. and learned Member for Orkney and Shetland (Mr. Wallace).
Current regulations stipulate that four qualifying criteria must be satisfied to ensure that a sheltered housing development can successfully apply for a concessionary television licence. First, sheltered housing must form part of a group of at least four dwellings within a common and exclusive boundary, with a concession that up to 25 per cent. of units in a scheme can be properties purchased under the right-to-buy legislation. Secondly, the accommodation must be specially provided for occupation only by disabled people or retired people of pensionable age. Thirdly, the units must be provided or managed by a local authority, a housing association, or a development corporation. Fourthly, the accommodation must have a person—for example, a warden—whose function is to care for the needs of the residents and who lives on site, or works there for at least 30 hours each week.
At one time, those regulations would have been an accurate reflection of the nature and characteristics of sheltered housing—that is, blocks of housing units constructed by local councils and with a resident warden living in a flat within the complex—but the world has moved on, and the regulations appear to relate to a very structured type of sheltered housing complex. Indeed, within the origins of the concessionary television licence scheme was a desire to ensure that sheltered housing benefited from a concession that was available to residential homes. The four criteria I mentioned bear a greater resemblance to the characteristics of a residential home than to sheltered housing as we know it today.
The criteria do not relate to the increasingly varied characteristics of sheltered housing complexes. As the right-to-buy legislation came into force in the 1980s, it

39
became almost impossible for local authorities to justify the construction of new family-style accommodation. Limitations were therefore placed on local authorities, and they increasingly concentrated what housing development work they undertook on the construction of sheltered housing. To their work was added the contribution of a plethora of other housing associations, which came forward with a number of innovative schemes to provide that type of housing.
Some smaller units were constructed as part of a wider housing development. Care for elderly residents is provided not by a resident warden, but by giving residents security through providing them with, for example, an alarm system linked to a communications network. If the elderly resident requires assistance at any time during the day or night, he or she simply rings the alarm, and help is at the end of the telephone. Help can be sent via mobile assistance units targeted at the needs of individual residents.
I visited the headquarters of such a system at Fairlie house in Kirriemuir in my constituency. It is or can be in contact with thousands of pensioners in sheltered housing throughout the county of Angus, and help is on hand all the time. It is an efficient and comforting method of giving security to fiercely independent elderly people. However, that system would lead to a range of sheltered housing complexes in my constituency failing the test of the four criteria, because the complex would not involve a resident warden, despite the fact that the care support and the type of protection available to the elderly residents are not really that different.
Early-day motion 930 raises the problem that concessionary television licences can be withdrawn because of circumstances over which the individual resident has absolutely no control. In the current climate of local authority financial constraints, which inevitably lead to cuts, there is an increasing trend for wardens to be removed from residential accommodation or to work fewer hours.
Such a change in practice, effected by the local authority, will result in one of the four criteria not being fulfilled, and the concessionary television licence being forfeited. In such a case, the individual's circumstances have changed not one iota, but the arrangements of the sheltered housing complex have changed as a result of the local authority's action. There appears to be no flexibility in the system to take account of such difficulties.
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I am aware that many Members have constituency cases related to the issues raised in the Bill, and I am grateful to a number of them for calling me in the past few days to discuss the cases that they have in mind. One case in my constituency—I have discussed it with the Television Licensing Authority—relates to Priory cottages in the village of Lunanhead in Angus, a sheltered housing complex separated from a larger complex at Carseview terrace. The two units share support services, but are not physically linked, being separated by a few other houses. Carseview terrace receives a concessionary licence, but Priory cottages does not; one complex passes all four criteria, but the other does not.
My Bill aims to modify the strict nature of these criteria and to define a more flexible set of criteria that can be applied, for the benefit of the residents and the organisations that care for them. At the very least, the criteria must be revised to make them more representative of sheltered housing patterns; and the absolute requirement that all four criteria must be satisfied should be modified.
The Government have said that they intend to revisit the concessionary television licence as part of the funding review of the BBC that will be concluded in advance of 2002.I welcome that commitment to a far-ranging review, but I believe that the Government must be encouraged to deal with some of the anomalies so as to make the application of these provisions more practical. If the Bill is not successful, I hope that the Government will look at the substantial proposals that emerge, and consider them as the review gathers pace.
I hope that my Bill will be successful in providing additional support and continuity for elderly and disabled people. The system is not working at present, and it should be simplified to expand assistance to these key groups in society. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Swinney, Mrs. Margaret Ewing, Mr. Dafydd Wigley, Mr. James Wallace, Mr. Huw Edwards, Mr. Peter Bottomley, Rev. Martin Smyth, Mr. Paul Keetch and Mr. Alasdair Morgan.

CONCESSIONARY TELEVISION LICENCE (AMENDMENT)
Mr. John Swinney accordingly presented a Bill to create greater flexibility in the definition of sheltered housing that is eligible for concessionary television licences, to reflect developments within the structure and management of sheltered housing: 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 155].
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [17 March].

  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
  [Relevant documents: The Third Report of Session 1997–98 from the Social Security Committee, on Tax and Benefits: Pre-Budget Report (HC 423), and the First Report of Session 1997–98 from the Environmental Audit Committee, on the Pre-Budget Report (HC 547).]
  4.42 pm
  The President of the Board of Trade and Secretary of State for Trade and Industry (Mrs. Margaret Beckett): It is both a great pleasure and an honour to open the final day of debate on this, the first full Budget of the new Labour Government: a Budget that starts to shape our future; a Budget that is radical and reforming. It begins to heal the divisions in our society and to tackle the weaknesses in our economy—a bold Budget from a Government who, I remind the House, have held office for less than a year.
  We came to office pledged to promote economic stability and sound economic management, to restore our public finances and to repair our damaged and divided country. This Budget makes further progress on all those aims. The announcement of a long-term framework for business taxation, following the steps last July to place interest rates in the hands of the Bank of England, contributes to the economic and policy stability that helps British business to plan ahead and which business called on us, when we were in opposition, to promote should we become the Government.
  As we have been in office for less than a year, we must remind ourselves and the country of what led the business community to make that universal and heartfelt plea. I refer of course to the economic legacy of the Tory party. Business failures reached all-time highs; more than 24,000 businesses went bust in 1992 alone. Manufacturing investment was at an all-time low. For the first time ever,
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  we had a manufacturing trade deficit. Interest rates soared to a peak of 15 per cent., and inflation was in double figures. Hundreds of thousands of homes were repossessed, and millions were condemned to a lifetime of hopeless unemployment.
  What about the public finances? National debt doubled under the Government led by the right hon. Member for Huntingdon (Mr. Major), with interest alone costing income tax payers about £1,000 a year. This was the burden that we were all forced to carry because of the sheer incompetence of that Tory Administration. When we came to power, the Tories were spending far more repaying the interest on their debts—the cost of their failure—than they were investing in our schools.
  All week, the Conservatives have been boasting of what they claim is our golden legacy—but what about their golden dowry? They ran up all these debts despite having the full benefit of the biggest windfall gain in our long history. To them and them alone fell the full bounty of North sea oil—£139 billion at today's prices. That was on top of income from privatisations that yielded further billions for the Exchequer. From those two sources alone, the Conservative party had well in excess of £200 billion at today's prices—approaching £30 million every single day for 18 years. What should have been a great opportunity to invest in all our futures and prepare for the next century was instead frittered away on incompetence and dogma.
  So much for the idea that the Tories are the party that knows how to run a tight ship. One would think that they would learn from their mistakes—to say nothing of the verdict of the British people on those mistakes—but the same blithe indifference and ignorance still apply. The same rhetoric is deployed about the wickedness of the minimum wage or the social chapter, as if the British people had rejected, not endorsed, those policies.
  The same sleight of hand is displayed in the Tory pretence that we are breaching policy promises which in fact exist only in the fevered imaginations of Conservative Members. In this vein, the Leader of the Opposition claimed to be quoting me when I was attacking certain Tory proposals in 1988 as being the same as the measures in this Budget—when almost the only thing they have in common is the use of the word "credit".
  Mr. John Redwood: Does the right hon. Lady think that DM3.06 to the pound is a good rate for British industry? Does she fear that it will mean big reductions in exports, a big surge in imports and a lot of factory closures?
  Mrs. Beckett: I am glad that the right hon. Gentleman raised that matter. I shall come to interest rates and the exchange rate later on. I am looking forward today to hearing from the right hon. Gentleman what the Conservative party proposes that the Government should do—
  Mr. Redwood indicated assent.
  Mrs. Beckett: I am very pleased to see that. We hope to hear a great deal from the right hon. Gentleman about the policies that his party now supports—because there have been some abrupt and rather surprising changes. When we introduced the competition and spectrum

  43
  pricing Bills, the right hon. Gentleman attacked policies that his party had broadly supported before the election. That must have come as a surprise to the Leader of the Opposition. Before I had even begun discussions with Jaguar over Government support for a new project, the right hon. Gentleman put the jobs of thousands in Halewood at risk by attempting a crass bit of interference in the negotiations. That, too, was rather awkward for the Leader of the Opposition.
  Then there was the debacle over Chancellor Kohl, which would be almost hysterical were it not so serious. A senior member of Her Majesty's Opposition managed to insult both the City of London and the Chancellor of Germany, one of Britain's most important trading partners, in one fell swoop. This time, the Leader of the Opposition had had enough and hauled the right hon. Gentleman publicly over the coals—sorry about the pun. Now there seems to be a public tug of war about economic and monetary union, and whether policy on it will or will not be softened.
  Today, in a fascinating article in The Times—it reads a little as if written by Conservative central office, as if preparing the ground for a policy U-turn—the right hon. Gentleman does at last observe that there will be a cost to staying out of EMU. He says that, when dealing with continental companies,
  "The British company has to take the exchange rate risk as the pound will continue to fluctuate against the euro".
  As I understand it, the right hon. Gentleman will have our companies facing that type of cost for ever, on principle, which does not seem to be in the interests of British business.
  The article says:
  "The compulsory introduction of the euro in some European countries may change some business views of the balance of advantages and disadvantages of a European currency".
  I hope that the right hon. Gentleman intends during his remarks to explain whether, as it appears, his position on that is changing.
  While the Opposition are ditching many of the policies on which they fought the most recent general election, we in government are working to deliver on our proposals, despite, not with the benefit of, their legacy. Make no mistake: whatever they say now, and however glowingly they paint the picture, we inherited what was, in many ways, a shambles. We inherited a health service burdened by bureaucracy while struggling to care for the sick, an education system that was failing our children, and an economy with fresh inflationary pressures after years of opportunistic manipulation for short-term political advantage.
  When one inherits a mess, it takes time to sort it out, especially after 18 years; but from day one, the Government have been delivering on our promises. We are delivering a new deal for young people, funded by the tax on the windfall gains of the privatised utilities, opposed by both the largest Opposition parties. That new deal is up and running already in pathfinder projects, and will go nationwide before our first year in office is over.
  A Low Pay Commission was established, and had its first meeting within 100 days of our taking office. The National Minimum Wage Bill is already through the House of Commons, and the wage should be in place next year.
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  We are providing more resources for health and education; we have provided £3.8 billion already.
  Ours is an impressive record of delivery on our pledges. Moreover, let us not forget that not one bit of it would have been done by the Conservative party or by those on its Back or Front Benches. Now we have—
  Mr. Ian Bruce rose—
  Mr. Deputy Speaker (Mr. Michael Lord): Order. Someone has an electrical device that is going off. I am sure that hon. Members are aware that Madam Speaker takes a very dim view of that.
  Mr. Bruce: As the Low Pay Commission met so quickly and no doubt will have to come up with a rate every year, will the right hon. Lady tell us what rate she expects for the minimum wage—not least because it has an impact on the Chancellor's Budget?
  Mrs. Beckett: No, I am not prepared to speculate about what the recommendations of the Low Pay Commission will be. We set it up as an independent body to do its own research and come to a view and make recommendations, and those recommendations will be before the House and the right hon. Member for Wokingham (Mr. Redwood) in the not too distant future.
  In this Budget, building on the one delivered in July 1997, we are taking the implementation of our pledges further forward for families, for the health service and education, and for the economy.
  Mr. Nick Gibb: Will the right hon. Lady give way?
  Mrs. Beckett: I shall continue a little further if I may.
  This is a Budget for the long term. It moves us still further from that legacy of short-termism, boom and bust and under-investment. Under the previous Administration, Britain's record of economic instability was one of the worst among the G7 countries. Under the previous Government, Britain suffered the two deepest and longest recessions since the war, separated only by an unsustainable boom. How could industry take a long-term decision when it did not know what to expect from week to week? We are creating a macro-economic framework for long-term stability and investment, giving our companies, at long last, the opportunity to thrive.
  We are not only giving the Bank of England a key role in controlling inflation, but working to follow the golden rule that Government borrow only to invest over the economic cycle—a principle of sound public finances that the Tories never even had the vision to contemplate. Moreover, we have launched the code for fiscal stability, which will be given statutory basis in the Finance Bill. That code sets out the requirement for an open, transparent and accountable approach to managing the public finances, which will ensure that fiscal policy continues to be set in Britain's long-term interests.
  We have sought to promote stability in tax policy, too.
  Mr. Gibb: Am I right in thinking that, in opposition, Labour pledged not to raise taxes when it was elected— and has it now breached that pledge in both Budgets?
  Mrs. Beckett: No. We did not give the pledge to which the hon. Gentleman refers. We said very specifically that

  45
  we would not raise—[Interruption.] Yes, I have read the record. I am very well aware of what we said, and I have no illusion about what it was. We were very clear and careful in what we said and what we promised. We promised not to raise either the standard rate or the higher rate of income tax. We promised to cut VAT on fuel, as we have done, and we promised—
  Mr. Gibb: Backtracking.
  Mrs. Beckett: No. We were most careful to say on all occasions that of course no Government could rule out making other changes, in various tax allowances and so on. We were determined not to repeat the crass errors of the Conservative party in telling the British people a pack of lies and then complaining when they came home to roost.
  Mr. David Ruffley: Why is it that, on 20 January 1997, the present Chancellor of the Exchequer said on "Newsnight":
  "It is my aim to get the burden down for ordinary people",
  yet he has increased taxes across the board, which impacts directly and indirectly on such ordinary people? What is the right hon. Lady's answer to that?
  Mrs. Beckett: I could not quite hear all of the end of the hon. Gentleman's remarks, but I can say to him that, as he pointed out, my right hon. Friend the Chancellor made it clear that he wanted to make people on low incomes better off, and that is precisely what we are already doing in this Budget.
  Mr. John Bercow: Is the right hon. Lady saying that the statement by the then Leader of the Opposition, reported on 21 September 1996 in the Financial Times, that
  "We have no plans to increase tax at all",
  is untrue? Is she saying that the Financial Times has given credence to an untruth?
  Mrs. Beckett: My right hon. Friend was being asked about personal taxation. Of course—[Interruption.] What we said about tax before the general election was clear, and the British people completely understood it. We made it absolutely clear that we would not change the rates of income tax. We also made it clear that we would have a windfall tax on the privatised utilities. We made it plain that we would cut VAT on fuel.
  Mr. Bercow: Burden.
  Mrs. Beckett: No one believes any of this nonsense from the Conservative party, for the simple reason—
  Mr. Ruffley: Try reading the facts.
  Mrs. Beckett: Yes, I am looking at the facts. No one believes what the Conservatives say, for the simple reason that what they say now about our proposals is as inaccurate as what they said about their own before the 1992 general election.
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  We have sought to promote stability in tax policy, too. We undertook a major review—
  Mr. John Butterfill: Will the right hon. Lady give way?
  Mrs. Beckett: I am sorry; I have finished with that point.
  We undertook a major review of company taxation and have already introduced reforms that remove the disincentive to invest for the future—the implicit incentive, instead, to pay dividends. By abolishing advance corporation tax, we have simplified company taxes and removed the distortions that affected our international companies.
  We have heeded the comments of the business community and excluded all small and medium-sized companies—those with profits below £1.5 million—from the obligation to pay corporation tax by instalments. The main rate of corporation tax will be 30 per cent. and there will be a small companies rate of 20 per cent. Those are the lowest rates since the tax was introduced in 1965— 3 per cent. lower than they were under the Conservative party, and with the lowest main rate of any major country. Once the package is fully in place—
  Mr. Redwood: To clarify matters for the House, can the right hon. Lady confirm that the Red Books for this and the previous Budget make it clear that, during this Parliament, there will be an increase in business taxation, including utilities tax, of £25,000 million? That is the Treasury figure. Can she confirm it?
  Mr. Bercow: Tell her, Gordon.
  Mrs. Beckett: I am not familiar with the final figure that the right hon. Gentleman gives, but I am well aware that we are proposing a package of changes in corporate taxation. That package of changes, as I am sure the right hon. Gentleman is well aware—[Interruption.] Ah; the right hon. Gentleman is including the windfall tax; that is why the figure that he gives is different from that given by most others. All I can say to the right hon. Gentleman is that we are indeed introducing a full package of changes in corporate taxation, which will make the tax system simpler and more stable, and which will encourage investment and long-term development. That is what the Government wish to achieve.
  As I said, once the package is fully in place, companies will pay £1.5 billion a year less in tax. Overall, the reform of corporate taxation in this Budget is worth £9 billion to business in present value terms. We have given a commitment not to increase corporation tax rates for the lifetime of this Parliament. That is all excellent news for businesses, and it was welcomed by them. Jeremy Peat of the Royal Bank of Scotland said:
  "The promise of a stable corporation tax framework and lower tax rates and enhanced reliefs for small and medium-sized companies … are all moves in the right direction."
  With the low rates of tax that we shall have in place from April 1999, a business with profits of £500,000 a year will pay £15,000 less in corporation tax than it paid under the previous Government.
  Small and medium-sized enterprises that pay dividends will gain a cash-flow advantage of about £1 billion from the abolition of ACT. Small firms will also benefit from

  47
  accelerated capital allowances for at least another year. As a result, they will pay £300 million less in tax in 1999–2000 and 2000–01. For a typical small company investing about £100,000 in the coming financial year, that will mean £3,150 less in tax for that year.
  Because this is a Budget for entrepreneurs, more people with great ideas for business opportunities will be able to turn those ideas into action. Capital gains tax will now encourage investment and enterprise, with a new effective rate of 10 per cent. or less on long-term gains on business assets. Important changes to the enterprise investment scheme and capital gains tax reinvestment relief will stimulate the provision of equity finance for smaller, higher-risk trading companies. That is an important set of fiscal changes for small firms, but we have done more.
  For many small firms, the administration associated with paying tax can be very costly. That is why we have announced a new payroll assistance scheme provided by the Inland Revenue and the Contributions Agency. The service will provide one-to-one help for new employers getting to grips with tax, national insurance and benefits. By making it easier and cheaper for small businesses to take on their first employee, it will reduce one of the major barriers to setting up and running a business. It is a straightforward, practical change that should have been made long ago, but the previous Government—who claimed so loudly to be the champion of small business— failed to act in this instance, as in so many other instances.
  Mr. Bercow: I am most grateful to the Minister for her courtesy in giving way. Will she take this opportunity to confirm to the House that small companies, many of which are technology or knowledge-based and employ highly paid staff, will face a bigger national insurance burden as a result of this Budget—yes or no?
  Mrs. Beckett: Overall, small businesses will benefit from this Budget—as I am sure the hon. Gentleman is perfectly well aware. The changes that my right hon. Friend the Chancellor has made to national insurance contributions alongside the changes to corporation tax and all the other issues to which I have referred will mean a benefit to small business. That is why small businesses have welcomed the Budget—and obviously the hon. Gentleman wishes that they had not.
  Small and medium-sized enterprises are the bedrock of the future growth in jobs and investment upon which we, as a nation, depend. A vibrant SME sector is quite simply vital to the future competitiveness of Britain, and tax changes and simplified regulation can help to promote enterprise.
  Mr. Malcolm Bruce: The Minister is making a very good point about the need to encourage small and medium-sized businesses. Does she acknowledge that, although the operators in the North sea are large multinational companies, many businesses that supply and service those industries are small and medium-sized? Does she agree that an adverse change in the regime when oil prices are at an all-time low could threaten both the home market and export opportunities for those businesses?
  Mrs. Beckett: Those small businesses, like others, will benefit from the overall package in the Budget. The hon.
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  Gentleman makes a different point about the review of taxation in the North sea. He is well aware that my right hon. Friend is continuing to examine that matter. My right hon. Friend has heard the hon. Gentleman, and we shall have his observations at the back of our minds when we consider the overall regime for the North sea.
  Mr. Ian Bruce rose—
  Mrs. Beckett: I have given way once to the hon. Gentleman and I am beginning to be concerned about time. If he does not mind, I shall make a little more progress.
  Those changes are only part of our aim to create a more entrepreneurial culture—a culture in which those who succeed in enterprise are praised and where failure does not stop people trying again. Risk taking, innovation and taking a long-term view are crucial elements of a successful economy today, and we want to encourage them. The tax measures and the initiatives to support entrepreneurs will help to create a more enterprising Britain. Other actions that we have taken in my Department—from the new Competition Bill, to a major review of corporate governance and company law, to an important shake-up of the foresight process—are part of our drive to foster an innovative economy.
  This Budget, too, will support innovation and research and development. It is increasingly recognised in the business community that innovation must be a continual process, taking place throughout the economy and involving every business and every employee. All types of innovative activities have a role to play, but there is an increasing premium on the successful exploitation of new technology—something that the previous Government either did not understand or did not seem to care about.
  Again, the previous Government's legacy speaks for itself. Total expenditure on research and development as a proportion of gross domestic product has fallen to below 2 per cent. for the first time in many years. The United Kingdom now ranks fifth among the G7 countries in terms of total business enterprise R and D, down from third in 1981. The latest figures released yesterday suggest that, in 1996, civil R and D spending fell as a proportion of GDP. Our R and D scoreboard shows that larger United Kingdom firms spend significantly less on R and D than their overseas counterparts. Fewer than half of all manufacturing SMEs employ qualified scientists and engineers.
  The Government are determined to improve Britain's investment in research and development—of course, that is not exactly the same as innovation, but it is an important component. The framework that we have put in place to promote stability and long-termism is the seedbed upon which innovation can bloom. With the Budget papers, my right hon. Friend the Chancellor and I have launched a national consultation—in a document entitled "Innovating for the Future—Investing in R&D"—on how we can improve our R and D performance.
  It will be a wide-ranging review. It will cover all aspects of the business environment that affect R and D, including sources of finance, the accounting treatment of intangible assets, the rules protecting intellectual property, how management affects firms' propensity to innovate, and access to technology. We must examine what other countries are doing in areas such as tax incentives for

  49
  R and D, to see whether we can apply any lessons here. We also want to ensure that our review reflects the views of business, investors, employees and outside experts, so we have announced a consultation period lasting until the end of June 1998. The results of that consultation will influence the competitiveness White Paper that I plan to publish in the autumn, as well as the preparations for the next Budget.
  Our commitment to R and D and innovation also lies behind the announcement of a new university challenge fund to encourage the commercial exploitation of university research. Under that scheme—which will create £50 million in venture capital—universities will be able to compete for funding provided by the Government in partnership with the Wellcome Trust and the Gatsby Trust. Challenge winners will be expected to lever in additional funds in partnership with the private sector. The Government are also considering several other initiatives designed to promote smaller high-tech businesses, where some of the most exciting and productive R and D is carried out. For example, we are consulting on ways of attracting experienced managers to small firms through equity-based remuneration schemes. We are determined to improve the United Kingdom's performance, and this Budget marks the start.
  This is a Budget for business—all business. However, when looking at the climate for British business today, we cannot and do not overlook the fact that the level of sterling—particularly against the major continental currencies—is causing difficulty and concern for some companies. Sterling has of course appreciated by much less against the dollar, so with whom one trades and in what currencies matters a great deal.
  We must look at the steps taken by other countries that have faced similar problems in the past. For example, the Germans and the Japanese sought competitiveness through a drive for quality and through the pursuit of less price-sensitive markets. Those approaches lie in the hands of business, although the drive to compete on quality, high standards and high added value is part of what sharply distinguishes this Government's approach to competitiveness from the sweatshop mentality of our predecessors. Those same predecessors, now the Opposition, complain continually that there must be further action that the Government can take, and call on us to take it.
  Let me at once remind the House that this Government's aim is to have a stable but competitive exchange rate. My right hon. Friend the Chancellor made it plain in his Budget speech that he understands and shares the anxieties, in particular, of exporters.
  What are the steps that the Opposition are calling on the Government to take? They complain that placing interest rates in the hands of the Bank of England means that the Chancellor himself no longer decides their level. Are they planning to reverse that step—even though it has led to a drop in long-term interest rates? A comment by the right hon. Member for Wokingham in an article this weekend suggested that he did indeed think that that step should be reversed. I hope that he will tell us whether that is the case.
  Mr. Howard Flight rose—
  Mrs. Beckett: The hon. Gentleman will have to forgive me. I am interested in knowing the policies of right hon. and hon. Members on his Front Bench.
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  The present level of interest rates—one of the factors that will influence the exchange rate—is itself a direct result of the Conservatives' politically driven refusal to put up interest rates to tackle inflationary pressures just before the general election. The Opposition's present stance suggests that they would again take Britain on the roller-coaster of boom and bust that cost so many jobs and homes in the 1980s and early 1990s.
  How else could we ease pressure on the exchange rate? Classically, by fiscal means. That means either a tight rein on public expenditure or higher taxes, or a mixture of the two. We have a tight rein on public spending—a very tight rein. Both in July and last week the Chancellor tightened the fiscal stance, and he does not believe that it needs to be tightened further.
  Mr. Butterfill: Does the right hon. Lady accept that although the fiscal stance has been tightened a little, the tightening in the previous Budget was completely wrongly targeted, in that it attacked savings rather than attacking expenditure by the public? That is the reason for the present state of the economy.
  Mrs. Beckett: No, my right hon. Friend did not attack savings, either in his previous Budget or in this one. As for an inadequate tightening of the public finances, I think that 2 per cent. of GDP is an extremely adequate tightening of the public finances.
  If the Opposition think that the fiscal stance with regard to public expenditure should be tightened more, as the hon. Gentleman has just implied, that presumably means that they oppose the extra priority that we have given to health and education, the release of capital receipts for house building and repair, the new involvement in transport, the help to pensioners for heating bills and the help for families.
  Mr. Butterfill indicated dissent.
  Mrs. Beckett: The hon. Gentleman shakes his head. Although he says that we should be doing more to tighten the fiscal stance, when it comes to saying what we should not be doing, he is silent.
  What about taxes? The Opposition have made many claims that we are increasing tax on business, but they oppose all those taxes, so what are they calling for— higher VAT? We know that they wanted 17.5 per cent. VAT on fuel, and were embarrassingly defeated following a revolt among their own Back Benchers, among others.
  The shadow Secretary of State, the right hon. Member for Wokingham, wrote in an article in The Birmingham Post on 20 March that we had
  "an overheating consumer side of the economy… Labour talk about 'hard choices', but they don't make them."
  I look forward to hearing from the right hon. Gentleman how he proposes that pressure on consumption should be tightened.
  Are the Conservatives seeking higher personal taxation, or just less for education, health, welfare or transport? It is hard to avoid the conclusion that they are in opposition just as they were in government—incompetent, short-sighted and irresponsible. Neither their policies nor their numbers added up then, and they clearly do not now.
  Mr. Kenneth Clarke: The right hon. Lady says that we were politically irresponsible. Our measures

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  are producing an inflation rate of 2.6 per cent. She says of the present strong exchange rate that it is entirely a matter for the Governor of the Bank of England, but does she not accept that the exchange rate will not begin to ease until the markets expect that the next movement of interest rates will be downwards? Does she further accept that the narrative that she has just given explains why the Chancellor's fiscal policy will do absolutely nothing to create the climate in which that movement might begin? The Chancellor has raised taxes on business and on savings, and he has done so for populist reasons, because as she has just revealed, the Government think that short-term political reasons rule out taking any other step.
  Mrs. Beckett: For the right hon. and learned Gentleman to complain about people taking decisions for short-term political reasons is truly a case of the pot attempting to call the kettle black. Everything that he has said about the present position in the economy is certainly not due to the inheritance that he left us, which left the country in a position of some instability. My right hon. Friend is taking steps to redress that, and those steps will, I believe, work in the longer term.
  By promoting stability and enterprise, the Budget helps to underpin the three pillars upon which our future competitiveness is based: strong markets, modern companies and an enterprising nation. Open and fair markets are good for business as well as for the consumer. Bad regulation should not hold them back. The Budget cuts the burden of red tape on large and small firms, freeing them to compete and to prosper.
  By simplifying tax, reducing compliance costs and recognising the importance of R and D and innovation, the Budget works to build a framework in which innovative modern companies can emerge. It is an important step to creating an enterprising nation that encourages entrepreneurs, backs good ideas and is alive to the opportunities of the future.
  It is also a Budget built on partnership. An important element in that partnership is that we have a Budget combining fairness with economic efficiency, a Budget that is alive to business needs and to the new challenges and opportunities that business faces. That is how it has been received.
  Dr. Andrew Sentence of BA called the Budget "cautious and responsible." The British Chambers of Commerce said that it was
  "a valuable Budget for enterprise and employment."
  Even Tim Congdon of Lombard Street Research said:
  "On balance this is an impressive Budget. If the Chancellor continues in this mode, Britain will have a strong economy in the early years of the next century."
  Above all, it is a Budget for a new nation—a new Britain. It delivers a great deal for those out of work, and it moves us to a position where work pays. Taken together with the minimum wage, it will transform the prospects for many families in or at present out of work. It transforms the prospects of mothers who have not been able to work because of the lack of affordable child care; they will have increased opportunities to take work.
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  The Budget makes it easier—and cheaper—for firms to take on more employees, especially for smaller firms. The improvements to national insurance will be a great boost to them.
  Mr. Gibb rose—
  Mrs. Beckett: I am sorry—I am almost finished.
  As the Forum of Private Business commented:
  "Cutting the cost through cutting employers national insurance on the lowest paid workers is a good way of encouraging small firms to take people on."
  This Budget is ambitious because we are ambitious for Britain. It had a widespread welcome. The Confederation of British Industry welcomed it, saying that it was
  "encouraged by the overall fiscal balance and the prudent approach to public spending together with the continued control of public borrowing."
  However, there was one endorsement that I found particularly interesting. I thought that in view of the keen interest of the right hon. Member for Wokingham in all things German, he might like to be reminded of some of the comments of the German press.
  Bild Zeitung, the largest-circulation paper in Europe, in an editorial on the UK Budget headed "Great!", commented:
  "Britain was in the lead when industrialisation began. Germany took a hundred years to catch up. Now the British are dashing away again."
  Handelsblatt described it as a "complete success".
  A good press is always nice, but what matters is not what newspapers or pundits say a few days after a Budget. It is whether our strategy improves Britain's competitiveness in the long term that really counts, and whether we use the fruits of that success to build a fairer and better country.
  This is a Budget for a new nation—a nation that fosters ambition and enterprise at the same time as valuing fairness; a nation that is as innovating as it is caring; a nation where each of us works for the good of all. It is a Budget to stimulate and support all who are ambitious for our country and ambitious for themselves and their families. It is the Budget that Britain needs.
  5.20 pm
  Mr. John Redwood: New speech writer, new Labour, but I think that we need a change of script. Three deutschmarks six pfennigs to the pound; that is the truth today as we meet to debate the plight of manufacturing industry. The Chancellor's policy is hurting, but it certainly is not working. Week by week, we see imports up, sterling up and consumer spending up. Week by week, we see exports down, manufacturing output down and savings down. That is the very opposite of what the Chancellor sought when he was in opposition, full of good ideas but with no responsibilities.
  The Chancellor's forecast shows us that there will be much more of the same gloomy outturn. He states in his Red Book that, over the year ahead, imports will surge; I fear that the right hon. Gentleman is right. He tells us that exports will come under pressure; again, I fear that he is right. He says that manufacturing industry will come under severe pressure from a strong pound; he is

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  undoubtedly right. The right hon. Gentleman tells us that savings will fall and that consumer spending will continue to increase.
  What does the President of the Board of Trade and Secretary of State for Trade and Industry tell us about all this? She says that business should be grateful because there is a long-term framework for business taxation. Well, business has stability in the plans for ever-higher business taxes. I see no reason for gratitude when business will have to pay so much more over the next three years of this Labour Government.
  The right hon. Lady then tells us that we should feel grateful because there is a long-term framework for monetary policy and sterling. That, she says, is bringing stability. The stability which it is bringing so far is that day by day, week by week, the value of sterling goes up against the currencies of some of our major competitors on the continent, making it extremely difficult—ever more difficult—for exporters. The right hon. Lady then tells us—
  The Minister for Science, Energy and Industry (Mr. John Battle): What would the Opposition do?
  Mr. Redwood: The Minister wants to know what we, the Opposition, would do in power. I shall tell him in a moment. I wish first to finish my analysis of the President of the Board of Trade's extraordinary statement that the long-term framework is to be welcomed and that it is delivering stability. It is not delivering stability and it is certainly not welcome to manufacturers.
  There is no stability in the exchange rate. The right hon. Lady should watch it: the rate is going up day by day. She should understand that, as a result, business cannot adjust at the necessary pace. The right hon. Lady tells manufacturing business, which has done a great deal to raise its productivity and efficiency over many years, that it must now keep up with a devaluation of the deutschmark and the franc of one third over a period of 18 months. Good, efficient businesses cannot achieve that pace of adjustment in that short a time frame because they were already trying extremely hard to make good products at a commercial price. The right hon. Lady should understand that things are not well.
  The Government ask the Opposition for ideas on how they could get out of a mess of their own creating. The Opposition are not short of ideas on how pressures could be alleviated or removed. I shall give the impatient President of the Board of Trade and the Chancellor of the Exchequer the benefit of our advice. First, the Chancellor should promote savings; he should not undermine them. When there is a danger that a consumer boom will get out of control, the right hon. Gentleman should be encouraging people to save rather than to spend. Instead, he threatens to remove the tax relief from personal equity plans and tax-exempt special savings accounts. He makes a modest U-turn, but he leaves a system of savings taxation less favourable than the one he found, instead of making it more generous, which would have been the right response at this stage of the cycle.
  More important, the Chancellor completely undermines pension saving by a huge, swingeing tax on people's pension prudence. That is a great disincentive for more people to come out of a state pension scheme to set up their own savings funds for their retirement. The Chancellor should be promoting saving for retirement now, not undermining it.
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  Next, the Chancellor should remove the burden of extra taxes on manufacturing businesses, which will bear the brunt of many of the taxes in his two Budgets to date. They will pay the bulk of the huge sum that I mentioned in my exchanges with the President of the Board of Trade. I noticed that she did not deny the figure that I put into the record—the £25,000 million of additional taxation that is the result, for this Parliament, of the Chancellor's Budget efforts so far. We have the impact on business of the windfall tax, the pensions tax, corporation tax changes and all the other back-door stealth taxes by which the right hon. Gentleman is hitting business activity and motoring.
  Mr. Butterfill: Will my right hon. Friend confirm that the Red Book shows not merely that our taxes are increasing but that the proportion of gross domestic product taken in taxes—that is the important factor—will rise every year for the lifetime of this Parliament?
  Mr. Redwood: That is right. My hon. Friend makes an extremely powerful point. We have a Chancellor who is out to tax people heavily, especially business. I notice that there is silence from on the Government Front Bench, because they know that what we say is true. The figures are in the Red Book. We have not invented them; those we have extracted them from a rather complicated document in which they were well concealed. They were there, however.
  Mr. Ian Bruce: Has my right hon. Friend noticed that the Labour party has always said that it is against people in business who are successful subsidising the low payers? Has my right hon. Friend noticed also that national insurance changes mean that those who pay their staff good, high wages are subsidising those who pay low wages? I thought that the Labour party was against that sort of thing.
  Mr. Redwood: My hon. Friend makes a powerful point. He might discover that there is a division of opinion between the President of the Board of Trade and her Department of Trade and Industry Ministers on the one hand and the Chancellor on the other. The Chancellor is trying to make it cheaper to employ people on lower income levels, whereas the President of the Board of Trade and her colleagues are trying to make it dearer. That is the purpose of the national minimum wage and the likely pay awards which will result. I shall come to that tension a little later.
  Mr. Clive Soley: In the event of a future Conservative Government, would the right hon. Gentleman repeal our national minimum wage legislation?
  Mr. Redwood: I have often been asked that question. Labour Members will have to restrain their impatience. My right hon. and hon. Friends and I will come to a decision nearer the time when we write our manifesto, on which of the many bad and damaging Government measures we are able to offer immediate relief. It would be foolish to set out now which of the large list of measures that we would like to repeal we shall definitely be able to repeal. We shall take a sensible judgment at the time. In the meantime, we shall offer strong opposition to the items that we think are wrong, in the hope that the

  55
  Government, which have about another three years ahead of them before we hope to displace them, will listen to our arguments in the interests of better national success.
  It is a great pity that the Chancellor did not work out last year in his first Budget the consequences for manufacturing. I warned then, with my right hon. Friends, that manufacturers and savers would take the hit of his first Budget. Now the damage is becoming visible even to the Treasury when we read the small print in the Red Book.
  Earlier this week, I was passed comments from the British Leather Confederation. It set out what this Budget and the previous one mean to a manufacturing sector. It is one of many that I could have chosen. I am told in the confederation's communication that, in the past six months, two of the largest tanneries in the United Kingdom have closed. Even the most successful companies in the industry have been losing export business and shedding labour.
  Another example which is given in the letter is that one tannery had more than 70 per cent. of its output exported, but that had been slashed to 30 per cent. and might well fall further. Those are the difficulties faced by individual industries.
  Mr. Austin Mitchell: The right hon. Gentleman may well go on about tanning, after the way in which the Conservative party was tanned last year.
  The right hon. Gentleman is not dealing with the point that he raised at the opening of his speech, which is that the pound is overvalued. None of the piddling measures that he has given us will have any effect on the valuation of sterling. Will he tell us what he would do to get the pound down? What was the advice that he gave to the then Government from 1979 to 1982 and from 1989 to 1992, when we were in a similar situation?
  Mr. Redwood: I was not a great fan of the exchange rate mechanism in the latter period to which the hon. Gentleman referred. I was much in favour of the then Chancellor intervening and securing lower interest rates at that stage because of the damage that the then rates were undoubtedly doing. We learned from that experience. The policy was recommended by the Labour party in opposition as well as by my right hon. Friends. We hoped that this Government might have learnt from it as well.
  A collective decision was taken by the House, with the Labour and Liberal parties in full support. It is— [Interruption.] The Chancellor laughs. We are talking about the only economic policy that the Conservative Government followed that the right hon. Gentleman supported. He supported ERM and therefore must have had some responsibilities for the consequences. It was a good example of how at that point it would have been better to have left earlier, and to have had lower interest rates earlier, to avoid some of the damage.
  The Chancellor is underestimating the impact of a strong policy of promoting saving. If we were successful in promoting a lot of saving, it would take some of the heat out of the economy, and the adjustment through sterling and interest rates would not have to be so strong on the manufacturing sector. He should also remember
  56
  that my right hon. Friends and I opposed his idea of giving away the power to settle interest rates which he thinks are correct for British manufacturing industry. That is another part of the problem.
  I do not blame the Governor of the Bank of England. Given the awful Budgets that the Chancellor has announced, the Bank of England has had no choice but to increase interest rates. It would have been much better if more of the strain of adjustment had been taken in the Chancellor's Budgets instead of in interest rates. Labour Members say that that must mean higher taxes; it means higher saving. If the savings ratio were not plummeting under the Chancellor's proposals, there would not be so much strain on the exchange rate and the interest rate.
  Just look at the damage forecast by the Chancellor. When the Conservatives left office in 1997, the Labour Government inherited a £4,500 million trade surplus. Their forecasts say that next year there will be a £6,500 million trade deficit. The price of Labour so far, on their numbers, is an £11,000 million plunge into the red on our trade account. When we left office, people were saving 11 per cent. of the nation's income. The Government's forecast for next year is that it will be only 9.5 per cent. The price of this Chancellor is a one-sixth reduction in savings as a proportion of national income.
  Meanwhile, the President of the Board of Trade sits smugly in her grace-and-favour apartment and does nothing to stand up for British manufacturers, British exporters or British savers. When I asked her to defend the £25,000 million tax hit on British business over the lifetime of this Parliament, she had the audacity to tell me, "Well, the rate of corporation tax is down." People are not interested just in the rate of corporation tax. They want to know how much in total they will pay, and, in total, business will pay a great deal more tax because of this Chancellor.
  Government figures show that business will pay £4,600 million more corporation tax as a result of the changes. I have Inland Revenue press release No. 9. It shows modest reductions to business because of the drop in the rate to 30 per cent. However, it then shows much bigger increases because of the change to instalments and the abolition of advance corporation tax. The overall net Exchequer effect is £1,000 million in 1999, £1,300 million in 2000–01, and £2,200 million— £2.2 billion—in 2001–02. That is a massive £4,600 million increase, from 1998 to 2002.
  If that were not enough, there is Inland Revenue press release No. 6—one on which the Chancellor did not dwell much in his statement—about much greater taxation of company cars and car fuel.
  We have Inland Revenue press release No. 12, "Taxation of Income from Property", with a £50 million one-off increase in tax. We have Inland Revenue press release No. 15, "Formal Consultation on the North Sea Fiscal Regime". Will the Chancellor promise the House today that, as a result of that review, there will be no increase in oil taxation? I shall give way to him if he wishes to confirm or deny that. The fact that the Chancellor will not intervene shows that the Government intend to up oil tax as a result of Inland Revenue press release No. 15. We then have Inland Revenue press release No. 30, which is about introducing tax on construction workers. Again, that means that more tax will be imposed.

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  Only the President of the Board of Trade could not have noticed that all that represented a series of tax rises. Can she really believe that the Chancellor has cut business tax? How does she explain the fact that business will be so much worse off following the Chancellor's Budget? Or does she wish to leave the House with a misleading impression on this matter?
  Of course, Labour want the headline "Corporation Tax Rate Down", yet companies pay more. Labour wants the headline "Advance Corporation Tax Abolished". It all means that companies will pay more corporation tax as a result of the Budget.
  When is a tax cut not a tax cut? When it comes from the present Chancellor. It was a miserable Budget. It was a miserable speech delivered in a miserable voice for a miserable purpose: taxing, taxing and taxing again. When the Chancellor was in opposition, he was Mr. Post-neo-classical-endogenous-growth-theory. We all loved that one and would like him to play it again. Now that he is in government, he might still be endogenous, but he is forgetting the growth. We now see endogenous mess theory.
  I have not always thought that Matthew Parris observed things entirely accurately, but I was in total agreement with him when he said, after the Budget:
  "Tony Blair"
  looked
  "so dreadful… Sallow and drawn, his face puckered by anxiety and a cartoon frown".
  It is no wonder the Prime Minister and the Chancellor have fallen out, because the Chancellor has not lived up to his own star billing. His Budget had to be watered down by an apprehensive Prime Minister.
  It was a bits-and-pieces Budget with little left alone, but little changed decisively for the better. It is true that there were a couple of welcome U-turns. I see that the Chancellor needs to be cheered up. We are delighted that he gave in over existing personal equity plans and tax-exempt special savings accounts, but he should not have mugged them in the first place. The dirty deed said then now does damage that lingers on. It puts people off saving. It makes them more worried than they should be about saving, because they can never be sure what the Government will do to their existing saving plans.
  We are glad that small businesses will be let off some of the extra corporation tax that the Chancellor had planned to heap on them. They do not have to be grateful for relief from an imposition that they should never have had to face. It does not make them better off than they would have been under a Conservative Government. It just means that they have been relieved of some of the burden that other businesses have to suffer under a Labour Government. It is a great pity that the Chancellor will not do the same for bigger businesses, especially for manufacturers caught by high sterling.
  The Chancellor has warned that growth will falter if wages go up too fast. I agree that there is a danger that wages going up too fast could do damage. He may be right. Why, then, is the President of the Board of Trade passing legislation to make wages go up faster? Why can the two of them not agree a rate now, in a democratic and civil way, and tell the House before the legislation is completed? It is most extraordinary to put a measure through both Houses recommending a minimum wage and
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  not tell anyone in the House of Commons or the other place what that minimum rate will be. That rate will have huge consequences for the Chancellor's Budget and for the cost of public services and public borrowing. As the Chancellor himself admits, it will have big consequences in due course for the rate of growth and inflation—but he and the President of the Board of Trade cannot agree the rate, so we all have to wait while they sort out their disagreements.
  The Chancellor's views are clear. We read in the press, courtesy of his spin doctor, that he wants a low rate, probably below £3.50 an hour. In the Red Book he says clearly:
  "Responsible pay bargaining, combined with the Government's welfare to work measures, would allow faster growth and higher levels of employment over the next few years."
  I welcome that statement. It shows that the Chancellor has understood that, if the Government boost wages too much, even for the best of reasons, it will be destructive of the very jobs that they need to give hope to people with few skills, and the younger people who need jobs. It would be a cruel policy. Yet the Chancellor cannot persuade his colleagues in the Cabinet to come straight out with a sensible rate from his point of view and end the tension around the Cabinet table.
  Mr. Butterfill: Would it not also be profoundly inflationary, thereby ensuring that interest rates would have to remain high, and the pound would remain uncompetitive?
  Mr. Redwood: It would certainly mean that interest rates would have to remain high or go higher if the Government lose control of wage settlements. I am sure that, privately, the Chancellor is apprehensive about that. It is important, therefore, that he gets some sense into his colleagues over their wages policy.
  Mr. Bercow: My right hon. Friend just informed us of the Chancellor's view about the potentially damaging impact of a high minimum wage. Is my right hon. Friend aware that the Chancellor's view is in conflict with that of the Minister of State, Department of Trade and Industry, the hon. Member for Makerfield (Mr. McCartney), whose McCartney curve tells us that a higher minimum wage is good for the economy because it will boost consumer expenditure? Is that another example of the splits in the Government?
  Mr. Redwood: My hon. Friend has put his finger on an important point. His example also shows a breakdown of collective responsibility. On this occasion, the Chancellor is right. He is clearly the senior Minister in the argument; he should instruct the Minister of State that the official Government line is that higher wage settlements are unhelpful, and that a realistic minimum wage is crucial to the attempt to retain some control over wage settlements.
  If the President of the Board of Trade introduces a minimum wage that really does lift wages at the bottom, everyone will want a pay rise to protect differentials. I hear that members of the Cabinet, including the right hon. Lady, wish to retain their differentials over junior Ministers. If people on £100,000-a-year packages want to keep their differentials over others who are fairly well paid, surely people on £15,000 or £20,000 a year will

  59
  want the same, and they will have a better case. The Chancellor must be very worried that he will have to face not just the cost of rises at the bottom of the income scale, but the understandable request of many higher up the income scale for a similar percentage increase in their pay, with all the consequences that he identified.
  Both the Chancellor and the Prime Minister say that we need flexible labour markets to compete successfully. The Confederation of British Industry agrees, and, again, I find myself in agreement with the Chancellor. Why, then, is the President of the Board of Trade doing all that she can to make our labour markets less flexible? When will she make up her mind about compulsory union recognition? Will she give in to the union bosses, and say that 50 per cent. of those voting should decide the issue, or will she be more cautious and leave it at 50 per cent. of the work force?
  It will be a defining moment for the right hon. Lady when her left-wing friends discover whether there is any of the old crusader remaining in her, or whether she is selling out. Her silence again today on that crucial issue speaks volumes about her unhappiness in this Government of the spin doctors, by the spin doctors, for the spin doctors.
  The Chancellor, the great meddler, is en route to becoming the great betrayer. When his party was in opposition, he huddled in the House of Commons Library, ransacking the statistics for any bad figure that he could alight on. That would make his day: it was being so miserable that kept him going. It is normal for Ministers to whistle a happy tune, even if they are whistling in the dark. Now, it seems, this dour Chancellor sits in the Treasury, out of sight, still dissecting every statistic and, like Jeremiah, rubbing his hands at every piece of bad news.
  The Chancellor warns us that, if we drink, it is bad for us, so he will tax it. He warns us that, if we drive, it is bad for the environment, so he will tax it. He tells us that, if we save for the future, it is bad for social justice, so he will tax it. He tells businesses that, if they make profits, it is bad for inflation, so he taxes that too.
  Of course all Governments must impose some taxes, but sensible Governments do not enjoy imposing them. The only point at which the Chancellor cheered up during my speech was when I was talking about higher taxes: he obviously gets a kick out of them. Nor do a sensible Government moralise over every tax that they do impose. This Government like taxing. They enjoy the sense of power that it gives them. They would tax more and more if they thought that they could get away with it, and they use taxes to meddle endlessly in our lives and those of our businesses.
  Even when it comes to reforming welfare, it is industry that is asked to do the work. I do not believe that business can cope easily with working out and implementing family tax credits. People in hard-pressed companies do not want to become a different kind of Child Support Agency, and to make all the inquiries that they would need to make to meet the Chancellor's requirements.
  The bottom line of this Budget, added to the Government's first Budget, is that we are all worse off. Companies are much worse off; families with mortgages and cars are worse off; people relying on pension savings
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  are worse off. The typical family is more than £1,100 a year worse off following the five mortgage rate rises, the cut in mortgage interest relief at source—the Chancellor hangs his head in shame, as well he may, but this is all true—the petrol taxes that he has increased, and the pensions tax.
  Less than a year ago, in that golden age, a litre of petrol cost 54.9p in a good garage. Today, it costs 65.9p, despite a big drop in the oil price. That is all the Chancellor's own work. He does not know, because he now has his tank filled on the firm, but if he had to go out and fill his own tank he would find out. He is lucky that we no longer hear about the price of a gallon, because he has put that up by a massive 40p.
  I am told by those who smoke that last May a packet of 20 cigarettes cost around £2.95. Today, it costs £3.35. Again, that is all the Chancellor's own work. Today, a young person saving for a pension must put aside £120 a month, while £100 did the job last May. That is a huge increase in the cost of taking a prudent view of the future and wishing to make provision.
  The Budget sandbags the farmer as well as the industrialist. Labour moves seamlessly from having high sterling to banning T-bone steaks. It is determined to destroy rural businesses. [Laughter.] I am glad that Labour Members find that amusing. The butchers to whom I have spoken do not find the ban on T-bone steaks at all amusing. It has cut away a piece of their business when they are already under pressure. Labour Members representing rural areas should listen to what businesses are saying in those areas.
  What do villages say about Labour? The pharmacist fears for his business as the Competition Bill threatens to knock his prices. The butcher struggles to stay out of gaol when his customers demand beef on the bone. The newsagent wants to know if Labour Members are going to abolish the newspaper boy. The publican can get no sense out of the Department of Trade and Industry on what business he can do with the brewer under the new competition measures that the right hon. Lady proposes. The farmer whose income has already been halved faces an even grimmer year with high sterling and high petrol prices.
  Country dwellers need their cars, and they are particularly hard hit by the petrol price rise. The Chancellor's £50 million sop for regional transport will do little to help. In his haste to attack car owners and manufacturers, he appears not to have understood the difference between engine size and fuel omissions, and is still in a muddle about exactly how to raise all the money that he wants. And what about the tax on new cars which was announced in a press release in January? The Leader of the House told the Opposition that it would appear in the Budget, but it has not—yet manufacturers have been told by letter that it will apply.
  That is the reality of Labour government—tax by stealth; no stability, just permanent uncertainty. Then we are all meant to feel grateful because income tax rates have not gone up. Under the Conservatives, they used to come down Budget by Budget. The standard rate fell from 33p in the pound to 23p. Why should anyone feel better as a result of this Budget, which contained no such welcome change?
  The exporter struggling with the pound at DM3.06 still has to struggle after the Budget, and cannot now look forward to a change of policy: he has no hope. The

  61
  manufacturer struggling against ever-cheaper foreign goods now knows that he must cut his operations, as the Government have nothing to offer him. The unskilled person seeking a job knows that he must hurry before the minimum wage starts to price people out of work, according to the Chancellor's own statements. The home owner knows that the five mortgage rate rises are here to stay, and that he may be in for more. The saver knows that saving for pensions will remain a dearer business. Labour is not making it better; it has made it worse. Labour is bad for business.
  The media strategy of the Budget was handled better than the economic strategy. That is not good but dangerous, and people should not be taken in by the weeks of bombardment threatening every industry and individual in sight with higher taxes. They will discover that some will be spared, while some will face the ordeal of consultation before the extra taxes are imposed. There have been threats to the house building industry, threats to the sand and gravel industry, threats to the oil industry, threats to savers, threats to home owners and threats to car owners. There are to be all sorts of extra taxes, and people do not feel especially grateful that some of them have been dropped—at least temporarily—from the Chancellor's Budget strategy.
  We should not feel grateful for what the Chancellor has not done; we should look at what he has done. We should remember what he said in opposition about manufacturing and the importance of industry. In a chapter of his book "Where There is Greed", entitled "Manufacture or Die", he wrote:
  "It is our ability to produce manufactured goods and compete in our own and in world markets that is central to our industrial and economic performance".
  Those are fine words, but he has not lived up to any of them. The very people whom he praised in that book now bear the brunt of his Budgets and his failed strategy.
  The Chancellor says that he gave the Bank of England its independence so that it would be free to control inflation, that high sterling is the Bank's problem, and that he has done his bit. He certainly has: his Budgets and his refusal to take a Chancellor's responsibility for the pound are destroying exports, manufacturing and agriculture, and damaging savings and jobs. Far from being the Chancellor for manufacturing, savings and investment, he will go down as the Chancellor who stood by as people were laid off and factories were closed. The main memory from this Budget will be of a Government who do not care about industry at all.
  5.49 pm
  Mr. Robert Sheldon: The right hon. Member for Wokingham (Mr. Redwood) says that we are worse off as a result of the Budget. I do not know how often he visits his constituency at weekends, but that is not the position as I see it. People think that this is not a bad Budget—they have not got everything that they wanted, but that is the nature of life. This is certainly a reforming Budget. As with all major reforms, it will take time before we are able to assess its full impact and the extent of changes to the conduct of our economic affairs.
  The highlight of my right hon. Friend the Chancellor's work is undoubtedly the welfare-to-work programme. In my constituency, I have frequently met unemployed young men who live next door to houses where the
  62
  windows are rotten and the doors are falling off. Our inability to bring together people who want to work and jobs that need doing, and our failure to address what is being done and what needs to be done, is disgraceful.
  People spend a great deal of money to go out to work. It was not always an expensive business: when the cotton industry was the mainstay in my constituency, we had one of the highest levels of working women in any industrialised country, and they did not need encouragement to work. The work was down the road, earning a living cost hardly anything, grandmothers and aunts looked after children, there were no transport costs and income tax was only for the better off. Those are now large expenditures that, together with the tax-benefit mismatch, have great disincentive effect.
  Fundamental changes have been necessary for a long time. Ideally, transport costs, which are a major expense, would be tax deductible, but problems are associated with that. Child care allowance is an acknowledgement of work-related expenditure and, although I am not sure that I understand the way in which child care centres will be set up and accounted for, I applaud my right hon. Friend's determination to implement the necessary changes.
  When I was at the Treasury, the replacement of child tax allowance with child benefit recognised the extra cost of raising a family and their reduced taxable capacity. We acknowledge taxable capacity to only a limited extent, such as in working tools allowance and some working clothing allowances. Income tax allowance did not benefit parents who did not pay income tax, but for once the two major parties agreed on a fundamental issue and changed tax allowance to a benefit. The Government and the Opposition reached a sensible decision together, and there was 20 years of agreement on it. I wish that such long-term agreement was more frequent: it should be the basis for everything other than a one-Administration reform that the Opposition intend to repeal. Such reforms are a disgraceful waste of time and effort and should be avoided wherever possible. Although I understand the needs of the Revenue, I support the recognition of the cost of child rearing.
  The Government took office accepting that manufacturing industry faces problems, and I had hoped that they would help by improving capital allowances and making the pound competitive. Figures in the Red Book suggest that the future does not look good. The forecast growth in manufacturing output is 0 per cent. to 0.5 per cent for 1998, against an increase in gross domestic product of 2 per cent. to 2.5 per cent; 1 per cent. to 1.5 per cent. for 1999, and 2.25 per cent. to 2.5 per cent. for 2000. The conjunction of those figures with forecast balances of payments of minus £6.5 million for 1998, minus £6.75 billion for 1999 and minus £6.5 billion for 2000 shows the importance of manufacturing industry.
  Manufacturing industry is important not for the number of people it employs, but for the wealth it creates and for its foreign earnings. I welcome improved capital allowances and the 40 per cent. rate, although I am sorry that we have not continued with the short-term capital allowances. I had hoped that the rate would be 60 per cent., which would have been worth while in the light of the difficulties that manufacturing industry faces with the high pound and high interest.
  The right hon. Member for Wokingham must have forgotten the wanton damage that the previous Government did with their $2.40 pound and their

  63
  17 per cent. interest rates. I shall never forget it, because more than 30 per cent. of the firms in my constituency closed their doors in two years. Germany and Japan—indeed, every country in the world—have similar medium-tech and high-tech firms. The sacrificing of manufacturing industry on the altar of dogma was disgraceful, and the previous Government should never be forgiven for it. Current exchange rates and interest rates are nowhere near such levels, but service industries are able to ride them out, which is why GDP is still increasing respectably. Manufacturing industry has suffered most. Having given control of interest rates to the Bank of England, my right hon. Friend the Chancellor has to take account of their requirements in the running of the economy. His Budget strategy is bound to be limited by that, and he will therefore be judged not so much on demand management, as he would have been in the past, but on the important tax and other measures that he has introduced.
  The quickest way to reduce unemployment is through aggregate demand, but that is not easily open to the Chancellor. However, my right hon. Friend's redistributive approach is clear, and I look forward to it featuring prominently in future decisions.
  How does the Budget fit in with the forthcoming single European currency? The consequences of our self-exclusion from monetary union cause me great unease. Britain is the only major country that will not participate. Sweden, Denmark and Greece have the luxury of not joining, because they would not influence the shape of the union to any important extent, whenever they joined.
  Britain is in a different position. If we had joined at the outset, we could have made an important contribution to the development of economic and monetary union. Latecomers to institutions are at a serious disadvantage in determining rules and outcomes. Sweden, Denmark and Greece would not have affected the rules, but Britain could and would have done. We have failed to join institutions at the outset again and again.
  I should have wished ardently for a postponement of EMU, which is too precipitous. It will take place, and we should have placed ourselves where the action is. There may be problems with the euro. My right hon. Friend the Chancellor of the Exchequer was well received in York on Saturday. He explained what needed to change in the European Union. His advice would more likely be taken to heart if we were participating members of the single currency. The difficulties facing the participant countries are obvious. We should not underestimate the will to make changes within the European Union to deal with problems as they arise. There may be some mush and fumble, but problems will be dealt with, because member countries will not want to admit defeat and face the enormous turmoil that the collapse of the single currency would create.
  We may not like some of the solutions, and I am worried that we shall not be properly involved in the initial decisions or in the subsequent changes that will affect us. Historically, we have always paid a price for our hesitancy: our voice should have been heard. We could have at least announced that we intended to join,
  64
  which would have given us a foot in the door. If it were known that we intended to join, we should perhaps be listened to more seriously.
  The major advantages of the City of London have been affected. We have lost some of the financial services market to Frankfurt as a result of our indecision. What saddens me most is that we should have been the bridge between the United States and Europe, sharing the language of the one with the geography of the other.
  We must decide on the arrangements for the pre-entry stage to membership of monetary union. Some companies have never had to operate dual currencies to anything like the extent that will soon be required. Daily euro transactions will be a major part of their business. Even the retail trade will have to cope with those changes. Some shadowing of the euro will be necessary, and I should like to be assured that the Chancellor is developing plans to deal with that.
  It is clear to me that the cost of the national health service will rise faster than the rate of inflation or growth in the economy. The population is aging and, as wants are met, the health service will require increasing expenditure. The time will come when we shall have to consider private medicine, which I do not favour, or a special national health service tax.
  Anyone who has served in the Treasury has a visceral feeling about hypothecation: it burns inside us. The road fund licence still casts its shadow 70 years later. An important weakness of hypothecation is that it does not take into account the changing patterns of priority and expenditure. One certain aspect of health is that demand will increase into the indefinite future. If people can see the consequences, they may be more willing to accept a national health service tax than other taxes that disappear in the vast generality of public expenditure. Despite the hostility aroused by such a proposal, it should be freshly examined, and I hope that my right hon. Friend will consider doing so.
  Meanwhile, we have had the first instalment of the reforms that my right hon. Friend will continue. We look forward to his later contributions.
  6.3 pm
  Mr. Kenneth Clarke: The Chancellor's Budget speech was commendably short in length and disgracefully short on detail—to an unprecedented degree—but it was long on rhetoric. I did not totally disapprove of some of his rhetoric: my theme was always that we should have no return to boom and bust. The trouble is that the Chancellor is not quite aware of the risk he is running of a return to boom and bust; nor does he know what to do about it.
  I enjoyed the Chancellor's repetition of our slogan of welfare to work. I agree with him that one of the best solutions to the problems of poverty and social exclusion is work and the opportunity of work. Unfortunately, I am not at all sure that his repackaging of our measures is wise, and his Budget will not make it easier for businesses to create jobs.
  The Chancellor added some new, portentous rhetoric about being a tax reformer, and about how this was the most tax-reforming Budget for a generation. I agree with my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley), who spoke on Thursday, that this grandiloquent language was not matched by the measures it announced, which were a ragbag of tax reforms.

  65
  Several of my right hon. and hon. Friends have made the point that the overall effect of the Chancellor's tax changes is to continue the practice of putting a considerable burden of extra taxation on the very businesses that must create jobs if more people are to move from welfare into work. When the President of the Board of Trade explained some of these tax changes, she seemed totally oblivious to the overall upward effect they will have on the businesses for which she has departmental responsibility. She was partial in her selection of examples to illustrate the changes.
  In less than one year in office, the Government have increased the burden of corporate taxation by more than £20 billion. My right hon. Friend the Member for Wokingham (Mr. Redwood) could get no denial of his figure of £25 billion; I thought that the figure was £22 billion. Whatever the figure, the President of the Board of Trade obviously does not want to intervene to rule between us. It is certainly an enormous additional burden.
  Considerable change has been made to capital gains tax. It is already our most complicated tax, and the most difficult to comply with and to collect, and it will be even more complicated in future. I happen not to agree with the theory that, if people produce a given capital gain on a sum of money in two years, that is bad, and if they make the same capital gain but take 10 years doing so, that is better. I was never attracted by the taper idea, which distorts the figures and is not wholly consistent with making the best use of resources for investment. The complications that will now face any taxpayer who is so reckless as to want to go in for self-assessment, or who needs the advice of his accountant, will be bewildering.
  Mr. Ian Bruce: I am sure that my right hon. and learned Friend was proud of the fact that capital gains relief was given to people who retire. Did he think that the Chancellor had improved the position? Has not the Chancellor decided to phase it out and to apply capital gains tax?
  Mr. Clarke: The Chancellor has made the position less attractive for the owner-manager and people who are building up their own business: my hon. Friend makes a valid point.
  Even more important are the changes made to employers' national insurance contributions. I concede that simplification is desirable in principle, because the aim of tax reform should be to make the system more simple and not more complex. However, the effect of making these changes now was brushed aside by the President of the Board Trade.
  The cost of creating employment for employers whose employees are largely low paid is reduced, but the cost of providing jobs for employers whose employees are well paid—not very well paid, but on average earnings or above—is much increased. At this difficult time for many an industry, the effect will be arbitrary.
  It may be good news for the retail and hotel and catering industries, and I have no objection to that. It will be extremely bad news for people who employ large numbers of professional or highly skilled staff. The total effect of the Budget on a medium-sized, high-tech business is particularly unattractive: the burden of creating jobs will be made worse, especially when the increases in corporation tax are also taken into account.
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  The way in which the Chancellor and the President of the Board of Trade explained the effect of the changes in corporation tax was disgraceful. It was an attempt to mislead the casual listener. We are constantly told that the rate of corporation tax is being reduced, but the method by which it will be collected from the bulk of British business will produce a very heavy flow from business to the Treasury.
  I had understood that there was to be consultation on that issue after the green Budget in November. After the trailing of the proposal, it took about 24 hours for everybody to realise that it would bring the Treasury at least £8 billion over the lifetime of this Parliament. The response to the consultation in the Budget was one sentence, which made it clear to those who were interested—but not to anybody else, because it was tucked away—that no change of mind was taking place.
  I welcome the fact that the new system of advance payments will not apply to small and medium companies, but it will be burdensome on the rest, and I think that the benefits will accrue only to those who make profits of £1.5 million or less a year. What about a company with profits of £2 million a year, which will not be a giant company? It may be a hi-tech company located in a science park of the type that I have described. Such companies are adversely affected by the Budget, and the overall effects are severe.
  Disingenuous arguments are still being used. The President of the Board of Trade repeated that, when the full effects come through, which will be in about 2002 according to the Government, business will start to save about £1.5 billion a year. That assumes that the lower rates of corporation tax will continue for that time until the benefits begin to flow.
  However, the commitment to the lower rates is only for the lifetime of this Parliament. The Chancellor is committed to them for as long as he needs them to sell the bogus proposition that he is helping business while raising a large sum from it. If there is a threat that the cash flow will reverse from the Treasury back to business, the Chancellor may use the latitude he has left himself to start raising business taxation.
  On the basis of what he has done so far, the Chancellor is eager to raise business taxation, for entirely populist reasons. The President of the Board of Trade gave that away when she gave her list of alternatives that might upset the public if the Government resorted to them.
  I will not burden the House with the argument that I used before. The Chancellor did not need to raise taxation on such a scale, because the public finances are altogether healthier than he constantly describes them. He continues to give pessimistic forecasts of the public sector borrowing requirement. As we said at the time, he gave pessimistic forecasts in November, but he will get into balance very quickly.
  I agree with the policy aim of moving people from welfare dependency into work. I commend any move in that direction. I was in favour of doing what we could to improve the previous family credit system, and we introduced a generous disregard for child care to help women with obligations to provide care for their children so that they could, if they chose, take low-paid work and cease to depend on benefit. There has been an elaborate repackaging of family credit and child care allowance into the new system of the working families tax credit.

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  My hon. Friend the Member for Bury St. Edmunds worked with me on several Budgets. Anybody who is interested in the subject is aware of the system in some countries of earned income tax credits. Like so many of the Government's policies, that one has been taken from the Clinton Administration. I remain to be persuaded that the Government, who are anxious to present a policy that they could claim to have invented and to dissociate themselves from the policies of the previous Conservative Government, are wise in importing a system that is not regarded by everybody in the United States as an all-fired success.
  In any event, there are big differences between the systems in America and Britain. The Americans lack two British policies. First, they do not have our system of pay-as-you-earn: everybody in America is required to submit an annual tax return. Secondly, America does not have our system of separate taxation for a woman and a man as a couple. They are at a disadvantage compared with us in not having either of those systems, and that makes it difficult to bring earned income tax credit into this country. A great cost is involved in bringing it in, some of which is due to increased take-up and some of which will be incurred by taking people further up the scale into benefit. It is more than that, because, under the new system, there are PAYE complications for the employer. There is also the administrative complication of turning the Inland Revenue into a department that will pay out money to people with children.
  Many supporters of the new system are shocked to discover that it cannot be introduced before October 1999. A great deal of money and administrative time will be spent trying to hit that deadline. The Inland Revenue does not know anything about children. Under our tax system, it does not know whether taxpayers have children, because there is no child care allowance. The Inland Revenue has never paid out money by itself or indirectly through employers in its experience. The Department of Social Security has always done that, but now the two systems are to be amalgamated. The cost of the complication will be considerable.
  In future, an employer will know all about the circumstances of each employee. When we made family credit more generous, Labour Back Benchers said that we were subsidising low-paying employers, and that that was terribly wicked. It was said that we were subsidising low pay, but that was not true. Under the family credit system, many employers do not know that an employee is drawing family credit. The snag under the new system is that every employer will know exactly how much each employee is getting on top of his pay.
  Another issue is the transfer from the mother to the father. What happens if a benefit for the mother is taken as a tax credit by the father if he is the principal earner? When the Government started to trail the idea, that matter was raised by a number of commentators, including me. The Financial Secretary to the Treasury joined in the debate about the purse-to-wallet problem—I do not like the jargon—that that transfer posed.
  The Government's answer—that people are given a choice—is absurd. The mind boggles. Of course some will make a sensible choice, but one can visualise a discussion between a mother and father about the
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  comparative advantages of one taking a benefit or the other taking a tax credit. No doubt the Chancellor fondly imagines that such people will take their accountant's advice. People who contemplate moving from benefit dependency to low-paid work may not be able to do it, and that is another complication.
  I approve of the objective of concentrating on subsidising low-paid jobs to widen the gap between earnings from them and the long-term receipt of benefit. The previous Government and this one appear to share that objective, but for the sake of originality, and to enable them to use grandiloquent phrases about transforming the tax system, the Government have wished upon us an extremely complicated new arrangement of dubious value.
  I have said how much I agree with the Chancellor, but I wish that he would not overdo the way in which he sells his policies. Sometimes, he makes it sound as if the creation of jobs is essentially a function of the relationship between the tax and benefits systems.
  New Labour seems to agree with some of my right-wing colleagues who are no longer in the House and who thought that the whole problem was the feckless poor. It was said that out there were many jobs, and that people were unemployed only because they had consulted their tax advisers and had decided that the marginal rate of reduction was too great to make it attractive for them to take advantage of the employment.
  That is not the case. The reality is that the northern part of my county, where the coalfields collapsed, and Doncaster and Barnsley a bit further south, are not full of single women who would take jobs if only the cut-off rate was not so sharp. We simply have not reached the stage where, with the development of the real economy, these jobs are being created in sufficient quantity. Vis-a-vis my previous point—no return to boom and bust—we were going in that direction.
  The Chancellor appears to have no interest in the real economy. He prefers social reform to macro-economic policy. He has left macro-economic policy to the Governor of the Bank of England. I remember being in the House when everyone complained that demand management and control of inflation were entirely a function of monetary policy. People used to complain about one-club golfers running the economy. The Chancellor is a one-club golfer, but he has given the club away to the Governor of the Bank of England, and he now says, "What goes on out there in terms of managing the economy has nothing to do with me."
  Mr. Malcolm Bruce: Is the right hon. and learned Gentleman's party in favour of taking this power back, and then handing it over to the European central bank?
  Mr. Clarke: I am in favour of this country's authorities, for which the Chancellor took sole responsibility when he took over, taking a proper view of their responsibility for the macro-economy. Our jobs and living standards depend on that.
  Governments do not create jobs. The tax-and-welfare system does not create jobs, except in the relevant offices. It is the duty of Government to try to create the conditions in which people in industry, business and commerce find it easier to create jobs and to raise people's living standards. In his speech, the Chancellor made it clear that

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  he has no interest in that, and the President of the Board of Trade appeared to take only a passing interest in that aspect today, giving a wholly rosy view of where we are.
  The fact is that business generally is faced with a combination of higher taxation, higher interest rates, an overvalued pound and a Chancellor, President of the Board of Trade and Government who do not believe that their fiscal policy has anything much to do with that. They are more concerned with social reform and the affairs of the Department of Social Security, in which the Chancellor likes to interfere. As long as we have the present Secretary of State for Social Security, it may be a good idea for him to interfere in that Department, but he should take a broader view of his fiscal measures in deciding what impact they are having out there.
  There is not a direct read from monetary policy to fiscal policy. It should not, in my view, be the case that, when we tighten fiscal policy, monetary policy is relaxed, and when we tighten monetary policy, fiscal policy is relaxed; but the Chancellor and the Governor have to work in harness and at least have some common analysis of whether consumer demand is too strong or too weak, and whether it is likely to go up or to go down. They may not be able completely to control the exchange rate, but one or the other has to ask himself why it has gone up to a level that is crushing manufacturing industry, and whether either of them is going to do anything about it. At the moment, it does not seem that either of them will.
  The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) talked about the problems of manufacturing industry, particularly exporters. Our export orders are going down rapidly. Manufacturing industry is about to go technically into recession. A recession is euphemistically described as negative growth for two successive quarters. This country has had five months of declining industrial production. The sixth is about to come up. Manufacturing is going into recession, and, even though service industries are thriving, the whole economy is slowing down at a remarkable rate.
  Unemployment is still dropping, but at a much lower rate than 12 months ago. The turn is about to come, and we are simply waiting to see when, not whether, unemployment starts to rise again. That will put back into proportion all this rhetoric about getting people from dependency into work by playing around with their marginal rates of deduction.
  The reason that the pound remains so strong—it is not the sole reason—is that we have raised interest rates in successive little steps, every time leaving the message that they are about to go up again. The reaction to the Chancellor's Budget was that the Monetary Policy Committee of the Bank would put them up again, and immediately the pound soared miles above DM3. The minutes of the last committee meeting showed that it was poised to put them up again.
  The Chancellor plainly never even addressed the question whether he could do anything about that. He remains completely oblivious to what the solution might be. In his speech, the only contribution he could make to tackling the threat of future growth was, "We must control our earnings." That is all part of his rhetoric about the frightfully inflationary inheritance when he took over.
  One of the good features about the British economy at the moment is that the increase of earnings has been flat for 12 months. The latest statistics about earnings growth
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  are exactly the same as those 12 months ago. The Chancellor was arguing about a shadow. He was missing the substance of the threat that our economy faces.
  The Chancellor's own Red Book has to concede that the economy will slow down. I think that the Red Book is optimistic. I think that the economy will slow down faster than he says. The Red Book says that the savings ratio will fall. That is partly a result of what he has done to pensions and savings. Even as revised, thanks to the Robinson factor, individual savings accounts are far less attractive than personal equity plans and tax-exempt special savings accounts. Savings ratios are coming down.
  None of the messages in the Budget does anything to dampen the belief that our high interest rates are going to remain in place and might go up again, or that the exchange rate will therefore remain strong against the deutschmark and the franc; of course, it is about to be very strong against the euro for some unknown period.
  The Budget was well received. I agree with all the people who say that most Chancellors should have a sinking heart when Order Papers are waved behind them. When the Order Papers are waved on the instruction of the bleeper, it is perhaps a little less worrying than when they are raised spontaneously at the wrong moment in response to previous Budgets.
  I do not think that all Labour Members are rejoicing about the Budget. I did a television programme at the weekend when I found that the right hon. Member for Chesterfield (Mr. Benn) and I were nearer to agreement on some of the analysis than at any time in our entire political lifetime. I do not take as much comfort from that as I do from the right hon. Member for Ashton-under-Lyne and quite a lot of sensible Labour Members, who know perfectly well that this country's economic well-being is being put at risk.
  As the actual content—the tax reform—of the Budget was so comparatively inconsequential, its lasting legacy will be that the Labour party has come into power and completely neglected the prospects for sustained growth with low inflation, which it should have been pursuing.
  Several hon. Members rose—
  Mr. Deputy Speaker: Order. Before I call the next hon. Member, I remind the House that, although there is no time limit on speeches today, many hon. Members are seeking to catch my eye, and it would be helpful to everyone if speeches could be moderately short.
  6.27 pm
  Mr. Clive Soley: It is a great pleasure to follow the right hon. and learned Member for Rushcliffe (Mr. Clarke), the ex-Chancellor of the Exchequer. I remember hearing one of his first speeches from the Dispatch Box and thinking, "That man is a future leader of the Tory party." He came very close to it. Like Chris Patten, with whom he has much in common, he is the exiled wing of the Tory party. Precisely because he can be such a formidable opponent, let me make it clear that he should not hide his light under a bushel, but should consider making a leadership bid. If he does so, I shall do everything that I can to encourage him.
  The reason why I was so anxious to get an answer from the right hon. Member for Wokingham (Mr. Redwood), the shadow President of the Board of Trade, about the

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  national minimum wage is precisely that he, more than anyone else in the Conservative party, has led a formidable, determined and persistent opposition to the introduction of the minimum wage. The idea that he could be a member of a Government who continued with the national minimum wage beggars belief. It would be the political equivalent of discovering, after 20 years, that Mary Whitehouse had been the marketing manager of Red Hot Dutch. It is impossible to think that he could be a member of a Government who wanted to keep the national minimum wage.
  The Conservative party seriously underestimates the view that the British public have taken about its capacity to manage the economy either firmly or efficiently. When a number of Conservative Members intervened on my right hon. Friend the President of the Board of Trade to criticise our taxation policy, I remembered two things. First, I remembered the clear commitment that we gave before the general election on direct taxation, that we would not increase income tax levels—we made exactly the same comments that the Conservative party made about other forms of taxation. Secondly—and more importantly—I remembered that over the 18 years from 1979 to the collapse of the Tories at the election, the burden of taxation imposed, as a percentage of gross domestic product, was higher for almost all those years than it had been under a Labour Government. When the Tories left office in 1997, it was about one to one and a half percentage points higher than under the previous Labour Government.
  The Conservative Government increased the tax take— largely through a switch from direct to indirect taxation— and thereby dramatically increased the tax burden at the same time as they caused phenomenal problems in Britain's investment policy, not least by the doubling of value added tax in 1979. That caused the first of the two Tory slumps that did immense damage to the manufacturing base of this country, from which it has yet fully to recover.
  Mr. Ruffley: On the point about rising tax burdens, what does the hon. Gentleman have to say about the fact that the Red Book shows that for the last financial year that the Conservative Government were in power, the tax burden was 38.1 per cent., compared with an anticipated figure of 40.1 per cent. for the financial year 2002–03? What is his explanation for that?
  Mr. Soley: What the hon. Gentleman is desperately trying to cover up is that included in his figures is the windfall tax. He cannot include that any more than we could include the windfall tax on the banks imposed by Lord Howe in 1979–80. His figures do not add up.
  Mr. Bercow rose—
  Mr. Soley: I will take one more intervention, but I am conscious of what you said about time, Mr. Deputy Speaker. I hope that the hon. Gentleman will be quick.
  Mr. Bercow: I am grateful to the hon. Gentleman for his courtesy in giving way. Will he clarify whether he is
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  saying that the Prime Minister, when Leader of the Opposition, never said,
  "We have no plans to increase tax at all"
  in September 1996, or whether he is admitting that the Prime Minister said it, but did not mean it? Which?
  Mr. Soley: The hon. Gentleman knows as well as I do that my right hon. Friend's remark was made in the context of a discussion about income tax—
  Mr. Bercow: No, it was not.
  Mr. Soley: Yes it was. The hon. Gentleman's memory is faulty. Throughout the election and during the period leading up to it, we were very clear on direct taxation. The answers that we gave on other forms of taxation were precisely the same as those that the Conservative party gave for 18 years—that no Chancellor of the Exchequer would ever say what he would do with other tax rates. That position has always been maintained by both parties.
  The Budget is excellent for British industry and for stability. Its general structure and balance are right, so I want briefly to deal with just two issues. The first is the family and children. I welcome, most of all, my right hon. Friend the Chancellor's recognition of that issue as an essential part of the structure of the state in the running of the economy. At times, we try to run the tax structure as if the old economic system still existed.
  One thing that the Labour party has to learn—and which the country also has to learn—is that the economic structure changed fundamentally in the 1960s, 1970s and 1980s. That first came dramatically to my attention when I noticed that in the late 1980s in south Wales, the primary carers for more than 50 per cent. of children at home were the fathers. In other words, the heavy industries had collapsed and women were going into part-time work, leaving the men at home to look after the children.
  That process has moved on and we now expect, almost automatically, that parents will have different roles throughout their lives. They may work part time or full time; they may work for short periods or for long periods. We have to develop a tax and benefits system that recognises that. Of course, it is much easier to recognise the problem than it is to determine the shape of the solution. However, I am sure that the shape of the solution includes the sort of benefits for families and children that my right hon. Friend included in the Budget. It is right to focus on the children, on child support and on parenting rather than on marriage as such. The structure of families changes, and it is difficult to come up with a definition that works.
  We need to do more, which is why I should like the long-term thinking shown in the Budget to be taken further. We need to recognise that companies need to be part of the changing structure, in which parents need support at certain times if they are to work. We need to find ways to help companies to become, in the current phrase, family friendly. Again, it is easier to recognise the problem than to find the solution. However, there are companies—not least Midland bank, which took the initiative in this area—that recognise that they need to make special arrangements for parents who want to work part time and for those who leave employment for a time and then want to return to work. We should give additional support to companies that make those special arrangements.

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  We need also to recognise that as the nature of work changes so, too, does the nature of the tax and benefits system. I received a letter today from a constituent who was made redundant and so became self-employed. Her work takes her away from home for a period of time, and then she is back at home with her child and might work from home for a few weeks. When she is at home, she might not need child care; when she is away, she does. Because there are no effective means of recognising that and creating a structure to help her, she has to employ a full-time nanny, even though she needs one only when she is away from home or when the work she does at home is such that she needs to devote all her time to it. She actually needs a more flexible system than we have been able to provide.
  My final point relates to the big issue that must be dealt with in the near future—housing finance. The Conservative Government got it disastrously wrong. I remember warning them on many occasions, when I was shadow Housing Minister, that if they went ahead with market rents, the cost of housing benefit would spiral out of control—and it did. By going to a market rent system, plus the individual support of housing benefit, there was no way to impose a cap without causing distress and difficulty for those who needed affordable accommodation. From a cost six or seven years ago of £1 billion or £2 billion, housing benefit has now risen to £12 billion—twice as much as mortgage income tax relief cost four or five years ago, when we considered that to be a problem.
  If we simply cut housing benefit, the effect would be dramatic. It would be appallingly difficult for housing associations, private landlords and councils. We have to reform housing finance so that it recognises the importance of the housing market to the economy as a whole. I would prefer a bricks-and-mortar subsidy to keep rents down, rather than an open-ended subsidy on income. We also need some innovative ideas in the short term to deal with some of the housing benefit problems. I would be prepared to accept tax breaks—perhaps total tax breaks—for private landlords in exchange for guarantees about the quality of management of their properties. I see nothing wrong with indirect subsidy on that basis, as long as there is a guarantee of quality.
  The three factors that matter to people in regard to housing are affordability, quality of management and— for tenants—tenants' rights. We have not got those right, nor have we got right assistance on mortgage interest for people who are in and out of work—the benefits system will pay the interest on some occasions but, unless we do something further, people will continue to be left vulnerable to indebtedness to their mortgage companies. That is a time bomb ticking away under not only the whole structure of housing, but the wealth and strength of the economy, so I believe that the Government must give it urgent consideration.
  6.39 pm
  Mr. Malcolm Bruce: I say at the outset that my party and I welcome a number of measures in the Budget, not least the ambitious welfare reform package and the important reforms in macro-economic policy, such as the fiscal responsibility legislation, for which we called—it is designed to complement the operationally independent central bank, about which the Conservatives seem to be more than a little confused. Nevertheless, I
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  hope that the Government will understand that my speech, inevitably, will concentrate on our concerns about the Budget, particularly about the funding of public services and the weakening in Labour's position on the environment.
  The extra money for education and health was little and late. I do not believe that it will prevent an increase in hospital waiting lists and class sizes. Even if it does, the way in which it is targeted means that that can be only at the expense of other important aspects of health and education, as the extra money was offset by an upward revision to inflation—the gross domestic product deflator. That will mean a real-terms cut in public spending next year of about £750 million, which cancels out nearly all the extra money for health and education.
  That extra inflation—combined with the black hole that we identified in last year's Budget as being caused by higher inflation—has resulted in a real-terms cut of £6.8 billion in the public spending plans for 1998–99 in comparison with the original forecasts of the right hon. and learned Member for Rushcliffe (Mr. Clarke), to which the Government claim to adhere. The Red Book confirms that we were right to claim that the Chancellor of the Exchequer is building a huge war chest of funds, and that cyclical adjustment does not change the vast size of that war chest.
  The Budget is bad for the environment, especially as the Government have backslid on their CO2 reduction target. There is neither an energy efficiency scheme nor a carbon tax, and the fuel duties are still being used simply as a tax increase, with no switch from excise duty.
  Of course it is good that the Government have at last come clean and produced estimates showing the cyclically adjusted current balance—we have been asking for that for months. In effect, that represents the Government's estimate of the war chest of cash surplus that will result from their borrowing rules.
  As a result of incorporating the Tory spending plans in their previous Budget, the Government have produced new cyclically adjusted projections of their fiscal position that give a war chest of cash of some £123.4 billion over the five years 1998–99 to 2002–03. That excludes our claim—which the right hon. and learned Member for Rushcliffe has confirmed—that many of the Chancellor's economic assumptions are deliberately cautious, so that he can disguise the size of his war chest. That figure of £123.4 billion is almost exactly the same as the figure— £124 billion—that was calculated by the House of Commons Library in January, which the Government sought to refute.
  The Chancellor still seems determined to hide the size of his war chest, even though the figures are available for everyone to see. Excluding the windfall tax, it is assumed that the public sector borrowing requirement will fall by only £1.1 billion this year to £3.9 billion, and by a mere £2.2 billion in 1999–2000, to £1.7 billion. In the 1997 Budget, the PSBR was expected to fall by £17.7 billion between 1997–98 and 2000–01; now, the assumed fall in the PSBR is only £7.9 billion over the same period. Those figures may be found in table 1.2 on page 11 of the Red Book.
  What are the reasons for that? Table 1.2—the first main table in the Red Book showing the PSBR—assumes that the war chest is already being spent. Tucked away in note 3 is the admission that the growth of public spending that

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  is assumed in the table is 2¼ per cent. per year in real terms, which is fully three times the rate that was allowed for in the Tory spending plans—it raises the PSBR by £4.5 billion in 1999–2000, and by £9.1 billion in 2000–01.
  The Chancellor may want to treble the growth rate that was assumed in Tory spending plans—indeed, some hon. Members may think that a reasonable option. However, he should not in such an underhand way massage down the PSBR and distort discussion of the options that are open to him. Indeed, we have been trying to have an honest and open debate about what is available and what options and priorities should be reasonably pursued—we should not let the Chancellor control the process entirely, without, it seems, consulting the Cabinet or his party, let alone the wider public or the House of Commons.
  We believe that the Chancellor continues to take an extraordinarily pessimistic view of revenues. We noted in November that he had attempted to massage down VAT receipts—the hon. Member for North Durham (Mr. Radice) will recall that we had an exchange about that in the Treasury Committee, of which he is Chairman—by having the National Audit Office rubber-stamp his decision to assume that VAT receipts as a proportion of consumer spending would fall, although that contradicted an effective Customs and Excise equation showing that VAT receipts would rise.
  On page 118 of the Red Book, the Treasury is forced to admit that
  "it seems likely that the ratio of VAT receipts to consumer spending has increased in 1997–98"
  Nevertheless, its projections continue to assume a modest downward trend in the VAT ratio. Income is rising, but the assumption is—despite experience to the contrary— that income will fall. If that assumption were corrected and the figures predicted by the Customs and Excise equation were accepted, we should find that VAT receipts alone would provide some £3 billion extra to the war chest by 2002–03—some £8.2 billion extra over the period from 1998–99 to 2002–03.
  The Budget includes a further adjustment of the GDP deflator for 1998–99, from 2¾ per cent. to 3 per cent. As I said, that cuts the real value of public expenditure by £750 million for 1998–99. Because of an additional upward revision to the GDP deflator for 1996–97, the real value of planned public expenditure in 1998–99 is now £1.4 billion less—in constant 1995–96 prices—than was estimated in November.
  The £5.4 billion black hole in public spending for 1998–99, which we were the first to identify, has now grown to £6.8 billion. If one compares the new public spending plans with those set out by the right hon. and learned Member for Rushcliffe—even taking into account the Chancellor's extra cash allocations—one finds that Labour plans to spend £6.8 billion less in real terms in 1998–99 than the previous Government planned in their final Budget. The Chancellor's public spending plans allow for no real-terms growth in public spending for the three years from 1995–96 to 1998–99.
  Mr. Ian Bruce: Is not the hon. Gentleman being too generous to the Government? Surely all the figures assume that public sector employees—such as those who work in education and the health service, both of which
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  we want to expand—will accept a pay rise at the rate of inflation rather than the real rise that people who work in the rest of the economy are enjoying.
  Mr. Malcolm Bruce: The hon. Gentleman anticipates the development of my speech. I am explaining what the figures suggest, although I am not sure whether things will turn out that way in reality. I say as an aside that it is unreasonable for a Government who say that they are committed to the development of education and health to deny the people on whom those services depend a real increase—or, indeed, even a maintenance of living standards—when the economy is growing. That is unlikely to be sustainable.
  The Chancellor has not kept to his pledges. The Labour manifesto said:
  "For the next two years Labour will work within the departmental ceilings for spending already announced."
  That pledge was broken in 1997, when Labour reallocated moneys within budgets. We have no quarrel with that, as we pushed the Government to do it, but they broke a specific pledge.
  In November 1997, the Chief Secretary made another pledge that has been broken. He said:
  "The Government are committed to holding to the Control Totals for 1997–98 and 1998–99."—[Official Report, 13 November 1997; Vol. 300, c. 622.]
  Yesterday, the Government had to acknowledge that public finances for 1998–99 are so tight that they have increased the 1998–99 control total by £1.5 billion, using a carry-over from 1997–98 caused by slower growth. That is not necessarily wrong, but it makes a mockery of the Government's claim that they are sticking to the established spending plans. In reality, there has been a continual redefinition of Labour's election pledge on spending, demonstrating how ridiculous and arbitrary the whole process has been.
  Only an extra £500 million has been allocated to the national health service in 1998–99: much less than the £2.25 billion identified in our alternative Budget. [Laughter.] Hon. Members may snigger but, when he was Chancellor, the right hon. and learned Member for Rushcliffe chided Labour for not having the courage to produce an alternative Budget, which the Liberal Democrats have consistently done. He said that any Opposition worth their salt would produce alternative proposals, but of course the Conservative party has not done so, now that it is in opposition.
  Taking the GDP deflator effect into account, the Budget is worth only about £400 million more for the national health service. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) put his finger on it. Given the huge pressures from the recent below-trend funding for the health service, and the millennium computer problem, which will definitely prove serious for the national health service, the extra funding is entirely inadequate to substantiate the Government's claim that they will save the service and deliver a cut of 100,000 in hospital waiting lists. We do not think that that Red Book promise is likely to be fulfilled. If it is, it can be only at the cost of severe cuts elsewhere in the NHS, with damaging consequences.
  With the higher inflation expected in 1998–99, the NHS will receive only about 2.5 per cent. more in real terms. Under the Conservatives, the average real-terms increase was 3.1 per cent., although the last two years were not

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  quite so good. The present Chancellor, in his 1988 autumn statement response to the then Chancellor, Nigel Lawson, said:
  "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.]
  We expect waiting lists and waiting times to go on rising, breaking Labour's early pledge, which in any case has become merely a long-term aspiration.
  The £2 billion extra that the Government boast will be spent on health is to be spent over two years and, taking inflation into account, represents only about £650 million more than the Tory plans. Judging by his outbursts, I know that those figures and that analysis have irritated the Prime Minister. He seems to take the view that the Government live in a changing world where figures can be adjusted, adapted and updated, but that Opposition parties cannot respond in kind.
  If the Prime Minister wants to compare like with like, he might consider that the Labour party's pledge for spending on health and education, at the time of the general election, was for £100 million on each. We welcome the fact that the Government have approved that spending, but it is not enough to deliver on their pledges.
  The Budget announced £250 million extra for education, £100 million of which is to be directed towards tackling skills shortages in key areas and promoting lifelong learning. Those are worthy aspirations, but schools are to receive only £100 million extra. Taking the deflator into account, the Budget gives education a net real addition of only £150 million.
  That cannot reverse the decline in the percentage of GDP spent on education under Labour, in breach of its manifesto commitment. The manifesto said:
  "We will increase the share of national output spent on education",
  but planned Government spending on education as a percentage of GDP is set to fall, from 4.5 per cent. in 1996–97 and 4.4 per cent. in 1997–98 to 4.3 per cent. in 1998–99. That is simply a betrayal of the manifesto pledge.
  The additional funding is woefully inadequate. It will not tackle immediate needs and certainly has no real ambition for a Government who claim that education is their top priority. The Government talk about £2.5 billion extra for schools, but that is what they propose to spend over the entire five-year Parliament, when they should spend it this year if they have any ambition to deliver quality education.
  Not only the Liberal Democrats have spotted the Government's U-turns on the environment. On Budget day, Charles Secrett, executive director of Friends of the Earth, said:
  "This was a major missed opportunity. Labour is rapidly forfeiting its claim to be a green government … this Budget is about as green as a smog alert. The Government cannot meet its manifesto and Kyoto promises with this Budget."
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  Friends of the Earth was offended by the Government's U-turn in committing themselves only to the European Commission's 8 per cent. carbon dioxide emission reduction target by 2010, rather than to the 20 per cent. target in the manifesto.
  Mr. Bercow: The hon. Gentleman appears to endorse the comments of Friends of the Earth, so we could be forgiven for thinking that he believes that the Government did not increase road fuel duty enough. Will he clarify whether the Liberal Democrats support the increase in road fuel duty or believe that it was too little?
  Mr. Bruce: Like the hon. Member for South Dorset (Mr. Bruce), the hon. Gentleman anticipates my speech. If he has a little patience, he will get the answer.
  The Government made a clear promise to produce a Green Book alongside the Red Book. The Financial Secretary repeated it 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.]
  That commitment seems to have re-emerged as a single green page—page 78—in the Red Book.
  The Budget contained no serious environmental measures: no carbon tax or home energy insulation scheme, and a cut in VAT on home energy insulation materials limited to certain Government grant schemes. That may be welcome, but it is very small.
  The Government have made proposals to reduce vehicle excise duty for fuel-efficient cars, but those proposals are still on the drawing board. The Government propose a reduction of £50 per annum, which is probably not enough to make much difference. According to the Red Book, the Government are "interested in introducing" a lower rate for the least polluting cars. That is a very vague statement.
  The Liberal Democrats proposed recycling money from higher petrol duty into cuts for smaller-engined cars. Had the Government made that connection, we might have taken a different approach to that aspect of the Budget. However, the Government have done nothing in that direction—they have merely talked about it—and they have increased fuel taxes by an extra £1.1 billion in 1998–99 or £3.3 billion over three years. That is simply a blow to rural motorists and a tax for everyone, and there are no offsetting fuel efficiency incentives or, as we would wish, tax cuts elsewhere.
  I should like to clarify the situation for the hon. Member for Buckingham (Mr. Bercow), following his intervention. We Liberal Democrats have a rule in our environmental tax policy that environmental taxes should be offset by corresponding tax cuts elsewhere. Under the Conservatives and now under Labour, such measures are simply another way to raise taxes and pretend that they are being green. We do not support such deception.
  The extra £500 million over three years for public transport is welcome, of course, but it will not revolutionise our transport system, and I doubt whether it will offset the cuts in local authority transport budgets. Today, £4.5 million of rural initiatives was announced for rural transport in Scotland. People are pointing out that local authorities do far more than that to support rural transport, and it is not at all clear whether those initiatives can make a difference. I urge people to bid for the schemes but, if they are successful, to put pressure on the Government to put in a lot more before too long.

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  As time is pressing, I must say that we welcome the welfare reform package, but are disappointed that nothing is being done for pensioners-not only we, but pensioners, are disappointed. We commend to the Government our proposals, which would not deal with the whole problem, but giving an extra £5 per week to those over the age of 80—up from the present derisory 25p— would at least show a commitment to helping the most elderly and vulnerable pensioners. We shall want to probe the details of some of the other measures in the Budget, but we genuinely applaud the Government's direction and hope that the delivery will match the rhetoric.
  The £ 1.4 million for working families tax credit is a substantial injection, but not everyone will be better off. Indeed, the Red Book points out that the number of families with high marginal deduction rates of 60 per cent. or more will increase by 33 per cent., to more than 1 million, which demonstrates the difficulties when one moves the thresholds. One may help people at the bottom end, but unfortunately one creates another category that needs help further up the scale. I hope that the Government will ultimately find ways to deal with that. When we debate the l0p rate of tax, we might be able to engage on more efficient ways to help people on low incomes.
  At this stage of the Budget, it has to be said that there are some losers, for example, a married man with no children will lose part of his married couple's allowance with no corresponding benefit, but Budgets do not please everyone, I guess.
  There are concerns about how fraud can be avoided and how the working families tax credit will be evaluated. It has been suggested that people might get round the system by taking in each other's children and finding a way to claim benefit in that way.
  Finally, on a macro-economic point, I found the exchange on exchange rates interesting. The right hon. Member for Wokingham (Mr. Redwood) clearly enjoys opposition. He has a talent for it—after all, he only has to attack. He is not so good at telling us what he would do. How cheerfully the right hon. Gentleman disowns the Conservative party's policies both in government and in opposition. Obviously, he has been practising for opposition for the past 10 years. He opened his comments by saying that the exchange rate was too high, but gave no idea of how the Conservatives would bring it down. He tried to explain that they would not have got there in the first place.
  The right hon. Member for Ashton-under-Lyne hit on the one issue that the right hon. Gentleman ignored, which is the euro effect. That we are not committing ourselves to the euro is an additional factor that encourages people to hold sterling and to force it up. I would not have expected the right hon. Member for Wokingham to endorse that policy, although I was interested that the right hon. and learned Member for Rushcliffe was not keen to answer my question about the operation of the independent central bank either. On that issue, the Conservatives would do best to keep quiet. Being the party of devaluation is a new role for them.
  We want sensible economic policies, to provide stability in the long term. I plead with the Government seriously to consider a clear timetable for British entry
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  into the single European currency, as that would do more than anything else to give manufacturers confidence. It would do so for two reasons. First, it would almost certainly reduce the immediate pressure on the pound and, secondly, in the long run, it would reduce the exchange rate risk for 60 per cent. of our foreign trade—something that seems to be lost on the Conservative party, or at least on its official leadership.
  We shall support some aspects of the Budget, but it has a big hole at its heart, and the Government will not deliver on health and education unless they are prepared to tackle that.
  7.4 pm
  Mr. Giles Radice: The right hon. and learned Member for Rushcliffe (Mr. Clarke) made a characteristically sturdy speech. Indeed, he showed why it was a mistake for the Conservative party not to have elected him as leader. He was a little reticent about his contribution to the overheating of the economy before the last election—I chided him about that before that election—but he certainly showed up the right hon. Member for Wokingham (Mr. Redwood). I give the right hon. Gentleman some advice—the shriller the tone, the less likely he is to be listened to. In the long term, the right hon. Gentleman's knockabout stuff will not do. It may be all right for a couple of years of opposition, but it is not persuasive, and he will have to do better.
  I agree with the hon. Member for Gordon (Mr. Bruce) and my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) about a single currency. However, some of my hon. Friends will be glad to hear that I shall not follow that line tonight as I want to concentrate on the Budget.
  This is a good Budget, and it deserves the widespread praise that it has been given. To begin with, it has proved that consultation is a good idea. The pre-Budget report and the consultation that followed it improved a couple of measures. First, it made individual savings accounts a more effective system. The Government can no longer be accused of retrospective taxation, as they might have been had they not listened to the consultation. Secondly, the new working families tax credit has answered some of the criticisms of the right hon. and learned Member Rushcliffe precisely because there has been a debate about the issues and the Chancellor has answered most of the questions. That is why it will be an effective system. More generally, it is better for the Budget process to be open and for there to be a system whereby one can discuss policy details before those policies are announced. That is a plus and a good thing for our policy making.
  I welcome some of the supply-side measures that the Chancellor introduced. I welcome the fact that he has managed a significant redistribution between the better and the worse-off without clobbering the middle classes, which is what people in some Conservative newspapers feared. I also welcome the fact that he has introduced measures to make work to work and employment pay— the working families tax credit, the reform of the national insurance contribution and the expansion of the new deal—and that he has helped children through the promise to increase child benefit next year and the extra help for younger children in poorer families. Incidentally, and sotto voce, the latter compensates for what happened with lone parent families before Christmas and I also welcome the Budget for that reason.

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  The Budget also contains extremely useful increases for education and health on top of the increases already announced for 1998–99. At times, the hon. Member for Gordon has been churlish about those increases, because they are a good sight larger than we promised and we shall be doing that in every Budget. The fact that a war chest is being built up at least means that there will be extra resources for health and education in every Budget. The hon. Gentleman should welcome that rather than rubbishing it.
  The economy faces an uncertain outlook, hovering uneasily between overheating and recession. There are inflationary signs, a tightening of the labour market, and shortages of skilled workers. The Budget forecasts 3 per cent. inflation during the year. On the other hand, a slowdown in the economy is forecast; it is down by 0.25 per cent. on the pre-Budget forecast. That has been caused by the interest rate hike and budgetary policy but above all by the 25 per cent. rise in sterling. There is also the possible impact of the Asian crisis. It is an uncertain situation. Added to that, we have two economies: a depressed manufacturing economy and the service economy, which is still expanding. An interesting graph in this month's Goldman Sachs report shows that clearly.
  How is the Chancellor reacting? He believes in long-term stability, which is a worthy objective, given what has happened in the recent past. We all remember the Lawson boom, which led to the Major-Lamont recession. The right hon. and learned Member for Rushcliffe remembers it well because he had to clear up some of the mess. It is right to want to get rid of stop-go and to turn our back on fine tuning, and I have heard the right hon. and learned Gentleman say that.
  I support giving the operation of monetary policy to the Bank of England because, in the end, I do not think that politicians can be trusted. Even the right hon. and learned Member for Rushcliffe could not be trusted in the run-up to the general election. He knows that he should have put up interest rates, but he did not. It would have been done if the Bank of England had been in charge.
  The Chancellor has imposed on himself the code for fiscal stability. First, there is the golden rule of borrowing only to fund investment. The second rule is that debt should remain at a sustainable level. Those are sensible rules. The Chancellor has been criticised—we have heard echoes tonight—for not taking enough out of the economy, for not having done enough to help the Monetary Policy Committee. We must examine that. The right hon. Member for Wokingham made that criticism, but he was clearly trying to evade the issue. He attacked the Government for increasing taxation but he also said that the Government had not taken enough out of the economy. That was a weak argument. As the Chancellor has said, there has been a 2 per cent. fiscal tightening over the past year, the biggest tightening of fiscal stance since Geoffrey Howe's 1981 Budget.
  Part of that is the tightening that comes at the top of the cycle, when more VAT comes in. Interestingly, self-assessment has produced more money for the Treasury. As someone put it euphemistically, people have taken the opportunity to bring their affairs up to date. I do not know what they were doing before, but it is good news for the Treasury. The Chancellor has imposed consumer taxes, such as the two petrol tax increases, the tobacco and alcohol increase, and the two stamp duty increases for houses costing more than £250,000. There is
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  also the mortgage tax relief reduction announced in July, which takes effect on 1 April, and the reduction of married couples' tax allowance from 15 to 10 per cent., which comes into effect next year.
  Added to those taxes, there is a very tight position on spending. The hon. Member for Gordon accepted that. We have stuck to Tory spending plans in a way that no one expected us to—no one thought that it was possible. I hope that that means that we shall have a lot to spend in future, but we cannot be accused of having too lax a fiscal stance now. If we had taken the advice of some City columnists and some speakers tonight and put more taxes on the consumer, we could have plunged the economy into recession. The Chancellor was right not to do that.
  To some extent, that policy leaves the strain on interest rates and the decisions of the Monetary Policy Committee. I support that idea. We have already rehearsed the difficulties that the committee faces with the economy overheating but also showing signs of going into recession. It is not surprising that that should produce divisions in the new committee. It is good that they are out in the open, so that we can read about them. They are in the inflation report and the minutes that are published six weeks after every meeting. I think that they should be published one week after. The delay is an unnecessary block to our knowledge.
  There are three points of view in the debate. One lot argues that priority should be given to the danger of inflation and that interest rates should rise immediately. They are the hawks. Another lot—I think that it comprises only one person—says that the greater danger is tipping the economy into recession and that there should be no rise in interest rates. The third argument is the most difficult to sustain: the committee should give priority to the dangers from inflation but should wait and see. That is wrong because if, according to the inflation report, there are really dangers from inflation, the committee must act now. It will get into the worst of all worlds by waiting and seeing. That would mean only that those who wanted to hold sterling would buy even more and the pound would go higher, which, as everyone agrees, damages manufacturing industry. It may also mean that we would need higher interest rates later. We may have to do more later and so increase the danger of a so-called hard landing. We want to slow down the economy enough to slow inflation, without tipping it into recession. That is the trick.
  It may be that, in April, the committee will say that recession is more likely and that inflationary pressures are being damped. However, if it really decides that the dangers lie more on the inflation side, it should put up interest rates and make people understand that interest rates will not rise further. That would be doing a service to the country and the economy.
  This is a an excellent Budget. It is the Chancellor's second skilful Budget. I welcome the supply-side measures. If we are to get their full benefit, the policies need to be sustained by an appropriate macro-policy. The Chancellor has done his bit; his policies now need to be supported by wise decisions by the Monetary Policy Committee.
  7.18 pm
  Mr. David Davis: It is a great pleasure to follow the hon. Member for North Durham (Mr. Radice). If I may return his slightly

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  back-handed compliment to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), it is only a pity that he spoke from the Back Bench rather than the Front Bench. No doubt, that will come.
  The hon. Gentleman made again the much-reiterated point that the Budget was originally billed as a once-in-a-generation, radical, reforming Budget. I believe that it is somewhat less than that. Indeed, given the comments of the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Soley) in a rather good speech, it will have less long-term impact than, for example, the early Geoffrey Howe Budgets or—I shall ignore his embarrassment—those of my right hon. and learned Friend the Member for Rushcliffe. Not only that, but what long-term impact it has will not necessarily be all good—anything but.
  I do not wish to be over-harsh about the Budget, and I recognise that there are some commendable aspects to it, on which I shall speak shortly. I shall focus on employment and, in particular, the central policy proposal in the Budget—picked out by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—the combined reform of national insurance, tax rates and benefits in an attempt to improve the incentives to work and to escape poverty.
  That reform is not cheap: the first year of its operation will probably cost about £2.8 billion and the cost seems likely to grow thereafter. However, the unemployment trap and the poverty trap are undoubtedly the plague of modern European economies and it must be right to try to eliminate the monstrosity of people losing more as a result of taxes and lost benefit than they get in pay. The Budget attempts to tackle that and, according to the Red Book figures, reduces by 100,000 the number of low-paid families who face the loss of more than 80 per cent. of increases in pay and by a further 400,000 those who lose more than 70 per cent. All that is to the good—at least at face value—but I shall make some criticisms shortly both of how it is structured and of how it is paid for.
  I agree that there is great moral and economic force in reducing the marginal economic taxes facing the poor, but my congratulations are limited and should not give much comfort. We should not miss the fact, already mentioned in the debate, that now more than a million families face marginal deduction rates of more than 60 per cent..—in fact, in most cases, 68 per cent. or 69 per cent.—under the new proposals. On the Chancellor's own figures, the policy puts a total of 250,000 more families in the poverty trap than were there before the reforms. In effect, the wage earner in each of those families, when he looks at his overtime pay, his bonus or his pay rise, must say to himself, "£1 for me and my family, £2 for the Government. £1 for me, £2 for the Chancellor."
  That high 69 per cent.-plus marginal deduction, that loss of more than two thirds of poor families' increase in income, applied before the Budget reforms to people on gross pay of up to about £250 a week; now, that 69 per cent. marginal deduction rate applies to families with two children and an income of up to £320 a week. Again, those figures come straight from the Red Book. For those families, the depressing prospect of giving the Chancellor two thirds of any pay increase that they achieve will in future apply to families whose breadwinner, on the basis
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  of a 40-hour week, earns up to £8 an hour, which is more than double any conceivable or plausible minimum wage level.
  Put in simple terms, the poverty trap is being made a little less deep, but a great deal wider. More people will fall in and getting out will be a slightly less steep but much longer climb. All those people—more than a million families—still face that prospect under the new proposals. Few things provide a more dismal demonstration of the depressing arithmetic of the dependency culture than that reform. Those high rates of withdrawal are, of course, a disincentive to work and we face them for the foreseeable future under the Government's strategy. The reasons are hard and uncomfortable and are demonstrable by testing the working families tax credit strategy against its numerical limits.
  High benefit withdrawal rates arise from two factors: high means-tested levels of benefit for the poor and low differentials between benefit levels and average earnings levels in society at large. Unless there is a massive change in the basis of our taxation, it is reasonable to assume that means-tested benefits to a worker on average earnings are zero; anything more than that creates a ridiculous dependency arrangement. That is true in most western societies—for example, the American earned income tax credit, on which the Government have based their policy, falls to zero at almost exactly the American median earnings. That means that the maximum range of income over which benefit is withdrawn is the difference between the earnings level from which the credit starts to be withdrawn, which the Budget proposes should be £90 a week, and the average wage, which in Britain today is about £370 a week. A family with two children receives £78.50 of working families tax credit. If the taper were extended right up to £370 a week, the net effective withdrawal rate would be 28 per cent. which, when added to tax and national insurance contributions, would give a withdrawal rate of 61 per cent.
  What I have described would be hugely expensive, would drag more than half the population into the benefits system and would still have a withdrawal rate of more than 60 per cent. In other words, the laws of arithmetic— I have used nothing else—virtually dictate that, under the system that the Government have designed, the total tax and withdrawal rate for poor people cannot get below 60 per cent.; therefore, the strategy is flawed.
  There are possible solutions. One is to allow the differential between average incomes and benefit levels to widen, but that is unlikely to commend itself to the Government. The second theoretical option would be a massive redistribution using higher taxes on the top half of the population to reduce them on the bottom half, but Labour tried that in the 1970s and it did not work. Finally, the Government could attempt to reduce underlying income tax rates in general by transferring the tax burden to indirect taxes, but they clearly do not intend to do that, as the Red Book shows the percentage of gross domestic product being taken in income tax climbing from 9.5 to 11 per cent. by 2002—by far the biggest proportion of the increasing tax burden is to be raised in that way.
  Without any of those changes, it is impossible to get marginal deduction rates for a million poor families below 60 per cent., so while there are good aspects to the

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  changes, which I hope that I have picked out, the overall strategy is certainly very limited and potentially fatally flawed, because it will not deliver enough in the long run.
  Mr. Jim Cousins: The right hon. Gentleman sets out an undoubted problem, but does he not regard the situation that he describes as being far better than a situation in which 750,000 people keep 7p in every extra pound because the marginal withdrawal is 93 per cent. and a further 650,000 people are better off if they stop working? That is the inheritance from his Government.
  Mr. Davis: The hon. Gentleman's figures do not tally with what appears in the Red Book—the 7 per cent. gain is certainly not right. What I am trying to point out is that, although some of the work in reducing the very high levels of withdrawal affecting around 100,000 people is worth while, the rest of the exercise has been to trade away the rights of a further 250,000 people by pulling them into the poverty trap. That cannot be a good long-term strategy.
  Working families tax credit is based on the American EITC. It would be wrong of me to leave the subject without flagging up some critical practical problems that afflict the policy where it has been used, even though my right hon. and learned Friend the Member for Rushcliffe has already mentioned some of them. In America, the EITC is known for its administrative complexity, its weakness as an incentive provider and its proneness to fraud—it is the most fraud-prone benefit in the United States. Those three weaknesses are intertwined: complexity of the policy leads to administrative weakness, which leads to policy failure and to fraud. In this country, fraud takes between 6 per cent. and 16 per cent. of any welfare budget other than pensions, which amounts to between £4 billion and £5 billion of taxpayers' money lost each year. It would be a tragedy if, on top of its other problems, that problem were to afflict the WFTC as well.
  The arguments on that subject in the Budget papers are very thin indeed. They recognise the problem, but do not make it at all clear how the complexity, delay and fraud issues are to be addressed. My right hon. and learned Friend the Member for Rushcliffe has pointed out that the apparently long delay between now and the initiation of the policy will probably not be enough for the tax authorities to deal with all the issues.
  I have long argued that it is necessary to design fraud out of welfare systems at the point of policy creation. That does not appear to have been done yet, but it is vital even to the partial success of this policy that it be done. Therefore, I hope that the Chief Secretary will tell us how he intends to achieve it when he winds up the debate.
  I shall return briefly to the funding of the reforms and to the macro-economic impact of that funding. To a large extent, the reforms have been funded in the medium term by the cash-flow effects of tax changes to the corporate sector. It is now widely understood that one impact of this and the previous Budget has been to damage pensions and savings—and incentives to pensions and savings—as well as to damage investment directly. It is no surprise that the impact of the two Labour Budgets, according to Treasury forecasts, is shown as reducing investment growth rates from 7.75 per cent. in 1997 to 3 per cent. by 2000. That is not a very good indicator of investment long-termism; nor will it help fundamental economic or employment growth.
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  That leads us to a rather awkward weakness of Labour's economic strategy, about which the argument has gone to and fro all evening. Last year, the Chancellor made the Bank of England independent. The primary characteristic of independent central banks is a focus on inflation almost to the exclusion of everything else. That has generally created a better-than-average inflation record in countries with independent banks—but it does not come cost free. All the studies show that such countries have sharper and deeper recessions than do countries with other arrangements. In other words, there are higher unemployment consequences.
  The Chancellor has failed to design his Budget strategy in such a way as to take that into account: just the opposite in fact. By funding welfare increases—in effect, by abstracting cash from the corporate sector—he is moving a significant quantity of money from saving and investment into consumer spending. The response of the Bank is predictable. While it is theoretically independent of government, and no doubt calculates its money supply figures carefully, it does not operate in a vacuum and is not independent of what is happening all around it. It is far less likely to reduce interest rates when the newspapers are full of accounts of consumer spending booms. So this Budget is designed to encourage higher interest rates in the long term—with the consequential effects, as several of my hon. Friends have pointed out, on the pound.
  As we know, the level of the pound will have a serious impact on manufacturing. My right hon. and learned Friend the Member for Rushcliffe has detailed some of the recent monthly figures. It takes a year or more for hedging and margin-cushioning effects on manufacturing to work their way out of the system. That means that the full impact is by no means yet visible. There may turn out to be a very sharp downturn—much sharper than the figures that we have heard may suggest.
  Opening the debate, the President of the Board of Trade, in a remarkable polemic, argued that the problem would be dealt with by competing on quality. British industry has done a remarkable job of improving quality over the past 18 or 20 years, and that does not owe a great deal to any Labour Government. However, all our competitors also compete on quality. Where there are two quality competitors, the lowest price will win. That is a fact that our engineering firms understand all too well; I hope that we shall not suffer because of it in the immediate future.
  Both this and the previous Budget have had the advantage of five years of economic growth greater than that of any comparable European country—twice that of France and Germany. We have also had the advantage of inflation and interest rates at 30-year lows, and of lower tax and regulatory burdens than those enjoyed by any other country in Europe—in short, the golden inheritance that has allowed the apparently healthy finances of this Budget.
  Those finances should not be taken for granted. We have been talking in precise terms of fractions of a billion pounds. If the economy turns down badly, £2 billion or £3 billion surpluses will turn into £20 billion or £30 billion deficits. Unemployment, which was falling by 50,000 a month last year and by 18,000 a month this year, could be climbing by 50,000 a month in a couple of years' time. If that happens, the Budget's arithmetic will fall to pieces.

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  More than any other country, we in Britain depend on our ability to compete in world markets. Without markets, there are no profits to tax or jobs to take. Welfare to work will certainly fail if there is no work. The Chancellor's golden rule on borrowing would turn to lead in his hands if tax buoyancy vanished and demand-led expenditure soared.
  I opened by saying that the Budget was less radical and dramatic than its billing. It would be a tragedy if its principal impact turned out to be the crippling of the economic engine on which all this welfare reform properly depends. The President of the Board of Trade said that this is a Government for the long term. I hope that British manufacturing industry will not have reason ruefully to remember Keynes's comment that, in the long term, we are all dead.
  7.35 pm
  Lorna Fitzsimons: I want to speak in the debate, not because I set myself up as someone who knows much about the economy but because what was announced in the Budget on Tuesday is having a real impact in my constituency. I want to make four points. One concerns the Budget process, which will be crucial to ensure that many people who used not to be enfranchised in Government Budget-making mechanisms now become enfranchised. That will surely be healthier for everyone. Secondly, I want to touch on the gains to poor people on benefits. Thirdly, I want to mention those in the benefit trap—the working poor. Many of my constituents find themselves in that situation. Lastly, I want to discuss small and medium enterprises. I came to the Chamber last Tuesday thinking that at least one of those groups would get something in the Budget. I certainly did not expect all of them—they make up a large part of my constituency—to benefit from the Budget.
  The right hon. and learned Member for Rushcliffe (Mr. Clarke) discussed some of the problems that were discovered when we first floated the idea of the working families tax credit. Everyone can say what Canada and the United States do, but the green Budget allows people inside and outside Parliament to debate the merits of what has been learned from other models across the world, and to say how we want to develop our own. That is why we did not end up with a transfer from the purse to the wallet; nor will we end up with some of the worst aspects of the Canadian and American systems. hon. Members need not take my word for this; after all, I am no expert on economics. They have only to read Jeffrey Liebman, the renowned US public policy expert, who expressed the same ideas in the Financial Times last Wednesday. Hence the importance of the green Budget, delivered sufficiently in advance to enable us all to engage in debate, formulate policy and think about the issues.
  I have the privilege of chairing the Back-Bench women's group, which felt able to participate in the debate. We welcome the approach that the Treasury and related Ministries adopted to consulting us on the consequences of the policies that they were initiating. The Budget will have a phenomenal impact on women and children—not to mention small businesses. For the first time, we can truly say that, behind the Budget, there
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  is a genuine understanding of the working lives of women and of child poverty. Child poverty is our direst legacy from the past 20 years. That is why this Budget is phenomenal. It manages not to squeeze people who are trying to do better, and it also manages to redistribute to people who need a helping hand.
  The Budget redistributes to parents—single parents or couples—who, for whatever reason, want to stay at home, looking after their children, and enables them to do so. The way in which we have increased child benefit—one of the biggest increases in child benefit in two decades— recognises the importance and the cost of nurturing children, and acknowledges the in-built cost of children under the age of 11. That aspect deserves to receive credit, because, as was said when we had the debacle of the single-parent benefit debate, there is an important cost, and a knock-on cost to children, of rearing younger children.
  Conservative commentators talk about increasing the poverty trap. Do they really understand what the poverty trap means? In my constituency, it means that people genuinely cannot afford to go out to work because there is no way—because of the way in which the intricate calculations are done in the benefit system—that they can afford to take the job that they are skilled enough and lucky enough to be offered.
  With the working families tax credit and all the related help, including the increase in the level above which employers' national insurance contributions become payable, for the first time ever lots of my constituents can afford to stay in work and not penalise their families for choosing to do so. They welcome the moves in the Budget to start to make work pay for the previously work-poor.
  Mr. Ian Bruce: I am grateful to the hon. Lady for giving way in such a passionate speech, but I am sure that she would not want to mislead anyone. Apart from the changes to single-parent benefits, which date from April 1998, the changes that the Government have announced will not be made until October 1999. I hope that she will ensure that her constituents realise that they must wait almost until the next century before any of those changes are introduced.
  Lorna Fitzsimons: Yes, but no claimant loses anything now, and my constituents would never take lectures from Conservative Members about anything that they did for women and children in poverty. The Budget clearly says to my constituents—they have told me so, because I have had several meetings with large groups of them since the Budget statement was made—that, for the first time ever, the Government are no longer stigmatising them for being in poverty or trying to do better.
  Some of my constituents have been allowed a real choice—whether to stay at home with their children or to go out to work. They feel that this is the first time that, in a Budget, a Chancellor has helped them by allowing them to make such a choice.
  The other indicative policy change in the Budget was small, but important—the allocation of £10 million to a scheme to ensure that partners of jobseeker's allowance claimants, who previously were unregistered, under the Treasury rules, and in the unemployment statistics, get assistance in seeking work. For the first time ever, the Treasury has recognised that women's patterns of work

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  very much depend on their partner's pattern of work, and that, if they happen to be a partner of an unemployed JSA claimant, they get no help. There are roughly 11,000 women in that position.
  That is one of the single biggest changes in the Budget. It shows that, for the first time ever, we have a Treasury that is no longer, in the glib phrases of some commentators last week, a "boy's zone", but is starting to conduct a gender impact analysis of the—[Laughter.] Conservative Members think that this is very funny, but their Front-Bench spokesperson on women, the hon. Member for Chesham and Amersham (Mrs. Gillan), was desperately trying to say that your Treasury actually invented it, so it is not that funny—you speak with forked tongue. The reality is that, if you are going to laugh at gender impact analysis—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. I am enjoying listening to the hon. Lady, but may I say to her, I do not have a Treasury—I honestly do not have one—so perhaps she will remember that.
  Lorna Fitzsimons: I am sorry, Mr. Deputy Speaker. You will be well aware that, as women make up 52 per cent. of the population, it would be smart to have some form of analysis of how Government policy and Treasury policy affect them. Therefore, although some people would choose to laugh at it, I think this would be a very dim economic thing to do. That is why I welcome the Chancellor's move to change the focus of the Treasury and study the effect on 52 per cent. of the population of the Budget measures.
  The measures affecting small and medium employers were very much welcomed. Rochdale—at least the portion of the borough that lies in my constituency—has more than 2,500 small and medium enterprises, the majority of which are small, and they very much welcome the Budget measures.
  As most people know, Rochdale has a very strong manufacturing tradition and manufacturing base. Many of the small employers managed to duck the worst aspects of the second recession by changing their business focus to exports. One or two big businesses in Rochdale have been the pioneers of a superb export drive. They used a lot of their clout and a lot of their experience to re-educate many of the small employers into the benefits of exporting. Obviously, they are now suffering because of the strength of the pound, but the thing—
  Mr. Ruffley: Will the hon. Lady give way?
  Lorna Fitzsimons: No. May I just finish my point?
  The one thing that employers are saying to me is, "Can you please get the Chancellor to make more positive statements about the single currency?" That is the point that my right hon. Friend the Member for
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  Ashton-under-Lyne (Mr. Sheldon) was making. They wanted us to go ahead and make positive noises about the single currency.
  Mr. Bercow rose—
  Mr. Ruffley rose—
  Lorna Fitzsimons: I give way to the hon. Member for Bury St. Edmunds (Mr. Ruffley).
  Mr. Ruffley: If Government economic policy is so successful, can the hon. Lady explain to the House why manufacturing output has fallen for five successive months?
  Lorna Fitzsimons: No. The point that I was making was the point that manufacturers in my constituency have asked me to make to Ministers. Those manufacturers understand the problem that the Government have in terms of the economy and the high pound. They are saying to Ministers, "We want you to make more positive comments about the single currency." The majority of small and medium employers in my constituency are subcontractors to big companies. They will need to be ready to deal with the single currency in 1999, because it will be a clause of their contract to do so—
  Mr. Bercow: Will the hon. Lady give way?
  Lorna Fitzsimons: No; I will not. This is important.
  Those manufacturers will need to be ready, even if we do not join the single currency. They are saying, "If the majority of us will have to be ready, why are we, as a country, not making more positive noises about joining the single currency?" In their estimation, it would make the problem of the strength of the pound less damaging to them and it would give them ease in terms of long-term planning and in their relationships with their banks, their investors, and so on.
  All I am doing is passing on a heartfelt message from the majority of employers in my constituency. That message is, please have the confidence to make more positive noises about the single currency.
  There have been a lot of good points—
  Mr. Bercow: Will the hon. Lady give way?
  Lorna Fitzsimons: I will not, because I am just about to wind up.
  Eminent Labour Members have made many good points about the strengths of the Budget. I welcome the fact that we have been able to do something about making work pay for the majority of my constituents, and about helping small and medium enterprises. Most of us did not hope to be able to do both in the same breath, in the same Budget, and we are very grateful. We want to work to ensure that the next Budget builds on that success.
  7.47 pm
  Mr. John Butterfill: The Budget is like the curate's egg—good in parts. Some parts are very good indeed; I shall say something about those. Some parts are muddled; others are addled; others are downright bad.

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  I am worried about the general thrust of the Government's taxation policy. The Chancellor seems to be constantly trying to find ways of raising taxation without anyone noticing. The worst possible example was the advance corporation tax change last year, which attacked the country's pension funds severely. Nothing in the Budget has remedied that.
  This time, the Chancellor is announcing nominal reductions in corporation tax rates, but the cash flow changes in the tax system mean that there have been substantial increases in the tax that companies pay.
  One aspect of the Red Book and the Budget speech that I find rather sinister is the reference to a review of the North sea oil tax regime. The hon. Member for Gordon (Mr. Bruce) mentioned that matter earlier. There is a real concern that, in looking for ways of raising taxes without anybody noticing, the Government may do serious damage to one of our most important industries. The problem is that the finds left in the North sea are not huge and easily exploitable; they are much smaller, complex oil deposits which are more expensive to mine. If it is much more expensive to operate in the United Kingdom, the oil companies could easily go elsewhere to Uzbekistan or wherever. I caution the Chancellor not to pursue that route because, although it may appear an attractive way of raising moneys in a manner that people will not notice, it will do much damage to the United Kingdom economy in the long term.
  The Chancellor introduced one or two welcome measures for small business, and it would be churlish not to welcome them. For example, it is helpful that small businesses will be exempt from stage payments. We also welcome the fact that small businesses will receive 40 per cent. capital allowances in the first year. However, that is not always a tremendous asset—particularly for new and emerging businesses that do not have profits to shelter. Therefore, the impact of that measure will be very much less than the Chancellor would have us believe.
  I also greatly welcome the changes to venture capital. I must declare an interest in that subject as I have been an adviser to the venture capital industry for many years—as the hon. Member for Delyn (Mr. Hanson) knows. The Government have made some worthwhile changes to an industry that does a great deal for the British economy. I am particularly pleased about the technical changes to transfer pricing and the enterprise investment scheme improvements. The Government have also introduced a £50 million venture capital fund for universities— although that is a rather small sum.
  More important still is the Chancellor's commitment to look at ways of developing share incentives in order to attract executives into smaller, growing companies. A principal problem in the economy is that small companies that need to grow cannot attract quality people. Many such people are comfortably ensconced in their established jobs and do not wish to take the risk of moving to a smaller company, even though they could have an enormous impact on its development. I hope that that consultation will bear fruit in the future.
  Unlike my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), I am keen on the idea of capital gains tax reform, and I have for many years advocated a taper for capital gains tax. It has always
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  seemed totally mad to have a tax system where the marginal rate of tax is the same for someone who has built up a business over 10 years as for someone who has made an overnight gain on the currency market. That position could not be sustained. Therefore, I believe that the introduction of the taper is worth while.
  I have some reservations about the way in which the taper is supposed to operate. I believe that 10 years is too long, because it will hold investment in existing patterns and, in a dynamic economy, we may wish to change those patterns. Another effect of the taper, combined with the withdrawal of indexation, is that some entrepreneurs will pay more than they do under the present arrangements. For example, the withdrawal for non-business assets will reduce by 16 per cent. over 10 years—or 1.6 per cent. per annum—on a flat rate. The real rate is less than 1 per cent. per annum. If we take away indexation, we can see that the situation will be worse than if there were no taper and only indexation.
  That is a problem as many of those who invest in developing businesses will not qualify for the business asset criterion. To qualify, people must have voting rights of 25 per cent. or more or they must be employed virtually full time in the business. I hope that the Chancellor will consider this matter in Committee, because some definitional changes must be made. For example, a financial partner will not invest in a business unless he ends up with more than 25 per cent. of the shares, which carry voting rights. That will act as a disincentive for entrepreneurs to bring in financial partners because the Government are, in effect, forcing them to give away more than 25 per cent. of the equity in return for the injection of finance. I am not sure that that is what the Chancellor intended when he drew up the rules. Therefore, I hope that he will consider an arrangement whereby someone coming in as a financial partner to a suitably qualified company will get the benefit of the business asset definition. I believe that the present definition leaves much to be desired.
  I welcome the ISA changes and the regime for TESSAs and PEPs. I think that it is as well to thank a Government for changing their mind. It is easy to criticise Governments and say, "You only did it under pressure," but it sometimes takes political courage to admit that perhaps one's first ideas were not correct. It is worth paying credit to the Government for showing that courage.
  I had intended to say quite a lot about the working families tax credit, but I do not think that I could improve in any way on the extraordinarily detailed and brilliant analysis of the problem by my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). The Government deserve some credit for examining the problem and for trying to do something about it. However, they are perhaps open to criticism for rushing in too quickly with a rather poorly thought-out scheme which could lead to all sorts of problems in the future. Apart from the scheme's technical difficulties and the other problems which my right hon. Friend outlined, I think that the Inland Revenue will have physical problems handling the work load. One prays that they do not recruit the people who are coming out of the Child Support Agency scheme.
  I do not like the stamp duty changes in the Budget. Many Labour Members will claim that they will affect only the rich, but that is not quite true. The tax will be paid almost exclusively in the south of England, in

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  London and the home counties where house prices are very high. If you walk out the doors of this Chamber, Mr. Deputy Speaker, you will find that £200,000 will buy only a two-bedroomed flat in central London. It is by no means only the very wealthy who will pay that tax. It will lead to less mobility of labour, which is a real problem.
  I am also a little concerned about the niche areas, such as tax relief for overseas giving. That sounds like a lovely idea with which we can all identify, but it means that people will be more inclined to give to charities that are involved in overseas giving and less inclined to give to domestic charities. I must again declare an interest— although it is not a financial one—as I am a member of the board of management of the People's Dispensary for Sick Animals. I predict that worthwhile domestic charities may experience problems when they find that their income has been diminished by the Chancellor's singling out a particular group of charities in that way.
  Having said that, my fundamental criticism of the Budget is that it does not address the major problem in the British economy: the level of our interest rates and the impact that that has on the parity of the pound and the competitiveness of British industry and commerce as a whole.
  When the Chancellor announced his proposals for perhaps joining the euro at some time, I asked him how he would approximate interest rates. Even though our long-term interest rates have come down a little, they are still virtually double those in the rest of Europe. The approximation of those interest rates is a real problem.
  There are two underlying reasons for our interest rates being so much higher than those of most of our competitors. One is that there has been an historic suspicion that British Governments will not, at the end of the day, stand up to the rigours of counteracting inflation, and that, sooner or later, a Government will let things rip a little. There has therefore been a propensity for interest rates to nudge up. The other reason has been the conduct of macro-economic policy. Although the Chancellor has engaged in fiscal tightening over the past 12 months, it has been in entirely the wrong areas—not in the areas that will damp down consumer demand, but in the areas that discourage investment and saving. That gives all the wrong messages.
  Unfortunately, those wrong messages which the Chancellor has been giving have not been addressed in the Budget. It is vital that they should be addressed sooner rather than later. If we continue down our present course, we will be in great danger. The Red Book makes it clear that it is not looking for the 3 per cent. level of growth in the economy that this Government inherited—indeed, it admits that next year the rate may be as low as 1.75 per cent. It says—more in hope, I think, than in reality—that the rate will go back over 2 per cent. in the subsequent years, but not much over 2 per cent. for the whole of the predicted life of the Government.
  The danger is that matters could be much worse than that. There are already clear signs that manufacturing industry is going into recession, which will inevitably have a knock-on effect on the service sector. Some elements of the service sector are already finding it difficult to compete in overseas markets. We are in danger of a severe downturn in the British economy, with a real prospect of going back into recession in a year or 18 months. I hope that the Chancellor will do something to redress that.
  8.2 pm
  Mr. John Grogan: We have rightly heard much in recent days about the people's Budget, the people's priorities, the people's money and the people's Chancellor. I shall change the focus slightly for a few minutes by examining the effects of the Budget on what the Conservative Prime Minister, Lord Liverpool, referred to in the last century as the people's pleasures. Early in the 19th century he warned his party not to get too involved in the strictures of Calvinism and to leave the people's pleasures well alone. Fortunately, many of the people's pleasures that he sought to conserve are still with us today, and very robust they are—namely, beer and gambling.
  I have boasted in the House before that I have more coal mines in my constituency, Selby, than there are in any other constituency in the country. I shall go a step further today and say that there is a greater concentration of breweries in my constituency than anywhere else. In the small market town of Tadcaster, there are three: Sam Smith's, John Smith's and Bass. There are no fewer than 1,700 businesses in my constituency. I have had a chance to visit only 40 so far, but by some miracle of fate I have managed to fit in visits to all three breweries.
  Beer brewing and the associated pub trade employ almost 1 million people. The industry can play a crucial role for the Government in helping to implement the new deal. The increase in beer prices by 1p a pint effectively index-links beer duty in line with inflation. That has no doubt been done to protect Government revenues, and if the UK were a closed market, there would be much merit in that. However, what is obviously regarded as a catching-up measure for the Treasury further increases the differential in tax rates between ourselves and France, and produces an even greater incentive for fraud and smuggling.
  The 6:1 beer duty differential, which has been increasing throughout the 1990s, is a denial of the European single market. UK duty on a typical pint is now 38p including VAT. The French equivalent is 6p—a difference of 32p a pint. Every day more than 1.4 million pints of beer are coming into Britain duty free from France. That daily invasion is equal to the weekly beer sales of 1,000 small pubs and adds up to a tax loss to the Treasury of more than £235 million.
  The Chancellor referred in his speech to the review by Customs and Excise of fraud and beer smuggling. I await with interest the publication of that report, but the plain fact is that fraud and smuggling are rife. Her Majesty's Customs and Excise reports that there is evidence of organised networks that employ mules, or runners, to make several journeys each day to France to buy amounts of beer up to the level of 110 litres. Once back in Dover, the beer is transferred to other vehicles and transmitted onward all over the country.
  A recent "Dispatches" programme on Channel 4 suggested that Yorkshire, my home county, is a centre for the bootlegging business. One of the key characters involved is apparently known colloquially as the Slug. As a Government we promised to be tough on the causes of crime. In the Slug's case the cause of crime may well have involved a deeply unhappy childhood, but it almost certainly also involves the massive differential in duty.
  Before the election the Prime Minister, in an interview with The Licensee, discussed the merits of an independent investigation into the issue. That was a good idea then

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  and it is a good idea now. Certain economic models indicate that a cut in beer duty would increase revenues to the Government, because of the effect that it would have on the brewing industry.
  As my right hon. and hon. Friends have pointed out, the Budget was historic, recasting the relationship between the tax and benefits systems, making work pay for all income levels and transforming the relationship between Labour and the business community. My right hon. Friend the Chancellor is assured of his place in history, but we on the Labour Back Benches have greater ambitions for him than that. We want him to be up there with the truly great Chancellors, so on top of what he has already achieved, if he could find it in himself to cut the price of beer in the next Budget, there would be no stopping him.
  I shall say a word about buses, trains and rural transport. The Budget allocated £50 million for rural public transport and £500 million for public transport generally. That is welcome, but we must recognise that for 30 or 40 years or more, public transport subsidies have been largely weighted towards the urban areas, as opposed to the rural areas. The Tories ruthlessly cut the budgets, particularly in England, of the six passenger transport authorities in the urban areas. Even so, the authorities' budgets dwarfed support for public transport in rural areas.
  In an urban area, for example, West Yorkshire passenger transport authority will spend almost £100 million next year on supporting public transport. In neighbouring North Yorkshire, the figure is just £1.6 million. Fares and concessions are much more generous in urban Britain than in rural Britain. That has some perverse effects.
  For example, there are seven stations in my constituency of Selby. Instead of getting on a train at one of those stations, some commuters who live in the constituency drive across the border into West Yorkshire every morning, with all the impact that that has on the environment, and get on a train there to make a significant cost saving. Some pensioners retire to the market town of Wetherby, which is just outside my constituency in West Yorkshire, rather than to the market town of Tadcaster in my constituency, simply because of the public transport concessions. The Chancellor's statement was a welcome first step, but there are tremendous challenges ahead for the Deputy Prime Minister when he makes his statement on integrated public transport.
  Finally, I shall say a word about the people's money and the exchange rate. The best thing that the Government could do to ease the pressure on the pound is to do everything in their power to make sure that the single currency and EMU are a success for the countries that join in the first wave. As holders of the presidency of the European Union, we have a crucial role to play in the coming weeks. I was delighted to see the positive efforts that were made during this weekend's ECOFIN summit in York.
  If the single currency works, interest rates will fall across Europe, output will be boosted and the pressure on the pound and British interest rates will ease. Conversely, if the single currency runs into difficulties, there could be increased speculative pressure on the pound. I hope that
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  before too long Britain can join the exchange rate mechanism in preparation for a decision on the single currency early in the next century.
  I think that the Budget will be remembered ultimately for two things: first, for a rejection of trickle-down economics, or the trickle-down theory, that dominated the previous Government for 20 years. They took the view that to help the poorest 20 per cent. in society we had only to wait for wealth and income to trickle down. The Budget is a rejection of that approach. Secondly, it is a recasting of the relationship between business and the political parties. Now Labour is the party of enterprise and business.
  I am delighted that the right hon. Member for Wokingham (Mr. Redwood) is embarking on business breakfasts and lunches. Every English breakfast that the right hon. Gentleman has and every continental breakfast that he rejects will tell the business community that it is now only the Labour party and the Labour Government whom it can trust with this country's economic future. I think that that will be the legacy of the Budget.
  Several hon. Members rose—
  Mr. Deputy Speaker: Order. I have no right to impose a time limit, but I would advise hon. Members to adopt a self-imposed rule of eight minutes apiece. If that is adopted, it will be possible to call almost every Member who wishes to contribute to the debate. I am in the hands of hon. Members.
  8.11 pm
  Mr. Ian Bruce: Thank you for calling me, Mr. Deputy Speaker. In the light of your advice, I shall have to speak that much quicker.
  I am grateful to be able to take up the remarks by the hon. Member for Selby (Mr. Grogan), who made an extremely good speech. If I may say so—the Government Whip probably noticed this—the hon. Gentleman was somewhat critical of the Budget. However, he spoilt it all by doing the usual bit at the end, showing how sycophantic he is.
  I have an opportunity to demonstrate my gratitude to the Labour party. Apparently it sent about 400 people to my constituency to have a south-west regional conference over the weekend. I understand that some Ministers and Labour Back-Bench Members attended it. As none of them wrote to tell me that he or she would be there, I was unable to write to welcome them and to tell them what they should be looking out for.
  Whenever I speak in the Chamber, I sense that hon. Members rush to the statistics which set out the wonderful 77 votes that brought me into this place. I am grateful to Labour Members for smiling. It gives me great joy to know that I beat the Labour party by 77 votes.
  It seems to me that many Labour Back Benchers fail to understand why they are here. They will probably get on better in their careers if they take on board what I am about to say. We are here, of course, to represent all our constituents. We are here also to hold the Executive to account. There are 17,678 people in my constituency who voted Labour, and in many ways they are more important than the 77 votes by which the local Labour party lost.
  Mr. Battle: Next time.
  Mr. Bruce: It is always interesting to hear the Minister and other Labour Members say, "Next time." It was always

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  the Liberal Democrats who used to say that. They thought that they would take five of the seats in Dorset at the general election. The Conservatives went into the election with six seats in Dorset and came out with eight. I have emphasised that there are many Labour voters in my constituency, and I wish to stress that I am in this place to represent all my constituents.
  There are 17,678 incredibly disappointed people who thought that the health service would be helped by a Labour Government. Throughout the 18 years of Conservative Governments—there were not 20, but we will own up to 20 if that is wished of us. Perhaps the first two years of the Blair Administration are supposed to be part of a Tory Administration, but I rather doubt that.
  Every year of Conservative government showed an increase of 3.1 per cent. above the rate of inflation in spending on the health service. On education, we always did better. Our record on social services and roads, for example, has been of benefit to the people.
  We must remember that at every Budget the Chancellor of the day always has something in his gift box. He will say, "Last year, I said that I would spend only this much, but this year I shall increase that spending by £X billion." We have heard from many who have analysed the miserly sum that has gone into the health services in all of our constituencies under the current Administration.
  What has local government been given? As for expenditure on education, for every extra £1 that we were supposed to have £1.40 has been taken away from social services, from the elderly and from expenditure on roads. In addition, we have enormous tax rises. Increases of three or four times the rate of inflation are the norm in Dorset.
  In some ways, we were looking forward to asking, "If this is a wonderful new reforming Government that will help to create jobs, what will it do for regional policy?" The South Dorset economic partnership has announced that it is closing because it receives no funds to keep it going. That partnership was causing unemployment in the area to decrease month after month. We are starting now to see the turn-round of our economy, but we need the partnership if we are to continue to go ahead.
  We have not heard yet how much the defence budget will be cut in real terms. I understand that that is shortly to be announced.
  I thought that I would be able to congratulate the Government on one point. I went on radio and said, "It looks very much as if I as a fat-cat business man will benefit from the nice situation of reducing capital gains tax right down to 10 per cent." What did we find? We found that the Government were doing away with the capital gains retirement relief and introducing a 10 per cent. capital gains rate. The Chancellor was saying from the Dispatch Box that he was doing something for small business men when in fact he was increasing the amount of tax that he would take off such people after they had built up their businesses, retired, and sold out. That is an interesting little twist.
  What about millennium gift aid? The Government have gone to the lottery month after month, saying, "We have decided that the lottery will pay for this or that Government policy." They are even saying now, "We would like you to give to charity and, by the way, we would like you to focus on education and poverty relief." Bearing in mind their policies, the Government want people to give to charity to bail them out.
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  I have difficulty in following the logic of many people when they talk about the stability of the pound. The pound that I have taken from my pocket is stable. We can all see that it is stable. If I put it flat down on the Bench, it stays where it is. Things are more difficult if it is placed on its edge. In relation to what is the pound supposed to be stable?
  It is useful to look back to the speeches of Lord Shore of Stepney. He always talked very well about these matters. In fact, he had a speech which he delivered regularly in the House. As older Members will say, "If you get a good speech, stick to it." It is interesting that in 1990, when we had just entered the ERM, Lord Shore, as he now is, was predicting everything that is currently going wrong throughout Europe and how we would have to get out of the ERM.
  Against that background, the Government are saying that they want to go into the European single currency. Yet they refuse to go into the ERM. People are asking, "How can we keep the pound stable?" Of course we can keep the pound stable if we go into the ERM and insist that our partners help to keep the pound at a stable level.
  Why are we not doing that? I would have thought by now that we all understood that the rush to get a stable pound is an illusion. Against what is the pound stable? We can run our economy wonderfully well but what if we decide that we want zero growth? Is that stability? Is zero growth in employment or productivity stability? We are seeking not to have boom-and-bust economics. I understand that and accept that that is something we should be going for. Every time a British Chancellor says, "I'm going for a stable pound," he is saying stable in relation to the deutschmark or the dollar, and that depends on other people and the way in which they keep their currencies going.
  One will never achieve total stability in currency, but one has to manage the economy. It was Lord Shore of Stepney—when in this place, and pretty much on this Bench—who said that giving the power to the Bank of England to set interest rates was total nonsense, because bankers can always keep to the narrow requirements of keeping a stable currency, or keeping inflation down, but they do not have the responsibility of managing the economy, which is so important and which the Government gave away almost on day one when they came to power. They believe that they can simply tell people, "It's not our fault that the pound is at an unsustainable level as far as our exports are concerned." They refuse to do anything about it.
  What about the change to national insurance? If people pay average wages, they will more or less not be affected, but if they pay above average wages, they will subsidise those who pay below average wages. A Labour Government are suggesting that that is a good idea. I do not understand it, and we need an explanation of what is happening.
  The hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Soley) refused to accept that the ratio of taxes to GDP had gone up. He said that that was because of the windfall tax. He must look at the Red Book—the "Un-Red Book" as far as the Labour party is concerned. Even without the windfall tax, taxes have risen as a proportion of GDP and will continue to rise despite the fact that we shall lose the windfall tax from the figures.
  What about child care? We all understand that the social security budget needs to be kept under control. I understand why the policy is not coming into effect

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  until October 1999: the Government do not have a clue how they will introduce it. They say that they will give £5,060 a year—the 70 per cent. of the £7,800 a year that people would have to pay—to pay for child care, when an individual on a 30-hour week at £3.50 an hour will earn only £5,060. The Government will double that amount, with all the additional things in child care.
  The previous Government got into a complete mess with the Child Support Agency. I have always said that and believe it to be true, but that mess was not predicted. That was not the criticism of the CSA. [Interruption.] Please look at what happened under the poll tax and the Child Support Agency. Learn from the mistakes that we made when in government. The whole idea that the state will take over child care for low-paid people is a mistake, because we tried to look at it when we were in government, and it just would not have worked.
  The test of any Budget is whether it will create jobs. The Government do not even expect it to, yet that is what their policy is supposed to do. The only thing that I can see coming out of it is that nursery assistants in 2000 will have a boom. What about my farmers' incomes? What about the leisure industry, which will have to find the minimum wage? What about the defence industry? The number of its tanks will be halved, which will affect my constituents. What about pensioners, who are totally under the Government's hammer? What about education? Teachers will be sacked soon. What about health? The Government should expand the number of people in the health sector. None of that is coming out of the Budget, and I believe that we should reject it tonight.
  8.23 pm
  Mr. Peter L. Pike: I am glad to have the opportunity to speak in the debate, because, for the first time in 15 years, I welcome the Government's Budget, as it is a change of direction and a positive move for the best. My constituency is in the top five in terms of numbers employed in the manufacturing sector, and a considerable number of my constituents are low paid. In 1983, Burnley elected me—by a slight majority—over the hon. Member for South Dorset (Mr. Bruce). It made a sensible decision.
  The hon. Gentleman showed a £1 coin a few moments ago. It was the Tory party that said that it would allow the pound to float. We know what the floating pound did during the 18 years in which the Tories were in office— it sank. I have an old £1 note. Think about what that was worth in May 1979. Compared with the hon. Gentleman's £1 coin, there was massive inflation and erosion of the pound during the Tories' period in office.
  The Budget is good for jobs, good for industry and good for Burnley. It is particularly good for the low-paid. It has to be considered with what we are doing on the national minimum wage, which is crucial in an area such as mine. The Budget must also be considered with what we have done about VAT on fuel.
  The hon. Gentleman spoke about the national health service and education, and asked what we have done in the 10 months since we have been in office. People outside know what would have happened if a Tory Government had been elected on 1 May last year, and they are glad that we have a Labour Government.
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  They know what VAT on fuel would have been. Let us remember that, before the general election, it would have gone up to 17.5 per cent. We kept it at 8 per cent., and have now reduced it to 5 per cent. That is crucial to the low-paid and those on low incomes.
  I welcome the move to the working families tax credit, which is long overdue. We should have done that many years ago. Many people who are eligible for family credit do not claim it. It has one of the lowest take-up rates of any benefit. It is nonsense to expect people to take up the jobs advertised in the jobcentre and the newspapers if they end up worse off than when they were on benefit. The Budget is a move in the right direction.
  The change to child care is long overdue. I welcome what the Government intend to do on that.
  The cuts in corporation tax to 30 per cent., and the small business tax to 20 per cent., are welcome. I recognise that we need to have industry and commerce to create wealth for this country so that the Government can have money for the social dividend, to spend on education, the welfare state, the health service and all the other things that we want to see.
  Last Wednesday, the Lancashire Evening Telegraph wrote:
  "But there was a warm welcome from shops spokesman Rita Walsh, who said the Chancellor's measure would put cash into the pockets of the poor, providing a much-needed boost for retailers.
  Mrs. Walsh, secretary of Burnley and District Chamber of Trade, said she had expected a balanced Budget, favouring the less well-off, and that is what the Chancellor had delivered."
  That is important, as we must recognise that, when the poor get additional money, they spend it, because they need to—they cannot save it. The option for the poor to save is not really there. They need the money. They need to spend it, whether on food, clothing or whatever, to improve their standard of living.
  Last Friday, I visited the Potterton Myson factory in Padiham, in my constituency. It has just announced a further 125 jobs as a result of consolidation and bringing some work from Warwick. It is wary about the value of the pound—DM3.06 to the pound makes trading difficult. It is the leading manufacturer in its field in this country, and it wants to be the leading manufacturer in Europe.
  Industries in my constituency believe that we need to be in the euro as soon as possible, and they condemn the previous Government for having failed to get us into a position where we could join it at the start. They will in any event have to trade in it, so it is crucial that we join as soon as possible. I visited Smurfit in the afternoon, and people there expressed exactly the same view about the European currency. They are in the paper industry and have to compete with other Europeans, and they think it wrong that we will be left on the side.
  One or two Conservative Members have mentioned interest rates. The right hon. and learned Member for Rushcliffe (Mr. Clarke) spoke. I think that he is condemned particularly on two counts. First, he did not move ahead on the euro. I do not believe that he had the power or the ability to do so, because he was a minority voice in his own party. Secondly, there was the question of interest rates. I think that the right hon. and learned Gentleman should have increased interest rates long before the general election. Why did he not do so? Because he put the political interests of the Conservative party above the interests of the country: I have no doubt of that.

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  I must utter one slight criticism of the Budget. I refer to duty on liquid petroleum gas. Lucas Aerospace, in my constituency, makes gas bottles for the vehicles involved, having developed its process from making cases for the multi-launcher rocket system. It has converted that technology, in one of the best defence diversifications. It believes that the market is growing; it also believes that the Government have failed to provide a sufficient incentive to persuade people to convert to the use of an environmentally friendly fuel. Italy has 2 million vehicles on liquid petroleum gas, while this country has only 2,000.
  I remind Ministers that, after the introduction of unleaded fuel in this country, the Environment Select Committee produced a report—it was produced some years ago, under the chairmanship of Sir Hugh Rossi and during my membership—recommending a differential encouraging people to opt for unleaded fuel. In their first Budget, the Government introduced a very small differential. They were condemned by an emergency report from the Committee saying that they needed to do more. They increased the differential, which speeded up the conversion. I urge my colleagues to consider the matter, because I think we should be doing more.
  I think it right to move the Contributions Agency to the Inland Revenue. They have been collected together and paid together for a long time, and I think it right for us to merge them in April 1999.
  Unlike the hon. Member for Bournemouth, West (Mr. Butterfill), I think that what has been proposed for overseas aid is absolutely right. It is also in line with what my right hon. Friend the Secretary of State for International Development is doing, and demonstrates the Government's belief that, although we must act in this country, we also have responsibilities in the wider world, and are prepared to put our money where our mouth is.
  8.32 pm
  Mr. Howard Flight: I congratulate the Chancellor of the Exchequer on the rhetoric of his Budget, on his press coverage, and on certain measures—particularly the increase in child benefit, which strikes me as a simple move, unlikely to cause fraud, and intended to benefit families.
  What worries me is the fact that the Budget was pretty thin on long-term strategy. It was a ragbag of measures. I also fear that, in many ways, the Chancellor has washed his hands of active economic policy. Much has already been said on the subject, but I want to make my point. Effectively, the Chancellor's actions say, "Yes, use the interest rate and the exchange rate as a manager of this economy. Allow higher interest rates and a higher exchange rate to take the strain and cool down the overheating."
  That risks causing much the same results as we saw in the early 1980s and the early 1990s. It is also entirely inconsistent with standing up and saying, "This is a Budget for stability—a Budget for exchange rate stability." Sterling will appreciate further, but as and when the United Kingdom moves into recession, as it surely will by 2000, the sterling trade-weighted exchange rate will depreciate, and the exchange rate will be used as the only positive economic regulator.
  The Budget also involved acts of what I would describe as disingenuousness—attempts to mislead the public into perceiving something good where there was actually
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  something bad. Much has been said about that already. It was fine to reduce corporation tax rates, but accelerating payments will cost an extra £4.6 billion through to 2001, which was not so fine. As for mortgage tax relief, we had all forgotten that it had been cut to 10 per cent. only nine months ago.
  The changes in capital gains tax have already been mentioned. In my view, they are much more arbitrary than the indexation arrangement that they will replace. There is an alleged new attractive rate for entrepreneurs. As my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said, most entrepreneurs cannot meet the criteria to qualify. I welcome the further thought that the Government will devote to the matter, but, as the measure stands, it really is empty. As for the changes to bed and breakfasting, I think that they are wrong, and will contribute to inefficiency in capital markets.
  I suppose that I should declare an interest as a PEP investor as well as a PEP manager. Let me make just one simple point about that much-discussed subject. After all the hoo-hah, let us remember that it was possible to save £10,800 per annum in combined single-company and other PEPs and TESSAs; that has now been halved. In fact, the Chancellor has been very clever. He has gained credit for not implementing the £50,000 cap, but people have forgotten that the amount they can save has been halved.
  Let me return briefly to the point about economic management. In the present circumstances, the only relatively painless option is to encourage savings. It would have been possible, for instance, to encourage building society windfalls to be saved last summer. That is part of the cause of the over-consumption that has got under way. As the Red Book shows, the Government are poised to produce a policy designed to reduce savings.
  Let me make some points that have not already been made about welfare changes. I am worried about the way in which the national insurance changes will work. There are bunched areas within the £107 to £450-a-week wages level in which there are disincentives to employing people. I fear that we will follow the pattern of the United States, which will mean a tremendous increase in the number of companies employing part-time workers to cut national insurance costs, particularly as and when the economy turns down. That has happened in the United States for similar reasons. Although, at the lower end, the changes will be enormously welcome in creating jobs, I fear that there will be disincentives further up the line.
  Much has been said about the working families tax credit. In certain American states where it appears to have been successful, there has been the stick of no benefits after one or two years as well as the carrot. I agree with other Conservative Members that these measures have been rushed in, in an attempt to copy Clinton, without having been thought through. My right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) presented the situation brilliantly. He explained that the poverty trap was being increased to the limit with regard to the number of people with a 60 per cent. tax rate poverty trap.
  I welcome the aims of the Budget, and hope that they will succeed, but I am worried about the increase of around 800,000 to 1.4 million in the number of people who will benefit under the working families tax credit. That strikes me as contrary to the Government's pledge

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  to contain welfare expenditure. I am sure that, unless changed, the child care arrangements will naturally result in neighbours using neighbours—after all, people are human—and that the cost is likely to be closer to £5 billion than £1.25 billion a year. That may deserve further consideration before it becomes law.
  For many ordinary people, petrol and, for a smoker such as myself, cigarettes are inelastic necessities, and much will be taken in duty on such items from less-well-off people; the net position of many people at the bottom of society will not be much better.
  Evidence from the past three years shows that an increasing number of married mothers or mothers who live with a partner want to stay at home with their children as soon as they can afford to do so. As the vicar of my parish church preached yesterday, the Budget is wrong to offer fiscal encouragement to bring up someone else's children. Equality must surely be ensured between the two; children are better off with their mother until they are at least six or seven.
  Little has been said about the proposed anti-avoidance provisions. Every business transaction will have to be given anti-avoidance clearance by the Revenue. Canada introduced a similar provision, but its Revenue fibbed when it said that it has only 240 officers: it has 600 highly paid, top men and women, who have to make complicated assessments. Our Revenue does not have such resources, but the last thing that we want is for businesses to move their headquarters elsewhere because of massive complications in securing anti-avoidance clearances on commercial transactions.
  There is a crucial difference in Anglo-Saxon culture between avoidance and evasion. No man is bound to pay more tax than he need, but not paying what he should is against the law. In continental Europe, the difference is blurred, and anyone who conducts business there will find that a problem. I believe that there is an element in the Budget, whereby it is suggested that avoidance and evasion are the same. That is unhealthy for this country's commercial integrity.
  Other hon. Members have dismissed the point, but I have ground through the figures, and have found that, before the Budget, taking into account the increases in the community charge, an average family has been paying an additional £780 in taxes since 1 May, and the figure has now increased to just over £1,000. I fear that this Government will repeat our mistakes, and that the average family will have a higher tax burden, yet the average family is expected to bring up children properly, set an example, support charities and be leaders in society.
  There is no merit in constantly loading taxes on the average family. Benefits must be spread broadly to help the less well-off, and they must be financed from a growing economy, and not by raising taxes on average, ordinary families.
  8.42 pm
  Mr. Malcolm Chisholm: The two central themes of the Budget can be found by focusing on two pages of the Red Book: page 68, which highlights the remarkable redistributive heart of the Budget, and page 83, which describes the primary objective of increasing the sustainable growth rate of the
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  economy. The former may be more exciting, but the latter is just as important, because the Government's success in increasing the sustainable rate of growth will determine how much we can redistribute and how quickly we can expand public services.
  I understand those who want a big-bang approach to public expenditure, but we must never forget the serious structural deficit that we inherited and which had to be dealt with. We shall not do anyone any favours if we increase public expenditure in an unsustainable and economically counter-productive way. I therefore welcome the first-ever framework for monetary and fiscal stability and the Budget's many specific measures to address the under-investment, instability and structural weaknesses that we inherited.
  A contrary view to those positions—or, rather, a contrary confusion—was expressed by the right hon. Member for Wokingham (Mr. Redwood), who simultaneously criticised tax increases and advocated even greater tax rises. As Samuel Brittan wrote in the Financial Times,
  "It is just not realistic to suppose that any Chancellor would increase taxes and pile up cash surpluses because of some highly debateable belief that he would enable interest rates to come down."
  It is difficult to be euphoric about macro-economics, so I shall leave the subject, but that word describes how I felt when I heard about the redistributive measures in the Budget. This is the first Budget for 20 years to redistribute towards the poor, especially towards poor families.
  That is the exact opposite of what the Tories did for 18 years, under whom families, especially poor families, suffered most. That is clearly shown by a book, "Taxes Down, Taxes Up", which was published by the Institute for Fiscal Studies in 1994. The Chancellor understandably prefers to say that his proposal is a redistribution in favour of work, because those paying tax will begin to do so at 50 per cent. of average earnings instead of at 25 per cent. The changes to national insurance contributions and, above all, the working families tax credit, which contains a child care element, will lead to job creation and increased pay.
  I was a little concerned before the Budget about the working families tax credit, and I still hope that the presumption is that it will be paid to the woman in a couple, but we all welcome the massive advance that the changes proposed in working families tax credit represent. It proposes a higher applicable amount than family credit, more support for younger children and a reduction in the problem of steep tapers.
  The outstanding problem, as the Government know, is housing benefit. I urge them to make a low-rent policy a foundation of their housing and welfare-to-work policies. That must be their starting point for reform of housing benefit.
  The Budget addressed many of the barriers to employment, of which child care was the greatest. This is the first Government in British history who regard child care as an essential part of economic policy as well as of children's policy and of equal opportunities policy. A lone-parent constituent told me a month ago that she had had to give up work because she was on maximum family credit and could therefore receive no child care support. Under our proposals, she and hundreds of thousands of others will have 70 per cent. of their child care costs paid.

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  Other barriers must be addressed. I welcome the introduction of a training element to the new deal for lone parents. I hope that it can be expanded in accordance with some of the suggestions of the Select Committee on Education and Employment. The gateway and other training, education, confidence-building and support measures should be opened to them.
  I also welcome the linking rule, which deals with the work disincentive element of the original lone parent benefit cuts.
  Not only those in work will benefit from the Budget. I particularly welcome the income-related benefits that will help children under 11. Recent research suggests that the gap between the amounts available to under-11s and over-11s is too big. The lone parent cuts in income support will be made up by next April, and for new claimants with more than one child under 11, the gap will be more than made up. I welcome the progress that has been made in that regard since December.
  The problem that remains, however, is the time lag, and it applies also to lone parent in-work benefits. Changes will be made for lone parents in April, June and November 1998 and April 1999. I make the simple proposal that all the changes should be made simultaneously in April 1999. That would be more or less revenue neutral.
  One other group not in work is pensioners. I welcome the large amount of money given to them in the summer Budget, but there is a problem with tenements. In certain Scottish cities, some pensioners have received £10 rather than £20 because of the way in which some tenement addresses are classified. I hope that that will not happen again, and that the Benefits Agency will ensure that the appropriate amount goes to every pensioner.
  The Budget is a defining moment for the Government. I welcome its core themes of redistribution and sustainable growth. I am delighted that we are back on course to deliver old Labour objectives in a new Labour way.
  8.50 pm
  Mr. Edward Davey: I want to focus on what the Budget tells us about the future direction of fiscal strategy. Like the hon. Member for Rochdale (Lorna Fitzsimons), I welcomed the pre-Budget report, which allowed consultation before the Budget. The amount of detail contained in the Red Book about the direction of fiscal policy is also welcome and remarkable.
  The Red Book gives projections of expenditure and revenue. In his Budget speech, the Chancellor made much of the need to look forward. The proposed fiscal code will make detailed assumptions and projections about public finances. In future, we shall not need to be Mystic Megs to predict what the Chancellor is likely to say on Budget day.
  An analysis of the Government's forecasts on fiscal policy shows that there is a positive story to tell. That begs the question why the Government are not taking more action on public services now. If the fiscal projections in the Red Book are correct, in the next three years the Chancellor will be able to say that there is a Budget surplus, that the Government are cutting taxes and that he wants massively to increase spending on public services. That is the message of the Red Book.
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  The number of sweepstakes on how often the Chancellor will use the word "prudent" in his Budget address will mushroom. He may be prudent in the future, but is his current approach to expenditure on public services prudent? Liberal Democrats argue that the bust-boom approach to funding of public services is imprudent, and will have a detrimental impact on the infrastructure of public services, on the lives of those who use services such as health and education, and on the careers of the professionals working in the services.
  Why are the Government taking such an imprudent approach to the management of the public sector? Is it because of their manifesto pledge, about which we have heard so much? As my hon. Friend the Member for Gordon (Mr. Bruce) said, they have already broken that pledge because they have not kept to the agreed departmental ceilings. I believe that the reason has to do with the comprehensive spending review. I am glad that the Chief Secretary to the Treasury is present, because he may want to confirm or deny my contention.
  The Government's approach to fiscal policy is based on realpolitik, and has damaging implications for public services. They have said to Whitehall and to the various spending Ministers, "There will be no money for you in the first two years, so you will have to concentrate on your comprehensive spending reviews." That may be a sensible pre-election strategy in the run-up to the next poll, but it is not a sensible way to manage public services.
  The figures in the Red Book show that delaying the inevitable increase in funding for public services is unnecessary and ill advised. The Government are being highly pessimistic about the public sector borrowing requirement. Despite massive reductions in the PSBR in the past two or three years, it is projected to be in a small surplus in two years' time. We believe that it is likely to be in surplus next year, and in the following years there will be a much larger surplus than is projected.
  The figures represent a large growth in public spending. Obscure note 3 of table 1.2 on page 11 of the Red Book says that public spending growth is assumed to be 2¼ per cent. in real terms. That is three times the growth for this year and that projected for next year. If such an increase in public spending is accounted for by the figures now, why not bring it forward a year, so that public sector managers can plan and invest properly and can make long-term decisions? Public services lack stability because the Government are not investing in them now.
  Another reason why the PSBR is so pessimistically projected in the Red Book is that revenue forecasts are ridiculously low. The figures show that Customs and Excise is making incredibly low predictions for future VAT revenues. That may make a difference of more than £8 billion between now and the next election.
  There is an assumption that no changes, apart from those already announced, will be made in future tax rates and allowances. As this Budget and the July Budget has shown, that is a highly unrealistic assumption.
  Even if we take the Government's pessimistic approach to public finances, the figures predict a huge surplus. Between the financial years 1998–99 and 2002–03, there will be an accumulative Budget surplus of £123 billion. Despite that surplus, the Government are not prepared, for the coming financial year, to provide an extra £1 billion for health and an extra £1 billion for education. Why are

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  they being so parsimonious when their figures suggest that they need not be? We know why the Government are building up this war chest.
  I welcome the fiscal code that the Government intend to introduce, the whole point of which should be to introduce stability in the management of public finances. We support such a laudable aim, but why start off with such bogus and pessimistic assumptions? Governments of whatever colour seem to be depressed and suffering from psychological disorders. At the beginning of a Parliament they are pessimistic about how things will turn out, and in the Budget before the election they become optimistic, and suddenly the growth rate has increased and the PSBR has vanished. We are on some sort of mental roller-coaster, but government needs mental stability. Perhaps that would be slightly more boring, but it would be more honest. The Government should have started with honest assumptions in the Red Book.
  I should like to comment on the detail of the proposed fiscal code. The Government derive much of their thinking on the code from the experience of the New Zealand Government's fiscal responsibility legislation. However, they have missed some key elements in that legislation, one of which is vital in the context of the Government's war chest. The New Zealand measure requires the Treasury to publish four to six weeks before an election the assumptions behind the Budget and the fiscal projections. If the Government were sincere about taking politics out of fiscal policy to produce a more stable approach, they would include such a provision. I hope that they will do that in Committee.
  When Liberal Democrats comment on Government policy, the Government say, "You are imprudent. It is right for the Government to be cautious. Look what happened to the Tories in the mid-1980s, when they cut taxes in the belief that they had reached fiscal nirvana. It is right for us to get away from such Victorian mismanagement." Liberal Democrats agree that the Government should not repeat Tory mistakes. We call not for £6 billion of tax cuts but for £1 billion to £2 billion extra for the public services now. That is a sensible approach and is not lacking in caution.
  The Government are making a serious mistake. Trying to turn round the public services after years of mismanagement by the Tories is like trying to turn the Titanic.
  Mr. Ian Bruce: It is like refloating it.
  Mr. Davey: I am afraid that the hon. Gentleman is right. The Secretary of State for Health has problems with waiting lists. The pledge to reduce them by 100,000 has not materialised: they have increased by 100,000. Time and resources are required, and if the Government delay investment in the health service, tackling the problems will be that much more difficult. The same applies to class sizes. We should reflect on the day-to-day realities of managing public services. Professional staff are the core of our schools and hospitals, and if they are not properly funded, they will go away and graduates will not go into medicine or teaching. There will be massive recruitment problems.
  This morning, at a primary school in my constituency, the head teacher told me about the massive problem not just in Kingston and Surbiton but throughout the country
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  of recruiting deputy heads and head teachers. Because of the hassle of ever-growing administration, it is not financially viable. If the Government do not invest in our public services, they will lose the support of the staff, the people who make things happen. That is the danger of delaying investment.
  On a slightly more positive note, the Government's approach to future fiscal policy by the use of consultation papers and comprehensive spending reviews should be supported. For example, the consultation paper on the reform of the tax and benefits system and the report from the chief executive of Barclays bank contained some welcome ideas. It is clear that the Government took the easy elements of that consultation paper and put them in the Budget, but Mr. Taylor outlined more difficult choices that the Government may have to face. I shall not go into details, but I hope that the Government will allow an early debate on those matters, so that we can get to grips with some of the tricky issues that are well set out in those consultation papers.
  It is ironic that although the Government are trying to take a longer-term view of economic policy, have given control of interest rates to the Bank of England, have published a fiscal code and are trying to widen and rationalise debate on economic policy, the Budget is one of the most political Budgets of all time. There were many leaks before the Budget about the possibility of hitting the middle class, but it was not hit. I do not condemn the Government for not hitting it, but those leaks show the political tone and the background of the Budget.
  The timing of the tax and spending decisions in the Budget is political. Some of the taxes will hit us now, so that the Chancellor can draw cash to the Treasury's coffers, but spending will occur in three or four years— close to the next general election. Why could not child benefit have been increased from April? The only reason for the delay is the Government's political planning. There are political calculations in the PSBR forecast and in the Government's bust-boom approach to the public services over the life of this Parliament. It will become clear that the Government's political judgment is wrong. It will take a long time to turn round the public services, but the ambition should be to have the world's best public services. The Government say that they have new ambitions for Britain, but they are not prepared to invest in our public services. Their words are hollow.
  9.4 pm
  Mr. Andrew Love: I listened carefully to the closely argued speech of the hon. Member for Kingston and Surbiton (Mr. Davey) and I still cannot tell whether he and his party are optimistic or pessimistic about the Budget. I am optimistic. We have been in government for almost a year, and perhaps this is an appropriate time to take stock of our stewardship of the economy and of the Chancellor's Budget judgment of where we are going.
  Everyone has said that the Budget is neutral, and from the achievements so far and from the Treasury projections it is easy to see why people say that. Inflation is at 3 per cent. and is set to reduce to 2.5 per cent. in 1999 and beyond. That is the target range that has been set for the Monetary Policy Committee. The public sector borrowing requirement is £5 billion, which is some £14 billion lower than the figure that was projected by the previous

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  Government, and it is due to be in balance by the millennium. According to the Red Book, we are well on the way to fulfilling the golden rule of the economic cycle that was introduced by the Chancellor in July.
  Growth is running at 2 to 2.5 per cent. and is to be held within the range of 1.75 to 2.75 per cent. over the next two years. That is at or near the trend growth rate for the economy. According to the Red Book, the debt to GDP ratio will be 52 per cent. this year and will decline to 47 per cent. by the millennium. That more than fulfils the fiscal rules that were set by the Chancellor in July. Of course, the Chancellor's fiscal stance is only one aspect of the Budget and in some respects it is not the most important. The Budget is emphatically for jobs and families and it will stand or fall on the Chancellor's judgment about refashioning the welfare state.
  The signs are modestly optimistic. The headlines and the editorial comment in the press the day after the Budget were consistently favourable. Even the Daily Mail, which sees itself as the voice of middle Britain, pronounced the Budget "sound and sober". The only body that simply refuses to find anything good to say about the Budget proposals is the Conservative party, which persists with the fiction of a golden legacy, conveniently forgetting that it did not appear very golden to the electorate in May.
  Critical to the success of the Budget will be the measures to deal with the poverty trap. I welcome the Chancellor's endorsement of child benefit as one of the pillars of a modern tax and benefit system. He has also reaffirmed that the benefit will remain universal and continue to be paid directly to the parent with primary responsibility for the children. That is all to be welcomed.
  Many low-paid families will also benefit from the introduction of the working families tax credit, which will replace family credit and is designed to provide a minimum guaranteed income to families on low pay. In the process, it will turn a benefit into a tax credit and help to overcome the stigma that continues to ensure that around 30 per cent. of people who are eligible for family credit simply do not claim it. However, payment through the tax system brings its own problems, which have been recognised by including an option for the working families tax credit to be paid to either parent.
  The third policy change that will boost the earnings of the low-paid is the reduction in national insurance contributions. That is calculated to be worth £65 a year and will benefit a significant number of the low-paid. The combination of all three changes will provide a powerful boost to the incomes of many families, but we have to recognise that the changes will interact with other benefits, notably housing benefit, and that this is but a first step—a radical and imaginative first step—in developing the new welfare state.
  I should like to give a special mention to one of the smaller initiatives that is tucked away in the Budget. The announcement of a £50 million venture capital fund will be warmly welcomed in my constituency. The Lee Valley business innovation centre is sited there and, in association with Middlesex university, supports many small businesses in the area. In association with the local authority, the centre is developing a science park. The university challenge fund—to promote enterprise and high-tech growth—is just what it needs to turn scientific discoveries into commercially viable projects. It will help to unlock the talents and ingenuity in our universities and to channel them into the creation of wealth and jobs.
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  I should like to comment on the Government's long-term ambition to secure economic stability and the role in that objective of the code for fiscal stability. The code will enshrine the need for transparency and accountability in Britain's economic policy framework. It will strengthen the credibility of fiscal and debt management, much as the new monetary policy framework has done for the setting of interest rates. It will be underpinned by detailed reporting arrangements and proper accounting methods. The code demonstrates again the Government's commitment to maintaining and strengthening the credibility of their economic policies.
  The Budget is both prudent and ambitious. It creates stability, but begins the task of modernising the tax and benefit system. That purpose is worth supporting, and I commend the Budget to the House.
  9.11 pm
  Mr. John Bercow: The Budget is a triumph of style over substance, yet no hon. Member should doubt for one moment that the substance is deeply damaging—to taxpayers, to country dwellers and to the economy as a whole. In the short time available, I shall deal with each of those three points.
  First, let us address the subject of taxation. Earlier in the debate, we witnessed the interesting spectacle of revisionism rampant on the Labour Benches, as Government Back Benchers misrepresented the record of past promises, to distort the reality of what has transpired since the general election. We need to be explicit about what was said by Labour Front Benchers before the election.
  The Prime Minister said—it was reported in the Financial Times on 21 September 1996—that there was no plan to increase taxes at all. In April 1997, an explicit statement was made by the then shadow Chancellor that Labour had no public spending commitments that would require extra taxes. Therefore, there was a reference to no plans for increases in taxes at all and a second reference to no requirement for extra taxes. It was not simply a question—as the President of the Board of Trade implied—of a commitment not to raise rates of income tax. The commitment was clear and explicit: Labour said that it had no plans to increase tax at all. Those pledges have been betrayed. That trust has been broken. The Government have reneged on the many words on this subject that were uttered before the general election.
  What we know now from the Red Book is that taxes will rise from 38.1 to 40.1 per cent. of gross domestic product by 2002–03. The Budget increases taxes. The Government then positively intend to increase taxes in each and every one of the succeeding four years. That is the plan, and that is the policy that the Government will deliver. It means that the proportion of GDP raised from income tax will rise from 9.5 to 11.1 per cent. Whatever the mirrors deployed by the Chief Secretary to the Treasury in responding to the debate, he cannot gainsay the reality of the written word of the Red Book and the financial statement.
  Let it be clearly understood that the Government believe that Britons are taxed too little and should be taxed more. That is what the Government intend. They believe that not only individuals but businesses are too lightly taxed. The first signal of the intention further to raise business taxes came in the Budget, which contains a

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  net increase in business taxation of £2.2 billion. That will not increase employment, it will reduce it; it will not enhance competitiveness, it will undermine it; it will not make our country more prosperous, it will make us relatively and, potentially, absolutely poorer. Those are the consequence of the Government's policies, even if they are not the intention.
  The Chief Secretary should not deny for one moment the intention, set out in the Budget, to increase employer national insurance contributions for higher-paid workers. Earlier, the President of the Board of Trade was challenged to explain how that increase in taxes upon business could help the process of employing higher-paid workers, could assist their retention, and could advance the cause of high-technology and knowledge-based companies in the international marketplace as they seek to develop. Answer came there none, as the right hon. Lady was visibly under pressure, flummoxed and deprived of any coherent answer to the attack that was made. I recognise that the Chief Secretary is an altogether more sophisticated operator, so I hope that he will manage a better reply than the right hon. Lady was able to give.
  That is the reality of the increase in taxation, although I readily concede that the Prime Minister was supremely ignorant of the contents of the Budget delivered last week by his Chancellor—an ignorance that he displayed not only in front of the House, but in front of millions of television viewers during Prime Minister's Question Time last week. That is the first criticism we make. Labour has two favourite sports, new Labour as much as old Labour. One is to raise taxes and the other is, by a variety of ingenious means and devices, to create new taxes.
  The second criticism, specifically representing the concerns expressed to me by my constituents, is the Government's attack on country dwellers. That comes in the form of a dramatic, swingeing increase in road fuel duty. The Government have imposed an additional burden of £2.75 billion on people in rural communities who drive cars. Let no one underestimate the scale of that imposition. A rural dweller with a car, who has the temerity to drive it 20,000 miles per year—that is not uncommon or untypical—will face an increased burden of £160 per year as a consequence of the Government's measures. That is damaging; it does not provide a work incentive for those who need a car to travel to work; it does not do anything to encourage the inhabitants of rural communities. It is the latest instalment in a systematic and inconsiderate attack by an urban-dominated Government on the inhabitants of our rural communities.
  If the Chief Secretary believes that that is amusing, he should think again. The number of times that Conservative Members heard that grievance expressed on the countryside march was too numerous to count. If the urban Minister thinks that that is insignificant, he is insensitive and can in no sense claim to speak for a one-nation Administration.
  The Institute of Directors, in its characteristically restrained and understated fashion, said that the two increases in road fuel duty in less than a year were regrettable. How right it was. For the Chancellor of the Exchequer to offer, as a sop to those whom he has just clobbered, a £50 million rural transport fund—supposedly to bolster public transport services in the countryside— borders on an insult. If it is to mean anything, why did he
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  not set a target for the increase in public transport services that would result from that policy? How many more journeys does he expect that there will be? What decline in the reliance on the car will result from that infusion of funds?
  If the Chancellor of the Exchequer and the Chief Secretary cannot estimate what the change in behaviour will be, we can deduce only that they have not got a clue and perhaps do not seriously intend a change of policy. They have patronisingly given rural dwellers a proverbial pat on the head—the fund amounts to nothing more than that. That is why the anger of rural communities will continue to be visited on the heads of the Administration.
  As I said, the Budget will damage the economy. I do not expect the Chief Secretary—or the Financial Secretary, one of the great authorities on tax and excise duties, who is now present on the Treasury Bench—to take that assessment from me. I invite them instead to take it from a distinguished economist, Professor Doug McWilliams, formerly of the Confederation of British Industry and now of the Centre for Economic and Business Research, who predicted that the Government's policies would have damaging consequences. He said that there would be a 5.6 per cent. reduction in non-Government investment in our economy relative to what would have happened if the Conservative Administration had continued; that there would be a £3.8 billion reduction in gross domestic product relative to what would have been achieved under the Conservatives; and that there would be a relative decline in output. He confidently predicted that the Government's misguided and uninformed policies would, by 2002–03, result in 95,000 more people being unemployed than would otherwise have been.
  In their Budget, the Government have nothing of which to be proud and much of which to be ashamed. That is why Conservative Members will take pleasure in voting against the Budget tonight. It is bad for the economy, bad for communities and bad for Britain—it deserves to be rejected.
  9.22 pm
  Mr. David Heathcoat—Amory: This debate, which has lasted for four days, has been very revealing. The string and the wrapping paper have come off the Budget, which now looks much less attractive than it did last Tuesday. The Economist said:
  "The fact is that the Budget was a muddle … it lacked an organising idea."
  Today's debate has again failed to supply an organising idea to the Chancellor's intentions. Last Wednesday and Thursday, the Government could not even provide enough speakers from their own ranks to support the Budget, and the debate had to be carried on by a series of speakers from the Opposition.
  There was much waffle in the Budget statement. The Chancellor said that it was the people's Budget—it was the people's this and the people's that. He said:
  "The Chancellor is above all the guardian of the people's money."—[Official Report, 17 March 1998; Vol. 308, c. 1099.]
  That is a bit rich coming from someone who has agreed in principle—if, as he hopes, we join the European currency—to hand over control of foreign currency and gold reserves to the European central bank in Frankfurt.

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  If the Budget had an attempt at an organising aim, it was to get people off welfare and into work. We share that aim. Indeed, the social security reforms pushed through by my right hon. Friend the shadow Chancellor were all designed to make work more attractive, and when we had the money we always reduced the burden of direct taxation on the low-paid.
  The difference between us and the present Government is that, in office, we did more to achieve that aim. We not only reformed the welfare state but delivered an economy—the golden economic legacy referred to by my right hon. and hon. Friends throughout the debate—in which unemployment was low and falling. One of the crucial ways in which we did that was by creating a flexible labour market.
  The Chancellor claims those achievements as his own, to the extent of lecturing other member states of the European Union on the subject of the need for flexibility in labour markets. He is a cadet member of the Robin Cook school of diplomacy, and his remarks create almost as much resentment as the Foreign Secretary's. Other member states know that, when the Chancellor was in opposition, not only did he do nothing to create the flexible labour market but he opposed all the measures which we enacted over 18 years to achieve it.
  European Union member states can see through the Chancellor's rhetoric and know that in practice he is increasing the burden of taxation on businesses, while relying on those businesses to supply new jobs. The Government's welfare-to-work programme will increase the demand for new jobs, but their company taxation will hit the supply.
  Behind that contradiction is the lingering belief that the Government create the jobs. That point was well made by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke): it is not Government but business that creates jobs, and if we tax businesses we will damage employment.
  The Red Book, and the information that we have managed to extract since it was published, shows that the burden of taxation on the business sector will approach £25 billion. Admittedly, that includes the windfall tax, about which the Government warned us before taking office, but even if that is taken out we still have more than £20 billion of extra taxation on the productive sector of the economy, on which the Government rely to provide the jobs that people will be asked to seek.
  There is a further paradox over savings. Everyone should know that the only realistic alternative to welfare is private savings and long-term pension provision. Last year, the Chancellor attacked pension funds, taking out about £5 billion annually. He has done nothing to correct that in this Budget. Indeed, he has added to the problem by a botched attack on PEPs and TESSAs and, indeed, by the new annual limit on savings, which is nothing like as generous as the one that applied previously.
  Under PEPs and TESSAs, a saver could put by £10,800 a year; under the ISAs, which will eventually replace them, the limit will be £5,000. It is not surprising that, again according to the Red Book, the savings ratio is due to fall further. In our last year in office, the savings ratio was 11 per cent. It is due to fall steadily to the end of the century, down to 9 per cent. That is a direct result of the very policies that the Chancellor has already introduced and did nothing to correct in this Budget.
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  There is another point about savings. Not only is it crazy to hit savings when one is trying to reform the welfare state, but, relatively, it encourages consumption, which has made the burden of the Bank of England that much heavier. It has forced the Bank to increase interest rates to compensate, which has led directly to the high pound, of which we have heard much during this debate. The Chancellor had washed his hands of high interest rates. Well, he has indeed divested himself of decisions about interest rates, but he cannot divest himself of responsibility for monetary policy—that remains with the Chancellor.
  When the Bank of England Bill was considered by the House, we warned that there could be a mismatch between taxation and interest rate policy. That has happened and the victim is manufacturing and exporting industry. The confusion in the Monetary Policy Committee has added to the problem. The known splits in the committee are creating an expectation of further interest rate rises.
  The Chancellor has compounded that error, or could be about to, by his attitude towards the euro. The drachma has already entered the exchange rate mechanism under the British chairmanship. Now, the Chancellor simply has to reverse his apparent attitude of weakness towards the euro by insisting on a rigid and strict application of the entry criteria. If not, the very weakness of the anticipated euro in the markets will again make the pound relatively stronger and do further damage. The damage done by the strong pound was constantly referred to in the debate, particularly on the Labour Benches. The Chancellor cannot be indifferent to that. The performance of the real economy is every bit as important as the welfare reforms that form the centrepiece of the Budget. The Chancellor cannot simply create rules for himself or divest himself of decisions and then say that the outcome of those decisions has nothing to do with him.
  Against that economic background, we can assess the welfare-to-work programme and the working families tax credit in more detail. It is not at all clear that the tax credit as proposed will provide the claimed incentives, and that is the judgment not merely of Conservative Members but of the independent Institute for Fiscal Studies, which is intensely sceptical about what will happen in practice when the credit is introduced.
  The Chancellor is indifferent to a lot of things—he said that he was indifferent to the family structure that the working families tax credit would promote. Conservative Members are not indifferent to it. I agreed with the remarks of my hon. Friend the Member for Arundel and South Downs (Mr. Flight). We oppose the switch from the married couple's allowance to the indiscriminate tax credit as proposed in this Budget. We are also worried about the complexity of the scheme, in particular the burden that it will place on business. Such a scheme will work only if it is comprehensible to the participants—not only the people who will get the credit, but those who will administer it in the business and small business sectors.
  My right hon. Friend the Member for Haltemprice and Howden (Mr. Davis) analysed the details of marginal withdrawal rates with great skill. In particular, he drew attention to the experience in the United States, where the system is subject to much fraud. He is absolutely right. Fraud must be designed out of a welfare system, and we are in danger of creating a system in which fraud is designed in.

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  We know that the system will be expensive, although the true cost is not fully disclosed. Perhaps an example is the child care credit, which is an important element of the overall scheme. At times, it appears that the Budget is not so much a Budget for children as one for child minders. Some perverse incentives could be set up. For instance, a young mother could take a part-time job as a child minder. She would then become eligible for more than £100 a week in child care credit, so that her own children could be looked after by other child minders, perhaps in the same child care centre at which she worked. We could create a situation where everyone was paid to look after everyone else's children, which is practically the definition of a nanny state. I am sure that that is not the intention of the system, but if the history of the welfare state teaches us anything, it is that good intentions are not enough. They often lead to unintended consequences and unplanned incentives. Almost always, the cost turns out to be much higher than originally predicted.
  At the end of this debate, let us finally have an answer to the question constantly posed by Conservative Members about who will get the working families tax credit if a couple disagrees about who should get it. What will happen if the mother believes that she needs it to support the family budget, but the man insists that he needs what I think Martin Taylor called the psychological incentive of having it paid through his wage packet? It is a simple system if they both agree—it can go to the mother or the father—but, if they disagree, as we know they sometimes will, who will get the tax credit? Can we have a simple, straightforward answer to a simple, straightforward question?
  On public expenditure, little can be gleaned from the Red Book until more analysis is done. However, I pick up the point made by the hon. Member for Gordon (Mr. Bruce)—although I did not completely follow his figures—that the Government will spend in 1998–99, the next financial year, less in real terms than we had predicted that we would spend. He mentioned a figure of more than £6 billion, but I cannot get the amount up to that. I went to the Library, which confirmed a very significant drop in the real level of public expenditure from what we had planned because of higher inflation under this Government. The Government are not increasing total public expenditure or even maintaining it; they are cutting it. It is not surprising that NHS waiting lists are increasing and that they have broken that promise.
  There is nothing in the Budget for pensioners, except, of course, the tax increases. They are the forgotten people of this Budget. All the tax increases are certainly coming their way. The fuel duty increases hit not only cars but heating oil, the duty on which went up by 9 per cent. The duty on tobacco and alcoholic drinks went up. We froze the duty on alcohol in our last two Budgets, and reduced it for spirits.
  The hon. Member for Selby (Mr. Grogan) spoke graphically about the problems of smuggling. I know exactly what he is talking about. It is a genuine problem. The hon. Gentleman knows that the Government announced a study into smuggling which has not been published. He may be as keen as we are to get a copy, under the public's right to know, openness, accountability and all that, to find out what his Government are doing
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  about it. On the face of it, they are only ratcheting up even further the differential between continental duty rates, which are low, and ours, which are already high. That makes the problem worse.
  There is also a problem regarding fuel, although that is not smuggled—at least not on such a scale. It is estimated that the motorist faces another £7 billion-worth of duty on road fuels during the lifetime of the Parliament. Diesel is especially badly hit; not only is that mad from an environmental point of view, because diesel produces less carbon dioxide for every mile travelled than petrol, but it is extremely bad news for industry as, yet again, industrial costs are raised. It is the same with stamp duty. The Government pretend that stamp duty is paid by people in large houses, but that is not true: three quarters of the stamp duty increase will be paid by businesses. The Government are gradually eroding the United Kingdom's strength as a low-tax, low-cost European economy.
  The subject of capital gains tax was comprehensively and knowledgeably covered by my hon. Friends the Members for South Dorset (Mr. Bruce) and for Bournemouth, West (Mr. Butterfill). They are right to say that the new system will be extremely complex—there are 34 different rates—and it will probably invite many avoidance schemes. The revenue raised from it is supposed to be approximately neutral, which is to say that the changes are not supposed to be of net benefit to the Exchequer. That will happen only if inflation remains low, and we know that inflation is not remaining low, because the Chancellor, in his Red Book, predicts that he will not hit his own inflation target until at least the end of next year. If that failure on inflation persists, the capital gains tax reform will turn into a fraud on savers and investors.
  I summarise the Budget as follows: it is a Budget that does nothing to correct the mistakes of last year, but actually compounds them. The mistake of taxing businesses and savings will be bad for employment, bad for inflation, bad for interest rates and bad for welfare reforms. The tax reforms in the Budget do not measure up to the absurdly inflated claims that it was a "once in a generation" Budget. It has been proved in the debate that the reforms are complex, expensive and most unlikely to achieve the desired effects. The Budget concealed as much as it revealed and, above all, it confirmed that the Labour party broke all its pre-election promises on taxation. We shall oppose it.
  9.41 pm
  The Chief Secretary to the Treasury (Mr. Alistair Darling): I shall start by referring to the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), which is more than the shadow Chief Secretary has done. I apologise to the right hon. and learned Gentleman for not being able to be in the Chamber to hear his speech; as I told him earlier, I had to be elsewhere when he caught the Deputy Speaker's eye. I make the same apology to the Liberal Democrat economic spokesman, the hon. Member for Gordon (Mr. Bruce). It is unfortunate that both were called at around the same time. I also pay tribute to all my hon. Friends on the Labour Back Benches who have supported the Government, especially my hon. Friend the Member for Luton, South (Ms Moran), who wanted to speak but, unfortunately, time was against her. It is frustrating to sit listening to the whole Budget debate, only to find that one has been pipped at the post.

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  The Budget is widely recognised as being radical and reforming. It builds on our determination to deliver economic stability, which is built on a commitment to prudent monetary and fiscal rules. We have made a commitment to low inflation, because we believe that stability is the essential precondition for long-term sustainable growth. It is a Budget to encourage work and to make work pay. It is the biggest modernisation of the tax and benefits system for 20 years. We are extending the new deal and providing child care support—recognising, unlike the previous Government, that the labour market has changed dramatically in the past 20 years. The Budget encourages enterprise: we are continuing our reform of business taxation to boost investment and especially to encourage small developing businesses. We are encouraging savings, promoting research and development and helping universities to develop their research into profitable production.
  The Budget builds a fairer society: it supports families, and protects the environment. Rigorous control of public spending has allowed us to invest more in schools, hospitals and transport. We are supporting families by increasing child benefit by the largest amount since its introduction almost 20 years ago. We have helped pensioners: this winter, we not only cut VAT on domestic fuel, whereas the Conservatives would have increased it to 17.5 per cent., but gave pensioners a major package of help. Pensioners received £20 and the poorest received £50, which is something that would not have happened but for the change of Government. This is also a Budget that demonstrates the new Labour Government's belief that fairness and enterprise go hand in hand. It is a Budget that delivers our political and economic objective, which is to raise the long-term sustainable growth rate, to increase employment, to promote a fairer society, and to reduce the inequality which grew during the term of office of the Tory Government.
  I want to start with the question of stability. We listened to the right hon. Member for Wokingham (Mr. Redwood) referring to the golden age of Conservative rule. It seems to me that the Tory party continues to delude itself about the past. The right hon. Gentleman talked about a golden age for the countryside. People remember what the Conservatives did to the countryside: the deregulation of buses, the closing of post offices, and BSE which ruined many farmers. People also remember the 22 tax rises designed to pay for economic failure. They remember the high interest rates. So much for a golden age.
  Our inheritance was a national debt that had doubled in six years because of Tory economic failure. We will not repeat the mistakes of the late 1980s, when the economic signals were misread, when a surplus became a £50 billion deficit, when inflation hit double figures, when interest rates doubled in two years, and when an "economic miracle" turned into the deepest recession since the war.
  Whenever they are asked about public spending, Liberal Democrats tell us to spend more on education, transport, the police, law and order, benefits, councils and just about everything else. Frankly, their position is incredible—although I do understand it. They have decided to become the old tax-and-spend party, only without the taxation bit. There is a stateable case for tax and spend, but tax and spend without the tax is an implausible stance.
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  There is no question of our building a war chest. We are ensuring that the public finances are maintained in a stable way so that we can provide the public services that we all want. We are still dealing with what we inherited: spending £25 billion a year to service the debt that the Tories left behind. That is more than we are spending on schools.
  Last July my right hon. Friend the Chancellor began the process of cutting that debt. In May of last year we found that the Tories had pledged to spend £19 billion more than they were going to get in. That was typical of their approach to the economy. We have cut that gap. We have cut the deficit this year to £5 billion and we will move into balance in two years' time.
  So we are providing the stability that brings with it long-term job opportunities. We are providing low inflation. We inherited inflation heading for 4 per cent.— way above the Government's target of 2.5 per cent. That is why we had to take action to bring inflation down. Thanks to our reforms to the Bank of England, we now have the most open and accountable monetary policy framework in the world. More than that, we have the lowest long-term interest rates for 33 years. The last time they were so low was under a Labour Government in the 1960s.
  We are providing a stable platform for the future. If we are to achieve an efficient and fair society we need to encourage work, to increase employability and to make work pay. Not just here, but right across the world, the same lessons are being learnt. The modern work force needs to be highly skilled, trained, motivated and adaptable. In a world where people will have many jobs between starting out in the labour market and retirement, it is the Government's job to encourage those who can work to do so, and to foster an environment where people can see the benefits of their work.
  Mr. Kenneth Clarke: The right hon. Gentleman appears to have finished with macro-economics already, having dusted down his election speeches yet again. Before he relies too much on mythical figures, such as the £19 billion deficit to which we were supposedly pledged and the 4 per cent. inflation which was supposedly looming, will he deal with current reality? I refer to the underlying inflation rate of 2.6 per cent. which the right hon. Gentleman inherited. I also ask what he proposes to do about the considerable strength of sterling, which has dominated today's debate and which is doing great damage to our manufacturing base. What is he going to do about five successive months of falling industrial production? What does he propose to do to prevent a manufacturing recession and an excessive slowdown of the economy? Or has the right hon. Gentleman not yet noticed these developments?
  Mr. Darling: I realise that the right hon. and learned Gentleman does not like to be reminded that he left us with a deficit that cost £25 billion per year to service, and that he left us in a position where inflation was heading to 4 per cent. and above, because he had ignored the advice of the Bank of England to do anything about it in the six months before the general election. He will also bear it in mind that sterling appreciated far more before 1 May 1997 than it has since.
  Manufacturing industry will recognise that the Government are taking action to ensure that we look to the long term and achieve long-term economic stability—

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  that we do not return to the boom and bust that we inherited. In addition, unlike the previous Government, we will not be buffeted around by short-term pressures, reacting to the day's headlines.
  This Government are prepared to take the right steps in the country's long-term interests, so people broadly support the stance that my right hon. Friend the Chancellor has taken. His judgment in the Budget was right. There is significant fiscal tightening, amounting to almost 2 per cent. of national income, and most commentators recognise that my right hon. Friend made the right judgment.
  Mr. Kenneth Clarke: Will the right hon. Gentleman give way?
  Mr. Darling: I shall give way once, but then I shall return to the subject of encouraging work—something that the previous Government did nothing about either.
  Mr. Clarke: The Chief Secretary is extremely generous and I am indebted to him for his courtesy, but do I take that long rant to mean that he has no idea what to do about strong sterling and does not think that it has anything to do with him or the Chancellor?
  Mr. Darling: To put it succinctly, in language that the right hon. and learned Gentleman will understand, he was wrong and we are right in the position that we are taking.
  I return to the subject of encouraging people into work, because the centrepiece of the Budget is reform to the national insurance system to remove barriers to work for the low-paid, and to cut the compliance costs on business. As a result, all employees pay £66 less per year from 1999. Employer and employee national insurance contribution entry fees and the steps in employer national insurance contributions will be abolished.
  We are extending the new deal for young people; for the long-term unemployed; and for the partners of the unemployed, who have been excluded from help until now. We are extending the new deal for those communities that have seen the worst, and fared the worst, in the past 18 years. We are extending the new deal to disabled people.
  We are introducing the working families tax credit, which will help make work pay, and we are taking other measures to reduce child poverty.
  Mr. Ian Bruce: Will the right hon. Gentleman give way?
  Mr. Darling: Perhaps in a moment.
  I find Conservative Members' attitude difficult to understand. They say that they think that the working families tax credit might be right in principle, and yet they almost seem to wish that it would fail from the start. The right hon. Member for Haltemprice and Howden (Mr. Davis) asked about the working families tax credit. If he looks at the Red Book, he will see that not only are we helping far more people than the family credit system was meant to help, but, whereas most of the people on family credit found marginal deduction rates of 70 per cent., under the scheme that we are proposing only a
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  quarter of the people have higher marginal deduction rates. In other words, we are reducing the cost that people face when they enter work.
  Mr. Bruce: Will the right hon. Gentleman give way?
  Mr. Darling: In a moment.
  The working families tax credit guarantees every working family an income of at least £180 a week. No family working full-time with earnings less than £220 a week will pay income tax. When people see the benefits that the WFTC will bring, they will see that working families now keep more of their money and that there is more of an incentive to enter work. When they take into account the reforms that we are making in the labour market, the increase in child tax credit and the provision of child care assistance—something that was never done under the previous Government—people will realise that the Government are taking action in ways that the previous Government never did.
  Mr. Bruce rose—
  Mr. Darling: I shall give way once to a man with a majority of 77, and hear what he has to say.
  Mr. Bruce: If this measure is so good, why do people have to wait until October 1999 for the change? [Interruption.]
  Mr. Darling: My hon. Friends are asking why the country had to wait 18 years for this sort of reform.
  We are determined to tackle child poverty. We inherited a situation where one child in three is brought up in poverty—what an indictment of one of the most industrialised countries in the world. We have introduced significant reforms, including the increase in child benefit by £2.50 from next year, that will ensure that we have a fair and efficient society.
  We have also introduced a Budget for enterprise. Reform to make work pay must be accompanied by an environment that encourages jobs. It must be very galling for the Conservatives to find that, despite their criticisms, nobody outside the Conservative party agrees with them. Our reforms to company taxation have been widely welcomed inside and outside the House.
  Mr. Peter Lilley rose—
  Mr. Darling: I shall give way in a moment. We have reformed corporation tax by cutting the rate to the lowest level ever, and we have said that it will not increase. We have cut the rates of tax being paid by small business, and we shall see major growth in employment in the small business sector in the future. We have examined ways of improving research and development and we have reformed the capital gains tax system.
  I am about to give way for the last time to the shadow Chancellor. One of the things that business likes most about the Labour party is its positive and constructive attitude to Europe—something that the shadow Chancellor and his right hon. and hon. Friends will never have.
  Mr. Lilley: I am grateful to the Chief Secretary for giving way. He said that nobody agrees with our critique

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  of the Budget. Is he not aware that the TUC has forecast that, as a direct result of the Chancellor's tightening of fiscal policy and his monetary and exchange rate policies, unemployment will rise by 100,000 during the rest of the year?
  Mr. Darling: At last year's Tory party conference, the Tories tried to tell us that much of the past 18 years had been a ghastly mistake. They claimed that they were a caring party and that they were sorry for everything they had done. The right hon. Gentleman now says that the TUC is the friend of the Tory party, but that claim has no credibility whatsoever.
  I emphasise the fact that, because we have exercised prudent control on public spending this year, we have been able to carry forward £l½ billion to next year. As we are prudent, we have allocated half a billion pounds to the reserve. However, we have also made more money available for schools, the health service and transport in the coming year. We are showing how, by conducting a root-and-branch examination of all public spending and by rooting out waste and inefficiency, the Government have been able to redirect money to our priorities in this Parliament and beyond. We shall see a great deal more of that during this Parliament.
  Prudent management of public spending has allowed us to allocate more money to our priorities. An extra £250 million for schools brings the total new money invested in schools since the election to £2½ billion—that is more money than the Liberal Democrats ever promised. We have been able to increase the amount of money going to the health service by an additional £2 billion. That money would not have been available but for the new Labour Government. We have been able to put money into public transport, and we are beginning to make up the backlog of investment needed in the London underground system, which was so neglected by the previous Government.
  Last July, the Chancellor took the first steps towards modernising the British economy, ensuring that we have economic stability and reducing the huge levels of debt that we inherited from the previous Government. We have reformed the Bank of England. We have yet to hear the Conservatives' position on the Bank of England, but most people recognise that that was a useful and a good reform. We are modernising the welfare state, and this Budget is a further step change along the way. We have extended the new deal, financed by the windfall levy on the privatised utilities. We are reforming the tax and benefit system and we are ensuring that work pays. We are making sure that help goes where it is needed. We are redirecting assistance to families with children, giving children the start in life that we promised them and that we know they need.
  Of course, modernising the welfare state goes hand in hand with encouraging enterprise. Enterprise and fairness go together. We are helping business; we are encouraging investment; we are reducing business tax and red tape. We are redirecting public funds to where they are needed, in schools, hospitals and transport. We are making sure that spending follows this Government's priorities in this Parliament and beyond.
  This is a radical and reforming Budget. We are committed to a fairer society. We are committed to reversing the inequalities over which the Tories presided.
  122
  We want a more productive, high-employment economy. This is a new Labour Budget and, step by step, we are delivering our manifesto promises. This is a Budget for enterprise and fairness, a Budget that has set new ambitions for Britain. I commend it to the House.
  Question put and agreed to.
  Resolved,
  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

  so far as it is applicable to services, applies to services of every description.

  MADAM SPEAKER then, pursuant to paragraph (3) of Standing Order No. 51 (Ways and Means motions), put forthwith the Questions necessary to dispose of the further motions.

  2. BEER (RATE OF DUTY)
  Motion made, and Question put,
  That provision may be made increasing the rate of duty set out in section 36(1) of the Alcoholic Liquor Duties Act 1979.
  The House divided: Ayes 350, Noes 147.

  Division No. 216]

  [10 pm

  AYES

  Abbott, Ms Diane

  Blunkett, Rt Hon David

  Ainger, Nick

  Borrow, David

  Ainsworth, Robert (Cov'try NE)

  Bradley, Peter (The Wrekin)

  Allan, Richard

  Brake, Tom

  Allen, Graham

  Brand, Dr Peter

  Anderson, Donald (Swansea E)

  Breed, Colin

  Anderson, Janet (Rossendale)

  Brinton, Mrs Helen

  Armstrong, Ms Hilary

  Brown, Rt Hon Gordon (Dunfermline E)

  Ashdown, Rt Hon Paddy

  Ashton, Joe

  Brown, Rt Hon Nick (Newcastle E)

  Atherton, Ms Candy

  Brown, Russell (Dumfries)

  Baker, Norman

  Browne, Desmond

  Ballard, Mrs Jackie

  Bruce, Malcolm (Gordon)

  Barnes, Harry

  Buck, Ms Karen

  Barron, Kevin

  Burden, Richard

  Battle, John

  Burgon, Colin

  Bayley, Hugh

  Burnett, John

  Beckett, Rt Hon Mrs Margaret

  Burstow, Paul

  Berth, Rt Hon A J

  Byers, Stephen

  Bell, Martin (Tatton)

  Cable, Dr Vincent

  Bell, Stuart (Middlesbrough)

  Caborn, Richard

  Benn, Rt Hon Tony

  Campbell, Alan (Tynemouth)

  Bennett, Andrew F

  Campbell, Menzies (NE Fife)

  Benton, Joe

  Campbell—Savours, Dale

  Bermingham, Gerald

  Canavan, Dennis

  Berry, Roger

  Cann, Jamie

  Best, Harold

  Caplin, Ivor

  Blair, Rt Hon Tony

  Caton, Martin

  Blears, Ms Hazel

  Chaytor, David

  Blizzard, Bob

  Chidgey, David

  123

  Chisholm, Malcolm

  Grant, Bernie

  Church, Ms Judith

  Griffiths, Jane (Reading E)

  Clapham, Michael

  Grocott, Bruce

  Clark, Rt Hon Dr David (S Shields)

  Grogan, John

  Clark, Dr Lynda (Edinburgh Pentlands)

  Gunnell, John

  Hain, Peter

  Clarke, Rt Hon Tom (Coatbridge)

  Hall, Mike (Weaver Vale)

  Clelland, David

  Hall, Patrick (Bedford)

  Clwyd, Ann

  Hancock, Mike

  Coaker, Vernon

  Hanson, David

  Coffey, Ms Ann

  Harman, Rt Hon Ms Harriet

  Cohen, Harry

  Harris, Dr Evan

  Coleman, lain

  Heal, Mrs Sylvia

  Colman, Tony

  Healey, John

  Connarty, Michael

  Heath, David (Somerton & Frome)

  Cook, Frank (Stockton N)

  Henderson, Doug (Newcastle N)

  Cooper, Yvette

  Henderson, Ivan (Harwich)

  Corbett, Robin

  Hepburn, Stephen

  Corbyn, Jeremy

  Heppell, John

  Corston, Ms Jean

  Hewitt, Ms Patricia

  Cousins, Jim

  Hill, Keith

  Cox, Tom

  Hinchliffe, David

  Cryer, John (Hornchurch)

  Hodge, Ms Margaret

  Cummings, John

  Hoey, Kate

  Cunliffe, Lawrence

  Home Robertson, John

  Cunningham, Jim (Cov'try S)

  Hoon, Geoffrey

  Cunningham, Ms Roseanna

  Hope, Phil

  (Perth)

  Hopkins, Kelvin

  Dafis, Cynog

  Howarth, Alan (Newport E)

  Dalyell, Tarn

  Howarth, George (Knowsley N)

  Darling, Rt Hon Alistair

  Howells, Dr Kim

  Darvill, Keith

  Hoyle, Lindsay

  Davey, Edward (Kingston)

  Hughes, Kevin (Doncaster N)

  Davey, Valerie (Bristol W)

  Hughes, Simon (Southwark N)

  Davidson, Ian

  Humble, Mrs Joan

  Davies, Rt Hon Denzil (Llanelli)

  Hurst, Alan

  Davies, Rt Hon Ron (Caerphilly)

  Hutton, John

  Dawson, Hilton

  Iddon, Dr Brian

  Dean, Mrs Janet

  Jackson, Helen (Hillsborough)

  Denham, John

  Jamieson, David

  Dismore, Andrew

  Johnson, Alan (Hull W & Hessle)

  Dobson, Rt Hon Frank

  Johnson, Miss Melanie

  Donohoe, Brian H

  (Welwyn Hatfield)

  Doran, Frank

  Jones, Barry (Alyn & Deeside)

  Dowd, Jim

  Jones, Helen (Warrington N)

  Drew, David

  Jones, Ms Jenny

  Drew, David

  (Wolverh'ton SW)

  Dunwoody, Mrs Gwyneth

  Jones, Martyn (Clwyd S)

  Eagle, Maria (L 'pool Garston)

  Kaufman, Rt Hon Gerald

  Edwards, Huw

  Keeble, Ms Sally

  Ellman, Mrs Louise

  Keetch, Paul

  Ennis, Jeff

  Kemp, Fraser

  Ewing, Mrs Margaret

  Kennedy, Charles (Ross Skye)

  Fearn, Ronnie

  Kennedy, Jane (Wavertree)

  Field, Rt Hon Frank

  Kidney, David

  Fisher, Mark

  King, Andy (Rugby & Kenilworth)

  Fitzpatrick, Jim

  King, Ms Oona (Bethnal Green)

  Fitzsimons, Loma

  Kirkwood, Archy

  Flint, Caroline

  Kumar, Dr Ashok

  Flynn, Paul

  Ladyman, Dr Stephen

  Foster, Rt Hon Derek

  Lawrence, Ms Jackie

  Foster, Don (Bath)

  Laxton, Bob

  Foster, Michael J (Worcester)

  Lepper, David

  Foulkes, George

  Levitt, Tom

  Fyfe, Maria

  Lewis, Ivan (Bury S)

  Galbraith, Sam

  Lewis, Terry (Worsley)

  Galloway, George

  Livsey, Richard

  Gapes, Mike

  Llwyd, Elfyn

  George,Andrew (St lves)

  Lock, David

  George, Bruce (Walsall S)

  Love, Andrew

  Gibson, Dr Ian

  McAvoy, Thomas

  Gilroy, Mrs Linda

  McCabe, Steve

  Godman, Norman A

  McCartney, Ian (Makerfield)

  Golding, Mrs Llin

  McDonagh, Siobhain

  Gorrie, Donald

  Macdonald, Calum

  Graham, Thomas

  McDonnell, John

  124

  McFall, John

  Sedgemore, Brian

  McGuire, Mrs Anne

  Shaw, Jonathan

  Mclsaac, Shona

  Sheerman, Barry

  McKenna, Mrs Rosemary

  Sheldon, Rt Hon Robert

  McLeish, Henry

  Simpson, Alan (Nottingham S)

  Maclennan, Rt Hon Robert

  Skinner, Dennis

  McNulty, Tony

  Smith, Rt Hon Andrew (Oxford E)

  MacShane, Denis

  Smith, Angela (Basildon)

  Mactaggart, Fiona

  Smith, Rt Hon Chris (Islington S)

  McWilliam, John

  Smith, Miss Geraldine

  Mahon, Mrs Alice

  (Morecambe & Lunesdale)

  Mandelson, Peter

  Smith, Jacqui (Redditch)

  Marek, Dr John

  Smith, John (Glamorgan)

  Marsden, Paul (Shrewsbury)

  Smith, Llew (Blaenau Gwent)

  Marshall—Andrews, Robert

  Smith, Sir Robert (WAb'd'ns)

  Martlew, Eric

  Soley, Clive

  Maxton, John

  Spellar, John

  Meale, Alan

  Squire, Ms Rachel

  Michael, Alun

  Starkey, Dr Phyllis

  Michie, Bill (Shefld Heeley)

  Steinberg, Gerry

  Milburn, Alan

  Stevenson, George

  Miller, Andrew

  Stinchcombe, Paul

  Mitchell, Austin

  Stoate, Dr Howard

  Moffatt, Laura

  Strang, Rt Hon Dr Gavin

  Moonie, Dr Lewis

  Straw, Rt Hon Jack

  Moran, Ms Margaret

  Strinqer, Graham

  Morgan, Alasdair (Galloway)

  Stunell, Andrew

  Morgan, Ms Julie (Cardiff N)

  Sutcliffe, Gerry

  Morgan, Rhodri (Cardiff W)

  Swinney, John

  Morris, Ms Estelle (B'ham Yardley)

  Morris, Rt Hon John (Aberavon)

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Mudie, George

  Taylor, Ms Dari (Stockton S)

  Mullin, Chris

  Murphy, Denis (Wansbeck)

  Taylor, David (NWLeics)

  Naysmith, Dr Doug

  Taylor, Matthew (Truro)

  Oaten, Mark

  Temple—Morris, Peter

  O'Hara, Eddie

  Thomas, Gareth (Clwyd W)

  Olner, Bill

  Thomas, Gareth R (Harrow W)

  O'Neill, Martin

  Timms, Stephen

  Öpik, Lembit

  Tipping, Paddy

  Palmer, Dr Nick

  Todd, Mark

  Pendry, Tom

  Tonge, Dr Jenny

  Perham, Ms Linda

  Touhig, Don

  Pickthall, Colin

  Trickett, Jon

  Pike, Peter L

  Truswell, Paul

  Plaskitt, James

  Turner, Dennis (Wolverh'ton SE)

  Pope, Greg

  Turner, Dr Desmond (Kemptown)

  Powell, Sir Raymond

  Twigg, Derek (Hatton)

  Prentice, Ms Bridget (Lewisham E)

  Twigg, Stephen (Enfield)

  Prescott, Rt Hon John

  Tyler, Paul

  Primarolo, Dawn

  Wallace, James

  Prosser, Gwyn

  Walley, Ms Joan

  Purchase, Ken

  Wareing, Robert N

  Quin, Ms Joyce

  Watts, David

  Quinn, Lawrie

  Webb, Steve

  Radice, Giles

  White, Brian

  Rapson, Syd

  Whitehead, Dr Alan

  Raynsford, Nick

  Wicks, Malcolm

  Reed, Andrew (Loughborough)

  Williams, Rt Hon Alan

  Reid, Dr John (Hamilton N)

  (Swansea W)

  Rendel, David

  Williams, Mrs Betty (Conwy)

  Robertson, Rt Hon George

  Willis, Phil

  (Hamilton S)

  Wills, Michael

  Robinson, Geoffrey (Cov'try NW)

  Wilson, Brian

  Rogers, Allan

  Winnick, David

  Rooney, Terry

  Winterton, Ms Rosie (Doncaster C)

  Ross, Ernie (Dundee W)

  Wise, Audrey

  Rowlands, Ted

  Woolas, Phil

  Roy, Frank

  Wray, James

  Ruddock, Ms Joan

  Wright, Anthony D (Gt Yarmouth)

  Russell, Bob (Colchester)

  Wright, Dr Tony (Cannock)

  Russell, Ms Christine (Chester)

  Wyatt, Derek

  Ryan, Ms Joan

  Salmond, Alex

  Tellers for the Ayes:

  Sanders, Adrian

  Mr. Jon Owen Jones and

  Savidge, Malcolm

  Mr. Clive Betts.

  125

  NOES

  Ainsworth, Peter (E Surrey)

  Jenkin, Bernard

  Amess, David

  Johnson Smith,

  Ancram, Rt Hon Michael

  Rt Hon Sir Geoffrey

  Arbuthnot, James

  Key, Robert

  Atkinson, Peter (Hexham)

  King, Rt Hon Tom (Bridgwater)

  Baldry, Tony

  Kirkbride, Miss Julie

  Bercow, John

  Laing, Mrs Eleanor

  Beresford, Sir Paul

  Lansley, Andrew

  Leigh, Edward

  Blunt, Crispin

  Letwin, Oliver

  Body, Sir Richard

  Lewis, Dr Julian (New Forest E)

  Boswell, Tim

  Lidington, David

  Bottomley, Peter (Worthing W)

  Lilley, Rt Hon Peter

  Bottomley, Rt Hon Mrs Virginia

  Lloyd, Rt Hon Sir Peter (Fareham)

  Brady, Graham

  Loughton, Tim

  Brazier, Julian

  Luff, Peter

  Brooke, Rt Hon Peter

  Lyell, Rt Hon Sir Nicholas

  Browning, Mrs Angela

  MacGregor, Rt Hon John

  Bruce, Ian (S Dorset)

  McIntosh, Miss Anne

  Burns, Simon

  MacKay, Andrew

  Butterfill, John

  Maclean, Rt Hon David

  Cash, William

  McLoughlin, Patrick

  Chapman, Sir Sydney (Chipping Barnet)

  Madel, Sir David

  Major, Rt Hon John

  Malins, Humfrey

  Chope, Christopher

  Mates, Michael

  Clappison, James

  Maude, Rt Hon Francis

  Clark, Rt Hon Alan (Kensington)

  Mawhinney, Rt Hon Sir Brian

  Clark, Dr Michael (Rayleigh)

  May, Mrs Theresa

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Moss, Malcolm

  Nicholls, Patrick

  Clifton—Brown, Geoffrey

  Norman, Archie

  Collins, Tim

  Ottaway, Richard

  Colvin, Michael

  Page, Richard

  Cormack, Sir Patrick

  Paice, James

  Cran, James Curry, Rt Hon David

  Paterson, Owen

  Pickles, Eric Prior, David

  Davis, Rt Hon David (Haltemprice)

  Randall, John

  Day, Stephen

  Redwood, Rt Hon John

  Dorrell, Rt Hon Stephen

  Robathan, Andrew

  Duncan, Alan

  Robertson, Laurence (Tewk'b'ry)

  Duncan Smith, lain

  Roe, Mrs Marion (Broxbourne)

  Emery, Rt Hon Sir Peter

  Rowe, Andrew (Faversham)

  Evans, Nigel

  Ruffley, David

  Faber, David

  St Aubyn, Nick

  Fabricant, Michael

  Sayeed, Jonathan

  Fallon, Michael

  Shephard, Rt Hon Mrs Gillian

  Flight, Howard

  Simpson, Keith (Mid-Norfolk)

  Forth, Rt Hon Eric

  Soames, Nicholas

  Fowler, Rt Hon Sir Norman

  Spelman, Mrs Caroline

  Fraser, Christopher

  Spicer, Sir Michael

  Spring, Richard

  Gibb, Nick

  Stanley, Rt Hon Sir John

  Gill, Christopher

  Steen, Anthony

  Gillan, Mrs Cheryl

  Streeter, Gary

  Goodlad, Rt Hon Sir Alastair

  Swayne, Desmond

  Gray, James

  Syms, Robert

  Green, Damian

  Tapsell, Sir Peter

  Greenway, John

  Taylor, Ian (Esher & Walton)

  Grieve, Dominic

  Taylor, Rt Hon John D (Strangford)

  Gummer, Rt Hon John

  Taylor, John M (Solihull)

  Hamilton, Rt Hon Sir Archie

  Taylor, Sir Teddy

  Hammond, Philip

  Townend, John

  Hayes, John

  Tredinnick, David

  Heath, Rt Hon Sir Edward

  Trend, Michael

  Tyrie, Andrew

  Heathcoat—Amory, Rt Hon David

  Viggers, Peter

  Heseltine, Rt Hon Michael

  Walter, Robert

  Hogg, Rt Hon Douglas

  Wardle, Charles

  Horam, John

  Waterson, Nigel

  Howard, Rt Hon Michael

  Wells, Bowen

  Hunter, Andrew

  Whitney, Sir Raymond

  Jack, Rt Hon Michael

  Widdecombe, Rt Hon Miss Ann

  Jackson, Robert (Wantage)

  Wilkinson, John

  126

  Willetts, David

  Young, Rt Hon Sir George

  Winterton, Mrs Ann (Congleton)

  Tellers for the Noes:

  Winterton, Nicholas (Macclesfield)

  Mr. John Whittingdale and

  Yeo, Tim

  Mr. Oliver Heald.

  Question accordingly agreed to.

  3. SPARKLING WINE, MADE-WINE AND CIDER (RATES OF DUTY)
  Resolved,
  That the Alcoholic Liquor Duties Act 1979 shall be amended as follows—
  (1)In Part I of the Table of rates of duty in Schedule 1, in column 2 of the fourth entry, for "201.50" there shall be substituted "161.20".
  (2)In section 62(1 A)(a), for "£37.54" there shall be substituted "£45.05".
  (3)This Resolution shall have effect as from 6 o'clock in the evening of 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  4. WINE AND MADE-WINE (RATES OF DUTY)
  Resolved,
  That provision may be made increasing the rates of duty set out in the Table in Schedule 1 to the Alcoholic Liquor Duties Act 1979.

  5. CIDER (RATES OF DUTY)
  Resolved,
  That provision may be made increasing the rates of duty set out in section 62(1A) of the Alcoholic Liquor Duties Act 1979.

  6. BEER (DRAWBACK)
  Resolved,
  That provision may be made repealing section 42 of the Alcoholic Liquor Duties Act 1979

  7. HYDROCARBON OIL (PRODUCTION IN THE UNITED KINGDOM)
  Resolved,
  That provision may be made charging excise duty on hydrocarbon oil produced in the United Kingdom.

  8. HYDROCARBON OIL (RATES OF DUTIES AND REBATES)
  Motion made, and Question put,
  That—
  (1)In section 6(1A) of the Hydrocarbon Oil Duties Act 1979—

  (a)in paragraph (a), for "0.4510" there shall be substituted "0.4926";

  (b)in paragraph (b), for "0.3928" there shall be substituted "0.4299"; and

  (c)in paragraph (c), for "0.4028" there shall be substituted "0.4499".

  (2)In section 11(1) of that Act—

  (a)in paragraph (a), for "£0.0200" there shall be substituted "£0.0218"; and

  (b)in each of paragraphs (b) and (ba), for "£0.0258" there shall be substituted "£0.0282".

  (3)In section 13A(1A) of that Act—

  (a)in paragraph (a), for "0.0150" there shall be substituted "£0.0050"; and

  (b)in paragraph (b), for "£0.0482" there shall be substituted "£0.0527".

  (4)In section 14(1) of that Act, for "£0.0200" there shall be substituted "£0.0218".
  (5) This Resolution shall have effect as from 6 o'clock in the evening of 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  The House divided: Ayes 302, Noes 197.

  Division No. 217]

  [10.15 pm

  AYES

  Abbott, Ms Diane

  Corston, Ms Jean

  Ainger, Nick

  Cousins, Jim

  Ainsworth, Robert (Cov'try NE)

  Cox, Tom

  Allen, Graham

  Cryer, John (Hornchurch)

  Anderson, Donald (Swansea E)

  Cummings, John

  Anderson, Janet (Rossendale)

  Cunliffe, Lawrence

  Armstrong, Ms Hilary

  Cunningham, Jim (Cov'try S)

  Ashton, Joe

  Dalyell, Tarn

  Atherton, Ms Candy

  Darling, Rt Hon Alistair

  Barnes, Harry

  Darvill, Keith

  Barron, Kevin

  Davey, Valerie (Bristol W)

  Battle, John

  Davidson, Ian

  Bayley, Hugh

  Davies, Rt Hon Denzil (Llanelli)

  Beckett, Rt Hon Mrs Margaret

  Davies, Rt Hon Ron (Caerphilly)

  Bell, Martin (Tatton)

  Dawson, Hilton

  Bell, Stuart (Middlesbrough)

  Dean, Mrs Janet

  Benn, Rt Hon Tony

  Denham, John

  Bennett, Andrew F

  Dismore, Andrew

  Benton, Joe

  Dobson, Rt Hon Frank

  Bermingham, Gerald

  Donohoe, Brian H

  Berry, Roger

  Doran, Frank

  Best, Harold

  Dowd, Jim

  Blair, Rt Hon Tony

  Drew, David

  Blears, Ms Hazel

  Drown, Ms Julia

  Blizzard, Bob

  Dunwoody, Mrs Gwyneth

  Blunkett, Rt Hon David

  Eagle, Maria (L'pool Garston)

  Borrow, David

  Edwards, Huw

  Bradley, Peter (The Wrekin)

  Ellman, Mrs Louise

  Brinton, Mrs Helen

  Ennis, Jeff

  Brown, Rt Hon Gordon

  Field, Rt Hon Frank

  (Dunfermline E)

  Fisher, Mark

  Brown, Rt Hon Nick (Newcastle E)

  Fitzpatrick, Jim

  Brown, Russell (Dumfries)

  Fitzsimons, Lorna

  Browne, Desmond

  Flint, Caroline

  Buck, Ms Karen

  Flynn, Paul

  Burden, Richard

  Foster, Rt Hon Derek

  Burgon, Colin

  Foster, Michael J (Worcester)

  Byers, Stephen

  Foulkes, George

  Cabom, Richard

  Fyfe, Maria

  Campbell, Alan (Tynemouth)

  Galbraith, Sam

  Campbell—Savours, Dale

  Galloway, George

  Canavan, Dennis

  Gapes, Mike

  Cann, Jamie

  George, Bruce (Walsall S)

  Caplin, Ivor

  Gibson, Dr Ian

  Caton, Martin

  Gilroy, Mrs Linda

  Chaytor, David

  Godman, Norman A

  Chisholm, Malcolm

  Golding, Mrs Llin

  Church, Ms Judith

  Graham, Thomas

  Clapham, Michael

  Grant, Bernie

  Clark, Rt Hon Dr David (S Shields)

  Griffiths, Jane (Reading E)

  Clark, Dr Lynda

  Grocott, Bruce

  (Edinburgh Pentlands)

  Grogan, John

  Clarke, Rt Hon Tom (Coatbridge)

  Gunnell, John

  Clelland, David

  Hain, Peter

  Clwyd, Ann

  Hall, Mike (Weaver Vale)

  Coaker, Vernon

  Hall, Patrick (Bedford)

  Coffey, Ms Ann

  Hanson, David

  Cohen, Harry

  Harman, Rt Hon Ms Harriet

  Coleman, lain

  Heal, Mrs Sylvia

  Colman, Tony

  Healey, John

  Connarty, Michael

  Henderson, Doug (Newcastle N)

  Cook, Frank (Stockton N)

  Henderson, Ivan (Harwich)

  Cooper, Yvette

  Hepburn, Stephen

  Corbett, Robin

  Heppell, John

  Corbyn, Jeremy

  Hewitt, Ms Patricia

  128

  Hill, Keith

  Morris, Ms Estelle (B'ham Yardley)

  Hinchliffe, David

  Morris, Rt Hon John (Aberavon)

  Hodge, Ms Margaret

  Mudie, George

  Hoey, Kate

  Mullin, Chris

  Home Robertson, John

  Murphy, Denis (Wansbeck)

  Hope, Phil

  Naysmith, Dr Doug

  Hopkins, Kelvin

  O'Hara, Eddie

  Howarth, Alan (Newport E)

  Olner, Bill

  Howarth, George (KnowsleyN)

  O'Neill, Martin

  Howells, Dr Kim

  Palmer, Dr Nick

  Hoyle, Lindsay

  Pendry, Tom

  Hughes, Kevin (Doncaster N)

  Perham, Ms Linda

  Humble, Mrs Joan

  Pickthall, Colin

  Hurst, Alan

  Pike, Peter L

  Hutton, John

  Plaskitt, James

  Iddon, Dr Brian

  Pope, Greg

  Jackson, Helen (Hillsborough)

  Powell, Sir Raymond

  Jamieson, David

  Prentice, Ms Bridget (Lewisham E)

  Johnson, Alan (Hull W & Hessle)

  Prescott, Rt Hon John

  Johnson, Miss Melanie

  Primarolo, Dawn

  (Welwyn Hatfield)

  Prosser, Gwyn

  Jones, Barry (Alyn & Deeside)

  Purchase, Ken

  Jones, Helen (Warrington N)

  Quin, Ms Joyce

  Jones, Ms Jenny

  Quinn, Lawrie

  (Wolverh'ton SW)

  Radice, Giles

  Jones, Martyn (Clwyd S)

  Rapson, Syd

  Kaufman, Rt Hon Gerald

  Raynsford, Nick

  Keeble, Ms Sally

  Reed, Andrew (Loughborough)

  Kemp, Fraser

  Reid, Dr John (Hamilton N)

  Kennedy, Jane (Wavertree)

  Kidney, David

  Robertson, Rt Hon George(Hamilton S)

  King, Andy (Rugby & Kenilworth)

  King, Ms Oona (Bethnal Green)

  Robinson, Geoffrey (Cov'try NW)

  Kumar, Dr Ashok

  Rogers, Allan

  Ladyman, Dr Stephen

  Rooney, Terry

  Lawrence, Ms Jackie

  Ross, Ernie (Dundee W)

  Laxton, Bob

  Rowlands, Ted

  Lepper, David

  Roy, Frank

  Levitt, Tom

  Ruddock, Ms Joan

  Lewis, Ivan (Bury S)

  Russell, Ms Christine (Chester)

  Lewis, Terry (Worsley)

  Ryan, Ms Joan

  Lock, David

  Savidge, Malcolm

  Love, Andrew

  Sedgemore, Brian

  McAvoy, Thomas

  Shaw, Jonathan

  McCabe, Steve

  Sheerman, Barry

  McCartney, Ian (MakerHeld)

  Sheldon, Rt Hon Robert

  McDonagh, Siobhain

  Simpson, Alan (Nottingham S)

  Macdonald, Calum

  Skinner, Dennis

  McDonnell, John

  Smith, Rt Hon Andrew (Oxford E)

  McFall, John

  Smith, Angela (Basildon)

  McGuire, Mrs Anne

  Smith, Rt Hon Chris (Islington S)

  Mclsaac, Shona

  Smith, Miss Geraldine

  McKenna, Mrs Rosemary

  (Morecambe & Lunesdale)

  McLeish, Henry

  Smith, Jacqui (Redditch)

  McNulty, Tony

  Smith, John (Glamorgan)

  MacShane, Denis

  Smith, Llew (Blaenau Gwent)

  Mactaggart, Fiona

  Soley, Clive

  McWilliam, John

  Spellar, John

  Mahon, Mrs Alice

  Squire, Ms Rachel

  Mandelson, Peter

  Starkey, Dr Phyllis

  Marek, Dr John

  Steinberg, Gerry

  Marsden, Paul (Shrewsbury)

  Stevenson, George

  Marshall—Andrews, Robert

  Stinchcombe, Paul

  Martlew, Eric

  Stoate, Dr Howard

  Maxton, John

  Strang, Rt Hon Dr Gavin

  Meale, Alan

  Straw, Rt Hon Jack

  Michael, Alun

  Stringer, Graham

  Michie, Bill (Shefld Heeley)

  Sutcliffe, Gerry

  Milburn, Alan

  Taylor, Rt Hon Mrs Ann

  Miller, Andrew

  (Dewsbury)

  Mitchell, Austin

  Taylor, Ms Dari (Stockton S)

  Moffatt, Laura

  Taylor, David (NWLeics)

  Moonie, Dr Lewis

  Temple-Morris, Peter

  Moran, Ms Margaret

  Thomas, Gareth (Clwyd W)

  Morgan, Ms Julie (Cardiff N)

  Thomas, Gareth R (Harrow W)

  Morgan, Rhodri (Cardiff W)

  Timms, Stephen

  129

  Tipping, Paddy

  Williams, Rt Hon Alan (Swansea W)

  Todd, Mark

  Touhig, Don

  Wlliams, Mrs Betty (Conwy)

  Trickett, Jon

  Wills, Michael

  Truswell, Paul

  Wilson, Brian

  Turner, Dennis (Wolverh'ton SE)

  Winnick, David

  Turner Dr Desmond (Kemptown)

  Winterton, Ms Rosie (Doncaster C)

  Twigg, Derek (Halton)

  Wise, Audrey

  Twigg, Stephen (Enfield)

  Woolas, Phil

  Vaz, Keith

  Wray, James

  Walley, Ms Joan

  Wright, Anthony D (Gt Yarmouth)

  Wareing, Robert N

  Wright, Dr Tony (Cannock)

  Watts, David

  Wyatt, Derek

  White, Brian

  Tellers for the Ayes:

  Whitehead, Dr Alan

  Mr. Jon Owen Jones and

  Wicks, Malcolm

  Mr. Clive Betts.

  NOES

  Ainsworth, Peter (E Surrey)

  Duncan Smith, lain

  Allan, Richard

  Emery, Rt Hon Sir Peter

  Amess, David

  Evans, Nigel

  Ancram, Rt Hon Michael

  Ewing, Mrs Margaret

  Arbuthnot, James

  Faber, David

  Ashdown, Rt Hon Paddy

  Fabricant, Michael

  Atkinson, Peter (Hexham)

  Fallon, Michael

  Baker, Norman

  Feam, Ronnie

  Baldry, Tony

  Flight, Howard

  Ballard, Mrs Jackie

  Forth, Rt Hon Eric

  Berth, Rt Hon A J

  Foster, Don (Bath)

  Bercow, John

  Fowler, Rt Hon Sir Norman

  Beresford, Sir Paul

  Fraser, Christopher

  Blunt, Crispin

  George, Andrew (St Ives)

  Body, Sir Richard

  Gibb, Nick

  Boswell, Tim

  Gill, Christopher

  Bottomley, Peter (Worthing W)

  Gillan, Mrs Cheryl

  Bottomley, Rt Hon Mrs Virginia

  Goodlad, Rt Hon Sir Alastair

  Brady, Graham

  Gome, Donald

  Brake, Tom

  Gray, James

  Brand, Dr Peter

  Green, Damian

  Brazier, Julian

  Greenway, John

  Breed, Colin

  Grieve, Dominic

  Brooke, Rt Hon Peter

  Gummer, Rt Hon John

  Browning, Mrs Angela

  Hamilton, Rt Hon Sir Archie

  Bruce, Ian (S Dorset)

  Hammond, Philip

  Bruce, Malcolm (Gordon)

  Hancock, Mike

  Burnett, John

  Harris, Dr Evan

  Burns, Simon

  Hayes, John

  Burstow, Paul

  Heath, David (Somerton & Frome)

  Butterfill, John

  Heath, Rt Hon Sir Edward

  Cable, Dr Vincent

  Heathcoat—Amory, Rt Hon David

  Campbell, Menzies (NE Fife)

  Heseltine, Rt Hon Michael

  Cash, William

  Hogg, Rt Hon Douglas

  Chapman, Sir Sydney (Chipping Barnet)

  Horam, John

  Howard, Rt Hon Michael

  Chidgey, David

  Hughes, Simon (Southwark N)

  Chope, Christopher

  Hunter, Andrew

  Clappison, James

  Jack, Rt Hon Michael

  Clark, Rt Hon Alan (Kensington)

  Jackson, Robert (Wantage)

  Clark, Dr Michael (Rayleigh)

  Jenkin, Bernard

  Clarke, Rt Hon Kenneth

  Johnson Smith,

  (Rushdiffe)

  Rt Hon Sir Geoffrey

  Clifton-Brown, Geoffrey

  Jones, Nigel (Cheltenham)

  Collins, Tim

  Keetch, Paul

  Colvin, Michael

  Kennedy, Charles (Ross Skye)

  Cormack, Sir Patrick

  Key, Robert

  Cran, James

  King, Rt Hon Tom (Bridgwater)

  Cunningham, Ms Roseanna

  Kirkbride, Miss Julie

  (Perth)

  Kirkwood, Archy

  Curry, Rt Hon David

  Laing, Mrs Eleanor

  Dafis, Cynog

  Lansley, Andrew

  Davey, Edward (Kingston)

  Leigh, Edward

  Davis, Rt Hon David (Hattemprice)

  Letwin, Oliver

  Day, Stephen

  Lewis, Dr Julian (New Forest E)

  Dorrell, Rt Hon Stephen

  Lidington, David

  Duncan, Alan

  Lilley, Rt Hon Peter

  130

  Livsey, Richard

  Simpson, Keith (Mid-Norfolk)

  Lloyd, Rt Hon Sir Peter (Fareham)

  Smith, Sir Robert (WAb'd'ns)

  Llwyd, Elfyn

  Smyth, Rev Martin (Belfast S)

  Loughton, Tim

  Soames, Nicholas

  Luff, Peter

  Spelman, Mrs Caroline

  Lyell, Rt Hon Sir Nicholas

  Spicer, Sir Michael

  MacGregor, Rt Hon John

  Spring, Richard

  McIntosh, Miss Anne

  Stanley, Rt Hon Sir John

  MacKay, Andrew

  Steen, Anthony

  Maclean, Rt Hon David

  Streeter, Gary

  McLoughlin, Patrick

  Stunell, Andrew

  Madel, Sir David

  Swayne, Desmond

  Major, Rt Hon John

  Swinney, John

  Malins, Humfrey

  Syms, Robert

  Mates, Michael

  Tapsell, Sir Peter

  Maude, Rt Hon Francis

  Taylor, Ian (EsherA Walton)

  Mawhinney, Rt Hon Sir Brian

  Taylor, Rt Hon John D (Strangford)

  May, Mrs Theresa

  Taylor, John M (Solihull)

  Morgan, Alasdair (Galloway)

  Taylor, Matthew (Truro)

  Moss, Malcolm

  Taylor, Sir Teddy

  Nicholls, Patrick

  Tonge, Dr Jenny

  Norman, Archie

  Townend, John

  Oaten, Mark

  Tredinnick, David Trend, Michael

  Öpik, Lembit

  Tyler, Paul

  Ottaway, Richard

  Tyrie, Andrew

  Page, Richard

  Viggers, Peter

  Paice, James

  Wallace, James

  Paterson, Owen

  Walter, Robert

  Pickles, Eric

  Wardle, Charles

  Prior, David

  Waterson, Nigel

  Randall, John

  Webb, Steve

  Redwood, Rt Hon John

  Wells, Bowen

  Rendel, David

  Whitney, Sir Raymond

  Robathan, Andrew

  Widdecombe, Rt Hon Miss Ann

  Robertson, Laurence (Tewk'b'ry)

  Wilkinson, John

  Roe, Mrs Marion (Broxbourne)

  Willetts, David

  Ross, William (E Lond'y)

  Willis, Phil

  Rowe, Andrew (Faversham)

  Winterton, Mrs Ann (Congleton)

  Ruffley, David

  Winterton, Nicholas (Macclesfield)

  Russell, Bob (Colchester)

  Yeo, Tim

  St Aubyn, Nick

  Young, Rt Hon Sir George

  Salmond, Alex

  Sanders, Adrian

  Tellers for the Noes:

  Sayeed, Jonathan

  Mr. John Whittingdale and

  Shephard, Rt Hon Mrs Gillian

  Mr. Oliver Heald.

  Question accordingly agreed to.

  9. HYDROCARBON OIL (ULTRA LOW SULPHUR DIESEL)
  Resolved,
  That—
  (1)In section 1 of the Hydrocarbon Oil Duties Act 1979, for subsection (6) there shall be substituted the following subsection—
  "(6) 'Ultra low sulphur diesel' means gas oil—

  (a)the sulphur content of which does not exceed 0.005 per cent. by weight or is nil;

  (b)the density of which does not exceed 835 kilograms per cubic metre at a temperature of 15° C; and

  (c)of which not less than 95 per cent. by volume distils at a temperature not exceeding 345° C."

  (2)This Resolution shall have effect as from 6 o'clock in the evening of 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  10. HYDROCARBON OIL (MIXING OF HEAVY OIL)
  Resolved,
  That—
  (1)In section 20AAA of the Hydrocarbon Oil Duties Act 1979, after subsection (2) there shall be inserted the following subsection—
  "(2A) Where—

  (a)a mixture of heavy oils is produced in contravention of Part IIA of Schedule 2A to this Act, and

  (b)the mixture is not produced as a result of approved mixing,

  a duty of excise shall be charged on the mixture."
  (2)In subsection (3) of that section, after "subsection (1)" there shall be inserted "or (2A)".
  (3)In section 20AAB of that Act, in subsection (1), after "section 20AAA(1)" there shall be inserted "or (2A)".
  (4)In Schedule 2A to that Act, after paragraph 7 there shall be inserted the following paragraph—
  "PART IIA
  UNREBATED HEAVY OIL
  7A. A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing—
  (a)ultra low sulphur diesel in respect of which, on its delivery for home use, a declaration was made that it was intended for use as fuel for a road vehicle; and
  (b)heavy oil of any other description in respect of which, on its delivery for home use, such a declaration was made."

  TABLE

  (I)Period (in months) for which licence granted

  (2)Machines that are not gaming machines

  (3)Gaming machines that are small-prize machines or are five-penny machine swith out being small-prize machines

  (4) Other machines

  £

  £

  £

  1

  30

  80

  220

  2

  50

  150

  425

  3

  75

  220

  615

  4

  95

  285

  800

  5

  120

  345

  970

  6

  140

  400

  1,125

  7

  160

  450

  1,270

  8

  185

  500

  1,405

  9

  205

  540

  1,525

  10

  225

  580

  1,635

  11

  240

  615

  1,730

  12

  250

  645

  1,815

  (2) This Resolution shall apply in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise after 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  14. AMUSEMENT MACHINE LICENCE DUTY (EXCEPTED MACHINES)
  Resolved,
  That—
  (1) In section 21(3A) of the Betting and Gaming Duties Act 1981, for paragraphs (b) and (c) there shall be substituted the following paragraphs—
  "(b) a five-penny machine which is a small prize machine; or
  (5)In paragraph 9 of that Schedule, after sub-paragraph (1) there shall be inserted the following sub-paragraph—
  "(1A) Subject to paragraph 10 below, duty charged under subsection (2A) of section 20AAA of this Act shall be charged at the rate for heavy oil in force at the time when the mixture is produced."
  (6)This Resolution shall have effect as from 6 o'clock in the evening of 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  11. TOBACCO PRODUCTS (RATES OF DUTY)
  Resolved,
  That provision may be made increasing the rates of duty set out in the Table in Schedule 1 to the Tobacco Products Duty Act 1979.

  12. RATES OF GAMING DUTY
  Resolved,
  That provision may be made increasing the rates at which gaming duty is charged.

  13. AMUSEMENT MACHINE LICENCE DUTY (RATES OF DUTY)
  Resolved,
  That—
  (1) In section 23 of the Betting and Gaming Duties Act 1981, for the Table in subsection (2) there shall be substituted the following Table—
  (c) a thirty-five-penny machine which is not a prize machine or which, if it is a prize machine, is not a gaming machine."
  (2) This Resolution has effect in relation to the provision of an amusement machine at any time on or after 1st April 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  15. VEHICLE EXCISE DUTY (OLD VEHICLES)
  Resolved,
  That provision may be made confining the exemption in paragraph 1A of Schedule 2 to the Vehicle Excise and Registration Act 1994 to vehicles constructed before 1st January 1973.

  16. VEHICLE EXCISE DUTY (PAYMENTS IN RESPECT OF VOID LICENCES)
  Resolved,
  That provision may be made amending section 35 A of the Vehicle Excise and Registration Act 1994.

  17. ASSESSMENTS FOR EXCISE DUTY PURPOSES
  Resolved,
  That provision may be made about assessing and recovering amounts for purposes of excise duty.

  18. VALUE ADDED TAX (DEEMED SUPPLIES)
  Resolved,
  That—
  (1)Paragraph 5 of Schedule 4 to the Value Added Tax Act 1994 shall be amended as follows.
  (2)In sub-paragraph (2)(a), for "is" there shall be substituted "of acquiring or, as the case may be, producing the goods was".
  (3)After sub-paragraph (2) there shall be inserted the following sub-paragraph—
  "(2A) For the purposes of determining the cost to the donor of acquiring or producing goods of which he has made a gift, where—

  (a)the acquisition by the donor of the goods, or anything comprised in the goods, was by means of a transfer of a business, or a part of a business, as a going concern,

  (b)the assets transferred by that transfer included those goods or that thing, and

  (c)the transfer of those assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services,

  the donor and his predecessor or, as the case may be, all of his predecessors shall be treated as if they were the same person."
  (4)In sub-paragraph (5), for "is" there shall be substituted "or any of his predecessors is a person who (disregarding this paragraph) has or will become".
  (5)After that sub-paragraph there shall be inserted the following sub-paragraph—
  "(5A) In relation to any goods or anything comprised in any goods, a person is the predecessor of another for the purposes of this paragraph if—

  (a)that other person is a person to whom he has transferred assets of his business by a transfer of that business, or a part of it, as a going concern;

  (b)those assets consisted of or included those goods or that thing; and

  (c)the transfer of the assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services;

  and references in this paragraph to a person's predecessors include references to the predecessors of his predecessors through any number of transfers."
  (6)The preceding provisions of this Resolution apply to any case where the time when the goods are transferred or disposed of or, as the case may be, put to use, used or made available for use is on or after 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  19. VALUE ADDED TAX (PLACE OF SUPPLY ORDERS)
  Resolved,
  That—
  (1)In the Value Added Tax Act 1994 the following section shall be inserted after section 97—
  "Place of supply orders: transitional provision
  97A.—(1) This section shall have effect for the purpose of giving effect to any order made on or after 17th March 1998 under section 7(11), if—

  (a)the order provides for services of a description specified in the order to be treated as supplied in the United Kingdom;

  (b)the services would not have fallen to be so treated apart from the order;

  (c)the services are not services that would have fallen to be so treated under any provision re-enacted in the order; and

  (d)the order is expressed to come into force in relation to services supplied on or after a date specified in the order ('the commencement date').

  (2)Invoices and other documents provided to any person before the commencement date shall be disregarded in determining the time of the supply of any services which, if their time of supply were on or after the commencement date, would be treated by virtue of the order as supplied in the United Kingdom.
  (3)If there is a payment in respect of any services of the specified description that was received by the supplier before the commencement date, so much (if any) of that payment as relates to times on or after that date shall be treated as if it were a payment received on the commencement date.
  (4)If there is a payment in respect of services of the specified description that is or has been received by the supplier on or after the commencement date, so much (if any) of that payment as relates to times before that date shall be treated as if it were a payment received before that date.
  (5)Subject to subsection (6) below, a payment in respect of any services shall be taken for the purposes of this section to relate to the time of the performance of those services.
  (6)Where a payment is received in respect of any services the performance of which takes place over a period a part of which falls before the commencement date and a part of which does not—

  (a)an apportionment shall be made, on a just and reasonable basis, of the extent to which the payment is attributable to so much of the performance of those services as took place before that date;

  (b)the payment shall, to that extent, be taken for the purposes of this section to relate to a time before that date; and

  (c)the remainder, if any, of the payment shall be taken for those purposes to relate to times on or after that date."

  (2)In section 6 of the Value Added Tax Act 1994, after subsection (14) there shall be inserted the following subsection—
  "(14A) In relation to any services of a description specified in an order under section 7(11), this section and any regulations under this section or section 8(4) shall have effect subject to section 97A."
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  20. VALUE ADDED TAX (BAD DEBT RELIEF)
  Resolved,
  That provision may be made amending section 36 of the Value Added Tax Act 1994.

  21. VALUE ADDED TAX (LONG LEASES IN SCOTLAND)
  Resolved,
  That provision may be made amending section 96 of the Value Added Tax Act 1994.

  22. INCOME TAX (CHARGE AND RATES FOR 1998–99)
  Motion made, and Question put,
  That income tax shall be charged for the year 1998–99, and for that year—

  (a)the lower rate shall be 20 per cent.;

  (b)the basic rate shall be 23 per cent.; and

  (c)the higher rate shall be 40 per cent.

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  The House proceeded to a Division—
  Mr. Nick St. Aubyn (Guildford) (seated and covered): On a point of order, Madam Speaker. I am afraid that I have not been present throughout the debate, but I know that the Liberal Democrats have criticised not only this Government but the previous Government time and again for raising taxes—
  Madam Speaker: Order. That is not a point of order for the Chair. Continue with the Division.
  The House having divided: Ayes 300, Noes 43.

  Division No. 218]

  [10.27 pm

  AYES

  Abbott, Ms Diane

  Canavan, Dennis

  Ainger, Nick

  Cann, Jamie

  Ainsworth, Robert (Cov'try NE)

  Caplin, Ivor

  Allen, Graham

  Caton, Martin

  Anderson, Donald (Swansea E)

  Chaytor, David

  Anderson, Janet (Rossendale)

  Chisholm, Malcolm

  Armstrong, Ms Hilary

  Church, Ms Judith

  Ashton, Joe

  Clapham, Michael

  Atherton, Ms Candy

  Clark, Rt Hon Dr David (S Shields)

  Barnes, Harry

  Clark, Dr Lynda (Edinburgh Pentlands)

  Barron, Kevin

  Battle, John

  Clarke, Rt Hon Tom (Coatbridge)

  Bayley, Hugh

  Clelland, David

  Beckett, Rt Hon Mrs Margaret

  Clwyd, Ann

  Bell, Stuart (Middlesbrough)

  Coaker, Vernon

  Benn, Rt Hon Tony

  Coffey, Ms Ann

  Bennett, Andrew F

  Cohen, Harry

  Benton, Joe

  Coleman, lain

  Bermingham, Gerald

  Colman, Tony

  Berry, Roger

  Connarty, Michael

  Best, Harold

  Cook, Frank (Stockton N)

  Blears, Ms Hazel

  Cooper, Yvette

  Blizzard, Bob

  Corbett, Robin

  Blunkett, Rt Hon David

  Corbyn, Jeremy

  Borrow, David

  Corston, Ms Jean

  Bradley, Peter (The Wrekin)

  Cousins, Jim

  Brinton, Mrs Helen

  Cox, Tom

  Brown, Rt Hon Gordon (Dunfermline E)

  Cryer, John (Hornchurch)

  Cummings, John

  Brown, Rt Hon Nick (Newcastle E)

  Cunliffe, Lawrence

  Brown, Russell (Dumfries)

  Cunningham, Jim (Cov'try S)

  Browne, Desmond

  Dalyell, Tam

  Buck, Ms Karen

  Darling, Rt Hon Alistair

  Burden, Richard

  Darvill, Keith

  Burgon, Colin

  Davey, Valerie (Bristol W)

  Byers, Stephen

  Davidson, Ian

  Caborn, Richard

  Davies, Rt Hon Denzil (Llanelli)

  Campbell, Alan (Tynemouth)

  Davies, Rt Hon Ron (Caerphilly)

  Campbell—Savours, Dale

  Dawson, Hilton

  136

  Dean, Mrs Janet

  Kaufman, Rt Hon Gerald

  Denham, John

  Keeble, Ms Sally

  Dismore, Andrew

  Kemp, Fraser

  Dobson, Rt Hon Frank

  Kennedy, Jane (Wavertree)

  Donohoe, Brian H

  Kidney, David

  Doran, Frank

  King, Andy (Rugby & Kenilworth)

  Dowd, Jim

  King, Ms Oona (Bethnal Green)

  Drew, David

  Kumar, Dr Ashok

  Drown, Ms Julia

  Ladyman, Dr Stephen

  Dunwoody, Mrs Gwyneth

  Lawrence, Ms Jackie

  Eagle, Maria (L'pool Garston)

  Laxton, Bob

  Edwards, Huw

  Lepper, David

  Ellman, Mrs Louise

  Levitt, Tom

  Ennis, Jeff

  Lewis, Ivan (Bury S)

  Field, Rt Hon Frank

  Lewis, Terry (Worsley)

  Fisher, Mark

  Lock, David

  Fitzpatrick, Jim

  Love, Andrew

  Fitzsimons, Lorna

  McAvoy, Thomas

  Flint, Caroline

  McCabe, Steve

  Flynn, Paul

  McCartney, Ian (Makerfield)

  Foster, Rt Hon Derek

  McDonagh, Siobhain

  Foster, Michael J (Worcester)

  Macdonald, Calum

  Foulkes, George

  McDonnell, John

  Fyfe, Maria

  McFall, John

  Galbraith, Sam

  McGuire, Mrs Anne

  Galloway, George

  Mclsaac, Shona

  Gapes, Mike

  McKenna, Mrs Rosemary

  George, Bruce (Walsall S)

  McLeish, Henry

  Gibson, Dr Ian

  McNulty, Tony

  Gilroy, Mrs Linda

  MacShane, Denis

  Godman, Norman A

  Mactaggart, Fiona

  Golding, Mrs Llin

  McWilliam, John

  Graham, Thomas

  Mahon, Mrs Alice

  Grant, Bernie

  Mandelson, Peter

  Griffiths, Jane (Reading E)

  Marek, Dr John

  Grocott, Bruce

  Marsden, Paul (Shrewsbury)

  Grogan, John

  Marshall—Andrews, Robert

  Gunnell, John

  Martlew, Eric

  Hain, Peter

  Maxton, John

  Hall, Mike (Weaver Vale)

  Meale, Alan

  Hall, Patrick (Bedford)

  Michael, Alun

  Hanson, David

  Michie, Bill (Shef'ld Heeley)

  Harman, Rt Hon Ms Harriet

  Milburn, Alan

  Heal, Mrs Sylvia

  Miller, Andrew

  Healey, John

  Mitchell, Austin

  Henderson, Doug (Newcastle N)

  Moffatt, Laura

  Henderson, Ivan (Harwich)

  Moonie, Dr Lewis

  Hepburn, Stephen

  Moran, Ms Margaret

  Heppell, John

  Morgan, Ms Julie (Cardiff N)

  Hewitt, Ms Patricia

  Morgan, Rhodri (Cardiff W)

  Hill, Keith

  Morris, Ms Estelle (B'ham Yardley)

  Hinchliffe, David

  Morris, Rt Hon John (Aberavon)

  Hodge, Ms Margaret

  Mudie, George

  Hoey, Kate

  Mullin, Chris

  Home Robertson, John

  Murphy, Denis (Wansbeck)

  Hope, Phil

  Naysmith, Dr Doug

  Hopkins, Kelvin

  O'Hara, Eddie

  Howarth, Alan (Newport E)

  Olner, Bill

  Howarth, George (Knowsley N)

  O'Neill, Martin

  Howells, Dr Kim

  Palmer, Dr Nick

  Hoyle, Lindsay

  Pendry, Tom

  Hughes, Kevin (Doncaster N)

  Perham, Ms Linda

  Humble, Mrs Joan

  Pickthall, Colin

  Hurst, Alan

  Pike, Peter L

  Hutton, John

  Plaskitt, James

  Iddon, Dr Brian

  Pope, Greg

  Jackson, Helen (Hillsborough)

  Powell, Sir Raymond

  Jamieson, David

  Prentice, Ms Bridget (Lewisham E)

  Johnson, Alan (Hull W & Hessle)

  Prescott, Rt Hon John

  Johnson, Miss Melanie (Welwyn Hatfield)

  Primarolo, Dawn

  Prosser, Gwyn

  Jones, Barry (Alyn & Deeside)

  Purchase, Ken

  Jones, Helen (Warrington N)

  Quin, Ms Joyce

  Jones, Ms Jenny (Wolverh'ton SW)

  Quinn, Lawrie

  Radice, Giles

  Jones, Martyn (Clwyd S)

  Rapson, Syd

  137

  Raynsford, Nick

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Reed, Andrew (Loughborough)

  Reid, Dr John (Hamilton N)

  Taylor, Ms Dari (Stockton S)

  Robertson, Rt Hon George (Hamilton S)

  Taylor, David (NW Leics)

  Temple—Morris, Peter

  Robinson, Geoffrey (Cov'try NW)

  Thomas, Gareth (Clwyd W)

  Rogers, Allan

  Thomas, Gareth R (Harrow W)

  Rooney, Terry

  Timms, Stephen

  Ross, Ernie (Dundee W)

  Tipping, Paddy

  Rowlands, Ted

  Todd, Mark

  Roy, Frank

  Touhig, Don

  Ruddock, Ms Joan

  Trickett, Jon

  Russell, Ms Christine (Chester)

  Truswell, Paul

  Ryan, Ms Joan

  Turner, Dennis (Wolverh'ton SE)

  Savidge, Malcolm

  Turner, Dr Desmond (Kemptown)

  Sedgemore, Brian

  Twigg, Derek (Halton)

  Shaw, Jonathan

  Twigg, Stephen (Enfield)

  Sheerman, Barry

  Vaz, Keith

  Sheldon, Rt Hon Robert

  Walley, Ms Joan

  Simpson, Alan (Nottingham S)

  Wareing, Robert N

  Skinner, Dennis

  Watts, David

  Smith, Rt Hon Andrew (Oxford E)

  White, Brian

  Smith, Angela (Basildon)

  Whitehead, Dr Alan

  Smith, Rt Hon Chris (Islington S)

  Wicks, Malcolm

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Williams, Rt Hon Alan

  (Swansea W)

  Smith, Jacqui (Redditch)

  Williams, Mrs Betty (Conwy)

  Smith, John (Glamorgan)

  Wills, Michael

  Smith, Llew (Blaenau Gwent)

  Wilson, Brian

  Soley, Clive

  Winnick, David

  Spellar, John

  Winterton, Ms Rosie (Doncaster C)

  Squire, Ms Rachel

  Wise, Audrey

  Starkey, Dr Phyllis

  Woolas, Phil

  Steinberg, Gerry

  Wray, James

  Stevenson, George

  Wright, Anthony D (Gt Yarmouth)

  Stinchcombe, Paul

  Wright, Dr Tony (Cannock)

  Stoate, Dr Howard

  Wyatt, Derek

  Strang, Rt Hon Dr Gavin

  Straw, Rt Hon Jack

  Tellers for the Ayes:

  Stringer, Graham

  Mr. Jon Owen Jones and

  Sutcliffe, Gerry

  Mr. Clive Betts.

  NOES

  Allan, Richard

  Hughes, Simon (Southwark N)

  Ashdown, Rt Hon Paddy

  Jones, Nigel (Cheltenham)

  Baker, Norman

  Keetch, Paul

  Ballard, Mrs Jackie

  Kennedy, Charles (Ross Skye)

  Berth, Rt Hon A J

  Kirkwood, Archy

  Bell, Martin (Tatton)

  Livsey, Richard

  Brake, Tom

  Llwyd, Elfyn

  Brand, Dr Peter

  Maclennan, Rt Hon Robert

  Breed, Colin

  Oaten, Mark

  Bruce, Malcolm (Gordon)

  Õpik, Lembit

  Burnett, John

  Rendel, David

  Burstow, Paul

  Russell, Bob (Colchester)

  Cable, Dr Vincent

  Sanders, Adrian

  Campbell, Menzies (NE Fife)

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

  Chidgey, David

  Taylor, Matthew (Truro)

  Tonge, Dr Jenny

  Dafis, Cynog

  Tyler, Paul

  Feam, Ronnie

  Wallace, James

  Foster, Don (Bath)

  Webb, Steve

  George, Andrew (St Ives)

  Willis, Phil

  Gorrie, Donald

  Hancock, Mike

  Tellers for the Noes:

  Harris, Dr Evan

  Mr. Edward Davey and

  Heath, David (Somerton & Frome)

  Mr. Andrew Stunell.

  Question accordingly agreed to.

  23. INCOME TAX (ADDITIONAL RELIEF IN RESPECT OF CHILDREN)
  Resolved,
  That—
  (1) In subsection (l)(c) of section 259 of the Income and Corporation Taxes Act 1988, for "man" and "wife" there shall be substituted, respectively, "individual" and "spouse".
  (2) In subsection (4) of that section, after "relief under this section" there shall be inserted "by virtue of subsection (l)(a) above".
  (3) In section 261A(3) of that Act, for "a man" there shall be substituted "an individual".
  (4) This Resolution has effect for the year 1997–98 and subsequent years of assessment.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  24. CORPORATION TAX (CHARGE AND RATE FOR 1998)
  Resolved,
  That, for the financial year 1998, corporation tax shall be charged at the rate of 31 per cent.

  25. CORPORATION TAX (SMALL COMPANIES RATE FOR 1998)
  Resolved,
  That, for the financial year 1998—

  (a) the small companies' rate shall be 21 per cent.; and

  (b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be one fortieth.

  26. CORPORATION TAX (DUE AND PAYABLE DATE)
  Motion made, and Question put,
  That provision may be made for and in connection with altering the date on which corporation tax and amounts treated as corporation tax become due and payable.
  The House divided: Ayes 339, Noes 147.

  Division No. 219]

  [10.39 pm

  AYES

  Abbott, Ms Diane

  Brown, Russell (Dumfries)

  Ainger, Nick

  Browne, Desmond

  Ainsworth, Robert (Cov'try NE)

  Bruce, Malcolm (Gordon)

  Allan, Richard

  Buck, Ms Karen

  Allen, Graham

  Burden, Richard

  Anderson, Donald (Swansea E)

  Burgon, Colin

  Armstrong, Ms Hilary

  Burnett, John

  Ashdown, Rt Hon Paddy

  Burstow, Paul

  Ashton, Joe

  Byers, Stephen

  Atherton, Ms Candy

  Cable, Dr Vincent

  Baker, Norman

  Cabom, Richard

  Ballard, Mrs Jackie

  Campbell, Alan (Tynemouth)

  Barnes, Harry

  Campbell, Menzies (NE Fife)

  Barron, Kevin

  Campbell-Savours, Dale

  Battle, John

  Canavan, Dennis

  Bayley, Hugh

  Cann, Jamie

  Beckett, Rt Hon Mrs Margaret

  Caplin, Ivor

  Berth, Rt Hon A J

  Caton, Martin

  Bell, Martin (Tatton)

  Chaytor, David

  Bell, Stuart (Middlesbrough)

  Chidgey, David

  Benn, Rt Hon Tony

  Chisholm, Malcolm

  Bennett, Andrew F

  Church, Ms Judith

  Benton, Joe

  Clapham, Michael

  Bermingham, Gerald

  Clark, Rt Hon Dr David (S Shields)

  Berry, Roger

  Clark, Dr Lynda(Edinburgh Pentlands)

  Best, Harold

  Betts, Clive

  Clarke, Rt Hon Tom (Coatbridge)

  Blears, Ms Hazel

  Clelland, David

  Blizzard, Bob

  Clwyd, Ann

  Blunkett, Rt Hon David

  Coaker, Vernon

  Borrow, David

  Coffey, Ms Ann

  Bradley, Peter (The Wrekin)

  Cohen, Harry

  Brake, Tom

  Coleman, lain

  Brand, Dr Peter

  Colman, Tony

  Breed, Colin

  Connarty, Michael

  Brown, Rt Hon Gordon (Dunfermline E)

  Cook, Frank (Stockton N)

  Cooper, Yvette

  Brown, Rt Hon Nick (Newcastle E)

  Corbett, Robin

  139

  Corbyn, Jeremy

  Hoey, Kate

  Corston, Ms Jean

  Home Robertson, John

  Cousins, Jim

  Hope, Phil

  Cox, Tom

  Hopkins, Kelvin

  Cryer, John (Homchurch)

  Howarth, Alan (Newport E)

  Cummings, John

  Howarth, George (Knowsley N)

  Cunliffe, Lawrence

  Howells, Dr Kim

  Cunningham, Jim (Cov'try S)

  Hoyle, Lindsay

  Dalyell, Tarn

  Hughes, Kevin (Doncaster N)

  Darling, Rt Hon Alistair

  Hughes, Simon (Southwark N)

  Darvill, Keith

  Humble, Mrs Joan

  Davey, Edward (Kingston)

  Hurst, Alan

  Davey, Valerie (Bristol W)

  Hutton, John

  Davidson, Ian

  Iddon, Dr Brian

  Davies, Rt Hon Denzil (Llanelli)

  Jackson, Helen (Hillsborough)

  Davies, Rt Hon Ron (Caerphilly)

  Jamieson, David

  Dawson, Hilton

  Johnson, Alan (Hull W & Hessle)

  Dean, Mrs Janet

  Johnson, Miss Melanie

  Denham, John

  (Welwyn Hatfield)

  Dismore, Andrew

  Jones, Barry (Alyn & Deeside)

  Dobson, Rt Hon Frank

  Jones, Helen (Warrington N)

  Donohoe, Brian H

  Jones, Ms Jenny (Wolverh'ton SW)

  Doran, Frank

  Drew, David

  Jones, Jon Owen (Cardiff C)

  Drown, Ms Julia

  Jones, Martyn (Clwyd S)

  Dunwoody, Mrs Gwyneth

  Jones, Nigel (Cheltenham)

  Eagle, Maria (L'pool Garston)

  Kaufman, Rt Hon Gerald

  Edwards, Huw

  Keeble, Ms Sally

  Ellman, Mrs Louise

  Keetch, Paul

  Ennis, Jeff

  Kemp, Fraser

  Fearn, Ronnie

  Kennedy, Charles (Ross Skye)

  Field, Rt Hon Frank

  Kennedy, Jane (Wavertree)

  Fisher, Mark

  Kidney, David

  Fitzpatrick, Jim

  King, Andy (Rugby & Kenilworth)

  Fitzsimons, Lorna

  King, Ms Oona (Bethnal Green)

  Flint, Caroline

  Kirkwood, Archy

  Flynn, Paul

  Kumar, Dr Ashok

  Foster, Rt Hon Derek

  Ladyman, Dr Stephen

  Foster, Don (Bath)

  Lawrence, Ms Jackie

  Foster, Michael J (Worcester)

  Laxton, Bob

  Foulkes, George

  Lepper, David

  Fyfe, Maria

  Levitt, Tom

  Galbraith, Sam

  Lewis, Ivan (Bury S)

  Galloway, George

  Lewis, Terry (Worsley)

  Gapes, Mike

  Livsey, Richard

  George, Andrew (St Ives)

  Lock, David

  George, Bruce (Walsall S)

  Love, Andrew

  Gibson, Dr Ian

  McAvoy, Thomas

  Gilroy, Mrs Linda

  McCabe, Steve

  Godman, Norman A

  McDonagh, Siobhain

  Golding, Mrs Llin

  Macdonald, Calum

  Gorrie, Donald

  McDonnell, John

  Graham, Thomas

  McFall, John

  Grant, Bernie

  McGuire, Mrs Anne

  Griffiths, Jane (Reading E)

  Mclsaac, Shona

  Grocott, Bruce

  McKenna, Mrs Rosemary

  Grogan, John

  McLeish, Henry

  Gunnell, John

  Maclennan, Rt Hon Robert

  Hain, Peter

  McNulty, Tony

  Hall, Mike (Weaver Vale)

  MacShane, Denis

  Hall, Patrick (Bedford)

  Mactaggart, Fiona

  Hancock, Mike

  McWilliam, John

  Hanson, David

  Mahon, Mrs Alice

  Harman, Rt Hon Ms Harriet

  Mandelson, Peter

  Harris, Dr Evan

  Marek, Dr John

  Heal, Mrs Sylvia

  Marsden, Paul (Shrewsbury)

  Healey, John

  Marshall—Andrews, Robert

  Heath, David (Somerton & Frome)

  Martlew, Eric

  Henderson, Doug (Newcastle N)

  Maxton, John

  Henderson, Ivan (Harwich)

  Meale, Alan

  Hepburn, Stephen

  Michael, Alun

  Heppell, John

  Michie, Bill (Shef'ld Heeley)

  Hewitt, Ms Patricia

  Milbum, Alan

  Hill, Keith

  Miller, Andrew

  Hinchliffe, David

  Mitchell, Austin

  Hodge, Ms Margaret

  Moffatt, Laura

  140

  Moonie, Dr Lewis

  Smith, John (Glamorgan)

  Moran, Ms Margaret

  Smith, Llew (Blaenau Gwent)

  Morgan, Ms Julie (Cardiff N)

  Smith, Sir Robert (WAb'd'ns)

  Morgan, Rhodri (Cardiff W)

  Soley, Clive

  Morris, Ms Estelle (B'ham Yardley)

  Spellar, John

  Morris, Rt Hon John (Aberavon)

  Squire, Ms Rachel

  Mudie, George

  Starkey, Dr Phyllis

  Mullin, Chris

  Steinberg, Gerry

  Murphy, Denis (Wansbeck)

  Stevenson, George

  Naysmith, Dr Doug

  Stinchcombe, Paul

  Oaten, Mark

  Stoate, Dr Howard

  O'Hara, Eddie

  Strang, Rt Hon Dr Gavin

  Olner, Bill

  Straw, Rt Hon Jack

  O'Neill, Martin

  Stringer, Graham

  Öpik, Lembit

  Stunell, Andrew

  Palmer, Dr Nick

  Sutcliffe, Gerry

  Pendry, Tom

  Taylor, Rt Hon Mrs Ann

  Perham, Ms Linda

  (Dewsbury)

  Pickthall, Colin

  Taylor, Ms Dari (Stockton S)

  Pike, Peter L

  Taylor, David (NW Leics)

  Plaskitt, James

  Taylor, Matthew (Truro)

  Pope, Greg

  Temple-Morris, Peter

  Powell, Sir Raymond

  Thomas, Gareth (Clwyd W)

  Prentice, Ms Bridget (Lewisham E)

  Thomas, Gareth R (Harrow W)

  Primarolo, Dawn

  Timms, Stephen

  Prosser, Gwyn

  Tipping, Paddy

  Purchase, Ken

  Todd, Mark

  Quin, Ms Joyce

  Tonge, Dr Jenny

  Quinn, Lawrie

  Touhig, Don

  Radice, Giles

  Trickett, Jon

  Rapson, Syd

  Truswell, Paul

  Raynsford, Nick

  Turner, Dennis (Wolverh'ton SE)

  Reed, Andrew (Loughborough)

  Turner, Dr Desmond (Kemptown)

  Reid, Dr John (Hamilton N)

  Twigg, Derek (Halton)

  Rendel, David

  Twigg, Stephen (Enfield)

  Tyler Paul

  Robertson, Rt Hon George (Hamilton S)

  Vaz, Keith

  Wallace, James

  Robinson, Geoffrey (Cov'try NW)

  Walley, Ms Joan

  Rogers, Allan

  Wareing, Robert N

  Rooney, Terry

  Watts, David

  Ross, Ernie (Dundee W)

  Webb, Steve

  Rowlands, Ted

  White, Brian

  Roy, Frank

  Whitehead, Dr Alan

  Ruddock, Ms Joan

  Wicks, Malcolm

  Russell, Bob (Colchester)

  Williams, Rt Hon Alan

  Russell, Ms Christine (Chester)

  (Swansea W)

  Ryan, Ms Joan

  Williams, Mrs Betty (Conwy)

  Sanders, Adrian

  Willis, Phil

  Savidge, Malcolm

  Wills, Michael

  Sedgemore, Brian

  Wilson, Brian

  Shaw, Jonathan

  Winnick, David

  Sheerman, Barry

  Winterton, Ms Rosie (Doncaster C)

  Sheldon, Rt Hon Robert

  Wise, Audrey

  Simpson, Alan (Nottingham S)

  Woolas, Phil

  Skinner, Dennis

  Wray, James

  Smith, Rt Hon Andrew (Oxford E)

  Wright, Anthony D (Gt Yarmouth)

  Smith, Angela (Basildon)

  Wright, Dr Tony (Cannock)

  Smith, Rt Hon Chris (Islington S)

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Tellers for the Ayes:

  Janet Anderson and

  Smith, Jacqui (Redditch)

  Mr. Jim Dowd.

  NOES

  Ainsworth, Peter (E Surrey)

  Brady, Graham

  Ancram, Rt Hon Michael

  Brazier, Julian

  Arbuthnot, James

  Brooke, Rt Hon Peter

  Atkinson, Peter (Hexham)

  Browning, Mrs Angela

  Baldry, Tony

  Bruce, lan (S Dorset)

  Bercow, John

  Burns, Simon

  Beresford, Sir Paul

  Butterfill, John

  Blunt, Crispin

  Cash, William

  Body, Sir Richard

  Chapman, Sir Sydney (Chipping Barnet)

  Boswell, Tim

  Bottomley, Peter (Worthing W)

  Chope, Christopher

  Bottomley, Rt Hon Mrs Virginia

  Clappison, James

  141

  Clark, Rt Hon Alan (Kensington)

  MacKay, Andrew

  Clark, Dr Michael (Rayleigh)

  Maclean, Rt Hon David

  Clarke, Rt Hon Kenneth

  McLoughlin, Patrick

  (Rushcliffe)

  Madel, Sir David

  Collins, Tim

  Major, Rt Hon John

  Colvin, Michael

  Malins, Humfrey

  Cormack, Sir Patrick

  Mates, Michael

  Cran, James

  Maude, Rt Hon Francis

  Curry, Rt Hon David

  Mawhinney, Rt Hon Sir Brian

  Dafis, Cynog

  May, Mrs Theresa

  Davis, Rt Hon David (Haltemprice)

  Moss, Malcolm

  Day, Stephen

  Nicholls, Patrick

  Dorrell, Rt Hon Stephen

  Norman, Archie

  Duncan, Alan

  Ottaway, Richard

  Duncan Smith, lain

  Page, Richard

  Emery, Rt Hon Sir Peter

  Paice, James

  Evans, Nigel

  Paterson, Owen

  Faber, David

  Pickles, Eric

  Fabricant, Michael

  Prior, David

  Fallon, Michael

  Randall, John

  Flight, Howard

  Redwood, Rt Hon John

  Forth, Rt Hon Eric

  Robathan, Andrew

  Fowler, Rt Hon Sir Norman

  Robertson, Laurence (Tewk'b'ry)

  Fraser, Christopher

  Roe, Mrs Marion (Broxbourne)

  Gibb, Nick

  Ross, William (E Londy)

  Gill, Christopher

  Rowe, Andrew (Faversham)

  Gillan, Mrs Cheryl

  Ruffley, David

  Goodlad, Rt Hon Sir Alastair

  St Aubyn, Nick

  Gray, James

  Sayeed, Jonathan

  Green, Damian

  Shephard, Rt Hon Mrs Gillian

  Greenway, John

  Simpson, Keith (Mid-Norfolk)

  Grieve, Dominic

  Smyth, Rev Martin (Belfast S)

  Gummer, Rt Hon John

  Soames, Nicholas

  Hamilton, Rt Hon Sir Archie

  Spelman, Mrs Caroline

  Hammond, Philip

  Spicer, Sir Michael

  Hayes, John

  Spring, Richard

  Heath, Rt Hon Sir Edward

  Stanley, Rt Hon Sir John

  Heathcoat—Amory, Rt Hon David

  Streeter, Gary

  Heseltine, Rt Hon Michael

  Swayne, Desmond

  Hogg, Rt Hon Douglas

  Syms, Robert

  Horam, John

  Tapsell, Sir Peter

  Howard, Rt Hon Michael

  Taylor, Ian (Esher& Walton)

  Hunter, Andrew

  Taylor, Rt Hon John D (Strangford)

  Jack, Rt Hon Michael

  Taylor, John M (Solihull)

  Jackson, Robert (Wantage)

  Taylor, Sir Teddy

  Jenkin, Bernard

  Townend, John

  Johnson Smith,

  Tredinnick, David

  Rt Hon Sir Geoffrey

  Trend, Michael

  Key, Robert

  Tyrie, Andrew

  King, Rt Hon Tom (Bridgwater)

  Viggers, Peter

  Kirkbride, Miss Julie

  Walter, Robert

  Laing, Mrs Eleanor

  Waterson, Nigel

  Lansley, Andrew

  Wells, Bowen

  Leigh, Edward

  Whitney, Sir Raymond

  Letwin, Oliver

  Widdecombe, Rt Hon Miss Ann

  Lewis, Dr Julian (New Forest E)

  Wilkinson, John

  Lidington, David

  Willetts, David

  Lilley, Rt Hon Peter

  Winterton, Mrs Ann (Congleton)

  Lloyd, Rt Hon Sir Peter (Fareham)

  Winterton, Nicholas (Macclesfield)

  Llwyd, Elfyn

  Yeo, Tim

  Loughton, Tim

  Young, Rt Hon Sir George

  Luff, PeterLyell, Rt Hon Sir Nicholas

  Tellers for the Noes:

  MacGregor, Rt Hon John

  Mr. John Whittingdale and

  McIntosh, Miss Anne

  Mr. Oliver Heald

  Question accordingly agreed to.

  27. ADVANCE CORPORATION TAX AND TAX CREDITS Resolved,
  That provision may be made in relation to—

  (a)the set-off of advance corporation tax against liability to
  corporation tax; and

  (b) tax credits.

  28. INTEREST PAYABLE UNDER THE TAX ACTS Resolved,
  That provision may be made imposing charges to tax in relation to interest payable under the Tax Acts to companies.

  29. RENTS AND OTHER RECEIPTS FROM LAND
  Resolved,
  That provision may be made about the taxation of rents and other receipts from land.

  30. COMPUTATION OF PROFITS AND LOSSES
  Resolved,
  That provision may be made as to the computation of profits and losses for tax purposes.

  31. REMUNERATION IN THE FORM OF SHARES OR SECURITIES
  Resolved,
  That provision may be made about shares or securities acquired by a person as a director or employee.

  32. SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
  Resolved,
  That provision may be made amending Chapter IV of Part XIII of the Income and Corporation Taxes Act 1988.

  33. CONSTRUCTION WORKERS SUPPLIED BY AGENCIES
  Resolved,
  That—

  (1)In section 134 of the Income and Corporation Taxes Act 1988, subsection (5)(c) shall cease to have effect.

  (2) In section 559 of the Income and Corporation Taxes Act 1988, in subsection (1), for "subsection (2) below" there shall be substituted "the following provisions of this section"; and after subsection (1) there shall be inserted the following subsection—

  "(1A) Subsection (1) above shall not apply to any payment made under the contract in question that is chargeable to income tax under Schedule E by virtue of section 134(1)."
  (3)Paragraphs (1) and (2) above have effect in relation to—

  (a) any payments made on or after 6th April 1998 other than
  any made in respect of services rendered before that date; and

  (b) any payments made before 6th April 1998 in respect of
  services to be rendered on or after that date.

  (4) Subject to paragraph (9) below, paragraph (5) below applies if—

  (a) a construction trade is being carried on by a person ('the)
  sub-contractor') at the end of the year 1997–98; and

  (b) there are receipts of that trade which, but for section
  134(5)(c) of the Income and Corporation Taxes Act 1988, would have fallen to be treated for the year 1997–98 as the emoluments of an office or employment.

  (5)Where this paragraph applies, then, subject to paragraphs (7) and (8) below—

  (a) the trade shall be deemed to have been permanently discontinued at the end of the year 1997–98; and

  (b) to the extent (if any) that the trade includes activities in

  addition to the rendering of services falling by virtue of this Resolution to be treated as the duties of an office or employment, a new trade shall be deemed to have been set up and commenced on 6th April 1998.
  (6) Paragraph (7) below applies if—

  (a) a construction trade ("the old trade") is deemed by virtue of paragraph (5)(a) above to have been permanently discontinued; and

  (b) a construction trade ("the new trade")—

  143

  (i) is deemed by virtue of paragraph (5)(b) above to have been set up and commenced; or

  (ii) (where sub-paragraph (i) above does not apply) is actually set up and commenced in the year 1998–99.

  (7) Where this paragraph applies then, notwithstanding the deemed discontinuance, the old trade and the new trade shall be treated as the same for the purposes of section 385 of the Income and Corporation Taxes Act 1988.
  (8) An officer of the Board shall not become entitled by virtue of anything in this Resolution to give a direction under paragraph 3(2) of Schedule 20 to the Finance Act 1994 in the case of a person whose trade is deemed under paragraph (5) above to cease on 5th April 1998.
  (9) Paragraph (5) above does not apply if the sub-contractor by notice to an officer of the Board otherwise elects.
  (10) An election under paragraph (9) above—

  (a) if it relates to a trade carried on by an individual, must
  be included in a return under section 8 of the Taxes Management Act 1970 which is made and delivered in that individual's case on or before the day on which it is required to be made and delivered under that section; and

  (b) if it relates to a trade carried on by persons in partnership,
  must be included in a return under section 12AA of that Act which is made and delivered in the partners' case,

  TABLE A

  Cylinder capacity of car in cubic centimeters

  Cash equivalent

  1,400 or less … … … … … … … … …

  £1,010

  More than 1,400 but not more than 2,000 … …

  £1,280

  More than 2,000 … … … … … … …

  £1,890

  TABLE AB

  Cylinder capacity of car in cubic centimeters

  Cash equivalent

  2,000 or less … … … … … … … … …>

  £1,280

  More than 2,000 … … … … … … … … …

  £1,890

  TABLE B

  Description of car

  Cash equivalent

  Any car … … … … … … … … … …

  £1,890

  (2) This Resolution shall have effect for the year 1998–99 and subsequent years of assessment.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  36. TRAVELLING EXPENSES
  Resolved,
  That provision may be made amending section 198(1) of the Income and Corporation Taxes Act 1988 and related provisions.

  37. PROFIT-RELATED PAY
  Resolved,
  That provision may be made about cases where profit periods for the purposes of profit-related pay overlap or are to be taken to overlap.

  38. FOREIGN EARNINGS DEDUCTION
  Resolved,
  That—
  (1) Section 193(1) of the Income and Corporation Taxes Act 1988 shall cease to have effect.
  or in the case of any one or more of them, on or before the day specified in relation to that return under subsection (2) or (3) of that section.
  (11) In this Resolution "construction trade" means a trade consisting in or including the rendering of services under contracts relating to construction operations (within the meaning of Chapter IV of Part XIII of the Income and Corporation Taxes Act 1988).
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  34. EMPLOYMENT TERMINATION BENEFITS AND RETIREMENT BENEFITS
  Resolved,
  That provision may be made about the taxation of benefits received—

  (a) in connection with the termination, or a change in the duties of, an office or employment; or

  (b) under a non-approved retirement benefits scheme.

  35. BENEFITS IN KIND (CAR FUEL)
  Resolved,
  That—
  (1) In section 158 of the Income and Corporation Taxes Act 1988, for the Tables in subsection (2) there shall be substituted—
  (2) Before that section there shall be inserted—
  "Foreign earnings deduction for seafarers
  192A.—(1) Where in any year of assessment—

  (a) the duties of an employment as a seafarer are performed wholly or partly outside the United Kingdom, and

  (b) any of those duties are performed in the course of a qualifying period (within the meaning of Schedule 12) which falls wholly or partly in that year and consists of at least 365 days,

  then, in charging tax under Case I of Schedule E on the amount of the emoluments from that employment attributable to that period, or to so much of it as falls in that year of assessment, there shall be allowed a deduction equal to the whole of that amount.
  (2) In subsection (1) employment 'as a seafarer' means an employment consisting of the performance of duties on a ship (or of such duties and others incidental to them).
  (3) For the purposes of this section a 'ship' does not include—

  (a) any offshore installation within the meaning of the Mineral Workings (Offshore Installations) Act 1971, or

  (b) what would be such an installation if the references in that Act to controlled waters were to any waters.

  (4) Schedule 12 has effect for the purpose of supplementing this section.".
  (3) The references in the Income and Corporation Taxes Act 1988 to section 193(1) shall be amended as follows—

  (a) in section 19(1), in Case I of Schedule E, the words from"and to section 193(1)" to the end shall be omitted;

  (b) in paragraph 10 of Schedule 11, after "193(1)" there shall be inserted "or 192A";

  (c) in section 132(3) and paragraphs 1, 1A, 2(1), 3(1) and
  (3), 5 and 6 of Schedule 12, for "193(1)" there shall be substituted "192A".

  (4) In Schedule 12 to that Act—

  (a) in paragraph 3(2)—

  (i) in paragraph (a) for "62" there shall be substituted "183", and

  (ii) in paragraph (b) for "one-sixth" there shall be substituted "one-half;

  (b) in paragraph 5—

  (i) for "vessel or aircraft" there shall be substituted "ship (within the meaning of section 192A)", and

  (ii) in paragraphs (a) and (b) for "voyage or journey" there shall be substituted "voyage"; and

  (c) paragraphs 3(2A) and 7 shall be omitted.

  (5) Paragraphs (1) to (4) of this Resolution shall have effect in relation to—

  (a) emoluments attributable to qualifying periods beginning
  on or after 17th March 1998, and

  (b) emoluments attributable to qualifying periods beginning before 17th March 1998 which are received on or after that date.

  (6) Nothing in those paragraphs shall affect the question what deduction (if any) falls to be made under section 193(1) of the Income and Corporation Taxes Act 1988 in the case of emoluments attributable to a qualifying period beginning before 17th March 1998 and received before that date.
  (7) For the purposes of paragraphs (5) and (6) of this Resolution the question whether emoluments are attributable to a qualifying period beginning before 17th March 1998 shall be determined without reference to any arrangements entered into on or after that date.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  39. PA YE (TRADE DEBTS)
  Resolved,
  That—
  (1) In relation to any asset provided on or after 2nd July 1997 and before 6th April 1998, section 203F of the Income and Corporation Taxes Act 1988 shall have effect with the following two modifications.
  (2) The first modification is the insertion in subsection (2), before the word "and" at the end of paragraph (b), of the following paragraph—
  "(ba) an asset not falling within paragraph (a) or (b) above which consists in the rights of an assignee, or any other rights, in respect of a trade debt that is or may become due to the employer;".
  (3) The second modification is the insertion in subsection (3), before the word "and" at the end of paragraph (a), of the following paragraph—
  "(aa) in the case of an asset falling within subsection (2)(ba) above, the amount of the debt;".
  (4) The preceding provisions of this Resolution shall be deemed, in accordance with paragraphs (5) and (6) below, to have come into force on 2nd July 1997.
  (5) Subject to paragraph (6) below, this Resolution shall not be taken to have changed—

  (a) the amounts which were deductible by any person under
  section 203 of the Income and Corporation Taxes Act 1988 at any time on or before 17th March 1998; or

  (b) the amounts which should have been accounted for to the Board under section 203J(3) of that Act at any time on or before 5th April 1998.

  (6) Where, by virtue of this Resolution, any employer would (but for paragraph (5) above) be treated as having been under an obligation at any time on or before 17th March 1998 to make deductions from payments made by the employer of, or on account of, an employee's assessable income—

  (a) sections 203 and 203J of the Income and Corporation Taxes Act 1988, and

  (b) the provisions of any regulations under section 203 of that Act,

  shall have effect as if the employer were obliged (subject to section 203J(3) of that Act) to make those deductions from any payments that are so made on or after 24th March 1998 and before 6th April 1998.
  (7) Expressions used in paragraph (6) above and in section 203J of the Income and Corporation Taxes Act 1988 have the same meanings in that paragraph as in that section.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  40. PA YE (NON-CASH BENEFITS ETC.)
  Resolved,
  That provision may be made—

  (a) extending the circumstances in which a person is to be treated for the purposes of PA YE regulations as having made a payment; and

  (b) amending section 144A of the Income and Corporation Taxes Act 1988.

  41. ENTERPRISE INVESTMENT SCHEME ETC
  Resolved,
  That provision (including provision having retrospective effect) may be made amending Chapter III of Part VII of the Income and Corporation Taxes Act 1988 and sections 150, 150A and 150B of, and Schedule 5B to, the Taxation of Chargeable Gains Act 1992.

  42. VENTURE CAPITAL TRUSTS
  Resolved,
  That provision (including provision having retrospective effect) may be made amending section 842AA of, and Schedules 15B and 28B to, the Income and Corporation Taxes Act 1988.

  43. RELIEF FOR LOAN TO BUY INTEREST IN CLOSE COMPANY
  Resolved,
  That provision may be made amending section 360 of the Income and Corporation Taxes Act 1988.

  44. RELIEF FOR LOSSES ON CERTAIN UNLISTED SHARES
  Resolved,
  That provision may be made amending section 576 of the Income and Corporation Taxes Act 1988.

  45. GROUP RELIEF
  Resolved,
  That provision (including provision having retrospective effect) may be made about relief under Chapter IV of Part X of the Income and Corporation Taxes Act 1988.

  46. LIFE POLICIES ETC
  Resolved,
  That provision may be made in relation to policies of life insurance, contracts for life annuities and capital redemption policies.

  47. INSURANCE COMPANIES (PROVISIONAL REPAYMENTS)
  Resolved,
  That provision may be made in relation to Schedule 19AB to the Income and Corporation Taxes Act 1988.

  48. PENSION SCHEMES ETC
  Resolved,
  That provision (including provision having retrospective effect) may be made about—

  (a) the approval of schemes for the purposes of Part XIV of the Income and Corporation Taxes Act 1988; and

  (b) cases in which an approval for those purposes has been given or has ceased to have effect.

  49. FUTURES AND OPTIONS
  Resolved,
  That provision (including provision having retrospective effect) may be made amending Schedule 5AA to the Income and Corporation Taxes Act 1988.

  50. EXCHANGES OF SECURITIES ETC
  Resolved,
  That provision may be made—

  (a) for sections 471 and 472 of the Income and Corporation Taxes Act 1988 to cease to have effect; and

  (b) for section 473 of that Act to apply in relation to shares instead of securities.

  51. DOUBLE TAXATION RELIEF ON FOREIGN INTEREST AND DIVIDENDS
  Resolved,
  That provision may be made amending Chapter II of Part XVIII of the Income and Corporation Taxes Act 1988.

  52. NOTIFICATION OF ADJUSTMENT OF FOREIGN TAX
  Resolved,
  That—
  (1) In section 806 of the Income and Corporation Taxes Act 1988, after subsection (2) there shall be inserted the following subsections—
  "(3) Subject to subsection (5) below, where—

  (a) any credit for foreign tax has been allowed to a person under any arrangements, and

  (b) the amount of that credit is subsequently rendered excessive by reason of an adjustment of the amount of any tax payable under the laws of a territory outside the United Kingdom,

  that person shall give notice in writing to an officer of the Board that an adjustment has been made that has rendered the amount of the credit excessive.
  (4) A notice under subsection (3) above must be given within one year from the time of the making of the adjustment.
  (5) Subsections (3) and (4) above do not apply where the adjustment is one the consequences of which in relation to the credit fall to be given effect to in accordance with regulations made under—

  (a) section 182(1) of the Finance Act 1993 (regulations relating to individual members of Lloyd's); or

  (b) section 229 of the Finance Act 1994 (regulations relating to corporate members of Lloyd's).

  (6) A person who fails to comply with the requirements imposed on him by subsections (3) and (4) above in relation to any adjustment shall be liable to a penalty of an amount not exceeding the amount by which the credit allowed has been rendered excessive by reason of the adjustment."
  (2) This Resolution has effect in relation to adjustments made on or after 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  53. TRANSFER PRICING (NEW REGIME)
  Resolved,
  That provision for the purposes of income tax and corporation tax may be made, in place of sections 770 to 773 of the Income and Corporation Taxes Act 1988, in relation to cases where provision is made or imposed as between any two persons which would not have been made as between independent enterprises.

  54. EXCHANGE GAINS AND LOSSES AND FINANCIAL INSTRUMENTS
  Resolved,
  That provision may be made about the application in relation to any transaction of sections 135, 136, 136A and 137 of the Finance Act 1993 and section 167 of the Finance Act 1994.

  55. CONTROLLED FOREIGN COMPANIES
  Resolved,
  That provision may be made in relation to controlled foreign companies.

  56. CORPORATION TAX (CHANGE OF OWNERSHIP)
  Resolved,
  That provision (including provision having retrospective effect) may be made for the payment of unpaid tax, by persons other than the company liable, in cases where there has been a change in the ownership of a company and corporation tax assessed on that company or an associated company remains unpaid.

  57. CORPORATION TAX SELF-ASSESSMENT, ETC
  Resolved,
  That provision may be made about corporation tax self-assessment and other matters relating to the management of that tax.
  The references in this Resolution to corporation tax include any amount treated as if it were corporation tax.

  58. CHARGEABLE GAINS (RATE FOR TRUSTEES ETC)
  Resolved,
  That provision may be made about the rate of capital gains tax in respect of gains accruing to trustees and personal representatives.

  59. CHARGEABLE GAINS (INDEXATION AND TAPER RELIEF)
  Resolved,
  That provision may be made amending the Taxation of Chargeable Gains Act 1992—

  (a) to restrict entitlement to indexation allowance; and

  (b) for purposes connected with the introduction of taper relief, to restrict the availability of other reliefs.

  60. CHARGEABLE GAINS (POOLING AND IDENTIFICATION)
  Resolved,
  That provision may be made for the purposes of the Taxation of Chargeable Gains Act 1992—

  (a) limiting the circumstances in which different assets are to be treated as parts of a single asset; and

  (b) setting out new rules for the identification of assets disposed of.

  61. CHARGEABLE GAINS (STOCK DIVIDENDS)
  Resolved,
  That provision may be made for the purposes of the Taxation of Chargeable Gains Act 1992 about stock dividends.

  62. CHARGEABLE GAINS (NON-RESIDENTS)
  Resolved,
  That provision may be made for the purposes of capital gains tax in relation to individuals who, having ceased to be resident or ordinarily resident in the United Kingdom, again become so resident or ordinarily resident.

  63. CHARGEABLE GAINS (OFFSHORE SETTLEMENTS)
  Resolved,
  That provision (including provision having retrospective effect) may be made imposing charges under the Taxation of Chargeable Gains Act 1992 on the beneficiaries and settlors of settlements where there has been a time when the trustees of the settlement, or of a settlement from which property comprised in the settlement directly or indirectly derives—

  (a) have not been resident or ordinarily resident in the United Kingdom, or

  (b) have fallen for the purposes of any double taxation relief

  arrangements to be regarded as resident in a territory outside the United Kingdom.

  64. CHARGEABLE GAINS (TRANSFERS WITHIN A GROUP ETC.)
  Resolved,
  That provision may be made, for the purposes of the taxation of chargeable gains, about—

  (a) the persons who are companies for the purposes of sections 170 to 181 of the Taxation of Chargeable Gains Act 1992;

  (b) transfers between companies within a group; and

  (c) schemes of reconstruction or amalgamation involving the transfer of a business.

  65. CHARGEABLE GAINS (ABOLITION OF RELIEFS)
  Resolved,
  That provision may be made repealing Chapter IA of Part V and sections 254 and 255 of the Taxation of Chargeable Gains Act 1992.

  66. CHARGEABLE GAINS (PRE-ENTRY GAINS)
  Resolved,
  That provision may be made amending the Taxation of Chargeable Gains Act 1992 so as to restrict the amounts which, where a company has joined a group, may be set against chargeable gains accruing to the company before it joined the group.

  67. INHERITANCE TAX (PROPERTY OF HISTORIC INTEREST ETC)
  Resolved,
  That provision may be made about—

  (a) the designation of property for the purposes of any exemption under the Inheritance Tax Act 1984 or for the purposes of section 258 of the Taxation of Chargeable Gains Act 1992;

  150

  (b) the undertakings given for any of those purposes or for the purposes of any exemption under the Finance Act 1976 or the Finance Act 1975; and

  (c) the conditions for exemption under section 27 of the Inheritance Tax Act 1984.

  68. INHERITANCE TAX (GIFTS FOR PUBLIC BENEFIT)
  Resolved,
  That provision may be made repealing section 26 of the Inheritance Tax Act 1984.

  69. INSURANCE PREMIUM TAX
  Resolved,
  That provision may be made for the purposes of insurance premium tax—

  (a) in relation to premiums taxable at the higher rate; and

  (b) in relation to taxable intermediaries.

  70. LANDFILL TAX
  Resolved,
  That provision may be made applying section 1 of the Collection of Taxes Act 1968 to landfill tax.

  71. STAMP DUTY (CONVEYANCES AND TRANSFERS ON SALE)
  Resolved,
  That the following provisions shall have effect for the period beginning 24th March 1998 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
  (1) Section 55 of the Finance Act 1963 and section 4 of the Finance Act (Northern Ireland) 1963 shall each be amended in accordance with the provisions of paragraphs (2) and (3) below.
  (2) In subsection (l)(d), for "£1.50p" there shall be substituted "£2".
  (3) In subsection (l)(e), for "£2" there shall be substituted "£3".
  (4) This Resolution shall apply to instruments executed on or after 24th March 1998, except where the instrument in question is executed in pursuance of a contract made on or before 17th March 1998.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

  72. GAS VALUATION
  Resolved,
  That provision (including provision having retrospective effect) may be made amending paragraph 3A of Schedule 3 to the Oil Taxation Act 1975, paragraph 12 of Schedule 2 to the Oil Taxation Act 1983 and section 493 of the Income and Corporation Taxes Act 1988.

  73. EUROPEAN SINGLE CURRENCY
  Resolved,
  That provision may be made for the modification, in connection with the adoption of a single currency by other member States of the European Community, of enactments and subordinate legislation relating to matters under the care and management of the Commissioners of Inland Revenue.

  74. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)
  Resolved,
  That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from taxation.

  PROCEDURE (FUTURE TAXATION)
  Resolved,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

  (a) provision modifying the effect of sections 256, 257C and 347B of the Income and Corporation Taxes Act 1988;

  (b) provision for charging corporation tax for the financial year 1999 and with respect to the rates of that tax for that year and the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988;

  (c) provision for and in connection with the abolition of advance corporation tax;

  (d) provision for the repeal of sections 26 and 27 of the Income and Corporation Taxes Act 1988;

  (e) provision as to the computation of profits and losses for tax purposes;

  (f) provision for reducing, in the case of cars capable of running on road fuel gas, the cash equivalents of the benefits chargeable to tax under section 157 of the Income and Corporation Taxes Act 1988;

  (g) provision preventing the opening of tax-exempt special savings accounts after 5th April 1999;

  (h) provision relating to tax credits;

  (i) provision relating to the taxation of payments representative of dividends and other distributions of companies;

  (j) provision about the attribution of gains to the settlors of settlements created before 19th March 1991;

  (k) provision phasing out retirement relief under sections 163 and 164 of, and Schedule 6 to, the Taxation of Chargeable Gains Act 1992.

  FINANCE (No. 2) BILL [MONEY]
  Queen's recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise—

  (a) the payment out of money provided by Parliament of sums payable by the Secretary of State by virtue of provisions of that Act relating to vehicle excise and registration;

  (b) the making out of the Consolidated Fund of repayments of gas levy and of payments of interest on such repayments;

  (c) any increase attributable to any provision of that Act relating to the Debt Management Account in the sums payable out of money provided by Parliament;

  (d) any increase attributable to any provision of that Act relating to that Account in the sums payable out of or into the National Loans Fund or the Consolidated Fund;

  (e) payments out of or into that Account.

  Bill ordered to be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Prescott, Mr. Secretary Straw, Mr. Secretary Blunkett, Secretary Margaret Beckett, Mr. Secretary Dobson, Secretary Harriet Harman, Mr. Alistair Darling, Mr. Geoffrey Robinson, Mrs. Helen Liddell and Dawn Primarolo do prepare and bring it in.

  FINANCE (NO. 2) BILL
  Dawn Primarolo accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue,
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  and to make further provision in connection with Finance: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 156].

PETITIONS

  Green Belt (Development)
  10.53 pm
  Mrs. Marion Roe: This petition of 170 signatures—[Interruption.]
  Madam Speaker: Order. hon. Members who are leaving the Chamber should do so quietly. A lady is on her feet trying to present a petition.
  Mrs. Roe: Thank you, Madam Speaker.
  This petition, with 170 signatures, is from the residents of Northaw and Cuffley and surrounding areas in my constituency in Hertfordshire, and is entitled "Save our Countryside". It reads:
  The petition of the residents of Cuffley and Northaw declares that we are concerned about the decisions to sanction plans for new development throughout the countryside.
  My constituents have been appalled by the decision of the Labour Secretary of State for the Environment, Transport and the Regions not to intervene in the Liberal Democrat and Labour-controlled Hertfordshire county council's structure plan proposals to build 10,000 houses on green-belt land to the west of Stevenage near my constituency. That area of green belt will be destroyed by that major housing development in spite of the Government's claims before the general election to be committed to protecting the environment. The whole point of green-belt land is that it is not an elastic idea.
  The petition continues:
  The petitioners therefore request that the House of Commons urge the Secretary of State for the Environment, Transport and the Regions to ensure that more homes are built in city areas instead of the countryside or green belt, to breathe new life into our cities and to protect valuable countryside for future generations.
  The petition has my whole-hearted support.
  To lie upon the Table.

  Disabled People (Benefits)
  10.55 pm
  Dr. Brian Iddon: I want to present a petition on behalf of 342 people of Bolton who have either suffered long-term mental illness or who are friends or relatives of such a person, which seeks to protect their welfare benefits. It reads:
  The petitioners therefore request that the House of Commons
  1) Seek clarification from Government as to the plans that are being proposed and ask the Government to recognise the levels of concern and anxiety that the proposals have caused to people.
  2) Urges the Secretary of State for Social Security to look for alternative ways of addressing the costs of the welfare state in preference to victimising the most vulnerable members of our society.
  To lie upon the Table.

  Local Government (Experimental Arrangements)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Allen.]
  10.56 pm
  Dr. Phyllis Starkey: When I first applied for this debate, it was to be a celebration of the start of the passage through the House of the Local Government (Experimental Arrangements) Bill, which has been promoted in the other place by Lord Hunt and in this House by my hon. Friend the Member for Southampton, Test (Dr. Whitehead). However, I understand that that Bill was opposed on Friday by the Conservative Whips, so this debate is more in the nature of a lament for opportunities denied, or at least delayed.
  Local government in the United Kingdom, unlike that in most European countries, has no separate or independent constitutional position. The powers, functions and financing of local authorities can be altered by statute, and the Crown in Parliament could abolish them altogether.
  Under the previous Government, it sometimes appeared to those of us who were then in local government that abolition was the ultimate agenda. The previous Government increasingly controlled the finances, both capital and revenue, of local councils, stripped away their ability to provide affordable housing and, through compulsory competitive tendering, tried to end the role of councils as direct service providers.
  Under the previous Government, there was an increasing number of areas in which local government was simply made an agent of central Government. The expansion of the quango state removed whole functions from local government. In spite of all that, local government—predominantly, although not exclusively, Labour local government—began to reinvent and modernise local democracy.
  The key features of most progressive Labour councils were their commitment to quality services, to working in partnership with the private and voluntary sectors, and to making democracy in their localities more participative. They concentrated on making public services high-quality and user-friendly. For example, York council pioneered the citizens charter, which was taken over by the previous Government. Councils also pioneered customer guarantees and tenant consultation and user panels and, instead of the paternalistic provision of monolithic services for people, developed the provision of flexible services with the people.
  Councils pioneered partnership, developing a facilitating role with the other players in community governance. They increasingly saw themselves not only as service providers but as facilitators and advocates for local communities, using their democratic legitimacy to take a leadership role. They also pioneered a variety of forms of more participative democracy, using citizens' juries and representative panels of citizens such as the Kirklees talkback scheme, neighbourhood forums with delegated budgets and tenant management co-operatives.
  The council in Milton Keynes runs a health forum that brings together local NHS providers, the council and the voluntary sector to plan health services. The council
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  consulted young people in Milton Keynes before the unitary council came into effect, to ensure that it provided the services that young people wanted and identified a need for. It set up a benchmark survey of more than 1,000 local residents, backed up by citizens' panels, to consult on its budget priorities. It also set up a scrutiny committee, chaired by the main opposition group on the council, the Liberal Democrats.
  Since the general election, the atmosphere has become distinctly more promising for local government. Unlike their predecessor, the new Labour Government are committed to renewing local democracy. There have been important symbols and signs of the new approach. The Government signed the European charter of local self-government, which recognises the independent democratic legitimacy of local government. They have brought into being a central-local concordat which recognises that central and local government are mutually dependent and sets out meetings at least twice a year between the Deputy Prime Minister, Cabinet and other Ministers, and leading members of the Local Government Association. The Government are committed to giving local authorities new powers to promote the economic, social and environmental well-being of their communities.
  Lord Hunt's Bill was part of the new approach. It would have allowed councils to experiment with more effective forms of internal decision making, enabling them to give much greater clarity of direction to their programmes while retaining proper accountability to the local electorate. It was permissive, not prescriptive, and would have allowed councils to experiment in the way appropriate to them by developing cabinet-style government, decision making by lead members, or an elected mayor. I leave my hon. Friend the Member for Southampton, Test to talk in more detail about the events of Friday's Second Reading.
  Many councils have already started to develop improved internal arrangements of the sort that would be permitted by the Hunt Bill. Several London boroughs have well-developed plans, including Hammersmith and Fulham, Barnet and Islington, as have several metropolitan boroughs and unitary councils such as Bradford, Kirklees, Southampton and Leicester.
  Milton Keynes unitary council was also hoping to exploit the opportunity of the Bill in two particular ways. Milton Keynes is a city with a young population. The council had attempted to set up an innovative departmental structure that split children's from adult social services and then brought together all services relating to children. Children's social services, education, leisure, and arts and museums were to be brought into the same structure, to deliver proper, comprehensive services to meet the needs of children and young people. Unfortunately, the current rules for social services committees demand complex management arrangements that add nothing to service delivery.
  The second way in which Milton Keynes council had hoped to use the opportunities of the Hunt Bill was to introduce a cabinet system that would have simplified the complex committee structure set up by the unitary council, and allowed councillors to concentrate their time and resources on delivering services rather than on keeping the committee system going. I am sorry to have to say that some of these sensible measures are being opposed by some Liberal Democrat councillors. I am

  155
  particularly sorry because I know that, when the Bill was discussed in the Lords, it was supported by several Liberal Democrat—and, indeed, Conservative—peers.
  I should like to quote from the speech of Baroness Maddock on 17 December. She said that she shared Lord Hunt's
  "desire to make local government much more accountable; much more accessible, particularly for constituents; and more attractive so that people will put themselves forward as councillors to serve their communities."—[Official Report, House of Lords, 17 December 1997; Vol. 584, c. 693.]
  Some peers expressed concerns about the need for effective scrutiny of the new proposals, but those concerns were addressed in amendments before the Bill completed its stages in the Lords. I hope that those Liberal Democrats in the Lords and in the Local Government Association who support the Bill will use their power to persuade their colleagues on Milton Keynes council to stop opposing the Labour administration's attempts to modernise and simplify local democracy.
  I hope that my hon. Friend the Minister will join me in regretting the steps taken on Friday to delay the Local Government (Experimental Arrangements) Bill. As I understand it, those steps will prevent the Bill from progressing to Committee stage, where genuine concerns that Opposition Members might have about the detail of the Bill could have been addressed. It would be helpful to all those progressive forces in local government that wish to bring local decision making into the 21st century if the Minister could say what steps the Government are proposing to introduce the sort of changes outlined in Lord Hunt's Bill, so that the proposed experiments can go ahead.
  11.5 pm
  Dr. Alan Whitehead: I should like to add my support to the case made by my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey). I was delighted to be able to pick up the Local Government (Experimental Arrangements) Bill when it came to this House from another place. It went through that other place with all-party support; indeed, several concerns expressed earlier in the Bill's passage were alleviated on Report, when all parties participated in drafting amendments to ensure that the Bill reached this House in a form that commanded a wide range of support, and that was genuinely innovative in terms of local government.
  The Bill is permissive, as my hon. Friend said. No local authority is forced to undertake the measures contained in the Bill, yet it allows local authorities, if they wish, to experiment with different—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. It may be helpful to the hon. Gentleman if I tell him that he cannot speak in detail about a Bill that is going before either this House or the other place. He can speak about the topic, but not about the Bill in detail.
  Dr. Whitehead: Thank you, Mr. Deputy Speaker. I shall try to make my remarks more general.
  The Bill was significant because local government has historically thrived on local innovation, not only because local is best in many areas of policy, but because good
  156
  practice is best spread by example and local government needs to learn by its own experience, not by experiences imposed on it by others.
  The problem of local government over the past 20 years is that central Government have all too often reacted to the problems that are sometimes thrown up by local government practice by exercising their prerogative to second-guess what local government is doing and by passing legislation, often in minute detail, to prescribe what local government can and cannot do. That has led to an atmosphere and a feeling prevalent in local government that it is always second-guessed and subject to decrees from above, and that its energies, innovation and experience are all too often ignored.
  We must resolve not to do that again: it is bad for local government, and bad for democracy as a whole. If people believe that voting in local government is a waste of time, it is hardly surprising if their cynicism spreads to national politics.
  I welcomed the recent comments of the Leader of the Opposition when he spoke to Conservative local councillors at Kensington town hall. I did not agree with everything he had to say, but I detected a welcome change of heart. He said that he considered local government to be important and that what it had to say was relevant for local and national purposes. He declared, on behalf of his party, a new beginning in the relationship between the centre and the local in the realm of local government.
  For all these reasons, I was dismayed when my private Member's Bill last Friday was objected to by a Conservative Whip. Local government of all party persuasions wants that Bill on the statute book. It wants the freedom to do the things suggested in the Bill, and it wants to make a new start of the type that the Leader of the Opposition suggested at Kensington town hall was on offer. This House, regardless of party, should not deny local government that opportunity.
  I have set the date of 24 April for another attempt at a Second Reading for the Bill. That provides a month for mature reflection. I hope that the Government tonight will give the assurances that the Opposition need to allow the Bill to proceed. I also hope that the Opposition will prove big enough to allow the Bill to go into Committee, where we can discuss the details that need discussion, to ensure that the Bill gives local government the opportunities it deserves.
  11.10 pm
  The Minister for Local Government and Housing (Ms Hilary Armstrong): I congratulate my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) on securing the debate, and my hon. Friend the Member for Southampton, Test (Dr. Whitehead) on supporting her.
  This evening marks a rather remarkable event. It is some time since the House, in an Adjournment debate, has considered innovation and the future shape of local government, and whether central Government should allow experimentation in that area. It is also some time since so many Members attended an Adjournment debate on such an issue. That signals the importance of the subject to Members of this Parliament, an unprecedented number of whom served in local government before coming here. That experience drives them to recognise that central Government have, for far too long, tried to shackle local government and not allow it to develop in response to the aims and ambitions of local people.

  157
  The Government are now pushing forward their agenda to enable local government to change its relationship with central Government, and with local people. For far too long, local government has had to look to central Government for its legitimacy, its opportunities to act, and approval for what it can spend money on.
  This Government came to power on a manifesto making it abundantly clear that we are committed to democratic renewal in local government. That is why we recently published a consultation paper on local democracy and community leadership, as part of modernising local government. It is why we have been keen to encourage councils to begin to plan for change in a structured way that emerges from the all-party discussions of the past five or six years. Those discussions were reflected in the Bill that recently passed through the other place.
  However, we do so not because we believe that it would be good for our party, but because we believe that it is healthy for democracy and better for local government, and therefore, in the long-term, better for government as a whole. The more we have a revived and a living democracy at local level, the more people become involved and interested in what government is up to at other levels, which is very healthy.
  The issue of experimental arrangements for democratic renewal in local government has always been a cross-party one; I urge that it should not now become a partisan issue. We have been pleased, therefore, that cross-party initiatives have guided the way in which the topic has been handled.
  In July 1993, a report of the working party on the internal management of local authorities in England, entitled "Community Leadership and Representation: Unlocking the Potential", said:
  "the Secretary of State for the Environment should take powers to allow, in consultation with local government, experimental changes to their internal management arrangements proposed by individual local authorities; legislation would allow approval of experiments subject to suitable safeguards."
  That working party existed during the previous Parliament and under the auspices of the previous Administration.
  Following the working party's report, a Select Committee on Relations Between Central and Local Government was established in the other place, and in July 1996 it published its report, "Rebuilding Trust". The all-party Select Committee in the other place took the view that
  "local authorities need to be allowed to experiment on the lines of the Scandinavian free commune system. This would include the freedom to experiment with ideas such as elected mayors and local referenda and new approaches to the provision of services and other responsibilities."
  In November 1996, the previous Administration responded to the report, and welcomed that part of it. They welcomed the Committee's examination of the subject, identifying the report as an important contribution to the debate about the nature of local government in Britain.
  The Government's response at that time was:
  "on freedom to experiment with internal structure and voting arrangements, the Government accepts the general principle of the Committee's recommendation that local authorities should be able to experiment with internal working arrangements."
  158
  In other words, the idea that we are discussing tonight was specifically welcomed by the previous Administration, and I know that they were committed to finding time in the House to introduce legislation.
  As you can see, Mr. Deputy Speaker, this topic, which led to the introduction of a Bill in the other place, has developed in a cross-party way over several years, so the Government were keen to support progress on the topic.
  It is not unusual for topics such as this to be introduced by the private Member's Bill route. For example, the Local Government (Access to Information) Act 1985 was introduced as a private Member's Bill by a Conservative Member, Mr. Robin Squire, who was then a Back Bencher. No Government time was provided for the Bill. The Government did, however, support it in the way that the present Government have supported the developments in the other place.
  To demonstrate the degree to which we wish to support this initiative, we should be prepared to see much more cross-party involvement, not only in the development of the Bill but in its implementation, should it proceed through Parliament.
  Therefore, I would first like to offer to have cross-party consultation on any guidance that legislation of this nature would produce, with all parties closely involved in its drafting in order to ensure maximum cross-party support. Throughout the preparation of any guidance that would attach to such legislation, we would wish to involve parties other than simply the Local Government Association, academics and so on.
  For example, we shall invite the Select Committee on the Environment, Transport and Regional Affairs to provide input into the content of any guidance. We believe that that is the best and most appropriate way of involving Members of Parliament from all parties in the preparation of such a document. I propose that because I want any guidance to reflect all-party support for the legislation, which is imperative if we are to renew the political culture in local government. The House must approach the matter in a manner that is more mature than folk outside are used to seeing. We must consider what is in the best interests not of central Government but of local government.
  Secondly, I propose to build in all-party participation when considering any submissions in which local authorities set out their plans for experimentation, which legislation of this sort would facilitate. It will be necessary to involve more than hon. Members in this place: it will be important to involve organisations such as the Local Government Association and the Audit Commission in consideration of such proposals. I shall invite the Select Committee to consider applications for inclusion under the provisions of any such legislation prior to a final decision being made by the Secretary of State for the Environment, Transport and the Regions.
  I have written already to the Chairman of the Select Committee inviting the Committee to consider this role. It is interested, and will discuss the matter in early April. That is another important step in developing the principle of all-party involvement in any arrangements of this nature. I believe that the proposals allow for cross-party involvement not simply in the passage of legislation but in its implementation if such legislation were to become law.
  I believe that this is an important issue, which the House must consider carefully. I understand that all parties are seeking to re-establish important relationships—as well as

  159
  establish new ones—with local government during this Parliament. They view those relationships much more as a partnership arrangement. The process began in 1992, with the review of local government initiated by the right hon. Member for Henley (Mr. Heseltine). That review was undertaken to replace the poll tax and to examine the internal, external and financial arrangements of local government.
  I believe that it would be an opportunity missed if the House were to act in its own interests and say, "We shall not consider these issues any further." It would also be a great disappointment to the Local Government Association and to many local councils—including Conservative councils—that are keen to experiment with their internal democratic arrangements. That is why I am
  160
  bringing forward a unique package of cross-party involvement in legislation. Government have gone the extra mile. 1 strongly urge all hon. Members to do the same.
  In the remaining few weeks, we can all become persuaders for experimentation in the way in which local authorities order their business to involve local people more effectively and to renew local democracy. I know that hon. Members from all parts of the House support the right of local councils to reform themselves and experiment with democratic innovation. I urge all those hon. Members to join us as persuaders to take the matter forward in the House, and to make sure that the House does not once again let local government down.
  Question put and agreed to.
  Adjourned accordingly at twenty-five minutes past Eleven o'clock.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Drinking Water
  Mr. Brake
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 12 March 1998,Official Report, column 261, if he will enable the Drinking Water Inspectorate to seek financial authorisation for water companies from Ofwat to enable water companies to carry out remedial works which will prevent a breach of standards before that breach occurs. [35299]

  Angela Eagle
  It is the duty of water companies to supply drinking water which complies with the Water Quality Regulations. The financial regime operated by Ofwat already allows companies money to maintain their systems at the levels required to meet current water quality standards. Allowing companies further money for such works would not be appropriate. If unforeseen circumstances arise, or new standards are introduced which result in water companies needing to carry out works or install new treatment plant, the mechanism already exists for this expenditure to be certified as necessary by the DWI and taken into account by Ofwat in the next price review.

  Secure Stations Initiative
  Mr. Brake
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the Suzy Lamplugh Trust's Secure Stations Initiative; and if he will make a statement. [35127]

  Ms Glenda Jackson
  The Suzy Lamplugh Trust has worked with the Department in the development of the Secure Stations initiative which we will be launching shortly. We are also aware of a research project put forward by the Trust into Safety at Stations for Disabled People with North West Trains but we understand that it is not yet underway. We greatly value the work of the Trust in these and other areas of personal security in public transport.

  Local Government Finance
  Mr. Edward Davey
  To ask the Secretary of State for the Environment, Transport and the Regions what are the outstanding arrears for each London borough with respect to(a) domestic rates, (b) community charge, (c) council tax and (d) rents. [35211]

  Mr. Raynsford
  Information on outstanding arrears with respect to domestic rates is not available.

  Information on community charge and cumulative council tax arrears for local authorities is not collected centrally. However, the Chartered Institute of Public Finance and Accountancy (CIPFA) regularly publishes
  2
  estimates for individual authorities. The information shown is provisional and relates to the position at 31 March 1997, and will be available in its Revenue Collection Statistics 1996–97 publication which is expected to be available from May 1998.

  The information collected on rent arrears for English authorities is based on the cumulative total of rent arrears at the end of the financial year, and is reported to the Department on Housing Subsidy Claim returns.

  Rent arrears

  Community charge Arrears1 outstanding at 31.3.97 £000

  Council tax Arrears 1 outstanding at 31.3.97 £000

  Cumulative Arrears 1 outstanding at 31.3.97 £000

  Arrears as a percentage pf rent roll for 1996–97 per cent

  London

  Corporation of London

  n/a

  n/a

  313

  4.7

  Inner London

  Camden

  6,087

  13,231

  7,921

  8.8

  Greenwich

  7,454

  7,186

  14,772

  17.5

  Hackney

  2,080

  27,395

  35,087

  30.1

  Hammersmith and Fulham

  4,800

  8,618

  5,786

  12.6

  Islington

  n/a

  n/a

  16,854

  15.6

  Kensington and Chelsea

  21,314

  3,289

  2,422

  8.7

  Lambeth

  54,314

  41,426

  30,186

  26.0

  Lewisham

  25,261

  16,469

  9,007

  10.8

  Southwark

  24,608

  13,508

  23,500

  16.7

  Tower Hamlets

  24,841

  25,128

  4,278

  4.9

  Wandsworth

  29

  7,857

  5,679

  8.4

  Westminster

  5

  3,797

  3,041

  5.8

  Outer London

  Barking and Dagenham

  845

  2,100

  1,949

  3.6

  Barnet

  8,952

  8,731

  1,167

  3.1

  Bexley

  1,989

  1,680

  795

  3.3

  Brent

  19,927

  13,198

  13,500

  24.4

  Bromley

  1,649

  2,933

  30

  0.0

  Croydon

  3,604

  9,793

  2,907

  5.4

  Ealing

  n/a

  n/a

  10,549

  20.3

  Enfield

  2,661

  10,828

  3,054

  7.1

  Haringey

  10,948

  23,393

  13,715

  22.3

  Harrow

  n/a

  n/a

  912

  4.2

  Havering

  2,221

  3,581

  893

  2.9

  Hillingdon

  n/a

  n/a

  981

  2.3

  Hounslow

  14,046

  7,789

  3,659

  8.4

  Kingston upon Thames

  708

  1,630

  667

  3.7

  Merton

  4,265

  3,981

  1,149

  4.2

  Newham

  23,427

  214,898

  6,126

  10.2

  Redbridge

  2472

  24,722

  859

  3.8

  Richmond upon Thames

  2,376

  2,422

  1,243

  5.8

  Sutton

  590

  1,224

  1,592

  6.1

  Waltham Forest

  8,478

  11,949

  4,442

  11.2

  1Comparisons of amounts of arrears can be misleading as authorities' figures reflect decisions about when to write off arrears, and the amounts of debts originally debited.

  2 Where 31 March 1997 information is not available, the previous year's figures (where available) have been substituted.

  3 Local authority has made a large scale transfer of dwellings to a Housing Association.

  Chrysotile
  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions which substitutes for Chrysotile the EU Scientific Committee on Toxicology, Ecotoxicology and the Environment identified on 11 February as being more hazardous than Chrysotile. [35300]
  3
  Angela Eagle
  The report the European commission presented to its Scientific Committee included a review of the main substitutes for white asbestos such as polyvinyalcohol, para-Aramid and cellulose fibres. The Scientific Committee's interim opinion was that insufficient evidence had been provided to justify a conclusion that substitute fibres had been proven to be safer. The Committee did not conclude they were more hazardous. Nor did it argue that the categorisation of Chrysotile Asbestos as a category 1 carcinogen was wrong.

  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with countries that have bans on Chrysotile concerning the lifting of such bans on the basis of the report by the EU Scientific Committee on Toxicology, Ecotoxicology and the Environment. [35301]

  Angela Eagle
  There have been no discussions whatsoever about lifting existing bans on white asbestos.

  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions how many members there are on the EU Scientific Committee on Toxicology, Ecotoxicology and the Environment; and how many of them are specialists in asbestos-related illness. [35302]

  Angela Eagle
  There are 15 members of the European Commission's Scientific Committee on Toxicology, Ecotoxicology and the Environment. Members are appointed by the European Commission as independent specialists. I understand that the European Commission considered the range of expertise necessary in making its appointments.

  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions what toxicological effects other than those of Chrysotile were considered at the 11 February meeting of the EU Scientific Committee on Toxicology, Ecotoxicology and the Environment; and if he will make a statement. [35303]

  Angela Eagle
  The European Commission's Scientific Committee on Toxicology, Ecotoxicology and the Environment has a wide remit. The meeting on 9 February considered several issues in addition to white asbestos and its substitutes.

  Social Housing
  Mr. Stephen Twigg
  To ask the Secretary of State for the Environment, Transport and the Regions if he will publish figures on Government investment in social housing, giving the numbers of beds for each year since 1994–95 in(a) London and (b) the United Kingdom. [35128]

  Mr. Raynsford
  Investment by Registered Social Landlords in new social housing in England is funded by the Housing Corporation through its Approved Development Programme (ADP) and by local authorities under the Local Authority Social Housing Grant (LASHG) scheme.

  The table shows the number of new social homes approved under these programmes in London and England
  4
  in each year since 1994/95 together with the number of people they can accommodate. Additional social lettings are also provided through grants to tenants to help them buy a new home and vacate their existing dwelling for reletting, and the Housing Corporation's Do-It-Yourself Shared Ownership scheme for tenants (DIYSO). The social lettings provided by these home ownership schemes are not included in the figures.

  1994/95

  1995/96

  1996/97

  ADP

  LASHG

  ADP

  LASHG

  ADP

  LASHG

  London

  Units

  11,064

  2,379

  8,025

  1,876

  10,279

  1,434

  Persons

  36,640

  8,713

  28,06

  27,034

  37,126

  5,448

  England

  Units

  46,196

  17,155

  29,789

  11,736

  41,176

  10,763

  Persons

  164,327

  63,061

  105,256

  41,763

  148,970

  39,947

  Note:

  ADP includes output from Rough Sleepers Initiative and City
  Challenge.

  Aircraft Noise
  Mr. Ottaway
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will make a statement on his policy on aircraft noise nuisance; [35400]

  (2) if it is his policy to continue to reduce aircraft noise after 2002. [35399]

  Ms Glenda Jackson
  The Government's policy is to minimise the impact of airports on the environment while ensuring that land use planning and conservation policies take account of the economic benefits of maintaining a strong and competitive British airline industry and providing sufficient airport capacity where it is economically and environmentally justified. This necessarily involves striking a balance between the needs of an efficient aviation industry, providing jobs and serving the local, regional and national economy and the need to minimise the impact on the environment and the communities around airports. There has been a substantial improvement in the noise climate around Heathrow over the past two decades, which has been accelerated since 1990 by the compulsory progressive phase-out of Chapter 2 jet aircraft, a process due to be completed by 31 March 2002. While this makes the securing of further improvement all the more challenging, the Government are committed to doing everything practicable to ensure that the noise climate around the airport continues to improve after 2002. We have given local people around Heathrow an additional commitment to take all practicable steps to prevent a deterioration in the noise climate after the Chapter 2 phase-out is complete.

  Mr. Ottaway
  To ask the Secretary of State for the Environment, Transport and the Regions how often he meets the BAA and airline representatives to discuss aircraft noise from planes using Heathrow Airport. [35398]

  Ms Glenda Jackson
  DETR Ministers meet with airline representatives and BAA plc from time to time to discuss a wide range of matters, including the nuisance caused by aircraft landing and taking off at Heathrow.
  5

  Water Pressure
  Mr. Touhig
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what plans he has to ensure that water companies meet their water leakage targets and maintain enough water pressure for fire fighting; [35388]

  (2) what statutory obligations are placed on water companies to maintain adequate water pressure for fire fighting; [35387]

  (3) which water companies in respect of which areas have reduced the mains water pressure since 1991. [35386]

  Angela Eagle
  Water companies continually monitor and alter the water pressures in their systems to meet prevailing circumstances in their areas. Under section 65 of the Water Industry Act 1991, water companies have a duty to ensure that water in mains which serve domestic properties or have fire hydrants fixed on them will normally be supplied at sufficient pressure to reach the top most storey of every building within their area. The Director General of Water Services has a duty to ensure that companies meet these provisions of the 1991 Act. Where water companies reduce pressure as one means of reducing leakage, they must still meet the requirements of the Act.

  Dr. Cable
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what is(a) the average pressure in water supplies made available to the London Fire Brigade by Thames Water and (b) the (i) optimal and (ii) minimum required level for operational efficiency; [35351]

  (2) what was the average pressure in water supplies made available by Thames Water to the London Fire Brigade in each of the last 10 years. [35352]

  Angela Eagle
  The average pressure of water in the mains in London is between 15 and 30 static head. There has been no appreciable variation in the pressure in the last 10 years.

  For operational purposes, the London Fire Brigade requires a minimum flow rate from a hydrant of approximately 760 litres per minute. At present, they do not have any difficulty with flow rates.

  Marine Pollution (Wales)
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received on the cleaning of vessel tanks off the coast of Wales and its impact on the marine environment. [35520]

  Ms Glenda Jackson
  None.

  Transport Policy
  Mr. Matthew Taylor
  To ask the Secretary of State for the Environment, Transport and the Regions what submissions concerning traffic management as a means of road traffic reduction he has received in respect of his consultation document, "Developing an Integrated Transport Policy"; and if he will place a copy of these in the Library. [35637]
  6
  Ms Glenda Jackson
  A large number of the 6,500 responses received mentioned ways of making better use of the existing network and urban traffic management although not always explicitly in the context of seeking road traffic reduction. A report of the views expressed in the consultation is being prepared for publication with the White Paper on Transport policy. I will ensure copies of that report are placed in the Library.

  M62 (Junction 8)
  Helen Jones
  To ask the Secretary of State for the Environment, Transport and the Regions when the public inquiry into plans to build Junction 8 on the M62 will take place. [35422]

  Ms Glenda Jackson
  The public inquiry for this scheme is planned for this Autumn. We have yet to fix a precise date for its opening, but I will ensure that my hon. Friend is notified as soon as we have.

  Rural Social Services
  Mr. Prior
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the impact of the 1998–99 rate support grant on the provision of social services in rural areas. [34065]

  Mr. Raynsford
  The impact of the 1998–99 revenue support grant settlement on the provision of social services in rural areas depends upon local authorities' decisions on the size and allocation of their budgets.

  Regional Airports
  Mr. Stringer
  To ask the Secretary of State for the Environment, Transport and the Regions when he expects to make a decision regarding air service access to regional airports. [35424]

  Ms Glenda Jackson
  Liberalisation of air services agreements to permit the operation of international services to regional airports is considered during many air services talks. Air services within the European Economic Area are already fully liberal. The airlines of a further 66 countries have access to any regional point in the UK, and the airlines of a further 21 countries have access to some regional points.

  We are reviewing the responses to the informal consultation on international access to regional airports and are also mindful of the current deliberations of the Environment and Transport Select Committee on access to regional airports. A decision will be made when all the relevant information and advice has been considered.

  Council Tax
  Mr. Yeo
  To ask the Secretary of State for the Environment, Transport and the Regions if he will publish figures for band D council taxes in England in 1998–99, showing(a) figures for each notifiable authority excluding parish precepts, (b) figures for each notifiable authority including parish precepts, (c) the percentage increase in council tax for each notifiable authority including parish precepts, (d) council tax for the area of each billing authority, (e) the percentage increase in council tax for the area of each billing authority and (f) equivalent figures for each class of authority. [35660]
  7
  Mr. Raynsford
  The information requested will be placed in the Library of the House.

  Rail Franchising
  Mr. Webb
  To ask the Secretary of State for the Environment, Transport and the Regions when plans by First Group plc to take over Great Western Holdings were submitted to the Director General of Passenger Rail Franchising; what powers the Director General has in such cases to prevent takeovers; what range of conditions he can impose on such takeovers; what are the duties of consultation of the Director General before determining such conditions; and if he will make a statement. [35419]

  Ms Glenda Jackson
  [holding answer 20 March 1998]: The first intimations that First Group were considering the takeover of Great Western Holdings Ltd. (GWHL) were given to the Franchising Director orally in the latter part of January 1998. The Franchising Director confirmed to the First Group that any change of control would require his approval; that in considering his approval he would take into account the Objectives, Instructions and Guidance (OIG) issued to him on behalf of the Secretary of State on 6 November 1997 (a copy is in the Library of the House) which, in his view, obliged him to ensure that benefits were secured for passengers if the change of control were to be allowed; and that the Office of the Rail Regulator and the Office of Fair Trading would deal with competition aspects of the proposed takeover. He was not party to the properly private discussions between First Group and GWHL. He heard from First Group on the evening of 3 March that, in view of Press speculation, they wished to announce on 4 March that they were in advanced discussions with GWHL. On 4 March the Franchising Director met First Group to discuss the passenger benefits to be provided under the 3 franchises involved, Great Western Trains and North Western Trains (which First Group seek to acquire) and Great Eastern (which First Group already own).

  The Franchising Director's powers are contractual. Under the franchise agreements for Great Western Trains and North Western Trains his prior consent to change of control must be obtained. He has unfettered contractual discretion to refuse or attach conditions to his consent.

  Having taken the view that, as a result of the proposed takeover none of the terms and condition of the franchise agreements would be changed the OIG obliged him to ensure that additional benefits were secured for passengers if the takeover were to be allowed. The Franchising Director announced on 6 March 1998 various benefits on the basis of which, subject to contract, he proposes to approve the takeover. These will include additional rolling stock; station improvements, including the provision of wheelchair access and bicycle facilities; security cameras and greater bus/rail through-ticketing. He is discussing details of the package with PTEs who, as parties to the North Western Trains franchise agreement, he is required to consult on issues affecting them. The Franchising Director has general obligations under his OIG to consult and liaise with other bodies. He has no specific duties of consultation about conditions to his consent to a change of control.
  8

  Environmental Task Force
  Mr. Llew Smith
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the number of non-governmental groups that have to date shown an interest in participating in the Environmental Task Force within the New Deal welfare to work programme; and what responses he has received from these organisations. [33113]

  Mr. Andrew Smith
  I have been asked to reply.

  Many non-governmental groups have shown great interest in the Environment Task Force option of the New Deal. However, the contracting process for this option is currently underway and the numbers participating are now yet available. Responses from non-governmental groups have been varied, ranging from comments on the design and implementation of the option to expressions of interest in tendering for delivery.

TREASURY

  Individual Savings Accounts
  Mr. Jim Cunningham
  To ask the Chancellor of the Exchequer (1) if current holders of TESSAs and PEPs will be required to transfer their investments to ISAs from April 19990; [33270]

  (2) what assessment he has made of the impact on existing holders of TESSAs and PEPs of the replacement of TESSAs and PEPs by ISAs in April 1999. [33271]

  Mr. Geoffrey Robinson
  [holding answer 10 March 1998]: As my right hon. Friend the Chancellor announced in his Budget, 17 March 1998, Official Report, column 1102, all PEPs held at 5 April 1999 can continue to be held as PEPs, outside the new savings account, but with the same tax advantages as the new account. TESSAs held at 5 April 1999 can run to maturity outside the new account, and the capital from maturing TESSAs can be rolled over into the new account without counting against the annual subscription limit.

  Mr. Lilley
  To ask the Chancellor of the Exchequer if the Government will require providers of ISAs to submit sufficient information to provide a breakdown of how many people invested(a) up to £1,000, (b) £1,001 to £2,000, (c) £2,001 to £3,000, (d) £3,001 to £4,000, (e) £4,001 to £5,000 and (f) £5,001 to £6,000 in the most recent year for which figures are available. [34961]

  Mr. Geoffrey Robinson
  [holding answer 17 March 1998]: Precise details of the information to be submitted will be for discussion with industry representatives when drafting detailed regulations for the ISA.

  Mr. Lilley
  To ask the Chancellor of the Exchequer how much of the estimated cost of tax relief on PEPs in(a) 1996–97, (b) 1997–98 and (c) 2000–1, as calculated in the consultative document on ISAs, is attributable (i) to CGT exemption and (ii) income tax relief. [33510]

  Mr. Geoffrey Robinson
  [holding answer 9 March 1998]: I refer the right hon. Member to the answer my right hon. Friend the Chief Secretary gave on 11 March 1998, Official Report, column 210, and to the answer I

  9
  gave to my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) on 3 February 1998, Official Report, column 574.

  Pensions (Tax Relief)
  Mr. Webb
  To ask the Chancellor of the Exchequer what are the most recent statistics collated by his Department on the distribution, by income, of the benefits from tax relief on contributions to occupational and personal pensions. [34339]

  Dawn Primarolo
  The distribution of tax relief by income of participants in occupational and personal pension schemes is not available, but the total cost of tax relief, based on aggregate information from a variety of sources, is published annually in table 1.6 of "Inland Revenue Statistics".

  Airports (Seizures of Medicines)
  Mr. Corbyn
  To ask the Chancellor of the Exchequer (1) if he will list for each year since 1991 those medicines and medical equipment seized from passengers at airports, who were travelling to Baghdad via Amman; and if he will make a statement; [31678]

  (2) if medicines seized at Heathrow on 6 February from Amman-bound passengers will be returned to them; [31677]

  (3) what medical materials were seized at Heathrow airport on 10 February from passengers bound for Baghdad via Amman. [31674]

  Dawn Primarolo
  [holding answer 27 February 1998]: No medical materials were seized at Heathrow airport on 10 February from passengers bound for Baghdad via Amman. Certain items understood to be destined for Iraq were detained pending further inquiries.

  Following the adoption of the UN Security Council Resolution 661 (1990) the export to Iraq of any goods, unless under the authority of an export licence, has been prohibited under the Export of Goods (Control) (Iraq and Kuwait Sanctions) Order 1990 [SI 1990/1640], which came into force on 9 August 1990. No seizures of medicines and medical equipment from passengers at airports travelling to Baghdad via Amman have been made as a consequence of these restrictions.

  Beer Duty
  Mr. Nicholas Winterton
  To ask the Chancellor of the Exchequer what representations he has received urging him to introduce a progressive beer duty. [35516]

  Dawn Primarolo
  The Society of Independent Brewers (SIBA) is a trade association which represents the smaller breweries. SIBA sent a detailed representation about the introduction of a progressive rate of duty to me on 9 March 1998. I have also received a number of letters from SIBA members urging me to consider SIBA's proposals and I have agreed to do so.

  Mr. Nicholas Winterton
  To ask the Chancellor of the Exchequer what assessment he has made of proposals for the introduction of a progressive beer duty; and if he will make a statement. [35515]
  10
  Dawn Primarolo
  I received proposals for a sliding scale of beer duty from The Society of Independent Brewers on 9 March 1998. I have asked Customs and Excise to examine them and to provide me with advice in good time for the next Budget.

  Industrial and Provident Societies
  Mr. Timms
  To ask the Chancellor of the Exchequer if he will make a statement about the current regime for co-operatives and other industrial and provident societies. [36181]

  Mrs. Liddell
  The Treasury and the Registry of Friendly Societies have issued a consultation document today inviting views on what changes to the existing legislation would be desirable if a suitable opportunity were to arise. Copies have been placed in the Libraries of both Houses.

  Valuation Office
  Ms Lawrence
  To ask the Chancellor of the Exchequer what targets will be set for the Valuation Office Executive Agency for the year 1998–99. [36182]

  Dawn Primarolo
  I have set the following key targets for the Valuation Office in 1998–99:

  Operational

  to clear 275,000 appeals in aggregate against the 1995 and earlier rating lists

  to clear 83,500 appeals against the council tax valuation lists; with the aim, in co-operation with the valuation tribunals, of clearing all cases within 6 months of receipt

  to clear Inland Revenue cases equal to the number received up to a maximum of 57,000—with the aim of clearing 90 per cent. of cases within:

  42 days where a valuation only is requested

  6 months where negotiation with the parties is required

  Quality of service

  to provide a substantive reply to:

  90 per cent. of correspondence within 15 working days of receipt

  the remaining 10 per cent. within 20 working days of receipt

  to see all callers to our offices within 5 minutes

  to achieve a further improvement against our indicator for valuation accuracy—by 1 per cent. to 87 per cent.

  to maintain performance against our indicator for timeliness at 98 per cent.

  Finance and cost efficiency

  to break even overall after charging for the full cost of chargeable services including notional interest of 6 per cent on the average working capital

  measurement will be within a tolerance of the greater of 2 per cent. of relevant turnover or £1 million

  to achieve financial efficiency gains of 4.6 per cent.

  Further details are contained in the Valuation Office's Forward Plan, copies of which will be placed in the Library of the House on publication.
  11

MINISTER WITHOUT PORTFOLIO

  Millennium Experience
  Mr. Mitchell
  To ask the Minister without Portfolio if it will be the responsibility of companies contributing to the Millennium Experience to finance and create exhibits in their section. [31524]

  Mr. Mandelson
  I refer my hon. Friend to the answer I gave him on 9 March 1998,Official Report, column 59.

  Mr. Mitchell
  To ask the Minister without Portfolio what estimate he has made of the additional tourist revenue which will be generated by the Millennium Experience. [31878]

  Mr. Mandelson
  I refer my hon. Friend to the reply 1 gave to the hon. Member for Lewes (Mr. Baker) on 17 November 1997,Official Report, column 77.

  Mr. Mitchell
  To ask the Minister without Portfolio if he will publish a full list of proposals for the content of the Millennium Experience(a) he and (b) the New Millennium Experience Company has rejected. [34789]

  Mr. Mandelson
  All proposals which come direct to me are passed to the New Millennium Experience Company for consideration. To date, the Company have received over 1,220 ideas from the public, interests groups, voluntary organisations and businesses, and they continue to receive a steady flow.

  All unsolicited proposals received by the Company are subject to review and assessment. To date about 340 have been rejected following this review process.

  Millennium Dome
  Mr. Hoyle
  To ask the Minister without Portfolio what assessment he has made of public reaction to the Millennium Dome to date. [31965]

  Mr. Mandelson
  The presentation of content, launched by my right hon. Friend the Prime Minister, on 24 February has prompted a very positive response from the public.

  Mr. Hoyle
  To ask the Minister without Portfolio whom he has appointed as creative director of the Millennium Dome; and who has overall creative responsibility for the Dome. [31968]

  Mr. Mandelson
  This is a matter for the New Millennium Experience Company. They are currently considering whether a single creative director is required or whether the current arrangements whereby the creative team report to the Directors of the Company remains the best way forward.

DEFENCE

  Brazilian Mahogany
  Mr. Alan Simpson
  To ask the Secretary of State for Defence on what dates his Department received certificates of conformity for the Brazilian mahogany purchased from Parker Kislingbury Ltd; and if he will place copies of the certificates in the Library. [34449]
  12
  Mr. Spellar
  [holding answer 13 March 1998]: This is a matter for the Chief Executive of the Ships Support Agency. I have asked the Chief Executive to write to my hon. Friend.

  Letter from J. D. Coles to Mr. Alan Simpson, dated 23 March 1998:
  I am replying to your Question to the Secretary of State for Defence about the Certificates of Conformity we received for the Brazilian mahogany purchased from Parker Kislingbury as this matter falls within my area of responsibility as the Chief Executive of the Ships Support Agency.
  Parker Kislingbury provided the initial Certificate of Conformity related to supplies of Brazilian mahogany from Madeireira Juary on 16 July 1997. Subsequent Certificates of Conformity which relate to later deliveries are also held. The Certificates are required in accordance with our long-standing policy that all material offered by contractors, and subsequently accepted under Contract, must be obtained from sustainably grown sources. The contract was placed with Parker Kislingbury on this basis on 30 July 1997.
  I will be pleased to arrange for copies of the Certificates of Conformity relating to the MOD Contract with Parker Kislingbury to be placed in the Library in the House of Commons.

  US Military Personnel
  Mr. Baker
  To ask the Secretary of State for Defence how many United States personnel have been based at(a) RAF Menwith Hill and (b) RAF Croughton in each year since 1987; and what was the maximum number present at one time in each year. [35602]

  Dr. Reid
  I will write to the hon. Member and a copy of my letter will be placed in the Library of the House.

DUCHY OF LANCASTER

  Freedom of Information
  Ann Clwyd
  To ask the Chancellor of the Duchy of Lancaster when he expects to introduce legislation on freedom of information. [35088]

  Dr. David Clark
  I expect to publish a draft Bill later in the year, which will continue the consultation process started with the White Paper "Your Right to Know". In the light of comments on this, a Bill will be introduced into Parliament as soon as the legislative timetable permits.

INTERNATIONAL DEVELOPMENT

  Pakistan
  Mr. Blunt
  To ask the Secretary of State for International Development, pursuant to her answer of 9 March 1998,Official Report, column 25, if Pakistan falls within her category of countries diverting limited resources into excessive military expenditure. [35241]

  Clare Short
  Pakistan has traditionally spent a high proportion of its national budget on defence. We understand and welcome the fact that defence spending measured as a percentage of GDP has been declining steadily in recent years. The UK's bilateral development co-operation programme with Pakistan focuses particularly on working to improve basic social services which benefit the poor.
  13

  Children and Armed Conflict
  Mr. Timms
  To ask the Secretary of State for International Development what support her Department is giving to the work of the UN Special Representative for Children and Armed Conflict. [35203]

  Clare Short
  We contributed £200,000 in November 1997 to support the work of the new UN Special Representative for Children and Armed Conflict and intend to continue to work closely with him to ensure the protection, healing and rehabilitation of war affected children world-wide. We recognise that children who find themselves in the unique situation of caring for younger children, possibly because parents have died in conflict or from conditions such as AIDS, are particularly vulnerable. We are trying to address these issues in our development programmes and will highlight our concerns to Mr. Otunnu when his proposals for international action on children and armed conflict are discussed with our European partners at a ministerial meeting in London on 23 June 1998 which my Department will host.

  Afghanistan
  Ms Roseanna Cunningham
  To ask the Secretary of State for International Development how many British-based aid agencies are currently undertaking work in Afghanistan; and if she will name them. [35712]

  Clare Short
  The Department for International Development (DFID) works with a number of British and international aid agencies in Afghanistan and funds projects in a variety of sectors including demining, health, community development and education. The British based Agencies which are funded by DFID are as listed. There may be other British NGOs working independently within Afghanistan supported by other donors.

  Afghanaid

  Agency Co-ordinating Body for Afghan Refugees (ACBAR)

  British Agencies Afghan Group

  British Red Cross Society

  CAFOD

  CARE

  Children in Crisis

  Non-Departmental Public Body

  (a)

  (b)

  (c)

  (d)

  (e)

  f

  g

  Commonwealth Scholarships Commission

  10–15

  0

  0

  1

  0

  11

  4

  Crown Agents Holding & Realisation Board

  7

  0

  0

  0

  0

  7

  0

  Economic and Social Committee for Overseas Research

  10

  2

  1

  0

  0

  8

  3

  Indian Family Pensions Fund Body of Commissioners

  10

  1

  0

  0

  0

  9

  0

  Know How Fund Advisory Board

  20

  5

  1

  0

  0

  14

  0

  Overseas Pensions Scheme Advisory Board

  4

  2

  1

  0

  0

  2

  0

HOME DEPARTMENT

  Firearms Certificates
  Mr. Blunt
  To ask the Secretary of State for the Home Department what is the current average time taken for the Metropolitan Police to amend and return firearms certificates. [35239]14

  Christian Aid

  Halo Trust

  Medair

  Merlin

  Ockenden Venture

  OXFAM

  Support for Afghan Further Education

  Sandy Gall's Afghanistan Appeal

  Save the Children

  TEAR Fund.

  Terrorism
  Mr. Blunt
  To ask the Secretary of State for International Development, pursuant to her answer of 9 March 1998,Official Report, column 25, if it is her policy that sponsoring terrorism in other countries is not a bar to countries receiving development assistance from the United Kingdom. [35240]

  Clare Short
  This Government like all responsible governments condemn state sponsorship of terrorism. Where the policies of other governments make a development partnership with them impossible, but where effective help can be given directly to poor people, it is my Department's policy to deliver development assistance through alternative channels, including community based and non-governmental organisations.

  Public Bodies
  Mr. Burns
  To ask the Secretary of State for International Development if she will publish(a) the number of places on each of her Department's non-departmental public bodies, (b) the number of places that are currently unfilled on each non-departmental public body, (c) the total number of members that have resigned since 1 May 1997, (d) the total number that have retired since 1 May 1997, (e) the total number that have not had their contracts renewed since 1 May 1997, (f) the total number that have remained in place since 1 May 1997 and (g) the total number that have been appointed since 1 May 1997. [35284]

  Clare Short
  [holding answer 19 March 1998]: The information is as follows:

  Mr. Michael
  The arrangement for processing firearm certificates in the Metropolitan Police area is an operational matter for the Commissioner. We understand that the average time for processing routine amendments to firearm and shotgun certificates is between two and three weeks.

  Following the surrender of handguns under the Firearms (Amendment) Acts 1997, some former handgun owners have sought variations to their certificates in order

  15
  to permit them to take up new shooting sports. No fee is payable by handgun owners in respect of amendments involving replacement, rather than additional, firearms. However, the proposed acquisition of new firearms may involve the police in inspecting the applicant's security arrangements and confirming the details of his proposed shooting activities. For these reasons, the time taken to deal with amendments and return certificates to their owners may take several months. While the Metropolitan Police have confirmed that they are seeking to deal with any backlogs as a matter of urgency, this will have to depend to some extent on the urgency of competing demands.

  As well as dealing with variations to firearm certificates recently, police firearms licensing departments have dealt with the considerable volume of work relating to the surrender of handguns and the processing of compensation claims, as well as routine licensing and firearms matters.

  British Citizenship
  Fiona Mactaggart
  To ask the Secretary of State for the Home Department how many applications for British citizenship by(a) naturalisation on the grounds of residence, (b) naturalisation on the grounds of marriage, (c) registration as an adult and (d) registration as a child were made in (i) 1994, (ii) 1995, (iii) 1996, (iv) 1997 and (v) 1998 to the latest convenient date; and what was the average length of time taken to deal with each application in each of the years listed. [35130]

  Mr. Mike O'Brien
  The number of applications received in each category in the years 1994 to 24 February 1998 are as follows. We do not record the average time taken to deal with each application within a calendar year. The figures in brackets show the average number of months taken to consider applications as at 31 December each year with the exception of 1998 when the position at the end of February is shown.

  Registrations

  Naturalisation

  Year

  Adult

  Minor

  Residence

  Marriage

  1994

  3,630

  6,355

  21,835

  16,586

  (6)

  (8)

  (14)

  (13)

  1995

  3,646

  11,339

  21,470

  17,822

  (5)

  (6.3)

  (14.2)

  (13.5)

  1996

  3,694

  12,673

  23,758

  19,580

  (7)

  (7.4)

  (16.1)

  (15.3)

  1997

  4,003

  11,407

  20,140

  16,266

  (6.6)

  (7.1)

  (20.8)

  (20.1)

  1998

  85

  208

  104

  124

  (7.5)

  (6.7)

  (20.5)

  (20.6)

  Airline Offences
  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department how many United Kingdom citizens have been prosecuted and convicted of committing an offence on board a commercial airliner in each year since 1990; and if he will make a statement. [35195]

  Mr. Michael
  Under Part IV of the Civil Aviation Act 1982, as amended by the Civil Aviation (Amendment) Act 1996, and Part I of the Aviation Security Act 1986, criminal proceedings can be brought if an offence takes place on board a commercial British-controlled aircraft, or a foreign commercial aircraft while in flight to the United 16
  Kingdom. However, although the Home Office Court Proceedings database records all prosecutions in England and Wales, the data held centrally do not identify whether the offence took place on board an airliner, nor the defendant's nationality.

  Court proceedings data for offences including the hijacking of an aircraft are given in the table.

  Number of defendants prosecuted at magistrates' courts and convicted1 at all courts for offences under Sections 1–3 and 6(2) of the Aviation Security Act 1982, 1990–1996

  England and Wales

  Offence

  1990

  1991

  1992

  1993

  1994

  21995

  21996

  Hijacking; destroying, damaging or endangering safety of aircraft; other acts endangering or likely to endanger safety of aircraft; and ancillary offences

  Sections 1–3 and 6(2)

  Prosecutions

  —

  4

  6

  3

  2

  5

  15

  Committed for trial

  —

  2

  3

  3

  —

  5

  13

  Convictions

  3

  2

  2

  —

  3

  2

  1

  1 Includes persons proceeded against in earlier years

  2 From 1995 onwards data also include offences under the Channel Tunnel (Security) Order 1994 Articles 4,5,7 and 8 (Sec 1(7) Channel Tunnel Act 1987)

  Hospitality
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will list planned expenditure on hospitality for April and May, indicating the date, location and purpose of each event. [35117]

  Mr. Straw
  Events planned so far for April and May for which expenditure on hospitality will be incurred are as follows:

  date

  Location

  Purpose

  Estimated expenditure (£)

  7 April

  Yet to be decided

  Dinner for Canadian Prisons Minister

  150

  16 April

  Police Training Centre, Ashford

  Dining-in guests

  85

  16 April

  Police Training Centre, Ryton

  Passout parade

  127

  21April

  Vienna

  Dinner for United Nation Crime Commission

  2,500

  23 April

  Queen Elizabeth II Conference Centre

  Seminar on prison health care

  4,960

  23 April

  Goring Hotel, London

  Dinner for Community Fire Safety Task Force

  400

  30 April

  Police Staff College

  International Commanders Programme course dinner

  60

  21 May

  Police Training Centre, Ryton

  Passout parade

  145

  21 May

  Police Training Centre, Ashford

  Dining-in guests

  85

  23 May

  Police Training Support, Harrogate

  Dining-in guests

  60

  17
  It is not possible to provide a comprehensive estimate for total expenditure on hospitality as the majority of events and meetings will not be finalised until nearer the time.

  Correspondence|
  Mr. Gray
  To ask the Secretary of State for the Home Department when he plans to reply to the letter dated 17 November 1997 concerning Mr. and Mrs. Utting from the hon. Member for North Wiltshire. [35771]

  Mr. Michael
  I replied to the hon. Member on
  18 March 1998. The Home Office has received a lot of correspondence on the subject of law and order in recent months; this has meant that not all letters have been answered as quickly as we would have liked. We have also put measures in hand to improve the Home Office correspondence system in order to provide speedier, high quality responses in future.

  Gambling
  Mr. Letwin
  To ask the Secretary of State for the Home Department what definition his Department applies to hard and soft gambling; and if his Department defines slot machines as a form of hard gambling. [35765]

  Mr. George Howarth
  We regard as hard gambling those forms likely to cause problem gambling among customers—for example, because of high frequency combined with high staking.

  We regard as soft gambling low stake, long odds forms where it is very difficult to chase losses.

  There are various types of gaming machines. How hard and how soft they are depends on their stake limits, prize levels and, to some extent, their locations and numbers.

  Crime Figures
  Mr. Allan
  To ask the Secretary of State for the Home Department when he intends next to publish recorded crime figures; and if he will make a statement on the methodology used to compile them. [34686]

  Mr. Michael
  The next recorded crime figures for England and Wales, covering the calendar year 1997, will be published in a Home Office Statistical Bulletin on 7 April 1998.

  The recorded crime figures are based on statistical returns provided by the 43 police force areas in England and Wales. The data are compiled using rules for classification and counting issued by the Home Office to maintain the consistency of recording some of the more complex and potentially difficult offences, such as multiple, continuous and repeated offences.

  Periodically, the Home Office rules and police recording practices are reviewed to ensure consistency and to determine whether updates are necessary. Recently, both Her Majesty's Inspectorate of Constabulary and a joint Home Office/Association of Chief Police Officers working party have undertaken such reviews. Their recommendations are being adopted in a package of measures for implementation on 1 April 1998, which were announced initially by my right hon. Friend on 1 October 1997. More detail was given by the Home Office's Director of Research and Statistics on 14 October 1997.
  18
  The main measures comprise the logical extension of the coverage of recorded crimes (or notifiable offences) to include all indictable and triable either way offences; the revision of the counting rules for certain offences to move closer to the concept of one crime per victim; a move to financial year publication; and less emphasis in publications on the overall total of recorded crime in favour of individual offence groups.

  Public Bodies
  Mr. Burns
  To ask the Secretary of State for the Home Department if he will publish(a) the number of places on each of his Department's non-departmental public bodies, (b) the number of places that are currently unfilled on each non-departmental public body, (c) the total number of members that have resigned since 1 May 1997, (d) the total number that have retired since 1 May 1997, (e) the total number that have not had their contracts renewed since 1 May 1997, (f) the total number that have remained in place since 1 May 1997 and (g) the total number that have been appointed since 1 May 1997. [35275]

  Mr. Straw
  [holding answer 19 March 1998]: The information requested is not held centrally within the Department. When it has been assembled and collated I will write to the hon. Member.

  Young Offenders
  Dr. Cable
  To ask the Secretary of State for the Home Department how many psychologists and assistants are currently in post at each Young Offenders Institution in(a) London and (b) the Home Counties; what is the full complement for each unit; and what were the number in post for each of the last five years. [34794]

  Ms Quin
  The number of psychologists and psychological assistants in post in Young Offender Institutions and the current complement of these units are:

  Current

  Complement

  London

  Feltham

  5

  6

  Home Counties

  Aylesbury

  4

  5

  A visiting psychology service is provided to young offenders at Bullwood Hall, Dover and Reading, East Sutton Park can call upon the services of a psychologist when necessary.

  Additionally, there are psychology units at Highpoint, Rochester and Woodhill. They provide a service to adult offenders but not to the young offender unit. The number of psychologists and pschological assistants in post and the complement of the psychology units in these three establishments are:

  Current

  Complement

  Home Counties

  Highpoint

  3

  3

  Rochester

  1

  1

  Woodhill

  5

  5

  19
  The number of psychologists and psychological assistants in post in the psychology units listed above for each of the last five years are:

  Establishment

  31.03.97

  31.03.96

  31.03.95

  31.03.94

  31.03.93

  Aylesbury

  3

  3

  5

  5

  4

  Feltham

  5

  6

  7

  7

  8

  Highpoint

  3

  3

  4

  3

  4

  Rochester

  —

  —

  —

  —

  —

  Woodhill

  3

  3

  3

  3

  2

  Dr. Cable
  To ask the Secretary of State for the Home Department how many young offenders in young offenders units are assessed to be suffering from mental health problems; and how many are awaiting placement in a secure psychiatric hospital.[34804]

  Ms Quin
  A study conducted by the Institute of Psychiatry for the Prison Service in 1988–89 indicated that a psychiatric diagnosis, including substance dependency or abuse, could be given to 33 per cent, of sentenced male youths, wherever detained. Data on female young offenders were not collated separately from data on adult women.

  On 18 March 1998 the Mental Health Unit of the Home Office, which authorises transfers to hospital exercising the warrant of the Secretary of State, had no cases outstanding on which medical reports had been submitted by Young Offender Institutions recommending transfer to hospital under section 47 of the Mental Health Act 1983.

  Dr. Cable
  To ask the Secretary of State for the Home Department what are the training and qualification requirements for staff of young offenders units(a) prior to employment and (b) during their term of employment [34803]

  Ms Quin
  Individuals who want to join the Prison Service as prison officers require five GCSEs or the equivalent. All newly recruited prison officers attend an eleven week course to equip them to work in a variety of prison establishments. Prison officers who will be working in Young Offender Institutions are also required to attend a specific module on the course which deals with issues related to working with young offenders.

  The Prison Service, working with the Trust for the Study of Adolescence, has produced a specialist training pack "Working with Young People in Custody". This specialist training pack is delivered in the workplace and external accreditation is now being sought. The Senior Command Course, aimed at Governors who will be taking up their first 'in charge' post, deals with issues of governing a Young Offender Institution.

  Dr. Cable
  To ask the Secretary of State for the Home Department what percentage of young offenders on remand in Young Offenders Units were in the care of the local authority prior to remand in each of the last five years. [34793]
  20
  Ms Quin
  It is not known what percentage of young offenders on remand in Young Offender Institutions were in the care of the local authority prior to remand in each of the last five years as this information is not held centrally. However, according to the 1991 National Prison Survey, 43 per cent. of young offenders on remand said that they had been in the care of the local authority at some time in their childhood.

  Shotguns
  Mr. Alan Campbell
  To ask the Secretary of State for the Home Department what proposals he has to alter legislation regarding the certification of shotguns. [35377]

  Mr. Michael
  There are no current proposals to alter legislation regarding the certification of shotguns.

  Countryside March
  Mr. Colvin
  To ask the Secretary of State for the Home Department what is the current estimate by the Metropolitan Police of the number of participants in the Countryside March in London on 1 March. [35360]

  Mr. Michael
  The Commissioner of Police of the Metropolis estimates that 250,000 people participated in the Countryside March in London on 1 March.

  Campsfield House Detention Centre
  Mr. Gerrard
  To ask the Secretary of State for the Home Department when he expects to publish HM Chief Inspector of Prisons' report on the Campsfield Detention Centre. [35551]

  Mr. Mike O'Brien
  The date for the publication of the report on Campsfield House Immigration Detention Centre has not yet been announced, but it is expected to be published shortly.

  Immigration Officers
  Mrs. May
  To ask the Secretary of State for the Home Department at what date seasonal staff employed as immigration officers were informed of his Department's new retirement policy for seasonal staff. [35391]

  Mr. Mike O'Brien
  In October 1996, seasonal immigration officers at ports were advised that, with effect from 1 November 1997, the normal retirement age would be sixty to bring them into line with the rest of the Department.

  Mrs. May
  To ask the Secretary of State for the Home Department how many seasonal staff in the Immigration Department will reach the age of 60 years during the next year and have their contracts terminated under the age retirement policy for seasonal staff. [35390]

  Mr. Mike O'Brien
  In the year up until 31 March 1999, three seasonal immigration officers who are currently on the Home Office payroll will reach the age of sixty and are liable to have their contracts terminated under the age retirement policy for seasonal staff.
  21

  Asteroids
  Mr. Öpik
  To ask the Secretary of State for the Home Department (1) if he will evaluate the reports concerning an asteroid on a near-collision course with the Earth; and if he will make a statement; [34873]

  (2) what contingency plans have been made in the event of a threat arising from asteroids colliding with the Earth; and if he will make a statement; [34874]

  (3) what provision exists for international consultation and co-operation over potential dangers arising from asteroids striking the Earth; and if he will make a statement. [34875]

  Mr. Battle
  I have been asked to reply.

  The asteroid 1997 XF11, which was discovered last year, has an orbit around the Sun which crosses the Earth's orbit. It will pass by the Earth in 2028. Computations made by American scientists earlier this month indicated that the asteroid could come within 30,000 miles of the Earth. However, I understand that scientists from the American space agency NASA have now been able to locate pre-1997 images of the asteroid. This has enabled them to calculate a more precise orbit for 1997 XF11 which indicates that it will Miss the Earth by a much larger margin of 600,00 miles (or about 2.5 times the distance to the Moon).

  The probability of a major impact from an asteroid is extremely low, but the emergency services and the emergency planning community in the UK prepare for a wide range of disasters and scenarios and they would respond if the need arose.

  International co-operation and consultation on this issue are taken forward in Europe through the European Space Agency and globally through the United Nations Committee on the Peaceful Uses of Outer Space (UNCOPUOS). The UK is involved in both.

NORTHERN IRELAND

  Multi-party Talks
  Rev. Ian Paisley
  To ask the Secretary of State for Northern Ireland what public money has been paid in

  Sports council for Northern Ireland Grant aid to governing bodies 1992/93–2000/2001

  £

  Governing body

  1992/93

  1993/94

  1994/95

  1995/96

  1996/97

  11997/98

  Aeromodelling

  1,009.75

  1,900.00

  1,000.00

  725.00

  —

  2,489.98

  Aikido

  —

  —

  1,044.48

  121.71

  —

  1,000.00

  Angling (inc Sea)

  8,563.19

  5,101.83

  8,518.25

  6,329.50

  1,043.90

  5,000.00

  Archery

  2,453.06

  5,637.41

  3,184.23

  3,547.77

  3,625.60

  2,500.00

  Athletics

  50,836.01

  39,403.71

  57,907.90

  57,396.44

  75,885.51

  70,204.20

  Badminton

  21,867.32

  31,598.33

  18,855.83

  24,277.18

  33,832.74

  —

  Basketball

  284.49

  2,435.61

  1,196.60

  1,904.49

  9,223.80

  16,401.00

  Billiards/Snooker

  5,928.58

  1,800.51

  5,679.72

  2,624.97

  3,517.32

  3,500.00

  Bowling (men)

  5,424.92

  9,453.48

  6,441.37

  10,377.44

  8,959.52

  5,500.00

  Bowling (women)

  429.79

  6,046.05

  5,560.07

  6,093.07

  4,097.89

  2,500.00

  Bowling (indoor)

  5,649.24

  2,852.51

  4,503.61

  4,375.21

  1,203.62

  2,000.00

  Boxing

  4,204.29

  11,305.00

  19,625.90

  9,698.23

  10,326.37

  6,380.00

  Camogie

  —

  365.00

  1,000.00

  8,784.00

  3,500.00

  10,000.00

  Canoeing

  1,355.05

  10,108.59

  5,327.19

  4,148.05

  6,344.42

  —

  Caving

  —

  —

  —

  —

  —

  2,000.00

  Coarse Fishing

  3,220.00

  1,626.00

  1,574.00

  1,632.80

  1,500.00

  22
  respect of (a) political parties and (b) individuals from political parties involved in the multi-party talks for transport to London for meetings with the Government. [25331]

  Mr. Paul Murphy
  To date a total of £5,811.50 has been spent on transportation costs conveying representatives from parties participating in talks to London for meetings with the Government.

  Paramilitary Organisations
  Mr. Trimble
  To ask the Secretary of State for Northern Ireland, pursuant to her answer of 11 March 1998,Official Report, column 251, what account she took of the involvement of the IRA in the murder of Kevin Conway in confirming the invitation to Sinn Fein to rejoin the peace talks on 6 March. [34863]

  Marjorie Mowlam
  The invitation to rejoin the talks issued to Sinn Fein on 6 March took into account all aspects of the state of the IRA ceasefire.

  By confirming the invitation to Sinn Fein, the two Governments demonstrated that they were satisfied the IRA ceasefire was being observed.

  Voting Methods
  Mr. Hunter
  To ask the Secretary of State for Northern Ireland if she will make a statement on the Government's policy in respect of the way in which the future structures for government within Northern Ireland will be determined with particular reference to methods of voting. [32960]

  Marjorie Mowlam
  It is for the multi-party talks to reach agreement on new structures of government within Northern Ireland, and the method of voting by which they are elected. We shall do all in our power to facilitate such agreement in the coming weeks.

  Sports Funding
  Mr. Pendry
  To ask the Secretary of State for Northern Ireland if she will list, by individual governing body, the grant-in-aid made available by the Sports Council for Northern Ireland to governing bodies of sport for each of the financial years 1992 to 1998. [34246]

  Mr. Worthington
  The information is as follows:
  23

  Sports council for Northern Ireland Grant aid to governing bodies 1992/93–2000/2001

  £

  Governing body

  1992/93

  1993/94

  1994/95

  1995/96

  1996/97

  11997/98

  Commonwealth Games

  —

  —

  —

  —

  8,773.01

  Cricket (men/women)

  7,982.32

  15,086.96

  25,865.75

  25,840.75

  25,799.46

  25,527.00

  Cycling

  9,633.84

  15,929.30

  24,595.53

  20,819.37

  18,808.73

  12,954.10

  Dancing

  1,013.92

  3,289.27

  1,504.72

  1,500.00

  —

  3,000.00

  Dancing (Scottish)

  1,012.99

  1,910.18

  1,329.06

  737.22

  144.11

  2,000.00

  Feat

  585.17

  378.11

  474.54

  426.52

  —

  —

  Fencing

  3,515.38

  7,572.16

  7,356.97

  180.57

  3,581.12

  3,750.00

  Fitness NI

  —

  —

  —

  —

  4,962.38

  3,792.48

  Football

  8,303.75

  8,617.15

  12,042.60

  2,628.00

  60,000.00

  47,500.00

  Football (association)

  6,085.43

  19,508.32

  22.63

  25,100.00

  —

  —

  Football (schools)

  5,382.66

  5,896.64

  2,983.21

  8,516.65

  103.58

  —

  Football (women)

  575.00

  875.00

  100.00

  800.00

  11.45

  —

  Football (American)

  —

  1,055.50

  1,015.88

  300.00

  1,012.17

  1,000.00

  Gaelic Games (hurling/football)

  29,627.44

  24,485.49

  18,489.68

  35,166.81

  32,090.35

  42,570.00

  Gliding

  407.06

  400.00

  2,000.00

  599.90

  —

  1,000.00

  Golf (men)

  1,000.00

  2,000.00

  2,000.00

  —

  3,500.00

  2,775.00

  Golf (women)

  1,110.85

  881.64

  1,878.67

  907.49

  88.94

  1,000.00

  Gymnastics

  12,506.20

  18,902.14

  22,169.74

  21,975.15

  24,239.09

  21,254.55

  Handball

  3,080.83

  3,226.78

  6,045.27

  2, 354.88

  3,052.10

  3,000.00

  Hockey (men/women/joint/dev)

  49,418.45

  48,387.68

  65,296.02

  73,688.55

  60,444.71

  33,443.00

  Ice Skating

  1,274.37

  3,135.89

  1,500.00

  1,200.00

  —

  1,500.00

  Judo

  18,757.52

  16,900.11

  17,877.07

  11,751.99

  16,156.30

  4,880.00

  Ju Jitsu

  —

  1,548.38

  261.40

  200.00

  —

  —

  Karate

  1,434.49

  4,386.22

  2,817.09

  171.87

  4,748.97

  2,500.00

  Karting

  1,366.89

  3,600.00

  1,500.00

  —

  1,500.00

  5,250.00

  Keep Fit

  6,588.56

  4,665.19

  5,277.14

  2,698.50

  —

  —

  Kung Fu

  —

  —

  1,042.80

  —

  2,000.00

  —

  Life Saving

  —

  —

  —

  —

  1,254.52

  1,000.00

  Martial Arts

  —

  —

  20,150.00

  —

  —

  —

  Motor Cycling

  13,650.70

  9,715.32

  11,522.60

  12,107.21

  3,999.12

  7,258.00

  Mountaineering

  4,000.00

  500.00

  —

  —

  5,603.50

  6,900.00

  Netball

  5,332.37

  8,210.98

  14,793.59

  20,535.76

  17,578.63

  8,711.00

  Orienteering

  1,886.84

  10,858.87

  6,450.48

  5,420.15

  189.41

  10,000.00

  Pool

  —

  1,000.00

  1,000.00

  1,000.00

  —

  1,000.00

  Racquetball

  1,591.48

  1,581.09

  5.31

  682.94

  1,000.00

  1,000.00

  Rambling

  120.60

  93.72

  70.12

  59.62

  —

  —

  Riding

  30,292.41

  20,966.67

  13,078.79

  18,882.08

  4,773.74

  —

  Rowing

  8,610.06

  12,087.52

  7,122.93

  6,259.21

  12,624.93

  4,480.00

  Rugby

  12,392.59

  9,090.25

  6,973.70

  3,631.35

  5,829.75

  23,533.00

  Sailing

  19,190.51

  23,913.23

  10,445.68

  18,159.99

  14,201.60

  6,839.00

  Shooting Federation

  2,410.90

  7,039.15

  53.50

  5,055.50

  34.35

  —

  Shooting (clay pigeon)

  6,489.23

  1,567.49

  10,407.09

  3,331.94

  8,122.14

  6,650.00

  Shooting (rifle)

  1,483.61

  4,725.10

  4,390.35

  2,898.44

  5,145.65

  2,000.00

  Shooting (smallbore)

  6,662.25

  4,110.15

  9,684.50

  10,319.60

  5,011.45

  8,930.00

  Skiing

  3,874.52

  1,345.50

  3,361.56

  2,155.94

  3,891.60

  3,000.00

  Squash (men & women)

  15,922.00

  14,978.70

  26,366.14

  15,906.88

  22,447.29

  18,900.00

  Student Games

  —

  —

  —

  —

  —

  8,000.00

  Sub Aqua

  1,143.56

  702.87

  1,185.30

  1,400.00

  68.70

  1,000.00

  Surfing

  —

  —

  5,968.83

  400.00

  —

  2,000.00

  Swimming

  27,831.91

  28,181.23

  26,457.56

  12,410.40

  31,729.06

  23,828.00

  Teakwon Do

  1,180.00

  1,778.53

  1,070.30

  54.93

  2,000.00

  1,000.00

  Table Tennis

  9,058.43

  8,830.66

  7,265.95

  13,234.37

  8,692.13

  19,603.00

  Tennis (inc lawn)

  10,287.64

  12,043.66

  13,451.91

  11,645.58

  11,299.41

  6,442.00

  Ten Pin Bowling

  10.15

  1,794.03

  1,529.55

  1,500.00

  9,522.90

  11,500.00

  Trampolining

  558.84

  6,616.83

  1,803.21

  1,303.13

  6,849.84

  4,750.00

  Triathlon

  1,706.14

  3,525.57

  3,375.38

  86,037.06

  1,103.89

  3,000.00

  Tug of War

  5,390.00

  7,600.00

  4,060.00

  3,725.00

  6,076.00

  4,000.00

  Volleyball

  —

  2,360.00

  4,514.49

  937.09

  3,753.42

  4,050.00

  Water Polo

  2,249.53

  4,146.56

  2,032.72

  2,255.81

  518.99

  4,000.00

  Water Skiing

  4,071.00

  1,310.50

  1,510.70

  1,072.20

  2,000.00

  2,000.00

  Weight Lifting

  1,154.78

  4,213.26

  1,039.96

  3,385.45

  4,675.93

  800.00

  Wildfowling

  —

  —

  21.20

  —

  —

  —

  Wrestling

  440.26

  1,717.34

  1,000.00

  —

  —

  —

  Yoga

  2,103.71

  2,471.78

  2,819.46

  2,632.85

  1,606.15

  1,000.00

  Disabled Sport

  —

  16,012.19

  8,252.77

  1,515.24

  31,417.71

  13,500.00

  Miscellaneous

  54,783.03

  35,851.35

  25,619.93

  7,090.26

  627.47

  2,115.79

  Total

  537,767.86

  613,212.24

  625,720.48

  656,606.06

  658,953.43

  581,234.11

  1To 28 February 1998

  24 25
  Mr. Pendry
  To ask the Secretary of State for Northern Ireland what was the total grant-in-aid made available by the Sports Council of Northern Ireland to governing bodies of sport for each of the financial years 1992 to 1998; and what it is projected to be for the next three financial years. [34244]

  Mr. Worthington
  The information is as follows:

  Year

  £

  1992–93

  537,767.86

  1993–94

  613,212.24

  1994–95

  625,720.48

  1995–96

  656,606.06

  1996–97

  658,953.43

  1997–981

  630,000

  1998–991

  620,000

  1 Estimate.

  It will not be possible to project figures beyond 1998–99 until the results of the Comprehensive Spending Review are known.

  Mr. Pendry
  To ask the Secretary of State for Northern Ireland if she will list, by individual governing body, the grant-in-aid projected to be made available by the Sports Council for Northern Ireland to governing bodies of sport for the next three financial years. [34245]

  Mr. Worthington
  It is not possible for the Sports Council for Northern Ireland to project grant-in-aid allocations to individual governing bodies, as these will depend on the nature of individual grant applications submitted.

  Shorts
  Mr. Donaldson
  To ask the Secretary of State for Northern Ireland what assessment she has made of the implications for Short's share of the Bombardier Aerospace Group's research, development and design work of the commitments made by Bombardier at the time of privatisation. [35534]

  Mr. Ingram
  Bombardier has fulfilled the undertakings provided in relation to Shorts when it acquired the business in October 1989. From the reports I have received from both Bombardier and Shorts on the future plans for the business I have no reason to doubt their assurances that Shorts will remain an integrated design and manufacturing operation within Bombardier Aerospace.

  Mr. Donaldson
  To ask the Secretary of State for Northern Ireland if she will provide a breakdown of the amount of public funds given to Shorts since privatisation, including a breakdown of the privatisation package into (i) projected losses, (ii) launch aid, (iii) additional capital expenditure and (iv) training. [35537]

  Mr. Ingram
  The cost to Government of the financial terms of the sale of Shorts to Bombardier in October 1989 was £780 million less £30 million paid by Bombardier for the share capital of Shorts. The £780 million included £665 million for the restructuring of the company's balance sheet which included projected losses on existing contracts and £115 million for future Government support including £79 million grant towards capital expenditure, £18 million for training and other costs and £18 million towards the non-recurring costs of developing 26
  components for the Regional Jet. No launch aid was provided at this stage. The grant aid has been fully paid and the conditions applied to it have been met.

  In addition to the privatisation package, Shorts has received the following grant assistance from the Department of Economic Development's agencies since October 1989:

  Agencies

  £ million

  Industrial Development Board

  13.93

  Industrial Research & Technology Unit

  14.57

  Training and Employment Agency

  5.79

  The company also received £17.72 million launch aid from the Department of Trade and Industry (£15 million) and Industrial Development Board (£2.72 million) towards the cost of the development of the Learjet 45 aircraft.

  Long-term Unemployed
  Mr. William Ross
  To ask the Secretary of State for Northern Ireland, pursuant to her speech to the Royal Geographical Society, if she will list the legal obstacles to employers recruiting directly from the long-term unemployed. [35844]

  Mr. Ingram
  Restricting the field of recruitment to the long-term unemployed brings with it a greater risk of the pool of potential candidates being disproportionately of one religion, gender or, possibly, race. In such circumstances a person of another religion, gender or race may have grounds for making a complaint of indirect discrimination on the basis that persons of his/her religion, gender or race in Northern Ireland were less able to satisfy the criterion of being long-term unemployed.

  Police (Conference)
  Mr. Maginnis
  To ask the Secretary of State for Northern Ireland what was the purpose of the recent one-day conference on policing held in the Galgorm Hotel; how many were involved; what was the respective appointment of each; who organised the seminar; and if two-tier policing was on the agenda. [35654]

  Mr. Ingram
  I have no knowledge of any conference on policing held in the Galgorm Hotel. However a two-day workshop organised by the Northern Ireland Office took place recently elsewhere. It involved 11 RUC Officers of ranks ranging from Assistant Chief Constable to Chief Inspector and 6 Senior Officials from the Northern Ireland Office. The aim of the workshop was to explore the implications of the evolving role of the RUC in terms of the police, the public and the broader criminal justice system. "Two tier policing" was not on the agenda.

  Visit (New York)
  Mr. Maginnis
  To ask the Secretary of State for Northern Ireland what was the purpose of the visit to the Harlem or Bronx districts of New York of those involved in policing in Northern Ireland; how many were involved; what was the respective appointment of each; who sponsored the visit; and what was the total cost involved. [35653]
  27
  Mr. Ingram
  In December 1997 fifteen RUC officers took part in a research visit to New York, which had been approved by the Chief Constable. The group of police officers, led by an Assistant Chief Constable and including Superintendents, Chief Inspectors, Inspectors and a Constable, observed a number of policing initiatives currently in practice within the New York Police Department. These included police management, performance measurement, community policing and community relations activities at both Headquarters and local precinct level. The total cost is not readily determinable.

  Mediation Network
  Mr. Maginnis
  To ask the Secretary of State for Northern Ireland to what extent the organisation Mediation Network is a Government sponsored or assisted body; and what financial or other support it receives from the Northern Ireland Office. [35655]

  Mr. Paul Murphy
  The Mediation Network for Northern Ireland is an independent voluntary organisation with charitable status. It has received the following grants in this financial year from the Northern Ireland Departments and the Northern Ireland Office.

  Community Relations Budget (through NI Community Relations Council): £117,680 towards salaries and running costs;
  NIO: £42,000 towards a research project 'Policing Our Divided Society'.

FOREIGN AND COMMONWEALTH AFFAIRS

  Arms Sales
  Mr. Howard
  To ask the Secretary of State for Foreign and Commonwealth Affairs what provisions exist within the proposed EU code of conduct on arms sales, to prevent an EU member state taking up an export order already turned down by another EU member state on human rights grounds. [34576]

  Mr. Tony Lloyd
  The Code is under negotiation. If our proposal is accepted, each partner would be obliged to consult a member state which had denied an export licence under any of the criteria elaborated in the Code, not just the provisions related to human rights, before coming to a decision on whether to authorise a licence itself for an essentially identical transaction. The decision on whether to authorise the licence would remain at national discretion.

  Mr. Howard
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress being made with the negotiations with other member states on the proposed EU code of conduct on arms sales. [34679]

  Mr. Tony Lloyd
  We have begun to negotiate the Code with our EU partners in the appropriate CFSP Working Group. We have held one meeting, and will shortly circulate a revised proposal. We hope to agree a Code during the UK Presidency.
  28

  Sana'a and Muscat
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on levels of staffing at the British Embassy in(a) Sana'a and (b) Muscat. [34555]

  Mr. Tony Lloyd
  There are 9 UK-based staff and 46 locally engaged staff in Sana'a and 17 UK-based and 37 locally engaged staff in Muscat.

  Staffing levels are regularly reviewed through inspections.

  Foreign Policy Centre
  Mr. Menzies Campbell
  To ask the Secretary of State for Foreign and Commonwealth Affairs if any persons working for the Foreign Policy Centre will have access to classified information held within his Department. [33936]

  Mr. Fatchett
  Access to official information, including protectively marked information, is governed by the Official Secrets Act 1989 which applies both to Crown Servants and to members of the public, including non-governmental organisations. In this respect, the Foreign Policy Centre is no different from any other non-governmental organisation. No-one employed by the Foreign Policy Centre will have access to classified information. One of the Directors of the Centre, Mr. Andrew Hood, has access to classified information in his capacity as Special Adviser in the Foreign Secretary's office.

  Cyprus
  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the northern Cyprus administration on developing meetings within Cyprus of members of the Greek Cypriot and Turkish Cypriot communities to discuss matters of common interest. [35385]

  Mr. Doug Henderson
  Our High Commission in Nicosia remain in regular touch with the authorities in the north of Cyprus to encourage them to remain actively engaged in the search for a Cyprus settlement, to work with the Government of Cyprus to ensure that the benefits of EU membership are available to all Cypriots, and to develop further links between Cypriots on both sides of the island. We also co-operate closely with the UN and others to promote bi-communal contacts.

  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs by what means he plans to obtain the views of Turkish Cypriots on the application of the Republic of Cyprus for membership of the European Union. [35372]

  Mr. Doug Henderson
  Mr. Denktash has expressed his views very clearly. My right hon. Friend the Foreign Secretary offered to meet him in London this month to discuss this issue, and is sorry that he did not take up this offer. We maintain contact with Mr. Denktash through our High Commissioner in Nicosia.

  We hope that the Turkish Cypriots will reconsider their refusal to take up the offer to participate in the delegation to the accession negotiations made by President Clerides.
  29
  This would allow them to make clear their views to the EU side and also to understand fully the implications of EU membership—including the very substantial benefits which would, we believe, flow to the Turkish Cypriot community.

  Turkey
  Mr. Gerrard
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the current human rights situation in Turkey; what representations he has made to the Government of Turkey on this issue; and what plans he has to include within his statement to the forthcoming UN Commission on Human Rights in Geneva concerns about human rights in Turkey. [35573]

  Mr. Doug Henderson
  The human rights situation in Turkey continues to give cause for concern. We regularly raise human rights issues with the Turkish authorities. We acknowledge the steps that the Turkish Government have taken to address such concerns, but we have made it clear that more needs to be done. We are committed to working closely with Turkey and to providing practical assistance to help Turkey fully meet its international obligations in this area. In our role as EU Presidency, we will make a series of interventions including on Turkey at the current session of the Commission on Human Rights. The detail of the interventions is still being discussed with partners.

  Saudi Arabia and Kenya
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs if the Government will support proposals to address the human rights situation in Saudi Arabia at the UN Commission on Human Rights under the public procedure. [35510]

  Mr. Fatchett
  We will support the continuing consideration of human rights issues in Saudi Arabia under the Commission's confidential 1503 procedure.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what proposals the Government intend to make in respect of human rights in Kenya at the UN Commission on Human Rights in Geneva. [35507]

  Mr. Tony Lloyd
  We will include Kenya in the statement we make in our EU Presidency capacity under Item 8 of the agenda for the UN Commission on Human Rights. It urges, amongst others, the Government of Kenya to co-operate fully with UN Special Rapporteur for Torture.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs if the Government will urge the Saudi Arabian Government at the UN Commission on Human Rights to extend an invitation to the UN Special Rapporteur on independence of judges and lawyers. [35509]

  Mr. Fatchett
  We consistently urge Saudi Arabia to co-operate fully with the UN human rights mechanisms.
  30
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Kenyan Government requesting co-operation with the(a) Special Rapporteur on torture and (b) Special Rapporteur on extra-judicial executions. [35533]

  Mr. Tony Lloyd
  We regularly raise human rights issues, including torture and extra-judicial killings, with the Kenyan Government. I will raise these issues personally when I visit Kenya on 23–24 March. We encourage all states to co-operate fully with Special Rapporteurs mandated by the UN Commission on Human Rights.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs if the Government will propose at the UN Commission on Human Rights that the Kenyan Government extend an invitation to a UN Thematic Rapporteur. [35505]

  Mr. Tony Lloyd
  We would urge the Kenyan Government to co-operate with any Thematic Rapporteur mandated by the UN. The EU statement, which we will make under Item 8 of the Commission on Human Rights agenda, urges the Kenyan Government to respond to the outstanding request by the UN Special Rapporteur for Torture to visit Kenya.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the current human rights situation in(a) Kenya and (b) Saudi Arabia. [35506]

  Mr. Fatchett
  (a) We receive reports from a variety of sources about human rights in Kenya. We are particularly concerned about persistent police brutality, torture and extra-judicial killings. The Kenyan Government are bound under international obligations to make progress in this respect. We will play a full part in ensuring that pressure for such progress is maintained.

  (b) Among matters of concern to us in Saudi Arabia are practices in places of detention, shortcomings in the administrations of justice, and barriers to freedom of expression. We welcome Saudi Arabia's recent ratification of Conventions against Torture and Racial Discrimination, and would urge Saudi Arabia to ratify other principal human rights treaties.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations the Government have made to(a) the Saudi Arabian and (b) the Kenyan Government on human rights. [35511]

  Mr. Fatchett
  (a) We regularly raise human rights issues with the Saudi Arabian government. I discussed human rights with the Saudi Ambassador in May 1997. My right hon. Friend the Foreign Secretary also discussed human rights issues with the Saudi Foreign Minister in New York in September 1997. Our Embassy in Riyadh did so with the Saudi Ministry of Foreign Affairs on 2 March.

  (b) We maintain a vigourous dialogue with Kenya on human rights issues through our High Commission in Nairobi and at Ministerial level. My right hon. Friend the Foreign Secretary raised human rights issues with the new Kenyan Foreign Minister on 3 March, as did my right hon. Friend the Prime Minister with President Moi on 4 January.
  31
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what statement the Government plan to make in respect of human rights in(a) Kenya and (b) Saudi Arabia, to the UN Commission on Human Rights in Geneva. [35508]

  Mr. Tony Lloyd
  We will include Kenya and Saudi Arabia in the statement on country situations made by our Head of Delegation to the Commission on behalf of the European Union under Item 10 of the agenda.

  Asia-Europe Meeting
  Mr. Faber
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list those countries invited to the second Asia-Europe Meeting in April, indicating which have(a) accepted and (b) refused. [35590]

  Mr. Fatchett
  [holding answer 20 March 1998]: The attendance at the second Asia-Europe Meeting (ASEM 2) will be the same as at the first Asia-Europe Meeting (ASEM 1) in Bangkok in 1996. The participants are: on the Asian side—Brunei, China, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam; on the European side—the 15 member States of the European Union plus the European Commission. All these countries will be sending their Head of State or Government or a representative.

  Commonwealth Human Rights Initiative
  Mr. Faber
  To ask the Secretary of State for Foreign and Commonwealth Affairs what action he has taken to promote the Commonwealth Human Rights Initiative. [35851]

  Mr. Tony Lloyd
  We support the activities of the Commonwealth Human Rights Initiative (CHRI) and have helped to finance many of their projects, most recently a seminar on National Human Rights Institutions in the Commonwealth, in October 1997, which I addressed.

  Harare Declaration
  Mr. Faber
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) of 16 March 1998,Official Report, columns 551–52, if he will press for a commitment to freedom of expression to be added to the Harare Declaration. [35859]

  Mr. Tony Lloyd
  It remains our view that freedom of expression should be one of the Commonwealth's core values and we will work to ensure that it takes its place alongside other principles expressed in the Harare Declaration. We are also working to ensure that the high standards already agreed in the Harare Declaration are applied throughout the Commonwealth.

  Israel
  Mr. Faber
  To ask the Secretary of State for Foreign and Commonwealth Affairs what was the purpose of the Minister of State's meeting with the Ambassador of Israel on 18 March; and if he will make a statement. [35850]

  Mr. Fatchett
  I had no meeting with Ambassador Zeigerman on 18 March.
  32

WALES

  National Assembly
  Mr. Rhodri Morgan
  To ask the Secretary of State for Wales if he will list the names and addresses of each of the consultancy companies who have advised or are advising him on the National Assembly for Wales location project; if each consultancy contract was publicly tendered; what is the expected cost of each contract; and on what date each contract commenced and, where relevant, finished. [35591]

  Mr. Win Griffiths
  [holding answer 20 March 1998]: Symonds Group of 22 Cathedral Road, Cardiff CF1 9LJ are the Welsh Office's Property Management Consultants. The Commission provides for the provision of all professional services by them and other professionals engaged by them with the Welsh Office's agreement at rates established in the contract. The contract was awarded following a procurement exercise fully compliant with EC rules on public procurement. It commenced on 1 April 1996, for a period of three years. The associated costs are included in the running cost expenditure of the Welsh Office which is published in the Welsh Office Departmental Report 1997. [Cm 3615]

  Under the contract, Symonds Group have engaged Crown and Company to provide advice on all estates and property matters including valuation and to act as negotiating agents for the Welsh Office. In addition, the Welsh Office has an agreement with PACE (Property Advisors to the Civil Estate), who are a Cabinet Office agency, to provide advice on all property matters.

  The Welsh Office is in the process of letting two contracts to property consultants to provide separate advice on land purchase and valuation matters and on building costs.

  Opencast Coal
  Mr. Edwards
  To ask the Secretary of State for Wales what representations he has received as a result of the review of planning policy for opencast coal; and if he will make a statement. [35047]

  Mr. Hain
  A consultation paper seeking views on possible changes to planning policy for opencast coal issued in Wales in September 1997. Over 200 responses have been received and these are currently being considered in deciding how the review should proceed.

PRESIDENT OF THE COUNCIL

  Privy Council
  Mr. Salmond
  To ask the President of the Council what criteria will be used in considering the appointment of members of the Scottish Parliament to be members of the Privy Council. [35594]

  Mrs. Ann Taylor
  Appointment to the Privy Council is an exercise of the prerogative. Appointments are made by Her Majesty the Queen on the advice of my right hon. Friend the Prime Minister. A range of factors is taken into account. The Government's devolution proposals assume that some members of the Scottish Parliament will be appointed to the Privy Council.
  33
  Mr. Salmond
  To ask the President of the Council what representations she has received on the need for a Scottish Privy Council; and if she will make a statement. [35595]

  Mrs. Ann Taylor
  I have received no such representations.

HOUSE OF COMMONS

  Smoking
  Mr. Barron
  To ask the Chairman of the Administration Committee if the Committee has concluded its review of smoking in the general areas; and if she will make a statement. [35923]

  Mrs. Roe
  At its meeting on 10 March, the Administration Committee reviewed the submissions it had received from hon. Members and staff in response to an invitation on the All-Party Notices concerning smoking in general areas; hon. Members will recall that the Committee had particularly sought views on whether the existing no-smoking zones should be extended to include telephone kiosks, lavatories, private meetings in Committee, Conference and Interview Rooms, the Families' Room and corridors.

  By the time of the meeting the Committee had received 54 responses, of which only three favoured the status quo being maintained; the remaining 51 favoured some extension of non-smoking zones, of which 48 supported an extension to include all of the aforementioned areas. Since the Committee's meeting, a further eight submissions, all supporting some extension, have been received, of which five favoured an extension of the no-smoking zones to include those areas specifically mentioned.

  Based on these responses, the Committee concluded that there does indeed seem to be a general mood that the non-smoking zones be extended to the above areas, and therefore, the Committee has agreed to such an extension for a trial period from when the House returns after the Easter Adjournment until the House returns after the summer; in the autumn the Committee will review the trial.

  However, hon. Members will wish to note that smoking will still be permitted on the Committee Corridor. This is to allow those hon. Members serving on Committees of the House to have an area to smoke during those brief periods when they are able to leave the Committee Room.

  I understand that the Information Committee has endorsed a proposal by the Librarian that the Members' Library become a non-smoking area, and that this policy will also take effect on the return of the House after Easter; and I am advised that the Catering Committee and the Director of Catering Services are currently reviewing smoking policy in Refreshment Department outlets.

  Finally, I wish to advise the hon. Gentleman that, at the request of the House of Commons Commission, the Administration Committee will be co-ordinating the views of the other relevant Domestic Committees, in order to formulate recommendations on those workplaces shared by both hon. Members and staff.
  34

SCOTLAND

  Millennium Compliance
  Mr. Ancram
  To ask the Secretary of State for Scotland if the pilot study into computer millennium compliance in respect of the Scottish Office has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32755]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Office is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by the Chancellor of the Duchy of Lancaster.

  Mr. Ancram
  To ask the Secretary of State for Scotland how many(a) officials and (b) others are currently working on computer millennium compliance in the Scottish Office; and how many have (i) given notice of their intention to leave or (ii) left the Department in the last six months. [32750]

  Mr. Dewar
  [holding answer 3 March 1998]: Within the Scottish Office, the central compliance team consists of 1 part-time and 2 full-time officials supplemented by 3 full-time contract staff. In addition, around 10 full-time equivalent staff are currently employed across the Department. One member of staff employed on Year 2000 activities has left in the past six months.

  Mr. Ancram
  To ask the Secretary of State for Scotland when he last met Treasury Ministers to discuss the costs of computer millennium compliance; and from which budgetary sub-head the costs will be met. [32753]

  Mr. Dewar
  [holding answer 3 March 1998]: My hon. Friend the Minister for Education and Industry, Scottish Office is representing The Scottish Office on the two Ministerial Groups addressing these matters. The costs of computer millennium compliance will fall on the appropriate Votes for the various bodies concerned.

  Mr. Ancram
  To ask the Secretary of State for Scotland when he last met the Chancellor of the Duchy of Lancaster to discuss the progress of the Scottish Office towards achieving computer millennium compliance. [32752]

  Mr. Dewar
  [holding answer 3 March 1998]: My hon. Friend the Minister for Education and Industry, Scottish Office is representing the Scottish Office on the two Ministerial Groups addressing these matters. My Department provides regular reports on progress towards achieving Year 2000 compliance. These have been placed in the library of the House and on the Internet.

  Mr. Ancram
  To ask the Secretary of State for Scotland when all testing on year 2000 computer compliance will be completed in the Scottish Office. [32751]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Office is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. The reports provide information on the timetable being followed by The Scottish Office in achieving Year 2000 compliance.
  35
  Mr. Ancram
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Agricultural Science Agency has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32758]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Agricultural Science Agency is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Scottish Agricultural Science Agency towards achieving millennium compliance.

  Mr. Ancram
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of Historic Scotland has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32757]

  Mr. Dewar
  [holding answer 3 March 1998]: Historic Scotland are currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by Historic Scotland towards achieving millennium compliance.

  Mr. Ancram
  To ask the Secretary of State for Scotland if he will estimate the cost to the Scottish Office of(a) consultants and (b) contractors engaged by his Department to address the issue of computer millennium compliance; and if he will list them. [32754]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Office is currently participating in the quarterly progress reporting of Year 2000 compliance activities and costs described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on the estimated overall cost to The Scottish Office of achieving Year 2000 compliance. Contractors are currently being supplied by Newall and Budge, Montrose Computing and IBM Global Services.

  Mr. Ancram
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Court Service has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32728]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Court Service is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Scottish Court Service towards achieving millennium compliance.
  36
  Mr. Ancram
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Fisheries Research Service has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32756]

  Mr. Dewar
  [holding answer 3 March 1998]: The Fisheries Research Service is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Fisheries Research Service towards achieving millennium compliance.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Accounts Commission for Scotland has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32734]

  Mr. Dewar
  [holding answer 3 March 1998]: The Accounts Commission for Scotland is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of each health board in Scotland have has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32741]

  Mr. Dewar
  [holding answer 3 March 1998]: Health Boards are being asked by my Department to participate in the quarterly progress reporting of Scottish Health Service Year 2000 compliance activities.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Fisheries Protection Agency has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32729]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Fisheries Protection Agency is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. these reports include information on progress made by the Scottish Fisheries Protection Agency towards achieving millennium compliance.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of Scottish Enterprise has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32736]
  37
  Mr. Dewar
  [holding answer 3 March 1998]: Scottish Enterprise is being asked by my Department to participate in the quarterly progress reporting of year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Environmental Protection Agency has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32738]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Environmental Protection Agency is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Prison Service has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32731]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Prison Service is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Scottish Prison Service towards achieving millennium compliance.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Office Pensions Agency has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32730]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Office Pensions Agency is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Scottish Office Pensions Agency towards achieving millennium compliance.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of each police constabulary in Scotland have been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32740]

  Mr. Dewar
  [holding answer 3 March 1998]: Police force computer systems in Scotland are a matter for individual police authorities and joint police boards. My officials are discussing with the Convention of Scottish Local Authorities (COSLA) how best to ensure that councils can demonstrate that they are effectively addressing the Year 2000 problem.
  38
  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of Highlands and Islands Enterprise has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32735]

  Mr. Dewar
  [holding answer 3 March 1998]: Highlands and Islands Enterprise is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Scottish Record Office has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32732]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Record Office is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Scottish Record Office towards achieving millennium compliance

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the Student Awards Agency for Scotland has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32733]

  Mr. Dewar
  [holding answer 3 March 1998]: The Students Awards Agency for Scotland is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster. These reports include information on progress made by the Student Awards Agency for Scotland towards achieving millennium compliance.

  Dr. Fox
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of Scottish Homes has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32739]

  Mr. Dewar
  [holding answer 3 March 1998]: Scottish Homes is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Mr. Jenkin
  To ask the Secretary of State for Scotland what contingency plans he will establish in case of computer failure on 1 January 2000 in respect of the Scottish water authorities. [32748]
  39
  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish water authorities are being asked to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998, and will include information about contingency planning.

  Mr. Jenkin
  To ask the Secretary of State for Scotland what contingency plans he will establish in case of computer failure on 1 January 2000 in respect of(a) the police, (b) the Fire Service and (c) the Ambulance Service in Scotland. [32747]

  Mr. Dewar
  [holding answer 3 March 1998]: Police and Fire Service computer systems in Scotland are a matter for individual authorities and joint boards. My officials are discussing with the Convention of Scottish Local Authorities (COSLA) how best to ensure that councils can demonstrate that they are effectively addressing the Year 2000 problem. The Scottish Ambulance Service is being asked by my Department to participate in the quarterly progress reporting of Scottish Health Service Year 2000 compliance activities. This will include reports on contingency plans.

  Mr. Jenkin
  To ask the Secretary of State for Scotland what contingency plans he will establish in case of computer failure on 1 January 2000 in respect of the Scottish Office. [32746]

  Mr. Dewar
  [holding answer 3 March 1998]: The Scottish Office is currently participating in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21 by my right hon. Friend the Chancellor of the Duchy of Lancaster. The reports include information on contingency planning.

  Mr. Jenkin
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of the East of Scotland Water Authority has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32743]

  Mr. Dewar
  [holding answer 3 March 1998]: The East of Scotland Water Authority is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Mr. Jenkin
  To ask the Secretary of State for Scotland if pilot studies of computer millennium compliance in respect of each NHS trust in Scotland have been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32742]

  Mr. Dewar
  [holding answer 3 March 1998]: NHS Trusts are being asked by my Department to participate in the quarterly progress reporting of Scottish Health Service Year 2000 compliance activities.

  Mr. Jenkin
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of West of Scotland Water Authority has been 40
  completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32745]

  Mr. Dewar
  [holding answer 3 March 1998]: The West of Scotland Water Authority is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activities by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Mr. Jenkin
  To ask the Secretary of State for Scotland if the pilot study of computer millennium compliance in respect of North of Scotland Water Authority has been completed; what conclusions have been drawn; when millennium compliance will be achieved; at what cost to public funds; and if he will make a statement. [32744]

  Mr. Dewar
  [holding answer 3 March 1998]: The North of Scotland Water Authority is being asked by my Department to participate in the quarterly progress reporting of Year 2000 compliance activates by Scottish Non-Departmental Public bodies. These reports will be published on The Scottish Office Internet Web site commencing June 1998.

  Computer Systems
  Mr. Ancram
  To ask the Secretary of State for Scotland if he will list the main computer systems used by the Scottish Office and its agencies. [32749]

  Mr. Dewar
  [holding answer 3 March 1998]: The main computer systems used by The Scottish Office and its agencies are listed in the quarterly progress reporting of Year 2000 compliance activities described to the House on 3 March 1998, Official Report, columns 619–21, by my right hon. Friend the Chancellor of the Duchy of Lancaster.

  Multilateral Agreement on Investment
  Mr. Gorrie
  To ask the Secretary of State for Scotland what discussions he has had with other ministers about the impact of the Multilateral Agreement on Investment on the powers of the Scottish Parliament. [34561]

  Mr. Wilson
  [holding answer 20 March 1998]: I will continue to keep in close touch with my right hon. Friend the President of the Board of Trade on matters concerning the Multilateral Agreement on Investment.

  Local Government Finance
  Mr. Gorrie
  To ask the Secretary of State for Scotland in respect of the Scottish Block and central Government support to local authority current expenditure, what the difference is between the planned provision for 1998–99 made by the previous Government after adjustment to take account of updated estimates of the GDP deflator and the revised provision for 1998–99 made by the current Government. [34528]

  Mr. Dewar
  [holding answer 20 March 1998]: The information requested is in the table.
  41

  £ million

  Cash terms

  Real terms—1996–97 prices

  1998–99 Planned provision

  1998–99 Revised provision

  Difference

  1998–99Plannedprovision

  1998–99Revisedprovision

  Difference

  Scottish block

  13,810

  13,978

  168

  13,068

  13,227

  159

  Of which:

  Central government support to local authorities' current expenditure

  5,169

  5,278

  109

  4,891

  4,994

  103

  These figures take account of announcements in the 17 March Budget.

  Rights of Entry
  Mr. Ancram
  To ask the Secretary of State for Scotland how many powers of entry or rights of entry he has created or is currently creating in legislation since 1 May 1997. [34585]

  Mr. McLeish
  [holding answer 16 March 1998]: Since 1 May 1997, new powers of entry have come into force in Scotland under section 76 of the Planning (Listed Buildings and Conservation Areas) Act 1997 (on 27 May 1997); the Cattle Identification (Enforcement) Regulations 1997 (on 22 August 1997); and section 53 of the Crime and Punishment (Scotland) Act 1997 (on 1 October 1997). Further powers of entry are proposed in the Crime and Disorder Bill to enable the police to seize noise-making equipment which is causing a nuisance.

  Free School Meals
  Mr. Cousins
  To ask the Secretary of State for Scotland what percentage of children were on free school meals in each local education authority area and in Scotland as a whole in the last year for which figures are available. [35568]

  Mr. Wilson
  The information is given in the following table which reflects the local authority structure in Scotland in 1996–97, the latest year for which figures are available.

  Percentage of pupils entitled to free school meals in 1996–97 school session

  Education authority

  Percentage

  Aberdeen City

  13.00

  Aberdeenshire

  5.60

  Angus

  9.00

  Argyll and Bute

  14.50

  Clackmannanshire

  21.70

  Dumfries and Galloway

  11.60

  Dundee City

  21.10

  East Ayrshire

  21.30

  East Dunbartonshire

  10.80

  East Lothian

  11.80

  East Renfrewshire

  10.40

  Edinburgh, City of

  19.30

  Eilean Siar2

  12.60

  Falkirk

  20.50

  Fife

  17.40

  Glasgow City

  39.50

  Highland

  14.60

  Inverclyde

  23.90

  Midlothian

  14.40

  Moray

  9.60

  North Ayrshire

  26.30

  North Lanarkshire

  25.00

  42

  Percentage of pupils entitled to free school meals' in 1996–97 school session

  Education authority

  Percentage

  Orkney Islands

  9.60

  Perth and Kinross

  7.90

  Renfrewshire

  22.90

  Scottish Borders

  7.00

  Shetland Islands

  9.40

  South Ayrshire

  18.80

  South Lanarkshire

  19.50

  Stirling

  14.20

  West Dunbartonshire

  28.60

  West Lothian

  16.20

  Scotland

  19.30

  1 Provisional

  2 Formerly known as Western Isles

  Residential Care
  Mr. Cousins
  To ask the Secretary of State for Scotland what was the spending on care of the elderly per resident of pensionable age in each social work authority area and in Scotland as a whole in the last year for which figures are available. [35567]

  Mr. Galbraith
  Local authority spending on the elderly is not separately identified in full by all local authorities, some social work spending being under general headings. The actual social work spend on the elderly includes both the directly recorded spend on the elderly and a major, though unknown, part of the spend not allocated to client groups. Provisional Outturn data for 1996/97 are the most recent outturn data available. The table shows, to the nearest £100, the amount recorded as spent directly on older people, per person aged 65 or over.

  Net social work expenditure on older people by Scottish Local Authorities 1996/971

  £

  Council

  Expenditure recorded directly against the 'Older People' client group, per person aged 65+2

  Aberdeen City

  300

  Aberdeenshire

  300

  Angus

  600

  Argyll and Bute

  500

  Clackmannanshire

  400

  Dumfries and Galloway

  500

  Dundee City

  700

  East Ayrshire

  500

  East Dunbartonshire

  200

  East Lothian

  500

  East Renfrewshire

  300

  Edinburgh, City of

  500

  Eilean Siar

  1,000

  Falkirk

  100

  Fife

  500

  43

  £

  Net social work expenditure on older people by Scottish Local Authorities 1996/971

  Council

  Expenditure recorded directly against the 'Older People' client group, per person aged 65+2

  Glasgow City

  700

  Highland

  500

  Inverclyde

  400

  Midlothian

  600

  Moray

  300

  North Ayrshire

  400

  North Lanarkshire

  400

  Orkney Islands

  800

  Perth and Kinross

  400

  Renfrewshire

  500

  Scottish Borders

  400

  Shetland Islands

  1,300

  South Ayrshire

  400

  South Lanarkshire

  600

  Stirling

  400

  West Dunbartonshire

  800

  West Lothian

  700

  Scotland

  500

  1 Figures based on Provisional Outturn/Budget Estimate Return, and have been rounded to the nearest £100.

  2 Age 65+ figures based on mid-1996 population estimates—General Register Office.

  Health Spending
  Mr. Cousins
  To ask the Secretary of State for Scotland if he will list the spending per head in each health board district and in Scotland as a whole in the last year for which figures are available. [35570]

  Mr. Galbraith
  The table shows the spend per head in each health board district for 1996–97. The gross per capita expenditure including central expenditure for Scotland in 1996–97 was £857.35.

  £

  Health Board

  Spend per Head

  Argyll and Clyde

  810.00

  Ayrshire and Arran

  799.00

  Borders

  824.00

  Dumfries and Galloway

  812.00

  Fife

  794.00

  Forth Valley

  815.00

  Grampian

  855.00

  Greater Glasgow

  882.00

  Highland

  863.00

  Lanarkshire

  796.00

  Lothian

  854.00

  Orkney

  1,004.00

  Shetland

  874.00

  Tayside

  930.00

  Western Isles

  939.00

  Education Spending
  Mr. Cousins
  To ask the Secretary of State for Scotland if he will list the spending per student in(a) primary and (b) secondary education in each education authority and in Scotland as a whole in the last year for which figures are available. [35571]

  Mr. Wilson
  The information is given in the following table, which reflects the local authority structure in Scotland in 1995–96, the latest financial year for which 44
  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.

  Net current expenditure per pupil in 1995–96

  £

  Region

  Primary

  Secondary

  Borders

  1,870

  2,933

  Central

  1,732

  2,784

  Dumfries & Galloway

  1,761

  2,941

  Fife

  1,771

  2,630

  Grampian

  1,860

  2,970

  Highland

  1,893

  3,061

  Lothian

  1,745

  3,024

  Strathclyde

  1,906

  2,914

  Tayside

  1,757

  2,932

  Orkney

  2,640

  3,592

  Shetland

  2,499

  5,397

  Western Isles

  2,478

  4,535

  Scotland

  1,854

  2,942

  Gaelic Broadcasting
  Ms Roseanna Cunningham
  To ask the Secretary of State for Scotland, pursuant to his answer of 3 March 1998,Official Report, column 581, on Gaelic broadcasting, when he received the consultants' report on "Opportunities for Gaelic Broadcasting in the Digital Era"; if he will publish the report; and if he will make a statement. [35651]

  Mr. Wilson
  I expect to receive the report by the end of March, Additional time has been allowed to enable the consultant to take account of the consultation paper on the National Economic Research Associates (NERA) Report, "Television: The Digital Era", which the Government published on 12 February. Decisions on taking forward the matters covered by the report will be taken when the report is received.

  Learning Disabilities
  Mrs. Ewing
  To ask the Secretary of State for Scotland what progress is being made in the review of services for people with learning disabilities; what are the terms of reference of this review; and if the voluntary sector will be consulted in the course of the review. [35233]

  Mr. Galbraith
  Such a review and its remit are currently under active consideration within the Scottish Office; the voluntary sector would be consulted.

  Disability Statement
  Mrs. Ewing
  To ask the Secretary of State for Scotland what progress is being made by colleges of further education on the production of disability statements. [35234]

  Mr. Wilson
  There is no statutory requirement for further education colleges in Scotland to produce disability statements. The Secretary of State requires each college to produce an Annual Report and makes it a condition of a college's grant-in-aid that its Annual Report shall contain statements as to how students with learning difficulties are provided for.
  45

  Ministerial Meetings
  Mr. Randall
  To ask the Secretary of State for Scotland 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. [31296]

  Mr. Dewar
  [holding answer 2 March 1998]: Information is not held centrally on the number of meetings requested of Scottish Office Ministers by right hon. and hon. Members. It would be unusual for any such requests to be refused. Departmental records show that the following meetings have taken place since May 1 1997:

  Minister

  Labour

  Conservative

  Secretary of State

  3

  1

  Mr. McLeish

  12

  1

  Mr. Wilson

  8

  0

  Mr. Galbraith

  4

  0

  Lord Sewel

  3

  0

  Mr. Chisholm/Mr. Macdonald

  16

  1

  Scottish Office Ministers have also met SNP and Liberal Democrat MPs.

HEALTH

  Health Services (Kent)
  Mr. Gale
  To ask the Secretary of State for Health if he will list the names of the consultants at(a) the William Harvey Hospital, Ashford, (b) the Kent and Canterbury Hospital and (c) the Queen Elizabeth the Queen Mother Hospital, Thanet, who are (i) performing out-posted sessions and (ii) providing services direct on behalf of fundholders or multifunds; and if he will indicate what services each consultant is providing to each fundholding practice or multifund. [33955]

  Mr. Milburn
  The information requested is not held centrally. I refer the hon. Member to the trusts, who will be able to provide the information.

  Mr. Gale
  To ask the Secretary of State for Health if he will list the names of general practitioners providing clinical assistant services to(a) the William Harvey Hospital, Ashford, (b) the Kent and Canterbury Hospital and (c) the Queen Elizabeth the Queen Mother Hospital, Thanet. [33956]

  Mr. Milburn
  The information requested is not held centrally. I refer the hon. Member to the trusts who will provide the information.

  Zantac
  Mr. Cousins
  To ask the Secretary of State for Health what was the cost to public funds of purchases of Zantac

  1996–97

  1997–98

  Quarter 1

  Quarter 2

  Quarter 3

  Quarter 4

  Quarter 1

  Quarter 2

  Quarter 3

  Northern & Yorkshire

  2,154

  3,283

  3,380

  3,713

  3,691

  3,147

  3,712

  Trent

  2,916

  2,785

  2,752

  3,031

  3,056

  3,173

  2,973

  Anglia & Oxford

  1,309

  1,875

  2,512

  2,258

  2,086

  2,013

  2,273

  North Thames

  1,614

  2,470

  2,730

  2,183

  3,021

  2,569

  2,948

  South Thames

  3,645

  3,107

  3,190

  4,251

  4,007

  3,563

  3,871

  46
  in the last three complete financial years; and what savings are estimated to derive from the expiry of the patent. [35052]

  Mr. Milburn
  The available information is shown in the table. No estimate has been made of any savings derived from the expiry of the patent.

  Number and the net ingredient cost of prescription items dispensed for Zantac (Ranitidine), 1994–95 to 1996–97 England

  Year

  Prescription items (millions)

  Net ingredient cost (£ million)

  1994–95

  4.7

  147.6

  1995–96

  4.6

  143.5

  1996–97

  4.4

  137.2

  Notes:

  1. The figures are based on a full analysis of all prescriptions dispensed in England in the community, ie by community pharmacists and appliance contractors, dispensing doctors, and prescriptions submitted by prescribing doctors for items personally administered.

  2. The information on costs is available only in terms of net ingredient cost which refers to the cost of the drug before discounts and does not include any dispensing costs or fees. It does not include any adjustment for income obtained where a prescription charge is paid at the time the prescription is dispensed or where the patient has purchased a pre-payment certificate.

  Community Care
  Mr. Burstow
  To ask the Secretary of State for Health what evaluation he has made of the scope for extending direct payments to include over 65 year olds. [35880]

  Mr. Boateng
  We will be reviewing the legislation covering direct payments after its first year of operation, and will consider its scope in the light of that review.

  Mr. Burstow
  To ask the Secretary of State for Health what plans he has to reinstate supplementary credit approval for the development of information systems for community care. [35881]

  Mr. Boateng
  We have no plans to reinstate the supplementary credit approval for information technology for community care which was a feature of the initial period of the implementation of the National Health Service and Community Care Act 1990.

  Hospital Readmissions
  Mr. Burstow
  To ask the Secretary of State for Health how many patients aged 75 years and over, by region, were readmitted to hospital within 28 days of their discharge in each quarter since April 1996. [35597]

  Mr. Milburn
  Information is not collected in the format requested. Information on the number of patients aged 75 and over who are readmitted as an emergency within 28 days of discharge for each quarter since April 1996 is shown in the table. This includes all specialties except psychiatry.
  47

  1996–97

  1997–98

  Quarter 1

  Quarter 2

  Quarter 3

  Quarter 4

  Quarter 1

  Quarter 2

  Quarter 3

  South & West

  3,637

  3,511

  3,285

  3,125

  3,093

  3,389

  3,481

  West Midlands

  792

  1,650

  1,809

  1,894

  2,087

  2,108

  2,241

  North West

  2,537

  2,767

  3,195

  3,170

  3,157

  3,125

  2,907

  GP Consortium Boundaries
  Mr. Burstow
  To ask the Secretary of State for Health what mechanisms he will use to implement the NHS White Paper's recommendation that GP consortia use boundaries coterminous with social services. [35879]

  Mr. Milburn
  Coterminosity with social services boundaries is an important consideration in establishing primary care groups but not the sole one. Others include the need to establish primary care groups around natural communities and ideally a population of 100,000. We shall be issuing guidance shortly on the configuration of primary care groups, including the criteria health authorities should take into account when proposing primary care groups.

  Special Transitional Grant
  Mr. Burstow
  To ask the Secretary of State for Health what plans he has for continuing special transitional grant into 1999–2000. [35878]

  Mr. Milburn
  Decisions on the local government finance settlement for 1999/2000 will be announced by my right hon. Friend the Deputy Prime Minister in the usual manner and at the appropriate time.

  Health Spending
  Mr. Cousins
  To ask the Secretary of State for Health what was the spending per head in each health authority area and in England as a whole in the last year for which figures are available. [35565]

  Mr. Milburn
  The information requested has been placed in the Library.

  Residential Care
  Mr. Cousins
  To ask the Secretary of State for Health what was the spending on care of the elderly per resident of pensionable age in each social services authority and in England as a whole in the last year for which figures are available. [35566]

  Mr. Boateng
  Figures of gross current expenditure on care of elderly per head of population aged 65 and over in each social services department and in England in 1995–96, the latest year for which information is available, are given in the table.

  Gross expenditure on care of elderly per head of population aged 65 and over in each social services department in England,1995–96

  Social services department

  £ per head

  Avon

  516

  Barking & Dagenham

  631

  Barnet

  633

  Barnsley

  505

  Bedfordshire

  541

  Berkshire

  534

  Bexley

  551

  Birmingham

  628

  48

  Gross expenditure on care of elderly per head of population aged 65 and over in each social services department in England,1995–96

  Social services department

  £ per head

  Bolton

  552

  Bradford

  564

  Brent

  756

  Bromley

  434

  Buckinghamshire

  514

  Bury

  689

  Calderdale

  735

  Cambridgeshire

  409

  Camden

  1,148

  Cheshire

  459

  City of London

  2,102

  Cleveland

  452

  Cornwall

  348

  Coventry

  525

  Croydon

  590

  Cumbria

  427

  Derbyshire

  558

  Devon

  465

  Doncaster

  654

  Dorset

  349

  Dudley

  526

  Durham

  479

  Ealing

  627

  East Sussex

  377

  Enfield

  608

  Essex

  453

  Gateshead

  613

  Gloucestershire

  297

  Greenwich

  742

  Hackney

  1,386

  Hammersmith & Fulham

  1,105

  Hampshire

  433

  Haringey

  1,027

  Harrow

  600

  Havering

  500

  Hereford & Worcester

  414

  Hertfordshire

  494

  Hillingdon

  602

  Hounslow

  639

  Humberside

  523

  Isle of Wight UA

  383

  Isles of Scilly

  549

  Islington

  1,279

  Kensington & Chelsea

  930

  Kent

  504

  Kingston Upon Thames

  606

  Kirklees

  616

  Knowsley

  472

  Lambeth

  973

  Lancashire

  527

  Leeds

  571

  Leicestershire

  499

  Lewisham

  887

  Lincolnshire

  344

  Liverpool

  827

  Manchester

  802

  Merton

  554

  Newcastle Upon Tyne

  533

  Newham

  1,160

  Norfolk

  448

  North Tyneside

  350

  North Yorkshire

  453

  Northamptonshire

  486

  49

  Gross expenditure on care of elderly per head of population aged 65 and over in each social services department in England,1995–96

  Social services department

  £ per head

  Northumberland

  505

  Nottinghamshire

  630

  Oldham

  676

  Oxfordshire

  438

  Redbridge

  517

  Richmond Upon Thames

  622

  Rochdale

  635

  Rotherham

  575

  Salford

  605

  Sandwell

  609

  Sefton

  531

  Sheffield

  641

  Shropshire

  443

  Solihull

  402

  Somerset

  306

  South Tyneside

  587

  Southwark

  1,194

  St. Helens

  594

  Staffordshire

  505

  Stockport

  598

  Suffolk

  466

  Sunderland

  563

  Surrey

  442

  Sutton

  606

  Tameside

  560

  Tower Hamlets

  1,203

  Trafford

  417

  Wakefield

  499

  Walsall

  508

  Waltham Forest

  679

  Wandsworth

  922

  Warwickshire

  421

  West Sussex

  432

  Westminster

  1,009

  Wigan

  520

  Wiltshire

  382

  Wirral

  555

  Wolverhampton

  688

  England

  526

  Source:

  R03 Return

  Age Discrimination
  Mr. Simon Hughes
  To ask the Secretary of State for Health if he will instigate an inquiry into age discrimination in the NHS; and if he will make a statement. [35774]

  Mr. Milburn
  My right hon. Friend the Secretary of State for Education and Employment is currently consulting widely on a code of practice for employers on discrimination at work on the grounds of age. This will give the National Health Service, like other employers, a framework for action, and a separate inquiry is therefore not necessary

  Cholesterol (Treatment)
  Mr. Rhodri Morgan
  To ask the Secretary of State for Health what proposals he has for issuing guidelines to general practitioners in relation to prescribing lipid limiting drugs for those with above average cholesterol levels. [35773]

  Mr. Milburn
  Guidance was issued in August 1997 in relation to prescribing cholesterol lowering drugs. A statement produced by the Department's Standing 50
  Medical Advisory Committee and an accompanying table were sent to health authorities, National Health Service trusts and general practitioners under cover of an executive letter. Further copies are available on request from the NHS responseline.

  An effective health care bulletin, entitled 'Cholesterol and Coronary Heart Disease: Screening and Treatment', was produced by the Centre for Reviews and Dissemination and issued in February. This gives further advice on prescribing lipid-lowering drugs.

  Copies of each document will be placed in the Library.

  Ambulances
  Mr. Webb
  To ask the Secretary of State for Health what regulations govern the maximum age at which ambulances are considered to be suitable for general use; and if he will make a statement. [35772]

  Mr. Boateng
  Normal regulations for the road testing and maintenance of transport vehicles apply.

EDUCATION AND EMPLOYMENT

  Work Permits (Professional Footballers)
  Mr. Hoyle
  To ask the Secretary of State for Education and Employment how many professional association football players in British teams have been issued with work permits by the Overseas Labour Service; and if he will list the countries from which they came. [33463]

  Mr. Alan Howarth
  Between 1 January 1997 and 31 December 1997 the Overseas Labour Service issued 51 work permits to football clubs in the United Kingdom in respect of overseas footballers from 31 different countries outside the European Economic Area:Australia, Barbados, Belarus, Bosnia, Brazil, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Czech Republic, Estonia, Georgia, Ghana, Israel, Macedonia, Yugoslavia, Moldova, Namibia, Nigeria, Romania, Russia, South Africa, Serbia, Slovakia, Slovenia, St. Vincent, Switzerland, Trinidad & Tobago and USA.

  Further Education
  Mr. Illsley
  To ask the Secretary of State for Education and Employment what plans his Department has to re-instate a demand-led element into the funding methodology for further education. [33580]

  Dr. Howells
  The Department has no such plans.

  Mr. Illsley
  To ask the Secretary of State for Education and Employment what representations he has received seeking a review of the funding methodology for further education. [33581]

  Dr. Howells
  The Department receives representations from time to time about the funding methodology. The Further Education Funding Council is currently undertaking a fundamental review of the methodology.

  Mr. Illsley
  To ask the Secretary of State for Education and Employment what assessment he has made of the impact of convergence in funding in the further education sector on the Government's plans to increase the number
  51
  of students entering further education by 2002, with particular reference to those from disadvantaged backgrounds. [33582]

  Dr. Howells
  My right hon. Friend the Secretary of State will keep under review the effects of convergence on the widening participation agenda.

  Mr. Illsley
  To ask the Secretary of State for Education and Employment (1) what assessment he has made of the effect of further education courses provided under franchised arrangements with partnership organisations in drawing people into learning opportunities from low-paid, unemployed and other disadvantaged backgrounds; [33584]

  (2) what assessment he has made of the effect further education courses provided under franchised arrangements with partnership organisations will have in drawing people into learning opportunities under the New Deal and Lifetime Learning programmes. [33585]

  Dr. Howells
  Franchised provision can be a means of widening participation by bringing disadvantaged learners into FE. There may be scope for such provision to play a part in the education and training opportunities available under the New Deal for 18 to 24-year-olds.

  Mr. John Cryer
  To ask the Secretary of State for Education and Employment if initial teacher training courses for further education teachers will be exempt from tuition fees. [34238]

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

  Mr. John Cryer
  To ask the Secretary of State for Education and Employment what plans he has to change the(a) structure, (b) membership requirements and (c) responsibilities of further education college corporations. [34239]

  Dr. Howells
  The Department published a consultation paper, "Accountability in Further Education", on 5 March 1998. Responses to the consultation are invited by 24 July.

  Mr. John Cryer
  To ask the Secretary of State for Education and Employment what plans he has to improve the professional development of(a) lecturers and (b) managers in further education colleges; and if he will make a statement on how they will benefit from the proposed general teaching council. [34323]

  Dr. Howells
  The Government attach great importance to improving the quality of teaching and management in further education. In our consultation document "The Learning Age", we propose that all new teachers in further education should hold, or within two years of appointment have begun, a recognised initial teacher training qualification. In the same document, we highlight the need for professional training of FE managers. We are working closely with the FE sector to develop national standards for professional development and we anticipate that a National Training Organisation for FE will be established by the end of the year to take forward these developments. FE staff, with qualified teacher status, will be eligible to register with the general teaching council on the same basis as school teachers.
  52

  Sixth Form Colleges
  Dr. Whitehead
  To ask the Secretary of State for Education and Employment how many sixth form colleges have closed or amalgamated since 1994. [33995]

  Dr. Howells
  On 1 January 1994 there were 115 sixth form colleges. Following closures and mergers there are now 108.

  Disability Rights Task Force
  Mr. Randall
  To ask the Secretary of State for Education and Employment if he will make a statement on the progress of the disability rights task force. [34060]

  Mr. Alan Howarth
  The Disability Rights Task Force has made good progress since its membership was announced on 3 December 1997. It has met three times, on 16 December 1997, 21 January 1998 and 16 March 1998. In line with its Terms of Reference it has been considering in detail the role and functions of a Disability Rights Commission. The Task Force is expected to make recommendations to the Government on this matter by the end of March. Task Force papers and minutes have been placed on the Internet at http:/www.disability.gov.uk for public access and comments may be returned to the Task Force Secretariat.

  Music, Dance and Drama Students
  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment if he will allocate additional funds to Essex County Council to maintain student awards for music, dance and drama. [34337]

  Dr. Howells
  The education Standard Spending Assessment (SSA) provides Councils with funding for student awards. The 1998–99 education SSA for Essex County Council has been increased by £27.3 million or 5.8 per cent. There are no plans to allocate additional funds.

  School Libraries
  Mr. Cann
  To ask the Secretary of State for Education and Employment how many individual schools library services have been discontinued in the last five years; and what local education authorities have been involved. [34563]

  Ms Estelle Morris
  The Department does not collect this information.

  Mr. Cann
  To ask the Secretary of State for Education and Employment what plans he has to ensure minimum standards for school libraries in maintained schools in England and Wales. [34564]

  Ms Estelle Morris
  The Department has issued non-statutory guidance on the provision of teaching and non-teaching accommodation for schools. We believe that schools are themselves best placed to determine standards for their library services, taking into account their own priorities, needs and circumstances.

  Mr. Cann
  To ask the Secretary of State for Education and Employment what plans he has to meet the National Library Association and the School Library Association to discuss school libraries in maintained schools in England and Wales. [34565]
  53
  Ms Estelle Morris
  We have no current plans to meet the Library Association and the School Library Association to discuss school libraries.

  Mr. Cann
  To ask the Secretary of State for Education and Employment if he will introduce legislation to make statutory provision for school library services in England and Wales. [34566]

  Ms Estelle Morris
  There are currently no plans to make the provision of schools library services a statutory duty.

  Mr. Cann
  To ask the Secretary of State for Education and Employment what assessment he has made of the implications for school libraries of financial delegation within the framework of LMS. [34567]

  Mr. Byers
  LMS delegation of funding for any service, including the school library service, is intended to allow schools to exercise a real choice in deciding upon their need for that service and the most appropriate supplier.

  Mr. Cann
  To ask the Secretary of State for Education and Employment what mechanisms his Department uses to monitor the library needs of maintained(a) primary and (b) secondary schools in England and Wales. [34568]

  Ms Estelle Morris
  Her Majesty's Chief Inspector of Schools reports annually to my right hon. Friend the Secretary of State on standards and quality in education, including the quality and quantity of learning resources in schools.

  Focus Groups
  Mr. Mullin
  To ask the Secretary of State for Education and Employment how much his Department(a) has spent since 1 May and (b) is planning to spend on focus groups. [34967]

  Dr. Howells
  The information requested on spend since 1 May 1997 was included in my answer to a question asked by the hon. Member for Gordon (Mr. Bruce) on 12 March 1998,Official Report, column 280.

  Information on planned spend could be supplied only at disproportionate cost.

  Portakabins
  Mr. Cousins
  To ask the Secretary of State for Education and Employment if local education authority returns to his Department include the numbers of portakabins used for teaching purposes in each school; and if he proposes to require such information. [35055]

  Mr. Byers
  The Department does not collate information about the number of Portakabins used for teaching purposes in schools. Local education authorities are responsible for providing and maintaining temporary accommodation, where they deem it to be necessary. There are no plans for the Department to collate this information in the future.

  School Students
  Mr. Cousins
  To ask the Secretary of State for Education and Employment (1) how many students there were at each local education authority and local education authority maintained school in Newcastle upon Tyne for the most recent period and the three previous years; [35056]
  54
  (2) if he will list all sixth forms with a student size of over 250 in the local education authorities within the counties of Northumberland, Tyne and Wear, Durham and Cleveland. [35057]

  Mr. Byers
  I refer my hon. Friend to the Secondary School Performance Tables for the years 1994–1997 and the Primary School (Key Stage 2) Performance Tables for the years 1996 and 1997. The tables show the total number of pupils of all ages on each school's register, together with the number of pupils aged 16 and over in secondary schools (which gives an indication of the size of a school's sixth form) for schools in England. Copies of the tables are available in the Library.

  Information for schools other than those in the performance tables is not published centrally.

  There were 40,749; 41,145; 41,055; 40,936 pupils of all ages at local education authority maintained schools in Newcastle Upon Tyne in January 1994 to January 1997 respectively.

  Hospitality
  Mr. Bercow
  To ask the Secretary of State for Education and Employment if he will list planned expenditure on hospitality for April and May, indicating the date, location and purpose of each event. [35113]

  Dr. Howells
  To date, there are no major events planned for April and May. However, it is not possible at this stage to give a comprehensive answer as the majority of Ministerial events and meetings will not be finalised until nearer the time.

  Physical Education
  Mr. Truswell
  To ask the Secretary of State for Education and Employment what representations he has received concerning the removal of core subject status from PE. [35526]

  Ms Estelle Morris
  The Department has received a number of representations from organisations and individuals about our proposals to enable primary schools to give priority to literacy and numeracy. Physical Education is to remain a National Curriculum foundation subject and will continue to be taught in all schools.

  Access Courses
  Mr. Keetch
  To ask the Secretary of State for Education and Employment, pursuant to his answer of 13 March 1998,Official Report, column 412, on access courses, what is the maximum time period for a realistic action plan leading to sustained employment; and if he will make a statement. [35711]
  55
  Mr. Andrew Smith
  A young person's action plan will specifically cover in detail the time to be spent in the New Deal, which for participants in the Full-Time Education and Training option can be up to 52 weeks, following their time on the Gateway. However, the action plan will also look forward to the period after the New Deal option. It should also include the steps that will be taken towards obtaining sustained employment in the longer term. In the case of young people who are undertaking Access to Higher Education courses in the New Deal, the action plan will include reference to their proposed employment goal following Higher Education.

  Regional Development Agencies
  Mrs. Ellman
  To ask the Secretary of State for Education and Employment what arrangements he is making to ensure that training available through further and higher education colleges and TECs is integrated with the skills strategies of the regional development agencies. [35741]

  Mr. Andrew Smith
  A central function of RDAs will be to involve partners in developing and implementing Regional Skills Strategies. The Government will be giving guidance to RDAs and Government Offices to help ensure that the training available through TECs and Further and Higher Education Colleges meets regional needs and national objectives.

  Tuition Fees
  Mr. Boswell
  To ask the Secretary of State for Education and Employment how many students expecting to begin Arts degree courses in autumn 1998 are currently studying for qualifying foundation courses; and what would be the total cost of exempting them from tuition fees during their higher education course. [35853]

  Dr. Howells
  Information is not yet available on either the number of students currently enrolled on relevant arts foundation courses in 1997–98, or on their intentions for entry in 1998–99. However, data collected by the Higher Education Statistics Agency (HESA) for the 1996–97 academic year suggest that there were some 4,500 students entering full-time first degree, HND and Dip HE courses in creative art and design whose highest entry qualification was a foundation course.

  Median income of pensioner units where the head has reached state pension age within the last five years

  £

  1979

  1981

  1987

  1988

  1989

  1990–91

  1992

  1993

  1994–95

  1995–96

  Couple gross

  153.5

  147.0

  183.1

  195.7

  177.1

  202.80

  216.5

  220.1

  211.90

  235.90

  BHCnet

  139.3

  136.3

  166.6

  173.3

  158.8

  179.30

  194.5

  199.8

  194.70

  217.00

  AHCnet

  121.5

  115.1

  148.0

  157.1

  145.8

  173.30

  181.0

  189.7

  180.00

  201.80

  Singles gross

  82.90

  92.70

  105.0

  105.9

  102.6

  107.80

  114.7

  116.2

  121.90

  129.10

  BHCnet

  76.00

  82.40

  93.30

  91.80

  89.50

  98.60

  106.2

  106.9

  109.50

  112.20

  AHC net

  61.50

  63.10

  65.80

  71.00

  67.80

  84.10

  87.10

  83.30

  84.60

  93.20

  All gross

  124.7

  125.9

  151.9

  162.3

  152.5

  163.60

  177.1

  175.4

  183.40

  199.10

  BHCnet

  112.2

  114.6

  135.2

  142.4

  134.7

  145.40

  162.1

  160.2

  166.70

  182.00

  AHCnet

  95.30

  95.30

  114.9

  125.0

  120.0

  133.70

  146.8

  143.6

  146.60

  166.50

  56

  New Deal (Costs)
  Mr. Willetts
  To ask the Secretary of State for Education and Employment what estimate he has made of the extent to which the costs of individual components of the New Deal in England and Wales will differ from the costs for Scotland set out in Scottish Office evidence to the Scottish Affairs Committee published on pages 138–9 of their report on the New Deal (HC 335-II Session 1997–98). [35867]

  Mr. Andrew Smith
  The average cost assumptions used for planning purposes for the New Deal for 18 to 24-year-olds were the same throughout Britain.

SOCIAL SECURITY

  Contributory Benefits
  Mr. Robathan
  To ask the Secretary of State for Social Security what progress is being made on the fundamental review of social security, with particular regard to the role of contributory benefits. [34063]

  Mr. Field
  Contributory benefits are currently being reviewed as part of the wider review of Social Security.

  We will be publishing a Green Paper on 26 March that will set out the framework and guiding principles for welfare reform.

  Pensioner Incomes
  Mr. Quinn
  To ask the Secretary of State for Social Security what assessment the Government have made of the range of inequality of income among pensioners. [34064]

  Mr. Denham
  I refer my hon. Friend to my reply given earlier today to my hon. Friend the Member for Hendon (Mr. Dismore).

  Mr. Webb
  To ask the Secretary of State for Social Security what was the median income of(a) single pensioners, (b) married pensioners and (c) all pensioners who (i) had reached state pension age within the previous five years and (ii) were aged 80 years or above in each year for which the Pensioners Incomes Series has been constructed; and how many pensioners were in each category. [30735]

  Mr. Denham
  The information is set out in the tables.
  57

  Pensioner units where the head is aged 80 years or above

  £

  1979

  1981

  1987

  1988

  1989

  1990–91

  1992

  1993

  1994–95

  1995–96

  Couple gross

  114.50

  129.00

  162.70

  135.00

  159.30

  149.70

  171.60

  169.60

  179.00

  169.50

  BHC net

  111.00

  120.00

  143.10

  123.60

  143.50

  136.80

  159.20

  159.10

  171.70

  157.60

  AHC net

  95.10

  106.20

  128.50

  105.90

  118.00

  117.20

  134.80

  132.40

  148.90

  140.10

  Singles gross

  73.50

  80.70

  91.40

  91.70

  87.50

  94.80

  94.20

  104.00

  109.10

  114.30

  BHC net

  68.60

  74.20

  82.10

  82.80

  77.50

  86.50

  87.80

  97.90

  102.10

  105.80

  AHC net

  53.90

  58.20

  62.80

  60.90

  60.00

  66.10

  65.80

  69.80

  72.10

  79.00

  All gross

  76.10

  85.20

  99.50

  96.90

  92.80

  103.60

  101.20

  110.40

  117.90

  120.90

  BHC net

  71.40

  77.90

  88.90

  86.90

  84.50

  94.70

  94.70

  103.70

  110.00

  113.00

  AHC net

  57.00

  61.60

  66.50

  63.80

  62.50

  79.40

  75.70

  80.40

  83.40

  95.70

  Number of pensioners in each category

  (000s)

  7979

  1981

  1987

  1988

  1989

  1990–91

  1992

  1993

  1994–95

  1995–96

  (i) Couples

  1,000

  1,000

  1,100

  1,100

  1,100

  1,000

  1,050

  1,000

  950

  1,050

  Singles

  700

  750

  750

  700

  750

  750

  700

  700

  700

  650

  All units

  1,700

  1,750

  1,850

  1,800

  1,850

  1,800

  1,750

  1,650

  1,650

  1,700

  (ii) Couples

  150

  200

  250

  250

  300

  300

  350

  350

  350

  350

  Singles

  900

  900

  1,150

  1,150

  1,200

  1,200

  1,200

  1,250

  1,350

  1,400

  All units

  1,100

  1,100

  1,450

  1,400

  1,450

  1,500

  1,550

  1,600

  1,700

  1,750

  Notes:

  1. (i) Pensioner units where the head has reached State pension age within the last five years.

  2. (ii) Pensioner units where the head is aged 80 years or above.

  3. BHC: Before Housing Costs; AHC: After Housing Costs.

  4. Numbers of pensioner units are rounded to the nearest 50,000.

  5. A pensioner unit is defined as a single person over State Pension Age (SPA), or a couple where the man, defined as head, is over SPA.

  6. Components may not sum to totals due to rounding.

  7. All incomes are in £ per week at July 1995 prices and are rounded to the nearest 10 pence.

  8. Estimates of median income levels are medians of the unequivalised income distribution.

  9. Estimates indicate broad trends through time, rather than giving a clear picture of year on year changes.

  10 The estimates in Table 1 differ slightly from those published in The Pensioners' Incomes Series 1995–96, owing to inaccuracies with rounding. Differences are small, up to 10 pence, except for 1979 where the difference is as large as 50 pence in some cases. A revised version of the publication will be issued as soon as possible.

  Source

  The Pensioners' Incomes Series 1979–1995/6.

  Child Support Agency
  Mr. Pike
  To ask the Secretary of State for Social Security when she will publish her proposals for changes in the CSA procedures. [34066]

  Mr. Field
  We are determined to ensure that the Child Support Agency provides an effective and efficient service to all its clients throughout the child support assessment process. We are looking closely at all aspects of the child support system and we expect to bring forward a consultation paper on our proposals by the Summer.

  Mr. Laurence Robertson
  To ask the Secretary of State for Social Security what steps she is taking to ensure that the Child Support Agency makes itself more accessible to the public. [34070]

  Mr. Field
  We expect the Child Support Agency to provide an effective and efficient service to all its clients. The Agency is currently reorganising its resources so that back room processing work which does not require face-to-face contact with the public is done in its larger centres. This will leave remaining local staff to focus their attentions more effectively on essential face-to-face contacts. From next month lone mothers claiming Income Support will be personally assisted in completing the maintenance application form by Benefits Agency staff.
  58
  For customers with general inquiries, more resources are to be allocated to the Agency's National Inquiry Line from next month. In the future the Agency will increasingly use the telephone to contact customers at the earliest stage at each point in the assessment process.

  Mr. Pond
  To ask the Secretary of State for Social Security if she will make a statement on the Government's plans to make the operation of the Child Support Agency fairer and more effective. [34057]

  Mr. Field
  We expect the Child Support Agency to provide a consistent, fair and effective service to all its clients. We are looking in detail at all aspects of the child support scheme to see where improvements can be made. We aim to bring forward a consultation document with our proposals by the Summer.

  Local Exchange Trading Schemes
  Mr. Drew
  To ask the Secretary of State for Social Security what plans she has to extend the disregard for local exchange trading schemes. [34067]

  Mr. Field
  We have no immediate plans to change the way credits from local exchange trading schemes are treated when calculating benefits, although we are keeping the individual benefit rules under review.
  59

  Winter Fuel Payments
  Mr. Hutton
  To ask the Secretary of State for Social Security if she will make a statement on the action the Government have taken in respect of winter fuel payments for pensioners. [34068]

  Mr. Denham
  This is the first time any Government have been prepared to help pensioner households with their winter fuel bills. A total of £400 million have been committed to provide extra help for this winter and next to eligible pensioner households.

  Around one and a half million pensioners on Income Support have already received a payment of £50. Virtually all of the payments of £20 or £10 to the other eight and a half million eligible pensioners have now been issued. The remaining few will be despatched in the next few days.

  Overall, almost ten million payments will have been made to more than seven million pensioner households.

  Mrs. Spelman
  To ask the Secretary of State for Social Security on what statutory authority the Benefits Agency Office advertises winter fuel payments to pensioners. [35767]

  Mr. Denham
  The Department's Benefits Agency does not need statutory authority to advertise winter fuel payments to pensioners.

  The Agency advertises these payments only to the extent of providing information to the public, in line with the normal Departmental advertising strategy.

  Any advertising carried out by the Department is done in support of its policy to explain and inform the public of the government services available to them. Any advertising is carried out in accordance with Cabinet Office guidance issued in July 1997.

  Advertising support for the Winter Fuel Payments campaign included national television advertising by the Department. It is in support of this campaign that the Benefits Agency is displaying posters and leaflets.

  We wanted pensioners to know what payments are coming to them and how and when, in order to make informed decisions about how to heat their homes. The most cost effective method of reaching pensioners quickly with this important information has been through a multi-media campaign involving highly targeted television advertising.

  Housing Benefit Fraud
  Mr. Stringer
  To ask the Secretary of State for Social Security if she will make a statement on the level of housing benefit fraud. [34069]

  Mr. Denham
  We have made clear our commitment to work towards a permanent reduction in all benefit fraud, as part of our drive to modernise the Social Security system and rebuild public confidence in it. We are conducting a series of reviews to provide reliable estimates of the level and types of Housing Benefit fraud. We are determined that Social Security will not be an easy target for fraudsters.
  60

  Disability Benefit
  Mr. Skinner
  To ask the Secretary of State for Social Security if she will make a statement on the review of the welfare state with particular reference to disability benefit.[34071]

  Mr. Field
  We are committed to reviewing and reforming Social Security to transform it from a system of dependency to a system of opportunity which promotes work incentives, reduces poverty and welfare dependency, and strengthens family life, and we continue to review sickness and disability as part of this commitment. No decisions have been made.

  Pension Funds
  Mr. Gibb
  To ask the Secretary of State for Social Security what estimate she has made of the average extra cost to the members of occupational contracted-out money purchase schemes as a result of the decrease in the state earnings-related pension scheme rebate if funds are to be maintained at the same level. [34072]

  Mr. Denham
  The reduction in the amount of rebate for individual Contracted Out Money Purchase (COMP) Scheme members is dependent on a number of factors and will vary according to age and earnings levels.

  However, for the tax year 1999–2000 it is estimated that the reduction for an average COMP Scheme member will be £74.

  Pensions Review
  Mr. Jim Cunningham
  To ask the Secretary of State for Social Security if she will make a statement on progress with the pensions review. [34073]

  Mr. Denham
  The pensions review that my right hon. Friend the Secretary of State announced last year fulfils our manifesto commitment to look at the central areas of insecurity for elderly people.

  We are carefully considering the more than 2,000 responses that we received to the first part of the review. We are also considering the more than 200 responses to the technical consultation document on our proposals for stakeholder pensions that we issued in November. We aim to publish an initial framework for change in the first half of this year. There will then be a period of further consultation before final proposals are developed.

  Mr. Caplin
  To ask the Secretary of State for Social Security what steps she has taken to encourage the taking out of value-for-money pensions. [34074]

  Mr. Denham
  A key objective of the Pensions Review is to ensure that resources devoted to pensions are used to maximum effect. We are therefore looking at how to encourage more of those who have access to good quality occupational pension schemes to join them. We have set up the Pensions Education Working Group which will recommend ways to improve awareness of the need to make provision for retirement.

  We are also developing a framework for Stakeholder Pension schemes which will offer secure, flexible and value for money second pensions for people who do not have the opportunity to join an occupational scheme and for whom many personal pensions can be unsuitable.
  61

  Pensions
  Mr. Flynn
  To ask the Secretary of State for Social Security if she will estimate the value of the basic single pension per week had its value been increased by the level of earnings since 1980. [34076]

  Mr. Denham
  The estimated value of the basic State pension for a single person would be £86 per week if its value had been increased by the higher of earnings or prices since 1980. From April it would have increased to £89.60.

  Disability Benefits
  Mr. Loughton
  To ask the Secretary of State for Social Security what plans she has to means-test benefits for people with disabilities. [34075]

  Mr. Denham
  We continue to review sickness and disability benefits as part of our commitment to modernise the Social Security system. No plans for change have been made at this stage.

  United Nations Commission on the Status of Women
  Angela Smith
  To ask the Secretary of State for Social Security if she will make a statement on the Commission of the Status of Women meeting attended by the Minister for Women. [34077]

  Ms Ruddock
  I refer the Member to the reply I gave earlier today to my hon. Friend for Reading, East (Jane Griffiths).

  Benefit Fraud
  Mrs. Lait
  To ask the Secretary of State for Social Security how many people have had their benefit claims withdrawn due to fraud; and what has been the saving to the social security budget since 1 May 1997. [34078]

  Mr. Denham
  The information is not available in the format requested.

  The Department's fraud and security staff carry out a wide range of activities designed to improve the integrity of the system, to investigate and detect fraud, and to ensure that the correct amount of benefit is in payment. Records are kept of successful investigations which include cases subject to traditional investigative activity by fraud officers, as well as assurance activity on new and existing claims. There have been 813,255 successful preventive and detective activities in the period 1 May 1997 to 31 January. As a result of these activities, it is estimated that savings of £1.46 billion have been made.

  Local authorities are responsible for the administration of Housing Benefit and Council Tax Benefit. Data on the number of Housing Benefit and Council Tax Benefit cases where fraud is established are collected annually. Figures for 1997/98 are therefore not yet available. The amounts of weekly benefit savings claimed by local authorities in cases where fraud is established are collected quarterly.
  62
  The unaudited, cumulative total of such savings claimed up to the end of the third quarter of 1997/98 in Great Britain is £279 million.

  Single Mothers
  Mr. Spring
  To ask the Secretary of State for Social Security if she will make a statement on her policy of securing employment for single mothers. [34079]

  Mr. Field
  The Government are committed to helping lone parents into work. The New Deal for Lone Parents shows the priority we attach to helping lone parents secure employment. The New Deal for Lone Parents offers lone parents their own tailored service, provided by Personal Advisers, to help them with jobsearch, training, childcare and in-work benefit calculations.

  We have introduced measures to ensure that there are no disincentives in the benefit system which will deter lone parents from taking jobs. Fast-track arrangements are in place to clear claims and to secure the speedy payments of Family Credit where a lone parent has started, or is about to start, work. The target to process 95 per cent. of these claims within five days is currently being achieved. The Child Support Agency has agreed to process applications for maintenance more quickly for lone parents participating in the New Deal for Lone Parents. We will also be introducing a 12 week linking rule for lone parents in receipt of Income Support and Jobseekers Allowance before April 1998. This will mean that there is no benefit disincentive to deter lone parents who want to work from doing so.

  Last week the Chancellor announced changes aimed at making work pay. The Working Families Tax Credit will make work pay for all families on low incomes. We will also provide extra help with childcare costs through the Child Care Tax Credit. As the next step in our National Child Care Strategy to ensure affordable, accessible, quality child care for all, the Child Care Tax Credit provides a passport to high quality childcare to all parents regardless of income.

  We are committed to helping all parents, particularly lone parents, to balance work and family life and we are taking every opportunity to champion family-friendly employment policies which will allow parents to combine successfully home and work responsibilities. Good family-friendly policies will assist us in delivering both our National Child Care Strategy and the New Deal for Lone Parents.

  Fraud (Landlords)
  Dr. Starkey
  To ask the Secretary of State for Social Security what plans she has for tackling organised fraud by landlords. [34080]

  Mr. Field
  We introduced new regulations in November 1997 to give local authorities additional powers to fight landlord fraud and tighten up the rules on paying benefit direct to landlords. We are developing a
  63
  counter-fraud strategy which focuses on prevention— identifying where fraud is most likely to happen and focusing resources where they will be most effective. Those who commit fraud—including organised fraudsters and dishonest landlords—will be vigorously pursued.

  Advertising
  Mr. Clifton-Brown
  To ask the Secretary of State for Social Security what is her Department's policy on awarding contracts to advertising agencies. [34042]

  Mr. Field
  The Department awards all advertising contracts through the Central Office of Information, which ensure compliance with the EU tender regulations on our behalf.

  Benefit Integrity Project
  Mr. Love
  To ask the Secretary of State for Social Security what are the costs, including review and appeals, and savings in the current year and the projected costs and savings in future years of the Benefit Integrity Project; and if she will make a statement. [35089]

  Mr. Denham
  This information is not available at present. In the light of my right hon. Friend the Secretary of State's announcement on 9 February 1998 of additional safeguards and other factors, statisticians have been asked to re-examine the estimated savings from the Project and to produce validated figures for the end of the financial year of operation. I will write to my hon. Friend as soon as this information becomes available.

  Contracted-out Money Purchase Schemes
  Mr. Duncan Smith
  To ask the Secretary of State for Social Security how much she estimates the average extra cost will be to the members of occupational contracted out money purchase schemes, as a result of the decrease in the SERPs rebate, if they are to maintain contributions to their funds at the same level. [32973]

  Mr. Denham
  New rebate levels for contracted-out money purchase schemes (COMPS) have been set out for the year 1999–2000, 2000–2001 and 2001–2002 in a draft Statutory Instrument and laid before Parliament. These rebates are lower than those set previously to take account of the higher prevalence of larger COMPS, which have lower administrative expenses. To set these rebates at a higher level would amount to an unwarranted reduction in the National Insurance fund, especially since it could lead to salary-related schemes changing their method of contracting-out without changing their benefit provision to increase the amount they get from the taxpayer.

  The reduction in the amount of rebates for individual COMPS members will vary according to their age and earnings levels, but the for average COMPS member in 1999–2000 it is estimated to be £74.

  Habitual Residence Test
  Dr. Lynne Jones
  To ask the Secretary of State for Social Security what were the costs of administering appeals against refusal of benefits by applicants failing the habitual residence test for each year for which figures are available(a) in total and (b) per appellant. [35086]
  64
  Mr. Denham
  The administration of appeals is the responsibility of the Independent Tribunal Service (ITS) who report that the information is not available in the format requested. Such information as is available is set out in the table.

  The average cost of an appeal to a Social Security Appeal Tribunal is £250, including the costs of work done by the Benefits Agency, the Employment Service Agency and work done by the ITS processing the appeal.

  Overall operational costs of ITS for the last four financial years

  Operational cost

  Financial Year

  (£ million)

  1994–95

  37.320

  1995–96

  44.371

  1996–97

  59.763

  1997–98

  56.338

  (estimated outturn)

  Note:

  The ITS does not hold statistical information enabling the cost of administering those appeals to be identified or separated from the costs of administering the various other types of appeal for which it is responsible.

  Dr. Lynne Jones
  To ask the Secretary of State for Social Security if she will make it her policy to abolish the habitual residence test. [35087]

  Mr. Denham
  We are currently reviewing the operation of the habitual residence test. A range of options is being considered as part of this work.

  Tribunals
  Mr. Levitt
  To ask the Secretary of State for Social Security what is the success rate for applicants taking their appeals to social security tribunals and presenting(a) oral and (b) written evidence only. [34943]

  Mr. Field
  The information is not available.

  Widows' and Widowers' Benefits
  Mr. Paul Marsden
  To ask the Secretary of State for Social Security what plans she has to equalise benefits for widows and widowers; and if she will make a statement. [34254]

  Mr. Denham
  I refer the hon. Member to the answer I gave the hon. Member for Edinburgh, West (Mr. Gorrie) on 23 June 1997,Official Report, column 413.

  Income Support
  Mr. Webb
  To ask the Secretary of State for Social Security what percentage of(a) single male pensioners aged 65 to 69 years, (b) single female pensioners aged 60 to 64 years and (c) married pensioners aged 65 to 69 years were in receipt of income support or supplementary benefit in each year since 1988 for which statistics are available. [34128]

  Mr. Denham
  The information is set out in the table.
  65

  Income support pensioner claimants by age, 1988 to 1997

  Year

  Single male aged 65–69

  Per cent. ofall malesaged 65–69

  Single female aged 60–64

  Per cent. of all females aged 60–64

  Couples:claimantaged 65–69

  Per cent. ofall males/femalesaged 65–69

  1988

  40,000

  3.1

  104,000

  6.9

  43,000

  1.5

  1989

  33,000

  2.5

  100,000

  6.7

  36,000

  1.2

  1990

  32,000

  2.5

  89,000

  6.0

  34,000

  1.2

  1991

  34,000

  2.7

  85,000

  5.8

  28,000

  1.0

  1992

  36,000

  2.9

  86,000

  6.0

  31,000

  1.2

  1993

  42,000

  3.4

  101,000

  7.0

  42,000

  1.6

  1994

  46,000

  3.7

  103,000

  7.3

  46,000

  1.8

  1995

  49,000

  4.0

  106,000

  7.6

  52,000

  2.0

  1996

  50,000

  4.1

  104,000

  7.5

  53,000

  2.0

  1997

  51.000

  4.2

  104,000

  7.5

  51,000

  2.0

  Notes:

  1 Numbers are given as at May of each year given and are rounded to the nearest thousand.

  2. Percentages are given to one decimal place.

  3. Sample size 1 per cent. up to and including 1992, 5 per cent. thereafter.

  4. Percentages for 1997 are based on mid-term population estimates for 1996.

  Sources:

  1. Income Support Annual Statistical Inquiries, 1988–1993.

  2. Income Support Quarterly Statistical Inquiries, May 1994 to May 1997.

  3. Office for National Statistics Mid-term estimates of the population 1988–1996.

  Myalgic Encephalomyelitis
  Mr. Hesford
  To ask the Secretary of State for Social Security what assessment she has made of the knowledge and experience of ME of doctors employed for the purpose of assessing potential claimants at appeal tribunals; and if she will make a statement. [33712]

  Mr. Keith Bradley
  Doctors sit as members of Medical Appeal Tribunals, as medical members of Disability Appeal Tribunals, and as medical assessors advising Social Security Appeal Tribunals concerning Incapacity Benefit. The appointment of all such members and medical assessors is a matter for the President of the Independent Tribunal Service, His Honour Judge Michael Harris.

  Council Tax Benefit
  Mr. Chaytor
  To ask the Secretary of State for Social Security what is the current assumed rate of interest in respect of capital for the calculation of council tax benefit. [33961]

  Mr. Keith Bradley
  The rules for the treatment of capital in Council Tax Benefit ensure that capital of £3,000 or less is ignored. There is no entitlement to Council Tax Benefit if a person's capital exceeds £16,000. For each £250 of capital above £3,000, but below the upper limit of £16,000, £1 per week is taken into account as income. This formula avoids the many practical difficulties that would arise if actual income were taken into account, and does not represent any assumed rate of interest.

  Mr. Chaytor
  To ask the Secretary of State for Social Security when the maximum level of capital for the calculation of council tax benefit was last uprated; what was the annual inflation rate in each year since the last uprating; and what would the current maximum level be if annual uprating to allow for inflation had taken place. [33962]

  Mr. Keith Bradley
  The maximum level of Council Tax Benefit, when it was introduced in April 1993, was £16,000. It has not been uprated since.
  66
  The table sets out the annual inflation rate that would apply to Council Tax Benefit since 1993. Council Tax Benefit is uprated by Rossi and not RPI. Rossi is RPI (all items) less rent, local taxes and mortgage interest payments.

  Uprating date

  Uprating percentages

  April 1993

  3.6

  April 1994

  3.5

  April 1995

  1.8

  April 1996

  3.0

  April 1997

  2.6

  The current maximum level of Council Tax Benefit if annual uprating to allow for inflation had taken place would be £17,815.30', based on Rossi.

  Notes:

  1. The Retail Prices Index (all items) and the Retail Prices Index (all items) less rent, local taxes and mortgage interest payments, produced by the Office for National Statistics, were used in these calculations.

  2. Figures rounded to nearest 5 pence at each uprating date.

  Housing Benefit
  Mr. Hurst
  To ask the Secretary of State for Social Security what progress has been made in the inter-departmental review on housing benefit for those in supported housing. [33853]

  Mr. Keith Bradley
  We sought stakeholders' views on the best means of translating our objectives for the long-term funding of supported accommodation into a modern, practical and sustainable funding system in November last year. Over 200 responses were received and are helping to inform the debate. Options for creating a more rational and effective system are presently under consideration. Whilst we are looking to implement a sustainable funding system as soon as possible, this is an extremely complex area with possible repercussions for all supported accommodation. We cannot, therefore, say when the review will be complete.
  67
  Mr. Hurst
  To ask the Secretary of State for Social Security (1) if she will list the total number of claimants of housing benefit in supported housing in each year from 1992 to 1997; [33852]

  (2) what estimate she has made of the average cost of the care and support element of staff costs claimed from housing benefit for those in supported housing in each of the last three years. [33851]

  Mr. Keith Bradley
  The information is not available in the form requested.

  We hope to have more information about the numbers of Housing Benefit recipients and the amount met by Housing Benefit in respect of service charges for personal counselling and support in supported accommodation during 1995–96 from research which is currently underway.

  Medical Testing
  Mr. Wareing
  To ask the Secretary of State for Social Security what factors underlay the policy of privatisation of medical testing for sickness and disability benefits; what financial benefit to Her Majesty's Government has resulted; and if she will make a statement. [32948]

  Mr. Keith Bradley
  [holding answer 9 March 1998]: My right hon. Friend the Secretary of State for Social Security announced on 31 July how we would proceed with a number of projects for the use of the private sector which were in the pipeline and which we had inherited from the previous administration. The projects were reviewed against the criteria announced in July:

  our objectives for modernising the Social Security system;

  our commitment to work within the announced spending totals for the first two years of Government;

  our aim of getting best value for public money and of reducing the burden on taxpayers;

  the scope to apply private sector expertise, discipline and economies of scale in procuring public services and the ability to secure increased investment from the private sector;

  the need for continuing flexibility for government to make future changes to services;

  the opportunities for improving the quality of service for customers;

  the implications for staff

  When I announced on 19 February that all three contracts for BAMS were to be awarded to Sema I explained that we have established a minimum quality of service threshold against which we have assessed all bids from the private sector. There will be greater evaluation of performance against the new quality standards. We have also placed greater emphasis on the management of staff when evaluating the contracts.

  The contract award is not part of the welfare reform programme. The responsibility for the overall service and for the determination of the entitlement to benefits remains with the Department. The award of the contract makes no change to the rules for entitlement to benefits and the rights of customers will not be changed in any way. Rigorous procedures will be put in place to ensure that we continue to receive independent, objective medical advice. We see the contract as providing an improved service to the customer and good value for money for the taxpayer.
  68
  The award of the contract will result in a saving of 10 per cent. over the cost of the present service.

  Publications
  Mr. Flight
  To ask the Secretary of State for Social Security if she will list those European Commission(a) newsletters, (b) magazines and (c) occasional publications to which her Department subscribes. [33665]

  Mr. Field
  The information is not available in the format requested. Such information as is available is as follows:

  Not all the Department's Agencies order publications centrally and it would be possible to provide details only at disproportionate cost. The Department also receives many European Commission publications on a complimentary basis and records of these are not held centrally.

  Newsletters and Magazines

  Bulletin of the European Union

  Economic and Social Committee Annual Report

  Employment and Social Affairs

  European Economy

  European Economy: Annual Economic Report

  Eurostar Population and Social Conditions

  Eurostat Unemployment Bulletin

  Eurostat Year book: A Statistical Eye on Europe

  General Government Accounts and Statistics

  General Report on the Activities of the European Union

  Labour Force Survey

  National Accounts Aggregates

  Official Journal of the EC, Series C

  Official Journal of the EC, Series L

  Reports of Cases before the Court of Justice and the Court of First Instance.

  Occasional Publications

  Basic Statistics of the Community Community Budget: the Facts and Figures

  Comparative Tables of Social Security Schemes in Member States

  Demographic Statistics

  Directory of Community Legislation on Force

  Earnings: Industry and Services

  Employment in Europe

  Employment and Unemployment

  Europe in Figures

  Interinstitutional Directory of the European Union

  Social Protection Expenditure and Receipts

  Taxes and Social Contributions

  Departmental Pay
  Mr. Duncan
  To ask the Secretary of State for Social Security how many people employed by(a) her Department and (b) the agencies for which her Department is responsible earn (i) less than £3.20 per hour, (ii) between £3.20 and £3.60 per hour, (iii) between £3.60 and £4.00 per hour and (iv) between £4 and £4.62 per hour. [30756]

  Mr. Field
  [holding answer 23 February 1998]: The information is set out in the table.
  69

  Number of staff earning less than£3.20 per hour

  Number of staff earning £3.20 to£3.59 per hour

  Number of staff earning £3.60 to£3.99 per hour

  Number of staff earning £4.00 to£4.62 per hour

  Benefits Agency

  0

  5353

  2416

  5895

  Contributions Agency

  0

  1123

  102

  543

  Information Technology Services Agency

  0

  0

  48

  179

  War Pensions Agency

  0

  29

  40

  97

  Child Support Agency

  0

  689

  187

  2002

  DSS Headquarters

  0

  24

  1

  26

  Independent Statutory Bodies

  0

  153

  7

  238

  Note:

  Hourly rates include allowances and includes staff on payroll as at 31 January 1998.

  Disability Benefits Taskforce
  Mrs. Ewing
  To ask the Secretary of State for Social Security if she will establish a disability benefits taskforce to include disabled groups in her departmental review of disability benefits and the Benefit Integrity Project. [35232]

  Mr. Denham
  Following my right hon. Friend the Secretary of State's most recent meeting with representatives of the Disability Benefits Consortium a joint statement was issued making clear the intention to open consultation on disability benefits on a formal basis. This process will begin very shortly in a seminar to discuss various research reports which were published on 12 March.

  Mr. Collings
  Mr. Steen
  To ask the Secretary of State for Social Security when she expects the case of Mr. Collings of 11 Barton Way, Paignton, to be heard by a new tribunal. [35436]

  Mr. Denham
  This is a matter for the President of Independent Tribunal Service (ITS), his honour, Judge Michael Harris. He will write to the hon. Member shortly.

  Family Credit
  Mr. Willetts
  To ask the Secretary of State for Social Security how many single parents are in receipt of family credit; how many of those are claiming the child care disregard; and what is their average of expenditure on child care. [35863]

  Mr. Field
  The latest available figures are for August 1997 when there were 351,000 lone parents receiving Family Credit. 36,000 lone parents were entitled to receive a child care disregard and, of these, 31,000 were in receipt of an increased award for child care charges. The remaining 5,000 cases receive no extra award for child care charges as maximum Family Credit is in payment.

  The average weekly cost for child care for lone parents with entitlement to a child care disregard was £39.07.

  Notes:

  1. Figures are rounded to the nearest thousand.

  2 Sample size is 5 per cent.

  Source:

  Family Credit Quarterly Statistical Inquiry, August 1997.

  Mr. Rendel
  To ask the Secretary of State for Social Security what is the final fortnight for which family credit payments will be due. [35860]
  70
  Mr. Field
  Family Credit is awarded for a 26 week period and paid on a weekly basis. It will continue to be awarded and paid, on this basis, until Working Families Tax Credit is introduced from October 1999.

  National Insurance
  Mr. Webb
  To ask the Secretary of State for Social Security what estimate she has made of the costs of raising the starting point for employee NICs from £64 per week to £81 per week. [35768]

  Mr. Willetts
  To ask the Secretary of State for Social Security what is the cost of raising the lower earnings limit for employee national insurance contributions from £64 per week to £81 per week, within the new structure of National Insurance set out in the Budget. [35861]

  Mr. Denham
  My right hon. Friend the Chancellor of the Exchequer has stated that future reforms will raise the starting point at which employees pay National Insurance contributions to the level of the single person's tax allowance while protecting benefit entitlement. If this change were to be introduced from April 1999, the estimated reduction in revenue from employee Class 1 National Insurance contributions, gross of contracted-out rebates, would be £1.35 billion for 1999–2000

  Source:

  Government Actuary's Department.

  Surveys
  Mr. Forth
  To ask the Secretary of State for Social Security if she will list each information, promotional, marketing and opinion survey contract, with its value, concluded by her Department and its agencies for the years(a) 1997–98, (b) 1998–99, (c) 1999–2000, (d) 2000–2001 and (e) 2001–2002. [32016]

  Mr. Field
  The information could be provided only at disproportionate cost.

  Mobility Allowance
  Mr. Dalyell
  To ask the Secretary of State for Social Security in how many cases mobility allowance related benefits have been withdrawn in the last 12 months for which general figures are conveniently available. [34319]

  Mr. Denham
  Mobility Allowance was superseded by the mobility component of Disability Living Allowance in 1992. It is estimated, on the basis of a 5 per cent.
  71
  sample, that awards of mobility component ceased in about 100,700 cases in the 12 months ending on 31 August 1997. Information is not available on the reasons for cessation, but these will include death, absence abroad, and non-renewal of a fixed period award, as well as withdrawal where the Benefits Agency found that the conditions of entitlement were no longer satisfied.

AGRICULTURE, FISHERIES AND FOOD

  Millennium Compliance
  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food from which budgetary sub-head his Department will meet the cost of millennium compliance.[35432]

  Mr. Morley
  The cost of the millennium compliance will be met from the administrative running cost and capital budgets of the Department and its Agencies. Cost will be incurred within sections G and H of the MAFF Vote, against the following programmes identified in our Departmental Report:

  Programme

  Title

  IR1:05

  Information Technology Services

  IR2:03

  Management of Accommodation and Property Resources

  EA1:02

  Central Science Laboratory

  EA1:03

  Veterinary Laboratories Agency

  EA1:04

  Pesticides Safety Directorate

  EA1:05

  Veterinary Medicines Directorate

  EA1:06

  Meat Hygiene Service

  EA1:08

  Farming and Rural Conservation Agency

  EA1:09

  Centre for Environment, Fisheries and Aquaculture Science

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food how many non-UK nationals are working on computer-related problems within his Department. [35429]

  Mr. Morley
  No non-UK nationals are working on millennium computer-related problems within the Department, and the Department is not employing any "off-shore" services.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what guidance his Department is giving to agricultural businesses and farmers on the year 2000 computer compliance problem. [35426]

  Mr. Morley
  The Department is not providing any specific guidance to agricultural businesses and farmers on the Year 2000 compliance problem, except where the Department has been asked to clarify its position (and Year 2000 plans) in a "supplier" capacity. The Department of Trade and Industry funded 'Action 2000' initiative will be gathering data and providing information across all private sectors; this extends to general advice, good practice, guidance material, signposts to further relevant information and a support infrastructure.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food when he last met Treasury Ministers to discuss the costs of millennium compliance in his Department. [35427]
  72
  Mr. Morley
  There has been no direct specific discussion with Treasury Ministers regarding the Department's millennium costs, which are being met from existing provision. Regular returns regarding millennium plans and costs are being provided to the Central IT Unit (Cabinet Office).

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what meetings he has had with the Chancellor of the Duchy of Lancaster to discuss his Department's progress towards millennium compliance.[35428]

  Mr. Morley
  My noble Friend the Parliamentary Secretary represents the Department's interests on a Ministerial sub-group that meets regularly and is chaired by my right hon. Friend the Chancellor of the Duchy of Lancaster. The Department's officials are in regular contact with the Cabinet Office (Central IT Unit) at an operational level.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what is the estimated cost to his Department of(a) consultants and (b) contractors engaged by the Department to address millennium computer compliance problems; and if he will list them. [35425]

  Mr. Morley
  It is not possible to separate out the costs relating to consultants as opposed to contractors engaged by the Department to address millennium computer compliance problems, or to provide an exhaustive list of them, without incurring disproportionate cost. However, the estimated cost of total external support is between £7 million and £8 million, primary sources on the IT side being Sema Group UK Ltd., Sherwood International Group Ltd., and Oracle Corporation UK Ltd. With regard to 'embedded chip' systems, CBG Consultants is the main source of external support.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food what discussions he has had with his European counterparts with regard to the millennium compliance problem. [35434]

  Mr. Morley
  The Department has taken steps to identify all interfaces with its European counterparts and is continuing to monitor progress via all appropriate channels including its involvement in the EU "Interchange of Data between Administrations" programme.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food (1) when all testing on year 2000 computer compliance will be completed within his Department; [35431]

  (2) if testing has been done on his Department's archive computer files for millennium compliance. [35433]

  Mr. Morley
  All work (including testing) on business critical systems will be completed by April 1999; work on less critical systems will be completed later in 1999. Operational requirements for access to historical/archived data will be addressed within the above timescales.

  Mr. Walter
  To ask the Minister of Agriculture, Fisheries and Food how many officials or individuals working within his Department on millennium compliance have(a) given notice of their intention to leave or (b) left his Department in the last six months. [35430]
  73
  Mr. Morley
  No officials or individuals working on the Department's millennium programmes in the central IT Directorate (the main area of millennium activity) has given notice of intention to leave or left the Department in the last six months.

  Cattle Movement Service
  Mrs. Spelman
  To ask the Minister of Agriculture, Fisheries and Food when farmers will receive payment for the grant up and running costs of the British Cattle Movement Service. [35766]

  Mr. Rooker
  The Government are meeting the costs of setting up the British Cattle Movement Service, and of running it during its first full year of operation. Farmers have paid none of these costs, so the question of paying them back
  does not arise.

  Central Science Laboratory
  Mr. Charles Clarke
  To ask the Minister of Agriculture, Fisheries and Food what estimates his Department has made of the value which might be achieved, on disposal of the Central Science Laboratory sites at(a) Sand Hutton, York, and (b) Colney Lane, Norwich. [35408]

  Mr. Rooker
  [holding answer 20 March 1998]: A formal estimate of the disposal value of the Central Science Laboratory site and Sand Hutton, York has not been prepared because the Ministry is not intending to dispose of it. In any event, such an estimate would have to be regarded as commercially confidential.

  The Central Science Laboratory site at Colney Lane, Norwich is leased to the Ministry although the buildings were erected at Government expense. Any disposal of the Ministry's interests at Colney Lane would be subject to the terms and conditions of the ground lease. The disposal value has not been assessed but, if it had, it too would have to be regarded as commercially confidential.

  Pesticides
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food how many pesticides approved for use prior to 1986 have been reviewed since that date; of those, how many have been rejected on review or had approvals restricted; and how many have not been reviewed. [35557]

  Mr. Rooker
  [holding answer 20 March 1998]: Approvals for agricultural and garden pesticides are issued by MAFF's Pesticides Safety Directorate. Approvals for other pesticides are issued by the Health and Safety Executive. Sixty-nine of the pesticide active ingredients approved by MAFF in 1986 have since been reviewed of which nine have had all their approvals revoked and 47 have had new restrictions imposed.

  The remaining 323 ingredients have yet to be reviewed. However, 129 of these had been withdrawn from the market by the end of 1997. The number of active ingredients on the market in 1986, still on the market at the end of 1997 and not yet reviewed, was therefore 194.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what volume of agricultural pesticides was seized by inspectors during 1997; what volume was destroyed; and how many separate incidents this represented. [35561]
  74
  Mr. Rooker
  [holding answer 20 March 1998]MAFF inspectors are empowered to seize pesticides and destroy them under Regulation 7 of the Control of Pesticides Regulations 1986 (as amended). No pesticides were seized or destroyed using these powers during 1997.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food how many requests were made to his Department during 1997 to obtain evaluation documents on pesticides; and how many requests were made to view the underlying data. [35563]

  Mr. Rooker
  [holding answer 20 March 1998]: The Pesticides Safety Directorate (PSD) maintains a list of individuals and organisations to whom all evaluation documents are sent as they are issued. At the end of 1997, there were 47 names on this list. In addition, PSD dealt with 98 one-off requests for evaluation documents during 1997. There were 7 requests to see underlying data.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what is the cost to his Department of providing information to the public about agricultural pesticides; and what is the mechanism for recovering these costs from the public. [35558]

  Mr. Rooker
  [holding answer 20 March 1998]: The cost of providing information to the public about agricultural pesticides is borne by the Department and, certain publication charges apart is not recovered from the public. An estimate of the cost of provision of this service cannot be provided without incurring disproportionate costs.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what scientific information he uses to specify maximum pesticide levels in crops, food and feeding stuffs. [35560]

  Mr. Rooker
  [holding answer 20 March 1998]: Two key types of study are used to specify maximum residue levels (MRLs) in crops. First, metabolism studies in the relevant crop are used to identify the chemical nature and fate of the residue. Second, residue trials are conducted according to Good Agricultural Practice to establish the highest residue level occurring in the crop when the pesticide product is used as intended. Cross checks are made with toxicological studies to establish that the MRL proposed is safe for consumers. If it would not, then that proposed use of pesticide would not be approved.

  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food if he will list each pesticide approved for use in agriculture, horticulture and food industries where the specified maximum residue level is(a) above, (b) the same as and (c) below that recommended by CODEX. [35562]

  Mr. Rooker
  [holding answer 20 March 1998]: There are some 10,500 MRLs established in the UK in the Pesticides (Maximum Residue levels in Crops, Food and Feedingstuffs) Regulations 1994 (as amended). There are about 1,000 Codex maximum residue levels (MRLs) in place. Where corresponding UK and Codex MRLs are both in place, generally the UK MRL is lower.

  More detailed information would be available only at disproportionate cost.

  A full list of Codex MRLs is published in the Codex Alimentarius Volume 2b. ISBN No. 92–5–003821–6.
  75
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what estimates he has made of the cost to the agrochemical industry of providing information to the public under the Food and Environmental Protection Act 1985. [35559]

  Mr. Rooker
  [holding answer 20 March 1998]: The costs of providing information to the public under the Food and Environmental Protection Act 1985 is borne by the Department. No charge for this work is passed to the agrochemical industry.

  Poultry
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the transposition by Italy of(a) the EU Poultry Meat Hygiene Directive, (b) other veterinary directives into national law and their enforcement of such directives; and if he will take steps to ensure that poultry meat imports into the United Kingdom from Italy are produced and processed according to the directive's requirements. [35221]

  Mr. Rooker
  [holding answer 19 March 1998]: In their fourteenth report on monitoring the application of Community law (published in the Official Journal of the European Communities ref. C332 1997) the European Commission noted that Italy had been censured by the European Court of Justice for failing to fulfil its obligation to transpose into national law various directives in the veterinary field. Failure to transpose Community law into national law does not necessarily mean that Italian producers are not complying with the veterinary requirements for intra-Community trade. Where failure to meet these requirements is identified in specific cases, they are thoroughly investigated and the necessary action is taken.

TRADE AND INDUSTRY

  Foresight Programme
  Mr. Breed
  To ask the President of the Board of Trade by what criteria the comprehensive spending review will identify the resource requirements of the foresight programme. [33622]

  Mr. Battle
  The UK Foresight programme develops visions of the future to guide today's decision-makers. Foresight aims to generate outputs which identify significant market opportunities or threats; identify emerging capabilities of, and demand for, science, engineering and technology; highlight areas of policy, regulation, education and training where Government action would deliver widespread benefits; and set an agenda for action by the business, scientific, voluntary and public sectors to increase national wealth and quality of life.

  The resource requirement of the Foresight programme will be decided in the light of the criteria set out by my right hon. Friend the Chief Secretary when he announced the Terms of Reference of the Comprehensive Spending Review on 24 July 1997: whether it meets the public interest; whether it contributes to the Government's objectives of promoting opportunity, employment,
  76
  investment and fairness; whether it is the most effective way of achieving those objectives; and whether there is scope for improving efficiency and effectiveness.

  Arms Sales
  Mr. Clapham
  To ask the President of the Board of Trade if she will take further steps to ensure that the end use and end user statements are correct on export licence applications for military hardware. [34525]

  Mrs. Roche
  [holding answer 16 March 1998]: Inquiries are made if there is reason to question the accuracy or relevance of any of the information relating to the stated end-use that is supplied with export licence applications.

  Work is in hand to identify ways to reduce further the risk that exported goods might be diverted to an undesirable end-user. As was said by the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on 9 March 1998, Official Report, column 55, an announcement will be made in due course.

  Riot Control Equipment (Kenya)
  Mr. Corbett
  To ask the President of the Board of Trade what requests for supplies of tear gas and riot control equipment have been made by the Kenyan government in the last three years; and what supplies have been authorised. [34232]

  Mrs. Roche
  There is no requirement to notify the Department of requests for goods received from potential customers overseas.

  Regarding the numbers of individual export licences permitting the export to Kenya of tear gas, I refer my hon. Friend to my answer to the hon. Member for North Devon (Mr. Harvey) of 12 March 1998, Official Report, columns 331–32. It is not possible to identify specific goods by the description "riot control equipment". Several of the entries in Part III of Schedule 1 to the Export of Goods (Control) Order (the so-called "Military List") describe goods that might be found capable of playing some role in riot control.

  Mr. Laxton
  To ask the President of the Board of Trade if she will list the military, security and police transfers from the UK to Kenya with particular reference to(a) tear gas and (b) plastic bullets. [31743]

  Mrs. Roche
  I refer my hon. Friend to my answer to the hon. Member for North Devon, (Mr. Harvey) of 12 March 1998,Official Report, columns 331–32.

  Mr. Letwin
  To ask the President of the Board of Trade what permits her Department has given for the export of(a) tear gas and (b) other items used in riot control to Kenya. [32030]

  Mrs. Roche
  [holding answer 2 March 1998]: I refer the hon. Member to my answer to the hon. Member for North Devon, (Mr. Harvey) of 12 March 1998, Official Report, columns 331–32.

  It is not possible to identify specific goods by the description "other items used in riot control". Several of the entries in the Military List describe goods that might be found to be capable of playing some role in riot control.
  77

  Engineering
  Mrs. Curtis-Thomas
  To ask the President of the Board of Trade if she will list by name and date the engineering institutions and engineering manufacturing industries she and her Ministers have visited since 1 May 1997. [35038]

  Mrs. Beckett
  I and my Ministers have had considerable contact with the engineering sector since 1 May 1997. This includes many visits to companies and sectoral bodies as well as meetings at the Department. I also gave the key-note address at the Engineering Employers Federation biennial dinner on 17 February 1998.

  Export Licences
  Mr. Faber
  To ask the President of the Board of Trade, pursuant to her answer of 9 February 1998,Official Report, column 90, on export licences, what percentage of applications for export licences were processed by the Export Control Organisation according to their stated aims in the four week period beginning 9 January. [33218]

  Mrs. Roche
  The Export Control Organisation's management data on the processing of licence applications are compiled on the basis of four week periods. The record nearest to that specified is 10 January to 6 February 1998 and the figures to the nearest percentage point are as follows:

  percentage

  Applications circulated to other Government departments according to their policy requirements and completed in 20 working days

  52

  Applications not circulated to other Government departments and completed in 10 working days

  61

  Mr. Faber
  To ask the President of the Board of Trade what percentage of applications for export licences were processed by the Export Control Organisation according to their stated aims in the four week periods beginning (i) 31 May 1997, (ii) 28 June 1997, (iii) 26 July 1997, (iv) 23 August 1997 and (v) 20 September 1997. [33375]

  Mrs. Roche
  The Export Control Organisation's management data on the processing of licence applications are compiled on the basis of four weekly periods, which include those specified. The figures to the nearest percentage point of these periods are as follows

  Percentage

  Applications circulated toother Governmentdepartments according totheir policy requirementsand completed in20 working days

  Applications notcirculated to otherGovernmentdepartments andcompleted in10 working days

  31.5.1997–27.6.1997

  63

  82

  28.6.1997–25.7.1997

  45

  67

  26.7.1997–22.8.1997

  46

  53

  23.8.1997–19.9.1997

  45

  64

  20.9.1997–17.10.1997

  48

  71

  78

  Multilateral Agreement on Investment
  Mr. Hawkins
  To ask the President of the Board of Trade what assessment she has made of the effects on United Kingdom local government of signing the Multilateral Agreement on Investment. [35105]

  Mrs. Roche
  [holding answer 18 March 1998]: Since discrimination against investors on grounds of nationality is not a factor in local government decision-making, the Agreement will have little or no effect on UK local government. Nevertheless, we have been consulting UK local government who have so far not identified any problems or any need for exceptions. If they raise new points, we shall certainly consider them.

  Mr. Hawkins
  To ask the President of the Board of Trade what estimate she has made of the future costs to the Exchequer of signing the Multilateral Agreement on Investment. [35107]

  Mrs. Roche
  [holding answer 18 March 1998]: It is proposed that the MAI will have a small Parties Group and Secretariat, the costs of which will be shared among all parties to the Agreement. Therefore the costs to the Exchequer are likely to be modest.

  Mr. Hawkins
  To ask the President of the Board of Trade what assessment she has made of the effect on British sovereignty of the Multilateral Agreement on Investment; and if she will make a statement. [35108]

  Mrs. Roche
  [holding answer 18 March 1998]: Like all treaties, the MAI will impinge on sovereignty to some extent. It will prevent governments discriminating on the ground of the nationality of an investor, unless an exception has been listed by that government for a particular measure. The MAI will not prevent general regulation in economic, social, labour, environmental and other fields.

  Ms Walley
  To ask the President of the Board of Trade if she will place in the Library a copy of the Local Government Association's response to the consultation in respect of the MAI. [35103]

  Mrs. Roche
  Consultations with the Local Government Association are on-going; to date we have not received a formal response.

  Director General of Telecommunications
  Mr. Hill
  To ask the President of the Board of Trade if she will make a statement about the successor to Mr. Cruickshank as Director General of Telecommunications. [36151]

  Mrs. Beckett
  I have today appointed Mr. David Edmonds as Director General of Telecommunications from 1 April 1998.

  In recent years there has been significant change in the telecommunications market. There are now more than 350 individually licensed telecommunications operators in the UK and competition is developing rapidly in all areas of the market. The rate of change is set to increase in this already fast-moving, international arena with the convergence of telecommunications, broadcasting and information technology. The Government wish to promote the further development of competition and continue to encourage innovation in services and technology. I wished therefore to appoint someone to this

  79
  important post who had direct experience of managing significant change and of working in a competitive business environment. I believe that Mr. Edmonds is that person and I feel sure he will do an excellent job.

  Mr. Edmonds has combined a successful career in both business and the public sector. He began his career in 1966 as a civil servant and, having risen to Under Secretary, left the Department of the Environment in 1984 to become the Chief Executive of The Housing Corporation. In 1991, Mr. Edmonds joined the Natwest Group and was appointed Managing Director of Group Central Services in 1995. From July 1996, he also had personal responsibility for co-ordinating the Group's preparations for European Monetary Union. Mr. Edmonds is also the chairman of CRISIS, the national charity for the single homeless.

  I would like also to take this opportunity to reiterate my appreciation of the major contribution Mr. Don Cruickshank has made over the past five years as Director General. He has developed the regulatory regime in the demanding context of a period of enormous change in telecommunications, and in so doing has played a key part in ensuring that the UK is very well-placed to benefit from the opportunities of the Information Age.

  Focus Groups
  Mr. Mullin
  To ask the President of the Board of Trade how much her Department(a) has spent since 1 May and (b) is planning to spend on focus groups. [34968]

  Mrs. Beckett
  I refer my hon. Friend to the answer I gave the hon. Member for Gordon (Mr. Bruce) on 17 February 1998,Official Report, columns 567–69.

  Telecommunications (China)
  Mr. Gordon Prentice
  To ask the President of the Board of Trade what steps she is taking to help UK companies enter the telecommunications market in China. [34743]

  Mrs. Roche
  UK exports of telecommunications equipment to China in 1996 exceeded £40 million (Overseas Trade Statistics collected and compiled by HM Customs and Excise). Last year the Department was a sponsor of the Britain On-Line travelling exhibition which promoted UK telecommunications technology, products and services in China. In addition, a visit was organised under the Inward Missions Scheme which enabled Chinese industrialists and senior officials to meet UK communications companies. The Department, which has recently appointed an Export Promoter to promote opportunities in the Chinese telecommunications market, is supporting a mission to China later this year by UK companies. The mission is being organised by the China-Britain Trade Group. In the context of the negotiations over the terms of China's accession to the World Trade Organisation, the UK supports fully the strong line taken by the EU that there must be meaningful access granted to Chinese telecommunication services markets comparable to that granted by its economic peers among existing WTO Members.
  80

  Pit Closures
  Mr. Redwood
  To ask the President of the Board of Trade how many pits she estimates will close in the next year under the Government's current policy towards the coal industry. [35227]

  Mrs. Beckett
  [holding answer 19 March 1998]: It is for the private sector coal companies to take decisions on the future commercial operation of individual coal mines.

  Millennium Compliance
  Mr. Redwood
  To ask the President of the Board of Trade what reasons underlay the selection of publications to be recommended by her Department's Millennium Hotline, with particular reference to "Year 2000 Solutions for Dummies"; and if her Department requested royalties in respect of the publications recommended. [26785]

  Mrs. Beckett
  [holding answer 2 February 1998]: Action 2000 is responsible for the operation of the Millennium Bug hotline, but I understand that the process of deciding what information to provide callers is steered by a group of independent experts, drawn from a range of user industries, professional bodies and independent business support organisations. Action 2000 aims to provide a list of best in breed publications, training modules and signposts to other sources of help/information.

  Action 2000 did not seek royalties. Its primary concern is that businesses should have access to information as rapidly as possible.

  Yemen and Oman
  Mr. Vaz
  To ask the President of the Board of Trade what meetings have taken place since 1 May involving representatives from her Department at which trade and investment in(a) Oman and (b) Yemen were discussed; and how many meetings she and her ministers have had with representatives of the (i) Oman and (ii) Yemeni Governments. [34554]

  Mrs. Roche
  Since 1 May 1997 the following significant occasions, involving representatives of the DTI, have included discussions on trade and investment in Oman:Omani Minister for Commerce's meeting with Lord Clinton-Davis and discussion at the Middle East Association—October 1997.
  Omani Minister for National Economy's meeting with Lord Clinton-Davis and discussion at the Middle East Association—February 1998.
  Lord Mayor of London's visit to Oman—September 1997.
  Chairman of the British Overseas Trade Board's visit to Oman— February 1998.
  Oman British Friendship Association's meeting in London— July 1997.

  Since 1 May 1997 the following significant occasions, involving representatives of the DTI, have included discussions on trade and investment in Yemen:
  Committee for Middle East Trade Round Table with Yemeni businessmen—September 1997.
  Invest in Yemen Seminar in London—September 1997. President of Yemen's visit to UK as Guest of Government—
  November 1997
  . Minister for Trade visit to Yemen—November 1997.
  81
  DTI officials and Export Promoters have such frequent meetings on trade and investment on Oman and Yemen that it is not possible to list them.

  Since 1 May 1997 DTI Ministers have had four meetings with Omani government representatives and eight meetings with Yemeni government representatives.

  Mr. Vaz
  To ask the President of the Board of Trade if she will make a statement on the current level of British investment in Oman. [34548]

  Mrs. Roche
  At the end of 1996, the latest year for which figures are available, the net book value of direct investment by UK firms in Oman was £40 million. The value is negative because UK groups' liabilities to their subsidiaries and branches in Oman are greater than the share capital and reserves of the subsidiaries using the balance of payments methodology. During 1996, the flow of direct investment by UK firms into Oman was £7 million.

  Mr. Vaz
  To ask the President of the Board of Trade if she will make a statement on the current level of trade between Britain and Oman. [34549]

  Mrs. Roche
  In 1997, total trade in goods between the United Kingdom and Oman was worth £476 million. The value of UK exports of goods was £370 million, while the value of UK imports was £105 million. Information on trade in services with Oman is not available.
  82
  Information on UK trade in goods with Oman over the last 5 years is given in the following table

  £ million

  Year

  UK exports

  UK imports

  Total trade

  1993

  306

  82

  388

  1994

  364

  78

  442

  1995

  448

  74

  522

  1996

  416

  87

  503

  1997

  370

  105

  476

  Note:

  Because of rounding, there may be slight discrepancies between the
  totals shown and the sums of constituent parts.

  Source:

  HM Customs and Excise Business Monitor MM20.

  Mr. Vaz
  To ask the President of the Board of Trade what plans she has to visit(a) Yemen and (b) Oman. [34553]

  Mrs. Roche
  I have no plans to visit(a) Yemen or (b) Oman in the immediate future. However, since 1 May 1997 DTI Ministers have had four meetings with Omani government representatives and eight meetings with Yemeni government representatives.

  ECGD (Indonesia)
  Ms Walley
  To ask the President of the Board of Trade if she will state the current level of ECGD exposure in Indonesia. [34523]

  Mrs. Roche
  ECGD's exposure on Indonesia currently stands at £1,815 million.

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

Schools: Use of Museums and Galleries
Baroness Brigstocke Baroness Brigstocke asked Her Majesty's Government:
What steps they are taking, in the light of the review of the National Curriculum for England and Wales and the development of the National Literacy Strategy, to ensure that schools are encouraged to make full and effective use of museums, galleries and heritage sites.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, the Government are well aware of the great educational value of museums, galleries and heritage sites. They provide a wealth of wide-ranging learning opportunities for schools which can make a valuable contribution to the policies we have put in place for raising standards. However, to be effective they need to work in collaboration with schools and LEA advisers so that their educational programmes complement the requirements of the national curriculum. Schools will benefit from those museums and galleries that provide a high quality experience which can help them meet their learning targets.
Baroness Brigstocke: My Lords, I thank the Minister for that reply. Perhaps I may express my worry that a child of five who is starting primary school this September will, for six years, have no entitlement to history, geography, music, art or design technology as core subjects in the national curriculum. They are all subjects, are they not, which can be enriched and supported by museums and galleries? Is the Minister aware of the results of a recent survey by the South Eastern Museums Education Unit of 126 schools in Greater London and Hertfordshire over the past two years which shows that many primary schools were making regular visits to museums just because museums support the teaching of national curriculum core subjects? Are the DfEE and the Department for Culture, Media and Sport working together to preserve the important role museums play in the education of young children?
Baroness Blackstone: My Lords, I accept entirely that it is important that my department and the DCMS should work closely together in encouraging schools and colleges for older young people to make the maximum use of what museums, galleries and heritage
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sites can offer. Similarly, it is important that museums and galleries, many of which provide excellent educational programmes, should work closely with our schools in putting on programmes of which the schools can make the very best use.
Lord Quirk: My Lords, the Question makes reference to the review of the national curriculum, presumably at the end of the present period of moratorium. May I ask the Minister whether her department will be issuing fairly soon a consultative document on the new curriculum?
Baroness Blackstone: My Lords, perhaps I should go back to the whole issue of the primary curriculum which was raised by the noble Baroness, Lady Brigstocke. There is no intention that, in concentrating on our literacy and numeracy targets, work that is going on in our schools in history, geography, art and any of the other six core subjects should be disrupted. It is just a matter of creating a somewhat more flexible timetable for teachers so that they can focus on those important targets. Everyone in your Lordships' House—the noble Lord, Lord Quirk, above all—will agree that if children cannot read or deal with the most basic numeracy they will be unable to benefit from any other parts of the curriculum. We shall be issuing curriculum guidelines in the near future.
Lord Hunt of Kings Heath: My Lords, does my noble friend agree that most, if not all, schools well recognise the benefit of those visits, but that for schools, especially in poorer areas, there can be real problems if funds are tight and the voluntary contributions asked for from parents are insufficient to cover the cost of an individual visit? Can she hold out any hope of special assistance for schools in such areas?
Baroness Blackstone: My Lords, again I accept that it is vital that children from disadvantaged areas, inner cities and homes where they may be least likely, because of poverty, to be taken to museums and galleries by their parents should have access to the excellent provision that can be made by our museums. Indeed, many schools in our inner cities are working hard to achieve that. I cannot tell my noble friend whether there are any additional funds to be made available for that purpose, but perhaps I may take that up with my right honourable friend the Secretary of State and let him know.
The Viscount of Falkland: My Lords, does the Minister agree that our admirable museum and gallery structure was set up in the 19th century, mainly with educational purposes in view, and that in order to continue that tradition and maintain the vast numbers of treasures that there are in our museums and galleries it is necessary to get young people into the habit of visiting those places young? Only the

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Minister's department can help to do that. That would benefit them and the survival of the galleries and museums.
Baroness Blackstone: My Lords, yes. It is the Government's policy to encourage access to all of our museums and galleries. One of the things that my right honourable friend the Chancellor of the Exchequer was able to do in the Budget last week was to announce additional funds for museums and galleries to promote that access. It is also important that my department should encourage educational institutions to make the maximum possible use of what museums and galleries can offer. It is doing that. However, it is up to head teachers and subject teachers to make the best use of those provisions. The Government cannot instruct them to do so, but we are doing all that we can to encourage that.
Baroness Blatch: My Lords, does the Minister agree that the children in inner city areas, deprived or not, are not so disadvantaged because they live within reasonable distances of museums and galleries, but that children in rural areas are disadvantaged because they face practical problems in reaching museums and galleries? Does she further agree that the increase in petrol prices announced in the recent Budget will make it increasingly difficult for children in rural areas—my Lords, it is not a laughing matter—to make such visits in the towns?
Baroness Blackstone: My Lords, children living in London have a big advantage because they are near to national museums and galleries. However, that is not true of children from all our cities and, regrettably, not all museums run education programmes. I accept that access for children from rural areas might be more difficult and that everything possible should be done to encourage schools to take children from rural areas to visit museums in our cities. The increase in petrol prices would be a small part of the total cost of such visits. I do not believe that it would be the main factor in discouraging a school from taking pupils a long distance to visit a museum.
Lord Annan: My Lords, does the Minister realise that the publications department of the National Gallery has a wide range of school aids, not merely books, and that Mrs. Patricia Williams of that department recently attended a conference at the conference centre in Birmingham—that repulsive looking building—where there was an even wider range of such aids for helping schools in this matter?
Baroness Blackstone: My Lords, yes, I am familiar with the education programmes set up by the National Gallery and the V&A, both of which have particularly strong programmes. The head of the education department at the National Gallery was for many years a member of my staff at Birkbeck College.

Former Soviet Army Officers: Retraining
2.45 p.m.
The Earl of Carlisle The Earl of Carlisle asked Her Majesty's Government:
How much they have spent since 1991 on retraining unemployed former Soviet army officers in Russia; and what financial contribution the Russian Federation has made towards such projects.
Lord Hoyle: My Lords, since 1991, the British Government have spent £3,651,000 on retraining projects for unemployed former Soviet army officers in Russia. The Russian Federation has made no specific financial contribution towards such projects.
The Earl of Carlisle: My Lords, I thank the Minister for his helpful Answer. Will he join me in congratulating Squadron Leader Max Jardine of the Royal Air Force, who has been the project officer for this interesting experiment? Is the Minister aware that 2,000 former Soviet Union officers are unemployed in Estonia and Latvia? Will he extend this valuable project to those two northern states not only in order to be even-handed but also because, as he may realise, the devil finds work for idle hands?
Lord Hoyle: My Lords, I am grateful to the noble Earl for congratulating Squadron Leader Max Jardine, who has worked tirelessly and single mindedly in support of these programmes. I am sure that your Lordships will wish those congratulations to be passed on to the squadron leader and I shall ensure that that is done.
As regards extending the programme to other Soviet states, we are happy to provide advice to other nations. However, we do not have the resources to establish similar schemes in other countries. Resettlement is only one area in which we can support countries of central and eastern Europe; for example, bilateral arrangements with Estonia, Latvia and Lithuania cover areas such as English language training, the provision of military training teams and the secondment of UK civil servants and military personnel to provide advice to the Ministry of Defence. We are always willing to provide advice.
Baroness Rawlings: My Lords, given the importance of the stability of the Russian Federation, can the Minister comment on this morning's news that the Russian president, Boris Yeltsin, has taken the unprecedented step of dismissing his entire government and has taken over temporarily as prime minister? What implications does that have for the political and economic stability of the country and the region as a whole, particularly since

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President Yeltsin has stated that the move is an attempt to give new impulse to economic reform rather than a change in economic policy?
Lord Hoyle: My Lords, I am afraid that I must say that that has nothing to do with the Question on the Order Paper. Indeed, it is far too early to comment on that matter.
Lord Stoddart of Swindon: My Lords, perhaps I may ask a different question, but one on the same lines. Bearing in mind that President Yeltsin has sacked his government because they are unable to glean from the Mafia and other "businessmen" the tax which is necessary to keep Russia going, is it not odd that British taxpayers should be forking out for the retraining of Russian officers?
Lord Hoyle: My Lords, I must say to my noble friend that I do not believe the two are connected. Indeed, we believe, along with our European allies, that it is in our interests and the interests of security and co-operation in Europe that we should help Russia with the resettlement and reorganisation of her army. For that reason, we undertook that project.
Lord Chalfont: My Lords, may I return to the Question on the Order Paper and ask the Minister from which Vote the money is taken? To be more specific, does it come from the defence budget?
Lord Hoyle: My Lords, I must write to the noble Lord in answer to that question; I note the point he makes.

Leasehold Valuation Tribunal
2.50 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes asked Her Majesty's Government:
Whether they are satisfied with the working of the Leasehold Valuation Tribunal and the basis of the appeals from that tribunal to the Lands Tribunal.
Baroness Farrington of Ribbleton: My Lords, the leasehold valuation tribunals have provided an effective means of resolving a variety of disputes relating to leasehold property without the risks of high and uncertain costs associated with court proceedings. We shall be monitoring the operation of their recently introduced role in hearing service charge disputes and applications for the appointment of a manager. There has been some concern about appeals to the Lands Tribunal, which has the power to award costs. The procedures at the Lands Tribunal are kept under review, and, if it is decided that there is scope for change, interested organisations will be consulted. We are generally satisfied with the basis of appeals from the Leasehold Valuation Tribunal to the Lands Tribunal.
Baroness Gardner of Parkes: My Lords, I thank the Minister for that reply. Is she aware that there is an
956
anomaly as regards the right of appeal? Under the Housing Act 1996, leave to appeal from any decision must be obtained from the Leasehold Valuation Tribunal, whereas under the Leasehold Reform, Housing and Urban Development Act 1993, an appeal can be !edged on any ground? Does she know that the Leasehold Advisory Service is extremely concerned that unscrupulous landlords are using that right of appeal as an intimidatory tactic to worry tenants into agreeing higher prices than those determined by the tribunal? Will the Government consider rectifying that anomaly?
Baroness Farrington of Ribbleton: My Lords, we are aware of concerns that different rules apply to appeals relating to service charge disputes and applications for the appointment of manager under the Housing Act 1996. In those cases, there is a requirement to seek leave to appeal from either the Leasehold Valuation Tribunal or the Lands Tribunal. In other cases, there is an unqualified right of appeal. The Government are committed to leasehold reform and plan to issue a consultation paper later this year. That will provide an opportunity to consider the working of the leasehold valuation tribunals and the arrangements for appeals against their decisions.
Lord Ackner: My Lords, is the Minister aware that the problem to which attention has been drawn arises quite simply from the situation that the opportunity to act with oppression is given to a landlord where an appeal is of right? Where an appeal requires the leave of either the tribunal or the Lands Tribunal, that opportunity does not occur because of the conditions that can be appended to leave to appeal. Will not the Government consider urgently making leave to appeal to the Lands Tribunal a requirement in every case?
Baroness Farrington of Ribbleton: My Lords, as I tried to explain to the noble Baroness, Lady Gardner of Parkes, we are aware of the concerns which have been raised in this field. We have a manifesto commitment to introduce commonhold reform and we appreciate that the two areas of leasehold and commonhold reform need to be considered together because they are closely connected. Therefore, we shall consider those matters in due course.
Baroness Gardner of Parkes: My Lords, will the Minister tell the House whether she is aware of the fact that Judge Marder, who is president of the Lands Tribunal, has issued guidance for those seeking to appeal under the 1996 Act, which is the one which requires leave to appeal. In that guidance he says:
"It may be appropriate to refuse leave to appeal where there is no substantive point at issue between the parties and the application appears to be oppressive, eg, where the application appears to be exploiting deeper pockets in order to deter other parties from asserting their rights".
Does not the Minister think that fear of the enormous cost which could be involved for ordinary people in being forced to answer an appeal at the Lands Tribunal is a very real deterrent for many people?
Baroness Farrington of Ribbleton: My Lords, we are aware of those concerns and are aware also of the

957
points which are being raised. We are monitoring the situation closely and we shall seek to act in the appropriate way, as necessary.

Equal Pay
2.55 p.m.
Earl Russell Earl Russell asked Her Majesty's Government:
What plans they have to expedite progress towards equal pay.
Baroness Blackstone: My Lords, the Government's New Earnings Survey for April 1997 shows women's average hourly earnings, excluding overtime, were 80.2 per cent. of that of men. Government policies will enable more women to train for and enter higher status jobs and will encourage employers to pay full and fair rates. The introduction of a national minimum wage will also help to reduce the gap between men's and women's pay, since women form a large proportion of those workers who will benefit from this measure. The Equal Opportunities Commission is currently undertaking a review of the Sex Discrimination Act 1975 and Equal Pay Act 1970 and the Government will consider the review when it is formally presented later this year.
Earl Russell: My Lords, I thank the Minister for repeating, with a change I believe of only six words, a Written Answer to me of 16th February. I am sure that she is familiar with the draft consultation paper issued by the Equal Opportunities Commission entitled Equality in the 21st Century. Will she pay particular attention to four proposals in that document: the proposal to change the negative ban on discrimination into a positive right to equal treatment; the proposal to incorporate the law on sexual harassment within the right to equal treatment; the proposal to consolidate the law on pregnancy and maternity leave; and the proposal to incorporate, where possible, the provisions of European Community law in British law? In that context, will the Minister agree that Europe is a girl's best friend?
Baroness Blackstone: My Lords, I am delighted that on this occasion at least the Government are found to be consistent and that the Answer I have given today is the same as the Written Answer which I gave to the noble Earl on 16th February.
It is obviously too early to comment on the Equal Opportunities Commission review, and we shall wish to do that when it has been completed. However, I believe that all the issues which the noble Earl has raised will be addressed by the commission, and the Government would certainly wish to see progress made in all those areas to ensure that we have equal rights at work and move slowly towards achieving genuine equal pay. Although there have been improvements, we are still not there.
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Finally, as regards the European Union, that is an area in which the Commission and the Community have in some respects been ahead of the UK and we can benefit from the work that they have done.
Baroness Lockwood: My Lords, can the Minister tell me which government departments are currently undertaking a pay audit in keeping with the code of practice on equal pay issued by the Equal Opportunities Commission in 1997?
Baroness Blackstone: My Lords, all government departments have to evaluate their pay systems as a condition of delegated pay. As part of that evaluation process, they are expected to review their systems for any sex bias and provide details of how any discrimination issues have been handled. The Cabinet Office monitors the results closely. However, I believe that the record of government departments in that respect is very good.
Baroness Platt of Writtle: My Lords, does the Minister agree that one of the most important ways to encourage progress in equal pay, especially for technologically qualified women but also for many other women, is to persuade employers to provide flexible working arrangements so that these women do not lose touch with their expertise in the subjects concerned and can pursue their careers, possibly on a part-time basis?
Baroness Blackstone: Yes, my Lords; family friendly working arrangements, as I believe they are now called, are something that the Government very much want to encourage in a variety of ways, both, as the noble Baroness said, through making it easier for women with small children to work part-time if they wish to do so and through providing reasonable opportunities for women—and, indeed, men—who have small children to take time off if their children are ill and for employers to be understanding in that respect. Moreover, we are keen for these women to be given adequate leave after either having a baby or adopting a child.
Lord McCarthy: My Lords, does my noble friend agree that the major practical problem in enforcing equal pay is the time involved in getting settlements out of industrial tribunals and the RUT? The important aspect is that we should have a way of taking collective cases to industrial tribunals and taking class actions to deal with disputes. That has long been a part of the policy of the present party in office. When will the Government do something about that?
Baroness Blackstone: My Lords, I entirely agree with my noble friend that long delays in industrial tribunal cases can be a serious disincentive to women who may have been discriminated against in pursuing their cases by that route. However, the Government wish to consider the outcome of the Lord Chancellor's working group on representative actions before making a decision on the matter. Such changes would allow a single body to bring an action on behalf of a whole class

959
of people and would require individuals to give up their right to have their cases heard individually. However, the implications of such a fundamental change in policy need to be thoroughly considered.
I should stress that the Government welcome the review of the Equal Opportunities Commission on equality legislation, which recommends that the courts should provide for representative actions and collective remedies. As I have already said, we shall give full and careful consideration to all the recommendations of the EOC for changes to the law.
Lord Avebury: My Lords, can the Minister tell the House how many Permanent Secretaries are women and what proportion of the total that represents? Further, is she satisfied that the promotion opportunities for women within the Civil Service are being looked at as part of the Government's reforms?
Baroness Blackstone: My Lords, this is something which is under active consideration in my department. I believe that Ministers in the new Government have been encouraging all departments to look at promotion opportunities for women in the Civil Service. We know that there is now a much higher proportion of women entering the Civil Service at all levels. However, what we have not yet seen is enough of them coming through to positions right at the top. The Government very much hope that that will happen.
Lord Evans of Parkside: My Lords, does my noble friend agree that some of the worst examples of unequal pay occur at the very bottom end of the scale, where hundreds of thousands of women enjoy even less in wages than men who earn poverty wages? Does she also agree that one way to strike a blow for equal pay and against poverty pay would be to give the National Minimum Wage Bill an uninterrupted and speedy passage through this House?
Baroness Blackstone: Yes, my Lords; I very much hope that that will happen. The introduction of the national minimum wage will help to end the worst cases of exploitation of vulnerable, low-paid workers, whether working full-time, part-time, on a temporary or casual basis, or even at home. Indeed, some of the worst paid women workers are actually home workers. In doing so, the national minimum wage will contribute towards easing the pay inequalities which, unfortunately, still exist between men and women.
The Lord Bishop of Norwich: My Lords, in the consideration of equal pay, has the Minister given any thought to those mothers who choose to stay at home to care for their children in the belief that this is a full-time and worthwhile job?
Baroness Blackstone: My Lords, those mothers who wish to stay at home looking after their young children should be able to do so. It is vital that the Government
960
ensure that they communicate that fact and that they do not in any way imply that it is not a worthwhile thing to do.
Earl Russell: My Lords, I thank the Minister for some helpful answers. However, does she realise that there is also a steadily growing impatience to speed up progress on the subject? In that context, can the noble Baroness tell the House when the Government intend to take measures to implement the European Union working hours directive and the parental leave directive?
Baroness Blackstone: My Lords, I recognise that many women—and, I hope, many men—want to see the discrepancy in the pay of men and women completely removed. Unfortunately, I cannot give the noble Earl a precise date in answer to his question. But if I am able to obtain one I shall write to him with that information.

Business
3.5 p.m.
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Hoyle will, with the leave of the House, repeat (after the proceedings on the Bank of England Bill) a Statement that is to be made in another place on the report of the Home Affairs Committee on the police disciplinary and complaints procedure.

Business of the House: Debate on Ceremony of Introduction
Lord Carter: My Lords, it may also be for the convenience of the House if I repeat the information contained in a special notice issued to all Peers on Friday last. It stated that the debate tabled for tomorrow on the Motion of my noble friend the Lord Privy Seal concerning the report from the Select Committee on the Ceremony of Introduction has been postponed to a later date. Personal circumstances would have precluded by noble friend from being in the House tomorrow. It has been agreed through the usual channels that it would not be appropriate for someone else to move that Motion on his behalf. Therefore, a date for the debate on the Ceremony of Introduction will be agreed through the usual channels and will be announced to the House at the earliest opportunity.
Community Care (Residential Accommodation) Bill
Brought from the Commons; read a first time, and to be printed.
Fireworks Bill
Brought from the Commons; read a first time, and to be printed.

Bank of England Bill
3.7 p.m.
Report received.
Clause 1 [Court of directors]:
Lord Mackay of Drumadoon Lord Mackay of Drumadoon moved Amendment No. 1:
Page 1, line 8, at beginning insert—
("() The Bank of England shall henceforth be known as the Central Bank of the United Kingdom ("the Bank").").
The noble and learned Lord said: My Lords, in speaking to this amendment I shall, with the leave of the House, speak also to Amendments Nos. 16, 18 and 24 which appear on the Marshalled List in my name. Those noble Lords who have been following the progress of the Bill will be aware that amendments in fairly similar terms were debated in Committee in the Moses Room. At that time, those amendments were moved by my noble friend Lord Mackay of Ardbrecknish. I regret that I was not able to be present on that occasion because I was in fact in the Chamber debating the Crime and Disorder Bill. Your Lordships may feel that the two subjects are not easily mixed. It has been suggested to me that the amendments merit further consideration by your Lordships—a view with which I completely agree—because they raise an important issue which is symptomatic of the fact that this House is increasingly being required to consider a number of very important constitutional matters.
This Bill has been presented to Parliament after the Government have carried out a thorough and detailed review of the operations of the Bank of England. Although the Bill is by no means lengthy as regards the number of pages and clauses, it includes—as I read it—a number of important and indeed radical changes to the constitution of the Bank of England, the manner in which it is to be regulated and, most important of all, the role with which it is to be charged vis-à-vis the monetary policy of the United Kingdom.
When major institutions—whether they are public institutions or companies in private ownership—carry out a radical review of their operations, structure, constitution, and management, it is not uncommon for the institution concerned at the same time to consider whether the role which it now has, and the manner in which it is to proceed in the future, is best served by retaining the name under which it has operated or traded, in some instances for many hundreds of years. Undoubtedly that exercise ought to be carried out during this Bill's passage through Parliament.
As I believe was observed when the Bill was in Committee, the Bank of England was founded by Royal Charter in 1694. As my noble friend Lord Mackay of Ardbrecknish helpfully informed your Lordships, like many valuable institutions in the United Kingdom it was founded by a Scotsman, William Paterson. In the same year a number of London-based Scots thought that Scotland should also have a national bank. The following year by Act of Parliament—at that stage it was the Scottish Parliament—the necessary Act was passed and the Bank of Scotland came into being.
962
However, from the outset the two banks differed fundamentally in their role. Ever since its creation the Bank of England has been closely associated with the government. One reason it was set up was to make a loan available to the King to enable him to conduct a war. The Scots were much more practically oriented. They set up the Bank of Scotland to meet the needs of commerce. It has continued to play a major role in the commercial life of Scotland ever since.
It is becoming increasingly obvious to those of us who follow the constitutional changes which are taking place at the moment that the review of major institutions, such as the Bank of Scotland, and the creation of new institutions, such as the new Scottish parliament, will have major ramifications which are not immediately obvious. I suggest that what we are discussing is a good example of that phenomenon. When the Scotland Bill reaches your Lordships' House, noble Lords will have to discuss the procedures by which the voice of Scotland and the voice of the new Scottish parliament are to be heard in the corridors of power in Brussels, Strasbourg and elsewhere. I anticipate that when we debate that Bill we shall have many interesting discussions on the best way forward. Your Lordships may be interested to learn that already some civil servants in the Scottish Office have been despatched to Brussels to set up an office to further the hearing of the Scottish voice. That office has already been nicknamed "SCOT.REP" to mirror "UK.REP" which is the colloquial way of referring to our ambassador there.
When the single currency is established—as many in this House anticipate it will be, if the present Government remain in office long enough to achieve their objective—that same issue will arise as regards the Bank of England. If the Bank of England is to represent the United Kingdom on the committee which is to be set up in Frankfurt, and in other discussions which will take place throughout the European Union, I believe there is great scope for confusion and for potential conflict between the new Scottish parliament on the one hand and the United Kingdom Government and the Bank of England on the other. It is important that those who will have to deal with the Bank of England, in the future—assuming that the single currency is adopted—should be well aware that it does not represent England, but rather the whole of the United Kingdom.
Those of us who are Scots are sometimes irritated and sometimes amused by the confusion that arises over where Scotland fits in to the United Kingdom. Every time I take a taxi from King's Cross station to your Lordships' House and present a Scottish banknote to pay my taxi fare, I await with a measure of anticipation the reaction of the taxi driver who holds up my banknote and examines it on both sides to check that it is genuine. That, of course, is amusing. So, too, was an experience to which I was subjected many years ago when I went to study at the University of Virginia. Having been there some six weeks I attended a football game with an attractive lady student from North Carolina who inquired where I came from. I told her I came from Edinburgh, Scotland. She asked how long I had been in the United States. When I replied, "six weeks", she said

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without pausing, "If I may say so, your English is remarkably good". These are whimsical examples, but they serve to illustrate the confusion which undoubtedly exists in the outside world as to where Scotland fits into the general picture of the United Kingdom, and where the Bank of England, which is, of course, a public body, fits into the United Kingdom.
This Government pride themselves on being prepared to think the unthinkable and to change the names of government departments if that serves to get their message across better. We know, of course, that they sought to change the name of their party. I hope that I have spoken with an element of humour in moving this amendment, but I trust that will not disguise the fact that I believe this is an important issue. When the Minister responds to the amendment I hope he can inform your Lordships what the senior officials in the Bank of England think about this measure which was, of course, debated previously. There is anxiety that unless this historical nettle is grasped, confusion may arise in the future. I beg to move.
3.15 p.m.
Lord Newby: My Lords, I speak in favour of this group of amendments. The current title of the Bank of England is clearly illogical given its role vis-à-vis the United Kingdom as a whole. We would hardly introduce a Bill simply to change the title of the Bank of England, but within this Bill we can try to adopt a more logical title. It is also an appropriate time to do this given the changing nature of the Bank and of the constitutional arrangements within the United Kingdom. The new title that is proposed in the amendment would help to reflect that.
I certainly believe that the way in which those in Scotland view the monetary policy committee might be enhanced if it was seen to represent a bank that clearly represented the United Kingdom as a whole. Later we shall discuss other measures which might improve the credibility of this new institution with those north of the Border. I shall not detain the House further. I believe that the arguments are clear and self-evident. As I said, we support this group of amendments.
Lord Boardman: My Lords, I cannot dispute any of the points made by my noble friend. I agree with them. However, I remind the House of arguments that I put forward in Committee as to retaining the name of the Bank of England. Over centuries it has acquired a reputation for integrity, straightforwardness and competence which is unequalled throughout the world. I have travelled to many international conferences for bankers. The Bank of England stood out supreme by name and reputation. I shall be very sorry to see that lost for something which, although logical, would be misunderstood. Much as I support what my noble and learned friend said, I find it difficult to support the amendment.
Lord Mackay of Ardbrecknish: My Lords, perhaps I may say a few words before the Minister responds. I fully understand the point made by my noble friend Lord Boardman. A number of people have made it over
964
the past few weeks. The issue was before the Committee and now, thanks to my noble and learned friend Lord Mackay of Drumadoon, it is before this Report stage.
Of course the Bank of England has a long history and in financial circles I hope that most people understand that it is the central bank of the United Kingdom. But, frankly, I am not sure that that hope would be realised if I quizzed many people in the financial sector, especially abroad. Like the noble Lord, Lord Newby, I would not have suggested this point on its own, but two things are happening. First, this Bill changes the policy nature of what the Bank of England does; we shall come to the substance of that later. Secondly, and at the same time, a Bill is going through another place, shortly to come before your Lordships' House, which will change the way in which the United Kingdom is governed. For the first time in 300 years there will be a government of Scotland as well as of the United Kingdom. As my noble and learned friend said, that government of Scotland will set up an office in Brussels. It will not be, of course, a member state, but it will be there. If the Government pluck up enough courage to move to a European central bank, with each central bank of a member state having a representative on it, it will become increasingly odd that the representative from the United Kingdom will come from the Bank of England. That is a difficulty.
I sometimes think that the Government have not realised the considerable change to the geography of the United Kingdom that they are making with the passage of the Scotland Bill and the Welsh Bill. My noble and learned friend Lord Fraser of Carmyllie drew the Committee's attention to wording in the Bill relating to the principle of what one calls the Bank. Is it the Bank of England or the "Central Bank of the United Kingdom"? He pointed out the phrase in Clause 16 which states that the Monetary Policy Committee will collect,
"the regional, sectoral and other information".
My noble and learned friend Lord Fraser of Carmyllie asked where the Scottish information will be collected. Is Scotland a region? I should not need to say this to the Treasury, considering that—I am not sure what percentage of "Scottishness" the noble Lord, Lord McIntosh brings to the Treasury team—there are three and a bit Scots in the Treasury team. They will understand exactly what I mean when I say that the one way to irritate a Scotsman (aside from beating him soundly at rugby as happened yesterday) is to call him English or to call Her Majesty the Queen of England, or to call Scotland a region.
The noble Lord, Lord McIntosh of Haringey, said that a new phrase had been devised: "the home countries". Interestingly, the noble Lord has not come forward with an amendment to the clause to which my noble and learned friend drew attention to get round the problem as regards how Scotland is included in the phrase,
"regional, sectoral and other information necessary".
The two issues—the perceptions we must now have of the United Kingdom and the roles of the member countries in the United Kingdom—are linked. My noble and learned friend has done us a service in bringing

965
forward this amendment at Report stage so that we can discuss the matter in this House rather than in the Moses Room.
There is a difficult balance between the considerable history of the name of the Bank of England and its status in Britain and around the world, to which my noble friend Lord Boardman referred, and the reality of the new way in which we shall run our country, with governments in Scotland and in Wales. A government in Scotland will have considerable powers. One wonders whether "the Bank of England" is the right name.
A journalist on the Herald, Mr. Ben Brogan, rang the Bank of England after we discussed the matter in Committee. Paraphrasing from memory, he asked, "What do you think of this?" The spokeswoman, I think, of the Bank of England said that she saw the logic of it. If even a spokeswoman from the Bank of England sees the logic of it, I wonder whether the Government will see the logic of it.
Lord McIntosh of Haringey: My Lords, the noble and learned Lord, Lord Mackay of Drumadoon, questioned what position Scotland takes in relation to the United Kingdom. The noble Lord, Lord Mackay of Ardbrecknish, talked about us changing the geography of the United Kingdom. I look at a map with the south at the bottom and the north at the top. Therefore my answer to the noble and learned Lord is that Scotland is where it has always been, on top; and I do not expect any change in that. I do not think that any change in wording is necessary in that respect.
If the noble Lord, Lord Mackay of Ardbrecknish, will forgive me, I do not know whether I am another half Scot on top of those others in the Treasury team. I am only half-Scots. However, I recognise that it was the McIntoshes at the Battle of Culloden who were in the centre of the line who were perhaps the bravest. But they were also foolhardy in that they advanced before the order was given and contributed substantially to the rout of Charles's army. I do not propose to follow noble Lords in the direction of the foolhardiness on which they have embarked.
I am grateful, as I was in Committee, to the noble Lord, Lord Boardman. He said today that the Bank of England is a byword for integrity, straightforwardness and competence. I took care to record what the noble Lord said at Committee stage. He said that the Bank of England was the hallmark of respectability and responsibility throughout the world and he would be sorry to see the disappearance of that name. That is exactly the Government's position. Of course we understand the theoretical correctness of the amendments which have been moved. Of course we understand that there is an illogicality in calling the Bank, which in Europe will represent the United Kingdom, the Bank of England. But it would mean effectively abandoning a reputation built up over more than 300 years. It would mean an irrevocable break with the past.
The risk that I see is that such a change would send the wrong signals and damage the Bank's credibility as an institution. I note that when the European Monetary
966
Institute considered the role of the Bank of England under the new arrangements it made no reference to the name. I seriously wonder whether we are not anticipating difficulties which are not likely to occur.
Although I could have done so, I made no investigation of the cost of such a change. I did not go to see whether the old lady of Threadneedle Street had her name carved in stone above the portals of the Bank. I suspect that throughout the United Kingdom there must be many representations of the Bank of England which would have to be changed if the name were changed. Enough is enough. Let us deal with the serious issues in the Bill. Let us not create a new name for a bank which would be an unknown entity on the world stage. I hope that the noble and learned Lord will not press his amendments.
Lord Mackay of Drumadoon: My Lords, I am grateful to the Minister for responding to the amendment in his characteristically friendly and open manner. While I fully confess to injecting an element of humour into what I said, I believe that underlying this issue there are certain practical difficulties. I hope that once the Bill becomes law, and once the Bank of England seeks to implement its provisions, it will do its best not only to educate the citizens of this country as to its new role, but also to make it clear that it is a different institution altogether from the Bank of Scotland and the Bank of Wales. I thank noble Lords who have contributed to this short debate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Functions to be carried out by non-executive members]:
3.30 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 2:
Page 2, line 25, leave out subsection (4) and insert—
("(4) The sub-committee shall elect one of its members to be its Chairman.").
The noble Lord said: My Lords, as a brief postscript to the remark made by the Minister in the previous debate as to the amount of "Scottishness" he brings to the Treasury team in reminding us about Culloden, perhaps I may tell him that such is the importance of his clan that the chief of that clan is in fact called "The McIntosh". So we now have two "The McIntoshes", and we shall have to be very careful about the one we face in this House. If the noble Lord moves too far forward of the rest of his troops, I assure him that we shall be on the lookout to cut him down in the way his ancestors were cut down at Culloden.
In Committee we examined on a number of occasions the question of who appoints people to either the court of the Bank of England or to the monetary policy committee. A number of us asked questions at various stages as to why it always seemed to be the Chancellor of the Exchequer—either directly or following consultation. I suggested that the Bank appeared not so much an independent Bank, as the Chancellor of the Exchequer's Bank.
The Minister defended the position of the Chancellor of the Exchequer by pointing out to us that the Chancellor was, on behalf of the people of this country, the shareholder in the Bank of England, and for that reason it was appropriate that he should make the appointments. We shall discuss later a variation in the method of appointment. However, it seems to me that the Minister had a good argument when he asked us who else would make the appointment if not the Chancellor of the Exchequer, given the Chancellor of the Exchequer's position. As a result of the arguments we had in Committee, this is the only amendment that calls into question one of the Chancellor's direct appointments.
I bring this matter before the House because I believe that this is a different kind of appointment from the appointment of members of the court or members of the monetary policy committee. In Clause 3 we are discussing a sub-committee of the court of directors of the Bank, which will have certain tasks delegated to it as outlined in subsection (2). The sub-committee will have a quorum of seven and will be, in a way, the non-executive directors of the bank. One of the things its members will do, for example, is decide the pay of the Governor.
As the Bill stands, the Chancellor, having appointed every member of the court, rather than leave the court or the sub-committee to decide on its own chairman, will designate one of the directors—or rather, he "may" designate one of the directors. We had an interesting discussion on that matter too. I asked a question during the course of discussion on the major amendment as to why the wording was "may" and not "shall". The Minister said that,
"if he [the Chancellor] does not designate somebody as chairman, then the sub-committee of the court itself will have to make that designation, because Clause 3(7) says that the sub-committee shall he responsible for its own procedures. I hope this answers that question".—[Official Report, 3/3/98; col. CWH29.]
That reply answered the question as to why the wording was "may" and not "shall". However, it raised the possibility that the Chancellor and the Treasury conceived of a situation in which the Chancellor would not appoint the chairman of the sub-committee but would leave it to the sub-committee itself. That led me to wonder: as the Chancellor has appointed all the men and women to the court, and may actually allow the sub-committee to appoint its own chairman, why do we not say that the sub-committee should always appoint its own chairman, and at least take one of the appointments inside the Bank's system out of the hands of the Chancellor?
The Minister said that he would reflect on the matter, since a number of other noble Lords joined in the debate on the issue. As he has not tabled any amendments of his own, I can only conclude that, on reflection, he prefers the matter the way it is. Ministers always prefer it the way it is—that is what they are advised to think. However, I would advocate a little independence for the members of the court. They are appointed by the Chancellor, and therefore one assumes that all of them are men and women in whom the Chancellor has confidence. Surely he can leave them to decide who should be chairman of the sub-committee.
I hope that the Minister will accept this amendment. I shall even be content if he tells me that it is not very well worded and that he will return to the matter at Third Reading. However, I feel that the hand of the Chancellor ought to be removed from this very small inside appointment in the Bank, and the sub-committee itself ought to be able to appoint its own chairman. That, after all, is what happens in many outside organisations. I beg to move.
Lord Stewartby: My Lords, I, too, hope that the Minister will welcome this amendment for the reasons that my noble friend gave. I cannot think of any other organisation that I have ever come across where a sub-committee of a board or a court does not have control over its own procedures. For the Chancellor of the Exchequer to have authority in that way, penetrating down into the affairs of the Bank of England, seems a perverse form of governance. I hope, if the noble Lord has not yet arrived at the view that this change needs to be made to the Bill, that he has not yet completed his process of reflection.
Will the Minister also place on record a definitive answer to the point that I raised in Committee as to whether or not the Governor and deputy governors are directors of the Bank? From the way in which Clause 3 is framed it seems that the only directors of the Bank are the non-executive members of the court: whereas Clause 1 states that the Governor and the two deputy governors are among those who comprise the court of directors. The natural interpretation would therefore be that they are directors. If they are not directors, there are problems.
In Committee the Minister said that it was intended that the Bank of England should be run as far as possible in the format of a company subject to the Companies Act. If the Governor was not a director of the Bank of England, he would not be able to sign the accounts; he would not be responsible for all the normal duties that a director is liable to perform under the Companies Act. On the other hand, if the Governor and the two deputy governors are directors of the Bank, then the wording at the beginning of Clause 3 is misleading. The rubric refers only to the:
"Functions to be carried out by non-executive members",
yet the text refers to the sub-committee consisting of the directors of the bank and under those circumstances would include the executive members in the form of the Governor and the two deputy governors. I hope that the noble Lord can clarify that point on this occasion.
Lord Boardman: My Lords, I too support the amendment. It seems to me that the Government are trying to have it both ways. Under the Bill the Chancellor retains all the appointments. It is as though the committee is purely a subsidiary of the Government, to respond to and do what the Chancellor says. When challenged about events that happened last week in regard to the conflict between interest rates and taxation, which have been a constant source of debate in the past few days in the press, the Chancellor takes the view that "The Bank of England has nothing to do with me". Yet he makes quite sure that it has everything to do with

969
him under this Bill. He will have complete control of every appointment and whatever happens. For him to turn round and say, "It has nothing to do with me", is unfortunate.
I hope that this small concession which would result from the amendment would achieve the logical sequence of a committee appointing its own chairman and not having him imposed on it. As my noble friend said, and as was said throughout the debate, that is what would follow. The Chancellor would not impose his appointment upon the committee. That would go one step towards making the Bank appear to have some independence from the Treasury.
Lord McIntosh of Haringey: My Lords, first I wish to deal with the point raised by the noble Lord, Lord Stewartby. I indicated to him informally between the Committee stage and today that I might have been wrong in the advice I gave the Committee. I was not wrong. The Governor and the two deputy governors are not directors of the Bank. If I carried the analogy with the Companies Act far enough to convince the noble Lord that it was a good idea that they should be directors of the Bank, then I carried it too far.
The Bank of England is established under a Royal Charter of 1694, as we have already heard. There is no need for the Governor and deputy governors to be called directors of the Bank because the role of directors is different from that which applies under the Companies Act. Therefore, the wording of the Bill is consistent throughout in Clauses 1, 2 and wherever else the issue occurs.
There may be some possibility of confusion in understanding the role of the chairman of the sub-committee of non-executive directors. The chairman of the sub-committee not only chairs the sub-committee but also the court when the Governor is not present. So the responsibilities of the chairman of the sub-committee go beyond that sub-committee itself and cover the court as a whole.
In effect, the senior non-executive member is acting as a deputy chairman of the board and in the discussion it has been seen and should be seen as an important appointment. It is in that light that I invite noble Lords to adhere to the view which I adhere to, that it is right for such a person to be appointed by the Chancellor of the Exchequer rather than by the members themselves. The non-executive members of the court will have important review functions with respect to the performance of the Bank, including the procedures of the Monetary Policy Committee and the Bank's internal financial controls. They will also set the remuneration of the Governor and deputy governors.
The senior non-executive, as the representative of this group, has an important role in safeguarding the interests of the shareholder—that is the Government and ultimately the taxpayer—in the management of the Bank. I am sorry to repeat myself, but it is important to remember that the Bank is not a private company; it is a public corporation carrying out public policy functions. Its sole shareholder is the Government. It is
970
sensible for the Chancellor, who represents the shareholder interests of the Bank, to designate the senior non-executive member because the Chancellor can be held fully accountable for his choice.
The noble Lord, Lord Mackay of Ardbrecknish, made a point about the word "may". The value of the choice being made by the Chancellor is particularly strong at this time because immediately after the Bill comes into force, the initial selection of the senior member could be difficult. There could be non-executive members who do not know each other well. Under those circumstances, the Chancellor, having recommended their appointment, is well placed to choose a senior member to head the sub-committee. Indeed, he has done so.
Noble Lords have not referred to the appointment of Dame Sheila Masters as the senior non-executive member. I remind the House that she is a partner at KPMG and vice president of the Institute of Chartered Accountants of England and Wales. She has been a director of the Bank since 1994. She has had a distinguished public service career as well, having been seconded to the Department of Health as director of finance of the NHS management executive for the period 1988 to 1991. She has been a member of the Inland Revenue Board since 1992, a member of the Chancellor's Private Finance Panel since 1993 and a commissioner of the Public Works Loan Board since 1995. So she has substantial experience, in both the public and the private sectors. In case there may be some fears about control on the part of the noble Lord, Lord Mackay of Ardbrecknish, her experience has not been predominantly in the Treasury or the Bank itself. So we have a good precedent for a sensible choice by the Chancellor of the Exchequer, being the shareholder representing the taxpayer and being accountable to that extent.
I do not recognise the statement that some noble Lords made that it is normal for sub-committees to decide on their own procedures. If I am involved in an organisation, whether it is in the private or the public sector, and I am involved in setting up a sub-committee, I make sure before it is set up that its objectives, procedures and timescale are set out and that its chairman is appointed in advance. Otherwise it will not perform the function that the main committee requires. I think the analogy is sound and I invite the noble Lord not to press his amendment.
3.45 p.m.
Lord Barnett: My Lords, before my noble friend sits down, will he reflect on something else that was said? The words now in subsection (4) are:
"The Chancellor of the Exchequer may designate one of the directors to chair the sub-committee".
I understood that to mean that he may also not designate one of them. Is that what the Bill says?
Lord McIntosh of Haringey: Yes, my Lords, I said that at Committee. I repeat that "may" allows the possibility of "may not". If a future Chancellor of the Exchequer wishes to delegate that power, because

971
he knows that he has a team of non-executive directors who know each other well and work well together, he can do so.
Lord Mackay of Ardbrecknish: My Lords, the intervention by the noble Lord, Lord Barnett, brought us back to the real puzzle. It is that if the defence put up by the Minister today of the position that the Chancellor appoints the chairman of the sub-committee has validity, the subsection ought to read "The Chancellor of the Exchequer shall designate". We were told how important it was that it should be done at the hands of the Chancellor of the Exchequer. He will chair the court when the Governor is not present. I will wager that there are not too many occasions on which the Governor is not present. He will act as a deputy chairman of the board. But there are two deputy governors who will do much of the work of the Governor. So I do not think it can be quite likened, as the Minister said, to any other kind of company. It is a special organisation.
It seems to me that if the Minister's argument were valid, this subsection would say "shall appoint". The Minister told us whom the Chancellor has appointed. I have no problems with that and would expect the Chancellor to appoint someone first-rate to the post. I would expect him to appoint someone first-rate to every position in the court of directors of the Bank. So I am still less than satisfied with the answer. I should be more satisfied if the Minister were to tell me that the case was that on all occasions, because of the importance of the job, the Chancellor "should appoint". There would be no "may" about it.
However, given what the Minister said at Committee and again today, when he did not detract in any way from what he said at Committee, I am still bemused as to why the Chancellor is not taking the power, without any qualification; or alternatively why the sub-committee itself is not allowed to do so. In fact, I am so unconvinced by his argument that I shall seek the opinion of the House.
3.50 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 48; Not-Contents, 78.

Division No. 1

CONTENTS

Ailesbury, M.

Gainsborough, E.

Archer of Weston-Super-Mare, L.

Gilmour of Craigmillar, L.

Belstead, L.

Gray of Contin, L.

Biffen, L.

Halsbury, E.

Boardman, L.

HolmPatrick, L.

Bruntisfield, L.

Home, E.

Butterworth, L.

Hylton-Foster, B.

Cadman, L.

Kimball, L.

Cavendish of Fumess, L.

Kinloss, Ly.

Chesham, L.

Kitchener, E.

Clanwilliam, E.

Knollys, V.

Courtown, E. [Teller.]

Layton, L.

Cullen of Ashbourne, L.

Leigh, L.

Davidson, V.

Long, V.

Dean of Harptree, L.

Mackay of Ardbrecknish, L.

Ellenborough, L.

Mackay of Drumadoon, L.

972

Macleod of Borve, B.

Palmer, L.

Milverton, L.

Rankeillour, L.

Monro of Langholm, L.

Stewartby, L.

Naseby, L.

Strathclyde, L. [Teller]

Newall, L.

Strathcona and Mount Royal, L

Noel-Buxton, L.

Swinfen, L.

Northesk, E.

Teviot, L.

Oppenheim-Barnes, B.

Weatherill, L.

NOT-CONTENTS

Acton, L.

Jenkins of Putney, L.

Annan, L.

Kilbracken, L.

Archer of Sandwell, L.

Lockwood, B.

Barnett, L.

Lofthouse of Pontefract, L.

Bassam of Brighton, L.

McIntosh of Haringey, L. [Teller.]

Berkeley, L.

Blackstone, B.

Marsh, L.

Blease, L.

Mason of Barnsley, L.

Brooks of Tremorfa, L.

Merlyn-Rees, L.

Bruce of Donington, L.

Merrivale, L.

Burlison, L.

Milner of Leeds, L.

Carmichael of Kelvingrove, L.

Monkswell, L.

Carter, L. [Teller.]

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Nicol, B.

Clinton-Davis, L.

Northbourne, L.

David, B.

Orme, L.

Davies of Coity, L.

Paul, L.

Dean of Thornton-le-Fylde, B.

Pitkeathley, B.

Dixon, L.

Plant of Highfield, L.

Donoughue, L.

Prys-Davies, L.

Dormand of Easington, L.

Puttnam,L.

Evans of Parkside, L.

Ramsay of Cartvale, B.

Farrington of Ribbleton, B.

Randall of St. Budeaux, L.

Gallacher, L.

Rea, L.

Gladwin of Clee, L.

Rendell of Babergh, B.

Glenamara, L.

Richard, L. [Lord Privy Seal]

Gould of Potternewton, B.

St. John of Bletso, L.

Graham of Edmonton, L.

Shepherd, L.

Greene of Harrow Weald, L.

Simon, V.

Gregson, L.

Stallard, L.

Hardy of Wath, L.

Stoddart of Swindon, L.

Haskel, L.

Stone of Blackheath, L.

Hogg of Cumbernauld, L.

Strabolgi, L.

Howie of Troon, L.

Symons of Vernham Dean, B.

Hoyle, L.

Taylor of Blackburn, L.

Hunt of Kings Heath, L.

Thomas of Macclesfield, L.

Hylton-Foster, B.

Turner of Camden, B.

Irvine of Lairg, L. [Lord Chancellor.]

Wedderburn of Charlton, L.

Whitty, L.

Janner of Braunstone, L.

Williams of Elvel, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 4 [Annual report by the Bank]:
3.57 p.m.
Lord Barnett Lord Barnett moved Amendment No. 3:
Page 3, line 5, at end insert—
("() The report mentioned in subsection (2)(a) shall, in particular, include a review of the Bank's performance in relation to its objectives and strategy, as determined by the court of directors of the Bank, in the financial year to which the report under this section relates.").
The noble Lord said: My Lords, I shall move Amendment No. 3 on behalf of my noble friend Lord Peston and myself, my noble friend having been delayed for a short while. I am hoping that the amendment will not take long because it is sensible, intelligent and so obvious that the Government are bound to accept it.
Amendment No. 3 seeks to add the words,
"The report mentioned in subsection (2)(a) shall, in particular, include a review of the Bank's performance in relation to its objectives and strategy, as determined by the court of directors of the Bank, in the financial year to which the report under this section relates".
As I indicated, it is clearly a sensible amendment and the other two amendments grouped with it are consequential. For example, Amendment No. 5 seeks to insert the words,
"a statement of the Bank's objectives and strategy, as determined by the court of directors of the Bank, for the financial year in which the report is made".
In other words, that should be included in the report. I know that my noble friend will recognise how sensible the amendments are and I therefore need not take up any more of the time of the House. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, I am intrigued at the confidence of the noble Lord, Lord Barnett. I noted his words, that his noble friend was "bound" to accept the amendment. I am not sure from where he gets his confidence. Unfortunately, his noble friend Lord Peston is not present; he will not be here for some time and the debate cannot go on long enough to await his arrival.
The noble Lords, Lord Peston, and Lord Barnett, made some important points in Committee in relation to the objectives and strategy of the Bank and what they were in relation to the court of directors. Later on we shall come to the objectives and strategy of the Monetary Policy Committee, which will not at all be related to what the court of directors does. The one thing we clearly obtained from the Minister in Committee was that the Monetary Policy Committee was totally independent and would not take instructions from the court of directors or anyone else. Perhaps I shall have a question mark on the "or anyone else" later in the proceedings, but at the moment I shall take it at its face value. Therefore, we wondered in Committee what the objectives and strategy of the court could be if it was not to be at all involved in the objectives and strategy of the monetary policy committee.
We had an interesting discussion in Committee and I hope the Minister will accept that he is, to quote his noble friend, bound to accept these amendments. If he is, he could perhaps explain them to us; and if he is not, perhaps he can say a few words about the objectives and strategy of the court.
Lord McIntosh of Haringey: My Lords, my noble friend Lord Barnett is half right. Certainly, the speeches that were made in Committee in support of similar amendments were sensible and intelligent. I did have some problems with the wording of the amendment and I am glad to see that the problems I had are now resolved in the wording that is before us.
The particular difficulty I had was that it was not clear whether my noble friends, in moving the amendments, wanted a review of the Bank's performance in the year to which the report related—that is, the previous year—or the current and future year—the year in which the report is made. Amendment No. 3 now provides that
974
there should be a report for the previous year and Amendment No. 5 complements it by saying that there should also be a statement of the Bank's objectives and strategy for the financial year in which the report is made.
In answer to the noble Lord, Lord Mackay of Ardbrecknish, it is of course for the court to decide what the content of its statement of objectives and strategy should be, but I should say to him that it goes very much beyond the monetary policy aspects which are the responsibility of the Monetary Policy Committee. As I made clear in Committee, the Bank has very many other responsibilities which are properly the subject of the report referred to in the amendments and the court of directors is also responsible for the management of the Bank.
The amendments, as they are now re-presented to the House, seem to us to be a useful clarification of the reporting responsibilities of the court and its sub-committee, and the Government are happy to accept them.
Lord Barnett: My Lords, I am most grateful to my noble friend. I always knew that he was a very sensible fellow, but he is particularly so now. I beg to move.
On Question, amendment agreed to.
Lord Barnett Lord Barnett moved Amendment No. 4:
Page 3, line 7, leave out ("period") and insert ("financial year").
On Question, amendment agreed to.
Lord Barnett Lord Barnett moved Amendment No. 5:
Page 3, line 8, at end insert (", and
("(b) a statement of the Bank's objectives and strategy, as determined by the court of directors of the Bank, for the financial year in which the report is made.").
On Question, amendment agreed to.
Clause 6 [Cash ratio deposits]:
The Earl of Home The Earl of Home moved Amendment No. 6:
Page 3, line 25, after ("with") insert (", and the payment of fees in lieu of such deposits to,").
The noble Earl said: My Lords, in moving this amendment, I wish to speak also to Amendment No. 19. In Committee we discussed which institutions should produce cash ratio deposits for the Bank. This amendment specifically allows for the payment of fees in lieu of deposits for other categories of institutions for which the provision of cash ratio deposits is not appropriate. When I moved the amendment on fees and charges in Committee, the Minister gave us an interesting insight into the Government's thinking on CRDs, but he did not give any answer to the amendment. So, in effect, I am asking the same question today in a rather different form.
In Schedule 2 to the Bill the Government admit that they have no idea who might, at some stage in the future, be called upon to put up cash ratio deposits with the Bank. If they had a clue as to who these people might be, they would not have proposed paragraph 1(2) in that schedule. They have therefore given themselves carte blanche to require anyone they like to put up

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CRDs with the Bank. Extending this argument further, they cannot therefore know whether requiring a group of institutions, as yet unknown, to put down CRDs is an even remotely appropriate way for the Bank to be repaid for whatever services it is supplying to this, as yet, still mythical group of institutions.
The Minister also said in Committee that they did consult but that it was difficult to publish the responses for confidentiality reasons. I accept that full responses may not be able to be published, but I would be surprised if any of the institutions which did respond would object to the Government publishing the number of institutions that approved the proposal and the number which came up with alternative proposals and what they were, albeit on an unattributable basis. I personally am aware that some institutions proposed "turnover" as an appropriate yardstick and some thought that it would be better to pay fees based on the number of transactions.
At no stage in Committee did the noble Lord tell us why fees based on turnover or the number of transactions were unacceptable to him. Institutions which do very little lending but have other businesses which benefit greatly from stability, which is one of the responsibilities of the Bank, will get away with paying very little, while others whose business is predominantly lending will bear an undue proportion of the burden. That is obviously inequitable, so I hope he will now tell us why these other methods have been rejected.
Further, the noble Lord said in Committee that careful consideration had,
"been given to alternative methods of funding, such as fees and charges".—[Official Report, 3/3/98; col. CWH 39.]
But what is he actually funding: the Bank's balance sheet or its profit and loss account? Fees contribute to the Bank's p and 1, and only ultimately to the balance sheet through reserves. So what the noble Lord is actually saying is that he believes that the Bank really needs the deposits. On that basis, I am beginning to wonder who is providing liquidity for whom.
The noble Lord, Lord Peston, said in Committee that he had always assumed that the Bank has an extraordinarily good deal in terms of cash ratio deposits. He is absolutely right. At the moment the Bank is receiving more than £2.5 billion in interest-free deposits. But it will now get an even better deal for doing less and the institutions providing CRDs will get an even worse deal.
When we talked about this previously the Minister set great store by the fact that banks and building societies benefit from the Bank's vital function as a provider of liquidity to the financial system. If this is such an important function of the Bank, meriting the Bank receiving, at a conservative estimate, some £180 million on an annualised basis as a result of CRDs, why is it not even mentioned in the memorandum of understanding? The MOU talks about stability, the infrastructure, an overview of the system, efficiency, effectiveness and even promoting the City of London. Sadly, no mention is made of Edinburgh. But it likewise makes no mention of the two functions for which it could be of some real worth to banks and building societies; namely, as a provider of liquidity and as a
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lender of last resort. Nor are these functions deemed to be worthy of inclusion in the Bank's latest annual report under the heading of the Bank's core purposes.
If providing liquidity into the system is such an insignificant part of the Bank's rationale, not to be mentioned in these two places, one can only assume that the banks and building societies are being asked to fund other functions of the Bank of England. The Treasury justification that banks and building societies uniquely benefit from the Bank's provision of liquidity clearly ignores all the other responsibilities discharged by the Bank for which banks and building societies will be paying, but others not, under this proposal.
Limiting the categories of institutions required to fund the Bank in this way goes totally against trends in the financial services sector as well as the other government policy initiatives in this area. Barriers between different types of institutions are indeed breaking down as the Government know: for instance, banks offering insurance; insurance companies offering banking services; and supermarkets selling mortgages.
The integration of financial services companies was one of the reasons behind the establishment in the first place of the Financial Services Authority. It seems odd that in this era of integration the way the Government have chosen to fund the Bank of England goes totally against that.
The noble Lord tried to justify singling out these two types of institutions by saying that they typically borrow short and lend long. If the Minister had looked at the actual experience of these institutions he would have seen, as regards building societies, that while the majority of their liabilities, for instance, are repayable at short or even no notice, in practice these funds have proved over the long term to be extremely stable. These liabilities are backed, by and large, by mortgage assets bearing extremely flexible interest rates. For banks and building societies in particular, withdrawals of deposits can usually be countered by increases in interest rates rather than by the use of liquidity.
The noble Lord also said that CRDs are used very commonly in other countries as a way of approximating the benefit of liquidity. That is the weakest excuse I have heard for a long time for justifying any course of action. By all means look at what others have done, but are the Government really not prepared to look at other ideas? What is good for others is by no means necessarily good for us. I know that other ideas have been put forward.
In this amendment we have tried to help the noble Lord by specifying some of the categories of institutions most likely to benefit from the revised role of the Bank. The noble Lord will no doubt have seen that we have actually tried to help him because we have left in his catch-all subsection. A mix between cash-ratio deposits and fees payable by other institutions is a much fairer way of paying for the Bank's role in the future. I beg to move.
4.15 p.m.
Lord McIntosh of Haringey: My Lords, the noble Earl rightly reminded us of the debate we had in Committee and I am grateful to him for raising the matter again. But I am afraid that my answer will be very similar to that made in Committee because, despite the changes in his approach and in the speech he has just made, the fundamental objections still apply. As the noble Earl recognised, the Bank of England has been funded for a very long time by a system of voluntary cash-ratio deposits. This Bill replaces the voluntary scheme with a statutory basis which makes the income secure.
If we adopt a prudent, step-by-step approach and complement that by consultation, as we have done, the most obvious first step is to say, "The system of voluntary cash-ratio deposits has survived without serious criticism. If our objective is to make the income secure then the first step is to keep the cash-ratio deposits system and make it statutory." The amendment widens the population of institutions that fund the Bank to include all institutions authorised under the Financial Services Act 1986.
The noble Earl says that the Bill makes it possible for us to extend the institutions obliged to pay under the cash-ratio deposits system. In Schedule 2, paragraph 1, we specify that the,
"eligible institutions for the purposes of this Schedule [are]
"(a) an institution authorised under the Banking Act 1987"
and
"(b) a European authorised institution".
It is true that sub-paragraph (2) says:
"The Treasury may by order amend sub-paragraph (1) as they think fit"
but in order to do so it would have to consult and have the approval of Parliament. I remind the House that the Committee on Delegated Powers and Deregulation was satisfied with the order-making procedures proposed here.
So in practice there is a restriction on the Government widening the population of institutions who fund the Bank. The current voluntary scheme applies only to banks authorised in the UK. The proposed statutory scheme also applies to building societies. The noble Earl made a point about the difference between building societies and banks. The point we are making is that both typically borrow short and lend long. Their balance sheets contain loans and other assets of long maturity and deposit liabilities, many of which can be recalled at short or no notice.
The noble Earl reminds us that building societies—and although he did not say so, some banks—are backed by mortgage assets. But the important point is the potential need for access to liquidity. That is measured by the potential maturity proposed in the CRD scheme in the consultation document.
Other financial institutions brought under the fee system proposed by the amendment include security firms and insurance companies who typically match the maturity of their assets and liabilities much more closely. As I made clear in Committee, the Government believe
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that it is appropriate for deposit-taking institutions to place CRDs to provide income for the Bank because they clearly benefit from the Bank's function as a provider of liquidity to the financial system.
Only a few banks actually have accounts with the Bank of England to settle obligations with each other but the other deposit-taking institutions manage their liquidity through deposits and credit facilities with the settlement banks, which in turn ultimately depend on their access to liquidity from the central bank. In effect this insures deposit-taking institutions against the risk they run from having liabilities at call but assets which are less liquid. So there is a dividing line between deposit-taking institutions which depend on access to central bank liquidity and the other institutions, referred to in the amendment, which do not.
I wonder whether there is some confusion between the more narrow issue of the funding of the Bank, with which this part of the Bill and the amendment are concerned, and the regulatory and supervisory aspects. The FSA is the institution which will have responsibility for ensuring that individual institutions operate prudently. It is already a requirement under existing legislation that banks and building societies conduct their business in a prudent manner. We do not want to use the cash-ratio deposit scheme, which is a funding scheme, to try to do the FSA's job for it.
On reflection, I wonder whether it is that confusion which to some extent lies behind this amendment. In the interests of prudence in the drafting of the Bill and keeping to the least possible change as we introduce a statutory scheme rather than a voluntary one, I hope the House will agree that what we have proposed is the most sensible solution and that the noble Earl will not press his amendment.
The Earl of Home: My Lords, what the noble Lord has said about it being on a voluntary basis is certainly true. I shall reserve judgment to see what the level of those deposits turns out to be because if they continue to be required at anything like their present level, producing some £2.6 billion in deposits and £180 million for the Bank's profit and loss account, that is way beyond what the costs to the Bank might be of providing the particular liquidity to which the Minister referred.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Earl for giving way. I neglected to say something to him. In his opening speech he made a perfectly legitimate point about the amount of money required to fund the Bank. I gave assurances in Committee that the amount would be closely scrutinised and kept to a minimum. I assure him that in so far as money has been raised to fund the Bank's supervisory functions, which are now being transferred, that will no longer be subject to cash ratio deposits. I am sorry that I did not repeat those assurances earlier this afternoon.
The Earl of Home: My Lords, I thank the noble Lord for that. It will be at least some comfort to the institutions involved. However, I am still concerned about the enormous importance which the noble Lord gives to liquidity. No bank runs itself assuming that if times get

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difficult the Bank of England will provide liquidity for it at any particular moment. No sensible bank can rely on the Bank of England to do that. The Bank of England has no legal or, indeed, moral obligation to put money into any bank or group of banks which happen to need it at a particular moment. Any bank running its business sensibly will have its own stand-by alliance with other banks. As the Treasury knows all too well, the internationalisation of money means that it can now come from an enormous number of different places. I really do not believe that nowadays any bank in the City of London or elsewhere runs its business on the assumption that the Bank of England will pump money into the system. All banks have their own prudential limits. We all have our own methods of calculating our own liquidity.
I accept what the noble Lord said about matching maturities. The fact is that unless the figures drop dramatically, the banks and the building societies will be funding an awful lot more than what the Bill states that they should fund. They are paying for all kinds of other functions of the Bank from which they do not benefit any more than anybody else. When the noble Lord rethinks this, I hope that he will recognise that the amounts of money which the banks and the building societies are being asked to put up is totally disproportionate to the cost of the benefit that they might get from liquidity. In the hope that the noble Lord will look at this again, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 [Objectives]:
Lord Barnett Lord Barnett moved Amendment No. 7:
Page 5, line 14, leave out from ("stability") to ("the") in line 15 and insert ("as a precondition of supporting").
The noble Lord said: My Lords, this amendment stands in the names of my noble friend Lord Peston and myself. I apologise once again on behalf of my noble friend because I had hoped that he might be here for this amendment, which deals with one of the most important parts of the Bill, Part II on monetary policy. Our amendment seeks to deal with the whole question of whether price stability should be pursued at the expense of the Government's own economic policy. That is what the Bill says as it now stands. It states that price stability should be the No. 1 priority and that the Government's economic policy will come second if and when they achieve price stability. I make it clear that I am strongly in favour of achieving price stability.
I hope that the noble Lord, Lord Mackay of Ardbrecknish, will not mind my saying that his amendments, Amendments Nos. 8 and 9, which are grouped with this amendment, seem somewhat contradictory. I hope that the noble Lord will pardon my saying that. He knows that I generally have enormous regard for him. Amendment No. 8 seeks to delete the words "subject to that" but then seems to say that those words should stand because Amendment No. 9 states,
"but only insofar as it can do so without prejudice to paragraph (a)".
To put it mildly, to say that Amendment No. 9 contradicts Amendment No. 8 is my customarily respectful way of saying that in his two amendments the noble Lord, Lord Mackay, is talking somewhat nonsensically. I am being polite to the noble Lord—as he knows, I always am.
As I have said, this is an extremely important matter because we return to the question of how price stability should fit together with the Government's own economic policy. I hope that my noble friend the Minister will not mind me saying that we have heard some contradictory remarks from him both at Second Reading and in Committee. I refer first to Second Reading, when he said:
"Price stability—low inflation—is an essential precondition of achieving the Government's objectives of high and sustainable levels of economic growth and employment".—[Official Report, 13/2/98; col. 1383.]
My noble friend and I have accepted what the Minister meant by that and we have sought to include those words in the Bill. As it now stands, the clause does not refer to preconditions. It states that price stability comes first and that only when that has been achieved does the Government's economic policy have to be considered. That does not make any sense to us. We believe that price stability and the Government's economic policy should come together. The Bill, therefore, does not say what the Government are minded for it to say. In Committee, my noble friend the Minister quoted what he said at Second Reading:
"I quoted Alan Greenspan in his Humphrey-Hawkins testimony last year. That sets out the position very clearly. He said"—
My noble friend was quoting Alan Greenspan, so I am quoting my noble friend quoting Alan Greenspan. I am sure that it is clear—
"'Our objective has never been to contain inflation as an end in itself, but rather as a precondition for the highest possible long-run growth of output and income—the ultimate goal of macroeconomic policy'".—[Official Report, 3/3/98; col. CWH58.]
Fine, I agree entirely. I would not be so rude as to say that I disagree with Alan Greenspan because he is much more intelligent on these matters than I would dare to suggest for myself or even for my noble friend Lord Peston who is, as we all know, a very bright and intelligent economist. However, I am not sure whether even my noble friend would compare himself with Alan Greenspan who has been doing a practical job, if that is not too insulting of economists generally, in the Federal Reserve Bank.
Therefore, if Alan Greenspan is right and if my noble friend the Minister was right to quote him, he should accept our amendment. It is quite straightforward. There is nothing difficult about it. It is very simple. We are saying that price stability should not be "and … subject to that", but we are not saying that price stability should override the Government's economic policy. I am sure that my noble friend, being the sensible man that he is—as I stated on a previous amendment which he was kind enough to accept—recognises that what I and my noble friend propose this time is equally sensible. On 3rd March my noble friend said:
"Price stability and high employment go hand in hand. Achieving price stability will help to achieve high employment, and achieving high employment will help to achieve price stability".
I agree with him entirely. He went on to say:
"If I may anticipate my noble friend's question, I am sure he will then ask me, as he did, quite reasonably, why we do not give them equal status".

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That is precisely what I seek to do today. I thought that I was right then and I believe that I am right today. My noble friend went on to say:
"Why do we not say 'price stability and the Government's economic objectives'? I think we do so, and I am surprised to be able to call in aid the noble Lord, Lord Stewartby".
He was surprised but nevertheless called him in aid. He added:
"If we are to give targets to the Bank of England, we have to give it targets which are explicit and which do not involve internal contradictions, otherwise they will simply be warm words. Somebody used the term 'weasel words".—[Official Report, 3/3/98; col. CWH 58.]
I hope my noble friend agrees that I do not often use weasel words and that I have not done so on these amendments. I have used the Government's own words, or at least my noble friend's words. I am sure that my noble friend would never use weasel words. I believe that what is proposed in Amendment No. 7 makes good sense and that therefore my noble friend will feel able to accept it.
Amendment No. 10 is also grouped with Amendment No. 7. I do not know whether I am supposed to speak also to that. I see my noble friend nodding. The amendment is quite simple. It deals with the regions. In Committee noble Lords debated membership of the monetary committee which should include someone from the regions, but that is another matter with which this amendment does not deal. The amendment deals with the Bank's objectives which should take account of regional policy and the problems in the regions. This is a big issue. I and other noble Lords who are members of the Select Committee upstairs have been to Europe to examine the European central bank. We are aware that the European central bank will have to take account of even bigger regions. However, the Bank of England (as I understand it will still be called) must take account of the Government's economic policies, but that will be a secondary objective to price stability under Amendment No. 7. If the Government accepted Amendment No. 10 they would simply be doing what the Bank would sensibly do anyway, knowing the members of the monetary committee; namely, they would take account of the problems of the regions.
The Minister has made clear that the objectives of the Bank shall be explicit and not involve internal contradictions. That is quite right. To add that the Bank should take account of the problems of the regions does not involve an internal contradiction; nor is it other than explicit. Knowing its own good sense it will do that anyway. One is not using weasel words but explicit words. I am quite confident in this matter. I am not so confident now that I see my noble friend smiling. However, I hope that, if he recognises these as sensible amendments, he will accept them. I beg to move.
4.30 p.m.
The Deputy Speaker (Baroness Lockwood): My Lords, I must point out that if this amendment is agreed to I cannot call Amendment No. 8.
Lord Mackay of Ardbrecknish: My Lords, as the noble Lord, Lord Barnett, has kindly pointed out,
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Amendments Nos. 8 and 9, which form part of this grouping, are my amendments. The noble Lord, Lord Barnett, is correct that Amendment No. 10 is separate from the other three and I shall deal with that at the end of my contribution. Clause 11 is central to the Bill. The clause gives the Bank of England operational independence over monetary policy and spells out how it should carry that out. In Committee and in the other place there was considerable discussion about the relationship between the maintenance of price stability and, subject to that, support of the economic policy of Her Majesty's Government, including their objectives for growth and employment. Neither in the other place nor in Committee here were participants in the debate entirely satisfied with what the Government said. The noble Lord, Lord Barnett, put the case well. Is price stability the principal objective? Are the objectives in paragraph (b) secondary objectives? As I understand the amendment moved by the noble Lord, Lord Barnett, it seeks to give those objectives the same status. I shall come to that matter in a moment. I do not believe that my amendment does so.
In the other place there was an interesting Second Reading exchange to which I drew the attention of the Committee. To be precise, I must quote some of the interventions by Mr. Dafydd Wigley because the key points that I wish to make are those of the Chief Secretary to the Treasury, Mr. Alistair Darling. The exchange was concerned solely with Clause 11. Mr. Wigley asked the Chief Secretary:
"The Bill gives overriding priority to maintaining price stability. Growth and employment are subject to that".
Lord McIntosh of Haringey: Or words to that effect.
Lord Mackay of Ardbrecknish: I shall quote the Minister. Mr. Wigley's point was that the Government should not make employment secondary to the control of inflation. Mr. Darling gave the following answer:
"The right hon. Gentleman is mistaken. Clause 11 shows that the Government's objectives are high levels of growth and employment".
Mr. Wigley intervened again to say that the Bill said "subject to that". Mr. Darling replied:
"The right hon. Gentleman is reading it the wrong way round. The Bank's objective is to maintain price stability, but that is in support of the Government's objectives of growth and employment".—[Official Report, Commons, 11/11/97; col. 712.]
I am still puzzled, despite what the noble Lord, Lord McIntosh of Haringey, told me in Committee, because if I read it correctly "price stability subject to that" means that the primary objective is price stability. Once I have made sure that that is all right I can look at the other matters referred to under paragraph (b), growth and employment and other matters not specified.
In Committee the Minister tried, at col. CWH 57, to clarify the situation:
"As the Bill says, the monetary policy objective of the Government is to maintain price stability and, subject to that, to support the Government's objectives for growth in employment. But in turn high levels of growth in employment will also create the conditions for price stability on a sustainable basis".

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That may or may not be correct. If it is correct the wording in the Bill does not reflect it. The present wording of the Bill clearly states that the relationship between price stability and growth and employment is such that price stability is on top and growth and employment are to be considered after that has been assured.
I understand that in the world of economists there is considerable argument about the relationship between price stability and employment. I do not believe that I can do much better than quote the evidence given by the noble Lord, Lord Eatwell, to the Treasury Select Committee of another place. He said:
"One group of theorists believes that there is no particular medium-term relationship between the level of unemployment and the rate of inflation. Another group believes that the key relationship runs from the level of unemployment to the rate of inflation, and from this group monetary policy is a means of controlling the level of output and so controlling the level of inflation".
Clearly there is disagreement among economists on how those factors relate to one another.
The noble Lord, Lord Barnett, has tried to rephrase the clause so that the point made by the Financial Secretary is clearer. I have tried to rephrase the clause so that the clause itself and the meaning of the words "subject to that" are clearer. In answering my points in Committee, the Minister referred me to the Bundesbank. I read afterwards with interest what I had heard from him:
"The Bundesbank is required to regulate the quantity of money in circulation and of credit supplied to the economy, with the aim of safeguarding the currency".
The Minister pointed out that that was comparable to price stability. It was also required by law to support the general economic policy of the federal government, but only insofar as it can do so without prejudice to the performance of its own function of safeguarding the currency.
That is where I got my wording. The words are not exactly the same, because they are different in the Bundesbank Act from those in the Bill. So that instead of "subject to that", I have rephrased the provision to maintain price stability and:
"to support the economic policy of Her Majesty's Government, including its objectives for growth and employment but only insofar as it can do so without prejudice to paragraph (a)."
That is pretty close to the Bundesbank Act which the Minister quoted with approval. It also makes it clear that it is price stability that is the primary concern of the MPC. Does the noble Lord, Lord Bruce of Donington, wish to intervene, as I have mentioned Europe? Perhaps he does.
The Minister went on in Committee and said:
"If we started to bring in all sorts of other targets—a later amendment is a target on exchange rates—this would be a target on growth and employment. The members of the Monetary Policy Committee would scratch their heads and say, 'We have a choice. We can either protect one or the other. Which should we do? The Government have not told us which we should do'."—[Official Report, 3/3/98; CWH58.]
As I understand it, the noble Lord, Lord Barnett, will probably say to them, "You must look at them all. You must not make one of them your primary concern". On the other hand, I have made it clear to them in my
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amendment that it is price stability with which they are concerned. That is their principle concern. I am therefore clarifying the position.
I read Clause 11 as doing that also, but as there is clearly doubt, even in the mind of the Financial Secretary to the Treasury, I felt, in a helpful way, that I should come to the Government's aid in writing down in the Bill what the Financial Secretary said he wished to achieve.
If we are uncertain over these matters, we should not be too worried about it, because I noticed in the MPC meeting on 4th and 5th February an interesting quote at paragraph 28 which said that uncertainty was a normal state of affairs in economic policy making, so it obviously agrees with the uncertainty caused in this debate. The noble Lord, Lord Barnett, and I, from different points of view, wish to make Clause 11 clearer than it is. The noble Lord is saying that the MPC must look at those other issues, because he is one of the theorists who believe that they are tied closely together. I suggest, as per the Bundesbank, that the MPC should look principally at price stability.
I have a great deal of sympathy with Amendment No. 10. I shall talk, perhaps at length, on this general area later. My only point is the one that I made in the first debate, relating to national and regional aspects. Is Scotland among the national aspects, or are Scotland and Wales among the regional aspects? Having brought us devolution, the Government will have to sort out their terminology. The draftsmen will have to sort out their terminology. I am content with Amendment No. 10. If the Minister accepts that, I shall cheer because it will go some way towards addressing the problems which the noble Lords, Lord Montague, Lord Barnett, Lord Peston and I aired in Committee. I fear that the Government will not accept it. I do so on the rule of thumb that when the amendments moved by the noble Lord, Lord Barnett, were accepted a few minutes ago, his speech was brief. As he spoke for longer on this occasion, I suspect that the Government are not going to accept them.
4.45 p.m.
Lord Bruce of Donington: My Lords, I am most grateful to my noble friend Lord Barnett for having introduced the amendment and for the interesting participation of the noble Lord, Lord Mackay of Ardbrecknish. In general, after listening to the debate, I am more than ever convinced of the undesirability of endeavouring to incorporate what must be the generalities of economic argument into an Act of Parliament, because, of course, Acts of Parliament cannot possibly encapsulate economic theories which are the subject of considerable debate. They are not always even in nature among economists themselves.
I look, for example, at the term "price stability". What does it mean? I do not see anything that might have been incorporated as a definition of the words used. What do they mean? What do the Government mean, and what do the Opposition mean, by "price stability"?
I have been studying these matters for some time. I have always been given to understand that in a competitive society stability is not what one requires. In

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fact, price competition among firms and nations, possibly even among banks, is just trying to freeze something that cannot be frozen without abolishing the nature of competitive society. Competitive society thrives, not on stability but on instability. To endeavour to put that into an Act of Parliament seems to me to be highly dangerous.
I was first given the opportunity to express those views in the debate on the Maastricht Treaty. I still think that it was extreme folly to put an economic formula or a series of formulae into a treaty, because they would be bound, sooner or later, to be falsified by events. I have the utmost sympathy with the Chancellor of the Exchequer and my noble friend Lord Barnett, who are trying to freeze these things into a frame and lay them down as a policy for eternity. I can sympathise deeply with that, but human nature is somewhat more fragile. Even the commercial and banking sectors of world and national economies have been known to be a little fragile also, and not least the banking professions themselves.
Therefore, I wonder how the Governor of the Bank, to whom has now been entrusted the fixing of interest rates—I observe that they have gone up six times since he has been appointed and the Chancellor of the Exchequer has been relieved of the responsibility—will interpret "price stability". I fear, and I hope that I am not being unduly prophetic, that the whole thing will fall to pieces very quickly if the definitions of "price stability" and "growth and employment" are to be kept within their ordinary meaning. Apart from that, I have nothing more to say on the matter.
Lord Howell of Guildford: My Lords, I hesitate to intervene in the debate as I did not have the privilege of taking part in the Committee. However, I am moved by the shrewd and perceptive scepticism of the noble Lord, Lord Bruce of Donington, to remark on the amendments. I have great sympathy with the thoughts behind the amendment tabled by the noble Lord, Lord Barnett. Indeed, I have great sympathy with many of his views on subjects in economic and other fields. However, from outside the Committee, I must offer the view that there is a fatal flaw in the intention.
I understand that the noble Lord, Lord Barnett, is trying to introduce an element of balance into an utterly unscientific area where many economists claim all kinds of precision which does not exist. The noble Lord seeks to avoid the kind of zealotry and pursuit of one particular branch of objective policy which in the end turns to dust and proves to the outside world what it knew already—that economists do not understand much about the relationship between the economy and the real world.
The flaw is that government objectives are never clear. I am not making a party point—I refer to any government. Their objectives are never clear and, what is more, they change rapidly, even from day to day and certainly from week to week and month to month. In this case, one is asking for a link with something that is broadly identifiable; price stability. However, as was said by the noble Lord, Lord Bruce, nowadays even that
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is an amorphous subject. In America, the CPI is revised frequently in radical ways and no one knows precisely what prices are doing. One is seeking to link a vaguely identifiable objective with something which is much more amorphous and ephemeral; that is, the set of government objectives.
If your Lordships think I am speaking in too many generalities, let us take today, this moment, now, when there is total confusion about whether the British economy is growing or shrinking. No one knows which sectors, in so far as one can divide the modern economy into sectors, are performing in which ways. It is believed that there is something called the "service sector", which is growing rapidly and may be promoting a degree of inflation. It is believed that there is something called the "manufacturing sector", which is alleged to be shrinking in the face of the high pound. But as no one understands how nowadays one can dissect and disaggregate services from manufacturing, or what a service is, or what a manufacturer is—they are sectors and concepts which belong to a past age and not to the age of the information intensive economy—it is hard to conclude from such general observations what is happening.
No doubt the distinguished members of the monetary policy committee are in the same dilemma as the rest of us. Indeed, it appears that recently they were at sixes and sevens about which way to go. Some say, "We must look at what we believe to be the monetary conditions. They lead us to the view that the monetary situation is loose. Heaven knows, if it is the Government's objective—and we have no idea whether it is or not—one day to put us into the EMU the pound will drop like a stone and inflation will go through the roof. We have been taught by the Bundesbank to think two years ahead in setting monetary targets and in thinking about short-term interest rates and therefore we must put interest rates up". That is one line of thought.
The other group apparently say, "Wait a minute, we don't know that the pound is going to fall. All we see is increasing difficulties in the manufacturing sector, increasing pressures on the economy and definite signs that overheating has finished and that the economy should be going into a downturn. We will look very silly, won't we, if we are found to be putting up short-term interest rates when we should be putting them down." Presumably, that is the kind of debate that has occurred among the price stability gurus who comprise the monetary policy committee.
If they were asked to link such considerations to the Government's policy they would be not less confused but even more confused because they would not have the slightest idea what the Government's policies are at this moment either in relation to growth or employment. In the longer term, it is like motherhood and apple pie. We are all in favour of people being employed, although even the concept of employment is dissolving because we do not know what the nature of work is in a modern society. In many societies, including this one, many people in future will not be in the old-fashioned sense employed. Therefore, it may not be that the objective of policy should be employment; it should be gainful,

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dignified work and status and usefulness. Many people are writing books saying that the whole idea of employment belongs to an industrial age that has passed.
To return from that diversion, even if we knew what employment was, and even if we knew how to define growth,—indeed, only in the past fortnight the Office for National Statistics has issued elaborate new details of how to measure GNP and GDP because it is beginning to believe that the old-fashioned measures do not reflect what is happening in the economy—to ask the monetary authority, the independent Bank of England experts, to link their struggle with the vagaries of monetary policy to the even more amorphous and uncertain tasks of trying to define government policy and objectives in relation to growth, which we are not sure about, and employment, which turns out to be an outdated concept, is asking a hell of a lot. In fact, it is asking them to do something which turns a very difficult task, and one which is currently dividing them and leaving them uncertain, into an impossible task.
I hate to part from the noble Lord, Lord Barnett, on these matters, so great is his wisdom and experience but, with great reluctance, I am driven to the view that what is in the Bill is about as good as one can get. It does not mean much in modern conditions. The monetary policy people are in a great state of confusion. That would be added to if they were asked to take more account of these ever-changing and vague concepts of government national economic objectives in a world where national economic objectives as opposed to the broader macro-objectives of the global economy, which is something different, are becoming much more difficult to define. We would be setting our monetary experts an even more difficult task. Therefore, in this case I support the Government against the amendment of the noble Lord, Lord Barnett.
As regards the amendment in the name of my noble friend Lord Mackay, I see what he is trying to do. I understand that in an uncertain and fog-filled world he is trying to distinguish more clearly price stability and to give the independent monetary authority some chance of sticking to that without becoming too diverted by all the other economic policy debates which over the years have excited us and filled us with passion, but in respect of which, thanks to the ill advice of the economic profession, now at its low point in terms of incompetence and failure to interpret the modern world, we have been misled. Only recently has this country begun to escape from the clutches of the national macro-economic policymakers with commendable results which are at last putting us ahead in the world rather than being a passenger and a humiliating laggard.
Lord Newby: My Lords, we are in danger of talking ourselves into a state of complete depression on this subject. The members of the monetary policy committee are portrayed as mariners on a boat in a thick fog with no charts. While nobody in debates off or on the Floor have argued that these matters are easy, I suspect that while they are difficult and complex people dealing with monetary policy and so forth are capable of getting to grips with them.
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I am not sure that I support the thrust of Amendment No. 9; I am even less sure that the wording strengthens the clarity of the Bill. One can argue either that the amendment is stronger than the existing wording of the Bill or vice versa. I believe that the form of words in the amendment does little to advance the cause of the noble Lord, Lord Mackay.
I welcome the amendment of the noble Lords, Lord Peston and Lord Barnett, for its attempt to tilt the balance in terms of consideration of monetary policy towards growth and employment, I wonder whether the word "precondition" has such a different meaning from the concept of "subject to". It seems to me as a layman in these matters that the difference is extremely slight. The clarity which has been sought does not flow from the wording. However, as I agree with the sentiment behind Amendment No. 7, I hope that the Government will be sympathetic towards it. To the extent that it differs from what is in the Bill, it differs in a direction which I support.
I support also Amendment No. 10 in terms of strengthening the degree to which the Monetary Policy Committee is required to look at the national and regional aspects of the consequences of what it does. That thought arose in Committee and on other amendments to the Bill and I hope that the Government will feel able to accept that amendment.
5 p.m.
Lord Davies of Coity: My Lords, I rise primarily to ask the noble Lord, Lord Mackay, for some clarification regarding Amendments Nos. 8 and 9 and the way in which he presented them from the Dispatch Box.
However, before dealing with that I should say that I believe that there will be tremendous problems in evaluating growth, unemployment and questions of price stability. But in establishing an economic policy, that has to be carried out and it seems that the Bill is doing precisely that.
However, I understood from the noble Lord, Lord Mackay, that he wants to remove from line 15 "subject to that". When he moved his amendment, I understood him to say that he wanted to add the words,
"but only insofar as it can do so without prejudice to paragraph (a)".
The written word refers also to the removal of,
"including its objectives for growth and employment".
I did not understand the noble Lord, Lord Mackay, to say precisely that. I am sure that he wants that to be removed. If that is the case and he has inserted into the Bill
"but only insofar as it can do so without prejudice to paragraph (a)",
and he is supporting the economic policy of Her Majesty's Government, what value is there in removing the words, "including its objectives for growth and employment"?
Lord Mackay of Ardbrecknish: My Lords, I agree that I did not address that. In Committee we discussed other matters such as exchange rates and, by removing "growth and employment", just referring to the economic policy of the Government. I include all

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aspects of the Government's economic policy and not just those listed here. I rather hope that the noble Lord might support that as an idea.
Lord Boardman: My Lords, this debate shows the fallacy in the Government's thinking in separating monetary policy from general economic policy and handing over monetary policy to the Bank of England, leaving the Bank of England to operate quite independently and without any safeguards except those in the Bill to which we shall come in due course. We are leaving the Monetary Policy Committee to make its own assessment of monetary policy without regard to any detailed knowledge of the economy. Indeed, before this was thought about last year, the Chancellor did that in his assessments of economic and monetary policy by weighing one matter against the other. That was standard practice. He is now handing over the monetary policy to the independent monetary committee and saying, "It has nothing to do with me. I will get on with the economic policy".
That has led to this confusion which we have here where it is "subject to" certain economic factors. Indeed, according to my noble friend, in the other place the words "subject to" seem to have been omitted altogether from its thinking. It is quite impossible to deal with monetary policy divorced from economic policy. The two factors must be borne in mind together.
The amendment of the noble Lord, Lord Barnett, is perfectly sensible, but I prefer that of my noble friend Lord Mackay. However, they both have the same purpose in mind; that is, to separate economic policy from monetary policy, which is to have priority. If the Government's intention is that the Bank of England will manage monetary policy and the Chancellor of the Exchequer will manage economic policy, so be it, but let that be clear on the face of the Bill. That is what the amendments in the name of my noble friend Lord Mackay aim to achieve and I support the purpose of those amendments.
It is extremely unfortunate that that confusion has arisen. I am perhaps digressing slightly, but it will be far worse if there is a European central bank. I hate the thought of what would happen in those circumstances. However, that is a different subject which I shall not develop. I support the amendments of my noble friend Lord Mackay.
Lord Stewartby: My Lords, at the risk of being called in aid again by the noble Lord, Lord McIntosh, I must say that I do not believe that the Government's wording of Clause 11 is too bad. The task which the members of the Monetary Policy Committee will have to discharge is extremely difficult. The foggier the criteria that they must follow, the more difficult it will be for them to do it. You cannot follow two birds at the same time without the risk of missing both of them. After all, those chaps do not have two barrels; they have only one. They must be very closely focused on the target which they are trying to hit.
I should have preferred this clause to stop at the end of Clause 11(a)—"to maintain price stability", because any respectable monetary economists who are likely to
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be appointed to the committee are bound to take into account the surrounding economic circumstances. It goes without saying that they would do that.
To the extent that the Government have felt, perhaps with a bow in the direction of some of their supporters, that they should include a direct reference to the economic policy of Her Majesty's Government and growth and employment, then I would find it least difficult to accept the wording which the Government have chosen; namely, that that should be subject to the principal objective of maintaining price stability. I would prefer the version of my noble friend Lord Mackay, because it is rather more explicit. In setting a task for the Monetary Policy Committee, the Government need to be as explicit as possible. Its members have a very difficult task. As my noble friend Lord Howell said, there are widely divergent views about the nature of economic growth and performance at present with one sector apparently advancing very strongly and the manufacturing sector finding extreme difficulty as a result of the strength of sterling.
The problem that arises if one introduces any reference to supporting economic policy is that the relationship between price stability and economic policy in the short run is so difficult to establish. If the members of the Monetary Policy Committee are to have to look over their shoulders all the time at the precise implications of movements in interest rates, growth and employment and other aspects of economic policy, they may be side-tracked from their principal and overriding objective; namely, the maintenance of price stability. That is something which will be specified.
In answer to the noble Lord, Lord Bruce of Donington, I should say that the way in which price stability is to be understood by the Monetary Policy Committee will be by way of a missive from the Treasury by notice in writing. At this stage, even that is not established. But assuming that the Treasury, by notice in writing, will give sensible instructions to the Bank, then those instructions need to be as simple, straightforward and comprehensible as possible. The members of the committee will have regard to those wider issues but it is essential to have the clarifying phrase in Clause 11(b), either "subject to that" or, as I prefer, the wording of my noble friend Lord Mackay. However, it must be made quite clear that the committee has a primary objective of price stability and not a more vague, generalised economic objective.
Lord McIntosh of Haringey: My Lords, I have a problem; namely, whether to speak to the debate or the amendments. They are rather different. I believe that I owe it to your Lordships to do both. Therefore, perhaps I may start by speaking to the amendments. Clause 11 says:
"In relation to monetary policy, the objectives of the Bank of England shall be—

(a) to maintain price stability, and

(b) subject to that, to support the economic policy of Her Majesty's Government, including its objectives for growth and employment".

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The effect of the amendment tabled in the names of my noble friends Lord Barnett and Lord Peston would be to make the clause read:
"The objectives of the Bank of England shall be to maintain price stability as a pre-condition of supporting the economic policy of Her Majesty's Government, including its objectives for growth and employment".
Amendment No. 10 follows on from that, and I will deal with it separately. On the other hand, the amendment of the noble Lord, Lord Mackay, would make the clause refer to the objectives as being,
"to maintain price stability and to support the economic policy of Her Majesty's Government",
but only in so far as it can do so without prejudice to paragraph (a). I want to suggest to the House that those three are all virtually the same; there is no significant difference between them. Although there have been differences in debate, I am delighted that, from one side, my noble friend Lord Barnett and, from the other, the noble Lord, Lord Mackay, have come round to the Government's position in the wording of their amendments.
What is the Government's position and what possible disagreements are involved? The key to it lies in the remarks made by the noble Lord, Lord Boardman. I do not agree with him. He suggested that you cannot make a distinction between economic policy in general and monetary policy in particular. I believe that you can and you have to, if you are doing so in the context of setting monetary policy targets for the Monetary Policy Committee of the Bank of England. That is the key to the difficulties which the noble Lord, Lord Mackay, had about the Chief Secretary's remarks in response to Mr. Dafydd Wigley on Second Reading on 11th November last year in another place.
The Chief Secretary meant that the Government's central economic objective is,
"to achieve high and stable levels of growth and employment".
That quote comes from the Pre-Budget Report of November 1997. What we are saying in Clause 11, when talking about the objectives of the Bank of England in relation to monetary policy, is that price stability is the most appropriate contribution that monetary policy can make towards sustaining high and stable levels of growth and employment.
Of course, there are other aspects of economic policy which are not being devolved to the Monetary Policy Committee of the Bank of England. The Budget is evidence of that fact. That committee was not invited to write the Budget. But, in the limited sense of monetary policy and the role of the Bank of England, it is correct to say, as we have said, that price stability is the most appropriate contribution that monetary policy can make to sustaining high and stable levels of growth and employment. Therefore, monetary policy must come first in the statement of objectives and the statement of general economic principle has to be set out after that, following the words "subject to that" in the clause.
My noble friend Lord Bruce said there is much doubt as to what price stability is. Clause 12 spells out that price stability is, as Humpty-Dumpty would say, "what I intend it to mean"; in other words, the Government
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actually spell out in Clause 12 what price stability is to be taken to consist of—namely, 2.5 per cent. inflation, neither much more nor much less.
5.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I apologise to the Minister for intervening. I listened to an economics professor say quite clearly that price stability had to mean zero inflation; but 2.5 per cent. inflation is not price stability. Inflation may be more stable than it has been at some time in the past, but it is not price stability. I recommend the professor of economics.
Lord Mackintosh of Haringey: My Lords, with due respect to my noble friend Lord Peston, we are not dealing with professors of economics; we are dealing with the instructions which the Government give to the Bank of England. We say, as Humpty-Dumpty says, "When I say a word, it means what I state it to mean". It means 2.5 per cent. and not too much more and not too much less. If we want to change that, we will change it in accordance with the wording of Clause 12.
After that, I take comfort from the words of the noble Lord, Lord Howell of Guildford, who said that the wording we have is the best that we can do. I loved the grouse moor metaphors of the noble Lord, Lord Stewartby: you cannot follow two birds without the risk of missing them both. When I made my maiden speech many years ago, a noble Lord said later in the debate,"The noble Lord has shot my fox". It is an equally unfamiliar metaphor to me as that of shooting birds. However, I recognise it for what it is; namely, support for the Government and support for our wording. It would not make very much difference which amendments we were to adopt. The amendments on the Marshalled List do not express the more radical views which have been expressed, especially by my noble friends. On the basis that the Government have done the best that they can, I invite the House to reject the amendments and hope that my noble friends and the noble Lord will not insist upon them.
Lord Barnett: My Lords, we have had a most interesting, if brief, debate. I know that the noble Lord, Lord Mackay, loves to bring in a little party politics. Once again, he tried to bring in one of my many successes as Chief Secretary to the Treasury to show that he agreed with the noble Lord. To be honest, I do not care whether or not he does. I believe he said that he was being rather contradictory. However, I shall not comment on his quote about my noble friend Lord Eatwell. There are many economists around, including, among the best of them, my noble friend Lord Peston who attached his name to the amendment.
However, the plain fact is that the noble Lord's amendments agree with the Government. I am glad to see that my noble friend Lord McIntosh agrees with me in that respect. Of course, my noble friend had to call in aid two noble Lords opposite. Indeed, the noble Lord, Lord Howell of Guildford—I nearly called him "my noble friend" because, very often, we tend to agree—said that government objectives can never be clear. But then he was prepared to leave the Government's

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objectives as set out in the Bill. My noble friend Lord Peston and I are seeking to make the Government's objectives even clearer. Indeed, calling in aid what my noble friend said both on Second Reading and in Committee, we used his words to make it clearer.
My noble friend Lord Bruce also did not know the meaning of the term "price stability". I hope that he will forgive me, because I do not intend to go into that. I deliberately avoided referring to Maastricht because I did not wish to provoke my noble friend. I know how easily provoked he is.
The noble Lord, Lord Mackay of Ardbrecknish, prefers price stability to mean zero inflation. There is no use his pointing—the plain fact is that is what he said. He prefers to quote economists and others who believe that price stability has to mean zero inflation. Perhaps my noble friend Lord Peston agrees with that. I see him nodding. That is where my noble friend and I disagree. I do not believe for a minute that one needs to have zero inflation to have price stability. Incidentally, the noble Lord, Lord Howell of Guildford, prefers to leave the Bill as it is. I believe he called the Bundesbank in aid—or rather I believe some of his noble friends did so. The plain fact is that the Bundesbank may not be able to define price stability or economic objectives, but it may be said that it "ain't done too bad" over recent years without being able to define that. If that is what the noble Lord is saying, I tend to disagree with him.
Our amendment makes the matter simpler, not more complicated. We do not propose to give a definition of price stability. I return briefly to what my noble friend said on price stability. He referred to Clause 12(1), which states, that,
"what price stability is to be taken to consist of, or
(b) what the economic policy of Her Majesty's Government is to be taken to be".
All we seek to do in our amendment is to do just that. We propose that the Government's objectives on price stability or their economic objectives should be as one. We propose nothing more complicated than that. I know that my noble friend the Minister does not always agree with his brief.
Noble Lords: Oh!
Lord Barnett: My Lords, I do not refer to my noble friend Lord Bruce of Donington. Does he agree on this occasion?
Lord McIntosh of Haringey: My Lords, what a shocking suggestion! Are you inviting me to resign?
Lord Barnett: My Lords, I would never dream of it. I think my noble friend should be promoted, although I would be the last person in the world to recommend it because my recommendations may not necessarily be productive. I would not dream of saying that. All I mean to say is that my noble friend can be flexible in his interpretation of his brief. I had better say for the benefit of the record that he shakes his head. He never disagrees with his brief. However, he can be flexible at times.
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I hope that he does not mind my saying that and going that far. My noble friend was not present when we discussed our previous three amendments—I apologise on his behalf—but I am happy to tell him that they were all totally accepted by the Minister. I hope that he will accept this amendment also because all we seek to do is to spell out exactly what is the Government's policy. Is my noble friend willing to speak again and say that he will accept the amendment?
Lord McIntosh of Haringey: My Lords, I have already indicated to the House that I cannot accept any of these amendments. I have invited my noble friend to withdraw the amendment.
Lord Barnett: My Lords, it is an interesting point that I should withdraw amendments with which I agree. But given that we shall have another opportunity—I hope—on Third Reading, or whenever, to consider these matters again, I accept my noble friend's request. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 8 and 9 not moved.]
Lord Barnett Lord Barnett moved Amendment No. 10:
Page 5, line 16, at end insert ("in their national and regional aspects").
The noble Lord said: My Lords, I had hoped that my noble friend might reply to this amendment. I am sorry that it is grouped with other amendments. For the moment I shall move this amendment to give my noble friend an opportunity to respond to this whole question of regional objectives. I beg to move.
Lord McIntosh of Haringey: My Lords, my noble friend is being perfectly fair. I neglected to address Amendment No. 10 when I responded to this group. It is right that I should discuss it. I understand his concerns but I have already made it clear that Clause 16(2) states that the Bank's Court will keep the procedures of the Monetary Policy Committee under review to ensure that it collects the necessary regional and sectoral information in order to meet its monetary policy objectives. The Bank has a well-established network of regional agents and has a wealth of distinguished regional contacts represented in its Court, enhanced by recently announced appointments. Therefore my first answer to my noble friend is that the amendment is not necessary; its aim is covered.
I am duty bound to respond to the noble Lord, Lord Mackay of Ardbrecknish, who said that the word "regional" would offend the Scots. In Committee I undertook to consult the draftsman again on whether it is appropriate to use the word "regional" to describe information relating to Scotland. The noble Lord will not be too surprised to hear that the draftsman said that it is appropriate. In this context it is clear that the word "regional" is simply being used to describe geographic areas. So in this sense "regional" would encompass Scotland, or the lowlands of Scotland, or it could encompass the lowlands of Scotland and Cumbria as an economic region. There is no offence of any kind

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intended or, I believe, would be taken by the people of Scotland and Wales from the use of the word "regional". I think the noble Lord will find that the word is used in this broader sense throughout legislation and throughout government. On that basis, I invite my noble friend to withdraw Amendment No. 10.
Lord Barnett: My Lords, I am obliged to my noble friend. I did not understand why my noble friend said that he rejects the amendment because it is not necessary. One could equally argue that it will not do any harm to include it as all it does is to spell out what the Government have in mind anyway. My noble friend can hardly say that the amendment does any harm. All he said was that it is not necessary.
Lord McIntosh of Haringey: My Lords, I responded to that point in Committee. With the leave of the House, I said then that unnecessary words of themselves do harm. I believe that is the case.
Lord Barnett: My Lords, I warn my noble friend that I shall bear in mind for other occasions the comments that he has just uttered as regards unnecessary words. He said they were not necessary and in this case they could do harm. I doubt that. I should be surprised if they did harm. However, in view of what he has said, and because I am fond of him I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 [Specification of matters relevant to objectives]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 11:
Page 5, line 17, leave out ("may") and insert ("shall").
The noble Lord said: My Lords, in moving Amendment No. 11, I speak also to Amendment No. 12. I have tabled these two amendments genuinely to be helpful to the Government. When we discussed Clause 12 previously both the noble Lord, Lord Peston, and I were puzzled about the first line of the clause, which states that,
"The Treasury may by notice in writing".
We are puzzled about the word "may". The Minister pointed out that we had not read the entire clause properly and did not understand what it meant. However, the Minister said that he would seek the advice of draftsmen. Clause 12(1) refers to what one might call the "one-off situation"; namely, a measure that the Government may adopt if they feel that something has gone wrong. That is encapsulated in Clause 12(1) which states,
"The Treasury may by notice in writing to the Bank".
Clause 12(2) refers to what I might call the normal annual position. Clause 12(3) refers to what will be done as regards the normal annual position. On reflection, I thought that it would be far better to refer to the normal position first and then stipulate the emergency position. However, the Bill refers first to the emergency position—the "may" position—and the "shall" provision
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follows. I should prefer it to be the other way round. I do not claim to be a draftsman but I believe that my amendments achieve that.
The Bill states that the Chancellor will every year,
"before the end of the period of 7 days beginning with the day on which this Act comes into force, and at least once in every period of 12 months",
send a notice to the Bank to state what price stability will consist of; and what the economic policy of the Government should be; that he will publish the notice and lay a copy before Parliament. That should be first because that is what he will do every year. Then after that should be the provision that he may,
"by notice in writing to the Bank",
at other times—I presume in emergencies—do the other thing. I believe that that would have been neater. It would have made my reading of the clause easier. I beg to move.
Lord Peston: My Lords, before the Minister replies, as my noble friend pointed out we have discussed this matter many times in the past. After all my years in your Lordships' House I should have learned my lesson by now. However, my problem is that the word "may" logically implies "may not". It is inconceivable that the Government mean "may or may not"; therefore, the clause means "shall". So for perhaps the last time in my career in your Lordships' House, I seek a convincing explanation of why, since "may" means "shall", we do not use the word "shall". I believe that my noble friend said in Committee that "may" means "shall"; he said that it has to happen. For the moment, I pause in the hope that the Minister can explain to me the point of "may" rather than "shall", and if "may" is used, why not "may not"?
5.30 p.m.
Lord Renton: My Lords, this is the first time I have intervened in debates on the Bill. I support the amendment. One of the things that worries me about the independence of the Bank of England from the Treasury is that it would be possible for the Treasury to fix a bank rate, for example, which was contrary to the economic interest of the country. If the Bank of England were to do that, there would be trouble. But if the Treasury is required to say by notice in writing to the Bank what price stability is to be taken to consist of, and what the economic policy of Her Majesty's Government is to be taken to be, it would not solve the problem I have mentioned but it might mitigate it.
Lord McIntosh of Haringey: My Lords, I hope that I did not say in Committee that "may" means "shall". It has always annoyed me when anyone has said that because it is patently not true. My noble friend is of course right to say that "may" allows the possibility of "may not". The explanation of the wording of Clause 12 is quite different. If I did not make it clear at Committee stage, I am grateful for the opportunity to try again.
Clause 12(1), which gives the Treasury the power to give notice to the Bank specifying what price stability and the Government's economic policy are, allows the

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Treasury to give such notices whenever it thinks fit. But Clause 12(2) means that the Treasury must specify these matters at least once in every 12 months.
I have sought the draftsman's view on the wording of this clause in the light of our debate. He has confirmed that he is content that the clause is clear as drafted. You might say, "He would be, wouldn't he?", but, when one thinks about it, I believe that the logic is sound. Subsection (1) deals with the general; namely, the Treasury's power to give the notice. Subsection (2) deals with the specific; that is, the Treasury's duty to give notice at least once in every period of 12 months. I suggest that it is appropriate to go from the general to the specific in so far as the specific qualifies the general. I hope that the noble Lord will withdraw the amendment.
Lord Peston: My Lords, may I seek clarification from the Minister? Does he say that if "shall" replaces "may" the clause will be different? It would help me very much if my noble friend could tell me the answer to that.
Lord McIntosh of Haringey: My Lords, I am saying that we want a level of permissiveness, of allowing the Treasury to give notice when it thinks fit, but we wish to qualify that by saying that whatever the Treasury decides to do it must—that is the specific—do it at least once every 12 months.
Lord Mackay of Ardbrecknish: My Lords, I think we are in danger of coming close to splitting hairs. My suggestion is that one states as the principal clause one's normal position: that annually one will do it. Then one qualifies that by saying that if one feels obliged to do so, one can do it at other times as well. I should have thought that that was the logical way round. I appreciate that once the draftsman has made up his mind, it is often difficult to get him to change it: the very good reasons given become the position that one has to defend.
I believe that there was nothing wrong with my amendment. It is interesting to note that the Minister did not suggest it was defective. I believe that such drafting would have shown the casual reader—if there ever will be casual readers of the Bill—what the Treasury will do every year, and that if the Treasury thinks fit it could do this at other times.
Clearly I shall not succeed in having the clause changed. My career as a draftsman has been short but sweet. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
Clause 13 [Monetary Policy Committee]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 13:
Page 5, line 39, at end insert ("in accordance with the procedures of the Commissioner for Public Appointments").
The noble Lord said: My Lords, in moving the amendment, I speak also to Amendment No. 14.
The amendments are related only in so far as they deal with the method of appointment of the four members of the Monetary Policy Committee. They are not related in any other way. Amendment No. 13 is merely an additional probe to an amendment I put forward at Committee stage. But Amendment No. 14 is a serious amendment arising from the debates at Committee stage.
The four appointments we are discussing are what I might describe as the away team of the Monetary Policy Committee. The home team will be the Governor, the two deputy governors and two of the employees, as outlined in Clause 13(2). Currently there are only four of them, but once the Bill is enacted there will be five members of the home team, and four members of the away team.
Those people will decide monthly on the interest rates to be pursued in this country. From the last debate we had, it was perfectly clear, however one reads Clause 11, that the Monetary Policy Committee will be an extremely important body. It will be a body constructed by the Chancellor appointing people to it. We are looking now at the four members of the away team, the outsiders so to speak, who will be appointed to play a major part in making that decision. Arguably, this will be the most important public body in the land—far more important than many others.
At Committee stage, I posed the question of the method of appointment. The Minister gave me some reassurance. Perhaps he can do so again, although I would prefer him to put the reassurance on the face of the Bill. The Minister pointed out that appointments to nationalised industries and public corporations are under the remit of the Commissioner for Public Appointments. He told me that a review was going on; a consultation document was out; and the Government expected to respond in the course of the next few months. He also told me that any extension of the remit of the commissioners, for example, to include the Monetary Policy Committee, would not need primary legislation. It would be dealt with by an Order in Council.
Having reread what the Minister said, I was unsure whether the Government believed that these four appointments should be made in the same way as other appointments, through the Commissioner for Public Appointments: being advertised, applied for, and so on. I shall be grateful if the Minister can clarify that. If the Government believe that they should be appointed in the same way as members of nationalised industries and other public corporations, is it not time that these matters were on the face of important Bills such as this one, so that no one is in any doubt?
Amendment No. 14 refers back to Amendment No. 10, proposed by the noble Lord, Lord Barnett, and to one or two other points made earlier. Those four members will be extremely important. They must therefore understand the needs of the economy of the whole of the United Kingdom. In Committee, we had an interesting debate on the need for manufacturing industry to feel that it had someone on the monetary policy committee who understood it and its problems. We also discussed whether we needed to be sure that

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there were people on the committee who had knowledge of the whole of the United Kingdom. Noble Lords who took part in that debate from both sides made valid points which concerned us all about manufacturing industry and, if I may so describe them, the regional aspects of economic policy.
The amendment I have tabled homes in on Scotland. For reasons I mentioned earlier, the Government have deliberately decided, as a matter of policy, to change the whole way in which the United Kingdom is governed. We are no longer to have one central government for all policy issues in the United Kingdom. We are to have three governments—and possibly four, if the talks in Northern Ireland reach a conclusion in reasonably short order.
The economies of the nations that make up the United Kingdom can be very different. I started out being mildly worried about this matter; however, I became more concerned when I read the CVs of the four excellent people who have been appointed to the monetary policy committee. It seemed to me that, apart from experience beyond this country, their working lives have been very much in a triangle consisting of Oxford, Cambridge and London. Indeed, the furthest north any of them seemed to think they should go in their professional careers—I hope I am not to be told that they spend a fortnight on holiday in Scotland once a year—is Oxford or Cambridge. I have still not worked out which of the two is further north—I keep hoping that somebody will tell me—but neither is terribly far north, considering the Midlands, the north of England, Scotland, Wales and Northern Ireland.
I shall not read the details at great length. Professor Goodhart is a professor of banking and finance at the London School of Economics. I shall turn to his past in relation to other matters. I do not think that he has ever in his career been north of Cambridge and the LSE—he taught in both. DeAnne Julius is the odd person out. Not only is she a woman; she is also not an academic economist. She works as the chief economist of British Airways. Nothing in her CV, unless Washington is north of Oxford and Cambridge, which it probably is—I am told it is not—suggests that she has worked outside that interesting triangle. Sir Alan Budd is the third. His appointments have all been very much within the triangle I mentioned. Professor Buiter is the last; he is professor of international macro-economics at Cambridge University. Prior to that, he was at the London School of Economics and Yale. To my knowledge, Yale is not in Scotland. Nor indeed is Bristol, where I note that he also worked, as he did at Princeton. He is obviously much travelled in his career; however, his travel does not include Scotland or any other part of the United Kingdom beyond Oxford, Cambridge and London.
My concern is this. Over my political lifetime there have been situations—not prevalent at present, but which did exist for many years—where the economies of Scotland and perhaps the north of England were quite different from the economy of the south-east of England. The economy of the south-east of England was often over-heating, and therefore in need of higher interest rates, when the economies further north were
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still in decline. Their old industries such as steel, coal and shipbuilding were declining, and there were serious problems. Frankly, higher interest rates were not part of the solution to those problems. They aggravated the problems. While, as I say, that is not happening currently, it has happened more often than not in the past. I am therefore very worried that the monetary policy committee will be looked upon from the north as merely a group of people meeting in London, largely drawn from London or close by, who have no knowledge and perhaps no interest (that would not be a fair accusation, but it will be the one that is levelled) in the economies of the other parts of the United Kingdom.
My argument is even stronger given the changes that are being made in the government of the United Kingdom by the Government this Session. While I fully accept that Treasury matters are reserved—indeed, the Minister gave that assurance in Committee—I must say to him that debate in the Scottish parliament will not be reserved. Its members will be allowed to debate anything they wish to debate. If they feel that the interest rates being pursued by the monetary policy committee are not in the best interests of Scotland, they will start debating the matter loud and long. They will be forced to do so, since they will have as their responsibility economic development, financial assistance to industry, inward investment and the promotion of trade and exports from Scotland.
That brings me directly to the question of the value of the pound, which is a matter that must concern members of that parliament. Tourism is also a factor, and the value of the pound plays an important part. Just as noble Lords are probably finding that the Easter Recess can be spent quite cheaply abroad. I suspect that people from abroad are finding this country, including Scotland, slightly more expensive than it once was because of the value of the pound. So although the Treasury's responsibilities are not devolved, there are many aspects which are devolved and which will be very much influenced by the decisions of the monetary policy committee.
My amendment is couched in the most sensible terms. Indeed, I even accept that the Chancellor of the Exchequer will continue to make the appointment, which I hope shows that I have listened to the Minister. What I am saying is that one of those members should be appointed on the advice of the First Minister of the Scottish Executive. I keep being told that the First Minister is to be Mr. Donald Dewar. Donald Dewar and I are friends; we go back a long time. I should be perfectly confident in the good advice that he would give the Chancellor. Indeed, I suspect that I should be perfectly confident in the good advice that any First Minister would give the Chancellor. So I do not think that I am being unreasonable in the way I have phrased this matter. I have changed the amendment quite markedly since Committee stage. I have thought about it, and I have tried to be practical. I have tried to give the Minister an amendment which he can accept, but which, if your Lordships decide to insist, would actually work, because the First Minister would exist and would be able to give advice. That would be very important.
I am not alone in believing this. The Law Society of Scotland thinks that there is merit in this case. Indeed, from my point of view support came from a very unlikely quarter—but support is coming from the most unlikely quarters these days. I now find that the National Union of Students considers that I am quite one of its heroes, having voted down one of the Government's proposals on fees. I suppose that the change of position in the Chamber brings new supporters. The supporter that I now pray in aid is the Scottish Trades Union Congress, which is very dominant in the Labour movement in Scotland. The Scottish Trades Union Congress made a submission to the Chancellor of the Exchequer ahead of the Budget in which it asked for Scotland to have a seat on the influential Bank of England committee which sets interest rates. It goes on to say, as I have, that there have been times over the past 50 years when interest rates did not seem quite right for Scotland. It also accuses the Bank of being "particularly insensitive" to the impact of interest rates on regional economies. It states:
"The STUC believes that the latter"—
that is, an appreciation, an awareness, of the economic priorities of the different parts of the UK—
"will only happen when seats on the monetary policy committee, and on the Bank's court, are allocated by region".
The Minister will tell us that, indeed, seats on the court are being given to people from a wide range of interests and places in the United Kingdom. I paid tribute to that in Committee and do not wish to take away from that. It is a plus, and is good for the Government on that basis. However, we also know that the court has no influence over the important issues the monetary policy committee will decide: namely, interest rates. So the Government cannot pray in aid that they have good regional or cross-sectional industry representation on the court and that that will do. The Government also say that the court and the monetary policy committee are quite separate when it comes to deciding interest rates. The STUC obviously understands it as well, as it goes on to say:
"We therefore call on the Chancellor to review representation on the monetary policy committee to ensure that Scotland's circumstances are properly taken into account".
It may think that I am an unlikely ally in this regard, but the STUC is correct. If the Government will not listen to the Opposition I hope they will listen to their friends in the Scottish Trades Union Congress. It is an important amendment. I believe that I have couched it reasonably. The Chancellor will still make the appointment and it will be on the advice of the First Minister. I cannot believe that a good professor of economics cannot be found in any of the Scottish universities. It would be a real insult if that is the Government's answer. There will be a number of people in Scotland, in the universities, business and commerce, who would make excellent members of the monetary policy committee. One of them ought to be on it. I therefore commend my amendment to the Minister and to the House. I beg to move.
Lord Newby: My Lords, I wish to speak on the amendment relating to the appointments to the monetary
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policy committee. In Committee I argued that there was a strong and compelling reason for there to be regional representation among the four appointees. That remains the case. The difference between the growth of different sectors of the economy, which bears differently in different regions, only serves to underline the strength of that argument.
I also argued in Committee that the amendment put down at that stage by the noble Lord, Lord Mackay, was defective in that it unduly constrained appointments to the court. At that stage he argued that one representative should be from Scotland and one from Wales. I still believe that to state that a region or nation should have one of the four as a representative as of right and that Wales, Northern Ireland and—dare I say it—Yorkshire should have to scrabble around possibly for one other regional place seems an imbalance and an undue constraint. Therefore, I cannot bring myself to support the amendment today.
However, I would welcome any assurance that the Minister can give that it is an issue that the Government take seriously. Throughout our discussions on a number of amendments, whenever we have considered the way in which the monetary policy committee is to be viewed from the nations and regions of Britain, the Government have taken a rather cavalier view that as long as there are half a dozen or a dozen good men and women and true from a little charmed circle in the south east taking decisions, everyone will meekly agree that that is the way forward. That seems to me an unduly arrogant and "south-eastist"—if there is such a word—view of the world. It would strengthen the credibility of the committee if there were representatives of the nations and regions of Britain. I would welcome any assurance that the Minister can give that it is something to which the Government will give due consideration.
Lord Molyneaux of Killead: My Lords, I wish briefly to intervene to support the points made by the mover of the amendment. As one who has had experience, though not as a member of the devolved Parliament at Stormont, still less the government at Stormont, I can testify this. On every issue involving public expenditure the blame will land not at the door of the local representatives in Scotland, and not at the door of the First Minister, perhaps to be called a Taoiseach to line up with our friends south of the Border. The blame will be allocated to the Treasury and the Bank of England. The blame will not be attached, oddly enough, to this Parliament at Westminster but to the party in power at Westminster, with no respite. For that good reason, as a sympathiser with noble Lords on the Front Bench, I should not like to see them subjected to the kind of abuse that will be heaped on their heads, no matter what kind of case they try to make. I beg them to think seriously about the amendment.
Lord Peston: My Lords, as the noble Lord, Lord Mackay of Ardbrecknish, is aware, I am sympathetic to the contents of the amendment. But I am not persuaded, for rather general reasons, that what is proposed should be on the face of the Bill. I thought that my noble friend Lord McIntosh said in Committee that it was the

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Government's general view that appointments ought to be made in accordance with the procedures of the commissioner for public appointments. I understood him to say that and I hope he will say something similar now. I regard that as a general statement, nothing to do with appointments to the Bank of England's monetary policy committee. I hope it would be a general characteristic of legislation from now on. It seems a pity to single out the Bill for it because, in due course, with respect to other Bills, one would either have to propose it for every other Bill, rather than the Government saying: "We shall do this generally", or an occasion will arise where we shall say: "What is there about this set of appointments that they will not come under that rubric?"
I hope my noble friend will be able to say either specifically, or in terms of where the Government hope to go, that in broad principle what is in the amendment is right and from now on it will apply to appointments made directly or indirectly by the Government. I hope that that is what my noble friend will say and therefore this is not an amendment to be pressed.
Similarly, on what I dare not call the "Scottish question"—I do not wish to raise the hackles of any Scots—the fact is that on any appointments made in connection with any Bill, someone is bound to say: "What about the Scots?" I take the cynical view that dawned on me in my earlier years here that we ought to pass a Motion at the beginning of every Parliament. Clause 1 would state, "What about the Scots?", and Clause 2 would state: "What about the Welsh?" That would save much of your Lordships' time and be in keeping with the spirit of the age of being highly efficient.
I believe strongly that governments, in making appointments to bodies of this kind, ought not to go for what are called charmed circles. I was a member of such a circle in my time and I am aware of its benefits, but it is quite wrong. One ought to be sensitive to the feelings of people away from central London. I cannot believe that my right honourable friend the Chancellor of the Exchequer is completely unaware of the existence of Scotland and the sensitivities of the Scots. I agree with the noble Lord, Lord Mackay of Ardbrecknish, that not merely was the greatest economist who ever lived a Scot, but that there are plenty of good Scots economists there. I cannot believe that when replacement appointments come up people will be unaware of such matters.
Where I take slight issue with the noble Lord, Lord Mackay of Ardbrecknish, is on the notion that if policy goes wrong—and I tend to feel that interest rates have gone high enough and sterling has gone high enough—it is not only Scotland that will suffer from that policy error but large parts of England will. Therefore, it is a pity if we simply bring up the Scots as the only possible sufferers. It seems to me that the noble Lord, Lord Mackay of Ardbrecknish, has made his points extremely well, but I am not persuaded that they require to be set out on the face of the Bill. If that happened, then every Bill should have such a clause in it, which we would not want to see.
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When my noble friend speaks, I am certain that he will not say, "Who cares about the Scots?" Quite the contrary. I am not convinced that we need the proposed wording in the Bill at this stage. Perhaps I may say directly to the noble Lord, Lord Mackay, that he and I will both see a Scot on the committee before long, in my judgment.
Lord Boardman: My Lords, I support my noble friend's amendment, Amendment No. 14. I wish to add one reason to those he gave why Scotland should be specially considered for a representative of some kind on the monetary policy committee. Banking forms an important part of the Bill. In banking, Scotland has always retained an independence and is somewhat jealous of its banking system which is not generally shared throughout the rest of the United Kingdom. It was necessary in my banking days to treat the Scots somewhat differently; they would insist on that. I believe that they have a powerful case for being represented, not necessarily in the banking sense, but so that they can look to somebody on the monetary committee who they believe will be able to understand the banking affairs of Scotland and represent their case.
6 p.m.
Lord McIntosh of Haringey: My Lords, perhaps I can address each amendment in turn. I thank the noble Lord, Lord Mackay, for agreeing to group these amendments together, though he is right in saying that they are different subjects.
On the issue of the procedures relating to the Commissioner for Public Appointments, I do not intend and would never wish to back down on our manifesto commitment to implement the Nolan recommendations fully. We published a Cabinet Office Paper—Opening up Quangos—which proposed extending the remit of the Commissioner for Public Appointments to nationalised industries and public corporations. That paper was published for consultation in 1997 and the results should be available within the next few months. I can confirm that appointments to the Monetary Policy Committee come within the scope of that consultation.
Noble Lords will recognise that there are unique sensitivities in the Monetary Policy Committee appointments, given the degree of huge market interest in the committee's deliberations and decisions. We certainly need to take those into account. However, I cannot say that we will anticipate the consultation and our response to it only for the Monetary Policy Committee. I can only express our general determination to open up as many public appointments as possible and leave the decision on the Monetary Policy Committee, as for all other public appointments, until the consultation has been completed.
In regard to legislation, clearly it would not be appropriate to put individual references to the Commissioner for Public Appointments into each piece of legislation going through Parliament. If we did that, we would have to do it for all existing legislation on the statute book. Instead, having established the principle and debated it in Parliament, we will proceed to open up appointments to the regime of the Commissioner for

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Public Appointments by Order in Council rather than by what would otherwise be enormously complex primary legislation.
I turn to Amendment No. 14. I recognise the difficulties that noble Lords proposing these amendments face. When different versions were proposed in Committee I was able to say, "If you make appointments taking account of regional needs, the national needs for Scotland, the needs of manufacturing industry and so forth, you crowd out the scope for appointment to what are, after all, only four appointments, whereas the emphasis should be on obtaining the best people regardless of where they come from".
The noble Lord, Lord Mackay of Ardbrecknish, responded to that and fined down his objections to one single point; that is, the need for somebody to be appointed on the advice of the First Minister of the Scottish executive. In doing so, he is once again leapfrogging the Government. The way in which the noble Lord embraces Scottish devolution with a passion and almost an extremism that was not apparent at the time of the general election somewhat surprises me. He is also now accepting the embrace of the National Union of Students and the Scottish Trades Union Congress. That is fine. I leave him on his road to Damascus and simply stand back and admire.
In this case there would be considerable difficulty in selecting one interest, however important and valuable and however much the words,
"Of the four members appointed under subsection (2)(c) one shall be appointed on the advice of the First Minister of the Scottish Executive",
should appear on the face of the Bill. I am not clear what the phrase "on the advice" means. Perhaps the noble Lord, Lord Mackay, can enlighten us. To me it means that one must take the advice once it has been offered. I assume that is what it means. In effect therefore it is a weasel word for nomination from the Scottish executive.
When talking of the Monetary Policy Committee, we must remember that this country has only one currency. I acknowledge to the noble Lord, Lord Boardman, that we have a somewhat separate banking system in Scotland. But monetary policy is concerned with one currency and the average of prices throughout the whole of the United Kingdom. The Monetary Policy Committee must consider developments in all regions of the United Kingdom. That is why we have a requirement in Clause 16 that the committee should collect and consider,
"the regional, sectoral and other information necessary for the purposes of formulating monetary policy".
There is a network of regional agents to ensure that the committee is fully aware of development in the regions.
I understand the reason for picking out Scotland in order to avoid the arguments which I put against these amendments at Committee. But the noble Lord, Lord Newby, has the message. Once we start on that road, will we continue with Wales, with Yorkshire and then go back to the needs of manufacturing industry?
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All those are important, and Scotland no less and almost, in some ways, more important because of devolution. However, a requirement of this kind cannot be put on the face of the Bill, otherwise the fundamental objective of forming the Monetary Policy Committee from the best and most highly qualified people for the job would be frustrated. I therefore invite the noble Lord to withdraw his amendment.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Minister for his response and to other noble Lords for taking part in this short debate. On the method of appointment, I am grateful to the Minister for his clarification. I felt in Committee, perhaps wrongly, that the Government were saying that appointments to the Bank of England Monetary Policy Committee should be conducted in the same way as with other bodies. However, I now hear better what he is saying: the Government have not actually made up their mind. I appreciate that the Monetary Policy Committee is important and is different. That is the point I was making when I prayed in aid that it should be appointed in the clearest and most open way. I am grateful to the noble Lord for that.
In relation to Amendment No. 14, which I clearly flagged up as being in my view the more important of the two, the Minister said that the Chancellor cannot be unmindful of the Scottish position. I fully agree that the current Chancellor cannot be unmindful of the Scottish position. However, I do not believe it is written into the constitution of our country that the Chancellor must always come from a Scottish constituency. In the future, therefore, we may well have Chancellors who are not so mindful of the needs of the Scottish position.
As the noble Lord, Lord Peston, said, it should not be difficult to find an economist from Scotland. I presume the noble Lord was referring to Adam Smith when he said that the greatest economist who ever lived was a Scotsman. There is therefore good precedent for that. We could easily find an economist and, as my noble friend Lord Boardman mentioned, Scotland has a significant banking and financial sector—the biggest outside London. It has its own aims and objectives which are extremely important.
Lord Peston: My Lords, perhaps the noble Lord will allow me to intervene, though I am slightly breaking the rules. I did not choose my words carefully when I spoke. I did not mean to imply that it should be an economist. It seems to me that it would be desirable for a Scottish businessman or even a Scottish trade unionist to be on the committee one day.
Lord Mackay of Ardbrecknish: My Lords, I was not implying that. I was simply discussing the economist's position. But the noble Lord, Lord Peston, is right.
In the normal run of things, I would be treating this as a probing amendment in order to get the kind of assurances I have had from the Government that, yes, they will take these points into account when

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they come to appoint and so on. However, this time next year my fellow Scots, including myself, thanks to the courtesy of the Government in allowing me a vote, will be electing a parliament for the first time in 300 years and they will have their own government. By the millennium Scotland will be operating on many major issues of policy very much on its own and quite separate from the Houses of Parliament here.
It is a very significant shift in the balance of power in this country. In many ways it is a far bigger shift than the one proposed for Wales, because all legislation regarding Wales will still start here at Westminster. In Scotland, the whole legislative programme, Scottish law, and so on, will be dealt with in Scotland. I see the Lord Advocate in his place. I am sure he can confirm that, except in some narrow reserved fields, most legislation about Scotland will no longer pass through your Lordships' House but will be taken in Scotland. As I said, that will not be the case for Wales and I suspect it will not be the case for Northern Ireland, although we do not know that yet. That is my reason for saying that Scotland—dare I say it to the noble Lord, Lord Newby?—is not the same as Wales and it certainly is not the same as Yorkshire. I do not think that his party north of the Border would thank him for that comparison.
The Government are making a huge change. Perhaps I may quote from an explanation of the change:
"Scotland is a proud, historic nation in the United Kingdom and the plans we put forward in this White Paper will give it an exciting new role within the United Kingdom".
Those are the words of a certain Mr. Tony Blair in his preface to the White Paper. Clearly, this exciting new role does not include a member on the Monetary Policy Committee; and it is on the decisions of that monetary policy committee that a good deal of the economy of Scotland will rest.
Two or three weeks ago I moved against the Government and got into the good company of the National Union of Students. The temptation to say that I am not happy with the noble Lord's answer and get into the company of the Scottish Trades Union Congress is too great for me to resist. Therefore, I wish to seek the opinion of the House.
The Deputy Speaker (Lord Strabolgi): My Lords, the amendment before the House is Amendment No. 13.I had an idea that the noble Lord wanted to withdraw it.
Lord Mackay of Ardbrecknish: My Lords, I beg leave to withdraw Amendment No. 13.
Amendment, by leave, withdrawn.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 14:
Page 6, line 8, at end insert—
("() Of the four members appointed under subsection (2)(c) one shall be appointed on the advice of the First Minister of the Scottish Executive.").
The noble Lord said: My Lords, I got carried away with myself and my new tartan guise. I beg to move.
6.14 p.m.
On Question, Whether the said amendment (No. 14) shall be agreed to?
Their Lordships divided: Contents, 93; Not-Contents, 90.

Division No. 2

CONTENTS

Addison, V.

HolmPatrick, L.

Ailsa, M.

Home, E.

Alexander of Tunis, E.

Hooper, B.

Anelay of St. Johns, B.

Howe, E.

Ashbourne, L.

Jenkin of Roding, L.

Astor of Hever, L.

Jopling, L.

Baker of Dorking, L.

Keyes, L.

Belhaven and Stenton, L.

Kimball, L.

Belstead, L.

Kinnoull, E.

Blatch, B.

Lauderdale, E.

Boardman, L.

Leigh, L.

Brabazon of Tara, L.

Liverpool, E.

Bridgeman, V.

Long, V.

Brougham and Vaux, L.

Lucas of Chilworth, L.

Butterworth, L.

Luke, L.

Byford, B.

Lyell, L.

Cadman, L.

Mackay of Ardbrecknish, L.

Carlisle of Bucklow, L.

Mackay of Drumadoon, L.

Carnock, L.

Masham of Ilton, B.

Chalker of Wallasey, B.

Massereene and Ferrard, V.

Chesham, L.

Miller of Hendon, B.

Colwyn, L.

Molyneaux of Killead, L.

Cope of Berkeley, L.

Murton of Lindisfame, L.

Courtown, E. [Teller.]

Napier and Ettrick, L

Cranborne, V.

Newall, L

Crickhowell, L.

Northesk, E.

Cumberlege, B.

Oxfuird, V.

Denham, L.

Palmer, L.

Denton of Wakefield, B.

Park of Monmouth, B.

Dixon-Smith, L.

Pender, L.

Dunrossil, V.

Rawlings, B.

Eccles of Moulton, B.

Rees, L.

Elliott of Morpeth, L.

Rennell, L.

Fookes, B.

Renwick, L.

Fraser of Carmyllie, L.

Rotherwick, L.

Garel-Jones, L.

Seccombe, B.

Geddes, L.

Sharples, B.

Granard, E.

Stewartby, L.

Greenway, L.

Strathclyde, L. [Teller.]

Halsbury, E.

Strathcona and Mount Royal, L

Harding of Petherton, L.

Sudeley, L.

Harrowby, E.

Trefgarne, L.

Hayhoe, L.

Vivian, L.

Henley, L.

Waddington, L.

Higgins, L.

Wakeham, L.

Holderness, L.

Weatherill, L.

Wise, L.

NOT-CONTENTS

Acton, L.

Clinton-Davis, L.

Addington, L.

Cocks of Hartcliffe, L.

Amos, B.

David, B.

Archer of Sandwell, L.

Davies of Coity, L.

Bassam of Brighton, L.

Davies of Oldham, L.

Beaumont of Whitley, L.

Dixon, L.

Berkeley, L.

Donoughue, L.

Blease, L.

Dormand of Easington, L.

Borrie, L.

Evans of Parkside, L.

Brooke of Alverthorpe, L.

Falconer of Thoroton, L.

Burlison, L.

Falkland, V.

Carmichael of Kelvingrove, L.

Farrington of Ribbleton, B.

Carter, L. [Teller.]

Fitt, L.

Chandos, V.

Gallacher, L.

1009

Geraint, L.

Milner of Leeds, L.

Gladwin of Clee, L.

Monkswell, L.

Glenamara, L.

Montague of Oxford, L.

Gordon of Strathblane, L.

Murray of Epping Forest, L.

Gould of Potternewton, B.

Newby, L.

Graham of Edmonton, L.

Nicol, B.

Greene of Harrow Weald, L.

Orme, L.

Grey, E.

Peston, L.

Hardie, L.

Pitkeathley, B.

Hardy of Wath, L.

Prys-Davies, L.

Haskel, L.

Puttnam, L

Hogg of Cumbernauld, L.

Ramsay of Cartvale, B.

Howie of Troon, L.

Randall of St. Budeaux, L.

Hoyle, L.

Razzall, L.

Hughes, L.

Rendell of Babergh, B.

Hunt of Kings Heath, L.

Renwick of Clifton, L.

Irvine of Lairg, L. [Lord

Richard, L. [Lord Privy Seal.]

Chancellor.]

Rodgers of Quarry Bank, L.

Jeffreys, L.

Shepherd, L.

Jeger, B.

Simon, V.

Jenkins of Putney, L.

Smith of Gilmorehill, B.

Kilbracken, L.

Stoddart of Swindon, L.

Lockwood, B.

Stone of Blackheath, L.

Lofthouse of Pontefract, L.

Strabolgi, L.

McCarthy, L.

Symons of Vemham Dean, B.

McIntosh of Haringey, L.

Taylor of Blackburn, L.

[Teller.]

Thomas of Macclesfield, L.

McNally, L.

Tordoff, L.

Maddock, B.

Turner of Camden, B.

Mallalieu, B.

Wedderburn of Charlton, L.

Mason of Barnsley, L

Whitty, L.

Merlyn-Rees, L.

Williams of Crosby, B.

Resolved in the affirmative, and amendment agreed to accordingly.
6.21 p.m.
Clause 25 [Liability]:
The Earl of Home The Earl of Home moved Amendment No. 15:
Page 10, line 37, at end insert ("or negligent"").
The noble Earl said: My Lords, this is a very short, but a quite important amendment. When we spoke about this in Committee the Minister rejected it on the basis that the regulator would not be able to operate effectively if he was,
"constantly constrained by the fear of speculative or constructive litigation".—[Official Report, 4/3/98; col. CWH 127.]
The purpose of this amendment was not to restrict the FSA in any way from carrying out its functions, as set out in the Bill or in the memorandum of understanding between the Treasury, the Bank and the FSA, nor is it the intention to expose it to speculative litigation. Of course, we accept that the FSA must be able to request and receive information without fear of retribution.
However, if a member of the FSA, through negligence or carelessness, loses a document, the contents of which are subsequently made public, that is a different and a very serious matter. The institution which gave the FSA the information in the first place could itself be liable to be sued by the third party which gave it the information. If that institution has no redress against the FSA for the carelessness of an individual or of itself, the banks and the institutions will only give the scantiest information that they can get away with. As the whole object is to build up confidence between the
1010
institutions and the FSA, it seems reasonable to ask that the institutions should have some redress purely for carelessness.
We do not ask for anything more than the same sanctions that might apply to any person who does not take reasonable steps to ensure that confidential documents do not get lost or carelessly left behind in a public place. When we had finished our discussion the Minister was kind enough to say that he would reflect on the amendment and possibly come back to me on it. We shall be grateful to know the result of his reflections. I beg to move.
Lord McIntosh of Haringey: My Lords, I did reflect on the amendment and I have looked back at the record of our debate on this subject. But I came to the same conclusion that this is an amendment which would reduce the scope of immunity conferred on the FSA as regards its new functions. Clause 25 is not about putting immunity for banking supervision on a statutory basis. That is already achieved by Section 1(4) of the Banking Act. This clause extends statutory immunity to supervision of the listed wholesale money markets.
As I said in Committee, if the regulator is to operate effectively he cannot be constrained by the fear of speculative or obstructive litigation. It is right that people can seek damages if the regulator can be shown to have acted in bad faith, and that is provided for on the face of the Bill. We want a regulator who is free to act as necessary and not to be too frightened of litigation to act effectively. I remind the House of the enormous importance of these issues and of the failures of banks because of bad management. There is a need, therefore, for a regulatory regime which is going to protect effectively the needs of investors in the wholesale as well as the retail money markets.
Narrowing the immunity could result in the FSA being held back from urgent action for fear of litigation. At the same time we do not want to have too much regulation. We do not want the regulator to be afraid of a suit for negligence which would encourage the FSA to collect more information than it would otherwise need; or to set tougher minimum standards or to take longer to take decisions than would otherwise be the case.
Inevitably there is a trade-off between the complexity of the regulation; the tendency for regulators to protect themselves and also the degree to which they can be challenged. I do not believe that it is true to say that the exclusion of negligence from these provisions is a serious problem for regulation.
Of course, the FSA must be answerable and its officials must be responsible for their actions. If we change the immunity in this way it could fundamentally change the nature of regulation. The example was given in Committee of documents being left on a train or unauthorised disclosure. That would be a breach of Part V of the Banking Act and of Part VIII of the Financial Services Act. The FSA and the officer concerned would be potentially liable for criminal prosecution. So there is plenty of incentive in existing legislation for the FSA to act responsibly.

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The board of the FSA will be accountable to Ministers and Parliament for any pattern of negligence or serious failures. Ultimately, Ministers will have the ability to change the board. The FSA is generally subject to judicial review like any other public authority. It is a matter of balance. We have to balance the rights of the organisations being regulated against the wider public need for effective regulation. We believe that the balance is right as it stands in the Bill. I hope that the noble Earl will not press his amendment.
The Earl of Home: My Lords, I thank the Minister for that response. I do accept that there have to be trade-offs from time to time in some of these matters. Today the Minister has given us a very much fuller answer, particularly to the point about leaving documents in public places. I shall certainly look up Part V of the Banking Act to ensure that that point is covered. If not, we shall have to return to it at Third Reading. I thank the noble Lord for a much fuller explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 [General interpretation]:
[Amendment No. 16 not moved.]
Clause 44 [Extent]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 17:
Page 16, line 30, at end insert—
("(1A) Section 33 extends to the Channel Islands and the Isle of Man.").
The noble Lord said: My Lords, this is a technical amendment to ensure that the transfer of the gilts-registration function of the National Savings stock register to the Bank of England's register also has legal effect in the Channel Islands and the Isle of Man. I apologise for bringing this amendment to the House so late in the passage of the Bill, but the Jersey, Guernsey and Manx authorities have all agreed to it.
On Question, amendment agreed to.
Clause 46 [Short title]:
[Amendment No. 18 not moved.]
Schedule 2 [Cash ratio deposits]:
[Amendment No. 19 not moved.]
6.30 p.m.
Schedule 3 [Monetary Policy Committee]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 20:
Page 21, line 32, leave out ("3") and insert ("5").
The noble Lord said: My Lords, in moving Amendment No. 20, I should like to speak also to Amendments Nos. 21 to 23. These amendments all deal with appointments to the monetary policy committee, not the important issue of who those members should be and where they should come from, which we discussed earlier but amendments none the less of some significance because they deal with the length of time that they may serve and, in the case of Amendment No. 23, with the question of who may or may not be
1012
considered for appointment. However, Amendment No. 23 is a little different and I leave it to one side for the moment.
Amendments Nos. 20 to 22 deal with the question of the length of appointment. In a way I am offering the Minister two alternative answers which perhaps he can discuss with us to see whether one or the other is attractive to him. Some of us still feel that a tenure of three years is too short. After all, the Government are appointed for five years. Three years is a pretty short time span. It is well within one Parliament and even within the chancellorship of one Chancellor. All four members could come up for reappointment, not just within the same Parliament, but within the same chancellorship, if I can put it in that way. If the Chancellor is displeased at the voting record or if theories on such matters have changed, in almost no time at all and certainly well within one economic cycle the whole composition of that important committee could be changed. We must add to that the fact that a Treasury official will also be on the committee. He can report back what is happening. If he signals one policy on behalf of the Treasury and the Chancellor and the members decide on another, will the members feel that their membership of the committee is, in farming terms, on a shoogly nail? I do not know, but I suspect that they will.
My first effort, Amendment No. 20, suggests that we change three years to five years. I believe that a member should be appointed for one term only, with the exception of those serving at the beginning who will be appointed for shorter periods in order to stagger the four appointments. The Minister and I entirely agree that that is fair and correct. If the Minister were to agree to the change from three to five, it is clear that if anyone who had been appointed for five years was then reappointed, that person would serve for 10 years. I know that the noble Lord does not like appointments of that length. He told me so. I pointed out that tenure at the Fed was for 14 years; at the Bank of France it was nine years; and at the Bundesbank, eight years. None of those figures seemed to find favour with the Minister. He thought that all those periods of tenure were far too long. That is why I appreciate that the noble Lord does not want long appointments and that is why my first suggestion is to change the tenure from three years to five years with no reappointments.
Just in case the noble Lord does not like that, I then thought, "Let's give him his three years because he is so keen on that", but if there is reappointment, three years could become six years and then even nine years. That began to worry me because it could be thought, "Be a good, reliable boy or girl; take careful heed of what the Treasury official says; read all the Chancellor's speeches; make sure your economic theories accord with his (even if they change) and reappointment will follow reappointment." Some noble Lords may well have experienced papers coming up from departments stating, "Professor Bloggs is a safe pair of hands, Minister, I think you should reappoint him." That is why I have tabled a limitation on three years. If the Minister is determined not to have a tenure of five years and wants to stick to three years, I suggest that a member may be

1013
reappointed only once, making a total of six years. I hope that the Minister will not have too much fun over the fact that I have approached this matter from two points of view. I have done so because I want to explore how we can specify a reasonable length of membership and how, if there are to be reappointments, we can determine the number. I hope that that is clear.
Amendment No. 23 is somewhat different. It is grouped with Amendment No. 20 for the convenience of the House and in order to make progress. Noble Lords will recall that I divided the monetary policy committee into the home team and the away team. I pointed out that five members will be the home team and four members will be the away team. We are now looking at the composition of the away team. I have already pointed out—your Lordships agreed with me—that it was not correct that all members of the away team should be drawn from the economic triangle of Oxford, Cambridge and London.
However, there is more to it once one has read the CVs of the very eminent people who have been appointed members of the away team, because one discovers that at one time they played for the home team in various roles. When I moved a similar amendment in Committee, the noble Lord, Lord Newby, rightly pointed out that if I excluded everyone who had ever worked in the Treasury or at the Bank of England, I would be excluding those who may have worked there for only a short time, perhaps at a low level. I took that point on board. The Minister knows what I am trying to prevent by this amendment.
Perhaps I may explain that of the four members of the committee, one of them, Professor Goodhart, worked at the Bank of England for 17 years as a monetary adviser and became the chief adviser in 1980. That is not an example of someone serving only a year or two on his way up the banking promotion tree. I repeat that he became the chief adviser in 1980. Furthermore, Sir Alan Budd has been the chief economic adviser at the Treasury since 1991. Indeed, the Treasury announced last year that his initial five-year contract has been extended until his retirement. Now, in retirement, he has been put on to the monetary policy committee. That led me to wonder whether an ex-governor could be put on the monetary policy committee or even an ex-deputy governor. If so, the whole meaning of the home and away teams would take on an entirely different complexion.
I know that the Minister will tell me that,
"a senior employee of the Bank or the Treasury",
is not defined nearly closely enough. However, I hope that he will accept my concern and that he will not tell me that I can rely on the current Chancellor not to appoint those who have been senior at the Bank or at the Treasury because, first, he has already done so and, secondly, the right honourable gentleman will not be Chancellor forever. I am thinking about future Chancellors as well as this one.
If we are genuinely looking at four away players—four people who are there for their independence and expertise—we really should be considering those who
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have not held senior positions at the Bank or Treasury. When the Minister replies, perhaps he can clarify whether I am right in thinking that a former governor or former deputy-governor could be appointed as one of those four. I see no reason why they could not be appointed if a former chief adviser to the Bank and a former chief economic adviser to the Treasury can be.
I did not write it down, but I believe that the noble Lord, Lord McIntosh, said earlier that there were many expert people out there who could easily be appointed to carry out those tasks. I do not disagree. I am sure that there are. That is why I think that it would be right and proper for the Government to table an amendment for consideration next Monday because I fully appreciate that my phrase "a senior employee" is perhaps not adequately tight and I should like the Government at least to convince me that the away team could not be constructed in such a way that it was really the home team in another guise. I beg to move.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for explaining his amendments, Amendments Nos. 20, 21 and 22. If I go into Woolworth's and see all the pick-and-mix sweeties, I never know quite where to start—and I did not know quite where to start with these amendments because, as the noble Lord rightly explained, they are alternatives rather than an expression of a coherent point of view. Therefore, I must ask the noble Lord what he would prefer. He is giving me all these alternatives, but what would he like me to do? But perhaps I should not ask the noble Lord that because I am not going to accept any of the amendments and I do not want to delay the House.
However, it is an interesting approach to the tabling of amendments. It may prove helpful in terms of debate. The difficulty is that there is no right answer to terms of appointment for renewal; it is a matter of judgment. As we made clear in Committee, a balance must be struck between a term that is long enough for members to gain experience and learn on the job while making it relatively easy not to renew the contracts of those who are not pulling their weight. I do not know whether there will ever be a perfect answer. Our solution is that the initial term of appointment should be relatively short in order to ensure that those who do not work out and who do not contribute can be removed by rather less violent means than those proposed by the noble Lord in Committee; namely, that their salaries should be docked. However, there should be a recognition that those who contribute to sensible debate, in terms of the monetary policy committee's own estimate of sensible debate, can have their appointments renewed. I have no fixed idea in my mind that 14 years or 10 years is too long or that three years is too short. I believe that it varies from one individual to another. We believe that the combination of three years and reappointment is the most flexible of the alternatives open to us.
In response to the noble Lord's last point, there is no Treasury appointment to the monetary policy committee. A Treasury official attends the committee as

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an observer. The noble Lord can build any suspicions he likes into that, but it is not quite the same as an appointment.
Amendment No. 23 is slightly different. It does not deny the appointment of an ex-senior employee of the Bank or Treasury but relates to the possibility of his removal; in other words, it is specifically an anti-Budd and anti-Goodhart amendment. It enables the Chancellor of the Exchequer to remove professors Budd and Goodhart simply on the grounds that they have been senior employees of the Bank or the Treasury. I cannot imagine that they would view it in any other way. I make no textual point about the phrase "senior employee of the Bank or Treasury". I simply believe that it is a mistake to insert a proposal for the removal of two highly respected people who are presently serving on the monetary policy committee by means of an amendment of this kind. I invite the noble Lord to withdraw the amendments.
6.45 p.m.
Lord Mackay of Ardbrecknish: My Lords, I was reasonably satisfied with the noble Lord's reply until he came to the last amendment. To deal with the first amendment, I take the noble Lord's point. There is no right answer to the question of how long an individual should serve on the monetary policy committee. Certainly, I believe that three years is too short. I believe that even three years with reappointment is too short, for the reasons I gave in Committee; namely, for too much of that period perhaps the person concerned is looking to his or her reappointment. I do not believe that that would be wise. There is much merit in having one appointment for a reasonable length of time and no reappointment. But I knew that the noble Lord was keen on three years—I was aware of the arguments that he put forward—hence my suggestion that someone with three years should be reappointed only once, making six years. However, I see that I shall not make much progress.
I do not believe that it is a very good argument to allege that this is an anti-Goodhart and anti-Budd amendment. It is not. It so happens that they bring to my attention the fact that they are both ex-senior members of the Treasury and the Bank. I wondered whether we really wanted that situation to be replicated all the way down the line. I was making no attack on those two gentlemen.
Lord McIntosh of Haringey: My Lords, I would not dream of accusing the noble Lord of making a personal attack on those two gentlemen. However, if he wanted to ensure that it did not happen again surely he should have drawn the amendment so as to disqualify those gentlemen rather than add this as a ground for removal.
Lord Mackay of Ardbrecknish: My Lords, if it is a ground for removal that is not my intention. I apologise. I meant that when the Chancellor came to appoint people he should not appoint a senior employee of the Bank or the Treasury. I shall look at this matter carefully. I may have to revisit it if it does not mean what I intended it to mean.
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The noble Lord has not answered my point about the possible appointment of a former governor or deputy governor. Would the noble Lord care to respond to that point before I decide what to do with this amendment?
Lord McIntosh of Haringey: My Lords, with the leave of the House, there is no formal exclusion for a former governor or deputy governor. I insist that the noble Lord's amendment as drafted refers to removal rather than disqualification.
Lord Mackay of Ardbrecknish: My Lords, I shall check to ensure that it means what I intended it to mean. I believe that all noble Lords in the House are aware of my meaning. The noble Lord's last response gives me greater concern which perhaps is shared by other noble Lords. My noble friend Lord Henley has said that the description could easily be not so much "home and away" as "the school versus the old boys". I believe that that is a fairly accurate description. I suggest that the noble Lord, Lord McIntosh, asks his Treasury colleagues whether they want a position in which the four members of the away team can be a former governor, a former deputy governor and the two who are already there. Does he really believe that that will give the outside world a great deal of confidence in the monetary policy committee and its spread of membership? I know that with only four members it is difficult to get a spread of membership. However, I do not believe that any of the four members should have been in their time members of the home team, certainly not an ex-governor and ex-deputy governor.
I shall take to heart the noble Lord's strictures about what the amendment means and check the matter. I may return to it next week when I hope that he will be able to table an amendment to ensure that a future Chancellor of the Exchequer cannot make the four away appointments from four people who were once involved in the home team in the Bank. A seamless move from being a member of the home team to being a member of the away team is a lot worse than I envisaged in my original amendment. I hope that the Government will give that consideration. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 21 to 23 not moved.]
In the Title:
[Amendment No. 24 not moved.]

Police Disciplinary and Complaints Procedures
6.48 p.m.
Lord Hoyle: My Lords, with the leave of the House, I should now like to repeat a Statement made in another place. The Statement is as follows:
"With permission, Madam Speaker, I wish to make a statement about the Government's response to the Home Affairs Committee Report into police

1017
disciplinary and complaints procedures. I am placing in the Library a copy of the response to each of the committee's conclusions and recommendations.
"I should like to start by praising the honesty and integrity of the vast majority of police officers in this country. Their job is a difficult and dangerous one. As a society, we make huge demands of them. We have a police service which is one of the finest in the world.
"The reputation of the service is put at risk, however, by a very small minority of officers whose behaviour falls below the standards which the public expect. Their actions undermine the work of honest officers, and shake public confidence in the service as a whole.
"I am therefore determined to give the police service the powers which they need to deal effectively with this corrosive minority of bad officers. The Home Affairs Committee's report made a compelling case for change. I am announcing today the steps which I am taking to implement most of its recommendations.
"A debate on reform of those procedures has been going on for five years, since the previous government launched a consultation paper in 1993. At the heart of that debate has been the issue of whether arrangements in the service should be brought more in line with normal employment practice in other fields. The basis of the Home Affairs Committee's report is that it should.
"The time has now come for the Government to take decisions and act upon them. I have been helped in this by the constructive and professional approach adopted by the Police Federation, the Superintendents' Association and the Association of Chief Police Officers.
"One illustration of that approach is the widespread agreement already achieved with the staff associations that the police need new procedures for tackling poor performance by individual officers and ones which are separate and different from those needed to deal with disciplinary matters. I accept the committee's recommendation that the new procedures should be introduced without delay.
"Let me now turn to procedures for discipline. I have decided that the standard of proof in disciplinary cases should be changed from the criminal to the civil standard. I am alive to the argument that some officers might be less likely to tackle criminal behaviour through anxiety that that change could leave them vulnerable to unfounded and malicious complaints. However, the civil standard of proof has operated fairly in the police service in Scotland, and there is no evidence that that has undermined officers' effectiveness. Moreover, I have every confidence that with this change police officers as a group will continue to act in the public interest. Nevertheless, I am discussing with the police associations the possibility of conducting attitudinal research to monitor the effect of the change among officers.
1018
"There are circumstances in which conduct may constitute a breach of discipline, although it has not been proved to be a criminal offence. At present, an officer acquitted of a criminal offence may not be charged with an equivalent disciplinary offence, principally because the standard of proof is the same in criminal and in disciplinary proceedings. In future it will be possible for officers to face both disciplinary and criminal action on the same facts. That brings the police into line with the position of most others in the public and private sectors.
"I am also accepting the committee's recommendation to end the 'right of silence' of officers in disciplinary hearings and to apply the same modified caution as laid down in the Criminal Justice and Public Order Act 1994.
"At present officers who face the loss of their job or rank as a result of disciplinary proceedings are entitled to legal representation at all stages of formal disciplinary action. The committee recommended that their right should be maintained only for those officers who are at risk of losing their jobs. However, I have decided to retain the status quo so that officers facing reduction in rank also retain their right to legal representation. I am also rejecting the committee's recommendation that discipline hearings should be held in public. While the public has a right to know the outcome of proceedings, it would in my view be manifestly unfair to officers facing discipline to have to present their cases at a public hearing.
"The committee recommended that chief officers should have available to them a system of 'fast track' dismissal for the most serious cases. I have decided to accept that recommendation. That system will need careful and detailed work before it can be ready for implementation. There will be discussions with the police staff associations about the appropriate procedure. The fast track procedure will be within the framework of a fixed timetable of no more than six weeks from beginning to end. The procedure would include the right to legal representation and there would be a right of appeal. Officers will be able to be suspended from duty immediately, as is the case now.
"There is one serious defect in the present practice which causes great public concern. That is where a police officer's retirement on ill-health grounds is agreed before disciplinary proceedings can be completed, thus ending all prospect of disciplinary action against an officer. As the House knows, the inability to complete disciplinary hearings after the Hillsborough disaster was quite rightly a cause of anger and frustration to the families of victims.
"The procedures will therefore be strengthened so that where accused officers claim that they are unable, through ill-health, to appear at disciplinary hearings, matters can be decided in their absence, with appropriate safeguards. I will also secure a rigorous application of the existing regulations so that any outstanding disciplinary matters have to be completed before any application for early retirement can be considered.

1019
"I also intend to take firm action against officers convicted of criminal offences connected with their work. At present police authorities can apply to me for a certificate to forfeit the pension of such an officer. In future police authorities will be asked to refer all such cases to me automatically. It is abhorrent that public money should be paid out to those very few officers who are convicted of criminal offences and who abuse their position of trust.
"It is my aim to introduce all those changes in England and Wales with effect from 1st April 1999. I have consulted my right honourable friend the Secretary of State for Northern Ireland on my response, as the Northern Ireland discipline regime mirrors the one for England and Wales. My right honourable friend agrees with my proposals and will be implementing them in Northern Ireland.
"I turn now to the committee's recommendations on complaints which must be considered separately. Independence and openness are the key to greater public confidence in the police complaints system. The committee's proposals point the way forward. However, some of its proposals require legislation and many have significant resource implications. Against that background, I intend to make progress on those changes which do not require primary legislation.
"I accept the committee's recommendation that the Home Office should conduct a detailed feasibility study of different arrangements for an independent complaints investigation process. I also accept the committee's view that, in the absence of a totally new investigative body, fundamental changes to the complaints process would be premature, but that in the meantime the Police Complaints Authority should make robust use of its powers.
"I accept in principle the committee's recommendation that the PCA be given the powers and the funds to commission independent investigations in cases where there is reason to believe that the existing process is inadequate. However, that has significant extra costs which make early change here unlikely.
"The committee also recommends that either the PCA or any independent review body should be able to undertake investigations whether or not the matter has been the subject of a complaint. In the light of that, I am minded to propose that, as Home Secretary, I should be given a power to request or require the PCA to initiate and oversee such investigations.
"Many people make a complaint about the police which for one reason or another is not recorded. The committee proposes a relatively straightforward change to the recording of complaints which will make the current system more responsive to public concerns. It suggests that all representations which could constitute a complaint should be registered by the police, with a right of appeal to an independent body for the complainant where there is a disagreement: and that it should be possible for a complaint to be registered directly with the PCA in certain circumstances. I accept these recommendations.
1020
"I have considerable sympathy with the criticism that existing arrangements are not sufficiently open to public scrutiny. The committee has recommended that investigating officers' reports should be subject to disclosure on the same basis as other documents relating to a complaint and that investigation files relating to deaths in custody should generally be made available to the deceased's family before inquests. These recommendations raise difficult issues.
"The reports of investigating officers form a class which the courts have ruled are entitled to public interest immunity, although the police can be directed to disclose a report where a court is satisfied that the public interest of disclosure outweighs the public interest of preserving confidentiality. On inquests, the High Court has held that a person is not entitled in advance of the inquest to see copies of statements provided by the police to coroners. The release of such documents is at the discretion of the police. I am giving further consideration to the scope for change in this area.
"My detailed response to the committee deals with the other confidence-building changes which it has recommended. Some of the recommendations on the complaints system which I have accepted will require primary legislation. The Government will look for suitable opportunities to introduce the changes. Much detailed work and consultation is required with ACPO, the police staff associations, the Association of Police Authorities and other interested parties. This further work and consultation will begin straightaway.
"In considering the committee's recommendations, I have paid full regard to the implications for all police officers who every day fight crime and disorder and protect the public. I have no intention of making them more vulnerable to malicious complaints about the way they do their jobs.
"Equally we must deal robustly with wrong doing by a very small minority of police officers if public trust is to be preserved. Uppermost in my mind has been protecting the deservedly high reputation and standing of the police service as a whole. In this country, we police by public consent and that consent depends on public confidence and trust. The measures I have announced today will strengthen the people's trust and confidence in their police service".
My Lords, that concludes the Statement.
7.2 p.m.
Lord Henley: My Lords, I thank the noble Lord, Lord Hoyle, for repeating the Statement made earlier today by the Home Secretary on the police discipline and complaints procedure. I also thank the noble Lord and the usual channels for agreeing to deal with the Statement at an hour later than is usual. It was extremely convenient to me, particularly bearing in mind the reliability of the West Coast Railway, of which the noble Lord will be aware.
Like the noble Lord and the Home Secretary, I pay tribute to the police. Their work is difficult and is often undertaken in almost impossible circumstances. As was recently made clear by the Metropolitan Police

1021
Commissioner, Sir Paul Condon, we must stress that the vast majority of policemen are honest and deserving of public trust. However, as the Home Secretary made clear, some fall below the high standards that we expect of our police officers. It is right that appropriate procedures are in place to ensure, first, that proper discipline can be maintained; secondly, that the "bad apples" can be removed speedily; and, thirdly, that the public retain confidence in the police and in policing.
In ensuring that we have an adequate system, can the Minister assure us that whatever emerges will deal with three classes? I refer to those officers who are out-and-out criminals; those officers who on occasions bend the rules in order to achieve convictions; and those officers who are inadequate and incompetent. In any organisation there are always those who are inadequate and incompetent, and procedures dealing with discipline and the removal of police officers should be designed to deal with them, too.
The Home Secretary has given a detailed response to the report of the Home Affairs Select Committee. I confess that, perhaps like others, I have not yet had time to read it. However, I imagine that the response will be debated and will merit detailed consideration. Some parts will indicate that primary or secondary legislation will be required. When that comes before this House we will have an opportunity to debate the issues in detail. However, I hope that the usual channels will consider finding time to debate the generality of the Home Secretary's response so that everyone who has an interest can offer their thoughts on that and on the Select Committee's suggestions. Can the Minister indicate in greater detail which of the proposed changes require primary legislation, which can be dealt with by secondary legislation, and which matters will require no legislation?
Tonight is not the right time to make off-the-cuff suggestions, or to shoot from the hip, about the Home Secretary's response to the Select Committee. However, the Statement raises a number of issues which we ought to address. The first issue relates to how much primary legislation will be required and how much can be brought into effect by 1st April 1999, barely a year away, as mentioned in the Statement. If primary legislation is required, will consideration be given to publishing a draft Bill before the beginning of the next Session? We would then have slightly more time for consideration than the November to April period usually allowed in the timetable.
Paragraph 21 of the Statement refers to consultations with colleagues in the Northern Ireland Office. As the English and Welsh systems are broadly similar to that in Northern Ireland, will the Minister elaborate on Scotland? Are issues there much the same? I appreciate that some are different and that Scotland already has a lower standard of proof, as referred to in the Statement, and seems to work happily with that. Will such matters need to be addressed in Scotland or will they be left to the devolved Scottish parliament?
1022
The rights of individual officers are being weakened and the Police Federation has expressed considerable anxieties, particularly as police officers need extra protection against unfounded complaints from principals. I expect that most noble Lords will understand those fears, which may or may not be groundless. Can the Minister say what consultations have already been held with the Police Federation? I appreciate that the Statement refers to consultations which will take place in the future, but it would be useful to know whether the Home Secretary has already had meetings with members of the federation and others. I am sure that more consultation will be offered in the future.
I turn now to a couple of specific questions. One is slightly detailed and it may be that the noble Lord would wish to write to me in response to it. Paragraph 19 refers quite rightly to the abhorrence that public money in the form of pensions should be paid out to those very few officers who have committed crimes and who abused their position of trust. My understanding of most pensions is that part is contributed by the employer and part by the individual concerned. Is the noble Lord saying that the part of the pension which has been contributed personally will also be confiscated or is it only that part of the pension which has been contributed from public funds?
Secondly, in paragraph 15, the Home Secretary makes it clear that he accepts the status quo with regard to legal representations and does not agree with the recommendations of the committee on that subject. Will the noble Lord confirm that it was the Conservative minority view on the committee that the status quo should be retained and that the Home Secretary, quite sensibly, has followed the recommendations of that Conservative minority on the committee?
I move on now to the second half of this Statement, which deals with complaints procedures. I have relatively little to say on that. I believe that that section might be described as fairly tepid. It adds very little to the current procedures. Might there be something to be said for requiring the police for example, to issue a receipt when a member of the public makes a complaint? The noble Lord will find reference to that in paragraph 28. That receipt would detail where, when and to whom the complaint was made and would give information as to how the complainant could find out what had happened to his complaint.
Further, might it not be possible to require police officers to make themselves available for interview with legal representatives of relatives of the deceased before any inquests have taken place? Indeed, the police should be encouraged to provide as much information as possible if they know what is to come out at an inquest or during civil proceedings. To keep all of that information secret increases suspicion of a cover-up and discourages full co-operation between the public and the police.
Finally, as regards the consultation referred to in paragraph 22, can the noble Lord tell us whether that consultation will be a public discussion? Will a

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consultation be published and will the responses to that he made public and available to Members of this House and another place should they so wish?
7.12 p.m.
Lord McNally: My Lords, the Minister will be aware that my noble friend Lord Harris of Greenwich raised many of the issues covered in this Statement in a debate in this House on 12th November. Many of the actions which the Minister outlined today were suggested directly during that debate by my noble friend. Therefore, from these Benches, it would be churlish not to give a very warm welcome to the initiatives taken by the Home Secretary and, indeed, a warm welcome to the work of the Select Committee in another place on those issues.
We should record also, as did the noble Lord, Lord Henley, that as long ago as last October, Sir Paul Condon raised those matters as issues for urgent response. It is fair to say that a Statement in March matches that criterion. The Government have shown a real sense of urgency about this.
There were and are three genuine concerns among the public. There is the concern expressed by many senior police officers that they lack the necessary powers to be able to manage their forces efficiently and I hope that some of these changes will help them in that respect. There is a lack of faith among the general public in the current system and, of course, there is genuine public abhorrence of criminality and corruption in the police force. The measures announced should be welcomed and the Home Secretary should be applauded for introducing them.
The closure of the retirement/health loophole will be welcomed generally. Will that apply right to the very top because, quite often, it is when the very senior police officers get into trouble that health is used as a convenient back door?
Also, in the case of corruption, there are a number of measures which can he taken but I believe that the general public would like to be reassured that criminal prosecution is among those options; that if policemen behave criminally, they come within the criminal law and not just under police discipline.
Apart from that, the only other small point that I make to the Minister that leaves me a little bit twitchy is that the term "resource implications" is used rather too often in the Statement for my peace of mind. I hope that that is not a get-out for the Government as regards not implementing very welcome intentions because I am sure the Minister would agree that there are resource implications in not doing things. Expensive civil litigation has resource implications. Therefore, in both complaints procedures and disciplinary procedures we need a proper machinery to be in place as quickly as possible. I hope that there will not be too much delay because of resource implications.
Together with that, we need a commitment to transparency, as far as that is possible, in the carrying out of these matters because nothing can give greater confidence in the police than public transparency in relation to how complaints are dealt with and how
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disciplinary procedures are undertaken. I understand some of the limitations on that but both the police authorities and the Home Office should test the limits of transparency as a way of winning back confidence. Likewise, the pressure for more powers of independent investigation needs to be pushed forward with all due diligence.
But balanced against that, I ask the Minister to consider one matter. As I prepared for the Statement and as I listened to it, a story my father used to tell me ran through my mind. My father was brought up in one of the toughest parts of Liverpool. He always used to tell stories of the local policeman who was known universally as "Clear off". That was because if ever he saw young people gathering or doing anything he did not like, he would simply say, "Clear off", and they did. Modern policemen and women have to operate against a society which is much less tolerant of discipline and among people who are much more likely to complain than those whom "Clear off" encountered. The modern policeman comes under pressures, with the drug regimes and other pressures in our society, which are far more difficult than any which his predecessors had to face.
It worries me that, in response to this Statement, the Police Federation said that there could be implications for morale. I am not sure that that impact on morale will necessarily be met simply by attitudinal research. There is a need for Ministers, in bringing forward these very welcome reforms, to couple them with real reassurances to policemen and women of our confidence in them and the respect that we have for the difficult job that they do.
7.20 p.m.
Lord Hoyle: My Lords, perhaps I may, first, express my sympathy for the noble Lord, Lord Henley, who has to use the West Coast line; indeed, I know the frailties of it. All I can say is that I am pleased to see him here this evening.
I should like to join with both noble Lords in paying tribute to the vast majority of the police who undertake the very difficult job of protecting all of us. What we are concerned with is a very tiny minority. In dealing with that tiny minority, we must not undermine the confidence of the vast majority in the new procedures which are being put in place. I believe that the vast majority do not like to be associated with the small minority involved in such matters. I believe that the present measures could well strengthen that relationship.
The noble Lord, Lord Henley, raised several matters. He asked, first, about the three classes of police officer—namely, those who are criminal, those who sometimes bend the rules and those who are inadequate officers. I should tell the noble Lord that the new procedures will cover all of them. The first two categories, the criminals and those who bend the rules, will be dealt with by disciplinary procedures. The case of inadequate officers is being looked at by management and new procedures will be put in place to deal with them. It is only right that they also should be considered.
Some of the new disciplinary procedures will be carried out by regulations and, indeed, some complaints are matters for primary legislation. As regards

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secondary legislation, I can confirm that the disciplinary matters which fall to be dealt with by secondary legislation are the standard of proof, the fast track dismissal and the completion of disciplinary procedures when an officer goes off sick. We have given a date for all of them, and the noble Lord is quite right to say that it is 12 months from now. We aim to introduce these changes with effect from 1st April 1999. Although it may be a short time from now, we shall, so far as possible, try to ensure that that date is met.
As regards primary legislation, that will cover any significant change in the complaints system, in the independent investigators' power to call an investigation and in the supervision of the PCA, even where there is no formal complaint required. The noble Lord also asked whether a consultation paper would be published on complaints matters. I can tell the noble Lord that no decision has yet been taken in that respect. At present, the Home Secretary will consult with the PCA, the police staff associations and the Association of Police Authorities. Indeed, he will consult with all of them before he decides the way forward.
The noble Lord, Lord Henley, also asked what other consultations had taken place prior to these changes being introduced. I can confirm that the Home Secretary has had extensive consultation with all the police associations and with all those connected; indeed, that has been taking place alongside this process. I should tell the noble Lord, Lord McNally, that I appreciated what he said about the Statement and about the speed with which the Government have acted in relation to it. We are intent on getting matters right because we must carry the public with us. However, as I said when repeating the Statement, we can only proceed by agreement with the public. In order to do so, the public must have confidence and trust in the police.
The noble Lord, Lord McNally, also mentioned "resource implications". While we cannot give any date as to when other matters which require resources will be carried forward, I am sure that the noble Lord will agree with me that we have acted fairly speedily up until now. Indeed, the Home Secretary has said that he will look into matters that have resource implications.
Finally, I welcome the comments of both noble Lords who have spoken, especially as regards their praise for the police. I repeat: in bringing in the new regulations, we shall not do anything to undermine honest policemen.
7.24 p.m.
Lord Randall of St Budeaux: My Lords, perhaps I may, first, make a few brief comments on the Statement. I should like to congratulate the Select Committee on producing what I believe to be a very focused and practical report. Indeed, great credit should be given to the committee in that respect. I should also like to endorse the comments by my noble friend the Minister about the way in which the Government have taken forward the recommendations in the report so expeditiously. There is a need for such action and I believe that that shows good and firm decision-making by the Home Secretary, on which I compliment him.
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On the question of complaints, I should tell the House that I have for some time believed in the idea of an independent complaints organisation. The reason for that is twofold. First, I feel that this would ensure that we always had the confidence of the public in our police service. It is a good service; but, from experience over the years, I believe that there have been times when the public have not been as confident in them as I would have liked. Secondly, many of the very senior police officers to whom I have spoken over the years have actually agreed that an independent complaints organisation would be laudable.
I hope that I got this right, but I believe that the Statement referred to the fact that the Government have rejected—if that is the right way to put it—the idea of an independent complaints organisation, which I presume was recommended by the Select Committee, on the grounds that it would be too expensive. For me, therefore, that creates some sort of dilemma. Yes, of course, we must always be careful about expenditure, but how much are we prepared to avoid paying? The saving of money in that respect might possibly damage the confidence of the public. Can my noble friend the Minister tell us exactly how much such a process would cost? Further, does he agree with me that such a rejection would in fact prevent us ensuring that we do maintain in the maximum possible way the confidence of the public in our police service?
Lord Hoyle: My Lords, I thank my noble friend for his kind remarks in relation to the Home Secretary and to the Select Committee's report; and, indeed, in relation to the speed with which the Government have acted. My noble friend asked me about an independent body. As I said, this is something into which my right honourable friend the Home Secretary has promised to look. As regards the cost, I am afraid that I am not in the position to be able to give my noble friend any idea of the amount involved.
I should point out that the Home Secretary has said, both in the Statement and generally, that it is the perception of the public which demands an independent body. Indeed, the police officers conducting the present investigation are themselves very independent and robust in the way in which they conduct their investigations. However, he agreed that there is a perception in the mind of the public that such a process is not always independent. I should say that there was a request from the Select Committee that, wherever possible, an independent force should examine such matters as indeed is the practice in many cases at present. The Home Secretary has also promised to look into that aspect.

National Minimum Wage Bill
7.29 p.m.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, I beg to move that the Bill be now read a second time.
It is a great privilege for me to launch today what I hope and expect will be an interesting and constructive debate on one of the Government's flagship policies: to

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introduce for the first time in this country a statutory national minimum wage. I add, not exactly in parenthesis, that I am extremely pleased to welcome to the Opposition Front Bench on this occasion two much admired, well liked Members of this House, the noble Baronesses, Lady Miller of Hendon and Lady Seccombe. I enter no caveats about their appearance on the Opposition Front Bench except that I expect them to support the Bill to the hilt! I shall proceed by giving a brief summary of the Bill. Broadly speaking it sets up a legislative framework—
Lord Strathclyde: My Lords, before the noble Lord explains the Bill I hope he will not mind if I introduce a hint of dissent. It is now half-past seven and the noble Lord is introducing one of the most important Bills that the Government are introducing during the course of this legislative Session. We were told that this Bill would start at around six o'clock this evening. There are 18 speakers. That means this debate will probably not finish until between 10.30 p.m. and eleven o'clock. Apart from those who are to speak in the debate, the House is relatively empty. Does not the noble Lord think that he owes the House an explanation, and indeed perhaps even an apology for not having organised the business in such a way that we could start the debate earlier?
Is it not a reflection on the Government that they have so organised their business as not to be able to discuss this Bill at prime time after Questions on a normal day? It will not have escaped the notice of the Minister that half-past seven is normally the time that we adjourn for dinner. What arrangements have been made to feed noble Lords who will take part and listen to the debate? The noble Lord, Lord Clinton-Davis, will know how much we, the official Opposition, have sought to co-operate with the Government ever since they came into office last May. We have done so not just to the letter of the law but also to the spirit of the law. I hope the noble Lord will convey to the business managers that although we have sought to co-operate in the past, after this evening's performance it will be considerably more difficult to do so.
Lord Clinton-Davis: My Lords, first of all, as to the dinner arrangements I have had mine, and so has the noble Baroness, Lady Seccombe, who ate with me. We have a crowded Back-Bench here.
As to the substance of the point that the noble Lord makes, of course he knows that I am not in charge of the usual channels. If he has a complaint to make, I am sure that he will make it in the appropriate manner. We had a Statement which did not involve all the Members of the House who are present now. I do not think I can usefully comment further. I think the noble Lord will be aware that those on my Front Bench read Hansard and they will read what he says. I have no doubt that he will communicate directly to the Government Whips his concerns about the matter. I hope that we are not to construe what he said about future business as a threat; he is too benign for that.
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I was about to embark upon a brief summary of the Bill when I was so inappropriately interrupted. I see that the Chief Whip is leaving the Chamber; obviously he intends to eat his dinner now.
The Bill sets up a legislative framework for a national minimum wage expressed as an hourly rate and applying to all workers in this country. It provides a power to establish a statutory low pay commission, and to treat the report of the existing Low Pay Commission as if it were the report of the statutory commission. The commission will recommend a rate for the national minimum wage, as well as how to calculate a worker's hourly pay for minimum wage purposes, and what reference period should be used in making this calculation. In addition, it will consider whether there should be any different rates or exemptions for young people below the age of 26, and for those such as trainees above the age of 26.
The Secretary of State will set the rate and any different rates or exemptions through regulations once the commission has reported. If she departs from the recommendations in any way, she must lay a report before Parliament giving her reasons for so doing.
The Bill also sets out various enforcement measures including the power to appoint enforcement officers and the creation of criminal offences, and imposes a duty on the Secretary of State to publicise the minimum wage. It also ensures that the minimum wage legislation interacts with existing legislation on minimum agricultural wages, so that all agricultural workers will be covered by the national minimum wage in addition to their existing regime.
I shall now briefly explain how the Bill works by running through the various parts of the Bill in rather more detail. We have of course provided detailed Notes on Clauses for those noble Lords who wish to become even more expert in the subject. We welcome the contributions that they may make not only in this debate but at later stages.
Clauses 1 and 2 are key clauses. They establish a worker's right to the national minimum wage and give the Secretary of State the power to make regulations which set and adjust the national minimum wage, determine any pay reference periods and determine how properly to calculate a worker's hourly rate.
Clauses 3 and 4 give the Secretary of State the power to make regulations which exclude or provide a different rate for those under 26, and to add others to this group who are over 26, such as trainees which I have already mentioned.
Clauses 5 to 8 provide a statutory framework for the low pay commission. The Secretary of State must refer particular matters to the low pay commission before first setting the national minimum wage. She has to at any future time refer matters to the low pay commission. The low pay commission must have regard to the economy of the United Kingdom and competitiveness in preparing its reports. The existing, non-statutory Low Pay Commission is—as I have already indicated—to be treated as if it were the statutory low pay commission.

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Clauses 9 to 12 deal with record-keeping. The Secretary of State may make regulations requiring employers to keep records which workers will have the right to inspect, and giving workers a right to a written national minimum wage statement when they are paid. Clauses 13 to 22 deal with enforcement. The Secretary of State may appoint officers or use the officers of another department or Crown body, to enforce the national minimum wage. The powers of such officers are set out. The clauses provide for information exchange between enforcement bodies for national minimum wage purposes, including arrangements with agricultural wage enforcement officers.
Enforcement will be achieved through two routes. First, any worker paid less than the minimum wage will have a contractual right to recover the difference between what he has been paid and the national minimum wage by going to an employment tribunal or any other appropriate civil court. This reflects the existing right to recover underpayments. Secondly, enforcement officers can issue an enforcement notice requiring an employer to pay the national minimum wage. Officers will be able to follow this up with a financial penalty if an employer fails to comply.
Clauses 23 to 27 make it unfair to dismiss a worker or take detrimental action against him on the grounds that he qualifies or will qualify in the future for the national minimum wage. A worker is also protected from any action against him for asserting his rights under the Bill.
Clauses 27 to 30 deal with proceedings for civil cases. This includes a reversal of the burden of proof in all civil proceedings, so that the onus is on the employer to show that an individual making a claim is not entitled to the minimum wage, or has in fact been paid it. ACAS has a conciliation role in tribunal cases involving the minimum wage.
Clauses 31 to 33 deal with offences. There are to be six criminal offences, the main one being the refusal or wilful neglect to pay the national minimum wage. The others relate to obstructing an investigation and failure to keep records. A person guilty of one of these offences will be liable to a fine of up to £5,000.
Clauses 34 to 45 clarify the position regarding particular classes of people. Agency workers and homeworkers who may not otherwise be "workers" as defined in the Bill are given the right to the minimum wage. This is in line with the Bill's inclusive approach. The Bill also covers Crown employees, staff of the House of Lords and House of Commons—they are to be treated on exactly the same basis—and mariners in UK-registered ships provided they normally reside in the UK. The Bill can be extended to others, including offshore workers. The Bill does not apply to members of the armed forces; share fishermen; genuine volunteers; or prisoners.
Clauses 46 and 47 ensure that agricultural workers receive at least the national minimum wage as part of any agricultural minimum rate and make various
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adjustments to ensure a smooth interaction between the national minimum wage and the agricultural minimum wage regimes.
Finally, Clauses 48 to 56 are miscellaneous and supplementary. The most significant is the clause which has the effect of preventing a worker and employer from agreeing to a level of pay below the national minimum wage. These clauses also cover publicity for the national minimum wage, deal with the regulation and order-making powers—most of which I think the House will be pleased to know, are subject to affirmative resolution—and define the terms used in the Bill.
I hope that this outline is sufficient to give noble Lords an overall picture of the Bill. Its purpose is straightforward. It is to mount a direct attack on the scandal of low pay and in-work poverty which exists all too often today. The minimum wage which it will introduce is to be established on principles of universality, clarity and simplicity. As my right honourable friend the Chancellor of the Exchequer said during the debate in another place on the Queen's speech:
"Only a minimum wage will provide the sure foundation for the tax and benefit reforms that we shall introduce to make work pay. Far from being a job-destroying measure, a minimum wage is an essential component of a constructive strategy to make work worth while and to create jobs."—[Official Report, Commons, 20/5/97; col. 544.]
The priority of that policy is underlined in much that the Government have already done, and in what the Chancellor has already taken forward in his Budget. It is a priority policy. We are very proud of the policy which we put clearly before the electors and on which we fought and won the election beyond any doubt whatsoever. I submit that the policy is right; it is fair; it is just and it is sensible.
The time is overdue for a minimum wage to be introduced. Our reasons for doing so are based both on social and on business grounds and I submit that the rationale may be considered from the workers' and the employers' points of view alike. For workers, together with tax and benefit reform, it can promote work incentives and form part of a strategy to "make work pay". By removing the worst cases of exploitation, it can ensure greater decency and fairness in the workplace. Too many people are paid too little. We need to raise their earnings and their earning power. We have made the introduction of a national minimum wage a top priority and it will set a floor of decent pay for everybody.
What we shall achieve through the Bill will contrast strongly with what went on in the previous 18 years before we took office, during which there was a constant erosion of the rights and security of workers, most notably, so far as concerns pay protection, involving the abolition of the wages councils which had protected the wages of large numbers of people in some of our lower paying industries.
Statistics tell us that the minimum wage will be of particular benefit to women and ethnic minorities. For a number of reasons, those groups are much more likely to be occupying jobs at the lower end of the pay spectrum. Many women have so far been unable to use

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the provisions of the equal pay legislation to raise their pay relative to that of men. Those groups will benefit, therefore, from the introduction of a fair and just minimum wage.
The goal that we set before the House is to make our country fit for the 21st century. The labour market our measures will usher in will accommodate the need for change and adaptability, aided by better training and retraining. But the workers in that market will have greater security and greater protection against abuse than they have ever enjoyed; and that is needed.
As well as the overwhelming social justification for a minimum wage, there is an equally powerful business case for having a pay floor legally set. More people will be attracted into work. Firms will be encouraged to invest in developing their staff. Workers will have a greater sense of attachment to and involvement and interest in their firms.
A minimum wage will prevent undercutting on price based on low pay. It should encourage firms to compete on the basis of quality, not just on the basis of price. It will bring an end to the situation, all too familiar, where a responsible employer finds he is being undercut by unscrupulous competitors paying rock-bottom wages.
A minimum wage should reduce staff turnover and encourage training. Rapid turnover of staff in low pay sectors is a key reason why employers are reluctant to invest in training. Research by the Centre for Economic Performance has shown that recruitment costs in sectors with a disproportionate number of low paid workers—the hotel and fast food business—can range from £352 to £686 per vacancy. This is in industries where recruits stay in a job on average eight to 10 months. There is little incentive to train employees if the skills acquired are likely to be lost to the firm.
We shall have a well trained and better motivated workforce—the kind of workforce in which good employers will want to invest. By helping to promote employee commitment, reduce staff turnover and encourage investment in training, the minimum wage will provide a boost to productivity. And that is seriously required in this country. This all adds up to a more competitive workforce and more competitive businesses. That represents one of my department's key priorities. It will make this country not only fairer, but also a more prosperous place in which to live. As both workers and businesses will benefit, so will the economy as a whole.
I anticipate—I hope that I am wrong—that we shall hear in the debate many of the traditional arguments against the Bill. The issue of job losses will no doubt arise even though the large number of studies into minimum wage fixing have revealed no evidence to prove that a sensibly set minimum wage will adversely affect employment prospects.
It is for all those reasons that, although we await the report of the Low Pay Commission, I hope that I have been able to rebut the claim that this Bill is nothing but an empty framework. And, hard on the heels of the job losses argument, I fully expect that we shall encounter the ogre of the "restoration of pay differentials", inviting us to believe that if the pay of a car worker in Daventry
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is raised to meet the requirements of the minimum wage, the pay of a car worker in Dagenham will go up in proportion.
It is interesting to note in that connection a recent study by Income Data Services [IDS]. This found that many of the arguments about the potentially damaging effect of minimum wages and the restoration of differentials had been highly partial and prone to exaggeration. It found that many companies were already putting up the pay of their lower paid employees—in advance of the arrival of the national minimum wage—and have not appeared unduly concerned at the costs involved. Even more interestingly, the study found no evidence of pressure from higher-paid workers to restore pay differentials. That provides, I submit, considerable food for thought for those who predicted that firms would lay people off rather than pay them a decent wage.
Of course, we recognise that companies which face competition from low paying competitors overseas face special problems. However, the fact is that the vast majority of workers who will benefit from the national minimum wage are not going to be under the immediate influence of the so-called "global market". Contract cleaners at Manchester airport, for example, where a company is offering rates of £1.30 per hour, are not up against competition from companies operating in Bangladesh or Sri Lanka. In the main it is all about local companies competing in a local labour market in a local economy.
There are those—and this may be articulated in today's debate—who favour a variable rate for the minimum wage, with different levels of minimum pay for different regions, sectors or size of company. Such a variable rate would fly in the face of our goal of keeping the minimum wage as simple as possible; but beyond that there are practical reasons for staying with a single national rate. Our view is that to attempt to aim tailor-made minimum pay rates at particular regions or sub-regions cannot be economically justified. Pockets of relatively low (and high) pay occur in all regions. Regional and sectoral rates would lead to endless special pleading from different groups and difficulties of the "where to draw the line" sort. Finally, we believe that workers for small businesses are entitled to the same degree of protection as are workers in larger undertakings. For all these reasons we reject the idea of a variable minimum wage.
As I touched on before, the Bill provides a power with the potential flexibility to make exemptions for specific narrowly defined groups and young people. We have asked the commission to make recommendations on possible lower rates or exemptions for young people. It makes sense, therefore, for the Bill to include provision for the commission's recommendations to be taken on board—there has to be that measure of flexibility—if that is what the Government ultimately decide. I wish to emphasise that, in the first place, it is entirely up to the low pay commission to recommend whether, and in what circumstances, there should or should not be exemptions. No decision has yet been made.

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Of course, it is right to look in depth at the problems of young people. The Government do not wish to see the national minimum wage discourage young people from remaining in education and training, or restrict employment opportunities for those looking for jobs. To fail to consider the options in this area would be foolish indeed. That is why we have asked the commission to pay particular attention to young people and make recommendations accordingly.
Perhaps I may remind your Lordships before moving on that the Government have a number of other initiatives which will benefit this age group. The New Deal for the young unemployed will give young people a number of options to help them escape from the travails of long-term unemployment. These initiatives have a common aim—to help young people get into the workplace, to end their exploitation, and to ensure that they are trained for the challenges of the 21st century.
Clearly, there would be little point bringing in legislation without providing the means to enforce it. Naturally, the priority will be to encourage compliance by companies and awareness by workers who are not being paid the statutory minimum. The fact that there is to be a single national rate, which should be given wide publicity and with which everybody will quickly become familiar, will greatly assist this process. Ensuring that proper records are kept is another important contribution to openness. For the reasons I gave earlier, it will be in employers' own interests to pay the minimum wage for business reasons, quite apart from the penalties that may apply for not doing so.
The Bill builds upon existing civil enforcement mechanisms for individuals to pursue recovery through the tribunals or courts. There will be cases, I hope very few, where wilful and deliberate efforts are made to avoid paying the legal minimum. There will be some wily employers who might attempt to wrest some perceived commercial advantage by exploiting vulnerable workers. That would be short sighted. But these people need to be stopped, and they will be stopped. That is what the business community as a whole will want to see. They will want to rest assured that, while they are observing the requirements of the minimum wage, their competitors are doing likewise.
That is why the Bill provides for criminal offences, including wilful failure to pay the national minimum wage. It is also why the Bill provides—as indeed it has to—for the possibility of enforcement by enforcement officers who will have the ability to enforce compliance, if necessary, through the imposition of a financial penalty.
The Government have been criticised over the manner in which we have pushed the legislation forward in parallel with the work of the low pay commission. Some of our opponents have referred to it as putting the cart before the horse. I would submit we have been shown to be right in taking this twin-track approach. We have been in office for a mere 10 months. A great deal has been accomplished in that time, and, with a fair wind from your Lordships' House, we now stand very near to seeing a national minimum wage become the law of the land.
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We wished to consult as widely as possible before setting a rate for the minimum wage. But to have waited until that had been achieved before starting to make progress with the legislation would have considerable lengthened the timetable, and entirely without purpose.
As it is, there are those who say we have not gone fast enough. They would like us to have declared a rate for the minimum wage right after winning the election. But that would have been wrong. It would have resulted in an arbitrary rate, based on some sort of formula, and would have carried little conviction in the world of business and commerce and even within the trade union movement. We have made no secret of the fact that we have considered, and discarded, such an approach.
It was vital to speak to, and, more importantly, listen to, those who would have to live with the effects of this measure and to take their views into proper account. During the years before the election we engaged in discussions with hundreds of individuals and groups about our proposals. The need to take action was clear, and that need was reflected unequivocally in our election manifesto. It was vital that we built on that foundation and cemented support for a partnership-based approach to the problem of low pay. For that purpose, we set up an independent body, the low pay commission which will present its recommendations by the end of May.
We hope that this method of proceeding, which, through the consultation process adopted by the commission, has involved as broad a range of people and organisations as possible, should result in the minimum wage commanding the widest respect and receiving the broadest observance—much more so than if a rate had been produced without any proper consultation and foisted on a suspicious business community.
The Government have themselves submitted evidence to the commission setting out the key issues which we thought it would find helpful to consider, but giving only factual background. It was presented in a balanced manner and did not attempt to steer the commission in any particular direction. I believe that that was the right approach.
Once the low pay commission has produced its report, full consultation on draft regulations to introduce the minimum wage will take place. The Government will themselves set the rate for the minimum wage, based on the recommendations we receive, and we will see to it that it is implemented as soon as practicable thereafter.
Many business people have long seen the sense of a legal floor to wages, provided it was sensibly set. We have succeeded in winning over more and more people to that view. I believe that when the minimum wage policy gets under way, as it will with the benefit of a number of supportive statements from businesses with household names, that will demonstrate its relevance to the needs of this country. More and more people are now seeing the sense of our minimum wage policies. Surveys have been undertaken by large numbers of organisations. There are employers now in every sector who support the principle.

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I believe that the setting up of a national minimum wage is a difficult task. We have tried to keep things as simple as possible; we have gone for a single national rate and not allowed variations by region, sector or size of firm. It is, of course, not a measure which should be seen in isolation. It is one of a range of policies which come under our broader "flexibility plus" agenda which has the overall aim of achieving high and stable levels of growth and employment. It takes its place alongside the tax and benefit reforms which will contribute towards reduction of poverty and welfare dependency and the promotion of work incentives.
The Bill is something to which the Government are totally committed. That is something I know the House will understand, even the noble Baronesses opposite. I believe that the intense consideration which we have given it illustrates our belief in the principles of justice and fairness. I look forward to hearing your Lordships' contributions to the debate. It is essential that we get it right. We shall certainly listen carefully to the contributions made. I commend the Bill to the House. I beg to move.
Moved, That the Bill be now read a second time.— (Lord Clinton-Davis.)
8 p.m.
Baroness Miller of Hendon: My Lords, I should like to thank the Minister for the warm welcome he gave to my noble friend and myself. I do not think he will be surprised and I hope he will not be disappointed to know that I do not agree with many of the things he said.
I wish to begin by disposing of two myths. The first is the myth perpetrated by every government of whatever political complexion: the myth of the mandate. It is as if every single voter reads and agrees with every single word in the fine print of the party manifestos. A party manifesto is not an à la carte menu. So those voters who read it have to take the whole package or nothing. Nor are the policies set in concrete. The policies set out in party manifestos themselves tend to change with the passage of time, due to what Harold Macmillan called "events". But apart from that, whatever we as politicians may think—and I speak from 25 years of door-to-door canvassing and teaching canvassing techniques to candidates and agents—the fact is that the majority of voters do not vote for anything. They simply vote against.
In 1979 they voted against the winter of discontent. In 1983 they voted against the longest suicide note in history. In 1997 they voted against the divisions in the Conservative Party, as well as against other things, some real and some imagined, that they felt the party was guilty of. However, according to the rules of the game which we on this side of the House fully respect and honour by virtue of the Salisbury convention, the Government have a mandate for introducing the concept of a minimum wage, however misconceived we believe the idea to be. We are, however, entitled to invite the Government to think again on some of the details, in addition to the changes which the Government have conceded in the other place.
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The second myth is the myth of the United States of America. This claims: "They have had a minimum wage since 1938, and look how prosperous they are". This myth has been repeated many times in the other place during the passage of the Bill and will doubtless be repeated here during this present debate.
The minimum wage in the United States of America has always contained exemptions in favour, for example, of small businesses which the Government refuse to concede. Secondly, it has always been set at a figure comparatively low to the average wage. During the 1950s and 1960s it was about 50 per cent. of the average wage. In the 1970s and the inflationary 1980s, it declined to around one-third of the average wage in manufacturing. It held steady at 3.35 dollars during the 1980s and so by 1989 its real value had fallen by a further 25 per cent. It was therefore so low that it had little, if any, effect in terms of its impact on jobs.
Since 1996, it has been only 5.15 dollars, which is about £3.09. That is trivial compared with United States wage levels. Even that is not the whole story, for if that 5.15 dollars were to be pro-rated to the United Kingdom level of wages, it would come out at just under £2.70.
A majority of American minimum wage earners are either young persons living in non-poor families or are a second or third earner in the household and not the primary breadwinner and in any case are subject to wide exemptions. In 1992, only 4.25 per cent. of minimum wage earners were adult householders.
In the Second Reading debate in the other place, the President of the Board of Trade alleged that:
"the Conservative party has argued that Britain can only and should only seek to compete by aiming to he the cheapest at all costs; aiming to be the bottom of the heap; aiming for the lowest wages and the worst working conditions to be found among our competitors".—[Official Report, Commons, 16/12/97; col. 162.]
That statement is not only a monstrous distortion but is manifest nonsense. It is just a refurbishment of Old Labour's caricature of the wicked bloated Tory capitalists grinding the faces of the poor. Unlike the Government and their paymasters in the trade unions, we on this side of the House understand that no one owes us a living.
Of course, to attract business we must be, as the Government say, a centre of excellence. Indeed, we have become ever increasingly so since the last government cured the British disease of constant industrial strife. We have acquired in this country more inward investment than any country in the world except the United States of America for three simple reasons: first, because of our low tax rates—
Lord McCarthy: My Lords, the noble Baroness is talking about America and nowhere else. Would she make the same remarks about the minimum wage legislation in Germany, Belgium, Switzerland or Austria? Has that been as low as in America?
Baroness Miller of Hendon: My Lords, the noble Lord should wait until I have finished my speech. However, in view of what he said, perhaps I should remind him—I am sure he would agree—that 20 per cent. of American workers work at below the minimum wage

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in Germany. In America, they have produced 30 million new jobs over the past 20 years at a time when there was a zero increase in jobs all over Europe. So if that is the kind of system the noble Lord would like to bring here, it may very well happen.
As I was saying, one of the reasons is because of our low tax rates, as Chancellor Kohl himself admitted when he met the Prime Minister last Friday. The second reason is because of our flexible labour market. The last one is—and some noble Lords opposite may choose to laugh at it—that it is because of our lower labour costs. But it is not because we are "the sweat shop of Europe", as the Labour Party and the unions contend. Our basic wage levels compare favourably with other industrialised parts of the EC. The difference is our smaller social on-costs, the price of the social chapter.
If the United Kingdom's unit labour costs are taken as 100, then Germany's are nearly double at 199, Switzerland's are 188, France's are 131 and Italy's are 123. The evidence from the OECD supports the view that the more flexible labour markets of the United Kingdom, the United States and New Zealand show lower unemployment rates than the highly regulated labour markets of France, Italy and Spain.
Germany, which until recently had low unemployment rates due to its undoubted superiority in education and training skills, is now also sliding down the unemployment slope. The Institute of Directors complains that the EU is over-regulated and increasingly uncompetitive with the rest of the world. The Far East continues to develop dynamically, and while no one suggests that we should reduce our labour costs to those of the third world, what we do not have to do is to hand them any sort of competitive advantages.
Ross Perot warned during the 1992 American election of American jobs slipping across the border to Mexico, and with the establishment of the North American Free Trade Area, that is exactly what has happened in parts of the American car industry.
We have all the former east European satellite states just waiting to take our jobs. Because, let us make no mistake about it, every authoritative study on the subject confirms that the minimum wage will cost jobs. In a sudden outburst of candour which he must be tired of having quoted against him, the Deputy Prime Minister admitted that "any silly fool" knew that a minimum wage would result in job losses.
Professor George Bain, the principal of the London Business School, is the chairman of the Low Pay Commission. He said in The Times of 3rd June 1997:
"I would be surprised if there were not some job losses, but the question is whether those jobs would be better lost anyway".
Perhaps he should ask those who lose their jobs what they think. They probably do not regard it as a price worth paying.
Lord Evans of Parkside: My Lords, perhaps the noble Baroness will allow me to intervene. Will she offer the House a forecast of the jobs she expects to be
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lost by this piece of legislation? Will her forecast come anywhere near the 2 million job loss forecast that was made by her party before the 1992 election?
Baroness Miller of Hendon: My Lords, I hope the noble Lord will wait until I come to job forecasts in a later part of my speech.
As I said, a minimum wage not only causes job losses, but it prevents job creation in the first place. Let me give an example from one of the professions where the sums are much higher than the sort of figures that even the TUC is talking about. I refer to the Minister's profession. There are hundreds of law graduates seeking what are now called "training contracts". They used to be called "articles" or "articles of clerkship". There are also a large number of small firms of high street solicitors in general practice who used to provide such places but cannot afford to do so because of the minimum wage set by the Law Society. A graduate cannot work for less, even though his or her parents who have supported them through university are prepared to continue to do so through what amounts to postgraduate studies.
Many people—my husband was one and so, I imagine, was the Minister—are prepared to accept jobs that are not well paid at the beginning of their working lives partly because they live at home and do not have high expenses but, more importantly, because they realise that one way to obtain a good job is to accept one that is not so good and work their way up.
The CBI, in its evidence, pointed out that even a modest minimum could lead to job losses unless wage differentials are squeezed. And there we come to the next point. I note that the Minister mentioned differentials when he started his speech, but the fact remains that it is meat and drink; the very stuff of life for the trade unions. "If an unskilled newcomer trainee gets £X, then my members must get £X times Y", and there we will be off in another round of inflationary wage increases, with wages going up without any increase in productivity. Another turn of the screw of uncompetitiveness.
The noble Lord, Lord Healey, said in 1994,
"Don't kid yourselves. The minimum wage is something on which the unions will build differentials. Therefore the minimum wage becomes the floor on which you erect a new tower".— [Official Report, Commons, 16/12/97: col. 193.]
The Engineering Employers Federation says it does not support the introduction of a national minimum wage because of its effect on differentials and the increased cost of subcontracted services.
The CBI says that,
"a national minimum wage would undermine flexibility and is a poor way to tackle poverty".
Indeed, it forecast that,
"it could result in rising prices, business closures and unemployment".
There are still many unanswered questions about the Government's proposals for a national minimum wage. My honourable friend the Member for Daventry asked them for a final time on the Third Reading in the other place. I will not take up your Lordships' time by

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repeating them here. The Minister will find them in col. 269, volume 308 of Commons Hansard. I do not expect him to answer them today, but perhaps he will write to me.
The most important of all the unanswered questions is at what level the minimum wage is going to be set. The Secretary of State tells us that we must wait until the Low Pay Commission reports. The Minister told us the same. In other words, we have to sign another of Labour's blank cheques to approve the principle and procedures for a national minimum wage without knowing how much it will be and without being able to assess its effect on jobs, on industry and on competitiveness generally. Perhaps the Minister can tell your Lordships' House when the commission's report will be published. If he cannot do so today, will he please write to me?
Lord Clinton-Davis: My Lords, I said that.
Baroness Miller of Hendon: My Lords, I believe the noble Lord said the end of May.
Lord Clinton-Davis: My Lords, I told the House that it would be by the end of May.
Baroness Miller of Hendon: My Lords, I thought the noble said towards the end of the month, but perhaps I did not hear him correctly.
The Bill gives the president somewhat convoluted powers to create exemptions, but those are far from clear. The Government refused in the other place to exempt directors who, for all sorts of reasons, in their own family businesses might not want to draw wages. What about family members like wives or children helping out in the family business for nothing or pocket money or pin money? Are they going to result in the owner being prosecuted?
Why will the Minister not take clear and unambiguous powers to create exceptions by statutory instrument when, in what is after all an experimental regime, there are bound to be anomalies and inconsistencies? Is it the case that she wishes to have the option if she chooses to hide behind the commission, by insisting that Parliament accepts whatever they recommend.—"It is not my fault, Guy!". Parliament should be supreme and not the rubber stamp for this newest quango.
Let us look at the composition of the Low Pay Commission. Three of the nine members are university economists who are indirectly on the government payroll and who have a strong Labour background; three of the nine are trade union officials or senior union executives; and three of the members represent trade and industry. One comes from the CBI, which represents large companies, one from the Grenada Group and the other from the Scottish Grocers Federation. Presumably this last gentleman can be described as representing small businesses, but as these will be the ones hardest hit by and probably driven out of business by a national minimum wage, the commission can hardly be described as a well-balanced organisation.
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The Minister of State in the other place proudly announced the support of Tesco for a national minimum wage. I am sure the fact that that would knock another nail in the coffin of the small corner grocer did not even enter into their considerations.
Then there is the vacillation of the Government over precisely who should or should not be affected by the national minimum wage. Their manifesto allowed for no exemptions. In the President of the Board of Trade's second sentence in the Second Reading in the other place she said,
"The Bill will introduce for the first time in the United Kingdom, minimum wage protection for all workers".—[Col. 162.]
Sections 3 and 4 of the Bill give power to exempt persons under the age of 26. At the Amsterdam summit, the Prime Minister endorsed the presidency's conclusion that wage agreements across Europe should take more account of differences in qualifications and regions to facilitate job creation. The Minister of State said on 20th November that there should be no regional, sectorial or company derogations. Exactly one week later, when the Bill was first published, there were special arrangements for share fishermen and agricultural workers in addition to those for 16–25 year olds. The Government also realised that they had to give themselves an exemption from the Act as the employer of the Armed Forces!
As presented to your Lordships, the Bill also contains exemptions for unpaid voluntary workers, which I am sorry to say includes Members of your Lordships' House. It also exempts prisoners.
Although we still have to await the result of the deliberations of the Low Pay Commission before we know what a minimum wage is, the Government have been conducting their own internal Dutch auction with kites being flown at figures from £4·61 down to £3·50. All higher than the USA. My right honourable friend the Member for Wokingham twice asked in the other place whether a waitress on £3 per hour with free accommodation and meals is better or worse off than a factory worker living in Central London on £4·50 per hour or a barman living in Liverpool on £4 an hour with free food.
The President of the Board of Trade has expressly forbidden the so-called independent low wages commission to take regionality into account. Why not? Perhaps the Minister in his reply will tell us the justification. My honourable friend Mr. David Maclean pointed out that a national minimum wage will harm employment in Cumbria, where the cost of living and other expenses are lower. Why should anyone start a business in that beautiful but remote part of the country with limited transport facilities when, for the same money, they could do so somewhere else?
It was suggested that low wages were being subsidised by the taxpayer in the form of family credit, now being abolished by the Budget. But in fact only 12 per cent. of people receive family credit for more than a year, and the completely independent Institute of Employment Studies reported that,
"employers did not have adequate knowledge of family credit or sufficient information about potential recruits to adopt such practices".

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I am not sure what effect the new working family tax credit will have on the national minimum wage. I suspect it may make it irrelevant. But perhaps the Minister will be able to enlighten us in his speech.
Where the taxpayer will be affected—because of the adverse effect the minimum wage will have on employment—will be through more unemployment, more jobseekers' allowances to be paid and less tax revenue coming in. How do the Government reconcile their attack on what they call low wage-paying employers with their welfare-to-work policy, where there will be a combination of wages and public subsidy?
It is impossible to assess the effect of a minimum wage on a growing, prosperous economy, but the effect on one that is slowing down will clearly be adverse to jobs. Employers will seek to replace human workers with machinery that does not need wages, pensions or holidays. Every one of your Lordships who has filled his car at a self-service petrol station has helped to destroy the unskilled jobs that used to be available. Every one of your Lordships who has ever used a cash machine at a bank has helped to deprive someone of a clerical job in that bank. The dangerous social effects of unemployed and unemployable youth cannot be overstressed.
I said earlier that because of the myth of the mandate the Government will get their Bill. Nevertheless, the Opposition still oppose the principles of the Bill. We believe that it will be damaging to jobs. A study by the Department of Trade in 1996 suggested that, at £4·15 an hour, which the unions were then demanding, assuming a half restoration of differentials, the job loss will be almost 1 million. A minimum wage is recognised by the Institute of Directors and the CBI as damaging to our buoyant economy. It will add to inflation. It will damage our competitiveness. It will not help the lowest paid in society. On the contrary, countries that have a minimum wage find themselves with a list of derogations growing year by year, as different groups have asked their legislators for exemptions because of the harm being done to their particular trade or industry.
I repeat what I said earlier because it needs to be stressed. A major defect in the Bill is that it does not give the President of the Board of Trade clear power to provide further exemptions if they are found to be necessary. If, as we fear it will, the minimum wage results in rising unemployment, the Government will bear the sole responsibility. It will give us no satisfaction whatever to say that we told you so.
8.22 p.m.
Lord Razzall: My Lords, I do not know whether it will be any comfort to the Minister if, speaking on behalf of the Liberal Democrat Benches, I indicate that I entirely disagree with the tone and virtually all of the content of the speech we have just heard from the noble Baroness, Lady Miller of Hendon. Furthermore, I do not know whether it will give him any assurance to know that in saying that, contrary to the assumption the noble Baroness makes, I never have been, never will be or ever could be described as Old Labour.
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We believe that for far too long the previous government tolerated the practice of cowboy employers exploiting their workforce with the taxpayer, whom the noble Baroness's party always professes to defend, having to pick up the bill. We all have our anecdotal evidence of that and we could all produce our stories about outrageous exploitation of workers on low pay. The best example I have relates to the enormous recent profits made by various of the owners and entrepreneurs who invested in the train operating companies compared with the wages that are currently paid to the men and women who walk up and down the trains providing us with the drinks and food that we have from the buffet cars. Their average hourly wage is infinitely less than any rate the minimum wage will be set at by the Low Pay Commission. If one juxtaposes those wages with the enormous wages that are being paid to those who are operating those companies, one sees that this is a significant problem which the Tory Opposition ignore at their peril.
I find it very strange as well that the Conservative Opposition have consistently opposed the introduction of a minimum wage, although, to be fair to them, they opposed it during their period in government. But we are the only serious industrial country in the western world that does not have some form of minimum wage legislation. The noble Baroness made much of the experience of the United States. Of course it is the case that if the minimum wage were to be set too high there would inevitably be some effect on jobs. However, six out of the seven recent studies that have been conducted in the United States, in regions as diverse as New Jersey, Texas and California, indicate that employment in the low wages sector and areas where the minimum wage has been monitored has increased recently by as much as 20 per cent. There is certainly no significant opposition among American economists to the minimum wage. So I think the American experience certainly does not prove the point which the noble Baroness made.
We on this side of the House by and large support the introduction of the Bill. We have welcomed the establishment of the Low Pay Commission. We advocated for some years that we should establish the Low Pay Commission and so we welcome that. We welcome the exclusion of volunteers from the provisions of the Bill. There was a good deal of debate in another place with regard to volunteers. Significant issues were raised by our side and we are pleased that, as a result of the amendments that were accepted by the Government in another place, the position of volunteers has been clarified.
We are also particularly pleased about the significant development that took place regarding agency workers, part-time workers and home workers. It has for long been a scandal in this country that those groups of workers, who are often paid £1 an hour or less, have been significantly exploited by employers. We all know of examples of that. We are pleased that the Government have taken on board that point and, in framing the legislation, are looking to deal with it.

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Having said that, noble Lords would not expect me to indicate that we would not wish to improve the Bill as it passes through this House. The major substance of the amendments which we shall bring forward will concern the point on which the Minister touched in his speech. I listened carefully to what he said but we still remain convinced that there needs to be a further provision to permit a regional variation of the minimum wage.
The case can be put very simply. I shall not detain the House, because the arguments have been made extensively and we shall seek to make those arguments again as the Bill proceeds. However, let us assume for the sake of argument—those who have read the press may know as little as or more than the Minister—that the minimum wage is set at around £3·50 an hour. The figures from the Office for National Statistics demonstrate that there is significant variation on a regional basis between the average income of people in relation to £3·50 an hour. For example, in the north east region 8·4 per cent. of the working population earn less than £3·50 an hour. In the south west the figure is 6·8 per cent. while in London it is 2·1 per cent. Thus it is clear that more than three times as many people as a proportion are earning less than £3·50 in the north east than in London.
Let us look at the figures for government departments, which are, after all, under the control of the Government. Answers obtained to questions in another place to tease out exactly what are government wage rates at the bottom end show that the lowest payer is the Department of the Environment, Transport and the Regions, which on average pays about £3·25 an hour. However, the average lowest rate in a government department in London is £4·30 an hour. So already within government departments there is a significant variation on a regional basis as to the minimum rate that is being paid.
Our case is that we believe that the Government are making a mistake in not authorising the Low Pay Commission, in making its recommendation as to a minimum wage, to introduce a regional variation. We understand the arguments that have been put forward. Broadly speaking, the Minister in the other place was quite clear about the first one. He said in terms that it was in their manifesto that they were not going to have a regional variation and therefore there will not be one. I accept that the Salisbury Convention applies so far, but I am not sure whether in this House it applies in requiring me not to argue the intellectual case for a regional variation.
The second argument which the Minister put forward is that it is very difficult to implement a regional variation. Our answer would be that that is something which the Low Pay Commission should be empowered to look at. It may well say that, for all the reasons we have looked at, there should be one national minimum rate. However, in this Bill the Low Pay Commission should be given the opportunity to look at that rate and the regional variation.
We support the argument of the Equal Opportunities Commission that the issue of gender imbalance is not properly dealt with in the Bill. I accept the point made
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by the Minister that the Bill will enable significant progress to be made in bridging the gap between the low pay of men and that of women. However, we would support an amendment to the Bill requiring the Low Pay Commission to consider the effect of the legislation on equality between women and men and assessing the rate level.
We believe, and have argued quite strongly in the other place, that the issue which the noble Baroness touched on—namely, that of young people and training and whether 26 is the right age to provide the cut-off for the minimum wage—should be looked at again. There are some very difficult issues. We would like to bring forward some suggestions in Committee as to how they should be dealt with. We are not sure that 26 is the correct cut-off age, nor are we sure that the Bill is going to make appropriate provision to ensure that the kind of training example which the noble Baroness described is properly taken into account in the Bill.
Although significant progress was made in another place as regards the status of the Low Pay Commission, we argue that we should go further at this stage. The Government are indicating that they would wish the Bill to contain powers for the commission to become a statutory body with permanent effect. We believe that there are so many issues thrown up by the minimum wage legislation and its imposition that it is clear that the Low Pay Commission should now have permanent effect. We would like the Bill to make provision to have various items referred specifically to the commission, including a regular review of the economic impact of the minimum wage. That should also include, in the light of the Minister's remarks, the impact of gender differentiation and the minimum wage. We are concerned that unless the Low Pay Commission has permanent status, the issue of equality between men and women's pay will become lost as we attempt to monitor the effects of the minimum wage. For that and many other reasons, we shall seek to bring in amendments to ensure the confirmation of the Low Pay Commission as a fully effective statutory body.
We are concerned about the status of the secondary legislation that is clearly going to be brought forward to give this Bill teeth. As the noble Baroness has indicated, to some extent we are debating the Bill in a vacuum. The issues which many noble Lords would wish to raise would be entirely different were the minimum wage to be set at £3 compared with £4·50 or £5. Many of the arguments about unemployment, regional variation and the gender gap—somebody's pager has gone off. I am sorry my Lords, it is mine!
Lord Harris of High Cross: My Lords, it's Mandelson!
Lord Razzall: My Lords, I apologise to the House. Many of the arguments on all those issues need to be continued over the course of the next few years. Therefore, we would like to see statutory effect given to the permanent status of that statutory body. In the other place the Government indicated some movement in that area. We propose to press the Minister somewhat further on that issue.

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The noble Baroness raised the critical issue behind this Bill. In another place many nights were taken by the Opposition in attempting to slow down the progress of the Bill. In the course of the debate I believe that Madam Speaker had to remonstrate with the government Minister for suggesting that a filibuster was taking place. Whether that was the case of not, I do not know: I was not there. I do know, however, that many nights and mornings were taken up in Committee and at other stages of the Bill. I urge the Opposition to accept the fact that we are going to have this legislation and that we should use the opportunity here to try to improve it in the way I have suggested and not indulge in the kind of behaviour that went on in another place. I believe that this is good legislation which is right for the country. We can improve it if we all work together here.
8.36 p.m.
Lord Harris of High Cross: My Lords, I am not sure whether I should apologise for taking part in this debate as a former practitioner of the dismal science of economics. Next to the offer of a free drink, the mere mention of a minimum wage is best calculated to get most economists to their feet with their mouths open. It is a subject that disproves the old quip that if you ask half-a-dozen economists a question, you get six different answers—or seven if Lord Keynes was among them. In contrast, it requires no homework, no new research, no statistical models, no consulting—not even a fee—for most independent economists to agree nem, con. that a minimum wage is likely to be damaging and could be disastrous.
Of all the anti-market wheezes that I have come across, the idea of enforcing by statute a single, national minimum wage seems to me the most damaging in prospect. That is for several reasons. First, it seems superficially a painless way, as we have heard, to prevent the "exploitation" of the weakest members of industrial society. Secondly, it can therefore be wrapped up in the rhetoric of fairness and so harness the moral passion of laymen, as the noble Lord, Lord Clinton-Davis, attempted. Thirdly, for politicians, less concerned with morality and guided by the vote motive, it serves wonderfully to promote short-term party popularity. At the outset it is an absolute winner. It is unstoppable. Apart from the Conservative Party, its only opponents are stony-hearted economists who, we all know, are lackeys of high capitalism.
Even if I could forthwith proceed to demonstrate the disastrous effects of a minimum wage on production costs and employment, I fear that the moral and political bandwagon could not now be halted. But, alas, I admit that I cannot demonstrate any such thing. I cannot prove the case against this massive, mammoth, monstrous Bill for the simple reason that I do not know what I am talking about. None of us knows what we are talking about. The Minister does not know what he is talking about. Not even the normally omniscient professor the noble Lord, Lord Peston, if he were here, would know what he was talking about. That is because we do not yet know the level at which the minimum wage will be set. I shall return to that challenge in a moment.
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Any of us can conceive of a minimum wage low enough to do no harm, but then it would also do little good. We also understand that if the minimum is set above what economists call the "market clearing wage", it will certainly hurt those it was meant to benefit. Thanks partly to the Institute of Economic Affairs, with which I have had some forty years' association, there is today a more general acceptance of what the late Lord Robbins used to call the "invincible platitudes" of liberal market economics. It is a central precept of textbook analysis that a rise in price will reduce demand. Of course, in the lecture room, that missionary truth is hedged around with cautious qualification. Thus, the rise in price will only "tend" to reduce demand and therefore to create unemployment, and it will do so only if "all other things remain equal". If I had the time I could tell the House of circumstances in which a minimum wage could possibly improve employment, but that is a textbook or examination exception such as one sets to catch out undergraduates.
The trouble is that there is not just one labour market. There are distinct labour markets in different regions, different industries and different skills. Although a single uniform minimum wage will have no ill effects for skilled workers in flourishing firms in the South East, it could do much damage at a number of other margins. It will bear most harshly on the least effective worker, in the least productive firms and in the less favoured regions.
A consistent lesson I recall from almost all of the empirical studies in the United States is that when the minimum was increased—usually around election time—the main victims of the resulting unemployment were the most vulnerable workers. They were typified by being unskilled, inexperienced, young, black and invariably women. It may not sound quite nice, but it follows that the one advantage which the least attractive, least employable people have in a competitive market is the freedom to offer their relatively unwanted services at a lower wage. At least they get their foot on the ladder. I wish that Milton Friedman were present to give his performance of thanking the almighty for the sweatshops on the east coast of America in the last century which enabled his immigrant parents to get a toe-hold on that great continent.
If we turn to the Bill, we find 50 pages of, for me, impenetrable legal mumbo-jumbo, with seven clauses giving wide powers of further regulation. There is no fear of unemployment, at least for lawyers. The prospect opens up of a new era of litigation by disaffected employees that will dwarf unfair dismissal cases. It should prove what I believe is called "a nice little earner" in retirement for the noble Lord, Lord Wedderburn, and the noble Lord, Lord McCarthy, who do not appear at the moment to be present among us.
The concept of a minimum wage sounds simple enough, but we must bear in mind that the rewards of a job include what economists call the "net advantages of employment". Let us consider the impossibility of evaluating payment by commission, discounts, and benefits in kind, including convenience, regularity and flexibility of work. Mention has been made of McDonald's. It may once have paid lowish wages but,

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in my view, it has done more than many government schemes to initiate and train generations of young people for regular work and so improve their future employability. For my money, it merits the accolade "McJobs" and it may now easily be in a position to cope with the minimum wage, but the same minimum will handicap smaller businesses in labour-intensive industries and prevent them growing into the McDonald's of the future.
I now come to the real heart of all this—I wish that there were time to go into it all. Let us turn to the Explanatory and Financial Memorandum and to the section headed "Financial effects of the Bill". We read:
"the net effect is likely to be relatively small",
but we should note the preceding proviso, which states:
"assuming the National Minimum Wage is set at a sensible level, with employment and the productive potential of the economy unchanged".
I need hardly say that if it is not set at a sensible level—that is, at a low level—the knock-on effects in the name of preserving differentials—whatever the noble Lord, Lord Clinton-Davis said—and the resulting unemployment will cost the Treasury many billions of pounds in wages and benefits.
Will the Minister take a moment at the end of the debate to confide in us his present judgement of a "sensible" minimum wage? He must have given this a great deal of thought. Indeed, he is paid to do just that. It would be helpful if he could tell us so that at later stages we can have some idea of whether it is to be £3·50 or £4-something. It would be useful to have that knowledge.
Noble Lords will be pleased to hear that I shall trouble them no further by participating at later stages—because this is a totally misconceived Bill which, by massive amendment, could be made only slightly less bad. The whole gamble was, of course, intended as a flower arrangement, a bouquet, to appease Old Labour. I fear that it may prove to be a wreath of nettles.
8.46 p.m.
Baroness Turner of Camden: My Lords, perhaps I may say first how much I welcome this Bill. We have had to wait a long time for it. That is no fault of this Government who have kept their pledge to introduce legislation to provide for minimum wages as soon as possible. There is no doubt that the move is highly popular—and that it is badly needed. For too long, many people in this country have had to work too hard for too little. As my noble friend the Minister explained, this Bill is part of the Government's overall strategy, which I applaud, to reform the tax and benefit system to aid poorer people, particularly those with children, and to assist with job creation, as the Chancellor did last week, by giving assistance to smaller firms in particular.
Why is the Bill so necessary in today's Britain? Today, we have over 1 million employees earning less than £2·50 an hour, of whom about 60 per cent. are women. According to the OECD, we have a higher proportion of people in low paid work than the majority
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of western European countries. There is apparently, according to the TUC, little variation of low pay by region and for that reason I understand that the TUC does not support the case for a regionally varied minimum wage, despite what the noble Lord. Lord Razzall, said.
I have here a dossier, compiled by the TUC and the Low Pay Unit, of simply appalling cases of what really amounts to sweated labour. Perhaps the noble Baroness, Lady Miller, will take note because she apparently does not think that we have sweated labour in this country. The examples include a hairdresser paid £1·95 per hour with no extra pay for overtime, which she is often required to work; a manager at a sports centre who is paid £200 for a six-day working week of 16 hours a day, which amounts to £2·08 an hour; an assistant MoT tester offered £1·50 an hour to work from 9 a.m. to 6 p.m. Monday to Friday; a care assistant paid £1·78 an hour for a 48-hour week; a woman working in a tailoring factory paid £2 an hour for a 35-hour week; a clothing factory worker earning £2·75 an hour; and a construction worker employed by an agency working for less than £3 per hour. These are examples of sweated labour by any standard. They are some of the cases culled from a large dossier covering various areas of the country. The situation in Scotland is no better. There are cases of employees in shops and restaurants working for less than £3 per hour. In particular care workers are badly paid at about £2·25 to £3 an hour. The security industry is particularly exploitative. Some cases have been recorded of men who earn as little as £1·50 an hour.
Some of the worst cases occur in industries where there were once wages councils. It will be recalled—as mentioned by my noble friend the Minister—that those councils were weakened and finally abolished by the previous government. When in opposition we put up spirited resistance to the move but unfortunately failed to stop the Conservative government from going ahead with it. As soon as wages councils disappeared a number of employers seized the opportunity to pay as little as they could get away with. In conditions of high unemployment that led to the grossest exploitation of very vulnerable people. It is noticeable that in low-paying industries, often the workforce is mainly female or from ethnic minorities. Far from there being a jobs explosion in the former wages councils sectors as the Conservative government promised, the rate of job growth slowed in those industries at a time when employment growth across the whole economy was accelerating. In the year before abolition around 17,800 full time equivalent jobs were created in the wages councils sector, but in the year following abolition only 5,000 full time equivalent jobs were created; and, of course, there were falls in pay. I commend those figures to those who claim that if we introduce minimum wages there will be job losses. The experience of wages councils proves exactly the opposite.
The sector hardest hit was hotels where the average earnings of all workers—men, women, manual and non-manual—fell in real terms after 1993. Even in those

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industries where there have been increases, such as clothing manufacture and food retailing, they have been significantly below those for service and manufacturing generally. A survey conducted in 1995 to examine vacancies that would previously have been covered by wages councils found that nearly half offered lower wages than would have been payable had wages councils remained in existence. Since 1979 the advent of Conservative administrations committed to the unfettered operation of the market has meant that the rich have become richer and the poor have become poorer.
We have witnessed the advent of so-called flexible employment. This may have suited some employers, but it was certainly disastrous for many employees. Most people like some degree of stability about their employment; it helps them to plan their lives. The Conservatives have attributed their heavy defeat at the polls last year to a variety of causes but they still fail to understand the enormous part played by job insecurity, affecting as it does large sections of the population including those who were once their natural supporters. Flexible employment has all too often meant short-term contracts, part-time working when full-time jobs would be preferred, contract and agency working, seasonal working and—perhaps the most exploitative work of all—zero working where an employee is expected to be on call, sometimes even at the work place, and is paid only when called upon to work, usually at a miserable hourly rate.
I am delighted that the Bill seeks to define "employee" to include the contract or agency worker quite specifically and also home working which exploits so many women. I am not sure about zero working but I believe that that is also covered by the provisions of the Bill. I am glad that detailed arrangements for enforcement via employment tribunals are set out in the Bill. It is also envisaged that there will be some form of inspectorate as there was for wages councils. Employees are offered protection against discrimination of any kind, including dismissal, for seeking to enforce their rights to a minimum wage. That is a very necessary provision.
This evening we have heard cries of, "What about the rate?" I am content to leave that to the low pay commission which I understand is to remain in being and will probably be given a statutory base. The rate may change from time to time, and it is therefore not appropriate to include it in primary legislation. The commission will have the job of consulting those with a particular interest, and I am sure it will do it well.
I am particularly happy that the Equal Opportunities Commission, of which I was once a member, has sought national minimum wage legislation and has already made submissions to the low pay commission. There are still substantial differences between male and female earnings despite more than 20 years of equal pay legislation, although the latter has made an enormous difference to job opportunities and pay for many women. A national minimum wage will help to improve matters for women at the lower end of the earnings scale.
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Good employers have nothing to fear from a national minimum wage. An increasing number express support for it. Most of them will have no difficulty paying it since they realise that a well-motivated work force depends on fair treatment and adequate rewards to employees. Why should the taxpayer continue to subsidise employers who believe that they can make a profit and stay in business only at the expense of paying employees too little for them to live on? The total cost of the subsidy to the in-work poor is of the order of £3 billion pounds a year, which is equivalent to £120 a year for each taxpayer. This is a very good Bill. I am delighted that we have it, and I congratulate my noble friend the Minister and his colleagues on its introduction.
8.56 p.m.
Baroness Eccles of Moulton: My Lords, I am very pleased to take part in this debate on such an important Bill. In spite of the Minister's comforting words, it has the potential for making unpredictable and perhaps damaging changes to our economy. I shall pursue a theme that has already been emphasised by my noble friend Lady Miller and the noble Lord, Lord Harris. I begin by reminding the House of the words of the Labour party in its election manifesto. It promised to introduce,
"a statutory level beneath which pay should not fall with a minimum wage decided…according to the economic circumstances of the time and with the advice of an independent low pay commission".
One difficulty that arises in debating the Bill is that we do not know what discussions have taken place between the Government and the Low Pay Commission regarding the latter's terms of reference. We do not know what advice the commission will give; nor do we know how the Government will react to that advice, which, as we understand it at present, they are not bound to accept. It is not unknown for governments to seek advice on pay and then not take it.
A second and more serious difficulty is the enabling nature of the Bill. It will give the Secretary of State wide powers to decide not only what the minimum wage should be but how pay will be defined. For example, does it include benefits in kind? Nor has the pay reference period been decided. Will calculations be based on total pay received over one week, four weeks or some other period? I disagree with the Minister when he says that nothing is lost by pushing ahead with legislation before the Low Pay Commission has reported.
The resulting vagueness on the face of the Bill makes it impossible to evaluate the probable effects, and the unintended consequences, of this proposed interference with interactions within the employment market. All there is to go on is a rather unsatisfactory clue or two. The Chancellor of the Exchequer has said many times that his objective is to make work pay. He has shown in the recent Budget that, within public expenditure constraints, his aim is to improve the position of the low paid from 1999 onwards. How does this policy initiative tie in with a minimum wage? Has the Chancellor's Budget speech engendered a fresh discussion between the Secretary of State and the Low Pay Commission in

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the light of the terms of reference added last year, which ask the commission to "consider and report on any matters referred to it by Ministers"?
Further, it is hard to engage in constructive debate without some knowledge of where the central thrust of the Government's policy towards minimum pay lies. Is it to provide a safety net for those who, for whatever reason, fall foul of imperfections in the market?
An example of gross pay which would presumably be above the safety net is £5 an hour for a 36-hour week, bringing in £180. But another example would be a security guard guarding an empty building and working long hours on a basic rate of £2·50 an hour. A 72-hour week would thus bring in the same gross pay as the first example. We might pause and ask ourselves why anyone would want to take such a job. Perhaps they are doing a distant learning course or even writing a novel in the silent watches of the night with only an alsatian to distract them. Be that as it may, are the Government concerned primarily to provide a safety net for the unwary who tend to be employed in the service sector, both public and private? Alternatively, are the Government minded to accept the Old Labour view of a basic minimum wage at, say, half average male earnings, as the foundation upon which the structure of all pay is to be set? That would result in all incentive payments being up for renegotiation and all differentials being fiercely defended. It seems highly unlikely that that is the intention of the present Government. The trouble is we do not know, because the Government have not told us.
In conclusion, one thing is clear. The decisions that will be made, if and when this unsatisfactory Bill becomes law, will be vital to the continued good economic performance of the United Kingdom. In that respect, in my view, a national minimum wage will not be a help. However, if it is to be introduced, perhaps I may emphasise again how important it is to follow the example of Canada or New Zealand and set it at a safety net level and not at a level which would result in increasing the pay of the majority. That would be a certain recipe for job losses. The safety net approach would be more consistent with the Chancellor's declared aims.
Nevertheless, it is frustrating, not in the spirit of openness, and—dare I say it?—bordering on the undemocratic for your Lordships to be left so much in the dark about the Government's intentions. If the chief executive of Barclays Bank can deliver his considered advice on national insurance to the Government in so short a time, why is it taking so long for the Low Pay Commission to publish its advice?
9.2 p.m.
Lord Wedderburn of Charlton: My Lords, I congratulate the Government, through my noble friend the Minister, on bringing forward this Bill and the low pay commission that goes with it. I was pleased to hear that my noble friend had fortified himself before our debate, so that he will be vigorous in carrying those thanks down to the other end of the building.
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Minimum wage laws have been a long time in their gestation. Bills were presented to Parliament in 1800 and 1808, albeit they were thrown out. In writing about them Beatrice Webb said:
"minimum conditions of service form an indispensable basis of any decent social order".
That is an argument that I have not heard addressed from the other side of the Chamber except, in one respect, by the noble Lord, Lord Razzall.
In view of the hour, I shall content myself by speaking mainly of the Bill's legal structure. In part that is because of the importance of some of its features. It is particularly important at a time when employees' organisations face transnational employers in the global economy, to which they have little defence, except occasionally by legislation. That in no way cuts down the importance of their organisation in trade unions.
Secondly, no one has yet mentioned the fact that we have some international obligations in this matter, or we did until the Thatcher government destroyed them; that is to say, the ILO Conventions 26 and 131 and Recommendation 135 which argue that it is an international moral obligation to have some kind of minimum wage arrangements.
I agree with my noble friend the Minister that the first problem is to reach all the workers to whom the protection is to be offered. My noble friend said that we must have universality. That is right, but on this matter the Bill is a legal landmark. The old categories of employee and self-employed, and, to some extent, worker, have gradually disintegrated in the market as it has developed. Waiters are hired as self-employed workers to serve at tables that are leased out to them. One driver of a lorry which was let to him on hire purchase by the employer was held by the court to be self-employed, even though he wore the employer's uniform and obeyed his orders.
In a recent case a security man's—how often security men have been mentioned; they form a group which is exploited atrociously—rights and duties were owed to so many different companies, and in such diverse manners, that the Court of Appeal held that he was not protected as an employee against unjust dismissal because his contract was one that was sui generis. The very special thing about the Bill is that it protects all such workers, even those whose contract is sui generis, as the Court of Appeal put it in that case.
The Bill makes also a valiant effort to protect two groups which again have been atrociously exploited: home workers—I am speaking of the old form of home workers (over 1 million of them) although there is a group of tele-workers whose conditions have not been explored properly by research—and agency temporary workers, or agency temps. They are protected by the various definitions of the word "worker" in the Bill, which means that any person under a contract, doing work for another, except the professional client or customer, will be protected.
The Government might consider extending the other power in the Bill—namely, the Secretary of State's power to extend the provisions to persons who are not otherwise workers within its provisions—to trainees and

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bring them into the fold of the protection of a minimum wage. It is also questionable whether the definition of worker, which is admirably wide, requires the word "contract"; that is to say, there will be some who will try to evade the Bill, and they might, as it stands, make arrangements which were not technically contractual, to get them beyond its frontiers.
Home workers and agency temporaries have been in the forefront of recent discussions and surveys. Last year, the Court of Appeal in the McMeechan] case decided that one must look at the facts to decide whose employee the agency temporary worker was. Was he the agency's employee or the client's employee? Indeed, if there was no contract of employment where did the contract lie? The Government may wish to look again at their admirable attempt to defend temporary workers against such analysis. They may wish to consider a formula used in some European directives based on the approach of French law whereby the worker is
prima facie presumed to be the employee of the agency and not of the client. That might be an addition which would make the position even more secure.
Your Lordships will be aware of the myriad forms of employment which workers, young workers in particular, are forced to take. I refer, for instance, to beck-and-call contracts, on-line contracts and zero hours contracts. Last year, I discovered, astonishingly, that a student in my graduate seminar, who was already laden with massive loans, had taken a job to help him through the year. He attended when the employers telephoned him to do so, including at weekends. However, once he arrived—and this is the esoteric form of zero hours contracts—he had to sit out the shift and if they wanted him to work they would call on him. But he was paid only for the time that he worked and not for the time waiting in the wings, hoping that the intolerable rate of £2 an hour might be paid to him for a little movement rather than remaining in a sedentary position.
That outrageous Taylorist abuse is one which perhaps demands more general legislation. I say to the noble Lord, Lord Razzall, hoping that he would be in his place, that the Bill cannot do everything. It is not the job of the Bill to deal with the problem of the gender gap. Indeed, I wonder whether it is within the Long Title. That is not to say that I do not believe that steps should not be taken; the gender gap in wages is much too great. Perhaps the Bill concentrates on what it does well.
There is a maxim which is applicable to the Bill. It is that no rights are stronger than their sanction. This Bill faces that problem by using, rather in the manner of the modern legislation on safety at work passed by the Labour government of 1974, not one but a whole series of interlocking legal remedies. It does not make the mistake that so much employment legislation has undergone of leaving everyone with only an action in the industrial tribunals (we must now call them employment tribunals) and a remedy which is scarcely enforceable. The Bill puts forward, both in the employments tribunals and in the courts, civil actions, criminal prosecutions and penalties and the intervention of enforcement officers with wide powers. In that
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respect, too, the Bill deserves congratulations on not being mealy-mouthed about the enforcement of its provisions.
The work of the enforcement officers is likely to be a critical component. The question must be asked: is the intention to give some of the tasks to an existing inspectorate, such as the VAT inspectors, or to create a new one? No doubt the Government will tell us their plans and we can consider them when they are announced.
Finally, it is for consideration whether the mechanism of enforcement might have one aspect added to it. It is to give to a representative trade union the status to appear in court on behalf of workers to defend a range of rights under the Bill. In France, since the law of 1920, unions have been regular parties to actions in various courts which were in defence either of particular workers' interests or of the so-called collective interest, l'intérêt collectif, which is a well-known concept in the civil law. It is my understanding that the working group on representative litigation set up by the noble and learned Lord the Lord Chancellor does not have that matter within its remit, or indeed the jurisdiction of the employment tribunals. However, if I am wrong the matter should surely be put on its agenda.
We have in this Bill a basis for a social advance which is of particular importance despite any adjustments or amendments that I have suggested. In my view, nothing that I have said can detract from the nature of the Bill or its general thrust which will be a powerful contribution to the cause of social justice for working people.
9.14 p.m.
The Viscount of Oxfuird: My Lords, for much of my life I have been overseas and have observed this country from a distance—in my youth at school in New Zealand and after that, working overseas, exporting and being involved with industry in this country from both the manufacturing and marketing points of view. I have seen the effect of government decisions, decisions made by companies, their managing directors and their workforces, on how they are perceived by the customer. Quite frankly, the only person who matters to any organisation's future and ability to pay anybody anything is a person called the customer.
I sometimes wonder whether the Government have two agendas: one for public consumption, as in the Budget; and the other conceived in the mist rising from Europe. Surely the Government must realise that the current unemployment problems facing our friends across the Channel are of their own making. Why do we have to put the blinkers on and follow them down that path and produce legislation like this when our competitors in the Far East have just been awarded a 30 per cent. price advantage due to currency devaluation against the strengthening value of sterling?
I go to Korea most years on business. The people of that country will be rubbing their hands with glee if this Bill is passed. When their nation suffered a recent economic downturn, the men and women defied their unions and went into the street with what might be

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called "mattress" money—fistfuls of American dollars which they offered to their government in support of their sad economic situation. This will be their turning point as ours was in 1979. The luxury of even being able to consider this Bill has been won by every working man and woman in this country over the past 18 years.
Why are we throwing away that hard-won position? The Government have been seduced by the emotion attached to wants as opposed to the reality attached to needs. In that there lies a big question: how long will it he before the electorate discovers that this Government's agenda has nothing to do with good governance but is totally devoted to the promotion of a political party—popular opinion versus public interest?
In opposition, the Government took every opportunity in your Lordships' House, when given the chance, to decry the Conservative government for their so-called lack of support for manufacturing industry. Claims that business is warming to the minimum wage are disingenuous. A statutory minimum wage is opposed by the CBI, the Institute of Directors, the British Chambers of Commerce, the Federation of Small Businesses, the Forum of Private Business and the small business bureau. That is a long list.
Why do they object? No one objects to people earning money but they do object to legislation. Sometimes I wonder whether we spend enough time stopping to truly consider the result of our actions. Strangely enough, the job-destroying characteristics of the minimum wage have not been lost on the Government. Despite earlier attempts by the President of the Board of Trade to fend off advice from the Minister without Portfolio, and her indications that there will be no variations to the national minimum wage, Clause 3 includes a provision allowing the holder of her office to decree by regulation a lower rate for younger workers and trainees.
The fact that the Government have not come forward with a rate for the minimum wage is no accident. Obviously they know that announcing the figure would prompt many estimates of the cost of the minimum wage, as we have already heard this evening, and its impact on jobs. Not a word has been heard since the general election; indeed, the DTI's estimate in 1996 was an additional million on the jobless total. How will the Government explain to the country the cost of 2·3 million unemployed?
Finally, regional variations have already been mentioned. Perhaps the Minister can tell the House whether any real consideration has been given to this area. Surely, the national minimum wage will have a greater effect on those employing in the north east than those employing in London. I do hope that your Lordships will think very, very carefully before passing this dreadful legislation.
9.20 p.m.
Lord Evans of Parkside: My Lords, unlike the noble Viscount who has just sat down, I left school at 15 years of age and went to work in the shipyards on Tyneside. I worked there for the next 28 years and I worked in some of the hardest, toughest and most dangerous industries in this country. I saw the impact on the lives
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of so many people who worked in those industries. Indeed, I saw people killed in the shipyards. I also had responsibility for helping the widows and wives of men who had been killed or seriously injured, and I saw men dying because their lungs had been destroyed by asbestos and other industrial substances. While I agree with the noble Viscount that the customer is of paramount importance, I should like to remind him that the worker also has some rights and is entitled to some justice in our society.
That is why I unreservedly welcome the Bill, which, in my view, honours one of the most significant general election pledges that the Labour Party made. The Labour Party's manifesto promised to introduce a "sensibly set minimum wage". I was also pleased that the Bill was introduced so quickly into the other place on 16th December last and that it was finally concluded, after a marathon all-night sitting, on 9th March. If any noble Lord takes the trouble to read the record of the proceedings, he will see that the committee in the other place sat for many hours, including a marathon sitting which was the longest since the war, as the Tory Party and Tory MPs fought tooth and nail to try to derail, prevent and stop this legislation.
From the speech that we heard tonight from the noble Baroness on the Front Bench opposite, it is quite obvious that the Tory Party has not changed at all; indeed, it is obviously determined also to fight the Bill in this House. However, I should remind Members opposite that the Bill received considerable consideration in the other place. I trust, therefore, that their opposition to the Bill will be tempered by the fact that it is necessary to have this legislation on the statute book at a reasonable time without a lengthy filibuster.
For the first time, this Bill will create in Great Britain a national minimum wage and it will bring our country into line with almost every other developed country, all of which have some form of national minimum wage. This legislation, taken together with the strategy that the Chancellor of the Exchequer announced in his Budget last week, will lay down the framework for a more just and a much more decent society than we have had over the past 18 years. I appeal to noble Lords opposite: surely employees, workers, are all entitled to reasonable pay and conditions. They should certainly be free from some of the gross exploitation which many of them have suffered over the past few years.
I spent 23 years in the other place. Sadly, for 18 of those years, I sat in opposition and watched Tory governments successfully abolish workers' rights with Bill after Bill through all those years. First they hamstrung the trade unions, the workers' main defence mechanism, and then they abolished the wages councils in 1993.
I remind the House of the words of Winston Churchill when in 1909 he introduced the wages boards which were the forerunners of the wages councils. He said,
"Where you have what we call sweated trades, you have no organisation, no parity of bargaining; the good employer is undercut by the bad employer, and the had employer is undercut by the worst".

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Those words were uttered 89 years ago. The wages councils in this country existed right up until 1993 and provided a modicum of cover for those in the most sweated trades in this country. Those words proved to be extremely wise, as was realised when the wages councils were abolished. The Tories claimed that abolition of the wages councils would create jobs, albeit at lower wages. There is scarcely a shred of evidence that a single job was created by the abolition of the wages councils. However, there is plenty of evidence of wages in certain sectors declining badly because of the loss of the wages councils.
Over the past few years every Member of Parliament could have regaled this House with details of some of the most appalling wages that were paid to workers in pretty awful situations, as revealed to those MPs at constituency surgeries. The words of my honourable friend Chris Pond, the Member of Parliament for Gravesham—who for 17 years worked for the Low Pay Unit and probably has more knowledge and experience of these matters than any other person in the United Kingdom—are probably the most telling. In another place he gave details of the Low Pay Unit's Christmas "Scrooge of the Year" award. Noble Lords can read his speech at col. 201 of Hansard of another place of 16th December. He stated that one of the previous,
"nominees for the award included the employer of a woman who worked in a residential nursing home. In a letter to her, the employer stated 'I would like you to work 5 pm to 9 am Monday to Sunday inclusive'. That is 112 hours of night work. The letter goes on: 'Salary will he paid in arrears at a rate of £150 a week', which is about £1·34 an hour".
Another "Scrooge" award winner was a clothing workshop employer who paid his staff the princely sum of 59p per hour. A Birmingham chip shop employee took home 80p an hour. The recently established TUC hotline uncovered cases such as that of a waiter paid £12 for an eight-hour shift. His tips were taken from him at the end of each day.
That Tory government policy which they ushered through both Houses of Parliament created a massive burden for the taxpayer as well as a degree of poverty for millions of workers in this country. In 1996 more than £2 billion was paid in family credit alone to subsidise employers who paid these scandalous wages. The incredible Tory claim that abolishing wages councils would create jobs must be put alongside the even more incredible Tory claim made before the 1992 general election that a national minimum wage would result in 2 million lost jobs. Unless my hearing went astray I believe that the noble Viscount who spoke before me reckoned that 2·3 million jobs would be lost as a result of this legislation. I notice that the noble Baroness did not offer any figure in her speech.
The Viscount of Oxfuird: My Lords, I thank the noble Lord for giving way. The addition to the current 1·3 million unemployed would be 1 million. I believe that makes a total of 2·3 million.
Lord Evans of Parkside: My Lords, I apologise to the noble Viscount. I accept the figures that he gives.
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I would say only that the figure of 1·3 million relates to those claiming jobseekers' allowance and does not represent the true number of people who are without work in this country. On the Bill's Second Reading in another place, Mr. John Redwood led for the Tory Party. While still claiming that jobs would be lost, he again offered no figures, unlike previous Tory claims about alleged job losses.
Clauses 2, 3 and 4 of the Bill provide no distinction in the minimum wage on the grounds of different areas, different sectors of employment, undertakings of different sizes, or different occupations for those aged over 26. I accept the broad principle. However, while I understand the reasons and thinking behind the propositions in Clauses 3 and 4, I wish to offer two caveats. First, I am puzzled by the reference to the age of 26. I am not sure why that age has been plucked out. In all the industries in which I have worked, the general ruling was that once that person had reached 21—in other words he or she was recognised as an adult—he or she then received the full rate for the job. Those below the age of 21 received a lesser amount. Secondly, if there were a differential at age 26, is there not a danger that some employers would be more inclined to employ those aged under 26 because they were cheaper than those just over 26 because they were more expensive? Can my noble friend give an undertaking that, if regulations are brought in under Clauses 3 and 4, they will be brought before Parliament for debate and a vote on whatever proposition the Secretary of State brings forward?
I congratulate my right honourable friend the President of the Board of Trade upon establishing the Low Pay Commission within a short period of taking office. It has been vitally important for the commission to be able to take evidence, and to start to do the necessary groundwork at this early stage. The commission will consider all the necessary factors, including the concerns of small businesses, and will produce a fair and justifiable minimum wage. While I understand employers' anxiety that the minimum wage should not be too high, I hope that they will understand our concerns that the minimum wage should not be too low. We shall be looking for a fair and adequate balance.
I strongly support the minimum wage enforcement clauses. As we have seen in so many other fields, it would be pointless to have minimum wage legislation if we have no means of enforcing it against the, it is to be hoped, very few cowboy employers who will undoubtedly do their utmost to get round the legislation. I believe that it is a fair, just and long overdue Bill. It will bring material benefits to millions of British people. There are almost 1 million people in full-time employment in Great Britain today, most of them with families, who earn less than £2·50 per hour. Many are mothers with children. Many are from ethnic minorities. All would benefit greatly from this legislation. I am proud that a Labour Government should at an early stage have introduced this Bill to combat poverty. I strongly support it.
9.33 p.m.
Lord Dixon-Smith: My Lords, I declare an interestas a practising farmer. As such, those parts of the Bill dealing with the agricultural wages aspect of the question might conceivably directly affect me. From what I have heard so far, I hope that my employees will be well clear of any provision introduced by the Bill.
However, declaring that interest gives me the opportunity to make two pertinent points. First, agriculture, like many other industries today, is an area of rapidly declining employment. There are a number of reasons for that, most of which do not have to do with either the beastliness of employers or indeed the dreadful environment in which most agricultural workers live. By and large, they are extremely fortunate in that regard.
However, there is one basic temptation, or pressure, depending on how one looks at it, which every employer, not just in agriculture, goes through; namely, the higher wages go, the easier it becomes to employ a machine to do the work. If we examine the consistent trend over the years in my industry, we see bigger, better and quicker machines, and more sophisticated systems, with fewer and fewer people required to do the work. The higher wages climb, the more intense that pressure is.
The other point, for what it is worth—and I shall slightly turn it round—is that agriculture is a basic industry, working with basic commodities. At the present time, because of the strength of the economy, as everybody in this Chamber will undoubtedly be aware, it is rather a depressed industry. In many parts of the country—in Wales, up in the hills, in Scotland, in the north west and parts of the West Country, there will be farmers who are already achieving what might be called negative income. It is not a very happy situation to be in. Anyone who is in that situation for long will find himself in considerable difficulties if he happens to have employees.
The thought occurs to me, slightly wickedly, that if we set the national minimum wage at something like £5 an hour and there is an immediate battle for a restoration of differentials and we let inflation rip, then the pound might be rapidly devalued and those farmers would probably find themselves once again with a positive income. However, I am sure that the rest of the country would suffer so much in bringing that about that we had perhaps better put that wishful thought aside.
In considering my remarks about the Bill, I had a passing fancy that perhaps we should cast Sessions of Parliament as Shakespearian plays. I could not help but think that perhaps "The Tempest" was appropriate for this current Session, with the new Government determined on immense activity and sweeping all before them. With that in mind, it becomes quite easy to "cast" the Budget debate and the Finance Bill that is to follow in the part of Prospero, with wonderful spells being cast which we all hope will be of general benefit to the country at large.
But this Bill then becomes a problem, because we do not yet have the information that enables us to define its character. Once again we have before the House an
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enabling Bill. Like the various referendum Bills before us earlier which did not at the time contain the information as to what was to be created, so now we do not know what the minimum wage might be. We know the "how", but not the "what"—and in this case it is the "what" that matters. Do we have Trinculo, a rather irrelevant but somewhat amusing character; or might it be Caliban, descendant of a former occupant of the island with rather unfortunate and self-destructive characteristics?
In the whirlpool of taxes and benefits surrounding people at the bottom of the wages pool, it is not always easy to determine precisely what is going on. I have tried to measure the intentions of the Bill against some of the points outlined by the Chancellor of the Exchequer in another place last week, and also in the context of views expressed in various places as to what the appropriate level of a minimum wage might be.
In the other place last week, in talking about restructuring national insurance as recommended by the tax and benefit task force, the Chancellor said:
"From next year, the Government will abolish the distorting entry fee for employers' national insurance. We will also abolish the multiplicity of separate national insurance rates. We will therefore cut the cost of hiring lower-paid employees. Employers will pay no national insurance on any employee earning less than the starting point of the personal tax allowance—£81 a week" .—[Official Report, Commons, 17/3/98; col. 1104.]
Assuming a 40-hour week, that is just over £2 an hour; noble Lords do not need me to tell them that. Of course, one has to consider that there may be part-time workers, but anyone who can earn £81 per week, say, in one day, is not likely to be considered to be low paid or at the bottom of the wages pool. Since I cannot accept that the Chancellor would waste his breath on the matter without some reason—still less do I believe that he might spin some irrelevant spell—I hope that the Minister in his reply will assure me that the Chancellor's remarks are pertinent in the light of the implications of the Bill. I assume, therefore—and I hope to be assured that it is so—that where the Secretary of State has power, under Clause 3, to create exemptions for those under 26 years, those exemptions will be made.
At col. 1105 of Hansard for 16th March in the other place, in discussing the change from family benefit to tax credit, a guarantee was given that work would pay and that for a family with a child and someone working full-time, income would be at least £180 per week. I assume that that sum is arrived at for some people by adding a tax credit to the wages paid. That is an interesting concept and I wish it well and hope that it works. But once again it suggests real wages at a level that may be well below some of the figures that have been suggested as appropriate for the minimum wage.
The reality is this. The Bill, with its flowing legal prose, creates a procedural mechanism to do a specific job. In itself, apart from the estimated cost of over £0·5 million, it is innocuous. The conclusion of the job, however, is highly significant. In other countries where minimum wages apply, the effects seem to vary depending on the conclusion that is reached as to what is appropriate. There appears to be a correlation between the level of the minimum wage and the level of unemployment.

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In the United States where the level of the minimum wage is relatively low, unemployment is also low. On mainland Europe, however, where various national minimum wages are relatively higher, unemployment is correspondingly much higher, certainly at levels which we would not wish to see here ever again; in many places at levels we have never seen here—thank heavens! It is on that decision that I shall finally have to decide how I cast the Bill. I think we must all hope that I do not have to cast it as Caliban.
9.43 p.m.
Lord Thomas of Macclesfield: My Lords, the question before us today is one of principle, a principle already accepted by many industrial countries of the world and by most European countries. So it was a particular disappointment to me today to hear the opening speech of the noble Baroness, Lady Miller of Hendon. We could have spared the toilers in Hansard because it was exactly the speech, the sentiments and facts brought out in the first Factories Act at the beginning of the last century, the second Factories Act and the third Factories Act. These were not the end of the world as was forecast at that time.
I was a proud member, with Lady Howe, of Opportunity 2000. I heard from women who had succeeded in industry that in their view often the biggest enemies of women prospering, going up the ladder and getting to the top, were other women. I find it ironic, therefore, since I always dismissed that as folklore, that the noble Baroness, Lady Miller, should speak against a national minimum wage when by far the greater beneficiaries will be women.
Baroness Miller of Hendon: My Lords, I am grateful to the noble Lord for giving way. I believe that my record in working for women is very good. However, does the noble Lord agree that in America there was an exemption in the Equal Pay Act 1963 which provided that men and women should receive the same salary because it was proved that, when there was a minimum wage structure, the women did much worse out of it than the men?
Lord Thomas of Macclesfield: My Lords, I do not accept that logic. In my experience, by treating women with respect an employer will earn much more loyalty and the business will benefit as a result. I see no reason to follow the example given by the noble Baroness.
If the principle is carried to extremes in terms of cash per hour worked, either extreme would be disastrous. Too much would result in redundancy, as the Benches opposite claim; in bankruptcy, unemployment and a reduction in gross domestic product and tax revenues. Clearly, therefore, too much would be wrong, though I wish that could be applied to some executive directors. That is why a commission needs to be set up which can be independent of the political debate and argument. It can judge what is an appropriate amount in terms of the economy at that time.
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The noble Baroness also confuses flexibility with minimum wages. Flexibility involves multiple skills; it concerns the hours of the day which one works. It is not about paying people a bag of rice a week. That is not flexibility; it is unethical. In terms of our New Zealand friend—obviously a refugee from New Zealand which has a national minimum wage—customers respect employers who respect employees. An employee is an employer's biggest ambassador and salesperson. If employees are exploited, they will not send a good message to the customers. It is therefore self-defeating to exploit people with very low wages.
Too little or no minimum wage, as has been suggested, results not only in low hourly rates, but also in increases in social payments—I have heard the figure of £2 billion suggested; that is a subsidy paid to some employers. However, it is interesting that the Benches opposite should be arguing that case. It puts the good employers at a disadvantage. And good employers, whether large or small, would regard it as unethical. They occasionally lose business because of the cowboys in the economy and the sooner we get rid of those, the better.
My experience of 44 years as a banker was that there was a tight correlation between what people were paid and what was invested in them in terms of skills and training. The more they are paid, the more advantageous it is to invest in them by helping them to develop skills. The opposite is also true. If the labour comes very cheap, it is rare to find those employers investing in and developing those employees.
If we carry on without a minimum wage, we will continue the exploitation, particularly of women and particularly of certain ethnic groups. Both extremes, therefore, could be a disaster to the individuals, to the companies, to the country's gross domestic product and to tax revenues. Worse still, a society with a value system that has no respect for individuals would result. That is part of the culture change which this legislation and the Budget of last week seek to address; that is, the culture change of valuing people.
It was Robert Owen, a textile manufacturer, who taught his fellow textile manufacturers 100 years ago that the more you invest in people and the more you respect people, the more profits you make and the more profits you are entitled to make. He had a track record that no one can besmirch after all this time.
I am delighted to support the principle of the Bill. The actual rate per hour should be decided by the commission and revised according to RPI every year. As a cautious banker, my inclination would be to start at the lower end of the scale and build on that rate every year. I certainly hope that the Bill will pass very quickly.
9.50 p.m.
Lord McCarthy: My Lords, I want to do two things at this late hour. First, I want to join those on this side of the House who have congratulated the Government on the drafting of the Bill. It is the next best thing to a masterpiece. It makes one appreciate what the parliamentary draftsmen can still do if they are properly encouraged. Secondly, I want to answer those who have

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opposed the purposes and functions of the Bill. The noble Lord, Lord Dixon-Smith, said that the arguments reminded him of Prospero in The Tempest. I could not quite get the connection, but they remind me of Touchstone in As You Like It, in particular what is called Touchstone's defence, a series of mutually contradictory arguments in declining order of plausibility.
There are four arguments really, four of what Touchstone would have called ripostes, replies, objections. The first riposte, reply or objection, which strangely enough has not been advanced very much in this House tonight although it was very much heard from the right honourable Member for Wokingham in another place—he made it the central arm of his defence—is that what the Opposition believe in is not a minimum wage but a minimum income. By that I think he meant the combination of social benefits—family credits, housing benefits and so on—that is likely to alleviate the worst forms of wage poverty. He said that if one got right the minimum income one would not need a minimum wage. I may or may not be seeing the noble Baroness, Lady Miller, nodding, but at least that is what the right honourable Member for Wokingham said.
There are three objections to that. In the first place the previous government were, I suppose, introducing the minimum income over 17 years, but there is no sign that they had achieved the minimum income. Secondly, what they achieved were inequalities of income and pay which were the second worst in the OECD. That is what they achieved in 17 years of trying to do without a minimum wage. Seven times the number of workers were below 40 per cent. of average income than was the case in 1979. That is what the previous government achieved with their minimum income guarantee. We do not think that is the answer, because we have had a long period of experience and it has not solved the problem.
The third riposte I would give to that refutation of our position is that to create a minimum wage involves part of a general policy of dealing with poverty. This is a multi-focused approach. The minimum wage is part of a whole series of measures, some of which might in the end produce a minimum income. I refer to job creation, social benefits, housing subsidies and tax remissions. If we go on long enough, we shall do something essential, important and permanent about wage poverty. But we certainly shall not do it without the assistance of a national minimum wage.
When one makes arguments of that kind, those who want to defend their position move on to the second riposte, saying, "That's all very well and fair, but it's unobtainable and impossible because the inevitable consequences of seeking to introduce a national minimum wage are higher costs, lower sales and rising unemployment". That argument has been put forward widely in this debate tonight. As I understand it, it is what the noble Baroness, Lady Miller, said. I did not hear him, but I understand it is what the noble Lord, Lord Harris of High Cross, said. It was also what the noble Baroness, Lady Eccles, and the noble Viscount, Lord Oxfuird, said. They said that if we try to solve the problem in that way all that we shall get will be unemployment, higher costs and lower productivity.
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There are three objections to this. The first is that the evidence for it is not evidence at all, but a series of simulations. One only gets this kind of catastrophic consequence if one uses computers and puts rubbish in and then gets rubbish out. One never gets that from empirical studies in the field. One can put in anything one likes. Various figures were tossed about. I can remember the expert on this, Michael Howard of another place, when he was Secretary of State for Employment. One Thursday afternoon at Question Time he got the figure to 1·7 million jobs. It was not very clear what was the minimum wage and how much the knock-on effects would be. He satisfied himself and he got the figure up to 1·7 million lost jobs. I believe that that is the record.
The most recent—and it has been tossed about in the debate tonight—was the 1996 figure of the DTI, which the previous government used in the course of the election. If there was a minimum wage of £4·15 an hour and a 50 per cent. knock-on effect in terms of differentials, one would lose 1 million jobs. That is a case of rubbish in, rubbish out. The CBI is a little more reasonable and serious. It told the Low Pay Commission that, going up to a figure of £4·40, with a replacement ratio of about 35 per cent., there would be a loss of 250.000 jobs. That is not quite so much rubbish in, and not quite so much rubbish out. Then there are the studies of Ferney and Metcalfe. They summarised the work of the academics who had done studies of this kind. They produced figures of between 9,000 and 120.000 jobs and an average of 80,000. So one can always obtain such figures if one makes assumptions about the level of the minimum wage. They are on the high side. If assumptions are made about the extent to which differentials are replaced, which are very much on the high side—especially if you are Michael Howard—one gets death-defying, terrifying figures.
Secondly, one never gets anything like that if one looks at the actual studies of the people who have been working minimum wage systems and who have increased that minimum wage by between 10 to 20 per cent. at any particular time. They can say what that has meant for employment. In those circumstances one has a wide variety of results, all about 2 per cent. plus or minus. But one never gets anything significant when one looks at computer-type simulations rather than what one gets from what really happens. That is my second argument against the misery of hypothesis.
My third argument is that the essential part of this Government's policy in this Bill is that they propose a softly, softly, catchee monkey approach to see what happens to unemployment, costs and wages whenever they change the minimum rate. That is the only sensible way. No intelligent person knows what a particular minimum wage is going to do to a particular industry or occupation at a particular point in time. Nobody knows, but anyone who tells you that he does has been mucking about with simulations.
The only thing to do is to start in a relatively modest way by keeping the Low Pay Commission in existence, giving it adequate research. It should then say exactly what is meant in terms of productivity or increased

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efficiency or in terms of employment levels in different parts of the labour market. That is the unique thing about this Bill. It proposes to do exactly that.
So I come to the third riposte or counter-claim: that all this may be true. That has been said by quite a number of speakers on the other side of the House. Their great objection is that the way in which we propose to establish a national minimum wage is inequitable and unfair because it is simple, understandable and will have a simple rate spread across the whole of industry. Those people who do not think that we need anything like a national minimum wage say that we need something much more complicated. They cite variations by industry, by region, and by size of firm.
There are three arguments against that. First, variations in levels of pay per hour for full-time workers by industry and by region are relatively small, with the possible exception of central London. The differences are relatively insignificant. At £3·50 per hour, 14 per cent. of the full-time labour force is affected—18 per cent. of the labour force in the north of England and 10 per cent. of the labour force in London. In other words, in terms of full-time workers, the variations are relatively insignificant.
Secondly, the main cause of variations between workers—and therefore the main beneficiaries of the minimum wage—is the number of part-time workers whom a particular industry, area or firm employs. It is part-time workers who are relatively low paid, and especially part-time working women. Indeed, part-time working women will be the major beneficiaries of any decent minimum wage, wherever they live in the country. That is because, even in central London. women part-time workers are universally badly paid.
The third argument against the "complications" of our simple, across-the-board minimum wage is that it is the only way we can imagine of having an enforceable system. Those who do not like it should come forward with an alternative. If everybody knows what the minimum wage is, if it can be printed on the back of payslips, everybody will know what they are entitled to and the system will be self-enforcing. That is the point about having a single minimum wage.
Indeed, that point was appreciated by the Conservatives when they were in office. I can remember—noble Lords who were there at the time will also remember—the noble Lord, Lord Young, standing at the Dispatch Box in 1986, when the then Conservative Government introduced the Wages Bill. The noble Lord told us that what was wrong with the wages councils was that they were so complicated, with enormous schedules of rates, differentials and regional changes. The noble Lord said that he would produce a single rate for every wages council. He said that it was sensible to have a rate across the board. He was right. The trouble was that several years later, the Conservatives abolished the whole lot!
Those are the arguments against, so I come finally to what I would call "the objection disingenuous", which is the last objection when all other objections have been destroyed. Frankly, this one is a bit of a cheek. It has
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been put forward tonight by the noble Baronesses, Lady Miller and Lady Eccles, by the noble Viscount, Lord Oxfuird, and by the noble Lord, Lord Dixon-Smith, and, I am sure, by several others. They say that the Government have a sauce not to put all this in the Bill. They say, "If the Government are so certain and want a straight rate across the board, and if they do not want exceptions, why not include it all in the Bill? Why do they leave us to wait and see what they are going to do?"
There are three answers to that. First, I remind those noble Lords who were here in 1992—I think that pretty well all noble Lords who are present were, and if they were not, they were in the country and they will remember the election—of what the Conservative Government said then when the Labour Party proposed a system such as this. In 1992, God save us, we proposed a simple rate which would be read off and automatically indexed every year from the new earnings survey. It was to be based on average male manual earnings. It was to be automatic, with no investigation. It was to be put on the face of the Bill—and the Conservatives went mad. They said that we should wait and see what could be afforded and study the matter in greater detail. They asked why we wanted to put a single figure in our manifesto. Perhaps we were listening and took the point and therefore arrived at a much more sensible system.
Those who say that the rate should be identified before legislation appears are asking for a delay of two-and-a-half years. They are suggesting that the low pay commission be set up to investigate the matter, do all the work, prepare a consultation document and argue about it, and a little time after the millennium legislation can be produced. That is not a serious argument; it is a disingenuous attempt to put us off.
The final point is that, far from rushing this issue, we have waited 86 years for it. Eighty-six years have gone by since a spokesman for the Labour Party in another place moved for the first time that there be a minimum wage. It has not been rushed or pushed. It is well overdue, and the sooner we do it the better.
10.6 p.m.
Viscount Bridgeman: My Lords, the sub-plot running through this debate tonight has been the question of jobs. I hesitate to follow the noble Lord, Lord McCarthy, with his dissertation on minimum wage and minimum income. The basic reason for our objection to a minimum wage is that it does not address the real roots of poverty. Most of those who will benefit from the minimum wage are young persons and part-time, usually female, earners in two-earner households. In other words, it will leave the bulk of poverty untouched. My noble friend Lady Miller referred to the calculation made by the Department of Trade in 1996 that a minimum wage—admittedly it assumed £4·15 per hour with a 50 per cent. restoration of wage differentials—would result in the loss of one million jobs in the United Kingdom. That is a frightening figure. In the absence of any revision of that estimate we must assume that that is still the department's view.

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It is the view of this party that there should be a targeting of cash subsidies via the tax and benefit system. That would be far less damaging to the labour market than a minimum wage. It has the advantage of helping individuals to remain in work in contrast to a minimum wage which, regrettably, may result in an individual losing his job. Sadly, the longer an individual remains unemployed the more difficult it is for that person to find work.
This Bill contains contradictions. Under pressure from my colleagues in another place, the Government have conceded exemption for the Armed Forces. Other exemptions include voluntary workers and share fishermen whose income is derived solely from the profits of a catch. This makes sense. But it is indicative of the Government's piecemeal approach to the anomalies thrown up. Countless small businesses whose profits and ability to pay their workforce can vary widely from year to year will he disadvantaged by this legislation. Small pharmacists who are already under threat from the Competition Bill could go out of business or have to cut staff. The hotel and catering trade in particular view this Bill with the greatest misgivings.
It is significant that the minimum wage legislation in the United States, about which the Government make much play, specifically excludes small businesses. There are other contradictory policy statements, most obviously the welfare-to-work initiative. On the one hand, employers are offered subsidies to take on the young or long-term unemployed to reduce the cost of employment. On the other hand, an increase in employment costs resulting from the minimum wage will lead to job losses.
My noble friend Lady Miller has said that most European countries have minimum wage rates. In practically every case these are accompanied by higher unemployment. My noble friend Lord Dixon-Smith referred to the correlation between unemployment and a minimum wage. Belgium, with a minimum wage of £4·05, has an unemployment rate of 12·9 per cent., and France, with a minimum wage of £3·60, has an unemployment rate of 12·1 per cent. France is indeed an interesting case.
A recent study in the Wall Street Journal Europe in November 1997 gave a stark contrast. From 1987 the real earnings of the lowest paid 10 per cent. of the British workforce rose by 13·8 per cent. without government intervention, compared to 4 per cent. in France where the minimum wage is being raised repeatedly. My noble friend referred also to the correlation of social security payments. In a recent study it was found that the average employee in the UK receives the equivalent of £6·80 an hour compared with £6·50 in Germany, £6·30 in France, and £5·70 in Sweden, after adjustments for national differences in pricing and purchasing power. We may be the only major country without a minimum wage, but the average worker here does not do too badly.
We are committed not to oppose the principle of the Bill. So my remarks are directed in the earnest hope that the rate will be set at a realistic and not an unacceptable level.
10.11 p.m.
Lord Davies of Coity: My Lords, like others, I consider the Bill to be one of the most important that the Government, in their short period of life so far, have put before the House. Like others, I welcome it; there will be no one who welcomes it more. The Bill, and the campaign for it, have played a special and significant part in my life. I shall come to that later.
Noble Lords may recall that in the economic debate on 3rd December last year I referred to Wilberforce and Shaftesbury—two great parliamentarians who campaigned for legislation to abolish slavery and child labour respectively. I did that to demonstrate clearly that when they were campaigning for those two worthy causes they were confronted by economic argument—much of the economic argument that we have heard this evening—whereas those of us who, by our support for a national wage, are trying to help the most vulnerable, the most exploited and the most deprived, meet economic arguments relating to bankruptcies, lost jobs and other areas of difficulty.
I concluded my speech in December of last year with the words:
"I may again feel obliged to remind the House of the things that I have said today".
I shall do that, but to this extent only:
"Earlier this year, in Scotland alone, it was assessed that £265 million per year is paid from the state to top up low pay. In the north west, where I now come from, 30 per cent. of the working population earn less than £4 an hour. Advertisements in Jobcentres cite a banner maker at £2·36 an hour, which is £92 a week; a care assistant at £2·80 per hour for working a night shift; a hairdresser is cited at £1·31 per hour, which is £55 a week. An employee in a travel agent is quoted at £60 for a 39 hour week. I could go on with further examples".—[Official Report, 3/12/97; col. 1386.]
The country cannot go on subsidising bad employers with welfare payments. We cannot go on allowing people to languish in the poverty trap between low wages and benefits, our people to have no training, no skills, no hope of jobs, or, indeed, even better jobs. That is a recipe for spiralling down further into the pit where we compete with the world's worst and not the best.
I wish to give two quotations. The first is:
"Low pay is a cruel injustice which should not be tolerated in a society like ours and yet we all know of employment exploited women having to fight through equal opportunity courts to achieve what is their right … We all know that the vast majority of low paid workers, mostly women employed in shops, in hospitals, in canteens, in hotels and many other areas of industry, make a contribution to the way of life of this nation no less equal than other workers and yet they are still low paid. These workers have been traditionally low paid. They have been historically disadvantaged, but despite our awareness of this injustice the situation grows worse, not better … the low paid are the ones who also suffer most from the attack made upon the social wage. Again, it is the low paid who are caught in the cruel poverty trap when State provision is applied as a subsidy to bad employers. If low paid workers tolerate low pay, they qualify for a subsidy which raises them marginally to a different level of low pay. On the other hand, if they accept a modest increase in wages, their entitlement to the taxpayers' subsidy is threatened. This is the classic low paid workers 'Catch-22'. Low paid workers do not want dignity and self-respect destroying handouts, they want decent wages.
"Low paid workers also suffer from not being able to borrow in the same way as better paid workers can. If you are well paid, credit worthy, you have established security, you can get the most economical and beneficial credit facilities, but if you are low paid

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and, doubtless, have little or no security, you have to resort to the most expensive and sometimes illegal and extortionate loan provisions. That completes the vicious circle of pressure on low paid trying to survive on poverty wages. There is no doubt that the urgency of our issue places a duty, a responsibility and a commitment on all of us to demand the introduction of a statutory minimum wage … Why? Because nothing short of a statutory minimum wage will solve the problem of low pay … Low pay represents an exploitation we can no longer tolerate. It saps hope and confidence. It destroys dignity and self respect. It cruelly deepens poverty and deprivation".
The second quotation is as follows:
"Low pay is no accident in this country. The injustice of low pay exists because we have not done enough about it … The low paid are workers in shops, in hotels, in laundries, in hospitals, in garment factories. They are workers in sweat shop industries in which unscrupulous employers operate. The majority are women workers, young workers, home workers, workers from ethnic minorities and part time workers. They are now a third of the nation's work force. They are the workers for whom … some legal protection has been provided for nearly 80 years. They are the workers for whom Wage Councils were established … Let us not forget why Wages Councils came into being. It was in 1909 that they were introduced, not by a Socialist, not by a trade unionist, but by a Liberal minister named Winston Churchill and he said that unless there were legal wage regulations good employers would he undercut by bad employers and bad employers would be undercut by even worse employers … Low pay is now so widespread that we need drastic action. We cannot tinker with the problem. Only by the introduction of a statutory minimum wage can we hope to remove the suffering, the hardship, the inequality and the injustice that low pay creates".
I draw those two references to the attention of the House for particular reasons. Your Lordships may say that much of what those extracts contain has been heard from the Minister on the Front Bench this evening. Your Lordships may have thought they were from Hansard when the Bill was going through the other place recently. They were neither. The first was from the speech I made to the British Trades Union Congress in 1986 when I seconded a composite motion on the introduction of a national minimum wage. For the first time in nearly 120 years the TUC Congress determined that year that we should have a national minimum wage campaign.
The second extract was from my speech to the Labour Party conference, also in 1986, when the Labour Party formally, for the first time in 80 years, determined that it would be campaigning for a national minimum wage. That was all very important to me. It was the year in which my trade union, USDAW, threw its weight behind a national minimum wage campaign. Twelve years later, it now looks as though it will reach the statute book.
Another big plus for my union in 1986 was the fact that we were one of the groups campaigning against the Sunday trading legislation. It was the first time that the Conservative government had been defeated since they came to power in 1979. In that year also I became general secretary of my trade union.
I do not wish to exaggerate the significance of my union's contribution to this campaign. But it can take some credit in being one of the prime movers. I have been somewhat disappointed to hear once again today the old arguments—sometimes described as the old bogeys—in opposition to this very worthy piece of
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legislation, namely, bankruptcies, lost jobs and high prices. Those are the essential areas of opposition to what is proposed.
As regards bankruptcies, let us bear in mind that the vast majority of employers have nothing to fear from a national minimum wage. But if there are some who are fearful because they survive by paying low wages or because their employees are receiving state benefits, paid by the taxpayer, because they are not receiving sufficient from their employment to survive, we must ask whether those employers deserve to be operating in those circumstances. Indeed, the question can go further. How long can they survive if that is what they are doing? But I do not believe that that is what is happening. In many circumstances, companies are maximising their profits as a result of paying low wages and ensuring that their employees receive state subsidies to compensate for those low wages.
I turn now to lost jobs. Nobody knows whether or not jobs will be lost. But it will not depend on the introduction of a national minimum wage. It will depend upon the level of that national minimum wage. Both the low pay commission and the Labour Government know precisely that difficulty. This Government are campaigning for and have policies in relation to full employment. They will not introduce a national minimum wage which will cost jobs.
Next, I deal with the issue of prices. In the early 1980s, I negotiated with hotel employers through the wages councils. I can remember arguing for a weekly rate of wage for hotel staff which was less than what many hotels in London were charging their guests for one night's accommodation and very often, not even providing breakfast. That was the disparity between prices paid by guests and wages paid to the employees. But in that regard we must recognise that if prices are being kept down because workers are subsidising those prices by low wages, that cannot be right and should be stopped in any event.
There are three areas in the Bill that I should like to address and to which I should like to draw the attention of the Minister, the Government and the low pay commission. The first is the question of the level of the national minimum wage; the second is the question of the wages and benefits syndrome or access, which is sometimes described as the "Catch 22"; and, finally, the 26 year-old threshold. I understand that we do not want a level for the national minimum wage that will be an attack on jobs. However, I recognise that we should have a national minimum wage that will be an attack on poverty and wages. I trust that the low pay commission and my noble friend the Minister will take those factors into account and address them as they should be addressed.
As regards the question of the national minimum wage and benefits access, perhaps I should explain that that arises where people have such low wages that they are entitled to benefit. However, when the minimum wage comes in, everyone on low wages should benefit. I trust, therefore, that the benefits system will be adjusted so that workers on low pay, who receive an increase by way of the national minimum wage, will not

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lose their benefit thus rendering them worse off as a result of the introduction of the national minimum wage. With regard to the 26 year-old threshold, this is obviously a changed qualification. If that qualification is to apply—which, to some extent, is contrary to the age at which the adult rate is normally applied—I trust that a full explanation will be given and that it will be a justified introduction.
10.26 p.m.
Lord Monkswell: My Lords, I thank my noble friend the Minister for introducing this debate in a most extensive and adequate manner. In my contribution tonight, I will touch upon history, economics, enforcement and the international situation. As several previous speakers have mentioned points that I wished to make, I hope that I shall he able to keep my remarks reasonably brief.
I believe that my noble friend Lord Davies pointed out to the House that it was only in 1986 that the labour and trade union movement actually adopted a policy for a national minimum wage. One might ask why they did so. We need to explain that they did so as a result of Conservative policies—indeed, because of the way that Conservative policies had affected the labour market in the United Kingdom.
Other speakers have mentioned the fact that we have had wage legislation since 1909, originally with the wages boards and then later with the wages councils. One of the factors that we should recognise is that, after the war, we had full employment for 30 years. Therefore, if a worker was in a badly paid job, he had the ability to walk away from it and get another one. Of course, some workers were not necessarily in that position, but most of them were. So the idea that they could, by their own efforts, get out of badly paid jobs was there simply because of the very fact of full employment. Indeed, the wages councils operated as a safety net for particular categories of employment.
We can see that, since 1979, we have had virtually permanent mass unemployment with levels of at least one million—sometimes two million or three million—above those recorded even for the late 1970s. That had a significant effect on the ability of low paid workers to improve their pay. The abolition of the wages councils effectively created an impossible situation to which the Labour and trade union movement responded by adopting their policy for a national minimum wage. I am glad to see that is now coming to fruition.
One of the aspects of this debate has concerned me. However, one should bear in mind that just under half the speakers in it sit on the Conservative Benches. Therefore, one can understand that one of the threads running through the debate has been the risk of increasing unemployment if the national minimum wage is set too high. I wish to offer a contrary argument to that supposition. I refer to an academic study that was carried out in a number of states in the United States eastern seaboard, all of which had a state minimum wage. One of them decided to increase its minimum wage above that of its neighbours. Extensive academic research was carried out to determine the effect of that
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on the economy. The study revealed that the state which increased its minimum wage above that of its neighbours had an increase in employment.
If one pays poor people at the bottom end of the labour market more money, they do not buy a big foreign car, or go on foreign holidays two or three times a year, or buy a second house. They purchase local goods and services with the extra money that they have in their pockets. That stimulates economic demand which generates more employment and that creates a virtuous circle. We need to understand and recognise that factor when we discuss the level of the minimum wage. I argue that it should be set as high as possible.
The figures that the noble Baroness, Lady Miller of Hendon, gave at the beginning of the debate help my case. She pointed out that in the 1950s and the 1960s the minimum wage across the United States was set at half average earnings. That was probably the period of the highest levels of employment and the most beneficial levels of industrial activity that the United States has ever experienced. I am glad that the figures of the noble Baroness help my case.
I quite understand that my noble friend who is to reply to the debate may not be able to answer my question off-the-cuff. His response may be more suitable for a Written Answer. As other noble Lords have mentioned, the other factor is that the Government subsidise had employers who pay low wages. At what level would the minimum wage have to be set to eradicate government subsidy for employers who pay low wages?
I was interested to hear the remarks of the noble Lord—he is not a noble Lord, not yet anyway—John Edmonds, the general-secretary of the general, municipal, boilermakers union, when he said last year that one of the difficulties with minimum wages is that in a situation of mass unemployment unscrupulous employers will inevitably prey on desperate people and arrange matters so that poor employees are paid less than the minimum wage on the basis that no one tells anyone what is going on but at least they have a job. I hope that this legislation, along with the Government's commitment to full employment, will be effective in the medium to longer term.
On enforcement, my noble friend Lord Clinton-Davis pointed out that employers could be taken to court to enforce payment of the minimum wage; and that they could be subjected to criminal proceedings with a fine of, I think, up to £5,000. The problem with that is as regards the really bad, unscrupulous employers. The idea that they might suffer a financial penalty at that level will not be a great deterrent. Will the Government consider amending the Bill so that the worst employers would face a term of imprisonment? One argument is that if a bad employer pays less than the minimum wage, he is in effect stealing money due to his employee. If the situation were reversed, and an employee stole money from an employer, I think that most employers would argue that their dishonest employee should face the penalty of gaol. What is sauce for the goose should be sauce for the gander.

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Perhaps I may turn to the international situation. A number of noble Lords have touched on the concept of regional variations of the minimum wage across the United Kingdom—a concept comprehensively demolished by my noble friend Lord McCarthy. But as a party which is internationalist, and a Government with an ethical foreign policy, surely we should argue that what is good for us—a minimum wage set at a decent level—should also apply to our partners on the international scene. We have heard that most continental countries have minimum wages set in their own circumstances. Surely we should put the concept of a European minimum wage on the agenda of the European Union. Bearing in mind the references by my noble friend Lord Wedderburn of Charlton to the effect of transnationals, we should also think in terms of a world-wide minimum wage to ensure that transnational corporations do not exploit one group of workers against another, pitting each against the other by threatening to take their jobs away from them because the companies can obtain cheaper labour elsewhere.
I have posed a couple of questions to my noble friend on the Front Bench. I am sure he will not be able to respond precipitately today since I am tail-end Charlie, and I did not have the chance to give him notice of them. I shall welcome a note in response to my questions. I welcome the Bill and hope that we can dispatch it fairly quickly through your Lordships' House.
10.37 p.m.
Lord Newby: My Lord, as my noble friend Lord Razzall said, we support the Bill in principle. In deciding on our line, we have asked ourselves these questions. Should we be prepared as a society to see people continue to be paid derisory and demeaning wages? Should we be prepared to see gross exploitation, in particular of women and members of the ethnic society?
Earlier in the debate, the noble Lord, Lord Harris of High Cross, described this Bill as a flower arrangement to appease old Labour. The noble Viscount, Lord Oxfuird, described it as a triumph of popular opinion over public interest. We fundamentally disagree with both sentiments. The Bill deals with the question of decency. As the noble Lord, Lord McCarthy, said, it will form part of a strategy to tackle poverty, which is surely a noble cause, and not an issue on which to make party political jibes.
The key argument of those who oppose the Bill, and indeed the only substantial argument which can be urged against it, is that low pay equals no pay, and that the minimum wage will put out of work many existing low paid workers. The argument that regulating the terms and conditions of employment should be opposed because it will lead to job losses is as old as the hills. As the noble Lords, Lord Thomas and Lord Davies, mentioned earlier, it was used in the previous century in opposition to the Factory Acts. It was used against proposals to keep women and children from going down the mines. It was used against the ending of the
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employment of children as chimney sweeps. In all those cases, in the short term legislation undoubtedly led to job losses. But it could be justified on decency and fairness grounds—and it did not lead to a permanent higher level of unemployment.
Will the minimum wage now under discussion lead to significant job losses? That obviously depends on the rate, and on the exemptions. But at the levels that have been discussed, I suspect that the net effect will be relatively small. I certainly share the view of the noble Lord, Lord McCarthy, against adopting the misery hypothesis—although, given that the noble Lord was my tutor in industrial relations and employment policy some 25 years ago, I could hardly do otherwise.
I cannot agree with the noble Lords, Lord Bridgeman and Lord Dixon-Smith, who argued that there was some kind of mechanistic correlation between unemployment and a minimum wage. If that were the case, how can they explain the fact that, during the period their party was in office, the rate of unemployment in this country fluctuated like a yo-yo, with no minimum wage at the beginning, no minimum wage in the middle, and no minimum wage at the end. As an argument, it simply does not stand up.
We have heard a number of arguments and discussions as to whether there should be a single minimum wage for everybody, or whether there should be variations. In a number of respects we strongly disagree with the concept of variation. There has been some discussion about whether small businesses should in their early stages be able to pay below the minimum wage. When I and a colleague set up a small business about six years ago, we accepted that, as we were taking a risk in setting up the business, the matter of what wage we might get in the short term was extremely questionable. We accepted that if the business did not prosper in its early months we might not take a wage at all. But the argument that, when employing secretaries or other employees, we should say to them, "We are terribly sorry, but we don't want to pay you a decent wage until we've proved that our risk has adequately paid off', frankly, does not stand up to scrutiny.
Secondly, we do not accept the argument that the minimum wage should vary between sectors. In our view, the key test relates to the extent to which those in receipt of the minimum are in receipt of a wage that enables them to live at a decent level. Whichever place people live in, that does not vary between sectors.
There has been much discussion about the position of the under-26s, and whether they should be exempt and to what extent. Not straying very far from this building, if a minimum wage were presently to be introduced at the same level for those aged under 26 as for those aged over 26, there would be a significant number of researchers in another place who would need to look for another job. That demonstrates that there needs to be a certain degree of special treatment, particularly for those who have just left university and who might be spending a small amount of time, not formally as a student, but as an intern. However, we do not accept the argument that there should be no minimum wage at all for those up to the mature age of 26. Indeed, the evidence from

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the National Association of Citizens Advice Bureaux gives a string of examples of people aged under 26 who were earning unacceptably low wages. A young woman working as a receptionist for a Devon solicitor was earning £50 for a 34-hour week. A young man working for a local radio station in Lancashire was earning £60 for a 45-hour week. Those levels of wages are just as unacceptable as they would be for someone aged 36 or 46 doing an equivalent job. When the low pay commission reports, we look forward to seeing that there will be a combination of a limited exemption for those at the bottom end of the post-teenage group and protection for those at the top end and the older groups.
Finallly, in terms of variation, we come to the issue on which these Benches differ from the Government, namely regional variations. The argument, stated simply, is that if the cost of living varies between regions there is a strong prima facie case for having a different minimum wage in those regions. The cost of living differs. We have heard about London weighting and know that housing costs vary considerably between the regions. Here I may disagree with the noble Lord, Lord McCarthy, although in London the number of people who will be affected is 10 per cent. and it would only be 18 per cent. in the north-west, that is nearly double, a big difference. This is an area that needs careful scrutiny by the low pay commission. It may be, as the noble Baroness, Lady Turner, said, that when that has been undertaken the degree of regional variation may not be very great. But it seems to us that, first, it should be considered seriously. Secondly, even though it may not be a great variation, a small variation could be quite significant. Therefore, it merits careful thought. We shall return to that in Committee.
That brings me to the role of the low pay commission. As a number of noble Lords said, the simplicity of the Bill is a great strength. But it has been clear from the debates so far in another place that a whole range of issues is likely to arise relating to the interpretation of the Bill when it becomes an Act which the low pay commission will need to examine. For example, we may need further exemptions, and a number have emerged during the passage of the Bill to date. We may need further clarification on existing exemptions, and, for example, the position of voluntary workers was developed during the Committee stage and later stages in the other place. It may need developing further.
The question of young people needs to be looked at as well as benefits in kind. The whole issue of monitoring, coupled with research and implementation of the Bill, needs to be examined. Therefore, we believe strongly that the low pay commission should be placed on a permanent and statutory basis; it should have powers to take initiatives and not be beholden to the Secretary of State for requests for specific pieces of work to be done. We shall return to that at a later stage.
Finally, on enforcement, as the noble Lord, Lord Wedderburn said, no rights are stronger than their sanction. We have a certain amount of concern about the extent to which it would be possible effectively to enforce the measures in the Bill. We have heard and know that a large proportion of employers who will be caught by the legislation are small employers. We also
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know that despite the protection in the Bill for workers who assert their rights, many workers are likely to be deterred from complaining either through fear of the consequences or through finding the thought of going to an employment tribunal too daunting. I hope therefore that the enforcement of the Bill will be possible or will not be reduced by there being a shortage of resources. One cheap suggestion in terms of how enforcement of the Bill might be made effective is that the Government are looking at the concept of naming and shaming in another context. It occurs to me that perhaps they should think of naming and shaming poor payers. It might work wonders.
The National Minimum Wage Bill is about fairness and social justice. We have some differences with the Government on specific aspects of the Bill, as I have made clear. But we do not disagree with its principle. We look forward to the debates in Committee and to the later stages as well as to the eventual passage of an improved National Minimum Wage Bill.
10.50 p.m.
Baroness Seccombe: My Lords, I add my thanks to the noble Lord, Lord Clinton-Davis, for his generous remarks. I wish I could be as generous about his contribution, but I am sure he knows that we will agree to differ.
We on this side accept that this misguided measure is part of the Government's programme. We tried to dissuade them from it; economists tried to educate them against it; business tried to influence them against it; above all, small and medium-sized businesses begged them not to go ahead with it. But all to no avail. Labour were determined to go ahead with it. Why? Not because this measure will create a single job; it will destroy them. Not because it will make life easier for business; it will bind them even tighter in a noose of bureaucracy and regulation. Not because it will make people wealthier; it will make many people poorer by depriving them of work. Why then?
Because of old Labour dogma. This Bill is part and parcel of the deal that still binds the Labour Party to a few powerful unions. Those unions made the minimum wage part of their political mantra. It was first sung in the old socialist anti-enterprise age of Michael Foot and Jack Jones. It is still being sung today in a world that has completely and utterly changed. What a pity that a government, so intent on modernising everything that does not need to be modernised, did not act to modernise this absurd piece of old Labour dogma.
That said, of course we accept that the Government must have this Bill. But we intend to subject it to close and detailed scrutiny in the hope that we may persuade the Government to reduce its impact on business and the low paid, who will be the biggest sufferers. We have heard, in this excellent debate today, many good reasons for altering and reconsidering parts of the Bill. I hope that we shall have a chance to pursue some of those in Committee. But how much we would be helped in this place if we were given some clear indication of what the minimum wage will actually be before Parliament is invited to pass the Bill. This is a bad procedure, as my

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noble friend Lady Miller of Hendon said. I understand that the Low Pay Commission will report in May. Will the Minister therefore give an undertaking to this House in his wind-up that he will report to us on the findings of the Commission and the Government's reaction to it before inviting a Third Reading for the measure before us today?
A minimum wage is not a good way to help the poor. Many low-income earners tend to be on their way to higher paid employment anyway; many others are working part-time for low wages out of choice; they are not the main income earners in a household. As the noble Lord, Lord Harris of High Cross, said, this Bill may deprive earners of getting on the ladder in the first place, and deprive some part-timers of the chance to find any work.
The chairman of the Low Pay Commission admitted, as famously once did the Deputy Prime Minister, that he would be surprised if there were not some job losses. He implied that those jobs might be better lost anyway. Jobs better lost? Someone who has the commitment to take a job must be truly disheartened by such a view coming from someone whose earnings were reported to have been over £200,000 a year. I believe that the way to raise wages is to enhance the success and the profits of employers. That will not be done by adding to burdens on employers and increasing the complexity of taking on new staff.
Look at what happened in France, as my noble friend Lord Bridgeman said. When the noble Lord, Lord McCarthy, mentioned other countries, I noticed that he did not include France in his list of countries which have a minimum wage. There they have a minimum wage of £3·60 per hour, and they have raised the threshold of the wage. But in France the Wall Street Journal reported that real earnings of the lowest-paid 10 per cent. of the workforce rose by only 4 per cent. in the 10 years to 1997, compared with a 13·8 per cent. rise in the same period in unregulated Great Britain. Yet for such little relative gain, the rise in unemployment among the young in France has been truly terrifying. I shudder to think that we should go down that road.
What will be the impact of this measure on public services? Will the Minister undertake to write to me on this before we come to Committee stage? Will he specifically set out how many employees of the health service would be affected by a minimum wage set at £3·70 an hour or £4 an hour? What would be the costs of implementing the minimum wage in the NHS at those levels? Are any sums allowed for a minimum wage in the expenditure plans for the NHS, and, specifically, in the extra money announced by the Chancellor in the Budget last Tuesday? If so, on what level of wage are the Government's plans predicated?
We welcome that the Armed Forces are now exempted from the Bill. That was the result of much pressure, not least from some on these Benches. We understand the exemption also for share fishermen. But, in the light of the fact that the Government have abandoned their commitment to a uniform national wage, will the Minister now consider specific exemptions for small and medium-sized businesses in those sectors of industry most open to shifts in cash flow or to the sudden impact
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of a minimum wage? Will he also undertake to review the draconian enforcement powers and fines proposed for small companies in technical breach of the requirements of this legislation?
Industry as a whole and the millions of businesses that make it up are inherently different. It must be nonsense, I believe, to seek to impose a single minimum wage across all industry in every area. I do feel that I, as a rural village resident, must refer to one matter which does concern me greatly. Perhaps I may give an example of a small delicatessen in a village—very different from a large employer like Tesco. The owner works hard but needs additional help. She consequently employs three people part-time. This is the type of work and the hours that suit them. One is able to walk to work, the second cycles and the third sometimes cycles and sometimes arrives by car. This is their choice. Obviously travel to work for them is inexpensive as none of them has to travel more than one mile, which is very different from those who commute to London. They know that the owner makes just enough profit to keep the business afloat and that any extra financial pressure will in all probability result in the closure of the shop. I know I do not have to remind your Lordships of the dramatic decline in the number of village shops in rural areas and I am desperately alarmed that the implementation of this legislation would result in the demise of thousands of village shops country-wide.
The three employees I have referred to know only too well that the only alternative employment available would involve them in travel of at least 10 miles or so, which means extra expense and extra time away from home. This type of employment is often combined with family responsibility, when time is of the essence. I cannot for the life of me see why employer and employee in these circumstances should not make their own arrangements.
If the Government go ahead with this legislation they will have to accept that business closures will lead to extensive unemployment in country areas. It seems to me, therefore, that, as I have said before, in this Bill we can see that Old Labour is alive and well and that government action will result in elderly people in villages who do not own cars suffering as their local shops disappear in addition to the rise in rural unemployment.
But if the Government are as determined as they seem to be to press ahead with this damaging measure, I beg them to consider carefully and constructively some of the many pleas for moderation and exemptions from this measure that we have heard today and which we on this side will want to explore further as the Bill makes its way through the House. Tonight's debate has highlighted the many issues of concern and set alarm bells ringing. We look forward to scrutinising those issues at the next stage of the Bill.
10.59 p.m.
The Solicitor-General (Lord Falconer of Thoroton): My Lords, I believe that the expectations of my noble friend Lord Clinton-Davis have been fully realised. This debate has been an interesting one and of the highest possible quality. Perhaps I may pay a particular tribute to the noble Baroness, Lady Seccombe. I understand that

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this is the first time that she has wound up such a debate. Perhaps I may say, without any degree of patronisation, what an excellent speech it was.
A number of points have been made in the debate; but I first of all draw attention to the depth and quality of the speeches made in support of the Bill. I refer first to the speech of the noble Baroness, Lady Turner of Camden, who was assistant general-secretary of a union. She brought before the House specific examples of the effect of low, exploitative pay. I refer to the speech of the noble Lord, Lord Wedderburn, who is one of the most distinguished labour lawyers in this country. He went into detail about how people are exploited by way of low wages. He gave chapter and verse of the way they are exploited by low wages brought on them by people in a position to abuse them. I draw attention to the speech of my noble friend Lord Evans of Parkside who gave detailed and personal examples of his impressive history in a shipyard and the consequences of low and exploitative wages there. I draw attention to the speech of my noble friend Lord Thomas of Macclesfield who was the head of a business which employed a large number of people. He made the point with force and authority that employing people and paying them a decent wage means that the employer invests more in the employee and makes him or her more worth training and fitted for the economic society in which we live.
I refer to the speech of my noble friend Lord McCarthy who completely demolished the arguments advanced about job losses. So far as I am concerned, he made my reply almost redundant. The noble Lord is one of the most distinguished industrial economists in the country. I draw attention to the speech of the noble Lord, Lord Davies, who described the struggles that had been made on behalf of the unions to obtain a minimum wage over a long period of time. I draw attention to the speech of the noble Lord, Lord Monkswell, who effectively demolished the arguments advanced about the USA by the noble Baroness, Lady Miller of Hendon.
The speeches drew attention to two particular things. They drew attention to the extent to which people are exploited by the use of low wages. Did anyone on the other side of the House refer to that in their speeches? Not one of them did. The speeches made the second point that if one pays people decent wages, one gets more out of them and the company improves. Did any noble Lord who spoke against the Bill or its detail refer to that point? Not one of them did.
The case for a minimum wage is a case for decency and fairness; but it is also a case for improving employment practices and the quality of the work that is done. That case requires to be met, but it was not addressed for one moment by those who oppose the Bill.
What were the arguments advanced against the minimum wage? The noble Baroness, Lady Miller of Hendon, made very tired arguments sound fresh and exciting. She began with something she described as "the myth of the mandate". She sneered at the Labour Party for doing that which it promised to do in its manifesto. She said that what we had to do in the manifesto was a myth. She told us that she had been
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training canvassers for the past 25 years for the Conservative Party. I dread to think what she told them to say on the doorstep if that is the view she took in relation to the myth of the mandate.
She then referred to the myth of the USA. She simply selected one part of the material relating to the question of whether the minimum wage causes job losses. She said that one can draw no conclusions from the USA. She, like many other speakers, then addressed the issue of job losses. She said that it was plain that if a minimum wage were introduced, there would be job losses. My noble friend Lord McCarthy completely demolished those arguments.
Perhaps I may repeat the highlights in relation to it. In considering whether job losses will be caused, one has to have regard to the rate at which the minimum wage will be set. If it is set at a sensible level, the broad opinion of academics and those who have done research is that it will not cause job losses.
What is the material on which the Conservatives rely to suggest that it will cause job losses? It depends on the day of the week and the particular Conservative to whom one is listening. As my noble friend Lord McCarthy said, sometimes the figure is 975,000; sometimes it is 60,000; sometimes it is 1·6 million, and I have even heard it said that 2 million jobs will be lost. What is the material on which they are relying? They ignore the studies about the effect of the wages councils which showed that they did not have a negative effect on jobs. They ignore the studies of the USA and other countries with minimum wages which show that there are no negative effects on jobs.
The Conservatives rely on figures based on assumptions that they themselves create. The particular favourite at the moment is the 1996 DTI figure which was based on a minimum wage of £4·15 and an assumption that differentials would rise by 50 per cent. right up the hierarchy. As I understand the position of the Conservatives, if there was such a minimum wage, the earnings of the chairman of National Westminster Bank would rise by an appropriate percentage to preserve the differential. With respect to the Conservatives, that is completely bogus. I would respectfully suggest in relation to the issue of job losses that, instead of simply selecting figures that suit a particular prejudice, all the evidence is considered in the round.
The next argument advanced by those opposed to the minimum wage was the question of differentials. They have said that the inevitable effect of introducing a minimum wage is that earnings will increase for all above the lowest paid and right up the scale. They say that that is what the unions would inevitably seek. My noble friend Lord Clinton-Davis, drawing on evidence from a recent report by Income Data Services, effectively demolished the argument that differential rises would occur—no noble Lord has referred to the study of Income Data Services. That argument was simply advanced as a matter of assertion with no evidence whatsoever to support it. There almost certainly will be instances where the pay of a particular group of workers and of their supervisors will both be

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below whatever level is set for the minimum wage. Clearly, in those circumstances the arrival of the minimum wage will entirely wipe out the existing pay differential and will need to be addressed. That can be done only by the employer and workers concerned. However, we do not accept the notion that higher paid workers will queue up for consequential adjustments to their own pay rates. There is no such evidence. People are more concerned with their own pay—
Lord Burnham: My Lords, I thank the noble and learned Lord for giving way. If he thinks that there is no such evidence that there will be a demand to maintain differentials, he should talk to his noble friend Lady Dean of Thornton-le-Fylde with regard to the printing unions in her time as general-secretary of SOGAT.
Lord Falconer of Thoroton: My Lords, I can tell the noble Lord one thing: the printing unions were not having their wages raised by any effect of the minimum wage. The question we are addressing here is what effect the minimum wage will have on differentials. Not one jot of evidence has been produced to suggest that it would have the sort of significant effect that noble Lords are suggesting. People are more concerned with their own pay and with the pay of those with whom they are accustomed to compare themselves than they are with what people elsewhere in the pay range may or may not be getting.
The next basis of attack on our proposals relates to the level at which the minimum wage will be set and to the question, "Why does the Bill not state what the level of the minimum wage will be?" Again, I submit that my noble friend Lord McCarthy dealt with that extremely effectively. We are putting in place a mechanism for the fixing of a minimum wage. That minimum wage will not last for ever. A time will come when it will have to be changed. If one followed the proposals made by noble Lords opposite one would have a huge amount of consultation. One would then decide on the minimum wage and introduce primary legislation. By the time that had reached the statute book the minimum wage decided upon would probably be out of date. Surely, the most sensible way to deal with it is to establish a mechanism for a minimum wage to be fixed after proper consultation.
Next, noble Lords ask why we do not know what the low pay commission has said about the issue. The reason is that that body is considering the matter at the moment. We believe that the two-track approach we have adopted—establishment of the mechanism by which the minimum wage can be fixed and, at the same time, consultation with the low pay commission—means that the matter can be dealt with as expeditiously as possible. But that occurs only after consideration has been given to all the issues by an independent body such as the low pay commission made up of representatives of the employers' side, the employees' side and small businesses.
It was also said that, surely, there should be an exemption for small firms. We appear to have given the impression that low pay is endemic in the small business
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community. It is not. Not all small firms by any means are low payers. Who, then, would benefit from a small firms exemption? The answer is that the beneficiaries in the main would be the more disreputable employers—those who competed solely on poverty pay rather than quality and service and those who forced reputable businesses to pay low wages so that they could continue to compete. In popular terminology, they are the cowboys.
Many small firms are on their way to becoming big firms while others, quite rightly, are content to remain modest in size. The Government recognise that small and growing firms are the bedrock of a successful enterprise economy. We appreciate that to run a small firm takes dedication, hard work, drive and imagination. We are taking steps to nurture this area of the economy with a number of policies that are particularly helpful to this sector. In his Budget speech last week the Chancellor announced a wide range of measures to help small firms. However, we shall not exempt small firms from paying the minimum wage. As my noble friend said earlier, employees of small firms are as entitled to receive protection from low pay as those who work for larger companies. This has been increasingly recognised by small firms themselves. I believe that the majority of them would be affronted if they were left out of the minimum wage legislation to form some kind of low-paying ghetto where morale and esteem would be as low as the pay rates.
Nevertheless, recognising as we do the importance of small firms to the economy and the special circumstances within which they operate, we have asked the low pay commission to take full account of the impact of the national minimum wage on small firms when formulating its recommendations. We do not believe that administrative and enforcement arrangements arising out of the legislation should be unduly burdensome for smaller businesses.
The noble Baroness, Lady Seccombe, gave the example of the small country shop. She did not tell us the rates of pay. The effect on the small country shop in relation to the minimum wage will depend on the level at which it is set but, as I have made clear, the low pay commission is to consider the effect on small businesses along with all other businesses when fixing the advice it gives on the level of the minimum wage.
The noble Viscount, Lord Oxfuird, asked about competitiveness. Perhaps I misquote him. I believe he said that the only person who mattered was the customer. That is not the view of noble Lords on this side of the House. We believe that the customer is not the only person who matters. There is an obligation to treat employees with fairness and decency. We also believe that if they are so treated it is likely that the business will be run better and that the customer will thereby benefit. Just to take the narrow view that everything must be sacrificed to the customer is short-term and unfair.
The Viscount of Oxfuird: My Lords, I thank the noble and learned Lord for giving way. He may be aware of total quality management and the programme under ISO 9000 which places the customer first, and

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obviously also accommodates the argument that he put forward. They can live together, but it is the customer first.
Lord Falconer of Thoroton: My Lords, I was just responding to the noble Viscount's remarks to the effect that it was only the customer who mattered. That is not the view that we take. What the noble Viscount just said amends and dilutes what he said earlier. We do not believe that so far as concerns competitiveness it is a legitimate argument against the minimum wage Bill. On competition with third world economies, most people who are being paid below minimum levels at the moment are not in businesses that are competing, as my noble friend Lord Clinton-Davis said, with manufacturing industries in Bangladesh or such places; they are businesses employing cleaners at Manchester airport at £1·30 an hour. They are not competing with any third world economy paying low rates.
In any event we believe that the way companies should compete is not on the basis of poverty pay; it is on the basis of quality of service or the quality of goods they produce. We further believe that it is beneficial to the economy as a whole that companies should be prevented from competing on such an unfair basis.
Those were the main arguments advanced against the principle of the minimum wage as a whole. As a matter of decency and fairness and as a matter of logic those arguments do not hold water. It is not without significance that the arguments in favour of the minimum wage were never addressed by those on the other side of the House.
I shall refer now to the speeches made on behalf of the Liberal Democrats by the noble Lords, Lord Razzall and Lord Newby. We are grateful for the support that they have given in principle to the Bill. We believe that they are right to give it their support. We may differ on a number of details, but we do differ on one major issue; namely, regional variation in relation to the minimum wage. They favour a regional variation in relation to a minimum wage. We do not.
Lord Razzall: My Lords, the noble and learned Lord attributes to us a view that we do not have. We favour the low pay commission being given the power to examine whether there should be regional variations. We would not be so presumptive as to say that we have decided that there should be regional variations but that the low pay commission should be given that power.
Lord Falconer of Thoroton: My Lords, fair enough. The Government believe that there should not be regional variations. The arguments against regional variations are strong. We said in our manifesto—we believe it right, not just because we said it in our manifesto, but as a matter of principle—that there should be a simple, easily understood minimum wage.
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If there is one minimum wage for the whole country, save for the possibility of those who are 26 or under, that would lead to a much easier, unbureaucratic and well-understood system of minimum wage. If one has regional variations one has the problem of identifying what are the regions; what happens if one works in two places; what happens if one lives in one place and works in another. Low pay is low pay wherever one lives. The purpose of the Bill is to eliminate it.
Moreover, to adopt a regional basis is not to deal with the problem that in many regions there are pockets of low pay and pockets of high pay. What happens if we have lots and lots of regional variations? Do we have six regions, 10 regions or 20 regions? Will they be uprated altogether or separately?
How will you deal with that position? We do not want to create low pay ghettos. Low rates of pay in some areas would act contrary to the Government's aim, which is to encourage firms to compete in terms of the quality of the goods and services they provide and not to focus on low prices based on rock bottom rates of pay. We believe that if you have a regional system of variation you will eventually "ghettoise" and institutionalise low pay in certain regions of the country. We therefore believe that a regional variation scheme will not achieve the overall goals of the Bill, and we reject it.
A number of your Lordships asked why we had adopted 26 as the possible exemption age for young people. The low pay commission is considering whether there should be exemptions or lower rates for people under 26 and we do not know what advice it will give. We took that figure because people under the age of 26 are defined as young people for the purposes of student support, social security payments such as income related benefits and the jobseeker's allowance and the new deal. In practice, that means that some people could join the new deal on the day before they reach the age of 26 and therefore would be working under the new deal at the age of 25. Therefore, a cut off point of under 26 has been chosen.
A number of noble Lords asked what would happen if just before one reached the age of 26 the lower rate were adopted. Would one then be fired by the employer? We sought to provide protection in relation to that by making it a ground of unfair dismissal if someone is dismissed because he is about to receive the benefit of the minimum wage or go into a higher bracket in relation to it.
I have dealt with all the major points raised in the debate. The Bill is delivering on a major manifesto promise. It is part of the Government's policy to make work pay. We have been waiting for the Bill for a considerable length of time and it is long overdue. I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty-three minutes past eleven o'clock.

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