Sitting of 24 June 1999

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  TREASURY
  The Chancellor of the Exchequer was asked—
  TREASURY

    Economic and Monetary Union
    Mr. Nick St. Aubyn: What discussions he has had with the Governor of the Bank of England on the employment consequences of EMU; and if he will make a statement. [87056]
    The Chancellor of the Exchequer (Mr. Gordon Brown): The Governor and I talk regularly about economic issues. As a result of the Government's October 1997 statement on their position on EMU, the Governor and I also sit on the standing committee on euro preparations. There is also a parliamentary committee on EMU preparations, which all parties have been asked to join. Our decisions on EMU will be made in the national economic interest.
    Mr. St. Aubyn: In February, the Prime Minister told us to prepare to join the euro. This, week the right hon. Gentleman told us that the economic conditions are not right; the Secretary of State for Trade and Industry told us that the economic conditions are not right; and the Governor of the Bank of England, in published evidence, told us that the conditions may never be right. Why should British business have to spend billions of pounds preparing for the euro when the Prime Minister is not prepared even to promote it?
    Mr. Brown: It is British business that is saying that the decision on EMU should be made in the national economic interest. It is the Conservative party that is saying that, such is its ideological objection to EMU, that, even if the national economic interest suggested joining, it would not join. If the hon. Gentleman would care to look at the views that have been expressed by business men within and outside the CBI, he will see that they make it absolutely clear that they have no support for the Conservative position on EMU.
    As for who is best at advancing the national economic interest, perhaps the hon. Gentleman will look back on the letter that he wrote to The Daily Telegraph on Tuesday in which he made clear his views on EMU, but also, interestingly, commented on the economy. Did he say that there was a recession, or that there was stagnation?
    1268
    No. His words were words of congratulation. He talked about this year's "resurgence of the economy." At every Question Time between now and the general election, we shall remind him of his congratulations to the Government.
    Mr. Bill Rammell: Independent economic estimates have suggested that a successful single currency could add 0.5 per cent. to Britain's GNP, significantly boosting employment prospects. If that is the case, and if the criteria for entry are met, does the Chancellor agree that it is essential that that issue is put to the people in a referendum, and that it would be wholly wrong, simply in the interests of one political party, to refuse to put that question to the people for an arbitrary period of 10 years?
    Mr. Brown: I am grateful to my hon. Friend, who points out a fundamental flaw in the Opposition's policy. Some Opposition Members say that they would not join a single currency for 10 years; others say—I think that the shadow Chancellor is one of them—that they would never join. I welcome two new Members to the Opposition Front Bench. One, I understand, is totally against the single currency; the other is totally for the single currency.
    Mr. Kenneth Clarke: Does the Chancellor agree with the Monetary Policy Committee of the Bank of England that the excessive strength of sterling against the euro is now causing a risk of deflation and of our falling far too far below the inflation target, and that it may need to be corrected? Does he further agree that the lasting misalignment of sterling with the euro and the currencies that preceded it is now giving us the worst trade deficit with our European markets that we have had for eight years, causing great damage to our manufacturing and exporting industries? Will the right hon. Gentleman encourage the MPC to continue to incline towards reducing interest rates in order to bring floating sterling back to a more sensible relationship with the euro?
    Mr. Brown: I am grateful that the economic debate on the Conservative Benches is being entered into on the matter of economics, not simply politics. I welcome the former Chancellor to our proceedings, although he will again be surprised to see the strength with which Conservative Front-Bench spokesmen are against the position that he holds on EMU. I hope that he, too, will come to the view that it is a good thing that we made the Bank of England independent, and I hope that he will try to persuade his colleagues that the Conservative Front-Bench position of being completely against the independence of the Bank of England threatens a return to stop-go in the economy. The strength with which the Conservatives have opposed the independence of the Bank of England makes it almost impossible for them, with any integrity, to change their position between now and the general election. With regard to the exchange rate, as the former Chancellor will know, 80 per cent. of the rise in the exchange rate took place under him.
    Mr. Geraint Davies: Given the resurgence of our economy about which we have already heard—and, therefore, the strength of sterling versus the euro—will my right hon. Friend support Chancellor

    1269
    Gerhard Schröder in his changes in tax and expenditure to make the German economy more competitive in order to encourage exports into Germany and to boost the strength of the euro, so that, alongside the resurgence in demand from the far east and more trade to the United States, we see balanced growth across Europe?
    Mr. Brown: I am grateful to my hon. Friend for pointing out the importance of the rest of Europe: 50 per cent. of our trade is with the rest of Europe, and 3 million jobs depend on it. A Conservative party that would threaten to detach us from Europe would put at risk British industry, British manufacturing and British jobs.
    On the agenda for reform in Europe, my hon. Friend will know well that it is the British Government who are pushing not just for the reform of labour markets and employment policy, with our employment action plans, but for the reform of capital markets and product markets to make the single market work more effectively for British business and British jobs.
    Mr. Malcolm Bruce: Does the Chancellor accept that there is a real threat to British jobs from the current high exchange rate, high real interest rates and uncertainty over the Government's intention on the single currency, borne out by the comments of the Prime Minister and the Secretary of State for Trade and Industry—made, interestingly enough, abroad rather than in this country? Is it not time that the Government, led by the Prime Minister, made a clear declaration of intent to join the single currency and set out a timetable of measures to achieve convergence and to secure the winning of a referendum?
    Mr. Brown: There are two positions in this debate that we do not support—the first is to rule out joining the single currency whether it is in the national economic interest or not, and the other is to join the single currency now, even when it is clear that, at this stage, the convergence tests have not been met. I know that the hon. Gentleman is one of the six candidates for the leadership of the Liberal Democrats, but he does not need to make outrageous statements to put forward his case.
    Mr. Barry Sheerman: Is my right hon. Friend aware that the Committee on euro preparations—which my right hon. Friend established under my chairmanship—met this morning, and that, yet again, we had an empty chair not filled by any member from the Conservative party? If the Conservatives are serious about scrutiny—as is suggested by the original question from the hon. Member for Guildford (Mr. St. Aubyn)—would it not be a good idea for them to become members of that committee, so that they could help us to scrutinise properly?
    Mr. Brown: I am grateful to my hon. Friend, whose chairmanship of the committee is much valued, and I am grateful that all other parties have joined the committee. I suspect that the reason why the Conservative party cannot join the Committee is that it cannot decide whether to put on it the Front-Bench spokesman who supports the single currency or the Front-Bench spokesman who opposes the single currency.
    Mr. Francis Maude: In the light of the confusion that is being sown deliberately, will the
    1270
    Chancellor today confirm that the Government's policy remains the same, and that the Government are, in his own words,
    "committed in principle to economic and monetary union"?
    Does he agree with the Chancellor of the Duchy of Lancaster, who said that it would be "extraordinary" if a Labour Government were not to hold a referendum on this issue with a view to scrapping the pound soon after the next election?
    Mr. Brown: The confusion is on the Conservative Front Bench, where there is someone supporting the single currency and someone opposing it. [Interruption.] Conservative Members are getting very upset about this. The hon. Member for Grantham and Stamford (Mr. Davies), one of those trying to make sedentary interventions, says about the policy of opting out of joining a single currency:
    "It would be completely crazy and contrary to the national interest to throw away our option to join the single currency."
    Not only is the Conservative party divided between the Back Benches and the Front Benches, it is divided within the Treasury team. The Government's position is the October 1997 statement—that is what we are pursuing.
    Mr. Maude: I am grateful to the Chancellor for highlighting the sense of our policy. The Government have continued to refuse to abandon the national changeover plan, despite nobody having voted for it. It is a bit like starting to build a house without applying for planning permission. Given that the Chancellor is committing hundreds of millions of pounds of taxpayers' money—and that he is asking businesses to commit hundreds of millions of pounds of their money—to a decision that even the Prime Minister admits hardly anyone supports, will the Chancellor be on the platform on 9 July with the other leaders of the scrap the pound campaign at its 15th relaunch? Or is he, like the Prime Minister, so gutless that he expects others to do his dirty work for him? Why can he not summon up the courage to stand up for what he believes in?
    Mr. Brown: First, there is no organisation called "the scrap the pound campaign". Secondly, the position on the single currency is unchanged. As for trying to push through the national changeover plan, and costs within it, without parliamentary discussion, it was discussed last week in the Committee considering the Finance Bill and it will be discussed on the Floor of the House. Any expenditures will be with parliamentary approval, so the right hon. Gentleman had that completely wrong.
    I suggest that the right hon. Gentleman goes back to the drawing board, and has a meeting of his Treasury team, He should ask the hon. Member for Grantham and Stamford whether he still agrees with this statement:
    "Taking irrevocable decisions before you have to and before the essential facts are available is bizarre and indefensible."
    Tory Front Benchers believe not only that their policy is
    "crazy and contrary to the national interest"
    but that it is "bizarre and indefensible". I hope that they will do some preparations before the next Treasury Question Time.
    Mr. Derek Twigg: Is it not important to listen to the views of business on employment? ICI, which employs more than 4,000 people in my constituency, has clear views on the euro and the single currency.

    1271
    Speaking of the bizarre, the hon. Member for Guildford (Mr. St. Aubyn) suggested in the Finance Bill Committee that there was a similar argument for retaining the euro option as for retaining the nuclear deterrent. Is that not bizarre?
    Mr. Brown: As I understand it, the hon. Member for Guildford (Mr. St. Aubyn) said:
    "Even if we change the Maastricht treaty and disengage in the next Parliament, it will be possible for a Government in 50 or 100 years to renegotiate."—[Official Report, Standing Committee B, 17 June 1999; c. 674.]
    The Conservatives' position is becoming more difficult to understand by the minute. I take it that their extremism is now such that they would not join a single currency even if it were in the national economic interest; they would oppose making preparations, as my hon. Friend the Member for Huddersfield (Mr. Sheerman) said, even though the CBI, the British Bankers' Association and British Chambers of Commerce are all sitting on our preparations committee, along with every political party other than the Conservative party; they would opt out of European legislation; and they would renegotiate the treaties of membership. That is a manifesto not for leaving Europe or the euro but for leaving their senses.

    Tax Revenues
    Mr. Michael Fabricant: What estimate he has made of the change in tax revenues in 1999–2000 as a result of the Budgets since July 1997. [87057]
    The Chief Secretary to the Treasury (Mr. Alan Milburn): Costings of the measures in the July 1997, March 1998 and March 1999 Budgets can be found in tables 2.2, 1.3 and 1.3 respectively of the appropriate "Financial Statement and Budget Report".
    Mr. Fabricant: I am not sure that I will thank the Minister for that answer. Do the tables agree with an impeccable source which says that the increase in taxes this year as a result of the Budgets has been £7.1 billion; that it will be £10.5 billion next year; £9.3 billion the year after; and £40.7 billion over the lifetime of this Parliament? If the right hon. Gentleman disagrees with that, is he aware that he is disagreeing with the economics and statistics section of the House of Commons Library?
    Mr. Milburn: The hon. Gentleman is wrong about that, just as he is wrong about most things. If he wants to trade facts, let me tell him that, this year, the tax burden is lower than it was last year; and that, next year and the year after, it will also be lower than it was last year. Another fact is that, if the Conservative party had remained in power, in accordance with the Budget that the right hon. and learned Member for Rushcliffe (Mr. Clarke) set in 1996, in each of those years, the tax burden would have been higher.
    The Conservatives have not learned any of the lessons of the general election, when they lost the trust of the British people on tax. Even now, they are planning to increase the taxes of the poorest families in the land. If they had their way and abolished the working families tax credit, 1.5 million of the poorest families would face an extra £24 a week on their tax bills. What clearer contrast
    1272
    could there be between today's Conservative party, committed to penalising the poorest families, and today's Labour Government, committed to helping them?
    Mr. Christopher Leslie: Is my right hon. Friend aware of the effect that Conservative amendments to the Finance Bill would have on Government revenues? The cumulative total of what they have proposed so far is more than the extra £40 billion that the Government have allocated for schools and hospitals. Is it not irresponsible for the Conservatives to say that they would match our commitment of £40 billion for schools and hospitals yet to fail completely to say where the money is to come from?
    Mr. Milburn: I am grateful to my hon. Friend for that information. He keeps a wary eye on the pledges that the Conservatives make. They think that they can get away with it in the Finance Bill Committee, but they cannot. My hon. Friend is absolutely right: the Conservatives' figures do not add up. The shadow Chancellor says that he wants to match our record increases for health and education but fails to will the means to do so. The amendments that the Conservatives have tabled in the Finance Bill Committee would mean £40 billion less for health and education. Now it is clear: the dividing line is between the Conservative party, committed to £40 billion less for hospitals and schools, and the Labour party, committed to £40 billion more.
    Mr. Oliver Letwin: As the Chief Secretary was so notably unwilling to answer the question from my hon. Friend the Member for Lichfield (Mr. Fabricant), and for the information of those of us who are new to the Front Bench, will he relieve a genuine perplexity on our part about the Labour Government in the light of the Prime Minister's self-proclaimed 100 per cent. rock-solid attachment to new Labour? What is new about a Labour Government raising taxes? Does the novelty perhaps consist in the fact that, instead of announcing it, they pretend that it is not happening?
    Mr. Milburn: I welcome the hon. Gentleman to the Front Bench; I suspect that we will have some fun with the new Conservative Front Benchers. Everybody in the country, apart, apparently, from them, knows that taxes are falling. We have introduced the new 10p starting rate; cuts in the basic rate of income tax; cuts in national insurance contributions which even now are benefiting 20 million people; and increases in family income through the working families tax credit and the minimum wage. Those measures were all opposed by the Conservative party.
    Mr. Denis MacShane: Is not one of the major problems of tax revenue caused by those gentlemen who so arrange their affairs as to avoid paying taxes due in this country? Will my right hon. Friend agree to commission the Inland Revenue to investigate Mr. Michael Ashcroft's tax arrangements? It cannot be right that a man who funds the Conservative party so arranges his affairs as to avoid paying tax and then uses the money that he saves to pay for the isolationist policies of the new anti-European Tories. It is wrong that the party of artful dodgers is paid for by a tax dodger.
    Mr. Milburn: It would be wrong to comment on the tax affairs of any individual British citizen, but I suspect

    1273
    that my hon. Friend's question is more tailored to Conservative Front Benchers, so perhaps they would be prepared to answer it. The one form of monopoly that they appear to support is the monopoly provision for the financing of the Conservative party.

    Road Fuel Duty
    Mr. Christopher Chope: What was the level of road fuel duty per litre of diesel in 1998–99 in (a) the United Kingdom, (b) Ireland and (c) other countries of continental Europe. [87058]
    The Economic Secretary to the Treasury (Ms Patricia Hewitt): The rate of duty on ultra-low-sulphur diesel in this country is 47.21p per litre, and on standard diesel the rate is 50.21p per litre. In other countries of continental Europe, the rates range from about 18p per litre in Luxembourg and Greece to 28p per litre in Italy. In the Republic of Ireland, the rate is 23.47p per litre.
    Mr. Chope: I am grateful to the hon. Lady for that factual reply. What message does she draw from those facts? Surely the message is that our road haulage industry and all those who use diesel are being priced out of business by the uncompetitive tax burden imposed on them by the Government. What message does she have for people such as Mr. and Mrs. Martin, who run Dorset Heavy Haulage and have written to me to say that they are threatened with being put out of business by the Government's tax policy on diesel? Will she accept that one of the verdicts to be drawn from the recent European elections, in which five times as many people voted Conservative in my constituency as voted Labour, is that the Government have got their policy on the taxation of diesel totally wrong?
    Ms Hewitt: My message to the hon. Gentleman is that, in the Budget, we froze the rates of vehicle excise duty for most lorries; we doubled the reduction in VED for the cleaner lorries; and we cut the duty on ultra-low-sulphur diesel relative to ordinary diesel so that that differential is now the widest in the European Union, with the beneficial result that very soon all diesel bought in this country will be cleaner diesel. I remind the hon. Gentleman that it was the Conservative Government who introduced the road fuel duty escalator—in the days when they believed in doing something about environmental pollution. They have now become such an extreme party that they have abandoned that policy and their commitment to improving air quality.
    Mrs. Gwyneth Dunwoody: My hon. Friend the Economic Secretary is right to say that it is unrealistic to look at only one element of road hauliers' overheads. However, will she continue to keep a close eye on the effect of environmental taxes? I know that the Conservative Government introduced those measures, but I still have the strange, old-fashioned idea that the Conservatives often do things wrong. Might it not occasionally be helpful if we did not pick up the debris that they left behind?
    Ms Hewitt: My hon. Friend is right to point out that, to assess the position of the British road haulage industry,
    1274
    we must look at total business costs, not just one element. For a typical road haulage firm, business costs could be nearly £600,000 a year higher in the Netherlands than in Britain. In Belgium, they would be nearly £820,000 a year higher than here.
    We continue to keep under review the impact of all taxation, including environmental taxes. In line with our statement of intent on environmental taxation, we pay special attention to the impact on income distribution and on international competitiveness. With my right hon. Friend the Minister for Transport, we are having very useful discussions with the road haulage industry through the road haulage industry forum that we have established.
    Mr. Graham Brady: The Government remain committed to increasing levels of duty on diesel, thus making it difficult for hauliers to run their fleets on that fuel. They have also introduced some commendable incentives for the use of compressed natural gas and other alternative fuels. However, does the Economic Secretary agree that one of the reasons why businesses are reluctant to spend huge sums of money to convert to the use of compressed natural gas is that they are not confident that the fiscal incentives will remain in the long term?
    Will she guarantee that those fiscal benefits will remain in the long term and that the Government will continue to cut costs for using compressed natural gas, just as they are increasing them over time for diesel?
    Ms Hewitt: I am grateful to the hon. Gentleman for his welcome for the measure in the Budget cutting the duty on road fuel gases by 29 per cent. Of course we shall continue to ensure that fuel duties, and road transport taxation in general, contribute to our goal of achieving cuts in CO2 emissions, improving local air quality and thereby people's health.

    Third-world Debt
    Ms Julia Drown: What agreement was reached at the recent G8 Finance Ministers' meeting with regard to reducing the debt burden of the poorest countries; and if he will make a statement. [87059]
    Ann Clwyd: What progress was made on debt relief at the Cologne G8 summit. [87066]
    The Chancellor of the Exchequer (Mr. Gordon Brown): Two weeks ago, at the G7 Finance Ministers meeting in Frankfurt, we took forward proposals for faster, deeper and wider debt relief. Agreement was then reached a week ago at the G8 Summit in Cologne on an initiative that will reduce the debt owed by the poorest countries by up to $100 billion. Under the proposals, two thirds of official debt of the poorest countries can be written off.
    I want to applaud the work of the Churches and non-governmental organisations in helping ensure that outcome.
    Ms Drown: I thank my right hon. Friend for that answer. The Government deserve much congratulation for their work in securing further and faster debt relief. I was also pleased that the Prime Minister told the House on

    1275
    Monday that he wanted further progress on debt relief to be made. That is needed because, even after Cologne, Tanzania will still be expected to pay $5 per person per year. That is much more than the health budget in that country, which still needs to spend much more money on basic health care to save lives.
    Will my right hon. Friend say what further steps can be taken to make further progress on debt relief, and will he assure the House and the public that the relief achieved at Cologne will not be funded out of our already overstretched aid budget?
    Mr. Brown: I can reassure my hon. Friend on her final point. What was agreed at Cologne was that 38 countries will be able to benefit from the debt relief—many more than were in the scheme beforehand—and that debt relief can be made possible by the end of 2000. There are three things that we must do between now and October, which is when the International Monetary Fund and the World Bank meetings will finally confirm many of the proposals.
    First—my hon. Friend's point about Tanzania applies to other countries as well—we want to ensure the front-loading of debt relief. That means that debt relief will be available immediately, and debt interest payments can be reduced. Secondly, we want the World Bank's millennium trust fund, which has received $100 million from the British Government and $171 million in total, to gain funds from other countries. We want to encourage other countries to contribute to the fund, and also private companies that are involved throughout the world.
    Finally, and most important for the long term, we want debt relief to be linked to poverty relief in the most immediate way. We want to create a virtuous circle of debt reduction, poverty reduction and economic development. That is the hope for the countries about which we are talking.
    Ann Clwyd: My right hon. Friend has always described debt relief as a great moral issue, and has pursued it with great vigour. He has been among the leaders on the matter in the G7 countries. The package brings important relief to eligible countries, but they must still pay more in debt servicing than they can spend on health and education. What progress is my right hon. Friend likely to make with the IMF and the World Bank? In conversations with representatives of those international institutions, the International Development Committee has found continued rigidity and lack of flexibility in their attitudes to some of the poorest countries, such as Rwanda, which, in addition to recovering from genocide, is trying to service its debt.
    Mr. Brown: I thank the International Development Committee for all its work on debt relief. Post-conflict proposals exist to help countries such as Rwanda to come more quickly into the debt reduction process, just as there are policies for post-catastrophe countries, such as Honduras and Nicaragua. My hon. Friend should not underestimate what is being done. Subject to the terms of the agreement, two thirds of the official debt of the poorest countries will be written off. That includes £20 billion in Overseas Development Administration loans, $30 billion from the previous package—for which my predecessor as Chancellor should be congratulated on leading the way several years ago—and £50 billion, or $70 billion, as a result of the negotiations.
    1276
    The package makes a major change because we want debt relief in 2000, the millennium year. The work of the Churches and the 120,000 people who sent cards to the Treasury over the past few weeks have succeeded in keeping debt relief alive in many countries around the world. From talking to fellow Finance Ministers, I know that that has had a substantial impact on public opinion. At the World Bank meetings in October and in IMF meetings, we will be determined that the link between debt relief and poverty relief should be recognised. My hon. Friend should recall that IMF gold sales will be approved for the first time, and the millennium trust fund will be set up.
    Sir Peter Tapsell: May I ask the Chancellor why the Government's proposals for reducing the debt burden on the poorest countries include having the IMF sell about 310 tonnes of its gold holdings? Is the Chancellor aware that, in Washington on Monday, Mr. James Motlatsi, president of the National Union of Mineworkers of South Africa—which has more than 200,000 members—told many leading United States Congressmen that, if the downward pressure on the gold price were maintained, at least 80,000 of his members would become unemployed? That would be the effect on South Africa alone, but 30 of the 41 poorest countries that we are trying to help are gold exporters, and, on average, each gold miner supports 10 people.
    Mr. Brown: The sale of gold is only one among the issues surrounding debt relief. I should have thought that the hon. Gentleman would wish to welcome the general package of debt reduction.
    Sir Peter Tapsell: Answer the question.
    Mr. Brown: I am coming to it, but I should have thought that someone on the Conservative Benches would wish to welcome the debt reduction proposals.
    Every country in the G7 is supporting the IMF gold sales. They are now agreed as an international policy and other countries on the IMF interim committee will endorse it. The income from gold sales enables the IMF to do far more than it would otherwise be able to do to secure debt reduction. It is obvious that the hon. Gentleman is not concerned about the question at all: it is about debt reduction.
    Mr. Edward Davey: Unlike the Conservatives, the Liberal Democrats wholeheartedly congratulate the Chancellor on the work that he has done to achieve the debt relief package. I wish him well in the work that he has pledged to undertake to make further progress. We all hope that he succeeds. Will he take this opportunity to confirm to the House that the United Kingdom contribution to debt relief will be additional to the Department for International Development budget in the period of both this comprehensive spending review and future ones? When will the G7 countries become more specific about their precise contributions to debt relief?
    Mr. Brown: On the first point, yes. On the second point, we expect announcements from the countries that are members of the G7 soon about the contributions that they will make to the millennium trust fund. There is also

    1277
    a proposal for the European development fund, which is made up of contributions from member states, but outside the EU budget, and which has substantial surpluses, to make a one-off contribution to the World Bank to enable it to reduce debt or make a one-off contribution to the countries with debts. I hope that that proposal will command support throughout the House.

    Working Families Tax Credit
    Helen Jones: What estimate he has made of the number of people in Warrington, North who will benefit from the working families tax credit. [87060]
    The Chancellor of the Exchequer (Mr. Gordon Brown): I regret that estimates for the Warrington, North constituency are not available at this stage, but 200,000 families in Merseyside and the north-west will be helped by the working families tax credit in its first year of operation. In total, 1.5 million families in our country will benefit.
    Helen Jones: I thank my right hon. Friend for that reply. Many people in my constituency welcome the lifeline that will be offered them by the working families tax credit and the encouragement to people in work and others to take low-paid jobs. Can my right hon. Friend tell me and them what the effect on those families would be if the Opposition were ever in a position to carry out their threat to get rid of the working families tax credit and force people back into reliance on benefit, which will affect them not only in the immediate term but in terms of their long-term prospects of progressing through work?
    Mr. Brown: I am grateful to my hon. Friend. It is true that 1.5 million families will benefit. Three million children in total will benefit. The average gain to the individual family is £24 a week. Some families will be £50 a week better off as a result of the combined measures for child support that we are introducing. More than 850,000 children and 1.5 million families will be lifted out of poverty. That is a major change from the situation that we inherited. For more than 20 years, child poverty had risen to the point where 40 per cent. of children were born into low-income households. I should have thought that that would be a dividing line between us and the Conservatives at the next election, as my hon. Friend says.
    The former social security spokesman for the Conservatives said:
    "We would cut the working families tax credit".
    The leader of the Conservative party says:
    "It is a tangible difference between the parties."
    Of course the shadow Chancellor, not to be outdone, says that the welfare spending involved
    "is economic and social lunacy."
    What to him is economic and social lunacy to us is elementary justice.
    Mr. Ian Bruce: May I ask the Chancellor—[HON. MEMBERS: "Seventy-seven."] Actually, two and a half times the Labour side since a week last Thursday. How much does the Chancellor rely on statistics in this matter? I ask that question seriously,
    1278
    because the Government suggested that some 2 million people would be affected by the minimum wage and would get a pay rise in April this year. The statistics provided by the Government statistical service show that wage rises in April this year were at a rate lower than that in April of the previous year. Why do the statistics seem to be at odds with what the Labour party is saying about low pay and family tax credit?
    Mr. Brown: I am grateful to the hon. Gentleman for raising the subject of the minimum wage and the working families tax credit, but before he asks the question again, perhaps he will deal with this simple point: why, when he talks about the minimum wage, can he not say that the Conservative party supports it? Why does it continue to oppose it and every measure that we have introduced to relieve child poverty? The party's extremism is such that it is against the new deal, against the working families tax credit, against the child benefit increase and against the minimum wage.

    Taxpayers (Conscience)
    Mr. Jeremy Corbyn: What policy is adopted by his Department in respect of taxpayers who do not wish to pay certain elements of taxation on grounds of conscience. [87061]
    The Chief Secretary to the Treasury (Mr. Alan Milburn): There are no special arrangements for taxpayers to withhold tax on grounds of conscience.
    Mr. Corbyn: Could the Minister consider whether it would be right to introduce such a measure? The Italian Parliament has draft legislation before it that would allow Italian taxpayers to divert a proportion of their tax from the armed services to peace building, and there are three relevant petitions before this House. Given the huge rebuilding costs that will fall to this country and others in Kosovo and elsewhere where there has been conflict, perhaps we should have a peace-building fund that could invest in conflict resolution, reconstruction and trying to prevent terrible wars and civilian conflicts.
    British taxpayers have a right of conscience not to participate in the armed forces in time of conscription and should have a similar right in time of peace to ensure that part of their tax goes to peace, not war.
    Mr. Milburn: We will deal with the costs of reconstruction in Kosovo in due course. Although I understand my hon. Friend's deeply held convictions on the issue—his view is shared by others in this House and elsewhere—the Government have a duty and obligation to make proper provision for our country's defences. That is precisely what we are committed to doing. I say in all candour that his proposal would undermine our ability to do that, and that is why the Government will not contemplate it.
    Mr. John Wilkinson: Is not the element of our taxes that taxpayers least like paying the net contribution to the European Union, over which they have no democratic control and which goes to such causes as the subsidy for tobacco growing and the misapplication of funds, waste and fraud?
    Mr. Milburn: I congratulate the hon. Gentleman for two reasons: first, on the most imaginative bid for a place

    1279
    on the Front Bench so far, and secondly, for acting as a continual reminder to us that the Conservative party has been become a genuine one-issue party.
    Mr. Tam Dalyell: As my hon. Friend said that he would come to a question on Kosovo in due course, would he care to take the opportunity of answering Question 29?
    Madam Speaker: But not yet!

    Business Taxation
    Mr. John Bercow: If he will make a statement on the level of business taxation. [87063]
    The Financial Secretary to the Treasury (Mrs. Barbara Roche): The Government keep the level of business taxation under constant review.
    Mr. Bercow: I acknowledge the hon. Lady's woefully inadequate reply. Can she tell the House whether it was through amnesia caused by stress that she failed to mention the proposed climate tax, the company car tax, the fuel tax, the vehicle excise tax, the windfall tax, the abolition of the tax credit on dividends and the huge hike in national insurance contributions under this Government? What about the crucial fact, emphasised by Sir Clive Thompson, the president of the Confederation of British Industry, that the cumulative effect of this Government's imposts will be to raise business taxes by £20 billion in the lifetime of this Parliament? Does she recognise that, if the Government continue at their present rate of confiscation, they will soon make Dick Turpin look like a charitable donor?
    Mrs. Roche: I make some allowances for the hon. Gentleman because his mind is obviously distracted now that he has been elevated to yet another Front-Bench team. He does seem to be suffering; he has forgotten that the Labour Government have cut the main rate of corporation tax. We now have the best possible regime for businesses in this country—the small firms rate of corporation tax and the Small Business Service. I also remind him that, under the previous Tory Government, a business went bust every three minutes. That is why we have been able to get employment figures up; that is why we have been able to work with businesses in the way that we have. It struck me as somewhat odd that the hon. Gentleman did not mention that, in his very own constituency, there has been a drop in unemployment of 32 per cent. That came about because of our management of the economy.
    Ms Joan Ryan: Those in businesses in my constituency and across north London generally tell me and their representative groups, such as the North London chamber of commerce and the North London manufacturing action group—of which my hon. Friend will be aware through her own constituency work—that they are very happy with the positive approach that the Government have taken on business taxation and on other policies to support business, in order to help business to grow and hence to create jobs. Will my hon. Friend comment on what I have been told recently by business people? The main problem—as they see it—is the way
    1280
    the Opposition continually talk down our economy and undermine the efforts made by our businesses and their success.
    Mrs. Roche: My hon. Friend is right. I know from my own experience—because my hon. Friend and I have the great privilege of representing constituencies in north London—the extensive contact that she maintains with the businesses in her constituency. The greatest threat to business in our country is the way in which the Opposition woefully ignore the business organisations in our constituencies and talk them down. The Opposition talk down our economy; they are clearly not acting in the national interest.
    Dr. Vincent Cable: Following consultations that took place week between the Inland Revenue and representatives of hundreds of thousands of service workers in information technology, offshore oil and other knowledge-intensive industries, is the Financial Secretary aware of the considerable dissatisfaction in those industries, and of the fact that the Revenue simply does not understand how those flexible, freelance industries operate? Will she agree to issue a consultative paper, setting out in detail how the regulations will apply, so that the Government's legitimate concern to stop tax avoidance does not drive those crucial industries off shore or destroy them?
    Mrs. Roche: I notice that the hon. Gentleman mentioned the legitimate concerns of Government. That is why my hon. Friend the Paymaster General is consulting so widely; that is why we shall listen to the representations that businesses make. I am sure that the hon. Gentleman will agree that it is most important that there be a level playing field, and that the people who are legitimately required to pay tax pay it. Of course, there is no question on our part of trying to get at legitimate businesses. We are trying to achieve a balance in this matter and that is what we shall do.

    Climate Change Levy
    Mr. Peter L. Pike: What progress has been made in deciding the details of the proposed climate change levy. [87064]
    The Economic Secretary to the Treasury (Ms Patricia Hewitt): We are working closely with business on the detailed design and implementation of the climate change levy, which will make a significant contribution towards reducing greenhouse gas emissions. The levy will entail no increase in the overall burden of tax on business, as the revenues will be fully recycled; and, following the recommendations of Lord Marshall, we recognise the special position of the energy-intensive industries, given their high energy usage and their exposure to international competition. We intend to set significantly lower rates of the levy for energy intensive sectors that agree targets for improving their energy efficiency. Detailed negotiations are now under way with the sectors concerned.
    Mr. Pike: I thank my hon. Friend for that helpful answer. While everyone accepts the main objective of environmental improvement, does she recognise that the

    1281
    manufacturing industries that are high-energy users have genuine fears that we may drive them and their investment out of the country, resulting in a loss of jobs and an adverse effect on our balance of payments? That will not have a beneficial effect on the world environment. Does my hon. Friend acknowledge that there should be a special case for combined heat and power schemes, which could perhaps be exempt from the levy?
    Ms Hewitt: I thank my hon. Friend for that question. Of course we understand the concerns of manufacturing industry. That is why we have said that we will not take an across-the-board approach to the levy but will set significantly reduced levy rates for energy-intensive sectors that agree our targets for improving energy efficiency.
    On the issue of renewables, we have not ruled out the possibility of an exemption. We are consulting on how to treat combined heat and power schemes within the climate change levy, as they can make a substantial contribution to improving energy efficiency, thereby cutting greenhouse gas emissions.
    Mr. David Heathcoat-Amory: After the fiasco of road fuel duties—which have effectively made the British haulage industry uncompetitive in European terms—why are the Government planning to do the same on a wider basis next year by imposing a general energy tax on the rest of industry? How will the Minister answer the many international firms that have explained to her that, even at a lower or rebated level, they will have to respond to the additional business tax by switching their operations and their investment away from the United Kingdom?
    How can the Government expect to be taken seriously on this issue when, at the same time, they are forbidding many of the same firms to invest in gas-fired electricity generating plants, which would cut carbon dioxide emissions? When will the Government sort themselves out on this issue and remove this threat to competitiveness, jobs and industry, which will do nothing for the environment in the longer term?
    Ms Hewitt: The right hon. Gentleman is wrong about the transport industry and wrong about the impact of the climate change levy. As Lord Marshall proposed, there must be recognition of the special position of the energy-intensive sectors. That is why, following his recommendations, we said that there will not be an across-the-board approach to the levy. There will be significantly reduced rates for those industries, providing that they agree the targets for energy efficiency improvements.
    We are in detailed negotiation with industry about this issue, in line with our statement of principles on environmental taxation. Meanwhile, the right hon. Gentleman has been reduced to making offensive remarks in the Finance Bill Standing Committee about Lord Marshall, who has done so much to move this debate forward, particularly in the business community. It shows once again how completely out of touch this extremist Conservative party is with the business community.
    Mr. Ian Pearson: Is my hon. Friend aware that the proposed climate change levy would
    1282
    be a nightmare for many small and medium-sized manufacturing businesses in my constituency; and that cutting a deal with major energy users will be of little or no help to them? Does she agree that measures that lead to booming supermarket profits but busts in large swathes of the manufacturing sector are absolutely no good for the British economy? Will my hon. Friend look to reducing the proportion of national insurance rebates, increasing the amount of money allocated to energy efficiency schemes, and ring-fencing some of them for small and medium-sized businesses?
    Ms Hewitt: Perhaps I should remind my hon. Friend that, as my right hon. Friend the Chancellor said in the Budget statement, the new climate change levy will entail no increase in business taxation because the revenues will be recycled both through a reduction in employers' national insurance contributions, thus helping to promote employment, and through specific support—as my hon. Friend suggests—to small and medium-sized enterprises to help them achieve greater energy efficiency.
    We made it very clear in our statement of intent on environmental taxation that we would always design environmental taxation in order to protect and, where possible, enhance the international competitiveness of British industry. That is what we are doing in our negotiations with industry, and I trust that my hon. Friend will support us in seeking not only to protect competitiveness but to reduce environmental damage.

    EU (UK Contribution)
    Sir Teddy Taylor: What estimate he has made of the gross and net contributions by the United Kingdom to the EU in the current calendar year; and what the figures were in 1998. [87065]
    The Chief Secretary to the Treasury (Mr. Alan Milburn): In line with established practice, the Government are arranging for information about the UK's gross and net contribution for the years in question to be published shortly, in the annual White Paper "European Community Finances".
    Sir Teddy Taylor: Although the Government do not appear to have those figures, do they agree that the gross contribution to the European Union exceeds £100 billion since we joined, and that the net contribution of £33 billion has cost the average British family £2,400? In view of the appalling amount of fraud and mismanagement in the EU, can the Government give us an assurance that they will not agree to further expenditure by the EU, and that they will argue strongly for a fairer contribution by the United Kingdom, which, under Governments of both parties, has paid in a huge amount since we joined?
    Mr. Milburn: That is precisely what the Government succeeded in obtaining for the UK at Berlin. The Opposition argued that we would lose the UK's abatement, but we retained it. Moreover, we got a good deal for the regions and nations of our country, with objective 2 status, objective 1 status and so on.
    It is always useful to have a question from the hon. Gentleman on European issues. Not so long ago, he was a voice in the wilderness on the Conservative Benches,

    1283
    but now he represents mainstream Conservative opinion on Europe. He is a reminder that the Conservative party's position on Europe is to weaken Britain in Europe, to isolate Britain in Europe and, ultimately, to withdraw Britain from Europe.
    Mr. Tom Clarke: Does my right hon. Friend agree that the figures will highlight the indolence and negative approach of the previous Government to Europe, by contrast with other member states—for example, the Republic of Ireland, which can show a great deal for its proactive commitment? Given the Government's intention to play a full role in Europe, is my right hon. Friend as confident as I am about the figures that will emerge in future?
    Mr. Milburn: My right hon. Friend is right. The best way for Britain to get the best from Europe is to take a leading role in Europe, and that is what we have done. The lifting of the beef ban, the successful retention of the UK's abatement, and more investment in our regions and nations show what happens when a UK Government take a leading role in Europe, rather than standing on the sidelines, as the previous Government did.
    It is worth reminding right hon. and hon. Members, as my right hon. Friend has just done, that 3 million jobs and 60 per cent. of our trade depend on our relationships with Europe. We are securing jobs, investment and industry by engaging in Europe. Those would all be threatened by the Conservative party.

    Road Fuel Duty
    Mr. Nicholas Winterton: If he will make a statement on his policy on taxation of road fuel. [87067]
    The Economic Secretary to the Treasury (Ms Patricia Hewitt): My right hon. Friend the Chancellor of the Exchequer has confirmed the Government's commitment to cutting greenhouse gas emissions by 2010, in line with our Kyoto and domestic
    1284
    targets. The road fuel duty escalator, which was introduced by the previous Government, is an important part of the Government's policy to reduce emissions of greenhouse gases and to improve local air quality. We estimate that the fuel duty escalator will save between 2 million and 5 million tonnes of carbon annually by 2010.
    Mr. Winterton: I am not sure that that is an answer to the question. Does the Minister accept that practically all goods and products that are delivered to shops, factories and other premises throughout the United Kingdom are delivered by road? Does she believe that not only the managers and directors, but the employees of all the transport companies in my constituency—Kirks Transport, Swains Transport, Coopers Transport, Whittakers Transport, Stevens Transport and Dane Valley Transport—are wrong when they say that the Government are following a policy that is detrimental to the UK haulage industry and is increasing costs dramatically? Further, the policy acts against the interests of the many people who live in rural areas where there is no public transport and never will be. Many of those people are on low wages. Will the Minister change the policy and end the fuel escalator?
    Ms Hewitt: I congratulate the hon. Gentleman on mentioning so many of his local transport firms. I seem to recall that he supported the previous Government, who introduced and increased the fuel duty escalator. This Government have cut corporation tax and have frozen the rate of vehicle excise duty for lorries. I hope that he will congratulate us on that.
    I also remind the hon. Gentleman that air pollution in this country contributes to more than 8,000 deaths every year and to more than 10,000 annual hospital admissions. Every sector, including road transport, must make its contribution to cutting greenhouse gas emissions and improving air quality by finding more efficient ways of transporting goods and people. I notice that the Conservative party these days opposes not only tax credits and child benefit but measures that will improve children's health.

Business of the House
12.31 pm
Sir George Young: May I ask the Leader of the House to give us the business for next week?
The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The business for next week will be as follows:
MONDAY 28 JUNE—Second Reading of the Financial Services and Markets Bill.
TUESDAY 29 JUNE—Opposition Day [16th Allotted Day].
Until about 7 o'clock, there will be a debate entitled "Delays in the Issue of Passports". Followed by a debate entitled "Planning and Transport Congestion". Both debates will arise on Opposition motions.
WEDNESDAY 30 JUNE—Until 2 o'clock, there will be debates on the motion for the Adjournment of the House.
Remaining stages of the Disability Rights Commission Bill [Lords].
THURSDAY 1 JULY—Debate on armed forces personnel on a motion for the Adjournment of the House.
It may be convenient for the House if I say at this point that, if agreement is achieved at the political talks in Belfast by the deadline of 30 June set by the Prime Minister, it will be the intention of my right hon. Friend the Secretary of State for Northern Ireland as soon as possible thereafter to lay a devolution order under section 3 of the Northern Ireland Act 1998, appointing the day for the transfer of powers to the Northern Ireland Assembly. A draft order would come before this House and the House of Lords on 1 July for approval. Of course it is not possible to be certain of the outcome of the negotiations, but I thought that it would be helpful for the House to be aware of the Government's intentions at this stage in case an agreement is reached next week.
FRIDAY 2 JULY—Debate on drugs on a motion for the Adjournment of the House.
The House may also be asked to consider any Lords messages which may be received.
The provisional business for the following week will be as follows:
MONDAY 5 JULY—Progress on remaining stages of the Finance Bill.
TUESDAY 6 JULY—Conclusion of remaining stages of the Finance Bill.
WEDNESDAY 7 JULY—Until 2 o'clock, there will be debates on the motion for the Adjournment of the House.
Opposition Day [17th Allotted Day].
There will be a debate on an Opposition motion. Subject to be announced.
THURSDAY 8 JULY—Remaining stages of the Youth Justice and Criminal Evidence Bill [Lords].
FRIDAY 9 JULY—The House will not be sitting.
The House will also wish to know that on Wednesday 7 July there will be a debate on 2000 Preliminary Draft Budget Overview European Standing Committee B. Details of the relevant documents will be given in the
Official Report.
[Wednesday 7 July 1999:
European Standing Committee B—European Union document: SEC(99) 6000: 2000 Preliminary Draft Budget; Relevant European Scrutiny Committee Report: HC 34-xxi (1998–99).]
Sir George Young: The House is grateful for next week's business and an indication of the business the following week.
The right hon. Lady referred to Northern Ireland. As she knows, the situation there continues to cause concern on both sides of the House. We support the Good Friday agreement, and we all hope that the talks will have a successful conclusion. Although we have Northern Ireland questions on Wednesday and the possibility of a debate on a draft order, I wonder whether that affords the House sufficient opportunity to express its views on a serious matter that has not been debated in the House for some time. Will she, after discussions through the usual channels, consider a statement or debate on Northern Ireland?
The House would still like to debate the report of the royal commission on long-term care, which was published some time ago and is of interest to many of our constituents. Can the right hon. Lady shed any light on that? When might we have such a debate?
When can we have our usual debate on policing in London, in the light of the serious and deplorable riots in the City of London last week?
May I press the right hon. Lady on time for debates on public expenditure and the economy? I have raised the matter on many occasions, and over several months. It is not right for the House of Commons to have no framework for discussion of key issues of this kind. Can the right hon. Lady confirm that we will debate the economy before the House rises for the recess, and that she will then set out how and when the House will debate the economy, and public expenditure, during the course of a parliamentary year?
I see from the Order Paper that the Secretary of State for Health is to answer a written parliamentary question on medical cloning. In view of the interest and controversy surrounding the issue, would it not have been better for the Secretary of State to make a statement to the House?
There is mounting interest in the dates relating to the summer recess. We all understand the difficulties involved, but could the right hon. Lady shed some light on the matter, so that the many people who work here can begin to make realistic plans?
Mrs. Beckett: As the right hon. Gentleman said, the whole House wants the discussions in Northern Ireland to have a successful outcome. I shall ensure that the issue is raised through the usual channels—although, as the right hon. Gentleman himself pointed out, there are Northern Ireland questions, and there may also be potential for a debate. The matter will have to be kept under review.
The right hon. Gentleman raised the issue of long-term care—a matter that he has raised on a number of occasions. Discussions are continuing but, as will be clear to him, the Government have a heavy programme of legislation and, because of events in Kosovo, have also had a heavy programme of debates. Although I am

1287
conscious of the fact that the House wants to discuss issues such as long-term care, I am not sure that it will be able to do so at an early date, although I do not rule that out in the slightly longer term.
The right hon. Gentleman asked for a debate on policing in London. I agree that the events of recent days make the issue even more pertinent, and I hope to find time for such a debate in the near future.
The right hon. Gentleman also asked for a debate on economic matters. Of course, we have just had Treasury questions. Discussions have been taking place about the pattern of future debates, and I have proposals which I hope can be discussed and agreed through the usual channels—perhaps, if we are lucky, as early as next week. The right hon. Gentleman pressed me to arrange a debate before the summer recess. I expect there to be a public expenditure debate before then and, as I said, I hope to be able to make proposals for the pattern of such debates over the year.
The right hon. Gentleman pressed for a statement on medical claims.
Sir Patrick Cormack: Cloning, not claims.
Mrs. Beckett: I beg the right hon. Gentleman's pardon.
I understand why the right hon. Gentleman pressed for such a statement, but I think that he will understand that a good many statements have been made. The Government have undertaken to try to avoid statements on Opposition days, which compresses the time available. It is a difficult situation. As you have pointed out in the past, Madam Speaker, there is nothing improper about Ministers' making policy decisions known by means of written answers on occasion, although obviously we try to arrange for statements to be made when that is possible.
The right hon. Gentleman asked me about recess dates. I am well aware that both Members and staff are anxious to make their arrangements. Uncertainties remain about possible future business, but I hope to be able to give the House more information in next week's business statement.
Mr. David Winnick: At a time when we are learning of terrible atrocities in Kosovo, can we be reassured that, if and when the guilty are brought before the International War Crimes Tribunal, Lord Bingham will have no input whatever in the sentencing or appeal procedure? In view of his latest outburst, would it not be appropriate for the Lord Chief Justice to consider his own position?
Mrs. Beckett: I understand my hon. Friend's concern that those who are responsible for events in Kosovo should be brought to justice. I rather suspect, however, that I might fall foul of your strictures, Madam Speaker, were I to be drawn further down the path that my hon. Friend has identified.
Mr. Paul Tyler: Will the Leader of the House make urgent representations to the Secretary of State for Health for an immediate—early, at least—statement on new-variant CJD? Has she seen this morning's press report to the effect that an instruction has been issued by the Department of Health that there may
1288
be a risk of contamination from the use of trial contact lenses? The Association of British Dispensing Opticians apparently had no advance notification of the instruction. There has certainly been no notice of it to the House, and no explanation of what is happening.
The Leader of the House will recognise that there is very real concern about new-variant CJD, and that it has been a long time since the Department of Health, or any other Department, gave any indication of the Government's current thinking on it. This latest announcement has all the hallmarks of a knee-jerk reaction such as the House suffered on 20 March 1996, when the previous Government made their bombshell announcement.
Mrs. Beckett: I understand the hon. Gentleman's concern, which I am sure is felt on both sides of the House. I cannot undertake to find time for an urgent debate on the matter, although I shall certainly draw his anxieties to the attention of my right hon. Friend the Secretary of State for Health. It is my understanding that the precise terms of advice and guidance to opticians are being worked on in consultation with the professional bodies. However, I think that both sides of the House will understand that my right hon. Friend wished to alert people, at the earliest possible date, to a possible risk identified to him by the Spongiform Encephalopathy Advisory Committee.
Mr. Bill O'Brien: Will my right hon. Friend consider an early debate on the Government's policy on reducing the licence fee for small cars? Many constituents are now finding that, although vehicles are registered as 1100 cc, technical details and obstacles are preventing many elderly people and people on low incomes from benefiting from the Government's policy, thereby creating great unrest and unfairness in many areas. The House should have an opportunity to resolve that problem and to try to persuade the Chancellor of the Exchequer that there should be a margin of tolerance, between 1100 cc and 1200 cc. Will my right hon. Friend allow a debate on the matter?
Mrs. Beckett: I am grateful to my hon. Friend. I must admit that the problem that he describes had not previously come to my attention, although I can well understand why it would cause anxiety and discontent. Although I cannot undertake to find time for a special debate, I draw my hon. Friend's attention to the fact that we shall have two days' debate-5 and 6 July—on the Finance Bill. He may find an opportunity to raise the issue then.
Mr. Peter Brooke: Although I appreciatively reinforce the request of my right hon. Friend the Member for North-West Hampshire (Sir G. Young) for a debate on policing in London, I understand that, next week, because of the creation of the Welsh Assembly, the Standing Order underpinning the Select Committee on Welsh Affairs may fall. When might the Leader of the House contemplate having a debate on the report of the Select Committee on Procedure introduced by my hon. Friend the Member for Macclesfield (Mr. Winterton)?
Mrs. Beckett: I am grateful to the right hon. Gentleman for drawing my attention to the issue, as I had

1289
not been aware that the Standing Order might fall. Also, I certainly take his point about the interest in the report of the Select Committee on Procedure, and am mindful that such reports are important and should be considered by the House. Equally, he will understand that there is great time pressure, particularly at the end of the Session. I therefore cannot give him the undertaking he seeks, but undertake to bear the matter in mind.
Mrs. Gwyneth Dunwoody: Before the end of the Session, will my right hon. Friend take back to the relevant Committee the whole question of Members of Parliament not having the right to speak in the House about their visit to an overseas territory if that visit was not made with the Commonwealth Parliamentary Association or the Inter-Parliamentary Union? It is slightly absurd that, although the House of Commons will know who is paying for a particular trip—it will be recorded—the hon. Members involved cannot raise any issue about that particular country. As, presumably, the whole point of hon. Members travelling the globe is to get a mild inkling of what is going on—[HON. MEMBERS: "Hear, hear."]—would it not be sensible at least to look at the rule again?
Mrs. Beckett: I am mindful of the great anxiety in the House that there should be absolute probity and transparency. I am not sure whether I ought to say this, but I have considerable sympathy with the point that my hon. Friend has raised. It is not entirely clear to me what would be the mechanism or how easy it would be to trigger re-examination of these matters. However, some hon. Members are involved in discussing them and they may like to take her observations on board, as well as the clear welcome that her words received across the House and in all parties. It is important for us to have the highest possible standards but, equally, as my hon. Friend said, if hon. Members have a valuable contribution to make and the position is clear and known, I understand her observations and her concern.
Rev. Martin Smyth: You will know, Madam Speaker, that I have been pressing for a debate on Northern Ireland for quite some time as Question Time does not allow us to examine certain issues. The Leader of the House may be aware that police salaries have been increased by 4.5 per cent. and that 80 per cent. of the Royal Ulster Constabulary's expenditure goes on personnel; yet, as a result of budgetary pressure, the police are not now able to do neighbourhood patrols. That is because the House is not aware that the RUC is still focused primarily on dealing with those who are disturbing the peace and on terrorism. May I press the Leader of the House for a debate and express the desire that, in the coming days, the Government do not travel down the road of "hope so" rather than that of reality?
Mrs. Beckett: I shall certainly add the hon. Gentleman's representations to those that I have already received requesting a debate. I understand his point about the work of the RUC. With regard to his final words,
1290
almost everyone in the House hopes that there can be agreement in Northern Ireland because the alternative is too awful to contemplate.
Mr. Peter L. Pike: My right hon. Friend will be aware that, in Kashmir, there are still incursions and problems between India and Pakistan. There is grave concern as both countries now have nuclear power and ballistic missiles. Is there any possibility of a debate on that critical situation before the recess?
Mrs. Beckett: I cannot undertake to find time for a special debate, although my hon. Friend's concern about the problems and the fighting in Kashmir is shared across the House. Everyone hopes that the talks that have been taking place will ease some of the difficulties. However, although I cannot undertake to find time for a special debate, no doubt we will have a pre-recess debate and my hon. Friend may have the opportunity to raise the matter then.
Mr. Eric Forth: Does the right hon. Lady agree that it would be helpful to Ministers to have a debate in the House about the way in which they announce new business, new proposals and new policies outside the House? She must be aware that there is increasing concern about the propensity of Ministers to make announcements outside the House. Not only does that allow them to avoid questioning by right hon. and hon. Members, but, inevitably, it diminishes the standing of the House of Commons with regard to the Government and enhances the role of the media and the areas where the announcements are made.
I hope that the right hon. Lady agrees that this is becoming an urgent and important matter. It need not be a long debate; a fairly short one would suffice, but it would help to clarify in the minds of Ministers what their responsibilities are and what their relationship with the House of Commons should be, and stop this distressing trend that seems to be going unnoticed and unchecked.
Mr. Dennis Skinner: It was always the same.
Mrs. Beckett: I fear that I cannot undertake to find time for such a debate. I entirely share the view of my hon. Friend the Member for Bolsover (Mr. Skinner) that it was ever thus. The statistics show that Ministers in this Government have made far more statements to the House than their predecessors did.
Ann Clwyd: My right hon. Friend will know that the export of arms to countries with bad human rights records is an important issue for many of us. Preventing such exports was also an important plank in the Labour Government's ethical foreign policy. Does she have any information on when the report on strategic arms exports for 1998 will be published and whether we shall have a debate in the House on it? The report for 1997 appeared two years late. One reason given was a problem with the computers. Is there still a problem with the computers, or can we expect the 1998 report to be published before the recess?
Mrs. Beckett: I am not aware of the likely publication date. Happily, I am also not aware of whether there is still

1291
a problem with the computers. The delay to which my hon. Friend referred arose because of problems not only with the computers but with the records, which were time-consuming to resolve. I do not know whether the problems have been resolved sufficiently to enable a date to be set for the publication of the next report, but I shall draw her request to the attention of my right hon. Friend the Foreign Secretary.
Mr. Brian Cotter: I am sure that hon. Members know that, this week, we suffered our first losses of service men in Kosovo—Sergeant Balaram Rai and Lieutenant Gareth Evans of 69 Gurkha Squadron. I am sure that the whole House joins me in expressing condolences to the families. Lieutenant Evans came from my constituency—in fact, he was from Congresbury, the village in which I live. I hope that his family will gain some consolation from the selflessness and bravery that he showed during the action. There will be a debate on Thursday of next week on armed service personnel. Will the Leader of the House and the Secretary of State for Defence ensure that that opportunity is taken to address the grave concerns about the safety of personnel in the difficult circumstances in Kosovo? I look forward to hearing some words to that effect.
Mrs. Beckett: The whole House will wish to express its sympathy and to agree with what the hon. Gentleman said about recognising the bravery of those who have suffered and about sending condolences to the families concerned. I shall draw his wish for those concerns to be reflected in next week's debate to the attention of my right hon. Friend the Secretary of State for Defence.
Mr. Gordon Prentice: Three hours ago, I received a faxed letter from the military aircraft division of British Aerospace, telling me that 880 jobs will be lost at Warton in Lancashire and a total of 2,200 jobs will go across the division. A decision has been made to build Eurofighter—more than 230 planes are going to the RAF at a cost of £40 million each, and more than £10,000 million of public money is being spent, most of which is going to British Aerospace. It is incomprehensible that there should be such major restructuring at the same time, with lots of jobs being lost. Aerospace is the life-blood of Lancashire. Will my right hon. Friend arrange for an early debate to discuss the important matter of aerospace and restructuring in detail?
Mrs. Beckett: I am sorry to learn of the matters raised by my hon. Friend. As he knows from experience, I well understand the importance of the aerospace industry in his part of the country. Restructuring in the aerospace industry is a matter of interest to many across the House. However, I fear that I cannot undertake to find time for an early debate. My hon. Friend will be aware of the process by which hon. Members seek to raise issues of wider concern for which a longer debate might be appropriate. Knowing his assiduity on behalf of his constituents, I am sure that he will pursue that avenue.
Mr. John Hayes: The Leader of the House will be aware that the Secretary of State for Education and Employment is in the mood to name and shame. You, Madam Speaker, will be as delighted as I am that my county of Lincolnshire,
1292
under the enlightened control of Councillor Speechley and his team, does rather well in the right hon. Gentleman's list. Given that naming and shaming, will the Leader of the House make time for a debate on the steps that the Government are taking to reduce bureaucracy and red tape in our schools? I do not say that the problem started in 1997 but, as I go round schools, teachers tell me that it is getting worse. They are suffering from initiative fatigue. Heads want to be left to lead and teachers want to be left to teach. In the context of that debate, may we have a list of shame of those Ministers who have not only increased their personal bureaucracy with extra special advisers and lackeys, but imposed extra bureaucracy and red tape on the public and private sectors?
Mrs. Beckett: The hon. Gentleman will be aware that my right hon. Friend has done a great deal to reduce the amount that the Government spend on bureaucracy and red tape. I know that he will be pleased that his authority comes out of the tables well, but he will also know that they show 31 authorities delegating less than 80 per cent., with Tory Westminster the worst at 75 per cent. As to the hon. Gentleman's further remarks, I simply say that the Government seek to run an efficient and tight ship, and do so.
Ms Rosie Winterton: Will my right hon. Friend find time for a debate on the energy industry, especially on mis-selling by domestic gas suppliers? Many problems in my constituency arise from the unscrupulous tactics used by companies to trick people into changing their supplier. Those companies then make it extremely difficult for the customer to return to the original supplier. I am sure that many other hon. Members know of such problems and I hope that, following such a debate, the Government might feel it necessary to take some action to curb such rogue companies.
Mrs. Beckett: I understand and sympathise with my hon. Friend's point and her pressure for a debate to focus attention on such matters. However, the matter lies very much within the responsibility of the regulator who, I know, has expressed concern about it in the past. I shall draw my hon. Friend's concern to the attention of the relevant Minister, but I am sure that she has also taken action to draw it to the regulator's attention.
Dr. Julian Lewis: Will the Leader of the House consider finding time for the Secretary of State for Health to make a statement to the House about the lack of variety in artificial limbs supplied by the NHS, particularly for children? I have in mind the case of my eight-year-old constituent, Laura Giddings, who, the right hon. Lady may be aware, lost her leg in the blast in the Planet Hollywood explosion in South Africa. Limbs have to be replaced frequently as a child grows but, because nothing available on the NHS looks realistic, the child's psychological trauma is greatly increased. In such a statement, the Secretary of State could explain why, if money is the problem, parents who decide to pay privately for a better-quality limb should not be given at least an amount equivalent to the cost of an NHS limb, which they would have had free. That arrangement applies to wheelchairs, so why cannot it apply to artificial limbs for children?
Mrs. Beckett: I cannot undertake to ask my right hon. Friend to make a statement or to raise a debate on the

1293
matter in the near future because there is so much pressure on the House's time. However, the whole House will sympathise with the point made by the hon. Gentleman. I imagine that he has drawn it to the attention of my right hon. Friend, but I will add to that the sympathy that is felt across the House.
Ms Joan Ryan: Can my right hon. Friend find time for a debate next week on Europe? It is extremely important that we have such a debate at an early stage because of the extremism of the Conservative party on Europe, as it seeks to abandon the right-wing European People's party in search of more extreme friends elsewhere. It is important that all our MEPs can represent the best interests of the British people, taking the lead from the Labour Government. I fail to see how any Conservative MEP—given the position of the parliamentary Conservative party—can represent the best interests of the British people in Europe.
Mrs. Beckett: I understand my hon. Friend's desire for such a debate, and it would be attractive to spend time focusing on both the extremism and the division within the parliamentary Conservative party, whether here or in the European Parliament. However, tempting such a thought may be, I fear that it is a luxury for which I cannot, at present, offer to find time.
Mr. William Ross: Given that the Government have clearly made contingency plans to change the business next week should there be agreement in Northern Ireland, and in the light of the serious threat of violence from Mr. Adams, which was published in The Times yesterday, have the Government made contingency plans to ensure that any violence perpetrated by the IRA or other terrorist organisations, if there is no agreement and if they do not get their own way, can be contained to ensure that the law-abiding people of Northern Ireland enjoy peace and quiet over the next few weeks?
Mrs. Beckett: Government plans for eventualities in Northern Ireland are the responsibility of my right hon. Friend the Secretary of State for Northern Ireland—they do not fall at my door. The announcement that I made was for the business of the House to accommodate the eventuality of an order needing to be laid because agreement had been reached. I am sure that the hon. Gentleman shares the hope of all in the House that agreement will be reached.
Dr. George Turner: My right hon. Friend will be aware of the launch of the rural audit last week. This publication was commissioned by the many Labour Members who now represent rural or semi-rural constituencies. Will my right hon. Friend acknowledge that it would be timely for the House to have a proper debate, ahead of the autumn publication of the expected White Paper on rural affairs? The Government have committed themselves to addressing the many problems in rural Britain that we inherited from the previous Government. Would it not be helpful for the
1294
House to debate this matter before the summer, so as to inform the decisions to be made in the production of the White Paper?
Mrs. Beckett: I am aware of the launch of that document, which was an excellent piece of work and a credit to my hon. Friends who represent rural areas and who are doing so much to bring their concerns to the attention of the House. I understand my hon. Friend's concern that it would be timely for him and his colleagues to have a debate on those matters before the autumn. I cannot undertake to find time for such a debate, but my hon. Friend may like to bear in mind that, at some point in the autumn, an alternative forum will open in Westminster Hall. He may like to put in an early bid for it.
Mr. Owen Paterson: The Government promised an integrated transport policy, but this last week has been awful for Britain's travelling public. It seems that the Deputy Prime Minister is losing out at every turn to the Treasury. More than £30 billion is taken from the transport industry, and less than £6 billion is put back. There have been ghastly problems on the tube and we have had the embarrassment of the Prime Minister zooming down a bus lane to avoid queues. In Shropshire, I continue to receive desperate representations from the haulage industry, and there is a £94 million backlog on Shropshire's rural roads. Could we have an urgent debate on the disintegrating transport policy of the Deputy Prime Minister?
Mrs. Beckett: The hon. Gentleman seems not to have noticed that I have announced a debate—next week, I think—on transport, in Opposition time. No doubt he will seek to catch your eye then, Madam Speaker.
I doubt that the £94 million backlog on Shropshire's roads arose since the general election. Before the general election, as we travelled around the countryside meeting people in the business community, we found that among their most pressing concerns was the desperate need for long-term investment in the transport infrastructure, which they had despaired of ever getting from the previous Government. It takes time to turn these things around.
Mr. Tam Dalyell: Albeit that, in Treasury questions, the Chief Secretary told my hon. Friend the Member for Islington, North (Mr. Corbyn) that he had to wait for the answer to my question, Question 29,
"What (a) has been and (b) he estimates will be the effect on the Contingency Fund of (i) the conflict in Kosovo and (ii) the measures to be taken following the peace agreement relating to Kosovo",
that question, alas, was, astonishingly, not reached. Will my right hon. Friend ask the Defence Secretary to give a proper answer next Thursday on what are the costs so far and the likely costs not only of Kosovo, but of obligations that this country seems to be accruing towards the former Yugoslavia?
Mrs. Beckett: My hon. Friend identifies a genuine difficulty for Ministers, in that it would not always be right to pre-empt an answer due to be given on a later question in response to a supplementary question from someone else, as that can cause resentment. I know, however, that he was making a different point of substance about information that he seeks from my right

1295
hon. Friend the Secretary of State for Defence. I will draw to my right hon. Friend's attention the fact that he is almost certain to be asked that question next Thursday.
Miss Anne McIntosh: Will the Leader of the House find time for an early debate on the new meat hygiene charges? The fact that a fully qualified veterinary surgeon must be present when animals are slaughtered has had the most devastating effect in the Vale of York, and the few remaining small abattoirs are likely to close soon if the charges remain. The cost of slaughtering animals has more than doubled since 1 April, even though the charges should not have been introduced until next year. That is making our producers much less competitive, as the Charges do not apply to the producers of imported meat.
Mrs. Beckett: I am aware of those concerns. The Government are reviewing the charges and an announcement is expected shortly. Agriculture questions are on 1 July and a further opportunity to press my right hon. Friend the Minister of Agriculture, Fisheries and Food may arise then.
Mr. David Drew: I associate myself with the remarks of my hon. Friend the Member for North-West Norfolk (Dr. Turner) and the response of my right hon. Friend.
Can we have a debate on prescription charges? After consultation with my right hon. Friends the Secretaries of State for Health and for Education and Employment, will my right hon. Friend consider having a debate on the way in which prescription charges affect those in receipt of a student loan? I want to raise the case of my constituent, Lucy Little of Nailsworth, who, because she is from a single-parent family and has to pay her way through university partly by working, now has to pay prescription charges, whereas better-off students who receive money from their parents get free prescriptions.
Mrs. Beckett: I hear and understand my hon. Friend's identification with the rural audit report. I agree that it was excellent.
I am aware that difficulties often arise with prescription charges, although I am obviously not familiar with my hon. Friend's specific constituency case. I fear that I am unlikely to find time for a debate on the matter in the near future, but I am sure that he will look for other opportunities to raise it.
Mr. Michael Fabricant: May we have an urgent debate on education, following the astonishing press release by the Secretary of State for Education and Employment, which states:
"Blunkett challenges LEAs on red tape spending"?
Is the Leader of the House aware that the Secretary of State has managed a double whammy of outrageous proportions? He has upset all the local education authorities by his inconsistent and spurious definition of central expenditure and he also continues to alienate teachers, who do not see any extra money trickling down to the classrooms and are suffocating under the daily notes that come from the DfEE instructing them what to do next.
Mrs. Beckett: As my right hon. Friend the Secretary of State for Education and Employment has made clear,
1296
local authorities were invited to supply the information that has been published and it was repeatedly cross-checked with them. He has also made it plain that, if there is some concern about the accuracy of that information, he will be more than happy for local authorities to publish what they believe to be the accurate figures so that people can examine the two cases side by side. That is a sensible approach. As for teachers not seeing money flowing to schools, I am sure that the hon. Gentleman is aware of the dramatic decline in class sizes for the youngest children, which was the key pledge made by the Government at the election. The hon. Gentleman mentioned teachers suffering under central control, but we all know who started that.
Mr. Dennis Skinner: Is my right hon. Friend aware that nothing is more important for next Thursday than the special debate on providing devolved powers to the settlement in Northern Ireland? Nobody, certainly on this side of the House, would argue with that. However, in the event of that not happening—I hope that it does—what will be the position of all those people in the Assembly in Northern Ireland who will continue to be paid for producing what appears to be, for the past 12 months, nothing less than gridlock?
Mrs. Beckett: I am not entirely sure of the answer to that question. Everybody shares the view that few things could be more important within the United Kingdom than to see a settlement in Northern Ireland. I find it hard to believe that more than a handful of people would wish not to see that settlement endorsed, and the vast majority of people, wherever they live in these isles, wish to see a settlement that puts behind us the pain, violence and brutality that has disfigured that province for so long.
Mr. Robert Syms: Will the Leader of the House ask the Deputy Prime Minister to make a statement on the National Air Traffic Service? Last summer, an announcement was made that the service would be sold off. Since then, the proposal has received major criticism from the unions and many Labour Back Benchers. When will the Labour party's disagreements on the issue be resolved so that we can have either a decision to proceed or another Government U-turn, because the lack of progress is causing a loss of confidence in that important service?
Mrs. Beckett: I cannot undertake to provide an early announcement on that matter, but I will undertake to draw my right hon. Friend's attention to the concerns expressed by the hon. Gentleman. I am not sure which side he is on, as—if I recall correctly—the proposal was originally made by the Conservative Government. For the Conservatives to reverse their position would be not unusual, but commonplace.
Mr. James Gray: Will the Leader of the House confirm that the report by the urban task force chaired by Lord Rogers will be issued on Tuesday? Will she find time for an urgent debate on that report, on where we are to put the 3.8 million houses that we are told we will need in the next 20 years, and on whether ways can be found to encourage people to build them in the north-east and north-west of England which are economically so demanding of them? In that debate,

1297
would it also be possible to examine the scarcely credible claims of the Deputy Prime Minister to be the guardian of the countryside?
Mrs. Beckett: I am not aware of the timetable suggested by the hon. Gentleman. Of course, the House shares his concern about the issues of planning and housing, but I reject any suggestion that my right hon. Friend the Deputy Prime Minister is a less than worthy guardian of the countryside. He is a worthy guardian of all our interests.
Mr. Christopher Chope: May we have an early opportunity to debate the high price that is being paid for the Prime Minister's gimmicks? Would that give us an opportunity to discuss the revelation today by leading general practitioners that it costs as much for one patient to contact NHS Direct as a general practitioner receives for serving that patient for a whole year? That is a misdirection of resources which has been condemned by GPs, who say that the money would be better spent by them on behalf of their patients instead of in pursuit of a gimmick by the Government.
Will the Leader of the House also update us on the progress of the electronic commerce Bill? Has control of the Bill been transferred from the Department of Trade and Industry to the spooks at the Home Office?
Mrs. Beckett: The hon. Gentleman has submitted two separate requests for a debate. I can assure him that, when the Government have something to announce about e-commerce, we will announce it.
I was surprised and disappointed to hear the hon. Gentleman describe NHS Direct as a gimmick when it is an extremely worthwhile and potentially very valuable initiative. I am not aware that many general practitioners condemn it. With regard to the general tone of the hon. Gentleman's remarks, I thought it wrong and odd for him to talk about my right hon. Friend the Prime Minister as someone for ever churning out gimmicks, given his recent record in handling very serious international events in Yugoslavia and Ireland.
Mr. John Bercow: Will the Leader of the House arrange an early statement from the Secretary of State for Education and Employment on the failure of the Government's so-called new deal? A person who completes its training and education option is twice as likely not to find a job as to find one. Youth unemployment has risen in every quarter since the national introduction of the new deal. Moreover, almost half of those who participate in the new deal receive absolutely no benefit whatsoever from it. Is it not time that the Secretary of State made a statement accepting the verdict of the Business Services Association, which represents companies with an annual turnover of £8 billion? That organisation's verdict was that the new deal "is not working". Is it not time that the Secretary of State owned up to the fact that his flagship has sunk?
Mrs. Beckett: That is a long and elaborate request for what I assume is an urgent debate. I do not accept any of
1298
the hon. Gentleman's arguments, so I do not accept that there is a need for an urgent debate. The desperate wish of Conservative Members that the new deal should be a failure is a little sad. They want young people who languished in unemployment without hope for many years under a Conservative Government to remain without hope. The Government are not prepared to give up on them. We have put substantial resources into a scheme that is better and more successful than any in this country for many a long year—better, in fact, than any scheme ever before. It is disappointing that Conservative Members would rather gloat over the supposed failure of a scheme than welcome the success of the young people involved in it.
Mr. Oliver Letwin: Will the Leader of the House arrange an early debate on the worrying contrast between statistics developed by the House of Commons Library and the Government's statistical analyses? As was evident in the response by the Chief Secretary to the Treasury to my hon. Friend the Member for Lichfield (Mr. Fabricant) during Treasury questions, those two sets of statistics are wholly in conflict. Will the right hon. Lady find time for the House to determine whether the statistics department of the Library is in urgent need of repair, or whether it is the statistics departments of Government services—or the recollections of Ministers—that are in urgent need of repair?
Mrs. Beckett: When we are talking about accuracy in the handling of financial matters, my own recollection is clear. The hon. Gentleman may recall that members of the Conservative Government—they are now on the Opposition Benches—could not be trusted to give reliable statistics and information. One of the tasks willingly undertaken by the Government was to clean up and restore to independence the Government statistical service.
I understand that the hon. Gentleman's premise—that there is a conflict between statistics produced by the Library and the underlying case presented by the Government's Treasury team—is contested.

BILL PRESENTED
  GENETICALLY MODIFIED FOOD AND PRODUCER LIABILITY
  Mr. Alan Simpson, supported by Mr. Tony Benn, Audrey Wise, Mr. John McDonnell, Mrs. Alice Mahon, Mr. Llew Smith, Mr. Robert Marshall-Andrews, Mr. David Chaytor, Mr. Jeremy Corbyn, Mrs. Maria Fyfe, Mr. John McAllion and Dr. Ian Gibson, presented a Bill to make further provision with respect to the safety of and liability for the deliberate release or marketing of genetically modified organisms and genetically modified food; to establish a genetically modified organism compensation fund; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 23 July, and to be printed [Bill 128].
Opposition Day
[15TH ALLOTTED DAY]

Widows
Madam Speaker: I have selected the amendment standing in the name of the Prime Minister.
1.20 pm
Mr. David Rendel: I beg to move,
That this House welcomes the long-overdue extension of widow's benefits to widowers, and the doubling of Bereavement Payments; but notes that this costs only £100 million annually in the long term, compared with the £600 million cut the Government will make through the replacement of widows' pensions by a Bereavement Tax Allowance, the abolition of Dividend Tax Credits and the restriction of Council Tax Benefit on higher-value properties; regrets the Government's woefully inadequate response to next year's halving of widows' entitlement to additional pension; welcomes the fact that this is now under investigation by the Parliamentary Ombudsman; and calls on the Government to cease their attacks on the living standards of widows.
Before I begin, may I point out to the House an unfortunate transcription mistake? The motion printed in the Order Paper is not that which we had intended. I understand that the original motion was correctly transmitted to the Government and the official Opposition yesterday.
Madam Speaker: Order. The motion that stands on the Order Paper is the one that was given to the House. It was tabled by the Liberal Democrat party, it was checked by an officer of the party, and it has been presented to the House. Whatever dealings the Liberal Democrat party has had with the other main parties to try to amend the motion is a matter for that party. The motion on the Order Paper is the motion that the House will debate.
Mr. Rendel: I entirely accept that, Madam Speaker, and I am sorry if I seemed to imply anything else. I merely meant to inform the House of the words that were not properly transcribed. I entirely accept that an error was made, and I apologise to the House for it.
The motion originally transmitted to the official Opposition and the Government last night contained, after the words "by a" and before the words "Bereavement Tax Allowance", the words:
"Bereavement Allowance; deplores the loss of widows".
I apologise for that unfortunate error. It is one of those things that occasionally happens, but we must take the blame as it happened in our Whips Office last night.
At least two aspects of changes in legislation relating to widows and benefits are welcome. The first is the extension of widows benefits to widowers. For the first time, the benefits are gender neutral, and that is absolutely right. There is no reason to suppose that men who have been bereaved of their spouses need any less protection than women similarly bereaved. It is unfortunate that change has taken so long to occur. The Government waited until the pressure from a European court case forced them to make a change that should have happened long before.
1300
Secondly, the Government were correct to double the bereavement payment from £1,000 to £2,000. The original payment was introduced long ago, and the costs of bereavement have considerably increased since then. Most of us have probably been involved in arrangements for a funeral, and we all know that costs have been escalating for some time. The £1,000 payment should have been increased before now, and the extent of the increase is evidence of that. Such a big jump should not have been necessary.
Rather less welcome is the fact that bereavement payment is still extended only to those below pension age. It would have been better to extend it to all. At the very least, if that was all that the Government could afford following their massive cuts in widows benefits, the payment should have been extended to the very poorest pensioners. It is odd that those below pension age should receive extra help with paying for funeral and other costs, while those above that age, who are often the poorest, should not receive equivalent help.
There are of course ways in which the allowance could be set up so that only the poorest pensioners received the payment. As we suggested in the Committee stage of the Welfare Reform and Pensions Bill, it may be possible to make the bereavement payment only to pensioners already on income support who had therefore proved that their means were very small. The Liberal Democrats would prefer to go beyond that because, as we have often said in the House, some of the poorest pensioners are for one reason or another not in receipt of income support. A case can easily be made for extending the payment to those of pension age, especially the poorest.
Mr. Eric Pickles: Does the hon. Gentleman recall that, in the Budget press releases issued by the Inland Revenue, the Chancellor promised that these very people would be taken care of? It subsequently emerged that they would not be taken care of and the promise had to be retracted in Committee.
Mr. Rendel: The hon. Gentleman makes a good point. I am delighted to have it added to my argument. It is a worthwhile point to include.
One further point that must be made on this subject takes up something that the Government said in the Committee stage of the Welfare Reform and Pensions Bill. They claimed that there was no need to hand a bereavement payment to pensioners because the equivalent sums were included in the benefits paid to pensioners. We pointed out that, if that were true, it was surely illogical. One assumes that the payment will in most cases be applicable only once in someone's retirement. It is illogical that the one-off payment should be spread over all the pensions and benefits given to pensioners. It is as if the Government were forcing people to start saving something out of their pensions and benefits from the moment that they retired for the day their spouse died. The sensible way is for the Government to make a one-off benefit.
I have pointed out one or two things that are right about the Government's benefit changes. What is wrong about them?
Ms Sally Keeble: Does the hon. Gentleman accept that the Government have also

1301
introduced a carers pension, which will apply particularly to women and help women who have stayed at home to look after children or people with disabilities? It is a big support for family life and for women, especially widows.
Mr. Rendel: We are debating widows in this case. Some widows and some widowers are carers, but that is a different aspect of the changes. We will no doubt welcome many other aspects of the benefit changes that the Government have promised but that perhaps have not yet been introduced. We are talking specifically about widows on this occasion.
Ms Keeble: If the hon. Gentleman thinks that we should talk only about matters that relate to widows, why has he included higher-value properties in the motion? What does that have to do specifically with widows?
Mr. Rendel: I assure the hon. Lady that there is a specific reason for including higher-value properties. It is largely widows who live in such properties. As I was about to explain to the House, I intend to leave that aspect of the motion to my hon. Friend the Member for Northavon (Mr. Webb), who will talk about that and two other aspects in a moment.
The aspects on which I will not take the time of the House at this stage are the abolition of the bereavement tax allowance, the abolition of dividend tax credits and the restriction of council tax benefit on higher-value properties. As the hon. Lady has referred to it, I shall explain further. It is often people who are left living alone in large properties when their families have moved out who are hit by that cut. That is sadly often widows.
What else is wrong with the Government's policies? The two aspects of our motion on which I intend to concentrate are the replacement of widows pensions by a bereavement allowance and the state earnings-related pension scheme. Government figures in answer to written questions show that the first will mean a long-term cut of £600 million to widows, compared with the £100 million cost of all the things that we have supported and welcomed. The long-term net saving to the Government—the net cut in benefits to widows—from all the changes amounts to £500 million. That is what the Government are taking from widows in the long term.
The Government have told us all along that they intend to cut the welfare bill but, instead of going for the areas where we would expect them to make savings, such as fraud, they are targeting some of the most vulnerable groups, including widows. All those who were expecting to get widows pensions believe that they have been paid for out of national insurance contributions; they are a contributory benefit. The spouses of people whose widows pensions are being removed have paid contributions to them and have expected during all their working lives that their widows would receive the pensions.
The wives of some people who are at the end of their working lives, or who are approaching that point, are much younger than they are. I have a constituent of 65 whose wife is only 50. If he dies before she reaches retirement age, she will get not the widows pension but only the small bereavement allowance, which lasts for
1302
only six months. Because he has already reached retirement age, he has no means of setting aside extra savings to make up for what he had expected her to get. As with the SERPS change, there is a strong case for saying that, were the Government to play fair with such people, they would at least delay the introduction of the new scheme to allow those who could still make up the difference to put aside extra savings. That would reduce the risk of there being people who cannot make it up because they have already reached retirement age.
A more important argument against targeting widows by removing their pensions is that the bereavement allowance that will replace them is available for far too short a time. The Government propose that it should last only six months. Most hon. Members will have had people write to them to say that six months is far too short a time to expect a widow to get back on her feet after bereavement. Bereavement is traumatic and takes time to get over. Many widows may have been out of work for some time if they have been staying at home looking after families or ailing spouses before their deaths. If they are not well trained in modern skills for modern jobs, things may be difficult for them. They may need time to retrain before they can get back into work. As we all know, it takes some time to find a job.
To suggest that one should be able to go straight back to work within a month or two is absurd in the modern age. Even if one has completed a period of training, it may still take some time to get back into employment. In effect, the Government are telling people, who may have been out of work for some years, that, the day after their husbands die, they should walk into the nearest jobcentre and say, "I want a job. I am available, I am trained and I can work within a few months." That is absurd.
Some cases of bereavement are even more traumatic; many Members will have heard of such cases. I quote from the response of the National Association of Widows and the Widows Advisory Trust to the document, "A New Contract for Welfare: Support in Bereavement", in which those proposals were originally outlined. The response states:
"To pay this benefit for 6 months makes a mockery of the title, 'Support in Bereavement'."
I also quote the words of Patricia Thomas of Survivors of Bereavement by Suicide—I am sure that we can all understand that to lose a spouse through suicide is an even more traumatic event, and one that it is likely to take even longer to overcome. Patricia Thomas writes:
"Unfortunately I am well qualified to comment, having been widowed when my husband committed suicide 5 years ago. I was 45 and left not only with the responsibility of supporting two teenage sons and an eight year old daughter, but also having to face the fact that I had to make provision for my old age, as my husband's private pension could not be inherited by myself."
She makes the same point that I made about getting back into full-time work. She writes:
"I discovered how difficult it is to find full-time work. Both ageism and employers' worries about the conflicting demands on mothers with school age children appear to be significant factors … I have had poorly paid posts of 20 and 24 hours per week, both of which have ended in redundancy."
That is the real situation for widows in our society today; it is not one that is met at all by the Government's proposals.
Given those difficulties, the Government should consider at least two new measures. First, there should, at the very least, be a longer lead time before the

1303
introduction of those proposals. Secondly, the bereavement allowance should be paid for much longer than the six months that the Government propose. It could be paid for up to five years and the Government would still achieve a net saving on their proposals. To pay the allowance for six months would give them £500 million net savings; they could easily afford to pay it for up to five years and there would still be a net saving.
The second part of our motion relates to the SERPS changes. That problem originated with the previous Conservative Government; no one should blame the current Labour Government for the fiasco of the initial failure to warn people about the change initiated by the Conservative Government in 1986. That Government introduced a policy of halving the additional pension, based on SERPS, paid to women after their husbands die. That halving is due to take place from 5 April next year. In one sense, people were given considerable warning—unlike the changes to which I referred earlier, for which we ask for a longer lead time—because the previous Government allowed a long lead time from 1986. However, although there was a long lead time, no one knew about it, because the previous Government failed to tell people what they were doing. It was worse than that; they continued to send out leaflets and letters from the Department of Social Security making it clear that the full SERPS entitlement would transfer. They made no mention whatever of the fact that it would make a difference when the male partner died.
Unfortunately, the present Government cannot be absolved of all blame. Having come to power in 1997, they continued to issue wrong information through the Department. The leaflets, which had been corrected by then, made some mention of the change, but people who wrote to the Department were often given the wrong information. We have considerable evidence to the effect that letters were sent out late last year giving people the wrong information.
Mr. Pickles: I apologise for stopping the hon. Gentleman in mid flow, but I must point out that letters giving the wrong information were sent out this year.
Mr. Rendel: The hon. Gentleman just got in before me; I was about to come to that point. There is evidence that, as recently as April this year, one or two inaccurate letters crept through the system and were sent out—even after the Government had explicitly told the Benefits Agency to clarify the position.
I asked the Minister by way of an oral question whether he planned to introduce some sort of compensation for people who had been misled by his Department. He promised me on 8 March this year that there would he a compensation scheme: he did not say what it would be, but he said that he would at least consider it. That is welcome news so far as it goes. However, more than three months later, we have been given no details of what compensation scheme is expected. People are worried about what will happen. They took the wrong decision, based on false information from the Government, and they do not know what will happen to their wives when they die. Some such people may be aware that they are nearing the ends of their lives and they do not know in what state their widows will be left.
I am happy to say that, as a result of efforts by me, my hon. Friends and other hon. Members, the parliamentary ombudsman has decided to examine the issue. I hope that
1304
he will advise the Government not only that they should introduce some sort of compensatory scheme for those who can prove that they were misled and that their financial situation has been damaged as a result, but that the whole scheme should be delayed. The introduction of the scheme should be put off until beyond next year. The ombudsman has promised that he will inform us of his advice to the Government well in advance of the provisional implementation date of 5 April next year. I hope that we will get his advice soon. I hope also that the Government will not wait for the ombudsman's advice before making up their own mind as to what sort of compensation scheme should be introduced. The Government must move ahead: three months is quite long enough to work up a decent scheme.
There is widespread fury about what has happened among those who have been misled. I am sure that all hon. Members have received letters from all over the country from people who are angry about what has occurred. Mr. W. K. Bennett wrote to say:
"I could not believe that such an important change to the income of so many people had not received more publicity (from either the Government, politicians or the media)."
Mrs. Betty Tilford wrote:
"perhaps we should all kill off our husbands before the 6th April deadline".
In saying that, she picked up on the comments of the present Leader of the House when she spoke to the original legislation in 1986. She said:
"I advise anyone who is married to a man who is lingering on 5 April quickly to shove a pillow over his face, because it will halve the pension entitlement if the husband dies on the following day. It is extraordinary that the Government should place people in such a position … They will be taking away rights that have been earned."—[Official Report, Standing Committee B, 27 February 1986; c. 470.]
There is a further aspect to the campaign to get the Government to change their mind—
Mr. Phil Willis: I trust that my hon. Friend is not proposing such draconian ways of dealing with the situation. Does he not find it bizarre that, a few months ago, the House debated the mis-selling of private pensions in the second-tier phase, and that the Government ran television advertisements alerting people to the fact that they may have been mis-sold second-tier pensions, yet there has not been a single television advertisement or press release and no campaign to alert people to a measure that could have an immense effect on their lives?
Mr. Rendel: My hon. Friend is entirely right. It seems unbelievably hypocritical that the Government should force the private pension industry to do what they are unwilling to do themselves. It is disgraceful. If the private section of the insurance industry is to be forced to write to people to ask whether they feel that they may have been given bad information, surely the Government should do likewise with regard to SERPS.
The Minister of State, Department of Social Security (Mr. Stephen Timms): I thank the hon. Gentleman for giving way. I do not want him to give the House the wrong impression. Can he confirm that he strongly

1305
supports, as I hope that he does, the action that the Government have taken to deal with the mis-selling scandal that we inherited from the previous Government?
Mr. Rendel: I certainly support that. The very fact that I support it means that I would support the Government acting in the same way about their own mis-selling scandal. If the Minister is so keen for us to support his action in relation to the private pension industry, that implies that he should be doing exactly the same with regard to the mis-selling of SERPS. Perhaps he will intervene again and tell me now whether he is keen to take the same sort of action in the public case as he has demanded that the private sector should take. It seems that the Minister is unwilling to intervene again.
There is a further aspect that proves how widespread is the public's fury. Hon. Members may have noticed that one of the rare occasions on which I obtained a full-page spread in The Sun came a few days ago, as a result of my presentation to the Prime Minister of the petition run by that newspaper, asking for the Government to reconsider what they had done and to introduce proper compensation. The petition was widely supported and demonstrates the importance of the issue and the widespread anger aroused by it.
What should be done? I admit that the Government are in an extremely difficult position. I have made it known to the Minister that he has my sympathy for that. It is difficult to see how to overcome the problem. There is only one fair way for the Government to do so. From the time when the information begins to flow, the introduction of the change should be put off for at least the length of time that people were originally given by way of warning. That means, in effect, that the change should not be fully implemented for another 10 years or so.
That will be expensive, but it is the only fair way of dealing with the problem, and I emphasise again to the Minister that that is what the Government have demanded of the private sector. If the private sector must provide compensation, the Government should do the same.
Compensation should be paid to those who can show that they were misled. The difficulty with the compensation scheme arises because the Government are demanding full evidence not only that people have been misled, but that, as a result of being misled, they changed the decisions that they otherwise would have taken. The House can see how difficult that will be.
People must be able to show that they have been misled. What if, 10 years ago, they telephoned the Department or their local Benefits Agency office and received the wrong advice? How can they now prove that, 10 years ago, they had a telephone conversation in which they were given the wrong advice? They may have something in writing from 10 years ago, but how many of us have kept all the paperwork for the past 10 years, which we may at some point need, if it gave advice that we followed? To prove that a person has been misled is difficult.
The Government are asking people to prove not only that they have been misled, but that they have changed their decision as a result of that false information. They may have decided to do nothing, because they thought that the full additional widows pension that the
1306
Government were offering was sufficient. If they left it at that and did not change their mind, how could they prove that they would have changed their mind had they been given the correct information? I suggest that that is almost impossible.
If we are to have a compensation scheme, there must be no quibbling about the evidence, and it must be full and fair to people who claim that they would have made a decision even though they cannot prove it.
Mr. Derek Twigg: I apologise to the hon. Gentleman for missing the beginning of his speech. What would the compensation scheme cost the Exchequer based on what he has told us?
Mr. Rendel: I would love to be able to ask the Government what it would cost, but it is impossible to cost a compensation scheme because we have no idea how many cases are involved as the Government have failed to find that out. We cannot possibly cost such a scheme until the Government have done their job properly.
Mr. Michael Jabez Foster: If the hon. Gentleman cannot answer that question, can he tell us what it would cost if the measure were postponed for 10 years, which was his other proposal?
Mr. Rendel: I do not have the figures with me, but they were given in a written answer to a parliamentary question that I tabled, so they are available to the hon. Gentleman. It would be expensive: it would cost billions of pounds. It would cost more depending on how long it were delayed. The cost would reduce over the years, because the man and the widow would eventually die. If I remember correctly—perhaps the Minister has the figures—it would be about £10 billion over the next 10 years. I have admitted that it would be expensive, but it is the only completely fair way of going about it.
Mr. Timms: I am happy to help the hon. Gentleman by giving the figures. It would cost about £5.5 billion cumulatively over the first 10 years, and £1 billion a year thereafter, although that figure would diminish. It is a substantial sum.
Mr. Rendel: I am grateful to the Minister for giving that information. I had already elicited it from him in a written answer. It is slightly less than I said, so that is good.
Mr. Andrew Stunell: Does my hon. Friend agree with me that the scale of the loss to the Government if the deferral took place shows the loss to those who would benefit if his compensation scheme were implemented? Does not that strongly underline the sleight of hand that has been performed on widows, the impact of which will last for decades?
Mr. Rendel: My hon. Friend is right. Any money paid out by the Government is money that they have saved by failing to give the correct information in the past. It is fair to those concerned to pay out this money. I have said all along that the only way in which the Government can

1307
make the situation fair once again is by putting off the introduction of this halving of the addition pension for another 10 years or so.
Mr. Derek Twigg: Where would this money come from? Would it be from 3p on income tax or from cuts in education or the health service?
Mr. Rendel: I am happy to say that it would be up to the Government to find the money, not up to me. The point is that it is money that was, in effect, taken from these widows as a result of the false information that was given. If society as a whole is to play fair by those people, society as a whole must pay its dues. It is unfair to expect widows to pay to reduce taxation for the mass of taxpayers.
Let me say a bit more about the cost to the individual. Mr. Michael Davies of Kidderminster has written a letter saying that an annuity to compensate for the amount that would be lost as a result of the change would cost £47,000. That is the amount that he has been quoted. It is relevant to what was said by my hon. Friend the Member for Hazel Grove (Mr. Stunell), and gives some idea of the real cost to people who have lost out as a result of the change.
It is hardly surprising that the overall cost to the Government of providing proper compensation for the misinformation that has been handed out will be considerable, but they must answer this question: is it fair for the individuals concerned to have to pay the whole cost, rather than its being paid by society as a whole? I suggest that it is not fair.
Mr. David Drew: If the Government were to prejudge such cases, it is possible that people would not be adequately compensated. The ombudsman's inquiry will facilitate a proper investigation.
Mr. Rendel: I hope that, if the ombudsman comes up with a solution similar to mine, the Government will accept it. I agree with the hon. Gentleman that the ombudsman's inquiry will provide a good indication of what an objective observer might consider a fair response to the Government's difficulty—a difficulty which, as I have said, originates from what was done by the last Government. But, whatever the ombudsman comes up with, if the Government can guarantee us now that they will follow his recommendations, many people will be much happier.
What have the Government done to widows? In effect, they have dealt widows a quintuple whammy. They have changed the widows' bereavement allowance, abolished dividend tax credits, restricted council tax benefit for higher-value properties, removed widows' pensions, and refused to give proper compensation to those who have been damaged by the change to SERPS.
A great many people who voted for a Labour Government in 1997 have become disillusioned. Those people had great hopes of this Labour Government, and believed that, for once, the poorest and most vulnerable would be supported. Harold Wilson once said, "The Labour party is a crusade, or it is nothing." What crusade have we seen? During the past two years, we have seen a crusade against lone parents, and a crusade against those on incapacity benefit; now we are seeing a crusade against widows.
1308
This is not the sort of Government people hoped that they were electing in 1997. This is a Government who did not deserve to give the people of this country the hope that they had when the Government were elected. This is a Government who have failed those who deserve most.
1.59 pm
The Minister of State, Department of Social Security (Mr. Stephen Timms): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
'supports the Government's proposals to reform bereavement benefits, including the Bereavement Payment, which will provide a tax-free lump sum of £2,000—double the value of the current Widow's Payment; welcomes the additional help given to the children of widowers, who will qualify for the new Widowed Parent's Allowance, which will replace the Widowed Mother's Allowance; welcomes the protection given to widows over 55, who might otherwise have no practical alternative to relying on Income Support; and welcomes the wide range of policies which are designed to assist women to play a full and active part in the community.'.
I am delighted that we have the opportunity to debate the Government's policy on bereavement benefits. I am grateful to the hon. Member for Newbury (Mr. Rendel) for pointing out an error in the drafting of the motion, which is indeed incomprehensible in the form in which it appears on the Order Paper. I must say, having seen his correction to it, it is still a pretty ill-focused, ramshackle and loosely connected collection of topics—but at least now it makes grammatical sense. [Interruption.] The hon. Gentleman said that it was the fault of the Liberal Democrats Whips that the motion appeared in that form initially—[Interruption.]
Mr. Deputy Speaker (Mr. Michael Lord): Order. There have been far too many sedentary interventions throughout the debate. If hon. Members wish to speak, they must wait and do so in the appropriate way.
Mr. Timms: Thank you, Mr. Deputy Speaker.
The speech by the hon. Member for Newbury was one with which, at least in outline, we had already become familiar in the Committee's proceedings on the Welfare Reform and Pensions Bill. Essentially, he welcomes the Government's measures that involve spending more money; objects to measures that involve spending less; and then goes on to call for a very long list of even more spending measures. His speech bore absolutely no relation to reality. One should expect from someone aspiring to leadership of his party a greater sense of the real choices facing a party in government.
The central feature of our changes to bereavement benefits is their extension to men. It is the first time that men will receive the benefit, which is a very big step forward. Our action has been widely welcomed, even—albeit in passing—by the hon. Member for Newbury. The change was long campaigned for, but bitterly resisted by Conservative Members when they were in government. At long last, the current Government are putting the matter right.
The current system—the one that we inherited—is based on the view that each married couple comprises one independent man, who is the breadwinner, and a woman who depends on him. Over 50 years ago, in his report, Beveridge simply assumed that married women would

1309
stay at home. That view, which underlies the current system, simply does not reflect the real position in which we now find ourselves. Like so many other parts of the benefits system, that part needs to be modernised.
It is right that the benefits system should reflect the changes that have occurred in society. I understand the attractions of arguments that we should leave things as they are, and appreciate that some people believe that that would be in the best interests of those who depend on the benefits system. However, if we continue paying benefits when real needs have moved elsewhere, it will sap confidence in the system and undermine it. In the long run, those who depend on the system are those who will lose from such an approach.
Thus, for those who believe in the benefits system—as the Government do—modernisation is so important.
Mr. Pickles: The hon. Gentleman mentioned those who are dependent on the system. In the debate on the Report stage of the Welfare Reform and Pensions Bill, he said that those who were on contributory benefits were part of dependency. Does he stand by that statement?
Mr. Timms: I recall making no such statement, but if the hon. Gentleman will remind me of the context in which he thinks I made it, I shall most emphatically stand by it. If he will give me the reference, I shall be glad to do just that.
For those who believe in the benefits system, as we do, and in the potential of publicly delivered welfare to improve people's circumstances in a decent and dignified manner, modernisation is vital. Things do not stand still, and it does absolutely no favours to those who depend on the benefits system to behave as if nothing had changed. If we are spending benefits cash to meet yesterday's needs rather than today's, we are weakening the system and damaging the interests of those who look to the system for support. If we insisted on dealing only with yesterday's needs, we would be unable to meet today's needs, let alone tomorrow's.
Mr. Rendel: Is the Minister telling us that no one today is widowed, not in a job and unlikely to find one for some time, or traumatically affected by bereavement?
Mr. Timms: I am saying that the circumstances in our society are radically different from those that prevailed when the existing system was introduced. We need to bring the system up to date to reflect the huge changes that have occurred over the past 50 years.
There are big new demands on the welfare system that must be addressed, such as the needs of bereaved fathers who were dependent on the income of their partners. We shall make sure that the necessary capacity is available so that we do not let people down.
Mr. Rendel: I thank the Minister for giving way again so quickly. Is he seriously saying that he needs to make £600 million worth of cuts in order to pay for £100 million worth of enhancement?
Mr. Timms: I shall come in a moment to the financial consequences of the changes that we are making, but it is
1310
a feature of the changes to bereavement benefits that there will be additional spending in the early years to meet the new needs that we are addressing. The savings to which the hon. Gentleman referred will take a long time to materialise, so, on that front, his point is misleading. There will be an additional £140 million in the first year and about £100 million extra in the following year. So there will be substantial extra spending in the early years to meet the new additional needs that will be picked up.
The benefits system needs to reflect the changes in our society. If it does not, the system will be weakened and people who depend on it to provide security will be the losers. We will not allow that to happen. We are absolutely determined to rebuild our welfare system, and to restore public confidence in it and public support for it. That is our goal and we will achieve it.
Society has changed but the system has not. It ignores the fact that married women are far more likely to be financially independent and that flourishing public-private partnerships have developed in this area of welfare provision. Two thirds of working-age women are in work, as are seven out of 10 married women. That is nearly as large a proportion as the proportion of married men in work. The picture is therefore completely different from when the existing system was originally designed. Today, 47 per cent. of widows have occupational pension income. It is a condition of contracting out from SERPS that the SERPS element of an occupational pension offers a 50 per cent. survivor's pension. The system needs to be modernised accordingly.
The current scheme fails on a range of fronts. First, and above all, it gives no help to bereaved husbands, even when they have children to care for. That is a scandal and we are putting it right. Secondly, it no longer provides enough help with the immediate costs of bereavement. It continues to provide most help to those least likely to be in need of it. Currently, 75 per cent. of expenditure on widows benefit goes to the more numerous widows without dependants, while 35,000 widows receive nothing at all because their income support is reduced, pound for pound, by the amount of widows benefit that they receive.
The system does not recognise the enormous changes that have taken place in welfare provision. Many families now make their own provision for bereavement through occupational pension schemes and life insurance policies.
Our reformed system will for the first time treat men and women equally and will focus resources where they are needed most. We are not simply extending the old system of widows benefits to widowers. We have re-examined it in the light of our principles for reform and made improvements to bring it up to date.
Mr. Steve Webb: The hon. Gentleman is right to say that things have changed, but widowhood is still a dreadful experience and the time that it takes to recover from it has not changed in the past 50 years. The six-month limit is crucial. The hon. Member for Croydon, North (Mr. Wicks), who is Chairman of the Education Sub-Committee, challenged the Minister on that limit in the early hours of the morning during Report stage of the Welfare Reform and Pensions Bill. Is the Minister saying that widows can now cope better with bereavement? Surely the situation has not changed and widows should not be forced back into the labour market so soon.
Mr. Timms: I shall come to that point in a moment. It is a question of balance and we believe that we have

1311
made the right judgment. I urge the hon. Gentleman to be cautious, because the bereavement benefit system is not to do with the scale of someone's shock and their difficulty in coming to terms with bereavement or the undoubtedly enormous trauma involved. It is about giving people a breathing space after they lose income from someone on whom they were dependent. We have decided that six months is the right period to give that opportunity.
We will give immediate support on bereavement by introducing the bereavement payment—a tax-free lump sum of £2,000. That is double the value of the current widows payment. Some 15,000 men widowed every year will benefit from that for the first time and 40,000 new widows every year will get £1,000 more than they receive under the existing system.
We also intend to introduce two new contributory, non-means-tested benefits: widowed parents allowance and bereavement allowance. They will also be available to both widowers and widows. Widowed parents allowance will follow the rules that currently apply to widowed mothers allowance and will be calculated in the same way, but it will also be paid to widowed fathers, who are unfairly excluded at present. The new benefit will apply not only to new widows and widowers, but also to fathers who have already been widowed, if they meet the qualifying conditions. In total, around 25,000 widowers will benefit in the first year. That is a substantial improvement that has been widely welcomed. Bereavement allowance will be paid for six months following a bereavement, at the rate of the current widows pension.
I stress again that the benefits are contributory, not means-tested—there has been some mischief and misinformation about that—but they are time-limited. It would not be right to go on paying a widows pension for life to those who could be earning a decent living or who have large alternative forms of income. I shall deal in a moment with the period for which they will last.
Financial support is important in the period immediately after the loss of a husband or wife.
Mr. Pickles: I am curious about what the hon. Gentleman has just said. He said that widows benefits should not be paid for life. Can he tell me a time in our history when they were paid for life, assuming the beneficiary did not die suddenly and tragically before retirement age?
Mr. Timms: It has always been paid up to retirement. We are saying that that is no longer appropriate and does not reflect the reality of people's circumstances now.
Financial support is important in the period immediately after bereavement. Bereavement allowance will provide support in those vital six months. It will give people the breathing space that they need before they are in a position to support themselves by returning to work or through other income. That important breathing space allows people to come to terms with the emotional and practical financial upheaval caused by the loss of a spouse. However, we do not think that it would be right for younger widows and widowers, many of whom will already have regular employment, to assume a lifetime of dependency.
Another aspect of the current situation that I have not mentioned is that 98 per cent. of married women have had a job. Even if they are not currently employed, they have
1312
a history of work. Our comprehensive welfare-to-work programme offers a range of support, including advice on employment, training and benefits, to aid a person's return to work. It must be right and beneficial to ensure that a person can be put in touch with that support at the earlier stage of six months rather than delaying it for a year or more.
It is often in people's interests to get back into the labour market as soon as possible. We want men and women to be financially independent while they are of working age and in retirement. We are committed to removing the barriers to work and ensuring that work pays. Our reforms will refocus expenditure, concentrating the help that is available where and when it is most needed. That means meeting immediate needs at the point of bereavement and focusing on children and families. We want to balance sensitivity to the needs of people who have been recently bereaved with a recognition that, after a period of readjustment, those who are able to support themselves should do so.
It has been suggested that bereavement allowance should be paid for a significantly longer period, with the cost offset against the expected savings. However, the savings of £500 million that we have published are for the long term—they are expected in 2020. We shall be spending around £100 million extra in each of the first couple of years following the introduction of the new scheme. Paying bereavement allowance for a longer period would add substantially to those costs. It would not be a responsible use of resources to pay a long-term benefit to widows and widowers—without dependent children—who could be earning a decent living or who may well have a substantial income from an occupational pension.
I want to underline again the fact that, as we have always said, existing widows will not be affected by the new arrangements. We shall ensure that the existing arrangements continue to apply to all who are currently entitled to widows benefits. The new scheme will ensure that help is focused on those with the greatest need at the time of that need, with a weekly benefit for widowed fathers and widowed mothers giving long-term help with the extra costs of bringing up children, and a transitional benefit for widowed people over 45 and without dependent children, to permit a breathing space to help them to adjust to their new circumstances.
The hon. Member for Newbury spent a considerable amount of his speech expressing concerns about the change to the amount of SERPS that can be inherited from a spouse. That change was brought in by the previous Government in 1986. The change was designed to bring SERPS into line with occupational pension schemes, in which it has been the norm to pay a widow only half the spouse's pension rights.
That change was not published before 1996. A great deal of concern has been expressed to me here and in letters by hon. Members on both sides who want to know why. I wish I knew. The then Minister told the Standing Committee in 1986 that there would be a major publicity campaign about the changes. Not only was there no publicity campaign; the Benefits Agency leaflets did not

1313
refer to the changes for 10 years, until 1996. That should clearly not have happened. As in so many other areas, we are having to clear up the mess that we have inherited.
Mr. David Heath: What was the position of the then official Opposition on the measure when it was introduced?
Mr. Timms: The measure was opposed in 1986, 14 years ago. We are now considering how to deal with the enormous difficulties that we have picked up as a result of those changes not being publicised at the time they should have been. As the then Minister said, there should have been a major publicity campaign at the time to make people aware of them. That was not done, and it led to the problems that we now face.
I have said that anyone who can show that they have been mis-advised and, as a consequence, have taken action to their own financial detriment, will be entitled to compensation. A large number of people may be affected and we are considering carefully how best to resolve the matter. The ombudsman is also considering a sample of cases. We will make an announcement in due course, in good time for April next year when the change is due to take effect.
Mr. Andrew Stunell: The Minister said that, where it could be shown that someone had taken action, he would be entitled to compensation. My hon. Friend the Member for Newbury (Mr. Rendel) pointed out that it is people who have not taken action who have been lulled into a false sense of security. Can the Minister give some assurance that those people, the real victims, will be compensated?
Mr. Timms: If, for example, people have received advice by telephone, we shall take that into account. If what the hon. Gentleman is putting to me is that people may have received advice—for example, over the telephone—on the basis of which they decided not to do something that they would otherwise have done, then they, too, will have a case for compensation. However, this is an exceedingly complex and large issue which requires careful consideration by the Government. That consideration is currently being given and we shall make an announcement in due course.
Mr. Derek Twigg: I am reassured by what my hon. Friend says. I, like other hon. Members, have received letters from constituents on the subject. It is obviously a serious issue. However, are not the Government dealing with the matter in a more responsible way than the Liberal Democrats? When I asked how they would pay for a 10-year delay, they said that it was up to the Government to sort that out. But this is the same party that wants to put 1p on income tax to fund its education priorities. That seems like double standards to me.
Mr. Timms: My hon. Friend is being kind. I do not know about double standards—I would say treble or quadruple standards.
The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Quintuple standards.
Mr. Timms: Indeed.
1314
My hon. Friend the Member for Halton (Mr. Twigg) is right to say that the Liberal Democrats' proposals are entirely free of any sense of responsibility.
Mr. Michael Jabez Foster: In view of the Liberal Democrats' interest today in the fact that the matter has not been mentioned since 1986, does my hon. Friend know whether the Liberal Democrats have mentioned it since 1986?
Mr. Timms: No, my impression is that they have not mentioned it until these last few months. My hon. Friend makes a telling point.
Mr. Pickles: The hon. Gentleman has been his customary courteous self today. One has become accustomed in debates such as this for Ministers to read their brief, not make important announcements. Today, however, the Minister has made an important announcement about telephone claims. How much proof will be required? Will an applicant's word that he telephoned in 1987 or 1988 be sufficient, or will a telephone bill have to be produced?
Mr. Timms: I advise the hon. Gentleman to be patient. As I have said, we shall make a fuller announcement on these matters in due course and as soon as we can.
Mr. Rendel: The hon. Gentleman seemed to make a double announcement, one of which was referred to by the hon. Member for Brentwood and Ongar (Mr. Pickles), concerning the proof that would be needed that a telephone call had been made. That is an interesting concept. I imagine that almost everyone involved could say that they had made a telephone call and it would be difficult to prove otherwise. But what happens if people say that they did not take any action? Most people, if they were reassured, will not have taken any action. Will they all receive compensation?
Mr. Timms: My advice to the hon. Gentleman is the same as to the hon. Member for Brentwood and Ongar—to wait for the announcement that we will make as soon as we are in a position to do so. The hon. Gentleman's point may well provide him with an explanation of why it is necessary to take some time over the details of the matter to ensure, as we will, that we get it right.
It is right, in meeting the needs of bereaved men for the first time, and in making a priority, as we are doing right across government, of the needs of children—in this case through the widowed parents allowance—that we should also take the opportunity to bring bereavement benefits up to date and modernise the circumstances in which they are paid. That is what we are doing, and I urge the House to support the proposals that are in the Bill.
2.26 pm
Mr. Eric Pickles: It is a great pleasure to speak in this debate. I commiserate with the hon. Member for Newbury (Mr. Rendel) on the mistake in the drafting of the motion. He blamed the Whips Office, but if any trade union operates in this building it is that of the Whips. I shall watch for the number of times that the hon. Gentleman is slipped over the next few months.

1315
It is also a great pleasure to follow the Minister. He spoke fluently and, in commemoration of the day and in honour of the Liberal Democrats, he is wearing a yellow tie. I also commend him on his bravery. His announcement concerning telephone calls is important. For him to say that, if people did nothing, they may well have a claim is an important announcement.
Mr. Derek Twigg: Will the hon. Gentleman give way?
Mr. Pickles: In a moment.
Not many hon. Members, save the Chancellor, have the opportunity to commit the Government to a potential £5 billion of expenditure. I congratulate the Minister on doing so. That shows real courage. I hope that he has a peaceful weekend in consequence, particularly as the hon. Member for Halton (Mr. Twigg), who is seeking to intervene, criticised the Liberal Democrats for suggesting such a thing. I trust that he will now apologise to the hon. Member for Newbury.
Mr. Twigg: When will the hon. Gentleman apologise for the current debacle? Will he apologise now on behalf of the Conservative party when it was in government?
Mr. Pickles: I have apologised from the Dispatch Box on a couple of occasions. Hon. Members should accept responsibility for what happens. The fact that the publicity campaign did not take place is a disgrace. I do not think for one moment that Ministers in the Department of Social Security prevented that from happening; nor do I suppose for a moment that the Minister would issue inaccurate information. At the beginning of this year, the Department issued a memo on pensions dated 12 January. It contains no instruction to give people the right information. That is an interesting date, because I received a letter on the same day giving inaccurate information.
Too often in politics, people are not prepared to accept responsibility. This situation arose when I was chairman of education for Bradford metropolitan district council and before the Minister entered the House, but I accept responsibility, as must we all. We must all find ways to deal with such matters. The Minister, in the undertaking that he has just given, and in terms of the ombudsman's report, will go some way towards doing so. I look forward to the Chancellor honouring the hon. Gentleman's pledge today. I hope that he will support him in that. It is a brave thing to come before one's Back Benchers and defy their wishes.
The Welfare Reform and Pensions Bill, which largely dealt with these matters, is now in another place. We spent many hours debating the Bill in Committee and on the Floor of the House. We hoped to receive some explanation of why the Government are abandoning a proportion of widows, but we have received no explanation in Committee, on Report or today. The Government have deliberately picked on a group of women who are unaware of their fate. The great advantage for the Government is that no one can identify the victims. The women are unaware—they are currently in a marriage, and they have a reasonable expectation of a long and happy marriage. Sadly, fate will deny them that. From a spin point of view, that is marvellous. There is no opposition, because no one can point out that they will lose from it. However, those women will have to face
1316
not only the loss of a spouse, but the sudden realisation that their Government will abandon them at their time of greatest need.
The proposal offers the veneer of change under the cover of sexual equality. The Government are right to say that times are changing. Widows pensions were introduced in 1925 when the man was the main breadwinner. In 1999, things are changing—but they are not changing that fast. I welcome the fact that there are more women in the work force, and their increasing role, but these are early days.
The hon. Member for Hackney, North and Stoke Newington (Ms Abbott) put it well on Report when she said:
"It will not do for Ministers to wrap it up in spurious feminism, claiming that the world has changed, women have moved on, women all work and they do not need the present provision. The world has not changed that much and the majority of women, particularly working-class women, still earn less than the majority of men."
The hon. Lady was absolutely right about "spurious feminism". The Government put on a veneer of sexual equality. They are using widows as the battering ram of social change, rather than as a reflection of social change. [Interruption.] The hon. Member for Sheffield, Attercliffe (Mr. Betts), from a sedentary position, does not show sufficient compassion. Surely it makes sense to carry out such a measure once matters have changed, rather than to use it as a battering ram to make the change.
Nobody is fooled by the veneer, which is entirely transparent. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said in the same debate:
"Many women who will be affected by the changes will not have had jobs, will not have qualifications and will find it impossible to find employment."
Unlike other matters in the welfare budget generally, the number of widows is falling. It fell by 30 per cent. between 1983 and 1997. This is simply a cost-cutting measure to save £600 million of money which, as the hon. Member for Newbury said, husbands have paid in over many years in the reasonable expectation that the Government would honour their pledges. This £600 million will force widows on to means-tested benefits.
Kali Mountford: The hon. Gentleman is as gracious as ever, and I am enjoying his flamboyant use of language. Does he accept that focusing resources on families with children will do far more socially than anything that he is now suggesting?
Mr. Pickles: The hon. Lady cannot get away from the fact that what she voted for the other week was the abandonment of widows at their most difficult time. It will ensure that women who perhaps have nursed a husband for many years will suffer. People who have lost a husband by suicide will suffer. In addition, someone who loses a sole child will suffer because of this when they are at their most vulnerable. The Minister is right to say that this is not about compensation for bereavement. It is about giving a breathing space, or providing the thing that the state can offer in those times—a little bit of money to allow women to make sensible decisions.
The Minister said that those on contributory benefits are part of the dependency culture—a point that he repeated on Report. He asked for the reference—it is

1317
column 810. That proposal goes to the heart of the Government. I do not believe that the Minister is an uncaring man, but he does not understand the difference between means-tested and contributory benefits, and the effect of pushing more of society on to means-tested benefits.
I accept that the Minister may not want to take my view on this, so I will simply repeat some of the speeches that have been made by Labour Back Benchers. This matter concerns the famous "something-for-nothing society" speech made by the Prime Minister. The Government believe that widows receiving benefits that their husbands have paid for are getting something for nothing. The right hon. Member for Birkenhead (Mr. Field) put this well in the debate on 17 May:
"Given that it is the Prime Minister's wish for welfare to be based on something for something, it is difficult to justify the Government's changes in the provision for widows. We are taking away benefits—contributions towards which may have been made for 30 years—and substituting nothing, which is the exact opposite of what he says he is about."
Kali Mountford: Does the hon. Gentleman accept that life on benefits is no fun at all, and that people in employment are significantly better off? Does he accept that those who are willing and able to work will find that the opportunity to work gives them far better opportunities in life than languishing on any benefit, whether contributory or otherwise?
Mr. Pickles: The hon. Lady is absolutely right, but those who receive contributory benefits are getting back money that they have paid in. The widows pension has enabled a number of women to receive a sum of money as of right, which has often enabled them to get back to the workplace. That is why only 17 per cent. of widows currently get means-tested benefits. After these proposals are brought in, a great deal more will be forced on to such benefits.
Mr. Rendel: Will the hon. Gentleman give way?
Mr. Pickles: I will in a moment. Distinguished as the hon. Member for Newbury is—and as I aspire to be—I fear that we are not going to impress the hon. Member for Colne Valley (Kali Mountford). Let us look instead at what the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) said. She said:
"The vast majority of working women are in jobs that pay less than the male average wage. Some have been on very low pay … Some will not have been working at all while raising their families. A woman's family might have left the nest only recently, leaving her on her own."—[Official Report, 17 May 1999; Vol. 331, c. 777–92.]
Mr. Rendel: Even if it is true that living on benefits is less worth while than having a job, is it not also true that living on no benefits at all when one cannot get work is the worst of all possible situations? Taking away the bereavement allowance after six months does not provide an opportunity for work; that opportunity exists anyway.
Mr. Pickles: The hon. Gentleman is entirely right. Widows will be forced further and further down the income scale and will have to sell their property and
1318
personal possessions until they qualify for income support. That will add to the amount being paid to people through means-tested benefits.
There is one vital question: why six months? What is so magical about the figure of six months? We have received much evidence and many statements from various organisations, all saying that six months is wholly inadequate. I recall a very moving speech by the hon. Member for Hackney, North and Stoke Newington about the loss of her mother, and I spoke in Committee and on Report about the loss of my mother. I know that one's judgment has not returned six months after that loss, so how much more difficult must it be for someone who has lost a life partner, someone to whom one may have been married for 20, 30 or 40 years?
The Minister said that it is all a question of balance. What is the balance? What are the ingredients of this magical balance? We know that part of the balance is that, if the widow remarries within the six-month period, she loses the bereavement benefit. Who marries within six months of a bereavement? It is odd to put such a provision in primary legislation.
We know of one famous marriage within six months: that of Hamlet's mother, Queen Gertrude.
Angela Eagle: A dysfunctional family.
Mr. Pickles: I suppose that it is fair to say that the king and queen of Denmark and their eldest son were indeed a dysfunctional family, but why is an entire piece of legislation being put together on the basis of such families? Not all families are the Simpsons or Hamlet's family. You are very well read, Mr. Deputy Speaker, so you will recall that Hamlet talked about thrift. He said:
"Thrift, thrift, Horatio! The funeral baked meats
Did coldly furnish forth the marriage tables."
One might need the provision if it were a matter of 15 years' potential pension—but 26 weeks? Now we know what the balance is that the Minister wants to achieve. At one end of the scale is Queen Gertrude of Denmark and at the other is the spurious feminism referred to by the hon. Member for Hackney, North and Stoke Newington—a balance between Denmark and Hackney.
Miss Anne McIntosh: My hon. Friend may know that I am part Danish. I have recently joined the Anglo-Danish society. On behalf of all my compatriots, I hope that he is not arguing that all Danish families are dysfunctional; I am sure that that was not his intention.
Mr. Pickles: I wish my hon. Friend a long and happy marriage. Much as I love and admire her, she should be reassured that I will not be on the waiting list should anything unforeseen happen.
Mr. Stunell: May I bring the hon. Gentleman back to this country? Labour peers have tabled an amendment that would increase the bereavement payment period from six months to 12. Does he agree that it would be good if the Minister could announce that the Government were prepared to accept that amendment?
Mr. Pickles: It would be marvellous. The Minister has had his chance, but I will gladly give way to him if he

1319
wants to make that announcement. Various formulae could be available to extend the period, but we have still not received an explanation of why the period should be six months. On this matter and on the bereavement tax allowance, to which the hon. Member for Newbury referred, we need to know where the Government stand.
Let us consider the plight of war widows. The Government appear to have a cynical attitude to widows. This is a small matter, but I think that it speaks volumes about the Government's attitude. For the purposes of housing benefit, £10 is disregarded from war widows pensions and from war disablement pensions. Some local authorities use their discretion and waive more, or the entire amount. That is as one would expect for the widows of the generation of heroes who gave their lives for their country. It is right that local authorities should act with compassion, but a few stick rigidly to the £10. It is unfair that widows living only a few miles from one another should be treated differently.
The hon. Member for Thurrock (Mr. Mackinlay), to whom I pay tribute, asked the Prime Minister to review the matter and consider how to achieve some uniformity among local authorities. The Prime Minister said:
"I am certainly happy to consider it, but my hon. Friend will know that discussions about the problem have been going on for a considerable time. It is for local authorities ultimately to make their own decisions, but we shall continue to keep the matter under review and under discussion."—[Official Report, 20 March 1998; Vol. 312, c. 950.]
When I heard that commitment, I thought that it was marvellous and I looked forward to some action. I felt that it would be a good test of the Government's and the Prime Minister's sincerity. It is a small matter with small cost implications, and a promise was made to the House from the Dispatch Box.
A year passed and nothing happened. I asked why that was, and the Prime Minister's reply was very different in tone and content to what he had said to the hon. Member for Thurrock. The Prime Minister said:
"We have explained constantly that the problem is cost, but I point out to the hon. Gentleman that he supported a Government who were in power for 18 years and never did that. I appreciate that we now have the responsibility"—
that is a good thing in a Prime Minister—
"for those decisions. We have said that we will look at it, and we will do that, but the problem is simply one of cost."—[Official Report, 12 May 1999; Vol. 331, c. 315.]
I have checked Hansard carefully, but I could see no reference in the intervening period to any Minister saying that it was a matter of cost. I cannot understand how the Prime Minister can say that the Government have consistently said that cost was the issue. I concede that the previous Government did not increase the disregard, but a promise is a promise.
I tried twice more. I asked the Leader of the House about the issue at business questions on 13 May and I asked the Under-Secretary of State for Social Security on 24 May. He told me that it was a matter for the discretion of local authorities. I already knew that. Indeed, the Prime Minister told the hon. Member for Thurrock that a year ago. What happened to the review of the situation? I submitted a written question, which was answered by the Under-Secretary of State for Social Security who is in her place. I asked her:
"how many local authorities (a) do and (b) do not disregard the whole amount of war widows' pensions and war disablement pensions".
1320
I also asked what the total cost would be. She replied:
"The additional cost to central Government of a full disregard … is estimated to be in the region of £70 million".—[Official Report, 20 May 1999; Vol. 331, c. 429–30.]
She also said that information on the use of discretion by local authorities could not be provided because of the "disproportionate cost".
The sum of £70 million is a full £10 million less than the Government spend annually on publicity. They could find £70 million by reducing the number of leaflets that they produce. [Interruption.] The Government Whip appears to look favourably on that idea. The sad fact is that the number qualifying for the benefit falls every year, because many of them are in their 60s, 70s or 80s so the Exchequer would not have to make a large commitment.
The Under-Secretary did not know which local authorities used their discretion. How then can the Prime Minister say it is a matter of cost? He does not know what the cost would be. However, for the cost of a telephone call, I have been able to obtain that information, courtesy of the British Legion. Only 10 authorities stick rigidly to the £10 disregard. I shall list them for the Under-Secretary's information—Chester-le-Street district council, Easington district council, Gateshead metropolitan borough council, Manchester city council, North Tyneside metropolitan borough council, Norwich city council, Redcar and Cleveland borough council, South Tyneside metropolitan borough council, the City of Sunderland metropolitan district council and Wear Valley district council. They are all Labour authorities. Another 31 authorities apply less than a 100 per cent. disregard. If that is the sum total of the problem, the figure of £70 million might be a smidgen on the high side.
The Prime Minister made a promise and then forgot about it. He stonewalled a year ago and Ministers have stonewalled since, and we are no further on. If the Government are not prepared to concede on an issue so small and insignificant, what chance have we of extracting any concessions in the House of Lords?
What will happen next? I can find no better way to express that than to use the words of the hon. Member for Knowsley, South (Mr. O'Hara). In a final appeal to the Government to change their mind he said:
"I appeal to them once again—in friendship and fraternity—to stop attacking that group"—
widows—
"and, when they have an opportunity in the future, to find some way of being more generous to them."—[Official Report, 17 May 1999; Vol. 331, c. 784.]
What an appalling indictment of the Government that a Labour Back Bencher has to urge them to stop attacking widows. If Conservative Members can make a speech on an issue based on criticisms from disgruntled Back Benchers and squirming Ministers, the Government's policy must be deeply flawed. They should reverse that policy and, in the words of the hon. Member for Knowsley, South "stop attacking" widows.
2.56 pm
Mr. Michael Jabez Foster: The Government's proposals to ensure that widows and widowers receive significant help when they most need it is to be applauded. The present provision that we inherited failed to provide the right amount of help at the right time. It is the time shortly after a bereavement, when distress is

1321
coupled with extra cost, that needs are at their peak and when help is required. I therefore support the Government's proposal for a doubling of the immediate help through the bereavement payment because that will be of great assistance at the time when it is most needed. Also important is the fact that it will be paid to widowers as well as widows.
However, neither the present provision nor the Government's proposals deal with the small group of widows who face perilous financial loss at a time when the enormity of their situation is at its worst. I speak of those recent widows who receive the support of widowed mothers allowance and then lose their child.
The current provisions rightly provide significant support for young mothers—those under 45—who have children to support at the time of their husband's death. Such support continues until the child ends full-time education and then, depending on the age of the widow, a widows pension may be claimed or, if the widow is under 45, the provision ends. However, the changes can be planned for, as there is some certainty about when the child will leave the nest.
There are some widows, however—no doubt, a very small number—who suffer grievous financial and personal loss when they suffer not only the loss of a spouse but the subsequent death of a child. Such a tragedy befell my constituent, Mrs. Norma Haigh.
Mrs. Haigh was just 40 when her husband died and she was granted widowed mothers allowance. Up until earlier this year, with a part-time job from which she brought in £136 per week and the widowed mothers allowance amounting to £103 and child benefit of £11, she was able to support herself and her 16-year-old daughter, Rachel, albeit not to the same standard as if her husband had lived. Mrs. Haigh had an older son in the family who had completed full-time education but who unfortunately was out of work. He at least had the stability of a home in which to live following the death of his father.
On 1 January, Rachel was rushed to hospital and died in the operating theatre in tragic circumstances. No one could have expected that otherwise healthy child to have died in that way. My constituent was distraught following the death of her husband and that second tragedy and was too ill to return to work full time. She did manage to work for 15 hours a week, but, in consequence, her income was reduced to £54. Her widowed mothers allowance of £103 and child benefit of £11 ceased on the very day of her daughter's death. Having had an income of more than £250 a week, she was thus reduced at the time of her greatest need to an income of just £54. There was no provision for the funeral expenses or for the extra help needed at such a time. The previous Government's provisions did not cover that tragic circumstance. I am not suggesting that the previous Government intended to deny help to this small minority of needy individuals, but I am absolutely sure that the present Government would not wish for that small but needy group to be left without support.
I am asking not for compensation for bereavement but for practical and immediate help in such tragic circumstances. In particular, I have two requests to put to my hon. Friend the Minister. First, will he ensure that, when such situations arise—when either a mother or,
1322
now, a father is left with a double bereavement such as I have described—there should be an immediate bereavement payment, such as is paid under the new provisions, to assist with the funeral expenses? Secondly, will he ensure that there is a period of protection of perhaps six months from the loss of the widowed parents allowance to help overcome the immediate trauma?
A period of six months would probably be sufficient, as people's circumstances change while they adjust to bereavement. Because of the rarity of the situation, the costs to the Exchequer would be minimal; but, to the affected parent, the assistance may just make life worth living.
It is too late to help Mrs. Haigh, but I look forward to receiving my hon. Friend's assurance that my requests will be taken seriously and that proposals will be made to help others in such tragic circumstances in the future.
3.1 pm
Mr. David Heath: I shall make a brief contribution to what has been an interesting debate. I commend my hon. Friend the Member for Newbury (Mr. Rendel) for the way in which he introduced the debate and ensured that it covered a wide spectrum of issues.
We are not holding the Government to account for one specific action in relation to widows, but we are worried about the cumulative effect of many different aspects of Government policy. When taken together, they make life very difficult for a particular group of people who often are not best equipped, either financially or emotionally after a bereavement, to make good the loss.
We do not damn the Government's intentions. The Government, when formulating social security policy, probably do not intend to be discriminatory against widows or any other group. Nor do we wish to damn all the Government's initiatives in that regard. We support many of them, and the extension of existing provision to include widowers is especially welcome, although we might quibble about its precise terms. We also welcome the promised additional support for carers although, given that the arrangements are not yet in place, it is stretching the point somewhat to claim that that is evidence of the Government's generous support for widows. We are entitled to wait until those arrangements are implemented before we hang out the flags.
The Government seem to have a blind spot in this matter, which is why the debate is so important. We must make it clear to those of our constituents who are widows or widowers that they are not forgotten, and that they are an important group whom we shall support in our arguments today.
It is rare for me to agree with the hon. Member for Brentwood and Ongar (Mr. Pickles), and spurious feminism is the last thing in the world of which the Conservative party could be accused. However, the hon. Gentleman had a case when he identified some wishful thinking in the Government's policy of social evolution rather than revolution. That evolution is under way, but it is not complete. The present sociological and demographic position is that many widows are not given the independent means and employment prospects that we want them to have. The truth is that they have often been placed at a disadvantage throughout their lives by the

1323
social conditions in which they have lived, and that they are disadvantaged now by the arrangements governing what happens after the death of a spouse.
I wish to concentrate on the changes to SERPS and the undoubted mis-selling of pensions using terms that were anything but precise. That is a Government responsibility and a matter of enormous consequence to constituents. I have received very many letters on that subject. I shall not read them out, but I will name some of my correspondents. They include Mr. Deasington of Queen Camel, Mr. Michael of Bower Hinton, Mr. Smith of Milborne Port, Mr. Brosnan of Frome, Mrs. Stonell of Frome and Mr. Cochran of Henstridge.
The people who wrote used almost exactly the same terms, and it is interesting that most of them are men—husbands worried about what will happen to their wives after they die. The letters share one of two emotions: either devastation at the unpicking, through no fault of their own, of what the writers had arranged on their spouses' behalf; or anger at the degree to which they had been misled, right up to a few weeks ago, by the advice that they had received.
People often make SERPS contributions over a lifetime. The men who wrote to me expected that those contributions would mean that, after their demise, the arrangements for their spouses would be satisfactory. That expectation has now been dashed. They feel that the Government have reneged on what amounted to a genuine contract.
I feel sympathy for Ministers, because clearly this matter is not of their doing. The fault lies with the previous Government, who should have made the appropriate dispositions at the time and should have maintained them in the intervening years. However, that does not alter the facts facing the people who write to hon. Members of all parties. They are not interested in where the fault lies. Their problem is that, through no fault of their own, they have been left in an impossible position. They made the simple mistake of trusting the Government, and assuming that advice from the Department of Social Security was good. That advice was not good.
The problem of SERPS for widows is especially difficult. The demographic information shows that widows are among the poorest pensioners, as the relevant statistics prove. Many widows do not take up their income support entitlement. We may wish that they did and that the mechanisms were better at encouraging them to do so, but the fact is that they do not. Women tend, in general, to have lower pension entitlements than men—another example of the disadvantage that widows suffer. In addition, people who work under the SERPS system tend to have lower lifetime earnings and are therefore the least able to cope with the financial shock that has been described.
I intervened on the Minister of State's speech to ask about the position of the Labour party in 1986, when it was in opposition. I was not trying to make some clever debating point. I do not expect nothing to have changed over such a period, nor that members of the Government should adopt exactly the same position on every matter as they did in 1986. However, I would have thought that, when the Government came to power, Ministers would have talked to civil servants in the Department of Social Security about that Department's prospects. I should have
1324
expected them to realise that a measure that they had opposed in opposition—and opposed virulently, as the contemporary remarks of the Leader of the House show—was still waiting to be implemented. If Ministers did not realise that when they came into government, civil servants certainly should have known it and should have included it in the hand-over brief. They should carefully have flagged up the fact that a provision yet to be implemented had been opposed, giving Ministers a chance to reconsider it.
Of course, nothing happened. There was no decision to reverse the policy, which may have been impracticable in any event. More importantly, it was not drawn to Ministers' attention that no publicity had been given to the proposal. It is absurd that people were incorrectly advised. The mistake, far from being rectified, was amplified after the Government came into office.
Mr. Rendel: Perhaps when she winds up the debate, the Minister will tell us when her departmental team was told that incorrect information had been given.
Mr. Heath: My hon. Friend makes an important point. Either Ministers were told and were negligent, or the civil service has made an appalling error of judgment. The Government have ended up implementing a measure to which they were strongly opposed, and it would be a dereliction of duty in the civil service if that fact had not been brought to Ministers' attention.
All that is history, and we must deal with what is happening now. People have been placed in a difficult financial position. The Minister made the perverse suggestion that people who have suffered real hardship must establish that they were misled, and that they consequently made the wrong decision. I do not know what will happen to those who were misled, but took the right decision. Is the test cumulative or single? The test is perverse. Anyone who was wrongly informed by a Department of Government has been misled. It matters not what process of mind people went through. If they were told something wrong, they were misled, and the Department should be big enough to say so.
The Minister has put a gloss on the situation by saying that a phone call is sufficient evidence of someone's having been misled, even where there is no documentary proof. Inaction is just as adequate as action as a proof of wrong action. A person need merely say that he was telephoned, and did nothing more. That will be enough proof to win compensation. That is nonsense, and if the Minister does not realise on reflection that it is nonsense, someone else will realise it for him.
It would be far better to deal with problems at source, and fairest to take proper measures to extend the period of introduction to mitigate them. If that is not done, both the Department's culpability and the size of damages will have to be established, and it might cost the Government more to act in that way than to extend the period. Alternatively, a clear system must be developed to identify cases in which people were let down. Leaving it to the ombudsman would be another dereliction of duty. The Government appear to feel that it is all too difficult for them, so someone else must decide. "See you in court," they seem to be saying. A responsible Government dealing with people who have taken decisions on the best available advice would surely think it right to pre-empt the ombudsman and the courts by doing the right thing from the start.

1325
I question the difference between the approach taken to this issue and that taken on the mis-selling of private pensions. There is a cost to the Exchequer, and I have the greatest of sympathy for Ministers. However, they must take this matter seriously. To the suggestion that the Liberal Democrats should somehow have warned people, I can say only that had we been running the Department of Social Security, we would have done so. It so happens that that responsibility fell to the Conservatives for a long time and has fallen for the past couple of years to Labour Ministers.
We achieve nothing by laying blame. We must do right by widows who are suffering and by husbands who are worried sick about the provision that they thought that they had made, and that they must now make again. It is cruel that elderly gentlemen have been left not knowing which way to turn. I implore the Government to take this matter seriously, and to do all that they can to mitigate a mistake that is not their own, but that they have not yet sought to repair.
The Minister of State is a decent chap—I often travel home with him on the tube, and I know that he would not intend widows to suffer. I hope that he will back his intentions with the right action.
3.17 pm
Kali Mountford: I apologise to the hon. Member for Newbury (Mr. Rendel) for missing his speech. He and I have exchanged views during the course of the Welfare Reform and Pensions Bill, so I have had the benefit in the past of the full range of his views.
The hon. Member for Brentwood and Ongar (Mr. Pickles) gave us a vision of a widow, wrapped in her weeds, covered in a black shawl, shuffling about and unable to raise her head for want of self-esteem or dignity. The hon. Gentleman should know that times have moved on. The picture that he painted did no credit to him or to widows. We ought to recognise that widows have reached a dreadful time of life—I can imagine few things more terrible than the loss of a spouse—but the point is that it is the loss of the spouse that causes deep grief, not just the loss of a husband.
The hon. Gentleman might have recognised that benefits should be extended to men as well as women, not out of some spurious feminism and not even out of simple fairness, but because both men and women grieve. I do not know how men have carried on until now. Those who have managed to set aside grief to go off to work have done so because they had to. I have never seen a difference in the ability of men or women to cope with grief, which is equally deep, whether the deceased is a husband, a wife or a child. The quality of grief does not vary according to gender.
To suggest that extending benefits to men is spurious feminism is both wrong and unfair, particularly to fathers who must support their children. Many fathers choose to continue to work, but others do not. Mothers make similar choices in the interests of their families. The Government are right to restructure benefits to help families at a time of great need.
I cannot imagine that anyone could offer me a sum of money—even £50,000 a week—that would ameliorate my grief. There is no cost to grief, but there is a cost to living.
1326
The argument is why a period of six months has been chosen rather than a year or two years, but we have to look at everything on balance. We do not argue that, after six months, the grief will suddenly end.
Eight years ago, I lost a grandchild. I grieve for him still. I imagine that I shall grieve for the rest of my life, but I am not incapable of working and never have been. Nor is my daughter, who returned to work fairly quickly after the terrible, grievous loss of her first child. We cannot put a defined time limit on grief, but benefits are not about compensating for grief. They are about giving a period of sanctuary, but then life goes on and it must go on. It is right for Governments to consider how they can best help people through a period of distress in their life. I know from my family, friends and neighbours, and my own life that dignity comes from work and that it can provide a way of returning to life.
I do not argue that every woman or man is capable of going back to work instantly after the grievous loss of their spouse. They may still be grieving and their grief may cause them mental ill health, for which they will receive support. Even Liberal Democrat Members have failed to recognise that, if the bereaved person does not have children, when the allowance comes to an end, a range of other benefits will be available. They are available to all people who are ill or seek to retrain for work. People are not left unsupported in British society today.
I am glad to see the hon. Member for Brentwood and Ongar back in his seat. I hope that he will read my remarks about widows and recognise that they are not the women wrapped up in shawls whom he seemed to describe. I am glad to have the chance to put that point directly to him. I am grateful to him for recognising the terrible mistake of the Government whom he supported. Much has been made by Members on both Opposition Benches of what happened with SERPS in 1986. It was gracious of the hon. Member for Brentwood and Ongar to accept responsibility, even though he was not a Member of the House at that time. It makes a pleasant change.
The hon. Member for Somerton and Frome (Mr. Heath) made the point that we had to look at the situation that we were now in, not the one that we would have wished to be in or imagined that we were in. We inherited the most appalling mess, and that is why I am grateful for the apology. That appalling mess is such that the ombudsman is investigating it. It would be foolish and wrong for any Government to come in and say, "Here we are. We are going to save the day without looking closely at the detail." The detail is so complex that it may take a little while to sort out. It would be a grave mistake to rush it.
It occurred to me during the debate that people might say that they telephoned and were given advice. If they telephoned from a telephone box, I have no idea how they can prove that they made the call. The mess will be difficult to unpick. I do not seek to cast blame here, there and everywhere; that would not help the situation. The fact is that the matter has to be put right. I have no idea what the ombudsman's report will look like; I await it with interest. People feel let down by what has happened to them. People have made plans according to the advice that they were given. It behoves the Government to look closely at how that can be put right. To pretend that we can come along 14 years later with an instant solution would do no one any service.

1327
Simply to say, "We do not blame you because you were not in government then, but you have to put it right and therefore it is your fault," does not take us any further forward. The way forward is what the Government are doing—namely, examining closely what happened and seeing whether there are lessons for the future and what, if anything, can properly be proposed to people who have lost out as a result of a mistake that was made 14 years ago in not giving out information.
Some comments were made about letters written in January to the Department about someone's entitlement on a particular day. My experience of Government Departments is that, when they consider a potential claim, they consider the day on which that claim might be made, which is the day on which it is proposed. Someone's entitlement may be six months down the line.
Mr. Pickles: The hon. Lady is courteous in giving way. I saw her name on the Annunciator screen so I came in to listen to her. She is doing well, but we are talking about 12 January. Information had gone out, instructions had gone out, everyone knew that there was a problem, and hon. Members were holding debates on the matter, but still the information had not got through to the Department. I cannot believe that we can run a Department on the basis of reading newspapers, but anyone who read a newspaper would have known. It is an indictment that the information was not passed down and that, on 12 June when a memorandum had gone out, it still had not told people in the Department to correct the mistakes.
Kali Mountford: I am flattered that the hon. Gentleman was so interested in what I had to say, but I would be more impressed if he did not try to use a tiny fig leaf to cover his embarrassment. It is extraordinary to pretend that the mistake is the responsibility of this Government when his Government introduced the procedures and I am surprised that he even attempted to do so.
Time is pressing, so I will simply say that the process that is in place now is the only one that can possibly work. The hon. Gentleman smiles at that, but I think that the process is right. I hope that lessons are learned for the future and that pensioners who feel aggrieved will have their concerns met by this Government.
3.27 pm
Mr. Steve Webb: The hon. Member for Colne Valley (Kali Mountford) has made a thoughtful speech in this important debate on an important issue, but she misses the point about what happens after six months. We are not saying that all financial support stops then. The significance of the six-month threshold is that it is when pressure starts to be applied to a widow. After six months, she ceases to be entitled unconditionally to what was previously the widows pension and will become the bereavement allowance. At that point, she receives only benefits conditional on actively seeking work and walking through the infamous single gateway. In other words, from the day of bereavement, a clock starts ticking and the widow knows that, six months down the line, pressure will be applied.
Widows will vary in their experience and circumstances of bereavement. A balance has to be struck, but we have been given no justification for the six-month threshold.
1328
It is another arbitrary assertion. I dare say that the pressure for the six-month threshold came not from Richmond house but from the Treasury 30 yd over the road. The balance that had to be struck was between what the Chancellor would let the DSS get away with and the needs of widows. What research has been done into the experiences and needs of widows and when they feel ready to look for work? I would love to know what evidence there is. Or is it just arbitrary or Treasury pressure?
The phrase "By their deeds ye shall know them" will be well known to hon. Members. New Labour has reconstructed the division between the deserving and the undeserving poor. The deserving poor are elderly or poor pensioners and the severely disabled. None of us would query that. Who are the undeserving? The Government have attacked lone parents and the incapacitated, but who would ever have thought that widows would constitute the undeserving poor? That is the group from whom they are now taking half a billion pounds. What is the great crime that widows have committed that the Government need to take half a billion pounds from them? It is that they have lost their husbands. That makes them undeserving under new Labour.
Much mention has been made of what the Government are doing for pensioners and carers. We have heard mention of the so-called minimum income guarantee. I offer my hon. Friends a guide to new Labour-speak. When a new name is given to something, it always means precisely the opposite. Therefore, the Bill to clamp down on information getting out is known as the Freedom of Information Bill, and the Bill to abolish legal aid is called the Access to Justice Bill; and the money to which 500,000 people are entitled but which they will not get is called a guaranteed minimum income. The Government's fig leaf is that they will help poor people through the guaranteed minimum income but, unlike the contributory benefits that they are cutting, the means-tested benefits are not guaranteed and will miss many of the most vulnerable. They have no defence.
My hon. Friend the Member for Newbury (Mr. Rendel) spoke passionately about the attack on widows through the cuts in SERPS. My hon. Friend the Member for Somerton and Frome (Mr. Heath) pointed out some of the absurdities of the Government's approach. That highlighted an interesting benefits policy issue. Many elderly men are distressed about what will happen because, next April, the widows pension will not be phased down but slashed. It will fall by half, overnight.
While it is Government policy to phase the increased retirement age for women by six months at a time over a decade, this cut is keenly felt—Ministers do not realise this—because, although there is allegedly 15 years' notice, the 50 per cent. pensions cut will happen with dramatic suddenness. There was no notice and people were never told, so they feel angry about the sudden halving of their widows' prospective income. None of us would accept the threat of such a prospect. That is why there is anger and why we need action.
We have touched often on the Government's benefit changes that are an attack on widows, but several other things in our motion have not been touched on. The first is an acute problem for widows: the restriction of council tax benefit. The Conservatives propose that someone who lives in a property above band E—a big house or a house in London—should get only as much council tax benefit

1329
as they would if they lived in a band E property. The Conservatives proposed that for everyone. The Government backed down on their proposal following pressure from the Liberal Democrats and others. [Interruption.] Labour Members snort; I am not sure whether that is parliamentary. I and my hon. Friend the Member for Newbury sat on the Committee that considered the regulation that would have introduced their proposal. We opposed it and voted against it. London Labour Members expressed their concern. The Government forced it through with their loyal Back Benchers but, after that debate, the Government rightly gave in to our pressure. That is a statement of fact.
The Government have protected existing recipients but new widows—widowhood can strike at any time—who live in properties above band E will find that council tax will be paid only up to band E equivalent. Why does that matter? Take a married couple who live in a large house and whose two or three children leave home for university and are no longer part of the benefit unit. The couple still live in a large or high-value home. If the husband dies, the widow, as well as coping with everything else, will find that the Government are saying that she lives in too big a house. That is the implication of the restriction to band E. The Government are saying that such people should trade down. They will only pay band E benefit because those people should not be living in such a big house. That is an extraordinary thing to say to people who have just been widowed. Not only are they being told that in six months they will have to get on their bikes and look for jobs, but, from now, day 1, they are to be told that they are living in too big a house. If they are on income support, they will have to find the shortfall in the council tax bill out of their basic income support—the poverty line that is supposed to be for food and clothing. How can that be acceptable?
I asked the Under-Secretary of State, the hon. Member for Wallasey (Angela Eagle), a written question last week about how many people had been affected so far, because the measure came in only this April. The answer was that the Government do not know. They will know next January. They do not know the effects of their policy on widows. Every widow affected by this—there will be many in London and the south-east where high-value properties are not necessarily huge; we are not talking mansions—will have to make up their council tax out of their basic income support. Because of what the Government have done to local government funding, council tax is rising faster than inflation. It is a serious burden. It is part of the Government's attack on widows.
The amount that the Government are saving through their measures is pathetically small given the scale of Government spending, but it will matter to widows who have to find £2 or £3 a week out of a pension of, say, £60. That is a substantial figure and the Government should reconsider.
It is not just the council tax. What about bereavement tax allowances? That allows widows to keep the tax allowance to which husbands were entitled through marriage in the immediate aftermath of bereavement. The Chancellor abolished that in the Budget but we did not hear about it in the Budget speech. We had to rifle through the Budget press releases. When someone untrustworthy has been to a house, it is necessary to count the silver after
1330
they have gone. When the Chancellor has not mentioned something in his Budget speech, we have to check the press releases to ensure that he has not abolished it. That is the precedent that he has set.
When we found the press release, it was wrong. As the hon. Member for Brentwood and Ongar (Mr. Pickles) said, it said that the Government were abolishing the allowance but were doubling the widows payment from £1,000 to £2,000 so that they would all be protected, but that applies only to widows under pension age. Widows above pension age have no offsetting protection. That is another Government attack on widows buried in the small print but it is real money to real people in real need.
It is not only the bereavement tax allowance. What about the dividend tax credit? That is the tax that non-taxpayers have to pay on their share dividends that they would previously have got back. Some 300,000 pensioners who do not pay tax, by definition poorer pensioners, will now pay tax on their dividends. Imagine a couple where the husband has put together a small share portfolio precisely because he wants to provide for his widow should the need arise. The Government say that it has been passed to her, so she must pay tax on it despite her not being well enough off to pay tax. That people are below the tax threshold and that it would cost only a few tens of millions to do something about it does not matter to the Government. In doctrinaire fashion, they will not make any concession because, if they make one, they might have to make another, so widows have to pay.
Mr. Timms: A few tens of millions?
Mr. Webb: My hearing is better than the Minister expected. He says that as though the Liberal Democrats are always spending such sums. Given the chance, we probably would. But, in forecasting its expenditure each year, his Department does not get it right to within £10 million or £100 million but has trouble getting it right to within £1 billion. In that context, £10 million to protect widows is small beer.
I may be mistaken, but my previous professional career reminds me that one of the Government's worst forecasting errors in recent years was in respect of war widows pensions. The Department of Social Security got its forecast wrong on a matter that one would have thought that it was not hard to forecast. If they can say that being a billion out does not matter because they will find the money from somewhere, the tens of millions that do not matter to Government but matter hugely to widows are not chicken feed. The Government need to act.
I am sorry that the hon. Member for Hastings and Rye (Mr. Foster) has gone because he raised the important problem of widows who suffer further the bereavement of losing a child. That is a dreadful situation that one would wish on no one. He seemed to be unaware that the Government's proposal not only fails to deal with the situation, but makes it worse. Previously, a widow who lost a dependent child would move from widowed mothers allowance to widows pension. [Interruption.] The Minister rightly indicates from a sedentary position that it would depend on age. However, there will be no widows pension if the child dies more than six months after the first bereavement. The hon. Member for Hastings and Rye was pointing to a deserving situation that his

1331
Government have made worse. He asked for reassurances from the Minister that it would be tackled but I look forward to them with little anticipation of a satisfactory answer.
We talked about widowers. Understandably, the Minister focused at length on widowers, as I would have in his situation. Denuded of anything to say on widows, I would have talked about widowers at some length—that is perfectly legitimate. However, some months ago, when the announcement was made in the House about widows and widowers, I challenged the Secretary of State on that matter. Although I welcomed the fact that the benefit will go to existing widowers and not only to new widowers, I asked why we have to wait until 2001.
I have had to ask the local rotary club to bale out two widowers in my constituency in order to provide a much-needed holiday after their bereavement or to help with child care costs. I told those widowers that the Government—with their arm behind their back—will be bringing in additional benefits for widowers, but that widowers would have to wait, not until the start of the next financial year, but until 2001. They asked me why—I could give them no answer. As constituency Members of Parliament, we are having to turn to the voluntary sector—to rotary clubs, for goodness sake—to find financial support for that group of people, because the Government say that they cannot do anything until 2001.
The Government's amendment to our motion is abject—for want of a better word. What does it do? It supports the Government's bereavement payment, and the doubling of the value of the widows payment—so did the Liberal Democrat motion. It welcomes the additional help given to the children of widowers—as did our motion—so none of that part of the amendment was necessary. What else does the amendment do? It welcomes
"the protection given to widows over 55, who might otherwise have no practical alternative to relying on Income Support."
Hang on—why might they otherwise have no practical alternative? Because the Government have just abolished their benefits. That is extraordinary. The amendment welcomes the fact that the Government have only been fairly nasty. For tomorrow's 55-year-olds, the Government will be very nasty, but for today's they will not.
We have already gone through half of the Government's amendment. The first two parts agree with our motion; and the next part states that we should applaud them for not being as nasty as they might have been. Then, in the last sentence, they give the reason that we should reject the motion: the amendment
"welcomes the wide range of policies"—
none of which are listed—
"which are designed to assist women to play a full and active part in the community."
So that is all right. We can take £500 million away from widows—the undeserving poor—because we are allowing women to play a full part in the community. I am sure that that makes widows feel very warm inside.
The Minister of State told us that the fact that the Government were slashing £500 million from widows was not important, because, over the first couple of years, they would be giving £100 million to widowers. That is bizarre logic. At the risk of insulting the hon. Gentleman, that is very un-new Labour. The new Labour thing to do is not
1332
to talk about what the Government are doing this year, but to add together the next three years—or, given half the chance, to add together the next 30. However, the case of widows is different: to make a cut a few years down the line does not matter, the Government count only the money that is being spent this year. They are disregarding cuts down the track of £500 million for widows to focus only on this year.
The Minister spoke to representatives of Help the Aged yesterday. I saw the press release issued by the Department of Social Security. Its headline claimed that the Government were spending £4 billion extra on pensioners. [Interruption.] As the Minister says, it would be very good if they were. The question is: over what period is that £4 billion to be spent? Probably, it is three years because, in new-Labour-speak, numbers are usually tripled, so that would give an amount of £1.3 billion. Inflation is usually included, so that would knock off about £500 million. In effect, the Government will probably be spending an average of £800 million extra a year on pensioners—as indeed they are through income support. We welcome that. However, that amount is only one fifth of the amount that was claimed.
The Minister tells us that the cuts of £500 million for widows are unimportant because they are a few years down the track. To those people who will be widows at that time, the cuts will be as important then as if they had been made now. It is truly extraordinary that the only defence that the Minister can offer is that the cuts will take a few years to come through. However, the benefits will not be paid now; as I pointed out, widowers will have to wait until 2001.
I want to clarify and confirm the concession that the Minister made in the debate, because it is probably the most expensive concession that any of us have ever heard. As I understand it, people who were wrongly advised about SERPS—because they phoned the DSS in 1986 and were not told that their SERPS widows benefits would be cut—and who, on the strength of that bad advice, stayed in SERPS when they might have been better advised to opt out, will be compensated for that mistake.
I think that the record will show that that is what the Minister said. I am more than happy for those who read our proceedings to confirm that that is what he said. My hon. Friend the Member for Hazel Grove (Mr. Stunell), who is leaving the Chamber at the moment, questioned the Minister on that point and is obviously running off to tell his local newspaper to report the concession that he wrought from the Government.
The Government must take action on the matter; Governments—in the sense that government is continuous—have failed to give citizens the right information. Let us face the fact that none of us really understand pensions.
Angela Eagle: Except the hon. Gentleman.
Mr. Webb: Present company included. I am grateful to the hon. Lady for suggesting that I might understand pensions, but even I would not claim that.
The complexity of these matters is such that Governments must be proactive. If they make a complex change to a complex system, they must tell people about it. If they fail to tell people, they must take responsibility

1333
for that failure. The Government failed to tell people about the SERPS changes; therefore, they have a responsibility to pay compensation.
The Minister said that an announcement would be made in due course—I think that those were the words he used. Three months ago, he told my hon. Friend the Member for Newbury that there would be compensation. Time is running out, because the ombudsman promised to give us a decision by next April, when this cut is implemented. Is the Minister in dialogue with the ombudsman? Is he waiting for the ombudsman to come to a conclusion? Will he undertake to implement whatever the ombudsman decides? Will he pre-empt the ombudsman? What if the ombudsman makes an announcement next March? Will we have to wait? It is not clear.
It is not good enough for the Government to say that there will be an announcement in due course. Elderly gentlemen—for it is they who are writing to us on these matters—who believe that they have made financial preparations in the event of their death, are distraught at what successive Governments have done to them. I accept the Government's admission that, in 1986, Labour voted against those measures, but, as with so many things, they are now in favour of them and will implement them. If they are going to implement them, they must compensate those people who were misled by successive Governments.
There has been a sustained assault on widows. A litany of measures have taken hundreds of millions of pounds out of the pockets of widows, who, by no stretch of the imagination, could be regarded as the undeserving poor. We have heard no convincing defence from the Minister; there is nothing in the Government's amendment that represents a defence. The case is proven and I urge the House to back our motion.
3.47 pm
The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): We have had an interesting debate. It has ranged from an interpretation of Hamlet from the hon. Member for Brentwood and Ongar (Mr. Pickles) that was rather odd in places to a whole range of issues, some of which were sweeping in their scale and some of which were extremely detailed. In the remaining time for the debate, I shall try to deal with some of those issues.
Before I respond, I emphasise that our reforms will modernise an outdated scheme for those people who are bereaved. In considering widows benefit and the extension of the scheme for compensating widows, we would do well to remember the original purpose of such benefits. That was referred to in the extremely good speech of my hon. Friend the Member for Colne Valley (Kali Mountford). In the Beveridge reforms, the original purpose of the benefit was to compensate for the loss of a sole breadwinner; it was not to compensate for the pain of bereavement itself. Many of us have had painful experiences of bereavement, but, in considering the redesign of this benefit, we must focus on its original purpose.
The society of the 1940s was different from today's society. We are also talking about 2020 and many more years in the future, when I assume that society will
1334
continue to evolve and change. Our society is not set in aspic, preserved like a museum piece. Nor should our welfare system be preserved like a museum piece. In the 1940s, when the widows benefit system was created, only one in eight married women worked. Now, seven in 10 married women work. In the 1940s, the opportunities available to women to support themselves through employment were much more limited than they are today. For example, in teaching—a profession in which women are always well represented—women were required to give up their jobs when they married. They were not expected to continue in employment. No such expectations exist now, thank goodness, and opportunities for women in the labour market continue to improve—although I would not say that they are entirely equal.
Mr. Pickles: The hon. Lady referred to the 1940s—the time of the second world war. Is she in a position to tell us what happened to the Prime Minister's review of war widows pensions? When did the review body meet, what were its deliberations and what was the outcome?
Angela Eagle: I congratulate the hon. Gentleman on his ingenuity in raising the issue of war widows pensions. However, he will know that the war pensions scheme is entirely separate and different and does not come within the purview of this review. If he reads the Prime Minister's words, the hon. Gentleman will see that the Prime Minister said that that situation—like all Government policy—will be kept under review.
Women's opportunities in the labour market continue to improve. I am an optimist in this regard: I think that they will improve still further in the future. In the 1950s, only 100,000 women had access to occupational pensions—and that was through the pensions of their husbands. Today, 1.6 million women have such access. The society that was reliant on the single male bread winner, around whom the original welfare state was built, has disappeared. Women are now far more likely to be in work and accruing their own pension entitlements.
Our new scheme recognises that fact: it refocuses assistance by providing a weekly benefit for both widows and widowers with dependent children. Widowed parents allowance will have the same entitlement conditions and be paid at the same rate as the existing widowed mothers allowance, but will be available equally to mothers and fathers. William Beveridge would never have countenanced that—indeed, he ruled it out explicitly when considering bereavement provisions. About 40,000 new widows and 15,000 new widowers each year will gain from the new bereavement payment, which, at £2,000, will be double the existing widows payment.
We have recognised the needs of older widows and widowers through the new bereavement allowance. There has been little focus today on the transitional scheme for widows aged over 55. We recognise that women of that age are more likely to have been out of the labour market for long periods so they will not be asked to make themselves available for work. Our transitional scheme will passport those women on to retirement pensions by giving them an amount of money that is exactly the same as widows benefit. Women aged 55 at the time of the change will be passported into retirement and will lose nothing. Older generations of women—who were not long in the labour market or did not expect to work—will have

1335
extra protection. There has been no mention of that scheme in the debate, and it would have been nice if hon. Members had conceded that point.
We have heard much talk about annuities and all sorts of pension rights. However, there has not been much criticism of the existing system, which fails to support poorer women as well as it supports those on higher incomes. Thy current system takes away benefit, pound for pound, from women on income support—who end up no better off, despite their widows payments. Therefore, we have introduced in legislation a £10 disregard on income support for women in that situation and a £15 disregard on both housing benefit and the working families tax credit in order to provide a little extra help. That is another positive measure introduced by the Government that was not mentioned in the debate.
I am glad that the hon. Member for Newbury (Mr. Rendel) welcomed the extension of these benefits to widowers. However, he did so rather churlishly, claiming that the Government had acted under pressure from the courts. In fact, we introduced the measure because we believe that people should have equal access to benefit and not be discriminated against on the ground of gender. The hon. Gentleman welcomed the doubling of the bereavement payment but seemed to want to extend the entire scheme to those above pension age. That has never happened before.
To return to my initial comments, the payments for widows—which are now being extended—are designed to compensate for the loss of a breadwinner's income. There is no breadwinner in retirement, so that factor is not relevant. Payments have never been made to women over retirement age who lose their husbands. The hon. Gentleman wants to change the system and extend bereavement payments to men and women in retirement. That would cost £400 million a year, which presumably must be added to the £10 billion that the Liberal Democrats spent when telling us what we should do about SERPS and to the dozens of other spending commitments that littered Liberal Democrat contributions to the debate.
We are considering how we can ensure that the welfare system is modernised properly so as to retain the support into the future of both the taxpaying public and those on benefit. Therefore, we must take a little notice of how much proposed measures will cost. One quickly learns that, in terms of welfare reform and the Department of Social Security, billions of pounds of public expenditure can be dispensed with in the twitch of an eye. We must ensure that the expenditure is in proportion with the problem.
Mr. Rendel: The Minister must accept that the additional £10 billion—the Minister of State mentioned £5 billion in the case of SERPS—must be paid for by somebody. It will be paid for either by the widows, in which case each widow must pay rather a lot, or by the taxpayers, who would pay rather less. Is the hon. Lady suggesting that, in order to retain the support of the taxpaying public, she will take all of that money from widows?
Angela Eagle: The money is not available in the way that the hon. Gentleman suggests. I suspect that that is why the previous Government decided to restrict SERPS to half of the payable pension. However, they did it so
1336
incompetently that—as I think all hon. Members have admitted today—they landed the present Government with enormous potential costs. That says it all about the standards that we expected, and became used to, from the previous Government.
The hon. Member for Brentwood and Ongar went on about how the contributory principle had been badly affected by the changes. No one has recognised the fact that we have extended that principle through these changes: widowers will benefit from the contributions of their wives.
Mr. Pickles: The hon. Lady must recognise that men will be disadvantaged because of the low level of women's contributions. Women have lower incomes, as the Minister of State conceded, so there will be no equality.
Angela Eagle: The hon. Gentleman should get his facts straight. First, women's contributions are rapidly catching up with those of men. Secondly, the contribution rates for qualifying for benefits are quite modest over a lifetime of earnings.
The hon. Gentleman announced at the end of his peroration that he wanted the Government to "reverse this policy"—they were his exact words. Therefore, I assume that he opposes all the changes, including the doubling of bereavement payments and the extension of payments to widowers, upon which the previous Government utterly and resolutely refused to legislate during 18 years in office. I presume that the hon. Gentleman will go to the country at the next election and tell the beneficiaries of that payment that he is against it.
Mr. Pickles: Will the hon. Lady give way?
Angela Eagle: No, I do not have much time.
On the question of when the changes should be introduced, the Conservative spokesman suggested that we should put off the changes to widows benefit until some unspecified time in the future. The hon. Member for Newbury also said that but, in his winding-up speech, the hon. Member for Northavon (Mr. Webb) suggested that we should bring forward the introduction of the changes.
One part of the Liberal party and the Conservative party say that we should put off the changes, but the hon. Member for Northavon says the opposite. The Opposition do not know which way they are facing. It is difficult to listen to their arguments, when there is no coherence or consistency in their position.
The existing scheme is outdated. It was devised for a time when few married women worked and very few had insurance or a private pension. The death of the family breadwinner clearly had a huge impact on family finances, and the widow was dependent on support from the state.

However, widowed men with dependent children were usually expected to continue to work following their wife's death. Beveridge maintained that
"very few men's wages are insufficient to cover at least two adults and one child."
Today the situation is entirely different. It is the norm in many two-parent families for both parents to work.
Our reformed scheme will reflect today's society by making bereavement benefits available equally to men and women. It will also take account of the increasing

1337
number of married women in work, and the much higher number of people who are protected by life insurance and occupational pensions.
Our reforms will refocus expenditure, concentrating the help available from the state by focusing on immediate needs. The bereavement payment will give a tax-free lump sum of £2,000—double the current payment. Bereavement allowance will give older widows and widowers without dependent children the support that they need for the six months following bereavement. The help will focus on children and families.
Just as society cannot be preserved in aspic, neither can our welfare state be so preserved. It is our duty to keep the system relevant to modern society, not for ever stuck in the past. We believe that our proposed changes will do just that.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 37, Noes 274.

Division No. 219]

[4.2 pm

AYES

Allan, Richard

Jones, Nigel (Cheltenham)

Ashdown, Rt Hon Paddy

Kirkwood, Archy

Baker, Norman

Maclennan, Rt Hon Robert

Beggs, Roy

Michie, Mrs Ray (Argyll & Bute)

Beith, Rt Hon A J

Moore, Michael

Bell, Martin (Tatton)

Öpik, Lembit

Bottomley, Peter (Worthing W)

Rendel, David

Brake, Tom

Ross, William (E Lond'y)

Breed, Colin

Russell, Bob (Colchester)

Burstow, Paul

Sanders, Adrian

Cable, Dr Vincent

Smyth, Rev Martin (Belfast S)

Campbell, Rt Hon Menzies (NE Fife)

Stunell, Andrew

Taylor, Matthew (Truro)

Cotter, Brian

Thompson, William

Davey, Edward (Kingston)

Tonge, Dr Jenny

Fearn, Ronnie

Tyler, Paul

Forsythe, Clifford

Webb, Steve

George, Andrew (St Ives)

Harris, Dr Evan

Tellers for the Ayes: Mr. Phil Willis and Sir Robert Smith.

Harvey, Nick

Heath, David (Somerton & Frome)

NOES

Abbott, Ms Diane

Blunkett, Rt Hon David

Adams, Mrs Irene (Paisley N)

Boateng, Paul

Ainger, Nick

Borrow, David

Alexander, Douglas

Bradley, Peter (The Wrekin)

Allen, Graham

Bradshaw, Ben

Anderson, Janet (Rossendale)

Brinton, Mrs Helen

Armstrong, Rt Hon Ms Hilary

Browne, Desmond

Ashton, Joe

Buck, Ms Karen

Atherton, Ms Candy

Burden, Richard

Atkins, Charlotte

Burgon, Colin

Austin, John

Butler, Mrs Christine

Barnes, Harry

Caborn, Rt Hon Richard

Beard, Nigel

Campbell, Alan (Tynemouth)

Beckett, Rt Hon Mrs Margaret

Campbell, Mrs Anne (C'bridge)

Bell, Stuart (Middlesbrough)

Campbell, Ronnie (Blyth V)

Benn, Rt Hon Tony (Chesterfield)

Casale, Roger

Bennett, Andrew F

Caton, Martin

Benton, Joe

Cawsey, Ian

Berry, Roger

Chapman, Ben (Wirral S)

Best, Harold

Chaytor, David

Betts, Clive

Clapham, Michael

Blackman, Liz

Clark, Rt Hon Dr David (S Shields)

Blizzard, Bob

Clark, Dr Lynda

1338

(Edinburgh Pentlands)

Hopkins, Kelvin

Clark, Paul (Gillingham)

Howarth, Alan (Newport E)

Clarke, Rt Hon Tom (Coatbridge)

Hughes, Ms Beverley (Stretford)

Clarke, Tony (Northampton S)

Hughes, Kevin (Doncaster N)

Clelland, David

Humble, Mrs Joan

Coaker, Vernon

Hurst, Alan

Coffey, Ms Ann

Iddon, Dr Brian

Cohen, Harry

Illsley, Eric

Coleman, Iain

Jackson, Helen (Hillsborough)

Colman, Tony

Jenkins, Brian

Connarty, Michael

Johnson, Alan (Hull W & Hessle)

Corbyn, Jeremy

Johnson, Miss Melanie (Welwyn Hatfield)

Cousins, Jim

Cranston, Ross

Jones, Barry (Alyn & Deeside)

Cryer, John (Hornchurch)

Jones, Helen (Warrington N)

Cummings, John

Jowell, Rt Hon Ms Tessa

Cunningham, Jim (Cov'try S)

Keeble, Ms Sally

Curtis-Thomas, Mrs Claire

Keen, Alan (Feltham & Heston)

Dalyell, Tam

Kennedy, Jane (Wavertree)

Darvill, Keith

Khabra, Piara S

Davey, Valerie (Bristol W)

Kidney, David

Davidson, Ian

Kilfoyle, Peter

Davies, Rt Hon Denzil (Llanelli)

King, Andy (Rugby & Kenilworth)

Davies, Geraint (Croydon C)

King, Ms Oona (Bethnal Green)

Dawson, Hilton

Kumar, Dr Ashok

Dean, Mrs Janet

Ladyman, Dr Stephen

Denham, John

Lawrence, Ms Jackie

Dobson, Rt Hon Frank

Lepper, David

Donohoe, Brian H

Lewis, Ivan (Bury S)

Doran, Frank

Linton, Martin

Dowd, Jim

Livingstone, Ken

Drew, David

Lock, David

Drown, Ms Julia

Love, Andrew

Dunwoody, Mrs Gwyneth

McAvoy, Thomas

Eagle, Angela (Wallasey)

McDonagh, Siobhain

Edwards, Huw

McDonnell, John

Ellman, Mrs Louise

McFall, John

Ennis, Jeff

McIsaac, Shona

Field, Rt Hon Frank

McNulty, Tony

Fisher, Mark

Mactaggart, Fiona

Flint, Caroline

McWalter, Tony

Follett, Barbara

McWilliam, John

Foster, Rt Hon Derek

Mahon, Mrs Alice

Foster, Michael Jabez (Hastings)

Mallaber, Judy

Foster, Michael J (Worcester)

Mandelson, Rt Hon Peter

Foulkes, George

Marsden, Gordon (Blackpool S)

Gapes, Mike

Marsden, Paul (Shrewsbury)

Gardiner, Barry

Marshall, David (Shettleston)

George, Bruce (Walsall S)

Martlew, Eric

Gerard, Neil

Maxton, John

Gibson, Dr Ian

Merron, Gillian

Godman, Dr Norman A

Michie, Bill (Shef'ld Heeley)

Godsiff, Roger

Milburn, Rt Hon Alan

Goggins, Paul

Moffatt, Laura

Golding, Mrs Llin

Moonie, Dr Lewis

Gordon, Mrs Eileen

Moran, Ms Margaret

Griffiths, Jane (Reading E)

Morgan, Ms Julie (Cardiff N)

Griffiths, Win (Bridgend)

Morley, Elliot

Grocott, Bruce

Mountford, Kali

Gunnell, John

Mullin, Chris

Hall, Mike (Weaver Vale)

Murphy, Denis (Wansbeck)

Hall, Patrick (Bedford)

Murphy, Jim (Eastwood)

Hanson, David

Norris, Dan

Heal, Mrs Sylvia

O'Brien, Bill (Normanton)

Healey, John

Olner, Bill

Henderson, Doug (Newcastle N)

O'Neill, Martin

Henderson, Ivan (Harwich)

Organ, Mrs Diana

Hepburn, Stephen

Osborne, Ms Sandra

Hesford, Stephen

Pearson, Ian

Hewitt, Ms Patricia

Pendry, Tom

Hill, Keith

Perham, Ms Linda

Hinchliffe, David

Pickthall, Colin

Hodge, Ms Margaret

Pike, Peter L

Hoey, Kate

Plaskitt, James

Hood, Jimmy

Pollard, Kerry

Hoon, Geoffrey

Pond, Chris

1339

Pope, Greg

Stoate, Dr Howard

Pound, Stephen

Stott, Roger

Powell, Sir Raymond

Stringer, Graham

Prentice, Ms Bridget (Lewisham E)

Stuart, Ms Gisela

Prentice, Gordon (Pendle)

Taylor, Rt Hon Mrs Ann (Dewsbury)

Primarolo, Dawn

Purchase, Ken

Taylor, Ms Dari (Stockton S)

Quinn, Lawrie

Temple-Morris, Peter

Radice, Giles

Thomas, Gareth (Clwyd W)

Reed, Andrew (Loughborough)

Thomas, Gareth R (Harrow W)

Reid, Rt Hon Dr John (Hamilton N)

Timms, Stephen

Robinson, Geoffrey (Cov'try NW)

Tipping, Paddy

Roche, Mrs Barbara

Todd, Mark

Rooker, Jeff

Touhig, Don

Ross, Ernie (Dundee W)

Trickett, Jon

Roy, Frank

Turner, Dennis (Wolverh'ton SE)

Ruane, Chris

Turner, Dr Desmond (Kemptown)

Ruddock, Joan

Turner, Dr George (NW Norfolk)

Russell, Ms Christine (Chester)

Twigg, Derek (Halton)

Ryan, Ms Joan

Twigg, Stephen (Enfield)

Salter, Martin

Walley, Ms Joan

Sarwar, Mohammad

Watts, David

Savidge, Malcolm

White, Brian

Sawford, Phil

Whitehead, Dr Alan

Sedgemore, Brian

Wicks, Malcolm

Shaw, Jonathan

Williams, Rt Hon Alan (Swansea W)

Sheerman, Barry

Shipley, Ms Debra

Williams, Alan W (E Carmarthen)

Simpson, Alan (Nottingham S)

Wills, Michael

Singh, Marsha

Winnick, David

Skinner, Dennis

Winterton, Ms Rosie (Doncaster C)

Smith, Rt Hon Andrew (Oxford E)

Wise, Audrey

Smith, Angela (Basildon)

Wood, Mike

Smith, John (Glamorgan)

Worthington, Tony

Smith, Llew (Blaenau Gwent)

Wray, James

Snape, Peter

Wright, Anthony D (Gt Yarmouth)

Southworth, Ms Helen

Wright, Dr Tony (Cannock)

Spellar, John

Wyatt, Derek

Squire, Ms Rachel

Steinberg, Gerry

Tellers for the Noes: Mr. Robert Ainsworth and Mr. David Jamieson.

Stewart, Ian (Eccles)

Stinchcombe, Paul

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House supports the Government's proposals to reform bereavement benefits, including the Bereavement Payment, which will provide a tax-free lump sum of £2,000—double the value of the current Widow's Payment; welcomes the additional help given to the children of widowers, who will qualify for the new Widowed Parent's Allowance, which will replace the Widowed Mother's Allowance; welcomes the protection given to widows over 55, who might otherwise have no practical alternative to relying on Income Support; and welcomes the wide range of policies which are designed to assist women to play a full and active part in the community.

Supermarkets
Mr. Deputy Speaker (Mr. Michael J. Martin): I remind the House that Madam Speaker has selected the amendment in the name of the Prime Minister.
4.14 pm
Mr. Matthew Taylor: I beg to move,
That this House notes that the rapid expansion of out-of-town superstores under the Conservatives and the concentration of local market share has hit traditional town centres; notes that supermarket purchasing and pricing policies have hit farmers but not led to lower prices for consumers and are now under investigation by the Competition Commission as a result; further notes that a new wave of larger superstore developments and predatory pricing to gain market dominance, and a squeeze of local producers and traditional retailers, is threatened by Wal-Mart's acquisition of ASDA; therefore calls on the Government to reaffirm its commitment to preventing further out-of-town greenfield development, and to tackle urgently anti-competitive, anti-producer and anti-consumer practices by the major food retailers; and calls on the Prime Minister to put on record in the House the substantive contents of his meeting earlier this year with the Chief Executive of Wal-Mart and to clarify exactly what flexibility in planning regulation was offered in respect of any future superstore development.
The motion relates to food and supermarkets, and especially to developments in the food retailing business in past decades and to the potential for great change given the takeover of Asda by the giant American corporation Wal-Mart—the world's largest company. Consumers have welcomed the supermarket revolution that has taken place over several decades, because it has offered convenience shopping and greater choice. In towns in my constituency, supermarkets have submitted planning applications, saying that they will create so many hundred jobs, and often claiming that they will cut prices.
As the 1980s rolled on and we came into the 1990s, the general public became increasingly aware of the problems that that revolution caused many communities. All parties in the House recognised that problem in the early 1990s, as planning guidance was changed. The problems were clear. That change was not free: it came on the backs of traditional food retailers and other retailers, particularly in town centres, which have had to close. It has comprehensively been shown that jobs have been lost and weaker town centres have been destroyed.
In January 1998, Boots sponsored a report for the national retail planning forum, which shows how great the impact on jobs can be. It said that the impact of out-of-centre food superstores on local retail employment was substantial job losses. That is contrary to the claims that the supermarkets have made. The report examined the 15 km catchment areas of 93 superstores that had opened between 1991 and 1995. It found that the supermarkets had created 10,500 full-time equivalent jobs, but that 25,000 jobs had been lost in local specialist food retailers, which is a net loss of 15,000, and another 10,000 jobs had been lost in non-food retailers. That is an average loss of 276 full-time jobs for every store.
In September 1998, the Department of the Environment, Transport and the Regions published its own research, which confirmed that town centre market share of food trade had been cut by 13 to 50 per cent., and that there was an overall cut in employment and an overall increase in car use. It also confirmed that—as we know from my own part of the world in Cornwall and

1341
from other rural areas with small market towns—the supermarkets, having pretty comprehensively covered the larger towns and cities, are now aggressively targeting new development in small towns that still have a reasonably successful parade of shops but feel under real threat. Perranporth in my constituency is one such small town. That report recommended that all edge or outside-centre applications over 1,000 sq m should have a combined retail economic and traffic evaluation.
There are, beyond any doubt, real problems of job losses. Supermarkets have an impact not only on traditional town centres, but on the environment. The town centre sites—the brown-field sites—that the Government say that they want to be developed are often not available. The sequential test leads supermarkets to push for development on the edge or even outside the town centre. Nothing in the sequential test says no to that. The larger the store for which they are seeking permission, the less likely it is that there will be a suitable in-town site.
Such development encourages traffic growth at a time when the Government are struggling to cut traffic and congestion. It leads to the dereliction of town centres in commercial terms with the loss of shops, and the loss of shops leads to the death of the town centre and to the increase in the dereliction of the community and, ultimately, in crime. From the environmental point of view, it leads to unnecessary food miles.
The supermarkets claim that there are price benefits, but they dominate the local market, which gives them real power over suppliers and customers. Farmers and other suppliers have reeled from the blows to agriculture. No one in this country can be unaware of the problems that farming has faced in the past few years, but what makes many farmers and, indeed, ordinary customers angry is the fact that the prices of supermarket goods have not fallen. We are also seeing some extraordinary anti-competitive practices, which are now subject to investigation by competition authorities.
Farmers who supply, for instance, brussels sprouts to major retailers have told me that they are required to buy their bags from a particular manufacturer, and that those bags are more expensive than the ones that they formerly obtained from their own sources. Why does the supermarket chain involved insist that those farmers buy expensive bags, when they could obtain bags more cheaply? The answer must be the link between the manufacturer of the bags and the supermarket. There have been negotiations which, supposedly, concerned an entirely different matter; but it has been alleged to me that the supermarkets get a kickback from the suppliers of the bags, while the farmers bear the cost.
We are also seeing sole agreements. Very little is given to farmers in the case of such agreements. Only rarely is there a guarantee of price, or even of purchase; but the price is squeezed, year by year by year. If the farmer finally goes out of business, that is not a problem: the business is simply transferred elsewhere. From the point of view of the rural community, money is being squeezed out. Similarly, because profits go elsewhere, supermarkets take money that might otherwise have stayed in the community. Local shops supplying meat and vegetables
1342
tend to buy within the local community, but supermarkets contract across the country, which means that food travels for long distances.
As for the producers, we often hear about promotions and cut-price sales; but the cut-price sales are often loss leaders, and the price of other goods in the supermarket often compares unfavourably with that of goods in local shops. Certain targeted items are sold very cheaply. The farmers who supply those items say that they are asked to bear the cost of promotion, so the supermarkets do not suffer in that respect either.
Customers, who are supposedly the big gainers, often find that they are nothing of the kind. Local and regional market dominance often means that prices are nowhere near as low as one might expect. We see loss leaders, but mostly high margins. We see returns for British supermarket chains that are several times higher than those of supermarket chains in France, and well above the average in Europe and America. As the town centre is lost, the 20 or 25 per cent. of the community who have no access to cars find that they can no longer get to the shops so easily.
I do not say any of this on the basis that the parties disagree. Certainly, they do not disagree publicly.
Mr. Eric Martlew: Is it now Liberal policy to oppose supermarkets? The hon. Gentleman has said nothing in their favour.
Mr. Taylor: I was about to say something about the policy developed by the last Government and the present Government, which we have supported. I refer to the process of constraining the development of supermarkets, especially out-of-town supermarkets. We want changes in the rating system to help small shops, which pay high rates compared with the rates paid by supermarkets. The Government have done nothing about that.
I do not want to give the false impression that there is a huge division between the parties. There are key questions about where we are to go from here and what is happening in Government, and I shall deal with those shortly.
The policy that has been observed since 1993 relating to the sequential test—town centre, edge of centre, outer centre—is an important development, which was updated in 1996. There were two elements in that. The first was the sequential test. I do not think that anyone would disagree with the suggestion that it is important to look for the town-centre site first. They might have in the past, but I think that we are all agreed now. However, there is a second element. Once the sequential test has been exhausted, a supermarket chain may say that the only place where it can go is out of town. That will lead to an argument that boils down to this: should we allow more competition among supermarkets, thus allowing the development of new supermarkets that can compete with existing ones? Is that more important than preserving town centres, existing communities and environment? The test does not provide an answer to that question. It says that there should be a decision based on need, but we have yet to find out exactly where the Government stand.
A report published last year by the Environment and Science Research Council states:
"Since the mid-1990s, when the revised planning guidelines were introduced, the major food retailers increased floor space by nearly 2.5 million square feet a year, much the same as in earlier years."

1343
The theory is great, but, in practice, not much has changed, partly because of existing permissions. That is why we are now reaching a stage at which the test will be much stronger. As the existing permissions are used up, new sites will be sought. Asda has clearly said that it wants to do that in the south. Permissions will also be sought for the expansion of existing sites.
Ms Sally Keeble: Is the hon. Gentleman opposed to supermarkets per se, or is he just opposed to out-of-town retail centres? There is a difference. A well-placed supermarket can provide an anchor for a town centre.
Mr. Taylor: I am opposed to bad sites, generally out of town, and also to the growth of larger hypermarkets which, increasingly, sell not only food but other goods. They will knock out competition, and, indeed, have been designed to do so.
The last year of the Conservative Government and the first year of the Labour Government saw similar levels of supermarket development, but I think that we face a real issue now.
Mr. David Drew: The hon. Gentleman has made an important point about existing planning permissions. I cannot specify the exact period, but it was always known that a considerable number of years of extant supermarket permissions would have to be gone through before the policy could change. Surely that is the crux of the problem.
Mr. Taylor: The hon. Gentleman is entirely right. He may recall, as he was present for some of our debates on protecting green fields, that we argued that, while the Government were going through a process of review of planning guidance and planning law, they should put a hold on the development of some of those very large sites.
The hon. Gentleman is not right in suggesting that only extant permissions are involved. In north-west Coventry, for instance, inspectors have overturned local opposition to allow development of sites that they themselves have described as not ideal, and local authorities have given permission for major increases in the size of retailing facilities.
Mr. Tony McNulty: Will the hon. Gentleman give way?
Mr. Taylor: Not yet. I have already given way several times.
Last autumn, at the annual convention of "Action for Market Towns", the Minister made some helpful and positive comments. He was right to draw attention to the problem to which I have drawn attention today. He said:
"Many superstores now offer services like banking and pharmacies, and can effectively take over the traditional role of the town centre. They also create fewer not more jobs in the local area."
Earlier this year, a report by the Select Committee on the Environment, Transport and Regional Affairs said that the Government should
"forbid future out-of-town or edge-of-town shopping centres or other developments which generate large amounts of private car travel".
1344
That is not the existing policy; it is quite a large change in policy. So far, the Government say that they want a period of stability, rather than to change the policy.
My first worry is that the existing policy is not as strong as it has been presented to be. Neither the sequential test nor the test of need answer that point. The real issue is: will these developments be allowed, or are we going to take the line suggested by the Select Committee and say no to such developments in normal circumstances?
Mr. James Gray: Why have so many of the planning permissions that have been granted for huge out-of-town shopping centres been granted by Liberal Democrat-controlled councils? East Hampshire and Harrogate have done so, and my own North Wiltshire district council gave permission for a Sainsbury and a Safeway outside Chippenham, which have wrecked Chippenham high street.
Mr. Phil Willis: There is not one in Harrogate.
Mr. Taylor: Yes; so the hon. Member for North Wiltshire (Mr. Gray) may be wrong about that. Moreover, he knows as well as I do that councillors, of whichever party, are obliged to follow the Government's planning guidance, and are at risk financially if they do not. They cannot refuse permission simply because the local community is against granting it, but may do so only on planning grounds. If planning guidance does not enable them to refuse permission, they cannot refuse it.
Rather more extraordinarily, the former Secretary of State—
The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): What waffle.
Mr. Taylor: How does the Minister explain the fact that councillors in my own area are facing surcharges precisely because they allegedly did not follow Government guidance? Councillors are clearly obliged to follow guidance and can be surcharged if they do not.
Several hon. Members rose—
Mr. Caborn: Will the hon. Gentleman give way?
Mr. Taylor: I shall give way to the Minister in a moment, but shall first answer the question of the hon. Member for North Wiltshire.
The former Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), often argued against the previous Government's policy on supermarket development. I spoke to him today on the issue, and he supported the Liberal Democrats' position on it. Yet, when he was Secretary of State, he overturned the recommendation—not only of the local community, but of the inspector—that an out-of-town supermarket should not be built just up the road from my constituency.
Although we could all throw brickbats on the issue, we have made some progress on it, to put it most mildly. Now, the issue is how we shall address current issues. I

1345
should like to mention specific issues facing the Government, on which their action does not match their briefings.
Mr. McNulty: The hon. Gentleman said that the Government should block extant planning permissions. From what he has said, clearly, he is a planning expert. Will he therefore tell us how they are to block those extant permissions?
Mr. Taylor: The policy position that we articulated in previous debates is that the Government should place a moratorium on granting further development permissions. If I said anything unclear in making that point, I hope that that will have clarified it. We have debated the issue at length in the House.
Mr. McNulty: Will the hon. Gentleman give way?
Mr. Taylor: The hon. Gentleman has to let me make some progress.
The Government's position has much support. However, I should like to know whether the debate within Government in contrast to the Government's stated position—that current planning guidance will provide protection—will protect traditional town centres, as the Minister has said that it will.
Mr. A. J. Beith: When Labour Members think that there are no possibilities of Government intervention, they should remember that the Secretary of State overturned an existing planning permission in my constituency that is now the subject of a court case between the council and the Secretary of State.
Mr. Taylor: I should like to deal with a couple of points before addressing the main issue in our motion. The first is that the Government have vacillated in their position on out-of-town supermarkets, between the need to restrain developments and the need to encourage competition between them.
In May 1996, for example, when Chris Davies—the former Member for Littleborough and Saddleworth, who is now a Member of the European Parliament—initiated a debate on the subject, that day's newspaper headlines proclaimed that the Government were to implement out-of-centre parking charges. Within hours, in an official statement, the possibility of such charges was rebutted, and it was said that they were no longer on the agenda.
The issue was raised again in debates on the transport White Paper, when the Government said that there would be parking charges on out-of-town supermarkets. We then heard the Deputy Prime Minister's fury in attacking the teeny-boppers at No. 10 Downing street for ruling out such charges after a meeting between supermarkets and No. 10 Downing street.
Similarly, Ministers at the Department of the Environment, Transport and the Regions—I give the Minister for the Regions, Regeneration and Planning credit for this—undoubtedly believe, and have argued very strongly, that major new out-of-town supermarkets should not be developed, and that the issue is not competition but protection of the countryside.
1346
Nevertheless, there have been regular briefings from the Treasury and the Department of Trade and Industry, saying that they believe that competition is the higher priority, and that planning requirements should be softened.
Mr. Willis: I should be grateful if my hon. Friend—and the Minister, who represents a Sheffield constituency—will address one crucial issue: differential support in rating valuations for supermarkets and town-centre shopping. Differential rating valuations between, particularly, small town centres and out-of-town shopping centres is making competition terribly unfair. Until we restore the balance between the two, we shall never solve the specific problem about which we are so concerned.
Mr. Taylor: My hon. Friend is absolutely right, and Liberal Democrats have made that argument many times in the House.
Mr. Gray: Will the hon. Gentleman give way on that point?
Mr. Taylor: No.
Now, we come to the key issue facing the Government: the purchase of Asda by Wal-Mart, the American retailer. The purchase should, in itself, ring alarms. Wal-Mart is an enormous company, with global sales totalling one tenth the United Kingdom's gross domestic product. It is also the world's largest private employer, and well connected—Hillary Clinton is a former board member.
One of Wal-Mart's tactics is to squeeze its suppliers but, as I said, British farmers are already suffering from such squeezing. Its basic tactic is to compete aggressively with other supermarkets. It moves in and opens more centres—contrary to the Government's policy and the views held on both sides of the House—which is exactly what Asda would like to do in southern England.
Wal-Mart would like to have much larger centres, selling a much larger range of goods—posing a correspondingly larger threat to traditional town centres, and entirely contrary to the Government's articulated position. It is therefore little wonder that there is great concern about Wal-Mart's potential impact on traditional town centres and traditional suppliers.
All those concerns are exacerbated by the fact that the process seems to have been started at a meeting, on 25 February, between the Prime Minister and Bobby Martin, Wal-Mart's chief executive. We might not be concerned about that meeting if we were given some clear answers about what happened at it, but we are not receiving clear answers. Off the record, newspapers have been briefed that there was no discussion of the planning issue. On the record, however, in parliamentary answers, we are told, "Nothing at all will be said about the meeting."
The most extraordinary feature of the Government's amendment to our motion is that they fail to address the key issue of Wal-Mart, which is mentioned in our motion. Was the planning issue raised? If not, why does the Prime Minister not say so in a parliamentary answer? As we all know, the difference between an official briefing to the newspapers by some unknown official and the Prime Minister replying on the record is that the Prime Minister can be held to account for his answer if it proves inaccurate.

1347
If the newspapers were not briefed by the Prime Minister's office—I assume that they were not—they must have been briefed by Wal-Mart.
Mr. Martlew: Will the hon. Gentleman give way?
Mr. Taylor: I shall be happy to give way in a moment, but I want to make progress on this point.
The Mail on Sunday stated on 20 June:
"The PM had used the meeting to further his aim to bring down prices in British supermarkets by giving the Americans the go-ahead to enter Britain. In his desire to do this, he is said to have offered to relax planning curbs which could let Wal-Mart build huge US-style hypermarkets on greenfield sites in Britain.
Mr. Blair was not alone at the meeting. At his side was his own Mr. Fix-It, personal economics adviser Geoff Norris … Mr. Norris was in a bitter row a year ago when he vetoed plans by Deputy Prime Minister John Prescott to curb car use to improve the environment. Mr. Prescott hit out at 'teenyboppers' at No. 10 … and said his remarks were aimed at Mr. Norris."
The official line was that it was a courtesy visit. Since when has a Prime Minister received courtesy visits from the bosses of one of the world's biggest companies when it does not even operate in Britain? Are we seriously being asked to believe that there was no discussion about the potential for Wal-Mart to enter this country or the consequences of that?
Clearly, The Sunday Telegraph was also briefed on the subject. It said:
"Earlier this year, Wal-Mart executives"
—[Interruption.] Perhaps Labour Members can tell me who the briefings were from. They were either from Wal-Mart or Asda, or from the Prime Minister's office. Either way, somebody within the industry believes that Wal-Mart was given the green light for those developments.
The article said that Wal-Mart executives
"shared a glass of sherry with Tony Blair at Number 10 Downing Street. They wanted to know whether their company would be welcome in Britain and were warmly received."
—[Interruption.] Labour Members may not like it, but that is what we were told. Perhaps they should ask the Prime Minister's office—[Interruption.]
Mr. Deputy Speaker: Order. We must have silence in the Chamber except from the hon. Member who is speaking.
Mr. Taylor: The article returned to the key issue:
"To achieve real competition, Wal-Mart needs a substantial relaxation in the planning laws to allow it to build its vast stores in favoured locations. The odds on that look long since the environmental lobby is growing ever stronger, but observers still believe that Wal-Mart will get what it wants."
Why else would Wal-Mart be moving into Britain? Its strategy is to achieve profits and growth by building new larger stores to take on and beat the existing ones. Yet Asda, which has very little presence in the south, is in no position to do that unless it can acquire new sites and in a way that the Government claim to be against. There is no logic to the takeover if that cannot be achieved, because Asda has made it clear that it intends to squeeze down the margins as a way of gaining competitive advantage.
Mr. Martlew: Will the hon. Gentleman give way on that point?
Mr. Taylor: In a moment.
1348
The Guardian, a paper with a very different political view, said in an article on 16 June:
"The Treasury and the Department of Trade and Industry have been keen to open up retail competition. A report last year for the Treasury by consultants McKinsey concluded that planning rules should be relaxed to allow more supermarkets."
The McKinsey report was commissioned by the Treasury and is now part of the competition inquiry into supermarkets that is now taking place. Is it any indication of the direction in which the Government are going?
The article includes a direct quote from an unnamed source at the DTI, which incidentally comes just after a reference to one of the Ministers. It states:
"The DTI source said: 'We want competition. Where there are barriers to competition, we need a good explanation. A particular concern is that national benefits such as lower food prices are properly taken into account, as well as local disbenefits from new developments.'"
As a result of today's debate, Asda has issued a press release stating that it intends to adjust its policies within the current planning requirements. However, Allan Leighton, chief executive of Asda, said this week:
"If we were in the south, prices would be lower. You have got to believe there should be a softening in planning to allow the leading players to develop leading formats."
There in no question about what Asda wants or what Wal-Mart must want. The real question is: Why was it after a meeting with the Prime Minister that Wal-Mart felt able to come in? If we get clarification from the Government on that, today's debate will have served a genuine and useful purpose.
Mr. Martlew: I am grateful to the hon. Gentleman for giving way. I realise that it is his job to probe the issue and I am sure that the Minister will answer his question. He has mentioned Wal-Mart bringing down prices. Is it Liberal Democrat policy to oppose Wal-Mart's takeover of Asda?
Mr. Taylor: On prices, the hon. Gentleman may not be aware that one reason why the Office of Fair Trading inquiry took place was that my hon. Friend the Member for South-East Cornwall (Mr. Breed) prepared a report on overpricing in the industry. Those issues, the anti-competitive practices and the bad treatment of suppliers can be addressed without Wal-Mart coming to Britain. If Wal-Mart is coming here on the basis of new development, we are opposed to it. The issue is not whether or not Wal-Mart is involved, but whether there will be new development. However, we must ask why Wal-Mart is coming here given that we know its policy. Why did it buy Asda, which supports the same policy of much bigger retailing units—indeed, it already has plans for 10 hypermarkets—and wishes to move into the south even though the sites are not available? Asda must be looking for new sites—indeed, it has already made that clear. Asda, unlike the other major food retailers, is specifically targeting similar operations to Wal-Mart and plans to move into non-food retailing, which has a greater impact on town centres. All the newspaper reports say the same thing. The information must be coming from somewhere.
Mr. Gray: Will the hon. Gentleman give way?
Mr. Taylor: In a moment.

1349
It is obvious where the information is from, as the newspapers make that clear. The Mail on Sunday said:
"An Industry Department source said: 'We must do everything we can to encourage competition. The vital importance of achieving lower food prices must be taken into account alongside environmental arguments involving proposed new developments.' Wal-Mart has made no public comment about wanting to build bigger stores in Britain."
However, Asda has.
It is pretty obvious that The Guardian has it exactly right when it says that there is a struggle with those who believe that the primary issue is lower prices, which can be achieved only by the development of more and bigger supermarkets in tighter competition. That is a perfectly legitimate view, but it is not the view of DETR Ministers or the majority of right hon. and hon. Members. There are other ways to tackle the issue without raping the countryside and our town centres.
Mr. Gray: In an intervention, the hon. Member for Harrogate and Knaresborough (Mr. Willis) said that there was no out-of-town supermarket in Harrogate. I am sorry that he is no longer in his place. He has made his intervention, issued his press release and shoved off some place else. Liberal Democrat-controlled Harrogate council gave planning permission to Morrisons and Sainsbury to build supermarkets on green-field sites.
Mr. Beith: Where?
Mr. Gray: Just outside Harrogate. Does the hon. Gentleman believe that Liberal Democrat-controlled Harrogate will give permission for Wal-Mart—
Mr. Deputy Speaker: Order. The hon. Gentleman's intervention is too long.
Mr. Taylor: My colleagues tell me that the hon. Gentleman is inaccurate, but I am not in a position to answer for my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis). The hon. Gentleman can pursue him on another occasion.
I do not know whether those on the Conservative Front Bench support our concerns. I know that the right hon. Member for Suffolk, Coastal, a former Secretary of State for the Environment, strongly supports them and went on the television to say so. We shall find out soon whether there is division among the Conservatives.
I want to quote one last time from the newspapers. The Sunday Telegraph said:
"Given Wal-Mart's relentless attention to detail there is no doubt that it has already drawn up a blueprint for Asda, one that it is reluctant to share with outsiders."
Wal-Mart has refused to comment. The report continued:
"It is almost certain to be based on the vision of transforming Asda into Britain's dominant retail business within the next few years, through a mixture of aggressive store openings and prices low enough to put rivals out of business."
We know that Asda is pursuing that strategy and that Wal-Mart's acquisition makes commercial sense only if it is allowed to do that. We need to know whether the Government are going to stand up to that strategy.
1350
The Government must clarify their policy. On 17 June, the Department of the Environment, Transport and the Regions issued a response to the report in The Guardian. It said:
"This is wrong. The Government has no intention of changing the policy on retail development which is directed to promoting the viability of our town and city centres."
That is reassuring, but the press release goes on to refer only to the sequential approach, and so does not clarify whether it will allow large, out-of-town retail development. The approach says only that the first choice is for in-town development, but, if there are no in-town or edge-of-town sites, the need should be examined. All the evidence is that the debate in the Government about whether the need for greater competition should allow out-of-town developments in the circumstances that I have described or whether they should hold the line is still lively and, at best, undecided.
The McKinsey report recommended a change to give competition priority over the environment. We know that Asda is pursuing those developments. We know that Wal-Mart's acquisition makes sense only on that basis. If the Government want to reassure us, they should stop refusing to say anything on the record about what happened at that meeting. They need to be clearer about what happens after the sequential approach is exhausted and what they believe about need, competition and the development of new and much larger superstores around our towns, cities and smaller country towns. That is the issue. I hope that the House will agree with us, but nothing in the takeover and the Government's response so far holds out any reassurance.
4.52 pm
The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
welcomes the Government's planning policy on town centres and retail development, which promotes the development of food retailing in existing centres; endorses its attempts to maintain vital, viable competitive town, district and neighbourhood centres, which provide a broad range of retail services accessible to the whole population regardless of whether they have access to a car; welcomes the benefits which supermarkets have brought to consumers; notes the concerns over the level of supermarket profits and approves the investigation of grocery retailing being carried out by the Competition Commission; welcomes the recently agreed re-shaping of the CAP and the establishment of the second pillar of the CAP—an integrated rural development policy; and welcomes the Government's commitment to rural communities, its efforts to increase collaborative marketing among farmers and encourage diversification, and its support for regional, speciality and traditional food producers.
We do not often congratulate an Opposition party on tabling a motion opposing the Government, but I welcome the debate because it gives us an opportunity to set out our position on out-of-town shopping and supermarkets. It is good of the Liberal Democrats to use half their Supply day to give me that opportunity. The hon. Member for Truro and St. Austell (Mr. Taylor) gave us one of the best examples that I have heard of a speech based on joined-up press releases and press cuttings. There was not a great deal of new substance to it. I shall try to clarify what has happened over the past 10 days and at some of the recent meetings.
I must make my apologies to the House, because unfortunately—or fortunately—I have a speaking engagement elsewhere and I shall not be here for the vote,

1351
if there is one. I shall deal with the Government's planning policy for supermarkets and my hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food will deal with the food issues that the hon. Member for Truro and St. Austell has raised.
I welcome the opportunity to make the Government's position clear. Soon after we came to office, we published our response to the report of the Environment Committee on shopping centres. We made it clear that we were firmly committed to the objectives of the planning policy guidance note on town centres and retail development—PPG6.
Everyone knows that PPG6 seeks to sustain and enhance the vitality and viability of existing city, town and district centres to make them the focus for retail investment, so as to provide everyone with easy access to a wide range of facilities and services by a choice of means of transport. I remind hon. Members that nearly a third of households still do not have a car. Such investment is essential to the regeneration and enhancement of the attractiveness of our towns and cities.
What does that mean? We want local planning authorities to establish the need—a point raised by the hon. Member for Truro and St. Austell—for new retail facilities in their plans, and we want them to apply the sequential approach to identifying sites where this can be accommodated. That should be in existing centres. Developers who propose schemes that do not conform to that will have to demonstrate clearly that there is a need for the scheme.
I refer the hon. Member for Truro and St. Austell to a written answer on 11 February, when I cleared up the whole question of need—a point on which the hon. Gentleman dwelt and on which, I think, he accused the Government of being inconsistent. What does "need" mean? In that written answer, I said that, first, would-be developers must demonstrate that need does not mean simply an assertion by the developer that there is a market demand. It means that the local planning authority must consider the wider needs of the community as well as the market demand for a plan before it accepts the development plan. If the local authority is satisfied that a need exists, it must also be satisfied that the sequential test has been applied in selecting the site. Even then—[Interruption.] The hon. Member for Truro and St. Austell said that he wants answers to his questions, so I hope he will do me the courtesy of listening while I give him those answers.
Even then, the local authority must also consider whether there will be an adverse impact on the existing centre before it allows the proposal to go forward. That was a clear definition of the word "need".
Mr. Matthew Taylor: The Minister's comments are helpful. As I said, I believe that the Minister and his team at the Department share my concerns on this. However, can the Minister clarify whether, if it is believed that there will be an adverse impact either on the community or the town centre, that in itself could always be taken as grounds by councillors for refusing permission?
Mr. Caborn: We actually have devolved government and the planning authority is the local authority. Because of certain cases before the courts, we have tried to clarify the word "need". It will be for the local planning authority
1352
to make the decisions. If people believe that local authorities have acted outside their rights and responsibilities, there are many mechanisms by which they can be challenged. But we cannot and will not be as prescriptive as to say that everything can be determined from the centre. On the contrary, we believe that devolving government to local authorities is important.
It is difficult in a narrow debate such as this to talk about the wider impact of the planning regime. I think that the hon. Gentleman will accept that, since we came to power, we have looked at modernising land use and transport planning. We have now instituted for the first time at the regional level an examination in public, in an attempt to change planning regimes from being reactive to proactive. The first hearing in public took place in the eastern region. I believe that it has been successful. SERPLAN, the south-east regional planning conference, is going through that process now, and all the regions will go through it this year and the early part of next.
So the context is one of the right to make decisions strategically at the regional level, translating that into the local or unitary development plan, and the planning authority, in turn, translating that. That gives local authorities every opportunity to plan in the most positive way for their communities.
Mr. Taylor: There is nothing in that with which we would disagree. However, the Minister knows that what Ministers say in this House helps to influence what happens, particularly in inspectors' inquiries when they try to interpret the Government's intentions. In the past, councillors have often looked to refuse permission for out-of-town or edge-of-town retail superstores on the basis that they would harm the existing community. However, councillors have not been successful because, while that condition may be taken into account, it is not sufficient in itself.
Is the Minister saying that the policy now is that, if there will be a detrimental impact on an existing town centre, that should be taken as sufficient in itself by an inspector, should it go to appeal, to uphold the refusal by the local council?
Mr. Caborn: I will repeat what I said on 11 February, and I advise the hon. Gentleman to read my response of that date. Following the court case, we believed that the word "need" needed to be clarified, and we did that. If the local authority is satisfied that the need exists, it must be satisfied also that the sequential test has been applied in selecting a site. Even then, it must consider whether there will be an adverse impact on existing centres by allowing the proposal.
All that we can do is to give that type of guidance. When we do that, it can be cited in courts and at the various planning inquiries. Coupling that with what we are trying to do to bring more certainty to the planning system through other actions will mean that local planning authorities will be able to carry through their plans for their communities.
As I was saying, developers will have to demonstrate that there is a need for their scheme; that they could not find a more central site; and that there would be no significant impact on existing centres. I want to reaffirm that that is still our policy and that we have no plans to change it. My right hon. Friend the Prime Minister has confirmed that.

1353
Let me put the record straight about the rumours concerning my right hon. Friend the Prime Minister's meeting with Wal-Mart. My right hon. Friend has put it on record that he has given no assurances to Wal-Mart about relaxing planning policy. Indeed, planning issues were not discussed.
I am pleased to say that our policy has widespread support in this House, from the general public and within the industry. However, there are some exceptions. For example, Asda's chief executive is reported to have told the BBC's "The Money Programme" that the only way forward is to loosen planning restrictions.
It is interesting to note that the Asda chairman, the hon. Member for Tunbridge Wells (Mr. Norman), told the House as recently as 3 February 1999 that
"it is important to recognise that the supermarket industry has, for the most part, welcomed the tightening of the planning restrictions, which is good for the industry and for the community."—[Official Report, 3 February 1999; Vol. 324, c. 1030.]
I wonder whether the hon. Gentleman maintains that view when he has been so publicly associated with the takeover proposal by Wal-Mart.
I picked up a copy of an Asda press release when I came to the House. It says:
"Following today's report in the Financial Times Asda wishes to clarify that following the proposed acquisition by Wal-Mart, it plans to continue to trade in the UK under the Asda banner.
We will continue to back British farmers, favour small British suppliers and crusade for value for British consumers.
It will remain Asda's policy to adapt its store development plans to meet the intention and spirit of today's planning regulations and to work closely with local communities to meet local environmental and transport needs.
As far as Asda is concerned, rumours to the effect that there has been any understanding, formal or informal, with the Government on relaxation of planning requirements are complete nonsense."
Asda is all over the shop, with its chief executive saying one thing and its chairman saying another. However, we welcome that statement.
We are determined to maintain a firm and consistent application of the policy. That is more important than scoring a few points about press releases, and would be expected of us by all the stakeholders. Indeed, in the past two years we have clarified and tightened up the policy in PPG6, closing some loopholes; we have called in a large number of applications to ensure the consistent application of the policy; we have refused a high proportion of appeal and call-in cases, allowing only those in or on the edge of town centres; and we have successfully defended our policy in the courts.
I would characterise our policy stance on supermarkets as tough but fair. We have tried to keep the policy up to date; to ensure that it is applied firmly and consistently, without fear or favour; and to ensure a level playing field for all players in the industry. All the letters that we have received support our policy. Nobody from whom the Department has received representations wants us to relax it. Everyone wants to be reassured that we will maintain and uphold the policy, and I give the assurance that we will.
Mr. Brian Cotter: The Minister talked about a fair policy on supermarkets. What about
1354
business rates, which cost supermarkets only 5 per cent. of their turnover, whereas small shops pay anything from 12 to 15 per cent? That is not exactly fair.
Mr. Caborn: We are prepared to debate anything that the Opposition table in a motion, but I was not asked to respond on that subject today.
We inherited a situation in which the number of superstores had increased nearly tenfold since 1980. Very many of them were built outside existing centres, and there were still out-of-town stores coming off the production line when we came to power. The legacy of the previous Government was a deluge of out-of-town stores. They left a trail of disaster and absolutely let the market rip. A combination of permissive planning policy and a property boom in the late 1980s meant that half the current out-of-town retail floor space was built in only five years, from 1986 to 1991. Another boom following the recession of the early 1990s brought another surge of out-of-town development. The situation was totally unmanageable.
Mr. Gray: Does the Minister agree that there was a significant change in policy at about the time when my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), for whom I worked as a special adviser in the Department of the Environment, entered that Department? From then on, there was a significant shift in the number of permissions given for out-of-town centres. Does he agree that some tribute should be paid to the previous Government?
Mr. Caborn: I have acknowledged on many occasions that the previous Government introduced PPG6, and we welcome that, but that does not alter the fact that they were responsible for the massive expansion of out-of-town shopping in such a short period that has done so much damage to our town and city centres. We are only now beginning to reap the benefit of the change in policy to which the hon. Gentleman referred and, in the meantime, the boom has had a devastating effect on many of our local centres. It has been a very damaging and wasteful process, effectively playing Russian roulette with the future of our towns and communities. It is a process that we cannot afford to repeat. We will not do so, which is why this debate is very timely indeed.
We are determined to take a tough line. We realise that we must capture new retail investment for our town and city centres. We must ensure that supermarkets are developed in existing centres, to help to make them attractive and competitive. That is particularly true of smaller towns and district centres where we need to have stores of the right size.
Our independent research, conducted by Hillier Parker, on the impact of large stores on market towns and district centres showed that locating stores outside such centres can be very damaging. It showed that large food stores outside towns or district centres have in some cases cut the market share of the principal food retailers in such centres by up to 50 per cent.
As the hon. Member for Truro and St. Austell will be only too aware, the opening of superstores on the edge of town in many areas in the south-west has had a devastating effect on the town centres. Penzance, Helston and Falmouth illustrate that all too well. Small towns in East Anglia and small centres in our larger towns show similar results.

1355
The research provides strong support for the tough line we are taking, and we need to capture that "inward investment" to revitalise our town centres. We cannot afford to allow new out-of-town schemes that undermine rather than reinforce the vitality and viability of existing centres.
If we are to regenerate our town, district and local centres, we will have to adopt a positive, plan-led approach. Our policy advice urges local planning authorities to adopt a much more proactive approach to the task. For example, they should say where new retail development is needed, and where it will be encouraged, and identify sites and, if need be, help to assemble those sites. We need to capture new investment for town centres. That means taking a positive approach to planning for new food stores, to help to bring about our wider aim of an urban renaissance, and using them to anchor the regeneration of district and local centres.
There are some encouraging signs that the message is getting through. Some companies have developed new formats, such as the Tesco Metro and Sainsbury's Local. The convenience store could be the format of the future for our local communities. Our retail policy is all part of our strategy for bringing about an urban renaissance.
Lord Rogers, who has headed the urban task force, will present his report and recommendations to the Government next week. We hope that his report will form the basis of the urban White Paper—and the rural White Paper—that we will publish later this year. Those White Papers will address the wider issues. The subject of our debate today will form part of that urban renaissance and should be seen in that context. If we are to make our towns and cities, and our local neighbourhoods, places where people choose to live, then we must make sure that we can offer them the quality of life that we all expect for ourselves.
Mr. Hilton Dawson: Does my right hon. Friend agree that, in pursuing the worthy objective of an urban renaissance, we should encourage distinctive urban centres, so that we do not end up with the uniformity of development that we have seen in the past? We should celebrate diversity and regional and local differences in our town centres.
Mr. Caborn: I could not agree more, and that is what we are trying to do. We are trying to change the whole concept of the planning regimes in this country and we want local authorities to be proactive, not reactive. Many initiatives are emerging in our city and town centres. I recently visited Manchester to open some flats that had been developed from an old broken-down warehouse. All those flats had been sold before the conversion had taken place. When designers and architects use their imagination, there is a market for the result. If professional people can be persuaded to stay in towns and cities, their disposable income starts to have an effect on the type of restaurants and shops in the area, and a virtuous circle develops.
We also want to develop the individual character of our towns and cities. We have some beautiful cities that can be said to be European, and there is no reason why we cannot develop some of those cities, as has been done in Barcelona. Shops and supermarkets are beginning to accept their responsibilities as part of the urban
1356
renaissance. That approach to planning and investment in the inner cities has brought out creative talent instead of letting the market rip, which produced the situation that we inherited. Even the Conservatives accepted that before they left office, and introduced PPG6, which we welcomed.
The new approach to regenerating smaller centres and building them up to meet a wide range of everyday needs is part of our approach to tackling social exclusion. We want to ensure that everyone has good access to shops, especially food shops, and that will often mean ensuring that appropriately sized supermarkets are opened in local centres.
Our objective is to promote competitive and vibrant town centres. We want retailers to compete on the same terms in the same market place: the town centre. The planning system provides a level playing field for all players, regardless of size or ownership. We are not trying to protect one firm against competition from another. Our policy is fair, clear and consistent with our overarching aim of revitalising our towns and cities. We intend to keep it that way.
5.15 pm
Mr. Nick Gibb: This is an important debate. A number of concerns have arisen in recent years about the food retailing industry. The growth of large supermarkets in out-of-town locations has been a fact of life for 20 or 25 years, and has taken place in Europe and the United States as well as in the United Kingdom.
The reasons for that growth are many, but unclear. They include social changes: people lead increasingly busy and demanding lives, and want to do their shopping in one trip once a week, at stores with easy parking. Other factors include increased pedestrianisation in many town centres, and the success of supermarkets in improving quality, choice and variety and in bringing down prices.
The motion tabled by the Liberal Democrats mentions
"the rapid expansion of out-of-town superstores under the Conservatives".
Like the Minister's speech, that is a facile and juvenile approach to a complex issue. It does no credit to the Liberal Democrats, or to the Minister. However, although it was one-sided and simplistic, the Minister's speech was slightly less polemical than the motion and will contradict many speeches made by Liberal Democrats in constituencies around the country.
The growth of out-of-town supermarkets has had a damaging effect on smaller retailers and town centres, as I know only too well from what has happened in Bognor Regis and Littlehampton. Moreover, despite the gains in efficiency and economies of scale that supermarkets achieve, the prices that they charge are considerably higher than in similar enterprises in the United States. An effective campaign has been run by The Sunday Times to expose such price differentials.
There may be many reasons for those differentials, as no doubt the Competition Commission will report. Transport costs are higher in this country, especially after the Government's huge hike in diesel prices. [Interruption.] In total, the Government have increased the escalator from 5 to 6 per cent., and there has been more than one increase in any given year. The result is

1357
that diesel prices are 21 per cent. higher than when the Government came to power. The escalator is higher and faster than it used to be. It should be ended, because it is making the problems worse.
Mr. Martlew: If the cost of DERV has gone up so much, why have supermarket prices risen by only 1.5 per cent. since the Government came into power?
Mr. Gibb: One cannot have one's cake and eat it too. Either there is a problem, or there is not. In this case, there is a problem. One of the key contributors to it is the high price of diesel, as we shall see when the commission reports.
The second problem is the price of land. We live in a crowded island where planning guidance is very strict, for worthwhile reasons. The result of the two problems that I have set out—high prices for diesel and for land—is that the prices charged by the supermarkets are also high. A more important factor still is the absence of fierce competition between the large, multiple retailers.
The third element that needs to be highlighted is that the British farmers who supply supermarkets do not receive a fair price for their produce. That is especially apparent in the fact that falling livestock prices have not been passed on to the consumer. The price of pork provides a stark example. There has been a catastrophic fall in pig prices over the past couple of years.
Dr. Howard Stoate: The hon. Gentleman makes a valid point about farm prices. A farmer in my constituency tells me that the price of his cabbages has not gone up for seven years. He receives 15p a cabbage now, and he got 15p a cabbage then. Supermarkets put their prices up year after year, so why is the poor old farmer receiving exactly the same price he was paid all that time ago?
Mr. Gibb: The hon. Gentleman makes a fair point, although I am keen to get away from the consensus that appears to be developing.
Lack of competition among supermarkets affects consumers, but it affects suppliers too. There is concern that the supermarkets have almost monopsonistic purchasing power over their suppliers, and that that position is being abused. Supermarkets set high environmental, hygiene and quality standards for farmers and suppliers, and strict employee welfare conditions are required; yet, if the price or quality is better overseas, they are happy to switch to suppliers who do not enforce those conditions.
The environment is my fourth concern. It is suggested that out-of-town developments eat up the fast-diminishing stock of our countryside and that more such shopping means more car journeys.
All four of those concerns are real. The multiples supplied 86 per cent. of the United Kingdom grocery market in 1998, and are expected to account for 32.5 per cent. of all UK retail sales by 2004. However, the issues are also complex—no simple answers exist. Competing and contradictory interest groups represent concerns on either side of the argument.
1358
It is all very well for Liberal Democrats Members to represent one set of interests in the House while Liberal Democrats locally represent different interest groups with contradictory policies, but the official Opposition, like the Government, require a joined-up policy. Commentators on these matters—the Liberal Democrats in particular—suffer from a lack of intellectual honesty or consistency that verges on the hypocritical. On the one hand, they are concerned that prices charged by supermarkets are too high in comparison with those of Europe and the United States; on the other, any suggestion that a new entrant to the market might force prices down raises concern about damage to town centres and smaller retailers.
If the supermarkets charge prices that do not drive out smaller stores, they will make larger profits which the Labour Government will deem too great. If they cut their prices, they will be accused of being predators. We need a balanced approach to enable competition to flourish, to allow the economies of scale enjoyed by the supermarkets to be passed on to the consumer and to enable farmers to be paid a decent price for their produce. We also need policies that enable our town centres to maintain a critical mass of viable shops and that protect an ever-dwindling stock of unspoilt countryside.
There are two pairs of competing policy objectives. One pair—lower prices for consumers and better rewards for farmers—benefits from greater competition. The other pair—protection of our town centres and rural areas—may be harmed by competition. How can the different political parties handle that dilemma? Labour, with its deep-rooted misunderstanding of capitalism and the free market, is subjecting the supermarkets to a battering because of what the Government regard as unacceptable profits. A commission, taking evidence in public, will judge the supermarket industry's profits, effectively returning us to the prices and incomes policies of the 1970s and sending the industry a signal not to be too profitable, innovative or efficient.
Meanwhile, Labour also let it be known that deals can be done behind the scenes to assist particular companies. A sherry party will be held for Wal-Mart, or a meeting with Formula One. That must never become the way in which the British Government do, or are seen to do, business. The Minister says that no planning guarantees were given and that planning was not even discussed at that meeting, but the mystery still remains. If planning was not discussed, what was discussed? As the hon. Member for Truro and St. Austell (Mr. Taylor) says, such meetings are unusual. In order to set minds at rest, will the Minister set out precisely what was discussed at the meeting? Only if he does that can we be sure that the Prime Minister is not just hiding behind careful words.
Mr. Dawson: Will the hon. Gentleman please take this comment from me with the seriousness with which I make it? It is galling and hugely irritating to sit across from him and hear a lecture about trivial issues. My experience of the city of Lancaster is that the Conservative Government wreaked absolute havoc. That is a situation from which we are desperately struggling to recover. Perhaps the hon. Gentleman will address the serious issues rather than nonsense about sherry parties.
Mr. Gibb: The hon. Gentleman does me an injustice. I have said that this is not the simplistic debate that the Liberal spokesman tried to present it as. There are

1359
competing concerns. Consumers want low prices and choice in supermarkets. Delivering that often means damage to the environment from the construction of out-of-town shopping centres. The competition provided by the supermarkets damages small retailers in the town centres. It is a question of balance. There is not a simple answer.
Mr. Caborn: Will the hon. Gentleman explain to the House why out-of-town food shopping increased by 50 per cent. in five years but we still have high prices in the supermarkets? The policy of the free market was given a fair wind. The market was let rip. Planning was ripped up. We allowed the supermarkets to do exactly what they wanted, yet we still had higher prices than on the continent when the Conservatives left office.
Mr. Gibb: It is worrying when Ministers have such a simplistic understanding. The Minister is confusing the comparison between prices in large out-of-town supermarkets in Europe and America and in Britain with the comparison between prices in out-of-town supermarkets and prices in town centres. If supermarkets had not been allowed to develop, there would not have been the huge falls in prices that have occurred in the past
20 to 25 years. That is a fact. [HON. MEMBERS: "No."]
Yes it is. Everyone knows that supermarkets have delivered lower prices and greater choice. That is their great attraction. That is why they make money and why they have displaced many of our independent smaller retailers in town centres. People do not go to out-of-town shopping centres to pay higher prices. The question is whether the falls in prices that the supermarkets have delivered are big enough. Have prices fallen sufficiently, compared to Europe and the United States? The Minister should understand that question.
Mr. Gray: Perhaps I can take my hon. Friend back to the famous sherry party at No. 10 Downing street. He will know that there are only two kinds of meeting in Government circles. One is an official meeting at which civil servants take minutes, and the other is a political meeting at which difficult political decisions are taken, no civil servants are present and there are no minutes. It might be interesting to know whether the meeting was political or non-political. If it was official, why can we not see a copy of the minutes?
Mr. Gibb: My hon. Friend makes a valid point. The problem is that we are prising from the Government the truth about the meeting on a piecemeal basis—a briefing to the press, a statement in a debate on a Liberal Opposition day. We need a categorical statement of precisely what happened. It would be better if it were delivered by the Prime Minister himself in this Chamber but, if we cannot have that, will the Minister say what precisely was discussed at the meeting and whether it was official and minutes were taken? If minutes were taken, can they be published?
Mr. Matthew Taylor: We will not disagree on the last point, but will the hon. Gentleman clarify whether he prefers maintenance of the town centres and the environment to developing competition? He said that it was a complex issue and that there was a balance to be struck. Asda, or at least someone in Asda, has argued that
1360
it could cut prices if it were allowed to develop superstores in competition with local monopolies in the south. Is it Conservative policy to protect the town centre and the environment and say no, or to say that competition to reduce prices is the priority so such developments should be allowed?
Mr. Gibb: Our policy is clearly set out in planning policy guidance 6. It is to help small business. That was our policy, and it remains our policy. The Liberal Democrats try to resolve the policy dilemma that I set out in their time-honoured fashion by saying one thing to one constituency and the opposite to another. They tell consumer groups that they want more competition to reduce prices, and the rural lobby that they want fewer supermarkets and less competition. They tell environmentalists that they oppose new supermarket developments, but to consumers in Yeovil the right hon. Member for Yeovil (Mr. Ashdown) will say nothing against a new supermarket development. That is Liberal policy in a nutshell.
Mr. McNulty: Can the hon. Gentleman say whether that will remain his policy? I ask only because he said of another policy:
"We believe that we are right in our view, but we may not be. We are not arrogant, and if we are proved to be categorically wrong, we shall change our policy. It is irrelevant whether one person in society believes that we are wrong. What matters is whether we are wrong."—[Official Report, Standing Committee B, 17 June 1999; c. 659.]
Will the policy change? Do those remarks represent the thrust of his policy formulation?
Mr. Gibb: We are not an arrogant party. We have a firm view about the euro, if I may digress. Our position at the next general election is that we will not take Britain into the single currency. Our policy for the general election after that will be decided nearer the time. That is a sensible, pragmatic approach to policy.
Neither the Labour nor the Liberal approach is acceptable in dealing with these difficult issues. Our approach, as it was in government, is one of balance. We want more competition to bring down prices and increase choice, and so that supermarkets have to compete with one another in their relationships with suppliers and farmers. However, as Conservatives, we understand that we live on a small and crowded island and that ever-more building and development are not sustainable ad infinitum. That is why the previous Government introduced PPG6 to slow the growth of out-of-town shopping development and ease pressure on the environment and town centres. That should remain the policy of the British Government, with no added codicils of ex-statutory, intramural deals for favoured companies. That balance is the right approach. I hope that no one will take any notice of the Liberal Democrats, whose disingenuous approach lacks integrity and damages the body politic as much as it damages them.
5.33 pm
Mr. Eric Martlew: I have been a critic of supermarkets for 10 years. On 9 December, I laid out my reasons in a poorly attended Adjournment debate. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) confused me because he seemed to say that

1361
we should not refer the problem of price rigging in supermarkets to what is now called the Competition Commission because that would interfere with the free market. However, we have a cartel of the four biggest supermarkets and his Government were to blame for that situation. One of the heads of the cartel is a Conservative Member, so we can understand why the Conservatives do not want the supermarkets to be examined by the Competition Commission. If I am wrong, he can intervene.
The growth in the power of the supermarkets has come at the expense of everyone else. We have heard the argument about small shops, which is difficult. My constituency had the sense to ensure that its centre was in a good state of repair before the out-of-town supermarkets came on the scene, so we still have a thriving city centre. That did not happen in some cities.
The British public love the supermarket—let us not kid ourselves about that; that is why I asked the hon. Member for Truro and St. Austell (Mr. Taylor) whether the Liberals were in favour of supermarkets. One has only to go round supermarkets to see that people look on going to supermarkets as a day out. That is not my view, although I do go to supermarkets. Indeed, on Sunday, I shall be opening the celebrations for the 100th anniversary of Morrisons at my local store in Carlisle—unless of course the staff read this speech. The reality is that the British public like supermarkets and politicians have to accept that. The Government's planning policies are strong enough to preserve what is left of our city centres, although devastation has taken place, as my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) pointed out.
Some of the information that is sent to Members of Parliament worries me. In March, we all received a briefing from the British Retail Consortium; it was called "Supermarkets' Prices and Profits—Myth and Reality", but most of it was myth. We were asked to phone the consortium if we had any queries. I pointed out that some of the figures in the briefing on competition with continental supermarkets were not quite right, because there is no VAT on food in the United Kingdom, but there is in France, Germany or wherever. I asked for some figures. The reply was, "Yes, of course." I waited for three months until June and rang the consortium again to ask for the figures, but was told, "We are very sorry, we don't have the resources." The British Retail Consortium does not have the resources to provide my answer. I was told that I should get my civil servants to find the information.
I pay credit to The Sunday Times for its work on supermarkets, and for exposing the fact that we are paying too much for our food. The idea that, if supermarkets charged less, the farmers would be paid less is nonsense. Supermarkets push down payments to suppliers as far as they can to increase their profits. Supermarket profits are extremely high, so I have no fear that the supplier would be paid less.
Dr. Stoate: Not only do purchasers force down prices, but they have told farmers in my constituency that, if they do not like the prices that they are offered, the purchasers
1362
will buy produce from abroad. They do not care about the deprivation and difficulty caused by their forcing down of farm prices for my constituents.
Mr. Martlew: I can give another example. Ten years ago, 68 per cent. of the price of a pint of milk in the supermarket—now it would probably be a litre—went to the farmer. Today, it is only 56 per cent. and the price has probably dropped in real terms. Supermarkets are screwing the suppliers and taking advantage of a monopoly.
Mr. Andrew Love: They are screwing the consumers.
Mr. Martlew: As my hon. Friend says, they are screwing the consumer as well. Considering how much the average family spends in supermarkets, if we can get supermarket pricing policy right, it would be the equivalent of a penny or tuppence off income tax. We should be doing that.
Mr. Gray: If the hon. Gentleman feels that way about milk marketing, why has his right hon. Friend the Secretary of State for Trade and Industry taken so long to release the Monopolies and Mergers Commission report on Milk Marque?
Mr. Martlew: I was one of those Members of Parliament who opposed the breaking up of the milk marketing boards under the Conservative Government. That Government are to blame for the current situation.
Wal-Mart concerns me. It may be necessary to bring in someone from abroad to break up the cartel, but I have worries about Wal-Mart. It has more than 2,000 stores in America; not one of them is unionised. In fact, some people have been sacked because they tried to form trade unions. I understand that Wal-Mart went to the courts in America to ask for exemption from the minimum wage. I am sure that, in his reply to the debate, my hon. Friend the Minister of State will tell us that, if the company were to try to do that in this country, the Government would not accept it.
Asda is part of the cartel, but it has a good record with its employees. I hope that, in the event of a takeover, Wal-Mart will maintain that good relationship, retain the terms and conditions of the work force and continue to co-operate with the GMB—I know that the union is prepared to work with Wal-Mart. We will not tolerate in this country the sorts of practices that Wal-Mart has followed in the United States.
There is a major problem with supermarkets that Parliament has not yet addressed. Many of our constituents use supermarkets and they are being exploited. We must break the cartel because, if we do not, it will continue to advance. It is not a question of allowing the supermarkets to have a particular market share; if we do not put the brakes on, we will find that, in four or five years, the growth in supermarkets will have continued, competition will be less and the suppliers and the public will be worse off.
5.41 pm
Mr. James Gray: I am pleased to participate in this important debate. The Liberal Democrat tradition in Supply day debates is to choose the least

1363
significant subject imaginable in which no one else is even slightly interested. However, the issue of supermarkets, the food in supermarkets and the future of food retailing is centrally important to us all.
Regardless of what one may say about town centres, village shops and the detrimental effects of the supermarket revolution, the truth is that we all use supermarkets. I challenge hon. Members who are present in the Chamber to say that they do not visit supermarkets—or perhaps it is a wife, a husband or a servant in some cases. [Interruption.] There is not a single person in this nation who does not use supermarkets.
For example, 88,000 people in the town of Chippenham go through supermarket checkouts every month—and Chippenham has a population of 30,000. It has three supermarkets, yet 88,000 people visit Safeway alone. Sainsbury and Somerfield presumably have a similar number of customers. [Interruption.] I am glad that I have been able to give the rather dull faces on the Government Benches a little innocent amusement. In order to set the record straight, I make it absolutely clear that I shop at Safeway and Sainsbury in my constituency.
Mr. Drew: Not your servant.
Mr. Gray: That is precisely my point.
When it comes to environmental issues—the same argument applies to supermarkets as to the use and building of motorways, the cost of road building and traffic congestion—the more self-righteous among us, whom we often find come from the Liberal Democrat Benches, love to claim the moral high ground. They say, "We believe in village shops and we believe in preserving the high street. We decry what has happened with regard to supermarkets across the nation, we decry the motorways that allow people to get to the supermarkets and the construction of parking facilities. We are into bicycles, bobble hats and high streets." The truth is that the Liberal Democrats use supermarkets as much as the rest of us, and they use motorways to get there just like we do. Pretending that, somehow or other, they are cleaner than clean and that we are the bad guys for using those facilities demonstrates how two-faced the Liberal Democrats are.
The truth is that hon. Members on both sides of the House are absolutely determined to do what we can to support our rural areas and village shops—and they are thriving in every village in my constituency that has them. The communities are vibrant and living, and villages that have lost their small shops are poorer as a result. We are all determined to do what we can to support the high streets—or what is left of them. We are doing an enormous amount in Malmesbury in my constituency to ensure that the vibrant high street remains. It would be foolish to suggest that any Member of Parliament from any political party is not committed to that useful aim.
However, that does not mean—as several luddite speeches have suggested—that supermarket shopping is somehow a bad thing. It plainly is not, and the people who voted for us use supermarkets an enormous amount.
As we heard earlier, 86 per cent. of all food shopping is done in supermarkets. The average weekly shop in the United Kingdom is six supermarket bags weighing 84 lb. That represents a significant change in the way in which
1364
we run our lives, and to try to ignore it or to argue that it is a bad thing gives the wrong impression to those who will read our debate later.
Mr. Gibb: Does my hon. Friend think it odd that the leader of the Liberal party did not oppose the development of a supermarket in his constituency on a site that was of particular interest because it was mentioned in a Thomas Hardy book, yet his spokesman in the Chamber today is antagonistic to all supermarket development?
Mr. Gray: I am grateful to my hon. Friend. He points out a curious anomaly in the attitudes of Liberal Democrats across the nation. Earlier, I had occasion to mention the fact that it was Liberal Democrat district councils that allowed superstore developments. The Liberal Democrats are proud of how many district councils they control, and those are the very councils—for example, in my constituency—that allow out-of-town shopping centres, but at the same time give lip service to supporting the high street.
It is interesting to note that although in Newbury the Liberal Democrat district council turned down the application by Vodafone, the hon. Member for Newbury (Mr. Rendel) apparently supports it. The Liberal Democrats are all over the place.
Dr. Jenny Tonge: I should like to place it on record that not only do I not wear a bobble hat, but the Liberal Democrat-controlled council in my constituency has opposed two major supermarket developments recently because of worries about damage to Richmond town centre. One of those applications was won on appeal—the Government opposed the council's decision.
Mr. Gray: I apologise, of course, if I slurred the hon. Lady by suggesting that she might wear a bobble hat, a smock or open-toed sandals. I am happy to accept her assurance that she wears none of those things.
The hon. Lady was not in the Chamber earlier when we spoke about Harrogate. The hon. Member for Harrogate and Knaresborough (Mr. Willis), from her own Benches, denied that an out-of-town shopping centre had been built on a green-field site in Harrogate. Liberal Democrat-controlled Harrogate district council gave planning permission for a Sainsbury supermarket in Rippon and a Morrisons superstore on a green-field site in Harrogate.
In Chippenham, the Liberal Democrat-controlled district council gave planning permission for a Sainsbury and a Safeway. There was no question of going to appeal or of turning down the application and leaving it to the Secretary of State to allow it; the district council was delighted and welcomed the development. However, the Liberal Democrat spokesman in the Chamber bad-mouths supermarkets as though we all hate them. That is not the truth.
The opening remarks from the Liberal Democrats went no way at all to addressing the problems that our town centres face. My experience in my area is that Liberal Democrat policies are responsible for killing off town centres. For example, just outside my constituency in Bath, the Liberal Democrats have introduced sky-high

1365
parking charges, which have led directly to a 7 per cent. slump in trade in Bath. That is an example of Liberal Democrat concern for our town centres.
In Chippenham, a small market town with a few town-centre shops, we have free parking for an hour. I welcome that, as it brings people in from the countryside to shop in the high street. The Liberal Democrats apparently propose to introduce parking charges in Chippenham and suggest that we might have a park-and-ride scheme in a town of 30,000 people. It is all very self-righteous, politically correct Liberal Democratism, but it will kill the high street in Chippenham. I challenge them to say what they would do to support the high streets.
This is an important debate, but so far it has not been characterised by a real desire to address the problems facing us in planning, transport and the other issues associated with supermarkets. The debate has been characterised by attempts to achieve the moral high ground and in a luddite way to express dislike of supermarkets. The Minister for the Regions, Regeneration and Planning, who is sadly not in his place any more, made some outspoken remarks against supermarkets. I should be interested to know, when the Minister of State, Agriculture, Fisheries and Food winds up, whether he uses a supermarket, whether it is an out-of-town supermarket and how he gets there. I would lay pretty good money that he or his wife do use a supermarket. The important thing is not to make party political points, but to deal with the marked change in taste that has occurred across the nation over the past 20 years or so.
When I was a child growing up in Scotland, my mother went down the high street with her shopping bag. She went into two or three different retailers and bought a loaf here and a lump of meat there. My grandfather was a butcher in Coatbridge: he was a small retailer and people went to his shop to buy meat. They do not do so today. They go to the supermarket and buy their 80 lb of shopping in six bags.
We must address these issues, and central to them is the subject of transport. It is not just a question of where to put supermarkets. I suspect that the market is nearing saturation point because of the large number that were built when we were in power—saturation may not be the right word. Most towns are served by supermarkets. A bigger issue is transport. The average customer at Tesco picks up six bags weighing 80 lbs. The only way in which people can shop at a supermarket is by motor car. It is nonsense to suggest that they go by bicycle, as Liberal Democrats would, or by bus.
My constituents who shop in Safeway and Sainsbury all use the car—or have done so up to now. It is apparently the Government's policy to make it more and more difficult for my rural constituents to use their car to go to the supermarket. They have put up petrol prices, which have gone through the roof. More than anyone else, that affects the less well off, the low-wage earners in rural areas, old people and the disabled. The Government are now talking about congestion charging. That would be helpful for a fat cat or a two-Jag Prescott, who would not mind congestion charging because such people could afford the £5 a day to get into central London. However, it would matter to an old person in my constituency who has to get to the supermarket.
1366
Incidentally, I do not know why we need congestion charging if new Labour VIPs are allowed to use bus lanes to get into the city in their Jaguars. That is what road charging and doing away with supermarkets is all about—getting other people off the road so that they can drive quickly through, as the Prime Minister did the other day in the bus lane on the M4. That is the truth about these people who pay lip service to environmental benefits. They want to continue their way of life and what they are doing, and do not want other people to get in the way while they do it.
We are told that the congestion charge may be £5 a day in London, and £1,000 a year for workplace parking in London. A fat cat in a Jaguar will be happy to pay £5 a day to get the plebs off the road and £1,000 a year for parking, but people on a low wage living in my constituency need their cars to get to the supermarket.
Most of the debate has ignored the realities of modern life in modern Britain, which requires people to use their motor cars to get to the supermarket. We have also failed to recognise the good bits about supermarkets. Almost everyone who has spoken has had a go at supermarkets. They suggest that they are bad and that they are pariahs. They say that they are awful, that they do not like them and that they like high streets. Of course we like high streets, but there is a huge amount that is good about supermarkets, such as the quality and choice of food. We demand strawberries on Christmas day and exotic fruits from the tropics not as a special treat, but as an everyday part of modern living. We buy pre-packed salads—we do not wash lettuce any more. We demand high-quality food in beautiful condition.
Mr. Love: I have listened carefully to the hon. Gentleman's speech in support of supermarkets. What attitude will he strike when the next application for the development of a supermarket in his constituency comes along and his constituents are opposed to it?
Mr. Gray: The hon. Gentleman brings me on to my next point, which addresses that question. In the past 20 or so years, the number of out-of-town supermarkets has significantly increased. I welcome that to a large degree, because they have brought in their wake a great many other benefits, such as new roads, new housing and new schools. However, we are now nearing the point at which we have the right number of supermarkets supplying the right number of people.
In the town of Malmesbury in my constituency, a site is available on which Tesco is trying to get permission to build a new supermarket. Malmesbury is five miles from Chippenham, which already has two gigantic superstores, and three miles from Tetbury. There is a huge Tesco store just outside Tetbury. The people of Malmesbury, where there is a vibrant high street, would be much better off without a new supermarket. [Laughter.] I do not know why Liberal Democrats find that funny. I am simply saying that my constituency has a worthwhile supply of supermarkets. My constituents use them, but we do not want any more, because of the environmental damage that would be caused and also because, if we allowed too much competition, at least one of the supermarkets involved would probably go out of business. We would then face the problem of what to do with the site.
So far, this has been a one-sided debate. The planning issue should be about balance. It should be about supplying what all our constituents want, while also

1367
preserving the countryside, preserving the high street and preserving the village store. The careful and subtle balance contained in planning policy guidance note 6, introduced by my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) when I was a special adviser to him, is precisely what we want in planning terms.
We want to supply the British people with the shopping experience that they now want. Incidentally, I heard on the radio this morning that there is talk of shoppers' actually paying to go shopping. My instinct would be to pay not to have to go shopping, but apparently that is the shopping experience that people want. On the one hand, we must give people what they want and need; on the other hand, we must have a balanced planning policy that protects our environment, saves our high streets and preserves our village stores.
I welcome what my right hon. Friend the Member for Suffolk, Coastal did with PPG6. I also welcome the assurance that the Government have given today and in earlier debates that they will continue the carefully balanced policy introduced by my right hon. Friend in considering future supermarket developments.
5.57 pm
Mr. David Lepper: I welcome the Liberal Democrats' choice of subject. Let me say at the outset that I have absolutely no interest in knocking the Liberal Democrats. In my constituency, Labour came first in the European elections; the Liberal Democrats came fourth, just about managing to beat the United Kingdom Independence party. I am afraid that any of my colleagues who are expecting to hear criticism of the Liberal Democrats should wait to hear another speaker.
In the past, I have hesitated to speak in debates on planning issues. Until last month, my wife chaired the Brighton and Hove council planning committee, and I thought it wise for just one member of the family to speak on such issues. My wife has now taken another role locally, and I am freed from that constraint.
It is certainly time that the Competition Commission investigated the whole question of grocery retailing and supermarket prices. We need an investigation, and I think that we need international league tables as well. Such tables would show us how much goods bought in this country would cost us in similar stores around the world, and would demonstrate the extent to which British shoppers are or are not being ripped off.
Having said that, let me make it clear that I do not wish to criticise either Liberal Democrats or supermarkets. In an intervention, my hon. Friend the Member for Northampton, North (Ms Keeble) made an important point about the need to distinguish between supermarkets and superstores.
The motion, the Government amendment and, indeed, comments that we have heard from Conservative Members today have a common theme: the need to ensure that development policies are consistent, especially in regard to out-of-town development. I welcome the assurance that the Minister gave me in reply to a question—last November, I think—that he had no plans to revise PPG 6 on town centres and retail development, and I welcome the further assurance that we have been given this afternoon. I was therefore surprised at the story published recently by The Guardian about relaxation of
1368
the rules. Until I heard the speech by the hon. Member for Truro and St. Austell (Mr. Taylor), with its patchwork of press cuttings, I had—in my ignorance—no idea of the extent to which the story had permeated. None the less, the story in The Guardian surprised me, although it should not have done. From the reassurances that we have been given today, the story proves to have been yet another of The Guardian's own-goals in stirring up tales of U-turns by the Government.
I have the honour of being chairman of the all-party group on town centre management issues. The group has more than 200 members, comprised of Members of this place and of the other place, and of all political parties. In membership numbers, it is rivalled only by the parliamentary beer group—as we now have to call it, rather than beer club.
The support enjoyed by the all-party group on town centre management demonstrates the genuine concern felt by hon. Members on both sides of the House about the future of our town centres, not only as places in which to shop and work, but in which to live and enjoy our leisure time. Moreover, the concern is not only for major cities or conurbations—such as Brighton and Hove, part of which I represent, with a population of a quarter of a million people—but about our smaller market towns.
I therefore welcome the initiative taken by my hon. Friend the Member for The Wrekin (Mr. Bradley)—who is not in the Chamber—which led to a recent report by the urban and economic development group on revitalising four small towns in his Shropshire constituency. I am sure that there are other examples of hon. Members, on both sides of the House, taking similar initiatives.
As the Minister said, next week, Lord Rogers will unveil the urban task force's report on regenerating our town and city centres. I am sure that we all eagerly await the report, to see what ideas it has on reversing the drift to the suburbs, to the edges of towns, and on to green-field sites—which, unfortunately, characterises so much of what happened, in the 1980s, under the previous Government.
I do not know what Lord Rogers's report will say about those issues, but know that, earlier this year, his summary of responses to the urban task force's prospectus stated:
"a number of respondents agreed with the House of Commons Environment Select Committee proposals for sequential tests, where developers are required to demonstrate that they have exhaustively examined the possibilities of developing any available brownfield land before being allowed to go ahead with green field development."
I hope that all of us will endorse that position, on which the Minister has given us reassurances.
Mr. McNulty: Does my hon. Friend agree that the attempt to rubbish the sequential test in PPG 6 by the hon. Member for Truro and St. Austell (Mr. Taylor) owed more to his ignorance about planning than any lack of integrity in the test?
Mr. Lepper: I thank my hon. Friend for his intervention, but I have already described my own humility in planning debates, although my wife was able to advise me on the issues. We should perhaps avoid lurching into addressing issues—[Interruption.] I do not criticise my hon. Friend—when we do not fully understand all of them.

1369
I should like to deal with the issue of the difference between superstores and supermarkets. We have to acknowledge the important role that food retailers, with supermarkets, are able to play as partners in regenerating our town centres. They have played an important role in many of the important town management schemes, not only by helping to enhance the appeal of centres—in which they are already located, and to which they decide to locate—and creating jobs, but by ensuring that they very often act as a lever for other funding sources to help to regenerate those town centres. Sainsbury, for example, claims that its active involvement in, and support for, town management schemes has helped local authorities across the country to lever in more than £300 million of additional funding from central Government, Europe and private investors.
I have no particular remit for Sainsbury. In fact I actively opposed its plans for a 38,000 sq ft supermarket on a brown-field site as it was a completely inappropriate development. I am glad to say that the inspectors upheld the decision of the local council to oppose that application. While acknowledging that the proprietors of supermarkets can play an important role as private partners in regenerating our town centres, we must be aware of some of the concerns that have been raised this afternoon.
There is a genuine fear that the entry of Wal-Mart into Britain might well be followed by yet another huge retailer. Will K-Mart be next? Will we have the same experience that I have not seen at first hand, but have heard about from visitors from the United States where some small towns have Wal-Mart at one end of what was once the main street, K-Mart at the other and absolutely no retail development in between? The assurances from my right hon. Friend the Minister that the Government do not want the same situation to develop here lead us to be optimistic.
Finally, I welcome the proposals in the Government's modernising planning documents to which the Minister referred and the pilot schemes in Bexley and elsewhere for one-stop shops providing assistance to developers submitting applications. I also welcome the proposals for mediation in the planning process to avoid the confrontation which often results from planning applications. I particularly welcome the underlying theme of the Government's modernising planning agenda for local development-led plans initiating the planning process in certain areas, rather than planning being a reactive process, as has often been the case in the past. Although there will be changes in the planning process—and not before time—we can all be assured that the Government are determined to stand by PPG6 and the safeguards that it provides.
6.8 pm
Mr. Norman Baker: I am pleased to follow my near neighbour the hon. Member for Brighton, Pavilion (Mr. Lepper) who spoke largely in support of the Liberal Democrat motion. I very much hope that he will join us in the Lobby this evening. I note that the Minister for the Regions, Regeneration and Planning is abstaining tonight, so the Government obviously have some sympathy with our motion.
1370
Let me pick up on one point. There was considerable approval among Labour Members for what the Minister said and he gave us some welcome assurances. I want to be clear in my mind that his speech reflects the view of the entire Government. My hon. Friend the Member for Truro and St. Austell (Mr. Taylor) said that there were two ways of looking at the issue. The part of the Government that seeks to protect the environment puts that foremost, whereas another part of the Government says that lower prices, competition and letting the market rip may be a good thing. That view is epitomised by the DTI. The Government need to make it clear which line they are taking.
That is the case not just on this issue. On genetically modified foods, the Minister of State, Ministry of Agriculture, Fisheries and Food and the Minister for the Environment are cautious, while the Minister for the Cabinet Office and the Prime Minister are carefree and keen to push GM technology as fast as possible. The Deputy Prime Minister introduces bus lanes and the Prime Minister drives down them in his car. There are differences in the Government. We need clarification that the Minister for the Regions, Regeneration and Planning was speaking on behalf not just of his Ministry, but of the whole Government, including the Department of Trade and Industry and the Prime Minister. Perhaps the Minister of State, Ministry of Agriculture, Fisheries and Food will give us that assurance.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): If it enables the hon. Gentleman to get on to the important part of his speech, I am happy to assure him that every Minister who speaks at the Dispatch Box speaks on behalf of the Government, unless they say that they are speaking for themselves.
Mr. Baker: I am grateful for that clarification. The important aspect of the debate is to tie the Government down, so I am glad to have heard that.
The hon. Member for North Wiltshire (Mr. Gray) said that people love their supermarkets and want to shop at them. People also want their corner shop to remain open. Finding the balance is important. The hon. Gentleman rather spoilt his case about supermarkets being wonderful by then saying that Chippenham high street had to be protected and he did not want a supermarket in his constituency. Never mind. We can gloss over that inconsistency.
Supermarkets bring benefits to the consumer, including lower prices—in some respects—ease of shopping and one-stop shopping. We know about those benefits, but there are disbenefits as well. The Government must ensure balance and should regulate when appropriate. Supermarkets have reduced the competition, particularly for groceries. The Conservatives mentioned a figure of 86 per cent. Village shops have closed around the country as a consequence of competition from supermarkets. That has happened in my constituency in villages such as Kingston. The effect of the concentration of ownership is like a cartel.
The Conservatives are also inconsistent in opposing any investigation into supermarkets and then complaining that farmers are not getting a fair deal as a consequence of the prices that supermarkets pay for their produce. That is

1371
why we support an investigation into supermarkets. I commend the good work done by my hon. Friend the Member for South-East Cornwall (Mr. Breed) on that.
Supermarkets can be ruthless. A Sainsbury store opened in Newhaven three or four years ago. It is a very popular and well-frequented addition to the area that people welcome. When it opened, there was a petrol station, which was already struggling, within sight. The petrol station opened 24 hours a day to try to make a living. The supermarket then opened its petrol station 24 hours a day and put up a big hoarding opposite to attract customers. The independent petrol station went out of business and, lo and behold, the supermarket reverted to its normal hours for petrol sales. Supermarkets are ruthless. They are interested not in serving the public, but in boosting their profits. Governments should always remember the down sides of supermarkets as well as their benefits when they are regulating.
Supermarkets are extending their range of wares, not just in food, which was always their central reason for existing, but in other areas of retail. Supermarkets in my constituency now have chemists and sell clothes, toys and videos. All that attacks independent retailers elsewhere in the high street to the detriment of the whole high street.
Lewes has a successful and vibrant town centre. Many people come into the town to work and there is a big work force at county hall, the police headquarters and the health authority. People go to the town centre to do their shopping at lunch time. Yet even in such a successful town centre, there is nowhere outside the supermarket that sells half a pound of butter. If the supermarkets expand to sell clothes, toys and products that chemists sell, I wonder how long the independent retailers will exist.
I hope that the Government will follow through their planning policy and see what they can do to protect smaller shops. The point made earlier by my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) about business rates is important, and I am sorry that the Minister for the Regions, Regeneration and Planning rather skated over that. The Government's amendment refers to the viability of town centres, so it was a legitimate point to raise. The Government should obtain the right balance by tipping it slightly in favour of smaller and independent shops, perhaps more than has been the case so far.

I was opposed for many reasons to the extension of Sunday trading. One consequence of that has been that the one day a week when small independent shops were able to make some money without competition from supermarkets has now been eroded. Many of them took more money on Sunday than the rest of the week put together and have now lost that opportunity. I regret that.
I should like the Government to consider car park charging for out-of-town shopping. That was referred to earlier by my hon. Friend the Member for Truro and St. Austell and is something that I support. The DETR was considering that as part of its transport White Paper until No. 10 stopped it in its tracks. Many people, quite erroneously, decide to shop where parking is free. They object to paying 20p to park in a town centre but they will drive 25 miles to an out-of-town supermarket where parking is free. [Interruption.] I can give the hon. Member for Harrow, East (Mr. McNulty) examples of that from my constituency. My constituents write to me and say that they will shop in Uckfield, for example, which is 10 miles
1372
away, rather than pay 20p to shop in Lewes. Therefore, people do make such decisions, however illogical they may be.
It is time that we reflected the environmental costs of out-of-town shopping with car park charging, and I should like the Government to consider that carefully. It is not Liberal Democrat policy, but I would go further by making it difficult for supermarkets and other out-of-town stores to refund that parking ticket other than by lower prices, so that people are aware that they are making an environmental contribution by buying that ticket.
I do not want to be all negative about supermarkets because, as the hon. Member for North Wiltshire and others have said, they have benefits and we need a balanced debate. One function of supermarkets is as a last resort to help the consumer when the Government of the day have failed the consumer, and to articulate public opinion in the way that the Government sometimes do not do. It was supermarkets which led the campaign, following pressure from their customers, for dolphin-friendly tuna some years ago. The Government did not intend to do anything about that in a free market, but the supermarkets traced that back and tuna in supermarkets is now almost exclusively dolphin friendly.
The supermarkets are now doing the same thing with regard to GM foods. In the words of the Minister, GM foods are not necessary, as he told the Environmental Audit Committee. Those words were echoed by the Minister for the Environment. The public at large are not interested in GM foods. They do not want to buy them. But the Government largely stand on the sidelines—not in the driving seat, to use the Minister's words—and rely on the supermarkets to deal with the problem. Therefore, supermarkets are having to respond to their customers. They have to trace back the ingredients because the World Trade Organisation, the Government and the EU have failed to require the segregation of supplies of, for example, soya. The supermarkets are having to take it upon themselves to fill the gap left by the Government.
I hope that, as a consequence of the debate, the Government will stick to their planning policies and make it clear that there is no further room for out-of-town shopping, which will be to the detriment of the environment if it goes ahead; will make sure that they introduce measures to help smaller stores and high streets, and will resist any measures from the Conservatives or anybody else to let the market rip in the way that we saw during the 18 to 20 years of Conservative Government.
6.19 pm
Mr. Hilton Dawson: I am delighted to take part in this debate because I like shopping and I like food. I go to a very large supermarket at least once a week, and it is highly convenient for loading up the car with tins of beans and getting the shopping in as quickly as possible. There is a certain quality and range of food, and shops are alongside the supermarket. Visiting the chemist, optician or travel agent, or getting money out of the cash machine, is easy.
The problem is that it is all so boring. The supermarket is in a large shed and, although there is an enormous variety of food and other wares, it is all pre-packed, dressed up and bland. I can have strawberries at Christmas if I want—which I do not—and food from all around the world, including green beans from Kenya. Frankly, who wants all that?

1373
In contrast, when I go to the glorious city of Lancaster and walk its historic and beautiful streets, I can go into the shops and have a unique experience. In the marvellous market town of Garstang, I can buy local cheese, local sausage and local fish, and it is a world removed from my local supermarket. In the marvellous town of Poulton-le-Fylde, I can buy local produce from long-standing traders who know their customers and the niches in which they operate. It is a wholly different experience from bashing round the supermarket with a loaded trolley.
Supermarkets have their place, and that will continue. However, we must reverse the devastation that supermarkets have induced in some of our glorious market towns.
There is no easy way out of the problem, but we must find one. I reject absolutely some of the dreadful complacency of Conservative Members. This is an urgent issue of concern about the quality of life in our country, our local economies and, particularly, the rural economy. The previous Government's desperate attention to letting the market rip failed to reflect the importance of local producers, and let them down. When local producers abroad work co-operatively to develop local marketing strategies, they are able to gain power and influence in the market place that can redress the balance with supermarkets. We need to achieve balance. We must market excellent local produce well and attract people into market towns to buy the unique products that are there. We must help producers to work together to compete more effectively.
The Government's tightening of planning restrictions has had a tangible effect in my constituency. In Poulton-le-Fylde, we have been able to see off two separate applications for supermarkets that would have devastated an important town centre, and we have our fingers crossed for the future.
Fiscal issues are also important. I agree that we should impose a parking levy on supermarkets. If we want to cut down on commuter parking by charging large employers for their car parks, we should put the same pressure on out-of-town supermarkets. We should also consider changes in business rates.
We must try to work in partnership with the supermarkets. They should give much more commitment to town-centre development and recognise their responsibilities. I reject the idea of some Conservative Members that we should all get in our cars, get on the motorway and get round the supermarket as quickly as possible. There may sometimes be a place for doing that, but we need to attract people into town centres and we cannot do that by letting the motor car rip in historic cities, because that would devastate our city centres and dramatically reduce the quality of people's experience there.
I have heard nothing today about internet or local delivery services, which are starting to develop. We must attract people into city centres via public transport. At the height of the rush hour in Lancaster—which is especially bad on a Friday afternoon, with very congested streets—I took a train, accompanied by only six people, on a 10-minute journey that would have taken three quarters of an hour by car. We need greatly to improve the prospects for public transport.
1374
Many hon. Members will, like me, be involved in initiatives with business, the farming community and local newspapers. In my constituency, we have developed the Wyre brunch and celebrated marvellous roast beef, glorious pies and wonderful fish and cheese. We did not have any beans. We need to move way beyond local initiatives and niche marketing to get more on a par with our friends and competitors in Europe.
Producers in Europe play a much bigger part in the marketplace, and European city centres are vibrant and celebratory places where people live. We need a different emphasis to the way that we shop in, and experience, our city centres. We also need to change the way that we use our supermarkets. They are an important part of life, but they cannot form the whole of shopping. I hope that the investigation by the Competition Commission will encourage the break-up of the dominant position of supermarkets, give more people a chance to compete and ensure that town centres take their grand place in the future urban renaissance.
6.30 pm
Mr. Stephen Day: I shall make some brief remarks about out-of-town shopping and its effects on my constituency. Some of the comments that I have heard this afternoon—I shall not identify individuals—have been silly party political points. The problem has been around for a while, although I recognise that the Conservative Government, in their early years, were responsible for planning permissions for many out-of-town shopping facilities, including two shopping developments just outside the Cheadle constituency. There is one at Handforth Dean, with Marks and Spencer and Tesco, and one at Cheadle Royal, with the John Lewis Partnership and—I forget the other store.
Mr. Andrew F. Bennett: Sainsbury.
Mr. Day: The hon. Gentleman has obviously shopped there, which raises another problem that the shopping centres have caused and which I shall address in a moment.
It is silly to start casting blame. I do not disagree with this Government's policy or their recognition of the problems that out-of-town shopping brings, and I am pleased to hear Ministers making such points. However, we should recognise that that policy change was brought about by my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), although it unfortunately came too late for my constituency and many other parts of the country. When he was Secretary of State for the Environment, my right hon. Friend visited the main centre in Cheadle to meet local traders. He made a genuine effort to bring publicity to the area to try to help the traders, and we should address practical issues such as that.
The out-of-town centres have had a devastating impact on shopping facilities in the villages of Cheadle, Cheadle Hulme and Bramhall. They have affected the trade and brought massive traffic movements into the area. Six months ago, I spoke at a ladies luncheon club in Liverpool and I was amazed when the lady in charge of the event, who sat next to me at lunch, told me that she knew my constituency well. I asked her whether she had friends there, and she said, "No, I come to shop at Marks

1375
and Spencer." She came all the way from Merseyside, and she said that many of her friends did, too. I told her that that explained why my local roads are jammed.
It was projected at the time of the public inquiry that the Cheadle Royal site alone would produce 20,000 extra car movements a day by 2000, but we passed that figure some 18 months ago, according to the most recent survey. It is an horrendous experience for the people living in the villages. A lot of traffic passes through village centres that have already been hit by the competition from the big superstores, and that makes those little village centres even more unattractive to shoppers, because they get stuck in traffic jams.
Mistakes were made in planning—I battled against the developments from the word go—but we must face the reality. It is all very well to say what the Conservative Government did or did not do, but we now have a Labour Government. People in my constituency look to the Government to solve their problems, and I ask the Government to do so.
The previous Government's road scheme retained a bypass system to cope with the traffic movements that I have described. One of the first actions of this Government was to cancel it. My constituency is an even worse mess as a direct consequence.
Mr. Bennett: Proposing more road works will not solve the problem. When I was first elected to represent Stockport, one of the worst problems was the so-called Cheadle crawl. A motorway was constructed to solve that problem, but the crawl has returned. More roads simply increase traffic and make problems worse. What should have happened is that the John Lewis group should have put its shop in the centre of Stockport.
Mr. Day: I do not disagree with the hon. Gentleman on that, but a third of the bypass scheme has been built. It attracts more traffic, much of which goes to the airport.
To solve the problems suffered by people and shops in villages as a result of the arrival of out-of-town shopping developments, the roads need to be finished. The Minister for the Regions, Regeneration and Planning said earlier that he wanted to help small village centres. I hope that his colleagues in the Department of the Environment, Transport and the Regions will hear this message: if they want to help the people of Bramhall, Woodford, Cheadle Hulme, Healds Green and all the other places similarly affected, they must give us our bypass back.
6.37 pm
Mr. Colin Breed: Although the Conservative spokesman, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), made it clear earlier that he wanted to get away from consensus, a thread of consensus is evident in the contributions from hon. Members of all parties. That shows that how we got to the present situation is less important than where we go from here. The problem has been brought into sharp focus by the Wal-Mart bid, which has made us realise that certain matters must be tackled to ensure that the issue that we have been debating is more controlled in the future than it has been in the past.
The history of the problem goes back about 30 years. It is only fairly recently that we have woken up to the creeping dominance—the stealth dominance—of the
1376
out-of-town supermarkets. The public interest has largely been pushed aside, but it is the only justification for Governments getting involved in the question of competition.
Companies have a duty to their shareholders to make profits. It is not for the Government to undertake to protect businesses, small or otherwise, but neither should they allow businesses to run riot against the perceived public interest.
The public interest was served by the benefits associated with the growth of supermarkets, which is why they became so successful. They provided a variety of products and were cheap, clean, efficient and convenient. They enabled people to switch their shopping habits, and they were pleased to do so.
However, that is now regarded as a slightly false perception. Supermarket prices are not as low as they should be, and high street prices are often comparable. As for choice, the number of shops has fallen after the many closures that have occurred in the high street. In fact, choice in shops is not as large as it is perceived to be. We tend to find only a brand leader and an own-brand product. Most second liners have disappeared off the shelves because manufacturers unable to compete go out of business or become a supermarket's own-brand supplier.
Supermarkets are convenient for many people, but they are becoming less convenient for more people as village stores disappear and as corner shops vanish from housing estates and the suburbs. People without access to a vehicle find it increasingly difficult to get to them.
Relationships with suppliers are changing, threatening the survival of small manufacturers who used to provide materials for all sorts of hardware shops but cannot fulfil a contract for, say, 200,000 buckets. Farmers face problems too. Only this week, one in Cornwall wrote to me, astounded that, having received only £20 per tonne for his potatoes, he found them in his local supermarket, washed and in a plastic bag, on sale for the equivalent of £484 a tonne. We have all heard about calves on sale for 29p.
I was pleased by the Minister's strident support for PPG6, but I hope that it can be strengthened, because the larger supermarkets are exploiting some weaknesses. We should move away from so-called planning gain, when supermarket development is allowed if new roads or leisure facilities come with it. The guidance is muddled, and it should be much clearer on planning gain, which must not bring a short-term gain in return for a long-term loss.
We have heard of the damage to our high streets and our villages. In the past 10 years, 50,000 businesses have ceased to be. The loss of the village shop—once a social centre and not just the place where people bought their groceries—strikes at the very heart of a small community. Supermarkets have also dominated buying, tending to be able to purchase all the top-grade fruit and vegetables and leaving smaller operations unable to buy the best quality produce. The ability to buy goods produced locally has virtually disappeared. Small operators that used to supply local shops are denied that opportunity by the disappearance of small shops, but they cannot put together the large quantities of produce required to win supermarket contracts.
Mr. Drew: I agree with what the hon. Gentleman has said about planning gain. Does he agree that the sequential

1377
test can be most valuable in that area, allowing us to measure the true costs and benefits of opening a supermarket on a green-field site against the loss to a town centre and smaller shops?
Mr. Breed: I agree entirely with the hon. Gentleman. In the past, not all relevant matters have been taken into account, and some subjective points have not been properly valued.
I do not believe that most people appreciate how big Wal-Mart is. The company serves 90 million customers a week in 3,600 stores, employing nearly 1 million people. With an annual turnover of £90 billion, Wal-Mart is truly a giant. It is already in Germany, and it has approached several British firms, including the furniture retailer MFI. Wal-Mart provides both an opportunity and a threat. It could kick some real competition into our supermarkets, but it would be threatening if it acted as it does elsewhere. If our planning regulations are not strong enough to meet the threat, they should be made stronger.
As several hon. Members have suggested, this is a complex issue. It is a prime example of a matter on which the Government should demonstrate joined-up government thinking.
The issue of food and supermarkets cuts across many areas of policy, including competition, environment, transport and social policy. All those policies need to be truly joined up. The Government must ensure that there is no rift between those who support an outright competition policy to reduce prices to their minimum—without any regard for the environmental and social consequences—and those who want environmental issues to drive our businesses.
The definition of the public interest has to be widened and better understood. The public interest is not served only by the lowest possible price of a tin of baked beans. Predatory pricing legislation also needs to be re-examined. We need to understand that, in trying to create the balance that everyone wants, policies need to be considered in conjunction with one another.
Planning policy is certainly important. Perhaps we could take a leaf out of other people's notebooks. The European cities often ensure that the floor space of large supermarket developments has some relevance to the size of the closest town. We should think about extensions to supermarkets. We may well think that Asda, or Wal-Mart, as it may well become, will go into a lot of new sites, but what about extensions to existing stores? Will we say that, because there is already a supermarket in a certain place, a precedent has been created so the company can build whatever size extension it likes? I hope that we shall ensure that extensions of, say, more than 10 per cent. of the existing floor space are subject to all the same impact studies as a brand new store. Existing stores should not be used as Trojan horses to defeat planning policy guidance.
We have talked about rate relief for small stores and parking charges. We need to support our smaller suppliers and small-scale agriculture and horticulture. I know that the Minister will say that the Government are already doing that, but we need to do more to provide opportunities for local traders. They should not be threatened with closure by trading standards officers, for example, because they have not quite got something right
1378
on a label. Perhaps supermarkets ought to be encouraged to use some of their car parks to allow people with local produce to sell on a Saturday morning. That would not dent their profits very much, and it might give people the opportunity to buy local produce.
Public transport must be made available to all stores. Any new store must demonstrate that public transport to it is available, either because the company will subsidise it or because existing services will be enhanced. Local councils must be given greater powers to restrict hours of trading, especially 24-hour trading. As my hon. Friend the Member for Truro and St. Austell (Mr. Taylor) said, Sunday trading has had a major impact on small shops on high streets in small towns.
It was once said many years ago that Britain was a nation of shopkeepers. We have rather sleepwalked into the current situation. There is a real threat that, if we do not get hold of it now, or in the not-too-distant future, and if the likes of Wal-Mart come in and have their way, we could soon have just one shopkeeper to the whole nation.
6.48 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I will do my best to respond to the points raised by hon. Members. It has been an interesting debate. The supermarkets feel very unloved at the moment. They probably feel less loved, having listened to some of the speeches in the Chamber, than they did before.
The hon. Member for North Wiltshire (Mr. Gray) said that everyone in the Chamber probably shopped in supermarkets. I plead guilty, if that is the issue. I do not use any of the loyalty cards. I did not have them before the election and after the election I made it clear that I did not want to be involved.
Mr. Baker: Just the pledge card.
Mr. Rooker: I carry the pledge card, but not loyalty cards. I am not in the business of giving publicity but I have used all the supermarkets at one time or another. The one I tend to use at present is not in the big four and is probably the nearest thing to a worker's co-operative in this country.
We have heard some interesting speeches. I shall long remember the matter of fact way in which the hon. Member for North Wiltshire explained his shopping arrangements. If he or his wife could not do the shopping, the servant would do it. Perhaps the servant does it when there are six bags weighing 84 lb.
This is not to criticise anyone's contribution, but it was worth coming to the debate to hear my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson). At first, I wondered where he was going, but he took us on a heritage trail of the market towns in his constituency and the fine local produce sold there. The one thing that is hard to get in supermarkets is local produce, because of the nature of the food distribution network. Food is moved around the country in lorries that do not carry full weight because they are carrying gas-filled plastic containers to keep food from central distribution centres fresh. The chance of getting local produce is therefore much diminished. If people want local produce, it is better to do what my hon. Friend said and go down the heritage trail of local market towns.

1379
I shall not repeat what my right hon. Friend the Minister for the Regions, Regeneration and Planning said earlier about planning. The position has been made abundantly clear. I understand from some of the interventions of Liberal Democrat Members that they appreciated the firmness with which the policy was set out. There are no changes. Some of the press reporting has been typically inaccurate.
The pattern of food retailing is consumer driven. Supermarkets have responded to demand. They are changing in some ways. They are trying to go back into the city centres that people accuse them of helping to destroy. Developments took place without the need for planning permission in some early enterprise zones. Those developments mean that families can go for a whole day out that does not encompass just the buying of food. My worry is that they buy food that needs to be kept chilled, load up the car, leave it out in the sunshine so that the temperature gets up nicely, and spend the rest of the day at the leisure facilities with children. They then take the food home, put it in the fridge, use it the next day and wonder why they got food poisoning. There is a problem with such expeditions.
The sourcing of produce and the grip of the supermarkets on the supply chain have been mentioned. In some ways, that grip can be used to our advantage. Information and traceability in respect of food safety for modern processed foods and ready prepared meals are crucial. Laboratories and traceability, and the technologists whom supermarkets employ, are all important. That is something that big organisations can provide.
The grip of the system encompasses, for example, supermarkets' contracts with suppliers. I shall not offer any clues as to the produce involved. The supermarket is happy with the price and finds out where the supplier obtains packaging, and then approaches the packaging supplier with a demand for a penny for every tray supplied to the supermarket. I was told of one case in which the number of trays used in a year was 300 million—at a penny a tray, that is £3 million for nothing. Alternatively, the first supplier would be told not to go to that packaging supplier. I hope that the Competition Commission will examine such practices because, in certain circumstances, they might be an abuse of market power. I do not say that that is always the case, but it seemed to be so in the example that I was given.
Contrary to the comments of the Conservative Front-Bench spokesman, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), the Government played no role in the referral to the Competition Commission. Anyone would think that the commission had only just been invented, but it used to be the Monopolies and Mergers Commission. The referral was from the Director General of Fair Trading. We await with interest the results of that study of the big four. The commission will examine such matters as barriers on entry to the market, including the availability of land, and the way that supermarkets exert their buying power over farmers and their other suppliers.
Mr. Bennett rose—
Mr. Matthew Taylor rose—
Mr. Rooker: I am trapped now. I give way to my hon. Friend the Member for Denton and Reddish (Mr. Bennett).
Mr. Bennett: Does my hon. Friend agree that, although that referral may be welcome, it was sad that it included a criticism of the planning system by someone who appears not to have a clue about it?
Mr. Rooker: The Government are not getting involved; it is a matter for the competition authorities. The commission was set up to do a job that it was asked to do by this House, under statute. It would not be helpful for me to make any comments other than those that I have made already. I am now duty bound to give way to the hon. Member for Truro and St. Austell (Mr. Tayor).
Mr. Taylor: I appreciate the Minister's giving way. Not everyone would be so fair.
The hon. Member for Denton and Reddish (Mr. Bennett) expressed a concern about the competition report. That is why we hope that Ministers will confirm that, whatever the report concludes, the Government are determined to protect land and town centres. I hope that the Minister will also take the opportunity to dissociate the Government from anything that appears to have been said to newspapers on this subject by officials in at least one Department—the Department of Trade and Industry. I am sure that they did not speak on behalf of the Government but, understandably, they fed the rumours that led to this debate.
Mr. Rooker: I am unable to say more than my right hon. Friend the Minister for the Regions, Regeneration and Planning said when he opened the debate. He spoke for the Government, collectively; he set the position out clearly. There will be no attempt by the Government to interfere with that inquiry.
In relation to food, last year, my right hon. Friend the Minister of Agriculture, Fisheries and Food set up a small group to consider the food chain initiative; it brought together farmers, manufacturers and retailers. We want food producers to exert more control over a larger part of the food supply chain. I realise of course that someone will say, "Look what happened when they did it with Milk Marque." We await, with interest, the results of the inquiry and the decision. That is a matter for my right hon. Friend the Secretary of State for Trade and Industry. However, MAFF has encouraged collaborative marketing. Compared with some of our European friends, partners and competitors, we do not have a history of such marketing, but it should be possible for farmers and food producers to talk to their neighbours without worrying about competition. It is in everyone's interest that there should be greater collaboration in marketing, food production and food supply.
Some producers worry about that, because they think that we want to force them into co-operative arrangements. That is not our intention. We want them to collaborate so that they can supply and control a larger part of the food chain. That will return added value to the producer. It is what happens in continental Europe and it is wholly to be applauded. Under such a system, there would be a greater chance of achieving wider distribution for some of this country's speciality foods, although there can never be a national supply of speciality, regional foods. However, that is why the initiatives that we have undertaken to try to get our local and regional brand names sanctified and codified in Europe are important to protect those names—
It being Seven o'clock, the debate stood adjourned.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must now move on to motion No. 3.
Mr. Paul Tyler: On a point of order, Mr. Deputy Speaker. I was on my feet, about to put the Question—
Mr. Deputy Speaker: Order. I am afraid that the hon. Gentleman was clearly too late. I am absolutely certain that the time had lapsed before I heard any call that the Question be now put. Therefore, I am afraid that the matter must lapse.

Prevention and Suppression of Terrorism
Mr. Deputy Speaker (Sir Alan Haselhurst): I call Mr. Straw.
7.2 pm
Mr. Tony Benn: On a point of order, Mr. Deputy Speaker. I wish to raise a matter that has been put to the Speaker's Office, the Clerk and to the Home Secretary relating to the constitutional implications of today's debate. I make no comment about the merit of the order, which closes a loophole in the Prevention of Terrorism Act. Parliament can legislate to do what it likes, subject to two considerations which I put before you now. The first is that, under the Bill of Rights, the courts cannot question what we do. Secondly, we have a long tradition under the sub judice rule of not intervening in matters that are before the courts.
It so happens that the order pre-empts a matter that will come to the House of Lords in its judicial capacity on 19 July: whether the order and the Prevention of Terrorism Act are a contravention of the European convention on human rights to which we are bound by the Human Rights Act 1998. That was the view of the court of first instance and it was endorsed by the divisional court. The Lord Chief Justice said:
"It seems to me that on the face of it both sections undermine in a blatant and obvious way, the presumption of innocence."
That is the law of the land until the House of Lords considers the matter and issues its judgment. Yesterday, obviously acting on advice, the Home Secretary said:
"The Government believe that these provisions, in their current form, are not incompatible with the ECHR".—[Official Report, 23 June 1999; Vol. 333, c. 1172.]
The House is being asked today—this is why I raise the matter as a point of order and not on its merits—to disregard the Lord Chief Justice's judgment. The issue goes even wider than that, because the European Court might hear a case regarding the matter. This is new territory for the House of Commons: we have always respected our relations with the courts, but now there is a new court.
I appreciate that this is a difficult point. I simply suggest that there is a case for adjourning the debate until after 19 July to give Madam Speaker an opportunity to consider the constitutional implications of reaching a view about an order when it is contrary to the law of the land, subject to a House of Lords decision that has not yet been reached. I am grateful to you for listening to me, Mr. Deputy Speaker. It is an important question and I hope that you will consider my request.
Mr. Deputy Speaker (Sir Alan Haselhurst): Madam Speaker is grateful to the right hon. Gentleman for giving notice of his intention to raise a point of order at this juncture. I have listened carefully to his comments. From his experience, he may recall that, so far as sub judice is concerned, our rule is that it does not apply to debates on legislation, including subordinate legislation. Therefore, we cannot be prevented from creating new legislation if that is the wish of the House.
As to the constitutionality, that must be a matter for debate rather than determination by the Chair. The House may wish to consider that issue in the course of the debate and decide accordingly.
7.4 pm
The Secretary of State for the Home Department (Mr. Jack Straw):I beg to move,
That the draft Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order 1999, which was laid before this House on 23rd June, be approved.
I shall be as speedy as I can. When I wind up the debate, I shall try to respond to any points that I have not covered in my opening remarks. Yesterday, I explained the circumstances in which, regrettably, due to an error in the drafting of the 1998 and 1999 continuation orders, parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 had not been in force since 22 March 1998. Today, I am seeking to revive those provisions but only from the day when the order becomes operative, not retrospectively.
Yesterday, I was asked a number of questions by, among others, the right hon. Member for Bridgwater (Mr. King) and the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) about the chronology of events that had taken place since the article first came to our attention. It may be helpful to the right hon. Gentleman, the right hon. and learned Gentleman and the House if I provide more detail.
The article was published in issue 19 of Criminal Law Week on 24 May. It was brought to my attention via a faxed copy of the article sent to us by the Attorney-General's office on 26 May. Advice on the argument in the article was sought initially from officials and legal advisers within the Home Office, and then from the Law Officers on 1 June.
I know that my right hon. and learned Friend the Attorney-General gave the matter extremely careful and detailed consideration. The final advice arrived from the Law Officers in the Home Office on 17 June. Officials provided me with detailed advice on 18 June, and the draft order reviving the provisions was laid yesterday, 23 June.
The matter may now seem straightforward—it turned out that part of the Prevention of Terrorism Act was inoperative—but it by no means seemed to be straightforward when the issue was first raised. Obviously, it was important to ascertain from the best legal advice available that what was suggested in one article in one law journal was likely to turn out to be an authoritative position.
I still do not know the author of the article, but plenty of articles that appear in law journals turn out not to be accurate. The right hon. and learned Member for Folkestone and Hythe is smiling. It is probably just as well that not all articles are authoritative, especially if one is the Home Secretary.
That is the chronology of events. We wanted to be sure about the position before seeking the approval of the House. Coming to the House yesterday, we were clear that the Act had been inoperative in respect of those parts, and we came to the House to remedy the matter.
The second issue that right hon. and hon. Members raised was whether I should have used the urgency procedures in section 27(7)(b) of the PTA in respect of reviving the provisions and immediately revived them, without coming before the House to seek retrospective approval. Of course I considered the matter carefully and took advice on the use of the urgency procedures, but those are used principally to deal with the need to revive provisions urgently because of a pending terrorist threat.
1384
The view that I took on advice was that it was difficult to argue that the present situation was the one anticipated by Parliament when it agreed to provide a Secretary of State with such urgency provisions. For that reason, I judged that the best approach was to come as quickly as possible to the House to make the position clear and to seek the House's co-operation in getting the changes through as quickly as possible.
I am extremely grateful to the right hon. Members for Bridgwater, for Maidstone and The Weald (Miss Widdecombe) and for Berwick-upon-Tweed (Mr. Beith), the right hon. and learned Member for Folkestone and Hythe for their suggestions about how we might deal with the matter speedily. We hope that it will go through this place speedily tonight and also through the other place tonight. If that happens, the order can become law tomorrow.
Mr. Chris Mullin: I understand that Parliament has a perfect right to put the order through as speedily as we intend to do it, but I do not understand the need for it, given that the two subsections are not much used, that there is an appeal pending on 19 July and that the Lord Chief Justice has made clear his view that
"Both sections undermine in a blatant and obvious way the presumption of innocence."
Mr. Straw: I shall give my hon. Friend the best answer that I can. We are seeking to recreate the status quo ante without making the legislation retrospective. If this technical drafting error had not come to light—and therefore made this part of the Act inoperative until, we hope, tomorrow—the appeal would have proceeded in the normal way. There is no suggestion that a provision of primary legislation should be withdrawn merely by virtue of the fact that a divisional court has held a particular part of an Act to be incompatible with the provisions of the European convention. It is my judgment that we need to put this provision back on to the statute book as quickly as possible because it was, after all, Parliament's intention that it should never have been off the statute book.
Although my hon. Friend is right to say that these provisions are not used that frequently—certainly in terms of charges, and I shall come on to the numbers in a moment—they are important provisions. One never knows, particularly in this area of law, how many offences are being deterred by such provisions. It is impossible to tell, but we believe that some are being deterred. The converse is more certain to be the case.
The other point that I should like to make to my hon. Friend is the important constitutional point about the sovereignty of Parliament. The whole issue of the European convention arose acutely when we debated what became the Human Rights Act 1998. We could have approached the introduction of a Human Rights Bill into our constitution in two ways. One was to follow the procedures that some Commonwealth countries have followed, by which a supreme court is able to override the will of Parliament. The other approach, which has been adopted by other Commonwealth countries, is the reverse of that, whereby the supreme court is allowed to exercise an opinion about whether legislation is incompatible with some basic law, but whether any action is taken is a matter for Parliament to decide, not the courts.

1385
I happen to believe strongly in the sovereignty of Parliament, and I know that that view is shared by many right hon. and hon. Members on both sides. We decided very clearly that, under the scheme that we set down for the Human Rights Act 1998, it should never be possible for the Appellate Committee of the House of Lords to make a judgment overriding the decisions of this House and the other place in their legislative capacity. That would have transferred the sovereignty of decision making from Parliament to a supreme court. That arrangement applies in some constitutions—most notably in the United States—but it does not apply here.
The scheme that we adopted, which is set out in section 6 of the Human Rights Act 1998, is that it is open to the courts at any stage to declare primary legislation—which this is, by the way—incompatible with the convention, but what action is then taken is a matter for this House and the other place. Two alternative courses of action can be taken. A decision can be taken to legislate for the change either by the urgency procedures in the 1998 Act or in normal time. Alternatively, Parliament can decide not to change the legislation, and a final decision would rightly and properly be made on appeal by the injured party to the Strasbourg Court and the matter would again come back to Parliament.
That was clearly the opinion of Parliament, so if we were to take any other decision today, we would be acting against the clear wishes of Parliament as set out in the Human Rights Act 1998. I should add a technical but important detail. Section 6 of the Human Rights Act 1998, although passed, is not yet in force.
Mr. Tony Benn: I am grateful to the Home Secretary for the way in which he is tackling the matter, but may I put one or two points to him? The consequences of the loophole are threefold. Because there was a loophole, we had, as my right hon. Friend quite properly said, the unusual circumstances in which the Lord Chief Justice was able to make a declaration of law that this provision was incompatible with the European convention, even if it has not come into effect, and was a denial of the presumption of innocence, which does not depend just on the European court but is embedded in many centuries of British legal practice.
Secondly, I think that my right hon. Friend is right to suggest that, although such action is contrary to the European convention, the Government will want to proceed with it, because I am a great believer in the sovereignty of Parliament; but yesterday—this can be found in column 1172 of Hansard—he said that the Government's view was that such action was not incompatible with the convention.
My right hon. Friend must make up his mind. If the Lord Chief Justice says that such action is incompatible with the convention and he says that it is not, he is saying not that it is incompatible but that he does not care. This is a very important point, which will arise time and again as the convention comes into effect following the implementation of the Human Rights Act 1998. I hope that my right hon. Friend will take my
1386
arguments seriously. They relate not to the merit of the case, but to the clarity of Parliament's approach to legislation of this importance.
Mr. Straw: My right hon. Friend is right in saying that I asserted yesterday that the Government consider that sections 16A and 16B of the Prevention of Terrorism Act are not incompatible with the convention. I still believe that. I also made it clear beyond peradventure that, as it happens, the Lord Chief Justice takes a different view, and that view is clearly set out.
I drew the House's attention to the proceedings yesterday. We do not know what decision the Appellate Committee will reach. It may decide to share the view of the Lord Chief Justice in the divisional court, which is not the final Court of Appeal in regard to matters of this kind, or it may reach a different view. As I said yesterday, the Government have already made it clear to the other parties that we will argue strongly that sections 16A and 16B are compatible with the convention. Given that position, I do not believe for a moment that it would be appropriate for us, because of the chance that a particular part of the Act will turn out to be inoperative for 15 months, to allow those sections to remain inoperative for a further period. Moreover, that would set a constitutional precedent that I do not think my right hon. Friend the Member for Chesterfield (Mr. Benn) would approve in any other context.
Mr. Paul Stinchcombe: My right hon. Friend has described, accurately and helpfully, the procedures that will follow implementation of the Human Rights Act; but is he not pre-empting those procedures, and preventing them from being followed? Instead of waiting for the House of Lords to adjudicate on the legal matter, he is simply saying, "I disagree with the Lord Chief Justice."
Mr. Straw: No. The position is quite the reverse. Another section of the Act—I have had to refresh my memory about each section—makes it absolutely clear that a declaration of incompatibility does not affect the operability, or remaining in force, of any primary legislation.
The Act is not yet in force, and will not be in force until late next year, but let us work on the basis of its operation. Section 4(6) clearly states—this was Parliament's explicit will—
"A declaration under this section ('a declaration of incompatibility') … does not affect the validity, continuing operation or enforcement of the provision in respect of which it is given; and … is not binding on the parties to the proceedings in which it is made."
That could not be clearer—and it was made clear in order to preserve the sovereignty of Parliament.
Mr. Stinchcombe: Will my right hon. Friend give way?
Mr. Straw: Just one more time.
Mr. Stinchcombe: My point is this: all that would follow if my right hon. Friend accepted the court's judgment that the legislation was incompatible with the

1387
convention, but he is simply saying that he disagrees and preventing the House from passing legislation in the light of a determination of incompatibility.
Mr. Straw: My hon. Friend is making the most extraordinary point. No declaration of incompatibility has yet been made by the highest court in the land—leaving aside the fact that the Act is not yet in force, which is a subsidiary and quite important issue in the proceedings, as one of the points that we shall be asserting is that the courts have anticipated implementation of an Act.
Any party to proceedings is entitled, particularly pending appeal, to seek to preserve the status quo. In the specific proceedings, I am entitled to assert—on the best advice and my best judgment—that section 16A and section 16B are compatible with the convention, and I have done. However, even if the Appellate Committee were to decide that the provisions were incompatible with the convention, it would not render the provisions invalid or undermine their continuing operation. Other action may have to follow, and judgments would have to be made, but such a decision would not affect that.
By way of reassurance, I should say that, in his decision in the divisional court, although the Lord Chief Justice was very clear in his own mind that sections 16A and 16B were incompatible with the provisions of the European convention, he did not say that they should not be operated. He went on to say that the Director of Public Prosecutions should have to bear in mind questions of compatibility in bringing prosecutions—which is a rather more subtle conclusion to the argument.
Mr. Jeremy Corbyn: Will my right hon. Friend give way?
Mr. Straw: If I may first make some progress, I shall give way.
Mr. Corbyn: It is on this point.
Mr. Straw: Then I shall give way.
Mr. Corbyn: I thank the Home Secretary for giving way now; obviously it would be helpful if we could deal with the issues as they arise.
As I understand it, the Law Lords will be considering the matter on 19 July. Will the Home Secretary explain why it is necessary for us to legislate now? Would it not be more appropriate, in normal constitutional terms, to leave the issue until after 19 July, when it may not be necessary for the House to debate the legislation at all?
Mr. Straw: As I sought to explain in answering the question of my hon. Friend the Member for Sunderland, South (Mr. Mullin), Parliament's will was that the provisions should be in force. They are not used all that often in prosecutions—although they have been used on one more occasion than I had thought that they were yesterday; I shall explain that to the House in a moment—but they are regarded as important. I therefore thought that it was important to bring them before the House as quickly as possible.
If the Appellate Committee of the House of Lords was the United Kingdom supreme court and its power overrode Parliament, the assumption made by
1388
my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) would be a correct one. We would then be in a situation in which a constitutional court had declared that Parliament should not have done something that we had done and that the provision was inoperative for the future. However, that is not case.
I cannot pre-empt the Appellate Committee's judgment, or any decision made by my right hon. and learned Friend the Attorney-General and other Ministers, if the Appellate Committee decides that sections 16A and 16B are outwith the convention. However, as I said, one possibility—it is only a possibility—is that the Government may decide that we continue to believe that the sections are compatible and that we wish to argue it out before the court in Strasbourg. Even then, the matter would not be settled, and it could be some years before there was a decision by the institutions of the Council of Europe and any jurisprudential clarity on whether the sections were compatible with the convention.
Meanwhile, it has always been accepted by all signatories to the European convention that domestic law should remain operative, for reasons that the whole House will understand: simply the prospect of a final declaration by the Strasbourg Court could render inoperative all sorts of legislation that each domestic jurisdiction needs.
Mr. Tony Benn: The matter boils down to one question. Does the House know what it is doing today? The Home Secretary might say, "The measure is incompatible. The Lord Chief Justice says that it is incompatible and so does the appellate court, but I do not care because it is in the national interest." If he did, the House would know what it was doing. Alternatively, he could say that there was no issue of incompatibility. If he did, he would be going against the current law of the land as the Lord Chief Justice lays down the law until it is reversed.
The House is entitled to know the basis of the vote that my right hon. Friend asks us for tonight. Is he saying that the measure is incompatible and therefore there is no problem, or that it is not incompatible and he does not think that it matters? At least we ought to know what we are being asked to do.
Mr. Straw: I have sought to explain the matter. Without labouring the point, right hon. and hon. Members are being asked to approve or not to approve the draft order that I have laid before the House, which brings in parts IVA and IVB of the 1989 Act. They are being asked to do that and nothing else.
Although the issue of compatibility or incompatibility is relevant to the debate, it is not directly relevant to the judgment as to whether the order should or should not become law. I have tried to explain that to the best of my ability. I have never said to my right hon. Friend that I do not care whether or not the measure is incompatible. Of course I care whether law is compatible with the Human Rights Act 1998—I expect that the entire House does, but as I was the Minister who brought the Human Rights Act before the House, I care profoundly about it. The alternatives that my right hon. Friend put forward—that it is either compatible or incompatible and that I do not care—are not the only options. I do care about it and, with respect to the Lord Chief Justice and his colleagues in the divisional court, I take a different view. On the best legal

1389
advice, the Government take a different view and that will be argued before the Appellate Committee. Although that is related to the order, it is separate from it.
I have spoken at greater length than I had anticipated but I should like to place one or two additional points on the record. Yesterday, I said that my information was that six people had been charged with offences under sections 16A and 16B. Central records on these matters are not kept, but I now understand from the police that the total is in fact seven. The seventh case also related to international terrorism and was dropped before it came to court. It remains the case, as I said yesterday, that there have been no convictions so far under sections 16A or 16B.
I also explained that the individual whose indictment was quashed had been in custody for some months and that we could therefore expect to receive a claim for compensation. In one other of the total of seven cases charged under sections 16A and 16B, a man whose alleged offence was committed after 22 March 1998 spent some months in custody before proceedings were discontinued. It may well be that he, too, will claim compensation.
Let me deal briefly with the content of sections 16A and 16B of the PTA. Section 16A makes it unlawful to be in possession of articles in circumstances which give rise to suspicion that they are intended for terrorist purposes. It is a defence to prove that the articles concerned were not held for terrorist purposes. Section 16B makes it an offence to collect or record information that is likely to be of use to terrorists without lawful authority or reasonable excuse for doing so.
Although the provisions have not been used very much, I understand that experience of the equivalent provisions in Northern Ireland has been positive. Both Lord Lloyd in his inquiry into legislation against terrorism and John Rowe in his annual reports have commented on the usefulness of these provisions and recommended that they should be retained. The Government's consultation paper on permanent counter-terrorist legislation agrees.
Mr. Tom King: May I clear up one point? The Leader of the House told us last night that there were plenty of other powers and measures and these were not needed.
Mr. Straw: I fully understand and appreciate the right hon. Gentleman's anxiety, but, with the greatest respect, I did not take that to be the case from reading the Hansard report of the comments of my right hon. Friend the Leader of the House. Other provisions are available for similar conduct, including conspiracy. They do not completely overlap or there would be no point in these provisions. One reason why the right hon. and learned Member for Folkestone and Hythe introduced the Act was the difficulty of charging with conspiracy in some cases.
I have dealt with the appeal at length. Section 16C and schedule 6A give the police, subject to authorisation at superintendent level or above, the power to cordon off areas and restrict access in connection with a terrorist investigation and make it an offence not to obey police instructions. As I told the House yesterday, central records are not kept, but our information is that the Metropolitan
1390
police have used the powers 86 times since March 1998. The police have certain common law powers to impose cordons, on which they rely in non-terrorist cases, but section 16C provides a firm statutory basis for their actions.
Section 16D gives the police power to impose temporary parking restrictions on roads in response to a general threat to vulnerable targets such as Government buildings or financial centres. The police have some powers in that respect under common law, but the provision gives the reassurance of statutory underpinning. Lord Lloyd and John Rowe agreed that the powers under sections 16C and 16D were valuable and should be retained.
I apologised to the House yesterday for what has happened and I do so again. I am grateful to the Conservatives and the Liberal Democrats for their co-operation in bringing the order before the House. I hope that I have explained the circumstances, including the important aspect of the appeal to the Appellate Committee and the question of the convention, to the House's satisfaction. I shall respond to any other points when I wind up the debate.
7.32 pm
Miss Ann Widdecombe: As I said yesterday, the Opposition will support the Government in their proposal to remedy the defects that they allowed to be created in March 1998. We also hope that we can maintain the position that the provisions of sections 16A and 16B are compatible with the Human Rights Act 1998.
I found the Home Secretary's explanation of the gap between 24 May, when the lacuna was first noticed—it was drawn to his attention two days later—and yesterday, when he did not show the most amazing urgency to put things right, wholly unacceptable given the seriousness of the legislation and some of the offences that might have been caught under the provisions. I do not want to labour the point because we dwelt on it at length yesterday, but I was hoping to hear a more satisfying explanation for the delay. There was a lamentable lack of urgency in the Home Office and on the part of Ministers in bringing the issue before the House and getting it sorted out. Given that it has now been brought before the House, I hope that we shall finally sort the issue out tonight.
I was going to refer to some of the points that have been made by Labour Members, not because I disagree with the Home Secretary's assessment of compatibility, but to test it. It is clearly in the interests of the House to be able to be confident in the assertions that Ministers make when we pass legislation. The Home Secretary has asserted continually tonight, as he did yesterday, that, in his view, the provisions were not incompatible with the Human Rights Act 1998. Although I have heard much assertion, I have heard little argument. For example, I have not heard the Home Secretary's reasons for the reverse in the burden of proof.
It is significant that, in opposition in 1994, the Labour party opposed sections 16A and 16B, and that the noble Lord Williams of Mostyn, now Minister of State, Home Office, and a former chairman of the Bar, gave as his reason for opposition at that time his assessment that the provisions of sections 16A and 16B violated ECHR considerations. I am not saying that I agree with that

1391
assessment—clearly, we did not at the time—but I should like the Home Secretary to put on the record, so that we may have some authoritative statement rather than assertion, why he considers that those contentions are not valid.
Last night, we were clearly told—I admire an interpretation of Hansard that could come to another view—that there was no urgency because other measures were on the statute book which would protect us should an offence arise under the provisions. The Home Secretary should now be frank with the House and say that what we were told was wrong, because he would not be here reintroducing the provisions if he believed that he already had adequate coverage under other parts of the Act.
We will support the Government in putting right the mess that they have made. It is not the first time that inattention to detail has resulted in problems for the right hon. Gentleman. It is not so long since a report was issued in which nobody had apparently noticed that the names of sensitive witnesses were still included. I would ask him, as a general question, although not without some sympathy, what he is doing to get a grip on the way that detail is handled in his Department.
7.37 pm
Mr. Paul Stinchcombe: Thank you, Mr. Deputy Speaker, for allowing me to make a short contribution in this important debate. I declare at the outset an interest as a barrister who practised in human rights law before the election. I spoke in support of the renewal of the prevention of terrorism measures after my election, and on Second Reading of the Human Rights Act 1998.
When I spoke in the first of those debates, I had missed entirely two points that give rise to these proceedings today. I had not anticipated that any provisions had not been renewed and I certainly had not anticipated that it was arguable that those provisions were in breach of the ECHR and, therefore, in breach, in certain limited respects at least, of the Human Rights Act which we would shortly be introducing.
It is now clear that those provisions are arguably in breach of the ECHR, and it is also clear that the arguments are far from idle ones. They command the support of the Lord Chief Justice and, not just in muted terms, but in firm terms, he says that the provisions blatantly and obviously undermine the presumption of innocence. In so saying, he relies not just on his own judgment, but on authorities from abroad, including an authority from the Chief Justice of Canada and from a judge of the South African constitutional court.
Whether the Lord Chief Justice be right or wrong, in the face of that judgment, I find myself uncomfortable in coming to the House today and being asked to support the reintroduction of exactly the same provisions. I say that for these reasons. First, I have simply not had the benefit of the argument that the Lord Chief Justice had when he came to the conclusion that this was blatantly and obviously undermining the presumption of innocence. Secondly, an appeal is imminently to be heard in any event. Thirdly—a point that I raised by way of intervention—my right hon. Friend is today, before the appeal, coming to the House. He is not saying that he accepts that his measure is incompatible with the ECHR
1392
and asking us to legislate in any event. Rather, he is simply saying that he has heard a judge say that it is incompatible and that he disagrees. That is not the way forward and not the way that the Human Rights Act anticipated would be the way forward.
We could wait and avoid that situation. That would enable the Home Secretary to come to the House in a few weeks and say, "I was right all along. Our highest domestic court agrees with me." Alternatively, he could say, "I disagree with the highest court, but we have enacted to protect the sovereignty of Parliament by the Human Rights Act." As matters stand, I would find those positions infinitely more comfortable than the position I am in today.
7.40 pm
Mr. A. J. Beith: The reason why my right hon. and hon. Friends and I feel that this matter could be brought before the House with a sense of urgency today is that Parliament's intention was frustrated by an error, and Parliament ought to have an immediate opportunity to restore the law to what it thought it had passed, without prejudice to the continuing argument over the compatibility of part of what we are passing tonight with the European convention on human rights.
I say "part of" what we are passing, because no one has challenged sections 16C and 16D in terms of their compatibility with the European convention. If the justification for action was an error, it would be slightly perverse not to restore the error as a whole. By restoring only part of it, on the grounds that certain provisions were in dispute in the courts in terms of their compatibility with the convention—although others were not—we would be selecting that part of the draftsman's error we were prepared to correct. That would not be a logical way of proceeding.
I say that without prejudice, in every sense of the words. It is without prejudice legally and, in more general layman's terms, without prejudice to the ultimate resolution of the question of compatibility by the case that is now proceeding in the courts. The Home Secretary did not complete the picture when he suggested what would happen if the Government continued to disagree on compatibility. After the issue has gone to Strasbourg, and if it is still found to be incompatible, there will then be created an obligation on Parliament not merely to consider defying Strasbourg by saying, "We do not like this and, in the national interest, we will not do it", but to pass legislation that becomes compliant. The end of this road is not potential defiance—we must seek compliance—but to follow a Strasbourg Court decision.
Those of us who are keen supporters of ECHR legislation hope that it will not often have to come to that. We hope that this House, on the basis of its initial consideration of proposed legislation, will not pass things that are not compliant, and that things that are found to be non-compliant will be changed fairly quickly. I shall refer to how we deal with that point in due course.
I raised with the Home Secretary yesterday a formal question, to which he gave an affirmative answer, about whether he would furnish a certificate of compatibility—as he would be obliged to do if this were primary legislation—if required to do so. He said that he would. I am bound to wonder what quality of advisers the right hon. Gentleman has if they can give that advice, when the

1393
Lord Chief Justice has said otherwise in relation to the two sections. However, the Home Secretary seems persuaded and—as the legal proceedings are not over—he and the Government are entitled to put their case. We shall be interested to see what that is.
This point raises the question of what we shall do with the certificates, when Ministers issue them for future Bills, if they come out in a form that is already in dispute with what the Lord Chief Justice thinks of the law. The Lord Chief Justice's opinion is not final, but he is obviously a high-powered legal adviser. The fact that the Home Office thinks differently gives me cause for concern. Tonight, we are trying to put the law back to where Parliament thought it had left it in terms of the court case to resolve the compatibility question.
The procedures tonight call to mind the high risk of error. The Home Secretary misunderstood my question to him yesterday. He thought that I was implying that this error had resulted from the hasty way in which some of the proposed legislation had been treated. That was not my point. My point was that we have so often legislated in this area with unseemly haste that we run a high risk of errors of this kind. If we can do that on occasions when legislation has been dealt with properly and at greater length, the risk of doing so when we legislate in a hurry must be high indeed.
I call to mind the 1996 measures that created the cordon provisions, which were rushed through in a day or so, and the Criminal Justice (Terrorism and Conspiracy) Act 1998, which was rushed through in a matter of days, even though its provisions extended far beyond the purposes of terrorism. In fact, they have created an area of law which is subject to annual review. As far as I am aware, the Home Secretary still has not announced a reviewing mechanism for those parts of the Act that are not terrorist related. That illustrates the danger of rushing into legislation.
Usually, there are powers that can be used, as the Home Secretary said, but the legislation being introduced is intended to provide the police and other authorities with a readier instrument to deal with a difficult situation. In my experience, the sense of urgency has not usually proved justified, but the powers have often proved useful.
The use of the cordon power on more than 80 occasions by the Metropolitan police suggests that there was some purpose in enacting it, and the difficulty that they were having with the possession of materials intended for terrorist purposes, scattered around lock-up garages in various outskirts of the capital, shows that there was a need for some of the other powers.
The right hon. Member for Bridgwater (Mr. King), whom I greatly respect and with whom I have often worked, is pushing the argument a bit far in suggesting that the Government were wholly irresponsible for allowing some days to pass while they sorted matters out. There were provisions on the statute book that could be used. Indeed, they were on the statute book for most of the time that the previous Government were in office, when they did not consider it necessary to introduce provisions in this precise form.
It is appropriate to restore the law to what it was, partly because of the usefulness of the provisions and partly because Parliament thought that they were there all along.
1394
If there were no means of challenging a possible incompatibility, I would not advise my right hon. and hon. Friends to support the motion, but there is a court procedure to be followed and the whole of the legislation is, rightly, under review.
Temporary provisions and occasional "recess Acts", enacted either on the very eve of a recess or in a recall, have had to be reviewed. They have been the subject of a consultative paper, in response to which there have been criticisms of sections 16A and 16B, which I hope that the Government are considering. I would like the Government to make it clear that the consultative process, the proposal phase of which was completed in March this year, will come to reasonably early fruition.
What we enact tonight will be on the statute book only until next March. When we are presented with a renewal decision at that time, we should know where we stand on the review and the enactment of permanent legislation.
Because of an error of which Parliament was unaware—I take some satisfaction from the fact that all the lawyers on all the Front Benches in both Houses failed to spot it—there has not been on the statute book a provision that Parliament thought that it had made. The problem that some of it is being contested in the courts for its compatibility with the European convention would not be resolved by our choosing not to correct a part of the error. I would rather that the powers remained in place and the legal challenge continued, with the review process proceeding apace, so that we can have carefully drafted permanent legislation at the earliest opportunity.
7.48 pm
Mr. Chris Mullin: I share the discomfort expressed by my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) about the provisions. I entirely accept the Government's right to do what they are doing, but it runs against the spirit of the human rights legislation that we are in the process of enacting and gives an inauspicious signal for the future, especially when the Lord Chief Justice is opposed.
Others are also opposed. The right hon. Member for Maidstone and The Weald (Miss Widdecombe) mentioned the Home Office Minister, Lord Williams of Mostyn, who is a distinguished Queen's Counsel. In his previous incarnation as Labour home affairs spokesman in the House of Lords, he was very outspoken on this subject. He said that sections 16A and 16B were
"far too harsh and draconian"
and said:
"If we condemn our citizens to the possibility of 10 years' imprisonment on the basis of reasonable suspicion … we are in serious danger of giving terrorism a victory that it would not otherwise achieve."—[Official Report, House of Lords, 7 June 1994; Vol. 555, c. 1208–09.]
So it is not only the views of the Lord Chief Justice that we have to take into account, but those of someone who is now a Minister of State at the Home Office. Even if we do not take the Lord Chief Justice seriously, we should take Home Office Ministers seriously.
We should bear in mind the strong criticisms that have been made when we review this legislation. As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) said, an overall review is being carried out and that may provide the opportunity to put it right. I feel very uneasy, as I know many others do, about doing away with the

1395
presumption of innocence, and I am unconvinced that it is necessary in the cause of fighting terrorism. I am as keen on catching terrorists as anyone else, and I have had better luck in finding them than some of those whose job it is, but I do not believe that 16A and 16B will do much to help. Finally, for the record, I ask the Home Secretary to confirm that, when the Government appeals on 19 July against the ruling by the Lord Chief Justice, they will appeal against both 16A and 16B.
7.51 pm
Mr. Tom King: The title of the order—the Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order—describes accurately the bizarre situation we are in. In case it is thought that I am being ungracious to the Home Secretary, I point out that I applaud the fact that we are here tonight. The action that we are taking is correct. It is very important that the order is approved, and I hope that it will be. I am also grateful to the Home Secretary for responding to the request that I made last night that we should give a timetable of events since the information first became available to the Government, and I shall have some questions to ask about that.
I shall not enter into the argument, which the hon. Member for Sunderland, South (Mr. Mullin) made, about whether we need the powers, because the Home Secretary has answered that, and we have the benefit of the report by Mr. Rowe to the Home Secretary as recently as February 1999, which made clear his views that the powers should be retained. Unfortunately, the comments made by the Leader of the House—in what I recognise was a difficult situation for her—did not do the House much credit, because this is a serious matter. Her answers were not especially helpful. The information that I have from the police is that the powers are important, for precisely the reason that the Home Secretary gave this evening.
The issue is not only how many people were charged and convicted, but how many were arrested under the power and what deterrent effect it has had. The Home Secretary is a lucky man, because those 86 cordons that were illegally imposed might have led to some difficult situations. There will be a bill to be paid in respect of those unlawfully detained, but it could have been much higher.
I listened carefully to the Home Secretary's comments about the timetable of events. I would be grateful if, when he winds up, he would clarify some points. The Home Office heard about the problem from the Law Officers' Department, which faxed a copy of the article to the Home Office on 26 May. When did the Law Officers first read that article? It took five days to decide to ask the Law Officers' advice and a further 16 to 17 days to get that advice.
I do not know whether the Law Officers regarded it as a serious matter or simply as part of the daily dross of their usual responsibilities, such as clearing up Home Office mistakes or clarifying problems in drafting. Perhaps they thought that that would work on it when they had the opportunity. However, we are entitled to an explanation as to why it took so long for them to do so.
We understand that the Home Office and parliamentary draftsmen will always be with us, and that, from time to time, they will make some pretty big howlers. My right
1396
hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) has had to face some of the consequences of that possibility. One of the most important requirements of Ministers is to have good antennae and a good sense of smell, so that they can detect problems before they happen. I thought that the Home Secretary was the one Minister in this Government to have those qualities, so I am all the more surprised by what has happened.
I think back on my experience in government, under Margaret Thatcher. If I had had to tell her that we had forgotten to include two key elements in the prevention of terrorism legislation, and that, for a month, I had not wanted to press the Law Officers too hard because they had a lot on their plate, I can imagine her reaction only too easily. No Home Secretary under Margaret Thatcher would have survived it.
To avoid misrepresentation, I assure the Home Secretary that I am not calling for his resignation. However, I find the situation that has arisen absolutely incredible. I have had no satisfactory explanation as to why requirements considered essential by Parliament were accidentally omitted. The right hon. Member for Berwick—upon—Tweed (Mr. Beith) said that Parliament had wanted those requirements included in the legislation because they were a necessary bulwark against terrorism, but nothing was done for a month after their omission became known.
The Law Officers are not present just now. Perhaps they are seeking advice—a wise precaution, if I may say so. I fail to understand their response. Surely any responsible Minister would have sought urgent advice from them and would have expected it on his desk the following morning. The Home Secretary knows well both the House and the attitude of all opposition parties with regard to prevention of terrorism, but, last night, the Leader of the House suggested that it was possible that the opposition parties would have considered it an affront to Parliament if the Home Secretary had remedied the mistake at the earliest possible moment.
The Home Secretary discovered the answer to that proposition as soon as he made his statement yesterday. It was that the mistake had to be rectified straight away. In his statement today, the Home Secretary has failed to explain how what I have called "this dereliction of duty" occurred.
The Home Secretary is a very lucky man. The police regard the two powers involved as important instruments in the fight against terrorism. What would have happened if incidents such as those that occurred in Manchester or Warrington had taken place again? What would have happened if there had been another terrorist outrage in this country?
For example, some time ago, there was an attempt, involving many people, to close down the power system in the City of London by attacking electricity substations. Let us suppose that a similar case arose, and that people had been arrested on a strong suspicion of being on their way to commit that terrorist offence, given that they were in possession of material and articles appropriate to the act. Even in such circumstances, the Home Secretary would have been required to tell the House that those people had been released because of a recently discovered

1397
omission in the law whose rectification was still being considered. I suggest that such an admission would have had to be accompanied by his resignation.
Mr. Beith: The right hon. Gentleman goes a little over the top by implying that the police would have sat back, saying that there was nothing that they could do. The police would have used existing powers, albeit with the weakness of a lower chance of ultimate conviction and the likelihood of a lower sentence on conviction. However, the right hon. Gentleman is wrong to imply that the police would have done nothing if they had been in possession of the facts that he has outlined.
Mr. King: The right hon. Gentleman may take his answer from my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) and from the Home Secretary who said—as he implicitly did earlier—that the powers are necessary. With my experience of those matters, I know the difficulties of finding sufficient grounds for arrest, or of establishing charges against terrorists, and I know that the right hon. Gentleman understands the problems.
It is remarkable that we should have remained without the powers—accidentally but for a long time at first, and subsequently because of a failure to correct the error. The right hon. Gentleman earlier paid me a nice compliment, and I can return it by saying that he is honourable and genuine. He knows that, if there had been a major terrorist incident while the Home Office was aware that the powers were faulty, but while nothing had been done, there would have been a major political scandal.
I do not seek such scandal. I am too committed to fighting terrorism from any quarter. Democracy faces many difficulties in that fight, and we must be properly equipped. I am seriously worried by the way in which this matter has been handled. Whether the error lies with Ministers or with the Law Officers, it lies with the Government. We are owed an adequate explanation.
8.3 pm
Mr. Michael Howard: My right hon. Friend the Member for Bridgwater (Mr. King) made several powerful points, with which I agree and which I shall not repeat. The Home Secretary told the House last night that the provisions are a serious part of the armoury against terrorism. As I was responsible for their introduction, the House will be unsurprised to hear that I agree. I welcome their restoration to the statute book, and I thank the Home Secretary for responding to my express invitation to reconsider the timetable that he had originally had in mind for putting the powers back where they belong and where they represent a serious weapon against terrorism.
I have one point to make about timing, which my right hon. Friend analysed in detail. I intend no excessive loyalty to my former Department in saying that, in the timetable provided by the Home Secretary, the 17 days that it took the Law Officers to respond to the Home Office request for advice shriek for our attention. That is an astonishing period, and I hope that the Home Secretary will discuss that point in his reply.
I listened with great interest to the points put to the Home Secretary by his right hon. and hon. Friends. Indeed, when he made a point of referring with some
1398
emphasis to the official Opposition, I was not at all sure whether he was using that term to distinguish us from the Liberal Democrats or from those behind him. Those points and the response that the Home Secretary made to them illustrate the constitutional mess that one gets into if one introduces the kind of legislation that the Home Secretary has introduced in the form of the Human Rights Act 1998. I regret to say that I believe that the country as a whole, and perhaps even the Government, will live to regret the day when they decided to put that legislation before the House.
Yesterday, I expressed some sympathy for the Home Secretary's predicament. I express further sympathy with him today for the disputes that have arisen between him and the judiciary. My sympathy will not do him any good at all, but he will understand that I very much feel for him as he makes his way. The Lord Chief Justice has ruled against him. He is now in the process of appealing to a higher court. It all has an incredibly familiar ring about it, but I am on the Home Secretary's side. It will not do him any good at all, but I wish him well in all those battles.
Audrey Wise: I know that the right hon. and learned Gentleman is enjoying this enormously, but it might do no harm to remind him that some of us on the Labour Benches remember the considerable difficulties that he got into with the law on lots of occasions as Home Secretary. So, a little humility would not come amiss.
Mr. Howard: I rather thought that that was the point that I was making. I am sorry if it escaped the hon. Lady.
I welcome what the Home Secretary has done tonight. I welcome the fact that he has brought the legislation to the House. As he said last night, it is an important part of our armoury against terrorism. It is needed in the fight against terrorism, and vigilance continues to be necessary in the face of the threat of terrorism. That is why the House should pass the measure that the Home Secretary has brought before us.
8.7 pm
Mr. Peter Brooke: I shall not rise to the level of my right hon. Friends who have preceded me in speaking from the Opposition Benches, but I will say a brief word. I can certainly declare an interest. For ministerial sins of omission and commission, I have never come remotely near being a member of the Home Secretary's club, although I have some vicarious experience. I remember my father's experiences and I certainly feel sympathy for the Home Secretary in the predicament in which he has found himself.
These are serious matters. There was a trivial example in yesterday's proceedings of how a slip of the tongue can get us into difficulties. The Home Secretary, in response to the right hon. Member for Berwick-upon-Tweed (Mr. Beith), said of the 1996 Act:
"That Act introduced changes in respect of sections 16C and 16D in part IVB of the Act, as opposed to part IVA, which relates to cordons and parking restrictions."—[Official Report, 23 June 1999; Vol. 333, c. 1174.]
He clearly meant part IVB of the Act, which relates to cordons and parking restrictions, as opposed to part IVA, but the wording that he used eluded the eye of whichever

1399
member of his private office was sent to check the record. Therefore, we are left with a thing that is mildly misleading in the record.
In terms of sections 16A and 16B, I have a question about the police powers on the statute book that would have protected us during the period since 22 March 1998. I have searched both what the Home Secretary said yesterday and what the Leader of the House said yesterday evening and I cannot detect any precise reference. I realise that lawyers who have participated in the debate may know precisely what powers would have been substituted for sections 16A and 16B, but it would be helpful for the purposes of historians to have on the record what they would have been.
On sections 16C and 16D, there was an exchange at column 217 on 2 April 1996 in discussing the Prevention of Terrorism (Additional Powers) Act 1996 in which my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) acknowledged to the hon. Member for North Antrim (Rev. Ian Paisley) that there were powers under common law on cordons and parking restrictions, and that the legislation that we were passing was simply intended to strengthen them.
I have an incidental question that seems relevant, given that the powers that we are reviving provide for 14 days initially, with a power for a 14-day extension for cordons and, I think, parking restrictions. It would be interesting to know the longest period for which the powers were required on the 86 occasions that the legislation has been used since 22 March.

I have a minor complaint that is not remotely worthy of a point of order. Events such as those with which we have been dealing in the past 24 hours highlight the utility of the library immediately behind me in the No Lobby, which contains Hansards and Bills. I make no complaint, and I do not know who has offended by removing them, but all the Bills for 1996 are absent from the No Lobby. I understand that the sessional index for 1996–97 has not yet been printed but those for 1994–95 and 1995–96 are absent. Although they are available in other parts of the Palace, it slows things down if we cannot make use of them in trying to research something in a short space of time. It is because of their absence that I ask the Home Secretary one remaining question on sections 16C and 16D, which are now Part IVB.
The hon. Member for Thurrock (Mr. Mackinlay), at the time of the 1996 Act, asked about the royal parks police. Section 5 of the 1996 Act, which we are renewing today, specifies that the ranks that can trigger a cordon as
"any police officer of or above the rank of commander of the metropolitan police, as respects the metropolitan police district".
The same provision is made in respect of the City of London police and it also specifies
"any police officer of or above the rank of assistant chief constable of a force maintained for any other police area".
Those powers can be renewed by an officer ranked as a superintendent or higher. What rank in the royal parks police is necessary? Such parks are exactly the sort of place where such a cordon or parking restrictions might be required.
8.13 pm
Mr. Straw: I will seek to answer the points that have been raised as best I can. I am grateful to the right hon. Member for Cities of London and Westminster
1400
(Mr. Brooke) for pointing out what appears to be a drafting subtlety in the Hansard record where A and B were transposed. That was a mocking point against myself, given the original description of the error that has led us here.
I shall go through the main points. First, the right hon. Members for Maidstone and The Weald (Miss Widdecombe) and for Bridgwater (Mr. King) asked about the time taken to bring the matter before the House. It is obviously a serious matter and we dealt with it as quickly as we could. Many articles make assertions. In the journal in question, the author of the article hit the bull's-eye but it is not a learned journal with the highest reputation. It is not avidly read on a wide scale, even by criminal law practitioners, so much so that the lawyers for the defendants in the case never took that point at all. Had they done so, the matter would probably have been resolved by the courts, rather than by this place.
Mr. Howard: Did the Home Secretary take the elementary precaution of checking that the editor of the publication is not one of his constituents?
Mr. Straw: I can guarantee that. I know all my constituents; they are engaged in higher occupations.
Many articles make many assertions. This article was drawn to the attention of the Law Officers; the member of that Department who read it made the judgment that it raised a serious point. It then came to the Home Office and my officials considered it with care. It was then considered by the Law Officers with great care. The right hon. Member for Bridgwater asked for details. For reasons that he will fully understand, such detail is not normally given about the work of the Law Officers. However, such was the care taken that the Law Officers consulted not one experienced counsel, but two separate counsel about the matter, because they—and we—wanted to be as certain as possible that the opinion that those parts of the Act were inoperative was accurate.
When issues arise, the Law Officers and departmental legal advisers may take an initial view and the matter goes to counsel for careful opinion. They might then arrive at a view that is different from that which was taken originally. There would then be nothing to bring before the House. That could easily have been true in this case. We had to achieve a balance—I think that the balance was right, but I understand the anxiety of the right hon. Member for Bridgwater—between dealing with the matter as quickly as possible and not dealing with it in haste and arriving at a judgment that turned out to be inaccurate. The House would not have thanked us if, on the basis of that article, we had rushed in with an inadequate consideration of what may be a very discrete issue, but one that is also rather complicated. It might have turned out that we had wasted everyone's time because we had acted on poor advice. I wanted to be certain that the advice that we received was robust. Having received that advice, we did everything necessary in order to come back to the House as quickly as possible.
Although I could have dealt with the matter in a written question, I was clear that it was of such importance that I should make an announcement to the House. The other factor that we had to take into account—it was a matter of one or two days—was ensuring that we were clear as to the decisions of the Director of Public Prosecutions in the case of the prosecution that would then be rendered otiose.

1401
My hon. Friend the Member for Wellingborough (Mr. Stinchcombe) and other hon. Members asked about the position of the European convention on human rights. The right hon. Member for Maidstone and The Weald asked me why we took a view that was different from that of the Lord Chief Justice.
Mr. Tom King: The Home Secretary has gone to some trouble to respond to my point and it is only courteous to say so. However, I do not think that I am the only Member of the House who finds his explanation quite unconvincing. It does not seem to advance us at all. Is it not correct that the point was that the renewal and the continuance related to parts I to V inclusive? However, when part II was deleted, the fact had to be mentioned that it was parts I, III, IV and V, but parts IVA and IVB also had to be mentioned. It was as complicated as that; I cannot understand why it took 16 days to work it out.
Mr. Straw: I am sorry that the right hon. Gentleman does not accept my explanation. I had no interest whatever in delaying the matter. I recognised the urgency of the matter and paid personal attention to it. I wanted the advice as quickly as possible. We received that advice as quickly as the Law Officers could produce it. However, I have also explained that, if it had been an obvious point, some of us might have spotted it. No one spotted it—not even the best legal brains in the House; not the Ministers responsible, including myself. No one spotted it—except the author of the article. I have done my best to satisfy the right hon. Gentleman. I am sorry that I did not succeed. We acted as fast as we could in the circumstances.
In the time available, I shall deal with some other points raised in the debate. One relates to the question of incompatibility and why I have come to my present view. However, before I deal with that point, I must pick up on the comments of the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who tweaked me about the fact that Home Secretaries occasionally take a different view from that of the courts. I did not particularly want to make this an ad hominem point, but I have the highest regard and respect for the Lord Chief Justice, Lord Bingham—and I am sure that my opinion is shared universally in the House.
The Lord Chief Justice would be the first to say that he is not the supreme court of the land, nor is he the sovereign Parliament. I can think of many occasions when he has come to a view that is different from that of the Secretary of State for the Home Department of the day, and an equal number of occasions when decisions of the court of appeal and the divisional court—in which the then Lord Chief Justice has sat—have been overturned by the Appellate Committee.
I can think of a current extradition case where the view of the divisional court was overturned by the Appellate Committee of the House of Lords, and the Appellate Committee then came to a different view from that of a previous Appellate Committee which heard the matter only a month or so before. These matters are not over until they are over.
I was asked for the reasons why we have come to the view that the provisions are compatible with the European convention on human rights. This should not be viewed
1402
by the Appellate Committee of the other place as a skeleton argument that will be advanced there; this is simply my explanation. There are many provisions in our law where the burden of proof is reversed. Article 6.2 of the convention does not prohibit absolutely a reversal of the burden of proof: it requires instead a balancing of the interests of the defendant and those of society. The jurisprudence of the European Court of Human Rights recognises that, where reasonable and justifiable, the state may impose a burden of proof on the defendant.
I remind all my hon. Friends who have practised in the lower courts that we often had to wrestle with this question when those whom we represented or prosecuted were charged with an offence under section 1 of the Prevention of Crime Act 1953. Those of us who once practised in those courts will remember that section 1(1) of the Act states:
"Any person who without lawful authority or reasonable excuse, the proof whereof shall lie on him, has with him in any public place any offensive weapon shall be guilty of an offence".
That was a decision by Parliament that has stood the test of time. For good reasons—and in rather interesting parallel circumstances—it was decided that the burden of proof would rest with the defendant rather than with the prosecution.
My hon. Friend the Member for Sunderland, South (Mr. Mullin) asked whether, in the matter that will go before the Appellate Committee, section 16B will be appealable as well as section 16A. That has not been determined finally. In any event, the issue before the court amounts to the same thing. In practice, I am advised that it amounts to a distinction without a difference. The divisional court took no issue in respect of sections 16A and 16B.
The right hon. Member for Berwick-upon-Tweed (Mr. Beith) asked for some details about when we propose to introduce new legislation. It is likely that the present Prevention of Terrorism Act will have to be renewed next March. We will be very careful to ensure that the renewal orders are in order—although that is almost an invitation to the gods to ensure that they are not. It is probably an unwise promise to make—particularly from this Bench.
Without anticipating the Loyal Address, I have made it clear that it is our intention to lay legislation before the House and the other place to put on the statute book permanent counter-terrorist provisions, which will do away with the difficulties that the right hon. Member for Cities of London and Westminster (Mr. Brooke) faced in finding the various bits of legislation.
The right hon. Member for Bridgwater asked what would have happened if terrorist incidents had taken place and the provisions had not been in force. I have never disguised from the House the fact that I regarded the matter as an error with potentially serious consequences. However, it is important to put it into perspective. In the circumstances of a major terrorist incident, such as the right hon. Gentleman described, charges under sections 16A and B would be unlikely to arise. The charges would relate to causing explosions, conspiracy to cause explosions and so on.
With regard to the cordon powers, a point raised by other right hon. and hon. Members, until those powers were taken in the Prevention of Terrorism

1403
(Additional Powers) Act 1996, the police used certain common law powers, as I made clear yesterday, and they would have used those powers again.
With one exception—the issue of the royal parks police—I believe that I have answered each of the questions raised by right hon. and hon. Members. The police do not have powers under section 16D. Anti-terrorist police provision is provided by the Metropolitan police throughout the London parks. The royal parks are not a cordon-free zone. That was anticipated by the draftsmen.
Mr. Howard: I am puzzled by one of the Home Secretary's answers, but the fault may be mine. He said that other powers were available to the police during the period when, as we now know, the powers that we are debating this evening were not available to them, but surely the police thought that those powers were available to them? Therefore the police would have used not the other powers—less satisfactory, but available—but the powers in question.
If there had been the threat of a major terrorist attack or plans for such an attack, in the course of which the police would normally use these powers, and if the powers had been used in good faith by the police, not knowing that they were not valid, those planning the major terrorist attack would have had to be released. That is the point made by my right hon. Friend the Member for Bridgwater (Mr. King).
Mr. Straw: I do not disagree with the right hon. and learned Gentleman's point. I was responding to a rather different point that the right hon. Member for Bridgwater had made with regard to major terrorist incidents. I have never disguised the fact that, although the powers are not used often, the omission is serious. That is the reason for the debate. The right hon. and learned Gentleman knows, as the right hon. Member for Berwick-upon-Tweed pointed out, that there are many other powers on the statute book. This has been a bipartisan debate, but if the powers were essential when we required anti-terrorist legislation, why were they not on the statute book until—
Mr. Howard: There is a simple answer. The powers were put on the statute book because I asked the police
1404
whether they needed to have their armoury strengthened in order to counter terrorism more effectively. That is why they were put there.
Mr. Straw: I know that. I remember the debate and I supported the right hon. and learned Gentleman, with the usual active support from the Back Benches.
My last point concerns the Human Rights Act 1998. The debate has been an interesting excursion into the kind of issues that may arise under that Act. The right hon. and learned Gentleman said that the country would live to regret the day that it put the legislation on the statute book. The right hon. Member for Maidstone and The Weald said the same.
However, that was not the view of the official Opposition when the Act came through the House. On Third Reading, they said:
"Although we have opposed aspects of the Bill"—
which were put in proper order as a result of a good Committee and Report stage on the Floor of the House—
"we now wish it well and hope that it will be implemented effectively, to the benefit of the citizenry as a whole."— [Official Report, 21 October 1998; Vol. 317, c. 1362.]
On 21 October 1998, the Opposition wished the Human Rights Act well.
Perhaps that is another change of policy in a matter of a few months, not as a result of a change of leadership of the Conservative party, which as far as I recall has stayed the same, but a change of opinion among members on the Front Bench. We shall live and learn.
I thank the House for the way in which it has dealt with this issue.
Question put and agreed to.
Resolved,
That the draft Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order 1999, which was laid before this House on 23rd June, be approved.

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

CONTRACTING OUT
That the draft Local Authorities (Contracting Out of Highway Functions) Order 1999, which was laid before this House on 26th May, be approved.—[Mr. Mike Hall.]
Question agreed to.

Nut Allergies
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]
8.31 pm
Mr. Edward Davey: I am grateful for this opportunity to raise the issue of nut allergies and labelling, which is particularly appropriate given today's debate on food policy.
My attention was first brought to this issue by a constituent, Mrs. Heather Forrester. Her son James has a peanut allergy, and it was due to his story and his mother's concerns about the inadequacies of the current labelling regime that I requested this debate. However, in the short time since this debate was granted, we have witnessed yet another tragedy—the death of the young athlete, Ross Baillie. His funeral today brings added poignancy to tonight's discussion.
I am sure that the Minister will want to join me in sending sincere condolences to the family and friends of Ross Baillie. That talented young man was is in prime physical condition. Last year, he broke the Scottish record for the 100 m hurdles at the Commonwealth games in Kuala Lumpur.
When a fit, gifted young athlete like Ross dies because of a few bites of a chicken sandwich, it is surely our duty to ask whether his death and others like it could have been avoided. We need to ask whether actions that the House has the power to take could help to prevent such tragedies in the future.
Like my constituent, James Forrester, Ross Baillie was aware of his allergy, and was always extremely careful. But, with the seemingly ever-increasing use of nuts in food, even careful, responsible adults can be caught out, sometimes fatally.
I know that the Minister is aware of this issue. He showed his commitment to tackling it by launching the catering awareness campaign in November 1997. He should know that there is much more to be done. Having tried awareness campaigns, it is time to get tough. We must work with manufacturers and retailers, and be realistic about what can work and what will not work. I do not believe that the Minister thinks that enough has been done, and I hope that he will tell us that he intends to go further.
The first and most important issue involves the catering industry—restaurants, cafés and take-aways. At the moment, unpackaged food, most of which is sold by the catering industry, is completely unregulated. As the food is not bought in a package, the labelling regime for pre-packed foods by definition does not apply. There has been little or no attempt to find other ways to provide consumers with the necessary information. The policy problem is clear. How should we convey information about the presence of allergens—nuts and so on—when the food product is unlabelled?
The Government were right to start tackling this problem by raising awareness. Chefs and waiters must understand the severity of the problem. Tiny traces of nuts in a dish can induce life-threatening seizures. Catering staff should be able to inform customers of the ingredients of every menu item. But the question for the Minister is this: does he really think that his awareness campaign has gone far enough? Should we not be doing much more?
1406
I should be fair to the Minister. On 18 May, in a letter to me, he admitted, when assessing the success of his own information campaign, that
"we know that many recipients effectively ignored the information and that we did not reach some outlets at all".
Presumably, the Minister believes that we do need to consider other measures, and I want to suggest a few to him this evening.
At present, there are no regulations, or even codes of practice, governing what menus should say about the contents of different dishes with respect to allergens. A few restaurants voluntarily say on their menus that a meal contains nuts, but they are still the exception rather than the rule. Indeed, more restaurants manage to say whether a meal is suitable for vegetarians or vegans. In the case of allergens such as nuts, informing customers can be a matter of life and death. I do not think that we can rely on voluntary action.
How could a code of practice work? I think that the Government should issue strict rules, under food standards and safety laws. Such a code of practice could cover all severe allergies, not just allergies to nuts. The rules could cover menu information, good practice in the kitchen and staff training. The code of practice could include information about how caterers could find out whether their raw materials contained allergens. I should be grateful if the Minister said whether he was prepared to consider introducing such a code of practice; but can he at least assure me that he will begin consultations with the catering industry?
In his letter of 18 May, the Minister suggested that nut-free menus wold be difficult to introduce, because food could become accidentally contaminated. He argued that requiring nut-free labelling would be very difficult unless there were a complete ban on nuts. I understand the point that he was making, but I do not accept his conclusion. Certainly, a code of practice will need to be drawn up carefully to ensure that it is workable, but I cannot believe that it is impossible to produce an effective and practical code. Indeed, I think that the Minister's Department has an obligation to do so, given the importance of the issue.
Some who object to the idea of a code of practice argue that this is a question of individual responsibility, and that it should be up to allergy sufferers to ask about ingredients. Individual responsibility is important, but that approach alone—which has effectively been Government policy so far—has been shown to have its limitations. Our constituents, when going out for a meal, may check with the waiter whether a meal contains nuts; but, unless the staff have been properly trained, allergy sufferers cannot be confident about the replies that they are given. That is borne out by experience.
The latest newsletter of the Anaphylaxis Campaign cites two cases of allergy sufferers who made specific, careful requests of catering staff in regard to ingredients, received assurances that the meals involved were nut free, and then suffered severe allergic reactions. Both those people have taken legal action, and one has been successful in an out-of-court settlement. A successful action for negligence would, however, have been scant comfort if the reaction had resulted in death.
Surely such cases demonstrate the limitations of placing the emphasis solely on the sufferer, and the limitations of awareness programmes. I believe that they also show that

1407
a tough approach would be in the interests of the catering industry. A strong code of practice would force the industry to become more aware of the problem, but it could also save individual caterers thousands of pounds in costs and compensation claims. In this instance, Government intervention would help both the consumer and business.
I note that regulations covering the identification of genetically modified foods in restaurants have been introduced quickly. Surely the same should apply to allergens such as nuts.
The second substantive issue on which I should like to press the Minister is the labelling of packaged foods. He will know that the labelling regime is widely criticised because of its failure to deal appropriately with allergens. Although in practice most manufacturers and retailers now go far beyond the requirements of the labelling regime, I hope that he will agree that the regime still needs changing.
The problem is the so-called 25 per cent. rule, which says that manufacturers do not have to list components of compound ingredients in which a component makes up less than 25 per cent. of the food. That might be reasonable for most component ingredients; but when part of the component is an allergen—such as a peanut—to which people may be hypersensitive, the 25 per cent. rule is clearly wrong.
The Minister will know that the European Commission has been seeking views, in a draft proposal, on amending the European Union directive to remove the 25 per cent. rule for allergens; but he will also know that progress has stopped, and that there is unlikely to be further action by the Commission. Will the Minister therefore raise the issue at the next Council of Ministers, so that fresh life might be breathed into the draft proposal? Will he also undertake to write to Ministers in other EU countries to ask for their support to fast-track the draft proposal?
The third issue that I should like to raise is so-called defensive labelling, which is the practice that some food manufacturers and retailers have adopted to protect themselves—of labelling everything as "may contain nuts". In that way, they seek to give themselves a type of insurance policy in relation to allergy sufferers. Such labelling certainly ensures that people are warned about nut ingredients, but it is completely the wrong approach.
For a start, defensive labelling is itself dangerous, as it devalues labelling information. People also soon realise that it is simply an insurance policy, particularly when the food seems very unlikely to contain nuts, so that they begin to lose faith in the labelling regime. Moreover, such a blanket approach is very unfair to allergy sufferers, as it unnecessarily restricts the choice of food available to them. As I said, I know that the Minister shares my concerns, and I should like to pay tribute to him for the way in which he has worked with the industry to try to curb that practice.
It is right to acknowledge the work that has been done by manufacturers and by their various trade bodies, such as the Food and Drink Federation, which has developed guidance for its members setting out minimum good practice standards for the handling of products containing severe allergens. Although I am told that there has been a reduction in the use of defensive labelling strategies, today the question is whether more could be done, with manufacturers and retailers, to make it possible to label more products as nut free.
1408
I appreciate that there are genuine problems in giving such guarantees; not least is the difficulty of cross-contamination, whereby food production lines are used both for foods containing nuts and for those that are nut free. I am told by the industry that it is not economically viable to have dedicated facilities for nut-free products. Yet I am sure that industry could be encouraged to do more, and could be shown that it is profitable to do so. For example, one company—Kinnerton Confectionary—has already recognised the market opportunity and decided to produce children's products on dedicated nut-free lines.
How could the Government help in that? First, I believe that the Government must continue to spread awareness among manufacturers and press for the complete implementation of industry-designed guidelines. However, there is also a role for the Government in spreading best practice, as various manufacturers will be trying new ways to deal with cleansing production equipment, and other firms will have found ways in which different lines can be dedicated to nut-free products without damaging their wider range. Those experiences could be shared, so that more products are available and labelled as nut free.
I have not had time today to deal with many other aspects of the issue—such as the need for better information for allergy sufferers themselves, perhaps in a Government leaflet. We also need more allergy centres, where sufferers can be properly diagnosed and counselled. There is also a need for Epipens to be more widely available, so that, when people are caught out and suffer an allergic reaction, they can be treated quickly.
I hope that today's debate will have helped to focus attention on the need for major improvements in the provision of information on allergens to consumers. I hope that the experiences of my constituent, and the tragic death of Ross Baillie, will spur the Minister to do more, and to build on his record of action so far.
8.45 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I congratulate the hon. Member for Kingston and Surbiton (Mr. Davey) on introducing an important subject. I accept that he had obtained tonight's debate before the tragic death of Ross Baillie.
Bearing in mind that this is only a short debate, let me take the unusual step of giving the hon. Gentleman my conclusions before putting some details on the record. I agree with everything he said. There is scope for industry to do more, and I am certainly prepared to consider going beyond guidelines and producing a code of practice.
I take seriously everything that he said about the fact that, with the agreement of the catering industry, we have managed to introduce practical legislation for catering on genetically modified organisms. It will come into force on 19 September, following a couple of rounds of consultation last year and early this year. In my view, if we can legislate for GMOs, we ought to be able to do so for nuts, too. I am not threatening or promising legislation. If it is practical for the industry to inform customers and to train manufacturers to know what ingredients they are using in respect of GMOs, it should be possible in respect of nuts.
I agree with the hon. Gentleman about the 25 per cent. rule. There is a problem that we are seeking to address through international negotiations; that is an exception

1409
that we do not consider should apply to nuts. I also agree with him about defensive labelling. I have criticised defensive labelling, which can be seen in most shops. I should like to put on record, however, the contribution of the industry. Some big confectionery manufacturers are operating nut-free lines because they cannot guarantee the complete separation of one product from another.
Since I became Minister with responsibility for food, I have taken a personal interest in the matter. However, the interest did not start under the present Government. When I met Mr. David Reading, I gave him a commitment that I would treat the matter as seriously as my predecessor, the hon. Member for Mid-Sussex (Mr. Soames), rightly did. Therefore, I was able to launch with some commitment the campaign for awareness in the catering sector. Although I was sometimes criticised by people who were ignorant of these matters, I recall that, as I went from studio to studio that morning, two individuals—a broadcaster and a sound technician—told me, "Someone in my family is affected by this. It is more widespread than you think." That is absolutely true and we have to take the matter extremely seriously.
There are too many deaths. There is more of the allergy about. We are checking into whether that is due to people's sensitivity or to the wider use of nuts, and we are funding research into the issue. It is not a matter of banning products, but of raising awareness. I have asked myself whether GM technology could remove the genes that cause the allergy, but it is more complicated than that. Technology has been used to good effect in the far east to deal with allergies to rice.
It is a matter not of looking to ban foods, but of looking for a solution through investigation. The Ministry spends just over £1 million on research. Several projects are under way, and there are bids for some new ones under our food standards and safety programme for next year. A number of groups are involved in addition to the Government and the catering industry, and there is more work to be done.
We have to revisit our expenditure on, and commitment to, the campaign, which involved contacting 200,000 establishments. Obviously, some people took the matter seriously, whereas others put the leaflets and posters in the bin and treated them as junk mail. The issue has to be revisited.
About one in 200 young children may be at risk of developing a life-threatening sensitivity to peanuts and nuts. In our population, that is a substantial number of people, so we cannot afford to be complacent. We need effective and practical labelling provisions and other measures. The Department of Health is taking the matter seriously. A few days ago, my right hon. Friend the Secretary of State for Health laid regulations, which came into effect on 7 June, designating the allergy as a medical speciality in its own right for the first time, which means that consultants can be appointed. A big contribution can be made in that area.
The catering industry is vastly complex. I have referred to the catering awareness campaign, launched in 1997. We sent out 200,000 information packs. At the annual meeting of the Chartered Institute of Environmental Health later this year, we shall discuss how the campaign has gone and seek ways to promote a "Be allergy aware"
1410
message throughout the industry. Some action is planned, and we shall be doing work with the industry and the enforcement officers at the conference in Bournemouth on getting the message across.
We shall also be meeting the anaphylaxis campaign, and the university and college caterers in July. Bearing in mind recent tragedies, we have to reinforce the message to caterers who deal specifically with young people in the further and higher education sector, and get across to them the seriousness of the issue. We also have meetings planned with representatives of large restaurant chains. With people eating out more than ever, it is in their interests to do everything that they can. We have the example of practical rules for GMO information in non-packaged foods, although the measure is not yet in force.
We have to pursue the issue of defensive labelling, which is an unsatisfactory lawyer's response. The British Retail Consortium has produced guidelines setting out good practice. We shall pursue the issue with the Institute of Grocery Distribution labelling group. We want to minimise the "may contain" tendency. Those words are not acceptable. We have to find imaginative ways to work in harmony with the industry to get the message across. It is not in the industry's interests to be seen to be lackadaisical or thought to be not taking the matter seriously.
There are moves in Brussels to amend the 25 per cent. rule for severe allergens. We have done a lot of work in this country on food intolerance, which we are sharing with our European partners. We are encouraging them to understand the seriousness of the issue. The 25 per cent. rule should go as soon as possible. There are problems with food sold loose, food sold at catering establishments and the 25 per cent. rule. We are tackling each of those systematically, in addition to our contribution to research projects.
I agree with the hon. Gentleman's points about getting the message across. I do not want to be over-critical of broadcasters, but they have a role to play. I was interviewed recently when promoting MAFF's research food safety budget for 2000–01, which will be the first year of the Food Standards Agency budget. One of the many projects relates to food intolerance and food allergy. I was criticised by an interviewer on an important daily early-morning food-related programme, who asked why we were spending all that money on an issue that was not serious. I had to point out with care and some force that it is a serious, life-threatening issue and people die. We feel that we can take measures to make the problems avoidable.
The media can help. This is not a food faddist issue, and is not a matter of the nanny state. A serious medical condition has been identified. We do not know all the answers, which is why we are spending money on research. We are not concerned only with nut allergies, although I am dealing with peanuts in particular. There is other food intolerance involving, for example, some dairy products, to which we must attend.
I do not know why such allergies are identified today when they were not 20 or 30 years ago when I was younger. They may have been around, but not been identified. People may have died or suffered serious injury without identification of the cause. With the advantage of biotechnology, we have more knowledge today.

1411
There is no excuse for inadequate labelling where such products are deliberately added. We must ensure that the labelling is clear. I have occasionally made purchases for people with a peanut allergy. One can search shelf after shelf of confectionery, only to find in the small print the words "May contain nuts" or "Contains nuts". Few specialist products are around, so niche markets exist in the food industry.
I freely admit that the resignation of the Commission in Brussels has caused considerable difficulties with regard to the labelling of GM additives and flavourings, GM animal feedstuff labelling and the 25 per cent. rule. Commissioners have reappointed themselves, only to say that they cannot take any major decisions because they are not really the Commission. Now that the European elections are out of the way, we shall be taking action in Brussels via the parliamentary committees to encourage them to put pressure on the Commission. This is not an issue of great moment between parties or political ideologies, and it should not have to await the appointment of the new Commission, which is some months away.
I contacted food manufacturers and retailers after the 1997 food intolerance conference to ask them to improve their quality control procedures, and some have taken action. We want to do more to encourage them to go for nut-free lines, rather than have the present uncertainty about whether lines can be cleaned of all nut traces. Supermarkets should be embarrassed to have on their bread and cake counters—particularly the bread counters—freshly-baked produce from the store which contains no nuts whatever, yet which has labels, usually in scrawly handwriting, saying "May contain nuts". That is slipshod quality control, and it is anti-consumer and anti-choice for the customer; such slipshod supermarkets should be avoided because they are not taking the issue
1412
seriously. That is inefficient, anti-consumer, defensive labelling. I deplore that, as I have no doubt does the hon. Gentleman.
Mr. Edward Davey: The Minister is being extremely helpful and I thank him for that, but may I press him on one issue on which he touched at the beginning of his remarks? He said that he is not threatening or promising legislation, but does he intend to consult the catering industry on a code of practice and on regulations, and over what timetable?
Mr. Rooker: The short answer is yes. I shall certainly consult on a code of practice and take that forward. Whether that would lead later to regulation, I am not in a position to say. An effective code of practice which will raise awareness, so that the industry takes responsibility, may be sufficient. I can now tell the catering industry and the rest—as I could not in 1997—that we have succeeded in the practical regulation of GMOs, and the industry has gone along with that. We spent a long time consulting on it. The technology means that there is no difference between the tracing and checking of products for GMOs and other products. We shall take the issue forward to see whether a code of practice rather than guidelines would be beneficial and practical, to which we can give impetus.
I am in no way being slipshod or backsliding. I take the matter seriously and I am grateful to the hon. Gentleman for raising it. It is important that I am able to say to the industry, "These matters are being raised in Parliament. They are not fads of MAFF Ministers or officials who are seeking further regulation on the industry. Members of Parliament who represent their constituencies and raise issues in the public interest on the Floor of the House of Commons are raising these issues, and they want answers. At some point, I or other Ministers must come back and account for what we are doing."
In that respect, I can assure the hon. Member for Kingston and Surbiton that I will keep him and the others who have raised the issue with me fully informed of what we are doing.
Question put and agreed to.
Adjourned accordingly at Nine o'clock.

FOREIGN AND COMMONWEALTH AFFAIRS

  Kosovo
  Mr. Dalyell
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his oral Statement of 14 June 1999,Official Report, column 22–33, on Kosovo, what response he has received from Hashen Thaqi about ending violence in Kosovo. [87591]

  Mr. Tony Lloyd
  As the Prime Minister pointed out in his statement to the House on Kosovo on 21 June 1999,Official Report, columns 761–64, and at the G8 Summit, the KLA has now agreed an undertaking to demilitarise in phases over 90 days, beginning with an immediate ceasefire.

  Mr. Paul Marsden
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to support the gathering of evidence in Kosovo on behalf of the War Crimes Commission. [87875]

  Mr. Tony Lloyd
  We are doing all we can to help ICTY investigate crimes against humanity in Kosovo. A UK Scenes of Crime team has been initially tasked by ICTY to examine sites of two of the worst atrocities thought to have taken place in Kosovo. The UK team was the first such team operating on the ground in Kosovo.

  In April, we appointed a UK Kosovo war crimes co-ordinator who is responsible for ensuring that as much information as possible is passed to ICTY that might be relevant to the Tribunal's investigations.

  We have contributed an extra £290,000 this year to ICTY in addition to the UK's assessed contribution of US$5.1 million.

  Euro (EC Seminars)
  Sir Richard Body
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) if he will deposit in the Library documentation relating to the seminars provided by the European Commission to EU consumer organisations in November and December on training in important aspects of the transition to the euro, from the consumer's viewpoint; [87672]

  (2) if he will make a statement on the (a) nature and (b) cost of the assistance supplied by the European Commission to the TUC to encourage public debate on EMU; [87686]

  (3) if he will make a statement on the nature of the project financed by the European Commission relating to vulnerable sectors of the population and preparation for the advent of the euro. [87659]

  Ms Hewitt
  I have been asked to reply.
  424
  These projects appear to be financed by the European Commission from the European Union Budget, line B3–306, Information Programme for European Citizens (Prince).

  The Prince programme exists to stimulate public debate on the EMU. I understand that the Commission gave the European Trades Union Congress (ETUC) 200,000 euro under the Prince programme in 1997. ETUC distributed this money to the national trades union organisations. The money received by the TUC was used to help organise seven conferences aimed at stimulating public debate on the EMU.

  The seminars for consumer organisations were also organised under the Prince programme.

TRADE AND INDUSTRY

  Special Advisers (US Visits)
  Mr. Matthew Taylor
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 17 May 1999,Official Report, column 253, which special advisers visited the United States of America on 10 and 11 September 1997; and if he will list the meetings which these special advisers held with members and officials of the US Government during the visit, stating the dates and locations of each meeting and the names of the US ministers and officials at each meeting. [87414]

  Mr. Byers
  My right hon. Friend the Member for Derby, South (Mrs. Beckett), as the then President of the Board of Trade met Charlene Barshefsky (US Trade Representative), William Daley (US Commerce Secretary) and Elizabeth Moler (US Deputy Energy Secretary) during her visit to the United States of America in September 1997. She also participated in other meetings involving Senators and Congressmen. She was accompanied by her Special Adviser, Mr. Corry, at these meetings.

  US Tariffs
  Mr. Laurence Robertson
  To ask the Secretary of State for Trade and Industry if he will make a statement on the tariffs imposed by the United States on European Union goods as a result of the banana dispute. [87506]

  Mr. Wilson
  The point at issue in this dispute is the compatibility of the EU's banana import regime with the rules of the World Trade Organisation (WTO).

  This regime was revised during 1998 to take account of the earlier adverse WTO rulings, but the WTO Panel ruled on 12 April that the revised regime is still not fully WTO-compliant. In addition, the WTO arbitrator determined that the annual loss to the US from the current regime is $191.4 million. On 19 April, the US was given formal WTO authority to retaliate up to that level.

  The US issued a revised retaliation list on 9 April removing several sectors which had been included on an earlier list. Whilst this scaling down was welcome, we remain acutely aware that many UK businesses are adversely affected by the retaliation still in effect.

  We are continuing to make representations to the US about the harm which is being caused to UK businesses in the affected sectors.
  425
  We are also continuing to press for the EU to work with the US and other interested parties to achieve an early end to this unnecessary damage to business. We are pressing for further intensive consultations with all the parties involved on the options for reforming the banana regime, in order to make it unambiguously compatible with the WTO.

  Correspondence
  Mr. Steen
  To ask the Secretary of State for Trade and Industry when he will reply to the letter of 18 May from Rosemary Maddock of Highclere, Slapton, near Kingsbridge, Devon, about a former employee of Anchorpac Ltd. [87986]

  Mr. Wills
  I understand that a reply was sent by an Official in the Employments Relations Directorate on 23 June.

NORTHERN IRELAND

  Rosemary Nelson
  Mr. Corbyn
  To ask the Secretary of State for Northern Ireland if the security force helicopters operating in the Ashgrove area of Lurgan on Sunday 14 and Monday 15 March were equipped with still or video cameras; and if photographs or video footage from them has been made available to the policy inquiry team investigating the murder of Rosemary Nelson. [86174]

  School

  Education and Library Board area

  Management Type

  Capital cost (£000)

  Number of part-time places

  Harryville Primary School, Ballymena

  North Eastern

  Controlled

  80

  52

  St. Joseph's Primary School, Crumlin

  North Eastern

  Maintained

  60

  52

  Bloomfield Road Primary School, Bangor

  South Eastern

  Controlled

  90

  52

  Abbey Primary School, Newtownards

  South Eastern

  Controlled

  70

  52

  St. Aloysius' Primary School, Lisburn

  South Eastern

  Maintained

  90

  52

  Craigavon Primary School, Gilford1

  Southern

  Controlled

  20

  12

  St. Clare's/St. Colman's Abbey Primary School, Newry

  Southern

  Maintained

  55

  52

  Ballykelly Primary School

  Western

  Controlled

  66

  52

  1This is an extension to an existing nursery unit

  FE Lecturers (Conditions of Service)
  Mr. John Cryer
  To ask the Secretary of State for Northern Ireland if lecturers in Northern Ireland further education colleges prior to April 1993 were employed on conditions of service similar to the Silver Book agreement in England. [87785]

  Mr. McFall
  Yes, subject to minor regional variations.

  Paramilitary Violence
  Mr. William Ross
  To ask the Secretary of State for Northern Ireland if she will list for the week ended Saturday 12 June the number of(a) punishment beatings and (b) punishments shootings which took place in Northern Ireland, indicating how many in each category were committed by (i) Loyalist and (ii) Republican groups. [87962]

  Mr. Ingram
  The number of paramilitary attacks during the period 6–12 June 1999 are as shown.
  426
  Mr. Ingram
  [holding answer 8 June 1999]All matters of security force activity in this area over the period of 12–15 March are the subject of major lines of inquiry for Mr. Port's continuing investigation. It is not, therefore, appropriate to go into detail at this stage. However, he has access to all the available information, in whatever form.

  Weapons Amnesty
  Mr. McNamara
  To ask the Secretary of State for Northern Ireland how many weapons and of what calibre were collected during the 1971 weapons amnesty; and how those weapons were disposed of. [87154]

  Mr. Ingram
  [holding answer 16 June 1999]The Northern Ireland Office does not hold the information in the form requested. I understand, however, that a total of 1,619 firearms and 99,440 rounds of ammunition were handed in.

  Pre-school Places
  Mr. Thompson
  To ask the Secretary of State for Northern Ireland if she will list for each(a) controlled, (b) maintained, (c) integrated and (d) voluntary sector school in each Education and Library Board area the number of, and the expenditure on, PEAG places for the school year 1998–99. [87674]

  Mr. McFall
  Under 1998–99 Pre-school Education Development Plans, my Department approved the establishment of new statutory nursery units at the following schools.

  Loyalist

  Republican

  Assaults

  4

  2

  Shootings

  2

  0

  Total

  6

  2

  Mr. William Ross
  To ask the Secretary of State for Northern Ireland if she will list for the week ended Saturday 12 June the number of violent incidents involving paramilitary groups which took place in Northern Ireland indicating how many involved(a) Loyalist and (b) Republican groups. [87961]

  Mr. Ingram
  The number of security incidents during the period 6–12 June 1999 are as shown:

  Number

  Deaths

  0

  Shooting incidents

  2

  Bombing incidents

  3

  427
  The number of casualties as a result of paramilitary-style attacks during the period are as follows:

  Loyalist

  Republican

  Assaults

  4

  2

  Shootings

  2

  0

  Total

  6

  2

  Notes:

  1. Figures may be subject to minor amendment

  2. The shooting and bombing incidents cannot as yet be firmly attributed to a grouping

  Belfast Harbour
  Mr. Öpik
  To ask the Secretary of State for Northern Ireland what plans the Government have for any sum exceeding the projected £70 million raised from the proposed privatisation of Belfast Harbour; and if she will make a statement. [88118]

  Mr. Paul Murphy
  The scheme for transferring Belfast Port to the private sector has not yet been finalised and no plans beyond the £70 million assumed in the Northern Ireland estimates for 1999–2000 have therefore been made.

HOME DEPARTMENT

  London River Police
  Mr. Cohen
  To ask the Secretary of State for the Home Department, pursuant to his answer of 9 June 1999,Official Report, column 332, on the London River Police, what estimate he has made of the (a) cost of overtime payments and (b) total cost for the service, over the millennium public holiday, at a strength of (i) 89 and (ii) 101. [87405]

  Kate Hoey
  The Commissioner for the Metropolitan Police tells me that all police officers on duty on the millennium public holiday will be entitled to overtime payment for being on duty. It is likely that every officer will be working a 12-hour duty, at an average cost of £297.69 per officer.

  The total cost of the millennium public holiday river policing arrangements, based on a 12-hour duty on 31 December and a 12-hour duty on 1 January, using the same figure will be £595.38 per officer. This gives a total cost of £52,988.82 for 89 officers, and £60,133.38 for 101 officers.

  Mr. Cohen
  To ask the Secretary of State for the Home Department, pursuant to his answer of 9 June 1999,Official Report, column 332, on the London River Police, for what reasons there will be a reduction in the number of river police in the period to 1 January 2000. [87402]

  Kate Hoey
  The Commissioner of the Metropolitan Police tells me that the reduction of numbers of river police, to 89 from 101, will align resources more closely to known and potential policing demands and so enhance the efficiency and effectiveness of the river police.

  Prisons (Cell Confinement)
  Mr. Mullin
  To ask the Secretary of State for the Home Department if he will list the prisons in which prisoners are confined to cells for 22 hours a day or more; how many prisoners in each prison are so confined; and what the reasons are. [87957]

  Mr. George Howarth
  The Prison Service does not collect centrally information on the time individual prisoners spend confined to their cell.

  Provisional data show that, for the year 1998–99, the average time prisoners were locked in their cells was 13.4 hours on a weekday and 14.7 hours at weekends.

  Within a prison establishment, the period for which individual prisoners or groups of prisoners are unlocked will vary according to a number of factors, including their level on the incentives and earned privileges scheme. Some prisoners may be confined to their cells for most of the day, though usually only for short periods. Reasons for this might include for the maintenance of good order and discipline, because the individual prisoner has declined regime activity or because of operational demands.

  Correspondence
  Mr. Sanders
  To ask the Secretary of State for the Home Department when he expects to reply to the letter from the hon. Member for Torbay of 9 May, in regard to the return of Mr. Melik's passport. [87839]

  Mr. Mike O'Brien
  Mr. Melik was granted leave to remain as a visitor and his passport returned to him on 21 June. A reply to the hon. Member will shortly be sent to this effect.

  Mr. Sanders
  To ask the Secretary of State for the Home Department when he expects to reply to the letter from the hon. Member for Torbay, of 9 May in regard to the return of documents belonging to Mr. and Mrs. Strange. [87840]

  Mr. Mike O'Brien
  I will reply shortly, but can say that Mrs. Strange has been given leave to remain in the United Kingdom for a further 12 months and her passport was returned on 22 June.

  Immigration and Nationality Directorate
  Mr. Sanders
  To ask the Secretary of State for the Home Department if he will make a statement on the performance of the Immigration and Nationality Directorate. [87838]

  Mr. Mike O'Brien
  The Immigration and Nationality Directorate's caseworking operation is undergoing major accommodation and organisational changes. These changes are necessary to modernise the work of the Directorate to enable it to meet the Government's commitment to a fairer, firmer, faster immigration control. I regret any delays caused by this.

  My right hon. Friend, the Home Secretary, has established a project team, working to tight deadlines, to plan and deliver urgent measures to ensure the Directorate returns to previous levels of service.
  429
  The team is looking at a range of organisational and strategic measures aimed at improving the performance of the Integrated Casework Directorate, and has developed systems for projecting future output levels so as to target improvements more effectively.

  Siemens Business Services delivered the computer system on 14 June. It will now be rigorously tested and piloted to ensure that the Directorate's requirements are met. The system will then be progressively introduced and should become operational early next year.

  Police Car Response Times
  Dr. Cable
  To ask the Secretary of State for the Home Department, pursuant to his answer of 15 June 1999,Official Report, column 93, on police car response times, what plans he has to commission research on this matter. [87975]

  Mr. Boateng
  We have no plans to commission research on this subject.

  Wormwood Scrubs
  Mrs. Humble
  To ask the Secretary of State for the Home Department when he expects Her Majesty's Chief Inspector of Prisons' report on his inspection of HMP Wormwood Scrubs to be published. [88449]

  Mr. Straw
  I understand that Sir David Ramsbotham intends to publish his inspection report on Wormwood Scrubs prison on Monday 28 June. I have arranged for copies of his report to be placed in the Library and the Vote Office on publication.

CULTURE, MEDIA AND SPORT

  Film Companies (Locations)
  Mr. Paul Marsden
  To ask the Secretary of State for Culture, Media and Sport what support the Government give to encourage film companies to use British locations. [87877]

  Janet Anderson
  The Government fund the British Film Commission (BFC), which provides information and advice to overseas and domestic film production companies on making use of suitable British locations and

  £000

  Project/programme title

  1996–97

  1997–98

  1998–99

  1996–97 to 1998–99

  Good Government (Voter Registration Programme)

  147

  —

  30

  177

  In-Service Education

  296

  226

  16

  539

  Health Management Strengthening

  106

  24

  —

  130

  Hospital Maintenance

  40

  14

  9

  63

  Primary Health Care

  60

  87

  —

  148

  Economic Management Capacity Building

  —

  —

  50

  50

  Assistance to Auditor General

  —

  —

  50

  50

  Mainstreaming Poverty and Gender

  —

  —

  25

  25

  Records Management Improvement Project

  —

  —

  120

  120

  Action Aid Capacity Building

  —

  —

  100

  100

  Total expenditure

  649

  351

  400

  1,402

  430
  facilities. In addition, the Government contribute to the British Film Office in Los Angeles which provides similar advice within the Hollywood community.

  The UK also has a network of regional film commissions which work to attract filming to their regions. On 15 June the British Tourist Authority published its "Movie Map" which highlights the number of first class films which were made in this country.

  Stonehenge (Vandalism)
  Mr. Key
  To ask the Secretary of State for Culture, Media and Sport what assessment he has made of damage to Stonehenge and the World Heritage Area over the period of the summer solstice; and if he will make. a statement. [88091]

  Mr. Alan Howarth
  While I deplore the public disorder at Stonehenge over the summer solstice, I am pleased that specialist staff from English Heritage have ascertained that there has been no structural damage to the monument. The modern perimeter fence was damaged and there was some scuffing and dislodging of lichen caused by those who climbed on the stones. The National Trust has also confirmed that although there were people camping and lighting small fires on its adjoining land within the area of the World Heritage Site, no damage was caused beyond scorching and flattening of grass.

  BBC Director-General
  Mr. Gordon Prentice
  To ask the Secretary of State for Culture, Media and Sport what discussions he has had with the Chairman of the BBC concerning the procedures for selecting the next Director-General; and if he will make a statement. [88149]

  Janet Anderson
  None. The appointment of the Director-General of the BBC is a matter for the Board of Governors.

INTERNATIONAL DEVELOPMENT

  Gambia
  Mr. McDonnell
  To ask the Secretary of State for International Development if she will list the projects for which aid has been provided to the Gambia during the last three years and the amounts for each project. [87946]

  Clare Short
  The following table shows British aid provided to the Gambia during the last three years. (The totals have been rounded up or down to the nearest £000).

  Kosovo
  Mr. Streeter
  To ask the Secretary of State for International Development if she will make a statement about her Department's involvement in the planned reconstruction of Kosovo. [88115]

  Clare Short
  The European Union, with the support of the World Bank, will assume the lead role in the reconstruction of Kosovo within the overall UN-led civil implementation structure. We are in close touch with all the international agencies, as well as bilateral donors, concerned with reconstruction.

  The European Union and World Bank, who have set up a joint headquarters in Brussels, are coordinating damage and needs assessment and will be organising a series of donor conferences over the coming months to mobilise the necessary international effort to help reconstruct Kosovo.

  We are working to ensure that the arrangements for managing EU assistance are effective and allow programmes to be implemented speedily. We are also seeking to ensure that the World Bank plays as wide a role in reconstruction as the legal status of Kosovo will allow.

SOCIAL SECURITY

  Child Support Agency
  Mr. Jim Murphy
  To ask the Secretary of State for Social Security (1) how many people were employed by the Child Support Agency Independent Case Examiner in each of the past three years; [87575]

  (2) how many cases have been dealt with by the Child Support Agency Independent Case Examiner in each of the past three years;[87573]

  (3) what was the average time taken by the Child Support Agency Independent Case Examiner to conclude each case referred to him in the past three years;[87574]

  (4) what plans there are to review the role and responsibility of the Child Support Agency Independent Case Examiner. [87576]

  Angela Eagle
  The administration of the Child Support Agency is a matter for the Chief Executive, Mrs. Faith Boardman. She will write to my hon. Friend.

  Letter from Faith Boardman to Mr. Jim Murphy, dated 23 June 1999:
  I am replying to your Parliamentary Questions to the Secretary of State for Social Security about the Child Support Agency Independent Case Examiner.
  I have answered three of your questions by presenting the information in table format annexed to this letter.
  Table 1 shows the numbers of staff employed by the Independent Case Examiner (ICE). Senior management grades and the Independent Case Examiner herself are included in the category of investigation staff. The ICE Office began its work on 7 April 1997 but staff were recruited and receiving training from the preceding February.
  Table 2 shows the intake of cases for two complete years of operation. It breaks down the number dealt with to those which received a full investigation and those which were rejected. When a complaint is received, the issues are identified and ICE check that
  432
  the case can be accepted. If, for example, the Child Support Agency's complaints procedures have not been exhausted ICE will reject the case.
  The rise in figures might at first sight suggest a deterioration in CSA customer service, however, this can be attributed to the legitimately rising workloads coupled with rising awareness of ICE following the launch of the first ICE Annual Report in September 1998 which generated a great deal of media interest and new work. September 1998 was the highest intake for ICE in a single month.
  Table 3 gives the average time taken to carry out an investigation and report findings. A process was introduced in 1998/99 which allows appropriate cases to be identified and referred to the Child Support Agency for early resolution of the problem by taking prompt action. Thus negating the need for a full investigation by ICE. One effect of this initiative is to lengthen the average time taken to resolve those complaints where early resolution proved impossible and full investigation was needed.
  In your fourth question you asked what plans there are to review the role and responsibility of the ICE. The post of Independent Case Examiner is a three year, fee paid, contract with the Department of Social Security, with the possibility of renewal by mutual consent. The three-year period for Mrs Parker does not expire until February 2000. Any announcements about this will be made to Parliament in the normal way.
  The ICE acts as an impartial referee and conducts investigations into cases where CSA customers feel that they have been badly treated by the Agency. The ICE makes recommendations on redress, whether that takes the form of an apology, or financial compensation, and also makes recommendations on how the Agency might improve its administrative systems for the benefit of customers. The ICE role does not extend to investigating complaints relating to Child Support legislation, or those which have undergone, or are undergoing, investigation by the PCA.
  There are also certain criteria that need to be satisfied for a complainant to obtain the services of the ICE. The ICE will only take on a case if the Agency's own complaints procedures have been exhausted, and the complainant has received a letter from, or on behalf of, myself in response to their complaint, within the last 6 months.
  I hope you find this helpful.

  Table 1: Number of staff employed by ICE

  Year

  Investigation staff

  Support staff

  Total

  1996–97

  35

  5

  40

  1997–98

  36

  5

  41

  1998–99

  34

  4

  38

  Table 2: Intake of cases

  1997–98

  1998–99

  Number at start of year

  0

  267

  New cases

  1,087

  1,536

  Total

  1,087

  1,803

  Dealt with:

  Rejected

  616

  832

  Investigated

  204

  474

  Total dealt with

  820

  1,306

  Carried forward

  267

  497

  Table 3: Average time for investigation and report

  weeks

  Year

  Early resolution

  Full report

  1997–98

  —

  17.4

  1998–99

  17.2

  33.6

  Note:

  These figures should be viewed in conjunction with Table 2 showing increased intake and outputs

  Stakeholder Pensions Advisory Group
  Kali Mountford
  To ask the Secretary of State for Social Security what progress he has made in setting up his stakeholder pensions advisory group. [88722]

  Mr. Darling
  The new stakeholder pensions advisory group will complement the formal consultation process for stakeholder pensions. It will draw on the experience of people with day-to-day experience of pensions—including employers and the pensions industry—to help make sure that the detail of stakeholders pensions is right, and that costs for the pensions industry and employers are kept to a minimum.

  Members of the group will be: Chair: Tom Ross (Aon Consulting and Scottish Life); large employer: Mark Hodgkinson (Barclays Bank); medium-sized employer: Judy Lever (Blooming Marvellous Ltd.); small employer: Ken Lewis (Dutton Engineering); insurance industry: Adrian Boulding (Legal & General); occupational pension scheme: David Morgan (CMT); independent financial adviser: Terry Bennet (PIFC); union fund: Joanne Segars (TUC); trust manager: Dugald Eadie (Hendersons).

  Housing Benefit Claimants (Rent)
  Mr. Webb
  To ask the Secretary of State for Social Security for how many current recipients of housing benefit their eligible rent is below the actual rent which they pay because of (i) the single room rent rules, (ii) the average reference rent rules and (iii) either of the above; and, in each case, what is the average amount by which the eligible rent falls short of the actual rent paid. [87778]

  Angela Eagle
  The information is not available in the format requested. We do not centrally collect information of individuals' contractual rent because it will commonly include items not eligible for Housing Benefit.

  The measures which limit the rent for Housing Benefit purposes are:

  certain service charges included in the contractual rent which are not generally eligible for Housing Benefit, for example, charges for cleaning, laundry, fuel, meals and personal care and nursing;

  the range of determinations, including determinations of single room rents, made by rent officers in respect of most claims from tenants living in the private rented sector; and

  where local authorities consider that the rent is unreasonably high or the accommodation overlarge or the eligible rent is nonetheless too high in respect of a particular case.

  Pension Schemes
  Mr. Webb
  To ask the Secretary of State for Social Security if he will list the existing pension schemes with charges at or below one per cent. to which he referred in his press statement of 2 June; and if he will make a statement on whether these schemes meet the other proposed requirements of stakeholder pensions. [86459]

  Mr. Darling
  I have written to the hon. Member today in response to his question. A copy of the letter has been placed in the Library.

  Poverty Audit Index
  Dr. Gibson
  To ask the Secretary of State for Social Security what plans he has to establish and publish the Poverty Audit Index. [87087]
  434
  Angela Eagle
  We will publish the first annual report on tackling poverty and social exclusion later this year.

  Incapacity and Invalidity Benefit
  Mr. Berry
  To ask the Secretary of State for Social Security how many(a) men and (b) women have claimed (i) invalidity benefit and (ii) incapacity benefit in each year since 1991. [87589]

  Mr. Bayley
  The information is in the table.

  The number of spells of Invalidity Benefit1 (1991–92 to 1994–95) and Incapacity Benefit2 short-term higher rate and long-term rate (the equivalent of Invalidity Benefit) (1995–96 to 1997–98) that commenced during each statistical year

  Men

  Women

  1991–92

  233,000

  90,000

  1992–93

  239,000

  98,000

  1993–94

  242,000

  106,000

  1994–95

  232,000

  109,000

  1995–96

  174,000

  97,000

  1996–97

  179,000

  104,800

  1997–98

  182,000

  104,000

  1Invalidity Benefit from 1991–92 to 1994–95.

  2Incapacity Benefit at the short-term higher and long-term rates (the equivalent of Invalidity Benefit) from 1995–96 to 1997–98.

  Notes:

  1. It is possible for a person to have more than one spell of benefit during a year.

  2. Figures are from a 1 per cent. sample of claimants.

HEALTH

  Yellow Card Scheme
  Mr. Etherington
  To ask the Secretary of State for Health what steps he proposes to take to increase the awareness of the yellow card scheme among medical and dental practitioners. [86157]

  Ms Jowell
  The Medicines Control Agency (MCA) and the Committee on Safety of Medicines (CSM) continue to investigate methods to increase the awareness of the yellow card scheme among medical and dental practitioners.

  A survey of general practitioners was recently undertaken and consideration is currently being given to the findings. Steps that have already been taken or are planned include:
  Education:

  A forthcoming edition of "Current Problems in Pharmacovigilance" will include a special feature on what happens to reports of suspected adverse reactions and how they help to protect public health.

  The MCA and CSM representation and presentations at conferences attended by doctors and pharmacists.

  Encouraging Medical Schools to include adverse drug reactions and promote an understanding of the methods of drug safety monitoring as core parts of the curriculum.

  Publication of articles in medical and pharmaceutical journals.

  Making yellow cards more widely available and easier to use and introducing alternative reporting methods eg fax, phone and electronic.
  435
  An electronic yellow card that automatically populates the fields of a pre-formatted yellow card and allows the GP to send the report directly to the MCA via a modem is already in use by a number of GPs.

  Improving feedback on the scheme, including changing the format and content of the bulletin "Current Problems in Pharmacovigilance" and the MCA and CSM internet homepages.

  Wheelchairs
  Mr. Paul Marsden
  To ask the Secretary of State for Health what maintenance checks are made on refurbished NHS wheelchairs before they are despatched to disabled people; and if he will make a statement. [87571]

  Mr. Hutton
  National Health Service Supplies arranges contracts on behalf of NHS trusts for the repair, modification and maintenance of wheelchairs.

  Rehabilitation engineers are employed by NHS trusts and among their duties carry out checks on a representative batch of the work completed by the repairers. If the batch inspected fails to meet the standard required, the whole consignment is rejected and has to be reprocessed by the repairer.

  Nurses (Costs)
  Mr. Öpik
  To ask the Secretary of State for Health (1) what is the average daily cost to the NHS of employing nursing staff through private employment agencies, at each grade; and if he will make a statement; [87425]

  (2) what is the average daily cost of nursing staff employed directly by the NHS, at each grade; and if he will make a statement. [87426]

  Mr. Denham
  The information requested is not available centrally.

  Insulin Pen Needles
  Mr. Cummings
  To ask the Secretary of State for Health when he expects pen needles used by insulin-dependent diabetics to be available free of charge; and if he will make a statement. [87641]

  Mr. Sanders
  To ask the Secretary of State for Health when he expects to make an announcement concerning the prescribing of insulin pen needles; and if he will make a statement. [87644]

  Mr. Denham
  We have received representations from most of the organisations consulted. We are considering them, and are seeking clarification on certain points before we make our final decisions.

  ME
  Mr. Paul Marsden
  To ask the Secretary of State for Health if he will make a statement on progress made by the working group on ME. [87872]

  Mr. Hutton
  The chronic fatigue syndrome/myalgic encephalomyelitis working group, supported by a sub group looking at children's issues and a wider reference group, is making good progress and remains on target to report to the Chief Medical Officer by the end of next year.

  Cloning
  Shona McIsaac
  To ask the Secretary of State for Health when he expects the Government response to the Joint Human Genetics Advisory Commission and Human Fertilisation and Embryology Authority report, "Cloning Issues in Reproduction, Science and Medicine", to be published. [88432]

  Ms Jowell
  The Government's response to the joint Human Genetics Advisory Commission (HGAC) and Human Fertilisation and Embryology Authority (HFEA) report, "Cloning Issues in Reproduction, Science and Medicine" has today been placed in the Library.

  Following public consultation, the joint HFEA/HGAC report's recommendations included the proposal that consideration be given to regulations under the Human Fertilisation and Embryology Act 1990 to allow research for therapeutic purposes which involved cloning techniques.

  The Government reaffirm their policy that human reproductive cloning is ethically unacceptable and cannot take place in this country. Also, more evidence is needed of the potential benefits to human health before the use of cloning for therapeutic purposes is allowed in research. We recognise that regulations to allow therapeutic research should be very carefully considered. We believe, however, that more evidence is required of the need for such research, its potential benefits and risks and that account should be taken of alternative approaches that might achieve the same ends.

  That is why we have asked the Chief Medical Officer, Professor Liam Donaldson, to set up and chair an independent expert advisory group to seek the views of a range of experts, both here and abroad, so that we have a clearer idea of the potential benefits of such research for human health.

  We expect it will begin work during the summer and report its findings to Ministers early next year.

  We welcome the HGAC/HFEA report's recognition that the safeguards currently in place are wholly adequate to prevent human reproductive cloning in the United Kingdom, and that the Government's policy of forbidding this practice received support during the public consultation.

  The Government accept the report's recommendations that the adequacy of the safeguards and related issues should be kept under review in order to address public concerns about the rapidity of development in these areas at the cutting edge of science and medicine.

  NHS Procurement
  Mr. Grogan
  To ask the Secretary of State for Health what plans he has to modernise NHS procurement. [88643]

  Mr. Denham
  My right hon. Friend the Secretary of State for Health is today publishing the report of a Cabinet Office Review of NHS Procurement which sets out a range of recommendations to develop NHS procurement.
  437
  Copies have been placed in the Library. We have accepted the broad thrust of these recommendations and the Department of Health, NHS Trusts, and the NHS Supplies Authority will now start to put in place the new arrangements to improve the efficiency and effectiveness of purchasing and supply in the NHS.

  A key recommendation was to establish a Supplies Co-ordination Body, drawn from the existing NHS Supplies Authority purchasing and strategy functions to provide a stronger central focus for procurement work. We are announcing today our intention to establish a NHS Purchasing and Supply Agency from 1 April 2000 to take this work forward in the Department of Health.

  Waiting Times
  Mr. Steen
  To ask the Secretary of State for Health what the waiting times are for orthopaedic (i) initial consultation and (ii) operations in(a) Dorset, (b) Somerset and (c) Bristol; and if he will make a statement on the procedures for the referral of a patient for an operation to a hospital outside his health authority area. [88020]

  Mr. Denham
  The latest information available on inpatient and outpatient orthopaedic waiting times in Avon, Dorset and Somerset Health Authorities is shown in the tables:

  Percentage

  Avon

  Dorset

  Somerset

  Waiting time for trauma and orthopaedic inpatients—Quarter 4 1998–99

  0–5 months

  57

  100

  70

  6–11 months

  34

  0

  25

  12–17 months

  9

  0

  5

  18 months plus

  0

  0

  0

  Waiting time for trauma and orthopaedic outpatients—Quarter 4 1998–99

  0–3 weeks

  25

  20

  20

  4–12 weeks

  30

  46

  29

  13–25 weeks

  19

  32

  29

  26 weeks plus

  26

  2

  22

  Under the new arrangements for commissioning patient services, general practitioners and consultants will retain the clinical freedom to refer patients for the most appropriate treatment and will base their decision on their professional judgment and assessment of the case.

  Where there are consistent patterns of referrals to a service, whether a specialised service or more locally, these are being built into service agreements. Cases that do not fit this will be covered by the new arrangements for out of area treatments. Unlike the extra contractual referral arrangements, there is no formal prior approval mechanism for out of area treatments, so the process for such referrals is simpler.

  All out of area treatment referrals will be covered by the standards for quality and effectiveness specified in the main commissioner's service agreement and will be treated under the same agreements and on exactly the same basis.

EDUCATION AND EMPLOYMENT

  Departmental Press Releases
  Mr. Keetch
  To ask the Secretary of State for Education and Employment what was the number of pages issued as press releases from his Department for 16 and 17 June; and if he will make a statement. [87973]

  Mr. Mudie
  The Department issued nine Press Releases consisting of 29 pages.

  Age Diversity
  Dr. Cable
  To ask the Secretary of State for Education and Employment by what means he plans to monitor the effectiveness of the recently published code of practice for age diversity in employment. [87855]

  Mr. Andrew Smith
  We plan to evaluate fully the effectiveness of the Code of Practice for Age Diversity. The evaluation will look in detail at employer policies and practices in recruitment and employment and the impact this has on age diversity in their workforce. After a competitive tendering exercise, we have commissioned an independent organisation, NOP, to carry out a large scale research project to help evaluate the effectiveness of the Code.

  An employer survey will involve telephone interviews with a random sample of companies employing 10 or more people. The sample will provide a good coverage of different industrial sectors, regions and size of employers. There will also be in-depth case studies in order to explore practices and attitudes towards age discrimination in employment in more detail and to discuss the issues with managers and workers at the establishment.

  In addition, a random sample of older people will be interviewed on their current situation and their employment experiences and on whether they have experienced any employment discrimination on grounds of age.

  In order to provide a baseline against which to measure change, an initial survey or employers and individuals has been carried out prior to the publication of the Code. Two further surveys will be carried out, towards the end of this year and in late Autumn 2000 to measure the impact of the Code. The evaluation will be completed and findings published early in 2001.

  We will also be using the range of key labour market indicators that we set out in Annex E of Action on Age to monitor changes and trends in the labour market activity of older workers. These will be published annually in June/July.

  Expelled Pupils
  Dr. Cable
  To ask the Secretary of State for Education and Employment how many year 11, 10 and 9 pupils were expelled from schools in London and the South East in 1997–98. [87856]
  439
  Ms Estelle Morris
  The information is not available in the form requested. However, the number of permanent exclusions for pupils aged 15, 14 and 13 is shown in the following table:

  Academic year 1997–98 (age as at August 1997)

  15

  14

  13

  Inner London

  106

  174

  147

  Outer London

  250

  349

  249

  London (Total)

  356

  523

  396

  South East

  355

  513

  355

  Total (London and South East)

  711

  1,036

  751

  This total represents a significant reduction from the 1996–97 year when 757 pupils aged fifteen, 1,070 pupils aged fourteen and 847 pupils aged thirteen were permanently excluded from schools in London and the South East.

  Rainsford School, Chelmsford
  Mr. Burns
  To ask the Secretary of State for Education and Employment, pursuant to his answer of 21 May 1999,Official Report, column 475, when he expects to reach a decision on the appeal made by Rainsford School, Chelmsford, against the direction of Essex County Council to admit a pupil, whose name has been supplied to his Department. [88081]

  Ms Estelle Morris
  Officials have now received the necessary information from Essex LEA and are drawing up advice for my right hon. Friend the Secretary of State to make his final decision on the case shortly.

  EU Education Council
  Mr. Sutcliffe
  To ask the Secretary of State for Education and Employment what was the outcome of the Council of EU Education Ministers held on 7 June. [88573]

  Mr. Andrew Smith
  On 7 June, the Council of EU Education Ministers held an exchange of views on the preparations for the implementation of the new EC education and training programmes Leonardo da Vinci II and Socrates II. Ministers also discussed the contribution of education to the European Employment Pact and Forward Planning in the field of education.

  Ministers received information on the Conference of European Education Ministers in Budapest from 24 to 26 June 1991, and on the Conference of EU Higher Education Ministers which will take place in Bologna on 18 and 19 June. No formal decisions were taken.

  A copy of the official minutes of the Council will be placed in the Library when they become available.

  School Standards and Framework Act 1998
  Mr. Watts
  To ask the Secretary of State for Education and Employment what plans he has to consult on draft regulations under section 38 of the School Standards and Framework Act 1998. [88572]

  Ms Estelle Morris
  These are significant regulations on which it will be important to have the widest debate. The Education Sub-Committee of the Education and Employment Select Committee is conducting an Inquiry into the Role of Governing Bodies, taking evidence from governing body, head teacher and other interests. As the 440
  Inquiry is expected to be completed before the summer recess, I have written to the Chairman of the Sub Committee, my hon. Friend the Member for Croydon, North (Mr. Wicks), to inform him that we plan to consult on the regulations in September 1999 to enable account to be taken of the Inquiry's recommendations. Copies of my letter have been placed in the Library.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Special Advisers
  Mr. Tyrie
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list the occasions when special advisers in his Department have travelled abroad in an official capacity accompanied by Ministers; and if he will give the total travel cost of each occasion and the place visited. [82431]

  Mr. Matthew Taylor
  To ask the Secretary of State for the Environment, Transport and the Regions on what dates special advisers from his Department have travelled abroad on official business since 2 May 1997; which countries were visited on each occasion; and what were the names of the special advisers who travelled abroad on each occasion. [87410]

  Mr. Prescott
  In the period 2 May 1997 to 31 March 1999, Special Advisers in my Department have accompanied Ministers overseas in an official capacity on 36 occasions to Asia and the Far East, Australasia, the USA, South America and mainland Europe. The total cost of travel and any hotel accommodation is £68,500. All travel complied with the requirements of the Ministerial Code and the Civil Service Management Code.

  A303(T)
  Mr. Key
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement about progress towards construction on the A303 (T) of(a) the Winterbourne Stoke bypass, (b) the cut-and-cover tunnel past Stonehenge and (c) a flyover at Countess Roundabout. [86846]

  Ms Glenda Jackson
  The responses to the Public Consultation on these proposals are being considered. An announcement will shortly be made.

  Drivers (Licences and Insurance)
  Mrs. Curtis-Thomas
  To ask the Secretary of State for the Environment, Transport and the Regions if he will estimate the numbers of drivers(a) driving without a full licence and (b) driving without adequate insurance; and what plans he has to reduce these numbers. [87149]

  Ms Glenda Jackson
  In 1997 there were 130,500 prosecutions for driving without a licence, 46,000 for driving while disqualified and 48,500 for failing to produce a driving licence. This suggests that in any one year 225,000 people or approximately 0.8 per cent. of drivers are detected driving while unlicensed. We intend, when a suitable legislative opportunity occurs, to introduce legislation to empower police services to have
  441
  direct access, in defined circumstances, to the driver licensing database so that offences can be more readily detected at the roadside.

  It is estimated that between 4 per cent. and 6 per cent. of motorists drive while uninsured, an offence for which 310,500 people were prosecuted during 1997. Plans for a motor insurance database have been drawn up by the insurance industry with the support of my Department. Once implemented, police will be able to check insurance details at the roadside.

  Rail Services (Carriage of Bicycles)
  Mr. Bradshaw
  To ask the Secretary of State for the Environment, Transport and the Regions if he will discuss with the Office of Passenger Rail Franchising and South West Trains the re-instatement of bicycle carriage on all trains to a minimum of 10 spaces per five car train. [87256]

  Ms Glenda Jackson
  The franchise agreements which govern the provision of service require train operators to provide facilities for the carriage of bicycles, so far as it is practicable for them to do so and subject to the availability of space on their rolling stock. The only five car trains operated by South West Trains are Wessex Electrics on services from London Waterloo to Southampton—Bournemouth, Weymouth and Poole. These

  Date

  Location

  DETR

  Irish Minister

  23 February 1998

  Dublin

  Angela Eagle

  Tom Kitt, Minister for Labour, Trade and Consumer Affairs

  24–25 April 1998

  Chester

  Michael Meacher

  Noel Dempsey, Minister for the Environment

  25 January 1999

  London

  Glenda Jackson

  Mary O'Rourke TD, Minister for Housing

  19 February 1999

  Dublin

  Hilary Armstrong

  Robert Molloy, Minister for Housing

  25 February 1999

  London

  Michael Meacher

  Joe Jacob, Minister for Agriculture

  Relevant officials were also in attendance.

  Road Safety (Traffic Speeds)
  Mr. Peter Bottomley
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of how the Slow Down Campaign will benefit vulnerable users of rural roads. [87635]

  Ms Glenda Jackson
  The DETR is currently engaged in a comprehensive review of speed policy. This will include a full assessment of the measures needed to improve speed management in rural areas and the safety of all road users, particularly the more vulnerable pedestrians, cyclists and equestrians. Officials have met a number of interested parties, including the Slower Speeds Initiative (formerly the Slow Down Campaign).

  Mr. Peter Bottomley
  To ask the Secretary of State for the Environment, Transport and the Regions how many crashes on rural roads causing injury were associated with excessive speed, listing the fatalities, serious injuries and slight injuries, in the most recent year for which figures are available. [87634]

  Ms Glenda Jackson
  The national reporting system for injury road accidents does not specifically record whether an accident took place on a "rural road". However, the 1998 casualty data for accidents which took place on roads with a speed limit in excess of 40 mph are shown in the table.
  442
  trains can currently carry five bicycles per five car unit in specially designed racks. We have made it clear that one of the key criteria to be considered in any franchise renegotiation will be the commitment to promote Integrated Transport.

  Welsh Highland Railway
  Mr. Snape
  To ask the Secretary of State for the Environment, Transport and the Regions when he expects to approve the application for an order under the Transport and Works Act 1992 for the reconstruction of the Welsh Highland Railway between Dinas and Porthmadog. [87583]

  Ms Glenda Jackson
  The application is being given the most careful consideration and I will ensure that my hon. Friend is informed of the outcome.

  Ministerial Meetings (Ireland)
  Mr. Matthew Taylor
  To ask the Secretary of State for the Environment, Transport and the Regions on how many occasions Ministers in his Department have held meetings with Ministers and officials of the Irish Government since 1 January 1998 indicating the dates and locations, the Ministers involved and the names of the Irish Ministers and officials in each case. [87428]

  Mr. Prescott
  The information for DETR is as follows:

  The contribution of speed to these accidents is not comprehensively recorded, but it is estimated that speed is a contributory factor in one third of road accidents on all roads.

  Casualties on non built-up1 roads: GB 1998

  Severity

  align="right">Casualties

  Fatal

  1,855

  Serious

  14,321

  Slight

  71,882

  All severities

  88,058

  Note:

  Roads with a speed limit in excess of 40 mph with the exception of motorways

  Listed Buildings
  Mr. Gordon Prentice
  To ask the Secretary of state for the Environment, Transport and the Regions how many listed buildings in each category have been destroyed since 1992. [87629]

  Mr. Raynsford
  My Department records, on a financial year basis, cases where local planning authorities in England notify the Department that they intend to grant consent for the total demolition of a listed building, consents which the Department itself issues, and other total demolitions which are brought to our attention. Since
  443
  the House of Lords judgment in the case of Shimizu (UK) Ltd. v. Westminster City Council, the demolition of a curtilage building is likely to be treated as an alteration and hence is no longer included in the demolition statistics from 1997–98. The figures for the last seven years are:

  Year

  Grade I

  Grade II*

  Grade II

  1992–93

  0

  0

  68

  1993–94

  0

  2

  62

  1994–95

  1

  12

  79

  1995–96

  2

  0

  49

  1996–97

  1

  5

  55

  1997–98

  0

  2

  56

  1998–99

  0

  0

  50

  Records are not kept centrally on the extent to which consents are implemented.

  Recycling
  Mr. Coaker
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what measures he is taking to encourage recycling by(a) local authorities, (b) businesses and (c) individuals; [87950]

  (2) what measures he is taking to encourage a market for recycled products with particular reference to paper; [87951]

  (3) what measures he is taking to encourage the use of recycled products. [87952]

  Mr. Meale
  In July 1998 the Government established a Market Development Group to consider the measures that could be taken to enhance the markets for recycled materials, including paper, and to develop proposals to help overcome any barriers. The Group considered a range of measures, including the use of economic instruments; quality standards and specifications for recycled goods and materials; the concept of eco-design; whether longer term contracts for the sale of recyclable materials might be helpful; and whether it is desirable to set mandatory levels of recycled content for specified goods.

  The Group has now finished its work and its report and recommendations for action will be published for consultation at the same time as the draft waste strategy.

  Wembley
  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with English Partnerships about the regeneration of Wembley around the new English National Stadium. [87792]

  Mr. Raynsford
  English Partnerships, LB Brent, the English Stadium Trust and Development Company, Sports England and the Government Office for London have jointly sponsored a comprehensive regeneration framework for Wembley. This work is shortly to be completed and in its next stage involves an area masterplan running in parallel with the design of the stadium and intended to secure a significant upgrade in Wembley's economic and physical environment.
  444
  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with local police and transport police about passenger safety and crowd control at Wembley Park, Wembley Central and Wembley Stadium stations. [87788]

  Mr. Raynsford
  Wembley's ability to handle large crowds through its public transport infrastructure was central to its successful bid for the new National Stadium. Issues of passenger safety and crowd control are a matter for the long standing and successful liaison arrangements between the stadium operator, local police, London Transport and other rail operators.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what measures he is taking to ensure that the quality of the built environment surrounding the new English National Stadium is adequate to accommodate international events. [87790]

  Mr. Raynsford
  This is a matter for the London Borough of Brent as local planning authority in the first instance. Their unitary development plan contains policies to protect and enhance the built environment around the Stadium which they will apply to the planning application for the Stadium when it is made and those for other development proposals as they come forward.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what measures he will take to ensure that the redevelopment of Wembley Stadium brings economic benefits to the local area. [87845]

  Mr. Raynsford
  The Wembley Park Regeneration Partnership between local public and private sector interests was formed for just this purpose. The Partnership has secured Single Regeneration Budget Challenge Fund support of £15,255,000, towards an overall £137 million seven year programme of infrastructure and training/employment initiatives in the Business Park surrounding the Stadium. The programme commenced in April 1996.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the applicability of lessons learned from the regeneration at Greenwich to the regeneration of Wembley. [87793]

  Mr. Raynsford
  There are distinct differences between the Greenwich Peninsula and the development context at Wembley; not least in the depth and extent of contaminated land and pre-existing levels of transport provision. We are keen however that appropriate lessons from both Greenwich and other key London Regeneration sites are incorporated into the Wembley solution.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with Sport England and the local planning authority on the capacity of the public transport infrastructure around the new English National Stadium. [87789]

  Mr. Raynsford
  Wembley's successful bid for the National Stadium was based on the adequacy of its local transport infrastructure. The impact of the Stadium on this infrastructure will turn both on detailed design which will not be unveiled until mid summer, and the substance of the planning application to the London Borough of Brent, which I understand will not be made until October. In the
  445
  meantime I am a member of the Stadium Development Monitoring Committee, which is the natural focus for visitor management issues, and at which Sport England are represented.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had with the Government Office for London about the SRB5 bid for Wembley submitted by the London Borough of Brent; and on what dates. [87794]

  Mr. Raynsford
  My right hon. Friend the Minister for the Regions, Regeneration and Planning met with GOL officials and the London Development Partnership on 14 June to discuss all London bids in the current SRB round.

  Mr. Gardiner
  To ask the Secretary of State for the Environment, Transport and the Regions what plans the Parliamentary Under-Secretary of State, the hon. Member for Hampstead and Highgate (Ms Jackson), has to visit Wembley to inspect the public transport infrastructure around the new English National Stadium. [87791]

  Mr. Raynsford
  My hon. Friend has been invited by the London Borough of Brent to visit the area in early July. No itinerary has yet been finalised but there may well be an opportunity to visit the Stadium environs.

  Liquid Petroleum Gas
  Mr. Laxton
  To ask the Secretary of State for the Environment, Transport and the Regions what grants are available towards the cost of converting private motor vehicles to be able to use liquid petroleum gas. [87959]

  Ms Glenda Jackson
  The Energy Saving Trust's Powershift programme, funded by my Department, provides grants towards the cost of converting new vehicles (up to one year old) to run on alternative fuels, such as liquid petroleum gas. The value of the grant, which can cover up to 75 per cent. of the conversion costs, is determined by the improvement in emission performance as a result of the conversion. To date, the Powershift programme which is targeted at fleet operators has assisted in the purchase of over 1,000 vehicles.

  Voluntary Sports Clubs
  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 10 February 1999,Official Report, column 245, on voluntary sports clubs, what was the outcome of the review into rate relief for non-profit making sports clubs; and if he will make a statement. [87874]

  Mr. Meale
  We are making good progress with the review of the arrangements under which local authorities may grant relief from non-domestic rates to non-profit making sports clubs and will issue a consultation paper later in the year.

  Genetically Modified Crops
  Mr. Baker
  To ask the Secretary of State for the Environment, Transport and the Regions how many hours HSE inspectors have spent undertaking field inspections of genetically modified trial crop sites for each month since October 1997. [87602]
  446
  Mr. Meacher
  [holding answer 22 June 1999]Over the period in question, on average, HSE has devoted 75 inspector hours per month to inspection and enforcement on GM trial sites under the Genetically Modified Organisms (Deliberate Release) Regulations 1997 (as amended) as required by the agency agreement with DETR. The detailed figures requested are given in the following table, up to April 1999, which is the most recently available information.

  Inspection hours

  1997

  October

  58.8

  November

  75.6

  December

  92.4

  1998

  January

  105.2

  February

  79.8

  March

  86.5

  April

  71.4

  May

  56.7

  June

  132

  July

  118

  August

  16.8

  September

  153.3

  October

  109.2

  November

  79.8

  December

  75.6

  1999

  January

  42.3

  February

  21

  March

  0

  April

  58.8

  Transport Council
  Mr. Hood
  To ask the Secretary of State for the Environment, Transport and the Regions what was the outcome of the Transport Council held in Luxembourg on 17 to 18 June; and if he will make a statement. [87977]

  Mrs. Liddell
  The Transport Council met in Luxembourg on 17 June. I represented the United Kingdom.

  The Council expressed its condolences to the French and Austrian transport Ministers following the recent fatal fires in the Mont Blanc and Tauern Tunnels. The Presidency said that, during the coming months, the Council would be considering recommendations on tunnel safety, in accord with the remit of the European Council in Cologne.

  The Council agreed a common position on a draft Directive aimed at avoiding pollution at sea by ensuring that ships discharge their waste while they are in port into properly planned and adequate waste reception facilities.

  A common position was agreed on an amendment to the guidelines on transport Trans-European Networks (TENs), to clarify the eligibility of sea and inland ports for TENs funding.

  The Council agreed a Resolution giving its support to the definition phase of the Galileo satellite navigation project. Ministers agreed that the Council should maintain oversight of this work, and at my request the Resolution included an instruction to the Commission to present the

  447
  results to the Council as soon as they are available, to allow early consideration of the validity of the project and of its advantages compared with current systems and their developments. The Council agreed to my suggestion that the Commission should in any case present a further report to the October Council.

  The Council agreed a Resolution expressing concern about growing air traffic delays. I expressed concern about the inconvenience caused to business and leisure travellers and stressed the need to ensure that the powers in EUROCONTROL' s new Convention were implemented and properly used to improve the situation.

  The Council took note of reports by Member States on action they are taking to deal with the Year 2000 computer problem in their transport sectors, and agreed to return to the issue at the October Council. The Commission undertook to convene a high-level group to consider whether additional action was needed at Community level.

  I joined others at the Council in suggesting that it is time for further progress to be made on EU rail liberalisation. At the end of the debate no agreement was reached, and the Presidency asked for further work to be done.

  Under other business, the Council heard reports from the Commission on its negotiations towards Community membership of EUROCONTROL and the proposed new European Aviation Safety Authority. The Commission also reported on: the successful outcome of the renegotiation of the Warsaw Convention, which brings air passenger liability rights in line with Community rules; the establishment of a high-level group to prepare for an "innovation forum", as requested by the informal Transport Council at Dortmund; and the proposed allocation of quotas for lorry transit traffic through Switzerland.

  Out-of-town Stores
  Mr. Redwood
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on Government policy towards planning applications for out-of-town stores. [88119]

  Mr. Caborn
  The Government's policy toward out-of-town retail development is set out in our Response to the House of Commons Environment Committee report on Shopping Centres [Cmnd 3729], which reaffirmed our commitment to Planning Policy Guidance note 6 (PPG6): Town Centres and Retail Developments. Further clarification of PPG6 was given in answer to a question from my hon. Friend the Member for Hull, West and Hessle (Mr. Johnson) on 11 February 1999,Official Report, columns 309–10.

  Walking
  Mr. Bob Russell
  To ask the Secretary of State for the Environment, Transport and the Regions what proportion of journeys were on foot in the most recent year for which data are available. [88162]

  Ms Glenda Jackson
  In 1995–97, 28 per cent. of journeys in Great Britain were on foot.

  Urban Task Force Report
  Mr. Pearson
  To ask the Secretary of State for the Environment, Transport and the Regions when the Urban Task Force report will be published. [88448]

  Mr. Prescott
  The Urban Task Force report will be published at 10.30 am on Tuesday 29 June. Copies of the Report and the Executive Summary will be placed in the Vote Office and the Library.

  Rail Performance
  Mr. Pickthall
  To ask the Secretary of State for the Environment, Transport and the Regions what is his Department's latest assessment of trends in rail performance. [88571]

  Mrs. Liddell
  My Department has today published the latest quarterly Bulletin of Rail Statistics, a copy of which has been placed in the Library.

  Comparing the fourth quarter of 1998–99 with the fourth quarter of 1997–98, punctuality fell from 93.3 per cent. to 92.5 per cent. This is an unacceptable decline in performance. At the Rail Summit in February this year, rail companies agreed to improve performance year on year.

  A calculation error made in 1996 means that the figures for national average punctuality have previously been understated. This does not affect the percentage punctuality figures that have been published for individual operating companies. The reliability figures are also unaffected.

  However, current measures, including the corrected figures in this Bulletin, remain misleading. They are derived from Passenger Charter statistics, which do not cover all services and allow operators to disregard days ("void days") on which performance is very bad. The shadow Strategic Rail Authority are currently consulting on an improved measure of punctuality and reliability to be finalised this Autumn.

  Punctuality is just one of a number of factors considered important by passengers. The new National Passenger Survey will ensure that all major passenger concerns will be monitored for each TOC. This will allow precise identification of areas for improvement and give passengers a voice in the running of the railway. First results from the National Passenger Survey will be published by the end of the year.

ATTORNEY-GENERAL

  Treasury Counsel (Common Law)
  Mr. Dismore
  To ask the Attorney-General what(a) representations he made, (b) correspondence he had and (c) meetings he held about (i) the creation of the vacancy for Treasury Counsel (Common Law) in May 1997 and (ii) the filling of the vacancy. [88016]

  The Attorney-General
  Soon after I was appointed Attorney-General in May 1997, I became aware of the fact that I would need to appoint a new First Treasury Counsel (Common Law) relatively soon as, although it was a matter for the Lord Chancellor, I believed that the then incumbent might be appointed as a High Court
  449
  judge shortly. The then Solicitor-General and I consulted widely, in meetings between May and November 1997, with members of the senior judiciary, the Treasury Solicitor's Department and others who could assist us in reaching a view as to who should be appointed as the next First Treasury Counsel (Common Law). I appointed Philip Sales after a meeting with him on 17 November 1997.

  My Department had correspondence with the Treasury Solicitor's Department on the subject and latterly with the Lord Chancellor's Department so that the announcement of the judicial appointment could be synchronised with the announcement of Mr. Sales' appointment.

  Hayes v. Attorney-General
  Mr. Dismore
  To ask the Attorney-General if he will place in the Library copies of the witness statements disclosed by the respondent in the case of Hayes v. Attorney General. [88017]

  The Attorney-General
  No. The statements are subject to legal professional privilege.

  Mr. Dismore
  To ask the Attorney-General if he will list the documents disclosed by the respondent in the case of Hayes v. Attorney General and place copies in the Library. [88018]

  The Attorney-General
  No. The documents were disclosed to the applicant only for the purposes of the proceedings in the employment tribunal, where the interests of justice required their disclosure. Many of the documents contain information about third parties which was imparted to me and to others in confidence. I believe that it would be inappropriate to disclose them further. It was not necessary to compile a list of the documents disclosed in the case and to publish a full list now would also breach the confidences referred to above.

AGRICULTURE, FISHERIES AND FOOD

  Bovine TB
  Lorna Fitzsimons
  To ask the Minister of Agriculture, Fisheries and Food what response the Government have made to recommendation 69 of the Standing Committee to the Bern Convention regarding TB and badgers. [88644]

  Mr. Nick Brown
  The Government submitted a formal response to this recommendation on 12 April. A copy has been placed in the House Libraries.

DEFENCE

  Territorial Army
  Mr. Evans
  To ask the Secretary of State for Defence when the closure of the TA base in Caernarfon was announced; and if he will make a statement on the consultation carried out prior to the decision. [82268]

  Mr. Doug Henderson
  [holding answer 27 April 1999]The Territorial Army (TA) Centre in Caernarfon will remain open as the home of Company 3 Caernarfon Detachment, the Royal Welsh Regiment. This was announced on 17 November 1998. The plan was included,450
  but not challenged, during the extensive rounds of consultation with the Army, TA and TAVRAs, held before decisions were taken in November.

  Mr. Paul Marsden
  To ask the Secretary of State for Defence what steps he is taking to encourage recruitment to the Territorial Army. [87876]

  Mr. Doug Henderson
  Territorial Army units continue to recruit locally to meet the overall target of some 10,000 recruits for this year. A national campaign to raise awareness of the TA and to attract recruits was run in February/March of this year involving the press, TV and a National Open Day. This was designed to show that the TA is maintaining its recruitment effort throughout the reform process. A further national campaign specifically aimed at recruiting into the Royal Army Medical Corps is planned for the autumn.

  HMS Newcastle
  Mr. Hancock
  To ask the Secretary of State for Defence what is the (i) current crew size and (ii) establishment of HMS Newcastle; and if he will make a statement. [86379]

  Mr. Doug Henderson
  The ship's company of HMS Newcastle on 11 June 1999 was 215 and her complement 226.

  HMS Monmouth
  Mr. Hancock
  To ask the Secretary of State for Defence if he will make a statement on the long term future of HMS Monmouth. [86384]

  Mr. Doug Henderson
  On current plans HMS Monmouth will remain operational for the foreseeable future.

  HMS Birmingham
  Mr. Hancock
  To ask the Secretary of State for Defence what is the short-term and long-term future of(a) HMS Birmingham and (b) HMS London; and if he will make a statement. [86374]

  Mr. Doug Henderson
  HMS London was decommissioned earlier this month. HMS Birmingham is currently on operational duty and is expected to be decommissioned later this year.

  HMS Beaver
  Mr. Hancock
  To ask the Secretary of State for Defence what is the(a) operational state and (b) future of HMS Beaver; and if he will make a statement. [86373]

  Mr. Doug Henderson
  HMS Beaver was decommissioned earlier this year and has since been placed on the disposal list.

  Helicopters (Royal Family)
  Mr. Brake
  To ask the Secretary of State for Defence under what circumstances Chinook helicopters are made available by his Department for travel by the Royal Family. [87783]

  Mr. Doug Henderson
  The Royal Family's rotary wing air travel requirements are normally met by a dedicated Sikorsky S76C+ operated by the Royal Household or else by chartered helicopter. However, RAF
  451
  Support Helicopters, including the Chinook, are available to transport members of the Royal Family if required, subject to other operational requirements.

  Gambia
  Mr. McDonnell
  To ask the Secretary of State for Defence what talks have taken place between British Military personnel and the Chief of Staff of the Gambian armed forces in recent months; and what was the purpose of the talks. [87948]

  Mr. Doug Henderson
  Two British military officers visited Gambia in May this year. The purpose of the visit was primarily fact finding, but also to make contact with the Gambian military. During the visit the British officers paid a call on the Chief of Staff of the Gambian armed forces, Colonel Jatta. Discussions covered regional peacekeeping matters.

  Submarine Spent Nuclear Fuel Cores
  Mr. Corbyn
  To ask the Secretary of State for Defence if he will list the number of submarine spent nuclear fuel cores that have been transported to Sellafield in each of the last 10 years. [87706]

  Mr. Spellar
  [holding answer 22 June 1999]The number of spent submarine fuel cores that have been transported to BNFL Sellafield for long term storage in each of the last 10 years was:

  Year

  Fuel cores

  1989

  1

  1990

  2

  1991

  1

  1992

  1

  1993

  0

  1994

  1

  1995

  3¼

  1996

  3

  1997

  ¼

  1998

  1

  1999 (to date)

  1

  These figures are rounded to the nearest ¼ reactor fuel core. Each "NTL3M" transport container will carry a number of individual components equivalent to ¼of a submarine reactor fuel core.

  NATO Peacekeeping Force (Young Soldiers)
  Dr. Tonge
  To ask the Secretary of State for Defence what is Her Majesty's Government's policy in relation to the deployment of under 18 year olds from British armed forces in the international peace force in Kosovo. [87976]

  Mr. Doug Henderson
  I refer the hon. Member to the answer 1 gave to my hon. Friend the Member for Wolverhampton, South-West (Ms Jones) on 22 October 1998,Official Report, column 1161, in which I stated that Service personnel would no longer be deployed if under 17 years of age. That policy applies to the operations currently underway in Kosovo.

  Greenwich Hospital
  Ms Oona King
  To ask the Secretary of State for Defence if he will make a statement about the annual financial estimates and accounts for Greenwich Hospital. [88574]
  452
  Mr. Spellar
  Greenwich Hospital is a Crown charity, of which my right hon. Friend is the sole trustee. It derives all its income from its property and investments and applies it for the benefit of seafarers and their dependants. I am today laying before Parliament copies of the audited accounts for Greenwich Hospital for 1997–98. Following an undertaking given during the passage of the Greenwich Hospital Bill in 1967 by the then Under-Secretary of State for the Navy (Mr. Foley) it has been the practice also to place in the Library of both Houses copies of the annual financial estimates for Greenwich Hospital which, nowadays, are prepared solely for this purpose. This practice no longer serves a useful purpose, given the more informative published financial accounts, and I have therefore decided to discontinue it.

  Tomahawk Missiles
  Mr. Menzies Campbell
  To ask the Secretary of State for Defence what proposals he has to replace stocks of Tomahawk missiles used in the Kosovo theatre; what contracts exist with the United States for replacement of Tomahawk stocks; and if he will make a statement. [87829]

  Mr. George Robertson
  This is a matter for the Chief Executive of the Defence Procurement Agency. I have asked the Chief Executive to write to the right hon. and learned Member.

  Letter from Sir Robert Walmsley to Mr. Menzies Campbell, dated 24 June 1999:
  I am replying to your question to the Secretary of State for Defence about proposals for the replacement of stocks of TOMAHAWK missiles used in the Kosovo theatre, and contracts with the United States for replacement of TOMAHAWK stocks. This matter falls within my area of responsibility as Chief of Defence procurement and Chief Executive of the Defence Procurement Agency.
  The arrangements for obtaining replacement TOMAHAWK missiles for those expended in the Kosovo campaign are being discussed with the US government. The US government is approaching these discussions in a positive manner but I am unable to provide further details at present.

  Mr. Menzies Campbell
  To ask the Secretary of State for Defence what is the(a) total expenditure by his Department on Tomahawk missiles from the United States and (b) average cost of each missile, including support costs. [87831]

  Mr. George Robertson
  This is a matter for the Chief Executive of the Defence Procurement Agency. I have asked the Chief Executive to write to the hon. and learned Member.

  Letter from Sir Robert Walmsley, to Mr. Menzies Campbell, dated 24 June 1999:
  I am replying to your question to the Secretary of State for Defence about the Ministry of Defence's total expenditure on TOMAHAWK missiles from the United States and the average cost of each missile, including support costs. This matter falls within my area of responsibility as Chief of Defence Procurement and Chief Executive of the Defence Procurement Agency.
  Total expenditure on the procurement of Tomahawk missiles, under the current Foreign Military Sales case with the US, is to be some £52M. The average procurement cost per missile is just over £800K. In addition each missile is likely to need two planned refurbishments at a cost of £210K per refurbishment, but no such payments will be incurred for missiles which have been expended.

  453
  Missile costs make up only a part of the overall cost of procuring the Tomahawk system. Overall costs include the procurement of the missiles, test and training systems, submarine weapon handling, and fire control systems, and provision of a mission planning and targeting facility.

  Mr. Menzies Campbell
  To ask the Secretary of State for Defence how many Tomahawk missiles were(a) available for use by the British armed forces and (b) in stock on (i) 20 March and (ii) 16 June. [87833]

  Mr. George Robertson
  I am withholding the detailed information you requested under Section 1a of the Code of Practice on Access to Government Information. Sufficient Tomahawk missiles were available throughout the conflict to enable the UK to maintain its significant contribution to the successful NATO campaign.

  Defence Aviation Repair Agency
  Mr. Menzies Campbell
  To ask the Secretary of State for Defence if he will make a statement on the progress made with setting up the Defence Aviation Repair Agency. [87830]

  Mr. Spellar
  The Defence Aviation Repair Agency (DARA) came into being on 1 April this year and I had the pleasure of attending the Agency's Launch Day on 7 April 1999 at St. Athan. DARA has been formed by merging the former Naval Aircraft Repair Organisation with elements of the RAF's Maintenance Group Defence Agency and provides MOD's deep maintenance (third line) capability for fixed and rotary wing aircraft. The Ministerial Advisory Board, which I chair, has approved the DARA's Corporate Plan which is now being implemented. This includes moving to Trading Fund status in due course.

  Mr. Menzies Campbell
  To ask the Secretary of State for Defence what plans he has to renegotiate the RAF repair, overhaul modification and upgrade contracts held by private companies once responsibility for such contracts is transferred to the new Defence Aviation Repair Agency; which RAF repair, overhaul, modification and upgrade contracts are currently under review; and if he will make a statement. [87832]

  Mr. Spellar
  My Department has no plans to renegotiate or review these contracts as a result of the launch of the Defence Aviation Repair Agency (DARA) and no responsibility for the administration of such contracts is being passed to the Agency.

  TA Deployment
  Mr. Duncan Smith
  To ask the Secretary of State for Defence how many members of the Territorial Army are currently deployed on operations in(a) Kosovo, (b) Bosnia and (c) Germany. [88128]

  Mr. Doug Henderson
  I refer the hon. Member to the answer I gave to the hon. Member for Eastbourne (Mr. Waterson) on 21 June 1999,Official Report, column 300. There are currently no members of the Territorial Army deployed to Germany.

  Depleted Uranium
  Mr. Mackinlay
  To ask the Secretary of State for Defence, pursuant to his answer of 16 June 1999,Official Report, column 148, if he will place in the Library the
  454
  March 1999 paper produced by his Department's Gulf Veterans' Illness Unit in respect of testing for the presence of depleted uranium. [87834]

  Mr. Doug Henderson
  Copies of the detailed paper entitled "Testing for the Presence of Depleted Uranium in UK Veterans of the Gulf Conflict: The Current Position" were placed in the Library of the House when it was published on 19 March 1999.

  Mr. Mackinlay
  To ask the Secretary of State for Defence, pursuant to his answer of 16 June 1999,Official Report, column 146, on depleted uranium, by what means service personnel can identify a vehicle damaged by depleted uranium ammunition; and if he will make a statement. [87835]

  Mr. George Robertson
  If Service personnel must, for operational reasons, approach damaged vehicles, they will visually examine the vehicle to identify if the damage is consistent with depleted uranium calibre ammunition. However, Service personnel are instructed not to approach any damaged vehicles unless operationally necessary, due to the wide variety of dangers they present.

WALES

  Gwrych Castle
  Mr. Evans
  To ask the Secretary of State for Wales what representations he has received regarding the condition of Gwrych Castle; and if he will make a statement. [87987]

  Mr. Michael
  Since June 1997 I have received letters on six occasions (from three sources) expressing concern about the deteriorating condition of Gwrych Castle. It is privately owned but the ownership is presently subject to legal dispute. When this has been resolved, Cadw: Welsh Historic monuments would be willing to consider grant assistance towards a project to repair the fabric of this Grade 1 listed building.

  Following the transfer of functions, CADW will be responsible to the National Assembly.

  Education Budgets
  Mr. Ruane
  To ask the Secretary of State for Wales if he will list the education budgets for each county in Wales for(a)1998–99 and (b)1999–2000, indicating the additional allocations of ring-fenced education funding from central Government. [87985]

  Mr. Hain
  The information requested is given in the following table.

  Local authority education budgets1

  £000

  Budget

  Budget

  Local authority share of earmarked funding

  1998–99

  1999–2000

  1998–99

  1999–2000

  Isle of Anglesey

  28,906

  30,755

  1,196

  1,689

  Gwynedd

  47,433

  50,045

  1,979

  2,833

  Conwy

  40,172

  42,388

  1,651

  2,407

  Denbighshire

  36,711

  37,732

  1,554

  2,233

  Flintshire

  59,366

  62,705

  2,417

  3,494

  Wrexham

  46,783

  49,392

  1,904

  2,737

  Powys

  55,711

  58,850

  2,217

  3,158

  Ceredigion

  32,580

  34,325

  1,234

  1,747

  455

  Local authority education budgets1

  £000

  Budget

  Budget

  Local authority share of earmarked funding

  1998–99

  1999–2000

  1998–99

  1999–2000

  Pembrokeshire

  50,340

  53,410

  1,986

  2,853

  Carmarthenshire

  75,554

  81,158

  2,942

  4,165

  Swansea

  90,124

  93,102

  3,588

  5,142

  Neath Port Talbot

  60,023

  63,616

  2,224

  3,215

  Bridgend

  54,499

  57,682

  2,198

  3,155

  Vale of Glamorgan

  45,366

  47,707

  1,961

  2,833

  Cardiff

  117,464

  124,672

  4,868

  7,189

  Rhondda Cynon Taff

  108,752

  114,760

  4,208

  6,014

  Merthyr Tydfil

  28,401

  29,991

  1,114

  1,571

  Caerphilly

  73,246

  78,797

  3,055

  4,404

  Blaenau Gwent

  30,587

  32,087

  1,214

  1,762

  Torfaen

  39,309

  41,784

  1,654

  2,380

  Monmouthshire

  31,377

  32,788

  1,281

  1,864

  Newport

  59,228

  62,340

  2,323

  3,356

  Wales

  1,211,932

  1,280,086

  48,767

  70,201

  1Net of all education specific grants and excluding all continuing education and payments to the Further and Higher Education Funding Councils

  Source

  Local authority revenue account returns

  This will be a matter for the National Assembly for Wales from 1 July 1999.

LORD CHANCELLOR'S DEPARTMENT

  Law Reform
  Mr. Peter Bottomley
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the timetable for the implementation of outstanding Law Commission recommendations for law reform. [87781]

  Mr. Vaz
  The Government will assess the priority for legislation implementing Law Commission recommendations in the context of the legislative programme as a whole.

  Mr. Peter Bottomley
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans he has for legislation to implement outstanding Law Commission reports on law reform. [87780]

  Mr. Vaz
  The Government are considering carefully a number of Law Commission reports. Legislation implementing those Law Commission recommendations, which the Government accept, will be introduced when Parliamentary time allows.

  Mr. Peter Bottomley
  To ask the Parliamentary Secretary, Lord Chancellor's Department what assessment he has made of the savings in costs to public and private funds of the implementation of outstanding Law Commission recommendations over the last four years. [87782]

  Mr. Vaz
  No such assessment has been made to date. However, under the Better Regulation provisions we will in future be required to make an assessment of the risks, costs and benefits whenever new legislation is published.

  Treasury Counsel (Common Law)
  Mr. Dismore
  To ask the Parliamentary Secretary, Lord Chancellor's Department what(a) representations he
  456
  made, (b) correspondence he had and (c) meetings he held about (i) the creation of the vacancy for Treasury Counsel (Common Law) in May 1997 and (ii) the filling of the vacancy. [88019]

  Mr. Vaz
  None.

CABINET OFFICE

  Government Consultation Papers
  Mr. Paul Marsden
  To ask the Minister for the Cabinet Office if he will make publicly available on a monthly basis a list of Government consultation papers, indicating the title, summary of the proposals, the issue date and the deadline for submissions. [87867]

  Mr. Kilfoyle
  I have no plans to publish a monthly list of Government consultation papers. Each Government department and agency is responsible for publishing its own consultation papers, including a summary of proposals and a deadline for submissions. Last year, the Cabinet Office published a guide on conducting written consultation exercises. This states that departments should publicise the existence of consultation documents (for example through an approximately targeted press release), and wherever possible the internet should be used to publish and receive replies.

  Ministerial Visits
  Lorna Fitzsimons
  To ask the Minister for the Cabinet Office which Ministers have visited the north-west region since May 1997; and which constituencies they visited. [88389]

  Mr. Kilfoyle
  This information is not held centrally and can be obtained only at disproportionate cost.

  Special Advisers
  Mr. Tyrie
  To ask the Minister for the Cabinet Office if he will make a statement on the pension arrangements for departmental Special Advisers. [87963]

  Mr. Kilfoyle
  The pension arrangements for Special Advisers are set out in the published Cabinet Office document, "Special Advisers Pay System", which is available in the Libraries of the House.

  Special Advisers are not eligible to be members of the Civil Service Pension Scheme, nor do their salaries include any element for pension contribution. Instead, a pension contribution of up to a maximum of 16 per cent, of salary is paid directly into an Adviser's existing or new occupational or personal pension scheme.

TREASURY

  Families (Support)
  Ms Stuart
  To ask the Chancellor of the Exchequer what measures he has put in place to support families. [87068]
  457
  Mr. Milburn
  The Government have announced an ambitious programme of support for families which will mean that by the end of this Parliament we will be spending an extra £6 billion a year on our 13.8 million children.

  Families will benefit from the largest ever increase in Child Benefit—an extra £2.50 a week for the eldest child from this April—and further three per cent. real increases for all children from next April. Together with the introduction of the new Children's Tax Credit in April 2001, a family with one child will receive double the support for their child compared to May 1997—£23 a week. We are also targeting extra support on the poorest families through the introduction of the Working Families Tax Credit and increases in IS. On average, £750 more will be going to each of 5.75 million children in low-income households every year by the end of this Parliament. The WFTC will make 1.5 million families on average £24 a week better off, benefiting three million children. It will provide a guaranteed minimum income of £200 a week (£10,400 a year for a family with someone in full-time work on the National Minimum Wage.

  These measures combined will lift 700,000 children out of poverty. Families with children will, on average, be £740 a year better off.

  English Wine (Duty)
  Mr. David Heath
  To ask the Chancellor of the Exchequer what assessment he has made of the effect of current duty rates on the competitiveness of English wines. [87069]

  Mrs. Roche
  The Chancellor takes account of the state of all sectors of the alcoholic drinks industry in the run up to the Budget.

  EU Withholding Tax
  Sir Michael Spicer
  To ask the Chancellor of the Exchequer what his policy is on the proposals for a European withholding tax. [87070]

  Mr. Loughton
  To ask the Chancellor of the Exchequer if he will make a statement on the European Commission's proposal for a council directive to ensure a minimum of effective taxation of savings income in the form of interest payments within the Community. [87075]

  Dawn Primarolo
  The Government will not accept the draft directive on Savings in its current form because of its likely impact on our financial markets, particularly the Eurobond market. The ECOFIN Council and the European Commission have come to accept our case, agreed a further review and asked us to submit our proposals for excluding the Eurobond market.

  We have received a number of representations from both individuals and City Institutions who share our concern to protect the interests of the UK financial markets. We welcome dialogue and are continuing to work closely with the City.

  Mr. Syms
  To ask the Chancellor of the Exchequer what assessment HM Treasury has made of the effects of the proposed European withholding tax on the financial sector in London. [87084]
  458
  Dawn Primarolo
  The treatment of international bonds as provided for under the draft European Commission Directive on the taxation of savings risks serious damage to the competitiveness of EU financial markets, in particular wholesale markets. The current draft Directive is therefore unacceptable to the UK.

  Public Service Agreements
  Mr. McNulty
  To ask the Chancellor of the Exchequer if he will make a statement about Public Service Agreements on key public services. [87071]

  Mr. Milburn
  We have fulfilled our commitment to publish Public Service Agreements covering all the public services. They set out the concrete improvements to be delivered in return for the extra investment we are making.

  Single Currency (Convergence Criteria)
  Mr. Robathan
  To ask the Chancellor of the Exchequer if he will make a statement on the convergence criteria to be adopted prior to joining the single currency. [87073]

  Ms Hewitt
  The EC Treaty stresses the need for a"high degree of sustainable convergence"
  in EMU. The Government's fundamental economic test for EMU membership is the same. I have set out five economic tests which must be met before UK membership of the single currency can be considered. Our assessment of those tests concluded that the UK needs a period of stability in order to demonstrate convergence which is settled and sustainable. The Government's new macro-economic framework will help to deliver that stability.

  Working Families Tax Credit
  Mr. Blizzard
  To ask the Chancellor of the Exchequer if he will estimate the number of families who will be eligible for the Working Families Tax Credit in its first year of operation. [87074]

  Dawn Primarolo
  We estimate that 1.4 million families will be eligible for the Working Families Tax Credit in 2000–01, the first full year of operation. These families will on average be £24 a week better off from WFTC alone, or £1,280 a year. Taken together with the reforms to tax, NICs and the largest ever increases in Child Benefit, the WFTC will lift 700,000 children out of poverty.

  Mr. John Smith
  To ask the Chancellor of the Exchequer if he will make a statement on the implementation of the Working Families Tax Credit. [87093]

  Dawn Primarolo
  Work is proceeding to plan for the introduction of the Working Families' Tax Credit. From October, this new Tax Credit will provide a guaranteed minimum income of £200 for families with one member in full time work earning the National Minimum Wage.

  Third-world Debt
  Mr. David Stewart
  To ask the Chancellor of the Exchequer what progress was made at the G8 summit in Cologne on reducing the debt burden for the world's poorest countries. [87076]
  459
  Mr. Simon Hughes
  To ask the Chancellor of the Exchequer what progress was made on debt relief at the Cologne summit. [87081]

  Mr. Gordon Brown
  At the G7 Finance Ministers Meeting in Frankfurt, I took forward my proposals for faster, deeper and wider debt relief. Agreement was secured at the G8 Summit in Cologne on an initiative which will reduce the debt owed by the poorest countries by $100 billion.

  Pensioners (Taxation)
  Mr. Bill O'Brien
  To ask the Chancellor of the Exchequer what representations he has received from pensioner organisations concerning tax payments from pensioners' incomes; and if he will make a statement. [87078]

  Dawn Primarolo
  Treasury Ministers have received a number of representations on income tax matters, including matters relating to pensioners.

  VAT (Service Industries)
  Mr. Bob Russell
  To ask the Chancellor of the Exchequer if he will make it his policy to raise the VAT threshold for businesses in the service sector. [87079]

  Dawn Primarolo
  No. A differential threshold for service traders would further complicate the VAT system and create uncertainty, thereby increasing compliance costs for business and administrative costs for Government. Recent consultation on the effect and level of the threshold revealed only minimal support for such a change.

  Housebuilding (Brown-field Sites)
  Mr. Grogan
  To ask the Chancellor of the Exchequer what plans he has to introduce fiscal measures to encourage housebuilding on brown-field sites. [87080]

  Mr. Milburn
  The Government have no present plans to introduce fiscal measures to encourage housebuilding on brown-field sites. However, the Deputy Prime Minister has announced the Government's desire to see the proportion of new homes provided on brown-field sites increased to 60 per cent. over the next ten years. The Government are considering a wide range of measures to help achieve this target. We will study the recommendations of Lord Rogers' Urban Task Force with great interest; and will publish an Urban White Paper later in the year.

  Gold Reserves
  Mr. Wilkinson
  To ask the Chancellor of the Exchequer what is his estimate of the present value in sterling of the United Kingdom's gold reserves; and what its valuation was on 1 January. [87082]

  Mr. Milburn
  Table 2 of the Quarterly Report on UK Official Holdings of Foreign Currency and Gold for the period October to December 1998 and January to March 1999 provide a breakdown of the size and composition of the United Kingdom's reserve holdings.

  Economic and Monetary Union
  Dr. Julian Lewis
  To ask the Chancellor of the Exchequer if he will make a statement on the economic tests to be met before any British application to join the single European currency. [87083]

  Ms Hewitt
  In his statement to the House of Commons in October 1997, the Chancellor of the Exchequer set out five economic tests which will have to be met before any decision to join a successful single currency can be taken. Applying the economic tests, the Government have concluded that there is no realistic prospect of the UK economy having demonstrated, before the end of this Parliament, convergence which is sustainable and settled. Barring any fundamental and unforeseen change in economic circumstances, making a decision, during this Parliament, to join is not realistic. This position was restated by the Prime Minister in a statement to the House of Commons on 23 February 1999,Official Report,columns 179–84.

  Mr. Beard
  To ask the Chancellor of the Exchequer if he will make a statement on the effects of UK non-membership of EMU on his policy of ensuring economic stability. [87088]

  Ms Hewitt
  Locking in stability is a key element of the Government's economic strategy. Reform of the macroeconomic policy framework through a new, open and transparent monetary framework and a new fiscal framework is helping to deliver low inflation and sound public finances.

  Achieving sustainable convergence with the euro area is one of the five economic tests which will have to be met before any decision to join is taken.

  Income Tax (Self-assessment)
  Mr. Gordon Prentice
  To ask the Chancellor of the Exchequer how many people have been surcharged for failing to return their completed self-assessment forms on time. [87085]

  Dawn Primarolo
  People who fail to return their completed self-assessment forms on time are charged a penalty of £100, and a further penalty of £100 if the return is more than six months late. Surcharges are applied to people who are late in paying the tax due on their self-assessment. There is a 5 per cent. surcharge where payment is more than 28 days late, and a further 5 per cent. surcharge where payment is more than six months late.

  The numbers of surcharges and penalties are increasing all the time as more late-issued returns become overdue. However, the great majority of returns are issued in April, and returns and payments become due at the end of the following January.

  Figures for the main issue of returns are as follows:

  1996–97 tax return, issued in April 1997

  First fixed filing penalty (issued in February 1998)–670,000

  Second fixed filing penalty (issued in August 1998) –335,000

  First surcharge for late payment (issued in March 1998)–142,000

  Second surcharge for late payment (issued in August 1998)–59,000

  1997–98 tax return, issued in April 1998

  First fixed filing penalty (issued in February 1999) –748,000

  First surcharge for late payment (issued in March 1999)–180,000.

  Kosovo (Cost)
  Mr. Dalyell
  To ask the Chancellor of the Exchequer what(a) has been and (b) he estimates will be the effect on the contingency fund of (i) the conflict in Kosovo and (ii) the measures to be taken following the peace agreement relating to Kosovo. [87086]

  Mr. Milburn
  The Ministry of Defence estimates the total additional cost of Kosovo military operations up to the end of May was £43 million (excluding the costs of munitions). It has been agreed that military costs will form the basis of a claim on the Reserve to the extent that they cannot be absorbed without detriment to other priorities.

  It is too early to say what the costs to Departmental Expenditure Limits or the Reserve will be of all the measures to be taken following the peace agreement.

  Taxation
  Mr. Burns
  To ask the Chancellor of the Exchequer what estimate he has made of the change in tax payable in the last two years. [87089]

  Dawn Primarolo
  Figures for tax receipts were published in table B10 of the Financial Statement and Budget Report.

  Landfill Tax
  Mr. Healey
  To ask the Chancellor of the Exchequer what plans he has for the reform of the landfill tax. [87090]

  Ms Hewitt
  My right hon. Friend announced a number of changes to the landfill tax in his 1999 Budget. The case for any further changes will be examined as and when the need arises.

  Climate Change Levy
  Mr. Swayne
  To ask the Chancellor of the Exchequer if he will make a statement on the proposed climate change levy. [87091]

  Ms Hewitt
  The climate change levy will make a very significant contribution to meeting the Government's legally binding target for reducing greenhouse gas emissions set under the Kyoto Protocol, and their domestic goal of a 20 per cent. cut in carbon dioxide emissions by 2010. The levy will encourage energy efficiency in business and is expected to save around 1.5 million tonnes of carbon a year by 2010.

  The design of the levy reflects closely the recommendations made by Lord Marshall. It will entail no increase in the overall burden of tax on business as revenues will be fully recycled via a 0.5 percentage point cut in the main rate of employer National Insurance Contributions. Business will also benefit from an additional £50 million for schemes aimed at promoting energy efficiency and support for renewable sources of energy, like solar and wind power.

  The Government recognise the need for special consideration to be given to the position of energy intensive industries given their energy usage and exposure to international competition. Consequently, the Government intend to set significantly lower rates of tax for those energy
  462
  intensive sectors that agree targets for improving their energy efficiency and these detailed negotiations are now underway.

  The Government also want to work with business on the detailed design and administration issues relating to the levy and have just completed a consultation covering these issues.

  Mr. Martyn Jones
  To ask the Chancellor of the Exchequer for what reasons the climate change levy is to be imposed on combined heat and power schemes. [87681]

  Ms Hewitt
  It is the intention that climate change levy should be charged on industrial and commercial use of electricity. The levy will be charged at the point of supply to the final consumer which means that the input to generation will be exempt.

  Combined Heat and Power (CHP) schemes are a form of electricity generation. The Customs and Excise consultation document asked for views on whether they should be treated as conventional generators, by relieving their input fuels and applying the levy to their outputs, or afforded special treatment whereby their input fuels are subject to the levy and the electricity they produced relieved. Officials are currently analysing responses to this exercise.

  Economic Stability
  Mr. Ben Chapman
  To ask the Chancellor of the Exchequer what fiscal steps he is taking to ensure economic stability. [87092]

  Mr. Milburn
  The Chancellor's recent Budget continued to lock in sound public finances and to ensure that our tough fiscal rules will be met. By providing a £6 billion boost to the economy, the Budget is supporting monetary policy and helping to steer a course of stability and lay the foundations for high and sustainable levels of growth and employment.

  Tax Hypothecation
  Mr. Gerrard
  To ask the Chancellor of the Exchequer if he will make it his policy to allocate funds raised by particular taxes to specified services. [87094]

  Dawn Primarolo
  No. The Government determine their expenditure according to their priorities. However, we look at each case on its merits.

  Capital Controls
  Mr. Chaytor
  To ask the Chancellor of the Exchequer what is the UK's policy advice to developing countries on capital controls; and what assessment he has made of IMF agreements which prohibit a Government from imposing capital controls. [86942]

  Ms Hewitt
  [holding answer 14 June 1999]We encourage emerging markets to carry out capital account liberalisation in a careful and well sequenced manner. However, the use of controls on capital inflows may be justified during transitional periods as emerging markets strengthen the institutional and regulatory environment in their domestic financial systems. Controls on capital outflows may sometimes be necessary in exceptional
  463
  circumstances. But controls on capital flows, particularly on outflows, carry costs and are no substitute for necessary reforms.

  The international financial crisis has clearly demonstrated that the IMF should play a constructive role in helping countries to liberalise their capital accounts in an orderly way. But the IMF should also further refine its analysis of the experience of countries with the use of capital controls.

  World Bank (Social Principles)
  Ms Drown
  To ask the Chancellor of the Exchequer what measures he is taking to ensure that the social principles drafted by the World bank will be adhered to by the IMF and World bank in any future financial crisis lending. [86988]

  Ms Hewitt
  My right hon. Friend the Chancellor of the Exchequer has consistently stressed the importance of preserving investment in the health, education and social programmes which are essential for growth and poverty reduction. The World bank are currently working with the IMF to translate the social principles into good practices in social policy, and this work is due to be completed by the Annual Meetings later this year. It will create an operational guide for the World bank and IMF which I hope will be drawn upon by the two institutions.

  Ms Drown
  To ask the Chancellor of the Exchequer what progress has been made on incorporating the social principles drafted by the World bank into macro-economic decision-making. [86987]

  Ms Hewitt
  My right hon. Friend the Chancellor of the Exchequer has consistently stressed the importance of preserving investment in the health, education and social programmes which are essential for growth and poverty reduction. He therefore welcomed the endorsement given by the Development Committee at the Spring Meeting in April to the social principles which the World bank had drafted following his call for action in this area at the Annual Meetings last year.

  As a matter of urgency, it was agreed that the World bank should report back to the Annual Meetings on policies and practices that could support national and international implementation of the social principles.

  Individual Savings Accounts
  Mr. Galbraith
  To ask the Chancellor of the Exchequer what plans he has to review the operation of ISAs; and if he will make a statement. [87420]

  Ms Hewitt
  The Government will keep ISAs under review and listen to the views of providers and consumers. A large number of providers are providing both CAT and non-CAT ISAs through a variety of channels and we have no plans to change ISA rules.

  Special Advisers
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer if he will list the people employed as paid 464
  special advisers in his Department since 1 May 1997, the dates of their employment and to which minister each was attached. [87455]

  Ms Hewitt
  The information is as follows:

  Dates of employment

  Name

  From

  To

  Minister served

  Ed Balls

  3 May 1997

  —

  Chancellor

  Charlie Whelan

  3 May 1997

  13 January 1999

  Chancellor

  Ed Miliband

  3 May 1997

  6 April 1999

  Chief Secretary

  Ed Miliband

  10 May 1999

  —

  Chief Secretary

  Andrew Maugham

  6 May 1997

  27 July 1998

  Chief Secretary

  Spencer Livermore

  4 August 1998

  —

  Chief Secretary

  Ian Austin

  21 June 1999

  —

  Chancellor

  Insurance Companies (Regulation)
  Mr. Flight
  To ask the Chancellor of the Exchequer what plans he has to review the working procedures within his Department regarding the regulation of insurance companies. [87628]

  Ms Hewitt
  I have no plans to review working procedures regarding the regulation of insurance companies. The Transfer of Functions (Insurance) Order 1997 transferred Department of Trade and Industry responsibility for regulation of insurance business to the Treasury. The Contracting Out (Functions in Relation to Insurance) Order 1998 empowered the Treasury to authorise a third-party—the Financial Services Authority—to carry out most of these functions from 1 January 1999. Subject to Parliamentary approval, the Financial Services and Markets Bill will vest this responsibility with the Financial Services Authority in its own right. In the meantime, the Treasury retains statutory and policy responsibility.

  Employment Rate (Shrewsbury and Atcham)
  Mr. Paul Marsden
  To ask the Chancellor of the Exchequer how many people were employed in Shrewsbury and Atcham(a) on the last date for which figures are available and (b) in May 1997. [87796]

  Ms Hewitt
  The information requested falls within the responsibility of the Director of the Office for National Statistics. I have asked him to reply.

  Letter from John Kidgell to Mr. Paul Marsden, dated 24 June 1999:
  In the absence of the Director of the Office for National Statistics (ONS), I have been asked to reply to your recent parliamentary question on the number of people employed in Shrewsbury and Atcham.
  Information is available for the number of Employee Jobs, derived from the Annual Employment Survey (AES) for September 1997 (latest available date) and September 1996. The persons holding these jobs may live outside the area shown.

  Employee jobs at September

  Thousand

  Year

  Shrewsbury and Atcham1

  1996

  38.3

  1997

  39.0

  1Local Authority District

  EU Tax Reform (Joint Working Group)
  Mr. Hopkins
  To ask the Chancellor of the Exchequer if he will list the organisations represented on the joint working group with business representatives set up by the Paymaster General to examine EU tax reform; which representatives were invited from the accountancy profession; and if he will make a statement. [87988]

  Dawn Primarolo
  The joint Government-CBI Group on EU tax issues is an informal working group whose main purpose is to allow the Government to get the views of business on European tax matters. At the first meeting of the Group in March, the CBI's team consisted of senior CBI officials and representatives of major companies.

  Private Finance Initiative
  Ms Lawrence
  To ask the Chancellor of the Exchequer when he will publish a revised version of PFI Technical Note No. 1 on How to Account for PFI Transactions. [88733]
  466
  Mr. Milburn
  I am today issuing revised Treasury guidance, approved by the Financial Reporting Advisory Board (FRAB), setting out the rules governing accounting for PFI transactions within Government.

  I am placing a copy of the Revised Guidance in the Library.

  Pensioner Incomes
  Mr. Waterson
  To ask the Chancellor of the Exchequer what proposals he has to improve the fiscal position of people over retirement age. [87077]

  Mr. Milburn
  The Government recognise that pensioners need fair and decent support. The average pensioner household will be £240 a year better off as a result of measures in the March 1998 and March 1999 Budgets. These measures include a fivefold increase in the winter allowance from £20 to £100, the introduction of a Minimum Tax Guarantee which will mean that no-one over 64 will pay income tax unless their income is over £110 a week, and the minimum income guarantee through Income Support which is set at £75 per week for single pensioners from April 1999.

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Bristol.): The LORD CHANCELLOR on the Woolsack.

Teachers: Recruitment
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
Whether an assessment has been made of the success or otherwise of their campaign for the recruitment of more teachers.
Lord Hunt of Kings Heath: My Lords, we have a range of successful strategies to boost recruitment to teaching, including the £5,000 incentives for new maths and science teachers, which have brought a substantial increase in applications, and the Teacher Training Agency's current advertising campaign. The recent quinquennial review of the Teacher Training Agency has recommended that the TTA makes recruitment the top priority for the next phase of its work.
Lord Dormand of Easington: My Lords, I thank my noble friend for that helpful reply. The advertising campaign to which he refers, with the theme of "No one forgets a successful teacher" is worthy, but is my noble friend aware that it needs to be associated with better salaries and good long-term projects? What evidence is there that the "golden hello" payments are being successful and, perhaps more importantly, what are the Government doing with regard to research into the attitudes of fifth and sixth-formers and undergraduates towards teaching?
Lord Hunt of Kings Heath: My Lords, my noble friend has raised an important point. I believe that the advertising campaign was successful. Certainly the information line run by the TTA has had 10,000 extra inquiries. While it is early days there is certainly evidence that compared with this time last year we have received considerably more applications from maths and science students who wish to undertake a PGCE. I am not aware of any research that is being undertaken on this matter but I shall take that point back to my ministerial colleagues. I believe that we are creating a virtuous circle; namely, the higher the standards of teaching in schools, the more pupils in schools will think that teaching is a good career for them. In addition, the Green Paper contains proposals to improve the career structure of teachers.
Lord Tope: My Lords, what success has been achieved in recruiting older people with experience in commerce and industry into the teaching profession? Is the noble Lord aware that when such people qualify as teachers they find it virtually impossible to obtain a full-time permanent post in a school, for no apparent
1058
reason other than age? Are the Government concerned about this problem and, if so, what do they propose to do about it?
Lord Hunt of Kings Heath: My Lords, the noble Lord has raised an important issue. I am sure that every Member of this House would be very much opposed to any ageist policy in education or elsewhere. On 14th June we published a code of practice on age diversity in employment which makes specific mention of the teaching profession. As part of our efforts to boost better recruitment of teachers, a new scheme aims to recruit 600 new mature maths and science teachers. It is interesting to note that the scheme will match them to on-the-job training in schools. The TTA has awarded a contract to a company called Timeplan to implement that scheme.
The Earl of Lauderdale: My Lords, is recruitment inhibited by the clamour for payment by results? How does recruitment of modern language teachers compare with recruitment of maths and science teachers?
Lord Hunt of Kings Heath: My Lords, I do not think there is any suggestion that this is simply a case of crude payment by results. The proposals in the Green Paper seek to reward teachers who perform well in schools but they are measured against careful criteria and a careful assessment process. Certainly there has been concern about the reduction in the number of people coming forward to train to be modern language teachers. We shall keep that situation under close review to see whether any special measures need to be taken. But in addition, in order to attract able people to the teaching profession it is essential to reinforce the message of success which we see in many schools and among many teachers, and to implement the proposals in the Green Paper which seek to reward those people adequately.
Lord Ewing of Kirkford: My Lords, is my noble friend aware that, just as no one forgets a successful teacher—as my noble friend Lord Dormand of Easington said—equally, no teacher forgets a successful pupil? I can report modestly that my primary school teacher wrote me a letter once a month until the day she died at the age of 96.
Lord Hunt of Kings Heath: My Lords, I suppose the question to ask is, what did she say?
Baroness Seccombe: My Lords, can the Minister tell the House what success the Government have had in getting rid of inadequate teachers? How many have been dismissed by use of the fast-track procedure?
Lord Hunt of Kings Heath: My Lords, I am not aware of the figures but I shall certainly write to the noble Baroness. As regards failing teachers and failing schools, we cannot afford to sweep failure under the

1059
carpet. While the failures are a small proportion in terms of the overall numbers of teachers and schools, it is essential that we tackle those with decisiveness.
Lord Pearson of Rannoch: My Lords, can the Minister tell the House of any progress that has been made with people who were somewhat disparagingly referred to as "Mum's Army"; in other words, parents with good A-levels and good degrees whose children have grown up and who, with perhaps the very minimum of teacher training, might be available to teach in our schools?
Lord Hunt of Kings Heath: My Lords, we are keen to see teaching assistants and classroom assistants coming into schools. We have plans for a further 20,000 over the next three to four years. Their whole purpose is to enable teachers to focus much more on classroom teaching.
Lord Dormand of Easington: My Lords, I am not suggesting for a moment that the Government are complacent in this matter, but does my noble friend appreciate that there is still a mountain to climb in the recruitment of teachers? I was a wee bit disappointed to hear that no research is being carried out in this area into the views of fifth and sixth-formers and undergraduates, because what we really want to know is why young people are not going into teaching. Until we find that out we shall not make much progress.
Lord Hunt of Kings Heath: My Lords, I said to my noble friend that I would reflect on his suggestion. However, I repeat what I said earlier: the clear way to attract more high calibre people into teaching is to ensure that there is a proper career structure, with adequate reward for such people. That is exactly what the Government's Green Paper is all about.

Parliamentary Groups
3.10 p.m.
Viscount Waverley Viscount Waverley asked Her Majesty's Government:
Whether they will consider a greater role for and effectiveness of country-specific and regional all-party parliamentary groups.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the Government recognise the valuable role that country-specific all-party parliamentary groups can play in the development of bilateral relations between the United Kingdom and the country concerned. The Government also appreciate that individual Members of both Houses of Parliament participate in those groups on a voluntary basis, applaud their commitment to the
1060
development of our overseas relations, and stand ready to offer support and advice to these groups as and when needed.
Viscount Waverley: My Lords, the haphazard and ineffective manner in which a large number of groups conduct themselves is, in my view, a lost opportunity. Would it not be better, while retaining the independent nature of the groups, to have properly documented minutes, scrutiny of official policy, possibly in support of the over-stretched Foreign Affairs Select Committee, to address the inadequacy of influence, knowledge-gathering and understanding?
Baroness Symons of Vernham Dean: My Lords, the noble Viscount said that the committees are organised on a haphazard basis. However, it is for the members of the committees to organise their business. On occasions when my colleagues in the Foreign and Commonwealth Office have offered particular advice or support, it has been their experience that that was thought to be interference with the committees. Her Majesty's Government are reticent to offer some kind of blueprint in the way suggested by the noble Viscount. The suggestions he made may be very helpful to individual committees; so far as concerns the FAC, I suggest that he makes his suggestions to the chairman of that committee, Mr Anderson.
Baroness Rawlings: My Lords, given that the Inter-Parliamentary Union is devoted to the cause of resolving disputes by peaceful means and to promoting the ideals of democratic government, does the Minister think that there are further ways in which her department can complement and build on its work and that of the all-party country groups, especially now in the Balkans?
Baroness Symons of Vernham Dean: My Lords, as I am sure the noble Baroness is aware, the IPU and the CPA offer some modest support to the all-party parliamentary groups. As I indicated in my initial response, we stand ready to give advice and support when we are asked so to do. Naturally, given that on occasions our advice has not always been tremendously welcomed, Her Majesty's Government are rather concerned about offering a blueprint for a way forward. The suggestions made by the House might be made more directly to the officers of the 73 all-party parliamentary groups, who may themselves be very happy to pick up the suggestions.

Lord Chancellor: Judicial Functions
3.13 p.m.
Lord Patten Lord Patten asked Her Majesty's Government:
Whether they intend to bring forward proposals to abolish the judicial functions of the office of Lord Chancellor.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, the Government do not intend to bring forward

1061
any proposals to abolish the judicial functions of the office of Lord Chancellor. The value of the office, with all the authority within government which it carries, is that it both upholds judicial independence and mediates between the executive and the judiciary when occasion for controversy arises. The Lord Chancellor is able to perform that function both because of his seniority in Cabinet and because he is head of the judiciary and sits as such from time to time in the chair, on important appeals.
Lord Patten: My Lords, I am very grateful to the noble and learned Lord the Lord Chancellor for that Answer. I hope that he will accept that I respect both the office of Lord Chancellor and himself. I hope that he will also understand that as someone who is both politically and constitutionally a Conservative, I sometimes believe that it is necessary in the interests of respecting institutions to promote organic and sensible change and to conserve respect for those institutions in that way. Therefore, does not the noble and learned Lord the Lord Chancellor recognise, as a Minister who is turning his reforming zeal upon this House and turning out so many of my hereditary colleagues, that he may well wish to turn some of that reforming zeal upon himself and the holders of his own office and seek to thoroughly modernise the office of Lord Chancellor, which is unique in the known world in combining legal duties, duties of a senior government Minister, making laws, and sitting in judgment upon people who are before the court under those laws?
The Lord Chancellor: My Lords, the fact that some things or institutions call for modernisation does not mean that every one does. As the noble Lord has described himself as one who has affection for tradition, he may be interested to know that the evidence to the Wakeham Commission on House of Lords Reform by the Judges' Council, which represents the whole judiciary of the High Court and the Court of Appeal, is,
"that the Lord Chancellor's dual position as head of the judiciary and a Cabinet Minister with responsibility for the administration of justice, should not be affected by the outcome of House of Lords reform".
Lord Strabolgi: My Lords, perhaps I may ask my noble and learned friend whether the Question of the noble Lord, Lord Patten, is not based on a false premise, as in this country we do not apply strictly the doctrine of the separation of powers. Has not this pragmatic development brought distinct advantages?
The Lord Chancellor: My Lords, I agree with my noble friend. Those who advance the argument which lies behind the Question proceed on the basis that the doctrine of the separation of powers between the legislature, the executive and the judiciary either does or should apply strictly in this country. It does not. We fashion our constitutional arrangements pragmatically. If we applied the doctrine of the separation of powers
1062
strictly, no Cabinet Minister would ever sit in a House of Parliament, as in the United States of America. But in Britain, all Cabinet Ministers do, and rightly.
Viscount Cranborne: My Lords, will the noble and learned Lord the Lord Chancellor accept my congratulations, which arise from his Answer to my noble friend? It is with the greatest of pleasure that I, for one, welcome him to the ranks of the High Tories.
The Lord Chancellor: My Lords, I am a member of the ranks of the rationalists.
Lord Borrie: My Lords, does my noble and learned friend agree with me that at least since the beginning of the century the presence of the Lord Chancellor in the judicial proceedings of the House of Lords has been of added value, particularly in the fields of public law, public administration and judicial review? Does he further agree that given that in the latter part of this century far fewer Law Lords have had experience of politics, it is now of even greater value for the Lord Chancellor to be willing to sit on judicial proceedings than may once have been the case?
The Lord Chancellor: My Lords, I agree with all of that.
Viscount Bridgeman: My Lords, does not the noble and learned Lord accept that, as a result of the Human Rights Act and the devolution legislation, the political pressure on the Judicial Committee, of which the Lord Chancellor is a member, will increase?
The Lord Chancellor: My Lords, there are two parts to a proper answer to that question. First, the occasions for controversy between the judiciary and the executive may increase as a result of the implementation of the Human Rights Act and the role of the judiciary in settling disputes under the devolutionary settlements. It is all the more important, therefore, that there should be a strong Lord Chancellor to mediate, to act as a buffer, between the judiciary and the executive. Secondly, the implementation of the Human Rights Act involves only a change of degree and not of kind. The judges in the House of Lords and elsewhere have traditionally handed down judgments which have a strong politically controversial dimension. Your Lordships should think of the landmark cases on civil liberties, trade union immunities, citizens' rights in time of war, natural justice, freedom of expression and the whole modern development of judicial review. The Human Rights Act does not make a difference of kind, only a difference of degree.
Lord Renton: My Lords, does the noble and learned Lord agree that it is a great advantage to have at least one Cabinet Minister responsible for achieving co-operation between the Government, the legislature and the judiciary and that that has been achieved by

1063
Lord Chancellors over the years? Does he further agree that if change is not necessary, it is necessary not to change?
The Lord Chancellor: My Lords, I agree with that and do not cast myself in some Burkean role as a High Tory in doing so. I believe in improving our traditions while we transmit them; but if our traditions have got it just about right, in leaving them as they are.
Lord Brightman: My Lords, on a lighter note, will the noble and learned Lord the Lord Chancellor allow me to remind him that there is still in the Royal Courts of Justice a court which is called The Lord Chancellor's Court? In my youth, the Lord Chancellor would come to that court and take his seat for a few moments at the beginning of the legal year. Will the noble and learned Lord consider reviving that happy custom?
The Lord Chancellor: My Lords, I shall certainly consider it. It is an attractive and beguiling possibility. I shall look at it with care when my workload diminishes.

European Monetary Union
3.21 p.m.
Baroness Young Baroness Young asked Her Majesty's Government:
Whether they would intend any British entry to the European single currency to be irrevocable.
Lord McIntosh of Haringey: My Lords, any country which chooses to enter EMU does so on the basis that it is an irrevocable step. The treaty contains no legal basis for a member state withdrawing from EMU. That is why we are determined that any decision on UK membership of EMU must be based on a thorough assessment of the national economic interest, and would need to be agreed by government, Parliament and the British people.
Baroness Young: My Lords, I thank the noble Lord for that very clear statement that any joining of EMU would be irrevocable. Does he not agree on the importance now of having a statement which sets out clearly not just the economic but the political advantages and disadvantages so that the British people will know what the facts are, if called on to decide in a referendum?
Lord McIntosh of Haringey: My Lords, our policy is to prepare in this Parliament in order to create a genuine option to decide whether to join early in the next Parliament. It is when we have a genuine option before us that it is appropriate to make a definitive assessment of the matters to which the noble Baroness referred.
Lord Shore of Stepney: My Lords, if a decision to join would be, to use the Minister's word, irrevocable, surely that adds an order of gravity to the decision itself.
1064
Is it not time that the Government stopped pretending that this matter is even primarily an economic decision but rather a constitutional and political decision of the first importance? How can the Government go on pretending that it is not when virtually every other government in Europe—certainly those who have joined EMU—have made it plain that for them it is a major stepping stone towards the goal of a European Union leading to a United States of Europe?
Lord McIntosh of Haringey: My Lords, I agree with my noble friend that this is a matter of very great gravity. However, the Government have made their position on the constitutional question and on the economic question very clear. We have taken the view that, although there are important constitutional considerations, those considerations would not rule out membership of EMU if the balance of economic advantage for this country were in favour of our membership. That is why we have set economic criteria and that is why, although we continue to consider the constitutional issues, in the end it is on economic criteria that a decision will be made.
Lord Ezra: My Lords, does the noble Lord agree that, when the time is right for us to join EMU, our overriding objective should be to work towards its continuing success based on our considerable experience in the conduct of monetary affairs?
Lord McIntosh of Haringey: My Lords, I am sure the noble Lord is right to say that we could at that time make a great contribution to the success of European monetary union.
Lord Mackay of Ardbrecknish: My Lords, I wonder whether the noble Lord can help me with his original reply. Is he aware of what Senor Romano Prodi, the Prime Minister of Italy who took Italy into EMU and currently the Commission's president-designate, said in Italy on 21st June? He stated:
"If we"—
that is Italy—
"continue to have costs that diverge from other European countries, it will be more difficult to remain in the euro".
Can the noble Lord say what construction one can put on that sentence other than that membership of the euro is not irrevocable?
Lord McIntosh of Haringey: My Lords, Mr Prodi himself put another construction on his remarks. He was speaking during a video conference to Italy's Chemical Industry Association. He did indeed make the remarks to which the noble Lord referred. He said, because he was trying to gee up Italian industry, that,
"instead of an opportunity, the euro could become our downfall if radical choices are not made. We must be absolutely virtuous".
But he clarified his remarks afterwards by saying:
"My remarks only moved the market because they were reported in a very ambiguous and wrong way".

1065
I think that Mr Prodi knows the position about membership of EMU as well as we do.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that he made an extremely important statement when he answered the Question? Is he further aware that what he did was to drive a coach and horses through the basic principle of our constitution that one Parliament cannot bind its successor?
Lord McIntosh of Haringey: My Lords, I had no intention of making an extremely important statement, either in my original Answer or in any subsequent answer. I am reflecting government policy, which has not changed for a considerable period.
Lord Stoddart of Swindon: My Lords, will my noble friend answer the question?
Lord Marsh: My Lords, was not the real reason for Senor Prodi's statement a perfectly honest recognition that the governments currently in euroland will, as they have done in the past, break and ignore the rules whenever it suits their national interests? That is what worried the 400 or more business men and women who met yesterday for the Business For Sterling conference. They were worried specifically about that degree of instability.
Lord McIntosh of Haringey: My Lords, I have no direct knowledge of the conference to which the noble Lord referred. I was not present, as no doubt he was. But I certainly reject his assertion that other countries in the European monetary union are constantly seeking to evade the convergence criteria. What was remarkable about the first half of last year was the way in which there was genuine convergence which made it possible for those 11 countries to agree to go into European monetary union and to set a rate of exchange for it.
Lord Jenkin of Roding: My Lords, does not the Minister's original reply underline the truth of the proposition that, far from being a building block on the way to building an effective European Union, a unified currency has to be the last brick in the edifice, if we ever get that far? The line now being taken by the organisation New Europe is a great deal more realistic than that taken by those like the noble Lord, Lord Shore, who believe that we should never go anywhere along that road, or those like the Government who think that we should join as soon as possible.
Lord McIntosh of Haringey: My Lords, far be it from me to seek to adjudicate between the various bodies that are setting themselves up, such as those referred to by the noble Lord, Lord Marsh, and that referred to by the noble Lord, Lord Jenkin, to express perfectly legitimate views about monetary union. The Government have made their position entirely clear. Nothing I have said has departed from that position.
Lord Bruce of Donington: My Lords, my noble friend has made an important constitutional
1066
announcement this afternoon concerning what is irrevocable and what is not. At the same time, will he agree that no Parliament can bind its successor?
Lord McIntosh of Haringey: My Lords, I have made no important constitutional announcement. I have simply reiterated what has been the constitutional position and the view of Her Majesty's Government over a considerable period of time. My noble friend is entitled to his constitutional views, just as my noble friend Lord Stoddart is. He challenged me for not answering his second question. I did not do so because I thought I had rejected the premise on which that question was based. I do so now again.
Lord Pearson of Rannoch: My Lords, in that case, will the Minister tell the House whether the House of Commons and this Parliament would be capable of taking the United Kingdom out of EMU if ever it had once been so foolish as to join?
Lord McIntosh of Haringey: My Lords, I reject the words, "so foolish", used by the noble Lord. Clearly, if the Government, Parliament and the people of this country decide to enter EMU, they will be doing so on the basis of long-term advantage, not short-term considerations.
Lord Haskel: My Lords, does my noble friend agree that it is best to leave this decision until it suits our economic interest, and not to attempt to make decisions now on matters of principle?
Lord McIntosh of Haringey: My Lords, that has indeed been the Government's position for a considerable period of time. We reject the views both of those who believe it is necessary to enter now, regardless of other considerations, and those who believe that it would never be possible or necessary for us to enter.

HFC Bank Bill
3.31 p.m.
Read a third time, and passed.

Business of the House: Prevention of Terrorism (Temporary Provisions) Act 1989
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I beg to move the Motion standing in my name on the Order Paper.
It may be helpful in moving this Motion to say to the House that the agreement of the usual channels has been sought and achieved to take this important piece of delegated legislation today, even though the Joint Committee has not yet reported on it. The order is necessary given the defects in legislation reported to the House by my noble friend Lord Williams of Mostyn in

1067
repeating the Statement yesterday. I hope that in these unusual circumstances the House will approve the business Motion that is before it.
Moved, That Standing Order 70 (Affirmative Instruments) be dispensed with to enable the Motion to approve the draft Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order 1999 to be taken today, notwithstanding that no report from the Joint Committee on Statutory Instruments on the draft order has been laid before the House.—(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Privileges: Select Committee
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Viscount Cranborne be appointed a member of the Select Committee in the place of the Viscount Whitelaw.—(The Chairman of Committees.)
On Question, Motion agreed to.

Water Industry Bill
3.33 p.m.
Lord Carter: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Water Industry Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Read a third time.
Clause 6 [Right of consumer to elect for charging by reference to volume]:
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 1:
Page 5, line 12, at end insert—
("(7A) In any case where—

(a) the premises had been let for residential purposes for a term of six months or more but not for a term exceeding 5 years, whether commencing before or after the commencement of this Act,

(b) the lessee for the time being had given a measured charges notice to the undertaker without the express written consent of the lessor for the time being,

(c) the premises have reverted to the original lessor, whether on the expiry of the term, or upon forfeiture or abandonment or disclaimer or surrender of the lease or by any other means, and

(d) the lessor to whom the premises have reverted intends to occupy them as his principal place of residence,

the consumer, (here meaning the lessor for the time being) may within 12 months of the premises reverting to him give a notice to the water undertaker revoking the measured charges notice.")
The noble Baroness said: My Lords, in moving this amendment I should like to speak also to Amendment No. 2. This is the substantive amendment, and Amendment No. 2 is merely the paving amendment.
I have mentioned the problem that these amendments seek to resolve many times in this House during the course of our debates on the Bill. I mentioned it first at Second Reading, again in Committee, and again on Report. I want to emphasise yet again that the amendments have nothing to do with water or water meters. They are concerned with landlords and tenants, and the right of landlords not to have their property changed by a tenant after the lease has expired.
Clause 6 provides that the customer has a right to elect to have a metered supply of water. Subsection (5) provides that he can change his mind within 12 months and revert to the previous method of payment. Under Clause 11, a landlord may not prohibit his tenant from exercising the option of a meter. If the tenant stays longer than a year, the landlord is committed forever. That cannot be right.
As well as having referred to the problem on numerous occasions in this House, I wrote to the Minister. He kindly answered in full detail, but did not address any of the points to my satisfaction. However, the Minister was extraordinarily courteous in allowing me to have a meeting with him yesterday which took up a great deal of his time. Considering that he and the noble Baroness, Lady Farrington of Ribbleton, had a long day before them on the Greater London Authority Bill, I should not like them to think that I was anything less than extremely grateful for that.
As a result of that meeting, I have made enormous concessions regarding my original points. I do not want to go through all those points again. The amendment that is before the House makes the matter clear. The period has now been reduced to five years. Originally I referred to "a short tenancy"—I understand that 21 years is considered a short tenancy in normal landlord and tenant proceedings. Now the reference is to "5 years".
I have also reduced the provision as follows. If a landlord grants a lease and the tenant, without the landlord's consent—as he is perfectly entitled to do—opts for a meter, the position would be amended. Within that period the landlord may return and want the premises for himself. If the premises have reverted to the original lessor and the lessor intends to occupy the premises as his principle place of residence—not to let them to anyone else—the present position seems incredible. Someone can have a tenancy, live in someone's property for up to a year, opt for a water meter and, after the year, decide to ask the water company to change that method of payment. Given that a tenant can do that, it seems extraordinary that the landlord of the property for which the method of payment was changed without his permission cannot revert to the former method of payment in the limited—I emphasise "limited"—conditions that this amendment suggests.
Perhaps I may repeat an example that I gave previously. Let us suppose that a landlord who has two young children works for a company and is suddenly posted to Saudi Arabia. His water charges are dealt with by means of the old rateable value. He lets his apartment to a tenant who has no children and decides that it would be cheaper to opt for a meter. The meter is installed, and the tenant leaves after a year. The landlord returns, wants to move back into his own home and finds that, no matter what, he cannot

1069
change the new position. The tenant himself, after the year, could, but the landlord, the owner of the property, cannot.
In no other way can a landlord lose his rights beyond the length of the lease as a result of his tenant changing the position.
Whether it be a right of way or other improvements that the tenant wishes to put in, he cannot alter the property in that way.
I believe it is a matter of natural justice. I have said that before and I say it again. I do not wish to take up too much of your Lordships' time. I think I have argued it well—I say that with the greatest modesty. I could read to your Lordships what I said at Second Reading and go through again my logical arguments at the Committee and Report stages. But the point I emphasise again is that this is not a matter of the water, the water meter and so on. It is the basic right of whether a tenant can alter the property in the end against the interests of the landlord when the landlord did not give permission. I beg to move.
Baroness Hamwee: My Lords, I congratulate the noble Baroness on her steadfastness in pursuing the point at every stage of the Bill. I said at the last stage that she had a point. Since then I have received copies of the correspondence from the Minister for which I am grateful. I regret that, while acknowledging that the noble Baroness has reined back her ambitions on the clause, I understand rather better than I did when listening to the debate why the Government are concerned about the amendment. The Minister will explain it himself.
During the course of the Bill I have had to accept the Government's position on switching between the two types of charging for water. We have had discussions about the position on switching or otherwise between measured and unmeasured charges when a property changes hands. I do not believe that the situation is substantially different.
I will not detain the House, but I understand the arguments that have been made throughout the Bill, some by myself, about the need for stability within the industry for the long-term protection of consumers generally. I look forward to hearing the Minister, but it is only fair to warn the noble Baroness that I am rather inclined to understand the Government's arguments through the correspondence. I congratulate the noble Baroness on her tenacity. She will go down as a hero, if she goes down.
Lord Elton: My Lords, before the noble Baroness sits down, will she share with us anything in the correspondence that effected the change in her mind, or will she rely on the Minister to reveal it and thus save time?
Baroness Hamwee: My Lords, I have checked with the Minister that the points made in the letter will be part of his reply.
Lord Elliott of Morpeth: My Lords, perhaps I may intervene as a past chairman of a water company. I am extremely interested in Clause 6 in that it addresses the difficult relationship between landlord and tenant.
1070
I wholly agree with my noble friend and with the amendment she put forward today. I believe it will strengthen Clause 6 and the whole Bill if it is accepted.
3.45 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I join in the recognition that the noble Baroness has pursued her case effectively throughout the Bill and has stuck to her guns. I should also record my appreciation of our meeting because it was not only my noble friend and myself who had the GLA Bill following our meeting yesterday. I appreciated the way in which we discussed this matter and corresponded on it. As the noble Baroness, Lady Hamwee, said, the noble Baroness, Lady Miller, has taken on board some of my objections to her previous clause at the earlier stage by restricting the scope of the amendment before us. Nevertheless, the clause as it stands cuts across the central principles of the Bill and I shall take a little of your Lordships' time to explain what I mean by that.
The Bill is about consumers; it gives rights to all consumers. It also attempts to treat all consumers in the same way. That means that landlords who are consumers who pay the bill will gain substantially from the Bill. It also means that compared with the current situation, no landlord will lose rights. Those are the principles. There are also some practical and technical matters which the House should know about before considering pursuing the amendment.
The principle underlying the Bill is to increase the choice for all consumers. By "consumers" we mean the normal meaning of the word and the legal meaning in water legislation. It is the person who pays the bill, irrespective of tenure and irrespective of the way in which they are charged for their water. All have an equal choice on the form of charging in the initial stages and all have an equal right of reversion for 12 months after having had a meter installed, if that is their choice.
The noble Baroness argued that the Bill would give tenants the ability to grant property rights extending beyond the terms of their lease. That is not the case. The Bill does not take away any rights that landlords currently enjoy in relation to water charging. Under current legislation, landlords do not have any right to choose the basis on which they are charged for their water. The present situation is that if a water company wished to impose a meter on a property the landlord, whether or not returning to occupy the property and whether or not covered by the amendment, would have no right to prevent this, regardless of his own wishes, actions or specific provisions he may have made in the lease with his or her tenants.
The arrangements currently in that sense, therefore, already override the landlord-tenant leasing arrangement. All we are doing is to transfer that right from the water company to the consumer, the person who pays the bill. The Bill, therefore, does not in any sense reduce landlords' rights over their property.
We are not dealing with property rights. Rights to determine the basis of water charging are being taken away from the water company, not the landlord. In some

1071
cases, the consumer who will benefit will be the landlord; in other cases it will be the tenants. Those who are consumers and pay the bill gain substantial rights over the current situation.
What is more, the noble Baroness's amendments undermine the important principle that increased choice should apply equally to all consumers. Landlords who fulfil the criterion in her amendment—which I agree is a relatively narrow one—would have full reversion rights not once but for five years as compared with every other form of tenure which is only 12 months. They would have the rights not just once but theoretically at least after each tenant who opts to pay on a measured basis. Those premises and the occupants would thus be in an entirely different and privileged position in relation to all other consumers—tenants, owner-occupiers, other landlords or new landlords or new tenants of the same premises. There would even be differential treatment between different kinds of property and different kinds of landlords since those rights could not apply to public sector landlords or social rented housing or housing which was rented out by property companies. There the landlord could not occupy the property as his principal place of residence.
I accept that the noble Baroness's amendments are more specifically targeted than those we debated at earlier stages of the Bill. There are therefore a significantly smaller number of cases which might be caught by her amendments. Nevertheless, that narrowing raises a number of technical and practical issues which noble Lords should bear in mind when considering the amendment.
First, the amendment introduces a real prospect of indefinite switching between measured and unmeasured charges for a significant number of customers. If that were pursued, it would undermine the stability of the water company's charging regime and those charges would have to be passed on to other customers.
Secondly, to trigger reversion to an unmeasured charge the landlord would need only to state his intent to re-occupy the property as a principal place of residence. How would a water company go about proving that that was the case? It would also need to be clear to the water company that the landlord had evidently and provably not agreed to the installation of the meter in the first place.
In addition to these concerns about how the clause would be interpreted, there are a number of technical defects in the amendment in a legalistic sense. These amendments could not be accepted in their current form, even if we put aside our considerable policy concerns. For example, Amendment No. 1 does not define "lessor". It would appear to grant rights of reversion not just to the direct landlord but to any tenant who sublet a property. Perhaps more importantly, the amendments would significantly change the meaning of "consumer". The word "consumer" has been well established in water legislation at least since the Water Act 1989. They would also change the general proposition that rights and duties attach to the person who pays the bill.
Of course, landlords who are concerned about the possibility of this effect have a relatively easy answer. If this is their main concern they can decide themselves to
1072
become consumers before they let out a short lease. If the issue of water metering is of sufficient importance to the landlord, all he needs to do is to take on responsibility for paying the bill and, presumably, therefore to include a sum to cover the water charge in the tenant's rent. In those circumstances, no rights accrue to the tenant unless he is the consumer. Landlords are already aware of this. I have had drawn to my attention a copy of a newsletter from the Small Landlords Association which draws attention to this option.
The noble Baroness has argued that this is not a sufficient answer to her point of principle, but I believe that there is a bigger point of principle here. We are concerned about consumer protection, equality of access to choice and equality of treatment for consumers across all housing tenures. Having said all that, the fear of the noble Baroness that we are taking rights away from landlords does not stand up. At the moment, the tenant-landlord arrangement can be overridden by the water company. All we are doing is transferring that to the consumer. Therefore, the position of the landlord does not materially change.
We believe that the policy package that we are implementing through this Bill introduces a major element of increased choice. It may not be as great a choice as the noble Baroness, Lady Hamwee, wants, but it is nevertheless very significant and one that is given equally to all consumers as that word is normally understood. It neither favours nor disadvantages groups of consumers relative to each other. The amendment tabled by the noble Baroness would undermine those important principles and also introduce a new level of complexity which in practice would be extremely difficult to enforce.
By this Bill we have no intention of making life more difficult for landlords. A very large swathe of landlords will benefit considerably from the additional rights and choices that we give them. But I do not believe that the elaborate provisions in this amendment, even given the relatively small number of people to whom it might in practice apply as compared with amendments moved at an earlier stage, justify altering the central principles of this Bill: choice, equality and equal treatment between all forms of tenure. I urge the House to reject this amendment if the noble Baroness is not at this stage convinced of my arguments.
Baroness Miller of Hendon: My Lords, I am extremely disappointed, although grateful to the noble Lord for the lengthy and detailed answer that he has courteously provided. I am also very disappointed that the noble Baroness, Lady Hamwee, does not feel able to support this very limited amendment which is much narrower than the one she believed had some merit. I note that she was convinced by the letter sent to her by the Minister. It is a pity that I did not have the opportunity to speak to her before we came into the Chamber so that I could point out what I consider to be the defects in the answer provided by the Minister.
The Minister made two points that I should like to deal with. First, he said that the water company could in any event impose a water meter on a landlord so that it would not make any difference. That is true. However, equally

1073
he can impose it on a tenant who cannot change it back. Whether or not it is imposed, we are talking about an altogether different idea. I am referring to a case in which a tenant under a tenancy decides to put in a water meter, and that is nothing to do with the landlord. After a year the tenant may decide to take it out because it does not suit him, but if the landlord comes back after a year he cannot do so. I regard that as a most unfortunate matter.
The second point relates to a matter referred to by the Minister in reply and on the previous occasion. The landlord can save himself by deciding to pay the water charges, and therefore he is the consumer, not the tenant, and can do as he wishes. I believe that to be a flaw in the Bill, and it is not appropriate for such matters to be dealt with by telling the landlord that he can get round it by paying the charges himself.
I am disappointed. Following the lengthy meeting yesterday, at which we took on board all of the points then made, I hoped that the Minister would find it possible to accept this amendment. If he does not, I conclude that there was no intention of accepting anything. I and the noble Baroness on the neighbouring Benches have raised several matters, but nothing has been accepted. That is a great pity. I believe that this amendment would strengthen the Bill.
Frankly, I did not realise, perhaps until an hour and a half ago, that this matter would be resisted. I thought that it would please the Minister. We have always tried to improve matters. I wish to test the opinion of the House.
3.57 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 116.

Division No. 1

CONTENTS

Ailsa, M.

Elton, L.

Alexander of Tunis, E.

Foley, L.

Annaly, L.

Freeman, L.

Astor of Hever, L.

Gainford, L.

Attlee, E.

Glentoran, L.

Berners, B.

Halsbury, E.

Biffen, L.

Hamilton of Dalzell, L.

Blaker, L.

Hanningfield, L.

Blyth, L.

Harding of Petherton, L.

Bowness, L.

Hemphill, L.

Brougham and Vaux, L.

Henley, L. [Teller.]

Burnham, L. [Teller.]

Higgins, L.

Buscombe, B.

Hogg, B.

Butterworth, L.

HolmPatrick, L.

Caithness, E.

Hooper, B.

Campbell of Croy, L.

Iveagh, E.

Carnock, L.

Jenkin of Roding, L.

Chadlington, L.

Knollys, V.

Clark of Kempston, L.

Liverpool, E.

Cochrane of Cults, L.

Long, V.

Crathorne, L.

Lucas of Chilworth, L.

Crickhowell, L.

Luke, L.

Cuckney, L.

McColl of Dulwich, L.

Davidson, V.

McConnell, L.

Dixon-Smith, L.

Mackay of Ardbrecknish, L

Dundee, E.

Marlesford, L.

Elliott of Morpeth, L.

Merrivale, L.

1074

Mersey, V.

Renton, L.

Miller of Hendon, B.

Renwick, L.

Milverton, L.

Rotherwick, L.

Mountevans, L.

Sandys, L.

Moyne, L.

Seccombe, B.

Munster, E.

Simon of Glaisdale, L.

Murton of Lindisfarne, L.

Skelmersdale, L.

Napier of Magdãla, L.

Slim, V.

Norrie, L.

Strathcarron, L.

Northbrook, L.

Swinfen, L.

Munburnholme, L.

Teviot, L.

O'Cathain, B.

Thomas of Gwydir, L.

Onslow of Woking, L.

Trefgame, L.

Pender, L.

Walker of Worcester, L.

Pilkington of Oxenford, L.

Westbury, L.

Quinton, L.

Wharton, B.

Rathcavan, L.

Windlesham, L.

Rees, L.

Young, B.

NOT-CONTENTS

Acton, L.

Ilchester, E.

Addington, L.

Irvine of Lairg, L. [Lord Chancellor.]

Ahmed, L.

Allen of Abbeydale, L.

Jay of Paddington, B. [Lord Privy Seal.]

Allenby of Megiddo, V.

Alli, L.

Jeger, B.

Amos, B.

Jenkins of Hillhead, L.

Archer of Sandwell, L.

Jenkins of Putney, L.

Avebury, L.

Kennet, L.

Bach, L.

Lovell-Davis, L.

Bassam of Brighton, L.

Macdonald of Tradeston, L.

Borrie, L.

McIntosh of Haringey, L.[Teller]

Bristol, Bp.

Brooke of Alverthorpe, L.

Mackenzie of Framwellgute, L.

Bruce of Donington, L.

Maddock, B.

Burlison, L.

Mallalieu, B.

Carter, L. [Teller.]

Merlyn-Rees, L.

Castle of Blackburn, B.

Methuen, L.

Charteris of Amisfield, L.

Milner of Leeds, L.

Christopher, L.

Mishcon, L.

Clarke of Hampstead, L.

Molloy, L.

Cledwyn of Penrhos, L.

Monkswell, L.

Clinton-Davis, L.

Morris of Castle Morris, L.

Cocks of Hartcliffe, L.

Morris of Manchester, L.

Crawley, B.

Nicol, B.

Currie of Marylebone, L.

Palmer, L.

David, B.

Paul, L.

Desai, L.

Peston, L.

Donoughue, L.

Pitkeathley, B.

Dormand of Easington, L.

Ponsonby of Shulbrede, L.

Evans of Parkside, L.

Prys-Davies, L.

Ezra, L.

Ramsay of Cartvale, B.

Farrington of Ribbleton, B.

Razzall, L.

Fitt, L.

Rea, L.

Gladwin of Clee, L.

Redesdale, L.

Glanusk, L.

Rendell of Babergh, B.

Goodhart, L.

Rodgers of Quarry Bank, L

Goudie, B.

Russell, E.

Gould of Potternewton, B.

Sawyer, L.

Grey, E.

Scotland of Asthal, B.

Hacking, L.

Serota, B.

Hamwee, B.

Sewel, L.

Hardy of Wath, L.

Shepherd, L.

Harris of Greenwich, L.

Simon, V.

Harris of Haringey, L.

Stallard, L..

Haskel, L.

Stoddart of Swindon, L.

Hayman, B.

Strabolgi, L.

Hilton of Eggardon, B.

Strafford, E.

Hogg of Cumbernauld, L.

Strange, B.

Hollis of Heigham, B.

Symons of Vernham Dean, B.

Holme of Cheltenham, L.

Tenby, V.

Howie of Troon, L.

Thomson of Monifieth, L.

Hughes of Woodside, L.

Thornton, B.

Hunt of Kings Heath, L.

Tomlinson, L.

Hylton-Foster, B.

Tordoff, L.

1075

Turner of Camden, B.

Weatherill, L.

Uddin, B.

Whitty, L.

Wigoder, L.

Warner, L.

Williams of Mostyn, L.

Warnock, B.

Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 2 not moved.]
Lord Whitty: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Whitty.)
On Question, Bill passed.

Welfare Reform and Pensions Bill
4.7 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Serota) in the Chair.]
Baroness Castle of Blackburn Baroness Castle of Blackburn moved Amendment No. 1.
Before Clause 1, insert the following new clause—

Welfare Reform and Pensions Bill

  PART I: COMMENCEMENT
  (". Part I of this Act shall not have effect until comprehensive legislation embodying the pensions proposals outlined in "A new contract for welfare: Principles into Practice" (Cm. 4101) has been introduced.")
  The noble Baroness said: The amendment is in my name and that of my noble friend Lady Turner of Camden.
  When the Committee has a chance to look at the amendment it will realise how very reasonable it is. The Minister laughs, which I am afraid shows rather clearly the Government's attitude to the whole question of the fundamental reform of pensions in this country.
  The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My laughter was because I was sure that my noble friend would not dream of bringing to the Committee any amendment that she deemed unreasonable.
  Baroness Castle of Blackburn: The big question is what the Committee thinks, and it is, I hope, on behalf of the whole Committee that I am now speaking.
  The amendment seeks to say that Part I, which deals with the stakeholder pension, shall not have effect until the Government have produced in legislative form their comprehensive plan for pensions provision in the coming millennium. The question that will be uppermost
  1076
  in most people's minds is "Why?" Why have the Government brought one item only of all the work on which we have been engaged for the past three years and put it this Bill? What are they up to? To fragment pensions provision is to confuse. I used to accuse the Government of the noble Baroness, Lady Thatcher, of having the principle of "confuse and move". But are we not in danger of emulating them?
  What the Government ask us to do in Part I of the Bill is to say, "Here's your stakeholder pension. Pass it. Trust us. And trust us, incidentally, with a great deal of the details", because the House is left entirely in the dark as to many aspects of the Government's plans even for the stakeholder pension. It is all to be prescribed by regulation. So we are voting blind in any case.
  What should have preceded the Government's introduction of what they call fundamental reforms in the pensions provisions of this country is a speech of explanation showing how each proposal fitted into all the rest; because they must interface if the whole edifice is not to fall apart. What I object to—I hope that the whole House will object to it—is having to vote blind. It is not good for democracy; and it is certainly not good for the pensions provisions of this country.
  We have had three years in which the pensions review body, on which a number of us have served, has had intensive discussions on every possible aspect of pensions policy. What should be the role of state insurance? What should be the role of private insurance, the occupational pension scheme, and even—that unhappy experience—the personal pension scheme? The Government should have told us their plan and what kind of security system we would have at the end.
  Goodness knows, the Government have consulted enough. It has been going on and on. Some of us began to realise that we were wasting our breath, and that the Government had in their own mind a master plan which they were not prepared to share with the rest of us. The stakeholder consultation document came out months after the pensions review body had been into its work. It is a later edition; yet it is the first to be legislated upon. Why? Why take it out of context? Can the Minister convince the House that there is in that anything but an attempt to disguise the whole plan—because if it were revealed in its whole, I think that there would be a large revolt on these Benches? My reading of this Government's tactics over this is that they always had a master plan. Secretaries of State for Social Security have come and gone in the past three years; and in the end the Treasury prevailed. We had the Treasury man; and this is his first product.
  The Minister, Mr Darling, is a very nice chap. I like him very much. The hand may be the hand of Beveridge, but the voice is the voice of the Treasury. The Government always intended to let state insurance in this country wither on the vine. It is to go: "It's not proper insurance, is it?" Instead, society is divided into two halves. In the one half there are those who can afford the risks and costs of private insurance schemes; and in the other, those who cannot, who are to be haled out with means-tested charity.

  1077
  The Government will not fight us cleanly on that because they know that they would not win. So they say, "No, you're quite wrong. We've got a stakeholder pension. Our aim is to ensure that everyone who does not benefit from an occupational pension scheme shall have a stakeholder pension to fall back upon. This is so clearly a noble principle that we can put it in separately, and without telling everyone else what will happen to the state insurance scheme, the basic state pension, SERPS, and other aspects of the policy, we'll all admit that occupational pension schemes are a jolly good thing". But I am afraid that the number who have those is declining; and many are abandoning the principles which govern the defined pension at the end of so many years' service in favour of money purchase schemes.
  We are told, "Don't worry. We're going to spread these benefits". Yet the Government do not tell us what their ultimate purpose is. It is certainly not clear from the Bill, is it? Only two principles of the stakeholder pension are made clear on the face of the Bill. The first is that they must be money purchase schemes. They cannot be guaranteed defined pensions. Secondly, the only duty on the employer is to provide access to a stakeholder pension for employees. There is nothing to prevent the employers who have been contributing under occupational pension schemes switching to the cheaper and more insecure stakeholder pension scheme.
  During debate, we can come to the detail of some aspects of the proposal. But on this amendment, I wish to concentrate on the fact that it is unfair to this House, and to pensioners, to say, "We've had three years of consulting, listening to your points of view, and all the rest of it. We shall give you one salami slice of our pensions policy". I happen to think that it is a rather inadequate slice. But it cannot properly be judged against what we know the Government intend to do, for instance, about fulfilling their manifesto commitment to make the basic state pension the foundation of their pensions provision. How do they propose to do that while refusing to restore the earnings link? Perhaps—heaven knows!—there might be a bright light of conversion shining in their eyes and they will give us the earnings link at last, the logic having overpowered them.
  But there is this second great question mark: what will happen to SERPS? Noble Lords will understand that I have a right to be nervous because the Government change their tune from day to day. For instance, the Minister told us in the Second Reading debate that we have no manifesto commitment on SERI'S. Minister, you had better read the document. I have it here. It is worrying.
  If the Minister does not know about commitments, why on earth should the Government be intending to enforce them? The manifesto states:
  "Labour will retain SERPS for those who wish to remain".
  That is a manifesto commitment. Perhaps the Minister may say, "Ah, but we never intended to retain SERPS as an option for anyone". So we have to watch the words carefully and read the small print. It is only fair to all of us who have to legislate on these matters and to the pensioners concerned to be clear, to be detailed and to be honest about what you are seeking to do.
  1078
  I think that the Government always intended to smuggle out SERPS through the back-door. Bu: they did not say, "We will not retain SERPS as an option for anyone who wishes to make use of it". I know millions of people who would like to. How can we judge the stakeholder pension unless we know what are to be the alternative options open to people? Are we not right to wonder whether it is a bit of a smoke-screen for other designs that it will be harder for the Minister to make sound reputable?
  So I make a plea to the Minister: please accept this amendment. It does not reject the stakeholder pension. It says only that you cannot expect us to accept it, except within the wider context of a comprehensive pensions policy. What is it going to be substituted for? I have no doubt that the Minister will have a very fluent answer indeed, but it will all be in general principles.
  Here we have a legislative commitment that we are asked to commit ourselves to and we are merely saying that until an equal legislative commitment is put in front of us covering the whole area we ought not to be expected to judge. Once we pass this legislation it will be said, "Oh, it's a framework", and then the battle will start on regulations. By then people will be told. "It's too late to do anything about it. We have got it arid the Parliament agreed, didn't it? You had an opportunity to express doubts but you didn't. You took things lying down". So I urge the Committee, regardless of party, to say, "We have a right to know the whole picture before we are expected to vote on a piece of it" I move.
  Lord Higgins: It was said:
  "Age cannot wither her nor custom stale her infinite variety".
  The more I listen to the noble Baroness, Lady Castle of Blackburn, the more it seems to me that the first part of that description of Cleopatra could not be more appropriate in describing her speech today. As regards the infinite variety, one has only to look through the Marshalled List to realise that, as is often the case, she has done a great deal of homework. Certainly, having sat opposite her in one place or another for many years, I thought that she put forward in an extraordinary way and with such cogency her view on pensions, the area in which she has played such an important role.
  First, I must declare an interest as chairman of an occupational pension scheme. Perhaps on this occasion I should be a little more specific and say that it is one of the final salary kind. During Second Reading I suggested that the Bill comprised four or five Bills all rolled into one. It presented us with some problems because it was impossible to deal with some of the Second Reading points in detail, which we would have done had the pensions section or the section on the disabled been presented to the House separately. However, the noble Baroness's amendment, which she has moved so eloquently, perhaps gives us an opportunity of looking at the legislation in a broad framework.
  Perhaps I may make two procedural points. If we are to discuss the remainder of the Bill coherently, there is some danger if we use the expression "a second pension" loosely and generically. If we are talking about

  1079
  stakeholder pensions there is a case for describing them so, and if we are referring to the state second pension we should also use that expression; otherwise the discussion will tend to become confused.
  Secondly, as regards the groupings, we on this side of the Committee have sought to focus attention on particular issues relating to stakeholder and other pensions so that we can debate the particular issues rather than joining them together and discussing them in a general context.
  The noble Baroness's amendment is concerned with two issues. The first is timing and the second is the context in which the Government's proposals have to be considered. The issue of timing is most important, as we shall see in relation to subsequent amendments. Of course, the reality is that it is not proposed to introduce the stakeholder pension for some considerable time.
  As the noble Baroness rightly said, there has been a great deal of consultation. However, we waited a long time before the Green Paper appeared. The noble Baroness always suggested that there was a secret agenda. If that is still the case, I suspect that today's secret agenda is different from that in the first year of government when Mr Frank Field was a Minister in the department. There has been a significant change since his departure.
  The fact is that while there have been delays, there have been fits and starts. We discovered that the consultation process was not completed before the Bill reached Committee in another place. As the noble Baroness rightly points out, there are still many provisions about which we are unclear. I believe that today the Committee will wish to clarify the Government's position on a considerable number of specific issues.
  Furthermore, we must put the matter into context, in particular with regard to the other pension products which the Government are putting forward; for example, the state second pension. So far as we can see, that will be deferred for a very long time. However, we understand that it is to be a replacement for SERPS. The noble Baroness rightly pointed out that the manifesto referred to retaining SERPS. Apparently, it is not proposed to retain it for this Parliament but not for the next. It is difficult to see the justification for saying, "We have a manifesto commitment", when it is apparent that the Government have no intention of maintaining that commitment into the following Parliament, should they be fortunate enough to be re-elected. But the reality is that SERPS will go and a state second pension will be introduced.
  It was also suggested that the Treasury has taken over these matters. I have addressed that theme from this Bench on a number of occasions in recent months. I believe that that is clearly the case. But curiously in this instance, while the Government and the Department of Social Security are putting forward stakeholder proposals, the Treasury has turned up with a different proposal; namely, a lifetime individual savings account. We do not know what the relationship is between the stakeholder pension and the lifetime individual savings account.
  1080
  As was rightly argued, we need to look at the matter in context.
  I say "we" and, of course, a number of different interests are involved. There are potential or actual pensioners and there are the providers of the pensions. All have an interest in seeing matters in context. As was rightly pointed out, a whole range of aspects and alternative products are involved, which we cannot consider specifically when we look at the proposal for a stakeholder pension. I believe it is arguable that the stakeholder pension provides one more option to consider alongside all the other pensions, some of which can be held instead of a stakeholder pension, some in addition to it, and so on.
  I take up the point, defended by the noble Baroness for many years, of the position of the basic state pension and the issue of up-rating it in line with earnings, which has always been a difficult issue for those on this side of the House. I say that honestly. None the less, the basic state pension has formed the bedrock of state provision in this country. However, there are serious fears that that bedrock is being undermined. We are told that there will be a guaranteed minimum income, which Age Concern rightly describes as income support, and the undermining of the contributory principle.
  The other day the noble Baroness, Lady Hollis, slightly misunderstood what I was saying in relation to that. I was referring to the clauses later in the Bill—Clauses 68, 69, 72 and 73. In those clauses we find that people will receive what previously had been called "contributory benefits" without contributing. They will be deemed to have contributed. The combination of the minimum income guarantee and the undermining of the contributory principle gives one cause for concern about the safety of the universal non-means-tested state pension. I believe that we are right to consider that in the contest of the remarks of the noble Baroness.
  Having said so much in favour of the argument of the noble Baroness, I am puzzled as to why she should attach this amendment to the document Principles into Practice, Cm. 4101. I had some difficulty in finding anything about pensions in that document. There are other documents to which she could have referred. However, I was struck by the extraordinary way in which the document is produced. I take, for example, some of the principles: Principle Eight says:
  "The system of delivering modern welfare should be flexible, efficient and easy for people to use".
  Anyone would suppose that the Government were to bring forward a system that was not flexible, was inefficient and difficult to use. Apparently, that is a principle that the noble Baroness set out in the document. I also refer to Principle Three:
  "The new welfare state"—
  not government—
  "should provide public services of high quality to the whole community, as well as cash benefits".
  That appears to be unexceptionable. I am puzzled to understand why anyone would pay £5 for this document and I am a little puzzled as to why the noble Baroness should have attached her amendment to this document.

  1081
  In reality, when looking at the possible range of products—I believe "products" is the right word—which are before us, we should consider the danger of the mis-selling of private pensions, about which, I fully accept, we have all been rightly concerned. In many ways, that has been a disaster which is very difficult to put right. Having said that, I believe that there is a great danger—implicit in what was argued in proposing the amendment—of considerable mis-selling of the new products because we do not know what the inter-relationship of them will be. Also, in legislation, we have to consider something that is being taken on its own without regard to the alternatives.
  On the timing issue, it is not clear what those who may consider taking out a stakeholder pension in due course ought to do in the meantime. As it will be a while before the stakeholder pension is introduced, perhaps the noble Baroness, Lady Hollis, will give us an indication of what people should do in the meantime. It may be two years before the stakeholder pension is introduced, and two years in the course of pension contributions which are paid at earlier stages of the contributory period rather than towards the end can have a significant effect.
  There is widespread concern outside the House about such issues. Perhaps I may end by quoting from an Age Concern document:
  "The Government has concentrated on providing additional help for current pensioners through income support"—
  which Age Concern refers to as a "minimum income guarantee"—
  "While increases to income support are welcome they are no substitute for a basic state pension paid at a reasonable level. The Government should be looking to minimise dependency on means-tested support yet by 2050 they still expect one in four pensioner households to be getting income support…Many older people with modest levels of savings and private/occupational pensions are already excluded from the minimum income guarantee and wonder why they bothered saving. There is a great danger that focussing on means-tested support will act as an even greater savings disincentive to future generations of older people".
  To be frank, there are some aspects of the views of the noble Baroness, Lady Castle, with which I do not agree, but with regard to the points that she made on timing and the question of discussing the issues in a sensible context, I find myself in agreement with her.
  4.30 p.m.
  Lord Goodhart: I have listened with great attention and respect to what the noble Baroness, Lady Castle, has said. As we all know, the noble Baroness was the author of the pensions legislation of 1975 which, to a considerable extent, is still the basis on which our pensions are built. No one in this House or outside it could possibly speak with greater authority than she does on the subject.
  I have a good deal of sympathy for what the noble Baroness has said in support of her amendment. My party supports, broadly and in many respects warmly, the Government's proposals for the reform of the pensions system. We believe that the idea of the basic state pension, the state second pension and the stakeholder pension as an alternative to the state second
  1082
  pension is an ingenious system that will move matters a long way in the right direction. In our view, the right direction is undoubtedly shifting pension provision as much as possible, so far as is consistent with the welfare of pensioners, from unfunded to funded. Of course, the state second pension is intended to provide for that.
  However, we have difficulty with the fact that we now have provisions for the stakeholder pension only and, as yet, we have no details on the state second pension. It is important, indeed vital, to understand the interaction between the stakeholder pension and the state second pension.
  We have seen from the Government's White Paper—not the earlier one to which the amendment refers—that the stakeholder pension is intended to be a funded alternative to the state second pension for those who are on incomes above £9,000. This is absolutely crucial. We need to know what the arrangements will be for opting out of the state second pension and into the stakeholder pension. But how can we know about that until we have an opportunity to see the legislation on the state second pension? Indeed, what has been brought out of the oven so far is no more than what might be described as a half-baked version of the stakeholder pension, because we know nothing about this crucial interaction. Until the state second pension is introduced, the stakeholder pension will be little more than a cheap and cheerful version of the long-standing and familiar personal pension.
  I am sorry that the Government found it necessary to delay introducing legislation in regard to the state second pension. Until that happens—I hope it will happen soon and I should like to know what the Government's proposals are on this—we are able to see only half the picture, and that is a pity. Therefore I have great sympathy with the views expressed by the noble Baroness.
  Lord Haskel: I too admire my noble friend Lady Castle and cannot improve on the compliments paid to her by noble Lords opposite. However, I feel that she is wrong to say that there is no context in which these pension proposals are made. The context is modern working life.
  In modern working life people are in and out of work much more frequently; they change their jobs more frequently; indeed, many people are self-employed. The Government tried to take care of that with the minimum wage and the working families' tax credit. In that way they seek to ensure that people receive a decent rate of pay. If people receive a decent rate of pay it gives them a chance to build up their own flexible pension which they can take with them from job to job. Indeed, if they are temporarily out of work or become carers, the Government have undertaken that the contributions will be paid.
  That is the context within which stakeholder pensions are being proposed and it is a logical context in which they should be discussed and debated.
  Baroness Crawley: My noble friend Lady Castle puts forward persuasive arguments, which is hardly

  1083
  surprising given her great expertise in these policy areas. I had the privilege of sitting with my noble friend for five years in the European Parliament and watched her forensically take apart good and bad arguments of parliamentarians from several member states of the European Union. No doubt, therefore, I shall be given a medal for foolhardiness for questioning her wisdom today.
  I am not convinced that it is realistic to delay this part of the Bill on stakeholder pensions until all the Government's other pension proposals are debated and introduced. The new stakeholder pension, as I see it, should be introduced sooner rather than later; not least because as a new, flexible, low-cost pension it will allow up to 5 million people access to a value-for-money funded pension for the very first time. No one can say that the present system is working for the benefit of everyone in this country, and we know that, unless action is taken quickly to modernise the pension system, one in three pensioners—those are my figures; the noble Lord, Lord Higgins, may be right to say one in four, but it is certainly millions—will end up relying on means-tested benefits in retirement in the middle of the 21st century.
  There is therefore more than an air of urgency about this debate. As noble Lords will know, the way in which pensions are provided for people continues to evolve. My noble friend Lord Haskel was right in saying that that evolution takes place in the context of rapidly changing markets, the increased supply of pensions to that rapidly changing market place and people's need for mobile pension schemes to suit their new working patterns. The delivery of pensions in the 1990s has become a partnership between the public and the private sector. The private sector delivers to those who can afford to save for their own retirement. The state should concentrate on what it does best; that is, alongside the basic pension, underpinning through the minimum income guarantee and the second state pension the incomes of those least well off.
  We need to reflect on the fact that, because of this Labour Government's initiatives such as the minimum wage and the working families' tax credit which is to be introduced in November, 80 to 90 per cent of women earners, who are the traditional losers when it comes to the pay and pension stakes, will be taken above the lower earnings level. They will therefore be able to build up a contributory pension scheme. While that does not at a stroke solve the pensions consequences problem for low-paid women, it represents some progress and it should be seen as such.
  Finally, I hope that we will not delay the establishment of a legal base for stakeholder pensions. They are an essential component of the whole reformed pensions package, not least because early legislation in this area gives time to potential providers to gear themselves up for the new schemes.
  4.45 p.m.
  Lord Peston: I intervene with some trepidation because, first, I do not agree with the amendment of
  1084
  my noble friends, Lady Castle and Lady Turner and, secondly, unlike everybody else who has spoken, I am a mere amateur. I am not an expert on pensions.
  I should perhaps declare an interest which is the counterpart of that of the noble Lord, Lord Higgins; namely, I am an occupational pensioner. I have three pensions at least, all index-linked and I am a great believer in all these matters. I too am delighted the amendment was tabled because the topic is well worth exploring.
  Perhaps I may start with one or two random remarks. I would love to believe that the Government have a master plan. If they do, no one has told me about it and perhaps my noble friend Lady Hollis will give me a copy of the master plan marked "Secret. Not for anybody else to see". I have read the published documents but my noble friend Lady Castle is talking about the master plan and not the published documents. If there is a master plan I should love to see it.
  We must start from the position that the existing state of affairs with respect to income for the elderly is a complete mess. It is not something that any member of this party can support. It has gone from not very good to very bad indeed, especially for anybody who has to live on the state pension. I say to my noble friend Lady Castle that I too totally support the earnings-related update; I put my hand up to that. I have no doubt about that whatever. The problem is that the earnings-related update will be paid by the existing labour force. And how are we to persuade all those people who are currently in work to agree to what I would advocate; that is, a rise in taxation? I am still an old-fashioned person who strongly believes in progressive taxation and redistribution. The problem is persuading people to vote for it.
  I have argued cynically for a great many years that I am astonished how, for 18 years, a lot of the relevant labour force voted for the party opposite, which abolished the earnings-related approach to this matter and, to a large extent, abolished progressive taxation. But when those same people, having voted for that, retired, they asked, "Where is our earnings-related pension?". It is a cynical view. When I address meetings and people question me about it, I respond by asking them, "What did you vote for all those years?"
  If I had a vote, I would still vote for progressive taxation and uprating, but the problem is to persuade the workers in work to do so. I have to say that I am not convinced that they all will. So that is the nature of that problem. My noble friend Lady Castle ought to know that if she needs one supporter in favour of earnings related update, then I am it. Unfortunately, that does not help in a general election, particularly as I do not have a vote.
  I turn now to the other problem that I have with this amendment. It is rather like the way that the Opposition have been approaching the House of Lords reform; in other words, it is based on the proposition that until you can do everything you should not do anything. I agree that this is only a first step. The way to judge it is to ask whether it is a first step that improves the current

  1085
  state of affairs. I have to say that I am persuaded that it will at least, within its limits, lead to an improved state of affairs in order to help. especially in the longer term.
  I do not disagree with my noble friend Lady Castle. I think that my noble friend the Minister owes it to us to give us as much practical detail as possible. If she cannot do so now—and I doubt that she can—we would at some point like to see precisely how some of these measures will work. Both my noble friend Lady Castle and the noble Lord, Lord Higgins, said that they would really like to see step by step how it would work. I, too, should like to see more of that, but that does not mean that we should not proceed with the legislation as it is or try to move forward.
  I have one further point to make about the question of what we can do. I actually believe that there is a broad sense in which the pension problem is insoluble. Indeed, it is fairly commonsensical; if it were an easy problem to crack, even noble Lords opposite would have cracked it. Certainly my noble friend Lady Hollis, who is brilliant at these things, would have got it sorted out by now. But we are discussing a number of rather conflicting difficulties. We have the problem of pensions for people who are in work, we have the problem of uncertainty with work and we have the problem that we do not have full employment. We also have all sorts of problems with the economy about which we do not even know.
  Essentially, as the noble Lord, Lord Higgins, and others pointed out, we have the incentive problem. We certainly want to tell people that they will be safe in their old age. None of us has any doubts about that as a moral principle, but if we then say that we will guarantee it, you may ask, "Why should I guarantee it?" It is the classic problem and not one that is easily solved, although we all say that we favour solving it.
  I have to tell my noble friend Lady Castle that I think she is being a little harsh in this respect. I stand second to no one in my willingness to attack my noble friends in government, especially as it turned out that I was not to be one of them. However, on this occasion my noble friend is being at least slightly unfair. The problem will not be easy to solve. But where people are in work and where the Government can deal with the mis-selling problem (which they can with appropriate controls), where they can say that, on average—not when you are poorer—if you can make provision for yourself within recognised schemes you should do so and where the Government then say that below that average they will use the tax system to try to help people, I think it is worth giving the kind of support that my noble friend would like to have on this occasion.
  I conclude my remarks by saying that I am delighted that my noble friend Lady Castle has raised this matter. It has given me a chance to say a few words in support, as well as make other comments. I entirely agree with her that we want more detail, if we can have it. But I hope that she does not in any way force us to vote on
  1086
  the matter today and that she will content herself with at least hoping that my noble friend the Minister will give us some enlightenment and some answers.
  Baroness Hollis of Heigham: As we have heard, the amendment tabled by my noble friend Lady Castle would insert a condition that Part I of the Bill should not have effect until comprehensive legislation has been introduced on our wider proposals for pensions reform. Behind this lies a belief held by my noble friend that our pension plans are incomplete and that they are secret—indeed, I think she actually said that our policy was to fragment and confuse. In other words, we need the comprehensive policy laid out so that people can understand where this part of the Bill fits, and only then would she feel able to give it a possible endorsement.
  I take the criticism in the point made by the noble Lord, Lord Higgins, that if you were to rely on the document cited in the amendment—namely, Principles into Practice—you would find that it does not say very much about the detail of pensions. Therefore, my noble friend is right: there is no coherent pension policy in it to enable her to put what we are proposing today into context. But, as that document made clear, it was never designed to do so. It was the first document and was subsequently followed by the major pensions document Partnership in Pensions, which came some nine months later. The first document was produced in March 1998, but the latter came out in December 1998 and was introduced by myself by way of a Statement. Indeed, my noble friend was one of the most senior contributors to the debate which followed.
  Therefore, I take it as being a little odd that my noble friend should claim that the Government have not produced a coherent policy which they have brought to the House as a framework document within which the policies of the Bill can be understood, appreciated and debated. We did precisely that last December and, as I said, my noble friend was one of those who took part in the debate and who pressed me perfectly properly on her concerns. I hope, therefore, that my noble friend will accept that her basic premise—namely, that the Government do not have a policy, or, if they do. they are concealing it—is simply unfair. She must recognise that fact because she took part in that debate.
  My noble friend has rightly said that we need more detail, as indeed have other noble Lords. That is perfectly reasonable. We are producing that detail in a series of consultation documents which will go out to the appropriate bodies. On the basis of that, we shall issue our proposals. That is surely the right way to proceed. This is a highly technical process, involving a major sector of industry and we are handling it in that way. To say that we have no coherent framework simply runs in the face of this document, especially when my noble friend contributed to the debate on it last December.
  In that Statement, in the subsequent debate and in this document, we made clear that our approach is to build a modern and affordable pensions system which will ensure that everyone has the opportunity to achieve a decent income in retirement. No Member of the Committee today has disagreed about the substance of

  1087
  what we need to do. But if we leave pensions are they are, too many people will passport the inadequacy of low wages into the poverty of old age. My noble friend and I entirely agree in one respect: we want to ensure that today's pensioners and, above all, tomorrow's pensioners can enjoy as comfortable a retirement as possible.
  My noble friend obviously prefers to argue the case of the SERPS proposals that she established in 1978. She was right then to do so. SERPS served some pensioners well, but I have to point out that it does not help those who need it most; that is to say, those on low earnings or those who move in and out of the labour market. Equally, as has already been said, occupational pension schemes are one of the great welfare success stories. But, as we all know, they are not available to everyone. Personal pensions can be a useful substitute for those who do not have access to an occupational scheme or those who change jobs frequently. But, again, as everyone knows—indeed, as we have said time and again in this Chamber—they are not suitable for everyone, especially those with moderate or low earnings or where the scheme carries heavy charges that can top-slice 25 or even 40 per cent off the pension of those who contribute for only a modest number of years.
  We know that the combination of SERPS, occupational pensions and personal pensions does not now address the problems of the modern labour market. As my noble friends Lord Haskel and Lady Crawley emphasised in their contributions today, we have to adapt that pension framework to pick up those who are currently falling between the holes and the meshes. That is why we produced this document—121 pages of it—laying out where we want to go, followed by consultation papers which have gone to those in industry. We have not gone by the rules for consultation documents because the industry would have been perfectly right to complain.
  We know where we are going. I would have hoped that your Lordships also knew where we were going. We seek to deliver a pension promise to those who are at present ill served by the offers in the market-place to ensure security in retirement. We have not been slow in doing that, despite the charges made by my noble friend.
  We introduced last April the new minimum income guarantee, which provides immediate help to today's poorest pensioners—often the elderly widow in her late 70s or 80s who has never had the chance to build a decent pension—and we have increased income support by three times the rate of inflation, so that single pensioners receive £75 and couples £116. To ensure that the value of that is maintained, next April the increase will be based on earnings and our long-term aim, if resources permit, is for that minimum income guarantee to be increased in line with earnings, so that all pensioners share in rising national prosperity.
  We believe that helping through the minimum income guarantee is the most effective way of helping those currently in need. It makes a real difference quickly to those who are poorest. But that is not all we are doing. In addition, we introduced winter fuel payments at a cost
  1088
  of £200 million, increased them in the Budget to £100 a year, and have provided extra help in terms of VAT, scrapping eye-test charges, and so on.
  Those are the first steps. We will also set out our plans to reform state and private pensions so that everyone with a lifetime of work and caring behind them will build up rights to a pension that will take them above the minimum income guarantee. That is a safety net and we want to lift people above that safety net as far as we can. How are we doing it? The answer is in two ways: we are going for a state second pension and for a stakeholder's pension. At the moment, SERPS covers something like 7 million people. We expect 5 million of those to go into the state second pension.
  As a result, because that state second pension will assume that anyone earning between the lower earnings limit of £3,400 (or whatever) to £9,000 will receive a pension as though they were earning £9,000 a year. It will be more distributive—as my noble friend Lord Peston called for that—than anything we have so far seen in the pension world. Anybody on an income of £3,500, £4,000, £5,000, £6,000 and so on will get a state second pension as though they were earning £9,000 a year. That is something SERPS could never do, because it was earnings related. It gave the least help to those who needed the most help. That is why it is not an adequate framework for our future.
  So part of our policy will be a state second pension, with carers and disabled people credited into it. We expect, therefore, that in that new state second pension there will be 5 million people: 4 million coming from SERPS; half a million from personal pensions; half a million from occupational pensions and perhaps 2 million carers. Of the other 2 million people currently in SERPS, we would expect the equivalent number to go into the stakeholder pension, which is safe and financially more generous than people could get under SERPS. That is why we have a two-tier policy. We expect that the state second pensions to attract 2 million from SERPS, plus 2 million from an approved personal pension and, of course, those who are very badly served in the pension market at the moment—the 1 million people who are self-employed.
  That is where we see the present SERPS "clientele" going. Those who are among the poorest, earning under £9,000, will go into a second state pension, unfunded, pay-as-you-go, but genuinely and decently redistributed so that the poorest get the same as those who are on £9,000 a year, which SERPS never did. For those earning over £9,000 and up to £18,000 or £20,000, we are for the first time going to offer the stakeholder pension, a second pension in which the rebates have been recycled to produce a pot which will be available for a funded pension which is portable, cheap, secure, properly governed, available to the self-employed and which, if you are out of work for whatever reason for up to five years, you can continue to keep ticking over.
  Together, the state second pension and the stakeholder pension will do what SERPS was doing in the late 1970s but which it can no longer do because the labour market and the world around us have changed. Short-term work, part-time work, women's work,

  1089
  contract work, low-paid work and being self-employed or moving in and out of the labour market: these were contingencies ill served by the SERPS that we inherited. I know that my noble friend did her best when SERPS was first established to meet some of those contingencies, but those provisions were stripped out.
  We believe that in this document we have set out our framework and that in this Bill we are starting the job of initiating stakeholder pension schemes. We do not think it is right to delay until both can come in at the same time. Even a short delay in starting pension arrangements can have a considerable impact on the level of pension which is available at retirement. We are particularly concerned at the lack of pensions suffered by so many people, or the inadequacy of personal pensions. Something like 50 per cent of personal pensions expenditure merely recycles the next rebate, which will ensure that those people will still need income-related benefits in retirement. We therefore need to move as speedily as we can on this. That is why we have brought forward this legislation at the earliest opportunity following the Green Paper. Potential scheme-providers need time to prepare.
  The Government need to ensure that the necessary administrative and regulatory arrangements are put in place. We need to act with some urgency and we are also conscious of the need to get the details right. Earlier this month, my right honourable friend the Secretary of State set out proposals for minimum standards, including charges. Further consultation papers will follow shortly.
  My noble friend would say that we can do nothing about stakeholders until everything else is in place. As my noble friend Lord Peston said, we cannot do anything until we are ready to do everything all at the same time. I can understand that concern. I appreciate that pensions policy has to be judged in the round otherwise problems arise—very much as happens with yellow lines on the road when the traffic tails back somewhere else down the system. You need to see it coherently.
  We believe that the Green Paper sets out all that. We shall take action as soon as we can and as soon as legislative time permits the introduction of the state second pension after this parliamentary Session. We cannot offer guarantees on that, but we hope to introduce it as speedily as possible. In the light of that, I hope that my noble friends Lady Castle and Lady Turner will feel able to withdraw their amendment. We do have a coherent pensions policy. It was shaped here and my noble friend took part in that debate. We are introducing it in two steps, partly because the industry needs the extra preparation time for what are essentially privately provided stakeholder pensions.
  We see this as a set of coherent policies. We shall be bringing forward proposals for the state second pension as soon after this parliamentary Session as time permits. In the light of that, I hope that my noble friend will accept that together the two elements—the state second pension, unfunded, and the stakeholder pension—do what she was seeking to do with SERPS, but in a more appropriate way which reflects the conditions of the
  1090
  labour market in which we now live. We all want to see security and decency of provision in old age. We believe that the stakeholder pension marks the first step and, complemented by the state second pension, will achieve precisely that.
  Lord Higgins: I wonder if I may press the Minister on one or two matters. Several of her remarks threw a new light on the present situation as opposed to what we previously believed to be the case. What she has not. done is to explain why the Government cannot bring forward in this Bill the state second pension. As I understand the situation from previous statements, it has been previously anticipated that the state second pension would not come into operation for some five years after the stakeholder pension. Can she say whether that is so or not?
  The other point the noble Baroness made which is of considerable interest relates to the fate of the people in SERPS. The noble Baroness is now suggesting that some 2 million people who are now in SERPS will move into stakeholder pensions. Perhaps she will elaborate on that a little given the different structure of the two measures. As regards the others who are in SERPS, will they be able to remain in a SERPS system or will they be compelled to move to the state second pension?
  Are the Government delaying implementation of the state second pension because of the manifesto commitment, or is that being done for some other reason? The comments that the noble Baroness has just made seem inconsistent with that manifesto commitment; namely, that the Government propose to legislate in the next Session of Parliament—not the next Parliament—to introduce the state second pension. I hope that the noble Baroness will clarify those points.
  Baroness Hollis of Heigham: I said that we have no intention of affecting accrued SERPS rights. They will continue to exist and they will be protected. However, as the state second pension and/or the stakeholder pension come into play—particularly the state second pension—those rights will be carried over into the new pension format. In other words, SERFS will not continue to run in parallel; it was never intended that it should. The introduction of the state second pension Is planned for April 2002. However, that is subject to time being made available to introduce the primary legislation. Should all go well—I have no reason to doubt that it will not—and subject to legislative time being available, I hope that we shall move as quickly as possible from consideration in this Session of the stakeholder pension to the introduction of the state second pension.
  Lord Higgins: Would that mean that people on an earnings-related pension—namely, SERPS—would go into the state second pension which is not earnings related?
  5.15 p.m.
  Baroness Hollis of Heigham: They would do so only if that would be to their financial advantage. In other

  1091
  words, the choice is available to go into a stakeholder scheme. Someone who at the moment earns £3,500 or £4,000 a year frankly receives pennies out of SERPS. Under the state second pension the return for someone who currently earns about £3,000 or £4,000 a year would be four times what they would currently receive under SERPS. Under SERPS someone on £3,000 or £4,000 a year might receive only £11. However, he or she would receive about £40 under the state second pension. The state second pension is infinitely more generous than SERPS every step of the way. We are not talking about a reduction of rights but rather a huge increase in returns.
  Lord Peston; Before my noble friend sits down, I hope I may ask her one other question which I forgot to ask earlier. I forgot to ask about the element of compulsion with respect to the stakeholder pension. I think of someone who is starting work rather than someone who is already in work. Is it the Government's view that everyone who is in work must now compulsorily have a stakeholder pension? According to my reading of the Bill, that matter is slightly ambiguous.
  Baroness Hollis of Heigham: If the straight question is whether everyone in work will be compelled to be a member of a pension scheme, the answer is no. We do not propose that at the moment. We have consulted on this matter and there has been quite a lot of support for that proposal. However, I want to qualify that by adding a few more points. First, anyone who is in employment—that is, an employee—is, by virtue of the current SERPS arrangements or the occupational scheme arrangements, already effectively compelled to belong to a pension scheme. My noble friend Lady Turner who knows so much about pensions nods in affirmation. If employees do not have access to an occupational scheme, they enter SERPS. Therefore any employee is already in a pension scheme and our proposal will not reduce that provision.
  Secondly, as my noble friend Lady Crawley rightly said, by virtue of the minimum wage, many more women who hitherto have not been over the lower earnings limit, and therefore have been unable to enter contributory pension schemes, will be able to do so. About 85 per cent of married women in work and 88 per cent of unmarried women in full-time work will pass the lower earnings limit. Between 60 and 70 per cent of those in part-time work will pass the lower earnings limit. They will come into a contributory scheme and therefore into a compulsory pension scheme, if you like, in so far as they are employees. As I believe we all recognise, the difficulty concerns whether compulsion should apply to those below the lower earnings limit; that is, those low earners who are perhaps working six or eight hours a week and earning, say, £2,000 a year. One could end up guaranteeing them a pension which is more generous than their earnings. There is a real dilemma there.
  The second problem concerns how best to help those who are self-employed. If we were to make pension membership compulsory, I suspect that the group on
  1092
  which that would bite most would be the self-employed. Many self-employed people regard their business as their pension. They believe that to "top slice" money which they consider could be more appropriately invested in their business and put that into a pension scheme would not be in their best interest. We have consulted on this matter. As I say, at the moment we do not propose to go down that route, but we are not closing the door on it. We hope that the new stakeholder scheme will be sufficiently attractive to encourage the self-employed to take out pension provision to an extent that has not been the case in the past. If we find that we are unsuccessful in that aim and that other avenues need to be explored, I promise the Committee that we shall reconsider the matter. We want to ensure comprehensive pension coverage. I believe that all Members of the Committee will understand the dilemmas that this Government and the previous administration—I refer to the Pensions Act 1995—have faced.
  Lord Peston: Some of these matters will be discussed when we discuss the next amendment which I gather my noble friend Lady Turner will put before the Committee. However, I have to say that in my judgment young people are incapable of taking a rational decision that will affect them 40 years ahead. Some time ago I remarked in this Chamber that I was incapable of taking such a rational decision in my youth. I am delighted that I had no choice in the matter and that I was forced to have a pension, the result of which is that I am not on the breadline now. I believe that we cannot let this issue of compulsion drift. It is hopelessly naïve to assume that people can take the right decisions with regard to provision 40 years in the future. That is the only reason I have intervened, but further points can be raised when the noble Baroness, Lady Turner, moves the next amendment.
  Baroness Castle of Blackburn: Has the noble Baroness finished her comments? One never knows; it goes on, does it not?
  Baroness Hollis of Heigham: If the Committee has finished with me, then I have finished.
  Baroness Castle of Blackburn: We have had the initial run of a worthwhile debate, not least because it enabled the noble Lord, Lord Peston, to get many of his repressions off his chest! I believe that the discussion has revealed the unsatisfactory position in which we find ourselves in that we are having to discuss on the basis of a narrow piece of specific legislation, a wide range of rather generalised promises. My amendment does not seek to say that the enforcement of the different aspects of pension policy must all take place at the same time, but that we must have the Government's whole proposition in front of us in legislative form. It is only when we come to draft the measure in statute that some of the vagueness disappears and we find that we do not like what we see.
  I stand by the claim I made that we ought not to have been asked to deal with one tiny slice of legislation. The position is also unsatisfactory because it enabled

  1093
  the noble Baroness, Lady Hollis, to give a wonderfully eloquent tirade about the wonders that are to come in the light of the Green Paper, when I had narrowed my contribution to the question of timing and the context of the measure. I do not want to filibuster because I am anxious not to give the Government justification for keeping us all here until the early hours on the grounds that we were all trying to wreck the Bill. If it comes to wrecking the Bill because of filibustering, I think the noble Baroness had better measure the length of her own speeches and compare them with mine!
  I think it was worth while to have this preliminary run. The whole issue of pensions—as, God knows, I know—is extremely complex. I do not intend to press my amendment for one very specific reason: it has been pointed out by the noble Lord, Lord Higgins, and the Minister that my amendment is wrongly drafted. They seemed puzzled as to why I had chosen the earlier document to quote in the amendment. Frankly, I was a bit puzzled when someone read it to me. There is a simple explanation. The Committee will be tired of hearing me say that I now suffer from very low vision and that everything has to be read to me. When I detailed the job I said, "I am talking about the Green Paper; look at the title", and the wrong one was looked at. I am not trying to push the blame on to anybody else. It was intended to be a reference to the Green Paper, so perhaps I will not be accused of inconsistency.
  Of course I have read the Green Paper; of course it is full of noble sentiments—but the Committee will forgive me if I am a bit cynical. The glossies with which we have been inundated are no substitute for the hard statutory force of policy. I am not surprised that people have difficulty in finding their way through the glossies that come from the Government. After all, the manifesto glossy had a reference to SERPS which is now being interpreted in rather different ways than seemed to be intended.
  With the permission of the Committee, I will withdraw the amendment with a view to living to fight another day.
  Amendment, by leave, withdrawn.
  Clause 1 [Meaning of "stakeholder pension scheme"]:
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 2.
  Page 1, line II, after ("conditions") insert (", including a minimum level of employers' contributions,")
  The noble Baroness said: I beg to move Amendment No. 2. Although this amendment is grouped with Amendment No. 10, I do not intend to speak to or move that amendment.
  The Bill contains the provision that employers must facilitate access to stakeholder pension schemes. However, there is no requirement for employers to make any contributions themselves; they simply allow the providers of such schemes access to their staff. The object of the amendment is to provide for a minimum level of employers' contributions. We think that otherwise what the Government propose may not
  1094
  increase or improve the general standard of pension provision. In fact it could accelerate a trend away from high-quality employer final salary schemes.
  Employers may be tempted to review their schemes, possibly redirecting the lowest paid into the state second pension and possibly middle earners into stakeholder schemes; higher employer contributions could then be confined to higher graded staff. That is not a development that most of us would want to see.
  A further point is that very few employees are likely to understand how much they may have to pay into a stakeholder scheme if they have to fund entirely themselves. It has been estimated that a young person joining a scheme funded on a money purchase basis would need to accumulate a fund of around £200,000 by age 60 in order to receive a pension of about £10,000 a year—adequate maybe, but not exactly luxury. A sum of £200,000 seems impossible to most young people.
  If stakeholder pensions are to fulfil the task envisaged by the Government of making retirement a pleasure rather than a time to be feared, employees will have to put aside a substantial sum at a time in life when many will be paying off mortgages and bringing up children. There seems no reason why employers should not be asked to bear some of this burden. That is the aim of this amendment.
  Lord Higgins: This amendment brings out a very important point which the noble Baroness has rightly emphasised. At the moment, a number of employers have schemes—nowadays, generally speaking, they are of a money purchase kind rather than a final salary kind—where they make contributions towards them. It is likely to be the case that, since the stakeholder pension does not have that provision, the benefits on that existing scheme may well be superior to what will eventually emerge on a stakeholder scheme.
  The noble Baroness paid tribute to occupational schemes. It is common ground that they have been a great success—no one is disputing that—but it may well be that to some extent there is an element of inertia in them. If suddenly employees, particularly perhaps of smaller firms, are told that the fashionable thing to do now is to have a stakeholder scheme in the terms set out very clearly on the face of the Bill, employers may well ask, "Why is it we are going ahead with the existing scheme rather than simply giving our employees a stakeholder scheme?" Because of the Government's—I was about to say "propaganda"—position on this, they may consider that that is something which the Government regard as perfectly reasonable. In short they will say perhaps, "We are being excessively generous'. In practice, employers are likely to close the existing scheme to new members and then introduce a stakeholder scheme.
  A real danger of the stakeholder scheme is that this kind of situation to some extent adversely affects a number of people who continue to have the opportunity of being in an occupational scheme. Having said that, there are much wider issues about the extent to which employers should be compelled to provide, contributions, which in effect is what I understand the

  1095
  amendment to say. That raises other difficult questions. The trend, if I may put it that way, which I have just described and which I think the noble Baroness supports gives one some cause for concern.
  Another concern is the extent to which one has to make contributions to ensure a worthwhile pension. That matter will arise more specifically on later amendments. There is obviously a danger—Mr Frank Field has expressed this in glowing terms which I will not repeat in this House—that people will decide they should spend the money rather than put it into a scheme from which, in the event, they may get no benefit because the level of the minimum income guarantee comes above the level of pension provided by the contributions they have made. I understand the concerns which the noble Baroness has expressed, although I think there may be real problems in going down the road she advocates.
  5.30 p.m.
  Lord Goodhart: We support very strongly the spirit behind the amendment moved by the noble Baroness, Lady Turner of Camden. My noble friend Lord Russell and I have tabled Amendment No. 19 which is intended to cover the same issue. In the draft grouping it was grouped with Amendment No. 2. I am not sure why it has been degrouped because it seems to me that this is the appropriate place at which to discuss this and one or two other closely related issues. I intend to save the time of the Committee by raising my points in this debate and not moving Amendment No. 19.
  As I said in the debate on Amendment No. 1, we give broad support to the Government's proposals for the troika of basic pension, second state pension and a funded stakeholder pension as an alternative to the second state pension. However, we do not believe that stakeholder pensions will provide adequate pensions for employees unless three conditions are satisfied.
  First, membership must be compulsory for those serving above a certain level unless they already belong to a contracted-out occupational scheme or another pension scheme to which the employer makes appropriate contributions. Secondly, employers as well as employees must contribute, as the amendment proposes. Thirdly, the minimum contributions from both employer and employee must be sufficient to build up an appropriate fund. Amendment No. 2 deals with the second point—that employers should contribute—but it does not propose that membership should be compulsory for employees. Without that requirement, I do not think it will work. For reasons to which I shall come in a moment, compulsory membership will be essential.
  Perhaps I may go into a little more detail on those three points. First, I believe that membership should be compulsory. The second state pension is intended, as the Government have explained, to be a flat-rate pension. The level of that pension will be fixed so that those earning sums greater than £9,000 a year will in effect do better by switching to a stakeholder pension. It is perfectly legitimate to say that people can choose for
  1096
  themselves whether to stay in the second state pension or shift to the stakeholder pension. But on that point I agree with what the noble Lord, Lord Peston, said in the earlier debate. Furthermore, inertia is a powerful force. The Government are in effect deliberately setting up a scheme which means that people on earnings of more than £9,000 a year will not get their money's worth if they stay in the second state pension. To rely on inertia to reduce the numbers opting out is something approaching mis-selling. The Government should lay down rules which provide that at some point people must switch to a stakeholder pension.
  What is that point in terms of earnings? That is a matter of detail. I certainly think that £9,000 is too low. The incomes of many people will fluctuate to some extent. Someone's earnings may have gone up £9,500, but they may go down again next year, so that should not mean that at that point they are required to change. Since the value of the stakeholder pension is not wholly predictable, there is a need to leave a margin. We do not want people to be forced out of the second state pension only to find that they would have been better off to stay in it. I suggest that earnings of £12,000 might be the point at which people would be required to make the switch.
  Secondly, employers as well as employees must contribute. Pensions are now recognised as a form of deferred earnings. In effect, therefore, they are part of pay. It is the duty of employers to contribute to the pensions of their employees. Many employers already recognise that duty either by providing occupational pension schemes of their own or by contributing to group personal pensions for the benefit of their employees. However, not all employers do so. It is not practicable for some employers, particularly small employers, to set up their own occupational schemes. It will become much easier for them to contribute to a stakeholder pension.
  I therefore believe that employers should, if they are making no other adequate pension provision by means of their own contributions, contribute to stakeholder pension schemes. But the employer cannot contribute unless the employee is a member of that scheme. That reinforces the argument that membership must be compulsory above a certain salary level. There will be a problem if employers have to contribute whenever their employee is in the scheme but it is not made compulsory for the employee to join the scheme. If employee membership is not compulsory, employees will come under great pressure from their employers not to switch out of the state second pension because of the greater burden it will impose on the employer.
  Finally, what is the appropriate level of contribution? The minimum needed is at least 10 per cent of current wages if the target is to provide a pension in due course of around half average wages. Some people say that that 10 per cent is not enough and that closer to 15 per cent is needed. However, it may be reasonable to say that it should not be as high as that and that the compulsory level of contribution should he 10 per cent of wages between the lower earnings limit and the upper earnings limit. That would be a reasonable level. I also suggest that two-thirds of those contributions should be paid by

  1097
  employers and one-third by employees. That corresponds roughly to the proportions in which contributions to SERPS are made, as demonstrated by the current rates of rebate. It would be necessary to phase it in over a period of some years. The present contribution level via SERPS on personal pensions is about 5 per cent. Doubling that in one year could cause problems and certainly would be inflationary.
  Compulsory membership of stakeholder pensions and compulsory contributions cannot take effect until the state second pension is in position. But when legislation for the state second pension is introduced, I hope that that legislation will also include provision for a compulsory switch to stakeholder pensions for those who have incomes from earnings significantly above £9,000 and for compulsory contributions by both employers and employees.
  Lord Higgins: I am grateful to the noble Lord for giving way. If he is advocating compulsion in that sense, does he feel that there needs to be some protection to ensure that the pension which is eventually paid is above the level of minimum income support?
  Lord Goodhart: In principle, yes. If it was contributed over a lifetime of work, that would be the case. However, some people might be in employment for only a relatively short period of time and then might unexpectedly lose it. They would be unable, therefore, to build up enough rights. But I would certainly hope that the level of contribution would be such that people who had been in employment for most of their working lives would be at a level above income support.
  Without proposals of this kind, stakeholder pensions will never guarantee proper pensions for those in the lower and middle earnings ranges—that is, £12,000 to £25,000 a year. I hope the Government will accept that they need to move in the direction which I have proposed.
  Lord Freeman: I have considerable sympathy with the amendment moved by the noble Baroness, Lady Turner. I think that her diagnosis is right. We need to encourage employers to make a contribution to pension provision for their employees. But I think that her cure is wrong. I have proposed an alternative route in Amendment No. 17, which seeks to permit dual membership. I believe that the noble Baroness's amendment is flawed because, as the noble Baroness, Lady Castle, said in a powerful speech on the earlier amendment, we must do everything we can to ensure that we do not move away, or encourage a movement away. from defined benefit to money purchase schemes which are cheaper for the employer to contribute to but are a poorer deal for the pensioner.
  The noble Baroness's amendment might encourage employers to close a defined benefit occupational pension scheme and make the minimum contribution to the stakeholder pension scheme, which is a money purchase scheme. That would help the cashflow and the cost base of the employer but it would be to the detriment of the employee. I strongly believe that
  1098
  anything which encourages employers to move away from defined benefits schemes should be resisted. I look forward later on to proposing an alternative route.
  Lord Peston: All my emotional instincts are to support my noble friends on this proposal but I think that there is a small problem with the economics of it which I feel obliged to draw to the Committee's attention.
  First, as a broad principle, the pension received by the average worker will in any system be paid for in full by the worker. Unless one believes that switching from one system to another—for example, from a state system to a stakeholder system or to an occupational pension scheme—leads to an economic revolution and suddenly the economy improves beyond all recognition. there are no free rides. In other words, all pensions are paid for. In general, the average person pays for what he or she receives. One hopes that in a decent system the rich finance the poor. I have made that point previously. I agree that it may be highly controversial to noble Lords opposite, but it has never been a problem for me. That is one part of the background. I shall say more about the numerical consequences in supplementing the points drawn to our attention in an important way by the noble Lord, Lord Goodhart.
  The difficult economics question is: who pays die employer's contribution? The naïve view is that the employer does. I have spent my life teaching economics and pointing out that that is not true; the worker does. The noble Lord, Lord Goodhart, has already alluded to that. The employer's compulsory contribution is simply part of the remuneration of a worker. In any reasonable labour market, unless the employer has monopoly power to a degree that I do not think employers have even in our system, the worker pays. I am not against the compulsory approach, but we should not mislead workers into believing that they are getting something for nothing. They are not. So there is nothing wrong with the idea of compulsion—
  Baroness Turner of Camden: Pensions are deferred pay.
  Lord Peston: That is right. My noble friend puts it much better than I can.
  The idea is not a bad one so long as workers are not under the impression that they did not pay for the pension in the first place.
  En passant, there seems to be a new rule now; namely, we can debate any amendment at any time we like. Therefore—
  Lord Freeman: There is a difference, is there not, between an occupational pension scheme where the employer makes a contribution to the deferred pay of the pensioner in addition to the employee's contribution and a stakeholder pension where the employee pays the whole amount?
  Lord Peston: I am not convinced of that either. My point is that the employee receives whatever the market

  1099
  has to pay the employee to get him or her to supply—if I may use the Marxist term—his or her labour power to the firm. Most economists would argue that the form in which that is done is irrelevant.
  The noble Lord, Lord Freeman, raises another important point in his Amendment No. 17 which also enables me to reveal my ignorance. It had never occurred to me that the problem that he mentions was a problem. It had never occurred to me that people could not have more than one pension. It may be convenient for my noble friend Lady Hollis to elaborate on the point in replying to this amendment. As someone who believes that saving and deferred pleasures are good, I had taken it for granted that the more pensions a person has and the more a person saves, the better—for the very good psychological reason that I prefer not to be dependent on anyone else, not least the state.
  Perhaps I may make a remark on a subject that intrigues me. Again, it relates to the point that people pay for what they get. In broad terms, I have assumed that if one is in full employment for 40 years, and lives for 60 years, essentially one's contribution would be approximately one-third. That is what would be taken out of one's pay. But then we switch to the fact that one would not require equal consumer spending through life. We divide the final part by two, and we get the state pension of approximately half of average earnings; so we get to 15 per cent. It seems to me that, assuming that one has paid for one's house, that part can be knocked off, plus paying for one's dependants, and one ends up within the range of 10 to 15 per cent of income as the likely contribution procedure. I believe that that is what the noble Lord, Lord Goodhart, had in mind. For those of us who have lived through university life, that has broadly been the case. I think I contributed 5 per cent and my employer 10 per cent, but I know that I actually contributed the whole 15 per cent. If my contribution had been nought, I should simply have received 15 per cent less income in the first place.
  The numbers are manageable. My real point is this. Let us assume that we do not have stakeholder pensions—which I support—but pensions on a fully taxed basis. We are then talking about adding 10 per cent to the standard rate of tax. In other words, to repeat my point, one gets nothing for nothing; one gets something for something.
  In conclusion, compulsion is vital. The noble Lord, Lord Goodhart, made a telling point. I should like to see it done by way of some compulsory employer contribution. But I do not think that any of us in this House should even remotely mislead our fellow countrymen and cause them to believe that even this great Government have devised a scheme whereby everyone can be better off when they are older without contributing anything while they are working.
  Lord Stoddart of Swindon: I tend to support the amendment. I believe that it is necessary for employers to make a contribution to a pension scheme—a stakeholder scheme or call it what you will. I do not quite agree with my noble friend Lord Peston that in the field of pensions people cannot get something for nothing.
  1100
  One great problem is that there are people at the present time, as Frank Field explained, who are in fact getting something for nothing because neither they nor their employers contribute to any basic pension scheme. The result is that when the many people who have paid contributions into a private pension scheme all their life and have forgone income as a consequence reach 60 or 65, they find that there is a range of state benefits that are not available to them because they have paid for their own pensions but which are available to those who have not paid any contributions—those people gain twice: they have not lost the income earlier in their life but they receive the benefits at the end of their life. That is the argument for compulsion. I believe that it will be absolutely necessary if any scheme is to stick over a long period of time.
  I am sure that the Government are doing their utmost to bring forward a scheme that will be beneficial and lasting. Although I appreciate the difficulties in relation to businesses, I fear that if the scheme is not made compulsory it will break down for the reasons I have mentioned.
  My noble friend is also right in saying that employers never pay. It is the employee who always pays. I know that to be the case. When I used to negotiate with the CEGB on the Electricity Council, and when I attempted to grind some extra wages out of the employers, they said to me, "Ah yes, Mr Stoddart, but you must not forget the large contribution that the CEGB and the electricity boards pay into the pension fund". So I appreciate what is being said.
  Nevertheless, for many of the reasons that have been mentioned, I believe that the employer should be part of the stakeholder pension scheme. The employer should have some influence on the provision, not only of a livelihood for the personnel throughout their lives but also to see that they have a good livelihood at the end of their lives. I believe that that will help employees to support good pension schemes. For that reason, the amendment should be given a fair wind.
  Lord Desai: Since we are having a very good seminar this afternoon, perhaps I may be allowed to contribute to it. I agree that if people are irrational, and especially the young who do not want to take part in saving, giving them the illusion that the employer pays a pension is a perfectly welcome piece of subterfuge. Of course, people themselves pay, but if they think that the employers pay, that is fine.
  Given the remarks of my noble friends Lord Peston and Lord Haskel on an earlier amendment, in the new labour market will there be administrative problems in tying employers down, because employers change? It is not like working for the electricity industry over a lifetime. I have worked for only one employer for 34 years—I hope that I do not get sacked for another six years! If people work for different employers, going in and out of employment, how can one best manage to obtain the element we want? It is an important question

  1101
  which we ought to face. I do not know the answer, but the modern labour market does not make for simple rules.
  Lord McIntosh of Haringey: My noble friend Lord Desai described this as a seminar. I am not too keen on seminars which take place in the afternoon given that some people stay for the afternoon but not for the rest of the work which has to be done in the evening. I am not talking about anyone in particular, I hasten to say, but it is a trend that seems to have arrived in recent months and years.
  I am pleased that the noble Lord, Lord Goodhart, has brought back the link between Amendments Nos. 2 and 19. We originally grouped them together but some centrifugal force which I do not understand took place and separated them. They ought to be debated together because you cannot have compulsion for employees without having it for employers and vice versa. It has been a sensible debate and I am grateful for that.
  I should declare a past interest as one who ran a pension scheme for 30 years which, until 1988, was an occupational pension scheme, a final salary scheme. It was wrecked by the government of which the noble Lord, Lord Freeman, was a member. His government not only wrecked SERPS by reducing the outcome from the average of the best three of the last 10 years to the average of the last 20 years so that the value of SERPS was much worse after the Conservative Government wrecked it; but they also wrecked much of the final salary occupational pension schemes by removing the compulsory element of membership of those schemes. So I do not take any moralising about compulsion from any Conservative Members of the Committee. The compulsion was removed. My scheme was largely wrecked because I had many young people who knew they would move on. In my business you do not stay for 40 years working for the same employer. The young people would not join the scheme and it lost its funding rationale. I had to introduce a group personal pension scheme instead.
  Of course, any good employer—and I was a good employer—will want to contribute to a pension scheme. I shall not become involved in the economists' arguments about transfer charges; we do not need to do that for the purposes of the Bill. The argument is about who ultimately pays. The good employer will want to contribute to a pension scheme and will encourage his employees to do so precisely for reasons of self-interest, if that is the way to maintain, retain and motivate staff. Therefore, we should be doing everything we can to encourage employers to contribute to pension schemes. That is not necessarily to say that compulsion is the right solution.
  Stakeholder pensions are aimed at those people who do not have access to an occupational, salary-related pension. I say that to the noble Lord, Lord Freeman, who seemed to think that they were a generalised alternative. They are designed specifically to provide a cheap, value-for-money way for people on moderate earnings to build up a funded second-tier pension. So it is vital that we make the schemes as attractive as possible, both for employees and employers. In
  1102
  considering subsequent amendments, we shall consider the tough terms for insurance companies on which we wish stakeholder pensions to be built up, making them attractive to employers by making as limited and bearable as possible the burden on them. That is to ensure that they collaborate with stakeholder pensions.
  In Clause 3 we propose that employers should offer access to a stakeholder pension scheme for those employees who are not offered access to an occupational scheme. This will be an additional burden on employers, but we believe it is a reasonable requirement. We have made it clear that we shall strive to minimise the burden.
  There is nothing in the Bill which will prevent employers choosing to offer contributions to their stakeholder pension scheme. In many cases, they will and we shall give them every encouragement.
  If it is any consolation to Members of the Committee who are worried about the minimum income guarantee question, we have looked at the amount of money that will be achieved after the basic pension and the statutory second pension which will be paid at the level of £9,000, even for those who earn less, including carers and the self-employed. After a reasonable working life, we can say that the return on the basic and the SSP will be more than 100 per cent of the level of means-tested benefits. That really makes a difference for those who think that there is a realistic alternative of refusing to have anything to do with it and relying on the state at the end. There is, therefore, already an element of compulsion in the pension scheme.
  Lord Higgins: Perhaps I may press the Minister on the question of more than 100 per cent. That would suggest it would be a small amount above. Presumably he has done the calculations and can tell us what percentage the Government expect above the 100 per cent.
  Lord McIntosh of Haringey: It is a different figure according to the number of years. It is 105 per cent at 25 years, I believe, but if I am wrong, I shall have to write to the noble Lord.
  Lord Higgins: So after all the contributions, all you get is 5 per cent more than the means-tested benefit.
  Lord McIntosh of Haringey: Yes, if you have only the statutory second pension and the basic pension. But we are not talking about the stakeholder pension here. The whole point is that everything you put into a stakeholder pension on top of the basic and the SSP is above the minimum income guarantee and therefore it is returned to the pensioner in due course. I was talking about the SSP and the basic pension, not about the stakeholder pension.
  I said that there was an element of compulsion in the pension system. National insurance contributions are paid by all workers except the lowest paid. They provide entitlement to the basic state retirement pension which is the basic building block of pension provision available to all workers, with the assistance of credits

  1103
  and home responsibilities protection to many carers and disabled people. That is another difference which must be taken into account.
  In addition, national insurance contributions for employees give entitlement to the state earnings-related pension. Employees who choose to make an equivalent arrangement through membership of the contracted-out occupational pension—I mean those who choose to or are able to because one is on offer to them—or an appropriate personal pension can receive a rebate of national insurance contributions.
  State pensions have many strengths and it is important to recognise that current compulsory pensions do not ensure a decent provision for many people, particularly the lowest earners. That is partly because SERPS has been cut back from its original design and because demographic and labour market changes are tending to reduce the periods over which people are able to contribute; SERPS also, by its nature, gives the smallest benefit to the lowest earners.
  We considered whether it was right to increase the level of compulsory saving in the system, which is what is being urged by Members of the Committee in Amendments Nos. 2 and 19. I do not believe that it is the right answer to the pension problems we face. I say to my noble friend Lord Peston that it is not that it is not viable; it is. We would not have considered it if we did not think we could do it; but it would provide little extra pension for the lowest earners, who would be likely to find the burden of higher compulsory contributions the hardest to bear. At the same time, it would force higher earners to build up a significantly larger pension.
  Compulsory contributions by higher earners are already at a level where the resulting pension is likely to lift them well clear of the minimum income guarantee in retirement. We know that two-thirds of those who earn over £15,000 a year already save an extra 5 per cent of their earnings voluntarily in occupational schemes or personal pensions. Compulsion is a blunt weapon. The new framework that we propose for pensions, in particular the new state second pension—I appreciate that it is difficult to view the stakeholder pension without reference to the state second pension—will ensure that those who need the most help, in particular low earners and carers, get higher pensions without the need for extra compulsion.
  At the same time, we believe that many people who can afford to do so will benefit from making extra pension provision. We want to encourage higher voluntary savings and need to make it worthwhile. The state second pension will provide a decent second pension for all workers and carers and remove the threat of means-testing in retirement. We want to ensure that more people are aware of the need for pensions, and we intend to improve the information that is available.
  I hear what the noble Lord, Lord Goodhart, says about our two cut-off points, but I do not believe that the difference is other than one of degree. We are working towards the same objective. The development of stakeholder pension schemes will ensure that all
  1104
  moderate and higher earners have the option of a good value funded pension arrangement to which they can add extra contributions as their circumstances allow. We have indicated that when stakeholder pension schemes are properly extended we plan to move to a flat-rate state second pension with all moderate and higher earners contributing to an occupational scheme or their own funded pension.
  The new clause introduced by Amendment No. 19 also provides for a compulsory employer contribution which, as I understand it, would be set at no more than half the rate that applied to employees.
  6 p.m.
  Lord Goodhart: I am most grateful to the Minister for giving way. I am afraid that an unfortunate glitch has arisen. What I intended to say was that the contribution rate should not exceed 7 per cent. Therefore, it would be twice the contribution rate of employees.
  Lord McIntosh of Haringey: I am grateful to the noble Lord. What he says corresponds with my experience. I had two group personal pension schemes. As to one of them, I said that I would not as an employer put in anything unless employees put in 5 per cent. If they did that I would also put in 5 per cent. As to the other scheme, my fellow directors said that they would put in money even if the employees put in only 2 per cent. I thought that that was quite inadequate. I do not believe in encouraging employees to deceive themselves into thinking that they have adequate pensions. It is right to make a real contribution, and that is what good employers should do.
  Lord Peston: I have been listening to my noble friend most attentively but occasionally I become lost in the technicalities, in particular his argument on compulsion. Perhaps at a later stage we can come back to it. I thought that my noble friend's argument on compulsion was decisively in favour of it, and then he suddenly concluded that he was against it. He lost me completely on that. The remarks of the noble Lord, Lord Goodhart, on compulsion—in particular that within a firm one would not want to have similar workers with different packages—were overwhelmingly correct. We can return to that on another occasion. But I became really lost when my noble friend spoke about the self-employed. I believe that the self-employed are eligible for the stakeholder pension. We keep switching—outside the rules of the game—to the state second pension. I am trying to keep that out of my mind because, as I understand it, that is not part of this Bill. Nonetheless, as we have wandered into that matter, will the self-employed be eligible for the state second pension—or is it wrong of me at this stage even to ask the question?
  Lord McIntosh of Haringey: I hope that I did not give a false impression. My noble friend is right to say that the self-employed are able to join the stakeholder pension. I did not mean to suggest—if I did—that a

  1105
  decision had been taken about the self-employed and the state second pension. We are still consulting on that matter.
  I hope that I have made clear that we are very strongly in favour of giving every encouragement both to employees and employers to participate in adequate pension schemes. It is not because of any antagonism to employer contributions that we resist these amendments. We believe that, because of the effect on lower paid workers in particular and the need to provide encouragement at both ends, it is a better to rely on encouragement rather than compulsion at this stage. Therefore, we must resist Amendment No. 2 and, in due course, Amendment No. 19.
  Baroness Turner of Camden: I thank my noble friend for his very comprehensive answer to all the arguments raised in what I believe has been a very useful and interesting debate. However, I still hold to the view that it will be very difficult to persuade younger people in particular to contribute the necessary amount to provide them with a proper pension when they reach retirement age. Very few people will understand just how much of their disposable income they are expected to invest if they are to be properly looked after when they reach normal retirement age. For that reason, my amendment suggests that employers should make a minimum contribution.
  My noble friend said that everything possible would be done to persuade employers and employees to participate in pension provision, and for that I am grateful. However, I should like to consider what has been said in the debate this afternoon, with much of which I agree. For example, I agree absolutely with the noble Lord, Lord Freeman, that everything possible must be done to encourage defined benefit schemes as distinct from money purchase. On the other hand, the amendment is designed to ensure that whatever method is used, whether money purchase or defined benefit, there is still a necessity for the employer to make a payment.
  Lord McIntosh of Haringey: Before my noble friend leaves that point, perhaps I should respond to one point made by the noble Lord, Lord Higgins. He suggested that it would be necessary for employers to close occupational pension schemes, if I understood him aright, as a result of our proposals. That is certainly not our intention. Those who offer occupational pension schemes will face no extra requirement, and those who offer an occupational pension scheme to some employees but not others can extend that scheme if they want. I thought it necessary to make that clear in case that was in the mind of any Member of the Committee.
  Lord Higgins: I am trying not to be disorderly. I did not want to make an intervention in an intervention. The noble Lord misunderstood me. I am suggesting that people who are in a scheme where the employer makes
  1106
  a contribution may well feel that they should switch to a stakeholder pension which does not require a contribution.
  Lord McIntosh of Haringey: That was what happened after 1988 when occupational pension schemes could no longer be part of a contract of employment. That happened under the Conservative government—and a very bad thing it was, too. That shall not happen in any additional way under this proposed legislation.
  Baroness Turner of Camden: The comments of my noble friend remind me of the debate on pensions that we had at that time. I remember tabling an amendment to try to provide for compulsory membership of occupational schemes. That amendment was defeated because it was opposed by the then government. I agree with the noble Lord, Lord Goodhart, that if there are compulsory employer contributions there must, therefore, be a compulsory contribution by the employee. I agree that that is completely logical, and I would feel inclined to support it. However for the time being anyway, I do not intend to seek to divide the Committee, and I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Higgins Lord Higgins moved Amendment No. 3:
  Page 1, line 12, leave out subsection (2)
  The noble Lord said: Clause 1 (2) reads as follows:
  "The first condition"—
  of a stakeholder scheme—
  "is that the scheme is established under a trust or in such other way as may be prescribed".
  We change gear slightly at this point, moving from the broad issues we have been discussing to something which is much more specific, because we have sought to focus some of the amendments on particular points. This is one which has already received a great deal of consideration.
  What is slightly puzzling at a rather tedious level is this: if establishment of the scheme can be prescribed in "such other way" as may be thought appropriate by the Government, why does "trust" have to be mentioned at all? Perhaps in a way it is fortunate that the Government have mentioned it, because that has resulted in many representations from outside bodies. The Government now seem very confused about whether some of the schemes will be trust schemes and some will not, or whether none of them will be trust schemes, or whatever.
  The outside representations seem by and large to come down against trust schemes. The National Westminster Bank said in its response:
  "We don't believe a trust-based governance is necessary. Trustees can add little extra protection but will make schemes more complex and expensive to administer."
  Pearl stated:
  "The Green Paper's proposal on establishing independent trustees for stakeholder pensions will increase rather than decrease the cost of administering the schemes."
  Therefore, I hope that the Minister can indicate what the Government's position is given that it has become a little unclear whether they are or are not in favour of a trust-based scheme.
  It seems to me that there could be two quite different animals. There could be a scheme with trustees, which in effect would be the same sort of set-up as we have with an occupational pension scheme; presumably the trustees would be responsible for operating the trust and would employ fund managers to manage the assets and so on. On the other hand, a scheme could be entirely on an insurance company sort of basis, where no trustees are involved.
  My particular concern is this: if one is to do it on a trustee basis, where will one find the trustees? They will not necessarily be paid. I would guess that most trustees are not, so the cost point which is made in the response to the Green Paper which I have just quoted is perhaps a little unfair.
  That having been said, the responsibilities of trustees are very considerable. Following the Pensions Act, which was rightly introduced to deal with events following the Maxwell scandal—when the trustees seemed to hold the most incredible views on the difference between the assets of the trust and the assets of the company—those responsibilities are even more onerous than they were before. Some of the hazards were exemplified in a report in Pensions Week a little while ago, which said that OPRA "takes charity to court." The trustees of a particular charitable pensions fund, who had not fully conformed with the requirements imposed by the legislation and by OPRA, found themselves open to prosecution and considerable prison sentences. The Government may well find it not all that easy to have a stakeholder pension scheme with trustees, given that they are unlikely to be paid and that they will expose themselves to very considerable problems with regard to the administration of the trust.
  Am I right in thinking that the Government are fairly clear now that they are not going down the trustee path; or is it otherwise? When I look at some of the other pension provisions, I am not at all clear what will happen about the state second pension. I presume the point does not arise there at all. No doubt the noble Baroness will clarify that. My understanding is that LISAs certainly will not have trustees. The whole issue has become a little unnecessarily crowded, partly because of the wording of the clause, which seems to imply that there may or may not be trustees. Perhaps we may have a reply from the Minister which will clarify the situation.
  6.15 p.m.
  Baroness Turner of Camden: I hope that my noble friend the Minister will not accept the amendment. Unions which have been involved in discussions over stakeholder pensions and so on are rather keen on the whole idea of having them written under trust law. The idea is that if trustees emerge as a result of some form of election, that will give people more confidence that
  1108
  the stakeholder scheme with which they are involved is under lay administration or governance to some degree, and they will therefore feel more protected.
  I accept that trustees now have quite onerous responsibilities. Therefore, once trustees were appointed, it would be necessary to make sure that they were properly trained so that they could carry out their task on behalf of the members of the scheme. Frankly, I think that to have stakeholder pensions written under trust law is a good idea, and I hope that the Government will not depart from that.
  Lord Goodhart: I cannot support the amendment. In my experience of dealing with pension funds in practice, occupational pension funds were to a large extent written under trust law. Some of the smaller ones were dealt with by direct contract between the employer and an insurance company, but certainly the great majority of the larger ones and many of the smaller ones were written under trust law. That was accepted as being entirely appropriate by the Goode committee in its report, and trust law has proved itself to be a very flexible instrument which, having come from completely different sources, has adapted itself to the pensions system very effectively and successfully.
  I recognise, of course, that personal pensions are not generally written under trust law, but arise by virtue of a direct contract between the employee and the pension company. But, for the reasons that the noble Baroness, Lady Turner of Camden, has just given, there may very well be pressure for stakeholder pensions to be written under trust law. I hope that there will be, because it seems to me to be another element of protection for the employees, for the pensioners. I can see that there may be cases in which it would not be the only appropriate system, but I certainly hope that it will be encouraged, and I should like to see this subsection stay in the Bill.
  Lord Higgins: Perhaps before the Minister speaks, or other interventions are made, I should make it clear that the amendment's purpose is to clarify the Government's position. I am in no way against arrangements which involve trustees. As I mentioned, I am myself a trustee of a pension fund, and I think that the system has considerable advantages. But what has seemed a little unclear is exactly whether the Government are going to say that every scheme should have trustees, or not, and precisely what type of scheme they see: the trade union one, which the noble Baroness, Lady Turner of Camden, mentioned, or something more general. I am simply seeking to clarify the Government's position, not to take a position for or against trustees.
  Baroness Hollis of Heigham: I certainly accept that the amendment, like so many others, is a probing amendment to clarify the Government's position rather than to challenge the views that the Opposition understand the Government to hold.
  The amendment would remove the requirement for stakeholder pension schemes to be established under a trust. In response to the noble Lord, Lord Higgins, I should like to explain why we consider it to be an integral part of stakeholder pension proposals. As was

  1109
  said by the noble Lord, Lord Goodhart, and by my noble friend Lady Turner, who served for many years on OPRA, which is the major regulatory body, trust law is already extensively used in the pensions sector and it has been widely tested in the past. It provides valuable security and protection to scheme members.
  As the noble Lord, Lord Higgins, recognised, following the Goode report trust law was heavily strengthened in the Pensions Act 1995 which was led for the Government by the noble Lord, Lord Mackay. I remember the efforts by myself and my noble friends Lady Turner and Lord McIntosh to strengthen even the trustee provisions to ensure, for example, representation of pensioners and issues about the balloting mechanisms and the like.
  Trust-based schemes are an effective way of ensuring that schemes have a governance structure which ensures that they look after the interests of their members rather than those of the pension provider. Supporting a trustee structure will have some costs for schemes but these are unlikely to he excessive. If trustees are able to deliver even a small reduction in overall scheme costs by negotiating on behalf of scheme members, as we expect them to do, this is likely to outweigh the direct costs of trustees.
  Stakeholder schemes need to have a governance structure which ensures that members' interests are looked after. Trust-based schemes run by a board of trustees provide an effective way of achieving this. Trustees will ensure that contributions are used to secure value for money from providers and that schemes comply with the minimum standards. They should help to ensure that members receive good quality information and high standards of service.
  That is why we say that the legislation for stakeholder pension schemes should be set up under trust law. However—in response to the question pressed on me by the noble Lord, Lord Higgins—we want to retain some flexibility and that is why we are considering alternative governance arrangements, provided that they are capable of delivering the same degree of protection and a comparable outcome for members. Indeed, we have said in the pensions Green Paper that we welcome views from the industry on alternative structures which could provide those comparable benefits for members. That invitation for views was echoed in the consultation paper by the Treasury and the DSS on new flexibility in pension investment. We shall shortly issue a further consultation paper on the detail of trustees and alternative governance arrangements for stakeholder pension schemes.
  The noble Lord, Lord Higgins, asked two questions. First, were trustees involved in the state second pension? It is an unfunded scheme so the question does not arise. Secondly, he asked who were the trustees. We envisage that they could be drawn from members, employers and affinity groups such as trades unions—providers where the independence of the overall board of trustees can be protected; or indeed independent of professional trustees according to the type of scheme.
  We think that a trustee scheme is at present our best established method of protecting the interests of members, but we are happy to consider alternative forms
  1110
  of governance where these offer a comparable degree of protection for members. I hope that noble Lords will be reassured by that explanation and that, in the light of it, the noble Lord will be able to withdraw his amendment.
  Lord Higgins: I am grateful to the Minister for going some way to clarify the situation. I shall need to consider carefully what she said.
  Am I right in thinking that the Government do not intend that a scheme which does not involve trustees would not meet the requirements of the legislation? Are the Government now clearly of the view that some of the schemes will have trustees and some will not?
  Baroness Hollis of Heigham: We are saying at present that stakeholder schemes have to come within trustee law as regards their form of governance as well as meet the bench-mark standards which we shall lay out. But we are willing to consider that some stakeholder schemes should not come within trust law provided that they can—and only if they can—offer an alternative form of governance which offers at least equivalent protection for members. As I said, the Government are about to issue a consultation document to that effect.
  Lord Higgins: On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Higgins Lord Higgins moved Amendment No. 4:
  Page 1, line 14, leave out subsection (3)
  The noble Lord said: This is a probing amendment. I do not understand what the subsection is intended to cover. It seems to cover almost everything. Subsection (3) states:
  "The second condition is that the provisions made by the instruments establishing the scheme comply with such requirements as may be prescribed".
  That seems to be totally devoid of content; or it contains everything that one can think of. Perhaps the Minister would like to explain why the Government wish to take such wide powers. I beg to move.
  Baroness Hollis of Heigham Baroness Hollis of Heigham As the noble Lord would expect, it is somewhere in between the two. It is neither devoid of content, nor absolutely encompassing.
  The amendment would remove the power to set out the requirements as to the content of the instruments that set up a stakeholder pension scheme. Perhaps I may explain why we think it is necessary to include such a power in the Bill.
  We have just discussed the proposed governance structure for stakeholder pension schemes. We have taken these amendments together; I do not know why they are ungrouped. I have emphasised the importance we attach to having a governance arrangement that ensures members' interests are looked after. Clause 1(2) and (3) provide the basis for defining the structure of stakeholder pension schemes.
  The governance arrangements for stakeholder pension schemes will need to be set up in such a way that value for money can be secured from providers and that schemes meet the minimum standards. We intend to use the power in subsection (3) to ensure that this is possible. For example, in the case of a scheme set up under trust, the trust deed should give trustees control of the scheme so that they are free to appoint and dismiss the organisations or individuals that provide services to the scheme. And the regulations can be used to prescribe the composition of the trustee board—it is part of the previous amendment—so that, for example, it requires a specific proportion of trustees to be nominated by members of the scheme.
  The effect of Amendment No. 4 would be that any type of trust arrangement (or alternative governance arrangement) would meet the stakeholder pension condition in Clause 1(2). It would not allow for the features of a strong governance arrangement to be specified.
  I hope that the noble Lords will accept the necessity of this piece. I am repeating myself. But we originally expected to group the amendments. I do not know why they were ungrouped. We are in discussion with the industry on how best to develop workable schemes. We are still consulting on the details. I repeat: we shall shortly be issuing a further consultation paper on trustees and governance arrangements. So, in the light of the explanation I have given, I hope that the noble Lord will withdraw the amendment.
  Earl Russell: I am sure that the Minister did not expect to get away without one speech from me on "such requirements as may be prescribed". The noble Baroness knows that those are words to which I am somewhat allergic.
  I understand that in a subject as complex as this, and where small changes in response to circumstances may be needed as often as this, the regulatory power cannot altogether be avoided. So that is not an issue between us. However, this provision is drawn in very general terms. It really does say that the Secretary of State may do whatever he likes. I should like a more defining purpose clause to say what it might be.
  If we are to have this sort of open-ended regulation, the provisions for parliamentary scrutiny and control of regulation have to be a great deal better than they are now. Some of your Lordships probably heard the Business Motion moved by the noble Baroness the Lord Privy Seal at the beginning of today's business. That related to the regulations renewing the provisions of the Prevention of Terrorism Act 1989, from which the Government happened to have left out two rather important sections. In the course of two years no one noticed that they had done so.
  We talk about scrutiny and reassurances as always relating exclusively to scrutiny. But is it not a fact that practising scrutiny without control is a little like practising football with the goal blocked up. It really
  1112
  does not engage the interest. If this sort of thing is to become general, the treatment of regulation in this Chamber will need some more attention.
  Baroness Hollis of Heigham: I might have guessed when the noble Earl entered the Chamber that such phrases as this might catch his eye. They have indeed done so in the past.
  What I plead in mitigation is that the Bill has been thoroughly scrutinised by the Delegated Powers and Deregulation Committee. As far as I am aware it has not commented on this proposal. It took no objection to it. It suggested only some modest changes to the entire Bill and every one of those we are happy to accept. So all I would say is that the watchdog appointed by your Lordships' House was apparently content with the phrasing in this clause.
  6.30 p.m.
  Earl Russell: I fully accept that, but the watchdog did not notice what happened to the Prevention of Terrorism Order renewal either.
  Lord Higgins: I am far too junior in this House to challenge the decisions of the body referred to by the Minister. Nonetheless, I find it a wide power.
  As regards the groupings, they arrived late yesterday afternoon. In suggesting the grouping, it seemed to me that there were separate issues with regard to trusts, for example, as opposed to the broad powers referred to by the noble Earl, Lord Russell. It seemed helpful to take the trust issue separately, rather than deal with it under the clause which gives these wide powers. However, another strange situation has arisen for which I am not responsible. The next two amendments, Nos. 5 and 6, go together and I am equally puzzled as to how they became separated.
  Baroness Hollis of Heigham: Perhaps I may intervene. I have with me the Government's original set of groupings. We proposed to group Amendments Nos. 2 and 10, for example, with No. 19. We also proposed to group together a number of issues on governance. Those groupings were published at the appropriate time around midday yesterday. I understand that the Opposition savagely ungrouped all our groupings and produced a shopping list virtually of single amendments, even though we visit some issues several times.
  If I have misunderstood the position and during the dinner break the noble Lord is happy to do some hasty regrouping, that would be to the convenience of the Committee and greatly welcome. We produced groupings which were one-third to one-half the number of separate debates now listed because we would otherwise be repetitive, which would be to no one's advantage.
  Lord Higgins: It would be best if the noble Baroness and I were to discuss the matter outside the Chamber. The list seemed to come out very late in the day, but no doubt we can go into that. I suggested that we should

  1113
  de-group some of the amendments because it seemed that it would speed up the proceedings and give a more coherent debate, but the next two amendments clearly go together. Perhaps we can chat about that during the break.
  As regards Amendment No. 4, which raises much broader issues, I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  The Deputy Chairman of Committees (Lord Murton of Lindisfarne): If Amendment No. 5 were to be agreed to I should be unable to call Amendments Nos. 6 or 7 owing to pre-emption.
  Lord Higgins Lord Higgins moved Amendment No. 5:
  Page 1. line 17, leave out subsection (4)
  The noble Lord said: There may be a case for taking this amendment and Amendment No. 6 together. It is a probing amendment. The legislation specifically provides that the stakeholder scheme, with,
  "such exceptions as may be prescribed",
  which undermines the whole thing, shall be a money purchase scheme within the meaning of the existing legislation. I was not clear whether that would include provision for straight insurance schemes or whatever. The noble Baroness, Lady Castle, has tabled an amendment proposing the opposite—that it should not be a money purchase scheme—and no doubt we shall hear her views on that in due course. I beg to move.
  Baroness Castle of Blackburn: I rise to speak to Amendment No. 6 which, as the noble Lord, Lord Higgins, pointed out, is more than a probing amendment. It is a very decisive amendment. It is designed to make it clear that approved stakeholder pension schemes will not be money purchase schemes.
  I was disappointed in the speech of the noble Lord, Lord Higgins, in moving Amendment No. 5, because I seem to remember that earlier he warned us most effectively that there was a drift in occupational pension schemes towards money purchase schemes which could become a torrent. Stakeholder pension schemes have to be money purchase schemes. I was beginning to say to myself. "Well, if our minds go on meeting like this, people will start to talk". Obviously, I was premature in my assumption.
  I have heard a number of gentlemen opposite warning us about the drift from the major merit of the occupational pension scheme, which was that it would be a defined pension. People would know to what they were contributing and what they would receive in relation to the number of years they served, salary and so on. During our debates today, we have heard widespread warnings that the whole tendency of the stakeholder pension, as it has been revealed to us, is to the poor man's occupational pension scheme; the inferior one. It is to have neither compulsory employers' contributions nor a guarantee of being a defined pension.
  Once that is injected into the pension scheme, the noble history of the occupational pension scheme will shrivel and die. We know that some workers are in a
  1114
  good occupational pension scheme, but under SERF'S people could contract out only into an approved occupational pension scheme. We were very determined to keep up the standards gained for working people in this country; and we surrender those standards at our peril.
  We look like having a stakeholder pension which will probably be weakened by not having employers' contributions, and it is doubtful whether even employees will take part in them. The employers' obligation is only to ensure that their workforce has access. That is a lovely word, but all it means is that when somebody or other has set up the stakeholder pension scheme, the employers' obligation will be confined to the check-off. That is taking the worker's contribution from his pay packet. It was one of the convenient arrangements which trade unions tried to reach with employers over trade union dues. Incidentally, I helped them in my notorious In Place of Strife.
  However, now we reach the question that is the nail in the coffin of good occupational pension schemes and I urge everyone in the House to think about it carefully. We are given one of the few definitions in the Bill that is not to be prescribed later. We are told that stakeholder pensions "must" be a money purchase scheme. So the risk to the employee is doubled. It is no longer a defined pension. It is at the mercy of stock market plays—the ups and downs and the vagaries of the stock market—and the employer need not contribute.
  What are we trying to do? Are we trying to turn back the clock to the pre-war age, before the 1945 Labour Government started to put a platform under the feet of working people and give them standards below which nobody would be allowed to fall? Is all that to go? Is the New Labour philosophy to be "The market reigns, OK"? I think that the House ought to hesitate before it passes this subsection of the Bill. Tonight, I hope that the Minister will make a statement that she is aware of that platform and that she will carefully consider not only what I say but also what other Members of the House have said.
  Earl Russell: The noble Baroness, Lady Castle of Blackburn, describes this scheme as the "poor man's occupational pension scheme". I take her point and, to a degree, I share her concern. However, I believe that the Minister can imagine what the noble Baroness, Lady Castle, would have said if she had begun by saying that this is the rich man's occupational pension scheme. The speech that would have followed would have been a much less gentle and much less calm speech than the one to which we have just listened.
  The noble Baroness has raised problems that go a great deal wider than her speech indicated. A great deal can be said for a final salary scheme. It is more reliable, more secure and in many cases a better form of provision. However, it is also important that the Bill should provide for as many people as possible. We have heard the Minister, the noble Baroness, Lady Castle, and many others speak about people who are left out of pension schemes. Too many people are left out arid we do not want any more.

  1115
  Since the noble Baroness, Lady Castle, was Secretary of State, there have been large changes in the labour market and not necessarily changes for the better. However, to attempt to reverse those changes is not within the powers of the Bill. A fairly large number of years of continuous employment are needed to make a final salary scheme work. Alas, that is now a rare thing indeed for a great many people. The "casualisation" of the global labour market means that many people will be left out of such schemes which could not be money purchase schemes. That would be very unfair.
  If the noble Baroness, Lady Castle, is saying that she wants to reverse the changes in the labour market, I believe that that would be a difficult undertaking. However, I would listen to her on the subject with a great deal of interest were it first to be conceded that such a reversal could not be done simply and solely by the Act of a British Parliament. It would have to be approached through international institutions, by global agreements, and it would have to proceed very slowly and carefully with an immense amount of consultation. If the noble Baroness, Lady Castle, wants to embark on that attempt, I would be happy to join her and would approach it with great interest. However, I believe that she is trying to do more within the compass of the Bill than it is within the power of the Bill to accomplish.
  Lord Freeman: The noble Baroness, Lady Castle, knows more about pension schemes than most noble Lords. Therefore, when she proposes an amendment one has to look carefully at the intention. If the intention is to ensure that stakeholder pensions are clearly not money purchase schemes—they must, therefore, be defined benefit—they will need an underwriter. If the underwriter is not to be the state, it must be an employer. Therefore, I find myself in agreement with the noble Baroness.
  However, we already have a system of occupational pension schemes which for many employers provide defined benefit schemes, where the employer makes a contribution and the pension received is dependent upon the years of employment and, typically the final salary. Therefore, the effect of the amendment is to wreck the stakeholder pension scheme, if that is designed, as I would hope it will be, as an alternative, and in some cases a supplementary mechanism by which individuals can top up their pension contributions.
  Therefore, I am not persuaded by what the noble Baroness, Lady Castle, has said. The effect of her amendment would be to deny a mechanism to those earning between, say, £10,000 and £20,000 during their working lives to continue making contributions to a stakeholder pension scheme, which I support, but it would be a top-up mechanism to occupational pension schemes that already exist. The working life of such people may move from employment to self-employment to unemployment and back to employment, where there may not be an occupational pension scheme or perhaps to later employment where there may be one.
  The noble Lord, Lord McIntosh, although not attacking me personally, took a swipe at former Tory Ministers who in the past moralised on pensions
  1116
  legislation. The reason that the compulsion to ensure that those in employment had to join an occupational pension scheme was lifted from employers was the reason why I am concerned about this legislation. The Inland Revenue would not permit those in a single employment to be in an occupational pension scheme and to take out a personal pension. Therefore, because we wish to promote personal pensions, we have to lift that compulsion in order to permit those in employment to take out a personal pension scheme. Some pension schemes were mis-sold and some had inadequate transfer values attached. I am well aware of the history and the problems. It was not for dogmatic reasons that that compulsion was lifted but because of the Inland Revenue rules that existed at the time. In a later amendment I shall argue for the change.
  6.45 p.m.
  Lord Higgins: I agree entirely with the noble Baroness, Lady Castle, that there is far more to be said for final salary schemes than for money purchase schemes. Equally, I agree with her that it is a shame that the trend has been away from final salary schemes to defined contribution schemes.
  The problem I have with the amendment—sympathetic though I am for the reason that I have just mentioned—is that the crucial difference between the two is who carries the risk. In regard to a final salary scheme, at the end of the day the employer carries the risk and. if necessary, has to make additional employer contributions in order to top up the scheme and to cover the provisions that the actuaries say are necessary to maintain the final salary guarantee.
  Lord McIntosh of Haringey: It works in both directions. Workers have been known to take contributions holidays when they have over-funded the scheme.
  Baroness Hollis of Heigham: When the scheme is over-funded.
  Lord Higgins: That is so. I would not dissent from that view. The noble Lord is absolutely right. It cuts both ways. There are many decided cases on who owns funds and, even today, that matter is not clear. On that point we go off on a different tack.
  If the noble Baroness were to say that they ought to be final salary schemes, it is difficult to see who in the context of a stakeholder pension will carry the risk. There will not be an employer standing behind the stakeholder pension scheme unless—perhaps this is a consideration—we take the kind of example mentioned earlier of a trade union scheme.
  I now wonder what is the purpose of the expression that clearly was not written in by accident,
  "exceptions as may be prescribed".
  For the reasons that I have mentioned, it is bound to be a defined contribution scheme rather than a final salary scheme. I am not clear what the Government think may

  1117
  be prescribed as the exceptions. Do they see a way in which the point made by the noble Baroness, Lady Castle, can be met?
  Baroness Hollis of Heigham: If one now knew what the exceptions were, they would not have to be prescribed in the future. But I shall come back to that point if I may.
  Clause 1(4) provides that stakeholder pension schemes must, with exceptions to be prescribed, offer money purchase benefits. Amendment No. 5 would remove the requirement that stakeholder pension schemes should be provided on this basis. Amendment No. 6 goes further by specifying that pension schemes must not offer money purchase benefits.
  I do not want to repeat the discussion we had earlier in explaining why we are introducing stakeholder pensions. But as many Members of the Committee have said, we are adding to the current framework where there are gaps in provision. The current framework includes salary-related schemes, which are excellent for many. It includes personal pensions, which are also suitable for many, and it will include the state second pension to help those who cannot afford to save towards their retirement.
  Stakeholder pensions will address a significant gap in the pensions market. For a large number of people they will provide affordable, funded pension provision for the first time, so that they can see their own "pot" of money grow and look forward to a secure income in retirement. We believe that the most effective way to promote financial security in retirement for most people is to encourage provision of funded pensions and personal savings.
  For many of the reasons cited by Members of the Committee tonight, we believe that money purchase schemes are the most suitable arrangements for stakeholder pensions. I join with everyone else who has said that where the conditions are appropriate, a final salary scheme—that is, a defined benefit scheme rather than a defined contributions scheme—is the best scheme going. But it benefits those who are in long-term work with the same employer, especially men, and especially those on ascending salaries; that is, the better off. In other words, it particularly privileges the more middle-class occupations, which are dominated more by men than by women.
  Let us be clear. That is the group that defined final salary schemes benefit. We need only to look at the structure of the occupational schemes to see who is in them. There are considerably more men—85 per cent of men compared to 75 per cent of women—in occupational pension schemes with those levels of benefit. So it belongs to a society where men could reasonably predict a long-term job with a long-term employer. For those people—and I have been a beneficiary of a final salary scheme—it is very nice; the Civil Service, the university world, teachers and so forth. But that is unlikely to be the case for many people.
  For somebody who is mobile and moving from job to job—perhaps in information technology and moving within a couple of years between employers—they are not the answer. Defined salary schemes have relatively low
  1118
  transfer values. Part-time staff, who may be above the LEL, are not eligible to join defined salary schemes, and, if they did, the benefits they would receive would not be particularly generous. For those moving in and out of work, for whatever reason; for those who are self-employed or women who may take several years out to have children or work part-time while they do, there is now less than adequate pension provision—and even now, those people are not in money purchase schemes and are certainly not likely to qualify and benefit from final salary schemes. So to tie a stakeholder to a final salary scheme which duplicates the provision that is already in the market-place, but does little to add to the provision for those who need a decent scheme and cannot get access to it, is wrong. That is why it is right to go for a money purchase scheme.
  The noble Lord, Lord Higgins, was right when jousting with my noble friend that behind a final salary scheme stands the employer to make good the pension promise: to underwrite the deficit and perhaps to take advantage of pension holidays. But there is no such person behind a money purchase or stakeholder scheme. Money purchase schemes are simpler, more flexible and will embrace those groups within our labour market that are currently ill served by the pension provision on offer. To do as my noble friend suggests would take stakeholder pensions effectively beyond the reach of precisely those people for whom they' are designed and we would he wasting our time.
  Money purchase schemes also enable each member to have their own easily identifiable "pot" of money. That has a number of advantages. It is a concept of saving with which people are familiar. Scheme charges will be easier to understand and compare. Transfer of funds will be more straightforward.
  One of the factors which currently discourages many people from starting a pension is the complexity of existing arrangements. We believe that providing benefits on any basis other than money purchase will inevitably be more complex and therefore less attractive to people who are thinking about moving into pensions for the first time. However, the Government recognise that pensions are a rapidly developing field and that suitable new arrangements may be developed in future. So the power to prescribe exceptions gives us the flexibility to allow other forms of arrangement, provided they still satisfy the other conditions for stakeholder pension scheme status. We would want Ito ensure that such schemes would remain secure, flexible and offer value for money. We propose to consider this issue further at a later stage in our programme of further consultation on the detail of stakeholder pension schemes. It is to allow headspace for alternative arrangements which offer the same benefits but which are not yet in the market-place that we include those phrases in the Bill.
  In the light of that explanation—I doubt that I have satisfied my noble friends—I hope that the noble Lord will feel able to withdraw his amendment.
  Lord Higgins Lord Higgins: In light of that response, l beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Castle of Blackburn Baroness Castle of Blackburn moved Amendment No. 6:
  Page 1, line 18, after ("are") insert ("not")
  The noble Baroness said: We have had a useful air-clearing this evening. We really began to see through the fog of obscurities of some aspects of government intentions. I would be much more impressed by the Minister's argument if stakeholder pensions were not intended to be a substitute for SERPS; if they were an option. Some of us have argued all along that we should give people a choice so that they can either continue with the SERPS with the Government's promise to retain it indefinitely, with newcomers entering a new SERPS with all the contribution details given to them, or choose a stakeholder pension which, by the Minister's definition, will be paltry in size. It will not have an employer's contribution. It is designed for people who are at the bottom of the scale and cannot afford SERPS and it will be risky.
  Incidentally, SERPS, which has been applauded by Eagle Star as I quoted to the House at Second Reading, has the most portability of any scheme. There is just one fund—the National Insurance Fund—and it does not matter which job we move to, which remains the basis of our security. But I point out also that as SERPS never advocated final salary schemes for people and we wanted to give working people a second pension, we suggested that a pension should be based on the 20 best earning years of a man's or woman's life. That is the only effective way of meeting the point made by the Minister.
  If the Government are honest with their figures, their statistics and information, people will be shocked to realise how little they will receive. They will be on their own. They carry their own risks and carry all the costs. I am asking the Minister to allow me to expand my arguments as she expanded hers. I am not suggesting that we should put it to the vote today. I beg to move.
  7 p.m.
  Baroness Hollis of Heigham: We are in some difficulty here because Amendments Nos. 5 and 6 were grouped, and we have now effectively de-grouped them.
  I take issue with some of my noble friend's assertions. I totally understand her degree of commitment to the SERPS, which she devised and which, at the time and under the conditions with which she surrounded it, was superb. However, some 20-odd years later and with so many of the conditions that my noble friend inserted into it—for example, the 20 best working years—the scheme is no longer meeting the needs that it could were we back in the late 1970s. In future, people who would have been protected by my noble friend's scheme will be able to go into a state second pension, which will offer to the lowest paid three to four times the levels of benefit offered by SERPS.
  I turn now to the stakeholder pension, which my noble friend was dismissive of by saying that the contributions would be "paltry". I can tell the Committee that they will be no more and no less than those of the average money purchase scheme. In fact, the stakeholder pension will probably offer rather better
  1120
  value, given the tightness of its charges. From our research, we expect that perhaps one third to a half of employers may contribute; but that pension will offer better value as an alternative to many of the personal pensions which currently exist. On reflection, I hope that my noble friend will accept that the state second pension that we will be introducing is SERPS without the earnings related component and, therefore, better devised in today's conditions, as opposed to those in the late 1970s, for the poorest people in our society who do not have a pension. We take the spirit of what my noble friend was doing at that time and we are adapting it to meet the needs of the current labour market.
  Earl Russell: I hope that the Minister will forgive me for taking up a few more minutes of the Committee's time to add a footnote to what I said on the previous amendment. The Minister is quite right to say that any final salary scheme must depend on a fairly long and continuous period of service. One of the things that I believe should concern us all about the funding of pensions is the reduction in the average number of earning years in some people's lives.
  When I started work, I was in pensionable employment at the age of 23. I do not know how many of us have children of whom we can say the same; not very many, I suspect. I can remember when most people were in regular employment up to the age of 65, but the figures now for people over the age of 50 exempted from actively seeking work, and who have not been in employment in the past 10 years, are really quite frightening. If you lose your job when you are over 50, your chances of getting re-employed are really very small.
  We need to be thinking about pensions in the context of the labour market. But if we are thinking about the labour market, we also need to be thinking about a rather longer period of earning years. I hope that we will keep that in the back of our minds throughout the discussions on this part of the Bill.
  Baroness Castle of Blackburn: I beg leave to withdraw my amendment.
  Amendment, by leave, withdrawn.
  Lord Higgins Lord Higgins moved Amendment No. 7:
  Page 1, line 21, at end insert ("but there shall be no requirement to take a stakeholder pension in the form of an annuity by a specified age")
  The noble Lord said: I am sure that the Committee will be well aware that problems have arisen with other types of pension scheme where the provisions are such, especially those imposed by the Inland Revenue, that a pension must be taken as an annuity by a specified age. Many people have suffered considerably in the past few years because they have had to take their pension at a particular time when, for a brief period, the stock market declined very substantially. In addition to that, annuity rates have plummeted.
  I noted a press article some while ago which reported that the Annuity Bureau had said that a man with a pension fund worth £100,000 could have secured an

  1121
  annual income of £15,823 seven years ago; a year ago he could have got an annuity of £9,700; but today he would only get £9,494. That disregards the effect of stock market collapse at certain times. I made a calculation at about that time that, in some of the worst cases, people would he lucky if they got 60 per cent of the pension which they might reasonably have expected to receive 18 months previously. It is obviously a serious matter, and is set against the background of very low rates of inflation—indeed, as low as we have had since the 1960s.
  There is no guarantee at all for the person who retired about a year ago, in the circumstances I described, that inflation rates will remain where they are. Indeed, all kinds of factors can come into play in the future. Whereas at the time of Beveridge the life expectancy of a man beyond his retirement age was something like two years, nowadays it can be very long. Therefore, someone may find that he is stuck with the kind of pension that I outlined but then goes on living for another 20 years. Inflation is not likely to be as low as it is now throughout the whole of that period; indeed, it could be substantially higher.
  The purpose of this amendment is to seek to avoid a situation where the stakeholder pensioner is restrained in such a way. Of course, against the background that I described there are increasing arguments for saying that it should not be necessary to buy an annuity, or that one ought to be able to buy some other form of asset, which might cope with inflation in the future or perhaps give a better yield than the present rates of annuity, and so on. Similarly, widespread discussions are taking place which stress that the age of 75 should not be a deadline. One well realises that the murky hand of the Inland Revenue may appear at this point and say, "You got all the tax reliefs when you were paying in; and, therefore, you ought not to be able to extend the thing indefinitely". There are even bigger arguments about whether one should be allowed to cash in one's pension at that point and transfer it to one's heirs.
  This situation has developed comparatively recently. As I said, rates are now down to where they were in the 1960s, but there seems to be a case for relaxing the rules as far as concerns stakeholder pensions. No doubt the Inland Revenue will have a view on that and doubtless the Minister has a view on whether or not this amendment is acceptable. But, against the background I have outlined, I should have thought that it is not an unreasonable consideration to put before the Committee. I hope that the Minister will give me a sympathetic reply. II beg to move.
  Lord Monson: Unlike the noble Lord, Lord Higgins, I am no expert on this matter. Nevertheless, I am very pleased to be able to support him. One of the reasons that annuities are such poor value at the moment is that annuity yields are linked to gilt yields. For technical reasons, gilts are presently exceptionally high, even allowing for the current low inflation environment. If those retiring were allowed to invest their retirement fund directly into debentures or good quality euro bonds and, in addition, to withdraw a maximum of, say, 2 per cent per annum from capital, they might receive
  1122
  almost as much annual income as they would if they had to invest in annuities, but they would also have a capital sum left over to pass on to their families on their death. This capital sum would, of course, be subject to capital transfer tax, so the Treasury would not lose out.
  Earl Russell: The point of the noble Lard, Lord Higgins, about taking a pension at a particular moment's valuation in the stock market is a serious one. I recall a story of my father's—it relates to a legacy, but the basic point is the same—about someone who was bankrupted by inheriting £1 million in shipping shares. She inherited the shares and they were assessed for duty in April 1929. The duty was payable in October 1929. The case is no doubt extreme but it illustrates the point. Whether this amendment is the best way to deal with it I do not know, but I hope the point will be taken on board.
  Baroness Hollis of Heigham: Whether the story is relevant to our debate is one matter, but it is a very good story, and a revealing one. Amendment No. 7 seeks to remove the need for purchasing an annuity with a stakeholder pension fund. Clause 1(4) provides for stakeholder pension schemes to provide money purchase benefits, as we discussed just now. We have also discussed the reasons why we think that should he so.
  Under Inland Revenue legislation the funds built up in money purchase schemes must be used to purchase an annuity. Perhaps I could remind your Lordships why this annuity rule exists. It reflects the fact that the tax privileges accorded to pension contributions are given in order to ensure that the beneficiaries have an income throughout retirement. The Government encourage saving for retirement on the understanding that the fund will provide a stream of income during retirement. This avoids the risk of an individual having to rely on a low pension income and perhaps income related benefits because they have spent the proceeds of their fund in the early years of retirement.
  There is some flexibility in the annuity requirement. We propose that the pensioner age for stakeholder pension scheme members will be between 50 and 75. A tax-free lump sum will be available. These rules obviously follow the rules for personal pensions. The point which concerns your Lordships, and which I entirely accept, is the problem of falling annuity rates. That is the core of this issue. As your Lordships know very well, annuity rates are set in the market and reflect factors such as life expectancy and long-term interest rates. Obviously what we would all like are high annuity rates, low inflation and long-term life expectancy. Actually it is not very easy to put all those things together.
  It is true that annuity rates have fallen recently, as has inflation. The annuities purchased therefore will have correspondingly greater purchasing power and many people with pension funds have benefited from investment yields which have more than offset the fall in annuity rates, particularly as their funds have grown. The noble Lord, Lord Higgins, asks what will happen if in future inflation should rise and someone is caught in an annuity with assumptions of lower inflation and so on.

  1123
  As the noble Lord will know, there are products in the market place and people are certainly well advised to consider the appropriateness of buying an inflation-proofed annuity from which you expect a lower figure now in order to get inflation proofing later on. Currently the gap between those two is relatively narrow and could provide good value. Certainly the noble Lord will know that in the marketplace you can get an inflation-proofed annuity or you can get a level annuity. Under the latter you get higher figures to start with or you can get an inflation-proofed annuity and you start with a lower figure which is protected. You can choose which to have. At the moment my understanding is that the inflation-proofed annuities represent good value.
  The best protection the Government can offer to those purchasing annuities is to maintain a framework of financial stability which will ensure lower inflation in the future. This is what we intend to do. We will ensure that pensioners will have a guaranteed level of pension and we have set out proposals in the Green Paper. We recognise that pensions are a rapidly expanding field. The power to prescribe exceptions, as discussed between the noble Lord, Lord Higgins, and myself a few moments ago, will give flexibility if new schemes should develop. I hope that in the light of these explanations the noble Lord will feel able to withdraw his amendment.
  7.15 p.m.
  Viscount Eccles: Would the noble Baroness just return to the 75-year age point, which I think applies to this whole scheme of personal pensions? She is clearly right that life expectancy is getting longer. Would it not be the case that regardless of annuity rates there is a case for raising that age limit from the present age of 75?
  Baroness Hollis of Heigham: The Government are certainly considering the whole range of issues. I hope I shall not be misunderstood when I say that that might go alongside a rise in age in the European countries regarding the average age of state retirement and pension age. We think at the moment, given the current retirement age, the age of 75 strikes a reasonable balance between flexibility for the individual and the need to ensure they have a pension which is secure for the rest of their lives. I am advised that the effect of mortality on annuity rates means that it is unlikely that individuals would actually benefit from deferral beyond the age of 75 in terms of mortality rates. Clearly that could change in terms of inflation rates, but there the protection would be in terms of getting an inflation proofed annuity.
  Viscount Eccles: I thank the noble Baroness for that answer. I do not want to prolong this but I was hoping that choice would come into the matter. I have an uneasy feeling that the Treasury does not like the idea of the deferment of income which would follow from raising the age of 75.
  Lord Higgins: I think my noble friend is right in supposing that to be the Treasury view. I was somewhat
  1124
  astonished by the noble Baroness's statement that index linked annuities are very good value at the moment. There are some strange implications in that for the Government's view on interest rates, as against the market's view on interest rates.
  Baroness Hollis of Heigham: All I meant was that if somebody seeking to buy an annuity shared the noble Lord's concern about future inflation rates they would have the option to purchase an annuity which protected them against any possible changes in inflation to their disadvantage. I absolutely was not making any suggestion that the Government's economic policy will not keep inflation at the present unrivalled low level which we all enjoy and which will do so much to strengthen our economy.
  Lord Higgins: I shall read carefully what the noble Baroness has said—but anyway I shall assume that it was a DHSS brief rather than a Treasury one! Be that as it may, I am rather disappointed by the noble Baroness's reply. This is a serious problem. Everyone is looking at it in a broader context so far as pensions generally are concerned. It seems rather a shame not to build this flexibility into the stakeholder pension scheme in the way the amendment suggests. I would like to give further thought to this. One would have hoped that the deliberations which have taken place otherwise would not rule out this particular amendment. However, I beg leave to withdraw the amendment now but I may well wish to return to it at a later stage.
  Amendment, by leave, withdrawn.
  The Deputy Chairman of Committees (Lord Strabolgi): Before calling Amendment No. 8 I must inform your Lordships that if this amendment is agreed to I cannot call Amendment No. 9.
  Lord Higgins Lord Higgins moved Amendment No. 8:
  Page 1, line 22, leave out subsection (5)
  The noble Lord said: I think I am right in saying that Amendment No. 8 is linked with Amendment No. 9. I therefore beg to move Amendment No. 8 which asks to leave out subsection (5). That subsection is concerned with the extent to which the income from a stakeholder provider can be used to defray the administrative expenses of the scheme—I presume whether it is a scheme written under trust or otherwise.
  The other amendment seeks to restrict the expenses to 10 per cent. I was slightly surprised by that figure. Perhaps the Minister could give us some idea of what they expect the administrative expenses to be. This raises a whole series of questions as to what the "operating costs" of particular stakeholder pensions are likely to be. The Government have suggested that the limit should be a maximum fee of 1 per cent of funds under management. This produced a reaction in the press—perhaps not wholly surprising—from some of the potential providers who said that this was a very restrictive figure. Of course it has repercussions also for the issuers of advice, to which we will turn on a later

  1125
  amendment, and exactly what it is that the providers of the stakeholder scheme are producing for the potential pensioner.
  I notice that Pensions Weekly states that the Government are suggesting that providers should perhaps make a loss in the early years of the schemes that they provide. Front-end-loaded costs are a feature of most conventional schemes. Therefore if one takes out a scheme and then withdraws from it in the early years, one may not even get one's money back, let alone anything on top. Will the Government indicate how they envisage expenses being spread over the life of a scheme? Some people may decide to take out a stakeholder pension and then subsequently withdraw from it. I refer to the competitiveness of the stakeholder pension in this regard vis-à-vis other schemes.
  There are considerable problems here. I was rather surprised to notice the words which appear at the end of the subsection which I seek to delete which state,
  "may be used to defray the administrative expenses of the scheme, to pay commission or in any other way which does not result in the provision of benefits for or in respect of members".
  Many criticisms have been made about the level of commission which is paid and the fact that charges are front-end-loaded. Therefore, conventional pension schemes are not good value unless one contributes to them throughout the entire life of a particular asset. I notice that the noble Baroness opposite nods in agreement. I do not refer to the noble Baroness on the Front Bench opposite, but the "back-up team", as it were.
  I hope that the Minister can explain to us in what circumstances commission will be paid and why it is considered that it should be subject to a limit. One of the advantages—I concede that there are advantages—of the stakeholder scheme is that if such a limit is set, that is likely to put competitive pressure on conventional schemes, and perhaps to some extent encourage them to spread their expenses over the life of a scheme. This is an important point which it is right to raise. I believe that the noble Baroness, Lady Castle, has another amendment in this group which refers to a figure of 10 per cent. I hope that the Minister will also comment on that amendment. I beg to move.
  Baroness Turner of Camden: Amendment No. 9, which is grouped with the amendment we are discussing, stands in my name and that of my noble friend Lady Castle. Originally we tabled this amendment because the consultation brief proposed a maximum figure of 1 per cent of the fund per annum. That would mean that a person who pays into a scheme for the whole of his or her working life would find that up to a quarter of his contributions could be swallowed up in charges. The amendment seeks to limit the reduction in the value of benefits to a maximum of 10 per cent. I shall be interested to hear the comments of my noble friend the Minister on this matter.
  The noble Lord, Lord Higgins, has mentioned the problem of front-loading in connection with normal insurance contracts. There has been criticism about the cost of administration and about the level of commission. Those criticisms are not always fully
  1126
  justified, but they were often made in relation to personal pension provision. If a clear limit is placed on what can be charged for administration, I believe that people will feel much more secure with regard to the safety of their investment. That is an important point. We shall not press this amendment this evening, but I should welcome hearing the Minister's comments on the question of charges and administration.
  Lord McIntosh of Haringey: I am grateful for the explanation that has been given of both these amendments. They both relate to the charging structure for stakeholder pensions although they are very different—indeed, opposite—in their approach. Amendment No. 8 would mean that stakeholder pension schemes could charge their members in any way and at any level they wished. Amendment No. 9 seeks to put on the face of the Bill a restriction on the level of charges in terms of a percentage of the benefits provided.
  I shall set out the Government's thinking on this matter. We think that a simple and transparent charging structure should be one of the fundamental features, and indeed one of the fundamental attractions, of stakeholder pension schemes. The Green Paper proposed minimum standards for stakeholder pension schemes. Our proposals were set out in our consultation document published on 2nd June. As the noble Lord, Lord Higgins, rightly says, it has aroused a considerable response. There are those in the pensions industry who believe that tough standards have been proposed. However, others in the pensions industry believe that they can meet those standards. We propose setting restrictions on the way charges are made—both the amendments address this matter—and an overall limit on the charges.
  Some personal pensions have a charging structure which bears heavily on those with low pension savings, or penalises those who stop paying into the pension scheme. The noble Lord, Lord Higgins, mentioned front end loading. Personal pensions often charge in a complicated way so that scheme members find it hard. to understand how the overall charge is worked out. I know that there have been some improvements in the terms offered by some personal pensions. That is good news, but we want to make sure that no stakeholder pension scheme is able to charge in a penal or complex way.
  We have proposed that stakeholder pension schemes may charge only in terms of a single annual charge on the value of the fund. We have also proposed that there should be a 1 per cent limit on total charges. No additional charges will be allowed for transferring in or out of a stakeholder scheme, or for stopping or changing contributions. We have invited further views on those issues.
  I understand the thinking behind Amendment No. 8. We know that the proposed limit on charges will be challenging for some schemes. However, we want to make sure that the members of those schemes get a good deal. Some have said that a limit is not necessary and that competition will drive down costs. However, many providers have come forward with proposals for

  1127
  lower-cost personal pensions which offer greater flexibility to their members. We welcome such initiatives and are pleased that our proposals for reform are having a beneficial effect. However, we do not think that this should be left to chance.
  Every fraction on the charge means a lower final pension for scheme members, and a limit on charges provides them with important reassurance. We are determined to strike a hard bargain on behalf of the consumer. That is why we proposed the challenging but realistic limit of 1 per cent. We have taken into account responses to the Green Paper and have considered what charges are being levied. As I said, we have already seen charges being offered at this level and lower. However, we shall listen to what the industry has to say and take its views into account before a final decision is made on the wording of the regulations.
  But even with a limit on charges, there will still be competition between stakeholder pension scheme providers and managers, and this should help to drive down charges below the maximum. The governance structure of stakeholder pension schemes, which we have already debated, should enable schemes to negotiate competitive charges for their members and obtain value for money.
  Amendment No. 9 seeks to limit the amount that can be taken in charges to 10 per cent. The noble Lord, Lord Higgins, asked me what that meant in terms of numbers of years. If we assume that contributions rise in line with average earnings, at the 20-years point we would just about reach the 10 per cent limit. A large number of schemes finish before 20 or 25 years. I do not know what the proportion is, but a high proportion of schemes would be below my noble friend's limit.
  The only way that we envisage Amendment No. 9 being workable would be for stakeholder pension schemes to make a single charge on contributions. A charge of 10 per cent on contributions would have the same outcome as the limit suggested in the amendment. We looked at the possibility of a charge on contributions. That would provide more revenue for the scheme in the early years, compared with a charge on fund value. But it would not provide schemes with any revenue when the scheme members suspend contributions, which is one of the conditions of the scheme. The other main option—a single charge on the fund value, which we favoured—produces an incentive for schemes to maximise the value of their funds, either by maximising investment returns or by transfers-in from other schemes. It should continue to provide schemes with some revenue from dormant accounts and means that those who suspend contributions to a scheme should not impose an excessive burden on other scheme members.
  These are finely balanced arguments, but we came to the view in the end that a single percentage charge of fund value was the better scheme and that is the one favoured by the great majority of Green Paper responses.
  Amendment No. 9 also seeks to quantify the limit on the face of the Bill. We do not want to do that yet. We are in the process of consulting further on the details of the minimum standards, including charges, and will lay down
  1128
  the detail in regulations to give us the flexibility to amend the standards in the future if as a result of regular review it becomes appropriate to do so. Setting standards that all stakeholder schemes must meet will ensure a level of conformity across schemes; it will allow individuals to compare what is on offer, which will be especially important when considering charges; and it will rebuild public confidence in pension schemes which are secure, flexible and value for money. On that basis, I hope that noble Lords will feel able to withdraw the amendments.
  I did not respond to the point made by the noble Lord, Lord Higgins, about the costs in early years. It is true that there will be extra costs in early years; that is not uncommon in business. We do not expect that to be unmanageable.
  Lord Higgins: I am grateful to the Minister for that reply. I raised one other point: I was not clear why commission should be included in the list of legitimate costs. I have always been better on concepts than arithmetic; I therefore have some difficulty in relating the 1 per cent charge per annum on funds under management to the amendment of the noble Baroness, which requires that the fund as a whole should not be reduced by more than 10 per cent. Am I wrong in thinking that if it is 1 per cent per annum and it runs for 30 years, that will be significantly in excess of the restriction which the noble Baroness was suggesting?
  Lord McIntosh of Haringey: That is true. That is why I gave the figure of 20 years as being the cross-over point.
  Lord Higgins: Even at 1 per cent the value of the fund will be quite significantly reduced. The noble Baroness's amendment would be much more stringent than the figure suggested by the Government. There are also more technical questions about discounting back and forth to get a present value and so on. I do not think we need to go into that on this occasion. Perhaps I may ask the Minister to answer my central point. Can he clarify why there is commission? Is it suggested that there should be different charges for investment in tracker funds rather than funds which are managed on a more general basis?
  Lord McIntosh of Haringey: I am guessing now, but it seems to me that commission is a way of incurring marketing costs—and marketing costs are part of the costs of running a pension scheme. It is not up to us to decide how a pension scheme provider should allocate its costs. So far as concerns the customer, commission is the same thing as any other back office cost. Commission is like any other cost; it reduces the value of an individual fund. That is why we have set the 1 per cent limit on the total fund rather than attempt to distinguish between different kinds of costs. That would be too detailed. As to tracker funds, the same charging rules would apply as to any other fund.
  Lord Higgins: In the light of that answer, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 9 and 10 not moved.]
  Baroness Amos: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage does not begin again before 8.15 p.m.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.

Prevention of Terrorism (Temporary Provisions) Act 1989 (Revival of Parts IVA and IVB) Order 1999
7.34 p.m.
The Minister of State, Home Office (Lord Williams of Mostyn)The Minister of State, Home Office (Lord Williams of Mostyn) rose to move, That the draft order laid before the House on 23rd June be approved.
The noble Lord said: My Lords, your Lordships will know that with permission I repeated yesterday a Statement made by the Secretary of State for the Home Office in another place. The burden of that Statement was that, due to an error in the drafting of the 1998 and 1999 continuance orders, Parts IVA and IVB of the Prevention of Terrorism (Temporary Provisions) Act 1989 had not been in force since 22nd March 1998. As promised, I return seeking the revival of those provisions. I am grateful to the noble Lords, Lord Cope of Berkeley and Lord Thomas of Gresford, for their assistance in having these matters very promptly brought back before your Lordships.
I said yesterday that it was our intention and understanding—and I have no doubt that of the House—that Sections 16A, B, C and D of the PTA should continue to be available following our debates. In repeating the Statement yesterday, I indicated that that was not so. The error was discovered by an academic writer in Criminal Law Week; it was brought to the attention of the Home Secretary on 26th May; we had advice on the argument in the article from the Law Officers which came to the Home Office on 17th June; thereafter we had detailed advice from officials on 18th June; and the draft order was laid yesterday, 23rd June.
Before I go, quite shortly, to these relatively simple provisions, I should correct one point from the repeated Statement of yesterday. The information we had yesterday was that six persons had been charged with offences under Section 16A and B; in fact the total was seven. The seventh related to international terrorism and the matter was dropped before it came to court. It is only right that I should correct that error. It remains the case, therefore, that there have been no convictions so far under Section 16A or B.
I perhaps should make one other point of clarification. In repeating the Statement I referred to an individual who had been in custody for some months and that we could expect to receive a claim for compensation. In one other of the total of seven cases, the alleged offence was committed after 22nd March and there were some months in custody; therefore there may be a compensation claim.
Quite shortly, Section 16A makes it unlawful to possess articles in circumstances which give rise to suspicion that they are intended for terrorist purposes. It is a defence to prove that the articles concerned were not held for terrorist purposes. Section 16B makes it an offence to collect or record information which is likely to be of use to terrorists without lawful authority or reasonable excuse.
It is true that these provisions have been rarely used, as I indicated yesterday in answer to particular questions from Members of the House. Experience of the equivalent provisions in Northern Ireland is positive. Both the noble and learned Lord, Lord Lloyd of Berwick, in his inquiry into legislation against terrorism and Mr John Rowe QC in his annual reports on the operation of the PTA have commented on the usefulness of the provisions and recommend that they should be retained.
Your Lordships will know from what was said yesterday that there is a matter going through the courts; I understand that it will be determined on 19th July by the Appellate Committee of your Lordships' House in the case of "K" and others. I simply mention that as part of the narrative; we spent some time discussing that matter yesterday.
I turn now to Sections 16C and D. Section 16C gives police, subject to authorisation at superintendent level or above, the power to cordon off areas and to restrict access in connection with terrorist investigations; and creates offences if police instructions are not obeyed. As I said yesterday, central records are not kept. The powers have been relatively frequently used by the Metropolitan Police Force, which has used them 86 times since March 1998. As I indicated yesterday, there are certain common law powers, but Section 16 provides a firm statutory basis for police action.
Section 16D gives the police the power to impose temporary parking restrictions on roads in response to a general threat to vulnerable targets such as government buildings or financial centres. There are some common law powers but the provision provides the reassurance of statutory underpinning. As with Section 16C', both the noble and learned Lord, Lord Lloyd, and John Rowe QC thought that the powers are valuable and should be retained.
I hope that that is a sufficient summary of the present position. Everyone who had to do with the passage of the continuance orders thought that the drafting brought about the legal consequence that Section 16A, Section 16B, Section 16C and Section 16D had legal statutory effect. Our advice being that they did not, we thought that it was our duty to notify both Houses of Parliament as soon as possible and, following the indications given by the noble Lords to which I referred with gratitude earlier, this has been the earliest opportunity. I commend the order to the House.
Moved, That the draft order laid before the House on 23rd June be approved.—(Lord Williams of Mostyn.)
Lord Cope of Berkeley: My Lords, as will be apparent to those who were present yesterday or who read what I said yesterday on this matter, I welcome the

1131
prompt way in which the Government have brought this order before the House. It is right to put these offences back on the statute book following the unfortunate way in which they fell off it, as it were, by accident. We have all supported these offences being on the statute book. We thought at the time that we were keeping them on the statute book—everyone did—and they are not, as far as I know, controversial. I welcome the order and the promptness with which it has been brought before the House.
The only matter which still concerns me is why it took a month between the discovery of the mistake and the Statement that was made and the order that was laid yesterday. I realise that the Government would be particularly keen to give attention to the drafting of the order in case there should be some further error in the matter. But the point, although obscure in the sense that it was tucked away in the law, is not a complicated one as far as I can detect. It is a relatively simple one. I am not a lawyer, but it seems that way to me.
The Minister has just explained in a little more detail what happened during the month. Evidently, the Law Officers took from 26th May to 17th June to decide what advice to give to the Home Secretary. So it would seem that three weeks or more were taken up by the Law Officers in considering the case. That is not of great importance now. The important point is that we are now putting the matter right. But I do not think that it reflects very well on the urgency with which the Government tackled the matter.
As the Minister said, there were references yesterday, both in the Statement and in the exchanges which followed, to the particular case involving the sections. It did not seem to me yesterday, and it does not seem to me in considering the matter since, that those are precisely relevant to what we are doing today. Thanks to modern devices, I was listening to some exchanges in another place on this order a few minutes ago. However, I do not think it is either necessary or helpful to pursue that matter today. We may or may not have to return to it once the Appellate Committee of your Lordships' House has come to its view. However, that is a matter for another day.
Lord Thomas of Gresford: My Lords, I apologise for introducing a sour note into this debate, but yesterday I raised the propriety of that part of the Statement which said:
"The Government believe these provisions, in their current form, are not incompatible with the ECHR and are an important part of the armoury in the fight against terrorism. It is entirely consistent with this position to seek the early revival of these provisions now that it has come to light that they are not currently in force. In adopting this course of action the Government are not attempting to pre-empt or in any way influence the outcome of the appeal. We shall await their Lordships' judgment with interest".—[Official Report, 23/6/99; col. 954.]
When I raised the propriety of making that kind of comment, my view was based not on knowledge of what had happened, but on principle. I was a little taken aback by the vigour of the Minister's reply on this issue. He
1132
was not his usual urbane self. At col. 956 of the Official Report, he said:
"The Home Secretary takes the view … that in speaking to Parliament we ought to be as candid, as open and as helpful as possible".
The method of his reply aroused my curiosity and I made further investigations. I discovered that what the Home Secretary failed to say to Parliament in the Statement repeated by the noble Lord was that the view being expressed as to compatibility with the European Convention was contrary to the law as at present interpreted by the Lord Chief Justice and two other judges in the Divisional Court in the case to which reference was made—"K". So it is not peripheral. I regret to disagree with the noble Lord, Lord Cope, on this matter. I had assumed that the Statement that was confidently made yesterday represented the present position and that it was the applicants in that case who were mounting a challenge to the Government, who had obtained a successful judgment.
The passing of this order does not affect the judgment of the Divisional Court. The decision of that court was that the DPP had continued the prosecution of the applicants in the mistaken belief that these provisions of the Prevention of Terrorism Act did not violate the European Convention and had thus made an error of law. So the view of the courts as presently expressed is that there is an error of law when prosecutions are brought under the Act. I think that there is a vast difference between this House being asked to approve an order which is in accord with the judgment of the Divisional Court and being asked to do so when, as at present, the legislation which is being continued is held to be contrary to that view and is determined to be in violation of the European Convention on Human Rights. I do not find the Home Secretary's Statement to be candid, open or helpful. Indeed, I feel that I was misled yesterday and that the House was misled.
It is central to the Human Rights Act that Parliament be made aware of the extent of compliance with the convention when it debates legislation. That is why we have Explanatory Notes at the beginning of proceedings on a Bill and a statement of compliance on the face of the Bill. No doubt that is the reason for what I thought yesterday to be an extraneous piece of information contained in the Statement.
I do not think it is helpful to discuss the decision of the Divisional Court except to point out that it is in exact accord with the views expressed by the noble Lord, Lord Williams of Mostyn, when in opposition. It was his view, he then said, that the offences were far too harsh and draconian and that they would bring the law into disrepute. When the measures were first introduced, he said that they would bring us into serious conflict with the European Convention on Human Rights. The noble Lord's view has been upheld by the Lord Chief Justice and other judges. The noble Lord said:
"If we condemn our citizens to the possibility of 10 years' imprisonment on the basis of reasonable suspicion…we are in serious danger of giving terrorism a victory that it would not otherwise achieve".—[Official Report, 7/6/94; col. 1208]

1133
That view was expressed not only by the noble Lord, but also by Mr John Rowe QC, who identified Section 16A as being potentially in breach of Article 6(2) of the European Convention.
The argument about the presumption of possession under Section 16A(4) of articles giving rise to a "reasonable suspicion" that the article is in his possession for a purpose connected with the position of terrorism is very reminiscent of the first case which came to the Privy Council from Hong Kong—the case of Lee Kwong Kut— in which I was personally involved. The point is that the test of "reasonable suspicion" in that Hong Kong legislation, and indeed in this legislation, is purely objective. A person can be found guilty and sentenced to up to 10 years in prison even if he is actually unaware of the true position. The presumption of innocence is violated.
As for Section 16B, the category of information that is encompassed is impossibly wide. I quote:
"a simple map or a simple list of addresses and telephone numbers would fall into this category … The real danger will be that persons who have information recorded or collected or possessed by them will be charged and harassed unnecessarily".—[Official Report, 7/6/94; col. 1209]
Those are the words of the noble Lord, Lord Williams of Mostyn. I commend him on his correct interpretation of the law as upheld by the Divisional Court.
This is a serious matter. It is positively unconstitutional to legislate, even with secondary legislation of this kind, which as I said yesterday does not make a great deal of difference so far as the order is concerned. The intention of Parliament was perfectly plain in the previous order that was passed. It is unconstitutional to legislate on the Government's assurance that these offences are compatible with the convention when the courts have ruled precisely to the contrary. Unfortunately, it gives no confidence that, when future legislation comes forward, with the Government giving a certificate that it complies with the European Convention, that certificate means anything.
It is for that reason that noble Lords see in me a complete volte-face from the position that I took yesterday; namely, that the quicker we got what I regarded as a technical and mechanical matter out of the way. the better. I do not believe that that is so. On further examination, there are important issues. This legislation should not have been brought forward until the Judicial Committee had—if it does so; and that is a matter of great argument—actually set aside the decision of the Divisional Court.
There are ample powers of protection in the meanwhile, as we discussed yesterday. The ordinary law of criminal conspiracy is sufficient to enable the prosecution of individuals who possess information with the intention of using it to carry out a terrorist attack. The only point is that the prosecution have to prove that offence beyond reasonable doubt, whereas under this legislation the burden of proof is entirely reversed.
Finally, I am reminded of the wise words that were spoken by my noble friend Lord Wigoder in 1974, when the Prevention of Terrorism Bill was introduced into the
1134
House by another of my noble friends, Lord Harris of Greenwich, who was then on the Labour Benches. My noble friend said:
"all of us who treasure our civil liberties—and that means every Member of your Lordships' House—is bound to want to consider with the greatest care emergency legislation which may have been hastily conceived, hurriedly drafted and passed into law without careful detailed examination in your Lordships' House".—[Official Report, 28/11/74; col. 1517.]
That was a very wise statement. It is as applicable today as it was then. I should be grateful if the Minister could deal with what I regard as the unconstitutional aspects of the order.
Lord McConnell: My Lords, on many occasions I have attacked the Government for their attitude towards terrorism and for not being enthusiastic enough in dealing with it. But on this occasion I support the order. It is perfectly right and proper that it should be brought before the House. It is, therefore, only right that I should stand up and say so.
This matter has taught us certain lessons about being more careful in the future, about not rushing legislation, and about examining it before it is presented to either House. But I need not rub that in. Those lessons have been learnt recently. I shall merely content myself by saying that I support the Minister in regard to this order.
Viscount Waverley: My Lords, I too support the order.
Lord Williams of Mostyn: My Lords, I want to make the timetable absolutely plain. I know that it is a relatively minor matter, but I do not want any misunderstanding.
The article appeared in the Criminal Law Week on 24th May. The Home Secretary was faxed the article on 26th May. We spent the time from 26th to 28th May preparing advice and questions for the Law Officers. So the advice from the Law Officers, in fairness to them, was asked for on 1st June. It arrived at the Home Office on 17th June. I should not like there to be any suggestion that the Law Officers were dilatory, because I do not believe that they were.
I am rather surprised that the noble Lord, Lord Thomas of Gresford, felt that he had been misled yesterday. I do not think anything could have been plainer. In repeating the Home Secretary's Statement, I made specific reference to the case of Kebilene and others. So far as I know, that has been reported and commented on in the newspapers. If the noble Lord. missed it, then I am rather surprised; it has been reported and commented upon. The reason that it was mentioned in the Statement, I think rightly, was to point out that there was a judicial review and it was about the question of whether or not the Director of Public Prosecutions should continue to give his consent to the prosecution of offences under Sections 16A and 16B. if they are incompatible with the terms of the European Convention on Human Rights. That is the point of Kebilene. The European convention has not been fully incorporated by the Human Rights Act, which will not come into effect until 2nd October next year. I believe that we did rightly

1135
in drawing your Lordships' attention to the case of Kebilene and the fact that the Appellate Committee was going to determine issues that were related, as the noble Lord, Lord Cope, said, not central to, the particular matter.
As the noble Lord, Lord Cope of Berkeley, indicated, and as your Lordships agreed, we all thought that the drafting of the continuation orders had had the legal effect of continuing Sections 16A, 16B, 16C and 16D as the basis for criminal offences. Because the drafting was in error, as I explained yesterday and was generally accepted, it turned out that Sections 16A, 16B, 16C and 16D were no longer of legal effect. Having taken advice on that—and one does not want to rush into matters of this potential importance—we brought the matter back to the House and explained the error that had been made; the Home Secretary said, "for which I take responsibility", and no one tries to derogate from that. I cannot imagine that anyone could conceivably have been misled who had put his or her mind to these matters.
There is nothing unconstitutional about what we are doing. I repeat, although I was reproved by the noble Lord, Lord Thomas of Gresford yesterday, that we believe that our stance on incompatibility and compatibility is the correct one. In due time, should the House of Lords Appellate Committee come to a different view, we shall have to review the position. But I stress that what the House of Lords is being asked to consider is the application for judicial review, which has already been heard at first instance in judicial review terms, as to whether the director should carry on giving his consent to the prosecution of offences if the offences are not compatible with the European convention. I see nothing unconstitutional in that. I believe that we were right to mention the case of Kebilene yesterday. If I had not mentioned it in repeating the Home Secretary's Statement, your Lordships could reasonably have felt a little aggrieved that we had not been as full and frank as possible. I put the matter yesterday on the basis that this is a related matter. The noble Lord, Lord Cope, was good enough to repeat it. I do not think that he ever said that it was peripheral, which was the word used by the noble Lord, Lord Thomas. I think he said that it was related but not central to this point. I commend the order to the House.
Lord Cope of Berkeley: My Lords, before the Minister sits down, is he aware that I myself saw both the law report and the newspaper report of this particular case at the time, although I am not as avid a reader of law reports as the Minister. It seems to me that if the Government had failed to bring the order before the House in these circumstances, they would have been prejudging, if not prejudicing, the case in the Appellate Committee. To me that would have seemed to be unconstitutional to a much greater degree than bringing the order before the House in the circumstances.
On Question, Motion agreed to.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure until 8.15 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.59 to 8.15 p.m.]

Welfare Reform and Pensions Bill
House again in Committee on Clause 1.
Lord Higgins Lord Higgins moved Amendment No. 11:
Page 2, line 11, leave out from ("to") to ("and") in line 12 and insert ("a minimum contribution level of £10 per month,")
The noble Lord said: The purpose of Amendment No. 11 is to raise the issue of what contribution those subscribing to a stakeholder pension can make. The Committee will be aware of widespread comment in the press that the Government intend that it should be set at a minimum level of £10 per month; in other words, £120 per annum. This raises a number of questions on which it would be helpful to have the views of the Government. This matter is also related to the earlier debate about the costs that might be involved in the provision of stakeholder pensions. It also looks forward to later amendments related to the extent to which advice will be given by those who provide such stakeholder pensions.
One must express hesitation about the figure of £10 which appears in the amendment in the light of press comments on the position of the Government. At £120 per year, for someone who provides a stakeholder pension of 1 per cent—we discussed this matter just before the adjournment—the cost allowed would be only £1.20. If one is a minimum contributor it seems unlikely that one will get very much for the sum of £1.20.
At the other end, the question arises: what kind of pension will one get for a minimum contribution of £10 per month? In that context, one raises yet again the issue of whether the pension that one gets is likely to be sufficient to provide a pension in excess of the minimum guaranteed pension proposed by the Government, which one understands is to be index-linked. Clearly, if an individual did not reach that level with the subscription just mentioned it would be money—I was going to say—down the drain. Without using Mr Frank Field's exotic expression, that would be roughly where it would go.
Of course. the Minister may well argue that one is unlikely to be making the minimum contribution throughout one's working life and that the expectation is that people will probably contribute significantly more. Even so, if the amount contributed is significantly higher, calculations suggest that even, say, for someone aged 21 on an income of £12,000 a year, with the salary rising by 2 per cent over inflation and a contribution of 10 per cent of earnings to the scheme, the total contributions will he only some £85,000. That would produce an estimated income in retirement at today's purchasing power of about £11,700, plus what is left, if anything, of a basic state pension. That would presumably be scarcely seen as a reasonable return on the investment made over one's life.
I am sure the Minister has alternative figures which we can consider. But certainly the minimum contribution level and indeed the level of contributions which may be expected by people above that level raise serious questions as to whether encouraging low-earners to go into this scheme will be a worthwhile investment. I should be grateful if the Minister could comment.
Baroness Hollis of Heigham: The amendment would put on the face of the Bill details of the minimum contributions that schemes can require stakeholder pension scheme members to make. We expect to set out these details in regulations. I am sure that the noble Lord will agree that the matter is much better handled in that way. I could explain the purpose in one phrase: this is meant to be a ticking-over contribution. Perhaps I may enlarge on that point.
Subsection (7) provides that schemes must allow members to make contributions as they think appropriate. This means that members will be able to contribute such sums as they wish, either on a regular basis or as and when they can. The subsection also provides a regulation-making power to prescribe minimum contribution levels and other restrictions on the making of contributions.
The Green Paper made clear our intention that schemes which require minimum contributions should not be able to set them above a specified amount. Our recent consultation document proposed that no scheme should be able to require a minimum contribution of more than £10. This low limit will ensure that people who can afford only modest contributions are not ruled out from joining a stakeholder pension scheme. I am pleased that the noble Lord's view of an appropriate minimum level is consistent with ours.
We have also proposed in our consultation document that there should be no requirement for contributions to be made at a specified frequency—for example, once a month, as suggested by the amendment. One of the key flexibilities that we want to introduce into stakeholder pensions is the freedom for individuals to make contributions as often as they wish—that is, by regular payments or by a one-off payment. We want them to be flexible enough to adapt to circumstances.
For example, regular and monthly contributions may be the most appropriate arrangement for those in work. However, they may lose their job and be unemployed for a time. If that happens, we want them to be able to continue to make modest contributions—perhaps £10 or £20—as and when they can afford to while they are looking for work. Likewise, we want to make sure that people who take a career break to raise a family—they may take three or four years out while they have a couple of children—can continue to make one-off contributions from time to time, possibly from freelance earnings or in some other way; we want them to be able to make a modest contribution while they are out of the labour market. And we want to cater for people who may wish to make irregular lump sum payments—for example, if they should inherit money or if they wish to make a contribution from their savings.
1138
In the consultation document we have invited views on the compatibility of the minimum contribution rule with the variety of ways in which schemes may collect contributions. I could discuss that if necessary, but essentially I entirely agree with the noble Lord that a £10 a month regular minimum contribution over many years will not produce a faintly satisfactory pension. But the point is that the provision allows a welcome flexibility for exactly those people that the stakeholder pension is designed to cater for: those who may be in and out of work, those who may temporarily drop out of work, those who may have temporary childcare responsibilities and the like. They can then have the option of making good that low level of contribution in their later contributions.
As I said originally, it is a sort of ticking-over contribution which we think offers much needed flexibility so that we keep people within the pensions system rather than have them drop out altogether. I hope that in the light of that explanation the noble Lord will withdraw the amendment.
Lord Higgins: There are two points here. If the Government suggest that minimum level which I understand is the figure they are suggesting now, presumably it may subsequently be adjusted for inflation and so on. The question nonetheless arises whether any provider of a stakeholder pension is prepared to take on the paper-work and so on involved, given that the charge it would be allowed to make would he about £1.20 a year.
Baroness Hollis of Heigham: I obviously did not make myself clear. We do not expect people to go into a scheme and pay £10 a month. What we expect is that people who are in a scheme may lose their job and want to keep ticking over by dropping down to a contributory rate of £10. It may also be a way of enticing people on very low pay to make a start.
Nobody disputes the noble Lord's assertion about whether, at £10 a month and with the level of charges that would need to be made, a viable pension would be produced. But the provision does produce flexibility to enable people who may be temporarily out of the labour market, temporarily unemployed, looking after children or whatever, to keep a scheme ticking over. Then hopefully they will be encouraged to make good that shortfall later. No one is suggesting setting up a new scheme for somebody for the most part on £10 a month. It may be the case on one or two occasions, but it is much more likely to be a drop-down rate rather than a starter rate.
Lord Higgins: The expression "tick-over" rate which the noble Baroness used is perhaps a convenient way of describing it. As she says, it may also be a start-up rate. None the less, I would have thought that there must be some minimum level below which, on average, a provider was not particularly keen to take on all the administrative hassle and so on for £1.20 a year.
The other issue is whether ticking it over at that rate will provide a pension which is in reality worth anything at all because it is below the minimum income level

1139
which the Government propose. Presumably it is possible to do the calculation to show how much one would have to pay into a scheme in order to produce the Government's income level. Indeed, that would be a rather useful calculation to have done generally because it would clarify the situation. One of our concerns, as I pointed out in an intervention during a speech by the noble Lord, Lord Goodhart, is that people will be deterred from saving at all or find that they have had a very bad deal. Then one is into mis-selling territory if they do not know. I leave on one side the issue concerning the disabled which we shall come to later.
It would be helpful to have this figure because it would give people some idea of whether it is worth while ticking over, for example, or going for a period. Obviously for the arithmetic one must make certain assumptions about whether the contribution is paid regularly or spasmodically. I presume the Government have done the calculation, and it would be helpful to have the figure.
Baroness Hollis of Heigham: I am not sure that it is a realistic figure that the noble Lord has asked for. People on such a low income that £10 a month is the only realistic contribution they can make to a pension scheme will not be in the stakeholder pension; they will be in the state second pension, an unfunded scheme for the low-paid earning less than £9,000 a year.
What we are talking about here are the circumstances of people, perhaps at the beginning of their working lives, expecting to make increased contributions and getting them into the pension habit. People in work who became unemployed—took time out—in the old days stopped their pension contributions. But we are allowing a tick-over. We do not expect a £10 a month contribution or sporadic lump sums of £20 here and £30 there to be a sustainable basis for a pension scheme, but the provision gives a flexibility to people whose incomes or earnings are somewhat erratic but who none the less feel that it makes sense to remain in the stakeholder framework rather than the state second pension. That is all that we are doing with it.
Lord Higgins: We have the same problem as with Amendment No. 1. We do not know exactly what the position will be on the state second pension.
Perhaps I may press the Minister. She may be unable to give the answer now. There are two cross-over points. What level of contribution on average floats people out of the state second pension into a stakeholder pension? At what level of contribution on average, on some reasonable expectation about the lifespan of the individual, would it not be worth while contributing because one runs into the problem of the guaranteed minimum pension? I should have thought that that can be calculated. It would be helpful to know.
8.30 p.m.
Baroness Hollis of Heigham: If the noble Lord is serious in his request, he must write to us with a list of the assumptions that he wants us to build in. That would
1140
include, for example, inflation and what has happened to the equity market in a funded scheme; it would have to make assumptions about that man's or woman's earning capacity, and so on. I am not sure why the noble Lord is pressing us on this. This is a drop-down rate or an early start rate for someone who will remain within the stakeholder pension.
We have already said today that the state second pension will be expected to cover people up to between £9,000 and £12,000. But between £9,000 and £18,000 or £20,000 it makes sense go to into a funded scheme. At £20,000 one is almost certain to be in an occupational scheme or able to afford an adequate personal pension.
I do not see why there is any problem about cross-over points. But if the noble Lord wants us to do some calculations and will specify the assumptions he would like us to include we shall have a look at them. However, as posed his question is unable to be answered.
Lord Higgins: I accept that one has to make assumptions. I shall give further thought to that.
My concern is that people should not invest in a stakeholder pension and find at the end of the day that they receive nothing. We need to have some parameters within which the scheme operates. Let us see whether we can make progress on it. Subject to that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 12:
Page 2, line 12, leave out ("and other restrictions as may be prescribed,") and insert ("up to a maximum of £5,000 a year of the proportion of earnings which may be relieved of income tax if invested in an eligible pension scheme for a person of the relevant age in accordance with current Inland Revenue rules, whichever be the higher,")
The noble Lord said: Perhaps the Minister can confirm that it is suggested that we should link this amendment with other amendments, including the amendment tabled by my noble friend Lord Freeman.
Baroness Hollis of Heigham: It is the same issue about concurrence, dual membership and tax relief. It is essentially a tax relief issue.
Lord Higgins: As the noble Baroness rightly said, Amendment No. 12 has some tax implications. I think that I am right in saying that at present the maximum figure which has been suggested by the Government is £3,600. We are suggesting—it is an arbitrary figure—that we should raise that to £5,000 to establish exactly what the situation is with regard to taxation.
Other amendments raise the question of whether one should be allowed to be in more than one scheme. As we understand, one is not allowed to have both a stakeholder pension and another pension. I believe that that is the case, whether or not the individual has more than one occupation. But no doubt the noble Baroness can confirm the Government's position.

1141
First, if an individual has two unconnected jobs, each of which has a stakeholder pension scheme, is it permissible for contributions to be paid to both stakeholder schemes where the aggregate contribution to both amounts to more than £3,600? If not, how does each employer know the amount of contributions to the other scheme? If there is an overall limit, on which scheme does the restriction apply? We need to know the relationship in dual employment.
My second question relates to additional voluntary contributions. What is the position as regards the £3,600 limit, which I understand is an aggregate contribution limit, so far as concerns AVCs? Does that limit apply in that case too? No doubt as the matter has been raised also by my noble friend Lord Freeman he will have a number of additional points to make in relation to dual membership. I leave him to spell those out. I beg to move.
Lord Freeman: I speak to Amendment No. 17. Because it is a probing amendment, I make plain that at the appropriate time I shall not move the amendment. I hope that the Minister will accept my comments on Amendment No. 17 as part of this debate.
My concerns relate to the rights to dual membership by individuals in a single employment. It is beyond doubt that so far as concerns Inland Revenue rules, if one has two or more employments one might have different pension provisions. For example, one might be in an occupational pension scheme for one's main employment. One might have a personal pension scheme at present; or some other form of pension provision for other employments. My concern relates to single employment and rights to dual membership.
Amendment No. 17 refers specifically to rights to dual membership of occupational pension schemes and a stakeholder's pension. It seemed to me that that is where the issue particularly arose. For the sake of my brief arguments, I define an occupational pension scheme as a defined benefit—for example, a final salary scheme.
At present, under Inland Revenue rules it is effectively impossible under tax law for those in single employment to have dual membership. It has to be one or the other. The noble Lord, Lord McIntosh, referred to the change in the law in the 1980s. He was right to describe it as presenting a problem to some in the sense that those in an occupational pension scheme have to leave that scheme in order to set up their own personal pension plan for that employment. Indeed, employers were not allowed to make it a mandatory condition of employment that one had to join an occupational scheme; otherwise one would have been in the situation of trying to promote personal pensions and effectively being unable to offer them to those in single employment. I believe that dual membership makes sense.
At Second Reading on 10th June, the noble Baroness, Lady Hollis—I shall paraphrase the essence of her helpful comments—said that the issue was complicated, that discussions were taking place with the Inland Revenue, that Her Majesty's Government were
1142
reflecting upon the issue of dual membership and that their mind was not closed to the issue. All that is extremely helpful. The issues may have moved on, and it may be that some resolution is close at hand. There are further stages to the Bill in this House. If it is not possible to resolve the matter tonight I hope that before Third Reading it will be possible to resolve the issue. I think that it is important to those in the industry. I do not speak for them but I am well aware of their concerns. Those who make provision and those who provide need to be clear about the position.
Why is the Inland Revenue involved? Why is tax law relevant? There is control over the deductibility of pension contributions by employees and employers. The noble Lord, Lord Peston, is not in his place but he seemed to argue for no tax restrictions on deductibility. I think that that is asking too much. There are laws in place. If one allows today unlimited provision for pensions in the future one will lose tax revenue. It will be recouped when the pensions are paid, but the short-term cash position is disadvantageous to the Government.
I would argue that a limited degree of relaxation is called for. I agree with my noble friend Lord Higgins that a simple way of relaxing provision is to allow those in one employment to have rights to remain in an occupational pension scheme whose tax rules are complicated and different from the simple tax provision for which the regulations will provide for stakeholder pensions—an upper limit of £3,600 or whatever. That is tax deductible, no questions asked: a lump sum provision by the employee. There is room to permit an employee to have both tax deductions under the different regimes that would apply to a stakeholder pension—I imagine that we are talking only about an employee's contributions and not an employer's— and an occupational pension scheme.
Why? There are two simple reasons I want to put to the Minister. I assume that we shall find a number of examples of employer-funded pension schemes, whether they are defined benefit or money purchase, to which the employee can make contributions and which cover employees in the salary range £10,000 to £20,000. The Minister earlier implied that one was dealing with a continuum of pension provision into which one could neatly fit different categories of people. She is largely right, but I am afraid there is some overlap. There are a number of examples of smaller companies, particularly in the engineering industry, which are employing people at £20,000 per annum, which are providing an employer-funded contribution pension scheme, and they should be encouraged.
Therefore, I am pressing the issue of dual membership for two reasons. First, in order to avoid the awkward decision when someone is coming out of self-employment, or employment where there is no employer-funded pension scheme, into full-time employment where there is an employer-funded pension scheme, avoiding the difficult decision as to whether he should continue his stakeholder pension. The economic arguments might be in favour of ceasing contributions to the stakeholder pension scheme and going into the employer's pension scheme. Frankly, in some cases it

1143
may be sensible to continue to top up one's stakeholder pension scheme. The figures that I have seen which indicate or moot a maximum contribution level of £3,600 per annum—that is, applying the normal 15 per cent tax deductibility rule—would give a salary of £24,000. Fifteen per cent of one's salary at £24,000 a year is quite a large sum. But if one was in an occupational pension scheme and was paying 5 or 6 per cent, with the employer paying perhaps 10 per cent, there would still be sufficient room to top up one's stakeholder pension scheme by 9 or 10 per cent of one's salary.
In the real world, many people will wish to maintain contributions to a stakeholder pension scheme throughout their working lives. It provides continuity. One needs to make contributions over a great number of years in order to have a meaningful pension. Ten pounds a month—£120 a year—even with a full working life, will provide only a modest pension of perhaps £10 or £15 a year. That is the pension one would get on retirement at 60 if one made that contribution for 20 or 30 years, given normal annuity rates.
The second and more important reason for the arguments lying behind my amendment is to avoid the problem referred to by the noble Baronesses, Lady Castle and Lady Turner, and my noble friend Lord Higgins. It is to avoid the problem of some employers closing their own schemes, to which they make contributions, and saying, "We have to provide introductions and advice to facilitate a stakeholder pension scheme in our little company or factory. We are going to stop our scheme. We don't have to make a contribution. Times are hard. Here is your scheme to which you as an employee will contribute."
The noble Lord, Lord McIntosh, said that all good employers will wish to keep their employer contribution scheme in order to attract people to the company. The Association of Consulting Actuaries, in a sample of 572 companies, reported that 12 per cent stated that they would close their scheme under the Bill as presently drafted. Perhaps that is an exaggeration, but every time an employer ceases making a contribution to an employer contributory scheme, however generous that may be, it is a retrograde step. Dual membership is a very modest way of increasing total contributions to pension provision in later life and maintaining employer responsibilities at the same time.
8.45 p.m.
Lord Goodhart: I rise to support both the amendment which have been introduced and to speak to my own amendment, No. 20. That amendment covers two issues. First, can a member of a stakeholder pension scheme use that scheme as though it were a personal pension and make contributions up to the Inland Revenue limits, even if they exceed the £3,600 proposed limit on stakeholder contributions? Secondly, can a member of a stakeholder pension also be a member of another scheme? As we have heard, the first issue is dealt with by Amendment No. 12. The second issue is covered by Amendments Nos. 17 and 18.
1144
I am not in complete agreement with Amendment No. 12 because the first part of the agreement deals with the limit to contributions and puts it at £5,000 a year as against the Government's proposal, which is to impose an upper limit by regulations of £3,600 a year. I agree that it is a good idea that anyone should be allowed to contribute up to £3,600 a year to a stakeholder scheme, provided that that does not exceed his or her total income.
The existing rules on maximum contributions imposed by the Inland Revenue are complicated. It seems that it is a good idea to have a simple rule for relatively small contributions. However, in our view, £5,000 a year is on the high side. While we cannot say that we regard it as a major issue, we would be more in support of the Government's proposed limit of £3,600. That is the point at which the Inland Revenue limits should come into effect.
However, we are in wholehearted support of the rest of Amendment No. 12. Let us assume that a young employee is taken on at relatively low salary. He does well in his job and reaches a salary level where the Inland Revenue limits are more than £3,600 a year. He may well prefer to continue to pay the full amount into the one stakeholder pension of which he is already a member and to make additional voluntary contributions. Is it intended that under the Government's regulations he will be allowed to do that? I can see no good reason why not and I strongly urge the Government to allow it to be done. There is no clear reason that that should not be allowed.
I turn to Amendments Nos. 17 and 18. Alternatively, if the Government are not willing to allow that, or if the individual prefers to be a member of a separate non-stakeholder pension scheme in respect of the sum over and above £3,600, there must be a strong case for allowing the employee to be a member of two schemes at the same time; one a stakeholder scheme and the other some form of approved pension provision. It can be a personal pension or membership of an occupational scheme. If the hypothetical employee cannot do that, the only possibility would be for that employee to transfer his or her existing funds out of the stakeholder pension scheme into a personal pension scheme or an occupational pension scheme, or leave the money in the stakeholder pension scheme as a deferred pension. None of those solutions seems attractive. Furthermore, I believe that that would be both unnecessary and undesirable.
The simple question is: why not allow dual membership? For the reasons clearly explained by the noble Lord, Lord Freeman, Inland Revenue limits are needed. If those limits are not exceeded, why does it matter that those contributions are made partly to one scheme and partly to another? Why not allow the contributions to be made to two different schemes?
I can see technical problems if one scheme is a money purchase scheme, which a stakeholder pension scheme must be, and the other is a defined benefit scheme. That is because the Inland Revenue limits are calculated in different ways. That does not seem at all impossible to me. It should certainly be within the abilities of the

1145
high-powered people who staff the Inland Revenue to provide a solution. That is why we have provided, in subsections (2) and (3) of Amendment No. 20, for an immediate right to become a member of a stakeholder pension scheme and another money purchase scheme. Where the alternative scheme is not a money purchase scheme, we have proposed, in subsection (4), that proposals for legislation should be laid before Parliament for consideration at a future date.
Having said that, it seems to me that the principle is clear. We want to make stakeholder pensions as attractive as possible. We believe that it is highly desirable that it should be possible to contribute up to the Inland Revenue limit in stakeholder pension schemes, even if those limits are higher than £3,600, and that it should be possible to have dual membership of a stakeholder pension scheme and a tax-exempt non-stakeholder scheme at the same time, provided that the total Revenue limits are not exceeded.
Lord Higgins: Perhaps I may mix my metaphors and say that I hope that I am allowed two bites of the cherry in such deep waters.
In regard to the transitional arrangements, there are some problems. First, people will be uncertain as to what they will do when stakeholder pensions eventually arrive. Meanwhile they may have engaged in other schemes and there may be considerable disadvantages for them if they have to stop one scheme in order to become a member of a stakeholder pension scheme. In particular, there will be difficulties with regard to the transfer values, if the Government persist in their view that one can hold only a stakeholder pension scheme but not any other scheme at any given time. I hope that attention can he given to the problems of the transitional arrangements, given that it will be some while before stakeholder schemes become operational.
Secondly, how will the £3,600 limit—if the limit remains at that figure—or the £5,000 limit, if that is accepted, be indexed? Will it be indexed in line with the RPI, as is normal with tax indexation, or with wage inflation? If it is the former, the effect will be to reduce annually the proportion of earnings that may be paid into a stakeholder pension scheme where the maximum contributions are being paid. Assuming that wage inflation continues at a low rate, in practical terms that will significantly reduce the pension that someone would expect to receive from the stakeholder pension scheme Summarising that, will it be indexed on the usual tax basis of RPI or wage inflation?—otherwise, the pension will decline as a proportion of what might have been expected.
Thirdly, in regard to AVCs—a matter I raised originally—do the Government feel that people in the scheme can have AVCs in addition to the existing £3,600 or the £5,000 limit? If so, I wonder whether that will require any changes to the regulations of the existing pension scheme arrangements which would seem to allow that to be the case at present.
Baroness Hollis of Heigham: The answer to all the points raised—two raised by the noble Lord, Lord Higgins, and other points raised by the noble
1146
Lords, Lord Freeman and Lord Goodhart— is that we are consulting on those matters. Within that context, I believe that we all agree the nature of the problem, including some of the implications in terms of costs and tax limits.
Amendment No. 12 refers to placing on the face of the Bill a maximum limit for contributions to stakeholder pension schemes. We propose a single flat rate of £3,600, or total earnings, whichever is the lower. At the moment we do not propose that people can go up to £3,600 in two schemes. However, that is a matter under consideration and under consultation. Amendment No. 12 seeks to increase this maximum Limit to £5,000, or some other limit based on a proportion of earnings, whichever is the higher.
Given that the target group comprises those earning between £9,000 and £18,000 a year, the limit of £3,600 is, therefore, generous enough to allow them to make significant contributions if they wish. Anyone who wishes to pay in more than £3,600, and who would be allowed to do so under the relevant contribution limits, will still have the option of taking out a personal pension scheme if they do not have access to an occupational scheme. As I say, we are considering the point made by the noble Lord, Lord Goodhart, on AVCs and their equivalent.
On the issue of whether membership of stakeholder pension schemes should be allowed in addition to membership of another type of pension, as is proposed in Amendments Nos. 17, 18 and 20, that is another issue that we are considering in the light of responses. A number of noble Lords have argued—we have heard the arguments put very eloquently—for concurrent membership of a stakeholder and an occupational scheme. We are mindful of the argument that that would encourage more people to join occupational pension schemes when they are offered, but still allow them to keep a stakeholder pension scheme alongside that.
We have also received strong views on the question of allowing membership of a stakeholder pension scheme in addition to personal pensions for those not in occupational pension schemes. A number of noble Lords have argued that allowing contributions up to only £3,600 in a stakeholder pension scheme could raise difficulties when someone would like to pay more because their earnings have risen. It was agreed that if the personal pension contribution based on earnings was higher, it could be inefficient and confusing to have to switch to a personal pension at that stage.
We are considering all these points, but we have to consider the other side of the matter. There is the risk of adding complexity to the operation of stakeholder pension schemes if providers have to check that total contributions, including to a stakeholder pension scheme and an occupational pension scheme, do not exceed the overall limit. There is a real problem concerning the transparency and the tracking of such contributions from the point of view of the Inland Revenue. Some noble Lords have had experience of a similar situation.
If stakeholder pension scheme contributions were allowed in addition to the existing limits on occupational pension schemes, the cost could be as much as

1147
£400 million. I could break down that figure if noble Lords were interested, but we have put the figure at that amount if stakeholder pension contributions are allowed in addition to the existing limits on occupational pension schemes. If they are not, there is not much point—because they are capped at the figure of £3,600 and one may as well stay within the stakeholder pension scheme.
A significant part of the costs would arise in relation to those who already use the tax allowance and occupational schemes to the full. I do not believe that they are the main priorities for additional help. So our concern would for those in an occupational scheme wanting to top up with a stakeholder pension rather than doing it the other way round.
9 p.m.
Lord Freeman: Would the Minister be amenable to putting on the record the basis of the calculation of the £400 million? It may be helpful for me to be in touch with her office to determine what the right mechanism for that might be.
Baroness Hollis of Heigham: I suspected that that question might be raised. The assumption underlying that figure is that those people who invest in stakeholders on the free-standing AVC contributions might do this to take advantage of a tax-free lump sum or whatever, and there will be a doubling of current investment levels so the cost in extra tax relief would be £250 million. There are currently around 900,000 free-standing AVC arrangements.
The second assumption is that around 400,000 people are in occupational schemes near to the maximum that they can invest. It is assumed that they would contribute to stakeholders at between 4 and 10 per cent, at a cost in additional tax relief of £100 million. It is assumed that 40,000 of those earning in excess of the current limits for occupational schemes will each contribute the maximum of £3,600 to a stakeholder pension scheme at a cost in additional tax relief of £50 million. Personal pension holders will take the higher of the limits currently applying so there is no additional cost for tax relief above that in the Green Paper estimates. Those are the bases of the assumptions we are making which underpin the figure and calculate that it could be up to £400 million in Inland Revenue tax relief on pension schemes.
The second question that arises, apart from tax concession, is that allowing membership of both a stakeholder pension scheme and a salary-related occupational pension raises the further issue that salary-related schemes are subject to a limit on the final benefit payable as well as a limit on the contributions. We would therefore have to consider carefully how the two regimes could be calibrated within arrangements such as those proposed in subsection (3) of the clause. In seeking to require proposals as to how this could be achieved rather than immediate introduction, the Committee will recognise the difficulties.
To summarise, we recognise where Members of the Committee are coming from and are mindful of the fact that we do not want people having to drop out of
1148
stakeholders simply because they have gone up the income scale, nor do we want people hampered by the fact that they are trammeled into one specific scheme. On the other hand, we do not want to add complexity. We are concerned about the cost and we recognize that there may be specific problems with final salary schemes. Having said all that, they are important issues and we take that on board. The Government are giving them careful consideration and in the light of that the Government will shortly be publishing a consultation paper on taxing pensions which bears on these selfsame issues. That being the consequence, I ask the Committee to bear with me and not to press further tonight. When we have this consultation paper out, the basis of our understandings will be seen and we can consider whether there are ways forward on which we can all agree. In the light of that, I hope the noble Lord will feel able to withdraw his amendment.
Lord Goodhart: Before the noble Lord, Lord Higgins, replies, perhaps I can say that I regard this position as deeply unsatisfactory. We have here two very important questions: the right of members of stakeholder pensions to pay AVCs into the pension scheme and the right of dual membership.
It may be adequate if, though these are not on the face of the Bill, we are told what the Government intend to put into regulations. But we are not told that; we cannot be told that because the Government have not yet made up their mind. We are told that there is going to be a continuing consultation process which will no doubt last well beyond the debates on this Bill in your Lordships' Chamber. I find it unsatisfactory that we are asked to legislate on that basis. That reinforces the idea that the proposals in Part I of this Bill are somewhat premature.
Baroness Hollis of Heigham: The Government have a very clear view; that we meant to have stakeholder pensions to a ceiling of £3,600. The Government could have held firm on that view and simply said, "We are not going to move". On the contrary, we are trying to recognize the strength of the arguments put to us tonight and through other representations, and are consulting further to see whether we can move. But when we started off with this Bill we did not expect to be departing from our position of £3,600.
If your Lordships want the Government's position to be always unambiguous, that means that the Government will never listen to any propositions or amendments put forward by the Opposition. I am sure that is not a position that the noble Lord, Lord Goodhart, would wish to espouse.
Lord Freeman: I am grateful to the Minister for putting on record the basis of the calculation and am also cognizant of the fact that if governments are to shift their position, they have to consult, and it is not always possible or desirable for everything to be laid out in an

1149
inflexible way to begin with. I do not wish to press my amendment, and reserve the right to come back at a later stage.
Lord Higgins: The Minister gave a reply which in a number of respects is very comprehensive. But I have much sympathy with the view expressed by the noble Lord, Lord Goodhart These are extremely important issues and obviously some degree of consultation is necessary. But we are not in the situation we were on the Tax Credits Bill where there were problems of consulting other departments. This is essentially a matter, as I understand it, between the Inland Revenue and the DSS. We have rather more time than we had in relation to the Tax Credits Bill. We are now only at Committee stage. One would have thought we might reasonably expect the Government to have come to a conclusion on this matter.
Baroness Hollis of Heigham: I am grateful to the noble Lord for giving way. I must say that that is an unusually uncharitable interpretation of what I said. I said that the Government went into the discussions when this Bill started in the other House with a clear view: £3,600 stakeholders. In the course of the discussion and also tonight we have had views put, backed up by representations from knowledgeable organizations with whom the Government are in partnership, that we should consider variance on this.
The Government could simply have dug in their heels and said, "Go away. We are not moving". We are not saying that. It is rather unfortunate because we appear to be damned if we listen and damned if we don't.
Lord Higgins: It is certainly not my intention to be uncharitable at all. We fully accept, as the Minister said, that instead of simply producing a fait accompli the Government are carrying out consultations and they will reconsider the position. That is an entirely reasonable view for the Government to take, indeed more reasonable than the one just suggested by the noble Baroness.
But having said that, it is equally reasonable on our side to say that we have a reasonable amount of time before this Bill completes its passage through this Chamber; we are only at Committee stage. And it is not unreasonable to ask the Government to take a view in the light of the consultations and representations. I am sure the outside bodies, which are all extremely expert and erudite in these matters, will be happy to make their representations at a technical level and then the Government can reach their conclusion.
If we on this side of the Chamber agree, that is fine; if we disagree, then we can table suitable amendments. This matter has been running for a good while before reaching this stage. It is not a matter where, other than considering the arguments, the Government need time to make a decision. Indeed, it is a question of sitting down, thrashing the thing out with those who are expert in such matters, and taking a view with which we may then agree or disagree. However, it is not satisfactory to leave the matter hanging totally in the air until after the Bill has received Royal Assent. I am entirely
1150
sympathetic to the noble Baroness who is seeking to be helpful. However, as on former occasions. I am seeking to press the Government to get together with officials, and others, and reach a conclusion on the matter.
Before I withdraw the amendment, perhaps I may throw one final stone into the pool—if that is not mixing metaphors even more—and ask the Government whether they would care to consider whether they need to make additional regulations under Section 111 of the Pensions Scheme Act 1993 if they are to fulfil what at present seem to be their intentions. Subject to that, although I do not expect the noble Baroness to reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 13 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 14:
Page 2, line 18, at end insert ("or other insurance contract,, annuity contracts or pension arrangements which satisfy Prescribed requirements")
The noble Lord said: This is a much simpler provision than the one that we have just discussed. It would ensure that the seventh condition for the definition of a stakeholder pension scheme is amended to ensure that such a scheme accepts transfer payments from a broad range of pension arrangements. There are, of course, difficult issues involved here. However, if people want to transfer their assets into a scheme, it would seem appropriate for them to have the ability to transfer assets of the kind described in the amendment, as well as existing rights in other pension schemes.
There are other issues with regard to the question of accepting transfer payments. My understanding at present is that the Government will insist that the trustees—if they are trustees—of a particular stakeholder pension scheme will need to accept such transfers. However, that position is not the same as that applying to an ordinary occupational scheme. If I remember correctly, an ordinary occupational scheme has the right to refuse to accept transfer payments and, in any event, considerable negotiations have 10 take place as to the actual value of the transferred assets. Perhaps the Minister will be able to clarify that point.
However, as the amendment stands, it seems to be a reasonably flexible approach to having transfers for people who want to take out a stakeholder pension but who already have other assets which they would wish to include in the stakeholder scheme. I beg to move.
Lord McIntosh of Haringey: The minimum standards which we propose should provide members with important reassurance that schemes will, among other things, be flexible enough to accommodate the changes in circumstances that can occur during their working lives. That is why we are proposing that the stakeholder pension scheme members will, if they so choose, be able to transfer rights in other pension schemes to their stakeholder scheme. The ability to consolidate pension rights into a single fund will also make it easier for people to understand the current value of their pension savings. It will also help to avoid the proliferation of a number of small "pots", thus helping to secure better value for members.

1151
Our proposals already require stakeholder pension schemes to accept transfers of rights in occupational and personal pension schemes. Of course, as the noble Lord, Lord Higgins, made clear, there are other types of financial arrangements which are recognized as pension arrangements; for example, retirement annuity contracts and certain other types of annuity or insurance policies. Insurance and annuity contracts, for instance, can be used to give effect to a former employee's rights in an employer's occupational pension scheme. When our proposals for pension-sharing on divorce come into effect, spouses who become entitled to a share of their former spouse's pension will be able to purchase a deferred annuity if, for example, they are not members of a pension scheme at the time. These people may eventually want to transfer such rights into a stakeholder pension scheme.
There is nothing in our proposals which would prevent a stakeholder scheme accepting such transfers under the existing rules. If I have understood the amendment correctly, the noble Lord is simply seeking to build on our proposal so that stakeholder schemes are required to accept transfers from a broader range of pension arrangements.
I accept the weight of the arguments which I believe have prompted the amendment, but I would need to be sure that broadening the requirement would not mean placing undue burdens on stakeholder schemes and that there was no conflict with wider pensions legislation. Therefore, I should like to consider the amendment further. In the light of that assurance, I hope that the noble Lord will agree to withdraw it.
Lord Higgins: This is not only the best assurance: I think it is the only assurance! I am looking forward to further assurances, but in the light of the Minister's agreement to look at this again, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.15 p.m.
Lord Higgins Lord Higgins moved Amendment No. 15:
Page 2, line 20, at end insert—
("(10) The ninth condition is that approved group personal pensions shall be deemed to be stakeholder pensions for the purposes of this Part.")
The noble Lord said: There are concerns outside that the Government's proposals could be damaging to occupational schemes and group personal pension schemes. The Government seem to have said very clearly, for example, in the Standing Committee on 3rd April that the provider of a stakeholder pension or a personal pension could not be the same. The conditional arrangements could be the same but people should be aware of the distinction between the two schemes.
As I say, fears have been expressed outside that the position of the pension schemes, in which the noble Lord, Lord McIntosh, is very expert, could be adversely affected. Perhaps the noble Lord could tell us whether, in his view, this is so or not. I beg to move.
Lord McIntosh of Haringey: The noble Lord, Lord Higgins, is of course right in saying that I am a supporter of group personal pension schemes and I am particularly in favour of those schemes in which employers contribute as well. The Government are also in favour. We are pleased that our proposals for reform are already having a beneficial effect for those seeking to provide for their retirement.
We have no wish to undermine good-value existing provision, where it exists, but personal pension schemes do not have all the features which will make stakeholder pension schemes a good deal for their members. We believe that stakeholder pension schemes, because of all the tough conditions we have set out for them, will provide better value and a more flexible alternative for many of those who cannot join an occupational pension scheme.
The proposed minimum standards will ensure that all stakeholder pensions will offer low minimum contributions as well as the flexibility to stop and restart contributions without additional charge. As much as I liked my own group personal pension scheme, it did not do that. The requirement for stakeholder schemes to have a government structure which ensures that they are run in their members' interests is particularly important and is fundamental to our proposals.
We are prepared to consider alternative arrangements, provided that they are capable of delivering a similar outcome for scheme members. We are determined that stakeholder schemes shall be run in the members' interest. Personal pensions, even group personal pensions, often fall short of the high standards that we expect from stakeholder schemes.
It has been suggested that the availability of a group personal pension scheme should be enough to exempt an employer from the proposed requirement to provide access to a stakeholder pension scheme. We are keen not to discourage good-quality provision and we want to consult further on our specific proposals with regard to the way in which we could best incorporate these arrangements into a new regime. We know that many employees will already have started to pay into a personal pension, and we want to ensure that they are not disadvantaged.
As part of our programme of further consultation we shall shortly be publishing a consultation document on the details of the requirements for employers. This will include proposals on how to incorporate group personal pensions into the new arrangements, including whether there should be an exemption from the employer access

1153
requirement for group personal pensions where certain conditions are met. I hope, on that basis, that the noble Lord will feel able to withdraw his amendment.
Lord Higgins: We understand that the Minister is sympathetic on this point, but we shall need to consider the various issues that he has just raised. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 16:
Page 2, line 20, at end insert—
("(10) The ninth condition is that the scheme shall provide to anyone who applies to join the scheme full and accurate advice as to how a stakeholder pension would benefit the applicant compared to other types of pension and shall tell the applicant that they have up to twenty eight days to cancel the application without cost or penalty; and an applicant to a stakeholder pension scheme shall have up to twenty eight days from receiving the said advice to canceling the said application without cost or penalty.")
The noble Lord said: My understanding was that the Government were suggesting—I have no reason to dissent from this—that Amendments Nos. 16, 31, 25 and 29 should be taken together.
Lord McIntosh of Haringey: We have been informed by the noble Baronesses, Lady Castle and Lady Turner. that Amendment No. 29 will not be moved—if that would help the noble Lord in his speech.
Lord Higgins: I was not proposing to make a speech on behalf of the noble Baroness, Lady Castle. I would not presume to rise to that level of oratory which we have seen during the course of the day. The real problem here is that, having regrouped it, I have lost sight of some of my most important notes. However, I shall seek to counter that! Essentially, here we have Amendment No. 16 first of all, which says that the ninth condition of the scheme shall provide anyone who applies to join the scheme with full and accurate advice on how the pension would benefit the applicant, compared to other types of pension, and telling the applicant, in simple terms, that they would have up to 28 days to cancel the application if they do not like it.
We are concerned about the level of advice. The reality of the situation is that the stakeholder pension adds to the list of products which are available to those who are seeking to provide for their retirement. In addition the Treasury is putting forward its proposals for LISAs. Further, there are the proposals for state second pensions. There are occupational pensions involving either final salary or defined contributions. There is the whole question of personal pensions and so on. There is now a plethora of products, and individuals will find it difficult to choose between them. We suggest that individuals will need advice. We cannot seem to obtain a clear response from the Government as to how they believe this advice should be provided. They have swayed back and forth on this matter. Either they have said that advice is not really necessary in this area or that advice is necessary only in relation to stakeholder pensions; or they have accepted that advice is necessary
1154
but they have not indicated how it is to be provided or who will provide the resources to enable the advice to be given.
It has been suggested that the figure of 1 per cent of funds under management per year will not be sufficient to enable those who are providing the pensions to give a great deal of advice. Earlier the noble Lord mentioned including commission within that figure. That suggests again that a provider of a stakeholder pension may seek to promote his stakeholder pension rather than someone else's. Amendment No. 16 seeks to provide adequate advice to anyone seeking to join a scheme.
Amendment No. 31 states that,
"the employer shall require a certificate from the designated scheme to the effect that none of his employees will be admitted to membership of that scheme without evidence that the employee has taken independent advice in relation to his pension provision".
The individual concerned will have to obtain that advice. That may involve him in expense. We are not clear as to the Government's position on this matter.
Amendment No. 25 states that,
"the employer shall confirm with the Department of Social Security that the stakeholder pension scheme he proposes to designate is the most appropriate form of pension provision for his employees",
as against one of the many alternative products which I mentioned a moment ago.
This matter raises important issues. The Government appear uncertain about it in their own mind. I shall not burden the Committee by quoting from ministerial statements, but they appear to vary as regards the giving of advice in this area and how important they think that is. Certainly we on this side of the Chamber believe that such advice is important. There are real dangers that an individual may take out a stakeholder pension and then find either that it is not the most appropriate form of pension provision for him or that it is a bad buy, not least because of its implications in relation to the minimum income guarantee. We have discussed this matter many times already today. I beg to move.
Lord Goodhart: I have some reservations about the matter of advice in this area. Advice is certainly important for people who are investing substantial sums in pensions. Of course they can afford to pay for advice which is proportionate to the amount at issue. However, advice is expensive. Most of the people at whom stakeholder pensions will be targeted will be extrernely reluctant to pay for advice. If it is provided at no immediate cost to them by means of funding it out of the stakeholder scheme, that will impinge upon them sooner or later because it will add to the costs of the scheme.
It seems to me that one of the attractions of the stakeholder scheme—I am not suggesting for one moment that people should not take advice on this—is that if someone does not wish to take advice, he knows that if he goes into a stakeholder pension it may not he the ideal solution for him but at least he will not go far wrong with it. For that reason I am unable to support any amendments which make advice compulsory.

1155
As to the question of commission, I hope very strongly that one of the rules of stakeholder pensions will be that no commission will be paid. It has always seemed to me that commissions are an invitation to institutionalised bribery.
Lord McIntosh of Haringey: I understand the sensitivity of the Conservative Party to the potential for the mis-selling of pensions.
I do not want to underestimate the importance of advice for some people and information for others. Pension provision is a long—term commitment; if people are to be encouraged to make that commitment they need to be aware of the benefits of saving towards a pension. They need to be confident that their proposed arrangement is suitable for their needs and that it is secure. I take the point of the noble Lord, Lord Higgins, that people will be making a judgment not only of stakeholder schemes but between other potential forms of provision.
It is true that good, accurate information and advice will be an important part of the decision-making process for many individuals considering joining stakeholder pension schemes. We want that to be available to all potential members. We are not suggesting that everyone should join a stakeholder scheme without seeking advice. The complexity of existing personal pensions and the way they are run is one of the reasons why people need individual advice at present.
The stakeholder scheme is basically off-the-peg; it is not tailor-made. It is Marks and Spencer, not Savile Row. Indeed, it might even be Marks and Spencer literally as well as figuratively. As the noble Lord, Lord Higgins, said, if we require the schemes to meet the costs of providing advice, that would impose excessive costs. On the other hand, if individuals had to bear some or all of the costs, many could be put off starting a pension altogether. A number of people, like me, are very resistant to financial advice. We do not understand it, and when we do not understand it we do not believe it. There are an awful lot of people in the country like that.
Perhaps I may now turn to the second part of Amendment No. 16. I agree that the existence of a cooling-off period provides important protection. The regulation of marketing and financial advice is a matter for the Financial Services Authority and its rules already ensure that anyone receiving advice on a personal pension—as for any other financial service product—can cancel their application within 14 days. I expect there will be a corresponding cooling-off period for stakeholder pension schemes, but I do not think anybody will go to the stake for the difference between 14 days and 28 days.
I think that the arrangements on which we will shortly be consulting will meet the concerns expressed by the amendment. On that basis, I hope that the noble Lord will feel able to withdraw it.
Amendment No. 31 requires stakeholder schemes to ensure that anyone applying to join the scheme had received independent financial advice when the scheme
1156
had been designated by the employer. Employers would have to ensure that their designated schemes provided a certificate guaranteeing that none of their employees would be allowed to join that scheme without receiving independent advice. My argument that advice may be valuable in some cases but not in all deals with the argument for Amendment No. 31.
I do not understand Amendment No. 25. It provides that the employer shall confirm with the Department of Social Security that the stakeholder pension scheme is the most appropriate form of pension provision. That seems to be ambiguous. It could mean that the employer shall confirm with the Department of Social Security in the sense that the Department of Social Security confirms to him; or that the employer reports to the Department of Social Security that it is the employer's view that it is the most appropriate form of pension provision. The wording,
"confirm with the Department of Social Security",
is ambiguous. Unless the noble Lord, Lord Higgins, has any more to say on that point, I think that that is enough to encourage me to resist the amendment, particularly in view of the arguments which I have already put forward, against universal advice.
9.30 p.m.
Lord Freeman: Will the Minister comment briefly on what is probably the best avenue of advice? I refer to the annual pension statement, for which the Bill provides and which I very much welcome. Does the Minister agree that it is difficult to provide initial advice on how much pension provision an individual should make? It is the realisation year by year of how little has been provided that is often the best prompt and encouragement to make provision.
Lord McIntosh of Haringey: I entirely agree with that point. When stakeholder schemes start, there will be no investment record that will be relevant to the decision which the individual has to make. Without that, it is difficult to see a distinction as between stakeholder schemes.
However, the noble Lord, Lord Higgins, had a wider point regarding people who need to make a judgment between stakeholder schemes and other forms of financial provision. I recognise that in some cases, although not in all, that is desirable and even essential. However, his amendments would make it a prerequisite without which one could not enter a scheme. Some people do not fit into that category.
Lord Higgins: Perhaps I may take up the point made by the noble Lord, Lord Goodhart, with regard to commission. In an earlier debate, we referred to the fact that the Bill provides that some of the costs which are to be allowed are commission payments to those providing stakeholder pensions. I agree with the noble Lord. There is a danger that a provider of a stakeholder pension who is paid commission will argue that his scheme is better than other schemes. That is one of the reasons why people will need to take advice. There are two angles to the advice. One is the advice that is needed by the

1157
person taking out the pension and the other is the advice that is needed by the employer in deciding which scheme to recommend to his employees. We shall come to that matter in a later amendment.
I did not find the Minister's reply very satisfactory as to whether the Government feel that they should in some way provide independent advice and that the individual should get independent advice. It would seem that the Government's view as far as concerns stakeholder pensions is that people do not need advice.
Lord McIntosh of Haringey: I specifically deny that I have said that on many occasions advice is desirable and even necessary. What I am contesting is the view, required by the wording of the amendment, which is that advice is always necessary.
Lord Higgins: I am slightly puzzled by that reply. The stakeholder pension is a fairly clearly defined scheme. In taking out a stakeholder pension, one either does or does not need advice. My view is that one will need advice. I am not clear where people will get that from.
We may return to this matter at a later stage, after I have looked carefully through what the Minister said and other government statements on the matter. Subject to that, and the point I made about commission, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
[Amendments Nos. 17 to 20 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 21:
After Clause 1, insert the following new clause—

Welfare Reform and Pensions Bill

  PUBLICATION OF ANNUAL PENSIONS AND SAVINGS INFORMATION
  (" The Treasury shall publish annually a decision tree showing the relationship between stakeholder pensions and all other types of pension and other forms of saving to enable employees to decide what is the most appropriate form of provision for retirement for them to make.")
  The noble Lord said: This amendment was my own idea. I have subsequently discovered that the Government have had the same idea. I believe I am right in saying that, in the Green Paper or elsewhere, the Government have suggested providing such a decision tree.
  Clearly, individuals are to have a wider choice of products than ever to enable them to provide for their retirement. Some of those products are appropriate for people in certain income groups—for example, between the well known limits of £9,000 to £18,500 or so—while others will find it more appropriate to go for the state second pension, and so on.
  It is important that, as soon as the stakeholder pension becomes a live issue for individuals, as well as being able to assess whether that is appropriate for them, they should be able to take into account the other government products, in particular the state second pension. They should be able to decide whether there is a more appropriate form of provision than the alternatives that are set before them. Even at this early stage perhaps the
  1158
  Government will consider producing a decision tree of this kind. Individuals can then decide whether one option would be better for them than another.
  A further dimension is required in relation to timing. One of the problems is that, as I understand it, the stakeholder pension will not be up and running until 2001. The expectation is that the state second pension will not be up and running until some five years later. Despite the noble Baroness's earlier remark about the legislative timetable, the estimate of five years after the stakeholder pension for the state second pension has been generally accepted, albeit apparently to the noble Lord's surprise. So there is also a sequential problem, as well as one of timing, about whether people should take up a particular form of provision now rather than later.
  That is important in this sense. If people defer making any provision for, say, two or three years early on in life, that has a far more dramatic effect on the actual pension that they will receive than if they were to lose the final two years of pensions contributions for simple reasons of compound interest and so on. So I hope that the Government will consider this proposal, not in a formal sense but by way of a general publication. It would certainly be more valuable than the one we discussed in relation to the first amendment by the noble Baroness, Lady Castle, which seems grossly over-priced at £5. A decision tree would give individuals a better idea of how to deal with this matter. We need to encourage people to make provision.
  Leaving compulsion on one side, it is quite apparent that in 20 years' time it is likely that a large proportion of people will still be on means-tested benefits rather than using the result of their own funded pension. We need the best information we can have and I hope that the Government will undertake to do that. I beg to move.
  Lord McIntosh of Haringey: We are very much on the same side; we are in favour of good quality and understandable information and advice. We are also in favour of decision trees. I do not know whether the noble Lord saw the Explanatory Notes to the Employment Relations Bill. For a 40-page schedule on recognition procedures, it had four decision trees. That was the only way in which I got even close to understanding what the schedule was about. So I am in favour of the format as well as the objective of what the noble Lord proposes.
  However, decision trees will not be a complete substitute for advice. We think it is right to consider whether a change in the balance between information and advice could reduce overall costs. A decision tree, together with clear supporting information, will enable many people to make an appropriate choice for themselves. But there will, inevitably be some people who, as I said—although the noble Lord did not believe it—will need more detailed, individual advice, particularly those who have already taken out a personal pension. The decision tree will direct such individuals towards taking appropriate advice.
  I understand the concerns that underlie this amendment. We made clear in the pensions Green Paper published last year that we would work with the

  1159
  Financial Services Authority and the industry to develop appropriate arrangements for the provision of information and advice to prospective members of stakeholder pensions. We want to consider the scope and contents of the decision trees; whether there should be a single standardised decision tree; and who should be responsible for making it available and ensuring that it remains relevant and up-to-date.
  Where we part company, I am afraid, is that we are not convinced that a government department is best placed to develop and issue this information, which is what the amendment proposes. It may be more appropriate for schemes to be responsible for decision trees, as they will be able to build in tailored elements such as where individuals can go for more information. Any information the schemes provide will, of course, be subject the normal FSA regulation of marketing material to ensure that it is accurate and not misleading.
  We are seeking further views on these issues. I would not want to pre-empt the outcome of that consultation by ruling out any options at this stage. This work is going ahead, and we shall shortly be issuing a consultation paper setting out our proposals for the provision of information and advice. I hope that that will convince the noble Lord that it is right to withdraw the amendment.
  Lord Higgins: I am grateful for the sympathetic response from the Minister. I believe there is a case for it being a government publication and I am glad that the Minister is prepared not to rule it out at this stage. It is important that the Government should take some responsibility for introducing the new products and ensuring that people understand them and make the right choice between the options. "Choice" is the crucial word. Subject to that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 2 [Registration of stakeholder pension schemes]:
  Lord Higgins Lord Higgins moved Amendment No. 22:
  Page 2, line 30, at end insert—
  ("() the premiums received will provide a pension in excess of what will be provided by the minimum pension guarantee;")
  The noble Lord said: Amendment No. 22 stands in my name. Noble Lords opposite may be right in saying that it should have been grouped with some of the other amendments. I was confused because it comes in a different clause and I misunderstood your Lordships' procedures.
  The amendment proposes that the Government and the schemes should ensure that the premiums received will provide a pension in excess of what was provided by the minimum pension guarantee. Despite our earlier debates, we have not had a clear assurance from the Government that that is so. Earlier, the noble Baroness said that we would carry out calculations to give us some indication of what the term is likely to be for any given level of contributions on certain assumptions which I have undertaken to suggest to her. However, we
  1160
  are still worried that people will simply pay into the scheme and that it will turn out not to have a real pay-off because the pension which the contributions provide is less than the minimum pension guarantee. Mr Frank Field stressed that at considerable length. I would have thought that if this amendment was accepted it would ensure that that was the position. But we must be sure that it is not mis-sold, in the sense that the eventual return from the contributions is effectively zero. I beg to move.
  9.45 p.m.
  Baroness Hollis of Heigham: Amendment No. 22 adds an additional condition for the registration of stakeholder pension schemes. It would mean that for a scheme to register itself as a stakeholder scheme the trustees of the scheme (or other responsible individuals in schemes set up under any possible alternative structure) would have to declare that the contributions paid into the scheme will provide a pension, perhaps 30 years down the line, in excess of the minimum pension guarantee.
  The minimum income guarantee provides an essential fall-back for those who cannot save enough to provide themselves with a decent income in retirement. It currently provides an income of at least £75 per week for a single pensioner and £117 per week for a pensioner couple. As resources allow, we shall uprate these in line with earnings. Next April they will rise in line with earnings. Therefore, it is a decent and proper commitment to protect today's poorer pensioners, which is our immediate priority.
  We are also looking at ways to modify the rules on capital so as to reward savings. But, as I mentioned in an earlier debate—we tried to group these amendments—the minimum income guarantee is a safety net for those who cannot afford to save for retirement. In particular, the safety net is for those who now have not saved enough in work for retirement, primarily older women who have not participated in the labour force, by virtue of children and so on, compared with women today.
  Those who can save will be helped by other parts of our reforms. The new state second pension will give extra help to the lowest earners who currently receive the least from SERPS. However, moderate earners are in a position to save more than the compulsory minimum and to build up funded pensions which can lift them clear of the minimum income guarantee. These are the people to whom we want to give an opportunity to save in stakeholder schemes.
  Amendment No. 22 takes a different approach and seeks to require an undertaking from stakeholder pension schemes that they will provide a pension (unspecified) in excess of the minimum income guarantee (unspecified) in years ahead (unspecified). As I explained earlier, this raises a number of difficulties. It requires schemes to look into the future and give an undertaking that a member will receive a pension in excess of the minimum guarantee. Of course, investment returns are subject to a degree of uncertainty. There must also be some uncertainty as to the level of the

  1161
  minimum income guarantee in 40 years' time when the youngest members of stakeholder schemes will retire. I
  do not believe that this is an undertaking that we can reasonably expect schemes to give.
  The amendment also raises an issue about who is liable in the event that the scheme does not deliver the promised pension. I fear that most commercial undertakings would simply not take on the kind of open-ended commitment which is implied by the amendment. It seems to me that the practical effect of the amendment would be to force schemes to accept only members who undertook to pay a level of contributions that could be safely expected to produce a pension well in excess of the minimum income guarantee. That could restrict stakeholder pension schemes to higher earners and undermine our aim of extending good value funded pension opportunities to moderate earners. Further, the amendment does not take into account the basic state pension. Even relatively small second-tier pensions when combined with the basic pension will be enough to lift people above the minimum income guarantee. I remind the Committee that the minimum income guarantee is about £7 or £8 above the basic state pension. The amendment would effectively deny such people the opportunity to join a stakeholder pension scheme.
  We are determined to ensure that as many people as possible retire on an income above the minimum income guarantee. The amendment, however, seeks to impose what I fear would be an unworkable requirement on stakeholder pension schemes. It would ask them to speculate as to the situation in 40 years' time and accept liability if their speculation proved unfounded, and to do so on stakeholder pensions alone. No similar requirement is envisaged for other pension schemes, such as money purchase schemes. I urge the Committee to reject this amendment.
  Lord Higgins: I confess that I do not find the Minister's response reassuring, in the sense that people may find that some of the stakeholder pension schemes do not provide a level of income above the minimum income guarantee.
  I find the reply of the noble Baroness the Minister somewhat surprising because one of the earlier provisions put forward by the Government will tell people on an annual basis what pension they are likely to receive eventually. I have previously expressed surprise at that, for the very reasons that the noble Baroness has just put forward; namely, that considerable assumptions about annuity rates, investment rates and so on are required. But if indeed the noble Baroness and the Government persist in taking the view that they will forecast what pension people are likely to receive as a result of their contributions, I should have thought there would be no problem in the Government equally accepting what the amendment says.
  I remain puzzled, not least for the reasons mentioned earlier, because even over a timescale of 18 months one may well be significantly out in one's pension forecast. Therefore, if the Government continue to take the view that they will provide people with an annual statement of the pension they are likely to receive as a result of
  1162
  their contributions, I should have thought that it would not be difficult to balance that—for the individual if necessary to balance it—against the level of the minimum income guarantee.
  Baroness Hollis of Heigham: As the noble Lord will recognise from his earlier discussion about employers' liability, there is a big difference between a forecast and a guarantee. We shall be doing the usual print-out saying "Given the current level of contributions, this is what you can expect". That is very different from guaranteeing. We know about some of the situations in which Equitable Life currently finds itself over guaranteeing a return at a certain level 30 or 40 years on. We do not know what the minimum income guarantee may be.
  Lord Higgins: I shall not be tempted to go down the Equitable Life road, on which I have strong views.
  If the Minister is indeed going to take the position that she has just described, such an indication is likely to be highly misleading and of no real value. I was surprised the Government put forward that idea. The noble Baroness said that it was a forecast rather than a guarantee. It is rather like the statement on proposals for taking out pension arrangements, which says that on the assumption of a growth rate of say, 3 per cent, the pension will be so much and on the assumption of a 7 per cent growth rate it will be a different figure. No doubt this was an idea thought up by the previous Government.
  Baroness Hollis of Heigham: I do not know about the noble Lord, but certainly any private pension scheme of which I have been aware will normally give an annual statement saying what one's current level of contributions will buy, and projecting that forward. This allows people a sense of ownership of their pot of money, because it is their money. In addition, if they feel that the anticipated level of pension is inadequate, this could encourage them to put extra money into the scheme. So this is about information; it tells people what they can expect and therefore encourages them, if appropriate, to invest more. It is a useful tool. If we were not to produce such information, which private schemes regularly produce for their clients, the noble Lord would be equally critical.
  Lord Higgins: Of course, the private schemes do so on very arbitrary assumptions, and mostly assumptions which do not mean very much. As I have said, the noble Baroness may well blame the previous government for producing this scheme, but my personal view is that it is not very helpful. Perhaps we may return to this point.
  I find it almost bizarre that the Government propose to tell people what they may expect, when, as we discussed earlier, that cannot be done with a reasonable expectation of accuracy, even over a timescale of a couple of years. But, subject to that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 2 agreed to.
  Clause 3 [Duty of employers to facilitate access to stakeholder pension schemes.]
  Lord Higgins Lord Higgins moved Amendment No. 23:
  Page 3, line 24, after second ("of') insert ("10 or more")
  The noble Lord said: This is becoming something of a duologue, or perhaps a trio.
  The amendment is about the position of small businesses. In particular, we are concerned about the burden that is likely to be placed on small businesses in putting forward for their employees a specific stakeholder pension. The CBI in particular has expressed strong opposition to the proposals in the Bill which will require firms without occupational schemes to nominate a particular stakeholder pension.
  We suggest that those with fewer than 10 employees are unlikely to have the resources which are necessary to decide on behalf of their employees whether a specific scheme is good or whether it is an appropriate form of provision for retirement. Employees may feel disgruntled if it turns out to be the case that the choice the employer made has been wrong, even if the employer is not legally at fault.
  I suspect that the vast majority of smaller firms do not feel competent to judge between one scheme and another so far as concerns stakeholder pensions. The CBI has also expressed the view that it is not in the Government's interest to compel companies to put this forward and that the alternative might be that there should be a requirement simply to act as a clearing house: that the smaller employers might agree to collect the contributions but that those should then go into some more general system rather than that they have to nominate a scheme which they are ill equipped to judge. I beg to move.
  Baroness Crawley: I hope that the Minister will not take much heed of the amendment. Stakeholder pensions are designed to benefit people who work for small firms and are unlikely to have occupational pensions. Under the amendment, 84 per cent of employers would be excluded from having to give access to stakeholder pensions. Surely the more people able to become members of stakeholder pension schemes, the greater economies of scale and the better value those schemes will be. I understand that the DTI has a small business service which small business can access easily. Under that service from April 2000 there will be assistance with payroll matters, under which heading I assume that this category of pension would come.
  Lord Goodhart: I am unable to go as far as the noble Lord, Lord Higgins, on the amendment. We are concerned about the position of small businesses. Under the Tax Credits Bill, these Benches joined with the Conservative Benches to exclude from liability to pay through the wage packet the working families' tax credit. We took that view because we felt that the employees were in no way disadvantaged by it.
  1164
  In this case the position is not the same. The employees will suffer if as a result they are denied access to stakeholder schemes. Those who will benefit from going to stakeholder schemes are those earning more than £9,000. That is a substantial sum. It is not a large wage but it is certainly more than, let us say, a part-time cleaning lady would receive.
  We cannot go the whole way and say that there should be a blanket exemption for any employer who employs fewer than 10 employees. Nevertheless, I think that there is a case for saying that those with smaller numbers may be exempted from some of the provisions in Clause 3. For instance, I see no reason why someone with two or three employers should be required to allow a representative reasonable access to the employee. It would be possible for the representative to approach the employees directly, and therefore there is a case for re-examining the clause and giving a power to modify the provisions in respect of small employers.
  There is a power to define "relative employees" which could be used to exclude employees by reference to the number employed by their employer. But that would be inappropriate and would not achieve the purpose. There is a case for saying that regulations could be allowed to modify the provisions of Clause 3 in the case of employers with fewer than 10 employees.
  10 p.m.
  Lord McIntosh of Haringey: My noble friend Lady Crawley urged me not to take heed of this amendment. I must disappoint her because I take heed of all amendments. That is what I am paid for. However, there are some difficulties with it. They are based on a misunderstanding on the meaning of "employer access" and there has been some exaggeration, not by your Lordships but in the public prints, of the burden which will be involved. Many employees are fortunate enough to work for an employer who runs an occupational pension scheme, so they have been able to join a good value pension scheme through their workplace. Employers see occupational pension schemes as a powerful tool for recruiting and retaining staff.
  For those who cannot join an occupational pension scheme, the only option has been a personal pension. But as we know, those can be costly and inflexible and shareholder pension schemes will offer a better value option. We want everyone in work to have access to a good value pension scheme through their workplace. That point was made by the noble Lord, Lord Goodhart, when he said that employees would suffer if they were excluded.
  Therefore, we have two reasons for framing the requirement on employer access; first, to help stakeholder pension schemes achieve the aim of better value provision; and, secondly, to encourage people to join the schemes. We think it is reasonable that employers should play a part in helping to make this a reality for those employees who cannot join an occupational scheme.
  We are not asking very much. Employers should provide information about a stakeholder pension scheme for employees covered by the requirement and allow

  1165
  scheme representatives access to those employees. The noble Lord suggested that that requirement might be waived for small firms. I suspect that it might not happen in any event because a number of scheme providers might consider it expensive for two or three people.
  Secondly, they should provide a facility for deductions to be paid to the scheme through the payroll arrangements. My noble friend Lady Crawley rightly reminded us that the DTI small business scheme exists and will provide payroll facilities for deductions.
  Employers who offer an occupational scheme to all their employees will not be affected. Other employers will he exempted from those requirements in relation to employees who can join an occupational scheme or those whose employees fall below the national insurance lower earnings limit. We are committed to minimising the impact on businesses and therefore in the Green Paper we invited views on whether the access requirement should be voluntary. We considered the responses we received. We shall be issuing a further consultation on our specific proposals. The Bill as it stands without the amendment would allow us to prescribe exceptions to the access requirement if it became clear that this was justified in the light of consultation or experience. I hope that that will reassure the noble Lord, Lord Goodhart.
  However, the amendment is too inflexible and too wide-ranging. It would mean that the requirement would not apply to 84 per cent of employers. Of a total of 1.2 million employers, only about 200,000 have 10 or more employees. Whereas a high proportion of those employers provide pensions, smaller employers are much less likely to offer an occupational pension. An exclusion for employers of fewer than 10 staff would leave out a disproportionate number of the very employees we are trying to reach.
  I hope the Committee will agree that we have struck a reasonable balance between the small additional burden on employers and the need to ensure wider access. I hope the noble Lord will not press the amendment.
  Lord Higgins: This has been a helpful debate. As the noble Lord, Lord Goodhart, rightly suggests, perhaps the figure of 10 is not necessarily the appropriate number of employees. The Minister and the noble Baroness, Lady Crawley, have suggested that 84 per cent of employers would be excluded on that basis.
  There are two separate issues. One concerns whether the employers should provide facilities for making contributions. Considering our discussion a few days ago on working families' tax credit, this is yet another complication with regard to the way in which the companies account for PAYE and so on. The burdens are, yet again, placed upon small businesses by the Government, but one can understand why they believe that it is appropriate that that should be so.
  The second question is that of selecting a stakeholder scheme. If there are only three employees, it is debatable whether they are in as good a position to make the decision as the company, which may involve, at most,
  1166
  one or two people. At this stage it becomes a personal matter, rather than a matter for a company as such. The employee and the employer are probably equally qualified to make a choice.
  There is also the question of the extent to which—
  Lord McIntosh of Haringey: The only argument for the employer making the choice is that, if he makes the selection and offers that to the employees, he will make deductions for one scheme only, whereas if three employees choose different schemes the employer would have to make deductions on behalf of three schemes, which would be more complicated.
  Lord Higgins: I am not suggesting that if there are three employees and two employers they could all choose different schemes. That would be pretty unlikely., as I believe the Minister would accept. However, the question is how much variation there will be in the schemes. Given the tight way in which the proposal is circumscribed, it is difficult to see how they will be greatly differentiated, or indeed why the employer should select one rather than another. There will not be many schemes offering the provision of the product at less than 1 per cent on the costs and presumably they will be much the same. I leave on one side trustee schemes involving trade unions and so on. Presumably the small employer will have a certain number of providers who will say that they can make the schemes pay at the level of charges that the Government impose. To what extent the products will be differentiated is difficult to see. The well known system of sticking a pin in a list of names may as well be used.
  Lord McIntosh of Haringey: Good capitalist competition will mean that many will beat the minimum conditions set out in our consultation paper and, therefore, there will be real competition.
  Lord Higgins: In deference to the noble Lords, Lord Peston and Lord Desai, I shall not go into economists' views on perfect competition. As the noble Lord has described, in the circumstances they very often come up with the business.
  On a serious level, it will be difficult for employers to make a choice. Subject to that, I beg leave to withdraw the amendment. I may want to return to the point made by the noble Lord, Lord Goodhart. There is probably a minimum level at which stage it becomes absurd, other than in the context of collecting the contributions.
  Amendment, by leave, withdrawn.
  Lord Higgins Lord Higgins moved Amendment No. 24:
  Page 3, line 25, at end insert ("but an employer shall in no way be responsible for any consequences which result from the failure or performance of an authorised stakeholder scheme")
  The noble Lord said: We have already stressed the difficulty which employers may face in deciding which scheme to go along with. But what is clearly the case is that the employer ought not to be held legally responsible for what happens, either with regard to a specific stakeholder scheme failing—I presume that is

  1167
  not totally impossible because such schemes are not subject to the kind of provisions to which some occupational schemes are subject—or its performance. It may be that the employee feels that the scheme that has been recommended has not performed in the way expected. Therefore, to exonerate employers from the consequences of having been compelled by the Government to choose one scheme rather than another, we ought at least to give them the protection which this amendment seeks to give. I beg to move.
  Lord McIntosh of Haringey: I do not like the noble Lord's arguments, but I have some sympathy with his amendment.
  I want to make it absolutely clear that Clause 3 imposes no duty on employers to designate a scheme which performs to any particular standard or to investigate a scheme before designating it. The duty is simply to select a scheme from the register and offer access to it in the way set out in Clause 3. An employer could, of course, choose to do more than this; for example, by meeting scheme representatives or consulting league tables.
  An employer might become liable if he misinformed his employees about the designated scheme or misled them. Any such liability would arise under the general law of negligence—as it would at present, for example, if he made any misleading statements about a group personal pension. It would certainly be sensible for employers to make clear to their employees what they are and are not doing in designating a scheme; that is, that they are not recommending it, offering advice about it or any guarantees about its performance. In addition, we hope that employers will take some action, perhaps by notifying the Occupational Pensions Regulatory Authority or informing their employees, if they discover a serious problem with the designated scheme. Such actions would be both proper and prudent.
  Notwithstanding this, concerns are still being expressed about employer liability. The amendment therefore seeks to include a statement on the face of the Bill making clear the intention that employers should not be liable for the performance of their designated scheme. I am pleased to say that we will consider whether it would be possible to include such a statement to the effect that Clause 3 is not to be construed as imposing any duty on employers in relation to the performance of their designated scheme. I hope that that positive response will by itself encourage the noble Lord to withdraw his amendment.
  However, by expressly including one duty, we do not wish to suggest that others may be implied, even though they are not apparent on the face of the Bill; nor do we intend to exempt employers from their general liability for negligence or breach of contract. So, we shall have to consider carefully whether it is feasible to include such a statement in the Bill and, if so, how it should be worded. I should therefore like to consider the principle embodied in the amendment and I give my assurance that we shall do so. We are taking further legal advice
  1168
  on the issue. In the light of that assurance, I hope that the noble Lord, Lord Higgins, will feel able to withdraw the amendment.
  Lord Higgins: That is assurance number two, so we are making rapid progress. It was a helpful remark. The Government recognise that it is particularly unfair for employers to have to take on responsibility for the results of any particular provider of a stakeholder pension which, in effect, the Government are forcing them to recommend. We therefore look forward to seeing the form of words the Government produce at a later stage and hope that that will be enough to meet the point. I am grateful to the Minister for his remarks and beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 25 not moved.]
  The Deputy Chairman of Committees (Viscount Simon): Before calling Amendment No. 26, I should point out to the Committee that if it is agreed to, I cannot call Amendments Nos. 27 and 28.
  10.15 p.m.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 26:
  Page 3, line 26, leave out from ("shall") to end of line 29 and insert ("ensure that at all times there is at least one scheme designated by him for the purposes of this subsection which is registered under section 2 and offers membership to all his relevant employees (whether or not any other scheme registered under that section which does not offer membership to all those employees is for the time being designated by him for those purposes).
  Before designating a scheme for the purposes of this subsection the employer shall consult with his relevant employees and any organisations representing them.")
  The noble Lord said: In moving this amendment, I shall speak also to government Amendments Nos. 30 and 34. I shall also give the noble Lord, Lord Higgins, an opportunity to speak to Amendment No. 27, to which I shall then respond.
  Amendment No. 26 makes is clear that an employer can ensure that "at all times" he has designated a scheme which is registered as a stakeholder scheme. That means that employers will be expected to check from time to time that the designated scheme remains on the register. We do not intend that this should impose an unrealistic expectation on employers that they should respond instantly when a scheme is removed from the register. We do not expect the "de-registering" of a scheme to be a common occurrence.
  Amendment No. 30 introduces a fifth requirement on employers, although, again, this is simply a clarification of what was originally intended. The amendment makes it explicit that an employer should withdraw his designation of a scheme if it ceases at any time to be registered as a stakeholder scheme. He would then be required to designate a new scheme. This will avoid a situation where a scheme which had lost its stakeholder status continued to be an employer's designated scheme; that would mislead employees. Amendment No. 34

  1169
  simply changes the wording of the definition of a designated scheme, as set out in Clause 8, to make it consistent with the new drafting in Clause 3(2).
  As I have explained, these amendments do not represent a change in the way we intend the requirement on employers to work. The amendments simply make it clear that an employer who is required to designate a scheme should make sure that it is, and continues to be, registered as a stakeholder scheme; and that if it is removed from the register, he must withdraw his designation of that scheme. This will ensure that employees have continuing access to a stakeholder pension scheme.
  We want to ensure that we strike the right balance between minimising costs to business and ensuring flexibility for scheme members. We intend to use regulations to ensure that these amendments do not place an unreasonable burden on employers; for example, the powers in Clause 3(1) can be used to give employers a reasonable period in which to recognise that a scheme had been deregistered and to find and designate a new scheme.
  We are committed to consulting further with employers' representatives and the pensions industry on the details of the requirement. Our consultation document on this will be issued shortly. I commend the amendments to the Committee. I beg to move.
  Lord Higgins: The Minister has set out the reasons for the Government's amendments, which, on the whole, would seem to be sensible with regard to the situation where a designated scheme ceases to be designated. To that extent, I think that those amendments are appropriate. As regards Amendment No. 27, I do not propose to move it at this stage. Nevertheless, it deals with a point that we may wish to consider further.
  On Question, amendment agreed to.
  [Amendments Nos. 27 to 29 not moved.]
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 30:
  Page 3, line 46, at end insert—
  ("() The fifth requirement is that the employer shall, if any scheme designated by him for the purposes of subsection (2) ceases to be registered under section 2, withdraw his designation of the scheme (but this requirement is not to be taken as implying that he cannot withdraw his designation of a scheme in other circumstances).")
  On Question, amendment agreed to.
  [Amendment No. 31 not moved.]
  Clause 3, as amended, agreed to.
  Clauses 4 to 6 agreed to.
  Schedule 1 agreed to.
  Clause 7 [Reduced rates of contributions etc: power to specify different percentages]:
  [Amendments Nos. 32 and 33 not moved.]
  On Question, Whether Clause 7 shall stand part of the Bill?
  Lord Higgins: This clause is concerned with reduced rates of contributions and so on. This is a complicated
  1170
  issue, and I have not tabled any specific amendment to focus discussion on it at this stage. However, I think it would be helpful if perhaps the Minister could outline precisely what the intention is as regards reducing the rates of contribution and altering the percentages in particular places.
  We shall of course come to some very complicated clauses later in the Bill with regard to contributions, but perhaps the Minister could outline what she has in mind for the purposes of this clause.
  Baroness Hollis of Heigham: I am happy to do that. Clause 7 sets out the treatment of national insurance contributions for the members of stakeholder pension schemes. As your Lordships will be aware. pension scheme members who have contracted out of SERPS are liable for a lower rate of national insurance contributions. The way in which this happens in practice varies according to the type of scheme. Some members pay a lower rate of contribution; others pay the normal rate but have part of their contributions related to the scheme; some schemes contain an element of both. For simplicity, I propose to refer here simply to "rebates". although the mechanisms will vary according to the type of scheme.
  Stakeholder pension schemes will fall in legislative terms into one of the two existing general categories of pension schemes. They will be either occupational pension stakeholder schemes or personal pension stakeholder schemes. As a result, much of the existing legislation for contracting-out will apply to them automatically. So there is already provision in the Pension Schemes Act 1993 about the arrangements for contracting-out and for rebates to be paid. But existing legislation only provides for a rate of rebate to apply to money purchase occupational schemes and a separate rate of rebate to apply to personal pension schemes. Both may vary with age. It does not, of course, currently make further separate provision for stakeholder schemes as these are a new development.
  This clause provides a power to set different rebates for stakeholder schemes. Rebate rates are set by the Secretary of State in the light of advice from the Government Actuary. The rates of rebate reflect the cost to the scheme of providing benefits to the value of the state benefit forgone by contracting-out. The Government Actuary takes into account, among other things, the expense level of schemes since these affect the cost of providing an equivalent benefit to that which has been given up.
  The clause would enable a different rate of rebate to be set for stakeholder pension schemes if it should be appropriate to do so. The presence of this power does not mean that we necessarily intend to set different rebates. Decisions on rebate rates for stakeholder pension schemes will be taken later. We expect to lay the appropriate orders by April 2000, a year in advance of their introduction, as is required under existing legislation. But the clause ensures that a different rate could be set for stakeholder pension schemes if it was judged necessary and desirable to do so. Should this be appropriate, the clause also allows different rebate rates

  1171
  to be set for personal pensions, whether or not they qualify as stakeholder pensions, according to when the member joined the scheme.
  Clause 6 provides an important flexibility for setting rebate rates in the future. Its powers may not always need to be used in practice but it is prudent to include them here to allow the most effective use to be made of significant public resources in the form of national insurance rebates.
  Lord Higgins: The Committee will be grateful to the noble Baroness for that explanation. As I understand it, the clause is essentially a precautionary clause to enable the Government to alter the rates of contributions. However, I wonder whether the Minister could clarify the relationship between that clause and the ones that appear much later in the Bill, in particular Clauses 68, 69, 72 and 73 which are concerned with contribution rates.
  I am not quite clear why the provisions of Clause 7 appear at this stage in the Bill rather than later. This is a rather complicated matter. Last year when the Government—wrongly, in our view—altered the rules in relation to advance corporation tax there were implications for rebates and contribution rates which had the rather perverse effect of encouraging people to move from personal pensions back into SERPS, which the Government did not intend.
  I seek to understand this issue. As I say, it is not a simple one. I seek to understand what will be the effect of changing these rates of contribution to enable the Government to set reduced rates. I am not clear about the relationship between this provision and later clauses which mention other contributions by employees. However, that may be due to my ignorance of the matter. Nevertheless, I still have some difficulty in ascertaining exactly what the Government have in mind.
  Baroness Hollis of Heigham: There is no connection at all between these issues. However, if the noble Lord has further worries on the matter and he wishes to write to me, I shall be happy to write back in greater detail. However, as I say, these are unconnected issues.
  Clause 7 agreed to.
  Clause 8 [Interpretation and application of Part I]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 34:
  Page 6, line 8, leave out ("under") and insert ("for the purposes of")
  The noble Lord said: This was spoken to with Amendment No. 26. I beg to move.
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 35:
  Page 6, line 16, at end insert—
  ("() The Secretary of State may by regulations make provision for a stakeholder pension scheme which—

  (a) is of a prescribed description, and

  (b) would (apart from the regulations) be an occupational pension scheme,

  to be treated for all purposes, or for such purposes as may be prescribed, as if it were a personal pension scheme and not an occupational pension scheme.")
  The noble Baroness said: This is a technical amendment that clarifies the definition of a stakeholder pension scheme. It will ensure that the appropriate provisions of existing pensions legislation are applied to stakeholder pension schemes. In particular, it will ensure that occupational pensions scheme legislation will apply to stakeholder pension schemes only where appropriate.
  Stakeholder pension schemes will fall, in legislative terms, into one of the two existing general categories of pension scheme. They will be either occupational pension stakeholder schemes or personal pension stakeholder schemes. As a result, much of the existing respective legislative arrangements will apply.
  Public discussion has tended to focus on personal pension stakeholder pension schemes. But, as I have explained, the Bill also allows for employers who would like to offer a stakeholder pension scheme as part of their occupational pension arrangements to do so. They will be able to set up their own stakeholder scheme if they wish to, rather than rely on an external scheme. However, these arrangements will apply only to "traditional" occupational pension schemes.
  There is a slight possibility that, because of the way in which a stakeholder scheme has been set up, it could fall under the definition of an occupational pension scheme under the Pension Schemes Act 1993, even though it was not set up, or funded, by any employer. This might arise, for example, where a scheme was restricted to persons in particular types of employment. There is a risk that in these cases legislation appropriate only to schemes sponsored by employers might apply. In particular, employers of those who joined such a scheme might find themselves unnecessarily caught by that regulation.
  We want to make sure that in such cases the appropriate legislation is applied. It would not be right, for example, for employers in such circumstances to have to be consulted in relation to the scheme's statements of investment principles, as is required by Section 35 of the 1995 Act; nor do we intend, in such circumstances, that employers should have any role where trustees modify scheme rules, as in Section 68.
  I should stress, however, that all trust-based stakeholder schemes will be subject to appropriate regulation and supervision by OPRA by virtue of Schedule 1. This amendment will not change that.
  As I say, this is a highly technical but clarifying amendment. I commend it to the Committee. I beg to move.
  Lord Higgins: The noble Baroness is right in saying that this is a technical amendment. However, on hearing her comments on the amendment, my initial feeling is that it is an appropriate amendment for the Committee to accept. It appears that a stakeholder scheme may inadvertently become an occupational pension scheme. An example could be where a group of employees in a particular profession all have a similar stakeholder scheme. That would be regarded, in some sense, as an occupational scheme, with the consequences outlined by the noble Baroness.

  1173
  Obviously very different considerations need to be taken into account so far as concerns occupational schemes as against stakeholder schemes. The provisions of the previous pension Act, which were introduced post-Maxwell, were extremely stringent. OPRA also imposes very important restrictions and regulations on those operating in occupational schemes. It would not seem appropriate, in general, for those to apply to a stakeholder scheme. On the other hand, as the noble Baroness pointed out, trustee stakeholder schemes will require regulation which is not appropriate to a stakeholder scheme run, for example, by an insurance company.
  Following the debates today, we still have a certain lack of clarity between schemes which are trustee schemes and ones which are not. Can the Minister say what provisions she has in mind for trustee schemes? Clearly, the full range of requirements imposed on occupational schemes would not be appropriate. For example, as she has rightly pointed out, they will not be required to produce a provision for investment principles. With occupational schemes, it takes a long while to work out what the investment principle should be and to submit it to the appropriate authority, and so on. At least the Minister has suggested that that is the position.
  Presumably, a stakeholder scheme which has trustees will require some regulation as far as concerns its investment principles. Can the Minister say to what extent the trustee stakeholder schemes will have the same regulations as occupational schemes, and to what extent they will not?
  10.30 p.m.
  Baroness Hollis of Heigham: I shall have to write to the noble Lord on the detail. I think perhaps he may be missing the purpose of the amendment; that is not what the amendment does. He has raised perfectly legitimate questions, but not ones generated by the amendment. If he will allow me, I shall write to him on the particular points about trustee responsibility.
  Perhaps I may expand and make this clear. The proposed amendment will ensure that the occupational pension scheme regulation will apply to stakeholder pension schemes only where appropriate. Perhaps I may give an example, which I possibly should have done in my speech. A stakeholder pension scheme might be set up for persons in a particular form of employment—a scheme for plumbers, a scheme for hairdressers or whatever. That scheme may not be set up or funded by any employer as an occupational scheme would be. We do not want that occupational pension scheme regulation with respect to employers' duties to apply in these cases. It would not be appropriate in these circumstances, for example, for employers to have to be consulted about the investment principles or to have any role where trustees modify the scheme rules. I do not know whether that helps the noble Lord, but that is what we are doing with the amendment.
  Lord Higgins: I think I have understood it correctly. The Minister gave an example of hairdressers or whatever. Clearly, a stakeholder scheme covering,
  1174
  generically, hairdressers does not have an employer; the hairdressers are either self-employed or employed by some boutique or whatever.
  Baroness Hollis of Heigham: It could be a network of small businesses.
  Lord Higgins: It could be a network of small businesses, as the noble Baroness rightly said from a sedentary position. None the less, presumably the trustees will have some responsibilities. It would seem appropriate for those to be well defined. If I understand correctly, the Government are not yet clear about what regulations will be imposed on trustee schemes which were not imposed on schemes operated by. say, an insurance company. Can the Minister give some indication of when such regulations are likely to arrive? They will be quite important to the operation of a trustee-based scheme because the whole structure of that part of the scheme will depend on what frame work the Government establish.
  Baroness Hollis of Heigham: The noble Lord asked what will be the governance requirements of trust-based schemes. Trust-based stakeholder schemes will be regulated under the 1995 Act by virtue of Schedule 1 to the Bill, where the detail is laid out.
  On Question, amendment agreed to.
  Clause 8, as amended, agreed to.
  Clause 9 [Monitoring of employers' payments to personal pension schemes]:
  Lord Higgins Lord Higgins moved Amendment No. 36:
  Page 7, leave out lines 13 and 14
  The noble Lord said: The purpose of Clause 9 is to establish general rules with regard to payments by employers to pension schemes. If I understand it correctly, that is outwith the whole of the stakeholder pension scheme structure. We are seeking to establish rules for monitoring employers' payments to personal pension schemes. I am not an expert in personal pension schemes as against occupational pension schemes. But this would appear to be a new set of provisions which the Government feel are now necessary despite the fact that an extensive pensions Act was passed only a comparatively short time ago.
  In this clause the Government are saying that employers,
  "must secure that there is prepared, maintained and from time to time revised a record of the direct payment arrangements which complies with subsection (4)",
  and that the record must, on the one hand, show the rates and due dates of contributions payable under the arrangements and, on the other, "satisfy prescribed requirements". The purpose of the amendment is to delete paragraph (b) and the words "satisfy prescribed requirements".
  One becomes increasingly worried about the tendency for "prescribed requirements". They seem to turn up on every conceivable occasion and in every conceivable clause. As this is a new proposal, can the noble Baroness

  1175
  indicate what "prescribed requirements" the Government have in mind for which they wish to take powers to make secondary legislation?
  Lord McIntosh of Haringey: Clause 9 covers direct payment arrangements, where an employer pays a deduction from an employee's salary, or sometimes an extra contribution, direct to the personal pension. We strongly support such arrangements because they provide for certainty of payment and a steady build up of pension. They are particularly welcome, of course, where the employer is also making a contribution. However, we recognise that there need to be safeguards to protect the employee's interests.
  There is already a body of rules which governs the timely payment of contributions to occupational pension schemes, with which the noble Lord, Lord Higgins, as he acknowledges, is more familiar. Clause 9 seeks to put employer payments to personal pensions on broadly the same footing.
  Amendment No. 36 would modify subsection (4) of Clause 9, which deals with the record that employers must set up showing details of their direct payment arrangements. The record is the agreement between employer and employee about what is to be paid to the personal pension provider and when it is to be paid. It will also be the means by which the personal pension provider will monitor the payments to ensure that they are made on time. Subsection (4) provides that the record must show the rates of payment and the due dates by which payments are to be made and contains a regulation-making power which will allow for additional features of the record to be prescribed. The amendment would strike that out.
  The Government share the concern about burdens on employers. We intend to make the requirements on employers in this area as simple and as straightforward as possible. But in drawing up requirements in this area we must keep in sight the primary purpose of the arrangement that personal pension providers must be able to monitor in a straightforward way that payments have been received on time. We have to take account of providers' views on this issue. We shall be talking to them about it. The regulation-making power will allow for flexibility to take account of the different ways in which employers and providers do business.
  1176
  We have already recognised one requirement as relevant to regulations. That arises where both the employer and the employee are contributing to the personal pension. The requirement will be that the record shall show separately the employer and employee rates of contribution. We have to distinguish, because it will be possible to have different due dates for employee and employer contributions. Separating the employer and employee contributions in that way is not new. Employers already do it for the purposes of tax relief. Tax relief on the employees' contributions is claimed directly from the Inland Revenue by the provider, so the provider needs to know the amount that represents employee contributions.
  The additional requirements will not be onerous. That would not be in anyone's interests. We shall be consulting on the regulations and will listen carefully to the responses. But in order to protect the members of personal pension schemes and offer them the same safeguards—I emphasise that point—as already apply for occupational schemes, we need to set up workable monitoring arrangements. The amendment would damage that. I urge the noble Lord to withdraw it.
  Lord Higgins: In the light of the Minister's comments, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 9 agreed to.
  Clause 10 [Late payments by employers to occupational pension schemes]:
  [Amendment No. 37 not moved.]
  Clause 10 agreed to.
  Lord McIntosh of Haringey: I beg to move that the House do now resume.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.

  Baxi Partnership Limited Trusts Bill [H.L.]
  Bill reported from the Unopposed Bill Committee with amendments.
  House adjourned at nineteen minutes before eleven o'clock.

  House of Lords: Age Limit
  House of Lords: Age Limit
  Advocate General for Scotland
  Advocate General for Scotland
  Scottish Parliamentary Counsel
  Scottish Parliamentary Counsel
  Wormwood Scrubs
  Wormwood Scrubs
  A.12: Advertisement Hoardings
  A.12: Advertisement Hoardings
  Human Reproductive Cloning
  Human Reproductive Cloning
  Tobacco Promotion
  Tobacco Promotion
  Contaminated Foodstuffs: Risk Assessment
  Contaminated Foodstuffs: Risk Assessment
  Food Poisoning and Slaughterhouse Processes
  Food Poisoning and Slaughterhouse Processes
  Submerged Islands and Territorial Waters
  Submerged Islands and Territorial Waters
  Mr. Akin Birdal
  Mr. Akin Birdal
  Iraq: Enforcement of UN Sanctions
  Iraq: Enforcement of UN Sanctions